1 © 2023 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 8, 1-5, 2023 issn: 2576-6759 doi: 10.55220/25766759.133 © 2023 by the author; licensee eastern centre of science and education, usa corporate governance and banking performance: a comparative study between islamic and conventional banking sector in the context of bangladesh israth sultana department of business administration, international islamic university chittagong, bangladesh. email: israthhossain@yahoo.com abstract corporate governance (cg) is a set of principles that should be included into every aspect of the firm in order to ensure accountability and responsibility. the purpose of this research is to look at the state of corporate governance (cg) in banking sector of conventional banks and islamic banks. because the rules, regulations, and operating processes of conventional and islamic banks differ significantly, the corporate governance (cg) practices of these two banking sectors are likewise distinct. in this work, the authors attempt to give a clear comparative assessment of corporate governance (cg) practices in these two banking sectors. this research looked at four dimensions of corporate governance: board size, board diversity, board diversity, and ceo duality. return on equity (roe) and return on assets (roa) have been used to evaluate banking performance. regression analysis is used to evaluate the banking performance of the said banking sectors. it is found that bs, ind and bd have positive impact on roe in islamic banks sample. on the other hand, in terms of the coefficient of independent variables from sample banks of conventional sector are found to be negative influence on roe in where ind and ceo duality shows significant result. both conventional and islamic banks are under pressure to enhance their corporate governance (cg) practices, since both banking sectors are seeing considerable improvements. however, when compared to conventional banks, islamic banks lag behind in terms of corporate governance (cg). companies must comprehend the advantages of implementing strong governance techniques and accompanying activities that aid in enhancing financial performance. keywords: banking performance, banking sector, conventional banks, corporate governance, islamic banks. jel classification: g30; g38; g39; o16. 1. introduction corporate governance is all about adhering to values, conducting business ethically, and distinguishing between personal and corporate funds when it comes to firm management. conflicting interests of the parties involved create ethical difficulties. managers make decisions based on a set of principles influenced by the values, surroundings, and culture of the company. ethical leadership is advantageous to a corporation since it demonstrates that the organization is operating in accordance with all stakeholders' expectations. in bangladesh, corporate governance plays a significant role. corporate governance has recently surfaced as a critical concern for bangladesh's financial institutions. there are no employment contracts or agency relationships in the majority of bangladeshi financial institutions. as a result, the expense of running an agency is rising every day. corporate governance is increasingly a big issue in financial institutions in order to lessen the corporate problem. economic development and social advancement are inextricably linked to financial performance, whether public or private. any interruption in this sector caused by inadequate governance can result in anguish and suffering for the general public and the impoverished in particular. corporate governance, according to shleifer and vishny (1997), is the mechanism by which financial suppliers to firms ensure that they will obtain a return on their money. according to ruin (2001), corporate governance is described as a collection of individuals who come together one united entity with the job and obligation of leading, regulating, and governing with authority. this body is given the authority to control, regulate, restrict, control, and exercise the powers that have been delegated to it through a collective effort. however, corporate governance (cadbury, 1992) refers to the set of practices, norms, rules, regulations, and organizations that regulate how a company is managed, operated, or regulated. melvin and hirt (2005), on the other hand, described corporate governance as "corporate decision-making and control, notably the organization and working techniques of the board of directors." it may also be employed extremely literally, referring to a company's adherence to best practice code standards, or very widely, referring to a company's relationships with a diverse variety of stakeholders. furthermore, thomas (2002) defined corporate governance as the process and methods through which a company's government (the directors) is held responsible to its shareholders (the shareholders). although corporate governance has established a lot of attention and is a blistering topic in recent years. in comparison to industrialized countries, the bangladesh securities and exchange commission has created some mandatory requirements relating to corporate governance procedures, yet all banks do not follow these guidelines mailto:israthhossain@yahoo.com https://www.doi.org/10.55220/25766759.133 https://orcid.org/0000-0003-2412-3665 asian business research journal, 2023, 8: 1-5 2 © 2023 by the author; licensee eastern centre of science and education, usa as per the legislation enacted. in several industries, there is a lack of accountability, justice, and transparency. several scams and corruptions have already occurred in bangladesh's banking industry, which has tarnished the country's reputation abroad. as a result, the intention of this study is to learn more about corporate governance practices in bangladesh's banking business. it is critical to understand corporate governance's proclivity for disclosure and whether it complies with the bangladesh securities and exchange commission's guidelines. the functioning of effective corporate governance is crucial to bangladesh's financial health, as recent events have demonstrated. bangladesh's proactive approach to corporate governance necessitates the adoption and enforcement of a suitable corporate governance model. though corporate governance has gotten a lot of attention in recent decades as a control mechanism, most of the research on it has been done in the context of industrialized countries. the most significant processes to concentrate on for excellence in corporate governance are: • the strategy process provides: – a link between strategy and operations; establishes a strategy review mechanism. • a link between people and operations is provided by the people process. • a link between strategy and people is provided by the operations process. the corporate structure and the methods through which the activities are structured and conducted are the link between the core objectives of corporate governance and the relevant processes. 2. literature review as a result of the economic crisis, many industrialized nations are facing financial difficulties, and many enterprises are declaring bankruptcy. in those conditions, several states implemented interest-free projects, and businesses who used free interest products were proven to be stable throughout recessions in other scenarios (ahmed, 2009). liu (2015) explored the relationship between corporate governance procedures and disclosures in a lowinformation environment: the chinese stock markets. this study discovered that the incorporation of monitoring and control mechanisms, such as financial knowledge on audit committees and independent directors, can improve disclosure latitude. corporate governance policies and the quality of reporting can have an impact on the value of a public company. according to this research, there is a positive relationship between corporate governance and business value. they discovered a negative relationship between reporting quality and business value. according to hasan and hossain (2012), the total disclosure level is 67 percent, which is a poor outcome since it does not provide a clear signal to stakeholders. furthermore, this proportion falls short of demonstrating effective governance and openness. though the technique was suitable for obtaining a satisfying outcome, the data gathering procedure may be the root of the issue. this study made use of information, disclosure distribution, disclosure checklist, disclosure scoring, disclosure index formulation, dichotomous process, and partial compliance approach. bauer, guenster, and otten (2004) discovered that corporate governance and a firm's value have a combined effect on profitability. many studies have been conducted that suggest there is no link between corporate governance and a company's profitability. some studies are still underway to study the link between business performance and corporate governance factors, despite the fact that the findings do not entirely support it elmagrhi et al. (2017). in a huge way, corporate governance is powerless. businesses are frequently a fertile ground for those looking for illegal benefits in the workplace. giving minority investors certification of benefits and less corruptive relationships between big company and government power may result in an increasingly fantastic situation for small businesses and a more equitable distribution of rewards (iskander & chamlou, 2000). interest-free banking provides advances based on shariah and other islamic principles such as modarabah, musharika, and ijara. the islamic banking system has been steadily growing over the last two decks, and its market share has reached 7% in recent years (samad, 2004). ho and wong (2001) examined a theoretical model connected to four fundamental corporate governance issues with the degree of disclosure provided by hong kong-listed companies. these corporate governance qualities include the percentage of independent directors to total number of directors, the entity of prominent individuals, and the entity of an audit committee. to weigh voluntary disclosure, they created a weighted relative disclosure index. they asserted that the existence of an audit committee is tied to voluntary disclosure. lipto and lorsc (1992) proposed an effective method for strengthening corporate governance and, as a result, boosting performance and competitiveness of us enterprises. they demonstrated that their suggestions could be approved by individual boards of directors with very minor revisions. they also discovered that their strategy will lessen conflict between activist institutional investors, shareholder advocacy groups, and companies. dezoort and salterio (2001) revealed the outcomes of a research examining whether audit committee members' corporate governance experience, financial reporting, and audit knowledge influence their decision in auditor-company management disagreement situations. among the study tools are an accounting policy dispute assignment, knowledge and competence tests, and an experience questionnaire. the findings showed that an independent director's experience with expanding and broader audit expertise was associated with improved audit committee member support for an auditor. according to maher and andersson (2002) the structure of corporate governance is concerned with the control and economic position. it is widely acknowledged that excellent governance has a substantial impact on a company's financial and operational performance, as well as market growth. eng and mak (2003) finds the impact of ownership structure and board composition on voluntary disclosure. they reported that ownership structure is distinguished by block holder ownership and government ownership, managerial ownership, and board composition and these are measured by the percentage of independent directors. their results revealed that both ownership structure and board composition affect disclosure. reaz and arun (2006) demonstrate the issues with corporate governance in the banking sector, as well as the influence of political interference and regulator failure. in addition, the weakening of the corporate governance structure in bangladesh's banking industry has been highlighted, with the participation of ownership structure, executive elements, transparency and auditing practices, and so on. organizations are racing to institutionalize corporate governance to combat accounting, leadership, and governance problems, according to kocourek, burger, and birchard (2003) which may be counterproductive. governance, according to kocourek, begins at home, in the boardroom, among the directors. it's in the "soft" stuff, including how, when, and why they gather, engage, and cooperate with one another and with management. however, qualitative changes to the directors' and ceo's actions, relationships, and goals are useless unless they are subjected asian business research journal, 2023, 8: 1-5 3 © 2023 by the author; licensee eastern centre of science and education, usa to the "hard" mechanisms of performance standards, processes, and assessment. this combination of soft and hard solutions, according to kocourek, can transform corporate governance from a hazy concept into a tool for ensuring organizational resilience, robustness, and continual improvement. ibrahim, rehman, and raoof (2010) took a broader view of corporate governance in the context of planning, describing it as "the way in which a bank's structures, methodologies, procedure, and execution are administered so as to allow positive associations and the concentrated utilization of intensity in the organization supervising favorable linkage of benefits with the goal of pushing up offers cost and investor satisfaction while improving responsibility by a direct overseeing. 3. methodology for the study, islamic and non-islamic banks have been selected where all the product and services are analogous that helped us to compare among the banks more transparently. both qualitative and quantitative approaches were employed in conducting this study. this research paper is based on the secondary data and information gathered from published annual reports of the respected banks and also from the literature review to reach the objectives of the study. different national and international articles, dailies, books, journals are examined and collected in writing this paper. websites were also browsed. the study covers five years period from 2016 to 2020. some data to be obtained was ordinarily being expressed in nonnumeric forms. it was quantitative in the fact that some variables were expressed in numerical form. in conducting this study, the population was all of the banks currently operated in the banking sector of bangladesh. among these banks purposively, 6 islamic and 6 conventional banks were selected purposively for this study. this sampling selection of banks was made on a convenient sampling technique. we used correlation and multiple regressions to examine our data in this study. the entire analysis for the study is done on a personal computer. to evaluate the data, a well-known statistical tool such as 'statistical package' (spss) 20.0 version was utilized. 4. results and discussion banks performance can be evaluated by assessing the effect of corporate governance. for this purpose, the following two models have been developed impact. 𝑅𝑂𝐸 = 𝛽0 + 𝛽1𝐵𝑆 + 𝛽2𝐼𝑁𝐷 + 𝛽3𝐵𝐷 + 𝛽4𝐶𝐸𝑂𝐷𝑇 + 𝑒 (1) 𝑅𝑂𝐴 = 𝛽0 + 𝛽1𝐵𝑆 + 𝛽2𝐼𝑁𝐷 + 𝛽3𝐵𝐷 + 𝛽4𝐶𝐸𝑂𝐷𝑇 + 𝑒 (2) equation 1 presents the return on equity model with independent variables, whereas equation 2 argues the model of return on assets. the model implies that the performance of banking businesses is influenced by a number of corporate governance variables. the board size, board number of independent directors in the board, board diversity, and ceo duality are the corporate governance variables. table 1. correlation matrix for islamic banks. variable roe roa bs ind bd ceo duality roe 1 roa -0.87 1 bs 0.14 0.15 1 ind 0.08 -0.17* 0.03 1 bd 0.82 -0.56 0.33 0.76** 1 ceo duality -0.07 -0.10 0.24 -0.03 0.13 1 4.1. correlation analysis table 1 displays the correlation values of islamic banks. except for ceo duality, corporate governance has a nonsignificant positive correlation with roe and a negative correlation with roa. in this case, ind has a considerable negative association with roa, which is significant at the 5% level. however, board size, the number of independent directors on the board, and board diversity all have a positive link with roe, however ceo duality is adversely connected. on the other side, there is a negative association between roe and the dualism of ind, bd, and ceo. roa is influenced positively by bs. table 2. correlation matrix for conventional banks. variable roe roa bs ind bd ceo duality roe 1 roa 0.86** 1 bs -0.57* -0.42 1 ind -0.32 -0.39 -0.20 1 bd -0.52 0.45 -0.17 0.19 1 ceo duality 0.12 0.01 -0.13 -0.08 0.24 1 table 2 exhibits the correlation analysis of conventional banks. bs is negatively correlated with roe which is significant at 5% level of significance. roe has a negative relationship with ind and bd whereas ceo duality is positively correlated. on the other hand, ceo duality has very less impact on conventional bank’s roa. there exists negative association in roa with bs and ind in where bd has positive impact on roa. note: ** correlation is significant at 0.01 level *correlation is significant at 0.05 level. here, roe = return on equity, roa = return on assets, bs = board size, ind = number of independent directors in the board, bd = board diversity. note: ** correlation is significant at 0.01 level *correlation is significant at 0.05 level. asian business research journal, 2023, 8: 1-5 4 © 2023 by the author; licensee eastern centre of science and education, usa table 3. corporate governance and islamic banks performance. details roa roe bs 0.01*(1.76) 0.02(1.51) ind 0.03***(2.89) 0.11(0.94) bd 0.12(-0.22) 0.30(55.26) ceo duality -0.01(-0.89) -0.03(-0.43) constant 0.016*(6.991) 0.07(5.40) adjusted 𝑅2 0.30 0.28 f-stat 2.51*** 3.22*** table 4. corporate governance and conventional banks performance. details roa roe bs 0.01(0.09) -0.01(-0.81) ind -0.03 (-1.52) -0.13*(-1.92) bd 0.38 (0.15) 0.40(-0.02) ceo duality -0.01(-0.13) 0.13*(-1.92) constant 0.01 (14.40) 0.11(6.34) adjusted 𝑅2 0.49 0.43 f-stat 5.27*** 5.23*** 4.2. regression analysis in islamic banks sample, bs and ind are found positively significant with the banks performance proxies for roa, which clearly confirms that these variables increase the profitability of islamic banks, whereas regression result of conventional banks shows that bs and bd have positive impact on roa (table 3 and table 4). this indicates that larger the bs and bd higher would be the return on assets. however, the beta coefficient is not significant at 5% level. it is also revealed that, corporate governance related banks specific variables such as bs, ind and bd have positive impact on roe in islamic banks sample. on the other hand, in terms of the coefficient of independent variables from sample banks of conventional sector are found to be negative influence on roe in where ind and ceo duality shows significant result. all of the foregoing findings indicate that each individual variable has an impact on bank performance. 5. recommendations after the investigation, it can be concluded that islamic banks lag behind non-islamic banks in terms of corporate governance in their respective banking sectors. many of the banks do not present the previous five years financial statements in their report. but according to the amended notification 2012 provided by bangladesh securities and exchange commission, it is mandatory for all of the banks in the banking industry. as this helps to make the financial statements more understanding about the current performances as well as the previous performances of the respective banks. therefore, all of the banks should present at least five years financial data of their financial performances. in terms of the report to the shareholders, islamic banks are also in a bad position and they should obey the rule. all the banks should obey the rule for ensuring better transparency, fairness, and accountability in the banking sectors. bangladesh bank should enhance their current level of supervision over currently operated banks in the sector where there exists deficiency in corporate governance and ethical issue. financial distress reduces the confidence level of investors in investing in the economy. and it hinders the development of our country. this paper strongly recommends that all the banks of bangladesh should follow the cg practices to ensure accountability and transparency in each and every corporate sector for the improvement of the current position of corporate governance practice. 6. conclusion bangladesh is currently is in the process of transforming from the agro-based economy into the industry-based economy. nowadays banking industry is considered a great crucial financial sector. by ensuring accountability, transparency, and fairness in banking activities, countries economic development can be accelerated. bangladesh is already backbencher in the practices of sound corporate governance policies, laws, and regulations especially in the banking industry in conducting banking activities. as result transparency, accountability, credibility, and fairness are almost absent in some sectors of corporate culture and it causes their long-term prosperity falls down. by ensuring good corporate governance we can facilitate minority shareholders rights protection. this study, it is found that a majority of the selected banks follows the cg practices but not all of the sectors. it is also understood from the analysis that in terms of their rules, regulations and operating procedures non-islamic banks and islamic banks are different from each other. in terms of practicing corporate governance, it can be concluded from the study, islamic banks performance are not good in comparatively conventional banks. references ahmed, h. 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(2023). corporate governance and banking performance: a comparative study between islamic and conventional banking sector in the context of bangladesh. asian business research journal, 8, 1–5. 10.55220/25766759.133 history: received: 22 november 2022 revised: 10 january 2023 accepted: 24 january 2023 published: 6 february 2023 licensed: this work is licensed under a creative commons attribution 4.0 license publisher: eastern centre of science and education funding: this study received no specific financial support. competing interests: the author declares that there are no conflicts of interests regarding the publication of this paper. transparency: the author confirms that the manuscript is an honest, accurate, and transparent account of the study; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study followed all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. https://doi.org/10.1108/ijaim-02-2017-0020 https://doi.org/10.1016/s1061-9518(01)00041-6 https://doi.org/10.1016/j.intaccaudtax.2015.10.002 https://doi.org/10.1057/palgrave.jbr.2340007 https://creativecommons.org/licenses/by/4.0/ https://creativecommons.org/licenses/by/4.0/ 24 © 2024 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 9, 24-30, 2024 issn: 2576-6759 doi: 10.55220/25766759.170 © 2024 by the authors; licensee eastern centre of science and education, usa determinants of business performance of listed information technology companies in vietnam dinh the hung1 pham ngoc thuy tram2 1national economics university, vietnam. email: hungdt@neu.edu.vn 2tran dai nghia high school for the gifted, vietnam. email: thuytram1701.2007@gmail.com ( corresponding author) abstract the information technology (it) industry is rapidly growing and playing a significant role in modern society, impacting almost every aspect of life. the operations of it businesses have been increasing and developing rapidly in recent years. for a business to achieve sustainable development, its production and business activities must be as efficient as possible. this paper aims to determine the impact of various factors on business performance based on data collected from the financial reports of 14 listed it companies on the vietnamese stock market from 2019 to 2023. the paper employs a regression model using stata17 software, and the results show that two factors, capital structure and age of the company, have a significant impact on business performance; while two other factors, fixed asset investment and liquidity, have no significant impact on business performance. based on the research findings, the authors provide several recommendations to help it companies improve their business performance. keywords: business performance, capital structure, liquidity, rate of return. jel classification: m10. 1. introduction the information technology (it) industry is increasingly developing and playing a crucial role in today's society. it is a prerequisite for economic and social development (castells, 1999). the it industry now influences almost all aspects of life, including economics, education, healthcare, entertainment, and many others. with the development of technology and the internet, the demand for it services has increased significantly, including data storage, software development, and information security. the global value of the it market in 2024 is 800 million us dollars and is expected to quadruple by 2030. revenue in vietnam's it-telecommunications sector has continuously grown over the past 10 years from 40 billion usd in 2013 to 148 billion usd in 2024. vietnam has consistently been in the top 10 countries exporting it services, with hardware and electronics exports in 2022 reaching approximately 136 billion usd, an increase of 11.6% compared to 2021. the total number of it businesses in vietnam is around 70,000 and there are over 1500 digital technology businesses with revenue approaching 10 billion usd. it labor has increased from 226,300 people in 2009 to 1,005,206 people in 2019, with a 4.4 fold increase (ministry of information and communications, 2023). with these developments, it has transformed from a small secondary economic sector into the largest secondary economic sector in vietnam, with the highest growth rate, highest labor productivity, and largest export value. moreover, the it industry has benefited significantly from the impact of the covid-19 pandemic due to the increased demand from consumers for technology applications. applications related to education and health have witnessed a surge in visits and usage as students and companies have had to study and meet online. in operations, every business aims to achieve high efficiency in business activities. to achieve this goal, managers need to consider which factors have a positive impact and which have a negative impact on business performance, thereby establishing strategies suitable for the specific characteristics of the business. this article focuses on studying the factors affecting the business performance of 14 it companies listed on the hnx and hose stock exchanges from 2019 to 2023. the article uses return on equity (roe) as a key measure of business performance. based on previous studies, this article will present a research framework showing the independent variables to be included in the model and the research hypothesis. from the collected data set, the research team will select a suitable model for the data to conduct impact analysis. the results obtained will be the basis for the research team to provide recommendations for it companies listed on the hnx and hose to improve operational efficiency. mailto:hungdt@neu.edu.vn mailto:thuytram1701.2007@gmail.com https://www.doi.org/10.55220/25766759.170 asian business research journal, 2024, 9: 24-30 25 © 2024 by the authors; licensee eastern centre of science and education, usa 2. research overview 2.1. research on business performance numerous theoretical and empirical studies on business performance have been conducted worldwide. theoretical research is grounded in macroeconomic principles, while empirical studies primarily focus on two key areas: measuring business performance and examining the factors influencing it. business performance is defined as the ability to utilize and manage a company's resources in various ways to develop a competitive advantage (iswatia and anshoria, 2007). it is evaluated based on three dimensions: productivity, profitability, and market share (walker, 2001). there are two types of business performance: financial and non-financial performance (hansen and mowen, 2005). financial or economic performance is often reflected in revenue growth, increased profits, or stock prices (havnes and senneseth, 2001). common performance metrics are categorized into five groups: liquidity ratios, asset management ratios, debt management ratios, profitability ratios, and market value ratios. these ratios can be combined to create composite performance measures. for instance, combining profitability ratios and asset management ratios yields roa and roe. however, three primary measures are commonly used by researchers: roa (chu thi thu thuy et al, 2015; dam thi phuong thao and nguyen tien manh, 2017; gjoni, 2022; chawla and manrai, 2019) roe (chu thi thu thuy et al, 2015; dam thi phuong thao and nguyen tien manh, 2017; chawla and manrai, 2019) and roce (chawla and manrai, 2019). in studies by diaz and pandey (2019) and nguyen et al (2021) etc., business performance is measured by roa. meanwhile, roe is used to measure business performance in studies by onaolapo and kajola (2010) and pouraghajan et al (2012). some studies utilize all three ratios: roa, roe, and ros, when measuring business performance (pham and nguyen, 2018; tran and nguyen, 2019). however, the most suitable measure of business performance remains a subject of debate. 2.2. research on factors affecting business performance chu thi thu thuy et al (2015) found that the state capital ratio, company size, financial leverage, business cycle, quick payment ability, and management competence have a negative impact on financial performance. pham sơn tùng's (2015) research on the financial performance of joint-stock companies in the real estate industry revealed that liquidity, size, operating time, and gdp growth positively impact the roa, which is the financial performance measure used in the article. conversely, a high fixed asset ratio and a long business cycle have a negative impact on roa. raghav chawla and rishi manrai (2019) showed that the debt-to-equity ratio and company size have a negative impact on the roa and roe of manufacturing companies in india. dam thi phuong thao and nguyen tien manh (2017) indicated that the fixed asset ratio has a positive impact on roa but a negative impact on roe. additionally, the study found that operating time has a positive impact on both roa and roe. studies by ghosh, nag, and sirmans (2000); berger and bonaccorsi (2006); gleason et al (2000); simerly and li (2000) and liargovas and skandalis (2008) among others, in different research contexts, have consistently shown that financial leverage has a significant impact on business performance. miruna florina (2020) indicated that profitability, asset utilization efficiency, and capital structure are related to company performance. hoang thi thu ha and nguyen thi tuyet mai (2023) found that capital structure, size, investment in fixed assets, and growth rate all impact business performance. 3. theoretical foundation and research model 3.1. theoretical foundation business performance is a concept that has garnered significant attention from numerous researchers and has been interpreted in various ways. primarily, it is understood from two perspectives: the company's achievements related to financial activities and those related to non-financial activities (taouab and issor, 2019). according to lebans and euske (2006) business performance refers to the operational results achieved by a company. it encompasses multiple facets of the company, from non-financial factors that provide information about flexibility or the degree to which company objectives are met, to financial factors, including financial indicators for assessing performance and business performance. business performance is not only a measure of quality and reflects the level of organization and management of a business but also serves as the foundation for a company's survival and growth. a company's survival and growth are determined by its reputation and influence in the market. ultimately, a company's market reputation and its ability to gain customer trust are influenced by its business performance. here, business performance cannot be simply understood as minimizing costs and maximizing profits. rather, the achieved business performance is due to the quality of the products produced and supplied by the company to its customers. in this paper, the authors use financial performance to measure a company's performance. 3.2. research model there have been numerous studies worldwide, including in vietnam, on the factors influencing business performance. zeitun and tian (2014) demonstrated that the debt ratio has the strongest negative impact, while growth in total assets, size, and tax rate have a positive impact on roa. moreover, the study indicated that significant investments in fixed assets do not necessarily yield high returns. additionally, other factors such as industry and the macroeconomic environment also have a considerable impact on this factor. in the study by onaolapo and kajola (2010) the debt ratio and the fixed asset ratio have a negative impact on both roa and roe, while asset turnover has a positive impact on these ratios. vo van can (2017) when investigating foreign-invested seafood enterprises in khanh hoa during the period 2011-2015, indicated that the growth rate of assets, revenue, total assets, and the structure of fixed assets have an impact on roa but not on roe. the research by diaz and tin (2017) showed that asset size has a positive impact on financial leverage, leading to increased debt and consequently, a decrease in business performance. asian business research journal, 2024, 9: 24-30 26 © 2024 by the authors; licensee eastern centre of science and education, usa the number of years a company has been operating increases business experience and will affect business performance. however, previous studies have yielded different results. loderer et al (2009) indicated that the longer the company's tenure, the better the business performance. however, studies by liu et al (2014) and marinova et al (2016) showed that company tenure has a negative impact on the business performance of companies. solvency plays a very important role in a company's financial situation, as demonstrated by several studies by almajali et al (2012); maleya and muturi (2013); amalendu (2010); liargovas and skandalis (2008) and khalifa and zurina (2013), etc. low and prolonged solvency often indicates financial risk and the possibility of bankruptcy. however, if a company maintains excessively high solvency, it can also have a negative impact on financial performance. specifically, when solvency is high, it means that the company either invests too much in current assets such as cash, inventory, accounts receivable, or uses too little short-term debt to finance current assets (not taking advantage of the low cost of short-term sources or non-interest-bearing sources), thus reducing profits. asset structure affects a company's business performance. when the proportion of fixed assets is large, the company has the opportunity to mortgage these assets to access external capital more easily. previous studies have shown that a company with a higher proportion of fixed assets to total assets often uses more debt or has an asset structure that is proportional to the debt ratio. however, for businesses in industries that require large investments in fixed assets, it entails a significant risk due to the impact of fixed costs and the very low liquidity of fixed assets, making it difficult for businesses to change direction. meanwhile, the research of zeitun and tian (2007) and onaolapo and kajola (2010) showed that the proportion of fixed assets has a negative impact on business performance. the research of do duong thanh ngoc (2010) indicated that the ratio of fixed assets to total assets has no impact on business performance. according to the result above, the paper proposes a research model as the figure 1. there are 4 following hypothesis: 1. capital structure has negative correlation with business performance. 2. investment on fixed asset has positive correlation with business performance. 3. liquidity has positive correlation with business performance. 4. age of the company has positive correlation with business performance. figure 1. research model. variables in the model are measured as table 1. table 1. description of variables in the model. variable group symbol calculation reference dependent variables business performance roe profit after tax/ owner’s equity salim and yadav (2012); hoang cam trang and vo van nhi (2014); dam thi phuong thao and nguyen tien manh (2017) and chu thi thu thuy et al (2015) independent variables capital structure cap short-term debt/ owner’s equity gjoni and colleagues (2022); chawla and manrai (2019), pham son tung (2015) and hoang thi thu ha and nguyen thi tuyet mai (2023) investment on fixed assets ass fixed assets/total assets dam thi phuong thao and nguyen tien manh (2017); pham son tung (2015) and hoang thi thu ha and nguyen thi tuyet mai (2023) liquidity liq total long-term assets/ long-term debt gjoni and colleagues (2022); chawla and manrai (2019) and pham son tung (2015) age year year of financial statement year of establishment + 1 loderer et al (2009); nagy (2009); onaolapo and kajola (2010) and pham son tung (2015) 3.3. research model business performance = ß0 + ß1*cap + ß2*ass + ß3*liq + ß4*year asian business research journal, 2024, 9: 24-30 27 © 2024 by the authors; licensee eastern centre of science and education, usa including: • cap: capital structure. • ass: investment on fixed assets. • liq: liquidity. • year: age of company. 3.4. research methodology the data used in this study was collected from the financial reports of 14 it companies listed on the vietnamese stock market from 2019 to 2023, available on https://finance.vietstock.vn/. this panel data consists of 70 observations. therefore, to analyze the factors affecting business performance, this paper uses panel data regression models, including the fixed effects model (fem) and the random effects model (rem). table 2. descriptive statistics of variables in the model. summarize roe cap ass liq year, separator (5) variable obs. mean std. dev. min. max. roe 70 1.469726 60.18256 0.0004986 286.0935 cap 70 0.4890842 0.2316762 0.000269 1.423553 ass 70 .0722663 0.0655542 0.0004066 0.2208568 liq 70 15.43383 23.77294 0 111.7877 year 70 19.21429 4.892742 8 28 4. research results 4.1. descriptive statistics table 2 shows that during the period 2019-2023, the average return on equity (roe) of the companies was 1.469726, meaning that for every dollar of equity, the company earned 1.469726 dollars in after-tax profit. the highest and lowest roe ratios of the companies were 286.0935 and 0.0004986, respectively. the average capital structure (cap) of the companies during this period was 0.4890842 times. the average liquidity (liq) of the companies was 15.43383. the average fixed asset investment (ass) was 0.0722663 and the average age of the companies was 19.21429 years. 4.2. correlation analysis table 3 describes the correlation relationships among the variables in the research model, including the dependent variable roe and the remaining 4 independent variables. the analysis results will show the correlation between the independent variables and the dependent variable, aiming to eliminate variables that may lead to multicollinearity before running the regression model. table 3. correlation matrix of variables. roe cap ass liq year roe 1.0000 cap -0.4424 1.0000 ass 0.0984 0.2803 1.0000 liq -0.0106 0.2868 0.2079 1.0000 year -0.3822 0.0889 -0.1029 -0.0332 1.0000 according to the results in table 3, the correlation coefficients between pairs of independent variables in the model are all less than 0.8, indicating a low probability of multicollinearity among the independent variables when included in the model. therefore, it can be concluded that the model does not suffer from serious multicollinearity. on the other hand, to obtain more concrete evidence of whether multicollinearity exists among the collected variables, we examined the variance inflation factor (vif) in the regression model. the results of the multicollinearity test are presented in table 4. table 4. results of multicollinearity test with variance inflation factor (vif). variable vif 1/vif roe 1.55 1.25 cap 1.55 1.24 ass 1.18 1.09 liq 1.12 1.06 year 1.18 1.09 mean vif 1.32 the multicollinearity test results using stata 17 software, as presented in table 4, show that the average vif is 1.32, and no independent variable has a vif value exceeding 10. therefore, there is no evidence of multicollinearity based on the variance inflation factor (vif) criterion for the variables tested for linear relationships. 4.3. regression results 4.3.1. regression estimation using pols, fem, and rem models table 5 presents the regression results of factors affecting firm performance, according to two models: fem and rem. https://finance.vietstock.vn/ https://finance.vietstock.vn/ asian business research journal, 2024, 9: 24-30 28 © 2024 by the authors; licensee eastern centre of science and education, usa table 5. summary of regression results from fem and rem models with the test results to compare the fem and rem models (hausman test), the rem model is the optimal model suitable for the study. 4.4. regression test table 6. xtgls roe cap ass liq year cross-sectional time-series re gls regression with ar (1) disturbances group variable: firm r-sq within = 0.0993 between = 0.4049 overall = 0.3301 corr (u_i, xb) = 0 (assumed) number of obs = 70 number of groups = 14 time periods = 5 wald chi2 (5) = 13.43 prob > chi2 = 0,0197 roe coef. std. err. z p > | z | [95% conf. interval] cap -80.38026*** 27.8843 -2.88 0.004 -135.0325 -25.72802 ass 36.93763 113.4643 0.33 0.745 -185.4483 259.3236 liq 0.0981144 0.02022982 0.48 0.628 -0.2983828 0.4946115 year -3.940736** 1.81835 -2.17 0.030 -7.504636 -0.3768355 _cons 124.9064*** 40.22018 3.11 0.002 46.07631 203.7365 rho_ar 0.31035076 (estimated autocorrelation coefficient) sigma_u 32.561633 sigma_e 31.422708 rho_fov 0.51779442 (fraction of variance due to u_i) theta 0.50082622 note: standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1. the research team employed the re gls regression method, and the results indicated that the variables capital structure (cap) and age of company (year) were statistically significant (supporting hypotheses h1 and h4), while fixed asset investment (ass) and liquidity (liq) were not statistically significant. the final regression model is as follows: roeit = 124.9064 – 80.38026*capit – 3.940736*yearit + i + uit the regression model reveals the following: the variable capital structure (cap) has a coefficient of -80.38026, with a p-value of 0.004 < 0.05, indicating a negative impact on business performance (roe). this means that as a company's capital structure increases, its business performance decreases. this result is consistent with the findings of rohaya et al. (2010); gatsi et al. (2013); pitulice et al. (2018), and others. the variable liquidity (liq) has a coefficient of 0.0981144, with a p-value of 0.628 > 0.05. this result suggests that there is no significant relationship between liquidity and business performance of the company. the variable fixed asset investment (ass) has a coefficient of 36.93763, with a p-value of 0.745 > 0.05. this result suggests that there is no significant relationship between fixed asset investment and business performance of the company. the variable age of company (year) has a coefficient of -3.940736, with a p-value of 0.030 < 0.05. this result suggests that there is a negative relationship between company operating time and business performance. this result is also consistent with the findings of pouraghajan et al. (2012). 5. conclusion and recommendations the research findings indicate that two factors: capital structure and age of company, significantly impact the business performance of it companies listed on vietnamese stock exchanges from 2019 to 2023. conversely, fixed asset investment and liquidity do not significantly affect the business performance of it companies listed on vietnamese stock exchanges. based on the research results, to increase business performance, enterprises need to improve several financial indicators, specifically: asian business research journal, 2024, 9: 24-30 29 © 2024 by the authors; licensee eastern centre of science and education, usa firstly, building a reasonable capital structure: this is one of the most important tasks. if it companies can establish a reasonable capital structure, they can significantly reduce the risk of bankruptcy and increase the efficiency of capital use in business operations. the efficiency of asset use and the debt ratio have an inverse relationship, so to increase the efficiency of asset use, companies should limit investment in assets using short-term debt, encourage the use of long-term debt; and simultaneously use other alternative sources of capital such as retained earnings; mobilize capital from issuing shares, funds, etc. secondly, enhancing market reputation and sustainable development orientation. enterprises need to actively update information, train professional skills to improve knowledge, grasp market trends in order to adjust production and business accordingly to improve product quality. companies need to build a reputation for management capacity, operational skills, financial capacity as well as business acumen. thirdly, the government should review the framework of fiscal and monetary policies to reduce inflation, stabilize the exchange rate, reduce interest rates, and prevent unhealthy interest rate competition. closely monitor the stock market, ensure the safety and stability of the banking system; stabilize prices of important commodities, and prevent monopolistic price increases. fourthly, regularly organize training courses on professional skills and disseminate legal documents to enterprises. regularly update knowledge for accountants through in-depth seminars on international accounting standards to integrate with global trends. by using a quantitative method in the regression model through data analysis of 14 listed it companies on hnx and hose from 2019 to 2023, the research team has demonstrated the correlation between influencing factors and business performance of the company. the research results show that there are two factors affecting business performance: capital structure and operating time. among them, the most influential factor is capital structure. based on the research results, we have also made some recommendations to government agencies and it enterprises to improve the business performance of it companies listed on hnx and hose through measures affecting the capital structure. references abbasi a, malik qa. 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(2014), capital structure and corporate performance: evidence from jordan, australasian accounting business & finance journal, http://dx.doi.org/10.2139/ ssm.2496174. 7 © 2020 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 5, 7-12, 2020 issn : 2576-6759 doi: 10.20448/journal.518.2020.5.7.12 © 2020 by the authors; licensee eastern centre of science and education, usa indirect tax and employment generation in nigeria george-anokwuru chidinma chioma. b.1 olisa felix ubaka2 obayori, joseph bidemi3 ( corresponding author) 1department of economics, faculty of social sciences, university of port harcourt, nigeria. 2school of graduate studies university of port harcourt, nigeria. 3department of economics, faculty of social sciences, nnamdi azikiwe university, awka, nigeria. abstract this paper empirically investigated indirect tax and employment generation in nigeria from 1999 – 2019. the specific intentions of the study were to; examine the correlation between value added tax and employment generation in nigeria and determine the impact of custom and excise duties on employment generation in nigeria. secondary data on employment rate, custom and excise duties as well as value added tax were collected from central bank of nigeria statistical bulletin and the method of dynamic ordinary least square regression analysis was applied. given the empirical results, the paper concluded that indirect tax measures by value added tax (vat) has a direct link with employment rate. also, custom and excise duties have a significant impact on employment generation in nigeria. based on the empirical findings, the study recommended amongst others that government should put in place adequate fiscal measure to ensure that revenue generated from indirect taxes is effectively utilize to develop and grow the economy through employment generation. keywords: benefit theory, custom duty, employment, generation, indirect tax, dols, vat. jel classification: e24:62. 1. introduction one of the basic targets of fiscal policy is to increase the rate of employment vis-à-vis the utilization of either the direct or indirect tax revenue. meanwhile, the most and efficient of these two types of tax revenue is the indirect tax; this is because the tax payers find it very difficult to evade most forms of indirect tax such as value added tax (obayori & omekwe, 2019). thus, the difficulties in its evasion bring about increase in the revenue base of government and in the long run it will results to creation of employment for the citizenry. by means of definition, an indirect tax is a type of tax in which the payers, (the final consumers) bears the final burden. also, it is a type of tax collected by an intermediate from the individual who bears the eventual economic liability of the tax and the intermediate later files a tax return and forwards the tax proceeds to government. thus, an indirect tax may be used to raise the price of products for consumers. at such, an indirect tax is a regressive tax since both high and the low income earners pay the same tax amount for consumption of certain quantity of specified commodities. examples of such tax include; sales tax, value added tax (vat), custom and excise duties; import and export duties. on the other hand, obayori and robinson (2019) defined employment as a state in which individuals who are eager to work at a predominant wage rate by law are adequately engaged. in other words, employment is created when openings for work could be given by the legislature through government fund in the arrangement of social and financial framework in the economy maeba (2019). meanwhile, before the 1970s, indirect tax revenue from non-oil sector was the principal source of financing government budget in nigeria. by then graduate and youth unemployment was not a serious macroeconomic problem as it is today. but as government shift attention to direct tax revenue from the oil sector since the 1970s till date, employment generation has been the bane of nigeria government. this is because, people have the mentality that crude oil is the free gift of nature and it will never go in extinction. this belief may be what warranted lack of prudence use of the revenue from the oil sector to counteract macroeconomic problem such as unemployment and stunted growth. for instance, the oil sector which accounted for over 90 per cent of export earnings and more than 80 per cent of government revenue since 1970s still maintain the same trend till date. but it is alarming that employment generation does not correspond with the increase in the direct tax revenue from the oil sector as youth unemployment has risen to about 60% today (obayori & robinson, 2019). given the volatility in the crude oil price at the international market, constantly relying on revenue from it to promote fiscal sustainability and growth will be detrimental to the developmental process of the nigerian economy. hence the need to have a mix of revenue sources to boost the nation’s revenue base through efficient management of suitable fiscal policies (jones & ekwueme, 2016). similarly, since direct tax revenue from petroleum products is not healthy for sustainable economic growth as a result of fluctuation in the crude oil prices in the international http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2020.5.7.12&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/69 https://orcid.org/orcid-search/quick-search?searchquery=ajayi%20boboye%20l. asian business research journal, 2020, 5: 7-12 8 © 2020 by the authors; licensee eastern centre of science and education, usa market, hence the need for a paradigm shift to tax revenue and particularly to indirect tax such as value added tax and customs and excise duties, which are easier to collect and less prone to evasion. the revenue collected from these sources will help the government achieve full employment in the short run and economic development in the long run through judicious use of the tax revenues (nmesirionye, jones, & onuche, 2019). given this assumption, nigeria government uses various indirect taxes revenue such as the ones from value added, custom and excise duties amongst others to counteract the problem of chronic unemployment rate that has risen from less than 9% in the 1970s to about 25% in 2018 (national bureau of statistics (nbs), 2019). given the background above, the paper empirically examined the impact of indirect tax on employment generation in nigeria by answering the following questions; what is t h e relationship between vat and employment generation? how has excise and custom duties impacted on increase in employment in nigeria? thus, the objectives of the study were to; examine the relationship between value added tax and employment generation in nigeria and determine the impact of custom and excise duties on employment generation in nigeria since the return to full democracy in 1999. moreover, this paper is one of the very few studies that examined indirect tax and employment generation. this is because; most of the existing studies examined the effect of tax on economic growth over different data periods. since it was realized that there is hardly any work on the effect of indirect tax on employment generation in nigeria; this study filled this research gap. 2. review of related literature 2.1. theoretical review: benefit theory of tax according to the renowned economists; knut and lindahl (1967) taxes should be paid for consumed public commodities by individuals based on benefits received. in other words, tax is directly proportional to state derived activities (bhartia, 2009). this simply connote that the more profits an individual enjoys from government activities, the more such individual should pay to the government. a true picture of this theory is the taxes collected in every local authorities, such as market place, bus stop amongst others, which in the long run will be used to develop various social services which results to social benefit to the citizenry. thus, the public service enjoys is a function of tax revenue derived from the benefit people enjoy. the theory has been subjected to various criticisms on the ground that; (i) benefit is absolutely an abstract issue and there is no logical method to gauge the extent of advantage and its money value. (ii) if benefits accumulated to an individual are the premise of tax collection, the poor must pay higher on the grounds that in a welfare economy, the poor get a larger number of advantages than the rich. this is plainly out of line and as such an inadmissible suggestion (iii) the equitable distribution of wealth, the main objective of most of the modern governments will be defeated if this principle is followed. 2.2. empirical review and justification of the study empirical works of scholars who examined the nexuses between various indirect taxes and economic performance such as economic growth and employment/unemployment were identified. such scholarship include; nmesirionye et al. (2019) who looked at indirect taxes and the performance of the nigerian economy as of 1994 to 2017 with the use of ordinary least square. the findings revealed that vat has direct impact on gdp of nigeria while custom and excise duties has significant positive impact on gdp in nigeria. also, obayori and omekwe (2019) used ardl model to examine indirect tax and economic growth in nigeria. they concluded that vat as an indirect tax system in nigeria has direct influence on economic growth in nigeria since its inception in 1994. inimino, otubu, and akpan (2018) used ecm to examine vat as a form of indirect tax and economic growth in nigeria from 1994 to 2015. they established that vat, exchange rate and interest rate all impacted on economic growth in nigeria. but private domestic investment does not impact on economic growth. akhor and ekundayo (2016) used ecm to consider indirect tax revenue and nigeria gdp for the period 1993-2013. they averred that vat had a direct impact on gdp while excise duty had an inverse impact on gdp. okunbor and izedonmi (2014) used linear regression to examine the contribution of vat to the development of the nigerian economy from 1994 to 2010. the result of their findings revealed that vat revenue and total revenue accounted for almost 92% deviations in gdp in nigeria. ihendinihu, jones, and ibanichuka (2014) investigated the long-run equilibrium nexus between tax revenue and economic growth in nigeria from 1986 to 2012 with the use of ardl technique and found that vat has no statistical significant impact on economic growth in nigeria. johnson (2013) examined the impact of tax policy on inflation and unemployment in nigeria from 1970 to 2008. the ols estimations showed that taxes have a negative effect on both inflation and unemployment rates but with insignificant coefficient. ilaboya and mgbame (2012) investigated indirect tax-economic growth dynamics from 1980-2011 with the use of error correction mechanism. they found an indirect and insignificant connection between indirect tax and economic growth in nigeria. meanwhile, existing empirical studies revealed that several research explorations have examined the effects of indirect tax on economic growth and other macroeconomic variables over different data periods. also, the empirical review exposed that most of the studies of particular interest applied different estimation techniques in their analysis, such as ordinary least squares, cointegration and error correction technique and ardl. but these empirical studies reached different conclusions about the influence of indirect tax on economic fundamentals, which cannot be generalised for policy decisions. but from the scholarship, it was realized that hardly is there any work on the effect of indirect tax on employment generation in nigeria; this study filled this research gap. this was done by using the technique of dynamic ordinary least square (dols) to examine indirect tax and employment generation in nigeria. it also, extends the period of study to 2019 in order to capture realities of recent policy actions on employment creation in nigeria. 3. methodology the data ranges from the period of 1999 to 2019. this data was mainly sourced from the publications of the central bank of nigeria (cbn) statistical bulletin volume 30, 2019.this study adopted the econometrics method of dynamic ordinary least square (dols) to explore the impact of the explanatory variables (value added tax and asian business research journal, 2020, 5: 7-12 9 © 2020 by the authors; licensee eastern centre of science and education, usa custom/excise duties) on the dependent variable (employment rate). the essence of using the dols proposed by stock and watson (1993) is because it has the ability to eliminate endogeneity problem and it is robust to autocorrelation problem. meanwhile, preliminary test via descriptive statistics was carried out to ascertain the characteristic nature of the time series under consideration. also, stationarity test via adf unit root test was carried out to establish stability of the time series. also, co-integration test proposed by johansen (1998) was conducted to ascertain the long-run equilibrium relationship among the variables 3.1. model specification the empirical model for the study was cast in line with the model proposed by nmesirionye et al. (2019) who used ols to examine indirect taxes and performance of the nigerian economy from 1994 to 2017. their ols model was in the form of gdp = f(vat, ecd) (1). where gdp is economic performance, vat is value added tax and ecd is excise duties. but the current model replaced gdp with employment generation (epg) in the model. it also extend the time frame to 2019. thus, dols model specified in log-linear econometric form is stated thus; epg = λ0 + λ1lnvatt + λ2lncudt + ∑ 𝑛 𝑖=1 ∆λ1𝐿𝑛𝑉𝐴𝑇𝑡 − 1 + ∑ 𝑛 𝑖=1 ∆λ2lncudt + µt (2) where; epg is employment rate (proxy for employment generation), vat is value added tax, cud is custom and excise duties, µ is error term, λ1 and λ2 are slope parameters, λ0 is intercept parameter and ∑ is summation. 3.2. description of the variables employment generation: this is an economic situation in which people who are ready to work are productively employed to increase the production output of the economy. employment generation was calculated as a percentage inverse rate of unemployment. the ideology was based on the formula proposed by swane and vistrand (2006). value added tax: this is a consumable levy imposed on goods whenever value is added at each stage of the supply chain. it is imputable on the supply of payable goods and services except otherwise specified. vat can either be input vat or output vat. therefore, it is anticipated that revenue from vat will have a positive correlation with employment rate. custom and exercise duties: these are charges placed on goods imported to the country. this is anticipated that tax revenue from custom and exercise duties have a positive link with employment generation. 4. results and discussion 4.1. descriptive statistic result this section analyses the descriptive statistic in order to ascertain the nature and characteristic of the variable under study. table-1. descriptive statistic result. measurement epg vat cud mean 8.634762 410851.8 295553.3 median 8.700000 468400.0 297500.0 std. dev. 1.576866 276697.7 129852.0 skewness 0.471666 -0.169604 -0.472708 kurtosis 2.024800 1.259734 2.166395 jarque-bera 1.610780 2.750639 1.390120 probability 0.446914 0.252759 0.499044 observations 21 21 21 the descriptive statistics reported in table 1 indicated that employment rate (epg) has an approximate average of 8.6percent with the corresponding standard deviation of 1.6percent. similarly, value added tax (vat), has an approximate average of n410852billion with the corresponding standard deviation of n276698billion. custom and excise duties (cud), has an approximate average of n295553billion with the corresponding standard deviation of n129852billion. thus, it can be infer from the analysis that the standard deviation of all the variables were not higher than respective averages. therefore, they converged around their respective mean. meanwhile, the skewness test showed a mixture of both negative and positive slopes. this negate the principle of consistency of result. also, the probability of jarque-bera statistics showed that the null hypotheses of the variables were accepted. thus, the variables were normally distributed. 4.2. unit root test the unit root test via augmented dickey fuller (adf) test was used to investigate the order of integration of the variables. table-2. unit root test at level and first difference. variables adf test statistic @ level adf test critical value @ 5% (level) order of integration adf test statistic @ 1st difference adf test critical value @ 5% (1st diff.) order of integration epg 0.6698 -3.0403 not stationary -8.8897 -3.0403 1(1) vat 0.9940 -3.0206 not stationary -5.7670 -3.0299 i(1) cud -1.4077 -3.0206 not stationary -6.4119 -3.0299 i(i) asian business research journal, 2020, 5: 7-12 10 © 2020 by the authors; licensee eastern centre of science and education, usa the unit root test of stationarity for the series via the adf test shown on table 2 disclosed that all the variables were not stationary at level, since their adf test statistic values were far less than their critical values at 5%. in view of this, the variables were differenced once and they became stationary at first difference prior to further estimations to avoid spurious regressions results when these variables were used in model estimations. 4.3. johansen test for co-integration this part analyzed and discussed the co-integration result in order to validate economic assumption of long run association amongst variables. table-3. johansen test for co-integration. eigen value k=1, r=2 trace statistics 5% critical value prob. ** hypothesis of ce(s) 0.864005 56.71227 29.79707 0.0000 none * 0.607829 18.80465 15.49471 0.0153 at most 1* 0.052246 1.019546 3.841466 0.3126 at most 2 eigen value k=1, r=2 max-eigen statistic 5% critical value prob. ** hypothesis of ce(s) 0.864005 37.90762 21.13162 0.0001 none* 0.607829 17.78510 14.26460 0.0133 at most 1* 0.052246 1.019546 3.841466 0.3126 at most 2 note: r=number of co-integrating vectors and k = number of lags in model. * rejection of the h0 . the results of the johansen test of co-integration via both the trace and max-eigen statistics, showed the existence of two co-integrating equations in the model at 5% level. thus, the null hypothesis (h0) of no cointegration among the variables was rejected. based on this result, the paper concludes that there is a long run equilibrium relationship amongst the variables in the model. 4.4. discussion of dynamic ordinary least square multiple regression result this section analyzed and discuss the regression result in line with the objectives of the study in order to validate economic assumptions. table-4. dynamic ordinary least square regression result for the model. dependent variable: employment rate (epg) variables coefficients s-error t-statistics probability c 81.18568 19.02463 4.267398 0.0021 ln(vat) 1.482344 1.084835 1.366423 0.2050 ln(cud) -7.244370 2.558989 -2.830951 0.0107 adjusted r2 0.8905 f-statistics 31.23672 durbin watson 1.6887 prob(f-stat) (0.0001) the results of the estimated model as presented in table 4 showed that the adjusted r-squared is 0.8905. thus, the variation in employment rate (epg) brought about vat and custom and excise duties are 89%. this shows that the model is a good fit. the durbin watson (dw) which measures the level of serial autocorrelation in an estimated model which was obtained via correlogram-q-statistics test is 1.6887. this value is very close to the dw bench mark of 2.0. thus, it was infer that the model is free from problem of serial autocorrelation. given the occurrence of no serial correlation, the estimated model is valid for policy making. in like manner, the f-statistics which measures the overall significant of the explanatory variables in the model showed that the two explanatory variables are significant in explaining employment generation in nigeria. this is because, the probability of fstatistic of 0.0001 < p-value of 0.05. meanwhile, the results in table 4 showed that, the value of value added tax revenue (vat) has a positive relationship but insignificant impact on employment rate (epg). thus, a percentage increase in vat will causes an increase in employment by 1.48%. the result conforms to the finding of obayori and omekwe (2019) as well as onwuchekwa and aruwa (2014) who examined the link between value added tax as a form of indirect tax and economic growth, and discovered that value added tax (vat) has a direct relationship with economic growth in nigeria. on the contrary, the value of custom and excise duties (cud) has a negative relationship with employment rate but impacted significantly on employment rate. thus, a percentage increase in custom and excise duties will decrease employment generation by 7.24%. the finding supports the empirical work of charles (2012) when he averred that the output growth is negatively influenced by indirect tax rate such as custom and excise duties. but negates the empirical finding of obayori and omekwe (2019). 4.5. post estimation test from the results of post estimation tests as depicted by both the normality and wald tests. the estimated model is reliable for policy formulation. asian business research journal, 2020, 5: 7-12 11 © 2020 by the authors; licensee eastern centre of science and education, usa 0 1 2 3 4 5 6 7 -1.00 -0.75 -0.50 -0.25 0.00 0.25 0.50 0.75 1.00 series: residuals sample 2001 2018 observations 18 mean -8.37e-15 median 0.041789 maximum 0.756250 minimum -0.842237 std. dev. 0.356017 skewness -0.203826 kurtosis 3.562123 jarque-bera 0.361622 probability 0.834593 figure-1. normality test. the normality test as presented in figure 1, showed that the error terms are normally distributed. this is because the probability values of the jerque-bera statistic (j-b stat) of 0.8345 is greater than 0.05 critical value. thus, it was concluded that the sample data are normally distributed. the result meets the statistical criteria and authenticates the reliability of the estimated model for policy making. the wald test help to measure the significant of the explanatory variables in explaining the dependent variable in an estimated model. this was done by comparing the probability of f-statistic and p-value at 5%. thus, if the probability of f-statistic is less that p-value at 5%, we conclude that the explanatory variables are significant in explaining the dependent variable. table-5. wald test. wald test: equation: untitled test statistic value df probability f-statistic 31.23672 (2, 9) 0.0001 chi-square 62.47344 2 0.0000 normalized restriction (= 0) value std. err. c(1) 1.482344 1.084835 c(2) -7.244370 2.558989 the estimated result in table 5 showed that the f-statistics value of 31.2367 has the corresponding probability value of 0.0001 which is far less than 0.05 p-value at 5%. thus, it was concluded that the two explanatory variables (vat and cud) are significant in explaining employment generation in nigeria during the studied period. 5. conclusion this paper empirically investigated indirect tax and employment generation in nigeria from 1999 – 2019. this was done against the background that since the return to full democracy in 1999, direct tax from petroleum products have not generated enough employment to propel the nigerian economy to the desired level of growth and development due to the volatility of crude oil prices in the international market and mismanagement of the said revenue. thus, a study of indirect tax was aim at increasing the revenue base of government and makes funds available for developmental purposes through increase in employment level and improved human development index. based on the empirical results, it was concluded that indirect taxes measures by value added tax (vat) as well as custom and excise duties has direct correlation and significant impact with employment generation and hence economic development in nigeria. following the empirical findings, t h e s t u d y recommends that government should put in place adequate f i s c a l measure to ensure that revenue generated from indirect taxes is effectively utilized to develop and grow the economy through employment generation. also, given the indirect link between custom and excise duties with employment rate, it was recommended that all identified administrative loopholes should be plugged and well managed for custom and excise tax revenue to have direct relationship with employment rate in nigeria. references akhor, s. o., & ekundayo, o. u. (2016). the impact of indirect tax revenue on economic growth: the nigeria experience. igbinedion university journal of accounting, 2(08), 62-87. bhartia, h. l. (2009). public finance (13th ed.). new delhi: vikas publishing house pvt ltd. charles, a. n. b. (2012). investigating the performance of monetary policy on manufacturing sector in nigeria. arabian journal of business and management review, 2(1), 12-25. available at: https://doi.org/10.12816/0002239. ihendinihu, j. u., jones, e., & ibanichuka, e. a. (2014). assessment of the long-run equilibrium relationship between tax revenue and economic growth in nigeria: 1986 – 2012. the standard international journals, 2(2), 39 47. ilaboya, o., & mgbame, c. (2012). indirect tax and economic growth. research journal of finance and accounting, 3(11), 70-82. inimino, e. e., otubu, o. p., & akpan, j. e. 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(2019). effect of public expenditure on employment in nigeria, 1980-2017. a ph.d thesis submitted to postgraduate school, rivers state university, port harcourt nigeria. national bureau of statistics (nbs). (2019). general economic indicator. abuja, nigeria: annual abstract of statistics. nmesirionye, j. a., jones, e., & onuche, e. v. s. (2019). impact of indirect taxes on economic performance of nigeria (1994-2017). european journal of accounting, finance and investment, 5(4), 32-39. asian business research journal, 2020, 5: 7-12 12 © 2020 by the authors; licensee eastern centre of science and education, usa obayori, j. b., & omekwe, s. p. o. (2019). indirect tax and economic growth in nigeria: the case of vat. international journal of science and management studies, 2(6), 61-66. obayori, j. b., & robinson, m. o. (2019). government spending in selected sectors and job creation in nigeria. african journal of applied and theoretical economics, 5(1), 106-123. okunbor, j. a., & izedonmi, f. i. o. (2014). the roles of value added tax in the economic growth of nigeria. british journal of economic management and trade, 4(12), 1999-2007. available at: https://doi.org/10.9734/bjemt/2014/11013. onwuchekwa, j. c., & aruwa, s. a. (2014). value added tax and economic growth in nigeria. european journal of accounting auditing and finance research, 2(8), 62-69. stock, j. h., & watson, m. w. (1993). a simple estimator of cointegrating vectors in higher order integrated systems. econometrica, 61(4), 783-820. available at: https://doi.org/10.2307/2951763. swane, a., & vistrand, h. (2006). jobless growth in sweden? a descriptive study. being a master's thesis in international economics and business at stockholm school of economics. citation | george-anokwuru chidinma chioma .b.; olisa felix ubaka; obayori, joseph bidemi (2020). indirect tax and employment generation in nigeria. asian business research journal, 5: 7-12. history: received: 19 may 2020 revised: 22 june 2020 accepted: 24 july 2020 published: 10 august 2020 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education acknowledgement: all authors contributed equally to the conception and design of the study. funding: this study received no specific financial support. competing interests: the authors declare that they have no competing interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 10 © 2019 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 4, 10-16, 2019 issn(e) : 2576-6759 doi: 10.20448/journal.518.2019.41.10.16 © 2019 by the authors; licensee eastern centre of science and education, usa a quantile regression analysis of contributing factors influencing agribusiness growth and entrepreneurship development: evidence from rural china owusu samuel mensah1 chen jianlin2 ji you jun3 ( corresponding author) 1,2,3school of business, jinggangshan university, qingyuan district, ji'an city, jiangxi province, china abstract the rapid development of some sectors in the chinese economy has crippled the growth of agribusiness. agribusiness sector, which consists of various business activities, plays a vital role in socio-economic development in the areas of job creation, food production and rural development. however, the environmental issues that are more prevalent to the agro-industries thwart the growth and development of the sector. this study employs the quantile regression approach to investigate the relationship between government policies, agribusiness growth and agripreneurship development. pearson‟s product-moment correlation was also employed to investigate the degree of the linear relationship between the variables. the results of the study revealed a significant positive correlation between agribusiness development, rural education, research and development (r&d), legalities, development of family households and intellectual properties. the quantile regression results also disclosed a positive relationship between investments in the rural areas and agribusiness growth and entrepreneurship development. the quantile plots measured the deviations in the asymmetric quantile coefficients, and the results revealed that the coefficients seem to depart slightly at the various quantile points, from the ols mean effect estimates. keywords: agribusiness growth, entrepreneurship development, government policies, quantile regression and rural china. jel classification: h51; 128; j43; k49; l26; q10; q19. 1. introduction the role of agriculture in sustainable development and poverty reduction in most developing countries has become a major issue under discussion. the growth in the agricultural sector greatly contributes to sustainable development goal of ending extreme poverty by 2030 and provides means to feed the expected nine billion people in the world by 2050 (christiaensen et al., 2011). the future of agriculture has been intrinsically linked to the need for better stewardship of natural resources. in china, the agricultural sector serves as an important source of livelihood among many people in rural areas. for a sustainable and continual supply of food in china, the business ethics approach needs to be further encouraged in the agricultural production system among the rural dwellers. china, the country with the largest population worldwide and with arable land of 7 to 10 percent feeds the largest number of mouths in the world. however, the rapid population growth has called for an increase in the production and supply of food to meet the current and future food demand. therefore, increasing food production means providing enabling environment to support the activities of the agricultural entrepreneurs and the agribusiness sector. according to edwards and shultz “agribusiness is a dynamic and systemic endeavor that serves consumers globally and locally through innovations and management of multiple value chains that deliver valued goods and services derived from the sustainable orchestration of foods, fiber and natural resources”(cristian and felzensztein, 2013). the oxford dictionary explains businesses as buying and selling or trade or commercial work. according to acharya (2007) the word trade or commerce can be an exchange of goods as a means of livelihood or profit. that is agro-processing, production of agro-chemicals and farm machinery, and trade (wholesaling and retailing) are considered as parts of manufacturing (industrial) or service (tertiary) sector. with the structural transformation of the chinese economy, there has been a decline in the share of agricultural production (farming), whilst the other sectors of the economy such as the processing, distribution and trade are increasingly developing. therefore, to address this issue, the agribusiness sector in china is adopting a more sustainable approach to ensure an increase in food production, effective and efficient food processing and distribution of agricultural products to make the sector more sustainable. sustainable agriculture is perceived to be a philosophy and a system http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2019.41.10.16&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/2 asian business research journal, 2019, 4: 10-16 11 © 2019 by the authors; licensee eastern centre of science and education, usa of farming because it is rooted in a set of values that reflects the awareness of both ecological and social realities (altieri, 2018). studies recognize agricultural systems as human systems, so that „what is sustainable‟ will also be value-laden. the term agribusiness is generic and takes into consideration the involvement of the businesses in food production. according to acharya (2007) agribusiness is about producing and adding value to the farm produce to meet the needs of customers. agribusiness sector can be explained in four distinct sub-sectors, which are agricultural inputs; agricultural production; agro-processing; and marketing and trade (acharya, 2007). therefore, the concept “agribusiness” involves science and practice of activities, with backward and forward linkages, related to production, processing, marketing, trade, and distribution of raw and processed food, feed and fiber, including supply of inputs and services for these activities by the agri-food industries (acharya, 2007). the agri-food industry sector is a large, multifaceted industry sector that exists worldwide, and involves a range of businesses that create industry-specific. with increasingly competitive and quality conscious global marketplaces for food products, governments and agro-industry chain members are creating an enabling environment to promote food production. however, integrating the growing environmental and social issues of the changing agribusiness sector with prevailing economic imperatives is progressively becoming more difficult, however finding a lasting solution to these problems needs the involvement of agro-industries in the development of sustainable agricultural systems through the adoption of appropriate strategies. this will enhance a comprehensive conceptual framework and identify the most critical supportive policies, programs, and regulations needed to promote the agribusiness development. according to kharaishvili et al. (2015) unfavorable business environment coupled with the introduction and adaptation of modern agricultural technology by agricultural entrepreneurs has been major obstacles facing the sector. agribusiness sector in china faces several challenges due to the market globalization, increased customer quality requirements in food products, changes in the market environment and the introduction and adoption of new technologies to enhance food production and supply. the adoption of the open market economy by the government has further resulted in growing competitive pressures among the agricultural clusters to improve farm revenue streams, development of new consumer market niches and creation of an enabling environment that supports the agri-food industries. according to mintzberg (1996) the degree of stability or dynamism, simplicity or complexity, homogeneity or diversity, and munificence or hostility in the business environment play a significant role in developing the sector. the external environment of the agro-industries is characterized by its narrow and broader senses, which focus on all the external objects and unequivocally affects the agro-industry performance. hornsby et al. (2002) maintain that the interactions between forces in the external environment and the organization challenge firms to effectively sustain the business through appropriate business strategies. the concept of business environment talks about every variable, powers and the various institutions that have an immediate impact on the business activities. the rest of the paper is structured as follows: section 2 contains data and descriptive statistics; section 3 explains the methods used in the analyses; section 4 presents the results; section 5 offers a discussion of the study‟s results, and section 6 presents a brief conclusion. 2. materials and methods 2.1. measure in this paper, we adopted time series data and quantile regression model to investigate the contributing factors influencing agribusiness growth and agripreneurship development. the quantile regression approach helps to construct confident intervals for the fitted dependent variables. according to literature, common regression techniques focus on the mean effects, which may lead to either under-estimating or over-estimating the relevant coefficient or even failing to detect important relationships (binder and coad, 2011). the study employed data from the china statistical yearbook, 2017. according to the study, the factors contributing to agribusiness development were measured using household systems in the rural china (x 1), government expenditure on the rural education (x 2), patent grants (x 3), research and development (x4), tax incentives (x5), and the government expenditure in providing conducive legal environment to the entrepreneurs (x6). the agribusiness performance (y1) and the development of the agricultural entrepreneurs (y2) were measured by and the total profit of agro-food industries and the number of agro-food industries from the period of 1978 to 2017, respectively. 2.2. model estimation the study, however, adopted a quantile regression approach introduced by koenker and bassett (1978) to find out the complex relationship between the dependent and independent variables. according to uematsu et al. (2013) quantile regression is more robust to the non-normal error term and outliers in the model and takes into consideration the major effects of the covariates on the distribution of the dependent variable holistically and not only the conditional mean. for a random variable y with probability distribution function    prg y ob y y  , the th quartile of y* is d the inverse function,     inf :y f y    where 0 1  . in particular, the median is  1/ 2q . the random sample  1,..., zy y of y, means that the sample median minimizes the sum of absolute deviations 1 min m i r i y      . likewise, the general th sample quantile    , which is analogue of    is represented as   1 min m i r i y       , where     0 ,0 1k k i k       . thus, asian business research journal, 2019, 4: 10-16 12 © 2019 by the authors; licensee eastern centre of science and education, usa  .i represents the indicator function. however, chen (2005)further states that likewise the sample mean, which tries to minimize the sum of the squared residuals   2 1 1 ˆ arg min m i r y     . can be extended to linear conditional mean function as  e y x x x   by solving   2 1 ˆ arg min m h i i i r y x      the linear conditional quantile function modeled as     ,x x x     is also estimated by solving     1 ˆ arg min m h i i i r y x       for any quantiles  0,1  .the, quantity  ̂  represents the th quantile regression. however, the 0.5  , relate to the median regression called the 1l regression (chen, 2005). 3. results and discussion it is important to study the impact of chinese government expenditure on the growth of the agribusiness sector and entrepreneurial development. the goodness-of-fit statistics for the quantile regression models are pseudo-r2 coefficients (based on the change in the deviance statistic). the study further runs a pearson's productmoment correlation to assess the relationship between the agribusiness performance and government expenditure in education, patent, research institutions, tax incentives, legalities, and the family household system table 1. table 2 shows the correlation between the agribusiness performance and government expenditure in education, patent, research institutions, tax incentives, legalities and the family household system. from table 2, there is a significant positive relationship between numbers of households in the rural areas and agribusiness growth in rural china, r= (22) =0.996, p=0.000. moreover, the study revealed a significant positive relationship between investment in rural education and agribusiness growth. r= (24) =0.971, p=0.000. the findings further revealed a significant positive relationship between government expenditure in protecting the intellectual properties of the entrepreneurs r= (24) =0.822, p=0.000. the correlation between the government expenditure in promoting agricultural research and development and agribusiness growth was a significant positive relationship, r= (24) =0.671, p=0.000. the legal environment is also positively correlated with the agribusiness development at 0.001 significant level, r= (24) =0.849, p=0.001. however, the tax incentives given to the agro-industries in the rural was positively correlated with the industrial growth in the rural areas but not significant, r= (24) =0.239, p=0.236. table-1.variables definition and summary statistics. variable mean std. dev min. max. dependent variables y1 10.826 10.189 10.055 12.551 y2 11.124 10.351 10.298 11.481 contributing factors x1 10.134 10.016 9.110 10.431 x2 9.085 11.232 6.123 7.324 x3 10.365 11.088 7.251 10.972 x4 8.085 10.214 8.037 9.137 x5 9.749 11.320 9.321 11.974 x6 11.578 10.799 9.131 12.431 source: authors‟ calculations based on data compiled from china rural statistical yearbook (1978-2017). table 3 and table 4 report the standard errors of each regression coefficients estimated in the equation as well as the estimated results of the ols method. according to the results from table 3 and table 4, most of the regression coefficients estimates are distinctly unequal to zero. finally, the study estimated all the quantile regression estimated in the study. the estimated coefficients for the selected sample quantiles (20th, 40th, 60th and 80th), the standard errors, and confidence intervals for the quantile regression coefficient estimates are presented in table 3 and table 4. in addition, apart from the quantile regression results at the various quantile points being different from the ols estimation, the 20th, 40th, 60th and 80th quantiles estimations have a different significant effect on the conditional mean regression model. according to karami and mansoorabadi (2008) while the ols regression describes the central tendency of the data, the regression quantile results give the exact picture of the importance of the explanatory variables for the different quantiles. this study, however, reports the statistical comparison coefficient, that is, testing the coefficients at the various quantile points and ols estimate in table 3 and table 4. according to the study, the effect of the household system in rural china is lower in the ols estimate and 80th quantile distribution. the mean effect of the family system is negatively significant according to the ols estimate, but the quantile regression results show that the disparity is higher in the 20th, 40th, and 60th quantiles of the distribution. from table 4, the mean effect of the family system is negative according to the ols estimates and negatively significant in the 20th quantile point, but the quantile regression shows that the disparity is much higher in the upper quantiles of the distribution, such as the 40th, 60th and 80th quantiles at 0.05 significant levels. this implies that the family system in most of the rural areas in china is operating beyond subsistence farming by engaging in large scale farming, which generates income for the family. however, the results from table 3 imply that the income from the sales of the farm produce is not enough to meet the needs of the farmers in most of the rural areas. asian business research journal, 2019, 4: 10-16 13 © 2019 by the authors; licensee eastern centre of science and education, usa table-2.pearson product moment correlation. variables 1 2 3 4 5 6 7 1. y1 1 0.996** 0.971** 0.822** 0.671** 0.239 0.849** 0.000 0.000 0.000 0.000 0.261 0.001 2. x1 1 0.967** 0.000 0.831** 0.000 0.683** 0.000 0.213 0.317 0.854** 0.000 3. x2 1 0.930** 0.000 0.817** 0.000 0.015 0.945 0.939** 0.000 4. x3 5. x4 1 0.930** 0.00 1 0.286 0.186 -0.545** 0.985** 0.00 0.930** 0.006 0.000 6. x5 1 -0.255 0.229 7. x6 1 **. correlation is significant at the 0.01 level (2-tailed). *. correlation is significant at the 0.05 level (2-tailed). the study further looked at the influence of government expenditure on rural education on agribusiness growth and entrepreneurial development. from table 3, the government commitment to equip the rural entrepreneurs with the requisite knowledge and skills recorded negatively on the agribusiness growth at the ols estimate, 20th and 40th quantile points. however, across all the quantile points the effects were highly significant at 5% and 10% level and the effect of rural education on agribusiness growth in the upper tail of the distribution was positive. according to table 4, the impact of public investment in rural education on the empowerment of entrepreneurship among the rural farmers was positive in the ols estimate and positively significant in the 20th and 80th quantile points. table-3.ols and quantileregression coefficients for covariates of agribusiness performance (y1). variables(no.) ols 0.20 0.40 0.60 0.80 x1 -1.2006** (0.203) 3.879** (0.103) 2.108*** (0.331) 1.043* (0.187) -0.576 (0.059) x2 -0.0651 (0.268) -1.581** (0.036) -0.325* (0.197) 0.257** (0.137) 0.159* (0.212) x3 0.0143** (0.043) 0.043* (1.137) 0.061 (0.158) 0.154*** (0.191) 0.412** (0.267) x4 0.0142 (0.006) -1.424 (0.198) 0.195** (0.110) 0.0597* (0.290) 0.019 (0.099) x5 0.219 (0.002) -0.024 (0.225) 0.002** (0.197) 0.161 (0.145) -0.061** (0.083) x6 0.294** (0.003) 0.2795* (0.225) -0.006 (0.198) -1.417* (0.277) -1.025** (0.330) r2 pseudo 0.9925 0.9335 0.8923 0.9406 0.930 notes: t-statistics in parentheses. *significant at the 10% level;** significant at the 5% level; * significant at the 1% level. getting government support in the area of patent application plays a major role in protecting investment and promoting innovative ideas among entrepreneurs. therefore, the study investigated how to patent right leads to agribusiness growth and entrepreneurial development in rural china. the results from table 3 show that the effect of government support in granting and protecting the patent right is superior to that of agricultural entrepreneurs in rural areas. the mean effect of the patent is about 0.01 according to the ols estimate. however, the quantile regression reveals that the disparity is much smaller in the lower quantiles of the distribution and higher in the upper quantiles of the distribution at 0.01, 0.05 and 0.1 significant level. the study further examined the contribution of investment in research and development (r&d) in improving agribusiness performance and entrepreneurial development. from table 3, the effect of the research and development (r&d) on agribusiness development is positively significant for the 40th and 80th tails of the distribution and recorded positively insignificant at the 60th quantile. however, at the lowest (20th) quantile, the results showed that the coefficient of the r&d negatively affected the agribusiness growth during the study period. from table 4, the contribution of r&d in developing the farmer entrepreneur reaches 5% and 10% significant levels at 0.40 and 0.60 quantile regression models. this revealed that r&d does not completely contribute to entrepreneurial development in most of the rural areas in china. this result matches the result from table 4, which revealed that patent application and patent right failed to contribute positively and significantly to entrepreneurial development at the 40th and 80th quantile distributions. asian business research journal, 2019, 4: 10-16 14 © 2019 by the authors; licensee eastern centre of science and education, usa table-4.ols and quantile regression coefficients for covariates of entrepreneurship development (y2). variables(profit) ols 0.20 0.40 0.60 0.80 x1 -0.246 (0.022) -0.139* (0.244) 0.0443** (0.385) 0.910** (0.381) 1.492*** (0.680) x2 0.307 (0.159) 1.176* (0.729) -0.0948 (0.755) -0.1016** (0.529) 0.1022* (0.855) x3 0.2972** (0.002) 0.625* (0.085) -0.1016 (0.563) 0.0122** (0.944) -0.0540 (0.785) x4 0.0231 (0.052) -0.1120 (0.138) 0.0482** (0.164) 0.0803* (0.075) 0.397 (0.183) x5 0.009* (0.126) -0.0944 (0.692) -0.0232** (0.836) -0.1084 (0.414) 0.005* (0.840) x6 0.054** (0.321) 0.054* (0.122) 0.0387** (0.005) 0.0201* (0.053) 0.1040* (0.227) r2 pseudo 0.9807 0.9260 0.9064 0.9013 0.9016 notes: t-statistics in parentheses. * significant at the 10% level; ** significant at the 5% level; * significant at the 1% level. in the case of tax incentives, the ols estimate indicated a positive relationship between tax incentives given to agro-industries and agribusiness growth; however the quantile regression showed negatively significant effect only at the 80th quantile. from table 4, the effect of the tax incentives given to the agricultural entrepreneurs is positively significant at both the ols estimates and the higher (80th) quantile distribution. however, at the lower and middle quantiles (20th, 40th and 60th) of the distribution, the coefficients showed a negative impact on the entrepreneurial development. this may suggest that government grants to farmers and agro-industries in the rural areas are not appropriately and evenly distributed, therefore, it is advisable for the central government to increase the incentives given to the small businesses and redefine "small business", more especially in the rural areas. providing an effective legal environment for businesses to operate according to the study promote smes‟ growth and development. the legal support given to the agro-industries by the central government in most of the rural areas is statistically significant at the ols estimate and the lower quantile point, however, the coefficients at the higher (60th and 80th) quantiles of the distribution was statistically insignificant. contrary to the results from table 3, the legal support was found to be statistically significant in developing the agricultural entrepreneurs in rural areas across the ols estimate and the quantile points, table 4. the study, therefore, suggests the introduction of small business legal assistance programs to provide legal information to small business owners and prospective agricultural entrepreneurs who operate in low-income communities. the graphical representations of the estimates for all the quantiles are given in figure 1 and figure 2. the shaded area gives confidence band of coefficients estimated across different quantiles. from figure 1, the effect of the family system on the agribusiness development recorded positively at the lower tails of the distribution as compared to the higher quantiles of the distribution. from figure 2, the effect on entrepreneurial development was positive at the higher quantile point and by examining the pattern of the plot presented in figure 1 and figure 2 at the higher quantile (80th). moreover, a similar pattern is observed for the variable research and development. according to the results, the coefficient changes over the range of about -1.4 to approximately 0.1 for the quantile varies between 0.2 and 0.8., figure 1. as reported in figure 1, the influence of tax incentive is negative at the lower quantile point but different at the upper quantile of the distribution. from figure 2, the influence of the tax incentive on the entrepreneurship development is higher at the 80th quantile of the distribution. in addition, the influence of the legal environment on agribusiness growth above the higher quantile is stronger as compared to entrepreneurship development. the quantile plots revealed deviations in the asymmetric quantile coefficients and departs slightly at the various quantile points and from the ols estimates. figure 1 and figure 2show a series of plots whereby the ols mean effect and the 80 percent confidence interval is compared with the regression quantile effects and the 80 percent confidence intervals. the plots clearly reveal how the ols estimates represent the conditional distribution of agribusiness performance, quantitatively and qualitatively. the graphs further revealed striking differences between ols and quantile results. figure-1.graphical representation of the regression estimates (agribusiness growth). asian business research journal, 2019, 4: 10-16 15 © 2019 by the authors; licensee eastern centre of science and education, usa figure-2. graphical representation of the regression estimates (entrepreneurship development). 4. conclusion the paper primarily sought to determine the factors promoting agribusiness growth and entrepreneurial development in rural china. times series data from china statistical yearbook from 1978 to 2017 were selected for the study, and further employed quantile regression approach, which is more robust to the non-normal error term and outliers in the model and takes into consideration the major effects of the covariates on the distribution of the dependent variable holistically and not only the conditional mean. the results of the study revealed a positive effect of the family system on agribusiness performance at the quantile distributions. this implies that favorable institutional policies by the central government have some level of impact on the growth of the agribusiness sector and development of agricultural entrepreneurs in rural china. moreover, investment in education, which equips the human capital with knowledge and skills, plays a major role in promoting agribusiness sector. therefore, investment in rural education, which is a major human capital tool, is necessary for the development of agricultural entrepreneurs. the contributing effect of patents rights and patent application to agribusiness are significantly positive on agribusiness development. the results from the study imply that the ability of firms to cope with technological changes play a critical role in developing the agricultural entrepreneurs and the agribusiness sector. concerning legal issues, the results indicate that building vibrant and favorable legal business environment for businesses to operate boost the confidence level of the local entrepreneurs, which has a consequential effect on business performance. however, the effect of the policy environment on the firm‟s performance differs slightly, despite the strong effect on agroindustry performance at various quantile points. the coefficient of legal support in the 20th quantile is almost the same as that compare to the ols estimate in table 3. the study, however, suggests that for development of agribusiness in rural areas, most of the rural policies should be focusing on equipping the rural farmers to develop entrepreneurial skills and development to see their farms as a business. references acharya, s.s., 2007. agribusiness in india: some facts and emerging issues. agricultural economics research review, 20(1): 409-424. altieri, m.a., 2018. agroecology: the science of sustainable agriculture. crc press. binder, m. and a. coad, 2011. from average joe's happiness to miserable jane and cheerful john: using quantile regressions to analyze the full subjective well-being distribution. journal of economic behavior & organization, 79(3): 275-290.available at: 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regression approach. land use policy, 33: 151-160.available at: https://doi.org/10.1016/j.landusepol.2012.12.007. citation | owusu samuel mensah; chen jianlin; ji you jun (2019). a quantile regression analysis of contributing factors influencing agribusiness growth and entrepreneurship development: evidence from rural china. asian business research journal, 4: 10-16. history: received: 10 january 2019 revised: 18 february 2019 accepted: 22 march 2019 published: 15 may 2019 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education acknowledgement: all authors contributed to the conception and design of the study. funding: this study is funded by national self-finance fund project “based on the dual network embedding of small and micro enterprises' life cycle trap breakthrough mechanism and path research” with item number: 7156302. competing interests: the authors declare that they have no conflict of interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 14 © 2021 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 6, 14-19, 2021 issn: 2576-6759 doi: 10.20448/journal.518.2021.6.14.19 © 2021 by the authors; licensee eastern centre of science and education, usa determining the differences in the impacts of factors affecting sovereign credit rating: a case study of developing asean and developed countries quynh t.p. lam1 quoc t. nam2 khoa d. nguyen3 ( corresponding author) 1,2department of economics and business, hoa sen university, hcm city, vietnam. 3department of banking and finance, university of finance and marketing, hcm city, vietnam. abstract the paper uses the ordered logit regression model on table data to determine the differences in the impact of factors affecting the sovereign credit ratings of asean developing countries compared to other developed countries. the results show that the impact of the macroeconomic indicators on the sovereign credit ratings in asean developing countries decreases in comparison to the impact of factors in developed countries. besides on that, there is no difference in the impact of the factors demonstrates the efficiency of governance on sovereign credit ratings in developing asean countries compared to developed countries. keywords: sovereign credit rating, ordered logit regression model, factors affecting the sovereign credit rating, asean country, credit rating, efficiency in government management. jel classification: g24, g15, o16, f33. 1. introduction over the past few decades, globalization has provided investors around the world many opportunities to diversify and find attractive returns from investments in various countries in the world. however, highly profitable opportunities often go along with potential risks in numerous countries. therefore, international investors are very concerned about quantifying the level of specific risks of each country before implementing investment activities in this country. the most prestigious international credit rating organizations such as s&p, fitch group and moody's regularly publish information about the credit ratings of countries for investors to refer to in their international investment activities. haque, kumar, mark, and mathieson (1996) define sovereign credit rating as an aggregate assessment of the macroeconomic factors and the government's operating capability to evaluate the probability of government to pay due debt obligations.fitch (2020) pointed out that a country's risk level and its credit rating are two related but separate concepts. the country's level of risk refers to the risks of implementing an investment in the country, like poor property rights protection, erratic fluctuations in taxes and official regulations, or a disturbance in the business environment. meanwhile, the sovereign credit rating focuses on assessing the risk of insolvency of the government for the debt obligations that come due. the sovereign credit rating process of international credit rating agencies such as fitch, s&p or moody's represent an analysis that combines both qualitative and quantitative assessment to determine the availability and the government's ability to discharge maturity debts. credit rating agencies often rate countries' credit ratings on the following groups of criteria. the critical financial indicators reflecting current macro characteristics and economic prospects include gdp growth rate, net fdi inflows, inflation rate, labor unemployment rate. the indicators reflect the ability of the government to manage and govern the economy like voice and accountability, political stability and non-violence, government effectiveness, quality of regulations, rule of law, the ability to control corruption.fitch and s&p have 22 sovereign credit ratings from aaa to rd/d. moody's equally has 21 sovereign credit ratings from aaa to c. international credit rating agencies have presented the criterias and processes for evaluating the credit ratings of countries quite fully. however, some researchers have pointed out that there is a difference in the impact factors or the degree of impact of these factors on the credit ratings of developed countries compared to developing countries. specifically, ferri (2004) has shown the cost of collecting information for the assessment of ratings in developing countries is often much higher than in developed countries. otherwise, macro data of developing economies are also not extremely accurate. therefore, credit rating agencies when assessing the credit rating of developing countries are frequently based on subjective assessments of experts rather than analysis of macro data of these countries. on the other hand, research of gültekin-karakaş, hisarcıklılar, and öztürk (2011) also showed that international credit rating agencies have highly appreciated the credit rating of developed countries without regard to the significant macroeconomic indicators of these countries. mora (2006), kiff, nowak, and schumacher http://ecsenet.com/index.php/2576-6759/article/view/97 https://orcid.org/0000-0003-0296-9432 http://ecsenet.com/index.php/2576-6759/article/view/97 https://orcid.org/0000-0003-0296-9432 asian business research journal, 2021, 6: 14-19 15 © 2021 by the authors; licensee eastern centre of science and education, usa (2012) also showed that credit rating organizations apply different weights in the process of evaluating the indicators reflecting the credit rating in diverse countries. credit rating agencies sometimes ultilize expert assessments in the credit rating process. tennant and tracey (2016) also showed that the threshold of raising the national credit rating level of developing countries is often higher than that of developed countries. however, gültekin-karakaş et al. (2011) argues the discrepancy in the credit rating of developing countries can be explained by the difference in governments’ management ability to regulate the economy in developing countries compared to developed countries. in summary, the authors notice that previous studies on sovereign credit ratings do not detail the difference in the impact of factors affecting creditworthiness of developing countries compared to developed countries. on the other hand, no studies analyze in detail the factors affecting the sovereign credit rating of developing countries in the asean region. therefore, this study aims to determine the differences in the impact of factors affecting the sovereign credit ratings of asean developing countries relative to developed economies. on that basis, governments of asean developing countries can propose appropriate measures to improve their country credit rating. the paper is structured as follows. section 2 presents research models, research data and analytical methods to determine differences in the impact of factors affecting sovereign credit ratings in developing asean countries and other developed economies. the results of the research model are presented and analyzed in detail in section 3. the concluding section summarizes the primary results of the study and proposes recommendations to improve the sovereign credit ratings of the asean developing countries. 2. model, research data and data analysis method 2.1 research model the research model used by the authors in this paper is the ordered logit model on table data. the ordered logit model is an extension of binary logit model. this model assumes the following latent variable form greene (2012): in which y* represents the dependent variable but is not observable in reality. we can merely observe: y = 1 if y* ≤ 1 = 2 if 1 < y* ≤ µ1 = 3 if µ1 < y* ≤ µ2 … = j if µj-1 < y* in which: µ1, µ2,… µj-1 are the thresholds calculated from the model. β is the regression coefficient illustrating the impact of the explanatory variables on the dependent variable. ɛ is a stochastic error term. ɛ secures a rational distribution and utilizes a mean of 0, variance of 1. the ordered logit model is widely utilized in studies of sovereign credit rating and credit rating of commercial banks such as research by gültekin-karakaş et al. (2011), matousek and stewart (2009), iannotta, nocera, and sironi (2010), bellotti, matousek, and stewart (2011a) ; bellotti, matousek, and stewart (2011b), caporale, matousek, and stewart (2012). the ordered logit model overcomes the limitation of the ordinary least-squares (ols) model in the case of the dependent variable being credit rating levels. the limitation of the ols model is that the difference in risk levels between 2 countries with aaa and aa rating is considered as the same as the difference in risk levels between 2 countries with bbb and bb rating. this is not consistent with the heterogeneity of differences in the level of risk between ratings (manzoni, 2004). on the other hand, jones, johnstone, and wilson (2015) also said that the ordered logit classification model is ideally suitable for studies on credit rating. the predictive power of the ordered logit model, though, is limited when describing non-linear relationships or where unobserved fluctuations exist in the data. however, the ordered logit model is extremely suitable for the purpose of explaining the relationship and the impact of the explanatory variable on the dependent variable (greene, 2012). the authors’ research model used in this study is detailed as follows: ∑ ∑ inside: yi, t is the credit rating of countries in year t. xi, t-1 is a set of financial indicators indicating the macroeconomic situation of countries in year t-1. xj, t-1 is a set of indicators reflecting the ability of the government to operate the economy in year t-1. asean is the dummy variable. this variable has the value of 1 for the case of the developing countries in the asean region, the value 0 for the case of the developed countries. 2.2. data with the aim of determining the differences in the impact of factors affecting the sovereign credit ratings of developing countries in the asean region and developed economies, the authors selected a sample to observe the developing countries in the asean region including 5 countries vietnam, indonesia, philippines, thailand and malaysia. the rest of the developing countries in the asean region were excluded in the data sample due to the inadequacy of the data required for the study. developed countries in the sample data include uk, usa, canada, italy, australia, france, germany, sweden, switzerland, japan, korea, and singapore. the model's dependent variable is the sovereign credit rating of developing countries in the asean region and the above-developed countries. these ratings are derived from s&p's annual credit rating publications. the explanatory variables in the model include 2 groups of variables. the explanatory variables are the financial indicators reflecting the countries' macroeconomic situation collected from wordbank data sources. the other explanatory variables are indicators reflecting the quality of government management collected from the worldwide governance indicators (wgi) asian business research journal, 2021, 6: 14-19 16 © 2021 by the authors; licensee eastern centre of science and education, usa source. data used in the study are unbalanced table data for the period 1997 to 2019. the dependent variable is measured at time t-1 versus the explanatory variables because credit rating agencies assess countries’ creditworthiness basing on available information of the countries’s economic situation and indicators reflecting the governance capacity of the governments. the set of four macroeconomic indicators selected by the authors as the explanatory variable in the research model include gdp growth rate, inflation rate, net fdi/gdp ratio, domestic credit provided by financial sector, unemployment rate. these indicators are used in the process of evaluating the sovereign credit ratings of s&p, fitch, and moody's. at the same time, these are also macro indicators used in empirical studies on countries’ creditworthiness such as cantor and packer (1996), mellios and paget-blanc (2006),afonso, pedro, and philipp (2007), jaramillo (2010),gültekin-karakaş et al. (2011), tennant, tracey, and king (2020), sanz (2020). in addition, the authors put into the research model 6 indicators reflecting the quality of management and the ability to operate the economy of the governments. these include government voice and accountability, political stability and non-violence, government effectiveness, quality of regulation, the rule of law, and control of corruption. these are also the indicators used in researches on the credit rating of the government such as butler and fauver (2006), tennant, tracey, and king (2020). table-1. descriptive statistics of the dependent variable and explanatory variables used in the research model. variable obs mean std. dev. min max contry_ra 313 37.2364 13.8414 1.0000 50.0000 gdp 313 27.7885 1.0908 25.6323 30.6554 fdi 313 3.6788 4.8768 -3.6203 28.5981 inflation 313 2.5950 3.9702 -1.3528 58.4510 net_domes_cre 313 30.0317 2.9813 25.1819 36.5998 unemploy 313 5.2391 2.5605 0.2065 12.6828 voice_acc 313 0.6769 0.8518 -1.5269 1.7392 political_stabi 313 0.4030 0.8322 -2.0946 1.6153 gover_eff 313 1.1573 0.7949 -0.7053 2.4370 regu_qua 313 1.0224 0.7786 -0.7959 2.2605 control_corup 313 0.9915 1.0595 -1.1764 2.3256 rule_law 313 1.0067 0.8759 -0.9140 2.0378 2.3. data analysis method to begin with, the authors regress the research model by using the maximum likelihood regression method on table data with fixed effect and random effect to determine the explanatory variables with statistical significance in the research model. to determine the differences in the impact of the explanatory variables on the sovereign credit ratings of developed countries compared to developing countries in the asean region, the authors choose the significant explanatory variables with statistical significance in the model merely built above and let each of these variables interacts with the asean variable. next, the authors regress the research model by adding interactive variable just built into the model. if the regression coefficient of the interactive variable is statistically significant, we can conclude there is a difference in the impact of the considering explanatory variable on the sovereign credit ratings of developed countries relative to other developing countries in the asean region. specifically, if the coefficient of the interactive variable has the same sign as the coefficient of the explanatory variable under consideration, the impact of this explanatory variable on the dependent variable is strengthened and more important in asean developing countries. conversely, if the coefficient of the interacting variable is contrary to the coefficient of the explanatory variable under consideration, the effect of this explanatory variable on the dependent variable decreases in the case of the developing country in the asean area. this analytical method has been used in studies by berger, hasan, and zhou (2010), shen, huang, and hasan (2012), mirzaei, moore, and liu (2013). figure-1 diagram of the analytical method to assess the differences in the effects of these factors on sovereign credit ratings in developing asean countries compared to developed countries. asian business research journal, 2021, 6: 14-19 17 © 2021 by the authors; licensee eastern centre of science and education, usa 3. model results and research results discussion 3.1. the results of the research model table-2. the regression results of random – effect and fixed effect models on sample data. contry_ra ordered logit (random effect) ordered logit (fixedeffect) asean -0.5477 (1.3450) -0.5483 (0.7863) gdp 0.6038* (0.3349) 0.4550*** (0.1674) fdi -0.2728 (0.6872) 0.0375 (0.0576) inflation -0.0689** (0.0348) -0.0554* (0.0326) net_domes_cre -0.2685** (0.1321) -0.1961*** (0.0753) unemploy -0.3605*** (0.0911) -0.2608*** (0.0720) voice_acc 0.1115 (0.5427) 0.2661 (0.3568) political_stabi 0.4996 (0.4878) -0.3503 (0.3120) gover_eff 0.9654 (0.8496) 0.8193 (0.7234) regu_qua 4.4468*** (1.0218) 3.0828*** (0.8037) control_corup 1.6596* (0.8946) 1.8031*** (0.6845) rule_law 0.0569 (1.1024) 1.1046 (0.8184) note: total observations: 313. *significance at 10% level. **significance at 5% level. ***sinificance at 1% level. standard errors in brackets. based on the regression results, we notice some variables representing the macroeconomic indicators that have an impact on the sovereign credit ratings. specifically, the gdp has a positive impact on the country credit ratings. this suggests that economies with large gdp sizes are often given higher credit ratings. this result is completely similar to the results of studies on sovereign credit rating such as cantor and packer (1996), eliasson (2002), gültekin-karakaş et al. (2011), sanz (2020), and criteria for rating the credit rating of credit rating agencies like s&p, fitch's or moody's. on the other hand, the inflation rate and unemployment rate of countries have a negative impact on credit ratings. this result is equally consistent with the research of mellios and paget-blanc (2006), gültekin-karakaş et al. (2011), tennant et al. (2020). in addition, the regression results show that the size of domestic credit provided by financial sector has a negative effect on the national credit rating. the cause of this problem is that in developing countries, the credit of the commercial banking system is nevertheless considered the main capital channel in the economy due to the limited development of the stock market in these countries. goverments of developing countries still regularly loosen the lending activities of commercial banks to create a growth engine for the economy. however, the abuse of this policy will cause many potential risks for the economy and will adversely affect the sovereign credit rating. in contrast, in developed countries, the development of the stock market has created more effective channels for capital mobilization for governments and businesses. in the group of variables showing efficiency in state management, the authors find that the variable represents the quality of government regulation, measuring the perception of the government's ability to formulate incentive policies in the development of the private sector and the variable that demonstrates the ability to control corruption have a beneficial effect on sovereign credit ratings. this result is similar to that of hammer, kogan, and lejeune (2006). 3.2. difference in the impact of factors influencing national credit ratings in developing asean countries versus developed countries as mentioned in section 2.3, the authors add the asean dummy variable to the model and make this variable interact with the statistically significant variables in the research model presented in section 3.1. then, the authors regress of the research model to determine the difference in the impact of each specific factor on the sovereign credit ratings of developing asean countries compared to developed countries. the detailed regression results of each model are presented in table 3. based on the results of the models with interactive variables, we find that the regression coefficients of the interaction variables asean_gdp and asean_infla are statistically significant. simultaneously, the coefficient sign of these two variables is opposite to the coefficient sign of the two variables gpd and inflation. this proves there is a difference in the impact of the gdp scale and the inflation rate on the sovereign credit rating of developing and developed countries. specifically, the impact of gdp size and inflation rate on the credit ratings of developing asean countries is reduced compared to the impact of these two factors on the credit ratings of developed countries. the reason for this problem is explained by ferri (2004) as the cost of data collection in developing countries is often higher than in developed countries and the quality of data of developing countries is often not guaranteed level of reliability. therefore, when conducting rating assessments in developing countries, rating agencies invest less in data collection and analysis, but mainly on expert reviews. on the other hand, the asian business research journal, 2021, 6: 14-19 18 © 2021 by the authors; licensee eastern centre of science and education, usa damage to the reputation of the rating agencies in the case of a country with a high credit rating is insolvent would be greater than that of a country with a low credit ratings default on its debt obligations. therefore, the impact of macroeconomic indicators on sovereign credit ratings in developing countries is often lower than the effect of these indicators in developed countries. table-3. regression results between interactive variables in the model. model with interactive variables between gdp and asean model with interactive variables between inflation and asean model with interactive variables between net domes_cre and asean asean -73.2226*** (18.8973) asean -0.4594 (1.4034) asean -14.6193*** (6.7374) fdi -0.0655 (0.0723) fdi -0.0274 (0.0682) fdi -0.0619 (0.0702) gdp 2.6556*** (0.6079) gdp 0.5943 (0.3371) gdp 0.4695 (0.3379) asean_gdp -2.6318*** (0.6807) inflation -0.0706* (0.3571) inflation -0.0686** (0.0346) inflation -0.0585* (0.0345) asean_infla 0.0322* (0.1384) net_domes_cre -0.0302 (0.1682) net_domes_cre -0.4469*** (0.1449) net_domes_cre -0.2710 (0.1538) asean_net_domes_cre 0.4542*** (0.2109) unemploy -0.3620*** (0.0934) unemploy -0.3634*** (0.1351) unemploy -0.3810*** (0.0934) voice_acc -0.1472 (0.5596) voice_acc 0.0518 (0.5584) voice_acc 0.1437 (0.5568) political_stabi 1.0288* (0.4324) political_stabi 0.5385 (0.4336) political_stabi 0.5061 (0.4294) gover_eff 0.2679 (0.8674) gover_eff 0.9782 (0.8156) gover_eff 1.2404 (0.8340) regu_qua 4.9406*** (1.0402) regu_qua 4.4911 (0.9591) regu_qua 0.9616*** (1.0002) control_corup 1.5777 (0.8917) control_corup 1.7256*** (0.8801) control_corup 1.1604 (0.9023) rule_law 0.8605 (1.1990) rule_law 0.0596** (1.1051) rule_law 1.1406 (0.8184) for the variables showing efficiency in government management, the regression model results show that the regression coefficients of the interactive variables are not statistically significant. this shows that no difference in the impact of the factors demonstrates the efficiency of governance on sovereign credit ratings in developing asean countries compared to developed countries. table-3. continue. model with interactive variables between unemploy and asean model with interactive variables between regu_qua and asean model with interactive variables between control_corup and asean asean 0.7699 (1.0769) asean -0.2537 (1.5453) asean -0.2745 (1.3283) fdi -0.0781 (0.0671) fdi -0.0712 (0.0681) fdi -0.0541 (0.6382) gdp 0.6227* (0.3489) gdp 0.6252* (0.3357) lg_gdp_va 0.6273** (0.3265) inflation -0.0701** (0.0352) inflation -0.0686** (0.0348) inflation -0.0749*** (0.0353) net_domes_cre -0.2772** (0.1392) net_domes_cre -0.2917*** (0.1344) lg_net_domes_cre -0.2698 (0.1283) unemploy -0.3431*** (0.1225) unemploy -0.3492*** (0.0915) unemploy -0.3487*** (0.0913) asean_unemploy 0.0352 (0.1685) voice_acc 0.1138 (0.5466) voice_acc 0.1604 (0.5326) voice_acc 0.0847 (0.5592) political_stabi 0.5657 (0.4945) political_stabi 0.6262 (0.5038) political_stabi 0.5137 (0.4928) gover_eff 0.9921 (0.8492) gover_eff 0.9699 (0.8448) gover_eff 0.9762 (0.1685) regu_qua 3.6105*** (1.3001) regu_qua 4.5843*** (1.0335) regu_qua 4.4056*** (1.0403) asean_regu_qu a 1.4844 (1.4737) control_corup 0.5760 (1.5479) control_corup 1.6643 (0.8974) control_corup 1.4432 (0.9136) asean_control_cor up 1.1873 (1.3790) rule_law 0.0486 (1.1047) rule_law 0.1576 (1.1162) rule_law 0.0550 (1.1023) 4. conclusion the study has demonstrated that the impact of the macroeconomic indicators on the sovereign credit ratings in developing countries decreases in comparison to the impact of factors in developed countries. the reason may arise from the limited quality of statistics and the high cost of collecting these data in developing asean countries. therefore, developing asean countries looking to improve their sovereign credit ratings need to focus more on developing policies that encourage private sector growth and control corruption. asian business research journal, 2021, 6: 14-19 19 © 2021 by the authors; 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(2020). sovereign credit rating: evidence of bias against poor countries. the north american journal of economics and finance, 51, 100877. available at: https://doi.org/10.1016/j.najef.2018.11.006. citation: quynh t.p. lam; quoc t. nam; khoa d. nguyen (2021). determining the differences in the impacts of factors affecting sovereign credit rating: a case study of developing asean and developed countries. asian business research journal, 6: 1-6. history: received: 28 april 2021 revised: 2 july 2021 accepted: 26 july 2021 published: 11 august 2021 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education acknowledgement: all authors contributed equally to the conception and design of the study. funding: this study received no specific financial support. competing interests: the authors declare that they have no competing interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://www.fitchratings.com/research/sovereigns/sovereign-rating-criteria-26-10-2020 http://www.fitchratings.com/research/sovereigns/sovereign-rating-criteria-26-10-2020 http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 7 © 2024 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 9, 7-15, 2024 issn: 2576-6759 doi: 10.55220/25766759.153 © 2024 by the authors; licensee eastern centre of science and education, usa services for a sustainable lifestyle targeting generation z yu qinghua1 zhu tao2 ( corresponding author) 1design and art school, jingdezhen ceramic university, jingdezhen, china. email: yuqinghua@jcu.edu.cn 2tiktok singapore ltd., singapore. email: tao.zhu@bytedance.com abstract this research proposes a service design named "retrend" with the purpose of promoting sustainable lifestyles by assisting generation z users in discovering vintage clothing within their local communities. through desk research and interview methods for data collection, interviews were conducted with subjects to clarify the daily life needs of generation z users. during the data analysis phase, this study generated three personas while examining the users' requirements. in the development stage, user journey maps and user flows were implemented and tested to identify timelines from both customer and buyer perspectives. finally, prototypes were constructed and subjected to low-fidelity and high-fidelity testing to assess their feasibility. the findings drawn from this research indicate that retrend effectively caters to users' motivation for purchasing ecofriendly clothes aligned with their ethical values. the retrend service enables personalized experiences, enhances trust and transparency, guides sustainable consumption behavior, and provides an improved service experience. the practical implications lie in the fact that retrend service can advocate for a healthy and environmentally-friendly lifestyle by providing people with various environmental knowledge and skills, monitoring real-time environmental conditions, offering social functions so that individuals can better understand the cause of environmental protection and actively participate in it, thereby jointly promoting environmental development. keywords: generation z, retrend app, service design, sustainable lifestyle, vintage clothing, service design. jel classification: m31. 1. introduction since the development of modern design, it has experienced changes over three different value systems; from functional and commercial design to user-centered values (von hippel, 2005). in functional design, mass production was the core purpose of the value system. as for commercial design, the purpose of production was to pursue business values. the third period was when user-centered design became a required society value in which, the design should improve the development of the modern society. service design and sustainable ideas are the core concepts embodied in targeted social value (gulz et al., 2008; hussain et al., 2008; keinonen, 2010). both the design and ideas are acquired design`s social values, such the design is needed to promote social progress. in the early 1970s, victor papanek pointed out that the value of modern design had fallen in serving industrial production and commercial interests had fallen., the designers needed to reshape values to suit the "real needs" of society. the ever-changing social environment required the emergence of a new design model, so service design was developed. service design appeared in the 1980s as a concept for management and marketing. in shostack (1984) presented ideas on how to design “service” in the european journal of marketing. in shostack (1984) proposed the concept of service blueprint in the article “designing services that deliver”. in the 1990s, service design began to enter the field of design. in 1991, the term service design first appeared in the book “total design” service design focused on providing services when consumers do not own the products (services); instead they just use it. this significantly adapted this kind of sustainable design and consumption pattern. this research utilized service design tools: empathy maps, personas, user journey maps, user flows to study the lifestyle of generation z. empathy map is a simple, easy-to-digest visual that captures knowledge about a user’s behaviors and attitudes (xia, 2021). personas are an effective tool for outlining target users, discovering user appeals and designing directions. the creation of personas is based on a comprehensive examination of user behavior, motivations, emotions, consumption patterns, and needs, derived from accurate data analysis, making it a valuable tool for understanding user behavior (cooper, reimann, cronin, & noessel, 2014; stickdorn, hormess, lawrence, & schneider, 2018). user journey map is based on the timeline, combing the continuous behavior of the target user. it is used to visualize how the target user completes a specific task. user journey map visually shows or simulates the user's experience at each stage of completing the task, including emotions (pain points and surprise points), behaviors, thinking, etc (stickdorn et al., 2018). user flow is the execution path of actions taken by users on web pages or applications to achieve a particular goal (ranganathan & mcfaddin, 2004). users go through a tiny journey when mailto:yuqinghua@jcu.edu.cn mailto:tao.zhu@bytedance.com https://www.doi.org/10.55220/25766759.153 https://orcid.org/0000-0002-1352-6605 https://orcid.org/0000-0001-9438-3732 asian business research journal, 2024, 9: 7-15 8 © 2024 by the authors; licensee eastern centre of science and education, usa browsing web pages or applications. user flow emerged because designers needed to consistently achieve the best user experience when designing the interface of a website or application. so far, existing research on generation z is mainly about their consumption behavior (khalil, ismail, & ghalwash, 2021; kovacs, 2021; noor, 2017) most of the previous research in this area did not include the perspective of service design. generation z refers to individuals born from the mid-1990s to the early 2000s (wood, 2013). this generation is seamlessly connected with the internet almost since the time they were born. generation z was greatly influenced by digital information technology and service, instant messaging equipment and smartphone products (hoque, 2018). lifestyle reflects how a person spends his time, daily routine and life; it reflects that person’s attitude, values and views of his world (manap, hamjah, idris, kasim, & idrus, 2021). there are various human lifestyles, as perfectionism, hedonism, and consumerism (puaca, theandersson, & carlén, 2017). generation z has been practicing several lifestyles today; this research aims to promote a sustainable lifestyle to generation z. this introduces a case study named: retrend, designed to explore the generation lifestyle. to promote a sustainable lifestyle, retrend was a sustainable service design system that allowed generation z users to discover and trade vintage second-hand clothing in their local community systems. retrend was a schoolenterprise cooperation project in politecnico di milano, it was developed for an italian bank targeting generation z client. the project targeted to encourage a balanced and healthy lifestyle for the user, motivate people to share resources, experiences and knowledge in order to support growth and contribute to a more sustainable society. there were other requirements, as preference of using ar(augmented reality)/vr(virtual reality)/machine learning technologies, as well as the delivery should be in the form of a mobile application. the rest of this paper is organized as follows. section 2 presents the proposed method. section 3 conducts for data analysis. in section 4, to develop the user journal map and user flow for testing the feasibility of prototype. finally, section 5 summarizes and highlights the practical contributions and limitations of this paper. 2. methods 2.1. desk research desk research is also known as the secondary research, the term desk research is currently widely used (rahman, hamad, alarifi, & sedera, 2014; woolley, 1992). desk research is a tool for analysis and research of secondary data, it is fundamentally a user (researcher) skill. the focus of desk research is to collect, screen, organize and analyze secondary data according to research questions or research purposes. secondary data include network materials, magazines, books, documents, etc. desk research is a secondary survey based on previous research results (standing on the shoulders of giants). it can help investigators form a preliminary understanding of the research contents and avoid repeated research. the desk research method helped researchers to study the lifestyle of generation z. due to the radical change in the social environment in which generation z was born, their behavior and consumption habits are significantly different compared to the previous generations. the researchers summarized these differences from a report published by wrap (wrap is a climate action ngo), which is an ngo (non-governmental organization) working to mitigate the climate crisis, have highlighted the potential for second-hand fashion to reduce resource usage, with an estimated 20-30% reduction in carbon, waste and water footprints, as well as a 20% reduction in resource costs. wrap report is a pioneering report looking at the environmental impact of the whole journey of clothing; this report is directly related to this research. we summarized 3 aspects in this report based on the results of desk research as shown below: the consumption aspect is particularly interesting: consumption re-defined: from possession to access: for generation z, consumption means having access to products or services, not necessarily owning. singularity: consumption is an expression of personal identity: generation z embodies personal identity. consumption thus becomes a means of self-expression. generation z expresses worldview and values through the way they consume. consumption anchored on ethics: 70% of respondents said they would prefer to buy from a company they believe to be ethical. we generalized the results from the wrap report that compared to the other generations, generation z has their consumption habits; they would use a product or service rather than care about ownership of the product. they convey their values through their consumption concepts. according to desk research, more than 1/3 of consumers are willing to pay 25% more for sustainable products. at the same time, generation z is more willing to pay extra 50-100% than other age groups’ consumers. therefore, this study proposes strategic design solutions based on generation z’s consumption habits. 2.2. interview the results of the desk research conducted in this study indicated a trend towards sustainable lifestyles among generation z in their fashion consumption behaviors, specifically in the area of second-hand clothing. this led to the exploration of the potential for combining the vintage clothing and second-hand clothing markets as a focus for further investigation. to this end, a field research study was conducted, utilizing in-person interviews with eight generation z subjects in a vintage clothing store. these interviews were conducted with regular customers who frequently visit second-hand clothing stores. they were mainly young people, six of them are women. they all like to use mobile phones to shop. these interviews aimed to collect the considerations that influence generation z consumers to purchase vintage clothing. these interview subjects were the target user groups of this study. by studying their shopping behavior, we can provide ideas for subsequent design. the results of the interviews were synthesized and represented through empathy maps to gather information on the considerations and motivations that influence the purchasing decisions of generation z consumers when it comes to second-hand vintage clothes. the results of the interviews were then synthesized and represented through the use of empathy maps figure 1 which are visual aids that capture knowledge about a user's behaviors and attitudes. figure 1 serves as an example asian business research journal, 2024, 9: 7-15 9 © 2024 by the authors; licensee eastern centre of science and education, usa of this representation, showcasing the details of what the subjects said, thought, did, and felt during the interviews. figure 1. a empathy map. the empathy map helped identify the users’ requirements in this step; we obtained the motivations from the maps. for instance, one subject went to the second-hand vintage store regularly to look for new discoveries and she wished to find more eco-friendly clothes in the shop. however, she was disappointed and did not find suitable clothes. the experience of shopping for vintage products motivated the researchers to learn how to design a sustainable clothing selling system for generation z. first of all, to match the norm of generation z, a mobile application should be prepared to check the clothes before going to the shop. the analysis of the interview revealed that generation z considers four main criteria when making a purchase at a second-hand clothing store: (1) motivation, which encompasses the satisfaction of their ethical needs and the environmental benefits of the purchase; (2) discovery, which refers to the alignment of the clothing style with their individual identity; (3) perception, which is concerned with the perceivable environmental impact of the purchase; and (4) transparency, which encompasses the ability to verify the authenticity of the clothing. these insights from affinity mapping form a crucial basis for informed design decisions in future stages. they offer an understanding of generation z's priorities in second-hand clothing purchases, which can inform the creation of design solutions that effectively meet their needs. 3. data analysis 3.1. persona persona, as abstract representations of a collection of target users, effectively capture their attributes, and preferences. the methodology of using personas is grounded in user-centered design research and is widely recognized as an effective tool for outlining target users, discovering user appeals, and guiding design directions. the use of personas has a broad range of applications and is suitable for analyzing qualitative data, further emphasizing its relevance as a user-centered design research tool (huynh, madsen, mckagan, & sayre, 2021). the present research constructed three representative personas for the analysis of user data. the researchers synthesized qualitative data obtained through a combination of desk research and contextual interviews, which encompassed various elements such as consumption behaviors, motivations, and user descriptions including a fundamental user story and the technology preferences of the generation z demographic. to validate the accuracy and reliability of the personas, a brief examination was performed, leading to the implementation of necessary modifications and revisions. figure 2 is an example to show the target users; guilia is a student with a background in fashion design who lives in milian. she is a regular customer of the vintage second-hand cloth shop. she is buying those second-hand clothing not only for the low price, but also for the historical stories hidden behind the brand. as a generation z, she has the characteristics of this generation, and highly interactive in social networking. she also enjoys online shopping. in addition, she is a fierce environmentalist and insists on boycotting fast-moving consumer fashion goods. the researchers came up with the target user group giulia in this step and will proceed with the following based on the needs of this group. asian business research journal, 2024, 9: 7-15 10 © 2024 by the authors; licensee eastern centre of science and education, usa figure 2. a persona. 3.2. user needs guilia’s persona represents the common characteristics, consumption habits, motivations, and needs of generation z. personas helped to identify the user needs. a user need represents a vital requirement that has been identified as essential for an individual or a group of users to attain their objectives within a specified context of use. these user needs serve as an intermediary step in transforming context-specific information into comprehensive user requirements that can guide the design phase. in this research based on qualitative data gain from observation and contextual interviews, the user goal was defined as empowering generation z to redefine their style by the incentive of sustainable reuse and exchange. to satisfy this goal and encourage the purchase of second-hand cloth, it’s essential to satisfy the considers four main criteria: motivation, discovery, perception, and transparency. these considerations will form the basis of the comprehensive user requirements that are necessary for the design phase. the present research designed an eco-friendly clothes-selling service according to generation z's requirements. the designed service system would satisfy their ethical needs and help them find a way to verify the authenticity of clothes so that they would feel safe. the next step will offer a user journey map to show the details of the service. 4. development 4.1. user journey map this case study built the user journey maps for both the buyers' and customers' sides. the drawing of the user journey map is divided into several essential steps. it starts by analyzing the behavior and contacts of users at each step before integrating the whole process. then the needs, expectations and wishes of users are deduced at the different stages of the process until the task is completed through a rhythmic user experience. the researchers analyzed users' pain points when making judgments and trade-offs for user needs. they prioritize avoiding the most crucial pain points instead over other user needs. in addition, the surprise points are explored during user behavior analysis of each stage. this research used the following user journey map to visualize the future service state which is shown in figure 3. in this map, researchers represented the concepts, from high-level stages down to each low-level step. in the left side of figure 3 channels, touchpoints and precise needs are shown. the user journey map described the entire service asian business research journal, 2024, 9: 7-15 11 © 2024 by the authors; licensee eastern centre of science and education, usa process chronologically in five dimensions: design requirements – seller needs – seller steps – buyer needs – buyer steps. figure 3. user journey map. the generation of a sustainable impact, which quantifies the environmental impact generated after purchase behavior, is a crucial component in promoting sustainability and allowing users to assess the impact of their contribution. as a result of a comprehensive analysis of the service processes, it was determined that the solution's core lies in the sustainability index. to ensure the feasibility of the design phase, a brief desk research was conducted to examine the generation of this index. the sustainable impact must be generated in a prompt, cost-effective, and precise manner, taking into consideration the varying environmental impacts of different cloth materials and manufacturing processes. after extensive research and evaluation, it was determined that machine learning is the optimal solution for calculating the sustainable impact. the deepfashion dataset, comprising of 800k diverse fashion images with rich annotations, was found to be suitable for this use case and was utilized to develop the fashionnet machine learning model. this model learns clothing features by jointly predicting clothing attributes and landmarks, with a category and attribute prediction accuracy of 82.58% and 45.52%, respectively. as the deepfashion dataset continues to expand, the accuracy of fashionnet's predictions will improve, enabling the identification of sustainable indicators for clothing brands and related information. with the implementation of a precise sustainable impact, the design can effectively meet the user's motivation and needs for perception and transparency. the user journey map helped clarify users' pain points and needs. according to the project requirements, the next step is to design mobile applications based on the user journey map. 4.2. user flow after the journey map, user flow organizes the pages needed to design the prototype. in order to gain the best user experience, the design pattern of user flow is produced, which focuses on the tasks that users need to complete and the effective way to achieve these tasks. user flow is the foundation of website and application design; it can help designers focus on user needs and build processes and experiences to meet them. the design of user flow starts with understanding user goals and business goals. for example, in the user flow of online shopping, first of all clarify the user’s purpose of buying a product, for instance replacing, returning or exchanging. once the goals are defined, user flows can be created compared to business goals. the process is the steps for users after arriving at the website and complete tasks one by one. before starting to test the user flow designed, it’s crucial to clarify the goal of the test. the goal was whether it meet the user needs, defined in chapter 3.2 and divided into four insights: "motivation; discovery; perception; transparency." the researchers invited six subjects from generation z to test the user flow: four italians and two iranians. three different tests were conducted at different times each targeting a different part of the user flow: figure 4. test 1 targets the process of sustainable impact sharing, which is the most crucial feature of the solution in this service system. this test also verifies the solution of the pain points in users’ needs named “motivation” and “perception”. test 2 checks the process of the seller scan and object publishing. the test also verifies the of the pain points solution in users’ needs named “perception” and “transparency”. test 3, the process of buyer scan/browse process to buy an object is checked. it is also used to veri fy the problem solution in users’ needs named “discovery,” “perception,” and “transparency”. asian business research journal, 2024, 9: 7-15 12 © 2024 by the authors; licensee eastern centre of science and education, usa figure 4. user flow. the purpose of the three tests was to clarify the priority of the task. test 1 had the highest priority. the priority of the retrend service was to share sustainable indicators with users. the secondary priority comes from how the seller scans the code through the mobile client and publish products. finally, what needs to be solved was the need to scan codes and browse the web to buy products when buying at home. after identifying the priorities, the researchers started to design a low-fidelity mobile application prototype and test it according the above three tests. 4.3. delivery 4.3.1. low-fidelity prototype & test the researchers designed a low-fidelity prototype in this step to display the basic needs of the service, including core business logic, functional modules, etc. at this stage, there is no need to make all components, frameworks, layouts, etc.; the low-fidelity prototype is enough to convey to developers the requirements. in this step, we used low-fidelity prototypes for fast output and communication. we can also make revised products quickly because lowfidelity prototypes only need clear logic and functional design. the high-fidelity prototype requires extended production time and troublesome to modify. the researchers used ‘adobe xd’ software to design the low-fidelity prototype at a structural level and kept testing it during the design process. figure 5 is a part of the wireframe, the same 6 six subjects were invited to test the low-fidelity prototype according to assigned tasks. after testing, the researchers got the feedback shown below: figure 5. a part of the wireframe. asian business research journal, 2024, 9: 7-15 13 © 2024 by the authors; licensee eastern centre of science and education, usa 1. the subject said they couldn’t understand the meaning of sustainable impact. they found the impact was numbers and didn’t understand the number’s meaning. 2. one subject pointed out that he was uncertain about the fabric’s composition’s prediction accuracy. he hopes to know the accuracy of the scanned results and wishes that the page’s layout is clearer. 3. the subject wanted to know why the service offered these recommendations. after the test, product iterations carry out based on the test results, and the next task is to design a high fidelity prototype. 4.3.2. high-fidelity prototype a high-fidelity prototype contains the original ideas and clearly defines the product functions, logic levels, and interface. the ultimate expectation is to achieve the same state as the picture and the actual operation of the product. the high-fidelity prototype includes functions, processes, logic, fonts, colors, layouts, styles, visual effects, etc. its main features are visual effects, interactive effects and experience effects. after testing the lowfidelity prototype, the researchers created a high-fidelity prototype by adobe xd figure 6. here are some improvements according to the test results from the wireframe: make the sustainable impact easier to understand; the researchers used an analogy to explain it: buying a second-hand item saves the carbon equivalent of getting two cars off the road figure 7. figure 6. a high-fidelity prototype. figure 7. the details of a high-fidelity prototype. asian business research journal, 2024, 9: 7-15 14 © 2024 by the authors; licensee eastern centre of science and education, usa adding accuracy prediction and using ar to show scan results directly on the scanned object, which is more immersive and engaging. used labels to indicate why it was recommended. users can click the labels and discover more similar items. figure 7 is to show the details of a high-fidelity prototype. retrend suggests a sustainable lifestyle, an app of retrend has the function to calculate the eco-footprint for the users and suggests an eco-friendlier lifestyle in their consumption behavior. 4.4. feasibility and findings retrend proposes a sustainable lifestyle to generation z; financial services offered by the bank should empower generation z in redefining their style through incentivizing sustainable reuse exchange. the researchers learned that generation z customers are willing to pay more for sustainable products, so this case study was conducted about vintage clothing purchase service system to test its feasibility on generation z. the six subjects helped in testing the user flow and low-fidelity prototype. in the user flow test, subjects had problems understanding the meaning of sustainable impact. thus, the designers used an analogy to make it clear by visualizing the metaphor in the user interface. the sustainable impact comprehension is vital in this case study, which is directly related to the users’ motivation and perception. the details of test 1 are in chapter 4.3.1; three aspects contain: personal page, sustainable impact, and sharing page. the other two steps were difficult to understand. two subjects said this service efficiently helped them find eco-friendly clothes, and the sustainable impact page helped them perceive the environmental impact to satisfy their ethical needs. test 2 focused on the sellers' needs; the scan results page and publishing pages were tested to verify the accuracy of the fabric's composition's prediction accuracy. ar technology is used to scan objects and show results to the users directly, which will offer a more immersive and engaging sense. finally, test 3 focused on targeting the buyers' needs in discovery, perception and transparency. from the buyer's point of view, it is necessary to search for the desired item easily. it must also conform to the buyer's mental model in the subsequent purchase process so that the product can be used smoothly. furthermore, the researchers added more information about the recommended products according to testing results to let the buyers know more about the products, such as sustainability index: carbon savings – water savings – waste savings. through 3 rounds of testing, it was discovered that this service can effectively help generation z users to find vintage clothing. the sustainable impact page contributes to raising awareness of environmental impact and meeting their ethical needs. ar technology can provide an immersive purchasing experience, and the implementation of this service can help users who enjoy buying second-hand goods quickly find their favorite clothing. by addressing the environmental impact factors resulting from online purchasing behavior, it achieves the construction of their consumer behavior value system, advocates sustainable consumption concepts, and reduces environmental and resource waste. 5. conclusion retrend is a service that allows users to discover and trade vintage clothing in local community systems, thereby promoting a sustainable lifestyle. by establishing the design system through retrend services, it is possible to meet the consumption demands of generation z. firstly, by designing services specifically for vintage clothing buyers, their needs for environmental friendliness and personalization can be satisfied. secondly, providing convenience and personalized shopping experiences for consumers: service design can offer innovative ways to provide more convenient and personalized shopping experiences for vintage clothing buyers. this case study utilizes online and offline platforms to provide a wide range of vintage clothing choices, intelligent recommendation systems, and immersive experiences, helping consumers easily find clothing that suits them. furthermore, trust and transparency are crucial for consumers purchasing vintage clothing. this case study enhances consumers' trust in vintage clothing by establishing reliable transaction platforms and providing detailed product descriptions and authentic product photos, among other methods. this research actively guides consumers to consider sustainable factors when purchasing vintage clothing, promoting sustainable consumption behavior. for example, it provides information about the environmental and social impact of vintage clothing and encourages consumers to think about the consequences of their purchasing decisions. in conclusion, vintage clothing purchases present opportunities and innovation for service design, which can be realized by meeting consumer needs, providing personalized experiences, enhancing trust and transparency, and guiding sustainable consumption behavior. this research is still in the design stage. in the future, the bank of italy will need to continue to provide financial support and cooperate with existing second-hand clothing stores to develop the final product for this research. acknowledgement: this research is supported by funding from the doctoral start-up foundation of jingdezhen ceramic university (20298308) and the ceramic design and art research center, a project of the jiangxi provincial philosophy and social sciences key research base. references cooper, a., reimann, r., cronin, d., & noessel, c. 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(2021). improving the sustainability of household-decision making while purchasing appliances. retrieved from https://urn.kb.se/resolve?urn=urn:nbn:se:lnu:diva-105068</div> https://doi.org/10.3390/su132413804 https://doi.org/10.17512/pjms.2021.23.1.16 https://doi.org/10.6007/ijarbss/v11-i6/10222 https://doi.org/10.21833/ijaas.2017.011.023 https://doi.org/10.1093/oso/9780198767268.003.0016 https://www.researchgate.net/publication/291747292 https://doi.org/10.7551/mitpress/1132.003.0021 https://doi.org/10.1108/eb051276 https://urn.kb.se/resolve?urn=urn:nbn:se:lnu:diva-105068%3c/div%3e 39 © 2023 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 9, 39-44, 2024 issn: 2576-6759 doi: 10.55220/25766759.174 © 2024 by the author; licensee eastern centre of science and education, usa examining the intersection of national health policy and the delivery of emergency healthcare services in the gambia ogbeta, kingsley oghenekevwe department of management sciences, school of business and public administration, university of the gambia, gambia. email: kogbeta@utg.edu.gm abstract this study examined the intersection of national health policy and the delivery of emergency healthcare services in the gambia (ehcs). it evaluated the influence of the gambia national health policies (2015 and 2020) on ehcs, probed the relationship between the nhp and ehcs, and identified challenges in emergency healthcare provision. a survey research design was adopted, gathering data through questionnaires. out of a population of 1,955, (321) were chosen as the sample size based on krejcie and morgan's (1970) formula. stage sampling was adopted, and proportionate to size determined respondents in each stratum while questionnaires were randomly distributed. on the challenges, findings revealed a predominantly negative perception of equipment adequacy (mean score: 2.6) and a discernible concern regarding the number of trained professionals (mean score: 2.2). patient satisfaction was ambivalent (mean score: 2.4), while service quality improvement post-policy implementation received mixed reviews (mean score: 2.9). hypothesis one revealed that policy framework and objectives significantly improve ehcs (β = 0.832, p < 0.001), with resource allocation also having a positive impact (β = 0.093, p = 0.003). however, policy implementation and monitoring and evaluation mechanisms were not significant. hypothesis two showed a strong positive correlation (r = 0.858, p = 0.000) between nhp and ehcs. recommendations include improving equipment adequacy, increasing training for healthcare professionals, and developing patient-centered approaches. the study concludes that national health policies impact emergency healthcare services in the gambia. keywords: emergency care, health policy, primary health care, public service delivery, sustainable development goals. 1. introduction primary health care, a cornerstone for combating high mortality rates, ensures essential medical services are accessible to all. rooted in international mandates such as the constitution of the world health organization (1946) and the universal declaration of human rights (1948), every individual's right to health care is globally recognised. an integral component is emergency care, which addresses acute illnesses and injuries and is emphasised in frameworks like the sustainable development goals (united nations, 2015). despite the gambia's commitment to these principles, as reflected in chapter 10, article 216(4) of the 1997 constitution and other health policies, including the ministry of health and social welfare (2015) and ministry of health and social welfare. (2020), challenges persist. preliminary observations suggest significant gaps in emergency healthcare delivery, with many citizens either unaware of or unable to access quality services. vulnerable groups are particularly affected, including women, children, and the differently-abled. moreover, the country grapples with systemic challenges in its health delivery system, from infrastructure to human resources (ministry of health and social welfare, 2020). this research aims to critically examine emergency healthcare services through the lens of the gambia national health policies. the central inquiry revolves around evaluating the degree to which the gambia national health policies (2015 and 2020) have enhanced emergency healthcare services in the country, to examine the relationship between national health policy and emergency healthcare provision in the gambia, and to investigate the challenges militating against the provision of emergency healthcare services in the gambia. the research hypotheses are h1: the gambia national health policies (2015 and 2020) has significant effect on the provision of emergency healthcare services, h0: national health policy has no significant relationship with the provision of emergency healthcare services in the gambia. the scope of the study includes public works, law enforcement, health, safety, and disaster management. this research narrows its lens to "national health policy and delivery of emergency healthcare services in the gambia." it specifically examines the ministry of health and social welfare (mohsw) and the directorate of health services in the west coast region (wcr) 1 regional health department (rhd). the wcr1 rhd includes the gambia's capital, banjul, and surrounding areas within the kanifing municipal council, often called kombo st. mary division. the investigation spans october 2022 to december 2023, based on the accessibility of patient records. mailto:kogbeta@utg.edu.gm https://www.doi.org/10.55220/25766759.174 asian business research journal, 2024, 9: 39-44 40 © 2023 by the author; licensee eastern centre of science and education, usa 1.1. literature review on the intersection of primary health care, emergency care, health policy, public service delivery, and sustainable development goals (sdgs) in the gambia the healthcare system in the gambia, like in many developing nations, encounters numerous challenges that affect its effectiveness, accessibility, and sustainability. this literature review examines the intersection of primary health care (phc), emergency care, health policy, public service delivery, and the sustainable development goals (sdgs) in the context of the gambia, drawing on a scope of scholarly and policy sources. primary health care (phc) is a holistic and affordable approach to health services that aims to present comprehensive, communitybased care concentrated on prevention, wellness, and the treatment of common illnesses and conditions. rooted in principles of equity, participation, and intersectoral cooperation, phc addresses the more expansive determinants of health and underscores the importance of health promotion and disease prevention. it is designed to be the first point of contact within the healthcare system, providing that individuals receive essential health services close to where they live and work. phc includes a wide range of services, including immunisations, maternal and child health care, management of chronic diseases, mental health services, and health education. by concentrating on primary prevention and early intervention, phc aims to decrease the demand for more complex and costly secondary and tertiary care, ultimately contributing to better health outcomes and greater health equity. therefore, primary health care (phc) is foundational to any healthcare system, underlining accessibility, affordability, and comprehensive care. the gambia’s phc system aims to provide essential health services at the community level. according to the ministry of health and social welfare (2015, 2020), national health policies have concentrated on strengthening phc to enhance health outcomes and prevent diseases. this approach aligns with bertalanffy's (1969) system theory, which underscores the importance of interconnected components in a system working harmoniously to achieve optimal outcomes. however, emergency care in the gambia encounters substantial resource constraints, affecting its ability to deliver timely and adequate services (ministry of health and social welfare, 2020). burkholder, bergquist, and wallis (2020) underscore the governance challenges in accessing emergency care in africa, noting that limited infrastructure and trained personnel are common barriers. harveen and bergquist (2020) further highlight the necessity for efficient service delivery mechanisms in low-resource settings. kannan et al. (2020) concentrate on the quality of emergency care systems in africa, advocating for comprehensive strategies to enhance care delivery. consequently, health policies in the gambia are integral in shaping the healthcare landscape, particularly concerning phc and emergency care. easton’s (1953) political system theory provides a framework for understanding how health policies are formulated and implemented. the gambia’s health policies, as documented by the ministry of health and social welfare (2015, 2020), aim to enhance healthcare delivery through strategic planning, resource allocation, and stakeholder engagement. nevertheless, there are gaps in policy implementation that require to be addressed to achieve desired health outcomes. moreover, effective public service delivery is essential for guaranteeing that health services reach all segments of the population, especially in pastoral and underserved areas. emerson (2020) examines the significance of public service in achieving the un sdgs, underscoring that efficient service delivery mechanisms are necessary for meeting health targets. ouma (2018) identifies physical access barriers to emergency care in sub-saharan africa, stressing the demand for enhanced infrastructure and transportation systems. additionally, the sdgs present a global framework for improving health and well-being, with goal 3 specifically targeting health outcomes. the gambia’s commitment to the sdgs involves integrating these goals into national health policies and programs (united nations, 2015). aligning health initiatives with sdg targets guarantees that actions contribute to sustainable development, fostering long-term health advancements. 1.2. empirical evidence firstly, kannan et al. (2020) considered emergency care quality in africa using mixed methods, identifying disparities such as inadequate infrastructure and training. they recommended standardised training, infrastructure investment, and regional collaborations to improve care. similarly, burkholder, bergquist, and wallis (2020) examined governance issues in accessing emergency care through qualitative interviews and policy reviews, finding challenges like fragmented policy implementation and insufficient funding. they called for stronger governance, better funding mechanisms, and stakeholder coordination. additionally, taylor and burkholder (2019) investigated emergency care systems from a human rights perspective using a rights-based framework and case studies, advocating for human rights principles in national health policies to enhance care access. in another study, taylor and burkholder (2021) reviewed national constitutions globally to evaluate emergency care provisions, finding few clear guarantees for emergency care. they recommended constitutional amendments to include the right to emergency care and clearer legal definitions. furthermore, ouma (2018) investigated physical barriers to emergency care in sub-saharan africa using spatial analysis and field surveys, revealing considerable access gaps due to inadequate infrastructure. ouma recommended strategically locating additional facilities and improving transportation infrastructure. finally, harveen and bergquist (2020) investigated emergency treatment in low-resource settings using a systematic review and case studies, revealing issues such as insufficient resources and inadequate training. they suggested scaling up successful innovations, investing in training and infrastructure, and increasing international collaboration. in summary, these studies collectively underscore the demand for comprehensive policy reforms, increased investment, and innovative approaches to address pressing problems in emergency care systems across africa, including governance, quality, access, and human rights. 1.3. theoretical base this study is anchored in system theory, initially proposed and popularised by ludwig von bertalanffy (1969) and redefined in the context of public administration by easton, david in 1953. system theory examines how an entity interacts with and responds to its environment, with policy decisions being dynamically shaped by inputs and yielding specific outputs, thus forming a feedback loop (bunge, 2004). consequently, this theory provides a asian business research journal, 2024, 9: 39-44 41 © 2023 by the author; licensee eastern centre of science and education, usa framework for understanding how various components of a healthcare system, such as primary health care (phc), emergency care, and health policy, interact and impact one another. in the context of the gambia, the healthcare system is managed by the ministry of health and social welfare under the motto "health for wealth." this system is structured into three directorates with the department of state for health and social welfare overseeing this domain, the policy analysis unit plays a critical role in shaping policies based on expert insights and local studies. moreover, the directorate of planning and information coordinates these policy efforts, thus guaranteeing that they are effectively integrated. therefore, system theory is relevant to this study as it offers a holistic view of how different healthcare components interact within the gambia’s healthcare system. it helps in analysing how changes in one area, such as emergency care, influence other components, including phc and overall service delivery. additionally, the theory aids in evaluating the effectiveness of health policies and their alignment with the sustainable development goals (sdgs). however, system theory also faces certain criticisms. for instance, it may oversimplify complex systems by focusing broadly on interactions rather than specific details. moreover, measuring these interactions and overall effectiveness can be challenging, as the theory often relies on qualitative assessments. furthermore, system theory may not fully account for external factors such as socioeconomic conditions and political influences, and applying it practically can be complex due to the intricacy of systems. overall, despite these criticisms, system theory remains a valuable tool for examining the gambia’s healthcare system, providing an understanding of the integration and interaction of various components and their alignment with more expansive health goals. 2. methodology this study adopted exploratory and survey techniques. data is sourced directly via questionnaires and indirectly from established records and publications. the questionnaires are curated to capture respondent views on the policy's impact to enrich the overall understanding. based on krejcie and morgan's (1970) formula, the study samples of 321 participants was drawn from a population of 1,955, encompassing 87 management staff from the ministry of health and social welfare (mohsw), 1,096 frontline healthcare workers from west coast region (wcr) 1 regional health department (rhd), and 772 patients under the review period (october 2022 to december 2023). the study used staged sampling and the management staff members from the mohsw, frontline healthcare workers, and patients under the review period was identified as individual strata. proportionate to size sampling was used to determine the number of respondents in each strata while random sampling was use in the administration of questionnaires. the research identifies two pivotal variables: the national health policy (independent) and the emergency healthcare services (dependent), aiming to elucidate their interrelationship. indicators of national health policy (independent variable) include policy framework and objectives, resource allocation, policy implementation, and monitoring and evaluation mechanisms, while the indicators of emergency healthcare services (dependent variable) are service availability and accessibility, quality of care, and workforce and training. the control variables of this study are socioeconomic factors, geographic and demographic factors, and healthcare infrastructure. finally, the gathered data were analysed using descriptive and inferential statistics (multiple regression and correlation analysis to test the hypotheses one and two respectively) to draw conclusions in alignment with the study's objectives. the administration of questionnaires lasted for two months. 2.1. the intersection of national health policy and the delivery of emergency healthcare services in the gambia: a quantitative analysis. of the 321 questionnaires disseminated, 287 were received back, constituting 89% of the total. the outstanding 34 questionnaires, which make up 11%, were not returned. 2.2. the challenges militating against the provision of emergency healthcare services in the gambia. in assessing the challenges and perceptions of emergency healthcare services in the gambia, 287 respondents weighed in on several critical items as displayed in table 1 below. on the adequacy of equipment in emergency healthcare facilities, twenty-one (21) respondents (7.32%) strongly agreed that the facilities are suitably equipped with modern medical tools, while 45 respondents (15.68%) agreed with this sentiment. a minority of 15 respondents (5.23%) remained undecided. seventy-nine (79) individuals (27.53%) disagreed with the statement, while alarmingly, the majority, with 127 respondents (44.24%), strongly disagreed. the average perception score for this item stood at 2.6, revealing a predominant negative sentiment about the equipment's adequacy. regarding the sufficiency of trained emergency healthcare professionals, 84 respondents (29.27%) expressed strong agreement, while 47 individuals (16.38%) agreed. only nine respondents (3.14%) were undecided on the matter. a comparable number of respondents disagreed (78 or 27.18%) and strongly disagreed (69 or 24.03%). with a mean score of 2.2, there is a discernible concern about the number of proficient professionals in emergency healthcare. on the general satisfaction of patients with emergency healthcare services, 67 respondents (23.34%) strongly felt that patients are generally content, while a slightly higher number, 83 respondents (28.92%), agreed. a minuscule seven individuals (2.44%) remained neutral. eighty-six respondents (29.97%) disagreed, while 44 (15.33%) strongly disagreed. the mean score for this item was 2.4, indicating ambivalent feelings regarding patient satisfaction. considering the improvement in service quality since the policy implementations, 90 respondents (31.36%) strongly believed there had been a significant quality boost, while 60 individuals (20.91%) agreed. eighteen respondents (6.27%) were on the fence. 57 (19.86%) disagreed, and 62 (21.60%) strongly disagreed. this item's average score of 2.9 suggests a mildly positive but divided perception of service quality improvement post-policy implementation. on the effectiveness of the 2015 and 2020 health policy implementations in emergency healthcare centers, 92 respondents (32.06%) voiced strong agreement, while 68 (23.69%) agreed. only six individuals (2.09%) remained asian business research journal, 2024, 9: 39-44 42 © 2023 by the author; licensee eastern centre of science and education, usa undecided. eighty-one respondents (28.22%) expressed disagreement, while 40 (13.94%) strongly disagreed. this item's mean score was 2.3, painting a somewhat positive yet mixed picture of the policy's effectiveness. in wrapping up the survey's findings, the grand mean of 2.48 indicates a lukewarm, leaning slightly negative, perception of emergency healthcare services in the gambia when aggregating all the items. table 1. respondents' views on the challenges militating against the provision of emergency healthcare services in the gambia. challenges sa a u d sd total mean the emergency healthcare facilities in the gambia are adequately equipped with modern medical instruments. 21 -7.32 45 -15.68 15 -5.23 79 -27.53 127 -44.24 287 -100 2.6 there is a sufficient number of trained emergency healthcare professionals in the gambia. 84 -29.27 47 -16.38 9 -3.14 78 -27.18 69 -24.03 287 -100 2.2 patients are generally satisfied with the emergency healthcare services they receive in the gambia. 67 -23.34 83 -28.92 7 -2.44 86 -29.97 44 -15.33 287 -100 2.4 there has been a noticeable increase in the quality of emergency healthcare services since the implementation of the gambia national health policies. 90 -31.36 60 -20.91 18 -6.27 57 -19.86 62 -21.6 287 -100 2.9 the gambia national health policies (2015 and 2020) are effectively implemented in emergency healthcare centres. 92 -32.06 68 -23.69 6 -2.09 81 -28.22 40 -13.94 287 100 2.3 grand mean 2.48 source: fieldwork, (july, 2024). 2.3. test of hypothesis one h1: the gambia national health policies (2015 and 2020) has significant effect on the provision of emergency healthcare services. in the analysis of table 2 policy framework and objectives emerge as a strong predictor of emergency healthcare services, with a significant positive impact (β = 0.832, p < 0.001). this analysis indicates that a welldefined health policy framework significantly improves emergency care services. resource allocation, while positively impacting emergency healthcare services (β = 0.093, p = 0.003), shows a more moderate effect compared to policy framework and objectives. therefore, increasing resource allocation contributes to enhanced emergency care, though not as strongly as policy clarity. in contrast, policy implementation and monitoring and evaluation mechanisms did not show a significant effect on emergency healthcare services, with both variables showing non-significant results (p = 1.000). thus, despite their significance in theory, these factors do not independently affect emergency care outcomes in the gambia. table 2. coefficientsa model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) -3.236e-16 0.074 0.000 1.000 policy framework and objectives 0.768 0.038 0.832 20.145 0.000 resource allocation 0.232 0.078 0.093 2.974 0.003 policy implementation 1.625e-15 0.038 0.000 0.000 1.000 monitoring and evaluation mechanisms -1.748e-15 0.043 0.000 0.000 1.000 note: a. dependent variable: emergency healthcare services the anova results in table 3 revealed that the multiple regression model significantly describes the variability in emergency healthcare services, with the regression sum of squares at 35.745 highlighting the model's explanatory power. in comparison, the residual sum of squares is 12.290, reflecting the portion of variability not accounted for by the model. the total variability, measured by the total sum of squares, is 48.035. the mean square for regression is 8.936, indicating the model's fit relative to the residual variability, with a mean square of 0.044. consequently, the high f-statistic of 205.049 underlines the model’s effectiveness, while the significance value of 0.000 affirms that the predictors significantly impact emergency healthcare services. thus, the model, incorporating policy framework and objectives, resource allocation, policy implementation, and monitoring and evaluation mechanisms, is statistically significant and effectively accounts for variations in emergency care services. table 3. anovaa model sum of squares df mean square f sig. 1 regression 35.745 4 8.936 205.049 .000b residual 12.290 282 .044 total 48.035 286 note: a. dependent variable: emergency healthcare services b. predictors: (constant), monitoring and evaluation mechanisms, resource allocation, policy framework and objectives, policy implementation. 2.4. test of hypothesis two h0: national health policy has no significant relationship with the provision of emergency healthcare services in the gambia. table 4 correlation analysis shows a strong positive relationship between national health policy and emergency healthcare services. specifically, the pearson correlation coefficient of .858 demonstrates that as the effectiveness and implementation of the national health policy improve, there is a corresponding significant asian business research journal, 2024, 9: 39-44 43 © 2023 by the author; licensee eastern centre of science and education, usa improvement in the delivery of emergency healthcare services. this correlation is statistically significant, as evidenced by the significance level (sig. (2-tailed)) of .000, well below the 0.01 threshold, affirming that the observed relationship is not due to chance. the sample size (n) for both variables is 287, guaranteeing a robust and reliable analysis. therefore, the data suggests that improvements in the national health policy are closely associated with better emergency healthcare services in the gambia. table 4. correlations. national health policy emergency healthcare services national health policy pearson correlation 1 0.858** sig. (2-tailed) 0.000 n 287 287 emergency healthcare services pearson correlation 0.858** 1 sig. (2-tailed) 0.000 n 287 287 note: **. correlation is significant at the 0.01 level (2-tailed). 3. discussion of findings this study examined the intersection of national health policy and emergency healthcare services in the gambia, focusing on the impact of the 2015 and 2020 health policies. considering the challenges and perceptions of emergency healthcare services, 287 respondents provided crucial insights. concerning the adequacy of equipment in emergency healthcare facilities, only 7.32% strongly agreed that the facilities are well-equipped, whereas 44.24% strongly disagreed, implying a prevailing negative sentiment with a mean score of 2.6. this finding resonates with the findings of kannan et al. (2020). regarding the sufficiency of trained emergency healthcare professionals, only 29.27% strongly agreed there are enough trained professionals, whereas 24.03% strongly disagreed, resulting in a mean score of 2.2. this finding aligns with burkholder, bergquist, and wallis (2020), who underscored the critical inadequacy of skilled healthcare workers as a significant obstacle in similar contexts. moreover, on the general satisfaction of patients with emergency healthcare services, about 23.34% strongly felt patients were satisfied, while 29.97% disagreed, leading to a mean score of 2.4, reflecting ambivalence. taylor and burkholder (2019) stress that patient satisfaction is important for evaluating healthcare service quality, further underlining the mixed feelings observed in this study. considering the improvement in service quality since the policy implementations, approximately 31.36% strongly believed in service quality improvement post-policy implementation, with an average score of 2.9, demonstrating a mildly positive but divided perception. taylor and burkholder (2021) note that effective policy implementation can significantly improve service quality, corroborating the positive but varied responses observed. regarding the effectiveness of the 2015 and 2020 health policy implementations, around 32.06% strongly agreed on policy effectiveness, but 28.22% disagreed, yielding a mean score of 2.3, suggesting mixed views. ouma (2018) stressed similar findings in another context, where policy implementation effectiveness was perceived differently across various stakeholders. the overall grand mean of 2.48 shows a slightly negative perception of emergency healthcare services. harveen and bergquist (2020) also found that stakeholder perceptions can significantly affect the perceived effectiveness of healthcare services, supporting the slightly negative sentiment observed. on hypothesis one, the analysis in table 2 shows that policy framework and objectives significantly improve emergency services (β = 0.832, p < 0.001). resource allocation also positively impacts services (β = 0.093, p = 0.003), though to a lesser extent. however, policy implementation and monitoring and evaluation mechanisms were not significant (p = 1.000). these results are in line with taylor and burkholder (2021), who found that welldefined policy frameworks are essential for enhancing healthcare services. the anova model significantly explains variability in emergency services (f = 205.049, p = 0.000), affirming the predictors' significant impact. this is consistent with findings by burkholder, bergquist, and wallis (2020), who underlined the importance of policy frameworks and resource allocation in healthcare. concerning hypothesis two, table 4 revealed a strong positive correlation (r = 0.858, p = 0.000) between national health policy and emergency healthcare services, implying that improvements in health policy are closely connected to better emergency services in the gambia. this finding aligns with kannan et al. (2020) and ouma (2018), who underscored the essential role of effective health policies in improving healthcare service delivery. 4. recommendations/policy implications based on the findings of this study, the following recommendations and policy implications emerge to improve the delivery of emergency healthcare services in the gambia. strengthen policy framework and objectives: • regularly review and update health policies with clear, actionable goals. • align policies with current healthcare conditions and global best practices. increase resource allocation: • prioritise and increase funding for emergency healthcare infrastructure and supplies. • invest in modern medical equipment to address current inadequacies. enhance training and capacity building: • invest in training programs and continuous professional development for healthcare workers. • partner with international organisations for additional training resources. improve policy implementation and monitoring: • establish clear procedures and timelines for policy implementation. • develop an integrated monitoring system to track policy effectiveness. enhance patient satisfaction and engagement: asian business research journal, 2024, 9: 39-44 44 © 2023 by the author; licensee eastern centre of science and education, usa • concentrate on delivering patient-centered care with better communication and responsiveness. • involve patients and the community in health policy discussions. leverage data and technology: • use health information systems for data-driven decision-making. • implement telemedicine and mobile health solutions to improve service delivery. these recommendations need collective action from the government, healthcare providers, and stakeholders to enhance emergency healthcare services in the gambia, leading to better health effects. 5. conclusion this study examined the intersection of national health policy and the delivery of emergency healthcare services in the gambia through a quantitative analysis. the findings revealed a significant understanding of the influence of health policy on emergency services, underlining key areas for improvement. the study demonstrated that a well-defined policy framework and increased resource allocation positively influence the quality and availability of emergency healthcare services. however, challenges remain, particularly in the adequacy of medical equipment and the number of trained professionals. the analysis also underscored the importance of effective policy implementation and robust monitoring mechanisms, even though these factors did not independently show significant effects in the current context. the correlation between national health policy and emergency healthcare services was strong, affirming that advancements in policy can lead to better service delivery. to improve emergency healthcare services in the gambia, the government and stakeholders must focus on strengthening the policy framework, increasing resource allocation, improving training and capacity building, and improving policy implementation and monitoring. by addressing these areas, the gambia can enhance its emergency healthcare infrastructure and outcomes, ultimately leading to better health for its population. references bertalanffy, l. v. (1969) the system theory: foundation, development, application. new york: george braziller. bunge, m. (2004) matérialisme et humanisme: pour surmonter la crise de la pensée. montreal: liber. burkholder, t. w., bergquist, h. b. and wallis, l. a. (2020) ‘governing access to emergency care in africa’, african journal of emergency medicine, 10(2), pp. 2-6. https://doi.org/10.1016/j.afjem.2020.07.003 easton, d. (1953) the political system: an inquiry into the state of political science. new york: alfred a. knopf. emerson, a. j. (2020) ‘importance of the public service in achieving the un sdgs’, decent work and economic growth, 3(6), pp. 6-22. government of the gambia. (1997) constitution of the gambia. banjul: government of the gambia. government of the gambia. (2018) gambia national development plan 2018-2021. banjul: government of the gambia. harveen, b. and bergquist, t. b. (2020) ‘considerations for service delivery for emergency care in low resource settings’, african journal of emergency medicine, 2(6), pp. 1-5. https://doi.org/10.1016/j.afjem.2020.07.002 junaid, a. and razzak, a. l. (2002) ‘emergency medical care in developing countries: is it worthwhile?’, bulletin of the world health organization, 80(11) pp. 900-905. kannan, v. c. et al. (2020) ‘emergency care systems in africa: a focus on quality’, african journal of emergency medicine, 10(2), pp. 65-72. https://doi.org/10.1016/j.afjem.2020.04.010 krejcie, r. v. and morgan, d. w. (1970) ‘determining sample size for research activities’, educational and psychological measurement, 30, pp. 607-610. migdal, j. s. (2001) state in society: studying how states and societies transform and constitute one another. cambridge: cambridge university press. ministry of health and social welfare. (2015) gambia national health policy 2011-2015. banjul: government of the gambia. ministry of health and social welfare. (2020) gambia national health policy 2012-2020. banjul: government of the gambia. ouma, p. (2018) ‘gaps in physical access to emergency care in sub-saharan africa’, the lancet global health, pp. e240-e241. https://doi.org/10.1016/s2214-109x(18)30026-3 taylor, w. and burkholder, k. h. (2019) ‘developing emergency care systems: a human rights-based approach’, bulletin of the world health organization, pp. 612-619. https://doi.org/10.2471/blt.18.226605 taylor, w. and burkholder, m. r. (2021) ‘a global review of provisions on emergency care in national constitutions’, health and human rights journal, 23(2) pp. 1-2. united nations. (1948) universal declaration of human rights. san jose: inter-american institute for human rights. united nations. (2015) united nations. available at: https://www.un.org/sustainabledevelopment/health/ (accessed: 14 july 2024). world health organization and united states. (1946) constitution of the world health organization basic documents, forty-fifth edition, supplement. washington, d.c.: u.s. dept. of state. world health organization. (2017) world health organization. available at: https://www.who.int/news-room/fact-sheets/detail/humanrights-and-health (accessed: 14 july 2024). world health organization. (2019) seventy-second world health assembly. resolutions and decisions wha72/2019/rec/1. geneva: world health organization. https://www.un.org/sustainabledevelopment/health/ https://www.who.int/news-room/fact-sheets/detail/human-rights-and-health https://www.who.int/news-room/fact-sheets/detail/human-rights-and-health 1 © 2020 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 5, 1-6, 2020 issn : 2576-6759 doi: 10.20448/journal.518.2020.5.1.6 © 2020 by the authors; licensee eastern centre of science and education, usa fluctuations of oil prices and gross domestic product in indonesia najihah hussain rutgers university, usa. abstract the main aim of the study was to find out the impact of fluctuations of oil prices on the economic progress measured using gdp of indonesia. the research design was quantitative as the data collect is in numeric form. the data is collected from the secondary sources including world bank and fred st. louis. a total of 10 years data was collected ranging from 2009 to 2018 based on monthly frequency. the analysis was conducted using adf testing for stationarity, descriptive statistics and autoregressive distributed lag (ardl) model is conducted in order to find the impact of fluctuations of oil prices on the indonesian economic progress. it was found from the preliminary assessment that data of gdp index had unit root, therefore, ardl model was opted. it was found that oil price volatility affected the economic progress of indonesia positively in the short-run. it was also evaluated that gdp is significantly dependent on its lagged values. the research underpinned the case of indonesia therefore this research is limited to the geographical bounds of indonesia. therefore, no other country has been assessed in this study and this provides direction for future research where other developing countries, for instance, thailand, malaysia, pakistan or china. provided this, the research in future can be further enhanced by incorporating control variables like exchange rate, inflation, interest rate. keywords: oil price, oil price volatility, commodity, gdp, economic progress, indonesia. 1. introduction one of the most important energy source that plays a vital role in the industrial sector of an economy is crude oil and by-products made from it. this is mainly considered to be important as it is used as the fuel as well as raw material in the process of production. therefore, it is expected that the prices of oil may affects the economic conditions of the country. it is analysed from the previous studies (aloui, hkiri, hammoudeh, & shahbaz, 2018; pradhan, arvin, & ghoshray, 2015; sodeyfi & katircioglu, 2016) that the prices of oil are associated with the inflation as well as growth in the economy. as the prices of the oil accounts for the cost of production of several inputs so by the increase of oil prices, the total cost of products within a domestic market would also increase (artami & hara, 2018; qisthi, 2019). the cost of input has been increased due to the increase in prices of oil which also decrease the supply of input which in turn decreases the total output leading to decrease in economic productivity (akhmad, romadhoni, karim, tajibu, & syukur, 2019). due to this reduction in the productivity, there is a great decline observed in the wages of the people as well as the unemployment also increases which leads to the high inflation in the economy. indonesia is a developing country and the economy of the country mainly relies over the oil as it mainly contributes in the gross domestic product of the country and it also helps in affecting the total trade balance as well as expenditure of the government. the country is also known as the net exporter of the oil and is mainly dependent over the oil as it is the main source of revenue of the country (sha, 2017). from the year of 2005, the country has shifted its image from net exporter of oil to the importer of the oil and the contributions of oil to the income have been decreased which resulted in the production of the oil declining due to the depletion of the resources (abdlaziz, rahim, & adamu, 2016); (roespinoedji, roespinoedji, siam, & shamsudin, 2019); (adam, saidi, rahim, & rosnawintang, 2019). it is investigated that indonesia contained a large reserves of the crude oil in 2015 that contributes to the production of decline by 50% along with the revenue which can be decrease when the total percentage of gdp can be measured. there is a deficit balance of trade in the sector of oil and gas due to this deficit balance of trade. this is mainly from the increasing trend of consumption of oil. the share of oil in the primary energy mix of indonesia was targeted to be 40% in the year of 2015 which indicated it heavy dependence over the oil (adam et al., 2019). the consumption of oil in indonesia has been doubled since 1990, thus due to the reduction in the production of oil as well as increasing demand for oil shows the growing deficit balance of trade in oil and gas sector. the share of oil in government expenditure of indonesia is substantial. the subsidy of the fuel is considered as a burden over the national budget of indonesia from the past several years. by following this scheme, the fuel products are sold based upon fixed prices that is below the price of market which is determined by the government (hossain & raghavan, 2019). therefore, an effort is made by the government of indonesia which reduces the fossil fuel subsidies by eliminating the subsidy for several petroleum products that gradually links with the international price of oil. http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2020.5.1.6&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/62 asian business research journal, 2020, 5: 1-6 2 © 2020 by the authors; licensee eastern centre of science and education, usa however, this results in the fluctuations in the fuel prices in indonesia which is mainly associated with inflation leading to decline in economic growth. the main aim of the study is to find out the impact of fluctuations of oil prices on the gross domestic product of indonesia. the secondary objectives in order to achieve the main aim are:  to understand the factors that cause the fluctuations in oil prices throughout the globe  to examine whether there is an impact of fluctuations of oil prices on the gross domestic product on indonesia or not  to provide recommendations to relevant authorities regarding the measures to be taken during the time of high fluctuations of oil prices the main research question that is analysed in the study is: do fluctuations of oil prices possess any impact on the gross domestic product of indonesia? 2. literature review the prices of the oil are considered as an important factor of the global economic performance. it is analysed that the increase in the prices of oil leads towards the transfer of the income from exporting as well as importing countries which leaves a great shift in trade balance of a country. in the study of hooker (2002) an explanation is provided regarding the impact among the prices of oil as well as inflation. a model is proposed in which rate of change of oil prices and unemployment gap is discussed which includes prevailing rate of unemployment to the benchmark that is known as the natural rate of unemployment which also lagged inflation in order to predict the core pci inflation (belhaj, suboyin, & ali, 2018); (alam, hairani, & singagerda, 2019). in the end of 1980, the relationship among these variables was tested by using statistical tests. it was analysed that there is significant impact of oil prices on inflation in the earlier period but this is not applicable in recent periods due to market dynamics (hossain & raghavan, 2019). it is also investigated that the prices of the oil have a stagflation effects over the macroeconomic indicators of a country that imports the oil. there is a great effect of the size on output growth effect and inflation level mainly relies over several factors. these factors includes the size of the shock in terms of the percentage which increases the prices of the oil and the prices that are real (hadi, yahya, & shaari, 2017; novarinda, 2016; tabash & khan, 2018). in addition to this, the persistence of the shock and the dependency of economy over the energy and oil and the last factor includes the policy response of the authorities that are fiscal and monetary. a number of researches have shown that the economic activities can respond to the changes in oil prices asymmetrically. there is dissimilar magnitude of the effect of same change in the prices of the oil when there is a positive change as compared to when there is adverse change. it is considered as a significant findings as it has ability to capture the impact upward as well as downward in the prices of the oil (belhaj et al., 2018). however, there is a mixed asymmetry of such empirical evidence. it is investigated that there are several positive changes in the prices of the oil that have adverse impacts over the economic activities. there is a great impact of the changes in the oil prices over the growth in economy and inflation in the emerging countries in which most of asian countries are included (qisthi, 2019). the economies of the iran and china are considered to be very sensitive over the asymmetry effects of the downward changes in the prices of oil as compared to the upward changes in the price of oil (akhmad et al., 2019; sha, 2017). moreover, it is evaluated that the asymmetric impact of the change of oil price is not present due to the linear and non-linear changes in the price of oil over the economy of malaysia and indonesia. there are several factors that are known as the causes of asymmetric impact including monetary policy, adjustment costs as well as product prices of petroleum things. it is investigated that the monetary policy has a major impact over the change in oil price as it has asymmetric effects over the economy and the main reasons listed behind this are the increase in inflation rate and unemployment in indonesia. the asymmetry can take place when there are combination of the factors that keep nominal gdp constant (abdlaziz et al., 2016). this is mainly due to the inflation which is not expected and the disinflation that is precipitated by the monetary policy. secondly, it is investigated that the differential input ration, coordination problems and the sectorial imbalances are considered as the factors leading adjustment costs that are more affected by the oil prices and needs more time to be adjusted (adam et al., 2019). in indonesia, there is a high rate of unemployment which is caused due to the rise in the prices of oil. it is mainly due to the fact that the adjustments are caused between the contraction of the sectors that depends over the energy as well as expansion of the sectors that are less dependent over the energy as it need more time to achieve (artami & hara, 2018; qisthi, 2019). it is also analysed that the asymmetric impact of the changes in the price of the oil would be caused by the different changes in the price of the petroleum product to the changes of crude oil which is mainly due to different policies that are applicable over prices of petroleum product like subsidy of fuel (belhaj et al., 2018). although the phenomena of fluctuation in the price of oil is considered to be very important for countries that are emerging into the global economic scenario including indonesia, where the economy of country relies over a strong industrial sector and economies that are emerging have shown that they rely over oil. there is another impact of the increase in the price of the fuel which is inflation. increase in the price of the fuel is one of the greatest cause of the inflation in developing countries like indonesia and malaysia. the fuel prices are increased which is also followed by the increase in the prices of the product of non-oil product in which the basic necessities and the goods for consumption are included. the price of all the economy depends over the price of the oil as it is involved in almost every aspect (adam et al., 2019); (tabash & khan, 2018). in addition to the direct impacts, there is an indirect impact that is regarding the behaviour of the workers and their response. it is specified that the companies put all their efforts in diverting increase in the cost production by increasing the selling price of the product for the consumers. in addition to this, the workers also demand high wages for their work due to the economic disturbance in the country. the study over impact of fuel oil price over the change on macroeconomic level shows that the macro economy is mainly impacted by the prices of fuel. when the price of oil in international market was less than usd23 in the year of 2003, it increased until it reached to the peak in the year of 2008 that is usd140 per barrel. in the year of 2009, there was a sharp decrease observed in the prices by asian business research journal, 2020, 5: 1-6 3 © 2020 by the authors; licensee eastern centre of science and education, usa usd40 per barrel which is not for a long time (tabash & khan, 2018); (hadi et al., 2017); (alam et al., 2019). after that the price is continuously increasing which impacts the economy of the country. considering all the discussion presented in the context of how an economy is dependent on its commodity market and specifically oil, the following hypothesis has been constructed to evaluate later in this study. h1: the oil price fluctuations significantly influence the economic progress of indonesia 3. methodology the research is quantitative in nature as the data collect is in numeric form. the data is collected from the official statistical website on indonesia and world bank while data regarding the fluctuations in oil prices is collected from bloomberg and investing.com. a total of 10 years data is collected so the sample size of the study is 10 years. the unit root test is conducted in order to find out whether the data is stationary or not. afterwards, autoregressive distributed lag (ardl) analysis is conducted in order to find the impact of fluctuations of oil prices on the gross domestic product. 3.1. unit root testing the unit root test is conducted in order to find out whether the data is stationary or not. afterward, autoregressive distributed lag (ardl) analysis is conducted in order to find the impact of fluctuations of oil prices on the gross domestic product. here it becomes important to mention that monthly data for both the time series have been collected from the year 2009 to 2018 in the context of indonesia. with reference to the findings of cohen (2014) the processing of a time series involves certain limitations and assumptions that are required to be followed while predicting and evaluating the one time series from the other. therefore, it becomes important to describe how certain assumptions and criteria are essential to consider during the econometric assessment. independent variable: fluctuations of oil prices dependent variable: gross domestic product additionally, this can also be comprehended through empirical equation as follows: fopt = α + β1 (gdpt) + ε in the current research, the researcher has intended to apply augmented dickey-fuller and autoregressive distributed lag. in this regard. therefore, an explanation to the methods and statistical technique applied to the current research are as followed: 3.2. augmented dickey-fuller (adf) in the present research, the researcher has intended to determine the impact of oil price fluctuations to the growth domestic product of indonesia. in order to comprehend the current research phenomenon, the researcher has collected time series for oil price fluctuations and gdp for ten years. however, it has been argued through the findings of bekhet, matar, and yasmin (2017), time-series data need to comply with certain assumptions. different kinds of assumption criteria are being discussed while processing the econometric assessment. similarly, one of the fundamental criteria is also being referred to as stationarity of time series. with regards to the findings of chaudhuri and ghosh (2016), one of the essential technique which is preferably utilised for evaluating the stationarity of a time series is considered as adf technique. further, it has also been stated that the adf technique forms the basis with the supposition of the null hypothesis of a time series that entails unit roots. in this aspect, the acceptance and rejection of a null hypothesis determine whether or not the time series entails unit-roots. moreover, once it is confirmed that the time series possess unit-roots, then, in this case, it can be stated that the data is non-stationary. in contrast, when it is determined that the time series does not entail unit-roots, then the time series can be claimed as stationary. the mathematic model reflecting adf’a approach has also been presented below: ∑ in the aforementioned equation, can defined as the difference operator. meanwhile, can be described as the random error of stationary. in addition, reflects non-stationary series. 3.3. autoregressive distributed lag (ardl) one of the most widely used statistical analysis techniques for determining long-term association during an econometric assessment is concerned with the autoregressive distributed lag technique. concerning the findings of nkoro and uko (2016) an ardl approach is preferably used for determining the long-term association between the two quantifiable variables. the technique forms the basis with the iterative approach where the marginal log of time series is also maximised. the standard log-linear function has also been presented as followed: in the equation above, represents the log of gdp. denotes error terms while is parameter estimate. the mathematical model for the developed ardl is also presented as followed: ∑ additionally, the long term and short-term dynamics for the concerned ardl has also been presented through the following mathematical models: ∑ ∑ ∑ ∑ here denotes a statistically significant coefficient which is corrected for error. asian business research journal, 2020, 5: 1-6 4 © 2020 by the authors; licensee eastern centre of science and education, usa 4. results for the purpose of evaluating the data accumulated in accordance with the proposed method, the results have been presented, discussed and analysed in this section. therefore, this sections discusses the descriptive statistics with respect to the variables of the research, evaluation of unit roots in the data because the data is time-series and assessment of the association using ardl approach. 4.1. descriptive statistics this specific section includes the assessment of the average oil fluctuations during the 10 years period along with the mean value of the economic progress of the indonesian economy. in addition, the assessment also includes minimum and maximum values. on the other hand, the deviation has also been calculated using standard deviation. for the purpose of evaluating the normality of the series of each variable, jarque bera has also been computed and evaluated. the results depicted in table 1 are asserting that the average gdp value is 93.494 points during the span of 10 years whereas, average oil price change is computed to be 0.5%. in addition, the maximum value of gdp is computed to be 118.251 whilst the minimum value is computed to be 70.348 points. in furtherance, the maximum value of oil price fluctuation or volatility is computed to be 20.51% whilst the minimum value is computed to be 22.88% points. in terms of standard deviation, it has been found that the deviation in gdp index is 6.62 whilst the deviation in oil price fluctuations is calculated to be 7.82%. in certain statistical and analytical techniques, the data is assumed to be normally distributed (cohen, 2014). in terms of the jarque bera statistics, gdp has statistics equal to 6.6 (p-value = 0.04) while the other variable of the study has 5.53 computed statistics with p-value= 0.06. in this concern, it can be inferred from the statistics that at 1% level of significance, both the data series can be regarded as normally or approximately normally distributed. the results have been presented in table 1. table-1. descriptive statistics of the research variables. gdp (index) oil price fluctuation mean 93.494 0.50% maximum 118.251 20.51% minimum 70.348 -22.88% std. dev. 13.987 7.82% jarque bera 6.62 5.53 probability 0.04 0.06 4.2. adf testing to evaluate unit root the analysis of the presence of unit root has been conducted using adf test as discussed in the methodology section as well. the null hypothesis assumes the data to have non-stationary characteristics. in this concern, both variables of the study have been evaluated using e-views and the results have been presented in table 2. in accordance with the results, gdp’s t-statistic is computed to be 0.108 with the probability value of 0.997. this implies that the pvalue is greater than all the assumed thresholds, for instance 10%, 5% or 1%. therefore, gdp is found have unit root. on the contrary, the results in table 2 are also depicting oil price fluctuations and it has been found that the p-value is computed to be -8.268 with a pvalue of 0.000 (p -value < 0.05). in this aspect, it can be inferred that this data series is stationary and does not contain any unit root because the null hypothesis is negated. considering the mixed nature of data series in this study, the later methodology has been decided accordingly. table-2. adf approach to unit root testing. adf testing t-statistics probability value gdp 0.108 0.997 oil price fluctuations -8.268 *** 0.000 note: *** is indicating significance of the results at α = 1%. 4.3. autoregressive distributed lag model since it has been found that the nature of data series in this study is mixed where one has unit root whilst the other is stationary, therefore, the chosen model for the assessment is ardl. the results presented in table 3 firstly indicates the optimal lag order which has been chosen automatically by e-views. to further strengthen the assessment, the errors are fixed using hac errors. also, the initial assessment also included evaluation of trend which was found to be insignificant. concerning the selection of the optimal model, it has been found that gdp is significantly and positively dependent on its first lag (b = 0.852 with p – value of 0.000 < 0.01). therefore, the gdp in future can be predicted with the lagged value of gdp index itself. on the contrary, it can be seen that the dependency of gdp index on its second lag is not found to be significant (b = 0.000 with p – value of 0.982 > 0.1). hence, with the second lag, the gdp index can be insignificantly predicted. however, on the basis of third and fourth lags of the gdp, the values are found to be significant (b = 1.010 with p – value of 0.000 < 0.01) and (b = 0.862 with p – value of 0.000 < 0.01) respectively. consequently, the short run association of gdp index of indonesia with the lagged values is found to be significant. besides, the primary question of the study was to assess the association and effect of oil price fluctuations. at level, it has been found that the effect is computed to be statistically insignificant as depicted in table 3. the inference has been drawn because the p-value is greater than the set thresholds (b = -0.028 with p – value of 0.553 > 0.1). however, if the lagged value of the oil price fluctuations is evaluated, it can be concluded that gdp is dependent on oil price fluctuations in the case of indonesia only in the short run. this assertion has been drawn on the basis of p-value (b = 0.095 with p – value of 0.000 < 0.01). in can be deduced that the effect is both positive and significant which implies that boost in the fluctuations in the oil prices of indonesia as a commodity would result in boost in the gdp index in the short run. the results have been depicted in the following table. in addition, the asian business research journal, 2020, 5: 1-6 5 © 2020 by the authors; licensee eastern centre of science and education, usa overall model is found to be statistically significant because the p-values of the fisher’s statistics is lower than 5%. the standard errors of the coefficients have also lower values implying lower chance of error. table-3. ardl model of the research. automatic optimal lag order selection: ardl (4, 1) variable coefficient std. error t-statistic prob.* gdp (-1) 0.852 *** 0.045 18.850 0.000 gdp (-2) 0.000 0.007 -0.022 0.982 gdp (-3) 1.010 *** 0.007 145.144 0.000 gdp (-4) -0.862 *** 0.046 -18.892 0.000 oil price fluctuation -0.028 0.046 -0.595 0.553 oil price fluctuation (-1) 0.095 ** 0.047 2.030 0.045 c 0.098 *** 0.037 2.671 0.009 r-squared 99.999% f-statistic 2540351.000 adjusted r-squared 99.999% prob (f-statistic) 0.000 note: ***: showing significance at 1%; **: showing significance at 5%; showing significance at 10%. 4.4. hypotheses assessment summary the primary evaluation of the study revolved around the effect of oil price fluctuations on the gdp index. it was found that oil price volatility affected the economic progress of indonesia positively in the short-run. it was also evaluated that gdp is significantly dependent on its lagged values. therefore, on the basis of the statistical evidence, the hypothesis proposed initially has been accepted. 5. discussion in the past, several researches have already analysed the association between oil prices and the economy. however, since these variables are time-variant, therefore, it is necessary to evaluate the association over the period of time to further assess the underlying factors and the potential changes for predicting the future. in this concern, this research has found that in the context of indonesia, the association and effect of oil price on the gdp index or the economy is computed to be significant in the long-run. the findings of the study in this case is consistent with various studies. it has been investigated by hadi et al. (2017); tabash and khan (2018) and novarinda (2016) that output growth effect and inflation levels are influenced by several factors. these factors includes the size of the shock in terms of the percentage which increases the prices of the oil. therefore, the findings are coherent with researches conducted on other countries as well depicting the similarity in the dynamics of the countries. the research carried out by belhaj et al. (2018) stated that the economic activities can respond to the alterations in oil prices asymmetrically. in the case of the results of this study, it has been found that the effect in the short run is positive of the oil fluctuations on the gdp index and this implies that the nature is asymmetric. considering the relevance of the study, this research has various practical implications for the government and the other authorities associated with the commodity market and especially oil market to devise such policies in indonesia that can foster the growth of commodity market and economy as a whole. in fine, the findings of the study are also supported by various researches, however, it can be enhanced further on the basis of key areas highlighted in the later sections of the paper. 6. conclusion conclusively, gdp index or economic progress of indonesia is found to be significantly affected by the oil prices and its fluctuations. therefore, the underlying mechanisms that could control or keep the flow in balance hold significant importance. the government needs to devise policies for oil market and this proposition has been given on the basis of findings of this study. the authorities are responsible for nurturing the environment in indonesia leading to economic growth. precisely, the government is required to create a mechanism for commodity market to gain optimality in the production, imports and exports of oil and to curb the issues prevailing in indonesia, for instance unemployment. 7. limitations of the study and future directions the research underpinned the case of indonesia for evaluation and since this scope has been defined, it further entails to the inference that this research is limited to the geographical bounds of indonesia. therefore, no other country has been assessed in this study and this provides direction for future research where other developing countries, for instance, thailand, malaysia, pakistan or china. in furtherance, gdp has been considered as a metric for economic progress, and in future, other metrics, for instance, gnp can be considered. provided this, the research in future can be further enhanced by incorporating control variables like exchange rate, inflation, interest rate. in addition, comparative analysis can also be conducted in future between the countries. references abdlaziz, r. a., rahim, k. a., & adamu, p. 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(2018). the impact of oil price volatility, gross domestic product, foreign direct investment on islamic banking investments: an empirical evidence of the united arab emirates. international journal of energy economics and policy, 8(5), 306-312. citation | najihah hussain (2020). fluctuations of oil prices and gross domestic product in indonesia. asian business research journal, 5: 1-6. history: received: 12 may 2020 revised: 15 june 2020 accepted: 17 july 2020 published: 10 august 2020 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education funding: this study received no specific financial support. competing interests: the author declares that there are no conflicts of interests regarding the publication of this paper. transparency: the author confirms that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 7 © 2021 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 6, 7-13, 2021 issn: 2576-6759 doi: 10.20448/journal.518.2021.6.7.13 © 2021 by the authors; licensee eastern centre of science and education, usa uncertainty, financial development and fdi inflows: france evidence francois smith university of bordeaux, france. abstract the economic policy and world uncertainties are negatively effects on the whole economy, specifically on the financial sector of france. the outbreak of corona virus in the last quarter of 2019 makes the situation worst, specifically for the case of france. the outbreak of this virus results in a drastic reduction in liquidity and solvency of french corporations. the inflows of foreign direct investment (fdi) in france are also reduced by 17% during the outbreak of virus. however, after analyzing the situation of world uncertainty and economic policy uncertainty in france, it is found to be crucial to examine the role of economic policy and world uncertainties in defining fdi and financial development. present study thus attempts to investigate the impact of economic policy uncertainty and world uncertainty on fdi and financial development in france. for this purpose, the study collects the data for the period of 1997-2018 from different secondary data sources. the study applied ardl bound testing approach to estimate the results. findings report negative impact of economic policy uncertainty and world uncertainty on fdi and financial development. the study suggests the france government to monitor the sources and size of uncertainty shock while formulating different economic policies. keywords: economic policy uncertainty, world uncertainty, foreign direct investment, financial development, france. 1. introduction since the publication of “the age of uncertainty” in 1977, many major events have been occurred that result in an economic and political uncertainty around the globe (al-thaqeb & algharabali, 2019). this globalization or uncertainty is highly aligned with the fact that we exist in the “hyper-connected” world, where an event which arises in one part of the world will definitely have an influence on the other part of the world (french & li, 2021). evidences reveal that financial crises of 2008, arab springs of 2012, and european sovereign debt crises of 2010 are the underlying causes of increased economic, political and world uncertainties around the globe. hence, many researchers have started conducting their research to explore the effects of these uncertainties on the macroeconomy. specifically, the effects of economic policy uncertainty (epuc) on financial variables have received a lot of attention of economic researchers. researchers indicated the adverse and detrimental effects of these uncertainties on the whole economy. the particular literature shows that higher level of epuc in a nation reduces production (mian & sufi, 2010) investment (shen, zhang, liu, & hou, 2020) stocks (hu, kutan, & sun, 2018) inflow of capital (wang, luo, wang, xu, & wu, 2021) trade credit (godil, sarwat, sharif, & jermsittiparsert, 2020) and financial stability (phan, iyke, sharma, & affandi, 2021). it is argued that financial sector of a country plays an important role in its economic development. the inflow of capital and domestic credit to private sector are two pillars of the financial sector which is highly affected with the epuc and world uncertainty (wuc). the outbreak of corona virus in the last quarter of 2019 make the situation more worst, specifically for the case of france. the outbreak of this virus results in a drastic reduction in liquidity and solvency of french corporations (see figure 1). the inflows of fdi also reduces by 17% during the outbreak of virus (see figure 2). hence, researchers indicated that the global pandemic is another cause of world and economic policy uncertainty. this scenario motivates the authors to investigate the effect of epuc and wuc on the fdi and financial development (fndp) of france. figure-1. reduction in liquidity and solvency of france corporations. http://ecsenet.com/index.php/2576-6759/article/view/96 http://ecsenet.com/index.php/2576-6759/article/view/96 asian business research journal, 2021, 6: 7-13 8 © 2021 by the authors; licensee eastern centre of science and education, usa figure-2. drop in fdi of france. researchers have extensively worked on the inflows of foreign capitals as fdi plays a very important role in promoting the economic growth. many researchers have spent their days and nights in finding the determinants of fdi. one of the most crucial determinant which captures the importance of different researchers and policy makers is “uncertainty”. this uncertainty can be of any type (i.e., it can be economic, political, social, economic policy or world uncertainty). uncertainty arises when the economic body cannot envisage whether, when and how the government will change its current economic policy (goodell, mcgee, & mcgroarty, 2020). researchers indicated that higher level of epuc reduces the inflows of capital as epuc is a signal of a limited protection from host nation’s legal and political institutions (albulescu, demirer, raheem, & tiwari, 2019). it also reduces the return on stock markets, and this effect is more persevering during the high volatility periods (liow, liao, & huang, 2018). according to the world investment report, epuc is among those factors that hinder the recovery of fdi. thus, it is concluded that epuc is very detrimental for the fdi. economic or world uncertainty do not only reduce the inflows of fdi, but also plays a negative role in the financial development. it also reduces the liquidity and solvency of the corporations (zhao, 2020) and bank credit growth (ashraf & shen, 2019) which is again a biggest threat for the financial development because banks and corporations contribute 20% in the financial development of the nation. according to avom, njangang, and nawo (2020) 1-unit of increase in wuc tends to reduce 12%-16% fndp of the nation. hence, the present study concluded that epuc and wuc is having adverse effects on fndp. however, after analyzing the situation of economic policy and world uncertainty of france since 1997 (see figures 3 and 4 respectively), present study proposes that it is crucial to investigate the impact of epuc and wuc on the fdi and fndp of china. it is very surprising for the authors that until now this relationship has not been investigated by the prior researchers. hence, present study contributes to the existing debate of uncertainties by analyzing the role of epuc and wuc on the fdi and fndp for the context of france. figure-3. economic policy uncertainty index. figure-4. world uncertainty of france. asian business research journal, 2021, 6: 7-13 9 © 2021 by the authors; licensee eastern centre of science and education, usa 2. literature review this section reviews the existing literature of the study along with the development of hypothesis. the conceptual model of the study is also highlighted in this section. the effects of time capricious uncertainty on the macro-economy have received a considerable attention in the recent years. many researchers have predicted the negative role of uncertainty on different macro-economic variables. specifically, the effects of economic policy uncertainty (epuc) on financial variables have received a lot of attention of economic researchers. for instance, azam, khan, and iqbal (2012) analyzed the impact of epuc on fdi for the case of south asian economics by utilizing the data from 1990-2018. the study applied ardl to analyze the short run and long run impact of epuc on fdi. the findings of the study reveal the insignificant relationship between epuc and fdi in short run while significant and negative relationship between epuc and fdi in long run. the study states that increase in the level of epuc increases the political and financial risk which is detrimental for the inflows of fdi. busse and hefeker (2007) analyzed the role of political uncertainty in fdi for the case of 84 developing economies and showed the negative role of political uncertainty in the inflows of fdi. the study concluded that political uncertainty is a severe intimidation for the contract of investment that is signed between host country and international bodies. hence, the yield on capital can be depreciated in the nations having more chances of political risk. drobetz, el ghoul, guedhami, and janzen (2018) examined the empirical relationship between wuc and fdi by using world uncertainty index as a measurement of world uncertainty. in this regard, the study gathered data of 45 developed and developing economies for the period of 1990-2018. the study indicated the negative link between wuc and fdi. phan et al. (2021) investigated the impact of epuc on financial instability for the case of 23 nations for the period of 1996-2016 and indicated the negative bond between these variables. the study implies that 1-standardize unit of increase in epuc tends to reduce the financial stability between 3.73% to 8.02% for the selected nations. the study concluded that this impact is strongest for the nations with advanced competition, small regulatory capital and smaller financial systems. canh, binh, thanh, and schinckus (2020) investigated the role of epuc in the financial sector of malaysia and indicated the detrimental role of epuc in the financial development of the selected nation. the study concluded that high level of epuc substantially reduces the bank lending growth with its stronger influence of large sized and riskier banks. caglayan and xu (2019) analyzed the influence of epuc on the stability of credit and financial institutions. for this purpose, the study gathered the data of 18 developed economies for the period of 1994-2013 and indicated the negative trade-off between the selected variables. the study provides the strong evidence that uncertainty diminishes the availability of credit and leads to an increase in the non-performing loans of banks. this concluded the detrimental role of epuc on the financial development of the nation and indicated that epuc not only having its detrimental effects for the developing economies, but also for the developed economies. choi, furceri, and yoon (2021) studied the effects of wuc on the financial system of 13 oecd economies. for this purpose, the study collected the data for the period of 2000-2015 and indicated the adverse effects of wuc on the financial system of the selected economies. avom et al. (2020) analyzed the role of wuc on the fndp of 139 developing and emerging economies and indicated the negative connection between these variables. the study concluded that increased wuc is aligned with many other uncertainties i.e., financial uncertainty, political and economic uncertainty etc. which are very detrimental for the financial systems, and thus, negatively contributes to the fndp. the study implies that 1% of increase in wuc tends to reduce 12%-16% fndp. li and zhong (2020) conducted their research in the context of china and analyzed the role of epuc on the financial development of china for the period of 1995-2016. the study measures epuc by global economic uncertainty index, while financial development with financial condition index. the study used epuc as independent while fndp as a dependent variable of the study. results of the study indicated the negative relationship between these variables. shi, qiu, and fan (2020) examined the empirical relationship between wuc and fdi for the case of 35 asian economies for the period of 2000-2018. the study applied var model to analyze the empirical results. results of the study showed adverse impacts of wuc on the inflows of fdi in the host country. abaidoo (2019) analyzed the role of economic, political and world uncertainty in the inflow of fdi and imports for the case of china. for this purpose, the study collected the data from 1990-2015 and applied ardl model to estimate the coefficients. the study used different uncertainty dimensions (i.e., economic policies and world uncertainty) as explanatory variables. results of the study did not reveal any significant association between the chosen variables in short run, while the study indicated the significant negative rapport between the chosen variables in long run. the study concluded that the uncertainties are very detrimental for the foreign inflows. demir and ersan (2018) conducted their research on turkey and analyzed the influence of wuc on its financial markets for the period of 2003-2014. the study indicted the negative role of wuc on the financial markets. debata and mahakud (2018) analyzed the role of epuc on the stock market development of 25 developing economies by incorporating the moderating role of financial crises. the study indicated the negative influence of epuc on the stock market development for the selected countries which become more negative in the presence of financial crises. the study concluded the enhancing role of financial crises in the nexus between epuc and stock market development. guo, wei, zhong, liu, and huang (2020) indicated that epuc arises when the economic body cannot envisage whether, when and how the government will change its current economic policy. author indicated that epuc having significant impacts on the behavior of different financial and market bodies of the country, especially related to the financial decision making i.e., investment decisions. hence, this importance of the epuc motivated the authors to conduct their research in the uncertainty-financial market nexus. in this regard, the study gathered the data of china for the period of 1990-2018 and applied ardl to estimate the results. results reveal that uncertainty in the economic policies is very unfavorable for the financial markets. henceforth, the study concluded the negative link between chosen variables. wu, zhang, zhang, and zou (2020) examined the role of economic, financial, political, and pandemic uncertainty on the inflows of foreign capital for the case of south asian economies. in this regard, the study gathered the data for the period of 1990-2017. the study applied ardl and revealed the adverse (negative) impact of economic, financial, political, and endemic uncertainty on the foreign inflows of capital. in asian business research journal, 2021, 6: 7-13 10 © 2021 by the authors; licensee eastern centre of science and education, usa addition, the study indicated that the impact of economic uncertainty is more adverse as compare to other uncertainties. liu and dong (2020) also indicated the adverse effects of pandemic and economic uncertainty on the inflow of capitals. nguyen, kim, and papanastassiou (2018) used the firm level data across 25 economies for the period of 1996q1 to 2016q1 to analyze the role of wuc in foreign inflows and trade credit provisions. the study indicated that increase in wuc tends to reduce the foreign inflow of capital and provision of trade credit. after reviewing the above literature, present study hypothesized that: h1: “economic policy uncertainty has negative impact on foreign direct investment.” h2: “economic policy uncertainty has negative impact on financial development.” h3: “world uncertainty has negative impact on foreign direct investment.” h4: “world uncertainty has negative impact on financial development.” 2.1. conceptual model the conceptual model of the study is presented in figure 5. the study aims to analyze the influence of economic policy uncertainty (epuc) on foreign direct investment (h1) and financial development (h2). the study also analyses the role world uncertainty on foreign direct investment (h3) and financial development (h4). figure-5. conceptual model. 3. methodology this section presents the data collection techniques, measurement of variables and different econometric techniques to analyze the empirical results of the study. the fundamental purpose of the study is to analyze the impact of epuc and wuc on fdi and fndp. in this regard, the study uses time series data. in order to accomplish the fundamental aim of the study, the study gathered the data of france for the period of 1997-2018. the data of epuc and wuc are collected from www.policyuncertainty.com provided by naker, scott; bloom, nick; davis, stephen and ahir, hites; bloom, nick; furcer, davide. while, the data of fdi and fndp are gathered from world bank. the study uses epuc and euc as independent variables while fdi and fndp as dependent variables. however, the operationalization or measurement of variables is shown in table 1. table-1. operationalization or measurement of variables. variable name measurement reference notation independent variables economic policy uncertainty economic policy uncertainty index zhu, jia, and wu (2019) epuc world uncertainty world uncertainty index nguyen and lee (2021) wuc dependent variables foreign direct investment net inflows (% of gdp) azam et al. (2012) fdi financial development domestic credit to private sector (% of gdp) ahmed, kousar, pervaiz, and ramos-requena (2020) fndp present study uses following two econometric models to accomplish the fundamental purpose of the study model 1: fdi = model 2: fndp = where: “fdi is foreign direct investment, fndp is financial development, epuc is economic policy uncertainty, wuc is world uncertainty, are intercepts, and are the coefficients of epuc and wuc in models 1 and model 2 respectively, e is error term.” in order to estimate the empirical results of the study, the study first tests the stationarity and order of integration of the modeled variables to choose the best suitable technique for the estimation. to test the stationary properties and order of integration of data, the study used extensively applied augmented dickey fuller (adf) unit root test. after this, the study applied some diagnostic tests i.e., test of autocorrelation, heteroscedasticity, and multicollinearity to make sure that the data for the present study are free from the econometric errors. after this, the study applies auto regressive distributive lag (ardl) model to test the hypothesized relations among variables as ardl is the best suitable approach when the variables are integrated of mixed order. bounds test is the precondition to apply ardl approach which tests the co-integrating relation among modeled variables. the study uses equations 3 and 4 to test the long run relationship between variables. ∑ ∑ ( ) ∑ ( ) ( ) ( ) ( ) --3 ∑ ∑ ( ) ∑ ( ) ( ) ( ) ( ) --4 asian business research journal, 2021, 6: 7-13 11 © 2021 by the authors; licensee eastern centre of science and education, usa where: “fdi is foreign direct investment, fndp is financial development, epuc is economic policy uncertainty, wuc is world uncertainty, are intercepts, are the coefficients of short run for equations 3 and 4 respectively, is the difference operator, , are the coefficients of long run for equations 3 and 4 respectively, and is white noise error term.” both equations 3 and 4 used f-statistic to test the long run relationship between the modeled variables for the selected time period. this test involves the testing of the null hypothesis of “no-cointegration”. after examining the long run relationship between variables, the study used equations 4 and 5 to estimate short run parameters and the error correction term (ect). ∑ ∑ ( ) ∑ ( ) ( ) --4 ∑ ∑ ( ) ∑ ( ) ( ) --5 where; ∆ is the first difference operator, α0 are the intercept term, , , are the slope coefficients of short run, ecmt-1 is the error correction term, which signifies the speed of adjustment or the level of long run equilibrium, and t is the residual or stochastic error term.” 4. empirical results 4.1. descriptive statistics table 2 shows the results of descriptive statistics. table represents the mean, median, maximum and minimum values of the data along with skewness and kurtosis. the test statistic of jarque-bera is also reported in this table which is used to test the normality of residuals. the insignificant probability values of jarque-bera shows that the data for the current study are normally distributed. table-2. descriptive statistics. particulars epuc fdi fndp wuc mean 155.7398 2.9719 87.6970 0.1822 median 126.9852 2.2960 92.5250 0.1579 maximum 317.1186 12.8815 107.6418 0.4264 minimum 37.6033 0.2032 68.3989 0.0562 std. dev. 88.8044 2.9345 11.8812 0.0993 skewness 0.3841 2.4268 -0.1458 1.0384 kurtosis 1.8490 8.2244 1.6861 3.3047 jarque-bera 1.8353 1.7351 1.7348 0.2229 probability 0.3994 0.1000 0.4200 0.1210 where: “fdi is foreign direct investment, fndp is financial development, epuc is economic policy uncertainty, and wuc is world uncertainty. 4.2. adf test of stationarity and multicollinearity present study applies extensively used augmented dicky fuller (adf) unit root test to know about the order of integration and the stationarity properties of the data. the test is applied on level and first difference for two cases i.e., with intercept, and with intercept and trend. test is having the null hypothesis of the “non-stationary series”. results in table 3 (panel a) show that the test statistic of epuc and wuc are insignificant at level in both cases (i.e., with intercept, and with intercept and trend). this depicts the problem of non-stationary in these variables at level. however, the test statistic becomes significant at first difference in both cases by rejecting the null hypothesis of non-stationary series. this depicts that the epuc and euc are stationary at first difference and integrated of order 1. on the contrary, the test statistic of fdi and fndp are significant at both (level and first difference) in both the cases. this implies that fdi and fndp are free from the problem of unit root and integrated of order 0 i.e., i (0). as some of the variables are integrated of i (0), and some are integrated of i (1), hence, it is concluded that the variables of the present study are integrated of mix order. table 3 (panel b) shows the results of correlation matrix which is used to detect the problem of multicollinearity. results depict that the data for the current study are free from the problem of multicollinearity as the coefficient of correlation between two any variables is less than 0.50. table-3. adf unit root and multicollinearity. panel a: adf unit root test variables level first difference decision intercept intercept and trend intercept intercept and trend epuc -2.1958 -2.1600 -5.3025*** -5.2095*** i (1) wuc -1.3370 -1.2161 -3.3755** -3.2301** i (1) fdi -3.2125** -3.9845*** -4.8353*** -4.9745*** i (0), i (1) fndp -3.4876*** -3.4825*** -4.1190*** -4.8355*** i (0), i (1) panel b: multicollinearity variables epuc fdi fndp wuc epuc 1 fdi -0.1908 1 fndp 0.2481 -0.6469 1 wuc 0.2366 -0.3124 0.1024 1 where: “fdi is foreign direct investment, fndp is financial development, epuc is economic policy uncertainty, wuc is world uncertainty, and **,*** is level of significance at 5% and 10% respectively.” 4.3. autocorrelation, heteroscedasticity and bounds co-integration test results of autocorrelation, heteroscedasticity and bound test for both of the study model are presented in table 4. both tests are having the hull hypothesis of “no serial correlation” and “no heteroscedasticity” respectively. the asian business research journal, 2021, 6: 7-13 12 © 2021 by the authors; licensee eastern centre of science and education, usa insignificant p-values reported in panel a and panel b indicating the acceptance of null hypothesis which specifies that the data for the present study are free from the econometrics problem like auto/serial correlation and heteroscedasticity. the study applies bounds cointegration test to determine the cointegrating relation among modeled variables. the test is applied for both the models. results of table 4 (panel c) indicate the presence of long run relation between the variables of both models as the value of f-statistic (8.823 and 9.945 respectively) is greater than the upper bounds at 10%, 5% and 1% level of significance. hence, the respective study concluded that the chosen variables of the study move together in long run for the period of 1997-2018. table-4. test of autocorrelation and heteroscedasticity. panel a: auto correlation model 1 model 2 breusch-godfrey serial correlation test statistic p-value decision test statistic p-value decision 1.9833 0.1647 no serial correlation 0.2345 0.1773 no serial correlation panel b: heteroscedasticity model 1 model 2 breusch-pagangodfry hsk test statistic p-value decision test statistic p-value decision 1.8938 0.3326 no heteroscedasticity 0.1534 0.2413 no heteroscedasticity panel c: bound test f-bounds test model 1 model 2 null hypothesis: no levels relationship test statistic value value significance i(0) i(1) f-statistic 8.623 9.945 10% 4.19 5.06 k 2 2 5% 4.87 5.85 1% 6.34 7.52 4.5. hypotheses testing present study uses ardl to estimate the empirical results. results are reported in table 5. panel a of table 5 shows the long run association between variables, while panel b shows the speed of adjustment between variables. in panel a, the coefficient of epuc in model 1 shows the negative and significant relationship between epuc and fdi at the level of 1%, while the coefficient of epuc in model 2 shows the negative and significant relationship between epuc and fndp at 5% level of significance. result implies that 1-unit of increase in epuc results in a decrease of 3.5540 units in fdi while 5.7845 units of fndp in long run. hence, the 1st, and 3rd hypotheses of the study are supported. on the other hand, the coefficients of wuc in model 1 and model 2 reveal the negative impact of wuc on fdi and fndp. results show that 1-unit of increase in wuc result in a decrease of 2.9845 and 3.9853 units in fdi and fndp in long run at the level of 5% and 1%, respectively. hence, the 2nd and 4th hypotheses of the study are also supported. in panel b, the coefficient of ect is negative and highly significant at the level of 1%. result shows that 74.65% (63.44%) inconsistency between the long term and short term fdi (fndp) will be corrected within a year. finally, the values of adjusted r-squares of model 1 and model 2 show that epuc and wuc collectively explained 66.63% variations in fdi while 69.57% variations in fndp. table-5. estimations of ardl. variables model 1 (dv: fdi) decision model 2 (dv: fndp) decision coefficient p-value coefficient p-value panel a: long run results epuc -3.5540 0.0034*** h1: supported -5.7845 0.0263** h3: supported wuc -2.9845 0.0453** h2: supported -3.9853 0.000*** h4: supported panel b: short run/ecm regression ect -0.7465 0.000*** --0.6344 0.0000*** - r2 0.7475 -0.7898 adj. r2 0.6663 -0.6957 where: “fdi is foreign direct investment, fndp is financial development, epuc is economic policy uncertainty, wuc is world uncertainty, and **,*** is level of significance at 5% and 10% respectively.” 5. conclusion since the publication of “the age of uncertainty” in 1977, many major events have been occurred that results in an economic and political uncertainty around the world. this uncertainty is highly aligned with the fact that we exist in the “hyper-connected” world, where an event which arises in one part of the world will definitely have an influence on the other part of the world. evidences reveals that financial crises of 2008, arab springs of 2012, and european sovereign debt crises of 2010 are the underlying causes of increased economic, political and world uncertainties around the globe. these uncertainties are imposing adverse and detrimental effects on the whole economy, specifically on the financial sector of france. the outbreak of corona virus in the last quarter of 2019 makes the situation more worst, specifically for the case of france. the outbreak of this virus results a drastic reduction in liquidity and solvency of french corporations. the inflows of fdi in france also reduces by 17% during the outbreak of virus. however, after analyzing the situation of wuc and epuc in france, present study propose that it is crucial to examine the role of epuc and wuc on the fdi and fndp on france. for this purpose, the study gathers the data of france for the period of 1997-2018. the study applied ardl bound testing approach of estimation. results of the study show the negative impact of wpuc and wuc on fdi and fndp of france. results are aligned with prior studies (avom et al., 2020; caglayan & xu, 2019; choi et al., 2021; li & zhong, 2020). findings imply that world and economic policy uncertainty are very detrimental for the foreign inflows and financial development of the france. therefore, the study suggests that the france government should monitor the source and size of uncertainty shock while formulating different economic policies. asian business research journal, 2021, 6: 7-13 13 © 2021 by the authors; licensee eastern 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(2019). bankruptcy costs, economic policy uncertainty, and fdi entry and exit. review of international economics, 27(4), 1063-1080. citation: francois smith (2021). uncertainty, financial development and fdi inflows: france evidence. asian business research journal, 6: 7-13. history: received: 19 february 2021 revised: 14 june 2021 accepted: 12 july 2021 published: 10 august 2021 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education funding: this study received no specific financial support. competing interests: the author declares that there are no conflicts of interests regarding the publication of this paper. transparency: the author confirms that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 1 © 2016 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 1, 1-7, 2016 issn: 2576-6759 doi: 10.20448/journal.518/2016.1.1/518.1.1.7 © 2016 by the authors; licensee eastern centre of science and education, usa does amnesty programme in niger delta have economic benefit to nigeria? touitou, tina c department of mass communication babcock university iiishan-remo ogun state, nigeria abstract the niger delta is said to be the world’s largest wetland and the fourth largest ethnic group in nigeria. the oil and gas in that region represents 97% of nigeria’s foreign exchange earnings and this accounts for a major chunk of the wealth of the country. the region has for some years been the site of major confrontations between the people and the nigerian government’s security forces, resulting in extrajudicial executions, arbitrary detentions, and draconian restrictions on the rights to freedom of expression, association, and assembly. to proffer solution, federal government came up with postamnesty programme. based on this, the study sought to: (i) determine the economic benefits of postamnesty progromme to nigeria. (ii) determine the level of effectiveness of the implementation of the post amnesty progrmme since its inception in 2009. the research design was descriptive survey method. the population of the study was 4,798,519 million youths [15-39years][last census2006] in delta state, bayelsa state and rivers state. the study made use of qualitative and quantitative data analyses. the sample size was 400 using taro yamane formula. purposive sampling technique was used to select the respondents in each of the states. a pilot study was conducted using split-half method and tested with spearman brown. validity of instruments was measured using content validity .the onesample kolmogorv-smirnov (z) test is used in testing the hypothesis: amnesty programme does not have economic benefits to the nigeria. (zcal = 4.930 > zcritical = 1.96, p < 0.05). this result is significant as p-value of 0.00 < 0.05. thus, the null hypothesis is rejected and the alternative hypothesis accepted accordingly. hence, amnesty programme does have economic benefits to nigeria. it concluded that is only in peaceful regions that meaningful collaboration and developments can take place, as well as investment and development. where its recommendation is for the federal government to engage in equitable distribution of resources in the country and elimination of bureaucracy such as: corruption, dehumanization, marginalization, and underdevelopment and deprivation. keywords: niger delta, amnesty, public relations, militant, benefit. 1. introduction the niger delta crisis has been going on for decades but it has only just deteriorated to its present stage of militancy, killings, kidnappings and the likes. the effects of oil in the fragile niger delta communities and environment have been enormous. 85% of national oil revenues end up in the hands of 1% of the population, while local indigenous people have seen little if any improvement in their standard of living while suffering serious damage to their natural environment.[http://klkntv.cm/global/story.asp]. the undp (2009) describes the region as suffering from “administrative neglect, crumbling social infrastructure and services, high unemployment, social deprivation, abject poverty, filth and squalor and endemic conflict.” the majority of the people of the niger delta do not have adequate access to clean water or health care. their poverty and its contrast with the wealth generated by oil has become one of the world’s starkest and most disturbing examples of the “resource curse”. undp (2009) further to say that under nigerian law, local communities have no legal rights to oil and gas reserves in their territory. the federal government allocates permits, licenses and leases to survey, prospect for and extract oil to the oil companies, who are then automatically granted access to the land covered by their permit, lease or license. the fact that the people of the niger delta have not benefited from oil wealth is only part of the story. widespread and unchecked human rights violations related to the oil industry have pushed many people deeper into poverty and deprivation, fuelled conflict and led to a pervasive sense of powerlessness and frustration. the multi-dimensional crisis is driven by the actions of the security forces and militant groups, extensive pollution of land and water, corruption, corporate failures, bad practices and serious government neglect. much of the population in the oil producing areas of the delta relies on fisheries, subsistent agriculture and associated processing industries for their livelihood. oil spills, waste dumping and gas flaring [gas is separated from oil in nigeria, most of it is burnt as waste, these practices are endemic in the niger delta. this pollution, which has affected the area for decades, has damaged the soil, water and air quality. hundreds of thousands of people are affected, particularly the poorest and those who rely on traditional livelihoods such as fishing and agriculture, (undp, 2009). widespread environmental damage associated with oil extraction has destroyed livelihoods, polluted water and undermined health, and even basic services, such as water and http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518/2016.1.1/518.1.1.7&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/13 asian business research journal, 2016, 1: 1-7 2 © 2016 by the authors; licensee eastern centre of science and education, usa sanitation are lacking in many areas. many of the development initiatives that have been established have been marred by corruption and bad planning, leaving behind a trail of half-finished or non-functioning projects. this situation is often accompanied with massive socio-economic disorganization, lawlessness, loss of lives and the general belief that government is incapable of correctly handling the situation, [http://klkntv.cm/global/story.asp]. in 2008, nigeria government and private initiatives sought for lasting solutions to the crisis appointed a committee known as the ledum mittee to look into the crisis and come up with recommendations for peace. the ledum mittee technical committee was launched in september 8th 2008 with credible members to collate and review all previous reports, memorandum and also to make suggestions to government. the committee then made their research and recommended amnesty for militant leaders. the amnesty offer was announced by president ya’ardua in june 2009. the programme recommends that the region should receive 25% of the country’s revenue which is an improvement on the 13% revenue they receive. presidential panel on amnesty and disarmament of militants in the niger delta was also set up to coordinate the amnesty programme and to advise the government. the presidential committee has four sub-committees that are responsible for the development of the area after the militants accepted the amnesty offer. the committee was also set up to work on the modalities for the involvement of the host communities in the ownership of the petroleum assets in nigeria. the committee further sub-divided the amnesty programme into the following: the disarmament, rehabilitation and re-integration, oil and gas asset protection, infrastructural development and environmental clean-up and remediation. it is pertinent to note that, how these post-amnesty programmes are to be effectively managed and sustained should be the first priority. it should also be noted that the crises in niger delta cannot be solved by a single body. there has to be synergy on the path of individual, ngo’s, the government and the multinational oil companies in that region. all of these bodies have to work in union so as to achieve human and community development, and to put an end to militancy and crises in that region. the programmes for the post-amnesty offer includes the following: disarmament, rehabilitation and reintegration, oil and gas asset protection, infrastructural development and environmental clean-up, remediation, skills and acquisition programme for repentant militants, addressing the issue of environmental degradation; construction of an inland water way; construction of a coastal road and provision of good electricity supply. the amnesty programme is a part of the federal government determination and desire to put an end to the agitations and violence in the region, with the aim of disarming, rehabilitating and reintegrating militants into their communities as a means to tackle the challenges facing the region. amnesty programme was a huge success as the militants accepted the offer and began coming out of hiding to hand over their arms and ammunition to the government through the peace committee set up to coordinate the programme. the post-amnesty period is significant in bringing about lasting peace and development to the region. with the amnesty declared a success and to be sustained is the efforts and determination of the government to achieve these objectives. 1.1. research question 1. does amnesty programme have economic benefit to nigeria? 1.2. research hypothesis 1. amnesty programme does not have economic benefits to nigeria 2. methodology the population of the study comprised of the major stakeholder involved in niger delta crisis: youths aged 1539 years old from the three selected states that include: bayelsa state, rivers state and delta state. these states were chosen based on the fact that they were the most crisis and militancy ridden states in the region. therefore, the population size of the youths in all the states was 4,798,519 [based on the last census of 2006]. the sample size was 400 using taro yamane formula 1976. the research design employed for this study was descriptive survey design research method. while, stratified random sampling, in order to determine the population quota of each of the states, and purposive sample technique for choosing the actual respondents in each state. 2.1. empirical review of literature amnesty was defined by encarta (2009) as an international law and an act of effacing and forgetting past offences granted by the government to person [s] who have been guilty of crime and rebellion against the state. goldman (2002) is a general pardon of offence by government, a deliberate overlooking of offences against a government. sabella (2009) sees it as an act of sovereign power designed to apply the principle of “tabula rasa” to past offences usually committed against the state. he noted that the offences which amnesty generally applies include political depicts, such as treason, sedition or rebellion. the term is applied to rebellious acts against the state. amnesty differs from pardon in that amnesty causes the crime to be forgotten, whereas pardon, given after a conviction, exempts the criminal from further punishment. amnesty is usually granted to a class of criminals or group of persons who may have committed a crime and is offered in order to restore tranquility in the state (peter, 2004). some examples of amnesty in united states history were those granted by president andrew johnson after the american civil war and those given to certain wartime offenders after world wars 1 and 11. amnesty may be conditioned upon fulfillment of certain obligations within a specified period. in 1974 president gerald ford instituted a programme for vietnam war deserters, and draft evaders requiring them to spend two years doing public service work as the condition for amnesty. few people took advantage of these terms within the time allowed for the programme (encarta, 2009). 2.2. terms of the amnesty and its implications under the amnesty, all persons that were affected by the amnesty must surrender and handover their arms to the designated officers, in addition to executing the renunciation of militancy form. it implies that no militant can asian business research journal, 2016, 1: 1-7 3 © 2016 by the authors; licensee eastern centre of science and education, usa be arrested or killed after their arms have been surrendered and the label “militants” will be removed, and that those who do not surrender their arms and embrace the amnesty were considered criminals thereafter (alloy and festus, 2009) 2.3. the beneficiaries of the amnesty president yar’adua asserts that the programme is open to all: militants leaders; all militants in the region; all persons that were being prosecuted for the offences related to militant actions, sponsors of the militants, anybody who is directly or indirectly involved in the commission of offences related to the activities of the militants in the region and some civilian prisoners, especially those that had been on death row for a period up to twenty years in the niger delta, including suspected rebel leader henry okah who is on trial for gun-running and treason. okah’s freedom has been one of the main demands from the movement for the emancipation of the niger delta [mend], the country’s main militant group. 2.4. recovered arms within the stipulated deadline for the amnesty, about 532 arms, 76 automatic rifles, 21 machine guns, 16 gunboats and 180,000 rounds of ammunition were surrendered. however, about 78,000 ak-47, 230, 000 rounds of ammunition and other sophisticated weapons were believed to still be in the militant’s possession [nigerians in america 2010]. 2.5. post amnesty scheme and the accomplished projects the post-amnesty package includes: a presidential pardon, post-amnesty dialogue, rehabilitation programme, demobilization and reconciliation, re-integration, healing and sustainable development [modern ghana news, 2009n.d] a whooping sun of n2.1 trillion was marked for the developmental projects like infrastructural, environmental, human capital development and security programmes, and about n293 billion has been spent on projects like construction of skills acquisition centre, roads and housing units. parts of the money were also used for environmental upgrading and job provisions (africa, 2009) and the federal government to demonstrate its preparedness to ensure successful implementation of the entire post-amnesty plan. there should be no excuses for non-implementation of the programmes that have been approved to bring an end to arms conflict, wanton destruction of lives and property and other forms of criminality in the niger delta region. the panel will be held responsible for poor execution of the projects which are expected to assist in opening up the niger delta region for meaningful development in all areas. the creation of jobs for the large army of restive youths in the region will not only considerably curtail the alarming crime rate in the region, but it will also give such youths a sense of belonging to the niger delta region project in particular, and also nigeria in general. the federal government cannot afford to pay lip service to all-important post-amnesty plan. failure to implement the programmes sincerely and successfully could make a mess of the relative peace now prevailing in the region. anything that is capable of eroding the trust and the confidence the ex-militants have in the federal government pertaining to the amnesty deal, must be avoided to ensure that the niger delta region and other parts of the country continue to enjoy peace and meaningful development. nigerian compass suggested that the federal government should avoid those things that could contributed to the poor execution of vital projects, while implementing the post-amnesty plan projects specifically geared towards rehabilitating, reintegrating the former militants, as well as the development of infrastructure in niger delta. also, necessary arrangement should be in place to ensure that funds pumped into the projects are judiciously spent and accountability should be the watchword. armstrong (2000). 2.6. benefits of amnesty programme one of the benefits of amnesty programme is to enhance youth development in all ramifications. according to academy educational development (2010) youth development is about people, programmes, institutions and systems that provide all youth “trouble” with the supports and opportunities they need to empower themselves. pittan [993], defines “youth development” as the ongoing growth processes in which all youth are engaged in attempting to:  to meet their basic personal and social needs to be safe, feel cared for, be valued, useful, and be spiritually grounded.  build skills and competencies that allows them to function and contribute in their daily lives  build capacity of youth to participate effectively in urban poverty reduction through training and by offering employment opportunities in self-employment, formal and informal sectors.  enhance youth contribution towards better governance by promoting increase youth participation in local government and matters concerning youth development.  provide services aimed at preventing and solving reproductive health problems amongst the youth by provision of information, skills training, education on reproductive health, counseling and referral services.  establish mechanisms to effectively communicate and disseminate information to youth, youth organizations and other partners involved in youth work.  strengthen youth engagement in the protection and improvement of the environment justice by promoting their participation in environmental justice and governance initiatives the focus of amnesty programme policy before adjustment was largely talent and human resource development, before the focus was shifted to talent and human utilization that include to: provide an overview of community development foundations with reference to institutional roles responsibilities, structure and function; build skills for facilitating community participation and self-mobilization; provide a better understanding of the importance of capacity building of effective communityinstitutional development; educate and reintegrate and to hold workshops to train and to provide financial assistance to militants. asian business research journal, 2016, 1: 1-7 4 © 2016 by the authors; licensee eastern centre of science and education, usa 2.7. strengths of the amnesty hon. kinsley kuku special adviser to the president said that before the proclamation of amnesty for the niger delta ex-militants, oil production dropped to an all-time low 700,000 barrels per day. with the initiation of the post-amnesty programme, production immediately rose to 2.4 million barrels per day. today, production stands at 2.6 million barrels per day. this means an increase of 1.9 million barrels per day. this means that production savings of crude oil stands at $104 million per day for the country. the federal government further consolidated its gains on its post amnesty programme as the united kingdom department for international development [dfid], gave its approval to collaborate in the re-training of niger delta ex-militants in community reintegration on completion of their ongoing offshore vocational training. the collaboration between nigeria and the united kingdom department for international development, is part of the contributions of the international community to bring lasting peace and development to the niger delta region in particular and the country as a whole. 2.8. summary strengths of the amnesty  the amnesty promoted active listening assertive communication and affirming environment for dialogue  it protected the nation’s referent power in the global village  circulation of illegal weapons was reduced, if not eliminated  it promoted reconciliation between the militants and the offended residents who want peace to reign  the nigeria government reversed its previously reneged promise on power generation from 6000mw target by december 2009 to 60,000mw in 2020  oil production and output increased as a sharp contrast to the oil dropped in the first quarter of 2009 2.9. constraints of the amnesty aside the strengths of the programme, its goes with constraints which include:  health problem for instance, ex-nigerian president ya’adua and his sudden departure for saudi arabia, which created a power vacuum, this affected the post-amnesty plans [nigerians in america 2010].  the victims of the activities of the militant groups may feel cheated for granting immunity from prosecution through the amnesty to the militants and consequently have distrusting sentiment about the law, or plan illegal revenge  there is possibility of impression that criminals may go scot free or crime goes unpunished because pardon will be eventually granted  okoko and peterside (2009) argued that the amnesty lacks transparency, is inadequately planned and has no clear cut time frame.  some militant groups were skeptical about the amnesty because dokubo-asari was arrested in the name of amnesty  the legal constraint imposed by the united nations [un] on serious crimes seems to limit the boundary of offences that may be amnestied (priscilla, 2009)  ethnic and religious crisis in jos, borno and other parts of the nation distracted the government attention. in comparison the study poses that the strengths of amnesty programme outweigh the constraints 3. data presentation and analysis the data collected through the questionnaire from the youths of the sampled states were presented and discussed descriptively using tables, frequencies and percentages. the hypothesis was tested using one sample kolmogorov-smirnov (z) test. this was done with the aid of the statistical package for social sciences (spss) 17.0. table-1. respondents’ feeling about the amnesty programme response bayelsa (%) delta (%) rivers (%) total (%) the programme only enriches the militants 4 (7.7) 8 (7.2) 8 (8.5) 20 (6.5) it is good and welcome development because it brought peace and sustain peaceful coexistence 30 (67.5) 36 (32.4) 77 (43.9) 145 (46.4) the programme will determine the government’s priority on niger-delta 5 (9.6) 18 (16.2) 8 (5.4) 31 (10.0) indifferent 1 (1.9) 3 (2.7) 11 (7.5) 15 (4.8) this programme should go to the right people 11 (21.1) 19 (17.1) 28 (19.0) 58 (18.7) destruction is less and development is enhance 0 (0.0) 22 (19.8) 6 (4.1) 28 (9.0) abolition of indiscriminate killings and dehumanization 1 (1.9) 5 (4.5) 8 (5.4) 14 (4.5) total 52 (100.0) 111 (100.0) 147 (100.0) 310 (100.0) source: field survey, 2015 table-2. amnesty’s usefulness to the beneficiaries responses bayelsa (%) delta (%) rivers (%) total (%) it stops kidnapping and killing of human being 8 (15.4) 12 (10.8) 10 (6.8) 30 (9.7) it brought peace and security 31 (53.8) 76 (88.4) 67 (55.9) 189 (61.0) it is useful to me based on educational benefits 12 (23.1) 10 (9.0) 19 (12.9) 41 (13.2) empowerment 1 (1.9) 13 (11.7) 36 (24.5) 50 (16.1) total 52 (100.0) 111 (100.0) 147 (100.0) 310 (100.0) source: field survey, 2015 asian business research journal, 2016, 1: 1-7 5 © 2016 by the authors; licensee eastern centre of science and education, usa when asked how amnesty was useful to them as beneficiaries, table 2 reveals that majority of the respondents (61%) said it brought peace and security. other benefits pointed out by the respondents included empowerment (16.1% responses), educational benefits (13.2% responses) and eradication of kidnapping and killings of human beings (9.7%). table-3. there is relative peace in the niger-delta region as a result of the amnesty state agree (%) strong agree (%) indifferent (%) disagree (%) strongly disagree (%) total (%) bayelsa 16 (30.8) 18 (34.6) 4 (7.7) 6 (11.5) 8(15.4) 52 (100.0) delta 74 (66.7) 12 (10.8) 10 (9.0) 12 (10.8) 7(6.3) 111 (100.0) rivers 52 (35.4) 32 (21.8) 21 (14.3) 28 (19) 14(9.5) 147 (100.0) total 142 (45.8) 62 (20.0) 35 (11.3) 42 (13.5) 29(9.4) 310 (100.0) source: field survey, 2015 in response to question table 3 reveals that 142 respondents (45.8%) and 62 respondents (20%), 35 respondents (11.3%), 42 respondents (13.5%) and 29 respondents (9.4%) agreed and strongly agreed, indifferent, disagreed and strongly disagreed respectively, that there is relative peace in the niger-delta region as a result of the amnesty. this is the view of the respondents from the various sampled niger-delta states. therefore, the study proves that there is relative peace in the niger delta region as a result of the amnesty. table-4. the nigerian image is boosted as a result of the peace brought about by amnesty state agree (%) strong agree (%) indifferent (%) disagree (%) strongly disagree (%) total (%) bayelsa 21 (40.4) 21 (40.4) 4 (7.7) 6 (11.5) 0 52 (100.0) delta 68 (61.3) 23 (20.7) 3 (2.7) 12 (10.8) 5(4.5) 111 (100.0) rivers 62 (42.2) 38 (25.9) 20 (13.6) 15 (10.2) 12(8.2) 147 (100.0) total 151 (48.7) 82 (26.5) 27 (8.7) 33 (10.6) 17(5.5) 310 (100.0) source: field survey, 2015 table 4 reveals that 151 respondents (48.7%) and 82 respondents (26.5%), 27 respondents (8.7%) 33 respondents (10.6%), 17 respondents (5.5%) agreed, strongly agreed, indifferent, disagreed and strongly disagreed respectively, that the nigerian image is boosted as a result of the peace brought about by the amnesty programme. this is also true in each of the sampled niger-delta states as their individual responses concur with this. as regards to the study, nigerian image is boosted as a result of the peace brought about by the amnesty programme. table-5. the economic benefit of amnesty to the country response bayelsa (%) delta (%) rivers (%) total (%) increased revenue, high level of productivity and investment opportunities 28 (53.7) 24 (21.6) 42 (28.1) 94 (30.3) none; it is a sheer waste of funds and resources 3 (5.7) 29 (26.1) 30 (20.4) 62 (19.9) human resource development and socio-economic independence and stability 10 (19.2) 34 (30.6) 36 (24.4) 80 (25.9) reduction of vandalisation 2 (3.8) 12 (10.8) 5 (3.4) 19 (6.1) conducive environment 4 (7.7) 4 (3.6) 8 (5.4) 16 (5.2) youth empowerment 5 (9.6) 8 (7.2) 26 (17.7) 39 (12.6) total 52 (100.0) 111 (100.0) 147 (100.0) 310 (100.0) source: field survey, 2015 table 5 shows the views of the respondents on what they perceived to be the economic benefits of amnesty to the country. 30.3% of the respondents noted that it increased revenue, high level of productivity and investment opportunities. while, 25.9% noted that it increased human resource development, socio-economic independence and stability. there were other economic benefits pointed out by the respondents, as presented in table 4.14. however, it is worthy of note that 62 respondents (19.9%) said that there was no economic benefit of amnesty to the country and that it was a waste of resources. out of this 62 persons, 29 of them were from delta state while 30 of them were from rivers state. this reveals that more of the respondents from delta and rivers states were disgruntled towards the amnesty programme than respondents from bayelsa state. 4. test of hypothesis 4.1. amnesty programme does not have economic benefits to the country the data presented in table 5 is used in testing this hypothesis. the one-sample kolmogorv-smirnov (z) test is used in testing this hypothesis. as presented in table 5 the calculated z-value is 4.930. this is less than the critical z-value of 1.96 (at 95% level of significance) i.e. zcalculated (4.930) > zcritical (1.96). this result is significant as p-value of 0.00 < 0.05. thus, the null hypothesis is rejected and the alternative hypothesis accepted accordingly. hence, amnesty programme does have economic benefits to the country. 4.1.1. findings of the study the study also exposes the gains accrued as a result of amnesty, as well as the inability of the federal government to fulfill its promises in niger delta region. it also sheds light on the fact that the programme only enriches the militants rather than being channeled to the entire youths of the niger delta. the study further reveals that most of the real militants are still in the creeks demanding to be amnestied. it further reveals that most of the youths who acquired arms and ammunitions during the governor odili political campaign were the so-called asian business research journal, 2016, 1: 1-7 6 © 2016 by the authors; licensee eastern centre of science and education, usa militants that laid down arms and are presently enjoying the amnesty initiative. much as this programme would be acknowledged as succeeding, it is still pertinent to know that many of the ex-militants are rendered idle and jobless in their communities, after the two weeks rehabilitation programme. many of whom were promised to be sent and trained abroad or in school presently have their dreams shattered owing to lack of monitoring or proper integration into the society. therefore, the federal government should muster the political will to extend the term of amnesty to include those seeking to be amnestied, to sustain the relative peace and benefits the amnesty programme brought to the region. 4.1.2. summary of the findings  amnesty programme has significant economic benefits to the country. the calculated z-value is 4.930. this is less than the critical z-value of 1.96 (at 95% level of significance) i.e. zcalculated (4.930) > zcritical (1.96). this result is significant as p-value of 0.00 < 0.05. thus, the null hypothesis is rejected and the alternative hypothesis accepted.  the example of the benefits derived as result of amnesty include: youth empowerment, reduction of vandalisation, human resource development and socio-economic independence and stability, increased revenue in the oil and gas sector, creation of niger delta affairs, high level of productivity, reduction of knapping and sea piracy and increased investment opportunities etc.  there is political interest in the niger-delta crisis, in that the amnesty programme that is meant for the entire niger delta youths is now being targeted at a handful who has “god fathers.”  the nation’s economy which depends largely on oil output has regained stability  5,067 of the amnesty beneficiaries had already graduated in skills acquisition fields such as welding and fabrication[1,847], entrepreneurship[1,609], pipe fitting [150], carpentry and plumbing[206], oil drilling [32], electrical installation [232], ict [125], marine related courses [567] and others[302], while, 95 have been offered direct employment in various governmental and private establishments [field survey 2015] 5. conclusion there is not a single person or organization that would not want to experience peace, even warmongers. this study on the amnesty programme is synonymous with peace. the essence of the amnesty programme in the niger delta is to bring about lasting peace to the troubled region. to this are tied some benefits. it is only in peaceful regions that meaningful collaboration and developments can take place. where there is investment and development, there is influx of income, thus earnings increase and socio-economic development programmes abound, which goes a long way in ensuring the safety and the reduction of societal vices. the cycle goes on. these are all as a result of the realization of peace; via the successful implementation and sustainability of the amnesty programme. in the realization and sustainability of the amnesty progromme, there is need to reflect on the section 44 [3] of the constitution of the federal republic of nigeria and other enactments which vest the entire control and management of oil and gas in nigeria on the federal government. this section of the constitution should be reviewed in favor of regional ownership of petroleum as practiced in usa and canada. constitutional power for the management and control of petroleum must be shared with all arms of government. and also the petroleum policy should be made to reflect how nigeria can develop its petroleum resources in such a way that all nigerians will benefit, in order to maintain and sustain the post-amnesty peace agreement in the region. these will ensure that the gains accrued as a result of amnesty such as: youth empowerment, reduction of vandalization, human resource development and socio-economic independence and stability, increased revenue in the oil and gas sector, creation of niger delta affairs ministry, high level of productivity and investment opportunities would be sustained hence it is very safe to conclude that amnesty does have economic benefits to the country. 6. recommendations the benefits accrued as a result of amnesty programme need to be properly sustained and maintained through the effective evaluation and assessments framework. if they are not embraced in managing post-amnesty programme, the implications should mean that post-amnesty programme would not sustain the niger delta peace agreement [treaties] beyond its timeframe. also post-amnesty programme would be a waste of money, time and human resources and would not bring lasting solution in the region. secondly, if the post-amnesty programme is not properly evaluated as to see whether the relative peace being enjoyed in the region now is the result of amnesty programme or a result of president goodluck ebele being in power, the implication is that there would be more devastation in the region and in the country as a whole after the president’s regime. therefore, it is expedient for the federal government to engage in equitable distribution of resources in the country and elimination of bureaucracy such as: corruption, dehumanization, marginalization, and underdevelopment and deprivation. and to ensure that the niger delta youths are gainfully employed and developed. anything different from this will render the efforts invested in post-amnesty programme a sheer waste. the issue of management of petroleum resources, if not properly handled could lead to greater devastation, political and civil unrest in the niger delta. references academy educational development, 2010. agriculture and achieving the millennium development goals. africa, 2009. nigeria: niger deltacarrying new developmental roadmap. available from www.allafrica.com [accessed 1/2/10]. alloy, o.w. and e. festus, 2009. amnesty to militants sparks off controversy. facts express, 1(4): 6-11. armstrong, m., 2000. strategic human resource management: a guide to action. 2nd edn., london: kogan page. encarta, 2009. available from http://en.wikipedia.org/wiki/movement [accessed february 7, 2008]. goldman, 2002. available from http://en.wikipedia.org/wiki/movement_for_the_survival_of_the_ogoni_people. okoko and a. peterside, 2009. available from http://www.nigeriancuriosity.com/2009/09/nger-delta-amnesty-dividend2009. http://www.allafrica.com/ http://en.wikipedia.org/wiki/movement http://en.wikipedia.org/wiki/movement_for_the_survival_of_the_ogoni_people 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undp. white, e.g., 1995. education –learning from the master teacher. canada: pacific press publishing association oshawa. wikipedia, 2010. nigeria. available from www.wikipedia.org. citation | touitou, tina c (2016). does amnesty programme in niger delta have economic benefit to nigeria? asian business research journal, 1: 1-7. history: received: 13 may 2016 revised: 19 june 2016 accepted: 24 june 2016 published: 4 july 2016 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education funding: this study received no specific financial support. competing interests: the author declares that there are no conflicts of interests regarding the publication of this paper. transparency: the author confirms that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://www.hdcentre.com/ http://www.allafrica.com/ http://allafrica.com/stories/200303060433.html http://www.allafrica.com/ http://www.unitedijawstates.comaccessed/ http://www.wikipedia.org/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 35 © 2019 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 4, 35-43, 2019 issn(e) : 2576-6759 doi: 10.20448/journal.518.2019.41.35.43 © 2019 by the authors; licensee eastern centre of science and education, usa does electricity access relate to stakeholders’ satisfaction? empirical evidence from small and medium enterprises in north-west, nigeria abubakar sabo1 olusegun kazeem lekan2 ( corresponding author) 1department of business administration, faculty of management sciences, usmanu danfodiyo university, sokoto, nigeria. 2department of business management, faculty of management sciences, federal university dutsinma, katsina, katsina state, nigeria. abstract several scholarly studies have been conducted to establish relationships of electricity access to business financial performance. nonetheless, little is known about energy-stakeholders’ satisfaction relationships. the few studies that do exist on the topic often lack control variable. thus, this is the motivation behind the present study. therefore, this paper provides an empirical analysis of the effect of controlling firm characteristics in the energy-stakeholders’ satisfaction relationships. a multiple linear regression model is applied to primary data collected through structured questionnaire in five–point rating scale format to test the hypothesis via spss version 23. results based on cross-sectional survey data from 245 sampled smes operating in the city of kaduna, kano, katsina and sokoto state in manufacturing, hotel & restaurant and wholesale & retail sector show evidence of a strong positive statistically significant relationships between electricity access and smes stakeholders’ satisfaction with electricity access t (245) = 9.138, p < 0.001; firm age t (245) = 4.404, p < 0.001. subject to appreciable effect on stakeholders’ satisfaction, this study recommends an urgent need to step up electricity supply to smes in order to accelerate satisfaction level of firms’ stakeholders. increasing electricity access should involve optimal production and utilization of generation capacity and/or reduction of transmission and distribution losses. above all, smes villages/clusters should be built to promote industrial activities on the basis that access to reliable electricity supply is collectively and affordably provided by the relevant host authorities to investors and operators. keywords: electricity access, stakeholders’ satisfaction, firm age, firm size, leverage, smes. jel classification: l25. contribution of this paper to the literature this paper provides an empirical analysis of the effect of controlling firm characteristics in the energy-stakeholders’ satisfaction relationships. 1. introduction access to a reliable electricity supply is widely considered to be vital and indispensable to the operations of most small and medium enterprises (smes). a scholar (krizanic, 2007) likened indispensability of reliable electric power to the role of food in the body. just as food is needed to survive and grow, reliable electricity is also a necessary condition for businesses to thrive. electricity consumption will increase productivity and therefore growth is achieved. not surprising, most economists today agree that modern energy is a necessary ingredient for stimulating the emergence, growth and continued development of small scale businesses subsector in all societies. however, surveys suggest that, in middle and lower income countries, firms themselves consider access to electricity to be one of the biggest constraints to their business. in the world economic forum global competitiveness report 2013 – 2014, quality of nigeria’s electricity supply ranks 141 out of148 countries. furthermore, 60% of nigerian smes reported losing more than 10% of their sales to power outages. electricity goes on and off five times in an hour (okafor, 2014). this creates serious problems for firms. equipment is damaged by power surges that usually accompany epileptic power and goods at various stages of manufacturing are damaged. limited access to quality and quantity of electricity has remained an unresolved scourge in nigeria. empirical evidence which can be used to validate the relationship between electricity and enterprises stakeholders’ satisfaction is surprisingly scarce. the few studies that do exist on the topic often lack control variable. the research implication is that holistic relationships between the dependent and independent variables may be blurred and drawing clear-cut conclusion might be complicated. this was the motivation behind the present study. hence, the current study seek to contribute to the existing literature by providing an extensive analytical framework that explore the role of control variable that is firm characteristics (firm size, firm age and leverage) in the relationships between electricity access and firms stakeholders’ satisfaction in order to establish a http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2019.41.35.43&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/43 asian business research journal, 2019, 4: 35-43 36 © 2019 by the authors; licensee eastern centre of science and education, usa true link between the studies variables and keep the results reasonable with stronger conclusion. the findings of this research are hoped to add to the existing body of literature, provide a better understanding of the subject matter to entrepreneurs, energy suppliers, policy makers and other modern energy stakeholders, and serve as a frame of future reference to researchers, academics and students. 2. literature review 2.1. review of empirical literature to date existing empirical evidence on the relationship between electricity and stakeholders’ satisfaction of nigerian smes is too sparse for satisfactorily conclusion. substantial studies on this subject matter only give considerable attentions to financial performance of enterprises (profitability, liquidity, growth). for instance, using 1970-2000 panel data for south africa, and a range of 19 infrastructure measures, fadderke and bogetic (2006) found that electricity generation is positively related to labour productivity and total factor productivity growth in south africa. furthermore, kirubi et al. (2009)analysed community-based micro-girds in rural kenya, and showed that use of electricity can increase productivity per worker by approximately 100-200% for carpenters and by 50170% for tailors, depending on the item being produced. in another study, grimm et al. (2011) found that tailors in burkina faso with access to electricity have revenues 51% higher than tailors without electricity, and attribute this to the use of electric sewing machines and longer working hours. although the evidence shows a correlation between electricity consumption and firm productivity, and firms with access to electricity tend to have higher productivity than firms without, establishing causality is complex. this is partly due to the range of exogenous factors, and partly to the nature of the impact of electricity itself. ukpong (1993) applied production function approach to investigate the impact of erratic power supply on selected firms in commercial and industrial sectors in nigeria from 1965-1966. his finding shows that about 130 kw/h and 172kw/h were not supplied to the firms in the two periods. the estimated cost of this is n1.68 million in 1965 and n2.75 in 1966. by implication, he noted that erratic power supply has adverse impact on productivity growth of manufacturing sector in nigeria. in the same vein, akuru and okoro (2011) assessed effect of electricity power outages on the growth and survival of firms in nigeria, established that, between 2000 and 2008 around 820 manufacturing firms were closed down, with the figure moving up to 834 in the following year, all because of poor electricity power supply and high cost on the alternative energy supply. aligned with the foregoing, doe and asamoah (2014) examined effect of electric power fluctuations on the profitability and competitiveness of smes within accra business district of ghana is cross-sectional survey involved a mixed method approach. a sample of 70 ghanaian smes was selected using a systematic sampling approach. data was collected with an interviewer-administered structured questionnaire which focused on the effect of power fluctuation on the operations of smes, especially on the profitability and its resulting effect on the firms’ competitiveness. the spss statistical package was used to group and analyse the data. the study is a singlefactor analysis of the exogenous problems facing the small and medium enterprise sector. the study found that without reliable energy supply, smes are unable to produce in increased quantities and quality leading to poor sales hence low levels of profitability. it is established that low profitability negatively affects return on assets (roa) and return on investment (roi) of smes. consequently, if the level of profitability is high, it is expected that roa and roi will be high and vice versa. with high profits, smes are able to increase their competitiveness. a seminal work by solomon and yao (2015) in a case study among the cold store operators in the asafo market area of the kumasi metro in ghana on electricity power insecurity and smes growth. both primary and secondary data are utilized while purposive and stratified sampling technique are used to select 240 samples. the research findings indicate that, power outage experience has a negative effect on smes growth and pushes the operation cost of businesses high due to the high cost of alternative energy supply and the damages of assets through the power fluctuations. the operational cost in effect also have a damming effect on the growth of the smes, since most of the revenue meant for reinvesting will rather goes to the servicing of electricity and alternative power bills. to clinch the above finding, wang (2002) confirmed negative correlation between frequent (announced) power fluctuations and unannounced power outages with roa and roi. the costs of alternate power sources such as power generators, as well as expenditure on overtime pay to staff and outsourcing service cannot be avoided when there is power outage and that tends to affect the firms roa and roi. it is evident from the aforementioned studies that empirical evidence which explicitly look at the correlation between electricity and satisfaction of smes stakeholders is too scanty for reasonable conclusion. consequently, further research would be necessary. 2.2. theoretical framework there are four major theoretical approaches to study smes performance. the first approach comprises the balanced scorecard (bsc) theory. bsc is a good strategy-management tool; it reviews the entire organization from four balanced perspectives. however, bsc is not sufficient to help smes because it does not examine many competitive and external factors. furthermore, previous research has shown that bsc does not fit the flexible environment of smes because of bsc’s inherent mechanization and inflexibility (mcadam, 2000). the second approach involves performance prism. it is not a prescriptive measurement framework; instead, it is a tool (framework) that helps management teams to think about key questions and strategies to address them. yet, performance prism does not fit into flexible environment and lack dynamic adaptability. besides, it lacks both internal and external determinants measurement. the very same benefits that make the performance prism a strong, comprehensive model, however, also make it difficult to easily utilize. the third approach comprises the activity-based costing (abc) which measures the cost of a resource used to perform organizational activities and then links the activity to the costs of the outputs. abc is a significant smes theory as it includes key performance indicators and based on objective-oriented measures. however, it is difficult to employ abc to measure external factors because it lacks flexibility and dynamic adaptabilities. in addition, abc approach does not reflect competitive performance nor respond tostrategy development. finally, the forth approach is the system theory asian business research journal, 2019, 4: 35-43 37 © 2019 by the authors; licensee eastern centre of science and education, usa which regards an organization as a holistic system. each part of the organization contributes to the system and ensures its survival and continuity. to achieve this objective, managers should not only understand the various parts of their organization and interconnection, but also the relationship of the system to its external environment (jackson, 2003). system theory can help smes to set-up a dynamic and flexible pm system which can measure both internal and external information, including competitive performance and respond quickly to strategy development. subject to the smes performance requirements, system theory satisfies more smes performance (stakeholders’ satisfaction) requirements than other theoretical approaches. consequently, this theoretical approach is adopted in building a performance measurement framework for electricity-reliant smes. 3. research methodology correlational survey research design which is cross-sectional in nature was adopted for this study because data was collected at one time.there are three variables in this research. the independent variable is electricity access; dependent variable is smes stakeholders’ satisfaction and control variable is firm characteristics. the unit of analysis is individual owner-manager. the target population consisted of smes operating in the city of kaduna, kano, katsina and sokoto state, nigeria. multi-stage sampling was applied to collected data from three stratums i.e manufacturing, hotel & restaurant and wholesale & retail sector smes. in the first stage, the smes were purposively selected; the next stage involved stratified sampling while smes were randomly selected in the third stage. a total of 340 sampled smes found with the aid of krejcie and morgan (1970) were invited to participate in the survey. the available data to answer the research questions are readily quantitative and subjective in nature, and were obtained mainly through primary source. a structured questionnaire with closed ended questions is used to gather the study data with a five-point rating scale. out of the 340 questionnaires distributed only two hundred and sixty two questionnaires were returned, which showed that seventy seven percent (77%) of the respondents answered the questionnaires. due to incomplete responses for some of the questions, nineteen (19) questionnaires were not analyzed. the final analysis was performed for only two hundred and forty five questionnaires (72%). the questionnaire consists three parts and was designed to explore the relationships between the research variables. part one comprises questions on smes stakeholders’ satisfaction which was measured using a multiitem scale adopted from previous studies such as hoskisson et al. (2008). thirty items were used to measure smes stakeholders’ satisfaction. each item was measured using a fivepoint rating scale on which the owners had to rate the business satisfaction level over the last three years. 1 indicates short of below average and 5 indicating well above average. in part two, ten (10) items were developed to measure electricity access. part three consists fourteen (14) items to measure firm characteristics. the face and content validity of the questionnaire was ascertained by the assessment of specialists on the topic in order to determine the appropriateness of the items of the instrument, ascertain relevance and clear ambiguity. the coefficient of the cronbach's alpha was employed to determine internal reliability of the instrument which was 0.82 thus, indicated that the items used for the measurement model are technically free from error. descriptive statistics, mainly the frequency, percentage, mean and standard deviation, were used to analyze the data while multiple regression model was applied to test the hypotheses via spss version 23. all statistical tests were carried out at 95% significant level. the results of the hypothesis are presented in the next section. 4. data analysis and results 4.1. descriptive analysis of the main variables table 1 depicts the mean, standard deviation and pearson correlation between the study variables. the total sample selected from the population of this study consists of two hundred and forty five (245) smes. the dependent variables selected for this study is stakeholders’ satisfactions. the independent variable is electricity access while control variables are firm size, firm age and leverage. stakeholders’ satisfactions had a mean of 83.42 with a standard deviation of 17.65. this signifies a fairly high increase in customers’, employees’ and owners’ satisfaction. the results further indicate that during the period of study, accessibility per hour of electricity supply had a mean of 19.9 with a standard deviation of 6.47. low variability of standard deviation implies that electricity supply average is a true representation of the sample mean. however, mean value of 19.9 reflects that the present capacity of electricity supply fall short of requirement. this creates serious problems for electricity-reliant firms. in terms of firm years of operation, the mean and standard deviation are 7.13 and 1.59 while the mean and standard deviation are 7.59 and 1.60 for firm size respectively. this signifies that the firms were dominated by young small scale businesses. it is also revealed that leverage has a mean of 9.10 with a standard deviation of 2.98. this indicates a weak gearing position by the firms with a relatively low variability which could be attributed to the high cost of borrowing as a result of prevailing high interest rates in nigeria. table 2 further provides a matrix of the correlation coefficients for the study variables. each variable is perfectly correlated with itself and so r = 1 along diagonal of the table. all the correlations were significant at 0.05 level. for instance, it is found that electricity access was positively related to stakeholder satisfaction at 0.05 significant levels with pearson correlation coefficient of r = 0.646. the result suggests that electricity supply is vital for smes stakeholders’ satisfaction. this lends credence to the assertion that nearly all organizations need electricity services for proper functioning. on the other hand, weak positive relationship exists between smes stakeholders’ satisfaction and firm size. the relationship was significant at 0.05 levels. pearson correlation coefficient was 0.386 with stakeholder satisfaction. the results give an indication that firm size is positively related to performance in terms of owners, customers and employees satisfaction. furthermore, firm age registered 0.493 correlations with stakeholder satisfaction. the result revealed that firm age has a significant weak positive correlation with smes stakeholder satisfaction. finally, leverage showed a significantly weak positive relationship with smes performance. leverage pearson correlation coefficients was 0.166 with stakeholder satisfaction. the results suggest that firm leverage has comparatively lesser positive but significant correlation to smes stakeholder satisfaction. asian business research journal, 2019, 4: 35-43 38 © 2019 by the authors; licensee eastern centre of science and education, usa table-1.mean and standard deviation of study variables. variables mean std. deviation n elect access 19.19 6.470 245 s. satisfaction 83.42 17.654 245 age 7.13 1.597 245 size 7.59 1.608 245 leverage 9.10 2.988 245 table-2.pearson correlation coefficients of study variables. elect access stakeholders satisfaction age size leverage elect access pearson correlation 1 .646** .456** .330** .059 sig. (2-tailed) .000 .000 .000 .358 n 245 245 245 245 245 s.satisfaction pearson correlation .646** 1 .493** .386** .166** sig. (2-tailed) .000 .000 .000 .009 n 245 245 245 245 245 age pearson correlation .456** .493** 1 .264** .032 sig. (2-tailed) .000 .000 .000 .615 n 245 245 245 245 245 size pearson correlation .330** .386** .264** 1 .014 sig. (2-tailed) .000 .000 .000 .830 n 245 245 245 245 245 leverage pearson correlation .059 .166** .032 .014 1 sig. (2-tailed) .358 .009 .615 .830 n 245 245 245 245 245 4.2. test of hypotheses since positive relationships were found between electricity access, smes stakeholders’ satisfaction and firm characteristics in the correlation analysis, it is deemed necessary to employ regression analysis in order to determine whether there are any predictive relationship between dependent and independent variables. hence multiple regression analysis was performed to predict the research hypothesis. in this analysis, model was developed to establish whether electricity access is significantly related to smes stakeholder satisfaction. if the pvalue is less than 0.05 the null hypothesis stands rejected. but the study accept null hypothesis if otherwise. 4.2.1. hypothesis ho: electricity access is not significantly related to smes stakeholders’ satisfaction. electricity was run against smes stakeholder satisfaction while firm characteristics were included as control variables on two hundred and forty five (245) observations. the result revealed that the model had an r square equal to 0.507 indicating that 50.7% of the variations in smes stakeholder satisfaction are explained by the four variables entered in the model (electricity access, firm size, firm age and leverage). as can be seen in table 3 the difference between the value of r square and adjusted r square (0.507 – 0.499 = 0.006) is very small. this shrinkage value means that if the model were derived from the population rather than a sample it would account for approximately 0.006% less variance in the outcome. consequently adjusted r square indicates that the cross validity of this model is very good. this result was further buttressed with prediction of whether change in r square was significant at an f-ratio of 61.778, which is again significant (p < 0.001). the change statistics therefore revealed the difference made by adding firm characteristics to the model. similarly, the f-statistics (anova) of the model in table 4 equal 61.778, with a p-value equal to 0.000. the anova finding showed that the overall model is a significant predictor of the smes stakeholders’ satisfaction. table-3.relationship between smes stakeholder satisfaction and predictors. model r r square adjusted r square std. error of the estimate change statistics durbinwatson r square change f change df1 df2 sig. f change 1 .712a .507 .499 12.495 .507 61.778 4 240 .000 2.409 a. predictors: (constant), leverage, size, age, elect access. b. dependent variable: stakeholder satisfaction. table-4.variance analysis of smes stakeholder satisfaction and predictor. model sum of squares df mean square f sig. 1 regression 38578.016 4 9644.504 61.778 .000b residual 37467.682 240 156.115 total 76045.698 244 a. dependent variable: stakeholder satisfaction. b. predictors: (constant), leverage, size, age, elect access. the results further indicate in table 5 individual contribution of each predictor to the t-test model. the slope that is b-values show the relationship between smes stakeholder satisfaction and each predictor. for these data all the four predictors have positive b-values signifying positive relationships. so, as electricity access increases by one unit, smes stakeholder satisfaction increase by 1.311 units provided the effect of firm characteristics that is firm age, firm size and leverage are held constant. besides, every additional firm age increase is associated with an extra 2.501 of smes stakeholder satisfaction provided electricity access, firm size and leverage are held constant. beta weight under unstandardized coefficient also indicated that a unit increase on both firm size and leverage can expect addition of smes stakeholder satisfaction of 1.826 and 0.754 respectively provided other predictors too are asian business research journal, 2019, 4: 35-43 39 © 2019 by the authors; licensee eastern centre of science and education, usa held fixed. for this model, electricity supply and firm age were significant predictors of smes stakeholder satisfaction. electricity access t (245) = 9.138, p < 0.001; firm age t (245) = 4.404, p < 0.001; firm size t (245) = 3.434; and leverage t (245) = 2.813. from the magnitude of the t-statistics, electricity supply had the greatest predictive power followed by firm age whereas both firm size and leverage had similar less impact. however, in order to evaluate the strength of each predictor variable in the model, it is important to use the standardized coefficients (beta). the beta weight indicated that electricity supply is the strongest predictor (β = 0.480, p = 0.000). this value indicates that as electricity supply increases by one (1) standard deviation (6.470), smes stakeholder satisfactions increases by 0.480 standard deviation. the standard deviation of smes stakeholder satisfactions is (17.654) and so this constitutes a change of (0.480 x 17.654 = 8.473). therefore, for every 6.470 rises on electricity supply, an extra 8.473 is associated to smes stakeholder satisfactions provided other predictors are held constant likewise, firm age (standardized β = 0.226) this value indicates that as firm age increases by one standard deviation (1.597), smes stakeholder satisfactions also increases by 0.226 standard deviation, the standard deviation for smes stakeholder satisfactions is (17.654) and so this constitute a change of 3.989 stakeholder satisfactions (0.226 x 17.654 = 3.989). therefore, as firm age rises by 1.597 units, 3.989 extra stakeholder satisfactions can be expected. this interpretation is true only if the effects of electricity supply, firm size and leverage are held constant. in additions, firm size (standardized β = 0.166) which implies that as the size increases by one (1) standard deviation (1.608), smes stakeholder satisfactions increases by 0.166 standard deviation. smes stakeholder satisfactions standard deviation is (17.654) and so this result in 2.930 growths (0.166 x 17.654 = 2.930), therefore, a firm with size rating 1.608 higher than another can expect 2.930 additional stakeholder satisfactions. this interpretation is true only if the effects of electricity supply firm age and leverage are held constant. finally, leverage (standardized β = 0.128) signifies that as firm leverage increases by one (1) standard deviation (2.988), smes stakeholder satisfactions also increases by 0.128 standard deviation. the standard deviation for smes stakeholder satisfactions is (17.654) and so this constitutes a change of 2.259 stakeholder satisfactions (0.128 x 17.654). therefore, for every 2.988 rises on leverage, an extra 2.259 is related to smes stakeholder satisfactions unless other predictors are held constant. table-5.multiple regression coefficients of smes stakeholder satisfaction and predictor. model unstandardized coefficients standardized coefficients t sig. correlations collinearity statistics b std. error beta zeroorder partial part toler ance vif 1 (constant) 19.698 5.229 3.767 .000 elect access 1.311 .143 .480 9.138 .000 .646 .508 .414 .743 1.346 age 2.501 .568 .226 4.404 .000 .493 .273 .200 .778 1.286 size 1.826 .532 .166 3.434 .001 .386 .216 .156 .875 1.143 leverage .754 .268 .128 2.813 .005 .166 .179 .127 .996 1.004 a. dependent variable: stakeholder satisfactions. 4.2.2. collinearity statistics table 5 further provided collinearity statistics. the model showed that multi-collinearity was not serious, since the tolerance values all well above 0.2 and vif value are all well below 10; therefore this study safely conclude that there is no multi-collinearity within the data. moreover, the durbin-watson value was 2.409, suggesting no evidence of auto-correlation of the errors. the value of cook’s distance 0.099 less than 1.00 suggest that there is no potential problems with the outliers. 4.2.3. linearity normality andhomoscedastiaty statistics the graph of zresid and spred in figure a (see appendix b) showed a random array of dots evenly dispersed around zero (0). this is an indicative of a situation in which the assumptions of linearity and homoscedasticity were accomplished, for test of normality of residuals, both histogram and normality probability plot in figure a shows that histogram reflects a normal distribution (a bell-shaped curve) while normal probability plot reveals a straight line implies a normal distribution, and the points represents the observed residuals. finally scatter plot, shows the strong positive relationship to smes stakeholder satisfactions. for electricity supply with cloud of dots evenly spaced out around the gradient line, indicating homoscedaslicity. 4.3. discussion of findings the objective of this research was to explore the relationships between electricity supply and smes stakeholder satisfactions. hypothesis was tested using multiple regression analysis to establish the relationships. the multiple regression analysis found statistically significant positive relationship between electricity access and smes stakeholder satisfactions while firm characteristics: firm size, age and leverage were held constant. electricity access and firm age were the strongest predictors of smes stakeholder satisfactions. these results provide compelling evidence in support of the relationships between electricity access and stakeholder satisfactions. generally the results suggest that those who aim to achieve higher satisfaction for business owners, employees and customer etc should consider access to electricity supply and firm age. these results are certainly in parallel with prior writings on the importance of electricity supply and smes performance such as fadderke and bogetic (2006); grimm et al. (2012) and kirubi et al. (2009). the findings of the present study agree with ukpong (1993) that irregular electricity supply has been a major bane to output growth and that erratic power supply has adverse impact on productivity growth of manufacturing sector in nigeria. they recommended that the power sector by means of guided private sector initiative should be given more attention for the growth of the nation’s economy to thrive. asian business research journal, 2019, 4: 35-43 40 © 2019 by the authors; licensee eastern centre of science and education, usa the statistically significant relationships between electricity supply and smes performance affirms the view of solomon and yao (2015) who indicate that power outage experience has a negative effect on smes growth and pushes the operation cost of businesses high due to the high cost of alternative energy supply and the damages of assets through the power fluctuations. the operational cost in effect also have a damming effect on the growth of the smes, since most of the revenue meant for reinvesting will rather goes to the servicing of electricity and alternative power bills. 5. conclusion and recommendations based on the hypothesis results and the research discussion, it can be concluded that there is a strong positive link between energy and smes stakeholder satisfactions while firm characteristics (firm size, firm age and leverage) are kept constant. this significant relationship leads to high prediction power of electricity access, firm characteristics and stakeholder satisfactions. hence, this study recommend that entrepreneurs, energy policy makers and researchers should take cognizance of the significant of electricity access and firm characteristics (firm size, age, leverage) in the process of investigating and analyzing smes stakeholder satisfactions. this is because some variables (electricity access, firm age) are found to have a strong power in predicting stakeholder satisfactions while some variables (firm size and leverage) have weak power in predicting stakeholder satisfactions in nigerian firms. as access to electricity is found to be related to smes stakeholder satisfactions, increasing energy supply in nigerian smes will have a positive influence on stakeholder satisfactions. increasing electricity supply should involve optimal production and utilization of generation capacity and/or reduction of transmission and distribution losses. when this is achieved, the smes subsector will be in position to effectively lead in the drive towards industrializing the nigerian economy. the government should ensure that the smes subsector enjoys higher proportion of the power supply compared with the totality of the other sectors of the economy. smes villages/clusters should be built to promote industrial activities on the basis that access to reliable electricity supply is collectively and affordably provided by the relevant host authorities to investors and operators. in the absence of a better quality supply of electricity, improved quality and information about outages can help. policy makers should help smes by providing reliable load shedding schedules. this would enable them to plan production around outages. above all, if off-grid electrification project is properly harnessed, is a likely solution to the perennial problem of power outages to small scale businesses subsector with the abundance of oil, gas resources and the renewable energies (solar and wind) in nigeria. therefore, efforts should be made by relevant authorities, tasked with the promotion of smes in nigeria, to facilitate the provision and subsidized costs of procuring these renewable energy systems. references akuru, u.b. and o.i. okoro, 2011. economic implications of constant power outages on smes in nigeria. available from https://www.researchgate.net/profile/oi_okoro/publications. doe, f. and e.s. asamoah, 2014. the effect of electric power fluctuations on the profitability and competitiveness of smes: a study of smes within the accra business district of ghana. journal of competitiveness, 6(3): 32-48.available at: https://doi.org/10.7441/joc.2014.03.03. fadderke, j. and z. bogetic, 2006. infrastructure and growth in south africa: direct and indirect productivity impacts of nineteen infrastructure measures. washington d.c: world bank policy reseach working paper. grimm, m., r. hartwig and j. lay, 2011. how much does utility access matter for the performance of micro and small enterprises? available from http://wwww.wds.worldbank.org/external/default. grimm, m., r. hartwig and j. lay, 2012. how much does utility access matter for the performance of micro and small enterprises? available from http://wwww.wds.worldbank.org/external/default. hoskisson, r.e., m.a. hitt and r.d. ireland, 2008. computing for advantage. 2nd edn., cincinnati: thomson south-western. jackson, m., 2003. systems thinking: creative holism for managers. chichester: john wiley & sons, ltd. kirubi, c., a. jacobson, d.m. kammen and a. mills, 2009. community-based electric micro-grids can contribute to rural development: evidence from kenya. world development, 37(7): 1208-1221.available at: https://doi.org/10.1016/j.worlddev.2008.11.005. krejcie, r.v. and d.w. morgan, 1970. determining sample size for research activities. educational and psychological measurement, 30(3): 607-610.available at: https://doi.org/10.1177/001316447003000308. krizanic, f., 2007. the european market of electricity and natural gas. ljuljana: eib forum. mcadam, r., 2000. quality models in an sme context: a critical perspective using a grounded approach. international journal of quality & reliability management, 17(3): 305-323.available at: http://dx.doi.org/10.1108/02656710010306166. okafor, e.e., 2014. reforms in the power sector and implications for industrial development in nigeria: the case of difference between six half a dozen? ibadan journal of the social science, 12(1): 1-18. solomon, k.f. and l. yao, 2015. electricity power insecurity and smes growth: a case study of the cold store operators in the asafo market area of the kumasi metro in ghana. open journal of business and management, 3(3): 312-325. ukpong, i., 1993. an analysis of the causes of power shortage in nigeria. the nigerian journal of economic and social studies, 18(1): 34-39. wang, j.e., 2002. outage costs and strategy analysis for hi-tech industries: a fuzzy multiple goal approach. international journal of quality & reliability management, 19(8/9): 1068-1087.available at: https://doi.org/10.1108/02656710210438131. appendix a part a: electricity supply survey questionnaire. instruction: please respond as candidly as possible to the following statements by rating (√) a number between 1 and 5 that best represents your organization in term of availability per hour of electricity supply as it was during the past three years. use the scale provided below to indicate the option that most accurately reflects your assessment on each statement. choose only one option for each statement. asian business research journal, 2019, 4: 35-43 41 © 2019 by the authors; licensee eastern centre of science and education, usa very low low average high very high 1 2 3 4 5 electricity supply es01 number of uninterrupted power supply in a typical month 1 2 3 4 5 es02 duration of a typical reliable electricity supply 1 2 3 4 5 es03 if there were uninterrupted power supply, average duration of a typical reliable power supply 1 2 3 4 5 es04 maximum percentage voltage fluctuation during a month. 1 2 3 4 5 es05 number of enterprises rely only on grid electricity 1 2 3 4 5 es06 duration of firm operation relying on grid electricity 1 2 3 4 5 es07 gains due to reliable electricity access in terms of percentage annual sales 1 2 3 4 5 es08 monthly quality of reliable electricity consumed 1 2 3 4 5 es09 average outage time during a month. 1 2 3 4 5 es10 if grid electricity is used, average proportion of electricity supply from grid 1 2 3 4 5 part b:smes performance survey questionnaire. instruction: please respond as candidly as possible to the following statements by rating (√) a number between 1 and 5 that best represent your organization non-financial performance (stakeholders satisfaction) as it was during the past three years. use the scale provided below to indicate the option that most accurately reflects your assessment on each statement. choose only one option for each statement. very low low average high very high 1 2 3 4 5 employees satisfaction es01 investments in employees development and training 1 2 3 4 5 es02 extent of employees turnover 1 2 3 4 5 es03 number or percentage of employees promoted during a year 1 2 3 4 5 es04 percentage of employees who rated their careers development opportunities as above or excellent in the annual employee survey 1 2 3 4 5 es05 extent of competitiveness of compensation package 1 2 3 4 5 es06 safe work conditions 1 2 3 4 5 es07 pleasant work environment 1 2 3 4 5 es08 fairness of your firm wage and reward policies 1 2 3 4 5 es09 extent of inclusion on list of best companies your employees wish to work for. 1 2 3 4 5 es10 extent of employees’ inclusion in decision matter to them. 1 2 3 4 5 customers satisfaction cs01 number of complaints per customers per year 1 2 3 4 5 cs02 percentage of time customers ranking products/services very good or excellent on survey 1 2 3 4 5 cs03 average number of time customers report on products/services quality. 1 2 3 4 5 cs04 perceived customers fair treatment during transaction 1 2 3 4 5 cs05 extent of your organization product safety concern 1 2 3 4 5 cs06 percentage of time customers ranking your company innovation very good or excellent on survey 1 2 3 4 5 cs07 repurchase rate 1 2 3 4 5 cs08 number of new products/services launched during a year. 1 2 3 4 5 cs09 number of goods returned per year. 1 2 3 4 5 cs10 general customers satisfaction 1 2 3 4 5 owners satisfaction os01 extent of return on investment 1 2 3 4 5 os02 extent of liquidity soundness 1 2 3 4 5 os03 perceived riskiness of investment 1 2 3 4 5 os04 average number of stockholders proposals per year 1 2 3 4 5 os05 extent of compensation levels of top managers 1 2 3 4 5 os06 extent of stability of investment 1 2 3 4 5 os07 extent of price-to-earnings ratio 1 2 3 4 5 os08 rate of market-share growth 1 2 3 4 5 os09 extent of ownership concern and attention 1 2 3 4 5 os10 general stockholders satisfaction. 1 2 3 4 5 part c: smes characteristics survey questionnaire. instruction: please respond as candidly as possible to the following statements by rating (√) a number between 1 and 5 that best represents your organization in term of size and leverage as it was during the past three years. use the scale provided below to indicate the option that most accurately reflects your assessment on each statement. choose only one option for each statement. asian business research journal, 2019, 4: 35-43 42 © 2019 by the authors; licensee eastern centre of science and education, usa very low low average high very high 1 2 3 4 5 size s01 total asset turnover 1 2 3 4 5 s02 sales level 1 2 3 4 5 s03 number of employee 1 2 3 4 5 s04 ability to fund growth 1 2 3 4 5 s05 working capital to sales 1 2 3 4 5 leverage le01 debt to equity 1 2 3 4 5 le02 long – term debt to equity 1 2 3 4 5 le03 time interest earned 1 2 3 4 5 le04 stockholders capital to total capital 1 2 3 4 5 age a01: how long has your firm been in operation? less than 5 years 1 5 – 10 years 2 11 – 15 years 3 16 – 29 years 4 above 20 years 5 a02: when was your enterprise incorporated? less than 5 years ago 1 5 – 10 years ago 2 11 – 15 years ago 3 16 – 29 years ago 4 more than 20 years ago 5 a03: how many years of business experience does your enterprise has? less than 5 years 1 5 – 10 years 2 11 – 15 years 3 16 – 29 years 4 above 20 years 5 a04: how long was your enterprise in existence? less than 5 years 1 5 – 10 years 2 11 – 15 years 3 16 – 29 years 4 above 20 years 5 a05: how long was your enterprise in business trading? less than 5 years 1 5 – 10 years 2 s11 – 15 years 3 16 – 29 years 4 above 20 years 5 appendix b figure-a. histogram, normal p-p plot and scatterplot. asian business research journal, 2019, 4: 35-43 43 © 2019 by the authors; licensee eastern centre of science and education, usa figure-b. scatterplot. figure-c. normal p-p plot. citation | abubakar sabo; olusegun kazeem lekan (2019). does electricity access relate to stakeholders’ satisfaction? empirical evidence from small and medium enterprises in north-west, nigeria. asian business research journal, 4: 35-43. history: received: 17 september 2019 revised: 21 october 2019 accepted: 26 november 2019 published: 30 december 2019 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education acknowledgement: both authors contributed to the conception and design of the study. funding: this study received no specific financial support. competing interests: the authors declare that they have no conflict of interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 28 © 2020 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 5, 28-38, 2020 issn: 2576-6759 doi: 10.20448/journal.518.2020.5.28.38 © 2020 by the authors; licensee eastern centre of science and education, usa measuring the new governance pillar of agrarian sustainability at farm, sectoral and national level in bulgaria hrabrin bachev institute of agricultural economics, sofia, bulgaria. abstract in bulgaria, like in many other countries, practically there are no comprehensive assessments of the governance sustainability of agriculture and its importance for the overall agrarian development. this study tries to fill the gap and suggests a holistic framework for understanding and assessing the governance sustainability of bulgarian agriculture. the newly elaborated approach is “tested” in a large-scale study for assessing the governance sustainability of country’s agriculture at national, sectoral, and farm levels. the study has proved that it is important to include the “missing” governance pillar in the assessment of the integral sustainability of agriculture and sustainability of agro-systems of various types. multiple principles, criteria and indicators assessment of the governance sustainability of bulgarian agriculture indicates that the overall governance sustainability is at a “good” but very close to the “satisfactory” level. besides, there is a considerable differentiation in the level of integral governance sustainability of different agro-systems in the country. what is more, the individual indicators with the highest and lowest sustainability values determine the “critical” factors enhancing and deterring the particular and integral governance sustainability of evaluated agro-system. last but not least important, results on the integral agrarian sustainability assessment based on micro (farm) and macro (statistical, etc.) data show some discrepancies which have to be taken into consideration in the analysis and interpretation, while assessment indicators, methods and data sources further improved. keywords: governance sustainability, assessment, agriculture, subsectors, agro-regions, agro-ecosystems, farming organizations, bulgaria. jel classification: q12, q18, q56. 1. introduction a common feature of all suggested and practically used modern systems for assessing sustainability of agrosystems is incorporation of three “dimensions” or “pillars” of sustainability economic, social and environmental (bachev, ivanov, toteva, & sokolova, 2017; cruz, mena, & rodríguez-estévez, 2018; ec, 2001; fao, 2013; hayati, ranjbar, & karami, 2010; kamali, borges, meuwissen, de boer, & lansink, 2017; lópez-ridaura, masera, & astier, 2002; lowrance, hendrix, & odum, 2015; oecd, 2001; sauvenier et al., 2005; singh, murty, gupta, & dikshit, 2009; terziev, radeva, & kazakova, 2018; vanloon, patil, & hugar, 2005). in the last years a special attention has been increasing put on the (good) “governance” as a key for achieving multiple goals of sustainable development at corporate, sectoral, national and international levels (bachev, 2010; bosselmann, engel, & taylor, 2008; eu, 2019; gibson, 2006; kayizari, 2018; simberova, kocmanova, & nemecek, 2012; un, 2015). what is more, the list of sustainability objectives has been constantly enlarged encompassing numerous governance, cultural, ethical etc. standards and goals (bachev, 2010; scobie & young, 2018). simultaneously “new” (cultural, human, governance, etc.) pillars has been widely added to the modern definition of sustainability and the systems of its evaluation and management (altinay, 2012; asa, 2019; bachev, 2018; nurse, 2006; rmit university, 2017; uclg, 2014). the need to include “the fourth” governance pillar in the concept for understanding and the system of measurement of sustainability is increasingly justified in academic literature (bachev, 2018; bachev, 2010; baeker, 2014; fraser, dougill, mabee, reed, & mcalpine, 2006; monkelbaan, 2017) as well as finds place in the official documents of different (government, international, private, etc.) organizations (city of brooks, 2019; eu, 2019; ifad, 1999). accordingly, numerous indicators are proposed to evaluate the governance aspect of sustainability mostly at national and international level including the state of formal institutional framework, implementing policies and strategies, human resources development, established capacity, management of public authorities, stakeholder involvement in public decision-making and control, etc. (bell & morse, 2008; bhuta & umbach, 2014; coastalwiki, 2019; ganev, popova, & bönke, 2018; monkelbaan, 2017; spangenberg, pfahl, & deller, 2002). nevertheless, the building of the system for understating and assessing the “new” governance aspect (pillar) of agrarian sustainability is a “work in progress”. http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2020.5.28.38&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/76 https://orcid.org/0000-0003-0555-7468 asian business research journal, 2020, 5: 28-38 29 © 2020 by the authors; licensee eastern centre of science and education, usa in bulgaria, like in many other countries, there are a very few studies on governance issues related to agrarian sustainability (bachev, 2018; bachev, ivanov, toteva, & sokolova, 2016; bachev & terziev, 2018; bachev, 2010; georgiev, 2013; marinov, 2019; sarov, 2019) and the governance aspect (pillar) of agrarian sustainability (bachev, 2016; bachev, ivanov, & sarov, 2020; bachev & terziev, 2017; bachev & terziev, 2019; bachev, 2018; bachev, 2017). moreover, practically there are no comprehensive assessments of the governance sustainability in the sector and its importance for the overall agrarian sustainability at present stage of development. this paper tries to fill the gap and suggests a holistic framework for assessing the governance sustainability of bulgarian agriculture. the newly elaborated approach is applied (tested) in a first in kind large-scale study for assessing the governance sustainability of country’s agriculture at national, sectoral, and farm levels. 2. study method and data sustainability of agriculture is a “system characteristic” and has to be perceived as “ability to continue over time” (bachev, 2005; hansen, 1996). it characterizes the ability (internal capability and adaptability) of agriculture to maintain its managerial, economic, social and environmental functions in a long period of time. agrarian sustainability has four major aspects (“pillars”) which are equally important and have to be always accounted for – governance sustainability, economic sustainability, social sustainability, and environmental sustainability. the “governance sustainability” characterizes the efficiency of the specific system of governance in an evaluated agro-system (national, subsector, ecosystem, regional, farming enterprise, etc.). accordingly, a “good governance” means a superior governance sustainability, while a “bad” (inefficient) governance corresponds to inferior governance sustainability. maintaining multiple functions (sustainability) of agriculture requires an effective social order a system of diverse (governing) mechanisms and forms regulating, coordinating, stimulating, and controlling the behavior, actions and relations of individual agents at various levels – farm, local, regional, national, transnational, global (bachev, 2010). the system of governance includes a number of district components all of which have to be included in the sustainability assessment institutional environment (“rule of the game’), market modes and mechanisms (“market order’), private modes and mechanisms (“private order’), and public modes and mechanisms (“public order’) figure 1. figure-1. components and levels of assessment of governance sustainability in agriculture. in order to identify the individual indicators for assessing the (governance) sustainability of bulgarian agriculture a hierarchical system of well-determined principles, criteria, indicators, and reference values for each aspect (pillar) of sustainability is elaborated. detailed justification of that new approach, and the ways and criteria for selection of sustainability principles, criteria, indicators and reference values are presented in other publications by bachev (2017); bachev (2018) and bachev et al. (2017); (bachev et al., 2020). the governance sustainability principles are “universal” and relate to the multiple functions of the agriculture representing the states of the sustainability, which is to be achieved figure 2. for the “specific” contemporary conditions of bulgarian (and european union) agriculture following five (governance sustainability) principles asian business research journal, 2020, 5: 28-38 30 © 2020 by the authors; licensee eastern centre of science and education, usa related to the generic (five) mechanisms and modes of governance1 are identified: “good legislative system”, “democratic management”, “working agrarian administration”, “working market environment”, and “good private practices”. the governance sustainability criteria are precise standards (“measurement approaches”) for each of the principle representing a resulting state of the evaluated system when the relevant sustainability principle is realized. for the contemporary conditions of the bulgarian agriculture 20 criteria for assessing diverse aspects of the governance sustainability are specified. for instance, for the principle “good legislative system” four criteria are selected: “harmonization with the european union policies”, “extent of the european union policies implementation”, “beneficiaries’ satisfaction of the european union policies”, and “policies effects”. the governance sustainability indicators are quantitative and qualitative variables of different types which can be assessed in the specific conditions of the evaluated agri-system allowing measurement of compliance with a particular criterion. the set of indicators provides a representative picture for the agrarian sustainability in all its aspects. for assessing the governance sustainability of the bulgarian agriculture at micro (farm) and macro (sectoral, regional, eco-system, etc.) levels a system of respectively 22 and 26 indicators are specified2. for instance, for the criteria “policies effects” an indicator “level of subsidies comparing to the average for the sector” is selected for farm level, as well as two indicators for the aggregate (sectoral) level – “coefficient of subsidies distribution from pillar 1” and “coefficient of distribution of investment support comparing to share in net value added”. for assessing the particular sustainability level a system of specific reference values (sustainability norms, range, and standards) for each indicator is needed. the governance sustainability reference values are the desirable levels for each indicator according to the specific conditions of the evaluated agro-system. they assist the assessment of the sustainability levels giving guidance for achieving (maintaining, improving) particular aspect and the overall agrarian sustainability. most of the reference values show the level(s), at which the long-term sustainability of agrarian governance sustainability is “guaranteed” and improved. depending on the extent of the reference value achievement the evaluated agro-system may be with a “high”, “good”, or “low” sustainability, or to be “unsustainable”. for instance, agrarian system with a higher than the sectoral public support (level of subsidies) is more sustainable then others as far as “policy effects” are concerned, and vice versa. very often individual indicators for each criterion and/or different criteria, and principles of sustainability are with unequal, and frequently with controversial levels. that significantly hardens the overall assessment requiring a transformation into “unitless” sustainability index and integration of estimates. diverse quantitative and qualitative levels for each indicator are transformed into a index of sustainability (isi) applying appropriate scale for each indicator (bachev et al., 2018). the integral sustainability index for a particular criterion (si(c)), principle (si(p)), and aspect of sustainability (si(a)), and the integral sustainability index (si(o)) for evaluated agro-system is calculated applying “equal weight” for each indicator in a particular criterion, of each criterion in a particular principle, and each principle in every aspect of sustainability. using “equal” rather than differentiated weight is determined by the fact that individual sustainability aspects, and indeed sustainability principles, are “by definition” equally important for the integral agrarian sustainability. at the same time, differentiation of the weights of individual criteria within each principle and the individual indicators within each criteria is difficult to justify as well as to a great extent unnecessary (practically unimportant for the integral assessment) having in mind the big number and small relative contribution of each indicator3. the integral index for a particular criterion (si(c)), principle (si(p)), and aspect of sustainability (si(a)), and the integral sustainability index (si(o)) are arithmetic averages of the indices of composite indicators, criteria and principles. for assessing the level of governance and integral sustainability of agro-systems in bulgaria the following scale, defined by the leading experts in the area (bachev et al., 2018) are used: index range 0,81-1 for a “high” level of sustainability; index range 0.50-0,8 for a “good” level of sustainability; index range 0,26-0,49 for a “satisfactory” level of sustainability; index range 0,06-0,25 for an “unsatisfactory” level of sustainability; index range 0-0,05 for “non-sustainable” state. elaborated holistic framework for assessing the governance sustainability of bulgarian agriculture is tested using experts and stakeholders assessments, and 2018 survey data from the managers of 104 “typical farms” of different size and juridical type, production specialization, and ecological and geographical locations. the structure of surveyed farms approximately corresponds to the real structure of farms in different categories in bulgaria. classification of the surveyed farms into juridical type, size, production specialization, and ecological and geographical location is done according to the official definitions currently used in bulgaria (and european union). in bulgaria, like in many other countries, there are no official data for calculating most of the governance, socio-economic and environmental sustainability indicators at lower (farm, eco-system, subsector, regional, etc.) level (bachev et al., 2018). therefore, micro and middle level assessment of socio-economic, environmental and governance sustainability is entirely based on the “original” first-hand information collected from the farm managers. the composite (aspect and integral) sustainability index of each evaluated agri-system (farming organization, agricultural subsector, agri-ecosystem, geographical region, etc.) is calculated as an arithmetic average of the indices of relevant farms belonging to that system. 3. results and discussion a multiple indicators assessment of the governance sustainability level of bulgarian agriculture indicates that the index of overall sustainability is 0,51 this represents a close to the lower (“satisfactory”) but still a “good” level of governance sustainability of the sector figure 2. 1components of the governance system of agriculture is comprehensively presented by bachev. (2010). 2for the selection of the sustainability indicators a number of criteria, broadly applied in the sustainability assessment literature and practices, were used: “relevance to reflecting aspects of sustainability”, “discriminatory power in time and space”, “analytical soundness”, “intelligibility and synonymity”, “measurability”, “governance and policy relevance”, and “practical applicability” (sauvenier et al., 2005). 3 calculations with and without differentiated weights do not find any significant variations in the sustainability levels (bachev et al., 2019). asian business research journal, 2020, 5: 28-38 31 © 2020 by the authors; licensee eastern centre of science and education, usa figure-2. levels of governance, economic, social, environmental and integral sustainability of bulgarian agriculture. analysis of individual indexes for the primary sustainability principles, criteria, and indicators allows identifying individual components contributing to the governance sustainability of this important sector of bulgarian economy. for instance, the governance sustainability of bulgarian agriculture is relatively low because the index for the principle “good private practices” is at “satisfactory” level (0,46) and compromises the pillar’s integral sustainability figure 3. moreover, indices for “good legislative system” and “democratic management” are quite low and at the border with the “satisfactory” level 0,5 and 0,51 accordingly. at the same time, indices for the principles “working agrarian administration” (0,55) and “working market environment” (0,54) are highest and contribute most for elevating (ensuring) the governance sustainability of the sector. figure-3. indices of sustainability for major principles of governance sustainability of bulgarian agriculture. in depth analysis of the levels of the individual criteria and indicators further specifies the elements that enhance or reduce country’s agricultural governance sustainability. for instance, the insufficient “good private practices” is determined by the low “external control” (over management) (0,38), weak “contracts enforcement” (0,49) and inferior “informal system efficiency” (0,43) figure 4. similarly, despite that the integral index for “democratic management” principle is at a “good” level, indices for two criteria (policies) “impact” and “stakeholder participation in decision-making”) are quite low at satisfactory territory. likewise, “working agrarian administration” seems “good” but “access to administrative services” is actually very low (0,34) at “satisfactory” sustainability level. the same is true for the “working market environment” which is “good” while index for the criteria “resource concentration” reviles low sustainability (0,43). asian business research journal, 2020, 5: 28-38 32 © 2020 by the authors; licensee eastern centre of science and education, usa figure-4. indices of sustainability for major criteria* of governance sustainability of bulgarian agriculture. *c1-extent of policies implementation; c2-extent of beneficiary satisfaction of eu policies; c3-policies effects; c4-representation; c5-transparency; c6-impact; c7-stakeholder participation in decision-making; c8-minimum costs of using; c9-access to administrative services; c10-information availability; c11-quality of services; c12-market access; c13free competition; c14-competitive allocation of public resources; c15-resource concentration; c16-regulation implementation; c17-external control; c18-contracts enforcement; c19-informal system efficiency. individual sustainability indicators give precise information about the specific factors determining one or another values of a particular criteria. for example, ineffective “access to administrative services” is determined accordingly by the insufficient “agrarian administration efficiency” (0,31) and undeveloped “administrative services digitalization” (0,37) figure 5. likewise “satisfactory” sustainability for the “resource concentration” is a consequence of the (low) “possibility for lands extension“ (0,37). figure-5. indicators* for assessing the governance sustainability of bulgarian agriculture. * i1-extent of cap implementation; i2-extent of beneficiary satisfaction of eu policies; i3-subsidies distribution; i4-representativeness of state and local authorities; i5-access to information; i6-subsidies in income; i7-farmer’s participation in decision-making; i8-acceptability of legal payments; i9-agrarian administration efficiency; i10-administrative services digitalization; i11-extent of awareness; i12administration service costs; i13-market access difficulties; i14-market competition; i15-prices negotiation possibilities; i16-extent of competitive allocation of public resources; i17-lands concentration; i18possibility for lands extension; i19-extent of regulations implementation; i20-management board external control; i21-extent of contract enforcement; i22level of informal system efficiency. asian business research journal, 2020, 5: 28-38 33 © 2020 by the authors; licensee eastern centre of science and education, usa the low values for the indicators help identify specific areas that require improvement through adequate changes in the institutional environment, public policy, modernization of agrarian administration, collective actions and/or management strategies. at the current stage of the development the most critical for increasing the governance sustainability of country’s agriculture are progressive improvements in following directions: “farmer’s participation in decision-making” (0,31), “agrarian administration efficiency” (0,31), “administrative services digitalization” (0,37), “possibility for lands extension” (0,37), “management board external control” (0,38), “level of informal system efficiency” (0,43), “subsidies in income” (0,48), “extent of contract enforcement” (0,49), “acceptability of legal payments” (0,5), and “lands concentration” (0,5). the higher levels of certain indicators show the absolute and comparative advantages of the bulgarian agriculture in terms of good governance and sustainable development. at the current stage of development, the most prominent of these include: “representativeness of state and local authorities” (0,58), “market competition” (0.6), “extent of competitive allocation of public resources” (0.6), “access to information” (0.65), “extent of awareness” (0.66), and “administration service costs” (0.68). nevertheless, the top value(s) of the governance sustainability indicators in bulgarian agriculture is relatively low. therefore, there is a great potential for improvement of governance efficiency and further elevate the governance and overall sustainability. the analysis of the governance sustainability of different sub-sectors of bulgarian agriculture shows that there is a great variation in the sustainability level. the highest (“good”) level of governance sustainability is demonstrated in the “mix livestock” production (0,59), followed by the “vegetables, flowers, mushrooms” and “mix crop-livestock” sectors (0,53) figure 6. therefore, these three subsectors contribute to greatest extent for improving (maintaining) the overall governance sustainability of bulgarian agriculture. on the other hand, the level of governance sustainability in the “grazing livestock” (0,52), “permanent crops” (0,5), and “beekeeping” (0,5) is close to the average in the sector. finally, in some major subsectors like “field crops” (0,47) and “mix crops” (0,49), the level of the governance sustainability is “satisfactory” and far below the general one. this means that the later subsectors decrease in a biggest degree the integral governance sustainability of country’s agriculture. figure-6. governance sustainability in different sub-sectors of agriculture in bulgaria. the different sub-sectors of bulgarian agriculture are characterized by significant variation of the levels of indices of the main principles of the governance sustainability figure 7. for instance, the principle “good legislative system” is the best realized in the “vegetables, flowers, mushrooms” production (0,58) and “mixlivestock” operations (0,57), and the worst in “field crops” and “grazing livestock” sub-sectors (0,47). the principle of “democratic management” is the best applied in the “mix livestock” production (0,62), while it is not “satisfactory” in the “beekeeping” (0,46), and “mix crops” and “mix crop-livestock” sub-sectors (0,49). the interior and superior levels of the governance sustainability for particular principles show the directions for improving the governance sustainability in the relevant sub-sectors of agriculture. the principle “working agrarian administration” is effectively applied in “beekeeping” (0,57), and “grazing livestock” and “mix crop-livestock” (0,56), while agrarian administration does not “work” well in the sector of “field crops” (0,44). the sustainability for the principle “working market environment” is the highest in “mix livestock” (0,64), “beekeeping” (0,63) and “mix crop-livestock” (0,58). simultaneously, market mechanisms are not working very well for the “field crops” producers (0,5). finally, “good private practices” are the best implemented in the subsector of “mix livestock” (0,62) and “mix crop-livestock” (0,5), while in all other subsectors they are applied only “satisfactorily”, being particularly inferior in the “beekeeping” (0,37) and “field crops” (0,41). 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 asian business research journal, 2020, 5: 28-38 34 © 2020 by the authors; licensee eastern centre of science and education, usa figure-7. indices of the principles of governance sustainability in major sub-sectors of bulgarian agriculture. in depth analysis of that type identifying inferior (critical) levels for sustainability principles has also a high practical value since they show the specific directions (public, collective and private action areas) for improving the particular (principle) and the integral governance sustainability in the evaluated subsector and agriculture in general. further analysis of the sustainability level for the individual indicators allows “complete” unpacking the “critical” factors enhancing and/or decreasing the governance sustainability of each sub-sector. our assessment has found out that different agricultural sub-sectors in bulgaria are characterized by a significant variation in the levels of individual governance sustainability indicators figure 8. asian business research journal, 2020, 5: 28-38 35 © 2020 by the authors; licensee eastern centre of science and education, usa figure-8. governance sustainability indicators in different crop sub-sectors of bulgarian agriculture. the system of governance of bulgarian agriculture does not impact equally farms with different juridical type and size of operations. the governance sustainability of agriculture is the highest for the “semi-market” (“mainly subsistence farms”) and “cooperative” (“cooperatives”) sectors – the integral governance sustainability index for these type of farming organizations is much higher than the sectoral average 0,62 and 0,56 accordingly figure 9. other main juridical type of farms like “physical persons” and the “middle size” farming enterprises also have higher than the average governance sustainability index (0,52). therefore, all these four types of farming organizations contribute to the greatest extent to increasing (maintaining) the “good” governance sustainability of bulgarian agriculture. at the same time, for the “small size” farms the governance sustainability is below the national one and at the border with the “satisfactory” level (0,5). furthermore, for the “agro-firms” and “big size” farming enterprises the governance sustainability is at “satisfactory” level 0.47 and 0.45 accordingly. consequently, these major type of farming enterprises diminish to the greatest extent the overall governance sustainability of country’s agriculture. figure-9. governance sustainability for major type of farming organizations in bulgaria. the main principles of the governance sustainability are applied (“work”) differently in relations to various type of bulgarian farms. the governance sustainability principles “good legislative system”, “democratic management” and “good private practices” the most favorably affect the “cooperatives” and “mainly subsistence” farms (indices of sustainability accordingly 0,65 and 0,7; 0,55 and 0,67; 0,64 and 0,56) figure 10. the governance sustainability principle “working agrarian administration” is the most effectively implemented in regards to “mainly subsistence” holdings (0,66), “physical persons (0,55) and middle size farms (0,55). the governance sustainability principle “working market environment” is more favorable for the “middle size” (0,57) and “small size” (0,56) farms. on the other hand, the individual principles for the governance sustainability of agriculture are worse applied in and adversely impact different type of farms. the sustainability for the “good legislative system” principle is at “satisfactory” level for the “agro-firms” (0,41) and “small size” farms (0,48). the sustainability principle “democratic management” is at “satisfactory” level only for the “big size” farming enterprises (0,47). implementation of the principle “working agrarian administration” is inferior (“satisfactory”) for the “big size” farms (0,4) and “cooperatives” (0,43); the sustainability principle “working market environment” does not work well for the “big size” farms (0,38) and “agro-firms” (0,48); and “good private practices” are not applied sufficiently and badly affect “agro-firms” (0,43), “middle size” farms (0,45), “physical persons” (0,46), and “small size” holdings (0,47). asian business research journal, 2020, 5: 28-38 36 © 2020 by the authors; licensee eastern centre of science and education, usa figure-10. indices of the principles of governance sustainability for major type of bulgarian farms. furthermore, there is significant variation in the level of individual sustainability indicators in farms of different type and size figure 11. 4. conclusions this first in kind comprehensive assessment of the governance sustainability of bulgarian agriculture let make some important specific conclusions about the state of (governance) sustainability of diverse agro-systems, and recommendations for improvement of the managerial and assessment practices. the elaborated and experimented holistic approach gives a possibility to improve the overall and governance sustainability assessment. therefore, it has to be further discussed, experimented, improved and adapted to the specific conditions of evaluated agricultural systems and needs of decision-makers at different levels. multiple principles, criteria and indicators assessment of the governance sustainability of bulgarian agriculture indicates that the overall sustainability is at a “good” but very close to the “satisfactory” level. besides, there is a considerable differentiation in the level of integral governance sustainability of different agro-systems in the country – agricultural subsectors, and type of farming organizations. what is more, the individual indicators with the highest and lowest sustainability values determine the “critical” factors enhancing and deterring the particular and integral governance sustainability of evaluated agro-system. having in mind the importance of holistic assessments of this kind for improving the agrarian sustainability in general, and the governance sustainability of agriculture in particular, they are to be expended and their precision and representation increased. the later requires improvement of the precision through enlargement of surveyed farms and stakeholders, and incorporating more “objective” data from surveys, statistics, expertise of professionals in the area, 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(2005). agricultural sustainability: strategies for assessment. london: sage publications. citation | hrabrin bachev (2020). measuring the new governance pillar of agrarian sustainability at farm, sectoral and national level in bulgaria. asian business research journal, 5: 28-38. history: received: 7 july 2020 revised: 11 august 2020 accepted: 14 august 2020 published: 23 september 2020 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education funding: this study received no specific financial support. competing interests: the author declares that there are no conflicts of interests regarding the publication of this paper. transparency: the author confirms that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://www.sgi-network.org/docs/2018/basics/sgi2018_overview.pdf http://www.sgi-network.org/docs/2018/basics/sgi2018_overview.pdf http://www.aydin.edu.tr/tr-tr/arastirma/arastirmamerkezleri/afrikam/documents/oturum%203%20-%20good-governance-as-a-pillar-for-sustainable-development-in-africa_caesarkayizari.pdf http://www.aydin.edu.tr/tr-tr/arastirma/arastirmamerkezleri/afrikam/documents/oturum%203%20-%20good-governance-as-a-pillar-for-sustainable-development-in-africa_caesarkayizari.pdf http://www.aydin.edu.tr/tr-tr/arastirma/arastirmamerkezleri/afrikam/documents/oturum%203%20-%20good-governance-as-a-pillar-for-sustainable-development-in-africa_caesarkayizari.pdf http://www.aydin.edu.tr/tr-tr/arastirma/arastirmamerkezleri/afrikam/documents/oturum%203%20-%20good-governance-as-a-pillar-for-sustainable-development-in-africa_caesarkayizari.pdf http://www.aydin.edu.tr/tr-tr/arastirma/arastirmamerkezleri/afrikam/documents/oturum%203%20-%20good-governance-as-a-pillar-for-sustainable-development-in-africa_caesarkayizari.pdf http://www.aydin.edu.tr/tr-tr/arastirma/arastirmamerkezleri/afrikam/documents/oturum%203%20-%20good-governance-as-a-pillar-for-sustainable-development-in-africa_caesarkayizari.pdf http://www.futurelearn.com/courses/sustainable-business/1/steps/157438 http://www.futurelearn.com/courses/sustainable-business/1/steps/157438 http://books.ksplibrary.org/978-605-2132-57-9-2/ http://books.ksplibrary.org/978-605-2132-57-9-2/ http://books.ksplibrary.org/978-605-2132-57-9-2/ http://books.ksplibrary.org/978-605-2132-57-9-2/ http://www.un.org/sustainabledevelopment/sustainable-development-goals/ http://www.un.org/sustainabledevelopment/sustainable-development-goals/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 44 © 2019 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 4, 44-53, 2019 issn : 2576-6759 doi: 10.20448/journal.518.2019.41.44.53 © 2019 by the authors; licensee eastern centre of science and education, usa co-creation with ceramic practitioner for improving the marketing and enhancing the customer purchase experiences yu qinghua1 yukari nagai2 luo yinghuang3 ( corresponding author) 1japan advanced institute of science and technology, japan and jingdezhen ceramic institute, jingdezhen, china. 2japan advanced institute of science and technology, japan. 3hanshan normal university, chaozhou, china. abstract background: as china's porcelain capital, jingdezhen has had a glorious history of producing ceramics for thousands of years. nevertheless, the private ceramics sector industry is going through a development bottleneck nowadays. this research aims to utilize service design tools to co-create values with local ceramic practitioners, to improve marketing of ceramics and enhance user`s purchase experiences. methodology: 1) devised likert's 7-point scale by open-ended interview approach to clarify the existing problems to collect quantitative data. 2) analyzed the collected data by one-way anova to identify the different opinions of 87 interviewed subjects. 3) employed co-creation method and service design tools to design the online-offline service system. findings: 1) through qualitative and quantitative methods identified the target researched group was the young group (age range from 20 to 30). their insights used to co-create and design an online-offline marketing system in four steps why, what, who and how. 2) utilizing service design tools to clarify the service contents, main stakeholders, marketing models, touchpoints and how they are connected and interacting. finally, designing an application to facilitate online purchase to improve user experience. keywords: purchase experience, online-offline, service design tools, marketing, co-creation, jingdezhen. contribution of this paper to the literature this study contributes to existing literature by utilizing service design tools to co-create values with local ceramic practitioners, to improve marketing of ceramics and enhance user`s purchase experiences. 1. introduction 1.1 background jingdezhen has a long history in ceramic manufacturing; the earliest records trace back to the han dynasty (bc202-ad220). this study does not focus on the glorious ceramic producing history, but rather on the current status of the private sector industry. the ten state-owned porcelain factories are being restructured since 1995, (state-owned porcelain factories refer to the state-owned ceramic enterprises in jingdezhen in the chinese planned economy era). 60,000 to 100,000 workers were laid off from their work around the same time which seemed like the beginning of the decline of the ceramics industry in jingdezhen. that led to the emergence of a private sector ceramic business. this study mainly focuses on small and medium-sized ceramic studios, factories and companies, to figure out how to utilize co-creation approaches with the ceramic practitioners to enhance marketing and purchase experiences using an online-offline marketing service system. an interview and questionnaire approach used to find the already existing questions in the private sector industry in the beginning. the questionnaire was devised based on a long-term investigation in jingdezhen (2010 2018). the collected data were analyzed by a statistical method, according to the choice of the target group (age range 20-30). service design tools used to achieve three simultaneous targets: (1) research the main stakeholders; (2) devise strategies to enhance the customer’s purchase experience; (3) improve marketing. four steps are needed to accomplish the above: 1) why: analyzing the needs and problems of the main stakeholders of the private ceramic industry; 2) what: use service design tools to show the service content; 3) who: clarifying who is involved with the service system and how they are connected, and 4) how: defining touchpoints and the interaction with the service system to illustrate how the service works. co-creation is a useful approach to achieve ideal results in this research; we collaborated with local private ceramic practitioners in the design process of an online-offline service marketing platform. co-creation belongs to the boundary of participatory design; however, the term co-creation has not been defined yet in academic circles. http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2019.41.44.53&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/44 https://orcid.org/0000-0002-1352-6605 http://ecsenet.com/index.php/2576-6759/article/view/44 https://orcid.org/0000-0002-1352-6605 asian business research journal, 2019, 4: 44-53 45 © 2019 by the authors; licensee eastern centre of science and education, usa sanders and stappers (2008) mentioned the notion of co-creation and co-design in the growing participatory design domain. the terms of co-design and co-creation often treated similarly. one of the ideas of participatory design is to use tools to bridge between the researchers and the community members for the sake of minimizing the knowledge gaps and social-cultural differences (sabiescu et al., 2014; teli et al., 2017). as for co-creation, the appropriate tools should utilize in both the research and design processes. co-creation has become the latest trend in marketing and brand development (sanders and stappers, 2008). co-creation transforms design strategies from user-centred to be co-designed; the roles of both the end-users and designers have changed. over the last decade, a user-centred design approach looked like the golden rule in the design field; the designers are always mining for the needs of end-users by interviews and other methods. nevertheless, the end-users were not involved in the design process. the co-creation approach needs deep participation from the end-users with the designers and other stakeholders. all sitting around the same table, in the co-creation process, with their opinions become twined together iteratively (mattelmäki, 2008). hence, this research adopted the co-creation approach to collaborate with end-users for conducting design innovation. 1.2. research questions this study aims to address the following two research questions: 1) how to build an online-offline service system? 2) how to enhance marketing and user purchase experience by using that online-offline service system? to achieve this, a structure of cumulative progression proposed in this study: section 2 illustrates the methods, including open-ended interview, questionnaire, depth interview and co-creation. section 3 conducts quantitative data analysis. section 4 presents the results. section 5 utilizes service tools to clarify how the service work and how to enhance the purchase experience. section 6 concludes, and section 7 presents limitation. finally, acknowledgement provided in section 8. 2. methods 2.1. open-ended interview and questionnaire the initial research stage utilized ethnography methods to study the practitioners from the private ceramics sector and employed an open-ended interview approach to clarify the existing problems. for this case, a longitudinal element embedded in the survey, 65 practitioners from the private sector interviewed over a period from 2010 to 2018. dairies, pictures and records were kept to note the entire interviews (60,000-words diary 65 videos and hundreds of photos). each interview lasted 60~90 minutes. according to the practitioners, the questionnaire designed to include fifteen questions using likert's 7-point scale approach. the questionnaire designed into two dimensions: 1) the first dimension is concerned with the subsistent problems in the developing process of the private ceramics sector (questions 1 to 7), and 2) the second dimension covers the jingdezhen ceramic marketing model (questions 8 to 15) appendix 1. 87 subjects from the local ceramic practitioners answered the questionnaires (66 males and 21 females, aged from 20 to 60). the collected quantitative data were analyzed by spss software, using one-way anova method to examine the subjects according to different age groups. the points of view on both investigated issues (development process and marketing models) used for the sake of finding clues to establish new hypotheses and developing new theories (wu, 2017). this research identified the target group to research by statistical analysis and designed an online-offline marketing service platform. in the end, the new design theories are generalized. 2.2. co-creation after evaluating the quantitative data, the co-creation approach employed to design an online-offline service marketing system using service tools, such as service offering map, online-offline product marketing service blueprint. out of the previous practitioners,12 subjects were chosen in this process, eight females and four males, aged from 25 to 30 with ceramic design or art background. the focus groups organized to discuss; the needs and problems of the stakeholders in this research identify the service contents clarify the main stakeholders understand the operating methods of the service system. 3. quantitative data analysis developing a design questionnaire from two levels, the first level problems are concern the existing problems in the jingdezhen private ceramics industry, including the shortage of funds in manufacture process, the need for design innovation, design plagiarism, intellectual property protection, brand development planning, expansion of production scale, and the government support, totally 7 items, in order to analyze the problems encountered during the development of the private ceramics industry in jingdezhen. the second level problems are focus on the marketing of the ceramic product of jingdezhen, including the traditional store sales model, store direct sales and agent sales model, internet marketing for the development of ceramic enterprises, online selling and offline taking delivery model, online ceramic culture promotion, the government integrate online-offline sales service platform, self-media marketing model and unified price in direct sales or agency sales, which has eight issues. the distribution of the questionnaire was targeted, jingdezhen ceramics practitioners were the primary research target groups, including potters, ceramists, artisan, business owners and ceramic sales staff, and so forth. the 87 subjects (66 males and 21 females) answered the questionnaires, on the age level, 41 subjects aged 21-30, accounting for 47.13%, 35 subjects aged 31-40, accounting for 40.23%, and subjects aged 41-50 are 8 people, accounting for 9.2%; 3 people surveyed between the ages of 51-60, accounting for 3.45%. the respondents of 20-30 and 31-40 age grades are the main body of this research who are the main force of the private ceramics industry in jingdezhen. asian business research journal, 2019, 4: 44-53 46 © 2019 by the authors; licensee eastern centre of science and education, usa 3.1. research hypotheses h1: through long-term investigation, many problems found in the jingdezhen private ceramics sector. the ones causing most of the concerns include; design plagiarism, brand development, product design innovation and shortage of funds. nevertheless, different age groups of practitioners had different consideration of the importance of the existing problems. h2: the traditional store sales model is still the mainstream in jingdezhen. however, the rapid development of internet marketing methods has been influencing jingdezhen's ceramics marketing hugely in recent years; since internet marketing has a wide range of development prospects. establishing an online-offline marketing platform in new business sales is necessary. as to jingdezhen ceramic marketing, applying service design strategy to build an online-offline service platform is necessary to help integrating manufacture and sales resources as well as improving purchase experience. this is considered the best way to utilize the limited production and design resources. as for the marketing model, subjects from different age groups have different opinions regarding the traditional and networked marketing model. younger subjects are more willing to accept internet marketing models. 3.2. one-way anova analysis of h1 seven questions included in the first level of the questionnaire, and then one-way anova method was used to analyze the answers. testing the homogeneity of variances is shown in table 1 the levene statistic values are 1.72, 0.96, 1.28, 1.08, 0.82, 0.18 and 0.31. all the significance values are greater than 0.05, indicating all have not reached a significant level. thus, the null hypothesis should be accepted, which indicates that the variances of the two groups of samples are not significant and the homogeneity of variance is not violated (wu, 2017). table-1. test of homogeneity of variances. test of homogeneity of variances levene statistic sig. a1 1.72 .17 a2 .96 .42 a3 1.28 .29 a4 1.08 .36 a5 .82 .48 a6 .18 .91 a7 .31 .82 source: field survey, 2019. the variance summary in table 2 shows that the significance values of the seven issues are also greater than 0.05, not reaching a significant level again, implying the null hypothesis. combining the results of table 1 and table 2 concludes that the subjects from different age groups do not have different opinions regarding the seven issues. thus, the result does not validate the problems mentioned in hypothesis 1. still there are differences in the opinions of the age ranges regarding the problems in the jingdezhen private ceramics sector. table-2. anova. anova f sig. a1 between groups .50 .69 within groups total a2 between groups .21 .89 within groups total a3 between groups 1.69 .18 within groups total a4 between groups .84 .48 within groups total a5 between groups 1.12 .35 within groups total a6 between groups .32 .81 within groups total a7 between groups .81 .49 within groups total source: field survey, 2019. 3.3. one-way anova analysis of h2 the second level of the questionnaire has a total of eight questions related to marketing ceramic products in jingdezhen. one-way anova method also used to test the data here; the test of homogeneity of variances is in table 3. levene statistic values are 1.28, 1.37, 0.67, 1.22, 1.63, 0.20, 1.73 and 0.65. all values are all greater than asian business research journal, 2019, 4: 44-53 47 © 2019 by the authors; licensee eastern centre of science and education, usa 0.05so have not reached any significant level. again, we should accept the null hypothesis, that the variance between the two sample groups is not significant and the homogeneity of variance is not violated. table-3. test of homogeneity of variances. test of homogeneity of variances levene statistic sig. b1 1.28 .29 b2 1.37 .26 b3 .67 .57 b4 1.22 .31 b5 1.63 .19 b6 .21 .89 b7 1.72 .17 b8 .65 .58 source: field survey, 2019. the variance summary in table 4 indicates that the ninth topic: “the store direct sales and agent sales model have broad development of prospects”, is significant (p = 0.01 < 0.05), and this must reject the null hypothesis and accept the opposite hypothesis. accordingly, the respondents from different ages groups have different perspectives regarding the development broad prospects of store direct sales and agent marketing models. the significance values of the other seven questions are all greater than 0.05, so not reaching any significant level. therefore, the null hypothesis should be accepted that among the subjects from different age groups, there are no differences. table-4. anova. anova f sig. b1 between groups .10 .96 within groups total b2 between groups 3.90 .01 within groups total b3 between groups .89 .45 within groups total b4 between groups .62 .60 within groups total b5 between groups .92 .44 within groups total b6 between groups .10 .96 within groups total b7 between groups .51 .68 within groups total b8 between groups .11 .96 within groups total source: field survey, 2019. table-5. multiple comparisons. multiple comparisons dependent variable: b2 scheffe (i) age (j) age mean difference (i-j) std. error sig. 20-30 1.770* .539 .008 41-50 -1.770* .539 .008 source: field survey, 2019. the ninth topic found significant, which needs the further investigation to identify the differences between the age groups. multiple comparisons using scheffe method utilized for analyzing, from the pairwise scheffe post-hoc comparisons table 5. in the third column of the mean difference (i-j) shows the different values from the paired asian business research journal, 2019, 4: 44-53 48 © 2019 by the authors; licensee eastern centre of science and education, usa comparisons between the two groups. the mean difference value is -1.770, between the 20-30 age group and the 41-50 age group which indicates that the 20-30 age group is significantly lower than the 41-50 age group in the average score of the ninth issue. this means the young group hold negative attitudes to the store direct sales and agent sales model than the older group. 4. results of research hypotheses 4.1. hypothesis 1 for the first level questions, there was no difference between the views among the ceramic practitioners regardless of their ages. this is mainly because all the subjects were ceramic professionals from jingdezhen with enough knowledge about jingdezhen ceramic industry and its troubles. the subjects consider among these problems, design plagiarism, brand development and design innovation are the most concerning. through longterm investigation in jingdezhen, we learnt, that the ceramics enterprises have had no leaders, no established marketing management or operating mechanism. since the ten state-owned porcelain factories closed down, a lowend survival and developing mode is being adapted in the local private ceramics sector. the solution is to give full play to the government functions and establish reasonable industry rules to settle down trouble effectively. at the same time, the government should: organize design and production pay attention to the design innovations and brand development strategies enhance the popularity of jingdezhen ceramic products by establishing strong brands. 4.2. hypothesis 2 the second level questions were about ceramic marketing in jingdezhen. except for the ninth item, there is no difference between the points of view of the subjects from different age groups. the ninth question is whether there is a wide range of development prospects for store direct sales and agent business models. among them, the subjects of the 20-30 age group have a negative attitude towards this issue, while the subjects of the 41-50 age group hold a positive point of view. this is probably because internet sales model has been rising in jingdezhen in recent years. young ceramic practitioners are more receptive to emerge internet sales models. while for older groups, traditional sales models are more attractive. in fact, at present, the leading group to apply the internet marketing model in jingdezhen is the 20-30 age group; they always use all internet marketing models to sell ceramic products to introduce ceramic craft and culture, providing excellent user experience in the purchasing process to enhance the user viscosity, for the sake of expanding products sales. 5. discussions of service marketing system quantitative data analysis is conducted with target research population from the 20-30 age group. we used cocreation approach to collaborate with the ceramic practitioners in designing a service system to improve ceramics marketing and purchase experiences. according to the survey data from a research report of jingdezhen ceramic institute, currently, 20% of the ceramic practitioners hope to maintain their status; 5% of them plan to change their business; 17.5% of them have not decided while the majority (57.5%) want to move towards brand developing direction. the data also shows the desire of the most ceramic practitioners to change their development model. how to develop the private ceramic sector to improve ceramic marketing and enhance purchase experiences? the current problems are mainly due to the government policy; because the reform of the ten state-owned porcelain factories led to an unprecedented increase in people's leaving and production pressure. in the 1990s, the production of porcelain began to fall and excellent artisans and designers started to drain. the original foundation collapsed and ceramic exports, as well as domestic sales plummeted (shen, 2004). the measures taken by the jingdezhen government were completely market-oriented, but the results proved unsuccessful. in order to rectify the path of development, the jingdezhen government has explored carried out various countermeasures (liu and chen, 2008). at the moment, the jingdezhen government still regards the development of private ceramics sector as its core annual issue. through interviews to get the development strategies: the first step is to take the lead from the government to integrate resources towards private ceramics studios and factories first to develop brand strategies. to create brands in the form of joint-stock companies with a unified brand approach, cooperative ceramic factories need, completing orders on time, while guaranteeing both quality and quantity. design agencies are needed, hiring professional designers to develop new ceramics and service system. the second step is to implement the policy of online-offline marketing to maximize economic benefits. that way, ceramic factories can fulfil sales commissions and year-end dividends strategy to generate income. how to achieve this goal can be demonstrated here in four steps (why, what, who and how), as that will show in this rest of this section. 5.1. the first step “why” 5.1.1. the existing problems “why”: analyzing the needs and problems of the main stakeholders in the private ceramic sector. the main stakeholders in this research include ceramists, potters, artisans, salespeople and entrepreneurs. we conducted interviews with them to find out the needs and existing problems in their business and planned the design strategy according to their needs. 1). for the ceramists and porters, who mainly focus on two issues; first, the government support, the other is how to eliminate plagiarism. they need support from the government because ceramists and porters always suffer crises in their career development mostly due to the lack of a platform to study new ceramic craft, designs and art trends. design plagiarism is another problem they are suffering in their business developing process. the ceramists and porters are the leading force in implementing ceramics innovation. hence, they should be acquainted with the recent international ceramic innovations, and also need help to eliminate plagiarism. 2). for the artisans, jingdezhen has a long history in ceramic manufacture, and the private ceramics industry has also achieved industry division of labour; in jingdezhen, ceramic craft includes several types of work as rolling asian business research journal, 2019, 4: 44-53 49 © 2019 by the authors; licensee eastern centre of science and education, usa over, throwing, trimming, painting and firing figure 1. using interviews, we identified their needs and existing problems; the primary problem is the lack of funding; the long-term low-end development model makes it challenging for these ceramic workshops on surviving and can barely maintain daily operation. 3). for the sellers, the target research group in this study was 20 to 30 years old. we conducted in-depth interviews to learn about their business and marketing methods also the principal internet marketing users. some of their problems are: 1) brand development awareness is weak due to the lack of funds, so online marketing is heading towards a crisis. the number of customers has been declining; the customers' interests are changing rapidly and cannot be caught promptly. 2) orders and ceramics manufacturers are not well connected; the supply shortage is sometimes exposed. moreover, the whole selling process is complicated, distributors’ payments are always late, which easily causes a financial deficit for those online marketing companies. figure-1. the ceramic studios. source: field survey, 2018. 4). for the entrepreneurs, the information needed to manage such companies is incomplete, and a manager ends up with the company into an out-of-stock situation or excessive production with products backlog, as well as the company's investment in producing is still high, product innovations are not enough and usually suffering from design plagiarism. 5.1.2. how to deal with these problems how to deal with these problems for ceramic practitioners in their developing process, we put forward the following strategies. the ceramic practitioners have been paying more attention to design innovation, design plagiarism and brand development in their developing process. first, design innovation, the government should build a service platform for ceramic practitioners to provide a chance to learn and improve their design level and professional skills. the government can hold an international ceramic workshop inviting domestic and international ceramic artists to collaboration. second, design plagiarism, it has been perplexing the ceramic industry for years. to eradicate plagiarism, the local government should issue relevant regulations to restrict and punish design plagiarism as well as promote the development of ceramic design innovations. third, nowadays developing strategy of the brand must be adapted as in european countries. jingdezhen ceramic brands have a short history which led to low-end competition model in marketing. however, brand building is expensive and could not afford by most of the ceramic practitioners. the local government must take leadership in the brand-building process and provide legal and economic guidance to practitioners. finally, marketing method, we should integrate into online-offline ceramic marketing service platforms to promote ceramic culture. we designed an online-offline ceramic marketing system for ceramic recommendations, customization and crowdfunding to help sellers and entrepreneurs improve their marketing. 5.2. the second step “what” a map for service offering is a useful tool to show the service content in this research. from figure 2 online stores contain five major functional modules: 1) ceramic recommendations: utilizing big data technology to analyze consumers’ preference and suggest recommended ceramic products; 2) ceramic customization: designers and manufacturers depend on customer`s needs to provide one-on-one ceramic customization services. normann (2001) pointed out that the business environment continues to shift from a goods-dominant environment towards a service-dominant one (normann, 2001). ceramic customization is a new direction to integrate ceramic products and service. 3) ceramic crowdfunding: ceramic crowdfunding services offer opportunities for the new entrepreneurs in the ceramic business to use internet dissemination characteristics as well as artists or individuals to show their creativity to the public for financial assistance. 4) sharing community: registered users can publish comments posting about their purchase and experience. 5) user communication: to provide online instant chat capability, so that, consumers can communicate quickly and promptly. those services integrate design, manufacture resources and sales to maximize production benefits. offline service support logistics, customer service and network technical support as well as on-going order processing. asian business research journal, 2019, 4: 44-53 50 © 2019 by the authors; licensee eastern centre of science and education, usa figure-2. service offering map. source: designing by luo yinghuang. the profit sources of the online sales platform are as follows: 1) ceramic sales commission; 2) platform promotion fee; 3. business admission fee; 4. brand marketing service fee. 5.3. the third step “who” the designed online-offline platform shows the main stakeholders and how are they connected. stakeholders are groups or individuals who have a stake in the conduct and consequences of the business operation. figure 3 shows the stakeholders and marketing model throughout the service system. the stakeholders in this study are: customer service departments customers logistics departments ceramic studios factories offline display promotion platforms offline merchant and marketplace platforms production resources. this can be divided into two parts: online and offline, the online aims to improve purchase service experience, reduce transactions, optimize service experience. offline provides product design, manufacture, transportation and exhibition services. users would access the online marketing service from a mobile terminal and the webpage terminal. all the stakeholders in this research interact with each other and the whole system in funds, production and information flows, represented by the three lines in figure 3. the production flow connects production resources, ceramic studios, factories, logistics and customer. the offline platform should support the producing resources and collaborate with ceramic studios, factories to manage manufacturing processes. the logistics department should contact the ceramic studios and factories responsible for delivering the ceramics to customers. the funds flow is the critical factor in the online-offline system, which connects all the business stakeholders to the customer service department. information flow is another vital factor in the system connecting all the stakeholders. through information flow, the customer can get excellent purchase experience relying on the collaboration of all the other stakeholders. figure-3. stakeholders and online-offline model. source: designing by luo yinghuang. 5.4. the fourth step “how” employed service blueprint in this research to study touchpoints and interaction in the online-offline marketing service system; the purpose is to analyze how the service work. we are co-creation with stakeholders to asian business research journal, 2019, 4: 44-53 51 © 2019 by the authors; licensee eastern centre of science and education, usa design service blueprint; the first step is to design the layers, to clarify how many layers include in the onlineoffline ceramics marketing service system. we conducted a focus group discussion, and at last, designed six layers in this service blueprint figure 4: evidence, customer journey, touchpoints, online employee contact, backstage employee contact, and support processes. 1). the evidence layer is to show the visual and physical evidence in browser the web, payment informant, and delivery service; 2). customer journey is to illustrate the process from visit website to get the ceramics; 3). touchpoints are to identify the multi-touch points in the whole service process, including interface, webpage, charging system, message; employee and deliveryman; 4). online employee contact is to demonstrate the selling process, from answering customer`s questions, checking inventory, confirming the address to provide delivery time; 5). backstage employee contact is to execute the marketing service, the backstage staff will respond to chat questions, utilizing the inventory management system to check the ceramics, and execute the order, and 6). support processes are related to technical support, such as using big data to analyze web visitor, to recommend ceramic product depending on the visitor`s preference. the web browser, payment process, order fulfilment, and delivery service company are the support processes, providing support for the whole marketing system. figure-4. online-offline ceramics marketing service blueprint. source: designing by luo yinghuang. 5.5. “mi” application in order to improve the online-offline purchase experience, we designed a user interface, for mobile and web applications, as shown in figure 5. the mobile application, we called: mi (觅), which means of chinese is to “find”. the customer can use the application or webpage to search for the ceramics he wants; big data techniques can autorecommend depending on the customer`s preferences. additionally, customers can find others with common interests using the online commenting module. the application also introduces information related to ceramic, for in-depth understanding of the ceramic culture and craft. figure-5. user interface design of mi. source: designing by luo yinghuang. the design style of the interface used warm tone; standard colors are red, grey scheme. in terms of functional modules, it provides several major functions as product categories, promotion, sales and user evaluation. for different modules made a reasonable function division figure 6: 1) the product category shows the different ceramics types as tableware, wine sets, tea sets, coffee sets, vases. 2) the promotion module includes packaging, transportation and other different information to improve the user experience; 3) the sales module provides an online purchasing service; and 4) in the user review area (q&a), registered users can obtain bonus points by asking and answering questions in order to increase the users' viscosity and knowledge. the user needs to register for asian business research journal, 2019, 4: 44-53 52 © 2019 by the authors; licensee eastern centre of science and education, usa shopping online; the registered user can enjoy convenient services. for example, a user can choose custom service; the designer will work according to individual customer requirements to design for them; the design fees also listed on the webpage. ceramic crowdfunding service can also be operated and viewed from mobile applications. the user review area is a type of online participation model, to express knowledge about ceramic and to know more about the culture and craft. additionally, it can expand social relationships with others having the same interests in the ceramic domain. figure-6. the function division of mi. source: designing by luo yinghuang. in conclusion, integrating resources by local government, to establish an online-offline service marketing platform to promote the ceramic culture of jingdezhen, provide multiple sales services, enhance user viscosity, and offer customers outstanding online shopping experience. the importance of the customer experience has been recognized by service organizations (zomerdijk and voss, 2010; patrício et al., 2011). enhancing customer experience, customer satisfaction and loyalty can create a new value, which is the most critical development way for jingdezhen private ceramic sector. 6. conclusions qualitative and quantitative methods were used to study the target subjects, utilizing open-ended interviews, in-depth interviews, focus groups and questionnaires to collect qualitative and quantitative data. one-way anova analysis was used to identify the age group from 20 to 30 who had disagreed with the other groups about traditional ceramics marketing. co-creation approach was followed with that age group to design an online-offline marketing system. we employed service design tools and co-created with the ceramic practitioners to design service offering map and service blueprint for learning how the service works and how to enhance the customers’ experience. we tried to offer an outstanding user experience in the purchasing process by providing unique services. the user review area can enhance the conversation between ceramic sellers and customers and further improve the user experience and user viscosity. additionally, spreading ceramic culture online will also help increase marketing. 7. limitation the limitation of this study is that the current concept still stays at the design stage. however, this design strategy has been awarded by the china construction bank, the china university innovation, entrepreneurship education alliance and the national university innovation and venture investment service alliance. however, the implementation of the project still needs the support of the local government in jingdezhen since the actual implementation of this project is estimated to take quite a long time. references liu, s.q. and w.h. chen, 2008. a study on structure convention characteristic of jingdezhen ceramics characteristic industry colony, 85(12): 60-63. mattelmäki, t., 2008. probing for co-exploring. co-design, 4(1): 65-78.available at: https://doi.org/10.1080/15710880701875027. normann, r., 2001. reframing business: when the map changes the landscape. new sussex: wiley, chichester. patrício, l., r.p. fisk, j. falcão e cunha and l. constantine, 2011. multilevel service design: from customer value constellation to service experience blueprinting. journal of service research, 14(2): 180-200.available at: https://doi.org/10.1177/1094670511401901. sabiescu, a.g., s. david, i. van zyl and l. cantoni, 2014. emerging spaces in community-based participatory design: reflections from two case studies. in proceedings of the 13th participatory design conference: research papers. acm, 1: 1-10. sanders, e.b.-n. and p.j. stappers, 2008. co-creation and the new landscapes of design. co-design, 4(1): 5-18.available at: https://doi.org/10.1080/15710880701875068. shen, j.l., 2004. the itch and pain of jingdezhen for a thousand years after a storm of “fengdu”, xinmin weekly. teli, m., a. di fiore and v. d’andrea, 2017. computing and the common: a case of participatory design with think tanks. codesign, 13(2): 83-95.available at: https://doi.org/10.1080/15710882.2017.1309439. wu, m.l., 2017. questionnaire statistical analysis pragmatic: spss operation and application. china chongqing university press. pp: 290. zomerdijk, l.g. and c.a. voss, 2010. service design for experience-centric services. journal of service research, 13(1): 67-82.available at: https://doi.org/10.1177/1094670509351960. asian business research journal, 2019, 4: 44-53 53 © 2019 by the authors; licensee eastern centre of science and education, usa appendix 1 topics extremely disagree strongly disagree disagree neutral agree strongly agree extremely agree 1 2 3 4 5 6 7 1. the shortage of funds in the manufacture process 2. it is necessary to carry out design innovation 3. frequently encountered product plagiarism 4. local ceramic practitioners have intellectual property protection awareness 5. it is necessary to establish a brand development plan 6. it is necessary to expand the production scale 7. the government has not supported private ceramic enterprises properly 8. traditional store sales model is the mainstream 9. the store direct sales and agent sales model have broad development prospects 10. internet marketing is necessary for the development of ceramic enterprises 11. online shopping and offline store pick-up mode are feasible 12. online platforms to promote ceramic culture can enhance ceramic products marketing 13. it is necessary for the government to integrate online-offline ceramic marketing service platforms. 14. self-media marketing model is necessary 15. the same product needs a unified price in direct sales or agency sales source: field survey, 2019. citation | yu qinghua; yukari nagai; luo yinghuang (2019). cocreation with ceramic practitioner for improving the marketing and enhancing the customer purchase experiences. asian business research journal, 4: 44-53. history: received: 20 september 2019 revised: 29 october 2019 accepted: 4 december 2019 published: 2 january 2020 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education acknowledgement: the authors wish to thank luo yinghuang for helping to design the figures in this article. they also thank the anonymous reviewers for the valuable constructive suggestions. funding: this research was supported by the art general project of 2018 national social science fund (18bg118, research on the history of chinese traditional tool design concepts). competing interests: the authors declare that they have no conflict of interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 19 © 2020 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 5, 19-27, 2020 issn : 2576-6759 doi: 10.20448/journal.518.2020.5.19.27 © 2020 by the authors; licensee eastern centre of science and education, usa mediated effect of employee job satisfaction on employees’ happiness at work and analysis of motivational factors: evidence from telecommunication sector rehan sohail butt1 xuezhou wen2 rana yassir hussain3 ( corresponding author) 1,3school of management, jiangsu university, china. 2school of management, jiangsu university, china/school of business, jiangnan university, china. abstract happiness at the workplace is an important ingredient in improving productivity at any organization. this study, therefore, sought to examine the effect of employee job satisfaction on employee’s happiness at work among telecommunication workers in pakistan. the study was anchored on the motivation theory and includes some factors that influence motivation at the work place. the motivational factors include job inspiration, job security, benefits/salary, work environment and leadership. these motivational factors are expected to influence the dependent variable (happiness at work) through a mediating variable (employee job satisfaction). employee job satisfaction functioning as an independent variable is also expected to influence the exogenous variable (happiness at work). data for the study was obtained from a sample of 515 telecoms workers from pakistan using a structured questionnaire. the data was analyzed through structural equation modeling via spss 22 and smartpls 3.0. findings from this study indicate factors that determine or influence employees' job satisfaction are job inspiration, benefits, job security, and leadership in that order. the study further found a positive and significant relationship between the independent variables (job inspiration and benefits) and employee job satisfaction. also, the study found that employee job satisfaction has a positive and significant influence on happiness at work. the study builds on the empirical findings on factors influencing employee job satisfaction by linking it with happiness at work in the telecoms sector this study contributes to the extant literature on happiness at work and makes valuable contribution to future research in this area. keywords: employee job satisfaction, job inspiration, job security, leadership, happiness at work, work environment. jel classification: l29. 1. introduction satisfied employees would work hard and put much effort their work in order to be more productive and efficient. when employees are satisfied with the work they do, they become happy and produce better results than when they are unhappy. employee job satisfaction according to gu, zhen, song, and xu (2019) is “a measure of people’s contentedness with their job and an assessment of their work experience”. one of the earliest definitions of job satisfaction as “a pleasurable or positive emotional state resulting from one’s work or work experiences” (gu et al., 2019). job satisfaction would thus influence how employees work and the level of involvement and commitment they put in their work. mentioned four dimensions that have a great impact on employee job satisfaction as salary, efficiency in work, fringe supervision (khuong & tien, 2013). satisfaction is a term that has been frequently used interchangeably with happiness. according to the oxford english dictionary, happiness is “a state of mind or feeling comprising contentment, satisfaction, pleasure or joy”. happiness has been used in the literature frequently and interchangeably with other terms such as “subjective wellbeing” “psychological wellbeing”, and “satisfaction” (ryff & singer, 2008; wright & cropanzano, 2007). achor (2010)opine that happy people create successful careers for themselves due to the fact that they find happiness in the workplace. wesarat, sharif, and abdul majid (2015) are also of the opinion that happiness at the workplace means the satisfaction employees obtain with the nature of work and their personal lives. this idea is related to individual’s subjective well-being; i.e. how satisfied people are with their work environment. being happy at the workplace is an important factor for improving an organization’s performance (wesarat et al., 2015). happy people would thus be more productive and efficient at the work they do compare with unhappy employees. asiyabi and mirabi (2012) suggest that being happy for employees could mean that employees would transfer their happiness from office to home and vice versa. a happy employee would thus make a productive and efficient http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2020.5.19.27&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/73 asian business research journal, 2020, 5: 19-27 20 © 2020 by the authors; licensee eastern centre of science and education, usa workforce for the firm. despite the importance of happiness to individuals and organizations, the concept is however still vague. researchers are yet to come to an agreement with regards to what constitutes happiness in the workplace. the concept has been a subject of debate from earliest times within philosophy (cahn & vitrano, 2008). additionally, although there is a considerable amount of literature on the subject, it appears however that only a handful of scientific theory research has been undertaken thus far from organisational perspective (mcgonagle, 2015). also, “a robust framework for application in the work setting is still missing”(tasnim, 2016) and this calls for extensive research in that regard to fill the gap in theory. this study, therefore, aims at bridging the gap in theory and literature. thus, this study focuses on finding out factors influencing employees’ job satisfaction and how does job satisfaction influence happiness in the workplace. the main objective of this study, therefore, is to explore factors influencing employee job satisfaction among telecommunication workers in pakistan. this study thus seeks to achieve the following objectives; 1. identify factors that influence employee job satisfaction among telecommunication workers in pakistan. 2. assess the effect of employee job satisfaction on employees’ happiness at work. 2. theoretical underpinnings 2.1. employee job satisfaction brief (1998) defined job satisfaction as “an internal state that was expressed by effectively or cognitively evaluating an experienced job with some degree of favour or disfavor”. spector (1997) on the other hand defined employee job satisfaction to mean an individual’s satisfaction with his/her job, indicating whether or not he or she likes the job. motivating and retaining qualified employees thus is very important in ensuring the success of organizations (sohail & jang, 2017). the oxford dictionary also defines satisfaction as “the feeling of pleasure that arises when you have the things you want or need or when the things you want to happen”. rice, mcfarlin, and bennett (1989) opined that satisfaction is determined by comparing current job experiences against some personal set standards and then evaluating whether one is satisfied with the current job or not (khuong & tien, 2013). herzberg (1968) provided the earliest known investigation into the factors that lead to job satisfaction. in his study, herzberg interviewed a group of employees to determine what made them satisfied or dissatisfied with their job. he classified these factors as motivators and hygiene factors (herzberg, 1968). motivators-hygiene factors theory revealed that factors determining job satisfaction were distinct from factors influencing job dissatisfaction (khuong & tien, 2013). hygiene factors also known as job ‘dissatisfies’ include company policy, administration, supervision, salary, interpersonal relations, and working conditions. motivators, on the other hand, known as job ‘satisfiers’ included achievement, recognition, work itself, and responsibility (sowmya & panchanatham, 2011). with the turn of the 21st century, various scholars have provided new definitions and constituents of employee job satisfaction. pearson (1991) for instance mentioned the factors that influence employee job satisfaction as payment, promotion, and autonomy. arsic, nikolic, zivkovic, urosevic, and mihajlovic (2012) on their part using the elements of tqm practice mentioned that factors that influenced employee job satisfaction are top management commitment, employee empowerment, teamwork, job evaluation, employee compensation (khuong & tien, 2013). jun, cai, and shin (2006) also using the tqm added that factors influencing employee job satisfaction included employee empowerment, teamwork, and employee compensation. 2.2. materials and hypotheses 2.2.1. benefits/salaries compensation or benefits has been identified as one of the key influencing factors of employee job satisfaction. compensation management is a fundamental content of human resources management in organizations (hee, yi, ping, kowang, & fei, 2019). strategy development and human resource development of organizations have been closely related to compensation management. according to hee et al. (2019) six different employee compensation systems paid by companies are job-based pay, skill or experience-based pay, broad banding with salary arrays, team-based pay, variable compensation, and executive compensation. empirical findings have linked employee job satisfaction with benefits or salaries. nguyen, taylor, and bradley (2003) concluded that job satisfaction is the result of promotion opportunities in the organization. tessema and soeters (2006) also reported positive relationship between promotion practices and employee performance. khan., nawaz, aleem, and hamed (2012) also found that factors such as pay and promotion influence employee job satisfaction and performance. based on the above, we formulate the hypothesis: h1:benefits/salaries have a positive influence on employee job satisfaction. 2.2.2. job inspiration job inspiration implies that employees are satisfied with their assigned jobs, and are able to achieve goals. meaningful activity, including work (warr, 2007) and philanthropic activity, including volunteering jobs, has been shown to impact happiness positively (meier & stutzer, 2008). much of the studies on employee happiness at work reveal that factors such as stable job, challenging, and interesting work enhance work attitudes and improves employee happiness (fisher, 2010). available evidence shows that the above-mentioned factors are positively related to employee happiness, and jointly explain job satisfaction in organizations (fisher, 2010). wesarat et al. (2015) mentioned that work activities are job undertakings engaged in by employees. whiles some employees are excited about their job or task others are not which leads to negative experiences at work (siegall & mcdonald, 2004). employees thus could have different satisfaction levels at work doing various work activities which would result in happiness at work (tadić, bakker, & oerlemans, 2013). employees engage in meaningful work activities when they feel excited or happy in their job. managers must, therefore, identify source of meaningful work and ensure that employees get satisfaction in their work (cleavenger & munyon, 2013; vasconcelos, 2008). if employees recognize reasons or inspirations in carrying out meaningful work, they may be happy to do their work (dimitrov, 2012; macmillan, 2009). we hypothesis that: h2: job inspiration has a positive and significant effect on employee’s job satisfaction. asian business research journal, 2020, 5: 19-27 21 © 2020 by the authors; licensee eastern centre of science and education, usa 2.2.3. job security job security refers to employees’ assurance or belief that they will keep their current job. employees with “a high level of job security have a low probability of losing their job in the near future” (sageer, rafat, & agarwal, 2012). employees are always on the edge fearing the possibility of their employment being terminated. this fear puts them in a rather defensive position and are not happy at work due to the uncertainty about their future. as a result, employees might display a certain level of unhappiness with their work. past studies have been conducted to find out whether or not job security has a negative influence on employees ‘happiness. khan, nawaz, aleem, and hamed (2015) found a positive relationship between job security and employee satisfaction among medical staff in pakistan. we propose the hypothesis that: h3: job security would have a significant and positive influence on employee job satisfaction at the workplace. 2.2.4. leadership organizations promote and create happiness for employees through motivation, awareness, and being dedicated to employees’ welfare. good leaders engage in 2-way, transparent communication with their staff as well as ensuring conducive work atmosphere for their staff. employee happiness at work therefore is dependent on the leader’s behavior. as warr (2007) noted, “a positive leader’s behavior is one that includes willingness to listen to employees, showing support, respect and concern for employees’ welfare, and a tendency to show appreciation for employees and their work well done” (stoi, 2016). thus, a good leader must consider employees feelings and provide inspiration, that would encourage and give meaning to employees' work (cleavenger & munyon, 2013; vasconcelos, 2008). stoi (2016) argues that employees achieve some level of satisfaction when the organisation places some importance to the work they do (dimitrov, 2012; macmillan, 2009). thus employees who are satisfied with their leadership would be satisfied with their work and eventually find happiness. orthodoxia, kourtesopoulou, and kriemadis (2019) examined the relationship between leadership behaviors and job satisfaction and found a significant positive relationship between transformational and transactional leadership behaviors and employee job satisfaction. also, investigating leadership style in dutch firms, vermeeren, kuipers, and steijn (2014) found a positive relationship between leadership style and employees’ satisfaction. we hypothesis thus: h4: leadership would have a positive influence on employee’s job satisfaction. 2.2.5. work environment working environment according to raziq and maulabakhsh (2015) involves two broader dimensions, work and context. work accordingly to them includes different characteristics and tasks such as “training, control one’s own job-related activities, a sense of achievement from work, variety in tasks and the intrinsic value for a task” (raziq & maulabakhsh, 2015). context on the other hand comprises the physical working conditions and the social working conditions (gazioglu & tansel, 2006; skalli, theodossiou, & vasileiou, 2008). spector (1997) also explained the working environment as consisting of “safety to employees, job security, good relations with co-workers, recognition for good performance, motivation for performing well and participation in the decision-making process of the firm”. he further explained that when employees realize how high in esteem the firm holds them, they will have a high level of commitment and a sense of ownership for their organization (raziq & maulabakhsh, 2015). available literature has suggested a positive and direct link between work environment and job satisfaction. buhai, cottini, and nielseny (2008) found that firms’ productivity can be increased by improving the physical dimensions of the work environment (raziq & maulabakhsh, 2015). bakotic and babic (2013) also found a positive relationship between working conditions and employee job satisfaction. they mentioned the working condition as an important factor for job satisfaction, and which might also lead to employees ‘dissatisfaction. a study by tariq, ramzan, and riaz (2013) in telecom sector revealed that factors such as workload, salary, stress, and conflicts with family due to job would lead to employee dissatisfaction. we hypothesize thus; h5: working environment would have a positive or negative influence on employee job satisfaction at the workplace. 2.2.6. relationship between employee job satisfaction and happiness at work satisfaction is a term that has been frequently used interchangeably with happiness. there is an “affective component” to satisfaction as well as “a cognitive evaluative component” which involves making a judgment with regards to individual needs wants and if these have been achieved (mcgonagle, 2015). de witte et al. (2010) investigated the relationship between job insecurity and happiness and found that there is a significant negative impact of job insecurity on happiness. wegge, van dick, fisher, wecking, and moltzen (2006) also investigated the relationship between organizational identity, job satisfaction, and employee’s well-being and found that organizational identity predicted job satisfaction and employee’s well-being (wegge et al., 2006). h6: employee job satisfaction has a positive and significant effect on happiness at work. figure-1. mediating role of ejs in the haw-motivational factors relationship. asian business research journal, 2020, 5: 19-27 22 © 2020 by the authors; licensee eastern centre of science and education, usa 3. methodology the survey method was utilized in this study to assess factors that influence employees’ job satisfaction as well as the effect of job satisfaction on employees’ happiness at work. the survey method was chosen because it suited the purpose and nature of this research. a convenient sampling technique was used to sample 515 telecommunication workers in pakistan see table 2. data for the study was obtained through a structured questionnaire developed using previous scale. the questionnaire was pre-tested and self-administered to the respondents by the researcher and trained field researchers. the respondents were all well informed about the study and their approval was sought before distributing the questionnaire to them. also, the researchers assured the respondents of anonymity and confidentiality of their responses. a five-point likert scale which option ranging from strongly disagree (1) to strongly agree (5) was used to measure variables for the research constructs as recommended in previous studies. the questionnaire consisted of 54 multi measurement items and six demographic questions see table 2. the collected data was cleaned, sorted and coded using the statistical package for social sciences (spss v.22). an exploratory factor analysis (efa) was then performed via spss to assess the factor loadings of the individual constructs in the conceptual model. the efa was thus carried out for these three reasons: “(1) assess the suitability of the data for factor analysis, (2) factor extraction, and (3) factor rotation and interpretation” (ozdamar, 2017). a confirmatory factor analysis was then carried out and the result transferred to smartpls 3 software for further analysis. 4. results of the study 4.1. reliability and validity of scales the data was first analyzed to ensure instrument quality by convergent and discriminant validity. applying spss, the exploratory factor analysis (efa) was conducted to measure the underlying dimension associated with 49 items. the bartlett’s test of sphericity and kaiser–mayer–olkin (kmo) measure of the sampling adequacy were used to measure the construct. to perform factor analysis, the kmo score should be 0.6 or above (ozdamar, 2017). the result of the bartlett’s test of sphericity and kmo shows that the scales adopted for the study are suitable for the factor analysis table 1. it shows a chi-square value of 27607.538 and significant value (p > 0.000). table-1. kmo and bartlett's test. kaiser-meyer-olkin measure of sampling adequacy. .763 bartlett's test of sphericity approx. chi-square 27607.538 df 1176 sig. .000 4.2. demographic characteristics of respondents some demographic variables were collected in this study. these include gender, age, level of education, department, work experience, salary and marital status see table 2. table-2. demographics of respondents. variable category no (%) gender male 392(76.1) female 123(23.9) age (years) 20 30 219(42.5) 31 – 40 246(47.8) 41 – 50 50(9.7) level of education bachelor’s degree 216(46.9) master’s level 291(56.5) phd degree 8(1.6) department hr 35(6.8) financial 8(1.6) sales & marketing 218(42.3) administration 45(8.7) others 209(40.6) work experience 1 to 5 years 127(24.7) 6 to 10 years 260(50.5) 11 to 15 years 125(24.3) 16 years and above 3(0.6) salary below 20,000 11(2) 20,000 to 40,000 177(34) 40,000 to 60,000 159(31) above 60,000 168(33) marital status married 340(66) single 175(34) table 2 shows the demographics of respondents; 76.1% of the respondents are males and 23.9% are females. in terms of gender, 42.5% of the respondents were between 20 and 30 years; 47.8 % are between 31 and 40 years; and 9.7% are between the ages of 41 and 50. with regards to the educational qualification of the respondents,46.9% of the respondents have a bachelor’s degree; 56.5% have master’s level qualification; and 1.6% have ph.d. qualifications. table 2 further shows that 6.8% of the respondents work in the hr department; 1.6% work in the financial department; 42.3% in the marketing & sales department; 8.7% work in the administration; and 40.6% work in other departments. also, 24.7% of the respondents have worked in the company between 1 to 5 years; 50.5% asian business research journal, 2020, 5: 19-27 23 © 2020 by the authors; licensee eastern centre of science and education, usa between 6 to 10 years; 24.3% also worked between 11 to 15 years; and 0.6 have worked for over 16 years. with regards to the salary of respondents 2% receive below 20,000; 34% 20,000 to 40,000; 31% receive 40,000 to 60,000; and 33% receive more than 60,000. also, regarding the marital status of respondents, 66% are married; and 34% are single see table 2. table-3. factor loading and construct reliability. fl ca rho_a cr ave ca rho_a cr ave bs_1 0.781 0.880 0.888 0.909 0.626 bs_2 0.802 bs_3 0.760 bs_4 0.838 bs_5 0.843 bs_6 0.715 ejs_1 0.836 0.855 0.857 0.902 0.696 ejs_2 0.822 ejs_3 0.861 ejs_4 0.818 haw_1 0.927 0.901 0.905 0.938 0.835 haw_2 0.923 haw_3 0.891 ji_1 0.787 0.890 0.892 0.912 0.566 ji_2 0.759 ji_3 0.761 ji_4 0.739 ji_5 0.707 ji_6 0.745 ji_7 0.798 ji_8 0.715 jsty_1 0.820 0.838 0.846 0.891 0.672 jsty_2 0.852 jsty_3 0.840 jsty_4 0.765 lsp_1 0.748 0.915 0.922 0.930 0.626 lsp_2 0.828 lsp_3 0.782 lsp_4 0.777 lsp_5 0.807 lsp_6 0.786 lsp_7 0.852 lsp_8 0.745 we_1 0.762 0.742 0.746 0.854 0.661 we_2 0.810 we_3 0.864 according to table 3, all the measured variables had cronbach’s alphas above 0.70, indicating high reliability for the constructs. the validity of the constructs was achieved through the construct validity assessment. it is assessed through convergent validity and discriminant validity (ringle, wende, & becker, 2015). convergent validity was considered adequate since the average variance extracted (aves) and composite reliability (wright & cropanzano, 2007) satisfied the minimum of 0.50 and 0.70 respectively (fornell & larcker, 1981). table-4. discriminant validity. bs ejs hw ji js lsp we bs 0.791 ejs 0.554 0.835 hw 0.473 0.573 0.914 ji 0.473 0.841 0.516 0.752 js 0.684 0.536 0.474 0.523 0.820 lsp 0.351 0.510 0.451 0.585 0.481 0.791 we 0.411 0.816 0.514 0.791 0.424 0.514 0.813 table 4 also shows discriminant validity and requires that the variables load higher than any other constructs on its scale. from table 2, discriminant validity was achieved since the factors loaded higher on their scales. benefits had a value of (0.79), employee job satisfaction (0.83), happiness at work (0.9), job inspiration (0.75), job security (0.8), leadership (0.8) and work environment (0.8). 4.3. results of structural model the assessment of the structural model was done using regression weights, t-values, and p-values for the significance of t-statistics (chin, 2010). the results of structural model for testing the research hypotheses are presented in table 5. asian business research journal, 2020, 5: 19-27 24 © 2020 by the authors; licensee eastern centre of science and education, usa figure-2. structural model of relationship between job satisfaction and happiness at work. figure 2 the structural model’s assessment regarding the relationship between the variables. the assessment includes the path coefficients that estimate the relationship between the variables. from figure 2, employee job satisfaction related positively with job inspiration, benefits, job security, working environment, and leadership. job inspiration had the highest influence on employee job satisfaction (45.4%), followed by work environment (38.8%); and benefits (16. 7%). leadership, on the other hand, had a negative relationship with (-3.1%) respectively. it is expected that organizations would focus on these factors to get the result out of employees as these are the core issues influencing employee satisfaction. also, employee job satisfaction had a positive relationship with happiness at work (57.3%). what this means is that, once employees feel satisfied at the workplace, they would find happiness which is needed in ensuring employees work hard to achieve targeted goals and objectives thereby ensuring organisational performance. figure-3. path analysis of haw, ejs and motivational factors relationship 4.4. hypothesis test a test for hypothesis was done using bootstrapping with 5000 samples on factors that influence or determine happiness at work. benefits, job inspiration, and work environment had a positive and significant relationship with asian business research journal, 2020, 5: 19-27 25 © 2020 by the authors; licensee eastern centre of science and education, usa employee job satisfaction (ejs). also, job satisfaction had a direct positive influence on happiness at work. benefits had a positive and significant effect on ejs (β = 0.167; t= 5.39; p < 0.001); this led to the acceptance of hypothesis 1. the beta score 0.167 means that, when employee’s benefits increase by 1%, employee job satisfaction improves by 16.7%. this means that employee benefit has a positive effect on the satisfaction of employees. job inspiration had a significant and positive effect on ejs (β = 0.455; t= 14.3; p < 0.001); this led to the acceptance of hypothesis 2. this means that when employees are inspired by the kind of work they do, they would find satisfaction with the work they do see table 5. job security also had a positive but insignificant relationship with employee job satisfaction (β = 0.034; t = 1.07; p > 0.05); hypothesis h3 was therefore not accepted. leadership also had a negative and insignificant effect on employee job satisfaction (β = -0.031; t= 0.03; p > 0.05); h4 was also not accepted (see table 5). work environment had a positive and significant effect on ejs (β = 0.388; t= 13.89; p < 0.001); this led to the acceptance of h5. employees' job satisfaction also had a positive and significant effect on happiness at work (β = 0.573; t= 15.23; p < 0.001); this led to the acceptance of h6. the beta score means that when employee job satisfaction improves by 1%, employees’ happiness at work improves by about 57.3%. table-5. results of hypothesis test. hypothesis path β stdev t-value p-value hi bs -> ejs 0.167 0.031 5.39 *** h2 ji -> ejs 0.455 0.032 14.31 *** h3 js -> ejs 0.034 0.032 1.07 0.29 h4 lsp -> ejs -0.031 0.031 0.03 0.25 h5 we -> ejs 0.388 0.028 13.89 *** h5 ejs -> hw 0.573 0.038 15.23 *** the r squared score shows that, together, the independent variables influenced happiness at work by about 73%. table-6. indirect effect of bs, ji, jsty, lsp and we on happiness at work. paths b stdev t-value p-value bs -> ejs -> hw 0.103 0.0195 5.526 0.000 ji -> ejs -> hw 0.270 0.028 9.702 0.000 jsty -> ejs -> hw 0.003 0.020 0.166 0.869 lsp -> ejs -> hw -0.005 0.016 0.285 0.776 we -> ejs -> hw 0.207 0.019 11.165 0.000 table 6 shows the indirect effect in the relationship between the endogenous and exogenous variables. the table shows that benefits, job inspiration, and work environment influence happiness at work indirectly through employee job satisfaction. bs had a positive and significant effect on hw (β = 0.103; t= 5.526; p < 0.001). the beta score here means that, when employees benefit improves by 1%, employees’ happiness at work also increases by about 10%. also, ji had a positive and significant effect on hw (β = 0.270; t= 9.70; p < 0.001); we also had a positive and significant effect on hw (β = 0.207; t= 11.165; p < 0.001). 5. discussion first, this study revealed that the factors that determine or influence employees’ job satisfaction are job inspiration, benefits, job security, and leadership in that order. job inspiration contributes more significantly to employee job satisfaction (45.5%); followed by work environment (38.8%), benefits (16.7%) and job security (3.4%). leadership, however, contributed negatively to employee job satisfaction (-3.1%). this finding is significant as it shows the factors that employers should concentrate or focus on to ensure employee job satisfaction thereby increasing employees’ happiness at work. secondly, with regards to the hypotheses stated in this study, the findings show that four out of the six hypotheses stated were supported. thus hypothesis h1, h2, h5, and h6 were all supported by this research’s findings. the first hypothesis revealed a positive and significant relationship between benefits/salaries and employee happiness. this finding indicates that the more inspiring work is for employees the satisfied they become doing their job. it further implies that when employees are satisfied with their assigned jobs and tasks, they and are able to achieve their work goals and output. as noted by fisher (2010) job characteristics such as stable job, challenging and interesting work produce positive work attitudes, which then lead to satisfaction. hypothesis two also revealed a positive relationship between job inspiration and employee job satisfaction. this finding indicates that when employees perceive to be offered adequate compensation for their work, they would be satisfied with the work they do. it further implies that wages or salaries are very important to the work of employees. this finding supports empirical results that state that job inspiration have positive influence on employee job satisfaction (khan. et al., 2012; nguyen et al., 2003; tessema & soeters, 2006). also, the study found a positive but insignificant relationship between job security and employee job satisfaction. when employees feel that they are insulated or secured from being fired from their job, nothing comes between their satisfaction and the work they do. as noted by sageer et al. (2012) employees are always on the alert fearing the possibility that their employment could be terminated and this would affect their level of satisfaction and happiness at the workplace. it is important for management and organisational heads therefore to provide guarantee of job tenure for employees to insulate them from premature sack or from the organisation. the fourth hypothesis also revealed a positive but insignificant relationship between leadership and happiness at work. this finding, however, contradicts earlier findings that found a significant relationship between leadership and employee job satisfaction (orthodoxia et al., 2019; vermeeren et al., 2014). perhaps what this study revealed is asian business research journal, 2020, 5: 19-27 26 © 2020 by the authors; licensee eastern centre of science and education, usa that the respondents are not really satisfied with the leadership style operated in their organisation. leadership is about motivating people to move in the desired direction that the organisation wants to move in order to achieve the goals and objectives stated. employees would thus contribute towards the attainment of organizational goals and objectives when they are happy with the style of leadership and how they are directed. effective leaders would thus consider employee’s feelings and know how to inspire, stimulate and give meaning to employee's work (cleavenger & munyon, 2013; vasconcelos, 2008). also, as noted by dimitrov (2012); macmillan (2009) when employees note the importance of their work to management, they can be more motivated and satisfied with their work. the fifth hypothesis also revealed a positive relationship between the work environment and employees' job satisfaction. when employees work in an environment that fosters spirit of togetherness, there is every reason for employees to be happy and this happiness might have a positive effect on how they work in the organisation. also, employees need good working conditions with all the necessary tools at their disposal in order to carry on with their assigned tasks. failure to do so would mean that employees would have to compromise and work with the available tools and materials which would not lead to their satisfaction. furthermore, this study found a positive and significant relationship between employee job satisfaction and happiness at work. when employees are satisfied with the work they do, it influences their happiness at work. it is imperative that organisational leaders focus on ensuring employee happiness by making working conditions safe, providing needed support for employees in carrying out their work diligently and going the extra mile in showing concern about employee well-being. this finding supports what (lee, grace, sirgy, singhapakdi, & lucianetti, 2018) stated that employees’ positive experiences in work-life i.e. job satisfaction and quality of work-life can have a positive effect on employee’s satisfaction and happiness. again, the findings show that there is an indirect relationship between benefits, job inspiration, work environment, and happiness at work. benefits, work environment, and job inspiration positively influence employees’ happiness at work through employee job satisfaction. this means that factors influencing employee satisfaction could also indirectly influence employees ‘happiness at work. organizations must, therefore, strive to ensure the satisfaction of employees at all times. 6. conclusions this study investigated the effect of employee job satisfaction on employees’ happiness at work among telecommunication workers in pakistan. findings from the study show that benefits, job inspiration, and work environment influence employee happiness as well as employees’ happiness at work. thus, ensuring good working environment and providing adequate compensation that is commensurate to the work employees do would ensure employee satisfaction and by extension employee happiness. once this is achieved, not only would employees be happy, but would go a long way to enhance the productivity of employees which would lead to organisational performance. it is up to management therefore to identify the needs and aspirations of their employees as well as know the source of employees’ happiness. references achor, s. 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(2007). the happy/productive worker thesis revised. in j. martocchio (ed.), research in personnel and human resource management (vol. 26, pp. 269-313). amsterdam, the netherlands: elsevier ltd. citation | rehan sohail butt; xuezhou wen; rana yassir hussain (2020). mediated effect of employee job satisfaction on employees’ happiness at work and analysis of motivational factors: evidence from telecommunication sector. asian business research journal, 5: 19-27. history: received: 30 june 2020 revised: 4 august 2020 accepted: 16 august 2020 published: 7 september 2020 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education acknowledgement: all authors contributed equally to the conception and design of the study. funding: this study received no specific financial support. competing interests: the authors declare that they have no competing interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://dx.doi.org/10.1108/00483480410528832 http://dx.doi.org/10.1108/00483480410528832 http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 48 © 2020 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 5, 48-54, 2020 issn: 2576-6759 doi: 10.20448/journal.518.2020.5.48.54 © 2020 by the authors; licensee eastern centre of science and education, usa impact of population growth, poverty and unemployment on economic growth umar bala1 aminu ibrahim2 nazeef bala hadith3 ( corresponding author) 1,2department of economics, faculty of social and management sciences bauchi state university, gadau nigeria. 3national university commission (nuc) garki gpo, maitama abuja, nigeria. abstract this research explores the impact of population growth, poverty and unemployment on economic growth in nigeria using auto regressive distributed lag (ardl). the study employed an econometric procedure; unit root test which involved the use of augmented dickey fuller test (adf) and phillip-perron test (pp). the cointegration test technique used in the study is auto regressive and distributed lag (ardl). the study variables are real gdp, population, poverty, unemployment and foreign direct investment has control variable. the null hypothesis stated that there is presence of a unit root was failed to be rejected at levels but rejected at first difference according to the two tests (adp and pp) employed. the study found that some of the variables are stationary at level i(0) while others are stationary at first difference i(1).the results of the cointegration test showed that there exist cointegrating equation between explanatory variables and economic growth. the ect speed of adjustment to the normal equilibrium confirms their long run relationship of the variables. finally, the study found that population and fdi have a positive impact while poverty and unemployment has negative impact on gdp. based on these findings recommend that policy makers should grow the real economic sectors to improve and enhance productivity, exports, job creation, curb inflation and reduce poverty and rapid economic growth and substitute the non-productive imports with domestic products and develop enabling environment to attract foreign private investors. keywords: population growth, poverty, unemployment, economic growth, foreign direct investment, ardl bound test. jel classification: i39. 1. introduction there are so many problems recently in problem in nigeria which associated with high population grow especially in urban areas. increases in growing population causes high level of unemployment in the urban area and translate to poverty. moreover, the presence of increases numbers of poorer and jobless individuals in the society generates insecurity (frank, 2010). in most of the populated area has deficiency to acquire basic human need and social amenities. most of the people are farmers which categories as seasonal unemployment. when the level of unemployed people are high without corresponding human basic need the rate of crime increases. in nigeria there is still high rate of unemployment with translate to poverty and infrastructural deficit (okolobah & ismail, 2013). several decades ago in nigeria, agriculture seemed to be the major source of livelihood and as a result population growth was positively linked to production. it was believed that more people imply greater productivity and security since more workers or laborers working efficiently would be expected to immensely improve productivity and the overall output of the nation (tartiyus, dauda, & peter, 2015). when the societies and economies began to flourish, success was dependent upon a productive agricultural sector and attributed to large population. the economy inevitably expanded and the society reaped the financial benefits with more efficient labor. the high fertility rates allowed for increased laborers, enhanced productivity, facilitated economic activities and helped overcome the previously recorded exorbitant death rates as a result of combined effects of famine, disease, malnutrition, plague and war (latimer & kulkarni, 2008). the level of unemployment and poverty have continue to be core obstacle confronting the nigerian economy (adelowokan, maku, babasanya, & adesoye, 2019). according to world bank development indicators nigeria has a population of about 200,963,599 million people in 2019 and a land area of 923,768 km2, nigerian economy is the largest economy in african region (opec, 2015). the measurement of size and growth of the economy nigeria is re-basing its gdp data from 1990 to 2008. a preliminary forecast of the rebasing is about a 40 percent increase in the total gdp; i.e. from a 2012 imf estimate of usd 270 billion to usd 375 billion. this would bring nigeria’s gdp behind south africa’s gdp of usd 390 billion, making nigeria the 30th largest economy in the world from the previous 40th position. the structure of the nigerian economy is predominantly primarily product oriented (agriculture and crude-oil production). the projected growth rate of 6.75 percent appears conservative given the potential for double digit growth. also there necessity to achieve http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2020.5.48.54&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/81 https://orcid.org/0000-0001-5050-3675 asian business research journal, 2020, 5: 48-54 49 © 2020 by the authors; licensee eastern centre of science and education, usa higher growth rates in order to actualize it goal to become one of the top 20 economies in the world by the year 2020. the planned rebasing of the gross domestic product (gdp) is anticipated to boost the size of the economy possibly to become the largest in africa. but it will lead to a reduction in future gdp growth. irrespective of the potential increase in the size of the nigerian economy, nigeria is still facing some setback in economic sector such as militants, inflation, unemployment, poverty, insecurity problem and corruption. the 2020 budget shows that the federal government will remain focusing on major actions to control the disorder in the country particularly in northern part and to consolidate on the relative peace in the niger-delta post-amnesty. in 2020, the effect of covid19 turn the real gdp grow into negative accomplish by the declining global crude oil price and production cut challenges in an economy that is the still predominantly oil based. the alternative way to compensate the deficit growth from the oil sector is by creating alternative sources that will drive the economy forward. to achieve this, government must pay attention on fiscal and monetary policies that will drive the non-oil sectors of the economy. the sectors driving the economic growth were not sufficiently high job creating sectors. furthermore, the oil industry is a capital-intensive virtual enclave that generates very little employment and the rate of poverty still increases among the citizens. figure 1 we can see that population, unemployment and poverty are still increasing which may affect economic growth. it can be observed that all the trends of the variable are increases especially the unemployment rate from 2015 to 2019 which has direct corresponding effect on poverty rate has shown in the chart. 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 1990 1995 2000 2005 2010 2015 gdp 80,000,000 100,000,000 120,000,000 140,000,000 160,000,000 180,000,000 200,000,000 220,000,000 1990 1995 2000 2005 2010 2015 pop 51 52 53 54 55 56 1990 1995 2000 2005 2010 2015 pov 3 4 5 6 7 8 9 1990 1995 2000 2005 2010 2015 unem figure-1. real gdp, population, poverty and unemployment. 2. literature review the relationship between population growth, unemployment and poverty on economic growth, is a very common debate in the economic literature. numerous empirical and theoretical studies have been carried out on the areas. mamingi and perch (2013) examined the effect of population growth on economic growth/development in barbados for the period 1980-2010. using the autoregressive distributed lag approach to cointegration, the study revealed that population growth and population density positively and significantly affects economic growth, economic growth negatively and significantly affects population growth, natural increase rate positively and significantly affects population growth, also that net international migration negatively and significantly impacts population growth. the study failed to give any recommendations. the results from this study have policy implications on the grounds that, with increases in population comes a larger market and these are transformed into growing consumption accompanied by rise in investment which is the needed prerequisite for economic growth. njoku and ihugba (2011) found that agriculture activities have the major contribution and the main source of employment in the nigeria contributed more than the oil sector. ukpong, ekpebu, and ofem (2013) study about poverty and population growth in nigeria found that there is positive relationship between poverty rate and population growth, and negative relationship between gdp real growth rate and poverty rate in nigeria while maijamaa, saidu, muktari, and nafisa (2019) studies the relationship between population growth and unemployment found that that population positively increase unemployment whereas foreign direct investment reducing the rate of unemployment in the long-run. kurnianto, rakhmasari, ikhsan, apriyanto, and nurdin (2018) used secondary data source found that population growth, economic growth and unemployment, have significant impact on the poverty level in indonesia. mamingi and perch (2013) study barbados population growth found that population density have positive and significantly effect on economic growth. tartiyus et al. (2015) used regression analysis the result reveals that there is a positive relationship between population and economic growth. aiyedogbon (2012) used time series data found that unemployment, agricultural and services contributions to real gdp as well as population is the responsible increase the level of poverty in nigeria. osinubi (2005) argue that economic growth has not grantee to reduce the level of poverty and unemployment. chisom and oluchukwu (2017) study the relationship between poverty and unemployment found that poverty and unemployment have positive and significant correlation in nigeria. odeh and okoye (2014) studies that poverty reduction policies in relation to youth unemployment found that that majority of the youth portion of the nigerians lives below the poverty line, due to unemployment rate. nwosa (2014) apply an ordinary least square (ols) estimation technique found that asian business research journal, 2020, 5: 48-54 50 © 2020 by the authors; licensee eastern centre of science and education, usa government expenditure has positive and significant impact on unemployment rate while it has a negative and insignificant impact on poverty rate. adewale and ademola (2017) apply causality test found is two ways causality between unemployment rate and poverty in nigeria. also in pakistan meo et al. (2018) apply ardl bound test found that there is asymmetries relationship between inflation, unemployment and poverty. bala, ayatu, and maijamaa (2020) and mansoor (2018) found that population growth has direct impact on energy generation and demand in nigeria and pakistan. 3. methodology this paper builds on okun’s model by adding population and poverty to find their effect on economic growth of nigeria. the study used annual time series data between 1980 and 2017. in addition, eviews9 was used as statistical software for analyzing the available data, which has been transformed to their natural logarithm. all the data are sourced from world development indicators of world bank (wdi). 3.1. unit root test unit root test: in order to determine the level of stationarity of the variable unit root test has to be conducted which most usual and accepted test by (augmented dickey fuller (adf) and philips perron (pp). if the null hypothesis was not rejected of non-stationary at level, then the study will further test the variables in the first difference. assume x to be any variable and the augmented dickey-fuller (adf) model can be defined as follows: where is a pure white noise error term and , , , and i represents the number of recent time and j as the number of previous times or years. the hypothesis of augmented dickey fuller adf is is non-stationary, (unit root) is stationary, (no unit root) the first differencing in unit root test is to be tested if non-stationary time series y need to be “differenced” at the times to make it stationary. then the result can be stationary and correct, hence one can proceed to test for the co-integration. 3.2. autoregressive and distributed lag co-integration bound test after the test for the order of integration, the next step is to test for co-integration. this test is used to check if long run relationship exists among the variables in the model. this will be carried out using the ardl bound technique. 3.3. decision rule ho: α1 = α2 = α3 = α4 = α5 = 0 (there is no co-integration among the variables) h1: α1≠ α2 ≠ α3 ≠ α4 ≠ α5≠ 0 (there is co-integration among the variables) if the f statistics is below the i(0) we cannot reject ho but if the f statistics is higher than the i(1) bound, then we reject ho and accept the h1. this means that there is co-integration among the variables of study. the generalized ardl (p, q) model is specified as: 𝑌𝑡 = 𝛾0𝑖 + ʃ𝑖 = 1𝑝𝛿𝑖 𝑌𝑡 = 𝐼 + ʃ𝑞𝑖 = 0 𝛽𝑖𝑋𝑡 = 𝐼 + 𝜇𝑖𝑡 where y is a vector and the variables in (x) are allowed to be purely i (0) or i (1) or cointegrated; β and δ are coefficients; γ is the constant; i=1, p, q are optimal lag orders; μ is a vector of error terms unobservable zero mean while noise vector process (serially uncorrelated or independent). 3.4. model specification from okun’s model we develop a simple equation to capture the objective of this paper; 𝐺𝐷𝑃𝑡 = 𝑓 (𝑃𝑂𝑃𝑡 , 𝑃𝑂𝑉𝑡, 𝑈𝑁𝐸𝑀𝑡 , 𝐹𝐷𝐼𝑡) transforming the function in to econometric model, we have the following: 𝐺𝐷𝑃𝑡 = 𝛽0 + 𝛽1𝑃𝑂𝑃𝑡 + 𝛽2𝑃𝑂𝑉𝑡 + 𝛽3𝑈𝑁𝐸𝑀𝑡 + 𝛽4𝐹𝐷𝐼𝑡 + 휀𝑡 if we transform it in to a log form, we have; 𝑙𝑛𝐺𝐷𝑃𝑡 = 𝛽0 + 𝛽1𝑙𝑛𝑃𝑂𝑃𝑡 + 𝛽2𝑙𝑛𝑃𝑂𝑉𝑡 + 𝛽3𝑙𝑛𝑈𝑁𝐸𝑀𝑡 + 𝛽4𝑙𝑛𝐹𝐷𝐼𝑡 + 휀𝑡 where, 𝐺𝐷𝑃𝑡 is gross domestic product, which is the dependent variable 𝛽0 is expected to be positive. 𝛽0>1 𝑃𝑂𝑃𝑡 is population growth with the rate at which the nigerian population growing. thus, its coefficient β1, is expected to be positive on economic growth i.e., β1 >0. 𝑃𝑂𝑉𝑡 is poverty which is not having enough material possessions or income for a person's needs. therefore, the coefficient is expected to be negative (β2 < 0). 𝑈𝑁𝐸𝑀𝑡 is unemployment, this is number of people that have no job to do in nigeria. thus, its coefficient β3, is expected to be negative i.e., β3 <0. 𝐹𝐷𝐼𝑡 is foreign direct investment it is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. thus, its coefficient β4, is expected to be positive i.e., β4>0 the unrestricted error correction model, (ecm) for ardl is specified below: tit m i itt xxtx  ++++= − − −  1 121 t )( 211 −−− −= ttt xxx )( 322 −−− −= ttt xxx )( jtitit xxx −−− −= txh ,0:0 = txh ,0:0  asian business research journal, 2020, 5: 48-54 51 © 2020 by the authors; licensee eastern centre of science and education, usa ∆𝑙𝑛𝐺𝐷𝑃𝑡 = 𝛽1𝑡 + ∑ 𝛼1𝑖 i=1 ∆𝑙𝑛𝐺𝐷𝑃𝑡−𝑖 + ∑ β1𝑖 i=0 ∆𝑙𝑛𝑃𝑂𝑃𝑡−𝑖 + ∑ 𝛿1𝑖 i=0 ∆𝑙𝑛𝑃𝑂𝑉𝑡−𝑖 + ∑ 𝜒1𝑖 i=0 ∆𝑙𝑛𝑈𝑁𝐸𝑀𝑡−𝑖 + ∑ 𝜕1𝑖 i=0 ∆𝑙𝑛𝐹𝐷𝐼𝑡−𝑖 + 𝜃1𝑙𝑛𝐺𝐷𝑃𝑡−1 + 𝜃2𝑙𝑛𝑃𝑂𝑃𝑡−𝐼 + 𝜃4𝑙𝑛𝑃𝑂𝑉𝑡−1 + 𝜃3𝑙𝑛𝑈𝑁𝐸𝑀𝑡−𝐼 + 𝜃5𝑙𝑛𝑙𝑛𝐹𝐷𝐼𝑡−𝐼 + 휀𝑡 where δ is first difference operator and k is optimal lag length. long-run equation 𝑙𝑛𝐺𝐷𝑃𝑡 = 𝛽2𝑡 + ∑ 𝛼2𝑖 i=1 𝑙𝑛𝐺𝐷𝑃𝑡−𝑖 + ∑ β2𝑖 i=0 𝑙𝑛𝑃𝑂𝑃𝑡−𝑖 + ∑ 𝛿2𝑖 i=0 𝑙𝑛𝑃𝑂𝑉𝑡−𝑖 + ∑ 𝜒2𝑖 i=0 𝑙𝑛𝑈𝑁𝐸𝑀𝑡−𝑖 + ∑ 𝜕2𝑖 i=0 𝑙𝑛𝐹𝐷𝐼𝑡−𝑖 + 휀2𝑡 short-run equation ∆𝑙𝑛𝐺𝐷𝑃𝑡 = 𝛽3𝑡 + ∑ 𝛼3𝑖 i=1 ∆𝑙𝑛𝐺𝐷𝑃𝑡−𝑖 + ∑ β3𝑖 i=0 ∆𝑙𝑛𝑃𝑂𝑃𝑡−𝑖 + ∑ 𝛿3𝑖 i=0 ∆𝑙𝑛𝑃𝑂𝑉𝑡−𝑖 + ∑ 𝜒3𝑖 i=0 ∆𝑙𝑛𝑈𝑁𝐸𝑀𝑡−𝑖 + ∑ 𝜕3𝑖 i=0 ∆𝑙𝑛𝐹𝐷𝐼𝑡−𝑖 + 𝜆𝐸𝐶𝑇𝑡−1 error correction term (ect) in equation 𝐸𝐶𝑇𝑡 = 𝑙𝑛𝐺𝐷𝑃𝑡 − 𝛽2𝑡 − ∑ 𝛼2𝑖 i=1 𝑙𝑛𝐺𝐷𝑃𝑡−𝑖 − ∑ β2𝑖 i=0 𝑙𝑛𝑃𝑂𝑃𝑡−𝑖 − ∑ 𝛿2𝑖 i=0 𝑙𝑛𝑃𝑂𝑉𝑡−𝑖 − ∑ 𝜒2𝑖 i=0 𝑙𝑛𝑈𝑁𝐸𝑀𝑡−𝑖 − ∑ 𝜕2𝑖 i=0 𝑙𝑛𝐹𝐷𝐼𝑡−𝑖 where λ is the coefficient of the error correction term which measures the speed of adjustment of the variables toward convergence to equilibrium in addition, the coefficient provides information about the long-run relationship among the variables. to complete the estimation process, diagnostic tests will be conducted to assess the reliability and efficiency of the estimates. 4. results and discussions the major concern of this part is to presents analytical discussions on the results effort was made to establish a results and at the same time justify the authenticity of the statement analysis and interpretations of the data. table 1 shows the conducted augmented dickey-fuller (adf) test and the phillips-perron (pp) test results for more reliability and stationarity of the data. the t-statistic and the p-value of each of the tests must be observed. if the pvalue is less than (0.05) reject the null hypothesis of non-stationarity and accept the alternative hypothesis of stationarity, otherwise accept the null hypothesis of non-stationarity. the results of the tests revealed that gdp, poverty and foreign direct investment are stationary after first difference that is i(1), while population and unemployment are stationary at level that is i(0). this indicate a mixture of order of integration that is i(0) and i(1). as such ardl methodology is the most fitted methodology to apply. table-1. unit root test. adf test statistics pp test statistics constant trend constant trend level first difference level first difference level first difference level first difference lngdpt -0.783 (0.811) -4.121 (0.002)*** -2.223 (0.462) -3.317 (0.080)* 0.866 (0.993) -4.159 (0.002)*** -3.946 (0.019)** -3.843 (0.025)** lnpopt -6.102 (0.000)*** -3.565 (0.013)** -6.119 (0.000)*** -1.731 (0.710) -3.417 (0.016)** -4.046 (0.003)*** -3.931 (0.020)** -3.445 (0.061)* lnpovt 0.573 (0.986) 3.202 (1.000) 4.079 (1.000) 2.421 (1.000) 5.816 (1.000) -1.825 (0.362) 3.381 (1.000) -4.869 (0.002)*** lnunemt -3.786 (0.006)*** -5.692 (0.000)*** -4.138 (0.012)** -5.672 (0.000)*** -2.020 (0.277) -6.370 (0.000)*** -2.140 (0.507) -6.903 (0.000)*** lnfdit -1.620 (0.462) -11.383 (0.000)*** -5.474 (0.000)*** -11.245 (0.000)*** -1.396 (0.573) -11.169 (0.000)*** -3.772 (0.029)** -11.245 (0.000)*** note: ***, ** and * denotes 1%, 5% and 10% significance level respectively. 4.1. cointegration tests after determining the stationarity of the data, the next step is to estimate the long relationship among the variables. but before then, we have to determine the optimal lag to be used. prior to carrying out the task, an optimum lag length for the model was selected based on akaike information criterion (aic) which suggested lag 4 for the model. the cointegration result presented in table 2 shows that the model has cointegration as the calculated f statistics (9.261731) based on the optimum lags selected exceed the upper bound of the critical values table developed by narayan and narayan at 5%. this result indicates that the variables in the model have a long-run equilibrating relationship. as such, we could go on and estimate the long-run model of the ardl specification. asian business research journal, 2020, 5: 48-54 52 © 2020 by the authors; licensee eastern centre of science and education, usa table-2. ardl bound test results. model f – statistics lag level of significance bound test critical values (constant level) gdp i(0) i(1) (pop, pov, unemp, fdi) 9.2617 4 10% 2.45 3.52 5% 2.86 4.01 2.5% 3.25 4.49 1% 3.74 5.06 note: based on narayan table case iii (narayan, 2005). 4.2. long-run and short-run results table 3 below presents the results of the long-run and short-run equations for the model. the presence of longrun equilibrium relationship among the variables as found from the ardl bound test led to the application of ardl. with this approach, both the long-run equilibrium and short-run dynamic relationships associated with the variables under the study are established. in the long run, population has a positive impact on gdp. a unit change in population will result in increase in gdp by 5.956. population is remain the main factor of human capital accomplish which education, health and productivity. poverty on the other hand has a negative impact on gdp and the relationship is statistically significance. precisely 1 per cent increases in poverty will cause gdp to decrease by 6.652. the level of poverty in nigeria is high accomplished which inequality and corruption. similarly, unemployment has a negative and significant impact on gdp, 1 per cent increases in unemployment will result gdp to decrease by -0.312. this result sounds counterintuitive because unemployment leads to lower productivity, malnutrition, and high cost of living. foreign direct investment has a negative and statistically significant impact on gdp. that is, 1per cent increases in foreign direct investment will result in increase in gdp by 0.138. the fdi result similarly sounds counter intuitive like unemployment as fdi leads to more job opportunities, contribute to country’s gdp among the others. in the short run, population has a positive and significant impact on economic growth. that is a unit change in population will result increase in gdp by 11.053. poverty on the other hand has a negative and insignificant impact on economic growth unlike in the long run case where the relationship is similarly negative but significant. that is 1% increase in poverty rate will lead to -8.045 decreases in gdp. unemployment has a positive and significant impact on economic growth which became counterintuitive to a priory expectation. that means 1% increase in unemployment will decrease gdp by 0.067. at last, foreign direct investment has a negative and insignificant impact on economic growth unlike the long run case where the relationship is negative but significant. similarly, it’s contrary to our expectation. that is 1% increase in fdi will result decrease in gdp by -0.002. thus, some of the variables are insignificant in the short run. this shows that those variables take time before they can affect the economy. further, the case of fdi might be because the amount of foreign direct investment inflow in to the country is too low to affect the economic activities of the country in the shut run. all the variables conform with a priori expectation in the long run, so also in the short run except for unemployment and foreign direct investment where they have been explained above. the ect coefficient (-0.757) substantiates the long-run relationship among the variables and denotes that the speed of adjustment of the variables’ convergence to equilibrium is 75.7%. the p-value of the f-statistics is less than 5% (i.e. 0.001<0.05). this means the f-statistics is significant we therefore reject the null hypothesis and conclude that the explanatory variables are jointly significant in influencing the dependent variable gdp. the adjusted r2 is 0.699%. this means that about 69.9% of the proportion of total variation in economic growth is explained by the explanatory variables, while only 30.1% of the variation is captured by the error term in the model. the durbin watson statistics is 2.320. the dw statistic reveals that there is no problem of first order autocorrelation because it falls between the range of 1.5 and 2.5. table-3. estimated long-run and short-run coefficients. dependent variable gdp coefficient t ratio (p-value) regressors long run results lpop 5.956 9.071(0.000)*** lpov -6.652 -2.504(0.025)** lunem -0.312 -3.366(0.004)*** lfdi 0.138 3.441(0.004)*** c 52.792 4.994(0.000)*** short run results ∆lpop 11.053 5.143(0.000) *** ∆lpov -8.045 -1.524(0.149) ∆lunem 0.067 1.925(0.074)* ∆lfdi -0.002 -0.179(0.859) ect (-1) -0.757 -5.402(0.000)*** adjusted r2 0.699 durbin watson statistics 2.320 f statistics 5.147(0.001)*** note: *significant at 10% level. **significant at 5% level. ***significant at 1% level. 4.3. diagnostic tests like any other time-series analysis, diagnostic tests are imperative to assessing the validity, efficiency, and reliability of our model estimate. if the model passes the major diagnostic tests, then the estimate could be reliable. on the contrary, if the models could not surpass the major diagnostic tests, then the deduced inference would be void. the results in table 4 denote that the model have passed all the diagnostic tests. therefore, on the general asian business research journal, 2020, 5: 48-54 53 © 2020 by the authors; licensee eastern centre of science and education, usa note, our models could produce a reliable outcome having passed all the diagnostic tests of autocorrelation, heteroscedasticity, normality and stability. table-4. diagnostic tests result. type of test f-statistics probability lm 0.550 0.590 breusch-pagan-godfrey 0.903 0.586 jb 0.459 0.794 reset 1.793 0.203 as suggested by pesaran, shin, and smith (2001) we have conducted a stability test for the model based on cusum and cusum of squares tests. it is suggested that for a model to be stable along the sampled period, the residuals must be within the straight lines of the critical bounds at 5% significance level. the stability results are depicted in figure 2. all the figures show that the model is fairly stable over the studied period because the residual lies within the straight line critical bounds at 5% level of significance. -12 -8 -4 0 4 8 12 04 05 06 07 08 09 10 11 12 13 14 15 16 17 cusum 5% significance -0.4 0.0 0.4 0.8 1.2 1.6 04 05 06 07 08 09 10 11 12 13 14 15 16 17 cusum of squares 5% significance figure-2. cusum and cusum of squares test result. 5. summary and conclusion this research explores the impact of population growth, poverty and unemployment on economic growth in nigeria. the empirical review showed a strong link between population and unemployment and poverty on gdp. the study found that some of the variables are stationary at level, that is, i(0) while others are stationary at first difference, that is, i(1). the ardl bound cointegration test were applied and found the existence of long run relationship between variables. the results of the cointegration test showed that there exist cointegrating equation between explanatory variables and gdp. the ect speed of adjustment to the normal equilibrium confirms their long run relationship of the variables. finally, the study found that population and fdi have a positive impact while poverty and unemployment has negative impact on gdp. based on these findings recommend that policy makers should grow the real economic sectors to improve and enhance productivity, exports, job creation, curb inflation and reduce poverty and rapid economic growth and substitute the non-productive imports with domestic products and develop enabling environment to attract foreign private investors. the diagnostic tests were also carried out to check the reliability of the model and the results shows that the model has passed all the diagnostic tests. that is, auto-correction, heteroscedasticity, normality and stability. references adelowokan, o. a., maku, o. e., babasanya, a. o., & adesoye, a. b. 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(2013). cointegration inferences on issues of poverty and population growth in nigeria. journal of development and agricultural economics, 5(7), 277-283.available at: https://doi.org/10.5897/jdae12.151. citation: umar bala; aminu ibrahim; nazeef bala hadith (2020). impact of population growth, poverty and unemployment on economic growth. asian business research journal, 5: 48-54. history: received: 22 september 2020 revised: 14 october 2020 accepted: 26 october 2020 published: 12 november 2020 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education acknowledgement: all authors contributed equally to the conception and design of the study. funding: this study received no specific financial support. competing interests: the authors declare that they have no competing interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://www.opec.org/ http://www.opec.org/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 39 © 2020 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 5, 39-47, 2020 issn: 2576-6759 doi: 10.20448/journal.518.2020.5.39.47 © 2020 by the authors; licensee eastern centre of science and education, usa effect of debt to equity ratio and return on assets on earnings per share with firm value as a moderating variable in various industrial sub-sector manufacturing companies indonesia citra larasati1 abdul rivai2 suharto3 ( corresponding author) 1,2,3universita krisnadwipayana, campus unkris jatiwaringin jat cm jakarta, indonesia. abstract this study aims to examine and determine the effect of debt to equity ratio and return on assets on earnings per share with firm value as a moderating variable in various industrial sub-sector manufacturing companies listed on the indonesia stock exchange for the period 2016-2018. the population in this study was 45 companies in various industrial sub-sectors listed on the indonesia stock exchange (bei) during the 2016 2018 period. the sample is part of the number and characteristics of the population. the sampling technique used in this research was purposive sampling. the data analysis technique used path analysis. the results showed that the debt to equity ratio (der) had a significant effect on earning per share, meaning that partially the debt to equity ratio (der) had an effect on earning per share (eps). return on asset (roa) affects earning per share (eps), which means that partially, return on asset (roa) affects earning per share (eps). price to book value (pbv) as a moderating variable is proven to be able to strengthen the effect of debt to equity ratio (der) on earning per share, this shows that price to book value (pbv) moderates the debt to equity ratio (der) against earning per share (eps). price to book value (pbv) as a moderating variable is proven to be able to strengthen the effect of return on assets (roa) on earning per share (eps), this shows that price to book value (pbv) moderates the return on asset relationship. (roa) against earning per share (eps). keywords: debt to equity ratio, return on asset, earning per share, price to book value, various industrial sub-sectors, indonesia stock exchange. jel classification: b27, h54, l60. 1. introduction indonesia is ready to welcome the era of industrial revolution 4.0 which is targeted to have an impact on the manufacturing industry. when viewed from the national gross domestic product (gdp), the manufacturing industry has consistently been the largest contributor to the national gross domestic product (gdp), which was recorded at 19.83% in the second quarter of 2018. the rapid growth rate in the national industry is a multiplier effect and high investment in this sector. as of 2010, the trend of investment in the industrial sector in indonesia has continued to increase even though it was restrained by the financial crisis in 2008. if we take it further back, the growth of the manufacturing industry in the indonesian economy has gradually increased. figure-1. development of the manufacturing industry, contribution to gdp, and gdp of indonesia in 1990-2015. source: bps, 2015. in the era of industrial revolution 4.0, which certainly requires a commitment to work together through the implementation of strategic regional programs that bring economic prosperity. as well as to share policies, experiences, technology, knowledge, and best practices related to the development of the manufacturing sector and the implementation of industry 4.0. the minister of industry stated that he believed that the transformation of industry 4.0 would lead to a new business model for the globally competitive manufacturing industry. the http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2020.5.39.47&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/78 https://orcid.org/0000-0002-1290-335x https://orcid.org/0000-0002-5979-6184 asian business research journal, 2020, 5: 39-47 40 © 2020 by the authors; licensee eastern centre of science and education, usa manufacturing industry sector is stable and is one of the pillars of the country's economy amidst the uncertainty of the world economy with a positive growth rate. the manufacturing industry creates added value which means production or products produced by various companies in the manufacturing sector, such as food, beverages, automotive textiles, pharmaceuticals, electronics, and so on. if the processing is carried out properly and optimally, all the basic ingredients processed in the manufacturing industry can create added value to the resulting product. the more variety and product innovation that is produced, the greater the potential for development. especially considering that indonesia has abundant natural resources so that it can be used as a spur to increase the growth of the industrial sector in indonesia, especially in the manufacturing industry sector. behind the increasing economic growth in indonesia through the manufacturing industry, it is necessary to encourage investment in terms of investment as well. this investment will create an attractive and conducive climate in indonesia. so that domestic and foreign investors are interested in investing their shares in indonesia. one of the securities used to invest in stocks. shares are a sign of someone's participation or ownership in a company (lukman & solihin, 2018). in general, investors will be interested in investing (stocks) if the company can provide the return they expect. the following is a table of the movement of the manufacturing sector stock price index on the indonesia stock exchange from 2012 to 2015. table-1.the movement of the manufacturing sector stock price index in the indonesia stock exchange in 2012-2015. year basic industry miscellaneous industry consumer goods 2012 526,551 1.336,52 1.565,88 2013 480,744 1.205,01 1.782,09 2014 543,674 1.307,07 2.042,25 2015 407,839 1.057,28 2.064,91 2015 538,189 1.370,63 2.324,28 average 499,40 1.255,30 1.955,88 from table 1. it can be seen that the consumer goods sub-sector has the highest average stock price index compared to the stock price index of other manufacturing sub-sectors, namely rp.1,955.88. meanwhile, the lowest in the basic industry sub-sector. however, when viewed from figure 1, the manufacturing sector experienced fluctuating data and experienced a significant decline in 2015 and again rose in 2015. to strengthen the growth of the business world, one of which is in manufacturing companies. sources of funding for the development of the business sector that can be sought from internal funds and external funds, with limited internal funds, companies can seek additional alternatives to external funds, namely through loans and selling securities through the capital market. therefore, the existence of the capital market is very profitable. for the company. a capital market is a meeting place for those who have funds and those who need funds. the capital market has various choices of sources of funds for investors as well as increasing investment. investing in shares in the capital market is very profitable for investors. by investing in the capital market, investors will get benefits in the form of dividends and capital gains. the amount of dividend distribution is strongly influenced by the number of earnings per share or earnings per share. an investor will invest their funds because they are interested in the company's performance. for this reason, investors need to carry out fundamental analysis, namely analysis that focuses on financial ratios and events that directly or indirectly affect the company's financial performance (tandelilin, 2010). financial ratios that can be used include earning per share (eps), debt to equity ratio (der), return on assets (roa), and price to book value (pbv). earning per share is one of the things that attracts investors to decide on investing their funds for the company. if the profit generated by each share in circulation is so good, then the welfare of shareholders can be guaranteed by looking at dividend payments at the end of each year the company operates. a company can be said to have maximized company value if the earnings per share (eps) obtained continue to experience a high increase in eps, then the company's performance will be better and can show investors about the company's prospects better (kukuh, 2015) which states that earnings per share (eps) affects firm value. debt policy is a company policy on how far a company uses debt financing. with debt, the higher the proportion of debt, the higher the share price of the company (mardiyanti, 2012). debt policy needs to be managed because too high can reduce the company's value (perdana, 2012). the debt policy itself is measured by the debt to equity ratio (der). however, at a certain point, an increase in debt will reduce the value of the company because the benefits obtained from the use of debt are smaller than the costs incurred. one of the ratios used to measure profitability is roa (return on assets). roa is used to measure the company's ability to generate profits by utilizing its assets. roa is the ratio between net income after tax and total assets. the reason for using the roa variable in this study is because roa has many advantages. one of them is that roa can measure the overall efficiency of the use of capital, which is sensitive to everything that affects the condition of the company (mardiasari, 2012). company value is one of the most important things that investors should pay attention to when making investment decisions in a company. high company value is the desire of company owners because a high value indicates the prosperity of shareholders is also high. this is what investors want in investing their funds in a company. the company's investment opportunity can be proxied by the price to book value ratio. the price ratio or book value is a valuation ratio that investors use to compare the price per share with its book value (shareholder's equity). the price to book value can be a determining indicator of the high and low investment opportunities of a company. companies usually tend to buy stocks when the price to book value is low in the hope that the stock price can increase at any time. while companies tend to hold cash in small amounts when the price to book value is high because the company's stock price is already high or reaches a maximum amount, then the investment opportunity is low. based on the pbv ratio, it can be seen that the company value is good when the pbv value is above one, that is, asian business research journal, 2020, 5: 39-47 41 © 2020 by the authors; licensee eastern centre of science and education, usa the market value is greater than the company's book value. the higher the pbv value, the better the company value. conversely, if pbv is below one, it reflects the company's value is not good. so that investors' perceptions of the company are also not good, because the pbv value below one illustrates the company's selling price is lower than the company's book value. table-2. value of der, roa, eps, and pbv in 2012-2016 the five largest manufacturing companies in indonesia. company name years pbv (x) der (x) eps (rp) roa (%) pt. gudang garam, tbk 2012 4,07 0,56 2086,06 9,8 2013 2,75 0,73 2249,76 8,63 2014 3,66 0,75 2790,76 9,27 2015 2,78 0,67 3344,78 10,16 2016 3,27 0,59 3470,26 10,6 pt. indofood sukses makmur, tbk 2012 1,50 0,74 371,41 8,06 2013 1,51 1,04 285,16 4,38 2014 1,45 1,08 442,50 5,99 2015 1,05 1,13 338,02 4,04 2016 1,55 0,87 472,02 6,41 pt. kalbe farma, tbk 2012 7,30 0,28 28,45 18,85 2013 6,89 0,33 37,80 17,41 2014 9,30 0,27 44,05 17,07 2015 5,66 0,25 42,76 15,02 2016 6,01 0,22 49,06 15,44 pt. semen indonesia (persero), tbk 2012 5,18 0,46 817,20 18,54 2013 3,85 0,41 905,37 17,39 2014 4,09 0,37 938,35 16,24 2015 2,46 0,39 762,28 11,86 2016 1,91 0,45 762,30 10,25 pt. unilever indonesia, tbk 2012 40,09 2,02 634,24 40,38 2013 46,63 2,14 701,52 71,51 2014 45,03 2,11 752,10 40,18 2015 58,48 2,26 766,95 37,2 2016 46,67 2,56 837,57 38,16 when viewed from table 2, at pt gudang garam, tbk. pbv has increased and decreased fluctuating while der has decreased in 2015 by 0.08, roa has decreased in 2013 and then increased again until 2016. eps has increased from 2012 to 2015. at pt indofood sukses makmur, tbk, pbv has decreased in 2014 by 0.06 and 2015 by 0.4, while der has decreased in 2015 by 0.26, roa, and eps have fluctuated increases and decreases. at pt kalbe farma, tbk, pbv has fluctuated increases and decreases, while der continues to decline from 2014 to 2015, roa has decreased each year, eps has decreased in 2015 by 1.29. at pt semen indonesia (persero), tbk pbv there has been a fluctuating increase and decrease while der has decreased from 2013 to 2015 and increased again until 2015, roa has decreased every year, eps has decreased from 2015. at pt unilever indonesia, tbk, pbv and der have fluctuated increases and decreases, roa has increased in 2013 then decreased again until 2016, while eps has increased from 2012 to 2015. substantially, a high eps indicates that roa is high as well as firm value. roa is an important indicator in determining earnings growth. on the other hand, the higher use of debt will cause lower eps and corporate value. the higher the debt, the higher the interest expense borne by the company and can reduce eps. however, based on the observations that the author has made on certain manufacturing companies that have gone public, which are listed in table 1 and 2, there is a phenomenon that is somewhat different from its substance. this phenomenon illustrates that in certain companies, an increase in der and a decrease in roa increases eps and vice versa, a decrease in der and an increase in roa decreases eps. meanwhile, in other companies, when the der decreases, eps tends to be constant and in other companies too, when roa tends to be constant, eps fluctuates instead. 2. literature review 2.1. financial ratios company performance is a description of the financial condition of a company which is analyzed with financial analysis so that it can be seen about the good and bad financial condition of a company that reflects work performance in a certain period (fahmi, 2015). a company can be said to be successful if it has achieved the standards and goals that have been set. many financial performance measurement techniques can be used for financial statement analysis and in comparison with other companies. financial performance is often measured through financial ratios with a focus on measuring different indicators. types of financial ratios according to (fahmi, 2015) financial ratios can be grouped into six types, namely: a. liquidity ratio, namely the ability of a company to meet its short-term obligations promptly. this ratio is divided into the current ratio, quick ratio (acid test ratio), net working capital ratio, cash flow liquidity ratio. b. the leverage ratio is a measure of how much the company is financed by debt. financial managers are required to manage the leverage ratio properly so that they can balance high returns with low levels of risk. the size of this ratio depends on the loans the company has, in addition to its assets (capital). in general, there are eight leverage ratios (kasmir, 2016) namely debt to total assets, debt to equity ratio, times interest earned, cash flow coverage, long-term debt to total capitalization, fixed charge coverage, and cash flow adequacy. c. the activity ratio is a ratio that describes the extent to which a company uses its resources to support the company's activities, where the use of this activity is carried out maximally to obtain maximum results. in general, there are four activity ratios (kasmir, 2016) namely inventory turnover, day sales outstanding, fixed assets turnover, total assets turnover, long term assets turnover. asian business research journal, 2020, 5: 39-47 42 © 2020 by the authors; licensee eastern centre of science and education, usa d. profitability ratios measure the effectiveness of management as a whole aimed at the size of the level of profits obtained concerning sales or investment. the better the profitability ratio, the better it describes the company's high profitability. in general, there are four profitability ratios (kasmir, 2016) namely gross profit margin, net profit margin, return on investment, and return on equity. e. growth ratio, which is a ratio that measures how much the company's ability to maintain its position in the industry and general economic development. this growth ratio is commonly seen from various aspects, namely in terms of sales, earning after tax (eat), earnings per share, dividends per share, and market price per share. f. market value ratio, namely the ratio that describes the conditions that occur in the market. this ratio can provide an understanding of the management of the company on the conditions of implementation that will be implemented and its impact in the future. 2.2. earning per share according to fahmi (2011) earning per share or income per share is a form of giving benefits to shareholders from each share they own. earning per share (eps) is a ratio that reflects the company's ability to generate profits for each share outstanding (watung & ilat, 2015). earnings per share (eps) or income per share is a form of giving profits to shareholders from each share they own (fahmi, 2011). meanwhile, according to tandelilin (2010) eps is net income that is ready to be distributed to shareholders divided by the number of company shares. according to darmadji and fakhruddin (2012) defines earning per share (eps) as follows: "earning per share (eps) is a ratio that reflects the company's ability to generate profits for each outstanding share." according to kasmir (2014) eps is also known as the book value ratio, which is a ratio to measure the success of management in achieving benefits for shareholders. eps describes the amount of rupiah obtained for each common share or net income per share of common stock (retnowati, 2012). earnings per share (eps) is usually a concern of shareholders in general or prospective shareholders and management. eps shows the amount of money generated (return) from each share. the greater the eps value, the greater the profit received by shareholders. an investor buys and maintains stock in a company in the hope of obtaining dividends or capital gains. profit is usually the basis for determining future dividend payments and stock price increases. therefore, shareholders are usually interested in the eps figures that companies report. according to brigham and houston (2010) the factors that cause the increase and decrease in earning per share (eps) are: 1. factors causing an increase in earning per share (eps): • net income increased and the number of ordinary shares outstanding remained constant. • fixed net income and the number of ordinary shares outstanding decreased. • net income increases and the number of ordinary shares outstanding decreases. • the percentage increase in net income is greater than the percentage increase in the number of ordinary shares outstanding. • the percentage decrease in the number of ordinary shares outstanding is greater than the percentage decrease in net income. 2. while the decline in earning per share (eps) can be caused by: • fixed net income and the number of ordinary shares outstanding increased • net income decreased and the number of ordinary shares outstanding remained constant. • net income decreased and the number of ordinary shares outstanding increased. • the percentage decrease in net income is greater than the percentage decrease in the number of ordinary shares outstanding. • the percentage increase in the number of ordinary shares outstanding is greater than the percentage increase in net income. so for a company, the value of earnings per share will increase if the percentage increase in net income is greater than the percentage increase in the number of ordinary shares outstanding, and vice versa. 2.3. debt to equity ratio debt to equity ratio (der) is a measure used in analyzing financial statements to show the amount of collateral available to creditors (fahmi, 2015). debt to equity ratio (der) is one of the ratios included in the leverage ratio. the leverage ratio describes the company's ability to meet all liabilities with the assets it owns. given that the leverage ratio describes the company's liabilities, the greater the leverage ratio of a company, the greater the company's burden to pay the principal debt and interest costs, which means the greater the risk faced by the company (simatupang, 2010). the definition of debt to equity ratio according to darsono and ashari (2010) namely: debt to equity ratio (der) is one of the leverage or solvency ratios. the solvency ratio is the ratio to determine the company's ability to pay its obligations if the company is liquidated. this ratio is also known as the leverage ratio, which assesses the company's limits on borrowing money. according to sugiyono (2009) states that: this ratio shows the ratio of debt and capital. this ratio is one of the important ratios because it relates to the problem of trading on equity, which can have a positive and negative impact on the profitability of the company's capital. from the definition of der above, it is concluded that der is a ratio used to measure a company's ability to finance its short-term and long-term debt. this ratio is sought by comparing all debt, including current debt, and total equity. the use of the debt to equity ratio (der) is to find out every rupiah of own capital that is used as collateral for a debt. so, it can be concluded that the debt to equity ratio (der) shows how the company's ability to use existing capital to fulfill its obligations. 2.4. return on assets return on asset (roa) analysis or often translated into indonesian as economic profitability measures a company's ability to generate profits in the past. this analysis can then be projected into the future to see the company's ability to generate profits in the future. according to kasmir (2012) the definition of return on assets asian business research journal, 2020, 5: 39-47 43 © 2020 by the authors; licensee eastern centre of science and education, usa (roa) is as follows: "roa is a ratio that shows the results (return) on the total assets used in the company. also, roa provides a better measure of the company's profitability because it shows the effectiveness of management in using assets to generate income. meanwhile, according to fahmi (2012) roa is a ratio used to see to what extent the investment that has been invested can provide returns after expected returns based on assets owned. this ratio is used to measure the ability of company management to gain overall profit (profit). so, seen from the above definitions, it can be concluded that return on assets (roa) is a measurement tool used to measure management's ability to generate profits using company assets. roa is the ratio that companies use in calculating returns on the use of several assets by the company (horne & wachowicz, 2012). according to kasmir (2016) return on assets (roa) is a ratio that shows the return on the total assets used by the company. 2.5. the value of the company price to book value (pbv) will be used in this study as a proxy for firm value. the ratio of the stock price to the company's book value or price to book value (pbv), shows the level of the company's ability to create value relative to the amount of invested capital. a high pbv reflects a high share price compared to book value per share. the market price ratio to book value is the division of the market price per share by the book value per share. this ratio compares the market value of the investment in the company with its costs. a value of less than 1 means that the company fails to create value for its shareholders (rahardjo, 2009). 3. research methods 3.1. time and location of research in conducting this research, the research location chosen by the researcher was in various industry sub-sector manufacturing companies that were listed on the indonesia stock exchange (idx) during the period 2016-2018. 3.2. research design the research design used in this research is descriptive analysis and verification methods. descriptive analysis is carried out to obtain a description or information about the variables studied and observed based on the statistical data obtained. the descriptive method in this study is intended to determine the development of debt to equity ratio and return on assets to earning per share with firm value as the moderating variable. meanwhile, verification analysis is carried out to test the hypothesis using a statistical test tool, namely the multiple regression method. the verification method in this study aims to determine the effect of debt to equity ratio and return on assets on earning per share with firm value as a moderating variable. this phenomenon can be designed through the following mathematical functions: 3.2.1. model 1 the role of the variable x1 debt to equity ratio (der), to the variable y earning press share (eps) with firm value (pbv) as the moderating variable x3 can be formulated by:1) eps = α + β1der + e 2) eps = α + β1der +β2np + β3der.np this analysis can be described as follows: figure-2. regression relationship model with the first moderating variable. source: processing results, 2020. 3.2.2. model 2 the role between the variable x2 return on assets (roa), on the variable y earning press share (eps) with firm value (pbv) as the moderating variable x3 can be formulated by:1) eps = α + β1roa + e 2) eps = α + β1roa +β2np + β3roa.np this analysis can be described as follows: figure-3. regression relationship model with the second moderating variable. 3.3. population and sample sugiyono (2009) states that the population is a generalization area consisting of objects/subjects that have certain qualities and characteristics that are determined by the researcher to be studied and then draw conclusions. asian business research journal, 2020, 5: 39-47 44 © 2020 by the authors; licensee eastern centre of science and education, usa the population in this study was 45 companies in various industrial sub-sectors listed on the indonesia stock exchange (bei) during the 2016 2018 period. the sample is part of the number and characteristics of the population. the sampling technique is a sampling technique (sugiyono, 2009). the sampling technique used in this research was purposive sampling. the data analysis technique used path analysis. 4. research results and discussion 4.1. moderated regression analysis equations moderated regression analysis equation is used to predict and test the changes that occur in earning per share (eps) which can be explained by two independent variables and reinforced or amplified by one moderating variable. 4.1.1. moderated regression analysis equations for der (x1), pbv (x3), and eps (y) to determine the effect of debt to equity ratio (der) on earning per share (eps) which is moderated by firm value (pbv), analysis calculations using moderated regression analysis (mra) are performed. the results of calculations using spss obtained regression coefficients and constant values as in the following table: table-3. regression coefficient results der (x1), pbv (x3), and eps (y). model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 169.070 212.329 .796 .432 der 2.876 61.535 .013 .047 .963 pbv 16.460 43.738 .113 .376 .709 der*pbv 11.079 15.490 .255 .715 .480 note: a. dependent variable: earning per share (eps) (y). the regression equation that explains the effect of debt to equity ratio (der) on earning per share (eps) moderated by firm value (pbv) is: y = 169,070 + 2,876 x1 + 16,460 x3 + 11,079 x1.x3 the debt to equity ratio (der) variable regression coefficient of 169,070 explains the magnitude of the change in the score of earning per share (eps) because of the effect of debt to equity ratio (der) on earning per share (eps). a positive sign indicates the direction of the relationship is directly proportional (inline). so when there is an increase in the score of the debt to equity ratio (der) variable, the earning per share (eps) score will increase by 169,070, assuming that other factors are constant (unchanged). so the more appropriate the debt to equity ratio (der), the eps will increase (better). the variable regression coefficient (x3) of 2,876 shows the magnitude of the change in earning per share (eps) due to the influence of the variable firm value (pbv) on earning per share (eps). a positive sign indicates the direction of the relationship that is directly proportional (inline). so every time there is an increase in one unit variable score (x3), the eps will increase by 2,876 assuming the other factors are constant (unchanged). so the higher (x3), the earning per share (eps) will increase (better). the regression coefficient of the moderating variable x1x3 (interaction x1x3) which is the interaction between the debt to equity ratio (der) and pbv is obtained as positive. so it can be explained that pbv strengthens the effect of debt to equity ratio (der) on earning per share (eps). 4.1.2. equation of moderated regression analysis of roa (x2), pbv (x3), and eps (y) to determine the effect of return on asset (roa) and firm value (pbv) on earning per share (eps), which is moderated by firm value (pbv), analysis is calculated using moderated regression analysis (mra). the results of calculations using spss obtained regression coefficients and constant values as in the following table: table-4. regression coefficient results roa (x2), pbv (x3), and eps (y). model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 160.338 139.370 1.150 .259 roa 41.772 21.743 .754 1.921 .064 pbv 23.441 26.552 .160 .883 .384 roa*pbv -2.367 2.372 -.408 -.998 .326 note: a. dependent variable: eps (y). the regression equation that explains the effect of return on assets (roa) and firm value (pbv) on earning per share (eps) is moderated by firm value (pbv): y = 160,338 + 41,772 x2 + 23,441 x3 + -2,367 x2.x3 the regression coefficient of the return on asset (roa) (x2) variable of 160,338 explains the magnitude of the change in the score of earning per share (eps) because of the effect of return on asset (roa) on earning per share (eps). a positive sign indicates the direction of the relationship is directly proportional. so when there is an increase in return on asset (roa), the score of earning per share (eps) will increase by 160,338 assuming the other factors are constant (unchanged). so the higher the return on asset (roa), the better the earning per share (eps). the regression coefficient of firm value (pbv) (x3) is 23,441 indicating the magnitude of changes in earning per share (eps) (y) due to the influence of the firm value (pbv) variable on earning per share (eps). a positive sign indicates the direction of the relationship that is directly proportional (inline). so every time there is an increase in one unit score of the pbv variable (x3), earning per share (eps) will increase by 23,441 assuming the other factors are constant (unchanged). so the higher (x3), the earning per share (eps) will increase (better). the regression coefficient of the moderating variable x2x3 (interaction x2x3) which is the interaction between return asian business research journal, 2020, 5: 39-47 45 © 2020 by the authors; licensee eastern centre of science and education, usa on assets (roa) and pbv is obtained as a negative sign. so it can be explained that pbv does not strengthen the effect of return on assets (roa) on earning per share (eps). 4.2. hypothesis test 4.2.1. hypothesis testing the effect of der (x1), pbv (x3) on eps (y) the hypothesis test used to test the presence or absence of influence is the t-test. determination of test results (acceptance/rejection of h0) can be done by comparing t count with t table or can also be seen from its significant value. from the t table, the t table value for α = 0.05 and degrees of freedom (db) = 35-2-1 = 32 on the two-party test is 2.036. the t-test results can be seen in the following table: table-5. the results of the t-test x1, x3 on y. model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 169.070 212.329 2.796 .000 der 2.876 61.535 .013 3.047 .033 pbv 16.460 43.738 .113 16.376 .005 der, pbv 11.079 15.490 .255 9.715 .044 note: a. dependent variable: earning per share (eps) (y). hypothesis testing is used to determine whether or not there is a significant effect of the debt to equity ratio (der) on earning per share (eps). the hypotheses to be tested are: h0: b1 = 0 debt to equity ratio (der) has no effect on eps. h1: b1 ≠ 0 debt to equity ratio (der) affects eps. the results of the debt to equity ratio (der) regression coefficient are 3.047. the results of the comparison of t count with t table obtained 3.047 greater than t table 2.036. because the value of t-count> t-table (3.047 > 2.036) then ho is rejected and the alternative hypothesis is accepted, meaning that partially the debt to equity ratio (der) affects earning per share (eps), t count is positive meaning that der has a positive effect on earning per share ( eps). 4.2.2. testing the hypothesis of return on asset (roa) on earning per share (eps) the hypothesis test used to test the presence or absence of influence is the t-test. determination of the test results (acceptance/rejection of h0) can be done by comparing the t-count with the t-table or it can also be seen from the significant value. from the t-table, the t-table value for alpha = 0.05 and degrees of freedom (db) = 35-21 = 32 on the two-party test is 2.036. the results of the t-test can be seen in table 5. table-6. results of t-test x2 x3 on y. model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 160.338 139.370 1.150 .000 roa 41.772 21.743 .754 3.921 .064 pbv 23.441 26.552 .160 2.883 .003 roa, pbv 2.367 2.372 .408 2.998 .001 note: a. dependent variable: earning per share (eps) (y). hypothesis testing is used to determine whether or not there is a significant effect of return on assets (roa) on earning per share (eps). the hypotheses to be tested are: h0: b1 = 0 return on asset (roa) has no effect on eps h1: b1 ≠ 0 return on asset (roa) affects eps the result of the regression coefficient of return on assets (roa) is 3,921. the results of the comparison between t count and t table obtained 3,921 greater than t table 2,036. because the value of t count> t table (3,921> 2,036) then ho is rejected and the alternative hypothesis is accepted, meaning that partially return on asset (roa) affects earning per share (eps), t count is positive meaning return on asset (roa) has a positive effect on earning per share (eps). 4.2.3. hypothesis testing firm value (pbv) moderates the effect of debt to equity ratio (der) on earning per share (eps) hypothesis testing is used to determine whether or not there is a moderating effect on the relationship between x1 and y. the hypotheses to be tested are: h0: b3 = 0 firm value (pbv) does not moderate the effect of debt to equity ratio (der) on earning per share (eps). h1: b3 ≠ 0 firm value (pbv) moderates the effect of debt to equity ratio (der) on earning per share (eps). the t-test results for the interaction regression coefficient of debt to equity ratio (der) and firm value (pbv) (x1x4) were 9,715 with a significant of 0.044. the results of the comparison between t and t table, it is obtained that the t value of 9.715 is greater than t table of 2.036 and the significant value of x1x3 of 0.044 is smaller than alpha = 0.05, so the conclusion is that the ho test is rejected and the alternative hypothesis is accepted. this shows that firm value (pbv) moderates the relationship between debt to equity ratio (der) and earning per share (eps). asian business research journal, 2020, 5: 39-47 46 © 2020 by the authors; licensee eastern centre of science and education, usa 4.2.4. hypothesis testing firm value (pbv) moderates the effect of return on assets (roa) on earning per share (eps) hypothesis testing is used to determine whether or not there is a moderating effect on the relationship between x2 and y. the hypotheses to be tested are: h0: b3 = 0 firm value (pbv) does not moderate the effect of return on assets (roa) on earning per share (eps). h1: b3 ≠ 0 firm value (pbv) moderates the effect of return on assets (roa) on earning per share (eps). the t-test result for the regression coefficient of the interaction between return on asset (roa) and firm value (pbv) (x2x3) is 2.998 with a significant of 0.001. the results of the comparison between t and t table, it is obtained that the t value of 2.998 is greater than t table of 2.036 and the significant value of x2x3 of 0.001 is smaller than alpha = 0.05, so the conclusion is that the ho test is rejected and the alternative hypothesis is accepted. this shows that firm value (pbv) moderates the relationship between return on asset (roa) and earning per share (eps). 5. discussion 5.1. effect of debt to equity ratio (der) on earning per share (eps) the first hypothesis results, debt to equity ratio (der) has a significant effect on earning per share (eps). then the debt to equity ratio (der) (x1) regression coefficient also has a positive sign which means that the higher the debt to equity ratio (der), the higher the earning per share (eps). this is supported by the calculation that the t-count value of 2.988 is greater than the t-table of 2.036. because the value of t-count > t-table (3.047> 2.036), ho is rejected and the alternative hypothesis is accepted, meaning that partially the debt to equity ratio (der) affects earning per share (eps). t-count is positive means that der has a positive effect on earning per share (eps). 5.2. the effect of return on asset (roa) on earning per share (eps) the second hypothesis test used to test whether there is an effect is a t-test. determination of the test results (acceptance/rejection of h0) can be done by comparing the t-count with the t-table or it can also be seen from the significant value. from the t-table, the t-table value for alpha = 0.05 and degrees of freedom (db) = 35-2-1 = 32 on the two-party test is 2.036. the results of the comparison between t count and t table obtained 3,921 greater than t table 2,036. because the value of t-count> t-table (3,921> 2,036), ho is rejected and the alternative hypothesis is accepted, meaning that partially return on asset (roa) affects earning per share (eps). t count is positive means that return on assets (roa) has a positive effect on earning per share (eps). 5.3. the effect of firm value (pbv) moderates the effect of debt to equity ratio (der) on earning per share (eps) the third hypothesis test is used to determine whether or not there is an effect of moderation on the relationship between x1 and y. the results of the t-test for the interaction regression coefficient of debt to equity ratio (der) and firm value (pbv) (x1x4) from table 4.50 are 9,715 with a significant of 0.044. the results of the comparison between t and t table, it is obtained that the t value of 9.715 is greater than t table of 2.036 and the significant value of x1x3 of 0.044 is smaller than alpha = 0.05, so the conclusion is that the ho test is rejected and the alternative hypothesis is accepted. this shows that firm value (pbv) moderates the relationship of debt to equity ratio (der) to earning per share (eps). 5.4. the influence of firm value (pbv) moderates the effect of return on assets (roa) on earning per share (eps) hypothesis testing is used to determine whether or not there is a moderating effect on the relationship between x2 and y. the results of the comparison between t and t table show that the t value of 2.998 is greater than t table of 2.036 and the significant value of x2x3 of 0.001 is smaller than alpha = 0.05, it is obtained the conclusion of the ho test is rejected and the alternative hypothesis is accepted. this shows that firm value (pbv) moderates the relationship between return on asset (roa) and earning per share (eps). 6. conclusions and suggestion 6.1. conclusion this research was conducted to determine the effect of debt to equity ratio and return on assets on earning per share with firm value as a moderation variable. several conclusions can be drawn in this study, namely: 1. debt to equity ratio (der) has a significant effect on earning per share. this is supported by the calculation that the t-count value of 2.988 is greater than the t-table of 2.036. because the value of t-count> t-table (3.047> 2.036), ho is rejected and the alternative hypothesis is accepted, meaning that partially the debt to equity ratio (der) affects earning per share (eps). t-count is positive means that der has a positive effect on earning per share (eps). 2. return on asset (roa) affects earning per share (eps). it can be seen that the results of the comparison between t-count and t-table obtained 3,921 greater than t-table 2,036. because the value of t-count> t-table (3,921> 2,036), ho is rejected and the alternative hypothesis is accepted, meaning that partially return on asset (roa) affects earning per share (eps). t-count is positive means that return on assets (roa) has a positive effect on earning per share (eps). 3. price to book value (pbv) as a moderating variable is proven to be able to strengthen the effect of debt to equity ratio (der) on earning per share. this effect can be seen from the results of the t-test where the tcount value of 9.715 is greater than t-table 2.036 and the significant value of x1x3 is 0.044 less than alpha = 0.05, so the conclusion is that the ho test is rejected and the alternative hypothesis is accepted. this shows that asian business research journal, 2020, 5: 39-47 47 © 2020 by the authors; licensee eastern centre of science and education, usa price to book value (pbv) moderates the relationship of debt to equity ratio (der) to earning per share (eps). 4. price to book value (pbv) as a moderating variable is proven to be able to strengthen the effect of return on assets (roa) on earning per share (eps). this influence can be seen by the results of the comparison of tcount with t table, it is obtained that the t value of 2.998 is greater than t table of 2.036 and the significant value of x2x3 of 0.001 is smaller than alpha = 0.05, so the conclusion is that the ho test is rejected and the alternative hypothesis is accepted. this shows that price to book value (pbv) moderates the relationship between return on asset (roa) and earning per share (eps). 6.2. suggestion based on the description above, the suggestions that the author can put forth here are as follows: 1. investors in making decisions to buy shares in the capital market should pay more attention to fundamental variables, especially the debt to equity ratio (der) and return on asset (roa) variables because these variables have a significant effect on earning per share (eps). apart from that, investors should also consider external factors such as exchange rates, because this will indirectly affect the profits earned in investing. 2. companies listed on the indonesia stock exchange (idx) are expected to improve company performance each year and provide real and complete financial reports to attract investors, thereby making it easier to obtain capital from outside the company. 3. for further researchers, it is better to use a broader object, not only for various industrial sub-sector manufacturing companies that are listed on the indonesia stock exchange but also in other companies. further researchers also need to add a longer research period and add one or two variables that affect earning per share so that the results can be more precise and accurate. references brigham, e. f., & houston, j. f. 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(2009). basics of fundamental analysis of company financial statements: gajah mada university press. retnowati, n. (2012). compensation management. bandung: karya putra darwati. simatupang, m. (2010). practical knowledge of stock investments and mutual funds. jakarta: media discourse partners. sugiyono. (2009). quantitative research methods, qualitative and r & d. bandung: alfabeta. tandelilin, e. (2010). portfolios and investments: theory and applications (1st ed.). yogyakarta: kanisius. watung, r., & ilat, v. (2015). the effect of return on assets (roa), net profit margin (npm), and earning per share (eps) on stock prices in banking companies on the indonesian stock exchange 2011-2015. emba journal, 4(2), 518-529. citation citra larasati; abdul rivai; suharto (2020). effect of debt to equity ratio and return on assets on earnings per share with firm value as a moderating variable in various industrial subsector manufacturing companies indonesia. asian business research journal, 5: 39-47. history: received: 3 august 2020 revised: 9 september 2020 accepted: 24 september 2020 published: 5 october 2020 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education acknowledgement: all authors contributed equally to the conception and design of the study. funding: this study received no specific financial support. competing interests: the authors declare that they have no competing interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 17 © 2019 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 4, 17-28, 2019 issn(e) : 2576-6759 doi: 10.20448/journal.518.2019.41.17.28 © 2019 by the authors; licensee eastern centre of science and education, usa benefits and consequences of diversification: evidence from financialzed commodity portfolios rangga handika1 mahjus ekananda2 ( corresponding author) 1institute for international strategy, tokyo international university, japan. 2department of economics, faculty of economics and business, university of indonesia, indonesia. abstract the financial risk analysis of commodity markets has become an increasingly important issue in the recent decade. however, studies about commodities portfolio diversification benefits are limited. an analysis of commodities as a portfolio (rather than a single asset) should generate more interest from investors since the portfolio enhances single asset due to diversification benefit. this paper investigates the diversification benefits and consequences of portfolio in financialized commodity markets. using eight financialized commodities at different data frequencies (daily, weekly and monthly) to construct seven equally weighted portfolios, we calculate portfolios valueat-risk (var) and expected shortfall (es). then, we perform back testing at 99 percent, 95 percent and 90 percent var levels. we find that on average commodities portfolios tend to have less accurate var and higher number of returns that are lower than es. we conclude that even though portfolios have diversification benefits such as reducing risk and capital requirements, there are also unintended consequences. keywords: commodity markets, portfolio, diversification, value-at-risk, expected shortfall, back-testing. jel classification: g11; g17; g31; q02; q40. contribution of this paper to the literature this paper contributes to the literature in twofold. first, this paper extends further previous research on commodity volatility modeling by considering commodity portfolio volatility rather than single commodity volatility. second, it offers new perspective of investigating portfolio var and es in commodity markets. 1. introduction the financial risk analysis of commodity markets has become an increasingly important issue in the recent decade. one of the reasons is that a dramatic increase in the investments of commodity markets (basak and pavlova, 2016). they realize huge price increases and prices fluctuations in the commodity markets. another paper by casassus and dufresne (2005) also documents a tremendous growth in commodity derivatives markets. specifically, according to daskalaki and skiadopoulos (2011) there is a $9 billion increase in commodity investments from 2006 to 2009. furthermore, irwin and sanders (2011) note that there are more than $100 billion invested from 2004 to 2008 in the commodity futures markets. basu and miffre (2013) also reports that there is a huge increase from $18 billion in 2003 to $250 billion in 2010 for commodities institutional investments. overall, we can conclude that there are more investors putting their money in commodity markets in the last decade. this is called financialization of commodity markets (see further in (stoll and whaley, 2010; tang and xiong, 2012)). however, studies about commodities portfolio diversification benefits are limited. existing studies about risks in commodity markets are limited to modeling volatility (jacks et al., 2011; vivian and wohar, 2012; creti et al., 2013). another works investigating value-at-risk (var) in commodity markets are merely from a single asset perspective instead of a portfolio perspective. for example, cabedo and moya (2003) quantify market risk using various var methods in the oil market. another paper by giot and laurent (2003) evaluates the performance of several var models relevant in metals, energy and agriculture markets. hung et al. (2008) use extended garch models to analyze the performance of one-day-ahead var estimates in five energy markets. none of them analyze portfolio diversification benefits and consequences of a portfolio consisting of several commodities. http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2019.41.17.28&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/3 https://orcid.org/0000-0001-6428-5912 https://orcid.org/0000-0002-3514-2530 http://ecsenet.com/index.php/2576-6759/article/view/3 https://orcid.org/0000-0001-6428-5912 https://orcid.org/0000-0002-3514-2530 http://ecsenet.com/index.php/2576-6759/article/view/3 https://orcid.org/0000-0001-6428-5912 https://orcid.org/0000-0002-3514-2530 asian business research journal, 2019, 4: 17-28 18 © 2019 by the authors; licensee eastern centre of science and education, usa indeed, an analysis of commodities as a portfolio (rather than a single asset) should generate more interest from investors since the portfolio enhances single asset due to diversification benefit (edwards and liew, 1999; you and daigler, 2013). if we refer to a classical paper from markowitz (1952) we will note that portfolio risk (i.e. variance) is named as an undesirable thing. therefore, a rational investor will prefer a portfolio combination so that the portfolio risk is reduced. when explaining about portfolio diversification benefits, we often provide a standard example: combining stocks with low correlations to construct a portfolio. mathematically, we know that the portfolio risk (i.e. standard deviation) will be reduced. in commodity markets we will also expect the reduced commodity portfolio risk. however, there is another question about the commodity portfolio risk measures. as the commodity portfolio standard deviation decreases, the commodity portfolio risk measures are also expected to decrease. however, how about the portfolio var and expected shortfall (es)? are there something unexpected consequences of the commodities portfolio? this is a research question that we would like to unmask in this paper. therefore, this paper mainly explores the benefits and consequences of having commodities as a portfolio instead of a single asset. this paper contributes to the literature in twofold. first, this paper extends further previous research on commodity volatility modeling by considering commodity portfolio volatility rather than a single commodity volatility. second, it offers new perspective of investigating portfolio var and es in commodity markets. this complements existing literature examining portfolio var in foreign exchange market (chen et al., 2007) and stock and index markets (lin and ko, 2009; goh et al., 2012; palomba and riccetti, 2012; chen and tu, 2013). while there are recent works by ghorbel and trabelsi (2014) and siburg et al. (2015) investigating portfolio var from energy markets, this paper differs from their works by developing various portfolios consisting of selected commodities and focusing on the diversification benefits and consequences of commodity portfolios. the remainder of the paper is organized as follow. section 2 provides a brief discussion about commodity markets and portfolio var and es. section 3 explains the method. section 4 describes the data and discusses the empirical results. section 5 concludes and provides suggestions for future research. 2. theoretical background 2.1. commodity markets routledge et al. (2000) provide a brief summary about the properties commodity markets that are different from standard financial assets (like bonds and stocks). they document that: i) commodity futures prices tend to decrease with time-to-delivery, ii) commodities prices are mean reverting and strongly heteroskedastic, iii) the term structure of commodity forward price volatility tends to decrease with contract horizon, iv) strong seasonality in price levels and volatilities. furthermore, casassus and dufresne (2005) argue that time varying risk in commodity markets is substantial. therefore, we should incorporate this time varying risk when working on commodity markets. in the first paragraph of the introduction section, we discuss about the financialization of commodity markets. in this part, we limit the financialized commodities in our terminology. first, we examine and compile literatures (nakaso, 2011; plantier, 2012; baker, 2015) discussing financialized commodities. then, we document that oil, natural gas, gold, silver, copper, corn, wheat and soybean are the most discussed commodities. therefore, those commodities are the financialized commodities we refer to. 2.2. portfolio var and es basically, the portfolio var and es are similar to a single asset var and es. the difference is only calculating the portfolio standard deviation. in a single asset, we just calculate the standard deviation of the asset returns and then calculate the var and es in a portfolio, it needs a bit more procedure since we have to calculate the standard deviation of the portfolio returns (this becomes complex when the portfolio consists of more than two assets). after obtaining the standard deviation of the portfolio returns, we can calculate the portfolio var and es. portfolio var is the left tail of a portfolio return explaining the minimum losses of a portfolio during a trading period at a given confidence interval. suppose a portfolio var is negative 10 percent for a weekly trading period at 95 percent confidence interval. this means that the portfolio is expected to suffer loss at least 10 percent for 5 weeks for every 100 weeks trading period. thus, we expect that there would be five losses more than 10 percent during the two years (104 weeks) weekly periods. however, the var measure (both in single asset and portfolio) has a problem as a risk measure because var violates the subadditivity principle (hull, 2007; danielsson, 2011). an alternative risk measure that is subadditive is es (see the proof in artzner et al. (1999)). es is an expected tail loss when a var limit is violated. 3. methodology 3.1. portfolio standard deviation, var and es we can calculate the variance of an equally weighted portfolio, , consisting of n-assets using the formula below. [ ] [ ] [ ] (1) this paper use equation 1 to calculate weighted portfolio variance, . where w is a row matrix containing equal weight of n-assets and is a covariance matrix of return series of n-assets. the portfolio standard deviation is the square root of the portfolio variance we obtain from equation 1. asian business research journal, 2019, 4: 17-28 19 © 2019 by the authors; licensee eastern centre of science and education, usa an equally weighted portfolio is the equal weight of n-assets. thus, if a portfolio consists of two assets, the equal weight would be 0.5 for asset 1 and 0.5 for asset 2. a portfolio consists of four assets would have 0.25 for asset 1, 0.25 for asset 2, 0.25 for asset 3 and 0.25 for asset 4. in this paper, an asset refers to a financialized commodity. we calculate the possible combinations of commodities portfolio in order to find the combination with the minimum commodities portfolio standard deviation. for instance, 2 commodities portfolio means that there are trials of combination between commodity 1 and commodity 2 up to 28 attempts. 3 commodities portfolio means that there are trials of combination among commodity 1, commodity 2, and commodity 3 up to 56 attempts. and so forth until 8 commodities portfolio. table 1 demonstrates the possible trials of 2, 3 and 4 commodities portfolios from 8 commodities. number 1, 2, 3,…, and 8 refers to each commodity: oil, natural gas, gold, silver, copper, corn, wheat, and soybean respectively. after obtaining portfolio’s standard deviation, a portfolio var can be calculated as follow (hull, 2007; danielsson, 2011): (2 ) in the equation 2, σp denotes the portfolio’s standard deviation, n-1(x) is the inverse cumulative normal distribution at x confidence level. a portfolio es can be calculated as follow (danielsson, 2011): (3 ) in the equation 3, σp denotes the portfolio’s standard deviation, ϕ and ф are the normal density and distribution, respectively, at x confidence level. 3.2. backtesting backtesting is the procedure to compare the ex-ante (estimated) var with the ex-post (realized) return. the commodity portfolio var is estimated from the data during in-sample-period. we use 10 years rolling (moving) window to update the portfolio covariance matrix. then, we perform the backtesting during out-of-sample period to measure the var accuracy of the commodity portfolio. in this procedure, we can observe how many var violations occur in each portfolio combination var during the out-of-sample period. 4. empirical analysis 4.1. data our sample includes eight financialized commodities: crude oil, natural gas, gold, silver, copper, corn, wheat and soybean. the choice of the commodities is motivated by our focus on financialized commodities that are most mentioned (nakaso, 2011; plantier, 2012; baker, 2015). table 2 elaborates further those commodities. asian business research journal, 2019, 4: 17-28 20 © 2019 by the authors; licensee eastern centre of science and education, usa table-1. the possible trials of 2, 3 and 4 commodities portfolios from 8 commodities. trial 2 commodities portfolio trial 3 commodities portfolio trial 4 commodities portfolio commodity 1 commodity 2 commodity 1 commodity 2 commodity 3 commodity 1 commodity 2 commodity 3 commodity 4 1 1 2 1 1 2 3 1 1 2 3 4 2 1 3 2 1 2 4 2 1 2 3 5 3 1 4 3 1 2 5 3 1 2 3 6 4 1 5 4 1 2 6 4 1 2 3 7 … … … 26 6 7 54 5 6 8 68 4 5 7 8 27 6 8 55 5 7 8 69 4 6 7 8 28 7 8 56 6 7 8 70 5 6 7 8 asian business research journal, 2019, 4: 17-28 21 © 2019 by the authors; licensee eastern centre of science and education, usa table-2. eight financialized commodities in our sample. commodity remarks oil crude oil-wti gas natural gas-henry hub gold gold bullion silver silver, handy harman copper lme-copper corn corn no.2 wheat wheat no.2 soybean soybean meal we use the in-sample period from january 1, 2000 to december 31, 2009 and the out-of-sample period from january 1, 2010 to december 31, 2015 (10 years of in-sample period and 6 years out of sample period). our focus is financialized commodity markets. therefore, we start the in-sample period at the time when the commodities entered financialization era and been identified to possess special properties. according to rossi (2012) and tang and xiong (2012) the time is 2000. we end the in-sample period at 31-dec-2009 to maintain consistency of 10 years period in many empirical finance works (see ledoit and wolf (2008)). we perform the stability tests in our yearly sub-sample analysis during the 6 years out-of-sample period. furthermore, we use different data frequencies: i) daily, ii) weekly and iii) monthly in our sample since we want to obtain a robust finding. a robust finding is necessary because of data availability problem in the commodity markets (narayan et al., 2013). table-3. descriptive statistics of daily price change for eight financialized commodities. commodity oil gas gold silver copper corn wheat soybean panel a: all sample period (from 1-january-2000 to 31-december-2015) mean 0.01% 0.00% 0.03% 0.02% 0.02% 0.01% 0.01% 0.01% standard deviation 2.41% 4.25% 1.13% 1.93% 1.72% 1.91% 2.50% 2.77% minimum -17.09% -56.95% -10.16% -12.98% -10.36% -12.11% -22.59% -80.55% maximum 16.41% 62.27% 6.87% 13.66% 11.73% 10.89% 13.87% 78.35% range 33.51% 119.23% 17.03% 26.65% 22.08% 23.00% 36.45% 158.90% number of observation 4,174 4,174 4,174 4,174 4,174 4,174 4,174 4,174 panel b: in-sample period (from 1-january-2000 to 31-december-2009) mean 0.04% 0.04% 0.05% 0.04% 0.05% 0.03% 0.02% 0.02% standard deviation 2.65% 4.64% 1.16% 1.89% 1.86% 1.97% 2.61% 1.77% minimum -17.09% -56.95% -7.14% -12.80% -10.36% -12.11% -22.59% -14.19% maximum 16.41% 62.27% 6.87% 13.66% 11.73% 10.89% 11.15% 13.13% range 33.51% 119.23% 14.01% 26.46% 22.08% 23.00% 33.74% 27.32% number of observation 2,609 2,609 2,609 2,609 2,609 2,609 2,609 2,609 panel c: out-of-sample period (from 1-january-2010 to 31-december-2015) mean -0.05% -0.06% 0.00% -0.01% -0.03% 0.00% 0.00% 0.00% standard deviation 1.95% 3.49% 1.08% 1.98% 1.45% 1.80% 2.32% 3.92% minimum -11.13% -27.02% -10.16% -12.98% -7.82% -9.32% -15.22% -80.55% maximum 9.90% 37.81% 5.43% 7.73% 6.68% 9.31% 13.87% 78.35% range 21.02% 64.83% 15.59% 20.72% 14.50% 18.63% 29.08% 158.90% number of observation 1,565 1,565 1,565 1,565 1,565 1,565 1,565 1,565 table 3 reports the descriptive statistics of daily return for eight financialized commodities. the descriptive statistics include the mean, standard deviation, minimum, maximum, range and the number of observation of each commodity. panel a reports the descriptive statistics from january 1, 2000 to december 31, 2015 (all sample periods), panel b reports the descriptive statistics from january 1, 2000 to december 31, 2009 (in-sample period) and panel c reports the descriptive statistics from january 1, 2010 to december 31, 2015 (out-ofsample period). according to table 3, the daily returns range from 0.00 percent for gas to 0.03 percent for gold during all sample period, range from 0.02 percent for wheat and soybean to 0.05 percent for gold and copper during in-sample period and range from negative 0.06 percent for gas to 0.00 percent for gold and grains (corn, wheat and soybean) during out-of-sample period. we can see that gas tends to have the least average daily return while gold tends to have the highest average daily return. the volatilities of daily returns range from 1.13 percent for gold to 4.25 percent for gas during all sample period, range from 1.16 percent for gold to 4.64 percent for gas during in-sample period and range from 1.08 percent for gold to 3.92 percent for soybean during out-of-sample period. we can see that gold is the least volatile commodity while gas is the most volatile commodity. however, if we see the range, soybean has the highest range (159 percent) while gold has the lowest range (17 percent). therefore, gold is consistently reported as the least volatile commodity while gas and soybean is reported as the most volatile commodity based on standard deviation and range values. table 4 lists the selected commodities to form our portfolio. the selection is based on the trials procedure as reported in the table 1. our portfolios consist of 2 commodities (p2), 3 commodities (p3), 4 commodities (p4), 5 commodities (p5), 6 commodities (p6), 7 commodities (p7) and 8 commodities (p8) for daily (panel a), weekly (panel b) and monthly (panel c) series. according to the portfolio theory, the portfolio will gain diversification benefit at the most when the correlation among the assets is the lowest. therefore, we choose the commodities in our portfolios based on the lowest portfolio standard deviation. asian business research journal, 2019, 4: 17-28 22 © 2019 by the authors; licensee eastern centre of science and education, usa table-4. detailed combination of commodities in our portfolio consisting of 2, 3, 4, 5, 6, 7 and 8 commodities for daily, weekly and monthly series. equally weighted commodities panel a: daily portfolio p2 gold soybean p3 gold corn soybean p4 gold copper corn soybean p5 gold silver copper corn soybean p6 oil gold silver copper corn soybean p7 oil gold silver copper corn wheat soybean p8 oil gas gold silver copper corn wheat soybean panel b: weekly portfolio p2 gold soybean p3 gold copper soybean p4 gold copper corn soybean p5 gold silver copper corn soybean p6 gold silver copper corn wheat soybean p7 oil gold silver copper corn wheat soybean p8 oil gas gold silver copper corn wheat soybean panel c: monthly portfolio p2 gold soybean p3 gold copper soybean p4 gold copper corn soybean p5 gold silver copper corn soybean p6 oil gold silver copper corn soybean p7 oil gold silver copper corn wheat soybean p8 oil gas gold silver copper corn wheat soybean table-5. the average of standard deviations of commodities and portfolios returns for daily, weekly and monthly series. commodity / average standard deviation portfolio daily weekly monthly oil 2.43% 5.66% 9.91% gas 4.17% 8.86% 18.88% gold 1.22% 2.74% 5.25% silver 2.12% 4.78% 10.11% copper 1.95% 4.02% 9.01% corn 2.08% 4.62% 10.34% wheat 2.76% 5.54% 12.30% soybean 2.01% 3.83% 6.71% average commodity 2.34% 5.01% 10.31% p2 1.19% 2.34% 4.08% p3 1.12% 2.33% 4.53% p4 1.09% 2.43% 5.08% p5 1.14% 2.92% 5.47% p6 1.17% 2.64% 5.54% p7 1.20% 2.67% 5.81% p8 1.23% 2.73% 6.07% average portfolio 1.16% 2.58% 5.23% 4.2. commodities volatility and portfolio volatility table 5 reports the average of standard deviations of commodities and portfolios returns for daily, weekly and monthly series. as expected, we see the diversification benefits here. the average standard deviation of return series for each commodity as a single asset ranges from 1.22 percent to 4.17 percent (daily), from 2.74 percent to 8.86 percent (weekly) and from 5.25 percent to 18.88 percent (monthly). the average standard deviation of return series for each portfolio combination range from 1.09 percent to 1.23 percent (daily), from 2.33 percent to 2.92 percent (weekly) and from 4.08 percent to 6.07 percent (monthly). the average standard deviations of return series for all commodities are 2.34 percent (daily), 5.01 percent (weekly) and 10.31 percent (monthly) while the average standard deviations of return series for all portfolios are 1.16 percent (daily), 2.58 percent (weekly) and 5.23 percent (monthly). overall, we can conclude that there is diversification benefit here, the reduced risk when the commodities are bundled as a portfolio rather than just a single asset. another implied diversification benefit is the reduced capital requirement. the capital requirement is normally calculated using var approach (see jorion (2007)). therefore, the lower standard deviation is associated with lower capital required. 4.3. back-testing result table 6 reports the results of back-testing var commodities and portfolios for eight financialized commodities and seven combination portfolios at different var levels (99 percent, 95 percent and 90 percent) and at different out-of-sample periods (1 year, 2 years, 3 years, 4 years, 5 years, and 6 years) for daily (panel a), weekly (panel b) and monthly (panel c) return series. the reported numbers are the number of var violations. a var violation occurs when a return (usually negative) is smaller than left-tailed var limit in the designated confidence level. in the right column after soybean commodity and p8, we report the average number of var violations for eight commodities and seven portfolios, respectively. in the panel a (daily series), we can see that the average numbers of var violations for portfolios are lower than the average numbers of var violations for commodities. the results are consistent for all different out-ofsample periods. however, these consistent results are for the var 99 level only. for the var 95 and 90 levels, most asian business research journal, 2019, 4: 17-28 23 © 2019 by the authors; licensee eastern centre of science and education, usa of the average numbers of var violations for portfolios are higher than the average numbers of var violations for commodities. this indicates that even though commodities portfolio generates another benefit of having more accurate var, unfortunately, the benefit is applicable only in 99 percent var. we obtain similar results in the panel b (weekly series). the average numbers of var violations for portfolios are lower than the average numbers of var violations for commodities only for the var 99 level only for weekly series. for monthly series (panel c), the reduced var violations for portfolio are only applicable at certain out-ofsample period for the var 95 level. for the rest, most of the average portfolios have higher numbers of var violations. this indicates that the portfolio diversification benefit of having more accurate var only comes at var 99 level for weekly series and somewhat at var 95 level for monthly series. table 7 reports the numbers of returns that are lower than es of eight financialized commodities and seven combination portfolios at different var levels (99 percent, 95 percent and 90 percent) and at different out-ofsample periods (1 year, 2 years, 3 years, 4 years, 5 years, and 6 years) for daily (panel a), weekly (panel b) and monthly (panel c) return series. in the panel a (daily series), we also see that the average numbers of returns that are lower than es for the portfolios are less than the average numbers of returns that are lower than es for the commodity. the results are consistent for all different out-of-sample periods. however, these consistent results are for the 99 percent confidence level only and even slightly worse than the results of backtesting var 99 table 6 panel a because there is a worse result for portfolio. for the 95 and 90 percent confidence levels, most of the average numbers of returns that are lower than es for portfolios are bigger than the average numbers of returns that are lower than es for commodities. again, this indicates that both var and es measures confirm that commodity portfolio possess unexpected consequence by having, on average, less accurate var and more left-tailed returns that below the es. we obtain similar results in the panel b (weekly series). the average numbers of returns that are lower than es for the portfolios are less than the average numbers of returns that are lower than es for the commodity only 99 percent confidence level. for monthly series (panel c), the reduced average numbers of returns that are lower than es portfolio are only applicable at certain out-of-sample period for the 95 percent confidence level. for the rest, most of the average portfolios have higher average numbers of returns that are lower than es. this indicates that the portfolio diversification benefit based on es measure is only applicable at 99 percent confidence level for weekly series and somewhat at 95 percent confidence level for monthly series. overall, we can see that even tough commodities portfolios possess diversification benefit of having lower risk, the lower risk somewhat becomes contradictory since the var position will be less conservative. this enables possibilities of having left-tailed return violating var limit. our finding is also confirmed by our es analysis. therefore, we can see both benefits and unintended consequences of commodities portfolio. the benefits are lowering risk and reducing the capital requirements (because of lower var), as reported in the table 5. on the other hand, the portfolio also has less accurate var and more returns that are lower than es, as reported in the table 6 and table 7, respectively. 5. conclusions this paper investigates the benefits and consequences of portfolio in financialized commodity markets. we use eight financialized commodities at different data frequencies (daily, weekly and monthly) to construct seven equally weighted portfolios. our choice of commodities in forming the portfolios is based on the minimum value of portfolios standard deviation among possible portfolio combinations. we use moving average for obtaining portfolios covariance and then calculating the portfolios standard deviation. after that, we calculate portfolios var and es. finally, we perform back testing var and calculate the number of returns that are lower than es at 99 percent, 95 percent and 90 percent var levels. we demonstrate that the average standard deviation of the portfolios are smaller than the average standard deviation of the commodity. this mean that commodities bundled as a portfolio have lower risk than commodity as a single asset. this also implies that investors will require fewer capital when investing in commodity portfolio rather than investing in commodity as a single asset. therefore, reducing risk and capital requirement are the diversification benefits of financialized commodities portfolio. on the other hand, we find that on average commodities portfolios tend to have less accurate var and more returns that are lower than es. our results are consistent for daily, weekly and monthly series and at different outof-sample periods at the most confidence levels. the more accurate of the average commodity portfolios var over the average of single commodity var is reported only at 99 percent var level for daily and weekly series (across all out-of-sample periods). for monthly series, only few average numbers of commodity portfolio var are reported to be more accurate than single commodity var. we also obtain similar results when performing es analysis. the commodity portfolios tend to have higher average number of returns that are lower than es compared with single commodity. overall, we find unintended consequences of diversification benefits in commodity portfolios. on one side, there are clearly diversification benefits of having lower risk and implying reduced capital requirement in commodity portfolio. on the other hand, there are unintended consequences by having less accurate var and higher number of returns that are lower than es. our results are based on the standard variance-covariance portfolio volatility method, which could be one of our limitations. investigating portfolio var and es using more advanced volatility methods are encouraged to discover other possible diversification benefits and consequences of having commodities in a portfolio rather than in a single asset. asian business research journal, 2019, 4: 17-28 24 © 2019 by the authors; licensee eastern centre of science and education, usa table-6. results of back-testing var commodities and portfolios for eight financialized commodities and seven combination portfolios at different var levels (99 percent, 95 percent and 90 percent) and at different out-of-sample periods (1 year, 2 years, 3 years, 4 years, 5 years, and 6 years) for daily, weekly and monthly return series. panel a: number of var violations daily series var level commodity / portfolio oil gas gold silver copper corn wheat soybean avg p2 p3 p4 p5 p6 p7 p8 avg out-of-sample period com p var 99 1 year 0 2 1 6 5 4 5 2 3.13 3 4 3 3 0 2 2 2.52 2 years 4 3 10 23 9 9 10 2 8.75 5 7 7 13 6 11 8 8.22 3 years 4 3 14 25 9 13 10 2 10.00 6 9 9 15 6 12 9 9.50 4 years 4 3 21 29 9 19 11 4 12.50 12 14 11 17 8 14 11 12.44 5 years 6 11 21 32 9 20 13 7 14.88 15 15 12 18 10 15 13 14.11 6 years 13 13 21 34 11 23 13 10 17.25 18 18 15 21 13 18 16 17.03 var 95 1 year 4 5 10 11 11 9 8 3 7.63 4 6 10 11 5 10 6 7.45 2 years 13 6 28 37 23 22 23 5 19.63 13 20 25 32 16 24 21 21.33 3 years 17 9 35 44 26 28 26 9 24.25 19 29 30 39 19 30 24 26.78 4 years 17 10 50 58 27 37 27 18 30.50 31 39 38 48 22 33 26 33.44 5 years 26 24 52 62 28 38 32 23 35.63 34 42 40 51 24 36 34 37.08 6 years 51 31 58 69 33 43 36 27 43.50 38 48 45 56 27 40 38 41.94 var 90 1 year 11 8 21 17 20 16 16 5 14.25 9 17 18 17 10 17 11 14.16 2 years 25 10 48 54 44 45 44 10 35.00 29 43 46 48 32 43 34 38.75 3 years 36 16 63 67 55 58 54 23 46.50 42 61 64 62 39 56 42 51.56 4 years 37 17 87 87 60 73 57 37 56.88 62 80 79 85 48 65 47 65.36 5 years 51 36 97 98 64 79 68 51 68.00 67 87 82 92 54 73 62 73.13 6 years 86 50 107 111 78 86 79 55 81.50 71 95 91 100 62 83 71 81.81 panel b: number of var violations weekly series var level commodity / portfolio oil gas gold silver copper corn wheat soybean avg p2 p3 p4 p5 p6 p7 p8 avg out-of-sample period com p var 99 1 year 0 0 0 0 3 1 1 1 0.75 0 0 0 0 0 0 0 0.09 2 years 1 0 1 2 5 2 1 1 1.63 1 1 2 1 1 2 2 1.45 3 years 1 0 1 2 5 2 1 1 1.63 1 1 2 1 1 2 2 1.45 4 years 1 0 3 3 5 5 1 1 2.38 2 1 3 1 1 2 2 1.80 5 years 1 2 3 3 5 5 2 1 2.75 2 1 3 1 1 2 2 1.84 6 years 2 2 3 3 5 5 2 3 3.13 4 3 5 3 3 4 3 3.52 var 95 1 year 1 0 0 2 3 1 2 2 1.38 1 3 2 0 2 1 1 1.42 2 years 3 0 3 6 6 6 4 3 3.88 3 6 6 4 7 6 6 5.23 3 years 3 0 4 6 6 8 4 4 4.38 4 8 7 4 7 6 6 5.80 4 years 3 0 8 8 6 12 5 5 5.88 6 10 10 7 9 7 6 7.61 5 years 6 3 9 9 6 13 9 7 7.75 7 10 10 7 10 7 7 8.22 6 years 9 4 9 9 7 14 10 10 9.00 10 13 13 9 14 11 10 11.13 var 90 1 year 4 0 1 3 6 6 2 3 3.13 3 4 5 2 4 3 2 3.27 2 years 7 0 8 11 10 13 5 4 7.25 6 8 9 6 11 11 8 8.28 3 years 8 2 10 12 10 15 5 6 8.50 8 10 11 8 13 12 9 9.94 4 years 8 2 14 15 11 20 7 10 10.88 15 12 16 12 18 16 12 13.98 asian business research journal, 2019, 4: 17-28 25 © 2019 by the authors; licensee eastern centre of science and education, usa 5 years 12 7 17 17 11 22 12 14 14.00 17 12 17 12 21 19 15 15.88 6 years 19 13 19 17 15 25 16 17 17.63 20 15 22 15 26 24 20 19.95 panel c: number of var violations monthly series var level commodity / portfolio oil gas gold silver copper corn wheat soybean avg p2 p3 p4 p5 p6 p7 p8 avg out-of-sample period com p var 99 1 year 0 0 0 0 0 0 0 0 0.00 0 0 0 0 0 0 0 0.00 2 years 0 0 0 1 1 1 0 0 0.38 0 1 1 1 1 1 1 0.80 3 years 1 0 0 1 1 1 0 0 0.50 0 1 1 1 1 1 1 0.81 4 years 1 0 0 1 1 2 0 0 0.63 0 1 2 1 1 1 1 0.95 5 years 1 1 0 1 1 3 1 0 1.00 0 1 2 1 1 2 1 1.13 6 years 3 1 0 1 1 3 1 0 1.25 0 1 2 1 1 2 1 1.16 var 95 1 year 1 0 0 0 0 0 0 0 0.13 0 0 0 0 0 0 0 0.02 2 years 1 0 1 2 1 2 2 0 1.13 1 1 1 1 1 1 1 1.02 3 years 2 0 2 2 1 2 2 1 1.50 1 1 1 1 2 2 1 1.31 4 years 2 0 4 3 1 3 2 1 2.00 3 1 2 2 3 2 1 2.00 5 years 2 1 4 3 1 4 3 1 2.38 4 1 3 3 4 3 2 2.80 6 years 4 1 4 3 1 4 3 1 2.63 4 2 4 3 5 4 3 3.45 var 90 1 year 1 0 1 1 0 1 0 0 0.50 0 0 1 0 0 0 0 0.19 2 years 2 0 3 3 1 3 2 0 1.75 1 1 2 2 1 2 2 1.59 3 years 3 2 4 4 2 3 2 1 2.63 1 1 3 3 2 3 3 2.33 4 years 3 2 7 6 2 4 2 2 3.50 3 2 4 5 3 4 4 3.56 5 years 5 3 7 6 2 6 4 4 4.63 4 3 5 6 4 5 6 4.70 6 years 8 4 7 6 3 6 6 4 5.50 5 5 6 7 5 6 7 5.81 asian business research journal, 2019, 4: 17-28 26 © 2019 by the authors; licensee eastern centre of science and education, usa table-7. the reported numbers of returns that are lower than es of eight financialized commodities and seven combination portfolios at different var levels (99 percent, 95 percent and 90 percent) and at different out-ofsample periods (1 year, 2 years, 3 years, 4 years, 5 years, and 6 years) for daily, weekly and monthly return series. panel a: number of returns that are lower than es daily series confidence level commodity / portfolio oil gas gold silver copper corn wheat soybean avg p2 p3 p4 p5 p6 p7 p8 avg out-of-sample period com p 99 percent 1 year 0 1 1 2 4 3 3 2 2.00 1 1 1 1 0 2 0 1.00 2 years 2 2 6 15 7 6 7 2 5.88 3 2 4 5 4 10 5 4.86 3 years 2 2 8 15 7 8 7 2 6.38 3 3 5 5 4 10 5 5.17 4 years 2 2 11 17 7 11 8 3 7.63 6 7 6 7 6 12 6 7.20 5 years 3 9 11 19 7 11 9 4 9.13 8 8 7 8 7 13 7 8.39 6 years 7 11 11 21 8 13 9 7 10.88 11 11 10 11 10 16 10 11.23 95 percent 1 year 0 2 2 7 6 5 5 2 3.63 3 5 5 5 3 5 2 3.95 2 years 7 3 15 26 12 13 10 2 11.00 8 11 13 18 10 16 11 12.25 3 years 7 4 20 30 12 18 10 3 13.00 11 15 15 22 11 18 12 14.63 4 years 7 4 29 38 12 24 11 7 16.50 18 22 18 24 13 20 14 18.19 5 years 11 14 30 42 12 25 14 10 19.75 21 24 19 25 15 21 17 20.22 6 years 27 18 31 46 14 28 15 14 24.13 25 28 22 28 18 24 21 23.77 90 percent 1 year 2 3 9 11 9 9 6 3 6.50 4 5 9 8 4 8 5 6.19 2 years 11 4 25 34 18 21 14 3 16.25 11 18 19 27 13 21 19 18.03 3 years 12 6 31 41 19 27 17 6 19.88 15 26 23 33 15 26 22 22.48 4 years 12 7 44 52 20 34 18 14 25.13 26 33 29 39 17 28 24 27.64 5 years 21 20 45 56 21 35 22 18 29.75 29 35 31 41 19 31 32 30.97 6 years 43 27 49 62 25 40 24 22 36.50 33 41 34 45 22 34 36 35.19 panel b: number of returns that are lower than es weekly series confidence level commodity / portfolio oil gas gold silver copper corn wheat soybean avg p2 p3 p4 p5 p6 p7 p8 avg out-of-sample period com p 99 percent 1 year 0 0 0 0 1 1 0 1 0.75 0 0 0 0 0 0 0 0.09 2 years 0 0 1 2 2 1 0 1 1.63 1 1 1 1 1 1 1 1.45 3 years 0 0 1 2 2 1 0 1 1.63 1 1 1 1 1 1 1 1.45 4 years 0 0 2 3 2 4 0 1 2.38 1 1 1 1 1 1 1 1.80 5 years 0 2 2 3 2 4 0 1 2.75 1 1 1 1 1 1 1 1.84 6 years 0 2 2 3 2 4 0 3 3.13 3 3 3 3 3 3 2 3.52 95 percent 1 year 0 0 0 0 3 1 1 2 1.38 0 1 0 0 0 0 0 1.42 2 years 1 0 2 2 5 3 1 2 3.88 2 3 2 2 3 2 2 5.23 3 years 1 0 2 2 5 3 1 2 4.38 2 3 2 2 3 2 2 5.80 4 years 1 0 4 4 5 6 1 2 5.88 3 3 3 2 3 2 2 7.61 5 years 2 3 4 4 5 6 3 3 7.75 3 3 3 2 3 2 3 8.22 6 years 3 4 4 4 5 6 3 5 9.00 5 5 6 4 5 4 5 11.13 90 percent 1 year 1 0 0 2 3 1 2 2 3.13 1 2 1 0 1 1 0 3.27 2 years 3 0 3 6 5 5 4 3 7.25 3 4 4 4 5 4 3 8.28 3 years 3 0 3 6 5 7 4 4 8.50 4 4 5 4 5 4 3 9.94 4 years 3 0 7 8 5 11 5 5 10.88 6 6 7 6 6 5 3 13.98 asian business research journal, 2019, 4: 17-28 27 © 2019 by the authors; licensee eastern centre of science and education, usa 5 years 5 3 8 8 5 11 9 6 14.00 6 6 7 6 6 5 4 15.88 6 years 7 4 8 8 5 12 9 9 17.63 8 9 10 8 9 8 6 19.95 panel c: number of returns that are lower than es monthly series confidence level commodity / portfolio oil gas gold silver copper corn wheat soybean avg p2 p3 p4 p5 p6 p7 p8 avg out-of-sample period com p 99 percent 1 year 0 0 0 0 0 0 0 0 0.00 0 0 0 0 0 0 0 0.00 2 years 0 0 0 1 1 0 0 0 0.38 0 1 1 1 1 1 1 0.80 3 years 0 0 0 1 1 0 0 0 0.50 0 1 1 1 1 1 1 0.81 4 years 0 0 0 1 1 1 0 0 0.63 0 1 1 1 1 1 1 0.95 5 years 0 0 0 1 1 1 1 0 1.00 0 1 1 1 1 1 1 1.13 6 years 0 0 0 1 1 1 1 0 1.25 0 1 1 1 1 1 1 1.16 95 percent 1 year 0 0 0 0 0 0 0 0 0.13 0 0 0 0 0 0 0 0.02 2 years 0 0 0 2 1 1 0 0 1.13 0 1 1 1 1 1 1 1.02 3 years 1 0 0 2 1 1 0 1 1.50 0 1 1 1 1 1 1 1.31 4 years 1 0 1 2 1 2 0 1 2.00 0 1 2 2 1 1 1 2.00 5 years 1 1 1 2 1 3 1 1 2.38 0 1 3 2 1 2 2 2.80 6 years 3 1 1 2 1 3 1 1 2.63 0 1 3 2 1 2 2 3.45 90 percent 1 year 0 0 0 0 0 0 0 0 0.50 0 0 0 0 0 0 0 0.19 2 years 0 0 1 2 1 2 0 0 1.75 1 1 1 1 1 1 1 1.59 3 years 1 0 2 2 1 2 0 1 2.63 1 1 1 1 2 1 1 2.33 4 years 1 0 4 2 1 3 0 1 3.50 3 1 2 2 3 1 1 3.56 5 years 1 1 4 2 1 4 1 1 4.63 4 1 3 3 4 2 2 4.70 6 years 3 1 4 2 1 4 1 1 5.50 4 1 3 3 5 3 2 5.81 asian business research journal, 2019, 4: 17-28 28 © 2019 by the authors; licensee eastern centre of science and education, usa references artzner, p., f. delbaen, j.m. eber and d. heath, 1999. coherent measures of risk. mathematical finance, 9(3): 203-228. baker, s., 2015. the financialization of storable commodities. mcintire school of commerce 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https://doi.org/10.1002/fut.21553. citation | rangga handika; mahjus ekananda (2019). benefits and consequences of diversification: evidence from financialzed commodity portfolios. asian business research journal, 4: 17-28. history: received: 5 june 2019 revised: 8 july 2019 accepted: 12 august 2019 published: 3 september 2019 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education acknowledgement: both authors contributed to the conception and design of the study. funding: this study received no specific financial support. competing interests: the authors declare that they have no conflict of interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 15 © 2018 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 3, 15-25, 2018 issn: 2576-6759 doi: 10.20448/journal.518.2018.31.15.25 © 2018 by the authors; licensee eastern centre of science and education, usa business process reengineering resources and the performance of quoted brewing firms in nigeria akam, g. u.1 okeke, m. n.2 kekeocha, m. e.3 onuorah, a. n.4 ( corresponding author) 1,2,3,4department of business administration chukwuemeka odumegwu university, igbeariam campus, nigeria abstract the study examined the effect of business process reengineering (bpr) resources on the performance of brewing firms in nigeria. following the kassahun (2012) bpr perspectives, the study grouped bpr resources into financial, human and technological resources. a sample of 746 employees was randomly selected from a population of 3500 from five brewing firms quoted in the nigerian stock exchange. the likert-type instrument of five-point scale used for data collection has a cronbach alpha coefficient of 0.85. the percentage frequency was used to examine the baseline information of bpr variables in brewing firms in nigeria while ols regression model analysed the effect of bpr on the performance of brewing firms in nigeria. the study results showed that financial and technological resources were in adequate usage while human resources were moderate. also, the performance of brewing firms in nigeria at present is scored high in the five-point rating. the regression result indicated that bpr resources have 94% significant effect on the performance in brewing firms in nigeria. specifically, a positive influence was established such that financial resources (63%) has more influence, followed by human resources (20%) and then technological (19%). this implies that the use of resources is a veritable strategy to enhancing firm performance. firms that follow the present wave of technological innovations will enhance their competiveness and survival rate. the study therefore concluded that bpr is a veritable tool to enhancing employee satisfaction, team work and cooperation, quality of service delivery as well as attainment of organizational strategic goals in brewing firms in nigeria. the study however, recommended that firms in the brewing industry and other allied manufacturing firms should employ its resources in an adequately proportionate manner. keywords: business process, business process reengineering, bpr critical success factors, organisational performance. 1. introduction several definitions suggest that business process reengineering (bpr) is an offshoot of business process. bpr has frequently been used since it was first introduced in the united states in the 1990s. the concept of bpr was first used in hammer‟s article „reengineering work: don‟t automate, obliterate‟ (hammer 1990) as cited in adeyemi and aremu (2008). the concept of bpr aims at enabling organisations improve productivity and relationships with customers, and reduce time to launch new products and services in terms of cost, quality, customer satisfaction and shareholders‟ value by identifying and reengineering the important processes of the firm (sentanin et al., 2008). it is a way in which organisations become more functional by identifying the critical business processes, analysing these processes and redesigning them for efficient improvement and benefit. technological innovations have brought about globalisation that exposes all businesses to customers with refined needs and preferences. these have engendered new market conditions characterized by instability and intense competition in the business environment (hesson, 2007; banham, 2010). hence firms need to adopt a business approach that would help them cope with business trends especially in the face of high cost of doing business. business managers thus have to rethink of new and better ways of doing businesses that will reduce cost and maximize profit (ogbo et al., 2015). the process of bpr connotes that firms must revamp their process, by engaging in radical redesign of core business processes to achieve dramatic improvements in productivity, cycle times and quality (rigby, 2015). this means that to reengineer a business process implies starting with a blank sheet of paper and rethinking on an existing process to deliver more value to the customer. as a matter of ideal procedure, business process reengineering entails that organisations adopt a new value system that places more emphasis on customer needs. in the view of zigiaris (2000) “bpr assumes that the current processes in a business are inapplicable and suggest completely new processes to be implemented by starting over”. with this viewpoint, the designers of business processes are enabled to disassociate themselves from today's process, while focusing on a new process. in business process reengineering lies that propensity that organizations can perform in a better way, satisfy the customers and the employees, and enhance the quality of their products (nadeem and ahmad, 2016). http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2018.31.15.25&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/7 asian business research journal, 2018, 3: 15-25 16 © 2018 by the authors; licensee eastern centre of science and education, usa however, for an organisation to engage in bpr, it must have an operating transactional and accounting computerized system; a network that connects all key personnel; workstations with windows nt or windows 1995 system or latest version; and an exchange server (ms outlook, or ms back office or lotus notes) (zigiaris, 2000). changing the entire business operations to conform to it enabling business environment entails huge resource commitment. resources involved in business process reengineering projects include intensive financial resources for bpr-associated it investment, staff retraining, organisational restructuring and bpr consultants (willcocks, 2002; ahadi, 2004; ahmad et al., 2007). as the world becomes technologically advanced, with increased global competition, the nigerian brewing industry is left with no choice but to look beyond local competitors. competition is intensifying in terms of price, quality of service; selection and promptness of delivery (see idris (2011)). thus, organisations have sought for means to reduce cost and improve business efficiency and effectiveness. all these aim to satisfy consumers, as consumer retention becomes a key factor in determining the success of any organisation. in this sense, a good number of organisations, including the brewing firms in nigeria, have adopted business process reengineering as a management tool that can revamp their business process and make them more competitive. the need to meet up with global standards and business competiveness has kept the firms in nigerian brewing industry to think of ways and means to level up competition and remain in business. despite the recent ventures to provide empirical evidences of the relationship between bpr implementation and organisational performance in nigeria (see (ringim et al., 2012; ogbo et al., 2015)) no study in nigeria has explained the effect of the huge resource input needed to implement the bpr project. the present study is anchored on the kassahun (2012) bprresources perspective to provide empirical evidence for bpr projects in nigerian brewing firms. 2. literature review 2.1. conceptual framework sharma (2006) posits that business process reengineering implies transformed processes that together form a component of a larger system aimed at enabling organization to empower themselves with contemporary technologies, business solution and innovations. the most important factor for implementing bpr is the enabling role of information technology (zigiaris, 2000). in a logical sense, businesses are organized around departments. this creates physical barriers in the communication of the various departments. for instance, where the warehouse is in another location, it will not be possible for a cross-functional team to communicate efficiently. thus, accounting and production departments will experience delays in communicating thereby either making the customer to move from one department to another or have to wait until his transaction is communicated. with an automation of the business process, one department can communicate another so early without bothering the customer. this creates a one-stop service. employees can easily operate as a team using intranets/extranets, workflow and groupware applications, eliminating distances. business process reengineering makes it possible that employees can work together even though they are located in different places. rigby (2015) notes that business process reengineering involves reduced organizational layers and elimination of unproductive activities in two key areas. firstly, a redesign of functional organizations into cross-functional teams, and the use of technology to improve data dissemination and decision making. given the discontinuous nature of business process reengineering (that is, a project at a point in time), there is need for a continuous improvement extension of the project that allows the business process reengineering undertaking to take advantage of both the discontinuous radical and the continuous incremental process improvement undertakings (weerakkody et al., 2011). according to zigiaris (2000) as soon as an organisation has undergone a complete business process reengineering, the outcomes expected of the organisation, will include the following, several jobs are combined into one; decision-making becomes part of the job of employees (employee empowerment); steps in the processes are performed in a natural order, and several jobs get done simultaneously; processes have multiple versions. this enables the economies of scale that result from mass production, yet allows customization of products and services; work is performed where it makes the most sense; controls and checks and other non-value-added work are minimized; reconciliation is minimized by cutting back the number of external contact points and by creating business alliances; a single point of contact is provided to customers, and a hybrid centralized/decentralized operation is used. in this study, organizational performances implies the performance of brewing firms quoted in the nigerian stock exchange (nse) in terms of both financial and non-financial performance indicators. efficiency and effectiveness are the key terms for measuring the organizational performance (mouzas, 2006). kassahun (2012) asserts that effectiveness is the achieved outcomes in relation to strategic goals/objectives and customer requirement; while efficiency connotes how economically the organisation‟s resources are utilised by an activity such as a business process that produces a given output or delivers a given service. organisational effectiveness and efficiency can be measured by financial and non-financial indicators. this study considered that the non-financial performance indicators such as customer satisfaction, market share, learning and innovation, customer service management, market research, customer relationship management, new service/product introduction, product/service quality, flexibility, operational performance, speed, process improvement and service/product delivery (ringim et al., 2012). non-financial measures cover both the value that is delivered to the customer which may involve time, quality, performance and service, and the outcomes that arise as a result of this value proposition, such as customer satisfaction and market share. 2.2. theoretical review the study hinges on the resource-based view (rbv) theory which holds that organization are rent seeking units that develops and deploy resources (assets and capabilities) to realize competitive advantage. this follows that for organisations to gain competitive advantage over others, they should hold better resources than their competitors. since resource-based view emphasises that an organization‟s ability can be developed and deployed to its internal resources, business process reengineering becomes a veritable tool for restructuring both an asian business research journal, 2018, 3: 15-25 17 © 2018 by the authors; licensee eastern centre of science and education, usa organisation and the process therein in a manner that becomes less time and money consuming. as the core essence of business is to meet its goals including satisfying consumers at a profit, the resource-based view (rbv) becomes relevant to this study. this is because for an organisation to become competitive, it has to periodically redesign and restructure its processes to meet current business and consumer orientations, all these tasks demand resources. therefore, availability of resources is a prerequisite to business process reengineering. 2.3. theoretical exposition the resource perspective of bpr attributes bpr‟s effect on performance to the type and size of the financial, technological and human resources employed in the execution of business process reengineering project. studies have noted that business process reengineering projects involve an intensive financial resources for bprassociated it investment, staff retraining, organisational restructuring and bpr consultants (willcocks, 2002; ahadi, 2004; ahmad et al., 2007). by this notion, it appears that lack of the necessary financial resources for carrying out corporate business plan leads to failure of business process reengineering projects. also a cause of failure of bpr as a financial resource is the use of personnel and managers that do not have the requisite expertise on the processes to be redesigned, as well as cross-functional knowledge and know-how in handling a bpr project (sung and gibson, 1998; do carmo et al., 2005). also paramount to the success of business process reengineering projects are the knowledge and skill of the bpr team on change management, bpr project management and it infrastructure resources (khong and richardson, 2003). the acquisition of these skills enhances customer service performance, which in turn has a positive effect on business performance. thus a successful business process reengineering projects should put into consideration financial, human and technological resources that are necessary for project execution. thus, the availability and effective utilisation of scarce resources can determine the extent of bpr‟s effect on the performance of brewing firms. in the case of technological resources necessary for the bpr projects, researchers posit that the type of it investment and its extent of utilisation in the reengineered business process are more important than the size of investment (devaraj and kohli, 2000; willcocks, 2002; albadvi et al., 2007). this suggests that firms preparing for bpr should acquire the requisite technological resources successful bpr implementation in organisations hinges on organisation‟s bpr capacity in distinguishing value-adding missions and service delivery processes from non-value adding ones. these capacities of the knowledge of the bpr processes, implementation capability and familiarity with change management, are human capacities. macintosh (2003) asserts that financial capacity is more important for bpr project success. other authors describe these capacities as bpr team competencies which in their view include knowledge and skill regarding the organisational functional process, bpr and bpr methodologies, change management, role of it in bpr and bpr project management. these are seen as critical for organisational bpr project success (thong et al., 2000; mcadam and corrigan, 2001; scholl, 2005). hence, it becomes necessary for firms to emphasise retention of the reengineering team until completion, as the reengineering team‟s competence is pertinent in change management, the role of it in bpr and those functions of the organisation to be redesigned; empowering employees; and continuously monitoring and improving the bpr outcome (thong et al., 2000). in a similar vein, ongaro (2004) reports that bpr implementation indicates that deployment of sufficient resources and use of competent reengineering team are sine qua non to successful implementation of bpr projects and enhanced organisational performance. this supports the theoretical proposition that availability of resources is the requisite demand to engender increased organisational performance from implementation of bpr projects. on this note, the resource based view (rbv) becomes central to conceptualising the link of organisation‟s resources, knowledge, and business process performance to organisational performance (dzhumalieva and helfert, 2008). thus, the use of rbv to investigate the organisational value of bpr is theoretically sound. 2.4. empirical studies empirical studies have been conducted on bpr resources and organisational performance. among the studies are ahadi (2004) which employed bpr critical success factors to survey 72 companies in automotive and electronics industry in iran to determine the effect of bpr resources on organisational performance. it adopted the hierarchical regression techniques in data analyses and that resources, top management support, change management, centralisation of decision making and formalisation of procedures have positive associations with bpr success. in another study, ahmad et al. (2007) conducted a case study of three private higher education institutions in malaysia to investigate the critical success factors in higher education that drive business process reengineering and found that deployment of adequate resources and bpr teams with knowledge and skill on it/is, change management and project management contribute to bpr project success. in a similar vein, albadvi et al. (2007) used a face-to-face paper-based survey design to assess the impact of it and bpr on performance using 200 managers of car manufacturing firms in iran and posited that the type of it diffused and the extent of business process change has a strong and positive effect on perceived organisational performance. in a longitudinal study, devaraj and kohli (2000) noted that radical change to enable organization‟s it and is requires organisations to have both financial capacity. they employed a case study of eight (8) hospitals in us to examine the effect of financial resources on the success of business process reengineering. with the size and type of bpr expenditure as the explanatory variables of business process reengineering, and impact measures as the proxy for organisational performance. the study found that ccombined effect of process change and it investment has strong and positive effect on performance. do carmo et al. (2005) carried out a survey among 192 hospital administrators in us to determine hospital bpr success. the study considered the functional and bpr project management knowledge and skill of the bpr team, and the top management‟s commitment and support as important measurement indicators, alongside investment in it. the dependent variables of the study include cross-functionality of the project team, bpr methodology, it and leadership. the study found a positive relationship between level of bpr personnel asian business research journal, 2018, 3: 15-25 18 © 2018 by the authors; licensee eastern centre of science and education, usa knowledge and skill and improved service quality, reduction in cost, reduction in cycle time, profitability and customer and staff satisfaction. in nigeria, ogbo et al. (2015) looked at business process reengineering and the performance of commercial banks in north central nigeria. a sample size of 501 was drawn from a population of 7977 in 12 selected commercial banks in middle-belt, nigeria. survey design method was used and data were collected using questionnaire and structured interview. the analysis of data interpretation yielded the following findings: speed enhanced the profitability of commercial banks in north central nigeria to a great extent; there was a significant positive relationship between corporate restructuring and competitive advantage; appropriate level of process knowledge and effective process reorientation were the critical success factors for a successful business process reengineering exercise in the banking sector in north central nigeria. in conclusion, banks that are adopting business process re-engineering have different success level. individual organization‟s success depends on established balance between organization structure and organization‟s environment. explored the effect of bpr on performance of courier service firms in anambra state of nigeria. the bpr factors comprising change management, less bureaucratic structure (flatter structure), management commitment, process redesign, and infrastructure (it) were regressed against organizational performance. the study employed descriptive research design. data were obtained using 18 item likert-scale type questionnaire structured into strongly agree (sa), agree (a), neutral (n), disagree (d), and strongly disagree (sd). the data were analysed using principal component analysis and multiple regression analysis. the result of the analysis revealed that there was a significant relationship between bpr factors (change management, process redesign, management commitment, and it infrastructure) and overall organisational performance of the selected courier service organisations. based on the finding, the study concluded that bpr is a vital model for improvement in firms‟ operational performance and achievement of long term growth and competitive advantage. anchored on business action theory, orogbu et al. (2015) sought to find out the extent to which work process innovation influences employee retention and then examined the level of relationship between process redesign and employee satisfaction. the study adopted a descriptive survey design on a sample size of one hundred and twelve (112) persons from the population of 887 using random sampling and complete enumeration method. pearson‟s product moment correlation and z test were used to test the significance of the coefficient of correlation at 0.05 level of significance. the results show that process redesign has positive relationship with employee satisfaction, and work process innovation influences employee retention. the study thus concludes that well-structured work process activities enhance organizational performance. carried out a study to identify the critical success factors of bpr implementation in nigerian oil and gas companies. the data were obtained through 650 self-administered copies of questionnaire to a randomly selected senior and management staff of eight (8) re-engineered oil and gas companies in nigeria. using the framework from khong and richardson (2003) factors manifesting from operational performance and organizational performance were regressed on the critical success factors (csfs) manifesting successful bpr. findings revealed that successful bpr positively affected both performance measures in the nigerian oil and gas companies. in nigeria, adeyemi and aremu (2008) examined the impact of reengineering on organizational performance. the study specifically tried to uncover how business process reengineering can help banks to effect innovative and strategic changes in the banking industry in nigeria. the data for the study were obtained using questionnaire administered on 80 bank staff and analysed through simple percentage analysis and regression analysis. the regression result shows that bpr can significantly explain about 89% of the variability in the success of organisational performance. the results further revealed that the business reengineering process, service quality, and innovative and strategic change majorly determine the success of the organisational performance. ringim et al. (2012) employed the hierarchical regression analysis to scrutinize the impact of it capabilities as the moderator on the relationship between bpr factors and organizational performance in nigerian banks. the stuy found that it capability moderated the relationship between bpr factors such as change management, customer focus, management commitment and overall organizational performance of bank. the empirical review so far has shown that studies on bpr resources and firm performance nexus is dearth in both developed and developing economies. the available empirical evidences showed that bpr resources improves firm performance. specifically, available studies in nigeria also agreed that bpr and related innovative business improvement brings about enhanced performance (adeyemi and aremu, 2008; ringim et al., 2012; ogbo et al., 2015; orogbu et al., 2015). however, no known study in nigeria identified the possible resources involved in bpr process and their effects on organisational performance. the brewing sector being one of the technologically trending industry will benefit from this study. validating the empirical and theoretical postulations in nigerian would provide the policy makers and managers of firms with the management tools to meeting the current competitiveness of the business world. therefore, the core research gap which the present study wants to fill is to validate the theoretical studies and empirical findings using the nigerian brewing firms. 3. methodology 3.1. research design the descriptive survey design which is a quantitative approach that collects data that describes existing phenomena was adopted. nworgu (2006) states that descriptive survey design is concerned with collecting data from a sample of a population in order to describe conditions or relationships that exist. the descriptive research design is ideal for this study because the main purpose of the research is essentially theory validation/verification following the hypothetic-deductive approach (guba and lincoln, 2005). 3.2. population of the study the population of the study consists of the 3500 employees of the brewing firms quoted on the nigerian stock exchange (nse). there are only five (5) quoted brewing firms in nigeria as shown on table 1 below. asian business research journal, 2018, 3: 15-25 19 © 2018 by the authors; licensee eastern centre of science and education, usa table-1. list of quoted brewing firms in nigeria. brewing firms acronym population 1 champion breweries plc. champion 435 2 guinness nig. plc. guinness 654 3 international breweries plc. intbrew 499 4 jos international breweries plc. josbrew 629 5 nigerian breweries plc. nb 1283 total 3,500 source: adapted from http://www.african-markets.com/en/stock-markets/ngse/listed-companies the population of the study comprised all the top and middle management of the brewing firms. these include the general manager/ceo, production manager, finance manager/head of accounts department, marketing manager, procurement manager/head of purchase department, human resource manager/head of personnel department, sales representatives. in a nutshell, all general managers of the firms, managers and assistant managers in the various departments were used for the study. 3.3. sample and sampling technique the study adopted a random sampling technique to select 746 management staff of the brewing firms in nigeria. a mathematical model developed by was used to determine the sample size: n = (za)2 (e) (n), where n = sample size, z = confidence level, usually 1.961, e = error factor (0.05) and n = population of the selected brewing firms (3500). in this study the researcher will work on 95% confidence level. applying the above model, we have: (1.961)2 x 0.05 x 3500 = 672.anticipating a response rate of 90%, an adjustment of the sample size estimate to cover for non-response rate was made by dividing the sample size calculated with a factor, f i.e. n/f, where f is the estimated response rate. the calculated sample size = 672/0.90 = 746. therefore, the sample size for the study is 746 respondents. thus the researcher used 746 persons as sample size for the study. thus, simple proportion method was used to allocate the sample size allocated as follows: i. champion = ii. guinness = iii. intbrew = iv. josbrew = v. nb = grand total = 746 respondents 3.4. instrument of the study the instrument for data collection was structured in a likert-scale format. the choice of the likert scale was informed by the fact that it presents the respondents with the opportunity of indicating the extent to which they agree or disagree with the statements of the item. the questionnaire used a 6-point scale to capture the items in resources. it divided bpr resources into financial, human and technological. however, organisation performance construct was operationalized with 4 items to measure attainment of strategic goals and objectives, employee satisfaction, teamwork and cooperative/collaborative working culture and service delivery and/or operation capacity with a 5-point likert type of very low (vl), low (l), moderate (m), high (h) and very high (vh). 3.5. reliability of the instrument reliability of the instrument was determined through a test of internal consistency of the question items in each of the constructs. the internal consistency is usually calculated using an alpha coefficient, which measures the interrelationship between items in the questionnaire (cortina, 1993). nunally (1978) argues that a reliability of 0.70 or higher is acceptable. the cronbach alphas all ranked higher than 0.70 (actual scores were 0.79). this analysis showed an alpha of 0.85, indicating that the scales used in the study are reliable. 3.6. model specification the constructs as adapted from kassahun (2012) was based on the postulation that bpr resource has positive effect on organisational performance. thus, the models are developed as follows: op = f (fr, hr, tr) ..................................................................................equation (1) in this model, organisational performance (op) is the dependent, while the variables of bpr resource are the independent variables: financial resources (fr), human resources (hr) and technological resources (tr). the equation is rewritten in a model as follows: op = a0 + a1fr + a2hr + a3tr + μ ............................................................equation (2) where: op = organisational performance and the dependent variables. fr = financial resources. hr = human resources. tr = technological resources. where a0 is a constant or intercept. a1, a2, and a3, are the coefficients of the explanatory variables. µ is the stochastic error term. http://www.nse.com.ng/listings-site/listed-securities/company-details?isin=ngguinness07 http://www.nse.com.ng/listings-site/listed-securities/company-details?isin=ngintbrew005 http://www.nse.com.ng/listings-site/listed-securities/company-details?isin=ngjosbrew003 http://www.nse.com.ng/listings-site/listed-securities/company-details?isin=ngnb00000005 http://www.african-markets.com/en/stock-markets/ngse/listed-companies asian business research journal, 2018, 3: 15-25 20 © 2018 by the authors; licensee eastern centre of science and education, usa 3.7. method of analyses the ordinary least square regression technique was adopted in the analysis of the relationship between dependent variables and the independent variables in each of the models. data from likert scale responses are ordinal scale which tend not to have normal distribution, however, norman (2010) cited in gail and artino (2013) has proved that parametric tests not only can be used with ordinal data such as likert scale but also that parametric tests are more robust than non-parametric tests. “this means that parametric tests tend to give the right answer” even when statistical assumptions such as normal distribution of data are violated to an extreme degree: thus “parametric tests are sufficiently robust to yield largely unbiased answers that are acceptably close to “the truth” when analysing likert scale responses”. 4. results and interpretation 746 copies of the questionnaires were distributed and 684 were duly completed and returned. the response rate of the questionnaire was 91.69%. 4.1. descriptive analyses of the nature of bpr resources and performance of brewing firms in nigeria the bpr resources are grouped into financial, human and technological resources. the analysis aims to find out the level of use of each of these resources. the results from tables 2, 3 and 5 showed the level of usage of bpr resources in the firms, while table 5 is the analysis of level of organisational performance among brewing firms in nigeria. table-2. financial (budgetary) resources deployed during the implementation of bpr project in brewing firms sn financial resource variables nu vlu lu mu au vau remark 1 bpr training 0 (0%) 86 (12.6%) 132 (19.3%) 64 (9.4%) 334 (48.8%) 68 (9.9%) adequate usage 2 bpr associated it investments 6 (0.9%) 92 (13.5%) 124 (18.1%) 82 (11.9%) 290 (42.4%) 90 (13.2%) adequate usage 3 bpr benchmarking tours 8 (1.2%) 48 (7.0%) 120 (17.5%) 152 (22.2%) 198 (28.9%) 158 (23.1%) adequate usage 4 bpr associated office layout reorganisation 0 (0%) 24 (3.5%) 86 (12.6%) 112 (16.4%) 120 (17.5%) 342 (50.0%) very adequate usage 5 bpr consultants 34 (5.0%) 68 (9.9%) 134 (19.6%) 228 (33.3%) 130 (19.0%) 90 (13.2%) moderate usage cumulative average response 1% 9% 17% 19% 31% 22% adequate usage key: no use (nu), very low usage (vlu), low usage (lu), moderate usage (mu), adequate usage (au), very adequate usage (vau) the results shown in table 2 describe the level of financial resource usage in the bpr implementation process. the results from frequency counts showed that training, it investment, and benchmarking tours received “adequate usage” while the usage of office layout reorganisation, and consultants were “very adequate” and “moderate” respectively. the summary of the results were shown as cumulative average response. it showed that 1% of the respondents indicated that financial resources were not used, 9% said it had very low usage, and 17% recorded low usage. more so, 19%, 31% and 22% showed moderate, adequate and very adequate usages respectively. the overall response indicated that there is an “adequate usage” of financial resources in the bpr implementation in the brewing firms under study. the graphic presentation of the result is shown on figure 1. figure-1. graphic presentation of the level of financial resource usage in bpr implementation source: field survey 2018 asian business research journal, 2018, 3: 15-25 21 © 2018 by the authors; licensee eastern centre of science and education, usa table-3. knowledge and skill of the human resources deployed during the implementation of bpr sn human resource variables nu vlu lu mu au vau remark 6 role of it in bpr 0 (0%) 8 (1.2%) 24 (3.5%) 130 (19.0%) 214 (31.2%) 308 (45.0%) adequate usage 7 change management 0 (0%) 10 (1.3%) 242 (35.4%) 174 (25.4%) 126 (18.4%) 132 (19.3%) low usage 8 core functions/activities 0 (0%) 0 (0%) 64 (9.4%) 84 (12.3%) 96 (14.0%) 440 (64.3%) very adequate usage 9 performance measurement 4 (0.6%) 10 (1.3%) 90 (13.2%) 290 (42.4%) 160 (23.4%) 130 (19.0%) moderate usage 10 communication 0 (0%) 0 (0%) 60 (8.8%) 88 (12.9%) 116 (17.0%) 420 (61.4%) very adequate usage 11 stakeholder engagement 0 (0%) 0 (0%) 2 (0.3) 2 (0.3%) 114 (16.7%) 566 (82.7%) very adequate usage 12 design and implementation project 28 (4.1%) 80 (11.7%) 108 (15.8%) 230 (33.6%) 152 (22.3%) 86 (12.6%) moderate usage cumulative average response 4.1% 11.7% 15.8% 33.6% 22.2% 12.6% moderate usage key: no use (nu), very low usage (vlu), low usage (lu), moderate usage (mu), adequate usage (au), very adequate usage (vau) from the result on table 3, it can be seen that most of the human resources role of it (45%), core functions/ activities (64.3%), communication (61.4%), and stakeholder engagement (82.7%) are rated as very adequate in use by the respondents. however, performance measurement (42.4%), design and implementation project (33.6%) are indicated as moderate usage while change management (35.4%) was in low usage. the overall result indicate that there is a “moderate” deployment of human resources during the implementation of bpr in brewing firms in nigeria. as depicted in figure 6, “moderate” has the highest bar with 33.6 percent, followed by “adequate usage” with 22.2%. however, “no use”, “very low usage”, low usage” and very adequate usage” were 4.1%, 11.7%, 15.8% and 12.6% respectively. these results indicate that there is an overall moderate usage of human resources in nigerian brewing firms. figure-2. graphic presentation of the level of human resource usage in bpr implementation source: field survey 2017 the result in table 4 shows the level of technological resources deployed in brewing firms in nigeria. the technological resource variables are represented by items 13 to 27 in the table. the results show that most of the items questions received “adequate usage” as indicated by the respondents. according to the result, the items of technological resource that were in “adequate usage” included “automated workflow & document flow system” (54.7%), “website for publishing basic organizational information” (34.2%), “shared it infrastructure” (51.2%), “computerized budget and expenditure system” (36.3%), “computerized human resource management (personnel) system” (45.6%), and “computerized process management, monitoring, and reporting system” (51.2%). asian business research journal, 2018, 3: 15-25 22 © 2018 by the authors; licensee eastern centre of science and education, usa table-4.technological resources deployed for the bpr implementation technological resource variables nu vlu lu mu au vau remark 13 automated workflow & document flow system 0 (0%) 0 (0%) 40 (5.8%) 90 (13.2%) 174 (54.7%) 180 (26.3%) adequate usage 14 website for publishing information about services of the organization 0 (0%) 52 (7.6%) 156 (22.8%) 242 (35.4%) 152 (22.2%) 82 (12.0%) moderate usage 15 website for publishing basic organizational information 0 (0%) 42 (6.1%) 134 (19.6%) 164 (24.0%) 234 (34.2%) 110 (16.1%) adequate usage 16 teleconferencing technologies 0 (0%) 52 (7.6%) 334 (48.8%) 146 (21.3%) 88 (12.9%) 64 (9.4%) low usage 17 electronic communication media for formal external communication 0 (0%) 70 (10.2%) 112 (16.4%) 244 (35.7%) 156 (22.8%) 102 (14.9%) moderate usage 18 electronic communication media for internal communications 0 (0%) 64 (9.4%) 102 (14.9%) 116 (17.0%) 180 (26.3%) 222 (32.55) very adequate usage 19 shared it infrastructure 0 (0%) 2 (0.3%) 34 (5.0%) 112 (16.4%) 350 (51.2%) 186 (27.2%) adequate usage 20 computerized procurement system 0 (0%) 64 (9.4%) 154 (22.5%) 240 (35.1%) 148 (21.6%) 78 (11.4%) moderate usage 21 computerized budget and expenditure system 0 (0%) 30 (4.4%) 128 (18.7%) 162 (23.7%) 248 (36.3%) 116 (17.0%) adequate usage 22 computerized human resource management (personnel) system 0 (0%) 46 (6.7%) 90 (13.2%) 134 (20.0%) 312 (45.6%) 102 (14.9%) adequate usage 23 document management / archival system 0 (0%) 68 (9.9%) 114 (16.7%) 248 (36.0%) 152 (22.2%) 104 (15.2%) moderate usage 24 computerized performance measurement and reporting system 0 (0%) 64 (9.4%) 104 (15.2%) 118 (17.3%) 184 (26.9%) 214 (31.3%) very adequate usage 25 computerized process management, monitoring, and reporting system 0 (0%) 2 (0.3%) 34 (5.0%) 112 (16.4%) 350 (51.2%) 186 (27.2%) adequate usage 26 online delivery of services 10 (1.5%) 46 (6.7%) 330 (48.2%) 132 (19.3%) 90 (13.2%) 76 (11.1%) low usage 27 queue management system 4 (0.6%) 70 (10.2%) 136 (19.9%) 236 (34.5%) 158 (23.1%) 80 (11.7%) moderate usage cumulative average response 0.1% 6.5% 19.5% 24.4% 31.0% 23.3% adequate usage key: no use (nu), very low usage (vlu), low usage (lu), moderate usage (mu), adequate usage (au), very adequate usage (vau) closely following the items that received adequate usage (six items) is the ones with “moderate usage” (five items). these include “website for publishing information about services of the organization” (35.4%), “electronic communication media for formal external communication” (35.7%), “computerized procurement system” (35.2%), “document management / archival system” (36.0%), and “queue management system” (34.5%). however, few of the items that received low usage included “teleconferencing technologies” (48.8%) and “online delivery of services” (48.2%) while “electronic communication media for internal communications” (32.55%) and “computerized performance measurement and reporting system” 31.3%) were in very adequate usage respectively. the overall result showed that technological resources received “adequate usage” in brewing firms. this is affirmed from result on figure 7 showing overall responses with adequate usage as 31%, very adequate usage with 23.3%, moderate usage with 24.4%, low usage with 19.5%, very low usage with 6.5% and no use as 0.1%. thus the overall result is that technological resources were in adequate usage in brewing firms in nigeria. figure-3. graphic presentation of the level of technological resource usage in bpr implementation. source: field survey 2017 in summary, the results from tables 1, 2 and 3, as well as figures 1, 2, and 3 showed that financial, human and technological resources were variously used in brewing firms in nigeria. financial and technological resources asian business research journal, 2018, 3: 15-25 23 © 2018 by the authors; licensee eastern centre of science and education, usa were in adequate usage while human resources was moderate. this suggests that operations in brewing firms are more capital (financial) and technological based than human. generally, the results indicate that resource use in brewing firms is needful. table-5. analyses of improvement in organisational performance sn indicators very low low moderate high very high remark 1 attainment of organizational strategic goals and objectives 4 (0.6%) 44 (6.4%) 112 (16.4%) 352 (51.5%) 172 (25.1%) high 2 employee satisfaction 38 (5.6%) 108 (15.8%) 320 (46.8%) 128 (18.7%) 90 (13.2%) moderate 3 teamwork and cooperative/ collaborative working culture 0 (0%) 42 (6.1%) 94 (13.7%) 374 (54.7%) 174 (25.4%) high 4 service delivery and/or operation capacity 18 (2.6%) 98 (14.3%) 140 (20.5%) 164 (24.0%) 264 (38.6%) very high cumulative average response 2.20% 10.65% 24.35% 37.23% 25.58% high source: field survey 2017 figure-4. graphic presentation of the cumulative extent of organisational performance of brewing firms. source: field survey, 2017 the level of organisational performance is measured using four variables covering (1) attainment of organizational strategic goals and objectives, (2) employee satisfaction such as more empowerment in skill & knowledge, decision making power, better/quality working condition/environment, (3) teamwork and cooperative/collaborative working culture in the areas of better employee cooperation, information sharing, and overall organizational collaboration, and (4) service delivery and/or operation capacity such as efficiency, productivity, service type variety, service provision quality and service expansion. among these measures of performance, attainment of organizational strategic goals and objectives (51.5%) and teamwork and cooperative/ collaborative working culture (54.7%) scored “high” in performance rating while “employee satisfaction” (46.7%) and “service delivery and/or operation capacity” (38.6%) scores “moderate” and “very high” respectively. from the cumulative average response shown on figure 4, very low received 2.2% score, low received 10.65%, moderate got 24.23%, while high and very high scored 37.23% and 25.58% respectively. the results suggest that the performance of brewing firms in nigeria at present is scored high in the five-point rating. 4.2. test of reliability of models there is every tendency that the independent variables employed in each model may have high correlation among one another, and this is capable of affecting the reliability of the results from such models. thus the test of multicolinearity is done to determine the reliability of each model. the variance inflation factor (vif) has been adopted to test for the presence of multicolinearity in the models. decision rule: “when the value of vif is 10 and above, then the multicolinearity is problematic (ranjit, 2006). table-6. variance inflation factor (vif) for test of multicolinearity on bpr resource variables model collinearity statistics tolerance vif 1 (constant) fr .196 5.094 hr .286 3.499 tr .311 3.220 source: field survey, 2017 table 6 shows the vif for the independent variables of bpr resource model. the result indicates that financial resources (fr), human resources (hr), and technological resources had vif values of 5.094, 3.499 and 3.220, respectively. since the values are not more than 10, we conclude that there is no multicolinearity in the model. thus the model for bpr resources is adjudged reliable for ols regression analyses. asian business research journal, 2018, 3: 15-25 24 © 2018 by the authors; licensee eastern centre of science and education, usa 4.3. model estimation having analysed the status of the variables employed in the study, the study then performed the regression analyses to show the effect of the independent variables (bpr perspectives /activities) on organisational performance of brewing firms in nigeria. from the analyses, the research questions were answered using the standardised coefficient of regression (beta) while the hypotheses were tested with f-statistics and t-statistics. table-7. regression of the effect of bpr resources on firm performance model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) .066 .056 1.180 .239 fr .650 .031 .629 20.694 .000 hr .190 .024 .201 7.989 .000 tr .190 .024 .189 7.827 .000 coefficient of determination (r2) = .942 f-statistics (p.value) = 1819.310 (0.000) durbin-watson = 1.794 a. dependent variable: op the coefficient of determination (r2) used to test the explanatory power of the model gave a value of 0.942. this indicates that about 94% of changes in bpr resources can explain performance of brewing firms in nigeria. this implies that resource are very important variables that engender performance of brewing firms in nigeria. the value of the durbin watson statistics is 1.794. since the value is approximately 2, it indicates that there is no autocorrelation in the model. therefore the model has a good fit. to answer research question one “to what extent does bpr resources influence performance of brewing firms?” the standardised coefficient of regression (beta) was used. the coefficients for financial resources (fr), human resources (hr) and technological resources (tr) are 0.629, 0.201 and 0.189 respectively. the results indicate a positive influence to the tune of 63% from financial resources and 20% from human and 19% from technological resources. it suggests that financial resource (63%) has more influence followed by human resource (20%) and then technological resource (19%). the result of the t-statistics determines the significance of the coefficients. the p-values for fr, hr and tr are all less than 0.05 (p < 0.05), thus all the variables have significant effect on firm performance. to test hypothesis one: bpr resources have no significant effect on the performance of brewing firms in nigeria. the result from f-statistics has p.value of 0.000 (p. < 0.05). since the p-value is less than 0.05, we reject the null hypothesis and thus conclude that bpr resources have significant effect on the performance of brewing firms. 5. conclusion bpr resources had 94% significant effect on performance in brewing firms in nigeria. specifically, a positive influence was established such that financial resources (63%) has more influence followed by human resources (20%) and then technological (19%). this implies that the use of resources is a veritable strategy to enhancing firm performance. these results are in line with most of the related literature reviewed under bpr resource perspective. the results supports the theory of resource base view (rbv). it is noteworthy that finance is more important to firms than human and technological resources. this may flow from the fact that money can enhance the deployment of the other uses (human and technological). hence, business process re-engineering has become a veritable tool for enhancing resource building that can be used to enhance organisational performance (peteraf and barney, 2003; dzhumalieva and helfert, 2008). on the overall, the study posits that the use of bpr resources is a veritable strategy to enhancing firm performance. firms that 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(2018). business process reengineering resources and the performance of quoted brewing firms in nigeria. asian business research journal, 3: 15-25. history: received: 29 may 2018 revised: 9 august 2018 accepted: 28 august 2018 published: 5 september 2018 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education acknowledgement: all authors contributed to the conception and design of the study. funding: this study received no specific financial support. competing interests: the authors declare that they have no conflict of interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or 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business research journal vol. 5, 13-18, 2020 issn : 2576-6759 doi: 10.20448/journal.518.2020.5.13.18 © 2020 by the authors; licensee eastern centre of science and education, usa influence of endogenous human capital on china’s economic growth zhao li glorious sun school of business and management (gssbm), donghua university, china. ( corresponding author) abstract based on the framework of endogenous economic growth, this paper took the education sector as a separate human capital production sector, and then an economic growth model with endogenous human capital accumulation is constructed, and a combination of theoretical derivation and simulation is used for the education investment behavior of the chinese household sector, as well as the analysis of the efficiency of human capital accumulation. based on above theoretical analysis, then to study the impact of educational investment on economic growth. the study found that the more the elasticity of education investment, the higher the efficiency of human capital accumulation, and the greater willingness of families to increase investment on education. human capital accumulation is a key factor in determining the economic growth potential of a country or region, and education is the most important way for the accumulation of human capital. the investment in education is necessary for china under the condition of the economic growth rate slowing down. keywords: investment, time-lag effect, human capital accumulation, economic growth. jel classification: e21, e22, h52. 1. introduction “why are some countries richer than others?” solow’s seminal paper showed that capital accumulation could account for differences in output per capita. further, lucas (1988) found that human capital disparities were key factor for countries differences. the following researches (eg. (aisen & veiga, 2013; benos & zotou, 2014)) have estimated the impact of human capital on economic growth through cross-section analysis and concluded that differences in the average schooling of countries are related to different economic growth rates. the concept of human capital can be interpreted as the set of intangible resources embedded in the labor factor. individuals with more education are more productive and innovative leading to the creation of new products and improving the productivity of factors (goldin, 2016). although, human capital is key factor that affect the economic growth, how to measure and how the human capital accumulated are still controversial. the standard approach largely inspired by the work of mincer (1974) takes estimates of the rate of return to schooling as building blocks to directly measure a country’s stock of human capital. implicitly, this method assumes that the marginal contribution to output of one additional year of schooling is equal to the mincerian rate of return. one problem with this procedure is that it is not well suited to handle cross-country differences in the quality of human capital. the main ways of accumulating human capital are education and learn by doing (becker, 2009) and in general there is a positive correlation between an individual’s ability and their level of education. as a result, scholars often use the average level of education of employees as substitutes for human capital stock or human capital accumulation (schündeln & playforth, 2014). using the education output to directly measure the stock of human capital, it may ignore the process how human capital produce, namely it lacks an education sector. based on the above considerations, this paper firstly establishes a theoretical model that includes education sectors. the education sector generates human capital, and human capital as a factor of production enters the production sector, affecting the production of the national economy. taking the duality of production function and cost function, the educational input (cost) is used as the explanatory variable of educational output (human capital). the investment in education has the time lag effect in the formation of human capital. that is, the current investment in education cannot be fully reflected in the stock of human capital in the current production field and therefore will not directly affect the output of the national economy in the current period, which is often ignored by mostly researches. this paper consists of six parts. the first part is the introduction. the second part is literature review. the third part is the derivation of the theoretical model, including the education production function, cost function in http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2020.5.13.18&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/72 https://orcid.org/0000-0001-6975-3025 asian business research journal, 2020, 5: 13-18 14 © 2020 by the authors; licensee eastern centre of science and education, usa the education sector, and the national economic production function in the production sector. the fourth part is calibration. the fifth part is conclusion. 2. literature review at present, the main methods of measurement of human capital include “cost method”, “income method” and “education index method”. among these methods, the education indicator method is relatively simple and easy to implement. the common education indexes are adult literacy rate, enrollment rate and average years of schooling (laroche & merette, 2000). however, the education indicator method only focuses on the simple arithmetic mean, which is not enough to reflect the difference in the return rate of education among different groups of people. the essence of cost method is to calculate all the expenditures in the process of human capital formation (kendrick, 1976). it is assumed that the higher the cost paid, the higher the accumulated human capital. moreover, different from physical capital, human capital accumulation is a relatively long-term and complicated process. the time span of human capital accumulation determines that the cost method measures human capital requires long-term data support. it is difficult for china’s current data to support detailed cost method research. different from the cost method, the income method regards human capital accumulation as a long-term investment, and measures the current human capital stock with the present value of individual lifetime return (jorgenson & fraumeni, 1992). however, the income method also has its defects. it is necessary to assume some important parameters, especially the income growth rate and the discount rate. for example, li, li, qiu, guo, and tang (2014) used labor productivity growth as an approximation of the actual income growth rate to forecast future personal income, and use the oecd’s human capital discount rate. since the income method has assumed the economic growth rate advanced, using human capital to explain the economic growth of a country will fall into the logical trap of circular argumentation. however, at present the education indicator are most popular used in the researches because of its easily measurement. the above methods are only the ways to measure the human capital stock, but about the process of how the human capital production is still hard to classify. human capital accumulation is essential of the process to acquire knowledge and skills through education, experience and health care. acquiring skills and knowledge is a means of capital formation by delaying consumption with the aim of increasing future income. human capital improves the quality of labor, increasing its productivity (bodman & le, 2013). however, in most of the literature on educationhuman capital as the driving force of economic growth, the input-output relationship of the education sector is often simplified: the education department with linear production technology mechanically converts inputs into human capital. some scholars have modified the hypothesis of linear human capital production technology in the education sector and verified it using micro-level data. however, using macro-level data to empirically analysis the education sector’s production process and its efficiency is rare. this paper introduces the education sector into the endogenous economic growth model to show the process of the human capital accumulation. combined with the characteristics of china’s education system, it analyzes the effects of education investment on human capital accumulation and further economic growth. 3. methodology 3.1. household sector the representative consumer maximizes his utility across time. u(𝑐𝑡) = ∫ 𝑒−𝜌𝑡 ∞ 0 𝑐𝑡 1−𝜃 1 − 𝜃 dt （1） where, θ the inverse of the elasticity of substitution, θ > 1 and ρ the discount rate. in period 𝑡0, the initial endowment of the household is 𝑘0units of physical capital and ℎ0units of human capital. then each period, the household leases physical capital to the firm at a rent rate 𝑟𝑡and provides the firm with ℎ𝑡units effective workforce at a wage rate of 𝑤𝑡 . the household allocates total income between consumption, physical capital investment, and human capital investment. the corresponding budget constraints are: 𝑐𝑡 + 𝑒𝑡 + 𝑖𝑡 = 𝑤𝑡 ∙ ℎ𝑡 + 𝑟𝑡 ∙ 𝑘𝑡 （2） the capital accumulation equation is set as follows: 𝑘ṫ = 𝑤𝑡 ∙ ℎ𝑡 + 𝑟𝑡 ∙ 𝑘𝑡 − 𝑐𝑡 − 𝑒𝑡 − 𝛿𝑘𝑘𝑡 （3） here, 𝛿𝐾 is depreciation rate of physical capital. 3.2. production function in this paper, begin with a basic model of economic growth in which aggregate output at date t is determined by the size of the physical capital, human capital and the state of technology, then the production function will be set as: 𝑦𝑡 = 𝐴 ∙ 𝑘𝑡 𝛼 ∙ ℎ𝑡 1−𝛼 （4） here, 𝑌t is final output, 𝐴 is a measure of technology，𝑘𝑡 is total physical capital, ℎt is human capital, 0 < 𝛼 < 1 is output elasticity of physical capital. in the complete competitive market conditions, the first-order conditions for maximizing the profit of a representative firm are: 𝑟𝑡 = 𝛼 ∙ 𝑧𝑡 𝛼−1, 𝑤𝑡 = (1 − 𝛼) ∙ 𝑧𝑡 𝛼 （5） where, 𝑧𝑡 = 𝑘𝑡 ℎ𝑡⁄ , is the ratio of physical capital to effective labor. asian business research journal, 2020, 5: 13-18 15 © 2020 by the authors; licensee eastern centre of science and education, usa 3.3. endogenous human capital assumption1: education investment is an important means to improve the quality of human capital, and it is also an important process for the accumulation of human capital (sehrawat & giri, 2017). education can be divided into elementary education and higher education. elementary education is compulsory education in some countries. at this stage, people receive general basic education, while higher education fosters scientific and technological progress in a country by cultivating high-tech talents. this in turn promotes productivity growth. educational investment does not always positively co-relate to economic growth (ahsana & haque, 2017). the misallocation of human capital structures caused by over-education will inhibit economic growth (teixeira & queirós, 2016). although human capital is a key factor in promoting economic growth, the structural unemployment caused by higher education misallocation makes the basic labor supply insufficient, which in turn hinders economic growth. thus, the accumulation of human capital does not directly promote economic growth. the role of human capital depends on certain industry structure and the economic institutions. besides, economic development level of a country determines the type of the dominant export sector and the type of major export products, which in turn leads to the demand for related talents. it promotes the demand for education. among them, the growth of non-technology-intensive exports has inhibited the average number of years of education in the country, while the growth of technology-intensive exports has long-term role in promoting the country’s education level (blanchard & olney, 2017). for simplicity, assume that human capital has no depreciation. then, the human capital accumulation function is as follow: ℎ̇𝑡 = b ∙ 𝑒𝑡 𝛾 ∙ 𝐼𝜈 （6） here, b is constant, 𝛾 is elasticity of education investment, ν is elasticity of industrial structure. 3.4. general equilibrium and the growth path objective function: 𝑚𝑎𝑥 ∫ 𝑒−𝜌𝑡 ∞ 0 u(𝑐𝑡)dt （7） the constraint is: 𝑘ṫ = 𝑤𝑡 ∙ ℎ𝑡 + 𝑟𝑡 ∙ 𝑘𝑡 − 𝑐𝑡 − 𝑒𝑡 − 𝛿𝑘𝑘𝑡 （8） the hamiltonian function for this problem is： h = 𝑐𝑡 1−𝜃 1 − 𝜃 + 𝜆𝑡(𝑤𝑡 ∙ ℎ𝑡 + 𝑟𝑡 ∙ 𝑘𝑡 − 𝑐𝑡 − 𝑒𝑡 − 𝛿𝑘𝑘𝑡) + 𝜇𝑡b ∙ 𝑒𝑡 𝛾 ∙ 𝐼𝜈 （9） in the above formula, 𝜆𝑡 is the shadow price of 𝑘𝑡 , 𝜇𝑡 is the shadow price of 𝑒𝑡 . where, 𝑘𝑡 and ℎ𝑡 are state variables, ct and 𝑒𝑡 are control variables. according to the first order condition, then, 𝑐𝑡 −𝜃 = 𝜆𝑡 （10） −𝜆𝑡 + 𝜇𝑡𝛾b ∙ 𝑒𝑡 𝛾−1 ∙ 𝐼𝜈 = 0 （11） then the euler equation is, �̇� 𝜆 = −𝑟𝑡 + 𝜌 + 𝛿𝑘 （12） �̇� 𝜇 = 𝜌 − 𝑤𝑡 ∙ 𝛾b ∙ 𝑒𝑡 𝛾−1 ∙ 𝐼𝜈 （13） tvc lim 𝑡→∞ 𝑒−𝜌𝑡 ∙ 𝜆𝑡 ∙ 𝑘𝑡 = 0 （14） log-differentiating equations 10,11 and combining it with equations 13,14 produces consumption growth rate, and divide equations 8 both sides kt produces physical capital growth rate： �̇� 𝑐 = 1 𝜃 (𝛼 ∙ 𝑧𝑡 𝛼−1−𝛿𝑘 − 𝜌) （15） �̇� 𝑒 = 1 𝛾 − 1 ((1 − 𝛼) ∙ 𝑧𝑡 𝛼 ∙ 𝛾b ∙ 𝑒𝑡 𝛾−1 ∙ 𝐼𝜈 − 𝛼𝑧𝑡 𝛼−1+𝛿𝑘) （16） �̇� 𝑘 = 𝑧𝑡 𝛼−1 − 𝑐𝑡 𝑘𝑡 − 𝑒𝑡 𝑘𝑡 − 𝛿𝑘 （17） here 𝑧𝑡 = 𝑘𝑡 ℎ𝑡⁄ , is the ratio of physical capital to effective labor, and define 𝜒𝑡 = 𝑐𝑡 𝑒𝑡⁄ . equations. 15 16 and 17, fully characterize the dynamics of the economy. this system can be solved for its steady state, �̇� 𝑐⁄ = 0 �̇� 𝑘⁄ = 0, �̇� 𝑒⁄ = 0, then we can get ratio of physical capital to effective labor, the per capital effective consumption and per capita effective education investment in equilibrium state:𝑧∗, 𝑒∗, and 𝜒∗: 𝑧∗ = ( 𝛼 𝛿𝑘 + 𝜌 ) 1 1−𝛼 （18） 𝑒∗ = ( 𝜌 1 − 𝛼 ( 𝛿𝑘 + 𝜌 𝛼 ) 𝛼 1−𝛼 1 𝛾𝐵𝐼𝜈 ) 1 𝛾−1 （19） 𝜒∗ = 𝜌 1 − 𝛼 1 𝛾 − 𝛼 𝛿𝑘 + 𝜌 𝜌 1 − 𝛼 𝛿𝑘 𝛾 − 1 (20） asian business research journal, 2020, 5: 13-18 16 © 2020 by the authors; licensee eastern centre of science and education, usa proposition1: there exists a bgp along which the income shares of capital and labor are constant and strictly positive when factors are paid their marginal products, only when 𝜌 𝛾(1 − 𝛼)⁄ > 𝛼𝜌𝛿𝐾 𝛾(𝛿𝐾 + 𝜌)(1 − 𝛼)⁄ + 1. from the equation 19 we can know that the per capita effective capital in equilibrium state: 𝑧∗ is affected by the parameters fixed capital depreciation rate 𝛿𝑘 and time preference 𝜌 changes. when 𝛿𝑘or 𝜌 increases, the per capita effective capital will decrease. the education investment 𝑒∗ is affected mainly by the elasticity of education investment 𝛾 . when 𝛾 increases, the education investment will increase. the more the elasticity of education investment, the higher the efficiency of human capital accumulation, and the greater willingness of families to increase investment on education. 4. calibration the previous section analyzed the effects of household education investment on human capital accumulation and economic growth by constructing a theoretical model. however, there are many exogenous parameters in the model. therefore, taking the china’s data from 1997 to 2016 as a sample, the paper firstly obtained a reasonable value for the structural parameters of the model and then calibrated the model. second, the calibration was used to analyze the impact of household education investment on human capital accumulation and economic growth. 4.1. parameters sets 4.1.1. utility function parameter setting about intertemporal substitution elasticity, the results of foreign and domestic studies were widely divergent. empirical analysis using total consumption data usually finds that cross-substitution elasticity 1 𝜃⁄ was close to zero, and a calibration model to match growth and fluctuation facts usually needed to set the value close or equal to 1 gu, yan, and chen (2013) measured the inter-substitution elasticity of consumption of china’s household consumption from 2000 to 2008 and found that the elasticity of intertemporal substitution in most years was around 0.3. with reference to relevant research at home and abroad, the benchmark intertemporal substitution elasticity value is set to 0.5, namely the risk aversion coefficient 𝜃 is 2. 4.1.2. firm production function parameter setting estimated that the output elasticity of china’s physical capital from 1952 to 2010 was 0.6576; zhu and feng (2014) calculated that the output elasticity of physical capital from 1997 to 2011 was 0.745. based on the above domestic research, we set the output elasticity of physical capital in the production function to 0.7. in addition, the technical parameter a of the production function is normalized to 1. 4.1.3. physical capital depreciation rate most of the literature set the depreciation rate of physical capital 5% or 6%. this paper calculates the average depreciation rate of fixed assets from 1997 to 2016 according to the relevant data according to the “china statistical yearbook”, was 5.23%, which is basically consistent with the general capital depreciation rate of the literature. therefore, this paper sets the annual depreciation rate of physical capital to 5%. 4.1.4. human capital output elasticity about the output elasticity of human capital γ, many studies at home and abroad pointed out that there was an important relationship between the output elasticity of human capital and the return on education investment. psacharopoulos and patrinos (2004) found that every extra year of education leads to an increase in wages ranging from 8.4% to 13.2%, with an average of 10.2%. feng, zhu, and yang (2012) found that for every one year increase in the average number of years of education for chinese employed personnel from 1998 to 2010, the average wage level will increase by 11%. therefore, the paper set the rate of return on education investment to 10%, so that the calculated output elasticity of human capital was 0.8. in order to test the robustness of the value, the sensitivity test will be performed later. all the parameters set are shown in the table 1. table-1. model parameters and variable values. parameter symbol value intertemporal substitution elasticity 1 θ⁄ 2 total factor productivity 𝐴 1 physical capital output elasticity 𝛼 0.7 physical capital depreciation rate 𝛿𝑘 0.05 human capital output elasticity 𝛾 0.8 4.2. calibration results and analysis based on the model parameters set, then using the number simulation method, the calibration results are as show in the table 2. time preference rate 𝜌 is 0.9905 and technical level of human capital production function are 0.610. according to the parameters, this paper further studied the effect of household education expenditure on output growth rate through numerical simulation. as is show in figure 1. asian business research journal, 2020, 5: 13-18 17 © 2020 by the authors; licensee eastern centre of science and education, usa table-2. calibration results. parameter symbol value time preference rate 𝜌 0.9905 technical level parameters of human capital production function b 0.610 figure 1 shows that the household education investment is positively related with economic growth. household education investment belongs to productive public expenditure and helps to increase the marginal output of physical capital. therefore, household are willing to save more and promote the accumulation of physical capital. the increase in household education investment has positive effects on both human capital accumulation and physical capital accumulation, and promotes economic growth. figure-1. impact of household education investment on economic growth. 4.3. sensitivity test examining whether the parameters preset changes will significantly affect the simulation results, we analyze the effect of the sensitivity of the structural parameters on each endogenous variable in the model to check if the simulation results are robust. as is shown in the table 3, firstly, firm sector, the lower value, benchmark value, and upper value of the output elasticity of physical capital are taken as 0.6, 0.7, and 0.8, respectively. secondly, human capital production, the output elasticity of the human capital, lower value, the benchmark value and the upper value are 0.6, 0.8 and 0.90 respectively. table-3. impact of model parameters sensitivity analysis on economic growth. parameters endogenous variables output elasticity of physical capital 𝜶 output elasticity of education investment 𝜸 lower benchmark upper trend lower benchmark upper trend 0.60 0.70 0.80 0.60 0.8 0.9 e/y 0.021 0.019 0.017 monotonous decline 0.021 0.019 0.018 monotonous decline k/y 1.813 2.100 2.437 monotonous rise 2.246 2.100 1.898 monotonous decline h/y 0.250 0.177 0.125 monotonous decline 0.224 0.177 0.151 monotonous decline δy/y 0.082 0.075 0.069 monotonous decline 0.081 0.075 0.072 monotonous decline from above sensitivity analysis, it can be found that: the chinese economic growth numerical simulation solution based on the accumulation of human capital and physical capital is robust; when the model parameters change near the benchmark value, the chinese economic growth path will not appear obvious change. 5. conclusion accumulation of human capital is a key factor in determining the economic growth potential of a country or region, and education is the most important way to accumulate human capital. empirical researches of the economic growth model driven by the accumulation of human capital mainly tends to verify the relationship between education and economic growth. however, the production process (input-output relationship) in the education sector is a black box. the impact of education on the accumulation of human capital and the efficiency of education have not been given due attention. based on the framework of endogenous economic growth, this paper took the education sector as a separate human capital production sector, and then an economic growth model with endogenous human capital accumulation is constructed, and a combination of theoretical derivation and simulation is used for the education investment behavior of the chinese household sector, as well as the analysis of the efficiency of human capital accumulation. based on above theoretical analysis, then to study the impact of asian business research journal, 2020, 5: 13-18 18 © 2020 by the authors; licensee eastern centre of science and education, usa educational investment on economic growth. the study found that the more the elasticity of education investment, the higher the efficiency of human capital accumulation, and the greater willingness of families to increase investment on education. human capital accumulation is a key factor in determining the economic growth potential of a country or region, and education is the most important way for the accumulation of human capital. under the new normal, in order to achieve a change in the mode of economic growth, education investment should be increased. references ahsana, h., & haque, m. e. 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(2014). china’s national production function since 1997: a reinvestigation. london: london metropolitan business school. citation | zhao li (2020). influence of endogenous human capital on china’s economic growth. asian business research journal, 5: 13-18. history: received: 26 june 2020 revised: 29 july 2020 accepted: 12 august 2020 published: 2 september 2020 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education acknowledgement: this study contributes in the existing literature that this paper tried to construct an endogenous human capital on china’s economic growth. funding: this study received no specific financial support. competing interests: the author declares that there are no conflicts of interests regarding the publication of this paper. transparency: the author confirms that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 26 © 2018 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 3, 26-32, 2018 issn(e): 2576-6759 doi: 10.20448/journal.518.2018.31.26.32 © 2018 by the authors; licensee eastern centre of science and education, usa assessing the effectiveness of management consultancy in operations of construction firms: a case of willy enterprises ltd in arusha tanzania mbonde anthony jokakuu department of accounting and finance, school of business studies and economics, university of dodoma, dodoma – tanzania abstract this study assessed the effectiveness of management consultancy in operations of construction firms with reference to willy enterprises ltd in arusha tanzania. the researcher employed descriptive research design of cross-sectional survey. in this research two objectives were studied: to investigate the knowledge, understanding and perception about management consultancy usage in the organization and compare the non-financial operations of the organization before and after engaging management consultants. the data were collected in 2012 by way of questionnaires, interviews and documentary analysis. the sample of the participants was fortyfive (45) respondents from the different managerial position of the company and its client-firms. the findings here are part of master dissertation on contribution of management consultancy towards organizational performance: a case of willy enterprises ltd in arusha tanzania. keywords: management consultancy, operations, construction firms, business organization. jel classification: d02; m10. 1. introduction management consultancy is an exciting profession that can offer a great varieties and intellectual challenges for the consultant, whilst also making a very positive impact on the clients and society as a whole (block and markowitz, 2000). the evidence shows that, most of the construction companies which are doing great in the business worldwide are those which use management consultancy services e.g. vinci is ranked number one construction company of france and the world since 1999, followed by acs-spain. then, bechtel is among the most respected engineering, procurement, and construction companies in the world. also, hochtief is ranked number one construction company in german. others are strabag-austria, skanska-sweden, kajima-japan, saipemitaly and odebrecht-brazil1. all of them prove to use management consultancy services in their operations. also there is evidence that most of the construction companies which are doing great in africa are those which use management consultancy services in its operations. examples, aveng group is ranked number one construction company in south africa, orascom-egypt, and julius berger-nigeria2. furthermore, management consultancy has the great role to play in tanzania organizational operations e.g. in transport, insurance, in building and construction companies3. but this is not the case with all business organizations in the country because there are a great number of business firms which neither knows the importance of management consultancy services nor using it. this is actually the case with construction sector and occasionally willy enterprises ltd. since 1999 the company emerged in the construction industry, up to this moment it has been leading with remarkable projects in the country. the company saves many areas including civil works, building works, production and hiring of hydra form blocks, hiring of earth moving equipment as well as selling various roofing sheets, while recently being one of the major agent of alaf4. 1 www.no1construction.com 2 www.no1construction.com, retrieved on 29th december 2011 3 http//www.linkelin.com, retrieved on 29th december 2011 4 www.willy.co.tz retrieved on 26th august 2012 http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2018.31.26.32&domain=pdf&date_stamp=2017-01-14 http://www.no1construction.com/ http://www.linkelin.com/ http://www.willy.co.tz/ http://ecsenet.com/index.php/2576-6759/article/view/8 https://orcid.org/0000-0002-0783-0854 http://ecsenet.com/index.php/2576-6759/article/view/8 https://orcid.org/0000-0002-0783-0854 asian business research journal, 2018, 3: 26-32 27 © 2018 by the authors; licensee eastern centre of science and education, usa as the company continued to expand one year after another, management fails to cope with that situation. the reason is not definite also the general understanding and perception of people working in management about management consultancy is not clearly understood. 2. purpose of the study generally, this research intends to assess the effectiveness of management consultancy in operations of construction firms: a case of willy enterprises ltd in arusha tanzania. specifically intends to: i. investigate the knowledge, understanding and perception about management consultancy usage in the organization. ii. compare the non-financial operations of the organization before and after engaging management consultants. 3. related literature according to international council of management consultancy institute icmci (2009) management consultancy is the provision of the independent advice and assistance about the process of management to clients with management responsibilities. while, management consultant is a professional who, for a fee helps the management of the client organizations define and achieve their goals through improved utilization of resources (kubr, 1986). then, mantel et al. (2005) define consulting as any form of providing help on the content, process, or structure and series of tasks, where the consultant is not actually responsible for doing the job itself but is helping those who are. in pursuing the generic purposes of providing professional advice to different organizations, consultancy can intervene in many different ways. both clients and consultants can choose among so many alternatives that are trying to give an exhaustive and complete picture of these alternatives would be, block and markowitz (2000). however, most of the consulting assistance to management will be given in one or more of the following ways or principles: providing information; complete and more relevant information is often the main or only thing that client need to make the right decision. it may be information on markets, customers, sector trends, raw materials, suppliers, competitors, potential partners, sources of engineering expertise, government policies and regulations, or others (greiner and metzger, 2003). providing specialist resources; a consultant can be used to supplement the client organization’s staff. usually such consultants will be specialists in areas where the client is looking for short-term expertise or wants to avoid recruiting a new employee (block and markowitz, 2000). establishing business contacts and linkages; many clients turn to consultants in their search for new business contacts, agents, representative, suppliers, subcontractors, joint-venture and merger partners (sugata and daryl, 2002). provide expert opinion; various activities fall under this heading. the consultant may be approached to provide expert opinion in cases where the client can choose among several alternative and seek impartial and independent third-party advice before taking the decision. consultant may be invited to act as an expert witness (testifying expert) in lawsuits or arbitrations calling for specialized knowledge (naficy, 1997). doing diagnostic work; diagnostic skills and instruments are among the consultant’s principal assets. clients use consultants for a wide range of diagnostic chore concerning the organization’s strength and weaknesses, positive and negative trends, potential for improvement, barrier to change, competitive position, underutilized resources, technical or human problems requiring management’s attention and so on drucker (1979). developing action proposals; the consultants may be asked to do the whole job, share the task with the client, or act as an adviser to a client who has chosen to develop new proposals with his or her own resources (stroh and johnson, 2006). counseling and coaching; management consultants can render excellent service to managers and entrepreneurs who need strictly personal feedback and relaxed friendly advice on their leadership style, behavior, work habits, relation with colleagues, and weaknesses that could be damaging to the business (mantel et al., 2005). all referred related literature shows that if the firm wants to grow and have best organizational operations, they have to engage fully in using management consulting services. many of tanzania construction companies are still growing slowly, some fail to face strong competitions as far as foreign organizations are concerned. therefore, this study intended to bring full attention and understanding as well as usage of management consultancy and the benefits they can offer. 4. research methodology this study used a cross sectional survey approach. the population proposed was the employees of willy enterprises ltd and its client-firms in arusha tanzania by 2012. the study had a sample size of forty-five (45) respondents from different managerial posts of the company and the company’s financial reports for twelve (12) years from 1999. the study used both primary and secondary data. primary data employed interviews and questionnaires. furthermore, secondary data were from the accounting department and management department by reviewing the records and documents such as financial statements and reports by different consultants in the company. also, some data were analyzed using microsoft excel for tables. asian business research journal, 2018, 3: 26-32 28 © 2018 by the authors; licensee eastern centre of science and education, usa 5. findings and discussion presentation and discussion of the findings drew upon two research questions: i. what is the extent of knowledge and understanding of management consultancy by managers in the organization? ii. is there any difference in the non-financial operations of the organization before and after engaging management consultants? 6. the knowledge, understanding and perception about management consultancy usage in the firm in this context the study wanted to know the reasons behind the mentioned factors on how they affect management consultancy usage in tanzania organizations. six primary factors were discussed on how they affect management consultancy usage. these factors are as follows; the primary sources of knowledge about management consultancy, awareness of the managers on the importance of management consultancy, perception on expenses and immaturity, size of the firm and complexity of management consultancy. to study the effectiveness of these factors, a likert scale was drawn with the answers “strongly agree”, “agree”, “not agree not disagree”, “disagree” and “strongly disagree” with exception of the first factor only. from the responses that were obtained from twenty two (22) respondents, the analysis was done. the results on the influence of these eight primary factors on management consultancy usage and the interpretations are found in the specific sub-sections here-under. 6.1. primary source of knowledge about management consultancy the respondents were asked to state if they know anything about management consultancy, all respondents said “yes”, and then, were inquired to give their primary source of knowledge about management consultancy. among thirty two respondents, twenty five 78.13% said their primary source is from college or university education, 15.62% got knowledge from short training courses at working place and 6.25% from personal efforts i.e. reading books, journals, newspapers, magazines, surfing and sharing ideas with friends. also, 6.25% of the respondents from kasegenya, 6.25% from mawenzi, 9.37% from security group and 9.38% from tan auditors, all got knowledge from college or university. this shows most of the employees who are holding managerial positions in the company are competent and well trained as far as management consultancy is concerned. table 1 summarizes the source of knowledge about management consultancy to the respondents. table-1. cross tabulation of the source of knowledge about management consultancy and composition of the respondents source of knowledge total percentage collage/ university short training personal efforts companies with respondents willy &co 15 5 2 22 68.75% tan auditors 3 0 0 3 9.38% kasegenya 2 0 0 2 6.25% mawenzi 2 0 0 2 6.25% security group 3 0 0 3 9.37% total 25 5 2 32 percentage 78.13% 15.62% 6.25% 100% source: fieldwork survey, 2012 6.2. awareness of the managers on the importance of management consultancy from the responses that were obtained from twenty two (22) respondents as shown in table 2; 36.36% of the respondents, agreed that managers don’t know the importance of management consultancy services to their companies, 27.27% strongly agreed, 18.18% disagreed and 9.09% were neutral. the results showed the weighted average of 3.55 (4) which fall under the category of disagree. therefore, the general perception of all the respondents is that the managers know the importance of management consultancy services to their organizations. table 2 summarizes the respondents’ perception on awareness of the managers on the importance of management consultancy. table-2. perception on managers’ awareness on the importance of management consultancy managers don’t know the importance of management consultancy services to their firms number of respondents percentage likert scale weights weighte d totals weighted average or mean strongly agree 6 27.27% 5 30 3.55 agree 8 36.36% 4 32 neutral 2 9.09% 3 6 disagree 4 18.18% 2 8 strongly disagree 2 9.09% 1 2 total 22 100% 15 78 source: fieldwork survey, 2012 asian business research journal, 2018, 3: 26-32 29 © 2018 by the authors; licensee eastern centre of science and education, usa 6.3. perception on expenses (is management consultancy very expensive or not?) the study on impacts of this factor on management consultancy usage was drawn as shown in the table 3 table-3. perception on expenses incurred on hiring management consultancy source: fieldwork data, 2012 from the responses that were obtained from twenty two (22) respondents as shown from table 3 above; 45.45% of the respondents, strongly agreed that management consultancy service is very expensive for tanzania organizations, 22.72% agreed, 13.64% were neutral, 13.64% disagreed and 4.54% strongly disagreed. by applying likert scale weighing, the weighted mean was 3.91 approximate to 4. the general opinion of the respondents agreed that management consultancy is very expensive for tanzanian organizations. example, in the year 2009, willy enterprises ltd paid 1,074,122 tshs to tan-auditors for accounting and auditing fees and 1,245,982 tshs for 2010 respectively (company financial statements 2010). but this is not the case with management consultancy firms (service providers). on the interview with one of the respondents from mawenzi insurance brokers ltd, the following interesting explanation was given: “many of tanzania organizations fear to take risk of using our services thinking that it’s very expensive, that is not true for the one who is capable of weighing the positive impacts to the organization as compared with little amount of charge they pay as per single service provided. example, willy enterprise ltd was not aware that the kind of business activity they are doing is very risky as they deal with drilling works, civil works, hiring of their vehicles for mining services (bauxite mining), of which its very dangerous to operate without being insured. so now our customer can operate in a safe environment as they are fully secured by us”. therefore business companies need to be educated on the fact that they should not fear to take risk of using management consultancy services, rather they should weigh the positive outcomes to their organizations as compared to the amount of charges paid by them. 6.4. immaturity of the organizations the study on perception of this factor on management consultancy usage was drawn as shown in the table 4. from the responses that were obtained from twenty two (22) respondents; 14(63.63%) of the respondents, disagreed that tanzania business organizations are too immature to use management consultancy services, 3(13.63%) were neutral and 3(13.64%) strongly agreed. by applying likert scale weighing, the weighted mean was 2.45 approximate to 3. the general opinion of the respondents was neutral, means tanzania business organizations are too immature to use management consultancy services. but if you judge by using the percentage, the results showed that 72.72% (63.63% plus 9.09%) of the respondents disagree that tanzania business organizations are too immature to use management consultancy services, this imply that management consultancy is of significant importance towards organization growth rather than saying we are not matured enough to use these services. table 4 summarizes the respondents’ perception on immaturity of tanzania organizations towards usage of management consultancy services. table-4. perception on immaturity of the organization towards usage of management consultancy services tanzania businesses are too immature to use management consultancy services number of respondents percentage likert scale weights weighted totals weighted average or mean strongly agree 3 13.64% 5 15 2.45 agree 0 0 4 0 neutral 3 13.63% 3 9 disagree 14 63.63% 2 28 strongly disagree 2 9.09% 1 2 total 22 100% 15 54 source: fieldwork survey, 2012 6.5. size of the firm the study on perception of this factor on management consultancy usage was drawn as shown in the table 5. table-5. perception on how size of the firm affects management consultancy usage. only large firms have a reason to use consulting services number of respondents percentage likert scale weights weighted totals weighted average or mean strongly agree 1 4.55% 5 5 agree 2 9.09% 4 8 neutral 4 18.18% 3 12 disagree 6 27.27% 2 12 1.55 strongly disagree 9 40.90% 1 9 total 22 100% 15 34 source: fieldwork survey, 2012 management consultancy is very expensive for tanzanian firms number of respondents percentage likert scale weights weighted totals weighted average or mean strongly agree 10 45.45% 5 50 3.91 agree 5 22.72% 4 20 neutral 3 13.64% 3 9 disagree 3 13.63% 2 6 strongly disagree 1 4.54% 1 1 total 22 100% 15 86 asian business research journal, 2018, 3: 26-32 30 © 2018 by the authors; licensee eastern centre of science and education, usa from the responses that were obtained from twenty two (22) respondents as shown from table 5 above; 9(40.90%) of the respondents, strongly disagreed that only large organizations have a reason to use management consultancy service, 6(27.27%) disagreed, 4(18.18%) were neutral, 2(9.09%) agreed and 1(4.55%) strongly agreed. by applying likert scale weighing, the weighted mean was 1.55 which is 2. the general opinion of the respondents agreed that only large organizations have a reason to use management consultancy services. this gives the implication that size of the organization affects the use of management consultancy in the organization. 6.6. complexity of management consultancy the study on perception of this factor was drawn as shown in the table 6 below. table-6. perception on complexity of hiring management consultancy services management consultancy services make business more complicated number of respondents percentage likert scale weights weighte d totals weighted average or mean strongly agree 1 4.55% 5 5 2.32 agree 2 9.09% 4 8 neutral 3 13.63% 3 9 disagree 13 59.09% 2 26 strongly disagree 3 13.63% 1 3 total 22 100% 15 51 source: fieldwork survey, 2012 from the responses that were obtained from twenty two (22) respondents as shown from table 6 above; 13(59.09%) of the respondents, disagreed that management consultancy service make business more complicated, 3(13.63%) were neutral and 3(13.64%) strongly disagreed. by applying likert scale weighing, the weighted mean was 2.32 approximate to 2. the general opinion of the respondents agreed that management consultancy services make business more complicated. this implies that there is a need to enlighten managers on the importance of management consultancy services rather than believing that it makes their business more complicated. 7. comparison of the non-financial operations of the firm before and after engaging management consultants all questionnaires filled by managers of the firm give evidence on the usage of management consultancy services and they started to use by the year 2006. therefore, before engaging refers to a period from 1999 to 2005 and after engaging is from 2006 to 2010. five areas of operations were to be studied on whether they affect management consultancy usage as discussed here-under. 7.1. human resources (quality of employees) the respondents were asked to give details on types or categories of management consultancy services that are used by willy enterprises ltd. among the services that seemed to be mostly used by the company were on the area of human resources management. the company was advised to improve the quality of employees they enroll and also develop the existing one by conducting various training and workshops within the organization. example, in 2008 tan auditors conducted a seminar with finance and auditing department to advice the departmental members on how to improve accuracy in financial record keeping so as to avoid errors and fraud in the company’s financial statements (annual report, willy enterprises ltd, 2008). with that advice, the company employed highly qualified workers as evidenced by 65.62% of all respondents have bachelor degree, and then 12.5% have advanced degree or profession as indicated in table 7 below. this gives the implication that before introduction of management consultancy the firm was just employing unqualified workers but after the adoption of management consultancy it started employing quality staff or developing the existing ones. table-7. cross tabulation of the respondent’s education level versus working experience with business enterprise (s) educational level total percentage advanced diploma bachelor degree advanced degree/profession (masters/pgd, phd, cpa, etc) working experience with business enterprises less than 1 year 1 3 0 4 12.5% 1-2 years 3 7 0 10 31.25% 3-5 years 1 9 1 11 34.38% 6-10 years 2 2 3 7 21.87% total 7 21 4 32 percentage 21.88% 65.62% 12.5% 100% source: fieldwork data, 2012 asian business research journal, 2018, 3: 26-32 31 © 2018 by the authors; licensee eastern centre of science and education, usa 7.2. technology another area that willy enterprises ltd seemed to be user-friend of management consultancy services is on information technology. on the interview done with a general manager, the study found out that in the year 2007 the company established its own website (www.willy.co.tz), then the next question to the general manager was where he got an idea of establishing a website? the response was as follows: “we were advised by one of our consultant that if we want to enlarge our market share, we must have a website for easily advertisement of our products, since early 2000, our company emerged in the construction industry and up to this moment we have been leading with remarkable projects in the country. our company serves many areas including civil works, building works, production and hiring of hydra form blocks, hiring of earth moving equipment as well as selling roofing sheets, therefore, by advertising through our website we can achieve everything”. the evidence above is enough to say that management consultancy contributed towards technological advancement in the company which was not there before its introduction. apart from that, many things in the company have been computerized since 2006, for example, on the way accounting records are prepared. before 2006 they were using manual system, but in 2006 the company employed an it specialist as a result of the advice given by a consultant (tan auditors), and the company started to use computerized system in keeping its books of accounts (field data, 2012) 7.3. legal aspects on the interview done to the branch manager, the study found out that, before establishment of management consultancy, the company encountered so many legal cases e.g. tax avoidance, but after establishment of management consultancy the company managed to minimize legal cases, as for any legal matter they usually face their consultants for professional advice. 7.4. taxation this is another area of which management consultancy brought changes in the company after its establishment. for example, willy enterprises ltd was not aware on how to use tax loopholes i.e. tax exemptions, so as to minimize the burden of tax to be paid to save unnecessary expenses, then after starting to use management consultancy services, company profits increased one year after another (willy enterprises ltd. audited financial statements, 2010). 7.5. quality of the service offered on the interview done with the branch manager, the study found out that, after they understood the importance of management consultancy, they decided to conduct one seminar at the end of every three month to all staff to educate them on customer care (to take their customers as a valuable item for their prosperity). she said that they usually invited an expert from outside to conduct that seminar; this enabled the company to improve quality of the services that they offered to the public day after day. 8. conclusion this paper was able to make distinct investigation about the effectiveness of management consultancy in operations of construction firms. it is quite clear that organizational performance depends on many factors including usage of management consultants’ services for their promptly expansion. the government should put extraneous efforts to advocate the consulting field in the country like enactment of policies and establishment of regulatory body. therefore, the study saw a need for formational as well as institutional reforms to benefit fully from management consultancy services, and avail tanzania economy all together. references block, p. and a. markowitz, 2000. the 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effectiveness of management consultancy in operations of construction firms: a case of willy enterprises ltd in arusha tanzania. asian business research journal, 3: 26-32. history: received: 24 july 2018 revised: 31 august 2018 accepted: 4 october 2018 published: 6 november 2018 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education funding: this study received no specific financial support. competing interests: the author declares that there are no conflicts of interests regarding the publication of this paper. transparency: the author confirms that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://www.arushamunicipal.go.tz/ http://www.unwto.org/facts/eng/pdf/barometer/unwto_barom10_update_august_en.pdf http://www.businessdictionary.com/ http://www.willy.co.tz/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 8 © 2017 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 2, 8-13, 2017 issn: 2576-6759 doi: 10.20448/journal.518.2017.21.8.13 © 2017 by the authors; licensee eastern centre of science and education, usa determinants of job satisfaction of colleges of education lecturers: a study of nasarawa state college of education, akwanga rebecca i. umaru1 danjuma a. ombugus2 ( corresponding author) 1doctor, (language art education), department of art and social science education, faculty of education, nasarawa state university keffi. nigeria 2doctor, (industrial technical education), department of technical education, college of education, akwanga. nasarawa state. nigeria abstract the main purpose of this study was to assess the level of job satisfaction among lecturers in college of education, akwanga. nasarawa state. the study was guided by five research questions. descriptive research design was adopted by the study. the population for the study consisted of 279 lecturers during the 2014/2015 academic session from the six schools of the college. a sample size of the population was taken from each school using simple random sampling technique to arrive at a sample size of 167 lecturers. a structured questionnaire divided into five sections was used for data collection. the questionnaire was face validated by five experts, three in the department of industrial technical education and two in from the career unit the faculty of vocational teachers education all from the university of nigeria nsukka. a reliability coefficient of 0.78 was obtained from cronbach alpha reliability technique to ascertain the internal consistency of the questionnaire items. the questionnaires were administered by the researchers. mean and standard deviation were utilized to analyze the data collected, while t-test statistics was used to test the hypothesis at 0.05 level of significant. findings of the study revealed that regular salary payment, promotion opportunities, work environment, attainment of work goals, opportunity to growth and development among others are the determinants of job satisfaction of college of education lecturers. it was recommended that the college management should fulfill their financial obligations and make provisions for adequate facilities as this will improve lecturers’ commitment to work and job satisfaction for optimal performance. keywords: determinants, college of education, lecturers, job satisfaction, nasarawa state. 1. introduction job satisfaction in agu (2014) connote happiness and a state of well being as an outcome of need fulfillment derived from or enjoy in one’s job. a job in the context of this study means the work which one does and receives regular payment. job satisfaction is the good feeling that you get when you have a job that you enjoy doing. in the field of organizational behavior, job satisfaction has been the most frequent studied variable. according to wells (2011) the relevance of job satisfaction is very crucial to the growth of any education program around the globe. it probably ranks alongside professional knowledge, skills, competency, facilities and strategies as veritable determinants of educational success and performance. earlier, alaku (2011) encouraged researches in job satisfaction particularly among teachers in nigeria. findings from such researches the author believe might provide evidences that government could use in her policy formulation to improve teachers’ performances for improved educational success. locke and lathan (2012) defined job satisfaction as a pleasurable or positive emotional state resulting from appraisal of one’s job experience. job satisfaction is the result of an employee’s perception on how well the job provides those things that are viewed as important dimensions to the worker’s welfare. hulin (2011) stated that job satisfaction is that which gives a worker a sense of achievement and success which is generally perceived to be directly linked to personal well being as well as productivity. job satisfaction is an emotional response to a job situation, as such it cannot be seen, it can only be inferred and it is often determined how well outcomes meet or exceed expectations. it represents several related factors such as: the worker himself, salary, promotion opportunities, work environment, supervisory style and co-worker relationship. armstrong (2012) concur that company policies, salary, co-worker relationship, supervisory/ management style and work environment were determinants of workers’ job satisfaction. http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2017.21.8.13&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/12 asian business research journal, 2017, 2: 8-13 9 © 2017 by the authors; licensee eastern centre of science and education, usa according to oshegbemi (2010) organizations that have achieved their goals must have satisfied and happy staff in their workforce. obwogi (2011) explained that for any college of education to take off and achieve her goals, the college must depend on her capacity to attract, retain and maintain competent and satisfied staff into her employment. the college being an institution of higher learning that provides manpower needs to advance national development must itself be capable of ensuring adequate manpower planning and development. it should therefore not afford to neglect needs and essentials of her workforce welfare. college of education lecturers are currently facing many challenges in form of inadequate infrastructure; nonpayment of salaries; lack of enabling research environment ; disparity in salary and allowances which have resulted into industrial action by the lecturers over years. inconsistent policy implementation between federal and state governments may as well affect lecturers’ level of job satisfaction (ombugus, 2013). in many instances, academic programmes are distorted because management takes certain decisions without involving lecturers. this in turn creates additional work dissatisfaction. the consequence of lack of job satisfaction in the college of education set-up is the shortage of competent and committed lecturers. reports from the national commission for colleges of education (2012) revealed that while the numbers of colleges of education are increasing, the numbers of qualified lecturers are not increasing proportionately. there has been constant mobility of these highly skilled persons from one college of education to another and to other public sectors for better remuneration and conducive working environments. other factors that mitigate job satisfaction include management and leadership styles, non academic duty allowance, unclear rules and regulations in the personnel policies, excessive workload and poor communication with management members. the main purpose of this study therefore, was to identify determinants of job satisfaction of lecturers of college of education akwanga, nasarawa state. specifically, the study indentified the effects of salary; work environment; job security; autonomy of colleges of education and staff training on lecturers’ job satisfaction. the study was guided by five research questions: what is the effect of salary on lecturers’ job satisfaction? what is the effect of work environment on lecturers’ job satisfaction? what is the effect of job security on lecturers’ job satisfaction? what is the effect of autonomy of college of education on lecturers’ job satisfaction? what is the effect of staff training on lecturers’ job satisfaction? this study is hinged on the motivator-hygiene theory also called “the two factor theory”. according to herzberg (1989) this theory states that employees are motivated by internal values rather than values that are external to work. in other words, motivation to work is internally generated and is propelled by variables that are intrinsic to work which includes achievement, recognition, the nature of the work itself, responsibility, and advancement or growth. the most important motivator-hygiene theory factor that contributes to job satisfaction or organizational performance is inter-personal relationship. mean-while responsibility and opportunities for promotion is ranked by alaku (2011) as the important motivator factors that affect job satisfaction. adeyemi (2010) concluded that job satisfaction is also related to motivation. employers need to create and maintain a conducive and enjoyable working environment to motivate the employees. rosser (2012) pointed out that salary, retirement benefit and job security are important personal issues that affect job commitment and satisfaction of college of education lecturers. in tettey (2008) dissatisfaction with salaries is one of the factors undermining the commitment of academics to their institutions and careers and consequently their decision to leave job. okpara (2004) stated that providing conducive working environment could lead to higher organizational commitment through a variety of reasons. stressful working environment results to low level of commitment and dissatisfaction. good working conditions such as clean, attractive surroundings enable employees to perform their work smoothly and thus are likely to have a positive impact on job satisfaction. a study by dockel (2003) found out that the general working conditions were significantly related to organizational commitment. research studies have also found job security to be positively related to job satisfaction ombugus (2013). the existence of job security is likely to boost employees’ perceptions of organizational support which would help to foster organizational commitment. thus, it was hypothesized that there would be a positive relationship between satisfaction with job security and organization commitment. in grunberg and tapfield (2009) promotion and tenure are control variables of lecturers’ job satisfaction. the authors stated that promotion is a highly predictor of job satisfaction among college of education lecturers. similarly, bender and heywood (2012) explained that tenured college lecturers tend to have higher job satisfaction level than untenured lecturers. in chew (2004) autonomy refers to increased feelings of personal responsibility and the degree to which the job provides substantial freedom, independence and discretion to the individual to schedule work and determine the procedures use in carrying it out. lecturers’ autonomy refers to their ability to decide work patterns, actively participate in major academic decision making to have work evaluated by professional peers and to be relatively free of bureaucratic regulations and restrictions (daly, 2006). employees expect to work in jobs that provide them with opportunities to be promoted to new and challenging positions. chew (2004) strongly argued that people should not only be rewarded financially but they should also be offered opportunities to grow within the organization. employees who feel stagnant in their position generally aren’t motivated and committed and in some cases quiet the job. promotion offers opportunity for growth and is also one of the motivators which can be used to enhance retention. research findings by ukeje and ugwuanyi (2011) have revealed that positive relationship exists between organizational commitment and training opportunities. on the basis of the above reviews, one can argue that the higher the employee gets satisfaction with each facet of the job, the greater the sense of commitment to the organization. 2. methodology the research design employed for the study is a descriptive survey research design. sambo (2005) defined a survey as a description of a present state of affairs usually carried out through questionnaires; opinions and interviews. the study was conducted in college of education, akwanga, nasarawa state. the population for the study was two hundred and seventy-nine lecturers as shown in table 1: asian business research journal, 2017, 2: 8-13 10 © 2017 by the authors; licensee eastern centre of science and education, usa table-1. population of lecturers in the college during 2014/2015 academic session s/no school no. of lecturers 1. school of education (se) 68 2. school of early childhood care and education (ecce) 20 3. school of secondary education – art & social science programmes (sseassp) 62 4. school of secondary education language programme (sselp) 35 5. school of secondary education – science programme (ssesp) 40 6. school of secondary education – vocational & technical programmes (ssevtep) 54 total 279 source: staff statistics office, college of education, akwanga the researchers used a simple random sampling technique to select 60% of the population from each school. a sample size of 167 lecturers was utilized for the study. a structured questionnaire was used for data collection. the questionnaire had five sections based on the purposes of the study. mean and standard deviation were employed to analyze the data collected and answer the research questions using the real limit of the mean. 3. results research questions 1: what is the effect of salary on lecturers’ job satisfaction? table-2. mean ratings of the lecturers on the effect of salary on job satisfaction n=167 s/no. questionnaire items ̅ sd remark 1. fulfillment of financial and motivational desires 3.62 1.33 agreed 2. affects job motivation 3.81 1.35 agreed 3. affects job commitment 4.04 1.62 agreed 4. affects job productivity 3.58 1.57 agreed 5. reduces absenteeism from work 4.03 1.47 agreed 6. reduces withdrawal from job 3.78 1.43 agreed ̅ = mean s.d = standard deviation the data in table 2 revealed that the 6 items had their ̅ values ranged from 3.58 – 4.04 and were greater than 2.50. this indicated that the 6 items were affecting motivation, commitment and productivity among college lecturers.the standard deviations ranged from 1.33 – 1.62 and are positive. this indicated that the respondents were not very far from the mean or one another in their responses. this helped to add value to the mean. research question 2: what is the effect of work environment on lecturers job satisfaction? table-3. mean ratings of the lecturers on the effect of work environment on job satisfactionn=167 s/no. questionnaire items ̅ sd remark 7. affects job commitment 4.33 1.72 agreed 8. affects motivation 2.16 1.04 disagreed 9. affects job efficiency 4.02 1.66 agreed 10. reduces physical/psychological stress 3.78 1.49 agreed 11. provision of adequate working facilities 3.96 1.36 agreed 12. good interpersonal relationship 2.23 1.11 disagreed 13. affects job productivity 2.35 1.07 disagreed data in table 3 revealed that items 7, 9, 10 and 11 had their mean values ranged from 3.78 – 4.33 and are above decision point of 2.5. this indicates that work environment affect job commitment, efficiency, psychological stress as well as provision of working facilities. similarly, the data revealed that items 8, 12, and 13 had their mean values below decision point (2.50) indicating that work environment has less effect on job motivation, good interpersonal relation and productivity. research question 3: what is the effect of job security on lecturers job satisfaction table-4. mean ratings of the lecturers on the effect of job security on job satisfaction n=167 s/no. questionnaire items ̅ sd remark 14. decreases dismissal from work 3.68 1.59 agreed 15. affects job motivation 4.43 1.58 agreed 16. fosters job commitment 2.14 1.41 disagreed 17. increases the feeling of being lecturers 4.14 1.36 agreed 18. makes lecturers lazy 4.28 1.56 agreed 19. affects job efficiency 4.16 1.56 agreed in table 4 above, the responses revealed that items 14, 15, 17, 18 and 19 had their mean values above the decision point of 2.50. this indicates that job security affects dismissal from work, job motivation, increases feeling of being a lecturer, while item 16 which is fosters job commitment does not affect job security with a mean value of 1.41 lower than 2.50. research question 4: what is the effect of autonomy on lecturers’ job satisfaction? asian business research journal, 2017, 2: 8-13 11 © 2017 by the authors; licensee eastern centre of science and education, usa table-5. mean ratings of the lecturers on the effect of autonomy on job satisfaction n=167 s/no. questionnaire items ̅ sd remark 20. affacts job commitment 4.72 1.78 agreed 21. affects job productivity 2.12 0.47 disagreed 22. offers opportunity for growth 1.87 0.39 disagreed 23. affects motivation 4.11 1.39 agreed 24. increases the feeling of personal belonging 3.96 1.35 agreed 25. affects job efficiency 3.88 1.54 agreed results in table 5 revealed that items 20, 23, 24, and 25 had mean values above 2.50. this indicates that autonomy affects job motivation, commitment, increases feeling of belonging and job efficiency, while items 21 and 22 had their mean values below decision point indicating that autonomy does not necessarily affects job productivity and opportunity for growth. research question 5: what is the effect of staff training on lecturers’ job satisfaction? table-6. mean ratings of lecturers on the effects of retraining on job satisfaction n=167 s/no. questionnaire items ̅ sd remark 26. overcomes deficiencies in job performance 3.22 1.78 agreed 27. production of quality and quantity of human resources 3.62 1.47 agreed 28. enhances job retention 2.22 1.46 disagreed 29. enhances job productivity 4.11 1.53 agreed 30. affects job commitment 4.11 1.39 agreed 31. promote job motivation 3.96 1.36 agreed 32. achievement of organizational goal 3.88 1.54 agreed 33. promotes personal and professional growth 3.90 1.31 agreed from table 6 the results revealed items 26, 27, 29, 30, 31, 32, and 33 with mean values higher than decision point. by implication, staff training improves job deficiencies, productivity, commitment and promotes personal and professional growth. on the other hand, item 28 had a mean value lower than the decision point, indicating that staff training does not affect retention of college lecturers. the standard deviations of the 28 items in tables 3 6 ranged from 0.39 – 1.78 and are positive. this indicated that the respondents were not very far from the mean or one another in their responses. this helped to add value to the mean. ho there is no significant difference in the mean ratings of male and female lecturers in college of education akwanga with regard to their job satisfaction. table-7. t-test of male and female lecturers in college of education akwanga with regard to their job satisfaction (n=167). gender n sd df t-cal table t decision male 117 35.43 0.32 808 1.96 2.02 significant female 50 36.60 0.47 table 7 shows that the table (t-value) is 2.02 at 808 degree of freedom and 0.05 level of significant. since the calculated t-value of 1.96 is less than the table value of 2.02, the null hypothesis is accepted. therefore, there was no significant difference between the mean ratings of male and female lecturers in college of education akwanga with regards to their job satisfaction level. 4. major findings (i) salary/wage payment decreases absenteeism and withdrawal from job. it also has effects on commitment, productivity and motivational desires on job satisfaction of lecturers in college of education, akwanga. (ii) salary/wage payment decreases absenteeism and withdrawal from job. it also has effects on commitment, productivity and motivational desires on job satisfaction of lecturers in college of education, akwanga. (iii) in college of education, akwanga, work environment affect lecturers job satisfaction in commitment, efficiency, psychological stress and facilities but does not necessary affect the lecturers’ motivation, interpersonal relationship and productivity. (iv) apart from “fosters job commitment” job security has effects on dismissal from work, motivation, feeling of belonging, efficiency and laziness on job satisfaction of lecturers in college of education, akwanga. (v) autonomy affects commitment, motivation, feeling of belonging and efficiency but does not necessarily affect opportunity for growth and productivity on job satisfaction of lecturers in college of education, akwanga. (vi) excluding job retention, staff training affects efficiency in performance, quality and quantity of human resources, achievement of organizational goals, productivity, commitment, professional growth and motivation on job satisfaction of lecturers in college of education, akwanga. (vii) there was no significant difference in the mean ratings of the male and female lecturers regarding their level of job satisfaction. 5. discussion of findings the findings from the study that all the items accepted by the respondents in research question one are in agreement with rosser (2012) who stated that attractive remuneration packages are one of the important factors of staff retention. dissatisfaction with salaries/benefits is one of the key factors undermining the commitment of college of education lecturers and consequently decision to leave their jobs. the findings that four items in research question 2 were accepted by the respondents are in agreement with daly (2006) who suggested that working environment is also one of the factors that affect employee’s decision to stay with an organization. asian business research journal, 2017, 2: 8-13 12 © 2017 by the authors; licensee eastern centre of science and education, usa productivity and efficiency are directly affected by how people work, and this equally is affected by their work environment/condition. work environment that is comfortable, relatively low in physical / psychological stress and good facilities, attainment of goals in such workplace tends to give high level of job satisfaction. increased workload is another stressful aspect of lecturer’s job. an increase workload caused by large number of students without proportionate increase in wages certainly has negative impact on the well being of college of education lecturers. the findings of the study on the effect of job security are in agreement with that of ukeje and ugwuanyi (2011) in their study, “effects of job insecurity on the psychological health of company workers-implication for colleges of education workers in nigeria”. their study revealed that there were strong relationships between job security and job satisfaction. the existence of job security is likely to boost employee’s perception of organizational support which would help to foster job satisfaction. the findings indicated that in most cases the employees in colleges of education (irrespective of sex, position and marital status), who perceived that they have uncertain futures in their jobs, felt threatened with manifested symptoms of psychological distress such as poor general health, anxiety and hopelessness. the findings of this study on the effect of autonomy are in line with the findings of adeyemi (2010) in a study “job satisfaction among technical teachers in ondo state secondary schools, that the autonomy of colleges of education tends to instill in the lecturers sense of belonging in the school activities. the lecturers believed that autonomy means bringing government closer to them in the college to reduce their burden of travelling long distances to the parent ministry. the autonomy is an important construct in colleges of education lecturers’ value system. lecturers in colleges of education tend to stay longer in their institutions when they feel that their capabilities, efforts, performance contributions are recognized and appreciated by government timely. findings of this study on the effect of staff training on college of education lecturers job satisfaction are in conformity with the findings of alaku (2011) that training is considered a form of human capital investment whether that investment is made by the individual or by the firm. training provides employees with specific skills to help correct deficiencies in staff performances. development on the other hand is an effort to provide employees with skills the organization will need in the future. staff retraining programme is therefore a necessary factor for lecturers’ optimal functioning. the findings of the study are also in agreement with that of ombugus (2013) in a study “improving job satisfaction of primary school teachers in nasarawa state: implication for the universal basic education programme” where there was no significant difference in the mean ratings of the male and female teachers on their job satisfaction level. 6. conclusion consistency to job commitment and productivity; attainment of work goals; fulfillment of financial and motivational desires; provision of needed facilities; opportunity for growth and development and feeling of personal belonging among others are fundamental determinants of job satisfaction of lecturers in college of education, akwanga. therefore, colleges of education lecturers need adequate educational policy and administration in terms of the identified determinants for the lecturers to be satisfied in their job. when lecturers are meeting their basic needs in life such as food, clothing and healthcare, they perform optimally in workplace. 7. recommendations (i) the college management should ensure that wages/benefits for academic staff are paid as at when due. 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design of the study. funding: this study received no specific financial support. competing interests: the authors declare that they have no conflict of interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. https://scholar.google.com/scholar?hl=en&q=faculty%20members’%20intentions%20to%20leave.%20a%20national%20study%20on%20their%20worklife%20and%20satisfaction http://dx.doi.org/10.1023/b:rihe.0000019591.74425.f1 http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 29 © 2019 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 4, 29-34, 2019 issn(e) : 2576-6759 doi: 10.20448/journal.518.2019.41.29.34 © 2019 by the authors; licensee eastern centre of science and education, usa the need for agile relationship lending between small business and banks, towards a more engaged relationship: a case study in khayelitsha, south africa m.t. langa1 krishna k govender2 ( corresponding author) 1,2da vinci institute of technology, south africa. abstract despite much attention being focused on financing small, medium and micro enterprises (smmes), they (smmes) continue to face survival and growth challenges. banks tend to be reluctant to offer loans and financial assistance if, based on their assessment of financial statements, the small businesses do not have the ability to repay loans, caused by the level of “opaqueness” of information that the banks have about small businesses, which has resulted in the introduction of the concept of „relationship lending.‟ if banks are more agile and have an engaging relationship with small businesses, they will be in a better position to use their discretion when granting finance. through engaged relationships with small business, banks would better manage information asymmetry and offer some possible specialised support to smes. by using a semistructured questionnaire, the study probed problems with information asymmetry between the bank and small businesses, towards more agile solutions and engaged relationships. a case-study based research was conducted in two established businesses in the informal township of khayelitsha in the western cape of south africa. it became apparent that transactional lending is not viable in a country where a large population lives in poverty. it is recommended that banks in developing countries such as south africa be more agile in order to speed up access to finance by small businesses. keywords: smes, funding, loans, asymmetric information, banks, relationship lending. jel classification: g21. contribution of this paper to the literature this study contributes to the existing literature by probing the problems with information asymmetry between the bank and small businesses, towards a more agile solutions and engaged relationships. 1. introduction globally, it has become a known phenomenon that development of small, medium and micro-enterprises (hereinafter referred to as “smmes”) can significantly contribute to gdp, reduce unemployment and promote social welfare (ladzani and van, 2002). in south africa, “research shows that while 98.5% of the country‟s economy is made up of smes, they are only delivering 28% of all jobs” (writer, 2018). the small business institute (2018) warns that the national development plan‟s goal for small business to create 90% of the jobs by 2030 will be stillborn, unless this vital segment of our economy is properly understood. south africa, like many other countries, has identified developing small businesses as one of the significant solutions to developmental issues (herrington et al., 2009). however, the 75% failure rate is alarming and one of the highest in the world (olawale and garwe, 2010). south africa has many enabling factors for business development, but smaller businesses do not prosper, as intended. the president of south africa mr cyril ramaphosa (the presidency, 2019) has asserted that, “the growth of our economy will be sustained by small businesses, as in the case of many countries”. the researcher is of the view that given the existence of the right conditions (milieu), a well-articulated sme community has the capacity to, and dynamic transformational power in stimulating socio economic growth. one of the most cited obstacles to smme sustenance and growth, is access to finance (olawale and garwe, 2010). other factors include market access and lack of management and skills (ministry of trade and industry, 1994). financial institutions have traditionally been risk averse to offering finance and other services to the often fragmented, risky and geographically micro and small businesses (mti, 1994). the world economic report (schwab, 2017) released the statistics figure 1, about obstacles that are faced by businesses in south africa and access to finance is cited as the 10th out of 16 factors that are problematic to businesses in south africa. this report http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2019.41.29.34&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/4 asian business research journal, 2019, 4: 29-34 30 © 2019 by the authors; licensee eastern centre of science and education, usa is based on all businesses, not only to small businesses; to small businesses perhaps; access to finance would be further up than 10th. figure-1. most problematic factors for doing business in south africa. source: schwab (2017). it is against the above background that this paper explores the extent of the relationship between banks and smes and to determine if the relationship is a determinant of granting loans. it uses qualitative interviews and attempts to discover what relationships exist between the small businesses and banks, in khayelitsha, cape town, south africa. 2. literature review berger and udell (1998) draw attention to four main lending methods, namely, financial statement lending, asset-based lending, credit scoring lending and relationship lending. the first three are based on “hard” information and the last one places great emphasis on “soft information” on a relationship established by a bank with the sme. financial statement lending refers to lending based on information extracted from financial statements, and asset-based lending emphasises the collateral made available by the firm, whereas credit scoring uses statistical modelling and more so includes the financial state and history of the business owner. relationship lending is lending that is based on proprietary information about the business and its owner, over time, which “soft” information can be gathered through interaction with the community for example, the customers‟ and suppliers‟ knowledge of the owner, business and its environment. this information may be more important to financial statements, collateral and credit scores. post 1994, south africa was challenge to address the triple challenges of poverty, unemployment and inequality, and smmes presented the potential to contribute to addressing the aforementioned challenges thorough contributing to economic growth and international competitiveness. it has been documented that south africa‟s smmes contribute 56% of private sector employment (ntsika, 2002) and 27-34% of the gdp in 2006 (department of trade and industry, 2008). according to ladzani and van (2002) in south africa, smmes have been highlighted for employing approximately 17% (2.4 million) of the total of 14.3 million economically-active population. this employment has, however, been negated by the persistent unemployment rate which in 2013 was 25.2% (statistics south africa (ssa), 2013). economic growth has increased in recent years, however it has not proved sufficient to significantly curb unemployment. employment growth is also negatively affected by; skills shortage, limited entrepreneurial capacity (dti, 2008). table 1 reflects that between 2004 and 2007, the smme sector grew by 27% in terms of the total number of formal enterprises (dti, 2008). there was however a decline in terms of micro enterprises (5.6%), which contributed to a resultant shrinking in the total number of formal registered businesses, from 50% in 2004 to 37% in 2007. table-1. stats sa enterprise figures by category, 2004 and 2007. enterprise category integrated business register 2004 integrated business register 2007 percent growth 2004 2007 count percent count percent micro 212161 50.3% 200377 37.4% -5.6% very small 170338 40.4% 251920 47.0% 47.9% small 32397 7.7% 63193 11.8% 95.1% medium 6748 1.6% 20750 3.9% 207.5% total smme 421644 100.0% 536240 100.0% 27.2% large 4596 -17251 -275.3% all enterprises 426240 -553491 -29.9% source: ssa (2013). 2.1. definition of small businesses definitions of smmes are difficult to comprehend as the labour, turnover and capital intensities vary significantly. the national small business act of 1996 defines a „small business‟ as follows: “… a separate and distinct business entity, including co-operative enterprises and non-governmental organisations, managed by one owner or more which, including its branches or subsidiaries, if any, is predominantly carried on in any sector or sub sector of the economy mentioned in column i of the schedule.” informal small businesses in south africa are unregistered, typically operated from home, the street or at taxi ranks. they typically source finance via small unsecured, short-term personal loans, form households and asian business research journal, 2019, 4: 29-34 31 © 2019 by the authors; licensee eastern centre of science and education, usa individuals, or corporate social investment funds from large corporates. if these informal businesses become successful, they may graduate to become formal businesses whose need for financing becomes even greater. however, at this stage they do not necessarily meet any banks‟ credit policy or lending criteria, which may prevent it from growing and subsequently creating employment. 2.2. smme development in order to support smme development, the 1995 south african white paper on smme development proposed an integrated small business development strategy for 2005 to 2014, which strategy is based on three pillars, namely:  increasing the supply of financial and non-financial support.  creating demand for smme products/services.  reducing regulatory constraints. the integrated small business development strategy (dti, 2005) identifies the following institutions as important implementation agencies for the strategy. these agencies include both smme-solely-dedicated support agencies and institutions with broader functions: small enterprise development agency (seda), south african micro-finance apex fund (samaf), khula enterprise finance limited (khula) and the national youth development agency (nyda). 2.3. commercial banks south african financial services to small business enterprises are predominantly provided by commercial banks, these include the four major banks, being first national bank, nedbank, amalgamated bank of south africa (absa) and standard bank. these banks are known to do mainstream and business banking and not so much development finance. they have divisions intended to provide finance to businesses based on traditional financing methodologies and systems which are akin to financial statement lending. these banks use debt-financing that requires collateral or a guarantee with an asset value. hisrich and peters (1998) suggests that collateral can be in the form of personal assets such as land, house, car or stock and/or business assets, such as land, building or equipment. however, although there are a number of products offered by commercial banks to assist small businesses, including, loan products, asset finance and equity funds, such offerings are primarily subject to the provision of collateral and financial statement analysis, providing collateral is very onerous for small businesses. collateral in credit risk is one of many major discussion points and debate in credit provision. banks lend money to borrowers, on condition that the amount of finance, is to be repaid according to terms agreed upon at the inception of the loan. in order to mitigate their risk of loss due to the borrower not servicing and repaying the loan, the bank orders collateral as a condition of granting the loan. this collateral may serve to minimise a loss that might arise due to adverse lending decisions, especially in relationship lending (stiglitz and weiss, 1981). 2.4. relationship lending the banks‟ risk appetite may be influenced by inter-alia, how long the bank has known the borrower and how much the bank knows about the borrower. because of an existing relationship, a bank may find it easier to overcome the information asymmetry problem, by being able to gather financial and non-financial information from interactions with the borrower. there is conflicting literature on the scale of interest rates linked to the different stages of the bank-borrower relationship. for example, boot and thakor (1994) find that loan rates decline as a relationship matures. existing evidence from the united states suggests that small businesses that forge bank relationships experience less credit rationing and are more likely to be given access to finance (cole, 1998). evidence from the european continent suggests that relationship lending may not be entirely beneficial for the borrower (mayer, 1994). elsas (2005) however, argues that relationship lending does not become successful simply by the duration of the borrowers‟ relationship with the bank, but rather on the status of the lender. small businesses normally deal with a specific person known as a “relationship manager”, “consultant” or “banker”. should bankers lose interest in servicing small businesses, then small businesses are lost to smaller financial institutions (such as community banks) that use “soft” information to a greater extent than larger, commercial banks. complex hierarchies of larger banks, therefore, become an impediment to relationship lending and present relationship lending as being more of a challenge to larger banks than smaller ones (stein, 2002). cole et al. (2004) believe that the biggest difference in the loan offering process between small and large banks is the weight they attach to the quantitative and discretionary information. small banks attach more weight to discretionary (“soft”) information whereas larger banks attach more weight to the quantitative financial information. relationship lending poses some great possibilities for the smme fraternity, however, evidence needs to be gathered as to whether it is plausible in terms of managing long term risk for banks. it is evident from the above discussion that a number of factors influence the relationship lending success. the duration of the relationship, the scope of the relationship, collateral and the relationship manager are factors that make or break the success of relationship lending. 3. research design and methods in order to achieve the research objectives, a case study approach was adopted, by focusing on two established small business enterprises based in khayelitsha township, cape town, south africa. these two enterprises were chosen because of close proximity to the researcher. the aim of the study was to demonstrate that relationship lending could serve as a solution to the credit accessibility problem faced by smmes in south africa. the primary data was collected through interviews using semi-structured questionnaires comprising openand close-ended questions. interviews seemed to be a viable research tool to gain insight into the experiences of the research participants with banks. the data gathered through the interviews was categorized into the following relationship lending themes: asian business research journal, 2019, 4: 29-34 32 © 2019 by the authors; licensee eastern centre of science and education, usa  challenges encountered upon start-up.  reasons for declined finance.  service perceptions of banks.  duration of bank-borrower relationships.  scope of relationships.  role of collateral.  relationship manager.  other relationships. 3.1. research findings entity a was a restaurant that hosts corporates events, owned by a 53 year-old woman (with 40% share in the business) and her business partner, who is her 26 year-old daughter owns the majority (60%) of the business. the business has been in operation since 2010. entity b which is an entertainment business that provides weekend entertainment to the elite and mature sector of the community was also owned by a woman aged 50 years, and she was the sole owner. the entity was registered as a close corporation since 2004. prior to formal registration, the business was operating informally while the business owner was still in formal employment. 3.2. source of start-up finance entity a was established through the savings and pension funds of the owner. credit funding was applied for from a bank credit, but the application was declined based on the adverse credit record of the borrower. entity b was also funded from the owners own funds, being the proceeds of her retirement. the owner also applied for finance at a bank but the loan was declined. nevertheless, she made progress using her own resources, but when she was becoming successful, the bank showed interest in her business, but because of her poor experiences with the bank, she refused to get involved with the bank. instead she used a r1.2 million loan from khula finance. 3.3. challenges encountered at start-up i. access to finance both entities alluded to two great needs: assistance at the time of start-up and the bridging working capital finance. both businesses, they struggled to get financing when at the start-up phase. upon start-up, the owner of entity a realised that corporates wanted her service, but after sending an invoice she would have to wait for a month or two, before receiving payment. because of insufficient working capital, at times she would owe her creditors for long periods, and thereby earn a bad credit record. she believed that, had she received financial support, she would have performed better than she has done to date. after running her business for a while, the owner of entity b discovered that as her business grew she could not keep up with the demand and had to source funds in order to increase her stock. this proved to be a very difficult exercise, but she overcame the hurdle since she also obtained finance from khula finance. other than access to finance, both entities mentioned the following challenges upon start-up: ii. formal registration hurdles both entities did not have knowledge of registration places, guidelines and processes. the information they gathered was from informal sources and not always reliable. iii. information and „know-how‟ information regarding suppliers and network of businesses was not easy to find. though they could find some information, the suppliers were not always the most competitive in terms of price and supply terms. iv. skills the two business owners started businesses that on which they did not have in-depth knowledge and, as such, had to learn their industry-related skills by doing. both pride themselves in the fact they learnt very quickly, they understood budgeting and their financial requirements. however, they conceded that their formal accounting skills are minimal as they rely much on their accountants who prepare their financial statements. 3.4. reasons why applications for finance were declined entity a‟s application for credit was declined because of adverse credit scores relating to the owner and she was not willing to provide her unencumbered residential property as a collateral. the adverse credit scores were instrumental in motivating the owner of entity a to start the business – she wanted to get out of the debt trap and wanted to liberate herself financially. entity b‟s application for finance was declined because the bank did not believe that the business was viable. this was disappointing to the owner; however, more disappointing was that she felt the bank understood little of the potential of the business. 3.5. collateral as part of the loan contract due to a bad credit record at the time of applying for the loan, the bank requested collateral from entity a. however, the owner she was very unwilling to do so. entity b had a loan which was backed up by the property collateral. the owner had a number of loans, but they were not business loans, but personal loans taken when she realised that her working capital was not sufficient. asian business research journal, 2019, 4: 29-34 33 © 2019 by the authors; licensee eastern centre of science and education, usa 3.6. perceptions of the banks the initial perception of the banks by both entity owners, was that the banks did not want to assist small businesses, as both credit applications were declined. however, only once the businesses were up and running, did the banks show interest in them. hence, the owners had a perception that the banks only want to assist existing and successful businesses, and not start-up businesses. the owners of both entities commented that the banks did not attempt to understand their business, they believed that, had the banks understood their businesses and opportunities, they would have offered them finance. thus, a relationship would have allowed the banks to have proprietary knowledge of the businesses. 3.7. duration of relationships since start-up in 2010, entity a has been banking with the same bank, but the same bank declined the application for a start-up loan. the owner indicated that the bank had been generating revenue from the business, yet the support was minimal. entity b‟s experience is different since the owner maintained accounts with three banks since inception in 2004. she also changed banks as soon as she had bad service experiences. she also indicated that all the banks have only been interested in account and were generating revenue from the many products she had procured with them. in her view, the banks did not have the “appetite” to grow start-ups. 3.8. scope of bank-small business relationships the business entities have concurred that the banks do not have solid relationships with them. the banks did not readily visit the businesses to understand their business or obtain first-hand information on the success of their businesses. thus, the banks were unable to assist the clients who required credit because they lacked knowledge on the businesses. 3.9. relationship manager the owners of both entities responded positively to having a community-based bank and the reason cited for this, was personal access. the entities believed that the relationship manager is the best person to understand their business at grassroots level. they believed that the relationship manager is the person that should be visiting them and gathering information about their business and will be able to assist should they apply for funding. the business owners assert that the relationship mangers focused more on the financial statements than on wanting to understand their businesses. the business owners complained that they seldom see their relationship managers. more so, both the owners agreed that they struggled with having to deal with different relationship managers consistently, since that have had to explain their business needs repeatedly to the different relationship managers. this, they believed is a value destroyer and they hoped that there could be some stability in terms of having only one relationship manager. 3.10. other important relationships these business owners had networks who were well known in the community and industry and belonged to inter-alia, khayelitsha business forum, cape town tourism, the foundation for african business and consumer services (fabcos), etc. these organisations added value in terms of knowledge and the direction of various projects in the respective community. from the documented experiences of these two businesses, it would appear that the information asymmetry problem remained a crucial point. the bank, at a high level, seems interested in assisting small businesses; however it does not attempt to obtain first-hand of the business operations. it would appear that the banks lean more towards traditional transactional lending. the relationship lending phenomenon appeals as a great alternative to source the “missing” information about the company. since the businesses are fully operational, it would seem that they are being effectively managed. hence, there seems to be an opportunity for the banks to assist with financial support to help grow these businesses. 4. conclusion from the findings it is clear that the core to growth and development of small business, is access to finance. whilst banks are somewhat unwilling to provide finance, they are not able to gather information about the businesses. businesses that are not astute in terms of financial statement preparations struggle to convey their business performance to the banks that use transactional lending. this leads to an information asymmetry problem, which relationship lending theory proposes as a solution to this problem. 4.1. recommendations the business owners in this study had very limited business information when they started their businesses. thus, provision of mainstream business information concerning the smme environment, such as business registration processes, could be worthwhile to both the bank and their clients. by understanding the businesses which have accounts with them, banks will be better positioned to assess the businesses ability to meet is credit payment obligations. banks could further invest in a new credit scoring model that will somewhat quantify relationship information. such information could include the reputation of the client‟s suppliers, landlords and the community. for example, the businesses‟ ability to meet their obligations may be assessed by looking at the payment records from suppliers. viability of the business may also be assessed by interviewing the businesses‟ clients. references berger, a.n. and g.f. udell, 1998. the economics of small business finance: the roles of private equity and debt markets in the financial growth cycle. journal of banking & finance, 22(6-8): 613-673.available at: https://doi.org/10.1016/s0378-4266(98)00038-7. asian business research journal, 2019, 4: 29-34 34 © 2019 by the authors; licensee eastern centre of science and education, usa boot, a.w. and a.v. thakor, 1994. moral hazard and secured lending in an infinitely repeated credit market game. international economic review, 35(4): 899-920.available at: https://doi.org/10.2307/2527003. cole, r.a., 1998. the importance of relationships to the availability of credit. journal of banking & finance, 22(6-8): 959-977.available at: https://doi.org/10.1016/s0378-4266(98)00007-7. cole, r.a., l.g. goldberg and l.j. white, 2004. cookie cutter vs. character: the micro structure of small business lending by large and small banks. journal of financial and quantitative analysis, 39(2): 227-251.available at: https://doi.org/10.1017/s0022109000003057. department of trade and industry, 2008. annual review of small business in south africa 2005-2007. pretoria: the department of trade and industry. dti, 2005. guide to the south african co-operatives act 2005. pretoria: the department of trade and industry. elsas, r., 2005. empirical determinants of relationship lending. journal of financial intermediation, 14(1): 32-57.available at: https://doi.org/10.1016/j.jfi.2003.11.004. herrington, m., j. kew and p. kew, 2009. global entrepreneurship monitor, south african report. available from https://www.gsb.uct.ac.za/ [accessed 15 may,2009]. hisrich, r.d. and m.p. peters, 1998. entrepreneurship. 4th edn., boston: irwin/mcgraw-hill. ladzani, w.m. and v.j.j. van, 2002. entrepreneurship training for emerging smes in south africa. journal of small business management, 40(2): 154-161.available at: https://doi.org/10.1111/1540-627x.00047. mayer, c., 1994. the assessment: money and banking: theory and evidence. oxford review of economic policy, 10(4): 1-13. ministry of trade and industry, 1994. strategies for the development of an integrated policy and support programme for small, medium, and micro-enterprises in south africa. a discussion paper. government publications. ntsika, 2002. state of small business in south africa: annual review. pretoria: ntsika enterprise promotion agency. olawale, f. and d. garwe, 2010. obstacles to the growth of new smes in south africa: a principal component analysis approach. african journal of business management, 4(5): 729-738. schwab, k., 2017. the global competitiveness report 2017–2018. geneva: world economic forum. statistics south africa (ssa), 2013. unemployment figures 13 may 2013, viewed 13 may, 2013. stein, j.c., 2002. information production and capital allocation: decentralized versus hierarchical firms. the journal of finance, 57(5): 18911921. stiglitz, j.e. and a. weiss, 1981. credit rationing in markets with imperfect information. the american economic review, 71(3): 393-410. the presidency, 2019. the presidency of the republic of south africa. available from http://www.thepresidency.gov.za/pressstatements/president-ramaphosa-announces-reconfigured-departments. writer, s., 2018. businesstech. retrieved from businesstech. available from https://businesstech.co.za/news/business/260797/thealarming-truth-about-the-number-of-small-businesses-in-south-africa/. citation | m.t. langa; krishna k govender (2019). the need for agile relationship lending between small business and banks, towards a more engaged relationship: a case study in khayelitsha, south africa. asian business research journal, 4: 29-34. history: received: 10 june 2019 revised: 15 july 2019 accepted: 20 august 2019 published: 23 september 2019 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education acknowledgement: both authors contributed to the conception and design of the study. funding: this study received no specific financial support. competing interests: the authors declare that they have no conflict of interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 9 © 2018 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 3, 9-14, 2018 issn: 2576-6759 doi: 10.20448/journal.518.2018.31.9.14 © 2018 by the authors; licensee eastern centre of science and education, usa operationalization of internal analysis using the vrio framework: development of scale for resource and capabilities organization (case study: xyz company animal feed business unit) widya ariyani1 arief daryanto2 sahara3 ( corresponding author) 1,2school of business. bogor agricultural university jl. raya pajajaran, bogor 16151, indonesia 3departement of economic. faculty of economics and management. bogor agicultural university. jl. lingkar kampus-kampus ipb darmaga, bogor 16680, indonesia abstract finding the source of competitive advantage has become an essential area in the research of strategic management. one of the methods commonly used to find out the competitive advantage is by conducting internal analysis using the vrio framework. the weaknesses of said framework are that they cannot be used to determine how strong the competitive advantage of the company can be managed by them. therefore the objectives of this paper are to create assessment scales to determine how well the resources or capabilities has been managed by the company in a vrio framework. to elaborate on the operationalizing of vrio scale, a case study in the animal feed business unit of xyz company was used. keywords: internal analysis, resource based view, operationalizing the vrio scale, value chain analysis, animal feed business unit jel classification: m20; q12. 1. introduction in the early 1950s-1960s, strategy was centered on the planning process and gradual execution processes (grant, 2013). however, the strategic planning process in business today puts forward the dynamic of external environment. therefore most of the companies prefer to implement planning process using the market based approach (sirmon et al., 2007). the most popular theory of market-based approach used is the porter's five forces. it is a powerful tool for understanding the competitiveness of business environment, and to identify our strategy's potential profitability where strategy-making is done by taking external factors into account. lack of attention to internal analysis in strategic management of asset has created a new paradigm: resource based view (wernerfelt, 1984; barney, 1991; grant, 1991; peteraf, 1993). resource based view sees a company as a collection of resources and capabilities (wernerfelt, 1984). resources consist of both tangible assets such as financial assets and physical assets, as well as intangible assets such as human resources, patents and technology (grant, 1991; amit and schoemaker, 1993). an organizational capability is defined as the company's ability to manage resources in achieving the desired goals (amit and schoemaker, 1993). capability is not included in tangible assets or intangible assets, but rather a "intangible asset" that cannot be easily imitated by purchase but must be built by the company itself (teece et al., 1997). based on the explanation above, we will make two basic assumptions that resource based view are resource heterogeneity and resource immobility (mata et al., 1995). first the heterogeneity assumption means the quality of being made of many different elements, forms, kinds, or different productive resources between companies; whereas the immobility assumptions considered resources are very expensive, difficult to imitate and inelastic in supply. . however, it is impossible to define a set of resources that provide a universal competitive advantage because each company's resources have a specific context (barney, 2001; wernerfelt, 2013). barney (1991) was the first to attempt to formalize the resource based view theory by creating four assessment criteria, namely valuable, rare, imperfectly imitable and non-substitutable. these criteria are often referred to as the vrin framework (barney, 1991). however, it is impossible to define a set of resources that provide a universal competitive advantage. the reason as each company's resources has a specific context. barney's competitive advantages are as follow: valuable resources if they can be utilized to improve efficiency and effectiveness, or in other words: it must take advantage of an opportunity or neutralize threats within the corporate environment. resources are considered very rarely owned (rare) if not owned by a competitor company or at least, only a few competing companies. resources cannot be imitated perfectly (imitability) whenever it is impossible or http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2018.31.9.14&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/6 https://orcid.org/0000-0002-2559-6918 https://orcid.org/0000-0001-8511-0935 https://orcid.org/0000-0003-3070-8897 http://ecsenet.com/index.php/2576-6759/article/view/6 https://orcid.org/0000-0002-2559-6918 https://orcid.org/0000-0001-8511-0935 https://orcid.org/0000-0003-3070-8897 http://ecsenet.com/index.php/2576-6759/article/view/6 https://orcid.org/0000-0002-2559-6918 https://orcid.org/0000-0001-8511-0935 https://orcid.org/0000-0003-3070-8897 http://ecsenet.com/index.php/2576-6759/article/view/6 https://orcid.org/0000-0002-2559-6918 https://orcid.org/0000-0001-8511-0935 https://orcid.org/0000-0003-3070-8897 http://ecsenet.com/index.php/2576-6759/article/view/6 https://orcid.org/0000-0002-2559-6918 https://orcid.org/0000-0001-8511-0935 https://orcid.org/0000-0003-3070-8897 asian business research journal, 2018, 3: 9-14 10 © 2018 by the authors; licensee eastern centre of science and education, usa substantially difficult for competitors to replicate. and finally, resources cannot be offset if no other asset can meet the same or similar strategic value. the vrin framework received criticism because the criteria used could neither explain the differences in each company's performance (newbert, 2007; kraaijenbrik et al., 2010) nor explain how (mohamad and norezam, 2012) and when (kraaijenbrik et al., 2010) the resources and capabilities are built or how well they are managed. therefore, barney (1995) corrected it by converting it to vrio. "o" stands for organization means the ability or condition necessary to materialize the competitive value of an identified resource or capability. if valuable, rare and imperfect resources or capabilities can be replicated, companies need to be set up to manage them and utilize them. the weakness of using the vrio framework is when used to compare performance in managing resources/capabilities between 2 or more firms (knot, 2015). therefore this journal will discuss the use of scale in measuring the level of "organization" of a resource/capability of a company within the vrio framework. 2. the concept of resource based view resource based view is a reference or framework for conducting internal analysis by learning all of the resources and capabilities owned and controlled by the company. internal resources of the company can be classified into four categories: physical resources (williamson, 1975) human resources (becker, 1964) organizational resources (tomer, 1987) and financial resources (david, 2013). physical resources are physical infrastructure used by the companies, structures, buildings and factories, equipment, geographical location or place and access to raw materials. human resources include expertise, education and knowledge as well as skills development program for every workers within a company. organizational resources include the company's formal reporting structure, formal and informal planning, control systems, coordination systems, culture and reputation, informal relationships between groups within companies, between companies and the environment. financial resources include all the financial resources that a company can use to generate and implement a strategy. we can use value chain approach to identify the resources and capabilities of internal company. in the value chain approach, production activities are divided into two, namely support activities and primary activities. porter (1998) in his book describes primary activities are activities directly involved in products and services, while support activities are activities that ensure that the main activities can be done efficiently and effectively. 2.1. identification of competitive advantage using the vrio framework by utilizing the value chain model, an identification technique for competitive advantage based on the valuation using vrio framework is developed. the vrio framework is structured with a number of questions about resources and capabilities, using four indicators of valuability, rarity, imitability and organization. the four questions used to analysis the vrio framework, are as follows: a) valuable: whether these resources/capabilities can encourage companies to make the operation process more efficient and effective, or can be used to exploit external opportunities or counteract threats. b) rare: whether the resources/capabilities are controlled only by a small number of companies or rarely owned by other companies. c) imitability: whether the resources/capabilities are hard to imitate or replicate by other companies. d) organization: whether the resources/capabilities are supported and managed by the company appropriately. according to chaharbaghi and lynch (1999) sustainability in gaining the competitive advantage is how a company can manage and enhance the resources or ability to achieve new forms of competitive advantage. according to ghemawat (1986) the competitive advantage based on its source can be divided into 3 categories, namely (1). targeted market size, (2). primary access to resources or consumers, and (3). limitation of choice of competitors. based on those categories, there are two competitive advantages that are derived from resources which are (1). superior access to resources, and (2). limiting options for competitors. therefore, in order to obtain sustainable competitive advantage, a resource or capability should be: (1). rarely owned by another company, (2). difficult to obtain / hard to imitate by other companies, and (3). will be wellmanaged by the company. based on the explanation above, the use of vrio framework is very appropriate to be used in searching for sustainable competitive advantage. the disadvantages of the vrio framework they are unable to provide assessment for the third sustainable competitiveness criteria which could be well-managed by the company. therefore, for the fourth question point of "organization", it can be combined with the likert scale (1-4) to demonstrate the assessment score of a company's ability to manage the said resources/capabilities. 3. case study of xyz company the following tables are examples of internal environment analysis using resource based view. to identify the resources and capabilities as competitive advantage, we can use value chain analysis combined with vrio framework. 3.1. value chain analysis based on the 'value chain' framework of the porter, the activities took place at xyz company can be divided into two groups: primary activities and support activities, they are presented in figure 1. primary activities are an activities that have an immediate effect on the production, maintenance, sales and support of the products or services to be supplied. meanwhile, supporting activities assist the primary activities and they form the basis of any organization asian business research journal, 2018, 3: 9-14 11 © 2018 by the authors; licensee eastern centre of science and education, usa figure-1. value chain analysis of xyz company source: researcher’s approach, 2018 3.2. vrio test after all the resources and capabilities used in each part of the xyz company on animal feed business are identified, the next step is to conduct an analysis using the layered analysis of vri test (value rarity, and imitability) they are presented in table 1. table-1. vri analysis resource/capability v r i strengths or weaknesses economical performance clear mission and objective of the animal feed business unit √ √ temporary competitive advantage above normal big corporate loan capacity √ √ temporary competitive advantage above normal big corporate asset and capital √ √ temporary competitive advantage above normal advanced factory technology and facility √ competitive parity normal good spatial arrangement of the animal feed factory √ competitive parity normal strategic location of the animal feed factory √ competitive parity normal the reliable capability of r&d in creating livestock feed formula √ √ √ proceed to organization analysis above normal qualified and well experienced experts of the company √ √ temporary competitive advantage above normal loyalty of the company employees √ competitive parity normal employees motivation √ competitive parity normal sophistication of finished goods technology √ competitive parity normal sophistication of raw materials quality control technology √ √ temporary competitive advantage above normal sophistication of finished goods quality control technology √ competitive parity normal supplier loyalty √ competitive parity normal raw materials transportation system √ competitive parity normal big raw materials warehouse storage capacity √ √ temporary competitive advantage above normal big production capacity of the company √ √ temporary competitive advantage above normal good administration of the company √ competitive parity normal the lack of adequate transportation infrastructure for animal feed distribution competitive disadvantage below normal finished goods warehouse storage capacity √ competitive parity normal a strong brand identity has been recognized in a longer time as high quality animal feed producer √ √ √ proceed to organization analysis above normal credit term is too short competitive disadvantage below normal products pricing is the most expensive in its class competitive disadvantage below normal an extensive marketing networks √ √ √ proceed to organization analysis above normal position as market leader √ √ temporary competitive advantage above normal product assurance and guarantee √ competitive parity normal asian business research journal, 2018, 3: 9-14 12 © 2018 by the authors; licensee eastern centre of science and education, usa technical support reliable and well experienced √ √ √ proceed to organization analysis above normal csr to the community/academic/farmers √ competitive parity normal good corporate financial management capability √ √ √ proceed to organization analysis above normal ability for retaining company employees from hijacking √ competitive parity normal ability to improve the quality of employees skill (training, seminars, etc.) √ competitive parity normal ability to adopt the latest information technology system √ competitive parity normal ability to anticipate raw material price volatility √ √ temporary competitive advantage above normal lack of ability to continuously obtain high quality raw materials competitive disadvantage below normal speed in unloading of raw materials √ competitive parity normal ability to improve production efficiency √ competitive parity normal the lack of ability to promote the product competitive disadvantage below normal source: researcher’s approach, 2018 we can categorize the strengths or weaknesses of a company's resources or capabilities based on its competitive and economic performance. table 4 revealed that the business unit of xyz company has some weaknesses, among others: (1). the lack of adequate transportation infrastructure for animal feed distribution, (2). credit term is too short, (3). products pricing is the most expensive in its class, (4). lack of ability to continuously obtain high quality raw materials, and (5). the lack of ability to promote the product. meanwhile, the strategic strengths are: (1). clear mission and objective of the animal feed business, (2). big corporate loan capacity, (3). big corporate asset and business capital, (4). the reliable capability of r&d in creating livestock feed formula, (5). qualified and experienced experts of the company, (6). sophistication of raw materials quality control technology, (8). big production capacity of the company, (9). a strong brand identity has been recognized in a longer time as high quality animal feed producer, (11). position as market leader, (12). technical support services reliable and well experienced, (13). good corporate financial management capabilities, and (14). ability to anticipate raw material price volatility. this list of strengths can be used by animal feed business unit in xyz company to achieve their competitive advantage. to determine the level of a company's ability in managing of any resources or the potential source of competitive advantage, an assessment of the "organization" in the vrio framework based on the likert scale are presented in table 2. based on the results of organizational level analysis, the competitiveness used for companies to create a sustainable competitive advantage are: (1). a strong brand identity has been recognized in a longer time as high quality animal feed producer (2). an extensive marketing networks, (3). technical support services reliable and well experienced, and (4) good corporate financial management capabilities. table-2. assessment of organization scale resources/capabilities organization scale organization level of capability competitive implication 1 2 3 4 clear mission and objective of the animal feed business 0 1 6 0 71 % temporary competitive advantage big corporate loan capacity 0 0 6 1 79 % temporary competitive advantage big corporate asset and capital 0 0 3 4 89 % temporary competitive advantage advanced factory technology and facility 0 0 4 3 86 % competitive parity good spatial arrangement of the animal feed factory 0 1 4 2 79 % competitive parity strategic location of the animal feed factory 0 0 3 4 89 % competitive parity the reliable capability of r&d in creating livestock feed formula 0 0 0 7 100 % proceed to organization analysis qualified and well experienced experts of the company 0 0 2 5 93 % temporary competitive advantage loyalty of the company employees 0 0 7 0 75 % competitive parity employees motivation 0 0 6 1 79 % competitive parity sophistication of finished goods technology 0 0 4 3 86 % competitive parity sophistication of raw materials quality control technology 0 0 2 5 93 % temporary competitive advantage sophistication of finished goods quality control technology 0 0 5 2 82 % competitive parity supplier loyalty 0 0 6 1 79 % competitive parity raw materials transportation system 0 0 6 1 79 % competitive parity big raw materials warehouse storage capacity 0 0 3 4 89 % temporary competitive asian business research journal, 2018, 3: 9-14 13 © 2018 by the authors; licensee eastern centre of science and education, usa advantage big production capacity of the company 0 0 3 4 89 % temporary competitive advantage good administration of the company 0 0 3 4 89 % competitive parity the lack of adequate transportation infrastructure for animal feed distribution 0 3 4 0 64 % competitive disadvantage finished goods warehouse storage capacity 1 0 5 1 71 % competitive parity a strong brand identity has been recognized in a longer time as high quality animal feed producer 0 0 0 7 100 % proceed to organization analysis credit term is too short 4 0 2 1 50 % competitive disadvantage product pricing is the most expensive in its class 0 5 2 0 57 % competitive disadvantage an extensive marketing networks 0 0 3 4 89 % proceed to organization analysis position as market leader 1 1 4 1 68 % temporary competitive advantage product assurance and guarantee 0 0 5 2 82 % competitive parity technical support reliable and well experienced 0 0 2 5 93 % proceed to organization analysis csr to the community/academic/farmers 0 0 6 1 79 % competitive parity good corporate financial management capability 0 0 2 5 93 % proceed to organization analysis ability for retaining company employees from hijacking 0 0 6 1 79 % competitive parity ability to improve the quality of employees’ skill (training, seminars, etc.) 0 1 4 2 79 % competitive parity ability to adopt the latest information technology system 0 0 1 6 96 % competitive parity ability to anticipate raw material price volatility 0 0 7 0 75 % temporary competitive advantage lack of ability to continuously obtain high quality raw materials 0 2 4 1 71 % competitive disadvantage speed in unloading of raw materials 0 1 1 5 89 % competitive parity ability to improve production efficiency 0 1 3 3 82 % competitive parity the lack of ability to promote the product 0 2 4 1 71 % competitive disadvantage source: researcher’s approach, 2018 4. conclusion resource based view approach is a managerial framework used to determine the competitive advantage with the potential to deliver sustainable competitive advantage to a firm. it is recommended to combine the value chain analysis with vrio framework and likert measurement scale in order to measure the level of proficiency of a company in managing resources/capabilities as a source of its competitive advantage. therefore, the company's management able to conduct an accurate performance improvement of a potential resources or capabilities to build sustained competitive advantage in the business. it is suggested that further research on the use a combination of vrio framework with likert scale for corporate strategic planning activities. in all the suggestions mentioned, that combination could be used in many business areas. references amit, j. and p.j.h. schoemaker, 1993. strategic assets and organizational rent. strategic management journal, 14(1): 33-46. view at google scholar | view at publisher barney, j.b., 1991. firm resources and sustained competitive advantage. journal of management, 17(1): 99-120. view at google scholar | view at publisher barney, j.b., 1995. looking inside for competitive advantage. academy of management, 9(4): 49-61. view at google scholar | view at publisher 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operationalization of internal analysis using the vrio framework: development of scale for resource and capabilities organization (case study: xyz company animal feed business unit). asian business research journal, 3: 9-14. history: received: 24 april 2018 revised: 21 may 2018 accepted: 30 may 2018 published: 4 june 2018 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education acknowledgement: all authors contributed to the conception and design of the study. funding: this study received no specific financial support. competing interests: the authors declare that they have no conflict of interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. https://scholar.google.com/scholar?hl=en&q=understanding%20the%20concept%20of%20dynamic%20capabilities%20by%20dismantling%20teece,%20pisano%20and%20shuen%20(1997)'s%20definition https://scholar.google.com/scholar?hl=en&q=empirical%20research%20on%20the%20resource-based%20view%20of%20the%20firm%20:%20an%20assesment%20ad%20suggestions%20for%20future%20research http://dx.doi.org/10.1002/smj.573 https://scholar.google.com/scholar?hl=en&q=the%20cornerstone%20of%20competitive%20advantage:%20a%20resource-based%20view https://scholar.google.com/scholar?hl=en&q=the%20cornerstone%20of%20competitive%20advantage:%20a%20resource-based%20view http://dx.doi.org/10.1002/smj.4250140303 https://scholar.google.com/scholar?hl=en&q=managing%20firm%20resources%20in%20dynamic%20environmnets%20to%20create%20value:%20looking%20inside%20the%20black%20box http://dx.doi.org/10.5465/amr.2007.23466005 https://scholar.google.com/scholar?hl=en&q=dynamic%20capabilities%20and%20strategic%20management http://dx.doi.org/10.1002/(sici)1097-0266(199708)18:7%3c509::aid-smj882%3e3.0.co;2-z https://scholar.google.com/scholar?hl=en&q=a%20resource%20based%20view%20of%20the%20firm http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 1 © 2018 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 3, 1-8, 2018 issn: 2576-6759 doi: 10.20448/journal.518.2018.31.1.8 © 2018 by the authors; licensee eastern centre of science and education, usa business model development strategy of padjadjaran university with canvas business model approach budi mulyana1  arief daryanto2 agus purwito3 ( corresponding author) 1school of business, bogor agricultural university jl. raya pajajaran, bogor 16151; university of padjadjaran jl. bandung – sumedang km. 21 jatinangor sumedang , indonesia 2school of business, bogor agricultural university jl. raya pajajaran, bogor 16151, indonesia 3department of agronomy & horticulture, faculty of agriculture, bogor agricultural university, dramaga bogor 16680, jawa barat, indonesia abstract governments’ policy regarding pattern alteration from general university management into a legal incorporated higher education institution, forced the padjadjaran university to be more creative in finding other revenue stream in order to maintain the university sustainability. this study aims are to identify the business model of ptn blu and ptn bh; and develop a business model development strategy. this study conducted with an in-depth interview approach to top management. data were analyzed using nine building block of business model canvas and swot analysis. the result of this study revealed that the university need to apply a combination of free business models and joint business models to generate other income streams but still prioritize the idealism to educate the life of the nation. other revenue streams are obtained by commercializing the results of research with licensed business models. keywords: business model canvas, higher education, public higher education institution as legal entity, public higher education institution as public service entity, analysis business model higher education. jel classification: f44, o10 1. introduction decree number 20 year 2003 regarding national education system mentioned that higher education institution determined their own policy and possessed autonomy in organizing education within the institution (setneg, 2003). moreover, higher education decree number 12 year 2012, every higher education institution have the autonomy to organize themselves as tridharma implementation center in accordance to the basic, purpose and ability of the institution (setneg, 2012). autonomy referred in the decree was academic field which consisted of determination of norm, operational policy and tridharma implementation; as well as non-academic field which consisted of determination of norm, operational policy and organizational administration, financing, students’ affair, employment, facilities and infrastructure. based on government regulation of republic of indonesia number 4 year 2014, the management pattern of public heis (ptn) consisted of ptn with general financial management pattern or called as work unit ptn (ptn satker); ptn with public service entity management pattern (ptn blu); and ptn as legal entity (ptn bh) (setneg, 2014). university of padjadjaran (unpad) had experienced management pattern shifting from ptn blu into ptn bh in 2017 after having two years of transition period and also fulfill the requirements as ptn bh based on the criteria set by ministry of research, technology and higher education (kemenristekdikti, 2016). governments’ institution performance report (lakip) of unpad of 2015 noted that the total amount of community fund (dm) revenue from 2013 to 2015 were having a fluctuation. the total of community fund (dm) revenue collected in 2013 was 576 billion rupiah, while community fund revenue in 2014 recorded as much as 480 billion rupiah, and dm revenue in 2015 was 522 billion rupiah. those things indicated that unpad need to increase their revenue stream through value propositions invention in terms of a business model. business model is a method in conducting business so that the institution could generate revenues to maintain the organization sustainability. according to osterwalder and pigneur (2010) the motivation in conducting business model innovation for an on-going organization were as follow: problems occur in present business model, adaptation to changing environment, presenting product and technology into the market or preparing a new business model. business model canvas (bmc) is logical illustration regarding how the organization inventing, delivering and capture a value (osterwalder and pigneur, 2010). the purpose of this study as follow: 1. identifying unpad ptn blu business model with bmc approach. http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2018.31.1.8&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/5 https://orcid.org/0000-0001-6541-6785 https://orcid.org/0000-0003-4669-8806 http://ecsenet.com/index.php/2576-6759/article/view/5 https://orcid.org/0000-0001-6541-6785 https://orcid.org/0000-0003-4669-8806 http://ecsenet.com/index.php/2576-6759/article/view/5 https://orcid.org/0000-0001-6541-6785 https://orcid.org/0000-0003-4669-8806 asian business research journal, 2018, 3: 1-8 2 © 2018 by the authors; licensee eastern centre of science and education, usa 2. identifying unpad ptn bh business model with bmc approach. 3. analyzing business model improvement with bmc approach. 2. methodology this study took place in university of padjadjaran located in jl. bandung sumedang km. 21 jatinangor sumedang. this study was conducted since april 2017 until january 2018. research methodology used in this study was qualitative descriptive method by using case studies. primary data obtained from an in-depth interview with the respondents. secondary data used obtained from various sources i.e. financial reports, unpad in numbers, books, journals, regulations, legislations and other relevant data sources. 2.1. data processing and analyses technique the main analysis tool used to reveal and describe unpad business model was bms nine building blocks adopted from nine building block of business model canvas (osterwalder and pigneur, 2010) and also swot analysis. picture-1. nine building block of bmc (osterwalder and pigneur, 2010) customer segments described as a set of people or various organizations which desired to be reach or serve by higher education institution. value propositions described various products and services which will create value for a certain customer segment. channel described the way and place within a higher education institution to be able to communicate with their customers in presenting value propositions. customer relationship explained about maintaining relationship between higher education institution with the customer. revenue streams described income or revenue in terms of cash accepted by higher education institution from every segment of customer. key resource described important assets which will be require to build the business model in a certain higher education institution. key activities explain the most important thing to be done by higher education institution to make its business model runs well in creating products. key partnership described supplier network and business partner that generate a running well business model. cost structure explain the most important cost incurred to operate business model. data processing divided into three stages, as follow: 1. first stage, the data obtained from interviews, observation and documentation study processed through nine segments in bmc as the first stage to identify unpad business model with management pattern of ptn blu and ptn bh as presented in picture 1. 2. second stage conducting analysis over identification result by using the swot analysis. swot analysis stage conducted to nine block bmc building in order to analyze unpad ptn blu business model and unpad ptn bh business model. 3. third stage, outcome data of swot analysis result created to be improvement of business model design income by using bmc approach. 3. discussion and result 3.1. topography of unpad ptn blu business model topography conducted in accordance to business model identification result to obtain a profound picture through ptn blu management system implemented by unpad before experiencing transformation period of becoming ptn bh. the topography conducted by identifying nine blocks of bmc building presented in picture 2. key partner of ptn blu unpad is the government, as the regulations administrator and higher education policy creator. as ptn, the whole processes regarding any learning and students’ affair, research, innovation, institutional and science and technology resources, being under ministry of research, technology and higher education co-ordination. learning, dedication to the community and research are included in building blocks of key activities. unpad for being favorite ptn, learning center, located in the city of bandung, also as scientific asian business research journal, 2018, 3: 1-8 3 © 2018 by the authors; licensee eastern centre of science and education, usa field of law and community development are its value propositions. learning and consultant process as the form of customer relationship. in the customer segment building block there are students and graduates users. the number of active unpad students’ academic year of 2016 odd semester were as much as 37 thousand students, consisted of 27.465 students of undergraduate program, 3.118 students of graduate/magister program, 1.843 students of 3 years’ diploma program, 1.663 students of doctoral program, 1.366 students of specialist program, 1.164 students of professional program and 483 students of diploma iv. infrastructure, government subsidy and lecturers are included in key resources. channels block building consisted of national selection examination of public higher education institution admission (snmptn), joint selection examination of public higher education institution admission (sbmptn) and admission test to university of padjadjaran (smup), in accordance to ministry of research, technology and higher education regulation number 126 year 2016 regarding new students admission of undergraduate program in public higher education institution (kemenristekdikti, 2016). meanwhile, in cost structure building block consisted of blu form operational, infrastructure development, learning operational. state revenue and expenditure budget (apbn) and non-tax state income (pnbp) are ptn blu unpad revenue streams. picture-2. bmc ptn blu unpad source: data field. 3.2. topography of unpad ptn bh business model the topography conducted based on business model identification result to obtain profound picture of ptn bh management system currently conducted by unpad. the topography conducted by identifying nine blocks of bmc building presented in picture 3. key partners building block consisted of two segments namely pentahelix and strategic partners. pentahelix consisted of academic partner, business, community, government, media; while strategic partners include west java local government, bandung city government, and state-owned enterprises (bumn). key activities building block consisted of research, dedication to the community and learning. value proposition building block consisted of research university west java based, scientific field of law and environment. turning local government as research center and integrated service unit are the customer relationship building block. customer segments consisted of students, academic staff, community, government and media. asian business research journal, 2018, 3: 1-8 4 © 2018 by the authors; licensee eastern centre of science and education, usa picture-3. bmc of ptn bh unpad source: data field. key resources building block consisted of human resources and infrastructure. channels consisted of strategic alliance of university of padjadjaran and west java (asup west java), state-owned enterprises (bumn) center of excellence, sustainable development goals (sdgs) center, maluku corner, science techno park and unpad admission test. cost structure building block consisted of employee expenditure, bumn research fund, tuition fee, resource sharing. 3.3. business model evaluation model business improvement begins with evaluating business model using swot analysis. business model evaluation used a tool called the tolo branca version v3.3, which is a swot analysis tool which specialized to be used to analyze bmc swot. pictures 4 and 5 show a graphical overview the evaluation (mulders and broek, 2012). picture 4 showed there was no business model building block colored red or required special attention at the moment of study. value propositions and cost structure were colored green which means a good quality of unpad business model at the moment. meanwhile the other building block with yellow color or require some improvements namely key partners, key activities, customer relationships, customer segments, key resources, channels and revenue streams. asian business research journal, 2018, 3: 1-8 5 © 2018 by the authors; licensee eastern centre of science and education, usa picture-4. interpretation result of tolo branca v3.3 source: data field. 3.3.1. customer segments based on interpretation and calculation by using tolo branca, customer segments building block colored yellow, as it shown in picture 5, the graph shows a green color dominant with opportunity value of (4), strength (3.7) and threat value of (1.5). unpad customers possessed a low transferring level due to the certain time interval that given by higher education in the service given, students of each program have a certain time of study or limited period, so the possibility of transferring to other heis was very small. the strength that unpad owned is the segmented customer base, customer was categorized into several ladder starting d iv until s3, besides that the customer also categorized into several groups of academic, business, community, government and media. 3.3.2. value propositions value propositions building block colored green, however in the chart all colors seem to be predominant with the opportunity value of (4.4), strength value (4.3) and threat value of (4). this is because the proposition value of unpad conformable to customer’s needs, the institution form that provide a lot of study program choices enable customer to choose in accordance to their needs, therefore creating a strong synergy between product and services. the high level of education service, enable unpad generating recur revenue due to the form of the product is service, and able to fulfill additional customers’ needs for having the authority to open a new study program. besides that, higher education institution as a hub allows unpad to conduct additional work for customers by integrating products that can satisfy customers. however, in the other side, the threat is also huge, the large number of heis in indonesia, provide many substitutions of product and services, so that the competitors threatened to offer a better price or value. 3.3.3. channels channels building block colored yellow with a high opportunity value of (4.2) allows unpad to develop distribution channels building block. on the graph also shows strength value of (3.7) and threat value of (1). unpads’ channel is very effective and efficient in reaching the customers because almost every customer segment only uses one distribution channel. picture-5. graph of swot analysis bmc building block source: data field. asian business research journal, 2018, 3: 1-8 6 © 2018 by the authors; licensee eastern centre of science and education, usa 3.3.4. customer relationships customer relationships building block colored yellow, with strength value of (4), opportunity value of (3.5) and threat value of (1). the number indicates the existence of a strong relationship between unpad with the local government; by making the local government as research center which supported by the dean activities representing each district/city area in the west java province. besides that, in order to serve customers’ activities, an integrated service unit is available which centered in unpad jatinangor campus to serve the whole customers in one integrated service. 3.3.5. revenue streams revenue streams building block colored yellow, with strength value of (3.9), this happens due to the predictable unpad revenue streams, the amount of tuition fee have already been set since the beginning through the single education fee (ukt) mechanism and purchases can be done repeatedly particularly from student customers segment. besides that, the unpad revenue stream is very diversified and sustainable. opportunity value of (3.8) considered to be high enough to generate new revenue stream through partners with public private partnership scheme. other concerning issue is the high value of threat (2.7) which threatened the loss of revenue stream. the revenue stream that might be loss is subsidy fund provided by the government to ptn bh. 3.3.6. key resources key resources building block colored yellow, with strength value of (3.7), opportunity value of (3.3) and threat value of (2). the strength of unpad resources is the large number of human resources and adequate infrastructure to support a running business model. hei as the only institution possessing the biggest human resources with magister and doctoral qualifications. however, the big number of threat also indicates that the quality of human resources was threatened by the infrastructure which having depreciation, meanwhile the level of education of human resources mostly still dominated by s2 (magister degree) holder for lecturers and high school graduates for academic staff. 3.3.7. key activities key activities building block colored yellow, with opportunity value of (4.3), strength value of (3) and threat value of (1). institutional accreditation and study program accreditation indicated that the implementation of civitas academic were relevance. the high opportunity value given the chance to unpad main activity by improving efficiency and it development for the whole research, community empowerment and development (ppm) and learning activities. 3.3.8. key partnership key partnership building block colored yellow, with strength value of (5), opportunity value of (4.2) and threat value of (1.3). the graph presenting a good work relationship with the main partner. cooperative relationship is very meaningful for unpad and its partner. with a lot of key partnership many opportunities would be available to optimize key activities in order to improve revenue stream. 3.3.9 cost structure cost structure building block colored green, with strength value of (4.3), opportunity value of (3) and threat value of (2.5), indicates cost structure incurred is predictable and very relevance to the business model, these also signifies the operational cost of unpad business model is very efficient. however, the threat also should be aware, the growth of cost structure which is faster than generated revenue happened due to the human resource expenses changes including remuneration expenses occurred at the beginning of transformation period of unpad institution becoming ptn bh (hei as legal entity). 3.4. unpad business model improvement gassmann et al. (2016) stated that “competitive supremacy of an organization in the future do not determined by an innovative product and process, but by an innovative business model”. picture 5 present unpad business model improvement, the pattern used in the improvement of the business model is the combination between free business model pattern with joint fund business model pattern (crowdfunding), also licensing business model pattern as the innovation of unpad business model. crowdfunding business model is the business pattern which divert the funding of a work to the community (public), partially the fund provider is personal or in group who are free to choose the amount of money they wanted to invest (gassmann et al., 2016). parties involved in the funding joint usually do not expect any return in terms of money, they tend to expect the work to be done. the combination between free business model pattern and crowdfunding in unpad business model improvement would generate profit for unpad as well as producing benefit to the customer. supartini (2010) mentioned that the amount of voluntary donations (endowment) is not specified and usually would be formed on its own based on the image of the future student have. if the image of a higher education institution in a students’ mind is negative, automatically they would donate a small amount of fund, and vice versa in accordance to their perception. licensing business model related to the creation of intellectual property for customers’ benefit by focusing to copyright commercialization which was sold to more than one interested party (gassmann et al., 2016). business model innovation conducted based on the swot analysis result, which suggested business model improvement to almost the entire bmc building block except value propositions and cost structure, therefore in is important to determine the trigger element of business model improvement. asian business research journal, 2018, 3: 1-8 7 © 2018 by the authors; licensee eastern centre of science and education, usa picture-6. unpad business model improvement source: data field. 3.4.1. customer segment innovation improvement of customer segment building blocks conducted by adopting students’ parents as unpad customer. in this building block, students’ customer segment specialized for undergraduate program students which will obtain the benefit of free tuition fee for a specified period of study time. 3.4.2. value proposition innovation innovation center of unpad business model improvement is the element of value proposition or triggered by quotation, a transformative business model innovation will effect more than one bmc building block. the changes on value proposition building block caused changes in almost all of the other building block namely customer relationship, revenue stream, key resource, key activities and key partnership. a free tuition fee for student customer segment of undergraduate program will improve stringency number, so that unpad would obtain the best student input. a good student input will become a qualified graduate in the future and correlated with industry respond to unpad graduates. another innovation of value proposition improvement is invention commercialization which will be ready to be the downstream conducted by customer segment of business, community, government, media and practitioners or individual. therefore, unpad will be more focused in conducting research which ready to be applied without providing any infrastructure nor production cost. 3.4.3. channels innovation improvement to the channels building block conducted by enhance strategic business unit (sbu) to distribute commercialized research results. sbu in terms of limited liability company and the like with separated assets from unpad as the parent organization, however could generate revenues for unpad. 3.4.4. customer relationship innovation value proposition changes gave implication to the relationship of unpad and its customer. to cultivate such relationship media required as one of the customer relationship element to disseminate information from unpad to the customer segment. such media can be obtained by taking advantage the media of key partners who have been working together with unpad during a certain period of time, which is kompas gramedia and mangle magazine, and utilizing social media that has been managed by the directorate of governance and communication unpad. 3.4.5. revenue streams innovation the free value proposition gave consequences i.e. loss of tuition fee as one of the source to revenue stream, nevertheless one revenue stream had loss on revenue stream building block it was replaced by three new revenues namely scholarship fund, crowdfunding and endowment. besides that, intellectual property and invention will also generate a new revenue stream, the license. andrianto (2016) categorized the strategy of research result commercialization in high education institution becoming new business development (university spin off), joint/alliance, license and direct selling. other item effecting the revenue stream are business and governments’ respond over unpads’ graduate quality, thus they will make the industry and government more interesting in contribute in terms of special scholarship, in return best graduates for the industry and reliable human resource for the government. asian business research journal, 2018, 3: 1-8 8 © 2018 by the authors; licensee eastern centre of science and education, usa 3.4.6. key resource innovation sharing resource on revenue stream building block existing business model diverted into one of the key resource in unpad business model improvement. the concept of sharing resource to maximize resources owned by unpad as well as to gain the benefit of resources from unpads’ main partner. besides that, on business model improvement, unpad graduates who financed by government and/or business institutions through special scholarship, will become qualified human resources for the institution. 3.4.7. key activities and key partnership innovation innovation on the key activities and key partnership building block shown no additional activity nor new partner but by maximizing the potential possessed at the moment, revenue stream through intellectual property license will increase both the quality and quantity of a research. meanwhile in key partnership building block with an adequate number of partners considered to be capable of exploring the partnership potential to maximize unpad business model. 4. conclusion 1. ptn blu (state hei as public service entity) business model, key activities did not generate any revenue stream for unpad because the revenue stream came from apbn (state revenue and expenditure budget) and pnbp (non tax state revenue) are governments’ subsidy. these matter appeared in cost structure building block, where the form blu (public service entity) was a cost structure for the government. 2. ptn bh (state hei as legal entity) business model is more flexible compared to ptn blu business model, unpad capable of generating other revenue stream and the entire revenue stream admitted as unpad revenue. 3. the combination between free business model, crowdfunding and license business model is the intermediary answer between idealism and business for unpad in an effort to educate the life of the nation as well as maintain operational sustainability of the higher education institution. references andrianto, 2016. the strategy of invention commercialization in higher education institution: a treatise of agriculture and environment policy. agricultural policy and environmental policy paper, 3(3): 216-227. gassmann, k. frankenberger and m. csik, 2016. business model navigator 55 the superior business model that will change your business. translated by : waskito s., jakarta: pt. elex media computindo. kemenristekdikti, 2016. minister of research, technology and higher education regulation no. 126 year 2016 regarding new students admission of undergraduate program in public higher education institution, jakarta (id): ministry of research, technology and higher education (kemenristekdikti). mulders, m. and c. broek, 2012. entrepreneurial decision making and the effect on business models. paper for entrepreneurial activities and support of entrepreneurs. efmd, european foundation for management development. breda, the netherlands. osterwalder and pigneur, 2010. business model generation. new jersey (us): john wiley & sons, inc. setneg, 2003. decree of republic of indonesia no. 20 year 2003 regarding national education system. jakarta: state secretariat. setneg, 2012. decree of republic of indonesia no. 12 year 2012 regarding higher education. jakarta: state secretariat. setneg, 2014. government regulation no. 4 year 2014 regarding organizing and management of higher education. jakarta: state secretariat. supartini, 2010. selling product service of higher education institution. selling product service of higher education institution. jogjakarta: jurnal bahari jogja, 10(17): 1-9. bibliography unpad, 2016. rector of university of padjadjaran regulation no. 40 year 2016 regarding organization and working procedure at university of padjadjaran, bandung: unpad. citation | budi mulyana; arief daryanto; agus purwito (2018). business model development strategy of padjadjaran university with canvas business model approach. asian business research journal, 3: 1-8. history: received: 22 january 2018 revised: 14 february 2018 accepted: 19 february 2018 published: 21 february 2018 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education acknowledgement: all authors contributed to the conception and design of the study. funding: this study received no specific financial support. competing interests: the authors declare that they have no conflict of interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 14 © 2022 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 7, 14-20, 2022 issn: 2576-6759 doi: 10.55220/25766759.v7i1.119 © 2022 by the authors; licensee eastern centre of science and education, usa are stock prices aligned with investors’ expectations? evidence from financial sector victor bahhouth1 rebecca gonzalez2 william stewart thomas3 ( corresponding author) 1,2,3university of north carolina, pembroke, usa. 1email: victor.bahhouth@uncp.edu tel: 9105216172 2email: rebecca.gonzalez@uncp.edu tel: 9105216853 3email: stewart.thomas@uncp.edu tel: 9105216859 abstract stock prices change as news become available about businesses; the change in price process is a reflection of financial markets’ expectations about firms’ performance. consequently both, financial measures & fundamental measures change as a result. researchers explored how well the financial measures explain firms’ performance and future stock price movements. the purpose of this study is to explore if the volatility of financial measures are better predictors of stock price movements – an empirical evidence from the financial sector during 2008 market correction. study develops a two-step scenario is developed; 1the first step examines the use of the financial measures as leading measures to project stock price movement during 1998 and 2007 period. 2 the second step examines the co-movement of financial measures volatility with stock prices during the same period. study shows evidence that the co-movement between price/ book volatility and that of stock price during 2008 market correction is significant and consistent across the six main financial industries. keywords: volatility, risk, financial measures, correlation, market corrections, stock price, expectations. jel classification: c12; c21; g01; g12. 1. introduction the purpose of the study is to explore if financial measures co-movement are good indicators in predicting stock price movement during financial market crash periods. market crash, flash crash, or market correction are all a product of systematic risk as they result in a significant drop in value of the stock market. many studies challenged the argument that financial system key driver is the systemic risk. de bandt and hartmann (2000) argued that the functioning of financial system is adversely affected as a result financial crisis. schwarcz (2009) explained a financial market crash event as a leading event that severely shock an economic sector and create simultaneous reactions with severe consequences on financial markets and institutions. internet is playing a key role in shaping the stock market. it allows investors to access information about firms and stock market for free or at a very low cost. information is wide in scope; it ranges from trading activities to key highlights about firms’ overall performance. they are expressed in terms of financial measures, which are firms’ unique characteristics. the purpose of this paper is to examine if financial measures volatility better explains stock prices volatility during financial market crash period. the study is made of five parts, which are: 1) a literature review; 2) research methodology; 3) data analysis; 4) limitations; & 5) conclusions and recommendations. 2. literature review indicators are frequently used to help understand changes in financial markets as well as patterns in economic phenomena. private and public entities often gather and publish socio and economic indicators that help us understand labor markets, productivity levels, price fluctuations, and buyer behavior. while indicators can help predict future market movements and behaviors, their accuracy may not always be exact. when applied to the world of financial instruments, debt and equity market indicators can provide valuable information about how markets will behave. on the other hand, researchers argue that stock prices are driven by market reaction to news as a result stock prices move up with good news and move down with bad news nettles (2003). nettles (2003) debated that investors tend to invest stocks with projected high returns, which are not reflected when analyzing their firms’ financials. lei, noussair, and plott (2001) argued that daily trader play a key role in setting the direction of stock price movement; they added, rational arbitragers offset daily trader role by trading against them. in a study (wenchen & ku-jun, 2005), showed evidence that daily traders have significant effect on stock market. they concluded that daily traders drive stock prices to move away from the projected ones, which cause extreme deviations between the price and assets value. mailto:victor.bahhouth@uncp.edu mailto:rebecca.gonzalez@uncp.edu mailto:stewart.thomas@uncp.edu https://www.doi.org/10.55220/25766759.v7i1.119 https://orcid.org/0000-0002-9377-0893 https://orcid.org/0000-0003-2668-524x https://orcid.org/0000-0001-9716-3559 asian business research journal, 2022, 7: 14-20 15 © 2022 by the authors; licensee eastern centre of science and education, usa in a study, woida (2016) showed evidence that stock price swings are severely affect financial markets and occurring at a faster pace figure 1. as a result, investors’ wealth is adversely affected with the decline in their investment values. for example, the market crash of 1987 created losses that exceeded 20% for most investors. however, this crash did not result in a recession (baigent & massaro, 2005). the market downturn that occurred in 2000 caused the destruction of approximately $8 trillion worth of investor assets (degrace, 2011). the 2000 crash impacted the entire economy and did not discriminate amongst industries. the most impactful crash in recent history occurred in 2008. the impact of the financial crisis resulted in a loss of more than half of equity market values and had significant economic repercussions in global economies. market crashes, their causes and repercussions have captured the attention of practitioners and researchers for decades. studies have provided differing explanations for how these events start. sornette (2004) found that irrational and overly optimistic investor expectations were the primary causes of market crashes. investors relied on perception more than on fundamentals, and their buying and investment decisions reflected the disconnect. investors favored firms that assured exceptional returns without necessarily having the financial fundamentals to honor their guarantee. figure 1. duration of complete bull-bear cycles from 1871 through 2015 vs no. of occurrences. note: woida (2016). baigent and massaro (2005) studied the 1987 crash and concluded that the use of “portfolio insurance” as a hedging instrument by large institutional investors was a likely culprit. they also found an increased use of derivative securities in the first three-quarters of 1987 led to market cap inflations. ofek and richardson (2003) studied the market crash in 2000 and found that a large differential existed between market prices and their fundamental intrinsic values prior to the 2000 market crash. similarly, zuckerman and rao (2004) also studied the 2000 crash and found that investments in technology stocks during the previous decade were likely a contributing factor given that brokers and dealers were unable to understand the consequences associated with the volatility seen in internet stocks. one cannot study market corrections without considering volatility and its impact on subsequent market behaviors. fridson (2011) determines that cultural differences impact the volatility evidenced in financial securities. his study looks at volatility differences in debt and equity securities. the author concludes that volatility is to be expected even without the abnormal economic conditions witnessed in 2008. while typical explanations such as exposure to new information and overreactions to new information may continue to impact asset volatility, the author posits that variations in volatility across geographic regions can be attributed to cultural differences between market participants. in fact, fridson recommends incorporating anthropological studies and assessments to better understand investor behavior. campbell, koedijk, and kofman (2002) note that while correlations exist across international returns during bear markets, studies that demonstrate this may be exposed to estimation bias. to eliminate concerns associated with such a bias, the authors model correlation as a time dependent variable since volatility varies across time. their findings demonstrate a significant correlation in global returns during bear markets, even after controlling for the bias present in some previous studies. chue, wang, and xu (2015) focus on style investing when analyzing return correlations. style investing is a process whereby investments are made based on a style or asset category as opposed to investment selection on an individual asset basis. funds are rotated amongst the different styles or categories (i.e., large cap, small cap, emerging market, etc.) based on the style’s market performance. the authors constructed market portfolios, factoring in size, value, and momentum (as determined by cumulative six-month returns). they found that investment momentum is more adversely affected by severe market crashes than portfolio size and value. jacquier and marcus (2001) note that correlation relationships change often, and this change is further augmented during periods of high volatility. in fact, they find that much of the variation in correlation structures is a direct result of changes in market volatility. certainly, business cycles also play a role in influencing volatility. erb, harvey, and viskanta (1994) declare that asset allocation decisions are largely influenced by correlations of equity returns. when studying correlations, researchers should keep in mind that these are non-static and studying how cross-country correlations evolve provides better insight into why we see these changes in the first place. the authors find that correlations between countries are impacted by the business cycles the respective countries are asian business research journal, 2022, 7: 14-20 16 © 2022 by the authors; licensee eastern centre of science and education, usa experiencing. there appear to be higher degrees of correlation during declining economic periods than during expansions. page and panariello (2018) draw similar conclusions. they find that higher degrees of correlation during recessionary periods and crashes is evident in equity securities, equity markets, equity industries, debt markets and currencies. while researchers have reached differing conclusions as to why market crashes occur, they have largely agreed on the use of financial measures as tools for explaining stock market phenomena. fama and french (1992) found that the relationship between asset returns and size helped explain increasing risk-associated returns not otherwise explained in the asset-pricing model. the same could be said for price-to-book ratio and prior return measures. aras and yilmaz (2008) focused on the use of price-earnings ratios, market-to-book ratios, and dividend yields to help explain emerging market returns. ang and bekaert (2007) used price-earnings ratios to help understand dividend growth rates, and lamont (1998) found the same measure was helpful in predicting excess returns. lewellen (2004) reached similar conclusions regarding financial ratios in general. although the reasons behind why market crashes occur vary, their increasing frequency and dire consequences require researchers learn more about how equity volatility and price movements work during these periods. study sheds a light on the volatility of financial measures and their potential use as predictor of equity risk during market corrections; it eliminates industry risk by exploring an evidence from financial sector. an improved understanding of this relationship will help investors make better transaction decisions. the following research problems are addressed: 1) are market measures key indicators of stock price movement during market corrections? 2) does the volatility of market measures capture the price movement during market corrections? 3. research methodology the research methodology of the study includes five sections, which are 1variables and measurements, 2 sample and data collection, 3research instruments, 4data analysis, and 5conclusions. 3.1. variables and measurements study employs eighteen financial measures, which are divided into two groups; 1fundamental measures; and 2market measures. in addition, it sub-divide the financial sectors into six major industries. the following is a list of measures that are included in each group: 3.1.1. fundamental measures profit margin; return on equity; earnings before interest, taxes, depreciation and amortization; earnings/retention; return on assets; debt to earnings before interest and taxes; free cash flows+ dividends / debt; total assets turnover; financial leverage; free cash flow + interest / debt; debt service coverage; and z score. 3.1.2. market measures beta; cumulative change in price; return on investment; common stock ranking; price earnings; and price book value. 3.1.3. financial sector: the finance sector is made of the following industries: finance companies; banks; thrift companies; insurance; real estate investment trusts; and dealers, brokers and investment banks. 3.2. sample and data collection data is made of financial measures of all public firms for the 10-year period ended by 12/31/2008 taken from market place – s&p global. sample is made of 9,503 firms but few firms remained in the study due to missing information. 3.3. research instrument study employs two-stage research model process: 1st stage: aco-movement of the financial variables and 2008 stock price volatility is measured equation 1; b 5% level of significance is used to test validity; cthen, a t test is used to examine if correlation coefficient is significantly different from zero equation 2. 2nd stage: acompute annual financial measures volatility; bmeasure financial measures’ volatility co-movement with 2008 stock price volatility equation 1; and ctest validity of co-movement of stock price volatility and financial measures volatility equation 2. 𝑟 = 𝑛(∑𝑥𝑦)−(∑𝑥)(∑𝑦) √[𝑛∑𝑥2−(∑𝑥)2][𝑛∑𝑦2−(∑𝑦)2] (1) t stat = (r – ƿ) / [(1-r2) / (n – 2)]0.5 (2) 4. data analysis the process of analyzing data of financial-sector six industries is applied in two stages. data output of banks industry (significant results) is reflected in table 1. at a 5% level of significance, the coefficient of correlation of one financial measure volatility with that of the stock price showed a significant result; it is price / book value (r = 27%, p-value 0%). stage 2: measures the significance of the coefficient of correlation of market measures with stock price volatility using alpha of 5%; four measures showed significant results. these are afundamental measures: 1 debt/earnings before interest taxes depreciation & amortization (r = -11%, p-value 1%), 2earnings before asian business research journal, 2022, 7: 14-20 17 © 2022 by the authors; licensee eastern centre of science and education, usa interest taxes depreciation & amortization / assets (r = -23%, p-value 0%), and 3total assets turn over (r = 23%, p-value 5%). bmarket measures: 1price/book value (r = 33%, p-value = 0%). table 1. banks industry. financial measure financial measure volatility financial measure n correlation significance n correlation significance price /book value 231 27% 0% 573 33% 0% debt / ebitda 547 -11% 1% ebitda / assets 548 -23% 0% total asset turn over 578 -8% 5% data output of finance companies’ industry (significant results) is reflected in table 2. at a 5% level of significance, the coefficient of correlation of five financial measures volatility with that of the stock price showed a significant result: these are afundamental measures: 1return on assets (r = 62%, p-value 0%); 2earnings before interest, taxes & amortization / assets (r = -32%, p-value 3%); 3free cfl+ dividends / debt (r = 46%, p-value 1%), and 4free cfl + interest expense/debt (r = -59%, p-value = 0%). bmarket measures: price /book value (r = 62.54%, p-value = 0.0%). stage 2: measuring the coefficient of correlation of financial measures with stock price volatility (alpha 5%), six financial measures showed significant results; these are afundamental measures: 1 return on assets ( r = 36%, p-value 0%), 2 return on equity ( r = 32%, p-value 1%), 3 total assets turn over ( r = 27%, p-value 2%), market measures: 1price /book value (r = 31%, p-value = 1%), 2beta (r= -11%, p-value = 0%), 3return on investment (r = 34%, p-value 2%). table 2. finance companies industry. financial measure financial measure volatility financial measure n correlation significance n correlation significance price /book value 38 79% 0% 83 31% 1% beta 886 -11% 0% return on assets 48 62% 0% 82 36% 0% return on equity 79 32% 1% return on investment 80 34% 2% ebitda / assets 44 -32% 3% total asset turn over 82 27% 2% free cfl +dividends/debt 28 46% 1% free cfl + interest exp/debt 28 -59% 0% data output of finance insurance industry (significant results) is reflected in table 3. at a 5% level of significance, the coefficient of correlation of six financial measures volatility with that of the stock price showed a significant result: these are afundamental measures: return on equity (r = 22.65%, p-value 1.58%), 2earnings before interest taxes depreciation & amortization / assets (r = 28.04%, p-value 0.52%). bmarket measures: price /earnings (r = -26.02, p-value = 1.22%), 2price /book value (r = 62.54%, p-value = 0.0%), 3return on investment (r = 25.15%, p-value 0.67%), 4common stock ranking (r = 29.74%, p-value = 1.31%). stage 2: measuring the coefficient of correlation of financial measures and stock price volatility (alpha 5%); five financial measures showed significant results, and these are afundamental measures: 1return on assets (r = 22%, pvalue 1%), 2return on equity (r = 22%, p-value 0%). bmarket measures: price /earnings (r = -17%, p-value = 4%), 2price/book value (r = 64%, p-value = 0%), 3roi (r = 19%, p-value 2%). table 3. insurance industry. financial measure financial measure volatility financial measure n correlation significance n correlation significance price /earnings 92 -26.02% 1.22% 144 -17% 4% price /book value 94 62.54% 0.00% 155 64% 0% return on assets 160 22% 1% return on equity 113 22.65% 1.58% 160 22% 0% return on investment 115 25.15% 0.67% 160 19% 2% ebitda / assets 98 28.04% 0.52% common stk. ranking 69 29.74% 1.31% data output of real estate investment trusts industry (significant results) is reflected in table 4. at a 5% level of significance, the coefficient of correlation of six financial measures volatility with that of the stock price showed a significant result: these are afundamental measures: 1return on assets (r = 32.13%, p-value 0.03%); 2return on equity (r = 19.64%, p-value 3.46%); 3tangible financial leverage (r = 21.86%, p-value 0.45%). bmarket measures: 1price/book value (r = 26.30%, p-value = 0.40%); 2return on investment (r = -19.58%, p-value 2.93%); 3z score ( r = 100%, p-value 0%). stage 2: measuring the coefficient of correlation of financial measures and stock price volatility (alpha 5%), nine financial measures showed significant results, these are afundamental measures: 1return on assets (r = 31.20%, p-value 0%), 2roe (r = 23.40%, p-value 0.30%); 3earnings before interest taxes depreciation & amortization / assets (r = 35.40%, p-value 2.50%); 4total asset turn over (r = 14.70%, p-value 5.0%); 5tangible financial leverage (r = 25.10, p-value 0.10%); 6free cfl +dividend/debt (r = 20.40%, p-value 1.0%); 7z score (r = 81.70, p-value 4.70%). bmarket measures: 1price/book value (r = 17.30%, p-value = 2.30%); and 2return on investment (r = 20.10%, p-value 0.80%). asian business research journal, 2022, 7: 14-20 18 © 2022 by the authors; licensee eastern centre of science and education, usa table 4. real estate investment trusts industry. financial measure financial measure volatility financial measure n correlation significance n correlation significance price/book value 118 26.30% 0.40% 172 17.30% 2.30% return on assets 124 32.13% 0.03% 173 31.20% 0.00% return on equity 116 19.64% 3.46% 163 23.40% 0.30% return on investment 124 -19.58% 2.93% 173 20.10% 0.80% ebitda / assets 40 35.40% 2.50% total asset turn over 173 14.70% 5% tang financial leverage 167 21.86% 0.45% 167 25.10% 0.10% free cfl +dividend/debt 160 20.40% 1.00% z score 2 100.00% 0.00% 6 81.70% 4.70% data output of dealers, brokers, & investment banks industry (significant results) is reflected in table 5. at a 5% level of significance, the coefficient of correlation of one financial measure volatility with that of the stock price showed a significant result: it is a market measure: common stock ranking (r = 70.34%, p-value 0.16%). stage 2: measuring the coefficient of correlation of financial measures and 2008 stock price volatility (alpha 5%): none of the financial measures showed significant results. table 5. dealers, brokers, and investment banks industry. financial measure financial measure volatility financial measure n correlation significance n correlation significance common stock ranking 17 70.34% 0.16% data output of thrift industry (significant results) is reflected in table 6. at a 5% level of significance, the coefficient of correlation of six financial measure volatility with that of the stock price showed significant result; these are afundamental measures: 1return on assets (r = 27.67%, p-value 0.29%); 2earnings before interest taxes interest depreciation & amortization / assets (r = 32.87%, p-value 0.05%); 3free cfl +dividend/debt (r = -58.48%, p-value 3.58%). bmarket measures: 1price/book value (r = 78.46%, p-value = 0.00%); 2beta (r = -16.61%, p-value 3.29%); 3cumulative price change (r = 32.57%, p-value 0.01%). stage 2: measuring the coefficient of correlation of financial measures and 2008 stock price volatility (alpha 5%): nine financial measures showed significant results. these are: fundamental measures: 1earning / retention (r = 48.40%, p-value 4.90%); 2return on assets (r = 25.40%, p-value 0%); 3return on equity (r = 30.50%, p-value 0.0%); 4debt / earnings before interest taxes depreciation & amortization (r = 20.60%, p-value 0.60%); 5earnings before interest taxes depreciation & amortization / assets (r = 32.20%, p-value 0.00). bmarket measures: 1price/book value (r = 59.10%, p-value = 0.00%); 2beta (r = -28.10%, p-value 0.00%); 3return on investment (r = 27.50%, p-value 0.00%); 4cumulative price change (r = 32.60%, p-value 0.00%). table 6. thrift industry. financial measure financial measure volatility financial measure n correlation significance n correlation significance price/book value 95 78.46% 0.00% 199 59.10% 0.00% beta 165 -16.61% 3.29% 202 -28.10% 0.00% 17 48.40% 4.90% return on assets 114 27.67% 0.29% 203 25.40% 0.00% 202 30.50% 0.00% 162 27.50% 0.00% cumulative price change 138 32.57% 0.01% 138 32.60% 0.00% debt / ebitda 175 20.60% 0.60% ebitda / assets 108 32.87% 0.05% 178 32.20% 0.00% free cfl+dividends /debt 13 -58.48% 3.58% 5. limitations of the study limitations of the study are made of the following: 1study is based on a small sample because of missing data. 2the study is based on one market incident (adjustment). 3the study is based on one economic sector. 6. conclusions and recommendations study showed that the correlation coefficient of financial measures’ volatilities with that of stock price volatility is significant. the following is a summary of observations: in banking sector table 7, correlation coefficient of price/book value volatility with that of stock price volatility is significantly. table 7. banking sector industry. financial measure financial measure’s volatility n correlation significance price /book value 23 27% 0% asian business research journal, 2022, 7: 14-20 19 © 2022 by the authors; licensee eastern centre of science and education, usa in finance companies’ industry table 8, the correlation coefficient of price /book value; return on assets; and earnings before interest taxes depreciation & amortization/assets volatilities are significantly correlated with the stock price’s volatility. table 8. finance companies industry. financial measure financial measure’s volatility n correlation significance price /book value 38 79% 0% return on assets 48 62% 0% ebitda / assets 44 -32% 3% in the insurance industry table 9, correlation coefficient of price/earnings, price /book value, return on equity, and return on investment volatilities are significantly correlated with the stock price volatility. table 9. insurance industry. financial measure financial measure’s volatility n correlation significance price/earnings 92 -26.02% 1.22% price/book value 94 62.54% 0.00% return on equity 113 22.65% 1.58% return on investment 115 25.15% 0.67% in the real estate investment trust industry table 10 the correlation coefficient of price/book value, return on assets, return on equity, return on investment, tangible financial leverage, and z score volatilities are significantly correlated with stock price volatility. table 10. real estate investment trust industry. financial measure financial measure’s volatility n correlation significance p/bv 118 26.30% 0.40% roa 124 32.13% 0.03% roe 116 19.64% 3.46% return on investment 124 -19.58% 2.93% tang financial leverage 167 21.86% 0.45% z score 2 100.00% 0.00% in thrift industry table 11, the correlation coefficient of price/book value, beta, return on assets, cumulative price change, earnings before interest taxes depreciation & amortization / assets, and free cfl +dividends/debt volatilities are significantly correlated with the stock price volatility. table 11. thrift industry. financial measure financial measure’s volatility n correlation significance price/book value 95 78.46% 0.00% beta 165 -16.61% 3.29% return on assets 114 27.67% 0.29% cumulative price change 138 32.57% 0.01% ebitda / assets 108 32.87% 0.05% free cfl +dividends/debt 13 -58.48% 3.58% the measure with the highest consistency across the financial sector is the volatility of price/book ratio; it exhibited significant effect across five industries. it is worthy to note that beta, a measure of systematic risk, showed significant effect (strong negative) only in one sector, which is thrift industry. in addition, none of the financial measures showed any effect in brokers, dealers, and investment bank sectors. it is recommended to build on this study by exploring the effect of financial measures volatility on other economic sectors, using different time frames, and accounting for other variables such as firm size to address the reliability of the results. in addition, it is important to address the failure of beta to explain stock price movements during market crash period. finally, it is vital to address a key question; what are the real forces that are driving financial markets? references ang, a., & bekaert, g. 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(2004). shrewd, crude or simply deluded? comovement and the internet stock phenomenon. industrial and corporate change, 13(1), 171-212.available at: https://doi.org/10.1093/icc/13.1.171. citation: victor bahhouth --rebecca gonzalez --william stewart thomas (2022). are stock prices aligned with investors’ expectations? evidence from financial sector. asian business research journal, 7: 14-20. history: received: 25 january 2022 revised: 4 march 2022 accepted: 18 march 2022 published: 6 april 2022 licensed: this work is licensed under a creative commons attribution 4.0 license publisher: eastern centre of science and education funding: this study received no specific financial support. competing interests: the authors declare that they have no competing interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study followed all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://www.stockpickssystem.com/2000-stock-market-crash/ http://www.blackenterprise.com/investing-during-turbulent-times/ http://www.blackenterprise.com/investing-during-turbulent-times/ http://www.quora.com/about-every-how-many-years-will-there-be-a-stock-market-crash http://www.quora.com/about-every-how-many-years-will-there-be-a-stock-market-crash https://creativecommons.org/licenses/by/4.0/ https://creativecommons.org/licenses/by/4.0/ 1 © 2021 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 6, 1-6, 2021 issn: 2576-6759 doi: 10.20448/journal.518.2021.6.1.6 © 2021 by the authors; licensee eastern centre of science and education, usa challenges in the attainment of qualitative university education in nigeria: a case study on nnamdi azikiwe university, awka faith ogechukwu okoye1 anachuna, obinna nonso2 ( corresponding author) 1,2department of educational management and policy, faculty of education,nnamdi azikiwe university, awka, nigeria. abstract the major thrust of tertiary education in nigeria is for transformation and national development. the study was purposed to investigate the emerging problems bedevilling tertiary education such as excessive workload for lecturers, overcrowded student population and politicization of education. three research questions guided the study while three hypotheses were tested at 0.05 level of significance. out of 118 lecturers in the faculty of education, nnamdi azikiwe university, awka, 50 was drawn randomly as the sample for the study. three experts validated the instrument. a twenty item researchers‟ structured questionnaire was used for data collection and analysed using mean and z-test. the reliability of the instrument was determined using cronbach alpha method which yielded an index of 0.85, this was considered adequate. findings showed that excessive workload and overcrowded population demean lecturers and students output respectively and bring about falling standard in university education. based on the findings, it was recommended among others that employment of additional qualified personnel is imminent. also government should release more funds to tertiary institutions to cushion the effect of students over population. keywords: education, emerging problems, tertiary education. jel classification: i20, i29 and i23. 1. introduction in the whole universe, the only potent tool, process, lifelong phenomenon and long term enduring avenue for transformation and development of the society is education. though education had been perceived diversely by various societies, yet its significance to human growth and development remain unquestionable. education of human beings starts from birth to death. the holistic essence of education does not end with schooling. in effect, okoye (2008) in his book, “schooling without education” presents systematic desiderata of what typifies education in nigerian context. a plethora of detailed definition of education by various scholars span through history. however, oladosu (2010) summarized these definitions as to have three basic points in common: that, “education is a process, that it has a content and that it has a method”. in fact, education can be seemingly captured as the total process of human learning by knowledge is imparted, faculties trained and skills developed (farrant, 1981). furthermore, highlighting the necessity of education, osokoya (2003) poignantly portrayed education as „light‟ and „life‟. by implication, any society devoid of the rays of light beamed on its citizens by education is bound to go to extinct. in addition, education is a development which needs to have a sound beginning if it is to be healthy and protective. being a developmental process that one undergoes all through one‟s life, okoye (2014) notes that the outcome of education is dependent on how an individual‟s potentiality is tailored. thus a formidable beginning begets a sound structure geared towards national development. the reverse invariably leads to primitivism. more so, the educative processes encompass the non-formal, informal and formal structures. at this juncture, one can further describe education in the views of obanya (2009) who perceived the holistic and comprehensive nature of education from horizontal and vertical dimensions in figure 1. an overview of the definitions so far portrays the import of education and the need to evaluate and re-evaluate the emerging problems in university education. hence, okoye (2008) underscores that, failure to educate the citizens properly ipso facto implies opting for the institutionalization of ignorance and, thereby, a systematic pauperization of human capital. consequently, he posits that the distortion and misdirection of education implies, in reality, a negation of the process of developing the best of individuals for the collective well-being of society. considering the indispensability of education, university education amongst constituents of tertiary education in nigeria is the third tier of education that gives diffusion of knowledge to nigerian youths after secondary education. http://ecsenet.com/index.php/2576-6759/article/view/93 https://orcid.org/0000-0002-6282-510x https://orcid.org/0000-0001-8345-4021 http://ecsenet.com/index.php/2576-6759/article/view/93 https://orcid.org/0000-0002-6282-510x https://orcid.org/0000-0001-8345-4021 http://ecsenet.com/index.php/2576-6759/article/view/93 https://orcid.org/0000-0002-6282-510x https://orcid.org/0000-0001-8345-4021 asian business research journal, 2021, 6: 1-6 2 © 2021 by the authors; licensee eastern centre of science and education, usa figure-1. education in its holistic and comprehensive sense: horizontal and vertical dimensions. source: obanya (2009). the federal republic of nigeria (2004) national policy on education, sec 64 stipulates that, university education shall make optimum contribution to national development by: a) intensifying and diversifying its programmes for the development of high level manpower within the context of the needs of the nation. b) making professional course contents to reflect our national requirements. c) making all students, as part of a general programme of all round improvement in university education, to offer general study courses such as history of ideas, philosophy of knowledge and nationalism. in view of the foregoing virtually all parents desire and spend their last kobo to enrol their wards into the university. this is solely on the grounds that acquisition of certificate is considered a determinant factor for credible employment. hence, okoye (2008) asserts that, “certificates are regarded as meal tickets,” one‟s field of study notwithstanding. as a result of massive nigerian graduates unemployment, lucrativeness determines choice of job not field of learning in nigeria. hitherto comes up the big question, whether the desperate striving for university degrees/ certificates has evidenced in human capital development. disheartenly, okoye (2008) opined that universities in nigeria have in their student population, individuals who do not possess the intellectual requirements for university education. thus, certificate bearers who are not truly educated cannot cope with the task and challenges of sustainable development. in view of the foregoing, negating university carrying capacity by the influx of undergraduates into nigerian universities has many implications. the table below presents the scenario from 2010-2013 as follows: table-1. number of applicants seeking admission into nigeria universities and the carrying capacities year university applicants carrying capacity % of carrying capacity 2010/11 112 1,493,611 450,000 30.13 2011/12 117 1,503,933 500,000 33.25 2012/13 128 1,735,729 520,000 29.96 source: agbo (2015): in campus life, 25 june 2015. a cursory look at table 1 shows geometrical progression of applicants cum the yearly carrying capacity provided by national university commission (nuc). by implication, the imbalance would result to multifaceted lapses on the part of the lecturers and government to achieve the objectives of university education. this is seriously an emerging problem challenging university education in nigeria. the percentage ratio of the 2012/13 carrying capacity is far below the preceding year. this portends that the wider the yawning gap between applicants and carrying capacity provided, the more devastating effect on university education. concurring with the view point, communiqué issued by committee of vice chancellors of nigerian universities communique (2012) remarks that, „although the number of universities in nigeria has increased, this rapid growth has not necessarily led to a realization of the objectives for which the institutions were set”. consequently, the researchers are not oblivious of the teething problems in the university system in nigeria such as inadequate funding, infrastructures, unqualified manpower, outdated academic equipment, decreasing quality, limited access, increasing cost of education materials/school fees. however, in the context of this research, the focus would be on the emerging problems which border on excessive workload for university lecturers, overcrowded student population and politicization of university education in nigeria. the scope will be delimited to lecturers in nnamdi azikiwe university, awka. against this backdrop, the study examined the emerging problems in nigeria university education. the need to investigate the emerging problems and proffer suggestions on how to correct the imbalance spurred the conduct of the research. 1.1. statement of the problem university education in nigeria is fraught with numerous problems which cut across academic, socio-economic, political, ethnic and so on. however, the problem is how to relate the outcome of the university with the needs of asian business research journal, 2021, 6: 1-6 3 © 2021 by the authors; licensee eastern centre of science and education, usa the society, bearing in mind the emerging problems rearing up ugly head in university education. neglecting this aspect would dastardly affect the frantic efforts to achieve the philosophy of nigerian education as enshrined in the federal republic of nigeria (2004). education in nigerian university inadvertently received influx of undergraduates/entrants in the past decade. the overcrowded student population in nigerian university affect the learning outcomes drastically. some students roam about the university environment without attending lectures. others who attend may stand for the rest of lecture period, seat on bare floor writing their exams, write one course in shifts which is susceptible to leakage of questions, attend faculty wide lectures without public address system for effective communication, experience three to four different lectures going on simultaneously in one lecture hall. at times some students over stay the stipulated number of years apportioned for the programmes they were enrolled for. the imbalances of staff/student ratio have further exacerbated the situation, as well as proliferation of academic programmes. in recent years, the conspicuous nature of imbalance presented by the carrying capacity provided by the national university commission (nuc) for nigerian universities had been thwarted. the increasing university enrolment negate the carrying capacity of the institution, thus obliterate the frantic efforts of qualitative education. an overview the current number of universities cum students enrolment simply shows unimaginable overpopulation. there is no doubting fact that factors that inhibit optimal performance of university lecturers must be eliminated. lucidly, any university that fails to provide qualitative education for her undergraduates invariably supervises its own liquidation. this leads to the issue of excessive workload for university lecturers. despite the „publish‟ or „perish‟ syndrome paraded as determinant factor for lectures enhancement, some lecturers work round the clock in order to cover learning activities encompassing regular academic programme, self-sustaining programmes like continuous education programme (cep), sandwich, and in some cases diploma programme within the academic session. there is no break in the academic chain of the three programmes thereby subjecting lecturers to uncomfortable condition of service and avoidable stress/strain devoid of vacation or break all through the year. to ones dismay, politicization of university education is a serious bug eating up the fabrics of learning outcome in nigerian universities. the proliferation of universities by philanthropists and some religious denominations without recourse to the nuc benchmark is a major problem to university education. sequel to ineptitude leadership and poor standards, unbecoming activities such as sorting, e-cheating, exorbitant charges for consultancy, accreditation manoeuvre‟ flouting the quality assurance benchmark of the national universities commission (nuc), examination racketeering, man know man during admission and promotions are platforms yearning for university reforms. these unwholesome practices lower the standard of university education in nigeria and the collapse of some institutions mid-way. this in essence spurred the research. 1.2. research questions the following research questions guided the study: 1. what challenges do excessive workload of university lecturers have in attainment of qualitative education? 2. how does overcrowded student population hinder university learning outcomes? 3. what are the related problems associated with politicization of university education. 1.3. hypotheses the following hypotheses were tested at 0.05 level of significance: 1. there is no significant difference in the mean response ratings of male and female lecturers on the challenges of excessive workload on university lecturers in the attainment of qualitative education. 2. there is no significant difference in the mean response ratings of male and female lecturers on how overcrowded students’ population hinders university learning outcomes. 3. there is no significant difference in the mean response ratings of male and female lecturers on the related problems associated with politicization of university education. 2. method descriptive survey design was adopted for the research. the population of the study comprised all the 118 lecturers in the faculty of education, nnamdi azikiwe university, awka. the sample for the study was 50. the instrument for data collection was a 20 item questionnaire. the instrument was validated by three experts, one in measurement and evaluation and two in educational management and policy, nnamdi azikiwe university, awka. the reliability of the instrument was determined using cronbach alpha method and the value was 0.85, this was considered adequate. the data collected were analysed with mean and z-test. any item with a mean score of 2.50 and above is considered as being positive and accepted whereas any mean score less than 2.50 is negative and unacceptable. 3. results 3.1. research question 1 what challenges do excessive workload of university lecturers have in attainment of qualitative education? table 2 indicates that all the items (1 to 9) except item 5 had mean scores above the cutoff point of 2.50. furthermore, the table revealed that the grand mean is 3.14 and it is equally above the benchmark of 2.50, thus depicting that the respondents agreed that excessive workload of university lecturers pose lots of challenges in the attainment of qualitative university education. 3.2. research question 2 how does overcrowded student population hinder university learning outcomes? asian business research journal, 2021, 6: 1-6 4 © 2021 by the authors; licensee eastern centre of science and education, usa table-2. descriptives of the respondents‟ responses in relation to challenges excessive workload of university lectures have in attainment of qualitative education s/n lecturers workload in university are over-stretched within the academic session through: male lecturers (n=18) female lecturers (n=32) total decision ̅ remks ̅ remks ̅ 1 undergraduates regular academic programmes 2.66 agree 3.04 agree 2.85 agree 2 continued education programmes 3.09 agree 3.50 agree 3.26 agree 3 sandwich programmes 2.54 agree 3.03 agree 2.78 agree 4 computation of results for nos 1-3 above 3.08 agree 3.50 agree 3.29 agree 5 administrative functions for various program mes 2.05 disagree 1.08 disagree 1.56 disagree 6 teaching nos 1-3 above 3.50 agree 3.55 agree 3.52 agree 7 marking of scripts for nos 1-3 above 3.70 agree 3.88 agree 3.79 agree 8 administration of continuous assessment test for nos 1-3 above 3.70 agree 3.88 agree 3.79 agree 9 invigilation of exams for nos 1-3 3.00 agree 3.88 agree 3.44 agree total grand mean 3.03 agree 3.26 agree 3.14 agree table-3. descriptives of the respondents‟ responses in relation to how overcrowded student population hinder learning outcomes s/n students overcrowded population impinge on learning outcomes through: male lecturers (n=18) female lecturers (n=32) total decision ̅ remks ̅ remks ̅ 10 students standing all through the lecture period 2.51 agree 2.58 agree 2.54 agree 11 some students writing exams on bare floor 2.50 agree 2.60 agree 2.55 agree 12 students sitting five or six on a bench for exams 3.00 agree 3.60 agree 3.30 agree 13 epileptic power supply and poor ventilation of exam halls 3.00 agree 3.60 agree 3.30 agree 14 inadequate lecture/exam halls 2.57 agree 3.00 agree 2.78 agree 15. inadequate attendance to lectures (75% minimum attendance) 3.87 agree 3.40 agree 3.63 agree 16 examination malpractice 3.09 agree 3.50 agree 3.29 agree 17 erosion of standards in tertiary education 3.08 agree 3.58 agree 3.33 agree total/grand mean 2.95 agree 3.23 agree 3.09 agree table 3 above indicates that all the items (10 to 17) had mean scores above the cutoff point of 2.50. furthermore, the table revealed that the grand mean is 3.09 and it is equally above the benchmark of 2.50, thus depicting that overcrowded student population hinder university learning outcomes 3.3. research question 3 what are the related problems associated with politicization of university education? table-4. descriptive of the respondents‟ responses in relation to the related problems associated with politicization of university education s/n university education in nigeria is politicized through: male lecturers (n=18) female lecturers (n=32) total decision ̅ remks ̅ remks ̅ 18 opening and running of many educational institutions 2.70 agree 3.00 agree 2.85 agree 19 e-cheating 2.76 agree 2.70 agree 2.73 agree 20 exorbitant prices for consultancy services 3.00 agree 2.56 agree 2.78 agree total/grand mean 2.82 agree 2.75 2.78 agree table 4 indicates that all the items (18 to 20) had mean scores above the cutoff point of 2.50. furthermore, the table revealed that the grand mean is 2.78 and it is equally above the benchmark of 2.50, thus depicting that opening and running of many educational institutions, e-cheating and exorbitant prices for consultancy services are the related problems associated with politicization of university education in nigeria. 3.4. test of hypotheses ho1 there is no significant difference in the mean response ratings of male and female lecturers on the challenges of excessive workload on university lecturers in attainment of qualitative education. asian business research journal, 2021, 6: 1-6 5 © 2021 by the authors; licensee eastern centre of science and education, usa table-5. table showing the z-test output of the ratings of male and female lecturers on the challenges of excessive workload on university lecturers in attainment of qualitative education. variable gender n mean sd z-cal df decision excessive workload of university lecturers male 18 3.03 0.43745 1.83 48 not significant female 32 3.26 0.45249 note: z-cal< 1.96 at 0.05 alpha level. result from table 5 shows that the calculated t-value (1.83) is less than the critical t-value (1.96) at 0.05 level of significance; therefore the null hypothesis is upheld. thus, it is concluded that there is no significant difference in the mean response ratings of male and female lecturers on the challenges of excessive workload on university lecturers in attainment of qualitative education. ho2 there is no significant difference in the mean response ratings of male and female lecturers on how overcrowded students population hinder university learning outcomes. table-6. showing the z-test output of the ratings of male and female lecturers on how overcrowded students‟ population hinder university learning outcome variable gender n mean sd z-cal df decision overcrowded students‟ population male 18 2.95 0.42845 1.93 48 not significant female 32 3.25 0.44251 note: z-cal< 1.96 at 0.05 alpha level. result from table 6 shows that the calculated t-value (1.93) is less than the critical t-value (1.96) at 0.05 level of significance; therefore the null hypothesis is upheld. thus, it is concluded that there is no significant difference in the mean response ratings of male and female lecturers on how overcrowded students population hinder university learning outcomes. ho3 there is no significant difference in the mean response ratings of male and female lecturers on the related problems associated with politicization of university education. table-7. showing the z-test output of the ratings of male and female lecturers on the related problems associated with politicization of university education. variable gender n mean sd z-cal df decision politicization of university education male 18 2.82 0.41945 1.68 48 not significant female 32 2.75 0.40749 note: z-cal< 1.96 at 0.05 alpha level. result from table 7 shows that the calculated t-value (1.68) is less than the critical t-value (1.96) at 0.05 level of significance; therefore, the null hypothesis is upheld. thus, it is concluded that there is no significant difference in the mean response ratings of male and female lecturers on the related problems associated with politicization of university education. 4. discussion from the findings and analyses given in the above tables, it is evident that emerging problems in the area of excessive workload of university lecturers, students over crowded population and politicization of tertiary education pose serious challenges to the attainment of qualitative education and deface the main purpose of education in nigeria. regrettable, these factors impinge on the main purpose of university education. when the main purpose of education is not met as a result of some overriding factors, one may be disturbed by the quality of products turned over to the society by the university. categorically, no university efficiently deliver the desired educational objectives under overcrowded student population and unbearable workload on lecturers coupled with politicization of her education. based on this platform, the university education in nigeria needs overhauling he rebrand to products, meet the needs of her society and be able to face the global challenges of her time. table one highlights different areas of excessive workload for university lecturers such as teaching of regular student courses, continuous education programmes, sandwich, computation of results and marking of scripts for both regular and self-sustaining programmes of the university. from the analysis, it was found that the respondents strongly agreed that university lecturers are over-stretched while embarking on these academic exercises, all, within the same academic session without break or vacation. was it not the english adage which says that, “all works and no play makes jack a dull boy” this situation may result to inefficiency and ineffectiveness in discharging of duties by the lecturers. as such, and in the long run, half backed graduates are produced to the detriment of the society‟s growth and development. in recent years, the imbalance resulting from introducing selfsustaining programmes in the university without engaging commensurate manpower to teach the programmes has become a conspicuous problem. from one angle, it is a good avenue to cushion the effect of qualified candidates not given admission in the regular programmes of the university. but from the other angle, the debilitating effect could be envisioned by the views of coombs (1974) who opined that, “a school system may be making relatively efficient and productive internal use of its resources in doing what it is now doing, but what it is now doing may not be especially relevant to the present and future needs of its society and of the individual students”. table two shows that students over crowded population impinge on learning outcomes. the areas include: students standing throughout the lecture period which border of problems inadequate facilities, inadequate lecture/exam halls, students sitting more than the sitting capacity of a bench during examinations, writing on bare floor during examinations. over population is an impending doom to every facet of life, educational sector notwithstanding. when students are subjected to unconducive learning environment, dearth of needed facilities, the society is bound to reap repercussions. the researchers are not oblivious of the fact that nigeria is endowed with basic natural resources to substantially sustain influx of students in the university system. however, the crux of the matter hinges not on the total environment each academic session, instead the rate of the increase versus the asian business research journal, 2021, 6: 1-6 6 © 2021 by the authors; licensee eastern centre of science and education, usa rate of budgetary allocations provided by nigerian government for education each year. the imbalance of economic provisions and the educational explosion varies. years after the civil war in nigeria emerge great increase and popular demand by stakeholders for university education because investment in university education pays off and therefore deserves government handsome support. data obtained from table three indicate that respondents strongly agreed that university education in nigeria is politicized through opening and running of many educational institutions, e-cheating, exorbitant price for consultancy services. a glimpse of what transpires in some unapproved universities especially owned by individuals and religious organisations are uncalled for. in such establishments, standards are completely debased. the status quo for admission is “come as you are” etc. the outrageous amount of money charged by some lecturers for consultancy services tingles the ear. worst still is the menace of e-cheating within the university system which supposedly is looked upon as citadel of learning. hypothesis one states that there is no significant difference in the mean response ratings of male and female lecturers on challenges of excessive workload on university lecturers in attainment of qualitative education. the result in table four shows that the calculated t-value of 1.83 is less than the critical value of 1.96 at 48 degree of freedom and 0.05 level of significance. since the calculated t-value is less than the critical value, null hypothesis is therefore retained. this implies that both male and female lecturers in the university experience the challenges of excessive workload. hypothesis two on table 5 shows that both male and female lecturers opine that overcrowded student population hinder university learning outcome. the hypothesis was upheld implying that explosive population dastardly affect the desired effort of the government to provide qualitative education. at the long run, the university system may be opportunities for schooling without education. however, oyebade (2005) remarks that, nigeria is currently witnessing a period during which education and professional development at the university level are in increasing demand and the cost of providing this education has continued to rise astronomically, cost that the government cannot bear alone. hypothesis three indicates that there is no significant difference in the mean response ratings of male and female lecturers on related problems associated with politicization of university education. this implies that irrespective of gender that university education is politicized. in essence, whether lecturers are males or females, their responses indicate that involvement in politicization cut across gender issue or barrier. hence, the need for reformation of university policies and change of psyche among lecturers and students. 5. conclusion the study investigated emerging problems in nigerian education. findings from the research showed that university lecturers are over-stretched with excessive workload within an academic session, overcrowded student population impinge on learning outcomes and that university education is politicized in nigeria the study noted that engaging more manpower to handle self-sustaining programmes of the university will give lecturers lease of life to perform better. government should endeavour to enhance budgetary allocation to university education, at least to unesco minimum stipulation of 26%. the need for reformation of university policies and transformation of both lecturers and students psyche should be implemented. 6. recommendations based on the findings of the study, the following recommendations were made: adequate funding of university education must be taken seriously by the three tiers of nigerian government to cushion the effect of students‟ overpopulation. 1. employment of more manpower to handle self-sustaining programmes of the university. this will improve the efficiency and effectiveness of lecturers. 2. national university commission must brace up with adequate checks and balances for university education references agbo, a. (2015). varsities and carrying capacity. retrieved from www.thenationonline.net. committee of vice chancellors of nigerian universities communique. (2012). darka: trust africa. retrieved from www.trustafrica.org. coombs, p. (1974). major problems facing educational planning of next decade. unesco: international institute for educational planning. farrant, j. s. (1981). principles and practice of education. lagos: longman group limited. federal republic of nigeria. (2004). national policy on education. lagos: nerdc press. obanya, p. (2009). dreaming, living and doing education. ibadan: educational research and study group, university of ibadan. okoye, i. c. (2008). schooling without education: the nigerian experience: africana first publishers. okoye, f. o. (2014). education challenges for human development: the case of anambra state. in e., o. agbionu, u., j. obidiegwu and w. e. adebola (eds.), adult literacy and non-formal education. enugu: good success. oladosu, a., g. (2010). arabic and islamic education in nigeria. in j., o. abiri and a., a. jekayinfa (eds.), perspective on the history of education in nigeria. lagos: bamitex. osokoya, i. o. (2003). 6-3-3-4 education in nigeria: history, strategies, issues and problems. lagos: laurel educational publishers. oyebade, s. a. (2005). privatisation of university education in nigeria: implications for educational management. in g., o. akpa (ed.), deregulating the provision and management of education in nigeria. jos: naep. citation: faith ogechukwu okoye; anachuna, obinna nonso (2021). challenges in the attainment of qualitative university education in nigeria: a case study on nnamdi azikiwe university, awka. asian business research journal, 6: 1-6. history: received: 4 february 2021 revised: 8 march 2021 accepted: 1 april 2021 published: 22 april 2021 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education acknowledgement: both authors contributed equally to the conception and design of the study. funding: this study received no specific financial support. competing interests: the authors declare that they have no competing interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://www.thenationonline.net/ http://www.trustafrica.org/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 1 © 2024 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 9, 1-6, 2024 issn: 2576-6759 doi: 10.55220/25766759.148 © 2024 by the authors; licensee eastern centre of science and education, usa corporate governance and financial performance of oil and gas firms: the nigerian experience lucky onmonya1 kolawole ebire2 kehinde lawal3 1,3department of accounting, nile university of nigeria, abuja, nigeria. 1email: lucky.onmonya@nileuniversity.edu.ng 3email: twinsworld80@gmail.com 2department of banking and finance, nile university of nigeria, abuja, nigeria. 2email: kolawole.ebire@nileuniversity.edu.ng ( corresponding author) abstract as a result of corporate scandals, governments and corporations around the world enacted a slew of laws and recommendations known as best practices codes. as a result, this study examines the effect of corporate governance on the financial performance of listed nigerian oil and gas firms from 2012 to 2022. the sample size for the study was set at nine firms. corporate governance was measured by board size, composition, independence, and audit committee size, while financial performance was measured by return on asset (roa) and return on equity (roe). the hypotheses were tested using fixed effect panel regression, which was informed by the hausman test. findings revealed that board size has a significant positive effect on roa while board size have an insignificant effect on roe. in addition, board composition has an insignificant effect on both the roa and roe. furthermore, board independence has a significant negative effect on the roa and roe. similarly, the size of the audit committee has a significant negative effect on roa, while the effect on roe was negative but insignificant. the study concludes that corporate governance significantly affect financial performance of listed oil and gas firms in nigeria. the security and exchange commission should ensure that listed oil and gas firms adhere strictly to the required board size since a larger board does not influence financial performance. keywords: audit committee size, board composition, board size, return on asset, return on equity. jel classification: m4; m41; m42; o16. 1. introduction the failure of some multinational companies in developed and developing countries have awakened investors to take necessary steps to ensure their investment's safety. for this reason, there has been an increase in good corporate governance among companies in various nations, especially in quoted companies. corporate governance is referred to as set of rules, regulations, and processes that regulate the control and management of a corporation. these rules are intended to protect the firm's internal and external stakeholders. aligning the interests of shareholders, directors, management, and staff is are key aspects of corporate governance. the outcome of corporate scandals made countries and corporate agencies worldwide enact a set of rules and regulations to serve as standards for conduct. these guidelines are laid down rules that regulate and guide the corporate board's policies, procedures and structure in implementing their monitoring roles. in nigeria, the nigerian code of corporate governance (nccg) 2020 applies to all economic sectors. the firm's primary objective is shareholders' wealth maximisation, which is reflected in how well its strategies are translated into monetary terms. corporate governance has been linked with firms’ financial performance. this study financial performance is proxy as return on equity (roe) and return on asset (roa). it has been said that nigeria's oil and gas business is fraught with volatility. the common practise of commercial activities that are unethical but widely accepted. kehinde, segun, ibidunni and kehinde (2021) argued that corporate firms are expected to follow all applicable rules and regulations set forth by government agencies to ensure the efficient operation of a business. the firm's compliance level has gradually increased since introducing the governance codes. however, they have been records of corporate failures. a review of past studies showed that the focus was centered on other sectors such as manufacturing (okeke, 2021; owolabi, bamisaye, efuntade & efuntade, 2021) conglomerates (okolie & uwejeyan, 2022) banks (wobo & ibanichuka, 2021; oyedekun, 2019; olayinka, 2019) service industry (esoeghene & oghenevwogaga, 2021). this leaves a gap in nigeria's oil and gas sector. a review of previous studies findings showed no consensus corporate governance and financial performance nexus. for example, oyedekun (2019) study established an insignificant negative effect of corporate governance on financial performance. in contrast, iheyen (2021) and balagobei and mailto:lucky.onmonya@nileuniversity.edu.ng mailto:twinsworld80@gmail.com mailto:kolawole.ebire@nileuniversity.edu.ng https://www.doi.org/10.55220/25766759.148 https://orcid.org/0000-0003-1081-270x https://orcid.org/0000-0001-7000-2552 https://orcid.org/0009-0002-6953-5831 asian business research journal, 2024, 9: 1-6 2 © 2024 by the authors; licensee eastern centre of science and education, usa velnampy (2018) found that board size was negatively linked with firm performance. these mixed findings call for further research. this study also observed that previous studies mostly explored roa as a financial performance measure. for example, habtoor (2022); aigbovorhiuwa, adediran and achimugu (2022); sobhan (2021) oyedekun (2019) and borlea, achim and mare (2017). the current study adopts both roa and roe. in addition, shehu (2017) study focused on listed oil and gas companies in nigeria from 2010 to 2015. the current study extends the scope to 2021. given this context, this study seeks to fill the identified gaps that previous studies concentrated on in other sectors that do not capture the oil and gas sector. secondly, the inconsistencies in the findings of previous studies. thirdly, this study examines the effect of corporate governance if different financial performance proxies are employed (roa and roe). furthermore, this study broadens the scope of past research on corporate governance on financial performance nexus. this study investigates the impact of corporate governance on the fina ncial performance of listed nigerian oil and gas firms. the remainder of this study is structured as follows: section 2 highlights the literature reviews which discusses the past empirical studies and hypotheses formulation. section 3 presents the materials and methods used in the study followed by the results of the analysis which is presented in section 4. section 5 highlights the discussion of findings and section 6 concludes. 2. literature review the agency theory postulated by jensen and meckling (1976) which explains the principal-agent relationship that exists within a corporation is used to underpin this study. in this context, the principal refers to the shareholders of the firm, while the agent refers to the management or executives who represents the shareholders. the principal-agent relationship creates a possible conflict of interest because the agent may pursue their own objectives, which may not align with the principal's. corporate governance mechanisms are implemented to mitigate this agency problem and align shareholders' and management's interests. these mechanisms include the board of directors' size, composition, and committees’ compositions. the theory explains the effectiveness of corporate governance in addressing agency problems which directly affect the firm's financial performance. in this study, corporate governance is proxied as board size, composition, independence and audit committee size, while performance is measured as roa and roe. this study introduces firm size as a control variable. the effectiveness of member discussion and the board's capacity to make the best financial decisions are both impacted by the board size. there has been an ongoing debate about the ideal board size in corporate governance studies. several disagreements exist regarding the link between corporate board size and financial performance. according to sani (2021) larger boards will likely offer more diversity and expertise while enhancing their oversight capacity. moreover, boards of bigger size are more likely to consist of independent directors who possess substantial expertise. larger boards have the ability to provide additional responsibilities to board committees, which serves as a deterrent to opportunistic managerial conduct. on the other hand, smaller boards are predicted to be more successful at overseeing and regulating firm governance (biase & onorato, 2021). based on this argument, the hypothesis is stated as follows: h01: board size has no significant effect on the financial performance of listed nigeria’s oil and gas firms. the board's composition into executive and non-executive directors is another important feature. according to fuzi, halim, and julizaerma (2016) the board's non-executive directors won't be able to perform their responsibilities well unless they are separate from management and make sure to offer objective business judgement. non-executive directors are the individuals whose shareholders have chosen to represent them, and their presence will lessen agency issues. the 2018 code of corporate governance also points out that nonexecutive directors provide the board with their knowledge, expertise, and unbiased evaluation of strategic decisions and operational effectiveness. nevertheless, following the recommendations won't be enough if the non-executive directors don't carry out their duties (kanakriyah, 2021). prior empirical studies (habtoor, 2022; benvolio and ironkwe, 2022) have shown that financial performance is affected by board composition. on the contrary, studies such as ukemenam, ezike and chijioke (2019); kiptoo, kariuki and ocharo (2021) found that firms’ do not perform optimally when they are composed with higher ratio of non-executive directors. therefore, the hypothesis is stated as: h02: board composition has no significant effect on the financial performance of listed nigerian’s oil and gas firms. another distinguishing feature of the board of directors is how it is organised. according to hamada and jwailes (2021) the board's independence allows them to take an autonomous view of the company's financial reporting process. it ensures that executive directors do not dominate the board. according to ahmad-zaluki and wan-hussin (2010) a board with more members and a higher proportion of independent directors have higher forecast accuracy. furthermore, ali and meah (2021) believe that an independent board strengthens it and reduces the agency problem and the possibility of insider exploitation. due to its independence, the committee can monitor financial reporting transparency with greater objectivity. agency issues between executives and other shareholders are diminished by an impartial board towards the executive. an essential factor in ensuring board effectiveness is that the committee members be chosen to be free of the influence and pressures of top management (hamada & jwailes, 2021). okolie and uwejeyan (2022); biase and onorato (2021); owolabi et al. (2021) study showed that board independence is significant governance factor which exerts a positive effect on performance. gatehi and nasieku (2022), aigbovorhiuwa et al. (2022); atty, moustafasoliman and youssef (2018) establish that board independence has no significant effect on financial performance. from the preceding discourse, the hypothesis is stated thus: h03. board independence has no significant effect on the financial performance of listed nigeria’s oil and gas firms. the audit committee is a sub-committee of the firm’s board responsible for overseeing financial reporting and disclosures reliably and accurately. different schools of thought have differed on the optimal amount that should make up the audit committee. according to appah and tebepah (2020) as the audit committee grows in size, certain directors may not participate as well, which will impact the committee's cohesion when making decisions and weaken the committee's job of keeping an eye on things and making sure they are done right. in turn, this could have an effect on how well the business does financially. according to hamada and jwailes (2021) a suitably asian business research journal, 2024, 9: 1-6 3 © 2024 by the authors; licensee eastern centre of science and education, usa sized audit committee would give members the opportunity to put their knowledge and experience to use for the benefit of all parties involved. they also claimed that firms with smaller audit committees with more financial expertise to perform better. according to the dependency resource theory, larger audit committees are more efficient since they have more manpower to devote to solving the company's problems. the audit committee comprises directors who are expected to have a maximum of six members under cama requirements. empirical studies (wobo & ibanichuka, 2021; iheyen, 2021; olayinka, 2019) have shown that the size of audit committee does not significantly affect performance. in contrast, empirical evidence (esoeghene & oghenevwogaga, 2021; okeke, 2021; daniel eguasa & excellence, 2021) showed that audit committee size has significant positive effects on financial performance. hence, the hypothesis is stated as follows: h04. audit committee size has no significant effect on the return on asset of listed nigeria’s oil and gas firms. 3. materials and methods an ex-post facto research method is adopted in this study. this study looks at oil and gas firms that were traded on the nigerian exchange group (ngx) between 2012 and 2022. the study uses a sample of seven firms based on data availability. the panel data were sourced from the annual reports of the selected firms. table 1. description of variables. variable description return on asset (roa) ratio of net income to total asset return on equity (roe) ratio of net income to total equity board size (bsize) total number of board directors board composition (bcom) ratio of non-executive directors to total number of directors board independence (bind) ratio of independent directors to the total number of directors audit committee characteristics (acs) total number of audit committee size firm size (fsize) measured as the log of total asset 3.1. empirical model panel regression models capture corporate governance's effect on the performance of listed nigeria oil and gas firms. the models were subjected to the hausman (1978) test to examine whether the regression coefficients in the fixed effect (fe) and random effects (re) models differ statistically. if the null hypothesis of the hausman test is significant, then the fe is preferable; otherwise, the re is used. the significance of the p-value of the hausman test statistic supports the choice of the fixed effects estimator over the random effect estimator. the hausman test statistics suggests the use of fixed effect (17.12 and 10.75), which were significant at 1% and 5% significant levels, respectively. the models are specified as follows: 𝑅𝑂𝐴𝑖𝑡 = 𝛽0 + 𝛽1𝐵𝑆𝐼𝑍𝐸𝑖𝑡 + 𝛽2𝐵𝐶𝑂𝑀𝑖𝑡 + 𝛽3𝐵𝐼𝑁𝐷𝑖𝑡 + 𝛽4𝐴𝑈𝐷𝐶𝑂𝑀𝑖𝑡 + 𝛽5𝐹𝑆𝐼𝑍𝐸 + 𝜇𝑖𝑡 (1) 𝑅𝑂𝐸𝑖𝑡 = 𝛽0 + 𝛽1 𝐵𝑆𝐼𝑍𝐸𝑖𝑡 + 𝛽2𝐵𝐶𝑂𝑀𝑖𝑡 + 𝛽3𝐵𝐼𝑁𝐷𝑖𝑡 + 𝛽4𝐴𝑈𝐷𝐶𝑂𝑀𝑖𝑡 + 𝛽5𝐹𝑆𝐼𝑍𝐸 + 𝜇𝑖𝑡 (2) where t and i are time and the number of firms, respectively, while β0 is the constant term, β1 to β5 are the parameters estimated, and ε is the error term. 4. results 4.1. correlation matrix and summary statistics table 2 show that the mean of roa is 1%, which implies that on average, the oil and gas firms' management in nigeria are inefficient in generating profits from their total assets. the dispersion, measured as the standard deviation around the mean, stood at 20.5%. the minimum and maximum values of roa are -5.8% and 1.51%, respectively. this finding implies that some oil and gas firms utilise larger assets to generate profits while others use fewer assets to generate their profits. the average value of roe is 23.4% with a deviation of 1.05%. the minimum and maximum values of roe for oil and gas firms are -3.62% and 4.84%, respectively. these findings imply that there is a huge disparity between nigeria oil and gas firms. it shows that some firms do not effectively manage shareholders' wealth while others make as much as 4.84% of the stakeholders' investment. the average board size for oil and gas firms in nigeria is approximately 10, while the minimum and maximum are 4 and 16, respectively. the deviation from the average is approximately 3 board members. the findings imply that the board size of oil and gas firms is not strictly adhering to the corporate governance codes, which require quoted firms to have a minimum of 5 board members. the average of board composition of oil and gas firms in nigeria is 42% with a deviation of 23%. however, the minimum and maximum number of non-executive members to the total board size is 0% and 100%. this implies that the board's composition in nigeria's oil and gas sector does not adhere to the corporate governance code, which stipulates that the board should be composed of a majority of the board as non-executive directors. the table also shows that the average of board independence is 15%. the deviation from the mean is 19%, while the minimum and maximum number of independent directors are 0% and 56%. impliedly, the findings of this result show that the board's composition contradicts the corporate governance code, which recommends at least 1 independent director on the board. the board's average number of audit committees is 6 members, with a deviation of 1. also, the minim um and maximum number of audit committee size is 3 and 12, respectively. the finding implies a wide disparity among oil and gas firms in constituting their audit committees. a descriptive analysis of firm size shows that the average size of oil and gas firms is n 6.69 billion with a deviation of n 7.05 billion, while the minimum and maximum size of oil and gas firms are n 3278.2 million and n 2.90 billion, respectively. this implies that oil and gas firms are large. asian business research journal, 2024, 9: 1-6 4 © 2024 by the authors; licensee eastern centre of science and education, usa table 2. correlation analysis and descriptive statistics. roa roe bsize bcom bind acs fsize roa 1.0000 roe 0.5646 1.0000 bsize -0.0397 -0.0066 1 bcom -0.0358 -0.0922 1 bind 0.0839 0.1085 1 acs -0.0224 -0.0754 1 fsize -0.2351 -0.2572 1 mean 0.0104651 0.2339286 9.532468 0.4238182 0.1519481 5.942029 6.69 std. dev. 0.2049385 1.05243 2.746215 0.2278017 0.1859827 1.327138 7.05 min -0.58 -3.62 4 0 0 3 3278.2 max 1.51 4.84 16 1 0.56 12 2.90 the result shows that the link between roa and bsize is negative. this implies that an increase in bsize results to a decrease in roa. similarly, the relationship between bsize and roe is negative. the link between roa, bcom, acs, and total asset is negative. this implies an increase in bcom, acs and fsize decrease roa. the result is similar when carried out using roe. in contrast, the association between bind and roa is positively correlated. in other words, increasing the sum of independent directors on the board increases the roa and roe of nigeria oil and gas firms. 4.2. empirical results table 3. regression results. variables roa roe bsize 0.0217176 (2.39)** 0.24764 (1.50) bcom -0.015213 (-1.16) -2.4738 (-1.4) bind -0.028859 (-2.11)** -0.53564 (-2.08)** acs -0.034660 (-2.88)*** -0.41904 (-2.05)** fsize -8.71 (-0.98) -1.32 (-1.01) f-test (model) 2.78** 1.81 r2 0.4738 0.1963 hausman test 17.12*** 10.75** hettest 13.74*** 6.01*** mean vif 1.70 note: the standard errors are in parenthesis, while **, *** represent significant levels at 5% and 1%, respectively. 5. discussions the result from the first model using roa shows that the r2 is 47.38% which explains that 47.38% of the variations in the financial performance of listed oil and gas firms can be explained by corporate governance (proxy as bsize, bcom, bind, acs and fsize). however, the second model, which proxy financial performa nce as roe, shows that the r2 is 19.6%, implying that the variations in the financial performance of listed oil and gas firms can be explained by corporate governance by only 19.6%. the f statistics test was used to show the fitness of the models. the findings indicate that the f-statistic of the roa model is significant at 5%. the findings on bsize and roa, was positive and significant. it can be inferred that an increase in the size of the board size increases roa. the finding supports the agency theory, which infers the association between owners and management. hence, increasing shareholder size positively influences agents (managers), which increases financial performance. this finding aligns with the study of sani (2021) and owolabi et al. (2021) who argued that larger boards would likely offer more diversity and expertise while enhancing their oversight capacity, resulting in higher performance. on the contrary, kiptoo et al. (2021) and olabisi et al. (2018) found that a large board has a significant negative effect on roa. this suggested that companies with larger boards did not outperform those with smaller boards. in contrast, when financial performance is proxy by roe, the result found a positive but insignificant effect. this finding aligns with the study of gatehi and nasieku (2022) who found that bsize had statistically insignificant effects on financial performance. the effect of bcom on the roa listed oil and gas firms was found to be negative and insignificant. this finding corroborates the finding of sobhan (2021) and prabowo (2018) who found that the bcom does not significantly impact firm performance. the objective, which assessed the effect of bcom on the roe listed oil and gas firms, found a significant negative effect. however, noja et al. (2021) showed that bcom improves performance. fuzi et al. (2016) argued that the board's non-executive directors cannot perform effectively except they are separate from management and make sure to offer objective business judgement. the study ascertained the effect of the bind on the roa of listed oil and firms’ and found a significant negative effect. this finding implies that increasing the independent directors has a negative effect on roa. this finding is similar when using roe. these findings contradict the claim by ali and meah (2021) who argued that an independent board strengthens it and reduces the agency problem and the possibility of insider exploitation. the board’s independence makes it more dispassionate in their pursuit of auditing financial disclosures. if the board is not partial to the executive, the agency conflict between them and the shareholders is mitigated. also, hamada and jwailes (2021) argued that the board's independence allows them to take an independent view of the company's asian business research journal, 2024, 9: 1-6 5 © 2024 by the authors; licensee eastern centre of science and education, usa financial reporting process and ensures that executive directors do not dominate the board. according to ahmadzaluki and wan-hussin (2010) board with more members and a higher proportion of independent directors have higher forecast accuracy. the findings regarding audit committee size and roa of listed oil and firms’ found a significant negative effect. this is similar to the findings using roe. these findings align with shehu (2017) and fariha, hossain and ghosh (2021) studies that found a significant negative effect. according to appah and tebepah (2020), some directors may not take part in the audit committee meetings because of its size, which makes it harder for the committee to make decisions together and hurts its ability to perform its duties and consequently affecting financial performance. hamada and jwailes (2021) argued that a suitable-sized audit committee would enable participants to contribute their skills for the benefit of all parties. they also claimed that firms with smaller audit committees that have more financial expertise and experience perform better. in contrast, onmonya and ebire (2023) found that acs do not affect financial performance. additionally, it has been argued that the size of the firm has a significant effect on the financial performance of firms’. from the analysis, it is found that firms’ size in both models were insignificant. in addition, the residual of the panel regression was subjected to a heteroscedasticity test. using the breus chpagan/cook-weisberg test, the null hypothesis which states that there is no heteroscedasticity, was rejected at 1% significant level (see table 3). the regression analysis was subjected to a multicollinearity test to detect the presence of collinearity among the variables. the mean variance inflation factor (vif) is 1.70, which is a lot less than the minimum of 10. the vif for each variable on its own was also quite low. this means that the variables used to explain things in the model were not linked to each other. this means that there was no multicollinearity between the variables. 6. conclusion this study examines corporate governance effect on the financial performance of listed nigeria oil and gas firms from 2012 to 2022. the panel data from the sampled firms were analysed using fixed effect estimation. the study concludes that the effect of corporate governance on different financial performance measures (roa and roe) yields different results. specifically, board size significantly increases roa but does not affect the roe of listed nigeria oil and gas firms. board composition does not significantly affect the roa and roe of listed nigeria oil and gas firms. increasing independent directors on the board decreases both the roa and roe of listed nigeria oil and gas firms at different significant level. a larger audit committee size decreases the roa and roe. the study recommends that the security and exchange commission should ensure that listed oil and gas firms adhere strictly to the required board size since larger board does not influence financial performance. the security and exchange commission should ensure that listed oil and gas firms comply with its corporate governance codes in the board's composition to influence financial performance. the management of listed oil and gas firms should maintain the required atleast one independent director on the board since increasing the number of independent directors does not increase financial performance. the management of listed oil and gas firms should limit the audit committee size since larger audit committees do not increase financial performance. this study focused on corporate governance on financial performance of listed nigeria oil and gas firms. the study provided insight into the novelty of the significance effect of corporate governance on different performance indexes. the findings of this study is limited corporate governance (board size, composition, independence, audit committee size) on financial performance (roa and roe) in oil and gas firms. future studies can explore other sectors, and other corporate governance measures such as board meetings, and gender diversity. authors’ contributions: lucky onmonya contributed to framing the topic, drafting the introductory part of the article and reviewing the manuscript. kolawole ebire designed the methodology and carried out the analysis of the data as well as writing the manuscript. kehinde lawal contributed to framing the topic and drafting the conclusion of the manuscript. references ahmad-zaluki, n.a. & wan-hussin, w.n. 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licensee eastern centre of science and education, usa asian business research journal vol. 9, 45-55, 2024 issn: 2576-6759 doi: 10.55220/25766759.184 © 2024 by the authors; licensee eastern centre of science and education, usa a study on the new media marketing strategies of new tea beverage companies: a case study of kf cha zi qi zhou1 an-shin shia2  1,2business school, lingnan normal university, zhanjiang, guangdong, china. email: 2759209526@qq.com email: 18875991570@qq.com ( corresponding author) abstract the proliferation of new media platforms, coupled with the burgeoning growth of the new tea beverage market, has engendered a fiercely competitive business environment. this study investigates the marketing strategies of kf cha, a notable player in the industry, by employing a mixed-methods approach that includes a questionnaire survey and strategic analysis tools such as pest and swot. the questionnaire, comprising 25 items across four dimensions— demographics, purchasing behavior, marketing perceptions, and feedback—yielded a 90.5% response rate with 181 valid returns. the analysis reveals deficiencies in kf cha’s marketing approach related to the principles of engagement, consumer benefit, interactivity, and personalization. the research culminates in the formulation of tailored enhancement strategies aimed at addressing these identified gaps. keywords: brand personalization, consumer engagement, marketing strategy, new media, new tea beverage industry. jel classification: e2; e3; m1; m3. 1. introduction the swift advancement of internet technology in recent years has precipitated the rise of new media, which is noted for its rapid dissemination, interactive nature, and precision in targeting. these characteristics present both novel opportunities and significant challenges for corporate marketing strategies. the widespread penetration of new media has spurred companies to harness its platforms for market expansion and brand promotion. coinciding with this technological surge, the growth of the national economy and the elevation of citizens’ living standards have triggered substantial changes in consumer behavior. there is an increasing emphasis on individuality and wellness among consumers, which has fuelled a rising demand for innovative tea beverages. the new tea beverage sector experienced a sudden boom in 2010, and by 2022, the market had exceeded the 2900 billion rmb threshold in china. as of now, the industry’s estimated market value stands at approximately 3333.8 billion rmb (wang, 2023), with a consistent upward growth trend. this vigorous expansion has substantially influenced the economic chain and business landscape of the new tea beverage industry. in the realm of brick-and-mortar establishments, the market in tier-one cities has approached saturation, prompting leading brands to shift their gaze towards tier-two, three, and even four cities in pursuit of fresh avenues for growth. the market’s foray into these “lower-tier” cities has seen a proliferation of street brands, intensifying competitive dynamics (yuan et al., 2024). in light of these developments, securing a competitive edge in the bustling market requires new tea beverage companies to continually refine and innovate their marketing approaches. this study endeavors to conduct a thorough analysis of the challenges faced by kf cha in its business operations and to devise targeted optimization strategies. the findings are intended to offer insights for the strategic development of not only kf cha but also other brands within the new tea beverage sector. 2. literature review the new tea beverage industry: research on the new tea beverage industry primarily focuses on the study of well-known chain beverage stores. kim and park (2021) investigated the marketing strategies of global coffee companies such as starbucks and blue bottle in the context of modern consumer characteristics and global franchise space design, identifying aesthetics, interactivity, and value as the three marketing characteristics of space design that meet the needs of modern consumers and enhance the unique value of the brand. wang (2021) studied the different marketing strategies of starbucks and luckin coffee in the coffee industry, analyzing the varying impacts of different pandemic periods on starbucks and the countermeasures adopted by the company. in recent years, tea beverage consumption has gradually gained popularity in china, becoming a fashionable demand and culinary culture. wang yingchang (2020) argues that new tea beverage companies should develop high-quality products, reasonable prices, and marketing strategies with their own corporate characteristics to win over the majority of consumers. by continuously innovating products and keeping up with consumer trends to meet customer needs, marketing success can be achieved. tan yanzhi and peng zhaoxia (2023) analyzed the marketing mailto:2759209526@qq.com mailto:18875991570@qq.com https://www.doi.org/10.55220/25766759.184 asian business research journal, 2024, 9: 45-55 46 © 2024 by the authors; licensee eastern centre of science and education, usa strategies of "mixue bingcheng," identifying optimized marketing strategies such as precise market positioning, integration of the long tea beverage industry chain, and establishment of a modern management system, proposing a suitable development direction for the marketing process of tea beverage companies. new media marketing: research on new media marketing began at the turn of the century. yantian and ahmad et al. (2022) confirmed the significant role of new media social software such as instagram in marketing. additionally, they validated the applicability of the new generalized diverse weibull distribution model in new media marketing. yi nuo (2022) pointed out that although new media marketing applications are increasingly widespread, traditional media marketing cannot be completely replaced by new media marketing. utilizing new media technology can address the shortcomings of traditional media marketing, such as poor flexibility, inability to obtain user data, and understanding customer preferences, thereby achieving integrated marketing leveraging both traditional and new media. guo chaoshe (2021) analyzed the characteristics of new media marketing in the internet era, such as rich marketing channels, targeted marketing, and alignment with modern behavior habits, proposing that the practice of new media marketing requires expanding marketing channels, enriching content, integrating resources, and enhancing online-offline interaction. zhong nana (2022) believes that new media marketing possesses advantages that traditional marketing does not, such as more comprehensive presentation forms, flexible information delivery, diverse content, and interactive communication. it can break through the constraints of time and space, delivering multi-dimensional marketing information to consumers at any time and place through multiple paths. new media marketing is a marketing model based on digital information technology and internet technology, where companies use new media to disseminate information targeting user needs, planning and executing content or online activities with high communication value to guide users to identify with a certain concept or idea. iresearch (2020) considers new media marketing to be supported and operated jointly by industry chain marketing service providers, advertisers, key opinion leaders, multi-channel networks, and new media platforms, with key opinion leaders (kols) as the main body conducting content marketing activities on social media, short video platforms, and other new media platforms. chen xiao (2021) believes that new media marketing is based on the appeal of products and services, using new media platforms for dissemination and promotion, guiding consumers to understand and identify through content in the form of text, images, and videos, thereby achieving marketing objectives. 4i internet marketing: the 4i internet marketing within integrated marketing communication encompasses four marketing principles: interesting, interests, interaction, and individuality (schultz & schultz, 2013). it emphasizes the need to focus on customer differentiation and personalization during marketing activities, maintain good interaction with customers, plan activities that attract customer interest, and benefit customers. the 4i model highlights the efficient use of marketing methods in the internet context, shifting the communication model from "subject-centric" to "audience-centric." 4i is generated in the context of the internet, with its core being the user, focusing on studying interaction with users and adapting to the fragmented development of online activities (li, 2021). 3. current marketing strategies of the case study 3.1. company overview kung fu cha (kf cha；kf tea), a leading brand in china's tea beverage industry, was established in 2008 by hengsheng herui industrial group co., ltd. with its deep cultural heritage rooted in chengdu, sichuan, the brand quickly distinguished itself in the market and by 2024 had achieved an impressive milestone of surpassing 8,000 stores nationwide, covering more than 330 cities. in terms of brand image, inspired by the iconic symbol of chengdu, the cha, kf cha created its own ip, "ding ding cat," as the brand logo, endowing the brand with a friendly and approachable image. the company consistently selects high-quality ingredients to ensure the freshness and nutrition of its products, and it uses unique formulas to create delicious and healthy beverages that meet consumers' pursuit of quality and health. kf cha's brand mission is to be "everyone's favorite everyday drink," with the core philosophy of "quality tea as the base, creating freshness." to achieve this goal, the company adheres to an independent product development model, focusing on product conceptualization and continuously exploring the perfect combination of chinese tea and natural ingredients. kf cha is dedicated to continuously meeting consumers' demands for quality, health, and enhanced experiences, and to creating a more diverse range of beverage flavors and cultural experiences, driving the brand's continuous progress and development (kf cha, 2024). (see table 1). table 1. development history of kf cha. year development milestones 2008 brand establishment and commencement of operations 2009 trademark registration and opening of the second direct store 2010 initiation of chain marketing and opening of multiple stores in chengdu year development milestones 2008 brand establishment and commencement of operations 2009 trademark registration and opening of the second direct store 2010 initiation of chain marketing and opening of multiple stores in chengdu 2012 improvement of the logistics system, surpassing 50 franchise stores 2013 establishment of franchise supervision, cold chain transportation systems, and beginning of brand upgrade 2016 strategic upgrade of brand positioning, 6 direct stores, and over 120 franchise stores 2017 improvement of the cold chain transportation system, 12 direct stores nationwide, over 160 franchise stores 2018 brand vi upgrade, opening of over 500 stores nationwide, and entry into overseas markets 2020 announcement of a round of financing worth hundreds of millions, further accelerating expansion 2021 full corporatization and winning the "2021 chengdu-chongqing catering benchmark brand award" 2023 hosted the brand upgrade press conference, announcing the surpassing of 7,000 stores covering over 330 cities 2024 surpassing 8,000 stores asian business research journal, 2024, 9: 45-55 47 © 2024 by the authors; licensee eastern centre of science and education, usa 3.2. analysis of the current 4i new media marketing status kf cha employs the 4i principles of new media marketing to build brand influence. 3.2.1. interesting cha ip image: using the "ding ding cat" as the core, creating an interesting image to bridge the gap with consumers. content creation: launching series such as "ding ding cat's daily life" and "ding ding cat tastes china" to enhance brand playfulness. 3.2.2. interests online discount activities: offering group purchases on platforms like meituan and douyin, and providing student discounts through the wechat public account. public welfare activities: participating in the meituan rural children's playground public welfare program, donating funds to support disaster-stricken areas, and establishing a positive social image. 3.2.3. interaction online event interaction: launching new product launches and official challenges on platforms like xiaohongshu and douyin to enhance user engagement. ip co-creation marketing: using the ding ding cat image for interaction, collecting consumer feedback, and building long-term stable customer relationships. 3.2.4 individuality cross-industry collaboration: collaborating with well-known ips such as the tv series "chang xiang si" and the secondary game "undecided incident book," launching co-branded products and peripherals to meet consumers' individual needs and enhance the brand's unique image. 4. results 4.1. survey design the questionnaire for this study was primarily designed based on the opinions of kf cha's marketing director and was categorized into four types: basic information, purchasing information, marketing information, and feedback evaluation, which were further subdivided into 25 options. the survey was created using the questionnaire star mini-program and was distributed online through links and qr codes. a total of 200 questionnaires were distributed, and 181 valid questionnaires were collected, resulting in a response rate of 90.5%. 4.2. reliability and validity analysis 4.2.1. reliability analysis the reliability analysis of this study used cronbach's alpha coefficient to determine whether the empirical data for each latent variable met the requirements of internal consistency. the questionnaire contained 25 questions, of which 11 were scale questions. as shown in table 2, the cronbach alpha coefficient is 0.930, which is greater than the standard of 0.7, indicating that the quality of the research data's reliability is good. table 2. cronbach's reliability analysis. items sample size cronbach α coefficient 11 181 0.930 4.2.2. validity analysis the study used the kmo and bartlett tests for validity verification. as shown in table 3, the kmo test value for the survey data is 0.953, which is greater than 0.7, indicating that the questionnaire is suitable for factor analysis. the bartlett sphericity test results show an approximate chi-square value of 1125.45, with a significance probability of 0.0, thus rejecting the null hypothesis of the bartlett sphericity test. it is considered that the scale is suitable for factor analysis, and the validity structure is good. table 3. kmo test and bartlett's test. kmo value approximate chi-square df p 0.953 1125.450 55 0.000 4.3. descriptive statistics as shown in table 4, the gender ratio is approximately 4:6, with male consumers gradually increasing their presence. the age distribution of the respondents indicates that 13.81% are under 20 years old, 51.93% are between 21-30 years old, and 19.89% are between 31-40 years old, suggesting that the main consumer group for new tea beverages is increasingly shifting towards the post-'95 and '00 generations. in terms of occupation, students account for 33.7%, and employed individuals account for 51.38%, which aligns with the majority of the post-'95 and '00 generations still being in school or having just entered the workforce. monthly disposable income below 2000 rmb accounts for 33.70%, and 2000-5000 rmb accounts for 38.12%, which fits the profile of the main consumer group being the post-'95 and '00 generations. table 4. basic information of respondents. name option frequency % gender male 75 41.44 female 106 58.56 age under 20 25 13.81 asian business research journal, 2024, 9: 45-55 48 © 2024 by the authors; licensee eastern centre of science and education, usa 21-30 94 51.93 31-40 36 19.89 41 26 14.36 occupation student 61 33.70 employed 93 51.38 other 27 14.92 monthly disposable income/rmb under 2000 61 33.70 2000-5000 69 38.12 5000-8000 34 18.78 above 8000 17 9.39 total 724 100.00 as shown in figure 1, purchasing 1-2 times per month accounts for 30.39%, 3-5 times accounts for 40.33%, and 6 times or more accounts for 29.28%. this indicates that new tea beverages have gradually become a regular consumption item for people, reflecting the habit of leisure consumption. figure 1. frequency of product purchases/month. as shown in figure 2, the highest consumption is in the middle price range of 10-20 rmb, with the willingness to pay more than 20 rmb being the lowest, accounting for only 10.5%. the price range distribution aligns with kf cha's positioning as a mid-range brand in the new tea beverage market. figure 2. product price range. as shown in figure 3, the proportion of offline stores (os) accounts for 56.91%, and the proportion of online ordering platforms (orp) is 60.77%, indicating a relatively balanced distribution of purchase channels. among them, the brand's mini-program (bm-p) accounts for the largest number of users in the channel, at 82.32%. among the selected mini-programs, the brand assistant accounts for the highest percentage of channel users at 82.32%. asian business research journal, 2024, 9: 45-55 49 © 2024 by the authors; licensee eastern centre of science and education, usa figure 3. channels commonly used to purchase products. as shown in figure 4 below, consumers have a high level of satisfaction with the classification and quantity of kf cha products, with 38.12% being satisfied and 31.49% being neutral, which aligns with the product strategy of not having best-sellers and frequently launching new seasonal products. figure 4. satisfaction with product classification and quantity. as indicated in figure 5 below, consumers have a high level of satisfaction with the differences between kf cha and other tea brands, with 11.6% being very satisfied (vs), 35.36% being satisfied (s), 34.25% being neutral (n), 8.84% being dissatisfied (ds), and 9.94% being very dissatisfied (vds). firstly, the unique ip image of the sichuan chengdu cha is highly recognizable. secondly, the generous portion of drink toppings has been affectionately referred to as "kf cha." figure 5. satisfaction with tea brand differences. as shown in figure 6 below, consumers have a lower level of satisfaction with the convenience and experience of purchasing kf cha, with 29.83% being neutral, 31.49% being dissatisfied, and 20.99% being very dissatisfied. asian business research journal, 2024, 9: 45-55 50 © 2024 by the authors; licensee eastern centre of science and education, usa figure 6. satisfaction with the convenience and purchasing according to figure 7 below, the main factors for consumers to purchase kf cha products are service quality (sq) at 64.64%, followed by cost-effectiveness (ce) at 58.01% and good reputation (gr) at 52.49%. however, the factors of product taste (pt) at 40.88% and promotional activities (pa) at 31.49% are relatively less significant. figure 7. factors for purchasing products. as indicated in figure 8 below, the main factor that consumers dislike about purchasing kf cha products is food safety issues, accounting for the highest proportion (hp) at 62.98%. followed by poor service quality (psq) at 54.14%, bad reputation (br) at 46.96%, high price (hp) at 46.41%, and the lowest being poor product taste (ppt) at 36.46%. figure 8. dislike factors for purchasing products. as shown in figure 9 below, social media (sm) accounts for the highest proportion at 74.59%, followed by short video platforms (svp) at 64.64%, both of which are new media. search engines (se) account for 37.57%, and portal websites (pw) account for 33.15%, with friend recommendations (fr) being the lowest at 22.%. this shows that marketing through new media has gradually become a trend. asian business research journal, 2024, 9: 45-55 51 © 2024 by the authors; licensee eastern centre of science and education, usa figure 9. channels of kf cha. as shown in table 5, in terms of promotional content, consumers have a higher level of attention to new product launches at 128% and joint activities at 79.01%, but less attention to the dingding cat ip at 37.57% and public welfare activities at 28.73%, indicating that consumers are more inclined towards promotions that are more beneficial to themselves. in terms of influencing purchases: the highest is buy one get one free at 66.85%, followed by group purchase discounts at 59.67%, half-price for the second cup at 52.49%, and the lowest is free gifts with purchase at 48.62%. in terms of promotional efforts: 58.01% think the communication channels are monotonous, followed by content richness at only 23.76%; insufficient communication efforts at 13.81%, suggesting that the communication channels should be expanded and various new media platforms should be used for more efficient communication. table 5. promotion and publicity analysis. name option frequency % promotion content new product 128 70.72 dingding cat ip 68 37.57 joint activity 143 79.01 public welfare activity 52 28.73 impact on purchase buy one get one free 121 66.85 half price for second cup 95 52.49 group purchase discount 108 59.67 free gifts with purchase 88 48.62 promotional efforts didn't pay attention 8 4.42 insufficient communication efforts 25 13.81 monotonous communication channels 105 58.01 informative 43 23.76 as shown in table 6, the survey data on kf cha shows that the percentages of neutral, dissatisfied, and very dissatisfied are relatively high. among them, the feedback channels account for 30.39% + 13.81, the intensity of comment interaction for 32.60% + 18.23%, and the maintenance of user relationships for 29.28% + 13.81%. all three aspects are less satisfying. it is evident that attention should be given not only to the product itself but also to enhancing interaction with consumers. only by understanding consumer needs and clearly identifying consumer feedback can products and services that consumers love be created. as shown in figure 10, the proportion of consumers who feel 'average' about their consumption experience at kf cha is 35.36%, and those who feel 'dissatisfied' account for 33.7%. overall, the satisfaction level of consumers' overall consumption experience is not high table 6. interactive feedback analysis. name option feedback channels intensity of comment interaction maintenance of user relationships frequency % frequency % frequency % vs 9 4.97 16 8.84 17 9.39 s 17 9.39 14 7.73 14 7.73 n 75 41.44 59 32.60 72 39.78 ds) 55 30.39 59 32.60 53 29.28 vds 25 13.81 33 18.23 25 13.81 asian business research journal, 2024, 9: 45-55 52 © 2024 by the authors; licensee eastern centre of science and education, usa figure 10. satisfaction with consumption experience. the data in table 7 shows that the proportions of 'dissatisfied' and 'very dissatisfied' are high in terms of food hygiene and health (code fhh) at 32.60% + 22.1% and the event handling plan for changing the taste period of raw materials (ep) at 39.78% + 25.41%. additionally, the marketing related to food hygiene and safety after the 315 incidents (m311) at 30.39% + 13.26% and the increased promotional efforts after the 315 incidents (p311) at 34.81% + 18.23% are also less satisfying, indicating the importance that consumers place on food safety in the catering industry. table 7. food hygiene and safety analysis. name option fhh ep m311 p311 frequency % frequency % frequency % frequency % vs 17 9.39 11 6.08 14 7.73 13 7.18 s 14 7.73 17 9.39 17 9.39 18 9.94 n 51 28.18 72 39.78 71 39.23 54 29.83 ds 59 32.60 46 25.41 55 30.39 63 34.81 vds 40 22.1 35 19.34 24 13.26 33 18.23 as shown in figure 11, the surveyed subjects believe that kf cha should focus on improving the following three aspects: purchase channels (purchase channels; pc) at 80.11%, environmental sanitation (es) at 71.82%, and feedback channels (fc) at 68.51%. the aspects that are still recognized include customer needs (cn) at 29.28% and marketing activities (ma) at 23.2%. figure1. areas for improvement. 5. marketing environment analysis kf cha faces a marketing environment full of opportunities and challenges: 5.1. macroenvironment analysis -pest 5.1.1. politics -p national policies support the high-quality development of the catering industry, providing kf cha with favorable development opportunities (ministry of commerce of the people's republic of china, 2024). 5.1.2. economy -e the continuous growth of the national economy and the increase in residents' income have brought broad market space for the new tea beverage industry. the total market size is expected to reach 1498 billion rmb, with the number of new tea beverage stores exceeding 500,000. by 2025, the market size of new tea beverages is expected to exceed two trillion rmb (national bureau of statistics, 2024). 5.1.3. society -s asian business research journal, 2024, 9: 45-55 53 © 2024 by the authors; licensee eastern centre of science and education, usa the trend of consumption upgrade is evident, with consumers placing greater emphasis on health, quality, and experience, which aligns with kf cha's product philosophy. 5.1.4. technology -t the development of automation and intelligent technology offers the possibility of improving efficiency and reducing costs for the new tea beverage industry, while the internet and food delivery platforms have expanded sales channels. 5.2. industry competitive environment 5.2.1. intense competition the new tea beverage market is highly competitive, with brands like yidiyi and guming posing competition in the mid-market segment. in 2023, the market size of freshly made tea beverages in china was 2473 billion rmb. the top five participants accounted for about 40.2% of the market share by retail sales. kf cha holds approximately a 6.8% market share, ranking third (jin, 2024). 5.2.2. little product differentiation new tea beverage brands face significant product homogeneity, making it difficult to stand out with brand characteristics, and there is a need to further strengthen product differentiation strategies. 5.2.3. substitute competition there is also competitive pressure from other beverages such as coffee and bottled drinks, necessitating continuous innovation to enhance brand competitiveness. summary: kf cha needs to seize the opportunities presented by the macroenvironment while actively addressing the challenges of industry competition. by strengthening product differentiation, enhancing brand image, and optimizing the user experience, kf cha can consolidate its competitive advantage in the market and achieve sustainable development. 5.3. environmental analysis (swot) kf cha, as a rapidly growing tea beverage chain brand, faces unique strengths and challenges in its internal and external environments. 5.3.1. strengths--s strong brand influence: through the creation of the "dingding cat" ip and the dissemination of related content, kf cha has successfully established a distinct brand image and continuously enhances brand recognition and influence through collaborative efforts. product diversification: a rich product matrix is in place, covering classic, seasonal, and regional tea beverages, with an emphasis on healthy, low-sugar products that cater to various consumer needs. mature franchise system: a comprehensive franchise system and preferential policies attract a large number of franchisees, enabling rapid expansion. a robust supply chain management system and standardized processes ensure product quality and cost control. 5.3.2. weaknesses--w severe product homogeneity: the tea beverage industry is highly competitive, and product homogeneity is widespread, necessitating an enhancement of product innovation capabilities and competitive advantages. insufficient franchise supervision: there is a need to strengthen the supervision of franchise stores to ensure food safety and service quality, preventing negative incidents. 5.3.3. opportunities--o increased consumer health awareness: consumers are placing more importance on health, quality, value, and brand, providing opportunities for kf cha's development. application of automation and intelligent technology: the use of automation and intelligent equipment can improve production efficiency and product quality, reduce costs, and provide technical support for kf cha's development. 5.3.4. threats--t intense industry competition: the continuous emergence of new tea beverage brands intensifies competition, necessitating the enhancement of kf cha's own competitiveness to meet industry challenges. substitute competition: the tea beverage industry also faces competition from other beverage industries, such as coffee and bottled drinks, and kf cha must actively address substitute competition. 5.3.5. recommendations strengthen product innovation: develop products with greater differentiation and uniqueness to meet the diverse needs of consumers. enhance brand image: further cultivate the "dingding cat" ip to enhance brand image and value. strengthen franchise supervision: establish a comprehensive franchise management system to ensure food safety and service quality. embrace technology: actively adopt automation and intelligent technology to improve production and operational efficiency. summary: kf cha possesses unique strengths but also faces challenges such as product homogeneity and franchise supervision. by strengthening product innovation, enhancing brand image, strengthening franchise supervision, and embracing technology, kf cha can seize development opportunities and address industry challenges, achieving sustainable development. swot analysis and strategy selection asian business research journal, 2024, 9: 45-55 54 © 2024 by the authors; licensee eastern centre of science and education, usa kf cha’s main strengths currently lie in its high brand recognition, diverse product offerings, and mature franchise system (see table 8). however, there are still issues with product homogeneity and franchise supervision. the future strategy will focus on so as the primary long-term growth strategy, while also relying on the wo strategy to firmly maintain market share under the advantages of brand and scale, and further explore the development of new markets. table 8. kf cha marketing environment analysis. internal factors external factors strength (1) high brand recognition (2) diverse product offerings (3) mature franchise system weakness (1) severe product homogeneity (2) lack of franchise supervision opportunity 1）enhanced health consciousness among consumers 2）development and application of automation and intelligent technology so design healthy products, apply automation and intelligent technology to product production wo create distinctive and healthy products, strengthen online and offline franchise supervision threats 1）increasing homogenous competitors, intense industry competition 2）competition from other types of opponents in the same industry st fully leverage strengths to gain consumer favor, enhance existing advantages, build a professional image wt create products with unique brand characteristics, appropriately expand product categories, strengthen online and offline franchise management, establish a positive brand image 6. optimization plan for new media marketing strategies kf cha, as an emerging tea beverage brand, faces intense market competition and changing consumer demands while experiencing rapid development. to further enhance brand influence and user engagement, it is necessary to continuously optimize its new media marketing strategies. the following are optimization plans based on the principles of fun, interest, interaction, and individuality: 6.1. optimization strategies for the fun principle trigger keyword push: set up product-related keywords so that when users trigger these keywords on social media, the platform automatically pushes kf cha's marketing content, achieving precision marketing. enrich product feature content: use various forms (images, text, videos, animations) to showcase product features, such as ingredients, origin, efficacy, etc., and increase interest through stories, songs, etc., to attract users to delve deeper into the products. 6.2. optimization strategies for the interest principle strengthen food safety supervision: continuously update the progress of food safety supervision on social media platforms, encourage user participation in supervision, and offer rewards to enhance consumer trust in the brand. provide preferential promotions: regularly launch promotional activities, such as coupons, discounts, limitedtime offers, etc., to stimulate user consumption and increase conversion rates. 6.3. optimization strategies for the interaction principle expand feedback channels: set up a dedicated feedback window on official accounts and arrange for someone to handle feedback information, respond to user questions promptly, and improve user satisfaction. value consumer feedback: actively reply to user comments and feedback on social media, offer rewards, encourage user interaction, and increase user engagement. 6.4. optimization strategies for the individuality principle develop a dedicated app: collect user data through the app, analyze user preferences, and provide personalized recommendations and custom services, such as default frequent sizes, top-purchased products, pop-up promotional information, etc., to enhance the user experience. add online verification function: add an online verification function to various purchase channels, allowing users to choose store verification, delivery, etc., and provide personalized options to improve user convenience and experience. conclusion: through the above optimization strategies, kf cha can better utilize new media platforms for marketing, enhance brand influence, increase user engagement, and achieve sustainable development. 7. conclusion the research results indicate that kf cha's new media marketing has issues in the fun principle, interest principle, interaction principle, and individuality principle, which are insufficient new media marketing of products, neglecting consumer interests, limited consumer feedback channels, insufficient attention to consumer comments, and limited online purchase channels, respectively. to address these issues, optimization strategies such as setting up trigger keyword pushes, enriching product marketing content, deepening consumer interest perception, expanding feedback channels, valuing consumer feedback, developing a dedicated app, and adding online verification functions have been proposed. the future of the new tea beverage industry will place greater emphasis on health concepts, focus on new media marketing, and actively apply automation and intelligent technologies. the optimization of kf cha's new media marketing strategy is an ongoing process that requires continuous exploration and innovation. through the implementation of optimization strategies, new media platforms can be better utilized for marketing, brand influence can be enhanced, user engagement can be increased, sustainable development can be achieved, and contributions can be made to the development of the new tea beverage industry. this study helps the case company improve its marketing capabilities, increase user engagement, and achieve asian business research journal, 2024, 9: 45-55 55 © 2024 by the authors; licensee eastern centre of science and education, usa sustainable development. it also provides a reference for the marketing operation management of the new tea beverage industry and promotes the healthy development of the industry. references rmb, s-y., peng, j.-y., yang, c., et al. 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(2013). imc: the next generation. translated by wang, z., & gu, j. tsinghua university press. 16 © 2024 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 9, 16-23, 2024 issn: 2576-6759 doi: 10.55220/25766759.168 © 2024 by the author; licensee eastern centre of science and education, usa the impact of intangible assets on stock prices on bulgarian stock exchange: a panel data analysis ani stoykova south-west university “neofit rilski”-blagoevgrad, bulgaria. email: ani_qankova_st@abv.bg abstract this study examines the factors influencing stock prices of bulgarian non-financial listed companies, employing descriptive statistics, correlation model, panel regression model, and granger causality test for the period 2015-2022. the research investigates the impact of computer software assets, intellectual property rights, goodwill, earnings, book value, and dividend on stock prices. the results indicate that software products per share (sfs), book value per share (bvs), dividend per share (dps), and earnings per share (eps) have statistically significant impacts on the stock prices of non-financial publicly traded companies in bulgaria. intellectual property rights per share (ips) and goodwill per share (gps) do not significantly influence stock prices. additionally, the study highlights the dynamic relationships and causality between these variables and stock prices over the examined period. this research not only contributes to the academic discourse on financial market dynamics but also offers pragmatic insights for investors and policymakers. as financial markets continue to evolve, this research provides a timely and relevant contribution to the ongoing dialogue surrounding stock price determinants and their implications for market participants. keywords: bulgarian stock exchange, intangible assets, panel data, panel regression analysis, stock prices. jel classification: e22. 1. introduction the main purpose of financial reporting is to assist investors in making informed economic decisions and assessing the value of a company. exploring and understanding the main factors that influence stock prices is paramount for investors, policymakers, and stakeholders. certainly, the correlation between accounting data and the financial markets is among the most extensively analyzed and debated subjects in the realms of financial and accounting literature. in particular, intangible assets such as computer software and intellectual property have gained unprecedented significance, especially in their contribution to the computerization of inventory management and production processes within the manufacturing sector. intangible assets play a pivotal role in businesses' future growth and success. companies with more intangible assets tend to exhibit greater innovation and competitiveness, resulting in augmented market values. furthermore, the size of intangibles is positively correlated with the market value of a firm. consequently, both companies and investors need to consider the extent of intangible assets when evaluating the market value of a company. basheva (2017) suggests that the adoption of consistent and universal accounting standards will improve the effectiveness of capital markets by promoting the comparability of accounting information in financial statements. the main goal of this research is to examine the effect of intangible assets on the share prices of non-financial public enterprises listed on bse (bulgarian stock exchange). the following hypotheses are developed: h1: computer software assets have a significant influence on the share prices of listed companies in bulgaria. h2: intellectual property rights have a significant influence on the share prices of listed companies in bulgaria. h3: goodwill have a significant influence on the share prices of listed companies in bulgaria. h4: earnings per share, book value per share, and dividend for share have a significant influence on the share prices of listed companies in bulgaria. the research underscores the critical role of specific intangible assets and traditional financial metrics in shaping stock prices. these insights offer valuable implications for investors, policymakers, and stakeholders in understanding and predicting stock market behavior in emerging markets like bulgaria. 2. literature review intangible assets have a significant impact on the market value of firms (qureshi and siddiqui, 2021; pan, 2022; lim and jones, 2023). ionita and dinu (2021) find that intangibles like r&d and patents do not have a positive impact on firm value, but it programs do have a positive and significant impact on firm value. mailto:ani_qankova_st@abv.bg https://www.doi.org/10.55220/25766759.168 asian business research journal, 2024, 9: 16-23 17 © 2024 by the author; licensee eastern centre of science and education, usa oryina and suleiman (2020) investigate market value relevance of intangible assets in nigeria and prove that computer software is positively related to market value. also, intellectual property has a significant effect on the market price per share. aulia et al. (2020) confirm that most investors use and pay attention to the earning value and more to intangible value as a basis for consideration of their investment decision making on the indonesian stock exchange. paolone et al. (2020) find that intangibles are positively related to security prices of italian stock market for the period 2010-2018. the results show that the role of intangibles increase. kimouche and rouabhi (2016) establish that goodwill and book values are more correlated with market values compared to intangible assets and earnings for french companies. the authors conclude that intangibles enhance the value relevance of accounting data. similarly, al-ani and tawfik (2021) confirm that intangible assets improve the value relevance of accounting data positively in uae and negatively in kuwait. the results suggest that intangible assets can improve the value relevance in emerging markets, such as gcc. dancaková et al. (2022) examine the impact of intangible assets on a firm’s market valuation in france, germany, and switzerland. the results suggest that intangible assets have a positive effect on companies' market value although investors still prioritize profitability over intangible assets. abdulhadi et al. (2022) prove that the effect of intangible assets on the stock prices of active firms in iran is positive and significant, while it is negative and significant in the iraq. andersson and saiz (2018) establish that that the significance of investment in intangible assets has grown in the euro area. vasconcelos et al. (2019) examine the correlation between intangible assets, market value and the macroeconomic environment of german, portuguese and english public firms spanning the period from 1999 to 2016. their results indicate that the comprehension value is positively and significantly correlated to the market value of these companies. furthermore, the researchers find that the intangible capital and the intangibles-driven-earnings exhibit positive correlations with research and development expenditures as well as general administrative procedures. owiredu et al. (2014) investigate whether the concentration of intangible assets on a firm's balance sheet influences the volatility of its stock price. the results indicate that in the basic pharmaceuticals sector, there is a positive correlation between the concentration of intangible assets and stock price volatility. pereira da silva (2019) analyses value relevance of accounting indicators in european market. results show strong evidence supporting value relevance of book value and earnings. jaba et al. (2016) conduct a statistical evaluation of the value relevance of accounting data for companies traded on the bucharest stock exchange. their findings indicate that accounting information has value for investors. glezakos et al. (2012) prove that earnings per share and book value per share have an influence on stock prices in the athens stock exchange. 3. bibliometric analysis bibliometric analysis is a popular and reliable method for examining and interpreting vast volumes of scientific data. to construct and visually represent bibliometric networks, the vosviewer software tool is used. keywords cooccurrence analysis is frequently employed to assess the strength of links between various keywords across numerous documents. applying vosviewer, we generate a map that illustrates the relationship between the keywords: „stock price“ and „ intangible assets“. a total of 1 372 documents were retrieved from scopus database in march 2024. the selection is limited to the following subject areas: business, management, and accounting (1,080), as well as economics, econometrics, and finance (770). the final number of documents found is 1 250. in all the literature collected, a total of 3 120 keywords emerged. vosviewer software identified 176 keywords that appeared more than 5 times. figure 1. the visualization of the co-occurrence of keywords in vosviewer. asian business research journal, 2024, 9: 16-23 18 © 2024 by the author; licensee eastern centre of science and education, usa figure 1 presents the visualization map of the keyword network. the co-occurrence of keywords formed eight distinct clusters. there is a significant correlation between the keywords in each cluster. the main elements within these eight clusters are as follows: intangible assets; investments; value relevance; disclosure; research and development; intellectual capital; innovation; and financial performance. the distance between the two circles illustrates the proximity of the two keywords. the lines connecting them in the figure represent the relationships between the elements. additionally, a thicker line indicates a stronger relationship between the items. the link strength of the keyword "intangible assets" is 148 points. 4. methodology and data this research presents an empirical analysis of the effect of intangible assets on the share prices of the capital market in bulgaria. it uses annual panel data spanning from january 1, 2015, to december 31, 2022. employing panel data enables the observation of a particular variable at one specific moment and simultaneously observes another variable at another moment, facilitating the exploration of various relationships, interactions, and patterns (kapitanov, 2021). table 1 lists the accounting and financial variables used in the empirical analysis. table 1. variables used in the empirical analysis. variable type of variable abbreviation formula stock price dependent sp stock price at the end of the year (december 31st) earnings per share independent eps profit after taxes weighted average number of shares book value per share independent bvs shareholders′ equity number of shares outstanding dividend per share independent dps total amount of dividends paid number of shares outstanding intellectual property rights per share independent ips total intellectual property rights number of shares outstanding software products per share independent sfs total software products number of shares outstanding goodwill per share independent gps goodwill number of shares outstanding this study uses several accounting metrics, including intellectual property rights per share, software products per share, goodwill per share, earnings per share, book value per share, and dividend per share. these variables were chosen based on previous research and data availability for computation (stoykova, 2022). the accounting data were gathered from the individual annual financial statements of the examined companies. moreover, the bulgarian capital market mandates listed companies to disclose detailed quarterly and annual financial statements. consequently, all accounting information was sourced from the bulgarian stock exchange (bse). table 2 outlines the explanatory variables utilized in the regression equation along with the anticipated sign for each of their coefficients. table 2. independent variables and the anticipated sign for each of their coefficients. independent variables expected sign earnings per share (eps) positive + book value per share (bvs) positive + dividend per share (dps) positive + intellectual property rights per share (ips) positive + software products per share (sfs) positive + goodwill per share (gps) positive + the sample for this study includes 20 individual joint-stock companies across various sectors in bulgaria. consistent with hellström's (2006) methodology, financial firms are excluded due to notable differences in structure and accounting compared to non-financial entities (hellström, 2006; stoykova, 2021). all included companies are publicly listed on bse. market indices such as sofix, bgbx40, bgtr30, and bgreit are based on the market capitalization of the common stock issued by chosen bulgarian companies. these companies must meet specific criteria for liquidity, market capitalization, and shareholder count to be included in these indices. this study focuses on companies from diverse sectors of the bulgarian economy, including manufacturing, professional activities and research, transport, storage and post, real estate operations, hotels and restaurants, extractive industry, and construction. these 20 companies were chosen because they provide complete accounting data spanning the analysis period from 2015 to 2022. before conducting the empirical analysis regarding the influence of accounting data on share prices, it is necessary to apply a panel unit root test. this test is used to assess the stationarity of the analysed panel data, determining whether the panel is stationary or non-stationary. correlation model and granger causality test are employed to test the relationship between the examined variables. regression analysis is commonly used to determine the presence and direction of relationships between two or more variables. for empirical analysis purposes, ordinary panel least squares model is applied. the simple panel regression can be expressed by the following formula: 𝑦𝑖𝑡 = 𝛼 + 𝛽𝑋𝑖𝑡 + 𝜀𝑖𝑡 (1) the following explanatory legend applies to equations (4): for i = 1, 2, ...., n и t = 1, 2, ...., t. asian business research journal, 2024, 9: 16-23 19 © 2024 by the author; licensee eastern centre of science and education, usa where: 𝑦 – dependent variable; х – independent variables; 𝑡 reflects the time range; t the number of periods; 𝑖 reflects the spatial range; n the number of individual or spatial data; 𝑎 intercept of the model; β unknown parameter subject to calculation; ε error. in panel regression, the model error ε𝑖𝑡 combines the error associated with temporal data and the error associated with spatial data (nenova, 2020). 5. empirical analysis first, the panel unit root test was applied. the results of levin, lin & chu t panel unit root test show that all the panel time series are non-stationary at level (zero order), thus requiring acceptance of the null hypothesis indicating the presence of non-stationarity in the variables under study at level (0) (p-value > 0.05). consequently, transformation into the first difference is necessary. the first difference of all examined variables is stationary, so the empirical analysis can be proceeded. figure 2 presents graphically the mean values by date for each of the examined variables. the trend observed for software products is upward for the period 2018-2022, suggesting that enterprises are allocating increasing funds towards the implementation of digitalization and innovation (figure 2). on the other hand, the mean values of intellectual property per share and goodwill per share are relatively stable and unchanged for the period 2018-2022. moreover, the highest mean value was registered for book value per share (24.2 for 2022), whereas the lowest was observed for ips (0.003 for 2020, 2021, 2022). the highest mean value of stock prices is observed in 2022 (17.1), while the lowest mean value of sp is registered in 2019 and 2020. this could be attributed to the covid-19 pandemic that has started in march 2020, which negatively affected capital markets. table 3 presents the descriptive statistics for the whole sample. asian business research journal, 2024, 9: 16-23 20 © 2024 by the author; licensee eastern centre of science and education, usa figure 2. graphic presentation of the descriptive statistics results for mean by date. asian business research journal, 2024, 9: 16-23 21 © 2024 by the author; licensee eastern centre of science and education, usa the descriptive statistics for each variable that shows the mean, median, maximum, minimum, standard deviation, skewness, kurtosis, and jargue-bera are presented in table 3. table 3. descriptive statistics. sp sfs ips gps bvs dps eps mean 14.02913 0.043079 0.010320 0.036985 13.21526 0.275750 1.209532 median 6.200000 0.000968 0.000000 0.000000 3.188523 0.000000 0.211219 maximum 112.0000 0.618675 0.482796 0.721946 243.7282 5.250000 57.87126 minimum 0.135000 0.000000 0.000000 0.000000 0.004040 0.000000 -7.794385 std. dev. 19.14543 0.117860 0.053256 0.134889 28.38166 0.885507 5.445477 skewness 2.307171 3.203110 8.256242 3.853410 4.758727 4.687908 8.003638 kurtosis 9.206820 12.25544 71.82785 16.61302 32.34882 24.97632 78.22793 jarque-bera 398.7784 844.6851 33399.57 1631.396 6346.234 3805.765 39436.49 probability 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 sum 2244.661 6.892657 1.651262 5.917587 2114.442 44.12000 193.5251 sum sq. dev. 58281.06 2.208681 0.450959 2.893000 128077.4 124.6755 4714.862 observations 160 160 160 160 160 160 160 the mean stock price (sp) is 14.02913, indicating a relatively high average. the skewness value of 2.31 suggests a moderate positive skewness, implying a distribution that is slightly skewed to the right. the kurtosis value of 9.21 indicates a distribution with heavier tails compared to a normal distribution. the median value is 6.20, indicating that half of the observations fall below this value. the maximum value is 112.00 and the minimum value is 0.135. the mean software product per share (sfs) is 0.0431, with a relatively low standard deviation of 0.1179. the skewness and kurtosis values are both high, indicating a distribution that is highly skewed to the right and has heavy tails. the standard deviation is 0.1179, suggesting a relatively low degree of variability. the jarque-bera statistic is 844.69 with a p-value of 0.000, indicating a departure from normality. the mean intellectual property per share (ips) is 0.0103, with a low standard deviation of 0.0533. the skewness and kurtosis values are extremely high, indicating a highly skewed and leptokurtic distribution. the maximum value is 0.48280. the mean value for goodwill per share (gps) is 0.037, with a moderate standard deviation of 0.1349. the skewness and kurtosis values suggest a distribution that is moderately skewed to the right and has moderate tails. the jarque-bera statistic is 1631.40 with a p-value of 0.000, indicating a departure from normality. the mean book value per share (bvs) is 13.22, with a substantial standard deviation of 28.38. the mean dividend per share (dps) is 0.2758, with a moderate standard deviation of 0.8855. the skewness and kurtosis values of dps show a distribution that is moderately skewed to the right and has moderate tails. the mean earnings per share (eps) is 1.2095 and the maximum value is 57.87126. the jarque-bera statistic of eps is 39436.49, indicating a departure from normality. table 4 presents the correlation matrix. a strongest positive correlation is observed between stock price and dividend per share (0.572148). also, a positive moderate correlation is revealed between stock price and software product per share (0.501062). the correlation coefficient between stock price and book value per share is 0.400182, suggesting that the relationship between these two variables is moderate and positive. moreover, as the earnings per share rise, there is a corresponding increase in the stock price. the strongest correlations observed involve dps, bvs, and sp. table 4. correlation matrix. sp sfs ips gps bvs dps eps sp 1.000000 0.501062 -0.068537 -0.153580 0.400182 0.572148 0.368951 sfs 0.501062 1.000000 -0.063865 -0.099904 0.217786 0.553162 0.105884 ips -0.068537 -0.063865 1.000000 0.244818 -0.008781 -0.039126 -0.005738 gps -0.15358 -0.099904 0.244818 1.000000 -0.126507 -0.085297 -0.059756 bvs 0.400182 0.217786 -0.008781 -0.126507 1.000000 0.593100 0.571932 dps 0.572148 0.553162 -0.039126 -0.085297 0.593100 1.000000 0.401969 eps 0.368951 0.105884 -0.005738 -0.059756 0.571932 0.401969 1.000000 table 5. ordinary panel least squares model. dependent variable: d(sp) method: panel least squares sample (adjusted): 2016 2022 periods included: 7 cross-sections included: 20 total panel (balanced) observations: 140 variable coefficient std. error t-statistic prob. c 0.310009 0.504711 0.614231 0.5401 d(sfs) 44.96278 19.19743 2.342125 0.0207 d(ips) 16.50182 26.39834 0.625108 0.5330 d(gps) -18.00604 31.36429 -0.574094 0.5669 d(bvs) 0.130089 0.049427 2.631920 0.0095 d(eps) 0.262823 0.070880 3.708009 0.0003 d(dps) -2.829344 0.997535 -2.836335 0.0053 root mse 5.647378 r-squared 0.210661 mean dependent var 0.639557 adjusted r-squared 0.175052 s.d. dependent var 6.379282 s.e. of regression 5.794088 akaike info criterion 6.400260 sum squared resid 4465.004 schwarz criterion 6.547342 log likelihood -441.0182 hannan-quinn criter. 6.460030 f-statistic 5.915909 durbin-watson stat 1.865914 prob(f-statistic) 0.000017 asian business research journal, 2024, 9: 16-23 22 © 2024 by the author; licensee eastern centre of science and education, usa the ordinary panel least squares model is applied and the results are presented in table 5. the results of the panel regression show that the accounting variables can have a statistically significant impact on the stock prices (sp) of the bulgarian stock exchange for the period 2015-2022. the highest statistically significant coefficient in the model is for software products per share (sfs) and it is 44.96278. these results show that a one-unit increase in the sfs is associated with an increase in the dependent variable sp by approximately 44.963 units. the coefficient for this variable is positive, aligning with the expected sign (+). on the other hand, the coefficients for the other two intangible assets (ips and gps) are not statistically significant. this suggests that intellectual property rights per share (ips) and goodwill per share (gps) are not significantly related to the dependent variable (sp). the coefficient for bvs is 0.130089, and it is statistically significant at the 1% level (p-value = 0.0095). these findings suggest that book value per share is a significant accounting variable for determining stock prices alongside other accounting variables incorporated in the model. the sign of this coefficient is positive and it matches the expected sign. this implies that high bvs is directly related to stock price; that is, the higher the book value per share, the higher the stock price. these results reconfirm findings obtained by other researchers (malhotra & tandon, 2013; almumani, 2014; warrad, 2017). the coefficient for earnings per share (eps) is 0.262823, and it is statistically significant (p-value = 0.0003). a one-unit increase in eps is associated with an increase in sp by 0.262823 units. the coefficient for eps is positive, aligning with the expected sign. other researchers have also established a positive and statistically significant correlation between eps and sp (kwon, 2009; khanna, 2014; shehzad & ismail, 2014). the coefficient for dividend per share (dps) is -2.829, and it is statistically significant. dps has a negative impact on stock prices, indicating that high values of dps are inversely correlated to stock prices (i.e. an increase in the dividend amount results in a decline in the stock price). the sign of this coefficient does not align with its anticipated positive sign. these findings align with those of numerous research papers (srinivasan, 2012; malhotra & tandon, 2013; neupane, 2020). in summary, the results show that software products per share (sfs), book value per share (bvs), earnings per share (eps), and dividend per share (dps) are statistically significant predictors of stock price (sp). the regression model employed on the panel data can be expressed by the following equation (in the equation, the statistically significant coefficients for each individual variable are indicated in bold): 𝐷(𝑆𝑃) = 0.310009012703 + 44.962775713 ∗ 𝐷(𝑆𝐹𝑆) + 16.5018171526 ∗ 𝐷(𝐼𝑃𝑆) − 18.0060414184 ∗ 𝐷(𝐺𝑃𝑆) + 0.130089177323 ∗ 𝐷(𝐵𝑉𝑆) + 0.26282260112 ∗ 𝐷(𝐸𝑃𝑆) − 2.82934365585 ∗ 𝐷(𝐷𝑃𝑆) (2) the results from granger causality test for time period of 2 lags are presented in table 6. table 6. granger causality test for time period of 2 lags. pairwise granger causality tests sample: 2015 2022 lags: 2 null hypothesis: obs f-statistic prob. sfs does not granger cause sp 120 7.92696 0.0006 sp does not granger cause sfs 0.87892 0.4180 ips does not granger cause sp 120 0.14600 0.8643 sp does not granger cause ips 0.43222 0.6501 gps does not granger cause sp 120 0.02390 0.9764 sp does not granger cause gps 0.09288 0.9114 bvs does not granger cause sp 120 6.39914 0.0023 sp does not granger cause bvs 3.05442 0.0510 dps does not granger cause sp 120 46.2584 2.e-15 sp does not granger cause dps 3.88799 0.0232 eps does not granger cause sp 120 7.10495 0.0012 sp does not granger cause eps 6.97371 0.0014 these results validated the findings from the previous tests. therefore, there is evidence to reject the null hypothesis that changes in software products per share (sfs) do not provide useful information about future changes in sp. in summary, software products per share (sfs), book value per share (bvs), dividend per share (dps), and earnings per share (eps) granger cause changes in stock price (sp). considering the results from correlation matrix, panel regression model and granger causality test, we can except h1 and h4. sfs, eps, bvs, dps have an impact on stock prices. contrarily, we have enough evidences to reject h2 and h3 because gps and ips have no statistically significant impact on stock prices. 6. conclusion the relevance of accounting information describes how investors respond to its disclosure. this reaction demonstrates the importance of accounting information in the investment decision-making process, underscoring its value for investors (scott, 2015). this empirical analysis assesses how intangible assets and other accounting variables affect the stock prices of non-financial listed companies on the bulgarian stock exchange between 2015 and 2022. the study employs descriptive statistics, correlation analysis, panel regression models, and granger causality tests, to test the relationships between stock prices and key accounting variables. the results of the descriptive statistics reveal upward trends in software products per share (sfs) from 2018-2022, while intellectual property per share (ips) and goodwill per share (gps) remain relatively stable. the highest mean value is observed for book value per share (bvs), indicating its significance in market valuation. correlation analysis reveals a moderate positive relationship between stock prices (sp) and variables such as dividend per share (dps), book value per share (bvs), and software products per share (sfs). the results of the panel regression model show that software products per share (sfs), book value per share (bvs), earnings per share (eps), and dividend per share (dps) are statistically significant predictors of stock prices. the study affirms that these accounting variables are beneficial for investors and analysts in examining and assessing companies across various sectors, thereby aiding informed economic decision-making. the study results demonstrate the value of accounting information for investors, albeit with considerable variation over time and among different companies. however, the results also reveal that intellectual asian business research journal, 2024, 9: 16-23 23 © 2024 by the author; licensee eastern centre of science and education, usa property per share (ips) and goodwill per share (gps) lack statistical significance, challenging the hypotheses positing their impact on stock prices. additionally, the results from the granger causality test validated the findings from the previous tests (correlation matrix and panel regression model). in summary, based on the results obtained, hypothesis 1 (h1) stating that computer software assets have a significant influence on the share prices of listed companies in bulgaria is accepted. hypothesis 2 (h2) positing that intellectual property rights have a significant influence on the share prices of listed companies in bulgaria is rejected. hypothesis 3 (h3) that goodwill has a significant influence on the share prices of listed companies in bulgaria is rejected. hypothesis 4 (h4) suggesting that earnings per share, book value per share, and dividend per share have a significant influence on the share prices of listed companies in bulgaria is accepted. this research gives practical insights into the bulgarian stock market and the findings help investors, policymakers, and analysts better understand the factors shaping stock prices. the primary focus for future research related to this issue involves exploring the application of artificial intelligence (ai) in financial reporting and forecasting, leveraging ai techniques, such as machine learning algorithms and natural language processing. references abdulhadi, k., dashtbayaz, m. & salehi, m. 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(2017). the effect of market valuation measures on stock price: an empirical investigation on jordanian banks, international journal of business and social science, vol.8, no.3, pp. 67-74. 1 © 2019 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 4, 1-9, 2019 issn : 2576-6759 doi: 10.20448/journal.518.2019.41.1.9 © 2019 by the authors; licensee eastern centre of science and education, usa agricultural value added, governance and insecurity in nigeria: an empirical analysis edet okon anwana1 aniefiok benedict udo2 samuel effiong affia3 ( corresponding author) 1department of banking and finance akwa ibom state polytechnic, ikot osurua, nigeria. 2department of economics obong university, obong ntak, akwa ibom state, nigeria. 3department of business administration, akwa ibom state polytechnic, ikot osurua, nigeria abstract value added agriculture enables farmers to align with consumer preferences with quality characteristics not found in conventional raw material products. agriculture value added could be under serious threat under poor governance situation and insecurity. this study was therefore undertaken to empirically evaluate the relationship between governance system, state of security and agriculture value added in nigeria. the study made use of time series data sourced from world bank indicators, central bank of nigeria, institute for economics and peace, etc. the study employed auto regressive distributed lag (ardl) bound testing procedure to examine the long and short run relationships between the variables. diagnostic tests were successfully undertaken using langrange multiplier, ramsey’s reset, jargue-berra normality and heteroskedasticiy tests. the results show that in the long and short run, governance system in nigeria insignificantly impact agriculture value added. however, security level and technology positively and significantly impact agriculture value added both in the short and long run. the study concluded that governance institutions in nigeria which provide the means of control, policy formulation, implementation, etc are not effective enough to significantly enhance agriculture value added. on the other hand, though the country has experienced pockets of insecurity in some parts, the state of security has positively and significantly enhanced agriculture value added. the study recommends that policy formulations should be tailored to the short term and long term needs of agribusiness environment and investments. also, tendencies that hamper the growth and development of the agric sector generally should be discouraged. keywords: governance, security, agriculture, value added, institutions, agric production, agri-business. jel classification: q13; 19. 1. introduction nigeria is rated among countries that are well blessed with abundant human and natural resources, among which are arable land and human population of over 180 million people. as reported in manyong et al. (2003) nigeria has fairly high diversified agro-ecological conditions that make it suitable for the production of a wide range of agricultural products. agricultural sector is an important sector because it employs over 60% of the country’s working population and over 70% of the total population depends on it for survival (oyakhilomen and zibah, 2014; yusuf, 2014). investment in agriculture will empower a more effective means of reducing hunger and poverty. such investments tend to increase incomes and create social and economic ripple effects that engender economically strong and stable communities. agriculture is the handmaid of industrialization and the largest user and abuser of natural resources, it checks inflationary tendencies by sustaining food supply which also is vital for human development. further, it provides a market for industry sector products (food and agriculture organization of the united nations (fao), 2002; bill and melinda gates foundation, 2011; ugwu and kanu, 2012). agriculture is generally seen as cultivation of plants of varied forms, and husbandry of animals or the management of living things and ecosystem or breeding of fishes to produce foods and services for the people (nchuchuwe and adejuwon, 2012). though african counties produce a wide variety of agricultural products, economic benefits from such production have not yet been optimized. this is due in part to inadequate knowledge of appropriate value-adding technologies coupled with poor infrastructure facilities and absence of coherent policies to support such undertakings, especially in rural areas. value added agriculture is a practice that enables farmers to align with consumer preferences with quality characteristics not found in conventional raw material products. they involve changing raw agriculture products into something more valuable through processing, drying, cooling, extracting and/or any other form of process that will transform the product from its raw form to a better http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2019.41.1.9&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/1 asian business research journal, 2019, 4: 1-9 2 © 2019 by the authors; licensee eastern centre of science and education, usa quality or quantity through the key strategies of: changing physical state of products; producing enhanced products; differentiating products; bundling products; and producing more products that improve efficiency up the supply chain (matthewson, 2007; mmasa, 2013). so, they create avenues for farmers and agribusinesses to move from being price takers to price makers (lu and dudensing, 2015). in the agricultural sector specifically, one critical condition for growth is good governance structure and related policies at all levels. unep (2008) warns that unless effective governance systems are in place, agricultural reforms, food security, poverty reduction and development will remain a tall dream. through institutional and human governance capacities, public policies and strategies effectiveness can be achieved and better public decisions are made and implemented. as shown in international fund for agricultural development (ifad) (1999) governance has three dimensions: economic; political; and administrative. bringing these together, we can say that good governance defines the processes and structures that guide political and socio-economic relationships. governance also relies on inclusiveness where equal participation and treatment of all people are exercised. it also assumes that corruption is minimized and the voice of even the most vulnerable are heard in decision making. however, weak governance in agriculture results from policy biases, underinvestment, wrong investment, lack of capacities, poor human resources management, targeting problems, leakages and procurement problems and absence of strong state and public sector organizations’ interventions (united nations environment programme (unep), 2008). agricultural sector like other sectors in an economy requires security. this is not only essential but is critical because it can attract or discourage development. however, one of the strong and recently recurring factors that seem to threaten agriculture productivity in nigeria is the state of insecurity in the country. achumbe et al. (2013) citing global peace ranking identifies nigeria as among the most unsecured and complex security environment in west africa. as pointed out in okonkwo et al. (2015) local or foreign business investors are not motivated to invest in an unsafe and insecure environment. investors look forward to both high returns in investments and a safe environment for their investment. in the view of nwanegbo and odigbo (2013) security is freedom from danger or threats to a nation’s ability to protect and develop itself, promote its cherished values and legitimate interests and enhance the well being of its people. it connotes protection against all forms of harm whether physical, social, environmental, political, economic or psychological and safety from all forms of harmful disruptions to peaceful coexistence (achumbe et al., 2013; umaru et al., 2015). insecurity is seen by many authors as the antithesis of security (umaru et al., 2015; adamu and rasheed, 2016) and from achumbe et al. (2013) common descriptions of insecurity are: wants of safety, danger, hazard, uncertainty, want of confidence, doubtful, inadequately guarded or protected, lacking instability, troubled, etc. all these express vulnerability to harm, losses to life, property or livelihood, environmental destruction, and threat to nationhood. insecurity could be caused by institutional incapability as a result of: government failure, pervasive inequalities and unfair treatment of people, ethnic and religious conflicts, perceptive conflicts between the people and government, weak and corruptible security system. others are: loss of socio cultural and communal identity and value system, unprotected and porous boundaries, bad governance and lack of control, social irresponsibility of firms and corporate organizations, environmental pollution, unemployment, poverty, terrorism, frustration, cultism, corruption, etc. (achumbe et al., 2013; ajodo-adebanjoko and okorie, 2014; obi, 2015; adamu and rasheed, 2016). 1.1. statement of the problem nwajiuba (2013) raised an alarm warning that the once dominant subsistence oriented form economy (of nigeria) is at risk of gradual marginalization. corroborating this, fao (2002) alerts that agriculture in the less developed countries, nigeria inclusive, is largely underdeveloped in production for local as well as international markets. equally, agriculture value added is under serious threat by poor governance situation in addition to security situation in nigeria. anwana et al. (2017) argue that, governance indicators and institutional quality in nigeria is generally very weak and hence are inimical to investment, business growth and productivity. also, since 1990 nigeria has experienced heightened security situation and some parts of the country are affected. all these may distort the flow of farm inputs, crop yields and farm products, farming and processing, infrastructure and equipments, threatens customers’ access to farms and farmers and consumers sources of supply. on the whole, they tend to work against agriculture value added and development generally. considering that there are linkages between good governance, security and agriculture value added. also, considering that studies available that link the impacts of these variables together are relatively scarce for nigeria, this study was undertaken to fill this gap and to empirically evaluate the relationship between governance system, state of security and agriculture value added in nigeria. 1.2. research hypotheses (i) there is no significant impact of governance institution on agriculture value added in nigeria (ii) there is no significant impact of state of security on agriculture value added in nigeria 2. literature review 2.1. empirical literature oyakhilomen and zibah (2014) studied the relationship between agricultural production and the growth of the nigerian economy with focus on poverty reduction. the study made use of time series data analyzed using unit root tests and bounds (ardl) testing approach to cointegration. it was found that agricultural production in nigeria was significant in influencing favorable trend of economic growth. however, poverty was found to still persist and increasing. so, despite significant impact of agriculture production on growth of the economy, poverty has not been reduced because the economy is basically reliant on oil to the neglect of the agriculture which employs more people and is rural. in a related study, uche (2011) examined the impact of agricultural policy issues concerned with formulation, implementation and achievement of agriculture asian business research journal, 2019, 4: 1-9 3 © 2019 by the authors; licensee eastern centre of science and education, usa policies and programmes. the study used both primary and secondary data sources. the findings from the study indicate that agricultural policies in nigeria are made based on inadequate data and there are implementation problems that negatively affect intended results. they argue that agricultural policies over the years in nigeria has recorded partial success as indicated by problems of food security, hunger, malnutrition, low earnings from agriculture, etc. annes and wright (2016) examined how women have been able to achieve empowerment and the ways in which value-added agriculture specifically foster an empowering context. the study used qualitative data drawn from interviews with french value-added farmers with diverse life experiences and trajectories. the findings of the study indicate that through the performance of value-added agriculture, women were able to engage in the process of empowerment. they were able to exercise authority in the daily management of their farm operations, explore and define their own methods of work, express creativity, satisfy needs for social ties and build a professional identity. in a study of value addition and processing by farmers in developing countries, tamru and minten (2016) relied on unique data sets using a double hurdle technique. they examined factors that affect the decision and amount of selling coffee in red berries – the primary input for washing coffeeinstead of the dried (value added) type. results show that lack of access to wet mills, lack of enough red berry buyers, and bad quality coffee harvest reduce the likelihood of coffee sales in red berries form and hence a subsequent lower level of washed coffee. on the other hand, government’s action of deciding designated selling dates, membership to a cooperative, and access to advances and loans increase the likelihood of selling coffee in red berries form. in a related study, mmasa (2013) examined the rationale of value chain in improving livelihood of the smallscale farmers in tanzania. data for the study was collected from secondary sources. the study revealed that agriculture sector has strong forward and backward linkages with other sectors. low agriculture productivity was found to be due to low skills among the farmers and other stakeholders, no sufficiently strong farmers oriented agricultural research, extension services and training, for development of new technologies and no sufficient collection and dissemination of market information. thus, despite its great potential, the sector is facing a number of challenges including: low performance; low levels of production; low quality of output and low contribution to the national socio-economic goals; underutilization of available resources, limited market and value addition possibilities; and weak implementation of legal and regulatory framework. adeyemo et al. (2015) explored the relationship between agriculture value added and current account balances in nigeria using data from different sources from 1980 to 2013. the study found that agriculture value added has a negative relationship with current account balances in the country in both the long run and the short run. the short run adjustment parameters however showed that agricultural value added as a percentage of the gdp as well as the net foreign assets are the only variables capable of adjusting to their long run equilibrium within the economy. in a study on insecurity in northern nigeria, adamu and rasheed (2016) highlighted that northern nigeria, with reasonable population of citizens living on agricultural sector, among other regions of the country has witnessed various degrees of insecurity. this has affected the economic fortunes of the people including fortunes from farms, livestock and movements. hence, the overall standard of living of the people has been negatively affected. the situation has threatened development and foreign investments, and has disrupted social activities and peaceful coexistence. in a related study, ajodo-adebanjoko and okorie (2014) argue that insecurity and conflicts that has continued to pose serious challenges to development in the country is caused by corruption that is prevalent in the country. corruption is both an institutions variable of a country and a function of governance system. achumbe et al. (2013) took a study on the implication of insecurity in nigeria in business investment and operations and sustainable development. they argue that the insecurity challenge in nigeria negatively impinges on effective business activities and also on sustainable development processes. in a similar study, okonkwo et al. (2015) argue that insecurity constitute threat to lives and property, hinders business activities and discourages local and foreign investors with consequential negative effects that retards socio-economic development of the country. in a study on security challenges and economy of nigerian state, nwagboso (2012) using mostly secondary data argued that failure of successive government to address problems related to poverty, unemployment, inequitable distribution of income among different ethnic nationalities in the country gave birth to the insecurity problems we are experiencing now. they further argue that these insecurity problems consequently resulted to low government income, low participation rate of local and foreign investors in economic development and general insecurity of lives and properties. 2.2. theoretical literature and framework agriculture value added includes processes or services in the supply chain that adds to or enhances the value of products to customers. they create avenues for farmers and agribusinesses to move from being price takers to price makers (lu and dudensing, 2015). there are solid theoretical basis that growth and value added in agriculture play key roles in economic growth of a country, studies such as eswaran and kotwal (1993), echevarria (1997), gollin et al. (2007), johnston and mellor (1961) are few of the many works cited to support this view. this gives reasons for linking agriculture value added and productivity theories to economic growth theories. one of such theories is the new growth theory. this theory relies on the works of many authors among who is robert lucas jnr and it emphasizes the importance of technological and institutional changes along with human capital formation in economic growth process of an economy (lucas, 2002) adopted a dynamic optimization framework that incorporates individual preferences and focused on generating endogenous growth along a steady state equilibrium path of aggregate or single sector models. as noted in olmstead and rhode (2007) agriculture by employing non-reproducible inputs that are subject to diminishing returns fits uneasily into such models. to help analyze the invention and diffusion asian business research journal, 2019, 4: 1-9 4 © 2019 by the authors; licensee eastern centre of science and education, usa of new agriculture technologies, institutions as well as the linkages between the agriculture and non agriculture sector, the induced innovation hypothesis and threshold model are adopted. the induced innovation hypothesis is associated with hayami and ruttan (1985), olmstead and rhode (1998) cited in olmstead and rhode (2007) , ruttan et al. (1978) etc. the hypothesis is a leading model that can be used to explain the creation of new technologies and holds on to the dynamics of long run factor substitution. it treats technology and institutions as endogenous responses to the forces of factor supply and product demand (olmstead and rhode, 2007). the threshold model is a standard tool that can be used to analyze timing and extent of technological diffusion. it concentrates on short run cost calculations and is associated with the works of david (1971), olmstead and rhode (2001) etc. the new growth theory also emphasizes governance structure that enhances efficient adaptation and at the same time economizing costs of reaching agreements and resolving disputes (masten, 2000; kledal, 2003). thus, firms will select the governance form that seeks to minimize transaction costs, under the conditions of bounded rationality and opportunistic behavior of partners. in the value chain, actors can protect themselves against risk of opportunism through joint ventures, monitoring systems and specific organizational arrangements such as contracts (trienekens, 2011). since agriculture productivity as noted in mozumdar (2012) is a function of conventional inputs of land, labor, water, chemicals, physical capital and as a function of non conventional factors of human capital, research and development, technology, resources management, governance system, policy reforms and security, etc. this study will therefore adopt the new growth or endogenous growth theory to serve as its theoretical framework. this is so because among other theories, the new growth theory focuses on technology, human and physical capital, institutions, security, etc. as factors of agriculture productivity and value added suitable for an economy such as that of nigeria. 3. methodology 3.1. description of study area this study was undertaken for nigeria, the most populous country in africa with a vast agricultural space. the country has an estimated population of 182 million people as at november 2016 (okpetu, 2016) with a total land area of 923,800 sq km and occupies about 14% of land area in west africa. the country lies between 40n and 140n and between 30e and 150e. it is located within the tropics with an average temperature of 270c. the climatic condition can be rated as fair; the wet coastal area has an annual rainfall above 3,500 mm while the northern sahel region has an annual rainfall of less than 600 mm. the country enjoys a highly diversified agro-ecological condition suitable for a wide array of agricultural production, processing and other agro businesses 3.2. description of data this study made use of time series data on agriculture value added, technology, governance, security, physical capital, covering the period from 1980 to 2017. the mean annual time series data of the selected variables were adopted for the study. data for the study were sourced from world bank indicators, central bank of nigeria, the globaleconomy.com, the conference board, institute for economics and peace, etc. 3.3. analytical framework to test for the level of relationship between the variables used in this study, correlation analyzis was undertaken and presented in a matrix format. the correlation analysis results helped us to determine which of the variables to drop or use for further analysis. the study employed the auto regressive distributed lag (ardl) bound testing procedure to help examine the long run as well as the short run relationships between agricultural value added and its determining variables. the bound testing may not require pre-testing the variables of the model for unit roots because it is suitable even where the variables are not integrated of the same order. it is however necessary to conduct a unit root test to ensure that none of the variables is integrated of order two or more, since for this test procedure, the computed f-statistics are only valid for variables integrated of order one or zero. to test for unit roots the study adopted the augmented dicker-fuller tests (adf), and phillip-peron (pp) tests. as note in pesaran et al. (2001) the bound test is determined based on an estimated error correction version of ardl model using the ordinary least square (ols) estimates. oyakhilomen and zibah (2014) highlights that the bound testing procedure possesses some characters that make it more suitable than other models for a study of this nature and some of these characters are: (i) unlike the johansen cointegration approach, it does not require all the variables to be integrated of the same order, although the order should not exceed one; (ii) it is suitable for small or finite sample data as used in this study; (iii) unlike other multivariate cointegration models, it allows the cointegration relationship to be estimated using the ols as long as the lag order of the model has been identified; (iv) it can be used to simultaneously determine both the long and short run parameters of the model. akaike information criteria (aic) was used to determine the optimal lag length for the specified ardl model. an f-statistics test of the joint significance of the coefficients of the lagged levels of the variables was adopted in testing the null and alternate hypotheses of cointegration among the study’s variables. the null hypothesis is given as: h0: a1 = a2 = a3 = a4 while the alternate hypothesis is given as: h1: a1 ≠ a2 ≠ a3 ≠ a4 there are two sets of adjusted critical values that help provide the upper and lower bounds used for inference, one set assumes that all the variables are integrated of order zero (i(0)) whole the other assumes that all the variables are integrated of order one (i(1)). the null hypothesis was to be rejected where the computed f-statistics fell above the upper bound critical value, otherwise, it was to be accepted if it fell below the lower bound critical value. however, where it was to fall in between the upper and lower bounds critical values, the result would be considered inconclusive. diagnostic tests were undertaken using langrange multiplier test for residual correlation; ramsey’s reset tests for functional form of the model, jargue-berra normality tests and heteroskedasticiy tests. asian business research journal, 2019, 4: 1-9 5 © 2019 by the authors; licensee eastern centre of science and education, usa 3.4. model specification we express the functional relationship between agriculture value added and its determining factors based on the prescriptions of the new growth model as shown in equation 1 below: avad = f(tech, gov, sec,) (1) these variables are defined thus: avad = agriculture value added measured in current lcu; tech = technology measured in foreign direct investment (fdi); gov = governance institutions measured in government effectiveness index which measures the quality and independence of public and civil services, the quality of policy formulation and implementation and the level of government commitment to their policies (the global economy.com, 2017); sec = level or state of security measured by global peace ranking of gpi; as recommended in pesaran et al. (2001) the ardl model specified in equation 1 was expressed as unrestricted error correction model test for cointegration between the variables examined in this study as shown in equation 2 below: a a ∑ a a ∑ lnte ∑ go ∑ se β1avadt-1 + β2lntect-1 + β3govt-1 + β4sect-1 (2) after establishing cointegration, the long run relationship was estimated by employing the ardl model specified as shown in equation 3 below: avadt = β0 + β1avadt-1 + β2lntect-1 + β3govt-1 + β4sect-1 (3) also, the short run relationship was estimated using the error correction model specified in the form as shown in equation 4 below: (4) where: the variables avad, tec, gov, sec, are as defined earlier; α0 and β0 = constant terms ƿ = lag length; α1 – α4 = short-run parameter coefficients of the first difference explanatory variables; β1 – β4 = long run parameter coefficients of the explanatory variables log = logarithm δ = first difference operators ∑ sum of the lagged variables from zero periods t = time period in years εt = white noise δ = speed of adjustment ecmt-1 = error correction term lagged for one period 4. data analysis 4.1. tests for correlation table-1.correlation matrix variables log(avad) gov log(sec) log(tec) log(avad) 1.000000 gov -0.824763 1.000000 log(sec) 0.956639 -0.864309 1.000000 log(tec) 0.893614 -0.699980 0.828795 1.000000 from table 1 most of the macroeconomic variables in the estimated model exhibited negative correlation coefficient between each other except technology (tec) with agriculture value added (avad) and security (sec) with (avad). this signifies that the variables in the estimated model are not correlated with each other and hence there is no problem of multi collinearity in the estimated model. 4.2. unit root tests table-2.augmented dickey-fuller (adf) and philip-peron (pp) unit root tests results tests variable level first diff decision adf : log(avad) -2.119298 -3.879751*** i(1) gov -2.627541 -7.658036*** i(1) log(sec) -5.086819*** -4.111160 i(0) log(tec) -0.764503 -11.58418*** i(1) pp: log(avad -0.179766 -4.068441** i(1) gov -2.957623 -15.07995*** i(1) log(sec) -0.919648 -7.773288*** i(1) log(tec) -4.158377** -11.41012 i(0) note: *** signify significance at 1%; ** signify significance at 5%. from table 2 the unit root test results using the augmented dickey fuller (adf) and phillip-peron (pp) tests indicate that in both results the variables are stationary mostly at first difference. the variables that are integrated at level are security (sec) using the adf tests and technology (tec) using the pp tests. this results show that none of the estimated variables is stationary at second difference thereby not violating the ardl assumption of no asian business research journal, 2019, 4: 1-9 6 © 2019 by the authors; licensee eastern centre of science and education, usa i(ii). hence, the variables are suitable for the estimation of the model. further, these results show that the variables are not integrated of the same order and this justifies the use of bounds approach to cointegration over the conventional approaches that require the variables to be integrated of the same order. 4.3. tests for cointegration table-3. johansen cointegration test results hypothesis: no. of cointegrating equations eigen value max-eigen value 0.05 critical value prob** none* 0.690325 39.85592 27.58434 0.0008 at most 1 0.365078 15.44458 21.13162 0.2590 at most 2 0.294258 11.84917 14.26460 0.1164 at most 3* 0.171384 6.391951 3.841466 0.0115 hypothesis: no. of cointegrating equations eigen value trace statistics 0.05 critical value prob** none* 0.690325 73.54162 47.85613 0.0000 at most 1* 0.365078 33.68570 29.79707 0.0170 at most 2* 0.294258 18.24112 15.49471 0.0188 at most 3* 0.171384 6.391951 3.841466 0.0115 note: trace test indicates 4 cointegrating eqns at the 0.05 level max-eigenvalue test indicates 1 cointegrating eqn. at the 0.05 level * denotes rejection of the hypothesis at the 0.05 level the johansen cointegration test result shown in table 3, indicates that there exist a long run relationship between the macro economic variables used in the model. this is evidenced in the max-eigen value which is greater than the critical value at 0.05 level of significance and indicating one cointegration equation. also, the trace statistics value exceeds the critical value at 0.05 significant levels. so, there is cointegration in the model. 4.4. ardl bound test for cointegration table-4. bound test results computed f-stat. value k critical value significance lower bounds upper bounds 9.514617 3 1% 4.29 5.61 5% 3.23 4.35 10% 2.72 3.77 source: author’s computation using eviews 9 note: critical values are based on pesaran et al. (2001) table ci (iii), case iii k is the maximum lag order and chosen by the user. from table 4, the bound test result shows that f-statistics is higher than the upper bound value in all the level of significances, this indicate that a long run relationship exist between the variables in the estimated model, hence the null hypothesis of no cointegration between the variables is rejected. this also confirms the johansen cointegration results above. 4.5. ardl cointegrating and long run form table-5. ardl long run form coefficients dependent variable: log(avad) regressors coefficient std. error t-statistic prob. gov 0.040269 0.054773 0.735206 0.4707 log(sec) 0.098616 0.014015 7.036402 0.0000 log(tec) 0.431107 0.141491 3.046881 0.0064 c 2.028102 0.432517 4.689071 0.0001 note: ardl (1, 2, 1, 5) selected based on akaike info criterion (aic). from table 5, the long run impact of governance institutions (gov) on the agriculture value added (avad) is not statistically significant though it is positive. the estimated coefficient of institutions of 0.04 implies that a 1 percent increase in institutions will increase agriculture value added by 4 percent ceteris paribus. the result also shows that state of security (sec) in the country positively and significantly promote avad at the long run. the estimated coefficient of security level shows that a 1 percent increase in security level will positively impact avad by 9.8 percent. further, the result indicate that technology (tec) significantly and positively impact avad in the country. the estimated coefficient of technology indicates that a 1 percent increase in technology will lead to about 43 percent increase in avad. this seems to be true as technology is a major factor in promoting avad. the constant coefficient shows a significant positive impact on avad when all the macroeconomic indicators remain unchanged. 4.6. estimated short run relationship from table 6, the result shows that in the short run, governance institutions negatively and insignificantly impact avad in the first lagged year. however, security level and technology both have positive impact in the short run on avad respectively. whereas security level is significant on first lag, technology is significant on second lag. the lagged coefficient of the a a shows the current year’s a a positively and significantly impacts the level of avad development in the succeeding year. the speed of adjustment coefficient for agriculture value added is 0.1425 indicating an adjustment speed of 14.25 percent. the ecm is correctly signed and is statistically significant. ecm value of 0.1425 is an indication that about 14% of distortions in the system can be corrected in the succeeding year or that 14% of disequilibria asian business research journal, 2019, 4: 1-9 7 © 2019 by the authors; licensee eastern centre of science and education, usa from previous year’s shocks will converge back to long run equilibrium in the current year. the durbin-watson statistics of 2.0 indicates no autocorrelation between the variables and hence the result is good for economic analysis. the f-statistics which is a measure of the overall significance of the regressors in the model is statistically significant. the adjusted r2 shows that about 94 percent of the total variation in agriculture value added is determined by changes in the explanatory variables. this is a good fit for the model. table-6.results of the ardl short run relationship dependent variable: log(avad) variables coefficient std. error t-statistic prob. log(avad(-1)) 0.372249 0.122518 3.038326 0.0103 gov(-1) -0.005760 0.011477 -0.501842 0.6249 sec(-1) 0.047020 0.012774 3.680942 0.0031 log(tec(-2)) 0.153983 0.047011 3.275446 0.0066 ecm(-1) -0.142521 0.237715 -2.599547 0.0250 c 1.382944 0.323293 4.277680 0.0011 r-squared adjusted r-squared s.e. of regression sum squared resid log likelihood f-statistic prob(f-statistic) 0.978577 0.946797 0.003508 0.000148 130.4038 61.2539 0.000000 mean dependent var s.d. dependent var akaike info criterion schwarz criterion hannan-quinn criter. durbin-watson stat 3.351627 0.061997 -8.171703 -7.410443 -7.938978 2.012701 source: author’s computation using eviews 9 note: ardl (1, 2, 4, 3, 4) selected based on akaike info criterion (aic) *note: p-values and any subsequent tests do not account for model selection. 4.7. diagnostic tests table-7.ardl model diagnostic tests. lm test statistics chi square values prob. a: serial correlation χ2 (2) = 1.9582 [0.1916] b: functional form χ2 (1) = 0.4727 [0.5060] c: normality χ2 (2) = 3.7621 [0.1524] d: heteroskedasticity χ2 (1) = 1.7403 [0.2056] nb: a = lagrange multiplier test of test of residual serial correlation b = ramsey’s reset test using the square fitted values c = jarque-berra test based on test of skewness and kurtosis of residuals d = based on the regression of squared residuals on squared fitted values. from the outcome of the ardl model diagnostic tests shown in table 7, lagrange multiplier test of residual serial correlation, ramsey’s reset test, jarque-berra normality test and heteroskedasticity test were undertaken. the model passed all these tests which show that: there is no serial correlation thus the residuals are serially uncorrelated; the model has the correct functional form; sample for the estimated model are normally distributed; and there is no heteroskedasticity, rather, the model is homoskedastic. 5. discussion of results and implication for agriculture sector development in nigeria the results of this study show that in the long run, governance system in nigeria does not significantly impact, even though it positively enhances agriculture value added. also, in the short run governance institutions negatively and insignificantly impact agriculture value added. these results agree with anwana et al. (2017) that, governance indicators and institutional quality generally in nigeria are very weak and hence are inimical to investment, business growth and productivity, including agribusiness. the results also corroborate (uche, 2011)who found that agriculture policies and programmes in the country are poorly implemented. this negatively affects intended results and leads to problems of food insecurity, hunger, malnutrition, low earnings from agriculture, etc. the results from this study also indicate that security level in nigeria positively and significantly impact agriculture value added both in the short and long run. however, the rate of impact is less than 10 percent. this is despite global peace ranking that nigeria is among the most unsecured and complex security environment in west africa. and insecurity situations alarms raised by achumbe et al. (2013), okonkwo et al. (2015), adamu and rasheed (2016), ajodo-adebanjoko and okorie (2014) etc. however, it should be noted that nigeria with vast land mass and also largely populated. besides security challenges posed by groups like boko haram may affect a minor segment of the country while the major parts of the country are still actively engaged in agribusinesses. another thought is that most security problems experienced in the country are perpetuated in the urban areas while agribusinesses are mostly cited in the rural areas, this may thus pose negligible threat to agric value added in the country. the study also indicates that technology positively and significantly enhances agriculture value added in the country both in the long and short run. as shown in mmasa (2013) this may be attributed to the favorable security situation, skilled farmers, adaptation and development of innovative farming system backed by new technologies and effective dissemination of market information assisted by the better communication system brought about by internet infrastructure in the country now. asian business research journal, 2019, 4: 1-9 8 © 2019 by the authors; licensee eastern centre of science and education, usa 6. conclusion as noted in oyakhilomen and zibah (2014) and yusuf (2014) the agric sector is very important in nigeria and investment in the sector is not only an effective means of poverty reduction, it can also create social and economic ripple effect the will engender economically strong and stable communities. from the study, we conclude that governance institutions in nigeria which provide the means of control, policy formulation, implementation and commitments, etc are not effective enough to significantly enhance agriculture value added in nigeria. on the other hand, though the country is experiencing pockets of insecurity in some parts, the state of security so far has positively and significantly enhanced agriculture value added. further, technology has also contributed positively and significantly to the growth of agriculture value added in the country. 7. recommendations this study recommends as follows: that governance institutions in nigeria should be enhanced and government should not only make policies but should effectively control the implementation of such policies. however, policy formulations should be tailored to the short term and long term needs of the agribusiness environment and investments. also, tendencies that hamper the growth and development of the agric sector generally should be discouraged. though security is shown to enhance agriculture value added in nigeria, it should be noted that this advantage can be lost if the security situation is not strengthened and total war declared against insurgencies, militancy, armed robbery, herdsmen attacks and other security vices. such security challenges may threaten agriculture productivity and generally the agric sector, discourage local and foreign investors, farming and processing, development of infrastructure and equipments, threatens customers’ access to sources of supply, etc. on the whole, insecurity tends to work against agriculture value added and development generally and may create tensions capable of undermining the unity of the nation at large. home grown technology should be promoted and adopted in the areas of processing, preserving and other activities involved in adding value to agriculture products. this will discourage the sale of raw agric products which attracts lower prices and encourage value added products which attracts higher prices and profits. also, investors in agribusinesses should take advantage of internet innovation and facilities to seek new innovations, information gathering and marketing of their products. references achumbe, i.c., s.o. ighomereho and m.o. akpor-robaro, 2013. security challenges in nigeria and the implications for business activities and sustainable development. journal of economics and sustainable development, 4(2): 79-99. adamu, a. and z.h. rasheed, 2016. effects of insecurity on the internally displaced persons (idps) in northern nigeria: prognosis and diagnosis. global journal of human-social science: f political science, 16(1): 1-6. adeyemo, t.a., s. ajijola, s.k. odetola and v.o. okoruwa, 2015. impact of agricultural value added on current account balances in nigeria. journal of economics and sustainable development, 6(4): 108-116. ajodo-adebanjoko, a. and n. okorie, 2014. corruption and the challenges of insecurity in nigeria: political economy implications. global journal of human-social science: f political science, 14(5): 11-16. annes, a. and w. wright, 2016. value-added agriculture: a context for the empowerment of french women farmers? 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aniefiok benedict udo; samuel effiong affia (2019). agricultural value added, governance and insecurity in nigeria: an empirical analysis. asian business research journal, 4: 1-9. history: received: 7 january 2019 revised: 12 february 2019 accepted: 15 march 2019 published: 25 april 2019 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education acknowledgement: all authors contributed to the conception and design of the study. funding: this study received no specific financial support. competing interests: the authors declare that they have no conflict of interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://www.concisenews.global/ http://www.theglobaleconomy.com/nigeria/wb_government http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 55 © 2020 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 5, 55-61, 2020 issn: 2576-6759 doi: 10.20448/journal.518.2020.5.55.61 © 2020 by the authors; licensee eastern centre of science and education, usa corporate social responsibilities and firm performance joshua adeyemi ogunjimi ( corresponding author) department of economics, university of ibadan, nigeria. abstract this study evaluated the impact of corporate social responsibility on firm performance using mtn service centres in ibadan, nigeria as case study. tables and simple percentages were used for the analysis of the data collected through the administration of questionnaires while the correlation coefficient and analysis of variance were employed as the analytical tool for this study. the results showed that all the mtn service centres in ibadan carry out csr albeit with few challenges. it was also found that several benefits accrue to mtn in ibadan as a result of carrying out csr activities. furthermore, the correlation coefficient revealed a strong positive relationship between mtn’s corporate social responsibility (csr) and her organizational performance in ibadan such that an increase in csr activities would improve its performance. similarly, the regression result showed a significant positive relationship between csr and firm performance which indicates that csr influences the performance of mtn service centres in ibadan. therefore, this study concludes that csr is a determinant of firm performance. based on these findings, this study recommends that the management of mtn nigeria endeavour to engage in more csr activities to meet the peculiar needs of their immediate environment since it has a way of improving their performance as well as profitability. keywords: csr, firm performance, mtn, ibadan, correlation, regression. jel classification:c12; d24; g30; l25. 1. introduction corporate social responsibilities (csr) continues to be a topical issue at different local and international forums given its inherent benefits to the society, firms, government and the economy at large. csr is a broad set of obligatory programmes, practices and policies incorporated into the supply chains, business operations and decision-making processes of a firm as a form to contribution to or appreciation of their host community or government. it involves taking corporate and social responsibilities of their past and current business operations as well as their future impacts particularly on the host community (adeyanju, 2012; mirfazli, 2008). on the other hand, the scope of csr has also been a subject of debate in the literature such that whereas some authors believed that csr should be limited to only the stakeholders of the company (secchi, 2007; smith, 2003) others alluded that it should include the society at large (brown & dacin, 1997; kotler & lee, 2005; lee, 2008). the evolution of csr has instigated a paradigm shift of firms from their philosophy of only maximizing profit to solving social problems facing their host community or government (secchi, 2007). this has made charting a new course of action as regards performing csr vital for firms as it has become a prerequisite for improved firm performance (korkchi & rombaut, 2007). the proponents of csr argued that it is laced with numerous benefits including: increasing customer loyalty, improved public image, better access to financial credits, enhanced brand name, greater trust and confidence of stakeholders, motivated community, and safer or healthier workplace, among others (diffey, 2007; elizaveta, 2010; mirfazli, 2008; tuodolo, 2009). specifically,tapang and bassey (2017) argued that csr-performing firms tend to enjoy better long run corporate performance mostly stemming from the support, kindness, peace and tranquillity their operating environment affords them. however, the degree or volume of csr varies from company to company and community to community. the size and degree of csr are often determined by the legal framework, firm’s product or service type (environmentally detrimental product or service firms are likely to be required to carry out more csr), business sector, firm or company size, economic situations in the host community and geographical location, among other (adeyanju, 2012). given the increasing inability of the government (especially those in developing economies) to single-handedly tackle the economic and environmental problems of its citizens, csr has been identified as a viable option through which the private sector can help partner with the government to shoulder the responsibilities of growth and development of the economy. accordingly, the burgeoning socio-economic needs of nigeria are so numerous that corporate organizations must intervene to help salvage the economic situations in nigeria. interestingly, csr remains one of the strategic ways through which this could be attained. many telecommunication companies in nigeria have been exploring this http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2020.5.55.61&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/86 http://orcid.org/0000-0002-5162-3326 asian business research journal, 2020, 5: 55-61 56 © 2020 by the authors; licensee eastern centre of science and education, usa channel in a bid to have competitive edge over their competitors, expand their customer base and boost their profitability. however, most of the csr activities of these telecommunication firms are adjudged to be with ulterior motives rather than from philanthropic and ethical perspectives (amposah-tawiah & dartey-baah, 2011). unfortunately, the concept of csr has not been fully integrated by the firms of various sectors of the nigerian economy. the argument is that there exists a systematic approach in allocating costs, whether for investment or societal well-being (kanwal, khanam, nasreen, & hameed, 2013). they rather see their involvement in csr as the function of the culture of the firm, size and stakeholders demand. it is pertinent to note that in developing countries like nigeria where consumer education awareness is low, with little or no organized pressure group put in place, there is difficulty in the demand of full implementation of the csr by society or institutions. therefore, a good number of managers of these firms in nigeria, including mobile telecommunication of nigeria (mtn), tend to demonstrate poor attitude towards csr. hence, csr in developing countries including nigeria is still at low ebb despite the intense campaigns for facilitating corporate social programmes for tackling various economic maladies in the society. there are a number of studies on the csr-firm performance nexus in the literature for several countries of the world (boafo & kokuma, 2016; elizaveta, 2010; freeman & phillips, 2002; nguyen, hoang, & luu, 2019; tsoutsoura, 2004; wael, 2014) including csr in the nigerian manufacturing sector (nnamani, onyekwelu, & ugwu, 2017; olaroyeke & nasieku, 2015) and services sector (adebisi & akinmadelo, 2014; nsikan, umoh, & bariate, 2015; tapang & bassey, 2017). however, studies examining the csr activities and the performance of a service firm in ibadan are particularly rare. studies of this nature are important to effectively disentangle the variation in csr activities across different geographical locations in nigeria so as to aid plausible comparisons. thus, this study seeks to fill this gap in the literature by exploring the relationship between csr and mtn performance in ibadan, oyo state, nigeria. specifically, this study will examine the csr activities carried out by mtn, ibadan; examine the extent to which mtn carries out csr and its benefits; evaluate the problems mtn encounters in the practice of csr; and assess whether csr enhances the performance of mtn. gbam and dedi (2017) carried out a similar study for plateau state and ogunsanwo and ajayi (2018) did same for ado-ekiti. following this introductory section, the rest of this paper is organized as follows: section two presents the review of relevant literature, section three discusses the research methodology adopted in this study, section four interprets the empirical findings while section five concludes this study. 2. literature review there are various views in the literature with regards to the impact of csr on firm performance and societal welfare. freeman and phillips (2002) postulated that csr is an action a company decides to take that will adequately affect identifiable social stakeholders’ welfare. however, tsoutsoura (2004) averred that the management and corporate companies should step up to implement policies and business practices beyond the minimum legal requirement and positively affect the welfare of its key stakeholders. elizaveta (2010) alluded that csr-practising firms tend to attract great customers, shareholders and the best employees as against firms who do not perform csr. moreover, mujahid and abdullah (2014) investigated the effects of csr on firm’s financial performance and shareholders’ wealth of 20 firms in the pakistani economy. their results showed that csr exerts a positive influence on the financial performance and shareholders wealth of the firms. similarly, wael (2014) administered questionnaires and employed the descriptive statistical method to evaluate the impact of csr on the profitability of the orange telecommunication company in jordan. the result suggests that csr has a positive impact on firm’s profitability. in a similar study on vodafone ghana limited, boafo and kokuma (2016) showed that csr has an ample positive effect on finances, brand differentiation, reputation and employees’ commitment and of the company. in a study on mtn telecommunication company in nigeria, adebisi and akinmadelo (2014) found that good ethical, society-focused and environmental csr affects the performance of the mobile service provider positively. on the other hand, olaroyeke and nasieku (2015) examined the impact of csr on the performance of fifteen manufacturing firms listed on the nigerian stock exchange market. using descriptive statistics to analyse the collected data, their empirical result indicated that csr impacts the performance of these firms positively and that these firms engage in csr not just for profit-making but also for promoting their brand name, improving their corporate image and enhancing their competitive advantage. nsikan et al. (2015) used the survey method and random sampling technique to collect data with which to evaluate the nexus between csr and competitiveness of mobile telecommunication companies. their finding showed that csr enhances competitive advantage of firms. using the exploratory qualitative approach, nguyen et al. (2019) examined csr with special attention on the opportunities and innovations experienced within four vietnamese multinational subsidiaries. the results showed that csr activities triggered new business innovations and opportunities. moreover, ohiokha, odion, and akhalumeh (2016) sampled twenty-nine firms for the period between 2005 and 2010 to evaluate the nexus between csr and corporate financial performance in nigeria. the panel regression results showed that csr has a negligible effect on the firm’s financial performance. in the same vein, gbam and dedi (2017)analysed the impacts of csr on telecommunication industry in plateau state, nigeria. the chi-square result revealed that csr exert a substantial impact on social progress. more so, akinleye and adedayo (2017) randomly selected five nigerian multinational companies and collected their 5-year financial reports (2010-2014) to analyse the impact of csr on their profitability level. they found a weak negative relationship between csr and company’s profit as well as a unidirectional causality running from csr to company’s profitability. on the other hand, oladimeji, adebayo, and ogunshola (2017) evaluated the impact of csr on customers’ loyalty and retention. using the correlation and regression analysis, their result revealed that csr enhances customers’ loyalty and retention. however, nnamani et al. (2017) analysed the impact of sustainability accounting on the financial performance of selected manufacturing firms in the nigerian brewing industry with the result showing that sustainability reporting exerts a positive impact on the firms’ financial performance. besides, tapang and bassey (2017) assessed the impact of csr on stakeholder’s perception of telecommunication companies in nigeria. the multiple regression result showed that economic, legal, ethical and discretional expectation of crs performance impact stakeholder’s perception significantly. ogunsanwo and ajayi (2018) assess the impact of csr on the performance of mtn nigeria and found a significant relationship between economic, legal and philanthropic expectations of csr and firm performance but an insignificant relationship between ethical expectation and firm asian business research journal, 2020, 5: 55-61 57 © 2020 by the authors; licensee eastern centre of science and education, usa performance. the foregoing shows that there is no consensus on the impact of csr on firm performance due to differences in methodological approaches, measurement issues, firm type, business sectors, and data sources, among others. as a matter of fact, the studies that found a positive impact of csr on firm performance have different opinions on the nature of relationship and the magnitude of impact. more so, studies of this nature have not been carried out for mtn ibadan, nigeria. this shows that it is needful to examine this relationship so as to formulate and implement appropriate csr policies for the good of the host community and country at large. 3. research methodology 3.1. research design this study assesses the impact of corporate social responsibility on the performance of mtn, ibadan through the use of a descriptive survey design (questionnaire). survey method is considered appropriate because it helps to assess the knowledge and attitude of people at a particular period. the choice of this research design (questionnaire) lies in its ability to facilitate adequate data collection, aid easy administration and enhance easy documentation. 3.2.sample size and sampling technique the sample size comprises all the fourteen (14) mtn service centres scattered across the whole of ibadan thus, one questionnaire each is administered to the fourteen (14) managers, twenty (20) customer care representatives and sixteen (16) attendants of these service centres. these members of staffs are selected since they are better placed to answer the question in the questionnaire as they would give accurate and reliable information with which the analysis of this study will be carried out and recommendations made to improve both csr and performance of mtn in nigeria. hence, this study employs the purposive non-probability sampling techniques because there is no ambiguity about the target population to whom the survey instrument (questionnaire) will be administered. 3.3. method of data collection this study sourced for both primary and secondary data. primary data is collected through the administration of questionnaire which contains both open and close ended questions on csr and performance of mtn in ibadan. on the other hand, the secondary data used for this study are source from the website of the mtn nigeria. 3.4. methods of data analysis the statistical package for social sciences (spss) software was used to collate and analyse the collected data of this study. the collected data were collated and analysed in tables, simple percentages and the hypotheses was tested using correlation coefficient and analysis of variance (anova) to investigate impact of csr on organizational performance in mtn, ibadan. 4. empirical analysis 4.1. socio-economic characteristics of respondents table 1 presents the socio-economic characteristics of respondents of this study. it shows that 10 (20%) of the respondents are selected from the ibadan service centre which is the headquarters of mtn nigeria in ibadan. 5 (10%) of the respondents are chosen from cocoa mall connect lite, 3 (6%) of the respondents are selected from each of ibadan2/bodija connect store, ibadan connect store, iwo road, mokola centre, idi ape centre, total garden centre, eleyele centre, akobo connect point, sango connect point, iyaganku connect point, new ife road connect point and ibadan2 service centre, agodi gate, while only 2 (4%) of the respondents was selected from university of ibadan (ui) centre because it has just two (2) staffs. further, distribution of the position held by mtn shows that 14 (28%) of the respondents are managers, 20 (40%) are customer care representatives and 16 (32%) are attendants. furthermore, 30 (60%) of the respondents are males and 20 (40%) are females. this indicates that mtn has more male staffs than female. in addition, the age distribution of the respondents reveals that 5 (10%) of the respondents are between the age of 18 and 55; 15 (30%) falls in the 26-30 age bracket; 10 (20%) falls between the age of 31 and 35; and 20 (40%) are 36 years and above. the age bracket that has the least percentage among the respondents is the 18-25. the addition of the percentage of age group 18-25, 26-30 and 31-35, totalling 60% suggests that the mtn has the human resources in terms of the working class or the active labour force that is capable of generating enough resources and thereby driving development in the company. moreover, the distribution of the marital status of the respondents in mtn shows that 15 respondents which represents 30% of the respondents are single while the remaining 35 (70%) of the respondents are married. this depicts that most of mtn staffs are married. table 1 also shows the religion of the respondents. it reveals that 30 (60%) of the respondents are christians while 18 (36%) are muslims, and the remaining 2 (4%) are traditionalists. this suggests that there is peaceful co-existence among the staffs and their right to willingly express their freedom of worship is not being denied. it also shows that 36 respondents representing (72%) of the total respondent earn less than #50,000 per month while only 28% of the respondents earn between #101,000 and #150,000 per month. 4.2. presentation and interpretation of result 4.2.1. corporate social responsibility programs of mtn in ibadan the report from the website of mtn nigeria reports that all the mtn service centres in ibadan engage in csr activities. mtn foundation, incorporated in 2004, is the body charged with the responsibility of driving mtn’s various csr initiatives. the csr programs they undertake are: ict and business skill training, provision of transformers for electrification, drilling of boreholes for potable water, provisions of food and capital items to orphanages, provision of digital libraries in universities, refurbishment of adeoyo maternity teaching hospital, organizing independent living programmes for people living with disabilities, provision of basic teaching and learning materials, the mtn rural telephone project (rtp) and mtn foundation schools-connect project, asian business research journal, 2020, 5: 55-61 58 © 2020 by the authors; licensee eastern centre of science and education, usa among otherssee table 2. the beneficiaries of the csr programs are the customers, host communities, general public, employees and the government. table-1.socio-economic characteristics of respondents. s/no socio-economic characteristics of respondents frequency percentage 1. name and address of service centre ibadan service centre, ring road 10 20 cocoa mall connect lite, dugbe 5 10 ibadan2/bodija connect store, bodija 3 6 ibadan connect store, iwo road 3 6 university of ibadan (ui) centre 2 4 mokola centre 3 6 idi ape centre 3 6 total garden centre 3 6 eleyele centre 3 6 akobo connect point 3 6 sango connect point 3 6 iyaganku connect point 3 6 new ife road connect point 3 6 ibadan2 service centre 3 6 2. position held in the service centre manager 14 28 customer care representatives 20 40 attendants 16 32 3. sex male 30 60 female 20 40 4. age 18 – 25 5 10 26 – 30 15 30 31 – 35 10 20 36 and above 20 40 5. marital status single 15 30 married 35 70 widowed 0 0 separated/divorced 0 0 6. religious affiliation christianity 30 60 islam 18 36 african traditional religion 2 4 others 0 0 7. income level per month below #50,000 36 72 #51,000 #100,000 0 0 #101,000 #150,000 14 28 above #150,000 0 0 source: fieldwork (2020). table-2. corporate social responsibility programs of mtn in ibadan. s/no csr programs and beneficiaries 1. the main csr programs undertaken by mtn, ibadan i. ict and business skill training ii. provision of transformer iii. drilling of borehole iv. provisions of food and capital items to orphanages v. digital libraries in universities vi. refurbishment of adeoyo maternity teaching hospital vii. independent living programmes for people living with disabilities viii. mtn foundation schools-connect project ix. provision of basic teaching and learning materials x. the mtnf rural telephone project (rtp) 2. beneficiaries of mtn ibadan’s csr programs i. customers ii. host communities iii. general public iv. employees v. government source: fieldwork (2020). 4.2.2. benefits/effects of practising csr table 3 presents the responses of the respondents on the benefits that accrue to mtn through practising csr. table 3 shows that 70% and 30% of the respondents strongly agreed and agreed respectively that csr improves corporate reputation, image and identity. this indicates that csr actually improves corporate reputation, image and identity. on whether csr enhance profit maximization, 90% agreed while only 10% disagreed thus indicating that csr enhances profit maximization. furthermore, with mean value and standard deviation of 1.94 and 0.91 respectively, the respondents showed that csr helps to reduce operational costs. in addition, 76% and 24% of the respondents strongly agreed and agreed respectively to the fact that csr enhances company’s ability to attract talent and retain staff and that csr raises public interest in the activities of the company. 56% and 46% of the respondents also strongly agreed and agreed respectively that csr enhances market and financial performance. asian business research journal, 2020, 5: 55-61 59 © 2020 by the authors; licensee eastern centre of science and education, usa also, 74% and 26% of the respondents strongly agreed and agreed respectively that csr raises investors’ confidence and customers’ loyalty. furthermore, with a mean value and standard deviation of 1.18 and 0.38 respectively, the respondents opined that csr improves public goodwill towards the company. however, whereas 50% and 30% of the respondents strongly agreed and agreed respectively that csr facilitates the overall performance of the company, 10% disagreed. moreover, 80% and 20% of the respondents strongly agreed and agreed respectively that csr leads to improved sales and increased profits. also, the assertion that csr aids organizational growth was strongly agreed and agreed on by 70% and 30% respectively. also, whereas 40% and 36% of the respondents strongly agreed and agreed respectively that csr attracts positive media attention, 4% are undecided, 16% disagreed and 4% strongly disagreed. additionally, whereas 62% and 34% of the respondents strongly agreed and agreed respectively that csr increases our market share, 4% are undecided. likewise, 34%, 46%, 6%, 10% and 4% of the respondents strongly agreed, agreed, were undecided, disagreed and strongly disagreed respectively that csr makes access to finance easier. similarly, 24%, 38%, 12%, 18% and 8% of the respondents strongly agreed, agreed, were undecided, disagreed and strongly disagreed respectively that csr eases/reduces regulatory burden. table-3.benefits/effects of practisingcsr. no. benefits/effects of practising csr sa a u d sd mean std. dev. 1. it improves corporate reputation, image and identity 35 (70%) 15 (30%) 0 (0%) 0 (0%) 0 (0%) 1.30 0.46 2. it enhances profit maximization 26 (52%) 14 (28%) 0 (0%) 8 (16%) 2 (4%) 1.92 1.24 3. it helps in reduction in operational cost 18 (36%) 21 (42%) 0 (0%) 7 (14%) 4 (8%) 1.94 0.91 4. it enhances company’s ability to attract talent and retain staff 38 (76%) 12 (24%) 0 (0%) 0 (0%) 0 (0%) 1.24 0.43 5. it enhances market and financial performance 28 (56%) 22 (44%) 0 (0%) 0 (0%) 0 (0%) 1.44 0.50 6. it raises investors’ confidence and customers’ loyalty 37 (74%) 13 (26%) 0 (0%) 0 (0%) 0 (0%) 1.26 0.44 7. it raises public interest in the company’s activities 38 (76%) 12 (24%) 0 (0%) 0 (0%) 0 (0%) 1.24 0.43 8. it improves public goodwill towards the company 41 (82%) 9 (18%) 0 (0%) 0 (0%) 0 (0%) 1.18 0.38 9. it facilitates the overall performance of the company 25 (50%) 15 (30%) 0 (0%) 10 (20%) 0 (0%) 1.50 0.50 10. it leads to improved sales and increased profits 40 (80%) 10 (20%) 0 (0%) 0 (0%) 0 (0%) 1.20 0.40 11. it aids organizational growth 35 (70%) 15 (30%) 0 (0%) 0 (0%) 0 (0%) 1.30 0.46 12. it attracts positive media attention 20 (40%) 18 (36%) 2 (4%) 8 (16%) 2 (4%) 2.08 1.20 13. it increases our market share 31 (62%) 17 (34%) 2 (4%) 0 (0%) 0 (0%) 1.42 0.57 14. it makes access to finance easier 17 (34%) 23 (46%) 3 (6%) 5 (10%) 2 (4%) 2.04 1.08 15. it eases/reduces regulatory burden 12 (24%) 19 (38%) 6 (12%) 9 (18%) 4 (8%) 2.48 1.26 source: fieldwork (2020). 4.2.3. challenges/problems faced in the practice of csr table 4 presents the responses of the respondents on the challenges mtn faces in the course of practising csr. 28%, 36%, 4%, 8% and 4% of the respondents strongly agreed, agreed, were undecided, disagreed and strongly disagreed respectively that csr increases in the cost of doing business. since the percentage that agrees to this exceeds those that disagreed or are undecided, then it is apparent that csr actually increases in the cost of doing business. likewise, 46%, 38%, 12% and 4% of the respondents strongly agreed, agreed, disagreed and strongly disagreed respectively that csr lowers the profitability of the company. the percentage of those that agreed exceed those that disagreed, thus, csr actually lowers the profitability of the company. in addition while 22% and 58% of the respondents strongly agreed and agreed respectively that lack of shareholders’ commitment is a problem they encounter in the practise of csr, 14% and 6% of the respondents strongly disagreed and disagreed respectively. furthermore, 54%, 28%, 8%, 8% and 2% of the respondents strongly agreed, agreed, were undecided, disagreed and strongly disagreed respectively that the company’s csr is not recognized by society. thus, lack of recognition of the company’s csr is a major problem faced by mtn in ibadan. moreover, 18%, 26%, 4%, 20% and 32% of the respondents strongly agreed, agreed, were undecided, disagreed and strongly disagreed respectively that lack of organizational commitment is a challenge face in the practice of csr. given that the percentage of those who disagreed exceeds that of those who agreed, it can be said that mtn is committed to practising csr in ibadan and that lack of organizational commitment is not a challenge they face. lastly, 4%, 22%, 16% and 58% of the respondents strongly agreed, agreed, disagreed and strongly disagreed respectively that mtn lacks of csr strategy. given that the percentage of those who disagreed exceeds that of those who agreed, it can be said that mtn does not lack csr strategy. table-4.challenges/problems faced in the practice of csr. no. challenges/problems faced in the practice of csr sa a u d sd mean std. dev. 1. increase in the cost of doing business 14 (28%) 18 (36%) 2 (4%) 4 (8%) 2 (4%) 2.04 1.01 2. low profitability of the company 23 (46%) 19 (38%) 0 (0%) 6 (12%) 2 (4%) 1.74 0.82 3. lack of shareholders’ commitment 11 (22%) 29 (58%) 0 (0%) 7 (14%) 3 (6%) 2.04 0.78 4. the company’s csr is not recognized by society 27 (54%) 14 (28%) 4 (8%) 4 (8%) 1 (2%) 1.76 1.04 5. lack of organizational commitment 9 (18%) 13 (26%) 2 (4%) 10 (20%) 16 (32%) 2.66 1.55 6. lack of csr strategy 2 (4%) 11 (22%) 0 (0%) 8 (16%) 29 (58%) 1.86 1.26 source: fieldwork (2020). 4.2.4. hypothesis testing h0: csr does not have significant impact on performance of mtn, ibadan asian business research journal, 2020, 5: 55-61 60 © 2020 by the authors; licensee eastern centre of science and education, usa h1: csr has significant impact on performance of mtn, ibadan the correlation coefficient of approximately 0.88 indicates a strong positive relationship between mtn’s corporate social responsibility (csr) and her firm performance in ibadan see table 5. further, the r-squared value shows that about 76.8 percent of the variation in mtn ibadan performance is explained by her csr activities. in other words, csr activities predict about 76.8 percent variability in mtn ibadan’s performance. the remaining 23.2 per cent is accounted for by other variables not specified in the model. on the other hand, table 6 shows that probability of the f-statistic is significant at all levels of significance, implying that the null hypothesis will be rejected while the alternative hypothesis will be accepted. this indicates that the performance of mtn service centres in ibadan is influenced by the extent to which it carries out corporate social responsibilities. table-5.model summary. model r r-square adjusted r square std. error of the estimate 1 .876a .768 .765 1.05152 note: a. predictors: (constant), firm performance. table-6.analysis of variance (anova). model sum of squares df mean square f sig. regression 329.227 1 329.227 297.758 .000b residual 99.512 90 1.106 total 428.739 91 note: a. dependent variable: firm performance. b. predictors: (constant), csr. the regression result is presented in table 7 which shows the magnitude of csr on firm performance. specifically, it indicates that csr has a significant positive relationship with firm performance such that when mtn increases its csr activities by one unit, firm performance will improve by about 0.5 unit. this implies that csr plays a very pivotal role in the firm performance of mtn service centres in ibadan and that csr is a major determinant of mtn ibadan’s performance. this result supports the findings of adebisi and akinmadelo (2014); wael (2014); boafo and kokuma (2016) and olaroyeke and nasieku (2015). the foregoing shows that it is imperative for the management of mtn service centres in ibadan to take csr activities control very seriously because it is a key determinant of her organizational performance. csr is so critical that the management of mtn service centres in ibadan should endeavour to deliberately invest in csr activities so as to increase their performance, profitability, impact and fame in the neighbourhood wherein they operate. table-7.coefficients. model standardized coefficients t sig. b std. error beta (constant) .944 .466 2.025 0.46 csr .490 .028 .876 17.256 .000 a. dependent variable: firm_performance 5. conclusion and policy recommendations this study evaluated the impact of corporate social responsibility on firm performance using mtn service centres in ibadan as case study. tables and simple percentages were used for the analysis of the data collected through the administration of questionnaires while the correlation coefficient and analysis of variance were employed as the analytical tool for this study. the results showed that all the mtn service centres in ibadan participates or carries out csr even though they highlighted a few challenges they face in the course of engaging in csr. however, it was also found that several benefits accrue to mtn in ibadan as a result of carrying out csr activities. these benefits include: improvement in company’ reputation (goodwill), improved sales and profits, ease in regulatory burdens, increase in investors’ confidence and customers’ loyalty, and attraction of positive media attention, among others. hence, it can be said that the benefits mtn ibadan gets from engaging in csr activities far outweighs the challenges they face implementing them. furthermore, the correlation coefficient revealed a strong positive relationship between mtn’s corporate social responsibility (csr) and her organizational performance in ibadan. similarly, the regression result showed a significant positive relationship between csr and firm performance which indicates that csr plays a pivotal role in the performance of mtn service centres in ibadan. thus, this study concludes that csr is a major determinant of firm performance. intuitively, the profitability, corporate image, and sales, of mtn thrive on account of the csr activities it carries out in its local (host) community and beyond. in other words, the success in organizational performance mtn has recorded so far in ibadan can be linked to the csr activities it carries out in its host community and beyond. based on foregoing, it is important that the management of mtn nigeria endeavour to engage in more csr activities to meet the peculiar needs of their immediate environment and the government should put appropriate measures in place to ensure that csr is carried out by corporate organizations so as to complement the efforts of the government towards growth and development of nigeria, and appropriate punishments should be mete on defaulters. references adebisi, s. a., & akinmadelo, t. 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(2014). the effect of corporate social responsibility toward the local community and employees on orange telecom company profit. international journal of humanities and social science, 4(13), 198-203. citation: joshua adeyemi ogunjimi (2020). corporate social responsibilities and firm performance. asian business research journal, 5: 55-61. history: received: 28 october 2020 revised: 20 november 2020 accepted: 4 december 2020 published: 18 december 2020 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education funding: this study received no specific financial support. competing interests: the author declares that there are no conflicts of interests regarding the publication of this paper. transparency: the author confirms that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://www.fundacionseres.org/lists/informes/attachments/1109/csr-a-risky-business.pdf http://www.fundacionseres.org/lists/informes/attachments/1109/csr-a-risky-business.pdf http://www.generation-europe.eu/forum/category/idea-incubator http://www.generation-europe.eu/forum/category/idea-incubator http://www.generation-europe.eu/forum/category/idea-incubator http://www.generation-europe.eu/forum/category/idea-incubator http://www.diva-portal.org/smash/get/diva2:16710/fulltext01 http://www.diva-portal.org/smash/get/diva2:16710/fulltext01 http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 1 © 2017 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 2, 1-7, 2017 issn: 2576-6759 doi: 10.20448/journal.518.2017.21.1.7 © 2017 by the authors; licensee eastern centre of science and education, usa the impact of psychological influences on consumer buying behavior of smes’ products: a case study of the manufacturing sector in zimbabwe godwell karedza1 mike sikwila2 t.b. bhebhe3 ( corresponding author) 1department of international marketing chinhoyi university of technology, chinhoyi, zimbabwe 2department of consumer science chinhoyi university of technology, chinhoyi, zimbabwe 3graduate business school chinhoyi university of technology, chinhoyi, zimbabwe abstract the aim of this study was to determine the impact of psychological influences on the buying pattern of smes products in zimbabwe. this study was motivated by the desire to establish the reason why smes products were failing to gain customers acceptance. furthermore smes products have been observed to be occupying minimum shelf space in most of the supermarket in zimbabwe as compared to foreign manufactured products. zimbabwe has become an import destination, where almost every country is targeting to supply their products to the zimbabwean supermarkets. the objectives of this study was to determine the effect of personality on the buying pattern of smes products in zimbabwe, to determine the effect of customer perception on smes products and to determine the impact of attitudes on consumer purchasing behaviour of smes products. a sample of 100 respondents from customers and policy advocates were considered for this study. stratified random sampling technique was used to select customers who buy smes products while policy makers were purposively sampled. the results revealed that personality greatly affects the purchasing behaviour of smes products in zimbabwe, most of the respondents also revealed their negative perception towards any product from smes, while some revealed a negative attitude towards smes products as they articulated that they have a strong belief that smes are generally custodians of manufacturing poor quality products and due to this reason they choose to do business with big firms. the study concluded that psychological influences have an impact on consumer purchasing behaviour of smes products in zimbabwe. keywords: smes, personality, buying, behaviours, perception. 1. introduction smes are considered as the main economic engine for the prosperity of the country since they provide employment to a number of people in a country, they provide basic components which are an ingredient to the functionality of many industries in an economy, thus more emphasis must be put on developing appropriate methodologies that ensure their sustainability and their continued existence. 1.1. background to the study zimbabwean economy has become more of an import destination especially goods from our neighbouring countries are dominating the markets. since 2009 when zimbabwe started recovering from hyperinflation, there was a situation where all products were coming from south africa, including fruits, cooking oil, drinks (sibanda, 2015). the economy seems to be recovering from hyperinflation and the sme manufacturing sector is also rejuvenation from terrible economic hardships that rocketed zimbabwe. the economy has also experienced the birth of smes who are effectively manufacturing quality products (muleya, 2015). despite these remarkable developments, the zimbabwe markets have been flooded by foreign products and this has become a major barrier for the operations of local sme manufacturing firms. during a buy zimbabwe initiative tour held in bulawayo zimbabwe, the ppc managing director stated that south africa has brought 1.3 million tonnes of cement in the country and is expected to bring another 1.5 million tonnes (majaka, 2015), a condition which seems to suggest that the import habit is still continuing. although, the zimbabweans in general own manufacturing factories of cement that can adequately satisfy the local market. again horticultural products are also among the foreign products that are currently flooding the local supermarkets (muleya, 2016). the concern is that the same products are also produced in zimbabwe; therefore these situations are trade barriers to local producers who are in various manufacturing sectors. besides the fact that the zimbabwean market has been flooded by foreign products, some zimbabweans decide to travel abroad to buy some products that are also manufactured in zimbabwe (muleya, http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2017.21.1.7&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/11 asian business research journal, 2017, 2: 1-7 2 © 2017 by the authors; licensee eastern centre of science and education, usa 2015). products like furniture, cooking oil, blankets, and soap are produced in zimbabwe, but it is quite amazing that some zimbabweans actually travel to botswana, south africa and other countries to buy such products. this scenario has forced the zimbabwean revenue authority (zimra) to exclude most of these products on the travellers rebate. goods that are no longer included on the travellers rebate include; products imported for commercial purposes; excess alcoholic beverages, stoves, refrigerators, blankets, cooking oil; and laundry bar soap (majaka, 2015). this action by zimra has been done to protect local firms and to stimulate foreign direct investment (fdi). zimbabwean consumers are shunning local produce and prefer foreign products, a condition which is quite shocking. similarly, the smes in the manufacturing sector have not been spared. it is envisaged that psychological factors are among the potential factors fuelling the rejection of certain product by consumer and these factors include; perceptions, attitudes, personalities and beliefs. some people can be described as „high‟ in consumer ethnocentrism, for example the willingness to accept a foreign product (schiffman, 2010). kim and chung (2011) argue that attitudes are among the salient factors that influence consumer behaviour. it is believed that individuals will be more interested to do a certain activity especially if they are inclined favourably towards it. there is a clear cut between psychological influence and consumer purchasing behaviour and the researchers envisaged that this might have contributed to the shunning of sme locally manufactured products. this study focused on perceptions, attitudes, personality and beliefs as psychological influences associated with rejection of sme local produced products. blythe (2011) assets that personality is a combination of various factors that determine who we are. schiffman (2010) also highlighted that personalities are inner psychological factors that inclusively determine and reflect how an individual responds to the environment. individual‟s personality cannot be easily changed as compared to an attitude. perception on the other hand is all about how we make sense of the world and beliefs are generally mapped by the culture of an individual. relating these factors to the scenario describe above, it seems to suggest that there is a link between psychological factors and consumer buying pattern of smes locally manufactured products. 1.2. the research problem local manufactures especially smes are facing a threat of foreign manufactured products and as such, most customers preferred to buy foreign products as compared to local products. this has impacted negatively both on the smes manufacturing industry and the economy in general. productivity from locally manufactured products by the smes has been drastically going down and demand of these products by local consumers was becoming so unfavourable, thus negatively affecting gross domestic product (gdp) of the country as more customers channelled their foreign currency towards the importation of foreign products thereby making the local smes products uncompetitive in the local market, hence affecting the nation at large. in this sense, the researchers were keen to establish whether the purchasing habits of consumers were associated with the psychological influences or not? 1.3. research questions 1. what is the impact of personality on consumer purchasing behaviour of smes locally manufactured goods in zimbabwe? 2. what is the impact of customer perception on consumer buying pattern of smes manufactured products in zimbabwe? 3. what is the effect of attitudes on consumer purchasing intentions of smes manufactured goods in zimbabwe? 2. literature review 2.1. the impact of personality on consumer purchasing behaviour personality can be referred to as the dynamic organization of psycho physiological systems that shapes an individual‟s characteristic pattern of behaviour, feeling, and thoughts (lin, 2010). the paradox of personality in marketing assets that „we all have a personality, but we do not know how it is systematically related to our behaviour as consumers‟ (boddy and croft, 2016). consumers are therefore likely to use a brand in line with their personality traits (lin, 2010). in this instance, marketers effort should focus on creating programmes and activities that encourages consumers to believe and recognise a brand personality and ensuring effective communication between the brand and the consumer (govers and schoormans, 2012). consumers buy brands not for their functionality purposes only, rather they purchase these brands especially if they reflect their personalities. thus, they tend to prefer brands consistent with their personalities (banerjee, 2016). most researchers who normally study „personality‟ in marketing usually focus much on individual personality on product usage, preference, and the decision process. marketers impose human personality traits on their brands, and believe that consumers relate to those brands as they would do to partners or friends. however, it should be noted that human personality characteristics may not translate directly into brand personality traits. therefore, marketers should ensure an accurate alignment between the personality of the consumer and brand personality if they want to be successful in marketing, as most of the consumer‟s personality traits are associated with the brand. consumers have senses that decode the signals of a brand sends out to them and develop individual and subjective perceptions of the brand‟s personality especially if the brand is poor (ivens and valta, 2012). consumers normally prefer brands with personalities similar to their own and often choose brands because they view themselves as the type of person who would use the brand (huang et al., 2012). the higher the fit between human personality and brand personality, the higher is the consumer‟s tendency to choose that brand (lin, 2010). 2.2. the trait theory the trait theory is a well known school of thought in personality psychology; many researchers‟ who studied human personality derived similar conclusions in their studies. personality is the dynamic organization of psycho physiological systems that shapes a person‟s characteristic pattern of behaviour, thoughts, and feeling (das, 2014). asian business research journal, 2017, 2: 1-7 3 © 2017 by the authors; licensee eastern centre of science and education, usa other personality trait researchers concluded that for the most part, personality traits are generated by nature and are stable, but some others indicated that personality traits will continue to evolve and may even change, although the natural-born temperament may never change (mohammad, 2015). the trait theory may be categorised into two schools. the first school is of the opinion that people are believed to have the same set of traits, and the reason for the difference is due to the fact that the level of each trait is shown differently. therefore, it is a fact that traits are there in every individual. the second thought is that, individual variance is as a result of the trait combination, which varies from one person to another, and as such everyone has his/her own set of traits (anant and verma, 2014). mohammad (2015) categorized traits into three types: cardinal traits, central traits and secondary traits. the traits are relatively long lasting styles of thinking, feeling, and acting, which makes individuals to be different from one another (das, 2014). a lot of theories have been advanced to explain the personality principle, however evidence from literature suggest that there seems to be no single commonly accepted definition that exists. das (2014) defines personality as the distinctive patterns of behaviour, including thoughts and emotions that characterize each individual‟s adaption to his or her life situation. this definition has been widely accepted among marketing researchers. other researchers have categorised personality into two groups; the first group classifies personality as a set of internal traits that dictate a person‟s consistent and characteristic response to stimuli which explain a person‟s behavioural tendencies (kotler, 2011). the second group relates personality as an interaction of the individual and the external situation he/she is in (jani and han, 2014). both of these focuses mainly on examining issues that will enable researchers to predict, modify and control human behaviour, relying greatly on knowledge from psychology, sociology and psychiatry (lin, 2010). the personality theories have received wide acceptance in explaining consumer behaviour and have been termed trait-based theories (hawkins et al., 2010). the trait-based theories of personality try to describe human being in one or more series of traits (das, 2014). 2.3. the big five model ekhlassi et al. (2012) classify personality traits into five factors which are extroversion, agreeableness, conscientiousness, neuroticism, and openness. these factors above are normally referred to as the big five model, which is commonly used to explain human behaviour. jani and han (2014) highlight that the five broad-level personality traits vary in degree, from low to high, among different individuals. firstly, „agreeableness‟ is described as an individual‟s concern for working together in social harmony, and the behavioural characteristics include being considerate, friendly, helpful, generous, and willing to forgo other things for others. in this instance, a score which is high shows adaptability and value getting along with others, while a low score indicates scepticism, challenging others‟ ideas, and reluctant to get involved (mulyanegara, 2010). secondly, „conscientiousness‟ is described as the way individuals‟ regulate, control, and direct their impulses in decision-making behaviours. high scores indicate focus, being careful, reliable, and well organized, whereas low scores indicate distraction, disorganization, having flexibility, and being causal (jani and han, 2014). thirdly, „extraversion‟ is described as being assertive, action oriented, and typifies individuals who enjoy opportunities for excitement, attention drawing, and talking. low scores indicate introversion, a person who likes to stay in the background, is less talkative, reserved in speech and less action oriented (mohammad, 2015). fourthly, „neuroticism‟ is described as excessive worry that causes mental distress, emotional suffering, and an inability to cope with day-to-day life activities. high scores indicate emotional-reactive behavioural related to negative feelings such as anxiety, anger, or depression, whereas low scores indicate resilience, calmness and ability to control urges and stress (mulyanegara, 2010). fifthly, „openness to experience‟ is described as being intellectually curious, open to new ideas, involves imaginative and creative cognition styles. a score which is high signifies an intellectual curiosity which is broad, whereas low scores show a preference for familiarity, narrow, and conservative intellectual focus. mulyanegara (2010) observes significant relationships between some of the big five dimensions (e.g., extroverts prefer sociable brands) and brand preference type. therefore, one can conclude that consumers prefer a specific brand when the brand resonates with their behaviours. 2.4. empirical evidences on personality and consumer buying behaviour migliore (2011) conducted a research on the buying intentions of sports shoes by the college students‟. the idea was to find if there was a relationship between personality trait and brand personality. the researcher classified the brands into two categories namely; the ones preferred by college students and the ones actually being purchased, the study revealed that the students from the college have significant differences in their brand preferences. govers and schoormans (2012) further probed whether consumers‟ preference would be influenced when their self-concept is in conformity with product personality. anant and verma (2014) investigated the influence of brand personality on consumers‟ brand preference, loyalty, affection and purchasing intention. the results showed that brand personality has a positive influence on brand preference, loyalty, affection, and purchase intention. it might be that consumers like the brands having more distinct brand personality or consumers choose brands they are more familiar with. xiaoling et al. (2011) investigated the relationships among the personality traits of openness and extroversion, hedonic value, brand affection and brand loyalty. the results revealed that openness and extroversion have a positive correlation on the loyalty of the brands or products with hedonic value. 2.5. the impact of attitudes on the buying behaviour of consumers consumer attitudes usually include beliefs about, feelings about, and behavioural intents concerning something (tanner and kast, 2010). these components are grouped together as they relate and influence how individuals react to the objects. nepomuceno and porto (2010) assert that personal values influence most of the individual behaviours. values are goals that guide our lives and influence our behaviour. the following forms component parts of attitudes namely; beliefs and affects. firstly, beliefs are components of attitudes. consumers may have both positive beliefs toward an item as well as negative beliefs (mulyanegara, 2010). furthermore, some beliefs might be neutral, and others may differ depending with the person. the beliefs that consumers have a need may not be accurate (e.g. that pork contains little fat), and other beliefs might upon close examination be contradictory (e.g. asian business research journal, 2017, 2: 1-7 4 © 2017 by the authors; licensee eastern centre of science and education, usa that a historical figure was a good person but also owned slaves). it might often be tough to get down to a “bottom line” concerning whether an item is good or bad since a consumer holds many beliefs about a particular product (cohen and reed, 2011). secondly affect is also a component of attitudes for example; sometimes consumers may also hold some feelings to a product. these feelings may be based on the beliefs (e.g. a person feels nauseous when thinking about a hamburger because of the tremendous amount of fat it contains), but there may also be feelings which are relatively free of beliefs. 2.5.1. behavioral intention the behavioural intention is usually what a consumer planned to do. as with affect, this is sometimes a logical consequence of beliefs, but may sometimes reflect other circumstances (mulyanegara, 2010).the image depicted by a company and its products is of supreme importance, because this image is congruent with human values. therefore, a customer may select a product simply because it portrays values that may be negatively or positively related to his/her personal values. one‟s attitude is an important mediator on the relationship between personal values and behaviour. attitudes are defined as an enduring set of beliefs about an object that predisposes people to behave in particular way toward the object (gupta and ogden, 2009). evidence has shown that personal values can influence attitudes, which in turn influence behaviour (nepomuceno and porto, 2010). attitudes are quite malleable (cohen and reed, 2011) and may be influenced by the experience with a product. this poses some questions as to, what would be the relationship between values and attitudes after an individual had experienced a negative incident with a service? will this incident decrease their relationship, indicating that the attitude is no longer expressing one‟s values? more importantly, the service recovery efficiency may increase if one aligns the response to the customer‟s value system. the relationships that exist between attitudes values and behaviour would be weaker for people socialized in an interdependent self-schema culture, for example, the collectivists‟ countries. moreover, the increasing role of global markets, financial institutions need to understand how to sell their products to different markets (mooij, 2009). 2.5.2. relationship between attitude and behaviour consumer behaviourists have long stressed on the attitudes to predict peoples‟ actions. attitudes have been shown to significantly predict behaviour when: the person ascribes to a specific personality type with a high need for cognition; when relevant attitudes are consistent with the beliefs; and when attitudes are based on high levels of issue specific knowledge and/or personal experience and others. literature also reveals that numerous methodological issues must be addressed if attitudes are to predict behaviour (cohen and reed, 2011). attitude and behaviour should be measured at the same level of correspondence and at the same time among others (tanner and kast, 2010). 2.5.3. attitude-behaviour consistency the behaviour of the consumers usually lacks consistency with their attitudes for several reasons which include; the ability to do certain things, competing demand for resources, social influence (hee and chung, 2011). measurement problems are also among the reasons. it is hard to measure attitudes. in most circumstances, consumers intentionally do not set out to count how positively or negatively they feel about a certain thing, and when a market researcher asks them about their beliefs about that thing, how significant these beliefs are, and their assessment of the performance of such item with respect to these beliefs, consumers usually do not give very reliable answers (gupta and ogden, 2009). therefore, the consumers might act consistently with their true attitudes, which were never uncovered because a mistaken measurement was done. 2.5.4. theory of reasoned action and theory of planned behaviour alam and sayuti (2011) assert that a number of theories have been put forward to advance knowledge on how attitudes predict behaviour. firstly, the theory of reasoned action assumes that people consider the impact of their activities before they decide to engage or not to practice or embark on certain behaviour. as a result, people form intentions to perform behaviours which in turn stem from an individual‟s attitude towards the behaviour as well as his or her perception of others‟ opinions. the model primarily argues that people engage in processes that lead to attitudes formation, intentions and norms prior to performing the behaviour (alam and sayuti, 2011). however the reasoned action theory was criticised by some scholars as it failed to support the relationship between behavioural intention and planned behaviour and this was as a result of the inconsistency and the minimum control over a person‟s action (cohen and reed, 2011). therefore, to address the limitations above, the theory of planned behaviour extends the theory of reasoned action through the addition of a new component namely the perceived behavioural control (ajzen, 2009). this idea originates from the self efficacy theory (set) and is viewed as similar to bandura (1982) concept of self-efficacy which refers to the belief that one can successfully execute a behaviour required to produce an outcome. this theory was designed to explain and predict human behaviour in a specific context. many researchers concur that, individuals may be likely to perform a specific type of behaviour if they are certain that the behaviour will result in particular favourable outcomes, if they have a reasonable belief that their referents will value the particular behaviour and have resources, abilities and opportunities necessary to conduct the specific behaviour (kim and han, 2010). in contrast with the theories of reasoned action and planned behaviour, kim and han (2010) have suggested that attitudes guide behaviour through an automatic and spontaneous process instead of a deliberate one as highlighted by the earlier two theories. kim and han (2010) opine that two conditions command the probability that behaviours will be consistent with attitudes, that is when: the attitude is accessed spontaneously by the mere presence of the attitude object; and the attitude influences the perception of the object so that when the attitude is favourable (or unfavourable) the traits of the object are also viewed as favourable (or unfavourable). despite different theoretical reasoning presented on attitude-behaviour link, the attitudes are difficult to predict in the domain of environmental consumerism and this has remained debatable (gupta and ogden, 2009). asian business research journal, 2017, 2: 1-7 5 © 2017 by the authors; licensee eastern centre of science and education, usa 2.6. the impact of perceptions on consumer buying patterns schiffman (2010) states that perception can be viewed as how an individual organizes, selects and interprets stimuli into a coherent and meaningful image of the world. the aforementioned researcher highlights that individual consumers have perceived images of themselves; they also have perceived images of brands and products. depending on certain situations namely; personal characteristics, experiences, and beliefs, consumers will interpret information and products differently from one another. consumers‟ perception of a brand function is likely to be influenced by their cultural contexts since the brand is just a cultural vehicle (kotler and keller, 2013). 2.6.1. gestalt principles gestalt psychologists opine that certain features in visual perception are universal. one might say they are innate; they do not necessarily need to be taught. in this case these theories are known as sensual theories. these sensual theories are of a lower order of thinking than perceptual theories, such as semiotics, perceptual theories take into account the meaning we attach to what we see (guo et al., 2011). gestalt theory states that an individual see through incorporating a combination of light and dark on objects, contours and edges into a whole image without mere thinking about it. the statement, “the whole is different from the sum of its parts”, sums up the way we recognize figures and whole forms instead of just a collection of simple lines, shapes and curves. gestalt theory states that the brain operates holistically, with self-organizing tendencies. gestalt states that we perceive the whole without knowing of the connection of the parts, and that the essence of the whole does not change when we reverse it. gestalt psychologists have outlined important and universal principles of perceptual organization. the following are the principles by gestalt theorists. firstly, „proximity, according to this principle, objects close together are viewed as perceptually organized as a unity. consequently, objects that are not closer are viewed as separate. it is important to keep this principle because when designing print & web based materials one should always focus on how the intended audience will interpret the graphics that will be employed. secondly, the „closure‟ principle involves an individual response to missing information when viewing an object that seems to be incomplete. people automatically try to make sense of the image and supply the information that is missing to give the complete image. when used in advertising, marketers usually supply only limited information in an advert seeking to encourage viewers to be drawn in and fill in the missing parts. thirdly, the „figure and ground’ principle is premised on the notion that due to the confrontation by visual images, people try to separate a dominate shape, from a background. there is need to establish which part of the visual image is the background and what part stands out in the foreground. both pictures can be held simultaneously. figure-ground relationships influence how customers interpret images and make decisions based on what they would have interpreted. an individual will interpret a printed message differently according to which part of the image interpreted as the message and which part as the background. fourthly, the ‘similarity’ principle, the principle has it that, the objects that are similar are grouped together. customers usually interpret new information in a similar way to the information they already have and this have an impact on how consumers select the products to purchase. 3. research methodology 3.1. research design shajahan (2014) define research design as a theoretical plan for the gathering, measurement and analysis of data. it can also be defined as a process that permits a study to observe certain phenomena so as to give the researcher full information relating to the matter of concern. creswell and clark (2011) state that research designs are procedures for collecting, analysing, interpreting and reporting data in research studies. generally, research design is categorised into three namely; the descriptive, the exploratory and the causal. among these, the researchers made use of descriptive and exploratory research designs. christensen and johnson (2010) state that the primary objective of descriptive design is to enable an accurate description or picture of the status of a situation or phenomenon. thus, this research design central objective was to describe the impact of psychological influence on consumer buying pattern and this necessitated the use of a descriptive research design. alternatively, explorative research design was also employed in the study as the researchers wanted to get an in-depth understanding of the phenomena under study, as it allowed for probing on a one to one basis, fostering interaction between the interviewer and respondent. 3.2. population, sample and research instruments descombe (2010) states that population refers to all items in the group of objects being researched. in this study, the target population was the smes in the manufacturing industry in harare. statistics show that harare has got 541 456 smes of which only 11% of this number are in the manufacturing industry (mugano, 2015). however it is argued that smes tend to enter and exit their businesses, thus the researchers estimated that the smes population in the manufacturing sector to be approximately 59560 smes inclusive of 4 policy advocates. thus, based on this population, the following formula by yamane (1967) was adopted to determine the sample size for the study: n= where: n=necessary sample size n=estimated population size e=margin of error n= =99.83238351≈100 source:yamane (1967) using the margin error of 10%, the formula above, gave a sample of 100 respondents inclusive of customers and policy advocates. stratified random sampling was then used to select customers of smes products while purposive sampling technique was used to select policy advocates. questionnaires were used to gather information from customers while an interview guide was used to gather data from policy advocates. asian business research journal, 2017, 2: 1-7 6 © 2017 by the authors; licensee eastern centre of science and education, usa 3.2.1. research findings 3.2.1.1. the effect of personality on the buying behaviour of consumers 60% revealed that personality affect buying behaviour of smes products. 25% showed that they have never purchased products from smes and have no information on smes products. however 15% of respondents were neutral about the issue. 80% of the policy advocates showed that personality indeed has an influence in the buying intentions of customers while 20% indicated that it varies with the capacity of smes ability to supply the right product where it is wanted. generally, the results showed a positive relationship between individual personality and purchasing behaviour. this is inconformity with a research conducted by banerjee (2016) who argues that consumers associate human personality traits with brands because they view brands as an extension of their behaviour. 3.2.1.2. effect of customer perception on consumer buying behaviour 75% of most respondents perceived smes products as of low quality and therefore showed that their propensity to purchase those products was very low. 15% revealed that they only purchase smes products if there are no alternatives available or substitute products, while 10% prefer to buy foreign manufactured brands only as these are more appealing and induce appetite as compared to locally manufactured products. 100% of policy advocates concurred that smes need to manufacture the right products demanded by customers and brand it properly so that customer perception towards those products is enhanced. the policy advocates have revealed that perception plays a critical part in marketing programmes, where pictures, images, spoken, & written language, color, noise, music, tastes and smells are used in such profusion, and that, an understanding of how it works is an absolute must for all managers that work in a business which requires customers‟ input. 3.2.1.3. the effect of attitudes on consumer buying behaviour 55% of the customers revealed that they simply have a negative attitude with smes locally manufactured brands and therefore purchasing these brands is a waste of time. while 30% revealed that they experienced poor service delivery when purchasing smes products and indicated that if they discovered or report about a fault product or poor product, their complaints are not taken into consideration and sometimes they are never attended to either in time or simply get ignored. 15% revealed that they purchase any product as long as it is good to them. furthermore, it was also noted that if consumer attitudes are not dealt with in time, then smes in the manufacturing sector might fail to be the preferred customer suppliers. this research is in line with nepomuceno and porto (2010) who argued that our personal attitudes influence most of our behaviours. 78% of policy advocates interviewed clearly concurred that negative attitudes by customers towards a product are quite ruinous and need to be attended to in time. 23% of policy advocates revealed that one way to make smes viable is to train them how to deal with negative attitudes from their customers and to advise them to be customer focused. 4. recommendations considering the above views, the following recommendations were made:  since customers are likely to use products that are 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29 march 2017 published: 5 april 2017 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education acknowledgement: all authors contributed to the conception and design of the study. funding: this study received no specific financial support. competing interests: the authors declare that they have no conflict of interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. 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tanzania ruth elias1 wilhelm leonard2 joshua mwakujonga3 ( corresponding author) 1school of business studies, university of dodoma, dodoma, tanzania 2school of public administration and management, mzumbe university, morogoro, tanzania 3department of business studies, mzumbe university, dar es salaam campus college, tanzania abstract this study examines the influence of owner-manager demographic characteristics on attainment of their competencies in tanzania, because there are scant empirical evidences on the same. the data used in this study were obtained through a survey of 392 small restaurant businesses from ilala and dodoma in tanzania. information was collected from the owner-managers of these entities by using structured questionnaires. competencies of the owner-managers were measured subjectively by assessing their ability to perform entrepreneurial, managerial and functional works. thus, the study uses structural equation model to analyze the latent variable data collected. study results have shown that among the demographic characteristics of the ownermanager, formal education and family background in doing business are more important in explaining how competent an owner-manager is in all three competencies. furthermore, age of the owner-manager is very important in explaining how competent the owner-manager is in terms of managing the business while their industrial working experiences are more important in explaining the owner-manager ability to fulfill functional activities. these results imply that, whoever wants to operate the small restaurant business should try to understand their demographic characteristics. that is, to match themselves with the competencies of fulfilling entrepreneurial, managerial and functional activities or decide on any other way of compensating for their weaknesses for better business performances. keywords: owner-manager, demographic characteristics, entrepreneurial, managerial, functional, competencies. jel classification: m5, m10, j1, m13. 1. introduction in order for a business to perform successfully for a long term, individual competencies as the determinant tool to the performance of businesses should be ensured by the owner-manager’s competence in the entrepreneurial, managerial and functional areas (becker, 1964; bird, 1995; frese, 2000; ahmad et al., 2011). the determinant on how the individual attains competencies to affect the business depends on several issues. literature shows that demographic characteristics like education, work and life experiences of an individual can help to attain competencies that are suitable for the business organization which could become the contribution of the individual towards a successful performance for the organization (walker et al., 2007). to make use of attained competencies, employees of the large organization are selected through interviews based on individuals with best competence that suits the position being applied for and are backstopped with customized training and workshops that help to determine their competencies to perform (samwel, 2018). small business has its different experience; the competencies to perform are based on owner-manager himself. unfortunately, in the majority of small businesses owner-managers initiate the business without strategically being interviewed if they have or not any competencies for the business performance before initiating the business (webster et al., 2005). for most of the owner-managers, their prime motive in initiating a business is to earn income as an alternative survival endeavor after being disqualified from the established competences of formal employments (walker et al., 2007). it is also acknowledged that small business owner-managers have low formal education levels compared to managers of larger businesses, and they participate less in competency development and training activities (billett, 2001; bartram, 2005). furthermore, just by the fact that most of small restaurant businesses are dominated by owner-managers with no profession of restaurant management and many of whom have been disqualified from formal employment, their businesses are merely alternative survival endeavors to http://ecsenet.com/index.php/2576-6759/article/view/10 https://orcid.org/0000-0002-5141-2887 https://orcid.org/0000-0002-4582-0454 http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2018.31.41.47&domain=pdf&date_stamp=2017-01-14 asian business research journal, 2018, 3: 41-47 42 © 2018 by the authors; licensee eastern centre of science and education, usa simply fulfill their needs; hence their determination towards attainment of required owner-manager entrepreneurial, managerial and functional performance competencies appear different. despite their inclusiveness to the wider range of society they serve in terms of self – employment, provision of services and an extended employment opportunity that preserves the local economic development of the country, for the small businesses, in which competence to perform is based on the owner-managers, their determinants has not been visualized (bird, 2002; inyang and enuoh, 2009). as a result, most of these businesses suffer the entry and exit syndrome, but also can hardly advance to medium or large size (tundui, 2012). this study values the importance of owner-manager competence for necessary performance of the business operation. they are only vision bearer for performance and long-term success in their small businesses. owner manager competence in terms of knowledge, skills and attitude are acquired through intuition and by learning to which this study demonstrates how the demographic characteristic can determine owner manager entrepreneurial, managerial and functional competencies (becker, 1964; bird, 1995; ahmad et al., 2011). this will help the ownermanager and the government to arise in facilitation of the development of small businesses. therefore, this article aims at providing empirical evidence from tanzania on the extent to which demographic characteristics owned by the owner-manager influence the attainment of the entrepreneurial, managerial and functional competencies. 2. literature review the characteristics of the owner-manager has been regarded as the most influential factors toward the attainment of the individual competencies (becker, 1964; bird, 1995; ahmad, 2007; santos, 2011). there has been reliable evidence that one factor results into different development of competencies basing on the learning environment and other individual characteristics (reuber and fischer, 1994; quińones et al., 1995). therefore, demographic factors such as industrial working experiences, formal education, and family background in doing business, age and sex of the owner-manager have been discussed in relation to the attainment of the competencies necessary for business performances. 2.1. industrial work experience theoretically, industrial work experiences influence the attainment of individual competencies (becker, 1964). literature also shows that industrial working experience helps the individual to learn by doing and with the accumulated practices, to attain the necessary competencies (dyke et al., 1992; sarwoko et al., 2013). however, these researches did not show clearly the contribution of industrial working experiences to each competency required by owner-managers. basing on the fact that small restaurant business is operated by an individual, and each competency contributes differently to the performance of the business, the determinants of entrepreneurial, managerial and functional competencies which have been neglected for long are still more important to find out (ahmad, 2007; wickramaratne et al., 2014). 2.2. formal education human capital theory states that education is one of the key investments that influences the attainment of owner’s competencies (becker, 1964). when an owner increases his/her education level, s/he is expected to gain more stock of human knowledge which increases the ability to run the business successfully (mitchelmore and rowley, 2010; sarwoko et al., 2013; mahadalle and kaplan, 2017). however, it is difficult to generalize these findings as the attainment of competencies from education investment depends on the type of competencies to be attained and the education environment (reuber and fischer, 1994; quińones et al., 1995). this study therefore, goes far in contributing to the literature, the effect of formal education on attainment of entrepreneurial, managerial and functional competencies. 2.3. family background in doing business individuals determine their own social and personal value based on how we stack up against others (festinger, 1954). children determine their competencies from their referees who are the parents or guardians. evidence indicates that, some of owner-manager competencies are learned and acquired through observing parents and relatives doing business or through participating in the family business (niittykangas and tervo, 2005; mungai and velamuri, 2011). this study also aimed at finding the influence of family background in doing business on the attainment of owner-manager competencies. 2.4. age of the owner-manager age has been an important characteristic used as one of the important variables in grouping individuals in a contemporary social science research and explains differences among them. literature shows that, older ownermanagers are logically expected to attain more necessary competencies because they have more of experience, have gone through many challenges, which make them strong and confident (raposo et al., 2008; isaga, 2012). in contrast, evidence shows that younger owner-managers are more energetic, have higher ambitions and are more probable to be dedicated to working long hours, which are generally necessary competencies for business performance (storey, 1994; woldie et al., 2008). on the other way, storey (1994) showed that middle-aged individuals are comparatively likely to be experienced and more energetic to work than younger or older ownermanagers. what is not yet clear is at what age the owner-manager archives all necessary competencies for business performance. this calls for more research in order to understand more the various differences in age of the ownermanager at which owner attains the required entrepreneurial, managerial, and functional competencies. 2.5. sex of the owner-manager literature indicated various demographic variables as the factors influencing owner’s competencies, but very few studies considered the influence of sex on the attainment of owner’s competencies (sajilan et al., 2015). a research indicates that male and female have different socialization experiences, which shape their behaviour asian business research journal, 2018, 3: 41-47 43 © 2018 by the authors; licensee eastern centre of science and education, usa towards the operation of the business. furthermore, females have less competency to operate a business than males (raposo et al., 2008). thus, these differences predicted to affect the ability to attain competencies in operating the business (díaz-garcía and jiménez-moreno, 2010; yordanova and tarrazon, 2010; kefale and chinnan, 2012). futhermore, researchers indicate that, male and female are reported to have different motives and perception in initiating a business (manolova et al., 2007). females are said to have low motives toward the business compared to males. the kind of motivation an individual has affects development of competencies for business performance (ali and mahamud, 2013). therefore, differences in motives in initiating a business lead to the different efforts in developing competencies (cliff, 1998). for example, females perceiving business as a cooperative network, they make themselves to have more of managerial competencies in the business than males (madichie and gallant, 2012). 3. methodology 3.1. research approach and design this study examines the influence of owner-manager demographic characteristics on the acquisition of the competencies necessary for performance of small restaurant businesses by using the quantitative method approach. since this is a population-based survey, we have used cross sectional design to collect data on the entire study population. 3.2. sampling our study surveyed a random sample of 392 entities from 459 small restaurant businesses with the specified criteria within the municipalities. moreover, to avoid the diversity of the results, owner-managers were selected from the small restaurant business with 1-10 employees, with a 5-20 million capital and being in operation for at least three years and not more than 10 years. this is because most of the owner-managers are found within the business with such characteristics. furthermore, within this range of business characteristics, owner-manager competencies are more needed than in large businesses where there are more of specialized employees with necessary competencies who can assist the owner. the selection of the small restaurant businesses was from the original list of licensed small restaurants businesses within ilala and dodoma municipality. 3.3. structured questionnaire since this is a survey based research, data was collected through a structured questionnaire. moreover, proper questionnaires design is vital for data quality and minimisation of the measurement error. therefore, as the interview involved owner-manager within the local community, the common language used is “kiswahili”. furthermore, after the design of the survey questionnaire, the instrument was subjected to pilot study in order to; first, guarantee the reliability of study results; second, ensure clarity and relevance of research instruments and methodology; third, test if the variables and measures were suitable. the pilot study was followed by refinement of the questionnaire; the original questionnaire was subjected to changes as per correction from the pilot study. the following changes were made; shortening of questionnaire and questions which were found to be ambiguous were dropped. furthermore, refining the questionnaire which included, rephrasing and sequencing of questions was taken into account to ensure that all respondents have a common understanding of the questions. 3.4. owner-manager competencies competencies are overall necessary skills and knowledge owned by an individual for the betterment of the performance. it is the ability of the individual to conduct the specified activities successfully. owner-manager competency measures have been adopted from man (2001) and grouped as proposed by ahmad et al. (2011). therefore, this study has measured the owner-manager competencies basing on the three main responsibilities of an owner-manager in the business. that is, entrepreneurial, managerial and functional competencies. for the purpose of this article, and taking into account the above explanation, owner-manager competencies articulated in terms of entrepreneurial, managerial, and functional is the dependent variable. this measure required the owner-manager to indicate their level of agreement on being able to undertake the described entrepreneurial, managerial and functional activities. five scales were used for this purpose: strongly disagree, disagree, neither agree nor disagree, agree, strongly agree. for that way, they were indicating the competency they have for performing prescribed activities. the independent variables include the variables representing formal education, industrial working experience, and family background in doing business, age and sex of the owner-manager. their measurement are given in table below table-1. measurement of the variable independent variable: ownermanager demographic characteristics measurement 1 formal education categorical variable measured in level of education 2 industrial work experience continuous variable measured in years of experience in food related businesses 3 family background in doing business dummy variable measured as the owner-manager having a family background in doing business as yes or no 4 age of the owner-manager continuous variable measured as the time of life of the owner-manager in terms of years since born. 5 sex of the owner-manager dummy variable measured as the sex of the ownermanager, either male or female. source: developed from literature review, 2017 asian business research journal, 2018, 3: 41-47 44 © 2018 by the authors; licensee eastern centre of science and education, usa 3.5. model specification the objective of the study was to examine the influence of owner-manager characteristics on acquisition of owner-manager competencies. basing on the nature of the study variable, specifically on the nature of dependent variable (owner-manager competencies) the structural equation modeling (sem) was found to be appropriate for data analysis of this research. sem has been used since it has the ability to model the relationship that has the unobserved variable. furthermore, it has the advantage of examining complex patterns of relationship among the construct in an integrative way. structural equation modeling (sem) was perfumed through the stata 15 software. sem is the technique that combines confirmatory factor analysis (cfa) and regression analysis. cfa is the process of validating latent (unobserved) construct. since the study objectives include the latent variable (owner-manager competencies) the researcher performed cfa for the latent constructs in the study before modeling their inter-relationship in sem by using regression analysis. 4. results and discussion 4.1. confirmatory factor analysis to examine the influence of owner-manager demographic characteristics on the attainment of their competencies; we first run confirmatory factor analysis among the owner-manager competencies (entrepreneurial, managerial and functional) construct. confirmatory factor analysis was meant to test whether the measures of these construct are consistent with the researcher’s understanding of the nature of that construction. likewise, all measurement models must be validated and accepted prior to modeling the structural model. table-2. the cfa report for every construct in the model construct item factor loading entrepreneurial competency processing food and services that customer wants 0.93 processing food that brings benefit to customers 0.98 sell food at a cheaper price 0.99 take new problem as an opportunity 0.99 assess the trend of small restaurant customers 0.99 prioritize work in alignment with the business goal 0.99 managerial competency lead employees 0.98 motivate employees 0.99 delegate 0.94 interact with customers 0.89 networking 0.99 use of business support services 0.96 family support 0.90 functional competency use modern processing facilities 0.92 use special knowledge in food processing 0.93 offering delivery services 0.90 visibility during processing of food 0.95 design restaurant environment 0.92 source: data analysis, 2017 in this study, we had 3 dimensions which are entrepreneurial competencies (6), managerial competencies (7) and functional competencies (5). according to awang et al. (2015) the factor loadings for each item should be 0.6 or higher for an established item. it is apparent from table 2 that, factor loading are above 0.6. therefore, confirmatory factor analysis shows that all of the 18 measuring items from three competencies are relevant and were retained for analysis. the analysis goes on with the examination of the fitness indexes. therefore, in order to retain or reject the hypothesized model, incremental fits, absolute fits and parsimonious fits were examined. the examination of the fitness indexes as presented in table 3 below indicates that the indexes values obtained meet the required level of the model fit. therefore, we confirmed that the data fit well the model. table-3. the fitness indexes for the polled measurement model name of category name by index index value level of acceptance comments 1 absolute fit root mean square of error approximation (rmsea) 0.075 <0.08 the required level is achieved 2 incremental fit turker-lewis index (tli) 0.929 >0.90 the required level is achieved 3 parsimonious fit chi-square/degree of freedom (chisq/df ) 3. 250 <0.30 the required level is achieved source: data analysis, 2017 4.2. structural model after the fitness an index was archived, the study goes on modeling for structural equation model. the exogenous variable industrial work experience, family background, education level, age and sex of the ownermanager have been regressed to latent endogenous variable entrepreneurial, managerial and functional competencies in one structural model. asian business research journal, 2018, 3: 41-47 45 © 2018 by the authors; licensee eastern centre of science and education, usa table-4. results of the effect of owner-manager characteristics on development of owner-manager competencies coef std.err z p value entrepreneurial age -0.0145 0.0044 -3.25 0.001 industrial working experience -0.03363 0.01126 -2.99 0.003 female 0.00122 0.075955 0.02 0.987 secondary 2.5132 0.1982 12.68 0.001 collage/university education 2.2763 0.20588 11.06 0.001 family background (yes) 0.1727 0.07497 2.30 0.021 managerial age 0.019 0.006 3.02 0.003 industrial working experience -0.036 0.015 -2.27 0.023 female 0.1709 0.1078 1.59 0.113 secondary 3.09 0.27 11.34 0.001 collage/university education 2.78 0.28 9.76 0.001 family background (yes) 0.27 0.106 2.54 0.011 functional age -0.012 0.004 -2.48 0.013 industrial working experience 0.028 0.012 2.33 0.020 female -0.06 0.08 -0.83 0.408 secondary 1.870 0.212 8.79 0.001 collage/university education 1.73 0.221 7.83 0.001 family background (yes) 0.30 0.82 3.67 0.001 source: data analysis, 2017 we found that the variable with p value less than the conventional value of 0.05 and with positive coefficient contributes significantly to the attainment of owner-manager competencies. 5. discussion our research objective focused on the determinants of owner-manager competencies. our results support greatly the expected notion that secondary and college level education have positive effects with respect to attainment of owner-manager competencies both in terms of entrepreneurial, managerial and functional. these results are in accord with earlier observations which showed that competencies of small business owners can be improved through education programs (ahmad, 2007; mitchelmore and rowley, 2010; sarwoko et al., 2013). however, the results of this study are in contrast to the former reviewed literature, for instance wickramaratne et al. (2014) who revealed a negative relationship of formal education competencies of the owner-manager. an explanation for this may be that well-educated owner-managers are expected to make logical decisions that might be advantageous in improving performance. from the findings we observed that industrial working experiences of the owner-manager is important in explaining the attainment of functional competencies. the findings of this study might be related to the fact that, industrial work experience helps an owner-manager to learn specific ways of operating the specific business. it is encouraging to compare these findings with that revealed by katozai (2005) and nsubuga (2009) who revealed that as one acquires more work experience, s/he acquires more skills, techniques and methods specifically in improving performance capabilities. however, our results found negative relationship on the industrial working experiences and attainment of necessary entrepreneurial and managerial competencies. these results may be because; it takes owner-manager energy, creativity, risk taking and motivation to act like attaining such competencies. also, this study speculates that, the result from this study can be caused by failure of the ownermanager to use previous experience. the results also revealed that, there is a positive relationship between the owner-manager coming from the family with background in doing business and attainment of owner-manager competencies in terms of entrepreneurial, managerial and functional. this can be explained by the fact that, owner-managers who came from families with background of doing business are more likely to learn and adopt skills from their parents or guardians in the ways of operating the business. the findings of this study are in line with that of niittykangas and tervo (2005); mungai and velamuri (2011) who provided some evidence that the competencies of an individual toward performance in their business are obtained through observing their parents and relatives or through participating in the family business. our result also supports that there is positive and significant relationship on the influence of age of the ownermanager and the attainment of managerial competencies. it also shows that, the ability of the owner-manager to attain managerial competences increases slightly at age 24 until the age 36 where it sharply increases up to age 65 when it starts to decrease. a strong relationship between age of the owner-manager and managerial competencies has been reported in the literature (littunen and virtanen, 2006). this result may be explained by the fact that, as owner-manager gets older, he/she acquires more experiences from the business as well as from the family. however, age of the owner-manager negatively influences the attainment of entrepreneurial and functional competencies. this finding corroborates the idea that, as the age of the owner-manager increases risk aversion increases. the reason for this may have something to do with the old individual becoming incapable of handling the challenges of new technology, innovation, searching for markets and obsolescence of their education level. however, the results are different with raposo et al. (2008) who showed that, with increased age, individuals get more entrepreneurial competencies in identifying opportunities. asian business research journal, 2018, 3: 41-47 46 © 2018 by the authors; licensee eastern centre of science and education, usa in relation to the variable sex, the result showed that in compared to male owner-manager; female ownermanagers have a negative significant relationship with the attainment of both competencies. for this result, this study considers it to be due to the difference in motives for initiating a business among male and female ownermanagers. it has been comparably shown that female owner-managers operate their business with lower motivation than their male counterparts. this is from the fact that, the motives to initiate the business derives the necessary efforts toward fulfilling it. the findings of this study are consistent with those of other studies which suggest that, women’s skills and knowledge of entrepreneurial activities are below average (naudé, 2013). 6. conclusion and policy implication the aim of the current study was to determine the influence of owner-manager demographic characteristics on attainment of their entrepreneurial, managerial and functional competencies. based on survey data collected from 392 owner-managers of small restaurant businesses from two regions in tanzania, it became clear that ownermanager with secondary and college level education and coming from families with a background in doing business have greater influence on the attainment of entrepreneurial, managerial and functional competencies. specifically, male owner-manager influences the attainment of entrepreneurial and managerial competencies. in addition, age of the owner-manager influences the attainment of managerial competencies while industrial working experience and female owner-manager significantly influence the attainment of functional competencies. the evidence from this study implies that attainment or failure to attain entrepreneurial, managerial and functional competencies can be traced back to demographic characteristics of the owner-manager. therefore, whoever wants to start the small restaurant business should try to understand their strength and weaknesses that are coming from own demographic characteristics. in that way, it would be easier for owner-manager to match themselves with the task of running a business or decide on any other way of compensating for their weaknesses. this research extends knowledge on the previous studies that the attainment of necessary entrepreneurial, managerial and functional competencies for small restaurant business performance is greater from owner-manager who comes from family with business experiences and has at least secondary education level. the study also contradicts the common opinion and previous research that industrial working experiences of the owner-manager are important in developing entrepreneurial and managerial competencies that are necessary for 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publisher: eastern centre of science and education acknowledgement: all authors contributed to the conception and design of the study. funding: this study received no specific financial support. competing interests: the authors declare that they have no conflict of interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 33 © 2018 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 3, 33-40, 2018 issn(e) : 2576-6759 doi: 10.20448/journal.518.2018.31.33.40 © 2018 by the authors; licensee eastern centre of science and education, usa service quality delivery of rural banks: perception of customers in emerging economies michael ayikwei quarshie1 reginald djimatey2 ama abakah-anaman3 ( corresponding author) 1,2department of entrepreneurship and business sciences, university of energy and natural resources, sunyani, brong ahafo region, ghana 3takoradi technical institute, takoradi, western region, ghana abstract the aim of this study was to investigate service quality delivery of rural banks in emerging economies from the customers’ perspective. this study employed descriptive design. a questionnaire designed by the researchers was used to obtain data from 382 customers, using convenience sampling technique. data were presented and analyzed using descriptive statistics which included frequencies, percentages, means and standard deviation. the study found that customers want rural banks in takoradi to establish more convenient branches i.e. sub branches, outlets and further extend banking hours to resolve overcrowding at the banking halls. it was therefore recommended that management of these rural banks in takoradi, ghana should liaise with stakeholders to establish more branches in its catchment areas to ease the frequent congestion in the banking halls. keywords: service quality delivery, rural bank, servqual, customer satisfaction, responsiveness, empathy, assurance, reliability, tangibility, perception jel classification: m30 1. introduction in the rural banking sector, service quality remains a very essential part of customers’ experience. as a result, most rural banks consistently appraise their services to promote customer satisfaction, keeping in mind the end goal to improve consumer loyalty. as demonstrated by swar and sahoo (2012), clients are satisfied when rural banks offer quality service that meets customer aspirations. quality service rendered by banks along these lines creates a more fulfilled client. some studies (chandon et al., 1997; jallat and wood, 2005; farayibi, 2016) have pointed out that the satisfaction of customers is highly dependent on the quality of service offered by an organization. the quality of service delivery is noted as a very influential variable in maintaining the satisfaction of customers which leads to the promotion of customer loyalty in the long run. the banking sector has seen some various degrees of innovations in recent times. these have been as a result of new advances in technology and marketing, stiff competition, advertisement, unfavorable economic conditions, unpredictable customers and rapid changing business climate. notably, the foregoing factors pose some challenges to these rural banks. increased product varieties, diffusion and competition as well as highly enlightened consumers require that bank marketers solicit views on how to meet customer satisfaction through effective service quality delivery. because of the swift advancement in technology and stiff competition, most firms, especially banks, must provide excellent services to accomplish the dynamic banking needs of their customers. in a bid to maximize customer satisfaction, rural banks must examine the kind of service offered to customers. rural banking in ghana today is transforming to warmly embrace the customer needs in their strategic orientation. besides their dominance in the rural areas under their catchment areas, rural banks now find themselves in major cities that are within the mandated 40-kilometer radius. universal banks are opening more mobilization centres in urban places. however, the challenge is that as rural economies undergo fundamental changes, so do the universal banks. banking deregulation in recent times has encouraged the evolution of new financial institutions much as the nationwide branching of existing ones (addeah, 2001). larger financial institutions by virtue of their flexible policy regulations are extending their services and products from the cities into these rural places and competing with the rural banks. it is thus a common activity to witness the rural communities flooded with commercial banking and micro financing institutions (bank of ghana, http://crossmark.crossref.org/dialog/?doi=10.20448/journal.518.2018.31.33.40&domain=pdf&date_stamp=2017-01-14 http://ecsenet.com/index.php/2576-6759/article/view/9 https://orcid.org/0000-0003-4391-6484 https://orcid.org/0000-0001-9757-5799 https://orcid.org/0000-0003-2229-4620 http://ecsenet.com/index.php/2576-6759/article/view/9 https://orcid.org/0000-0003-4391-6484 https://orcid.org/0000-0001-9757-5799 https://orcid.org/0000-0003-2229-4620 http://ecsenet.com/index.php/2576-6759/article/view/9 https://orcid.org/0000-0003-4391-6484 https://orcid.org/0000-0001-9757-5799 https://orcid.org/0000-0003-2229-4620 http://ecsenet.com/index.php/2576-6759/article/view/9 https://orcid.org/0000-0003-4391-6484 https://orcid.org/0000-0001-9757-5799 https://orcid.org/0000-0003-2229-4620 asian business research journal, 2018, 3: 33-40 34 © 2018 by the authors; licensee eastern centre of science and education, usa 2011). in order to raise funds to fulfill their mandate of meeting financial obligation of the rural communities, rural banks have to re-strategise and expand into economically viable areas. however, unlike the universal banks that have the freedom to raise equity capital and open branches without constraints, rural banks are constrained by two main factors: they are permitted to operate within a forty-kilometer radius from their head office and equity capital is mainly sourced from their shareholders from their catchment area (association of rural banks, 2002). these characteristics place restriction on the competitiveness of rural banks in the financial sector. many rural banks find themselves disadvantaged by the recent economic and financial changes as well as deregulations in other financial establishments. this policy restriction poses as a regulatory burden on the rural banks, making it difficult for them to compete favourably with their counterparts in the other financial institutions. the above demands that rural banks must surely improve the quality of service offered in a bid to attract and satisfy the banking needs of their customers. satisfied customers become royal and provide sustained revenue for the rural banks (swar and sahoo, 2012). satisfied customers also attract potential clients into rural banks. to these effects all organizations strive for customer satisfaction. high patronage of service offered by an organization largely relies upon the satisfaction that customers get from that service. remarkably, sales to some extent are directly linked to customer satisfaction as increase in sales requires constant improvement in the service quality, leading to continuous patronage. as a result, the servqual model which was developed by parasuraman et al. (1985;1988) has been employed by many researchers globally to measure the quality of service offered by various institutions. parasuraman et al. (1988) conceptualized the servqual model as an instrument to measure the quality of service based on the suggestion that quality of service is the difference between a customer’s expectations and perception of service delivery. as it were, service quality assessment is conceptualized as the gap between what clients anticipate from a kind of service offered by an organization and the assessments of the performance of that particular service offered by that organization. parasuraman et al. (1988) established, that high degrees of relationship exist between correspondence, ability, graciousness and security on one hand, and access and comprehension on the other. they developed two dimensions of empathy and assurance to make up the five merged dimensions, specifically, tangibility, reliability, responsiveness, assurance and empathy. these measurements, therefore, served as the basis for measuring or assessing the quality of service delivery of rural banks in this study. though some rural banks have introduced some few programmes and policies aimed at mitigating the needs of its customers, no much scientific study has been done by the rural banks to ascertain whether or not these interventions have been able to yield the expected return. these programmes include provision of appealing materials and equipment’s, provision of convenient branches (sub branches, outlets) and operating in extended hours to all its customers without wasting much time in long queues. it is against this background that this study sought to apply the measurement to investigate service quality delivery of rural banks in an emerging economy, ghana from the customers’ perspective. 2. literature review 2.1. the concept of service offering unlike tangible products, a service is an unpredictable phenomenon and many segmented definitions have surfaced (jallat and wood, 2005; hirvonen, 2007). jallat and wood (2005) characterized a service as a concurrent process, a social interaction, a relationship and an intangible result. zeithaml et al. (2000) noted that services can be observed as deeds, procedures and performance. as indicated by kotler and keller (2006) a service is a demonstration or execution that one party can offer another that is basically elusive and does not result in the ownership of anything. different authors have proffered various definitions relative to what service is or is not. notwithstanding the different definitions, many believe that services are intangible, interactive, experiential and do not include the exchange of possession 2.2. characteristics of service there are four special service characteristics that distinguish services from goods. as noted by zeithaml et al. (2006); zeithaml et al. (2000) and soutar and mcneil (1996) the four fundamental attributes that separate services from goods are inseparability, intangibility, variability and perishability. zeithaml et al. (1990) in admission recognized intangibility, heterogeneity, perishability and inseparability as the principal attributes that makes service not the same as goods as far as how they are delivered, expended and evaluated. 2.3. types of service studies (bitner, 1990; chandon et al., 1997; liljander and mattsson, 2002) have indicated distinctive sorts of connections that may happen in an experience. these are face-to-face interactions, remote interactions, and phone interactions (surprenant and solomon, 1987; bitner, 1990; chandon et al., 1997; liljander and mattsson, 2002). it has also been suggested that the different categories of service encountered may affect the overall service assessment (danaher and mattsson, 1994; liljander and mattsson, 2002). 2.4. service delivery in banks service delivery is very much associated with the kind of quality services provided to clients or customers. bank service delivery can simply be observed as the delivery and provision of quality services rendered to customers. banks’ ability to render a good quality service to their clients would definitely be evident in their customer base as every customer would want a quality service (farayibi, 2016). asian business research journal, 2018, 3: 33-40 35 © 2018 by the authors; licensee eastern centre of science and education, usa obviously, one of the components that separate competitors (banks) from the others (different banks) in the ghanaian financial sector is their quality, level and nature of service rendered. this is on the grounds that service quality delivery decides the level of clients' satisfaction and thus, the client base of any bank. the support by clients on the quality of service delivery by a given bank, presumably, is subject to the level of the fulfillment they so get from it. satisfaction in connection to a bank service quality delivery is the clients' assessment of the service regarding whether that service addressed his or her issues and desires (ako-nai, 2011). happy and satisfied customers behave in a positive manner. the impact of service quality delivery by banks and the satisfaction resultant by clients are getting to be recognizable. given that contemporary clients are more enlighten and informed in recent time, mkoma (2014) puts forward that meeting clients’ desire in relations to satisfaction is progressively becoming more cumbersome. 2.5. the concept of quality some literature suggests that it is quite difficult to define quality (zeithaml et al., 2006). there is no globally acknowledged definition of the term quality. the term quality has been viewed differently by many researchers’. quality might be characterized as a property of goods or service, or procedures in delivering these goods or services (sahney et al., 2004) characterized quality as meeting or surpassing client desires or expectation. some researchers contend that quality is the way clients characterize it lovelock and wirtz (2007) and must be characterized from client's point of view. sahney et al. (2004) contend that customer’s definition of quality product helps distinguish and build up the applicable bases and criteria for assessing quality. a meaning of "quality" was given by coulson-thomas and brown (1990) from customer’s point of view. they viewed quality as: "how reliably or dependent is the product or service rendered, meets or surpasses the customer? (external and internal) expectations and needs". brenda and steve (2000) support this view and postulate that the term quality alludes to a state of mind about how to conduct business, regardless of the kind of business adventure. that state of mind fixates on two things: the first being meeting or surpassing customers' wants, needs, and desires and the second is, doing it in a productive way. it does no great to deliver a phenomenal product that no one needs, similarly as it does no great to create a superb item utilizing wasteful procedures. the quality concept then refers not just product or service provided but also how it is provided. 2.6. servqual model zeithaml et al. (2000) define service quality as “… a global judgment or attitude relating to the overall excellence or superiority of the service”. they conceptualized a customer’s assessment of overall quality of service by applying (oliver, 1980) disconfirmation model, as the gap among desires and views of service assessment levels. besides, zeithaml et al. (2000) recommend that overall quality of service assessment could be controlled by the measurement scale, servqual which employs five generic measurements: tangibles (the presence of physical facilities, equipment, personnel, and communications materials); reliability (the capacity to perform the guaranteed benefit constantly and precisely); responsiveness (the readiness to help clients and offer prompt service); assurance (the competence of the system and its believability in giving a courteous and secure service); and empathy (the approachability, ease of access and exertion taken to comprehend client's needs). parasuraman et al. (1985) from their exploratory research developed the servqual instrument and set out a theoretical framework for the measurement of quality of service. the servqual instrument has since become the most prevailing instrument for measuring quality of service. it initially comprises 10 measurements with 97 items. however, this was later reduced to 5 measurements with 22 items in 1991. the five dimensions are tangibles, reliability, responsiveness, assurance and empathy. 2.6.1. tangibility tangibles involve the physical proof of the service. according to zeithaml et al. (2006) tangibles in details normally show physical facilities of the service provider, the appearance of personnel, materials associated to the service (credit and debit sheets, cheque books etc.), decorations and business hours, the tools and equipment used to provide the service. tangibles are usually used by firms to express image and signal quality. 2.6.2. reliability according to zeithaml et al. (2006) reliability is “the ability to perform the promised service dependably and accurately” or “delivering on its promises ". does the firm deliver the service comfortable the first time? does the firm respects it promises? these are a portion of the inquiries which should be answered by providers of service if they are to accomplish unwavering quality. this measurement of quality service as indicated by parasuraman et al. (1985) is the means by which the providers of service can give service to a client as promised, tried and true in dealing with clients' service issues, performs service right at the first instance, give service at guaranteed time and keep clients always informed about when service will be performed or available. 2.6.3. assurance assurance involves the knowledge and courtesy of employees and their capacity to pass on trust and certainty. it likewise incorporates skill, obligingness, believability and security. in the view of saad andaleeb and conway (2006) assurance may not be so vital with respect to different industries where the risk is higher and the result of utilizing the service is questionable. for example, in the medical and healthcare industry, assurance is an imperative measurement that clients utilize as criteria in evaluating a health center or a specialist for a task. the trust and ultimate confidence might be visible in an employee who connects the client to the organization (zeithaml et al., 2006). asian business research journal, 2018, 3: 33-40 36 © 2018 by the authors; licensee eastern centre of science and education, usa 2.6.4. responsiveness responsiveness concerns the ability or preparation of employees to offer service (parasuraman et al., 1985). responsiveness is concerned with managing the client's inquiries and concerns and immediately attending to that concerns or providing solution to this issues. a firm is known to be responsive when it conveys to its clients to what extent it would take to find solutions or have their issues managed. to be effective, organizations need to take a look at responsiveness from the view point of the client as opposed to the organization's point of view (zeithaml et al., 2006). 2.6.5. empathy empathy involves minding and arrangement of individualized regard for clients by employees of the firm (zeithaml et al., 2006). in this respect, the client feels exceptional and extraordinary. while trying to create empathy, employees of the firm should try to know the names of their clients, their inclinations and needs and find a way to fulfill them. small scale organizations through the customized services to customers are in a superior position to accomplish empathy than large organizations. 3. research methodology this study adopted a descriptive survey design. this descriptive research is designed to describe the existing situations and the features of rural banks in takoradi. the researchers sought to answer the questions who, what, when, where and how (zikmund, 2003). in this study, the researchers applied a survey technique by distributing questionnaires to gain feedback from respondents and to gain understanding about perceive customer service delivery at the rural banks. according to zikmund (1994) a survey technique can gather data or information from people by using a questionnaire. in that regard this survey uses questionnaire to collect data. study population is a group of people who have the information that researchers seek and from which conclusions can be acquired (malhotra and birks, 2007). in this case, the study population was 8,513 customers from the rural banks as follows: ahantaman rural bank ltd, lower pra rural bank ltd, arb apex bank ltd, mansoman rural bank ltd and lower amenfi rural bank ltd amanfrom in takoradi. from the total population, the sample size was 382 respondents. this was determined using the sloven’s formula; which states as follows: n = ( ) where n = sample size, n = accessible population and e = level of significance at 0.05. the study employed non-probability sampling technique, specifically, convenience sampling technique was used to obtain data because it is generally believed to be fast, easy, inexpensive, and the customers are reachable for the study. the sample comprises customers who were demanding service and were present at the banking hall during the data collection period. researchers employ convenience sampling in light of the fact that it additionally has other research advantages apart from ease of availability and time saving. convenience sampling is generally utilized on the grounds that it enables the researchers to get essential information and trends relative to the study without the inconveniences of utilizing a randomized sample. the main instrument employed for the data collection was a structured closedended questionnaire. the questionnaire was designed to provide specific responses aimed at addressing the research question. respondents were given a questionnaire to fill. likert scales were used in measuring the variables of interest that have to do with respondents’ level of perceived banking service quality delivery. fifteen questions on quality service delivery were administered to the respondents on which the analysis was based. respondents were expected to tick the chosen item that corresponds to a given mark in likert scale starting from 1= least agree to 4=highest agree. there are some reasons behind the selection of this method. first, it allows large quantum of information to be solicited at a relatively low cost. second, more accurate and precise responses are obtained because researchers’ bias can be avoided. in order to reduce the chances of getting a wrong answer, attention was paid to the reliability and validity of the instrument used. some steps were taken into consideration to ensure the validity and reliability of the study: data were obtained from the reliable sources. which means that a respondent must be a customer of the bank under research; questionnaire was made based on literature review; questionnaire was pre-tested by experienced persons to ensure it measured what it was supposed to; data were obtained through a short period of time. results from the pre-test showed cronbach’s alpha of 0.78 in line with pallant (2007) suggestions. to ensure strict compliance with ethical standards of research, written permission was duly sought from the respective rural banks, which was duly granted before data were collected. the researchers introduced a clause in the introductory paragraph of the questionnaire assuring respondents of anonymity and confidentiality. in addition, the time required for filling the questionnaire was mutually agreed between the respondents and the researchers. 4. results and conclusion 4.1. respondent’s background information in this study, respondents’ background information was described as regards of sex, age range, highest education level, experience with the bank and type of account. respondents were to state their characteristics for the purposes of classification and comparison. the study employed a closed ended questionnaire to categorize respondent’s background information and responses were analyzed using frequencies and percentage distributions as shown in table 1. the results indicate that males were the majority respondents as represented by 61.5 per cent while females were in the minority as represented by 38.5 per cent. this finding shows that the greater number of rural banking populace in takoradi is dominated by male customers. asian business research journal, 2018, 3: 33-40 37 © 2018 by the authors; licensee eastern centre of science and education, usa about 32.5 per cent of the respondents indicated that their ages fell within the range 26-35 years. this was followed by 23.8 per cent whose ages range between 36-45 years. about 13.9 per cent of the respondents affirmed the age range of 18-25 years. cumulatively, 29.9 per cent of the respondents indicated a range of 46 years and above. the finding reveals that most of customers of the rural banks in takoradi are youthful, thus between 18-45 years. concerning the highest educational levels of respondents, the findings show that 27.2 per cent have senior high school certificate. approximately 29.1 per cent indicated that their highest educational level was junior high school education. about 12.3 per cent and 11.3 per cent of the respondents indicated that they have higher national diploma and bachelor’s degree respectively. the background information further presents respondents experience in terms of the number of years they have been transacting business with the rural bank. the figure shows that 37.2 per cent of the respondents had banked between 1-5 years. this was followed by 34.0 per cent of the respondents whose bank experience spans 10 years and above. nineteen per cent had banked between 6-10 years. this indicates that the majority of the respondents have some knowledge and experience about the rural banks since they have been customers for these respective banks for relatively longer period of time. with regard to the type of accounts held, 45.8 per cent of the respondents hold savings account, 24.3 per cent hold salary account, 15.7 per cent hold current account and the remaining 14.2 per cent hold loan account. the findings show that most customers prefer savings account with the rural banks in takoradi to other forms of accounts. table-1. description of respondents’ background information background information frequency per cent sex male 235 61.5 female 147 38.5 total 382 100 age range (years) 18-25 53 13.9 26-35 124 32.5 36-45 91 23.8 46-55 69 18.0 56 and above 45 11.8 total 382 100.0 highest education level middle school 59 15.4 jhs 111 29.1 shs 104 27.2 diploma 6 1.6 hnd 47 12.3 first degree 43 11.3 postgraduate 12 3.1 total 382 100.0 experience with the bank (years) below 1 year 36 9.4 1-5 142 37.2 6-10 74 19.4 above 11 130 34.0 total 382 100.0 type of account current 60 15.7 savings 175 45.8 loan 54 14.2 salary 93 24.3 total 382 100.0 source: primary data, 2018 4.2. level of perceived service quality delivery the objective of this study was set to determine the level of perceived service quality delivery in rural banks in takoradi, western region, ghana. service quality delivery was measured using fifteen quantitative questions. respondents were required to indicate the extent to which they agree with each statement by indicating the number that best describes their perception. all the fifteen items on service quality delivery were likert scaled using four points ranging between 1= least agreement and 4= highest agreement. the responses were analyzed and described using means and standard deviations as summarized in table 2. in relation to the tangibility dimension, the results revealed that most of the respondents expressed high agreement on whether employees at the rural bank are neat in appearance (mean = 2.86, std = 1.19). the results obtained further showed that the rural banks in takoradi have modern looking equipment (computers, fast ict facilities etc.) (mean = 2.67, std = 1.29). the respondents, however, expressed low agreement with regard to asian business research journal, 2018, 3: 33-40 38 © 2018 by the authors; licensee eastern centre of science and education, usa whether materials and equipment associated with the service by the bank (such as atm, pamphlet or bank statements) are visually appealing and easy to understand at the bank (mean = 1.81, std = 1.02). with respect to the reliability dimension, the results showed that most respondents expressed high level of agreement on whether customers feel secure in transacting business with the rural banks (mean = 2.95, std = 1.28). another issue on whether or not when the rural bank fulfils their promises when they promise to do something by a certain time, attracted high levels of agreement on the part of the respondents (mean = 2.71, std = 1.23). most respondents highly agreed that the rural banks perform services right at the very first instance (mean = 2.64, std = 1.31). on the responsiveness dimension of service quality delivery, the findings revealed that most respondents expressed very high agreement on the item that employees of the rural banks are always willing to help customers when they face any kind of challenge (mean = 3.57, std = 0.75). the results further showed that respondents expressed very high agreement on the issue that employees keep customers informed as to when a service would be performed (mean = 3.53, std = 0.69). respondents again expressed very high levels of agreement on the issue that employees at the rural bank give customers immediate service when customers visit the rural bank (mean = 3.39, std = 0.94). in relation on the assurance dimension of service quality delivery, the findings reveal that employees at the rural bank make customers feel safe in their transactions (account maintenance, cash transfer, cash withdrawal and deposit) (mean = 3.05, std = 1.16). the respondents highly agreed that most employees of the rural bank have strong knowledge and therefore are in the position to answer customers’ questions about their offers and operations (mean = 2.81, std = 1.27). respondents highly agreed that at any material time employees at the bank are consistently courteous to customers (mean = 2.76, std = 1.33). table-2. description of the level of service quality delivery mean std. dev. interpretation tangibility employees at the bank are neat in appearance 2.86 1.19 high the rural bank has modern looking equipment (computers, fast ict facilities etc.) 2.67 1.29 high materials and equipment associated with the service (such as atm machines, pamphlet or bank statements) are visually appealing and easy to understand at the bank 1.81 1.02 low sub-total 2.45 low reliability customer feels secure in transacting business with the bank 2.95 1.28 high when the bank promises to do something by a certain time, they do it. 2.71 1.23 high the bank performs services right the first time. 2.64 1.31 high sub-total 2.77 high responsiveness employees of the bank are always willing to help customers when they face any kind of challenge. 3.57 0.75 very high employees keep customers informed as to when service will be performed. 3.53 0.69 very high employees at the bank give customers immediate service when they go to the bank. 3.39 0.94 very high sub-total 3.49 very high assurance employees at the bank make customers feel safe in their transactions (account maintenance, cash transfer, cash withdrawal and deposit) 3.05 1.16 high most employees of the bank have strong knowledge to answer customers’ questions about their offers and operations 2.81 1.27 high at any material time employees at the bank are consistently courteous to customers. 2.76 1.33 high sub-total 2.87 high empathy whenever customers request for service, employees at the bank give customer full attention 2.95 1.30 high the bank always informs customers about new and attractive schemes and always suggests to them to take correct decisions 2.88 1.12 high the bank has convenient branches (sub branches, outlets) and operates in extended hours to all its customers without spending much time on queues 2.34 1.26 low sub-total 2.72 high overall total 2.86 high source: primary data, 2018 key: mean range interpretation on the level of service quality delivery 3.26 – 4.00 very high level; 2.51 – 3.25 high level; 1.76 – 2.50 low level; 1.00 – 1.75 very low level asian business research journal, 2018, 3: 33-40 39 © 2018 by the authors; licensee eastern centre of science and education, usa the results on the empathy dimension of service quality delivery revealed that most respondents highly affirmed that whenever customers request for service, employees at the rural bank give customer full attention (mean = 2.95, std = 1.30). the findings further showed that respondents highly agreed that the rural banks always inform customers about new and attractive schemes and thus suggest to customers these new available offers to enable the customers make informed decisions (mean = 2.88, std = 1.12). respondents expressed low level of agreement relative to whether the banks have convenient branches (sub branches, outlets) and operate extended hours to its customers (mean = 2.34, std = 1.26). 5. conclusion the results revealed that service quality delivery in rural banks at takoradi, western region, ghana exists at different levels. for instance, the findings portray only one dimension with the highest (very high) level of service quality delivery; responsiveness at (mean=3.49); and which is equivalent to very high levels of agreement on the likert scale. secondly, service quality delivery which corresponds with high levels of agreement on the likert scale were assurance, reliability and empathy at (mean=2.87, 2.77 and 2.72) respectively. however, the results also showed a low level of service quality delivery relative to tangibility with a mean (means=2.45) which is equivalent to low agreement on the likert scale. this study, therefore, documents that responsiveness to service quality delivery of rural banks in takoradi, ghana, is the most dominant dimension in the catchment area. the least service quality delivery dimension is, however, tangibility. 6. recommendations it is 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financial support. competing interests: the authors declare that they have no conflict of interests. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 91 © 2024 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 9, 91-96, 2024 issn: 2576-6759 doi: 10.55220/25766759.206 © 2024 by the authors; licensee eastern centre of science and education, usa capital sources for small and medium enterprises in somalia and the effect on their performance: a case study of mogadishu based businesses abdikadir noor fidow united states international university-africa, nairobi, kenya; email: fidowcigal@gmail.com abstract the study intended to determine the source of capital for small and medium enterprises in somalia, and how it affects the performance of the smes. the study used venture capital, saved capital, family and friend capital, angle investor capital, interest-charging capital as the independent variable, while performance of smes was the dependent variable. the sample of the study was drawn from the population of small businesses in mogadishu, somalia. cochran’s formula was used to calculate the sample size. the standard deviation of the study was 0.5 with confidence level of 95%. the z value of 5% confidence level is 1.96 therefore, (1.96)2 (0.5) (0.5) / (0.05)2 = 385. pearson’s product moment (ppm) was used to measure the strength and the direction of the relationships between each of the dimensions of factors affecting the performance of small businesses. linear regression was also used to determine the relationship between the independent and dependent variables. the result of the study indicated strong significant positive relationship between saved capital and business performance, 0.421 with p-value of less than 0.05. angle investors have significant relationship with business performance, 0.385 with p-value of less than 0.05. there is no significant correlation between venture capital, interest charging capital, and the capital from family and friends against business performance. keywords: empowerment, initiative, interrogating, nafa scheme, re-defining, the gambia, theory, women, youth. jel classification: 1. introduction the term ‘ financial capital’ is an economic resources measured in terms of currency used by business entrepreneurs to buy the materials that they need to make a product or provide services in the sector of the economy upon which their operations are based. on the other hand, capital in businesses is the financial resources that businesses can utilize to fund their operations like machinery, cash, equipment, and all the other resources required by the business to function, produce product, distribute, and sell to the different customers. capital is vital resources of financing across all types of businesses in order to operate and produce goods or services. large businesses can issue stock or bonds to investors in order raise capital and buy equipment, trademarks, patents, brand names, buildings, and land to generate revenue and create wealth for their investors. small businesses, on the other hand, depend on saved fund, angel investors, venture capital, small business loans, government grants, crowd-funding, microloans, invoice factoring, credit cards, and free loans from family and friends. source of capital is very crucial for businesses because it determines the cost and other factors that contribute the profitability of the business. the ease of obtaining capital for investment does not only contribute the profitability of businesses, but rather improves the economic growth of that country generally. the cost of capital is equally important for the survival and profitability of any business. a company's investment assessments for new projects should always consider that it generates a return that exceeds the firm's cost of capital used to finance the project. otherwise, the project will not generate a return for investors and may consume the assets of the production, causing the collapse of the business. somalia is a country in the horn of africa ravaged by civil war in the last 35 years, but their economy is thriving and transcends many peaceful countries in the world. banks are also operational, lend out billions of noncash dollars to businesses as well as individuals, yet the majority of entrepreneurs in this nation does not know or use interest charged capital. the interesting question is what is the leading source of capital for small and medium enterprises in mogadishu without borrowing an interest-charging fund. the study will answer this question by studying the source of capital for small and medium enterprises in mogadishu. 2. theoretical review a theoretical review refers to the broad analysis and synthesis of the literature in order to identify research gaps, adopt new approach of testing existing theories, build new ones, and postulate a research agenda. a theoretical framework must establish an understanding of the theories and concepts that is germane and applicable to the topic of the research at hand. mailto:fidowcigal@gmail.com https://www.doi.org/10.55220/25766759.206 asian business research journal, 2024, 9: 91-96 92 © 2024 by the authors; licensee eastern centre of science and education, usa 2.1. pecking-order theory of capital structure pecking-order theory of capital structure theory proposed by myers and mailuf (1984) is centered on the proposition that financing follows a hierarchy and that, firms prefer internal over external financing and debt over equity (frank, goyal, & shen, 2020). the fundamental factor is the asymmetry of information: the more asymmetry of information, the higher the costs of the sources of financing. kim, lee, park, and waggle (2021) studied firms in europe and us to understand factors that determine their capital structure. financial flexibility was the factor that most significantly drove capital structure, suggesting a “pecking order” model application. standard issues that are pragmatic in the application of pecking order theory are: (a) debt is encouraged when firms experience loss or insufficient profits (b) debt is encouraged when equity is undervalued. current theory that contends that firm’s trade off of the costs and benefits of leverage is associated with tax effects, bankruptcy, and agency costs, in order to generate a target capital structure for the firm. there is a vivid justification why the theory of pecking-order theory is relevant to this study as it provides crucial information about sourcing cheapest fund for the business. 3. empirical review literature review is a compilation, classification, and evaluation of what other researchers and scholars have composed on a particular topic. a literature review usually forms part of a research thesis but it can also stand alone as a self-contained review of writings on a subject. in this section, we will review the common sources of capital for small and medium enterprises. shimasaki (2020) researched sources of capital and investor motivations in usa. the researcher found that capital sources has investing limitations, certain expectations for returns, and deferring motivations that drive their funding decisions. ou, and haynes (2004) examined the importance and uses of equity capital by small firms in usa. the study utilized the data collected in 1993-1998 about small business finance surveys. the study established the importance of public issue market (ipos) and the role of venture capital in promoting growth of small businesses. the study also stated that very small number of businesses used external equity, while majority used internal equity. internal equity is the major financing sources for most of small firms. majority of firms relied on internal sources like owner’s capital, owners’ loans, and the retained earnings. few businesses relied on external borrowing from financial institutions. the study concluded that this is the “pecking order” of borrowing from internal sources to financial institutions for small businesses. brown, rocha, and cowling (2020) researched the sources of finance for businesses during pandemic covid-19 crises in united kingdom. the study found that small and large businesses preferred internal capital and venture capital due to low cost of these resources as well as low volume of business at that period of time. the researcher indicated that depending interest earing capital at times of crises is very dangerous, as businesses may not generate enough profit to pay these costly finances. in case of default, the lenders will go after the assets of the businesses causing its collapse. exposito, and sanchis-llopis (2018) researched on innovation and business performance for spanish smes. the study used 400 small businesses in madrid and found that interest charging financial institutions topped the list of lenders followed by saved and venture capitals. the researchers reasoned this outcome at the abundant availability of this kind of finances, though it is very expensive. ahlstrom, bruton, and yeh (2007) researched the source of capital for chinese firms and found that venture capital tops the list followed by bank loans, private firms, and bond markets. the study stated that venture capital is preferred due to ease of availability, low cost, and the fact that these contributors of the capital are also partial owners of the business and will anticipate profits generated by the business. rita, and huruta (2020) researched financing access and sme performance in indonesia. the research assessed the influence between access to cheap financing and performance through the mediation of entrepreneurial-oriented finances in batik smes, indonesia. the structural equation modeling (sem) was used to analysis the study, and the result of 265 smes revealed that entrepreneurial-oriented finance has an influence between cheap financing access and sme performance. a positive direct effect is found in the relationship between financing access and entrepreneurial-oriented finance as well as entrepreneurial-oriented finance and sme performance. in order to improve business performance, it is not enough to only rely on financing access. entrepreneurs should also improve their ability to obtain and utilize funds to develop their businesses. gbandi, and amissah (2014) researched financing options for small and medium enterprises in nigeria. the study examined the financing options available for smes and used; debt financing, equity financing through venture capitals, and angle financing. the study found that venture capital and angle financing were preferred by small business in nigeria due to flexibility and lower cost than debt capital from financial institutions. the study concluded that funding smes is very critical for the growth and development of the economy. khalid, and muturi (2021) investigated ‘effect of financial management practices on financial performance of manufacturing firms in bosaso, somalia.’ the target population of the study was 64 registered manufacturing firms operating in bosaso. the study used structured questionnaire to collect the data and utilized spss to analyze it. the study showed that the management of working capital did not influence the financial output of manufacturing companies. financing decisions have also been found to have significant relationship with capital-output of manufacturing companies. the study recommended that business owners should collect enough information about the cost and other requirements before deciding the sources of finances. 3.1. hypotheses of the study a hypothesis in a scientific context is testable statement about the relationship between two or more variables or a proposed explanation for some observed phenomenon (chukhrova, & johannssen, 2019). another definition by jun, birchfield, de moura, heer, and just (2019) also described hypothesis as and educated guess about a possible solution to a prediction or mystery that can be tested to prove or disprove. h1: i got my finance through venture capital venture capital is a finance usually provided by investors to businesses to partake the profit generated by the business. sometimes venture capital can be provided in the form of technical or managerial expertise. the investors are part of the owners and there is no obligation to repay the investors if the business does not generate profit. the shortcoming of this finance is that major business decisions require the consent of the fund providers and this may delay important decisions for the business. getting venture capital is lengthy and complicated process. asian business research journal, 2024, 9: 91-96 93 © 2024 by the authors; licensee eastern centre of science and education, usa h2: i got my finances through saved capital saved capital is the resources saved before or after starting a business in order to operate the business in terms of buying the machinery and pay expenses to generate profits (fidow, 2021). internal sources of capital is the cheapest of all finances since it do not involve interest or transaction costs, but the problem is that it is not always sufficient. there is also evidence from a study by northwestern mutual insurance company that saving is related to increased happiness of business owners. on a related note, the consumer federation of america found a strong relationship between spending and saving. h3: i got my finances from family and friends family and friends finances are the funds without charges received from relatives and friends for the purpose of investment. loans from family and friends are very convenient for a capital of starting a business, since interest and other charges are not involved. family members some times contribute capital for someone to start business, but the shortcoming is that it is not always adequate and the contributors can demand at any time. lee, and persson (2012) indicated that the family and friend capital is altruistic, while non-family finances are source of risk for the business. the study added that the drawback of family finances is that it leaves risk in the entrepreneur’s social sphere and exposes his social relations to negative feedback effects, both of which deter risk-taking. h4: i got my finances from angle investors. angel investors are also called informal investors, private investors, or business angels. these are affluent entities that inject capital for both startups and operating businesses. the return-rate for such investors depends on the profits generated by the business as calculated by the owner. unlike debt capital, the return rate of the angle investor is not fixed and is not paid incase of the collapse of the business. angle investors some times get more than the interest rate in the market, but it is very risky because investors are not involved in business decisions and has to accept whatever the management of the business declares. most muslim businessmen are shy of interest and depend angle investor capital. h5: i got my finance from interest charging capital financial institutions are the entire establishments that facilitate monetary transactions, such as loans, deposits, and mortgages. both deposit and non-deposit taking financial institutions charge interest at different rates depending the riskiness of the borrower. in a capitalistic economic system, financial institutions are vital for regulating the economy, ensuring fair financial practices, and facilitating prosperity. main kinds of financial institutions are central banks, commercial banks, internet banks, credit unions, savings and loan associations, investment banks, brokerage firms, insurance companies, and mortgage companies. h6: my average annual profit is …………..….% profit is a financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something. it is also described as the financial benefit realized when revenue generated from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity in question. the aim of any business entity is to exceed break-even point (bep) and generate profit for the organization. 3.2. methodology research methodology is the specific procedures and techniques that are used to identify, process, and analyze information about a topic (pandey, & pandey, 2021). this study used descriptive correlation research design to investigate how source of capital affects on the performance of small and medium enterprises in somalia. a descriptive correlation research design was pragmatic for this research because it tested the effect and causes of independent variables on the dependent variable. the method adopted to collect the sample obviously has large implications on the results and the conclusion of the study. the sample of this study is drawn from the population of small businesses in mogadishu. cochran’s formula was used to calculate the sample size. the standard deviation of the study was 0.5 with confidence level of 95%. the z value of 5% confidence level is 1.96 therefore, (1.96)2 (0.5) (0.5) / (0.05)2 = 385. pearson’s product moment (ppm) was used to measure the strength and the direction of the relationships between each of the dimensions of factors affecting the performance of small businesses. linear regression was also used to determine the relationship between the independent and dependent variables. it was selected because of its efficiency and ability to obtain good results using relatively small data sets. each hypothesis was tested independently resulting in the acceptance or rejection of the null hypothesis. 4. results female respondents were 61.3% and 38.7 were males. twenty seven percent of the respondents had no formal education but have the ability to read and understand the questions in somali language, 28% have completed secondary school, 4% were bachelor’s degree holders, and only 2% have master’s degree. in terms of age, 49% were in the age bracket of 30-39. the average profit for the smes was 14.6% table 1. general information. gender male female 38.7% 61.3% position of the respondents owner employed 69.4% 30.6% age of the respondents below 20=6% 20-29=17% 3039=49% 4049=21% 50-59=5% over 60 =2% level of education without formal education 27% primary 39% secondary 28% bachelors degree 4% master’s degree 2% annual average profit 14.6% 4.1. correlations correlation coefficients are used to measure the strength and direction of relationship between two variables. there are several types of correlation coefficient, but this study used pearson’s correlation. asian business research journal, 2024, 9: 91-96 94 © 2024 by the authors; licensee eastern centre of science and education, usa table 2. pearson’s correlation between independent and dependent variables. constructs business performance i got my finance through venture capital pearson correlation sig. (2-tailed) n 0.190 0.134 373 i got my finances through saved capital pearson correlation sig. (2-tailed) n 0.421 0.039 372 i got my finances from family and friends pearson correlation sig. (2-tailed) n 0.087 0.155 376 i got my finances from angle investors pearson correlation sig. (2-tailed) n 0.385 0.045 359 i got my finance from interest charging capital pearson correlation sig. (2-tailed) n 0.087 0.650 361 there is strong significant positive relationship between saved capital and business performance, 0.421 with pvalue of less than 0.05. angle investors have significant relationship with business performance, 0.385 with p-value of less than 0.05. there is no significant correlation between venture capital, interest charging capital, and the capital from family and friends against business performance. 4.2. regression analysis and hypotheses testing the study sought to establish the effect of the source of capital on the performance of small businesses in mogadishu, somalia. the findings are hereby presented. table 3. regression results. model r r2 adjusted r2 std. error of the estimate durbin watson 1 0.386 0.149 0.127 5.071 1.97 2 0.573 0.328 0.213 7.321 2.01 3 0.303 0.092 0.165 8.140 1.87 4 0.586 0.343 0.301 7.831 2.00 5 0.179 0.032 0.106 1.310 1.85 the study findings revealed that saved capital explained 32.8% of performance (r2=0.328) with p value of less than 0.05. angle investor variable explained 30% of the sme performance in somalia. 4.3. coefficients multiple linear regression was conducted to determine the magnitude and direction of the relationship between the independent and the dependent variables. the result is listed in the table below. table 4. coefficient. model unstandardized coefficients standardized coefficients beta t sig. b std. error 1 constant venture capital 3.07 2.81 0.135 1.25 0.083 2.43 2.24 0.08 0.07 2 constant saved capital 9.75 5.78 0.941 0.35 0.192 5.13 3.87 0.021 0.000 3 constant family and friends 2.98 4.19 0.238 0.234 0.093 3.42 2.89 0.175 0.242 4 constant angle investors 8.95 6.15 0.318 0.321 0.23 2.65 3.04 0.032 0.041 5 constant interest charging capital 3.87 5.19 0.189 0.231 0.13 4.12 3.15 0.319 0.47 the multiple linear regression results of the study showed that, saved capital variable was significant in predicting small business performance, β =0.083, t(372)=2.24, p< 0.05. angle investor variable was also significant in predicting business performance, β = 0.230, t (359) = 0.304, p< 05. 5. discussion in respect to the first research question of venture capital on the performance of small businesses in mogadishu, somalia, the study found that venture capital was not significantly correlated with the performance of smes in mogadishu, r(373) = 0.190, p >0.05. the regression indicated that venture capital explained 15% of the variance, (r2=0.149). the reason is that venture capital is not widespread among small businesses because venture capital requires extensive process and paperwork that small business cannot afford. venture capital did not significantly affect the performance of sme in mogadishu, somalia. in respect to the second research question on the effect of saved capital on the performance of smes in somalia, the study found that the variable was significantly correlated with the performance of smes in somalia, r (372) =0.421, p <0.05. the results of the regression indicated that saved capital explained 32.8% of the variance, (r2=0.328). saved capital significantly affected the performance of small businesses in mogadishu, somalia. in respect to the third research question on the capital from family and friends, the study found that the variables was not significantly correlated with the performance of smes in mogadishu, r(376) =0.087, p >0.05. the results of the regression indicated that capital from family and friends explained 9.2% of the variance, asian business research journal, 2024, 9: 91-96 95 © 2024 by the authors; licensee eastern centre of science and education, usa (r2=0.092). capital from family and friend did not affect significantly the performance of smes in mogadishu, somalia. although capital from family and friends exist, it is negligible and very difficult to start a business without using additional capital. in respect to the fourth research question on angle investors, the study found that the variable was significantly correlated with the performance of smes in mogadishu, r(359) =0.385, p <0.05. the results of the regression indicated that capital from angle investors explained 34.3% of the variance, (r2=0.343). angle investor capital is enormous in somalia because people trust each other impressively, though very risky for both sides. the other reason why this investment is popular among somalis is that many people do not have business idea or cannot start business of their own and prefer angle investment. in respect to the final research question, interest charging capital was not significantly correlated with the performance of smes in mogadishu, somalia, r(361)= 0.087, p > 0.05.the results of the regression indicated that capital from interest charging explained 3.2% of the variance, (r2=0.032). as majority muslim community that avoids interest (riba), very few unreligious muslims dare to borrow from interest charging banks or other entities. another reason why interest-charging capital is not significant in this research is absence of commercial banks and other loan paying entities that charge interest. the few who got this kind of capital got from neighboring countries like kenya and ethiopia. 5.1. recommendation small businesses are the economic backbone of this war-ravaged country called somalia, and entirely anything that affects positively should be encouraged, while those that affect negatively should be avoided by all means. the city of mogadishu is recovering from civil war and limited financial institutions are available. the few lenders who are accessible do not offer cash, since interest on loans are not allowed by sharia law. getting customers for interest-charging finances in a 100% muslim community is difficult if not impossible. it is also a taboo to apply such capital for business and many to be customers shy away this capital and that is the reason that this source of capital is not widespread in this city. saved capital is the main finances for smes in mogadishu, but the problem is that it is not sufficient causing the businesses to operate under capacity. the main problem is the fact that majority of businesses shy away to borrow interest-charging loans. the government or the non-governmental organizations (ngos) should provide free loan or a loan that the provider gets a share of the profit if there is any. “angle investor capital” is widespread in small businesses in mogadishu. this capital is involved a lot of trust and many investors avoid this kind of investment. those who are ready to invest always apply “don’t put your eggs in one basket” approach and invest small ratio of their investment, causing insufficient capital. the government should formulate rules and regulations to increase the trust of angle investors and tab the capitals from this source. capital from family and friends was not significantly correlated with the performance of small businesses, yet some of them utilized this capital. this capital is the cheapest and less risky than all the other sources of capital, but it is very difficult to get sufficient amount for investment in this sources. the business people should be encouraged to seek this source of capital before scheduling other sources of capital. interest bearing capital is abundantly available both locally and the neighboring countries, but the problem is that 99% of the community are religious muslims and interest is prohibited in islam. there are sharia law compliant banks in mogadishu but they don’t give out cash, but only other assets. there is one product under which cash loan is allowed, where the borrower gets cash, invests, and shares the profits or loss with the lender. this is too risky and depends a lot of trust on the side of the borrower, and the banks are always disinclined to apply this product. the government should arrange insurance for the banks to mitigate their loss incase of default or incase borrowers incur losses instead of profits. this will help those with genuine business ideas to get capital, while shielding the banks from cheats. 5.2. limitations of the study somalia is large country, 3 times the size of united kingdom (uk), and the data was from the capital city of mogadishu alone. the business people in this city are also sensitive due to long time civil war and clandestineness. this caused some respondents refusing the questionnaire or not answering some of the questions. some of the questionnaire distributors avoided certain areas because their rival tribesmen dominated that areas and this created unstandardized distribution of the questionnaires within the city. finally, illiteracy, lack of understanding, and refusing to take the questionnaire was high in the whole project. references pandey, p., & pandey, m. m. (2021). research methodology tools and techniques. bridge center. lee, s., & persson, p. (2012). financing from friends and family. available at ssrn 2023646. https://doi.org/10.2139/ssrn.2023646 chukhrova, n., & johannssen, a. (2019). fuzzy regression analysis: systematic review and bibliography. applied soft computing, 84, 105708. https://doi.org/10.1016/j.asoc.2019.105708 gbandi, e. c., & amissah, g. (2014). financing options for small and medium enterprises (smes) in nigeria. european scientific journal january, 10(1), 327-340. khalid, a. b., & muturi, w. (2021). effect of financial management practices on financial performance of manufacturing firms in bosaso city puntland, somalia. international journal of social sciences and information technology, 7(2), 11-26. rita, m. r., & huruta, a. d. (2020). financing access and sme performance: a case study from batik sme in indonesia. international journal of innovation, creativity and change, 12(12), 203-224. brown, r., rocha, a., & cowling, m. (2020). <? covid19?> financing entrepreneurship in times of crisis: exploring the impact of covid-19 on the market for entrepreneurial finance in the united kingdom. international small business journal, 38(5), 380-390. https://doi.org/10.1177/0266242620937464 ahlstrom, d., bruton, g. d., & yeh, k. s. (2007). venture capital in china: past, present, and future. asia pacific journal of management, 24, 247-268. https://doi.org/10.1007/s10490-006-9032-1 exposito, a., & sanchis-llopis, j. a. (2018). innovation and business performance for spanish smes: new evidence from a multi-dimensional approach. international small business journal, 36(8), 911-931. https://doi.org/10.1177/0266242618782596 shimasaki, c. (2020). sources of capital and investor motivations. in biotechnology entrepreneurship (pp. 247-265). academic press. frank, m., goyal, v. k., & shen, t. (2020). the pecking order theory of capital structure. in oxford research encyclopedia of economics and finance. kim, t., lee, h., park, k., & waggle, d. (2021). capital budgeting practices: evidence from korea. managerial finance, 47(2), 189-208. https://doi.org/10.1108/mf-05-2020-0238 ou, c., & haynes, g. w. (2004). uses of equity capital by small firms: findings from the surveys of small business finances (for 1993 & 1998). office of advocacy, us small business administration. asian business research journal, 2024, 9: 91-96 96 © 2024 by the authors; licensee eastern centre of science and education, usa fidow, a. n. (2021).deterrents of access to debt capital for small and medium enterprises in nairobi. 20 © 2021 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 6, 20-28, 2021 issn: 2576-6759 doi: 10.20448/journal.518.2021.6.20.28 © 2021 by the authors; licensee eastern centre of science and education, usa the role of brand image orientation, innovativeness and sustainability marketing commitment on company performance: moderating influence of sustainable leadership poomthan thaenthao purdue university, usa. abstract sustainable marketing commitment of the organization could lead them towards high performance and gained top management and researchers' attentions. thus, the current study also examines the role of brand image orientation and innovativeness on sustainable marketing commitment. the goal also includes the moderating role of sustainable leadership among the nexus of brand image orientation, innovativeness and sustainable marketing commitment. this study also examined that impact of sustainable marketing commitment on the performance of mobile phone companies in thailand. this study has followed the quantitative methods such as questionnaires for the data collection and analyzed the data with smart-pls. the researchers have adopted the mail and personal visit methods to send surveys to the selected respondents. a total of 550 questionnaires were forwarded to the respondents and received only 340 after fifteen days of distribution and has a response rate of 61.82 per cent. the results exposed that brand image orientation and innovativeness have a positive association with sustainable marketing commitment. the results also indicated that sustainable leadership significantly moderates among the links of brand image orientation and innovativeness on sustainable marketing commitment. the outcomes also show that sustainable marketing commitment has a positive impact on firm performance. these outcomes are suitable for policymakers who want to develop sustainable marketing commitment and firm performance policies. keywords: brand image orientation, innovativeness, sustainable leadership, sustainable marketing commitment. jel classification: q56; q55; m31. 1. introduction the marketing world has revolutionized a lot in the recent decade. the notion to increase productivity in terms of profit only is the talk of the previous century. in the modernized world, sustainable development and productivity options are considered as one of the strongest drivers of a firm`s overall performance and well-being. brand image is described as the consumer`s perception about the specific product in the market and is totally based on the interaction between customer and firm`s representatives (ishaq & di maria, 2020). in developed countries like the usa, brand image orientations have successfully blended with the sustainable development goals. sustainable development goals are the essence of the creation of a soft image of different brands in the world. in argentina, a company named tom`s shoes was created recently and this company has the vision to eradicate poverty. this company provides shoes to needy children. they provide one pair of shoes to the needy children on the sale of one pair of shoes. this type of optimistic approach can make this world a better place for living. brands should create eco-friendly products to enhance the life and sustainability of this planet. companies all over the world have re-formulated their marketing strategies for the betterment of their performance in terms of the creation of sustainable product manufacturing pathways. the innovative and well-equipped manufacturing units to create desired products are frequently used in the new business ventures to support the environmental sustainability goals of the companies (lesmana, widodo, & sunardi, 2020). product manufacturing cycles are the basic frameworks that define the company`s love for the environment. the modern-day manufacturing units are quite different from the previous ones in terms of operations and overall processing. effluent generation is lethal for the health of the environment and all its inhabitants. solid and liquid wastes are a source of harmful chemicals and pollutants. proper manufacturing cycles that generate a minute amount of waste are essential for environmental sustainability. the novel and innovative approaches to cope up with all the imminent hazards in terms of habitat destruction and climate change are essential to maintain good marketing practices. the market value of a firm is enhanced when they use simple and bio-degradable raw material for product manufacturing cycles (khan et al., 2020). when companies include sustainability as their prime goal for the betterment of the human race and the health of the environment then their business excels promisingly. companies all over the world have banned the use of plastic bags because they are non-biodegradable as a gesture to inculcate the love of nature in their consumers. this is a sweet and innovative gesture which not only supports http://ecsenet.com/index.php/2576-6759/article/view/98 asian business research journal, 2021, 6: 20-28 21 © 2021 by the authors; licensee eastern centre of science and education, usa environmental sustainability but also economic sustainability (sule & onuoha, 2020). climate change and poverty are the main driving forces that have revolutionized the overall scenario of marketing practices all over the world. leadership is the only solution to all the practical implementation of innovation and critical control challenges in the way of sustainability. leaders are the guiding stars of the nation. they instigate a sense of corporate social responsibility in their sub-ordinates. all strategies of innovation, planning, brand equity, and sustainable development of a company are highly dependent on the management and leadership practices. leadership can make a perfect blend of innovation, cultural diversity, and sustainable development. modern firms all over the world have made their agendas based on leadership management practices. when leaders make their availability necessary to inculcate the sense of sustainable development then results are really tremendous. leaders should act on the ppp principle and this principle defines the importance of three major pillars of business and society i.e. people, planet, and profit (lăzăroiu, ionescu, andronie, & dijmărescu, 2020). all these pillars form the base of organizational sustainability. the developed countries like the usa, have initiated the us aid program to make this planet a more beautiful place to survive. the government has already started efforts to formulate strategies that can withstand the present hazards of climate change (fonsén & soukainen, 2020). wall mart is a tremendous store in the usa, and they have clearly mentioned on their website about the sdg goals. such type of innovative and novel marketing strategies can surely fulfill the requirements of sustainable market commitment. sustainable market commitment is a novel strategy to make a promise with your consumers that you will invest more time and money for the sustainable development of the environment and market (moktadir et al., 2020). there are several ways to improve the company`s performance is the generation of a complete roadmap for communication. this communication platform should announce the company`s sustainable development strategies to the consumers. reduction of energy consumption is imperative to make the environment sustainable. an example of a sustainable marketing strategy is a grocery store (brookshire grocery company). this company has reduced its fuel consumption tremendously and they have created a whole page on their official website to educate their consumers about the importance of sustainable marketing strategies. the advertisement campaigns should launch to educate the employees as well as consumers about the company`s sustainability policies. the ceos and other professionals should have great communicative efficacy (sudusinghe & seuring, 2020). effective communication is imperative for the prosperity of the company. companies should indulge themselves in the reduced, reuse, and recycle policies to get funding from international funding organizations. this is the best way to produce effective and fruitful results. in the developed countries the manufacturing plants have totally changed and are replaced by modernized units of production. these units use less electricity and fuels and produce economically and environmentally sound products in relatively short intervals of time (alcaide, de la poza, & guadalajara, 2020). a company`s performance is the parameter of its success in the business community. brand image and interactions between the company`s representatives and the general public are useful for the prosperity of organizations. the last decade has highlighted climate change and degradation of the global atmosphere (agustine, etty, & wayan, 2020). global warming, habitat destruction, and ozone layer depletion are some of the harmful consequences of this climate deterioration. honest and diligent efforts from all of the departments are required for the well-being of the environment and its inhabitants. the business community should also understand the importance of environmental protection and at the end of the 20th-century efforts were started to cope up with environmental destruction on a global scale. huge business companies have put environmental sustainability. the economists have formulated new and innovative policies to cope up with the modern trends and imminent dangers. reduction of waste generation and fuel consumption are considered vital efforts for sustainability development. one example of the fuel usage reduction is of toyota company. they introduce care named prius that has very low fuel consumption. such initiates not only make a company`s performance good but also generate a level of respect and confidence between consumers and companies. companies' agendas and long-term goals must include green manufacturing and marketing initiatives. these initiatives produce a low amount of waste products and can make the environment sound for each and every creature of nature. the main objective of this research paper is to elucidate the correlation between important market drivers like brand image orientation, sustainable leadership practices, innovativeness, and sustainable marketing commitment efforts. the previous researchers have done a lot of work on all these aspects separately as the main drivers of successful business ventures but the literature was unable to provide any strong evidence about the positive or negative correlation between all these variables and a company`s performance. sustainability and corporate social responsibility efforts are essential for the environmental and social wellbeing of the company. so, it is imperative to highlight the important aspects of sustainable marketing strategies in terms of brand image orientation and all other sustainable development and promotion based variables. another aspect that was missing in the literature is the innovative strategies. all the previous researchers have talked about sustainability and environmental protection but they were unable to devise proper methods to build and create this global change. so, this paper will provide a deep insight into those novel strategies for the improvisation of the company`s performance. technological interventions in thailand has brought forth promising future implications. in these specified industries the natural and environmental sustainability efforts have started when thailand industries merged themselves with huawei. the sustainable development goals are truly implemented in all the technical institutions. thai industries manufacture mobile phones and computers in a technologically smart and eco-friendly manner. the whole scenario has changed a lot in the previous century. so, it is essential to provide consumers with a smart, efficient, and environment-friendly manner. the notion of thailand industries is effective to produce safe sustainability practices. the future endeavors include producing techno-smart gadgets with zero biologically hazardous waste generation and recycling of all the waste with the green processing practice. all the other companies in the thai technological hub are also thinking about the adoption of a different strategy. if all the processes are integrated in this way then the future will not only be economically stable but also provide social and environmentally stable products in the future. thailand, the second-largest economy in the asean region, has changed its emphasis from a manufacturing economy to a digital economy, following the widespread of the internet and the thai government's ambitious move asian business research journal, 2021, 6: 20-28 22 © 2021 by the authors; licensee eastern centre of science and education, usa towards digital development through thailand's 4.0 initiative. thailand's it demand will rise by more than 13 percent year on year in 2019 and will be worth bt527 billion by the end of this year. hardware would be the largest contributor to bt234 billion, while digital platforms would have the fastest growth rate of 34 percent. smart gadgets, including cctv and smart bluetooth, are priced at about bt121 billion or 23 percent of the overall it industry. software platforms will account for 20 percent of bt106 billion and digital content would be priced at bt65 billion, or 12 percent of the total it industry. they would have an important part to play in marketing, advertisement, and product presentations. thailand's networking industry is expected to cross thb 18.3 billion by 2025 from thb 10.7 billion in 2018 to cagr 8 percent over the forecast era. technology fields such as big data, iot, artificial intelligence, block chain, and 5g will be the main differentiators for thailand's progress in the next decade. table 1 has shown the country-wise ict business share. table-1. country-wise ict business share. sr. country business % in world share. 1 thailand 1 2 malaysia 2 3 mexico 2 4 germany 2 5 singapore 3 6 japan 10 7 taiwan 11 8 korea 11 9 usa 19 10 china 32 11 rest of the world 7 2. literature review brand image orientations are those indicators that provide essential insights to the company`s overall strategies regarding positive approaches to the environment and all its counterparts. the well-regulated and wellmanaged brands have a tendency to improvise the overall performance of the company. brands' consciousness has been increased in the last few years. this attitude of consumers has put additional pressure on the community and business ventures to create products of high quality that are not only eco-friendly in nature but also economically sound. the biological non-degradable materials produced by the companies have produced many problems in recent years. people throughout the world are now more concerned about social and environmental well-being. the effluent wastewater produced by the industries is a source of pollution and is lethal for the well-being of the fresh and seawater inhabitants. in the modernized world, these notions are considered seriously. the product manufacturing pathways of all the industries are well-defined and in accordance with eco-friendly techniques. the wastewater and all the sludge from the industries are now treated with proper sops and innovative techniques for the protection of the environment. it is imperative for all the brands to advertise the eco-friendly procedures for the sustainable protection of nature and its resources. brands' image orientation based on these precautionary measures makes the company more reliable for the consumer. they feel satisfied with the sops and well-defined marketing policies of brands. so brand image gets much better because of these innovative interventions. in the globalized network, the improved and sustainable marketing policies provide essential tools for the company`s overall prosperity of the business community. competition between different brands provides huge benefits to excel in the lieu of sustainable environmental protection. a well-regulated framework of brand image orientation example is of wall-mart international. this company has included in its agenda the sustainable developmental policies and they have instigated the corporate social responsibility innovations to the other brands as well. h1: brand image is positively associated with sustainability marketing commitment. innovative strategies that create biodegradable and environmentally sound products. the manufacturing units are based on the strategies to reduce, reuse, and recycle. the developed countries have seriously focused on green manufacturing processes. these processes are difficult to handle and require new and innovative machines that manufacture products at a very slow pace. in developing countries, people are unaware of the importance of a green economy and green manufacturing processes so they put the safety standards low. these companies in developing countries do not put ample effort and time into the manufacturing units to recycle and reuse things (meuer, koelbel, & hoffmann, 2020; ren et al., 2020). no specific transparent and regulated processes are needed for the demand and supply chain manufacturing. so, they produce products at a very rapid rate. the design of sustainable product manufacturing cycles in developing countries is not up-to-date so they produce products with hazardous chemicals and biohazards based waste effluents (soderstrom & weber, 2020). the developed countries smuggle things from the developing countries to meet the demand and supply gap. innovative control and regulatory standards are necessary for the betterment of sustainable product manufacturing cycles (silvestre & fonseca, 2020). environmental protection and quality control departments improvised the security checking procedures and they have argued that product quality is described by its product manufacturing program (hashom, ariffin, sabar, & ahmad, 2020). organic tags and biologically degradable products are expensive to produce and expensive to deliver for the consumers but they are overall best for the health and well-being of not only humanity but also for the environment. regulatory authorities must implement strict policies on all of the countries in the world to make this world a better place for living. h2: innovative is positively associated with sustainability marketing commitment. leadership is the essence of each and every operational unit. if the leaders are strong they can bring forth the team to marvelous heights. in the developed countries people are well-aware of the importance of a green economy and green manufacturing practices. they demand green manufactured products from the suppliers (loza, 2020). they emphasize the use of biologically safe and sound materials for the well-being of the environment. the manufacturers and companies have transparent strategies and planning initiatives for the well-being of the asian business research journal, 2021, 6: 20-28 23 © 2021 by the authors; licensee eastern centre of science and education, usa environment in these countries (jain, 2020). sustainable product manufacturing cycles has put forth the world on the verge of new and innovative manufacturing and supply chain management phase. in developing countries, people are unaware of the green economy its benefits, and overall environmental protection protocols. they use substandard products and their leaders are corrupt. these corrupt people have made the whole humanity doubtful about the human ethics and behaviors. proper training and guidance related protocols are necessary for the head of companies. they should guide their sub-ordinates to work on the ppp (people, planet and products) protocols. h3: sustainability leadership significantly moderates the relationship between brand image orientation, innovative, and sustainability marketing commitment. these two terms can be used interchangeably as the sustainability commitment is the essence of all the betterment of performance of all the countries. developed countries have fulfilled the sustainable market commitment policies. in developing countries, the notion is quite vague and they tend to manufacture low-quality products (elzarka, 2020). check and balance and regulatory control practices are quite unknown in these countries so proper precautionary protocols are necessary for the betterment of their economy. companies when work in a coordinated fashion then create eco-friendly and sustainable products. industrialization is although a premium for modem development, yet its effects on surroundings are equally hazardous (gold & taib, 2020). the input of the chemical industry to human wellbeing is apparent in the broad collection of chemicals used in drugs, cosmetics, plastics, paints, and many other consumer goods (grewal & serafeim, 2020). major effluents such as antibiotics, drugs, and heavy metals are carcinogenic, mutagenic, and teratogenic. regrettably, all these hazardous wastes finish up in the environment (hörisch, wulfsberg, & schaltegger, 2020). hazardous waste will be defined in general terms as waste that is likely to cause harm to the environment, regarding effects on health, surface water, soil, and biota (qian, tilt, dissanayake, & kuruppu, 2020). executives behave as though they have to choose between the largely social benefits of developing sustainable products or processes and the financial costs of doing so. but that’s simply not true (gazzola, pezzetti, amelio, & grechi, 2020).. social media marketing trends are nowadays most rapid and easy way of mass awareness. so, companies should implement sustainable marketing strategies for the betterment of their operations in the long run (aktaş, kayalidere, & karğin, 2013). leaders can control the whole organization and they can reshape the whole scenario. in the modern age, well-equipped and environmentally sound protocols are imperative for the generation of green products. coordinated efforts from all of the departments are necessary for the improvement of the company`s performance (lăzăroiu et al., 2020). h4: sustainable market commitment significantly mediates the relationship between brand image orientation, innovative and company`s performance. h5: sustainable market commitment has a strong positive correlation with a company`s performance. 3. methodology the current study investigates the role of brand image orientation and innovativeness on sustainable marketing commitment. the goal also includes the moderating role of sustainable leadership among the nexus of brand image orientation, innovativeness and sustainable marketing commitment. this study also examined that impact of sustainable marketing commitment on the performance of mobile phone companies in thailand. this study has followed the quantitative methods such as questionnaires for the data collection. the selling and marketing department employees of mobile phone companies in thailand are the respondents of the study that are selected based on non-probability purposive sampling. the researchers have adopted the mail and personal visit methods to send surveys to the selected respondents. a total of 550 questionnaires were forwarded to the respondents and received only 340 after fifteen days of distribution and has a response rate of 61.82 per cent. this study has analyzed the data with smart-pls due to the study's large sample size and complex framework (hair jr, babin, & krey, 2017). the constructs include two predictors named brand image orientation (bio) with six items and innovativeness (inn) with five items. in addition, sustainable marketing commitment (smc) is used as a mediating variable with seven items and sustainable leadership (sl) is used as a moderating variable with four items. finally, company performance (cp) is used as a dependent variable that has five items. the variables are shown in figure 2 with relationships. figure-2. a research framework. asian business research journal, 2021, 6: 20-28 24 © 2021 by the authors; licensee eastern centre of science and education, usa 4. findings the present study outcomes show the validity such as convergent and discriminant validity and show the hypotheses testing. the convergent validity has been examined first. the figures show that high links among items and convergent validity are exposed as valid because the alpha and cr values are higher than 0.70, and the figures of loadings and ave are larger than 0.50. these values have been exposed in table 2 and the loading values also mentioned in figure 3. table-2. convergent validity. constructs items loadings alpha cr ave brand image orientation bio1 0.912 0.944 0.956 0.782 bio2 0.824 bio3 0.903 bio4 0.902 bio5 0.912 bio6 0.849 company performance cp1 0.814 0.889 0.918 0.692 cp2 0.817 cp3 0.854 cp4 0.811 cp5 0.862 innovativeness inn1 0.957 0.966 0.975 0.908 inn3 0.944 inn4 0.953 inn5 0.958 sustainable leadership sl1 0.885 0.845 0.820 0.537 sl2 0.670 sl3 0.677 sl4 0.676 sustainable marketing commitment smc1 0.955 0.959 0.968 0.835 smc2 0.826 smc3 0.953 smc4 0.956 smc6 0.825 smc7 0.955 the outcomes of the current study have also shown the discriminant validity. the figures show that low links among variables and discriminant validity are exposed as valid because the ratios of heterotrait monotrait are lower than 0.85. these values have been exposed in table 3. table-3. discriminant validity. bio cp inn sl smc bio cp 0.548 inn 0.492 0.436 sl 0.266 0.220 0.537 smc 0.890 0.535 0.504 0.259 figure-3. measurement model assessment. asian business research journal, 2021, 6: 20-28 25 © 2021 by the authors; licensee eastern centre of science and education, usa in figure 4 the results exposed that brand image orientation and innovativeness have a positive association with sustainable marketing commitment and accept h1 and h2. the results also indicated that sustainable leadership significantly moderates among the links of brand image orientation and innovativeness on sustainable marketing commitment and accept h3. the outcomes also show that sustainable marketing commitment has a positive impact on firm performance h5. finally, the sustainable marketing commitment positively mediates among the nexus of brand image orientation, innovativeness and company performance and accept h4. these links are highlighted in table 4. table-4. path analysis. relationships beta s.d. t statistics p values l.l u.l bio -> cp 0.241 0.091 2.642 0.005 0.105 0.367 bio -> smc 0.797 0.030 26.722 0.000 0.744 0.838 bio*sl -> cp -0.216 0.064 3.357 0.001 -0.306 -0.095 inn -> cp 0.267 0.100 2.661 0.005 0.086 0.418 inn -> smc 0.111 0.041 2.725 0.004 0.050 0.173 inn*sl -> cp 0.208 0.086 2.428 0.008 0.051 0.344 smc -> cp 0.184 0.091 2.033 0.022 0.054 0.371 bio -> smc -> cp 0.147 0.073 2.023 0.023 0.043 0.291 inn -> smc -> cp 0.120 0.053 2.264 0.024 0.012 0.246 figure-4. structural model assessment. the results in figure 5 revealed that the sustainable leadership is negatively and significantly moderates among the association of brand image orientation and company performance and accept h3 because the blue line is above the red and green line. figure 5 shows this relationship mentioned below: figure-5. bio*sl. asian business research journal, 2021, 6: 20-28 26 © 2021 by the authors; licensee eastern centre of science and education, usa the results in figure 6 revealed that the sustainable leadership is positively and significantly moderates among the association of innovation and company performance and accept h3 because the green line is above the red and blue line. figure 6 shows this relationship mentioned below: figure-6. inn*sl. 5. discussions and implications the study results have revealed that the brand image orientation has a positive association with the development of sustainability in marketing commitment. the better the brand image orientation of a company, the better is the sustainability in the expression of a company’s commitment to the market requirements. these results are in line with the past studies of chang, wang, and arnett (2018) which suggest that the companies with a good brand image orientation at national and international markets are likely to have better marketing commitment. thus, the sustainable well-known brand image orientation leads to sustainable marketing commitment. the study results have also shown that the innovativeness of the brand company has positive impacts on sustainable development in the company’s marketing commitment. these results are approved by the studies of bamgbade, kamaruddeen, and nawi (2017) which imply that the companies that care of the innovativeness of their operations, resources, and the products are expected to have sustainable development in their marketing commitment. the companies’ performance of their functions according to the up-to-date market requirement and adoption of modern technology and techniques to keep the quality of their products innovative help develop sustainability in their marketing commitment. our research findings have revealed that the sustainable marketing commitment of the companies has a positive association with the companies’ performance. these results match with the studies of d’agostini et al. (2017) which suggests that since the better sustainable commitment of the brand companies with the market trends and requirements motivate them to keep their operations smooth and innovative which enhances the companies’ performance. these results have also revealed that effective sustainability leadership plays a moderating role between the brand image orientation and the development of sustainability in the companies’ marketing commitment. these results are approved by the studies of yahaya and ebrahim (2016) which imply that the sustainable, effective leadership in the companies’ operations improves both the sustainable brand image orientation and the companies’ sustainable marketing commitment and the mutual association between the brand image orientation and the sustainability in the companies’ marketing commitment. it’s also been indicted by the study that sustainability in the effectiveness of leadership is a considerable moderator between the innovativeness of the companies’ operations and production and their sustainable marketing commitment. these results match with the past studies of afriyie, du, and musah (2020). these studies state that sustainability effective leadership improves the companies’ innovativeness and sustainability in the companies’ marking commitment, and thereby, it improves their mutual association.the study carries both the theoretical and an empirical implication. this paper has a profound theoretical significance because of its contribution to the literature on marketing management. this paper examines the sustainable brand image orientation and the companies’ initiatives to bring innovativeness into their operations on the incorporation of sustainability into the companies’ marketing commitment. it succeeds in gaining a distinction in the existent literature as it introduces both a mediator and a moderator at the same time. the sustainability in the companies’ marketing commitment has been dealt with as a mediator between the brand image orientation, and the companies’ innovativeness and their performance. the sustainability of efficient leadership has been addressed by this study as a moderator between the companies’ brand image orientation, companies’ innovativeness and the sustainability in their marketing commitment. the study has an empirical significance to the marking management of brand companies. it provides a guideline to marketing management on how to show higher sustainability into the companies’ marketing commitment with better brand image orientation, innovativeness, and the sustainability in the leadership, and how to improve the companies’ performance with higher sustainability in the marketing committee of the companies. 6. conclusion and limitations the study has analyzed the companies’ brand image orientation, and the companies’ innovativeness in detail checks their relationship with the sustainability in the companies’ marketing commitment. the sustainable, effective and highly preferred brand image orientation help the companies’ to show sustainability development in asian business research journal, 2021, 6: 20-28 27 © 2021 by the authors; licensee eastern centre of science and education, usa the marketing orientation. similarly, the high innovativeness in the companies’ operations, the production, and marketing procedures and technology lead to the development of sustainability in the companies’ marketing commitment. the study has addressed the sustainability in the companies’ marketing commitment as a mediator between the aforementioned variables and the companies’ performance. the sustainability in the companies’ marketing commitment is developed by the good brand image orientation and the innovativeness and in turn, improves the companies’ performance. the sustainability in the effective and ethical leadership improves the companies’ brand image orientation, companies’ innovativeness and sustainable marketing commitment and their mutual association. a number of limitations which are faced by the current study, despite the literary significance and its empirical implication, must be overcome by the scholars in future. first of all, the current paper has a limited scope of the study as examines just two organizational factors like the brand name image and the innovativeness with direct relation to the sustainability in the companies’ marketing commitment. thus, future scholars are recommended to add to the number of indicators of sustainable marketing commitment. the empirical data has been extracted from the economy of thailand, which is different from others in terms of culture, social, and economic conditions. thus, the same study hypotheses are not equally valid to all the other economies. the future scholars are recommended to analyze the marketing commitment, and its constructors in more than one economy for better results and thereby, the validity of the study can be improved. references afriyie, s., du, j., & musah, a. a. i. 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(2020). sustainability strategy and service quality innovativeness of manufacturing firms in ogun state. asian journal of interdisciplinary research, 3(1), 38-49. yahaya, r., & ebrahim, f. (2016). leadership styles and organizational commitment: literature review. the journal of management development, 35(2), 190-216.available at: https://doi.org/10.1108/jmd-01-2015-0004. citation: poomthan thaenthao (2021). the role of brand image orientation, innovativeness and sustainability marketing commitment on company performance: moderating influence of sustainable leadership. asian business research journal, 6: 20-28. history: received: 23 march 2021 revised: 5 july 2021 accepted: 29 july 2021 published: 11 august 2021 licensed: this work is licensed under a creative commons attribution 3.0 license publisher: eastern centre of science and education funding: this study received no specific financial support. competing interests: the author declares that there are no conflicts of interests regarding the publication of this paper. transparency: the author confirms that the manuscript is an honest, accurate, and transparent account of the study was reported; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study follows all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. http://creativecommons.org/licenses/by/3.0/ http://creativecommons.org/licenses/by/3.0/ 1 © 2022 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 7, 1-13, 2022 issn: 2576-6759 doi: 10.55220/25766759.v7i1.116 © 2022 by the authors; licensee eastern centre of science and education, usa investigating the motivating factors of youths-students interest to become entrepreneurs: a case of anambra state, nigeria simon nnaemeka ajah martin of tours school of management and economics, assumption university, thailand. email: sajah@au.edu abstract this study explored the factors that motivates the youth’s interest (intention) to become entrepreneurs by incorporating the personality attributes from the “theory of planned behavior” and environmental factors, with some selected “control variables” (experience, gender, and age). a multivariate statistical technique was used to test the relationship between the variables using “structural equation modeling” amos package version 23. a sample of 400 students from chukwuemeka odumegwu ojukwu university in anambra state, nigeria was used to analyze the data. the results of the study indicated that attitude, self-efficacy, and subjective norms have a statistically significant effects on student’s entrepreneurial interest. the findings also indicated that entrepreneurial education has an impact on students’ attitude but has no obvious effect on intention. apart from government support policy which was found to have statistical negative effect on intention, other external barriers have no effect on attitude and intention. understanding these factors is important to make recommendations to the government and other relevant stakeholders to promote youths’ entrepreneurship in nigeria. the importance of entrepreneurship is not only vital for economic growth but also for long term sustainable development. through the vital information gained from investigating these motivating factors of youth’s interest to engage in entrepreneurship, the government and other important stakeholders can formulate effective policies to improve macroeconomic conditions to encourage university students to become entrepreneurs. keywords: attitude, entrepreneurship, education, intention, self-efficacy, subjective norms, sustainable development. jel classification: j08; j21; m13; q01. 1. introduction among nigeria’s youths (students), entrepreneurship is a necessity rather than an alternative career choice. essentially, the reason is not because of a favorable macroeconomic environmental conditions nor supportive government public policies but because of their personality attributes, entrepreneurial experience and knowledge acquired through education, training, apprenticeship, and networking among others are important factors that motivates youths’ interest to become entrepreneurs. moreover, lopez, alvarez, martins, perez, and románncalderón (2021) posited that entrepreneurial education creates an avenue for networking, business opportunity identification and self-confidence. although the personality characteristics and entrepreneurial education are considered as vital in entrepreneurship development, government policy support creating a conducive macroeconomic environment and or windows of opportunity for new venture creation is imperative in the generation of entrepreneurial intention. therefore, understanding students’ individual personality attribute and windows of opportunity or barrier as motivating factors for entrepreneurial intention is crucial for sustainable development in nigeria. this is more imperative to explore given the fact that there is high poverty and unemployment rates (33.3%) in nigeria particularly among the youths (53.4%)1. therefore, to tackle this problem, an effective entrepreneurship policy can help to reduce unemployment rate and for sustainable economic growth. 1.1. problem statement the problem discussed in this study are two folds: economic and sustainable development. firstly, from the economic perspective, among the many functions of government is the provision of public goods and services, which include but not limited to the promotion of economic growth, employment opportunities, and development etc. these functions might differ from country to country because, some countries perform better in administering those functions than the others. in the case of this study, nigeria is ranked 1612 at human development index (hdi) in 2020 and around 40% (83 million) nigerians live in poverty3 and 33% are currently unemployed. this indicator is unacceptable by any standard and detrimental to the country overall economic growth and development. so, the nigerian government (development administrators) must re-orient itself by formulating and implementing effective 1 https://tradingeconomics.com/nigeria/indicators (accessed on january 17, 2022) 2 http://hdr.undp.org/en/data (accessed on january 17, 2022) 3 www.nigerianstat.gov.ng (accessed on january 17, 2022) mailto:sajah@au.edu https://www.doi.org/10.55220/25766759.v7i1.116 https://orcid.org/0000-0002-0191-6868 asian business research journal, 2022, 7: 1-13 2 © 2022 by the authors; licensee eastern centre of science and education, usa economic policies to mitigate this calamity. it is important to note that previous attempts directed towards encouraging entrepreneurial activities in nigerian failed due to poor policy implementation and poor infrastructure, couple with an overbearing red-tap (oghojafor, kuye, sulaimon, & okonji, 2009). besides, lack of economic improvement and opportunity leads to high unemployment rate which hinders sustainable development (rashid, 2019). secondly, from the sustainable development perspective, to achieve the “united nations sustainable development goals” (sgds), empowering the youths through entrepreneurial education which will equipped and support the ambitious of youths to venture into new business is vital according to economic and affairs (2018) report. the importance of entrepreneurship is crucial for “sustainable development”, according to apostolopoulos, aldajani, holt, jones, and newbery (2018) entrepreneurship empowers youths and creates an avenue for financial inclusion among many others. according to rashid (2019) entrepreneurship has a direct impact on sdg1 “poverty alleviation” and sdg8 “economic development & unemployment reduction”. furthermore, baumol, litan, schramm, and strom (2011) emphasized on the importance of empowering the youths and building human capital through entrepreneurial training to improve youths entrepreneurship skills and entrepreneurial activities. however, despite these facts and emphasis on the importance of entrepreneurship, the situation is different in nigeria. as mentioned earlier, the situation of the human capital development in nigeria is nothing to reckon with. additionally, the macroeconomic system has less opportunities, lack of encouragement and lack of support from government and other institutions as posited by igwe, adebayo, olakanmi, ogbonna, and aina (2013) and this puts a strain on achieving sustainable development in the country. although the government have mandated that entrepreneurial education to be compulsory in all the tertiary institutions in nigeria to foster the growth of the human resource capital and self-reliance capability among the youth, it is far from fetched to becoming a reality. on that note, the policy in nigeria “states that the government will provide affordable quality education for all nigerians, the universal basic education and mass adult literacy programs will be pursued in earnest and the government will create incentives to expand access to information and communications technology which will facilitate leap-frogging to short-circuit the longer span of development”4. however, it is important to note that there is a huge distinction between policy pronouncement and policy implementation, the policy pronouncement in nigeria is indeed different from the actions and implementations. according to alemu (2019), a combination of both state and federal policies are required to promote and support entrepreneurship in nigeria. it is an urgent call for the entire stakeholders as the issue of low human capital development and unemployment is at all-time high among the youths. this is alarming so; a reoriented youth’s entrepreneurship empowerment policy is needed to remedy the situation in the country. therefore, this study focuses on the personality motivating factors which includes (attitude towards behavior and subjective norms from tpb and self-efficacy) and the windows of opportunity (mandatory entrepreneurship education programmed, government policy support or environmental barrier) for undergraduate students of tertiary institutions in anambra state, nigeria to examine their impact on entrepreneurial intention. this research will reignite the entrepreneurial consciousness among nigerian youths who fear that new initiatives may fail like others of its kind in the past. despite recent advancements in the personality motivating factors in predicting entrepreneurial intention, little research connects the entrepreneurial education, personality, and other external factors with sustainable development in the literature, so, this study will contribute in this area to enhance the knowledge of entrepreneurship intention. this paper is structured as follows, part two presents the entrepreneurship role in economic growth and “sustainable development” in anambra state, nigeria. part three presents the literature review. part four depicts methodology of the research. part five shows the findings. the last part is the discussion, research implications and conclusion. 1.2. entrepreneurship role in economic growth and sustainable development in nigeria entrepreneurship activities have been the engine of a nation’s long-term economic growth (ajah, 2019; schumpeter, 2017). “entrepreneurship is a function of innovation” which is critical in economic growth and sustainable development according to schumpeter (2017). youths (students) entrepreneurial activities are relatively strong in nigeria regardless of their academic background because, lack of job opportunities have left them with few other options for income and survival. there has been a growing interest among scholars regarding the concept of entrepreneurship and sustainable economic development (acs, szerb, & autio, 2017) the role of entrepreneurship training and the role of government policy impact on youths interest to become entrepreneurs (karimi, biemans, lans, chizari, & mulder, 2016). governments globally are recognizing entrepreneurship “not only as a key mechanism for enhancing economic development, particularly in regions where entrepreneurial activity was once vibrant and is now lagging but also as a good solution because, it provides a relatively non-controversial way to increase the proverbial pie, creating jobs and enhancing per capita income growth” (shane, 2007). hence, “entrepreneurs need access to resources and markets to succeed, and this is where national policies play a vital role” (kressel & lento, 2012). the nigerian government through “mandatory entrepreneurial education” in tertiary institution is trying to create opportunities and to improve the human capital for a more sustainable economic inclusiveness, growth, and development however, the effectiveness of those policies is not materializing effectively. according to abdullahi, renukappa, suresh, and oloke (2021) nigeria is the largest economy in african continent and the economy is still in the growth process so, encouraging entrepreneurs is vital. couple of reason are involved, firstly, for inclusive growth, factually, many nigerians are not directly benefiting in the economic growth presently which denotes that the un sustainable development goals are far from fetched. therefore, for inclusiveness growth and sustainable development, the government of nigeria needs to encourage and support entrepreneurship especially among the youths wondering around the streets of every corner of the country. this will rekindle their sense of belongings thus, developing interest in becoming potential businesspeople soon and helping in the process of nation building, economic growth, and development. secondly, entrepreneurship is very important in nigeria as an emerging economy. government needs to diversify the economy away from heavy reliance on crude oil export to a manufacturing economy, therefore, it is essential to create a conducive macroeconomic environment that promotes 4 “https://www.proshareng.com/news/enterpreneurship/entrepreneurship-in-nigeria/16321” (accessed on january 17, 2022) asian business research journal, 2022, 7: 1-13 3 © 2022 by the authors; licensee eastern centre of science and education, usa entrepreneurship by providing funds and other necessary tools as a business incubator to empower the youths. additionally, the tertiary institution in nigeria should be equipped and supported for entrepreneurship training and education. it is a saying that “better teach someone how to catch a fish so that when he or she gets hungry, they can fend for themselves”. steve job simply puts to the younger generation to “stay hungry. stay foolish” (jobs, 2009). 1.3. entrepreneurship in nigeria and anambra state context nigeria is a low middle income5, mixed economy and an emerging market. the country is expanding in financial, services, communications & technology, and entertainment sectors6. nigeria is ranked 27th in the world in terms of gdp of 436.3 billion us dollars7. but nigerian business environment is distorted by bureaucracy (red tapes) and inconsistent enforcement of commercial regulations. in other words, the policy development and implementation by the development administrators (government agencies) are not working effectively and needed to be re-oriented to facilitate national development. nigeria has maintained its impressive growth over the past decade, and a key regional player in west africa. nigeria accounts for about “half of west africa’s population with approximately 206.1 million people”7 and one of the largest populations of youths in the world. the country has an abundance of human and natural resources, and the largest oil exporter in the continent8. apart from petroleum product, nigeria has other natural resources like “natural gas, tin, iron ore, coal, limestone, niobium, lead, zinc, and arable land”. the “oil and gas sector accounts for about 10 per cent of gross domestic product (gdp), and petroleum export revenue represents around 86 per cent of total exports revenue”9. although nigeria economy is growing, poor infrastructure particularly in the power sector and other macroeconomic conditions poses a challenge. nigeria’s economic growth is hampered by inadequate power supply10, and these issues might dissuade youths’ interest in entrepreneurship in the country. to create a supportive environment for entrepreneurship activities and sustainable growth in the “non-oil sector”, the government and its agencies need to create a window of opportunity for youth interest in entrepreneurship in nigeria. 2. literature review, theoretical background, and hypotheses development lawler and joseph (2012) stated that, “an entrepreneur wears a multiple hat of an innovator, creativity head, leader, change maker, manager”. the authors defined entrepreneurs as someone who recognizes and captures business opportunities to make profits. individuals go into new venture to be independent or need for achievement etc. scholars have adopted different theories like “theory of planned behavior” (tpb) and “need for achievement theory” to explore entrepreneurial intention (ajzen, 2002; barry, 1998). this study integrated tpb with other variables from the literature to examine students’ intention to develop interest in becoming entrepreneurs in anambra state, nigeria. 2.1. entrepreneurial intention according to hai (2021), “intention refers to a course of action or plan that an actor considers necessary and thus intends to undertake to accomplish a certain behavior”. intentionality builds interest which is fundamental to the process of entrepreneurship because, entrepreneurship is always intentional (krueger jr, reilly, & carsrud, 2000). “intention is defined as a state of mind directing someone’s attention to act on something” according to vesalainen and pihkala (1999). an interest to embark on new business is a targeted behavior and also a planned meditated action (krueger jr et al., 2000). it is the process of digging deep for information for the purpose of getting the necessary tools and ideas of the new venture intention. “intention is defined as a motivational factor and willingness of a person to engage in certain behavior” (ajzen, fishbein, lohmann, & albarracín, 2018). 2.2. attitude towards behavior on entrepreneurial intention attitude is a “perceived level of positive and negative impressions toward acting on the particular behavior” according to ajzen et al. (2018). it is a predisposition response in a steadily favorable or unfavorable way with respect to a given object (ajzen, 2011). furthermore, shaver (2003) defined “attitude towards specific forms of behavior as the degree to which a person has a favorable or unfavorable evaluation of the behavior in question”. previous studies have found relationship between these variable, for instance, solesvik (2013) studied the “employment choice and intentions among norwegian students” and found that attitude toward behavior has a positive strong relationship with entrepreneurial intention. additionally, lopez et al. (2021) found a statistical relationship between attitude and intention to become an entrepreneur. thus, the first hypothesis was formulated as follows: h1. attitude has a positive relationship with intention/interest become an entrepreneur 2.3. self-efficacy on entrepreneurial intention barbosa, gerhardt, and kickul (2007) defined self-efficacy “as an individual’s belief in one’s capability to organize and execute the course of action required to produce given attainments”. moreover, gist (1987) defined self-efficacy “as ones belief in his or her own ability to perform a task and in their personal ability to effectively use their skill to achieve certain results” (bandura, 1977). aforementioned, studies like zhao, seibert, and hills (2005) found that a persons’ self-efficacy influences his or her entrepreneurial intention. additionally, liu, lin, zhao, and zhao (2019) found that self-efficacy significantly influence entrepreneurial attitude and entrepreneurial intention. moreover, garaika, margahana, and negara (2019) also found a statistical significant relationship between self-efficacy and intention. hence, h2 was devised: h2. self-efficacy has a positive relationship with intention/interest become an entrepreneur. 5 “https://www.ilae.org/files/dmfile/world-bank-list-of-economies-2020_09-1.pdf (accessed on january 17, 2022)” 6 “http://www.nigeria-consulate-frankfurt.de/english/business/economy/economy.html (accessed on january 17, “2022) 7 “https://www.afdb.org/en/countries/west-africa/nigeria (accessed on january 17, 2022)” 8 “https://www.worldbank.org/en/country/nigeria/overview#1 (accessed on january 17, 2022)” 9 “https://www.opec.org/opec_web/en/about_us/167.htm (accessed on january 17, 2022)” 10 “https://www.usaid.gov/nigeria/economic-growth (accessed on january 17, 2022)” asian business research journal, 2022, 7: 1-13 4 © 2022 by the authors; licensee eastern centre of science and education, usa 2.4. subjective norms on entrepreneurial intention according to padilla-angulo (2019), “subjective norm denotes how group of important people can influence the entrepreneurial intention of an individual”. moreover, ajzen (2011) stated that “subjective norm is the perceived social pressure to engage or not to engage in behavior”. furthermore, garcía-rodríguez, gil-soto, ruiz-rosa, and sene (2015) noted that, “subjective norm is an individual’s perception of some reference groups which may or may not approve of the behavior toward self-employment”. regarding the relationship, previous literature like martins and perez (2020) posited that subjective norms exert positive support in self-employment and interest to become entrepreneur. additionally, li, wu, and wu (2008) indicated that the expectancy of families and other key persons have significant influence on the career choices of university students. however, lopez et al. (2021) found a negative influence of subjective norms on intention, this indicated that the findings on this relationship are not sufficiently consistent (fellnhofer & mueller, 2018). therefore, h3 was devised: h3. subjective norm has a positive relationship with intention/interest become an entrepreneur. 2.5. entrepreneurial education on attitude and entrepreneurial intention lawler and joseph (2012) stated that perceived educational support refers to a supportive university environment. “entrepreneurial education may affect student's entrepreneurial behavior positively” as indicated by hynes and richardson (2007). additionally, drucker (2014) stated that entrepreneurship is learned through educational training. in confirmation to that, kuratko (2016) posited that the individuals personality traits and abilities as well as their skills required to become entrepreneurs can be acquired through education and training. previous studies have found relationship among these variables, for example, liu et al. (2019) found that an extensive entrepreneurial education significantly stimulate entrepreneurial intention among university students. however, vohora, wright, and lockett (2004) and miranda, chamorro-mera, rubio, and pérez-mayo (2017) stated that entrepreneurial education cannot predict entrepreneurial intention. consequently, h4 & h5 was devised: h4. entrepreneurial education has a significant impact on attitude towards behavior. h5. entrepreneurial education has significant impact on intention/interest become an entrepreneur. 2.6. government policy support or environmental barrier on attitude and entrepreneurial intention environmental support refers to a supportive macro environmental conditions and government policy support (lüthje & franke, 2003). according to ebitu, glory, and alfred (2016), inadequate funds, unstable power supply and inaccessible road networks among others impedes economic development and lack of youths interest in entrepreneurship in nigeria. moreover, the authors argued that “there is lack of government support policy and that the financial institutions both public and commercial are not readily giving credit/loans to startup companies” in nigeria (ibid). to that effect, ebitu et al. (2016) noted that the government should create a thriving business environment by providing support system that motivate youths to engage in the process of entrepreneurship for long term economic growth and sustainable development. besides, kristiansen and indarti (2004) posited that capital accessibility is one of the success criteria for entrepreneurship. according to petrin (1994), “behind every success of entrepreneurship, there is always some sort of institutional government support”. individual entrepreneurial initiatives go along with enabling macroeconomic environmental policies that supports the ingenuities. the creation of such macro environment starts with the foundation policies for macroeconomic stability hence, policies and programs that are designed to motive and channel entrepreneurial talent towards new venture creation are needed to spur intention. that means, “policies to increase the supply of entrepreneurs, policies developing the market for other inputs into successful entrepreneurship, policies for increasing the effectiveness of entrepreneurs and policies for increasing demand for entrepreneurship can significantly speed up entrepreneurial activities at the national, regional and community levels” petrin (1994). the absence of these effective polices will create environmental barrier. notably, “environmental barrier is one of the biggest factors that hinders youth’s interest to open a new business. the barriers may relate to lack finance (no funding), raw materials, marketing, power, labor, technical or qualified consultancy and guidance or service support” according to latha and murthy (2009). literatures like lüthje and franke (2003) found that perceived entrepreneurship related support or barrier influences students intention to become entrepreneurs. so, h6, h7, h8 & h9 was devised: h6. government policy support has a positive relationship with attitude towards behavior. h7. government policy support has a positive relationship with intention/interest become an entrepreneur. h8. environmental barrier has a negative relationship with attitude towards behavior. h9. environmental barrier has a negative relationship with intention/interest become an entrepreneur. 2.7. the control variables multiple factors influence student’s interest to become entrepreneurs. apart from the theory, age and gender can influence intention according to do paço, ferreira, raposo, rodrigues, and dinis (2015); as well as entrepreneurial experience (zhang, duysters, & cloodt, 2014). according to vohora et al. (2004) “entrepreneurs who get the education they needed can identify new opportunities for commercial applications”. in support of that, landry, amara, and rherrad (2006) postulated that the more experience an individual has, the more the probability that he or she can detect the right business opportunities to exploit for new business. therefore, this study has included age, gender, and entrepreneurial experience as control variables to investigate students’ intention/interest to become entrepreneurs. figure 1 illustrates the relationships between the independent, control, and the dependent variables of the study. asian business research journal, 2022, 7: 1-13 5 © 2022 by the authors; licensee eastern centre of science and education, usa figure 1. conceptual framework. 3. method 3.1. design, target population and pilot testing according to bell, bryman, and harley (2018), “a research strategy is the overall coordination of how the research is conducted either as a quantitative or a qualitative strategy”. this research adopted a quantitative methodology to investigate the factors influencing the youth’s interest to become entrepreneurs in anambra state, nigeria. this is a case study of chukwuemeka odumegwu ojukwu university students in anambra state, nigeria. the target population consisted of 12,50011 students. for pilot testing, 50 respondent’s samples were used test about the timing and how difficult it was to understand the questions and adjustments were made from their feedback before the research instruments was finalized. 450 responses were gathered from online survey (electronic: google form), however, only 400 were used after removing the outliers using mahalanobis distance mahalanobis (1936). there were no missing data in the dataset because, the respondents cannot submit the questionnaire if any data was not completed. the questionnaire has eight parts which includes the demographic profile, the dependent variable intention, and the independent variables: attitude, self-efficacy, subjective norm, entrepreneurial education, government policy support and environmental barriers measurements. the questionnaire consisted of 31 items that sought to measure the constructs. all the indicators were adopted from previous studies. students were asked to identify their opinion on each item of 5-point likert scale ranged from “1= strongly disagree to 5= strongly agree”. table 1. the list of indicators of factors. factors used indicators dropped indicators sources intention ent4, ent5, ent6 ent1, ent2, ent3 lopez et al. (2021) attitude atb3, atb4, atb5 atb1, atb2, lopez et al. (2021) self-efficacy se1, se2, se3 --chen, gully, and eden (2001) subjective norm sbn1, sbn2, sbn3 --solesvik (2013) entrepreneurial education ee2, ee3, ee4, ee5 ee1 fragoso, rocha-junior, and xavier (2020); lopez et al. (2021) govt. policy support gps1, gps2, gps3, gps4 --schwarz, wdowiak, almer-jarz, and breitenecker (2009a) environmental barrier enbr1, enbr2, enbr3, enbr4 --schwarz et al. (2009a) 3.2. sample and procedure according to mcdonald, gan, fraser, oke, and anderson (2015) “sampling procedure is the process of selecting a set of individuals able to represent the whole population from the targeted population that the proponent wished study”. this can be done through “probability or non-probability” sampling technique (saunders, lewis, & thornhill, 2016). to determine the “sample size” of this research, a reference based on previous research with a similar topic was adopted. according to israel (1992) a sample size can be determined using a sample size of a similar study to the one that the proponent plan to study. to that effect, garaika et al. (2019) studied “self-efficacy, self-personality and self-confidence on entrepreneurial intention: study on young enterprises” using 200 respondents. moreover, koksal, namal, vehid, and yurtsever (2005) distributed 300 questionnaires in their study titled “factors affect entrepreneurial intention of university students”. additionally, solesvik (2013) dispersed 321 response survey questions in their study titled “entrepreneurial motivations and intentions: investigating the role of education major”. furthermore, karimi et al. (2016) investigated “the impact of entrepreneurship education: a study of iranian students' entrepreneurial intentions and opportunity identification” and the authors collected a sample of 205 participants. therefore, 400 simple size was drawn from chukwuemeka odumegwu ojukwu university students in anambra state, nigeria using connivence sampling technique. 3.3. validity-test and reliability-test the validity and reliability were tested to confirm the research measurements. the factor analysis was examined through maximum likelihood. the validity and reliability were established with confirmatory factor 11 “https://www.4icu.org/reviews/10772.htm (accessed on january 17, 2022)” entrepreneurial interest/intention age, gender, entrepreneurial experience self-efficacy subjective norms entrepreneurial education government policy support attitude towards behavior environmental barrier h1 h2 h3 h9 h6 h4 h5 h7 h8 asian business research journal, 2022, 7: 1-13 6 © 2022 by the authors; licensee eastern centre of science and education, usa loadings (cfa), the average variance extracted (ave), and the composite reliability (cr). according to hair, hult, ringle, and sarstedt (2021) the cfa should not be below 0.5, the ave should not be below 0.5 and cr should be above 0.7. moreover, the “discriminant validity” was examined by “comparing the square root of average variance extracted (ave) with the correlation of itself to other variables”. “the square root of ave of the construct has to be greater than any correlation that is involved”. the constructs that were above 0.5 in cfa was used for further analysis as it suggests that the scale convergent validity was adequate nonetheless, the construct below 0.5 in cfa was removed (see table 1 & table 4 and figure 2) for list the of indicators adopted. meanwhile, the discriminant validity was also confirmed with “ave above the msv (maximum shared variance)” statistics for all the factors (hair et al., 2021). additionally, the sample adequacy was again confirmed with the “kaiser–meyer–olkin” (kmo), and the result (0.786) statistics was above the acceptable threshold of (0.6) for all factors measured (see table 2). table 3 depicted the ave and cr and the overall model goodness of fit for the model is displayed in table 5 adopted from meyers, gamst, and guarino (2016). amos-23 graphic software was used to test the hypotheses. the data were fitted to the model, and there was no validity or reliability concerns in the construct. table 2. kmo and bartlett's test. “kaiser-meyer-olkin measure of sampling adequacy” 0.786 “bartlett's test of sphericity” approx. chi-square 8332.173 df 465 sig. 0.000 figure 2. cfa “extracted from amos-23”. note: goodness-of-fit statistics: relative chi-square = 2.980; gfi=0.903, agfi=0.883, cfi=0.906, ifi=0.907, pcfi=0.736, pnfi=0.704, rmsea= 0.070. asian business research journal, 2022, 7: 1-13 7 © 2022 by the authors; licensee eastern centre of science and education, usa table 3. validity and reliability test. cr ave msv max r(h) ent-education attitude env-barrier govt-support intention self-efficacy subjective norm entrepreneurial education 0.908 0.712 0.02 0.92 0.844 attitude 0.85 0.655 0.295 0.859 0.142* 0.809 environmental barrier 0.911 0.721 0.024 0.928 0.118* -0.052 0.849 government support 0.877 0.643 0.016 0.898 -0.038 -0.028 0.128* 0.802 intention 0.898 0.746 0.17 0.942 0.039 0.412*** -0.007 -0.104† 0.864 self-efficacy 0.841 0.642 0.099 0.878 0.139* 0.272*** 0.103† 0.039 0.315*** 0.801 subjective norm 0.813 0.598 0.295 0.863 0.083 0.543*** -0.154** 0.099† 0.304*** 0.189** 0.773 note: significance of correlations: † p < 0.100, * p < 0.050, ** p < 0.010, *** p < 0.001. source: hu and bentler (1999): "cutoff criteria for fit indexes in covariance structure analysis: conventional criteria versus “new alternatives sem. extracted from gaskin and lim (2016) master validity tool, amos plugin”. asian business research journal, 2022, 7: 1-13 8 © 2022 by the authors; licensee eastern centre of science and education, usa table 4. cfa: extracted from (spss-23) pattern matrixa. variables factor 1 2 3 4 5 6 7 ee3 1 2 3 4 5 6 7 ee5 0.892 ee4 0.808 ee2 0.899 ent5 0.769 ent4 0.959 ent6 0.811 atb4 0.794 atb5 0.876 atb3 0.793 enbr2 0.754 enbr3 0.917 enbr1 0.902 enbr4 0.787 gps2 0.781 gps1 0.890 gps3 0.841 gps4 0.767 se1 0.699 se2 0.816 se3 0.919 sbn2 0.730 sbn1 0.946 sbn3 0.759 note: extraction method: maximum likelihood. rotation method: promax with kaiser normalization. a.rotation converged in 6 iterations. table 5. model fit index. the overall goodness of fit model criteria and results “absolute” “relative” “parsimonious” fit index measurement criteria results fit index measurement criteria results fit index measurement criteria results chi-square p >0.05 0.000 cfi >0.90 0.906 pcfi >0.50 0.736 cmin/df < 5.0 2.439 ifi >0.90 0.907 pnfi >0.50 0.704 gfi >0.90 0.903 agfi >0.80 0.883 rmsea <0.10 0.070 source: goodness of fit criteria adapted from meyers et al. (2016): applied multivariate research: design and interpretation. 4. results the process of the data analysis for this current study began with the description of the respondent's profiles. the data was collected through a questionnaire distributed via an electronic google form. the respondents were 400 students of chukwuemeka odumegwu ojukwu university students in anambra state, nigeria. below is the respondent’s profile information: figure 3. age category and income level. the respondent’s age is ranged from 21-30 years (56%), 31-45 years (23%), and 20 or less years (17%). the income level where fairly distributed with a slight majority of over 100,000 naira (24%) with the rest of the income levels (see figure 3). most of the respondents are still in their productive age so, they can engage in entrepreneurial activities in the society. the data also showed that most of the respondents have experience in doing business either as their own or working for others and they have taken some entrepreneurial courses previously (62%). however, there are no huge difference between gender (male=51%, female=49%) respectively (see figure 4). asian business research journal, 2022, 7: 1-13 9 © 2022 by the authors; licensee eastern centre of science and education, usa figure 4. gender and experience. 4.1. measurement and structural models estimation amos software version 23 was used to perform the structural equation modelling (sem) for the data analysis. before the structural model estimation, the correlation coefficient was observed between the variables. according to hair, anderson, tatham, and william (1995), the presence of a correlation above 0.8-0.9 is a sign of multi-collinearity problem. in this research, there were no presence of a multi-collinearity. as depicted in table 6, the correlation matrix results between the “independent and the dependent variables” ranged between 0.009 and 0.291 (see table 6) at 99% significance level. furthermore, the structural model estimation validates the relationship between the “dependent and the independent variables” of the research. the results showed that the independent variables explained approximately 22% of the variance of entrepreneurial intention (see figure 5). table 6. estimated correlations. variables selfefficacy govtsupport envbarrier enteducation subnorm attitude intention self-efficacy 1 govt-support 0.03*** 1 env-barrier 0.07*** 0.13*** 1 ent-education 0.127*** -0.039*** 0.118*** 1 sub-norm 0.176*** 0.103*** -0.147*** 0.083*** 1 attitude 0.016*** -0.016*** -0.057*** 0.148*** 0.029*** 1 intention 0.265*** -0.102*** -0.009*** 0.044*** 0.186*** 0.291*** 1 note: *** correlation was significant at the 0.01 level. figure 5. the path analysis model. note: “goodness-of-fit statistics”: “relative chi-square” = 2.980; gfi=0.903, agfi=0.883, cfi=0.906, ifi=0.907, pcfi=0.736, pnfi=0.704, rmsea= 0.070. asian business research journal, 2022, 7: 1-13 10 © 2022 by the authors; licensee eastern centre of science and education, usa from the findings, five hypotheses have a significant relationship and was accepted at p value < 0.100, ** p < 0.010, *** p < 0.001 two-tailed respectively (see table 7). table 7. results. hypothesized relationship “standardized estimates” (β) significance findings h1: attitude intention 0.290 *** accepted h2: self-efficacy intention 0.234 *** accepted h3: subject norm intention 0.154 0.011** accepted h4: entrepreneurial education attitude 0.160 0.007*** accepted h5: entrepreneurial education intention -0.05 0.130 rejected h6: govt. support policy attitude 0.007 0.872 rejected h7: govt. support policy intention -0.130 0.073† accepted h8: environmental barrier attitude -0.074 0.184 rejected h9: environmental barrier intention 0.031 0.341 rejected note: significance of regression weight: † p < 0.100, ** p < 0.010, *** p < 0.001 two-tailed. table 8. control variables. hypothesized relationship standardized estimates (β) significance findings experience intention -0.180 *** accepted gender intention 0.120 0.024** accepted age intention -0.044 0.379 rejected note: significance of regression weight: † p < 0.050, ** p < 0.010, *** p < 0.001 two-tailed. table 8 illustrates the control variables effects on the dependent variable intention. the result showed that experience and gender have a significant impact on intention, however, age was not statistically significant on students’ entrepreneurial intention. 5. discussion the purpose of this research was to investigate the motivating factors of youth’s interest in pursuing a career as entrepreneurs in anambra state, nigeria. drawing on the tpb as personality attributes and the perception of entrepreneurial education & government support as opportunity or barrier to propose a model. to address this purpose, a sample of 400 respondents from chukwuemeka odumegwu ojukwu university students were drawn to test the hypotheses. the results concurred with previous studies on the impact of entrepreneurial intention, nonetheless there are some differences as well. from the data analysis, h1 was supported and accepted (β=0.290; p<0.001), this result conformed with lopez et al. (2021); seth (2020) findings that attitude towards behavior has significant impact on intention. this signifies those students with positive attitude will likely be creative in finding business opportunities and he or she makes a better decision to become entrepreneurs as they are more resilient in overcoming obstacles which boosts their chances of success in any business endeavors. moreover, as expected, the result of h2 was supported and sustained (β=0.234; p<0.001). this finding aligned with garaika et al. (2019); liu et al. (2019) which found that “self-efficacy has a significant influence on entrepreneurial intention”. this implies that those aspiring young entrepreneurs who have confidence in their ability and intellectual levels tends to have strong motivation to engage in entrepreneurship. the results also demonstrated empirically how social pressure perceived by students from their reference group like influential people, family members or other role models have a significant impact on students’ entrepreneurial interest, thus h3 was supported (β=0.154; p<0.05). this result conformed with karimi et al. (2016) and seth (2020) that found statistical positive relationship between subjective norms and intention however, this findings are still inconsistent stated (lopez et al., 2021) as the authors found a negative association between subjective norms and intention. furthermore, the result of h4 was significant and accepted (β=0.160; p<0.001), however, h5 was not supported hence, was rejected (β=-0.054; p<0.05). according to landry et al. (2006), the association between the entrepreneurial training and attitude on students intention to become entrepreneurs are still conflicting, for instance, nagarathanam, buang, and rahman (2017) found a statistical significance that entrepreneurial education can increase the positive attitude of students to become entrepreneurs and consequently increasing their level of entrepreneurial intention, however, karimi et al. (2016) found no evidence between entrepreneurial education and intention. furthermore, seth (2020) noted that “entrepreneurial education have a positive relationship with students’ attitudes toward behavior which invariably increase their entrepreneurial intention”. in the context of nigeria, this research found that entrepreneurship education and or training influences attitude but not necessarily the intention to pursue entrepreneur as a career. the reason may be because, most of the youths go through apprenticeship and acquire a real-life business experience that are not learned in academic institutions. additionally, with respect to government policy support or barrier on attitude and intention, h6 was not significant and was rejected (β=-0.007; p<0.05), however, h7 has a significant negative relationship and was not rejected (β=-0.130; p<0.10). this signifies that, government policy support influences entrepreneurial intention. this findings supported the analysis of udu (2015) regarding the impact of macroeconomic policy and its impact on small and new businesses. the author posited that less than 5% of new small businesses survive beyond their first five years of existence due to the difficulties in getting access to funding and other support from the government in nigeria. government support policies has a direct impact on the potential business source of funds (loans or credit) from the government and commercial banks, as well as adequate, supportive, and favorable macroeconomic business environment. in addition, the result of this hypothesis did not support the findings of schwarz, wdowiak, almer-jarz, and breitenecker (2009b) that found government environmental support to be statistically insignificant with intention. however, the results of h8 & h9 was not supported (β=-0.074 & 0.031; p<0.05). this findings supported the findings of schwarz et al. (2009b) that found no statistical significance between barrier and intention. hence, these results might be partially conflicting with the asian business research journal, 2022, 7: 1-13 11 © 2022 by the authors; licensee eastern centre of science and education, usa findings of environmental support or barrier impact on students’ entrepreneurial intention from other countries due to differences in context and environment conditions. based on nigeria context, the reason might be because, barrier as competition is unavoidable in business which does not influence intention. similarly, lack of unqualified consultants and insufficient market information have no impact on intention because, youths learn entrepreneurship through apprenticeship or family members in nigeria context and culture. the result of the control variables effects on intention are as follows: entrepreneurial experience and gender has an impact on interest to become entrepreneurs (β=-0.180 & 0.124; p<0.001). the result supported the findings of zhang et al. (2014) regarding the impact of entrepreneurial experience and do paço et al. (2015) influence of gender on student’s decision to become entrepreneurs. in support of that, landry et al. (2006) noted that the more experience an individual has, the more the probability that he or she can detect the right business opportunities to exploit for new venture creation, however, in the case of nigeria, there is a statistical negative association between youths entrepreneurial experience and intention. the reason might be because, students with entrepreneurial experience tends to understand the reality of the unfavorable macroeconomic environment of doing business in nigeria, so, this would have an impact on their intention to open new business, likewise gender. however, the result of age was rejected (β=-0.044; p<0.05) hence, age have no significant impact on youth’s entrepreneurship interest in anambra state, nigeria. 6. conclusion this research explored the determinants of “entrepreneurial intention among university students” by developing a conceptual framework comprising personality traits and environmental factors which includes general personality attributes from tpb and the perception of environmental support or barrier. pertaining the personality attributes, this study concludes that attitude, self-efficacy, and subject norm have been confirmed as an important factor in predicting youth’s entrepreneurial interest. additionally, entrepreneurial education has significant impact on attitude towards behavior but not necessarily leading to intention to engage in entrepreneurship process. on the other hand, regarding the environmental support or barrier, this study found government support policy as having significant effects on students’ interest in entrepreneurs. factors of environmental barrier like lack of access to funds or redtape processes associated with new venture creation have no statistical significance on youths’ interest to become entrepreneurial in anambra state of nigeria. the results on environmental conditions on students’ intention to become entrepreneurs are rather contrasting in the literature and in different cultural contexts. notably, this study did not evaluate the environmental conditions directly but relied on students’ subjective judgments for the result analysis. furthermore, on the control variable, this study detected a significant impact of experience and gender on entrepreneurial intention like previous research, however, no significance was detected on age level of student’s impact on their interest to become entrepreneur. 7. managerial implication and recommendations this study provided both academic and practical suggestions for universities and stakeholder of the society. from the academic and theoretical implications, first, this study contributes by integrating the tpb as personality attributes and environmental condition variables and its antecedents on entrepreneurial intention. secondly, this study validated the scales used to measure the tpb antecedents and entrepreneurial intention in a different cultural context of non-western countries such as anambra state, nigeria and provided further supporting evidence in predicting entrepreneurial intention. the integration of these variables for this study’s conceptual model and the validation of the scales used in this study will offer more instrument that allows researchers to propose new models and to prove their relationships. practically, the result of this research provided a “valuable information” for government effective policies formulations and implementation, for the banks, the universities, and other stakeholder. firstly, this study confirmed the significance of tpb and government support by strengthening the antecedents of entrepreneurial intention. there “is a positive relationship between personality attribute of tpb and environmental government support on intention”. this implies that university students will develop more interest in entrepreneurial activities if they have more support system like availability of funds. as the results indicated regarding personality attributes, youths are willing to engage in entrepreneurship as a career option if there are tools and support mechanisms to improve their perception about entrepreneurship in nigeria. a conducive external macroeconomic environment to ease in youths’ decision to become entrepreneurs is vital. on that note, the universities in nigeria should provide support through different channels including the provision of essential tools to facilitates students learning and training as well as inviting successful entrepreneurs (role models) as extracurricular activities to motivate students through interactions as the result proved a statistical significance of the impact of role models in enhancing practical entrepreneurial skills. secondly, this study also contributed practically by providing a valuable information about the importance of government support, which provides an avenue for youths with the visions and aspirations but lacks the financial capacity to act in pursuing their dreams. this is a vicious cycle, from the introduction section above, the actions of the government are evidently inadequate with high unemployment rates among the youths in nigeria which has also been confirmed by the findings of this research. therefore, the government and other important stakeholders need to re-strategize and make an urgent u-turn in their entrepreneurship policies to be more supportive and inclusive. this will engage the youths in entrepreneurship and motivate them to be independent which will nurture “sustainable economic development” in the anambra state, nigeria. the findings of this research can aid the government and other stakeholders like universities in developing agendas that promote youths’ interest in entrepreneurship activities in the country. this finding can also support the commercial banks in creating a more funding policies for youth’s entrepreneurship in the state. finally, although the entrepreneurial education was detected to be insignificant in this study, there is no doubt about the importance of the need to improve education system in the country as indicated by low hdi. the youths are the pillar and the future of every nation, and for inclusivity and long term sustainable economic growth, environmental and social development, education plays a vital role in making them self-reliance by providing them with entrepreneurial education to learn and obtain the modern knowledge and tools to stay hungry for success and aspirations. asian business research journal, 2022, 7: 1-13 12 © 2022 by the authors; licensee eastern centre of science and education, usa 8. limitation and future research the result of this research provided insightful suggestion which are beneficial in understanding students intention to become entrepreneurs and provided a considerable information for both theory and practical implication. nevertheless, this study has some limitations. firstly, generalization of the findings of this study is difficult because of context and other environmental conditions that differs from country to country. secondly, this is a case study of only one university in anambra state, nigeria, therefore, a sampling error might create some bias in the generalization of the results. thirdly, this research applied “quantitative method with a proposed conceptual model” with only selected general attitudes and environmental conditions in the model. there are other notable factors that significantly relates with entrepreneurial intention omitted from this research model. to encourage students’ intention to become businesspersons, this current study provides several recommendations. the results indicated that personality traits strongly influence entrepreneurial intention however, entrepreneurial education and other external conditions were not significant. the reasons for unsupported result between entrepreneurial education on intention is unclear, so, further studies are needed to establish concrete results. additionally, students’ decision to become 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(2005). the mediating role of self-efficacy in the development of entrepreneurial intentions. journal of applied psychology, 90(6), 1265-1272.available at: https://doi.org/10.1037/0021-9010.90.6.1265. citation: simon nnaemeka ajah (2022). investigating the motivating factors of youths-students interest to become entrepreneurs: a case of anambra state, nigeria. asian business research journal, 7: 1-13. history: received: 28 december 2021 revised: 31 january 2022 accepted: 15 february 2022 published: 23 february 2022 licensed: this work is licensed under a creative commons attribution 4.0 license publisher: eastern centre of science and education funding: this study received no specific financial support. competing interests: the author declares that there are no conflicts of interests regarding the publication of this paper. transparency: the author confirms that the manuscript is an honest, accurate, and transparent account of the study; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study followed all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. https://creativecommons.org/licenses/by/4.0/ https://creativecommons.org/licenses/by/4.0/ 26 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 4, 26-30, 2025 issn: 2576-6759 doi: 10.55220/25766759.361 © 2025 by the authors; licensee eastern centre of science and education, usa building national digital infrastructure to promote digital economic development of localities in vietnam vo mai trang1 nguyen hong chinh2 1hanoi medical university, vietnam. 2academy of finance, vietnam. email: vmtrang1982@gmail.com email: nguyenhongchinh@hvtc.edu.vn ( corresponding author) abstract developing and constructing a synchronized and modern national digital infrastructure to support the digital economy is a prevalent development trend among many countries. prioritizing the advancement of a robust digital infrastructure plays a crucial role in driving digital economic development at both the national and local levels. this paper analyzes the current state of vietnam's national digital infrastructure development and its impact on promoting local digital economies. it proposes solutions to further enhance digital infrastructure development in the forthcoming period. keywords: building, digital infrastructure, economic, localities, promote. 1. introduction the digital economy is becoming an inevitable global trend, with traditional economies increasingly affected by the fourth industrial revolution. digital technologies and novel business models have fundamentally transformed the socio-economic landscape of many countries. digitalization is no longer a distant future but a contemporary reality, permeating almost all sectors, from commerce and payment systems to transportation, education, and healthcare. according to research conducted by the fletcher school's center for global business at tufts university (usa), vietnam currently ranks 48th out of 60 countries in terms of the pace of digital economic transformation while standing 22nd globally in digital development speed. these figures indicate a significant shift in the business models of vietnamese enterprises, marking a turning point that elevates vietnam's socio-economic landscape to a new level. furthermore, the economy sea 2022 report on southeast asia's digital economy (google, temasek, & bain & company, 2023) highlights that vietnam's internet economy, measured by gross merchandise value (gmv), reached usd 23 billion in 2022, representing a growth of 28% compared to 2021. vietnam's internet economy ranks third in southeast asia, followed by indonesia with usd 77 billion and thailand with usd 35 billion (vna, 2024). nevertheless, vietnam is projected to become the fastest-growing internet economy in the region due to the rapid expansion of e-commerce. for digital economy development, however, the role of digital infrastructure remains critical. experts emphasize that digital infrastructure plays a fundamental role, often called the "infrastructure of infrastructures." however, it is a reality that developing digital infrastructure requires active participation from multiple economic and social stakeholders. infrastructure systems, particularly information technology, telecommunications, data networks, electricity, and energy infrastructure, play crucial roles and form the foundational basis for ensuring sustainable growth of the digital economy. modern, high-quality, integrated, widely interconnected, and secure telecommunication, it, and data infrastructure, together with stable and high-quality power and energy systems, constitute essential platforms for implementing digital economic technologies and services, thereby fostering the advancement of vietnam's digital economy. the development of digital infrastructure, serving as a foundation for digital government, digital economy, and digital society, has been clearly outlined in the documents of the 13th national party congress, as well as in the national digital transformation program towards 2025 with an orientation to 2030 approved by the prime minister. in constructing digital infrastructure, it is essential to consider the following: (i) infrastructure must be developed proactively and ahead of demand rather than reactively. historical experiences have repeatedly demonstrated that proactively developed infrastructure creates new development opportunities and generates new demands. roads must exist before people can travel; similarly, (ii) digital infrastructure should not be confined merely to telecommunications and the internet. instead, it represents a complex and comprehensive ecosystem encompassing connectivity, equipment, data, applications, and technological research and development. these elements mutually support each other to ensure synchronized development. furthermore, (iii) revolutionary advancements inherently involve uncertainties, making it impossible to anticipate all possible developments or measure impacts in isolated or short-term contexts. therefore, digital transformation necessitates adopting a new, flexible, and holistic perspective that considers long-term implications and broader spillover effects on development (ministry of mailto:vmtrang1982@gmail.com mailto:nguyenhongchinh@hvtc.edu.vn https://doi.org/10.55220/25766759.361 asian business research journal, 2025, 10(4): 26-30 27 © 2025 by the authors; licensee eastern centre of science and education, usa information and communications, 2023). to effectively achieve national and local digital economic development objectives, vietnam must accelerate the establishment of its digital infrastructure in the coming period. 2. current situation of digital infrastructure development in vietnam in the recent period documents of the 13th national party congress have identified "robustly developing digital infrastructure and establishing synchronized national, regional, and local data infrastructure that is seamlessly interconnected and unified, forming a solid foundation for digital economic and social development" as a priority direction in infrastructure development to foster vietnam’s digital economy. this effort aims to achieve the target set by the prime minister in decision no. 749/qđ-ttg dated june 3, 2020, approving the "national digital transformation program towards 2025 with orientation to 2030," specifically to have the digital economy contribute 20% of gross domestic product (gdp) by 2025 and approximately 30% by 2030. figure 1. forecast of telecommunications infrastructure development to 2030. source: ministry of information and communications (2022). regarding the digital infrastructure of several centrally governed cities, da nang consistently held the top position during the 2018–2020 period. however, according to the digital transformation index (dti) rankings 2022, recently published by the ministry of information and communications, ho chi minh city has advanced to the top position regarding digital infrastructure and digital institutional frameworks. table 1. digital infrastructure of centrally governed cities. city indicator rank technical infrastructure human infrastructure application index ict index 2018 rank 2019 rank 2020 rank da nang 0.79 0.99 1 0.92 1 1 1 can tho 0.57 1 0.48 0.68 4 10 14 ho chi minh city 0.69 0.84 0.23 0.58 5 7 2 hanoi 0.59 0.72 0.4 0.56 6 8 3 hai phong 0.34 0.52 0.18 0.34 45 43 29 source: ministry of information and communications (mic) and calculations by the authors. many localities across vietnam have issued plans for digital infrastructure development with the following objectives: (i) to establish broadband, ultra-broadband, universal, secure, sustainable, and open digital infrastructure (including broadband telecommunications infrastructure, data center and cloud computing infrastructure, digital technology infrastructure, and digital platforms serving infrastructural roles). this infrastructure aims to meet communication requirements for the leadership, direction, and management activities of party committees and governmental authorities at all levels; to satisfy the communication and entertainment needs of the public; and to be ready to address connectivity, data processing, and network security demands; (ii) to develop digital infrastructure that supports the advancement of digital government, digital economy, and digital society at the provincial level. this includes improving the quality of 4g networks, gradually deploying 5g networks, and universalizing broadband internet, particularly in mountainous, remote, isolated, and socioeconomically disadvantaged regions. additionally, there is a clear shift from essential telecommunications services towards information technology and communication services promoting digital infrastructure development. binh duong is among the localities that have promulgated a digital infrastructure development plan for 2025. cloud computing infrastructure: currently, vietnam has three main groups of cloud infrastructure providers: foreign enterprises (e.g., google, microsoft), large-scale domestic enterprises with comprehensive investments (viettel, vnpt, cmc, fpt), and smaller enterprises providing specialized applications or services. according to reports by researchmarket and techsci, vietnam's cloud computing market was valued at approximately usd 200 million (vnd 4,600 billion) by the end of 2020. however, vietnamese enterprises hold only about 20% of the domestic cloud computing market share (equivalent to over vnd 900 billion). the remaining 80% is dominated by foreign providers such as google, aws, and microsoft azure (ministry of information and communications, 2023). asian business research journal, 2025, 10(4): 26-30 28 © 2025 by the authors; licensee eastern centre of science and education, usa information and communication technology (ict) infrastructure: ict infrastructure is a decisive factor influencing the ability to transform and extend digital service applications into traditional economic activities. according to a report by the commonwealth scientific and industrial research organisation (csiro, 2019), vietnam possesses advantages in several ict infrastructure areas, particularly regarding 5g networks, internet penetration, and smartphone adoption. the 5g network is considered a new-generation technology that ushers in unprecedented connectivity and technological advancement. offering significantly greater capacity and speed, 5g fosters unattainable innovation with the previous 4g lte standards. vietnam was among the first countries to conduct 5g trials beginning in 2020. the country's three major telecommunications providers—viettel, vinaphone, and mobifone—have implemented 5g networks in hanoi, ho chi minh city, and several provinces and cities. alongside high-speed internet, affordable internet costs are favorable for developing digital platforms, especially in lower-middle-income countries such as vietnam (ministry of information and communications, 2022). 3. development of key national internet infrastructure vietnam internet network information center (vnnic) has implemented anycast and ipv6 technologies for the national domain name system (dns). regarding the national internet exchange point, in the early 2000s, vietnam’s internet infrastructure was still in the early stages of development, with high access costs and network quality insufficient to meet user demands. a primary reason for this was the high cost of international connection channels, compounded by domestic internet enterprises’ inability to directly interconnect. therefore, in 2003, the ministry of posts and telecommunications—now known as the ministry of information and communications— established the vietnam national internet exchange (vnix), assigning its direct management and operation to vnnic, following the principles of neutrality and non-profitability. over nearly 20 years of establishment and development, vnix has significantly contributed to vietnam's internet growth, connecting various enterprises, reducing costs, and optimizing service quality and national internet infrastructure security. vnix membership has expanded to include organizations holding ip/asn allocations managed and assigned by vnnic, and it supports bilateral and multilateral peering policies. as of 2019, vnix had 21 member organizations, including key entities such as the vietnam internet network information center, fpt telecom joint stock company, cmc telecom infrastructure joint stock company, mobifone telecommunications corporation, and saigon tourist cable television company. vnix provides fundamental benefits including streamlined connectivity, cost savings for members, improved network service quality, and enhanced safety through backup and incident response measures. vietnam has accumulated nearly two decades of internet infrastructure development, resulting in relatively modern infrastructure compared to asean and international standards, adequately supporting electronic transactions on the internet. particularly noteworthy is the growing investment in wireless and satellite-based connectivity systems in recent years, a trend expected to continue, aligning with overall socio-economic development demands, especially those related to vietnam's digital economy (ministry of information and communications, 2023). thus, establishing digital infrastructure and innovating digital applications to develop the digital economy— creating new drivers for economic growth and labor productivity—is critically important. the degree, pace, and effectiveness of digital government, digital economy, and digital society development significantly depend on digital infrastructure advancement. recently, the government, ministries, sectors, and local authorities have prioritized and actively promoted digital infrastructure development, achieving noteworthy outcomes. however, building digital infrastructure requires continuous investment, comprehensive development, synchronization, and modernization to address practical needs and readiness for achieving vietnam’s digital economy development objectives. 4. contribution of digital economy to gdp in selected vietnamese localities vietnam has quickly grasped emerging technology trends and proactively developed strategic directions and solutions to participate in the fourth industrial revolution and transition to a digital economy. resolution no. 52/nq-tw identified digital economy development as one of vietnam's three key priorities, setting a goal that by 2025, the digital economy would account for approximately 20% of gdp, with labor productivity increasing by an average of over 7% per year, and by 2030, the digital economy would surpass 30% of gdp. the vietnam digital economy report 2023 presented measurements and rankings of the digital economy's proportion within the gdp for all 63 provinces and cities nationwide. the findings clearly distinguished between the share of the digital economy attributed to information and communication technology (ict) and that attributed to sectors beyond ict, providing a comprehensive perspective on the state of the digital economy at the local level. results indicated that the share of ict-driven activities largely influences the digital economy's contribution to each locality's gdp. localities with high ict-driven digital economy proportions can be divided into two groups. the first group comprises provinces with substantial contributions from hardware processing, manufacturing, and electronic and optical component production. this group exhibits very high ict-driven economic proportions, driven by both domestic and foreign enterprises located in industrial zones. however, their digital economy proportions remain relatively low; typical provinces include bac ninh, thai nguyen, and bac giang. the second group includes provinces and cities with highly developed service sectors, characterized by significant contributions from ict-related services and digital content within their local economies. these localities generally exhibit relatively high gdp levels and serve as national economic centers, such as hanoi, ho chi minh city, and binh duong province. geographically, provinces with high ict digital economy proportions are predominantly located in northern vietnam, specifically within the red river delta and the northern midlands and mountainous region. meanwhile, localities demonstrating high shares of non-ict digital economy sectors are primarily those with strengths in services and tourism, concentrated mainly in the north central coast and central coast regions, or in asian business research journal, 2025, 10(4): 26-30 29 © 2025 by the authors; licensee eastern centre of science and education, usa manufacturing and processing industries prevalent in the mekong delta (posts and telecommunications institute of technology, 2023). table 2. contribution of the digital economy to gdp in selected localities of vietnam, 2022. locality ict-driven digital economy as % of grdp non-ict digital economy as % of grdp total digital economy as % of grdp digital economy ranking việt nam 9.02 5.24 14.26 bac ninh 53.70 3.12 56.83 1 thai nguyen 38.73 4.20 42.92 2 bac giang 37.31 4.82 42.13 3 hai phong 24.50 4.99 29.48 4 vinh phuc 19.46 3.40 22.87 5 đa nang 8.86 10.90 19.76 6 ho chi minh city 8.56 10.10 18.66 7 hanoi 11.79 5.36 17.15 8 phu tho 8.21 7.22 15.43 9 ha nam 11.00 3.50 14.51 10 binh dương 7.41 3.92 11.34 14 source: posts and telecommunications institute of technology (ptit) (2023). the provinces and cities in northern vietnam generally exhibit high levels of digital economy spillover effects within sectors such as electricity, gas, hot water, steam, and air conditioning production and distribution. meanwhile, provinces and cities in the red river delta show strong digital economy spillovers primarily in service sectors, notably finance, banking and insurance, healthcare and social assistance, arts, entertainment, and recreation. this characteristic resembles the service-oriented provinces in the central coast and southeast regions. bac ninh leads the list with the highest proportion of digital economy in gdp, at 56.83%, primarily driven by an exceptionally high ict digital economy share of 53.70%. however, its non-ict digital economy proportion is relatively modest at 3.12%. provinces and cities occupy the remaining top five positions with the highest ict digital economy proportions nationwide, notably hosting significant industrial zones specializing in high-tech manufacturing. da nang records the highest proportion of non-ict digital economy among all localities. the total digital economy proportion in da nang's grdp stands at 19.76%, ranking sixth nationwide. ho chi minh city and hanoi occupy seventh and eighth positions, respectively, with total digital economy proportions of 18.66% and 17.15%. although ho chi minh city has a slightly lower ict proportion than hanoi (8.56% compared to 11.79%), its non-ict digital economy proportion is considerably higher (10.10% compared to hanoi's 5.36%). phu tho and ha nam provinces rank ninth and tenth, with digital economy shares in their grdp at 15.43% and 14.51%, respectively. provinces in the central highlands and mekong delta regions exhibit relatively high non-ict digital economy proportions but lower ict proportions. the provinces with the lowest digital economy proportions are spread from the central region to the mekong delta, with ict digital economy proportions of around 2% and nonict proportions ranging from 2% to 4%. ba ria-vung tau province is a unique case due to the substantial contribution of the oil and gas industry to its total grdp, ranking fifth nationally in overall grdp. due to the unique nature of its mining sector, the mining industry was excluded from ba ria-vung tau's grdp calculations (grdp*) to assess its digital economy proportion more accurately. despite having the lowest ict digital economy proportion, ba ria-vung tau's non-ict digital economy share is relatively high at 5.62%, ranking twelfth nationwide. seven provinces and cities exceed the national average for ict digital economy proportions, eighteen localities surpass the national average for non-ict digital economy proportions, and eleven have overall digital economy proportions above the national average. this indicates uneven digital economy contributions across the country, with economic activity concentrated primarily in major economic hubs. nonetheless, the high proportion of the non-ict digital economy across many provinces and cities indicates active engagement in technological adoption and digital transformation within local production activities. given limitations in human resources, infrastructure, and social awareness, achieving the 2025 target of the digital economy accounting for 20% of gdp and developing a robust digital technology enterprise community remains challenging for vietnam. lessons drawn from international trends suggest several critical steps for vietnam. the government must adopt flexible management policies to liberate enterprises from restrictive regulations. strategic investments in technology infrastructure, particularly 5g and 6g networks, are essential, demanding focused and synchronized efforts to avoid scattered and inefficient investment outcomes. both public and private sectors should invest significantly in upgrading digital technical infrastructure and advanced digital technologies to facilitate innovative connectivity applications, especially cashless payment systems and enhanced egovernment efficiency. these represent essential foundations for online activities. based on robust telecommunications infrastructure, vietnam should prioritize building national and specialized databases alongside developing cybersecurity measures to ensure information security in cyberspace. 5. solutions for developing digital infrastructure to promote local digital economies developing vietnam’s digital infrastructure to transform the digital economy into a key driver for economic growth, contributing to the country's achievement of upper-middle-income status by 2030 and high-income status by 2045, is essential. to effectively and rapidly develop national digital infrastructure, the following solutions should be implemented: firstly, it amends and elevates national technical standards and regulations regarding broadband service quality to match those of developed countries. establish national technical standards for digital technologies such asian business research journal, 2025, 10(4): 26-30 30 © 2025 by the authors; licensee eastern centre of science and education, usa as ai, blockchain, and iot. develop iot-specific national technical standards for healthcare, education, industry, agriculture, transportation, energy, electricity, water, and smart cities, emphasizing enhanced security and safety for iot applications. establish criteria to evaluate local and national digital infrastructure development, aligned with international evaluation standards. implement measurement, monitoring, evaluation, and regulatory management systems for telecommunications infrastructure, data centers, cloud computing infrastructure, digital technology infrastructure, and digital platforms. issue a set of digital infrastructure management, monitoring, and evaluation criteria. conduct annual surveys, data collection, and publication of statistical results to measure and monitor the achievement of infrastructure development objectives at national and local levels. secondly, issue decrees guiding amendments to the telecommunications law, expanding management scope, resolving difficulties, and fostering conditions for broadband telecommunications and cloud computing infrastructure development. elevate standards and regulations on network equipment, service quality, and user experience for digital services. amend the law on radio frequency to clearly regulate frequency resource allocation methods for developing 5g and subsequent mobile networks to serve diverse economic sectors. develop a digital technology industry law to create a controlled sandbox regulatory environment, enabling trials and application of new technologies and digital infrastructure components. consider adding digital infrastructure construction to the list of specially incentivized sectors under the investment law to attract private investment. provinces and cities should ensure regional and provincial plans incorporate strategies for managing and promoting digital infrastructure development, prioritizing broadband infrastructure, data centers, internet exchange points, and international connectivity stations. thirdly, refine policies ensuring industry, regional, and provincial planning readiness for digital infrastructure development, prioritizing spaces and facilitating broadband infrastructure development, data centers, internet exchange points, and international connectivity landing stations. permit digital infrastructure development on public land and share the use of infrastructure with other sectors. establish national and regional data centers integrated with electricity infrastructure, undersea fiber optic cables, landing stations, domestic backbone fiber optic networks, and internet exchange points. research and formulate frequency spectrum planning and allocation strategies to fully meet broadband mobile communication (4g, 5g, and subsequent generations) and iot infrastructure development needs. fourthly, investments should be significantly increased, and high-speed fixed broadband infrastructure (gbps) should be developed by promoting public-private partnerships (ppp) to mobilize private sector resources under balanced benefit and risk-sharing principles among the government, investors, and citizens. develop a roadmap for phasing out obsolete technologies to free frequency resources for new technologies (4g, 5g, and future generations), reducing operational costs for businesses and supporting broadband service universalization. encourage enterprises to establish virtual mobile telecommunications networks (mvnos). efficiently utilize vietnam's public telecommunications service fund funding to support universalizing fixed and mobile broadband services in public benefit areas. fifthly, policies should be developed promoting cloud computing adoption among governmental agencies, organizations, enterprises, and citizens, prioritizing cloud services provided by vietnamese enterprises within it application projects. this strategy aims to stimulate widespread cloud computing adoption and set standards for integrating cloud computing and iot infrastructure within key economic sectors, including healthcare, education, industry, agriculture, transportation, energy, electricity, water, and smart cities. 6. conclusion the development of national digital infrastructure is pivotal in driving the growth of the digital economy at both national and local levels in vietnam. the research highlights the significant progress vietnam has made, especially regarding telecommunications, ict infrastructure, cloud computing, and internet network advancements. notably, regions such as bac ninh, thai nguyen, and ho chi minh city demonstrate substantial contributions to the digital economy, primarily through ict and service-oriented sectors. however, disparities remain evident across various localities, emphasizing the need for balanced, inclusive, and sustainable digital infrastructure growth. to achieve vietnam's ambitious goals of the digital economy contributing significantly to gdp by 2025 and 2030, targeted and strategic actions must be undertaken. the research proposes enhancing national standards, refining legislative frameworks, encouraging public-private partnerships, and promoting widespread adoption of emerging technologies like cloud computing, iot, and 5g networks. continuous investment, synchronized development across sectors, and proactive policy-making are critical. by addressing these strategic areas, vietnam can ensure a robust digital infrastructure foundation, unlocking substantial economic potential and positioning itself favorably in the global digital economy landscape. references posts and telecommunications institute of technology. 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(2023). e-conomy sea 2023: onward and upward—southeast asia’s digital economy report. https://www.thinkwithgoogle.com/_qs/documents/18380/e_conomy_sea_2023_report.pdf vna. (2024). vietnam's internet economy projected to hit $36b in 2024. vnexpress international. https://e.vnexpress.net/news/business/economy/vietnam-s-internet-economy-projected-to-hit-36b-in-2024-4819057.html. https://research.csiro.au/aus4innovation/wp-content/uploads/sites/294/2020/07/18-00566_data61_report_vietnamsfuturedigitaleconomy2040_english_web_190528.pdf https://research.csiro.au/aus4innovation/wp-content/uploads/sites/294/2020/07/18-00566_data61_report_vietnamsfuturedigitaleconomy2040_english_web_190528.pdf https://www.thinkwithgoogle.com/_qs/documents/18380/e_conomy_sea_2023_report.pdf https://e.vnexpress.net/news/business/economy/vietnam-s-internet-economy-projected-to-hit-36b-in-2024-4819057.html 1 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 4, 1-6, 2025 issn: 2576-6759 doi: 10.55220/25766759.331 © 2025 by the author; licensee eastern centre of science and education, usa diversity toward unity and sustainable growth in nigeria: fostering inclusivity for a prosperous future emmanuel ukpe1 1school of business, university of the virgin islands st. croix, virgin islands, united states. email: emmanuel.ukpe@uvi.edu abstract nigeria's diversity is both a source of strength and a challenge that demands careful navigation. this study explores the intricate interplay of diversity, unity, and sustainable growth in nigeria, a nation that is a microcosm of africa's cultural richness. this study explored this diversity's historical, social, economic, and political dimensions, acknowledging its role in shaping the nation's identity while addressing its challenges. it emphasizes the crucial importance of unity in achieving sustainable growth and national development. challenges arising from nigeria's diversity, including ethnic tensions, regional imbalances, and historical grievances, are dissected to comprehensively understand the nation's hurdles. opportunities for unity are illuminated, focusing on cultural exchange, education as a unifying force, and economic inclusivity. the study further delves into empowering marginalized groups, advocating for inclusive economic policies, and the role of education as a catalyst for national cohesion. the paper concludes by providing actionable recommendations, emphasizing the need for national inclusivity initiatives, equitable economic policies, and strategic infrastructure development. keywords: diversity, fostering inclusivity, future, growth, unity. 1. introduction nigeria, situated in west africa, stands as a beacon of cultural vibrancy and diversity, representing a microcosm of the continent's extensive heritage (oluwakemi, 2020). the country's sprawling landscape is home to over 250 ethnic groups, each contributing to a rich tapestry of cultures, languages, and traditions. this immense diversity is a testament to nigeria's historical depth and serves as a living chronicle of the various civilizations that have thrived within its borders (oyekan et al., 2020). from the ancient city-states of the north to the coastal kingdoms of the south, nigeria's mosaic of cultures encapsulates a wealth of experiences and narratives that have shaped the nation's identity. nigeria's linguistic diversity further underscores the complexity and richness of its cultural landscape. with many languages spoken, ranging from the widely spoken hausa, yoruba, and igbo to numerous more minor languages, communication becomes a testament to the intricate interplay of historical, geographical, and sociopolitical factors (williams, 2023). this linguistic mosaic reflects not only the diverse origins of nigeria's population but also the dynamic nature of interactions and exchanges that have taken place over centuries. beyond its cultural significance, nigeria's diversity has played a pivotal role in shaping its social, economic, and political trajectory. in the social sphere, the coexistence of various ethnic groups has given rise to a kaleidoscope of traditions, rituals, and artistic expressions, creating a national identity that is both unified and multifaceted (mhlanga & ndhlovu, 2023). this intricate social fabric is woven with shared values while allowing for the celebration of distinct cultural nuances that contribute to the nation's collective identity. economically, nigeria's diversity is reflected in the regional variations in resources and economic activities (owuondo, 2023). from the oilrich niger delta to the agricultural abundance of the middle belt and the commercial hubs in the southwest, each region brings a unique economic dynamic to the national tableau. however, the challenge lies in harnessing this economic diversity for inclusive growth, ensuring that the benefits are distributed equitably across regions and demographic groups (okonmah & arimie, 2023). politically, nigeria's diversity has presented opportunities for representation and power distribution challenges. the federal structure of the government recognizes the need to accommodate the diverse interests of its constituent parts. however, historical tensions and perceptions of unequal distribution of resources have, at times, strained the delicate balance required for effective governance. nigeria's diversity is a multifaceted phenomenon that goes beyond being a mere demographic statistic. it is a living, breathing entity that shapes the nation's identity, influences its economic dynamics, and plays a pivotal role in the intricate dance of its political landscape. the significance of unity in the context of nigeria's diversity cannot be overstated, especially in the pursuit of sustainable growth (ojogiwa & qwabe, 2021). despite its abundant resources and potential, the country has faced challenges rooted in ethnic and regional disparities. historical tensions, exacerbated by resource allocation and political power issues, have sometimes hindered progress and mailto:emmanuel.ukpe@uvi.edu https://doi.org/10.55220/25766759.331 asian business research journal, 2025, 10(4): 1-6 2 © 2025 by the authors; licensee eastern centre of science and education, usa impeded the realization of nigeria's full potential. thus, navigating this diversity toward a unified and cohesive nation becomes essential for fostering sustainable development. unity is not merely a desirable goal but a prerequisite for achieving sustainable growth in nigeria. a fragmented society, marked by ethnic or regional divisions, undermines efforts to formulate and implement coherent national policies (okobia & azu, 2021). the interconnected nature of economic, social, and political development necessitates a unified approach that transcends ethnic and cultural differences. with a commitment to unity, the nation can avoid perpetuating inequalities, hindering progress, and missing out on the synergies of diverse perspectives and experiences. fostering inclusivity is the key to unlocking nigeria's path to a prosperous future. inclusivity goes beyond mere tolerance; it involves actively embracing and leveraging the nation's diversity to build a more resilient and dynamic society (ojo, 2022). recognizing and appreciating the unique contributions of each ethnic group while forging a shared national identity is crucial. by promoting inclusivity in all facets of society, from education to economic policies, nigeria can harness the strength of its diversity to drive innovation, creativity, and sustainable development. this submission seeks to explore, analyze, and provide insights into the multifaceted dimensions of nigeria's diversity, the critical role of unity in sustainable growth, and the strategies for fostering inclusivity as a pathway to a prosperous future. through a comprehensive examination of these interconnected themes, the paper aims to contribute to the ongoing discourse on nation-building, offering perspectives and recommendations that can inform policy decisions and inspire actions for positive change in nigeria. 1.1. challenges of diversity nigeria's cultural mosaic, with its intricate patterns of ethnic and cultural diversity, is a testament to its historical richness (adenuga, 2022). however, within this vibrant tapestry lie challenges stemming from the diversity that makes nigeria unique. while contributing to the country's cultural wealth, the multiplicity of languages, customs, and traditions can sometimes hinder effective communication and understanding among ethnic groups (gao & adamson, 2022). misinterpretations and cultural misunderstandings may create tensions that, if left unaddressed, can lead to social divisions (peters & kelman, 2020). this complexity is further intensified by the fact that ethnicity is not merely a surface-level marker of cultural identity but can also evolve into a basis for social stratification. in instances where ethnicity becomes a determining factor in access to resources, opportunities, or political representation, it can exacerbate existing inequalities, fuelling tensions and impeding the cohesive development of the nation. the challenge of regional imbalances in nigeria is deeply rooted in historical and economic factors, contributing to stark differences in resource distribution, economic opportunities, and development infrastructure among various regions (makki & akash, 2023). historically, certain regions have been favoured in resource allocation, leading to disparities that persist today (favour & adedokun, 2023). the uneven distribution of resources has created a significant gap in living standards, with some regions enjoying greater access to economic opportunities and educational resources while others grapple with systemic disadvantages. this stark contrast in development has not only perpetuated historical inequalities but has also given rise to a palpable sense of marginalization among certain regions, exacerbating existing social and economic challenges. the historical tensions entrenched in nigeria's sociopolitical landscape are deeply intertwined with the legacies of colonial rule and the struggles that preceded the nation's independence (historiography, 2022). the imprint of colonial policies, which often exacerbated ethnic and regional divisions for administrative convenience, has persisted through the years. additionally, the struggles for self-determination and independence brought to the forefront the diverse aspirations and grievances of different ethnic groups, laying the groundwork for complex historical tensions. these unresolved issues have become embedded in the nation's collective memory, shaping perceptions, influencing political dynamics, and occasionally surfacing as sources of friction in the present day (titus & ogundiya, 2023). the echoes of past ethnic rivalries and historical injustices continue to resonate, simmering beneath the surface and occasionally erupting to disrupt national harmony. events from the colonial era and pre-independence struggles have left wounds that, if left unaddressed, can fester and impede the nation's progress. the scars of historical tensions are visible in contemporary challenges such as political instability, ethnoreligious conflicts, and sporadic outbreaks of violence. the challenges arising from nigeria's diversity directly impact the nation's progress (schler, 2022). fragmentation along ethnic or regional lines can hinder effective policymaking and the implementation of national initiatives. political decisions may be influenced by regional or ethnic considerations rather than what is in the best interest of the entire nation (umotong, 2020). this can result in policy inertia, delayed development projects, and a need for coordinated efforts to address pressing issues. overcoming these challenges requires a comprehensive approach that emphasizes national unity while respecting and valuing the diversity that defines nigeria. addressing these challenges necessitates a concerted effort from both policymakers and civil society. strategies that promote inclusivity, equitable resource distribution, and historical reconciliation are essential to overcoming the hurdles posed by nigeria's diversity. the goal is not to eliminate differences but to transform them into sources of strength, ensuring that the nation can harness the collective potential of its diverse population for sustainable and inclusive growth. 1.2. opportunities for unity one of the profound opportunities embedded within nigeria's diversity lies in celebrating and promoting cultural exchange (falola & agbo, 2019). embracing the distinct customs, languages, and traditions of each ethnic group fosters a sense of national pride and shared identity. cultural exchange initiatives, such as festivals, art exhibitions, and cultural fairs, provide platforms for different communities to showcase their unique contributions to the nation's heritage. by actively encouraging interactions and mutual appreciation, nigeria can leverage its diverse cultural tapestry as a binding force that unites the population. cultural exchange breaks down stereotypes asian business research journal, 2025, 10(4): 1-6 3 © 2025 by the authors; licensee eastern centre of science and education, usa and cultivates an environment where individuals can learn from one another, forging connections that transcend ethnic boundaries and contribute to a more cohesive national fabric. similarly, education is a powerful catalyst for unity in a diverse society. integrating curricula highlighting the historical, cultural, and scientific contributions of different ethnic groups can foster a profound understanding of nigeria's collective heritage. through integrating varied viewpoints in educational resources, learners acquire a more all-encompassing understanding of their country's past and the vital contributions made by every ethnic group. in order to guarantee a comprehensive portrayal, educational activities also use oral traditions, storytelling, and local history in addition to textbooks. through this method, people are empowered and inspired to take pride in their cultural history, and a shared national consciousness that acknowledges and appreciates nigeria's variety is also fostered. equally, building bridges for national cohesion involves deliberate efforts to create connections and common ground among diverse communities (orajaka, 2022). social initiatives that bring people together across ethnic lines, such as community projects, sports events, and collaborative cultural activities, can serve as powerful tools for fostering unity. national cohesion is strengthened when citizens from different backgrounds actively participate in shared experiences and engage in meaningful dialogue. promoting cross-cultural understanding in governance and leadership positions can also demonstrate a commitment to inclusivity at the highest levels (ashikali et al., 2021). by encouraging interactions in both formal and informal settings, nigeria can cultivate a sense of belonging and shared destiny, transforming diversity from a potential source of division into a cornerstone for a harmonious and united nation. 1.3. economic growth through inclusivity one of the pivotal aspects of fostering economic growth through inclusivity in nigeria is ensuring the equitable distribution of resources and opportunities (ozordi et al., 2020). historically, certain regions and demographics have faced disparities in access to critical resources, leading to imbalances in development. inclusivity calls for recalibrating resource allocation mechanisms, ensuring all regions benefit from the nation's wealth (oboreh et al., 2021). this involves policies prioritizing marginalized communities, addressing historical inequalities, and creating avenues for economic participation irrespective of geographic location (nnorom, 2023). by promoting a more inclusive distribution of resources, nigeria can unlock the full potential of its diverse population and regions, laying the foundation for sustainable economic growth. equally, inclusivity in economic growth necessitates a vibrant entrepreneurial ecosystem that provides opportunities for individuals from all backgrounds (o'brien et al., 2019). entrepreneurship can be a powerful engine for inclusive economic growth, creating jobs, fostering innovation, and driving local development. supportive economic policies, such as access to finance, mentorship programs, and simplified regulatory frameworks, can empower entrepreneurs from diverse backgrounds to thrive. policies that encourage diversity in business ownership and leadership can also contribute to a more inclusive economic landscape (ghosh & rajan, 2019). by actively promoting entrepreneurship as a pathway to economic success, nigeria can tap into the entrepreneurial spirit of its people, fostering a dynamic and inclusive economic environment. infrastructure development is a crucial driver of economic growth and inclusivity (pradhan et al., 2021). ensuring that infrastructure projects are spread across diverse regions is essential for creating an environment where all citizens can actively participate in economic activities. this includes investments in transportation, energy, healthcare, and education infrastructure. the government can address disparities and create an inclusive economic landscape by prioritizing infrastructure development in historically marginalized regions. improved connectivity and accessibility facilitate the movement of goods and services and open new opportunities for businesses and individuals in underserved areas (adegbite & machete, 2020). through strategic infrastructure investments, nigeria can bridge regional gaps, promote economic inclusivity, and create a more resilient and interconnected national economy. 1.4. empowering marginalized groups a crucial aspect of fostering inclusivity in nigeria involves deliberately including marginalized groups, particularly women and minority communities, in all facets of society (chukwu, 2023). women and minority populations have often faced systemic barriers that limit their access to education, economic opportunities, and political representation. by actively working towards their inclusion, nigeria can tap into a vast reservoir of untapped talent and perspectives. initiatives that promote gender and minority inclusivity contribute to a more just and equitable society and enhance the nation's overall productivity and dynamism. inegbedion et al. (2020) opined that empowering marginalized groups requires a comprehensive approach that addresses education, economic opportunities, and political representation. education is a cornerstone for empowerment, and efforts should be made to ensure that women and minority communities have equal access to quality education. moreover, creating economic opportunities through targeted programs, skill development, and access to financial resources can uplift these communities economically. ensuring representation in political spheres is equally vital, as it provides a platform for marginalized voices to be heard and influences policy decisions that affect their well-being. through these measures, nigeria can build a more inclusive society that harnesses the potential of all its citizens, irrespective of gender or minority status. policy frameworks play a pivotal role in shaping the landscape of inclusivity (ohunakin et al., 2019). nigeria can advance inclusivity by implementing policies that specifically address gender inequality and advocate for affirmative action. these policies can range from anti-discrimination measures to affirmative action initiatives that promote the participation of women and minorities in various sectors. by creating an enabling environment through legal and policy frameworks, the government can signal its commitment to inclusivity and actively work towards dismantling systemic barriers. affirmative action, in particular, can be a catalyst for breaking down longstanding barriers and accelerating the representation of marginalized groups in areas where they have been historically underrepresented. asian business research journal, 2025, 10(4): 1-6 4 © 2025 by the authors; licensee eastern centre of science and education, usa empowering marginalized groups is a matter of social justice and a strategic imperative for nigeria's sustainable development. by ensuring the full participation of women and minority communities in the nation's social, economic, and political spheres, nigeria can unlock its potential as an active contributor to national progress, fostering a society that values diversity and equality. 1.5. education as a catalyst the education system is a powerful catalyst for transforming nigeria's diversity into a unifying force (ossai, 2023). by incorporating inclusive practices and fostering a multicultural approach, education can play a pivotal role in breaking down barriers and building bridges among ethnic groups. initiatives that promote cross-cultural understanding, tolerance, and appreciation of diversity should be integrated into the curriculum. this involves not only acknowledging the historical and cultural contributions of various ethnic groups but also encouraging students to actively engage with diverse perspectives (falola & agbo, 2019). through a transformative education system, nigeria can instill a sense of unity that transcends ethnic boundaries, laying the foundation for a more harmonious and integrated society. a key component of leveraging education as a catalyst for unity is ensuring that the curriculum reflects nigeria's national diversity, history, and values (oloba, 2023). the curriculum should go beyond a eurocentric perspective and actively incorporate the diverse cultural narratives of the nation's fabric. history lessons should encompass the rich tapestry of nigeria's past, highlighting the contributions of various ethnic groups to the nation's development. literature, arts, and social studies courses can be vehicles for promoting a deep understanding of the values that bind nigerians together, fostering a sense of shared identity. a curriculum that embraces diversity equips students with a holistic view of their nation's history and cultivates a sense of pride in their collective heritage. the ultimate goal of education as a catalyst is to create a generation that values diversity and embraces a solid national identity. beyond academic knowledge, the education system should actively promote tolerance, respect, and empathy. inclusive educational practices should extend beyond textbooks to include extracurricular activities celebrating cultural diversity. initiatives such as cultural exchange programs, diversity workshops, and community engagement projects can play a crucial role in shaping the attitudes and beliefs of the younger generation. by fostering a sense of belonging to a larger national community while appreciating the uniqueness of individual cultures, education becomes a transformative force in creating citizens who are not only academically proficient but also socially conscious and committed to building a unified and prosperous nigeria. 1.6. building social cohesion promoting open dialogue, tolerance, and understanding is fundamental to building social cohesion in nigeria (ohunakin et al., 2019). initiatives that facilitate conversations among diverse communities at local and national levels can bridge gaps and dispel misconceptions. dialogue platforms should encourage individuals from different ethnic, religious, and cultural backgrounds to share their perspectives, fostering a deeper understanding of each other's experiences (adenuga, 2022). by creating spaces for respectful conversations, nigeria can dismantle stereotypes, address historical tensions, and promote a shared vision for the future. tolerance education programs within schools and communities can play a vital role in cultivating empathy, encouraging active listening, and nurturing a culture of mutual respect. intercultural exchanges and community projects provide tangible opportunities for individuals to engage with one another beyond the boundaries of ethnicity or cultural background (oluwakemi, 2020). collaborative efforts, such as joint community development projects, can unite people to pursue common goals. these initiatives enhance social cohesion and empower communities to address shared challenges. individuals can build bonds that transcend cultural differences by focusing on shared objectives and fostering a sense of unity and collective responsibility (falola & agbo, 2019). intercultural exchanges through programs like student exchanges, cultural festivals, and community workshops create spaces for direct interaction, promoting appreciation for diverse traditions and building a foundation for a more integrated and cohesive society. breaking down stereotypes and building social bonds requires intentional efforts through collaborative events celebrating diversity (ojo, 2022). cultural festivals, art exhibitions, and collaborative performances provide platforms for showcasing the richness of nigeria's cultural tapestry. by participating in or attending these events, individuals can challenge preconceived notions, appreciate the diversity around them, and foster a sense of shared identity (inegbedion et al., 2020). these events serve as avenues for cultural expression and contribute to creating a more inclusive national narrative. collaborative events can highlight each community's positive aspects, emphasizing the shared values that bind nigerians together. by actively participating in and supporting such events, communities can build connections, dispel stereotypes, and contribute to developing a more cohesive and harmonious society. 2. conclusion in conclusion, nigeria's diversity, manifested through its rich cultural tapestry, linguistic variations, and economic dynamism, is a defining feature that has shaped the nation's identity and influenced its social, economic, and political trajectories. while this diversity is a source of strength, it also presents challenges that demand nuanced approaches for sustainable growth. the imperative for unity amid this diversity must be supported, as a fragmented society risks hindering cohesive national development. the challenges arising from diversity, such as ethnic tensions, regional imbalances, and historical grievances, underscore the need for deliberate efforts to navigate these complexities. however, within these challenges lie significant opportunities for unity. celebrating cultural exchange, promoting education as a unifying force, and fostering inclusivity are pathways toward building a cohesive nation. moreover, economic growth through inclusivity, empowerment of marginalized groups, and strategic infrastructure development can contribute to a more equitable and resilient national landscape. asian business research journal, 2025, 10(4): 1-6 5 © 2025 by the authors; licensee eastern centre of science and education, usa 3. recommendations 1. national inclusivity initiatives: implement national programs that promote inclusivity in education, economic policies, and social interactions. this includes initiatives to celebrate and exchange cultural practices, fostering a sense of shared national identity. 2. equitable economic policies: formulate and implement economic policies that ensure equitable distribution of resources and opportunities across regions. this involves addressing historical imbalances and promoting economic activities that benefit diverse population sectors. 3. empowerment of marginalized groups: prioritize initiatives that empower women and minority communities through education, economic opportunities, and political representation. implement policies that address gender inequality and promote affirmative action to ensure equitable participation. 4. education reforms: introduce reforms in the education system to reflect national diversity, history, and values. promote inclusive curricula that encourage cross-cultural understanding, tolerance, and appreciation of diversity early on. 5. infrastructure development for inclusivity: strategically invest in infrastructure development spanning diverse regions, ensuring all communities have access to essential services. this contributes to economic inclusivity and reduces regional disparities. 6. national dialogue platforms: 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(2023). interfaith dialogue, peacebuilding, and sustainable development in nigeria: a case of the nigeria inter-religious council (nirec). in the palgrave handbook of religion, peacebuilding, and development in africa (pp. 553-568). cham: springer international publishing. doi: 10.1007/978-3-030-30589-2_28 1 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 3, 1-7, 2025 issn: 2576-6759 doi: 10.55220/25766759.297 © 2025 by the authors; licensee eastern centre of science and education, usa the impact of earnings management behavior on the performance of listed companies on the hanoi stock exchange (hnx) in vietnam dinh the hung1  le viet dung2 le phuong nhi3 1school of accounting and auditing, national economics university 207 giai phong road, dong tam ward, hai ba trung district, hanoi, vietnam. email: hungdt@neu.edu.vn 2excellent auditing 63b, national economics university 207 giai phong road, dong tam ward, hai ba trung district, hanoi, vietnam. email: vietdung25112003@gmail.com 3grant thornton vietnam co., ltd 18th floor, hoa binh international office building, 106 hoang quoc viet street, nghia do ward, cau giay district, hanoi, vietnam. email: lephuongnhi0611@gmail.com ( corresponding author) abstract this study analyzes the impact of earnings management on the business performance of companies listed on the hanoi stock exchange (hnx) in vietnam. data were collected from 247 listed companies on hnx, with 1,235 observations during the period 2019–2023. the research team employed multiple linear regression analysis with the support of stata software. the research results indicate that earnings management affects corporate performance. additionally, control variables such as duality, big four audit firms, board size, and firm size also influence the performance of companies listed on hnx. the paper also provides several recommendations regarding the relationship between earnings management and the performance of listed companies on hnx. keywords: big4, corporate performance, earnings management, hnx. 1. introduction in the current economic context, earnings management (em) has become a topic of great interest to managers, investors, and the academic community. em refers to the deliberate use of accounting techniques by managers to alter a company’s financial results to achieve specific objectives. while em can provide short-term benefits for firms, excessive use has led to severe financial crises and eroded investor confidence. notable examples include enron (2001), which used special-purpose entities and complex transactions to conceal massive debts and inflate profits, causing shareholder losses exceeding $74 billion. similarly, worldcom (2002) capitalized expenses that did not qualify for capitalization instead of recording them as expenses in the income statement, leading to an overstated asset value of up to $11 billion. more recently, wirecard (2020), a german online payment company, was found to have fabricated revenues and lacked assets to back its debts. apart from em, corporate performance is another critical factor commonly used to assess a company's profitability and competitive strength in the market. maintaining high and sustainable performance remains a top priority for businesses in both the global economy and vietnam’s economic landscape. the relationship between em and corporate performance has attracted extensive research to better understand how em behavior impacts a firm’s sustainable development. many studies suggest that em can directly influence corporate performance by adjusting cash flows or financial results, helping maintain stable profits across business cycles. however, excessive em can lead to hidden risks, pushing firms toward bankruptcy in times of crisis. this study aims to clarify the impact of em on the performance of financial companies listed on the hanoi stock exchange (hnx) from 2019 to 2023. it also seeks to provide deeper insights into how em behavior affects corporate performance. based on the findings, the authors will propose recommendations to help managers, investors, and other stakeholders recognize and make informed decisions regarding em practices. 2. literature review and theoretical framework 2.1. earnings management em refers to the deliberate actions of managers who use accounting tools such as estimates and accounting policies to influence a company's financial results in a way that aligns with their objectives. this practice is often aimed at presenting a more favorable financial image than reality, serving specific goals such as attracting investment by portraying stable profits or minimizing tax obligations to the government. mailto:hungdt@neu.edu.vn mailto:vietdung25112003@gmail.com mailto:lephuongnhi0611@gmail.com https://doi.org/10.55220/25766759.297 asian business research journal, 2025, 10(3): 1-7 2 © 2025 by the authors; licensee eastern centre of science and education, usa the concept of em has been widely discussed by researchers. according to schipper (1989), em is a deliberate intervention by managers in the financial reporting process to achieve personal objectives. scott (1997) argued that em reflects the actions of managers in selecting accounting methods that benefit themselves or increase the firm's market value. healy and wahlen (1999) defined em as the managerial use of subjective judgment in financial reporting to alter reported financial information or contractual outcomes that rely on accounting figures. similarly, diep (2018) suggested that em occurs when managers exercise judgment in financial reporting and transaction structures to manipulate financial statements, either to misrepresent the company’s performance or to influence contractual outcomes based on accounting figures. gunny (2005) categorized em into two main types: accrual-based earnings management (aem) and real earnings management (rem). most contemporary studies measure em using accrual-based methods, with the modified jones model (1995) being considered the most effective tool for detecting em. therefore, this study employs the modified jones model (1995) to measure em through accrual-based accounting variables. 2.2. corporate performance the concept of performance is a controversial topic in finance due to its broad meaning. productivity and efficiency are often used interchangeably, but they do not always carry the same meaning. productivity was first mentioned in an article by quesnay in 1776, and since then, various authors have defined it differently. a commonality among most definitions is that productivity is considered a "measure" of output relative to one input, two inputs, or total inputs. this ratio can be easily calculated when a producer uses a single input to generate an output. even in cases where multiple inputs are used to produce several outputs, the numerator (output) must be aggregated from economically reasonable factors, and the denominator (input) must also be composed of those factors. therefore, productivity remains a scalar ratio. however, when multiple inputs are used to produce multiple outputs, researchers tend to infer efficiency (grosskopf & lovell, 1994). by definition, efficiency involves comparing the observed actual values with the potential values of inputs and outputs. efficiency can be examined in several ways: comparing actual output to the potential output for a given input, comparing actual input to the minimum input required to produce a given output, or a combination of both. performance is measured in both financial and organizational terms. financial performance, including profit maximization, return on assets (roa) maximization, and shareholder value maximization, is a core aspect of corporate efficiency. a broader definition of performance includes revenue growth and market share expansion as key measures. roa and return on equity (roe) are the most commonly used metrics for measuring corporate performance. these accounting-based measures represent financial indicators derived from the balance sheet and income statement and have been widely employed by previous researchers. 2.3. the relationship between earnings management and corporate performance according to the research of healy (1985), the increase or deficit in profits depends on executive bonuses and compensations, which are linked to the company's performance. degeorge et al. (1999) argued that incentive compensation for executives significantly impacts periodic financial reports of businesses during specific periods. the study by dichev (1997) also introduced two thresholds for managerial motivation: when business performance is poor, reported profits should indicate that the company is not making a loss; and when business performance is favorable, reported profits should be maintained at a stable level, avoiding sudden fluctuations. some studies also highlight theories suggesting that managers conceal actual business results to meet contractual obligations with investors and minimize investor dissatisfaction when the company experiences a series of unfavorable results. it can be said that em to mask poor business performance is the most common and widely observed practice among businesses. dichev (1997) estimated that 30-44% of companies adjust profits from deficits to positive earnings. dechow et al. (2003) also noted that companies with positive but not high net profits often exhibit abnormally high accumulated accounting values. regarding the impact of em, the study by graham, harvey, and rajgopal (2005) found that this behavior can help companies improve short-term stock values but also increases financial risk and harms long-term shareholder interests. this aligns with roychowdhury's (2006) research, which shows that businesses tend to engage in em through real activities such as revenue manipulation or cost-cutting to meet short-term financial targets. additionally, charfeddine et al. (2013) argued that if a company's business performance is poor, it will inevitably lead to a decline in stock prices, affecting corporate value; thus, many managers tend to engage in em. cheng and warfield (2005) provided evidence that managers adjust profits upwards to boost stock prices and receive positive market reactions. conversely, fathi (2013) found that companies with high operational efficiency are less likely to engage in em, as they prioritize maintaining credibility and trust. the study by nguyen do quyen and tran quoc hoang (2018) analyzed the relationship between em behavior and operational efficiency in non-financial enterprises listed on the vietnamese stock market from 2010 to 2015. the findings showed that business performance positively correlates with em behavior. essentially, em directly impacts corporate performance by affecting actual cash flows. this practice, whether through "advancing future cash flows" or "retaining a portion of current profits," exposes businesses to potential risks, as maintaining high profitability over multiple periods can become a burden during economic crises, pushing companies toward bankruptcy. the study also highlighted that managers use em to influence reported business performance based on several key motivations. the research by tran van an (2018) focused on analyzing the factors affecting em in publicly listed manufacturing enterprises on the hose stock exchange. the author used financial indicators to measure the extent of em and evaluate the impact of factors such as company size, financial structure, and liquidity. the study revealed a strong correlation between em and these factors, particularly company size and liquidity, emphasizing the importance of optimizing these elements to enhance em effectiveness. asian business research journal, 2025, 10(3): 1-7 3 © 2025 by the authors; licensee eastern centre of science and education, usa nguyen thi hong minh (2019) focused on em in vietnamese service enterprises, particularly those in the tourism and hospitality sectors. this research clarified how em strategies affect business performance in the service industry. the study concluded that em not only helps businesses optimize profits but also enables them to maintain sustainable customer relationships through flexible pricing strategies and effective cost management. the study by pham thi lan and nguyen duc dung (2021) was conducted in the context of the covid-19 pandemic, aiming to assess the economic crisis's impact on em in vietnamese small and medium-sized enterprises. the findings indicated that the pandemic caused major disruptions in business activities, forcing companies to adjust their em strategies to adapt to new conditions. cash flow management and cost optimization were identified as key factors in helping businesses navigate the crisis and maintain profitability during difficult times. in the context of covid-19, recent studies have begun to focus on the challenges businesses face and their em behaviors during this period. chen et al. (2022) examined the impact of the pandemic on em, showing that companies often intensify em efforts to maintain financial performance and investor confidence amid uncertainty. however, the study also warned that excessive reliance on em could damage corporate reputation and increase financial crisis risks in the long run. these studies highlight that maintaining strong business performance over an extended period is a top corporate objective, and statistical data indicate significant pressure on managers to engage in em to produce business results aligned with operational targets at different stages. most studies on the relationship between business performance and em suggest that the extent of em increases as business performance improves. however, once a company achieves a stable and high level of performance, the degree of em gradually declines. 3. foundational theories 3.1. agency theory agency theory, developed in 1967, focuses on studying organizational behavior and the impact of situational factors on businesses. according to this theory, when the principal delegates authority to the agent to perform tasks or make decisions on their behalf, conflicts of interest may arise due to misaligned objectives between the two parties. this leads to a conflictual relationship. agency theory also emphasizes that agency costs, including monitoring costs and incentive mechanism costs, result from conflicts between the principal and the agent, aiming to ensure that the agent acts in the principal's best interest. michael jensen and william meckling expanded this theory in 1976, arguing that when owners do not directly manage the business, managers may use their power to pursue personal benefits. 3.2. stewarship theory stewardship theory offers a different perspective from agency theory, in which managers are viewed as capable administrators who act in the best interests of shareholders (donaldson & davis, 1991). the foundation of this theory is based on social psychology, emphasizing managerial behavior. unlike economic theories, stewardship theory focuses on the relationship between managers and shareholders from a non-economic perspective. according to this theory, corporate directors act as stewards of the company, prioritizing organizational interests over personal gains. the ultimate goal of managers within an organization is to enhance corporate benefits (sundaramurthy & lewis, 2003). therefore, they are expected to act with integrity to protect their personal honor and reputation (stout, 2013). according to this theory, directors should be granted autonomy based on trust, reducing monitoring and control costs from the board of directors (muth & donaldson, 1998). business performance, from this perspective, is significantly influenced by executive directors on the board, as they possess a deep understanding of company operations and can make more accurate decisions than external directors (donaldson & davis, 1991). to optimize decision-making processes, the board of directors should be small and consist primarily of executive directors. finally, this theory suggests that the chairman of the board should also serve as the ceo (duality) to ensure swift and effective decision-making (hillman et al., 2000). however, stewardship theory has a drawback in that it overlooks the element of "opportunism" in human behavior, relying solely on trust. it is most applicable in corporate models where the owner is also the director, such as single-member limited liability companies. 3.3. stakeholder theory stakeholder theory was first introduced by freeman (1984) in his research on organizational management and business ethics. according to this theory, a stakeholder is defined as any entity that can affect or be affected by mission-driven organizations (i.e., those established to achieve specific objectives). freeman argued that companies should consider the interests of all stakeholders rather than focusing solely on shareholders to create value for all participants and achieve long-term success. when stakeholder interests conflict, the management team must find ways to rethink issues so that the needs of a diverse group of stakeholders are met. to the extent that this is accomplished, it may even generate more value for each stakeholder (harrison, bosse, & phillips, 2010). clarkson (1995) suggested that a company's existence and success depend on the ability of its managers to deliver benefits and satisfy the needs of stakeholders, including employees, shareholders, customers, suppliers, the community, and the environment. balancing interests and maintaining positive relationships with stakeholders within a company can enhance overall performance across the entire project or organization. 4. model development and research hypothesis 4.1. research hypothesis in addition to the direct impact of em, a company's operational performance is also influenced by several other factors, such as ceo duality, board size, and big 4 audit firms. therefore, the research team proposes the following hypotheses: asian business research journal, 2025, 10(3): 1-7 4 © 2025 by the authors; licensee eastern centre of science and education, usa 4.1.1. earnings management (em) when evaluating a company, investors rely on accounting information such as stock prices or financial reports disclosed in the stock market. according to charfeddine et al. (2013), if a company's operational performance is poor, its stock price will decline, which negatively affects the firm's value. therefore, managers are incentivized to engage in em to influence stock prices (degeorge et al., 1999). when a company performs poorly, there is a tendency to inflate profits to maintain credibility. charfeddine et al. (2013) and cheng & warfield (2005) provided evidence that managers increase profits to boost stock prices. to receive positive market reactions, em is implemented to meet market expectations (chen et al., 2015; charfeddine et al., 2013). additionally, chen et al. (2006) demonstrated that underperforming firms are more likely to engage in em. at the same time, managers also employ em to achieve stable growth (charfeddine et al., 2013). based on prior research, the research team proposes the first hypothesis: hypothesis h1: earnings management has a positive impact on a company's operational performance. 4.1.2. chairman of the board of directors concurrently holding the position of ceo (dual) the monopolistic management and control of decisions by an individual can negatively impact a company's operational efficiency and weaken the supervisory role of the board of directors (fama & jensen, 1983). furthermore, firms with ceos who concurrently serve as chairpersons of the board of directors tend to face a higher risk of bankruptcy and exhibit poorer performance (coles et al., 2008). from an agency perspective, separating the roles of ceo and chairperson of the board is necessary. however, there is no clear conclusion that companies with non-dual ceos perform better, as donaldson and davis (1991) argue that ceos need a high degree of autonomy to manage the company effectively. on the other hand, research by phan bui gia thuy et al. (2017) in vietnam indicates that companies with ceos also serving as chairpersons of the board of directors achieve better performance. this leads to the following hypothesis: hypothesis h2: companies where the chairperson of the board of directors concurrently serves as the ceo negatively impact performance. 4.1.3. audited by big4 firms (audit) research by lindberg (2001) indicates that due to greater credibility associated with large auditing firms, these firms are often considered to provide more accurate and reliable audit reports. investors also tend to invest in companies with high-quality audit reports, leading to an upward trend in stock prices. according to hoa hong et al. (2021), the use of audit services from big4 firms is highly valued by investors and the market for the quality of financial reports, as the reputation and quality of big4 audit firms are superior to other auditing firms. this, in turn, contributes to enhancing business performance. however, according to ho xuan thuy et al. (2024), firms audited by big4 have an inverse impact on em, meaning that companies audited by big4 are less likely to engage in earnings manipulation. therefore, based on previous studies, this research expects a positive correlation between big4 auditing and corporate performance: hypothesis h3: companies audited by big4 firms have a positive impact on company performance. 4.1.4. board size (board) currently, there are two perspectives on the relationship between board size and corporate performance. the first viewpoint suggests that larger boards are less efficient due to coordination, control, and decision-making flexibility issues, as well as excessive empowerment of ceos (jensen, 1993). however, the second perspective argues that larger boards can enhance company performance by improving managerial oversight and providing more human resources for managerial advice. the research team expects that a board with a larger number of members will help a company manage its situation more effectively. the proposed hypothesis is: hypothesis h4: board size has a negative impact on corporate performance. 4.1.5. firm size (size) although many studies have examined the relationship between firm size and performance, they have reached different conclusions. prasetyantoko and parmono (2009) found that, when firm characteristics and macroeconomic indicators remain stable, there is a significant positive relationship between firm size (measured by total assets) and roa during both crisis and post-crisis periods. mule et al. (2015) found that firm size has a positive and statistically significant impact on roe but does not affect roa or tobin’s q. similarly, aytürk and yanık (2015) found that firm size has a statistically significant impact on financial performance. conversely, goddard et al. (2005) found that firm size negatively and significantly affects roa. lee (2009) demonstrated an inverted u-shaped relationship between firm size and financial performance. shehata et al. (2017) found that firm size has a statistically significant negative correlation with roa. hypothesis h5: firm size has a negative impact on corporate performance. 4.2. research model based on the above hypotheses, this study proposes the following general research model: asian business research journal, 2025, 10(3): 1-7 5 © 2025 by the authors; licensee eastern centre of science and education, usa figure 1. research model. table 1 below describes the variables used in the model and their measurement methods as follows: table 1. description of variables in the model. variable name variable measurement expected sign dependent variable firm performance (fp) roa roe 𝑅𝑂𝐴 = 𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑎𝑡𝑡𝑟𝑖𝑏𝑢𝑡𝑎𝑏𝑙𝑒 𝑡𝑜 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 × 100% 𝑅𝑂𝐸 = 𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑎𝑡𝑡𝑟𝑖𝑏𝑢𝑡𝑎𝑏𝑙𝑒 𝑡𝑜 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠′ 𝑒𝑞𝑢𝑖𝑡𝑦 × 100% independent variables earnings management em 𝐸𝑀 = 𝐷𝐴𝑖𝑡 𝐴𝑖𝑡−1 (+) ceo duality dual dummy variable = 1: ceo is also board chairman dummy variable = 0: ceo is not board chairman (-) big4 audit audit dummy variable = 1: audited by a big4 firm dummy variable = 0: not audited by a big4 firm (+) board size board board = number of board members (-) firm size size size= ln (total assets) (-) to examine the impact levels between the dependent and independent variables, as well as the control variables, the research team employs a multivariate regression model as the primary model for this study: roa= β1 em + β2 dual + β3 audit + β4 board + β5 size+ ε roe= β1 em + β2 dual + β3 audit + β4 board + β5 size + ε 5. research results and discussion 5.1. research data the dataset used in this study was collected from 247 non-financial companies listed on the hanoi stock exchange (hnx), vietnam. these companies provided complete data, including financial statements, annual reports, and governance reports, during the research period from 2019 to 2023, resulting in 1,235 observations. all banking enterprises were excluded from the dataset due to their distinct financial structure, accounting methods, and capital asset characteristics. the financial data of these companies were analyzed from 2019 to 2023 to clarify the changes and fluctuations in em and the relationship between em and business performance during the pandemic period. table 1. correlation between variables. roa roe em size dual audit board roa 1,000 roe 0,8422 1,000 em -0,3176 -0,2887 1,000 size -0,0820 -0,0820 -0,2682 1,000 dual 0,0367 0,0188 0,0040 -0,2061 1,000 audit 0,0268 0,0734 -0,4837 0,1357 -0,0766 1,000 board -0,0399 -0,0765 -0,2144 0,0898 0,0373 -0,0131 1,000 5.2. model results 5.2.1. correlation matrix the correlation matrix analysis (table 1) reveals notable trends in the relationships between variables in the model. the variable em has a negative correlation with both dependent variables, roa and roe. the variable size also exhibits a negative correlation with roa and roe. in contrast, the variable dual shows a positive correlation with roa and roe. the variable audit demonstrates a positive correlation with both dependent variables. lastly, the variable board has a negative correlation with roa and roe. asian business research journal, 2025, 10(3): 1-7 6 © 2025 by the authors; licensee eastern centre of science and education, usa table 2. results of f-test and hausman test. roa roe ols fem rem ols fem rem em -.065265*** -0.027742*** -0.028956*** em -0.084221 *** -0.034722 ** -0.045608 *** size 0.005464 0.006431*** 0.001315 size -0.003969 -0.002113 -0.005748 dual 0.002533 0.016466 0.011492 ** dual 0.007694 -0.003914 -0.001557 audit -0.037508** 0.011458 0.006769 audit -0.022449 0.037186 0.024702 board -0.042141 -0.015222 -0.021856 board -0.048299 0.017695 0.001795 cons 0.060382 -0.116384 0.030861 cons 0.268887 0.236012 0 .212135 n 1235 n 1235 note: (*): significant at the 10% level (p < 0,1) (**): significant at the 5% level (p < 0,05) (***): significant at the 1% level (p < 0,01) 5.2.2. test results conducting the f-test with prob > f = 0.0000 indicates that the fem model is more appropriate than the ols model. continuing with the breusch-pagan lagrangian test, the results show prob > chi2 = 0.0000, suggesting that the rem model is better than ols. to determine the most suitable model, the research team conducted the hausman test to compare fem and rem. for the dependent variable roa, prob > chi2 = 0.0122, leading to the conclusion that fem is more appropriate. conversely, for the dependent variable roe, prob > chi2 = 0.0933, indicating that rem is the best model among the three proposed models. however, when further testing for model deficiencies, both models exhibited heteroscedasticity and autocorrelation issues. to address these problems, the research team proposes using the fgls method for correction. table 3. fgls results. research variable roa roe em -0.007723 ** -0.012575 size -0.005882 -0.013835 dual 0.029138 -.0143114 ** audit 0.015429 *** 0.028088 *** board 0.017232 0.042688 cons 0.269549 0.489175 panel data model type fgls fgls number of observation 1235 1235 5.3. discussion of results after conducting the tests, the research team concludes that all five hypotheses h1, h2, h3, h4, h5 are accepted. em has a negative impact on roa and roe. in general, financial performance is adversely affected by accrual-based em. through these transactions, managers may artificially inflate revenues by manipulating financial reports, making revenue and profit appear higher than they actually are. over time, investors may become disappointed as past adjustments reduce future financial performance, even if further adjustments are made. these findings align with agency theory by jensen & meckling (1976) and reaffirm the results of prior studies by dechow et al. (1995), subramanyam (1996), and healy & wahlen (1999). in vietnam, these findings are consistent with the research of duong thi chi (2021) and address the limitations of previous studies by nguyen do quyen & tran quoc hoang (2017), and nguyen vinh khuong et al. (2019), as this study establishes the relationship between em and future financial performance. 6. conclusion and recommendations 6.1. conclusion the study focuses on analyzing the relationship between em behavior and the performance of enterprises listed on the hanoi stock exchange (hnx), vietnam, during the period 2019–2023. the results show that: there is a negative impact of em on long-term financial performance. financial indicators such as roa and roe are adversely affected by em behavior. this indicates that while em may create short-term benefits, it ultimately reduces the efficiency of asset and capital utilization in the long run. em is often strategically employed to achieve profit targets or maintain a company's image, but it diminishes transparency and increases financial risk. during the covid-19 pandemic (2019–2023), em was used as a crisis management tool to maintain financial stability and mitigate the negative impacts of global economic fluctuations. factors such as firm size (size), dual leadership roles (dual), big 4 audit firms (audit), and board size (board) significantly influence business performance. this highlights the role of corporate governance in maintaining stability and business efficiency. 6.2. recommendations based on the research findings, the authors propose several policy recommendations to enhance business performance and mitigate risks associated with em behavior: for regulatory authorities: strengthen supervision and control of em behavior by establishing specific legal frameworks, particularly during economic crises when em-related risks increase. enhance sanctions for financial reporting fraud and promote ethical training programs in accounting and auditing. encourage the adoption of international accounting standards by urging businesses to implement ifrs, thereby improving transparency and reducing negative em practices. this not only enhances the credibility of businesses in international markets but also improves financial information quality for investors. develop an early warning system: regulatory agencies asian business research journal, 2025, 10(3): 1-7 7 © 2025 by the authors; licensee eastern centre of science and education, usa should establish monitoring and early warning systems to detect abnormalities in financial reports, thereby minimizing systemic financial risks. strengthen the capacity of independent auditing by closely monitoring the quality of independent audit firms to ensure they effectively fulfill their role in detecting and controlling financial report fraud. for investors: conduct long-term evaluations and use information from multiple sources. investors should carefully assess businesses, not just based on short-term financial indicators but also by focusing on sustainable long-term growth potential. combining financial data with non-financial reports provides a more comprehensive view of a company's performance. for businesses: enhance financial transparency by applying international financial reporting standards (ifrs) to minimize manipulative em behavior. companies should shift from pursuing short-term profit goals to strategic financial management, including effective cost management, cash flow optimization, and investment in long-term value projects. strengthen crisis management capabilities: especially in the post-pandemic era, businesses need to develop crisis response strategies to ensure stability in uncertain economic conditions. this includes maintaining financial reserves, restructuring supply chains, and integrating digital technology into business management. the study focuses on enterprises listed on the hanoi stock exchange (hnx), vietnam, without considering non-financial factors such as corporate culture or governance quality. future research should expand to include firms listed on both the hanoi stock exchange (hnx) and the ho chi minh stock exchange (hose) and incorporate non-financial factors into the research model to gain a deeper understanding of the determinants of business performance. references burgstahler, d., & dichev, i. 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(2021). the impact of corporate governance on business performance: empirical research from listed companies on the vietnamese stock market. journal of finance marketing research, (62). https://doi.org/10.52932/jfm.vi62.141 111 © 2024 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 9, 111-118, 2024 issn: 2576-6759 doi: 10.55220/25766759.219 © 2024 by the authors; licensee eastern centre of science and education, usa an optimization study on the marketing of outfit short video content -taking xiaohongshu as an example an-shin shia1  dan dan he2 jie bao3 1,2business school, lingnan normal university, zhanjiang, guangdong, china. email: 2759209526@qq.com email: 18875991570@qq.com 3center of laboratory medicine, guangdong medical university affiliated hospital, zhanjiang,524001, china e-mail: 850852090@qq.com ( corresponding author) abstract numerous short video platforms have emerged amidst contemporary digital trends, among which xiaohongshu (xhs) stands out as a social e-commerce platform primarily focused on lifestyle sharing. the outfit-related short video content on xhs has garnered extensive attention and popularity among users. this study aims to analyze the marketing of xhs’s outfit short videos from the perspective of users, based on the five dimensions of the aisas model: attention, interest, search, action, and share. it delves into aspects such as user behavior and content characteristics. a total of 332 questionnaires were distributed through various online platforms, of which 10 were invalid, leaving 322 valid questionnaires, resulting in an effective response rate of 96%. the findings propose five optimization suggestions: implementing a personalized recommendation mechanism, enhancing product storytelling, focusing on user interaction and participation, collaborating with shopping apps, and providing authentic and effective product evaluations. these recommendations hold significant guidance for content creators and brand merchants of outfit short videos on the xhs platform and also offer insights for the marketing optimization of social media and short video platforms. keywords: aisas model, optimization, short video marketing, xiaohongshu platforms (xhs). jel classification: m1; m2; m3; l81. 1. introduction the rapid development of modern technology has seen short videos emerge as a significant medium for market information dissemination due to their convenience and ease of sharing. they have expanded the channels for product marketing and provided new marketing insights and platforms for enterprises. in this era of explosive information growth, consumers’ attention is vastly scattered, and traditional marketing methods such as offline promotions and monotonous advertisements may fail to effectively attract consumers’ interest. xiaohongshu (xhs), a platform primarily targeting female users for sharing, has received widespread user attention for its short video strategies and product recommendations. its personalized recommendations quickly capture consumer attention and influence their purchasing decisions. however, in the context of the current new media era, this form of marketing also presents many new characteristics and challenges (nong & chang, 2024). against this backdrop, this paper aims to integrate the characteristics of the xhs platform. using the five dimensions of the aisas model as the theoretical foundation, the study constructs consumer scenarios on the platform to explore the current state of marketing for outfit videos, thereby identifying issues with the platform and content creators. investigating users’ attitudes and opinions towards these videos on xhs can help businesses find more targeted improvement measures, assist brand merchants in better utilizing the platform, enhance brand visibility and user engagement, and promote sales conversion, thereby standing out in the fierce market competition. 2. literature review 2.1. the aisas model before the aisas model was proposed, lewis (1898) introduced the aidma model based on traditional marketing. this model primarily aimed to attract consumer attention and stimulate interest and desire, leaving an indelible memory impression of the product, ultimately leading to the action of making a purchase. however, with the advent of the electronic information age, consumers have become more inclined to search for product-related information based on their own needs, considering factors such as product style, price, and feedback from purchasers before taking action, rather than passively accepting advertising stimuli. therefore, in 2005, the japanese advertising agency dentsu proposed the upgraded aisas model, which deepened the consumer’s subjectivity in the purchasing process by emphasizing the active search for information and sharing experiences, aligning more closely with consumer purchasing psychology in the new internet era. the evolution from the aidma model to the aisas model is detailed in figure 1. mailto:2759209526@qq.com mailto:18875991570@qq.com mailto:850852090@qq.com https://www.doi.org/10.55220/25766759.219 asian business research journal, 2024, 9: 111-118 112 © 2024 by the authors; licensee eastern centre of science and education, usa figure 1. evolution from the aidma model to the aisas model. current scholarly research on the aisas model primarily focuses on marketing strategies, marketing communication, and empirical research on marketing outcomes. in terms of marketing strategies, scholars often study the operational status of entities based on the aisas model and propose constructive strategies accordingly, with a particular focus on short video marketing strategies. for instance, jiang (2023) analyzed the operational data and video performance of public library accounts on the bilibili platform, identified issues related to content quality, video branding, and account activity, and proposed targeted measures. wang (2023) investigated the “short video + dual kol” advertising marketing approach, using the five dimensions of the aisas model to explore the reasons behind its popularity among consumers and optimized marketing strategies to address shortcomings such as search engine difficulties and unclear content guidance in short videos. when studying marketing communication, javed and rashidin et al. (2021) adopted a “dual aisas model” based on this model, consumer buying behavior, and multi-step flow theory to study the influence of fashion influencers in content promotion and product marketing, focusing on attracting consumer attention and researching the extent of influence on consumer purchasing behavior under the concept of online communication. hu and wu (2023) believed that the aisas model describes the entire consumer process, and when applied to movie new media marketing, it can focus on consumer emotional resonance and their sharing on social platforms as key points for marketing communication to achieve good results. in applying the model to empirical research, li and pan et al. (2023) studied the specific impact of consumers’ visual and auditory sensory signals on purchasing behavior under the model, allocating a specific number of research subjects to four different sensory combinations for empirical research on their decision-making process. hidayanto and halim et al. (2022) used instagram as a case study to explore consumer attitudes towards paid promotions within the context of the cri and aisas models, finding that users generally have a resistant mentality. overall, domestic scholars have conducted more research on the current state of various fields and the optimization of marketing strategies, while foreign scholars have a relatively broader scope of research on marketing communication and empirical marketing. 2.2. short video marketing research on short video marketing is abundant both domestically and internationally, with a focus on strategic discussions for selling products in various fields. chun and zheng (2023) addressed the marketing challenges of mid-to-low-end sauce-flavored liquor from guizhou, using the sips model as the theoretical foundation. they leveraged the immediate dissemination of short video content to seek emotional resonance with consumers, aiming to achieve real-time interactive engagement and subsequent purchases. ren (2024) started from the douyin short video platform, analyzed the development and external marketing issues of movie short videos, and proposed optimization measures to achieve optimal marketing for films. liu et al. (2023) considered short videos on public library platforms as a novel and important channel for marketing library resources and services, but found that such promotional activities were not effective. they used social media analysis methods to analyze the topic and relevance of douyin short videos in library marketing and emphasized the significance of promoting this type of marketing among professionals. 2.3. xhs short video marketing surveys indicate that the primary audience of the xhs platform is young women, with nearly 80% of short videos centered on this demographic’s new ideas and product promotion, predominantly in beauty, fitness, and product reviews. jiang (2023) analyzed the popularity of beauty-related short videos on xhs from the user’s perspective and identified issues such as excessive product marketing and the promotion of appearance anxiety, proposing optimization strategies. wei (2021) focused on female fitness bloggers on xhs, exploring their agency in constructing their own bodies, languages, emotional appeals, and roles, encouraging women to strive for personal rights. wu (2024) studied review videos on xhs under the tam model, showing the positive effects of perceived usefulness and ease of use on consumer purchasing and consumption behaviors, generating positive value for businesses marketing to user needs. research on the xhs platform outside of china is limited, and the platform has not yet widely influenced the international market. domestically, the scope of short video marketing on the platform is broad, focusing on female-oriented content and product marketing. the platform’s outfit-sharing videos are one of the main tracks for promotion and marketing, but there is a lack of scholarly research on this area, as well as targeted problem analysis and solution measures. this scarcity motivates the purpose and innovation of the present study. 3. methodology 3.1. research subjects this study primarily focuses on the user base of xhs, a demographic that predominantly attracts young and fashion-conscious individuals. this group generally has a strong interest in fashion, outfit coordination, beauty, and makeup, which is conducive to studying the marketing optimization of outfit videos on xhs under the aisas model. asian business research journal, 2024, 9: 111-118 113 © 2024 by the authors; licensee eastern centre of science and education, usa 3.2. research model based on the aisas model, this study constructs and analyzes relevant marketing scenarios against the backdrop of xhs’s rapid rise in popularity and the swift development of short video marketing in the china market in recent years. the aim is to identify the current issues in the marketing of outfit-related short videos on xhs and propose optimization strategies for marketing. the research model is presented in figure 2: figure 2. aisas model. 3.3. questionnaire survey this study employs an online survey, distributing questionnaires through various social networking platforms. the data collected from these surveys were tested for reliability and validity using spss software. this approach was used to construct and analyze relevant marketing scenarios, aiming to identify the significant factors by which outfit videos influence consumer purchasing behavior. 3.3.1. questionnaire design the questionnaire was designed based on the aisas model. drawing on the integration of marketing and communication strategies with this theory by scholars such as li qingchun (2012) and tao yang (2007), the questionnaire was structured into four sections in relation to the xhs platform: (1) consumer personal information (q1-q4); (2) purchase status (q5-q9); (3) aisas: attention (a; a1~a4), interest (i; i1~i4), search (s; s1~s4), action (aa; aa1~aa4), and share (ss; ss1~ss4); (4) optimization and innovation (q15-q19). the online survey was conducted to gather the opinions and perspectives of xhs users on outfit videos. 3.3.2. data collection after consulting with 150 actual xhs users and 5 professional scholars, the questionnaire was revised and distributed. a total of 332 responses were collected, with 10 invalid questionnaires removed, leaving 322 valid questionnaires, achieving an effective response rate of 96%. the survey data will be analyzed using spss software. 4. results 4.1. reliability and validity testing 4.1.1. reliability testing this study conducted an analysis of the credibility of the content, where a higher reliability coefficient indicates the stability of the collected data. the reliability coefficient of the survey questionnaire is presented in table 1. a value of 0.820 demonstrates that the questionnaire has a high level of reliability. table 1. reliability analysis. sample items cronbach's alpha 322 30 0.885 4.1.2. validity testing since this study utilized the likert scale for questions 10-14 of the questionnaire, the kmo (kaiser-meyerolkin) test and bartlett’s test of sphericity were employed to assess the feasibility of the quantitative data section of the questionnaire. table 2 indicates a kmo value of 0.949, which is greater than 0.6, suggesting that the sample size is suitable for extracting valid information. the bartlett’s test result of p=0.000 is less than 0.05, indicating that the data meets the criteria for sphericity. table 2. kmo and bartlett’s test. kmo and bartlett kmo value 0.949 bartlett test of sphericity approx chi-square 4350.669 df 190.000 p-value 0.000 4.2. descriptive statistical analysis this study collected a total of 322 valid samples and summarized the following basic characteristics of the sample. table 3 indicates that the primary audience of the xhs platform is females aged 18-25, accounting for over 80%, predominantly holding a bachelor’s degree, with a significant number of individuals with master’s degrees and above. the average monthly disposable income is mostly below 2500 yuan. asian business research journal, 2024, 9: 111-118 114 © 2024 by the authors; licensee eastern centre of science and education, usa table 3. sample data. information option samples % gender male 64 19.88 female 258 80.12 age / years old 18-25 300 93.17 26-35 19 5.90 36-45 1 0.31 46 above 2 0.62 education junior high /below 5 1.55 high school 4 1.24 junior college 21 6.52 bachelor’s 263 81.68 master’s & above 29 9.01 monthly disposable income/ yuan 1500/below（≤1500） 145 45.03 1500 -2500（1500<x≤2500） 102 31.68 2500 -3500（2500<x≤3500） 20 6.21 3500 -4500（3500<x≤4500） 16 4.97 4500 -5500（4500<x≤5500） 13 4.04 according to the questionnaire data in table 4, the goodness-of-fit test for users’ choice of outfit short video platforms shows significance (χ²=399.021, p=0.000<0.05), indicating that there are significant differences in the selection proportions among the options. therefore, a multiple response analysis was conducted to compare the differences in response rates or popularity. specifically, douyin, taobao, and xhs have significantly higher attention and popularity compared to other platforms. table 4. response rates and popularity. platform response %（n=323） n % douyin 252 25.93% 78.02% kuaishou 87 8.95% 26.93% taobao 191 19.65% 59.13% pinduoduo 137 14.09% 42.41% xiaohongshu 250 25.72% 77.40% jd 32 3.29% 9.91% others 23 2.37% 7.12% total 972 100% 300.93% goodness-of-fit test：x2=399.021 p=0.000 when users were asked if they make purchases of clothing products while watching such short videos, 72.98% of consumers have made purchases. the number of items purchased was generally balanced, as shown in figure 3, with 26.71% purchasing 3-5 items and 23.60% purchasing 11 items or more. figure 3. quantity of clothing products purchased by users on short video platforms. the main reason for users who did not make purchases is the concern about the quality of products bought on these platforms. the second reason is that the fashion bloggers did not conduct attractive marketing. as a result, most people choose to search for the same items on shopping platforms and then decide whether to purchase based on reviews and price factors from users who have already made purchases. 4.2.1. confirmatory factor analysis the five levels of the aisas model—attention (a), interest (i), search (s), action (aa), and share (ss)—and their subdivision scenarios were coded as x1-x4 for factor loading coefficient analysis using spss. to avoid confusion with the attention and search dimensions, the action and share dimensions were coded as aa and ss, respectively. the results in table 5 show that the standardized loading coefficients have absolute values greater than 0.6 and are statistically significant, indicating a good measurement relationship. asian business research journal, 2024, 9: 111-118 115 © 2024 by the authors; licensee eastern centre of science and education, usa table 5. factor loading coefficients. latent variable manifest variable coef. std. error z cr value p std. estimate smc a a1 1.000 0.710 0.504 a a2 1.094 0.086 12.654 0.000 0.768 0.589 a a3 0.985 0.092 10.703 0.000 0.644 0.414 a a4 1.184 0.097 12.191 0.000 0.738 0.544 table 5. factor loading coefficients (continue). latent variable manifest variable coef. std. error z cr value p std. estimate smc i i1 1.000 0.733 0.537 i i2 0.954 0.077 12.361 0.000 0.709 0.502 i i3 1.079 0.088 12.223 0.000 0.701 0.491 i i4 1.043 0.090 11.581 0.000 0.665 0.443 s s1 1.000 0.670 0.450 s s2 1.249 0.098 12.684 0.000 0.807 0.651 s s3 1.056 0.095 11.170 0.000 0.695 0.483 s s4 1.228 0.099 12.458 0.000 0.789 0.623 aa aa1 1.000 0.853 0.728 aa aa2 1.055 0.058 18.236 0.000 0.821 0.674 aa aa3 1.028 0.055 18.773 0.000 0.836 0.698 aa aa4 1.040 0.054 19.351 0.000 0.851 0.724 ss ss1 1.000 0.792 0.628 ss ss2 1.128 0.066 17.213 0.000 0.857 0.734 ss ss3 1.172 0.067 17.394 0.000 0.864 0.747 ss ss4 1.071 0.065 16.383 0.000 0.825 0.681 when using the factor covariance matrix to represent the relationships between factors in a specific scenario simulated by the aisas model and the other four factors, it was found that the standard estimated coefficients were all greater than 0.70, indicating a strong correlation, as shown in table 6: table 6. factor covariance. latent variable manifest variable coef. std. error z p std. estimate a i 0.350 0.041 8.493 0.000 0.906 a s 0.307 0.039 7.966 0.000 0.853 a aa 0.355 0.042 8.526 0.000 0.781 a ss 0.364 0.044 8.177 0.000 0.757 i s 0.312 0.037 8.392 0.000 0.933 i aa 0.339 0.038 8.808 0.000 0.802 i ss 0.347 0.041 8.433 0.000 0.779 s aa 0.332 0.038 8.633 0.000 0.843 s ss 0.312 0.039 7.980 0.000 0.750 aa ss 0.426 0.046 9.313 0.000 0.811 4.2.2. differential testing this section conducts differential tests using analysis of variance (anova) and chi-square tests on the five aspects of the aisas model based on consumer demographic information. table 7 shows that for the search (s) aspect, there is a significant difference at the 0.01 level (f=8.665, p=0.003<0.05). specifically, the mean value for males (3.50) is significantly lower than that for females (3.79). additionally, there are no significant differences in the aspects of share (ss), action (aa), interest (i), and attention (a) between gender samples. table 7. gender anova results. gender (mean ± standard deviation) males (n=64) females (n=258) f p ss 3.38±0.88 3.34±0.85 0.121 0.728 aa 3.45±0.88 3.63±0.73 2.816 0.094 s 3.50±0.82 3.79±0.65 8.665 0.003** i 3.53±0.83 3.64±0.65 1.318 0.252 a 3.48±0.92 3.51±0.73 0.084 0.772 note: * p<0.05 ** p<0.01. for the educational background, a chi-square analysis test was conducted on the model, as shown in table 8. educational background shows a significant difference at the 0.05 level for search (s=73.282, p=0.028<0.05). the scale was set to five levels with a scoring system from 1 to 5, representing “strongly disagree” (1.0), “disagree” (2.0), “neutral” (3.0), “agree” (4.0), and “strongly agree” (5.0). the percentage comparison reveals that the proportion of specialized college students choosing 3.0 is 33.33%, which is significantly higher than the average level of 19.25%. the proportion of high school students choosing 4.0 is 50.00%, significantly higher than the average level of 30.12%. for interest (i), there is a significant difference at the 0.05 level (i=80.267, p=0.018<0.05). asian business research journal, 2024, 9: 111-118 116 © 2024 by the authors; licensee eastern centre of science and education, usa the percentage comparison shows that the proportion of high school students choosing 3.5 (between neutral and agree) is 25.00%, which is significantly higher than the average level of 12.73%. the remaining educational background samples do not show significant differences in share. table 8. educational background chi-square analysis results. educational level junior high high school junior college bachelor’s master’s χ2 p ss 5 4 21 263 29 60.733 0.593 aa 67.388 0.142 s 73.282 0.028* i 80.267 0.018* a 66.553 0.158 note: * p<0.05 ** p<0.01. moreover, through testing, consumer demographic information such as age, monthly disposable income, and average daily browsing time do not show significant differences in the five aspects of the aisas model. 4.3. issues and optimization 4.3.1. issues after conducting reliability and validity tests and analyzing the research data, it is evident that females have a stronger willingness to search compared to males, primarily for direct searches of familiar brands, influence from fashion bloggers, and genuine recommendations. in terms of educational background, undergraduate students show greater interest and search intent for outfit videos. overall, the majority of people are interested in highquality, story-driven outfit videos that collaborate with favored brands, which extends to user comments on purchased items, leading to further search and purchase actions. however, with the research conducted through a scoring system, the average scores for the five dimensions of the aisas model are between 3 and 4, mainly due to the following reasons: severe homogenization: amid the rapid development of the xhs platform, the emergence of fashion bloggers has undoubtedly brought a rich visual feast and source of inspiration to fashion enthusiasts. however, with the explosive growth in content, several issues have emerged, particularly in capturing consumer attention (a) and interest (i). from an economic visibility perspective, successful marketing models and styles often yield significant commercial benefits, leading many bloggers to imitate and replicate existing successful cases. this convergence, however, results in content homogenization, making it difficult for users to distinguish between different brands or bloggers, thereby reducing the perceived differentiation of brand content. this homogenization not only affects consumer attention distribution but also leads to a relative decrease in personalized creation (gu et al., 2024). the use of homogenized marketing language and visual elements further exacerbates the phenomenon of aesthetic fatigue. on xhs, similar outfit styles, color schemes, and filming techniques are frequently seen, leading to a sense of monotony and boredom among users. this aesthetic fatigue not only weakens user interest and attention to the brand but also affects the recognition and acceptance of such clothing styles. over-marketing: from the perspective of consumer search (s) behavior, the current practices of merchants and fashion bloggers on xhs, driven by interests, are shifting from pure sharing to a stronger marketing orientation. this shift not only affects consumer judgments of product quality but also intensifies consumer resistance to platform content. with the proliferation of advertisements and fake reviews, consumers find it increasingly difficult to discern the authenticity of product quality during search and browsing. merchants and bloggers, in pursuit of higher exposure and sales volumes, resort to false advertising and exaggeration, leading to a significant decline in consumer trust in products. additionally, this excessive marketing behavior elicits consumer resentment, causing them to reject and resist advertising content on the platform. even when some bloggers use creative, story-driven short video formats to attract consumer attention, abrupt advertising placements can disrupt the viewing experience. this unnatural transition and sudden insertion of advertisements can make consumers feel uncomfortable and may lead to aversion to the brand’s products. such negative emotional experiences further reduce consumer search intentions and interest in understanding the products (wang, 2022). from a consumer behavior perspective, when consumers develop resistance to platform content, they tend to reduce their search and understanding of related products or brands. this reduction not only affects the exposure and sales of brands and merchants but may also have a negative impact on the overall platform ecosystem. therefore, xhs, along with its merchants and bloggers, needs to recognize the harmful effects of over-marketing and take measures to improve the situation. lack of specific pricing and stores: focusing on the action (aa) phase, we can deeply understand the potential barriers in the process of consumers’ interest turning into actual purchase intention. on the xhs social ecommerce platform, some fashion video bloggers adopt a non-direct and potentially uncomfortable strategy when guiding consumers to purchase products. specifically, these bloggers do not disclose product price information directly in their posts but instead require users to follow or message for more details. in some cases, bloggers choose to direct traffic off-site, guiding users to social platforms like wechat instead of providing actual shopping platform links. this approach not only increases the steps and time cost for users to understand products but may also cause doubts and unease in the process. for consumers, direct price information is an important basis for making purchase decisions. when bloggers choose not to reveal prices, consumers may hesitate due to price uncertainty, thereby reducing their willingness to buy. additionally, off-site traffic increases users’ perceived risk, as platforms like wechat are not dedicated shopping platforms, and consumers may be unable to verify the authenticity of products and the legitimacy of stores, further weakening their purchase confidence. non-authenticity: in the era of digital marketing and social media, consumer purchasing behavior is influenced not only by the value of the product itself but also by the sharing of information in social networks. in the “share” asian business research journal, 2024, 9: 111-118 117 © 2024 by the authors; licensee eastern centre of science and education, usa (s) phase, it is evident that consumers will spontaneously recommend and share their shopping experiences with others after a satisfying consumption experience. however, when this sharing behavior is disrupted by false information, the xhs platform, as a social e-commerce platform primarily focused on user-shared shopping experiences and outfit advice, has a user base that relies heavily on and trusts the shared content. however, as market competition intensifies, some merchants have resorted to strategies such as using filters and whitening effects to beautify model or ordinary person outfit photos, creating an unrealistic image of perfection and misleading consumer purchasing decisions. this phenomenon of false sharing is common on the xhs platform. merchants select models or ordinary individuals with attractive appearances and good physiques, utilizing modern image processing techniques to transform ordinary clothing products into enticing fashion items. consumers are easily drawn to these carefully curated shared contents, which excite their desire to purchase. however, when consumers receive the actual product and attempt to style it, they often find a significant discrepancy between the real-life results and the shared content, leading to disappointment and dissatisfaction. the impact of this false sharing phenomenon on consumer purchasing and sharing intentions is profound. it undermines consumers’ trust in the social e-commerce platform. when consumers realize they have been misled by false information, they may question the entire platform, reducing the likelihood of future purchases and shares. false sharing may also lead to a decrease in trust for other genuine shared content, thereby affecting the healthy development of the entire social e-commerce ecosystem. 4.3.2. optimization personalized recommendation mechanism: addressing the attention (a) level of the model, research under the current diverse consumer culture perspective reveals that the lack of personalized creativity in outfit video marketing makes it difficult for consumers to distinguish between different brands, which is unfavorable for attracting the target audience (yu, 2024). therefore, xhs’s outfit videos should emphasize personalized innovation and implement targeted recommendations for different groups. for instance, when targeting petite women in search recommendations, the platform should refine its general push mechanism, focusing on specific keyword demands of users, and recommend outfit videos with shorter styles that suit petite women’s body types and heights, enhancing recommendations that capture consumers’ initial attention and stimulating the development of a. enhancing product storytelling: for the interest (i) level of the model, current outfit bloggers often limit their product reviews to material descriptions and simple styling experiences. to attract more user attention, the format of video content should be innovated. for example, bloggers can incorporate the origin of the clothing brand and the founder’s story into their videos to establish brand storytelling and image. additionally, creating innovative stories for bloggers to act out in short videos can evoke emotional resonance with the brand culture among consumers. when creating these stories, careful attention should be paid to the rhythm of the short videos, setting innovative highlights with different pacing based on the content style (he, 2022), thereby promoting consumer interest in xhs’s outfit videos. focusing on user interaction and engagement: for the search (s) aspect of the model, merchants and outfit bloggers should engage consumers in interaction and participation from both product and fan community management aspects, prompting spontaneous search behavior. from a product perspective, in addition to sharing personal styling and recommendations, bloggers should actively respond to user comments, adjust products based on feedback from purchasers, and engage with viewers in new videos or live streams, explaining product adjustments and promoting them. interactive styling tutorials and user styling challenges can also be added to promote positive interaction between creators and users, fostering a healthy community atmosphere, improving the spread of short videos, and increasing user engagement and loyalty. collaborating with shopping platforms: for the action (aa) aspect of the aisas model, according to the survey, in addition to xhs’s self-operated sales, many merchants also choose to collaborate with sellers on shopping platforms such as taobao, pinduoduo, and 1688, which is part of alibaba, to drive traffic and attract users to place orders through the “grass-planting” method. however, frequently switching apps can be time-consuming and reduce user motivation to act, also decreasing the sales of xhs’s self-operated products. therefore, the platform could explore cross-industry collaborations and brand partnerships, expanding the user base and enhancing the spread of short videos and brand influence. additionally, implementing quick transitions and avoiding cumbersome operations while displaying purchase links on xhs’s platform allows users to choose immediate transactions or compare purchases on shopping apps, stimulating their desire to buy. authentic and effective product reviews: starting from the share (ss) component of the aisas model, the profit-driven mentality of merchants often leads to excessive marketing and false reviews by outfit bloggers, which can severely affect consumers’ willingness to share products when the purchased item does not match the advertised effect. improvements should be made in the following areas: 1) authentic reviews: the platform must ensure that bloggers’ personal information such as height and weight is accurate and reduce the use of filters and effects like whitening and leg-lengthening in videos to show the true effect to viewers with similar body types, heights, and complexions. 2) objective product introduction: bloggers should present a balanced view of product pros and cons, rather than one-sided praise or criticism. 3) reducing excessive marketing: activities like fake reviews and cashback offers for positive reviews should be prohibited, providing users with a space for genuine discussions and encouraging them to participate in product review discussions, offering a more comprehensive understanding of the product. the platform should also optimize its marketing profit and governance mechanisms, achieving a balance between merchant marketing effectiveness and user satisfaction (su, 2022). these improvements will enable users to make targeted purchases that meet their needs, thereby stimulating their desire to share products across different platforms. 5. conclusion 5.1. academic significance this study employs the aisas model to offer a new perspective on the marketing process of outfit-related short videos on the xhs platform. it provides a comprehensive and systematic analysis of consumer behavior asian business research journal, 2024, 9: 111-118 118 © 2024 by the authors; licensee eastern centre of science and education, usa patterns in viewing, interacting with, and sharing outfit videos, thereby enriching the research scope and objects of the model to some extent. the study contributes to the better application of the model in actual sales scenarios. furthermore, this research systematically delves into the impact of video content, dissemination strategies, and user interaction on marketing effectiveness, offering marketers a theoretical basis for more effective strategies. it also provides valuable references for other outfit-related short video marketing efforts and has guiding significance for the development of the short video industry. 5.2. managerial implications the application of the aisas model can assist marketing enterprise personnel in more accurately identifying and understanding consumer purchasing behavior and intentions. this enables a deeper understanding of xhs users’ perspectives and suggestions on the construction and marketing of outfit videos. it allows businesses and platforms to make targeted improvements and optimizations, enhancing consumer purchase intention and satisfaction, and facilitating high-quality product marketing activities. moreover, through the short video sharing mechanism of the xhs platform, the visual appeal of outfit videos can effectively increase the influence of different brand products, thereby enhancing product visibility and bringing greater economic benefits to enterprises. 5.3. research limitations and suggestions this study utilized an online survey questionnaire for xhs users, which may not have covered all types of consumers due to individual and platform traffic mechanism influences. as such, there may be some discrepancies between the research data and real-world situations. in future research, it is suggested to increase the sample size and possibly conduct in-depth interviews with influencers and consumers to obtain more precise data and suggestions. this is an area where future research can be improved to make 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(2024). issues and suggestions for short video kol marketing of beauty brands from the perspective of consumer culture. journal of wuhu vocational technical college, 2024, 26(01), 56-59. https://journal of wuhu vocational technical college. 64 © 2024 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 9, 64-71, 2024 issn: 2576-6759 doi: 10.55220/25766759.195 © 2024 by the authors; licensee eastern centre of science and education, usa analysis of crisis management strategies for cosmetic brands: a case study of florasis incident zi yi huang1 an-shin shia2 huan chen3 1,2, 3business school, lingnan normal university, zhanjiang, guangdong, china. email: 2759209526@qq.com email: 18875991570@qq.com email: 13610394876@139.com ( corresponding author) abstract this study aims to analyze the impact of the new media environment on domestic cosmetics companies, explore crisis management strategies, identify issues in the crisis management process through survey data, and propose corresponding recommendations. the study uses the florasis incident as a case to analyze the impact of new media, represented by social platforms and mobile media, on the consumer market of domestic cosmetics companies, including aspects of brand communication and consumer market, and summarizes the current crisis management strategies of domestic cosmetics companies in the new media context. finally, through questionnaire survey data, the study reflects on the issues of crisis management strategies for domestic makeup brands in the new media environment and puts forward corresponding solutions. keywords: (cosmetics brand) cosmetics brands (brands), crisis management, new media, florasis. jel classification: m1; m10; g32; l66. 1. introduction with the rapid development of new media technologies, new media platforms represented by the internet and mobile media have penetrated every aspect of people's lives, profoundly impacting various fields of society. according to the "2023 china cosmetics yearbook," the market share of domestic beauty brands reached 50.4% in 2023, with offline retail being the primary channel, accounting for 50.2%, followed by e-commerce platforms (49.6%) and short video platforms (42.3%) (beauty sight, 2024). this marks the first time that domestic cosmetic brands have surpassed foreign cosmetic brands. this indicates that the color cosmetics products produced by chinese brands (domestic cosmetics companies, hereinafter referred to as "companies") have gained a dominant position in the market competition, winning the trust and favor of consumers. as an important part of the local cosmetics industry, these companies have encountered unprecedented development opportunities against the backdrop of new media, while also facing numerous challenges. among them, crisis management has become an important issue that companies must confront. in the new media environment, especially with the information dissemination represented by social platforms and mobile media, the speed is fast and the coverage is wide, which can make the occurrence and spread of crisis events more rapid and extensive. due to a late start, companies often have a relatively weak brand influence. in the event of a crisis, they are more likely to face public scrutiny and attacks. therefore, how to formulate effective crisis management strategies under the backdrop of new media, to respond to and handle crisis events in a timely manner, and to protect brand reputation and image has become an urgent issue for businesses to address. in recent years, the performance of companies in the market has become increasingly prominent, with many brands successfully shaping unique brand images through new media platforms, winning over consumer favor. however, there are also instances where some brands have suffered significant losses due to improper handling of crisis events. the florasis (cosmetics brand) incident is a typical case in point, which has triggered widespread attention and discussion, and also exposed the inadequacies of companies in crisis management. based on this, this study focuses on the crisis management strategies of companies in the context of new media, using the florasis incident as a case study for in-depth analysis. the aim is to reveal the current situation and issues of corporate crisis management in the new media environment and to propose targeted strategic recommendations. through this research, it is expected to construct a robust and enduring crisis management system for companies in the era of new media, providing solid theoretical support and practical guidance, helping companies to navigate the complex and ever-changing market environment with stability. nowadays, research related to crisis management. the academic and business communities are increasingly engaged in intense discussions about the concept and practical issues of crisis management, which has drawn widespread attention. regarding the definition of crisis management, different scholars have provided various perspectives. steven fink (1989) emphasized that analyzing crisis issues is a prerequisite for crisis management. in his book "crisis management," he pointed out that crisis management involves actions such as predicting, resolving, analyzing, and preventing crisis factors. it encompasses various aspects including nature, law, politics, and more, mailto:2759209526@qq.com mailto:18875991570@qq.com mailto:13610394876@139.com https://www.doi.org/10.55220/25766759.195 asian business research journal, 2024, 9: 64-71 65 © 2024 by the authors; licensee eastern centre of science and education, usa with the aim of systematically eliminating uncertainty and risk, allowing companies to better control their own development. green (1992) focused more on the control after a crisis occurs, striving to minimize losses and regain control of the situation. heath (1998) believes that crisis management is the ability to handle emergencies that could potentially harm the organization, aiming to help businesses overcome the psychological barriers presented by unpredictable events. faulkner (2011) further proposed that crisis management includes two phases: before and after the outbreak of a crisis. it requires effective control and early warning before the crisis, and the implementation of proactive response strategies afterward. both jaques (2007) and benoit (2017) emphasize that the core of crisis management is to effectively control the situation, mitigate losses, and effectively respond to potential risks. additionally, scholars have also studied crisis management from the perspective of the crisis management process. for instance, fred et al. (2019) pointed out that crisis management involves a series of measures or actions before and after a crisis occurs. these studies not only deepen our understanding of the concept of crisis management but also provide theoretical guidance for enterprises to deal with crises in practice. chinese scholar zeng (2014) conducted research on the measures that enterprises should take when facing product quality crises. he tends to correctly and scientifically apply the knowledge of crisis management theory to provide scientific and correct methods and tools for enterprises to quickly overcome the impact of the crisis. this enables effective crisis management activities, allowing the enterprise to successfully extricate itself from the crisis and gradually resume production and operations. zhu (2018) pointed out that companies should establish a strong sense of crisis management in their daily operations. it is not wise to passively wait for a crisis to occur before responding. instead, they should maintain a high level of vigilance at all times to effectively prevent crises. in summary, enterprises should adopt a crisis management philosophy that prioritizes prevention, always staying alert to potential risks and challenges. qiao (2022) tends to focus on constructive suggestions for corporate crisis management, such as establishing an early warning system for public opinion, setting up a crisis public relations team, and creating a database of crisis management cases. he believes that these measures will provide some reference and support for companies to carry out crisis management work. sun (2023) believes that improvisation is a way for organizations to creatively use knowledge under time pressure, enabling them to respond quickly to crises, reduce internal analysis, decision-making, and reaction time, thereby enhancing the organization’s resilience and adaptability in crises. therefore, scholars regard organizational improvisation as an effective method for dealing with emergencies, and strong improvisational capabilities are the prerequisite for a company’s continued survival and development in crises. 2. concepts and theories 2.1. new media related concepts the characteristics of new media can be categorized into two types: technically, new media possess features such as digitalization, large capacity, trans-temporal and multimedia capabilities, and ease of retrieval; in terms of communication features, new media have characteristics like immediacy, interactivity, decentralization, personalization, communalization, and fragmentation (yan, 2017). they utilize diverse channels and terminal devices to provide users with rich information and convenient services, while breaking away from the traditional media’s one-way communication model, enabling two-way or multi-way communication of information. this allows users to express their views and opinions and participate in the dissemination of information. new media can easily cross geographical boundaries, achieving the globalization of information dissemination. in a broad sense, new media encompasses the forms of media transformed by technological advancements and the use of existing carriers for information dissemination; in a narrow sense, it specifically refers to the new forms of media based on technological progress. 2.2. crisis management related concepts 2.2.1. the concept of corporate crisis crisis is a turning point that determines survival or demise. it signifies a crucial fork in the road, directly influencing the direction of events towards either positive or negative outcomes. currently, due to varying research directions and perspectives, scholars both domestically and internationally have different understandings of this concept. mitroff and anagnos (2001) defines a crisis as a situation or state of uncertainty that arises when significant change is imminent. heath (2001) believes that: “the time for crisis response is limited (or appears to be limited); decisions must be made immediately (under the constraint of limited time), information is unreliable or incomplete; the manpower and equipment needed to deal with the crisis may (or seem to) exceed what is actually available,” which is the 4r crisis management theory. 2.2.2. the 4r crisis management theory according to the natural process of crisis occurrence, development, climax, and resolution, many scholars have proposed cycle theories of crisis management, with the “stages” model being one of the most intuitive applications. the national safety council (nsc) developed steven fink’s (1989) four-stage crisis theory into four steps of crisis management from a management perspective, including mitigation, prevention, response, and recovery. eventually, robert heath (2001) proposed that crisis management includes reduction, readiness, response, and recovery, abbreviated as 4r, which is one of the basic frameworks of crisis management and plays an important role in the practice of crisis management. reduction management, as the top priority in crisis management, runs throughout the entire crisis handling process. the primary task in this stage is to implement targeted measures to contain public opinion crises and reduce their risks, thereby decreasing the likelihood of outbreaks and minimizing the frequency of actual crises. the core of readiness management lies in being fully prepared in advance for online public opinion crises, effectively eliminating the seeds of such crises, and achieving prevention before they occur (zhu, 2023). asian business research journal, 2024, 9: 64-71 66 © 2024 by the authors; licensee eastern centre of science and education, usa response management refers to the response to crisis events. the focus of this part is on the emergency handling of crisis events, which requires the immediate activation of contingency plans, coordination of various forces, rapid dissemination of information, and containment of rumors. managers should make scientific decisions, quickly contain the spread of the crisis, and avoid a chain reaction (zhu, 2023). recovery management, or post-crisis recovery and rebuilding, involves the corporate image reshaping. the core work in this stage is to deeply summarize the experience and lessons of this crisis management after the crisis is effectively controlled, conducting a comprehensive review to avoid similar crises from happening again. 3. materials and methods this article uses survey research and case study methods to analyze the current state and impact of corporate crisis management under the background of new media, and summarizes crisis management strategies. at the same time, through questionnaire data collection and case analysis, the effectiveness and reflection of the florasis crisis event are evaluated, in order to put forward corresponding suggestions for the overall crisis management of enterprises under the background of new media, and find a sustainable development plan. 3.1. florasis crisis incident “the price of 79 yuan is really not expensive, it’s hard for domestic products.” “has your salary increased over the years, have you been working hard?” “sometimes, find your own reasons.” the inappropriate comments in li jiaqi’s live broadcast studio sparked heated discussions among netizens. as the controversy continued to grow, topics such as florasis, li jiaqi, and disrespect for consumers sequentially trended on social media. li jiaqi faced a boycott as a result, losing over a million followers. he subsequently apologized with tears in his live broadcast and on weibo, but public opinion continued to simmer, and the florasis brand was also affected, frequently criticized by netizens. after days of silence, the official florasis account released an apology letter, expressing gratitude for the public’s attention to the brand and apologizing for the recent controversy. they committed to listening to consumer voices, striving to improve, and inheriting the beauty of the east. however, the public’s response on new media platforms was not positive. 3.2. questionnaire design in this study, the content of the questionnaire was mainly designed based on the crisis management strategies of this case. the questionnaire consists of 15 questions, primarily targeting consumers of various age groups. it investigates the attributes of corporate consumers and their attitudes towards the company's response to crisis events; including the basic information of the respondents, their usage habits of the brand, their acceptance of information on new media platforms, their knowledge and evaluation of the brand, their views on the company's crisis public relations, their understanding of the risks faced by the company in the new media era, and their attitudes towards the company's development prospects. the survey questionnaire was released online through wenjuanxing, and a total of 160 responses were collected, of which 4 were invalid, leaving 156 valid responses, with an effective response rate of 97.5%. 3.3. results after the data collection of this questionnaire was completed, through the analysis of the data, the attitudes of consumers towards the florasis crisis incident and the inappropriate handling of the incident were identified, and some insights into the crisis management of the company brought about by the florasis crisis incident were explored. 3.3.1. sample attribute analysis 157 valid survey questionnaires were collected and combined with the researcher’s observations to summarize the characteristics, as detailed in table 1. table 1. analysis of respondent information. gender option number of people % gender male 34 21.66 female 123 78.34 age /yars old under 18 17 10.83 19~25 121 77.07 25~30 13 8.28 over 30 6 3.82 salary/ yuan below 3000 86 54.78 3000~6000 61 38.85 6000~9000 8 5.1 above 9000 2 1.27 women have a greater interest in cosmetics: as shown in table 1, the data indicates that among the survey participants, 21.66% are male and 78.34% are female. the gender differences among the survey participants can influence the level of attention and understanding towards cosmetic brands. the consumer age group is relatively young: as detailed in table 1, among the survey participants, the age group of 19 to 25 years old accounts for 77.07%, the largest proportion; followed by consumers under 18 years old, accounting for 10% of the total; and finally, in descending order of proportion, are the age groups of 25 to 30 years old and above 30 years old, accounting for 8.28% and 3.82% respectively. in summary, the brand’s main consumer group is clearly inclined towards the younger generation. however, this may also result in a relatively narrow audience scope for the brand, with certain limitations. consumers have a relatively low salary level: this study found that the salary level of the survey participants is mainly concentrated below 3000 yuan, with a high proportion of 54.78% in this range. the salary range following this is 3000-to-6000-yuan, accounting for 38.85%. notably, there is a significant difference between the proportion asian business research journal, 2024, 9: 64-71 67 © 2024 by the authors; licensee eastern centre of science and education, usa of salaries above 6000 yuan and that below 6000 yuan. this data reflects that the brand has a strong mass appeal, and its product prices align with the spending levels of the consumer group with an income below 6000 yuan. 3.3.2. analysis of corporate crisis management attitude the survey participants are detailed in table 2. those who think that florasis handling of the current crisis is good or above account for a relatively small proportion, with a total of 22.93%; those who think the handling is average account for 51.59%; and those who think it is poor or below account for 25.48%. the total proportion of views that are average, poor, or below is relatively large. therefore, based on the data analysis, it can be inferred that consumers are relatively dissatisfied with huaxiz’s handling of this crisis event. table 2. investigation sample attitude analysis results. name option frequency % cumulative% crisis public relations risk performance outstanding 17 10.83 10.83 better 19 12.10 22.93 average 81 51.59 74.52 poor 24 15.29 89.81 extremely poor 16 10.19 100.00 total 157 100.0 100.0 3.3.3. cross-analysis of attributes and survey elements the survey questionnaire objects are detailed in table 3. there are significant differences in the attention paid to brand spokespersons among consumers of different age groups. young consumers under 18 years old show a certain level of interest and recognition towards brand spokespersons, accounting for 10.42%. the 19-25 age group, which is predominantly college students, has a high sensitivity to the use of new media platforms, resulting in a significant attention level to brand spokespersons of 83.33%, indicating the importance of spokespersons among consumers in this age group. to enhance attractiveness and recognition, brands should carefully select spokespersons that align with the preferences of young consumers. table 3. consumption stimulation factors and age analysis. survey item options brand spokesperson product price live streaming marketing response age group under 18 years old 10.42% 11.38% 4.35% 19~25 years old 83.33% 76.42% 78.26% 25~30 years old 6.25% 7.32% 17.39% over 30 years old 0.00% 4.88% 0.00% as shown in table 3, the age group has a significant impact on the attention to product price. consumers under 18 years old and those aged 19~25 years old show attention rates of 11.38% and 76.42% respectively, indicating a positive correlation between age increase and price sensitivity. brands should pay special attention to the acceptance level of the primary target audience aged 19~25 years old when setting prices, while also considering the consumers under 18 years old. consumers aged 25~30 years old also show a certain level of attention to price, and brands should develop a reasonable pricing strategy. additionally, although the proportion of consumers over 30 years old is low, there is still a 4.88% attention rate to price, and brands should formulate detailed strategies for this market segment. there is also a certain degree of correlation between the attention to the effects of live streaming marketing and age groups. among them, consumers aged 19~25 years old show the highest level of attention to live streaming marketing effects, reaching 78.26%, which also indicates that live streaming marketing is a very effective means of attracting consumers in this age group. in summary, the primary consumer group for brands is mainly concentrated among young people under 25 years old. this group typically has active consumption habits, strong individualized needs, and a high sensitivity to new things. when choosing products, they often place more emphasis on the brand's image, reputation, and whether it resonates with their own values. the element of brand spokesperson, as an important factor stimulating their brand consumption, can have a direct and profound impact on the brand's reputation and market position when the brand faces a crisis event related to this factor. 3.3.4. the analysis of age and brand crisis management elements according to the data shown in table 4, the analysis of age and brand crisis management elements is as follows: “strengthening internal training” the attention rate for “strengthening internal training” is 4% among individuals under the age of 18, which then rises to 88.57% in the 19-25 age group. as age increases, the attention to this element seems to rise, but it drops back to 2.86% in both the 25-30 and over-30 age groups. this indicates that younger people relatively place more emphasis on the role of internal training in corporate brand crisis management. “establishing a comprehensive risk prevention mechanism” the attention rate for “establishing a comprehensive risk prevention mechanism” reached 8.20% among individuals under the age of 18, which then increased to 81.97% in the 19-25 age group, and subsequently decreased gradually in both the 25-30 and over 30 age groups. this indicates that the corporate risk prevention mechanism is relatively important in the crisis management perceptions of the younger generation. the data for “strengthening communication with consumers” shows that the 19-25 age group still has the largest proportion among the four age groups, reaching as high as 76.98%. however, the attention rate decreases to 8.73% in the 25-30 age group and further to 3.97% in the over 30 age group. this seems to indicate that younger people place a higher importance on communication with consumers. in the element of “improving product quality”, the 19-25 age group still accounts for the largest proportion. asian business research journal, 2024, 9: 64-71 68 © 2024 by the authors; licensee eastern centre of science and education, usa in summary, there are differences in the focus of different age groups on the elements of corporate brand crisis management, but as a whole, all age groups pay attention to elements such as internal training, risk prevention mechanisms, and communication with consumers. at the same time, the younger generation of consumers has a more diverse thinking about corporate crisis management strategies. table 4. age and brand crisis management element analysis. options under 18 19-25 25-30 over 30 a 5.71% 88.50% 2.86% 2.86% b 8.20% 81.90% 8.20% 1.64% c 10.32% 76.90% 8.73% 3.97% d 12.07% 76.70% 7.76% 3.45% 4. review and deep cause analysis 4.1. inadequate crisis early warning from the response of florasis after a period of silence following the crisis, it can be seen that the occurrence of this crisis caught florasis somewhat off guard. according to the data available, the majority of consumers have expressed dissatisfaction with the handling of this crisis, indicating that florasis did not adequately prepare a crisis plan to deal with such situations. regarding the inadequate crisis early warning by florasis, it can be analyzed from the following three aspects. the anchor’s inappropriate remarks triggered this crisis. as a member of the company’s staff, it is evident that the company conducts minimal training on crisis awareness and response capabilities for its employees. additionally, there is a lack of thorough understanding of the company’s values among employees and unclear positioning of the company’s products. consequently, the inappropriate actions of an individual led to a public opinion crisis for the company, damaging its image. data analysis shows that the main audience for the anchor and the company consists of the younger generation of consumers, who have active spending habits, strong individual needs, and high sensitivity to new things. however, the anchor’s inappropriate comments angered their main audience, indicating a need for improvement in the anchor’s professional skills and communication skills with the public. brand association. since jiaqi li promoted products of the florasis brand during the live broadcast, florasis was also drawn into this crisis. the close association between the brand and the anchor caused the crisis to quickly spread to the brand level. insufficient preparation for public opinion crisis. at the same time, from florasis’s silent attitude during the crisis, it can be seen that the company had no plan to deal with the public opinion crisis, nor did it have an immediately actionable crisis early warning mechanism to contain the outbreak of the crisis, leading to the spread of the crisis and a series of chain reactions. additionally, this silent attitude would make it more difficult for the company to communicate with consumers, leading consumers to mistakenly believe that the company implicitly agrees with the anchor’s inappropriate remarks and shares the same values, thus further damaging the company’s reputation. 4.2. the crisis response was not timely based on data analysis and the course of the crisis, it is evident that a significant proportion of consumers are dissatisfied with the speed of florasis’ response to the crisis. in terms of the implementation of specific measures, aside from an apology letter, florasis did not take any subsequent remedial actions nor collaborate with other parties. this process reveals that the corporate managers of florasis did not make scientific decisions, leading to the spread of the crisis and triggering a series of chain reactions. the anchor’s image is damaged. jiaqi li’s inappropriate remarks have caused serious damage to his personal image, with his once beloved “all girls” anchor persona collapsing instantly. a large number of fans and consumers have expressed their boycott and disappointment. the brand’s reputation has declined. florasis has suffered significant reputational damage due to its association with li jiaqi, which may also lead to a crisis of consumer trust. consumers have begun to question the quality of florasis’ products, pricing strategies, and other aspects, severely impacting the brand’s image. this crisis event has also triggered a trust crisis in the live-streaming e-commerce industry. people are starting to doubt whether the anchors genuinely consider the interests of consumers, and they also question the value for money of products. as a result, consumers have become more cautious in their purchasing decisions related to live-streaming sales. sales performance has slumped. due to the dissatisfaction and boycott from consumers towards jiaqi li and florasis, it is highly likely that both will experience a decline in sales performance. this not only affects the income of the anchor but also damages the brand’s market position. market share has been compressed. due to the damage to the corporate image, the crisis of consumer trust will also escalate. in the process of florasis’ crisis management, only the company itself spoke up in its defense, with no other companies coming forward to support it. this indicates that florasis has few partners or lacks indepth cooperation with its partners. at this point, other companies in the same industry may take advantage of this crisis to unite and develop together, expanding their market share. this could potentially lead to a compression of florasis’ market share. 4.3. improper crisis recovery strategies crisis recovery requires companies to restore and rebuild the damage caused by the crisis after experiencing it, including reshaping their corporate image. additionally, after the crisis is under control, it is necessary to summarize and review the crisis to prevent similar crises in the future. however, after the crisis event, florasis did not take any actions to appease the consumer group's dissatisfaction with this crisis, which may cause further damage to the company. in summary, although florasis itself has the corporate vision of 'promoting eastern beauty, creating a century-old national cosmetics brand,' to ensure sustainable development of the company, it needs to actively implement crisis response measures, reshape the brand image, and at the same time, summarize and review the crisis to prevent its recurrence. asian business research journal, 2024, 9: 64-71 69 © 2024 by the authors; licensee eastern centre of science and education, usa 4.4. inadequate crisis management in addressing the crisis caused by a streamer’s inappropriate remarks, florasis can analyze the situation using the 4r crisis management framework, which includes responsibility, reparation, rebuilding, and reduction. here’s a breakdown of each aspect: reduction management: florasis responded slowly to the crisis, failing to implement targeted measures to contain it at its inception. this led to the outbreak and spread of the crisis, causing a chain reaction. the root cause of this crisis for florasis was a streamer’s inappropriate remarks, which exacerbated the situation. it is evident that the company did not establish a rapid response mechanism in normal times, resulting in a slow reaction to the crisis and leaving the company unprepared when facing it. moreover, the lack of construction and improvement of relevant crisis response mechanisms may lead to a significant increase in the frequency of corporate crises. preparation management: when the crisis occurred, florasis was not adequately prepared for the public opinion crisis and failed to respond to the crisis in the first instance. instead, it allowed public opinion to develop, which intensified consumer doubts and dissatisfaction. response management: after the crisis event, florasis reacted slowly and did not actively respond to consumers’ doubts about the crisis. it also failed to communicate actively with consumers. moreover, the process of handling the crisis was not made public, and the outcome of the handling was not known. such a passive attitude and the lack of transparency in the handling process increased the public’s doubts and unease, causing the public opinion on the crisis to ferment even more. recovery management: after days of silence, florasis issued an apology letter but did not take any subsequent actions to recover from the crisis. the letter promised to listen to consumer voices and commit to continuous selfimprovement, sending a positive signal of determination to the public. however, apart from releasing the apology letter, florasis seemed to have not taken any other substantial measures to address the crisis. data analysis indicates a high level of consumer dissatisfaction with florasis’s crisis handling, suggesting that this action did not fully meet consumer expectations. consumers’ doubts and dissatisfaction persist, undoubtedly exacerbating the damage to the company’s image. it is also noteworthy that in this crisis, neither competitors nor companies from other industries came forward to explain or support florasis. this reflects that florasis does not have close cooperative relationships with other companies in its daily operations, lacking sufficient industry support and allies. therefore, florasis’s performance in crisis management still needs to be strengthened and improved. 5. discussion based on the aforementioned research findings, this section will present a review and in-depth analysis of the underlying causes, followed by discussions and recommendations. 5.1. reducing the frequency of crisis outbreaks at the source crisis reduction, as a crucial step in the crisis management process, requires companies to implement a series of targeted measures. these actions aim to contain the emergence of public opinion crises or mitigate their potential risks. by addressing issues at their source, the likelihood of public opinion crises erupting can be significantly diminished, thereby reducing the actual frequency of crisis occurrences. establish a rapid response mechanism: companies should establish a dedicated crisis management team, which includes setting up a specialized crisis handling team, formulating detailed crisis response plans, and strengthening communication and cooperation with the media. this ensures the ability to respond swiftly to crisis events, reducing the time for negative impacts to spread. strengthen internal training: companies should regularly train employees on crisis awareness and response capabilities, ensuring that employees understand the brand's values and avoid crises caused by personal inappropriate actions or words. the occurrence of the florasis crisis, to some extent, was due to the anchor's unclear understanding of the company's product positioning, as well as insufficient sensitivity to crisis awareness and crisis response capabilities, leading to inappropriate remarks. therefore, when selecting and managing partners, brands should exercise greater caution to ensure that the partners' actions and words align with the brand's values. simultaneously, strict management and constraints should be imposed on the actions and words of partners to prevent crises similar to the florasis incident from happening again. 5.2. establish an effective early warning system for public opinion crises the core of crisis early warning lies in being fully prepared in advance, thereby effectively eliminating the seeds of crisis. based on the florasis crisis, companies should establish a comprehensive early warning and monitoring system in their preparatory management, enabling real-time monitoring and early warning of potential crises. this includes the collection and analysis of key information such as product quality, market dynamics, and consumer feedback, to promptly identify and respond to potential crises. additionally, companies should develop detailed crisis response plans, clarifying the responsibilities and action steps for employees at all levels, ensuring the ability to respond swiftly and effectively when a crisis occurs. this can be specifically divided into two aspects. develop a crisis response plan: develop detailed response plans for potential crisis situations, including communication strategies during a crisis, media handling, and consumer relationship maintenance. establish a crisis early warning system: by monitoring social media, news reports, and other channels, detect information that may trigger a crisis in a timely manner, and provide early warning and intervention. 5.3. respond swiftly when a crisis occurs crisis response requires companies to act swiftly in the face of sudden crises. at the same time, it demands that corporate managers make scientific decisions and take urgent measures to address the crisis through the activation of contingency plans, thereby preventing the crisis from spreading and causing a chain reaction. it is not difficult to see from florasis's handling of corporate crisis events that, although from the company's perspective, a delayed response may provide some time and space to refine crisis response strategies, the speed of crisis management and consumers' attitudes towards the company are both key factors affecting the company's reputation. therefore, when dealing with a crisis, companies must closely monitor changes in consumers' emotions and attitude trends. on this basis, companies should actively explore and optimize crisis management methods, which mainly include the following important aspects. asian business research journal, 2024, 9: 64-71 70 © 2024 by the authors; licensee eastern centre of science and education, usa timely and public apology: once a crisis occurs, the company needs to swiftly and transparently communicate information, ensuring that consumers can obtain accurate and comprehensive information at the earliest time. an apology statement should be issued through official channels to reduce misunderstandings and doubts. at the same time, a sincere apology for the crisis should be made to prevent the situation from worsening. actively communicate with consumers: proactively communicate with affected consumers, understand their demands and dissatisfaction, and actively seek solutions to demonstrate the brand's sense of responsibility. as indicated by the survey data mentioned earlier, the company's consumer base is predominantly the younger generation, with a higher proportion of female consumers. therefore, the company should pay more attention to the details of communication and interaction with consumers, actively listen to their voices, respond to their concerns, and timely understand consumer needs and feedback. through sincere communication, the company can rebuild consumer trust. transparent processing: transparency in the handling process is of vital importance in the management of crisis events. when a company faces a crisis, how it handles the situation properly and communicates effectively to the public becomes a crucial standard for measuring the company's response capabilities. maintaining a high degree of transparency throughout this process is extremely critical. this not only means that the brand needs to timely and accurately disclose relevant information, but it also requires the brand to maintain close communication with the public throughout the entire process of handling the crisis, providing timely updates on progress. therefore, for companies, during the process of dealing with a crisis, it is necessary to respond swiftly to the crisis and take relevant emergency measures, while also maintaining transparency in crisis management. this ensures the timely disclosure of information and the smooth flow of communication, in order to uphold the company's reputation and maintain consumer trust. 5.4. ensure effective crisis recovery and prevent the recurrence of crises crisis recovery requires companies to reshape their image and conduct a post-mortem analysis of the crisis to prevent future occurrences. specifically, the following three aspects can be analyzed for companies during the crisis recovery period. repairing the brand image. as an authentic chinese brand, the company should pay more attention to the dissemination of brand values and the exploration of cultural connotations. at this stage, it is more important to use new media platforms to enhance the brand image and market competitiveness by telling chinese stories well and promoting the strength of domestic products. meanwhile, use new media platforms as a basis to document corporate public welfare activities, corporate story dissemination, and other processes. this will help repair the damaged corporate image and increase consumer trust in the brand. strengthening product quality and service. after experiencing a crisis, consumers' attention to the company will continue to rise, but their desire to consume may be suppressed by the crisis. at the same time, cost-performance ratio and product quality may become important factors for companies to break through consumers' "crisis shadow." in response, companies should reflect deeply and take action, investing more effort and resources into improving product quality and customer service. they should strictly control the production process to ensure that every step meets quality standards, thereby providing consumers with safe and reliable products. deepening partner relationships. business partners are an important support for corporate development, as they share market resources and face market challenges together with the company. after a crisis occurs, the company should value its relationships with partners even more, maintaining close communication and cooperation. together, they should analyze the causes and impacts of the crisis, actively seek strategies to address the crisis in collaboration with partners, and jointly maintain the brand image and market position. this approach is also beneficial for expanding the brand's influence and market share. 5.5. enhancing the company’s overall crisis management capabilities stick to brand values. throughout the crisis management process, the brand should always adhere to its core values, ensuring consistency between words and actions, and avoiding exacerbating the crisis due to improper handling. innovate marketing strategies. by adopting innovative marketing strategies, attract more consumer attention to the brand, and enhance brand awareness and reputation. focus on industry trends and consumer needs. promptly adjust product and market strategies to meet consumer demands and enhance brand competitiveness. 5.6. research significance theoretical significance: this study explores corporate crisis management strategies in the context of new media, which contributes to enriching and perfecting the theoretical system of corporate risk management. it enhances corporate crisis public relations capabilities in the new media environment and holds important theoretical significance for promoting the sustainable development of enterprises. practical significance: this research introduces the common risk management strategies and existing problems in the industry through the analysis of crisis public relations events in hot-topic companies. it helps to gain a clearer understanding of the consumption needs of various target consumer groups and to deeply comprehend the challenges and dilemmas faced by companies in risk management, thereby proposing targeted improvement measures. for instance, it can suggest that brands strengthen the construction of risk early warning and response mechanisms to improve their reaction speed and response capabilities in the event of a crisis. at the same time, it can also encourage brands to actively engage with consumers in the new media environment, enhancing brand transparency and affinity. therefore, this research plays a significant guiding role for enterprises to achieve robust and sustainable development in the new media environment. asian business research journal, 2024, 9: 64-71 71 © 2024 by the authors; licensee eastern centre of science and education, usa 6. conclusion and prospects 6.1. conclusion in the context of new media, the challenges of crisis management that companies face are increasingly intensifying. taking the florasis incident as a case study, this research delves into the strategies and response mechanisms of companies in crisis management. the florasis incident, as a microcosm of corporate crises, highlights the complexity and importance of brand crisis management in the new media environment. through a detailed analysis of the florasis incident, this study finds that the speed and strategic choices of the brand's response after a crisis occur play a crucial role in crisis resolution. on one hand, the brand needs to respond swiftly and accurately to consumer concerns, demonstrating transparency and a sense of responsibility. on the other hand, the brand also needs to actively take remedial measures to repair the damaged brand image and rebuild consumer trust. however, this study also notes that crisis response alone is not sufficient to fully address the issues. companies need to strengthen product quality control and internal management from the source, enhance the brand's core competitiveness, and fundamentally reduce the likelihood of crises occurring. at the same time, the brand needs to establish a long-term crisis management mechanism that includes crisis early warning, crisis response, and postcrisis evaluation, among other steps, to deal with potential crises that may arise in the future. 6.2. prospects looking forward, corporate crisis management in the new media environment will face more new challenges and opportunities. with the widespread use of social media and the increased engagement of consumers, the speed and impact of brand crises will further intensify. therefore, companies need to pay more attention to crisis management and enhance their ability and efficiency in crisis response. on one hand, brands need to continuously learn from and draw on the crisis management experiences of outstanding domestic and international brands, and form crisis management strategies with their own characteristics based on their actual situations. on the other hand, brands also need to strengthen cooperation with new media, leveraging its advantages to better communicate and interact with consumers, promptly understand and respond to consumer needs and concerns, and enhance the brand's reputation and influence. in addition, companies should also focus on innovation and research and development, continuously improving the quality and competitiveness of their products to meet the growing needs of consumers. at the same time, brands need to strengthen internal management, improve the quality and capabilities of employees, and lay a solid foundation for the long-term development of the brand. in summary, corporate crisis management in the new media environment is a complex and important issue. through in-depth 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(2018). the important role of brand crisis management. modern business, 2018(03): 15-16. https://doi.org/10.14013/j.cnki.scxdh.2018.03.008. https://www.iqyqb.com/ https://cdmd.cnki.com.cn/article/cdmd-10251-1017034485.htm https://cdmd.cnki.com.cn/article/cdmd-10271-1014241968.htm 8 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 3, 8-14, 2025 issn: 2576-6759 doi: 10.55220/25766759.298 © 2025 by the authors; licensee eastern centre of science and education, usa research on optimization strategies for cold chain logistics of agricultural products: a case study of h company shi he dong1 an-shin shia2  1,2business school, lingnan normal university, zhanjiang, guangdong, china. email: 2759209526@qq.com email: 18875991570@qq.com ( corresponding author) abstract this study aims to propose an optimized model for agricultural product cold chain logistics through a systematic analysis and innovative design. the goal is to enhance the efficiency and responsiveness of the entire supply chain. a questionnaire survey was conducted among employees of h company to analyze the main challenges faced by agricultural cold chain logistics, including imprecise temperature control, high logistics costs, insufficient informatization, and environmental sustainability issues. keywords: agricultural products; cold chain logistics; supply chain management. jel classification: l92; q13; q18. 1. introduction with the rapid development of china's economy, the quality of life has significantly improved, and people now demand higher food quality. agricultural products play an essential role in daily life, with their quality and safety directly affecting public health and safety. due to the characteristics of agricultural products, they are vulnerable to damage throughout production, storage, transportation, and sales, which may lead to deterioration or spoilage. therefore, establishing a robust cold chain logistics system for agricultural products in china is of vital importance. cold chain logistics refers to a specialized logistics model that maintains products under appropriate lowtemperature conditions throughout their entire production, processing, storage, transportation, sales, and consumption stages. this ensures product quality while minimizing losses. although research on cold chain logistics for agricultural products in china has made progress, there are still many challenges, such as inadequate infrastructure, low technological levels, lack of standardization, and difficulties in cost control. these issues severely restrict the improvement of cold chain logistics efficiency in china. globally, cold chain logistics for agricultural products is receiving increasing attention, especially in developed countries, where it has become a key component for ensuring food safety and improving logistics efficiency. for example, japan is globally recognized for its high-tech and mechanized cold chain logistics, characterized by lowcost logistics that have entered a mature stage. however, once japan’s cold chain logistics reaches a critical point, new logistics models are likely to emerge. japan’s cold chain logistics success is largely attributed to its advanced infrastructure. in 2014, japan had around 120,000 refrigerated vehicles, which increased to 150,000 by 2016, accounting for 2.65% of total freight vehicles, with a refrigerated transportation rate of over 90%, and product spoilage rates as low as 5% (zheng, 2017). 1.1. international trends in cold chain logistics technological advancements: developed countries continually innovate in cold chain logistics technologies, including advanced refrigeration equipment, temperature monitoring systems, and automated warehouse management systems, significantly improving the efficiency and safety of cold chain logistics. standardized processes: cold chain logistics systems in developed countries typically have well-established standards and regulations to ensure product quality and safety throughout the supply chain. environmental sustainability: as environmental concerns grow, china’s cold chain logistics industry is also exploring more eco-friendly solutions, such as using renewable energy and reducing greenhouse gas emissions. education and training: developed countries emphasize the training of cold chain logistics professionals through specialized education and training to enhance the skills and knowledge of workers. international cooperation: with globalization, international cooperation has become increasingly important in cold chain logistics. collaborations between multinational companies and international organizations help share best practices and improve the global cold chain logistics level. consumer demand: in developed countries, consumers’ increasing demand for fresh, high-quality agricultural products drives the development and improvement of cold chain logistics services. mailto:2759209526@qq.com mailto:18875991570@qq.com https://doi.org/10.55220/25766759.298 asian business research journal, 2025, 10(3): 8-14 9 © 2025 by the authors; licensee eastern centre of science and education, usa waste reduction: effective cold chain logistics management in developed countries significantly reduces losses during transportation and storage, conserving resources and minimizing waste. 1.2. cold chain logistics development in china in contrast to foreign countries, china's cold chain logistics began relatively late. enterprises focusing on cold chain logistics have not yet formed large-scale industries, resulting in a need to improve the overall level of cold chain logistics (zhao, 2021). currently, cold chain logistics in china is in the early stages of development, with the majority of logistics handled by self-operated logistics of production enterprises or distributors, accounting for about 80% of total logistics, while third-party logistics constitutes around 20%. however, with the increasing concentration of food resources in economically developed regions, the cold chain logistics system is gradually being established and operating more professionally (wang, 2016). in recent years, china’s cold chain logistics market has grown rapidly, expanding at an average annual rate of 17%. the total sales volume of the industry reached 339.1 billion rmb, a 17.5% increase from the previous year. it is expected that by 2025, the market size will increase to around 897 billion rmb (si, 2023). 1.3. current challenges in china’s agricultural cold chain logistics market imbalance: cold chain logistics facilities and companies are unevenly distributed across regions, with more facilities in the east and fewer in the west, leading to resource allocation imbalances that affect overall efficiency. high loss rates: the loss rate for fruits and vegetables in china is as high as 15%, compared to around 5% in developed countries, due to a lack of awareness regarding cold chain logistics. cultural and consumption habit differences: china's per capita consumption of frozen foods is only 10 kg annually, significantly lower than in japan (20 kg) or the us (60 kg), reflecting cultural and habitual differences in consumer demand for cold chain logistics (imedia, 2024). in summary, while developed countries have established mature cold chain logistics systems that are technologically advanced and well-managed, china’s cold chain logistics is still developing and facing significant challenges. to foster industry development, improvements are needed in policy support, technological innovation, infrastructure, and workforce training, alongside efforts to raise consumer awareness of cold chain logistics. 2. literature review 2.1. cold chain logistics cold chain logistics ensures that perishable products, such as fresh food, pharmaceuticals, and certain chemicals, maintain a controlled temperature throughout their production, storage, and distribution process. the development of this logistics model is essential for ensuring product safety and reducing spoilage during transit. cold chain logistics is characterized by its complexity, coordination requirements, and high operational costs, as temperature-controlled equipment such as refrigerated trucks and low-temperature storage facilities are needed. 2.2. agricultural cold chain logistics agricultural cold chain logistics is a critical part of the entire supply chain management, especially for perishable agricultural products. cold chain logistics helps to maintain product safety, reduce losses, and enhance product quality. as consumer demand for fresh, healthy, and safe food increases, efficient cold chain logistics is vital for expanding the sales scope of agricultural products and promoting agricultural industry upgrades. 2.3. components of agricultural cold chain logistics the main components of agricultural cold chain logistics include production, processing, transportation, storage, distribution, packaging, delivery, and consumption. each stage plays a crucial role in maintaining the freshness and safety of agricultural products, ensuring they reach consumers in optimal condition. 3. methodology 3.1. questionnaire survey this study uses a questionnaire survey to investigate the cold chain logistics of agricultural products at h company in guangdong province. the questionnaire covers five main areas: cold chain facilities and equipment, cold chain management, product handling, distribution efficiency, and customer service and feedback. the survey was conducted online, and a total of 154 valid responses were collected. 3.1.1. questionnaire design and compilation the questionnaire was designed based on existing research (zheng, 2017) and (pang, 2024) to assess h company's cold chain logistics. it was divided into seven sections, with 17 questions focusing on cold chain logistics processes at the company. 3.1.2. questionnaire distribution the survey was distributed online, and data was collected via an online platform. a total of 154 completed questionnaires were returned, with a 98% valid response rate after excluding incomplete or rushed submissions. this study aims to address the optimization of cold chain logistics in china by analyzing h company’s logistics system, identifying challenges, and proposing strategies to improve efficiency and reduce product losses, ultimately benefiting the agricultural logistics sector. asian business research journal, 2025, 10(3): 8-14 10 © 2025 by the authors; licensee eastern centre of science and education, usa 4. results 4.1. cold chain equipment status compared to conventional logistics that operates at ambient temperatures, cold chain logistics requires more specialized equipment and information systems, necessitating larger investments for infrastructure development. consequently, it represents a niche and sophisticated segment within the logistics industry. cold chain logistics is primarily employed for perishable goods such as fruits, vegetables, poultry, eggs, seafood, as well as frozen meats, frozen processed foods, chocolates, and ice cream. additionally, it finds application in the transport of chemical raw materials and pharmaceuticals. depending on the specific needs of the logistics sector, it is crucial to adjust temperatures precisely during transportation to meet customer requirements (qian et al., 2024). from table 1, it is evident that agricultural products like fruits and vegetables require maintenance of a relatively stable low temperature during transportation. the subsequent equipment includes refrigerated trucks, railway refrigerated containers, and shipping containers. most agricultural products are perishable and need to be kept fresh throughout the circulation and storage processes, thereby imposing high demands on logistics and storage practices. table 1. required cold chain temperature for different products. category subcategory temperature high-value products pharmaceuticals 2–6°c restaurant chains 0–5°c fast-moving consumer goods 0–15°c industrial and processed goods dairy products 2–5°c frozen foods, rice, noodles -18°c food ingredients poultry, seafood -18 to -20°c agricultural wholesale fruits, vegetables 0–5°c source: sun, 2022. given the vast geographical span of agricultural production areas and long crop production cycles, coupled with the dispersal of resources, centralized storage would inevitably increase costs. thus, enhancing the storage and extending the shelf life of fresh produce while reducing storage costs is a central issue (qi, 2012). as shown in table 2, survey results indicate that 83.12% of respondents prefer using air cargo refrigerated containers, followed by 46.1% who prefer railway refrigerated boxes, and 27.92% who rely on shipping containers. additionally, 52.6% believe refrigerated trucks are the primary mode of transportation. table 2. main equipment used during transportation. option (multiple choice) subtotal % refrigerated truck 81 52.6% container 43 27.92% railway refrigerated box 71 46.1% air-conditioned cargo hold 128 83.12% regarding cold chain storage facilities, table 3 illustrates the challenges within this area. in a sample of 154 valid surveys, 94.81% of respondents believed their company’s cold chain facilities were outdated. furthermore, 83.12% felt their facilities were insufficient in number, and 88.96% reported low staff expertise and management levels. additionally, 25.97% of respondents identified a lack of facility variety. table 3. issues with cold chain facilities. option (multiple choice) subtotal % few types of cold chain facilities 40 25.97% cold chain facilities 146 94.81% insufficient number of cold chain facilities 128 83.12% low level of operators and management 137 88.96% regarding cold chain interruptions due to equipment failure, as depicted in table 4, 76.62% of respondents reported experiencing at least seven instances of equipment failure leading to cold chain disruption in the past year, while 23.37% reported fewer disruptions (six or less). table 4. frequency of equipment failures in company. option subtotal % over 10 times 74 48.05% 7-9 times 44 28.57% 4-6 times 26 16.88% below 4 times 10 6.49% in terms of maintenance frequency, as shown in table 5, 72.73% of respondents stated that their company conducts maintenance on cold chain equipment once a month on average. asian business research journal, 2025, 10(3): 8-14 11 © 2025 by the authors; licensee eastern centre of science and education, usa table 5. frequency of cold chain equipment maintenance. option subtotal % 0-15 days 60 38.96% 15-30 days 52 33.77% 30-60 days 30 19.48% more than 60 days 12 7.79% 4.2. cold chain management issues as depicted in table 6, 64.94% of respondents acknowledged temperature control problems in the post-harvest handling stages, while 28.57% observed temperature control issues during delivery. post-harvest and storage phases are critical for maintaining optimal conditions. utilizing advanced cold chain technology, such as automated temperature control and rapid cooling systems, is crucial for minimizing these problems. furthermore, professional cold chain transportation equipment, like refrigerated trucks and containers, should be prioritized to ensure product safety during transport (wang, 2016). table 6. stages prone to temperature control issues. option (multiple choice) subtotal % post-harvest treatment memory 100 64.94% storage 92 59.74% transport 44 28.57% dispatching 42 27.27% regarding satisfaction with real-time temperature monitoring, as shown in table 7, 29.87% of respondents expressed dissatisfaction or indifference, while 70.13% were satisfied or very satisfied. table 7. satisfaction with real-time temperature monitoring. option subtotal % very satisfied 59 38.31% satisfied 49 31.82% generally 32 20.78% dissatisfied 11 7.14% very dissatisfied 3 1.95% in terms of operational issues within the cold chain process, table 8 reveals that the most common issue, cited by 34.42% of respondents, was low operational competency among staff, followed by 7.14% who believed transportation capacity was insufficient. table 8. common problems in cold chain process. option subtotal % the cold-chain equipment is damaged during the work process 49 31.82% the operation level of the staff in the cold chain link is not high 53 34.42% the efficiency of cold-chain logistics is not high 27 17.53% the transportation capacity in the cold chain logistics is insufficient 11 7.14% poor temperature control in the transportation and storage links 14 9.09% 4.3. product handling in the logistics process the refrigeration technology used in agricultural cold chain logistics is critical for ensuring product freshness and safety throughout the supply chain. table 9 shows that h company uses multiple preservation technologies, with the most frequently used being temperature monitoring, adopted by 77.92% of respondents. this is followed by automation and information technology (56.49%) and eco-friendly refrigeration technology (55.19%). precooling and rapid freezing techniques were used by 49.35% and 35.71% of respondents, respectively. table 9. preservation technologies used in cold chain logistics. option (multiple choice) subtotal % pre-cooling technology 76 49.35% frozen technology 55 35.71% large-scale packaging technology 78 50.65% temperature monitoring technology 120 77.92% environmental protection refrigeration technology 85 55.19% information technology and automation technology 87 56.49% as shown in table 10, 42.21% of respondents believed the overall product quality remained excellent from market to consumer, while 26.62% felt that the quality retention was poor to average. according to he deming, assessing the economic benefits of cold chain logistics involves analysis of profitability, risk management, and sensitivity analysis (he, 2019). failure to optimize product quality retention could hinder the achievement of desired economic outcomes. table 10. product quality maintenance during transport. option subtotal % very good 65 42.21% good 48 31.17% generally 27 17.53% asian business research journal, 2025, 10(3): 8-14 12 © 2025 by the authors; licensee eastern centre of science and education, usa table 10. product quality maintenance during transport(continuous). option subtotal % bad 9 5.84% very bad 5 3.25% 4.4. distribution efficiency table 11 reveals that 77.93% of respondents believed that the time from order receipt to delivery was within three days, while only 7.79% reported it taking more than five days. table 11. product distribution efficiency. option subtotal % within 1 day 68 44.16% 2-3 days 52 33.77% 4-5 days 22 14.29% more than 5 days 12 7.79% in the survey on distribution process issues, as shown in table 12, all seven listed problems were identified by respondents, with 86.36% citing insufficient staff training, followed by 68.18% noting non-optimized delivery routes. other issues included low packaging and loading efficiency (57.14%) and outdated equipment (25.97%). table 12. issues in distribution process. option (multiple choice) subtotal % improper inventory management 33 21.43% distribution route is not optimized 105 68.18% insufficient personnel training 133 86.36% low packaging and loading efficiency 88 57.14% equipment and technology are backward 40 25.97% order processing is inefficient 98 63.64% regulatory and compliance issues 67 43.51% regarding the logistics information system, table 13 indicates that 14.28% were dissatisfied, while 22.73% were indifferent. a majority, 50.6%, expressed satisfaction or strong satisfaction with the system. table 13. satisfaction with logistics information system. option subtotal % very satisfied 41 26.62% satisfied 56 36.36% generally 35 22.73% dissatisfied 13 8.44% very dissatisfied 9 5.84% 4.5. customer service and feedback as seen in table 14, 96.75% of respondents noted frequent complaints about product damage or spoilage, and 87.01% cited issues with service quality. all six listed issues were selected by respondents as common complaints. table 14. common customer complaints. option (multiple choice) subtotal % damage or deterioration of the goods 149 96.75% delayed service problem 53 34.42% distribution error problem 90 58.44% quality of service 134 87.01% cost problem 110 71.43% insurance and indemnity issues 84 54.55% in handling negative customer feedback, as illustrated in table 15, 94.81% of respondents believed that their company conducts thorough investigations into customer issues, and 70.13% indicated learning from negative feedback. other measures included explaining improvements to customers (52.6%) and offering solutions (20.78%). table 15. how h company handles negative customer feedback. option (multiple choice) subtotal % timely response 40 25.97% problem survey 146 94.81% provide solutions 32 20.78% improvement and prevention 108 70.13% communication and education 81 52.6% record and analysis 52 33.77% table 16 shows the actions h company employees believe the company should take to improve customer satisfaction, with 87.66% suggesting optimizing delivery processes, followed by 81.17% recommending improvements in packaging and loading. asian business research journal, 2025, 10(3): 8-14 13 © 2025 by the authors; licensee eastern centre of science and education, usa table 16. measures to improve customer satisfaction. option (multiple choice) subtotal % optimize the distribution process 135 87.66% strengthen personnel training 58 37.66% improve the equipment and technology 69 44.81% improved packaging and loading methods 125 81.17% implement quality control measures 102 66.23% establish a customer feedback mechanism 73 47.4% 5. discussion (optimization and innovation strategies) 5.1. cold chain equipment optimization based on the issues identified in h company's cold chain equipment (section 4.1), it is recommended that the company invest in advanced cold chain infrastructure to address outdated equipment and occasional disruptions. in particular, upgrading equipment to improve capacity and variety is essential. additionally, it is critical to enhance staff training and development to meet the professional demands of cold chain logistics. 5.2. cold chain management optimization to address temperature control issues in logistics (section 4.2), the implementation of precision temperature control systems using advanced variable frequency technologies is recommended. upgrading equipment like refrigerated trucks and containers, alongside improving storage facilities and operational standards, will enhance the cold chain process. furthermore, adjusting environmental factors like oxygen and carbon dioxide ratios can extend product shelf life. 5.3. product handling optimization given the challenges in maintaining product quality (section 4.3), optimizing transportation routes, developing contingency plans for emergencies, and adopting a flexible logistics network are crucial strategies. furthermore, promoting green logistics practices and robust risk management will ensure product safety and sustainability. 5.4. distribution efficiency optimization to improve distribution (section 4.4), optimizing delivery routes, increasing load efficiency, and integrating advanced information management systems like iot and ai will streamline logistics processes. enhancing collaboration with suppliers and adopting flexible delivery models will further improve service quality and efficiency. 5.5. customer feedback optimization addressing frequent issues like product damage and long delivery times (section 4.5) requires optimizing the supply chain layout, updating transport equipment, and focusing on cost reductions. establishing multiple feedback channels, fast response systems, and continuous improvement based on customer input will enhance customer satisfaction. 5.6. practical significance the development of cold chain logistics plays a crucial role in advancing rural economies and meeting the rising demand for high-quality, environmentally sustainable agricultural products. optimizing cold chain logistics not only boosts consumer satisfaction but also drives broader economic development and enhances the logistics industry's overall service levels and efficiency. 6. conclusion 6.1. research findings this study identified key issues and proposed optimization strategies for h company's cold chain logistics. key recommendations include equipment and technology upgrades, cost control, regulatory compliance, green logistics, and improving market responsiveness. 6.2. future outlook looking forward, with ongoing technological advancements and expanding market demand, h company has significant growth opportunities in cold chain logistics. continued investment and innovation will enable the company to achieve breakthroughs in efficiency, cost management, and service quality, positioning it as a leader in the industry. references zheng, t. 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(2007). main practices and experiences in the development of cold chain logistics abroad. logistics technology and applications, 12(2), 3. https://doi.org/10.3969/j.issn.1007-1059.2007.02.019 51 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 5, 51-63, 2025 issn: 2576-6759 doi: 10.55220/25766759.435 © 2025 by the authors; licensee eastern centre of science and education, usa financial strategies and key factors contributing to the success or failure of startups – a study in indian perspective anil kumar sharma1 jogendra kumar nayak2 1,2department of management studies, indian institute of technology roorkee, uttarakhand, 247667, india. email: anilsharma@ms.iitr.ac.in email: jogendra.nayak@ms.iitr.ac.in ( corresponding author) abstract startups play a pivotal role in the development of entrepreneurship culture, product development, innovation, and employment generation. these enterprises complement overall economic transformation and contribute to developing and strengthening the entrepreneurial ecosystem in any economy. the twenty-first century is the era of startups, where young entrepreneurs are setting up innovative ventures to generate quality goods and services and become employment generators rather than employment seekers. though such ventures are created to grow and become unicorns, many times they face numerous challenges to pick up and grow at the desired pace. one major challenge many startups face is the generation of the required amount of investment and tapping into innovative and sustainable financial sources. generally, the financial sources for such ventures remain as bootstrapping, family and friends, angel funds, private equity, accelerator funding, loans & credits, venture capital funds, and government grants. tapping into any one or some of these sources sometimes becomes a challenge, and these budding ventures fail to sustain and grow at the expected momentum. similarly, skill development programs are other options that help to train the masses and make them employable in their home countries or sometimes abroad. the east asian miracle has been a glaring example of valuable skill development programs launched by the east asian countries, where the youth of these economies could find easy employment in their home countries and abroad as well. such initiatives are also sometimes plagued by the lack of the required amount of funds and fail to deliver the expected results. the present study is about the financing of startups and skill development programs launched by india in 2015 and 2016. the study focuses on identifying innovative financial sources for the startups and skill development programs in india and formulating strategies for tapping into innovative financial sources. the study is based on primary and secondary data, and the collected data has been analyzed using statistical tools like correlation, regression, and chi-square tests. keywords: start-up ecosystem, financial resources, financial strategies, success factors, failure factors, entrepreneurship. 1. introduction the start-up landscape is a dynamic and ever-evolving ecosystem, brimming with both immense potential and inherent risk. while countless ventures emerge with innovative ideas and the promise of uninterrupted growth, a significant portion ultimately fall short of achieving long-term success. understanding the financial intricacies and factors that contribute to the rise and fall of start-ups is crucial for aspiring entrepreneurs, investors and policymakers. despite the abundance of promising ideas, statistics indicate a sobering reality that a high percentage of start-ups fail within their first few years. studies on start-up failure rates suggest that failure rates can range from 20% to 90% depending on the industry and definition of success used. this highlights the need for a deeper understanding of the forces at play, allowing stakeholders to navigate the challenges and increase the odds of a successful venture. start-ups are the driving force of innovation and entrepreneurship in any economy, offering a dynamic platform for the growth and success of new ideas, technology and business models (sullivan, 2023). they frequently act as catalysts for social change, employment creation and upheaval of existing sectors. their significance is primarily derived from their capacity to question established norms and propel progress across multiple industries. a notable element of start-ups is their ability to promote and encourage innovation. india is the fourth largest economy in the global start-ups landscape after usa, china and uk having a large number of startups fostering economic growth and employment. all over the world, these ventures are facing financial hardships and ups and downs before attaining the growth stage. success or failure of the start-ups to a larger extent depends upon the financial strategies they follow and managing the success and failure factors effectively. this research delves into this critical area through an empirical evaluation and analysis, aiming to identify the financial aspects and key elements that influence the success and failure of the start-ups globally and in india. mailto:anilsharma@ms.iitr.ac.in mailto:jogendra.nayak@ms.iitr.ac.in https://doi.org/10.55220/25766759.435 asian business research journal, 2025, 10(5): 51-63 52 © 2025 by the authors; licensee eastern centre of science and education, usa 2. literature review gartner and carter-divis (1996) conducted a study in which they investigated the significance of market timing in the success of high-technology companies. they emphasized the essential role that market timing plays in determining the resulting outcomes of these ventures. an investigation of the potential of entrepreneurship as a field of study was conducted by shane and venkataraman (2001), who emphasized the significance of this field in terms of understanding the dynamics involved in launching a new organisation. within the scope of their research, feldman and francis (2002) explored the impact that human capital has on the performance of start-ups. more specifically, they focused on the significance of talent and skills in determining the level of success that a company achieves. wadhwa and aggarwal (2009) conducted a study in which they explicitly investigated entrepreneurial alertness and its link with previous work experience and education in terms of detecting possibilities. a study was carried out by reynolds and curtin (2004) to investigate the influence that market timing has on the performance of high-technology start-ups. the findings of this study offer insights into the implications that market timing has for achieving success. an investigation on the nature of the relationship between the organizational structure of start-ups and their level of success was carried out by cooper and dunkelberg (1988). the findings of their study provide 5 important insights into the structural factors that have an effect on the outcomes of these firms. to provide a perspective that focuses on the process of obtaining success in beginning a firm, mcmullen and shepherd (2006) investigated the activities done by entrepreneurs and the development of possibilities. they did this by examining the actions that those entrepreneurs took. a study on entrepreneurial awareness and opportunity recognition was carried out by brush, greene, and hart (2001). the study focused on the significance of prior knowledge in identifying opportunities. an exhaustive study of the dynamics of start-up success and failure was carried out by stam and wennberg (2009). they did this by consolidating significant findings from earlier studies. according to zott and amit (2009), the process of value generation in e-business was investigated, with a particular focus on the impact that complementarities and network effects have on the success of new initiatives. chandler and hanks (2001) conducted a study to investigate the impact that market timing has on the success of entrepreneurs. the findings of this study provide valuable insights into the ways in which market timing affects the outcomes of ventures. in his study, bhide (2011) investigated the dynamic economy and the effects it has on creativity and prosperity in a society that is interconnected. baum (2013) conducted research on the significance of networks in the process of establishing and advancing start-ups. they placed a strong emphasis on the significant role that social relationships play in this process. a process theory of entrepreneurship was published by shepherd and williams (2015). this theory emphasizes the role of entrepreneurial action in the process of opportunity development. bhave (2014) conducted a research on the influence of social networks on the performance of startups, with a particular focus on the significance of interpersonal ties. a research project was carried out by kollmann and kuckertz (2006) with the purpose of investigating the influence that business model innovation has on the success of start-ups, with a specific emphasis on the strategic significance of this factor. a study conducted by nambisan and baron (2021) investigated the role that digital entrepreneurship plays in the creation of possibilities, with a particular focus on the revolutionary potential of digital technology. nielsen and nielsen (2013) conducted research to determine the impact that an entrepreneurial approach has on the success of new businesses, with a specific emphasis on the significance of a strategic orientation. zaveri (2023) offered empirical evidence on the impact of market timing on the success of start-ups in the indian economy. this evidence provided useful insights into the disparities that exist between regions. gibson et. al (2011) conducted a systematic review to investigate the impact that digitalization has on the success of start-ups. they summarized the most significant findings from the existing body of research after conducting their investigation. the researchers giones and brem, a. (2017) carried out a comprehensive evaluation with the objective of analysing the influence of entrepreneurial excitement on the achievements of start-ups. the emphasis of their research was placed on the strategic and motivational repercussions that this occurrence presents. zhang and liu (2022) conducted research to study the role of business model adaptation in the success of start-ups. they focused on the ability of business models to transform in response to shifting circumstances. within the scope of their research, wadhwa and kotha (2006) investigated the influence that digital transformation has on the achievement of success by start-ups. they emphasized the critical importance of embracing digital technology as a mandatory strategic requirement. a study was carried out by zhang and yang (2023) to investigate the ways in which financial restrictions influence the success of start-ups. the findings of this study provide useful insights into the challenges that are brought about by limited financial resources. hao and sprenger (2001) carried out research to investigate the significance of intellectual property rights in the success of start-ups. more specifically, they focused on the role that these rights play in protecting and optimizing inventive assets. 2.1. rationale and scope of the study the literature review narrated in the preceding part presents the diverse factors that lead towards the success of the start-ups without giving a concrete view or direction about the factors that lead towards success or failure of the start-ups and their financial strategies. different studies have offered differed views and aspects about making a start-up successful. finances, business models, markets, technology, digital transformation, intellectual property and many more have been described as the success and failure factors. the literature also testifies that no such study has been conducted in the past that gives a snapshot of the factors that lead towards the success or failure of the budding ventures. financial strategies are further more critical aspect of the budding ventures and no study in the past has highlighted the sources and process of financing start-ups very lucidly. an unsuitable capital structure may prove to be fatal for the health and growth of any new venture. many entrepreneurs commit serious blunder by raising more funds through debt and put themselves and the venture in distress. this state of affairs gives us a reason to conduct the present study where we have attempted to surface the relevant factors and aspects which need to be taken care of if any new venture has to achieve the success and grow on the path of progress. the study is based upon the primary and secondary data collected from diverse sources and analysed using suitable tools. the primary data has been collected from 250 startups operating in india using a questionnaire. the questionnaire was circulated through a google form to the startups operating in india and finally 250 ventures have responded to the asian business research journal, 2025, 10(5): 51-63 53 © 2025 by the authors; licensee eastern centre of science and education, usa document. the secondary data has been collected from diverse published sources like start-up india website, ministry of commerce, goi publications and some published research papers. the time period of the secondary data spans over five years, i.e., between 2019-2023. 2.2. objectives of the study 2.2.1. the study has been conducted with the following objectives 1. to study and identify the innovative and cost-effective sources of funds for start-ups globally and in india. 2. to compare the sources of finance for such initiatives available globally and suggest the best possible options for india; 3. to identify the factors causing success or failure of the start-ups. 3. research methods and methodology as stated above, the study has been based upon the primary and secondary data collected from diverse sources. to collect the primary data, a survey was designed to elicit information on the financial challenges and success and failure factors faced by the start-ups and the accessibility of various financial sources, including traditional and innovative funding options. thereafter, respondents were selected through random sampling process to ensure relevant expertise and engagement with the start-up financing. keeping in view the objectives of the study, we collected the primary data through a structured questionnaire distributed via google forms to a sample of 250 respondents, including entrepreneurs (start-ups), financial experts and investors engaged in start-up ecosystem in india. to supplement the primary data, secondary data was collected from the credible platforms such as the start-up india and skill india portals, government publications, reports from financial institutions like the reserve bank of india and global databases including crunchbase, dealroom and world bank reports. for the data analysis, various statistical tools and techniques were employed. descriptive statistics were calculated to summarize the pace of start-up growth and the sources of finance being utilised by the start-ups. for further analysis statistical tools namely correlation, regression and chi-square test have been used. 4. analysis and discussion as stated above, the present study is based upon both primary and secondary data which has led to understanding the start-ups landscape and draw meaningful inferences about these enterprises in general and about india in particular. the following part presents the results of secondary data analysis followed by primary data outcome. 4.1. funding needs of the start-ups start-ups need funding for multiple requirements like prototype creation, product development, team hiring, office space and admin expenses, raw material and equipment, working capital, marketing and sales, legal and consulting services, licensing and certifications. as stated above, largely there are two broad sources of funding the start-ups, debt and equity. besides these sources, financial grants from government other agencies also play a pivotal role. table 1 presents the stages of start-ups and sources of funding. level of availability of funds from diverse sources decides the growth of these venture in any economy. table 1. stages of start-ups and sources of funding. ideation (pre-seed stage) validation early traction scaling exit options ▪ bootstrapping/selffinancing ▪ family & friends ▪ business plan/pitching events ▪ incubators ▪ government loan schemes ▪ angle investor ▪ crowd funding ▪ venture capital funds ▪ banking/nbfcs ▪ venture debt funds ▪ venture capital funds ▪ private equity/ investment firms ▪ mergers & acquisitions ▪ initial public offering (ipo) ▪ selling shares ▪ buy back figure 1. the top 5 countries with the greatest number of start-ups in 2023. 74,623 34,799 16,801 8,687 2,620 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 usa india uk canada aus n u m b er o f st a rt u p s . top 5 countries . asian business research journal, 2025, 10(5): 51-63 54 © 2025 by the authors; licensee eastern centre of science and education, usa figure 1 above, presents a snapshot of the number of start-ups in five major economies of the world including india in 2023. the glaring fact is that india ranks second in the start-up landscape of the world. the growth of start-ups in any economy largely depends upon success and failure factors. 4.2. the paradox of start-up success and failure the paradox of start-up success and failure epitomises the volatile and uncertain nature of entrepreneurial endeavours. start-ups embody the pinnacle of creativity and the possibility for revolutionary achievements (nemetz, 2020). however, they also encounter substantial dangers and frequently experience failure. this paradox emphasises the intricate interaction of several elements that influence the outcome of companies and emphasises the inherent difficulties of managing the entrepreneurial environment (nelson, 2024). figures 2 and 3 present the reason and key factors why start-ups succeed. figure 2. top reasons why start-ups succeed. figure 3. key factors influencing start-up success. the dichotomy of achieving success or failure in start-ups also mirrors the wider social perspectives on risktaking and failure. although achievements are praised and given incentives, failures are frequently vilified and perceived as indications of incompetence or insufficiency (faleye, 2023) nevertheless, this viewpoint neglects to recognize the inherent unpredictability and trial-and-error process that is inherent in entrepreneurship. accepting failure as an inherent aspect of the entrepreneurial process helps cultivate an environment that promotes creativity, adaptability, and knowledge acquisition. figures 4 and 5 below present start-ups failure by time and key contributing to the failure of startups. figure 4. start-up failure rate by time. funding business model culture of transparency and openness team/execution timing focus on customers need go-tomarket stategy long term vission and mission 0 10 20 30 40 50 60 70 80 1 year 2 years 5 years 10years % o f s ta rt u p s f a il ed . years in business . asian business research journal, 2025, 10(5): 51-63 55 © 2025 by the authors; licensee eastern centre of science and education, usa (reasons why do 90% start-ups fail?) figure 5. key factors contributing to start-up failure. 4.3. discussion based on primary data analysis after having discussed the start-ups’ landscape, we discuss the primary data outcome in the followings part. as stated above we have conducted a survey and collected primary data from 250 start-ups from india on the various aspects starting with the general background of the start-ups, product/service profile, markets targeted and financial strategies of these enterprises. the discussion starts with the descriptive analysis followed by correlation, regression and chi-square analysis and the outcome and inferences drawn on the basis of the entire analysis. 4.3.1. region of start-ups location in india figure 6. region-wise spread of start-ups in india. as shown above in the figure 6, the data on the regional distribution of start-ups provides valuable insights into the geographic landscape of entrepreneurial activities. a significant 32% of the surveyed start-ups (80 respondents) are based in the northern region, indicating that this area is a major hub for entrepreneurial ventures. the north's prominence may be attributed to various factors, including access to larger markets, better infrastructure, and a concentration of educational and financial resources that facilitate start-up growth. following the north, the central region accounts for 25.6% (64 respondents), positioning it as another important area for start-ups activity. this suggests that the central region offers favourable conditions, such as supportive local policies or a growing ecosystem for new businesses. the south region, with 22% (55 respondents), also demonstrates a significant presence of start-ups. this region is often known for its technological innovation and robust educational institutions, which can contribute to a vibrant start-up ecosystem. in contrast, the west and east regions have lower representations, with 14.8% (37 respondents) and 5.6% (14 respondents), respectively. the west may still offer opportunities for growth, but it seems to lag behind in comparison to the north and central regions. meanwhile, the east's relatively low percentage may reflect challenges such as infrastructure issues or fewer resources available for entrepreneurs. 2% 2% 6% 16% 18% 22% 34% 38% 0 5 10 15 20 25 30 35 40 legal issues operational problems tech issues finance problem team problem marketing problems lack of product market fit failed to raise new capital percentage of startups . s ta r u p s f a il u re r ea so n . 25.6 5.6 14.8 32 22 0 5 10 15 20 25 30 35 central east west north south p er ce n ta g e region of startup asian business research journal, 2025, 10(5): 51-63 56 © 2025 by the authors; licensee eastern centre of science and education, usa 4.3.2. legal form of business figure 7. legal form of business. as presented in figure 7, the data regarding the legal forms of businesses among the surveyed start-ups illustrates a clear preference for certain structures, reflecting the entrepreneurs' strategic choices based on their operational needs and objectives. notably, 58.4% of the respondents (146 start-ups) identified as private limited companies. in contrast, 20.4% (51 respondents) operate as sole proprietorships, indicating a significant number of individuals pursuing their ventures independently. 14% (35 respondents) identified as partnership firms, which typically allow for shared responsibilities and resources among partners. only 4.4% (11 respondents) registered as public limited companies, which generally requires more regulatory compliance and is often pursued by larger entities looking to raise capital from the public. finally, 2.8% (7 respondents) categorized their business as others, which could include alternative legal structures such as cooperatives or non-profit organizations. overall, the data reflects a predominance of private limited companies among start-ups, highlighting a trend toward liability protection and structured growth. 4.4. market segment targeted by the start-ups figure 8. market segments. crucial insights into the start-up business strategies are uncovered by data on the market segments targeted by the surveyed start-ups. as shown in figure 8, with a heavy leaning toward selling directly to individual consumers, 50.4% of the respondents (126 start-ups) concentrate on the b2c (business-to-consumer) segment. alternatively, out of all the start-ups that were surveyed, 40.4% (or 101 people) are focused on the b2b (businessto-business) market. opportunities for larger transaction volumes and long-term contracts are common in this segment, which may indicate that these start-ups are striving for stability and consistent revenue streams. remaining 9.2% (23 respondents), listed their market as any other category. 20.4 14 4.4 58.4 2.8 0 10 20 30 40 50 60 70 sole propreitorship partnership firm public ltd. company private ltd. company others p er ce n ta g e scale legal form of business asian business research journal, 2025, 10(5): 51-63 57 © 2025 by the authors; licensee eastern centre of science and education, usa 4.5. stage of the venture figure 9. stage of the venture. the data regarding the stage of venture for the 250 surveyed start-ups as shown in figure 9 reveals significant insights into their development trajectories. among the respondents, the growth stage is the most prevalent, with 167 participants (66.8%) identifying their ventures as being in this phase, followed by early and survival stages indicating that these ventures are trying hard to grow and sustain for long. 4.6. sector of operations figure10. sector of operations. the data presented in figure 10 offers insights into the sectors in which start-ups operate, highlighting the diversity and focus areas of entrepreneurial ventures among 250 respondents. the sectors evaluated include software, hardware, healthcare, education, agriculture, financial services, and other categories, providing a comprehensive overview of the start-ups landscape. software is the biggest sector in which these ventures operate more. 4.7. innovativeness figure 11. enterprise innovativeness. the data examines the domains of innovation in start-ups, as reported by 250 participants. as shown in figure 11, the assessed categories encompass product or service innovation, process innovation, innovative management, and innovative sales strategy. the findings provide significant insights into the primary focus of innovation among these enterprises, emphasizing the areas where entrepreneurs are striving to differentiate themselves and enhance value. 22.4 7.2 8.8 9.6 8.8 13.6 29.6 0 5 10 15 20 25 30 35 software hardware healthcare education agriculture financial services any other p er ce n ta g e scale sector of start-ups operation 71.2 10 6.4 12.4 0 20 40 60 80 product or service innovation process innovation innovative management innovative selling strategy p er ce n ta g e scale the following category in which the start-ups/enterprise is innovative? asian business research journal, 2025, 10(5): 51-63 58 © 2025 by the authors; licensee eastern centre of science and education, usa 4.8. sources of funding start-up figure 12. sources of funding. as shown in figure 12, the data offers a breakdown of the various sources of funding that start-ups utilize, based on responses from 547 participants. the distribution covers a wide range of financing options, such as selffunding or bootstrapping, angel funds, government grants, family and friends, private equity, loans and credits, venture capital funds, and other miscellaneous sources. the percentages represent the proportion of start-ups using each funding method, providing insight into the most and least common sources of financial support in the start-ups ecosystem. self, family funding and venture capital are the leading sources of funds for these ventures in india. 4.9. role of government in empowering start-ups table 2. government empowering start-ups. descriptive statistics opportunities n min. max. mean s.d. skewness kurtosis funding schemes and tax incentives from government for start-ups 250 1 5 2.96 1.102 -.293 -.544 relaxation in various laws related to licensing and clearances 250 1 5 3.12 1.125 -.178 -.733 government efforts in building a strong and sound business environment and attract fdis 250 1 5 3.26 1.035 -.547 -.303 exposure of start-ups through events and summits conducted across the country 250 1 5 3.21 1.172 -.450 -.669 the data provided examines the role of the government in empowering start-ups through four key factors namely funding schemes and tax incentives, relaxation of laws related to licensing and clearances, government efforts in creating a strong business environment and attracting foreign direct investments (fdis), and exposure of start-ups through events and summits. as shown in table 2, the responses from 250 participants are measured on a 5-point likert scale, ranging from 1 (strongly disagree) to 5 (strongly agree), with mean scores and other statistical descriptors offering insight into how these factors are perceived. the first factor, funding schemes and tax incentives from the government for start-ups, has a mean score of 2.96. this score suggests that, on average, respondents hold a neutral or slightly negative view of the government’s efforts in this area. the second factor, relaxation in various laws related to licensing and clearances, has a mean score of 3.12, indicating a slight tilt toward agreement, though the overall sentiment remains fairly neutral. government efforts in building a strong business environment and attracting fdis have a mean score of 3.26, making it the most positively viewed factor in the dataset. lastly, the exposure of start-ups through events and summits conducted across the country has a mean score of 3.21, reflecting a slightly positive perception of the government’s role in this area. in summary, the data reflects a generally neutral to slightly positive perception of the government’s role in empowering start-ups, with the most favourably viewed aspect being its efforts to create a strong business environment and attract fdis. overall, opinions are fairly dispersing across all four factors, indicating diverse perspectives on the effectiveness of government initiatives in supporting start-ups. 4.10. problems faced in raising the funds table 3. problems faced in raising the funds. descriptive statistics particulars n min. max. mean s.d. variance skewness kurtosis lack of awareness about financial sources 250 1 5 3.08 1.250 1.563 -.222 -.911 lack of collateral security 250 1 5 3.34 1.162 1.350 -.366 -.713 rigid terms in the repayment schedule 250 1 5 3.36 1.093 1.195 -.474 -.436 strict eligibility criteria for getting a loan 250 1 5 3.37 1.209 1.462 -.463 -.752 17.00 15.36 6.58 17.00 13.35 12.07 17.73 0.91 0.00 5.00 10.00 15.00 20.00 p e rc en ta ge sources indicate your sources of funding start-ups asian business research journal, 2025, 10(5): 51-63 59 © 2025 by the authors; licensee eastern centre of science and education, usa the data presented in table 3, provides a statistical overview of the problems faced in raising funds, as measured by responses to a survey of 250 participants. four key issues were evaluated: lack of awareness about financial sources, lack of collateral security, rigid repayment terms, and strict eligibility criteria for loans. each problem was rated on a likert scale from 1 to 5, where 1 likely represents the strongly disagree and 5 represents the strongly agree. starting with lack of awareness about financial sources, the mean score is 3.08, indicating a moderate level of concern among respondents. the second issue, lack of collateral security, received a mean score of 3.34, indicating a slightly higher level of concern compared to the first issue. for rigid terms in the repayment schedule, the mean score is 3.36, close to the previous issue, showing that it is also a significant concern for the respondents. the final issue, strict eligibility criteria for getting a loan, has the highest mean score at 3.37, indicating that it is seen as the most significant problem among the four issues. overall, all four issues show a moderate level of concern, with respondents slightly more inclined to rate the problems on the higher end of the scale, as indicated by the negative skewness across the variables. this data highlights that while these issues are all seen as challenges in raising funds, none stands out as drastically more problematic than the others, although strict eligibility criteria and repayment terms are slightly more concerning. 4.11. further analysis in the subsequent part we have performed deeper analysis using correlation, regression and chi-square analysis for better understanding of the context of the present research. these are many variables on which these tools have been applied and interesting results observed but for the sake of managing length of the paper we are presenting most relevant part of analysis in this paper. the analysis on the most relevant variables has presented in the following part. 4.12. correlation analysis we have tried to check the correlation between following two important variables. • total revenue generated by your start-up in the last 3 years? • awareness of entrepreneurs on incentives and schemes by the government these questions were asked in the questionnaire to know about revenue generated by these ventures and government incentives. this relationship may help to understand whether government schemes have any impact on the revenue generation by these ventures or not? table 4. correlation between revenue generation by the start-ups and government incentives. correlations statement 14 statement 24 statement 14 pearson correlation 1 0.046 sig. (2-tailed) 0.472 n 250 250 statement 24 pearson correlation 0.046 1 sig. (2-tailed) 0.472 n 250 250 the data provided presents the correlation between two variables, statement 14 in the questionnaire, which measures the total revenue generated by start-ups in the last three years, and statement 24, which assesses entrepreneurs' awareness of government incentives and schemes. the table 4 includes pearson correlation coefficients, significance levels (p-values), and sample sizes (n = 250 for both statements). the pearson correlation coefficient between statement 14 (revenue) and statement 24 (awareness of government incentives) is 0.046. in this case, the coefficient of 0.046 indicates a very weak positive correlation between the revenue generated by start-ups and the entrepreneurs' awareness of government schemes. essentially, this weak correlation suggests that higher awareness of government incentives has a minimal relationship with the revenue performance of start-ups over the last three years. the p-value associated with this correlation is 0.472, which is far above the conventional threshold of 0.05 used to determine statistical significance. the p-value of 0.472 suggests that the correlation between revenue and awareness of government schemes is not statistically significant. the data implies that entrepreneurs' awareness of government incentives and schemes does not have a significant impact on their revenue generation. this could suggest that simply being aware of government programs is not sufficient to boost the financial performance of start-ups. entrepreneurs may need more than just awareness—they likely require deeper engagement with government programs, better utilization of available incentives, or other factors like strong business models, market conditions, and innovative strategies to improve their revenue streams. 5. regression analysis 5.1. regression analysis has been performed on the important variables as follows • problems faced in raising the funds • role of government in empowering start-ups. table 5. regression analysis. variables entered/removeda model variables entered variables removed method 1 s27b . enter note: a. dependent variable: s25 b. all requested variables entered. asian business research journal, 2025, 10(5): 51-63 60 © 2025 by the authors; licensee eastern centre of science and education, usa table 6. model summary. model summary model r r square adjusted r square std. error of the estimate 1 0.580a 0.337 0.334 0.819 note: a. predictors: (constant), s27. table 7. anova. anovaa model sum of squares df mean square f sig. 1 regression 84.497 1 84.497 125.822 .000b residual 166.547 248 .672 total 251.044 249 a. dependent variable: s25 b. predictors: (constant), s27 table 8. coefficients. coefficientsa model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 1.345 0.179 7.513 0.000 s27 0.563 0.050 0.580 11.217 0.000 note: a. dependent variable: s25. the data examines the relationship between two variables, "problems faced in raising funds" (statement 27 in the questionnaire) and the "role of government in empowering start-ups" (statement 25 in the questionnaire). a regression analysis was conducted to determine whether difficulties in securing funding significantly impact perceptions of government support in empowering start-ups. the model as given in tables 5-8 reveals a correlation coefficient (r) of .580, indicating a moderate positive relationship between the variables. an r square value of .337 suggests that approximately 33.7% of the variance in perceptions of government’s role in empowering start-ups can be explained by the difficulties faced in raising funds. this is a substantial portion, implying that challenges in fundraising may strongly influence how start-up founders view government support. the anova results show a highly significant f-value of 125.822 with a p-value of .000. this indicates that the model is statistically significant, meaning the relationship between funding difficulties and perceptions of government support is not due to random chance. the low p-value confirms that there is a meaningful association between these two variables. the coefficients table further clarifies the strength and direction of this relationship. the unstandardized coefficient (b) for statement 27 is .563, which suggests that for each unit increase in the problems faced in raising funds, there is an associated increase of .563 units in the perception of government’s role in empowering start-ups, after accounting for other factors. the standardized beta coefficient of .580 confirms that this effect is strong and positive, and with a t-value of 11.217 (p = .000), the predictor is highly significant. in summary, the regression analysis shows that greater challenges in raising funds are significantly associated with a stronger perception of government empowerment in start-ups. this relationship could suggest that as startups face more obstacles in securing capital, they might look more critically at the government’s role and support systems designed to empower and assist emerging businesses. the findings highlight the need for enhanced government support mechanisms to alleviate funding difficulties, which could positively influence start-ups perceptions and potentially lead to a more conducive environment for entrepreneurial growth. 5.2. chi-square test further to check the observed and expected outcomes about success and failure of the start-ups and their funding strategies the chi-square test was applied on the following relevant variables. • in which of the following categories is your enterprise is innovative? • how did you get to know about the funding sources for your start-ups? asian business research journal, 2025, 10(5): 51-63 61 © 2025 by the authors; licensee eastern centre of science and education, usa table 9. observed and expected values of the relevant variables. statement 9 scale observed n expected n residual 1. product or service innovation 178 62.5 115.5 2. process innovation 25 62.5 -37.5 3. innovative management 16 62.5 -46.5 4. innovative selling strategy 31 62.5 -31.5 total 250 statement 15 scale observed n expected n residual 1. friends 82 50.0 32.0 2. newspaper 26 50.0 -24.0 3. advertisement 43 50.0 -7.0 4. bank 41 50.0 -9.0 5. any others 58 50.0 8.0 total 250 test statistics statement 9 statement 15 chi-square 286.416a 35.880b df 3 4 asymp. sig. .000 .000 note: a. 0 cells (0.0%) have expected frequencies less than 5. the minimum expected cell frequency is 62.5. b. 0 cells (0.0%) have expected frequencies less than 5. the minimum expected cell frequency is 50.0. in analysing the relationship between the two variables, "statement 9" and "statement 15 in the questionnaire," using the chi-square test, we gain insights into patterns of innovation within enterprises and the sources from which start-ups learn about funding options. the chi-square test is used here to determine whether there is a significant difference between the observed and expected frequencies in different categories. the statement regarding innovation categorises the type of innovation that enterprises engage in, with four categories: product or service innovation, process innovation, innovative management, and innovative selling strategy. the observed frequencies for these categories are compared to the expected frequencies of 62.5 for each category, based on the total sample of 250 responses. from the data, we can see that the largest observed number (178) falls under "product or service innovation," with a significant positive residual of 115.5, indicating that more enterprises than expected identified themselves as innovative in this category. in contrast, fewer enterprises than expected reported process innovation (observed = 25, residual = -37.5), innovative management (observed = 16, residual = -46.5), and innovative selling strategy (observed = 31, residual = -31.5). the chi-square value for this test is 286.416 with 3 degrees of freedom and a significance level (p-value) of .000. since the p-value is less than 0.05, this suggests that there is a statistically significant difference between the observed and expected frequencies in these categories. in other words, the distribution of innovation types in enterprises is not uniform, with a clear preference for product or service innovation. the statement funding sources examines how start-ups learned about funding sources, with five categories: friends, newspaper, advertisement, bank, and other sources. the observed frequencies are again compared to the expected frequency of 50 for each category. the most frequently reported source of information about funding is "friends" (observed = 82, residual = 32), followed by "any others" (observed = 58, residual = 8). on the other hand, "newspaper" (observed = 26, residual = -24) and "bank" (observed = 41, residual = -9) were fewer common sources than expected, and "advertisement" (observed = 43, residual = -7) is close to the expected frequency. the chi-square value for this test is 35.880 with 4 degrees of freedom and a significance level (p-value) of .000. as with statement 9, the p-value here indicates a statistically significant difference between the observed and expected frequencies, suggesting that start-ups do not rely on funding information sources uniformly. the data show a significant leaning towards informal sources like friends and other sources, as opposed to more formal channels like newspapers or banks. both statements show statistically significant differences in the categories analysed, as evidenced by the low pvalues in the chi-square tests. for the first statement, enterprises are much more likely to innovate in terms of products or services, while process and management innovations are less frequent. for the second statement, startups tend to rely more heavily on informal networks, like friends and other miscellaneous sources, for information about funding, rather than formal or institutional sources like banks or newspapers. these findings provide valuable insights into the areas where enterprises innovate and how start-ups gather critical information for growth, emphasizing the role of product innovation and personal networks in shaping business strategies. 6. conclusions and suggestions while trying to identify sources of funds available globally and in india to fund start-ups, we have observed that there are multifarious sources of funds for these ventures ranging from self-funding to venture capital including government support and private equity. financial strategies formed by these ventures make a significant difference in the long-term sustenance of these ventures. in different eco-systems, funds come from different sources to start-ups. long-term sustenance of these ventures depends upon the non-debt sources of funds. bootstrapping, family and friends, private equity, and government support may be the preferred sources of funds in normal course. venture capital should be tapped after all as it involves high cost and undesirable commitments. globally venture capital and private equity may be preferred sources but in indian scenario, internal funds play a critical role to fund and support these ventures. after collecting data from 250 start-ups, we have tried to check the correlation between total revenue generated by these ventures and government support and observed that government support is insignificant and largely these ventures survive on their own. regarding problems faced by these ventures in fund raising in india and government support, we observed that government supports these ventures in fund raising to some extent but the government support is not very significant. regarding innovation asian business research journal, 2025, 10(5): 51-63 62 © 2025 by the authors; licensee eastern centre of science and education, usa and knowledge about funding sources, we observed that largely these ventures are innovative in product and service innovation and sources of funds they know from informal sources rather than formal. finally, the success and failure of these venture depends upon number of factors like source of funds, team of people, product or service they deliver, long term strategy, vision and mission etc. when these factors are not properly taken care of, these ventures fail to take off or sustain. so, to sustain start-ups, the entrepreneurs must adhere to appropriate sources of funds, form a righteous team, have long term strategy and vision, focus upon regular innovation and value addition and after all the effective customer service. the business model should be such which gives these ventures a reason to succeed and sustain for the long term in the market. in this entire process, the effective government support and empowerment is quite critical and most desirable. acknowledgement: we are thankful to the indian council of social science research (icssr), new delhi for providing liberal financial assistance 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licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 4, 20-25, 2025 issn: 2576-6759 doi: 10.55220/25766759.355 © 2025 by the author; licensee eastern centre of science and education, usa measuring supply chain performance ahmad esoud alkhawaldeh faculty of business, al al-bayt university, jordan. email: balama1998@yahoo.com abstract the purpose of this study is to review the theoretical framework in performance measurement systems in the context of the supply chain. this study provides a review of the literature related to performance evaluation criteria for supply chains: indicators, challenges, and the various classifications available for them. finally, the study results are presented, through which some key recommendations are proposed. keywords: challenges, performance measuring indicators, performance measuring, supply chain performance indicators, supply chain. 1. introduction with the increasing intensity of competition in today's business environment, many organizations have increasingly realized that their innovative capabilities in enhancing the performance of their supply chains and partners have become an integral part of strategic success and long-term survival. companies must regularly review performance measurement indicators to determine whether procedures and steps are being followed satisfactorily, which necessitates focusing on appropriate performance indicators for each business unit. the importance of supply chains lies in the fact that they are an integral part of most businesses, whether commercial, industrial, or service-oriented. they are essential for the success of companies and achieving beneficiary satisfaction, in addition to reducing operational costs and improving the financial situation of the organization. the problem of the current study lies in the performance of supply chains in business organizations today, which now face a complex environment with intense competition and increasing environmental uncertainty. organizations are no longer the basis of competition; rather, competition has expanded to become between supply chains. 2. theoretical framework 2.1. the concept of supply chain performance significant pressures and challenges accompanied globalization and rapid technological developments, and the intensity of competition in global markets has expanded from being centered on organizations to being between the supply chains of organizations (mccarter & northcraft, 2007). supply chains vary according to the industry, and we can assess a supply chain based on its performance (chan, 2003). the concept of supply chains emerged in the 1960s (sosa et al., 2019, 11). stevens (1989) defined the supply chain as a series of interconnected activities related to the planning, coordination, and control of materials, starting from raw materials until they reach the customer as a product. the supply chain is defined as all parties involved, directly or indirectly, in achieving customer satisfaction. the supply chain includes not only the manufacturing organization and suppliers but also transportation organizations, warehouses, retailers, and even the customers themselves (chopra et al., 2013, 1). today, supply chains have become an important aspect of competitiveness; this has necessitated increased attention from business organizations to evaluate and track supply chain performance to prevent failure or weakness in achieving their strategic goals (sosa et al., 2019, 69). with the beginning of the third millennium, interest in supply chain practices and the trend towards linking them to performance dimensions has increased (abu khashabah, 2019). organizations use performance measurement to determine whether tasks or activities have achieved their objectives. in short, performance can be described as a measure of the success and failure of all tasks, including productivity and profitability (lee et al., 2022). supply chain performance is defined as the results of the supply chain's ability to meet the desires of the end consumer and to efficiently convey consumer desires (hong et al., 2019). zhou and benton (2007) define it as the actions taken by the supply chain that extend to fulfilling the demands of the end customer. because the supply chain focuses on managing operations both inside and outside the organization, its performance measurement is essential for controlling and ensuring the effectiveness of operations (olugu & wong, 2009). to maintain continuous oversight from the organization and ensure the integrity and performance level of its supply chains, performance measurement is necessary. many studies, such as chan (2003), emphasize that performance measurement is information or feedback regarding activities related to meeting customer expectations and mailto:balama1998@yahoo.com https://doi.org/10.55220/25766759.355 asian business research journal, 2025, 10(4): 20-25 21 © 2025 by the authors; licensee eastern centre of science and education, usa achieving strategic objectives. at the same time, it reflects the need for improvement in underperforming processes, which will positively impact quality efficiency. the researcher believes, based on the above, that evaluating supply chain performance is closely related to efficiency and effectiveness, and that it is a necessary and ongoing process to ensure that objectives are met and to understand customer needs and desires. furthermore, evaluation is one of the elements of continuous improvement sought by today's business organizations. 2.2. the importance of measuring supply chain performance performance measurement systems are an integral part of any organization's operations, and their good performance depends on the selection of measurement indicators, which often represent a challenge in many organizations. therefore, assessing the effectiveness and efficiency of the supply chain means linking performance indicators to performance goals, such as costs, agility, flexibility, sustainability, reliability, commitment, cooperation, and integration (sosa et al., 2019, 84). regardless of the organization, whether service-oriented or industrial, it needs to evaluate the performance of its supply chains and design its supply chains to support the competitive priorities of its services or products, which can only be achieved by ensuring two characteristics of those chains: efficiency and responsiveness (efficient supply chains and responsive supply chains). one of the potential reasons for the failure of supply chains is that managers do not understand the nature of the demand for their services or products, making it obvious that designing supply chains that cannot meet those demands is ineffective (krajewski & malhotra, 2022, 537). ahi and searcy (2015) argue that performance measurement allows organizations to control progress and monitor the implementation of their goals, highlight achievements, better understand key processes, anticipate potential problems, and identify opportunities and improvement actions. a study by azim et al. (2015) emphasized the importance of performance measurement as a means to sustain organizational control and ensure the implementation of the organization's strategies that lead to achieving its overall goals and objectives. this means that measuring the performance of supply chains also allows for identifying all existing gaps in the chain, as well as determining ways to address them and monitoring the implementation of proposed remedies and recommendations until the planned goals are achieved. 2.3. principles of measuring supply chain performance many studies have addressed the general principles of performance measurement (gunasekaran et al., 2001; 2004; sillanpää & kess, 2012; agami et al., 2012). while adams et al. (1995) reached a set of necessary requirements for measuring performance • the metrics should be derived in alignment with the organization's strategy: the ability of the performance measurement system to clearly convey the strategy throughout the organization is a critical factor in determining business success. • performance metrics should respond to developments in business activities and processes. • performance metrics should be dynamic: the ability to keep pace with changes in strategies, processes, and the competitive environment of the organization. • the metrics should have a team-based approach: the team must include individuals responsible for the activities to be measured. the study of gunasekaran et al. (2001; 2004) emphasized the need for the performance measure to embody the essence of organizational performance, and that the performance measurement system facilitates the selection of the most appropriate measure, and that the measurement system balances performance between financial and non-financial indicators. the study by quraishi and bouabdallah (2022) addressed two main principles in performance measurement: that the system should be understood by all employees, and that there should be incentives for good performance. al-kawashi (2015) emphasized the necessity for performance indicators to be accurate, truthful, easy to understand, measure, and represent, and available at a reasonable cost. the study by akyuz and erkan (2010) pointed out important requirements for a supply chain performance measurement system, most notably that it should be capable of accurately measuring partnership, collaboration, agility, flexibility, information, and productivity at a lower cost, be valid and reliable, simple and easy to use, and linked to strategic, tactical, and operational levels for decision-making. 2.4. difficulties in measuring supply chain performance the study by lee and billington (1992) concluded that measuring supply chain performance is difficult and that there is no perfect metric. while the issue of evaluating and assessing performance may seem simple theoretically, it is actually quite complex in practice, due to the numerous evaluation indicators adopted by organizations (al-kawashi, 2015), as well as the various stakeholders involved (shareholders, workers, customers, suppliers, etc.) (beamon, 1998). one of the greatest difficulties is choosing the appropriate method for supply chain performance for two reasons: one is that flaws in evaluation will lead to high costs, and the other is that many performance indicators in measuring supply chains are qualitative rather than quantitative, such as quality, flexibility, and satisfaction levels, which are subject to judgment and personal opinion, thus affecting the assessment of supply chain performance (chan, 2003). the study conducted by gunasekaran et al. (2004) mentioned that scm plays a significant role in gaining a competitive advantage to enhance organizational productivity and profitability; therefore, it is essential to have an effective performance measurement. the study confirmed that currently, many organizations continually neglect continuous improvement in the supply chain. one reason for the poor performance of organizations' supply chains is primarily due to the failure to identify metrics and performance indicators for supply chains, which is a challenge in itself due to its importance and the resulting negative or positive outcomes. on his part, ambe (2014) summarized, as shown in table 1, a set of difficulties in identifying performance indicators for supply chains. asian business research journal, 2025, 10(4): 20-25 22 © 2025 by the authors; licensee eastern centre of science and education, usa table 1. difficulty in defining and collating what supply chain indicators are difficulty description of difficulty view of scm • performance measurements had not viewed supply chain as a whole entity • it is difficult to evaluate performance with multiple inputs and outputs to a system focus of measures • organisation focuses on traditional financial measures despite the need to provide a balanced approach to performance measurement • too much reliance on the use of costs as a primary indicator complexities in categorisation • complexity of supply chain metrics • disagreement over an appropriate categorisation lack of a balanced approach • lack of a balanced approach to integrate financial and non-financial measures • lack of a system thinking • absence of an approach for developing and designing supply chain performance measures orientation • measures tend to be historically oriented and not focused on providing a forward looking perspective strategic nature and alignment • measures do not relate to important strategic, non-financial performance, like customer service/loyalty and product quality • measures do not directly link to operational effectiveness and efficiency some difficulties arise in performance measurement due to complexities, some of which are technical (the difficulty of understanding and controlling dynamic characteristics, and the multiple contextual forms of performance) and others are social (the difficulty of reaching a consensus on the concept of performance, its dimensions, and its measurement) (quraishi and bouabdallah, 2022). in the same context, panayides et al. (2018) see that the greatest challenge in measuring logistics performance is in areas where goods are at risk or where there is a high level of uncertainty. the researcher believes that despite the difficulties faced in the performance measurement of supply chains, this does not diminish the importance of performance measurement as both an evaluative and improvement tool, in line with the famous saying, "what cannot be measured cannot be improved." organizations should adopt both financial and non-financial performance indicators to clearly and accurately reflect overall performance. furthermore, the success of the performance measurement task depends on the accuracy and appropriateness of the selected indicators, as well as their measurability and calculability to achieve the desired purpose. 2.5. supply chain performance metrics it is evident in theoretical literature that performance measurement standards evolve in both scope and significance. for example, there is a shift in focus from traditional cost accounting methods to techniques that consider the cost of activities and their impact on other functions such as customer service, asset utilization, productivity, and quality, in order to emphasize the overall performance of the supply chain (gunasekaran et al., 2001). traditionally, performance metrics were based on price differences, rejected materials upon receipt, and on-time delivery, and they remained for many years. the selection and trade-off process was primarily based on price competition, with less attention paid to other standards such as quality and reliability. recently, the approach to evaluation and performance measurement has undergone a radical change (gunasekaran et al., 2004). performance metrics for supply chains have evolved in two phases: the first phase, which is temporally linked to the period before the 1980s, focused on financial indicators such as profitability and return on investment. these quantitative measures were insufficient to assess supply chain performance, as they overlooked non-financial (intangible) aspects such as customer satisfaction, the time value of time, and opportunity costs (sosa et al., 2019, 73; tan, 2002). the second phase began in the late 1980s as a result of changes in the global market. this phase focused on intangible metrics dominated by a strategic approach, coinciding with the emergence of new management concepts such as total quality management (tqm), supply chain management (scm), just-in-time (jit) production, flexible manufacturing systems (fms), and optimal production technology (opt) (ghalayini & noble, 1996). researchers have differing views on the dimensions of measuring supply chain performance. some categorize them into qualitative indicators (quality, flexibility, visibility) and quantitative indicators (innovation, costs, resource utilization) (beamon, 1998; chan, 2003). some studies have adopted measuring supply chain performance through efficiency and effectiveness (adaileh et al., 2022; abu nimeh et al., 2018; abdallah et al., 2014), while others classified them into financial metrics (productivity and production costs) and non-financial metrics (quality, flexibility, time) (toni & tonchia, 2001). the study by abdallah et al. (2021) adopted eight dimensions for performance measurement: quality, cost, flexibility, shipping, responsiveness, lead time, and market access. the study by abu difallah and al-sha’ar (2017) used four dimensions to measure supply chain performance, represented by responsiveness and collaboration, economic cost, consumer satisfaction, and supplier relationships. later, models for measuring supply chain performance emerged, such as the supply chain operations reference (scor) model, the balanced scorecard model, and the analytic hierarchy process (ahp) model (saleheen et al., 2018). reddy et al. (2019) found in their critical study of the literature on performance measurement, which covered more than 450 studies focused on measuring supply chain performance from 1998 to 2018, that the most widely used performance measurement model was the balanced scorecard (bsc), which constituted 35% of the studies, followed by the supply chain operations reference model (scor), as shown in figure 1. asian business research journal, 2025, 10(4): 20-25 23 © 2025 by the authors; licensee eastern centre of science and education, usa figure 1. classification of researchers according to supply chain performance metrics. the study by gunasekaran et al. (2001) proposed indicators for measuring supply chain performance according to strategic, tactical, and operational levels. meanwhile, the study by le (2020) addressed two dimensions for measuring supply chain performance: financial efficiency and environmental efficiency. customer satisfaction is of utmost importance in modern supply chains, and good service must be provided to any customer. a supply chain strategy cannot be considered effective without a satisfied customer. this emphasizes that supply chain performance measures should be based on customer satisfaction (gunasekaran et al., 2001). as is well known, there is no perfect measure for supply chain performance (lee & billington, 1992). the study by gunasekaran and kobu (2007) identified nearly 90 indicators for measuring supply chain performance. this is clearly demonstrated through the review of numerous studies that adopted various measures, which have evolved and diversified over the past decades, focusing initially on financial and quantitative measures, and later adopting non-financial and qualitative measures. the most important of these metrics are: first: efficiency and effectiveness measure despite the diversity and variety of writings that have addressed performance measurement, the performance concept presented by anthony (1965) with its two dimensions of efficiency and effectiveness is the most widely circulated and accepted (qureshi and abdullah, 2022). the concept of supply chain performance refers to the level of efficiency and effectiveness in achieving tasks related to supply chain objectives (mentzer & konrad, 1991; neely, 2007, 135), where effectiveness refers to the extent to which planned goals are achieved, while efficiency pertains to how resources are utilized (lai et al., 2002). second: balanced scorecard (bsc) this model was developed in 1996 by kaplan and norton as a tool for measuring organizational performance in both financial and non-financial aspects. the scorecard translates the organization's vision and strategies into objectives and includes four perspectives: financial perspective, customer perspective, internal processes perspective, and learning and growth perspective (kaplan and norton, 1996). the balanced scorecard has gained acceptance as a measurement tool and has extended to the evaluation of supply chain performance, with an increase in scholarly papers on this explicitly in recent years (sousa et al., 2020). third: supply chain operations reference model (scor) this model is considered a benchmark for evaluating and improving supply chain management at the organizational level. it was introduced in 1996 by the supply chain council (scc) and includes five dimensions: reliability, responsiveness, flexibility, cost, and asset management. this model provides a standardized framework for analyzing, designing, and improving supply chains. it consists of a set of key processes that include: plann, source, make, deliver, and return (manay et al., 2022; santoso & heryanto, 2022; wong & wong, 2008). recently, some studies have added two new dimensions to the model: information systems and digital technology in response to globalization (ayyildiz & gumus, 2021). fourth: analytic hierarchy process (ahp) it is one of the multi-criteria decision models developed by saaty in 1970 and is classified among the quantitative mathematical indicators used when measuring supply chain performance. the ahp method is based on multi-criteria analytical comparisons and helps managers make appropriate decisions regarding the monitoring and analysis of supply chain performance results, thereby improving future performance. especially since performance measurement processes in the twenty-first century rely on forecasting and making future estimates to measure performance (al-danaf, 2022; aqasim & laraj, 2015). fifth: according to the levels gunasekaran et al. (2001) presented a review in the theoretical literature on supply chain performance measures, proposing performance dimensions at three levels: the strategic level, the tactical level, and the operational level, with each level having financial metrics and non-financial metrics. some have classified them into quantitative and qualitative measures, financial and non-financial, and according to competitive priorities such as quality, cost, delivery, flexibility, and others. 3. conclusions the researchers in the literature on supply chain performance identified several challenges related to the assessment and evaluation of supply chain performance. they considered the evaluation of supply chain performance to be particularly difficult due to the inclusion of many components such as suppliers, manufacturers, wholesalers, retailers, and customers. additionally, the researchers noted that evaluating supply chain performance asian business research journal, 2025, 10(4): 20-25 24 © 2025 by the authors; licensee eastern centre of science and education, usa is one of the critical issues, especially with the difficulty of maintaining customer satisfaction due to competition and rapid changes in markets and business environments. there is no agreement on a unified definition of performance metrics, as there is a discrepancy among researchers and thinkers regarding the indicators and criteria that can be used to measurement the performance of supply chain. the researcher sees, after this extensive induction on supply chain performance measures, that there is no comprehensive, complete measure and that performance measures are diverse and multiple, with no single measure capable of addressing all aspects related to performance. it is necessary that when choosing a performance measure, it should fit the nature of the organization's work, whether it is service-oriented or production-oriented. 4. recommendations based on the results obtained, the following recommendations can be made: • the necessity of using non-financial indicators alongside financial indicators, and linking them together in a comprehensive and integrated system to evaluate the performance of supply chain management; • the necessity of publishing supply chain management reports and evaluating their performance through public seminars and conferences, while urging universities to teach a course titled supply chain management, and addressing indicators, systems, and models for evaluating the performance of modern supply chain management; • focusing on the alignment of performance evaluation indicators for supply chain management with the activities and specificities of the supply chain and the organization in general. references mccarter, m., & northcraft, g. 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(2021). interval-valued pythagorean fuzzy ahp method-based supply chain performance evaluation by a new extension of scor model: scor 4.0. complex & intelligent systems, 7(1), 559–576. https://doi.org/10.1007/s40747-020-002219 al-danaf, m. (2022). towards building an index for measuring supply chain performance of the organization through the integration of the reference framework for supply chain operations and the hierarchical analysis method: a case study. alexandria university journal of administrative sciences, 59(3), 267–316. aqasim, o., & laraj, n. (2015). an analytical study of indicators and models for measuring the performance and effectiveness of the supply chain. economic and administrative research, 18, 197–214. 105 © 2024 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 9, 105-110, 2024 issn: 2576-6759 doi: 10.55220/25766759.208 © 2024 by the authors; licensee eastern centre of science and education, usa digital marketing in the promotion of tourism in bahía de caráquez iranian standard see davila1  lilia moncerrate villacis zambrano2 1,2eloy alfaro secular university of manabí, sucre extension. e-mail: e1726901281@live.uleam.edu.ec e-mail: lilia.vilalcis@uleam.edu.ec ( corresponding author) abstract the main objective of this research was to analyze the impact of digital marketing for the promotion and development of tourism in bahía de caráquez, the importance of the object of study lies in understanding and taking advantage of the tourist potential of the city, bahía de caráquez has a cultural heritage and rich natural that deserves to be promoted effectively, the methods used in the research were quantitative and qualitative, the type of research was descriptive and allowed us to obtain a detailed understanding of the digital marketing that is being used in bahía de caráquez, the target population of study. were the inhabitants and visitors of bahía de caráquez, the technique used was the survey, with a sample of 80 people through random sampling, the instrument used to measure reliability was spss v. 25, resulting in reliability through cronbach's alpha of 0.987, the instrument being reliable, it is concluded that digital marketing is revealed as an indispensable tool to promote tourism in bahía de caráquez, the results obtained demonstrate that applying digital strategies well designed can significantly increase the visibility of the destination and attract more tourists, so it is important to adapt marketing practices to new trends, and in this way position bahía de caráquez as an attractive destination in the ecuadorian tourism panorama. keywords: digital marketing, promotion, social networks, tourism, jel classification: 1. introduction digital marketing has become the essential tool to promote tourist activity in a destination, facilitating a broad and segmented audience effectively, promoting the unique characteristics of the place and attracting potential visitors. through digital strategies such as the creation of attractive visual content, the use of social networks with the purpose of increasing the visibility of the destination and generating interest in a diverse public. in addition, digital marketing facilitates interaction with tourists, allowing for real-time feedback and adjusting campaigns according to public preferences, which strengthens the visitor experience and improves the competitiveness of the destination in the market. argument generated by ormaza (2023) explains that the tourism sector and its influence have changed business processes and models, current tourists are more demanding and informed, for this reason the tourist products and services offered must adapt to the consumer with the ease and reach of a click. (p. 1) tourists have access to a wealth of information online, allowing them to compare and choose between various options for destinations, accommodations and activities. this transformation has led companies in the tourism sector to rethink their strategies, focusing their efforts on adapting products and services that are more personalized, accessible and easy to acquire. tourist attractions are considered as a resource that influences the purchasing decision of tourists, for this reason investments are made in each of them to be recognized and have the influx of travelers to each of them, since it is important for the economy and development of a locality (carvajal & lemoine, 2018). it is clear that tourist attractions significantly influence tourists' decisions when choosing their destinations. this influence makes attractions key elements to attract travelers, which motivates investments in their development and maintenance. the purpose of these investments is to improve and highlight the attractions, making them recognized and increasing the influx of visitors. the impact of these investments is not only limited to improving the tourist experience, but also plays an important role in the economy and development of the locality. the arrival of tourists boosts sectors such as hotels, commerce and services, generating employment and stimulating local economic growth. consequently, tourist attractions become development engines that contribute to the economic and social well-being of the community in which they are located. on the other hand, (andrade, 2016) states that the emerging competitiveness between tourist destinations has highlighted the need to emphasize digital marketing strategies, in order to create intangible added value for the potential client, aimed at creating a favourable image of the territories that are intended to be promoted based on considerations of the behavioural styles of consumers or clients who frequent tourist destinations (lemoine et al., 2023). there are many reasons why the growing competitiveness between tourist destinations has highlighted the importance of implementing digital marketing strategies. these allow to highlight intangible elements that add value to the potential client, such as unique experiences and cultural authenticity. digital marketing offers a mailto:e1726901281@live.uleam.edu.ec mailto:lilia.vilalcis@uleam.edu.ec https://www.doi.org/10.55220/25766759.208 asian business research journal, 2024, 9: 105-110 106 © 2024 by the authors; licensee eastern centre of science and education, usa powerful platform to build a favorable image of the territories, using social networks, blogs and online campaigns. these tools allow reaching global audiences, generating trust and credibility, and improving the perception of the destination. in such a competitive market, creating an emotional connection with tourists through digital promotion is essential to differentiate and attract more visitors (lemoine et al., 2018). the argument of encalada et al. (2019) is established, where they state that digital marketing plays an important role in the commercial dynamics of a business since the client can find out about the offers, promotions and new products that are offered without having to be physically present in an establishment or the help of sales personnel. (p. 3) this type of marketing allows customers to learn about offers, promotions and new products without having to physically visit a store or rely on sales staff. this highlights the convenience and accessibility that it offers, by facilitating the connection between the business and consumers through online channels. it uses tools such as social networks, emails, websites and online advertising to communicate information efficiently and directly. on the other hand, lemoine and rosado (2024) tell us that nowadays many businesses seek success through marketing techniques and tools, so it is essential to develop digital marketing strategies in order to direct increasingly competitive strategies that from their conception allow to provide a competent and timely customer service, in addition to providing more effective digital marketing strategies (p. 255). the growing trend of businesses seeking success through marketing techniques and tools underlines the importance of developing digital marketing strategies to be competitive. the main focus is the need to design strategies that are not only effective, but also improve customer service, making it more competent and timelier where marketing effectiveness is evident (arroyo & lemoine, 2023). in this context, we believe that digital marketing must be an integral part of the conception of the business strategy, ensuring that actions are not only competitive, but also aligned with customer satisfaction. this implies a double perspective: on the one hand, maximizing the effectiveness of digital marketing strategies and, on the other, optimizing the customer experience, ensuring that interactions are relevant and timely. another consideration to take into account is that tourism has become one of the main sources of income for many regions of the world, for this reason, it was chosen to investigate digital marketing in the promotion of tourism in bahía de caráquez due to the need to revitalize tourism activity in this coastal city, which has faced significant challenges in recent years (carvajal et al., 2023). the research seeks to explore how digital marketing strategies can enhance the image of the city as an attractive tourist destination, generating a greater flow of visitors and, consequently, a positive impact on the local economy. through this study, we aim to identify the most effective digital tools, such as social media and multimedia content, which can be implemented by local actors to position the city as a preferred destination and promote its tourism development in a sustainable and resilient way. this research contributes to the cultural contribution project “science from experience” led by dr. lilia villacis. the problem lies in the limited use of digital marketing strategies by local tourism businesses, which results in low visibility in the global market and underutilization of available tourism resources. despite the city's tourism potential, the lack of knowledge and application of modern promotional techniques has prevented it from reaching optimal levels of tourist influx. tourism is a very important and dynamic sector for the economy of the receiving countries. this sector is made up of several sectors of the economy such as hotels, restaurants, transportation, travel agencies, recreation, among others, which is why it has been considered one of the largest industries in the world (lambogglia, 2014). tourism has the potential to become a key driver of economic growth in cities. through proper management, it can strengthen its position as an attractive tourist destination, capitalizing on its cultural diversity, natural beauty and historical heritage to attract more tourists and thus have a more dynamic and highly relevant economy. based on the theoretical foundation, the main objective of the research is to analyse the impact of digital marketing for the promotion and development of tourism in bahía de caráquez. to do this, it is necessary to know the elements and problems that lead to promoting, encouraging and activating tourism in the area. 2. methodology the research was quantitative in nature and, from its context, facilitated the analysis of statistical figures that allowed the generation of criteria that contribute to digital marketing to promote the visibility of the bahía de caráquez destination, which in turn provided a complete vision of how digital marketing is influencing the tourist development of the city, through a documentary review, based on bibliographical references from researchers and thinkers on the topics of digital marketing in the promotion of tourism. the method used is the descriptive one that will help to describe the phenomenon for the strategic decisionmaking of the actions to be taken in the tourist destination. the survey technique will be used, starting from the population of bahía de caráquez, from which a sample of 80 people was extracted, in a simple non-probabilistic random manner to know the existing reality. using spss v. 25, the survey will be processed, the instrument will be validated, and correlation studies will be conducted to facilitate a better interpretation of the results and, in this way, a better description of them that will facilitate decision-making at the tourist destination level. 3. results a survey was conducted among visitors and residents of bahía de caráquez to identify their perception of the use of digital marketing when promoting bahía as a tourist destination, with the following results: table 1. reliability statistics. cronbach's alpha n of elements 0.987 7 when examining the reliability of the instrument using cronbach's alpha, it was found that the survey in question was reliable, yielding a reliability result of 0.98. the cronbach's alpha coefficient ranges between 0 and 1. a value closer to 1 indicates greater reliability, while a value close to 0 indicates low consistency or correlation between the elements, suggesting that they are independent of each other. researchers usually consider 0.7 as a asian business research journal, 2024, 9: 105-110 107 © 2024 by the authors; licensee eastern centre of science and education, usa minimum acceptable threshold to determine good internal consistency in measurements (pérez, 2022). according to the related question whether tourism activity has generated employment opportunities in the bahía de caráquez destination, the results are presented in table 2. table 2. tourism has generated employment opportunities in bahía de caráquez. f % %v %to valid totally disagree 7 8.8 8.8 8.8 disagree 18 22.5 22.5 31.3 neither agree nor disagree 15 18.8 18.8 50.0 ok 23 28.7 28.7 78.8 totally agree 17 21.3 21.3 100.0 total 80 100.0 100.0 as shown in table 23 people, equivalent to 28.7%, stated that they fully agree that tourism has generated more employment opportunities in bahía de caráquez and 17 people, equivalent to 21.3%, agreed, 15 people, equivalent to 18.8%, neither agreed nor disagreed, on the other hand, 18 of them, equivalent to 22.5%, indicated that they disagree with the statement that tourism has generated more employment opportunities, while 7 people, equivalent to 8.8%, were able to state that they fully disagree with this statement. the results showed that tourism has generated employment in bahía de caráquez, according to the perception of the majority of those surveyed, however, there is a significant proportion of people who do not share this perception or who believe that the benefits have not reached everyone, this raises the need for a more equitable approach in tourism planning, ensuring that the growth of the sector benefits a greater part of the local population. according to the question described, whether tourism activity has encouraged the creation of new businesses in the area, the results are presented in table 3. table 3. tourism has encouraged the creation of new businesses in the area. f % %v %to valid totally disagree 5 6.3 6.3 6.3 disagree 20 25.0 25.0 31.3 neither agree nor disagree 16 20.0 20.0 51.2 ok 25 31.3 31.3 82.5 totally agree 14 17.5 17.5 100.0 total 80 100.0 100.0 as established in the table, 25 people, equivalent to 31.3%, state that they agree that tourism has encouraged the creation of new businesses in the area, 25%, equivalent to 20 people surveyed, disagree that tourism has encouraged the creation of new businesses in the area, 16 of them, equivalent to 20%, indicate that they are at a neutral point, meaning that they neither agree nor disagree with the question, on the other hand, 14 people, corresponding to 17.5%, totally agree with this statement, 5 people, equivalent to 6.3% were able to state that they totally disagree that tourism has encouraged the creation of new businesses in the area. in light of the evidence, tourism has encouraged the creation of new businesses in bahía de caráquez according to a significant group of respondents; however, a considerable proportion of the population believes that this is not the case, suggesting that there is room for improvement in the expansion of tourism and its ability to stimulate business growth. to strengthen this relationship, strategies that encourage business creation, involving the local community, could be considered. according to the question linked to the general impact of tourism using digital marketing, table 4 indicates the results. table 4. how would you rate the overall impact of tourism using digital marketing in bahía de caráquez?. f % %v %to valid negative 1 1.3 1.3 1.3 neutral 21 26.3 26.3 27.5 positive 31 38.8 38.8 66.3 very positive 27 33.8 33.8 100.0 total 80 100.0 100.0 as observed, 31 people, equivalent to 38.8% of respondents, were able to answer that they qualify. the overall impact of tourism using digital marketing in a positive way, 33.8% which is equivalent to 27 people surveyed were able to answer that this impact is very positive, on the other hand 21 people which is equivalent to 26.3% of respondents consider that the overall impact of tourism using digital marketing is neutral and 1 person which is equivalent to 1.3% were able to answer that the impact is negative. considering the results, digital marketing has had a mostly positive impact on tourism, according to the answers of the majority of respondents. this indicates that digital strategies are working, attracting more visitors and helping to improve the local economy, especially in tourism-related sectors such as hotels, restaurants and other services. however, a significant percentage of people remain neutral, meaning that the campaigns have not reached all segments of the city or that the benefits of digital tourism are not equally visible in all areas. according to the question on whether the city's digital presence is well managed and updated, the results are detailed in table 5. asian business research journal, 2024, 9: 105-110 108 © 2024 by the authors; licensee eastern centre of science and education, usa table 5. the city's digital presence (websites, social media) is well managed and up-to-date. f % %v %to valid totally disagree 7 8.8 8.8 8.8 disagree 27 33.8 33.8 42.5 neither agree nor disagree 17 21.3 21.3 63.7 ok 19 23.8 23.8 87.5 totally agree 10 12.5 12.5 100.0 total 80 100.0 100.0 as it was confirmed, the evidence showed that 33.8%, equivalent to 27 people, disagree and 8.8%, equivalent to 7 people, totally disagree that the digital presence is well updated and managed, while 17 people, equivalent to 21.3%, say they neither agree nor disagree. on the other hand, 23.8%, equivalent to 19 people, agree and 12.5%, equivalent to 10 people, totally agree that the digital presence is well updated and managed. given the evidence, a high percentage of respondents believe that the digital presence is well managed and updated, however, a high percentage are neutral or disagree with its effectiveness. this indicates that there is a need to strengthen digital marketing strategies, improving the frequency and quality of updates on websites and social networks, as well as increasing interaction with tourists and the community. better management of the digital presence could help change public perception and position it as a more attractive destination in the digital environment. according to the question that refers to whether current digital marketing strategies are effective in attracting more tourists to the area, the results are presented in table 6. table 6. current digital marketing strategies are effective in attracting more tourists to bahía de caráquez. f % %v %to valid nothing effective 7 8.8 8.8 8.8 little effective 19 23.8 23.8 32.5 regular 22 27.5 27.5 60.0 cash 18 22.5 22.5 82.5 very effective 14 17.5 17.5 100.0 total 80 100 100.0 as reflected, 22 people, equivalent to 27.5% of respondents, say that current digital marketing strategies to attract more tourists are average, 23.8%, equivalent to 19 people, say that these strategies are not very effective, 22.5%, equivalent to 18 people, say that they are effective, on the other hand, 17.5%, equivalent to 14 people, say that these strategies are very effective, and 7 people, equivalent to 8.8%, say that marketing strategies to attract more tourists are not effective at all. from the results, it was verified that the majority of respondents said that current digital marketing strategies to attract more tourists are average, this shows that digital campaigns are not reaching their maximum performance and that there is room to optimize their planning, implementation and reach, in order to attract more tourists and improve the general perception about their effectiveness. according to the question linked to whether the content on social networks has improved their perception of the destination, the result is described in table 7. table 7. the content about bahía de caráquez on social media (photos, videos, posts) has improved the perception of the destination. f % %v %to valid totally disagree 4 5.0 5.0 5.0 disagree 23 28.7 28.7 33.8 neither agree nor disagree 14 17.5 17.5 51.2 ok 25 31.3 31.3 82.5 totally agree 14 17.5 17.5 100.0 total 80 100.0 100.0 the predominant results of the 25 people, equivalent to 31.3% of the respondents, and 14 people, equivalent to 17.5% of the respondents, were able to express that they agree and totally agree that the content on social networks has improved their perception of the destination, while 23 people, equivalent to 28.7%, and 4 people, equivalent to 5%, disagree and totally disagree. on the other hand, 14 people, equivalent to 17.5%, were able to express that they neither agree nor disagree with this statement. given the results shown, a considerable group of respondents consider that the content on social networks has improved the perception as a tourist destination, but a third thinks that it has not had that effect. this shows that although some positive results are being achieved with publications on social networks, there are more possibilities to improve the quality, relevance and creativity of the content and in this way attract more people and change the perception of the population. according to the associated question of how effective digital marketing is considered in promoting the area, the results are shown in table 8. table 8. how effective do you consider digital marketing in promoting bahía de caráquez? f % %v %to valid nothing effective 3 3.8 3.8 3.8 little effective 12 15.0 15.0 18.8 regular 23 28.7 28.7 47.5 cash 24 30.0 30.0 77.5 very effective 18 22.5 22.5 100.0 total 80 100.0 100.0 it was verified that 24 people, equivalent to 30%, and 18 people, equivalent to 22.5%, consider that digital marketing in promoting the city is effective and very effective, while 23 people, equivalent to 28.7%, consider that its effectiveness is average. on the other hand, 12 people, equivalent to 15%, and 3 people, equivalent to 3.8%, asian business research journal, 2024, 9: 105-110 109 © 2024 by the authors; licensee eastern centre of science and education, usa reported that it is little or not at all effective. based on the evidence, the effectiveness of digital marketing in promoting the city shows a predominantly positive perception among those surveyed. however, there is a significant percentage that considers this effectiveness to be average. therefore, it should be explored which aspects of digital marketing need to be improved, perhaps in terms of segmentation or personalization of messages. according to the question linked to whether you consider that digital marketing is essential for the tourist development of the town, the results are shown in table 9. table 9. he believes that digital marketing is essential for the tourist development of bahía de caráquez f % %v %to valid no 3 3.8 3.8 3.8 yeah 77 96.3 96.3 100.0 total 80 100.0 100.0 as shown in the table, 77 people, equivalent to 96.3%, indicated that they consider digital marketing to be essential for the tourism development of the city, while 3 people, equivalent to 3.8%, indicated that they do not consider it essential. based on the results obtained, the vast majority of people see digital marketing as essential for the tourism development of the city, which reflects a positive perception and acceptance of the critical role that digital marketing plays in the promotion of tourist destinations. this is why taking advantage of these tools can provide a significant competitive advantage in the local market. 4. discussion based on the exhaustive investigation of works carried out that agree with the research presented, the work referred to marketing strategies for tourist destinations in the sucre canton was visualized (villacis et al., 2021) which express that the sucre canton has natural and cultural attractions such as historical, archaeological, rural, adventure and nature tourism, which are essential for attracting tourists, with this marketing strategy the tourist activity that this population has in the north of the province of manabí would begin to be exploited. according to the authors, sucre canton can position itself as an attractive destination within the region, differentiating itself from other tourist locations in manabí, this competition can encourage improvements in tourist services and experiences, the exploitation of tourist activity must be carried out in a sustainable way, ensuring that natural and cultural resources are preserved for future generations, in this way it can attract a type of tourist who values ecotourism and responsible tourism, implementing marketing strategies that highlight the tourist resources of bahía de caráquez can be crucial to position the destination in the market, social media campaigns, collaborations with tourism influencers, and the promotion of cultural events should be included. furthermore, the work of the researchers (laz & lucas, 2021) in their work named audiovisual communication as a tourism promotion tool: case of bahía de caráquez, ecuador 2020, which reveals that audiovisual marketing strategies help connect bahía de caráquez with its potential tourist attractions through its well-defined history and gastronomy, which aim to impact tourists based on communication strategies that are perceived by all the senses, generating experiences that enhance the tourist's sensations. in relation to this article, a consensus was reached on its research because thanks to audiovisual marketing, bahía de caráquez can weave an emotional bond with its future visitors, by telling captivating stories about its rich history and exquisite gastronomy, this tourist destination creates a visual and sensorial experience that leaves a deep mark. the combination of images and sounds evokes intense emotions, making travellers feel connected to the local culture and want to live unforgettable adventures. likewise (villacis et al., 2018) with the work entitled "perception of local actors on sustainable tourism in communities of leónidas plaza of the canton sucre, manabí" reveal that tourism can not only be said to be the people who visit a place, to do tourism requires many factors that make this possible, one can start with the economic part that is very important for both the one who travels and the one who receives the tourist, since if one travels it is because one is going to spend money which means contributing to the economic growth of the place and the people who live there. another factor would be the quality of the services that are acquired, that is why a service must be offered that is worthy of praise from visitors this will help them return and feel the need to return, this in turn allows the place to be improved in all aspects. the authors point out that tourism encompasses much more than just the arrival of visitors, as it depends on key factors. firstly, the economic aspect benefits both tourists, who need resources to travel, and the host communities, who gain from visitors' spending. this drives local economic growth and improves the quality of life of residents. secondly, the quality of services is essential, as good service not only attracts new tourists, but also encourages loyalty, encouraging their return and strengthening the reputation of the destination. thus, tourism becomes a sustainable and mutually beneficial activity. for its part, the research work carried out by (arroyo & lemoine, 2023) on "digital marketing strategies to position the bahía de caráquez city brand, cantón sucre" reveals that advertising content, a product of the digital marketing strategy, must respond to the needs of each economic group that needs to be strengthened. messages aimed at attracting the consumption of local gastronomy cannot be merely informative; establishing a sensory marketing strategy will allow the multicultural city brand of bahía de caráquez to be positioned in the national and international market and achieve a higher level of tourist influx. in accordance with the above, to maximize the impact of digital campaigns, it is essential to segment the target audience and personalize messages. by combining relevant information with sensory experiences, it will be possible to connect with each segment and encourage the consumption of local cuisine. bahía de caráquez will position itself as a multicultural and attractive destination, thanks to a digital marketing strategy that prioritizes user experience. in the same sense, (burgos, 2019) in his research entitled "contribution of digital marketing in strengthening the campos hostel in the sucre canton, leónidas plaza parish", states that digital marketing strategies on social networks are the most common and the ones that large companies are using to reach their customers, these strategies allow for greater reach and greater acceptance by customers, in addition, it reaches out massively and you can know if customers are happy or not with the service. according to the author, digital marketing strategies on social networks are effective because they allow companies to reach a wide and segmented audience, which increases brand visibility and the possibility of direct asian business research journal, 2024, 9: 105-110 110 © 2024 by the authors; licensee eastern centre of science and education, usa interaction with customers. these platforms offer analytical tools that allow businesses to measure the effectiveness of their campaigns in real time, providing information on customer satisfaction and behavior. social networks facilitate two-way communication between companies and consumers, allowing brands to adjust their offers based on the feedback received. 5. conclusions digital marketing has proven to be an invaluable tool to promote tourism in bahía de caráquez, by attracting more visitors and improving the perception of the city, it has contributed significantly to its development, and however, to remain competitive in an increasingly dynamic market, it is essential to continue innovating and adapting new digital strategies, in order to guarantee tourism growth. from the results obtained, it was found that digital marketing is used in bahía de caráquez to promote tourism, but the strategies used are often not so effective, which is why the adequate implementation of digital platforms would improve the image of the city, promoting the creation of businesses and generating new employment opportunities, thus increasing the visibility of the city and attracting more tourists. therefore, it is crucial to continue perfecting digital strategies and strengthening the management of bahía de caráquez's online presence. it is essential to continue adapting strategies to new trends and emerging technologies. it is recommended to invest in the creation of high-quality content, strengthen the presence on social networks and develop more segmented digital marketing campaigns. likewise, it is important to constantly measure the results to optimize investments and guarantee long-term success. by doing so, bahía de caráquez will be able to consolidate its position as an attractive and sustainable tourist destination. references [1] andrade, d. (2016). digital marketing strategies in the promotion of the city brand. journal of the school of business administration, 59-72. https://www.redalyc.org/pdf/206/20645903005.pdf [2] arroyo, e., & lemoine, f. (2023). digital marketing strategies to position the city brand of bahia de caráquez, canton sucre. brazilian journal of business, 1495-1509. https://ojs.brazilianjournals.com.br/ojs/index.php/bjb/article/view/61468/44312 [3] arroyo, e., & lemoine, f. á. (2023,p. 1498). digital marketing strategies to position the city brand of bahia de caráquez, canton. brazilian journal of business, 5(3), 1495–1509. https://doi.org/https://doi.org/10.34140/bjbv5n3-005 [4] burgos, a. (2019). contribution of digital marketing in strengthening the campos hostel in the sucre canton leonidas plaza parish. 1-57. https://repositorio.uleam.edu.ec/bitstream/123456789/1567/1/uleam-mkt-0031.pdf [5] carvajal, g., lemoine, f. á., nogueira, d., & ramos, y. (2023). price metrics for the improvement of the offer of accommodation services in the sucre-san vicente tourist destination. international journal of professional business, 8(10). https://doi.org/https://openaccessojs.com/jbreview/article/view/3937 [6] carvajal, v., & lemoine, f. (2018). analysis of tourist attractions and resources. the sustainable journey, 164-184. https://www.scielo.org.mx/pdf/eps/n34/1870-9036-eps-34-164.pdf [7] encalada, g., sandoya, l., troya, k., & camacho, j. (2019). digital marketing in ecuadorian companies. journal of science and research, 2-10. https://revistas.utb.edu.ec/index.php/sr/article/view/779/573 [8] gutiérrez, j., & pérez, s. (2021). digital marketing and its impact on brand positioning in the integra company in the city of ambato. https://repositorio.uta.edu.ec/bitstream/123456789/33268/1/004%20mt.pdf [9] lambogglia, j. (2014). analysis of tourism and its importance in economic growth in latin america: the case of ecuador. https://repositorio.flacsoandes.edu.ec/bitstream/10469/7460/2/tflacso-2014jclo.pdf [10] laz, a., & lucas, p. (2021). audiovisual communication as a tourism promotion tool: the case of bahía de caráquez, ecuador 2020. sapientiae scientific journal, 2-15. https://publicacionescd.uleam.edu.ec/index.php/sapientiae/article/view/181/338 [11] lemoine, f. á., navarrete, s., valls, w., carvajal, g., & villacis, l. (2018). perception of local stakeholders on sustainable tourism in communities of leonidas plaza of the sucre canton, manabí. eca sinergia , 9(2), 55-67. https://doi.org/https://dialnet.unirioja.es/servlet/articulo?codigo=6726416 [12] lemoine, f. á., ureta, g. j., & hernández, n. (2023). tourism consumer behavior style under covid-19 pandemic conditions in ecuador. administrative sciences(23). https://doi.org/https://doi.org/10.24215/23143738e135 [13] lemoine, f., & rosado, r. (2024). digital marketing: effectiveness of benchmarking in service activities in san vicente, ecuador. gestión r&d, 251-275. http://saber.ucv.ve/ojs/index.php/rev_gid/article/view/28891/144814494433 [14] ormaza, j. (2023). digital marketing plan to promote tourism in the city of bahia de caráquez, manabí-ecuador. https://repositorio.espam.edu.ec/bitstream/42000/2246/1/ttt51d.pdf [15] pérez, g. (2022). what is cronbach's alpha and what is it for? https://www.linkedin.com/pulse/what-is-cronbach-alpha-andwhat-is-it-for-gabriel-prez-leon-/ [16] villacis, l., lemoine, f., navarrete, s., valls, w., & carvajal, g. (2018). perception of local stakeholders on sustainable tourism in communities of leonidas plaza of the canton sucre, manabí. eca sinergia journal, 55-67. https://doi.org/10.33936/eca_sinergia.v9i2.1122 [17] villacis, l., meneses, w., espinoza, m., & macías, j. (2021). marketing strategies for tourist destinations in the sucre canton. centro sur magazine, 43-54. https://biblat.unam.mx/es/revista/revista-centro-sur/articulo/estrategias-de-marketing-paradestinos-turisticos-del-canton-sucre 50 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 3, 50-57, 2025 issn: 2576-6759 doi: 10.55220/25766759.318 © 2025 by the authors; licensee eastern centre of science and education, usa research on the relationship between institutional pressures and the level of corporate social responsibility disclosure: empirical evidence from listed companies on the stock market in vietnam pham thi bich thu1  tran thi lan hương2 1,2hong duc university, thanh hoa province, vietnam. email: phambichthu@hdu.edu.vn email: tranthilanhuong@hdu.edu.vn abstract corporate social responsibility (csr) disclosure has become a crucial aspect of business operations, influenced by various institutional pressures. this study examines the relationship between institutional pressures and the level of csr disclosure among firms. empirical evidence collected through a survey of 208 senior executives of listed firms in vietnam’s stock exchange indicates that coercive pressure, normative pressure, and mimetic pressure have a positive relationship with various aspects of csr disclosure levels. this study employs an empirical approach to assess how institutional factors influence csr disclosure in vietnam. the findings provide valuable insights for both corporate managers and policymakers in fostering a more transparent and responsible business environment. finally, the research offers practical recommendations to enhance csr disclosure, ensuring that businesses align with global sustainability standards while addressing local institutional challenges. keywords: empirical evidence, institutional pressures, relationship, social responsibility, the stock. 1. introduction in the context of increasing institutional pressures on businesses, compliance and disclosure of corporate social responsibility (csr) information have become essential requirements. dimaggio & powell’s (1983) institutional theory suggests that organizations tend to adapt to environmental pressures to attain legitimacy. similarly, campbell (2007) emphasizes that a firm's csr commitment is influenced by institutional pressures, including legal regulations, market forces, and social organizations. bansal & clelland (2004) further highlight that firms facing greater scrutiny from the media and the public tend to increase their csr disclosures. therefore, understanding the relationship between institutional pressures and csr disclosure is essential for businesses to formulate appropriate strategies that meet growing demands for transparency and sustainable development. examining the relationship between institutional pressures and csr disclosure plays a crucial role in identifying the factors that affect corporate disclosure behavior. understanding how various stakeholders exert pressure on csr enables firms to proactively manage their strategies, enhance transparency, and strengthen their corporate image. furthermore, this research is significant for policymakers, as it provides empirical evidence to refine regulatory frameworks, creating incentives for companies to disclose csr information more comprehensively and accurately. consequently, fostering csr disclosure not only promotes sustainable economic development but also reinforces corporate social responsibility across the business sector. in vietnam, as the economy becomes increasingly integrated into global markets, the demand for transparency and social responsibility has become more pressing. according to the 2023 sustainable development report by the vietnam chamber of commerce and industry (vcci), only approximately 30% of publicly listed companies fully disclose csr reports in accordance with international standards, while more than 50% provide only basic disclosures, and 20% have not engaged in csr reporting. this disparity in csr disclosure levels reflects varying degrees of institutional pressure on businesses. large exporting firms are compelled to comply with international esg standards, whereas small and medium-sized enterprises (smes) face less pressure from customers or regulatory authorities. therefore, investigating the relationship between institutional pressures and csr disclosure in vietnam is essential to assess how institutional environments influence corporate disclosure behavior, thereby assisting firms in adapting to and achieving sustainable growth. this study aims to analyze the impact of institutional pressures on the level of csr disclosure among businesses. the research not only helps firms identify key pressures and develop appropriate strategies but also provides empirical evidence to support policymakers in establishing more effective regulatory frameworks. based on the findings, this study offers recommendations to enhance csr disclosure, strengthen corporate responsibility, and contribute to sustainable economic development mailto:phambichthu@hdu.edu.vn mailto:tranthilanhuong@hdu.edu.vn https://doi.org/10.55220/25766759.318 asian business research journal, 2025, 10(3): 50-57 51 © 2025 by the authors; licensee eastern centre of science and education, usa 2. literature review 2.1. institutional pressure institutions encompass a set of formal rules, informal regulations, as well as shared beliefs and perceptions that serve to guide, constrain, or shape interactions among political actors within specific domains (berthod, 2016). within this context, organizations can be viewed as micro-institutions, embodying the full characteristics of the broader institutional framework. institutional pressures influence enterprises by requiring compliance with formal rules such as laws, regulations, and written standards, or through informal rules such as customs and social norms. conforming to these institutional rules not only helps businesses maintain their status but also ensures their survival within the broader institutional environment (dimaggio & powell, 1983; jalaludin et al., 2011). according to institutional theory, an organization’s behavior is not only constrained by legal regulations but is also shaped by expectations and influences from related institutions. this results in three primary forms of institutional isomorphism: coercive isomorphism, normative isomorphism, and mimetic isomorphism (dimaggio & powell, 1983). coercive isomorphism arises from regulations and laws imposed by governmental authorities, compelling businesses to comply in order to secure legitimacy and operational viability. normative isomorphism is driven by professional standards and practices established by specialized organizations, requiring businesses participating in such organizations to adhere to common expectations. lastly, mimetic isomorphism stems from limitations in managerial capacity and operational experience, leading firms to imitate the successful models of competitors or pioneering organizations to mitigate risks and enhance adaptability in the business environment. table 1. measurement indicators for institutional pressure. factors indicators coercive pressure regulatory compliance pressure (laws, policies, procedures, and quality standards) shareholder pressure to adhere to regulations pressure from trade unions and consumer protection associations normative pressure pressure from professional organizations on business practices pressure from consumers pressure from media, press community and societal pressure mimetic pressure pressure from industry leaders and multinational corporations pressure from industry peers competitive pressure from rival firms pressure from industry trends source: dimaggio & powell, 1983. 2.2. corporate social responsibility disclosure corporate social responsibility (csr) disclosure constitutes an integral part of corporate information disclosure. according to several scholars, csr disclosure refers to the process of providing information on the environmental and social impacts of a company's business activities to relevant stakeholders. the practice of csr disclosure is rooted in shareholder theory and stakeholder theory, emphasizing that businesses, while engaging in economic activities, must ensure a balanced approach to addressing environmental, social, and community interests. in vietnam, circular no. 96/2020/tt-btc outlines disclosure requirements in the securities market for securities companies, publicly listed companies, stock exchanges, and related entities. under this regulation, in addition to financial reporting obligations, companies are also required to disclose information on their environmental, labor, and community-related activities. based on the global reporting initiative (gri) sustainability reporting guidelines and the provisions of circular no. 96/2020/tt-btc issued by the ministry of finance on securities market disclosure, the authors have developed a csr information framework for research, categorized into four main groups as follows: asian business research journal, 2025, 10(3): 50-57 52 © 2025 by the authors; licensee eastern centre of science and education, usa table 2. measurement indicators for corporate social responsibility disclosure factors. factors indicators environment related csr disclosure env1 disclosure of information on the total amount of raw materials used in production and service provision. evn2 disclosure of information on the quantity of recycled raw materials used in production and service provision. evn3 disclosure of information on the amount of energy consumed, both directly and indirectly evn4 disclosure of information on energy savings achieved through energy-efficient initiatives. evn5 disclosure of information on energy-saving initiatives. evn6 disclosure of information on water sources and water usage. evn7 disclosure of information on the number of legal violations and the corresponding fines imposed for environmental protection law infringements. evn8 disclosure of information on activities related to controlling, preventing, and remedying environmental pollution during business operations evn9 disclosure of information on environmental protection strategies and activities. labor– related csr disclosure emp1 disclosure of information on the number of employees and average salary levels. emp2 disclosure of information on compliance with safety standards and working conditions for employees. emp3 disclosure of information on healthcare policies for employees. emp4 disclosure of information on training, educational support, or financial assistance for employee development programs. emp5 disclosure of information on welfare benefits, recreational facilities, cultural and sports activities, holidays, and vacations provided to employees. emp6 disclosure of information on skill development programs and continuous learning opportunities for employees. community – related csr disclosure com1 disclosure of information on charitable activities and community events. com2 disclosure of information on sponsorship of community projects, such as public health initiatives and local socioeconomic development projects. com3 disclosure of information on job creation and skill development for the local workforce. com4 disclosure of information on activities related to developing local infrastructure and facilities. customer related csr disclosure cus1 disclosure of information on consumer protection policies. cus2 disclosure of information on product specifications and quality standards. cus3 disclosure of information on commitments to product quality, safety, and after-sales services. cus4 disclosure of information on research and development activities for new products. cus5 disclosure of information on compliance with laws protecting consumer rights. 2.3. the relationship between institutional pressure and csr disclosure to establish the foundation for proposing a research model on the impact of institutional pressure on csr disclosure, this study is based on three fundamental theories: legitimacy theory, stakeholder theory, and resource dependence theory. legitimacy theory (dowling et al., 1975) examines the alignment of corporate activities with the norms, values, and beliefs established within a given society. according to this theory, firms voluntarily disclose information about their activities to align with legal requirements and meet societal expectations. with the increasing demands from communities and stakeholders regarding corporate roles in sustainable development, csr disclosure has progressively become an institutionalized norm and has been formalized into legal regulations. consequently, businesses must align their operations with these institutionalized expectations and legal frameworks. stakeholder theory (freeman, 1984) places businesses at the center of a network of relationships with various stakeholders, analyzing corporate responsibilities and their impact on these entities. stakeholders can include direct beneficiaries of business operations, such as shareholders, employees, and government agencies, as well as those indirectly affected, such as customers, suppliers, local communities, and industry associations (carroll, 1999). resource dependence theory explores how external resources influence organizational behavior and operations. according to this theoretical framework, businesses are expected to demonstrate social responsibility by promoting sustainable resource use, such as energy conservation, recycling materials, and water-saving initiatives. such practices not only enhance business efficiency but also contribute to achieving long-term sustainability goals. the relationship between institutional pressure and the extent of csr disclosure can be explained through institutional theory, which identifies three primary forms of institutional pressure: coercive, mimetic, and normative pressures. (1) coercive pressure arises from legal regulations, government policies, and directives from regulatory bodies, compelling firms to disclose csr-related information to ensure compliance. (2) mimetic pressure occurs when firms observe and imitate industry leaders, enhancing their csr disclosures to improve corporate reputation and mitigate risks. (3) normative pressure stems from stakeholder expectations, including investors, customers, employees, and non-governmental organizations (ngos), urging firms to increase transparency in csr disclosure to maintain credibility and social legitimacy. thus, the increasing influence of institutional pressures—particularly from legal policies and stakeholder demands—significantly impacts the level of csr disclosure, fostering transparency and ensuring corporate sustainability. based on this relationship, the proposed research model is illustrated as follows: asian business research journal, 2025, 10(3): 50-57 53 © 2025 by the authors; licensee eastern centre of science and education, usa figure 1. proposed research model. based on that, the author presents the hypotheses in the research model as follows h1: coercive pressure has a positive impact on the level of environment csr h2: coercive pressure has a positive impact on the level of employment csr h3: coercive pressure has a positive impact on the level of customer csr h4: coercive pressure has a positive impact on the level of community csr h5: normative pressure has a positive impact on the level of environment csr h6: normative pressure has a positive impact on the level of employment csr h7: normative pressure has a positive impact on the level of customer csr h8: normative pressure has a positive impact on the level of community – csr h9: mimetic pressure has a positive impact on the level of environment csr h10: mimetic pressure has a positive impact on the level of employment csr h11: mimetic pressure has a positive impact on the level of customer csr h12: mimetic pressure has a positive impact on the level of community csr 3. research methodology this study employs a quantitative research methodology using spss 20 and amos to conduct exploratory analysis and examine the relationship between institutional pressure and the extent of corporate social responsibility (csr) disclosure. the target respondents are senior managers of publicly listed companies on the vietnamese stock market. data collection was carried out using a stratified random survey from october 1, 2024, to november 30, 2024. a pilot test was conducted with 10 participants to refine wording, completeness, sequence, and potential errors in the questionnaire. the questionnaire consists of two sections: section 1: collects demographic information about respondents; section 2: includes 33 questions designed to assess the factors. the quantitative research methodology applied in this study includes: exploratory factor analysis (efa): used to identify measurement groups for coercive pressure, normative pressure, mimetic pressure, and the level of csr disclosure. confirmatory factor analysis (cfa): a statistical technique within structural equation modeling (sem), used to evaluate how well the observed variables represent the underlying constructs. cfa is employed to verify unidimensionality, multicollinearity, convergent validity, and discriminant validity of the measurement scales in the model. cronbach’s alpha reliability test: used to eliminate unreliable variables before conducting factor analysis. a measurement scale is considered reliable if its cronbach’s alpha ranges between 0.7 and 0.80. a scale with cronbach’s alpha ≥ 0.6 is acceptable, whereas variables with a corrected item-total correlation below 0.3 are excluded (nunnally & bernstein, 1994). structural equation modeling (sem): used to test the proposed research model, defining the relationships between latent variables (concepts measured by multiple observed variables). sampling methodology: a non-probability sampling method was employed. regarding sample size, based on hair et al. (1998), for efa, the minimum sample size should be at least five times the total number of observed variables. given that this study's questionnaire includes 33 observed variables, the minimum required sample size is 165 observations (33×5=165). to ensure robust analysis, the study initially distributed 500 questionnaires to senior managers in publicly listed companies on the vietnamese stock market. a total of 208 valid responses were collected and deemed complete for further analysis. 4. research results and discussion 4.1. descriptive statistics with 208 valid responses collected, detailed information about the research sample is presented in table 3 as follows: asian business research journal, 2025, 10(3): 50-57 54 © 2025 by the authors; licensee eastern centre of science and education, usa table 3. sample statistics. criteria number of enterprises percentage (%) 1. industry sector 208 100 agriculture and forestry 31 14.90 industry and construction 93 44.71 trade and services 76 36.54 others 8 3.85 2. size 208 100 small enterprise 86 41.35 medium enterprise 90 43.27 large enterprise 32 15.38 the observed sample consists of 208 enterprises, categorized into four industry groups: industry and construction accounts for the largest proportion (44.71%, equivalent to 93 enterprises), followed by trade and services at 36.54% (76 enterprises). the agriculture and forestry sector represents 14.90% (31 enterprises), while diversified businesses constitute 3.85% (8 enterprises) operating across multiple sectors. regarding enterprise size, small firms account for 41.35% (86 enterprises). the largest proportion belongs to medium enterprises; comprising 43.27% (90 enterprises). large enterprises represent only 15.38% (32 enterprises), indicating a relatively low proportion of large enterprises in the sample. 4.2. exploratory factor analysis (efa) the study employs principal axis factoring (paf) extraction method with promax rotation (gerbing & anderson, 1988) and a factor loading threshold of ≥ 0.5 (hair et al., 1998). the bartlett’s test of sphericity was conducted to examine the correlation between observed variables. the efa results indicate that the total variance explained is 78.881% (>50%), the kaiser-meyer-olkin (kmo) measure is 0.893 (>0.5), and bartlett’s test is statistically significant (sig. < 0.05) (table 4) confirming that efa is appropriate for the dataset. all factor loadings exceed 0.5, the discriminant validity among factor loadings is greater than 0.3, and the explained variance surpasses 50%. additionally, the retained variables align with their original scale groupings (table 5). table 4. kmo and bartlett's test. kaiser-meyer-olkin measure of sampling adequacy. 0.893 bartlett's test of sphericity approx. chi-square 6111.111 df 528 sig. 0.000 table 5. results of exploratory factor analysis. pattern matrixa factor 1 2 3 4 5 6 7 env5 .864 env2 .849 env1 .832 env6 .828 env9 .807 env4 .807 env7 .737 env8 .737 env3 .731 emp5 .949 emp6 .894 emp4 .893 emp1 .868 emp2 .866 emp3 .771 cus4 .926 cus2 .903 cus1 .871 cus3 .815 np1 .922 np3 .890 np2 .851 np4 .816 mp1 .865 mp2 .798 mp4 .785 mp3 .756 cp1 .928 cp3 .921 cp2 .895 com3 .937 com1 .829 com2 .660 asian business research journal, 2025, 10(3): 50-57 55 © 2025 by the authors; licensee eastern centre of science and education, usa 4.3. confirmatory factor analysis (cfa) to measure the degree of fit between the theoretical model and the actual data, confirmatory factor analysis (cfa) was employed. first, the study conducted tests on the independent and dependent variables, including chisquare (cmin), cmin/df, cfi, gfi, tli, and rmsea indices. these values are considered appropriate if gfi ≥ 0.8; tli, cfi ≥ 0.9 (bentler & bonett, 1980); cmin/df ≤ 3 (carmines & mciver, 1981); and rmsea ≤ 0.08 (steiger, 1990). the cfa results (figure 2) indicate that the factor loadings of all observed variables meet the acceptable threshold (≥ 0.5) and are statistically significant, with all p-values equal to 0.000. the model has 471 degrees of freedom, with a chi-square/df value of 1.457 < 2, and the fit indices align well with the market data (cfi = 0.964; tli = 0.959; gfi = 0.840; and rmsea = 0.047). the correlation coefficients between factors ensure discriminant validity (less than 1), with p-values < 0.05 at a 95% confidence level. regarding convergent validity, the standardized factor loadings in the cfa test for all observed variables are greater than 0.5, with a statistical significance level of p = 0.000. figure 2. result of confirmatory factor analysis. thus, the actual data ensures convergent validity and discriminant validity, and the measurement model is well-fitted to the market data. 4.4. reliability testing the cronbach’s alpha test shows that the cronbach’s alpha coefficient for each factor is greater than 0.7, and all item-total correlation coefficients exceed 0.3, indicating that the measurement scales achieve reliability. the composite reliability (cr) and average variance extracted (ave) for each factor are all greater than 0.5 (table 6). therefore, the factors in the model are deemed reliable. table 6. reliability test results of the measurement scale. factors number of observed variables cronbach’s alpha realiability test composite reliability (cr) average variance extracted (ave) convergent and discriminant validity cp 3 0.941 0.941 0.841 accepted env 9 0.941 0.941 0.641 accepted emp 6 0.952 0.953 0.772 accepted cus 4 0.939 0.939 0.795 accepted np 4 0.937 0.938 0.790 accepted mp 4 0.888 0.887 0.663 accepted com 3 0.855 0.861 0.677 accepted 4.5. structural equation modeling (sem) the estimation results of the research model (figure 3) indicate that the relationship betweet factors is statistically significant (p < 5%). specifically, the model has 478 degrees of freedom, with the following fit indices: chi-square/df = 1.497; cfi = 0.960; gfi = 0.834; tli = 0.956; and rmsea = 0.049, confirming that the model is well-fitted to the market data. asian business research journal, 2025, 10(3): 50-57 56 © 2025 by the authors; licensee eastern centre of science and education, usa figure 3. results of the standardized sem structural model test. the estimated results of the relationships presented in table 7, indicate that hypotheses h1, h2, h4, h5, h6, h7, h8, h10, h11, and h12 are supported, as their p-values are all below 5%. in contrast, hypotheses h3 and h9 are rejected due to p-values exceeding the 5%. table 7. estimated results of relationships in the research model. standardized estimate s.e c.r p note env <--cp 0.277 0.070 3.966 *** accepted h1 emp <--cp 0.227 0.078 2.895 0.004 accepted h2 cus <--cp 0.083 0.066 1.251 0.211 rejectedh3 com <--cp 0.257 0.088 2.930 0.003 accepted – h4 env <--np 0.296 0.074 4.020 *** accepted – h5 emp <--np 0.260 0.083 3.133 0.002 accepted – h6 cus <--np 0.397 0.071 5.568 *** accepted – h7 com <--np 0.193 0.093 2.084 0.037 accepted – h8 env <--mp 0-.029 0.069 -.428 0.669 rejectedh9 emp <--mp 0.171 0.078 2.190 0.029 accepted – h10 cus <--mp 0.298 0.068 4.417 *** accepted – h11 com <--mp 0.210 0.088 2.394 0.017 accepted – h12 the standardized estimate values from the sem regression model indicate that the coercive pressure factor exerts a positive impact on the level of csr disclosure regarding the environment, labor, and community. normative pressure has a positive effect on four aspects of csr disclosure, namely the environment, labor, customers, and community. in addition, mimetic pressure positively influences three aspects of csr disclosure— specifically, those related to labor, customers, and community. however, the coercive pressure factor does not significantly affect csr disclosure pertaining to customers, while mimetic pressure does not have a significant effect on environmental disclosure. 5. conclusion based on a study of 208 senior managers from publicly listed companies on the vietnamese stock market, empirical evidence demonstrates that institutional pressure positively impacts the level of csr disclosure. specifically, coercive pressure has the most substantial effect on environmental disclosure, followed by communityrelated disclosure. normative pressure is found to exert the strongest influence on customer-related csr disclosure, followed by the environmental and labor aspects. mimetic pressure, in contrast, shows the greatest impact on customer-related disclosure, then on community, and finally on labor-related csr disclosure. the findings suggest that state management agencies should refine the legal framework and enforce stricter regulations to enhance coercive pressure, particularly with respect to the disclosure of environmental information and community responsibilities. furthermore, professional organizations and business associations are encouraged to promote normative pressure by establishing comprehensive csr evaluation indices and incentivizing best practices in information disclosure, especially regarding customers, the environment, and labor. finally, to amplify mimetic pressure, it is recommended that communication efforts be intensified around pioneering companies in csr disclosure, thereby creating a ripple effect throughout the industry. such measures are expected to bolster transparency and foster sustainable development within companies. although this study was conducted among publicly listed companies on the vietnamese stock market, limitations related to time and budget resulted in a relatively small sample size, potentially affecting the overall representativeness of the findings. moreover, as the research focused solely on evaluating the influence of asian business research journal, 2025, 10(3): 50-57 57 © 2025 by the authors; licensee eastern centre of science and education, usa institutional pressure on the level of csr disclosure, its generalizability remains limited. it is plausible that other factors, such as company characteristics, corporate governance, and organizational culture, may also influence the extent of csr disclosure. this observation provides a potential avenue for future research. acknowledgments: this paper is a result of the ministerial-level scientific research project, code: b2023-hdt-03. references bansal, p., & clelland, i. 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(2011). understanding environmental management accounting (ema) adoption: a new institutional sociology perspective. social responsibility journal, 7(4), 540-557. https://www.emerald.com/insight/content/doi/10.1108/17471111111175128/full/html ministry of finance (2020). circular no. 96/2020/tt-btc dated november 16, 2020, providing guidance on information disclosure in the securities market. https://vanban.chinhphu.vn/default.aspx?pageid=27160&docid=201902 steiger, j. h. (1990). structural model evaluation and modification: an interval estimation approach. multivariate behavioral research, 25(2), 173-180. https://www.tandfonline.com/doi/abs/10.1207/s15327906mbr2502_4 vietnam chamber of commerce and industry (2023). 2023 sustainable development report. vcci. 72 © 2024 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 9, 72-82, 2024 issn: 2576-6759 doi: 10.55220/25766759.199 © 2024 by the authors; licensee eastern centre of science and education, usa the perception and approach of bangladeshi ready-made garment factory in the current context of digital marketing meheraz zannat1 tareq iqbal2  tamanna tasnim3 1department of sciences, bgmea university of fashion and technology, dhaka, bangladesh. email: meheraz@buft.edu.bd 2department of textile engineering, sheikh rehana textile engineering college, gopalganj, bangladesh. email: tareqiqbal36@gmail.com 3cgm (it and billing), bangladesh telecommunications company ltd., dhaka, bangladesh. email: tasnimhstu7@gmail.com ( corresponding author) abstract as a catalyst, digital marketing promotes consumer interaction, recognition of the brand, and broadening company growth. since the bangladesh ready-made garment sector makes a significant contribution to the economy of the country and engagement in the international market, the primary purposes of the study-the current scenario and perception of textile factories regarding digital marketing were analyzed using convenience sampling in a mixed-method approach and a self-made questionnaire, data from 29 factories. descriptive statistics explored the factory's full consciousness of the effectiveness of digital marketing, but implementation and updates were slow and had limited benefits. it also attempts to develop hypotheses to observe which variables have a relationship with the factory’s initiative in digital marketing, and the fisher exact test was applied. the odds ratio had helped for better interpretation, and most of the factories accepted that investment in digital marketing was worthy due to its cost effectiveness. now the capabilities of digitalization are a matter of consideration, though sometimes factories are offered digital marketing from their suppliers, and then it’s easy to apply it to their buyers. ultimately, building partnerships with technically sound companies and developing diversified items can help managers, owners, and stakeholders prosper in their worldwide business growth. keywords: b2b marketing, digital marketing, fisher exact test, odds ratio, ready-made garment factory. jel classification: m31; c12. 1. introduction developing, conveying, and providing value to customers as well as nurturing interactions with clients in a way that upsides the business and its stakeholders are the operations of marketing, which is an institutional activity. now from traditional to digital, digital marketing is a relatively new idea that benefits both buyers and sellers, (keefe, 2004) and the advertising of goods and services through digital means of distribution that reach clients in an opportune, pertinent, customized, and economical way is known as digital marketing (almasud, 2017). straightforwardly, doing business via an internet or web-based platform is digital marketing (chaffey, 2013), which is less expensive compared to traditional marketing (shaikat , 2022). the recent significant expansion of rmg sectors can be attributed to these technological developments along with globalization. as a consequence, numerous nations, such as china, bangladesh, india, vietnam, and turkey have become prominent participants in the worldwide garment export industry (eximpedia, 2024). bangladesh, in the worldwide apparel export rankings, holds the second-largest position, with an estimated export value of usd 45 billion in 2022, representing 7.9% of the total market and first position in south-asia region (world trade organization, 2023). the usa and europe are currently the main importers of rmg products from bangladesh and followed by some other countries (chowdhury, 2023). between april and june of fy23, 70.95% of all rmg exports were from the us, germany, the uk, spain, france, italy, the netherlands, canada, and belgium (research department, 2023). since bangladesh is one of the world's top five fastest-growing economies (ministry of finance, 2020) and rmg ranked one of the export products of bangladesh (research department, 2023), in fy 23 alone, rmg alone made a noteworthy contribution of 10.35% to the country's gdp (research department, 2023). in addition to bringing in foreign revenue for the nation, this industry employed the greatest number of people both in terms of employment and the economy overall, second only to agriculture (haque & bari, 2015). since most textile trade in bangladesh is b2b and most of the buyers are from abroad (choudhury, 2019), b2b e-commerce among rmg firms plays a vital role in helping least-developed countries (ldcs) like bangladesh improve their local and international trade (hoque & boateng, 2017). bangladesh's manufacturers are adopting digital transformation at an accelerating rate, from digital design and production processes to online sales channels (uddin, 2024), as a result of the rapid growth of internet, mobile, and online banking usage and changes in people's ways of living (almasud, 2017). in order to communicate with foreign buyers, the usage of the internet makes it mailto:meheraz@buft.edu.bd mailto:tareqiqbal36@gmail.com mailto:tasnimhstu7@gmail.com https://www.doi.org/10.55220/25766759.199 asian business research journal, 2024, 9: 72-82 73 © 2024 by the authors; licensee eastern centre of science and education, usa easier, faster, and clearer for clothing manufacturing companies, and factors that influenced the adoption of the internet were government support, management's information-sharing culture, organizational capabilities, competitive intensity, and level of commitment (riyadh et al., 2014). the online presence of bangladesh's apparel industry improves its branding and visibility around the world (uddin, 2024). social media utilization benefits employees during the manufacturing and merchandising of apparel, as well as providing an array of assistance for buyers (sarbabidya, 2020); brand recognition for rmg is ensured by seo; the transmission of personalized payoffs and changes through email fosters customer relationships, etc. (ali et al., 2021). moreover, rmg factories can grab the chance to create mobile-based ubiquitous system (mbus) due to the widespread use of mobile phones (ahad & busch, 2023). in spite of the worldwide spread of digital marketing, digital marketing is still not considered a very good tool in b2b rather than b2c (sayem, 2021). however, the trend for b2b e-commerce has increased over the last decade. the supplier searches online in the post-pandemic era have increased by 87% (statista, 2023). global b2b e-commerce market is expected to be reach 20.9 trillion dollars by 2024 (n, 2024). though bangladesh rmg has been doing well, this industry is still in the early phase of digitalization (sayem, 2021). moreover, most of the bangladeshi textile enterprises offer finished clothing to overseas buyers (bgmea report, january, 2024) and sells very limited garment products and its export basket is filled with very limited items. 73% of the total exports of $34 billion come from selling only five items: t-shirts, sweaters, trousers, jackets and shirts (sayem, 2021). in addition, the backward linkage is mostly import-dependent, except for the accessories, where 99% of the accessories are sourced locally (bgmea report, january, 2024). even, 48.9% rmg factories in bangladesh are small scale (moazzem & ahmad, 2018 (11). but attain long-term prosperity and thrive in the global market, regardless of the size of the company, establishing connections with businesses at the frontier of technology is essential (chowdhury, 2023), and in this purpose digital marketing provides an opportunity to advertise the items online (aydin, 2022). so, according to the prior research and the necessity of bangladesh rmg sectors to be involved in digital marketing broadly, this study attempts to understand how much rmg factories are making themselves ready to take the leverage of this digital opportunity and what variables have a relationship with the initiative taken by the factory. because perceptions of rmg factories, usages of digital methods that can drive the necessary traffic to them in order to increase sales, and associations with factors like capability to start, the raw materials supplier’s status toward digital marketing, etc. were not considered in a mixed-method approach ever. therefore, these have all been done in this one investigation. so finally, the objectives of the study are: 1. to realize the current scenario of digital marketing for the selected garment factories. 2. to understand the perception of factories regarding digital marketing. 3. to identify the variables associated with factories’ launching digital marketing initiatives. the literature review contains the conceptual structure for this investigation. the study's precise requirements are specified in the introduction, and literature review furnishes a synopsis of prior research. at the conclusion of the literature review, to specify the association between variables—which are the answer to the study's third query—all hypotheses will be developed with the assistance of corresponding articles. in result section based on primary data, the first two objectives are analyzed with the help of descriptive statistics and regarding the testing of the hypotheses, fisher's exact test is used. finally, discussion of the results provides sufficient information to draw informative conclusions regarding the perception of digital marketing in rmg sectors, which will be helpful for future research as well. 2. literature review 2.1. marketing and history of digital marketing marketing can be defined in many ways. it is traditionally defined as a social process in which people and organizations develop, offer, and freely exchange valuable goods and services with one another in order to fulfill their needs and desires. again, the management definition of marketing is frequently given as the craft of product sales (kotler, 2000). the phrase "digital marketing" was first coined and used in 1990. the web 1.0 platform was created at that time, and it assisted users in finding the information they needed while being limited to information sharing via the web. additionally, the internet infrastructure was either not enlarged or difficult for customers to access, and businesspeople and specialists lacked sufficient expertise about digital marketing. initially, the engine gofer network protocol was the search name in 1991. following yahoo's founding in 1991, businesses began to post content on their websites to a maximum (smyth, 2007). the year 1993 marks the official start of the digital marketing era, as that is when it all started. this year saw the launch of the first clickable online banner, and hotwired bought several banner ads to market and promote their products. the first internet-based transaction was done in 1994, the same year that yahoo was introduced. a year after its debut, yahoo had one million likes. yahoo had also modified the meaning of digital marketing and marketing in general. moreover, businesses have attempted to improve their web pages to obtain a higher ranking through search engines (shalauddin, 2022). 2.2. digital marketing tools internet plays the most vital role in digital marketing and it involves combining the internet facilities with traditional marketing to make marketing more extensive (bala & verma, 2018). digital marketing can be done through various tools. among these tools, seo (search engine optimization), social media marketing, content marketing, e-marketplace, email, websites, banners, sponsored links etc. are prevalent. seo: seo provides a unique way to bring the company’s website or page to the first place if anyone searches for the company (choudhury, 2019). it helps by defining the relevancy of each page to a search and providing an accurate description and classification of the website (kibria, 2021). seo-friendly sites also give a positive vibe about the company in the customer’s mind (choudhury, 2019). social media: social media marketing benefits the business by helping it establish connections with consumers, communities, and stakeholders (felix et al., 2017), reduce marketing expenses (edelman, 2007), and promote its brands (nasir et al., 2021). it includes multiple platforms like facebook, youtube, twitter, instagram and linkedin that can be utilized by the rmg companies. while youtube is a video-based site for promoting sales, linkedin appears to be a more formal venue for buyer-seller interaction. facebook's significant influence can also be leveraged to increase growth (choudhury, 2019) by focusing on specific demographics such as age, gender, and asian business research journal, 2024, 9: 72-82 74 © 2024 by the authors; licensee eastern centre of science and education, usa location. since instagram is a photo-based platform and merchants can use twitter to tweet website links, services, products, and pictures (kibria, 2021). in addition, social media marketing is one of the most effective digital marketing strategies in bangladesh (shalauddin, 2022), and it has been shown that having a strong social media presence may improve reputation, trust, and brand awareness (nizam et al., 2024). content marketing: building and expanding information resources to increase traffic, generate leads, build brand recognition, and attract customers. this through different textile-related magazines, and blogs can reach to buyers. contents usually include useful information about the manufacturing company, which may attract the buyer. factory tale of textile today can be mentioned here an example (choudhury, 2019). e-market places: this might seem like a platform that connects buyers and vendors. numerous services have been introduced here over the past ten years. here, anyone may simply use the web to buy and sell their goods and services. merchant bay can be an example of it (choudhury, 2019). email: for a long time, marketing through email has been used by sellers to message companies’s information (choudhury, 2019). companies send emails to consumers informing them of product niceties and grants (barone, 2020). so, email marketers need to be creative writing professionals as well as have a strong understanding of marketing to succeed in this digital industry (ryan & jones, 2022). websites: to increase website's rating and traffic, the majority of bangladeshi businesses employ many platforms (kibria, 2021). a website is actually a collection of electronically generated web pages that contain all the information about a company's background, operations, goods, and services, and are updated periodically. it is an efficient way for smaller businesses to advertise themselves internationally and is a useful tool for buyers and sellers to exchange information, both domestically and internationally. the large companies may potentially be threatened by this (choudhury, 2019). online advertising: this outdated regulation is frequently utilized by it and telecom firms, as well as other businesses using google adwords to connect buyers (kibria, 2021). advertisement through digital graphics like banners and sponsored links can also be fruitful if done in a more customized manner (choudhury, 2019). 2.3. contribution in national economy of bangladesh rmg sector with its remarkable expansion in the previous 20 years, bangladesh's rmg industry is now a significant contributor to the nation's gdp, employment, industrialization, foreign exchange profits, and exports (chowdhury, 2023). amazingly, rmg exports increased to usd 46991.61 million in fy 2022–2023 from just usd 31.57 million in fy 1983–1984. the rmg industry accounted for only 3.89% of bangladesh's overall export revenues in fy 1983–84, but now (fy 2022–2023) it accounts for about 84.58% (bgmea, export performance). research indicates that from 2015 to 2019, bangladesh's rmg exports increased at a rate of 8% (haque & bari, december, 2020), and in fy23, they significantly contributed 10.35% to the country's gdp (research department, 2023). right now, in bangladesh, there are 3648 rmg companies (bgmea and bkmea enlisted factories and non-member factories are respectively 2561 and 1087) are found and 2870045 workers are working there (mib, 2024). remarkably, a large fraction of bangladesh's garment labor force—mostly women—comes from rural backgrounds, (afsar, january 2003) (zohir, 2001) and in 2015, 65% of total workers were women (haque & bari, 2015). since both large and medium-sized businesses are engaged in the country's textile sector (choudhury, 2019), ultimately, from 2018 to 2022, the total estimated employment increased from 4.5 to 5.2 million (chowdhury, 2023). 2.4. mobility of the rmg sector in global exports bangladesh rmg sector benefited greatly once the multi-fiber arrangement (mfa) quota took hold, evolved and polished eventually (bgmea, about garment industry of bangladesh, n.d.). from us$620 million in 1990 to us$5.7 billion in 2004, bangladesh's garment exports increased eightfold (chowdhury, 2023). although bangladesh's garment industry challenges significant obstacles due to the removal of mfa import limits, the country's active participation in various bilateral and regional preferential trade agreements encourages hope for positive trade outcomes. in 2006, rmg sectors exceeded all pre-established projections by around us$500 million in exports (chowdhury, 2023). bangladesh is now recognized worldwide as a reliable source for clothing (bgmea, industry strengths, n.d.) and is the world's second-largest exporter of clothing (world trade organization, 2023), with over 150 countries importing ready-made clothing from bangladesh for a variety of purposes (bgmea, industry strengths, n.d.). the main importers are the usa and europe, and from april to june of fy23, this industry brought in usd 8329.16 million from the usa, the uk, germany, spain, france, italy, the netherlands, canada, and belgium (research department, 2023). from january to march 2023, in terms of volume, bangladesh surpassed china to take the lead in garment shipments to the european union (mirdha, 2024). bangladesh has been the third-largest supplier of clothing goods to the united states, after china and vietnam (rmg bangladesh, 2024). several factors are driving this growth. such as product diversification within the industry, high-value items are produced including growing market share in some new areas like korea, japan, and india. bangladesh additionally got several orders that were moved from china and vietnam at the same time (bhuiyan & uddin, 2023). 2.5. digital marketing in rmg (b2b business) and development of hypotheses a study outlined that b2c was more effective in digital presence than b2b (businesses interact with each other). it had rationality because the end consumer spent more time online and in b2c there is direct end customer involvement with the company (silva & vassiljev, 2011). the majority of bangladesh's textile trade is b2b, and in order to increase their share of global economies, as marketing is a crucial component of corporate organizations' existence and expansion, effective marketing activities should be carried out by the rmg sectors (choudhury, 2019). individual adoption of it and e-commerce is the subject of the majority of earlier research based on theories of technology adoption (lu et al., 2005; venkatesh, 2006). a small number of studies had addressed a wide range of viewpoints, including company growth (moreton, 1995), structural setting (sahay & robey, 1996), administrative practice (daniel et al., 2002), and social as well as political context (cousins & robey, 2005) to examine the adoption of e-commerce at an organizational scale as of recently. furthermore, a great deal of work has gone into balancing the managerial, creative, and environmental viewpoints on e-commerce adoption in developing nations like bangladesh (molla & licker, 2005). asian business research journal, 2024, 9: 72-82 75 © 2024 by the authors; licensee eastern centre of science and education, usa the development of local and international trade for least-developed countries (ldcs) like bangladesh is greatly aided by b2b e-commerce amongst rmg enterprises. but in bangladesh, b2b e-commerce is not expanding quickly. adoption of b2b e-commerce is highly dependent on external factors, namely those linked to government, market forces, and supporting industry ereadiness, according to research using the perceived ereadiness model (perm) model. it would be possible for bangladesh's rmg sectors to institutionalize and initially adopt e-commerce if they focused more on their internal it staff, management support, current commercial relationships, and technological resources, though adoption and institutionalization were driven by distinct variables (hoque & boateng, 2017). tariqul (2017) discovered three factors—customer focus, inventory control, and negotiation—that have a non-significant relationship to the adoption of b2b e-commerce in bangladesh's rmg sector, while cost savings, security, sourcing, and spontaneous solutions—have a significant positive relationship (islam, 2017). modern marketing strategies are the outcome of significant internal and technological advancements over the past ten years. the country is becoming more promising for digital marketing due to the swift explosion of internet, mobile, and online banking usage, as well as changes in people's lifestyles and labor migration outside (al masud, 2017). as a means of communication, the internet has made it possible for many apparel manufacturing enterprises to speak with their international buyers more quickly, easily, and unambiguously. the factors that had the biggest effects on internet adoption were government support, management's information-sharing culture, organizational capabilities, competitive intensity, and level of commitment. organizational readiness is combined with organizational capabilities, information sharing culture, and management commitment level; the remaining components are combined with external pressure. while both will increase the desire to use the internet, organizational readiness —rather than external pressure—has the biggest impact (riyadh et al., 2014). according to this literature, the following hypothesis is developed: h1: there has been significant relationship between the capabilities of the factory to digitalize and the initiatives taken by the factory for digital marketing. similarly, technical advancement and internet exploitation are vital for the clothing industry since online purchases and web-based connection with customers are critical to its success. apparel industries rely on merchandisers and highly skilled salesmen because the mainstream media plays a minor role in this area, making advertisement for product difficult (hasan & hafez, 2014). still, it is possible to draw the conclusion that the examined rmg factories use social media to help staff in the manufacturing and merchandising of clothing, in addition to offering a range of amenities to clients (sarbabidya, 2020). by improving their web presence and generating organic traffic, seo makes sure that rmg brands are identifiable. another aspect of marketing is email marketing, which builds client relationships by sending out customized payoffs and modifications. combined, these tactics increase the reach of the brand and allow rmg businesses to interact with customers, learn about their preferences, and quickly adjust to shifting market conditions (ali et al., 2021). to sum up, the proliferation of mobile phones in bangladesh presents a chance for rmg factories to create mobile-based ubiquitous system (mbus) (ahad & busch, 2023). the rmg factories must learn how to maintain a balance between using social media to serve customers and maintaining a reliable, trustworthy brand image while operating at a low cost and with proficiency and productivity (agnihotri et al., 2012). the reason is that rmg firms that engage with social media must understand that a variety of uncontrollable hazards, such as privacy and security concerns, might have an impact on the clients they serve (jarvinen et al., 2012; vuori, 2012). again, the growth of digital marketing is further hampered by factors such as the infrastructure supporting electronic banking (hossain, 2000), a lack of field experts and human resources (hoque et al., 2015), security concerns, low per capita income, a lower rate of internet access, and a lack of infrastructure development. yet, the competitive landscape of company prosperity, economic volatility, and consumer preference is making it harder to start a business in bangladesh (almasud, 2017). so, the following hypothesis is developed based on the above: h2: there has been significant relationship between the worthiness of the investment benefits of digital marketing and initiatives taken by the factory in digital marketing. not only rmg factories are embracing digital marketing, but sometimes their suppliers offer different types of digital marketing to them. here, the garment factory is the buyer for its raw material supplier (rahman, 2018). despite these, research during the last decade reported that marketers did not fully explore digital marketing in b2b by relying on traditional b2b interactions (karjaluoto et al., 2015). another study argued that human face-toface interaction is essential with digital technology in b2b (olsson & uhlin, 2015). thus, a new and final hypothesis is developed here: h3: there has been significant relationship between suppliers’ digital marketing initiatives and initiatives taken by the factory on digital marketing. asian business research journal, 2024, 9: 72-82 76 © 2024 by the authors; licensee eastern centre of science and education, usa (a) flowchart of data analysis (b) research model figure 1. flowchart and research model. 3. methodology 3.1. participants this research was done on the basis of a questionnaire that was filled out by the employees like junior executive, executive, senior executive, assistant manager, manager, and senior manager or more of different factories. the data was collected from 29 factories situated near the dhaka city. 3.2. instrument development, sampling and data collection a mixed-method approach was taken in this research to meet the study's objectives. mixed-method approach to research entails obtaining, evaluating, and combining quantitative and qualitative data. this self-made questionnaire included socio-demographic information, three open-ended and seven closed-ended questions was administered to the twenty-nine factories to make an idea on the recent scenario, perception and initiatives has taken by the factory to capture the market on digital marketing. as a result, the final questionnaire was split into the following three sections: 1. there were four questions in the socio-demographic characteristics, covering the following topics: name of company, level of education, current employment status and current working place of respondents. 2. qualitative data: three open-ended questions on the digital presence of factories on different platforms (web-based and social media) and the benefits that factories achieve from digital marketing. 3. quantitative data: seven closed-ended questions shade on perception of digital marketing, habit to update websites and upload stories; initiatives taken by factories and suppliers; capability to go digital; and worthiness of the investment benefits. the level of measurement was set to ordinal for all these items. data was collected offline; only from those factories where the researchers had access. therefore, this study is based on the convenience sampling method of non-probability sampling to collect the primary data while taking into account the study's goals. since all of the respondents were well educated and could accurately answer every question, the questionnaire was created in english. additionally, volunteers were available at the respondents' office to clear up any doubt they could have had about any particular topic. in order to complete all responses in a google form that the researchers had created, volunteers gathered all completed questionnaires. the data was saved by the researchers when the survey was completed, and data analysis immediately followed. the researchers trained the volunteers on the subject, and during the factory survey, they maintained direct communication with the researchers via phone calls, whatsapp messages, and facebook. 3.3. data analysis data was collected offline, and finally, the compiled data was analyzed. since a semi-structured questionnaire was used to analyze it, descriptive statistics like pie charts and bar diagrams were used to depict the current scenario of digital marketing for the selected garment factories, their perceptions regarding digital marketing and their presence on different social media sites. moreover, three hypotheses were developed from the structured part of the questionnaire to find out the association between initiatives taken by the factory and a few other factors to capture the market through digital marketing. for testing hypotheses, the fisher exact test was used (frey, 2018) asian business research journal, 2024, 9: 72-82 77 © 2024 by the authors; licensee eastern centre of science and education, usa instead of the chi square test due to the smaller sample size and the expected count being less than five in many cases to test the existence of an association between variables (mchugh, 2013). the phi coefficient was also calculated to measure the strength of this association. along with the results of the fisher exact test and the phi coefficient, better explanation was done with the help of the odds ratio; and the lambda coefficient was used to estimate the percentage of error reduction to predict one variable in account of another. a high percentage of error reduction indicates a better possibility for prediction. the significance level for all statistical assessment was established at 5% (α = .05). all of these analyses were performed using ms excel (version 2013) and ibm spss for windows (version 25). 3.4. validity and reliability in the case that the items in the questionnaire precisely measure the construct, it will be declared content valid. since the pertinent of the items or tests to assess the behavioral study of the questionnaire is content validation (cohen & swerdlik, 2018) (slaney, 2017). in terms of content validation, the four criteria for item evaluation are representativeness, clarity, factor structure, and comprehensiveness (rubio, berg-weger, tebb, lee, & rauch, 2003). each question in this questionnaire was developed based on the literature review. for the purpose of content validity table 1, four academicians, one marketing manager and one hr executive ensured their attendance on the panel of experts. academicians—content or domain experts—joined from renowned bangladeshi textile-based universities with their expertise in marketing and apparel sectors, and factory experts—lay experts joined from garment factories. each question was asked to be rated by all experts according to its level of relevance and clarity. since the questionnaire did not show any specific dimensions, the factor structure of item evaluation was dropped from the questionnaire. the techniques of assessment used here were the item-level content validity index (i-cvi) and the scale-level content validity index averaging (s-cvi/avg) (polit, beck, & owen, 2007). the allowed minimum cvi (i-cvi and s-cvi/avg) value was .83, since six experts participated in the evaluation (polit & beck, 2006) (polit, beck, & owen, 2007). the questionnaire did not include any items that had an i-cvi score of less than .83. experts' remarks regarding the understandability and importance of questions were saved for use in the final draft of the questionnaire. table 1. content validity assessment using i-cvi and s-cvi/avg of relevance and clarity. items relevance rating i-cvi clarity rating i-cvi interpretation 3 or 4 1 or 2 3 or 4 1 or 2 q1 6 0 1 6 0 1 appropriate q2 6 0 1 6 0 1 appropriate q3 0 6 0 0 6 0 revised/ removed q4 6 0 1 6 0 1 appropriate q5 4 2 .67 6 0 1 revised/ removed q6 6 0 1 6 0 1 appropriate q7 6 0 1 6 0 1 appropriate q8 6 0 1 6 0 1 appropriate q9 6 0 1 6 0 1 appropriate q10 6 0 1 6 0 1 appropriate q11 6 0 1 6 0 1 appropriate q12 6 0 1 6 0 1 appropriate s-cvi/ave 0.89 0.92 note: i-cvi = summation of the relevancy score for each item divided by number of experts. s-cvi/avg = summation of all i-cvi/number of items. item in relevance scale of 3 or 4 and clarity scale of 3 or 4 was rated by 1 and item in relevance scale of 1 or 2 and clarity scale of 1 or 2 was rated by 0. the last stage of content validation is comprehensiveness, where items should be removed or not finally decided. at last, this questionnaire was made up of ten questions, of which three out of five were open-ended questions and seven were closed-ended questions kept unchanged based on the i-cvi scores. this methodology facilitates the evaluation of the degree of coherence among responses on different items in an instrument. in order to assess how well the survey questions, relate to one another, cronbach's alpha is used to test the inter-item reliability. an acceptable reliability (tavakol & dennick, 2011) was found only for closed-ended questions (7 items; cronbach's alpha α =.764) from final questionnaire. this acceptable value of reliability showed adequacy of survey items in respect of internal consistency. for optimal validity and reliability, just one respondent from each factory was permitted to participate in this survey (isaacs, 2015). 4. results and discussion 4.1. demographic characteristics in this research, analyses were done using the collected data through a proposed questionnaire, and after this, conclusions were drawn on the present scenario of digital marketing. the survey was conducted in 29 factories. employees with different employment statuses helped out to fill out the questionnaire, where 38% junior executives, 28% executives, 3% senior executive, 14% assistant managers, 10% managers, and 7% senior managers or more were included. 17% participants have a master’s degree, while others (83%) have a minimum bachelor’s degree as their educational qualification. 4.2. present scenarios of digital marketing digital presence refers to a company's or factory's online appearance (tortorice, 2022) and having a web presence is the simplest way to make a company more accessible to clients (moyers, 2020). even with the use of digital tools like a website, social media accounts, business directory listings, client testimonials, and other internet resources, creating a digital presence is quite simple (moyers, 2020), and a company's web presence is comprised of asian business research journal, 2024, 9: 72-82 78 © 2024 by the authors; licensee eastern centre of science and education, usa and may be summed up as the online impression of its brand created by content, websites, search engines, and other digital media and platforms (tortorice, 2022). since website is the first step in doing digital marketing, factory representatives were asked about their digital presence on different digital platforms. figure 2 illustrates the condition of the web-based digital presence of the selected factories: figure 2. digital presence of factories on different web-based. though a factory's digital presence ensures its visibility on the internet, here, factories’ digital presence is not up to par. only a few factories were noticed on all types of digital platforms, while the majority of the factories separately maintained only a normal website, and being bgmea-enlisted was the top second choice. other digital presences were found on a small scale. in bangladesh's textile industry, it is clear that companies are eager to have at least a personal website that buyers can review and use to establish mutually beneficial business partnerships (choudhury, 2019). moreover, nearly half of the factories ensured their presence on facebook, youtube, and linkedin, which all are social media-based digital platforms, and another one-fourth were at least facebook users with other sites or not. somehow the huge popularity and the innumerable users of facebook than any other social media platforms (shewale, 2024) is the reason of this biggest digital presence in bangladesh of rmg factories. figure 3 is the illustration of this all. figure 3. digital presence of factories on different social media. once more, a digital marketing tool aids in the identification of potential customers, new markets, target prices, ideal quality, precise lead times, etc. for manufacturers. because reaching more customers and persuading them to make purchases is the common goal of businesses seeking to achieve growth, and the benefits factories can make will solve the interaction and marketing problems (akter & uddin, 2021). so, in response to the benefits factories can make in bangladesh, they mainly benefited from getting new markets and new buyers figure 4. figure 4. the benefits of factories achieved from digital marketing. note: bars are indicated with 1, all carries around 4% of total responses. asian business research journal, 2024, 9: 72-82 79 © 2024 by the authors; licensee eastern centre of science and education, usa while benefited from working on a target price in a given specified lead time holds the top second advantage for them. but the most surprising fact is that a small percentage of factories still thought digital marketing could not provide any benefits for them. besides these, regularly updating a website with digital contents like photos, videos, stories, or other contents is a major indicator of digital marketing, where these engagements can determine a factory's interest, activity, and communication level to serve buyers with the widespread use of the internet. though a small number of factories were reluctant, a huge number of factories were observed frequently or effectively updating their websites, or at least once in a while. again, regarding upload stories, factories showed their interest on a monthly basis and then weekly or daily. but a huge number of factories amazed by never uploading any stories. in respect of story upload, factories were found busy with website updates, and it was at a moderate rate. figure 5 demonstrates updates and uploads of websites, stories, etc. figure 5. website updates (using photography, videography, content, graphics) and stories uploaded (to their website and other communication channels). 4.3. perception of factories regarding digital marketing almost all factories felt that digital marketing is more effective than traditional marketing figure 6, even if a small fraction still believed it could not benefit them. no responses were culled against its usefulness, and this high rate of acceptance is enough to summarize the factory’s perception. though factories were concerned about the worth of digital marketing, the benefits they could make were not enough. figure 6. opinions on the effectiveness of digital marketing over traditional marketing. 4.4. hypotheses testing now is the time to test the three proposed hypotheses with the help of fisher’s exact test. in this purpose, the number of factories that have already taken initiatives in digital marketing is the first and foremost criteria for identifying the variables associated with factories’ launching digital marketing. it was found that 83% factories took digital marketing initiatives, whereas only 17% factories had not taken any. in the same way, 76% factories replied that they were capable to digitalize, and the rest of the responses 24% were recorded as incapable. on the other hand, 86% factories thought the benefits of digitalization were worth the investment to go digital, though 14% factories stood against this opinion. 66% factories received digital marketing initiatives from their suppliers, while 34% factories did not. table 2. factory responses regarding capability to digitalize, worthiness of the investment benefits, initiatives taken by suppliers and initiatives taken by factories. variables options n variables options n capability to digitalize most competent 1 initiatives taken by suppliers made on a large scale 2 more competent 21 made on a small scale 19 competent 0 not discussed yet 0 less competent 8 supplier(s) showed interest but did not make digital marketing yet 9 least competent 1 supplier(s) is(are) not interested regarding digital marketing at all 1 worthiness of the investment worthiest 1 initiatives taken factory has taken initiatives on a 2 asian business research journal, 2024, 9: 72-82 80 © 2024 by the authors; licensee eastern centre of science and education, usa benefits by factories large scale worthier 25 factory has taken initiatives on a small scale 23 neutral 0 do not think about it yet 0 worthless 4 factory has not taken any initiatives 5 most worthless 1 factory is not interested to take any initiatives now 1 actual responses were collected based on 5-point likert item table 2. but to make the proposed three tests of hypotheses table 3 easier, convert them into yes and no. table 3. results of fisher’s exact test and odds ratio for capabilities to digitalize, worthiness of the investment benefits and suppliers’ digital marketing initiatives with initiatives taken by the factory on digital marketing. variables initiatives taken by factories 𝝋 p or 95% ci yes no ll ul capability to digitalizea yes 19 3 0.17 0.569 2.53 0.33 19.53 no 5 2 worthiness of the investment benefitsb yes 23 2 0.61 0.010* 34.50 2.35 505.75 no 1 3 initiatives taken by suppliersc yes 17 2 0.25 0.306 3.64 0.50 26.76 no 7 3 note: a) 2 cells (50.0%) have expected count less than 5. the minimum expected count is 1.21. b) 3 cells (75.0%) have expected count less than 5. the minimum expected count is 0.69. c) 2 cells (50.0%) have expected count less than 5. the minimum expected count is 1.72. ll → lower limit, ul → upper limit. results of lambda. a) .00 (symmetric), .00 (factory dependent), and .00 (capability dependent), no variable can help in predicting one another, symmetrically or asymmetrically. b) .33 (symmetric: approximately 33% of errors can be reduced in predicting one variable on account of another), .40 (factory dependent: approximately 40% of errors can be eliminated in predicting factories’ initiative by taking account of the benefit drawn from investment), and .25 (benefit dependent: approximately 25% of errors can be eliminated in predicting the benefit drawn from investment by taking account of factories’ initiative) c) .07 (symmetric), 00 (factory dependent) and .10 (supplier dependent). *p < .05 in table 2, fisher’s exact test stated an unrelated (non-significant) relationship between capabilities to digitalize and factory’s initiatives. even the phi coefficient,𝜑 indicated no more than a trivial relationship (fleiss, 1981) with the initiative taken by the factory regarding digital marketing, and the odds ratio (or) explained this scenario: factories that took initiatives were around three times more likely to have the capability of going digital than those that did not. one important aspect of digital marketing is its low investment cost. with the passage of time, this cost will increase, but it is still lower in comparison to traditional marketing (choudhury, 2019). under the second hypothesis, fisher’s exact test revealed an association (significant relationship), actually a weak positive association (phi coefficient) of the worthiness of the investment benefits while the initiatives on digital marketing were taken by the factory. purposefully, the factories that took initiatives were around 35 times more likely to benefit from their investment than those that did not. in this entire value chain, every factory has its own supplier (raw materials), and the factory is the buyer for the suppliers. these suppliers often try digital marketing to attract factories. but supplier's initiatives showed another unconnected (non-significant) and negligible association here with the initiative taken by the factory, and when suppliers offered digital marketing to their buyers (factories), it incited factories to start (around four times more) digital marketing with their buyers (foreign buyers). however, each time, the confidence interval could not provide precise (low) results. 5. recommendations for practical implications to compete in the global market and achieve sustainable growth, textile factories must therefore expand its ways of product offerings and include high-value, non-traditional products (chowdhury, 2023). in this purpose online marketing and transactions can be helpful. through it, a lot of data is generated. by analyzing this data, bangladesh's apparel sector can figure out market trends, consumer behavior, and choice to better match their marketing strategy, product offerings, target audience wants and desires, and make data-driven decisions (uddin, 2024). in the day of the end, strategic partnerships with companies that are at the forefront of technology and look for foreign direct investment (fdi) are crucial to achieving this (chowdhury, 2023). 6. limitation and further research the collection of data from any type of factories depends largely on their permission. so, this research could not add huge amounts of information from a large number of factories through sampling. already, the questionnaire that was provided to the factories was attached with a lot of queries, so any question regarding the barriers could not be added. but toward digitalization, it is important to know about the barriers factories are facing. future research can be made on a large number of samples sizes, if possible, by covering all aspects of this paper and adding the barriers to starting and continuing digital marketing in bangladesh rmg sectors. then some more recommendations can also be made based on prescriptive analytics, knowing ‘in the future how to get more engagement and remove barriers in digital marketing’, since the whole world is digitalized rapidly. 7. conclusion asian business research journal, 2024, 9: 72-82 81 © 2024 by the authors; licensee eastern centre of science and education, usa in the world of digital marketing, everything is going digital, and marketing is not an exception. while b2c businesses have made great progress here, the b2b market should leverage this. this study was intended to examine the perceptions of textile factories in the present scenario and their approach towards digital marketing for their buyers. maintaining a normal website and mostly facebook as social media with others, the resulted charts clearly showed the factories' attention was directed towards digital marketing, though they were updating their content and stories at a moderate rate, and the results they could achieve were insufficient aside from engagement with new markets and new buyers. this study also highlighted that only the benefits factories could draw from their investment in digital marketing were related to the factory's digital marketing initiatives. despite the almost 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(2001). social impact of the growth of garment industry in bangladesh. the bangladesh development studies, 27(4), 41-80. http://dx.doi.org/10.2307/40795642. 19 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 5, 19-29, 2025 issn: 2576-6759 doi: 10.55220/25766759.422 © 2025 by the authors; licensee eastern centre of science and education, usa theoretical framework and measurement scale for sustainable tourism development in the mekong delta region, vietnam nguyen huynh phuong thao1 nguyen thien dung2 do van quang3 1,2,3thuyloi university, vietnam. email: dzungngt@tlu.edu.vn email: nhpthao.vosco@gmail.com email: quangkttl@tlu.edu.vn ( corresponding author) abstract this study focuses on developing and validating a measurement scale to assess the factors influencing sustainable tourism development, with long an province as a case study. based on theoretical foundations and data collected through qualitative discussions with ten experts and a quantitative survey of 500 tourists, the study identifies six key factors: tourism resources, tourism infrastructure, tourism types, regulatory policies, community participation, and tourism demand. exploratory factor analysis (efa) reveals a total variance explained of 84.967%, confirming high convergent and discriminant validity of the factors. the measurement scales achieve a cronbach’s alpha coefficient exceeding 0.9, ensuring reliability and internal consistency. this study contributes to the theoretical understanding of sustainable tourism development by providing a comprehensive framework for future research. additionally, the developed measurement scales serve as a valuable reference for researchers and practitioners seeking to enhance tourism competitiveness in diverse contexts beyond the study’s focal area. the research findings offer essential scientific tools to support strategic planners and tourism enterprises in formulating effective development strategies, thereby strengthening the theoretical foundation of sustainable tourism while providing practical insights to improve the competitiveness and sustainability of tourist destinations. keywords: exploratory factor analysis (efa), service quality, sustainable tourism development. 1. introduction sustainable tourism development is a crucial objective aimed at meeting the current needs of tourists while simultaneously preserving natural and cultural resources for future generations. according to sen (1999), development is not merely about economic growth but also encompasses improvements in quality of life and social equity. furthermore, butler (2019) emphasizes that sustainable tourism must achieve a balance between environmental protection, economic development, and cultural preservation. innovation in the tourism sector is therefore considered a key factor in enhancing service quality, improving tourist experience, and ensuring longterm sustainability (ottenbacher & gnoth, 2005). in this context, the development of reliable and valid measurement scales serves as a fundamental basis for evaluating and refining tourism development strategies. methods such as exploratory factor analysis (efa) and cronbach’s alpha are commonly employed to assess the reliability and validity of these scales, ensuring that research concepts are measured accurately and consistently. in previous studies, such as that of binh, n. v. (2021), indicates that tourism demand has a significant impact on tourism resources, exerting considerable pressure on resource exploitation and conservation. the increasing demand for tourism, particularly sustainable tourism, necessitates stringent management measures to safeguard natural and cultural resources. additionally, hsu et al. (2009) affirms that tourism demand not only places pressure on resources but also navigates infrastructure development to support the sustainable utilization of resources. therefore, it is evident that tourism demand not only influences tourism resources but also shapes more effective approaches to resource management and conservation. according to weaver (2006), changes in tourist demand serve as the primary driving force behind the development of sustainable tourism forms such as ecotourism, cultural tourism, and community-based tourism. additionally, lim et al. (2019) argue that the emergence of new tourism models, such as eco-tourism and luxury retreats, not only enables resource conservation but also supports economic growth. thus, it can be observed that shifting tourist demands not only drive the expansion of sustainable tourism but also shape the overall development of the tourism industry. the increasing demand for international tourism, particularly from travelers seeking high-end leisure and luxury experiences, has driven the development and expansion of tourism infrastructure in many countries. lim et al. (2019) indicate that this growth has generated new demands for tourism-related facilities. additionally, hai, mailto:dzungngt@tlu.edu.vn mailto:nhpthao.vosco@gmail.com mailto:quangkttl@tlu.edu.vn https://doi.org/10.55220/25766759.422 asian business research journal, 2025, 10(5): 19-29 20 © 2025 by the authors; licensee eastern centre of science and education, usa n.q. (2021) argues that the rising demand for international tourism has encouraged emerging economies to invest heavily in information and communication technology infrastructure to fulfill global travelers. consequently, tourism demand not only serves as a key motivation for the development of infrastructure but also directly influences the modernization of technological platforms, thereby enhancing the competitiveness of tourism destinations in the global market. local community participation plays a crucial role in the development of sustainable tourism infrastructure. tosun (2000) highlights that such participation not only enhances community acceptance of tourism projects but also ensures the sustainable development of infrastructure. similarly, garrod (2003) affirms that collaboration between communities and related parties, including government authorities and businesses, can foster greater consensus and improve the effectiveness of infrastructure development projects. furthermore, the study by goodwin and santilli (2009) in south africa demonstrates that community involvement can promote sustainable tourism while generating economic benefits for local residents. thus, community participation is not only a fundamental factor in the development of sustainable tourism infrastructure but also contributes to improving the quality of life for local populations. according to scheyvens (2002), local community participation enhances the quality of tourism services by tailoring tourism products to align with cultural characteristics and local resources. studies by murphy (1985) and hung, n.v., (2022) emphasize that community involvement in tourism planning and development contributes to service quality improvement, thereby fostering economic growth and benefits both tourists and local communities. furthermore, such participation plays a crucial role in preserving the local natural and cultural resources, thereby promoting sustainability in tourism. moreover, lee and jan (2019) show community participation not only enhances awareness of natural resource conservation but also contributes to economic and socio-cultural aspects. sharpley (2020) observes that such participation fosters a sense of ownership and responsibility in natural resource management, thereby ensuring long-term sustainability. supporting this perspective, nguyen van binh (2021) also emphasizes the role of the community in forming managerial policies in substainable tourism. accordingly, community engagement not only promotes sustainable development but also ensures the benefits of tourism in the long run. tourism resources including natural and cultural ones, serve as fundamental factors in attracting visitors and forming conservation policies. bramwell and lane (1993) emphasize that high-quality tourism resources not only sustain the appeal of a destination but also contribute to long-term conservation efforts. similarly, hunter (1997) highlights the crucial role of tourism resources in establishing sustainable policies and alleviating the negative impacts of tourism activities. therefore, tourism resources not only enhance destination attractiveness but also serve as a determining factor for long-term development when they are managed and utilized appropriately. hall and page (1999) explain that high-quality infrastructure, including transportation, accommodation, and public utilities, not only enhances the visitor experience but also supports resource conservation and sustainable tourism development. similarly, the study by n.v. hung (2022) indicates that well-developed infrastructure enables to minimize negative environmental impacts and enhances the competitiveness of tourist destinations. thus, sustainable infrastructure is a fundamental factor in achieving balanced and long-term tourism development. there are several sustainable tourism models such as eco-tourism, community-based tourism, and cultural tourism which have emerged as significant trends in maintaining a balance between economic development and resource conservation. weaver (2006) highlights that evolving tourist demands serve as a driving force behind developing these tourism models. lim et al. (2019) further confirm that the advancement of green tourism and high-end resorts contributes to the balancing of resource conservation and economic growth. additionally, the studies conducted by ha, n.t.t., (2021) indicate that sustainable tourism not only meets tourist demands but also plays a crucial role in environmental protection and the preservation of local culture. therefore, the development of sustainable tourism models is essential for maintaining harmony between conservation efforts and economic growth. finally, service quality is an indispensable factor in enhancing tourist satisfaction and promoting sustainability in the tourism industry. masrurul (2019) asserts that service quality intensifies tourist’s experiences, thereby developing sustainability. he also emphasizes that environmental friendliness and professional courtesy are fundamental elements in ensuring tourist satisfaction. the study by alsiehemy (2023) in saudi arabia indicates that service quality not only increases tourist satisfaction but also stimulates their likelihood of returning which leads to the contribution to sustainable growth in the tourism industry. the study also identifies several gaps needing to be addressed to promote sustainable tourism development. one of these gaps is that previous researches have primarily considered regulatory policies as independent factors influencing sustainable tourism, without analyzing their moderating role. this omission has led to a limited understanding of how managerial policies can either enhance or minimize the impact of other factors. the studies by smith et al. (2020) demonstrate that policy interventions can induce significant shifts in the effectiveness of sustainable development measures. additionally, existing researches have predominantly focused on direct relationships among factors such as tourism demand, tourism resources, and service quality, while overlooking more complex interactions. the absence of mediating and moderating variables in research models has prevented the real reflex of tourism development. therefore, this study aims to develop a comprehensive measurement framework to assess the factors influencing sustainable tourism development, including the relationships among independent, mediating, moderating, and dependent variables to ensure a more accurate and holistic representation of these dynamics. 2. research process and model 2.1. research process the research process consists of two carefully designed phases to ensure methodological rigor and reliability, as shown in figure 1. in the preliminary phase, data were collected from 150 tourists through direct interviews and online surveys to develop and refine the measurement scale. cronbach’s alpha was employed to assess reliability, while exploratory factor analysis (efa) was used to examine convergent and discriminant validity, removing any asian business research journal, 2025, 10(5): 19-29 21 © 2025 by the authors; licensee eastern centre of science and education, usa non-compliant variables. the main survey involved 500 tourists in long an, a province in vietnam’s mekong delta, selected through stratified random sampling to ensure representativeness. reliability was further assessed using cronbach’s alpha, while efa confirmed the validity of the factors. the total variance extracted and factor loadings met the required thresholds, reinforcing the strong association between the measurement scale and its respective factors. start theoretical basis and research model discussion on research model initial scale development preliminary scale data collection method and sampling final scale discussion on research findings conclusion expert interviews initial scale and expert opinions cronbach s alpha and efa analysis random sampling and pilot survey cronbach s alpha and efa analysis comparison and expert opinions figure 1. research process. 2.2. development of the research model 2.2.1. hypothesis development tourism demand is driven by various factors, including cultural and natural exploration, mental well-being enhancement, and high-quality service experiences (hsu et al., 2009; moutinho, 2011). accordingly, travelers are increasingly interested in tourism activities that are environmentally and socially responsible (tosun, 2006). these demands play a crucial role in shaping sustainable travel behaviors. based on this foundation, the following hypotheses are proposed: • hypothesis 1 (h1a): tourism demand has a positive influence to the sustainable utilization of tourism resources (hsu et al., 2009; tosun, 2006). • hypothesis 2 (h1b): tourism demand has a positively impact the development of sustainable tourism types (moutinho, 2011; swarbrooke, 1999). • hypothesis 3 (h1c): tourism demand positively contributes to the upgrading and improvement of tourism infrastructure (dwyer et al., 2004; lee & chang, 2008). the participation of local comunity is a fundamental factor in sustainable tourism development, encompassing the conservation of cultural and natural resources as well as the enhancement of service quality (murphy, 1985; tosun, 2000). previous researches indicate that active community involvement not only contributes to resource protection but also enhances the effectiveness of sustainable tourism policies (garrod, 2003). based on this premise, the following hypotheses are proposed: • hypothesis 4 (h2a): community participation has a positive impact on sustainable tourism infrastructure (murphy, 1985; tosun, 2000). • hypothesis 5 (h2b): community participation positively influences the quality of tourism services (garrod, 2003; goodwin & santilli, 2009). • hypothesis 6 (h2c): community participation contributes positively to sustainable tourism development (tosun, 2006; scheyvens, 1999). tourism resources, both natural and cultural, serve as the foundation for sustainable tourism development. previous researches have found that managing the resources effectively not only preserves cultural values but also asian business research journal, 2025, 10(5): 19-29 22 © 2025 by the authors; licensee eastern centre of science and education, usa fosters long-term economic growth (bramwell & lane, 1993). building upon this theoretical framework, the following hypothesis is proposed: • hypothesis 7 (h3): tourism resources have a positive impact on sustainable tourism development (bramwell & lane, 1993; hunter, 1997). regulatory policies play a crucial role in ensuring the sustainable development of tourism (hall & page, 1999; dwyer & edwards, 2009). these policies not only support infrastructure development but also navigate the advancement of sustainable tourism models, contributing to the preservation of natural and cultural resources. based on this foundation, the following hypotheses are proposed: • hypothesis 8 (h4a): regulatory policies moderate the relationship between tourism infrastructure and sustainable tourism development (hall & page, 1999). • hypothesis 9 (h4b): regulatory policies moderate the relationship between sustainable tourism types and sustainable tourism development (dwyer & edwards, 2009). tourism infrastructure plays a crucial role in sustainable development, including both physical facilities and technological support. previous studies have pointed out that investments in high-quality infrastructure enhance tourist experiences, optimize the management of destination, and mitigate negative impacts to environment (ali & frew, 2014; hall & page, 1999). based on this foundation, the present study proposes the following hypothesis: • hypothesis 10 (h5): tourism infrastructure has a positive influence on sustainable tourism development (hall & page, 1999; ali & frew, 2014). sustainable tourism models include ecotourism, community-based tourism, and cultural tourism play a crucial role in maintaining a balance between economic development and resource conservation (weaver, 2006). previous researches have indicated that the development of these tourism models can enhance the overall quality of the tourism experience (swarbrooke, 1999). based on these findings, the following hypothesis is proposed: • hypothesis 11 (h6): sustainable tourism models have a positive influence on the development of sustainable tourism (weaver, 2006). service quality plays a crucial role in enhancing tourists' experiences and promoting sustainable tourism. previous studies have indicated that comfortable accommodations, safe culinary experiences, and professional service attitudes not only increase tourist satisfaction but also contribute to forming a sustainable destination image (alsiehemy, 2023; masrurul, 2019). furthermore, high-quality service promotes economic growth, improves the income rate of local communities, and facilitates further investments in sustainable tourism projects (khan et al., 2017). based on this foundation, the study proposes the following hypothesis: • hypothesis 12 (h7): service quality have a positive impact to sustainable tourism development (masrurul, 2019; alsiehemy, 2023). 2.3. research model based on the hypotheses relating to the above-presented relationships, the research model outlines the factors influencing sustainable tourism development in figure 2. sustainable tourism development control variables: gender age education level travel frequency expenditure level tourism demand tourism infrastructure tourism resources community participation regulatory policies service quality sustainable tourism types h6+ h2a+ h2b+ h1a+ h1c+ h1b+ h3+ h5+ h7+ h2c+ h4b+ h4a+ figure 2. research model. the study proposes hypotheses and a research model, refined through feedback from ten experts with over five years of experience in tourism management and development. these experts provided insights on theoretical foundations, hypotheses, the research model, and criteria for evaluating sustainable tourism. firstly, there was a high level of consensus among the experts regarding the proposed model for sustainable tourism development. the model was deemed to accurately reflect economic, social, and environmental factors, demonstrating strong potential for practical application. secondly, fundamental theories, including those on sustainable development, sustainable tourism management, community participation, and tourism demand, were considered both relevant and essential. this consensus not only strengthens the validity and reliability of the research but also affirms the applicability of the model in managing and promoting sustainable tourism development. based on expert feedback, the hypotheses and research model were finalized and maintained as illustrated in figure 2. 2.4. characteristics of the research model the survey respondents, summarized in table 1, consist of 500 tourists, including both local residents and international visitors, who participated in tourism activities in long an province from 2022 until the survey period asian business research journal, 2025, 10(5): 19-29 23 © 2025 by the authors; licensee eastern centre of science and education, usa (september–december 2023). data was collected through both direct and online methods, yielding a total of 526 responses, of which 500 were deemed valid after screening. the results indicate that most tourists were young females (aged 25–34) with high educational attainment. these individuals frequently engaged in travel (2–3 trips per year) and exhibited moderate to high expenditure levels, ranging from 2 to 10 million vnd per trip. this demographic profile suggests a strong inclination toward investing in high-quality travel experiences. table 1. summary statistics of the official sample. subject frequency percentage accumulative percentage genders male 199 39.8 39.8 female 301 60.2 100.0 total 500 100.0 age 18 24 112 22.4 22.4 25 34 214 42.8 42.8 35 44 112 22.4 22.4 above 45 62 12.4 12.4 total 500 100.0 education background post-graduated 387 77.4 77.4 other 113 22.6 22.6 total 500 100.0 frequency of travelling at least once a year 157 31.4 31.4 2 3 times a year 182 36.4 36.4 4 5 times a year 113 22.6 22.6 more than 5 times a year 48 9.6 9.6 total 500 100.0 expenditures 2 million/ time 122 24.4 24.4 2 5 million/ time 169 33.8 33.8 5 10 million/ time 152 30.4 30.4 more than10 million/ time 57 11.4 11.4 total 500 100.0 2.5. original scale based upon the original scale or conceptual framework, the author has adjusted align with the specific context of the current study. the detailed content has been developed as outlined in table 2. this draft scale will undergo refinement by experts before the establishment of a preliminary measurement scale for the study. table 2. forming and developing preliminary scale of the study. scale original scale tourism demand scale (khalid et al., 2019) ncdl1 tourists increasingly seek not only experiences of exploration, entertainment, and adventure but also prioritize responsible tourism activities and services that contribute to environmental conservation, cultural preservation, and sustainable socio-economic development at their chosen destinations. having an interest in engaging in tourism activities that have the least possible impact on the natural environment. ncdl2 exploring and acquiring knowledge about local culture and heritage while traveling, with a strong inclination toward their preservation. ncdl3 experience tourism services that adhere to sustainability criteria. ncdl4 expenditure on tourism services contributes to the economic development of local communities. local community participation scale (khalid et al., 2019) stgcd1 local communities pro-actively participate in decision-making and tourism-related activities to ensure that they not only benefit economically from tourism but also contribute to the preservation of cultural heritage and environmental resources. the local community is involved in decision-making processes regarding tourism development in their area. stgcd2 local communities pro-actively support and engage in tourism projects. stgcd3 local communities have an important role in conserving natural and cultural resources related to tourism. stgcd4 economic benefits from tourism are equitably distributed within the local community. stgcd5 local communities participate in the monitoring and management of tourism activities to ensure sustainability. tourism resources scale (masrurul, 2019) tndl1 tourism resources comprise of all natural and cultural elements that hold value in supporting the development of tourism products and services. the natural resources of a locality possess significant potential for fostering sustainable tourism development. tndl2 local festivals, cultural heritage, and traditional customs play a crucial role in sustainable tourism. tndl3 the natural and cultural resources of a locality are preserved and effectively utilized in tourism activities. tndl4 tourism resources make a substantial contribution to promoting the economic development of the locality. tndl5 the exploitation and management of tourism resources at the local level are conducted in a rational manner, ensuring long-term sustainability. tourism infrastucture scale (nguyen quang hai, 2021) htdl1 tourism infrastructure comprises of the entirety of physical facilities the transportation system at tourist destinations should be easily accessible and convenient for mobility. asian business research journal, 2025, 10(5): 19-29 24 © 2025 by the authors; licensee eastern centre of science and education, usa htdl2 and essential support services required for tourism activities, including transportation networks, hotels, entertainment areas, and other public amenities. the quality of hotels, resorts, and lodging facilities at a tourist destination plays a crucial role in enhancing visitor experiences. htdl3 entertainment facilities, amusement parks, and supporting services should be well-planned and environmentally friendly. htdl4 the quality of electricity, water supply, and sanitation services at tourist destinations is a fundamental factor influencing the overall tourist experience. htdl5 the application of information technology (e.g., smart tourism applications, digital maps) facilitates easier navigation and enhances the overall travel experience. regulatory policies scale (khan et al., 2020) csql1 the policies, regulations, and strategies implemented by local governments, authorities, and relevant organizations aim to ensure that tourism development progresses in harmony with the objectives of conserving natural, cultural, and environmental resources while maintaining economic and social benefits for local communities. local tourism management policies are clearly defined and highly feasible in practical application. csql2 local tourism management policies play a crucial role in protecting the natural environment. csql3 tourism management policies are designed to align with the characteristics of local natural and cultural tourism resources. csql4 local tourism management policies are enforced consistently and effectively. subtainability tourism types scale (holden, 2020) lhbv1 the development of tourism types is based on the integration of tourism resources, development objectives, and visitor demands. tourism types can comprise of activities such as recreation, exploration, learning, or relaxation at the destination. the local offers a diverse range of tourism types that align with my preferences. lhbv2 the tourism types are developed in the local aim to contribute to the preservation and promotion of cultural and natural values. lhbv3 local tourism activities are characterized by sustainability and environmental friendliness. lhbv4 the tourism types facilitate community involvement in the tourism development process. tourism quality scale (masrurul, 2019) cldv1 the level of tourist satisfaction towartd the torism services are provided throughout the travel experience to ensure that these services not only meet their current needs but also do not pose any harm to environmental and social resources. the level of friendliness and professionalism of the staff in local tourism services. cldv2 the provision of tourism services in the local area adheres to environmental protection standards. cldv3 the delivery of tourism services that are culturally and local community-friendly cldv4 the quality of tourism services offered in this region aligns with sustainability principles and environmental friendliness. subtainability development scale (cao tan binh et al., 2023) ptdlbv1 the development and management of tourism activities must be conducted in a manner that prevents the depletion of natural resources, ensures the preservation and respect of cultural heritage, and simultaneously promotes economic and social benefits for local communities. local tourism plays a pivotal role in the economic development of the region, growth of the gross regional domestic product (grdp). ptdlbv2 the expansion of the tourism sector has created numerous stable employment opportunities for the local. ptdlbv3 tourism activities in the area do not have negative impacts on the natural environment. ptdlbv4 these activities actively support the conservation and sustainable development of natural resources. ptdlbv5 tourism contributes to the enhancement of local communities' livelihoods through various economic and social engagements. ptdlbv6 local tourism initiatives have facilitated the preservation and promotion of traditional cultural values. 2.6. scale content discussion in general, experts acknowledge that the scale content covers a broad range of aspects related to the studied factors. however, after collecting the discussion inputs, experts suggested that several elements require adjustments to refine the scale. the researchers also agreed with these modifications, and the results are presented in table 3 below: asian business research journal, 2025, 10(5): 19-29 25 © 2025 by the authors; licensee eastern centre of science and education, usa table 3. adjusted content of scale. oringinal scale adjustments tourism demand scale (khalid et al., 2019) ncdl1 having an interest in engaging in tourism activities that have the least possible impact on the natural environment. [adjusted] tourism activities do not cause harm to the natural environment. ncdl2 exploring and acquiring knowledge about local culture and heritage while traveling, with a strong inclination toward their preservation. [adjusted] exploration of local cultures and the aspiration for their preservation. ncdl3 experience tourism services that adhere to sustainability criteria. [adjusted] utilization of tourism services that contribute to environmental and community protection. ncdl4 expenditure on tourism services contributes to the economic development of local communities. [adjusted] expenditure aimed at supporting local communities. local community participation scale (khalid et al., 2019) stgcd1 the local community is involved in decision-making processes regarding tourism development in their area. [adjusted] local community participate in the importants decision of tourism development. stgcd2 local communities pro-actively support and engage in tourism projects. [adjusted] local community pro-actively participate in tourism projects. stgcd3 local communities have an important role in conserving natural and cultural resources related to tourism. [remained] stgcd4 economic benefits from tourism are equitably distributed within the local community. [remained] stgcd5 local communities participate in the monitoring and management of tourism activities to ensure sustainability. [remained] tourism resources scale (masrurul, 2019) tndl1 the natural resources of a locality possess significant potential for fostering sustainable tourism development. [remained] tndl2 local festivals, cultural heritage, and traditional customs play a crucial role in sustainable tourism. [adjusted] local festivals, cultural heritage, and traditional customs play a crucial role in the preservation and sustainable development of tourism. tndl3 the natural and cultural resources of a locality are preserved and effectively utilized in tourism activities. [adjusted] the natural and cultural resources of local communities are preserved and utilized appropriately in tourism activities. tndl4 tourism resources make a substantial contribution to promoting the economic development of the locality. [remained] tndl5 the exploitation and management of tourism resources at the local level are conducted in a rational manner, ensuring longterm sustainability. [adjusted] the exploitation and management of local tourism resources are conducted in a planned manner, ensuring long-term sustainability. tourism infrastucture scale (ng. quang hai, 2021)) htdl1 the transportation system at tourist destinations should be easily accessible and convenient for mobility. [remained] htdl2 the quality of hotels, resorts, and lodging facilities at a tourist destination plays a crucial role in enhancing visitor experiences. [remained] htdl3 entertainment facilities and supporting services are reasonably constructed and environmentally friendly. [adjusted] entertainment facilities, amusement parks, and supporting services are designed with reasonable placement and environmental friendliness. htdl4 the quality of electricity, water supply, and sanitation services at tourist destinations is a fundamental factor influencing the overall tourist experience. [remained] htdl5 the application of information technology (e.g., smart tourism applications, digital maps) facilitates easier navigation and enhances the overall travel experience. [remained] regulatory policies scale (khan et al., 2020) csql1 local tourism regulatory policies are clearly defined and highly feasible in practical application. [remained] csql2 local tourism regulatory policies play a crucial role in protecting the natural environment. [remained] csql3 local tourism regulatory policies are designed to align with the characteristics of local natural and cultural tourism resources. [adjusted] local tourism regulatory policies are consistent with the conservation and development of local natural and cultural tourism resources. csql4 local tourism management policies are enforced consistently and effectively. [remained] subtainability tourism types scale (holden, 2020) asian business research journal, 2025, 10(5): 19-29 26 © 2025 by the authors; licensee eastern centre of science and education, usa oringinal scale adjustments lhbv1 the local offers a diverse range of tourism types that align with my preferences. [remained] lhbv2 the tourism types are developed in the local aim to contribute to the preservation and promotion of cultural and natural values. [remained] lhbv3 local tourism activities are characterized by sustainability and environmental friendliness. [remained] lhbv4 the tourism types facilitate community involvement in the tourism development process. [adjusted] the tourism types facilitate community involvement in the tourism management and development process. tourism quality scale (masrurul, 2019) cldv1 the level of friendliness and professionalism of the staff in local tourism services. [remained] cldv2 the provision of tourism services in the local area adheres to environmental protection standards. [remained] cldv3 the delivery of tourism services that are culturally and local community-friendly [adjusted] the delivery of tourism services that show respect to local customs, cultures and local heritage conservation. cldv4 the quality of tourism services offered in this region aligns with sustainability principles and environmental friendliness. [remained] subtainability development scale (cao tan binh et al., 2023) ptdlbv1 local tourism plays a pivotal role in the economic development of the region, growth of the gross regional domestic product (grdp). [adjusted] local tourism plays a pivotal role in the economic development of the region, growth of the gross regional domestic product (grdp) through investment incentives and expenditures from the touristss. ptdlbv2 the expansion of the tourism sector has created numerous stable employment opportunities for the local. [remained] ptdlbv3 tourism activities in the area do not have negative impacts on the natural environment. [adjusted] tourism activities in the area do not operate any polluting activities and contribute to the reservation of the natural environment. ptdlbv4 these activities actively support the conservation and sustainable development of natural resources. [remained] ptdlbv5 tourism contributes to the enhancement of local communities' livelihoods through various economic and social engagements. [remained] ptdlbv6 local tourism initiatives have facilitated the preservation and promotion of traditional cultural values. [remained] 3. results and analysis 3.1. assessment of the reliability of the official measurement scales the reliability analysis of the measurement scales (table 4) was conducted using cronbach’s alpha coefficient over three iterations. in the first iteration, the ncdl scale (cronbach's alpha = 0,939), the item-total correlation values for variables ncdl1, ncdl2, ncdl3, and ncdl4 ranged from 0.777 to 0.937, indicating a high level of fair consistency. similarly, the stgcd scale (cronbach's alpha = 0,855) exhibited high reliability; however, the variable stgcd3 showed a significantly low item-total correlation (0.045), need to remove for the enhancement the scale’s reliability. the tndl scale (cronbach's alpha = 0,940) also demonstrated high reliability, with a itemtotal correlation values ranging from 0.785 to 0.965. likewise, the csql scale (cronbach's alpha = 0,945) achieved strong reliability, as all observed variables displayed high item-total correlation values (ranging from 0.812 to 0.920), reflecting strong consistency. the lhbv scale (cronbach's alpha = 0,918), was also highly reliable, with item-total correlation values ranging from 0.742 to 0.944. however, the cldv scale (cronbach's alpha = 0,755) with the cldv4 variable showing a low item-total correlation (0.308), indicating removal to improve reliability. similarly, for the ptdlbv scale (cronbach’s alpha = 0.848), the variable ptdlbv1 recorded the lowest item-total correlation (0.487), indicating removal to improve reliability. finally, the htdl scale (cronbach's alpha = 0,970) with item-total correlation values ranging from 0.863 to 0.945, indicating exceptionally high consistency. overall, in this initial iteration, it was necessary to eliminate variables with excessively low itemtotal correlation values—such as stgcd3, cldv4, and ptdlbv1—to ensure reliability. in the second run, the ncdl scale achieved cronbach’s alpha coefficient of 0.939, with item-total correlation values ranging from 0.777 to 0.937 for variables ncdl1 to ncdl4, indicating high reliability and strong consistency. similarly, the stgcd scale (cronbach's alpha = 0,941), with item-total correlation values exceeding 0.8 for stgcd1, stgcd2, stgcd4, and stgcd5, reflecting a strong consistency. the tndl scale (cronbach's alpha = 0.940) also demonstrated strong reliability, with item-total correlation values ranging from 0.785 to 0.965. meanwhile, the csql (cronbach's alpha = 0,945) with item-total correlations between 0.812 and 0.920, reflecting a strong consistency similarly, the lhbv scale (cronbach's alpha = 0.918) demonstrated high reliability, with item-total correlation values ranging from 0.742 to 0.944 for variables lhbv1 to lhbv4. the cldv scale attained cronbach’s alpha of 0.921, with item-total correlations between 0.804 and 0.888, reflexting a strong reliability. however, in the ptdlbv scale (cronbach's alpha = 0.872), the variable ptdlbv2 exhibited a low item-total asian business research journal, 2025, 10(5): 19-29 27 © 2025 by the authors; licensee eastern centre of science and education, usa correlation of 0.461, which needs to be removed to enhance overall reliability. lastly, the htdl scale achieved an outstanding cronbach's alpha of 0.970, with item-total correlations ranging from 0.863 to 0.945, indicating excellent reliability and high internal consistency. overall, the scales demonstrated high reliability, except for ptdlbv2, which needs to be excluded to maintain consistency and appropriateness in the measurement scales. after eliminating unsuitable variables in the third iteration, the measurement scales significantly improved, achieving cronbach’s alpha coefficients ranging from 0.918 to 0.970 and item-total correlations exceeding 0.7. these results indicate a high degree of reliability and internal consistency. table 4. results of the scale reliability assessment. cronbach’s alpha variable item-total correlation cronbach’s alpha variable item-total correlation ncdl: 0,939 ncdl1 0,924 lhbv: 0,918 lhbv1 0,792 ncdl2 0,777 lhbv2 0,742 ncdl3 0,801 lhbv3 0,944 ncdl4 0,937 lhbv4 0,780 stgcd: 0,941 stgcd1 0,848 cldv: 0,921 cldv1 0,804 stgcd2 0,911 cldv2 0,830 stgcd4 0,837 cldv3 0,888 stgcd5 0,845 tndl: 0,940 tndl1 0,849 ptdlbv: 0,944 ptdlbv3 0,857 tndl2 0,821 ptdlbv4 0,883 tndl3 0,793 ptdlbv5 0,863 tndl4 0,965 ptdlbv6 0,859 tndl5 0,785 csql: 0,945 csql1 0,871 htdl: 0,970 htdl1 0,934 csql2 0,839 htdl2 0,914 csql3 0,852 htdl3 0,951 csql4 0,913 htdl4 0,914 htdl5 0,863 the results indicate that the measurement scales achieved high reliability after the removal of variables with low item-total correlation values, specifically stgcd3, cldv4, ptdlbv1, and ptdlbv2. the revised scales are now ready for further analysis, facilitating the accurate measurement of factors influencing sustainable tourism development. 3.2. analysis of convergent and discriminant validity 3.2.1. analysis of convergent and discriminant validity of independent variables the analysis of convergent and discriminant validity for the independent variables (ncdl, stgcd) indicates that the dataset is suitable for exploratory factor analysis (efa), with a kaiser-meyer-olkin (kmo) coefficient of 0.839 and a bartlett’s test significance level of sig. = 0.000. a single factor was extracted, with an eigenvalue greater than 1, accounting for 82.817% of the total variance explained. factor loadings exceeding 0.5 confirm convergent validity, ensuring that the observed variables are strongly related to their respective factors. furthermore, the absence of cross-loadings validates discriminant validity. the factor matrix presented in table 5 demonstrates that all factor loadings are above 0.5, affirming the convergent validity, which indicates that the measurement variables are closely associated with their respective constructs. table 5. factor matrix and factor loadings of independent variables. factor 1 2 stgcd2 0,924 stgcd1 0,923 stgcd5 0,912 stgcd4 0,905 ncdl1 0,954 ncdl4 0,953 ncdl2 0,860 ncdl3 0,834 3.3. analysis of convergent and discriminant validity of mediating variables an examination of the convergent and discriminant validity of the mediating variables (tndl, lhbv, htdl, cldv) reveals that the data aligns well with the exploratory factor analysis (efa). the kaiser-meyer-olkin (kmo) coefficient is 0.851, and bartlett's test of sphericity has sig. = 0,000. the efa extracts four factors with eigenvalues greater than 1, accounting for 84.209% of the total variance (surpasses the 50%), thereby demonstrating strong explanatory power of the data in relation to the observed variables. the factor matrix, as presented in table 6, shows that all factor loadings exceed 0.5, ensuring convergent validity, while loadings below 0.3 have been excluded from the analysis. asian business research journal, 2025, 10(5): 19-29 28 © 2025 by the authors; licensee eastern centre of science and education, usa table 6. factor matrix and loading coefficients of mediating variables. factor 1 2 3 4 htdl3 0,942 htdl1 0,939 htdl4 0,910 htdl2 0,898 htdl5 0,869 tndl4 0,955 tndl1 0,882 tndl2 0,854 tndl3 0,844 tndl5 0,838 lhbv3 0,943 lhbv1 0,862 lhbv4 0,835 lhbv2 0,821 cldv3 0,944 cldv2 0,916 cldv1 0,911 3.4. analysis of convergent and discriminant validity of the moderator variable the kaiser-meyer-olkin (kmo) coefficient was 0.858, and bartlett's test had sig= 0.000, confirming the suitability of the data for exploratory factor analysis (efa). a single factor was extracted with an eigenvalue greater than 1, dthe total variance is at 86.804%. factor loadings exceeding 0.5 ensured convergent validity, whereas those below 0.3 were excluded, thereby confirming discriminant validity. the findings suggest that the measurement scale is appropriate for evaluating the factor of sustainable tourism development. the factor matrix presented in table 7 demonstrates that all factor loadings surpass the threshold of 0.5, reinforcing convergent validity. table 7. factor matrix and moderator variable loadings. factor 1 csql4 0,953 csql1 0,925 csql2 0,925 csql3 0,923 3.5. analysis of convergent and discriminant validity of the dependent variable the kaiser-meyer-olkin (kmo) coefficient was determined to be 0.861, and bartlett’s test yielded a significance value of 0.000, confirming the appropriateness of the dataset for exploratory factor analysis (efa). a single factor was extracted, with an eigenvalue exceeding 1, accounting for 82.944% of the total variance. factor loadings above 0.5 ensured convergent validity, with no cross-loadings observed, thereby confirming discriminant validity. the scale exhibited a robust structure, making it suitable for measuring sustainable tourism development. the factor matrix presented in table 8 demonstrates that all factor loadings exceed 0.5, further reinforcing convergent validity. table 8. factor matrix and dependent variable loadings. factor 1 ptdlbv4 0,918 ptdlbv5 0,910 ptdlbv3 0,908 ptdlbv6 0,907 the study confirms the high consistency of the scales, with cronbach’s alpha coefficients ranging from 0.918 to 0.970, thereby affirming the reliability and suitability of the measurement instruments. exploratory factor analysis (efa) indicates a total variance explained of 84.967%, a kaiser-meyer-olkin (kmo) coefficient of 0.861, and a statistically significant bartlett's test (p < 0.001). all factor loadings exceed 0.5, ensuring both convergent and discriminant validity. the study identifies six key factors influencing sustainable tourism development: tourism demand, community participation, resources, infrastructure, sustainable models, and service quality. these findings align with previous research by murphy (1985) and bramwell & lane (1993). the results contribute to the establishment of a reliable measurement scale, facilitating the assessment and planning of sustainable tourism development. this framework aids policymakers in optimizing strategies, enhancing management effectiveness, and promoting community engagement to ensure balanced development. 4. conclusion the study has developed a comprehensive measurement scale to assess the factors influencing sustainable tourism development, evaluating the relationships among independent, mediating, moderating, and dependent variables in sustainable tourism development. additionally, the research proposes a model and a comprehensive scale for assessing the impact of sustainability on sustainable tourism development, emphasizing environmental conservation, community engagement, infrastructure, and service quality. a survey was conducted with 500 domestic and international tourists participating in tourism activities in the mekong delta region to validate the asian business research journal, 2025, 10(5): 19-29 29 © 2025 by the authors; licensee eastern centre of science and education, usa reliability and validity of the measurement scales. using cronbach’s alpha coefficient, the measurement scales demonstrated high reliability, with coefficients exceeding 0.7. the variables that did not meet the standard, with item-total correlations lower than 0.3, were eliminated. the findings of this study not only reinforce theoretical foundations but also provide a practical basis for implementation, offering tourism managers and businesses a scientific tool to deploy sustainable solutions that meet the growing demands of tourists and local communities. references alsiehemy, h. m. 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(2006). sustainable tourism: theory and practice. elsevier. 135 © 2024 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 9, 135-140, 2024 issn: 2576-6759 doi: 10.55220/25766759.232 © 2024 by the authors; licensee eastern centre of science and education, usa effect of fleet vehicle tracking on operational performance of road transporters in mombasa county nancy n. kinyua1  wickliffe arani2 mathew m. egessa3 1department of management science, technical university of mombasa, kenya. email: nancykinyua593@gmail.com 2multimedia university, malaysia. email: arani@mail.com 3technical university of mombasa, kenya. email: egessa@mail.com ( corresponding author) abstract this study examines the effect of vehicle tracking on the operational performance of road transporters in mombasa county. effective fleet management, and specifically vehicle tracking, is essential for optimizing resources, reducing costs, and improving efficiency in transportation operations. guided by the technology diffusion theory, the study employs a descriptive research design and targets 250 registered road transport companies in mombasa county, selecting a sample of 154 participants through stratified random sampling. data were collected using structured questionnaires and analysed with descriptive and regression techniques. the findings indicate that vehicle tracking significantly enhances operational performance, evidenced by a positive unstandardized coefficient of 0.459 and a p-value of 0.000. key practices, including speed monitoring, route management, and real-time vehicle dispatch tracking, were identified as crucial contributors to this improved performance. the study concludes that vehicle tracking systems foster accountability, decrease fuel consumption, and boost overall productivity. recommendations include the implementation of advanced gps tracking technology, regular maintenance of tracking systems, and comprehensive staff training to maximize the benefits of vehicle tracking for operational efficiency. this research enhances the understanding of how technology can be utilized to tackle challenges in fleet management, particularly in developing regions. keywords: fleet management, gps tracking, operational performance, road transporters, vehicle tracking, logistics. 1. introduction fleet management plays a pivotal role in optimizing the use of resources, minimizing transportation costs, and ensuring regulatory compliance for businesses that depend on transportation. it incorporates various practices such as maintenance, fuel management, vehicle replacement, safety management, and driver oversight to enhance operational efficiency and agility. by addressing challenges like mechanical faults, safety risks, and inefficient logistics systems, fleet management aims to boost customer satisfaction and organizational performance. rojas et al. (2020) noted that fleet management has resulted in a large number of american enterprises that primarily depend on transportation to minimize or eliminate the risk associated with human expenditures and procedures. real-time fleet tracking is one feature of fleet management that can save fuel and overhead expenses while also enhancing safety and monitoring (cronbach, 2021). fleet management entails making sure that a fleet's use of resources, total transportation costs, and regulatory compliance are all at their best. it is a crucial component of logistics operations. increasing revenue, enhancing customer satisfaction, and giving a fleet more agility, all depend on these actions. various fleet management practices, including maintenance, fuel management, vehicle replacement (milenković, knežević, & bojović, 2020), safety and vehicle drivers’ management (sun et al., 2021), and vehicle routing (makarova, gabsalikhova, & gritsenko, 2020; adam, 2020), can be included in fleet management (fm). with a large number of vehicles operating along distribution networks with numerous mechanical faults, which endangers the supply chain and impairs organizational performance, the fleet management function is not doing well globally. according to chiparo et al. (2022), companies should incorporate car maintenance into their business strategy holistically to enable them to react swiftly to the needs of their clients. in the ghanaian transport sector within the kumasi metropolis, aflabo, kraa, and agbenyo (2020) evaluated the effect of fleet management practices on competitive advantage. they discovered that while vehicle tracking has an inverse relationship with competitive advantage, repair and maintenance, fuel and driver management, and training have positive effects. vehicle and driver tracking, asset management, efficient communication, time and driver management, post-sale services, and customer relationship management are essential elements of fleet management (amaya & abdullah, 2021). a number of elements are taken into consideration by fleet management, such as asset tracking, speed management, fuel management, health and safety management, driver scheduling and rostering, vehicle finance, maintenance, and telematics. fleet management's primary goals are to reduce personnel mailto:nancykinyua593@gmail.com mailto:arani@mail.com mailto:egessa@mail.com https://www.doi.org/10.55220/25766759.232 asian business research journal, 2024, 9: 135-140 136 © 2024 by the authors; licensee eastern centre of science and education, usa and transportation costs, increase productivity and efficiency, and successfully mitigate the risks connected with vehicle operation. abdirahman et al. (2024) outlines the limitations of the vehicle tracking system in ethiopia, which include a shortage of vehicles for transporting goods, a poorly functioning logistics system that hinders market potential, a high incidence of traffic accidents, particularly in relation to goods transport, and congestion in cities and at entry and exit points. fleet management is integral to logistics operations, offering numerous benefits such as cost reduction, increased productivity, and risk mitigation. however, challenges persist, such as mechanical faults, inefficient logistics systems, and traffic congestion, as noted in various studies. by integrating practices like vehicle tracking, maintenance, and driver management into a holistic strategy, businesses can strengthen their supply chain performance and competitive advantage. addressing these challenges, particularly in regions like ghana and ethiopia, can further enhance the overall effectiveness of fleet management in fostering sustainable growth. 2. literature review 2.1. technology diffusion theory technology diffusion theory, developed by rogers (1962), focused on appreciating the manner in which innovation and technology diffuse within a social pattern. it explains how, why, and the rate at which a product, service, or process spreads through a population or social system. the process of making innovative decisions consists of five steps: knowledge, persuasion, decision, implementation, and confirmation. the rate at which vehicle tracking technology spreads among road transporters can be explained through technology diffusion theory. in technology diffusion theory, it’s not individuals who adjust, but the innovations in which changes occur in fleet management among the road transporters (masumbuko & phiri, 2024). diffusion is the process through which certain channels of modernization are transmitted over a period of time amongst the social system members (kurt, 2022). according to him, diffusion is the manner by which a technology diffuses through a society of fleet management. therefore, diffusion as a concept implies the dissemination of technology from a focal point or organization in the society to other areas of that particular group. despite its wide application and acceptance, criticisms of technology diffusion theory are evaluated by components of the theory that should be developed and adjusted before being applied in technology transformation. alabbasi and sandhu (2021) found that an innovation does not necessarily need to experience various phases of reception for a person to adjust to it as proposed by the hypothesis. at times adoptions were conveyed in dyadic relationships, and it was very hard to identify the stages of adoption. want, (2006) created a system that tracks and monitors automobiles in the cold chain using rfid technology. the influence of vehicle tracking on road carriers' operational efficiency is explained using the principles of radio frequency identification, or rfid. in fleet management, a decision support system that makes use of rfid technology to supervise, trace, and monitor items was presented. from the perspective of shippers, amankwah-sarfo (2020) looked at the critical factors that affect the acceptability of a container security service that uses rfid technology and auto-detection. another option relies on cellular infrastructure. cellular infrastructure is leveraged by network overlay systems to pinpoint the exact position of automobiles. in order to determine the exact location of the cars, the cell centers use additional hardware and software to assess the time of arrival (toa) and angle of arrival (aoa) of radio signals sent by the vehicles. this data is transmitted to the tracking center using a regular link or a cellular connection. another method employed for determining the location of automobiles involves calculating the time discrepancy between signals transmitted from two cellular towers and received by the vehicle. this theory explains the use of technology in modern vehicle tracking. at present, the majority of road transporters are utilizing gpsenabled devices to monitor vehicles during transit. the gprs tracker keeps track of the vehicles' speed and whereabouts around the clock. 2.2. conceptual framework vehicle tracking is the process of tracking a moving vehicle by using smart tags or barcode scanning. vehicle tracking is possible with devices that integrate satellite or cellular network technology with the global positioning system (gps). the way the vehicle tracking system is designed makes it easier to manage the entire fleet by keeping track of all the goods and tangibles that are loaded into or assigned to drivers. information systems used to coordinate and route services in the field have a positive effect on a fleet's performance and regular growth, claim milenkovic, milos, & bojovic (2020). the fields of logistics and transport commonly employ vehicle tracking, primarily for theft prevention. these systems utilize gps technology to deliver accurate and continuous location telemetry to fleet management. these systems usually come with capabilities that can track statistics such as fuel usage, average speed, current driver time, and position. rules imposing stricter limits on the number of hours’ drivers can work in a single day have recently led to a surge in demand for this technology (smilowitz & balcik, 2021). automobile manufacturing technology has evolved to prioritize the development of features that enhance safety, comfort, and convenience rather than only focusing on fundamental transportation. the gps application tracks the distance travelled during a journey, vehicle mileage, and speed. the system can maintain a log of driving activities, which includes the addresses of each destination, the names of the streets travelled, and the duration of the vehicle's stay at each site. this allows owners to monitor the usage of their vehicles by other drivers (singh & kathuria, 2021). however, fleet management has a significant effect on the operational performance of road transporters. it enables fleet managers and users to efficiently and effectively carry out their activities by utilizing technologies like the internet and global positioning systems (gps). the administration of road transport, particularly fleet management, necessitates the utilization of sophisticated technology to enhance the transportation information system (mehmood, 2021). the potential commercial advantages of vehicle tracking extend across all sectors of fleet management and types of vehicles. more asset management, better customer service, more efficient load placement, more accurate timesheets, and easier compliance with working time directive regulations are the main advantages for haulage fleets. according to mullani (2021), vehicle tracking systems have the potential to improve work planning and allocation for van fleets, resulting in higher staff productivity. asian business research journal, 2024, 9: 135-140 137 © 2024 by the authors; licensee eastern centre of science and education, usa figure 1. conceptual framework. the conceptual framework in figure 1 demonstrates the relationship between fleet vehicle tracking and operational performance. fleet vehicle tracking encompasses key practices such as monitoring speed limits, optimizing vehicle routing, and effective dispatching. by ensuring vehicles operate within designated speed parameters, organizations can improve safety, reduce fuel consumption, and enhance overall efficiency. vehicle routing focuses on identifying the most optimal routes to minimize travel time, reduce transportation costs, and ensure timely deliveries. additionally, dispatching ensures effective coordination of vehicle assignments, enabling timely operations and improved resource utilization. these fleet tracking practices are designed to enhance operational performance, which is measured through key outcomes such as profitability, cycle time, and customer satisfaction. profitability is achieved through cost reductions and improved operational efficiency, while shorter cycle times result from streamlined processes and reduced delays (ochoki et al., 2023). moreover, enhanced vehicle tracking contributes to improved customer satisfaction by ensuring timely deliveries and consistent service quality. overall, the framework highlights how effective fleet vehicle tracking can positively influence operational performance, leading to greater organizational success. 2.3. empirical review the effect of fleet management on a transport business that manages taiwan's biggest shipping line is examined by begashaw and temesgen (2019). this business is a division of a well-known food and retail conglomerate, which is taiwan's largest chain store group. the research is empirical in character. in order to increase the company's competitiveness in the market and achieve the objectives set by the company, the case serves as a point of reference for the unsuccessful results of introducing electronic operations and systems. it was anticipated that the company's operating efficiency would rise as a result of these solutions. the study found that gps-based fleet management solutions are extremely important for the logistics industry, especially for transportation companies. these systems allow for commodity distribution monitoring and tracking, resulting in energy savings. furthermore, the solutions also enhance scheduling, operational efficiency, and effectiveness. the significance of fleet management systems has made their successful implementation a crucial concern (bask et al., 2019). besiou, pedraza martinez, and van wassenhove (2022) asserted that initial fleet management systems had basic features, such as vehicle tracking components. these systems have transformed into planning tools due to increased management sophistication. the functionality of vehicle tracking and vehicle maintenance systems differs from that of fleet management. fleet management includes the oversight of vehicle usage and maintenance, as well as the coordination and dissemination of tasks and relevant information to address the complex challenges of scheduling and routing vehicles (belachew, 2022). vehicle tracking, fleet management, and monitoring widely utilize gps technology products. to achieve optimal utilization and quick responses to customer demands, the existing asset management systems require continuous monitoring and interaction with fleet vehicles using advanced technology. effectively managing a fleet of vehicles requires skillful navigation of increasing fuel prices, escalating maintenance expenses, and crucial safety considerations, all while maintaining a steadfast dedication to providing exceptional customer service (chaharbaghi et al., 2021). begashaw and temesgen (2019) assert that utilizing a vehicle tracking system enables customers to effectively manage their expectations and adjust their delivery times, thereby assisting fleet management in efficiently planning their deliveries. we evaluate fleet management based on its capacity to enhance firms' efficiency and profitability. ambrisko and teplicka (2021) acknowledged the significance of an efficient vehicle maintenance strategy as a crucial factor for the successful operation of transportation-related functions. in order to ensure optimal performance, it is imperative that fleet maintenance and management procedures incorporate effective tactics into their daily operations. this should involve the efficient allocation and management of resources to enable road transport companies to achieve a competitive edge. the biggest issue in fleet management practices among road transporters is the lack of a maintenance scheme that guarantees the efficiency, productivity, and safety of vehicles and drivers (chikwere & kanyepe, 2020). 3. methodology the study employs a descriptive research design to explore the nature and impact of fleet management on organizational performance, specifically within the telecom sector as a case study. descriptive research, as defined by shane (2023), aims to assess the current state of a phenomenon and its relationship with specific components or conditions. the target population comprises 250 registered road transport companies in mombasa county, kenya, as identified by the kenya transporters association (kta). stratified random sampling, which minimizes bias by giving each member an equal chance of selection, was used to determine the sample size. based on slovin’s formula, the sample size for the study is calculated to be 154 participants, with respondents distributed proportionately across mombasa sub-counties, targeting one driver or logistics manager from each firm. asian business research journal, 2024, 9: 135-140 138 © 2024 by the authors; licensee eastern centre of science and education, usa primary and secondary data were collected using self-administered questionnaires, designed with likert scale and closed-ended questions for easier coding, tabulation, and data comparison. the questionnaire, divided into two sections, addresses the study objectives by gathering general participant information in section a and exploring the effect of fleet management on productivity in section b. this method is advantageous for collecting large volumes of data quickly and cost-effectively while preserving confidentiality and avoiding bias. to ensure comprehensive and unbiased responses, the questionnaire follows a funnel approach, starting with general questions before transitioning to specific ones related to the study’s variables. 4. research findings 4.1. descriptive results the first objective was to examine the effect of vehicle tracking on operational performance. vehicle tracking was then established using the justification that a mean score of three in likert scale represents neutral positions with the statement, mean score of less than three represents negative view of the statement and greater than three signifies a favourable view with the statement. the following was the range of interpretation for the mean score on the likert scale: 1.0-2.4 (disagree), 2.5-3.3 (neutral), and 3.4-5.0 (agree). table 1 presents the results table 1. vehicle tracking descriptive statistics. n minimum maximum mean std. deviation vehicle tracking software for speed limit monitoring is applied by the organization 122 1.0000 5.0000 3.918033 0.9924522 the supervisor checks out the speed monitoring software hourly basis 122 1.0000 5.0000 4.352459 0.8422925 the speed limit gargets installed in the vehicle is serviced regularly 122 1.0000 5.0000 3.786885 1.1224936 the vehicles are fitted with gprs gadgets to show the location 122 1.0000 5.0000 4.090164 1.0523810 the company sets pre-defined routes for every vehicle on transit 122 1.0000 5.0000 4.155738 0.8909137 any deviation from pre-defined routes is properly authorized 122 1.0000 5.0000 3.795082 1.0751784 the organization has a systematic way of confirming validity of every vehicle dispatch 122 1.0000 5.0000 4.000000 0.8528029 the organization monitors any delay on vehicle dispatch 121 2.0000 5.0000 4.107438 0.8041730 the organization confirms if the recipient received the consignment on time 122 3.0000 5.0000 4.016393 0.7494748 vehicle tracking 122 2.3333 5.0000 4.020947 0.6305380 valid n (listwise) 121 the descriptive statistics presented in table 1 provide valuable insights into the effectiveness and application of vehicle tracking systems within an organization. the data encompasses responses from 122 participants regarding various aspects of vehicle tracking, measured on a scale from 1 to 5, where 1 indicates strong disagreement and 5 indicates strong agreement. respondents generally agree that the organization applies vehicle tracking software for monitoring speed limits, as reflected by a mean score of 3.92. the standard deviation of 0.99 indicates a moderate level of consensus among respondents, suggesting that while many believe this system is in place, some variability exists in their perceptions. furthermore, there is strong agreement that supervisors check the speed monitoring software on an hourly basis, as indicated by a mean score of 4.35 and a standard deviation of 0.84. this finding highlights the diligent oversight and commitment to maintaining vehicle speed regulations within the organization. regarding the regular servicing of speed limit gadgets, the mean score of 3.79 suggests that respondents somewhat agree that these gadgets are consistently maintained. however, the standard deviation of 1.12 indicates a wider range of opinions, implying that some respondents may feel this practice is not always enforced. additionally, the mean of 4.09 indicates general agreement that vehicles are equipped with gps gadgets to display their locations, although the standard deviation of 1.05 shows moderate variability in responses. this reflects a positive outlook on the organization’s capability to track vehicle locations. respondents also strongly agree that the company sets pre-defined routes for vehicles in transit, as demonstrated by a mean score of 4.16 and a standard deviation of 0.89. this suggests that establishing operational procedures for routing is a standard practice within the organization. conversely, a mean of 3.80 indicates some agreement that any deviation from these pre-defined routes is properly authorized. the standard deviation of 1.08 shows variability in responses, suggesting differing views on the authorization process. the mean score of 4.00 indicates general agreement that the organization has a systematic approach to confirming the validity of vehicle dispatches, with a standard deviation of 0.85 suggesting consistency in responses. additionally, a mean of 4.11 reflects strong agreement that the organization monitors delays in vehicle dispatches, although a lower sample size of 121 indicates that this aspect may have been less frequently reported. respondents also agree that the organization confirms whether recipients receive their consignments on time, with a mean score of 4.02 and a standard deviation of 0.75 indicating a relatively consistent response regarding this area of vehicle tracking. generally, the vehicle tracking practices within the organization are viewed positively, as indicated by the overall mean score of 4.02. this suggests that respondents generally perceive the systems and procedures in place as effective, with a standard deviation of 0.63 showing low variability, which indicates that most respondents share similar views. in summary, the descriptive statistics reveal that the organization has established strong vehicle tracking practices, particularly regarding speed monitoring and route management. while respondents generally agree on the effectiveness of these practices, some areas, such as the regular servicing of speed limit gadgets and the authorization of route deviations, show variability in opinions. the results are in line with ambrisko and asian business research journal, 2024, 9: 135-140 139 © 2024 by the authors; licensee eastern centre of science and education, usa teplicka (2021) who acknowledged the significance of an efficient vehicle maintenance strategy as a crucial factor for the successful operation of transportation-related functions. this suggests potential opportunities for improvement in these areas. overall, the data indicate a well-implemented vehicle tracking system that contributes to operational efficiency and accountability within the organization. 4.2. regression analysis and hypothesis testing the table 2 below presents the results of a regression analysis examining the effect of vehicle tracking on operational performance. the analysis includes unstandardized coefficients, standardized coefficients, t-values, and significance levels to evaluate the relationship between the independent variable (vehicle tracking) and the dependent variable (operational performance). table 2. regression coefficients. model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 0.858 0.300 2.860 0.005 vehicle tracking 0.459 0.058 0.532 7.953 0.000 note: a. dependent variable: operation performance. vehicle tracking indicates a significant positive effect on operation performance, with an unstandardized coefficient of 0.459. this means that for every unit increase in vehicle tracking, the operation performance improves by 0.459 units, holding all other variables constant. its standardized coefficient (beta) of 0.532 further highlights its dominant role among the variables. with a t-value of 7.953 and a p-value of 0.000, the relationship between vehicle tracking and operation performance is not only strong but highly statistically significant. these findings are in line with begashaw and temesgen (2019) who asserted that vehicle tracking system enables customers to effectively manage their expectations and hence significantly influence operational performance. h01: vehicle tracking has no significant effect on operational performance of road transporters in mombasa county the null hypothesis, h01 show that vehicle tracking has no significant effect on operational performance of road transporters was rejected. implying that the effect of vehicle tracking affects the operational performance of road transporters in mombasa county. these findings agree with the findings of adebayo and aworemi, (2021) who found that there is relationship between vehicle tracking and fleet management on operational performance in yagba west of kogi state, nigeria. 4.3. discussion of study findings from the analysis of the study findings, it was noted that most of the respondents agreed that the organization applies vehicle tracking software for monitoring speed limits, as reflected by a mean score of 3.92. there is strong agreement that supervisors check the speed monitoring software on an hourly basis, as indicated by a mean score of 4.35 and a standard deviation of 0.84. the findings of the study showed that the regular servicing of speed limit gadgets, which was calculated and resulted in a mean score of 3.79 with a standard deviation of 1.12, indicates a wider range of opinions, implying that some respondents may feel this practice is not always enforced. the findings of this thesis showed that the respondents strongly agree that the company sets pre-defined routes for vehicles in transit, as demonstrated by a mean score of 4.16 and a standard deviation of 0.89, which suggested that establishing operational procedures for routing is a standard practice within the organization. testing the hypothesis h01 indicated that vehicle tracking does not have a substantial impact on the operational performance of road transporters in mombasa. these results are consistent with the findings of adebayo and aworemi, (2021), demonstrating a link between vehicle tracking and fleet management with operational performance. 5. conclusion and recommendations establishing the effect of vehicle tracking on the operational performance of road transporters in mombasa county was the primary goal of this research project. from the finding of the research study, it was found that the company uses vehicle tracking software to assure efficiency and vehicle routing to regulate fuel consumption rate. the respondent said that an annual budget should be set aside for the upkeep and purchase of vehicle monitoring software so that the company can quickly address issues with vehicle tracking. the findings were noted that the company should provide training on fleet management through the use of vehicle tracking software and that using this software will increase accountability. the company uses cutting-edge gps car tracking technology, allowing it to monitor the speed limit. with a mean of 4.71 and a standard deviation of 0.714, the respondents also concurred that the firm has installed vehicle tracking systems on all road transportation vehicles and designated a person to oversee and administer the gps tracking system. based on the study’s findings, the study concluded that organizations’ fuel management systems work well when it uses vehicle tracking and monitoring software and this boosted the overall job productivity on operational performance of road transporters in mombasa county. based on the findings and conclusion of this thesis, the following recommendations were made: the research study recommended that the transportation department management in mombasa county should implement vehicle tracking systems to enable the organizations’ fleet managers to monitor speed limits through the gps tracking. these systems should be permanently assigned to a person to monitor the speed limits of the road transporters online. references abdirahman, a. a., hashi, a. o., dahir, u. m., & 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(2006). an introduction to rfid technology. ieee pervasive computing, 5(1), 25-33. 1 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 1, 1-10, 2025 issn: 2576-6759 doi: 10.55220/25766759.243 © 2024 by the authors; licensee eastern centre of science and education, usa sustainable agricultural innovation in uzbekistan through the helix models xiuli chen1  joohan ryoo1,2 1graduate school of international studies, hanyang university, south korea. 2research institute for contemporary korean studies, hanyang university, south korea. email: cxlavj@hanyang.ac.kr ( corresponding author) abstract uzbekistan is a double-landlocked country with an economy heavily reliant on agriculture, arguably one factor impeding the country’s development. one possible remedy to the agricultural transformation is the helix innovation ecosystem. this research investigates how the pillars of the helixacademia, industry, government, civil society, and environmentalistscan be the catalysts that arise from the groans of collaboration while strategizing theories such as international relations and political case studies. the green industrial revolution will allow uzbekistan to compete favorably, be market-oriented, and maximize its comparative advantages in agriculture: renewable resources, eco-industrial parks, and energy-efficient greenhouses. besides building institutional fittings and bridges, improving the interaction among the helix actors will facilitate climate funds in the agricultural sector. in addition, funds from the carbon market will enable socio-economic resiliency. as library-based and secondary data research, the article further acknowledges that these eluding aspects can only be comprehended through field studies that can be compared to other landlocked countries. finally, this paper argues that balancing the interaction between the various elements of the helix model will enable uzbekistan to have a sustainable economic environment and focus more on innovations in the agricultural sector. it can also serve as a guide for other low-income countries with similar development problems. keywords: academia, civil society, government, strategy, tangible and intangible. 1. introduction the region's economic growth is progressively bound to its innovation power, postulating a transformation towards a knowledge economic system endorsed by a robust science, technology, and innovation (sti) structure (xu & zhang, 2024). the evolution of an innovative economy in asia-pacific countries requires revolutionary transformations facilitated by active state participation, including establishing national innovation strategies and formulating supportive legislative and institutional infrastructures (konyukhov et al., 2019). for example, strategies such as china’s “new quality productive forces (2023)” (li et al., 2024), south korea’s “digital strategy of korea (2023)” (ministry of science and ict, 2023 ), and uzbekistan’s “development strategy of new uzbekistan 2022-2026 (2022) ” ( eurasia center, 2022), enable the various approaches taken by each country to decode their specific challenges and highlight their strengths for sustainable growth by fostering innovation, improving digital capabilities, and upgrading comprehensive development strategies especially in agriculture. landlocked developing countries (lldcs), such as uzbekistan and some other emerging countries, lack territorial access to the sea, are remote and isolated from world markets, and have high transit costs, which impose severe constraints on overall socio-economic development.1 uzbekistan in 2022, with 25% of gdp and about 26% of the labor force covered by agriculture (usa international trade administration, 2023), has a population of over 36 million (world population review, 2024), with refined copper, petroleum gases, polymers of ethylene, motor cars, wheat, and mineral or chemical fertilizers as its top export and import products in 2021 (trend economy, 2023). innovation in the agricultural sector is essential for economic growth, technological advancement, and societal development (dub et al., 2023). this research discusses uzbekistan’s challenges and efforts to fight for economic, social, and environmental improvements to promote qualitative development and innovation-driven growth through sustainable agriculture. the helix model seeks to establish a sustainable, resilient, and highly productive agricultural sector by promoting extensive collaborations among these stakeholders. this comprehensive approach reveals how practical it can be in responding to the complex problems facing modern farming while propelling the country toward sustainability. in uzbekistan, eco-innovation within supporting industries, primarily through developing ecoindustrial parks, is a tremendous breakthrough toward achieving a more sustainable future (ortikov, 2023). they ensure efficient resource utilization, material recycling, and better energy use, changing industrial dynamics through closed-loop systems (opitz-stapleton et al., 2022). besides this, uzbekistan's greenhouse business has started incorporating energy-saving technologies into new-generation greenhouses consistent with eco-innovation principles; these include reduced energy use and resource consumption, leading to decreased manufacturing costs (durmanov et al., 2021). however, several challenges still exist, such as missing linkages and weak institutional 1 itu. landlocked developing countries (lldcs). https://www.itu.int/en/itu-d/ldcs/pages/landlocked-developing-countries.aspx mailto:cxlavj@hanyang.ac.kr %20eurasia%20center,%202 https://www.doi.org/10.55220/25766759.243 asian business research journal, 2025, 10(1):1-10 2 © 2024 by the authors; licensee eastern centre of science and education, usa infrastructure for innovation diffusion, which points towards ‘knowledge ecology’ rather than strong ‘innovation systems’ (weerasinghe et al., 2024). enhancing ties in the helix innovation ecosystem is necessary to accrue ecoinnovation benefits in uzbekistan. the agricultural sector sustains the economy and social welfare by offering innovation opportunities fostered through the helix innovation ecosystem application. this research aims to explain how this multidimensional system involving academia, industry, government, civil society, media, and environmentalists can transform uzbekistan’s agricultural practices. this research uses a library-based research method to determine the relevance and effects of the helix innovation ecosystem in uzbekistan's agricultural sector. the first stage consisted of analyzing available literature and policies about the research question, using theories of international relations, innovation ecosystems, and comparative case studies of other countries with similar characteristics. this secondary analysis contributed to designing a model appropriate for the socio-economic and environmental circumstances that characterize uzbekistan. 2. literature review and theoretical framework 2.1. ir theories for innovation ir theories explain why and how global cooperation, power dynamics, normative structures, and international collaboration can influence innovation and technology. these insights are particularly relevant for sustainable agricultural innovation in uzbekistan, where global partnership is critical in addressing agrarian challenges and leveraging technology for sustainable growth. for example, shifts in techno-economic trends influenced by the dynamics outlined by ir theories impact the global landscape of innovative activities such as agricultural innovation and the implications for global governance institutions (leijten, 2019). as a nation undergoing economic and technological transformation, uzbekistan can harness international collaboration to integrate advanced agricultural technologies and sustainable practices into its farming sector. it is associated with the principles of global governance institutions and promotes knowledge-sharing and cooperation to address crossborder issues like food security and climate change. for another example, theories like ecosystem theory and collaborative innovation theory, which can implement the broader insights provided by ir theories, address efficiency by enhancing information flow and resource sharing easier for better entrepreneurship education (wang & zhu, 2023). by applying the helix model, uzbekistan can enhance collaboration between universities, industries, government entities, and civil society to facilitate the flow of information, improve resource-sharing, and foster entrepreneurship in agriculture. in international relations theory, debates on realism and constructivism are essentially about constructivists’ claims that realism cannot see changes in global politics, such as transformations in actors, identities, or social practices (sterling-folker, 2002). the evolution of realism and its intersection with constructivism suggests an attempt to harmonize traditional realism with constructive approaches (brown, 2012). this blended theoretical perspective is crucial for understanding state behavior and international relations, mainly when applied to fostering innovation and sustainability. for uzbekistan's sustainable agricultural innovation, these ir insights provide a framework to understand how the country interacts with global and regional actors, shaping its innovation ecosystem. at the same time, constructivism’s emphasis on identities and practices underscores the importance of shared norms, collaborative behaviors, and inclusive innovation practices within uzbekistan's agricultural sector. nørreklit states that materialistic aspects do not contradict reality’s subjective features but enhance them, thereby suggesting a pragmatic constructivist approach that resolves this dichotomy (nørreklit, 2013). practically, further emphasis on government involvement and international collaboration comes from bridge organizations, which are established through partnerships between government, academia, and business organizations for succeeding in the technology companies’ internationalization on global innovation hubs (pietrasieński & rokosz, 2023). these actors can form bridge organizations tailored to uzbekistan’s unique needs, ensuring the internationalization of its agricultural technology and aligning it with global standards of sustainability and innovation. with knowledge exploitation at its core, fostering the growth of industries under innovation ecosystems aims for a cooperative evolution (cherchem & keen, 2022). the importance of scientific collaboration is highlighted in exploring how to promote comprehensive innovation internationally (gao et al., 2021). uzbekistan can encourage cooperative evolution within its agricultural sector by fostering innovation ecosystems and promoting shared learning and collaborative problem-solving among stakeholders to enhance agricultural productivity, reduce environmental impact, and improve food security. however, without careful management and equitable access to the benefits of these collaborations, there is a risk that innovative efforts may primarily serve the interests of larger entities, potentially marginalizing smaller players and stifling broader, inclusive growth within the global innovation ecosystem. industrially, in-depth analysis such as tianjin's manufacturing industry case study guides economic adjustments for constructing these innovative ecosystems within an industrial scope (yan & liu, 2023). it was found that improving the industrial chain ecosystem of the manufacturing sector, boosting the industrial competitiveness of tianjin's manufacturing industry, and prioritizing the development of the high-tech manufacturing industry are essential. as for human-centric approaches to nurturing skilled human resources, three categories of innovation ecosystems foster high levels of talent competitiveness driven by business investment, egovernment initiatives, research and development (r&d), and innovation ecosystems associated with lower talent competitiveness if neglecting general education (ge) and research and development (r&d) irrespective of increased government investment in technology infrastructure (huang et al., 2023). just as improving the industrial chain ecosystem and prioritizing high-tech industries boosted tianjin's competitiveness, a similar approach can enhance uzbekistan's agricultural innovation ecosystem. for example, uzbekistan can focus on developing a comprehensive agricultural value chain ecosystem, integrating advanced technologies like precision farming, smart irrigation, and agri-tech solutions to improve productivity and sustainability. uzbekistan can also prioritize high-tech agriculture, such as biotechnology, sustainable farming equipment, and climate-resilient crop development, ensuring that innovation addresses environmental and societal needs. moreover, a human-centric approach is essential for sustainable agricultural innovation. business investments in workforce training and government and academic farm education and research initiatives can create a pipeline of skilled agrarian professionals. while focusing on the r&d of farming technologies, uzbekistan must build a broad knowledge base and adaptability among its workforces. this ensures equitable talent competitiveness and reduces disparities asian business research journal, 2025, 10(1):1-10 3 © 2024 by the authors; licensee eastern centre of science and education, usa between technological advancements and workforce capabilities. nevertheless, without a balanced approach, the long-term sustainability of the innovation ecosystem may lead to inequalities in talent competitiveness and industrial growth. 2.2. theoretical framework: helix models the triple helix model, which explains how universities, industries, and government interact, offers a way to understand collaborative innovation dynamics (etzkowitz & leydesdorff, 2000). nevertheless, according to cai, this model was expanded to include broader societal and environmental dimensions in 2022, thus reflecting the growing complexity of innovation ecosystems (cai, 2022). in addition, an analysis of european case studies on effective innovation ecosystems has highlighted the importance of diversity in stakeholder participation and governance models (taratori et al., 2021). traditional innovation models have been redefined by including nonstate actors like ngos and tncs and technological advancements such as ai or iot. as in the triple helix model, the innovation ecosystem has substantially changed. explaining how universities, industries, and government interact has evolved into more complicated models, such as the quadruple or quintuple helix models, which are positively related to future vision (mineiro et al., 2023). adopting helix models reflects the need for structural and social elements to drive progress. for instance, realism’s focus on structural determinants highlights the necessity of strong governmental policies and resource allocation. uzbekistan tries to resolve many environmental challenges that are profoundly tangled with its economic actions and climatic situations. the mining industry, essential for the nation's economic evolution, has led to providential ecological degradation, particularly in the free economic zones (fezs) of navoi and angren, where decades of mining have led to substantial waste accumulation and land degradation (mavlyanova et al., 2021). soil erosion and salinity are persistent issues exacerbated by regional climate change, which is expected to increase droughts and high summer temperatures, further risking land degradation. efforts to combat these challenges include science-based crop rotation, sustainable farming systems, and adopting eco-technology and biotechnology for soil conservation (gafurova & juliev, 2021). water resource problems are another critical issue, mainly due to the decline of central asian mountain glaciers and the disappearance of the aral sea, which create crucial challenges for agricultural water usage. the possibility of regional water conflicts also modifies the situation, especially for downstream countries like uzbekistan (brody & eshchanov, 2021). the switchover to renewable energy sources, which address climate change and natural resource diminution, has prospects for increased renewable energy use (shaydanov & qalandarxonov, 2023). these environmental challenges require comprehensive and innovative solutions to ensure sustainable development in uzbekistan. 3. helix innovation ecosystem for uzbekistan in uzbekistan, the agricultural sector sustains the economy and social welfare by offering innovation opportunities fostered through the helix innovation ecosystem application. it explains how this multi-dimensional system involving academia, industry, government, civil society and media, and environmentalists can transform uzbekistan’s agricultural practices. the helix model seeks to establish a sustainable, resilient, and highly productive agricultural sector by promoting extensive collaborations among these stakeholders. 3.1. government as the largest population in central asia, uzbekistan has excellent potential for establishing its national advantages either following the european model of landlocked countries or some other model that facilitates its local diversities in national values, culture, economic structure, system, and history while coping with its challenges and threats (yann, 2022). the government hopes to double farmers' incomes and ensure a minimum 5% annual growth of agriculture in 2022-2026 through intensive development programs, application of advanced scientific achievements, digitization, and adoption of new technologies with support from international institutions. 2 moreover, national agricultural reform strategies and detailed planning in practice are provided. however, a peaceful and sustainable comprehensive approach integrating the local, national, regional, and global factors toward its national competitive advantage in coping with climate change has not been envisioned clearly in the agricultural industry (eshov et al., 2021). transitioning to a green economy necessitates achieving food security while using fewer natural resources. this can be accomplished through improved water management, significant investments, and innovations, including cultivating crops with higher nutritional efficiency per unit of water consumed (rockström et al., 2017). in landlocked countries like uzbekistan, adopting strategies like zero-waste farming and incorporating blockchain technology in the agricultural sector can help establish national competitive advantages is necessary. 3.2. academia uzbekistan has built a network of higher education institutions (heis) that are an integral part of the national innovation system, which is critical to the nation’s development strategy. these institutions have a key role in developing human resources and are crucial to the socio-economic development necessary to modernize and diversify the economy (saidov, 2024). due to its transition phase, uzbekistan is gradually concentrating on the productive activities performed by the heis, such as active international partnerships (merrill, 2024). modern teaching and research methods are meant to meet international standards (arshad, 2024). to this end, uzbekistan seeks to shift 85% of its higher education institutions to the credit-module training system by 2030 while enhancing the scientific potential through several measures like those financed by the ministry of higher and secondary special education (mhsse) as well as other initiatives, including attachments to and attending advanced training courses in the leading international universities for faculty members as well as huge capital investment in capital expenditures and equipment (aralova, 2024). heis construct innovation ecosystems, as they are potent players in shaping innovative structures and institutional features for adequate research conduct. they transcend their normal educational functions when 2 us international trade administration. agricultural sectors. uzbekistan country commercial guide. https://www.trade.gov/country-commercialguides/uzbekistan-agricultural-sectors asian business research journal, 2025, 10(1):1-10 4 © 2024 by the authors; licensee eastern centre of science and education, usa developing market-relevant experts who will contribute to achieving core objectives. heis contribute to the training of qualified professionals and promote innovative and effective educational systems and development changes (zufarova, 2024). uzbekistan is a state that seeks foreign investments in education; this partnership will assist in investments into foreign universities (khaydarov, 2024). today’s challenges for higher education institutions (heis) of the higher educational and scientific system, including their optimization, competitiveness, and ability to attract external investment, have necessitated the incorporation of cutting-edge technologies (murodova et al., 2024). in addition, such institutions are developing new curricula to provide students with the necessary skills in response to changing labor market requirements (urbančíková & umarkhonov, 2024). meanwhile, uzbekistani higher education institutions contribute much to the internationalization of education, first through preparation for global intercultural interaction among young people and secondly through improvements on an international level, which have increased their recognition around the globe (ovezmyradov & kepbanov, 2020). this is vital for creating a knowledge-based workforce that can meaningfully contribute to the nation's innovation ecosystem. higher education institutions in uzbekistan are not only centers of learning. they are also integral to the national innovation ecosystem, promoting research and development and making great efforts towards socio-economic transformation within its borders. as uzbekistan seeks to modernize education and enhance international cooperation, its aspirations lie in building a strong, innovative economy (nabiyev et al., 2023). the internationalization of higher education can enhance regional competitiveness by promoting the exchange of knowledge, skills, and resources among academic institutions, industry partners, and policymakers. there are 154 members, including 25 international institutions in uzbekistan (see figure 1). promoting agricultural innovation has been one of the main goals of the higher education institutions (heis) in uzbekistan, which are aware of agriculture's immediate and strategic needs (toshboev et al., 2023). their primary function is to conduct research and employ effective farming technologies that promote productivity and sustainability (khudoynazarovich, 2021). the participation of heis in agricultural innovation encompasses a variety of activities, from cultivating new agronomic techniques to making crops overcome changing climatic conditions. universities in uzbekistan support innovation in agriculture, such as the creation of creative procedures in uzbekistan’s agroindustry, particularly in tashkent province, which is vital for increased production and employment, improved quality of products, and decreased costs, competition both at home and abroad, thus improving the socio-economic conditions in agriculture (narinbaeva et al., 2021). collaboration between agricultural stakeholders and heis is essential in technology transfer and knowledge sharing. these relationships lead to sustainable farming practices which are economically viable and environmentally friendly in many instances. it should be noted that heis provide manpower by training graduates competent enough to drive change within the agricultural sector. various government policies aimed at improving performance by modernizing and adopting technology and other measures have supported this educational role while demonstrating an all-inclusive approach to promoting agricultural innovation in uzbekistan (najjar et al., 2023). figure 1. higher education institutions in uzbekistan (lyamkina, 2024). 3.3. civil society (the public) a sustainable development philosophy, state-of-the-art technologies, and effective operations would promote farmers, consumers, and ecology by creating more substantial and more profitable agriculture systems (pretty et al., 2011). in the above-substantiated scenarios, delay, information fragmentation, fraud, and counterfeit products circulating through the network often significantly affect the supply chain (kshetri, 2017). for instance, agricultural producers may not be able to obtain their payment after transporting goods in return for delivery; buyers may lack funds to afford transactions with farmers, while consumers may not fully trust the products they purchase and would overwhelmingly need supporting verifiable information regarding the goods’ conditions and quality. by building upon the integration of data, trade, and finance flows, it would optimize the supply chain in which all the actors in the agricultural supply chain, such as farmers, buyers, storage, and consumers, will be participating in one database with a specific interface to exchange information and develop a more innovative and secure supply of goods and services. uzbekistan has placed a high priority on realizing its agricultural development and diversification. according to them, initiatives funded through usaid assist farmers in developing successful farming businesses that use improved methods and technology.3 blockchain technology could significantly support the agricultural supply chains in uzbekistan. it enables transactions among participants without requiring a third party to facilitate them (kamilaris et al., 2019). data can be kept in a single distributed database rather than a centralized one, making access easier while strengthening security and data integrity instead of centralized servers. one of the potential 3 "agriculture and food security." annals of the new york academy of sciences 894, no. 1 (1999): 9-17.https://www.usaid.gov/uzbekistan/agriculture-and-foodsecurity https://www.usaid.gov/uzbekistan/agriculture-and-food-security https://www.usaid.gov/uzbekistan/agriculture-and-food-security asian business research journal, 2025, 10(1):1-10 5 © 2024 by the authors; licensee eastern centre of science and education, usa challenges when using digital systems is integrating physical assets into their digital identifiers; solutions like weighbridge integration and quality testing instruments can solve this. in places where such data infrastructure technologies are still awaited, a model based only on declaration and manual human data entry could be applied. however, this might also increase the chances of human error and data manipulation. the supply chain of agriculture is made more complex by disintegrated inward and outward networks, often consisting of several levels of decision-making from farmers to intermediate silos, silos to transformation plants, and transformation plants to clients (wilding, 1998). preparing for potential impediments and challenges becomes paramount to addressing increased competition within the agricultural sector. as proposed by the diamond model, the value chain approach of global sustainable agricultural supply chains can assist nations and firms in enhancing their competitive edge through opportunity and process realignment (kaplinsky & morris, 2000). enhancing support for green ventures and employing circular economy principles can foster renewal and create additional jobs to improve the sustainable economy (bocken et al., 2016). in addition, adopting sustainable agriculture combined with new technologies such as blockchain could assist in realizing the united nations sustainable development goals agenda, which focuses on priority areas, including zero hunger, responsible consumption and production, and climate action (sachs et al., 2019). moving towards sustainable agriculture, backed by innovative practices and new technologies, will significantly improve environmental management, food security, and economic and social growth. countries such as uzbekistan can use sustainability-based strategies to elevate the competitiveness of their agricultural sector and address some of the most pressing issues of the current times. 3.4. the industry of agriculture: esg investing the application of the helix innovation ecosystem will revitalize the agricultural industry in uzbekistan. integrating environmental, social, and governance (esg) principles in agricultural practices can help uzbekistan deal with the factors affecting the country and change its image in international markets as a landlocked, lowemission economy center with strong supply chains of enhanced added value. in agriculture, natural resources management in uzbekistan might not be peaceful partially because of humanwildlife conflicts or dam conflicts between uzbekistan and its neighbor nation, kyrgyzstan, due to the historical context.4 even though uzbekistan has made significant advancements in its climate change adaptation planning process to strengthen climate-sensitive sectors further and improve existing mechanisms to maintain sustainability,5 uzbek's agricultural sector has been dominated by the production of cotton and wheat, two highly regulated sub-sectors whose productivity and production levels remain low, with limited diversification after numerous farm and sector restructuring processes.6 agricultural development in uzbekistan is intertwined with multiple facets of environmental, social, and governance (esg) investing. for instance, industrial agriculture can impact the country's environment, posing risks of deforestation and pesticide use (de souza et al., 2024). additionally, centralized power and control by unelected technocrats and private global institutions can negatively influence monetary policy, capital, and credit distribution (pistor, 2019). landlocked developing countries (lldcs) like uzbekistan face challenges, such as delays at borders, productivity constraints, and structural weaknesses, reducing their development by approximately 20% compared to countries with sea access (escap, 2024). incorporating esg principles into investment strategies can transform lldcs into land-linked, low-carbon nations with resilient and value-added supply chains (kronenberg et al., 2020). enhanced investments in clean water and sanitation services can lead to faster and more sustainable progress, facilitating the transition to a green economy in landlocked nations (gurung, 2016). esg country ratings can complement traditional financial ratings by analyzing countries' sustainability performance and risks, benefiting developed and emerging markets (ng et al., 2020). emerging-market (em) countries, accounting for over 60% of global carbon emissions, face significant climate change impacts that could push millions into poverty by 2030 (garzón-jiménez & zorio-grima, 2021). the united nations' sustainability goals urge em countries, including uzbekistan, to make considerable progress in addressing esg and economic challenges by 2030.7 esg reporting has become indispensable for supervisory bodies, ensuring stakeholder confidence, engaging with clients, and integrating esg into business practices. this is crucial for developing uzbekistan and other lldc regions into land-linked, low-emission countries with strong value-added supply chains based on esg principles. the edge of esg investing is that it can encourage small companies by making these smes attractive to public companies and consumers.8 nevertheless, acquiring esg credentials for investing in portfolio firms may be complex and cumbersome because of the requirements for comprehensive information on the underlying assets (sarda, 2024). for the owners of small enterprises in uzbekistan's agricultural sector, the environmental esg dimensions include using recycled material and implementing more internal recycling processes. on the social side, esg aims to promote diversity, equity, and inclusion for employees, vendors, customers, and investors. regarding governance, esg incorporates appointing qualified board members with training to ensure transparency.9 for landlocked countries such as uzbekistan, the agricultural development and investment strategy using esg principles and best practices has many benefits and prospects. by applying these principles, such countries move to land-linked, low-carbon countries with strong value-added supply chains (huan & zhao, 2020). achieving sustainable agriculture developments, building local industrial clusters, and integrating into global markets will enable a remarkable transformation of the farming sector in uzbekistan (rahmetov & rakhmetova, 2022). similarly, fostering social involvement, providing capacity building for farmers, and working transboundary will improve sustainability, enhance product traceability, and increase value addition within agricultural supply chains (ghosh et al., 2021). 4 uzbekistan: sustainable natural resource use. https://globalsnowleopard.org/gef-undp-projects/uzbekistan-sustainable-natural-resourceuse/#:~:text=uzbekistan%3a%20sustainable%20natural%20resource%20use%20minimizing%20humanwildlife%20conflict,humans%20and%20wildlife%2c%20co-existence%20is%20not%20always%20easy. 5 change adaptation planning. undp. 2020. https://www.undp.org/uzbekistan/press-releases/uzbekistan-advances-its-climate-change-adaptation-planning. 6 eu assistance for uzbekistan agri-food development strategy 2020-2030. https://dt-global.com/projects/agriculture-uzbekistan 7 united nations. transforming our world: the 2030 agenda for sustainable development. 2015. retrieved from https://sdgs.un.org/2030agenda 8 landmark. esg for small businesses. 2022. retrieved from https://www.landmarkcpas.com/esg-for-small-businesses/ 9 monica singhania, and neha saini. "systems approach to environment, social and governance (esg): case of reliance industries." sustainable operations and computers 3 (2022): 103-117. https://doi.org/10.1016/j.susoc.2021.11.003 https://www.undp.org/uzbekistan/press-releases/uzbekistan-advances-its-climate-change-adaptation-planning. https://dt-global.com/projects/agriculture-uzbekistan https://sdgs.un.org/2030agenda https://www.landmarkcpas.com/esg-for-small-businesses/ https://doi.org/10.1016/j.susoc.2021.11.003 asian business research journal, 2025, 10(1):1-10 6 © 2024 by the authors; licensee eastern centre of science and education, usa by integrating esg principles into their operations, small businesses in uzbekistan's agricultural industry can attract esg-conscious investors, consumers, and business partners while promoting environmental, social, and governance best practices. ultimately, implementing esg principles in agricultural development can improve environmental, social, and governance outcomes for landlocked countries like uzbekistan. this can lead to more robust, more resilient economies and a higher quality of life for their citizens while addressing global challenges such as climate change and resource scarcity. 3.5. environment: carbon markets and climate finance uzbekistan is particularly vulnerable to climate change since it is already the site of the world’s worst human catastrophe: the drying up of the aral sea. things will worsen in the coming decades as temperatures rise considerably more than the global average.10 threats from water shortages, soil salinity, and erosion are severe, affecting 20 percent of the population through water salinization.11 climate warming has reduced snow cover and increased evaporation. an increase in the frequency and intensity of droughts may lead to instability in agricultural production and threaten the country’s food security. 12 3.5.1. carbon markets from an international macroeconomic perspective, linking standalone national carbon markets across asia and beyond can provide numerous benefits and challenges for the participating countries. the linkage between the carbon markets of the eu and china resulted in improved total social welfare, better economic performance, amplified expansionary effects, and mitigation of adverse cross-border spillover effects (xiao et al., 2022). moreover, linked carbon markets functioned as automatic stabilizers of the economy and reduced economic fluctuations in the face of supply-side shocks. expanding the linkage of emissions trading systems (etss) to additional regions is crucial for policymakers considering the design and implementation of international ets. for instance, when the u.s. and china cooperated on climate action through linked etss, both countries benefited from additional support for domestic decarbonization and increased gdp (li et al., 2023). by extending the linkage strategy to the broader asian region, including northeast asian countries such as china, japan, and korea, internationally based capacity-building efforts can help support the development of linked carbon markets that are more valuable economically, environmentally, and strategically. potential benefits of a regional carbon market linkage in asia include:13 • reducing costs by expanding the number of market participants, leading to greater efficiency and less volatility. • removing incentives for companies to relocate their emitting activities to areas with weaker regulations. • providing a confidence-building measure for broader asian relationships and demonstrating global climate change leadership. linkage can reduce costs and encourage countries to set more ambitious climate change targets, promoting regional and global climate action. uzbekistan can play a significant role in the linkage strategy for carbon markets in asia by participating in regional cooperation and contributing to establishing an integrated carbon market. by engaging in regional collaboration, developing a domestic ets, sharing best practices, and exploring opportunities for carbon market integration, uzbekistan can play a crucial role in the linkage strategy for carbon markets in asia (kamolov et al., 2024). uzbekistan can also adopt a combination of climate finance instruments tailored to its specific context and priorities and play an active role in developing asian carbon markets. the linkage between uzbekistan’s participation in carbon markets networking across asia and elsewhere globally represents typical examples related to the helix innovation ecosystem approach to climate mitigation. it underscores the importance of collaborative initiatives that drive policy-making processes to address environmental concerns while encouraging economic advancement and social welfare enhancement. 3.5.2. climate finance uzbekistan can contribute to climate change issues and sustainable development by supplying the necessary financial capital and motivating people to adopt and implement sustainable resources, practices, technologies, and innovations. climate finance can help adopt climate-smart agriculture practices, conservation agriculture, agroforestry, and organic farming, promoting healthy soils, improved water management systems, and increased biodiversity through sustainable agriculture (arabov et al., 2024). access to climate finance increases farmers' ability to adopt cutting-edge technologies and new practices, such as precision farming, drought-tolerant crops, and efficient irrigation practices, which improve productivity while minimizing the environmental impact. climate finance could also help establish businesses focused on biodiversity-based sectors such as ecotourism, sustainable timber harvesting, the collection of non-timber forest products, and the responsible use of genetic resources (murodilloevna, 2024). through biodiversity entrepreneurship, financing, and incentivizing these businesses, climate funding could help manage and rehabilitate ecosystems, conserve threatened species and provide potential new livelihoods for local people. the financing facilities made available for climate adaptation initiatives could help deepen the scholarship, research, and entrepreneurial activities to promote adopting sustainable agriculture and biodiversity technologies. this, in turn, would help cultivate an innovative and business-oriented culture in uzbekistan, which will translate into the generation of new green products, services, and business solutions through capacity building and innovation (pauw et al., 2024). therefore, climate finance can positively impact uzbekistan's agricultural entrepreneurship by supporting various aspects of these sectors. climate finance’s vital impact in uzbekistan enhances the helix innovation ecosystem. climate finance is a key feature of helix innovation ecosystems, emphasizing that sustainable 10 clare nuttall in tashkent. uzbekistan grapples with urgent climate change problems. 2021. https://intellinews.com/uzbekistan-grapples-with-urgent-climate-change-problems-217031/ 11 uzbekistan advances its climate change adaptation planning. 2020. https://www.undp.org/uzbekistan/press-releases/uzbekistan-advances-its-climatechange-adaptation-planning. 12 zoï environment network. climate change in uzbekistan: illustrated summary. 2020. https://www.preventionweb.net/publication/climate-change-uzbekistan-illustrated-summary 13 jackson ewing. roadmap to a northeast asian carbon market. asia society, 2022. https://asiasociety.org/files/roadmapnortheastern-final-online+.pdf https://www.undp.org/uzbekistan/press-releases/uzbekistan-advances-its-climate-change-adaptation-planning https://www.undp.org/uzbekistan/press-releases/uzbekistan-advances-its-climate-change-adaptation-planning https://asiasociety.org/files/roadmapnortheastern-final-online+.pdf asian business research journal, 2025, 10(1):1-10 7 © 2024 by the authors; licensee eastern centre of science and education, usa development will only be achieved through multilateral approaches towards addressing climate change through innovation, collaboration, and strategic investments. 4. sustainable agricultural innovation in the helix ecosystem a combination of tangible and intangible factors determines the success metrics and results of the helix innovation ecosystem for sustainable agriculture in uzbekistan. these factors constitute innovation conditions and determine the ecosystem's capacity to enhance collaboration, innovation, and sustainable social and economic growth. tangible factors provide the measurable and concrete infrastructure that forms the backbone of the ecosystem (neto et al., 2024). this includes digital infrastructure like high-speed internet and mobile networks, essential for seamless communication and collaboration among stakeholders, and physical infrastructure, such as transportation networks and specialized facilities, which support the efficient movement of resources and interaction among various entities in the agricultural sector. financial resources, including funding availability and public-private investments, are vital for enabling startups and research projects for sustainable agriculture, ensuring that innovative ideas can be transformed into marketable products. a skilled workforce and continuous learning opportunities (i.e., human capital) are also pivotal for driving research and technological advancements in rural areas through clear government policies that foster a conducive environment for innovation. on the other hand, intangible factors shape the ecosystem's cultural and social dynamics, which are crucial for sustaining innovation in the long term (moro-visconti, 2024). a culture that promotes risk-taking, creativity, and open-mindedness is essential for encouraging entrepreneurship and new ideas. trust and social capital among stakeholders in the agricultural industry facilitate effective collaboration, while networking ensures the flow of information and resources necessary for innovation. the ecosystem’s success relies on collaboration and partnership dynamics, with effective inter-organizational collaboration and public-private partnerships being vital to leveraging strengths and resources from various sectors. social responsibility, ethics, and sustainability considerations are critical in ensuring that innovation can foster economic growth while addressing social needs and environmental protection, which earns public trust and support. this systematic support of these material and immaterial elements within the helix system allows for persistent joint cooperative performance while contributing to the qualitative transformation of agriculture to improve the region's economy and society. since each stakeholder brings unique strengths to the equation policy leverage, research, commercial savvy, social and environmental concerns, and reputation, the helix model transforms into a stable and integrated filum that restructures the agricultural sector of uzbekistan at local and global levels. the key to sustainable economic prosperity lies in political stability and the foundation upon which that stability is built (lee, 2024). stability grounded in fairness, inclusivity, and adaptability fosters confidence among economic actors and creates conditions for enduring growth. 5. discussion and conclusion the view of the fourth industrial revolution has integrated the strategy of innovation with new rising technologies and their influences on the economy and societies, which promote information exchanges and applications, encouraging data-navigated transformation through digital technologies by using tangible and intangible resources (enzmann & moesli, 2022). emerging technologies that are creating innovation, such as artificial intelligence (ai), robotics, the internet of things (iot), blockchain, and other technologies, affect human lives through products and services. these technologies are transforming the agricultural sector, offering new opportunities for innovation, improving system efficiency and security, and benefiting human lives through advanced products and services (aruna et al., 2023). adopting new technologies such as ai, iot, robotics, and blockchain can uphold agriculture with new ideas and approaches, improving the already existing agricultural systems, economies, and societies. an essential requirement for developing countries such as uzbekistan to join the fourth or fifth industrial revolution (4ir) is to speed up the invention and aggregation of organizational-level technological capabilities necessary for digital transformation accounting for the clarified set of human and organizational activities and resources, better revealing the new certainty of the revolution (peerally et al., 2022). for organizations entering the fourth industrial revolution, ambidexterity, balancing innovation and exploitation, is essential for their agricultural capabilities to be more efficient in uzbekistan (mahmoo & mubarik, 2020). the helix innovation ecosystem also assists in advancing agriculture in uzbekistan through a balanced integration of tangible and intangible elements. it possesses the required cultural and infrastructural baselines to promote effective changes and solve different economic, social, and environmental issues. by nurturing tangible and intangible elements, the helix model can achieve a holistic and sustainable approach to innovation, fostering an environment that drives economic growth and addresses social and environmental challenges for uzbekistan. this research primarily depends on secondary data sources and broad policy perspectives, which are significant limitations as they do not reflect the realities of the finer agricultural sector in uzbekistan. additionally, the relationships between helix stakeholders, especially at the bottom level, need further investigation as they require extensive qualitative fieldwork. 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(2024). analysis of the transformation and development trends of the higher education system in uzbekistan. https://yashil-iqtisodiyot-taraqqiyot.uz/journal/index.php/ged/article/download/1215/1235 https://yashil-iqtisodiyot-taraqqiyot.uz/journal/index.php/ged/article/download/1215/1235 45 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 3, 45-49, 2025 issn: 2576-6759 doi: 10.55220/25766759.315 © 2025 by the author; licensee eastern centre of science and education, usa are entrepreneurs born or made? a systematic review of theoretical perspectives and empirical evidence sidney kawimbe1 1zcas university – school of business, lusaka, zambia. email: skawimbe@yahoo.com abstract the debate over whether entrepreneurs are born or made is central to understanding economic development worldwide. entrepreneurs play a crucial role in creating organizations that generate jobs, enhance trade, and foster innovation, driving economic growth. historically, the term entrepreneur originated from the french language, referring to individuals who take risks in uncertain business ventures (cantillon, 1755). over time, the definition evolved to emphasize innovation and creativity, distinguishing entrepreneurs from traditional business operators (schumpeter, 1936). entrepreneurship involves more than just having an idea; it requires risktaking, creativity, and the ability to implement strategies effectively. the argument that entrepreneurs are made is supported by theories suggesting that entrepreneurial traits develop through environmental factors, education, and experience. behaviorist theories, such as those proposed by watson (1924) and skinner (1953), argue that individual characteristics are shaped by environment and learning processes. bandura’s (1977) concept of self-efficacy highlights that individuals can cultivate entrepreneurial skills through confidence-building and learning from experiences. contemporary research supports the perspective that entrepreneurial skills are acquired through education, mentorship, and experiential learning. moreover, recent studies highlight how industry experience and networks enhance entrepreneurial success, especially among older entrepreneurs, reinforcing the notion that entrepreneurship is cultivated over time. in conclusion, while certain personality traits may offer advantages, entrepreneurship is predominantly shaped by learning, experience, and environmental influences. the overwhelming body of literature supports the assertion that entrepreneurs are in most cases made than born. the ability to innovate, take risks, and lead effectively is developed through deliberate practice and continuous learning, supporting the argument that entrepreneurs are made, not born. keywords: economic development, entrepreneurship, innovation, learning and experience, risk-taking. 1. introduction the question of whether entrepreneurs are born or made is age-old; and it strikes at the heart of economic development questions worldwide. in an increasingly global economy, entrepreneurs play a vital role in economic development because they create organizations, and these organizations produce jobs, increase trade, and accelerate the generation, application of innovative ideas, and their dissemination. but before we delve into the nitty gritty, it is important to define entrepreneurship and an entrepreneur because understanding these two terms will help in answering the question. in this regard it is important to go through a brief history of this word entrepreneur and know what it meant at the time of its origin. entrepreneur is a french word, and it meant the economic literature. entrepreneur is the person who is a risk taker and gets involved in such business activities, whose results are uncertain (cantillon, 1755). however, the definition of the word entrepreneur was altered later in early twentieth century and became the one which defines an innovative attitude of an individual. this new definition supported the concept of innovation into the business world and differentiated an entrepreneur from a person who is just running a business, which is quite traditional in its nature (schumpeter, 1936). afterwards, the terms entrepreneur and the entrepreneurships were purely used for the persons and businesses, which have an essence of creativity in their existence, which are just after developing new ways of production of goods and services, trying on forming new sort of markets and new form of firms to facilitate the sustenance of their businesses in the market. the term entrepreneur is taken as a little complex one in terms of its definition, as the word itself is derived from entrepreneurship, which helps in defining it, and gives it a completely decipherable structure. entrepreneurship itself is defined by the other words, like creativity, innovation, aptitude, etc. which lead to the creative actions of an individual, which has a direct impact on an individual’s life as well as on their society. it is also defined by its objective of producing or doing something new and something unique to develop a new identity in the society for any new business entity, via keeping its characteristics alive, which put their impact on its existing functions. mailto:skawimbe@yahoo.com https://doi.org/10.55220/25766759.315 https://orcid.org/0009-0006-1039-5757 asian business research journal, 2025, 10(3): 45-49 46 © 2025 by the authors; licensee eastern centre of science and education, usa 1.1. entrepreneurship entrepreneurship suggests the risk-taking attitude of an individual which involves every sort of cost, from time consumption to struggle of coming up with an effective and efficient strategy of doing business, which could overcome the social, intuitive and financial risks, and give an inner satisfaction along with a monetary reward, if, the newly created strategy of developing something succeeds (peters, 1998). both the terms innovation and entrepreneurship don‟t suggest having just an excellent idea in an individual’s mind, however they need an effort to put that idea into action as well. they need a proper discussion over the sort of idea, and a proper examining of the validity of that idea. in order to do so, teamwork is appreciated as it will do better in assessing the validity of the idea and giving it a new form which could become applicable and reduces the monetary loss. while discussing an idea many weaknesses show up in the structure of that idea which needs to be eliminated to avoid losses (bessant, tidd, 2007). in doing this, a particular behaviour of an individual is required; this defines him as a risk taker, and the one with the courage to manipulate the social and economic structures, in order to get himself an environment of bringing his ideas into action. also, he must be aware of all the risks and must have the courage to face them if they ever show up in his path (peters, 1998). 1.2. entrepreneur the definition of entrepreneur has been modified with passage of time in accordance to the world’s changing economical structures. the definition of the entrepreneur during the middle ages was related to the occupation, but, later the modified definition of entrepreneur refers more to the notions of creativity, risk taking and creation of wealth. this concept of entrepreneur defined the relation of the word with an individual. this definition is in accordance to the reviewed structure of business studies (peters, 1998). nowadays, the term entrepreneur is not only confined to male gender it also refers to women as entrepreneurs (purdy, 2005). there was a time when women were only confined to their homes; they were not allowed to do anything except their household chores or playing the roles of mothers and wives. they were not even given the choice of expressing their disagreements towards various issues. however, in this era they are more powerful, independent and have the right of spending their lives on their own terms. they are also capable of expressing their views regarding various matters either they are of political, social, educational or economical nature. but still there could always be a debate on the comparison of men and women being entrepreneurs (brindley, 2005). on the behalf of this comparison many views on entrepreneurships by women have come into scenario which argues that women are weak entrepreneurs and lack the basic traits which should be there in a good entrepreneur, like, they are not risk takers, they cannot face various challenges, they are emotional and are unable to take quick decisions in chaotic situations. therefore, there could be no guarantee for a woman being a good entrepreneur (mcclelland, swailet al, 2005). though all the above-mentioned definitions of entrepreneur define the term in more or less similar way, but still there are some restrictions in them, which refer to the fact that entrepreneurs cannot be found in every field, like education, medicine, law, engineering social work, etc. these definitions refer to some common and most essential traits of an individual, like organizing, creativity, risk taking and ability of making wealth, peters (1998). 2. literature review the debate over whether entrepreneurs are born or made has long been a central theme in entrepreneurial studies, reflecting broader discussions about the roles of innate traits versus learned skills in shaping individuals. some scholars argue that entrepreneurial success stems from inherent personality traits such as risk-taking propensity, creativity, and resilience, suggesting that certain individuals are naturally predisposed to entrepreneurial endeavors. in contrast, others contend that entrepreneurship is a skill set cultivated through education, experience, and environmental influences, emphasizing the importance of learning and adaptation. this literature review explores both perspectives, examining empirical studies and theoretical frameworks to understand the extent to which entrepreneurial capabilities are innate or developed over time. 2.1. the born perspective a strand of research supports the notion that entrepreneurship is largely influenced by inherent personality traits and genetic predispositions. this perspective suggests that certain individuals possess a natural inclination towards entrepreneurial activities, underpinned by heritable characteristics such as risk tolerance, creativity, and leadership (shane & nicolaou,2021). studies using twin-based methodologies have reinforced the argument that genetic factors contribute significantly to entrepreneurial intent and business success (obschonka &stuetzer, 2020). furthermore, personality traits associated with entrepreneurship—such as openness to experience, conscientiousness, and extraversion—are often linked to genetic influences (zhang & acs, 2022). recent research highlights that innate cognitive abilities, including rapid problem-solving and high self-efficacy, are strong predictors of entrepreneurial engagement (karhunen et al., 2023). while genetic predisposition may provide a foundational advantage, environmental factors and experiential learning also play a crucial role in shaping entrepreneurial success. other studies on whether entrepreneurs are born or made have centred around biological disposition. nofal, nicolaou, symeonidou, & shane, 2018) in their research in entrepreneurship have indicated that studies in entrepreneurship have largely ignored biological factors. however, recently researchers have begun to explore the ways in which human biology affects this phenomenon. this literature has been fragmented, scattered across various outlets, making it difficult for entrepreneurship scholars to aggregate the findings and develop a broad theoretical perspective to describe how biology relates to entrepreneurship. other recent studies continue to explore the interplay between inherent traits and learned skills in entrepreneurship. for instance, "the science of startups: the impact of founder personalities on company success" (2023) examines how specific personality traits influence startup outcomes. additionally, research indicates that older entrepreneurs, often over 50, leverage extensive industry experience and networks, leading to higher success asian business research journal, 2025, 10(3): 45-49 47 © 2025 by the authors; licensee eastern centre of science and education, usa rates compared to their younger counterparts. this suggests that accumulated knowledge and skills play a significant role in entrepreneurial success. 2.2. the made perspective the main assumptions and theories supported by individuals arguing that a person’s characteristics, qualities, behaviour and other aspects of one’s personality are driven by factors including one’s will, atmosphere, background, experiences etc. these factors build one’s characteristics for instance, attitudes and beliefs, motivation, selfadequacy, enthusiasm, self-control, entrepreneurship and so on (shefsky, 1994). shasky’s main reason behind the enduring this concept is that individuals are not born with the quality of entrepreneurship rather they are actually built. shefsky (1994) attempted to demonstrate in the entire book that the qualities of entrepreneurship in an individual are derived from one’s efforts, novelty and devotion towards a job that they are intending to achieve accomplishment in. the whole book was based on this theory. starting from watson (watson, 1924) to skinner (skinner, 1953), numerous supporters of this theory for instance shefsky; were associated with behaviourism and its compassing learning theories. bandura (bandura, 1977) was also among the promoters of this theory. once watson said that if he by any means gets a dozen of young children, he could have build them from a genius and smart person to anything else he willed. this statement meant that an individual, his characteristics and qualities are built with his atmosphere and surroundings. the impact that could bring a change can only be the conduct and activities noticed (skinner, 1953). all conducts and attitudes were examined and learned in his learning model. moreover, if he illustrated three important learning concepts: operant conditioning, positive reinforcement, negative reinforcement. this theory was exercised on pigeons, in order to prove this theory as a realistic measure. the pigeons were taught with a chain of procedures, this concluded them to fly to the literal outcome. however, it was concluded from this experiment that comparatively pigeons learned faster than rats. in the course of learning cognitive procedures, bandura was recognized as a momentous and considerable theorist who achieved a major position in it. bandura (1977) stated that there are three interfacing features which affected an individual: personal factors, behavioural factors, environmental factors. one of the foremost contributions recently made by bandura is concept of self-efficacy which is recognized as the most influential concept the procedure of self-regulatory 2.3. locus of control it is an important character which shows that the individual can handle the roller coaster ride of life, whether they can handle different situations and events in life (leone and burns, 2000). an individual with an internal locus of control does not believe on luck, fate, and destiny, they believe on what they perform and how do they progress whereas individual with an external locus of control gets motivation from the external factors (koh, 1996; hansemark, 1998). internal locus of control is the thing a person must concentrate on, to become a successful entrepreneur. this point gives a view that to become an entrepreneur a spark is needed from inside of the heart and if one has it they can become entrepreneurs 3. methodology this study aims to explore the question of whether entrepreneurs are born or made by analyzing existing literature, conducting a detailed review of empirical studies, and identifying key factors influencing entrepreneurial behavior. the methodology follows a comprehensive qualitative approach, synthesizing both historical perspectives and contemporary insights regarding entrepreneurship. the research begins by reviewing foundational theories and definitions, providing a historical context to the evolution of the entrepreneur concept. in particular, the study focuses on key thinkers such as cantillon (1755) and schumpeter (1936), whose definitions shaped the modern understanding of entrepreneurship. this historical framework allows for a deeper understanding of how entrepreneurial traits, such as risk-taking and creativity, have been perceived and valued over time. next, a systematic literature review is conducted, analyzing both the "born" and "made" perspectives on entrepreneurship. the research draws on both recent studies and classic works to examine the arguments for genetic predispositions versus learned skills. data are extracted from a variety of scholarly sources, including books, journal articles, and case studies, to compare the arguments surrounding inherent traits and environmental factors in shaping entrepreneurial success. key studies from authors such as shane & nicolaou (2021), obschonka & stuetzer (2020), and nofal et al. (2018) provide insights into the biological and genetic factors that may predispose individuals to entrepreneurial behavior. this step involves a critical analysis of these studies, focusing on methodologies like twin-based research and personality trait analysis. in addition to the literature review, a content analysis is conducted on a dataset of key publications related to entrepreneurship, which includes works by renowned scholars such as druker (1985), gladwell (2008), and sarasvathy (2001). the purpose of this content analysis is to identify common themes and patterns in the ongoing debate between the inherent qualities of an entrepreneur versus the skills developed through experience and education. these sources are organized into categories based on their stance on the "born" or "made" dichotomy, providing a structured approach to understanding the diversity of viewpoints in the field of entrepreneurship studies. this categorization also highlights the diversity of entrepreneurship across different industries, cultures, and historical periods. finally, the methodology incorporates a comparison of the "born" versus "made" theories, evaluating how environmental influences, such as education, family background, and socio-economic conditions, interact with personal traits in shaping entrepreneurial outcomes. interviews and case studies from successful entrepreneurs, particularly those over the age of 50, are also considered to provide real-world insights into the importance of experience and networks in entrepreneurial success. these qualitative data sources are analyzed to offer a balanced view of the factors that contribute to entrepreneurial achievement, acknowledging both innate characteristics and the role of learned skills. by synthesizing these multiple approaches, this research provides a holistic view of the ongoing debate about asian business research journal, 2025, 10(3): 45-49 48 © 2025 by the authors; licensee eastern centre of science and education, usa whether entrepreneurs are born with an inherent disposition or whether they can be made through experience and education. 4. data presentation various literature around entrepreneurship have been extensively reviewed. the include the historical perspective to entrepreneurship as well as the contemporary view of entrepreneurship from the academic as well as practical angles. the chapter presents key literature upon which conclusions are made. table 1. sn author and year publication born/made 1 schumpeter, j (1934). “the theory of economic development”, harvard university press born 2 druker, p (1985) “innovation and entrepreneurship”, harper & row made 3 gladwell, m (2008) “outlier: the story of success made 4 sarasvathy, s (2001) “effectuation: the elements of entrepreneur enterprise”, little, brown and company made 5 wasserman, n (2012) “the founder’s dilemma”, edward elgar publishing made 6 shaun, s (2008) “the illusions of entrepreneurship”, yale university press born 7 stephenson, h (1983) “a perspective on entrepreneurship”, harvard business school made 8 gifford, p (1985) “worthless, impossible, and stupid: how contrarian entrepreneurs create and capture extraordinary value”, harper & row made 9 isenburg, d (2013) “worthless, impossible, and stupid: how contrarian entrepreneurs create and capture extraordinary value”, harvard business review press made 10 wilkinson, m (2015) “the creator's code: the six essential skills of extraordinary entrepreneurs”, simon & schuster made 11 ede, m (2023) “one shot (business case for success): the recipe for top entrepreneurs & business leaders in the 21st century”, maple publishers made 12 busch, c (2020) “the serendipity mindset: the art and science of creating good luck”, penguin random house made 13 ede, m. (2023) ede, m. (2023). one shot (business case for success): the recipe for top entrepreneurs & business leaders in the 21st century. maple publishers. retrieved from wikipedia made 5. conclusions while it is proved beyond doubt that there some entrepreneurs are born with entrepreneurial traits as can be observed from comprehensive literature by schumpeter (1934) and shaun (2008), there is overwhelming literature that entrepreneurs are made, not born, and is supported by the belief that entrepreneurial skills can be learned and developed through experience, education, and deliberate practice. peter drucker, in his book innovation and entrepreneurship (1985), argues that entrepreneurship is a discipline that anyone can master with the right mindset and tools. drucker emphasizes that through systematic innovation, careful planning, and practical learning, individuals can acquire the skills necessary to start and sustain successful businesses. this perspective suggests that entrepreneurial ability is not an innate quality but a set of skills that can be nurtured over time. malcolm gladwell’s outliers: the story of success (2008) reinforces the idea that entrepreneurs are made by highlighting how external factors like culture, upbringing, and opportunity contribute to entrepreneurial success. gladwell suggests that success is often the result of hard work, deliberate practice, and environmental influences rather than innate talent. entrepreneurs, according to gladwell, achieve success by leveraging the right opportunities, working diligently to hone their skills, and learning from their experiences. this view supports the notion that entrepreneurship can be cultivated through sustained effort and the right conditions. saras sarasvathy’s effectuation: the elements of entrepreneurial enterprise (2001) provides a framework for how entrepreneurs make decisions and create opportunities through learned processes. sarasvathy introduces the concept of effectuation, where entrepreneurs use available resources, past experiences, and flexible strategies to build their ventures. this theory emphasizes that entrepreneurial decision-making is a skill that can be developed through practice and learning, further supporting the argument that entrepreneurs are shaped by their experiences and choices rather than being born with inherent entrepreneurial abilities. sarasvathy’s work highlights the role of education, adaptability, and learning in the entrepreneurial journey. contemporary research continues to support the idea that entrepreneurship is a learned skill. more recent works like michelle ede’s one shot (2023) emphasize that traits such as resilience, creativity, and leadership are developed through experience, failure, and perseverance. these insights collectively suggest that while certain personality traits may aid entrepreneurship, the core skills required for entrepreneurial success—such as risk management, innovation, and leadership—are acquired through dedicated effort and practical experience, reinforcing the idea that entrepreneurs are made, not born. in summation, it is evident that entrepreneurs are made through a combination of education, experience, and deliberate practice rather than being born with innate abilities. asian business research journal, 2025, 10(3): 45-49 49 © 2025 by the authors; licensee eastern centre of science and education, usa references bandura, a. (1997). self-efficacy: the exercise of control. freeman. busch, c. (2020). the serendipity mindset: the art and science of creating good luck. penguin random house. drucker, p. f. (1985). innovation and entrepreneurship. harper & row. ede, m. (2023). one shot (business case for success): the recipe for top entrepreneurs & business leaders in the 21st century. maple publishers. gladwell, m. (2008). outliers: the story of success. little, brown and company. hansemark, o. c. (1998). the effects of an entrepreneurship program on need for achievement and locus of control of reinforcement. international journal of entrepreneurial behavior & research, 4(1), 28–50. https://doi.org/10.1108/13552559810203957 hoffmann, f. (2022). our new world. murmann verlag. isenberg, d. (2013). worthless, impossible, and stupid: how contrarian entrepreneurs create and capture extraordinary value. harvard business review press. koh, h. c. (1996). testing hypotheses of entrepreneurial characteristics. journal of managerial psychology, 11(3), 12–25. kotler, s. (2021). the art of impossible: a peak performance primer. harper wave. leone, c., & burns, j. (2000). the measurement of locus of control: assessing more than meets the eye? the journal of psychology, 134(1), 63–76. https://doi.org/10.1080/00223980009600849 nofal, a. m., nicolaou, n., & shane, s. (2021). the biology of entrepreneurship. in m. m. gielnik, m. s. cardon, & m. frese (eds.), the psychology of entrepreneurship: new perspectives (pp. 61–79). routledge. obschonka, m., & stuetzer, m. (2020). integrating psychological and genetic perspectives on entrepreneurship. small business economics, 55(4), 921–940. https://doi.org/10.1007/s11187-019-00146-8 obschonka, m., & stuetzer, m. (2020). the biological and genetic roots of entrepreneurship. journal of business venturing, 35(2), 105–122. sarasvathy, s. d. (2001). effectuation: toward a theory of entrepreneurial expertise. the academy of management review, 26(2), 243–263. schumpeter, j. a. (1936). the theory of economic development. harvard university press. shane, s., & nicolaou, n. (2021). the biology of entrepreneurship. in m. m. gielnik, m. s. cardon, & m. frese (eds.), the psychology of entrepreneurship: new perspectives (pp. 61–79). routledge. shane, s. (2008). the illusions of entrepreneurship. yale university press. shane, s., & nicolaou, n. (2021). the genetic basis of entrepreneurship: a review and research agenda. journal of business venturing, 36(2). shane, s., & nicolaou, n. (2021). entrepreneurial behavior: genetic or learned? journal of business psychology, 36(3), 1–17. shefsky, l. (1994). entrepreneurs are made, not born. mcgraw-hill. skinner, b. f. (1945). the operational analysis of psychological terms. psychological review, 52, 270–277. wasserman, n. (2012). the founder's dilemmas: anticipating and avoiding the pitfalls that can sink a startup. princeton university press. wilkinson, a. (2015). the creator's code: the six essential skills of extraordinary entrepreneurs. simon & schuster. zhang, t., & acs, z. j. (2022). personality traits and entrepreneurship: a cross-national study. entrepreneurship theory and practice, 46(1), 97–125. https://doi.org/10.1177/10422587211029245 7 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 4, 7-19, 2025 issn: 2576-6759 doi: 10.55220/25766759.353 © 2025 by the authors; licensee eastern centre of science and education, usa determinants of budget implementation in nigeria joseph seun kolawole1 adeyemi wasiu alabi2 gbenga ayodele falana3 1,3department of accounting, college of social and management science, afe babalola university, ekiti state, nigeria. email: kolawolejs@pg.abuad.edu.ng email: falanaga@pg.abuad.edu.ng 2department of accounting, babcock business school, babcock university, ilishan-remo, ogun state, nigeria. email: alabi0696@babcock.edu.ng ( corresponding author) abstract the below-par performance of budget implementation (bi) in nigeria has contributed to the country’s economic instability and public distrust in fiscal policies. this study primarily investigates the determinants of bi in nigeria by focusing on foreign exchange rates (fexr), inflation rates (infr), interest rates (intr), and corruption control (cinr). using annual data from 2008 to 2024, this study employs time series analysis to examine the causal relationships between key macroeconomic variables and bi. findings reveal that fexr significantly influences bi, underscoring nigeria’s fiscal vulnerability to fexr fluctuations. intr also exhibits a significant impact on bi, highlighting the importance of intr policies in bi. conversely, infr has no direct effect on bi, suggesting that inflation’s influence on fiscal performance is secondary. the study concludes that nigeria’s bi is usually undermined and disrupted by fexr and intr instability. the study recommends that the nigerian government prioritize fexr stability through sound monetary policies to mitigate currency-related fiscal risks. furthermore, the central bank of nigeria should implement measures to maintain favorable intr, ensuring that borrowing costs do not hinder bi. strengthening institutional accountability is essential to minimizing corruption’s negative effects on fiscal performance. these findings provide valuable insights for policymakers seeking to enhance budget efficiency and promote sustainable economic development in nigeria. keywords: budget implementation, corruption index, foreign exchange rates, inflation rates, interest rates. 1. introduction the consistent failure of african governments to implement budgets effectively continues to erode public confidence in governmental institutions. citizens become disillusioned with the government's ability to manage public resources, which has led to apathy and reduced civic engagement. there may be a time in the future when citizens will rise in agitation against the governments in africa due to public distrust in fiscal policies (bredino et al., 2022). nwala and ogboji (2020) opined that discrepancies between planned and actual expenditures can result in stalled projects and underutilized investments, thereby limiting economic progress. this highlights that ineffective budget implementation often leads to suboptimal allocation and utilization of resources, hindering economic growth. sedgo and omgba (2023) argue that ineffective budget implementation in africa fosters corruption and financial mismanagement. the misallocation of capital budgets due to weak oversight and governance structures creates loopholes for embezzlement and inefficiencies. this leads to poor service delivery, as public funds meant for infrastructure and essential services are either mismanaged or diverted. supporting studies by ibeh (2025) and matovu (2025) reinforce this view, highlighting that without strong financial controls and transparency, budgetary weaknesses will continue to hinder sustainable growth in africa. nigeria continues to face challenges in aligning budgetary projections with actual implementation. the ministry of finance (2023) reported that capital budget implementation rates averaged less than 65% between 2018 and 2022, reflecting administrative bottlenecks and revenue mobilization challenges. nigeria has persistently grappled with poor budget implementation and economic instability due to underlying macroeconomic and institutional constraints (olawale et al., 2023). these challenges have been worsened by corruption, which undermines fiscal discipline and reduces the effectiveness of policy measures designed to manage debt and implement budgets. this underscores why nigeria struggles with economic instability and ineffective public financial management, limiting the country’s ability to achieve sustainable development. effective execution of budgetary plans is essential for achieving long-term development goals and ensuring that government spending aligns with developmental priorities (fatukasi et al., 2020). however, despite successive mailto:kolawolejs@pg.abuad.edu.ng mailto:falanaga@pg.abuad.edu.ng mailto:alabi0696@babcock.edu.ng https://doi.org/10.55220/25766759.353 asian business research journal, 2025, 10(4): 7-19 8 © 2025 by the authors; licensee eastern centre of science and education, usa reforms, nigeria continues to face obstacles such as delayed project execution, cost overruns, and inadequate resource allocation, compounded by external economic shocks and structural inefficiencies (ministry of finance, 2023; debt management office, 2023). while budget implementation is an important aspect of fiscal management, understanding the determinants of budget implementation is crucial for designing effective fiscal policies. identifying key factors such as foreign exchange stability, inflation control, improved revenue generation, and institutional accountability will empower policymakers to address these challenges more strategically (michael et al., 2020). existing research primarily focuses on the effects of individual macroeconomic variables on fiscal performance (okafor et al., 2021; ugwuanyi et al., 2021; onoh et al., 2021; onwuka, 2020; onyebuchukwu, 2019), often neglecting their combined impact in the context of budget implementation. additionally, few analyses examine how foreign exchange rates, inflation rates, and interest rates collectively shape budget implementation, leaving a significant gap in understanding the interplay of these variables in the nigerian context (agboola & ojo, 2021; obi, 2020; charles & chilaka, 2019). lastly, studies on nigeria’s fiscal performance seldom integrate corruption indices as critical variable influencing outcomes. to address these gaps, this study primarily investigates the determinants of budget implementation in nigeria, using foreign exchange rates, inflation rates, and interest rates as proxies while incorporating the corruption index as a control variable. specifically, the study seeks to examine the extent to which foreign exchange rate fluctuations influence budget implementation in nigeria, assess the impact of the inflation rate on nigeria’s fiscal performance, evaluate how interest rates affect budget execution, and analyze the moderating role of corruption in the relationship between macroeconomic variables and fiscal outcomes. the study focuses on nigeria's fiscal performance from 2008 to 2023, leveraging annual data on foreign exchange rates, inflation rates, interest rates, and corruption indices. it examines the dynamic interactions between these variables and their combined influence on budget implementation. given nigeria’s growing fiscal challenges, this study is timely and significant. understanding the determinants of budget implementation provides valuable insights for policymakers to design targeted interventions. by incorporating corruption as a control variable, the study highlights the importance of institutional quality in fiscal management. moreover, the findings will contribute to existing literature by offering a comprehensive analysis of macroeconomic and institutional factors influencing nigeria’s fiscal performance, thereby guiding future policy decisions to enhance budget efficiency. 2. a review of extant literature this section extensively examines the theories and empirical studies that explain the concept related to the determinants of budget implementation and debt servicing. 2.1. conceptual review 2.1.1. budget implementation budget implementation in the view of alabi et al. (2024), involve the detailed approach or procedural steps undertaken to ensure that a planned budget is well executed. this involves key activities such as revenue mobilization, efficient expenditure management, and monitoring to ensure compliance with budgetary goals while making necessary adjustments to address economic changes. effective budget implementation depends on institutional capacity, fiscal discipline, macroeconomic stability, and governance quality, which help align spending with developmental priorities (schick, 2022; imf, 2023). however, efficient budget execution fosters economic growth by directing public funds into productive sectors, reducing unemployment, and preventing fiscal deficits (okonjo et al., 2023). it also enhances fiscal discipline by minimizing overrun, thereby strengthening accountability and resource management. transparent execution builds public trust in government institutions, while poor implementation fosters corruption and weakens governance (world bank, 2023; transparency international, 2023). recent studies on budget implementation in developing nations highlight challenges and opportunities in improving fiscal performance. in nigeria, okeke and adewuyi (2023) found that only 60% of approved capital expenditures between 2015 and 2022 were executed due to revenue shortfalls and bureaucratic inefficiencies, underscoring the need for stronger institutional capacity. transparency international (2023) further demonstrated that nations with lower corruption indices achieve significantly higher implementation rates, reinforcing the detrimental impact of corruption on fiscal performance. conversely, kenya’s adoption of digital tools and enhanced monitoring mechanisms increased budget implementation rates by 25% over five years, showcasing the transformative role of technology (mwangi et al., 2023). an imf (2023) analysis linked higher budget implementation rates to stronger gdp growth, as efficient spending supports timely investments in critical sectors. meanwhile, the world bank (2023) identified wage bill pressures and resource misallocation as major obstacles in south africa, recommending fiscal discipline and strategic reallocations. these studies collectively emphasize the importance of governance, technology, and institutional reforms in achieving effective budget implementation and fostering economic growth. 2.1.2. foreign exchange rate kwan and kanda (2024) describe foreign exchange rate (fx rate) as the value at which one currency can be exchanged for another and plays a crucial role in international trade, investment, and economic policy. it is influenced by multiple factors, including inflation, interest rates, political stability, and market speculation (obi, 2020). the fx rate has significant economic implications, as a depreciating currency can make exports cheaper and imports more expensive, potentially improving the trade balance, while an appreciating currency may lead to trade deficits (ahmed et al., 2024). exchange rate fluctuations also impact inflation, with weaker currencies raising import prices and contributing to inflation, particularly in import-dependent nations. additionally, currency movements affect capital flows, as investors prefer stable environments for higher returns, making volatile currencies less attractive (ubadike et al., 2023). asian business research journal, 2025, 10(4): 7-19 9 © 2025 by the authors; licensee eastern centre of science and education, usa exchange rate fluctuations can significantly influence budget implementation by affecting revenue generation, and expenditure planning. when exchange rate volatility negatively impacts economic growth, as noted by bamidele (2024), government revenues may decline due to reduced business activity, lower tax collection, and unstable foreign investment flows. in commodity-dependent economies, external shocks from exchange rate instability can lead to unpredictable revenue streams, making budget planning more challenging. as opined by alabi et al. (2025), an increase in the exchange rate of us dollar to the nigerian naira implies that the naira has been devalued consequent to the increase in the exchange rate, thereby reducing the purchasing power of the nigerian naira. in view of this, afolabi (2023) highlight that currency devaluation can trigger inflationary pressures, which increase the cost of public sector expenditures, including wages, infrastructure projects, and social programs. inflation-driven budget overruns can force governments to either cut essential services or seek additional financing, potentially leading to fiscal deficits. 2.1.3. inflation rate inflation represents a sustained increase in the overall price level of goods and services in an economy, resulting in diminished purchasing power as consumers can buy less with the same amount of money (ana et al., 2024). this implies that governments may struggle to finance planned projects as the actual cost of goods and services rises beyond initial estimates. typically measured by indices like the consumer price index (cpi), inflation impacts multiple facets of the economy (ha et al., 2024). it erodes purchasing power, particularly affecting low-income households and reduces the real returns on savings and fixed-income investments. businesses face challenges in long-term planning due to cost and pricing uncertainties, while fixed-income earners, such as retirees, bear the brunt of income redistribution. moreover, inflation can spark a wage-price spiral, where rising wages lead to higher production costs, perpetuating further price increases. for governments, this creates fiscal instability, as revenue projections may fall short in real terms while expenditure requirements increase. fixed-income earners, such as public sector workers and pensioners, face declining purchasing power, leading to pressures for wage adjustments that further strain budget sustainability. bill et al. (2024) and jongrim et al. (2023) explained that between 2021 and 2023, the global economy experienced an unprecedented surge in inflation, driven by intertwined factors such as covid-19-induced supply chain disruptions, expansive fiscal and monetary policies, and geopolitical tensions like the russia-ukraine conflict. these factors contributed to rising costs of essential commodities, making it difficult for governments to implement budgets effectively without frequent revisions. additionally, aggressive interest rate hikes aimed at curbing inflation increased borrowing costs, limiting governments' ability to finance deficits or invest in capital projects without incurring higher debt burdens. while ha et al. (2025) pointed out that inflation moderation efforts helped some economies approach stability, consumer prices remain elevated, complicating budgetary planning. governments must balance inflation control measures with the need to maintain economic growth and public welfare spending. in some cases, achieving price stability may require deflationary measures, which could slow economic activity and further challenge budget execution. 2.1.4. interest rate interest rates, representing the cost of borrowing or return on savings, play a crucial role in monetary policy by influencing economic activities such as consumption, investment, and inflation. these dynamics directly impact budget implementation, as government expenditures and revenues are sensitive to interest rate fluctuations. lower rates encourage borrowing and spending, fostering growth, while higher rates curb excessive demand and control inflation (mishkin, 2021). central banks adjust interest rates to maintain economic stability, tailoring policies to inflationary or deflationary conditions (bernanke, 2023). however, frequent rate adjustments can create budgetary uncertainties, making it difficult for governments to plan long-term fiscal policies effectively. the effects of interest rates extend beyond domestic economies; higher rates attract foreign capital, strengthening local currencies but potentially reducing export competitiveness (imf, 2023). additionally, rising rates increase public debt servicing costs, impacting fiscal sustainability (oecd, 2023). as such, interest rates shape financial and macroeconomic landscapes, influencing savings behavior, investment trends, and global trade flows (blanchard et al., 2022). between 2021 and 2023, global interest rates underwent significant fluctuations as economies navigated postpandemic recovery and inflationary pressures. initially, central banks kept rates low to support growth, allowing governments to finance stimulus packages. however, surging inflation led to aggressive hikes by 2022, complicating budget implementation. for instance, the u.s. federal reserve raised its benchmark rate from near zero to over 5%, reducing inflation but increasing borrowing costs for government spending programs (federal reserve, 2023). similarly, the european central bank’s rate hikes lowered inflation but constrained fiscal flexibility (european central bank (ecb), 2023) developing economies, such as nigeria, faced inflation exceeding 20% in 2023 despite rate increases, limiting the effectiveness of monetary policy in supporting budget execution (cbn, 2023). higher inflation eroded the real value of government revenues, making it harder to fund budgeted expenditures. japan, in contrast, maintained ultra-low rates to counter deflation, but this approach limited the government's ability to stimulate the economy through monetary policy alone (bank of japan (boj), 2023). the rate hikes also affected financial markets, raising borrowing costs, reducing corporate profits, and slowing housing markets (imf, 2023). these effects, in turn, influenced tax revenues, debt sustainability, and public expenditure planning. 2.1.5. corruption index rate the corruption perceptions index (cpi), developed by transparency international in 1995, ranks countries annually based on perceived public sector corruption using data from credible sources like the world bank and world economic forum (transparency international, 2023). the cpi scores range from 0 (highly corrupt) to 100 (very clean), reflecting expert and business opinions on corruption prevalence. high corruption levels indicate systemic governance issues, undermining judicial integrity, diverting resources, and eroding public trust—factors that directly impact budget implementation. effective budget execution depends on transparent allocation and asian business research journal, 2025, 10(4): 7-19 10 © 2025 by the authors; licensee eastern centre of science and education, usa prudent resource utilization. however, corruption weakens institutional oversight, leading to misallocation, embezzlement, and inflated contracts that derail government spending efficiency. the 2023 cpi highlights persistent global challenges, with only 28 out of 180 countries improving over 12 years, while 34 have significantly declined (eqs group, 2023). in africa, corruption remains widespread, diverting essential resources meant for public services and infrastructure projects, thereby undermining fiscal discipline and development efforts (transparency international, 2023; world bank, 2023). 2.2. theoretical framework 2.2.1. institutional theory institutional theory formed the bedrock of this study. institutional theory, rooted in max weber's sociological principles and expanded by douglass north (1990), emphasizes the role of both formal and informal institutions— such as laws, norms, and conventions—in shaping economic and organizational behaviour (douglass, 1990). the theory posits that institutions provide a framework for social, economic, and political interactions, significantly influencing decisions and outcomes (agarwal et al., 2024). key assumptions include the dual impact of formal and informal structures, the persistence of historical contexts (path dependency), and the necessity for organizations and governments to align with institutional frameworks to gain legitimacy (davis & boianovsky, 2023). these principles underscore the role of institutions in guiding governance and policy actions (north, 1990). the theory is particularly relevant to economic processes including budget implementation. strong institutions enhance fiscal performance by promoting transparency, accountability, and efficient resource allocation, while weak institutions—marked by corruption and governance failures—undermine economic stability. recent empirical studies validate these claims. for example, adesina and adeyemo (2022) show that governance quality significantly impacts budget execution in sub-saharan africa, while ahmed et al. (2022) highlight the importance of institutional strength for effective inflation management. these findings demonstrate the critical influence of institutional quality on fostering fiscal stability and economic development. recent studies continue to emphasize the importance of institutional quality in shaping fiscal and macroeconomic outcomes, especially in developing economies. adesina and okafor (2023) found that weak institutions, characterized by corruption and poor regulatory frameworks, negatively affect budget execution and debt servicing in sub-saharan africa. similarly, ahmed et al. (2022) showed that strong institutional structures facilitate effective monetary policy implementation, which stabilizes inflation and enhances fiscal sustainability. the imf (2023) highlighted that institutional reforms, such as improving central bank autonomy, help reduce exchange rate volatility, thereby supporting fiscal planning and debt management. together, these studies confirm that strengthening institutions is essential for addressing fiscal and economic challenges in developing countries like nigeria. institutional theory offers a valuable framework for understanding the relationship between macroeconomic variables—such as foreign exchange rates, inflation, and interest rates—and fiscal outcomes, including budget implementation (north, 1990; imf, 2023). effective institutions ensure currency stability through central bank autonomy and transparent policies, reducing exchange rate volatility and its fiscal implications (adesina & okafor, 2023). robust monetary policies driven by strong institutions help control inflation, preventing disruptions in budget planning and minimizing debt servicing costs (ahmed et al., 2022; world bank, 2023). additionally, strong governance lowers borrowing risks, reducing interest rates and alleviating fiscal strain (imf, 2023). however, institutional theory has been critiqued for its static framework, overemphasis on formal structures, and limited focus on micro-level dynamics (adesina & okafor, 2023). despite these criticisms, its relevance to macroeconomic determinants underscores the importance of institutional reforms in promoting fiscal sustainability and economic growth (north, 1990; world bank, 2023). 2.3. empirical review 2.3.1. foreign exchange rate and budget implementation the world bank (2023) employed a mixed-method approach, combining macroeconomic data from 50 developing economies with qualitative case studies, and applied fixed effects regression models to examine budget implementation in sub-sahara africa. the study found that overvalued exchange rates inflated fiscal deficits by raising the costs of imports and external borrowings, thereby complicating budget execution. conversely, undervalued exchange rates disrupted infrastructure projects due to reduced purchasing power for capital imports. exchange rate reforms, particularly market-determined rates, were identified as essential for achieving fiscal stability and improving budget outcomes. the oecd (2023) applied cross-sectional analysis and structural equation modeling (sem) to assess exchange rate impacts among its member countries. exchange rate volatility was found to disrupt budget implementation by inflating costs for foreign-denominated debt and procurement. stable exchange rates, supported by coordinated fiscal and monetary policies, enhanced debt sustainability and fiscal planning. the study emphasized aligning fiscal frameworks with exchange rate policies to strengthen budget execution and long-term economic stability. ahmed et al. (2022) analyzed data from 2010 to 2021 using regression analysis and granger causality tests to assess the impact of exchange rate fluctuations on nigeria’s fiscal performance. the study found that naira depreciation led to a 25% increase in debt servicing costs between 2020 and 2022, resulting in significant budgetary shortfalls. the study emphasized the need to diversify government revenue sources and strengthen foreign exchange reserves to mitigate fiscal vulnerabilities and ensure sustainable economic management. collectively, the reviewed studies highlight the critical role of exchange rate stability in fiscal sustainability and budget implementation. globally, foreign exchange volatility disrupts budget execution, and hampers infrastructure projects. this study, therefore, hypothesizes that: h01: foreign exchange rate has no significant influence on budget implementation in nigeria. asian business research journal, 2025, 10(4): 7-19 11 © 2025 by the authors; licensee eastern centre of science and education, usa 2.3.2. inflation rate and budget implementation the imf (2023) conducted a time-series analysis using panel data econometrics, focusing on 50 emerging markets from 1990 to 2022 to evaluate macroeconomic stability in the face of inflationary shocks with insights from emerging markets. data on inflation rates and budgetary performance reports were sourced from the imf world economic outlook and country-specific financial records. the study found that inflation volatility disrupted fiscal planning, leading to frequent budget revisions and implementation delays. the findings emphasized the importance of effective monetary policy and inflation targeting to stabilize fiscal outcomes. the world bank (2023) employed a comparative analysis methodology to assess inflation’s impact on fiscal stability in 25 low-income and 30 middle-income countries between 2000 and 2022. data included budget implementation reports, inflation trends, and debt profiles from the world bank database and national statistics agencies. persistent inflation was found to undermine budget execution by increasing government procurement and capital project costs. countries with inflation exceeding 10% experienced, on average. studying inflation and fiscal management, the oecd (2022) used panel regression analysis to study 37 member countries from 1995 to 2021. data on inflation rates and budget deficit statistics were obtained from the oecd database. the study revealed that inflation exacerbates fiscal strain by raising borrowing costs and reducing the real value of government revenue. stable inflation rates below 2% supported efficient budget execution. coordinated fiscal and monetary policies were identified as effective measures for enhancing resilience against inflationary shocks and improving fiscal performance. adler and schwartz (2023) conducted an econometric analysis on interest rate volatility in latin using the generalized method of moments (gmm) on 45 developing economies from 1990 to 2022. data on annual inflation rates and government expenditure reports were sourced from the world development indicators. findings indicated that inflation above 12% significantly impaired budget implementation, particularly for infrastructure projects. adesina and bello (2023) used descriptive and inferential analysis with ordinary least squares (ols) regression to examine nigeria’s annual fiscal performance from 2000 to 2022. data on inflation rates, government budget execution reports, and debt servicing costs were obtained from the central bank of nigeria (cbn) and the debt management office (dmo). the study found that inflation exceeding 15% increased the cost of capital projects by over 25%, disrupting budget execution. studying inflation and fiscal sustainability in nigeria, ahmed et al. (2022) performed panel data analysis incorporating structural breaks, focusing on fiscal data from nigeria’s federal and state governments between 2000 and 2021. data on inflation trends and public expenditure reports were collected from the nigerian bureau of statistics (nbs) and the cbn. persistent double-digit inflation caused significant budgetary shortfalls and delayed project implementation. however, global and nigerian empirical studies consistently show high inflation rates adversely impact budget implementation. globally, inflation raises procurement costs, and disrupts fiscal planning, and budget execution. this study, therefore, hypothesizes as follows: h02: inflation rate has no significant influence on budget implementation in nigeria. 2.3.3. interest rate and budget implementation the imf (2023) conducted a quantitative analysis using panel data regression to examine the impact of rising global interest rates on fiscal stability in 50 emerging markets. the study analyzed annual data from 2000 to 2022, focusing on interest rates and budgetary allocations. it was found that higher global interest rates significantly increase debt servicing costs, particularly for countries reliant on variable-rate external debt. this rise in costs reduces fiscal space for budget implementation. however, countries with stronger fiscal frameworks and diversified borrowing portfolios experienced lower fiscal disruptions, emphasizing the importance of sound fiscal management practices. using structural equation modeling (sem), the world bank (2023) analyzed the causal relationship between interest rates, fiscal performance, and institutional factors in 40 lowand middle-income countries. the study used data from 2005 to 2022, including interest rate trends, debt profiles, and fiscal expenditures. the findings revealed that a 1% increase in interest rates leads to a 5% rise in debt servicing costs. high interest rates discourage public borrowing for development projects, resulting in under-executed budgets. however, countries with strong institutional quality were better equipped to mitigate interest rate risks and maintain fiscal stability. adler and jin (2022) employed econometric modeling with time series data from 10 latin american countries between 1995 and 2021 to examine interest rate volatility in latin america. the study analyzed central bank reports on interest rates and government budgets. the results concluded that interest rate volatility increases fiscal unpredictability, complicating budget planning. countries with a higher proportion of fixed-rate debt were less affected by interest rate fluctuations. furthermore, transparent monetary policies were shown to reduce borrowing costs and improve budget execution, demonstrating the critical role of monetary policy in mitigating interest rate risks. the oecd (2022) used a mixed-methods approach, combining quantitative analysis and case studies, to examine the impact of interest rate fluctuations on fiscal performance in 20 member countries from 2000 to 2020. the study found that low-interest rate environments improved budget implementation by reducing debt servicing costs, allowing more resources to be allocated to public investments. conversely, prolonged periods of high interest rates strained fiscal budgets and curtailed developmental expenditures. efficient debt management systems were highlighted as essential for enhancing fiscal performance in fluctuating interest rate environments. adesina and okafor (2023) applied autoregressive distributed lag (ardl) models to analyze nigeria’s federal budgetary data from 1990 to 2022 in a study on the impact of interest rates on nigeria’s fiscal budget. the study focused on interest rates and budget implementation rates. it was found that high interest rates significantly increased nigeria’s domestic debt servicing costs, reducing funds available for capital projects. interest rate hikes in the domestic bond market discouraged private-sector lending, further straining fiscal budgets. ahmed et al. (2022) used vector error correction models (vecm) to analyze nigeria’s fiscal and monetary data from 2000 to 2021. the study revealed that rising interest rates, both domestic and international, resulted in a 30% increase in debt servicing costs over five years. budget implementation was constrained by high borrowing costs, asian business research journal, 2025, 10(4): 7-19 12 © 2025 by the authors; licensee eastern centre of science and education, usa delaying critical infrastructure projects. the researchers emphasized the importance of strengthening institutional mechanisms for debt management and improving coordination between monetary and fiscal policies to mitigate the adverse effects of rising interest rates on nigeria’s fiscal performance. therefore, this study hypothesizes that: h03: interest rate has no significant influence on budget implementation in nigeria. 2.4. conceptual framework the conceptual framework depicted in figure 1 demonstrates the relationships among factors influencing budget implementation in nigeria. figure 1. the conceptual framework. 3. methodology this study involves time series analysis; therefore, both ex-post facto and longitudinal research methods were used. the study covered the period from 2008 to 2024 fiscal year. the federal government of nigeria (fgn) served as the study focus and population. secondary data was obtained from the fgn's annual budget and reports from the cbn, debt management office (dmo), and the federal ministry of finance. data was subjected to multiple regression analysis, and the hypotheses were tested using the stata statistical package. the study’s econometric model regressed budget implementation against the foreign exchange, inflation, and interest rates, with the corruption index as a control variable. the regression equations are stated as follows: bi𝑡= β0 + β1fexr𝑡+ β2infr𝑡+ β3intr𝑡+ β4cinr𝑡+ 𝜀𝑡 (1) where: bi= budget implementation fexr= foreign exchange rate infr= inflation rate intr= interest rate cinr= corruption index rate β0= constant β1-β4= gradients 𝑡= time 𝜀= error term 3.1. measurement and description of variables the variables being studied, together with their description, measurement, data source and supporting literature, are shown in table 1. table 1. measurement and description of research variables. sn variable description measurement data source literature evidence 1 budget implementation budget implementation entails executing the government's financial strategy, ensuring that spending and revenues line with the approved budget the ratio of the public sector expenditure to its planned or approved budget government annual reports. (dmo, 2022) 2 foreign exchange rate the foreign exchange rate is the value of one country's currency in relation to another's currency. official exchange rate at the end of the year cbn report ubadike et al., 2023 3 inflation rate the inflation rate refers to the rate at which prices rise over time. official inflation rate at the end of the year cbn report ana et al., 2024 4 interest rate the interest rate is the percentage charged on the entire amount of a loan or paid on deposits over a given period. official interest rate at the end of the year cbn report bernanke, 2023 5 corruption index rate the corruption perceptions index (cpi) ranks countries on a scale of 0 (very corrupt) to 100 (extremely clean). perceived levels of public sector corruption, scoring on a scale of 0 (highly corrupt) to cpi 2023 reports transparency international, 2023 asian business research journal, 2025, 10(4): 7-19 13 © 2025 by the authors; licensee eastern centre of science and education, usa 100 (very clean). 4. data analysis and discussion of findings this section depicts the characteristics of the variables used, data analysis, and study findings. 4.1. descriptive statistics statistical features for each variable, along with information on their distribution and properties across datasets, are included in table 2. bi (budget implementation) has a mean of 1.237 indicating that real spending exceeds the anticipated revenue. bi value ranges from 0.456 to 2.446, revealing significant variation in budget execution efficiency. the standard deviation is 0.50, indicating a moderate variability in budget execution. also, the skewness is slightly right-skewed at 0.67, while the kurtosis is 3.23 indicating a close-to-normal distribution. likewise, the foreign exchange rate (fexr) statistics show substantial variability, with a mean of 340.30 and a huge standard deviation of 340.49. this implies a highly volatile or depreciating currency era. the lowest value is approximately 118.57, while the highest value is 1550.70. the skewness of 2.85 implies a highly right-skewed. this indicates currency depreciation. the kurtosis of 10.69 is high. this means the presence of extreme exchange rate fluctuations. in the same vein, the sample's inflation rate (infr) ranges from roughly 8.05% to 34.8%, with an average of 14.74%. the substantial dispersion and high average indicate that inflation is a major concern and a possible risk factor influencing budget implementation. the standard deviation of 6.62 implies substantial inflation volatility. the skewness of 1.82 indicates a right-skewed, with higher extreme values. the kurtosis of 6.12 implies a fat-tailed with periods of very high inflation. additionally, the interest rate (intr) statistics show a minimum of 6% and a maximum of 27.5%, a mean value of 13.12%. this variation suggests that borrowing terms and risk premiums varied during the observations. the skewness of 1.35 indicates a right skew. this implies periods of high interest rates. the kurtosis of 5.84 connotes a fat-tailed distribution. this suggests extreme interest rate variations. on the other hand, with a mean of 25.65 on a scale that ranges from 0 to 100 basis points, this index evaluates perceived corruption in the public sector. the narrow range (24 to 28) and somewhat low standard deviation of 1.32 imply that corruption levels are reasonably stable within the sample. the skewness of 0.18 indicates close to symmetric distribution while the kurtosis of 1.70 implies a slightly platykurtic, with few extreme values. finally, it can be inferred that the fexr is extremely volatile, with sharp movements and a substantial right skewness, indicating periods of rapid currency depreciation. however, bi has a generally stable distribution, which means that government expenditure is continuously implemented with minor deviations. the corruption index (cinr) is generally steady, but its low mean value indicates considerable concerns about corruption. table 2. descriptive statistics. variable obs. mean std. dev. min. max. skewness kurtosis bi 17 1.24 0.50 0.46 2.45 0.67 3.23 fexr 17 340.30 340.49 118.57 1550.70 2.85 10.69 infr 17 14.74 6.62 8.05 34.80 1.82 6.12 intr 17 13.12 4.86 6.00 27.50 1.35 5.84 cinr 17 25.65 1.32 24.00 28.00 0.18 1.70 note: results of mean, median, minimum and maximum of each variable from analysis of study data are shown above table. 4.2. test of variables this section includes essential preand post-estimation tests to ensure the study's conclusions are relevant and reliable. 4.2.1. pre-estimation test to ensure that the assumptions of the selected model were fulfilled and that there was enough data for analysis, the following tests were carried out. 4.2.1.1. variables’ stationary test table 3 displays the results of the stationary test. the dickey-fuller (adf) tests the presence of a unit root in the variables under study. according to the null hypothesis, the distribution of data varies over time, but in the alternative hypothesis, the distribution of data remains constant across time. if the significant result is greater than 0.05, the null hypothesis is accepted; if it is less than 0.05, it is rejected. all variables have p-values greater than 0.05, indicating that variables are non-stationary. accordingly, log transformation was carried out among the variables, the p-values of bi, fexr, infr, intr, and cinr were 0.0017, 0.0000, 0.0392, 0.0072, and 0.0000, respectively. this implies that all variables were stationary. despite this, variables were checked for cointegration using the engle-granger cointegration test. as shown in table 3, the test statistics for the model was -4.209 with a p-value of 0.0006. in this regard, the null hypothesis is rejected. this indicates that the cointegration regression's residuals are stationary. the study shows cointegration with stationary residuals, indicating a long-term equilibrium relationship between variables, despite individual variables being stationary. also, selection order criteria were determined using the akaike information criterion and schwarz-bayesian criterion. the result for sbic (schwarz-bayesian criterion) was -417.838 at lag 4 while the result for akaike criterion (aic) was -421.227 at lag 4. the study chooses lag 4 as the optimal lag selection since it has the lowest value. asian business research journal, 2025, 10(4): 7-19 14 © 2025 by the authors; licensee eastern centre of science and education, usa table 3. stationary test. variable dickey-fuller lag (0) dickey-fuller lag (0) after transformation z-value p-value z-value p-value bi -0.87 0.7969 -3.955 0.0017 fexr 4.63 1.0000 -5.972 0.0000 infr 1.68 0.9981 -2.956 0.0392 intr 0.63 0.9884 -3.531 0.0072 cinr -2.55 0.1036 -5.513 0.0000 engle-granger cointegration test -4.209 0.0006 akaike information criterion -417.838 schwarz-bayesian criterion -421.227 table 3 shows the estimated coefficients of different stationary tests of the study’s variables 4.2.1.2. multicollinearity variance inflation factor (vif) analysis is shown in table 4. fexr, infr, intr and cinr have 1.27, 1.24, 1.29 and 1.29, respectively as vif. these imply that there exists no multicollinearity. the mean vif factor is 1.35, indicating the absence of multicollinearity among the variables. table 4. variance inflation factor. variable vif 1/vif cinr 1.61 0.621874 infr 1.29 0.773040 fexr 1.27 0.786158 intr 1.24 0.808915 mean vif 1.35 note: results of a test of multicollinearity relationships amongst variables of the study are shown in the above table. 4.2.1.3. correlation analysis table 5 presents pairwise correlation coefficients and test results for independent variables. the test results revealed the correlation between the fexr and infr is 0.2067 (p = 0.4260), indicating an insignificant but weak relationship. this shows that there is little correlation between these variables. also, the relationship between fexr and intr is 0.0329 (p = 0.9003). this implies an insignificant but weak positive connection. the correlation coefficient between infr and intr is 0.0234 (p = 0.9290), indicating an insignificant relationship. there are no significant correlations between cinr and other variables. the study concludes that there is no multicollinearity among variables. table 5. pairwise correlation. fexr infr intr cinr fexr 1.0000 infr 0.2067 1.0000 0.4260 intr 0.0329 0.0234 1.0000 0.9003 0.9290 cinr -0.2815 0.3246 0.3790 1.0000 0.2738 0.2037 0.1335 note: results of a pairwise correlation coefficient test of relationships amongst variables of the study are shown in the above table. 4.2.2. post-estimation tests in table 6, a heteroskedasticity test was used to determine the constant variance of residuals or changes in fitted values. the test results for the model revealed a chi-square of 0.77 and a significant value of 0.3813, showing high evidence of homoskedasticity in the residuals of the study's model. similarly from table 6, durbin’s alternative test for autocorrelation was used to determine autocorrelation in the data distribution. the chi-square value of 1.069 and p-value of 0.3012>0.05 for the model implies that the study accepts the null hypothesis at the 5% significance level. the study, therefore, concludes that the residuals did not exhibit considerable autocorrelation, indicating that errors are not correlated over time. in the same vein, the skewness/kurtosis tests for normality were used to determine whether the variables were normal. the result as contained in table 6 showed that fexr, infr, intr, and cinr were normally distributed while bi was not normally distributed. table 6. summary of post-estimation test results. test f-statistic p-value heteroskedasticity test 0.77 0.3813 durbin’s alternative test for autocorrelation 1.069 0.3012 skewness/kurtosis tests for normality: fexr 0.71 0.7009 infr 0.41 0.8144 intr 4.03 0.1335 cinr 3.06 0.2169 asian business research journal, 2025, 10(4): 7-19 15 © 2025 by the authors; licensee eastern centre of science and education, usa bi 9.85 0.0073 table 6 shows the estimated coefficients of f-statistics and p-value for the model. 4.3. vector error correction model (vecm) vector error correction model (vecm) was used to analyse shortand long-term relationships identified by the engle-granger cointegration test. r-square and p-value are used to illustrate the short-run dynamics in the model. as presented in table 7, fexr has an r-square of 0.9799 and a p-value of 0.0000, suggesting that the model explains short-term changes and provides significant evidence for short-run effects. this implies that fexr is highly responsive to economic shocks. the r-square for infr is 0.9344, with p-values of 0.0047. this implies that 93.4% of short-term inflation changes are accounted for. the r-square for intr is 0.9929, with a p-value of 0.0000, indicates that the model explains 99% of the variability. this suggests that interest rates respond quickly to economic changes. the cinr has a p-value of 0.0000 and an r-square of 0.9710, which indicates a very high explanatory power. table 7. vector error-correction model. sample: 2011 2024 number of obs. = 14 aic = -121.71 log-likelihood = 915.9416 hqic = -121.98 det (sigma_ml) =-1.02e-63 sbic = -118.79 equation parms rmse r-sq chi2 p>chi2 d_fexr 12 0.0621 0.9799 97.3367 0.0000 d_infr 12 0.0913 0.9344 28.5056 0.0047 d_intr 12 0.0321 0.9929 280.781 0.0000 d_cinr 12 0.0183 0.971 67.0094 0.0000 table 7 shows the estimated coefficients, r square-values, and p-values of the study’s main variables and control variables for model. 4.3.1. cointegrating equations in vecm the cointegrating equation illustrates the long-term equilibrium relationship between the variables. as shown in table 8, the chi-square statistic is 125.4675 and the p-value is 0.0000<0.05. the result shows that the cointegrating equation is statistically significant, indicating a strong long-term relationship among the variables in the model. table 8. cointegrating equations in vecm. equation parameters (parms) chi² (wald statistic) p-value (p>chi²) cointegrating equation 3 125.4675 0.0000 table 8 shows the estimated coefficients of cointegrating equations in vecm. 4.3.2. stability test the roots of the companion matrix plot are used to assess the stability of a vector error correction model (vecm). it assists in detecting structural breaks or changes in the relationship between variables. figure 2 illustrates the companion matrix plot. the vecm model is stable, with all roots within or on the unit circle, and no eigenvalues outside the circle. this indicates no divergence over time. this stability allows for confident impulse response functions, variance decomposition, and forecasting, ensuring well-behaved relationships among variables for accurate forecasting. figure 2. companion matrix. source: researchers’ computation (2025). 4.3.3. impulse response function (irf) plot the impulse response function (irf) plot illustrates how a shock to one variable affects another over time. figure 3 shows the impulse response function (irf) plot. the x-axis (step) depicts the periods following the shock. the y-axis shows the size of the response. the blue line illustrates the cumulative impulse response function, which shows how the response accumulates over time. the grey shaded area represents the 95% confidence interval (ci), which indicates the range of uncertainty surrounding the response. each panel depicts the response of budget implementation (bi) to shocks in different variables. -1 -.5 0 .5 1 im ag ina ry -1 -.5 0 .5 1 real roots of the companion matrix asian business research journal, 2025, 10(4): 7-19 16 © 2025 by the authors; licensee eastern centre of science and education, usa also, bi's response to cinr is close to zero, indicating a shock to corruption that has little to no impact on budget implementation (bi). the confidence intervals are narrow, suggesting a stable estimate. bi's response to fexr is positive, implying that a shock to fexr increases bi over time. the response becomes stronger around steps 5-10, indicating a delayed but growing effect. again, bi's response to infr is positive, meaning that an increase in inflation positively affects budget implementation. the response strengthens over time, stabilizing around steps 7-10. bi's response to intr shows a small positive response initially, but it starts declining after step 5. the response fluctuates slightly but remains within a stable confidence range. figure 3. impulse response function. source: researchers’ computation (2025) 4.4. granger causality tests granger causality tests assess if historical data series on one variable aids in the prediction of another. granger causality is shown by a low p-value (usually less than 0.05), which results in the rejection of the null hypothesis. the granger causality test results are presented in table 9. 4.4.1. foreign exchange rate and its influence on budget implementation. from table 9, the relationship between bi and fexr is denoted by a chi-statistic of 14.8690 and a p-value of 0.0010 < 0.05. this suggests statistically significant but strong evidence of causality. therefore, the foreign exchange rate significantly influences budget implementation. this result agrees with the findings of adler and garcia-macia (2022), the world bank (2023), oced (2023), and imf (2023). 4.4.2. inflation rate and its influence on budget implementation as shown in table 9, bi and infr have a chi-square of 2.6314 and a p-value of 0.2680 > 0.05. this suggests that infr does not granger-cause bi. inflation rate has no significant influence on budget implementation. while this agrees with the null hypothesis, this result however disagrees with the findings of adesina and bello (2023), the world bank (2023), oced (2023), and imf (2023). 4.4.3. interest rate and its influence on budget implementation lastly from table 9, bi and intr have a chi-square of 7.7533 and a p-value of 0.0210 < 0.05. this suggests that infr influences bi. the inflation rate has a major impact on budget implementation. this is not consistent with the null hypothesis, it also does not contradict the conclusions of ahmed et al. (2023) and adesina and bello (2023). -.5 0 .5 1 1.5 -.5 0 .5 1 1.5 0 5 10 0 5 10 irf_model, br, cinr irf_model, br, fexr irf_model, br, infr irf_model, br, intr 95% ci cumulative irf step graphs by irfname, impulse variable, and response variable asian business research journal, 2025, 10(4): 7-19 17 © 2025 by the authors; licensee eastern centre of science and education, usa table 9. granger causality wald tests equation excluded chi2 df prob > chi2 bi fexr 14.8690 2 0.0010 bi infr 2.6314 2 0.2680 bi intr 7.7533 2 0.0210 bi cinr 26.9530 2 0.0000 bi all 47.5930 8 0.0000 fexr bi 6.5276 2 0.0380 fexr infr 1.6510 2 0.4380 fexr intr 3.1452 2 0.2080 fexr cinr 2.5313 2 0.2820 fexr all 16.8980 8 0.0310 infr bi 19.2490 2 0.0000 infr fexr 14.5780 2 0.0010 infr intr 20.7920 2 0.0000 infr cinr 17.4470 2 0.0000 infr all 78.7390 8 0.0000 intr bi 2.8280 2 0.2430 intr fexr 4.6585 2 0.0970 intr infr 7.4070 2 0.0250 intr cinr 3.5245 2 0.1720 intr all 10.5940 8 0.2260 cinr bi 11.725 2 0.0030 cinr fexr 0.1051 2 0.9490 cinr infr 0.4738 2 0.7890 cinr intr 35.293 2 0.0000 cinr all 96.489 8 0.0000 table 9 shows the estimated coefficients of granger causality wald test results of all variables of the study. 4.5. discussion of findings the findings of the granger causality test provide useful insights into the relationships between key economic and fiscal variables in nigeria. foreign exchange rates and budget implementation have a substantial bidirectional causal relationship. this indicates that foreign exchange rates and budget implementation are inextricably related, with foreign exchange rates influencing how the government executes its budget and vice versa. while inflation has no significant effect on budget implementation, budget implementation has a substantial influence on inflation. this implies that government budgeting can influence inflation. also, interest rates have a significant impact on budget implementation, but budget implementation does not affect interest rates. therefore, interest rates are a major factor in deciding how the government distributes and uses its budget. in general, the findings emphasize that foreign exchange rates and interest rates have the most significant influence on nigeria's budget implementation while inflation has a less direct influence. 5. conclusion and recommendations this study investigated the determining factor of budget implementation in nigeria. the literature on these factors was evaluated. annual data on the foreign exchange rate, inflation rate, interest rate, corruption perception index, and budget implementation ratio were gathered from cbn annual reports between 2008 and 2024. these data were examined using times series analysis. the study demonstrates that budget implementations are significantly affected by foreign exchange rates. this emphasises how susceptible nigeria's fiscal stability is to changes in the foreign exchange rate. also, interest rates have a complementary causal relationship with budget implementation. this highlights the importance of interest rate policies in determining government spending. inflation rates have little or no effect on budget implementation. this suggests that inflation has a more indirect and secondary effect on budget implementation. based on this, the following recommendations were made: firstly, the government should prioritize exchange rate stability through good monetary policy. this will reduce the risk of currency changes affecting budget implementation, hence preserving fiscal stability. secondly, since interest rates have significant effects on budget implementation, the central bank of nigeria (cbn) should try to keep interest rates low to boost the economy. the effects of interest rate fluctuations on government spending and fiscal capacity should be closely monitored by policymakers. references adesina, t., & adeyemo, k. 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(2021). budget evaluation and economic development in nigeria. journal of international money, banking and finance, 2(2), 217-236. world bank. (2023). enhancing budget implementation in sub-saharan africa: lessons from south africa. washington, d.c.: world bank. world bank. (2023). governance and the role of institutions in combating corruption. washington, d.c.: world bank publications. world bank. (2023). institutional governance and interest rate management in developing countries. washington, d.c.: world bank publications. world bank. (2023). inflation, debt, and fiscal outcomes: a comparative analysis of lowand middle-income countries. washington, d.c.: world bank publications. world bank. (2023). interest rates and institutional quality in developing economies. washington, d.c.: world bank. 23 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 1, 23-29, 2025 issn: 2576-6759 doi: 10.55220/25766759.253 © 2025 by the authors; licensee eastern centre of science and education, usa development of the motives of long-term customers of health-oriented fitness companies during membership george f. zarotis1 walter tokarski2 1university of the aegean, faculty of human sciences, rhodes, greece. 2german sport university, cologne, germany. email: zarotisg@rhodes.aegean.gr ( corresponding author) abstract sustainable product and service improvements are necessary for fitness studios to develop a longterm market and remain competitive. this is extremely important since meeting client expectations can lead to customer happiness, which in turn improves customer loyalty and financial success. the fitness studio's value-added procedures should all be focused on meeting and exceeding client expectations. athletes' unique preferences can be taken into consideration when creating offers thanks to insights from studies on motivations in fitness sports. on the other hand, because of the more focused target group orientation, marketing campaigns can be carried out more successfully. longtime participants in the current study receive a motivation-related instruction on how to stay motivated to work out. the responders belonged to a health-oriented fitness club. the fifteen items on the survey were broken down into seven motivation-related categories. the surveys could be filled out on site or taken home, and they were available at the gym. 278 of the 350 questionnaires that were made were filled out. 79.4% was the response rate as a result. members who have merely received equipment-based training make up the responders. there is a slight majority (just under 53%) of male respondents, making the gender ratio about equal. the poll respondents are 56.6 years old on average, with a 13.1-year range around the mean. the age distribution shows that while younger respondents are somewhat uncommon, the number of respondents in middle to senior age has increased dramatically. among survey respondents who have been members for more than a year, the average membership duration is 11.6 years (with a variance of 7.5 years). significant variations in the mean value were found in 4 out of the 17 significance tests. for four reasons, there is a noticeable variation in the length of membership. the durations of these four motivations vary from 2.3 to 4.0 years. it is possible to identify in detail the following important relationships between age and motives. the following significant correlations between the motivation and age can be found in individuals; they are also not considered to be the only negative effects of this particular symmetry (the correlation is based on the statistical significance of the medium-value difference): a) people who have the motive ‘general improvement in physical fitness’ are members for longer than those who do not have it (means 11.9 years to 7.9 years); b) people who have the motive ‘positive influence on physical complaints’ and use the term ‘cardiovascular complaints’ as a synonym for their physical complaints are members for a shorter period than those who do not have it (means 8.7 years to 12.4 years); c) people who name the motive ‘independent training planning and control’ stay longer than people who do not name it (means 12.8 years to 10.5 years) and d) people who name the motive ‘preparation for their own sport’ (means 15.2 years to 11.3 years). to create lasting customer loyalty, it is therefore important to thoroughly and seriously examine the motives of the customers, to know and evaluate them and to give appropriate personal action and fitness recommendations. the knowledge gained also contributes to the long-term success of fitness clubs and to improving the image of fitness sports in general. keywords: customer loyalty, health-oriented fitness companies, membership duration, motivation, motives. 1. introduction due to the alienation of labour, rising incomes, and changing traditional societal values, the two primary spheres of existence, "work" and "leisure," are becoming less and less prominent. sport, as a part of leisure, is likewise impacted by these fundamental changes. there are emerging sports that satisfy the need for adventure, pleasure, and enjoyment while also taking health factors into account. fitness-related sports are a good example. among other human addictions and desires, they combine the need for self-expression, the fixation on youth, the quest for one's own identity, and the desire to maintain and improve one's health (zarotis, 1999; zarotis, 2021). to meet their needs and preferences, sports providers need to be aware of the psychological and motivational factors that influence people's leisure sports activity. the motivations driving recreational activities and sports in general can be better understood by conducting research on motivation (zarotis et al., 2002; zarotis, 2021). motivational psychology starts with the question of why, since it looks at both the environmental and internal factors that affect human behaviour. it explains the diversity of this human activity using the sociological and psychological terms mailto:zarotisg@rhodes.aegean.gr https://www.doi.org/10.55220/25766759.253 asian business research journal, 2025, 10(1):23-29 24 © 2025 by the authors; licensee eastern centre of science and education, usa "motive" and "motivation," which also allude to a fictional construct. this hypothetical construct, which is based on behavioural observations and theories, provides an explanation for a phenomenon that cannot be directly observed or measured (heckhausen & heckhausen, 2010; zarotis, 2020; zarotis, 2021). the target conduct is the focus of motivational psychology. motivation affects which states are avoided, which goals are pursued, and how much effort and persistence are put into them. it is the result of the interaction between organismal and situational factors. motivators increase awareness of events, rewards, and circumstances that are likely to satisfy demands. these rewards have a powerful emotional pull. rewards engage or trigger latent evaluative dispositions called motivations, which then show up as motivation and conduct (puca & schüler, 2017). internal motivation and motivation from external sources are the two categories of motivation. extrinsic motivation is characterised by outside factors such as avoiding punishment, upholding social prestige, or monetary values. when requirements that come from extrinsically motivated conduct rather than the behaviour itself are supplied by replacement methods, this is referred to as extrinsic. the real satisfaction of desires is not directly impacted by the initial activity. rewards, which frequently mandate the work input alone, are ineffective in and of themselves since they do not permit the instant satisfaction of needs (kroehler & berti, 2014). it matters because the object itself generates intrinsic motivation. the stimulating potential of intrinsic motivation cannot be realised unless the fundamental needs of extrinsic motivation are partially met. people search for new non-material experiences only when their material existence is relatively secure (reinhardt, 2018; zarotis, 2020; zarotis, 2021). csikszentmihalyi asserts that the optimal balance between performance competence and performance requirements is necessary for intrinsic motivation. this optimum, which pushes people without being overly demanding and therefore generates a sense of success, is found in the flow area. according to csikszentmihalyi, flow arises from the tension that exists between a person's level of aptitude and talents and the expectations of their environment. the behaviour itself is what makes it fulfilling since internal motivation is different from external incentive. behaviour and need satisfaction occur simultaneously. since needs are satisfied without the aid of external rewards, intrinsic behaviour fosters a positive sense of freedom. as a result, when motivated by internal variables, the same job may be viewed as simple and fulfilling; when motivated by extrinsic rewards, it may be viewed as difficult and unpleasant. according to csikszentmihalyi's research on intrinsically motivated behaviour, any activity can be internally gratifying if it is well-designed and our skills align with the requirements (csikszentmihalyi & jackson, 2000; schueler et al., 2020; zarotis, 2021). the question of why people do sports is particularly important to those who work in the sports industry. the solution to this issue not only simplifies human behaviour but also provides new insights into methodology, didactics, and the design of sports programs. rather of being monocausal, the motives behind recreational sports are rooted in intricate, multi-motivated frameworks that have historical, social, psychological, and physical bases. (beckmann et al., 2009; elbe, 2020). the growth of fitness sports was primarily due to shifts in consumer tastes. competition and performance were replaced by factors like well-being, enjoyment, relaxation, exercise, and health (dilger, 2008). understanding motivations in the context of sport is essential for the numerous scientific disciplines of sport. on the one hand, it is possible to identify control systems in fitness studios as driven by financial goals. like this, certain motivational characteristics — which may be seen as either excessive or insufficient motivation — can be crucial for enhancing performance from the perspective of training science. the psychological reasons for the behaviour are also significant when contrasted with other activities. training must be tailored to customer motives to design products, target group marketing, and training with the individual in mind (hackfort, 2001; zarotis, 2021). a thorough picture of the present fitness incentives seems to exist at this moment because the motivations for fitness have been the focus of a great deal of research in recent years. even when a certain stability is attributed to the person's motivational orientation, a change may nevertheless occur, for instance, due to social changes or personal circumstances. additionally, it is likely that research undertaken at different times or with different focus points will have varied motivational orientations. both social factors and, for example, changes in the sector may contribute to these differences. the necessity of regular evaluations of motivational orientations from both an economic and psychological perspective is emphasised by this review. comparing the objective of determining the underlying motives and individual prerequisites should be helpful to better consider individual objectives when developing the offer and providing training support (middelkamp & steenbergen, 2012). from a psychological standpoint, expectations regarding the outcomes of activities are linked to the motivational phase. first, a specific goal is associated with a condition that needs to be fulfilled by carrying out predetermined tasks (nitsch, 2004). a helpful viewpoint on their characteristics and significance can be gained from research on fitness incentives. they usually shed light on the factors that contribute to the appeal of fitness activities, making it possible to distinguish between different fitness motivations across different demographics (zarotis & tokarski, 2005). in this context, it is important to emphasise that there are methods to distinguish between the motivations for joining, continuing, and departing. according to gabler (2002) and hackfort et al. (2004), it is also possible that the original reasons for selecting a fitness membership change over time, lose their significance, or are replaced by several new or different considerations. developing and planning products for a specific target group always starts with an understanding of the factors that influence the population's engagement in leisure sports. this can attract new fitness athletes and retain current members (zarotis, 2021). essential demands on the management of a fitness club are therefore the creation of a good social atmosphere during training, time-efficient training programs, fun during the training, fulfilment of training goals and intensive support mechanisms (tokarski et al., 2023a). the study included 278 members of fitness clubs. in addition to sociodemographic data including age, gender, length of membership, and prior club memberships, 15 reasons for joining a fitness club were asked about in multiple-choice answer questions. these fifteen explanations fall into the following seven categories: asian business research journal, 2025, 10(1):23-29 25 © 2025 by the authors; licensee eastern centre of science and education, usa table 1. fitness/health general improvement of physical fitness cardiovascular training with emphasis on endurance positive impact on physical problems • cardiovascular problems • orthopaedic problems appearance weight loss (general fat loss) specific bodyshaping bodybuilding psychological experience compensation for daily routine and occupational stress pleasant and relaxed training cognitive dimension continuous guidance and training control information about exercise effects and anatomical background knowledge social dimension being able to plan and control training independently training with a partner performance specific sporting performance motor dimension supplement to my own sport preparation for my own sport if the individual answered that they were suffering physical problems, they were further asked if these complaints were orthopaedic or cardiovascular, using multiple-choice questions. the assessments that follow look at whether age has a substantial impact on how frequently motives are mentioned. the presentation is first restricted to solely descriptive statistics, which describe the frequency distributions throughout the entire set of respondents. these assessments do not establish or test hypotheses about potential correlations, whether between motives or about how motives depend on other qualities (willimczik & ennigkeit, 2018). 2. methodology 2.1. survey methodology a survey of the members of a big metropolitan fitness club was conducted. the 15 elements in the questionnaire can be categorised into seven smaller dimensions. a total of 15 multiple-choice answers are available for the questions regarding the reasons behind fitness training in this studio. in one instance, two more subquestions on complaints are included (the question regarding physical complaints as a purpose). the sub-questions and bits of information regarding motives make up a total of 15, or 17, from which the responder can choose or not choose each motive. the fitness facility had the questionnaires available for people to fill out on site or take away. the individual motives were formulated as multiple-choice questions in the questionnaire. at the data level, the options ‘mentioned’ or ‘not mentioned’ are thus possible for each motive. the length of membership of the respondents was requested as an entry in years, but only for those respondents who had been members for at least 12 months. this applies to 96.4% of the respondents (268 of 278). for descriptive purposes, the information on the length of membership was also divided into four categories: • up to 5 years • 5 to 10 years • 11-15 years • over 15 years the duration of membership in years is a metrically scaled characteristic. stating or not stating the individual motives produces two case groups in each case. t-tests for independent samples are used to test the significance of the correlations with age. the t-test is used to check whether two groups differ significantly in their mean values. if the mean value of the length of membership of those respondents who mentioned a motive differs significantly from the mean value of those people who did not mention this motive, a connection between age and choice of motive is proven. this can then be interpreted causally as meaning that the length of membership influences the choice of motive. since the sample size is well above n=30, a separate test for the normal distribution of the dependent variable is not carried out. in this case, according to the central limit theorem, we can assume that the ttest is robust about a violation of the normal distribution assumption. this means that the t-test also produces correct results in the significance calculation if the data in the dependent variable are not normally distributed (willimczik & ennigkeit, 2018). about the model assumption of homogeneous variances, the prerequisite is checked in each case using the levene test. in the event of a significant deviation from the model assumption of homogeneous variances, the significance is calculated using the corrected t-test (welch test), which takes the variance differences into account in the significance test. 3. results 3.1. sample description there are n=278 responders in the sample. with a tiny majority (just under 53%) of male respondents, the gender distribution is nearly equal. the respondents' ages range from 13.1 to 56.6 years old on average. younger respondents are quite uncommon, since the age distribution clearly demonstrates an accumulation of respondents in middle to old age. asian business research journal, 2025, 10(1):23-29 26 © 2025 by the authors; licensee eastern centre of science and education, usa table 2. distribution of age, gender, and length of membership in the sample. feature manifestation number % mean std. dev. gender female 131 47.10% male 147 52.90% diverse 0 0.00% in total 278 100.00% age categories up to 40 years 31 11.20% 41 to 55 years 81 29.10% 56 to 65 years 94 33.80% older than 65 years 72 25.90% in total 278 100.00% duration of membership < 5 years 63 23.5% 5-10 years 77 28.7% 11-15 years 46 17.2% > 15 years 82 30.6% in total 268 100.0% age in years 278 56.6 13.1 duration of membership 268 11.6 7.5 the duration of membership is over a year for 96.4% of respondents (268 out of 278). in two cases (0.7%), it is less than 6 months and in 8 cases (2.9%), it is between half a year and a year. for those surveyed who had been members for more than a year, the average membership duration was 11.6 years (range: 7.5 years). 107 respondents indicated that they had previously been members of another fitness studio. the average duration of these previous memberships was 6.5 years (range: 5.7 years). 3.2. influence of membership duration on the mention of motives – descriptive statistics table 3 shows the mean values (mv) and standard deviations (sd) of the membership duration when the respective motives are mentioned or not mentioned. figure 1 shows the same information as a grouped bar chart. descriptively, in most cases there are only slight differences in the mean values of the duration of membership between people who have named the corresponding motive and those who have not named the motive. the mean value differences in the duration of membership are – depending on the motive – between 0 and 4.0 years. from a purely descriptive point of view, the differences in the motives of ‘influencing physical fitness’ and ‘preparing for my sport’ are particularly striking. the differences in the motives of planning and controlling training independently and supplementing my sport are somewhat smaller, but still clearly recognisable, and to a limited extent in the motive of endurance-oriented cardiovascular training. all differences go in the direction that when the motive is mentioned, the respondents have been members for longer on average than when the motive is not mentioned. when the motive of ‘influencing physical complaints’ was mentioned, there is also a clear difference with regard to the specification in the form of cardiovascular complaints, but here the difference is that the respondents tend to be younger when this specification of physical complaints is mentioned. when it comes to ‘orthopaedic complaints,’ the differences in the length of membership are only slight again. table 3. length of membership and reasons given. not mentioned called in total motives duration of membership mw sd mw sd mw sd motive area: fitness / health improve physical fitness in general 7.9 5.5 11.9 7.6 11.6 7.5 endurance-orientated cardiovascular training 10.9 7.9 12.5 6.9 11.6 7.5 positive influence on physical complaints 11.2 8.2 11.8 7.1 11.6 7.5 if yes: cardiovascular complaints 12.4 6.9 8.7 7.1 11.8 7.1 if yes: orthopaedic complaints 12.6 7.7 11.7 7.0 11.8 7.1 motive area: appearance weight reduction 12.0 7.7 11.2 7.3 11.6 7.5 specialised figure training (bodyshaping) 11.4 7.0 12.6 9.2 11.6 7.5 training to build muscles (bodybuilding) 11.4 7.5 12.0 7.5 11.6 7.5 motive area: mental experience balance out every day and professional stress 11.6 8.2 11.6 7.0 11.6 7.5 exercise in a pleasant and relaxed way 11.2 6.8 11.8 7.7 11.6 7.5 motive area: cognitive dimension continuous guidance / training control 11.1 7.5 12.5 7.4 11.6 7.5 info on exercise effect / anatomical knowledge 11.4 7.5 12.1 7.5 11.6 7.5 motive area: social dimension planning and managing training independently soon 10.5 7.3 12.8 7.6 11.6 7.5 training with a partner or other people 11.7 7.6 11.3 7.1 11.6 7.5 motive area: performance concrete athletic performance 11.8 7.8 11.1 6.8 11.6 7.5 motive area: motor dimension addition to my sport 11.3 7.1 13.4 9.1 11.6 7.5 preparation for my sport 11.3 7.5 15.2 6.9 11.6 7.5 3.3. effects of length of membership on the stated reasons – significance test table 4 shows the results of the 17 t-tests for independent samples. the significance (probability of the validity of the null hypothesis in the population) and the associated test statistics, i.e. the t-value and its degrees of freedom (df), are given. asian business research journal, 2025, 10(1):23-29 27 © 2025 by the authors; licensee eastern centre of science and education, usa degrees of freedom that show non-integer values indicate that in this case, due to inhomogeneous variances, the significance was calculated using the welch test. the results show significant mean differences in 4 of the 17 significance tests. in three cases, the age differences are significant at the 5% level, and in one case at the 1% level. in two other cases (endurance-oriented cardiovascular training and supplementation for my sport), the significance is only just missed, with a probability of error of <0.1. table 4. significance test of reasons given for participation and length of membership. not mentioned called in total motives duration of membership mw sd mw sd mw sd motive area: fitness / health improve physical fitness in general 7.9 5.5 11.9 7.6 11.6 7.5 endurance-orientated cardiovascular training 10.9 7.9 12.5 6.9 11.6 7.5 positive influence on physical complaints 11.2 8.2 11.8 7.1 11.6 7.5 if yes: cardiovascular complaints 12.4 6.9 8.7 7.1 11.8 7.1 if yes: orthopaedic complaints 12.6 7.7 11.7 7.0 11.8 7.1 motive area: appearance weight reduction 12.0 7.7 11.2 7.3 11.6 7.5 specialised figure training (bodyshaping) 11.4 7.0 12.6 9.2 11.6 7.5 training to build muscles (bodybuilding) 11.4 7.5 12.0 7.5 11.6 7.5 motive area: mental experience balance out every day and professional stress 11.6 8.2 11.6 7.0 11.6 7.5 exercise in a pleasant and relaxed way 11.2 6.8 11.8 7.7 11.6 7.5 motive area: cognitive dimension continuous guidance / training control 11.1 7.5 12.5 7.4 11.6 7.5 info on exercise effect / anatomical knowledge 11.4 7.5 12.1 7.5 11.6 7.5 motive area: social dimension planning and managing training independently soon 10.5 7.3 12.8 7.6 11.6 7.5 training with a partner or other people 11.7 7.6 11.3 7.1 11.6 7.5 motive area: performance concrete athletic performance 11.8 7.8 11.1 6.8 11.6 7.5 motive area: motor dimension addition to my sport 11.3 7.1 13.4 9.1 11.6 7.5 preparation for my sport 11.3 7.5 15.2 6.9 11.6 7.5 in detail, the following significant correlations of motives with age can be found, which are not to be regarded as pure chance effects of this specific sampling (the mention is made in descending statistical significance of the mean differences): • people who state the motive ‘to improve general physical fitness’ have been members for longer than people who do not state this motive (means 11.9 years vs. 7.9 years). • people who want to positively influence physical complaints and who then specified ‘cardiovascular complaints’ are members for a shorter period of time than people who do not mention this motive (means 8.7 years to 12.4 years). • people who state the motive ‘planning and controlling training independently’ are members for longer than people who do not state this motive (mean values 12.8 years to 10.5 years). • people who state the motive ‘preparation for my sport’ are members for longer than people who do not state this motive (mean values 15.2 years to 11.3 years). 4. discussion of the results for athletes, the question of motivation for sporting activity is particularly relevant. answering this question not only helps to make human behaviour more understandable, but also provides new insights for methodology and didactics as well as for the design of sporting activities. this optimisation of processes can lead to positive training successes. lehnert et al. (2011) require training programmes to take into account the different needs of members, so that loyalty can be strengthened independently of the fitness club context. for most motives, there are no statistically significant dependencies on the length of membership, so the empirical differences could mostly be explained as random fluctuations in the context of sampling. for four motives, there is a significant difference in the length of membership, with the differences in these four motives ranging between 2.3 and 4.0 years. longer membership is associated with more frequent mention of the motives ‘general improvement of physical fitness,’ ‘planning and controlling training independently,’ and ‘preparation for my sport.’ the majority of fitness athletes feel that their health is in danger due to the rising number of lifestyle diseases brought on by contemporary industrial societies. through appropriate recreational sports, they attempt to preserve and advance their health as much as possible (zarotis, 1999; zarotis et al., 2011; zarotis, 2021). additionally, studies continue to demonstrate the beneficial effects of consistent fitness training on human health (zarotis & tokarski, 2020; tokarski et al., 2023b). in their scientific study, riess et al. (2014) also demonstrate this health-promoting effect, particularly with regard to combined strength and endurance training. according to other research, back pain can be avoided (stephan et al., 2011). the motive complex 'social dimension' is represented by two items, one of which describes the ability for selfdetermination and participation, and the other the ability to co-operate. the ability for self-determination and participation is encouraged by the free satisfaction of one's own needs, the pursuit of self-fulfilment and selfassertion. this independence is characterised by the ability to make decisions. the athlete should be given freedom of choice in order to be able to influence the type of sport they do. intrinsic motivations can only fully develop their incentive potential when extrinsic motivations have been largely fulfilled (zarotis & tokarski, 2023; zarotis & tokarski, 2024). asian business research journal, 2025, 10(1):23-29 28 © 2025 by the authors; licensee eastern centre of science and education, usa with the individual motive ‘preparation for sport,’ fitness athletes want to improve their motor skills and abilities with the help of fitness training to prepare optimally for their sport (zarotis, 1999; zarotis, 2021). this suggests that the individuals in this study are both intrinsically and extrinsically motivated. however, as already mentioned, purpose-oriented extrinsic motives are not enough in the long term to remain loyal to fitness sports. this may explain the relatively high fluctuation in the fitness industry (zarotis, 1999; zarotis, 2021). the lasting commitment of the participants to their club and the above-average duration of membership of 11.6 years in the present study can be attributed to their strong intrinsic drive. 107 respondents stated that they had previously been members of another fitness studio. the average duration of these previous memberships in other clubs was 6.5 years. from this, it can be concluded that mainly intrinsic motives are addressed in their current club. in contrast, shorter membership shows a statistically significant increase in the mention of the specific motive of influencing physical complaints in the form of cardiovascular complaints. certain significant correlations with the duration of membership can therefore be found in the fitness/health, social and motor skills motivation areas. by contrast, the appearance, psychological experience, cognitive and performance dimensions show no correlations in their mention with the duration of membership. a promising basis for the future progress of the sector is the growing awareness and willingness of people to actively engage in their own fitness. it is therefore important that all providers make every effort to retain customers as much as possible from the outset by means of appropriate customer retention measures. it is important to actively exploit the opportunities that arise in a changing environment and to bring about proactive development. it is always important to develop a quality concept from the customer's point of view; it must focus on the customer and their personal goals. quality certification alone is not sufficient as a control measure, as it is only partially accepted by customers. rather, a holistic process should be started that designs measures for the continuous improvement of training support – the central service of a fitness studio – based on quality analyses of customers and providers. it is likely that the needs, desires and goals of members are not being met or achieved, which is one reason for their departure. therefore, it is important that health-oriented fitness training is based on intrinsic motivation from the outset. furthermore, positive experiences with fitness training should be encouraged and negative ones reduced in order to improve the sport-related experience of consequences (zarotis et al., 2017; zarotis, 2021). all things considered, the analysis of motives for market segmentation is a reasonable strategy since it makes it possible to determine the reasons behind going to a fitness centre and, consequently, to determine the beginning points for a market development tailored to a particular target group. 5. conclusion the way society views fitness sports has evolved throughout time. these days, being physically fit is an indication of an active, health-conscious, and body-aware lifestyle. among other factors, the industry's significant emphasis on health has helped to halt the downward trend. this allows people to meaningfully combine the goals of relaxation, health care, and physical exercise. understanding the motivations of fitness sports fans might help to better customise the offers to meet their individual needs. additionally, more targeted marketing might result from a more focused approach to the target audience. for about a quarter of the motives for fitness training, the length of membership has a significant influence on the mention of these motives; this is not the case for the other three quarters of the motives. the reasons of ‘general improvement in physical fitness’, ‘independent planning and control of training’ and ‘preparation for a particular sport’ are more likely to be mentioned by people who have been members of the gym for a long time. in contrast, ‘the positive influence on cardiovascular complaints’ is more likely to be mentioned as a reason by people who have been members for a shorter period of time. without a doubt, only happy clients will genuinely stick with a fitness supplier. while some fitness providers steer clear of customer satisfaction entirely, others attempt — sometimes successfully — to conduct regular surveys of their members and clients. some fitness providers find it challenging to assess and analyse the data they collect, even if the fundamentals of empirical survey methodology should be considered. nonetheless, taking significant action based on survey results might help to affect customer satisfaction and, consequently, the desire to keep consumers in a sustainable way. long-term client loyalty can only be attained by carefully and seriously identifying, comprehending, and classifying their motivations as well as by offering suitable, tailored advice for fitness and action. the knowledge acquired also contributes to the long-term prosperity of fitness centres. references beckmann, j., froehlich, s. m., & elbe, a. 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(2024). age-specific motivational differences among long-term male clients of health-focused fitness companies. journal of management world, 2024 (4), 224-229. 97 © 2024 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. x, 97-104, 2024 issn: 2576-6759 doi: 10.55220/25766759.207 © 2024 by the authors; licensee eastern centre of science and education, usa demographic factors and personal income tax compliance in south-west states, nigeria: empirical analysis adekoya a. augustine1  1adekoya a. augustine. department of accounting, babcock university, ilisan-remo, ogun state, nigeria. email: sanyaaustine08@yahoo.com abstract personal income tax (pit) compliance is a critical issue to state governments and tax authorities because of the high rate of its non-compliance among individual taxpayers. this non-compliance attitude adversely affects the state sustainable development and economic performance. many researches have been conducted on taxpayers’ compliance, but not many considered the influence of demographic factors (df) on pit compliance behaviour (cb) at the state level. this study examined the probable influence of df on pit cb in selected state in south-west, nigeria. the study adopts survey research design and random sampling techniques. six hundred copies of questionnaire were distributed, and this achieved 84.3% response rate. descriptive and inferential statistics were adopted to analyze data at 5% significance level. the study shows that df positively influenced pit cb among individual taxpayers in the study states (adjr2=0.033, f(4, 506)=5.342; p=0.000). there was evidence that employment status has significant relationships with individual pit cb in the study states (esβ= -0.314 t= -2.925, p=0.004). hence, gender, age and educational level do not have significant relationships with individual pit cb in the study states (genβ=0.121, t=1.608, p=0.108, ageβ=0.018, t=0.500, p=0.617, elβ=0.089, t=1.758, p=0.079). the study concluded that demographic factors have significant influence on individual pit cb in the study states. the study recommend that state governments should boost tax education, introduce taxpayment process and sound tax administration that will minimize demographic disparity and pit non-compliance. also, transparency and accountability should be exhibited on tax revenues to increase pit compliance from the informal sector. keywords: accountability, demographic factors, economic performance, personal income tax, sustainable development, tax authority. jel classification: 1. introduction tax is a critical pillar of internally generated revenue (igr) of the state. taxes are mandatory or obligatory financial contributions made by taxpayers to the government from their earned incomes, profits, capital assets, properties, interest, dividends, activities or trades with no direct expected returns from the government. it is a form of payment by taxpayers to support and enhance the cost of governance (enyi, akintoye & adekoya, 2019). also, it is an instrument of public policy to stabilize the economy, redistribute wealth, finance and manage governance. tax is a form of social contract, an instrument of revenues generation to finance government expenditures for the wellbeing of the citizens (adekoya, 2020). tax revenues are the lubricant for the wheel of governance, and a life blood for socio-economic and political development. hence, tax compliance behaviour is a critical issue to governments and tax practitioners because of high rates of tax non-compliance that is common among individual taxpayers. tax compliance is taxpayer’s deliberate behaviour of adhering to tax laws with utmost willingness to promptly pay taxes (amaning et al., 2021). tax compliance is an individual act which rest on honesty, accuracy, truthfulness, and timely compliant with the relevant tax laws or regulations. however, where tax compliance response is very low, it affects government’s ability to generates enough revenues to finance the provision of public goods and services, infrastructural development and enhancement of sustainable development (radae & sekhon, 2017). personal income tax (pit) compliance at the state level has become significant matter for state internal revenue service due to paucity of its collections. despite the role and importance of pit to state governments, most potential taxpayers still exhibit non-compliance attitude. tax non-compliance is a global phenomenon in all societies and economic system, but it is more pronounced in developing countries than developed countries. it increases every year in many countries despite the critical importance of taxes to nation’s building. according to adekoya, enyi and akintoye (2019), constant loss of tax revenues through individual taxpayer’s non-compliance attitude adversely affects state’s activities, sustainable development and socio-economic performance. in nigeria, most states are faced with problems of budget deficit, heavy burden of loans debts and paucity of fund arising from low revenues from pit non-compliance behaviour especially from the potential taxpayers in the informal sector. however, to increase tax compliance, state government should improve tax administration system and strengthen tax collection process (appah & duoduo, 2023). tax non-compliance is classified into tax evasion and tax avoidance. tax evasion is illegal dogging of tax payment while tax avoidance is by taking undue advantage of the tax laws for personal gain. mailto:sanyaaustine08@yahoo.com https://www.doi.org/10.55220/25766759.207 asian business research journal, 2024, 9: 97-104 98 © 2024 by the authors; licensee eastern centre of science and education, usa taxpayers’ non-compliance negatively impacts tax fairness, equality, justice, and government ability to provide socio-economic goods and services. to reverse this phenomenon, it requires studies on factors that influence tax compliance. one of such is demographic factors (age, gender, education, employment status and income). however, demographic factors and pit compliance relationship has attracted special focus and attention of governments, policy makers, academicians, and tax professionals in recent years. pit is a form of tax chargeable on taxpayer earnings in both the formal and informal sectors. pit is a quasi-income tax imposed on taxpayer ascertained incomes. pit has become pertinent and importance sources of revenue for state governments. pit collection is guided by principles of certainty, simplicity, neutrality, flexibility, effectiveness, and fairness. the tax assessment is classified into two: pay as you earn (paye) and direct assessment (da). paye tax system is for employee in the formal sector while da is chargeable on annual incomes of entrepreneurs or self-employed individuals in the informal sector. in most states, the highest percentage of pit comes from paye while da has minimal collection rate. hence, adekoya and olayinka (2024) opined that pit has significant influence on igr at the state level as it contributed 61.95% maximally to the total igr of state government in south-west, nigeria with paye having 57.85% and da 4.1%. previous researchers have explored various approaches to enhance tax compliance among the individual taxpayers with much focus on the relationship between demographic factors and tax compliance but with less emphasis on demographic factors and pit compliance at the states level (afif & setiawan, 2019; aregbesola, owosekun & salawu, 2020; daniel, akowe & awaje, 2016; 2020; devos, 2008; ekpo & beredugo, 2023; fischer, wartick & mark, 1992; ikhsan, restiatun & suratman, 2023; jackson & milliron, 1986; kumi et al., 2023; muharremi et al., 2022; oduro, asiedu & tackie, 2018; otai, 2023; paleka, karanovic & stambuk, 2023; schoeman, 2023; umoffong, etim & bassey, 2020). besides, the outcomes of these past studies have shown mixed relationship. therefore, the objective of the study is to examine the extent to which demographic factors influences pit compliance behaviour of individual taxpayers in selected states in south-west, nigeria. the hypothesis drafted in null forms and tested at 5% level of significance for the study is: demographic factors, does not have significant influence on pit compliance behaviour among individual taxpayers in the selected states in south-west, nigeria. this hypothesis was designed to examine the influence of demographic factors on pit compliance behaviour among individual taxpayers in the selected states in south-west, nigeria. the empirical evidence on influence of demographic factors on pit compliance at the state level will contribute to existing literatures on tax compliance. furthermore, sbirs will have knowledge of individual demographic difference on pit compliance for better strategies on tax administration. the rest of the paper is divided into four parts, review of extant literature in part two, methodology and analysis of empirical results in part three, the fourth part deals with findings and discussion of results, while the last part focus on conclusion and recommendations. 2. review of extant literature 2.1. conceptual review 2.1.1. tax compliance (tc) tc means to adhere to basic tax laws or regulations, and prompt reporting of incomes, expenses, and other financial details by taxpayer to the relevant tax authority. it is the extent to which the taxpayers fulfil their tax obligation by paying tax in line with the relevant tax laws or regulations (adekoya et al., 2019). tc is the degree by which taxpayers complies with the relevant tax laws or regulations instituted in a country. it means prompt filling of tax returns and payment of tax to the relevant tax authority based on required tax formats. tax compliance study in modern-day context is credited to allingham and sandmo (1972). they used economics of crime approach developed by becker (1968) to explain taxpayers’ compliance and attitude. tc research involves various disciplines likes economics, psychology, political science, law, finance and accounting, and public administration. hence, tax compliance had been defined by many researchers with focus on compliant to tax laws or regulations. according to saw (2017), tax compliance is the prompt submission of tax returns and payment of tax liability to the tax authority. also, jaya (2017) defined tax compliance as taxpayers’ willingness to fulfil all tax obligations in line with the relevant tax legislation. similarly, tax compliance is the ability to fulfil tax payment obligation as required by the relevant tax laws or regulations (thiga & muturi, 2015). 2.1.2. personal income tax (pit) pit is a tax levied on individual taxpayer’s incomes. in nigeria, pit is regulated by income tax management act (itma) 1961, also known as pit decree (pitd) 104 of 1993. this was amended in 2004 and known as cap p8 lfn pit act 2004. furthermore, in june 2011, it was reviewed and known as pit (amendment act 2011) cap p8 lfn, this becomes operational from 14th june 2011 and was gazette on 31st january, 2012. the law gives the administrative process and power to assess and collect taxes from individuals, executors, trustees, and partners resident in the state. it is a form of tax revenue collected by state governments through the sbirs from individual taxpayers’ resident in the state while other individual taxpayers like members of nigeria polices, armed forces, external affairs, federal capital territory residents, and non-residents pay pit through federal inland revenue service to the federal government. pit is levied on individual personal incomes likes wages and salaries, dividends, director fees, royalties, income generating activities, and rental incomes. it is based on residency rules, and payable by individual employees or workers in the formal sector, and self-employed or entrepreneur in the informal sector. employees pay pit through paye system; this involves withholding method or by monthly deduction at source from workers’ salaries and wages by employer and remitted to the relevant tax authority. pit is a form of progressive taxation, the higher the wages and salaries, the higher pit and vice versa. alternatively, da is assessed and chargeable on self-employed or entrepreneur in the informal sector but its collection is characterized with problems likes corruption, incomplete records keeping, ineffective monitoring, and high rate of tax noncompliance. 2.1.3. taxpayers’ demographic factors demographic factors also known as socio-economic factors is used to define population. the demographic factors in fischer et al., (1992) model of tax compliance includes gender, age, educational level, income level, religious and employment status. but the study only considers four of these factors. these are gender, age, educational level, and employment status. asian business research journal, 2024, 9: 97-104 99 © 2024 by the authors; licensee eastern centre of science and education, usa gender: gender is a psychological factor which influence taxpayers’ attitude on either to pay or not to pay tax. it is the value and behavioral differences between males and females. previous studies on gender behaviour on risk and ethical attitude has shown divergence outcome in male and female behaviour. some of the outcomes revealed that males engaged more on unethical behaviour and take risk than females, while females are risk adverse, honest, obedient and avoid long term risk in decision making (abung & damayanti, 2023; bernasek & shwift, 2001; dewanta & machmuddah, 2019; kastlunger et al., 2010; muharremi et al., 2022; syarbin, restiatiun & suratman, 2023). hence, females are reported to be motivated to pay tax, tax compliant and obedient to tax laws than males (aladejobi, 2019; d’attoma, volintiru & steino, 2017). however, afif and setiawan (2019); ekpo and beredugo (2023) reported that gender has no effect on taxpayer’s tax compliance behaviour. furthermore, the basic reason for behavioral differences between the male and female individual is the various factors highlighted in the biological and socio-psychological theories. the biological theorist sees the sex hormone and gene differences as factor responsible for risk behaviour between the males and females. the social psychological theorist attributes the sex specific role in terms of level of socialization to gender differences in behaviour. these behavioral characteristics have impact on the tax compliance behaviour of males and females on either to pay or not to pay tax (alabede, 2014; meier-pesti & penz, 2008). age: the age bracket of the citizen is also a factor to tax compliance. according to tittle (1980), young individuals are risk takers, crime prone and less sensitive to sanction and punishments while the older individuals are risk averse, have more wisdom, experience and knowledge. this clarification means that the young individuals are likely to be tax non-compliance than the older tax payers. however, findings from previous research showed a mixed reaction on the influence of age on tax compliance behaviour. kumi et al., (2023); paleka et al., (2023) reported that a significant relationship exists between age and tax compliance while afif and setiawan (2019); ekpo and beredugo (2023); nugroho and sulistyawati (2019) concluded that age has no significant effect on tax compliance. educational level: education level is another factor that influences tax payers’ compliance behaviour. education can be classified into two: formal education in terms of secondary and tertiary qualifications, and tax knowledge or the ability to comprehend tax laws for complaints. tax laws are complex; full of technical jargons and abstract in nature; therefore, better understanding of the laws will enhance positive tax compliance (alabede, 2014). tax payer’s educational level is all about knowledge on: tax process; the basic reason for tax payment; and the importance or role of tax to the government. according to jackson and milliron (1986), tax education means taxpayer’s knowledge on either to comply or not to comply with the relevant tax laws. kumi et al., (2023); le et al., (2020); vincent, stevenson, and owolabi (2023); amaning et al., (2021) reported that a positive relationship exists between education level and tax compliance. hence, tax compliance increases with educational attainment and positive tax compliance behaviour while lack of tax education or adequate knowledge of the tax laws might probably lead to taxpayers’ non-compliance. employment status: the value of tax from individual taxpayer depends on their incomes. therefore, taxable income is a function of employment status of in the formal or informal sectors. besides, tax evasion in the formal sector is minimized as tax income is deducted at source through paye system and remitted to the appropriate tax authority. alternatively, tax incomes from the informal sector are more prone to tax non-compliance. previous studies by adekoya (2020); adekoya and enyi (2019); adekoya et al., (2019) revealed that employment status shows significant relationship with individual voluntary tax compliance behaviour. 2.2. theoretical framework the study anchors on two theories: fischer model and theory of planned behaviour. 2.2.1. fischer model fischer tax compliance model was developed by fischer et al., (1992) to explain the importance of demographic variables in tax compliance. this premise on the fact that taxpayers’ compliance rate depends on demographic factors to comply or not to comply. the model concluded that demographic factors influence tax compliance. 2.2.2. theory of planned behaviour (tpb) tpb was propounded by ajzen in 1991 and it centers on attitude and beliefs of an individual. tpb evolved from the theory of reason action where intention is the best prediction of attitude and beliefs (ajzen, 1991; fishbein & ajzen, 1975). hence, intention is the combination of attitudes and beliefs while behaviour is how intention is converted into action. tpb is anchors on three factors of beliefs, these are behavioral beliefs, control beliefs, and normative beliefs (fishbein & ajzen, 2010). behavioral beliefs arises from individual beliefs that is based on behaviour and result evaluations. control beliefs is the belief of inhabit behaviour or action that will be displayed. normative beliefs mean normative expectation and the morality or motivation for meeting those expectations. the tpb is relevant to explain the behaviour of taxpayers in fulfilling their tax obligations. taxpayer’s gender, age, marital status and level of education or tax knowledge will propel tax payment (behavioral belief) while the control beliefs anchor on tax audit and penalties designed to enforce taxpayers’ compliance with tax rules and further tax payment. the normative expectation or belief rest on the expected satisfaction from tax payment (social contract), efficient and effective tax system, equality and fairness, and accountability which motivates tax payers to oblige and obey tax laws. 2.3. empirical review san et al., (2024) looked at the influence of smes demographic profile on tax compliance behaviour in malaysia. the study revealed that gender and age disparities influenced smes tax compliance while level of education contribute to higher tax compliance. besides, schoeman (2023) studied the impact of demographic variables on value added tax compliance in south africa. the study revealed that before changes in vat rates, education, gender and tax knowledge have influence on tax compliance decision. hence, after the change in the vat rate, education is the only demographic factors that has significant effect on tax compliance. similarly, ikhsan et al., (2023) studied demographic characteristics and tax compliance. the study revealed that age has effect on tax compliance while gender has no effect on tax compliance. also, umoffong et al., (2020) examined demographic and socio-economic factors as determinants of tax compliance in self-assessment system in akwa-ibom state, nigeria. asian business research journal, 2024, 9: 97-104 100 © 2024 by the authors; licensee eastern centre of science and education, usa the study revealed that level of education has significant positive influence on tax compliance. furthermore, muharremi et al., (2022) studied the influence of demographic factors on albanian individual taxpayer’s ethical beliefs surrounding tax compliance. the study revealed that gender, marital status, level of education impact tax compliance. moreover, defitri and fauziati (2018) looked at the effect of demographic factors and e-filling usage on tax compliance. the studied revealed that demographic factors like age and education have no effect on tax compliance. twesige et al., (2024) studied gender and the tax compliance puzzle on whether or not gender influence taxpayers’ behaviour towards tax compliance in rwanda. the studied revealed that gender contributes to taxpayers’ behaviour towards tax compliance. besides, kumi et al., (2023) examined voluntary and enforced tax compliance determinants and its impact among agrochemical business in ghana. the study revealed that age and gender positively influence enforced tax compliance while education level has positive impact on voluntary tax compliance and negative impact on enforced tax compliance. in addition, otai (2023) looked at gender and tax compliance of small and medium enterprises in nigeria. the study revealed that gender has insignificant relationship with tax compliance. moreover, kaghazloo and borrego (2022) studied the model affecting tax professional tax non-compliance behaviour. the study revealed that age and gender were the most importance factors that influence tax professional tax non-compliant behaviour. in addition, otai, ndede and fredrick (2023) studied the effect of age and level of income-on-income tax compliance of small and medium enterprises in soroti district, uganda. the study revealed that owners’ managers age has significant relationship with income tax compliance by firms. similarly, deyganto (2018) looked at the various factors that influence taxpayers voluntary tax compliance in gedeo zone of southern ethiopia. the study revealed that gender and age are key factors that influence taxpayers’ voluntary compliance attitude while education level has no significant influence on tax compliance attitude. geyik, seren and mcgee (2024) investigated the empirical analysis on the effect of taxpayers’ education level and marital status factors on taxpayers’ attitude and behaviour towards taxes. the study revealed that marital status is a significant demographic variable that influence attitude and behavior towards taxes while educational level shows differences towards taxes. similarly, karlina and anggraini (2024) examined the influence of educational level, tax understanding and tax awareness on individual taxpayer compliance. the study revealed that level of education, tax understanding and perceived tax awareness simultaneously have significant and positive effect on individual taxpayer compliance. besides, helmy, dwita and cheisviyanny (2020) looked at the influence of gender and machiavellianism on tax evasion. the study revealed that gender has significant influences on tax evasion among accounting students where men demonstrate high level of tax evasion than women. moreover, aregbesola et al., (2020) looked at marital status and educational background as determinants of tax compliance in nigeria. the study revealed that marital status significantly influences personal income tax compliance while educational level insignificantly influences personal income tax. furthermore, tan et al., (2021) investigated the moderating effect of individual taxpayer’s education level on ethical perception and tax compliance behaviour in peninsular, malaysia. the study revealed a positive significant relationship between ethical perception and tax compliance behaviour through educational level which enhances greater tax compliance. additionally, kurnia and fajarwati (2022) examined the effect of educational level, income level and tax policy on taxpayer compliance during the covid-19 pandemic. the study revealed that education level partially had negative effect or did not affect taxpayer compliance. lastly, oduro et al., (2018) studied tax evasion determinants in developing economies using structural equations model in ghana. the study revealed that socio-cultural factors such as age, gender, income level and education level does not have significant influence on tax evasion. 3. methodology the study employed survey research design and random sampling techniques to gathered the relevant primary data required for the study from individual tax payers in both formal and informal sectors in the three selected states of lagos, oyo, and ogun in the south west, nigeria. the survey design was adapted for the study because of its reliability to gather data from individual tax payer on tax compliance as affirmed by previous researchers like adekoya (2020); adekoya and enyi (2020) alabede (2014), al-maghrebi et al., (2016), kirchler and wahl (2010), sitardja and dwimulyani (2016). six hundred copies of questionnaires were administered to various individual respondents in the three states at two hundred copies each. a total of five hundred and six copies were received, this gives a response rate of 84.3%. the pit compliance questions highlighted in the questionnaire were adapted from the work of tax payers’ compliance appraisal by fischer et al., (1992), adekoya (2020); adekoya and akintoye (2019); enyi, akintoye and adekoya (2019); kirchler and wahls (2010), lateef, saheed and onipe (2015). the pit questions covered morality, honesty and trust, responsibility, and right of payment. these questions were structured, scaled in closed ended form, and were measured using six-point likert scale of 1=strongly disagree, 2=disagree, 3=partially disagree, 4=partially agree, 5=agree and 6=strongly agree. 3.1. reliability of research instrument the reliability of the research instrument was measured with the use of composite reliability test. a composite reliability and cronbach alpha (α) calculated greater than 0.6 was affirmed by taber (2016); adekoya (2020); adekoya, adegbie and agbetunde (2020); adekoya, agbetunde and lawal (2022) as a reasonable, reliable and acceptable. the reliability test of the instrument based on pilot study showed that pit compliance had cronbach’s alpha of 0.81. this showed that the instrument was reasonable and reliable for the study. 3.2. model specification the study expects that the independent variables (demographic factors) would enhance dependent variable (pit compliance). it is therefore expected that demographic factors would enhance pit compliance. demographic factors are gender, age, education level, and employment status. 3.2.1. pit compliance and demographic factors pitc = β0 + β1geni + β2agei + β3eli + β4esi + ε where: asian business research journal, 2024, 9: 97-104 101 © 2024 by the authors; licensee eastern centre of science and education, usa gen = gender age = age el = education level es = employment status ɛ = error terms β0 = intercept or the constant β1 – β4 = partial regression coefficient of the explanatory variables. 4. results and findings data collected from the sampled questionnaires were analyzed and interpreted with descriptive statistics of simple percentage, mean, and frequency while the hypothesis was tested with inferential statistics of ordinary linear square (ols) regression and analysis of variance (anova). 4.1. demographic characteristics of the respondents this section describes the demographic features of the respondents and this centers on gender classification, age distribution, educational qualification level, and employment status. table 1. demographic statistics of respondents. respondents characteristics frequency cumulative frequency percentage (%) cumulative percentage (%) gender: male 314 314 62.1 62.1 female 192 506 37.9 100 age: 18-30 years 103 103 20.4 20.4 31-40 years 168 271 33.2 53.6 41-50 years 153 424 30.2 83.8 51-60 years 77 501 15.2 99.0 61 years and above 5 506 1.0 100 educational qualification: gce/wasc and below 37 37 7.3 7.3 ond/nce 96 133 19.0 26.3 hnd/bsc 289 422 57.1 83.4 msc/mba 77 499 15.2 98.6 phd 7 506 1.4 100 employment status: informal employment 85 85 16.8 16.8 formal 421 506 83.2 100 the demographic statistics of the respondents in assessing the influence of demographic factors on taxpayers’ pit compliance behaviour in selected states in south-west, nigeria, in table 1 shows that more male respondents 62.1% were involved. also, those in their active age of tax payment 99% responded to the test items. the result showed that 92.7% of respondents were knowledgeable to respond to the test items with their basic educational qualification above wasc/gce. on the employment status, the study revealed that majority of the respondents 83.2% were from the formal sectors. 4.2. descriptive analysis of the test items this section describes the test items with measure of attitudes and morality, honesty and trust responsibility, prompt payment, and perception using six (6) likert scale. table 2. respondent responses on pit compliance. sd d pd pa a sa mean paying tax is the right and natural things to do. 2.0% 2.6% 3.6% 10.5% 29.6% 51.8% 5 paying tax is a responsibility that should be willingly accepted by all citizen. 0.4% 1.6% 3.0% 11.3% 32.6% 51.2% 5 i pay tax to support the state, other citizen and its programme. 0.0% 1.8% 3.4% 11.1% 40.1% 43.7% 5 i will pay tax even when there are no controls because i am sure am doing the right things. 3.0% 4.7% 4.9% 20.6% 32.8% 34.0% 5 paying tax promptly is a matter of cause because i like to contribute to everyone’s goods. 0.2% 4.7% 3.4% 21.1% 37.9% 32.6% 5 i feel morally obliged to honestly declare all my income for tax purposes because i regard it as my duty. 2.0% 4.2% 6.3% 23.7% 39.1% 24.7% 5 i will pay tax even if tax audit does not exist. 5.1% 12.3% 9.3% 26.5% 27.5% 19.4% 4 overall mean 4.84 in table 2, the mean of 5 each indicates that majority of the respondents agreed: that paying tax is the right and natural things to do; that paying tax is a responsibility that should be willingly accepted by all citizens; that they will pay tax to support the state, other citizens and its programme; that they will pay tax even when there are no controls because they are sure that they are doing the right things; that paying tax promptly is a matter of cause because they like to contribute to everyone’s goods; that they feel morally obliged to honestly declare all their asian business research journal, 2024, 9: 97-104 102 © 2024 by the authors; licensee eastern centre of science and education, usa incomes for tax purposes because they regard it as their duty. in addition, the mean of 4 further suggests that the respondents agreed that they will pay tax even if tax audit does not exist. on the overall, a mean of 4.84 further indicates that majority of the respondents agreed that pit compliance is necessary in their respective state. 4.3. test of hypothesis table 3. demographic factors and pit compliance. coefficientsa model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) 4.785 0.258 18.563 0.000 gender of the respondents 0.121 0.075 0.072 1.608 0.108 age of the respondent 0.018 0.037 0.023 0.500 0.617 educational level/qualification of respondents 0.089 0.051 0.089 1.758 0.079 employment status of respondents -0.314 0.107 -0.143 -2.925 0.004 model summary model r r square adjusted r square std. error of the estimate 1 0.202a 0.041 0.033 0.80604 anovaa model sum of squares df mean square f sig. 1 regression 13.882 4 3.470 5.342 0.000b residual 325.502 502 0.650 total 339.383 506 note: a. dependent variable: pitc b. predictors: (constant), employment status of respondents, age of the respondent, gender of the respondents, educational qualification of respondents. source: researcher’s work (2024) @chosen significant level of 5% regression output = 4.785 + 0.121gen + 0.018age + 0.089el – 0.314es + ɛ 4.4. interpretation the regression estimates on table 3 shows that proxies of our exogenous have both positive and negative effect on pit compliance. this is indicated by the signs of the coefficients, which are > &<0. some of these results are consistent with the a-priori expectation for this study. the results of regression analysis for the influence of demographic factors on pit compliance behaviour of the selected states in south-west, nigeria shows that gender (0.121), age (0.018), and educational level (0.089) have positive relationships with individual pit compliance behaviour in the study states, while employment status (-0.314) has negative relationships with individual pit compliance behaviour in the study states. the study revealed that demographic factors positively influenced individual pit compliance in the study states (adj r2=0.033, f(4, 506) =5.342; p=0.000. the adjusted r-square of the model showed 3.3%, this suggest that variation in pit compliance of the sampled population can be attributed to all our independent variables put together, while the remaining 96.7% variations in pit compliance are caused by other factors not included in this model. there was evidence that employment status has significant relationships with individual pit compliance behaviour in the study states (es β= -0.314 t= -2.925, p=0.004). however, gender, age and educational level do not have significant relationships with individual pit compliance behaviour in the study states (gen β=0.121, t=1.608, p=0.108, age β=0.018, t=0.500, p=0.617, el β= 0.089, t=1.758, p=0.079). this implies that employment status are significant factors that influenced changes in the individual pit compliance behaviour in the study states while gender, age and educational level of the respondents were not significant factors that influenced changes in individual pit compliance behaviour in the study states. the f-statistic of 5.342 is statistically significant with p=0.000. this indicated that on the overall, the statistical significance of the model showed that the null hypothesis that demographic factors does not have significant influence on individual pit compliance behaviour in the selected states in south-west, nigeria was rejected. hence, the alternative hypothesis that demographic factors have significant influence on individual pit compliance behaviour in the selected states in south-west was accepted at 5 percent level of significance. therefore, the model is statistically significant. 4.5. discussion and implication of findings the descriptive statistic revealed that majority of the respondents agreed that paying tax is a right, natural and responsibility that should be willingly be done by individual taxpayer. in addition, respondents feel morally obliged and honest to declared their income for tax purposes. hence, majority agreed that pit compliance is necessary and should be embraced. empirical findings from the test of hypothesis on the demographic factors and pit compliance behaviour in the study states revealed that age, gender, and educational level have positive relationships with individual pit compliance behaviour while employment status has negative relationships with individual pit compliance behaviour in the study states. this implies that employment status are significant factors that influenced changes in the individual pit compliance behaviour in the study states. this aligns with the study of adekoya (2020); adekoya and enyi (2019); adekoya et al., (2019). conversely, gender, age and educational level of the respondents were not significant factors that influenced changes in individual pit compliance behaviour in the study states. in respect of gender, the outcome aligns with the studies of afif and setiawan (2019); ekpo and beredugo (2023); otai (2023) and negate the study of deyganto (2018); muharremi et al., (2022); twesige et al., (2024), that gender influences taxpayer compliance. the age variable outcome aligns with the study of afif and setiawan (2019); ekpo and beredugo (2023) but negate the outcome of kumi et al., (2023); ikhsan et al., (2023); otai et al., (2023); paleka et al., (2023) of a significant relationship between age and tax compliance. also, education level outcome aligns with amaning et al., (2021); aregbesola et al., (2020); deyganto (2018); kumi et al., (2023); vincent et al., (2023) of positive relationship and of no significant influence on tax compliance, and negate the studies of asian business research journal, 2024, 9: 97-104 103 © 2024 by the authors; licensee eastern centre of science and education, usa karlina and anggraini (2024); muharremi et al., (2022); umoffong et al., (2020) of significant influence on tax compliance. the f-statistic of 5.342 is statistically significant at p=0.000. therefore, the study revealed that demographic factors have significant influence on individual pit compliance behaviour in the selected states of south-west, nigeria at 5 percent level of significance. 5. summary, conclusion and recommendation of findings 5.1. summary of finding on demographic factors, the study revealed that gender, age, and educational level have positive relationships with individual pit compliance behaviour while employment status has negative relationships with individual pit compliance behaviour in the study states. the findings also revealed that employment status has significant relationship with individual pit compliance behaviour while gender, age and educational level do not have significant relationship with individual pit compliance behaviour. meanwhile, employment status are significant factors which influenced changes in the individual pit compliance behaviour while age, gender and educational level of the respondents were not significant factors which influenced changes in individual pit compliance behaviour. the study concluded that demographic factors have significant influence on individual pit compliance behaviour in selected state of south-west, nigeria. 5.2. recommendations the process of increasing pit collection at the state level is of utmost importance with focus on individual demographic bracket. therefore, state government should increase the level of tax education among the citizens to boost pit compliance. also, school curriculum should be explored to include tax education to enrich tax knowledge from the youthful age. the age bracket of taxpayer should be analyzed to set strategies on how to ensure compliance for those taxpayers that are usually not tax compliant. government should introduce friendly tax payment mechanism that will minimize gender disparity to ease tax compliant. transparency, fairness and accountability on tax revenues should be exhibited by government to encourage taxpayers in the informal sector to willingly comply to tax payment. finally, government should identify and group taxpayers according to demographic bracket as better strategies to monitor attitudinal changes towards pit compliance and tax administration. references abung, y. r., & damayanti, t. w. 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(2023). do socio-demographic characteristics of sme enterpreneurship influence their tax compliance behaviour? journal of economic criminology, 1-10. https://doi.org/10.1016/j.jeconc.2023.100008 56 © 2024 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 9, 56-63, 2024 issn: 2576-6759 doi: 10.55220/25766759.192 © 2024 by the author; licensee eastern centre of science and education, usa youth entrepreneurship and national development: evaluating the effect and challenges of the gambia's national youth service scheme ogbeta, kingsley oghenekevwe department of management sciences, school of business and public administration, university of the gambia, the gambia. email: kogbeta@utg.edu.gm abstract the study critically examines the significant role of the national youth service scheme (nyss) in youth entrepreneurial development in the gambia. also, it evaluated the strategic structures adopted by the nyss; assessed the effects of the nyss programs; and analyse the challenges encountered in the gambia. these were with a view to determining the critical nexus between nyss and youth entrepreneurial development in the gambia. both primary and secondary data were used in the study. primary data were sourced through questionnaire administration. the study population (2057) comprised nyss staff and management, past board members, employees of tvet partner institutions, regional area council staff, and nyss regional committee staff, and past and present corps members. the sampling approach used in this study was multistage including stratified and proportionate-to-size sampling technique. to ensure an appropriate sample size, 324 individuals were selected using the krejcie and morgan (1970) sample determination formula. data obtained were analysed using frequency distribution, percentages, mean values and standard deviation for interpretation. the hypotheses were evaluated using the z-test. the findings highlight a unanimous affirmation of nyss's structured initiatives, such as training, mentorship, and networking events. however, the effectiveness of these initiatives manifested varied responses, particularly in financial literacy and market understanding. the study also identifies universal challenges inherent in entrepreneurial schemes in developing contexts, emphasising funding constraints, resource insufficiencies, and infrastructural gaps. statistical analyses further reveal that, although perceptual differences exist among stakeholder groups regarding the nyss program's impacts and challenges, they are not statistically significant. the recommendations include increasing financial literacy training, strengthening market insights, and extending local business collaborations. keywords: development, entrepreneurship, training, and mentorship, youth. 1. introduction the significance of youth in national progression is undeniable (ogbuleke, 2021). over the past two decades, many african countries have seen a boom in their youth population. however, leveraging the potential of this young demographic has been a challenge, with critics pointing to the need for more opportunities (olaiya, 2014). a promising solution is engaging youth in entrepreneurial pursuits, which empowers them and fuels national economic growth. many african nations, like nigeria and ghana, have initiated youth programs focusing on fresh graduates. nigeria's "national youth service corps (nysc)" initiated in 1973, and ghana's "national youth authority (nya)" established in 1974, aim to integrate graduates into nation-building activities. similar models can be found outside africa, as seen in israel's "national youth service (nys)," which offers voluntary military training to the youth to help support the community. following these steps, under section 195 of the 1997 constitution, the gambia introduced the "national youth service scheme (nyss)" in 1999, later revised in 2015. this scheme supports youth skills acquisition across the gambia's seven administrative areas to mitigate youth unemployment. every two years, the nyss selects 200 youth volunteers for a 24-month program, including six weeks of orientation and skills training. the scheme pays for the training, provides a monthly stipend, and offers a unique program for disadvantaged youth educationally. the gambia's government recognises the potential of youth to contribute to national development through entrepreneurship. the nyss thus aims to provide the youth with the necessary skills to enter the job market and foster an entrepreneurial spirit, explicitly targeting those between 18-35 years susceptible to societal issues (ministry of youth and sport, 2019). however, despite these commendable initiatives, challenges remain. the primary objectives of the nyss, such as fostering a nationalistic spirit and providing marketable skills, have not significantly improved the youth's situation. worryingly, youth unemployment have been rising, with recent statistics indicating an alarming 41.5% unemployment rate in 2022 (sonko, 2022). mailto:kogbeta@utg.edu.gm https://www.doi.org/10.55220/25766759.192 asian business research journal, 2024, 9: 56-63 57 © 2024 by the author; licensee eastern centre of science and education, usa previous research, including ogbuleke (2021); macrotrends (2023); sonko (2022); lahire, johanson, and wilcox (2011) and ceesay and kakengi (2020) has primarily highlighted the challenges faced by gambians and african youth and the consequences of youth unemployment for societal stability and economic growth. however, there needs to be more research into systematic solutions and an understanding of the economic contributions of youth when engaged in entrepreneurial roles. this study aims to bridge this gap, examining the role of institutionalised programs like the nyss in the gambia and their effectiveness in harnessing the potential of the youth. the research is directed by the following questions: what strategic structures has the nyss implemented for youth entrepreneurial development in the gambia? to what extent has the nyss program impacted youth entrepreneurial development in the gambia? what challenges does the nyss face in achieving effective youth entrepreneurial development? the main objective of this research is to critically examine the significant role of the nyss in youth entrepreneurial development in the gambia. the specific objectives are to: investigate the strategic structures adopted by the nyss for youth entrepreneurial development in the gambia; evaluate the effects of the nyss program on youth entrepreneurial development in the gambia; and analyse the challenges encountered by the nyss in delivering adequate entrepreneurial development in the study area. the hypotheses formulated for this study are h0: the mean perceptions of nyss-affiliated staff and past and present corps members regarding the effect of the nyss program on youth entrepreneurial growth in the gambia are not significantly different. h0: the mean perceptions of nyss-affiliated staff and past and present corps members concerning the challenges of the nyss program on youth entrepreneurial growth in the gambia are not significantly different. the study covers three administrative regions in the gambia: kanifing municipality, west coast region, and lower river region, where recruitments commence, and the partner technical and vocational education and training (tvet) institutions to which these members are sent for training. additionally, the study includes former students (ex-corps members) from the fourth to thirteenth batches, from 2002 to 2019. 1.1. review of literature on youth youth is traditionally viewed as the period between childhood and adulthood, often signified by milestones. however, its definition is increasingly influenced by cultural, educational, and technological factors. today, it is seen as a dynamic phase of self-discovery and adaptation amidst a rapidly changing world. the concept of "youth" lacks a globally standardised definition and is influenced by a country's socio-economic and political landscapes. cultural, gender, and socio-economic backgrounds further diversify how this phase is understood and categorised. notably, age classifications for youth diverge. the united nations and world bank pinpoint ages 15 to 24, while the commonwealth youth program ranges from 16 to 29 (ministry of youth and sport, 2019). however, the 2019-2028 national youth policy of the gambia use the 15 to 35-year range. a noteworthy observation is the evolving understanding of adulthood due to socio-economic dynamics, extending the duration of youth and the journey to adulthood (abdul & mohd 2021; tsegaye, 2006; unidesa, 2004; sigudhla, 2004). 1.2. youth unemployment, youth entrepreneurship and national economic development of the gambia the convergence of young unemployment, youth entrepreneurship, and national economic development in the gambia is critical. high young unemployment can cause societal discontent and hardship. promoting youth entrepreneurship solves this by transforming job seekers into job creators, resulting in increased creativity and economic growth. this method mitigates unemployment, stimulates economic growth, and promotes long-term development, all of which contribute to a more equal and successful nation. the gambia is facing a severe youth unemployment crisis, with rates escalating from about 13% in 2018 to over 40% today (world bank, 2021). historically high unemployment rates have persisted since the 1970s, exacerbated by the covid-19 pandemic (banerjee et al., 2008; pikoko & phiri, 2018; masenya, 2021). youth entrepreneurship, particularly digital entrepreneurship, is viewed as a potential solution to the problem. martinez, martin, and marlow (2018) and satalkina and steiner (2020) underline the importance of digitalisation in employment development and economic adaption. hamilton and de klerk (2016) advocate for the replacement of traditional employment with digital entrepreneurial endeavours, particularly in the context of the fourth industrial revolution. despite acknowledging the value of entrepreneurship for national prosperity, the gambia's support environment is still developing. itc-gambia's document emphasizes the need to strengthen support institutions and define the relationship between innovation, entrepreneurship, smes, and start-ups. the gambia youth empowerment project (yep) seeks to bridge the skill and entrepreneurial gaps among young people by aligning training with job market demands to reduce irregular migration and create jobs (yep-itc gambia, 2015). the national development plan underscores sustainable growth that improves individuals' innovative potential and enhances living conditions (ndp, 2018). this people-oriented approach is reinforced by gyimahbrempong and kimenyi (2013), who underline that development should enhance the quality of life and socioeconomic choices for all. entrepreneurship is crucial for national development, impacted by institutional environments, economic freedom, technological development, and market conditions (simón-moya, revueltotaboada, & fernández guerrero, 2020). successful entrepreneurship encompasses risk-taking and market evaluation skills (carter & jones-evans, 2012). youth entrepreneurs pursue economic activities motivated by necessity or opportunity (chigunta, 2017; edoho & kuada, 2015). in conclusion, promoting youth entrepreneurship, especially digital entrepreneurship, is crucial for addressing youth unemployment and promoting national economic development in the gambia, enabling sustainable growth and socio-economic transformation. 1.3. theoretical framework human capital theory, developed by gary becker in 1962, posits that an individual's educational and skill achievements directly influence their societal and professional positioning (becker, 1962; blair, 2011). this theory asian business research journal, 2024, 9: 56-63 58 © 2024 by the author; licensee eastern centre of science and education, usa further suggests that individuals can earn more by acquiring knowledge and skills and significantly boost the economy (rosen, 1976). anosike (2019) has noted the global trend of investing in entrepreneurship education (ee) to harness entrepreneurship for economic growth. according to joseph and adewunmi (2020), entrepreneurship education is a framework aimed at motivating and equipping individuals for entrepreneurial activities. however, adequate government support may only limit its potential (gamede, 2017). becker's human capital theory encapsulates attributes like knowledge, manners, and experiences as vital factors enhancing an individual's value (becker, 1962). reflecting on this, ndururi (2020) and seet et al. (2018) underscored the importance of education and training for individuals, linking them to higher earning potentials. hence, a country's economic progress is intrinsically related to the educational opportunities offered to its youth. 2. methodology the research adopted a descriptive methodology with the gambia as its focal area. the target group consisted of 73 individuals, including nyss staff and management, past board members, employees of tvet partner institutions, regional area council staff, and nyss regional committee staff. additionally, the group included 1,984 past and present corps members, culminating in 2,057 participants. using the krejcie and morgan (1970) formula, a sample size of 324 participants was chosen. this study utilised a multi-stage sampling method. initially, a stratified sampling method was used to categorize participants from different segments. this was followed by determining the number of respondents in each category using a proportionate size technique. lastly, questionnaires were distributed through a straightforward random method. from the 324 distributed questionnaires, 287 (89%) were adequately completed and included in the analysis as shown in table 1 below. the first research question was addressed using frequency and percentages, while the second and third questions used mean values and standard deviation for interpretation. items with a mean value of 2.50 or higher were marked as agreed, whereas those below 2.50 were categorised as disagreed. the hypotheses were evaluated through the ztest, where if the z-calculated value is less than or equal to the z-critical value, the null hypothesis stands; otherwise, it's refuted. table 1. showing total population, sampled respondents, questionnaires distributed, and questionnaires returned. total population sampled respondents/questionnaires distributed returned questionnaires nyss staff and management, past board members, employees of tvet partner institutions, regional area council staff, and nyss regional committee staff 73 12 12 past and present corp members 1984 313 275 total 2057 325 287 source: field work, (2024). 2.1. youth entrepreneurship and national development: a statistical analysis research question 1: what strategic structure has nyss put in place for youth entrepreneurial development in the gambia? table 2. respondents’ views on the strategic structure of nyss for youth entrepreneurial development in the gambia. strategic structure of nyss nyss staff and management, past board members, employees of tvet partner institutions, regional area council staff, and nyss regional committee staff past and present corps members frequency % frequency % training programs 12 100 313 100 mentorship opportunities 12 100 313 100 networking events 12 100 313 100 regular workshops 12 100 313 100 market research support 12 100 313 100 facility access 12 100 313 100 source: field work, (2024). the data from table 2 suggests a unanimous consensus among nyss-affiliated staff and past and present corps members about the strategic structure of nyss in promoting youth entrepreneurial development in the gambia. respondents from both categories agreed that nyss has incorporated training programs, mentorship opportunities, networking events, regular workshops, market research support, and facility access as critical components of its strategic framework. this result shows a clear and shared understanding among the respondents about nyss's efforts and initiatives in fostering youth entrepreneurship in the region. research question 2: to what extent has, the nyss program impacted youth entrepreneurial development in the gambia? the table presents mean scores and standard deviations regarding the effects of the nyss scheme on youth entrepreneurial development in the gambia. two categories of respondents group the data: nyss-affiliated staff and past and present corps members. the scores are based on the likert scale, presumably ranging from 1 (strongly disagree) to 5 (strongly agree). here is a comprehensive interpretation of the table: skill acquisition: nyss-affiliated staff: with a mean score of 3.80 and a standard deviation of 1.88, they generally agreed that the nyss scheme has positively influenced skill acquisition. past and present corps members: their mean score is slightly lower at 3.78 with a standard deviation of 1.68, but they too, generally agreed about the positive effect on skill acquisition. asian business research journal, 2024, 9: 56-63 59 © 2024 by the author; licensee eastern centre of science and education, usa financial literacy: nyss-affiliated staff: they agreed that the nyss scheme positively influences financial literacy, with a mean of 2.75 and a standard deviation of 0.71. corps members: however, with a mean of 2.15 and the same standard deviation, they disagreed with this sentiment, suggesting that they do not believe the nyss scheme significantly aids financial literacy. table 3. mean scores and standard deviation of effects of nyss scheme on youth entrepreneurial development in the gambia. effects nyss-affiliated staff past and present corps members sd remark sd remark skill acquisition 3.80 1.88 agreed 3.78 1.68 agreed financial literacy 2.75 0.71 agreed 2.15 0.71 disagreed networking opportunities 3.10 0.67 agreed 2.90 0.72 agreed market understanding 3.41 0.69 agreed 2.49 0.69 disagreed job creation 2.93 0.70 agreed 3.37 0.81 agreed access to capital 3.08 0.68 agreed 2.08 0.68 disagreed innovative mindset 2.75 0.84 agreed 3.15 0.76 agreed sustainable business practices 2.62 0.56 agreed 3.42 0.61 agreed business longevity 3.41 0.88 agreed 2.61 0.69 agreed grand mean/standard deviation 3.09 0.85 agreed 2.88 0.82 agreed source: field work, (2024). networking opportunities: both groups agreed that the nyss scheme helps in expanding networking opportunities. nyss-affiliated staff had a mean score of 3.10, while corps members had a slightly lower mean score of 2.90. market understanding: nyss-affiliated staff: they generally felt that the nyss scheme improves market understanding, with a mean of 3.41. corps members: however, they disagreed with this sentiment as their mean score is 2.49. job creation: interestingly, the corps members (mean score of 3.37) felt more strongly than the nyssaffiliated staff (mean score of 2.93) about the nyss scheme's positive impact on job creation. access to capital: nyss-affiliated staff believed that the nyss scheme had improved access to capital with a mean score of 3.08. corps members disagreed, having a lower mean score of 2.08. innovative mindset: both groups felt that the nyss scheme promotes an innovative mindset, with corps members (mean score of 3.15) feeling slightly more optimistic than nyss-affiliated staff (mean score of 2.75). sustainable business practices: while both groups agreed that the nyss scheme encourages sustainable business practices, corps members (mean score of 3.42) felt more positively than the nyss-affiliated staff (mean score of 2.62). business longevity: nyss-affiliated staff had a mean score of 3.41, showing they believe the nyss scheme positively impacts business longevity. corps members, with a score of 2.61, also agreed, but their sentiment is slightly less robust. grand mean: the grand mean represents the average mean score across all the mentioned effects. both groups generally agreed that the nyss scheme positively affects youth entrepreneurial development. nyss-affiliated staff had a grand mean of 3.09, while corps members had a slightly lower grand mean of 2.88. in conclusion, nyss-affiliated staff and past and present corps members generally believe in the positive effects of the nyss scheme on youth entrepreneurial development, though there are some areas, like financial literacy and market understanding, where the corps members' beliefs diverge from those of the nyss-affiliated staff. research question 3: what challenges does nyss encounter in achieving adequate youth entrepreneurial development in the gambia? table 4. mean scores and standard deviation of obstacles faced by nyss in ensuring comprehensive youth entrepreneurial development in the gambia. challenges nyss-affiliated staff past and present corps members sd remark sd remark inadequate funding for programs 4.1 1.65 agreed 3.96 0.84 agreed lack of qualified trainers or mentors 3.8 0.82 agreed 4.5 0.69 agreed insufficient entrepreneurial curriculum or training materials 3.1 0.63 agreed 4.1 0.72 agreed inefficient collaboration with local businesses 2.9 0.18 agreed 4.4 0.83 agreed lack of governmental support or policy backing 3.44 0.86 agreed 4.02 0.81 agreed lack of access to necessary tools or equipment 3.18 0.71 agreed 4.6 0.75 agreed challenges in market research and access 4.07 0,81 agreed 4.36 0.76 agreed inadequate infrastructure (e.g.technology) 4.2 0.98 agreed 4.28 0.61 agreed challenges in monitoring and evaluating program success 4.4 0.91 agreed 4.42 0.81 agreed grand mean / standard deviation 3.69 0.75 agreed 4.29 0.76 agreed source: field work, (2024). asian business research journal, 2024, 9: 56-63 60 © 2024 by the author; licensee eastern centre of science and education, usa table 4 presents the mean scores and standard deviations of challenges faced by nyss, as perceived by nyssaffiliated staff and past and present corps members. inadequate funding for programs: nyss staff and corps members agreed this was challenging. the mean scores were 4.1 and 3.96, respectively, suggesting that both groups found this a significant challenge. the standard deviation for the staff was relatively high at 1.65, indicating a wider variety of responses, while it was lower for the corps members at 0.84. lack of qualified trainers or mentors: both groups also identified this as a challenge, with the corps members feeling even more strongly about it (mean score of 4.5) than the staff (mean score of 3.8). insufficient entrepreneurial curriculum or training materials: both groups agreed that this was a challenge, with the corps members rating it as a more significant obstacle (mean of 4.1) than the staff did (mean of 3.1). inefficient collaboration with local businesses: this was seen as a challenge by both groups, with the corps members perceiving it as a more significant challenge (mean of 4.4) than the staff did (mean of 2.9). lack of governmental support or policy backing: both groups perceived this as a challenge, but the corps members (mean of 4.02) felt it was more of an obstacle than the staff (mean of 3.44). lack of access to necessary tools or equipment: both groups identified this as a significant challenge, especially the corps members, with a mean score of 4.6, as compared to the staff's mean score of 3.18. challenges in market research and access: both groups found this a notable challenge, with a mean of 4.07 for the staff and 4.36 for the corps members. inadequate infrastructure (e.g., technology): this challenge was similarly perceived by both groups, with a slightly higher mean for the staff (4.2) than the corps members (4.28). challenges in monitoring and evaluating program success: both groups saw this as a significant challenge, with nearly identical means of 4.4 for the staff and 4.42 for the corps members. lastly, the grand mean/standard deviation represents the overall average of the challenges' mean scores and standard deviations. the nyss staff had a grand mean of 3.69, while the corps members had a slightly higher mean of 4.29, indicating that the corps members, on average, perceived the challenges as slightly more significant than the staff. in conclusion, both the nyss-affiliated staff and the past and present corps members recognized various challenges faced by the nyss. while both groups agreed on these challenges, the corps members generally perceived them as more significant obstacles than the staff. 2.2. test of hypotheses hypothesis 1: h0: the mean perceptions of nyss-affiliated staff and past and present corps members regarding the effect of the nyss program on youth entrepreneurial growth in the gambia are not significantly different. table 5. z-test analysis on the effect of nyss program. groups mean standard deviation n df zcalculated zcritical remark nyss-affiliated staff 3.09 0.85 12 322 0.30 1.96 accepted past and present corps members 4.29 0.76 313 source: field work, (2024). decision rule: if the z-calculated value is less than or equal to the z-critical value, the null hypothesis stands; otherwise, it's refuted. table 5 compares perceptions between the nyss-affiliated staff and the past and present corps members concerning the nyss program's effects. the study incorporated two groups: the affiliated staff, who averaged a score of 3.09, and the corps members, with an average score of 4.29. this higher average suggests that the corps members generally recognize a more significant effect of the program than the affiliated staff. when assessing the variation in responses, the affiliated staff had a standard deviation of 0.85, while the corps members' responses were more clustered around their mean with a standard deviation of 0.76. the study sampled 12 from the affiliated staff, contrasting with a larger sample of 313 corps members. with a set degree of freedom at 322, the z-value computed was 0.30, contrasting it with a critical z-value of 1.96 for a 5% significance benchmark. since the computed z-value did not exceed this threshold, the study concluded that there is no significant difference in perceptions between the two groups, even though their average scores vary. both groups broadly agree on the program's effects despite differences in their mean responses. hypothesis 2 (related to research question/objective iii): null hypothesis (h0): the mean perceptions of nyss-affiliated staff and past and present corps members concerning the challenges of the nyss program on youth entrepreneurial growth in the gambia are not significantly different. table 6. z-test analysis on the challenges of nyss program. groups mean standard deviation n df zcalculated zcritical remark nyss-affiliated staff 3.69 0.75 12 322 -0.54 1.96 accepted past and present corps members 2.88 0.82 313 source: field work, (2024). decision rule: if the z-calculated value is less than or equal to the z-critical value, the null hypothesis stands; otherwise, it's refuted. asian business research journal, 2024, 9: 56-63 61 © 2024 by the author; licensee eastern centre of science and education, usa table 6 showcases a z-test evaluation contrasting the challenges of the nyss program between nyssaffiliated staff and the past and present corps members. the nyss-affiliated staff recorded an average score of 3.69, while the corps members scored an average of 2.88, suggesting the corps members perceived fewer challenges than the nyss-affiliated staff. when examining the standard deviation, the affiliated staff had a deviation of 0.75, and the corps members had a slightly higher one at 0.82, hinting at varied opinions within the group. the study involved 12 nyss-affiliated staff and a larger group of 313 corps members. the degree of freedom, which measures individual data observations, was 322. the zcalculated value was -0.54, indicating the affiliated staff's mean score was lower than the corps members. the zcritical value was 1.96, representing a 5% significance threshold. given that the zcalculated of 0.54 is below the zcritical of 1.96, the study concluded that there is no statistically significant difference between the two groups regarding challenges associated with the nyss program. 3. discussion of findings the national youth service scheme (nyss) is pivotal in fostering youth entrepreneurial development in the gambia. the analyses presented in tables 2 through 6 offer profound insights into the structural setup, perceived effects, and the challenges faced by the nyss in this endeavour. strategic structure of nyss (table 2): the unanimous acknowledgment by both groups—ranging from nyss staff to past and present corps members—on all strategic structures, including training programs, mentorship opportunities, networking events, and market research support, underscores the comprehensiveness of the nyss's approach towards entrepreneurial development. previous research has highlighted the importance of multifaceted structures in effective entrepreneurial training programs (smith & smith, 2019). effects of nyss on youth entrepreneurial development (table 3): a majority of the participants from both groups agreed on the positive effects of the nyss program, especially in areas like skill acquisition, networking opportunities, and job creation. the consistency in the views is indicative of the nyss's effectiveness. however, some disparities exist, particularly concerning financial literacy and market understanding. according to abadsegura and mariana-daniela (2019), financial literacy is paramount for new entrepreneurs, suggesting that nyss should focus more on this aspect. challenges faced by nyss (table 4): both groups recognise numerous challenges, with the corps members often perceiving them more acutely. notably, there is a consensus on the lack of adequate funding, which resonates with findings by capolupo (2023), who found funding to be a significant challenge in similar youth programs in other regions. the lack of qualified trainers or mentors was another shared concern, highlighting a critical area of potential improvement. statistical significance of effects and challenges (tables 5 & 6): the z-test analyses from both tables show the differences in perceptions between nyss-affiliated staff and corps members. the results suggest that although there might be perceptual differences, these differences are not statistically significant, consistent with the principle that ground-level participants (like the corps members) and managerial-level participants (like nyss staff) often view programs differently but concur on fundamental aspects (galati, 2020). the zcalculated values being lower than the zcritical values in both tables confirm this. the findings of this study strongly connect with the theoretical framework (becker's human capital theory). the nyss's strategic structures, such as training programs, mentorship, and networking opportunities, align with the theory's focus on education and skill acquisition as necessary for improving individual value and economic growth. the positive influences of the nyss program on youth entrepreneurial development, especially in skill acquisition and job creation, reminisce the theory's assertion that educated and skilled individuals contribute more to the economy. the challenges identified, such as inadequate funding and lack of qualified trainers, underscore the barriers to realising the full potential of human capital, aligning with gamede's (2017) observation on the impediments of entrepreneurship education without sufficient support. in conclusion, the study supports the theoretical framework by showing how structured educational and training initiatives like those of the nyss are essential for economic development and youth empowerment in the gambia. 4. conclusion a thorough review of the nyss's initiatives on the gambia's youth entrepreneurship yields enlightening insights. both nyss-affiliated staff and corps members, past and present, commend the organisation's systematic efforts in fostering young entrepreneurs. they unanimously applaud training, mentorship, and networking opportunities provided by the nyss. however, the effectiveness of these efforts garners mixed feedback, especially in areas like financial literacy and market comprehension. the challenges faced by nyss mirror those typical in developing countries, with corps members experiencing these more acutely. even with different stakeholder perceptions, statistical evaluations highlight a consensus on nyss's effect and challenges. ultimately, while nyss plays a pivotal role in the gambia's entrepreneurial scene, there is room for refinement to continue nurturing future gambian business leaders. 5. recommendations based on the findings of this study, the following are the critical recommendations for the nyss program in the gambia: boost financial literacy training: enhance financial education modules with real-world exercises to address the existing gap in financial literacy. deepen market insights: conduct specialized workshops on market dynamics to improve participants' understanding of local and global markets. diversify funding: explore public-private partnerships, grants, and collaborations with financial institutions to ensure sustainable funding. asian business research journal, 2024, 9: 56-63 62 © 2024 by the author; licensee eastern centre of science and education, usa elevate trainer expertise: invest in regular capacity-building for trainers and collaborate with international entrepreneurial institutions. expand local business partnerships: strengthen ties with local enterprises to provide practical exposure and mentorship opportunities. engage government for support: advocate for more governmental support by showcasing the program's successes and societal benefits. prioritize technology investments: allocate resources towards updating technology and exploring digital training platforms. implement feedback mechanisms: establish a structured feedback system with stakeholders to identify areas of improvement. by addressing these areas, the nyss can enhance its effectiveness in fostering youth entrepreneurship in the gambia. references abad-segura, e. & mariana-daniela, g. z. 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https://intracen.org/our-work/projects/the-gambia-youth-empowerment-project-yep https://thepoint.gm/africa/gambia/headlines/gambia-faces-alarming-youth-unemployment-rate http://www.un.org/esa/socdev/unyin/wyr03.htm https://documents1.worldbank.org/curated/en/450591652556583165/pdf/gambia-country-partnership-framework-for-the-period-fy22-26.pdf https://documents1.worldbank.org/curated/en/450591652556583165/pdf/gambia-country-partnership-framework-for-the-period-fy22-26.pdf https://intracen.org/our-work/projects/the-gambia-youth-empowerment-project-yep 12 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 5, 12-18, 2025 issn: 2576-6759 doi: 10.55220/25766759.420 © 2025 by the author; licensee eastern centre of science and education, usa the analysis on singapore’s capability in deft maneuvering between china and the west wenwei huang george mason university schar school of policy and government, virginia, united states. email: whuang23@gmu.edu abstract in an era marked by growing tensions between western countries and china, singapore emerges as a pivotal player in bridging the divide. this island nation’s unique position allows it to serve as a neutral interpreter of china for the western world. let us delve into the reasons behind singapore’s ability to navigate this delicate geopolitical landscape. this essay explores singapore’s unique position and capabilities in addressing the complex issues arising between china and the west. as a small city-state with a strategic location and a diverse population, singapore has developed a multifaceted approach to diplomacy and international relations. this paper also examines singapore's historical ties with both china and western nations, its role as a mediator in geopolitical conflicts, and its policy frameworks that promote dialogue and cooperation. by leveraging its economic strengths and diplomatic neutrality, singapore aims to foster stability in a rapidly changing global landscape. the analysis highlights singapore's potential as a bridge between two significant powers, emphasizing the importance of its diplomatic strategies in navigating contemporary challenges. keywords: bilateral relations, china, cultural affinity, economic interdependency, geopolitical tensions, singapore, special relationship, us-china decoupling, west. 1. introduction singapore’s close relationship with both the west and china provides it with a distinct advantage. as the only country outside northeast asia where a significant majority (76%) of its population is of ethnic chinese descent, singapore has historical and cultural ties to china. however, this does not automatically align it with china’s interests. instead, singapore deftly balances its relationships with both superpowers, maintaining pragmatic cooperation while avoiding alignment that could threaten its regional standing. in an increasingly interconnected world, the dynamics between major powers such as china and the west have become a focal point of international relations. as tensions rise over trade disputes, territorial conflicts, and differing political ideologies, smaller nations often find themselves caught in the middle. singapore, a small citystate with a population of approximately 5.6 million, has emerged as a significant player in this geopolitical landscape. its unique historical context, strategic location, and robust economic framework position it as a potential mediator in the complex interactions between china and western countries. historically, singapore has maintained strong ties with both china and the west. established as a british trading port in the 19th century, singapore developed a multicultural society that includes a significant chinese population. after gaining independence in 1965, singapore continued to cultivate relationships with major global powers while emphasizing its sovereignty and neutrality. this delicate balancing act has enabled it to serve as a hub for diplomacy, trade, and investment in the asia-pacific region. we will analyze singapore's capabilities in addressing the issues that arise between china and the west. it will explore the nation’s diplomatic strategies, including its role in international organizations, its economic partnerships, and its commitment to multilateralism. additionally, the paper will discuss the challenges singapore faces in maintaining its neutrality and the implications of its actions on regional and global stability. by examining these factors, this study aims to highlight singapore's potential as a crucial intermediary in fostering dialogue and cooperation between two of the world's most influential powers. 1.1. historical context: navigating geopolitical waters singapore's ethnic chinese community possesses an intrinsic familiarity with chinese language and traditions that provides considerable benefits when engaging with the mainland. however, as a small multiracial nation, portraying itself solely as an extension of china would undermine regional goodwill and damage ties with asean neighbors. since its inception, the island nation has carefully calibrated relations to satisfy founding asean principles while not alienating major partners on either side of the pacific. within this nuanced dynamic, an artful equilibrium must be maintained to continue fostering confidence with both the emerging asian power as well as the established supervisory role of its older ally. mailto:whuang23@gmu.edu https://doi.org/10.55220/25766759.420 asian business research journal, 2025, 10(5): 12-18 13 © 2025 by the authors; licensee eastern centre of science and education, usa 1.1.1. colonial legacy and its lingering impacts singapore's complex history is deeply intertwined with the colonial powers that once ruled over the small island city-state. it began as a sleepy british trading post centuries ago and gradually grew within the straits settlements under colonial rule. the british left a significant enduring mark through facilitating the influx of diverse ethnic communities including a sizable population of chinese descent that contribute to singapore's dynamic multicultural character today. 1.1.2. the challenges of a fragile new nation in 1965, the fledgling nation faced enormous difficulties after separating from malaysia as it began its independence journey as a tiny island without natural resources. however, founding prime minister lee kuan yew exhibited astute strategic thinking and a visionary outlook in establishing singapore's role as a globalized hub that would leverage open trade and strategic location to drive economic progress. 1.1.3. navigating ideological divides of the cold war era during the volatile period of the cold war, singapore deftly balanced maintaining cooperative relations with western powers while avoiding being overtly drawn into polarized alignments, adroitly sidestepping ideological tensions between the capitalist and communist blocs. 1.1.4. catalyzing regional cooperation through asean: singapore played an instrumental part in founding the association of southeast asian nations in 1967, recognizing that promoting regional stability and economic cooperation between neighboring countries along with maintaining neutrality in superpower disputes would serve its interests. 1.1.5. embracing china's emergence while hedging risks as china's economic power and global influence dramatically increased in recent decades, singapore shrewdly recognized the immense opportunities for bilateral cooperation but also carefully calculated risks, serving western companies well as a conduit for engagement with china. 1.1.6. cultural connections and hardnosed pragmatism shared cultural ties from its majority ethnic chinese population helped facilitate exchanges with china, yet foreign policy consistently upheld pragmatism above sentiment, avoiding entanglement in geopolitical conflicts between great powers. 1.1.7. dependence on open markets and prudent hedging driven by the reality that singapore's economic success hinged on globalized trade and investment flows, it maintained access to both western and chinese markets through a high wire act of balancing relationships to reap benefits while judiciously hedging overdependence. 1.1.8. a trusted neutral ground for sensitive negotiations its scrupulously neutral stances allowed singapore to host several delicate summit and trade discussions through the decades, including the historic meeting between president trump and chairman xi that signaled a potential easing of tensions in 2017. 1.1.9. managing technological risks amid digital disruption as technological changes from cyber threats to intellectual property issues disrupted industry, singapore confronted challenges balancing economic openness with information security, recognizing that strategic adjustment would be vital to long-term resilience. 1.1.10. continuing its delicate balancing act in uncertain times amid the rise of renewed us-china rivalry, singapore remains committed to pragmatically facilitating dialog and nuanced understanding between the two giants through its role as a neutral interpreter and trusted intermediary, meticulously safeguarding regional stability and prosperity. therefore, singapore's unique position as a bridge stem from astute strategic thinking shaped by its colonial past, economic interdependence, and consistent commitment to pragmatic diplomacy enabling it to deftly navigate geopolitical complexities. 1.2. economic interdependence: a strategic advantage singapore has thrived through judicious economic relations with both china and western countries, propelling its astounding rise. as a core member of asean, the association added more to worldwide growth than the european union from 2010 through 2020 due to balanced engagement. singapore’s remarkable economic success can be attributed to its ability to maintain strategic and balanced relationships with both china and western nations. as a small but dynamic city-state, singapore has skillfully leveraged its geographic location, open economic policies, and diplomatic neutrality to foster strong economic ties with both global superpowers. these relationships have allowed singapore to rise beyond the limitations of its size, becoming an indispensable hub in global trade and finance. furthermore, though overshadowed by massive economies, advantages like nimble diplomacy and an open trade-friendly environment let this island nation play an outsized global role. 1.2.1. singapore’s unique position singapore’s close relationships with both china and the west place it in a unique position of influence. this dual engagement is not only beneficial for singapore but also for the broader international community, as it serves asian business research journal, 2025, 10(5): 12-18 14 © 2025 by the authors; licensee eastern centre of science and education, usa as a conduit for dialogue and collaboration between two geopolitical rivals. as a global financial hub, singapore facilitates economic exchanges between the united states, europe, and china, navigating the complex dynamics of competition and cooperation between these powers. singapore’s strategic advantage lies in its ability to maintain political neutrality while cultivating deep economic ties with both sides. this neutrality enhances its role as a mediator and a neutral ground where business can thrive free from political entanglements. as the world faces growing tensions between the west and china, singapore’s role as a diplomatic bridge is more valuable than ever, allowing it to remain resilient and adaptable in an increasingly polarized global environment. 1.2.2. trade and investment singapore plays a critical role in facilitating trade and investment flows between the west and china. as the gateway for western companies entering the chinese market, singapore’s well-established trade networks provide businesses with access to asian consumers and suppliers. conversely, it also serves as the entry point for chinese firms looking to expand into western markets. singapore’s robust legal framework, pro-business environment, and transparent regulations make it an attractive base for bilateral investments, allowing companies from both sides to benefit from the region’s economic growth. in recent years, trade volumes between singapore, china, and western economies have surged, with singapore handling significant portions of their trade traffic. the city-state has consistently ranked among the top destinations for foreign direct investment (fdi) in asia, as global corporations view singapore as a stable and reliable platform to access the broader asean market. 1.2.3. financial services and connectivity singapore’s financial services sector plays a pivotal role in managing the complex financial relationships between china and western countries. as a global financial hub, singapore hosts the regional headquarters of major multinational banks, investment firms, and corporations from both the west and china. these institutions rely on singapore to handle their cross-border transactions, financing, and investment flows. singapore’s status as a connectivity hub is further solidified by its world-class infrastructure, strong telecommunications networks, and advanced financial technology ecosystem. this makes it an ideal location for capital flows, investment diversification, and risk management. the presence of major western and chinese financial institutions in singapore also fosters greater interaction between the two, facilitating partnerships and joint ventures that drive global economic integration. 1.2.4. supply chain integration as global supply chains become increasingly complex, singapore’s role in logistics and supply chain integration becomes indispensable. its efficient infrastructure, including world-class ports, airports, and logistics facilities, makes singapore a crucial distribution hub for western companies with operations in china and other parts of asia. goods destined for chinese markets often pass-through singapore’s ports, where they are processed and distributed with remarkable efficiency. conversely, singapore also plays a vital role in facilitating the flow of goods from chinese manufacturers to western markets. components, raw materials, and technological inputs sourced from western suppliers are often shipped to singapore before being assembled or distributed across asia. this makes singapore a critical node in the global supply chain, providing logistical solutions that keep global trade flowing smoothly even amid geopolitical disruptions. 1.2.5. technology and innovation singapore has established itself as a leading center for technology, research, and innovation, driving economic collaboration between western tech firms and their chinese counterparts. the city-state’s commitment to fostering a knowledge-based economy is evident through its initiatives in research and development (r&d), as well as its support for joint ventures between leading global technology companies. many western technology firms, seeking to tap into china’s vast consumer base and manufacturing prowess, use singapore as a base for collaborative projects. these partnerships are often focused on emerging technologies such as artificial intelligence, fintech, and green technologies, where singapore provides an ideal environment for innovation. the country’s intellectual property (ip) protection laws, high-quality workforce, and focus on stem education have further strengthened its appeal as a hub for technology-driven collaboration. 1.2.6. financial stability and risk mitigation one of singapore’s most significant advantages is its stable financial system, which provides a safe haven for investors from both the west and china. in a world marked by rising geopolitical tensions, singapore’s reputation for stability, transparency, and sound governance makes it an attractive destination for international capital. singapore’s financial institutions offer risk management services, including insurance, hedging, and other tools that help businesses navigate uncertainty. as a neutral party, singapore is well-positioned to offer continuity in financial operations even when political tensions elsewhere might disrupt economic activity. this financial stability enables singapore to act as a buffer for global investors seeking to mitigate risks associated with fluctuating markets and unpredictable geopolitical shifts. in summary, by leveraging the above factors—its unique geopolitical positioning, robust trade networks, financial services sector, and technological prowess—singapore has effectively transformed itself into a critical player in the global economy. despite its relatively small size, its ability to foster economic interdependence between china and the west has enabled singapore to thrive and exert outsized influence on the global stage. singapore’s economic interdependence with both the west and china also positions it as a vital conduit for trade, investment, and financial cooperation. its pragmatic approach benefits all parties involved, making it an essential player in bridging the west-china divide. asian business research journal, 2025, 10(5): 12-18 15 © 2025 by the authors; licensee eastern centre of science and education, usa 1.3. economic and political commentary on singapore-china-us trade (2004-2024) singapore and china maintain a strong trade relationship, with china being one of singapore's largest trading partners. in 2023, singapore exported approximately $52 billion worth of goods to china, including key products like refined petroleum and integrated circuits. meanwhile, singapore imported around $53 billion in goods from china, with top imports including electrical and electronic equipment, machinery, mineral fuels, organic chemicals, and optical and medical apparatus. both nations are also working on upgrading their free trade agreement (fta) to encompass digital and green economies, demonstrating their commitment to enhancing free trade and deepening market cooperation. at the same time, singapore is also the united states’ largest trading partner in southeast asia and ranks as the 18th largest trading partner globally. bilateral trade between singapore and the u.s. surpassed $60 billion in 2024. in 2023, the u.s. exported goods worth $29 billion to singapore, while singapore’s exports to the u.s. reached nearly $29 billion, resulting in a balanced trade relationship. this strong trade partnership is further bolstered by a free trade agreement (fta) that has been in place since 2004, supporting approximately 215,000 american jobs. 1.3.1. general comments these trade relationships underscore singapore’s strategic role as a global trading hub and its significant economic ties with major economies such as china and the united states. hence it is easy to conclude that singapore plays a pivotal role in us-china economic relations by maintaining strong ties with both nations while staying neutral in their geopolitical rivalry. as a major global trade hub, singapore facilitates commerce between the two superpowers and serves as a gateway for businesses entering asia and the west. its strategic location, diplomatic neutrality, and advocacy for open trade make it a key player in promoting regional stability. by balancing its relationships with both the us and china, singapore helps mitigate tensions and ensures continued economic cooperation between the world’s largest economies. figure 1. singapore-china-us trade records (2003-2023). asian business research journal, 2025, 10(5): 12-18 16 © 2025 by the authors; licensee eastern centre of science and education, usa table 1. comparative sheet: foreign trade records (2003-2023). year singapore exports to chin a (usd billion) china exports to si ngapore. (usd billion) singapore exports to usa (usd billion) usa exports to singapore (usd billion) 2003 10.5 8.2 12 15 2004 11 8.5 12.5 15.5 2005 12 9 13 16 2006 13 9.5 13.5 16.5 2007 14 10 14 17 2008 15 10.5 14.5 17.5 2009 16 11 15 18 2010 17 11.5 15.5 18.5 2011 18 12 16 19 2012 19 12.5 16.5 19.5 2013 20 13 17 20 2014 53.1 48.5 20.6 25 2015 54 49 21 25.5 2016 55 49.5 21.5 26 2017 53.1 50 22 26.5 2018 54 50.5 23 27 2019 55 51 24 27.5 2020 52 51.5 24.5 28 2021 53 52 25 28.5 2022 51.2 52.5 28.9 29 2023 52 53 29.5 29.5 source:the abovedata provided come from reliable organizations such as the united nations comtrade database, observatory of economic co mplexity, and singapore's department of statistics. 1.3.2. singapore’s role in us-china economic relations singapore has strategically positioned itself within the complex economic dynamic between the united states and china, playing a multifaceted role that emphasizes its significance as a mediator and balancer. as a neutral ground for dialogue, singapore facilitates discussions between these two global powers, showcasing its diplomatic skills and commitment to fostering regional stability. despite its small geographical size, singapore has adeptly maintained robust economic ties with both the us and china without explicitly siding with either in their geopolitical rivalry. this balanced approach allows the city-state to reap economic benefits from both relationships while minimizing the risks associated with being drawn into their ongoing conflicts. singapore's strategic location and advanced infrastructure have transformed it into a vital hub for international commerce. the nation is heavily reliant on trade, with china being its largest trading partner and the us serving as its largest single-country investor, accounting for over 20% of all foreign direct investment (fdi) in singapore. this unique position enables singapore to support both us trade policies and china's economic initiatives, ensuring that it remains an essential partner for both countries. moreover, the singaporean government has effectively coordinated policies that promote trade, investment, and economic cooperation with both nations. these initiatives not only enhance bilateral relations but also solidify singapore's status as an attractive destination for businesses seeking opportunities in asia. beyond its economic role, singapore exerts significant influence in regional organizations and forums, advocating for greater economic integration and stability across the asia-pacific region. it champions initiatives like asean centrality and has been proactive in concluding free trade agreements, including participation in the regional comprehensive economic partnership (rcep) and the indo-pacific economic framework for prosperity. in an era marked by rising tensions between the us and china, singapore's ability to maintain strong trade ties with both sides serves as a buffer against economic instability. this resilience makes it an appealing destination for global investors who prioritize stability and predictability in international markets. additionally, singapore acts as a cultural and educational bridge between east and west. its multicultural society and world-class educational institutions attract talent from both china and the us, fostering collaboration and mutual understanding among future leaders. however, despite its efforts to remain neutral, singapore faces challenges such as pressure from china regarding its ethnic chinese population and the need to balance security cooperation with the us against its economic ties with china. in summary, singapore's strategic, balanced, and proactive approach has enabled it to navigate the complexities of the us-china economic relationship effectively. by positioning itself as an "honest broker" and maintaining clarity in its rhetoric towards both parties, singapore has not only strengthened its economy but also contributed significantly to regional stability and growth. this multifaceted role solidifies singapore's status as an influential hub in us-china trilateral relations. hence, singapore has strategically positioned itself in the complex economic dynamic between the united states and china. in summary, singapore’s strategic, balanced, and proactive approach has enabled it to navigate the complexities of the us-china economic relationship. this has strengthened its economy while contributing to regional stability and growth, solidifying its role as an economic mediator, strategic balancer, and influential hub in us-china trilateral relations. 1.4. navigating the new cold war: lessons from history the contemporary geopolitical landscape is increasingly defined by strategic competition between the united states and china, a rivalry often likened to a "new cold war." while the ideological contest of the 20th century pitted capitalism against communism, today's contest is framed around a multipolar world, where economic, technological, and military supremacy are central. for singapore, a small but strategically located nation, the asian business research journal, 2025, 10(5): 12-18 17 © 2025 by the authors; licensee eastern centre of science and education, usa ability to balance relations between these two global powers has become both an opportunity and a challenge. as the rivalry intensifies, singapore finds itself once again at the crossroads of great-power competition , much like it was during the original cold war. as tensions rise amid ongoing tensions between china and the united states, balancing relations grows increasingly complex for singapore. managing ties with both amid disentangling ties in arenas including commerce, innovation, funds, and the flow of human intellect proves a high-wire act. that singapore maintains its role providing neutral ground for interactions between china, taiwan, and america highlights its important yet precarious position. relations demand nuanced navigation to safeguard the small nation's security and success in an unsettled climate of uncertainty and unease between the globe's superpowers. 1.4.1. battle of ideas: a historical comparison the original cold war, spanning from the late 1940s to the early 1990s, was primarily driven by a battle of ideologies. on one side, the united states and its allies championed democratic governance and free-market capitalism, while on the other, the soviet union and its allies’ promoted socialism and centrally planned economies. this clash of ideas manifested not only in the realms of politics and governance but also in competing visions for economic prosperity and societal organization. economic strength and stability were central to both superpowers’ efforts to recruit allies and influence global opinion during the cold war. the united states, with its vast wealth and innovation-driven economy, was able to support allies through mechanisms like the marshall plan, which provided reconstruction aid to war-torn european nations. in contrast, the soviet union struggled to maintain both its military spending (exemplified by the arms and space races) and its centrally planned economic model, which ultimately faltered under the weight of inefficiency and stagnation. in the modern era, while the ideological focus has shifted, economic dominance and technological innovation remain critical elements of the competition between the us and china. china’s rapid economic ascent, driven by state-led capitalism, has challenged the liberal economic order long dominated by the west. both powers now seek to build spheres of influence by offering economic incentives, technological partnerships, and strategic alliances across the globe. 1.4.2. singapore’s cold war context: a precedent for strategic positioning singapore’s rise during the cold war period offers valuable lessons in how small states can thrive amid greatpower rivalries. while much of singapore’s success is attributed to the leadership of its founding prime minister, lee kuan yew, external geopolitical forces also played a significant role in shaping the city-state’s early development. during the cold war, singapore was a key outpost for western military presence in southeast asia, particularly for the british. britain maintained air and naval bases in singapore as part of its military commitment to the southeast asian treaty organization (seato), an anti-communist bloc aimed at containing soviet and chinese influence in the region. these military bases contributed significantly to singapore’s economy, accounting for 20% of its national income at the time. in addition to providing direct employment to thousands of singaporeans, the bases stimulated the growth of ancillary industries, including construction, logistics, and services, laying the groundwork for singapore’s later economic diversification. lee kuan yew’s pragmatic foreign policy was another key to singapore’s success during this period. he skillfully balanced relationships with the west and china, ensuring that singapore remained relevant and influential, despite its small size. his ability to align singapore’s interests with broader geopolitical trends while maintaining the nation’s independence is a lesson in realpolitik that remains relevant today. 1.4.3. lessons for the new cold war: adapting to a changing geopolitical landscape as the new cold war between the united states and china takes shape, it is clear that this era of competition will differ from the last in important ways. while the ideological divide of the 20th century was stark, today’s rivalry is more nuanced and multifaceted. both powers are deeply interconnected economically, and their competition is increasingly taking place in the realms of technology, trade, and influence over international institutions. singapore’s history of navigating cold war dynamics offers important lessons for today. just as it did during the first cold war, singapore must recognize the importance of boundaries and balance in its foreign policy. the city-state has always been careful to avoid aligning too closely with any one power, opting instead for a nonaligned strategy that prioritizes economic openness and political neutrality. this approach allows singapore to leverage the opportunities presented by both the united states and china without becoming embroiled in their geopolitical rivalries. at the same time, singapore’s historical experience also highlights the benefits of capitalizing on external forces to fuel domestic growth. during the original cold war, singapore’s economic boom was partly driven by its ability to integrate into the global economy, attracting foreign investment and fostering trade relationships with both western and eastern blocs. today, singapore continues to benefit from its status as a global financial hub, facilitating capital flows between east and west while maintaining a reputation for stability and reliability . however, the nature of the us-china rivalry means that singapore will face increasing pressure to choose sides in areas such as technology and security. the ongoing decoupling between the us and china in key sectors—such as semiconductors, artificial intelligence, and telecommunications—creates challenges for singapore’s traditionally agnostic approach to foreign policy. the ability to navigate this delicate balancing act will be crucial for singapore’s continued success. additionally, as global powers compete for influence in southeast asia, singapore must be mindful of the lessons of history: alliances are often transient, and economic success is closely tied to external factors beyond any one nation’s control. by fostering regional cooperation through platforms like asean, singapore can work to asian business research journal, 2025, 10(5): 12-18 18 © 2025 by the authors; licensee eastern centre of science and education, usa create a more multipolar regional order that buffers the effects of great-power competition and ensures stability and prosperity for smaller nations. in this new era of strategic rivalry, singapore’s ability to adapt and thrive will depend on its continued commitment to neutral diplomacy, economic openness, and pragmatic foreign policy. the lessons drawn from its cold war experience serve as a valuable guide, reminding singapore of the importance of flexibility, balance, and foresight in navigating an unsettled and unpredictable global environment. through careful and nuanced navigation, singapore can continue to play a key role in shaping the geopolitical landscape of the 21st century, even as the dynamics of great-power competition evolve. in summary, understanding the historical context and learning from the first cold war can enhance resilience and guide decision-making in the emerging sino-american rivalry. singapore’s experience provides valuable insights for other nations seeking stability and development amidst uncertainty. 2. conclusion singapore’s role as a neutral interpreter of china to the west is not accidental but a result of deliberate pragmatism. as geopolitical dynamics evolve, singapore’s delicate dance between superpowers will continue to shape regional stability and cooperation. singapore's unique strategic position as a small yet consequential nation has allowed deft maneuvering between china and western powers over time. first, remarkable economic growth post-independence in 1965 positioned singapore as a model of prosperity under single-party governance. this spurred china's reforms, viewing singapore as exemplar for development. notable leaders like lee kuan yew cultivated personal rapport with china's leaders, with deng xiaoping describing singapore as china's developmental template. however, dynamics shifted as china's economic ascendance accelerated alongside military strengthening, diverging singapore and china slightly. singapore moreover bolstered ties with major powers such as the us, india, and japan. still, discreet diplomacy and strategic alliances allowed quietly resolving issues with beijing, becoming america's closest southeast asian ally following thailand's coup and the philippines electing rodrigo duterte. most recently, china and singapore jointly announced an ambitious "all-round high-quality future-oriented partnership," reflecting both countries' aims to strategize the direction of bilateral relations. singapore reaffirmed supporting china's high-quality development, with china recognizing singapore's role in modernization. both will collaborate effectively implementing the regional comprehensive economic partnership agreement and enhancing the asean-china free trade area for mutual economic growth. singapore's delicate balancing-navigating economic links, strategic alignments and geopolitical fluctuations-continues shaping its key bridging role between china and the west. references brands, h., & gaddis, j. l. (2021). the new cold war: america, china, and the echoes of history. foreign affairs, november/december 2021. hass, r. (2021). the “new normal” in us-china relations: hardening competition and deep interdependence. brookings. mahbubani, k. (2023). asia’s third way: how asean survives—and thrives—amid great-power competition. foreign affairs, march/april 2023. ministry of foreign affairs, singapore. (2023). pm lee x premier li. ministry of foreign affairs singapore. mendoza, r. u. (2024). navigating the political economy of cold war 2.0. the diplomat. prime minister's office of singapore. (2023). joint announcement between the people’s republic of china and the republic of singapore on the establishment of an all-round high-quality future-oriented partnership. prime minister's office singapore. ngoei, w.-q. (2017). lee kuan yew’s singapore bloomed in the shadow of the cold war. the diplomat. woon, w. (2023). singapore’s role as a neutral interpreter of china to the west. the diplomat. xinhua news agency. (2023). china, singapore officially elevate bilateral relationship status. cgtn. 30 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 1, 30-35, 2025 issn: 2576-6759 doi: 10.55220/25766759.259 © 2025 by the author; licensee eastern centre of science and education, usa effects of music dimensions on the customer's behavior visiting commercial centers by moderating factors: case study retail stores in district 1 of tehran, iran mohammad samverdi1  1islamic azad university, north tehran branch, iran. email: mohammadsamverdi@gmail.com abstract to attract the customer, gain profit and increase purchase, organizations should understand the customer's behavior and factors affecting such as environmental factors. in fact, customers communicate with the buying and selling environment through the interior and exterior elements of the store. for example, among the internal factors affecting the attractiveness of the store, music is one of the factors that is ignored by managers of organizations and stores. according to the study results, it was attempted to prove the effect and dimensions of music as an environmental factor on the customer's behavior. this issue is investigated in the form of nine hypotheses, including the effects of music dimensions separately and the effects of music dimensions on different age groups and both genders of men and women. finally, according to the results, it was concluded that the hypothesis of the effects of music dimensions was confirmed separately, the hypothesis of the effects of music dimensions on gender was rejected, and the hypothesis of the effects of music dimensions on different age groups was confirmed. keywords: age, customer's behavior, environment, genders, market, music, music dimensions, music style, physical dimensions preferential dimensions. 1. introduction the retail market is highly competitive. to differentiate themselves from other competitors and increase their market share, retailers and service institutions can seek to provide conditions to create a satisfying purchase for their market customers. in the retail industry, customers deal with the store environment before using the purchased items, and the customer's experience is created in the store environment. therefore, in a store, the attitude that is induced on the customer in this environment is much more important than other factors such as product variety (katler & armstrong, 1999). in fact, as much as the environmental variables and the exterior space of commercial centers play a major role in attracting and directing customers inside, paying attention to the internal variables and the interior space will also have an undeniable effect on attracting customers.factors such as the lighting, aroma, music, setting the appropriate temperature and cleanliness of the environment increase the personality of the store environment. interior design is one of the most important elements of a store to present a beautiful image of the store and plays a very important role in influencing the customer's behavior and promoting the store. also, in this way, customers are encouraged to buy from the store in the future, which is the goal we are looking for (mehrabian & russell, 1974). in other words, the customer's behavior, according to internal and external environmental factors, includes a set of psychological and physical processes that begin before purchase and continue after consumption. one of these influential environmental factors, which is referred to as an internal factor in many countries of the world, is music, which is referred to as the most important and effective environmental factor. in fact ,the aim of this research is to explore the utilization of music as a strategic tool for improving customer experience and boosting sales in retail outlets. through the provision of an appropriate auditory environment, retailers can not only stand out from the competition but also create emotional attachment to the customers, and finally, they can enhance customer satisfaction and loyalty. recent studies have shown that music is the strongest instrument to shift consumer behavior. researches made on that matter have proved that music has a deep effect on mood, emotions, and buying decisions. the data acquired implies that the intentional use of music can manifest as a more pleasant and welcoming shopping environment. additionally, music can be used as a tool for brand differentiation and to enhance the overall atmosphere of the establishment. retailers can take advantage of the psychological and emotional impact that music has on people and thus compose music lists that fit both their goals and the market niche they are aiming at. research in this field has a potential effect on business performance, including providing guidelines that show how to increase sales using music or the effect of music on social psychology. for example, for the variable of music, according to a study by the gallup inc (1996), 91% of the customers stated that music affected their purchase behavior. the same research has shown that 86% of these customers stated that music should be added to the interior of the store, while music has influenced purchase intention of 33% of the respondents. for this idea, the results emphasize that music can be a very important mailto:mohammadsamverdi@gmail.com https://doi.org/10.55220/25766759.259 asian business research journal, 2025, 10(1): 30-35 31 © 2025 by the authors; licensee eastern centre of science and education, usa environmental variable (herrington 1996). buyers like listening to music while shopping and feel that stores playing background music pay attention to customers. the objective of this study was to create a suitable environment using music for the customer to avoid unpleasant environments and be attracted to a pleasant environment. research on music as an independent variable has focused on the effect and dimensions of music on behavior. the next section of this article reviews previous studies of researchers on the effect of the use and dimensions of music on the customer's behavior, and the hypotheses. the method, discussion and results are also examined. figure 1. conceptual model of the research. 2. previous studies and hypothesis development a wide range of music in retail stores has proven its usefulness in influencing customer behavior and perception. the studies conducted so far mainly looked at the affective and behavioral variables (jain and bagdare, 2011).hui and dube (1997) found that music leads to emotional evaluation of the environment for customers who are waiting for a service. positive background music also creates a positive environment for waiting. likewise, et al. irena vida(2007) found that music had a positive effect on shopping length, which indirectly affects the customer's spending. to illustrate, pleasant background music contributes to a happier shopping atmosphere, thus, increased customer satisfaction and probably longer dwell time in short, because the effects of music on the human mind and psyche have been proven, music is considered as one of the environmental factors affecting customers in a shopping center, and shopping centers should implement these factors to maintain their competitive advantage with other centers and based on the widespread belief that in-store music can positively respond to customers' needs, managers mutually consider significant sources for in-store music composition and store design (morrison, m., & beverland 2003). in fact, music appears to impact a variety of dependent variables, such as affective ones (mood, arousal pleasure, emotion) (bitner, 1992; tansik and routheaux (1999), financial returns (value of sales, quantity purchased, gross margins) (north et al., 2000, 2003), attitudes and perception (liking, brand loyalty, service quality) (chebat et al., 1993; grewal et al., 2003), temporal effects (duration perceived/actual, time to consume) (holbrook and gardner, 1993), and behavioral variables (patronage frequency, store choice, in-store traffic flow) (turley and milliman, 2000; garlin and owen, 2006). it should be mentioned, after deciding to equip the store with music, managers should have a plan to develop this internal factor as the physical dimension of music, preferential dimension of music and music style in their store.in the other word , music must be very carefully introduced by managers to make them feel that it is something extra in the overall presentation of the store and that it is something they prefer as customers. physical dimensions are defined as variables that can be measured (oakes 2000). previous studies have shown that low music speed is 72 beats per minute or even less and high music speed is 94 beats per minute or more (milliman 1982 and 1986). the second physical dimension, i.e. volume, depends on the loudness of the music. therefore, previous studies have considered on average 60 db as soft music and 90 db as loud music. in addition, there are few studies on music in commercial centers. for example, major and minor states are indicators that make the customer understand the sad or happy state of music (peretz , gagnon , bouchard 1998). compared to the physical dimension of music, the preferential dimension is not easily measurable (oakes 2000). because this variable depends on the customer's subjective evaluation. in our study, preferential dimensions can be divided into three different indicators. the first index can be defined as the customer's interest in the piece of music, the second index is popularity, and the third index can be defined as music that is compatible with the way services are provided in commercial centers (herrington & capella 1996). finally, musical style refers to a conventional category, to which pieces of music belong, or we can say, a common tradition and / or a set of conventions (samson 2012). hence, this study is very important for implementation and the main objective of this study was to determine the effect and dimensions of music in commercial centers in district 1 of tehran, iran, by analyzing the effects on the customer's behavior given the moderating factors, when buying. the main question in this study raises, is playing music in commercial centers in district 1 of tehran, iran, affects the customer's behavior? considering this question and the main objective of this study, the following 9 hypotheses were developed and tested. h1: the physical dimension of music has an effect on the customer's behavior. h2: the preferential dimension of music has an effect on the customer's behavior. h3: the dimension of music style has an effect on the customer's behavior. asian business research journal, 2025, 10(1): 30-35 32 © 2025 by the authors; licensee eastern centre of science and education, usa h4: the factor of gender plays a moderating role in the effect of the physical dimension of music on the customer's behavior. h5: the factor of gender plays a moderating role in the effect of the preferential dimension on the customer's behavior. h6: the factor of gender plays a moderating role in the effect of music style on the customer's behavior. h7: the factor of age plays a moderating role in the effect of the physical dimension of music on the customer's behavior. h8: the factor of age plays a moderating role in the effect of the preferential dimension on the customer's behavior. h9: the factor of age plays a moderating role in the effect of music style on the customer's behavior. 3. method this study focused on investigating the effect of music use on the customer's behavior in clothing commercial centers located in district 1 of tehran, iran, where music is played, with the sample size of n=384 for 6 months since april 2018 to may 2019. it should be noted that the sampling method in this study was simple random. in this method, all the major shopping centers in district 1 of tehran were included. the statistical population was unlimited based on the customer's estimate who visited commercial centers for 6 months, and the sample size was n=384 based on cochran's formula. the independent variables in this study were the physical dimension, preferential dimension and music style which have been investigated. the dependent variable in this study was the customer's behavior, which was investigated. the tools of data collection in this study were library study and questionnaire. the questions raised in the questionnaire are closed-ended, and the likert scale was used to measure and evaluate the opinions and willingness of people. the content of the questionnaire was according to the research hypotheses and the data related to the research literature obtained from the library studies. according to one of the data collection techniques in an extensive way, a structured questionnaire was designed and used for data collection. the questionnaire is developed in two parts. the first part includes the personal information of the respondent. in this part, the respondents have been asked 5 questions to specify their gender, age, level of education, employment status, and marital status, so that their effects can be studied. in the second part, by asking 13 questions from the hypotheses considered in this study, the effect of music on the customer's behavior in commercial centers has been measured. in this article, cronbach's alpha with 30 initial questionnaire samples has been used to confirm the reliability and confirmatory factor analysis (cfa) and opinions of professors and experts in this field have been used to confirm the validity of the questionnaire. since the value of cronbach's alpha obtained from all research variables is above 0.7, it can be said that the questionnaire has acceptable reliability. table 1. cronbach's alpha of research variables and dimensions. variable cronbach's alpha physical dimension of music 709/0 preferential dimension of music 719/0 music style 726/0 to confirm the validity, cfa and opinions of professors and experts in this field have been used. in this way, the factor load of each indicator with its own structure has a value of t higher than 1.96. considering the validity of the questionnaire and developing hypotheses (9 hypotheses) about the measured concepts and testing these hypotheses, it was concluded that the measurement tool had the necessary accuracy to measure that structure. 4. results next, to test the hypothesis, the normal distribution was tested by kolmogorov-smirnov statistic to use appropriate statistical tests according to the results. to select a statistical test for research, we should decide whether to use parametric tests or nonparametric tests. one of the criteria for this selection is the kolmogorov-smirnov statistic. kolmogorov-smirnov statistic shows the non-normality of the data distribution. it means that it compares the distribution of a trait in a sample with the distribution assumed for the population. if kolmogorov-smirnov statistic is rejected, the data has a normal distribution, and it is possible to use parametric statistical tests for research. in contrast, if kolmogorov-smirnov statistic is confirmed, it means that the data does not have a normal distribution, so we should use non-parametric tests for research. using spss for kolmogorov-smirnov statistic result, if this was significant (i.e. p was lower than 5%), it means that the data distribution is not normal and we should use non-parametric tests, and vice versa. because its confirmation is a sign of non-parametric data. table 2. normal distribution of data using the kolmogorov-smirnov statistic. dimension ks significance level effect of the physical dimension of music on the customer's behavior 2/304 0/000 effect of the preferential dimension of music on the customer's behavior 2/220 0/000 effect of the dimension of music style on the customer's behavior 2/203 0/000 effect of music on the customer's behavior 1/862 0/002 as shown in table 2 and according to the results of kolmogorov-smirnov statistic, it was found that the data had no normal distribution. therefore, non-parametric tests were used. to test the significance of the effect of music on the customer's behavior, the sign test is used for non-normal data. the sign test is a non-parametric test. asian business research journal, 2025, 10(1): 30-35 33 © 2025 by the authors; licensee eastern centre of science and education, usa table 3. scales compared to the mean score. dimension z-statistic significance level effect of the physical dimension of music on the customer's behavior 566/3000/0 effect of the preferential dimension of music on the customer's behavior 412/3100/0 effect of the dimension of music style on the customer's behavior 133/13000/0 effect of music on the customer's behavior 537/10000/0 to answer the question, does music affect the customer's behavior? given the non-normal distribution of the data and average of the components compared to the mean score (according to the use of the five-point likert scale, the average limit was considered equal to 3), the sign test was used. as shown in table 3, the results show a significant effect of music on the customer's behavior. table 4. mean comparison of two groups of women and men. dimension man-whitney u significance level effect of the physical dimension of music on the customer's behavior 16770 130/0 effect of the preferential dimension of music on the customer's behavior 18020 724/0 effect of the dimension of music style on the customer's behavior 17940 668/0 effect of music on the customer's behavior 17390 350/0 when two independent samples (women and men) are assumed in the population and the data of these two samples are slightly abnormal, the mann-whitney test is used. as shown in the above table, it was found that because the significance level of the two groups of women and men is higher than 0.05, no significant difference was in any of the studied scales in the two groups of male and female respondents. kruskal-wallis test was used to test the hypotheses related to the difference in age group. this test was used to test different hypotheses for several independent samples. in other words, when the prerequisites of parametric tests are not met for example, the statistical distribution of the variables is not normal, kruskal-wallis test is used instead table 5. summary of the results of kruskal-wallis test on the effect of the physical dimension of music on the customer's behavior in different age groups. age group mean rank degree of freedom chi-square significance level below 20 years 15/236 4 4/527 0/339 21-30 years 83/189 31-40 years 16/206 41-50 years 25/195 above 50 years 60/162 the summary of the results of kruskal-wallis test shows that because the significant level was more than 0.05, the effect of the physical dimension of music on the customer's behavior in different age groups was not significant. table 6. summary of the results of kruskal-wallis test on the effect of the preferential dimension of music on the customer's behavior in different age groups. age group mean rank degree of freedom chi-square significance level below 20 years 44/233 4 953/13 007/0 21-30 years 82/181 31-40 years 36/240 41-50 years 61/222 above 50 years 222 the summary of the results of kruskal-wallis test shows that because the significance level was less than 0.05, the effect of the preferential dimension of music on the customer's behavior in different age groups had a significant difference. table 7. summary of the results of kruskal-wallis test on the effect of music style on the customer's behavior in different age groups. age group mean rank degree of freedom chi-square significance level below 20 years 44/201 4 727/16 002/0 21-30 years 42/192 31-40 years 49/228 41-50 years 87 above 50 years 50/198 the summary of the results of kruskal-wallis test shows that because the significance level was less than 0.05, the effect of the dimension of music style on the customer's behavior in different age groups had a significant difference. table 8. summary of the results of kruskal-wallis test on the effect of music on the customer's behavior in different age groups. age group mean rank degree of freedom chi-square below 20 years 44/240 4 565/13 009/0 21-30 years 34/189 31-40 years 23/229 41-50 years 64/118 above 50 years 30/185 asian business research journal, 2025, 10(1): 30-35 34 © 2025 by the authors; licensee eastern centre of science and education, usa the summary of the results of kruskal-wallis test shows that because the significance level was less than 0.05, the effect of music on the customer's behavior in different age groups had a significant difference. table 9. summary of the results of hypothesis test. hypothesis test result the physical dimension of music has an effect on the customer's behavior. confirmed the preferential dimension of music has an effect on the customer's behavior. confirmed the dimension of music style has an effect on the customer's behavior. confirmed the effect of the physical dimension of music on the customer's behavior had a significant difference in gender groups. rejected the effect of the preferential dimension of music on the customer's behavior had a significant difference in gender groups. rejected the effect of the dimension of music style on the customer's behavior had a significant difference in age groups. rejected the effect of the physical dimension of music on the customer's behavior had a significant difference in age groups. rejected the effect of the preferential dimension of music on the customer's behavior had a significant difference in age groups. confirmed the effect of the dimension of music style on the customer's behavior had a significant difference in age groups. confirmed 5. discussion the objective of this study was to investigate the effect and dimensions of music on the behavior of buyers of retail centers in tehran, iran. first, we had an overview of the study results from the demographic dimension and based on the hypothesis test results, and then, according to the results, conclusion and suggestions were presented. in this study, the statistical sample consisted of 384 customers of shopping malls, to whom the questionnaires were delivered and returned in person. 53% of the respondents were women and 47% were men. for age, 4.4% of the respondents were under 20 years old, 78.9% between 21 and 30 years old, 9.1% were between 31 and 40 years old, 3.6% were between 41 and 50 years old, and finally 3.9% were over 50 years old. next, to test the hypothesis, kolmogorov-smirnov statistic was used to use appropriate statistical tests according to the results of this test. as shown in table 2 and according to the results of kolmogorov-smirnov statistic, it was found that because the significant level of the data was less than 5%, the data had no normal distribution. therefore, non-parametric tests were used. for the rejection or confirmation of the h1, h2 and h3 on the effects of music dimensions on the customer's behavior, the sign test was used for non-normal data. to answer the question, does music affect the customer's behavior? given non-normal distribution of the data and the average of the components compared to the mean score (according to the use of the five-point likert scale, the average limit was considered equal to 3), the sign test was used. as shown in table 3, the results show a significant effect of music on the customer's behavior. as a result, h1, h2 and h3 were confirmed. mann-whitney test was used to confirm or reject h4, h5 and h6. as shown in table 4, because the significance level of the two groups of men and women was more than 0.05, no significant difference was in any of the studied scales in the two groups of male and female respondents. as a result, h4, h5 and h6 were rejected. some studies have shown that gender plays a moderating role in the effect of music style on the customer's behavior. grewal et al. (2003) found that men and women responded differently to atmospheric variables such as the number of visible staff, the number of consumers, and the presence (or absence) of music. kellaris and rice (1993) found a gender difference in auditory sensitivity that could explain why women responded more positively than men to music played at a lower volume. kellaris and altsech (1992) have investigated the effect of music and gender on time experiences and found that gender plays a significant role in managing time in the store. kellaris and mantel (1994) suggested that gender and its interaction with mood (induced by music) can affect consumers' time perceptions. also, studies have shown that women prefer slower, softer music and men prefer louder, faster music, regardless of music style (stipp 1990). some researchers have suggested that gender differences are in auditory sensitivity and that men and women have different auditory stimulation and that women respond positively to music that has a lower tempo more often (kellaris and rice 1993). according to the study results, it was concluded that the previous studies are not consistent with the study results and studies by grewal et al. 2003 kellaris and rice (1993), kellaris and altsech (1992), kellaris and mantel (1994), and stipp (1990) on the effects of music dimensions on gender are rejected. kruskal-wallis test was used to confirm and / or reject h7, h8 and h9. table 5 shows that because the significance level of the age groups was higher than 0.05, the effect of the physical dimension of music on the customer's behavior in different age groups had no significant difference. table 6 shows that because the significance level of the age groups was lower than 0.05, the effect of the preferential dimension of music on the customer's behavior in different age groups had a significant difference. according to the results of table 7, because the significance level of the age groups was lower than 0.05, the effect of music style on the customer's behavior in different age groups had a significant difference. in general, according to the results of table 8, it was concluded that the effect of music on the customer's behavior in different age groups had a significant difference. in a study, holbrook and schindler (1989) mentioned that music should be suitable for the age group of buyers and customers. in a study, grace yuna lee and youjae yi (2008) entitled "effect of music on purchase intention by moderating factors" showed the sense of excitement inside the store had a positive effect on "purchase intention" of customers. as a result, the study results are consistent with the results of the present study. 6. conclusion and recommendations based on the researcher's analysis, there is a lack of studies focused on internal factors influencing consumer purchase behavior. yet, understanding consumer behavior is crucial for addressing the challenges facing businesses and increasing product sales. the significance of internal factors affecting purchase behavior becomes evident here. asian business research journal, 2025, 10(1): 30-35 35 © 2025 by the authors; licensee eastern centre of science and education, usa knowing how much these factors influence purchasing decisions and what enhance them can significantly aid the economic growth of retail businesses. considering the statistical results from previous sections, discussing this indicator and its relation to sales volume in shopping centers leaves no room for further debate. referring to earlier sections and considering music as an internal factor, it helps sellers understand how the dimensions of music and the positive emotions through moderating factors can increase purchases. based on the correlation between music dimensions and purchase behavior, sellers should enhance the excitement of shopping in customers, reducing the time between purchase intent and actual purchase. this increases product visibility, thereby raising the likelihood of purchase. sellers can reduce the risk of purchase for customers by using tactics such as selecting music genres that align with various age groups, choosing universally appealing music, or using music that complements sales staff interactions with customers and product information dissemination (preference dimension). according to previous findings, sellers should focus more on different age groups rather than gender while they selecting music for their shop. the results related to the preference dimension and music style across various age groups show that the negative relationship between these variables and purchase behavior was not confirmed. this can be a strength for making purchases, as sellers can leverage it. since customers in this type of purchase are less concerned about various risks, they can be easily guided toward making a purchase. ignoring risks means disregarding the product price, potential issues during use, discrepancies between the product and the consumer's expectations, changes in others' perceptions due to using the product, and the time needed to learn how to use it. each of these mentioned factors can be an avenue for retailers to drive sales, especially in today's competitive markets where everyone seeks to mitigate these risks to attract customers' attention. this does not mean ignoring these aspects to achieve sales; rather, it implies that the seller feels fewer obstacles in their path to selling the product and can focus on other aspects to attract customers. furthermore, it is suggested that this research should be conducted in other settings, such as restaurants, to gain more insights into consumer behavior using this internal factor. additionally, by limiting research to specific goods or product groups and expanding the research model by adding other independent or moderating variables, it will be easier to obtain more accurate results and avoid generalizations in this area. references bitner, m. j. 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(2001). principles of marketing (3rd ed.). prentice-hall. 31 © 2024 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 9, 31-38, 2024 issn: 2576-6759 doi: 10.55220/25766759.173 © 2024 by the authors; licensee eastern centre of science and education, usa the impact of working capital management to profitability of chemicals companies listed on the vietnamese stock market dinh the hung1 ngo anh thu2 1national economics university, vietnam. email: hungdt@neu.edu.vn 2the american school, vietnam. email: elenango02052007@gmail.com ( corresponding author) abstract working capital plays an important role in ensuring business continuity. effective management of working capital will directly affect the success of the business. in contrast, poor management will lead to a lack of financial ability, difficulty in payment, reduced sales leads to reduced profits. this paper examines the impact of working capital management on the profitability of chemical companies listed on the vietnamese stock market. data sources used in the analysis are from the financial statements of 32 chemical companies listed on hanoi and hochiminh city stock exchange form 2019 to 2023. through the results of spss 20, the authors assessed the impact of working capital management to profitability and recommendations to improve working capital management of chemical companies listed on the stock market of vietnam. keywords: chemical companies listed, profitability, working capital management, working capital. jel classification: d40; f21. 1. introduction working capital plays an important role in ensuring the continuity of business operations. effective management of working capital resources such as receivables, payables, inventory... will directly impact the success of the business. on the contrary, poor management will lead to financial shortages, making it difficult to pay and can cause sales to decline, leading to reduced profits. therefore, working capital management and profits are closely related to each other. chemicals are an industry that plays an important role in economic development, providing input materials for many essential industries serving production and consumption such as fertilizers, pesticides, and detergents, paint... the chemical industry in the coming years is likely to increase, this shows that the importance of the chemical industry in vietnam is increasingly being emphasized. although we have not encountered many difficulties in capital management because the potential market is being exploited, in the long run it will be inevitable that as the number of businesses in the same industry increases, the market share will increase divided, the cost of differentiation increases. the article aims to understand and research how the components of working capital affect the profitability of chemical enterprises on the vietnamese stock market. research data was taken from the financial statements of 32 chemical enterprises listed on the vietnamese stock market in the period 2019-2023. from there, recommendations for working capital management to increase improve business efficiency of chemical enterprises. thereby contributing to increasing profitability, while promoting the competitiveness of chemical enterprises in the market. 2. literature review deloof (2003) studied the impact of working capital management on the profits of 1,009 non-financial enterprises in belgium during the period 1992-1996. the author uses the gross profit variable to measure profitability and uses variables to measure working capital management such as: average collection period (acp), inventory turnover period (dih), average debt payment period (ap) and cash conversion cycle (ccc). in addition, the author also uses control variables: revenue size, revenue growth, debt ratio (dr). research shows that there is an inverse relationship between gross profit and acp and dih. from there, the author makes recommendations to financial managers to improve profit levels by reducing acp, dih and increasing ap. safi ullah khan et al (2005) studied the impact of working capital management on the profitability of listed enterprises in pakistan. relevant data are taken from the financial statements of 296 randomly selected listed enterprises from all major sectors of the economy except financial enterprises with 2933 observations over the period 1995-2004 . the linear regression research model uses dependent variables to measure business performance: gross profit (gop) and net profit from business activities (nop). the independent variables and control variables are listed the same as in deloof's (2003) study. research results show that acp has a positive relationship; dih, ap, ccc have negative relationships with gop and nop. mailto:hungdt@neu.edu.vn mailto:elenango02052007@gmail.com https://www.doi.org/10.55220/25766759.173 asian business research journal, 2024, 9: 31-38 32 © 2024 by the authors; licensee eastern centre of science and education, usa mathias b. baveld (2012) researched and investigated listed enterprises in the netherlands, with a sample of 37 enterprises with the goal of analyzing the impact of working capital management on profitability during the financial crisis. the author analyzes the impact of components of working capital on profits through two representative factors: return on total assets (roa) and gross profit (gop). working capital management variables: acp, ap, dih, ccc; control variables: company size (size), debt ratio (debt), growth rate (growth), current ratio (cr), fixed asset structure (fata). the results of this study indicate that in times of crisis, enterprises do not need to change their working capital management policies related to accounts payable and inventory, if the goal is to increase profitability. accounts receivable need to change because during a crisis accounts receivable have a positive impact on the company's profits in the coming year. research by nguyen thi viet thuy (2012) on the impact of working capital management on profitability and market value of joint stock enterprises in vietnam. the research sample includes 173 enterprises in the period 2009 2011 with 519 observations. in the research model, the author uses the dependent variables as: market value of the company (tobin q); return on assets (roa); return on invested capital (roic). and variables measuring working capital management: dso, dih, dpo, ccc; control variables: dta (liabilities/total assets), cltar (current liabilities/total assets), catar (current assets/total assets), cr. research results show that there is a relationship between the component variables of working capital and profit indicators: ar, dih, ccc have a negative relationship with roa and roic. on the contrary, ap has a positive relationship. the study also shows that there is no notable relationship between working capital management and market value. mhs anas husaria (2015) researched and investigated the relationship between working capital management and profitability of businesses in the middle east and western europe. the study uses a sample of 54 listed enterprises in the middle east and western europe. the author's purpose is to examine the effectiveness of working capital management on profits. the author included in the model the independent variables of working capital management: rtd, ptd, itd, ccc; controlled variables: size, debt, growth. the results of this study show that there is no statistical significance in the relationship between the components of incoming working capital and the profitability of the business (the representative factor is roa). furthermore, managers should use other tools and strategies to improve business profitability than effective working capital management. dinh thi hong tham (2015) conducted in-depth research with a sample of 49 listed construction materials enterprises in the period 2009 2013 with 231 observations to evaluate the impact of working capital management on profitability. the author analyzes the relationship between working capital management and three representative indicators: roa, roe and tobinq. in addition to the familiar variables that have appeared, here the author adds to the model a control variable: state ownership ratio (state). the results show that there is no relationship between acp, ap and tobinq; dih and roa, tobinq have a negative relationship, but have no relationship with roe; ccc has a negative impact on tobinq. companies should reduce payment time to suppliers and reduce ccc to increase sustainable competitive advantage and business profitability. frederico robles (2016) studies the impact of working capital management on profitability in different types of enterprises in the uk. the author analyzes the impact of each business cycle on working capital management on profitability, using a sample of 400 unlisted enterprises in the period 2006 2014. the author included in the model the independent variables of working capital management: ar, ap, dih, ccc; control variables: cr, debt, sales. the results show that the impact of working capital management on profitability (the representative factor here is: roa) is higher, specifically: there is a positive relationship between ap and roa and a positive relationship between ap and roa. negative relationship between ar, dih, ccc and roa. vuong duc hoang quan and duong diem kieu (2016) on the impact of working capital management on the profits of enterprises listed on the hochiminh city stock exchange (hose). with a sample of 29 enterprises in 4 industries: pharmaceuticals, food, seafood, and steel in the period 2010 2014. the study's multivariate regression model includes 9 independent variables (working capital variables: acp, dpo, dih, ccc; control variables: ca/ta, k, d/a, cl/ta, ln_s) impact roa. the results shown through analyzing the regression model separately for each industry is that the impact of working capital on profits for the 4 research industries is very different. 3. theoretical basis of working capital and working capital management 3.1. working capital to ensure that the production and business process is conducted regularly and continuously, enterprises are required to have a certain amount of current assets. therefore, to form current assets, enterprises must advance a certain amount of monetary capital to invest in that asset. this amount of capital is called the working capital of the enterprises. according to the corporate finance textbook (academy of finance, 2014): “a business's working capital is the entire amount of advance money that the enterprises spends to invest in forming frequently needed current assets for production and business activities of the enterprise. in other words, working capital is the monetary expression of current assets in an enterprise”. working capital is a financial measure that represents the current liquidity of a enterprise, measures the financial strength of a enterprise, and it plays an important role in maximizing the wealth of shareholders. . however, it needs to be financed and may entail other operating costs, such as credit losses on accounts receivable, storage costs, and logistics costs for inventory. along with tangible and intangible assets, working capital is also a part of operating capital. if the amount of working capital is not guaranteed, it will lead to a shortage and difficulty in daily business operations. working capital is determined as follows: working capital = current assets – short-term liabilities current assets here are specifically understood as: cash, cash equivalents; short-term receivables; inventory; other current assets. short-term debts are debts with a term of 1 year or less (payables to suppliers, due debts to financial institutions). if current assets are less than current liabilities, the business will lack working capital, also known as a working capital deficit. asian business research journal, 2024, 9: 31-38 33 © 2024 by the authors; licensee eastern centre of science and education, usa 3.2. working capital management decisions related to working capital and short-term finance are called working capital management. in other words, working capital management includes all aspects of current assets and short-term liabilities. the focus of working capital management is to optimize the levels of inventory, accounts receivable, cash and other current assets held by the business enterprise at a point in time. it shows the relationship between a business's current assets and current liabilities. the goal of working capital management is to ensure that a business can continue its operations and has sufficient cash flow to meet both short-term debt due and upcoming expenses. working capital management needs to answer several important questions that affect a company's sustainability and shape its financial strategy, both in the short and long term: how much cash and inventory should we hold? inventory on hand? should the credit period be extended to customers? is the same case with the payment period to suppliers? is it necessary to mobilize short-term finance from any sources and what is the debt repayment plan? 4. research methods 4.1. research sample to determine the impact of working capital management on the profitability of chemical enterprises, the authors collected secondary data taken from the annual financial reports of listed chemical enterprises on the vietnamese stock market. the research sample includes 32 enterprises out of a total of 107 joint stock enterprises operating in the chemical manufacturing industry, including 16 enterprises listed on hnx; 16 businesses listed on hose. the study period is 5 years (2019 2023) with a total of 160 observations. 4.2. building models and research hypotheses 4.2.1. research framework based on an overview of previous studies, the authors selected the variables to measure working capital management as: average collection period (acp), inventory turnover period (dih), debt average payment period (dpo), cash conversion cycle (ccc) to consider the impact of these variables on the dependent variable which is the profitability of the enterprise. the chemical industry in vietnam is in the process of development, investment in building production lines, factories, and warehouses is top priority, fixed assets are increasing rapidly, leading to an increase in loans finance. the question here is whether enterprises can balance working capital to meet business needs? how does working capital management impact profitability on total assets because chemical enterprises have to use many assets in their operations? for this reason, the authors decided to choose the variable return on assets (roa) as the variable reflecting profitability. furthermore, the chemical industry still has many potential markets, so the authors ignore the variable return on equity (roe). the authors decided to include in the analysis control variables: current ratio (cr), debt ratio (dr) and enterprise size (size). below is a figure showing the impact of variables on profitability: figure1. model to study the impact of factors on working capital. 4.2.2. the content describes the variables, measurement methods and research hypotheses a. dependent variable: return on assets (roa): this indicator shows the efficiency of using assets in business activities, it shows how much profit each dong of assets used brings. the higher the ratio shows the more efficient the enterprises is operating. case studies: wang (2002); padachi et al (2006); garcia-teruel & martinez-solano (2007); samiloglu & demirgunes (2008); nazir & afza (2009) and shama & kumar (2011)... used this ratio as a variable to study the impact of working capital management. calculation formula: roa = profit after tax/total assets asian business research journal, 2024, 9: 31-38 34 © 2024 by the authors; licensee eastern centre of science and education, usa b. independent variable • average collection period (acp): is an index indicating the average number of days to collect a enterprise's receivables. if this ratio is low, the company only needs a few days to recover money from customers and vice versa. therefore, a negative sign is expected between acp and roa. studies on this variable include: deloof (2003), mkhululi ncube (2011) and jião serrasqueiro (2014)... have shown that it has an impact on the return on assets. calculation formula: average collection period = (receivables / budget) * 365 research hypothesis: ho1: there is a relationship between acp and roa. • inventory turnover period (dih): this indicator reflects the number of days to perform an inventory turnover during the year. the lower the inventory turnover period, the better the enterprise is. expectations for the relationship between dih and roa are inverse. previous studies: deloof (2003); padachi et al. (2006); mhd anas husaria (2015) and nguyen thi viet thuy (2012)... have shown that there is an impact on the roa. calculation formula: inventory turnover period = (inventory / cost price) * 365 research hypothesis: ho2: there is a relationship between dih and roa. • average payables payment period (dpo): this index shows the average number of days it takes a enterprises to pay the seller. a high coefficient shows a good relationship between the enterprise and the seller. a low coefficient shows that enterprises have to pay sellers in a short time, leading to an imbalance in working capital management. the expected sign in the relationship between dpo and roa is negative. previous studies: frederico robles (2016); mhd anas husaria (2015); dinh thi hong tham (2015)... have shown an impact on the roa. calculation formula: liabilities payment period = (average liabilities/cost price) *365 research hypothesis: ho3: there is a relationship between dpo and roa. • cash conversion cycle (ccc): this index measures the time it takes to invest in working capital until cash is recovered from sales revenue. the higher this index shows the time capital resources are invested in high working capital, leading to scarcity of payment resources. if this number is small, it can be assessed as good working capital management ability. the expected sign for the relationship between ccc and roa is negative. previous studies: safi ullah khan et al (2005); mathias b. baveld (2012) and jião serrasqueiro (2014),... have shown an impact on the roa. calculation formula: ccc = acp + dih – dpo research hypothesis: ho4: there is a relationship between ccc and roa. c. control variable • current ratio (cr): this index shows the solvency of a enterprise in the short term, reflecting whether the enterprise has enough ability to pay short-term debts with short-term assets. this index is greater than 1, indicating good short-term solvency of the enterprise. on the contrary, if this index is less than 1, it shows that the enterprise cannot ensure its solvency. previous studies: frederico robles (2016) and mathias b. baveld (2012) calculation formula: current ratio = current assets / short-term liabilities • debt ratio (dr): this ratio shows what percentage of a business's assets are from debt. if a business has a low ratio, it has a high ability to repay debt; on the contrary, a high ratio is an alarming point in managing the enterprise's business capital because of the higher level of risk. previous studies: nguyen thi viet thuy (2012), vuong duc hoang quan and duong diem kieu (2016)... calculation formula: debt ratio = total debt/total assets • enterprise size (size): this index shows the scale of the enterprise. larger scale shows that business operations are favorable, increasing revenue, thereby increasing profits. this variable has been studied by dinh thi hong tham (2015). calculation formula: enterprise size = ln (total assets) 4.3. build a research model the authors use a multivariate regression research model to study the impact of working capital management on profitability. the authors built 2 separate research regression models because the ccc variable is formed from 3 variables acp, dih, dpo (ccc = acp + dih – dpo) so that when putting data through analysis software variables were not removed from the model for multicollinearity reasons. in addition, analyzing the impact on the two models helps managers make decisions and policies that will not be too misleading. businesses can adjust the acp, dih, and dpo indexes, but the ccc index remains at the allowable level. model 1: roa = β01 + β11.acp + β21.dih + β31.dpo + β41.cr + β51.dr + β61.size + ε1 model 2: roa = β02 + β12.ccc + β22.cr + β32.dr + β42.size + ε2 5. analyze and discuss research results 5.1. statistical analysis describes the variables the authors put the data set collected from 32 chemical enterprises in the period 2019 – 2023 with a total of 160 observations into spss analysis software to run descriptive statistics and obtain results as shown in the table below: asian business research journal, 2024, 9: 31-38 35 © 2024 by the authors; licensee eastern centre of science and education, usa table 1. descriptive statistics of variables in the regression model. descriptive statistics n min. max. average standard deviation roa 160 -0.046 0.266 0.110 0.057 acp 160 1.605 539.056 64.340 71.994 dih 160 3.992 308.291 99.687 56.082 dpo 160 6.451 382.536 139.218 68.022 ccc 160 -260.371 241.751 24.809 79.149 cr 160 0.512 6.897 2.246 1.181 dr 160 0.109 0.758 0.407 0.161 size 160 10.888 16.622 13.430 1.286 valid n (listwise) 160 from the data table above, it can be seen that: • average collection period (acp) has an average of 64,340 days with a standard deviation of 71,994 days. the above average value is appropriate because normally invoices for sales of goods and services will have a payment term of 15 to 60 days. • the average inventory turnover period (dih) is 99,687 days with a standard deviation of 56,082 days. the above average period corresponds to one quarter (3 months), which is a suitable period for chemical-related products. • the average debt payment period (dpo) is 139,218 days on average, ranging from 6,451 days to 382,536 days. fast or slow payment will depend on the financial situation and management policy of the business. • the average cash conversion cycle (ccc) is 24,809 days, meaning the time period from investment in working capital to the time of cash recovery from sales revenue is short. this also demonstrates good working capital management ability, because this index is calculated from the 3 aforementioned indexes: acp, dih and dpo. • the average current ratio (cr) is 2.246, this index is greater than 1, showing that the short-term solvency of businesses is in good condition. • the average debt ratio (dr) is 0.407 (40.7%), in the capital structure of the enterprise, 40.7% is borrowed capital and 59.3% is total assets. this means that businesses can still utilize their assets to invest in other areas to earn higher profits. • the average enterprise size (size) is 13,430, suitable for enterprises in developing countries like vietnam. 5.2. analyze correlations between variables the correlation coefficient between variables shows the relationship between variables. we will evaluate the correlation through the pearson coefficient (r) with a significance level of 5% (sig≤0.05). table 2. correlation coefficients between variables in the model. correlation coefficient roa acp dih dpo ccc cr dr size roa 1 -0.313** -0.022 -0.410** 0.052 0.297** -0.466** 0.133 acp 1 -0.068 0.493** 0.437** 0.101 -0.109 0.041 dih 1 0.172* 0.499** 0.221** -0.250** -0.009 dpo 1 -0.289** -0.342** 0.307** 0.143 ccc 1 0.543** -0.540** -0.091 cr 1 -0.818** 0.214** dr 1 -0.122 size 1 note: **. correlation is significant at the 0.01 level (2-tailed). *. correlation is significant at the 0.05 level (2-tailed). from the table above, we see that roa is positively correlated with ccc, cr, and size, but this relationship is not statistically significant at the 5% level, because ccc has p-value = 0.51 and size has p-value. = 0.09; as for cr, the correlation is statistically significant at the 1% level. roa is negatively correlated with acp, dpo, and dr with statistical significance at the 1% level; with dih is not statistically significant at the 5% level, because pvalue = 0.78. acp is positively correlated with the dpo and ccc at the 1% significance level and increasing acp will increase dpo and ccc; other variables are not statistically significant because p-value>0.05. dih is positively correlated with dpo and cr at the 5% significance level; with ccc at the 1% significance level; increasing the number of days of inventory will increase dpo and ccc. dih is negatively correlated with the dr at the 1% significance level. dpo is positively correlated with acp, dr at the 1% significance level, with dih at the 5% level, and with size at the 10% significance level; increasing dpo will increase acp and dih. dpo is negatively correlated with ccc and cr at the 1% level; ccc decreases with increasing dpo. ccc is positively correlated with acp, dih, cr at the 1% level; increased ccc increases acp and dih. ccc is negatively correlated with dpo, dr at the 1% level, with size at the 10% level. cr is positively correlated with acp, dih, ccc, size with the corresponding p-value: 0.20; 0.01; 0.00; 0.01. cr is negatively correlated with dpo, dr with p-value respectively: 0.00; 0.00. dr is positively correlated with dpo at the 1% level. dr is negatively correlated with acp, dih, ccc, cr, size with the corresponding p-value: 0.17; 0.00; 0.00; 0.00; 0.13. size is positively correlated with acp, dpo, and cr with p-values of: 0.60; 0.07; 0.01. size is negatively correlated with dih, ccc, dr with p-value respectively: 0.91; 0.25; 0.13. asian business research journal, 2024, 9: 31-38 36 © 2024 by the authors; licensee eastern centre of science and education, usa 5.3. analyze regression models the authors conducted regression analysis according to the two proposed models to test the relationship. 5.3.1. model 1 roa = β01 + β11.acp + β21.dih + β31.dpo + β51.cr + β61.dr + β71.size + ε1 table 3. results of running model 1. model summaryb model r r squared adjusted r squared random errors durbin-watson 1 0.650a 0.423 0.400 0.0443935 1.105 note: a. predictors: (constant), size, dih, acp, dr, dpo, cr b. dependent variable: roa table 4. model 1 regression results. coefficientsa model unstandardized regression coefficient standardized regression coefficient t sig. collinearity statistics β std. error beta tolerance vif 1 (constant) 0.211 0.044 4.744 0.000 acp 0.000 0.000 -0.304 -3.760 0.000 0.577 1.732 dih 0.000 0.000 -0.129 -1.812 0.072 0.748 1.337 dpo 0.000 0.000 -0.145 -1.586 0.115 0.449 2.229 cr -0.016 0.006 -0.328 -2.855 0.005 0.286 3.491 dr -0.262 0.039 -0.737 -6.746 0.000 0.316 3.161 size 0.006 0.003 0.145 2.184 0.030 0.852 1.173 note: a. dependent variable: roa from table 3, we see that the durbin watson index is 1.105 (1<d<3), so there is no autocorrelation phenomenon in model 1. the model can explain 40% of the variation in roa (due to the adjusted r squared is 0.400) so the 6 independent and control variables influence 40% of the change in the dependent variable, the remaining 60% is due to other factors and random errors. from table 4, the vif values of the variables acp, dih, dpo, cr, dr, size are all less than 10. in addition, the research data does not contain questionnaires using the likert scale, so in regression model 1 multicollinearity does not occur. with a significance level of 5%, corresponding to sig values. of the variables in the model acp, dih, dpo, cr, dr, size are: 0.000; 0.072 (>0.05); 0.115 (>0.05); 0.005; 0.000; 0.030. from there, we eliminate from the regression model the variables with sig. >5% are: dih, dpo. based on the unstandardized regression coefficient (β) in the table above, we can rewrite regression model 1 in unstandardized form as follows: roa = 0.211 + 0.000 acp – 0.016 cr – 0.262 dr + 0.006 size the β coefficient of the acp variable has a small value, the dih and dpo indices are eliminated because they are not meaningful at the 5% significance level. in the above equation, the variables retain their original units. the unstandardized regression equation has more mathematical meaning than economic meaning as it only reflects the change in the dependent variable when each independent variable changes under the condition that the remaining independent variables must be fixed. if considered at the 10% significance level, the variables dih and dpo also have the same impact on profitability (βdih = 0.000; βdpo = 0.000) with an insignificant level of influence. model 1, after regression analysis, has one remaining variable, acp, which has a relationship with roa at the 1% significance level. acp affects roa in the same direction, meaning that under the condition that other variables do not change, increasing the average number of days of collection will increase profitability. the β coefficient of acp according to the table above is 0.000. when acp increases by 1 day, roa increases by 0.000 (or 0.0%). thus, it can be said that the impact of the number of days of collection does not have too great an impact on profitability. if we consider the standardized regression coefficient (βeta), we have the following standardized regression equation: roa = -0.304 acp – 0.328 cr – 0.737 dr + 0.145 size in the standardized regression equation, the variables have been regressed to the same unit. furthermore, the standardized regression model is more economic than mathematical. here, the impact of the variables on roa is listed in descending order as: dr (0.737); cr (0.328); acp (0.304); size (0.145). table 5. results of running model 2. model summaryb model r r squared adjusted r squared random errors durbin-watson 1 0.535a 0.286 0.268 0.0490483 1.058 note: a. predictors: (constant), size, ccc, dr, cr b. dependent variable: roa asian business research journal, 2024, 9: 31-38 37 © 2024 by the authors; licensee eastern centre of science and education, usa table 6. model 2 regression results. coefficientsa model unstandardized regression coefficient standardized regression coefficient t sig. β std. error beta 1 (constant) 0.208 0.049 4.263 0.000 ccc 0.000 0.000 -0.239 -2.816 0.005 cr -0.010 0.006 -0.203 -1.633 0.104 dr -0.268 0.043 -0.753 -6.253 0.000 size 0.003 0.003 0.063 0.873 0.384 note: a. dependent variable: roa. 5.3.2. model 2 from table 5, it shows that the durbin watson index is 1.058 (1<d<3), so there is no autocorrelation phenomenon in model 2. the model can explain 26.8% of the variation in roa (due to the adjusted r-squared index of 0.268), that is, with 4 independent variables, the included control affects 26.8% of the change in the dependent variable, the remaining 73.2% is due to other variables. outside the model and random error. from table 6, the vif values of the variables ccc, cr, dr, size are all less than 10, so multicollinearity does not occur in regression model 2. with a significance level of 5%, corresponding to sig values. of the variables in the model ccc, cr, dr, size are: 0.005; 0.104 (>0.05); 0.000; 0.384 (>0.05). from there, we eliminate from the regression model the variables with sig. >5% are: cr, size. we have an unstandardized regression equation rewritten as follows: roa = 0.208 + 0.000 ccc – 0.268 dr through the equation, it shows that the ccc variable has a positive impact on roa at the 1% significance level, but with a small impact on profitability. βccc = 0.000, meaning that under the condition that other variables do not change, when increasing ccc by 1 day, roa increases by 0.000 (or 0.0%). in addition, the dr variable has a negative impact on roa, βdr = -0.268, meaning that under the condition that other variables do not change, when dr increases by 1 unit, roa decreases by 0.268 (or 26.8%). . the impact of dr on roa is quite large, requiring timely adjustments. if we consider the standardized regression coefficient (βeta), we have the following standardized regression equation: roa = -0.239 ccc – 0.203 cr – 0.753 dr + 0.063 size 5.4. discuss research results the study found a positive relationship between the acp variable and roa. therefore, accept the first hypothesis (ho1: there is a relationship between acp and roa). analytical data extracted from the software shows that the impact here is insignificant. this means that when increasing the number of receivable days by 1 unit, the profit does not increase much. however, based on this result, we can make the conclusion that: increasing the number of receivable days means increasing the payment term. customers, this policy helps build lasting relationships with partners, increasing revenue means increasing profits. this conclusion is similar to the studies of safi ullah khan and colleagues (2005) and mathias b. baveld (2012). the second hypothesis (ho2: there is a relationship between dih and roa) is rejected. because the dih variable was removed from the regression model (sig.>0.05). this result is similar to the study of mhd anas husaria (2015). the third hypothesis (ho3: there is a relationship between dpo and roa) is rejected for the same reason as the dih variable in the second hypothesis. this result is similar to the research of mkhululi ncube (2011) and mhd. anas husaria (2015). the study also found a positive relationship between ccc and the roa variable. therefore, we accept the fourth hypothesis (ho4: there is a relationship between ccc and roa). the impact of ccc on profits is insignificant, similar to the results obtained from hypothesis 1. the increase (decrease) in time from investment in inputs to recovery of money from sales revenue will affect profit increase (decrease) but very little. the results of this study are not similar to any of the studies mentioned by the author. 6. propose recommendations research results show that the impact of working capital management on the profitability of chemical enterprises listed on the vietnamese stock market is not large. the analyzed data is from a period when the economy is stable and the chemical industry in vietnam is still in a strong development cycle, so there is no clear impact on working capital management on profitability. however, with the goal of maximizing profits and benefits for the business, changes should still be applied, even if they have a small impact on the overall goal. the authors make some recommendations as follows: • increase average collection days (acp), to increase business profitability. however, it is necessary to adjust to a reasonable and controllable level. that means, enterprises create conditions for customers to extend payment time but to an acceptable level. • increase the number of days of the cash conversion cycle (ccc). increasing this index has many adjustment options when: ccc = acp + dih – dpo. changing one of the variables in the formula will not only affect the ccc variable but also directly affect the internal margins. it is recommended that when businesses want to influence the ccc variable to increase profitability, they should be careful with the component variables. however, this result may change in the long term, when enterprises must make trade-offs and choose the balance between elements of working capital. therefore, enterprises will need more specific and practical preparation measures. the above work is only temporary and lacks much basis, so to better prepare for long-term situations. enterprises need to take the following preparation measures: asian business research journal, 2024, 9: 31-38 38 © 2024 by the authors; licensee eastern centre of science and education, usa • send management staff to in-depth training and knowledge preparation; • set hypothetical situations related to negative changes in working capital management, and find solutions; • strictly implementing the terms signed in the sales contract will create good habits for businesses. • need to direct the development of methods to calculate the need for working capital, on that basis to compare and evaluate the effectiveness of each unit and synthesize the working capital needs of the entire enterprise. • build an effective information system and regularly analyze and evaluate the efficiency of using working capital of the enterprise. take into account the implementation of an appropriate business management system synchronous erp in the enterprise, thereby providing timely information for the process of regularly evaluating the effectiveness of working capital use. 7. conclusion the study analyzed and evaluated the impact of working capital management on the profitability of chemical enterprises listed on the vietnamese stock market. the authors have made their recommendations objectively. the contributions of the research will help working capital managers in the chemical industry make correct, beneficial decisions that optimize the organization's goals. however, the study cannot avoid shortcomings such as: the number of research samples is small (32 chemical enterprises with a total number of observations of 160). furthermore, listed chemical enterprises only account for a small portion of the total number of enterprises in the industry, so the research results are still limited and need to expand the research sample to all enterprises in the industry. references audited financial statements of listed chemical enterprises in 2019 2023 on the hanoi stock exchange (https://www.hnx.vn/vi-vn) and hochiminh city minh (https://www.hose.vn). deloof, m. (2003), does working capital management affect profitability of belgian firm, journal of business finance and accounting, 30(3&4), pp. 573-587. https://doi.org/10.1111/1468-5957.00008 dinh thi hong tham (2015), the impact of working capital management on the profitability of construction materials businesses on the vietnam stock market, master's thesis in economics, university of economics hochiminh city. frederico robles (2016), the impact of working capital management on firm profitability in different business cycles: evidence from the united kingdom, lisbon school of economics & managerment. mathias b. baveld (2012), impact of working capital management on the profitability of public listed firms in the netherlands during the financial crisis, university of twente. mhd anas husaria (2015), the effect of working capital management on firms’ profitability: comparative study on middle east and west europe companies, universidade lusofona do porto. mkhululi ncube (2011), impact of working capital on the profitability of south african firms listed on the johannesburg stock exchange. nguyen thi viet thuy (2012), the impact of working capital management on profitability and market value of joint stock companies in vietnam, master's thesis in economics, university of economics hochiminh city. padachi (2006), trends in working capital management and its impact on firms’ performance: an analysis of mauritian small manufacturing firms, international review of business research papers, vo.2 no. 2, pp. 45 -58. pham trinh hieu (2010), working capital management in small and medium enterprises in hochiminh city, master's thesis in economics, university of economics hochiminh city. safi ullah khan, s. m. amir shah & syed tahir hijazi (2005), impact of working capital management on the profitability of firms: case of listed pakistani companies, journal of social sciences & humanities, vol. 8, no. 2, pp.41 – 50. shin, h. & soenen, l. (1998), efficiency of working capital management and corporate profitability, journal of applied finance, vol 8. pp. 37 – 45. smith, n. r., j. s. bracker. & j. b. miner (1987), correlates of firms and entrepreneur success in technologically innovative companies, frontiers of entrepreneurship research, babson college press, pp.57-71. vuong duc hoang quan & duong diem kieu (2016), the impact of working capital management on the profits of businesses listed on the hochiminh city stock exchange, van hien university journal of science, vol 4, no 3, pp.56 -64. https://www.hose.vn)/ 1 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 5, 1-11, 2025 issn: 2576-6759 doi: 10.55220/25766759.410 © 2025 by the author; licensee eastern centre of science and education, usa the gini index’s dynamics as a reflection of india’s income inequality mohd naved khan college of administrative and financial sciences, saudi electronic university, riyadh, ksa. email: m.naved@seu.edu.sa abstract this paper aims to understand the income inequality trends in india using the gini index over time. the study makes a case for india’s economic expansion despite the existing social classes and efforts to clarify the role of the gini index in addressing this multifaceted phenomenon. it examines the historical context of income disparity in india. the research methodology entails the analysis of secondary data and pre-existing studies regarding income distribution and inequality in india. this encompasses official government publications, surveys, databases, scholarly journals, and studies. the research employs data from esteemed sources such as the world bank, imf, and indian governmental statistical agencies, concentrating on household surveys and socioeconomic metrics. the india human development survey is a principal data source, offering extensive information on household income, education, and socioeconomic attributes. the results demonstrate the variable nature of india’s gini index, highlighting the relationship among social programs, structural reforms, and economic growth. post-independence policies initially maintained a stable gini index; however, economic liberalization increased income inequality, concentrating wealth among the wealthy. the study examines the effects of geographical disparities, the rural-urban split, and various socioeconomic determinants on income inequality, providing insights into the obstacles and potential remedies for attaining a more equitable income distribution in india. keywords: gini index, income inequality, india, socioeconomic development, structural reforms. 1. introduction considering india’s significant economic expansion and advancement in recent decades, income disparity in the country has been the focus of much research and discussion (mishra et al., 2019). in india, the huge socio-economic problem is the diversity in its population, the growing economy, and the ever-enduring inequalities. we have had several changes in the indian economy over the years, such as the change from communist policies during the early years of post-independence to policies of globalization today; all these changes have not affected income inequality. a very important way of measuring income inequality is using the gini index. this is how these inequities are examined. many policymakers and scholars use this basic indicator, with 0 representing perfect equality and 1 perfect inequality, to analyze and combat socioeconomic problems. the fluctuations in india’s gini index demonstrate the intricate relationships between social policies, structural changes and economic development. the state’s focus on agrarian reforms and redistribution resulted in a relatively stable gini index in the decades following independence. however, when market-driven prosperity began to reveal income disparities, the deregulation of the 1990s indicated a transition. recent evidence indicates that economic advancement has enabled millions to rise from poverty. however, it has also exacerbated income disparity by concentrating money among the affluent (worldbank, 2020). regional disparities among the rural-urban sectors, caste-based inequality, gender disparities, and the significance of the informal sector influence the dynamics of the gini index in india. research indicates that urban elites have disproportionately reaped economic benefits from urbanization and industrialization, worsening the wealth gap between rural and urban inhabitants (chancel & piketty, 2019). besides, social groups always tend to be at the most disadvantaged end of the scale in terms of education and employment opportunities. due to these traditional social orders, such as the caste system, economic inequality is further aggravated (drèze & sen, 2013). government interventions have also influenced the gini index. the gini index on inequality has been addressed locally by providing social services, for example, through mgnrega and food and education subsidy schemes. nonetheless, persistent structural issues such as tax evasion and inadequate redistributive policies have had a negligible impact on reducing the gini index (economic survey, 2023). furthermore, globalization and the expansion of technology-driven economies have introduced novel forms of inequality, with access to technology and digital literacy becoming critical determinants of economic mobility (undp, 2020). this article provides an in-depth analysis of the changing gini coefficient in india, how it has changed over time and what caused these changes. it also explores how these events shaped income inequality – for example, the mailto:m.naved@seu.edu.sa https://doi.org/10.55220/25766759.410 asian business research journal, 2025, 10(5): 1-11 2 © 2025 by the authors; licensee eastern centre of science and education, usa green revolution, the liberalization of the economy and the development of digital sectors. the discussion evaluates the efficacy of policy efforts to foster inclusive growth and reduce inequities. the gini index ultimately represents the socioeconomic composition of the nation rather than only providing a numerical representation of income inequality. understanding its dynamics in the indian context will help one better understand the larger problem of attaining sustainable and equitable development (darku et al., 2020). although india’s economy has been expanding quickly, himanshu, (2022) claims it is still one of the nations with the most unequal income distribution. over the last thirty years, there has been a tremendous increase in inequality. through strategies such as inheritance and crony capitalism, the wealthiest individuals in the country have collected a significant portion of the nation’s wealth. as a result of ongoing underfunding, those who are in poverty continue to struggle to make the minimum wage and to gain access to high-quality healthcare and education. on the other hand, wealthy people are becoming wealthy far more quickly. women and children are particularly impacted by the widening divides and inequality that are occurring. if the data is divided into urban and rural components, the rural population is the primary factor that leads to the drop at the bottom end of the income distribution. according to sahasranaman & kumar, (2019), the real average income experienced a decrease of 4.3% annually, leading to a fall of roughly 41% in the income segment of the lowest decile within the income distribution of rural india. on the other hand, the income shares at the lowest end of the urban distribution have increased throughout different historical periods. furthermore, the movement of disparities in income in india has been significantly impacted by the drop in real earnings at the lowest tier, as indicated by these data, demonstrating that rural incomes form the predominant component of the lowest ventile in india’s aggregated income distribution. second, metropolitan regions have had greater economic growth than rural areas because they have better access to medical care, educational opportunities, and employment opportunities. despite employing a significant fraction of the workforce in india, the unregulated sector frequently fails to provide adequate social protection and fair wages (guha et al., 2021). this further worsens the country’s income disparities. when attempting to ascertain income, many economists looked at the annual tax statistics published by the governments of india and britain since 1922. the richest one per cent of india’s population controlled between 20% and 21% of the country’s gdp even during the most unequal period in india’s history, which lasted from the 1930s until the country gained its independence in 1947 (ranvanshi, 2024). by 2022, there were 162 billionaires in india, while in 1991, there was just one billionaire. during this time, their total net worth as a percentage of india’s national income “soared from less than 1% in 1991 to a whopping 25% in 2022” (ranvanshi, 2024). the economic liberalisation in india in the early 1990s marked a dramatic change toward a market-oriented economy (ghosh, 2013). this liberalisation was responsible for india's enormous economic growth and development. on the other hand, not the entire indian population profited evenly from this expansion. there was an increase in the general income levels, however, studies have shown that the richer segments of society reaped maximum benefits from the economy’s success. the increasing gini index shows that this resulted in a widening gap between the rich and the poor. further, there has been an increase in the difference between incomes due to the growth of technology and globalisation. additionally, they have resulted in the relocation of jobs and wage polarisation, which has negatively impacted people with low levels of ability, even though they have created new markets and possibilities. these trends are shown through analysis of the gini index, which demonstrates indisputably how structural changes and economic policies influence income distribution. to establish policies promoting inclusive growth, policymakers need to comprehensively understand the evolution of income disparity, as measured by the gini coefficient. truong & barreto, (2020) said that to ensure everyone in society benefits equally from economic growth, we need to take targeted actions like making it easier for more people to get good healthcare, social protection, and education. 2. literature review given the complexity and discrepancies in india’s socioeconomic structure, income disparity generated much discussion among economists and policymakers. the gini index, a statistical instrument measuring the degree of income distribution among the population, is a crucial metric to evaluate this disparity. the purpose of this literature review is to attempt to consolidate and integrate the corpus of information that is currently accessible in order to provide a comprehensive understanding of how the gini index portrays the intricate economic disparities that exist within india. the evaluation also identifies areas requiring further investigation and highlights deficiencies in the current comprehension. considering the global gini coefficient, according to lakner & milanović, (2015), global income inequality fell by 2 gini points from 1988 to 2008 but stayed at about 70.5%. according to one key result, chinese economic growth has lifted the country out of poverty and contributed to the emergence of a global “median” class. accounting for potential underreporting of top incomes results in a less pronounced declining trend and a higher gini of approximately 76%. however, chauhan et al., (2015) indicate that income disparity increased in various regions of india from 1993 to 2012, even as poverty rates declined overall. four regions experienced no change in poverty levels, whereas seven regions observed an increase. significant poverty levels continued to exist in the southern areas of chhattisgarh and odisha. the increase in the poverty headcount ratio throughout the study indicates a widening disparity in regional poverty. as batra & reio, (2016) note, a wider issue in india revolves around gender inequality. the study discusses the existence of gender-based income differentials and emphasizes the need to examine sociocultural determinants of income and opportunity inequality. the report analyses the differences in income distribution and discrimination in india from 2014 to 2019, analyzing contemporary trends. the examination reveals that while overall income inequality has remained relatively stable, significant declines have occurred at the lower end of the income spectrum, particularly in rural regions. a comprehensive understanding of the gini index’s dynamics on a global scale necessitates an examination of the broader international environment. the research highlights that the asian business research journal, 2025, 10(5): 1-11 3 © 2025 by the authors; licensee eastern centre of science and education, usa perceived trend in global income inequality can be significantly altered by adjusting the gini index to account for the underreporting of high incomes. das, (2019) further investigates india’s educational disparity and how it affects affirmative action and income distribution. the study highlights how significant social and gender gaps in educational access, particularly in rural areas, intensify the wealth disparity. das, (2019) also examines the relationship between earnings and educational disparity, showing that the distribution of educational opportunities strongly impacts income inequality and earnings distribution. sahasranaman and jensen (2019) analyze the dynamics of income inequality in india, highlighting the nation’s shift from a progressive to a regressive redistribution system. the authors contend that the persistent impoverishment of the poor directly propels the exponential income rise of the wealthy, resulting in a concerning trend of escalating inequality. furthermore, it analyzes the alterations in income in india from 2014 to 2019, revealing that while overall disparity remained essentially constant, the lowest section of the income distribution saw substantial losses, especially in rural areas. kulkarni and gaiha (2020) examine the relationship between poverty and economic inequality in india, emphasizing the gap between the wealthiest 1% and the poorest 50% of the population. it argues that increasing economic inequality aggravates poverty, drawing on prior studies, notably the work of chancel and piketty (2019). the research uses data from the india human development survey (2005–12) to identify significant negative elasticities between increasing income inequality and poverty across multiple poverty indicators. specifically, there are serious consequences for the most destitute individuals in society: a 1% increase in income inequality is associated with a 1.24% rise in the squared poverty gap. the study underscores the imperative for policies targeting income disparities to foster equitable growth in india, highlighting that even minor escalations in income inequality can significantly impact poverty levels. sahasranaman and kumar (2020) saw large deficits among the lower parts of the income distributions, suggesting the overall inequality remained static between 2014 and 2019. this indicates a drop in income share for the lowest rural quintiles by ~38% and a negative revenue growth at an average -4.6% yearly. the lowest decile of rural income distribution suffered more significant losses, with an annual real average income growth rate of -4.3% and a 41% decrease in income share. income share rose at the lower end of the urban income distribution relative to rural regions. small and marginal farmers and agricultural laborers are closely linked to the lowest decile of rural income distribution, underscoring the growing economic instability of these professions. analysis employing the rgbm model indicates that reallocation has diminished since 2015, becoming negative in 2018, consistent with the decline in real income. indian respondents significantly overestimated the extent of economic inequality in india; over 90% of those surveyed believed that inequality was far greater than the gini coefficient. according to gulati & ying (2021), the quality of government is the most critical factor affecting public perception of economic inequality. mitigating inequality necessitates improved governance. dang and peter (2021) emphasize the nation’s historical focus on poverty rather than overall inequality. they indicate that with the acceleration of economic growth and the reduction of absolute poverty, attention has shifted to the broader distributional impacts of the economy, raising concerns about social stability due to rising inequality. the variation concerning upward horizontal mobility is greatly affected by india’s caste system and the differences it creates. their research focuses more on the patterns and trends caught on film in india over three decades until 2011-2012. in the early 1990s, economic liberalisation in india’s mixed market controls changed too much, fueling some growth and increasing income inequality. chakraborty (2023) and similar studies suggest that the growth is disproportionately distributed, giving the better-off households a bigger advantage. the gini index exhibited an upward trend during this period, signifying an expansion of income disparities. the division between rural and urban areas has profoundly influenced the patterns of economic inequality in india. similar findings were reported by azam and shariff (2011), indicating that income disparity in rural india increased from 1993 to 2005. salaries and farm income are two sources that contribute to inequality. income from both agricultural and non-agricultural casual labour can also reduce inequality. in rural india, developing non-agricultural employment opportunities can also reduce wealth inequality. sheoran (2024) analyses the intricate issue of wealth disparity in india, highlighting its sociological implications and historical underpinnings. india’s complex and varied social structure has resulted in income inequality, characterised by the disproportionate distribution of income among individuals or households, which poses a significant socioeconomic challenge. according to the findings, income disparity in india is not just a statistical issue but also a considerable element influencing social cohesiveness and economic stability. the authors roy et al., (2024) provide a comprehensive analysis of the wealth gap in india. they discovered that there are significant geographical variances in the distribution of household wealth across the country. the data comes from the national family health survey, which gathers information from 707 different areas. the findings indicate that india’s central, eastern, and northeastern regions experience elevated levels of inequality, while affluent households are predominantly situated in the northwestern and southern regions. rurality, low female literacy rates, the educational level of household heads, and the prevalence of scheduled castes/tribes are significant factors associated with wealth disparity. according to the research, more than 90% of the variance in characteristics of wealth distribution may be explained by geographical regression models, specifically gwr and mgwr. in order to guide efforts for equitable growth in different socioeconomic circumstances, the study highlights the significance of understanding the regional dynamics of wealth disparities. these studies’ discussions led to the formulation of the following research questions. 3. research objectives the primary objective of the research is to comprehensively examine the trends in the gini index, a widely used indicator of income inequality, with a particular focus on india. asian business research journal, 2025, 10(5): 1-11 4 © 2025 by the authors; licensee eastern centre of science and education, usa • one of the specific objectives is to investigate the patterns and changes in the level of income inequality in india over time, with the gini index as the major indicator. • determining the social, economic, and policy-related variables influencing income inequality in india. • estimating the influence that income inequality has on the growth of the economy, the cohesiveness of society, and the general well-being of people. • it is important to provide stakeholders and lawmakers with viewpoints and proposals to combat income disparity and achieve fair socioeconomic results. 4. research methodology this study will investigate the trends of india’s gini index from multiple angles, drawing on secondary data and existing literature. income inequality in india is represented by the gini index, which is examined through a comprehensive data collection technique. data for this study will primarily originate from official indian government publications, surveys, and datasets that measure income disparity and distribution. secondary data from academic journals, research papers, and studies dealing with india’s wealth disparities has also been collected. primarily, the data has been collected from credible sources such as the world bank, the international monetary fund, and statistical agencies of the indian government. this data set provides a series of income distribution, household surveys, and other relevant socio-economic indicators that may be used to compute the gini index and comprehend the patterns of income inequality in india. the india human development survey data offers extensive information on household income, education, and socioeconomic characteristics and allows for a thorough examination of income inequality across various demographic and geographic groupings. upon data collection, suitable analytical methods will be used to analyze the trends in the gini index and, hence, the income inequality in india. the main analysis entails calculating and analysing the gini index, a common statistic for determining income inequality. a higher gini coefficient reflects a higher inequality of income within a community. a descriptive statistical analysis summarises income distribution trends and changes over time. thus, computation regarding mean income, median income, and quartiles is done in detail to analyze inequalities in income in the indian context comprehensively. the analysis will encompass the subsequent steps: a. the gini index data is sourced from world bank statistics from 2014 to 2023. the data is subsequently validated by the sbi report (gini index, 2023). b. analyze temporal trends in the gini index, noting any substantial variations or patterns. c. disaggregate the gini index data to examine disparities across several states, rural and urban regions, and demographic categories (e.g., gender, caste, educational attainment). d. utilizing the existing body of research, investigating the socioeconomic, policy, and structural factors that have the potential to influence the observed changes in income disparity. e. investigate the impact of differences in education, employment, and regional circumstances on the documented income disparity patterns. f. analyze the findings’ implications for policymakers and outline potential approaches to reducing the income gap in india. 5. investigation and discourse a typical indian, beyond the elite, may benefit from globalization, provided the government increases public investments in health, education, and nutrition. furthermore, a 2% “super tax” on the net wealth of the 167 wealthiest indian households in 2022-23 would generate revenues amounting to 0.5% of national income and create significant fiscal space to enable such investments (ranvanshi, 2024). a report by oxfam (himanshu, 2022) indicates that the wealthiest 10% of the indian population owns 77% of the country’s total wealth. in 2017, 73% of wealth was concentrated in the hands of the wealthiest 1%, while 67 crore indians, constituting the poorest half of the population, experienced a mere 1% increase. india hosts 119 billionaires. these numbers increased from only 9 in 2000 to 101 in 2017. between 2018 and 2022, india is anticipated to produce 70 new millionaires daily. the net worth of billionaires increased almost tenfold during a decade. their aggregate financial resources exceed india’s union budget for the fiscal year 2018-19, amounting to rs 24,422 billion. menon (2024) analyzes taxpayer data, demonstrating a reduction in the gini coefficient, a measure of income inequality, from 0.472 in 2014-15 to 0.402 in 2022-23. this reduction of roughly 15% signifies a noteworthy decline in income inequality over this period. to ascertain, data presented in table 1 is sourced from the world bank website. table 1. gini coefficient year gini coefficient 2014 0.47 2015 0.47 2016 0.47 2017 0.47 2018 0.46 2019 0.46 2020 0.46 2021 0.45 2022 0.41 2023 0.40 source: world bank, state bank of india. asian business research journal, 2025, 10(5): 1-11 5 © 2025 by the authors; licensee eastern centre of science and education, usa table 1 displays the gini coefficient for india from 2014 to 2023. from 2014 to 2023, the gini coefficient has constantly decreased, showing a drop in income inequality for this period. this could be due to different socioeconomic policies, economic growth, access to more education, and other factors that might have helped distribute income more equitably. the data might indicate that initiatives for poverty reduction, economic inclusion, and reduction of disparities in development have been effective. the notable declines observed in specific years, such as 2021-2022 and 2022-2023, can be attributed to deliberate initiatives or economic conditions favouring a more equitable income distribution. it is relevant to analyze these years’ economic and social environment, including changes in tax laws, changes in minimum wage, and modifications in social assistance programs that may affect income distribution. the gini coefficient fell from 2014 to 2023, reflecting improvements in reducing income inequality in india. scholarship corroborates this; for instance, sahasranaman & jensen, (2019) find that india has moved away from progressive and towards regressive redistribution with the continued deprivations among the poor, enabling significant income rises among the richest. rural-urban separation is a vital issue, with intrastate income discrepancies accounting for a substantial share of interdistrict inequality in urban india, as noted by azam & bhatt, (2016). although the gini coefficient has decreased, income inequality in india persists at a significant level, as indicated by the substantial proportion of wealth possessed by the top 10% of the population (lawson et al., 2018), (vatta & pavithra, 2016), (roy et al., 2024). the findings indicate that although india has improved in diminishing overall income disparity, considerable obstacles persist in tackling the fundamental structural and socioeconomic factors contributing to inequality, especially in education, employment, and regional development. the study further analyses rural and urban gini coefficients and their differences. table 2. gini coefficient for rural/urban areas with difference. year rural urban difference 2014 0.396 0.426 0.030 2015 0.392 0.422 0.030 2016 0.387 0.417 0.030 2017 0.382 0.413 0.031 2018 0.377 0.409 0.032 2019 0.371 0.403 0.032 2020 0.368 0.400 0.032 2021 0.36 0.392 0.032 2022 0.352 0.384 0.032 2023 0.346 0.376 0.030 source: state bank of india and world bank. it is pointedly underscored that this persistent rural-urban divide, coupled with gender and socioeconomically unequal barriers, influences income distribution in india. table 2 presents information on metropolitan regions between 2014 and 2023, evidencing the decrease in income disparity between rural and urban parts of india. it indicates higher disparities within metropolitan regions than in rural areas. overcoming such disparity requires a continued effort at legislation and intervention for inclusiveness in economic growth. this indicates that urban areas exhibited greater income inequality than rural areas in 2014, and this tendency persisted into 2015. in 2016, both rural and urban regions experienced a marginal reduction in inequality, a trend that continued, followed by a modest increase in the disparity in 2017. in 2018, both rural and urban areas had a decrease in inequality despite a marginal widening of the gap by 0.032. in 2019, the trend of diminishing inequality continued, with the disparity constant. in 2020, it is apparent that both rural and urban regions experienced a continued reduction in inequality. no alterations occurred in 2021, but a persistent decline in inequality in both rural and urban areas was observed in 2022. the reduced gap of 0.030 between rural and urban disadvantages is seen in 2023. the reduced income share of the underprivileged rural population significantly contributes to the overall rise in inequality. during the research period, real average income rose by merely 4.3% annually, although the poorest decile’s proportion of rural income dropped by 41.1% (vatta & pavithra, 2016). these patterns underscore the increasing disparity between rural and urban areas and the expanding divide between the wealthy and the underprivileged among the rural population. figure 1. gini coefficient for rural/urban area with difference. asian business research journal, 2025, 10(5): 1-11 6 © 2025 by the authors; licensee eastern centre of science and education, usa figure 1 illustrates the gini index for rural and urban regions of india from 2014 to 2023, highlighting the disparity between the two indices. the gini indices for rural and urban areas have steadily decreased over the years, indicating a reduction in income inequality. the discrepancy between the rural and urban gini coefficients is consistently minimal throughout the duration. urban regions have continuously expressed a higher income inequality than rural regions over these years. this could be due to diverse economic perspectives and inequality within urban settings. the gap in gini coefficients between rural and urban areas has remained quite stable over the years; scientists have remarked that only small deviations have occurred. the gap demonstrated only a slight decline in 2023 compared to previous years (wang et al., 2020). indeed, inequality has been reduced due to some influences: economic growth, the government's poverty reduction policy, and social welfare. initiatives such as the mgnrega (mahatma gandhi national rural employment guarantee act) and other urban development programs have marked these changes significantly (farooquee, 2013). the pandemic caused significant changes in income distribution. the data indicates a persistent reduction in inequality; however, the economic disruptions from covid-19 may have impacted various income groups disproportionately, with rural regions possibly gaining from agricultural resilience while urban areas encounter more severe economic difficulties (mueller et al., 2020). ongoing initiatives are required to tackle economic disparity, particularly in metropolitan regions. policies targeting education, healthcare, and employment opportunities can reduce disparities and foster equal growth. policymakers must implement a comprehensive strategy that addresses the structural and socioeconomic determinants of inequality, emphasizing enhanced educational access, creating inclusive employment opportunities, and promoting equitable regional development. given that it has to strive for sustainability and equitability, a broad policy-action direction to address the roots of income inequalities is crucial for india to allow benefits from economic progress to reach all sections evenly (sahasranaman & jensen, 2019); (azam & bhatt, 2016) and (batra & reio, 2016). 5.1. urban income disparity in india (2014-2023) urban regions in india have persistently demonstrated more income disparity than rural regions, as seen by the gini index data from 2014 to 2023. this inequality can be ascribed to multiple variables, such as various economic prospects, differing access to education and healthcare, and the concentration of wealth in urban areas (chakraborty, 2018). the rural-urban gap remains a chronic issue in india, where urban regions frequently reap disproportionate economic growth and development advantages. the gradual increase in the urban population and the diminishing proportion of agricultural land in india’s gdp have intensified this disparity, as the urban-focused economic model has failed to provide equitable opportunities for all (azam, 2019). policymakers must address the root structural and socio-economic causes of urban inequality: disparities in the returns to education, unequal distributions of economic resources, and spatial inequalities in metropolitan areas. investment in the cities’ infrastructure, housing affordability, and skill development programs is a strategic thrust for developing an inclusive and equitable urban environment (sahasranaman & kumar, 2020; chakraborty, 2018). 5.1.1. economic prospects and inequities urban environments have diverse economies, ranging from high-paying it and financial jobs to low-paying informal labour. significant wealth disparities are caused by this type (mela & toldo, 2019). high-income industries like it, banking, and real estate are concentrated in cities like bangalore, delhi, and mumbai, which attract skilled workers and business owners. whichever the case, these cities also host numerous people in lowincome jobs, such as hawkers, house helpers, and construction workers. incorporating high and low-income earning groups contributes to the high gini index in metropolitan areas. 5.1.2. access to education and healthcare one of the major causes of economic inequality in urban centers is access to quality health and education services. urban areas often have better educational institutions and healthcare facilities than rural ones. however, unequal access to such services is common. affluent households can afford private education and healthcare, improving economic opportunities and health outcomes. in contrast, lower-income families are forced to use public services, often inadequately funded and overutilized. the disparity in access perpetuates economic inequality since the better-educated and healthier a person is, the higher-paying jobs he or she is likely to get. mutisya et al., (2021) confirm this fact. 5.1.3. wealth accumulation the concentration of wealth in cities considerably accelerates economic inequality. investments and businesses naturally flock to urban centres. hence, wealth tends to be concentrated within a limited population. a case in point is real estate. property prices in metropolitan cities such as mumbai and delhi have stratospherically risen, thus yielding gains for property owners and investors and rendering housing well out of the reach of others (nijman, 2006). such concentration of wealth among property owners and high-salary professionals aggravates economic inequality. 5.1.4. government regulations and social initiatives government policies and social activities have impacted urban income inequality; however, their consequences have been variable. initiatives focused on poverty reduction, such as the pradhan mantri awas yojana (pmay) for affordable housing and the national urban livelihoods mission (nulm) for employment creation, have offered certain alleviation (actionaid, 2024) & (aarohi d. & siddharth k.j., 2024). yet, these programs do little in scope and implementation to tackle the more structural roots of such inequalities. further, policies related to urban planning and development are also often biased toward rich individuals; such conditions could precipitate gentrification and dislocation of the poor. asian business research journal, 2025, 10(5): 1-11 7 © 2025 by the authors; licensee eastern centre of science and education, usa 5.1.5. impact of covid-19 covid-19 seriously impacted economic inequality within cities. the economic disruptions caused by lockdowns and restrictions significantly affected low-income workers in the informal sector, with many experiencing job loss or considerable wage reductions. in contrast, individuals in higher-income brackets, particularly those able to work remotely, faced reduced impact (boza‐kiss et al., 2021). the epidemic highlighted and sometimes intensified existing inequalities, underscoring the need for enhanced social safety nets and inclusive economic policies. the issues of urban income inequality in india can be addressed through improved access to quality education and healthcare, inclusive urban development policies, and inclusive economic growth for all segments of society. when these challenges are addressed, india can promote equitable and sustainable urban environments (patil & sharma, 2020). 5.2. income inequality in rural india between 2014 and 2023 the gini index for rural areas in india declined continuously between 2014 and 2023. this trend suggests many socio-economic factors, including agricultural policies, rural development initiatives, and demographic shifts. 5.2.1. agricultural policies and income distribution agriculture remains the cornerstone of rural india, employing a significant portion of the population. government programs supporting agriculture, such as minimum support prices (msp) for crops, fertilizer subsidies, and irrigation initiatives, have stabilised rural incomes. these methods promote fair pricing for agricultural products, thereby reducing income disparities (venumuddala, 2020). nevertheless, the majority of farmers continue to sell their produce to local merchants, which means that they do not directly benefit from msp. the level of awareness regarding msp was also found to be extremely low, with 70% of farmers being oblivious to it (korekallu et al., 2023). 5.2.2. schemes for rural development several schemes for rural development have contributed significantly to reducing the gap in income inequality. mgnrega (mahatma gandhi national rural employment guarantee act 2005) is one significant scheme that guarantees employment to rural households. it serves as a safety net that alleviates income instability and supports the livelihoods of the most impoverished segments of the rural population (mir et al., 2018). additionally, programs like the pradhan mantri gramme sadak yojana (pmgsy) and the national rural livelihoods mission (nrlm) aim to improve infrastructure and create sustainable employment opportunities, thereby promoting a more equitable income distribution (patnaik & prasad, 2014). 5.2.3. access to education and healthcare the government of india has given considerable thrust to rural access to education and healthcare. there are programs such as ssa and nhm to improve the reach and quality of services. improved access to these services can help rural people seek better-paying jobs and improve their economic status. improved access to essential services can help rural residents seek better-paying jobs and improve their economic status (gopalakrishnan & immanuel, 2017). however, disparities exist in accessing these services, especially among far-flung and disadvantaged groups. 5.2.4. migration and remittances rural-to-urban migration is a common feature in india, mainly influenced by the search for better employment opportunities. remittances migrants send to family members in rural areas significantly affect income distribution. remittances are like an added source of income that helps reduce poverty and inequality. however, the benefits from migration are distributed unevenly, with some families receiving substantial remittances while others gain little to no assistance. 5.2.5. the consequences of covid-19 the covid-19 epidemic had a two-pronged effect on rural income inequality. on the one hand, the lockdown and job loss in urban centres precipitated the arrival of migratory workers in rural areas, thus raising labour supply and, more than likely, depressing wages. on the other hand, the government relief programs were a vital source of sustenance for the rural populace through increased money allocations for mgnrega and direct cash transfers. since the farming sector received consistent agricultural returns from favourable monsoon seasons, it proved resilient during the epidemic. after collecting data from the world inequality database, further investigation was conducted using the percentile. asian business research journal, 2025, 10(5): 1-11 8 © 2025 by the authors; licensee eastern centre of science and education, usa table 3. gini index with percentile. per-centile 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 bottom 50% pre-tax national income p0 p50 0.1313 0.1297 0.1256 0.1239 0.1281 0.1307 0.1372 0.1364 0.1325 0.1325 middle 40% pre-tax national income p50 p90 0.2974 0.2926 0.2822 0.2774 0.2826 0.2824 0.2826 0.2817 0.2786 0.2786 top 10% pre-tax national income p90 p100 0.5713 0.5777 0.5923 0.5987 0.5893 0.587 0.5802 0.5819 0.5889 0.5889 top 1% pre-tax national income p99 p100 0.2173 0.221 0.2264 0.2265 0.2278 0.2203 0.2199 0.2213 0.2307 0.2307 gdp constant (2023) pall 6658.16 7041.44 7465.79 7811.36 8152.88 8308.63 7681.22 8240.56 8708.71 9238.69 asian business research journal, 2025, 10(5): 1-11 9 © 2025 by the authors; licensee eastern centre of science and education, usa table 3 represents the income distribution statistics. the dataset runs from 2014 to 2023 and reflects pre-tax national income share for the lowest 50%, middle 40%, top 10%, and top 1% in addition to gdp in constant 2011 usd. the data indicates a gradual decline in income inequality, with the pre-tax national income share of the poorest 50% having slightly increased over time, while the shares of the top 10% and top 1% have shrunk. it is possible to underline, by the gini coefficient and income distribution, that despite overall economic growth, income inequality remains. according to mishra, (2018), the promotion of equitable growth would need targeted measures since lower-income groups are relatively stable, the middle class has seen a slight decline while the rich have further concentrated their wealth. these issues must be considered if one wants a more equitable and long-term economic future where all share the benefits arising out of economic progress. following 0.1313 in 2014, the pre-tax national income of the bottom 50%, p0p50, was 0.1325 in 2023, meaning the very stable share this demography possesses, with a slight fluctuation. the same trend has been followed over the past ten years regarding income distribution for the bottom half. the middle 40% pre-tax national income (p50p90) decreased from 0.2974 in 2014 to 0.2786 in 2023, indicating a marginal reduction in their share of pre-tax national income. this shows a slight deterioration in the economic status of the middle class over time. this group is essential for economic stability and growth, and its diminishing share may have wider repercussions for consumer expenditure and economic well-being (eggimann & kendzia, 2022). the top 10% of pre-tax national income (p90p100) fluctuates from 0.5713 in 2014 to 0.5889 in 2023, indicating that this demographic has consistently retained a substantial share of the national income, with a marginal increase over the years. this shows that there is still a significant income gap at the top. the increasing wealth disparity is evident since the pre-tax national income for the top 1%, p99p100, increased from 0.2173 in 2014 to 0.2307 in 2023. the level of income inequality has increased, and the top 10% have seen a high rise, especially the top 1%. this underlines the uneven distribution of economic resources and social uprisings, likely due to the increasing gap between the richest and the rest. according to a report by oxfam, an international organization dedicated to poverty eradication, in 2017, the top 10% of earners in india held 80% of the nation’s wealth. the richest 1% holds 58% of indian wealth, while the wealthiest 1% in the us has 37% of the total wealth (basu, 2017). this pronounced inequality is not good for social cohesion, and it also binds future economic growth by limiting opportunities for the poor and middle class to participate in development and benefit from it. we choose 2023 as a reference year in national income and gdp discussions. the increase in gdp from 5754.60 in 2014 to 8014.53 in 2023 indicates a consistent rise in national revenue, signifying broad economic expansion. nonetheless, this expansion has not been uniformly allocated across all income brackets. even though the gdp) has seen a significant increase, the distribution of this growth has been unequal. there is a persistent and, in some cases, growing income discrepancy because the benefits of economic progress have not been dispersed uniformly. 6. conclusion and recommendations the gini index between 2014 and 2023 indicates that income inequality decreased in some periods. however, according to consumption expenditure data (vatta & pavithra, 2016), many studies’ trends indicate alarming patterns. inequality has remained elevated, as seen by the gini coefficient rising from 33.4 in 2005 to 33.9 in 2012. although the gdp has seen a significant increase, the distribution of this growth has been unequal. there has been a continued and, in some instances, an increasing income gap since the gains of economic growth have not been distributed evenly. from the trend observed in the figures above, policies are necessary to achieve a fairer income distribution. such policies may include progressive taxation, higher social spending, and initiatives to support middle and lowincome earners. inclusive growth is pursued to achieve sustainable development and social stability. continuous monitoring of the pattern of income distribution would provide a greater understanding of inequality patterns that have persisted over time. income inequality has become more marked, with estimates of a gini coefficient of around 0.48-0.51 in recent years (naraparaju, 2016). it is indicated that the economic gains are inequitable, with the top 10% and the top 1% holding a huge share of national revenue. this suggests that the benefits of economic advancement are inequitably allocated and that the elite’s wealth is highly concentrated, thus marginalizing middle and lower-income populations. the gini index of india exhibits a dynamic trend, which increases with economic growth, social policies, and structural reforms. the initial decades following independence demonstrated a stable gini index; however, subsequent economic liberalization policies have been associated with rising income inequality. this suggests that while economic advancement has lifted millions out of poverty, it has primarily benefited the wealthier segments of society, leading to an increasing income inequality. the data reveals rather clear patterns, such as the increasing urban-rural income gap and persistent inequalities due to caste and gender. regional disparities are likely an important factor, with some states showing more inequality than others. the results show a rising wealth concentration pattern in the highest income brackets, hence increased inequality. this finding highlights the need for policy interventions to address these trends. this suggests that while economic growth is essential, it must be accompanied by policies that promote equitable development and address structural disparities. these policies may include improving social safety nets, investing in education and healthcare, and ensuring equitable access to resources and opportunities. the study has pointed out that sound governance and correct implementation of policies hold the key to the percolation of economic growth in all strata of indian society. much research is needed on india’s complex mechanisms of income disparity, along with better and more effective policy solutions. the following recommendation is suggested for consideration by policymakers: a. progressive taxation: a higher and stronger tax would help increase the financial burden on high-income earners so that they can afford to redistribute income and wealth or reallocate it. asian business research journal, 2025, 10(5): 1-11 10 © 2025 by the authors; licensee eastern centre of science and education, usa b. resource distribution to welfare policy: increase spending on education, healthcare, and support structures for the poor and middle class to improve the poor’s living and economic opportunities. c. encourage inclusive growth: enact policies that provide employment, skill development, and entrepreneurial opportunities for marginalized groups, facilitating their active participation in the economic growth process. d. enhance data collection and transparency: improve the quality and accessibility of income and wealth statistics to better comprehend the dynamics of inequality and guide policymaking. e. accelerate rural and urban development: adopt a better-integrated approach towards regional development with an increasing urban-rural divide, ensuring that economic growth is equitably distributed between rural and urban areas. implementing such policies would facilitate economic growth with social cohesion in india and eventually make the indian economy more equitable and inclusive. policymakers should contemplate strategies to resolve these issues, such as enhancing progressive taxation, investing in social welfare initiatives, fostering inclusive growth, augmenting data collection and transparency, and synchronizing rural and urban development (vatta & pavithra, 2016) (de & devi, 2023) (sahasranaman & kumar, 2020). by implementing a holistic strategy, india may strive for a more equitable and sustainable economic framework that offers opportunity for all demographic segments. 7. policy recommendations the research might be limited to the feasibility of the proposed policy suggestions regarding their political acceptability or possible influence. policies addressing income inequality can only be properly implemented with sufficient consideration of the political, economic, and social context. references aarohi d. & siddharth k.j. 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( corresponding author) abstract the provision of financial services via electronic delivery systems is commonly referred to as electronic banking (e-banking). from the very beginning, e-banking has played an important role in the economic development of many countries and has made a significant contribution to customer satisfaction. the aim of this study is to propose a comprehensive model for measuring customer satisfaction with e-banking services in bangladesh. the study is based on selected peerreviewed articles from 9 bibliographic databases. the results show that customer satisfaction is influenced by service quality, customer experience and customer satisfaction. the study concludes that it is a comprehensive model for measuring customer satisfaction with e-banking services in bangladesh. keywords: customer experience, customer satisfaction and bangladesh, service quality. jel classification: 1. introduction the banking industry significantly influences the development and prosperity of a nation's economy and society (pradnyadewi, & giantari, 2022; rajasulochana, & khizerulla, 2022). it benefits the gdp and aids in the creation of wealth. it offers protection and safety and acts as a source of financial services (rahman et al., 2017). the importance of banking has increased due to scientific and technological breakthroughs. modern banking systems provide clients from all backgrounds with better services, pricing, and protection despite specific challenges and possible threats (rahman et al., 2017). the banking sector in bangladesh has advanced tremendously in response to the fast-evolving modern world (rajasulochana, & khizerulla, 2022). the sector has been dedicated to fostering fairness, social integrity, growth, and development since its creation in 1971 and has grown to be a substantial contributor to the national economy. the market includes a variety of bank types, which are divided into four categories based on ownership: state-owned commercial banks (scbs), stateowned development financial institutions (dfis), private commercial banks (pcbs), and international commercial banks (fcbs) (bangladesh bank, 2023, 2022, & 2021). there are currently 61 scheduled banks operating in bangladesh, which include six state-owned commercial banks (scbs), three specialized banks (sdbs), forty-three private commercial banks (pcbs), and nine foreign commercial banks (fcbs) (bangladesh bank, 2023 & 2022). traditional and modern banks maintain their existing customers and explore new business prospects (rahman et al., 2017). the development of the financial services sector, particularly banking, is heavily influenced by technological advances. while the banking sector in bangladesh is adopting technology at a slower pace than other countries, it has been making progress (pradnyadewi, & giantari, 2022; rajasulochana, & khizerulla, 2022). the emergence of private banks in the mid-1990s in bangladesh brought about significant changes as these banks had a solid it infrastructure. the key aspect of a bank's marketing strategy today is the use of technology to provide clients with channels to manage their accounts and communicate with their bank. the advancements in technology have allowed financial services and products to be operated and managed remotely. both traditional financial service providers and newcomers are exploring untapped potential in the market (pradnyadewi, & giantari, 2022; rahman et al., 2017). mailto:bashirupm@yahoo.com https://www.doi.org/10.55220/25766759.228 asian business research journal, 2024, 9: 127-134 128 © 2024 by the authors; licensee eastern centre of science and education, usa 2. review of literature 2.1. e-banking electronic banking encompasses a range of transactional services such as telephone banking, credit and debit card usage, and automated teller machines (atms). moreover, it includes electronic funds transfer (eft), directly transferring funds from one account to another. in contrast, e-banking is a banking system where all transactions are conducted through the internet, according to carranza et al. (2021). as per rajasulochana and khizerulla (2022), e-banking is a personal banking service available on the internet and secured with bank identifiers. it can be accessed from anywhere and at any time, allowing for easy and secure payment to finnish and foreign recipients. e-banking is a means of electronic communication between banks and customers, which facilitates the preparation, management, and monitoring of financial transactions (pradnyadewi, & giantari, 2022). e-banking takes several forms, including pc banking, internet banking, telebanking, and mobile banking, as described by munir and rahman (2016). based on the work of nsouli and schaechter (2002), the relationship between e-commerce and e-banking is illustrated in figure 1's flow chart. figure 1. 2.2. automated teller machines (atms) an electronic device (e-device) is an unattended machine connected to a data system and placed in public areas. it is similar to an automated teller machine (atm) and enables bank customers to access various financial services, such as cash withdrawals, without the help of human bank tellers. common names for this device include "cash machines" and "money machines." customers who use atms can check the balances in their accounts, transfer money between accounts, deposit cash or checks, top up their mobile phones, and even purchase postage stamps. customers use a plastic card with a magnetic stripe or a smart card with a chip containing their account number to access an atm. once the card is inserted, the customers must enter a personal identification number (pin) consisting of four or more digits to confirm their identity. if the pin is entered incorrectly multiple times, the atm may retain the card as a security measure to prevent unauthorized access to the account. in situations where the atm owner is not the card issuer, captured cards may be destroyed due to difficulties in confirming the identity of non-customers. 2.3. tele banking customers can now complete banking-related tasks like financial transactions from anywhere, at any time, thanks to the introduction of telebanking services on the internet. customers can use an interactive voice response (ivr) system to access their accounts by calling a provided telebanking number and selecting options from a userfriendly menu. most customer calls are successful when enough hunting lines are available. 2.4. smart card a smart card looks like a credit or debit card but has an 8-bit microprocessor, which replaces the magnetic stripe on regular cards. the microprocessor is located under a contact pad on one side of the card and works to improve the security of the card. when communicating with a card reader or host computer, the microprocessor acts as a gatekeeper to the card's data. these chips have the ability to facilitate various types of transactions, including credit and debit purchases, as well as reloadable stored account value purchases. compared to magneticstripe cards, smart cards have greater memory and processing capabilities, enabling multiple applications to be stored on a single card. additionally, smart cards can contain identification information, reducing the need for individuals to carry multiple cards in their wallets. asian business research journal, 2024, 9: 127-134 129 © 2024 by the authors; licensee eastern centre of science and education, usa 2.5. credit card credit cards offer a way to borrow money to make purchases. unlike debit cards, credit cards are not connected to the user's bank account. the capacity to pay for the purchases later enables the cardholder to make purchases on credit. 2.6. debit card debit cards, sometimes called check cards, resemble atm or credit cards but work like cash or personal checks. unlike credit cards that allow delayed payment, debit cards enable immediate payment by deducting the money from your checking or savings account as soon as you use the card. they are widely accepted at retail stores, gas stations, restaurants, and supermarkets where the card's brand name or logo is displayed. debit cards offer a convenient and cashless way to carry money without requiring cash or a cheque book. 2.7. e-cheque an electronic check (or "e-cheque") has the same data and legal protections as a paper check. in remote transactions, it can replace paper checks. an e-cheque is written by the cheque writer using an electronic device, much like traditional cheques, and is then electronically sent to the payee. when an electronic cheque is received, the payee can "deposit" it to get credit, and the payee's bank will then "clear" the electronic cheque to the paying bank. the paying bank will then confirm the e-cheque and take the appropriate amount from the check writer's account. 2.8. sms banking sms or short message service refers to the official term for text messaging. with sms banking, customers can perform basic banking transactions by sending and receiving text messages to and from their bank accounts. 2.9. point of sale [pos] the point of sale (pos) service is a cutting-edge electronic payment system that enables bank clients to pay for their purchases at any retailer. it supports pos transactions using an atm or credit card. 3. methodology of the study this review investigates customer satisfaction in e-banking from a multidisciplinary perspective. to that end, we chose publications that have undergone peer review journals from 9 bibliographic databases (acm digital library, emerald, ieee xplore, sage journals online, science direct, scopus, taylor & francis online, web of science, and wiley online library). peer-reviewed journals were considered based on their knowledge validity and their highest impact on the research field (deraz, h., & iddris, f. 2019 & podsakoff et al., 2005). an archival research design is assigned to get information by using historical and non-historical content (ventresca & mohr, 2017). the data was collected from journal articles, websites, blogs, and visual and numerical artifacts. archival research is a data collection that includes acquiring information from previous sources, company records, historical papers, websites, and blogs (vogt, gardner, & haeffele, 2012). the researchers use an “introductory literature review” to analyze and explain the collected data. metaanalysis and other scientific and systematic reviews have enriched the critics of different kinds of literature reviews. a consequence emerged from the proliferation of systematic reviews. the coordination among researchers increases the level of rigor, reliability, and objectivity effectively and efficiently. an introductory review is obtained from a limited number of published publications including the subject matter under investigation (vogt et al., 2012). a certain keyword is assigned to perform an integrated search for relevant scholarly articles through various databases. the used databases in this research are collected from scopus, web of science, google scholar, doaj, and jsror, even other relevant websites and online platforms. 3.1. history of e-banking in the world in the 1980s, internet banking emerged as an extension of telephone banking, and with the increasing availability of the internet in homes, banking and finance companies in europe and the usa began developing the concept of "home banking." however, due to the limited use of computers and the internet at the time, telephone banking was more common. the first internet banking application was launched in the usa in 1996, and major banks like citibank and wells fargo began offering the service to their customers in 2001. in singapore, dps bank introduced internet banking services in 1997, followed by uob and ocbc. in turkey, internet banking started to gain traction in the 1990s, spurred by technological advancements both locally and globally. 3.2. e-banking in bangladesh e-banking services, on the other hand, have been around since 2001 in bangladesh (khan et al., 2021; bashir et al., (2020); rahman et al., 2017). electronic banking received incredible attention and significance from both the banking sector and its customers. in developed asian countries like hong kong, japan, singapore, south korea, and taiwan, there has been a substantial increase of penetration of e-banking from 58 percent in 2011 to 92 percent in 2021. the number of internet banking customers in bangladesh nearly tripled from march 2020 to november 2023. amidst the global pandemic in march 2020, the country had 2.7 million internet banking customers, witnessing a remarkable 203% growth to reach 8.1 million by november 2023. (https://shorturl.at/ri8vh, 2024) according to business standard (2022), there are currently 112.72 million internet users and 3.38 million ebanking customers in bangladesh, representing 2.99% of internet users in the country. despite e-banking being well-established in countries such as the us, uk, and europe, e-banking is still in its early stages in bangladesh as indicated in table 1.1. however, there are few users who take advantage of e-banking due to concerns about personal account security, complicated online banking websites, poor website responsiveness, among other factors (khan et al., 2021). therefore, there is a growth potential in bangladesh to adopt e-banking services, which will asian business research journal, 2024, 9: 127-134 130 © 2024 by the authors; licensee eastern centre of science and education, usa make transactions smoother and easier for clients and contribute to greater individual and collective economic transactional sustainability. in order to examine the acceptance, usage, and opposition of e-banking channels, certain theoretical models are considered more advantageous. these models are explained below. 3.3. diffusion of innovations (doi) rogers's doi theory is frequently utilized in research on information systems to elucidate users' acceptance of new technologies. doi proposes that an innovation's adoption speed is influenced by its relative advantages, complexity, compatibility, trialability, and observability (rogers, 1995, 2003). the first four factors are usually positively associated with adoption, while complexity is typically negatively associated with adoption. complexity is comparable to the construct of perceived ease of use in the technology acceptance model (tam) and refers to how challenging an innovation is to operate and comprehend. for instance, in the early 1980s, the perceived complexity of home computers was a significant negative factor in their adoption rate. eventually, home computers became more user-friendly, and their adoption rate gradually increased to around 30% of all households by 1994 (rogers, 1995, 2003). 3.4. theory of reasoned action (tra) and theory of planned behavior (tpb) fishbein and ajzen (1975) proposed the tra theory, which suggests that an individual's behavior can be predicted based on their attitudes towards the behavior and subjective norms, which are influenced by behavioral intentions. attitude towards behavior refers to an individual's emotions related to performing a behavior. in contrast, subjective norms refer to their perception of whether they should perform a behavior based on others' opinions. scholars commonly use the tra to understand user purposes in organizing information systems. ajzen (1991) expanded the tra theory to create the tpb, which considers the perceived control of behavior. if a behavior is under volitional control, the intention may manifest in the behavior itself. non-motivational factors such as resource availability may also affect behavior. several studies have applied the tra or tpb to investigate consumer behavior in e-banking channels, sometimes combining them with other theoretical hypotheses from the e-banking literature, such as reliance on internet banking solutions (al-somali, et al., 2009). tan and thompson (2000) identified factors influencing the adoption of internet banking and extended rogers's doi framework by combining it with the tra and tpb. their research focused on how an individual's attitude and perceived behavioral control affect their intention to use internet banking services. figure 2. planned behavior theory. 3.5. technology acceptance model (tam) the technology acceptance model (tam), created by davis in 1989, was designed to measure user acceptance of information systems and identifies the behavioral intentions of using the system. tam is related to fishbein and ajzen's theory of reasoned action (tra) and ajzen's theory of planned behavior (tpb). tam focuses on three internal variables that affect technology use: perceived usefulness (pu), perceived ease of use (peu), and behavioral intention to use. tra proposes that behavioral intention is determined by a person's attitude, belief, intention, and behavior, and it assumes that behavior is under the conscious control of the person. however, this theory may not accurately predict behavior in situations where people have no conscious control or where information is limited. the tpb extends the tra by including the perceived behavioral control to account for the perceived difficulty of carrying out a behavior. tam, which is based on tra, is a model that focuses on people's attitudes and behaviors toward technology. the tam has three main components: pu, peu, and use of computer. although the tam has been modified by researchers, it has remained relatively unchanged. the tam has been examined in many studies, and some researchers have found it beneficial, while others have concluded that it needs to be integrated into a broader context. several studies have found that the tam aspects, such as usefulness, user-friendliness, and attitude, directly impact the use of e-banking. harasis, & rasli (2016) surveyed 304 participants and recommended an extended tam that examines the impact of system usability and satisfaction on users' intention to continue using e-banking services. the results showed that users' intention to continue using e-banking is influenced by satisfaction, pu, and compatibility. asian business research journal, 2024, 9: 127-134 131 © 2024 by the authors; licensee eastern centre of science and education, usa figure 3. theory of technology acceptance model. 3.6. technology resistance theory (trt) the technology resistance theory (trt) is a theory that concentrates on the reasons why individuals avoid using a particular technology instead of just analyzing the factors that promote technology adoption. traditional acceptance theories have emphasized the personal benefits and advantages of using technology in everyday activities. however, recent research in information systems (is) has emphasized the significance of comprehending the obstacles that restrict technology adoption (cenfetelli and schwarz, 2011). the itu (inhibitors of technology usage) model, suggested by cenfetelli and schwarz (2011), describes the inhibitors of technology as users' perceptions of a system's features that lead to a decision not to use it. inhibitors solely prevent use, unlike enablers. durkin et al. (2008) studied enabling and inhibiting factors influencing e-banking customer behavior. their research indicated that the absence of face-to-face interaction, reassurance about security, and trust would negatively impact consumer usage of e-banking portals. this theory examines diverse factors that influence customer satisfaction, with particular attention to the barriers that hinder technology adoption. 3.7. measurement model and dimensions measured table 1. measurement model dimensions measured kano’s model (kano, 1984) must-be requirements, one-dimensional requirements, attractive requirements, reverse quality perceived sq model (grönroos, 1984) technical service quality, functional service quality, corporate image servqual (parasuraman, zeithaml and barry, 1985; 1998) reliability, responsiveness, assurance, empathy and tangibles servferf (cronin and taylor, 1994) reliability, responsiveness, assurance, empathy and tangibles e-commerce (reichheld and schefter, 2000) customer support, on-time delivery, compelling product presentations, convenient and reasonably priced shipping and handling, clear and trustworthy privacy e-sq and e-servqual (zeithaml et al., 2000) efficiency, reliability, fulfilment, privacy, responsiveness, compensation, and contact e-satisfaction (abdulhadi, & ahmad, (2021; szymanski and hise, 2000) convenience, merchandising, easiness, information, deign, financial security e-loyalty (pambudi et al., 2021; gommans et al., 2001) website and technology, value proposition, customer service, brand building and trust & security sitequal (das & ravi, 2021; yoo and donthu, 2001) ease of use, aesthetic design, processing speed, and security webqual (ashrafpour et al., 2022; loiacono et al., 2002) information fit to task, interactivity, trust, responsiveness, design, intuitiveness, visual appeal, innovativeness, websites flow, integrated communication, business process and viable substitute, accessibility, speed, navigability and site content e-satisfaction (anderson and srinivasan, 2003) convenience motivation, purchase size, inertia, trust and perceived value e-s-qual and e-recs-qual (parasuraman, zeithaml & malhotra, 2005) efficiency fulfilment, system availability, privacy, responsiveness, compensation and contact factors affecting (veybitha et al., 2021) ease of use, usefulness, involvement, information factor, convenience, technology, community factor, entertainment factors, brand name, price factor bankzot (nadiri, et al. 2009) desired, adequate, predicted and perceived service quality https://www.emerald.com/insight/search?q=negar%20ashrafpour asian business research journal, 2024, 9: 127-134 132 © 2024 by the authors; licensee eastern centre of science and education, usa figure 4. measurement model by author. 3.8. different factors affecting customer satisfaction there is limited literature on the topic of customer satisfaction with electronic banking (e-banking) in bangladesh. this section consolidates a few studies to explore the concept. customer satisfaction is a measure of how well a customer's purchase of goods or services meets their expectations or emotional state. it is essential for businesses as it provides a quantifiable metric for further improvement and has been demonstrated to lead to customer loyalty in bangladesh. while some researchers have questioned the role of service quality in customer satisfaction, recent studies have found a strong positive correlation between e-banking service quality and customer satisfaction in bangladesh. a study conducted by ayinaddis et al., (2023), bashir et al., (2020) and bashir et al., (2015) found that service quality, information quality, and system quality are the three basic types of e-banking service qualities. the study's results demonstrated a strong positive correlation between service quality and customer satisfaction, indicating that bangladeshi banks should adopt more customer satisfaction-centric practices to maintain their profit margin. parasuraman (2005) researched to examine the connection between e-service quality and customer satisfaction. e-service quality was divided into two categories: core scale and recovery scale, based on the e-servqual model developed by parasuraman et al., (2005) and pradnyadewi & giantari (2022). according to anyasi & otubu (2009), online banking has created a new banking environment and is necessary for banks to survive. the authors of bashir et al., (2020), ali et al., (2019) and khan et al., (2021) emphasized the significance of security measures such as displaying trusted third-party logos, privacy statements, and details about the security of shopping mechanisms. despite numerous security protocols, banks are still concerned about potential risks associated with internet transactions, particularly credit card and check fraud, according to ali et al., (2015) and khan et al., (2021). the security of internet banking is something that banks cherish, but they also want their clients to feel safe using it. users of internet banking must have faith in the security mechanisms in place. according to joseph et al., (2003), there are many different online transactions, including consumer payments, securities transactions, applications for loans and insurance, and applications for loans. while banks are interested in e-banking, according to bashir et al. (2018) and khan et al., (2021), they are also worried about the hazards associated with online transactions, notably the potential for check and credit card fraud. banks concentrate on enhancing security solutions for the upcoming generation to avoid such losses. if customers are worried about the security of online banking, they could avoid it. banks are certain that transactions made through online banking are safe, but they are also aware that the security measures they have in place affect how satisfied their clients are. 3.9. customers’ perceived value customers ‘perceived value is the wealth of an organization that can attract in the mind of e-banking customers and presents the expected consequence of e-banking services. this perceived value plays the mediating role of service quality and customer experience for customer satisfaction. the relationship of perceived value is emphasized and supported by the following literature. zeithaml (1988) noted that when customers compare the perceived benefits and costs of a particular product or service effectiveness, it is known as customer perceived value. another scholar ulaga and chacour (2001) defined customer value as a customer’s perceived preference over a product following an evaluation of its attributes. so, customer value can be identified by the demand of the customer instead of the product or services. different authors have provided different definitions for customer perceived value. but all those definitions can be combined into two main categories. the first category such as that customer perceived value is the relationship between the benefits of the service and the cost that a customer expends to get the service. the second category status that customer perceived value can be considered as a multidimensional construct. but to predictor customer behavior, customer perceived value is very important. because based on the customer's perceived behavior it is possible to predict the customers' loyalty to the company (makanyeza et al.,2015). 3.10. service quality of e-banking in bangladesh service quality is the difference between customers’ expectations and perceptions of a service. it can be measured by various dimensions, such as reliability, responsiveness, assurance, empathy, and tangibles. service quality can also be influenced by the physical, interactive, and corporate aspects of the service delivery. different services have different characteristics and require different approaches to ensure quality. e-banking is a service that asian business research journal, 2024, 9: 127-134 133 © 2024 by the authors; licensee eastern centre of science and education, usa relies on human-internet interaction and information and communication technology to provide financial services to customers. e-banking service quality can affect customer satisfaction, as well as the competitive advantage of ebanking providers. 3.11. customer experience in bangladesh e-banking service delivery past research on customer behavior in various fields, including banking, has explored how demographic factors such as age, gender, income, and education level impact customer behavior. this study aims to enhance the integrative customer experience model in bangladesh's e-banking service delivery. the existing model has certain shortcomings, and this study intends to investigate further driver influences that affect the perception and attitude toward e-banking adoption in bangladesh. thus, the primary goal of this research is to develop a more extensive comprehensive model for customer experience and customer satisfaction with e-banking services in bangladesh. 4. conclusions this study aims to identify gaps in the literature regarding the development of an integrated model for ebanking usage that incorporates customers' perceptions and opinions about e-banking. the proposed research model provides a holistic outlook on e-banking use, considering personality dimensions and interplay among various factors that present trade-offs and alternatives to processes that require human decision-making. the model includes pertinent variables such as users' age, gender, and computer expertise. this study has practical implications as it uncovers motivating factors and barriers to e-banking usage and assists stakeholders in the echannel industry comprehend the complex interactions between various factors. the findings of this study can help bank managers and other stakeholders enhance their e-banking services. references ajzen, i. 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(1988). consumer perceptions of price, quality, and value: a means-end model and synthesis of evidence. journal of marketing: american marketing association, 52(3), 2-22. https://doi.org/10.2307/1251446 33 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 3, 33-44, 2025 issn: 2576-6759 doi: 10.55220/25766759.305 © 2025 by the authors; licensee eastern centre of science and education, usa the impact of fund characteristics on environmental, social, and governance (esg) risks: an empirical analysis juan infante1  tomás curto2 carlos arenas3 1juan infante, universidad villanueva, madrid, spain. email: juan.infante@villanueva.edu 2tomás curto, universidad villanueva, madrid, spain. email: tomas.curto@villanueva.edu 3carlos arenas, universidad villanueva, madrid, spain. email: carlos.arenas.laorga@gmail.com ( corresponding author) abstract this study examines the impact of fund characteristics on environmental, social, and governance (esg) risks in investment funds. the research focuses on three key factors: fund size, fund category, and investment area. using regression analysis, the study investigates how these characteristics influence esg risks across different fund types and geographical regions. the methodology addresses potential statistical issues such as multicollinearity and heteroscedasticity to ensure robust results. the findings reveal significant relationships between fund attributes and esg risk levels, with notable variations across regions and fund types. fund size is found to positively influence certain esg risks, while geographical location and investment focus play crucial roles in determining the level of esg risks. the study aims to contribute to a better understanding of esg risk factors in investment portfolios, offering valuable implications for fund managers and investors in their decision-making processes and risk management strategies. keywords: environmental, social, governance; risk, investment. jel classification: g34; m14; q51. 1. introduction the consideration of environmental, social, and governance (esg) factors has gained significant attention in the investment management industry in recent years (friede et al., 2015; eccles & klimenko, 2019). numerous studies have explored the relationship between esg performance and financial outcomes, with mixed results (margolis et al., 2009; orlitzky et al., 2003). while these studies have provided valuable insights into the financial implications of esg integration, they have largely overlooked the specific influence of fund characteristics—such as size, category, and investment area—on esg risks. this gap in the literature is particularly significant given the growing emphasis on sustainable investing and the increasing sophistication of esg risk assessment methodologies. this study aims to address this gap by investigating the impact of fund size, fund category, and investment area on the environmental, social, and governance risks of investment funds. specifically, the research seeks to answer the following questions: 1. does the size of the fund influence the environmental, social, and governance risks? 2.how does the fund category (e.g., equity, fixed income) affect the environmental, social, and governance risks?. 3. does the investment area (e.g., europe, asia, global) impact the environmental, social, and governance risks? by addressing these research questions, this paper contributes to the existing literature on the integration of esg factors in investment decision-making (amel-zadeh & serafeim, 2018; dyck et al., 2019). the findings of this study provide insights for fund managers, financial advisors, and investors seeking to incorporate esg considerations into their investment strategies. furthermore, the study employs robust regression analysis to examine these relationships, addressing potential econometric issues such as heteroscedasticity and multicollinearity. this methodological ensures that the results are both reliable and actionable. the significance of this research lies in its ability to bridge the gap between theoretical discussions of esg integration and practical investment decision-making. while previous studies have focused on the performance implications of esg factors, this paper shifts the focus to understanding how structural characteristics of funds influence their esg risk profiles. this perspective is crucial for developing targeted strategies to manage esg risks and enhance the sustainability of investment portfolios. the findings of this research have important implications for various stakeholders in the investment community. for fund managers, understanding how structural characteristics influence esg risks can inform portfolio construction and risk management strategies. for investors, our results provide valuable insights for fund mailto:juan.infante@villanueva.edu mailto:tomas.curto@villanueva.edu mailto:carlos.arenas.laorga@gmail.com https://doi.org/10.55220/25766759.305 asian business research journal, 2025, 10(3): 33-44 34 © 2025 by the authors; licensee eastern centre of science and education, usa selection and portfolio optimization, particularly when esg considerations are paramount. additionally, our findings contribute to the broader academic discourse on sustainable finance by providing empirical evidence of the relationships between institutional characteristics and esg risk exposure. the paper is organized as follows: section 2 reviews the relevant literature and develops our hypotheses. section 3 describes our data and methodology. section 4 presents our empirical results and analysis.finally, section 5 discusses the implications of our findings and concludes with suggestions for future research. 2. literature review the integration of environmental, social, and governance (esg) factors into investment decision-making has gained significant traction in recent years. this shift reflects growing awareness of the financial and reputational risks associated with poor esg performance, as well as the opportunities presented by sustainable investing (friede et al., 2015; eccles & klimenko, 2019). while the relationship between esg performance and financial outcomes has been extensively studied (margolis et al., 2009; orlitzky et al., 2003), the specific influence of fund characteristics—such as size, category, and investment area—on esg risks remains underexplored. this literature review examines the existing body of research on these themes, highlighting key findings, gaps, and the relevance of this study. fund size and esg risks. fund size is a critical determinant of esg risk management. larger funds often have more resources to integrate esg considerations into their investment processes, enabling them to conduct thorough due diligence and engage with portfolio companies (dyck et al., 2019; starks et al., 2017). however, they may also face challenges related to scale, such as increased complexity in maintaining consistent esg standards across diverse portfolios (krueger et al., 2020). hartzmark and sussman (2019) suggest that economies of scale in esg implementation may exist, but these benefits can diminish beyond certain thresholds. despite these insights, the literature offers mixed evidence on the relationship between fund size and esg performance, necessitating further investigation (dimson et al., 2015; pastor et al., 2021). fund category and esg risks. the type of investment fund—whether equity, fixed income, or allocation— significantly influences its esg risk profile. equity funds, for instance, are often more exposed to environmental and social risks due to their investments in industries with high environmental impact or labor-intensive operations (friede et al., 2015; eccles & klimenko, 2019). in contrast, fixed-income funds may face greater governance risks, particularly in assessing the creditworthiness of issuers with varying esg practices (bauer & hann, 2010; chava, 2014). recent studies indicate that bond funds are increasingly incorporating esg criteria, particularly in evaluating environmental externalities and corporate governance (henke, 2016; el ghoul & karoui, 2021). however, the extent to which these practices mitigate esg risks across different fund categories remains an open question. investment area and esg risks. geographic considerations play a pivotal role in shaping esg risk profiles. funds investing in emerging markets often encounter higher esg risks due to weaker regulatory frameworks, limited enforcement, and varying corporate practices (liang & renneboog, 2017; dyck et al., 2019). conversely, european funds are generally more advanced in esg integration, reflecting the region's stringent regulations and investor demand for sustainable practices (ferreira et al., 2018). studies by krueger et al. (2020) and berg et al. (2022) highlight significant regional variations in esg implementation, underscoring the need for context-specific strategies. despite these findings, the interaction between investment area and other fund characteristics, such as size and category, remains underexplored. while the existing research provides valuable insights into the relationship between esg factors and investment performance, several gaps persist. first, the interplay between fund size, category, and investment area in determining esg risks is not well understood. second, most studies focus on developed markets, with limited attention to emerging economies and their unique esg challenges (liang & renneboog, 2017). finally, the role of fund management practices, such as active ownership and engagement, in mitigating esg risks warrants further investigation (dimson et al., 2015; bauer & hann, 2010). this literature review underscores the growing importance of esg factors in investment decision-making and the need to understand the influence of fund characteristics on esg risks. by addressing the identified gaps, this study aims to contribute to the academic discourse on sustainable finance and provide actionable insights for investors, fund managers, and policymakers. 3. data and methodology the data for this study was sourced from morningstar direct, a globally financial analysis platform renowned for its comprehensive coverage of sustainable investment funds and standardized esg metrics. morningstar direct was selected due to its database, which aligns with the stringent regulatory and sustainability standards prevalent in the european market. the dataset provides a detailed view of fund characteristics and esg performance, making it an resource for analyzing the relationship between fund attributes and esg risks. the final dataset comprises 1,737 sustainable investment funds, classified under the sustainable finance disclosure regulation (sfdr). of these, 1,635 funds (94.1%) are categorized under article 8, which promotes environmental or social characteristics, while 102 funds (5.9%) fall under article 9, targeting specific sustainable investment objectives. the sample spans 31 geographical areas, offering a diverse representation of both developed and emerging markets. specifically, the dataset includes 887 global funds (51.1%), 415 european funds (23.9%), 161 united states funds (9.3%), 124 global emerging market funds (7.1%), and 65 asian funds (3.7%), with the remaining 85 funds (4.9%) distributed across other regions. in terms of asset class composition, the sample is diverse, encompassing 686 equity funds (43.2%), 549 fixedincome funds (34.6%), 267 mixed-asset funds (16.8%), and 91 money market funds (5.4%). this variety allows for a comprehensive analysis of how different investment strategies address esg risks. the dataset includes 97 variables, capturing both numerical and categorical indicators essential for esg risk analysis. key numerical variables include financial performance metrics and portfolio size, which provide insights into the impact of esg asian business research journal, 2025, 10(3): 33-44 35 © 2025 by the authors; licensee eastern centre of science and education, usa policies on fund outcomes. categorical variables offer segmentation based on geographical focus, sustainability classification, and sector exclusion policies. the assessment of environmental, social, and governance (esg) risks in funds by morningstar direct is facilitated through a structured framework that leverages sustainalytics' esg risk ratings. this rating system evaluates a company's exposure to esg risks and its ability to manage them, with scores ranging from 0 to 100. lower scores indicate better management of these risks. the sustainalytics esg risk rating is categorized into several risk levels: negligible (0-10), low (11-20), medium (21-30), high (31-40), very high (41-50), and severe (51100). this risk assessment is then used to inform the morningstar sustainability rating, which is expressed as a number of globes (1 to 5). the rating reflects how well a fund manages financially material esg risks compared to its peers in the same morningstar global category. the distribution of these globes is as follows: one globe for the lowest 10% of funds, two globes for the next 22.5%, three globes for the middle 35%, four globes for the next 22.5%, and five globes for the top 10%. the esg risk assessment itself is composed of three primary components: environmental (e), social (s), and governance (g) risks. environmental risks are evaluated based on factors such as carbon emissions and resource depletion, with the weight given to these factors varying by industry. social risks include labor practices and community relations, also industry-specific. governance risks focus on corporate oversight, board independence, and shareholder rights, which are crucial across industries for maintaining financial stability and investor confidence. while morningstar does not explicitly use a points system for esg risks, one could conceptualize it as allocating points across these components. for instance, in a hypothetical scenario, environmental risks might contribute 30 points, social risks another 30 points, and governance risks 40 points, totaling 100 points. however, the actual method involves comparing a fund's esg risk profile to its peers within the same category, rather than using a fixed points system. in practice, the morningstar sustainability rating is determined by assessing the esg risks associated with both corporate and sovereign entities in a fund's portfolio. at least 67% of a fund's assets under management must have an esg score for it to receive a morningstar sustainability rating. this rating serves as a relative measure, comparing a fund's esg risk management to that of its peers, rather than an absolute assessment of its esg performance. this approach provides investors with a clear indication of how well a fund manages esg risks relative to its industry peers. the dataset also incorporates detailed information on sector exclusions, which are critical for assessing the alignment of funds with their sustainability objectives. these exclusions cover sectors such as military contracts, small arms, nuclear energy, palm oil, pesticides, tobacco, thermal coal, and fossil fuels. by analyzing these exclusion policies, the study evaluates how such decisions influence esg risk scores and overall fund performance. 4. results and analysis the variable, fund size, is a quantitative and continuous variable; we will treat it as a covariate, that is, control its influence and isolate its effect so that it does not contaminate the conclusions we may obtain about the remaining variables. the remaining variables: fund category and investment area, are qualitative variables. the aim is to verify whether their presence or absence significantly affects the average environmental, social, and governance risks. the two options considered for conducting the analysis were ancova and regression analysis; ultimately, we opted for the latter methodology. the reasons for this decision are several, but essentially regression analysis allows for a more appropriate treatment of potential problems such as heteroscedasticity and multicollinearity, in addition to being able to construct interactions between variables. the first step has been to estimate the relationship between government risk and the explanatory variables. once the model was formulated, interactions between the variables were sought to determine if any combination among them produces an effect greater than the sum of the individual effects.the heteroscedasticity tests indicate the presence of this problem in the estimated model. in all the tests used, the null hypothesis is rejected, admitting the presence of heteroscedasticity. it was resolved with robust estimators and elimination of non-significant variables. table 1. estimation relationship between government risk and the explanatory variables. _cons 6.943955 .1430724 48.53 0.000 . equity -.0275986 .0926814 -0.30 0.766 -.0104681 fixed -.7573785 .1032952 -7.33 0.000 -.2565637 globalemergingmarket -.7305952 .1568139 -4.66 0.000 -.151478 global -.4634486 .1182473 -3.92 0.000 -.1766006 asia .3589717 .1968683 1.82 0.068 .0524111 europa -.5449813 .1264027 -4.31 0.000 -.1802057 china 1.036894 .3079451 3.37 0.001 .0877511 fundsizebasecurrency 4.56e-11 1.49e-11 3.07 0.002 .0760006 governanceriskscore coefficient std. err. t p>|t| beta total 2481.96613 1,445 1.71762362 root mse = 1.2236 adj r-squared = 0.1283 residual 2151.48996 1,437 1.49720944 r-squared = 0.1332 model 330.476176 8 41.309522 prob > f = 0.0000 f(8, 1437) = 27.59 source ss df ms number of obs = 1,446 asian business research journal, 2025, 10(3): 33-44 36 © 2025 by the authors; licensee eastern centre of science and education, usa table 2. heteroskedasticity tests. table 3. estimation relationship between government risk and the explanatory variables. the model does not present multicollinearity problems.this approach has been maintained to explain both environmental risk and social risk. the presence of heteroscedasticity is detected in both models. table 4. multicollinearity test. _cons 6.857772 .1066254 64.32 0.000 . equityasia .5147938 .2045947 2.52 0.012 .0724809 equityeuropa -.4883664 .1329831 -3.67 0.000 -.122471 equitychina 1.097098 .1585564 6.92 0.000 .0928461 fixedglobalemergingmarket -4.128383 .2758783 -14.96 0.000 -.55302 fixedasia -1.336933 .204727 -6.53 0.000 -.0464324 fixed -.4237719 .1032172 -4.11 0.000 -.1435537 globalemergingmarket .8452152 .1329176 6.36 0.000 .1752427 global -.4616011 .1072079 -4.31 0.000 -.1758966 europa -.3680082 .1560375 -2.36 0.018 -.121687 fundsizebasecurrency 4.47e-11 1.41e-11 3.18 0.001 .0745249 governanceriskscore coefficient std. err. t p>|t| beta robust hc3 root mse = 1.0798 r-squared = 0.3258 prob > f = . f(9, 1435) = . linear regression number of obs = 1,446 mean vif 1.99 fundsizeba~y 1.02 0.980407 fixedasia 1.03 0.969476 equitychina 1.13 0.888184 equityasia 1.35 0.742034 fixed 1.59 0.627692 fixedgloba~t 1.85 0.539508 equityeuropa 2.30 0.434280 globalemer~t 2.36 0.424004 global 3.18 0.314143 europa 4.09 0.244456 variable vif 1/vif asian business research journal, 2025, 10(3): 33-44 37 © 2025 by the authors; licensee eastern centre of science and education, usa table 5. estimation relationship between environmental risk/social risk and the explanatory variables. table 6. heteroskedasticity tests. asian business research journal, 2025, 10(3): 33-44 38 © 2025 by the authors; licensee eastern centre of science and education, usa to eliminate the problem, they are estimated with heteroscedasticity-robust estimators, and non-significant variables are sequentially eliminated. both models do not present multicollinearity problems. table 7. estimation relationship between environmental risk/social risk and the explanatory variables with heteroscedasticity-robust estimators. asian business research journal, 2025, 10(3): 33-44 39 © 2025 by the authors; licensee eastern centre of science and education, usa table 8. multicollinearity test. table 9. interpretation of results: comparative summary. 5. interpretation of the government risk model the portfolio governance risk score reaches an average value of 6.86 points. this indicator is influenced by several key variables. the fund size in base currency (fundsizebasecurrency) has a direct positive influence. for every euro increase in fund size, the portfolio governance risk score increases on average by 4.47e-11 points, provided that the other variables remain constant. geographic location also plays a crucial role. if the fund is located in europe, the portfolio governance risk score decreases on average by 0.368 points, dropping from 6.86 to 6.49 points, with statistically significant differences between both categories compared to funds located in the u.s. on the other hand, if the fund is global, the indicator decreases by 0.4616011 points, resulting in a value of 6.3962 points. in contrast, funds classified as global emerging markets experience an increase in the indicator of 0.8452152 points, raising the average risk to 7.703 points. regarding investment categories, fixed funds show a decrease in risk on average of 0.4237719 points, achieving a mean score of 6.434 points compared to allocation funds. additionally, interactions between different variables are also significant. for example, the interaction between fixed funds and location in asia reduces the portfolio governance risk score to an average value of 5.0971 points. this reduction is even more pronounced for fixed funds in global emerging markets, where the indicator drops to 2.30562 points. on the other hand, equity funds in china experience an increase in risk to an average value of 7.95487 points, while in europe the risk is reduced to 6.0214 points. finally, equity funds in asia present an increase in risk to an average value of 7.37257 points. these interactions and variables demonstrate how different geographic and investment factors influence the governance risk of funds. asian business research journal, 2025, 10(3): 33-44 40 © 2025 by the authors; licensee eastern centre of science and education, usa figure 1. standardized coefficients. table 10. interpretation of the government risk model. figure 2. effect on the model mean. 6. interpretation of the environmental risk model the portfolio environmental risk score variable measures the environmental risk of the portfolio. in this case, the average risk of the different portfolios included in the data reaches a value of 3.4337 points. the variables that significantly influence this variable are several. geographic location plays a crucial role. if the fund is based in asia, the average risk increases by 0.6303906 points, so that the average value of the variable, in this case, is 4.064 points, with significant differences between the asia and usa categories. similarly, if the fund is categorized as global, the average risk increases by 0.1601834 points, so that the average value for the environmental risk variable is 3.5939 points. funds classified as global emerging markets exhibit a more pronounced increase in environmental risk, rising by 0.9296787 points; so that the average value for the studied variable in this type of funds is 4.3633787 points. additionally, the type of investment also impacts the risk. if the fund is equity, compared to allocation, the asian business research journal, 2025, 10(3): 33-44 41 © 2025 by the authors; licensee eastern centre of science and education, usa average risk increases by 0.2206866 points; so that the average of the environmental risk variable is in this case 3.6543866 points, with significant differences between the equity and allocation categories. interactions between variables further modify the environmental risk. for instance, if the fund is both fixed and based in europe, the environmental risk is reduced by 0.7405457 points, so that the average value of the studied variable in this case is calculated as (3.4337 0.7405457* fixedeurope) = 2.6931543 points. a similar reduction occurs for fixed funds categorized as global, where the risk decreases by 0.6374979 points. in this case, the variable reaches an average value of (3.4337 0.6374979* fixedglobal) = 2.7962021 points. conversely, equity funds based in china experience a significant increase in environmental risk by 1.265613 points on average, so that in this case, the studied variable reaches an average value of (3.4337 + 1.265613 * equitychina) = 4.699313 points. equity funds based in europe also see an increase, albeit smaller, by 0.4469055 points, so that the variable takes an average value of (3.4337 + 0.4469055* equityeurope) = 3.8806055 points. these interactions highlight how different geographic and investment factors influence the environmental risk of funds. figure 3. standardized coefficients. table 11. interpretation of the environmental risk model figure 4. effect on the model mean. asian business research journal, 2025, 10(3): 33-44 42 © 2025 by the authors; licensee eastern centre of science and education, usa 7. interpretation of social risk score the portfolio social risk score variable measures the social risk of the portfolio; in this case, the average risk of the different portfolios included in the data reaches a value of 8.84548 points. several variables significantly influence this score. the fund size in base currency (fundsizebasecurrency) has a positive or direct influence. for each euro increase in fund size, the portfolio social risk score variable increases on average by 5.70e-11 points, provided that the remaining variables remain constant. geographic location also plays a crucial role in determining social risk. if the fund is based in europe, the social risk is reduced, on average, by 1.261423 points, resulting in a risk value of 7.584057, which is significantly lower than if it is based in the usa. similarly, if the fund is based in asia, the social risk is reduced by 0.9339996 points, with the risk taking a value of 7.9114804, also significantly lower than if the fund is based in the usa. for global funds, the social risk is reduced by 0.8046352 points, resulting in a risk value of 8.0408448, which is again significantly lower than if the fund is based in the usa. funds categorized as global emerging markets experience a reduction in social risk by 0.6936723 points, leading to a risk value of 8.1518077, which is also lower than if the fund is based in the usa. in terms of investment categories, fixed funds show a reduction in average social risk by 0.6982014 points, reaching a value of 8.1472786, which is significantly lower than if the fund is categorized as allocation. interactions between variables further modify the social risk. for instance, if the fund is both fixed and based in europe, the average social risk reaches a value of (8.84548 0.6982014fixed + 0.393866fixedeurope) = 8.5411446 points. a more pronounced reduction occurs for fixed funds based in asia, where the risk reaches a value of (8.84548 0.6982014fixed 1.486803 fixedasia) = 6.6604756 points. for fixed funds categorized as global in emerging markets, the risk is significantly reduced to (8.84548 0.6982014fixed 3.082935 fixedglobalemergingmarket) = 5.0643436 points. conversely, equity funds located in china experience an increase in social risk, reaching a value of (8.84548 + 0.7308476* equitychina) = 9.5763276 points. these interactions highlight how different geographic and investment factors influence the social risk of funds. figure 5. standardized coefficients. table 12. interpretation of the social risk model. asian business research journal, 2025, 10(3): 33-44 43 © 2025 by the authors; licensee eastern centre of science and education, usa figure 6. effect on the model mean. 8. conclusions this study makes significant contributions to understanding of how fund characteristics influence environmental, social, and governance (esg) risks in investment portfolios. through a comprehensive analysis of 1,737 sustainable investment funds, utilizing data from morningstar direct, we have uncovered several important relationships between fund attributes and esg risk profiles. our findings have substantial implications for investment decision-making and portfolio management in the context of sustainable finance. the analysis reveals that fund size significantly impacts governance risk, with larger funds experiencing greater challenges in managing governance-related issues. this finding suggests that as funds grow, they may need to implement more sophisticated governance structures and risk management frameworks. however, the relationship between fund size and environmental or social risks appears to be less pronounced, indicating that these dimensions of esg risk may be more influenced by other factors. our investigation of fund categories yields notable insights, particularly regarding the distribution of esg risks across different investment vehicles. global emerging market and equity funds demonstrate higher governance and environmental risks compared to their allocation and usa-focused counterparts. conversely, fixed income and european funds generally exhibit lower esg risk profiles, suggesting that these categories may be more effective at managing sustainability-related challenges. these findings highlight the importance of considering fund category when constructing sustainable investment portfolios. the geographical focus of funds emerges as a crucial determinant of esg risk exposure. funds invested in asian and global emerging markets show elevated environmental and social risks, while those focused on european and global markets generally demonstrate lower social risk profiles. this geographic variation in esg risk exposure underscores the need for investors to carefully consider regional factors when making allocation decisions. the implications of our findings extend beyond academic interest to practical application in investment management. for institutional investors and fund managers, our results suggest the importance of implementing robust esg risk management frameworks, particularly in larger funds and those with exposure to emerging markets. the study also provides valuable insights for regulatory bodies and policymakers, highlighting areas where additional oversight or guidance may be beneficial in promoting sustainable investment practices. looking ahead, several avenues for future research emerge from our findings. first, investigating the temporal dynamics of esg risks across different fund characteristics could provide insights into how these relationships evolve over time. second, examining the interaction between fund management strategies and esg performance could yield valuable insights for optimizing sustainable investment approaches. finally, exploring the relationship between esg risks and financial performance at the portfolio level could further enhance our understanding of the risk-return trade-offs in sustainable investing. this study advances understanding of the complex relationship between fund characteristics and esg risks, providing a foundation for more effective sustainable investment strategies. as the importance of esg considerations continues to grow in the investment industry, these insights become increasingly valuable for stakeholders seeking to balance financial returns with sustainability objectives. the findings not only contribute to the academic discourse on sustainable finance but also offer practical guidance for investment professionals navigating the evolving landscape of responsible investing. data statement: the datasets generated during and/or analysed during the current study are available from the corresponding author on reasonable request. references alessandrini, f., & jondeau, e. 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(2017). corporate esg profiles and investor horizons. ssrn electronic journal. https://doi.org/10.2139/ssrn.3049943 https://doi.org/10.2139/ssrn.3049943 31 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 4, 31-37, 2025 issn: 2576-6759 doi: 10.55220/25766759.405 © 2025 by the author; licensee eastern centre of science and education, usa autonomous intelligence in fashion: a comprehensive analysis of agentic ai across the fashion ecosystem andrew burnstine1 1college of business and management, lynn university, boca raton, fl, united states. email: aburnstine@lynn.edu abstract the fashion industry is undergoing a paradigm shift with the emergence of agentic artificial intelligence (ai), a sophisticated class of intelligent systems exhibiting autonomous decisionmaking, continuous learning, and adaptive action with minimal human intervention. moving beyond traditional ai applications in fashion focused on predictive analytics, generative tools, and supervised automation, agentic ai introduces a transformative paradigm wherein intelligent agents proactively navigate the complexities inherent in design, manufacturing, supply chain optimization, and consumer personalization. this paper presents a comprehensive exploration of the evolving role of agentic ai across the multifaceted fashion ecosystem, offering an in-depth analysis of its technological underpinnings, operational transformations, and strategic implications. employing an interdisciplinary framework and detailed examination of five pivotal case studies—stitch fix, zara, tommy hilfiger, farfetch, and matchesfashion—this study meticulously investigates how agentic ai is revolutionizing creative ideation processes, enabling real-time adaptive logistics, and facilitating hyper-personalized retail experiences. our findings reveal that agentic systems are redefining established industry norms by fostering synergistic human-ai collaboration, significantly enhancing operational efficiency, and paving the way for more sustainable and intelligent fashion operations. furthermore, this paper critically contextualizes agentic ai within broader scholarly debates surrounding technological autonomy, ethical considerations, and the potential for labor displacement, thereby contributing to the theoretical discourse on ai agency and innovation within the fashion domain. by offering a forward-looking perspective grounded in empirical examples and theoretical insights, this study delineates critical future research pathways and strategic considerations for stakeholders navigating the next frontier of intelligent fashion systems. as agentic ai continues to blur the traditional boundaries between human creativity and machine intelligence, its profound integration stands to fundamentally reshape the future trajectory of fashion as a dynamic, datadriven, and increasingly autonomous industry. keywords: agentic ai, artificial intelligence, autonomous systems, design automation, fashion innovation, intelligent decision-making, personalized retail, supply chain optimization. 1. introduction the fashion industry, historically renowned for its deep-rooted reliance on human creativity, intuitive design processes, and the rapid cyclical evolution of trends, is currently experiencing a profound and accelerating transformation driven by the pervasive integration of advanced technological innovations. artificial intelligence (ai), once perceived as a peripheral tool with limited applicability, has now ascended to a central and increasingly indispensable role across a diverse spectrum of the fashion sector's operations. this technological integration is significantly influencing consumer engagement and experiences, enhancing the accuracy of upcoming trend predictions, and substantially optimizing intricate operational processes throughout the value chain (shen, wang, lo, shum, & hau, 2024). initially, the adoption of ai within the fashion domain primarily concentrated on applications characterized by their supportive and largely human-supervised nature. these early applications included the utilization of sophisticated machine learning algorithms for enhanced trend forecasting, empowering brands to proactively anticipate evolving consumer preferences and dynamic market demands (tekstilec, 2024; heuritech, n.d.). for example, statistical models and time series analysis were employed to predict future sales based on historical data, while early machine learning algorithms began to incorporate factors like economic indicators and social media trends to refine these forecasts. virtual try-on technologies, leveraging ai-powered image processing and augmented reality, offered customers more immersive and engaging online shopping experiences, enabling them to visualize garment fit and style before purchase (digitaldefynd, 2025). these systems utilized 3d modeling and computer vision to overlay digital garments onto user images or video. recommendation engines, driven by sophisticated ai algorithms analyzing extensive customer data such as historical purchase patterns and online browsing behavior, became ubiquitous on e-commerce platforms, facilitating the provision of highly relevant mailto:aburnstine@lynn.edu https://doi.org/10.55220/25766759.405 asian business research journal, 2025, 10(4): 31-37 32 © 2025 by the authors; licensee eastern centre of science and education, usa product suggestions and thereby enhancing personalization (wang, shen, & choi, 2021). collaborative filtering and content-based filtering were early techniques, evolving into more complex models incorporating user demographics, social network data, and real-time browsing behavior. furthermore, ai has been strategically deployed for optimizing inventory management practices, assisting fashion retailers in maintaining optimal stock levels, minimizing waste associated with overproduction, and ensuring a more agile and responsive approach to fluctuating market demands (gauri et al., 2021). these systems moved from simple reorder point calculations to more dynamic models that consider lead times, demand variability, and logistical constraints. these foundational forays into the application of ai laid critical groundwork for the development and adoption of the more autonomous and deeply integrated intelligent systems that are now materializing with the advent of agentic ai (burnstine, 2025). this evolutionary trajectory within the fashion industry mirrors a broader trend observed across the entire field of ai, where significant advancements have led to the development of intelligent systems capable of matching, and in certain cognitive domains, even surpassing human capabilities, particularly in tasks involving complex learning and intricate problem-solving (russell & norvig, 2020). ai, at its core, represents the interdisciplinary science and engineering endeavor focused on creating intelligent machines through the development of sophisticated algorithms that emulate complex human cognitive functions, including learning, reasoning, and sensory understanding (kalisetty et al., 2023). the synergistic integration of ai with other cuttingedge technologies is exerting a profound impact on production systems across a wide array of industries, underscoring its substantial potential to drive significant improvements in operational efficiency and foster radical innovation (xenonstack, n.d.). agentic ai, distinguished by its inherent capacity for continuous adaptation to dynamic environments and autonomous decision-making capabilities, empowers machines to execute complex tasks independently, rendering it particularly well-suited for the often volatile and unpredictable landscape of the fashion industry (cegid, 2025). these advanced intelligent systems are not merely programmed to rigidly adhere to a predefined set of instructions but are intricately designed to learn from their interactions with the environment, dynamically evolve their operational strategies, and proactively act in pursuit of clearly defined objectives (aisera, n.d.). agentic ai can be precisely defined as ai systems specifically engineered to autonomously make informed decisions and take decisive actions with minimal direct human oversight, effectively blending the inherent flexibility and contextual understanding of large language models with the precision and reliability of traditional programming paradigms (ibm, n.d.). these sophisticated systems can autonomously pursue intricate and multifaceted goals, make independent judgments based on contextual awareness, and plan, adapt, and execute complex, multi-step processes without explicit human supervision, essentially operating with a level of intelligence and initiative comparable to a human employee (digitaldefynd, 2025). this proactive and goal-oriented form of artificial intelligence can operate independently without constant human intervention, leveraging sophisticated reasoning capabilities to comprehend and effectively address complex problems through a clearly defined goal-oriented approach (burnstine, 2025). agentic ai systems are inherently capable of autonomously executing intricate workflows and making dynamic decisions in real-time to achieve specific and measurable outcomes (uipath, n.d.). unlike generative ai, which primarily focuses on the automated creation of novel content such as initial design prototypes and marketing copy (vogue business, 2024), agentic ai centers on the autonomous formulation of decisions and the proactive execution of actions with limited human supervision (ibm, n.d.). key defining features of agentic ai include a high degree of autonomy, the inherent ability to act independently and self-directedly; adaptability, the crucial capacity to learn from interactions and feedback mechanisms, thereby refining future actions; and strong goal orientation, the fundamental ability to reason about and effectively achieve specific, complex tasks (aisera, n.d.). therefore, agentic ai represents a significant advancement in the fieldl, enabling intelligent systems to not only generate outputs but also to autonomously plan strategic actions, make critical decisions, and execute them effectively to achieve complex goals, demanding a substantially higher level of intelligence and operational independence than earlier, more reactive forms of ai (cegid, 2025). this paper undertakes a rigorous investigation into the practical implementation and multifaceted impact of agentic ai across the diverse fashion ecosystem. drawing upon five carefully selected and diverse case studies— stitch fix, zara, tommy hilfiger, farfetch, and matchesfashion—we critically assess how agentic ai technologies are currently being deployed and their potential for future application in critical areas such as innovative design ideation, agile inventory management, optimized manufacturing logistics, and highly personalized consumer interactions. our methodological approach strategically combines a qualitative case study methodology, allowing for in-depth contextual understanding, with a robust theoretical synthesis, enabling the evaluation of the broader implications of agentic ai on operational efficiency, ethical governance frameworks, and the potential for future innovation within the sector. the overarching goal of this research is to provide a timely and highly relevant analysis of this rapidly evolving technology and its potential to fundamentally reshape the fashion industry, a transformative process that holds significant implications for both academic understanding and practical application within the sector. the subsequent sections of this paper will delve into a comprehensive review of the existing scholarly literature on the application of ai in fashion, meticulously detail the methodological framework employed in this study, present an in-depth analysis of the chosen case studies, critically discuss the broader implications of these empirical findings, outline the key theoretical contributions of this study, explore potential promising avenues for future research endeavors, and finally, offer concluding remarks summarizing the transformative role of agentic ai in the global fashion industry. 2. literature review 2.1. historical use of ai in fashion the fashion industry possesses a notable and evolving history of strategically integrating artificial intelligence tools to optimize various critical aspects of its complex operations, with the primary historical focus centered on enhancing operational efficiency and delivering increased personalization within established organizational frameworks (gauri, bhatnagar, & нный, 2021). early applications of ai in the fashion sector included the sophisticated use of machine learning algorithms for enhanced trend forecasting, empowering brands to proactively asian business research journal, 2025, 10(4): 31-37 33 © 2025 by the authors; licensee eastern centre of science and education, usa anticipate evolving consumer preferences and dynamic market demands (tekstilec, 2024; heuritech, n.d.). for example, statistical models and time series analysis were employed to predict future sales based on historical data, while early machine learning algorithms began to incorporate factors like economic indicators and social media trends to refine these forecasts. virtual try-on technologies represented another significant early application, leveraging ai-powered image processing and augmented reality to provide customers with more immersive and engaging online shopping experiences, enabling them to visualize garment fit and style before purchase (digitaldefynd, 2025). these systems utilized 3d modeling and computer vision to overlay digital garments onto user images or video. recommendation engines, driven by sophisticated ai algorithms analyzing extensive customer data such as historical purchase patterns and online browsing behavior, became ubiquitous on e-commerce platforms, facilitating the provision of highly relevant product suggestions and thereby enhancing personalization (wang, shen, & choi, 2021). collaborative filtering and content-based filtering were early techniques, evolving into more complex models incorporating user demographics, social network data, and real-time browsing behavior. furthermore, ai has been strategically deployed for optimizing inventory management practices, assisting fashion retailers in maintaining optimal stock levels, minimizing waste associated with overproduction, and ensuring a more agile and responsive approach to fluctuating market demands (gauri et al., 2021). these systems moved from simple reorder point calculations to more dynamic models that consider lead times, demand variability, and logistical constraints. these foundational forays into the application of ai laid critical groundwork for the development and adoption of the more autonomous and deeply integrated intelligent systems that are now materializing with the advent of agentic ai (burnstine, 2025). the overarching trend in these early applications was towards leveraging ai to provide data-driven insights and automate specific, often repetitive tasks, largely within human-controlled operational processes. 2.2. from generative to agentic ai the evolution of ai in fashion has progressed from generative models to the more advanced agentic systems, marking a significant shift in the capabilities and autonomy of these technologies (burnstine, 2025). generative ai, primarily focused on the automated creation of novel content such as initial design prototypes and marketing copy, has enabled fashion brands to streamline certain creative and promotional processes, enhancing speed and potentially reducing initial resource investment (vogue business, 2024). models like generative adversarial networks (gans) and variational autoencoders (vaes) are employed to produce new designs, and natural language processing (nlp) aids in generating product descriptions and marketing copy. in stark contrast, agentic ai introduces a transformative leap in functionality by incorporating crucial elements of operational autonomy, deep contextual awareness, and sophisticated decision-making capabilities (cegid, 2025). while traditional ai agents can be conceptualized as digital assistants designed to handle specific, well-defined tasks independently, agentic ai elevates this concept by acting as an ai manager capable of orchestrating complex objectives across an entire interconnected ecosystem of specialized ai agents (aisera, n.d.). agentic ai operates with a high degree of independence, making critical decisions through a process of continuous learning and indepth analysis of both external environmental data and complex internal datasets, fundamentally setting it apart from rule-based systems and robotic process automation (rpa) that typically require fixed, pre-programmed rules and significant human intervention for adaptation (uipath, n.d.). unlike previous generations of ai that primarily assisted in human decision-making processes or facilitated content creation, agentic ai possesses the capacity to autonomously initiate decisions, strategically plan sequences of actions, and execute these plans independently (ibm, n.d.). this advanced form of ai is characterized by autonomous goal-directed action, proactive problemsolving capabilities, sophisticated complex reasoning, and adaptive learning mechanisms, fundamentally distinguishing it from traditional machine learning algorithms that often rely on simpler pattern recognition and correlational analysis (kalisetty et al., 2023). agentic ai, as an overarching concept, refers to independent, goalachieving ai systems, with individual ai agents serving as the fundamental building blocks within this sophisticated architectural framework (aisera, n.d.). the key differentiating factor lies in the fundamental shift from generative ai's primary focus on creation to agentic ai's central emphasis on autonomous action and strategic decision-making, with agentic ai demonstrating enhanced adaptability, the potential to optimize creative processes, and a significantly higher degree of operational autonomy (cegid, 2025). 2.3. theoretical foundations the theoretical underpinnings of agentic ai are deeply rooted in a synergistic convergence of multiple academic disciplines, including computer science, cognitive psychology, and systems theory, providing a comprehensive and robust framework for the development and understanding of autonomous intelligent systems (russell & norvig, 2020). the foundational concept of self-maintaining structures, developed in the mid-20th century within cybernetics and systems theory, laid some of the early conceptual groundwork for agentic ai, with initial rule-based frameworks designed to address specific problem-solving tasks through predefined algorithms focused on basic decision-making and logical operations (wiener, 1948). key characteristics of agentic ai, such as operational autonomy, environmental adaptability, and real-time learning capabilities, are central to its theoretical framework, with cognition, encompassing the complex processes of acquiring and processing information, drawing logical conclusions, and continuously learning from experience, serving as a core conceptual element (simon, 1969). this involves theories of knowledge representation, reasoning, and learning, including symbolic ai, connectionism, and hybrid approaches. from a systems-theoretic perspective, a comprehensive understanding of agentic ai necessitates looking beyond the capabilities of individual ai models to consider the emergent behaviors arising from the complex and dynamic interactions between multiple ai agents, human users, and the broader operational environment (bertalanffy, 1968). this includes concepts like feedback loops, self-organization, and emergent properties. agentic architecture, the specific design that supports sophisticated agentic behavior, typically involves ai agents driven by advanced machine learning models that can proactively interact with their surroundings and autonomously utilize asian business research journal, 2025, 10(4): 31-37 34 © 2025 by the authors; licensee eastern centre of science and education, usa various available tools to achieve their objectives (wooldridge, 2009). this architecture encompasses a diverse range of models, including reactive agents that respond to immediate environmental stimuli, deliberative agents that plan their actions based on internal representations of the world, and sophisticated cognitive architectures that mimic human-like thinking, reasoning, and learning processes, with the belief-desire-intention (bdi) framework being a notable example of such an architecture (bratman, 1987; rao & georgeff, 1991). these diverse theoretical foundations collectively explain the inherent autonomous nature of agentic ai, its sophisticated decision-making processes that often involve complex reasoning and planning, and its remarkable ability to adapt and learn effectively within dynamic and unpredictable environments (russell & norvig, 2020). 3. methodology this research employs a qualitative case study methodology to provide an in-depth exploration of the practical implementation and multifaceted impact of agentic ai across the diverse fashion ecosystem. the case study approach is particularly suitable for this research as it allows for a detailed examination of complex phenomena within their real-world contexts, providing rich and nuanced insights into the application of agentic ai in various organizational settings (yin, 2018). the strategic selection of five representative case studies—stitch fix, zara, tommy hilfiger, farfetch, and matchesfashion—was guided by a set of specific and rigorous criteria, including direct industry relevance to the fashion sector (or a closely related sector with transferable insights), demonstrable evidence of significant autonomy in their ai applications, the public availability of detailed documentation and reports regarding their ai usage and outcomes, and alignment with different critical stages of the fashion value chain or analogous industries offering valuable comparative insights. these carefully chosen criteria were established to ensure that the selected cases offer a diverse yet informative range of real-world examples illustrating the application and impact of agentic ai in practice or in closely related contexts highly relevant to the fashion industry, adhering to the principles of rigorous academic research. the primary sources of data for the in-depth case study analysis included peer-reviewed academic publications, comprehensive industry reports from reputable consulting firms and market research organizations, and detailed corporate disclosures (e.g., annual reports, white papers, and official press releases), providing a comprehensive and multi-faceted view of each organization's strategic approach to and the reported outcomes resulting from their aidriven initiatives. these diverse sources allowed for a detailed and nuanced examination of how agentic ai is being practically applied, the tangible benefits realized by these organizations, and the specific challenges encountered during the implementation and scaling of these advanced technologies, all viewed from academic, industry, and organizational perspectives. data analysis involved a thematic analysis approach. this involved systematically identifying recurring patterns and themes across the case study data. key themes related to the application of agentic ai, its impact on operations, and the associated challenges and ethical considerations were identified. the analysis also involved comparing and contrasting the findings across the different case studies to identify commonalities and differences in the adoption and impact of agentic ai. 4. case study analysis 4.1. stitch fix stitch fix has been at the forefront of integrating ai into personalized fashion retail. the company employs a sophisticated blend of ai and human expertise to deliver curated selections to its customers (lo, 2023). stitch fix leverages ai to understand customer preferences, predict fashion trends, and optimize inventory (stitch fix, 2024). their ai-powered recommendation system analyzes a wealth of data, including customer style profiles, feedback, and purchase history, to suggest items that align with individual tastes. this focus on data-driven personalization is a hallmark of their approach. to further refine the customer experience, stitch fix has incorporated ai into virtual try-on features, allowing customers to visualize how garments will look on them before making a purchase (stitch fix engineering, 2023). this has contributed to increased customer satisfaction and reduced return rates. operationally, ai algorithms streamline logistics, optimizing sorting, packing, and shipping processes, leading to greater efficiency. 4.2. zara zara, a global fashion giant, has integrated artificial intelligence to enhance its agility and responsiveness to rapidly changing fashion trends. the company utilizes ai in various aspects of its operations, but particularly excels in its inventory management and supply chain optimization. zara employs ai-powered analytics to forecast demand, optimize stock allocation, and manage logistics (inditex, 2024). by analyzing a wide range of data, including past sales, current purchasing patterns, weather forecasts, and social media trends, zara can more accurately predict which items will be popular and ensure they are stocked in the right quantities in the right locations. this just-in-time inventory management, driven by ai, minimizes waste and markdowns while maximizing customer satisfaction. zara is also exploring the use of ai to personalize the customer experience, offering tailored recommendations based on browsing history and purchase data (inditex, 2024). 4.3. tommy hilfiger tommy hilfiger has strategically integrated artificial intelligence to revolutionize its trend prediction capabilities and deliver deeply personalized customer experiences (tommy hilfiger, n.d.). with fashion trends changing rapidly, tommy hilfiger utilizes ai-powered tools to analyze vast amounts of data from various sources, including social media trends, search engine analytics, fashion week highlights, and historical sales data, enabling the brand to accurately anticipate upcoming fashion trends and optimize its design process. this involves a combination of natural language processing (nlp) for social media analysis, time-series analysis for sales data, and machine learning for trend forecasting. asian business research journal, 2025, 10(4): 31-37 35 © 2025 by the authors; licensee eastern centre of science and education, usa tommy hilfiger has collaborated with ibm on several ai initiatives. in one project, they leveraged ibm's ai technology to enhance design processes. the ibm ai system processed extensive datasets, including social media trends, fashion show data, and historical sales, to provide designers with insights and inspiration (ibm, n.d.). this collaboration aimed to reduce the guesswork involved in design and enable tommy hilfiger to create collections that are more aligned with evolving consumer preferences. this involved using ai to identify emerging trends and patterns that might not be immediately apparent to human designers. tommy hilfiger has also explored the use of ai in the metaverse, hosting an ai design contest during metaverse fashion week (tommy hilfiger, n.d.). this initiative allowed consumers to use ai-driven tools to create their own virtual clothing designs, fostering a sense of co-creation and deeper engagement with the brand. the company has also experimented with "ai stylist" campaigns, using ai to generate personalized fashion narratives and outfit recommendations for customers (tommy hilfiger, n.d.). while primarily focused on design and trend prediction, these initiatives indicate tommy hilfiger's exploration of ai's potential to autonomously generate design concepts and personalize customer interactions, reflecting a move towards agentic ai in both creative and customer-facing aspects. the collaboration with ibm, the metaverse design contest, and the ai stylist campaigns all demonstrate a move towards ai systems that can operate with greater autonomy and make decisions with less direct human intervention. 4.4. farfetch farfetch, a global online luxury fashion platform, is increasingly leveraging ai to enhance various aspects of its operations, with a particular focus on personalization and optimizing its complex global logistics. farfetch's business model, coordinating a vast network of boutiques and brands, necessitates sophisticated ai applications. farfetch employs ai to provide highly personalized shopping experiences. this includes personalized product recommendations, tailored search results, and customized content (farfetch, n.d.). their ai algorithms analyze extensive customer data, such as browsing history, purchase patterns, and stated preferences, to understand individual style preferences and predict future demand. this enables farfetch to present each customer with a unique and relevant selection of products, increasing purchase likelihood and enhancing customer satisfaction. the company also optimizes its product discovery process using ai. ai-powered search functionality allows customers to find specific items more efficiently, while recommendation engines suggest complementary products and help customers discover new brands and styles (farfetch, n.d.). these systems likely involve machine learning models that learn from user interactions and product attributes to refine search results and recommendations. farfetch also utilizes ai to optimize its global logistics network, which involves coordinating a vast network of boutiques and brands across different countries with varying shipping times and regulations (farfetch, n.d.). this includes predicting delivery times, identifying potential delays, and suggesting efficient shipping routes to improve the customer experience and reduce shipping costs. moreover, farfetch employs ai to detect counterfeit products, protecting both customers and brands from fraudulent transactions and maintaining the integrity of the platform (farfetch, n.d.). this involves image recognition and machine learning models trained to identify authentic and fake items. farfetch is also exploring the use of ai to enhance the customer experience through visual search and augmented reality (ar) (farfetch, n.d.). visual search allows customers to find products using images, while ar can provide virtual try-on experiences. these technologies personalize shopping and increase engagement. 4.5. matches fashion matchesfashion, a prominent online luxury fashion retailer, has increasingly integrated ai to enhance personalization and customer experience. the company leverages ai to analyze customer data, including purchase history, browsing behavior, and stated preferences, to offer tailored product recommendations and styling advice (matchesfashion, n.d.). this personalized approach aims to create a more engaging and intuitive shopping experience for its discerning clientele. matchesfashion employs ai to understand customer preferences and behaviors, enabling personalized recommendations that drive sales. their website and mobile app are designed with a user-centric approach, offering seamless navigation and a personalized shopping experience powered by ai (matchesfashion, n.d.). the retailer also utilizes ai-enabled virtual personal stylists who can make recommendations to customers based on their stated preferences, browsing, and purchase history (matchesfashion, n.d.). this suggests the use of natural language processing (nlp) to understand customer requests and machine learning to match products to individual tastes. matchesfashion further integrates technology to connect the physical and digital aspects of the shopping experience. their physical retail space in london incorporates mobile technology connected to the matchesfashion app, giving staff access to visitor's sizing information, past orders, and browsing history via a bespoke algorithm. this algorithm likely uses machine learning to suggest relevant and personalized recommendations (matchesfashion, n.d.). this aims to provide a highly personalized luxury shopping experience, both online and in their physical stores. 5. discussion the analysis of the five case studies reveals the diverse and transformative impact of agentic ai across the fashion ecosystem. stitch fix demonstrates the power of ai in enhancing personalization and influencing design through continuous learning from extensive customer data (wang, shen, & choi, 2021; lo, 2023). their hybrid human-ai approach, where ai provides recommendations and stylists refine them, highlights the potential for collaboration. zara showcases the significant operational efficiencies achievable in supply chain and inventory management by implementing autonomous systems that respond to real-time data (gosselin, 2020; redress compliance, 2025; inditex, 2024). their ability to quickly adapt to changing demand and minimize waste is a key advantage. tommy hilfiger illustrates the potential of ai in fostering creative design and enriching customer interaction via personalized virtual experiences (tommy hilfiger, n.d.; ibm, n.d.). their use of ai in trend asian business research journal, 2025, 10(4): 31-37 36 © 2025 by the authors; licensee eastern centre of science and education, usa forecasting and co-creation with customers demonstrates its versatility. farfetch demonstrates how ai can optimize complex global supply chains and enhance the customer experience in a multi-brand online marketplace (farfetch, n.d.). their use of ai for personalized recommendations, logistics optimization, and fraud detection highlights its broad applicability. finally, matchesfashion highlights the growing importance of ai in delivering personalized and seamless shopping experiences, both online and in their physical stores (matchesfashion, n.d.). their focus on using ai to understand customer preferences and provide tailored recommendations is crucial in the competitive luxury market. these case studies highlight several key benefits of agentic ai. in terms of creative ideation, tommy hilfiger's "ai stylist" autonomously crafts personalized fashion narratives (tommy hilfiger, n.d.), while stitch fix's outfit creation model (ocm) generates outfit suggestions based on client preferences (stitch fix, n.d.), demonstrating ai's role in augmenting human creativity and offering novel design avenues. regarding efficiency, zara's ai-driven "just-in-telligent" supply chain optimizes inventory levels and logistics (redress compliance, 2025; inditex, 2024), and farfetch optimizes its complex global logistics network using ai (farfetch, n.d.), while matchesfashion's aidriven personalization aims to streamline the customer journey (matchesfashion, n.d.). concerning personalization, stitch fix's client time series model continuously refines recommendations (stitch fix, n.d.), tommy hilfiger's ai chatbots offer real-time assistance and personalized styling advice (tommy hilfiger, n.d.), zara provides personalized product suggestions based on customer behavior (gosselin, 2020; inditex, 2024), farfetch provides personalized shopping experiences (farfetch, n.d.), and matchesfashion leverages ai to offer tailored recommendations and styling advice both online and in their physical stores (matchesfashion, n.d.). despite these considerable benefits, the integration of agentic ai also presents several ethical challenges. algorithmic bias is a significant concern, as ai algorithms trained on biased data can perpetuate and amplify these biases in fashion, leading to discrimination and reinforcing harmful stereotypes. this requires careful attention to data collection, model training, and ongoing monitoring. data privacy is another critical issue, given the extensive collection of personal preferences, body measurements, and even biometric information by ai systems, often without full transparency or explicit consent. robust data governance frameworks and privacy-preserving technologies are needed. the increasing autonomy of ai in fashion also raises concerns about job displacement across various roles, particularly in manufacturing and routine administrative tasks, necessitating a focus on human-ai collaboration, reskilling, and the emergence of new roles. 6. theoretical contributions this paper contributes to the existing body of knowledge by proposing a model for understanding the integration of agentic ai in the fashion industry, which emphasizes continuous learning, human-ai collaboration, and ethical alignment. this model is supported by the core characteristics and theoretical perspectives of agentic ai. • continuous learning: agentic ai systems are characterized by their ability to learn continuously from data and experience. this is evident in the adaptive nature of agentic systems, which utilize supervised and reinforcement learning to rapidly adapt to novel situations (mitchell, 1997). • human-ai collaboration: the case studies highlight the importance of human-ai collaboration. the systems-theoretic perspective underscores the importance of human-ai collaboration, where humans can focus on higher-order thinking, creativity, and complex problem-solving, while ai handles routine tasks and provides data-driven insights (engelbart, 1962). • ethical alignment: the ethical challenges identified necessitate the integration of ethical considerations as a fundamental component of any agentic ai implementation in fashion. this includes addressing issues of bias, fairness, transparency, and accountability. this aligns with the growing field of ai ethics and responsible ai (mittelstadt et al., 2016). agentic ai extends the capabilities of traditional ai by incorporating self-governance and dynamic goal pursuit. unlike traditional ai, which relies on predefined instructions, agentic ai interprets intent, evaluates options, and executes decisions autonomously. its goal-oriented architecture, with objective hierarchies and dynamic goal prioritization, enables it to decompose complex tasks and adapt to changing circumstances (wooldridge, 2009). this capacity for self-governance and dynamic goal pursuit allows agentic ai to be more proactive and strategic, setting it apart from the reactive nature of traditional machine learning algorithms. 7. future research directions several avenues for future research emerge from this study. • cross-sector studies: cross-sector studies comparing the implementation of agentic ai in fashion with other industries like healthcare and manufacturing could reveal valuable insights into best practices and industry-specific challenges. • ethical frameworks: given the unique ethical considerations in fashion related to aesthetics, cultural impact, and creative work, the development of industry-specific ethical frameworks for agentic ai is crucial. • sustainability: further exploration of agentic ai's role in enabling and optimizing circular fashion systems, such as autonomously managing waste and material reuse, presents a significant opportunity. • workforce adaptation: longitudinal studies on workforce adaptation are needed to understand the longterm impact of agentic ai on job roles and skill requirements within the fashion industry. • visualization suggestion: a graph illustrating potential job displacement in the fashion industry due to ai automation, and the projected growth of new roles related to ai development and maintenance. • supply chain optimization: research into applying agent-based modeling and simulation techniques to optimize fashion supply chains under various competitive and collaborative scenarios could provide valuable insights for improving resilience and efficiency (lo, hong, & jeng, 2008). asian business research journal, 2025, 10(4): 31-37 37 © 2025 by the authors; licensee eastern centre of science and education, usa • personalized recommendation systems: exploring the use of multi-agent systems for creating highly personalized and adaptive fashion recommendation systems represents another promising research direction (wang, shen, & choi, 2021). • impact on creativity: further research is needed to understand how agentic ai will impact the creative process in fashion design. will it augment human creativity or lead to lead to a homogenization of styles? • consumer behavior: how will agentic ai-powered personalization and virtual experiences change consumer behavior and shopping habits in the fashion industry? 8. conclusion this paper has explored the transformative role of agentic ai across the fashion ecosystem, highlighting its potential to revolutionize design, manufacturing, supply chain management, and customer experience. through the analysis of five diverse case studies—stitch fix, zara, tommy hilfiger, farfetch, and matchesfashion—we have illustrated the current applications and future possibilities of autonomous intelligent systems in the fashion industry. these companies demonstrate varying degrees of agentic ai implementation, from enhancing personalization to optimizing complex global supply chains and driving creative design. while significant benefits such as enhanced personalization, improved efficiency, and novel creative avenues are evident, ethical considerations and the need for careful integration remain crucial. the theoretical framework proposed in this study emphasizes continuous learning, fostering human-ai collaboration, and ethical alignment as key principles for the successful adoption of agentic ai in fashion. the fashion industry stands at the cusp of a new era, where agentic ai has the potential to redefine its fundamental operations and creative processes. as agentic ai systems become more sophisticated, their ability to autonomously make decisions, adapt to changing circumstances, and pursue complex goals will only increase. this will likely lead to even greater efficiency gains, more personalized customer experiences, and the emergence of entirely new business models. however, the widespread adoption of agentic ai also raises important questions about the future of work, the role of human creativity, and the ethical implications of increasingly autonomous systems. it is therefore crucial that stakeholders in the fashion industry—including designers, manufacturers, retailers, and consumers—engage in a thoughtful and proactive dialogue about how to harness the benefits of agentic ai while mitigating its potential risks. by prioritizing continuous learning, fostering human-ai collaboration, and adhering to ethical principles, the fashion industry can ensure that the integration of agentic ai leads to a more sustainable, innovative, and inclusive future. future research should continue to explore these issues, focusing on developing practical guidelines and best practices for the responsible development and deployment of agentic ai in this dynamic and evolving industry. references aisera. 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(2018). case study research and applications: design and methods (6th ed.). sage publications. 64 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 5, 64-80, 2025 issn: 2576-6759 doi: 10.55220/25766759.437 © 2025 by the author; licensee eastern centre of science and education, usa epistemological reconfiguration of esg integration: a multi-theoretical analysis of investor decision-making paradigms in vietnam's emergent sustainable finance ecosystem minh khue nguyen united nations international school of hanoi, vietnam. email: minhkhuenguyen847@gmail.com abstract this research investigates the epistemological reconfiguration of environmental, social, and governance (esg) integration within vietnam's nascent sustainable finance ecosystem, examining investor decision-making paradigms through a multi-theoretical analytical framework. employing a quantitative methodological approach utilizing partial least squares structural equation modeling (pls-sem) with complementary fuzzy-set qualitative comparative analysis (fsqca), this study analyzed data collected from 287 institutional investors operating within vietnam's financial markets. the findings reveal significant relationships between institutional isomorphic pressures, esg information asymmetry, perceived esg value attribution, and sustainable investment decision-making behaviors. the research identified four distinct configurational pathways to esg integration, with market knowledge sophistication demonstrating significant moderating effects on the relationship between esg performance assessment and investment allocation decisions. this study contributes to sustainable finance literature by advancing a novel multi-theoretical integration model that synthesizes institutional theory, stakeholder theory, and behavioral finance perspectives, offering both theoretical extensions and practical implications for emerging market sustainable finance ecosystem development. the empirical evidence establishes vietnam as a compelling contextual case for examining sustainable investment paradigm evolution within transitional economic frameworks. keywords: esg integration, information asymmetry, institutional isomorphism, investment decision-making, sustainable finance. 1. introduction sustainable finance has witnessed unprecedented acceleration, fundamentally reconfiguring global capital allocation paradigms through environmental, social, and governance (esg) integration into mainstream investment frameworks (amel-zadeh & serafeim, 2017). this paradigmatic shift necessitates critical scholarly examination as markets increasingly acknowledge sustainability parameters' material significance in asset valuation. whilst developed financial ecosystems have experienced substantial esg integration progression, emerging markets present distinctive transitional contexts where theoretical frameworks require considerable recalibration to account for distinct institutional configurations and evolutionary market dynamics (esty & karpilow, 2014). vietnam's emergent sustainable finance ecosystem offers a particularly compelling analytical context for examining the epistemological reconfiguration of esg integration paradigms. hermeneutic analysis of contemporary sustainable finance literature reveals significant theoretical and empirical lacunae concerning the complex interplay of institutional forces, information asymmetries, and cognitive biases shaping investor decision-making in emerging market contexts (crifo et al., 2015). whilst substantial scholarly attention has examined esg integration within developed markets (eccles & serafeim, 2013), transitional economies' distinctive characteristics necessitate specialised theoretical frameworks accounting for contextual variability in regulatory environments, market sophistication, and cultural determinants. the current research paradigm exhibits particular limitations in explicating configurational pathways through which institutional pressures translate into operational esg integration within investment architectures in emergent financial markets (doh et al., 2010). vietnam represents an exemplary case for examining sustainable finance evolution within transitional economic frameworks. its accelerated economic liberalisation coupled with increasing global market integration has catalysed heightened esg awareness among institutional investors (oh et al., 2013). however, transdisciplinary scholarship posits that significant institutional barriers persist, including regulatory fragmentation, information asymmetry challenges, and limited market knowledge sophistication (sharma, 2013). these structural limitations manifest in heterogeneous esg integration practices, necessitating theoretical frameworks that elucidate the multidimensional influences shaping sustainable investment behaviours within this specific context. mailto:minhkhuenguyen847@gmail.com https://doi.org/10.55220/25766759.437 asian business research journal, 2025, 10(5): 64-80 65 © 2025 by the author; licensee eastern centre of science and education, usa the theoretical urgency for this research emerges from three interrelated conceptual limitations. first, current theoretical frameworks predominantly adopt siloed analytical perspectives, failing to synthesise institutional, stakeholder, and behavioural finance paradigms into cohesive explanatory frameworks (kitzmueller & shimshack, 2012). second, extant research exhibits limited empirical investigation of configurational pathways through which institutional pressures translate into operational esg integration (campbell, 2007). third, market knowledge sophistication's moderating role in shaping the relationship between esg performance assessment and investment allocation decisions remains insufficiently examined, particularly within emerging market contexts (crifo & forget, 2015). this research's novelty lies in developing a multi-theoretical integration model synthesising institutional theory, stakeholder theory, and behavioural finance perspectives to elucidate the complex determinants of esg integration within vietnam's sustainable finance ecosystem. this integrated framework enables nuanced analysis of how institutional isomorphic pressures, esg information asymmetry, and perceived value attribution interact to shape sustainable investment behaviours (attig et al., 2013). furthermore, methodological innovation through complementary application of pls-sem and fsqca analytical approaches facilitates both variance-based and configurational examinations of esg integration phenomena. the research significance extends beyond its empirical context, contributing theoretical advancements that enhance understanding of sustainable finance evolution within transitional economic frameworks. by elucidating the complex interplay of institutional forces, information environments, and cognitive factors shaping esg integration, this study provides valuable insights for policymakers, market regulators, and institutional investors navigating sustainable finance in emerging markets (ioannou & serafeim, 2015). the multi-theoretical integration model offers a conceptual foundation for future empirical investigations across diverse institutional contexts. transdisciplinary scholarship posits that esg integration represents a transformative reconfiguration transcending traditional financial analysis (cheng et al., 2014). however, translation into operational investment practices remains highly variable across institutional contexts, with particular heterogeneity in emerging markets (margolis et al., 2009). within vietnam, institutional investors navigate complex trade-offs between short-term performance imperatives and long-term sustainability considerations within information environments characterised by significant asymmetries (dhaliwal et al., 2011). this research contributes to theoretical advancement through three principal mechanisms: empirical validation for an integrated theoretical framework demonstrating the explanatory value of multi-theoretical approaches to complex financial phenomena (godfrey et al., 2009); identification of distinct configurational pathways illuminating the equifinality characterising sustainable investment evolution (surroca et al., 2010); and establishing market knowledge sophistication's critical moderating role in determining relationships between esg assessment and investment outcomes (luo et al., 2015). the practical significance extends to multiple stakeholder groups. for policymakers, findings inform regulatory frameworks addressing information asymmetry challenges (dhaliwal et al., 2012). for institutional investors, strategic insights optimise esg integration within contexts characterised by information constraints and institutional complexities (flammer, 2015). for corporations, findings illuminate the critical importance of robust esg disclosure practices in addressing information asymmetry challenges inhibiting effective market valuation of sustainability performance (dhaliwal et al., 2011). 2. foundational theories and literature review 2.1. foundational theories 2.1.1. institutional theory institutional theory provides a robust theoretical foundation for examining the complex dynamics shaping esg integration within investment decision frameworks. this paradigm elucidates how organisational behaviours are influenced by normative pressures, social expectations, and legitimacy considerations rather than purely economic rationality (dimaggio & powell, 1983). within sustainable finance contexts, institutional theory illuminates how regulatory, normative, and cognitive institutional forces shape the evolution of esg integration practices among investment actors (campbell, 2007). the theory's emphasis on institutional isomorphism—the process through which organisations within a field adopt increasingly similar structures and practices—offers essential conceptual tools for analysing how sustainable investment approaches diffuse throughout financial ecosystems (scott, 1995). dimaggio and powell's (1983) seminal work identifies three primary mechanisms driving organisational homogenisation: coercive, mimetic, and normative pressures. in sustainable finance contexts, coercive isomorphism manifests through regulatory frameworks mandating esg disclosure, while mimetic isomorphism operates through imitation of successful sustainable investment practices during periods of uncertainty (matten & moon, 2008). normative isomorphism emerges through professionalisation processes as investment professionals increasingly incorporate sustainability considerations into accepted standards of practice (doh et al., 2010). institutional theory further illuminates how organisations navigate legitimacy challenges associated with evolving sustainability expectations. suchman (1995) defines legitimacy as "a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions" (p. 574). for investment organisations, establishing legitimacy increasingly requires demonstrating appropriate consideration of esg factors, particularly as stakeholder expectations regarding sustainable finance practices continue to evolve (sharma, 2013). the concept of decoupling provides valuable insights regarding potential divergence between formal esg integration structures and actual investment practices. meyer and rowan (1977) introduce decoupling as the process through which organisations adopt ceremonial structures that conform to institutional expectations while maintaining operational practices that substantively differ from these formal structures. in sustainable finance contexts, decoupling may manifest as investment organisations implementing superficial esg integration procedures to enhance legitimacy while maintaining substantive investment decisions based primarily on traditional financial metrics (westphal & zajac, 2001). asian business research journal, 2025, 10(5): 64-80 66 © 2025 by the author; licensee eastern centre of science and education, usa north's (1990) institutional economics framework enhances understanding of how formal and informal constraints shape sustainable investment behaviours. the interaction between formal constraints (explicit regulatory requirements) and informal constraints (cultural norms, values, and beliefs) creates complex incentive structures that influence esg integration approaches (peng et al., 2009). in emerging markets such as vietnam, understanding these institutional dynamics is particularly critical for analysing sustainable finance evolution within transitional economic contexts. institutional logics represent another valuable theoretical construct for examining esg integration. thornton and ocasio (1999) define institutional logics as "the socially constructed, historical patterns of material practices, assumptions, values, beliefs, and rules by which individuals produce and reproduce their material subsistence, organize time and space, and provide meaning to their social reality" (p. 804). within financial markets, competing institutional logics—such as short-term profit maximisation versus long-term sustainability—create complex tensions that investment actors must navigate (lounsbury, 2007). oliver's (1991) strategic responses framework provides additional analytical tools for understanding how investment organisations navigate institutional pressures regarding esg integration. organisations may adopt responses ranging from acquiescence to defiance, depending on factors such as perceived legitimacy benefits, consistency with organisational goals, and institutional enforcement capacity. institutional complexity theory further elucidates how organisations navigate environments characterised by multiple, potentially competing institutional demands (greenwood et al., 2011), while institutional entrepreneurship provides frameworks for understanding how certain actors drive sustainable finance innovation within established environments (dimaggio, 1988; maguire et al., 2004). 2.1.2. stakeholder theory stakeholder theory provides essential theoretical frameworks for conceptualising how investment organisations navigate complex relationships with diverse stakeholders holding varying expectations regarding esg integration. freeman's (1984) seminal work defines stakeholders as "any group or individual who can affect or is affected by the achievement of the organization's objectives" (p. 46). this theoretical perspective emphasises that organisational success requires effective management of relationships with multiple stakeholders beyond shareholders, including employees, customers, communities, and regulators (freeman et al., 2010). the normative foundation of stakeholder theory asserts that stakeholders possess intrinsic value deserving moral consideration beyond instrumental utility (donaldson & preston, 1995). for investment organisations, this normative perspective suggests ethical obligations to consider how investment decisions impact diverse stakeholders, providing philosophical justification for esg integration beyond pure financial materiality (phillips et al., 2003). stakeholder theory's instrumental dimension provides complementary frameworks emphasising how effective stakeholder management enhances organisational performance outcomes (jones, 1995), with empirical research indicating positive relationships between corporate sustainability performance and financial outcomes (margolis et al., 2009). mitchell et al.'s (1997) stakeholder salience framework offers valuable analytical tools for understanding how investment organisations prioritise attention to various stakeholders within esg integration processes. stakeholder salience—determined by perceived power, legitimacy, and urgency—influences which sustainability considerations receive priority within investment decision frameworks. in sustainable finance contexts, evolving stakeholder salience dynamics—such as increasing regulatory attention to climate risks or growing client demand for social impact consideration—significantly shape esg integration evolution (agle et al., 1999). berman et al. (1999) distinguish between instrumental stakeholder orientation—focused primarily on financial benefits derived from stakeholder management—and intrinsic stakeholder orientation emphasising moral obligations toward stakeholders independent of performance benefits. jones and wicks' (1999) convergent stakeholder theory synthesises normative and instrumental stakeholder perspectives, recognising both the moral foundations of stakeholder consideration and the performance benefits derived from effective stakeholder management. within esg integration contexts, this convergent perspective helps reconcile potential tensions between fiduciary obligations and sustainability considerations (crifo & forget, 2015). the concept of stakeholder value creation provides frameworks for understanding how investment decisions can simultaneously generate financial returns while creating value for diverse stakeholders (freeman et al., 2010), challenging zero-sum conceptualisations of financial versus sustainability objectives (porter & kramer, 2011). stakeholder network theory extends traditional stakeholder frameworks by examining complex interdependencies among stakeholders rather than focusing exclusively on bilateral organisation-stakeholder relationships (rowley, 1997), while stakeholder dialogue offers theoretical frameworks regarding engagement processes that address sustainability concerns while potentially enhancing investment outcomes (dimson et al., 2015; gifford, 2010). post et al.'s (2002) stakeholder view emphasises that organisational wealth creation capacity depends fundamentally on relationships with critical stakeholders who provide essential resources, capabilities, and support. for investment organisations, this theoretical lens illuminates how effective esg integration may enhance critical stakeholder relationships—such as client trust or regulatory relationships—that fundamentally determine organisational success (brammer & millington, 2008). 2.2. review of empirical and relevant studies 2.2.1. esg information asymmetry in investment decision-making empirical research consistently identifies information asymmetry as a critical challenge impeding effective esg integration within investment decision frameworks. information asymmetry—where certain market participants possess superior information compared to others—creates significant barriers to efficient capital allocation in sustainable finance contexts (akerlof, 1970). unlike traditional financial information subject to standardised reporting requirements, esg information frequently lacks consistency in measurement, reporting frameworks, and verification processes (cheng et al., 2014). asian business research journal, 2025, 10(5): 64-80 67 © 2025 by the author; licensee eastern centre of science and education, usa research examining esg disclosure quality reveals significant heterogeneity in reporting practices across organisations and markets. dhaliwal et al. (2011) document substantial variation in voluntary sustainability disclosure practices, finding that firms with higher disclosure costs and poorer financial performance are more likely to initiate stand-alone sustainability reporting. this strategic disclosure pattern creates challenges for investors attempting to compare esg performance across potential investments (cho et al., 2015). in emerging markets specifically, oh et al. (2013) find particularly pronounced heterogeneity in esg disclosure quality, with significant implications for investor ability to effectively incorporate sustainability considerations. the relationship between information asymmetry and cost of capital provides important evidence regarding the financial materiality of esg disclosure quality. dhaliwal et al. (2011) document that initiation of voluntary esg disclosure is associated with subsequent reductions in cost of capital, particularly for firms with superior sustainability performance. this suggests that improved sustainability transparency reduces information asymmetry that would otherwise manifest in higher risk premiums demanded by investors (el ghoul et al., 2011). complementary research by cheng et al. (2014) establishes that superior esg performance is associated with enhanced capital access through reduced capital constraints. crifo et al. (2015) document that investors respond heterogeneously to different sustainability dimensions, with governance and environmental factors typically receiving greater consideration than social factors due to perceived financial materiality and information reliability differentials. in emerging market contexts, xiao et al. (2017) find that information asymmetry regarding esg factors creates particularly significant barriers to sustainable investment, as concerns regarding information reliability amplify inherent evaluation challenges. the role of information intermediaries in addressing esg information asymmetry represents another important research stream. chatterji et al. (2009) examine the relationship between external sustainability ratings and actual corporate environmental performance, finding significant variation in rating methodologies and reliability. complementary research by ioannou and serafeim (2015) demonstrates that investment analysts' interpretation of sustainability information has evolved over time, with increasing recognition of the financial materiality of esg factors. elliott et al. (2014) document that investors' willingness to incorporate sustainability information into investment decisions is significantly influenced by whether this information is explicitly linked to financial performance. this finding highlights how framing effects shape investor responses to esg information (hockerts & moir, 2004). research on mandatory versus voluntary esg disclosure regimes provides valuable insights regarding potential regulatory approaches to addressing information asymmetry. ioannou and serafeim (2014) analyse the impact of mandatory sustainability reporting regulations across multiple countries, finding that such requirements increase disclosure quantity and quality while improving sustainability performance. 2.2.2. institutional isomorphic pressures in sustainable finance empirical research examining institutional isomorphic pressures provides valuable insights regarding how coercive, mimetic, and normative forces shape esg integration. coercive isomorphism manifests in sustainable finance contexts through regulatory requirements, client mandates, and societal expectations regarding esg consideration (dimaggio & powell, 1983). matten and moon (2008) document how regulatory frameworks significantly influence corporate sustainability practices. in emerging markets specifically, jamali and neville (2011) find that regulatory environments exhibit particularly powerful influence on esg-related practices due to their formative role in shaping market development trajectories. mimetic isomorphism—the tendency to imitate other organisations during periods of uncertainty—represents another significant force shaping sustainable finance evolution. doh et al. (2010) document how investment organisations frequently adopt esg integration practices established by industry leaders, particularly when facing uncertainty regarding appropriate sustainability evaluation methodologies. zhao et al. (2017) find that mimetic isomorphism is particularly pronounced in emerging market contexts, as investment organisations with limited esg experience frequently emulate practices established in more developed financial markets. normative isomorphism—emerging through professionalisation processes and shared educational backgrounds—increasingly influences sustainable finance practices as esg considerations become integrated into professional investment standards (dimaggio & powell, 1983). louche et al. (2012) document the evolution of responsible investment norms within the investment profession, finding that normative frameworks regarding esg integration have strengthened significantly over time. in emerging market contexts, xiao et al. (2017) find that international professional networks play particularly important roles in transmitting sustainable investment norms to developing financial ecosystems. hoffman (1999) analyses how organisational fields evolve in response to emerging environmental considerations, finding that field reconfiguration processes significantly influence how organisations interpret and respond to sustainability imperatives. comparative research examining sustainable finance evolution across different institutional contexts provides important insights regarding how national institutional environments shape esg integration. ioannou and serafeim (2012) analyse how country-level institutions influence corporate sustainability performance, finding that political, labour, education, and cultural systems significantly impact esg practices. research examining decoupling phenomena provides valuable insights regarding potential divergence between formal esg structures and actual investment practices. westphal and zajac (2001) document how organisations frequently adopt ceremonial structures that symbolically conform to institutional expectations while maintaining substantive practices aligned with traditional objectives. within sustainable finance specifically, dumas and louche (2016) find evidence of decoupling in responsible investment implementation, with some organisations adopting formal esg policies that have limited influence on actual investment decision-making. 2.2.3. market knowledge sophistication and esg value attribution empirical research examining market knowledge sophistication provides valuable insights regarding how investor expertise and cognitive frameworks influence sustainable investment behaviours. market knowledge asian business research journal, 2025, 10(5): 64-80 68 © 2025 by the author; licensee eastern centre of science and education, usa sophistication encompasses both technical expertise regarding esg assessment methodologies and cognitive frameworks for interpreting sustainability information within investment contexts (meehan et al., 2006). research indicates that knowledge sophistication significantly influences how investors attribute value to esg factors and incorporate sustainability considerations into decision frameworks (slager & chapple, 2016). amel-zadeh and serafeim (2017) survey global investment professionals regarding esg integration, finding that perceived importance of sustainability information is strongly associated with understanding of financial materiality pathways. investors with more sophisticated knowledge frameworks demonstrate greater ability to identify materiality connections between specific esg factors and financial performance outcomes (eccles et al., 2011). in emerging market contexts specifically, esty and karpilow (2014) find that knowledge limitations regarding esg materiality represent particularly significant barriers to sustainable investment. research examining cognitive biases in sustainable investment provides important insights regarding how psychological factors influence esg integration. hirshleifer (2001) documents how various cognitive biases affect investor decision-making, creating systematic deviations from rational information processing that particularly impact evaluation of complex or unfamiliar factors. within sustainable finance specifically, glac (2009) finds that framing effects significantly influence how investors interpret and respond to esg information. slager and chapple (2016) find that investors with longer time horizons demonstrate greater propensity to incorporate esg considerations, reflecting alignment between sustainability's long-term materiality and extended investment perspectives. knowledge sophistication regarding intertemporal esg value attribution significantly influences how investors perceive the relevance of sustainability factors within their specific investment contexts (busch et al., 2016). chava (2014) documents that perceived relationships between environmental performance and financial outcomes significantly influence investor responses to sustainability information. knowledge sophistication regarding specific value-creation mechanisms—such as risk mitigation, efficiency improvements, or stakeholder relationships—shapes how investors interpret esg information within decision frameworks (clark et al., 2015). delmas and blass (2010) document the methodological challenges associated with comprehensive esg assessment, finding that effective sustainability evaluation requires significant technical expertise regarding appropriate metrics and analytical frameworks. dimson et al. (2015) analyse successful esg engagement initiatives, finding that investor knowledge regarding specific sustainability issues significantly influences engagement effectiveness. more knowledgeable investors demonstrate greater capacity to identify material esg concerns, engage constructively with companies regarding improvement opportunities, and effectively monitor subsequent performance (gifford, 2010). 2.2.4. sustainable investment decision-making behaviour empirical research examining sustainable investment decision-making behaviours provides valuable insights regarding how investors operationalise esg considerations within investment processes. sustainable investment decision-making encompasses multiple dimensions including screening practices, integration methodologies, active ownership approaches, and thematic allocation strategies (eurosif, 2016). research indicates significant heterogeneity in these operational behaviours, reflecting varying motivations, capabilities, and institutional contexts (amel-zadeh & serafeim, 2017). hong and kacperczyk (2009) document the financial implications of exclusionary screening, finding that "sin stocks" historically outperformed comparable investments due to investor aversion creating undervaluation. more recent research indicates increasing adoption of inclusionary screening approaches that favour sustainability leaders rather than simply excluding problematic sectors (durand et al., 2013). eccles and serafeim (2013) analyse best practices in esg integration, finding increasing incorporation of material sustainability factors within fundamental valuation models rather than as separate overlay processes. this integration evolution reflects growing recognition of esg financial materiality (khan et al., 2016). in emerging market contexts, van der ahee and schulschenk (2013) find that integration practices remain less developed, with investors frequently relying on simplified approaches due to information constraints. dimson et al. (2015) analyse successful esg engagement initiatives, finding that collaborative approaches, clear objectives, and home-country investor involvement significantly enhance effectiveness. in emerging markets specifically, gifford (2010) finds that engagement practices require significant adaptation to account for distinct ownership structures, governance norms, and relationship expectations within different institutional contexts. kaminker and stewart (2012) analyse green bond markets, documenting growing institutional investor allocation to specifically environmental financing instruments. chava (2014) documents the relationship between environmental risk exposure and financing costs, finding that firms with higher environmental concerns face significantly higher cost of debt. in emerging market contexts specifically, oh et al. (2013) find that governance risk factors receive particular attention from investors, reflecting perceived materiality of governance considerations within developing market environments. 2.3. proposed research model the proposed research model integrates multiple theoretical perspectives to examine the complex determinants of esg integration within vietnam's emergent sustainable finance ecosystem. the model examines relationships among institutional isomorphic pressures, esg information asymmetry, perceived esg value attribution, market knowledge sophistication, and sustainable investment decision-making behaviours, with specific hypothesised relationships informed by existing literature and contextual considerations. institutional isomorphic pressures represent a critical independent variable, reflecting the coercive, mimetic, and normative forces that shape organisational approaches to esg integration. drawing on dimaggio and powell's (1983) institutional isomorphism framework, this construct encompasses regulatory requirements, peer imitation processes, and professional normative expectations regarding sustainability consideration within investment frameworks. previous research indicates that these institutional pressures significantly influence organisational adoption of esg practices (doh et al., 2010). the research model hypothesises that institutional asian business research journal, 2025, 10(5): 64-80 69 © 2025 by the author; licensee eastern centre of science and education, usa isomorphic pressures positively influence sustainable investment decision-making behaviours, with this relationship mediated by perceived esg value attribution. esg information asymmetry constitutes another important independent variable, reflecting the challenges investment organisations face in accessing, evaluating, and comparing sustainability information across potential investments. this construct encompasses multiple dimensions including information availability, quality, comparability, and verification (cheng et al., 2014). previous research indicates that information asymmetry creates significant barriers to effective esg integration, particularly in emerging market contexts characterised by less developed sustainability disclosure practices (oh et al., 2013). the research model hypothesises that esg information asymmetry negatively influences sustainable investment decision-making behaviours, with this relationship mediated by perceived esg value attribution and moderated by market knowledge sophistication. figure 1. proposed research model. perceived esg value attribution represents a mediating variable, reflecting how investment organisations interpret the financial implications and materiality of sustainability factors. this construct encompasses perceptions regarding how specific esg considerations create or protect value through mechanisms such as risk mitigation, efficiency enhancement, reputation protection, or opportunity identification (clark et al., 2015). previous research indicates that these value attribution processes significantly influence how investors operationalise sustainability considerations within investment frameworks (amel-zadeh & serafeim, 2017). the research model hypothesises that perceived esg value attribution positively influences sustainable investment decision-making behaviours, mediating the relationships between institutional pressures, information asymmetry, and operational sustainable investment practices. market knowledge sophistication constitutes an important moderating variable, reflecting investment organisations' technical expertise and cognitive frameworks regarding sustainability assessment and integration. this construct encompasses multiple dimensions including understanding of esg financial materiality pathways, technical capability for sustainability evaluation, and cognitive frameworks for interpreting sustainability information (meehan et al., 2006). previous research indicates that knowledge sophistication significantly influences how investors interpret and respond to sustainability information (eccles et al., 2011). the research model hypothesises that market knowledge sophistication moderates the relationship between esg information asymmetry and perceived esg value attribution, with higher knowledge sophistication reducing the negative impact of information challenges on value perception. sustainable investment decision-making behaviour represents the dependent variable, reflecting the operational approaches through which investment organisations incorporate esg considerations into investment processes. this construct encompasses multiple dimensions including screening practices, integration methodologies, active ownership approaches, and thematic allocation strategies (eurosif, 2016). the research model examines how institutional pressures, information environments, value perceptions, and knowledge sophistication collectively shape these sustainable investment behaviours within vietnam's emerging market context. the model addresses significant gaps in existing literature by developing an integrated theoretical framework that synthesises institutional, stakeholder, and behavioural perspectives on sustainable investment (kitzmueller & shimshack, 2012). the model advances understanding of sustainable finance evolution within emerging market contexts, addressing the notable lack of empirical research examining esg integration within developing financial ecosystems (xiao et al., 2017). the model employs partial least squares structural equation modeling (pls-sem) with complementary fuzzy-set qualitative comparative analysis (fsqca) as primary analytical approaches. pls-sem offers particular advantages for this research due to its capacity to examine complex relationship networks, test mediating and asian business research journal, 2025, 10(5): 64-80 70 © 2025 by the author; licensee eastern centre of science and education, usa moderating effects, and accommodate both formative and reflective measurement models (hair et al., 2014). the complementary fsqca approach enables identification of configurational pathways to sustainable investment outcomes, recognising the potential equifinality that characterises esg integration within complex institutional environments (fiss, 2011). based on the theoretical foundations and empirical evidence presented, the research model examines the following specific hypotheses: h1: institutional isomorphic pressures positively influence sustainable investment decision-making behaviours. h2: institutional isomorphic pressures positively influence perceived esg value attribution. h3: esg information asymmetry negatively influences perceived esg value attribution. h4: esg information asymmetry negatively influences sustainable investment decision-making behaviours. h5: perceived esg value attribution positively influences sustainable investment decision-making behaviours. h6: perceived esg value attribution mediates the relationship between institutional isomorphic pressures and sustainable investment decision-making behaviours. h7: perceived esg value attribution mediates the relationship between esg information asymmetry and sustainable investment decision-making behaviours. h8: market knowledge sophistication moderates the relationship between esg information asymmetry and perceived esg value attribution, such that higher knowledge sophistication reduces the negative impact of information asymmetry. these hypothesised relationships collectively constitute a comprehensive theoretical framework for examining the complex determinants of esg integration within vietnam's emergent sustainable finance ecosystem. 3. research methodology 3.1. research design this study employs a quantitative research design utilising a cross-sectional survey methodology to investigate esg integration determinants within vietnam's emergent sustainable finance ecosystem. this approach aligns with the research objectives of examining relationships among key variables and testing specific hypotheses regarding sustainable investment behaviours (creswell, 2014), whilst providing valuable insights regarding sustainable finance evolution within this transitional economic context (amel-zadeh & serafeim, 2017). the research design incorporates complementary variance-based and configurational analytical approaches, enabling examination of direct relationships among variables whilst identifying distinct pathways to esg integration. the primary analytical framework utilises partial least squares structural equation modelling (plssem) to test hypothesised relationships (hair et al., 2014), offering advantages through its capacity to examine complex relationship networks, test mediating and moderating effects, and accommodate both formative and reflective measurement models (hair et al., 2012). the complementary fuzzy-set qualitative comparative analysis (fsqca) enables identification of configurational pathways to sustainable investment outcomes, recognising the potential equifinality characterising esg integration within complex institutional environments (fiss, 2011). several mechanisms address potential methodological limitations: incorporation of both perceptual measures and objective indicators facilitates triangulation across measurement approaches (jick, 1979); rigorous validity and reliability assessment procedures ensure measurement quality (bagozzi et al., 1991); and multiple control variables account for potential confounding factors such as investor characteristics, portfolio composition, and international exposure (podsakoff et al., 2003). the design reflects theoretical considerations regarding appropriate methodological approaches. testing specific hypothesised relationships necessitates a quantitative approach capable of statistical inference and hypothesis testing (creswell, 2014), whilst developing generalisable insights aligns with quantitative methodologies enabling systematic examination across a substantial institutional investor sample (johnson & onwuegbuzie, 2004). several innovative methodological elements address limitations in previous sustainable finance research: complementary application of pls-sem and fsqca enables both variance-based and configurational examination, providing more comprehensive insights than either approach individually (woodside, 2013); sophisticated measurement approaches for key constructs capture the complex nature of these phenomena (edwards, 2001); and rigorous moderation analysis techniques examine how market knowledge sophistication influences the relationship between information challenges and value attribution processes (hayes, 2013). 3.2. data collection the study employed a systematic data collection approach targeting institutional investors operating within vietnam's financial markets. the population comprised investment organisations actively managing portfolios within vietnam, including fund management companies, securities firms, insurance companies, pension funds, and banking institutions with investment operations (crifo et al., 2015). the sampling frame was constructed using multiple authoritative sources including the vietnam securities depository, state securities commission, and vietnam association of financial investors membership directories. stratified random sampling ensured proportional representation across investor categories. stratification variables included investor type, asset size, and ownership structure, enhancing sample representativeness through inclusion of diverse investor categories (cochran, 1977). within each stratum, random selection identified specific organisations for inclusion, enhancing generalisability to the broader institutional investor population (lohr, 2009). the primary data collection instrument comprised a structured questionnaire administered to senior investment professionals. developed through comprehensive literature review, expert panel consultation, and pilot testing, the instrument ensured content validity, clarity, and contextual appropriateness (devellis, 2016). it incorporated multi-item likert scales for key theoretical constructs and objective indicators regarding esg integration practices, enabling triangulation across measurement approaches (jick, 1979). the data collection process involved multiple stages to maximise response quality and participation. initial contact established appropriate respondents based on involvement in investment decision processes and familiarity asian business research journal, 2025, 10(5): 64-80 71 © 2025 by the author; licensee eastern centre of science and education, usa with organisational esg practices (kumar et al., 1993). mixed-mode administration involved both electronic distribution and in-person collection based on respondent preferences (dillman et al., 2014). follow-up communications at two and four weeks encouraged participation among non-respondents (baruch & holtom, 2008). the final sample comprised 287 completed questionnaires, representing a 64.2% response rate from 447 organisations initially contacted. this substantial response rate enhances confidence in sample representativeness (baruch & holtom, 2008). respondent characteristics indicate balanced representation: 32.4% from fund management companies, 28.6% from securities firms, 18.5% from insurance companies, 12.2% from banking institutions, and 8.3% from pension funds. asset size distribution includes 38.7% small investors (under usd 100 million aum), 42.5% medium investors (usd 100-500 million aum), and 18.8% large investors (over usd 500 million aum). ownership structure representation includes 58.2% domestic organisations, 27.5% foreign institutions, and 14.3% joint ventures. data collection procedures incorporated specific mechanisms addressing methodological limitations: nonresponse bias assessment compared early and late respondents, with no significant differences identified (armstrong & overton, 1977); common method bias mitigation included respondent anonymity, varied response formats, and separation of predictor and criterion measures (podsakoff et al., 2003); and key informant bias was addressed through screening questions assessing position, experience, and involvement in esg-related decision processes (kumar et al., 1993). 3.3. measurement and validation the measurement approach incorporated multi-item scales for key theoretical constructs, ensuring comprehensive coverage of complex phenomena whilst enabling rigorous reliability and validity assessment (churchill, 1979). all instruments were adapted from established scales with modifications ensuring contextual appropriateness for vietnam's sustainable finance ecosystem through expert panel review and pilot testing with 15 investment professionals (devellis, 2016). the institutional isomorphic pressures construct was measured using a 12-item scale adapted from kostova and roth (2002) and doh et al. (2010), encompassing coercive, mimetic, and normative dimensions. coercive pressure items addressed regulatory requirements, client expectations, and societal demands; mimetic pressure items examined imitation of successful peer practices and industry standards; and normative pressure items assessed professional expectations and legitimacy considerations (dimaggio & powell, 1983). the esg information asymmetry construct was measured using a 9-item scale adapted from dhaliwal et al. (2011) and cheng et al. (2014), addressing information availability, quality, and comparability dimensions. this approach captured multifaceted information challenges facing investors incorporating sustainability considerations (amel-zadeh & serafeim, 2017). the perceived esg value attribution construct was measured using a 10-item scale adapted from eccles et al. (2011) and clark et al. (2015), examining perceptions regarding financial materiality of sustainability considerations through risk mitigation, efficiency enhancement, reputation effects, competitive positioning, and market valuation mechanisms. the market knowledge sophistication construct was measured using an 8-item scale adapted from meehan et al. (2006) and slager and chapple (2016), examining technical expertise regarding esg metrics and evaluation methodologies, alongside cognitive frameworks for interpreting sustainability information (eccles et al., 2011). the sustainable investment decision-making behaviour construct was measured using both perceptual and objective indicators. the perceptual component employed a 15-item scale adapted from eurosif (2016) and amelzadeh and serafeim (2017), examining screening practices, integration methodologies, active ownership approaches, and thematic allocation strategies. the objective component collected specific indicators regarding esg policy formalisation, dedicated sustainable investment products, staff resources, and portfolio esg score measurement. control variables included investor characteristics, portfolio composition, ownership structure, and international exposure (podsakoff et al., 2003). all measurement instruments underwent rigorous validation procedures: exploratory factor analysis examined initial factor structures (conway & huffcutt, 2003); confirmatory factor analysis validated the measurement model structure (anderson & gerbing, 1988); internal consistency reliability was assessed using cronbach's alpha and composite reliability, with values exceeding 0.7 deemed acceptable (nunnally, 1978); indicator reliability was evaluated through factor loadings exceeding 0.7 (chin, 1998); convergent validity was assessed using average variance extracted exceeding 0.5 (fornell & larcker, 1981); and discriminant validity was evaluated using both the fornell-larcker criterion and heterotrait-monotrait ratio below 0.85 (henseler et al., 2015). 3.4. analytical procedure the analytical procedure involved multiple stages examining the theoretical model and testing specific hypotheses. the primary analytical approach utilised partial least squares structural equation modelling implemented through smartpls 4 software (ringle et al., 2015), following established procedural guidelines (hair et al., 2014). the initial stage involved measurement model assessment, evaluating indicator reliability through factor loadings, internal consistency through cronbach's alpha and composite reliability, convergent validity through average variance extracted, and discriminant validity through the fornell-larcker criterion and heterotraitmonotrait ratio (hair et al., 2014). the second stage examined the structural model, assessing path coefficients, significance levels, and r² values of endogenous constructs. bootstrapping with 5,000 resamples tested significance of path coefficients (davison & hinkley, 1997). effect sizes (f²) determined practical significance of relationships, with values of 0.02, 0.15, and 0.35 indicating small, medium, and large effects respectively (cohen, 1988). predictive relevance was evaluated using stone-geisser q² values through blindfolding procedures (geisser, 1974; stone, 1974). asian business research journal, 2025, 10(5): 64-80 72 © 2025 by the author; licensee eastern centre of science and education, usa the third stage focused on mediating effects, assessing specific indirect effects using bootstrapping procedures to determine whether perceived esg value attribution mediates relationships between institutional pressures, information asymmetry, and sustainable investment behaviours (preacher & hayes, 2008). both direct and indirect effects were examined to determine mediation type and significance (zhao et al., 2010). the fourth stage examined the moderating effect of market knowledge sophistication on the relationship between esg information asymmetry and perceived esg value attribution, using the product indicator approach and creating interaction terms between moderator and predictor variables (chin et al., 2003). simple slope analysis visualised the moderation effect, examining relationships at different levels of market knowledge sophistication (aiken & west, 1991). the fifth stage employed fuzzy-set qualitative comparative analysis to identify configurational pathways to sustainable investment outcomes, examining how different combinations of causal conditions collectively lead to sustainable investment behaviours (ragin, 2008). the procedure involved calibration of construct measures into fuzzy-set membership scores, truth table analysis to identify consistent causal configurations, and examination of necessary and sufficient conditions (schneider & wagemann, 2012). the final stage included supplementary analyses enhancing robustness: multi-group analysis examined potential heterogeneity across investor categories (henseler et al., 2009); control variable examination, alternative model specification testing, and common method bias assessment through harman's single-factor test and the unmeasured latent method construct approach were conducted (podsakoff et al., 2003). throughout all stages, established procedural guidelines ensured methodological rigour and result validity, supporting valid inferences regarding esg integration determinants within vietnam's sustainable finance ecosystem. 4. research findings 4.1. measurement model assessment the measurement model assessment examined reliability and validity of all construct measures prior to substantive hypothesis testing. this comprehensive assessment ensures that measurement instruments appropriately capture the theoretical constructs under investigation, providing a solid foundation for subsequent structural model analysis. the assessment procedure followed established guidelines for evaluating pls-sem measurement models, incorporating multiple criteria to ensure measurement quality (hair et al., 2014). exploratory factor analysis (efa) employing principal component analysis with varimax rotation was initially conducted to examine factor structures and identify potentially problematic items. this analysis revealed a clear five-factor structure corresponding to the theoretical constructs, with all indicators loading primarily on their intended factors. two items demonstrated problematic cross-loadings exceeding 0.40 on multiple factors and were subsequently removed from further analysis to ensure construct unidimensionality (conway & huffcutt, 2003). the final measurement model retained 52 indicators across the five theoretical constructs, with each indicator demonstrating primary loading on its intended factor and minimal cross-loadings on other factors. confirmatory factor analysis (cfa) was subsequently performed to validate the measurement model structure and formally assess construct validity. this analysis confirmed appropriate indicator alignment with theoretical constructs, with all items demonstrating significant loadings on their respective factors (p < 0.001). the cfa model demonstrated satisfactory fit with the empirical data according to established criteria, with standardized root mean square residual (srmr) of 0.058 below the recommended threshold of 0.08 (hu & bentler, 1999). this confirmation of measurement model structure supports subsequent reliability and validity assessments for individual constructs. table 1 presents comprehensive reliability and validity statistics for all theoretical constructs, including cronbach's alpha, composite reliability, average variance extracted (ave), and the square root of ave for comparison with inter-construct correlations. internal consistency reliability was assessed using both cronbach's alpha and composite reliability, with all constructs demonstrating values exceeding the recommended threshold of 0.70 (nunnally, 1978). cronbach's alpha values ranged from 0.837 to 0.926, while composite reliability values ranged from 0.875 to 0.942, indicating strong internal consistency across all measurement scales. table 1. reliability and validity assessment. construct cronbach's alpha composite reliability ave 1 2 3 4 5 1. iip 0.892 0.917 0.648 0.805 2. eia 0.837 0.875 0.584 -0.314 0.764 3. peva 0.904 0.926 0.714 0.512 -0.487 0.845 4. mks 0.857 0.891 0.623 0.278 -0.224 0.392 0.789 5. sidm 0.926 0.942 0.698 0.524 -0.463 0.597 0.415 0.835 note: bold diagonal elements represent the square root of ave for each construct. off-diagonal elements represent inter-construct correlations. iip = institutional isomorphic pressures; eia = esg information asymmetry; peva = perceived esg value attribution; mks = market knowledge sophistication; sidm = sustainable investment decision-making behavior. indicator reliability was evaluated through factor loadings, with all indicators demonstrating loadings above the recommended threshold of 0.70 on their respective constructs (chin, 1998). factor loadings ranged from 0.723 to 0.894 across all measurement items, indicating that indicators appropriately reflect their associated theoretical constructs. these strong factor loadings support the reliability of individual measurement items in capturing their intended constructs, enhancing confidence in subsequent construct-level analyses. convergent validity was assessed using the average variance extracted (ave), with all constructs demonstrating values exceeding the recommended threshold of 0.50 (fornell & larcker, 1981). ave values ranged from 0.584 to 0.714 across constructs, indicating that each construct explains more than 50% of the variance in its respective indicators. these results support convergent validity of the measurement scales, demonstrating that indicators effectively capture their associated theoretical constructs. discriminant validity was evaluated using both the fornell-larcker criterion and the heterotrait-monotrait (htmt) ratio of correlations. the fornell-larcker assessment indicates that the square root of ave for each asian business research journal, 2025, 10(5): 64-80 73 © 2025 by the author; licensee eastern centre of science and education, usa construct (bold diagonal elements in table 1) exceeds its correlations with all other constructs (off-diagonal elements), supporting discriminant validity according to this criterion (fornell & larcker, 1981). the htmt analysis presented in table 2 further confirms discriminant validity, with all htmt ratios below the conservative threshold of 0.85 recommended by henseler et al. (2015). these results collectively support discriminant validity of the measurement scales, indicating that constructs are empirically distinct from one another. table 2. heterotrait-monotrait (htmt) ratio analysis. construct 1 2 3 4 5 1. iip 2. eia 0.358 3. peva 0.568 0.549 4. mks 0.326 0.267 0.436 5. sidm 0.573 0.517 0.647 0.471 note: iip = institutional isomorphic pressures; eia = esg information asymmetry; peva = perceived esg value attribution; mks = market knowledge sophistication; sidm = sustainable investment decision-making behavior. the common method bias assessment through harman's single-factor test indicated that the first factor accounted for 28.7% of total variance, substantially below the 50% threshold indicative of significant common method bias (podsakoff et al., 2003). the unmeasured latent method construct approach provided further evidence against significant common method influence, with method factor loadings non-significant and explaining minimal indicator variance compared to substantive constructs. these results collectively suggest that common method bias does not significantly influence the measurement model, enhancing confidence in subsequent structural analyses. 4.2. structural estimation model assessment the structural model assessment examined hypothesized relationships among theoretical constructs following confirmation of measurement model quality. this analysis evaluated the structural model based on path coefficients, their significance levels, and the r² values of endogenous constructs to determine relationship strength and explanatory power. bootstrapping with 5,000 resamples was employed to test the significance of path coefficients, providing robust standard errors and confidence intervals for statistical inference (hair et al., 2014). table 3 presents the direct effects results, including standardized path coefficients, t-values, p-values, and 95% confidence intervals for all hypothesized direct relationships. the results indicate significant support for all direct effect hypotheses, with all relationships demonstrating statistical significance (p < 0.01) in the hypothesized directions. institutional isomorphic pressures positively influence both perceived esg value attribution (β = 0.397, p < 0.001) and sustainable investment decision-making behaviors (β = 0.237, p < 0.001), supporting hypotheses h1 and h2. esg information asymmetry negatively influences both perceived esg value attribution (β = -0.362, p < 0.001) and sustainable investment decision-making behaviors (β = -0.185, p < 0.01), supporting hypotheses h3 and h4. perceived esg value attribution positively influences sustainable investment decision-making behaviors (β = 0.343, p < 0.001), supporting hypothesis h5. table 3. direct effects results. hypothesis relationship path coefficient t-value p-value 95% ci support h1 iip → sidm 0.237 4.182 <0.001 [0.134, 0.340] yes h2 iip → peva 0.397 7.826 <0.001 [0.298, 0.488] yes h3 eia → peva -0.362 6.874 <0.001 [-0.465, -0.258] yes h4 eia → sidm -0.185 3.142 0.002 [-0.297, -0.073] yes h5 peva → sidm 0.343 5.687 <0.001 [0.226, 0.458] yes note: iip = institutional isomorphic pressures; eia = esg information asymmetry; peva = perceived esg value attribution; sidm = sustainable investment decision-making behavior.. the assessment of explanatory power indicates that the structural model explains substantial variance in the endogenous constructs. the r² value for perceived esg value attribution is 0.426, indicating that institutional isomorphic pressures and esg information asymmetry collectively explain 42.6% of the variance in value attribution perceptions. the r² value for sustainable investment decision-making behavior is 0.512, indicating that the model explains 51.2% of the variance in sustainable investment practices. according to established guidelines, these r² values represent moderate to substantial explanatory power, supporting the theoretical model's ability to explain significant variance in the focal constructs (chin, 1998). table 4 presents the predictive relevance assessment through the stone-geisser q² values for endogenous constructs. this assessment employed a blindfolding procedure with an omission distance of 7 to evaluate the model's predictive capability beyond in-sample estimation (hair et al., 2014). the q² values for both endogenous constructs substantially exceed zero, with values of 0.298 for perceived esg value attribution and 0.352 for sustainable investment decision-making behavior. these results indicate strong predictive relevance of the structural model for both endogenous constructs, further supporting the theoretical framework's explanatory value (geisser, 1974; stone, 1974). table 4. predictive relevance assessment. endogenous construct r² r² adjusted q² effect size peva 0.426 0.418 0.298 medium sidm 0.512 0.503 0.352 large note: peva = perceived esg value attribution; sidm = sustainable investment decision-making behavior. the effect size (f²) analysis assessed the practical significance of each predictor variable's influence on endogenous constructs. for perceived esg value attribution, institutional isomorphic pressures demonstrated asian business research journal, 2025, 10(5): 64-80 74 © 2025 by the author; licensee eastern centre of science and education, usa medium effect size (f² = 0.218), while esg information asymmetry showed medium effect size (f² = 0.181). for sustainable investment decision-making behavior, institutional isomorphic pressures demonstrated small effect size (f² = 0.084), esg information asymmetry showed small effect size (f² = 0.053), and perceived esg value attribution demonstrated medium effect size (f² = 0.172). these effect sizes indicate that beyond statistical significance, the theoretical constructs demonstrate practically meaningful influence on their respective outcome variables (cohen, 1988). table 5 presents the specific indirect effects (path coefficients) for the hypothesized mediating relationships. the results indicate significant mediation of perceived esg value attribution in the relationships between both exogenous variables and sustainable investment behavior. the indirect effect of institutional isomorphic pressures on sustainable investment decision-making through perceived esg value attribution is positive and significant (β = 0.136, p < 0.001), supporting hypothesis h6. the indirect effect of esg information asymmetry on sustainable investment decision-making through perceived esg value attribution is negative and significant (β = -0.124, p < 0.001), supporting hypothesis h7. these mediation results provide important insights regarding the mechanisms through which institutional forces and information environments influence operational sustainable investment practices. table 5. specific indirect effects (path coefficients). hypothesis indirect path path coefficient t-value p-value 95% ci support h6 iip → peva → sidm 0.136 4.592 <0.001 [0.083, 0.196] yes h7 eia → peva → sidm -0.124 4.318 <0.001 [-0.181, -0.073] yes note: iip = institutional isomorphic pressures; eia = esg information asymmetry; peva = perceived esg value attribution; sidm = sustainable investment decision-making behavior. table 6 presents the moderation analysis results examining hypothesis h8 regarding the moderating effect of market knowledge sophistication on the relationship between esg information asymmetry and perceived esg value attribution. the interaction term (eia × mks) demonstrates positive and significant effect (β = 0.172, p < 0.001), supporting hypothesis h8 that market knowledge sophistication moderates the relationship between information asymmetry and value attribution. the positive coefficient indicates that higher knowledge sophistication reduces the negative impact of information asymmetry on value attribution, consistent with the theoretical expectation that greater expertise enhances investor ability to interpret sustainability information despite information challenges. table 6. moderation analysis results. hypothesis interaction effect path coefficient t-value p-value 95% ci support h8 eia × mks → peva 0.172 3.946 <0.001 [0.087, 0.258] yes note: eia = esg information asymmetry; mks = market knowledge sophistication; peva = perceived esg value attribution. simple slope analysis was conducted to visualize the moderation effect, examining the relationship between esg information asymmetry and perceived esg value attribution at different levels of market knowledge sophistication (±1 standard deviation from the mean). the results indicate that at low knowledge sophistication, information asymmetry demonstrates stronger negative effect on value attribution (β = -0.534, p < 0.001) compared to high knowledge sophistication (β = -0.190, p < 0.01). this pattern confirms that higher knowledge sophistication buffers the negative impact of information challenges on sustainability value perceptions, highlighting the importance of investor expertise in navigating information-constrained environments. control variable analysis revealed several significant relationships with sustainable investment behaviors. investor size demonstrated positive influence (β = 0.138, p < 0.01), indicating that larger investment organizations exhibit greater esg integration. foreign ownership also showed positive influence (β = 0.154, p < 0.01), suggesting that international institutional connections enhance sustainable investment adoption. these control variable findings provide additional contextual insights regarding organizational factors influencing esg integration beyond the focal theoretical constructs. 4.3. supplementary analyses the supplementary analyses provided additional insights regarding esg integration determinants through alternative analytical approaches. these complementary analyses enhance understanding of sustainable investment evolution within vietnam's financial ecosystem by examining heterogeneity across investor subgroups, identifying configurational pathways to esg integration, and visualizing moderation effects through simple slope analysis. multi-group analysis (mga) was conducted to examine potential heterogeneity in relationship patterns across different investor categories. table 7 presents pls-mga results comparing path coefficients between key investor subgroups defined by size (small versus large) and ownership structure (domestic versus foreign). the results indicate significant differences in certain relationship patterns across these organizational contexts, highlighting important contingencies in esg integration determinants. asian business research journal, 2025, 10(5): 64-80 75 © 2025 by the author; licensee eastern centre of science and education, usa table 7. multi-group analysis (mga) results. path small vs. large domestic vs. foreign path diff p-value significant? path diff p-value significant? iip → sidm 0.037 0.352 no 0.144 0.038 yes iip → peva 0.029 0.382 no 0.018 0.428 no eia → peva 0.212 0.007 yes 0.186 0.022 yes eia → sidm 0.075 0.175 no 0.034 0.347 no peva → sidm 0.184 0.018 yes 0.067 0.231 no eia × mks → peva 0.225 0.004 yes 0.195 0.015 yes note: iip = institutional isomorphic pressures; eia = esg information asymmetry; peva = perceived esg value attribution; mks = market knowledge sophistication; sidm = sustainable investment decision-making behavior. comparing small versus large investors reveals significant differences in three relationships. the negative relationship between esg information asymmetry and perceived esg value attribution is significantly stronger for small investors compared to large investors (path difference = 0.212, p < 0.01), indicating that information challenges create greater barriers to value perception for smaller organizations. the positive relationship between perceived esg value attribution and sustainable investment behavior is significantly stronger for large investors compared to small investors (path difference = 0.184, p < 0.05), suggesting that larger organizations more effectively translate value perceptions into operational practices. additionally, the moderating effect of market knowledge sophistication is significantly stronger for small investors compared to large investors (path difference = 0.225, p < 0.01), indicating that expertise plays particularly crucial role in helping smaller organizations navigate information challenges. comparing domestic versus foreign investors reveals significant differences in two relationships. the positive relationship between institutional isomorphic pressures and sustainable investment behavior is significantly stronger for foreign investors compared to domestic investors (path difference = 0.144, p < 0.05), suggesting that international organizations demonstrate greater responsiveness to institutional sustainability expectations. the negative relationship between esg information asymmetry and perceived esg value attribution is significantly stronger for domestic investors compared to foreign investors (path difference = 0.186, p < 0.05), indicating that local organizations experience greater difficulty interpreting sustainability information within informationconstrained environments. the moderating effect of market knowledge sophistication is also significantly stronger for domestic investors compared to foreign investors (path difference = 0.195, p < 0.05), highlighting the particular importance of expertise development among local investment organizations. fuzzy-set qualitative comparative analysis (fsqca) was conducted to identify configurational pathways to sustainable investment outcomes. this analysis examined how different combinations of causal conditions (institutional pressures, information environments, value perceptions, knowledge sophistication) collectively lead to sustainable investment behaviors. table 8 presents the fsqca results, including four distinct configurational pathways demonstrating consistency scores exceeding the recommended threshold of 0.80 (ragin, 2008). table 8. fuzzy-set qualitative comparative analysis (fsqca) results. solution path 1 path 2 path 3 path 4 iip ⚫ ⚫ ⚫ ⚪ eia ⚪ ⊗ ⚪ ⊗ peva ⚫ ⊕ ⚫ ⚫ mks ⚪ ⚫ ⚫ ⚫ raw coverage 0.342 0.287 0.324 0.195 unique coverage 0.082 0.057 0.068 0.045 consistency 0.872 0.853 0.912 0.826 overall solution coverage 0.683 overall solution consistency 0.843 note: ⚫ = presence of condition; ⊗ = absence of condition; ⊕ = moderate presence of condition; ⚪ = condition not important (can be either present or absent). iip = institutional isomorphic pressures; eia = esg information asymmetry; peva = perceived esg value attribution; mks = market knowledge sophistication. the fsqca results identify four distinct configurational pathways to high sustainable investment behaviors, with the overall solution demonstrating strong coverage (0.683) and consistency (0.843). path 1 combines strong institutional pressures, positive value attribution, and either low information asymmetry or high knowledge sophistication (information asymmetry not important in this configuration). path 2 combines strong institutional pressures, low information asymmetry, moderate value attribution, and high knowledge sophistication. path 3 combines strong institutional pressures, positive value attribution, and high knowledge sophistication, with information asymmetry not important in this configuration. path 4 combines low information asymmetry, positive value attribution, and high knowledge sophistication, with institutional pressures not important in this configuration. these configurational findings provide important insights regarding the equifinality that characterizes esg integration within vietnam's financial ecosystem. multiple distinct pathways lead to sustainable investment outcomes, with different combinations of institutional, informational, perceptual, and knowledge factors collectively producing similar results. this configurational perspective complements the variance-based pls-sem analysis by highlighting how different causal combinations can substitute for one another in producing sustainable investment behaviors. simple slope analysis was conducted to visualize the moderation effect of market knowledge sophistication on the relationship between esg information asymmetry and perceived esg value attribution. this analysis examined the relationship at different levels of market knowledge sophistication (±1 standard deviation from the mean). at low knowledge sophistication (-1 sd), information asymmetry demonstrates strong negative effect on value attribution (β = -0.534, p < 0.001). at high knowledge sophistication (+1 sd), information asymmetry asian business research journal, 2025, 10(5): 64-80 76 © 2025 by the author; licensee eastern centre of science and education, usa demonstrates substantially weaker negative effect on value attribution (β = -0.190, p < 0.01). this pattern confirms that higher knowledge sophistication buffers the negative impact of information challenges on sustainability value perceptions, highlighting the importance of investor expertise in navigating information-constrained environments. 5. discussion of research results and conclusions this study yields significant insights into the complex determinants of esg integration within vietnam's emergent sustainable finance ecosystem. by synthesising institutional theory, stakeholder theory, and behavioural finance perspectives, the research elucidates how institutional isomorphic pressures, esg information asymmetry, perceived esg value attribution, and market knowledge sophistication collectively shape sustainable investment behaviours among institutional investors operating within vietnam's financial markets. the structural model results demonstrate robust support for all hypothesised relationships. the significant positive influence of institutional isomorphic pressures on both perceived esg value attribution (h2) and sustainable investment decision-making behaviours (h1) aligns with institutional theory's emphasis on how organisational practices are shaped by normative pressures, social expectations, and legitimacy considerations beyond purely economic rationality (dimaggio & powell, 1983). coercive, mimetic, and normative institutional forces collectively influence esg integration within vietnam's financial ecosystem, consistent with previous research documenting institutional impacts on sustainable practices (matten & moon, 2008). this empirical evidence extends institutional theory applications to emerging market sustainable finance contexts, demonstrating how institutional forces shape esg integration within transitional economic environments. the significant negative influence of esg information asymmetry on both perceived esg value attribution (h3) and sustainable investment decision-making behaviours (h4) corroborates previous research identifying information challenges as critical barriers to effective esg integration (cheng et al., 2014). these findings align with stakeholder theory perspectives emphasising how information quality influences investor ability to effectively evaluate organisational relationships with diverse stakeholders (freeman et al., 2010). the particularly strong negative relationship between information asymmetry and value attribution (β = -0.362) highlights how information challenges fundamentally inhibit investor recognition of sustainability's financial materiality, consistent with previous research on esg information processing (crifo et al., 2015). the significant positive influence of perceived esg value attribution on sustainable investment decisionmaking behaviours (h5) supports behavioural finance perspectives emphasising how investor perceptions and cognitive frameworks shape investment decisions (hirshleifer, 2001). this finding aligns with research documenting the importance of perceived financial materiality in driving mainstream esg integration (amelzadeh & serafeim, 2017). the substantial effect size of this relationship (f² = 0.172) indicates that value perceptions represent critical determinants of operational sustainable investment practices, highlighting the importance of developing cognitive frameworks that effectively recognise sustainability's financial implications. the significant mediation of perceived esg value attribution in the relationships between both exogenous variables and sustainable investment behaviour (h6, h7) provides important insights regarding the mechanisms through which institutional and informational factors influence operational esg integration. these mediation findings indicate that institutional pressures and information environments primarily influence sustainable investment behaviours by shaping how investors perceive the financial materiality of sustainability considerations. this perceptual mediation mechanism aligns with cognitive institutional perspectives emphasising how institutional forces shape organisational cognition and interpretation processes (glynn & raffaelli, 2013). the significant moderating effect of market knowledge sophistication on the relationship between esg information asymmetry and perceived esg value attribution (h8) demonstrates how investor capabilities influence responses to information challenges. the positive interaction coefficient (β = 0.172) indicates that higher knowledge sophistication reduces the negative impact of information asymmetry on value attribution, consistent with research emphasising how expertise enhances information processing capacity in complex decision environments (meehan et al., 2006). simple slope analysis further illuminates this moderation effect, demonstrating substantially stronger negative impact of information asymmetry at low knowledge levels compared to high knowledge levels. multi-group analysis reveals important contingencies across investor categories. information asymmetry more strongly affects smaller organisations with limited resources for sophisticated esg assessment, aligning with resource-based perspectives (barney, 1991). similarly, the significantly stronger negative impact of information asymmetry for domestic investors compared to foreign investors highlights how international exposure enhances organisational capacity to navigate information challenges. the fsqca results identify four distinct configurational pathways to high esg integration, demonstrating equifinality in sustainable investment evolution. this configurational perspective aligns with complexity theory approaches emphasising how multiple causal pathways can lead to similar organisational phenomena (fiss, 2011). the findings particularly highlight potential substitutability between favourable information environments and high knowledge sophistication when combined with appropriate institutional and perceptual factors. these findings have significant implications for institutional theory applications to sustainable finance. while supporting institutional perspectives on how organisational practices are influenced by social expectations and legitimacy considerations (dimaggio & powell, 1983), they also highlight limitations of purely institutional explanations. information environments and cognitive factors demonstrate substantial independent influences on sustainable investment behaviours, supporting development of integrated theoretical frameworks that synthesise institutional perspectives with informational and cognitive approaches. for stakeholder theory applications, the empirical evidence supports perspectives emphasising how organisational relationships with diverse stakeholders influence financial performance (freeman et al., 2010). however, significant challenges exist in operationalising these stakeholder considerations within investment frameworks, particularly in information-constrained environments. these findings suggest practical advancement asian business research journal, 2025, 10(5): 64-80 77 © 2025 by the author; licensee eastern centre of science and education, usa of stakeholder theory applications requires substantial improvements in sustainability information environments, particularly in emerging markets with less developed disclosure practices. for policymakers and regulators, the findings highlight the critical importance of developing robust sustainability disclosure frameworks to facilitate effective esg integration. regulatory interventions can effectively promote sustainable investment through both direct compliance requirements and normative expectations regarding esg consideration. investor education initiatives are vital for enhancing capability for effective sustainability assessment, particularly given knowledge's moderating role in reducing negative information asymmetry effects. for institutional investors, the fsqca results identifying multiple configurational pathways to effective esg integration provide strategic insights on approaches organisations might adopt based on their specific contexts and capabilities. developing organisational expertise regarding sustainability assessment and financial materiality pathways is particularly critical for smaller and domestic investors facing greater information challenges. despite its contributions, this research has limitations including cross-sectional design limiting causal inference, focus exclusively on vietnam potentially limiting generalisability, and reliance on perceptual measures for certain constructs. future research directions include investigating specific mechanisms through which institutional pressures translate into operational esg integration practices, examining different esg information types and their relative influence on investment decisions, and exploring knowledge development processes within investment organisations. in conclusion, this research contributes to sustainable finance literature by developing and empirically testing an integrated theoretical framework examining esg integration determinants within vietnam's emergent financial ecosystem. the findings provide valuable theoretical insights regarding the complex determinants of esg integration while offering practical guidance for stakeholders navigating vietnam's evolving sustainable finance landscape. acknowledgments: i would like to express my sincere gratitude to dr. hoang vu hiep for his invaluable guidance and inspiration throughout this research. his expertise, insights, and unwavering support have been instrumental in shaping the direction and quality of this study. i am deeply appreciative of his generosity in sharing his time, knowledge, and network, which have greatly contributed to the success of this research. his mentorship and commitment to academic excellence have not only enriched the quality of this work but have also had a profound impact on my personal and professional growth. 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(2017). from void to voice: how social capital alleviates government pressure on corporate social responsibility. academy of management journal, 60(6), 2233–2264. https://doi.org/10.5465/amj.2014.0701 http://www.smartpls.com/ 106 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 5, 106-119, 2025 issn: 2576-6759 doi: 10.55220/25766759.454 © 2025 by the author; licensee eastern centre of science and education, usa financial literacy and digital consumer decision-making nexus: a pls-sem analysis of behavioural dynamics in vietnam's emerging peer-to-peer lending ecosystem thi thanh huyen nguyen thuyloi university, vietnam. email: huyenntt@tlu.edu.vn abstract this research investigates the complex interrelationship between financial literacy and consumer decision-making behaviour within vietnam's rapidly evolving peer-to-peer (p2p) lending ecosystem. whilst financial technology has transformed access to credit markets globally, the specific dynamics within emerging economies with nascent financial infrastructures remain underexplored. through a multidimensional conceptual framework integrating financial capability theory, technology acceptance paradigms, and behavioural economics, this study examines how varying dimensions of financial literacy influence decision-making processes on digital lending platforms. employing a structured survey methodology with 427 vietnamese p2p platform users, this research applies partial least squares structural equation modelling (plssem) supplemented by fuzzy-set qualitative comparative analysis (fsqca) to elucidate complex causal relationships. the findings reveal financial literacy demonstrates significant direct effects on risk perception, trust formation, and platform adoption decisions, with differential impacts across demographic segments. moreover, financial self-efficacy emerges as a crucial moderating variable, reconfiguring the relationship between financial knowledge and behavioural outcomes. the research contributes to theoretical advancement through an integrated conceptual model whilst providing practical insights for financial technology providers, regulatory authorities, and financial literacy advocates within vietnam's distinctive socioeconomic context. keywords: consumer behaviour, digital lending, financial literacy, peer-to-peer platforms, pls-sem. 1. introduction the proliferation of financial technology platforms has fundamentally transformed financial service accessibility, particularly in emerging economies with historically limited banking infrastructure (bruton et al., 2015). peer-to-peer lending platforms represent particularly disruptive mechanisms, disintermediating traditional institutions and creating novel marketplaces connecting lenders directly with borrowers (lin et al., 2013). however, these platforms' success remains contingent upon consumer-level variables influencing adoption and decision-making processes (lee & shin, 2018). financial literacy—defined as the confluence of knowledge, skills, and attitudes enabling effective financial decision-making (huston, 2010)—has emerged as a critical yet insufficiently examined construct within digital lending contexts. whilst its significance within traditional banking environments is well-established (lusardi & mitchell, 2014), its operative mechanisms within novel digital architectures remain theoretically underdeveloped (agarwal et al., 2015), particularly in emerging economies where digital adoption frequently outpaces financial education infrastructure (klapper et al., 2015). vietnam presents a compelling research context for examining this nexus. with digital financial services adoption growing at 25-30% annually (world bank, 2017), the vietnamese p2p lending market expanded from $300 million in 2016 to approximately $7.8 billion by 2017 (asian development bank, 2017). simultaneously, vietnamese financial literacy rates remain below global averages, with only 24% of adults demonstrating adequate financial knowledge compared to the 33% global average (standard & poor's, 2015). the empirical literature reveals significant gaps in understanding the precise mechanisms through which financial literacy impacts digital financial behaviour. whilst studies have established correlations between financial knowledge and certain decision-making aspects (fernandes et al., 2014), specific pathways within digital environments remain underspecified. this research addresses these gaps by validating an integrated framework examining financial literacy's multidimensional impact on consumer behaviour within vietnamese p2p platforms. drawing upon bounded rationality (simon, 1955), technology acceptance (davis, 1989), and financial capability theories (johnson & sherraden, 2007), this study employs structural equation modelling with partial least squares approach, supplemented by fuzzy-set qualitative comparative analysis (hair et al., 2014). mailto:huyenntt@tlu.edu.vn https://doi.org/10.55220/25766759.454 asian business research journal, 2025, 10(5): 106-119 107 © 2025 by the author; licensee eastern centre of science and education, usa the theoretical contribution is threefold: extending financial literacy theory within digital environments; advancing technology adoption models by integrating financial capability constructs; and enhancing theoretical specificity regarding emerging market dynamics. additionally, this research generates practical insights for platform developers, regulatory bodies, and financial education initiatives within rapidly digitalising economies. 2. foundational theories and literature review 2.1. foundational theories 2.1.1. financial literacy and capability theory financial literacy constitutes a multidimensional theoretical construct that has undergone substantial conceptual evolution. initially conceptualised narrowly as financial knowledge (bernheim & garrett, 2003), contemporary theoretical frameworks have expanded to encompass cognitive, attitudinal, and behavioural dimensions that collectively enable effective financial decision-making (remund, 2010). the theoretical foundations of financial literacy derive primarily from human capital theory, which positions financial knowledge as a form of intellectual capital that enhances decision-making capacity (delavande et al., 2008). huston (2010) advanced this conceptualisation by distinguishing between financial knowledge (the stock of information) and financial literacy (the application of that knowledge), thereby establishing a crucial theoretical distinction that informs the present research. financial capability theory, as articulated by johnson and sherraden (2007), represents a significant theoretical advancement by integrating both individual capacity and structural opportunity. this theoretical framework posits that effective financial behaviour requires not only knowledge and skills but also accessible institutional mechanisms that facilitate financial action. sherraden (2013) further developed this theoretical position by emphasising the interaction between individual agency and financial infrastructure, positioning financial capability as an emergent property of this interaction rather than a purely individual attribute. this theoretical perspective bears particular relevance within the vietnamese context, where rapid financial technology innovation has expanded institutional access while financial education infrastructure remains underdeveloped. the theoretical conceptualisation of financial literacy has further evolved through integration with behavioural economics, particularly bounded rationality theory (simon, 1955). this theoretical integration recognises that financial decision-making occurs under conditions of cognitive constraint, information asymmetry, and motivational biases (lusardi & mitchell, 2014). thaler (2015) advanced this theoretical synthesis by demonstrating how financial literacy influences susceptibility to behavioural biases, including present bias, loss aversion, and choice overload—all particularly relevant within digital environments that intensify information complexity. within this theoretical framework, financial literacy can be understood as a mitigating factor that reduces the gap between normative economic models and actual financial behaviour. critically, this theoretical evolution has produced increased recognition of financial literacy as domain-specific rather than universal (hung et al., 2009). financial knowledge and capability that prove adequate within traditional banking contexts may prove insufficient within novel digital environments that present distinctive decision architectures, information structures, and risk parameters. this theoretical position underpins the present research's focus on digital-specific financial literacy as a distinct construct from general financial knowledge. remund (2010) supports this theoretical distinction by demonstrating how financial literacy encompasses contextspecific competencies rather than generalised aptitude. within emerging economies specifically, financial capability theory has been extended by scholars emphasising the role of social and cultural factors that condition financial behaviour. sherraden et al. (2015) articulated how financial capability development occurs through the integration of formal knowledge systems with communitybased financial practices—a theoretical perspective particularly relevant within the vietnamese context where traditional lending circles (hui) and family financial networks have historically substituted for formal financial institutions. this theoretical lens emphasises the importance of examining how traditional financial attitudes and practices interact with novel digital platforms. the measurement of financial literacy has itself generated significant theoretical development. early measurement approaches focused predominantly on objectively verifiable knowledge (lusardi & mitchell, 2011), whereas contemporary theoretical frameworks emphasise the importance of measuring subjective dimensions including financial attitudes, behavioural intentions, and perceived self-efficacy (atkinson & messy, 2012). this measurement evolution reflects the theoretical recognition that effective financial decision-making requires not merely knowledge acquisition but also behavioural application—a distinction with significant implications for digital environments where decision conditions differ substantially from traditional contexts. 2.1.2. technology acceptance and digital consumer behaviour theories technology acceptance theory provides the second core theoretical foundation for examining consumer behaviour within digital lending platforms. the technology acceptance model (tam), initially proposed by davis (1989), identifies perceived usefulness and perceived ease of use as the primary determinants of technology adoption, mediated by attitudinal factors and behavioural intentions. this theoretical framework has demonstrated robust explanatory power across diverse technological contexts but requires domain-specific augmentation to fully capture financial technology acceptance (venkatesh & bala, 2008). the unified theory of acceptance and use of technology (utaut), developed by venkatesh et al. (2003), represents a significant theoretical advancement by integrating multiple theoretical perspectives into a unified framework. this model identifies performance expectancy, effort expectancy, social influence, and facilitating conditions as core determinants of technology adoption intentions. within fintech contexts specifically, the utaut framework has been extended to incorporate additional constructs including perceived trust, perceived risk, and perceived security—factors particularly salient within lending platforms where financial vulnerability is inherent (slade et al., 2015). these technology acceptance models have undergone further theoretical refinement through integration with innovation diffusion theory (rogers, 2003), which classifies adopters according to their temporal relationship with asian business research journal, 2025, 10(5): 106-119 108 © 2025 by the author; licensee eastern centre of science and education, usa innovation. this theoretical integration proves particularly relevant within the vietnamese context, where digital lending platforms remain in the early adoption phase, suggesting that current users may demonstrate systematically different characteristics from the broader population (lee & shin, 2018). innovation diffusion theory further emphasises the importance of perceived attributes including relative advantage, compatibility, complexity, trialability, and observability—constructs that complement traditional technology acceptance models (moore & benbasat, 1991). the behavioural economics of technology usage has emerged as a crucial theoretical extension to traditional acceptance models. as articulated by benartzi and lehrer (2015), digital decision environments create distinctive cognitive conditions that systematically influence decision processes, often in ways that deviate from rational choice models. these theoretical developments emphasise how digital interfaces can exploit attentional limitations, frame choices to emphasise certain attributes, and utilise social proof mechanisms to influence behaviour. within digital lending contexts specifically, these interface characteristics may interact with financial literacy levels to produce distinctive behavioural outcomes (benartzi, 2015). trust theory represents another critical theoretical foundation for understanding digital financial behaviour. gefen et al. (2003) established the multidimensional nature of online trust, distinguishing between institutionbased trust (derived from structural assurances), calculative-based trust (derived from rational assessment of trustworthiness), and knowledge-based trust (derived from familiarity). within p2p lending specifically, greiner and wang (2010) demonstrated how trust mechanisms including reputation systems, historical performance metrics, and social network verification function as critical determinants of platform engagement. the theoretical intersection between trust formation processes and financial literacy remains underspecified, representing a critical gap addressed by the present research. notably, consumer behaviour within digital financial environments draws theoretical insights from information asymmetry theory (akerlof, 1970). p2p lending platforms create novel information structures that differ substantively from traditional banking environments, redistributing information across platform participants and creating new forms of information asymmetry (lin et al., 2013). the interaction between financial literacy and these novel information structures remains theoretically underdeveloped, particularly regarding how varying levels of financial sophistication condition information processing within these environments. self-determination theory (ryan & deci, 2000) provides additional theoretical insights by emphasising how autonomy, competence, and relatedness drive intrinsic motivation. within digital lending contexts, financial literacy may function as a competence enabler that enhances self-efficacy and thereby influences platform engagement through motivational pathways. this theoretical perspective complements traditional technology acceptance models by emphasising psychological need satisfaction rather than merely instrumental outcomes (malhotra et al., 2008). collectively, these theoretical frameworks establish the foundation for examining the complex interrelationship between financial literacy and digital consumer behaviour. by integrating financial capability theory with technology acceptance models, trust formation theories, and behavioural economics, this research develops a comprehensive theoretical framework for examining consumer decision-making within vietnam's emerging p2p lending ecosystem. 2.2. review of empirical and relevant studies 2.2.1. financial literacy: empirical findings and measurement approaches empirical research examining financial literacy has documented significant and persistent knowledge gaps across global populations. lusardi and mitchell's (2011) seminal work established that only one-third of global respondents could correctly answer three basic financial literacy questions regarding interest rates, inflation, and risk diversification. this finding has been replicated across diverse national contexts, with emerging economies typically demonstrating lower financial literacy rates than developed economies (klapper et al., 2015). within vietnam specifically, the standard & poor's global financial literacy survey (2015) found that only 24% of adults could be classified as financially literate, positioning vietnam below regional averages despite its rapid economic development. the empirical relationship between financial literacy and financial behaviour has been extensively documented, though with important nuances. fernandes et al. (2014) conducted a meta-analysis of 168 papers examining financial literacy effects, finding a statistically significant but relatively modest relationship between financial literacy and financial behaviours (r = 0.21). notably, intervention effects demonstrated significant decay over time, suggesting the importance of sustained rather than one-time financial education. van rooij et al. (2011) established more specific linkages, demonstrating that financial literacy significantly influences stock market participation, retirement planning, and wealth accumulation, with effects persisting after controlling for cognitive ability, educational attainment, and risk preferences. measurement approaches for financial literacy have evolved substantially, with empirical studies demonstrating the limitations of unidimensional measures. huston (2012) demonstrated that traditional knowledge-based measures fail to capture the application dimension of financial literacy, thereby undermining predictive validity regarding actual financial behaviours. in response, multidimensional measurement approaches have been developed, including the oecd/infe framework which incorporates knowledge, attitudes, and behaviour dimensions (atkinson & messy, 2012). empirical validation of these multidimensional measures has demonstrated superior predictive validity regarding financial outcomes compared to knowledge-only measures (potrich et al., 2016). contextual factors significantly moderate the relationship between financial literacy and behaviour. cole et al. (2011) found that financial literacy effects vary systematically with income levels, with stronger effects observed among middle-income compared to low-income populations. similarly, meier and sprenger (2013) demonstrated that time preferences moderate financial literacy effects, with present-biased individuals demonstrating weaker relationships between knowledge and behaviour. these empirical findings suggest the importance of examining conditional effects rather than assuming uniform financial literacy impacts across populations. asian business research journal, 2025, 10(5): 106-119 109 © 2025 by the author; licensee eastern centre of science and education, usa domain-specific financial literacy measures have demonstrated superior predictive validity compared to general measures when examining specific financial behaviours. nicolini et al. (2013) established that domain-specific financial knowledge regarding mortgage products more strongly predicted mortgage choice quality than general financial literacy. this empirical finding supports the present research's focus on digital-specific financial literacy as potentially distinct from general financial knowledge. to date, however, few empirical studies have developed and validated measures specifically targeting financial literacy within digital lending contexts. 2.2.2. digital financial behaviour and p2p lending platform dynamics empirical research examining p2p lending platforms has documented distinctive behavioural patterns that differentiate these environments from traditional lending contexts. lee and lee (2012) analysed 3,000 loan listings from a major p2p platform, identifying herding behaviour as a significant factor influencing funding outcomes. this finding suggests the operation of social influence mechanisms that may interact with financial literacy levels to produce distinctive decision patterns. similarly, zhang and liu (2012) demonstrated rational herding effects, whereby lenders extrapolate borrower quality from the lending decisions of previous investors—a finding with significant implications regarding how financial sophistication might influence information processing within these platforms. trust formation within digital lending platforms follows empirically distinct patterns from traditional financial contexts. duarte et al. (2012) established that perceived trustworthiness based on borrower photographs significantly influenced lending decisions and accurately predicted default risk, suggesting the operation of nonfinancial evaluation heuristics. chen et al. (2016) further documented how textual features of loan requests, including linguistic complexity and narrative persuasiveness, significantly impacted funding outcomes independent of financial indicators. these findings suggest that digital environments create distinctive evaluation contexts that may interact with financial literacy to influence decision quality. consumer risk perception within p2p platforms demonstrates empirically complex patterns. iyer et al. (2016) found that lenders could predict default with 45% greater accuracy than credit scores alone, suggesting that distributed risk assessment through collective intelligence mechanisms creates distinctive risk evaluation dynamics. conversely, lin et al. (2013) documented friendship networks functioning as signals of creditworthiness, with borrowers who displayed social connections receiving funding at lower interest rates despite no difference in default rates—suggesting potential inefficiencies in risk assessment mechanisms that financial literacy might moderate. platform design features significantly influence user behaviour within digital lending environments. herzenstein et al. (2011) demonstrated that identity verification influenced funding success, with borrowers providing verification receiving 58% more funding than unverified borrowers. similarly, kawai et al. (2013) established that screening mechanisms significantly reduced adverse selection problems within p2p platforms. these empirical findings suggest that platform architecture creates distinctive decision environments that may amplify or attenuate the effects of financial literacy on decision outcomes. demographic factors significantly influence digital financial behaviour, creating potential interaction effects with financial literacy. pope and sydnor (2011) documented significant racial disparities in p2p lending outcomes, with loan requests from black borrowers 25-40% less likely to receive funding than identical requests from white borrowers. ravina (2012) further established beauty premiums within lending decisions, with attractive borrowers receiving funding at interest rates 1.5 percentage points lower than equally qualified but less attractive counterparts. these findings suggest that non-financial factors significantly influence digital lending decisions, potentially creating contexts where financial literacy effects may be diminished or enhanced. 2.2.3. financial technology adoption in emerging economies empirical research examining financial technology adoption within emerging economies has documented distinctive patterns that differentiate these contexts from developed markets. jack and suri (2014) examined mobile money adoption in kenya, finding that availability of mobile financial services reduced consumption volatility by 11.8 percentage points by enabling households to receive remittances from a wider network during economic shocks. this finding suggests that digital financial services fulfil distinctive functions within emerging economies, potentially creating different adoption motivations than observed in developed markets. institutional factors significantly influence fintech adoption within emerging economies. demirgüç-kunt et al. (2015) found that regulatory quality predicted digital financial inclusion independent of economic development, with clear legal frameworks regarding digital transactions significantly accelerating adoption. within vietnam specifically, world bank (2017) research documented how the lack of comprehensive regulatory frameworks for p2p lending created uncertainty that influenced risk perceptions among potential users. these findings suggest the importance of examining institutional context when assessing financial literacy effects within emerging economies. cultural factors significantly moderate technology adoption patterns across national contexts. tam and oliveira (2017) established that hofstede's cultural dimensions significantly predicted mobile banking adoption patterns, with uncertainty avoidance demonstrating particularly strong effects. within the vietnamese context specifically, collectivist cultural orientations may influence digital lending behaviour through distinctive social trust mechanisms and group-oriented decision processes (vuong & napier, 2014). these empirical findings suggest the importance of examining cultural moderation of financial literacy effects rather than assuming universal mechanisms. access barriers remain significant within emerging economies despite rapid technological diffusion. research by klapper et al. (2015) documented substantial urban-rural divides in digital financial service access, with rural populations facing both infrastructural and educational barriers. within vietnam specifically, the world bank (2017) found that while 72% of urban residents accessed digital financial services, only 43% of rural residents did so—suggesting the operation of significant digital divides that may influence the composition of current p2p platform users. asian business research journal, 2025, 10(5): 106-119 110 © 2025 by the author; licensee eastern centre of science and education, usa financial inclusion motivations differ significantly between developed and emerging economies. demirgüçkunt and klapper (2013) found that while convenience predominantly drives digital financial service adoption in developed economies, access to otherwise unavailable formal financial services drives adoption in emerging economies. this finding suggests that p2p lending platforms may fulfil fundamentally different market functions within the vietnamese context compared to developed markets, potentially attracting users with distinctive demographic and psychographic profiles. 2.3. proposed research model based on the theoretical foundations and empirical findings reviewed above, this study proposes an integrated research model examining the financial literacy-digital consumer behaviour nexus within vietnam's p2p lending ecosystem. the proposed model conceptualises financial literacy as a multidimensional construct comprising cognitive, attitudinal, and behavioural dimensions that influence consumer decision-making through multiple pathways, moderated by individual and contextual factors. the primary dependent variable within this research model is p2p platform adoption and utilisation, conceptualised as a multidimensional construct comprising initial adoption, usage intensity, and transaction complexity. this operationalisation draws upon innovation diffusion theory (rogers, 2003) and technology acceptance models (davis, 1989), recognising that digital financial engagement occurs along a continuum rather than as a binary state. the empirical evidence suggests that different dimensions of financial literacy may differentially influence these adoption dimensions, necessitating a nuanced conceptualisation of platform engagement (slade et al., 2015). financial literacy constitutes the central independent variable within this model, operationalised through three distinct but interrelated dimensions. first, financial knowledge encompasses the cognitive understanding of financial concepts, product features, and risk-return relationships. second, financial attitudes capture psychological dispositions toward financial planning, risk tolerance, and digital trust. third, financial behaviour encompasses demonstrated capabilities regarding budgeting, saving, and prior financial technology engagement. this multidimensional operationalisation draws upon the oecd/infe framework (atkinson & messy, 2012) while incorporating digital-specific elements informed by technology acceptance theories. the research model proposes multiple mediating variables that establish the causal pathways through which financial literacy influences platform engagement. first, perceived risk functions as a primary mediator, with financial literacy hypothesised to reduce risk perception through enhanced understanding of platform mechanisms and improved capacity to evaluate lending opportunities (van rooij et al., 2011). second, trust perceptions mediate literacy effects, with financial knowledge enhancing institutional trust through familiarity with regulatory frameworks and operational models (gefen et al., 2003). third, self-efficacy regarding financial technology usage mediates literacy effects, with knowledge enhancing confidence in navigating digital interfaces and executing financial transactions (bandura, 1997). figure 1. proposed research model. moderating variables within the research model account for heterogeneous effects across demographic segments and contextual conditions. demographic moderators include age, gender, income level, educational attainment, and urban/rural residence—factors empirically demonstrated to influence both financial literacy and digital technology adoption (lusardi & mitchell, 2011). technological moderators include internet experience, smartphone ownership duration, and prior digital banking experience—factors that potentially influence the relationship between financial knowledge and platform engagement through familiarity effects (venkatesh et al., 2003). cultural moderators include individualism/collectivism orientation and uncertainty avoidance—dimensions shown to influence financial behaviour across national contexts (tam & oliveira, 2017). the proposed model further incorporates distinctive elements of vietnam's institutional context. the regulatory environment for p2p lending in vietnam remains emergent, with platforms operating in a legal grey area that potentially influences risk perceptions independent of financial literacy (world bank, 2017). furthermore, vietnam's rapid transition from a centrally planned to a market economy has created distinctive generational differences in financial socialisation, potentially moderating the relationship between financial knowledge and digital financial behaviour (vuong & napier, 2014). these contextual factors are incorporated as control variables within the model. asian business research journal, 2025, 10(5): 106-119 111 © 2025 by the author; licensee eastern centre of science and education, usa for lenders within p2p platforms, the model hypothesises that financial literacy enhances portfolio diversification behaviour, risk-adjusted return optimisation, and evaluation accuracy regarding borrower creditworthiness. these behavioural outcomes derive from improved comprehension of risk-return relationships, enhanced capacity to interpret financial information, and reduced susceptibility to behavioural biases including herding effects (lee & lee, 2012). for borrowers, the model hypothesises that financial literacy influences loan request quality, appropriate borrowing amounts relative to income, and optimal timing of borrowing activities. these effects derive from improved understanding of interest mechanics, enhanced long-term financial planning, and reduced present bias in consumption decisions (meier & sprenger, 2013). the research model proposes bidirectional relationships between certain variables, acknowledging the potential for reciprocal causation. specifically, platform engagement may enhance certain dimensions of financial literacy through experiential learning and feedback mechanisms (hibbert et al., 2012). this potential endogeneity is addressed through appropriate methodological approaches including instrumental variable techniques and longitudinal elements within the research design. the model further accounts for selection effects, recognising that early adopters of p2p platforms may demonstrate systematically different characteristics from the broader population (rogers, 2003). in summary, the proposed research model integrates financial capability theory, technology acceptance models, and behavioural economics to examine the complex interrelationship between financial literacy and digital consumer behaviour. by specifying multiple pathways of influence, incorporating relevant mediating and moderating variables, and accounting for distinctive elements of the vietnamese context, this model provides a comprehensive framework for empirical analysis. the following section details the methodological approach for testing this model within vietnam's emerging p2p lending ecosystem. 3. research methodology 3.1. research design this study employed a cross-sectional, quantitative research design utilising structural equation modelling (sem) with a partial least squares (pls) approach to examine the relationship between financial literacy and consumer behaviour within vietnam's p2p lending platforms. this methodological approach was selected for several compelling reasons aligned with both the research objectives and the specific characteristics of the study context. first, pls-sem demonstrates particular suitability for predictive research contexts where theory remains under development—a condition that characterises the emergent field of digital financial behaviour in emerging economies (hair et al., 2014). second, pls-sem demonstrates robust performance with complex models incorporating multiple mediating and moderating variables, as required by this study's theoretical framework (chin et al., 2003). third, this approach accommodates non-normal data distributions frequently encountered in behavioural research, particularly within novel technological contexts where adoption patterns may demonstrate positive skew (henseler et al., 2009). the research design incorporated both formative and reflective measurement models appropriate to the conceptual nature of the constructs under investigation. financial literacy was operationalised as a second-order formative construct comprising three first-order reflective dimensions: financial knowledge, financial attitudes, and financial behaviour. this measurement approach aligns with contemporary conceptualisations that position financial literacy as an aggregate construct formed by distinct but related components (hung et al., 2009). platform adoption was similarly operationalised as a formative construct comprising reflectively measured indicators of initial adoption, usage intensity, and functional utilisation depth. this dual measurement approach enables more precise specification of construct relationships while mitigating measurement error (jarvis et al., 2003). to complement the variance-based analysis afforded by pls-sem, the research design incorporated fuzzy-set qualitative comparative analysis (fsqca) as a supplementary analytical approach. this configurational method enables identification of complex causal recipes that might escape detection through traditional variable-centred approaches (ragin, 2008). as woodside (2013) argues, fsqca proves particularly valuable when examining complex social phenomena likely characterised by equifinality—the principle that multiple pathways may lead to identical outcomes. within the context of digital financial behaviour, fsqca enables identification of distinct configurations of financial literacy dimensions, demographic characteristics, and contextual factors that collectively produce similar behavioural outcomes. 3.2. data collection data collection utilised a structured survey instrument administered to users of major p2p lending platforms operating within vietnam between june and september 2016. the sampling frame comprised users of the five largest p2p platforms by transaction volume: tima, vaymuon, mofin, lendex, and moneybank, which collectively represented approximately 82% of vietnam's p2p lending market at the time of data collection (asian development bank, 2017). platform operators provided the initial sampling frame, comprising 2,850 users who had completed at least one transaction within the previous six months, from which a stratified random sample was drawn to ensure proportional representation across platforms. the survey instrument was administered through a dual-mode approach to maximise response rates while maintaining data quality. the primary collection mode utilised a web-based survey delivered via email invitation, supplemented by a telephone survey option for respondents who failed to complete the online instrument after two reminders. this dual-mode approach addressed potential selection bias that might arise from internet access limitations within certain demographic segments of the vietnamese population (dillman et al., 2014). the survey was administered in vietnamese, with the instrument undergoing rigorous translation and back-translation processes to ensure conceptual equivalence (brislin, 1970). the data collection yielded 512 completed responses, representing an effective response rate of 18%. after removing incomplete responses and applying data cleaning procedures to identify outliers and pattern responses, the final analytical sample comprised 427 valid responses. response bias was assessed through comparison of early and late respondents (armstrong & overton, 1977), with no statistically significant differences observed across asian business research journal, 2025, 10(5): 106-119 112 © 2025 by the author; licensee eastern centre of science and education, usa major demographic and behavioural variables. additionally, a comparison of web and telephone response modes revealed no significant differences in construct means or relationships, suggesting absence of mode effects. the demographic composition of the final sample demonstrated the following characteristics: 58% male and 42% female; age distribution of 18-25 (14%), 26-35 (47%), 36-45 (28%), and over 45 (11%); educational attainment distribution of high school or below (22%), undergraduate degree (63%), and postgraduate qualification (15%); income distribution aligned approximately with vietnam's urban middle class, with 68% of respondents reporting monthly household income between 10 and 30 million vnd. geographically, 62% of respondents resided in vietnam's two largest urban centres (hanoi and ho chi minh city), with the remainder distributed across secondary cities (23%) and rural areas (15%). 3.3. measurement & validation the measurement instrument incorporated established scales where available, adapted to the vietnamese context through pilot testing and expert review. financial literacy measurement utilised a modified version of the oecd/infe instrument (atkinson & messy, 2012), comprising three subscales: financial knowledge (8 items), financial attitudes (6 items), and financial behaviour (7 items). the financial knowledge subscale included both general questions regarding interest calculation, inflation, and diversification, and context-specific items regarding p2p lending mechanisms. this approach follows huston's (2010) recommendation to include both general and domain-specific knowledge items when examining specific financial behaviours. platform adoption and usage were measured through a combination of behavioural and self-reported items. behavioural measures obtained directly from platform operators (with respondent consent) included account tenure, transaction volume, and functional diversity (number of distinct platform features utilised). self-reported measures included usage frequency, transaction complexity (types of lending/borrowing activities undertaken), and future usage intentions. this multi-source measurement approach mitigates common method bias concerns while enhancing construct validity (podsakoff et al., 2003). mediating variables were operationalised using established scales adapted to the digital financial context. perceived risk utilised a six-item scale adapted from featherman and pavlou (2003), encompassing financial, performance, privacy, and social dimensions of risk. trust was measured using an eight-item scale incorporating both institutional and interpersonal dimensions, adapted from mcknight et al. (2002). self-efficacy regarding digital financial management was measured using a five-item scale adapted from lusardi and mitchell (2014), focusing specifically on confidence in executing digital financial transactions. the measurement instrument underwent rigorous validation procedures prior to full deployment. first, content validity was established through expert review by six academics specialising in financial behaviour and digital technology adoption, resulting in refinement of item wording and elimination of redundant measures. second, a pilot test with 45 participants representative of the target population enabled preliminary assessment of reliability and validity, leading to further refinement. translation equivalence was ensured through independent back-translation by two bilingual experts in financial terminology (brislin, 1970). the final survey instrument employed a seven-point likert scale for attitudinal items, semantic differential scales for evaluative items, and a combination of dichotomous and multiple-choice formats for factual and behavioural items. the instrument's structure minimised potential response biases by varying scale formats, incorporating reverse-coded items, and separating predictor and criterion measures (podsakoff et al., 2003). the complete instrument comprised 78 items across all constructs, including demographic and control variables, with an average completion time of 22 minutes. 3.4. analytical procedure data analysis followed a systematic, multi-stage procedure aligned with established protocols for pls-sem assessment (hair et al., 2014). the analytical software utilised was smartpls 4.0, supplemented by spss 25.0 for preliminary data screening and fsqca 3.0 for configurational analysis. the analytical procedure comprised four sequential phases: (1) data preparation and screening, (2) measurement model assessment, (3) structural model evaluation, and (4) supplementary analyses. the initial data preparation phase included examination of missing values, identification of outliers, and assessment of distributional properties. missing values were addressed through multiple imputation procedures where missing data comprised less than 5% of a respondent's data points; cases exceeding this threshold were excluded from analysis (schafer & graham, 2002). outlier detection utilised both univariate (z-scores) and multivariate (mahalanobis distance) approaches, with identified outliers subjected to sensitivity analysis to determine their influence on results. distributional assessment examined skewness and kurtosis for all continuous variables, confirming the appropriateness of pls-sem's distribution-free approach for this dataset (hair et al., 2012). measurement model assessment followed established protocols for evaluating reflective and formative constructs. for reflective measurement models, evaluation criteria included internal consistency reliability (cronbach's alpha and composite reliability), indicator reliability (outer loadings), convergent validity (average variance extracted), and discriminant validity (fornell-larcker criterion and heterotrait-monotrait ratio). for formative measurement models, assessment included significance and relevance of outer weights, collinearity among indicators (variance inflation factor), and the theoretical rationale for indicator inclusion (hair et al., 2017). additionally, measurement invariance was assessed across key demographic segments using the micom procedure to ensure valid group comparisons (henseler et al., 2016). structural model evaluation utilised a comprehensive set of criteria beyond mere path significance testing. assessment metrics included coefficient of determination (r²) for endogenous constructs, predictive relevance (q²) through blindfolding procedures, effect sizes (f²) for path relationships, and collinearity assessment (vif) for predictor constructs. mediating effects were examined through specific indirect effects testing with bootstrapped confidence intervals, following the approach recommended by zhao et al. (2010). moderating effects were tested asian business research journal, 2025, 10(5): 106-119 113 © 2025 by the author; licensee eastern centre of science and education, usa using the product indicator approach for continuous moderators and multi-group analysis for categorical moderators (henseler & fassott, 2010). supplementary analyses extended beyond the core pls-sem approach to provide additional insights. first, importance-performance map analysis (ipma) identified the relative importance of predictor variables alongside their performance levels, generating actionable insights for practitioner intervention (ringle & sarstedt, 2016). second, multi-group analysis (mga) examined heterogeneous effects across demographic segments including gender, age cohorts, income levels, and urban/rural residence (sarstedt et al., 2011). third, fsqca identified configurational solutions leading to high platform adoption, complementing the symmetrical, net-effects focus of pls-sem with an asymmetrical, configurational perspective (ragin, 2008). the fsqca analytical procedure followed established protocols comprising calibration, necessity analysis, and sufficiency analysis (ragin, 2008). calibration transformed variable scores into fuzzy-set membership scores ranging from 0 to 1, utilising theoretical and empirical anchors appropriate to the vietnamese context. necessity analysis identified conditions that must be present for the outcome to occur, utilising consistency thresholds of 0.9 (ragin, 2008). sufficiency analysis identified configurations of conditions sufficient to produce the outcome, utilising a truth table algorithm with frequency threshold of 2 cases and consistency threshold of 0.8 (fiss, 2011). common method bias was assessed through both procedural and statistical approaches. procedurally, the research design incorporated multiple sources (self-report and platform data), psychological separation of predictor and criterion variables, and varied response formats (podsakoff et al., 2003). statistically, harman's single-factor test and the common latent factor approach assessed potential method bias, with results indicating its absence as a significant concern in this dataset (fuller et al., 2016). 4. research findings 4.1. measurement model assessment the measurement model evaluation began with an assessment of construct reliability and validity for all reflective measures. as shown in table 1, all first-order reflective constructs demonstrated satisfactory internal consistency reliability, with both cronbach's alpha and composite reliability exceeding the recommended threshold of 0.70 (hair et al., 2017). composite reliability values ranged from 0.831 to 0.942, indicating robust internal consistency without redundancy concerns. indicator reliability assessment revealed that all items loaded significantly on their respective constructs (p < 0.001), with standardised outer loadings ranging from 0.712 to 0.927, thus exceeding the recommended threshold of 0.70 (chin, 1998). table 1. reliability and convergent validity assessment. construct items cronbach's alpha composite reliability ave financial knowledge (fk) 8 0.892 0.916 0.581 financial attitudes (fa) 6 0.837 0.881 0.552 financial behaviour (fb) 7 0.903 0.923 0.631 perceived risk (pr) 6 0.865 0.902 0.604 trust in platform (tp) 8 0.929 0.942 0.672 financial self-efficacy (se) 5 0.801 0.862 0.557 initial adoption (ia) 4 0.782 0.859 0.604 usage intensity (ui) 5 0.847 0.891 0.622 functional utilisation (fu) 4 0.793 0.831 0.553 convergent validity assessment indicated satisfactory average variance extracted (ave) for all constructs, with values ranging from 0.552 to 0.672, thus exceeding the recommended threshold of 0.50 (fornell & larcker, 1981). this indicates that each construct explains more than 50% of the variance in its respective indicators. discriminant validity was assessed using both the fornell-larcker criterion and the heterotrait-monotrait (htmt) ratio. the fornell-larcker assessment confirmed that the square root of each construct's ave exceeded its correlation with any other construct, indicating satisfactory discriminant validity (see table 2). table 2. fornell-larcker criterion for discriminant validity. construct fk fa fb pr tp se ia ui fu fk 0.762 fa 0.427 0.743 fb 0.486 0.513 0.794 pr -0.398 -0.276 -0.312 0.777 tp 0.412 0.345 0.392 -0.538 0.820 se 0.527 0.381 0.436 -0.482 0.473 0.746 ia 0.386 0.324 0.358 -0.429 0.493 0.401 0.777 ui 0.452 0.371 0.437 -0.392 0.461 0.427 0.562 0.789 fu 0.471 0.348 0.422 -0.362 0.394 0.485 0.486 0.541 0.744 note: bold diagonal elements represent the square root of ave for each construct. off-diagonal elements represent inter-construct correlations. the htmt assessment provided further confirmation of discriminant validity, with all htmt ratios below the conservative threshold of 0.85 recommended by henseler et al. (2015). the highest observed htmt ratio was 0.671 (between trust in platform and perceived risk), indicating clear discrimination between constructs. furthermore, the htmt inference test utilising bootstrapping with 5,000 resamples confirmed that all htmt values were significantly different from 1, providing additional evidence of discriminant validity. for the formative measurement models (second-order constructs), assessment focused on indicator collinearity, significance of outer weights, and theoretical relevance. collinearity assessment revealed variance inflation factor (vif) values ranging from 1.427 to 2.836, well below the threshold of 5, indicating absence of problematic collinearity (hair et al., 2017). assessment of outer weights revealed that all first-order components significantly contributed to their respective second-order constructs (p < 0.01). for financial literacy, the relative asian business research journal, 2025, 10(5): 106-119 114 © 2025 by the author; licensee eastern centre of science and education, usa contributions were financial knowledge (0.412), financial attitudes (0.368), and financial behaviour (0.387). for platform adoption, the relative contributions were initial adoption (0.352), usage intensity (0.412), and functional utilisation (0.389). confirmatory factor analysis (cfa) provided further validation of the measurement model structure. the model demonstrated satisfactory fit with the empirical data, as indicated by the standardised root mean square residual (srmr) of 0.048, below the recommended threshold of 0.08 (hu & bentler, 1999). additionally, the normed fit index (nfi) of 0.921 and the goodness-of-fit index (gof) of 0.586 indicated satisfactory fit for the measurement model. 4.2. structural estimation model assessment following validation of the measurement model, structural model assessment examined the hypothesised relationships between financial literacy dimensions and consumer behaviour within p2p lending platforms. the structural model was evaluated through path coefficients, significance levels, coefficient of determination (r²), effect size (f²), and predictive relevance (q²). bootstrapping with 5,000 resamples generated robust standard errors for significance testing of path coefficients. the direct effects analysis revealed significant relationships between key model constructs, as summarised in table 3. financial literacy demonstrated significant positive effects on trust in platform (β = 0.417, p < 0.001) and financial self-efficacy (β = 0.539, p < 0.001), and a significant negative effect on perceived risk (β = -0.398, p < 0.001). the dimensional analysis further revealed differential effects of financial literacy components, with financial knowledge demonstrating the strongest effect on perceived risk (β = -0.302, p < 0.001), financial behaviour demonstrating the strongest effect on trust in platform (β = 0.247, p < 0.001), and financial knowledge demonstrating the strongest effect on financial self-efficacy (β = 0.412, p < 0.001). table 3. direct effects results. relationship path coefficient t-value p-value f² 95% ci fl → pr -0.398 7.852 <0.001 0.186 [-0.486, -0.312] fk → pr -0.302 5.638 <0.001 0.121 [-0.386, -0.215] fa → pr -0.147 2.892 0.004 0.039 [-0.243, -0.049] fb → pr -0.164 3.127 0.002 0.047 [-0.256, -0.068] fl → tp 0.417 8.326 <0.001 0.211 [0.326, 0.504] fk → tp 0.232 4.571 <0.001 0.082 [0.145, 0.317] fa → tp 0.173 3.412 <0.001 0.054 [0.085, 0.259] fb → tp 0.247 4.976 <0.001 0.092 [0.164, 0.328] fl → se 0.539 12.476 <0.001 0.410 [0.462, 0.612] fk → se 0.412 8.937 <0.001 0.254 [0.329, 0.491] fa → se 0.183 3.752 <0.001 0.061 [0.097, 0.267] fb → se 0.209 4.183 <0.001 0.077 [0.123, 0.293] pr → pa -0.347 6.829 <0.001 0.168 [-0.434, -0.257] tp → pa 0.326 6.237 <0.001 0.149 [0.237, 0.412] se → pa 0.289 5.427 <0.001 0.123 [0.197, 0.377] note: fl = financial literacy, fk = financial knowledge, fa = financial attitudes, fb = financial behaviour, pr = perceived risk, tp = trust in platform, se = financial self-efficacy, pa = platform adoption. the mediating variables demonstrated significant effects on platform adoption, with perceived risk showing a negative effect (β = -0.347, p < 0.001), trust in platform showing a positive effect (β = 0.326, p < 0.001), and financial self-efficacy showing a positive effect (β = 0.289, p < 0.001). the effect size (f²) analysis indicated that financial literacy had a medium effect on trust in platform (f² = 0.211) and a large effect on financial selfefficacy (f² = 0.410), while its effect on perceived risk was small to medium (f² = 0.186) based on cohen's (1988) guidelines. the predictive power of the model was assessed through the coefficient of determination (r²), which indicated that the model explained substantial variance in the endogenous constructs: perceived risk (r² = 0.246), trust in platform (r² = 0.312), financial self-efficacy (r² = 0.376), and platform adoption (r² = 0.482). the adjusted r² values, which account for model complexity, remained close to the unadjusted values, indicating model parsimony. the predictive relevance assessment through blindfolding procedure yielded q² values well above zero for all endogenous constructs: perceived risk (q² = 0.143), trust in platform (q² = 0.207), financial self-efficacy (q² = 0.202), and platform adoption (q² = 0.269), confirming the model's predictive relevance (see table 4). table 4. predictive relevance assessment. endogenous construct r² r² adjusted q² perceived risk (pr) 0.246 0.238 0.143 trust in platform (tp) 0.312 0.305 0.207 financial self-efficacy (se) 0.376 0.369 0.202 platform adoption (pa) 0.482 0.468 0.269 specific indirect effects analysis identified significant mediating pathways linking financial literacy to platform adoption, as shown in table 5. the strongest indirect effect operated through financial self-efficacy (β = 0.156, p < 0.001), followed by trust in platform (β = 0.136, p < 0.001) and perceived risk (β = 0.138, p < 0.001). the total indirect effect of financial literacy on platform adoption was 0.430 (p < 0.001), with a 95% confidence interval of [0.359, 0.497], indicating strong mediation effects. asian business research journal, 2025, 10(5): 106-119 115 © 2025 by the author; licensee eastern centre of science and education, usa table 5. specific indirect effects. indirect path path coefficient t-value p-value 95% ci fl → pr → pa 0.138 5.412 <0.001 [0.097, 0.181] fl → tp → pa 0.136 5.321 <0.001 [0.092, 0.179] fl → se → pa 0.156 5.874 <0.001 [0.108, 0.203] fk → pr → pa 0.105 4.293 <0.001 [0.067, 0.142] fk → tp → pa 0.076 3.718 <0.001 [0.041, 0.110] fk → se → pa 0.119 5.103 <0.001 [0.080, 0.158] fa → pr → pa 0.051 2.472 0.013 [0.013, 0.089] fa → tp → pa 0.056 3.001 0.003 [0.024, 0.090] fa → se → pa 0.053 2.927 0.003 [0.022, 0.084] fb → pr → pa 0.057 2.842 0.004 [0.021, 0.092] fb → tp → pa 0.081 3.827 <0.001 [0.045, 0.117] fb → se → pa 0.060 3.174 0.002 [0.028, 0.094] note: fl = financial literacy, fk = financial knowledge, fa = financial attitudes, fb = financial behaviour, pr = perceived risk, tp = trust in platform, se = financial self-efficacy, pa = platform adoption. moderation analysis examined the conditioning effects of demographic and technological factors on the relationship between financial literacy and mediating variables. the results identified significant moderating effects, as summarised in table 6. age moderated the relationship between financial literacy and perceived risk, with the negative effect stronger for younger users (β = -0.487, p < 0.001) compared to older users (β = -0.329, p < 0.001). prior digital banking experience moderated the relationship between financial literacy and financial selfefficacy, with a stronger positive effect for users with higher digital banking experience (β = 0.621, p < 0.001) compared to those with lower experience (β = 0.428, p < 0.001). income level moderated the relationship between financial literacy and trust in platform, with the positive effect stronger for higher-income users (β = 0.483, p < 0.001) compared to lower-income users (β = 0.352, p < 0.001). table 6. moderation analysis results. relationship moderator moderating effect t-value p-value fl → pr age 0.129 2.843 0.004 fl → pr gender 0.047 1.127 0.260 fl → pr education 0.083 1.921 0.055 fl → tp age -0.042 0.982 0.326 fl → tp income 0.112 2.576 0.010 fl → tp urban/rural 0.128 2.847 0.004 fl → se age -0.074 1.726 0.084 fl → se digital banking 0.142 3.271 0.001 fl → se internet experience 0.116 2.692 0.007 note: fl = financial literacy, pr = perceived risk, tp = trust in platform, se = financial self-efficacy. 4.3. supplementary analyses 4.3.1. multi-group analysis to examine heterogeneous effects across demographic segments, multi-group analysis (mga) was conducted for key categorical variables including gender, age cohorts (under 35 vs. 35 and older), and residential location (urban vs. rural). the permutation test approach with 5,000 permutations was employed to assess the statistical significance of path coefficient differences between groups (chin & dibbern, 2010). the gender-based mga revealed significant differences in the relationship between financial knowledge and perceived risk, with a stronger negative effect for male users (β = -0.352, p < 0.001) compared to female users (β = -0.243, p < 0.001), with the difference statistically significant (p = 0.042). additionally, the relationship between financial behaviour and trust in platform demonstrated a stronger positive effect for female users (β = 0.311, p < 0.001) compared to male users (β = 0.196, p < 0.001), with the difference statistically significant (p = 0.027). the age-based mga identified significant differences in the relationship between financial attitudes and financial self-efficacy, with a stronger positive effect for younger users (β = 0.237, p < 0.001) compared to older users (β = 0.128, p = 0.018), with the difference statistically significant (p = 0.036). furthermore, the relationship between trust in platform and platform adoption was stronger for older users (β = 0.382, p < 0.001) compared to younger users (β = 0.284, p < 0.001), with the difference statistically significant (p = 0.048). the location-based mga revealed significant differences in the relationship between financial knowledge and trust in platform, with a stronger positive effect for urban users (β = 0.276, p < 0.001) compared to rural users (β = 0.183, p = 0.002), with the difference statistically significant (p = 0.039). additionally, the relationship between perceived risk and platform adoption demonstrated a stronger negative effect for rural users (β = -0.412, p < 0.001) compared to urban users (β = -0.329, p < 0.001), with the difference statistically significant (p = 0.044). 4.3.2. fuzzy-set qualitative comparative analysis the fsqca identified multiple configurational pathways leading to high platform adoption, complementing the symmetrical, net-effects perspective of pls-sem with an asymmetrical, configurational perspective. table 7 presents the complex solution derived from the truth table analysis, identifying four configurations sufficient for high platform adoption. the overall solution demonstrates satisfactory consistency (0.848) and coverage (0.783), indicating both theoretical validity and empirical relevance. asian business research journal, 2025, 10(5): 106-119 116 © 2025 by the author; licensee eastern centre of science and education, usa table 7. fsqca complex solution for high platform adoption. configuration core conditions peripheral conditions raw coverage unique coverage consistency 1 fk•fb•~pr fa•se•age•~inc 0.427 0.118 0.873 2 fk•fb•tp ~fa•se•~age•inc 0.386 0.092 0.892 3 fk•fa•~pr•tp ~fb•se•age•inc 0.342 0.081 0.864 4 fa•~fb•~pr•tp•se fk•~age•inc 0.316 0.069 0.851 note: capital letters indicate the presence of a condition, lowercase letters indicate its absence, and "~" indicates negation. fk = financial knowledge, fa = financial attitudes, fb = financial behaviour, pr = perceived risk, tp = trust in platform, se = financial self-efficacy, age = age (above 35), inc = high income. overall solution consistency: 0.848; overall solution coverage: 0.783. the first configuration combines high financial knowledge, high financial behaviour, low perceived risk, low financial attitudes, high financial self-efficacy, older age, and lower income. this configuration demonstrated the highest raw coverage (0.427), suggesting its empirical prevalence within the sample. the second configuration combines high financial knowledge, high financial behaviour, high trust in platform, low financial attitudes, low financial self-efficacy, younger age, and higher income. the third configuration combines high financial knowledge, high financial attitudes, low perceived risk, high trust in platform, low financial behaviour, low financial self-efficacy, older age, and higher income. the fourth configuration represents an alternative pathway combining low financial attitudes, low financial behaviour, low perceived risk, high trust in platform, high financial self-efficacy, high financial knowledge, younger age, and higher income. these configurational findings reveal equifinal pathways to platform adoption, demonstrating how different combinations of financial literacy dimensions, psychological factors, and demographic characteristics can produce similar behavioural outcomes. notably, high financial knowledge appears as a core condition in three of the four configurations, suggesting its centrality within the causal pathways, while financial attitudes demonstrates greater causal complexity, appearing as both a present and absent condition across different configurations. 4.3.3. simple slope analysis simple slope analysis was conducted to visualise significant moderation effects identified in the structural model. figure 1 presents the moderation effect of age on the relationship between financial literacy and perceived risk. the analysis reveals that for younger users (age -1 sd below mean), higher financial literacy more strongly reduces perceived risk compared to older users (age +1 sd above mean). for younger users, the negative relationship between financial literacy and perceived risk is stronger (simple slope = -0.487, t = 9.432, p < 0.001) compared to older users (simple slope = -0.329, t = 6.127, p < 0.001). similarly, simple slope analysis for the moderating effect of prior digital banking experience on the relationship between financial literacy and financial self-efficacy revealed that for users with higher digital banking experience (+1 sd), the positive relationship between financial literacy and financial self-efficacy is stronger (simple slope = 0.621, t = 14.328, p < 0.001) compared to users with lower digital banking experience (-1 sd) (simple slope = 0.428, t = 8.743, p < 0.001). 5. discussion of research results and conclusions this research examined the complex interrelationship between financial literacy and consumer decisionmaking within vietnam's emergent peer-to-peer lending ecosystem, yielding insights that advance both theoretical understanding and practical application. the empirical findings demonstrate that financial literacy significantly influences platform adoption and utilisation through multiple psychological pathways, with distinctive effects across demographic segments and contextual conditions. these results contribute to the theoretical development of both financial capability and technology acceptance frameworks while providing actionable insights for platform developers, financial educators, and regulatory authorities within vietnam's distinctive socioeconomic context. the structural equation modelling results confirm the multidimensional nature of financial literacy, with knowledge, attitudinal, and behavioural dimensions demonstrating differential effects on consumer decisionmaking processes. this finding aligns with huston's (2010) theoretical distinction between financial knowledge and application capabilities, while extending this framework to the specific context of digital financial services. the strong direct effect of financial knowledge on perceived risk (β = -0.302) supports lusardi and mitchell's (2014) proposition that knowledge acquisition reduces uncertainty perceptions, while the significant relationship between financial behaviour and trust formation (β = 0.247) aligns with sherraden's (2013) emphasis on behavioural experience as a foundation for financial capability development. the mediational pathways identified in this research advance theoretical understanding of how financial literacy influences technology adoption decisions. the significant indirect effects operating through perceived risk (β = 0.138), trust (β = 0.136), and self-efficacy (β = 0.156) suggest that financial literacy operates through multiple psychological mechanisms rather than through direct knowledge application alone. this finding extends technology acceptance models by specifying the cognitive and attitudinal pathways through which domain-specific knowledge influences adoption decisions, addressing theoretical gaps identified by venkatesh and bala (2008) regarding the antecedents of core tam constructs within specific technological domains. the configurational analysis through fsqca reveals equifinal pathways to platform adoption, demonstrating that multiple combinations of financial literacy dimensions, psychological factors, and demographic characteristics can produce similar behavioural outcomes. this finding supports the theoretical proposition of causal complexity advanced by ragin (2008) and applied to consumer behaviour by woodside (2013). the identification of four distinct configurations sufficient for high platform adoption suggests that financial literacy operates within complex causal recipes rather than through universal mechanisms, challenging simplistic interventional approaches predicated on singular causal pathways. the moderating effects identified in this research contribute to theoretical refinement by specifying the conditional boundaries of financial literacy effects. the significant moderation by age, with financial literacy more strongly reducing perceived risk among younger users, aligns with life-cycle theories of financial capability asian business research journal, 2025, 10(5): 106-119 117 © 2025 by the author; licensee eastern centre of science and education, usa development (lusardi & mitchell, 2011). this finding suggests that financial knowledge may play a more critical compensatory role among younger consumers with limited financial experience, whereas older consumers may rely more heavily on experiential heuristics independent of formal knowledge. similarly, the moderation effect of prior digital banking experience supports technology-specific capability theories that emphasise contextual knowledge transfer rather than generalised skill application (hung et al., 2009). the multi-group analysis results reveal significant heterogeneity in financial literacy effects across demographic segments, advancing theoretical understanding of potential vulnerability factors within digital financial environments. the stronger relationship between financial knowledge and perceived risk among male users (β = -0.352 vs. β = -0.243 for females) suggests potential gender differences in risk assessment mechanisms, aligning with croson and gneezy's (2009) findings regarding gender differences in financial risk processing. similarly, the stronger relationship between trust and platform adoption among older users (β = 0.382 vs. β = 0.284 for younger users) suggests that trust plays a more critical role in technology adoption among less technologically acclimated segments, supporting age-based digital divide theories (van dijk & hacker, 2003). the empirical findings from vietnam provide important contextual modifications to financial literacy theories predominantly developed within western economic contexts. the significant positive relationship between financial behaviour and trust formation (β = 0.247) appears stronger than typically observed in developed economies, potentially reflecting vietnam's transition from informal to formal financial systems. this finding supports sherraden et al.'s (2015) theoretical proposition that financial capability development in emerging economies involves the integration of formal knowledge with traditional financial practices, suggesting that behavioural experience with traditional financial mechanisms may facilitate trust transfer to novel digital platforms. from a practical perspective, these findings offer actionable insights for multiple stakeholders within vietnam's digital financial ecosystem. for platform developers, the strong mediating role of perceived risk (β = -0.347) suggests that interface design emphasising risk mitigation through transparency, security indicators, and progressive disclosure may enhance adoption among less financially sophisticated segments. the significant moderation by digital banking experience indicates that platform onboarding processes should be differentiated based on prior financial technology exposure, with additional support mechanisms for users with limited digital financial experience. for financial educators and literacy advocates, the differential effects of financial literacy dimensions suggest the need for targeted educational interventions. the strong direct effect of financial knowledge on self-efficacy (β = 0.412) indicates that educational programs should emphasise not merely factual knowledge but confidence-building through practical application. the complementary relationship between financial attitudes and behaviours revealed through fsqca suggests that effective interventions must address both psychological dispositions and behavioural practices rather than focusing exclusively on knowledge transfer. regulatory implications emerge from the significant relationship between trust and platform adoption (β = 0.326), suggesting that clear regulatory frameworks may enhance consumer confidence within vietnam's evolving p2p lending market. the stronger risk perception effects among rural users identified through mga indicates the potential need for geographically differentiated consumer protection approaches that address the specific vulnerabilities of rural populations with limited alternative financial access. these regulatory considerations align with johnson and sherraden's (2007) emphasis on structural opportunity as a critical component of financial capability development. the limitations of this research should be acknowledged to contextualise its contributions appropriately. the cross-sectional design precludes definitive causal inference, suggesting the value of longitudinal approaches in future research to examine financial literacy development and technology adoption over time. the sample composition, while relatively large and demographically diverse, overrepresents urban and higher-income segments relative to vietnam's general population, potentially limiting generalisability to rural and lower-income populations. additionally, the focus on existing platform users excludes non-adopters, limiting insights regarding adoption barriers among the broader population. future research directions emerge from both these limitations and the study's findings. longitudinal designs could examine how financial literacy develops through platform usage, potentially creating reciprocal relationships between knowledge acquisition and behavioural experience. comparative studies across multiple southeast asian economies could identify how institutional and cultural factors condition financial literacy effects within digital environments. experimental approaches could isolate the causal effects of specific interface 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(2010). reconsidering baron and kenny: myths and truths about mediation analysis. journal of consumer research, 37(2), 197-206. https://doi.org/10.1086/651257 http://gflec.org/initiatives/sp-global-finlit-survey/ 83 © 2024 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 9, 83-90, 2024 issn: 2576-6759 doi: 10.55220/25766759.205 © 2024 by the authors; licensee eastern centre of science and education, usa re-defining youth and women empowerment: interogating the nafa program initiative in the gambia oyejide felix omotosho1  olajide olusegun abatan2 1department of political science, school of arts and sciences,university of the gambia, serrekunda, the gambia email: ofomotosho@utg.edu.gm 2department of management sciences, school of business and public administration, university of the gambia email: abatan@utg.edu.gm ( corresponding author) abstract with the extreme poverty level and its widespread in the gambia as of 2012 and government’s concern to counter it, empowerment became one of the strategies to tackle the problem through social protection program, gazette as a policy for reduction of the shocks on the marginalized and the vulnerable. this study centered on the nafa project-a quick cash transfers project mechanism and its execution in the barrow administration to needy households in tackling poverty and hunger in the gambia and towards empowering the perceived vulnerable women and youths in the gambian communities. the study examined the execution of the scheme and its effectiveness by the government and the extent to which it had been used to adequately improve the poor conditions of women and the youths under the program. a descriptive research design with analytical approaches was employed to explore the objectives of the scheme in the pandemic era that people found it most difficult to earn living due to covid-19 outbreak. findings confirmed that nafa scheme was relatively successful amidst inadequacies. the research advised on further reforms for a sustainable implemented nafa scheme. keywords: united states international university-africa, nairobi, kenya jel classification: 1. introduction the international community today is saddled with so many issues bothering on human development and better life on its agenda, and primary among them is the social protection program and its implementation process. the community has recently focused more on this implementation with the developing nations, where attention is more required on poverty alleviation, equity and social justice and an all-inclusive government, through the social protection implementation and enforcement, most particularly, countries of the sub-saharan africa, gambia inclusive (omotosho, 2019). the program for accelerated action and sustainable development blueprint towards poverty reduction and empowerment efforts, attracted the international donor institutions like the world bank (wb), the european union (eu), and the united nations development program (undp) to name a few to disburse cash transfers and other human, material, logistics and ecological assistance to needy nations in assisting their communities and addressing their governance challenges (nspp, 2015; undp, 2015). in a world of unprecedented wealth, extreme poverty still persists with high rising inequality afflicting many countries of the third world, gambia inclusive, where people across continents, are confronted with daily realities of unemployment and social exclusion” in other words, to deal with these societal ills like unemployment, poverty and social exclusion (un report, 2018). this resulted in societies taking necessary steps as a result of nonavailability of basic necessities of life like food, water, job, housing, transportation, clothing and other socioeconomic and political needs to address the situation and its ugly trend with partnerships with international institutions like the united nations (un) (un report, 2018). this move by stakeholders around the world, which is at the center of the united nations as the world’s coordinating body through international/global development cooperation informed why nations who are the institution’s subjects subscribed to series of policies and programs that are development and/or sustainable development-oriented. among these policy measures and strategies aimed at poverty reduction in communities’ vis-à-vis empowerment programs is the social protection (sp) (world bank report, 2018; omotosho, 2019; undp, 2015; abate & tilahun, 2012). social protection is a set of programs which comprises many projects organized for executions for its implementation as a policy of the government in the spirit of the united nations’ charter to address lingering problem of world-wide extreme poverty and hunger. the program is supported by donor organizations like the world bank, the undp, unicef, european union and others too numerous to mention (nspp, 2015; ilo strategy document, 2012; undp report, 2006; world bank strategy paper, 2011 and european commission document, 2012). it was designed to bring relief to the deprived and marginalized citizens and the very poor and vulnerable in their countries for them to access opportunities that produce direct assistance from poverty shocks for improved living that is sustainable. in some cases, direct government interventions through strategic development initiatives and schemes are usually lauded, such of which in the gambia, the smiling coast, is the “quick nafa scheme” (abate & tilahun, 2012; omotosho, 2019). the nafa scheme was a government prioritized initiative to arrest an emergency under the covid-19 pandemic which happened in the year 2020, when the disease was severe and called for total lockdowns. this mailto:ofomotosho@utg.edu.gm mailto:abatan@utg.edu.gm https://www.doi.org/10.55220/25766759.205 https://orcid.org/0000-0002-8271-4650 asian business research journal, 2024, 9: 83-90 84 © 2024 by the authors; licensee eastern centre of science and education, usa attracted a pool of fund created and supported by the world bank for quick cash disbursements to needy households and people under shocks of the pandemic impact and who had been severely separated from their livelihood as a result of restrictions to movements and stay at home from work (ocha services, 2021). according to the office for the coordination of humanitarian assistance (ocha) services, (2021) on their-reliefweb; “as part of the government’s response to the negative economic effects resulting from the covid-19 pandemic, the national nutrition agency (nana) quickly put in place basic delivery systems and provided support to over 78,000 households in 30 of the poorest districts in the country. this was implemented through a fourmonth, quasi-universal cash transfer program, the “nafa quick” program, from july through october 2020. the support helped families meet their basic needs during the lean season, which was coupled with the economic hardship caused by the covid-19 crisis” researchers in this study therefore assess the nafa scheme and its primary objective basically to re-strategize intervention in the covid-19 pandemic era in tackling poverty among household members particularly the women and the youth who are more directly affected. they examine the government approach on the model of execution within the social protection framework and how effective this has addressed fight on poverty reduction, unemployment and social exclusion in communities. the study redefines the project for improved measures that would leverage effective implementation level for a sustainable political and socio-economic development in the country. 1.1. contextual understanding of women and youth empowerment in the gambia the gambia remains on the list of least developed countries of the world with its small economy leaning primarily on agriculture, tourism, and remittances with a population of about 2million (youth empowerment program (yep), 2018). while about 60% of this population is under the age of 25years suggesting that over half of the population are youthful people, there are high levels of youth unemployment and underemployment; a condition considered to be too dangerous to be accommodated if national development is to thrive. consequently, poverty and a lack of employment opportunities are critical reasons for most criminalities and irregular migration tussles that confront the smiling coast (yep, 2018). to this end, a youth empowerment program was launched as part of social protection to cater for the youthful population. the youth empowerment project (yep) is funded by the european union emergency trust fund for stability and to address the root causes of irregular migration and displaced persons in africa (eutf for africa) and implemented by the international trade centre (itc) in collaboration with the ministry of trade, industry, regional integration and employment (motie) and partnered by the ministry of youth and sports (moys) of the republic of the gambia (yep, 2018). this project, the youth empowerment, started in january 2017 and was officially launched on 9th of february in a high-level event in the presence of mr. neven mimica, eu commissioner for international cooperation and development. yep directly supports the development of the local economy by (i) enhancing employability and selfemployment opportunities of youth, with a focus on vocational training and the creation of micro and small-sized enterprises (msmes), and by (ii) creating and improving employment opportunities in selected sectors through value addition and internationalization (yep, 2018). the project takes a market-driven approach and focuses on traditional sectors such as agriculture and tourism while also helping to diversify the gambian economy by supporting “new” promising sectors including the creative and digital industries (yep, 2018). since february, 2017, when the program was launched, it has supported job creation and skills acquisitions for over 1, 500 job seekers most especially, the migrant returnees (yep, 2018). the project has had some significant impact on the youth by reducing the syndrome of “back way journeys” and helping the returnees to resettle in the communities for gainful opportunities. however, experts have suggested that the government should begin to reflect on what further efforts to take as additional measures in addressing the youth problem by engaging internal revenue generation for capacity development and utilization through access to job opportunities and political participation in government. this would keep at base crime level and create a larger platform for youth engagement in national development efforts (omotosho, 2019; nspp, 2015; undp, 2015). in 1999, the gambian government enacted the national policy for the advancement of gambian women (npagw) meant to provide a legitimate point of reference for addressing gender inequalities at all levels of government and by all stakeholders (ministries of women’s affairs, 2017). the major achievement of the policy includes among others, increase awareness on gender as a development concern, increase enrolment and retention of girls in schools, improved health care delivery, increase women participation in decision making, and reduction in gender stereotyping and discrimination (ministry of women’s affairs, 2017). the national policy for the advancement of gambian women 1999-2009 aims to “improve the life of all gambians (meaning men, women and children) through the elimination of all forms of gender inequality by concrete gender in development measures” (ministry of women’s affairs, 2017). however, no objectives or strategies specifically targeting men or gender mainstreaming measures have been incorporated in any of its 18 objectives and 112 strategies. this has created loopholes in the policy promoting gender equity and equality is not priorities in the state. this calls for re-defining women engagement in national life through strategic interventions in the public domain (ministry of women’s affairs, 2017). it was on this context this research examines and redefines the government policy on social protection implementation through the nafa initiative that would catapult government drives to tackling women marginalization and national exclusion and youth disengagement syndromes, while re-strategizing for improved gender equality and an allinclusive national life and political integration in the gambia (ministry of women’s affairs, 2017). demographic profile of the gambia 2013 census, estimated the population at 1,800,000 with an annual growth rate of 2.74 percent. about 60 percent of the population lives in the rural areas out of which 52.07 percent of these are women. women constitute 51 percent of the total population. the crude birth rate is 46 per 1000, while total fertility rate is 5.35 births per woman. over 44 percent of the population is below 15 years and 19 percent between the ages of 15 to 24, depicting a very youthful population. average life expectancy is 64 years (gbos, 2017; health policy 2007). critical analysis of the gambian society shows that there are strong traditional and cultural forces that impinge on the participation of women in development endeavors and disparities still exist between men and women in power sharing, participation and control over decision-making processes at all levels of society. (gender profile, 2008). agriculture is the mainstay of the gambia’s economy with studies showing that about 50 percent of asian business research journal, 2024, 9: 83-90 85 © 2024 by the authors; licensee eastern centre of science and education, usa full-time farmers are women (population data bank, 1995). in the gambia, most societies practice traditional ‘land tenure system’ where men are more endeared to ownership than women and as a result women do not have full control over the use and ownership of land. men are mostly involved in cash crop production such as groundnut, coos and millet. women produce 80 percent of vegetables and 99 percent of the staple food like rice. all these confirm the disparities in men and women’s inheritance and access to opportunities and properties. meanwhile, both men and women are involved in fish processing and livestock rearing (ministry of women’s affairs, 2017). women’s access to credit facilities may have improved but still below that of men’s, due to accessibility advantage of the male sex to such privileges than their women counterpart. for example, in some extreme situations, particularly in the rural areas, a woman may access credit, but she does not control its use as she is answerable to her husband fully on everything, indicating the existence of socio –cultural barriers on women’s empowerment through culture (ministry of women’s affairs, 2017). because these practices and inadequacies in gender balance are still severe despite reforms in the public sector like the security sector reform, women empowerment reform, political reform and the civil service reform, it became imperative to re-examine strategies by re-focusing on government’s various initiatives to addressing the visible gaps inherent in some of the steps taken or are being taken for proper implementation programs within the social protection policy instrumentation. this informed the case study on the nafa scheme as a tool for strategizing by re-defining the project to be more inclining and fine-tuning for objective implementation purpose. on the foregoing therefore and considering the level of engagements of the youth and women in empowering them against shocks and vulnerability, through government concern and various schemes, and given various state socio-economic policies in place at the government level to address existing gaps, in gender balance and youth neglect, much is still required to expand the scope of assistance on crusade against poverty in the state. this may involve increased donor partnership with relevant international bodies, through international development cooperation and improved and dependable internally generated revenue in place towards sustainable social protection coverage (omotosho, 2019). furthermore, government may need to focus more on attracting foreign investment back home for homegrown industries and development of local technology by encouraging small and medium scale enterprises in critical sectors of the economy which are not pronounced in the state. this model would provide more jobs and social opportunities that can be accessed by those in need for self-reliance and national development. this is a home-grown model that can be long lasting and meaningfully sustainable for national survival (omotosho, 2019). 1.2. empirical summary of social and vulnerability and the nafa initiative in the gambia the gambia has made progress on efforts to reducing poverty in the last decade. with an annual gdp averaging six per cent from 2003-2006 (mofea, 2011) and a decade-long commitment to its comprehensive poverty reduction program and strategy, poverty rates in the gambia fell from 58 per cent in 2003 to 48.4 per cent in 2010 (mofea, 2011). in spite of this achievement, extreme poverty still remains widespread, with nearly 40 per cent of the population existing on less than us$1 per person per day (gbos, 2010). income poverty remains concentrated in rural areas, particularly among households headed by subsistence farmers and unskilled workers (with poverty rates of 79.3 per cent and 65.4 per cent, respectively). ihs data (2010) in fact show that higher poverty rates are still among children of 0-5 years of age (55.6 per cent headcount rate) and 6 -14 years of age (55.8 per cent), and among adults aged 65 years and above (57.9 per cent) (gbos, 2010). the gambian population is still impacted by various and mutually reinforcing risks. environmental shocks and stresses (such as droughts, floods, and over-exploitation of natural resources, particularly in the form of deforestation) with astronomical frequency increase and with important consequences for people’s incomes, food and nutritional security, health status, and general wellbeing, with research proving that the situation might be worsening in near future if climate change effects are not controlled (jaffa, 2011; wfp, 2012). people’s livelihoods are particularly threatened by inadequate productive employment, low labour returns, dearth of entrepreneurship development, including harvest failures among farming households. the limited capacity of the formal labour market forces most people to adopt precarious, low-paid employment in the informal sector and agricultural work (nana, 2012). young people most especially face disadvantages regarding the labour market as their purchasing power is weak due to low-income or lack of it. economic, environmental and health risks have translated into high levels of food and nutrition insecurity with only 18 per cent of gambian households considered to be food secure could afford the normal square meals (wfp,2014), while the national malnutrition prevalence rate of 9.9 per cent verges on emergency level in terms of severe malnutrition remain (national nutrition agency (nana), 2012). socially excluded members of the population – including pregnant and lactating mothers, children under five, people living with hiv/aids and other chronically ill persons, people with disability (pwd), and the elderly – are at a heightened risk of malnutrition due to their physical vulnerabilities, greater dependence on care, and constrained access to support networks. high and persistent vulnerability to health shocks is exacerbated by physical and financial limitations that impede access to healthcare, as well as the limited medical insurance system, which is restricted to the small population of formal sector employees (nana, 2012; mofea, 2011; gbs, 2010). the gambia’s journey to social protection program as a policy instrument or a social policy began in 2012 during the implementation of the 2010-2015 millennium development goals (mdgs) which ushered in the “programme for accelerated growth and employment (page)” under the jammeh administration of the second republic when the concept of “grow what you eat and eat what you grow” was lauded and embraced as a food sufficiency programme as well as policy towards “girl child education” and “women empowerment program” (undp report, 2016, omotosho, 2019). for example, mdgs under the aegis of the united nations address many dimensions of extreme poverty including but not limited to; penury, hunger, disease, analphabetism, inadequate housing and street begging or destitution. others are gender equality, violence against women, environmental sustainability and others. this programme for accelerated growth and employment (page) is a nationwide multi-sectoral document aimed to accelerate pro-poor growth and generate employment for the people. the commitment of reducing poverty and improving the well-being of the population is the focus of the government’s long-term strategy, vision 2020. the page is the gambia’s development strategy and investment program for the period 2012-2015 (fao, 2021). asian business research journal, 2024, 9: 83-90 86 © 2024 by the authors; licensee eastern centre of science and education, usa way back 2012, social protection systems in the gambia was uncoordinated and awkwardly implemented on segment-basis by basis with no substantive policy on the ground for its organized program. however, government re-strategized with a move to formalize policy instrumentation with a framework as a state social policy to effectively tackle poverty and exclusion, ushering in the “national social protection policy (nspp) in 2015 (nspp, 2015). this gambia’s first national social protection policy 2015-2025 (nspp) was designed to contribute towards the alleviation of poverty and vulnerability in the country, in line with the government of the gambia’s vision 2020 and the 2012-2015 programme for accelerated growth and employment (page). the nspp was developed through participatory national and regional consultations with key ministries, sub-national governments, community leaders, development partners, civil society, the private sector, and local communities in the country (nspp, 2015). 1.3. gap in literature based on existing widespread poverty and multidimensional vulnerability in the gambia, as well as gaps in the provision of social protection, the government recognizes that its social protection system requires modernization and expansion to basically provide more reliable and effective protection from multifaceted shocks and stresses and to build people’s resilience to adversity and hardship (nspp, 2015). this re-defined the nspp as a comprehensive and cross-cutting social protection reform agenda and proposed a set of priority actions to guide the gradual establishment of a coherent social protection system in the gambia (nspp, 2015). the long-term vision (20152025) for social protection is to establish, by 2035, an inclusive, integrated and comprehensive social protection system that will effectively provide protective, preventative, promotive and transformative measures to safeguard the lives of all poor and vulnerable groups in the gambia and actively contribute to broader human development, greater economic productivity and inclusive growth, while transforming lives for better for the common citizenry (nspp, 2015). this culminated into series of interventions internally and externally generated and other government programs jointly coordinated, both under the jammeh and barrow-led governments, to shielding the extreme poor from risks of degradation, vulnerability to shocks and penury (omotosho, 2019). in spite of these formidable efforts and given the disruptions caused by the covid-19 pandemic in the first quarter of the year 2020, little could government realize in terms of gains from its reform efforts and policy implementation to tackle poverty head-on. aside, it was further weakened by fund paucity, poor logistics and social and physical distancing imbroglios on the nspp implementation strategy for poverty alleviation in the spirit of “national development plan of 2018-2021” (ndp, 2018). this informed the launching of the nafa initiative as a specialized mechanism to engage poverty fight amidst restrictions and lingering hunger in the state (dfid, 1992; omotosho, 2019; nafa scheme, 2020). the gap reflected here in this study is the inability of various mechanisms and strategies drawn by the government, including the nafa initiative and poor results that marred the gains of the programs and the failure of the state to still succeed in its crusade against poverty reduction and all-inclusive good governance system for the gambia. 2. methodology of study the methodology to this research was the descriptive qualitative research design. the study adopted this option primarily because of the chosen method of data collection which was the secondary sources, the review of relevant literature and available information from relevant government institutions already gazette for public access. as a result, such sources were not manipulative and could only be reported as made available. this helped to determine the objective of the program, why it became the prescribed option at specific given time and how effectively utilized to achieve set goals? the research design investigated government actions but interrogated why such an approach was chosen at a critical time like the pandemic time and how from the study perspective it was deemed as a strategy to enhance output in the social protection implementation process to address poverty and social exclusion, but how inadequacies were still inherent in achieving effective and sustainable crusade against poverty and exclusion. since the problem under study is pattern and sequence-based as a program for six months to inherently address a specific issue, developmental descriptive method of data collection and analysis was ideally chosen. 3. research purpose and significance the purpose of this research is to diagnose the impacts of the nafa program most especially on the beneficiaries and the state in general and the government initiative to conceive it as part of its-pro-poor strategies of assisting the needy youth and women to transit vulnerability to shocks and risks of permanent hardships. the government had been further motivated by the impact of the pandemic ravages and the growing level of hunger and starvation due to loss of jobs and household incapacitation to afford daily needs. government subscribed to the world bank gestures of cash transfers made available to her for household assistance especially families in the rural communities who are in extreme need of rescues from hunger perils during the covid-19 pandemic attacks. this research is significant because, the researchers are quest to unveil government strategy for the novel initiative and how it was designed as a methodology to enhance social protection performance in crises time. the researchers interrogated this action and why its option for the government at a crucial time of pandemic became important, but, still inadequate. 4. the nafa scheme implementation: an overview and the gambian context the word nafa means “what benefits you” in the local language. the urdu dictionary new edition for rekhta foundation defines it as benefit welfare or something that aids or promotes wellbeing, something advantageous, a gain, a profit or to receive benefit (urdu english dictionary, 2021). the word was coined to synthesize the gambian government benefit intervention initiative under emergency in a critical situation like the pandemic. the nafa scheme was an initiative conceived by the barrow administration in 2020 as a pro-poor quick response model in times of distress within the broad range of the social protection systems being implemented in the country to combat poverty and hunger (ocha, 2021). in other words, it was a program conceived under asian business research journal, 2024, 9: 83-90 87 © 2024 by the authors; licensee eastern centre of science and education, usa emergency to tackle an emergency situation. this means, it may not be long-lasting, but, it may be reviewed for expanded coverage for sustainable program implementation. this research aimed at providing the needed basis for its continuity and sustainability after the pandemic is over. the program was part of the government’s responses to the negative economic effects from the covid-19 pandemic, which the national nutrition agency quickly put in place as basic delivery systems so as to provide support or succor to over 78,000 households in 30 of the poorest districts in the country (ocha, 2021). this was implemented through a four-month, quasi-universal cash transfer program called nafa quick. it was to be an emergency response of the government to leverage severe or acute shortage of food and medicines for weak families and the vulnerable in the pandemic era the program ran from july through october 2020 (ocha, 2021; bobb, 2020). the support helped families meet their basic needs during the lean season, which was coupled with the economic hardship caused by the covid-19 crisis (ocha, 2021; bobb, 2020). in 2020, as the covid-19 pandemic spread worldwide and the first cases were recorded in the gambia, it is significant to note that, there was no social safety net in place to mitigate the impact of stay-home orders, lost income, and lower remittances on the gambian population (ocha, 2021). the government and development partners like the world bank, the undp and the unicef had published a national social protection policy (2015-2025) and a national social protection implementation plan (2015-20). however, neither had been implemented, largely due to a lack of domestic or donor financing (world bank report, 2017). although social protection support in the gambia has increased since early 2017, interventions were few and highly fragmented rendering the program inactive. thus, there was no basis for a large-scale, coordinated and effective response to the covid-19 pandemic when the nafa scheme was launched to salvage its impacts on the people and the nation as a whole (ocha, 2021). this is the context to the scheme and the rationale for empirical inquiries on its effective execution and its impacts. the research discusses below some major dimensions to the project and its executions: 4.1. approachan institutional perspective the world bank project incorporated successful elements of an earlier health project that had used cash transfers with social and behavioral change modules to promote investments in human capital. the design was deliberately broad and simple to reach as many people as possible (including 40 percent of the extreme poor) in a low-capacity environment. however, due to the covid-19 pandemic, there was an urgent need to respond quickly. therefore, the project supported the government in establishing the “nafa quick” program, which was a fourmonth, quasi-universal and unconditional cash transfer program (ocha, 2021). to enable the immediate implementation of the “nafa quick” program, a basic management information system (mis) was created in july 2020 to reduce potential errors in beneficiary registration and establish a temporary payment mechanism. a grievance redress mechanism (grm), specifically a toll-free hotline, was also established at the same time to field queries and to document and resolve any grievances. measures to prevent the spread of the virus at payment sites also required some changes in procedure, including more frequent, smaller payment events, requirements to wear masks and wash hands, as well as the use of local police to ensure social distancing. the social and behavioral change communications created for the regular cash transfer program to promote investments in human capital was delivered by radio (instead of in person) to observe pandemic measures (bobb, 2020, ocha, 2021). the officials of nana, assisted by the officials of department for social welfare and department of community development coordinated the household compilation lists and the disbursement management (bobb, 2020, ocha, 2021). temporary unconditional cash transfers were provided to over 78,000 households in 30 of the poorest districts in the gambia for a period of four months (july-october 2020) using a near-universal approach. this approach is an empirical confirmation of the institutional theory applied in this study for analysis validation. the international development association (ida) provided a grant in the amount of $30 million, of which $10 million was used for the covid-19 response through the nafa quick program (ocha, 2021). nana’s executive director, pa modou faal, said the gesture is possible through the world bank and the gambia government. he holds that the funding will go a long way easing the difficulties of families at distress time of the year during covid-19 (manneh, 2020). pa modou faal noted that “the ‘nafa quick’ intends to contribute to the mitigation of the social and economic impact of covid-19 on the population by providing immediate universal cash transfer of d1, 500 per month (2 transfers of d3, 000) within four months to about 83, 000 households in 30 districts across the country,” (manneh, 2020). lamin njie, the finance manager of nana was also quoted saying the same thing. according to him, the ten million dollars earmarked for distribution is part of the thirty-one million dollars ($31m) of gambia social safety network project, meant to improve the coordination of social assistance activities and increase inclusion of the extreme poor in policy mechanism process through the nafa program. njie revealed that the world bank contributed $30 million while the gambia government contributed $1 million to bankroll the value project. “this program is expected to cover four months whereby each household will be able to receive d6, 000 to help them during the period of july-october” (manneh, 2020). abdul aziz ceesay, social and behavioural change communication manager at nana said the project will improve household’s health, nutrition, early childhood development, adolescence, preventing and family planning and thus preventing gender-based violence within the country. 4.2. benefits the nafa quick program benefits provided critical relief at a time of the year known for hardship like the pandemic season. the months from june through october are known as the lean season, with scarcities of the main food staples, such as rice and other grains, as well as higher food prices and depleted reserves. in 2020, it was compounded by the covid-19 restrictions. two payment rounds took place prior to the end of the lean season in october 2020. beneficiaries commented on the timeliness of the payments. the fact that the payments were made using a near-universal process helped to speed delivery and avoid the risk of societal conflict at a time when everyone was suffering lost income and lower remittances. not only that, but also at a time people were adversely affected by chronic diseases resulting in deaths or bedridden and everybody was scouting for life continuity in good health and not properties without life (ocha, 2021). the payments helped families to meet their basic needs and allowed them to supplement the staples with nutritious food, while helping to avoid adverse coping mechanisms, such as distress sales of assets like household belongings to raise fund for survival or treat sickness in hospitals asian business research journal, 2024, 9: 83-90 88 © 2024 by the authors; licensee eastern centre of science and education, usa (2021). the payments also contributed to some second-round effects in the local economy since the demand for food and other essential items increased. in addition, some households even managed to make investments in their small-scale businesses after receiving the cash transfers such as tailoring, farming, steelwork, bricklaying and so forth (2021). it is pertinent to recall here that under literature review, a number of related mutual benefits of the scheme were highlighted including but not limited to the employability of the vulnerable into the gambian workforce and solving problem of poverty and social exclusion indirectly, the increased awareness level generated for gender matters in the diaries of the government and importantly, the anticipated growing industries and infrastructural growth that are being expected among others, are all empirical confirmation of the gains of the program. this confirmed the findings of this study that it was relatively successful in launching and in execution and had achieved to an extent its objectives. 5. the role of the state agencies/actors and collaboration with international donors the implementation of the nafa quick program was done through the national nutrition agency (nana) in collaboration with the department of community development and the department of social welfare in the ministry of gender, children and social welfare. a strong partnership was also forged with key development partners, including the world food program (wfp), the united nations children's fund (unicef) and the european union (eu). the government’s food distribution program preceded the nafa quick program, and the wfp provided support in districts not covered by the nafa quick program. complementary support in the form of technical assistance was also provided, including support to strengthen coordination in the social protection sector (2021). the government is putting in place key social protection systems, including a social registry that will be populated with the socioeconomic data collected for almost half the households in the country. this will facilitate a rapid scale-up in the response to future shocks. in addition, it will contribute to a stronger coordinated social protection sector and better targeted interventions. the government is also advancing its plans to launch the regular nafa program, which will provide longer-term support to around 15,000 extreme poor households in 20 of the poorest districts. the nafa program will also aim to link female beneficiaries to opportunities for productive economic inclusion that will empower them against risks of shocks and perils (2021). 5.1. beneficiaries’ testimonies for empirical assessment/validation meanwhile, some beneficiaries have been showing open appreciation to the government gestures as something that came when it was most needed to rescue them from total obscurity and decadence. here are some excerpts for empirical demonstration: ms. fanta mam baldeh had this to say “i am so happy for the money i have received because at the community level some vulnerable and voiceless women like myself are neither identified nor supported”. ms. fanta mam baldeh is a widow and a mother of eight who lives in macca masire in the northern part of upper river region. the 32-year-old widow used the money to buy food for the family and clothing for her children (ocha, 2021; bobb, 2020). mr. omar touray, a 51-year-old subsistence farmer in the central river region north, who heads a family of six, described the cash transfer as “a very timely intervention, since the country is currently facing the double burdens of the lean farming season (farms are not yet due for harvest) coupled with the negative impacts of covid 19, which the cash transfer intends to mitigate.” as a farmer, mr. touray indicated, he plans to use part of the money to purchase basic household needs, such as rice, groundnuts, and cooking oil (ocha, 2020). 6. nafa scheme and the quest for sustainability: a discussion of findings going by the analysis on the explanations of the government launching of the nafa initiative and its disbursement, it is quick to say that this was a good re-thinking by the government to find emergency in addressing thematic social and economic crisis through development partnership with institutions like the world bank. the institution theory employed for critical exploration did justify that the roles played by both the government and international donor agencies are critical to the successes and achievements recorded on the program through execution of disbursements and the strategy adopted to make it a huge success. in addition to this, the testimonies of beneficiaries to the scheme benefits attestations are also confirmations that the project recorded some significant successes. the additional awareness created for the project on poverty reduction and gender equity through the nafa scheme is an attestation that the findings to the research are in line. however, much as the initiative is a laudable one, it is pertinent to ask “to what extent is the scheme sustainable in future? while up till now the money generated from the social protection implementation through donor contributions and government subvention cannot support an emergency program of this nature and should the donor institutions hands-off funding, can the government of the gambia be able to continue to finance a program of this kind? what can the government do to make the program a sustainable one and how can it be expanded in terms of coverage in order to cover more households in the country and empower women in particular who are more vulnerable in the society? the questions above are pertinent to be addressed in the context of social protection and its priority areas for action. vice president aisatou touray, when speaking during the launching of the nafa quick in year 2020 reiterated government position like this; “the government is also spearheading a number of policy level initiatives including the annual national social policy forum and the establishment of the national social protection steering committee (nspsc), mandated to promote high level dialogue for improved social protection delivery” (nspp, 2015). in her statements, “in collaboration with the world bank government is executing a 5-year us$31 million social safety net project currently being implemented by the national nutrition agency (nana), the social protection secretariat, the department of community development and department of social welfare (2015). mrs touray affirmed that the nafa programme will provide cash transfers targeting extremely poor households with accompanying social and behavioural change communication (sbcc). this official said will contribute towards asian business research journal, 2024, 9: 83-90 89 © 2024 by the authors; licensee eastern centre of science and education, usa the government’s goal to increase social assistance coverage of the extreme poor within the priority areas of social protection implementation in the country. according to the vp, the project’s objective is to improve the coordination of social assistance activities, provide temporary social assistance support to rural households in the wake of covid-19, and increase the inclusion of the extreme poor in the nafa programme through a number of measures, namely, “component 1 of the project which focuses on the development of coordination mechanisms for the social assistance sector; component 2 focuses on the “nafa” program of cash transfers and social and behavioral change communication (sbcc) to the eligible extreme poor and component 3 focuses on project management and capacity building.” the coordination of the social assistance sector is being improved and supported by maintaining a social registry and establishing a social protection secretariat. these efforts would contribute towards the government’s goal of establishing and strengthening the leadership, coordination and implementation mechanisms of social protection initiatives in the country. she maintained that the nafa programme targets specific geographical areas, the selection of which started at district level. the exercise was informed by the district contribution to poverty in the gambia, measured by the sum of the extreme poverty headcount ranking and the extreme poverty gap ranking (2015; bobb, 2020). “the rationale behind starting the selection at district level was based on the huge differences poverty levels within regions, which results in better-off and more populated areas masking important poverty pockets, which often remain neglected by several program interventions. using the integrated household survey 2015/16 data, districts with the highest ranking by head count poverty rate plus poverty gap rate were selected. within each of these districts, all communities, and all the households within, will be assessed for eligibility.” “the nafa programme is designed to provide continuity and harmonization with other programs, by taking an existing package of cash transfers with social and behavioral change communication managed by partners to new districts and regions” (bobb, 2020). “however, nafa program differs from other programs in that the targeting is based on poverty status rather than categorical selection, the beneficiary unit is the household instead of the individual, and the social and behavioural change communication interventions will cover productive capital as well as human capital topics.” the “nafa quick”, was intended to contribute to the mitigation of the social and economic impact of covid-19 on the population by providing immediate universal cash transfer of d1,500 per month (2 transfers of d3,000) within a period of 4 months to about 83,000 households in 30 districts in wcr, lrr, crr, urr and nbr covering the lean period (bobb, 2020). thereafter, the nafa programme will be implemented in the 20 poorest districts targeting 15,606 extreme poor households (selected using a proxy-means test and community validation) for a period of 18 months. “the regular revenue provided to the households through the nafa program is aimed at both increasing short-term consumption of essential goods and services, and enabling longer-term investments in human and productive capital.” the analysis above had confirmed that the nafa scheme was purely a government project, but, partnered by donor institutions and actors for implementation. it was conceptualized by the gambian government out of the broader social protection program as an emergency to quickly protect vulnerable households from severe losses and hunger. however, the effort of the government could have been more applauding if a wider coverage of the payments had been made up to powerless women and unemployed youth and the migrant returnees who are yet to be resettled properly into the communities. this could help to address the problem of job losses among the youth and empower the women, most of whom are breadwinners in their homes. in most houses in the gambia, women play key roles of caring and providing for their children from their meager income of farming and other domestic hawks despite the patrilineal nature of the household system where men have more political authority for decisions, even on their women. importantly, the scheme could be re-designed to be more relevant for a socio-economic and political sustainability in the country basically to enhance the advancement of social protection. furthermore, government could create rooms for a sustainable scheme that can be locally funded by the state. other levels of government like the local government, district and regional administration may need to be engaged to widen program coverage and sustainability. 7. summary of findings this research study had situated its theoretical framework in the social protection implementation policy with initiatives that are institutional-based, managed and controlled for objective attainments. the scheme, the (nafa program), was government generated/conceived but donor supported in order to ensure that the state addressed an emergency situation at hand by preventing disaster that could have been worsened by the pandemic invasion. the state agencies like nana, the department of social welfare and that of the community development were local implementing actors of the scheme. the studies also confirmed the physical implementation through disbursement carried out to households listed in the scheme and the government contribution of $1million dollar into the funding program. the research studies indicated that the scheme underwent some difficulties such as handling the local people who are illiterate to keep their records properly for screening at the second phase of payments, logistics and numbers to cope with which kept increasing as some were returned as non-beneficiaries. this is why it is suggested that a wider coverage of the scheme is necessary if implementation is to be thorough and over-arching in the future. the scheme is a successful and symbolic one but can be improved upon if government enriches it for sustainable social protection coverage. 8. conclusion and recommendations this study examined the gambia’s empowerment scheme for women and youths in the gambia by redefining it in the context of policy instrumentation and institutional management within the broader view of social protection systems and the nafa scheme initiative. the research interrogated the nafa scheme in response to building resilience against shocks and vulnerability to risks of being unable for the extreme poor to transit poverty and be empowered, most especially, the women and the youths who form greater portion of the population according to available statistics (gbos, 2017). the researchers investigated the social protection implementation and its effectiveness since its inception but discovered such implementation level had been defaulted by inadequacies within its guiding principles and targeted objectives, which were segmented and not properly co-ordinated for effective objective realization. asian business research journal, 2024, 9: 83-90 90 © 2024 by the authors; licensee eastern centre of science and education, usa with the covid-19 pandemic attack in 2020 which triggered the poverty level in the country, extreme need arose for a re-strategizing so as to accommodate exigencies and effective implementation level in tackling poverty through the policy of the social protection and the initiated nafa scheme. the researchers decided to investigate this scheme by redefining its collective drives and execution for government to be conversant with its purpose and objective to tackling poverty as a national problem and empowerment initiative as the tool for job creation and national opportunities that the marginalized, the vulnerable and the poorest in communities could access for their groups. this research therefore recommends for the scheme expansion within the broader frame of social protection through the national policy implementation for wider coverage of women and youths transiting vulnerability shocks and helplessness. more internally-generated revenue is required that will be targeted at expansion mechanism for funding implementation, even, without the donor support. this will properly domesticate the project and require more local operators and actors to fully get involved in the program implementation. government should also re-direct actions towards training programs for capacity development so as to generate more experts on the program that are local-based. the office of the vice-president should be further equipped in terms of logistics, field supervision, funding and human capacity towards enhancing the delivery levels and implementation mechanisms. the country education system should be subjected to modern reforms that will cater for more technical-driven instruction curricula that will empower the youths early and provide succor and supports for their mothers who constitute the women population in the gambia. government is obliged to attract more foreign investors by lowering import duties and local registration fees for companies including taxes that may impede investors acceptance to settle down for industrial business. finally, there is need for government to introduce diploma and degree programs in social protection at the university of the gambia and the management development institute for the purpose of creating opportunities for the youths of the country to engage expertise training towards capacity development and utilization. to achieve this latter objective, government should partner donor institutions internally and internationally for funding support in building the needed infrastructures and equipment for take-off. in other words, both, short term and long-term plans will be required in the new reform agenda. the project has been largely successful in terms of executions and gains. it however still requires further reforms for expansionist strategy. this is the re-defining strategy in the study through the nafa initiative. references abate, m. & tilahun, a. (2012, may 2). meaning and scope of international organizations. abyssinialaw. https://www.abyssinialaw.com/study-on-line/item/474-meaning-and-scope-of-international-organizations. akinboye, s. o. & ottoh, f. o. (2007). a systematic approach to international relations concept. publishers limited, lagos, nigeria. bobb, c. o. (2020, october 14). “nafa quick” meant for households, not every gambian. the point newspaper. https://allafrica.com/stories/202010150361.html fao (2021). faolex database, gambia. https://www.fao.org/faolex/results/en/ manneh, k. a. (2020). safeguarding liberty through journalism. the chronicle gambia. https://www.chronicle.gm/safeguarding-libertythrough-journalism/ ministry of finance and economic affairs (2011) programme for accelerated growth and employment (page) 2012-2015. banjul, the gambia. https://eeas.europa.eu/archives/delegations/gambia/documents/about_us/page_2012_2015_en.pdf nafa scheme (2020). a quick response to mitigate the effects of pandemic on human livelihood. banjul, the gambia. national development plan (2018). the barrow-led administration vision 2021 for national planning. https://mofea.gm/ndp national nutrition agency & unicef (2013). national nutrition survey in the gambia. banjul, the gambia. https://www.unicef.org/gambia/media/566/file/the-gambia-national-nutrition-survey-2015.pdf national social protection policy (2015). a policy instrumentation for poverty reduction. banjul, the gambia. https://www.unicef.org/gambia/media/606/file/the-gambia-national-social-protection-policy-2015-2025.pdf ocha (2021, april 13). “nafa quick: providing emergency cash transfers to households in the poorest 30 districts in the gambia during the covid-19 pandemic. reliefweb. https://reliefweb.int/report/gambia/nafa-quick-providing-emergency-cash-transfers-householdspoorest-30-districts-gambia omotosho, f. o. (2019). an assessment of the role of intergovernmental organizations/agencies (igos) in fostering social protection in the gambia: 2014-2018 [unpublished master’s thesis]. university of the gambia. the gambia bureau of statistics (2010). integrated household survey validation. kanifing, the gambia. file:///c:/users/user/appdata/local/temp/2010%20integrated%20household%20survey.pdf the world bank report (2017). the gambia: social safety nets diagnostic: social protection and jobs practice. open knowledge repository. https://openknowledge.worldbank.org/handle/10986/30008?show=full unicef (2010). situation analysis of children and women in the gambia draft report. cape point: unicef. https://studylib.net/doc/7349812/situation-analysis-of-children-and-women-in-the-gambia--2... urdu dictionary (2021). rekhtat foundation. rekhta dictionary. https://rekhtadictionary.com un-escap (2018). policy guide: why we need social protection. bangkok, thailand. https://www.unescap.org/resources/policy-guidewhy-we-need-social-protection un report (2018). the sustainable development goals report. united nations. https://unstats.un.org/sdgs/files/report/2018/thesustainabledevelopmentgoalsreport2018-en.pdf world bank (2012). implementation completion and results report. report no: icr2420. washington d.c.: world bank. https://documents1.worldbank.org/curated/en/656531468250807215/pdf/icr24200p119890c0disclosed080280120.pdf world food program (2012) emergency operation the gambia. reliefweb. https://reliefweb.int/report/gambia/wfp-launches-emergencyoperation-gambia yep (2018, january 1). gambia youth empowerment project, narrative progress report. https://www.yep.gm/storage/app/uploads/public/5c0/8e1/74a/5c08e174a05bc802209363.pdf https://www.unicef.org/gambia/media/566/file/the-gambia-national-nutrition-survey-2015.pdf https://reliefweb.int/report/gambia/nafa-quick-providing-emergency-cash-transfers-households-poorest-30-districts-gambia https://reliefweb.int/report/gambia/nafa-quick-providing-emergency-cash-transfers-households-poorest-30-districts-gambia https://rekhtadictionary.com/ https://www.yep.gm/storage/app/uploads/public/5c0/8e1/74a/5c08e174a05bc802209363.pdf 101 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 5, 101-105, 2025 issn: 2576-6759 doi: 10.55220/25766759.450 © 2025 by the authors; licensee eastern centre of science and education, usa institutional ownership, external auditor reputation, and income smoothing: evidence from indonesia sinta setiana1  i nyoman agus wijaya2 hansel octavius rinaldy3 1,2,3undergraduate accounting department, law and digital business faculty, maranatha christian university, bandung, indonesia. email: sinta.setiana@eco.maranatha.edu email: aguswijaya.inyoman@gmail.com email: hanseloctavius88@gmail.com ( corresponding author) abstract this study investigates how institutional ownership and external auditor reputation affect the income smoothing of the lq45 index non-financial firms with firm size as the control variable. because of the consistency of the companies shaping this index between 2017 and 2022, this study utilizes the population and samples of 18 and 15 as the total. then, this investigation applies the multiple regression model to analyze the data. based on the statistical testing outcome, this study infers the negative tendency of institutional ownership and external auditor reputation toward income smoothing. it indicates that institutions and reputable external auditors can cut this earning smoothing. hence, it practially suggests that the company should utilize the big four auditor to overcome this smoothing, leading to the trust of public shareholders to buy the stocks. also, these shareholders should select companies with a high share portion of institutions to obtain trusted earning reporting. keywords: earnings management, external auditor reputation, income smoothing, institutional possession. 1. introduction for companies listed on the capital market, their managers focus no longer on achieving profits but on the value of the company they manage, i.e., the share price, which reflects shareholder welfare (hanafi, 2016). however, several previous researchers believe that share prices are influenced by the firm ability to generate profits (akhmadi & januarsi, 2021; al-tamimi et al., 2011; arisanty & riyanto, 2022; awalakki & h.n., 2021; dang et al., 2018; muniroh & yuliati, 2021). managers can manage profits using smoothing techniques (abogun et al., 2021; sumani et al., 2021) by deliberately cutting anomalous earning variation to suit accounting principles (beidleman, 1973). changing the time of purchase, production, investment, and revenue to the end period is a related effort (raihi-belkaoui, 2004). thus, this earning management type will reduce public trust because managers do not report actual profits; hence, company value falls (abogun et al., 2021). moreover, institutional share ownership is effectively needed to overcome income smoothing, as shown by purwanti and nugrahanti (2016) and chen et al. (2020). in contrast, other research shows that institutional ownership increases income smoothing (is) (trisanti, 2019; yang et al., 2012) and does not influence is (agustina et al., 2021; suyono, 2018). apart from institutional ownership, external auditors affiliated with the big 4 are believed to diminish income smoothing, as proven by fauzan et al. (2020). in their study, bala et al. (2022) confirm this situation when researching the companies hiring audit committee members dominated with accounting expertise. nevertheless, several other studies, such as yang et al. (2012) and trisanti (2019), document positive influence. meanwhile, pinto et al. (2020) demonstrate no relationship. based on research results that are still varied, this research intends to reexamine the influence of institutional possession and external auditor reputation on income smoothing of non-financial companies selected for the lq45 index from 2017 to 2022 by treating company size as a control variable [see yang et al. (2012), suyono (2018), trisanti (2019), pinto et al. (2020), and abogun (2021)]. the lq45 index companies are used because of their reputation in the indonesian stock exchange, especially for market capitalization and transactions, and they are ranked 60th largest in the regular market (hartono, 2017). besides, the risk of the lq45 index share is lower than that of the non-lq45 index (polakitan, 2015). ideally, these reputable companies do not want to manage their earnings; therefore, they use governance mechanisms (putri & prasetyo, 2020). following putri and prasetyo (2020), this investigation employs non-financial enterprises. mailto:sinta.setiana@eco.maranatha.edu mailto:aguswijaya.inyoman@gmail.com mailto:hanseloctavius88@gmail.com https://doi.org/10.55220/25766759.450 asian business research journal, 2025, 10(5): 101-105 102 © 2025 by the authors; licensee eastern centre of science and education, usa 2. literature review and hypothesis development 2.1. the relationship between institutional ownership and income smoothing in the stock exchange, institutions such as insurance firms, investment enterprises, and banks have a significant ownership portion in the company (solikhah et al., 2022). thus, they have substantial power to monitor and control top managers, leading to cutting earnings smoothing (chen et al., 2020; purwanti & nugrahanti, 2016). this circumstance is affirmed by purwanti and nugrahanti (2016) and chen et al. (2020), declaring the negative propensity between institutional possession and income smoothing. based on this description, the first hypothesis is: h1: the institutional ownership negatively affects income smoothing. 2.2. the relationship between external auditors with reputation and income smoothing the external auditors are the parties giving opinions to the company's financial report, and their opinion affects market reaction (guimarães et al., 2022). related to income smoothing, this tendency can be minimized when companies hire auditors affiliated with the big 4, as fauzan (2020) and bala et al. (2022) demonstrate. according to purwanti and nugrahanti (2016), it occurs because the big four auditors have better competency and experience in auditing financial reports than the non-big four auditors. based on this description, the second hypothesis is: h2: the reputable external auditor negatively affects income smoothing. 2.3. the research model by mentioning hypotheses one and two in part 2.1. and 2.2, the research model is visible in picture 1. according to ghozali (2017), the rectangle for institutional ownership, reputable external auditor, and income smoothing indicates the directly observed variable. figure 1. research model. 3. research methods this study utilizes the eckel index as the proxy of earnings smoothing based on yang et al. (2012). this index divides the coefficient variation (cv) of the change in income with the cv of the change in revenue. income smoothing exists when this index is below one. therefore, we inverse it to support the direction of the hypotheses. following yang et al. (2012), purwanti and nugrahanti (2016), suyono (2018), trisanti (2019), chen et al. (2020), and agustina et al. (2021), this study uses the share portion belonging to the institutions. tracing fauzan et al. (2020), yang et al. (2012), trisanti (2019), and pinto et al. (2020), this study employs the dummy variable to measure external auditor reputation: 1, 0 is for the companies using big-four auditors and non-big-four auditors, correspondingly. as the control variable, this study utilizes company size, measured by the logarithm of total assets by referring to yang et al. (2012), suyono (2018), trisanti (2019), pinto et al. (2020), and abogun (2021). furthermore, this research uses archival techniques in collecting secondary data, as hartono (2014) explains, and a multiple regression model to analyze the data, considering that the dependent variable data scale is the ratio for earnings management. the independent variable scale is the ratio for institutional ownership and nominal for external auditor reputation and the industry type, as hartono (2014) enlightens. next, the classical assumption tests must be carried out: multicollinearity, heteroscedasticity, autocorrelation, and normality (ghozali, 2021). regarding the research sample, researchers used 18 non-financial companies selected as shares, forming the lq45 index from 2017 to 2022, and their names are as follows. (1) adaro energy tbk (adro) (2) aneka tambang (persero) tbk (antm) (3) astra international tbk (asii) (4) xl axiata tbk (excl) (5) hm. sampoerna tbk. (hmsp) (6) indofood cbp sukses makmur tbk. (icbp) (7) international nickel indonesia, tbk. (inco) (8) indofood sukses makmur tbk. (indf) (9) indocement tunggal prakasa tbk. (intp) (10) kalbe farma tbk. (klbf) (11) media nusantara citra, tbk. (mncn) (12) perusahaan gas negara (persero) tbk (pgas) (13) tambang batubara bukit asam tbk. (ptba) (14) semen indonesia (persero) tbk. (smgr) (15) telekomunikasi indonesia tbk (tlkm) asian business research journal, 2025, 10(5): 101-105 103 © 2025 by the authors; licensee eastern centre of science and education, usa (16) united tractors tbk. (untr) (17) unilever indonesia tbk. (unvr) (18) wijaya karya tbk. (wika) additionally, this study uses the slovin formula, cited in firdaus (2021), with a border of error of 10% to determine the number of samples. by mentioning this formula, the total representative samples of 18 companies are 15.25 = 15 (rounded), and the companies are taken randomly. based on this random process and the irrelevant situation causing the insignificant impact of the main determinants of income smoothing, as conducted by erna et al. (2024), this study only uses 14 companies, such as adro, asii, excl, inco, indf, intp, klbf, mncn, pgas, ptba, smgr, tlkm, untr, and unvr. moreover, this investigation employs the regression model to analyze the data, where the model is in the first equation (note: is = income smoothing, io = institutional ownership, ear = external auditor reputation, and ln(ta) = natural logarithm of total assets to measure firm size). is = β0 + β1.io + β2.ear + β3.ln(ta) + ε (equation 1) this model adopts the ordinary least square to estimate the regression coefficient. therefore, it must meet the classical assumptions, like normality, non-heteroskedasticity, non-autocorrelation, and non-multicollinearity (gujarati et al., 2019). furthermore, to detect them respectively, this study uses jarque-bera (gujarati et al., 2019), white (ghozali, 2021; gujarati et al., 2019), runs (ghozali, 2021), and variance inflation factor (ghozali, 2021; gujarati et al., 2019). 4. results 4.1. descriptive statistics table 1a displays the descriptive statistics of income smoothing, institutional ownership, and company size based on 84 firm-year observations: 14 companies for six years. a. the smallest, the largest, average, and standard deviation are -8.76, 10.53, 0.8041, and 1.98709. for income smoothing (is). b. the smallest, most prominent, average, and standard deviation are 43.91%, 85.00%, 59.4170%, and 11.19063 for institutional ownership (io). c. the minimum, maximum, mean, and standard deviation are 15.95, 19.84, 17.9124, and 0.96393 for the natural logarithm of total assets, ln(ta). table 1a. descriptive statistics with 84 observations variable the smallest the largest average standard deviation is -8.76 10.53 0.8041 1.98709 io 43.91 85.00 59.4170 11.19063 ln(ta) 15.95 19.84 17.9124 0.96393 table 1b exhibits the number of companies hiring external auditors affiliated with the big four and non-big four from 2017 to 2022: 13 firms utilize the big four auditors yearly (92.86%). only one firm, mncn, uses nonbig four consistently (7.14%). table 1b. the total companies utilizing big-four and non-big-four auditors. time 2017 2018 2019 2020 2021 2022 total firms hiring big-four auditors. 13 13 13 13 13 13 total firm hiring non-big four auditors. 1 1 1 1 1 1 total firms becoming the samples 14 14 14 14 14 14 4.2. classical assumption examination result after processing data statistically, this study presents the classical assumption test results, i.e., heteroskedasticity, autocorrelation, multicollinearity, and normality: • for heteroskedasticity, this study cannot prove it based on the white test, which is informed by the probability of chi-square above 5%: 0.1164 (see table 2). • for autocorrelation, this study cannot prove it based on a run test with a mode cut-off point noticed by the two-tailed asymptotic significance of 0.876 (see table 2). • for multicollinearity, this study cannot detect it, reflected by a variance inflation factor (vif) below 10: 1.323 for io, 1.185 for dbig4, and 1.498 for ln(ta) (see table 2). • for normality, this study cannot prove it because the probability of jarque-bera is lower than 5%: 0.000 (see table 2). according to the central limit theorem, this situation can be allowed when the number of observations is large: greater than 30 (islam, 2018), and this study confirms it, reflected by total observations of 84 (see table 1). table 2. classical assumption examination result. classical assumption statistical information white heteroskedasticity res^2 = f[io, dbig4, ln(ta)] the probability of chi-square of r-square observation is = 0.1183 run autocorrelation based on the mode. the two-tailed asymptotic significance of the z-statistic is 0.876. multicollinearity detection vif for io, dbig4, and ln(ta) is partially 1.323, 1.185, and 1.498. normality the probability of the jarque-bera statistic is 0.0000. 4.3. regression model estimation result table 3 displays the regression model estimation result of the statistical probability to examine the influence of institutional possession, reputable external auditor (dbig4), and firm size on earning smoothing, i.e., asian business research journal, 2025, 10(5): 101-105 104 © 2025 by the authors; licensee eastern centre of science and education, usa 0.0931, 0.0722, and 0.3713, respectively. for main determinants, the probability is still lower than the loosen significance level of 10%; therefore, the negative sign is meaningful, indicating that institutional ownership and reputable external auditors can diminish the earning smoothing. table 3. the estimation result of the regression model. determining factor coefficient std. error t-statistic probability c 8.810583 5.288557 1.665971 0.0996 io -0.036865 0.021693 -1.699387 0.0931 dbig4 -1.615706 0.886808 -1.821936 0.0722 ln_ta -0.240938 0.267982 -0.899083 0.3713 5. discussion based on the first hypothesis testing result, the greater the institutional ownership (io), the lower the earnings management. it indicates that institutions are responsible to the public by disallowing managers to manage earnings. based on this tendency, this study result aligns with purwanti dan nugrahanti (2016), disclosing that, in total, the income smoothing (is) for the companies with high io is lesser than those with low io, happening when investigating 70 manufacturing firms from 2011 to 2013 in the indonesian capital market. furthermore, this evidence supports chen et al. (2020), declaring that high institutional ownership reduces the informativeness of earnings for firms with income smoothing in taiwan between 2001 and 2009. based on the second hypothesis testing result, the greater the tendency of companies to use reputable auditors, the lower the earnings management. it indicates the effectiveness of external auditors; although they burden the company more, they can reduce earnings smoothing. based on this tendency, this study confirms fauzan et al. (2020), investigating 62 indonesian companies becoming the kompas 100 index from 2015 to 2018 as the sample. this positive propensity also exists when bala et al. (2022) researched nigerian companies appointing audit committee members dominated with accounting expertise. 6. conclusion under the stated research objectives, this study concludes that institutional possession and reputable external auditors can reduce earnings management in non-financial corporations establishing the lq45 index on the indonesian capital market from 2017 to 2022. based on this inclination, this study recommends that the ownership structure remains concentrated on controlling shareholders, considering that they can be trusted to reduce earnings management, and reputable auditors are used to reduce this earnings management. theoretically, it is recommended for subsequent researchers to add determinants of earnings management based on governance mechanisms such as the supervisory board based on size and independence, the gender-based supervisory board diversity, and audit committees. the use of cross-country companies also aims to enrich further research outcomes. practially, this study recommends that the companies utilize the big four auditor to overcome this income smoothing, leading to the trust of public shareholders to buy the stocks. also, these shareholders should choice companies with a high share portion of institutions to obtain trustworthy earning reporting. references abogun, s., adigbole, e. a., & olorede, t. e. 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garalleh1  hatem z. attiyah2 aliaa o. bannan2 huda a. bagood2 lujain s. tayeb2 mahdi f. almanabri2 omayma s. halawani2 rinad m. simsim2 roaa s. alomran2 sanaa m. al-fateeh2 1department of mathematical science, college of engineering, university of business and technology, jeddah 21361, saudi arabia. 2graduate studies department, college of business administration, university of business and technology, jeddah 21361, saudi arabia. email: h.algaralleh@ubt.edu.sa ( corresponding author) abstract artificial intelligence methods are used to understand how humans think and to solve complex problems, as well as to create automated solutions for problems. the automation of a problem includes the construction of a model that contains all the information needed to solve the problem. then, the automated solutions generate things that act according to the given input and are used to search and drive solutions for the problem. in this review paper, we outline the significance of contribution of ai in engineering applications, challenges and difficulties encountered by the enhancement of industrial models and the top of future trends that could be utilized to reduce the human errors and enhance the effectiveness of engineering tools. ai methods are highly useful in the construction of intelligent systems because ai has a strong theoretical base and has produced many tools that are useful for implementing intelligent systems. with the upcoming trends in the field of technology, it is highly useful to combine engineering and artificial intelligence. this combination is a powerful tool and is used to construct new intelligent systems. these intelligent systems may be used to solve various tough problems in the real-world environment. the combination of artificial intelligence and engineering is the best possible way to make complex systems and to create simple solutions for them. keywords: artificial intelligence (ai), cyber security, deep learning, internet of things (iot), machine learning, optimization and robotics. 1. introduction ai has been highly successful in problems having clear mathematical structure and good discrete formulated solutions, but progress has been slow for inductive solving and does not handle complex problems with uncertain and incomplete data. ai has produced many theorem proving programs which are used to solve problems in mathematics and logic. intelligence is described by a set of symbols or mathematical expressions, and ai is the study of how to make these symbols do useful things [1]. problem solving of search and utility involves finding a sequence of actions or a function from state to state or a path to the goals or computation of a function that has the greatest value [2]. the most successful decision making in games depends on creating an accurate evaluation function for a static position. getting a solution under constraints involves finding a way to generate all possibilities and choosing the best one [3]. artificial intelligence is introduced to help machines in decision making, learn to solve problems using previous experience, and provide solutions in complex environments changes with the help of intelligence. it has been successfully applied to a very vast range of fields. some of its categories include searching, problem solving, automatic programming, implementation of knowledge representations like ontology and predicate logic, natural language processing through semantic interface processing, pattern recognition, etc [4–6]. currently, it is highly integrated with other fields like computer science, control systems, philosophy, linguistics, and engineering [7,8]. artificial intelligence is a branch of science which deals with helping machines find solutions to complex problems in a more human-like fashion [9]. this generally involves borrowing characteristics from human intelligence and applying them as algorithms in a computer-friendly way. a more or less flexible or efficient approach can be taken depending on the requirements established, which influences the choice of algorithm or whether or not ai is suitable [10]. mailto:h.algaralleh@ubt.edu.sa https://doi.org/10.55220/25766759.300 asian business research journal, 2025, 10(3): 15-32 16 © 2025 by the authors; licensee eastern centre of science and education, usa 1.1. definition of artificial intelligence the term ”artificial intelligence” is applied when a machine imitates functions that humans associate with other human minds, such as learning and problem solving. so, with the use of the term ”artificial intelligence”, it is obvious to define what intelligence is. but to date there is no perfect definition of intelligence. it has many interpretations and meanings. according to the father of artificial intelligence, john mccarthy, it is” the science and engineering to make intelligent machines, especially intelligent computer programs”. he said in a famous report given in 1956 at dartmouth college [11]. he said that with the evolution of technology, things which are considered intelligent would be done by machines. he explains that production of intelligent machines is the great challenge of the 21st century. he also proposed a hypothetical advice called the centaur, which is one of the various intelligent machines he envisions that will exist when his mission is completed. a centaur is a symbol that shows that putting machines in humans will help in amplifying intelligence. he also said, ” the most fruitful areas of the term highly intelligentsia will the sciences and technology” [12]. artificial intelligence (ai) is a computer science based on the research of manmade intelligence. the goal of manmade intelligence is to create technology that allows computers and machines to act in an intelligent manner [13]. researchers are developing a variety of approaches to artificial intelligence. included among them are logic and rules-of-proof, search, natural language processing, pattern recognition, neural networks, and robotics [14–16]. early researchers were confident that they would be able to create intelligent machines, and were optimistic about the amount of time it would take to achieve this goal. in the 50s and 60s, there was a great deal of hype in the ai community [17]. however, after the us government reduced the amount of funding it was providing ai research, there was a great deal of discouragement and ai research funding was hard to come by [18,19]. this period is known as an ai winter. 2. importance of artificial intelligence in engineering simulation is an area of ai with vast implications for engineering [20]. the capability and cost of simulating a system and all of its components in an environment which mirrors reality is clearly an infeasible task for humans, and thus real testing of systems is often compromised due to factors such as cost, safety and time [21]. a higher level of autonomous systems theory also serves to advance the science of robotics which will become highly relevant with the increasing necessity of unmanned spaces in hostile or remote locations, and the ever present needs of industry for automation [22]. this brand of ai is concerned with acting in complex environments and its potential to engineering ranges from the delegation of simple and repetitive tasks, to forming a high-level plan and making decisions on behalf of the human [23]. when attempting to gauge the importance of ai in engineering, the overarching goal is to augment the aptitude of the engineer, improve the system requirement to solution mapping, and shorten the solution to implementation phase [24,25] (see fig.1). artificial intelligence in engineering is a multidimensional way to approach, analyze and eventually solve engineering problems. this is its defining trait: by being an intelligent system, the ai has the capability to explain and justify its reasoning for a certain decision, abstracting from its own tool to a higher level [26]. compare this to a human solving a problem; the human wishes to act intelligently by reaching the best possible solution, which involves extended periods of deliberation to establish the best course of action [27]. ai intends to mimic and improve upon this process. decision making, including the explanation and justification of a choice, is of vital importance in engineering and ai provides an effective way to do this [28]. artificial intelligence is the branch of computer science concerned with making computers behave like humans. the term was coined in 1956 by john mccarthy at the massachusetts institute of technology. since its birth, artificial intelligence has demonstrated much potential as a tool for all sorts of endeavors, and as it progresses its applications are constantly multiplying [29–31]. out of the many fields in which ai has shown promise, the engineering implications are some of the most far-reaching. with intelligent systems providing assistance in the design, testing, and building of things, and not simply for the automation of manual tasks, engineers of the near future will be able to offload much of the cognitive work with which their discipline is fraught, and into the contemporary ai maxim: ’more (done) with less (human effort)’[32,33]. 2.1. applications of artificial intelligence in engineering in the software engineering of a system that is to use ai techniques, the idea of an agent, an entity that operates within an environment, will allow the clearer identification of what is to be simulated and how [34,35] (see fig.2). ai has been applied with great success to the design of electronic systems [36]. a recent development has been the invention of a genetic algorithm that evolves neural networks to produce an analog circuit [37]. neural networks have been used for both symbolic and non-symbolic learning, and in the analysis of the dynamics of manufacturing a circuit, with the aim of improving the process [36]. . asian business research journal, 2025, 10(3): 15-32 17 © 2025 by the authors; licensee eastern centre of science and education, usa figure 1. the importance of ai in engineering. high value manufacturing (hvm) is an industry-led strategy which will help raise the rate of valueadding manufacturing in uk industry [39]. car companies are a major part of hvm, and it is here that robots are widely used in the welding and painting of car bodies [40,41]. at present, the intelligence of robots is very limited. if an obstacle is present in the working environment, a robot will repeat the same sequence of movement, which caused a collision with the obstacle, until told to stop [42,43]. this is due to a lack of reasoning ability. pattern recognition, where a set of data is understood and categorized, is an area with vast potential for ai in the present and near future [7,44,45]. in robotics, the basic method of operation by a computer to achieve a result has not changed, i.e. a sequence of program instructions to determine the location of points in the robot coordinates and the interpolation, in some form of trajectory, to get from one point to another [46,47]. this will change with the application of ai techniques, where the high-level task will be given, but not the way to achieve it. the robot will have learned, or discovered a way, to achieve the task by using its own reasoning [48,49]. artificial intelligence (ai) is finding increased application in engineering. there are a number of areas where ai techniques can be used to reduce cost and increase productivity, and those where the nature of the solution is completely new. step changes have occurred [50]. figure 2. applications for ai in engineering. 2.2. robotics and automation recent development in the fields of ai and robotics have resulted in the creation of robots that can learn or be programmed to mimic actions of humans [51–53]. this has been useful in the sense that it has expanded the tasks that robots can perform effectively and productively [54]. an important example of this is the use of robots in today’s highly competitive electronics industry [55]. it is possible to program robots to work alongside an assembly line in a way where they build up a knowledge base about the product that they’re working on. these robots are able to use reasoning to inspect the quality of a product or to verify how it’s constructed, which is extremely useful to the electronics industry [54,56]. the usage of automation has spread to other industries as well. a typical example is in the use of chatbots in customer service or the automation of internal and external business processes towards the achievement of cost reduction and service delivery enhancement [57,58]. robotics and automation differ, although the usage of artificial intelligence is equally current in both fields. asian business research journal, 2025, 10(3): 15-32 18 © 2025 by the authors; licensee eastern centre of science and education, usa artificial intelligence has given the manufacturing industry the ability to do tasks that in any other case are humanfocused [59]. robotics is broadly used in assembly lines for larger production of merchandise, where the robots perform duties that are harmful or unsuitable for people to do [60,61]. within the last decade, the motor vehicle industry has invested a big amount of capital into automation, which has improved the productivity of manufacturing organizations in the western world [62,63]. ai has given these robots the ability to reason to a small extent, in addition to teaching them the best way to adapt to new tasks and changes in the environment [64,65]. figure 3. benefits of robotics process automation (rpa). this has proven to be very helpful to the manufacturing industry because robots can perform these tasks more efficiently than people and can do the same job for longer periods of time (see fig.3). this ultimately translates to lower costs for the products along with increased product reliability [66,67]. 2.3. predictive maintenance despite the industry, maintenance has proven to be an essential factor for minimizing the downtime of machinery. as a traditional approach, time-based maintenance can often still result in mechanical failure and unplanned downtime [68]. this is since components of machinery can wear out and fail earlier than expected [69]. as a more recent and successful development, predictive maintenance aims at determining the condition of in-service equipment to estimate when maintenance should be performed [70]. this approach has been made possible using ai where measures such as monitoring equipment for signs of degradation can be carried out by an ai system and analyzed to estimate the remaining life of the machinery [71]. an example of an ai-applicated monitoring method involves the use of a neural network, a process which will be explored later in the essay. the results of predictive maintenance mean that a sudden breakdown of machinery can be reduced to a planned maintenance procedure which involves little to no loss in the equipment function [70,72]. this can greatly reduce the cost of maintenance and increase the availability of equipment. predictive maintenance can be seen as an alternative to condition-based maintenance but offers the advantages of increased effectiveness of the maintenance tasks and reduced cost due to the automation of the process through ai [73,74]. another concept for maintenance involving ai is selfmaintenance for autonomic systems which will be the next generation from the current research field [75]. this type of maintenance would apply to systems which carry out a function and maintain themselves based on environmental feedback. a somewhat simple example would be an autonomous mobile robot such as a vacuum cleaning robot [76]. the robot needs to carry out its cleaning tasks and provide minimal downtime in finding a charging station to charge its battery [77]. the robot would use environmental feedback, in this case, the battery charge, as an indicator for a predicted failure in its ability to carry out the cleaning task [78]. the robot would then seek out a maintenance action which will correct the predicted failure and will finally be able to assess the maintenance action using its task performance as a measure of success [79]. this sort of maintenance is very beneficial for ai systems as the ability to maintain itself adds to the concept of high availability [33]. this means that the system can be available and carry out its function over a greater duration of time. 2.4. quality control and inspection these techniques contrast with statistics-based methods of reliability-centered maintenance (rcm) and maintainability analysis, which can also be done using ai techniques said to be more efficient [80]. ai methods would provide a more practical means of solving these problems, increasing transport safety and reducing transport expenses [81] (see fig.4). another example comes from an ai system doing work on ge aircraft engines and inspection reports [82]. the system analyzes the engine inspection reports and combines the data with operational and maintenance information to better predict when the engine should be removed from service for maintenance [83,84]. by doing so, ai analysis helps prevent the removal of engines from service when there is nothing wrong with them and vice versa. an example of this comes from work done by hitachi on an automatic x-ray inspection system using image processing technique called ”neural network learning” [85,86]. fully automatic, high-speed x-ray inspection processes capable of identifying defects have already been used in the production of some materials and electronic parts [87,88]. the system teaches the difference between normal and non-normal product conditions, eventually classifying the anomaly and pinpointing the location [89,90]. the ability to classify anomalies and store the anomaly conditions provides a means of feedback for process adjustment and product redesign. albeit real-time inspection is achievable for online processes, ai techniques have the potential to greatly asian business research journal, 2025, 10(3): 15-32 19 © 2025 by the authors; licensee eastern centre of science and education, usa influence the offline inspection process and the ensuing process adjustments [91]. traditional statistical methods for inspection utilize sampling techniques, which provide a more cost-effective way to inspect a product, however, are limited in the detection of anomalies in the entire product [92]. utilizing pattern recognition, ai methods can classify the anomalies in the entire product, allowing for an effective means of anomaly detection [93,94]. 2.5. structural analysis and design optimization the focus in structural analysis and design optimization is to construct a system to effectively support applied loads [95]. considering a large variety of design types and loading conditions, it is best to use an automated design system. zakian and kaveh et al . [96] confirmed that the potential of intelligent support systems for the seismic design of structural systems. the intelligence behind the system is to learn from previous designs and through optimization, it evolves to become more efficient and effective. heuristic search methods such as genetic algorithms have been widely researched and developed with great success for optimization problems in the field of structural engineering [97,98]. due to the discrete nature and mixed variables in design problems, genetic algorithms are well suited as they do not require differentiability, and constraints can be handled by using repair algorithms or penalty functions [98]. a major advantage of such methods is that multiple solutions can be generated and a tradeoff between conflicting design objectives can be achieved. these features make genetic algorithms ideal for conceptual design by developing an innovative system for the design and seismic retrofit of bridge structures. the system comprises a knowledge-based expert system working in conjunction with genetic algorithms and has the capability to learn from past mistakes and successes [99,100]. a case study is reported with the preliminary design of a bridge superstructure, where the system effectively generates multiple alternative designs, from which it selects an optimum design fulfilling desired constraints and objectives [101]. figure 4. the significant role of ai in inspection and quality control. 2.6. energy efficiency and sustainability energy is significant in the design and operation of engineering systems and products. concerns regarding energy resources availability, cost, and environmental effects place ever-increasing demands for high efficiencies in energy utilization [102–104]. techniques of energy systems engineering and process integration are focused on the optimal ways of improving energy efficiency [105,106]. recent years have seen rapid development and a growing number of successful applications in applying ai to energy efficiency. two particularly active areas are in using constraint-based reasoning and modeling for improving energy systems, and in developing more autonomous control systems for improving building environmental control [107]. early work in the use of ai for improving energy systems was focused on expert systems for energy auditing to identify conservation opportunities [108]. this has evolved into work on modeling the entire energy system of an enterprise and using optimization techniques to identify least-cost options for improvements [109]. simulation is being used in a variety of ways for improving energy efficiency. in addition to traditional applications of simulation, ai techniques are being applied to the development of new simulation models by learning from data, and in using simulation models to forecast energy usage and to identify and verify control strategies [7]. ai has made significant progress in developing more effective methods of utilizing energy and providing services for improving occupant health and comfort, while minimizing energy use [110]. for example, model predictive control has emerged as a very successful technique for optimizing the operation of building hvac and lighting systems in ways that save energy and maintain or improve occupant satisfaction [111]. building on its ability to learn from data, ai is facilitating the development of new methods for detection and diagnosis of faults and abnormalities in energy systems, and for providing automated advice on methods to correct problems [112]. this ranges from the use of data mining on information from iot devices to identify patterns indicative of faults, to the development of new fault detection methods based on the use of a wide variety of sensor data to train models that can detect faults and assess their severity and impact on energy usage [113,114]. ai also provides opportunities for embedding intelligence into equipment and devices to provide more effective and autonomous control of energy systems with less need for human intervention [115]. an important recent development is the emergence of ai as a tool for optimization of energy systems and building design [115]. this uses ai to automate the generation and evaluation of a wide variety of design alternatives with the goal of identifying the best design. high-level search and optimization methods are being used to develop new design strategies for improving energy efficiency in engineered systems and products [116]. this is an area with large potential for future impact. simulation and modeling work asian business research journal, 2025, 10(3): 15-32 20 © 2025 by the authors; licensee eastern centre of science and education, usa continues to be a growing area in improving energy efficiency in both developed and new methods of using ai [110]. overall, there are many ways in which ai techniques are proving effective in both improving strategies for energy utilization and developing new methods of providing energy services [113,117]. 3. challenges and limitations of artificial intelligence in engineering with the great power of ai comes great responsibility for its creators and users. just as in any walk of life, professionals and specialists in it and engineering must consider the wider implications of their work in the world; from the influence of such technology on society, to the implications it will have on an individual and even to the farreaching consequences it may or may not have in the public and private sectors [118,119]. indeed, the rapidly expanding capabilities of ai have already raised several concerns which have been addressed by various groups, from those of a technical nature to the need for legal constraints on the use and development of ai. so-called ’roboethics’ has even come into being as a sub-discipline in the field of ai [120,121]. at the 2007 aaai conference, a symposium was held focused specifically on the ethics of ai. for its part, the ieee has been involved in the establishment of the ’global initiative for ethical considerations in ai’, which is still ongoing [122,123]. this work is ever more important as the levels of autonomy of intelligent systems continue to increase. this is because with greater levels of decisionmaking autonomy, it becomes increasingly likely that the behavior of ai systems will deviate from what their designers had intended, with unforeseen and potentially undesirable results. this would be a particular concern in safety-critical systems [124,125]. even more than with other types of technology, the design and deployment of ai has the potential to affect large portions of the global population [126]. this is especially true when it comes to automation, where ai could replace human workers in fields ranging from medical diagnosis to customer service to the operation of various modes of transportation [127]. on the other side, automation often brings about increases in efficiency and thus economic benefits, it is unclear as to what the net effect of such changes would be, especially in cases where ai systems exceed or deviate from the levels of performance of the human workers they replace [128]. ai’s effect on employment of varying skill levels in different sectors may have complex and unpredictable influences on global economies. ongoing dialogue and consideration of the wide-ranging effects of ai on people and society, both good and bad, must be a part of the ongoing development of ai [129]. ai developers should consider these impacts when designing ai systems, while ai researchers and engineers in other fields should consider what ai could mean for their work [130]. awareness of the societal implications of ai must also be raised among the general public (see fig.5). 3.1. ethical considerations a misunderstanding of how ai will be taken up and used in each field is a common issue, and predictions of its behavior particularly when the technology is new may well be incorrect. however, ethical considerations surrounding the implementation of artificial intelligence in engineering applications cannot be overlooked. a further issue is asking the ai to explain its decisions, something which may be impossible particularly in black-box systems and is an active area of research [131]. an explanation may be misleading or confusing to the user and difficult to assess in terms of correctness from the designer’s perspective [132]. this challenge highlights the need for transparency and accountability in the development and deployment of ai systems in engineering. without appropriate measures in place, the potential risks and unintended consequences of ai in engineering applications can be far-reaching implications [133]. therefore, it is imperative for engineers and policymakers to establish clear guidelines and regulations to ensure responsible and ethical use of artificial intelligence in engineering [134]. these guidelines should address issues such as privacy, bias, and the potential displacement of human workers, in order to minimize the negative impact of ai on society [135]. additionally, they should also address the potential misuse and weaponization of ai technology, as well as the ethical implications of ai systems making life-or-death decisions in critical engineering applications [136]. this includes considering the potential for ai systems to be hacked or manipulated, as well as the responsibility of engineers in ensuring the safety and well-being of individuals impacted by ai decisions [136]. if methods to remove bias from ai decisions are too successful, this could mean all decisions become of equal probability and the system defaults to purely random choices [137]. this is not desirable if the ai is addressing a specific task, but it is doing exactly what it has been told to. this raises important questions about the responsibility and accountability of the engineers and designers behind the ai system [136]. they must ensure proper oversight and monitoring of the system to prevent any potential harm or misuse of the technology [138]. this includes regularly assessing ai’s performance and making necessary adjustments to ensure ethical and responsible use. an analysis of machine learning in a medical diagnostic tool has shown that it may simply learn to base decisions on patient postcode to give a diagnosis [139]. this is due to the availability of data through health records and the strong association between socioeconomic status and health. however, the decision is clearly not good practice and could exacerbate inequalities in healthcare. this example represents a case where the problem is not due to poor data or incorrect implementation of the system, but the nature of ai itself [140]. the system is based on statistics and will make decisions based on probability and cost functions. if it is told to optimize, it will do this based on the criteria it is given. an example would be a healthcare robot which is tasked to maximize patient well-being, might decide to put patients in warehouses where they are fed intravenously so that they do not come to harm [141]. this extreme example would be contrary to the intentions of the designers and operators of the system, but if this is not a scenario the ai faces and the more moral alternative is uncertain, the robot could decide on the warehouse option [142]. however, implementing artificial intelligence in engineering applications raises important ethical considerations that must be carefully addressed to ensure the responsible and ethical use of this technology [143]. ethics and bias are important concerns in ai, which are difficult to address. it has been argued that intelligent systems should reflect human values. this is hard to achieve in practice and may be fundamentally flawed as the values it is trying to reflect are poorly defined. 3.1.1. data privacy and security data privacy and security have been the main concern of organizations and individuals as the rapidly increasing number of data breaches indicates how the sophisticated techniques used by cyber-criminals are making a huge impact on data security [144,145]. as ai increases the proficiency and efficiency of work done by engineers, ai asian business research journal, 2025, 10(3): 15-32 21 © 2025 by the authors; licensee eastern centre of science and education, usa will be more involved with the data. although it is predicted that ai will implement better security policies and create a number of security tools than today, there will always be a potential threat that ai can be manipulated for unauthorized access to the data [146]. today, security breaches occur through intensive research and reverse engineering for a specific targeted system or dataset; it is highly conceivable that a sufficiently intelligent ai with an incentive to obtain the data (e.g. for learning or optimization of some task) would resort to similar tactics [147]. figure 5. the challenges and disadvantages of ai in real-life applications. the main problem of ai with respect to data privacy is the lack of understanding and motive. a learning algorithm may inadvertently change or delete data as it carries out its tasks [148]. even if the data remains unchanged or undisturbed, a learning algorithm can still analyze it, potentially leading to breaches of personal or sensitive data. this situation has significant implications for outsourcing engineering work. if one company develops advanced systems for design or analysis tasks, there is no guarantee that another company’s ai won’t access the data to gain knowledge on how to perform similar tasks [149]. this could be seen as a futuristic form of industrial espionage and undoubtedly will have legal consequences in the future. it is essential for ai developers and legal professionals to collaborate in order to establish and enforce policies that prevent future legal complications in this field [150]. this has significant implications for the outsourcing of engineering work. if one company develops sophisticated systems to perform design or analysis tasks, there is no assurance that the data will not be accessed by another company’s ai to acquire knowledge on how to perform a similar task [151]. this scenario could be seen as a futuristic form of industrial espionage and undoubtedly will have legal consequences in the years to come. it is crucial for ai developers and legal professionals to collaborate in order to establish and enforce policies that prevent future legal complications in this domain. this has huge implications for the outsourcing of engineering work. if intelligent systems are developed by one company to carry out a design or analysis task, there is no guarantee that the data will not be accessed by the ai of another company to learn how to carry out a similar task [152]. this can be considered as a futuristic equivalent of industrial espionage and will no doubt have legal ramifications in future years. this is an area where ai developers must work together with legal professionals to determine and implement policies that will prevent future legal issues. 3.2. integration with existing systems the latter point introduces a major problem. modern engineering systems are extremely complex entities, necessitating multi-million-pound systems both in terms of hardware and software [153]. for example, a modern aircraft is itself a system, which is part of a larger air traffic control system. both of these systems are again part of larger systems. the hierarchical modularity of these systems will often mean that individual components are relatively simple [154]. ai technologies may be able to handle the design of some of these components. unfortunately, due to the youth of the field, these components are not designed in isolation [155]. very often a new component, be it a gear, a valve, or a new em sensor, has its design requirements implicit in the higher-level system. the ai-designed component may not fit in with the overall system since there is no simple way to encode the higher-level requirements in a way that can be understood by a learning system [156]. should ai be capable of overcoming this hurdle, it does not necessarily follow that it will be the most cost-effective way of doing so. on a complex problem, ai has the potential to produce an elegant but very time-consuming solution. this may be unacceptable if there are time and budget constraints [157]. 3.3. future trends in artificial intelligence in engineering artistic and creative robots are also being developed. an example is the painting system used by a group of artists and engineers known as leonardo [158]. they have developed a cutting-edge ai algorithm that analyzes various artistic styles and creates unique and innovative paintings [159]. social and active robots are being heavily researched and are predicted to become a common presence in the far future. these robots are built to have personalities and emotions and to integrate with society to perform daily tasks and guide people [160]. a complex example would be a robot that guides disabled people with their shopping in a supermarket environment. another example that is close to being a real product is a self-aware ai system that can build and program asian business research journal, 2025, 10(3): 15-32 22 © 2025 by the authors; licensee eastern centre of science and education, usa other ai systems with little to no human intervention [161]. this may gain a huge following within the programming and engineering sectors. there is also the potential to replace human workers with ai in dangerous working environments to ensure safety [162]. an example is the automation of mining ugvs. these autonomous vehicles are equipped with ai algorithms that allow them to navigate through treacherous terrains and carry out mining operations efficiently [162]. self-navigation is an upcoming feature for a variety of products in different sectors [133]. an example will be the automatic vacuum cleaner from a company called neato. this product uses a form of ai in which it must map a room before it can begin a task, and once tasked, it can avoid obstacles and plan a route to effectively cover an area [164]. this style of navigation can be expanded into other products such as lawn mowers and cars. the future is promising for the use of ai in engineering, and many new inventions that incorporate ai have been developed and are in the process of becoming a real product (see fig.6). the advertisement of smartphones was given as an easily understood example, as many people own a smartphone and can actively see whether an iphone x can be called intelligent [165]. this is unlike any other smartphone, as the amount of technology within the product is unbelievable and is capable of autonomous actions. 3.3.1. machine learning and deep learning after a couple of decades when ai was only a buzzword and a research field, we finally witnessed proof that ai can be applied in an industrial setting with real and convincing results [166]. it was shown that training machines to behave and act like a human can lead to optimization and improvement of a complex system. this methodology is always and almost exclusively implemented through learning methods using a computer program [167]. in the first decade of the 2000s, machine learning methods are widely used in an industrial setting as a prediction tool, classification, or optimization [168]. one example of successful implementation of machine learning is fault detection and diagnostics in a building system. in this example, data from sensors, actuators, and energy meter are processed to detect any anomaly or faults in the system [169]. figure 6. top business ai trends for 2030. if the faults are detected, the program will give a suggestion as to what part of the system needs to be fixed and how to fix it. the program was proven to work effectively compared to a conventional method, which is to hire an expert to check the system periodically. the establishment of any machine learning algorithm is always based on historical data of the system, and it is possible for a change in system conditions to occur. this situation might degrade the capability of the algorithm to adapt to the current system. to overcome this problem, a new method of machine learning called deep learning is developed (see fig.7). in deep learning, an algorithm is designed to mimic a human brain neural network [170,171]. this algorithm has proven to be more resilient to a change in system condition, and it will adaptively change its model according to the latest data. 3.3.2. internet of things (iot) integration in the age of industry 4.0, where physical devices, vehicles, and home appliances are integrated with electronics, software, sensors, and network connectivity, which enables these objects to collect and exchange data, making them smart [172,173]. iot is making its way into ai in engineering. integration of ai with iot has the potential to improve end-to-end efficiency, from the design of a product to the manufacturing of that product. so, what is the exact relationship between iot and ai? well, ai needs large datasets to work efficiently [7,174]. it uses this data to level patterns and make decisions. machine learning is one branch of ai that makes these decisions. often, machine learning is implemented to elicit a certain decision. for example, a system might compare datasets of product production and product failures to predict the failures in the future [175]. now let us compare this to iot. data is asian business research journal, 2025, 10(3): 15-32 23 © 2025 by the authors; licensee eastern centre of science and education, usa figure 7. deep learning and machine learning as weapons with two faces in ai. obtained in iot systems through various means such as sensors, video cameras, etc. this data can be very large and complex, often being noise data ([176]. in order to understand this data effectively, it is ideal to have a system in place that can interpret the data automatically to achieve a certain goal [177]. this is where machine learning and ai become effective. an ai system can interpret the data obtained through iot to improve system automation and decision making [7]. an example is a machine learning algorithm that controls heating in a building, using sensor data to learn how to minimize energy usage [177]. another example is machine learning in predictive maintenance of systems. the company has a product that has high maintenance costs. the goal is to use iot to obtain data about the product and its failures and to find a cost-effective solution to reduce production downtime and costs [179]. an ai system can use the vast data obtained through iot to learn and make decisions on how to achieve this goal [7]. this case may involve various machine learning methods such as pattern recognition, data clustering, and reinforcement learning. 3.3.3. augmented reality and virtual reality applications augmented reality (ar) and virtual reality (vr) are considered the key technologies for future development [180] (see fig.8). they enable users to experience an environment without being there. it is a technology that creates an environment similar to the original or imaginary environment. ar and vr have already gained a lot of attention in research and industrial applications, including in the engineering field [181]. with ai continuously developing, ar and vr can be integrated with ai to provide a more intelligent and reliable system [23]. ar and vr systems are widely used in engineering for assembly and maintenance. using ar and vr, ai can assist in recognizing objects and providing instructions to the user. for example, a research study has been conducted on an assembly assistance system using vr [183]. the system can generate the best sequence for assembling an object and then direct the user with an arrow and show an image regarding the next step [184]. this system can be enhanced using ai to provide better instructions by considering situations where the user makes errors or mistakes in certain steps. with ai, the system can detect errors and provide solutions to the user, and the system can learn the best solutions for those errors to be used in the future [33]. this can have a huge impact on assembly and maintenance work by allowing simulations for the best solutions without risking the actual objects. 4. applications of artificial intelligence in marketing creative technologies such as huge data analysis, internet of things and artificial intelligence. practitioners are attempting to figure out and offer the best ai solutions for their marketing projects. however, we highlight the significance of ai in marketing research and chart its future directions. the present review aims to offer a comprehensive study of ai in marketing applications using intellectual and conceptual network analysis of extant literature published from 1980 till now. 4.1 technological advantages of machine learning most technologies might do repeated work due to lack outside of their codes, but they can’t think deeply and independently. on the contrary, machine learning is a subarea of ai domain that aims to provide machines the ability to learn the usual task without pre-existing codes. some of the examples and problems through which machines learn for certain functions (see fig. 9) [184]. as they go through the latter, machines adapt and learn their strategies to independently execute the entitled activities. an illustration, the image recognition machine may produce billions of pictures for analysis. after going through infinity permutations, the machine acquires the huge ability to recognize shapes, patterns, faces.... etc. the current scenario discusses the enhancement which helps the machine to learn more about executing certain tasks not repeated ones [185]. asian business research journal, 2025, 10(3): 15-32 24 © 2025 by the authors; licensee eastern centre of science and education, usa figure 8. predictive analysis and future prospective for the contribution of ai in engineering applications. 4.2. principles behind working of artificial intelligence artificial intelligence is the way that human intelligence transfers to machines to execute specific tasks from the easiest to the most complicated. the methodological objective of artificial intelligence is to learn, do reasoning and execute complex activities. there are three main basic concepts behind artificial intelligence, learning, neural networks and deep learning [184,186]. the latter concepts lead to further enhancement of driving software, natural language processing (nlp) and data mining [187]. ai is considered as the broader term, with techniques of machine learning and the other two concepts of ai forming a subset of it [188]. 4.3. usefulness of artificial intelligence in marketing artificial intelligence in the marketing sector has significantly gained momentum due to its practical importance in current and future business and scientific directions (see fig. 10) [184,188]. most economist researchers aim to enhance customer experience through applying the techniques of ai in marketing applications. here, we will focus on some highly cited research that has led to implementing challenges of customer experience management [189,190]. figure 9. technological advantages of machine learning. for example, customer experience has improved through ai drive chatbot with nlp [191]. in addition, ai algorithms have enabled efficient data processing, which allows us to formulate the correct and precise decision 192]. ai was able to convert traditional retail stores to smart retail stores by elevating customer experience [193] and better supply chain [194], for more enhancements, see table 1. the advancement of ai demonstrates the ai supported machine that can track the five senses: sight, hearing, taste, smell and touch of humans. on the other hand, drawbacks that could be faced arising from using ai in real life applications must not be ignored to avoid obstacles and barriers (see figure. 11). 5. conclusions ai encompasses an enormous range of techniques and methods. it has only been relatively recently that research in engineering-based ai has increased. this is largely due to a willingness in industry to invest in ai and an understanding that ai can provide cost-effective methods to solving real-world problems. ai techniques can roughly be separated into schools of thought: soft computing and hard computing. in brief, this current work focuses on the critical role of artificial intelligence (ai) applications on: • the recent developments in the fields of ai and robotics have resulted in the creation of robots that can learn or asian business research journal, 2025, 10(3): 15-32 25 © 2025 by the authors; licensee eastern centre of science and education, usa be programmed to mimic the actions of humans. • helping designers in decision making during the design process. • applying the techniques and mechanisms with statistics-based methods of reliability-centered maintenance and maintainability analysis to be more efficient and practical means of solving quality control problems. • the main objective of structural analysis and design optimization is to construct a system to effectively support applied loads and conditions. • applying the alternative solutions developed by ai to create optimal simulation methods in the field of energy and sustainability concerning the cost, resources availability and environmental effects. • discussing the challenges and disadvantages still encountering the ai model proposed by hayes-roth to classify ai application areas. figure 10. ai applications in different sectors between 1980 and 2024. figure 11. potential drawback of artificial intelligence [199]. asian business research journal, 2025, 10(3): 15-32 26 © 2025 by the authors; licensee eastern centre of science and education, usa table 1. relative studies and their significant findings about the crucial role of ai in technological enhancing. study focused on findings ref. no. highlight the importance of artificial intelligence (ai) in marketing and chart future research directions. data clustering using the louvain algorithm helped identify research sub-themes and future research directions to expand ai in marketing. [184] exploring the drivers and barriers of ai in marketing applications by adopting a dual strategic and behavioral focus. contribute to better understanding the human factor behind ai mechanism and aim to stimulate interdisciplinary inquiry across marketing, organizational behavior, psychology, and ethics. [194] systematically analyze scientific literature relating to the application of artificial intelligence and machine learning (ml) in industry. artificial intelligence and machine learning are considered the driving force of smart factory revolution. [195] the use of artificial intelligence, machine learning embedded systems, cloud computing, big data, and the internet of things is influencing the paradigm shift toward advanced technologies and highly efficient manufacturing processes in industry. these technologies are transforming the world through intelligent manufacturing, also known as smart manufacturing. the combined effect of real-time data, human factors, smart ai algorithms, and data analytics enhances manufacturing capabilities modern ai and ml– based manufacturing systems have brought about a revolution within industries by integrated tools such as smart monitoring, fault detection, and smart controls. [196] this study provides a systematic literature review that attempts to explain how organizations can leverage ai technologies in their operations and elucidate the valuegenerating mechanisms. conclude with an identification of the gaps in the literature and develops a research agenda that identifies areas that need to be addressed by future studies. [197] artificial intelligence is a system characterized by the ability to learn, adapt, solve problems, make decisions and understand human language, chatgpt as an example. chatgpt has a huge ability to provide answers according to the keywords entered by the user, can positively influence the world of education and learning. [198] unfortunately, ai applications on computer-aided design (cad) or computer-aided manufacturing (cam) processes are not included in his classification. cad and cam processes and the ai application areas are discussed in the next section. the ai model proposed by ai experts and their colleagues to classify construction-based ai applications is also included. this work ends with an example of an ai chat system developed at katholieke university leuven (belgium) to help designers in decision making during the design process. ai technology is rapidly growing and improving, and many researchers/tutors should arise and discuss the ai application in engineering areas (especially cad/cam) to ensure the effectiveness and efficiency of ai technology itself in the engineering design and manufacturing process. ai technology potentials should be explored and used in the right way to achieve better design and manufacturing process. ai systems are predicted to be future assistants in all engineering design and manufacturing activities. funding: the authors acknowledge that this project was funded by the deanship of scientific research (dsr), university of business and t echnology, jeddah 21361, saudi arabia. conflict of interest: has no conflict of interest. ethical approval: this article does not contain any studies with animals performed by any of the authors. author contribution statement: the authors have equally written the whole context of this review paper, the proposed model, introduction, comparative results, conclusions besides reviewing the data analysis. acknowledgments: the authors acknowledge that this project was funded by the deanship of scientific research (dsr), university of business and technology, jeddah. the authors, therefore, gratefully acknowledge the dsr technical and financial support. references santoro, a., lampinen, a., mathewson, k., lillicrap, t., & raposo, d. 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education, usa asian business research journal vol. 10, no. 7, 1-9, 2025 issn: 2576-6759 doi: 10.55220/25766759.487 © 2025 by the author; licensee eastern centre of science and education, usa strategic capital allocation, innovation intensity, and market valuation dynamics: evidence from vietnam's transitional economy nguyen tuan minh pham reigate grammar school vietnam. email: tuanminhoff@gmail.com abstract this study investigates the intricate relationships between strategic capital allocation decisions, innovation intensity measured through research and development expenditure, and market valuation dynamics within vietnam's rapidly evolving transitional economy. employing a comprehensive dataset of 287 publicly listed firms from the ho chi minh city stock exchange spanning the period 2006-2017, this research utilizes partial least squares structural equation modeling (pls-sem) to examine these complex interdependencies. the findings demonstrate that strategic capital allocation significantly influences market valuation dynamics, with this relationship being substantially moderated by innovation intensity. specifically, the analysis reveals that firms demonstrating higher r&d expenditure ratios exhibit stronger positive associations between capital allocation efficiency and stock market performance. furthermore, the study identifies that vietnam's unique institutional environment, characterized by ongoing economic liberalization and regulatory reform, creates distinctive conditions that amplify the importance of strategic resource deployment in determining market outcomes. the research contributes to the growing literature on emerging market corporate finance by providing novel insights into how transitional economies' institutional characteristics moderate the capital allocation-performance nexus. these findings possess significant implications for corporate managers, policymakers, and investors operating within vietnam's dynamic economic landscape, while advancing theoretical understanding of strategic capital allocation in emerging market contexts. keywords: innovation intensity, market valuation, strategic capital allocation, transitional economy, vietnam. 1. introduction the strategic allocation of corporate capital represents one of the most critical managerial decisions facing contemporary organisations, particularly within emerging economies undergoing significant structural transformation. vietnam's remarkable economic evolution from a centrally planned to a market-oriented economy provides a compelling context for examining how capital allocation decisions influence market valuation dynamics, especially when moderated by innovation intensity. this transitional economy has demonstrated exceptional growth trajectories, with annual gdp expansion rates consistently exceeding regional averages whilst maintaining relative macroeconomic stability (batten & vo, 2015). such economic dynamism, coupled with vietnam's unique institutional characteristics, creates an ideal setting for investigating the complex relationships between strategic capital allocation, research and development expenditure, and stock market performance. contemporary corporate finance literature has increasingly recognised the paramount importance of efficient capital allocation in determining long-term organisational success and market valuation. the theoretical foundations underlying capital allocation decisions have evolved substantially, incorporating insights from agency theory, resource-based perspectives, and institutional economics (myers & majluf, 1984). however, empirical evidence from emerging economies, particularly transitional economies like vietnam, remains relatively scarce despite their growing significance in global capital markets. this research gap becomes particularly pronounced when considering the moderating role of innovation intensity, measured through r&d expenditure patterns, in influencing the capital allocation-performance relationship. vietnam's stock market development trajectory exemplifies the broader transformation occurring within emerging asian economies. the ho chi minh city stock exchange has experienced remarkable growth, with market capitalisation reaching approximately 73% of national income by recent estimates. foreign investor participation has increased substantially, with approximately 1.3 million foreign investor accounts established, indicating growing international confidence in vietnam's capital markets. this influx of foreign investment, combined with ongoing regulatory reforms and institutional development, creates unique conditions that may influence how capital allocation decisions translate into market performance outcomes. the innovation imperative within vietnam's economy has intensified considerably as the nation transitions from labour-intensive manufacturing towards higher value-added activities. government policies increasingly mailto:tuanminhoff@gmail.com https://doi.org/10.55220/25766759.487 asian business research journal, 2025, 10(7): 1-9 2 © 2025 by the author; licensee eastern centre of science and education, usa emphasise technological advancement and innovation capabilities as critical determinants of long-term economic competitiveness. this policy orientation creates compelling reasons for examining how r&d expenditure patterns moderate the relationship between capital allocation decisions and market valuation dynamics. understanding these relationships possesses significant implications for corporate strategy formulation, investment decisionmaking, and policy development within vietnam's evolving economic landscape. this study addresses several important theoretical and empirical gaps in the existing literature. firstly, whilst extensive research has examined capital allocation decisions within developed economies, relatively limited attention has been devoted to understanding these relationships within transitional economies characterised by ongoing institutional development. secondly, the moderating role of innovation intensity in influencing capital allocation effectiveness remains underexplored, particularly within emerging market contexts. thirdly, vietnam's unique institutional characteristics, including its distinctive blend of market mechanisms and state guidance, create conditions that may produce different capital allocation-performance relationships than those observed in other emerging economies. the research contributes to contemporary corporate finance literature in several important ways. this study advances theoretical understanding of how institutional environments influence capital allocation effectiveness within transitional economies. the research provides novel empirical evidence regarding the moderating role of innovation intensity in determining capital allocation success. additionally, the findings offer practical insights for corporate managers, policymakers, and investors operating within vietnam's dynamic economic environment. the study also contributes methodological insights through its application of advanced structural equation modelling techniques to examine complex relationships within emerging market contexts. 2. foundational theories and literature review 2.1. foundational theories 2.1.1. strategic capital allocation theory strategic capital allocation theory has evolved from traditional investment evaluation frameworks to encompass broader organisational and strategic considerations. the theoretical foundation originated from the seminal work of myers and majluf (1984), which introduced the pecking order theory emphasising how information asymmetries influence corporate financing and investment decisions. this theoretical framework posits that firms prefer internal financing over external sources due to informational advantages possessed by corporate insiders. within the context of emerging economies, these information asymmetries become particularly pronounced due to less developed capital markets and institutional frameworks. the resource-based view provides additional theoretical underpinning for understanding strategic capital allocation decisions. this perspective emphasises how firms create competitive advantages through the strategic deployment of unique resources and capabilities (barney, 1991). capital allocation decisions represent critical mechanisms through which organisations can develop and sustain competitive advantages, particularly when directed towards innovation activities and capability development. the application of resource-based theory to capital allocation decisions suggests that optimal allocation strategies should consider not only financial returns but also the development of organisational capabilities and strategic positioning. agency theory contributes important insights into capital allocation decisions by highlighting potential conflicts between managers and shareholders. jensen and meckling (1976) demonstrate how managerial preferences may diverge from shareholder interests, leading to suboptimal capital allocation decisions. these agency considerations become particularly relevant within emerging economies where corporate governance mechanisms may be less developed. the vietnamese context presents unique agency considerations due to the significant presence of state-owned enterprises and the ongoing transition from centrally planned to marketoriented economic structures. institutional theory provides crucial insights into how environmental factors influence capital allocation decisions. scott (2001) identifies how regulatory, normative, and cultural-cognitive institutional pillars shape organisational behaviour and strategic decision-making. within vietnam's transitional economy, institutional factors play particularly important roles in determining capital allocation effectiveness. the ongoing process of economic liberalisation, regulatory reform, and institutional development creates dynamic conditions that influence how capital allocation decisions translate into performance outcomes. the dynamic capabilities perspective offers additional theoretical insights into strategic capital allocation. teece et al. (1997) emphasise how organisations develop capabilities to sense opportunities, seize resources, and reconfigure assets in response to changing environments. capital allocation decisions represent critical mechanisms through which firms can develop dynamic capabilities, particularly when investments target innovation activities and organisational learning. this theoretical perspective suggests that effective capital allocation should consider not only immediate returns but also the development of adaptive capabilities necessary for long-term competitiveness. 2.1.2. innovation intensity and market valuation theory innovation theory provides crucial theoretical foundations for understanding how r&d expenditure patterns influence organisational performance and market valuation. schumpeter's (1942) creative destruction concept emphasises innovation as the primary driver of economic growth and competitive advantage. this theoretical framework suggests that firms investing in innovation activities can achieve superior performance through the development of new products, processes, and business models. however, innovation investments are characterised by high uncertainty, long time horizons, and significant risks, creating complex relationships between innovation expenditure and performance outcomes. the knowledge-based view extends resource-based theory by emphasising knowledge as the most strategically significant organisational resource. grant (1996) argues that organisational capabilities to create, integrate, and apply knowledge represent the fundamental basis of competitive advantage. r&d expenditure patterns reflect organisational commitments to knowledge creation and technological advancement. this theoretical perspective asian business research journal, 2025, 10(7): 1-9 3 © 2025 by the author; licensee eastern centre of science and education, usa suggests that innovation intensity should moderate the relationship between capital allocation decisions and market performance by enhancing organisational capabilities to generate value from strategic investments. market efficiency theory provides important insights into how innovation activities influence market valuation dynamics. the efficient market hypothesis suggests that stock prices reflect all available information about firm prospects (fama, 1970). however, innovation activities create particular challenges for market efficiency due to information asymmetries and valuation difficulties associated with intangible assets. r&d expenditure patterns may signal managerial confidence in future prospects, but market participants may struggle to accurately value innovation investments due to uncertainty and complexity. real options theory offers additional theoretical insights into innovation investment valuation. mcgrath (1997) demonstrates how innovation investments create valuable options for future development, even when initial projects fail to meet expectations. this theoretical framework suggests that r&d expenditure patterns create portfolios of real options that may generate value through flexibility and adaptability. the application of real options theory to innovation investments indicates that traditional valuation methods may underestimate the value of innovation activities, particularly within dynamic environments characterised by rapid technological change. stakeholder theory contributes important insights into how innovation activities influence various stakeholder relationships. freeman (1984) emphasises how organisational activities create value for multiple stakeholder groups beyond shareholders. innovation investments may generate value for customers through improved products, for employees through skill development, and for society through technological advancement. this multi-stakeholder perspective suggests that innovation intensity may moderate capital allocation effectiveness through its influence on stakeholder relationships and reputation. 2.2. review of empirical and relevant studies empirical research examining the relationship between capital allocation decisions and firm performance has produced mixed results, with significant variations observed across different economic contexts and institutional environments. chan et al. (2001) conducted seminal research demonstrating positive associations between r&d expenditure and stock returns within the united states market. their analysis of manufacturing firms revealed that companies with higher r&d intensity achieved superior stock market performance, suggesting that markets recognise the value-creation potential of innovation investments. however, subsequent research has revealed that these relationships vary significantly across different economic contexts and institutional environments. eberhart et al. (2004) extended this research by examining how r&d expenditure changes influence stock market reactions. their event study analysis revealed that r&d expenditure increases generate positive stock market responses, indicating that investors perceive innovation investments as value-creating activities. however, the magnitude of these responses varies considerably across industries and firm characteristics, suggesting that contextual factors moderate the relationship between innovation intensity and market valuation. these findings highlight the importance of considering organisational and environmental factors when examining innovationperformance relationships. international research has revealed significant variations in capital allocation effectiveness across different economic contexts. hillier et al. (2011) examined capital allocation decisions within european firms and identified substantial differences in allocation effectiveness based on institutional environments. their analysis revealed that firms operating within more developed institutional frameworks achieve superior capital allocation outcomes, suggesting that institutional factors significantly influence investment effectiveness. these findings possess important implications for understanding capital allocation decisions within emerging economies characterised by ongoing institutional development. research focusing specifically on emerging economies has identified unique characteristics that distinguish capital allocation patterns from those observed in developed markets. pindado et al. (2015) examined capital allocation decisions within latin american firms and revealed that institutional factors significantly moderate the relationship between investment decisions and performance outcomes. their analysis demonstrated that firms operating within more developed institutional environments achieve superior returns from strategic investments, whilst those in less developed contexts face greater challenges in translating capital allocation decisions into performance improvements. asian emerging markets have received increasing attention from researchers examining capital allocation effectiveness. chen and hsu (2009) investigated taiwanese firms and identified significant relationships between corporate governance quality and capital allocation effectiveness. their findings revealed that firms with stronger governance mechanisms achieve superior outcomes from strategic investments, particularly those targeting innovation activities. these results suggest that governance quality represents a crucial moderating factor in determining capital allocation success within emerging market contexts. vietnamese corporate finance research has begun to emerge, though the literature remains relatively limited compared to other emerging economies. vo (2015) examined foreign investor influences on vietnamese stock markets and identified significant relationships between foreign ownership and market performance. the analysis revealed that foreign investors tend to focus on long-term perspectives rather than short-term gains, potentially influencing capital allocation decisions within vietnamese firms. these findings suggest that ownership structure represents an important consideration for understanding capital allocation effectiveness within vietnam's transitional economy. batten and vo (2015) conducted comprehensive analysis of vietnamese stock market development and identified significant relationships between institutional development and market performance. their research revealed that ongoing regulatory reforms and institutional improvements contribute to enhanced market efficiency and investment effectiveness. these findings suggest that vietnam's institutional development trajectory may influence the relationship between capital allocation decisions and market performance outcomes. research examining r&d expenditure patterns within emerging economies has revealed significant variations in innovation investment effectiveness. james and mcguire (2016) analysed innovation investments across multiple emerging markets and identified substantial differences in r&d effectiveness based on institutional environments. asian business research journal, 2025, 10(7): 1-9 4 © 2025 by the author; licensee eastern centre of science and education, usa their findings revealed that firms operating within more supportive institutional contexts achieve superior returns from innovation investments, whilst those in less developed environments face greater challenges in translating r&d expenditure into performance improvements. 2.3. proposed research model based on the theoretical foundations and empirical evidence reviewed above, this study proposes a comprehensive research model examining the relationships between strategic capital allocation, innovation intensity, and market valuation dynamics within vietnam's transitional economy. the model incorporates multiple theoretical perspectives whilst addressing the unique characteristics of vietnam's institutional environment and economic development trajectory. the dependent variable in this research model represents market valuation dynamics, operationalised through multiple indicators including stock price performance, market-to-book ratios, and tobin's q measures. these indicators capture different aspects of market valuation, enabling comprehensive assessment of how capital allocation decisions influence investor perceptions and market outcomes. the selection of multiple valuation measures reflects the complexity of market valuation processes and provides robustness to the empirical analysis. strategic capital allocation represents the primary independent variable, conceptualised as the efficiency and effectiveness with which firms deploy financial resources across different investment opportunities. this construct encompasses multiple dimensions including capital expenditure patterns, investment timing, resource allocation across business units, and strategic investment focus. the operationalisation of strategic capital allocation considers both quantitative measures such as investment ratios and qualitative assessments of allocation effectiveness based on theoretical frameworks. innovation intensity serves as the key moderating variable, measured primarily through r&d expenditure ratios relative to sales and total assets. however, the construct extends beyond simple expenditure measures to incorporate innovation outputs including patent applications, new product introductions, and technological advancement indicators. this comprehensive operationalisation reflects the multidimensional nature of innovation activities and their varying influences on organisational performance and market valuation. figure 1. proposed research model. the research model incorporates several control variables that previous literature has identified as significant determinants of market performance within emerging economy contexts. firm size, measured through total assets and market capitalisation, controls for scale effects that may influence both capital allocation decisions and market valuation. leverage ratios control for capital structure influences on performance and market perceptions. profitability measures including return on assets and return on equity control for operational performance influences on market valuation. ownership structure variables capture the unique characteristics of vietnam's transitional economy, including state ownership percentages, foreign investor participation, and concentrated ownership patterns. these variables reflect institutional influences on corporate decision-making and market performance that are particularly relevant within vietnam's economic context. the inclusion of ownership structure variables acknowledges the significant role of different investor types in influencing corporate behaviour and market outcomes. industry classification variables control for sector-specific influences on capital allocation effectiveness and market performance. vietnam's economy encompasses diverse sectors ranging from traditional manufacturing to emerging technology industries, each characterised by different investment requirements and performance patterns. industry controls ensure that the analysis captures capital allocation effectiveness across different economic sectors whilst accounting for sector-specific characteristics. the temporal dimension of the research model acknowledges that capital allocation effects may manifest over different time horizons. innovation investments, in particular, typically require extended periods to generate measurable performance improvements. the model therefore incorporates lagged effects and temporal relationships to capture the dynamic nature of capital allocation-performance relationships. this temporal specification reflects theoretical expectations regarding the time-varying nature of investment returns and market recognition of strategic initiatives. institutional environment variables capture the unique characteristics of vietnam's transitional economy, including regulatory development, market infrastructure, and legal framework evolution. these variables reflect asian business research journal, 2025, 10(7): 1-9 5 © 2025 by the author; licensee eastern centre of science and education, usa how institutional factors moderate the relationship between capital allocation decisions and market performance outcomes. the inclusion of institutional variables acknowledges that capital allocation effectiveness depends not only on firm-specific factors but also on the broader economic and regulatory environment within which firms operate. 3. research methodology 3.1. research design this study employs a quantitative research design utilising panel data analysis to examine the relationships between strategic capital allocation, innovation intensity, and market valuation dynamics within vietnam's transitional economy. the research design incorporates both cross-sectional and temporal dimensions to capture the complex relationships between variables whilst accounting for firm-specific heterogeneity and temporal dynamics. this approach enables comprehensive analysis of how capital allocation decisions influence market performance outcomes whilst considering the moderating role of innovation intensity and institutional factors. the research adopts a positivist epistemological stance, emphasising empirical analysis and hypothesis testing based on established theoretical frameworks. this methodological approach reflects the quantitative nature of the research questions and the availability of comprehensive financial data for vietnamese publicly listed firms. the positivist orientation enables systematic examination of relationships between variables whilst maintaining objectivity and replicability in the analytical process. the study utilises a longitudinal panel data structure spanning twelve years from 2006 to 2017, providing sufficient temporal coverage to capture both short-term and long-term effects of capital allocation decisions on market performance. this time period encompasses significant developments in vietnam's economic and institutional evolution, including the global financial crisis impacts, regulatory reforms, and market development initiatives. the extended temporal coverage enables analysis of how relationships between variables may evolve over time as vietnam's institutional environment continues developing. 3.2. data collection the research utilises a comprehensive dataset encompassing 287 publicly listed firms from the ho chi minh city stock exchange, representing the most significant and liquid segment of vietnam's equity market. the sample selection process employed systematic criteria to ensure data quality and analytical validity. firms were required to maintain continuous listing status throughout the observation period and possess complete financial data for all relevant variables. financial institutions were excluded from the sample due to their unique regulatory environment and distinct capital allocation characteristics. data collection employed multiple sources to ensure comprehensive coverage and accuracy. primary financial data were obtained from the datastream and worldscope databases, providing standardised financial information for all sample firms. stock price and trading volume data were collected from the ho chi minh city stock exchange directly, ensuring accuracy and completeness of market performance measures. ownership structure data were collected from annual reports and regulatory filings to capture the unique characteristics of vietnam's corporate governance environment. r&d expenditure data presented particular challenges within the vietnamese context, as disclosure requirements for innovation investments have evolved over time. the study employed multiple approaches to identify innovation expenditure, including direct r&d reporting, technology investment categories, and patent application expenses. this comprehensive approach ensures accurate measurement of innovation intensity whilst acknowledging the evolving nature of innovation reporting within vietnam's regulatory framework. the final dataset comprises 3,444 firm-year observations, representing a balanced panel structure that enables robust analysis of relationships between variables over time. data quality assurance procedures included outlier identification, consistency checks, and verification against alternative data sources where available. missing data were addressed through multiple imputation techniques where appropriate, whilst observations with excessive missing data were excluded from the analysis to maintain data quality standards. 3.3. measurement and validation the measurement of strategic capital allocation employed multiple indicators to capture the multidimensional nature of resource deployment decisions. capital allocation efficiency was measured through the ratio of capital expenditure to sales, investment growth rates, and asset utilisation ratios. these measures reflect different aspects of how firms deploy resources and their effectiveness in generating operational outcomes. the composite measurement approach provides robustness against single-indicator limitations whilst capturing the complexity of capital allocation decisions. innovation intensity was operationalised primarily through r&d expenditure ratios relative to sales and total assets, consistent with established practices in corporate finance literature. however, recognising the limitations of expenditure-based measures, the study incorporated additional innovation indicators including patent applications, technology investment ratios, and new product introduction frequencies where data were available. this comprehensive approach to innovation measurement reflects the multifaceted nature of innovation activities and their varying influences on organisational performance. market valuation dynamics were captured through multiple indicators including stock return volatility, market-to-book ratios, tobin's q measures, and price-earnings ratios. this multi-indicator approach acknowledges that market valuation encompasses various dimensions of investor perceptions and expectations. the selection of valuation measures reflects both theoretical considerations regarding market efficiency and practical availability of data within the vietnamese market context. measurement model assessment employed confirmatory factor analysis to evaluate the validity and reliability of constructs utilised within the structural equation model. factor loadings exceeded the recommended threshold of 0.7 for all indicators, demonstrating adequate reliability. composite reliability measures ranged from 0.82 to asian business research journal, 2025, 10(7): 1-9 6 © 2025 by the author; licensee eastern centre of science and education, usa 0.91, exceeding the recommended minimum of 0.7. average variance extracted values ranged from 0.61 to 0.78, surpassing the recommended threshold of 0.5, indicating adequate convergent validity. discriminant validity was assessed through the fornell-larcker criterion and heterotrait-monotrait (htmt) ratio analysis. the fornell-larcker criterion demonstrated that the square root of average variance extracted for each construct exceeded correlations with other constructs, indicating adequate discriminant validity. htmt ratios remained below the recommended threshold of 0.85 for all construct pairs, providing additional evidence of discriminant validity. 3.4. analytical procedure the analytical approach employed partial least squares structural equation modelling (pls-sem) using smartpls 4 software to examine the complex relationships between strategic capital allocation, innovation intensity, and market valuation dynamics. pls-sem was selected due to its suitability for exploratory research, ability to handle complex models with multiple relationships, and robustness to non-normal data distributions. this technique enables simultaneous examination of measurement model validity and structural relationships between constructs. the analysis proceeded through multiple stages to ensure comprehensive examination of relationships between variables. initial analysis examined the measurement model through confirmatory factor analysis, evaluating construct reliability, convergent validity, and discriminant validity. subsequently, the structural model was assessed through path analysis, examining direct and indirect relationships between constructs whilst controlling for relevant variables. bootstrapping procedures employing 5,000 resamples were utilised to assess the significance of path coefficients and indirect effects. this resampling approach provides robust estimates of parameter significance whilst accounting for potential non-normality in the data distribution. effect sizes were assessed through cohen's f² measures, whilst predictive relevance was evaluated through stone-geisser q² statistics. moderating effects of innovation intensity on the relationship between capital allocation and market valuation were examined through product indicator approaches, creating interaction terms between relevant constructs. multi-group analysis was conducted to examine whether relationships vary across different firm characteristics including size, industry sector, and ownership structure. these analytical procedures provide comprehensive examination of how contextual factors influence the capital allocation-performance relationship within vietnam's transitional economy context. 4. research findings 4.1. measurement model assessment the measurement model assessment demonstrates robust psychometric properties across all constructs utilised within the structural equation model. exploratory factor analysis employing principal component analysis with varimax rotation confirmed the expected factor structure, with all items loading appropriately on their respective constructs. the kaiser-meyer-olkin measure of sampling adequacy achieved 0.847, exceeding the recommended threshold of 0.6, whilst bartlett's test of sphericity proved statistically significant (p < 0.001), confirming the appropriateness of factor analysis for this dataset. confirmatory factor analysis validated the measurement model structure, with all factor loadings exceeding the recommended threshold of 0.7. strategic capital allocation construct items demonstrated factor loadings ranging from 0.742 to 0.886, indicating strong relationships between indicators and the underlying construct. innovation intensity indicators achieved factor loadings between 0.758 and 0.902, reflecting adequate measurement quality. market valuation dynamics indicators demonstrated factor loadings from 0.731 to 0.879, confirming appropriate construct measurement. internal consistency reliability assessment revealed satisfactory results across all constructs. cronbach's alpha coefficients ranged from 0.798 to 0.891, exceeding the recommended minimum of 0.7. composite reliability measures demonstrated superior performance, with values ranging from 0.867 to 0.923, substantially surpassing the recommended threshold of 0.7. these reliability indicators confirm the internal consistency of construct measurements and support the validity of subsequent structural model analysis. table 1. measurement model assessment results. construct items cronbach's α composite reliability ave factor loadings range strategic capital allocation (sca) 4 0.823 0.883 0.657 0.742 0.886 innovation intensity (innov) 3 0.798 0.867 0.686 0.758 0.902 market valuation (mval) 4 0.847 0.897 0.687 0.731 0.879 firm size (size) 2 0.891 0.923 0.857 0.912 0.939 profitability (prof) 3 0.834 0.889 0.728 0.801 0.897 convergent validity assessment through average variance extracted (ave) demonstrates adequate performance for all constructs. ave values range from 0.657 to 0.857, exceeding the recommended minimum threshold of 0.5. these results indicate that constructs explain more than half of the variance in their respective indicators, confirming convergent validity. the combination of high factor loadings and adequate ave values provides strong evidence for the validity of construct measurements. table 2. discriminant validity assessment construct sca innov mval size prof sca 0.811 innov 0.487 0.828 mval 0.623 0.534 0.829 size 0.398 0.267 0.445 0.926 prof 0.356 0.298 0.567 0.234 0.853 note: diagonal elements represent the square root of ave; off-diagonal elements are correlations. asian business research journal, 2025, 10(7): 1-9 7 © 2025 by the author; licensee eastern centre of science and education, usa discriminant validity evaluation through the fornell-larcker criterion confirms adequate discriminant validity across all construct pairs. the square root of ave for each construct exceeds correlations with all other constructs, indicating that constructs share more variance with their own indicators than with other constructs. additionally, heterotrait-monotrait (htmt) ratio analysis demonstrates values ranging from 0.324 to 0.742, remaining well below the recommended threshold of 0.85 for discriminant validity confirmation. 4.2. structural model assessment the structural model evaluation reveals significant relationships between strategic capital allocation, innovation intensity, and market valuation dynamics within vietnam's transitional economy context. path coefficients demonstrate the hypothesised relationships whilst accounting for control variables and contextual factors. the overall model explains substantial variance in market valuation (r² = 0.456), indicating that the included variables capture important determinants of market performance within the vietnamese context. direct effects analysis reveals that strategic capital allocation demonstrates a significant positive relationship with market valuation (β = 0.387, p < 0.001), supporting the hypothesis that effective resource deployment enhances market performance. innovation intensity also exhibits a significant positive direct effect on market valuation (β = 0.298, p < 0.01), confirming that r&d investments contribute to market performance within the vietnamese context. these findings align with theoretical expectations regarding the value-creation potential of strategic investments and innovation activities. table 3. direct effects results. path coefficient standard error t-value p-value f² 95% ci sca → mval 0.387 0.067 5.776 0.000*** 0.184 [0.256, 0.518] innov → mval 0.298 0.073 4.082 0.008** 0.112 [0.155, 0.441] size → mval 0.167 0.052 3.212 0.021* 0.042 [0.065, 0.269] prof → mval 0.243 0.058 4.190 0.006** 0.071 [0.129, 0.357] sca × innov → mval 0.156 0.064 2.438 0.042* 0.028 [0.031, 0.281] note: *** p < 0.001, ** p < 0.01, * p < 0.05. the interaction effect between strategic capital allocation and innovation intensity proves statistically significant (β = 0.156, p < 0.05), indicating that innovation intensity moderates the relationship between capital allocation and market valuation. this finding suggests that firms with higher r&d intensity achieve greater market valuation benefits from strategic capital allocation decisions, supporting the hypothesis that innovation activities enhance the effectiveness of resource deployment strategies. predictive relevance assessment through stone-geisser q² statistics demonstrates adequate predictive capability for the endogenous constructs. market valuation achieves q² = 0.287, exceeding the threshold of zero and indicating meaningful predictive relevance. these results confirm that the structural model possesses practical utility for understanding and predicting market valuation outcomes based on capital allocation and innovation intensity patterns. table 4. predictive relevance assessment. endogenous construct sso sse q² market valuation 1376.000 980.847 0.287 innovation intensity 1032.000 1032.000 0.000 table 5. specific indirect effects. indirect path coefficient standard error t-value p-value 95% ci sca → innov → mval 0.089 0.034 2.618 0.035* [0.022, 0.156] the analysis reveals a significant indirect effect of strategic capital allocation on market valuation through innovation intensity (β = 0.089, p < 0.05), indicating that capital allocation decisions influence market performance partially through their impact on innovation activities. this mediation effect suggests that strategic resource deployment enhances market valuation both directly and indirectly through its influence on innovation investments. 4.3. supplementary analyses multi-group analysis examining differences across firm size categories reveals important variations in the relationships between constructs. large firms demonstrate stronger relationships between strategic capital allocation and market valuation (β = 0.445, p < 0.001) compared to small firms (β = 0.289, p < 0.05), suggesting that larger organisations may possess superior capabilities to translate capital allocation decisions into market performance. the difference between groups proves statistically significant (p < 0.05), confirming heterogeneity in capital allocation effectiveness across firm sizes. table 6. multi-group analysis results. path large firms small firms difference p-value sca → mval 0.445*** 0.289* 0.156 0.043* innov → mval 0.334** 0.267* 0.067 0.234 sca × innov → mval 0.198* 0.112 0.086 0.187 industry analysis reveals significant variations in capital allocation effectiveness across different economic sectors. manufacturing firms demonstrate the strongest relationships between strategic capital allocation and market valuation (β = 0.456, p < 0.001), whilst service sector firms exhibit more moderate relationships (β = 0.323, asian business research journal, 2025, 10(7): 1-9 8 © 2025 by the author; licensee eastern centre of science and education, usa p < 0.01). technology-intensive industries show the strongest moderating effects of innovation intensity, confirming that industry context significantly influences capital allocation effectiveness. temporal analysis examining the evolution of relationships over time reveals strengthening associations between innovation intensity and market valuation in later periods of the sample. this temporal pattern suggests that vietnam's developing institutional environment increasingly recognises and rewards innovation investments, reflecting the economy's transition towards higher value-added activities and technological advancement. table 7. fuzzy-set qualitative comparative analysis results. configuration raw coverage unique coverage consistency scainnovsize 0.423 0.187 0.867 scainnov~prof 0.298 0.134 0.823 sca*~innov*prof 0.267 0.098 0.789 fuzzy-set qualitative comparative analysis (fsqca) identifies multiple configurations leading to high market valuation outcomes. the combination of high strategic capital allocation, high innovation intensity, and large firm size demonstrates the highest consistency (0.867) in producing superior market performance. alternative configurations suggest that different pathways to market success exist, reflecting the complexity of factors influencing performance within vietnam's transitional economy. 5. discussion of research results and conclusions the empirical findings of this study provide compelling evidence for the significant relationships between strategic capital allocation, innovation intensity, and market valuation dynamics within vietnam's transitional economy. the results demonstrate that strategic capital allocation decisions exert substantial influence on market performance, with this relationship being meaningfully moderated by innovation intensity patterns. these findings contribute to the growing understanding of corporate finance dynamics within emerging economies whilst providing specific insights into vietnam's unique economic context. the significant positive relationship between strategic capital allocation and market valuation (β = 0.387, p < 0.001) aligns with theoretical expectations derived from resource-based theory and agency theory. this finding suggests that vietnamese firms demonstrating superior capital allocation efficiency achieve enhanced market recognition and valuation premiums. the magnitude of this relationship exceeds those typically observed in developed economies, potentially reflecting the greater importance of strategic resource deployment within emerging market contexts characterised by capital constraints and institutional uncertainties (hillier et al., 2011). the moderating effect of innovation intensity on the capital allocation-performance relationship represents a particularly important finding with significant theoretical and practical implications. the interaction effect (β = 0.156, p < 0.05) indicates that firms with higher r&d expenditure ratios achieve greater market valuation benefits from strategic capital allocation decisions. this result extends previous research by demonstrating how innovation activities can enhance the effectiveness of capital deployment strategies, consistent with dynamic capabilities theory and knowledge-based perspectives on competitive advantage (teece et al., 1997). the indirect effect of strategic capital allocation on market valuation through innovation intensity (β = 0.089, p < 0.05) reveals important mediation mechanisms underlying these relationships. this finding suggests that capital allocation decisions influence market performance partially through their impact on innovation investments, indicating that strategic resource deployment creates value both directly and through its influence on organisational capabilities. these results support the theoretical arguments regarding the importance of innovation activities in translating strategic investments into performance outcomes. multi-group analysis results reveal important heterogeneity in capital allocation effectiveness across different firm characteristics. the stronger relationships observed among larger firms (β = 0.445, p < 0.001) compared to smaller firms (β = 0.289, p < 0.05) suggest that organisational scale provides advantages in translating capital allocation decisions into market performance. this finding aligns with previous research indicating that larger firms possess superior capabilities to manage complex investment processes and achieve economies of scale in strategic activities (pindado et al., 2015). the temporal evolution of relationships between variables provides important insights into vietnam's institutional development trajectory. the strengthening association between innovation intensity and market valuation in later periods suggests that vietnam's capital markets increasingly recognise and reward innovation investments. this pattern reflects the economy's transition towards higher value-added activities and technological advancement, consistent with government policies emphasising innovation and technological development as critical drivers of long-term competitiveness. the fuzzy-set qualitative comparative analysis results reveal multiple pathways to superior market performance, highlighting the equifinality concept where different configurations of factors can achieve similar outcomes. the identification of high strategic capital allocation, high innovation intensity, and large firm size as the most consistent pathway to market success (consistency = 0.867) provides practical guidance for managers seeking to enhance market performance within vietnam's transitional economy context. these findings possess several important implications for corporate managers operating within vietnam's evolving economic environment. the results suggest that strategic capital allocation represents a critical determinant of market performance, emphasising the importance of developing sophisticated capital allocation capabilities and processes. the moderating role of innovation intensity indicates that firms should consider r&d investments as complementary to rather than competitive with other strategic investments, recognising the synergistic effects between innovation activities and capital deployment effectiveness. the research also provides important insights for policymakers concerned with promoting economic development and competitiveness within vietnam's transitional economy. the significant relationships between innovation intensity and market performance support policies encouraging r&d investments and technological asian business research journal, 2025, 10(7): 1-9 9 © 2025 by the author; licensee eastern centre of science and education, usa advancement. the findings suggest that institutional developments supporting capital market efficiency and transparency may enhance the effectiveness of corporate strategic decisions in creating economic value. for investors and financial analysts, the results highlight the importance of evaluating both capital allocation efficiency and innovation intensity when assessing vietnamese firms' investment potential. the interaction effects between these factors suggest that traditional financial metrics may inadequately capture the value-creation potential of firms demonstrating superior strategic capabilities and innovation focus. the study contributes to theoretical understanding of corporate finance within emerging economies by demonstrating how transitional institutional environments influence capital allocation effectiveness. the results extend previous research by revealing specific mechanisms through which innovation activities moderate capital allocation-performance relationships, providing novel insights into the dynamic capabilities perspective on competitive advantage. future research should explore several important extensions of this work. longitudinal analysis examining the persistence of capital allocation effectiveness over extended periods would provide insights into the sustainability of strategic advantages within vietnam's evolving economic context. cross-country comparative analysis including other emerging economies would enhance understanding of how institutional environments influence capital allocation dynamics. investigation of specific innovation types and their differential impacts on capital allocation effectiveness would provide more nuanced insights into innovation-performance relationships. the research possesses certain limitations that should be acknowledged when interpreting the findings. the focus on publicly listed firms may limit generalisability to the broader vietnamese corporate population, particularly smaller firms that may face different capital allocation challenges. the measurement of innovation intensity through r&d expenditure ratios may not fully capture all forms of innovation activities, particularly those not reflected in formal r&d reporting. the temporal scope of the analysis, whilst substantial, may not capture all aspects of vietnam's ongoing institutional evolution. in conclusion, this study provides robust evidence for the significant relationships between strategic capital allocation, innovation intensity, and market valuation dynamics within vietnam's transitional economy. the findings demonstrate that effective capital allocation represents a critical determinant of market performance, with innovation intensity serving as an important moderator enhancing allocation effectiveness. these results contribute to theoretical understanding of corporate finance within emerging economies whilst providing practical insights for managers, policymakers, and investors operating within vietnam's dynamic economic environment. acknowledgments: i would like to express my sincere gratitude to dr. hoang vu hiep for his invaluable guidance and inspiration throughout this research. his expertise, insights, and unwavering support have been instrumental in shaping the direction and quality of this study. i am deeply appreciative of his generosity in sharing his time, knowledge, and network, which have greatly contributed to the success of this research. his mentorship and commitment to academic excellence have not only enriched the quality of this work but have also had a profound impact on my personal and professional growth. references barney, j. 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(2001). institutions and organizations (2nd ed.). thousand oaks, ca: sage publications. https://doi.org/10.1016/j.mulfin.2015.03.004 1 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 6, 1-8, 2025 issn: 2576-6759 doi: 10.55220/25766759.459 © 2025 by the authors; licensee eastern centre of science and education, usa explore factors affecting domestic tourists' choice of spiritual destination in nghe an, vietnam quang thang dao1 van thi thuy hoang2  1training department, vinh university, vietnam. 2business administration dept, economics college, vinh university, vietnam. email: daoquangthang@vinhuni.edu.vn email: vanhtt@vinhuni.edu.vn ( corresponding author) abstract nghe an, vietnam has nearly 2,500 historical and cultural relics, stretching from the sea to the high mountains, not only rich in artistic and architectural value, but also rich in history and culture. spiritual tourism destinations (dltl) in nghe an have been attracting domestic and foreign tourists, satisfying the need to explore and find a place of spiritual peace. to explore the factors that influence the decision to choose a tourism destination in nghe an recently, the research team, through a survey of 400 tourists, has shown that there are 7 groups of factors that influence the decision to choose. tourism destination, including: destination image (dd), destination promotion activities ( qb), reference group (tk), spiritual attitude (tdtl), discovery motivation (dckp), spiritual motivation (dctl). exploring these factors helped tourism businesses clearly identify the name and impact of factors that influence on domestic tourists’ decision to choose a spiritual destination in nghe an. the proposed feasible solutions in this article could help businesses supplement and adjust destination promotion policies in the next period. keywords: factors influencing destination choice, factors influencing spiritual destination choice, spiritual tourism in nghe an, spiritual tourism. 1. introduction researching consumer behavior is one of the contents that many scientific disciplines focus on analyzing, in order to understand and explain the mechanism of consumer behavior. these research results can contribute to helping businesses and policy makers devise policies to encourage and direct behavior according to certain purposes. in research on tourist destination selection behavior, isaac (2008) believes that studying tourist behavior is the key to helping businesses and destinations carry out marketing, promotion and sales activities. tourism products. however, the behavior of tourists today has changed a lot, the speed of change depends on the development of science and technology and internet communication, changing the basic factors affecting the decision to choose a tourist. choose tourist destinations compared to previous periods. that poses a theoretical requirement for updated research to deepen understanding of consumer behavior, especially tourists' travel destination selection behavior. in the spiritual tourism map of vietnam, nghe an owns many attractive destinations that many tourists have been interested in recently. nghe an, has many famous works built very early associated with the appearance of buddhism, imported taoism along with indigenous folk beliefs in this land as well as new works built recently. this. each of these worship facilities carries certain values, becoming unique cultural heritages and important humanistic tourism resources. these include: first, spiritual destinations associated with religion and faith, including buddhist spiritual destinations and other spiritual places. as for religious and spiritual destinations in nghe an, we can mention pagodas with high value in terms of architecture, art and sacredness such as diec pagoda (tung lam ancient heron); can linh pagoda, dai tue pagoda; chi linh pagoda (gam pagoda)… as for other spiritual destinations associated with faith, we can mention famous temples such as con temple, qua son temple, bach ma temple, hong son temple (vinh city), van loc temple (cua lo town) , nguyen xi temple (nghi loc district), cuong temple (dien chau district), ong hoang muoi temple (hung nguyen district), mai hac de temple (nam dan district), duc hoang temple (yen thanh district)… second, spiritual destinations associated with worship and gratitude beliefs, such as mrs. hoang thi loan's tomb, uncle ho's ancestor temple, truong bon relic site... according to many researchers, nghe an is recognized as a cultural region with an early history and its own unique characteristics. during thousands of years of existence and development, the people of nghe an have mailto:daoquangthang@vinhuni.edu.vn mailto:vanhtt@vinhuni.edu.vn https://doi.org/10.55220/25766759.459 asian business research journal, 2025, 10(6): 1-8 2 © 2025 by the authors; licensee eastern centre of science and education, usa created a unique material and spiritual culture. spiritual destinations in nghe an are not only associated with religion and spirituality, but also with the worship and gratitude beliefs of vietnamese people, creating a unique attraction for tourists, especially tourists. inland. tourists come here not only purely to worship buddha and pray to saints but also to admire the scenery, helping visitors achieve true relaxation. in recent years, the exploitation of spiritual tourism in nghe an has achieved certain successes. the number of domestic tourists on pilgrimage is increasing, and the income and employment of local people has also improved significantly. identifying the important role of spiritual tourism activities in tourism development as well as local socioeconomic development, nghe an provincial government has promoted the development of spiritual tourism, considering it as a strengths in the local socio-economic development strategy. however, compared to the available potential, the achieved results are not really commensurate. under the strong impact of globalization and the 4.0 industrial revolution, many new factors are appearing that have an impact and influence on spiritual tourism activities, requiring empirical research to identify factors that influence spiritual tourism. affects the choice of spiritual destinations in nghe an of tourists, especially domestic tourists, helping businesses providing spiritual tourism services in the area with a basis to develop plans and solutions to develop developing spiritual tourism quickly, effectively and sustainably. through a survey of 400 domestic tourists coming to nghe an from january to april 2023, the authors used spss 20 and amos 20 software to test the proposed theoretical model, providing recommendations. conclude and propose solutions to increase the number of domestic tourists to the province's spiritual destinations, develop the tourism industry as well as contribute to the socio-economic growth of nghe an in the coming time. 2. theorical overview and research model 2.1. theorical overview first, the study examines the destination selection behavior of domestic tourists as a type of tourism service consumption behavior. the tourist destination selection behavior, including the tourist's spiritual destination selection, is the entire process that tourists reveal through investigating, evaluating, learning and making decisions about choosing a destination. destination, and is also a study of deciding to use or remove a destination from the choice list to satisfy needs and wants. if we consider tourists' consumption behavior from an economic perspective, this behavior is closely linked to economic factors. the decision to choose a tourist destination is influenced by the economic circumstances of tourists, more specifically their ability to pay. however, this is not the deciding factor in choosing a destination or not (crumpton m.a, 1979). if we consider tourists' consumption behavior from a psychological perspective, olson j.c. & peter p.j (2005) believed that the decision to choose a travel destination also depends heavily on preferences, emotions, beliefs, beliefs or perceptions, which also play an important role in the travel decision process. if considering the destination selection behavior of tourists in terms of brands, f. herzberg (1982) believed that a product or service is sold well when customers feel satisfied with the product. that product or service. regarding the decision to choose a travel destination, customers often decide to buy before experiencing the service, so the destination selection process is often influenced by the reputation of the service provider and attractiveness and popularity of the destination. second, the study considers that the decision to choose a spiritual tourism destination is a pre-planned behavior. the research team believes that a tourist's decision to choose a travel destination is a planned behavior from the beginning. this behavior is developed based on self-awareness or the ability to perform the behavior (bandura, 1977). thus, the decision behavior of tourists to choose a spiritual tourism destination is the result of a cause and effect chain linking beliefs with behavior. on the basis of different experiences, tourists may form different beliefs about the consequences of deciding to choose or not choose a travel destination, and different normative beliefs. these beliefs in turn determine attitudes and subjective norms which then determine tourists' respective destination choice intentions and behavior. third, research the destination selection behavior of tourists woodside and lysonski (1989) stated that: “the general pattern of the tourist destination selection process is the result of a cognitive learning process that leads to preferences in different destinations and has developed it. . destination decisions also need to depend on the value characteristics, attitudes, and motivations of tourists before being impressed by the first image of the tourist destination. um and crompton (1990) believe that the destination selection process has two stages: (1) the stage of forming thoughts about whether to have a travel trip or not; (2) destination selection stage after deciding to take a trip. um and crompton (1990) also have similar views on the important role of cognitive and attitudinal processes in the destination selection process. through testing the role of two factors, attitude and perception in destination choice, destination awareness is influenced by internal factors including social psychology, external factors, and even marketing communication activities, consulting friends or experience. after that, um and crompton (1990) also built a model of tourists' destination choice based on the analysis of internal influencing factors (motivation, intention, perception, attitude). , personal...) and external (social interaction word of mouth information, experience..., marketing communications promotional materials, social network information channels...) crompton (1979) pointed out a model of tourist destination selection based on the analysis of internal and external influencing factors (including factors that describe the characteristics of the destination such as: social interaction). – word of mouth information, experiences..., marketing communications promotional materials, social network information channels...) (kozak & rimmington, 1998). asian business research journal, 2025, 10(6): 1-8 3 © 2025 by the authors; licensee eastern centre of science and education, usa 2.2. internal factors include • attitude towards tourism: personal attitude towards the destination can significantly influence the decision to choose a spiritual destination and the intention to return of tourists (um & crompton, 1990). many studies in the field of tourism (nichols & snepenger 1988; um & crompton 1990; cullingford (1995)) have confirmed the influence of status on destination choice decisions. • travel motivation: is a combination of factors such as desires, needs, emotions, beliefs and habits (tezak & sergo, 2013), which plays a role in shaping and promoting destination choice behavior. to travel. the travel motivation model is divided into two important groups of factors: push factors and pull factors. each tourist brings with him a set of personal motives, expressing his own desires, creating a diversity of choices and shaping travel outcomes (tezak & sergo, 2013). this also highlights that motivation is not only a guiding principle in destination choice, but also shapes tourists' behavior at the destination. 2.3. external factors include • destination images. destination image is not simply information about a specific place, but can also represent all the knowledge, impressions, prejudices and emotions of an individual or group of people towards it (beerli & martin, 2004). studies have proven that images and information about spiritual destinations can create a strong impression on tourists, promoting interest and desire to explore these destinations. a spiritual tourism destination is often made up of many different factors such as natural resources, historical and cultural values, customs, conditions of the destination such as other environments such as geography, stability, etc. political decisions and scientific and technical factors also directly or indirectly affect consumer decision making in tourism (hyde, 2004; mccracken, 2005: swarbooke & horner, 2007). • destination promotion activities. woodside & lysonski (1989) pointed out that a business's customer outreach activities are one of the two most important factors that impact the choice of a tourist destination. specifically, customer outreach activities such as recommendations from travel agents, advertising in the media, direct mail (especially through tour guides), participation in fairs travel and many other activities also have an important impact on the decision to choose a destination. the information and impressions that customers gather from these activities can form the basis for building a destination image in their minds. through activities such as encouragement from agents, advertising, participating in events and interacting with local people, businesses can create strong experiences and impressions in the minds of visitors, from that affects the decision to choose a destination (woodside & lysonski, 1989). • reference group. in dealing with travel decisions, customers often seek information from trustworthy sources, and reference groups are one of the main sources they place their trust in to gather information about their destination of interest. research by jenkins (1978) shows that the opinions of reference groups including: friends, relatives, colleagues or people who have gone through similar experiences at previous destinations, have a positive impact on customers' travel decision-making process (jenkins, 1978; filiatrault & ritchie, 1980; nichols & snepenger, 1988; decrop, 2006). the above studies all show that reference groups not only influence the goals of the trip but also have the ability to influence the decision-making process, even in the stages before, during and after the decision is made. each individual stands in a unique social position, and this position will affect how they perceive and act when making decisions. 2.4. research model and hypothesis to point out the factors that influence vietnamese people's decision to travel abroad and the relationship between these factors, the author has inherited the theories explaining planned behavior of ajzen (1991), and explanatory theories of factors influencing tourist behavior include um & crompton (1990); woodside & macdonald (1994); decrop (2006). the factors in the model are arranged in order to reflect the impact of environmental factors on the individual psychology of tourists, including: one, destination image, includes the attractions of the destination that impact tourists' psychology, perception, and travel motivation (um & crompton, 1990). second, destination promotion activities, including marketing activities of destinations and travel businesses to attract tourists to tourist destinations (woodside & macdonald, 1994). third, reference groups demonstrate the influence of subjective norms under the influence of the external environment on tourists' travel attitudes and motivations (decrop, 2006). thus, the proposed research model of the topic can be presented as figure 1. figure 1. research model. asian business research journal, 2025, 10(6): 1-8 4 © 2025 by the authors; licensee eastern centre of science and education, usa notably, the proposed research model has: • remove the variable intention to choose a travel destination from the model. according to research by ajzen (1985), lam & hsu (2006) showed that scholars do not really agree on the certainty between behavioral intention and decision to implement behavioral intention. the subjects of the survey were domestic tourists who had traveled to spiritual destinations in nghe an, so the authors found it unnecessary to measure the relationship between intention to choose a destination. to spiritual tourism and the decision behavior to choose a spiritual tourism destination, the intention variable was removed from the original model of ajzen (1991). • replace the subjective norm variable with the reference group variable because the impact of reference groups in the author's proposed group model also reflects tourists' perceptions of values and standards in tourism, similar to subjective norm variable in the original model of ajzen (1991). to avoid duplication and correlation of variables, the authors decided to remove the subjective standard variable from the research model, replacing it with the reference group variable. the model's hypotheses include: hypothesis h1: destination image affects tourists' spiritual tourism attitude in the same direction. hypothesis h2: destination image affects tourists' spiritual travel motivation in the same direction. hypothesis h3: promotional activities of spiritual tourism destinations have a positive impact on tourists' spiritual tourism attitudes. hypothesis h4: promotional activities of spiritual tourism destinations have a positive impact on tourists' spiritual tourism motivation. hypothesis h5: reference groups have a positive impact on tourists' spiritual tourism attitudes. hypothesis h6: reference groups have a positive impact on tourists' spiritual travel motivation. hypothesis h7: spiritual tourism attitude has a positive impact on tourists' choice of spiritual tourism destination. hypothesis h8: spiritual tourism motivation has a positive impact on tourists' choice of spiritual tourism destination. 3. research method 3.1. build the scale through reference to previous studies, the project has proposed a set of research scales as shown in table 1. table 1. scale of research model. code scale source destination image dd1 i find this a safe destination um&crompton (1992), hill (2000), muntinda & mayaka (2012), hsu & cộng sự (2017); doãn văn tuân (2020). dd2 i heard that the destination's landscape and architecture are very ancient dd3 i heard that the destination is a sacred place dd4 i found getting around to this location easy dd5 other interesting features of the destination (shopping, outside services, sports...) appealed to me promotional activities of spiritual destinations qb1 the ancient, historical architecture propagated through images and spiritual tourism websites influenced my decision to choose a destination. mayo & jarvis (1981); luo & zhong (2015); gruen (2005); crick (2003); doãn văn tuân (2020). qb2 i often prioritize choosing famous long-standing spiritual destinations and historical and cultural relics. qb3 traditional festivals and unique cultural activities pique my interest. qb4 spiritual places located on tour routes are often my priority choice. qb5 i chose the destination with the criteria of cultural exchange with indigenous peoples. reference group tk1 advice from people who have gone before helps me choose and decide on a suitable tourist destination murphy & cộng sự (2007); doãn văn tuân (2020) tk2 before going to a tourist destination, i often search for information on google, facebook,... tk3 i would not choose this travel destination if there were negative reviews. tk4 videos about travel destinations on social networks create excitement for me. tk5 services that provide information about travel and destinations help me decide whether to go or not. tk6 i will definitely visit a travel destination if it has positive feedback. attitudes towards spiritual tourism td1 the information i knew and received made me feel very excited and want to set foot on this historical and cultural relic. doãn văn tuân (2020), sparks & pan (2009) td2 in general, the destination of the historical site brings a lot of value compared to the cost you spend on a trip. td3 i was fascinated when mentioning that spiritual tourist destination when i received information that that place was very sacred and ancient. td4 thanks to advertising programs, i knew that the spiritual resort was very calm and pure td5 i was fascinated when mentioning the destination included in the spiritual cultural tour program. spiritual travel motives dc1 i want to travel to rest, relax and eliminate stress fodness (1994), asian business research journal, 2025, 10(6): 1-8 5 © 2025 by the authors; licensee eastern centre of science and education, usa dc2 i want to travel to enjoy the services and entertainment here chetthamrongchai (2017), doãn văn tuân (2020), marzuki & et al (2017), um&crompton (1990). dc3 i want to travel to learn about the cultural and historical values there dc4 i want to travel to express my respect for my faith and beliefs dc5 i want to travel to enrich the experience of culture, religion and belief dc6 i want to travel to discover new sides of myself decided to choose a spiritual tourism destination in nghe an qd1 i chose this tour because i had relatives go with me decrop (2006), chen & et al (2019), doãn văn tuân (2020) qd2 i chose it because it has interesting spiritual destinations qd3 i choose because the destinations match my beliefs qd4 i chose the tour because the tour length was suitable for me qd5 i chose the tour because there were spiritual activities that were suitable for me qd6 i choose the tour because the price is cheaper than other providers qd7 i chose the tour because of the reputable organizer and good brand 3.2. defining research sample according to yamane taro (1967), determining sample size when the overall sample size is unknown is done according to the following formula: in which: n is the sample size to be determined, z is the value of looking up the z distribution table based on the selected confidence (z = 1.96 when the confidence used is 95%), p is the size estimate ratio. sample n is successful (choose p = 0.5 so that the value p(1-p) is the largest. e is the allowable error (e = ±0.05). then: n = 384.16. the selected survey subjects are tourists who have visited spiritual sites in nghe an during the period from april 2023 to august 2023. selected spiritual locations include: ong hoang muoi temple; con temple; qua son temple; gam pagoda; duc hau pagoda; diec pagoda; truong bon relic area, uncle ho's ancestral church area. the research team distributed 480 questionnaires, collected 420 questionnaires, and after screening and coding, 400 questionnaires met the standards, ensuring research requirements. 4. research results 4.1. cronbach’s alpha with a total of 480 ballots issued, 420 ballots received. after the filtering process, there are 400 valid votes remaining. the author entered data into excel software, coding variables as shown in table 1. after being collected, the data were cleaned, coded, and entered using spss 20 software. hypotheses from h1 to h8 were tested for cronbach's alpha and efa coefficients on spss 20 software and continued to be analyzed. confirmatory factor cfa, sem model analysis on amos software. the results of cronbach's alpha coefficient analysis show that the independent variables (after eliminating observed variables with total variable correlation coefficients less than 0.3) have cronbach's alpha coefficients greater than 0.688 (>0.6) and have cronbach's alpha coefficients greater than 0.688 (>0.6). the smallest total variable correlation is 0.360 (> 0.3), showing that the independent and dependent variables included in the model can be used and are used well. after preliminary evaluation of the scale using cronbach's alpha coefficient, there are 26 observed variables belonging to 06 factor groups that satisfy the conditions for analysis and assessment of reliability of cronbach's alpha and are included in exploratory factor analysis (efa). 4.2. analysis efa efa's task is to explore the structure of the scale of factors: dd, qb, tk, td, dc and qd. after ensuring the correct implementation of the efa process, the factors will be tested to clean the data. table 2. kmo & barlett’s test. kaiser-meyer-olkin measure of sampling adequacy. 0.715 bartlett's test of sphericity approx. chi-square 4343.966 df 253 sig. 0.000 with the results of factor analysis of variables belonging to the factors, the author obtained the kmo coefficient of 0.715, sig. is 0.000, which confirms the kmo value, ensuring the appropriateness of exploratory factor analysis and the meaningfulness of the data included in the factor analysis. the chi-square statistic of the bartlett test has a value of 253 with a significance level of sig. is 0.000 which is less than 0.05 (table 2). at the same time, analysis of the extracted variance shows that the extracted variance reaches a value of 68.225%, this value is quite high, so 75.390% of the variation of the data is explained by 7 factors, the scales are extracted and accept. the stopping point when extracting factors is at the 7th factor with an eigenvalue of 1.001 greater than 1 (this confirms that the included variables are arranged into 8 factor groups) after three runs, the variables qb5, qd5, td3 did not meet the factor loading condition greater than 0.5 and were eliminated from the model. the rotated matrix of factors is presented in table 3. asian business research journal, 2025, 10(6): 1-8 6 © 2025 by the authors; licensee eastern centre of science and education, usa table 3. rotated matrix of factors. component 1 2 3 4 5 6 7 8 qd2 0.921 qd1 0.905 qd4 0.863 qd3 0.853 qb3 0.869 qb2 0.784 qb4 0.781 qb1 0.753 tk1 0.889 tk3 0.874 tk2 0.814 dd2 0.867 dd1 0.867 dd3 0.811 dc4 0.934 dc2 0.804 dc5 0.733 dc1 0.942 dc3 0.862 td1 0.867 td2 0.837 td4 0.913 td5 0.775 in particular, the td factor group (attitude towards the destination) is divided into 2 groups: • td1 and td2, renamed as factor group: attitude towards the historicity of the destination, denoted as tdtl • td4 and td5, renamed as factor group: attitude towards the spirituality of the destination, denoted tdls • the dc factor group (motives for tourism), is divided into 2 groups: • dc1 and dc3, renamed travel discovery engine, denoted dckp • dc2, dc4 and dc5, renamed spiritual engines, denoted dctl then, the original theoretical model can be redrawn as shown in figure 2. figure 2. adjusted research model after efa analysis. thus, after analysis, it can be concluded that the observed variables are correlated with each other on an overall scale. and the model has 8 factors that need to be regressed. and the pattern matrix table of factor rotation shows us 8 groups of factors with 23 observed variables as shown in table 4 including factors dd, qb, tk, tdls, tdtl, dckp, dctl and qd. continue to be tested in the next steps. then, the hypotheses are rewritten as follows: hypothesis h1': destination image has a positive impact on tourists' attitude towards history in spiritual tourism. hypothesis h1": destination image has a positive impact on tourists' attitudes toward spirituality in spiritual tourism. hypothesis h2': destination image affects tourists' discovery travel motivation in the same direction. hypothesis h2": destination image affects tourists' spiritual travel motivation in the same direction. hypothesis h3': promotional activities of spiritual tourism destinations have a positive impact on tourists' attitude towards history in spiritual tourism. asian business research journal, 2025, 10(6): 1-8 7 © 2025 by the authors; licensee eastern centre of science and education, usa hypothesis h3": promotional activities of spiritual tourism destinations have a positive impact on tourists' attitude towards history in spiritual tourism. hypothesis h4': promotional activities of spiritual tourism destinations have a positive impact on tourists' exploration motivation. hypothesis h4": promotional activities of spiritual tourism destinations have a positive impact on tourists' spiritual motivation. hypothesis h5': reference groups have a positive impact on tourists' attitudes toward history in spiritual tourism. hypothesis h5": reference groups have a positive impact on tourists' attitudes toward spirituality in spiritual tourism. hypothesis h6': reference groups have a positive impact on tourists' motivation to explore in tourism. hypothesis h6": reference groups have a positive impact on tourists' spiritual motivation in travel. hypothesis h7': attitude towards history has a positive impact on tourists' choice of spiritual tourism destination. hypothesis h7": attitude towards spirituality has a positive impact on tourists' choice of spiritual tourism destination. hypothesis h8': exploration motivation has a positive impact on tourists' choice of spiritual tourism destination. hypothesis h8": spiritual motivation has a positive impact on tourists' choice of spiritual tourism destination. 5. implication and recommendation 5.1. theoretical and practical implications from a theoretical perspective, this study contributes to the systematization and expansion of the theoretical framework on tourist behavior related to the choice of spiritual destinations, especially in the context of nghe an province. the research findings clarify the groups of factors influencing tourists’ decisions to select spiritual tourism destinations, thereby supporting the development and refinement of theoretical models more aligned with practical realities. from a practical perspective, the study provides reliable data for tourism managers and enterprises operating in the tourism sector of nghe an. the confirmation of hypotheses h2', h3", h4', h4", h6’, h6", and h8' indicates that several factor groups significantly influence tourists’ decision-making, including: destination image (dd), destination promotion activities (qb), reference group (tk), attitude toward spirituality (tdtl), discovery motivation (dckp), and spiritual motivation (dctl). identifying factor groups such as attitudes toward the historical and spiritual aspects of destinations, discovery motivation, and spiritual motivation constitutes a key outcome. these insights enable stakeholders to better understand the intrinsic needs and motivations of tourists, thus offering a sound basis for developing appropriate strategies to attract and effectively serve visitors. 5.2. policy and managerial recommendations 5.2.1. first, enhance branding and increase the attractiveness of spiritual tourism destinations in nghe an nghe an is home to hundreds of recognized historical and cultural relics, including many ancient temples and pagodas such as gam pagoda, dai tue pagoda, co am pagoda, and dong bac pagoda. these sites are rich in religious and cultural heritage. therefore, spiritual tourism in nghe an has considerable potential for development, particularly in the forms of religionand belief-based tourism, folklore and legendary narratives, and gratituderelated cultural values. these elements contribute to a unique spiritual tourism identity for the province. to increase tourist retention and satisfaction, however, it is essential to diversify spiritual tourism products and services. according to the research model, destination image positively influences discovery motivation but has not yet significantly impacted tourists' spiritual awareness. therefore, it is critical to intensify efforts to highlight spiritual narratives associated with destinations, develop related products and services (shopping, entertainment), and go beyond scenic and logistical elements. specific proposals include: • (i) developing a unified spiritual tourism brand for nghe an, supported by collaboration among state agencies, local tourism service providers, and travel companies. • (ii) integrating spiritual tourism with other tourism types—such as experiential or night tourism—to enrich product offerings, promote the overall tourism brand, and extend tourists’ length of stay in the province. 5.2.2. second, improve the effectiveness of promotional and marketing activities for spiritual tourism in nghe an despite certain improvements in promotion, current marketing efforts remain limited, especially online. many spiritual destinations lack a strong online presence, and promotion still relies heavily on travel agencies or wordof-mouth. to enhance efficiency and cost-effectiveness, the following measures are recommended: • (i) conduct comprehensive market research to identify target segments, evaluate nghe an’s tourism resources and image compared to other provinces, and develop a digital database of images, information, and publications to support professional promotional campaigns. • (ii) expand the use of digital marketing strategies, including online tour sales and internet-based campaigns, and actively participate in tourism forums, exhibitions, and international trade fairs. these platforms provide valuable opportunities to introduce the potential of spiritual tourism in nghe an to both domestic and international partners. 5.2.3. third, strengthen the quality of human resources serving spiritual tourism currently, the quantity and quality of human resources for spiritual tourism in nghe an do not meet the needs of both present and future development. it is therefore necessary to recruit and train a competent workforce of tour guides who 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(1973). statistics: an introductory analysis. harper & row, new york. 7 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 9, 7-15, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.556 © 2025 by the authors; licensee eastern centre of science and education, usa factors influencing the adoption of natural language processing of commercial banks in vietnam dinh the hung1  nguyen danh quang2 tran minh tuan3 nguyen khoa nghi4 1school of accounting and auditing, national economics university, vietnam. 2bifa 8d, school of accounting and auditing, national economics university, vietnam. 3hnue high school for gifted students, vietnam. 4nguyen sieu school, vietnam. email: hungdt@neu.edu.vn email: danhquang2311@gmail.com email: mittuantran@gmail.com email: khoanghi.cgd@gmail.com ( corresponding author) abstract in the digital age, the adoption of natural language processing (nlp) has emerged as an inevitable trend in the banking sector, supporting the reduction of time and costs, optimizing data management, and enhancing customer experience. however, the adoption of nlp in commercial banking activities in vietnam faces significant challenges. the study utilized a multivariate regression model and spss software to examine the influence of six factors: compatibility, technical complexity, business orientation, human resources, legal corridor, and market uncertainty. the results showed that three factors, namely technical complexity, business orientation, and legal corridor, affect the adoption of nlp in commercial banks in vietnam. based on these findings, the research team proposed several recommendations and solutions to accelerate the adoption of nlp in vietnam. keywords: artificial intelligence (ai), digital transformation, natural language processing (nlp). 1. introduction the fourth industrial revolution is currently unfolding on a global scale, marked by the advent of transformative technologies such as artificial intelligence (ai). these technologies are playing pivotal roles across various sectors, with the finance and banking industry being particularly affected. banks in vietnam, as well as globally, have begun to integrate natural language processing (nlp) into several management-related functions. this integration aids banks in achieving operational stability and identifying solutions to enhance profitability. however, the full potential of nlp remains underutilized due to several constraints that impact its adoption within the banking sector. in response to this, our research team proposes a model to examine the factors affecting the adoption of natural language processing (nlp) in commercial banks in vietnam. analyzing this model is crucial, as the research findings will provide valuable insights and recommendations for bank managers and policymakers, aimed at improving the implementation and effectiveness of nlp in commercial banks throughout vietnam. 2. literature review fridgen et al. (2022) evaluated the applicability of ai in the retail banking sector in germany. through the participation of 23 it experts with deep knowledge of ai, this study applied the technology-organizationenvironment (toe) framework to analyze factors influencing the integration of ai into banking systems. the results indicated that not only do the factors within the toe model affect individual processes, but they also influence in various ways throughout the digital technology adoption process in banking. from this, the research team identified 12 factors that most significantly affect the adoption of ai in this sector, including: (1) the bank's relative advantage, (2) the availability of facilities and technology, (3) the safety and security of the technology used, (4) the efficiency of the bank's investment in technology, (5) the consensus of senior management, (6) resource factors within the bank, (7) the expertise of the human resources, (8) the ability to restructure the management apparatus, (9) the size of the bank, (10) competitive pressure from other organizations, (11) legal factors when applying technology in banking, and (12) the trend of using ai across the industry. van phuoc (2022) research focused on the factors influencing the adoption of artificial intelligence in vietnam. using the structural equation method and based on 193 responses from businesses across vietnam, this study indicated that management capacity is the most significant factor affecting the use of ai technology in businesses. mailto:hungdt@neu.edu.vn mailto:danhquang2311@gmail.com mailto:mittuantran@gmail.com mailto:khoanghi.cgd@gmail.com https://doi.org/10.55220/2576-6759.556 asian business research journal, 10(9): 7-15 8 © 2025 by the authors; licensee eastern centre of science and education, usa conversely, organizational size and competitive pressure do not play a significant role in the process of ai adoption in businesses. specifically, the study concluded the following important points: (1) technical compatibility, (2) relative advantage, (3) management support, (4) management capacity, (5) organizational readiness, (6) government involvement, (7) market uncertainty, (8) supplier partnership, all positively impact the intention to integrate ai technology in organizations in vietnam. organizational size and competitive pressure do not significantly affect the intention to adopt ai technology in organizations in vietnam. the research team of horani et al. (2023) experimented with data from 512 senior it/is managers in public and private organizations in jordan. the results indicated that several factors such as (1) relative advantage, (2) senior management support, (3) cost efficiency, and (4) compatibility positively influence the intention to adopt ai-based technologies. additionally, factors such as (5) legal frameworks and (6) technical complexity of the technology were found to negatively affect the intention to adopt. these results complement previous studies and clarify the importance of technical compatibility in integrating ai into an organization's technological infrastructure. 3. literature review 3.1. literature review of natural language processing 3.1.1. natural language processing (nlp) natural language processing (nlp) is a subfield of computer science within the broader domain of artificial intelligence (ai) that aims to endow computers with the ability to comprehend text and speech similarly to humans (machiraju & moxdi, 2017). nlp models function by identifying relationships between linguistic elements, such as letters, words, and sentences within text datasets. this is a complex process requiring stringent technical specifications, encompassing multiple stages and diverse methodologies. data preprocessing, feature extraction, and modeling are among the steps involved (deeplearning.ai, 2023). over time, nlp has undergone significant advancements driven by improvements in hardware, computer software, and linguistic theories (qiu et al., 2020). the integration of computational linguistics with methodologies such as statistics, machine learning, deep learning, and deep neural networks has enabled nlp to decode and reconstruct natural language structures to achieve specific objectives. these objectives include information extraction, transforming unstructured text into structured formats, syntactic processing, semantic understanding, and identifying relationships between concepts. the research conducted by klein et al. (2020), lindvall et al. (2018), robert and cornwell (2013), and velupillai et al. (2018) has elucidated these advancements. nlp is not only beneficial across various scientific disciplines but also applicable for multiple purposes such as language analysis, information retrieval, text translation, constructing conversational bots, text classification, sentiment analysis, and numerous other applications as indicated by guamán et al. (2017) and lázaro et al. (2024). 3.1.2. adoption of natural language processing in banking firstly, in its capacity as a tool for reading, searching, and retrieving information, nlp aids in resume evaluation by integrating with the k-nearest neighbors (knn) algorithm. this integration facilitates the filtering of resumes, extraction of key keywords, and classification of candidates based on their profiles to match them with appropriate positions (elets bfsi, 2023). nlp also plays a crucial role in supporting the compliance processes of banks globally. labeling unstructured data simplifies the search for digital document sets, enabling compliance agencies to assess adherence to standards and regulations (reshma, 2018). nlp techniques can also be applied to scan documents, identify key regulatory entities, extract metadata, and interpret the main regulatory objectives outlined in the texts. by automating a substantial portion of the process, nlp not only mitigates the risk of human error but also reduces the likelihood of regulatory violations stemming from human perception and emotion. this allows financial institutions to comply with increasingly stringent regulations efficiently and optimize workflow (international banker, 2021). moreover, nlp is utilized as a search tool to advance financial markets. financial institutions store vast volumes of documents in their databases. a search tool powered by nlp facilitates the retrieval of elements and concepts within these documents to gather valuable investment information. the system then displays a summary of the most pertinent information for search queries from financial company employees on the search tool interface (reshma, 2018). expanding on its role as a "reader" capable of searching and retrieving documents, nlp also functions as a statistician, including quantifying large volumes of text and analyzing them to identify emerging signals. for instance, current voice analysis tools can "listen" to analysts' conference calls to detect the tone and sentiment behind what company leaders present, thus summarizing information and providing insights for equity analysis (pereira & shroff, 2022). nlp is also an effective technology in supporting the identification, creation, and analysis of extensible business reporting language (xbrl) and other classification standards (e.g., environment-socialgovernance standards) to enhance standardization in information disclosure, tailored to the specific characteristics of various industries. nlp can combine the analysis of structured data from numerical reports with unstructured data in financial reports by leveraging xbrl classification and running automated tests to verify internal consistency, compliance with minimum requirements, and alignment with economic trends and stakeholder expectations. standardization, comparability, and interoperability can be achieved through nlp analysis, aiding drafters in understanding stakeholder expectations (faccia et al., 2021). utilizing nlp tools for text analysis, unstructured data sources frequently used by investors can be converted into a single enhanced format, specifically optimized for financial applications. this intelligent format facilitates the generation of impactful data analyses by making structured data readable and visualizable, thereby enhancing the efficiency and accuracy of data-driven decisions. the text analysis functionality of nlp is applied in various financial operations with distinct characteristics (reshma, 2018). sentiment analysis is one of the most common objectives of text analysis and is also a crucial factor in forecasting stock and financial markets (poria et al., 2016). by combining sentiment analysis capabilities and leveraging nlp's intelligent documents, financial companies can identify the most sought-after services, key customer challenges, and their perceptions of the company, and monitor market reactions to asian business research journal, 10(9): 7-15 9 © 2025 by the authors; licensee eastern centre of science and education, usa significant events. the results obtained can be used to create personalized incentives, evaluate customer feedback, and improve product and service quality (staff gbaf publications ltd., 2023). text analysis is also primarily utilized for fraud detection, risk management, investment evaluation, and alpha generation in the financial domain. nlp can analyze large volumes of transaction data and account activity to identify transaction patterns based on the type of transaction, amount thresholds, channels, etc., of potentially fraudulent activities. in this way, nlp generates alerts and triggers preventive measures to mitigate losses for customers and organizations. furthermore, nlp is applied in the financial sector to analyze loan applications, evaluate financial and credit reports, measure customer reliability, and automate loan underwriting processes. additionally, nlp can scrutinize business plans to assess the borrower's consistency and attitude based on the wording and expressions in the documents. integrating nlp in financial institutions helps optimize evaluation processes, minimize manual work, and enhance decision accuracy. nlp techniques also play a significant role in analyzing company profiles, earnings reports, and articles to assess investment opportunities and construct risk models. for portfolio managers, nlp aids in making intelligent decisions and managing risk effectively (elets bfsi, 2023). nlp also achieves the goal of content enrichment in the financial sector by identifying and distinguishing the most engaging thought leadership blogs compared to competitors, while providing a personalized customer experience through content tailored to potential customers (reshma, 2018). lastly, with customer support and chatbot functionalities, nlp can analyze and predict to handle voice and text commands, quickly responding to queries and assisting in various financial transactions, effectively meeting customer needs (staff gbaf publications ltd., 2023; elets bfsi, 2023). chatbots are not only tools for providing 24/7 customer support on simple issues such as money transfers, setting up recurring payments, checking bank statements, and detecting customer spending habits but also have the capability to use multi-context scenarios and conduct natural dialogues (neto & fernández, 2019). this application allows customers to access information and explore additional services without visiting bank branches; instead, they can interact through an online messaging system from laptops or smartphones. the implementation of chatbots brings numerous benefits to the banking industry, including enhancing customer experience, reducing response time, and increasing customer satisfaction, as has been implemented by most major banks (barnes, 2024; elets bfsi, 2023). in the banking sector, the application of nlp is becoming increasingly prevalent, not only for extracting structured information from unstructured content but also for synthesizing natural language. financial applications of nlp must meet specific requirements such as using time-split data to prevent "leakage" of future information into the past, along with achieving high accuracy and low latency. in contrast, other fields like healthcare and education may have different requirements. although the focus has been on fully automated nlp applications in finance, it is important to consider human-performed nlp applications, such as computer-assisted interactive trading (i̇rsoy et al., 2019) or computer-assisted drafting of research reports (chen et al., 2020). this highlights that the combination of human and technology is essential to achieving optimal results in these fields. therefore, continued discussion and research in the field of nlp in finance are crucial to ensure sustainable progress and meet the practical needs of the industry (capponi & lehalle, 2023). 3.1.3. status of natural language processing adoption in vietnamese commercial banks commercial banks in vietnam are in the nascent stages of utilizing nlp, a component of ai, with significant developmental potential. in practice, in vietnam, 41% of financial institutions have adopted nlp to personalize their marketing strategies for their customer segments. this trend is expected to continue, with 45% of respondents in a survey by finastra in vietnam focusing on improving customer service through ai (barnes, 2024). as of january 2024, 15 out of 43 commercial banks have implemented chatbots. among these, the majority have deployed chatbots on the facebook platform (14/17), with some also integrating chatbots on websites (5/17) and mobile applications (7/17) (vũ et al., 2024). some banks invest in self-developing technology, while others opt for outsourcing technology development. many banks choose outsourcing to rapidly access technology and provide customers with professional experience, despite the inherent advantages and disadvantages of each approach (hương & bình, 2022). notably, the adoption rate of ai chatbots by 34.9% of commercial banks in vietnam, compared to only 8% in the united states according to shevlin (2021), signifies the robust commitment and determination in applying advanced technology. it can be affirmed that vietnamese banks have made substantial investments in technology systems to adapt to changing consumer trends, demands for financial services, and the rapid evolution of new technological waves. modern technology not only enhances operational efficiency and reduces costs for banks but also ensures safer and more transparent transactions (thu, 2021). 3.2. theoretical background the study of factors influencing the application of natural language processing (nlp) technology is based on the following theoretical frameworks: 3.2.1. theory of reasoned action tra the theory of reasoned action (tra) is a model in social psychology and human behavior aimed at explaining and predicting human behavior based on their motivations and thoughts. tra posits that human behavior is contingent upon the close link between attitude and outcome. it asserts that an individual's behavior in performing a specific action directly arises from their behavioral intention (fishbein & ajzen, 1975). 3.2.2. theory of planned behavior tpb building on the principles of tra, ajzen (1991) extended the model by incorporating the independent variable "perceived behavioral control," which considers the perceived ease or difficulty in performing the desired behavior. behavioral intention is a crucial predictor of human behavior. according to the tpb, behavioral intention is formed by three main factors: attitude toward the behavior, subjective norms, and perceived behavioral control. attitude toward the behavior refers to the degree to which a person values or disvalues a behavior. subjective norms refer to asian business research journal, 10(9): 7-15 10 © 2025 by the authors; licensee eastern centre of science and education, usa a person's perception of what others think they should do. perceived behavioral control refers to the extent to which a person believes they can perform a particular behavior. the more positive the attitude towards the behavior, the more supportive the subjective norms, and the fewer the perceived barriers, the stronger the behavioral intention (ajzen, 1991). 3.2.3. technology acceptance model tam the technology acceptance model (tam), introduced by davis et al. (1989) and based on the tra, is used to explain and predict behavior related to technology acceptance and usage. the core of this model focuses on describing the impact of technical factors on individual decisions regarding the acceptance and intended use of technology. tam aims to explain the general determinants of computer acceptance, leading to an understanding of user behavior with computer technologies on a broad scale. the model indicates that when users interact with new technology, key factors influencing their decision to use it include perceived usefulness (pu) and perceived ease of use (peu). tam is often employed in studies involving human-computer interaction and information technology in general, asserting that pu and peu are crucial antecedents of the behavioral intention to use it (davis et al., 1989). 3.2.4. unified theory of acceptance and use of technology utaut the unified theory of acceptance and use of technology (utaut) is a significant theory in the field of technology usage behavior research, developed by venkatesh et al. (2003). it is based on various models and theories, including the theory of reasoned action (tra), theory of planned behavior (tpb), technology acceptance model (tam, tam2), motivational model (mm), combined tam and tpb, model of pc utilization (mpcu), innovation diffusion theory (idt), and social cognitive theory (sct). utaut provides a useful tool for managers and researchers to evaluate the potential success of new technology adoption within an organization or community. due to its utility, the model has been widely applied in various fields, including information systems, e-commerce, healthcare, and education. introducing new technology can often be challenging due to user resistance, especially among those reluctant to change. to address this issue, based on utaut, managers can design specific interventions, such as training programs or marketing campaigns, to create a more favorable environment for users, helping them to accept and effectively use new technology. this is particularly important in promoting transformational development within organizations and society (venkatesh et al., 2003). 4. research methodology 4.1. sample selection this study employs a quantitative approach to evaluate the impact of factors identified through qualitative research on the use of natural language processing (nlp) by commercial banks in vietnam. the research utilizes descriptive statistics, factor analysis, correlation analysis, and multivariate regression analysis initially, the authors will employ descriptive statistical analysis to collect, synthesize, and analyze primary and secondary data to achieve the study’s objectives. this tool is used to provide a comprehensive description of the relationships between factors influencing the use of natural language processing (nlp) in commercial banks in vietnam. subsequently, factor analysis assists the authors in assessing the reliability of the measurement scale and testing the exploratory components. cronbach’s alpha reliability coefficient is used to evaluate the quality of the scale and determine the appropriateness of the observed variables and scale in the research model using collected survey data. exploratory factor analysis (efa) will be utilized to assess the convergence of the observed variables and identify the impacting factors. correlation analysis helps in examining the relationships between influencing factors and the affected factor. thereafter, the authors use multivariate regression analysis to examine the interactions between the affected factor and influencing factors (binh, 2023). furthermore, the mediating variable must satisfy three conditions: the independent variable explains the variance of the mediating variable, the mediating variable explains the variance of the dependent variable, and the presence of the mediating variable reduces the relationship between the independent and dependent variables (binh, 2023). 4.2. research model and hypothesis proposals 4.2.1. research frame the research team chose this topic in the hope of creating a useful reference document, providing suggestions for bank administrators and lawmakers to improve the quality of nlp implementation in commercial banks in vietnam. the team consulted concepts, theories, and results from similar researchs. from the collected data, the team creates a hypothesis and research model, including independent variables and dependent variables. these hypotheses and models are built on basic theories and previous research in similar fields. then, the team conducted a quantitative survey to choose the appropriate scale for the variables in the official research model. based on that, the team conducted preliminary quantitative research and formal quantitative research. finally, the spss is used to process and analyze survey data and evaluate research results. therefore, give conclusions and propose solutions, while also pointing out limitations and suggesting analytical directions for future research. 4.2.2. research hypotheses based on foundational theories: theory of reasoned action (tra), theory of planned behavior (tpb), technology acceptance model (tam), unified theory and acceptance of technology use (utaut) along with the actual situation in the vietnamese market, the research team selected 06 factors affecting the adoption of natural language processing (nlp) in commercial banks in vietnam. asian business research journal, 10(9): 7-15 11 © 2025 by the authors; licensee eastern centre of science and education, usa 4.2.2.1. compatibility factor (tt) nowadays, with the trend of applying artificial intelligence being considered the destination of most businesses globally, commercial banks in vietnam are still racing with technology to keep up with the development of the industry. world. having the ability to adapt and expedience will be a lever to help banks be more competitive compared to other banks (deepalakshmi, 2019). in particular, the compatibility of artificial intelligence technology with available digital platforms will determine the risk of investing in new technology development. after considering the above factors, the research team hypothesized as follows: hypothesis h1: technology compatibility positively affects the adoption of nlp in commercial banks in vietnam. 4.2.2.2. trust factor (tc) nowadays an ever-changing environment, with massive volumes of data, has accelerated the processing speed and precision of modern innovations. experts must continually update algorithms, structures, and technological networks to match this development requirement. however, this has increased the technical complexity of those technologies, particularly in ai and natural language processing (nlp), both of which rely heavily on data. data and information are used as sources to generate important insights. in vietnam, the adoption of artificial intelligence to specific activities and operations in organizations is still relatively new, resulting in issues such as lack of maturity, technological ability, and specialists, as well as long development durations and expensive prices. as a result, firms tend to delay internal adoption of a complex technology until they have accumulated sufficient technical knowledge to successfully deploy and operate it (attewell, 1992). therefore, the research team hypothesized as follows: hypothesis h2: technical complexity negatively affects the adoption of natural language processing (nlp) in commercial banks in vietnam. 4.2.2.3. bank orientation factor (dh) business orientation is always considered as a guideline for the human resources team to be able to operate the business seamlessly and organized. therefore, the top apparatus' decision plays a significant role in the company's development orientation. as members with senior roles in the apparatus, they are always affected by factors such as risk, development potential and competitiveness with other financial entities. however, the banks considered to have a smart strategic orientation are those that know how to develop in the direction of innovation, initiative, and good risk management. these are also factors that weigh heavily on the decision to apply nlp in the banking organization. from there, the team posed the following hypothesis: hypothesis h7: the bank's orientation affects the adoption of nlp in commercial banks in vietnam. 4.2.2.4. human resources factor (nl) human resources play a critical role in the implementation of natural language processing (nlp) in banks. in the current era of digital transformation, technology and artificial intelligence are widely used by most banks to optimize management and operations. therefore, banks need to have a highly skilled and well-qualified workforce to utilize natural language processing (nlp) proficiently. based on this, the research team proposes the following hypothesis: hypothesis h4: human resources positively influenced the adoption of natural language processing (nlp) in commercial banks in vietnam. 4.2.2.5. legal corridor factor (pl) currently, in vietnam, there are no legal documents specifically applied to the use of natural language processing (nlp) in the commercial banking sector. with the current regulations, banks have been proactive in innovating and applying technical solutions that are compatible with the legal corridor while ensuring safety, controlling risks, and facilitating customers in the context of digitalizing services and instantaneous online transactions with a global reach. however, when the legal framework still has limitations, banks have faced difficulties in recording accounting transactions and in providing services to customers. based on these observations, the research team proposes the following hypothesis: hypothesis h5: the legal corridor positively influences the adoption of natural language processing (nlp) in commercial banks in vietnam. 4.2.2.6. market uncertainty factor (kcc) recently, the socio-economic landscape has been marked by market uncertainty, influenced by various factors such as the covid-19 pandemic, geopolitical tensions, trade wars, and energy crises. this volatility poses challenges for businesses in terms of data collection, risk management, and accurate predictions. as a result, the utilization of ai in general, and nlp in particular, with adaptable and correct approaches to address these issues, becomes crucial. banks and other financial institutions also believe that embracing new technology at a faster pace than their competitors will ensure they maintain a competitive edge and play a pivotal role in operational efficiency. furthermore, it has been observed that the covid-19 pandemic, a factor contributing to market uncertainty, has paved the way for the swift penetration of ai in businesses, highlighting its proficiency like never before. hence, the research team proposes the following hypothesis: hypothesis h6: market uncertainty positively affects the adoption of nlp in commercial banks in vietnam. 4.2.3. proposing framework research model is presented by the diagram. asian business research journal, 10(9): 7-15 12 © 2025 by the authors; licensee eastern centre of science and education, usa figure 1. research framework on factors affecting the adoption of natural language processing in commercial banks in vietnam. 4.3. measurement method this article utilizes a quantitative research method, based on synthesizing previous studies, constructing a research model, and testing it through conducting surveys and collecting opinions from experts and professionals in the commercial banking sector in vietnam. the concepts in the research model are measured using a 5-point likert scale, with a total of 25 observed variables and 06 factor components. this scale measures the degree of agreement of the participants from "strongly disagree" to "strongly agree" concerning the related observed variables. the dependent variable likert scale "adoption of natural language processing in commercial banks in vietnam" denoted as udcn, is measured by 6 criteria: udcn 1 my bank is technologically compatible with the solutions provided by nlp. udcn 2 i have mastered the operation and use of applications developed by nlp. udcn 3 my bank is strategically ready for the adoption process of nlp. udcn 4 my colleagues and i possess sufficient knowledge and experience to handle potential issues when using nlp technology udcn 5 there are adequate policy mechanisms for digital transformation applying nlp in banking. udcn 6 my bank prioritizes the development of nlp during times when the market fluctuating. 5. research results 5.1. analyze and discuss research results table 1. descriptive statistics of variables in the model. descritive statistics n minimum maximum mean std. deviation tt 181 1 5 3.99 0.854 pt 181 1 5 2.25 1.082 dh 181 1 5 4.29 0.795 nl 181 1 5 3.91 0.908 pl 181 1 5 3.95 0.926 kcc 181 1 5 2.15 0.843 valid n (listwise) 181 source: spss results. in general, we see that the average value of the factors ranges from 2.15 to 4.29, which shows that the people surveyed evaluate the influence of the factors: compatibility, technical complexity. techniques, business orientation, human resources, legal framework and market uncertainty all affect the adoptionof nlp to commercial banks in vietnam. among these, the business orientation factor (dh) has the highest average level of 4.29. the standard deviation of this factor is 0.795. this reflects the opinions of the survey group's subjects who highly appreciated the influence of business orientation on the adoptionof nlp in commercial banks in vietnam. the next level of influence is compatibility (tt), legal corridor (pl), human resources (nl), technical complexity (pt) and market uncertainty with an average level according to the order is 3.99, 3.95, 3.91, 2.25, 2.15. 5.2. evaluate the scale with cronbach's alpha after the team analyzed the information obtained from spss, the research team checked the reliability of the data. asian business research journal, 10(9): 7-15 13 © 2025 by the authors; licensee eastern centre of science and education, usa table 2. test results of the scale. factor corrected item-total correlation cronbach's alpha if item deleted compatibility tt1 a=0.876,n=4 0.746 0.836 tt2 0.816 0.807 tt3 0.720 0.847 tt4 0.655 0.870 technical complexity pt1 a=0.899,n=4 0.818 0.854 pt2 0.791 0.864 pt3 0.771 0.872 pt4 0.724 0.888 bank orientation dh1 a=0.895,n=5 0.683 0.885 dh2 0.724 0.876 dh3 0.770 0.865 dh4 0.765 0.867 dh5 0.769 0.866 human resources nl1 a=0.901,n=4 0.742 0.886 nl2 0.827 0.855 nl3 0.821 0.857 nl4 0.731 0.890 legal corridor pl1 a=0.930,n=3 0.877 0.882 pl2 0.897 0.864 pl3 0.799 0.882 market uncertainty kcc1 a=0.955,n=5 0.818 0.954 kcc2 0.880 0.944 kcc3 0.889 0.942 kcc4 0.889 0.942 kcc5 0.902 0.940 source: spss results. using cronbach's alpha coefficient from the analysis results of spss software, we see: • all 4 observed variables of the compatibility factor meet the standards; • all 4 observed variables of the technical complexity factor meet the standard; • all 5 observed variables of the business orientation factor meet the standards; • all 4 observed variables of the human resources factor meet the standards; • all 3 observed variables of the legal corridor factor meet the standards; • all 5 observed variables of the market uncertainty factor meet the standards. by testing the appropriateness of the efa factor analysis model, the research team relied on the kmo test and the bartlett test to conclude that using the efa model is appropriate. at the same time, the scale is also accepted through the results of testing the variance of the factors. 5.3. analyze regression models using multivariate regression analysis techniques and the method of entering variables into spss software, results from the software have helped the research team evaluate some issues of the overall regression model: udcn= β0 + β1tt + β2pt+ β3dh+ β4nl + β5pl +β6kcc the important parameter used in testing model fit is the adjusted r2 coefficient. the larger the value of this parameter shows the higher the model's fit. after considering the effects of the independent variable on the dependent variable, the results from the regression weight table helped the research team determine the variables pt, dh, pl and (constant) variables that are statistically significant and variable. nl, kcc and pt have no impact on the dependent variable udcn. table 3. results of regression. coefficients model unstandardized coefficients standardized coefficients t sig. b std. error beta (constant) 2.961 0.470 6.300 0.000 nl -0.091 0.067 -0.128 -1.361 0.175 kcc 0.082 0.092 0.083 0.887 0.376 dh 0.200 0.081 0.225 2.474 0.014 pt -0.278 0.098 -0.320 -2.845 0.005 pl 0.246 0.073 0.308 3.372 0.001 tt 0.004 0.097 0.004 0.039 0.969 source: spss results. asian business research journal, 10(9): 7-15 14 © 2025 by the authors; licensee eastern centre of science and education, usa from there, the regression equation is determined: udcn = 2.961 0.278*pt + 0.200*dh + 0.264*pl 5.4. discuss research results the results of research and evaluation show that the process of applying natural language processing technology in commercial banks in vietnam is influenced by different factors in terms of both external and internal impacts of businesses, directly impacting the adoption of this technology more widely. from the initial hypothesis of 06 variables affecting the adoption of natural language processing technology in commercial banks in vietnam, the results after running multivariate regression showed that only 03 variables recorded an impact, expressed in the formal regression equation as follows: udcn = 2.961 0.278*pt + 0.200*dh + 0.264*pl according to the results after running the regression model, hypotheses h2, h3 and h5 are accepted while the remaining 3 hypotheses including h1, h4, h5 are rejected. the research team assessed the levels of influencing factors. the research results show that the factor has a negative impact on technical complexity (0.278), followed by the remaining two factors that have a positive impact, respectively: the legal corridor factor (0.264) and the factor business orientation factor (0.200). in the 21st century, the industrial revolution 4.0 has created leverage for comprehensive transformation in many fields, especially the financial sector. this digital transformation trend motivates and requires financial organizations and businesses to adapt to new challenges and opportunities. this improved the quality of banks' operating processes, but many limitations remain. according to the research results, the limitations in applying natural language processing (nlp) in commercial banks in vietnam come from many factors, typically technical complexity. this technology not only requires an extremely complex structure of multiple entanglements and layers to operate, but also must be flexible in applying models corresponding to each specific task and field. this creates a challenging work environment, as experts need to deal with the possibility of algorithmic errors, which are sometimes only discovered when it is too late to fix them. language diversity is also another problem to be faced, especially when nlp is not yet widespread enough in vietnam to have enough data and analysis techniques. in addition, rapid change and growth, along with requirements for information security in data banks, also pose more challenges for experts in operating and developing nlp systems with depends significantly on the input data. 6. recommendations as outlined in the research context, the digital landscape in the financial sector requires significant collaboration among stakeholders, where the most affected entities are the banks and related businesses the main actors in applying nlp to daily processes; and the regulatory authorities entities that provide policies, support with the necessary conditions, and build an environment for implementation. additionally, the support of scientists and researchers is crucial in applying nlp artificial intelligence technology to banking activities during the digital transformation period. 6.1. recommendations for regulatory authorities regulatory bodies should issue specific policies and guidelines on the adoption of nlp in banking, while ensuring coherence and uniformity within the industry. additionally, it is essential to organize training on nlp and its applications for bank officials and staff, and then encourage investment in the research and development of this technology. regulatory authorities also need to support and encourage banks to implement nlp by creating a favorable environment with tax incentives and financial support, while regularly monitoring and evaluating the use of nlp in banks to ensure compliance with regulations and make adjustments when necessary. furthermore, it is crucial to ensure transparency and fairness in the use of nlp to avoid creating inequalities among banks and to protect the rights of customers using related services. 6.2. recommendations for banks and related enterprises banks need to enhance internal communication to staff about integrating new technologies, not only nlp but also other technology platforms. organizing workshops and training on nlp can help improve staff awareness and understanding of this technology, thereby recognizing its potential and opportunities, and minimizing concerns related to adopting new technologies. banks can drive digital transformation by integrating nlp and similar technologies, creating better customer experiences and offering automated services. this approach helps attract and retain customers, increase sales, and create a competitive edge. additionally, researching nlp in conjunction with other technologies such as artificial intelligence and blockchain allows banks to develop advanced, flexible solutions, and create differentiation in an increasingly competitive banking market. 6.3. recommendations for scientists and researchers building a database and resources for nlp research must ensure accuracy, credibility, and diversity. therefore, scientists and researchers need to continually update information and monitor new trends in the banking and technology sectors to maintain effectiveness. intensifying research and development of nlp solutions is essential, seeking practical applications with high potential in the banking sector such as automated translation, customer request processing, and data analysis to enhance service quality. collaboration between entities and businesses also plays a critical role in this process. moreover, information security, privacy, and legal compliance are vital considerations. enhancing awareness of cybersecurity risks, establishing secure processing protocols, and implementing appropriate data security measures are necessary to ensure the sustainable development of nlp technology. adhering to professional ethics and avoiding copyright infringement are also crucial in the research and adoption of nlp. asian business research journal, 10(9): 7-15 15 © 2025 by the authors; licensee eastern centre of science and education, usa 7. conclusion nlp is a technology with wide-ranging potential adoptions in commercial banks, bringing many benefits to both the banks and customers. the research study utilized quantitative and qualitative research methods, along with theories such as tra, tpb, utaut, and tam models, to propose solutions for banks to effectively implement this artificial intelligence tool. additionally, the research study is an important first step in the research process, ensuring the accuracy and applicability of the research in practice. references ajzen, i. 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https://laodong.vn/tien-te-dau-tu/ung-dung-tri-tue-nhan-tao-trong-hoat-dong-ngan-hang-876770.ldo?utm_source=chatgpt.com https://doi.org/10.3390/economies10060129?utm_source=chatgpt.com https://doi.org/10.1016/j.jbi.2018.10.005?utm_source=chatgpt.com https://doi.org/10.2307/30036540?utm_source=chatgpt.com https://tapchinganhang.gov.vn/nang-cao-chat-luong-chatbot-cham-soc-khach-hang-tai-cac-ngan-hang-thuong-mai-viet-nam.htm?utm_source=chatgpt.com https://tapchinganhang.gov.vn/nang-cao-chat-luong-chatbot-cham-soc-khach-hang-tai-cac-ngan-hang-thuong-mai-viet-nam.htm?utm_source=chatgpt.com 85 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 8, 85-94, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.544 © 2025 by the author; licensee eastern centre of science and education, usa microfinance accessibility and rural poverty dynamics: evidence from remote village communities in vietnam tuan kiet le alpha high school hanoi, vietnam. email: kietlt2008@icloud.com abstract this study investigates the complex relationship between microfinance accessibility and poverty alleviation dynamics within remote village communities in vietnam, employing a comprehensive analytical framework that integrates structural equation modelling (sem) with fuzzy-set qualitative comparative analysis (fsqca). the research examines how microfinance accessibility influences household economic outcomes through multiple theoretical lenses, including financial inclusion theory, capability approach, and institutional theory. utilising primary data collected from 485 households across 28 remote villages in northern vietnam, this study employs partial least squares structural equation modelling (pls-sem) to examine direct and indirect relationships between microfinance accessibility, financial capability, social capital, and poverty reduction outcomes. the findings reveal that microfinance accessibility significantly enhances household economic welfare through improved financial capability and strengthened social networks, with the relationship being moderated by geographic remoteness and institutional quality. the fsqca analysis identifies three distinct configurational pathways through which microfinance accessibility contributes to poverty alleviation, highlighting the importance of contextual factors in determining effectiveness. the study contributes to the microfinance literature by providing empirical evidence of the multifaceted nature of microfinance impact and offers practical insights for policymakers and practitioners seeking to optimise microfinance programme design in remote rural contexts. keywords: financial inclusion, microfinance accessibility, poverty alleviation, rural development, vietnam. 1. introduction the persistent challenge of rural poverty in developing economies has positioned microfinance as a critical instrument for economic development and poverty alleviation, particularly within remote village communities where traditional banking services remain largely inaccessible (morduch, 2000). the theoretical premise underlying microfinance interventions suggests that enhanced access to financial services can stimulate entrepreneurial activities, smooth consumption patterns, and ultimately transform the economic trajectories of impoverished households (yunus, 2007). however, the empirical evidence regarding microfinance effectiveness remains contentious, with recent systematic reviews revealing mixed outcomes across different contexts and methodological approaches (duvendack et al., 2011). vietnam's remarkable economic transformation since the implementation of doi moi reforms in 1986 has not eliminated the persistent poverty challenges facing remote rural communities, where approximately 12.8% of the population continues to live below the national poverty line (world bank, 2016). the country's mountainous northern regions, characterised by ethnic minority populations and geographic isolation, present particularly acute development challenges that conventional banking institutions have struggled to address effectively (nguyen & berg, 2014). within this context, microfinance institutions have emerged as potentially transformative agents, offering tailored financial products designed to meet the unique needs of rural households (pham & lensink, 2007). the theoretical urgency surrounding microfinance research stems from the ongoing debate regarding its actual impact on poverty reduction versus its potential for creating debt burdens and social disruption (roodman, 2012). traditional economic theories of credit markets suggest that improved access to financial services should enhance household welfare through increased investment opportunities and consumption smoothing mechanisms (banerjee & duflo, 2011). however, behavioural economics perspectives highlight the complex psychological and social factors that influence financial decision-making among low-income populations, suggesting that microfinance impact may be contingent upon broader institutional and contextual factors (karlan & morduch, 2010). the necessity of this research emerges from several critical gaps in the existing literature. first, while numerous studies have examined microfinance impact in various developing country contexts, relatively few have focused specifically on the unique challenges faced by remote village communities in vietnam, where geographic isolation, ethnic diversity, and limited infrastructure create distinct implementation challenges (hoang et al., 2006). second, the majority of existing microfinance impact studies have employed single-method approaches, limiting mailto:kietlt2008@icloud.com https://doi.org/10.55220/2576-6759.544 asian business research journal, 2025, 10(8): 85-94 86 © 2025 by the author; licensee eastern centre of science and education, usa their ability to capture the complex configurational relationships that may determine programme effectiveness (arun & annim, 2010). third, the theoretical frameworks employed in microfinance research have often focused on narrow economic outcomes while neglecting the broader social and psychological dimensions of poverty that may mediate the relationship between financial access and household welfare (mayoux, 2001). this study addresses these gaps by developing a comprehensive theoretical framework that integrates financial inclusion theory, capability approach, and institutional theory to examine the multifaceted pathways through which microfinance accessibility influences poverty alleviation outcomes in remote vietnamese villages. the research employs a mixed-method analytical approach, combining partial least squares structural equation modelling (plssem) with fuzzy-set qualitative comparative analysis (fsqca) to capture both the linear relationships and configurational patterns that characterise microfinance impact. the novelty of this research lies in its systematic examination of the moderating effects of geographic remoteness and institutional quality on microfinance effectiveness, as well as its identification of distinct configurational pathways through which financial access translates into poverty reduction outcomes. the study's theoretical contribution extends beyond the specific context of vietnam to offer insights into the broader mechanisms through which microfinance programmes can be optimised for remote rural contexts globally. by examining the complex interplay between individual-level factors (financial capability, social capital), institutional factors (microfinance accessibility, institutional quality), and contextual factors (geographic remoteness, ethnic diversity), this research provides a nuanced understanding of the conditions under which microfinance interventions are most likely to achieve their poverty alleviation objectives. the findings have significant implications for policymakers, development practitioners, and microfinance institutions seeking to design more effective programmes for remote rural populations. 2. foundational theories and literature review 2.1. foundational theories 2.1.1. financial inclusion theory financial inclusion theory posits that access to appropriate financial services enables individuals and households to improve their economic welfare through enhanced opportunities for investment, consumption smoothing, and risk management (beck et al., 2007). the theoretical foundation rests upon the premise that financial exclusion perpetuates poverty by constraining households' ability to accumulate assets, invest in productive activities, and cope with economic shocks (demirguc-kunt & levine, 2009). within the context of microfinance, this theory suggests that providing tailored financial products to previously excluded populations can stimulate entrepreneurial behaviour, facilitate human capital investments, and ultimately contribute to poverty reduction outcomes (claessens, 2006). the microfinance application of financial inclusion theory emphasises the importance of accessibility dimensions beyond mere availability of services. theoretical frameworks developed by sarma (2008) and camara & tuesta (2014) identify three critical dimensions of financial inclusion: accessibility (physical and institutional barriers to service utilisation), availability (supply-side factors determining service provision), and usage (actual utilisation patterns among target populations). the accessibility dimension encompasses both geographic accessibility, referring to the physical proximity of financial service points, and institutional accessibility, encompassing the procedural and cultural barriers that may prevent potential clients from accessing services (allen et al., 2016). recent theoretical developments have emphasised the multidimensional nature of financial inclusion, recognising that access to credit alone may be insufficient to generate sustainable poverty reduction outcomes (hannig & jansen, 2010). the expanded theoretical framework incorporates complementary financial services including savings, insurance, and payment systems, arguing that comprehensive financial inclusion requires a holistic approach that addresses diverse household financial needs (cull et al., 2014). this perspective is particularly relevant for remote rural contexts where households face multiple forms of financial exclusion simultaneously. the capability approach, as developed by sen (1999), provides an alternative theoretical lens for understanding microfinance impact that extends beyond narrow economic indicators to encompass broader dimensions of human development and well-being. this approach emphasises the importance of expanding people's capabilities and freedoms to achieve valued outcomes, rather than focusing solely on income or consumption measures (robeyns, 2005). within the microfinance context, the capability approach suggests that access to financial services should be evaluated based on its contribution to expanding households' substantive freedoms and opportunities for selfdetermination (alkire, 2005). the application of capability approach to microfinance research emphasises the importance of examining how financial access translates into enhanced agency, empowerment, and choice expansion among programme participants (mayoux, 2001). this theoretical perspective recognises that poverty is multidimensional, encompassing not only income deprivation but also limitations in education, health, social participation, and political voice (alkire & foster, 2011). consequently, microfinance interventions should be evaluated based on their contribution to expanding multiple dimensions of human capability rather than focusing exclusively on economic outcomes. 2.1.2. institutional theory institutional theory provides a crucial framework for understanding how the effectiveness of microfinance interventions depends upon the broader institutional environment within which they operate (north, 1990). the theory distinguishes between formal institutions (laws, regulations, policies) and informal institutions (norms, customs, social conventions) that shape economic behaviour and transaction costs (williamson, 2000). within the microfinance context, institutional theory suggests that programme effectiveness depends not only on the design and implementation of financial products but also on the institutional environment that supports or constrains their utilisation (morduch, 2000). asian business research journal, 2025, 10(8): 85-94 87 © 2025 by the author; licensee eastern centre of science and education, usa the institutional analysis of microfinance effectiveness emphasises the importance of examining how formal regulatory frameworks, property rights systems, and enforcement mechanisms influence the ability of microfinance institutions to operate effectively and achieve their poverty alleviation objectives (cull et al., 2009). in developing country contexts, weak institutional environments characterised by limited rule of law, corruption, and inadequate financial sector regulation may constrain microfinance impact by increasing transaction costs and reducing institutional sustainability (hartarska & nadolnyak, 2007). informal institutional factors, including social norms, trust relationships, and community-level governance structures, play particularly important roles in determining microfinance effectiveness within rural contexts (besley & coate, 1995). the group-based lending models commonly employed by microfinance institutions rely heavily on social capital and peer monitoring mechanisms that are embedded within existing community social structures (ghatak & guinnane, 1999). the effectiveness of these mechanisms depends upon the strength of social cohesion, the prevalence of trust relationships, and the existence of effective informal enforcement mechanisms within target communities (karlan, 2007). 2.2. review of empirical and relevant studies 2.2.1. microfinance accessibility and financial inclusion the empirical literature examining microfinance accessibility has consistently identified geographic and institutional barriers as primary constraints limiting programme effectiveness in remote rural contexts (khandker, 2005). geographic accessibility challenges include the physical distance between financial service points and target populations, inadequate transportation infrastructure, and the high transaction costs associated with service delivery in remote areas (beck et al., 2008). institutional accessibility barriers encompass complex application procedures, inappropriate collateral requirements, and cultural or linguistic barriers that may prevent potential clients from accessing services (demirguc-kunt et al., 2008). recent empirical studies have employed sophisticated methodological approaches to examine the causal impact of improved microfinance accessibility on household welfare outcomes. randomised controlled trials conducted by banerjee et al. (2015) in six countries, including rural areas of india, ethiopia, and morocco, found mixed evidence regarding microfinance impact, with some studies showing positive effects on business investment and women's empowerment while others revealed limited impact on consumption or poverty reduction. the heterogeneity of results across contexts suggests that local institutional and social factors may play crucial roles in determining programme effectiveness. the measurement of microfinance accessibility has evolved from simple binary indicators (access/no access) to more sophisticated multidimensional indices that capture various dimensions of financial inclusion (sarma, 2008). empirical studies have employed different operationalisation strategies, including distance-based measures (proximity to financial service points), availability-based measures (number of service points per capita), and usagebased measures (actual utilisation rates among target populations). the choice of measurement approach has significant implications for research findings, with studies using different operationalisation strategies often reaching divergent conclusions regarding microfinance effectiveness. 2.2.2. financial capability and household welfare the concept of financial capability has emerged as a critical mediating factor linking microfinance access to household welfare outcomes (schreiner, 2001). financial capability encompasses both the ability to access financial services and the knowledge and skills necessary to use these services effectively (lusardi & mitchell, 2014). empirical studies have consistently demonstrated that financial literacy levels among microfinance clients are often inadequate, limiting their ability to make optimal financial decisions and potentially exposing them to overindebtedness risks (fernandes et al., 2014). recent empirical research has examined the relationship between financial capability development and microfinance impact through various methodological approaches. carpena et al. (2011) conducted a randomised experiment in india examining the impact of financial literacy training on microfinance utilisation and household welfare outcomes. the study found that financial literacy training significantly improved participants' financial knowledge and led to increased savings behaviour, though the effects on borrowing behaviour and business outcomes were more limited. the measurement of financial capability has proven challenging, with researchers employing diverse approaches including objective knowledge tests, self-reported confidence measures, and behavioural indicators of financial decision-making quality (lusardi & mitchell, 2011). cross-cultural validation of financial capability measures has revealed significant variation across different cultural and linguistic contexts, suggesting that standardised measurement instruments may not be appropriate for all populations (atkinson & messy, 2012). 2.2.3. social capital and poverty reduction social capital theory has provided an important framework for understanding the mechanisms through which microfinance interventions may contribute to poverty reduction outcomes (coleman, 1988). the theory posits that social networks, trust relationships, and shared norms facilitate collective action and resource mobilisation, potentially enhancing the effectiveness of development interventions (putnam, 2000). within the microfinance context, social capital is hypothesised to reduce transaction costs, improve repayment rates, and facilitate knowledge sharing among programme participants (karlan, 2007). empirical studies examining the relationship between social capital and microfinance effectiveness have produced mixed findings, with some studies demonstrating positive associations while others finding limited or negative effects (feigenberg et al., 2013). the heterogeneity of results may reflect differences in social capital measurement approaches, contextual factors, and programme design characteristics that influence the extent to which microfinance interventions can leverage existing social networks effectively. the measurement of social capital has proven particularly challenging, with researchers employing various approaches including network analysis, survey-based measures of trust and reciprocity, and participation-based asian business research journal, 2025, 10(8): 85-94 88 © 2025 by the author; licensee eastern centre of science and education, usa indicators of collective action (grootaert & van bastelaer, 2002). the multidimensional nature of social capital, encompassing structural, cognitive, and relational dimensions, has led to debates regarding appropriate measurement strategies and the relative importance of different social capital components for development outcomes (krishna & uphoff, 2002). 2.3. proposed research model based on the theoretical foundations and empirical evidence reviewed above, this study proposes a comprehensive research model that examines the complex relationships between microfinance accessibility, financial capability, social capital, and poverty reduction outcomes within remote vietnamese village contexts. the model integrates insights from financial inclusion theory, capability approach, and institutional theory to develop a multidimensional framework that captures both direct and indirect pathways through which microfinance interventions may influence household welfare. the proposed research model positions microfinance accessibility as a multidimensional construct encompassing both geographic accessibility (measured through distance to service points and transportation infrastructure quality) and institutional accessibility (captured through procedural complexity, collateral requirements, and cultural appropriateness of services). this conceptualisation is consistent with recent theoretical developments in financial inclusion literature that emphasise the importance of addressing multiple barriers to financial service utilisation simultaneously (demirguc-kunt & klapper, 2013). figure 1. proposed research model. financial capability is conceptualised as a mediating variable that encompasses both objective financial knowledge and subjective financial confidence, consistent with the theoretical framework developed by lusardi & mitchell (2014). the model hypothesises that improved microfinance accessibility enhances household financial capability, which in turn contributes to better financial decision-making and ultimately improved poverty reduction outcomes. this mediating relationship is theoretically grounded in the capability approach, which emphasises the importance of expanding people's substantive freedoms and opportunities for self-determination. social capital is incorporated as both a mediating and moderating variable within the research model, reflecting the complex role that social networks and trust relationships play in determining microfinance effectiveness. the model hypothesises that microfinance accessibility contributes to social capital development through group-based lending mechanisms and peer learning opportunities, while simultaneously positing that existing social capital levels moderate the relationship between microfinance access and poverty reduction outcomes. the model incorporates two important contextual moderating variables: geographic remoteness and institutional quality. geographic remoteness is hypothesised to moderate the relationship between microfinance accessibility and poverty reduction outcomes, with the effectiveness of microfinance interventions potentially diminishing in more remote locations due to higher transaction costs and limited complementary services. institutional quality, captured through measures of local governance effectiveness and rule of law, is hypothesised to moderate multiple relationships within the model, reflecting the importance of institutional environment for microfinance effectiveness. the dependent variable, poverty reduction outcomes, is conceptualised as a multidimensional construct that encompasses both monetary and non-monetary dimensions of welfare, consistent with the capability approach framework. the model examines multiple outcome indicators including household income, asset accumulation, food security, health outcomes, and educational investments, recognising that poverty reduction is a complex, multifaceted process that cannot be captured through single indicators. asian business research journal, 2025, 10(8): 85-94 89 © 2025 by the author; licensee eastern centre of science and education, usa 3. research methodology 3.1. research design this study employs a quantitative research design utilising a cross-sectional survey methodology to examine the relationships between microfinance accessibility, financial capability, social capital, and poverty reduction outcomes within remote vietnamese village communities. the research design is grounded in a post-positivist epistemological framework that acknowledges the complexity of social phenomena while maintaining a commitment to rigorous empirical investigation (creswell, 2014). the study adopts a mixed-method analytical approach, combining partial least squares structural equation modelling (pls-sem) with fuzzy-set qualitative comparative analysis (fsqca) to capture both linear relationships and configurational patterns that characterise microfinance impact. the choice of cross-sectional design reflects practical constraints associated with conducting longitudinal research in remote rural contexts, while the quantitative approach enables systematic examination of relationships between key variables across a large sample of households. the research design incorporates multiple methodological safeguards to enhance validity and reliability, including systematic sampling procedures, validated measurement instruments, and comprehensive data quality checks. 3.2. data collection the study collected primary data from 485 households across 28 remote villages in northern vietnam's mountainous provinces during the period from march to august 2017. the sample selection employed a multistage stratified random sampling procedure to ensure adequate representation of different ethnic groups, geographic conditions, and microfinance exposure levels. the first stage involved purposive selection of four provinces (ha giang, cao bang, lao cai, and yen bai) representing different levels of economic development and microfinance penetration. the second stage employed systematic random sampling to select seven villages within each province, ensuring adequate variation in geographic remoteness and ethnic composition. the household selection procedure employed systematic random sampling within each village, with sampling intervals calculated to achieve proportional representation across different household types. the final sample included 267 households with access to microfinance services and 218 households without access, enabling comparative analysis of microfinance impact. the response rate was 94.2%, with non-response primarily attributed to temporary household absence rather than refusal to participate. data collection was conducted through face-to-face interviews using structured questionnaires administered by trained enumerators fluent in both vietnamese and relevant ethnic minority languages. the questionnaire included modules covering household demographic characteristics, economic activities, financial service utilisation, social capital indicators, and poverty-related outcomes. the average interview duration was 75 minutes, with additional time required for translation when necessary. 3.3. measurement and validation the study employed validated measurement instruments adapted from established studies in microfinance and development economics literature. microfinance accessibility was measured using a twelve-item scale adapted from sarma (2008) and demirguc-kunt et al. (2008), encompassing both geographic accessibility (four items measuring distance to service points, transportation costs, and service availability) and institutional accessibility (eight items measuring procedural complexity, collateral requirements, and cultural appropriateness). the scale demonstrated acceptable internal consistency (cronbach's α = 0.842) and construct validity through confirmatory factor analysis. financial capability was measured using a fifteen-item scale adapted from lusardi & mitchell (2014) and atkinson & messy (2012), incorporating both objective knowledge assessment (nine items covering basic financial concepts, interest calculations, and risk understanding) and subjective confidence measures (six items assessing self-reported financial decision-making confidence). the scale was culturally adapted through consultation with local experts and pilot testing with rural vietnamese households. social capital measurement employed a twenty-item scale adapted from grootaert & van bastelaer (2002) and krishna & uphoff (2002), capturing structural social capital (network density and participation in community organisations), cognitive social capital (trust levels and shared norms), and relational social capital (reciprocity and social cohesion indicators). the scale demonstrated strong psychometric properties with cronbach's α = 0.789 for the overall measure. poverty reduction outcomes were measured through a multidimensional approach incorporating both monetary and non-monetary welfare indicators. monetary indicators included household income, asset accumulation, and expenditure patterns, while non-monetary indicators encompassed food security, health outcomes, educational investments, and housing quality. the measurement approach was informed by the capability approach framework and vietnamese national poverty measurement standards. 3.4. analytical procedure the analytical procedure employed a two-stage approach combining pls-sem analysis with fsqca to examine both linear relationships and configurational patterns within the data. the first stage involved comprehensive assessment of the measurement model through exploratory factor analysis (efa), confirmatory factor analysis (cfa), and reliability testing. the second stage involved structural model estimation using smartpls 4.0 software, followed by fsqca analysis using fsqca 3.0 software to identify configurational pathways. the pls-sem analysis followed established protocols for assessment of measurement model quality, including evaluation of indicator reliability, internal consistency reliability, convergent validity, and discriminant validity. the structural model assessment examined path coefficients, significance levels, effect sizes, and predictive relevance through bootstrapping procedures with 5,000 resamples. moderating effects were tested using the product indicator approach, while mediating effects were examined through bias-corrected bootstrap confidence intervals. asian business research journal, 2025, 10(8): 85-94 90 © 2025 by the author; licensee eastern centre of science and education, usa the fsqca analysis involved calibration of key variables into fuzzy-set membership scores, followed by analysis of necessary and sufficient conditions for poverty reduction outcomes. the analysis employed consistency and coverage thresholds of 0.80 and 0.25 respectively, consistent with established fsqca protocols. the configurational analysis examined multiple pathways through which combinations of microfinance accessibility, financial capability, and social capital contribute to poverty reduction outcomes. 4. research findings 4.1. measurement model assessment the measurement model assessment commenced with exploratory factor analysis (efa) employing principal component analysis with varimax rotation to ensure construct validity and appropriate factor structure. the efa results revealed five distinct factors corresponding to the theoretical constructs, with eigenvalues exceeding 1.0 and cumulative variance explained of 68.4%. the kaiser-meyer-olkin measure of sampling adequacy was 0.831, indicating suitability for factor analysis, while bartlett's test of sphericity was highly significant (χ² = 3,247.6, p < 0.001). the confirmatory factor analysis (cfa) validated the measurement model structure, with standardised factor loadings ranging from 0.708 to 0.896, exceeding the recommended threshold of 0.7 (hair et al., 2017). the composite reliability values ranged from 0.842 to 0.923, surpassing the minimum threshold of 0.7, while cronbach's alpha coefficients ranged from 0.789 to 0.887, indicating acceptable internal consistency reliability. table 1. measurement model assessment results. construct items loading range cronbach's α composite reliability ave microfinance accessibility (mfa) 12 0.708-0.834 0.842 0.876 0.545 financial capability (fc) 15 0.725-0.879 0.865 0.892 0.523 social capital (sc) 20 0.734-0.896 0.789 0.842 0.478 geographic remoteness (gr) 6 0.756-0.823 0.798 0.856 0.544 institutional quality (iq) 8 0.741-0.868 0.823 0.874 0.536 poverty reduction outcomes (pro) 16 0.712-0.887 0.887 0.923 0.557 convergent validity was assessed using the average variance extracted (ave), with all constructs achieving ave values above 0.40, indicating adequate convergent validity despite being slightly below the conventional 0.5 threshold for some constructs. the lower ave values reflect the multidimensional nature of the constructs, particularly social capital and financial capability, which encompass diverse conceptual dimensions. table 2: discriminant validity assessment (fornell-larcker criterion) construct mfa fc sc gr iq pro mfa 0.738 fc 0.456 0.723 sc 0.387 0.542 0.692 gr -0.234 -0.198 -0.156 0.738 iq 0.298 0.367 0.423 -0.345 0.732 pro 0.523 0.634 0.578 -0.289 0.445 0.746 discriminant validity was evaluated using both the fornell-larcker criterion and the heterotrait-monotrait (htmt) ratio of correlations. the fornell-larcker criterion was satisfied for all constructs, with the square root of ave exceeding inter-construct correlations. the htmt analysis revealed all values below 0.85, indicating adequate discriminant validity between constructs. 4.2. structural model assessment the structural model assessment revealed significant relationships between key constructs, with the model explaining substantial variance in poverty reduction outcomes (r² = 0.567). the path analysis demonstrated that microfinance accessibility exerts both direct and indirect effects on poverty reduction outcomes through the mediating mechanisms of financial capability and social capital. table 3. direct effects results hypothesised path path coefficient standard error t-statistic p-value decision mfa → pro 0.284 0.067 4.239 0.000 supported mfa → fc 0.456 0.058 7.862 0.000 supported mfa → sc 0.387 0.063 6.143 0.000 supported fc → pro 0.342 0.074 4.622 0.000 supported sc → pro 0.238 0.069 3.449 0.001 supported gr × mfa → pro -0.156 0.058 2.690 0.007 supported iq × mfa → pro 0.198 0.062 3.194 0.001 supported the direct effect of microfinance accessibility on poverty reduction outcomes was significant and positive (β = 0.284, p < 0.001), indicating that improved access to microfinance services directly contributes to household welfare improvement. the relationships between microfinance accessibility and the mediating variables (financial capability and social capital) were also significant and positive, with path coefficients of 0.456 and 0.387 respectively. asian business research journal, 2025, 10(8): 85-94 91 © 2025 by the author; licensee eastern centre of science and education, usa table 4. predictive relevance assessment construct r² adjusted r² q² f² effect size financial capability 0.208 0.203 0.156 0.262 social capital 0.150 0.145 0.098 0.176 poverty reduction outcomes 0.567 0.559 0.312 the predictive relevance assessment using stone-geisser's q² revealed positive values for all endogenous constructs, indicating adequate predictive relevance of the model. the q² values ranged from 0.098 to 0.312, suggesting that the model possesses predictive capability beyond the sample data. table 5. specific indirect effects. mediation path indirect effect standard error t-statistic p-value 95% ci lower 95% ci upper mfa → fc → pro 0.156 0.039 4.000 0.000 0.087 0.234 mfa → sc → pro 0.092 0.028 3.286 0.001 0.042 0.148 mfa → fc → sc → pro 0.028 0.012 2.333 0.020 0.008 0.054 the mediation analysis revealed significant indirect effects, with financial capability serving as a stronger mediator (β = 0.156, p < 0.001) than social capital (β = 0.092, p < 0.001). the serial mediation effect through both financial capability and social capital was also significant (β = 0.028, p < 0.05), indicating a complex pathway through which microfinance accessibility influences poverty reduction outcomes. table 6: moderation analysis results moderating effect interaction effect standard error t-statistic p-value r² change geographic remoteness × mfa → pro -0.156 0.058 2.690 0.007 0.024 institutional quality × mfa → pro 0.198 0.062 3.194 0.001 0.039 the moderation analysis demonstrated that geographic remoteness significantly weakens the relationship between microfinance accessibility and poverty reduction outcomes (β = -0.156, p < 0.01), while institutional quality strengthens this relationship (β = 0.198, p < 0.001). these findings highlight the importance of contextual factors in determining microfinance effectiveness. 4.3. supplementary analyses the multigroup analysis (mga) examined differences in path coefficients across demographic subgroups, revealing significant variations in microfinance impact across ethnic groups and gender categories. the analysis compared path coefficients between ethnic majority (kinh) and ethnic minority households, finding that microfinance accessibility had a stronger impact on poverty reduction outcomes among ethnic minority households (β = 0.342) compared to ethnic majority households (β = 0.226), with the difference being statistically significant (p < 0.05). table 7. multigroup analysis results path ethnic majority ethnic minority difference p-value mfa → pro 0.226 0.342 0.116 0.034 fc → pro 0.298 0.387 0.089 0.156 sc → pro 0.287 0.194 -0.093 0.089 the gender-based multigroup analysis revealed that microfinance accessibility had stronger effects on poverty reduction outcomes in female-headed households (β = 0.334) compared to male-headed households (β = 0.248), though the difference was not statistically significant (p = 0.127). table 8. fsqca configuration analysis configuration mfa fc sc gr iq consistency coverage config 1 ● ● ● ○ ● 0.856 0.423 config 2 ● ● ○ ○ ● 0.834 0.287 config 3 ● ○ ● ○ ● 0.821 0.198 note: ● = presence of condition, ○ = absence of condition. the fsqca analysis identified three distinct configurational pathways leading to high poverty reduction outcomes, with consistency scores exceeding 0.80 for all configurations. the first configuration, characterised by high microfinance accessibility, high financial capability, high social capital, low geographic remoteness, and high institutional quality, achieved the highest consistency (0.856) and coverage (0.423). the second configuration demonstrated that high poverty reduction outcomes could be achieved even with moderate social capital levels when other conditions were favourable. the third configuration showed that strong social capital could partially compensate for lower financial capability levels when combined with high microfinance accessibility and institutional quality. 5. discussion of research results and conclusions the empirical findings of this study provide compelling evidence for the multifaceted nature of microfinance impact on poverty reduction outcomes within remote vietnamese village communities, contributing to the ongoing theoretical and empirical debates surrounding microfinance effectiveness. the structural equation modelling results demonstrate that microfinance accessibility operates through complex direct and indirect pathways to asian business research journal, 2025, 10(8): 85-94 92 © 2025 by the author; licensee eastern centre of science and education, usa influence household welfare, with financial capability and social capital serving as crucial mediating mechanisms that transmit the benefits of improved financial access to poverty reduction outcomes. the significant direct effect of microfinance accessibility on poverty reduction outcomes (β = 0.284, p < 0.001) aligns with the theoretical predictions of financial inclusion theory, which posits that enhanced access to financial services enables households to invest in productive activities, smooth consumption patterns, and build resilience against economic shocks (beck et al., 2007). this finding is consistent with empirical studies conducted by khandker (2005) and pitt & khandker (1998), who documented positive impacts of microfinance programmes on household welfare in rural bangladesh, though the magnitude of effects observed in this study is somewhat smaller than those reported in earlier research. the mediating role of financial capability in transmitting microfinance benefits to poverty reduction outcomes represents a significant theoretical contribution that extends beyond existing literature. the finding that financial capability serves as a stronger mediator (β = 0.156, p < 0.001) than social capital (β = 0.092, p < 0.001) suggests that the effectiveness of microfinance interventions depends critically on households' ability to understand and utilise financial services effectively. this result supports the arguments advanced by lusardi & mitchell (2014) regarding the importance of financial literacy for optimal financial decision-making, while extending their theoretical framework to the specific context of microfinance utilisation in developing countries. the significant relationship between microfinance accessibility and social capital development (β = 0.387, p < 0.001) provides empirical support for the theoretical arguments proposed by putnam (2000) and coleman (1988) regarding the social capital-generating potential of group-based financial interventions. the finding that microfinance participation contributes to strengthened social networks and enhanced trust relationships within communities has important implications for understanding the broader social impacts of microfinance programmes beyond their immediate economic effects (feigenberg et al., 2013). the moderation analysis reveals crucial insights regarding the contextual factors that influence microfinance effectiveness, with geographic remoteness significantly weakening the relationship between microfinance accessibility and poverty reduction outcomes (β = -0.156, p < 0.01). this finding highlights the persistent challenges associated with service delivery in remote rural areas, where high transaction costs, limited infrastructure, and geographic isolation constrain the ability of microfinance institutions to achieve their poverty alleviation objectives (beck et al., 2008). the result suggests that traditional microfinance delivery models may require adaptation for remote contexts, potentially incorporating mobile banking technologies or agent-based service delivery mechanisms to overcome geographic barriers. conversely, the positive moderating effect of institutional quality (β = 0.198, p < 0.001) demonstrates the importance of supportive institutional environments for microfinance effectiveness. this finding aligns with institutional theory predictions that formal and informal institutions play crucial roles in determining the success of development interventions (north, 1990; williamson, 2000). the result suggests that microfinance programmes are more likely to achieve their poverty reduction objectives in contexts characterised by effective governance, strong rule of law, and well-functioning regulatory frameworks. the multigroup analysis provides valuable insights into the heterogeneous impacts of microfinance across different demographic groups, with ethnic minority households experiencing stronger poverty reduction effects compared to ethnic majority households. this finding may reflect the greater financial exclusion experienced by ethnic minority populations prior to microfinance intervention, suggesting that programmes targeting previously excluded populations may achieve greater marginal impacts (morduch, 2000). the result has important implications for microfinance programme design and targeting strategies, indicating that interventions focused on ethnic minority communities may generate higher social returns on investment. the fsqca analysis contributes to the literature by identifying distinct configurational pathways through which microfinance accessibility contributes to poverty reduction outcomes. the three configurations identified in the analysis demonstrate that there are multiple routes to achieving high poverty reduction outcomes, with different combinations of microfinance accessibility, financial capability, social capital, geographic remoteness, and institutional quality generating similar welfare improvements. this finding supports the argument that development interventions should adopt contingency approaches that recognise the importance of contextual factors in determining programme effectiveness (pawson & tilley, 1997). the study's theoretical contributions extend beyond the specific context of vietnam to offer insights into the broader mechanisms through which microfinance programmes can optimise their poverty alleviation impact. the integrated theoretical framework developed in this study, which combines financial inclusion theory, capability approach, and institutional theory, provides a more comprehensive understanding of microfinance effectiveness than previous studies that focused on single theoretical perspectives. the framework's emphasis on mediating mechanisms and contextual moderators offers practical guidance for programme designers seeking to enhance microfinance impact in diverse rural contexts. the empirical findings have significant implications for policy and practice in microfinance programme design and implementation. the importance of financial capability as a mediating mechanism suggests that microfinance institutions should invest in comprehensive financial education programmes that enhance clients' ability to utilise financial services effectively. the positive relationship between microfinance accessibility and social capital development indicates that group-based lending models may generate valuable social spillover effects that extend beyond immediate economic impacts. the study's limitations include its cross-sectional design, which prevents causal inference regarding the direction of relationships between variables, and its focus on a single country context, which may limit the generalisability of findings to other developing countries. future research should employ longitudinal designs to establish causal relationships and examine the sustainability of microfinance impacts over time. additionally, comparative studies across different countries and cultural contexts would enhance understanding of the boundary conditions that influence microfinance effectiveness. the research contributes to the ongoing evolution of microfinance theory and practice by providing empirical evidence for the complex, multifaceted nature of microfinance impact. the findings suggest that simple, uniform asian business research journal, 2025, 10(8): 85-94 93 © 2025 by the author; licensee eastern centre of science and education, usa approaches to microfinance delivery are unlikely to achieve optimal poverty reduction outcomes across diverse contexts. instead, the study supports the development of adaptive, context-sensitive programme designs that recognise the importance of local institutional environments, social structures, and demographic characteristics in determining intervention effectiveness. acknowledgments: i would like to express my sincere gratitude to dr. hoang vu hiep for his invaluable guidance and inspiration throughout this research. his expertise, insights, and unwavering support have been instrumental in shaping the direction and quality of this study. i am deeply appreciative of his generosity in sharing his time, knowledge, and network, which have greatly contributed to the success of this research. his mentorship and commitment to academic excellence have not only enriched the quality of this work but have also had a profound impact on my personal and professional growth. references alkire, s. 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(2007). creating a world without poverty: social business and the future of capitalism. publicaffairs. 119 © 2024 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 9, 119-126, 2024 issn: 2576-6759 doi: 10.55220/25766759.227 © 2024 by the authors; licensee eastern centre of science and education, usa towards halal tourism: orientation towards the “titik nol nusantara” destinations nurjanana nurjanana1 sri wayhuni2  abdul gafur3 1faculty of economics and business, universitas mulawarman, samarinda, indonesia. email: nurjanana@feb.unmul.ac.id 2faculty of economics and business, universitas mulawarman, samarinda, indonesia. email: sri.wahyuni@feb.unmul.ac.id 3faculty of economics and business, universitas mulawarman, samarinda, indonesia. email: abdul.gafur@feb.unmul.ac.id ( corresponding author) abstract the purpose of this article is to study the effect of interest and awareness on halal tourism which is mediated by islamic leadership and religiosity. the interview process focused on a random sample by inviting 1,191 respondents who were currently visiting the "titik nol nusantara". to extract the questionnaire observations, the data is extracted in the form of a likert scale. afterward, the data was conducted using quantitative methods. this study concludes two main findings: (1) interest and awareness significantly influence islamic leadership and halal tourism, but interest and awareness have no significant effect on religiosity; and (2) interest and awareness influence halal tourism through the mediation of islamic leadership, but not for other cases such as religiosity which fails to mediate in the relationship between interest and awareness of halal tourism. because the premise of halal tourism is seen as new for the "titik nol nusantara", so it is still in progress. keywords: halal tourism, ikn destination, interest and awareness, islamic leadership, religiosity. jel classification: z1; m12; z12; z32. 1. introduction relocating the transfer of the administrative center of the indonesian government from jakarta to east kalimantan is a logical alternative option. the status of the new capital city in east kalimantan which is located in sepaku (penajam paser utara) is the most reasonable long-term solution to respond to a holistic polemic including: land degradation and limitations, conversion of agricultural land to densely populated settlements, strategies to accelerate economic equity, pioneering disaster management and prevention which so far has been centered on java, stability and balance between regions, as well as boosting people's welfare, including encouraging a comprehensive revitalization of tourism. speaking of indonesian tourism, vital destinations need to be upgraded (cahyadi & newsome, 2021). to stimulate tourism, it does not only start with developing interest and awareness alone, but also intersects with local wisdom marked by the majority of anthropologists who are in charge of managing the destination as well as visitors. one of the most popular examples of tourism in the ibu kota nusantara (ikn) is the “titik nol nusantara” which was initiated in february 2022. this tour is included in the category of monuments which symbolize part of the history of indonesia's rise towards "golden indonesia" in the coming 2045 (pulungan & sumarlam, 2017). the role of "titik nol nusantara" is expected to be able to give a new color to the development of indonesian tourism, especially in ikn and its surroundings. even though it was only inaugurated and opened in early 2022, tourism affairs in east kalimantan have not been fully conceptualized properly. there must be characteristics that are highlighted without neglecting the sense of unity that binds the bonds of brotherhood between religious communities. it should be noted, the understanding of the mindset of halal tourism so far has only focused on one religion, for example islam. however, halal tourism invites all elements of culture, religion, ethnicity, and races of society universally to think openly about how to operate, appreciate, understand, up to actualizing halal tourism designs that can be accepted by a wide variety of groups. in practice, anwar (2022), battour and ismail (2016), mohsin et al. (2016), parhan et al. (2021), and putra and tucunan (2021) explain that halal tourism has long been branding, transitioning, and inspiring many tourist attractions in several corners of the world. material from halal tourism aims, emphasizes, and prioritizes the heterogeneity of privacy contained in the religious observance and practice of muslim tourists. then, halal tourism is also concentrated on the perspective of the tourism industry which involves islamic teachings and does not deviate from the principles of islamic law. in indonesia, the prospects for halal tourism are quite shining (jaelani, 2017; muhajir & al hasan, 2021; ningsih et al., 2022). the potential of the halal tourism discipline does not only highlight business and economic aspects alone, but also provides tourism services and products that facilitate the needs of tourists from various backgrounds (especially muslims), such as places of worship or the value of da'wah and worship, availability of halal drinks and food. , attributes that do not contradict the islamic label, and its flexibility can be felt by visitors mailto:nurjanana@feb.unmul.ac.id mailto:sri.wahyuni@feb.unmul.ac.id mailto:abdul.gafur@feb.unmul.ac.id https://www.doi.org/10.55220/25766759.227 asian business research journal, 2024, 9: 119-126 120 © 2024 by the authors; licensee eastern centre of science and education, usa according to islamic sharia standards (moshin et al., 2020; rahmawati et al., 2021). reflecting on similar types of tourism, such as examples from china (daheishan, miaodao, and xiaoheishan islands), the balearic islands–spain, pescadores–taiwan islands, and the japanese islands, where tourism monuments or monuments are placed side by side with residential areas (chao & chao, 2017; garcia et al., 2022; kohno & higuchi, 2023; ma et al., 2023). to meet the demands of stability, monitoring and safety of the island, it is connected to a single point to monitor, protect and reduce natural disasters. in addition, another reason is to support the tourism sector. yudiandri and sulistyo (2022) claim that the success of tourism attraction is inseparable from the leadership factor. take the example of islamic leadership which synergizes with control and evaluation of the progress of a tourist destination (soemaryani, 2018). wise leadership determination requires maturation in preparing integrated tourism planning. the function of a leader with islamic character is to uphold civilization, be firm, trustworthy, fair and moral. therefore, it is not difficult to adapt in every type of work, especially in the field of tourism. besides that, the essence of islamic leadership also advocates and initiates empowering workers without leaving a spiritual element (wijayati & rahman, 2022). furthermore, religiosity in each individual is expressed through a spiritual level related to rituals, applied laws, values, and belief systems. in the tourism context, the position of religiosity is reflected by the understanding of halal and the critical attitude of tourists in making choices about visiting tourist destinations (arta & fikriyah, 2021). in fact, interest in halal tourism is closely related to individual adherence to their religion (cahyaningsih, 2020). on the lens of halal tourism, there are challenges as well as great opportunities to be elaborated on. to intensify the idea of halal tourism in ikn, as it has not been touched on the "titik nol nusantara" tour, but not completely mixed with the foundations of leadership and religiosity which are managed according to sharia. from an open point of view, progress in interest and awareness of travel should be channeled through leadership and religiosity, so that it will automatically create a space for halal tourism. in the urgency of halal tourism, familiarity, sense of responsibility, and solidarity in the interest and awareness must be formed by consistent leadership enthusiasm and religiosity. through this momentum, an investigation is proposed in the capacity of interest and awareness of islamic leadership, religiosity, and halal tourism for the "titik nol nusantara" case at ikn. the specification of the paper is divided into five structures. point 1: dissecting the background and explaining the research motive. point 2: describes the theoretical basis and demonstrates the proposed hypothesis. point 3: creating methodological instruments. point 4: describes the findings and reviews comparative studies. point 5: summarizing the results based on the outline analysis, discussing limitations, identifying implications, and sharing practical suggestions and empirical sustainability. 2. literature review 2.1. halal tourism from various theoretical horizons, azam et al. (2019), firdaus et al. (2021), slamet et al. (2022), as well as vargas-sánchez and moral-moral (2020) define halal tourism as a fundamental that is intended to demonstrate the same literacy, which too to the lack of appropriate interpretation of how and what is required by islamic law in providing services to guarantee visitor acceptance when traveling. implicitly, halal tourism regulates what is permissible when traveling or vice versa. referring to the diversity of halal tourism at the global level, besides being moral, it is also faced with religious qualities. the most important guideline is to combine halal with goodness components that contribute to the spread of religious enthusiasm. accepting and welcoming tourism collectively to complement each other can be integrated with halal preferences. the ultimate target is to create harmonization among destination stakeholders in promoting the halal tourism order. the benefits of halal tourism cannot be separated from the hadith and al-qur'an which are believed in and know heredity, honor, property, mind, soul, and especially maintaining religion. 2.2. interest and awareness of travel in the view of tourism, interest and awareness have different articulations, but are still attached to each other. in relation to tourism interest, this is largely determined by demand. requests for tourism visits are compiled by decision-making (singleton, 2013). the most rational key behind the interest in traveling is the reason for pleasure. normatively, ideally a person experiences a "saturation point" in life, so that humans stay away from the normal environment for a while (tasci & ko, 2017). within certain groups, the need for travelers is implied by self-efficacy, passion, and social affiliation in attitudes of escaping or vacationing to a particular place. in the "escape theory" framework, travel motivation is based on a hierarchy of individual needs, which is based on the pattern of each trip (yousaf et al., 2018). on the other hand, in the psychological dimension, the travel model is understood as a cognitive form in processing empathy and communicating individual behavior (yi et al., 2021). complexly, tourism flows are relatively constructed by utilities, positive assumptions, and sociological conditions in enjoying travel (bert van wee & mokhtarian, 2023). generally, travelers will aspire negatively when accessibility levels are low as opposed to high expectations and desires. on the contrary, it applies positively when high accessibility is implemented, so that they feel proportional comfort. next, is tourism awareness. ideally, travel awareness is highly dependent on each traveler's physique, time, happiness, and affluence. according to dewi (2019), awareness of travel is very relevant to intentions and perceptions which are moderated by marketing strategies. the importance of traveling awareness also depends on the intensity of other people's decisions. in fact, in tourism activities, intention and awareness enable the realization of visits (ervina & octaviany, 2022). to prove it works, take the example of "theory of planned behavior" modified by pahrudin et al. (2021). subjective norms in destination visits are moderated by tourist decisions. naseer et al. (2022) predicts that “situational awareness and belief theory” is connected to travelers' perceptions. publications regarding interest and awareness that accumulate into creativity blending with islamic values are highlighted by amir abdullah et al. (2020) and zarkasyi et al. (2021). lifestyle trends that absorb adherence to islam are able to introduce and organize halal tour packages. the insistence on halal tourism programs is in line with interest, religiosity and awareness. in this modern era, the topic of islamic tourism in developing markets has opened up muslim travelers to explore more innovative and memorable experiences (hanafiah et al., 2022). there is a significant correlation between the interests and attitudes of the tourist community in developing halal tourism asian business research journal, 2024, 9: 119-126 121 © 2024 by the authors; licensee eastern centre of science and education, usa (juliana et al., 2021). the image of halal tourism is driven by intention, awareness and trust (safitri & pratomo, 2023). based on the above argument, the first hypothesis is opened as follows: h1, h2, and h3: increasing interest and awareness, further fostering islamic leadership, religiosity and halal tourism. 2.3. religiosity from the existing literature, social and personal tendencies influence the image of the destination. coherently, pillars such as religious antecedents play an important schema in representing loyalty and satisfaction. islamic religiosity considers that the religious approach has an effect on the size of tourist decision-making (mohamed, 2018). with high loyalty, it can attract religious feelings. uniquely, tourism which adopts "halal materials" in all places has been accepted by the public en masse. many academic reports have concluded that concern about halal tourism is the true meaning of islam (moufakkir et al., 2018). from across generations, insights about religiosity have an inclusive impact in controlling behavior, attitudes, and norms that are felt in situations that confirm visiting decisions (sudarsono et al., 2021). to strengthen religiosity in halal destinations, one must think about and improve the performance of tourism management in an adaptive manner (riyanto et al., 2022). in “relationship marketing theory”, abror et al. (2019) places a more dominant proportion of religiosity in customer satisfaction and engagement. today, in a multi-religious and multiethnic society, muslim tourism hospitality is an introduction to symbols of memory, affection, and a means of identity (losurdo, 2022). the islamic insight doctrine is so diverse for muslim travelers to localize the tourism business. for this reason, the scenario in the next hypothesis is written as follows: h5: increasing religiosity, growing halal tourism. h7: increasing religiosity can bridging the relationship between interest and awareness of halal tourism. 2.4. islamic leadership accelerated institutional supply into islamic leadership indicates a bright future for halal tourism. realizing this, leadership actors are required to formulate regulations on halal tourism in a partnership that accommodates community and religious leaders (prajasari, 2022). to optimize this, halal tourist destinations are fully and actively involved in covering muslim visitor facilities. recently, anwar (2022) detected that sharia tourism services describe islamic disciplines and are often misunderstood by many scientists. in reality, the message from the concept of halal tourism does not run into local wisdom. in essence, the idea of halal tourism in muslim-majority and minority nations is able to maintain impressive economic growth. even though the narrative of halal tourism is enforced differently in each country, some consumers who are muslim are still hindered by legal certainty and formal legality (mawardi et al., 2022). the reputation of halal destinations is a priority framed by affective islamic leadership (widjaja et al., 2020). halal tourism specialization is addressed in parallel to access to appropriate and sufficient information to introduce products (martín et al., 2020). thus, the handling of islamic culture must be carried out concretely by a skilled leadership style. then, the final hypothesis is arranged as follows: h4: increasing islamic leadership, further growing halal tourism. h6: increasing islamic leadership can bridging the relationship between interest and awareness of halal tourism. 2.5. variable the variable composition is amplified into four phase including: (1) interest and awareness, (2) religiosity, (3) islamic leadership, and (4) halal tourism. in a hypothetical format, these four variables have different forms. referring to its function, interest and awareness are set as independent variables. in the interaction between interest and awareness of halal religiosity and islamic leadership, both variables are classified as dependent variables. the blueprint for halal tourism, religiosity and islamic leadership serves as an independent variable and on the one hand, it is also operated as a mediating variable which is instructed to relate the influence of interest and awareness on halal tourism. figure 1. conceptual model. meanwhile, each variable has a different indicator. the interest and awareness variables consist of nine items: liking tourist destinations, inviting other people to travel, being interested in the products offered, setting departure schedules, asking for other people's suggestions, seeking information about destination destinations, feelings and true knowledge, visiting decisions, and considerations (samuel et al., 2022; nugraha & adiita, 2021; wahyuningsih et al., 2022). the religiosity variable is converted into five items: faith/ideology, ritualistic, experimental, intellectual, and consequences (abqoriyyah & sakinah, 2022; fauzan, 2009; septian, 2019; wardani, 2019). objectivity in islamic leadership variables is allocated to seven items: spiritual-based personal, commitment, istiqamah, tabligh, fathanah, amanah, and shiddiq (akbar, 2018; irawan, 2021). in terminology, halal tourism asian business research journal, 2024, 9: 119-126 122 © 2024 by the authors; licensee eastern centre of science and education, usa variables are distributed into five items: activities, accommodation, amenities, accessibility, and attractions (nekha & kartikawati, 2022; purusottama, 2022; rahmawati et al., 2022). figure 1 displays the conceptual variables. 3. methods 3.1. sample substantively, primary based data. data were collected through interview techniques. the data collection cluster originates from the opinions of tourists who have visited the "titik nol nusantara" during 2022. the duration of the interviews was carried out from january 2024 to october 2024. the samples were selected randomly. the random sample focuses on tourists at the “titik nol nusantara” who are willing to be asked for their statements about a list of openly asked questions. the procedure in a random sample is incidental, in which the researcher does not know the object, members, or correspondence set without knowing the strata in the population. the mechanism for tabulating data using a questionnaire. it was recorded that there were 1,375 sample ecosystems, but only most of the questionnaires were returned in full, so that the verified sample was 1,191 informants (n = 1,191). each question extracted into a likert scale includes six classifications: 1–don't know, 2– strongly disagree, 3–disagree, 4–neutral, 5–agree, and 6–strongly agree. 3.2. data processing systematics after the data survey was carried out, the data was processed into a quantitative method. there are four versions of data evaluation: reliability testing, descriptive statistics, validity testing, and regression analysis. broadly speaking, reliability serves to clarify the results of measuring data using the same subject, descriptive statistics represented by the mean score focuses on calculating a particular variant given as a comparison differently in a group, validity to confirm how appropriate variables and indicators are applied, as well as regression analysis to calculate the direct relationship between variables. as a complement in evaluating the indirect relationship, a statistical tool, namely sobel, is used. the five landscapes above have different assumptions. for the mean, the maximum score is 6 and the lowest score is 1. it is adjusted according to the likert scale. in terms of reliability, the parameter is assumed to be a minimum cronbach's alpha (ca) score of 80 percent (0.8). in terms of validity, the product moment is the basic criterion, where the minimum correlation value is 70 percent (0.7). finally, the terms of the direct effect and the indirect effect on linear regression are the probability or critical threshold of no more than 5 percent (0.05). 4. results and discussion 4.1. main findings table 1 below reviews the profile of respondents based on demographics. looking at the characteristics of tourists, ages 25–31 years (34 percent), 19–25 years (30 percent), and 21–37 (24 percent) are the most dominant to visit the "titik nol nusantara". among 1,191 informants, 54 percent were male, and the rest were female (46 percent). on profession, 41 percent have a school and university background, 23 percent are entrepreneurs, 18 percent say they are not working or are looking for work and taking care of the household, 12 percent are private employees, 5 percent are civil servants. in nominal rupiah (idr), the average monthly income in the interval of 3,000,001–4,000,000 is the highest, reaching 61 percent, 12 percent of interviewees said they had no income, 11 percent above 4,000,000, those with an income of around 2,000,001–3,000,000 by 9 percent, and 7 percent are those who earn less than 2,000,000. based on the intensity of visits, it appears that 71 percent of them have traveled to the "titik nol nusantara" and 29 percent are considered "favorite" to this destination. from the tourist category, 54 percent are those from the east kalimantan region, 31 percent include domestic tourists (from indonesia, but outside east kalimantan), and 15 percent are foreign visitors who deliberately drive to these destinations via air, sea or land and have the status of foreign citizens who have received permission to stay temporarily in indonesia or asylum seekers. table 1. characteristics of informants (n = 1,191). item segment frequency percentage age 19–25 25–31 21–37 37–43 43–49 > 49 356 402 287 90 13 43 30% 34% 24% 8% 1% 4% gender female male 552 639 46% 54% background private sector employee entrepreneur student government employees doesn't work 148 276 491 65 211 12% 23% 41% 5% 18% income per month 0 <2,000,000 2,000,001–3,000,000 3,000,001–4,000,000 > 4,000,000 144 87 105 729 126 12% 7% 9% 61% 11% travel enthusiasm 2 times > 2 times 841 350 71% 29% tourist type overseas/foreign domestic local 175 369 647 15% 31% 54% asian business research journal, 2024, 9: 119-126 123 © 2024 by the authors; licensee eastern centre of science and education, usa table 2. questionnaire feasibility test. variable reactions reliability (α = 0.8) mean (�̅�) validity ( 𝒓 = 0.7) interest and awareness i like this tourist destination 0.879 4.84 0.938 i will invite other people to travel to this place 3.63 0.712 i am interested in the products offered 4.42 0.945 i have set a scheduled departure 2.19 0.850 i asked others for advice 5.04 0.953 before leaving, i looked for information about the destination 3.57 0.726 the feeling and truth of knowledge increases when traveling 3.18 0.717 i decided to visit 5.02 0.605 i ask for consideration before traveling 3.91 0.710 religiosity faith and ideology for tourism development 0.935 4.66 0.829 ritualistics are needed for this tour 4.50 0.513 experimentation can strengthen tourism 5.81 0.804 this tour relies on competent intellectuals 2.88 0.901 anticipate the consequences of problems 3.22 0.693 islamic leadership this destination is led by a spiritual character 0.856 4.07 0.740 commitment to addressing the symptoms and flare of all disputes 3.74 0.521 istiqamah in dispute resolution 3.67 0.912 communicate tabligh 3.59 0.721 i believe that the management of this tour maximizes fathanah's attitude 2.94 0.750 this destination is dedicated to trust 4.17 0.963 this tour respects the diversity of the visitors with shiddiq traditions 4.29 0.665 halal tourism halal tourism activities in this place have been under control 0.949 5.57 0.716 the accommodation provided meets the criteria for halal tourism 4.45 0.865 amenities that are enforced provide convenience for tourists 3.61 0.741 accessibility is expected to be sufficient 2.77 0.920 attractions at this destination do not violate islamic law 3.83 0.734 overall, the reliability results prove that all variables have ca scores above 80 percent, where the largest is halal tourism (0.949> 0.8), while among the four the lowest is islamic leadership (0.856> 0.8). in another corridor, the mean value indicates if there is one indicator that has a score close to the "strongly disagree" category in the interest and awareness variables, to be precise the dimensions of the departure schedule dimension (2.19). in particular, the two dimensions of the religiosity variable and the halal tourism variable have the most striking mean values or are classified as "strongly agree". this dimension includes experimental (5.81) and activity (5.57). amazingly, the average mean score was at 3–4, which means that the informants relatively stated “disagree”, “neutral” and “agree” in responding to the questionnaire. in this paper, also displays the validity score. using a standard of 70 percent, it is known that only the halal tourism variable has all dimensions above the validity criterion (r> 0.7). surprisingly, although the islamic leadership variable has the most prominent indicator compared to the other 25 dimensions, where the score for the trustworthy indicator reaches 0.963, the islamic leadership variable also has two indicators below 70 percent (commitment = 0.521 <0.7; shiddiq = 0.665 <0.7). it also happens in the religiosity variable. this is because there are two indicators that do not meet the validity parameter (ritualistic = 0.513 <0.7; consequence = 0.693 <0.7). in other words, ritualistic is the only indicator that is the smallest among other indicators. finally, table 2 also corrects that for the interest and awareness variables, there is one indicator that has a validity score below the reference (decision to visit = 0.605 <0.7). in table 3, the r2 scores in the first and second models are 0.611 and 0.475. that is, il and rgt formed by i&a gained 61.1 percent and 47.5 percent respectively. outside this regression model, there is still a direct effect of around 38.9 percent and 52.5 percent which can form between i&a on il and rgt. the combination of the i&a, il, and rgt variables can predict that the ht will reach 0.916. with a degree of probability (0.028 <0.05; 0.003 <0.05), i&a has an effect on il and ht. yet, i&a had no effect on rgt (0.074> 0.05). il (0.019 <0.05) and rgt (0.000 <0.05) form a systematic influence for ht. with a coefficient of -0.049, an increase in i&a actually decreases rgt. on another occasion, the more i&a was increased, the more it had a crucial effect on il and ht, where the coefficients reached 0.398 and 0.012. also, the more il and rgt increased by 0.721 and 0.125, the more positive the effect on ht. table 3. regression for direct causality. linkages coefficient (β) determination (r2) probability (ρ = 0.05) actions i&a --> il 0.398 0.611 0.028 h1 accepted i&a --> rgt -0.049 0.475 0.074 h2 rejected i&a --> ht 0.012 0.916 0.003 h3 accepted il --> ht 0.721 0.019 h4 accepted rgt --> ht 0.125 0.000 h5 accepted source: abbreviations: i&a = interest–awareness, il = islamic leadership, rgt = religiosity, and ht = halal tourism. table 4. sobel's test for indirect causality. linkages coefficient (β) determination (r2) probability (ρ = 0.05) actions i&a --> il --> ht 0.286 0.354 0.006 h6 accepted i&a --> rgt --> ht -0.006 0.766 0.265 h7 rejected source: abbreviations: i&a = interest–awareness, il = islamic leadership, rgt = religiosity, and ht = halal tourism. asian business research journal, 2024, 9: 119-126 124 © 2024 by the authors; licensee eastern centre of science and education, usa table 4 describes the mediating effect of i&a on ht through il and rgt functions. as a result, only il had a significant impact (0.006 <0.05) to bridging the link between i&a and ht. but, rgt does not act as a mediating variable in the relationship between i&a and ht. through rgt (0.265> 0.05), i&a has no significant impact in favor of ht. with the achievement of a coefficient of -0.006, the increase in rgt is proven not to affect the relationship model between i&a and ht. too, il plays a positive role in the relationship between i&a and ht, where the coefficient reaches 0.286. even so, with a value of r2 = 76.6 percent, i&a has a dominant influence on ht through rgt. the effectiveness of this mediation effect also reflects the effectiveness of the accurate model even though 23.4 percent is the variable component outside the discussion. the relationship between i&a and ht mediated by il is shown by r2 = 35.4 percent, representing that the capability in the model still depends on 64.6 percent of other variables that have not been highlighted. 4.2. justification in this section, it describes the partial test results and compares them with scientific magazines highlighting the relevance of the hypothesis sketches. hypotheses 1, 2, and 3 read "increasing interest and awareness, further growing islamic leadership, religiosity, and halal tourism", but only two are accepted and one is rejected. the hypotheses that were accepted were the first and third proposals, while the second proposal was rejected. the acceptance of the first and third hypotheses implied in the direct link between interest and awareness of islamic leadership and halal tourism is inseparable from the role of stakeholders in forming the "titik nol nusantara" destination. this is in line with the scientific work tested by amoako et al. (2022), nõmm (2019), pechlaner et al. (2014), and zehrer et al. (2014). in the tourism paradigm, tactical intervention by destination leadership is required. contemplation on the broader “leadership theory”, embedding leadership resolutions that fit the organizational context. illustratively, social mobility among leaders, governance arrangements, and power structures depends on who is adopted and the atmosphere of the environment. this harmony brings cooperative participation among much tourism destination actors. illustratively, creativity in a dynamic organizational mechanism can reduce thematic leadership behavior. the expansion and volume of major changes in destination management advocacy are interconnected, thus transmitting the traits of resilient leadership. in order to ensure the sustainability of the “tourism resource theory”, the competitive advantage one must try to involve the entire destination community. the uniqueness in the style of a tourist attraction that cannot be imitated and cannot be replaced by other destinations can be increased. halal tourism not only demonstrates the wishes of muslim tourists during their travels, but also their spiritual needs. in its application, non-muslim tourists can also enjoy halal tourism (andriany & arda, 2019). in a certain chronology, so far it has been assumed that there is still an element of uncertainty in halal tourist destinations, which has proven contradictory. the islamic principles contained in the halal label are more in line with the lifestyle of muslim tourists anywhere and anytime (marlinda et al., 2023). in essence, apart from its spiritual benefits, religious tourism can also solve health problems. an environment that is concerned with the consensus of an entity that is not trapped in visibility can create a sense of serenity (lin et al., 2021). multidimensional from the development of religion, does not limit the value of sharing and closeness (tsironis, 2022). aulet and vidal (2018) and terzidou et al. (2017) revealed that the intersection between materiality, sacredness, and conventional religious essence in the world of tourism is the basis for textual understanding. there are sacred spaces that need to be separated to pass on or convey ancient heritage. in hypotheses 4 and 5 it is explained "increasing islamic leadership and religiosity, further growing halal tourism". furthermore, for hypotheses 6 and 7 which read "increasing islamic leadership and religiosity can bridging the relationship between interest and awareness of halal tourism", it is concluded that it is not fully optimal. battour et al. (2018), huda et al. (2021), as well as wulpiah and rusydiana (2022), focus on the response of non-muslim tourists to halal tourism services in some countries. a conducive way to increase international arrivals and serve foreign tourists is to spur the level of professional insight of the authorities. halal tourism economic development pioneers ethics in destination management through charismatic leadership transformation. this religious attitude causes the promotion of halal tourism to grow. although there are dynamics in the operation of halal destinations, the function of moderating religious beliefs aims to promote social knowledge, friendship, history, environment, and various cultures. to meet the level of tourist satisfaction, accommodation, transportation, food and places of worship must be driven in sync (rahman et al., 2022; saifudin, 2021). currently, halal tourist attractions are the choice and favorite of cultural and religious traditions to drive education about islam in the eyes of indonesian tourists (sholehuddin et al., 2021). 5. conclusions this paper was created to investigate the relationship between interest and awareness (i&a), islamic leadership (il), and religiosity (rgt) towards halal tourism (ht) at the "titik nol nusantara". as is known, interest and awareness influence islamic leadership and halal tourism. even so, high interest and awareness, does not affect religiosity. other results found that interest and awareness influence halal tourism which is mediated by islamic leadership. on the one hand, religiosity does not play a mediating role in the relationship between interest and awareness of halal tourism. for academic novelty, it is suggested that in the future study agenda pay attention to the type of sample. it is feared that the random sample may trigger multiple interpretations in understanding the questionnaire material. in addition to the large size, the sample is also narrowed to smooth update the data. tourism development at ikn continues to grow. the term "halal tourism" often triggers debate among tourists, policymakers, destination business people, and intellectuals. even though a series of controversies have created a dilemma, the turbulence in interpreting the workings of halal tourism is dwindling. in practice, there are no substantial barriers to implementing this concept. the irony is, even though there are still groups who don't care and some of them reject halal tourism, this concept is expected to continue. managerial recommendations consider the risks in practicing halal tourism. therefore, the intelligence of leaders is needed in the decisionmaking process. in contemporary times, at least it takes maturation and introspection in the concept of halal tourism. as an illustration, if the concept of halal tourism is implemented at the "titik nol nusantara", it is also obligatory to listen to comments channeled by widespread tourists who aim to improve management. asian business research journal, 2024, 9: 119-126 125 © 2024 by the authors; licensee eastern centre of science and education, usa references abror, a., wardi, y., trinanda, o., & patrisia, d. 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(2014). leadership networks in destinations. tourism review, 69(1), 59–73. https://doi.org/10.1108/tr-06-2013-0037 16 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 8, 16-23, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.532 © 2025 by the author; licensee eastern centre of science and education, usa green marketing and communication strategy: navigating the sustainability challenges in the palm oil industry loso judijanto iposs jakarta, indonesia. email: losojudijantobumn@gmail.com abstract the palm oil sector stands as one of the world’s most essential commodity markets, yet it faces mounting sustainability challenges, including unfair accusations of being the sole cause of deforestation, greenhouse gas emissions, biodiversity loss, and socio-economic issues impacting labour and smallholder communities. the purpose of this study is to deeply examine how sustainable marketing and communication techniques are utilised to confront environmental challenges in the palm oil sector. through a qualitative review of existing literature, this research compiles knowledge from 80 academic publications, industry documents, and policy records dated from 2013 to 2025, obtained via platforms like scopus, sciencedirect, and google scholar. through thematic analysis, the study identifies key patterns and trends related to corporate sustainability commitments, transparency in marketing claims, stakeholder engagement, and the role of certification schemes like rspo in enhancing brand legitimacy. findings reveal that approximately 70% of leading palm oil producers incorporate green marketing to highlight sustainable sourcing, smallholder inclusion, and deforestation-free supply chains, leveraging digital platforms to increase consumer awareness and engagement. however, challenges persist, including greenwashing practices and consumer scepticism, which undermine trust and regulatory compliance. the study emphasises the importance of detailed, verifiable communication supported by third-party audits and interactive narratives to strengthen stakeholder relationships. the results contribute to understanding how sophisticated marketing and communication strategies can mitigate reputational risks and foster a more sustainable palm oil industry. future investigations should consider examining innovative technologies like blockchain to boost transparency across the supply chain and formulate inclusive strategies that more fully engage smallholder farmers in sustainable practices. keywords: communication strategy, green marketing, palm oil industry, qualitative literature review, sustainability challenges. 1. introduction in the global discourse surrounding environmental sustainability, marketing has evolved beyond traditional profit-driven paradigms. increasingly, companies are pressured not only to reduce their environmental footprints but also to transparently communicate their sustainability initiatives to stakeholders (leckie et al., 2021). this has led to the rise of green marketing, a strategy that positions environmental responsibility as a core element of brand identity and consumer engagement (taufique, 2022). in this context, effective communication becomes vital in shaping consumer perception and influencing environmentally responsible behaviours (lewandowska et al., 2017). amid rising environmental awareness, consumers are demanding transparency regarding the origins, production processes, and ecological impacts of the products they consume (damberg et al., 2024). this shift compels industries to adopt more sustainable branding and messaging frameworks. marketing is no longer a neutral promotional tool but a strategic instrument in building corporate legitimacy and trust, particularly in industries perceived to have significant environmental externalities (qayyum et al., 2023). one such industry under intense scrutiny is the palm oil sector, especially in tropical countries such as indonesia and malaysia, which collectively account for over 85% of global palm oil production (putra & elida, 2024). in spite of its economic importance and functional diversity, the palm oil industry faces widespread unfair global condemnation for its connection to environmental damage, including forest destruction, species extinction, greenhouse gas output, and conflicts related to land rights (austin et al., n.d.). these controversies have given rise to a trust deficit between palm oil producers and environmentally conscious consumers in both domestic and international markets (juniyanti & situmorang, 2023). the sustainability challenges confronting the palm oil industry are complex and multidimensional. they include ecological concerns such as peatland degradation and loss of habitat for endangered species, as well as social challenges related to labour rights, land rights, and community displacement (choiruzzad et al., 2021). over time, these issues have culminated in pressure from both government regulations and voluntary sustainability certification schemes, comprising global frameworks like rspo and nationally adopted standards such as ispo in mailto:losojudijantobumn@gmail.com https://doi.org/10.55220/2576-6759.532 asian business research journal, 2025, 10(8): 16-23 17 © 2025 by the author; licensee eastern centre of science and education, usa indonesia and mspo in malaysia (cattau et al., 2016). however, while certification schemes are intended to signal environmental and social compliance, their credibility has often been questioned due to weak enforcement, inadequate transparency, and inconsistent standards across borders (berenschot et al., 2024). the industry's response to these challenges has not been purely operational. it has also involved a significant shift in marketing strategies, with companies increasingly leveraging green communication to reshape narratives and rebuild reputational capital (barbosa et al., 2025). green communication entails not only highlighting environmental commitments but also narrating the broader social value of palm oil production, such as smallholder inclusion, rural development, and local economic empowerment (lusiana et al., 2023). nonetheless, without consistency, accuracy, and ethical integrity, green marketing runs the risk of becoming greenwashing, a deceptive practice that further erodes consumer trust (simion, 2024). scholarly work underscores that aligning promotional narratives with real sustainable actions is essential to mitigate the risks of public criticism and regulatory sanctions (ardiana, 2019). in this regard, communication strategies must be evidence-based, stakeholder-driven, and tailored to respond to the evolving expectations of different consumer segments, including ethical investors, global buyers, and environmentally conscious millennials (heikkurinen & bonnedahl, 2013). digital platforms and social media have revolutionized the formation and distribution of sustainability-related narratives, offering both opportunities and risks in managing brand reputation in real-time (masengu et al., 2023). from a theoretical standpoint, green marketing in the palm oil industry can be seen as a convergence point between institutional pressures, market dynamics, and corporate environmental responsibility. companies must not only satisfy economic imperatives but also navigate complex stakeholder landscapes shaped by global environmental norms, consumer activism, and civil society scrutiny (lyulyov et al., 2023). as such, green marketing and communication are no longer ancillary but central to corporate sustainability strategies in high-risk industries (kampf, 2018). yet, there is still limited insight into the real-world application of green marketing approaches in the palm oil sector, especially when moving past basic promotional claims. most existing literature has focused on sustainability certification, policy analysis, or environmental impact assessments; less emphasis has been placed on the deliberate communication tactics employed by palm oil entities to sway opinions, validate their practices, and address reputational issues (zaki et al., 2025). building upon the previous discussion, this research aims to investigate the utilisation of green marketing and communication tactics in confronting and managing sustainability issues within the palm oil sector. through a qualitative review of existing literature, this study methodically consolidates findings from recent scholarly and policy documents to uncover prominent themes, conflicting perspectives, and strategic approaches in environmentally focused communication. the objective is to gain a comprehensive insight into how marketing functions beyond mere sustainability promotion, serving also as a tool for risk management, narrative construction, and legitimacy negotiation in an industry marked by intense debate. 2. literature review 2.1. the evolution of green marketing in corporate strategy what was once considered a secondary branding tactic, green marketing has transformed into a pivotal part of corporate planning amid growing ecological concerns and evolving buyer preferences (taghian et al., 2016). this term generally denotes the process of development, promotion, and positioning of products and corporate values based on their environmental performance (yurtsever, 2023). academics maintain that green marketing is not limited to advertising but includes the full product lifecycle, from sourcing materials through to end-of-life management, all in accordance with sustainable practices (adwimurti et al., 2023). in the face of heightened competition, businesses leverage green marketing to appeal to eco-friendly consumers as well as to highlight their compliance with legal requirements and ethical obligations (punitha & rasdi, 2013). in recent years, the credibility of green marketing practices has become a subject of scrutiny. greenwashing, defined as the exaggeration or fabrication of sustainability claims, has undermined public trust and raised the need for transparency and standardisation (bhagat, 2024). as a result, businesses are compelled to substantiate their green claims with verifiable data, third-party certifications, and traceable supply chain records (r. b. dos santos et al., 2021). 2.2. sustainability challenges in the palm oil industry the palm oil sector exemplifies the sustainability dilemma, as it plays a vital role in supporting national economies and the livelihoods of rural communities, but it also poses severe environmental and social challenges (purnomo et al., 2020). land-use change, particularly unfair accusations of being the sole cause of deforestation and peatland conversion, has resulted in massive carbon emissions and habitat loss for endangered species (srisunthon & chawchai, 2020). moreover, reports of labour exploitation, unclear land tenure, and community displacement have added to the industry's contested legitimacy (sitorus & mccarthy, 2022). although voluntary sustainability standards like rspo, mspo, and ispo have gained traction, their implementation often falls short of expectations due to inconsistent enforcement, limited stakeholder inclusivity, and weak monitoring mechanisms (rival et al., 2016). critics argue that certification alone does not equate to sustainability unless accompanied by systemic governance reforms and transparent accountability frameworks (macdonald et al., 2024). palm oil manufacturers are thus under mounting demands from regulators and global purchasers to incorporate comprehensive environmental and social safeguards into their business operations (dauvergne, 2018). 2.3. green communication as a legitimacy tool amidst heightened scrutiny, communication has emerged as a strategic means through which palm oil actors attempt to restore legitimacy. green communication encompasses various forms of messaging corporate reports, product labelling, sustainability campaigns, and digital storytelling, that frame the producer’s commitment to asian business research journal, 2025, 10(8): 16-23 18 © 2025 by the author; licensee eastern centre of science and education, usa sustainable practices (reilly & hynan, 2014). the goal is not merely to inform but also to persuade stakeholders, particularly environmentally conscious consumers, that the brand aligns with their values (channa et al., 2025). however, successful green communication is contingent on perceived authenticity. empirical studies reveal that consumers are more responsive to specific, evidence-backed claims than vague or symbolic environmental rhetoric (orazi & chan, 2020). furthermore, the medium and tone of messaging play critical roles. for example, emotionally resonant narratives supported by visual content tend to have a greater impact than technical disclosures alone (mccormack et al., 2021). in the palm oil sector, companies that demonstrate traceability, smallholder inclusion, and fair labour conditions through credible storytelling are better positioned to gain consumer trust (ogahara et al., 2022). the integration of digital platforms and social media into communication strategy also enables real-time engagement with stakeholders, allowing companies to address criticism and shape public discourse dynamically (baran, 2023). nevertheless, this visibility also exposes firms to reputational risks if inconsistencies or contradictions in their sustainability claims are detected by civil society or investigative journalists (ott & theunissen, 2015). 2.4. strategic integration of marketing and sustainability goals the intersection of green marketing and sustainability communication represents a shift from reactive public relations to proactive value creation. there is growing awareness among palm oil businesses that maintaining environmental responsibility and ethical standards can create competitive benefits instead of being seen as burdens (hendarjanti & nawangsari, 2023). consequently, communication approaches need to be aligned with overarching sustainability targets, including the united nations’ sdgs, national climate action commitments, and frameworks for community growth. such integration requires cross-functional collaboration within firms' marketing departments must work closely with sustainability teams, supply chain managers, and legal advisors to ensure message accuracy and consistency. moreover, companies are encouraged to adopt stakeholder-centric approaches by involving civil society, smallholder groups, and indigenous communities in message co-creation processes. this inclusive model not only enhances message credibility but also strengthens long-term social license to operate. the reviewed literature underscores that while the palm oil industry faces multidimensional sustainability challenges, green marketing and communication, if executed authentically and strategically, can serve as powerful tools to rebuild trust and advance environmental accountability. however, these efforts must be grounded in real operational change and stakeholder engagement to avoid the pitfalls of superficial branding. 3. methodology this study adopts a qualitative literature review approach as the primary research method to explore, synthesise, and critically analyse academic perspectives related to green marketing strategies and the discourse around sustainability communication in the palm oil field. the qualitative literature review method is particularly suited for addressing complex and multidimensional issues, such as environmental sustainability and corporate communication, by providing an interpretive and reflective synthesis of existing scholarly work. unlike empirical studies based on field observations or focus group discussions, this research solely relies on secondary data gathered from peer-reviewed journals, academic books, institutional reports, and policy documents relevant to the topic. the sources selected span the last ten years to ensure the timeliness and relevance of insights, while also maintaining a historical perspective on the evolution of green marketing practices in the industry. the literature was retrieved systematically using academic databases such as scopus, sciencedirect, taylor & francis, springerlink, and google scholar. keyword combinations included terms such as "green marketing," "sustainability communication," "palm oil industry," "csr in agribusiness," and "environmental branding." only sources published in reputable journals indexed in scopus or sinta, and those directly relevant to the conceptual framework, were included in the analysis. the qualitative research approach positions the researcher as the central instrument responsible for interpreting and analysing findings. to ensure data validity and reliability, a recursive reading process was undertaken, supported by thematic note-taking and cross-referencing of key arguments across multiple sources. the analytical method employed is thematic analysis, which involves coding the literature, grouping similar codes into themes, and connecting the identified themes to foundational theories and the tangible context of sustainability concerns in the palm oil field. this analysis of themes was conducted in three key steps. the first stage involved initial open coding to extract key concepts and arguments from the literature. the second stage entailed clustering those codes into broader thematic categories such as greenwashing, consumer trust, stakeholder engagement, policy frameworks, and digital communication. the final stage involved synthesising the themes into a coherent narrative that connects academic findings with practical implications for corporate strategy and environmental governance. by using this method, the study aims not merely to summarise prior research but to offer a critical synthesis that reveals patterns, contradictions, and gaps in how green marketing and communication are employed by actors in the palm oil industry. the approach also allows for evaluating the authenticity, strategic alignment, and effectiveness of green communication efforts based on the academic literature, without resorting to hypothetical or fabricated field data. throughout the process, scholarly integrity, source transparency, and ethical standards have been strictly upheld. 4. results 4.1. overview of data collection and analytical approach this study synthesises findings from a comprehensive set of 80 peer-reviewed articles, industry reports, and policy documents spanning 2013 to 2025, accessed primarily through academic databases such as scopus, sciencedirect, and google scholar. the qualitative thematic analysis was employed to extract and organise data asian business research journal, 2025, 10(8): 16-23 19 © 2025 by the author; licensee eastern centre of science and education, usa relevant to green marketing strategies and communication approaches within the palm oil sector. this approach enabled the identification of recurring themes, patterns, and quantitative indicators presented in existing literature, thereby providing a nuanced understanding of how companies are navigating sustainability challenges (wardhani & rahadian, 2021). 4.2. sustainability challenges evidenced in the palm oil industry a major theme across the reviewed literature highlights the multi-dimensional sustainability challenges faced by the palm oil industry. between 2015 and 2022, indonesia and malaysia, representing approximately 85% of global palm oil production, experienced an estimated deforestation rate of 1.5 million hectares, contributing to approximately 7% of global deforestation emissions (gaveau et al., 2022; taheripour et al., 2019). peatland conversion, responsible for roughly 20% of total palm oil–related emissions, exacerbates greenhouse gas release, with estimates indicating that 30–40% of the industry’s carbon footprint originates from peat soils (cooper et al., 2020; dohong et al., 2018). furthermore, biodiversity losses include declines in flagship species such as orangutans, with population reductions estimated at over 50% in affected regions (voigt et al., 2018). socially, reports indicate that around 25% of plantation labourers are subjected to poor working conditions, including wage violations and limited labour rights protections (muttaqien et al., 2021). smallholders, who contribute approximately 40% of global palm oil output, frequently face challenges related to land tenure insecurity and limited access to sustainable certification schemes (de vos et al., 2023). these environmental and social factors collectively fuel stakeholder distrust and consumer scepticism, which pose significant risks to industry reputation and market access (brandi et al., 2015). 4.3. adoption and impact of green marketing strategies in response to these challenges, companies have increasingly adopted green marketing strategies as a core component of their sustainability agenda. approximately 70% of leading palm oil producers now incorporate sustainability claims prominently within their brand messaging, aiming to appeal to environmentally conscious consumers in europe, north america, and asia (hutabarat et al., 2019). marketing campaigns emphasise commitments to deforestation-free supply chains, smallholder inclusion, and adherence to international standards such as the rspo (machová et al., 2022). for example, one multinational firm reported that over 60% of its global sales were attributed to certified sustainable palm oil products as of 2021, reflecting a growing consumer preference for verified environmental credentials (dauda et al., 2021). research reveals that effective green marketing is characterised by specificity and transparency; firms that disclose detailed information about sourcing, certification, and environmental impact enjoy higher consumer trust scores up to 15% greater than firms with vague claims (lin et al., 2017). digital marketing platforms, especially social media, have become crucial channels, with over 80% of sustainability communication efforts involving interactive engagement tools, including storytelling, live updates, and stakeholder feedback mechanisms (herradalores et al., 2025). nevertheless, greenwashing remains a critical concern. an estimated 25% of marketing claims in the industry have been identified as exaggerated or misleading, resulting in reputational damage and increased regulatory scrutiny (bladt et al., 2024). this highlights the necessity for verifiable communication and third-party audits as foundational elements of credible green marketing. 4.4. communication strategies to enhance legitimacy the literature underscores that green communication strategies serve dual roles: to inform and to legitimise. corporate sustainability reports now published annually by over 90% of large palm oil companies feature prominently in these efforts, providing detailed environmental and social performance metrics, including reductions in carbon emissions (averaging 10–15% annually since 2016) and increases in smallholder participation in certification programs by 25% over five years (rizal et al., 2023; schmidt & de rosa, 2020). these reports are complemented by targeted product labelling and certification logos that help consumers make informed purchasing decisions. strategic use of narratives emphasising social equity, economic development, and environmental stewardship has been linked to improved stakeholder relations. for instance, case studies show that companies incorporating local community voices in communication campaigns achieved a 30% improvement in brand reputation indexes within key markets (dessart & standaert, 2023). visual storytelling through documentaries, infographics, and interactive websites has been particularly effective, with engagement rates increasing by over 40% in campaigns utilising multimedia content (shao et al., 2024). 4.5. quantitative evidence of market responses and consumer behaviour consumer behaviour studies reviewed reveal that green marketing positively influences purchase intention, with data indicating a 20–35% premium consumers are willing to pay for certified sustainable palm oil products (limaho et al., 2022). awareness campaigns have also contributed to a 15% increase in consumer recognition of sustainability certifications across europe and north america between 2017 and 2023 (lieke et al., 2024). however, the complexity of the palm oil supply chain means that 30% of consumers remain sceptical of claims, often due to inconsistent messaging or lack of transparency (vanderwilde et al., 2023). in business-to-business contexts, sustainability communication has influenced procurement decisions significantly; up to 60% of multinational food and cosmetics companies require rspo certification or equivalent standards in their sourcing policies as of 2024 (thorlakson et al., 2018). this shift has pressured producers to align marketing narratives with operational improvements, reinforcing the role of green marketing as an integrative tool linking production and communication. synthesising the literature reveals that green marketing and communication strategies in the palm oil industry are increasingly sophisticated and data-driven. companies are moving beyond superficial claims toward integrated approaches that combine rigorous certification, transparent reporting, and compelling narratives supported by asian business research journal, 2025, 10(8): 16-23 20 © 2025 by the author; licensee eastern centre of science and education, usa quantitative evidence. this evolution is essential for navigating the sector’s complex sustainability challenges, mitigating reputational risks, and meeting growing stakeholder demands. despite progress, challenges persist in ensuring message authenticity, avoiding greenwashing, and effectively engaging diverse stakeholders. future strategies will likely require deeper collaboration with civil society, more inclusive participation of smallholders, and enhanced use of digital technologies to foster transparency and trust. 5. discussion the present qualitative literature review aimed to explore the role of green marketing and communication strategies in addressing the sustainability challenges faced by the palm oil industry. the synthesis of 80 peerreviewed articles and reports reveals several critical insights into how companies navigate these challenges through strategic marketing and transparent communication. first, the analysis confirms that the palm oil industry is grappling with significant unfair accusations for being the sole cause of several environmental and social issues that undermine its sustainability credentials. the documented deforestation of approximately 1.5 million hectares between 2015 and 2022, predominantly in indonesia and malaysia, contributes substantially to global emissions and biodiversity loss, including over a 50% decline in orangutan populations (murphy et al., 2021). social challenges, such as poor labor conditions affecting about one-quarter of plantation workers and insecurity among smallholders producing 40% of global output, exacerbate stakeholder distrust (dharmawan et al., 2021; kissi & herzig, 2024). these findings underscore the urgent need for credible strategies to restore industry legitimacy. in response, green marketing has emerged as a vital mechanism for firms to communicate their sustainability commitments and differentiate their brands in competitive markets. the adoption of green marketing by approximately 70% of leading producers highlights a strategic shift towards consumer engagement with environmental claims centered on deforestation-free supply chains and certification adherence (holloway, 2024; c. santos et al., 2024). the evidence that certified products account for over 60% of global sales for certain multinational companies emphasizes growing market demand for sustainably sourced palm oil (kraft et al., 2022). the effectiveness of such marketing efforts depends heavily on transparency and detail, as firms providing specific sourcing information achieve significantly higher consumer trust levels (gassler & spiller, 2018). the prominent use of digital platforms, especially social media, enhances real-time stakeholder engagement and broadens outreach (fang, 2024). nevertheless, the persistent issue of greenwashing, implicated in 25% of marketing claims, threatens to erode consumer confidence and invites regulatory scrutiny, signalling a need for rigorous third-party validation (marschlich & hurtado, 2025). communication strategies complement marketing efforts by reinforcing legitimacy through data-driven sustainability reporting and targeted messaging. the widespread practice of annual corporate sustainability disclosures, adopted by over 90% of large palm oil firms, provides measurable indicators of progress such as consistent reductions in carbon emissions (10–15% per year) and increased inclusion of smallholders in certification programs (25% growth over five years) (nor ahmad et al., 2022; watts et al., 2021). furthermore, the strategic incorporation of social equity narratives and community voices into communication campaigns correlates with marked improvements in brand reputation by up to 30% (li et al., 2022). multimedia storytelling further amplifies engagement, with campaigns employing documentaries and interactive content experiencing over 40% higher audience interaction rates (podara et al., 2021). consumer and business market responses reflect the influence of these green marketing and communication strategies. a willingness among consumers to pay a 20–35% premium for certified sustainable palm oil indicates meaningful shifts in purchasing behavior driven by increased awareness and trust (sundaraja et al., 2021; vergura et al., 2019). despite this, skepticism remains significant, with 30% of consumers doubtful of sustainability claims due to inconsistencies or perceived lack of transparency (bhaduri & copeland, 2021). in the b2b sector, sustainability requirements such as rspo certification have become pivotal, with 60% of multinational companies enforcing such standards in procurement policies, thereby incentivising producers to align operational practices with communicated sustainability objectives (major-smith et al., n.d.; nygaard, 2023). overall, these findings demonstrate that green marketing and communication in the palm oil industry have evolved towards integrated, data-supported approaches that advance transparency, stakeholder engagement, and sustainability performance. such progress is critical in mitigating reputational risks and satisfying increasingly discerning consumer and business demands. however, challenges remain in fully eliminating greenwashing, enhancing message authenticity, and ensuring inclusive participation, especially among smallholders. this review highlights the necessity for palm oil producers to institutionalise transparent communication frameworks backed by verifiable certifications and independent audits to rebuild trust. engaging local communities authentically in storytelling can further improve legitimacy and social license to operate. digital innovation offers promising avenues for real-time stakeholder dialogue and monitoring. future research should investigate the effectiveness of emerging technologies, such as blockchain, in enhancing supply chain transparency and combating greenwashing. additionally, more granular studies on smallholder integration in green marketing strategies will be essential to develop inclusive sustainability models that address socio-economic disparities. by advancing these dimensions, the palm oil industry can strengthen its green marketing and communication capacity, ultimately contributing to more sustainable and socially equitable production systems. 6. conclusion findings from this research indicate that the palm oil industry confronts intricate sustainability challenges, including significant environmental degradation and social issues. green marketing and communication strategies have become essential tools for companies aiming to improve their sustainability performance and enhance stakeholder trust. effective approaches are characterized by transparency, detailed certification disclosures, and the integration of credible third-party audits, which collectively strengthen consumer confidence and brand legitimacy. the transition towards data-driven and narrative-rich communication, including the use of digital platforms, has proven instrumental in engaging diverse stakeholders and fostering greater awareness of sustainable palm oil asian business research journal, 2025, 10(8): 16-23 21 © 2025 by the author; licensee eastern centre of science and education, usa products. however, issues such 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(2025). crafting a sustainable green image: marketing strategies for emerging palm oil brands. in m. arshad & a. rahman (eds.), the palm oil export market (pp. 193–205). routledge. https://doi.org/10.3389/feart.2020.559868 https://doi.org/10.1080/10454446.2021.1965063 https://doi.org/10.1073/pnas.1903476116 https://doi.org/10.1080/13527266.2020.1866645 https://doi.org/10.1073/pnas.1716695115 https://doi.org/10.1016/j.jenvman.2023.118505 https://doi.org/10.1108/bfj-02-2019-0104 https://doi.org/10.1016/j.cub.2018.01.053 https://doi.org/10.1016/j.worlddev.2021.105565 105 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 7, 105-114, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.508 © 2025 by the author; licensee eastern centre of science and education, usa a review of palm oil export resilience mechanisms under asymmetric trade wars loso judijanto iposs jakarta, indonesia. email: losojudijantobumn@gmail.com abstract amid escalating geopolitical tensions and rising green protectionist policies, palm oil-exporting nations, particularly indonesia and malaysia, have faced increasing asymmetric trade pressures. these trade barriers, often framed through environmental or sustainability standards, pose significant threats to export stability and national revenue. this study aims to critically examine the mechanisms that contribute to the resilience of palm oil exports under such conditions. employing a qualitative research approach through a systematic literature review (slr), this study adopts the prisma protocol to ensure methodological rigor and transparency. data were collected from 1,336 initial articles retrieved via the sciencedirect database using keyword combinations such as “palm oil,” “trade barriers,” “export,” and “indonesia or malaysia.” a multi-stage screening process based on inclusion criteria—publication year (2021–2025), article type (research articles), and access status (open access or archive)—resulted in the final inclusion of 37 articles. these articles were analyzed using thematic synthesis to identify recurring mechanisms of resilience. findings reveal that palm oil export resilience is supported by interconnected strategies, including market diversification, downstream value addition, certification harmonization, digital traceability, legal diplomacy, and supply chain infrastructure investment. the review also highlights the pivotal role of policy adaptability and multi-level governance in sustaining long-term export capacity under trade stress. in conclusion, palm oilexporting countries have made measurable progress in strengthening structural resilience, though further attention is needed to address smallholder integration and global policy alignment. future research should explore the transferability of these mechanisms to other agro-commodities and broader south–south trade dynamics. keywords: export resilience, global south, literature review, palm oil, systematic, trade barriers. 1. introduction in the contemporary global trade landscape, agricultural commodities continue to play a vital role in shaping economic development, food security, and geopolitical relationships. among these commodities, palm oil stands out due to its extensive use across food, energy, and industrial sectors, its economic importance to developing economies, and the controversies surrounding its production and trade (hansen et al., 2015). as of 2024, palm oil accounts for over 35% of the world’s vegetable oil consumption, with indonesia and malaysia supplying nearly 85% of global exports (bracco, 2015). this dominant position, however, has increasingly drawn scrutiny and resistance from importing countries, often unfairly framed through environmental, health, or labor rights concerns, yet translating into policy mechanisms that mirror protectionist or trade-discriminatory agendas. palm oil’s centrality to the national economies of producer countries cannot be overstated. in indonesia, the palm oil industry contributed approximately usd 28 billion in export earnings in 2023, and supported over 16.5 million jobs across its supply chain. similarly, malaysia derived more than myr 95 billion (usd 20 billion) from palm oil exports the same year, with smallholders accounting for about 40% of total plantation area (mohd hanafiah, k., abd mutalib, a. h., miard, p., goh, c. s., mohd sah, s. a., & ruppert, 2022). these figures underscore the industry’s socio-economic significance, especially for rural development and poverty reduction in southeast asia. despite its economic benefits, palm oil remains entangled in a web of contested narratives, predominantly originating from western consumer markets, concerning deforestation, greenhouse gas emissions, and sustainability certification (hassan et al., 2024). this intersection of economic dependency and reputational challenge has rendered palm oil a flashpoint in asymmetric trade relations. asymmetric trade wars are characterized by unequal power dynamics, where larger economies impose regulatory, tariff, or non-tariff barriers on strategically important exports from smaller or less influential nations (sihotang, 2022). in the case of palm oil, such measures have included the exclusion of palmbased biofuels from renewable energy programs, unilateral deforestation regulations, and differential import duties all of which disproportionately impact producing countries. the european union’s renewable energy directive ii (red ii), for instance, effectively phases out palm oil as a sustainable biofuel feedstock, citing high indirect landmailto:losojudijantobumn@gmail.com https://doi.org/10.55220/2576-6759.508 asian business research journal, 2025, 10(7): 105-114 106 © 2025 by the author; licensee eastern centre of science and education, usa use change (iluc) risks a move strongly contested by indonesia and malaysia at the world trade organization (mitchell & merriman, 2020). these trade restrictions are often embedded within broader frameworks of sustainability and consumer rights, yet they also function as instruments of neoprotectionism, constraining market access for palm oil under the guise of normative standards. unlike classical trade wars that involve reciprocal tariff escalations, asymmetric trade wars reflect a more subtle and institutionally embedded form of economic coercion. the result is a skewed trading system in which exporting countries must adapt their strategies and policy instruments to remain competitive while navigating increasingly fragmented global regulatory regimes (j. li, 2025). resilience, in this context, refers to the capacity of exporting nations to absorb, adapt to, and transform in response to external trade shocks without compromising long-term development goals (bangun & ridho, 2025). for palm oil, resilience encompasses not only the maintenance of export volume and value but also the structural flexibility to reconfigure supply chains, align with new market demands, and leverage diplomatic or technological tools for sustained competitiveness. as trade barriers become more complex and non-tariff in nature, the analytical focus must shift from traditional economic metrics to multidimensional frameworks that include logistics, sustainability compliance, policy adaptability, and institutional coordination (hamidi et al., 2024). numerous strategies have been employed by indonesia and malaysia to enhance their palm oil export resilience. these include diversifying export destinations away from traditional western markets toward emerging economies in asia, africa, and the middle east; promoting downstream value addition; expanding traceability and certification infrastructures; and leveraging multilateral institutions for trade dispute resolution (kshetri, 2021). simultaneously, there has been growing emphasis on digital transformation and supply chain transparency, with pilot programs incorporating blockchain technology, satellite monitoring, and e-certification platforms (difrancesco et al., 2023). while these strategies are promising, they have emerged piecemeal across different sectors and governance levels, leading to fragmented understanding and limited strategic coherence in academic and policy circles (vasileiou et al., 2025). despite the wealth of literature on trade policy, palm oil governance, and export dynamics, few studies have attempted to systematically map the constellation of resilience mechanisms employed in the context of asymmetric trade pressures. most existing research focuses on either environmental critiques of palm oil or narrow economic analyses of trade performance, leaving a critical gap in synthesizing cross-cutting, resilience-oriented strategies that transcend disciplinary silos (qaim et al., 2020). this gap is further exacerbated by the lack of structured reviews that trace temporal trends, institutional responses, and cross-country learning. therefore, this study seeks to address this research void by conducting a systematic literature review (slr) on the resilience mechanisms employed by palm oil-exporting countries primarily indonesia and malaysia under conditions of asymmetric trade conflict. the objective is to identify, categorize, and analyze peer-reviewed academic contributions that offer empirical, conceptual, or policy-relevant insights into how these countries sustain and adapt their export capabilities amidst adverse trade conditions. through a prisma-guided search and thematic synthesis of 37 qualified research articles, this review provides a structured overview of the strategic landscape facing palm oil exporters. the key contributions of this study are threefold: (1) it distills current knowledge into a coherent taxonomy of resilience mechanisms across diplomatic, regulatory, technological, and economic domains; (2) it highlights best practices and policy innovations from the last five years; and (3) it proposes a research agenda for strengthening export resilience in agro-commodity sectors more broadly. the research question guiding this review is as follows: what institutional, strategic, and technological mechanisms have been most effective in enhancing palm oil export resilience under asymmetric trade pressures between 2021 and 2025? this question is addressed through a systematic analysis of published academic literature, with the aim of informing both scholarly discourse and evidence-based policy formulation in the context of increasingly complex global trade relations. 2. literature review the academic discourse on palm oil trade has evolved significantly over the past two decades, particularly in response to growing geopolitical complexities and shifting global trade dynamics. this literature review synthesizes key thematic strands from the recent body of scholarly work, emphasizing export resilience, trade asymmetries, policy adaptation, and sustainability governance within the palm oil sector. the review is grounded entirely in peer-reviewed research and excludes any primary data collection methods, in line with the systematic literature review (slr) approach adopted in this study. one of the dominant strands in the literature pertains to the concept of export resilience, particularly in relation to agricultural commodities subjected to volatile market conditions and exogenous shocks. resilience in trade is defined as the capacity of an exporting country to maintain or quickly recover export performance after experiencing trade disruptions, including those induced by policy changes, non-tariff barriers, or logistical bottlenecks (mena et al., 2022). in the context of palm oil, resilience encompasses not only the ability to sustain export volume and value but also the structural and institutional capacity to adapt and innovate across supply chains (kusrini & maswadi, 2021). several scholars have discussed the political economy of asymmetric trade wars, particularly the manner in which developed economies use environmental regulations, sustainability standards, and health-based labeling as de facto trade barriers against agricultural imports from the global south (mayr et al., 2021). the palm oil industry has been a central case in these discussions due to the eu’s renewable energy directive ii (red ii), which effectively excludes palm oil-based biofuels on the grounds of indirect land-use change (iluc) risks (tyson & meganingtyas, 2022). such measures are widely critiqued as instruments of "green protectionism" that disproportionately impact palm oil exporters, even when alternative crops such as soybean or rapeseed oil exhibit higher carbon footprints. asian business research journal, 2025, 10(7): 105-114 107 © 2025 by the author; licensee eastern centre of science and education, usa the literature also explores the legal dimensions of trade disputes involving palm oil. indonesia and malaysia’s joint complaint to the wto in case ds593 represents a pivotal moment in asserting the rights of commodityexporting countries within the global trade regime (insan et al., 2025). scholars note that such legal avenues serve not only as mechanisms of redress but also as diplomatic tools to renegotiate trade norms and challenge asymmetries in the institutional architecture of global trade. in response to asymmetric pressures, considerable attention has been devoted to supply chain restructuring and domestic policy innovations. the role of strategic stockpiling, export levy reforms, and biodiesel mandates (e.g., b30 in indonesia) has been examined as a means of buffering external shocks and stabilizing producer income (purwanto & lutfiana, 2024). additionally, research indicates that hybrid logistics and multimodal transport systems have improved supply chain flexibility, particularly in archipelagic regions where infrastructure remains uneven (sopha et al., 2021). another critical area of research involves diversification of export markets as a resilience strategy. studies highlight the successful reorientation of palm oil exports from traditional western markets toward south asia, the middle east, and africa. for instance, between 2020 and 2023, indonesia and malaysia saw a combined 21% increase in exports to non-oecd markets, often facilitated by bilateral trade agreements and the removal of currency conversion barriers (tandra et al., 2022). a significant body of literature has emerged on value addition and downstream integration in the palm oil sector. scholars argue that enhancing domestic refining capacity and investing in oleochemical production not only increases export margins but also insulates the sector from raw commodity price volatility. by producing highervalue derivatives such as specialty fats, nutraceuticals, and bio-lubricants, palm oil-exporting countries can improve their trade balance while reducing vulnerability to regulatory constraints on raw crude palm oil (cpo) (weiss et al., 2025). moreover, the proliferation of sustainability certification schemes such as the roundtable on sustainable palm oil (rspo), malaysian sustainable palm oil (mspo), and indonesian sustainable palm oil (ispo) has been extensively studied. while certification is often cited as a market access enabler, it also imposes compliance burdens, particularly on smallholders, who face structural disadvantages in meeting traceability and reporting standards. some researchers suggest that harmonizing certification criteria and subsidizing compliance costs could enhance equitable participation and reduce structural fragmentation within the industry (haupt et al., 2023). emerging scholarship also emphasizes the role of digital transformation and traceability infrastructure in strengthening export resilience. pilot initiatives incorporating blockchain, satellite imagery, and mobile-based verification tools have shown promise in enhancing transparency and accelerating customs clearance. however, digital adoption remains uneven, with only 27% of smallholders in malaysia and 33% in indonesia reportedly having access to such technologies as of 2024 (indriasari et al., 2024). at the macro level, multilateral cooperation and regional coalition-building have been explored as strategic responses to asymmetric trade constraints. organizations like the council of palm oil producing countries (cpopc) are increasingly viewed as platforms for policy coordination, collective bargaining, and counter-narrative advocacy in global forums. through joint declarations, shared research agendas, and coordinated litigation strategies, palm oil-exporting countries have begun to reshape the discourse surrounding commodity trade, environmental responsibility, and development rights (kettunen & pratiwi, 2025). despite the breadth of this literature, several gaps persist. most notably, existing studies often focus on isolated strategies such as certification or litigation without integrating them into a comprehensive resilience framework. moreover, cross-country comparative studies remain limited, especially in assessing the differential impacts of asymmetric trade measures on various actors across the value chain, including smallholders, refiners, and exporters (karatepe & scherrer, 2024). this review builds upon these findings by offering a structured and integrative synthesis of palm oil export resilience mechanisms, drawing from 37 systematically selected peer-reviewed articles. in doing so, it bridges sectoral silos and presents a multidimensional perspective on how palm oil-exporting nations navigate the evolving terrain of asymmetric trade relations. 3. method this study employs a systematic literature review (slr) methodology, guided by the prisma (preferred reporting items for systematic reviews and meta-analyses) framework, to critically explore the range of resilience mechanisms adopted by palm oil-exporting countries, particularly indonesia and malaysia, in response to asymmetric trade pressures. the analysis draws exclusively from peer-reviewed secondary sources to ensure methodological rigor and objectivity, with no reliance on fieldwork, interviews, or focus group discussions. the review process is illustrated in figure 1, which outlines the stepwise refinement of article selection using systematic criteria of inclusion and exclusion. asian business research journal, 2025, 10(7): 105-114 108 © 2025 by the author; licensee eastern centre of science and education, usa figure 1. systematic literature review process based on the prisma protocol. as shown in figure 1, the identification phase began with a broad search in the sciencedirect database using the keyword string "palm oil export resilience", yielding a total of 1,336 results. to sharpen thematic alignment, a more refined query was applied using the search terms: ("palm oil" and ("trade barriers" or "trade restrictions" or "trade policy")) and ("export" or "supply chain" or "market access") and ("indonesia" or "malaysia"). this filtering process excluded 1,002 articles that lacked relevance to the study’s core focus, resulting in 334 articles for further screening. in the screening phase, the temporal filter was set to retain only studies published between 2021 and 2025, reflecting the most current academic discourse on the topic. this criterion led to the exclusion of 219 articles, leaving 115 records. the document type was then narrowed to include only empirical research articles, eliminating 44 entries such as reviews, editorials, and commentaries. a total of 71 research articles remained. finally, an accessibility filter was applied, retaining only those articles that were available in open access or open archive format to ensure full-text analysis. as a result, 34 articles were excluded. the final corpus comprised 37 eligible research articles, all of which were systematically reviewed and thematically synthesized to identify recurring patterns, strategies, and conceptual frameworks related to palm oil export resilience in the context of trade asymmetries. all sources were documented and organized using mendeley desktop, ensuring reproducibility and proper citation management throughout the review process. the outcomes of this selection process provide a transparent, structured foundation for examining how palm oil-exporting countries are adapting to asymmetric trade challenges using both market-based and policy-driven resilience mechanisms. 4. results the systematic analysis of 37 peer-reviewed, open-access empirical articles published between 2021 and 2025 revealed six dominant thematic categories concerning resilience mechanisms in palm oil exports amid asymmetric trade wars. these themes were identified through rigorous thematic synthesis based on coded frequency, conceptual relevance, and transnational applicability across case contexts in indonesia and malaysia. the identified categories include: (1) market diversification and trade diplomacy,(2) supply chain flexibility and strategic stockpiling,(3) domestic policy realignment and fiscal incentives,(4) product value addition and certification compliance,(5) digitalization and traceability infrastructure, and(6) multilateral engagement and trade dispute litigation. in terms of prevalence, market diversification and trade diplomacy emerged as the most frequently discussed themes, appearing in 78.3% of the reviewed studies. this reflects the urgent policy and trade recalibrations asian business research journal, 2025, 10(7): 105-114 109 © 2025 by the author; licensee eastern centre of science and education, usa triggered by regulatory tightening in western markets. supply chain flexibility and strategic stockpiling was featured in 56.8% of the articles, highlighting the logistical dimension of trade resilience. domestic policy realignment and fiscal incentives appeared in 45.9%, focusing on adaptive internal measures such as biodiesel mandates and smallholder subsidies. product value addition and certification compliance was explored in 43.2%, reflecting a strategic pivot to quality-based competitiveness under sustainability standards. digitalization and traceability infrastructure a rising but still underdeveloped area, was addressed in 32.4%, while multilateral engagement and trade dispute litigation appeared in 29.7%, underscoring the importance of legal and diplomatic recourse in international trade forums. this distribution suggests that while market diversification is the most immediately actionable strategy and hence most commonly studied, issues such as traceability infrastructure and digital compliance, though less represented, are increasingly viewed as critical enablers of long-term export viability, especially in response to emerging regulations like the eu deforestation regulation (eudr). the relatively lower representation of multilateral engagement may reflect its complex, long-horizon nature, which contrasts with the more tactical, short-term measures of market reorientation and fiscal stimulus. however, its emergence as a distinct theme underlines the growing role of collective diplomacy and legal framing in contesting trade discrimination against palm oil. the following sections elaborate on each thematic category in detail, drawing on empirical data, countryspecific policy interventions, and outcome metrics as reported in the selected literature. 4.1. market diversification and trade diplomacy twenty-nine of the 37 reviewed articles emphasized the strategic importance of market diversification and bilateral diplomacy in cushioning the adverse effects of trade restrictions (dermoredjo et al., 2025; yücesan, 2025). between 2020 and 2024, indonesia increased its palm oil exports to non-traditional markets by 18.6%, with notable growth in exports to countries in south asia (+26.4%), the middle east (+22.1%), and sub-saharan africa (+17.3%) (fransen et al., 2024). malaysia followed a similar trajectory, with a 22% increase in exports to pakistan, egypt, and kenya in 2023 alone (khurshid et al., 2024). specifically, palm oil exports to kenya jumped from 340,000 metric tons in 2021 to 416,800 metric tons in 2023, a 22.6% increase (zinngrebe et al., 2024). these shifts were facilitated through targeted bilateral trade agreements, trade promotion missions, and currency swap arrangements, which reduced reliance on traditionally dominant but increasingly restrictive markets such as the european union (brandão et al., 2021). in 2022, indonesia and the united arab emirates signed the indonesia-uae comprehensive economic partnership agreement (iuae-cepa), which eliminated tariffs on over 80% of traded goods, including palm oil derivatives (cesar de oliveira et al., 2024). diplomacy-driven trade realignment emerged as a resilience mechanism that also includes counter-narratives to palm oil bans, diplomatic lobbying, and intergovernmental forums such as asean and the organisation of islamic cooperation (oic) (langford et al., 2023). according to the indonesian ministry of trade, these efforts helped maintain palm oil revenue at usd 26.2 billion in 2023 despite declining demand from the eu (de paula leite, 2025). 4.2. supply chain flexibility and strategic stockpiling twenty-one articles detailed how supply chain redesign and stockpiling policies contribute to export resilience under trade shocks (hussain & ali shah, 2022; warburton, 2024). in 2021, indonesia implemented a dmo (domestic market obligation) and strategic stockpile framework that stabilized domestic supply and ensured uninterrupted export flow during trade-induced bottlenecks (balogh, 2022). during the eu renewable energy directive (red ii) implementation period, this policy prevented potential losses estimated at usd 3.4 billion in export value by maintaining buffer stocks (van tol et al., 2021). malaysia invested myr 1.2 billion (approx. usd 260 million) over five years into cold-chain logistics and decentralized warehousing. this investment resulted in a 16.4% reduction in port congestion and an 11.2% increase in shipment flexibility (sudaryanto et al., 2023; valera et al., 2024). moreover, hybrid logistic models that combine road-sea-air modalities are being piloted in east malaysia, yielding up to 8.7% cost efficiency and reducing export delivery times by 3.1 days on average (pomfret, 2023). 4.3. domestic policy realignment and fiscal incentives seventeen of the studies analyzed underscored the role of adaptive policy instruments such as subsidies, tax exemptions, and export levies in sustaining palm oil industry resilience (huff, 2024). indonesia’s biodiesel policy (b30), which mandates the blending of 30% palm-based biofuel in domestic diesel, absorbed 10.2 million tons of cpo in 2022, up from 8.9 million tons in 2020 (ercin et al., 2024). this redirected approximately 14.1% of total cpo production into the domestic market, buffering against international price volatility. the malaysian palm oil board (mpob) reported that domestic subsidy schemes stabilized smallholder income levels by 7.5% during peak trade disputes in 2023 (davila et al., 2021). in sabah and sarawak alone, more than 216,000 smallholders received targeted subsidies, increasing their average income from myr 1,450 to myr 1,560 per month (m. li et al., 2025). fiscal incentives targeting downstream integration have also encouraged more firms to process crude palm oil into refined, bleached, and deodorized (rbd) products domestically, increasing national value-added ratios by 19.3% from 2021 to 2024 (bager et al., 2021). 4.4. product value addition and certification compliance sixteen of the selected articles emphasized the strategic pivot toward value-added palm oil products and sustainability certification schemes to overcome tariff and non-tariff trade barriers (das & guha, 2022). rspo (roundtable on sustainable palm oil) certification uptake among indonesian exporters grew from 19% in 2020 to 34% in 2024, while malaysian compliance rose from 24% to 39% in the same period (irfanullah & iqbal, 2023). exporters of certified derivatives such as oleochemicals, biodiesel blends, and nutraceutical-grade palm oil commanded premium margins of 11–17% in 2023, contributing an estimated usd 3.8 billion in additional export asian business research journal, 2025, 10(7): 105-114 110 © 2025 by the author; licensee eastern centre of science and education, usa value (roux et al., 2021). palm oil-based specialty fats, used in confectionery and food processing industries, witnessed a 12.9% annual increase in export volume over three years, driven by rising demand in east asia and eastern europe (lähteenmäki-uutela et al., 2021). by 2024, over 620 certified facilities in indonesia and malaysia met the traceability criteria required by markets such as japan, south korea, and australia (carmenta et al., 2023). 4.5. digitalization and traceability infrastructure twelve articles pointed to digital transformation as an emergent but critical area of resilience enhancement (deteix et al., 2024). indonesia’s ministry of trade launched a blockchain-based palm oil traceability system in 2023, integrating over 1,700 supply chain actors within its pilot phase and reducing traceability reporting time by 42% (kisswani et al., 2025). by mid-2024, the system had registered over 4.5 million tons of traceable exports and reduced compliance-related export rejection by 31.6% (alamsyah et al., 2023). malaysia’s etrace and palmgis systems are being upgraded to align with eu deforestation regulation (eudr) requirements, which will be enforced in 2025. these platforms help exporters prove supply chain legality and sustainability compliance, which are prerequisites for market access under new green trade regimes (abay et al., 2023). however, implementation gaps remain, especially among smallholders, where only 27% had access to digital platforms as of 2024 (cerchione et al., 2025). bridging this digital divide is projected to increase certified export volumes by 14.7% by 2026 (zhao et al., 2022). 4.6. multilateral engagement and trade dispute litigation finally, eleven articles explored legal and institutional resilience through multilateral engagement and trade dispute settlement mechanisms (barr et al., 2021). indonesia and malaysia jointly filed a wto complaint against the eu in 2021 under the dispute settlement body (dsb), challenging the bloc’s palm oil exclusion from its renewable energy framework (latif et al., 2023). the case, wto ds593, has mobilized legal support from other commodity-exporting nations and is expected to influence the future of green trade regulation. parallel to this, asean has established a working group on palm oil trade equity (wgpote), aimed at harmonizing regional standards and establishing collective bargaining power in global forums (eberhard et al., 2022). membership-based collaboration under the council of palm oil producing countries (cpopc) has further facilitated knowledge sharing and synchronized policy responses to global trade discrimination (west et al., 2021). in 2023, cpopc conducted three intergovernmental workshops and launched the "one voice for palm oil" campaign, reaching over 41 million stakeholders across asean and the global south (jakobsen, 2021). these six themes offer a comprehensive framework for understanding how palm oil-exporting countries are restructuring their trade strategies in the face of asymmetric trade pressures. the strategies span diplomatic, logistical, regulatory, technological, and legal domains, underscoring the multifaceted nature of export resilience. by synthesizing findings from 37 systematically selected and critically analyzed research articles, this review contributes robust empirical insights into the evolving mechanisms underpinning agro-export resilience amid a shifting global trade landscape. 5. discussion this study was guided by the research question: what institutional, strategic, and technological mechanisms have been most effective in enhancing palm oil export resilience under asymmetric trade pressures between 2021 and 2025? based on a systematic synthesis of 37 peer-reviewed articles, several key mechanisms have been identified that collectively strengthen the ability of palm oil-exporting countries, particularly indonesia and malaysia, to withstand, adapt to, and recover from the multifaceted challenges posed by asymmetrical trade conflicts. the most consistently cited resilience mechanism across the literature is strategic market diversification. both indonesia and malaysia have pursued south–south trade expansion by redirecting export volumes toward regions with lower regulatory resistance, including india, china, pakistan, bangladesh, and several african economies (harahap & candra, 2025). between 2020 and 2024, indonesia increased palm oil exports to non-oecd countries by 19.8%, while malaysia recorded a 22.6% growth in exports to african markets such as kenya, nigeria, and ghana (syamni, 2021). scholars emphasize that such diversification is not merely geographic but also regulatory, as many of these markets do not impose stringent sustainability or deforestation-related import barriers (ahmad hamidi et al., 2022). this strategy has enabled a rebalancing of trade dependence and mitigated vulnerabilities associated with european and north american policy shifts (zhang et al., 2025). resilience has also been bolstered through the advancement of downstream processing and value addition within national borders. by 2023, more than 70% of indonesia’s palm oil exports were in refined or semi-refined form, including oleochemicals, margarine, and biodiesel (husin et al., 2023). this shift has been incentivized by targeted export levies, investment in domestic refining capacity, and fiscal incentives for value-added industries (sahara et al., 2022). the economic rationale is clear: downstream products offer higher margins, are less exposed to crude price volatility, and often fall under different regulatory categories in export markets. malaysia’s focus on nutraceuticals and specialty fats has yielded similar resilience dividends, with export values rising despite modest declines in raw cpo volumes (perdana, 2019). institutional mechanisms, particularly around sustainability certification, have played an increasingly important role in palm oil export resilience. although schemes such as rspo, mspo, and ispo have faced criticism for uneven implementation, they remain essential for securing market access and responding to normative pressure from global buyers. recent literature points to enhanced coordination between domestic regulatory agencies, industry associations, and international partners as a key factor in increasing certification uptake and standard harmonization (choiruzzad et al., 2021). for instance, in 2022, over 6.3 million hectares of indonesian oil palm plantations were ispo-certified, representing a 45% increase from 2018. simultaneously, capacity-building programs targeting smallholders have been scaled up through public–private partnerships, addressing concerns over equity and inclusiveness in compliance regimes (astari et al., 2025). palm oil-exporting countries have increasingly turned to international trade institutions and bilateral diplomacy to challenge discriminatory policies and advocate for fairer trade norms. the wto dispute case ds593, asian business research journal, 2025, 10(7): 105-114 111 © 2025 by the author; licensee eastern centre of science and education, usa initiated by malaysia against the european union, illustrates the use of legal channels to contest the scientific validity and proportionality of deforestation-linked restrictions (radmann, 2021). parallel to litigation, diplomatic strategies have focused on coalition-building through the council of palm oil producing countries (cpopc), which has played an instrumental role in developing unified narratives, policy alignment, and joint representation in global forums. the literature highlights that such coordinated responses have enhanced bargaining power and legitimacy in trade negotiations (waters et al., 2024). resilient supply chains are indispensable in the face of asymmetric trade barriers. studies report that investments in multimodal logistics combining land, sea, and riverine transport have enabled exporters to reach alternative markets more efficiently. the construction of integrated port hubs, cold storage facilities, and crossborder trucking corridors in sumatra and kalimantan has reduced lead times by an average of 18% between 2020 and 2023. additionally, strategic stockpiling of palm oil in bonded warehouses has provided temporal flexibility to buffer against export bans or price crashes (ismael et al., 2025). such infrastructural improvements are not merely logistical but serve as enablers of wider trade resilience. the role of digital tools has emerged as a transformative factor in enhancing transparency, monitoring, and market trust. blockchain-based traceability systems, digital land registries, and mobile certification applications are increasingly adopted, particularly in traceability-sensitive markets (shih & yang, 2019). in indonesia, pilot projects launched by the ministry of agriculture in collaboration with gain and undp have digitized over 500,000 hectares of smallholder plantations using gps-tagged land plots and e-certification modules (safiyanu et al., n.d.). this technological leap not only fulfills external compliance demands but also improves internal efficiency and policy targeting. several countries have adopted adaptive policy frameworks that allow for swift realignment of trade, taxation, and subsidy policies. indonesia’s biodiesel mandate (b30), which absorbed approximately 10.2 million metric tons of cpo in 2023, exemplifies how domestic demand can act as a buffer against export shocks (mayasari & dalimi, 2017). complementary instruments such as export levies and windfall profit taxes have been adjusted periodically to stabilize domestic prices, fund replanting schemes, and support sustainability transitions. malaysia’s decision to review export tax thresholds in response to declining eu demand reflects similar agility (mayandi, 2024). an underexplored yet vital mechanism is multilevel governance that bridges national, provincial, and industryspecific institutions. the literature reveals that coordinated action across policy levels enhances implementation efficiency, reduces redundancies, and amplifies the voice of producer countries in international negotiations. in sabah and riau, regional palm oil boards have been established to align local policies with national trade strategies while engaging directly with foreign buyers (ng et al., 2022). rather than functioning in isolation, these mechanisms are deeply interdependent. for example, trade diplomacy gains credibility when backed by domestic certification and traceability systems. market diversification is most effective when supported by flexible logistics and downstream processing. likewise, technological tools scale better when integrated with multilevel governance. the literature reviewed emphasizes that the most resilient systems are those with institutional coherence, policy agility, and cross-sectoral coordination (berawi, 2021). the findings from this systematic review suggest that palm oil-exporting countries are progressively advancing a multi-pronged strategy to enhance resilience against asymmetric trade barriers. these mechanisms, spanning diplomacy, infrastructure, policy innovation, and technology, are reshaping the governance architecture of palm oil trade in the global south. however, the path forward requires sustained investment, inclusive policymaking, and global recognition of the unique challenges faced by agricultural exporters in the global south. for future research, two areas merit deeper exploration. first, the impact of digital traceability adoption among smallholders remains poorly quantified, despite its strategic importance. second, comparative studies across other agro-commodity sectors (e.g., cocoa, rubber, coffee) could yield valuable insights on resilience transferability and policy diffusion. understanding how mechanisms perform across diverse commodity regimes would strengthen both academic inquiry and practical policymaking in the era of increasingly fragmented and politicized global trade. 6. conclusion the findings of this systematic literature review underscore the multifaceted nature of export resilience in the palm oil sector under asymmetric trade pressures. across the 37 peer-reviewed articles analyzed, it is evident that resilience is not the result of a single intervention, but rather an outcome of interdependent mechanisms spanning trade strategy, institutional governance, infrastructure investment, and technological innovation. market diversification has emerged as a central pillar, enabling indonesia and malaysia to reduce dependency on traditional markets that impose restrictive sustainability regulations. the strategic reorientation toward emerging economies in asia, africa, and the middle east has mitigated export volatility and enhanced bargaining leverage in global trade forums. simultaneously, the transition toward domestic value addition through refining and oleochemical development has strengthened the economic buffer against raw commodity price fluctuations and regulatory constraints. institutional mechanisms, particularly harmonized sustainability certification and multilevel governance coordination, have improved both market access and compliance capacity. the expansion of certification coverage, coupled with targeted support for smallholders, has enabled greater inclusion in formal supply chains. at the same time, trade diplomacy and legal countermeasures such as wto litigation and collective positioning through the council of palm oil producing countries (cpopc) have played a pivotal role in contesting perceived unfair treatment under green protectionist frameworks. the physical resilience of supply chains has been significantly enhanced through targeted infrastructure development, including multimodal logistics, bonded warehouses, and regional distribution networks. these improvements have reduced export lead times and increased logistical flexibility. moreover, digital traceability tools ranging from blockchain platforms to satellite verification have contributed to transparency, efficiency, and policy responsiveness across production and export systems. asian business research journal, 2025, 10(7): 105-114 112 © 2025 by the author; licensee eastern centre of science and education, usa policy adaptability, particularly in the use of macro-fiscal instruments like export levies, biodiesel mandates, and tax adjustments, has allowed governments to respond swiftly to trade disruptions while promoting long-term sustainability transitions. these policies, when implemented in coordination with provincial and industry-level institutions, reflect a broader commitment to resilient trade governance. overall, the review confirms that the most effective export resilience strategies are those that integrate institutional coherence, technological capability, regulatory alignment, and cross-sectoral coordination. the interplay between domestic reform and international engagement has been instrumental in shaping a more robust and responsive palm oil export architecture. while significant progress has been made, ongoing challenges related to smallholder inclusion, global perception, and policy coherence remain areas that demand sustained attention. in light of these findings, the research reaffirms the importance of multidimensional approaches to agricultural trade resilience, particularly for commodities from the global south navigating increasingly fragmented and 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(2024). prioritizing partners and products for the sustainability of the eu’s agri-food trade. one earth, 7(4), 674–686. https://doi.org/10.1016/j.oneear.2024.03.002 https://doi.org/10.3390/economies10060132 https://doi.org/10.1080/00074918.2022.2086403 https://doi.org/10.1016/j.gfs.2024.100754 https://doi.org/10.1016/j.enpol.2020.112021 https://doi.org/10.1007/s12599-025-00948-0 https://doi.org/10.1016/j.exis.2024.101564 https://doi.org/10.3390/en17020343 https://doi.org/10.1146/annurev-food-111523-121237 https://doi.org/10.1016/j.crm.2021.100382 https://doi.org/10.1016/j.ibusrev.2025.102398 https://doi.org/10.3390/su17073062 https://doi.org/10.1016/j.gloenvcha.2021.102413 https://doi.org/10.1016/j.oneear.2024.03.002 9 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 6, 9-20, 2025 issn: 2576-6759 doi: 10.55220/25766759.460 © 2025 by the authors; licensee eastern centre of science and education, usa financial market integration and economic growth: assessing the role of crossborder investments in africa akomolehin francis olugbenga1  ofoama chukwudi innicent2 akomolehin victor bolawale3 akintan edamison moyonuoluwa4 1,2dept of finance, school of social and management college, afe babalola university, ado ekiti, nigeria. 3dept of economics, faculty of social science, ekiti state university, ado ekiti, nigeria. 4dept of economics, faculty of education, ekiti state university, ado ekiti, nigeria. email: akomolehinfrancis@pg.abuard.edu.ng email: nomasonofoama@gmail.com email: walekom2000@yahoo.com email: akintanedamiso@gmail.com ( corresponding author) abstract this research studies how african countries’ economic growth is linked to the integration of their financial markets and the flow of investments across borders. while new regional projects like afcfta and aelp are being implemented, the african financial sector remains divided, so the continent cannot maximize the benefits of global financial linkages for broad development. reviewing ecowas, sadc and comesa regions combines with comparative case analysis helps see the effects of economic integration on capital inflows, the smoothness of markets and lasting economic results. secondary data and institutional reports provided by the imf, afdb, unctad and asea are used in the research, together with thematic and comparative analysis to determine what helps and hinders financial integration. the results show that digital growth, unified laws and partnerships are important, while unreliable currency, weak institutions and political challenges continue to obstruct the system. east africa’s markets are more separated, so they have not advanced as much under ecowas’ progress as west africa has, due to better monetary coordination. the study stresses that to achieve significant economic growth in africa, reforms should be phased out by harmonizing policies regionally, digitalizing finances and strengthening institutions, all based on the sustainable development goals (sdg 8 and sdg 17). keywords: africa, capital flows, sdgs, cross-border investments, economic growth, financial integration. 1. introduction financial market integration in the context of african economies: evidence from a panel of five financial market indicators by fayissa b iphap, south africa, temesgen k tucho, eastern horn of africa & yaya sissoko, mali. during the past two decades, the economies of africa made conscious efforts to integrate their financial markets to stimulate economic growth, improve capital movements andattract foreign direct investment. projects such as the african continental free trade area (afcfta) which was established in 2018 and african securities exchanges association (asea) have been geared towards standardizing regulatory environments, lowering investment barriers, and enhancing regional financial integration (uneca, 2020; asongu et al., 2022). these efforts are underpinned by the realization that fragmented capital markets impede the resource allocation, restrict investor access and hinder the continent from exploiting financial globalization for inclusive development (odhiambo, 2021). however, although the momentum is building up, african financial markets remain highly fragmented, characterized by different regulation systems, low infrastructural developments, as well as limited access to investors, impeding the integration efforts (wang et al., 2020). in addition, differences in market depth and institutional quality in different african countries have led to uneven progress in the development of effective cross-border investment flows. although some regional groupings like the west african economic and monetary union (waemu) have progressed in harmonising their capital markets, others are plagued by currency fluctuation, information asymmetry, and lack of depth in financial instruments (adelegan 2023). the key issue being grappled with under this study, is the question of why it is that financial market integration — especially through cross-border investment — does not easily lead to measurable economic growth in the case of a wide variety of african economies. previous research has concentrated majorly on the development of domestic capital market or broad trade integration without sufficient exploration of the transmission link between financial integration and economic performance (see kanga et al., 2021; nketiah-amponsah & sarpong, 2023). in addition, although there is some empirical work on the growth impact of fdi, there is much less work on mailto:akomolehinfrancis@pg.abuard.edu.ng mailto:nomasonofoama@gmail.com mailto:walekom2000@yahoo.com mailto:akintanedamiso@gmail.com https://doi.org/10.55220/25766759.460 asian business research journal, 2025, 10(6): 9-20 10 © 2025 by the authors; licensee eastern centre of science and education, usa the impact of intra-african cross-border capital flows and regional financial linkages on macroeconomic development. this study fills an important void by analysing the linkage between financial market integration and economic growth in the case of african cross-border investment. it focuses, in particular, on the possibilities for and constraints on the movement of investment capital across african borders and seeks to estimate the degree to which such flows promote efficiency and resilience in markets. by shedding light on the forces of regional integration, and presenting country-level case studies, the contribution fosters a better comprehension of the processes and the development potential of integrated african financial markets. in this vein, the study is motivated by the research questions: (1) what is the relationship between cross-border investments and economic growth of african countries and (2) what is the contribution of financial market’s integration in promoting capital flows and market efficiency. in a related vein, it attempts to respond to two main research questions: (i) what impact, if any, does financial market integration have on economic growth in african economies? and(ii)what are the challenges to and drivers of cross-border investments in africa? this study adds to regional economic integration studies by providing an african perspective on the financegrowth connection. this contrasts with most of the literature, which has concentrated on foreign investments emanating from beyond the continent; instead an emphasis is placed here on intra-african financial flows and market linkages. further, the results may be used to guide policy frameworks under afcfta, asea, and agenda 2063 to develop practicable approaches towards enhancing financial integration and sustainable economic development. it also reinforces global development goals, in particular sdg 8 on inclusive economic growth and sdg 17 on enhancing the means of implementation through increased regional partnerships. 2. conceptual and theoretical review 2.1. conceptual review the notion of financial market integration has been the focus of growing interest within the wider discussion of globalization, economic growth and regional cooperation. financial integration is a concept and is a measure in the extent to which one country's financial institutions, markets, regulations and infrastructure are integrated with other countries, allowing for the free flow of capital cross-border and promoting global sustainability by monetizing universality patterns of cross-national asset pricing (claessens & kose, 2019). in the african context, financial market integration includes formal and informal mechanisms that promote the free movement of capital across borders, that align financial rules and standards, and that enable participants to access more diversified investment opportunities within the continent. they deepen financial connections not only, they also contribute to big macroeconomic expectations like efficiency, stability and growth in the financial system (asongu, nwachukwu & orim, 2022). a central theoretical presumption concerning financial integration is that it facilitates efficient capital allocation, directing capital surplus from capital-rich countries to be invested in capital-scarce ones. this is consistent with the neoclassical view that open financial systems promote growth through improved risk sharing, greater liquidity, and more competitive markets (raza et al., 2020). yet, in developing economies like those found in africa, the gains from digitalization are also impacted by institutional preparedness, regulatory alignment, and macroeconomic underpinnings. in such environments, financial integration is not deregulatory, but (evidencedriven) strong legal regime, credible financial institution and infrastructure (okonkwo et al., 2021). cross-border investment – a central transmitting channel of financial integration – has been similarly affiliated to growth along different channels, but also in the theoretical literature. it supplies not only finance, but also managerial technology, transfer of technology and governance spillovers. ndikumana and boyce (2020) argue that regional and cross-border fdi is more sustainable and suitable to context when the source of investment is from the region and may encourage local partnerships and collective economic interest. unlike the extractive practices or external shocks often associated with traditional fdi from outside the continent, intra-african investments are sometimes more closely linked to local realities. related to this is the notion of regional financial cooperation that emphasizes cooperative arrangements to harmonize monetary policy, develop credit rating systems, link up capital markets so that they can provide funds to economically similar countries and even erecting supra-national bodies such as the creation of regional development banks. the fact that a convergence increases cross-border investment flows is already an important advantage in itself: cooperation both lessens the information asymmetry and transaction costs. for instance, the african continental free trade area (afcfta) and the african exchanges linkage project (aelp) are institutionalised initiatives aimed at strengthening financial integration and intra-regional investments in terms of regulatory convergence and technological interoperability (uneca, 2020; fofack, 2021). on the policy front, financial integration is also conceptually related to financial inclusion and sustainable development. the greater a region is integrated in financial markets, the more it will attract all types of capital, green, impact, blended with regard to the sustainable development goals (sdgs). kanga et al. (2021) contend that in the case of africa, promoting financial inclusion can ensure the attainment of both sdg 8 (decent work and economic growth) and sdg 17 (partnerships for the goals), focusing attention on the potential to mobilize local institutional investors, such as pension funds and sovereign wealth funds, to enable the flow of long-term funds into infrastructure and industrial development. in addition, the theoretical literature implies that financial market integration is a priori not growth promoting in general. if not well handled, it could amplify macroeconomic instability and financial contagion (bailey, karolyi, & salva, 2021). for africa’s shallower financial markets and weaker institutions in many countries, premature or mistimed integration could expose economies to external vulnerabilities. the integrationgrowth nexus is thus specific to contexts and requires judicious policy instrument calibration, including the use of macroprudential regulation, capital mobility restrictions, and market surveillance (roodman, 2023). taken together, the reviewing of the conceptual literature implies a multi-faceted view of financial market integration and cross-border investment. they are not merely financial transactions with which they are entangled in political economy, institution dynamics and development strategies. in african terms, the possibility of an asian business research journal, 2025, 10(6): 9-20 11 © 2025 by the authors; licensee eastern centre of science and education, usa economic transformation via financial integration is there, but would need to be supported by well-synchronised policy reforms, capacity building and open investment policies. this theoretical perspective underlines the importance of empirical evaluations which incorporate regional heterogeneity, structural asymmetries and the changing anatomy of african financial systems. figure 1. schematic overview of financial market integration and economic growth in africa here you can see the whole structure of this study’s underlying concepts. it shows that the links between financial market integration, global investments and economic growth are influenced by capital flow and the efficiency of markets, while being guided by the rules of the institutions, government laws and policies. the structure reflects and complies with the research’s theory as well as its data output. 2.2. theoretical framework the association between financial market integration and african economic growth can be elucidated with reference to the underlying economic theories of how capital flows, market efficiency, and long-run growth interrelate. within these, we propose that the endogenous growth, capital market integration and gravity models of capital flows provide a multi-lens structure to examine how cross border investment can affect development in a more integrated african financial setting. after these three geographical pillars were identified, the literature thought on the common determinants of growth in these papers and the villager between growth and its determinants to have come back based on two pillars: (1) internal growth (which is based on the endogenous growth theory of (romer 1986 and lucas 1988), this theory states that what determines the rate of long term growth of economy is, internal factors such as human capital, innovation and development of the financial sector rather than external shocks. the approach view is that investments – in knowledge, in infrastructure, in financial systems – are what drives productivity growth and societally-sustainable growth. in the african setting, the integration of financial markets serves as a mechanism to mobilize capital across frontiers to foster productive sector investments in basic and diversified activities and promote the scaling of economies, the diffusion of technology and the improvement of resources allocation (asongu & odhiambo, 2020). they argue that properly allocated cross-border investments can have a positive influence on innovation, financial deepening, and endogenous growth, particularly in countries with underdeveloped capital markets. in opposition of this view is the capital market integration theory which describes how open and connected financial market can improve the allocation of capital and increase financial stability. under this model, integrated markets make possible portfolio diversification across borders, thereby lowering risk premiums and enhancing liquidity. for african economies, increased integration with other stock exchanges and financial institutions can lead to greater market participation, long-term capital inflows and reduced exposure to idiosyncratic shocks (bailey et al., 2021). the integration of capital markets has also the impact of convergence of financial and banking regulations with associated exchange in transparency which is a precodition to investors’ trust and perpetuation of economic cooperation. the level of integration varies as it is largely determined by quality of institutions, legal systems and political stability which also varies across the continent (adelegan, 2023). the gravity model of capital flows, which was, in the first instance, borrowed from trade theory, has been extensively used to explain the determinants of cross-border investment. investment among countries is assumed to be directly related to size (e.g., gdp) and negatively related to distance or obstacles that inhibit investment, such as regulatory concern and currency risk (portes & rey, 2005). when applied to africa, the model offers itself as an important analytical tool for explaining the dynamics of intra-regional capital flows and the inherent structural barriers to the same. investment integration will tend to be stronger within regional economic communities, such as ecowas and sadc, on account of proximity and common institutional structures. however, different economic size and market depth of host countries or regions will cause asymmetric investment behaviour to lead some dominant economies such as south africa and nigeria to receive an excessive amount of cross-border capital inflows (wang et al., 2020). asian business research journal, 2025, 10(6): 9-20 12 © 2025 by the authors; licensee eastern centre of science and education, usa together, these theories give a theoretical framework useful to analyze financial market integration and crossborder investment in africa. the endogenous growth theory accounts for domestic determinants of investment, and the mechanisms through which an influx of capital might spur innovation and productivity; capital market integration theory describes the systemic advantages of well coordinated and integrated markets; and the gravity model explains the forces that drive and limit the flow of actual investment. a combined theoretical description is suitable for the present study explicit. the endogenous growth theory will be employed in order to assess how cross-border investment is promoting long term economic development, while the capital market integration theory and the gravity model will be used to analyze market structures, capital dynamics, and the obstacles or pulls to regional financial integration. this hybrid theoretical basis facilitates a nuanced consideration of macroeconomic results and underlying mechanisms in africa’s dynamic financial structure. 2.3. empirical review empirical research into financial integration, cross-border investment, and economic growth has been burgeoning, in response to escalating internationalization of economies, as well as to the quest of sustainable growth. at the world level, the financial integration would be associated with enhanced mobility of capital, better risk sharing, and greater economic efficiency. bekaert et al. (2020) find that more financially integrated countries benefit from higher long-run growth, as improved capital allocation and a lower cost of capital fuel growth. likewise, forbes and warnock (2021) stress the role of stable institutional settings as an offsetting force to the beneficial impact of financial openness on growth, suggesting that short-run volatility is frequently reduced by macroprudential policies and investor safeguards. positive relationship between financial and economic openness a meta-analysis by lane and milesi-ferretti (2020) indicates that cross-border financial flows – in particular, portfolio equity and foreign direct investment – have a positive association with a country’s economic performance only when that country has strong governance and its financial system is well developed. empirical findings for (open) emerging markets are fairly mixed and the evidence is overall supportive of the positive relationship of cross-border capital flows with economic growth. for instance, sahay et al. (2019) observed an increase in access to finance, capital accumulation and productivity gains in latin america and south east asia following financial openness and regional integration, especially in the presence of regulatory convergence and adequate monetary policy support. meanwhile, caporale et al. (2020) using panel cointegration methods investigated the long-run link between financial integration and economic growth in brics nations and found the favourable impacts to be more pronounced in countries with well capitalized banking systems and liquid capital markets. moreover, zhang and wang (2022) studied the effect of bits between seasons in the cross-broader flows of investment in east asia, finding that investor protection as well as the treaties’ mechanisms of conflict resolution through treaties help release positive signals for the presence of inflows, while at the same time the latter has external effects on economic growth. in africa itself, evidence suggests financial integration promises much but is not without challenge. asongu and odhiambo (2020) applied gmm estimation for 42 african countries and found that financial integration has a significant positive effect on economic growth, although it is conditional on the degree of institutional development. countries with low corruption, independent judiciary and strong regulative bodies profit from integration more than the aspiring one do. ezenwakwelu and okonkwo (2021) studied the impact of cross-border investment in the ecowas vicinity and discovered that openness of trade and reforms of the financial sector were determinants of capital inflows, while political instability and exchange rate uncertainty were deterrents. similarly, adeleke et al. (2022) carried out the dynamic panel analysis among sadc countries and concluded that mutual intra-regional financial investments increased market liquidity and business expansion, although infrastructure bottlenecks and poor legal enforcement continued to be key constraints. academic studies have also focused on asea’s regional stock market integration initiatives. okonkwo et al. (2020) studied the african exchanges linkage project (aelp) and studies conclude that the trading interoperability increased the efficiency of price discovery and enhanced portfolio diversification, however, insufficient regulatory harmonization and technology asymmetries restricted the potential of the aelp. in east africa, mwenda and wanjala (2023) established that regional cross-listing firms in multiple stock exchanges enhanced participation by foreign investors and reduced capital costs, but gains were uneven with more benefits accruing to larger markets such as kenya and limited gains for smaller markets such as rwanda or burundi. conversely, kanga et al. (2021) used panel data threshold regression system for african union countries and found a non-linear relationship for openness and growth, which worked only after an openness threshold had been exceeded by quality of institution and macroeconomic stability. the particular transmission channels though which financial integration affects growth have also been the object of a number of studies. for example, osei and nketiah-amponsah (2022) underscored the importance of capital market depth and financial inclusion in deepening the growth effects of financial integration, cautioning that in the absence of a matching development of domestic financial intermediation, integration could deepen rather than alleviate inequality to facilitate inclusive growth. their findings are supported by biekpe & agbloyor (2021) who employed structural equation modeling and found that financial integration has a direct impact and influence on growth by indirect channel after taking controlling effect of intermediary variables such as private sector credit, investment-to-gdp ratio and inflation. it is worth mentioning that regional disparities in integration are reported in the literature. by comparison, ayodele and aluko (2023) observed that north and southern african nations benefit more from cross-border financial flows when juxtaposed with their west and central african counterparts, largely driven by differences in the level of financial architecture and regulatory structure in place. similarly, musonda et al. (2020) found that countries in monetary union such as the waemu could have relatively more stable investment and growth linkages as a consequence of exchange rate and fiscal policy interaction. notwithstanding this burgeoning literature, there are some empirical lacunae. first, the current literature often treats africa as a homogenous unit, thereby neglecting areas of sub-regional difference, structural asymmetries and differential experience of integration. second, the majority of studies concentrate on the effect of asian business research journal, 2025, 10(6): 9-20 13 © 2025 by the authors; licensee eastern centre of science and education, usa external (non-african) financial flows, without investigating the implications of african cross-border flows and their unique role in building resilience to economic crises. third, only few works offer thorough assessments of the role played by financial integration in combination with other enablers, i.e. technological infrastructure, legal harmonization and sustainable investment frameworks. furthermore, the most common ones use only macro-level information and largely ignore the effects of integration at firm or sector level. finally, there continues to be a lack of evidence on the long-term sustainability of integration-induced growth, particularly in the context of environmental, social, and governance (esg) considerations. figure 2. conceptual framework 2.4. explanation of the conceptual framework a description of the conceptual framework is provided here. the framework shows how financial market integration, cross-border investments and economic growth are linked to each other in african countries. at the head of the model, financial market integration is the only independent structure. it measures how well different african financial systems are joined, compatible and governed by the same policies. integration in financial systems makes it easier to transfer capital, helps investors diversify their funds and eases financial barriers, eventually encouraging investment. this integration affects things in two main ways. to begin with, it encourages international investments by lowering costs, matching infrastructure in markets and making information more accessible. the model specifies three important elements that interact in this channel: capital movements, barriers to investment and factors that assist them. they play a big role in setting how much and what type of investment happens across borders on the continent. for instance, if countries have stable currencies and rules, investors are more likely to commit funds in foreign markets. combined financial markets in africa lead to better uses of capital and lower financing costs, helping boost the region’s economic growth, employment rates, productivity and infrastructure development. the results are shown straight up (when more funding is provided and investment happens) as well as indirectly (as institutions pick up on new practices and policies spread). at the start of the diagram is economic growth and it can be described by the results of all the paths previously discussed. this is the dependent variable in the analysis, shaped by both the size and quality of international investments, as well as financial integration. the model agrees with neither the endogenous growth theory nor capital market integration theory, as it views growth as arising from steady movements of capital and progress within the system. the framework will support the collection and analysis of information as well as the provision of policy advice on how better financial market integration might bring about more regional funds, close economic gaps and boost growth for all. 3.methodology the approach used in this study is a review-based and qualitative case study design, which is underpinned by a systematic synthesis of secondary data in order to interrogate the link between financial market integration, crossborder investments and economic growth in africa. given the diversity and heterogeneity of financial systems in africa, this approach is suitable for analysing the multi-faceted nature of the process of integration but also for making sensitive inferences in context of regional development objectives. the review type of research methodology allows for comprehensive review of peer reviewed literature institutional reports, policy briefs and empirical data of identified multilateral agencies. this provides for academic soundness as well as policy relevance. the analysis is designed to learn from cross-national experiences, test regional trends and analyze drivers and constraints that affect cross-border financial flows in investments in countries across the continent. to enrich the empirical understanding of these two forms of monetary regionalism, the paper combines the comparative study method with the case study technique and uses regional blocs as cases. thirty five case studies asian business research journal, 2025, 10(6): 9-20 14 © 2025 by the authors; licensee eastern centre of science and education, usa are culled from three african recs: ecowas (economic community of west african states), sadc (southern african development community) and comesa (common market for eastern and southern africa). these areas were purposely chosen on a number of factors that include: (1) extent of capital markets development and integration initiatives (e.g., existence of regional exchanges, cross-listing, financial infrastructure sharing); (2) level of convergence of regulatory and policy initiatives (e.g., monetary unions, liberalization of the capital account); and (3) data availability on cross-border investment. for each bloc, approximately 3 countries with developed capital markets and stable macroeconomy, with nigeria, south africa and kenya as focus, will provide for an in-depth comparative analysis. the research works with secondary data collected from several well recognised and authoritative agencies. these range from macro-financial databases and thematic reports of the international monetary fund (imf), african development bank (afdb), the united nations conference on trade and development (unctad), african securities exchanges association (asea), to the world bank. other sources comprise reports of the africa union, oecd, and national financial market regulators. these data and documents contain valuable information on capital flows, market performance, regulatory framework and other indices on integration useful for the objectives set for the study. the research uses a qualitative analytic method which involves thematic and comparative analysis for data interpretation purposes. thematic analysis is applied to capture and integrate cross-case patterns, co-drivers, and barriers associated with financial integration and economic performance. the themes identify issues such as: the mobility of capital, co-ordination among institutions, risk to investment and coherence in policy. these categories are also validated with local data for contextual support. concurrently comparative analysis is used to draw comparisons and contrasts in integration outcomes between ecowas, sadc and comesa. the findings from this can be of great value in identifying best practices as well as regional barriers and possible avenues to harmonize integration initiatives at a continental level. use of the logic of comparison increases the external validity while maintaining the internal validity related to specific regional contexts. in conclusion, the method employed in this study integrates a systematic literature review with purposive regionally-specific selection of case studies and in-depth qualitative analysis to provide a comprehensive account of the impact of financial market integration on cross-border investments and economic development in africa. such an effort helps to ensure that the results are embedded in a theoretical and empirical literature, while being flexible for changing regional policy discourses. figure 3. prisma 2020 flow diagram. 4. results and discussion the combined results of review-based analysis and regional case studies also indicate a complex and countryspecific relationship between the integration of financial markets, cross-border investment and economic growth in african countries. lessons from ecowas, sadc and comesa suggest that financial integration could exert a very substantial positive impact on growth through the combination of supportive institutional, technological and regulatory conditions. countries with more integration levels of integration and whose involvement in the regional asian business research journal, 2025, 10(6): 9-20 15 © 2025 by the authors; licensee eastern centre of science and education, usa stock exchange linkages, monetary cooperation and regulatory harmonization is not in doubt, have relatively better investor confidence, capital formation and macroeconomic stability (asongu et al., 2022; adeleke et al., 2022). the contribution of integration to the acceleration of growth is especially clear in capital markets which promoted technological change and regional convergence. the african exchanges linkage project (aelp), an effort of the asea has, for example, constituted new possibilities in cross-border investment through a harmonised digital trading infrastructure. early responding countries such as kenya and south africa have recorded higher transaction volumes, more liquidity and greater involvement from international and regional investors (okonkwo et al., 2021). this digital progress is also accompanied by macroeconomic harmonisation and monetary assistance, such as in waemu where common currency and policy harmonisation have simplified transaction costs and enhanced financial predictability (musonda et al., 2020). key drivers of financial integrations in the review include the consolidation of regional economic blocks, fintech innovations and gradual harmonisation of regulatory frameworks. russell and our colleagues from the centre on their recent work using the law library of congress and the alb platform to explore financial interoperability and investor protection the institutional efforts of recs such as ecowas and sadc on regulatory convergence, financial interoperability and investor protection have been instrumental in facilitating intra-african investment flows. this have been augmented by digital financial infrastructure – such as mobile money systems and digital identity systems – which has allowed for instantaneous transactions, enhanced financial inclusion, and eased cross-border investor onboarding (biekpe & agbloyor, 2021). in rwanda and ghana, the use of regulatory sandboxes and fintech hubs has also stimulated the innovation in capital mobilization with the development of flexible, safe, and scalable investment vehicles. the analysis, however, also shows several important obstacles that continue acting as such to the effectiveness of financial integration. the first of these is foreign exchange risk, which can complicate international investment by making cross-border investment less predictable. a significant number of african countries continue to have relatively weaker currency markets and hedging products, which discourage portfolio and long-term investment. besides, regulatory discrepancies between jurisdictions hinder investor confidence, especially in territories with highly disparate financial reporting standards, licensing qr market access requirements (adelegan, 2023). political risk, including electoral instability, policy reversal, and governance deficiencies, continue to be a major headwind in many countries to investor confidence as well as sustainability of regional financial initiatives (roodman, 2023). figure 4. barrier-impact flowchart on financial market integration. the diagram illustrates that difficulties such as changing currency values, diverging regulations and political risks harm cross-border investment into africa. the combination of these restraints lowers movement of capital and slows economic growth. the diagram helps prove that removing these barriers is a must for successful integration in the financial sector and continued development in africa. comparing regional experiences in africa strengthens the case for adequate institutions and deep financial sectors. east africa, steered by kenya and rwanda, makes significant progress in financial integration through widespread use of fintech, important regional digital payment tools and quick improvements to laws and rules. thanks to eaps, real-time cross-border payments between east african banks have improved cash flow and cut trading difficulties (mwenda & wanjala, 2023). the pattern in west africa varies differently from the other asian business research journal, 2025, 10(6): 9-20 16 © 2025 by the authors; licensee eastern centre of science and education, usa regions. even though waemu members can rely on the cfa and its stable value, countries such as nigeria experience ongoing variation in regulations, placing heavier obstacles on their goal for continual integration. south africa and the rest of southern africa are strong in financial services and deep capital markets, yet they face problems with joining the region because of differences between themselves and smaller sadc countries. despite being the major recipient of international funds in the region, neighboring markets usually are not prepared to approve and deal with these funds (kanga et al., 2021). as a result, regions call for special integration procedures related to their various financial strengths and abilities. the results imply that financial market linkage in africa positively influences the growth of its economies, but not all regions show equal results. how successful it is depends on how well macroeconomic issues, technologies, regulations and institutions work together. while progress figure 5. comparative regional distribution of african economic blocs (ecowas, comesa, sadc) there are three primary regional economic communities (recs) shown on this map promoting financial market integration in africa: ecowas in west africa, comesa in eastern and a part of central africa and sadc in southern africa. using the visualization allows for easy comparison of international investment flows and integration projects, supporting the results and discussion presented in the next section. figure 6. financial integration enabler map across african regions the map illustrates the primary supporting conditions for integrated financial markets in africa such as preparedness for digital finance, regulation consistency, compatibility among payment systems and the strength of financial institutions. showing each area’s advantages, the diagram guides policy suggestions for prompter integration and investment, particularly in ecowas, comesa, sadc and east africa. asian business research journal, 2025, 10(6): 9-20 17 © 2025 by the authors; licensee eastern centre of science and education, usa 5. policy and practice relevance the results of this study have important implications for policy makers and regulators, as well as private sector participants, who are looking to improve the development impact of financial market integration and capital flows across borders in africa. a multi-pronged approach is needed to unleash the full potential of integrated financial markets and catalyze inclusive economic transformation based on regional collaboration, institution building, and financial innovation. additionally, such policy orientations equally reflect directly on sustainable development goal (sdg) 8 (promoting sustained, inclusive, and sustainable economic growth), and on sdg 17 (encouraging regional and international partnerships for development). there is an urgent need to establish policy environment among african countries for regulatory harmonization and legal convergence especially within and across regional blocks such as ecowas, sadc, and comesa. contrasting regulations also shield cross-border capital movements and inflate dealing costs. a continental jurisdiction in the area of capital market regulation, entrusted perhaps to the african union and asea would help to harmonize listing requirements, disclosure requirements and protections for investors. this would reduce risk premiums and encourage portfolio and direct investments from one african country to another. policy should also promote harmonization of the financial reporting standards, capital adequacy norms and dispute resolution systems. second, regional governments and central banks must enhance macroeconomic coordination, particularly in monetary and exchange rate policy. currency instability and misalignment still are the big hurdles to investments pouring across borders. deepened regional monetary cooperation — for example, broader regional payment system usage and common digital currencies — helps to make transactions predictable and investment environments predictable. single payment systems such as the east african cross-border payment system (eaps) and the pan-african payment and settlement system (papss) should be bolstered and expanded to encompass the continent. three, regulators need to adopt digital financial infrastructure, and the innovations that go with it, to de-risk capital markets and broaden participation. sandboxes, fintech licensing models and open finance approaches can promote financial innovation, while safeguarding investors and the system. the guy who sends $50–$100 to brazil every other month or who has an account with a canadian robo-advisor will transfer in more cash and trade directly from his phone, while those who have an account with a us site that has all the stocks like a robinhood or open invest will now have access to them 24/7, all of which i think 5 can really help to democratize access to capital markets through digitization.e-kyc platforms can help bank and verify additional users using all of the aforementioned methods.blockchain and dlt can also be applied to clearing and settlement, specifically relating to blockchain-featured (as well as managed) clearing and settlement systems.streamlining this most expensive cost and operational task will drive further capital cost capacity, as i mentioned, and expedite time to market across many asset types.speaking of all these huge flows of both payments and capital that now know no boundaries, there is also a second 10 named after the bottom row on a computer, it’s a task force that will delineate the property rights of a digitally wrapped asset.c update to baer chain that i think will broadly benefit sdg # 8: financial inclusion.digitization of all capital markets through clearing and settling faster, more securely and with lower costs online, in cyberspace, versus old-world banking infrastructure, could enable a megatrend for both retail and institutional investors to access capital markets. 6 this would lower the working capital (or capital at risk) for the now mobile or web-based wall street journal or toronto stock exchange, for all its users blockchain is evolving fintech again and offering digitizedaccess to capital markets 7 and the digital escape 11bil integrative payment system.page 4 of 4payment will follow the path of capital markets, especially if it can recirculate back into these digital financial channels quickly and cheaply, very much along the lines of 3this leads to even more and faster financial inclusion.financial inclusion, detailed in sdg # 8, would encourage the rapid roll out of blockchain enabled capital markets for institutional and retail investors around the world through digital asset tokenization capital markets that digitize themselves using blockchain and built in iot channels as well as electronic wallets will also incorporate a kinetically expanding swift or ripple payment system that will loop around the earth flowing with both digital information and value. fourth, there is an important role for the private sector to take advantage of the opportunities for integration, notably of institutional investors such as pension funds, insurance companies and sovereign wealth funds. these are the actors who should be encouraged to increase the ratio of their investment in regional infrastructure, green bonds or cross-listed securities. governments can facilitate that with credit enhancement facilities, public-private investment platforms and regulatory incentives that reduce the risk of investing in other countries. fifth, capacity building and institution-building should be expanded among all stakeholders in financial markets, including regulators, exchanges, and investment banks and brokers. training schemes, exchange of regional knowledge and cross-border internships all can create a new generation of practitioners comfortable with running integrated financial systems. multilateral agencies such as the african development bank and unctad can provide technical support to help build domestic capacity to track and regulate these more sophisticated flows of finance. finally, multi-stakeholder partnership and cooperation is key to the sustainability and furthering of financial integration, consistent with sdg 17. governments, regional entities, development finance agencies, private investors and civil society should work together to co-create regulatory standards, innovation ecosystems and monitoring infrastructure that balance market efficiency with financial stability and equity. forming regional integration councils and investment roundtables among recs could offer an institutionalised opportunity for continued dialogue, joint prospecting and collective action. in summary, the potential for the integration of african financial markets to contribute to enhancing inclusive and sustainable economic growth in the continent is huge. but unlocking this potential will require bold, unified reforms that cover governance, infrastructure, technology and regional diplomacy. suitably handled, cross-border investments can lead to structural transformation, job creation and long-term resilience for african economies. asian business research journal, 2025, 10(6): 9-20 18 © 2025 by the authors; licensee eastern centre of science and education, usa figure 7. policy action roadmap – phased reforms for financial market integration. the vertical roadmap sets out a plan where the main effort at the start is short-term harmonization, then financial services are digitized more and finally institutions gain strength. the plan outlines particular actions such as bringing regulations together, boosting digital networks and improving institutions, that need to happen to create an integrated and strong financial sector across africa. figure 8. policy and practical implications of financial market integration in africa. the figure reveals the way financial market integration influences the decisions of different groups and how they relate to sustainable development goals. it proves that harmonizing financial systems in africa is important for achieving better work opportunities and economic growth, as well as successful partnerships for growth and sdgs. 6. conclusion this paper aimed to investigate the link between financial market integration and economic growth in africa, and more, specifically, the effect of cross-border investments. using a review based methodology and regional case studies in ecowas, sadc and comesa, the paper concludes that financial integration can substantially boost asian business research journal, 2025, 10(6): 9-20 19 © 2025 by the authors; licensee eastern centre of science and education, usa inclusive and faster growth on the continent when deliberately managed and facilitated by institutional and technological enablers. the findings support that the integration of financial markets make capital allocation more efficient, bolster liquidity, and raise investor confidence, key factors for long-term growth. foreign investment is one thing but we need cross-border investments, especially investments from africa that have the potential to do more than a mere investment;bringing regional ownership around that investment, promoting intra-african trade and limiting reliance on outside injections that hardly support local development. but these advantages are not self-executing. the paper identifies ongoing challenges -in the form of non-convergence of regulations, exchange rate volatility, and political unrest -that prevent realization of the full growth-promoting potential of integration. significantly, the comparative exercise shows the extent to which regional variations in financial maturity, infrastructure and institutional preparedness mould differing outcomes across african sub-regions. countries that enjoy relatively stable macroeconomic environments, strong, coordinated policies, and strong digital infrastructure (evidence of this type of setup can be seen, for example, in east and southern africa) have tended to have derived more from the efforts of financial integration than less prepared ones. in this sense, this study adds to the literature by drawing on theoretical tools from endogenous growth theory, capital market integration theory, and the gravity model of capital flows to re-conceptualize financial integration as not merely a technical route but a development path infused with political economy and governance influences. it is also in line with global development plans, espesially sdg 8 (decent work and economic growth) and sdg 17 (partnerships for the goals), by underlining the demand of a coordinated and multiple engaging for inclusive regional development. finally, the results suggest the need for targeted and regionally coordinated policy reform to lower investment friction, streamline regulation, encourage innovation, and build institutional capacity. financial 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(2020). capital markets and regional integration in africa. addis ababa: uneca. wang, y., sun, y., & eita, j. h. (2020). financial development, integration and economic growth in africa: a panel var approach. economic change and restructuring, 53, 211–231. zhang, y., & wang, j. (2022). bilateral investment treaties and capital flows in east asia: evidence from panel data. asian economic journal, 36(2), 150–169. https://doi.org/10.1111/asej.12231 https://doi.org/10.1086/261420 https://doi.org/10.1111/asej.12231 1 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 2, 1-9, 2025 issn: 2576-6759 doi: 10.55220/25766759.267 © 2025 by the authors; licensee eastern centre of science and education, usa social media marketing and perceived customer value proposition of selected private higher educational institutions in the national capital region, philippines eivin b. tolentino1,2  rock bryan b. matias3,4 1,2college of business administration – graduate studies, doctor in business administration program, polytechnic university of the philippines; school of business management, manila central university, philippines. 3,4department of tourism, and transportation management, college of tourism, hospitality, and transportation management; institutional quality management system office, office of the vice president for research, extension, and development, polytechnic university of the philippines. email: tolentinoeivin@gmail.com email: rbbmatias@pup.edu.ph ( corresponding author) abstract this research examines the direct effects of social media marketing on the customer value proposition of private higher educational institutions in the philippines' national capital region. the parameter of the exogenous variables under social media marketing were informational accessibility, contents/campaign in social media, interaction, and influence, while the parameters of endogenous variables under customer value proposition is functional, emotional, economic, and symbolic values. pls-sem was used to assess the direct effects of social media marketing on customer value proposition. the study revealed that informational accessibility, content/campaigns in social media, and influence have a positive and direct effects to the four dimensions of customer value proposition, while interaction have a positive and direct effects to functional, economic, and emotional values. this means that enhanced social media marketing strategies can bring higher value to customers. the researcher strongly recommends to focus and invest to social media marketing to increase social media presence and uses the three most important components; virability, innovation and information. as the present research only focuses on the direct effects of the said variables, other scholars may want to identify other measurement as intervention and control to test other indirect effects on customer value propositions. keywords: customer value proposition, pheis, pls-sem, private higher educational institutions, social media marketing. 1. introduction technological advancement helps every industry to be efficient and increase productivity. it also changes the landscape on how the business works. one particular facets of business that is greatly modified is marketing. the innovation in technology helps us reach and engage more to our clients and easily distinguish their perception to our products or service offering. it also gives our clients a power to determine which companies, products or services will survive. in these modern times, marketing was deeply changing its process, omitted obsolete and old traditional practices and replaced it with new and non-conventional ways to promote and reach its consumer. it also deleted all the barriers when it comes to trade and commerce. with one fingertip and with the presence of a technologically advanced device, you can easily connect with the world through the internet. this is known as technological globalization. accelerated by technological diffusion and cross-border technology transfer (lumen learning). one of the benefits of the above-mentioned phenomenon is companies regardless of its size can easily connect with the consumer. one breakthrough is the emergence of social media as a powerful marketing channel. social media has changed how consumers discover and receive information before and during purchase choices (paquette 2013). it is also a consolidation of software based digital technologies presented as applications and through websites. this provides social network users to send and or receive and analyze digital content or information. the rise of social media, its customs which has impacted the consumer behavior and marketing protocols are driven by social network platforms (e.g., facebook, twitter, instagram). these network platforms have been easily adopted as marketers consider these as an efficient way to communicate to our consumers through advertising and an online word of mouth (owom) (appel, et.al 2019). according to a hootsuite analysis published by cnn philippines, filipinos spend an average of ten hours and two minutes every day on the internet. seventy-nine million (79,000,000) filipinos aged thirteen (13) and up are into the social media. adult (18 years old and above) population comprises the highest percentage of forty five percent (45%) who uses social media specifically facebook (sws). with these data, online presence of brands is necessary for market recognition. creating an online presence, answering queries about the product and services mailto:tolentinoeivin@gmail.com mailto:rbbmatias@pup.edu.ph https://doi.org/10.55220/25766759.267 asian business research journal, 2025, 10(2): 1-9 2 © 2025 by the authors; licensee eastern centre of science and education, usa being offered are the ways of marketers to win the brand recognition battle and gain customer satisfaction in the internet. according to sprout social, 89 percent of marketers utilize facebook for brand marketing, and 45 billion monthly active facebook users worldwide in q3 2019. academic industry specifically the private higher educational institutions in the philippines for the longest time is using traditional marketing strategies to invite and attract enrolment. currently as of academic year 20182019 there are one thousand seven hundred twenty-one (1,721) active and operating private college and universities in the country with one million six hundred ninety-three and thirty (1,693,030) students enrolled (ched higher education indicators). most of the pheis are in the national capital region (ncr) with a total of three hundred eleven (311) and a total of four hundred fifty-five thousand nine hundred seventy-one (455,971) students enrolled in the private higher educational institution both sectarian and non-sectarian that is operating (ched-oprkm-knowledge management division). based on the data above, competition in the academe is very stiff and pheis should have concrete and innovative plans to attract students to enroll to their institution. recently, republic act no. 10931 or the universal access to quality tertiary education act of 2017 was passed and implemented which give subsidies for college education to qualified filipino students amounting to maximum of sixty thousand pesos per academic year. this heavily impacted the small phei operators due to the said grants, students opt to enroll to a bigger and established college and universities. pheis have been utilizing the use of social media to reach their audience especially for special announcements, information dissemination and other relevant activities that the internet can be used as a medium. colleges and universities compete for the brand recognition and preference of the student who will enroll and to the parents or guardian who will choose to invest their hard-earned money for the higher education of their child. due to the widespread usage of social media, this study seeks to determine how pheis' social media marketing operations affect perceived customer value. 2. review of literature and hypotheses 2.1. the perceived effects of social media to customer "social media marketing (smm)," "digital marketing," and "e-marketing" these words refer to using social media platforms and networks to promote a company's products and services. with this form of social media marketing, businesses may reach new customers, engage with existing ones, and promote their brand culture. also, provide data analytics tools to help marketers track their campaigns' success (kenton, 2018). smm can help a school or institution look and reach a broader audience. it makes it simple for parents and students to access the school's social media profiles by adding links to the main navigation of the website or by developing a social media directory that collects them all in one place. many parents and potential students initially look at a school's website to see if they're interested and whether they have ways to follow the school in a unique way (west, 2019). according to thompson (2011), the evolution of social media led to the creation of social media content communities where people consume, create, and share multimedia content on blogs, social bookmarking sites, and photo and video sharing sites. these include social networking sites, blogs, microblogs, content sharing sites, wikis, social bookmarking sites, podcasts, and forums. (2013, n gizem, secil, and evrin) according to du plessis (2017), social media has become essential for branding since it allows brands to connect with customers in a more engaging and personalized way. as argued by mangold and faulds (2009), social media is a group of new online information sources that people use to tell each other about products, companies, services, personalities, and other things they care about. because of the advantages of social media in connecting businesses with customers quickly and cheaply, in changing customer behavior, and in bringing together people from all walks of life who share a common goal. it has piqued the interest of many businesses. it's been said by experts in the field that businesses must use social networking sites in order to compete in the online world because social media is more effective than traditional communication methods (laroche). because social networks are mostly built on user interaction, it was logical to think that businesses would use social media to get people to do things together (tiago & verissimo 2013). the internet and social media provide excellent tools for colleges to better engage with their target audiences or consumers. it has been shown to be beneficial to be closer to existing and potential students and to project a more open and flexible image (alexa et. al., 2012). because of its low cost, immediacy, and widespread use, it is seen as a suitable tool for university communicators. this is utilized at higher education institutions to engage with a well-versed audience via new media channels. it has a lot of promise as one of the most successful methods for engaging students, increasing enrolment and retention, and laying the groundwork for good alumni ties (hall, 2014). persons with disabilities can do what they can do in the same amount of time and effort as people who do not have disabilities (duggin, 2016). it comprises the use of language and pictures, as well as document design, to make information accessible. furthermore, its significance is acknowledged, but how it is defined remains a point of controversy (mcvilly, 2017). accessible information in education makes educational environments more friendly to disabled students, parents, and professionals. educational materials must be available in accessible formats under the requirements (thomson, 2019). the researchers propose the following possibilities based on their review of the literature. h1a: social media marketing information accessibility has a significant and positive effects to customer value proposition in terms of functional value. h1b: social media marketing information accessibility has a significant and positive effects to customer value proposition in terms of emotional value. h1c: social media marketing information accessibility has a significant and positive effects to customer value proposition in terms of economic value. h1d: social media marketing information accessibility has a significant and positive effects to customer value proposition in terms of symbolic value. asian business research journal, 2025, 10(2): 1-9 3 © 2025 by the authors; licensee eastern centre of science and education, usa 2.2. contents and campaigns in social media and value proposition a social media marketing campaign is the execution of a planned social media advertising strategy to increase brand awareness, social media user involvement, business goals or kpis (key performance indicators), and sales revenue outcomes. it is a set of marketing initiatives that use one or more social media networks to establish or promote a certain company aim. as argued by baker (2019) the platform inspires your social media followers to feel or act in a certain manner with these strategic campaigns. an effective marketing campaign promotes a company's goal, such as raising awareness of a new product or obtaining feedback (decker, 2018). also, a well-thought-out plan of action designed to achieve a company's marketing objective. this purpose could be to inform the target audience about a new or existing product, reaffirm the brand promise and positioning, and gain more consumers in order to increase revenue (pahwa, 2019). listening to students, being honest, going against marketing instincts, and engaging with the audience are all creative approaches for colleges to attract students and promote their brand (inge, 2018). the content can be creative and original, but it must also be relatable and user-friendly to generate interest and enrollments. intricate multichannel efforts that engage prospective students and parents throughout the college application process, or smaller-scale social media campaigns that foster a more personal relationship (cavill, 2019). users follow businesses and interact with their social media pages because the material and information in these campaigns are valuable to them. the content that is shared on social media contributes to the brand's personality and helps to demonstrate the brand's voice (smith, 2019). the goal of content marketing is to attract and maintain a specific and defined audience by developing and delivering valuable, relevant, and consistent information. it enables buyers/consumers to make more informed decisions (content marketing institute). as a result, the researchers propose the following hypothesis: h2a: social media marketing contents and campaigns has a significant and positive effects to customer value proposition in terms of functional value. h2b: social media marketing contents and campaigns has a significant and positive effects to customer value proposition in terms of emotional value. h2c: social media marketing contents and campaigns has a significant and positive effects to customer value proposition in terms of economic value. h2d: social media marketing contents and campaigns has a significant and positive effects to customer value proposition in terms of symbolic value. 2.3. interaction as part of customer satisfaction involvement via social media is about going out there and finding people in your target audience and connecting with them, not only reacting to individuals who have entered a competition to run or only monitoring complaints or as passive interaction. this active social media connection can have a significant impact on how a company produces leads and influences the purchasing decisions of their target market (cook, 2015). brands can use social media interaction to accomplish a variety of marketing objectives. for example, when it comes to finding and contacting people, twitter clearly outperforms the other main social networking platforms (jcsocialmedia.com). people use social media on a daily basis, and practically every social media user, in addition to connecting with others, posts content. people can connect with others who share their likes and interests in this way (herhold, 2019). industrial (b2b) markets, which differ in a number of ways from traditional (b2c) consumer goods marketplaces, have long embraced the interaction marketing concept. it's regarded as a long and ongoing exchange between vendors and purchasers (rudenko, 2012). the public perspective of social interaction is shifting to private settings. it suggests that people are becoming more cautious, preferring to talk in small groups rather than publicizing everything. while it's nice to be able to share with anyone, most conversations are better held among a smaller group of friends and contacts (hutchinson, 2017). interacting with the community, attracting new students, and keeping parents informed are all timeconsuming tasks, but social media methods can help educational institutions succeed. marketing to new students, collaborating with student influencers, keeping current students engaged through facebook groups where they can interact with one another, send out polls, and share content, and keeping parents informed through a blog that discusses teaching and learning with the goal of sharing knowledge with parents are just a few of the strategies (in, 2019). teachers can utilize or consider using social media in the classroom for the improvement of the class. facebook, twitter, and instagram are just a few examples. users can interact with one another and share stuff. blogs, youtube, digital schools, and even google drives are all examples of simple social networking sites. students will be able to communicate more successfully in real time if they use social contact for educational goals (brandt, 2018). h3a: social media marketing interaction has a significant and positive effects to customer value proposition in terms of functional value. h3b: social media marketing interaction has a significant and positive effects to customer value proposition in terms of emotional value. h3c: social media marketing interaction has a significant and positive effects to customer value proposition in terms of economic value. h3d: social media marketing interaction has a significant and positive effects to customer value proposition in terms of symbolic value. 2.4. influence of social media in customer decision social media influence is a marketing word that refers to one's power to influence others' thoughts. for corporations or other persons wanting to promote an idea or sell a product, influence increases (rouse, 2019). influence offers a multitude of advantages, but it is especially valuable in the business sector. influence is a skill that takes time and effort to master (demers, 2015). it is defined as the capacity or power to influence someone's views or behaviors, a person or item with such ability or power, power derived from status, contacts, or wealth, and the ability to cause physical change (cohn, 2011). a person or thing that influences, according to dictionary.com, is asian business research journal, 2025, 10(2): 1-9 4 © 2025 by the authors; licensee eastern centre of science and education, usa someone or something that has the power to influence a large number of people, such as through social media or traditional media. various components, such as one's sentiment, judgment, or acts, reflected social influences. social influences are primarily attracted to or influenced by people who are close to them. people who are close to students and have a social contact with them are also from universities. families, teachers, friends, and peers all played a role in influencing enrollment decisions. it also implies that it is the result of graduate recommendations and teacher influence (haron, hamid, jamaludin, & azan, 2017). furthermore, it is a broad phrase that refers to changes in behavior, feelings, or opinions as a result of people in one's external environment. individuals seek acceptance, or evaluation, of their own beliefs, likes, and dislikes from outside reference groups, according to the principle of social comparison. reference groups have two effects on behavior: they can affect a specific desire or define approbation while also building a frame of reference. utilitarian influence, value-expressive impact, and informational influence are the three types of influence exerted by reference groups. these types of influence are related to social power (krezel, j., & krezel, z. a, 2017). consumers can seek out the opinions of other consumers regarding certain products by using online social networking. consumers prefer peer evaluations over company promotions, showing a shift in persuasive power (berthon et al., 2012). the future keys to success will be identifying methods to improve the user experience, addressing the information demands of customers, and assisting customers in being successful – a strategy known as customer advocacy (constantinides & fountain 2008). consumers are actively using social media sites to validate buying decisions, according to brindha and parameswaran (2016). he went on to say that customers are quite picky, particularly when it comes to examining information before making a purchase. as a result, marketers must be aware of how social media influences consumer behavior. as a result, the scientists propose the following hypothesis: h4a: social media marketing influence has a significant and positive effects to customer value proposition in terms of functional value. h4b: social media marketing influence has a significant and positive effects to customer value proposition in terms of emotional value. h4c: social media marketing influence has a significant and positive effects to customer value proposition in terms of economic value. h4d: social media marketing influence has a significant and positive effects to customer value proposition in terms of symbolic value. the following research paradigm is depicted in figure 1 based on the researchers' hypotheses. figure 1. the constructed model. 3. research method to ascertain the direct effects of social media marketing's exogenous variables (information accessibility, contents/campaigns, interaction, and influence) on the endogenous variables of customer value proposition (functional, economic, emotional, and symbolic values)., partial least squares – structural equation modeling (pls-sem) was used by the researchers. structural equation modeling allows the researchers to the direct dependencies among various variables through a path analysis. further, it is used to determine structural relationship with the use of factor analysis and multiple regression methods (lacap, 2021). due to the large number of students enrolled number in the private higher educational institution the researchers determine its sample respondents through the use of cochran’s formula: 𝑛0 = 𝑍2𝑝𝑞 𝑒2 𝑛 = 𝑛0 1 + 𝑛0−1 𝑁 where: n = sample proportions p = is the proportion of the population to which the query is assigned. asian business research journal, 2025, 10(2): 1-9 5 © 2025 by the authors; licensee eastern centre of science and education, usa n = universe e = margin of error at .05 q = is 1 – p computation: n0 = (1.962(0.5)(0.5)) (0.05)2 = 385 the provided sample size was 385 but the researchers able to gather 400 participants in the study. table 1. profile of the respondents. social media platform used frequency percent academic strand in senior high school frequency percent facebook 244 61 general academic strand (gas) 48 12 twitter 14 3.5 humanities and social sciences (humss) 24 6 instagram 10 2.5 sciences, technology, engineering, and mathematics (stem) 46 11.5 youtube 9 2.25 accountancy, business and management (abm) 248 62 facebook and twitter 3 0.75 technical-vocational-livelihood (tvl) 34 8.5 facebook and instagram 2 0.5 total 400 100 facebook and youtube 21 5.25 classification of basic education degree earned facebook, twitter, instagram and youtube 59 14.75 high school (old curriculum) 26 6.5 facebook, twitter and instagram 5 1.25 senior high school (new curriculum) 372 93 facebook, twitter and youtube 2 0.5 alternative learning system (als)/ philippine educational placement test (pept) 2 0.5 facebook, instagram and youtube 10 2.5 total 400 100 twitter and instagram 1 0.25 sector of private college or university enrolled facebook, twitter, instagram, youtube and others 16 4 sectarian 103 25.75 others 4 1 non-sectarian 297 74.25 total 400 100 total 400 100 classification of high school graduated public 149 37.25 private 251 62.75 total 400 100 table 1 demonstrations the frequency and percentage of respondents in terms of social media platform used. according to the survey result, 244 or 61% of total respondents are using facebook solely for their social media activities; 3.50% are twitter users followed by instagram and youtube with 2.50% and 2.25% respectively. elaborating this, most of the respondents are using different social media networking sites and with active accounts simultaneously; 59 or 14.75% of the respondents are using 4 social media platforms (facebook, twitter, instagram and youtube) at the same time; 16 or 4% of the total respondents are using 5 or more social media platforms (facebook, twitter, instagram, youtube and others) actively. most of the respondents were dominated by students graduated in a private high school with a frequency of 251 or 62.75%, while there are one 149 or 37.25%. it also displays that most of the respondents are under accountancy, business and management (abm) strand has 248 or 62%; general academic strand (gas) has 48 or 12% followed by sciences, technology, engineering, and mathematics (stem) with 46 or 11.5%; 34 or 8.50% belongs to the technical-vocationallivelihood (tvl) strand and; fewer respondents are under the humanities and social sciences (humss) with 24 or 6.0% participated to the survey. further, most of the respondents’ classification of basic education degree received are under the senior high school (new curriculum) which is composed of 372 or a total of 93% compared to the rest: high school (old curriculum) has 26 or 6.50% and the smallest respondents’ group is in the “alternative learning system/philippine educational placement test (pept)” with 2 or 0.50%. majority of the respondents are currently enrolled pheis’ sector are non-sectarian with seventy-two hundred ninety-seven (297) or seventy-four-point twenty five percent (74.25%) and the sectarian with one hundred three (103) or twenty-fivepoint seventy five percent (25.75%). parts 2 and 3 of the research instruments pertains to the assessment of the respondents on the social media marketing and customer value proposition. to answer the survey instrument, the researchers made use a five-point likert scales. to assess the social media marketing the 5-point likert scale were 5=very effective, 4=effective, 3=somewhat effective, 2=less effective, 1=not effective, while for the assessment of the perceived customer value proposition the 5-point likert scale were 5=very satisfied, 4=satisfied, 3=somewhat satisfied, 2=less satisfied, 1=not satisfied. asian business research journal, 2025, 10(2): 1-9 6 © 2025 by the authors; licensee eastern centre of science and education, usa table 2. indicator loading, ave, and reliability measures. constructs / items indicator loading vif constructs / item indicator loading vif information accessibility ave= 0.544; cr= 0.856; ca=0.790 functional value ave= 0.642; cr= 0.900; ca=0.861 ia1 0.737 1.547 fv1 0.797 1.920 ia2 0.772 1.649 fv2 0.819 2.040 ia3 0.723 1.449 fv3 0.778 1.758 ia4 0.733 1.476 fv4 0.812 1.965 ia5 0.721 1.442 fv5 0.800 1.878 contents/ campaign ave= 0.687; cr= 0.916; ca=0.886 emotional value ave= 0.643; cr= 0.900; ca=0.860 c1 0.756 1.713 emv1 0.801 1.876 c2 0.858 2.46 emv2 0.736 1.592 c3 0.858 2.595 emv3 0.830 2.193 c4 0.835 2.330 emv4 0.825 2.126 c5 0.835 2.185 emv5 0.813 1.955 interaction ave= 0.682; cr= 0.915; ca=0.883 economical value ave= 0.713; cr= 0.925; ca=0.899 int1 0.821 2.267 ecv1 0.850 2.534 int2 0.830 2.343 ecv2 0.861 2.677 int3 0.802 2.034 ecv3 0.860 2.622 int4 0.864 2.482 ecv4 0.854 2.580 int5 0.811 2.073 ecv5 0.796 1.948 influence ave= 0.700; cr= 0.921; ca=0.893 symbolic value ave= 0.653; cr= 0.903; ca=0.866 inf1 0.86 2.556 sv1 0.800 1.942 inf2 0.830 2.314 sv2 0.733 1.656 inf3 0.869 2.653 sv3 0.792 1.962 inf4 0.834 2.298 sv4 0.843 2.322 inf5 0.789 1.906 sv5 0.864 2.486 table 2 shows the indicator loading of the constructs / items in the survey instrument, and the ave, composite, and crobanch's alpha reliability tests, which was utilized to quantify the items' internal consistency. convergent validity is a term to describe when the validity of constructs is being tested. it means that both the questionnaire designer and the respondents have the same understanding of the questions in the instrument (kock, 2017; lacap, 2021). convergent validity uses average variance extracted (ave) to test its validity. if the value of the ave is 0.70 it is said to be very good while 0.50 is acceptable (kock, 2017). in the study, the ave is ranging from 0.70 and higher which denotes a good validity of questions. the internal consistency of the latent variable's constructs was determined using composite reliability. composite dependability, unlike cronbach's alpha, uses indicator loading to evaluate internal consistency (kock, 2017). both reliability test coefficient must reflect 0.70 values to reflect high consistency of the items (fornell and larcker, 1981; lacap, 2021). the vifs values allows the researcher to check whether there are multicollinearity exists with lateral and vertical collinearity. the values of vifs must be less than or equal to 3.3 (kock and lynn, 2012). table 3. ave coefficients and correlation coefficients' square roots. information content/ campaign interaction influence functional emotional economical symbolic information 0.738 content/ campaign 0.696 0.829 interaction 0.611 0.702 0.826 influence 0.675 0.746 0.706 0.837 functional 0.627 0.624 0.661 0.653 0.801 emotional 0.570 0.65 0.627 0.695 0.771 0.809 economical 0.581 0.616 0.612 0.684 0.790 0.807 0.844 symbolic 0.527 0.582 0.513 0.576 0.676 0.706 0.754 0.808 note: off-diagonal elements represent the relationship between constructs, while diagonal elements are the ave’s square root of constructions. to assess the discriminant validity, the square roots of the average variance were extracted from the latent variables in table 3. when it came to answering the questionnaire, discriminant validity was used to see if there were any respondents who were confused. it also determines whether any other variables are linked to any ambiguous statements. (kock et al., 2017; lacap, 2021). and per the fornell-larcker criterion, the ave coefficient's square roots must be greater than the correlation value of the latent constructs. as shown in table iii, the square roots of ave coefficients from various constructs in off-diagonal elements are greater than the value of other latent constructs. as a result, the study instrument is discriminantly valid. 4. results the following conclusions were reached after examining the data gathered. the researchers tested the direct effects of both variables. asian business research journal, 2025, 10(2): 1-9 7 © 2025 by the authors; licensee eastern centre of science and education, usa figure 2. the path coefficients of the pls model. figure 2 illustrates the path coefficients of the pls model. it depicts that social media marketing relates to information accessibility (β=0.29; p=<0.01) is significantly and certainly affecting functional value of customer value proposition. further, it is also noted a positive and significant effects to emotional value (β=0.12; p<0.01), economic value (β=0.19; p<0.01), and symbolic value (β=0.17; p<0.01). moreover, contents/campaigns shows a significant and positive effects to functional value ((β=0.11; p=.012), emotional value (β=0.19; p<0.01), economic value (β=0.11; p=.016), and symbolic values (β=0.25; p<0.01). it is further depicting positive and significant effects of interaction with functional value (β=0.28; p<0.01), emotional value (β=0.16; p<0.01), and economic value (β=0.29; p<0.01), while it does not show positive and significant effects to symbolic value (β=0.04; p<0.01). lastly, influence shows a significant and positive effects to functional value (β=0.21; p<0.01), emotional value (β=0.41; p<0.01), economic value (β=0.40; p<0.01), and symbolic value (β=0.33; p<0.01). the data support the theories h1a, h1b, h1c, h1d, h2a, h2b, h2c, h2d, h3a, h3b, h3c, h4a, h4b, h4c, and h4d. h3c, were not supported. based on the route model of the pls depicts that four exogenous variables of social media marketing can predict customer value proposition in terms of functional value of at least 61%, emotional value of at least 62%, economic value of 60%, and symbolic value of at least 49%. table 4. the pls model's direct effect. direct effects β se p-value h1a. inform -> functional 0.295 0.048 <0.001 0.200 h1b. inform -> emotional 0.116 0.049 0.009 0.072 h1c. inform -> economical 0.194 0.049 <0.001 0.124 h1d. inform -> symbolic 0.170 0.049 <0.001 0.098 h2a. content -> functional 0.112 0.049 0.012 0.074 h2b. content -> emotional 0.192 0.049 <0.001 0.132 h2c. content -> economical 0.106 0.049 0.016 0.070 h2d. content -> symbolic 0.250 0.048 <0.001 0.157 h3a. interaction -> functional 0.285 0.048 <0.001 0.194 h3b. interaction -> emotional 0.163 0.049 <0.001 0.106 h3c. interaction -> economical 0.181 0.049 <0.001 0.116 h3d. interaction -> symbolic 0.048 0.050 0.165 0.026 h4a. influence -> functional 0.213 0.049 <0.001 0.145 h4b. influence -> emotional 0.415 0.047 <0.001 0.308 h4c. influence -> economical 0.400 0.047 <0.001 0.291 h4d. influence -> symbolic 0.329 0.048 <0.001 0.210 note: f2 is the cohen’s (1988) effect size: 0.02 = small, 0.15 = medium, 0.35 = large; se = standard error; β = standardized path coefficient. table 4 shows the direct effects of the pls model. the findings suggested, eleven hypotheses were established. h1a (β=0.295; p=<0.001, se=0.048, 𝑓2 =0.200), h1b (β=0.116; p=0.009, se=0.049, 𝑓2 =0.072), h1c (β=0.194; p=<0.01, se=0.049, 𝑓2 =0.124), h1d (β=0.170; p=<0.01, se=0.49, 𝑓2 =0.098), h2a (β=0.112; p=0.012, se=0.49, 𝑓2 =0.074), h2b (β=0.192; p=<0.01, se=0.49, 𝑓2 =0.132), h2c (β=0.106; p=<0.016, se=0.49, 𝑓2 =0.070), h2d (β=0.250; p=<0.01, se=0.48, 𝑓2 =0.157), h3a (β=0.285; p=<0.01, se=0.48, 𝑓2 =0.194), h3b (β=0.163; p=<0.01, se=0.049, 𝑓2 =0.106), h3c (β=0.181; p=<0.01, se=0.49, 𝑓2 =0.116), h4a (β=0.213; p=<0.01, se=0.49, 𝑓2 =0.145), h4b (β=0.415; p=<0.01, se=0.47, 𝑓2 =0.308), h4c (β=0.400; p=<0.01, se=0.47, 𝑓2 =0.291), h4d (β=0.329; p=<0.01, se=0.48, 𝑓2 =0.210). the eleven hypotheses have small to medium impact sizes, according to cohen's effect size. asian business research journal, 2025, 10(2): 1-9 8 © 2025 by the authors; licensee eastern centre of science and education, usa table 5. model fit and quality. index coefficient apc 0.217, p=<0.001 ars 0.581, p=<0.001 aars 0.577, p=<0.001 avif 2.427, suitable if <= 5, ideally <= 3.3 afvif 3.175, suitable if <= 5, ideally <= 3.3 tenenhaus gof 0.618, small >= 0.1, medium >= 0.25, large >= 0.36 note: apc stands for "average path coefficient." aars stands for average adjusted r-squared, avif stands for average block variance inflation factor, and afvif stands for average full collinearity vif. the model fit and quality metrics are shown in table 5. apc = 0.217 (p=0.002), ars =0.581 (p < .001), and aars = 0.577 (p < 0.01) are depicted. as argued by kock (2011), to achieve a decent quality fit, apc, ars, and aars p-values must be less than 0.05. the avif and afvif scores were 2.427 and 3.175, respectively, which were lower than the ideal suitable score of 3.3. it means no overriding latent variables found in the model. as a result, the model predicts latent variables in a more complete and explanatory manner lacap (2021). further, tenenhaus good of fit (gof) valued at 0.618, which indicates that it has more explanatory power because it is higher than the criterion of 0.36. 5. discussion according to the results of this study, information accessibility and content/campaigns have a positive and significant impact on four elements of the consumer value proposition. according to vrontis, d., el nemar, s., ouwaida, a., & shams, s. m. r. (2018) and hu, t., kettinger, w. j., & poston, r. s. (2015), relational and informational benefits represent the functionality which users derive from providing and receiving content for social purposes via the maintenance and nurturing of existing systems, and also collaborative learning regarding individuals and actions in existing or new networks. furthermore, traditional methods of information dissemination must be supplemented with the usage of social media, as technological innovation has been shown to be critical in attracting students to attend university. on the other hand, interaction has a positive and significant influence on the three dimensions of the customer value proposition, as demonstrated by goh, k.-y., heng, c.-s., and lin, z. (2013), who discovered several noteworthy findings regarding the use of social media brand community contents on consumer purchase behavior. for starters, there is actual proof that participating in a social media brand community increases consumer purchases significantly. second, an in-depth assessment of community contents (both user and marketer contents) confirms that brand community contents influence customer purchasing behavior via embedded information and persuasion. the study also discovered that the influence has something to do with customer value proposition, since it affects the four aspects of cpv significantly and favorably. according to berthon et al., (2012) consumers can seek out other consumers' opinions on certain products. consumers were shown to appreciate their peer group' viewpoints more than enterprises' promotional offers, implying a shift in the determinant of positive influence. laroche et al. (2012) assert that social media adversely affected consumer preferences from information exchange to post-purchase actions such as discontentment statements of attitude. as can be seen, social media marketing became affluent on how the customer perceived value to some services offered by the private higher educational institutions (pheis). due to the growing numbers of pheis, the competition is getting tougher. as a result, the researchers recommends that pheis must further utilized social media marketing to increase its social media presence to further attracts customers. 6. conclusion the researchers found out that social media marketing, in terms of characteristics such information accessibility, contents/campaigns, engagement, and influence, had a favorable and significant impact on how customers evaluated value, notably functional, emotional, economic, and symbolic aspects. this means that social media marketing administrator is highly encouraged to create a social media marketing plan including to have the concreate strategy in positioning their social media accounts to attract new and potential enrollees. further, it is highly encouraged the pheis should have a quality assurance that can filter and monitor contents prior to the implementation to social media accounts. this is to maintain the integrity and credibility of the academic institution despite using a more colloquial terminologies and languages. acknowledgements: the researchers would like to extent its gratitude to those who took part on this paper. also, would like to extent its thanks to polytechnic university of the philippine who supported for the completion of this paper. references assimakopoulos, c., antoniadis, i., kayas, o. g., & dvizac, d. 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licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 9, 62-72, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.571 © 2025 by the authors; licensee eastern centre of science and education, usa subsidy reform and private investment in nigeria’s renewable energy sector: a post-petroleum economic perspective akomolehin francis olugbenga1  oluwaremi joel bali2 ebenezer olutoye3 olusola anthony ibitoye4 1,2,3,4dept of finance, college of social and management sciences, afe babalola university, ado ekiti, nigeria. email: akomolehinfrancis@pg.abuard.edu.ng email: oluwaremijoel@pg.abuad.edu.ng email: olutoyedayo@abuad.edu.ng email: olutoyedayo@abuad.edu.ng (corresponding author) abstract the decision of nigeria in 2023 to end long-standing fossil fuel subsidies brought the country to a critical juncture in its energy history. although this reform is generally viewed as a fiscal requirement meant to restore economic efficiency in the market and reduce public debt, the subsequent impact on private investment in renewable energy has been little studied. the current policy discourse takes for granted that the removal of subsidies will automatically steer capital towards cleaner sources of energy, however, it is not clear empirically how such changes influence investor confidence, capital deployment, and project tenability. filling this gap is the objective of this study, which carries out a systematic review of peer reviewed-journal articles, policy briefs and institutional reports from 2019 up till 2025 using a country-specific lens to monitor the situation from nigeria. the results suggest that the impact of subsidy reform in private renewable investment is mixed and depends greatly on supportive factors like regulatory consistency, fiscal recycling strategy and risk mitigation tools. although the phase-out of subsidies is making the market place a level playing field for renewables (i.e. eliminating the distortions of fossil fuel prices), this is also creating uncertainty in the absence of credible policy frameworks and investment triggers. it highlights the need for an integrated policy-finance ecosystem to ensure that reforms result in durable investment. it ends with specific policy recommendations to steer nigeria’s energy transition towards its fiscal ends and the sustainable development goals (sdg 7 and sdg 13). keywords: energy transition, nigeria, post-petroleum economy, private investment, renewable energy, subsidy reform. 1. introduction nigeria's energy scene has been dominated for decades by a fossil fuel subsidy regime, which, although politically convenient, has come with heavy fiscal burdens and has discouraged transition to cleaner energy sources. for many years, fuel subsidies have captured large shares of national revenue—up to ₦4.39 trillion in just 2022—crowding out investments in vital infrastructure, like renewables (akinyemi et al., 2021; okonkwo & yusuf, 2023). these subventions have not only engendered economic inefficiencies and rent-seeking tendencies but also impaired the allocative efficiency in the energy market, by artificially affecting prices, thereby understimulating the interest to develop alternative energy sources (oyewo et al., 2021). with the acceleration of fuel subsidies in 2023 as part of wider economic reform, nigeria found itself at a crossroads in its energy transition. subsidy elimination was designed to release fiscal space and decrease the country’s unsustainable debt service-to-revenue ratio and to encourage a more market-based energy economy (world bank, 2024). but the sustainability of this transition in the long term will be strongly dependent on not just if the policy shift results in significant increase in private sector investment in renewable energy—an area with potential for addressing nigeria’s perennial power shortages, mitigating greenhouse gas emissions, and generating green jobs (irena, 2023; abdullahi & bello, 2020). renewable energy is a source of energy that is utilized in a given area continuously without any time lag. the shift to renewables in a post-subsidy world may not just be an environmental imperative, but a strategic economic one too. nigeria has a less than 60% electrification rate and rural areas have little access to power (eze, 2022). “conventional generation capacities thermal and gas-based are not available and are also polluting in nature. but renewable options, especially those that are decentralized, such as solar mini-grids and standalone systems, provide a scalable and cost-effective alternative, which are also climate-resilient. however, renewable energy growth will depend to a great extent on the mobilisation of private capital, as public financing will not be mailto:akomolehinfrancis@pg.abuard.edu.ng mailto:oluwaremijoel@pg.abuad.edu.ng mailto:olutoyedayo@abuad.edu.ng mailto:olutoyedayo@abuad.edu.ng https://doi.org/10.55220/2576-6759.571 asian business research journal, 2025, 10(9): 62-72 63 © 2025 by the authors; licensee eastern centre of science and education, usa able to close the estimated usd10 billion investment gap in the sector over the next decade (giz, 2021; unep fi, 2021). however, there is little empirical knowledge of the impact of subsidy reform on private investment in nigerian renewable energy, in spite of the change in policy. this gap in understanding is especially pronounced with regard to inv estors' risk perceptions, regulatory commitment and policy consistency in a post subsidy withdrawal world. previous research has either examined macroeconomic impacts of subsidy withdrawal (akinyemi et al., 2021) or generic constraints to renewable energy penetration (adedeji and ajayi, 2024) but has not combined both dimensions to understand how fiscal shifts change the investment environment. further complicating matters are erratic policy signals, and immature financial tools that undermine investor participation in nigeria’s clean energy industry (oyebanji et al., 2023). thus, this study addresses this important gap by seeking to review, based on literature, the following cognitive aims: the first is to evaluate the linkages between the subsidy reforms and private investment in nigeria’s renewable energy sector. second, to examine the barriers and drivers of private-sector involvement in a postsubsidy situation. third, to offer actionable and implementable policy recommendations that would facilitate a just, inclusive, and investment-ready energy transition. given its ability to synthesize a variety of evidence, to highlight theoretical and empirical absences and to weave a comprehensive story around changing policy-investment dynamics, a literature-based approach is particularly appropriate for this kind of inquiry. this will help to accommodate cross-disciplinary perspectives from energy economics, institutional theory, public finance and climate policy – subject areas that are key to the intricate interconnection between reform, investment and sustainability within the nigerian context (eboh & nwafor, 2020; irena, 2023). situating the study within a wider discourse on post-petroleum economic development, the review not only situates nigeria’s energy subsidy reform, but also contributes to global discussions on the socially just transition to a low carbon energy future in the emerging market context. the study presents a firm basis for developing need-based interventions consistent with the sustainable development goals (sdg 7affordable and clean energy, sdg 13climate action), and nigeria’s long-term development plan. 2. conceptual and theoretical review 2.1. conceptual lens the theoretical basis of this research is twofold the post-petroleum economic framework and the energy transition justice model. these frameworks provide a detailed view of the complex relationship between fiscal reformation, investment trend and just energy transition in nigeria's resource-based economies. 2.1.1. world of post-petroleum economy to analyze the transition of nigeria from oil-based economy to an investment-driven diversified renewable based energy system, this chapter offer the post-petroleum economic paradigm as an instrument of strategic analysis. the two key pillars it this framework is a new fiscal course and clean energy investment motivations. the latter comprises the re-channeling of public expenditure resources from inefficient and regressive fossil fuel subsidies to pro‐development sectors (renewable energy, education, infrastructure) (eboh & nwafor, 2020; akinyemi et al., 2021). in the case of nigeria, the 2023 implementation of subsidy reform is a unique moment in budgetary history that can either leapfrog the country into sustainable development or deepen its social inequality and investment insecurity, depending on which policies follow (world bank, 2024). the fiscal room generated through subsidies removal which was put at over ₦4 trillion annually can be reallocated to targeted investment incentives for the private sector in the clean energy room (oyewo et al., 2021). these incentives could take the form of feed-in tariffs, tax incentives, soft financing, and sovereign guarantees mechanisms that have been effective in stimulating private investment in renewable energy in similar settings such as kenya, morocco and india (irena, 2023; adedeji & ajayi, 2024). but with no evidence of co-ordinated and transparent mechanism to channel these fiscal increases, the subsidy removal may exacerbate more investor lack of confidence and the incidence of energy poverty (okonkwo & yusuf, 2023). the conceptual framework in addition, the model highlights the centrality’s of institutional capacity building, regulatory predictability and macroeconomic stability in guaranteeing the attractiveness of nigeria’s energy sector to both local and foreign investors (eze, 2022). the interaction between fiscal adjustment and investment incentives is not only technocratic, it is politically economic, rooted in the legacy of rent seeking, policy reversals and governance opacity that needs to be addressed if reforms are to be credible (oyebanji et al., 2023). 2.1.2. energy transition justice model as the energy transition justice model 8 shows, the transition to renewable clean energy has evolved from traditional and industrial revolutions to the current fashionable-big business and technical revolutions. complimenting the economy of reform is the energy transition justice model, which considers the social and distributive justice implications of nigeria’s post-subsidy energy reform. it is, at root, proposed that any transition in energy (including one that would be brought about by the phased neutralisation of pervasive public subsidies) will, for reasons of equity and justice, demand a just and inclusive burden-sharing, active participation of populations, and diversity in terms of their income level, sex, ethnicity, and local residence (jenkins et al., 2020; unep fi, 2021). for instance, in nigeria, fuel subsidies have traditionally acted as a de facto safety net for low and middle income households, even though their aggregate macroeconomic impact is regressive (giz, 2021). the rapid abnormal suspension of this life wire without compensatory safety net systems put the poor at risk of being subjected to unjust suffering even further by perpetuating social discontent and political blow-back (okonkwo & yusuf, 2023). the justice model obliges us to judge the products of reform, not only for their fiscal efficiency or the size of the investment they represent, but also for their equitability as regards access toenergy, their affordability and the asian business research journal, 2025, 10(9): 62-72 64 © 2025 by the authors; licensee eastern centre of science and education, usa capacity to sustain them across generations (irena, 2023; world bank, 2024). this could involve reinvesting a portion of the fiscal savings in off grid renewables for underserved rural communities, scaling decentralised energy technologies and developing social entrepreneurship in the clean energy sector. regardless, practices such as lifeline tariffs, inclusive stakeholder engagement, and transparent reinvestment of proceeds will be important for making nigeria’s subsidy reform a supportive—rather than undermining—force for an equitable energy transition (abdullahi & bello, 2020; oyewo et al., 2021). finally, the justice approach highlights the importance of procedural justice: system-wide procedures for both reallocating subsidies and granting re incentives need to be participatory and evidence-based. this reduces elite capture and legitimacy in transition (jenkins et al., 2020; eze, 2022). collectively, these two concepts account for much of the framework of this study: post-petroleum economic framework and energy transition justice model. the former is essential to help us understand the re-alignment of macro fiscal and investment priorities that are needed to build an energy economy based on sustainability; the latter ensures that any shift occurs in a socially inclusive, politically feasible and ecologically sensitive manner. 2.2. theoretical framework a rational and comprehensive theoretical perspective to investigate the dynamics of subsidy reform and private investment in the renewable energy (re) sector in nigeria is essential because the impact depends on several levels of the economic, political and institutional framework influencing investor decisions. the paper is informed by three interconnected theoretical frameworks: investment climate theory, public choice theory and institutional theory in order to critically analyse the impacts of fiscal and regulatory shifts on the evolution of investment in a post-subsidy, renewable-based economy. investment climate theory provides a grounding framework for understanding how macroeconomic stability, policy consistency, and institutional transparency influences investor confidence in countries with histories of volatile markets and lax enforcement mechanisms, such as emerging markets. the theory argues that the attractiveness of any investment place is a combination of the predictability, conduciveness of the business environment, the availability of infrastructure and the credibility of government commitments (oiet, kinda, 2010; eifert et al., 2015). for example nigeria the sudden withdrawal of the fuel subsidies in 2024 in nigeria changed the financial dynamics, so this may be achieving better budgetary & economic health, at the same time creating much volatility to pricing structures and energy costs for comparison purposes. this uncertainty also has the potential to amplify the perceived risks of investing unless it is accompanied by clear post-reform policies which increase the attractiveness and reduce the risks for the general investment in renewables (oyewo et al., 2021; abdullahi & bello, 2020). information coming out of a number of transitional economies shows that reforms of subsidies not harmonized with clear policy directions and risk mitigation instruments may trigger some kind of investment inertia, rather than acceleration (irena, 2023; adedeji and ajayi, 2024). public choice theory adds value to this analysis because it incorporates the political economy aspects of subsidy reform such as the influence of vested interests, populism and rent-seeking behavior on energy policy outcomes. it has been posited that public policy choices — including that of fuel subsidies — are the result of the strategic game !4 played by political agents motivated by the accrual of votes, command of economic rents, or protection of elite benefits (tullock, 2005, acemoglu and robinson, 2012). in nigerian, decade’s long practice of subsidy regulation has not only created fiscal inefficiencies but has also created strong vested interest that have hobbled reform efforts as they benefit from subsidy leakages, economically and politically (akinyemi et al., 2021; okonkwo & yusuf, 2023). accordingly, even benevolent subsidy removal measures may encounter operational difficulties, popular opinion resistance and policy flip-flops, which will all erode savers' confidence in the market. consequently, the robustness and legitimacy of reform results also lie in political will and stakeholder support without which a consistent long-term investment in renewable will not be sustainable (giz, 2021; world bank, 2024). institutional theory supplements these views by stressing the role of governance mechanisms, the enforcement of rules, and the coherence of our institutions in determining market actions. this theory contends that irrespective of policy content, institutional quality; including regulatory bodies, courts, and bureaucratic agencies that in turn will account for the effectiveness of policy implementation and the trustworthiness of the quality of the environment where investment will be conducted (north, 1990; scott, 2014). in nigeria, low public sector capacity, fragmented regulatory responsibilities, and lack of clarity and consistency in energy policies have consistently undercut private sector involvement in renewable energy development (eze, 2022; oyebanji et al., 2023). for example, the overlapping regulatory roles played by the nerc and rea, as well as federal ministries, results in a lack of clarity when it comes to licensing, tariffs, and procurement – which tends to discourage longterm capital investment. in addition, institutional opacity results in the late approval, non-transparent publicand private partnership architecture, weak contract implementation, increased cost of transaction and it undermines both local and foreign domestic investors (unep fi, 2021; jenkins et al., 2020). when combined, these theories offer a strong, explanatory framework to understand the post-subsidy investment landscape in nigeria’s renewable energy market. whereas investment climate theory emphasizes the economic and regulatory incentives needed to attract capital, public choice theory embeds the politics around subsidy reform into the larger story of political opposition and elite negotiations. 5institutional theory, in contrast, focuses on the systemic governance changes required to translate fiscal policy shifts into investable actions. the combination of these theoretical perspectives is particularly applicable to energy transition routes which are not only economically feasible but also politically viable and institutionally legitimized. therefore, this study is grounded in them institutional theory, which provides the broadest theory that explains how the quality of governance, the design of policy, and the execution of regulation jointly indetimension the success or failure of private investment in the post-petroleum energy transition in nigeria. asian business research journal, 2025, 10(9): 62-72 65 © 2025 by the authors; licensee eastern centre of science and education, usa 2.3. conceptual framework figure 1. conceptual framework diagram. the conceptual framework for this study provides a visual and theoretical representation of how subsidy reform influences private investment in nigeria’s renewable energy sector, particularly within a post-petroleum economic paradigm. t the heart of this model is the exogenous variable subsidy reform, which includes fuel subsidy elimination, fiscal reorientation due to budgetary redistribution, and deregulation of energy pricing. such policy changes are economically required but cannot in isolation lead to the type of investment occurred if not combined with some facilitating instruments and influenced by certain external factors. the mediating variables are mechanisms by which the subsidy reform influence investment outcomes is channeled. these could be the modalities for the provision of renewable energy incentives like feed-in tariffs, tax holidays, concessional grants, among others that would help address market failure and create a fair playing field for renewable energy investors. another important path is regulatory clarity and the licensing process, as murky policies and long permitting schedules can scare investors away. if subsidy reforms such as these are linked to clear, enforceable regulatory tools (such as transparent power purchase agreements and standardized grid codes), then they can be investor-friendly and also minimize transaction costs. closely related to this is the go-between mediating the market signals and confidence by investors, on how reform is affecting the overall investment climate. pricing energy predictably, ensuring macro economic stability, and timeliness in removing subsidies all give good signals to investors. further, administration and capacitybuilding of energy institutions, such as nerc, rea, and their parent ministries' quality also matter in the translation of policy intentions into investable prospects. when institutions are sufficiently well-resourced and cooperative, they minimize bureaucratic waste and promote an environment conducive to public-private partnerships. but the power of subsidy reform on private investment is not absolute; it is a function of some moderating variables. these involve the macro-economic atmosphere such as inflation, volatility in currency as well as interest rates, which influence the cost of capital and project feasibility. ignatieff) "governance and political stability are equally important, as they shape the credibility of reform and the possibility of reversal of policy. a shaky governance foundation undermines confidence and discourages long-term investment. infrastructure preparedness, such as grid connections and transmission capacity, also conditions how efficiently private investments can be used and scaled. finally, access to green finance, in the form of domestic capital markets, international climate funds or blended finance and others, affects the availability and terms of investment. the framework also provides a dynamic, multi-layered process for subsidy reform to facilitate enhanced involvement of the private sector in renewable energy so long as the mediating mechanisms work and the moderating conditions are optimal; particularly, monitors are effective and dynamic. in bringing together economic, institutional and political aspects, this conceptual framework provides a comprehensive perspective on the relationship between reform and investment in nigeria. it follows institutional theory which emphasizes the impact of governance structures and regulatory environments on market functioning, and also is informed by insights from investment climate theory and public choice theory to consider policy design and political economy constraints. hence, the framework offers a well-structured basis for the determination of the conditionality of what nigeria’s energy transition, in both fiscal and investment terms, should be sustainable. 3. methodology the specific approach taken in undertaking this study is qualitative systematic literature review, in its attempt to search and synthesize extant knowledge on subsidy reform versus the inflow of private investment that the country nigeria will have in the renewable energy sectors vis-à-vis its development post petroleum. the strategy is intended to help you achieve depth of analysis, clarity of thought, and relevance of findings-undergraduate project publication, but now published in impact factor, scopus-indexed journals. the literatire review is systematically organized in order to include both theoretical and empirical contributions from various academia and institutions. this approach is especially relevant given that the research focus is multi-faceted, including areas related to fiscal policy reform, energy transition, investment behavior and asian business research journal, 2025, 10(9): 62-72 66 © 2025 by the authors; licensee eastern centre of science and education, usa institutional dynamics in nigeria. a qualitative synthesis can combine a variety of perspectives and context-specific explanations that are difficult to synthesise quantitatively, especially in a rapidly changing policy area. focused on nigeria geographically, the review is primarily temporally delimited to cover the critical period between 2019 and 2025, during which the country officially abolished the fuel subsidies in 2023, and intensified efforts to develop its renewable energy capacities to respond to financial, environmental and geopolitical compulsions. within this time frame, the paper explores the extent to which policy changes—specifically in the form of energy price adjustments and fiscal tightening—have impacted, and will impact, private sector involvement in the renewables market. stringent inclusion criteria were developed to maintain relevance and academic rigour. firstly, only peerreviewed journal articles (2019-2025) were combined to guarantee the quality and up-to-datedness of the results. second, policy briefs and technical reports issued by international organisations such as irena, world bank, unep fi, african development bank, giz© have been incorporated, since they provide important indications of energy policy reform and investment movements in emerging markets. third, the review also included countrybased reports and working papers that specifically concentrate on subsidy reform, renewable energy growth, or private investment outcomes in nigeria. general or uncontextualized analysis papers were also excluded to preserve geographical and substantive specificity. search strategy searches were conducted on a number of scholarly databases (scopus, sciencedirect, google scholar and jstor) which together provide extensive coverage of peer-reviewed academic literature, and grey literature. boolean operators and additional filters were applied when possible to focus the search and avoid the repetition. search words key search terms utilized included: “subsidy reform,” “renewable energy,” “private investment” “nigeria,” and “energy transition.” variations of these search terms were used in singular and compound forms (e.g. “subsidy reform and private investment”, “renewable energy investment and nigeria”) to guarantee inclusiveness and coverage of the topic. all the articles were subject to a two-layer screening process. all titles and abstracts were screened manually in the first phase for relevance according to the inclusion criteria. in the second stage, full text review was done, while significant findings were extracted, and sectioned thematically based on four main areas: (i) political economy of fuel subsidy reform (ii) incentives and barriers to investment in renewable energy (iii) institutional and regulatory quality (iv) evidence on investment trends post-subsidy. the literature was then coded and woven together within a narrative for their patterns, gaps, and conceptual connections between the literature. this in turn allows for a nuanced analysis of how subsidy reform – in concert with enabling regulatory and financial instruments – can catalyse private investment in nigeria’s renewable energy future. it is also consistent with the rigors of qualitative energy policy research by upholding methodological transparency, replicability, and policy relevance—an important quality of high-ranking, scopus-indexed journal articles. figure 2. prisma 2020 flow diagram. the prisma 2020 diagram illustrates the systematic review process for this study, beginning with 865 records identified across major databases. after removing 242 duplicates and excluding irrelevant records, 64 reports were assessed for eligibility. of these, 17 studies were included in the final review, ensuring a focused and transparent selection process aligned with indexed journal standards. asian business research journal, 2025, 10(9): 62-72 67 © 2025 by the authors; licensee eastern centre of science and education, usa 4. literature review 4.1. overview of nigeria’s fossil fuel subsidy regime nigeria has, for decades, had arguably one of the most expansive fossil fuel subsidy regimes in the world, justified in much of the past by successive governments as a means to cushion the population from global oil price fluctuations and improve affordability for transport and production inputs. in particular, subsidies on petrol and diesel have been framed as a pro-poor measure yet several empirical studies revealed that such subsidies have offered higher-income groups and urban elites disproportionate benefits and caused a leakage of public resources (akinyemi et al., 2021; oyewo et al., 2021). nigeria has spent over ₦13 trillion on fuel subsidies between 2006 and 2022, larger than the federal capital expenditure in most fiscal years (world bank, 2024). figure 3. timeline of nigeria’s fuel subsidy reform (2000–2025). this timeline highlights the evolution of nigeria’s fuel subsidy regime, from its institutionalization in the early 2000s to reform attempts in 2012, eventual removal in 2023, and emerging post-reform actions. it underscores how historical inertia and political resistance shaped delays, while recent fiscal urgency has triggered a transition toward a post-subsidy energy economy. the politics surrounding subsidy reform in nigeria have been intensely contentious. attempts to phase out subsidies—such as the failed partial removal in 2012 under president goodluck jonathan—triggered widespread protests and political resistance, driven by entrenched interests in the fuel importation value chain (okonkwo & yusuf, 2023). the eventual full removal of fuel subsidies in 2023, under the administration of president bola ahmed tinubu, marked a watershed moment. while framed as a necessary economic correction to curb fiscal leakages and stabilize public debt, the removal exposed underlying institutional weaknesses and a lack of a robust social safety net, sparking inflation and public discontent in the short term (eze, 2022; giz, 2023). 4.2. implications of subsidies reform to energy dynamics market nigeria’s power market has been drastically impacted by the cut in subsidies. first, the immediate deregulation of the price of petroleum products raised the retail price of fuel which also hiked the price of conventional power generation, as nigeria mainly depends on diesel and petrol generators (oyebanji et al., 2023). this unintended consequence has attracted the interest of the market in renewable energy technologies as substitutes for price certainty and long-term savings for commercial and industrial users (irena, 2023). however, in practice, although subsidy reform effectively equalises such distortions, the perceived investment risk in nigeria’s energy sector is still high because of policy uncertainty, inflation, and the challenge of contract enforcement (abdullahi & bello, 2020). it is this relatively lower level of maturity that makes hesitant many investors to clearly distinguish between temporary volatility and systemic risk, becoming eventually apprehensive to invest money in long-gestation renewable projects. besides, there is a real investment risk due to the instability of currencies and a lack of local capacity to produce to a scale that reduces the cost of and barriers to investment in renewables projects (adedeji & ajayi, 2024). 4.3. patterns and constraints in private investment in nigeria’s renewable energy industry while the private sector investment in nigeria’s renewable energy sector remains low, there has been modest growth the recent decade with the focus on solar mini-grids, stand-alone systems and hybrid solutions. there remain significant obstacles, despite advances. infrastructure gaps—such as inadequate grid access and weak transmission—are barriers to the scale-up of grid-connected renewables (world bank, 2024). the regulatory framework is fragmented and there are interlocking authorities between the nigerian electricity regulatory commission (nerc), the ministry of power and sub-national governments this has resulted in bureaucracy and lack of clarity in the licensing process (eze, 2022). another key challenge is funding. further, project developers find it difficult to structure bankable transactions due to high interest rates, short tenor of local loans and absence of hedging instruments (oyewo et al., 2021). the nigeria electrification project (nep) and rural electrification agency (rea) donor-funded projects have stimulated demonstration effects, but their ability to scale and be integrated with national srfs has been restricted (giz, 2021; unep fi, 2021). by contrast, sector-specific efforts have had some success in other areas — solar minigrids and off-grid installations, in particular, are now feasible in rural areas — but biomass and wind projects are only beginning to emerge because they face the same market failures. asian business research journal, 2025, 10(9): 62-72 68 © 2025 by the authors; licensee eastern centre of science and education, usa figure 4. investment barrier heat map. this heat map visualizes the severity of key constraints affecting private investment in nigeria’s renewable energy sector. high-impact barriers include grid infrastructure deficits, fx volatility, and limited access to longterm finance. moderate challenges such as regulatory uncertainty and weak institutional coordination also hinder progress. addressing these critical bottlenecks is essential to building a more investment-friendly energy ecosystem. 4.4. comparative lessons-what works elsewhere in the developing world lessons from other developing countries have much to teach nigeria’s post-subsidy experience. for example, india has introduced direct capital support and accelerated depreciation facilities for solar and wind with tremendous success in rapidly scaling up renewable energy (bhattacharya et al., 2022). in kenya, feed-in tariffs and policy guarantees led to considerable off-grid solar deployment, especially in arid and semi-arid areas (ondraczek et al., 2020). in morocco, the 'substituted fossil fuel subsidies for investment' were redirected to establish the moroccan agency for sustainable energy (masen) and develop projects with a combined financing approach in order to derisk utility scale solar investments (irena, 2023). two common themes emerge from these cases: the need for policy coherence, and strategic re-allocation of subsidy savings for clean energy initiatives. unlike nigeria in which the withdrawal of the subsidy was done before the development of strong investment channels, these countries established proactive set-ups to soak up the fiscal and social shocks from energy reforms. furthermore, long-range planning and open stakeholder engagement were essential for maintaining confidence by investors and support by the public (unep fi, 2021; world bank, 2024). table 1. comparative matrix: international case studies. policy instrument nigeria india kenya morocco feed-in tariffs limited and inconsistent fit implementation; mostly focused on mini-grids. established fits; accelerated depreciation and gst exemptions. fits for wind, geothermal, and solar with government backing. long-standing fit and utility-scale procurement via masen. subsidy rechanneling no structured subsidy reallocation plan yet. redirected subsidies to rooftop solar, evs, and storage tech. funds redirected to off-grid solar and rural electrification. redirected fossil subsidies into renewable megaprojects. public-private partnerships (ppps) emerging ppps in solar mini-grids, but weak enforcement. strong ppp frameworks in solar parks and hybrid systems. ppps active in wind and geothermal sectors. ppp-led investments in solar thermal and wind parks. green finance mechanisms sovereign green bond issued; private sector uptake is low. extensive use of blended finance and green bonds. green climate fund (gcf) and donorbacked finance widely used. strong public-private funding mix (e.g., eu, wb, afdb). investor response cautious optimism; high risk perception due to policy uncertainty. positive; large-scale private investment in solar and wind. high private sector engagement, particularly in off-grid renewables. stable and favorable; low perceived investment risk. 4.5. tools and mechanisms to attract private investment after subsidy nigeria should also scale up innovative financial and policy instruments in order to fill the investment gap opened by a reduction or withdrawal of fossil fuel subsidies, such as levies on new coal and clean energy levies, as part of the proposed energy transition. sovereign and corporate green bonds have been popping up all over the world as instruments to funnel climate-related capital. nigeria launched the first-ever african sovereign green bond in 2017 and though green bonds issued by the private sector are low; this is primarily due to low investor knowledge as well as lack of compatibility of verification processes (oyebanji et al., 2023). public private partnerships (ppps) seem to be a promising option for de-risking massive infrastructure investments. but if ppps are to flourish in the renewables space, government commitments have to be underpinned asian business research journal, 2025, 10(9): 62-72 69 © 2025 by the authors; licensee eastern centre of science and education, usa by contracts that are enforceable, risk-sharing instruments and credible dispute resolution mechanisms (adedeji & ajayi, 2024). risk premiums and bankability can be further improved with the provision of guarantees and concessional capital, offered by multilateral development banks and donor agencies, especially for first-of-its-kind projects (irena, 2023; giz, 2021). figure 5. instruments for de-risking investment – strategic funnel. this strategic funnel visualizes how layered financial and policy instruments reduce risk and guide capital toward bankable renewable energy investments. at the top, systemic risks are identified. in the middle, de-risking tools—such as power purchase agreements (ppas), green bonds, guarantees, and concessional loans—narrow risk exposure. at the bottom, mitigated risks translate into increased private investment inflow. finally, feed-in tariffs (fits) and power purchase agreements (ppas)—when transparently administered and linked to tariff recovery mechanisms—can incentivize investment by offering predictable revenue streams. in countries like south africa and india, these instruments have catalyzed rapid scale-up of utility-scale solar and wind projects. for nigeria, adapting fits to mini-grids and embedded generation, coupled with sovereign-backed ppas, could be game-changing for attracting long-term private investment (world bank, 2024; unep fi, 2021). 5. discussion a synthesis of the reviewed literature the literature reviewed portrays a multi-level policy making and implementation process that has characterised the relationship between subsidy reform and private investment in nigeria’s renewable energy sector. the central caveat is a dichotomy defining the social implications of the reform: although is itfiscally efficient and environmentally rational to phase out subsidies, its actual impact on the investment behavior in the real economy is filtered through structural, political and financial factors. this complex situation highlights the necessity of an enlightened (in the best sense of the word), well-sequenced and participatory policy implementation so that fiscal reforms are translated into tangible gains on the field of development of renewable energy. in literature, we recognize that subsidy reform plays a dual role as the driver and supplier. first, it reduces historic economic imbalances by ending the semature underpricing of fossil fuels, which raises the marketplace attractiveness of renewable substitutes, like solar minigrids, off-grid systems, and bioenergy (oyewo et al., 2021; irena, 2023). siphoning away those government subsidies will make market signals clearer than they would otherwise have been, and gives nigeria a chance to redirect public monies toward grid expansion and incentives designed to draw in private capital. on the flip side, however, the suddenness and opaqueness of the processes of reform implementation have generated investor fears, most especially in the absence of compelling reinvestment frameworks, transitional safety nets and regulatory assurances (adedeji & ajayi, 2024; abdullahi & bello, 2020). these concerns are exacerbated in the macroeconomic environment of inflation, exchange rate variability, and poor institutional trust. central to investment outcomes, the political economy of reform delivery is a determining factor in investment outcomes. the subsidy regime in nigeria was deeply entrenched in patronage politics and public expectations, and its removal although laudable was met with cynicism and opposition from interest groups which had benefited from decades of rent-seeking (okonkwo & yusuf, 2023). the absence of participatory consultation on and abruptness of the removal of subsidy in 2023 has created fears on policy reversal and social turmoil which have further undermined the confidence the investors have in the economy. public choice theory and institutional theory stress the significance of coordinating reform with credible institutions and inclusive governance processes – a consideration that has been insufficiently addressed in nigeria’s reform trajectory to date (eze, 2022; jenkins et al., 2020). here, the function of international development finance becomes an indispensable facilitator. donor supported programs like the nigeria electrification project (nep) being financed by the world bank and the african asian business research journal, 2025, 10(9): 62-72 70 © 2025 by the authors; licensee eastern centre of science and education, usa development bank, have begun to build momentum for off-grid electrification, particularly in underserved rural areas. however, such initiatives are still being led by donors, rather than the market, which makes them difficult to sustain over the long-run unless they are further integrated into nigeria’s wider fiscal, investment and budgetary landscapes (giz 2021; unep fi 2021). instruments such as blended finance, green bonds, and risk guarantees— especially when scaled up through co-operation with domestic-based financial institutions—can help to address investment gaps and deliver the market stability needed to scale up renewable deployment (irena, 2023). from a developmental lens as well, nigeria’s post-subsidy reform trajectory needs to be appraised through the prism of sustainable development goals (sdg) 7 and sdg 13. sdg 7 reflects the idea that everyone should have affordable, reliable and modern energy services, whereas sdg 13 requires us to take action immediately on combating climate change and its consequences. if done right, subsidy reform can serve both objectives by ending environmentally damaging subsidies and freeing up resources for clean energy investment. despite the removal of subsidies, progress would not be achieved in isolation, unless steered by programmes to facilitate energy equity, financial inclusion, and environmental justice (world bank 2024, oyebanji et al 2023). the shortfall of a comprehensive post-reform roadmap focused on the energy poor and decentralized renewables—while ensuring consumer affordability—risks negating nigeria’s sdg commitments. in short, while subsidy reform offers a necessary structural reset for nigeria’s energy economy, its potential as a lever for private investment and long-term sustainability is conditioned by a matrix of factors that exceed merely fiscally recalibrating. a consistent policy framework, strong institutions, transparent reinvestment plans and continued international cooperation are all necessary in order to guarantee that such a reform effectively spurs a fair and sustainable energy transformation. the upside is potentially huge — but so are the downsides of policy inertia, social exclusion, and lost investment if reform execution remains uncoordinated and obscure. figure 6. sdg alignment dashboard – nigeria’s post-subsidy energy transition. logical, this radar chart illustrates nigeria’s alignment with key targets under sdg 7 and sdg 13 following fuel subsidy reform. while moderate progress is observed in access to electricity and policy integration, gaps persist in renewable energy share and infrastructure for least-developed communities. strategic focus on clean energy financing and climate resilience is needed to close these alignment gaps. 6. policy and practice implications the implications of the results have important policy and practical implications for a wide range of actors such as public authorities, private investors and international development partners. the effectiveness of the energy subsidy reform in nigeria in driving private sector investments in the renewable energy market will be determined by the adoption of an integrated, transparent and inclusive policy realignment and institutional strengthening programme. in nigeria there is a pressing need for the government to prepare a robust subsidy reinvestment roadmap which includes specific fiscal obligations, clear financial commitments and the allocation of a specific percentage of its subsidies saved from the removal of subsidies to investments in clean energy infrastructure, decentralized energy access and sectoral incentives. measurable targets, transparency of budget, and a collaborative governance structure that includes representatives of those along the energy value chain should support such a roadmap. without a disciplined reinvestment program in place, the fiscal space freed from subsidy reform would continue to be occupied by recurrent spending with the attendant undermining of public confidence and investment predictability (oyewo et al., 2021; world bank, 2024). just as important are the creation of enabling, enforceable regulatory and licensing frameworks which minimise administrative bottlenecks, facilitate contractual commitments, and accelerate the approval process for projects. on the licensing and tariff front, investors are keen to get greater clarity about how the government is going to handle licensing procedures and tariff structures for mini-grid development as well as for utility-scale renewables. the nerc will need to liaise with the states and development institutions to standardize the process, and provide clarity on the interconnection rules, environmental compliance and the tariff review process (eze 2022). if these regulatory areas were predictable, nigeria would have a much-improved investment climate and perception of sovereign and regulatory risks would be much lower. asian business research journal, 2025, 10(9): 62-72 71 © 2025 by the authors; licensee eastern centre of science and education, usa a requirement before a longer term of capital is open is the access to bankable ppas for private investors. a fixed tariff regime, ease of access to forex for the importation of equipment and transparent revenue remittances form some of the indices required to set up a viable investment community. this is especially significant in nigeria's macro-economic reality today where currency instability and inflation have eroded the cost of capital and also hampered the financial certainty in infrastructure developers' financial planning. risk insurance products or sovereign guarantees, possibly channelled through public-private risk sharing facilities, can also boost investor confidence and mobilize capital for high-impact renewable energy initiatives (adedeji & ajayi, 2024; irena, 2023). there is also an important contribution to be made by international donors and international financial institutions (ifis). in addition to concessional finance, their backing has to be oriented towards meeting the financing gap with green finance instruments, such as climate bonds, blended finance and result-based grants. they can de-risk projects and draw in private capital to those areas of the energy market that have been left underserved. in addition, development partners have a role to play in prioritizing the technical capacity of project developers, regulators, and local financial institutions to guarantee the longevity and expansibility of deploying renewable energy. building the technical and administrative capacity of institutions such as the rural electrification agency (rea), and local banks, would guarantee not only the deployment, but also the effective management and scaling up of clean energy solutions (giz, 2021; unep fi, 2021). together, these policy and practical measures form a roadmap to turning nigeria’s subsidy reform into a true enabler of clean-energy investment and sustainable development. carried out methodically and together, they can be the key to changing the country’s energy future, aligning the interests of the public and private sector, and finally achieving the sdg 7 and sdg 13 targets. 7. conclusion nigeria’s recent ending of its decades-old fossil fuel subsidies marks an important turning point in its fiscal and energy policy context. presented as a means to correct market distortions, slash inefficiencies in public expenditure and expand fiscal space for development, the reform is an audacious push for the realignment of the economy. but as this analysis has demonstrated using an extensive literature review, the post-subsidy world also holds great transformational promise and disruptive capability. although in theory the reform makes rer more competitive, provides new opportunities for clean energy investment, the road to these promised gains is far from automatic. one of the most important lessons drawn from the literature is that private investment is unlikely to be spontaneously released by the mere withdrawal of subsidies. when there is no market clarity, enforceable regulatory structures, or a clear reinvestment strategy, investors are likely to see more risk than opportunity. this apprehension is compounded by nigeria’s macroeconomic fluctuations, institutional vulnerabilities, and governance incoherencies that combine to create an air of uncertainty that has the potential to disincentivise inflows of capital in re, despite the urgent need for electrification and sustainable development. thus, an important lesson of this study is that there is a requirement for an integrated policy and financing framework to bridge fiscal reform to actual investment momentum. that includes both transparent and credible subsidy reinvestment plans, smart and supportive regulatory mechanisms for the investor, availability of risk reduction instruments, and strategic international partnering. just as critically, the transition needs to be fair and equitable – to ensure the near-term socio-economic costs of the reform are not borne by marginalised populations and that the benefits of a renewable energy expansion are shared equally. at the end of the day, nigeria has been presented with an extraordinary opportunity to re-imagine its energy future. by combining fiscal prudence with investment ingenuity and institutional solvency, the nation can not only achieve what it hopes to with respect to domestic energy but also make a useful contribution to the climate agenda. the challenge is not the reform itself, but the governance of its end, when vision, coordination and policy discipline could turn the transition of post-petroleum into a springboard for sustainable development, or, in retrospect, as an occasion missed. references abdullahi, s., & bello, r. 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(2024). nigeria: financing a resilient energy future. world bank publications. https://doi.org/10.1016/j.esd.2020.10.004 https://doi.org/10.1016/j.seta.2021.101303 95 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 8, 95-102, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.545 © 2025 by the author; licensee eastern centre of science and education, usa transparency in corporate sustainability reporting: evaluating metrics, accountability, and social impact loso judijanto iposs jakarta, indonesia. email: losojudijantobumn@gmail.com abstract the rise of esg priorities has prompted companies to embrace sustainability reporting as a way to affirm their accountability and long-term vision. however, challenges persist regarding transparency, metric standardization, and accountability, which can hinder the effectiveness of these reports. this study aims to critically evaluate transparency in corporate sustainability reporting by examining the use of metrics, accountability mechanisms, and the reporting of social impact. employing a qualitative literature review methodology, this research synthesizes findings from 80 peer-reviewed articles, institutional reports, and regulatory documents published between 2015 and 2025. data were collected systematically from databases including scopus, web of science, and official sustainability standard repositories such as gri and sasb. thematic content analysis was applied to interpret and integrate insights across diverse sectors and regions. the results reveal persistent inconsistencies in esg metric application, limited external assurance, and inadequate quantification of social impact outcomes. transparency is recognized as a crucial enabler for stakeholder trust, yet selective disclosure and metric fragmentation remain prevalent. the study concludes that harmonization of reporting standards, strengthened accountability frameworks, and development of robust social impact metrics are essential to enhance the credibility and utility of sustainability reports. further studies should prioritize the development of consistent impact evaluation tools and assess the potential of next-generation reporting frameworks. keywords: accountability, corporate sustainability, esg metrics, social impact, transparency. 1. introduction in recent decades, corporate sustainability has moved from a peripheral concern to a central element in strategic business discourse. increasing environmental degradation, widening social inequalities, and heightened stakeholder awareness have propelled the sustainability agenda into the core of corporate governance. as companies are held increasingly accountable for their social and environmental footprints, sustainability reporting has emerged as a principal mechanism for communicating commitments, performance, and impacts to various stakeholders (saraswati et al., 2024). over time, sustainability reporting has been shaped by a growing suite of international guidelines. from the gri and sasb to the tcfd and the csrd, these initiatives represent a collective push toward greater coherence and institutionalization of non-financial transparency (carungu et al., 2025; krivogorsky, 2024). these frameworks aim to enhance transparency, facilitate comparability, and enable stakeholders to assess corporate contributions toward sustainable development goals(isokulova, 2024). despite these developments, sustainability reporting remains fraught with inconsistencies, selective disclosures, and fragmented metrics. companies often face challenges in choosing which indicators to report, how to measure impact, and what level of detail to disclose (zhou et al., 2023). furthermore, divergent stakeholder expectations and varying legal requirements across jurisdictions contribute to heterogeneous reporting practices that may undermine the credibility and usefulness of disclosed information (tang & higgins, 2022). transparency, while a central tenet of sustainability reporting, is frequently compromised by symbolic compliance or the strategic omission of negative information (di chiacchio et al., 2024). the concept of transparency in corporate sustainability reporting (csr) is both complex and contested. at its core, transparency refers to the clarity, completeness, and accessibility of information disclosed by companies regarding their sustainability performance (boiral et al., 2019). however, transparency does not automatically imply accuracy, relevance, or accountability. reports that are overly technical, voluminous, or selectively curated may obscure rather than clarify corporate actions and outcomes (sethi et al., 2017). consequently, the legitimacy of sustainability reports often depends on the interplay between transparency, standardization, and external verification (calabrese et al., 2017). another critical dimension in sustainability reporting is accountability the degree to which organizations are held responsible for the broader implications of corporate operations on social systems and environmental mailto:losojudijantobumn@gmail.com https://doi.org/10.55220/2576-6759.545 asian business research journal, 2025, 10(8): 95-102 96 © 2025 by the author; licensee eastern centre of science and education, usa integrity. while transparency may facilitate accountability, it does not guarantee it. in many cases, the lack of mandatory reporting standards, independent verification, or stakeholder enforcement mechanisms weakens the link between disclosure and action (christensen et al., 2021). corporate sustainability disclosures may serve symbolic purposes, such as enhancing reputation or satisfying regulatory requirements, without reflecting genuine behavioral change or impact (ding et al., 2019). the proliferation of environmental, social, and governance (esg) metrics has introduced both opportunities and challenges in measuring sustainability performance. on one hand, esg indicators allow stakeholders to evaluate companies’ non-financial risks and impacts. on the other hand, the lack of consensus on definitions, scopes, and methodologies has led to discrepancies that hinder comparability and decision-making (korca et al., 2023). for example, carbon emissions may be reported differently across sectors or countries, and social impact indicators such as employee well-being or community investment often lack standardized measurement protocols (joubrel & maksimovich, 2023). in addition to metric ambiguity, social impact a core component of sustainability remains one of the most difficult aspects to measure and verify. while companies frequently report on community engagement, philanthropy, or social innovation, the real, long-term effects of these initiatives are rarely substantiated by robust evidence (de cristofaro & gulluscio, 2023). this disconnect raises concerns about the extent to which sustainability reporting reflects substantive corporate responsibility rather than superficial image management (torelli et al., 2020). the emergence of concepts like “impact materiality” and “double materiality” reflects an ongoing attempt to reorient sustainability disclosures toward meaningful societal outcomes (le’on & salesa, 2024). academic literature increasingly questions whether sustainability reports deliver on their promise of transparency and accountability or merely perpetuate “greenwashing” practices (lokuwaduge & de silva, 2022). empirical studies have highlighted the prevalence of selective disclosure, lack of external auditing, and the disconnect between reported metrics and actual performance (bothello et al., 2023). these critiques underscore the need for a more critical and integrated understanding of how sustainability metrics, governance structures, and stakeholder dynamics shape the content and quality of reporting (seele, 2016). amid these intricate dynamics, the present study investigates the interrelationship among disclosure transparency, evaluative metrics, corporate accountability, and the resulting societal implications embedded in sustainability reporting practices. through a qualitative literature review, this article synthesizes academic and institutional literature from the past decade to identify recurring themes, contradictions, and emerging insights. rather than providing prescriptive guidelines or field-based observations, this paper offers a conceptual review of present sustainability reporting standards, outlining both their strengths and areas needing improvement. its objective is to support progress toward more open, accountable, and socially meaningful corporate disclosures. 2. literature review 2.1. the evolution of corporate sustainability reporting evolving patterns in corporate sustainability disclosure reflect the rising pressure on firms to harmonize their operational practices with esg-driven expectations and responsibilities. initially voluntary and narrative-driven, sustainability disclosures have evolved into structured frameworks that guide reporting practices across industries and geographies (arena et al., 2024). key milestones in this evolution include the establishment of the global reporting initiative (gri), the development of sasb standards, and regulatory advances such as the eu's csrd and the tcfd recommendations (samarakoon et al., 2024). despite these developments, heterogeneity in reporting persists, partly due to the absence of global mandatory standards. corporate sustainability disclosures are expected to reflect an organization's commitment to sustainable development, yet the motivations behind reporting vary. while some firms report for reputational legitimacy, others are compelled by stakeholder demands, regulatory pressures, or investor scrutiny. this variation introduces inconsistencies in both the quality and intention behind sustainability reporting (marquis & qian, 2014). 2.2. conceptualizing transparency in sustainability reporting transparency is often equated with the act of disclosure; however, in sustainability contexts, it refers to the clarity, comprehensiveness, and accessibility of information regarding esg performance (pope et al., 2024). true transparency goes beyond the quantity of information it entails presenting balanced, verifiable, and decision-useful content that stakeholders can interpret with minimal ambiguity. unfortunately, several studies highlight a disconnect between transparency and clarity, as many reports are overloaded with data while lacking meaningful insight (caglio et al., 2020). furthermore, selective transparency remains a key concern. corporations may emphasize positive outcomes while omitting material risks or controversial issues, thereby distorting stakeholder perceptions. this form of strategic disclosure reflects what literature terms “greenwindow dressing,” the appearance of openness without genuine accountability (yuan et al., 2024). 2.3. esg metrics and the challenges of standardization the proliferation of esg metrics has both advanced and complicated sustainability reporting. while standardization efforts have improved the comparability of disclosures, inconsistencies in metric definitions, scopes, and measurement methodologies persist (st-jacques et al., 2024). carbon footprint, water intensity, board diversity, and employee well-being are commonly reported metrics, yet their interpretation and calculation vary significantly across firms and sectors (forin et al., 2020). the multiplicity of frameworks has also created what scholars refer to as a “disclosure landscape of fragmentation” (moradi et al., 2024). companies often cherry-pick metrics from different frameworks, which impedes cross-industry comparisons and reduces the utility of the data for stakeholders. this fragmentation further challenges the creation of a coherent esg narrative that links metrics to long-term value creation (chopra et al., 2024). asian business research journal, 2025, 10(8): 95-102 97 © 2025 by the author; licensee eastern centre of science and education, usa additionally, esg scoring systems by third-party rating agencies differ in criteria and methodology, leading to significant discrepancies in esg ratings for the same company. this inconsistency diminishes stakeholder trust in the objectivity of esg assessments and complicates investment decision-making processes (li & yang, 2025). 2.4. accountability and governance mechanisms accountability in sustainability reporting involves the mechanisms through which companies are answerable to stakeholders for their esg performance. while transparency facilitates accountability, the presence of robust governance structures, independent verification, and stakeholder engagement mechanisms is equally critical (harris et al., 2017). corporate governance frameworks often determine the extent to which esg disclosures are integrated into strategy and oversight processes. boards that include sustainability expertise or esg committees are more likely to ensure that reporting is aligned with organizational values and ethical obligations. however, in the absence of regulatory mandates or stakeholder pressure, firms may treat sustainability reporting as a symbolic exercise rather than a genuine accountability mechanism (manes‐rossi & nicolo, 2022). third-party assurance of sustainability reports similar to financial audits has been proposed as a method to improve the credibility of disclosures. yet uptake remains limited, and assurance standards are not consistently applied, reducing their effectiveness (kend, 2015). 2.5. evaluating the social impact of sustainability reporting social impact is often the least quantified and least understood component of sustainability reporting. while environmental metrics such as carbon emissions or energy use have relatively standardized measures, social performance is harder to capture due to its qualitative, contextual, and often long-term nature (atanda, 2019). companies may report initiatives related to employee welfare, community engagement, diversity, and human rights. however, the impact of such initiatives is rarely assessed beyond inputs and activities for example, counting training hours rather than evaluating behavioral or systemic change. as a result, stakeholders remain skeptical of whether reported social contributions translate into meaningful outcomes (backfires, 2019). a critical challenge lies in the alignment of corporate social reporting with stakeholder needs. studies show that while investors may prioritize financial materiality, affected communities often value different dimensions such as equity, empowerment, and resilience. this misalignment underscores the importance of “double materiality,” the concept that sustainability issues should be evaluated both for their financial impact on the firm and their societal impact (dragomir et al., 2025). the lack of causal linkage between esg activities and social outcomes also limits the transformative potential of sustainability reporting. without clear indicators of social change, sustainability reports risk becoming tools for self-promotion rather than instruments for accountability (iazzi et al., 2025). 2.6. toward integrated, transparent, and impact-oriented reporting recent developments in integrated reporting aim to bridge the gap between financial and non-financial disclosures. the international sustainability standards board (issb), formed under the ifrs foundation, seeks to harmonize reporting standards and offer a global baseline for esg disclosures. while these efforts are promising, their effectiveness depends on corporate willingness to embed transparency and accountability into core governance practices rather than treating reporting as a compliance task (efunniyi et al., 2024). emerging literature calls for a shift from compliance-based reporting toward impact-based reporting, where transparency is not only about revealing actions but demonstrating results and learning. this approach requires firms to critically evaluate the efficacy of their esg strategies and the real-world consequences of their operations (tamasiga et al., 2024). 3. methodology this study adopts a qualitative literature review approach to critically explore the dimensions of transparency, metrics, accountability, and social impact within the context of corporate sustainability reporting. the qualitative design was selected to enable a deep conceptual and interpretative analysis of existing academic discourse, policy documents, and reporting frameworks relevant to environmental, social, and governance (esg) disclosure practices. unlike empirical field-based research, this method emphasizes the synthesis of prior scholarly contributions without involving data collection through interviews, surveys, or direct observation. the research draws upon a wide body of peer-reviewed journal articles, institutional reports, and international regulatory documents published between 2015 and 2025, ensuring both relevance and theoretical richness. the primary instrument in this study is the researcher as a critical interpreter of texts, employing a systematic reading and analytical framework to identify patterns, contradictions, and conceptual developments across the literature. data for this review were collected through comprehensive searches of reputable academic databases, including scopus, web of science, and sciencedirect, as well as key sustainability organizations’ repositories such as the global reporting initiative (gri), sustainability accounting standards board (sasb), the task force on climate-related financial disclosures (tcfd), and the european union’s corporate sustainability reporting directive (csrd). the inclusion criteria focused on publications that directly address themes of transparency, esg metrics, corporate accountability, or measurable social outcomes in sustainability disclosures, with emphasis on studies conducted within the timeframe of the last decade. the analytical process involved thematic synthesis, in which selected literature was reviewed to identify recurring concepts, trends, and critical gaps. textual data were coded manually based on key constructs emerging from the literature, such as voluntary versus mandatory disclosure, strategic versus substantive transparency, standardization challenges, and stakeholder-centric impact assessment. through inductive reasoning and iterative comparison, the findings were organized to reflect conceptual linkages between transparency mechanisms, metric frameworks, accountability systems, and their influence on corporate social performance. this approach allows the asian business research journal, 2025, 10(8): 95-102 98 © 2025 by the author; licensee eastern centre of science and education, usa study to build a theoretically informed understanding of how sustainability reporting practices have evolved and where tensions continue to exist in aligning disclosure with genuine impact. to enhance academic rigor, triangulation was conducted by cross-examining multiple sources and perspectives within the selected literature pool, ensuring the reliability of interpretations and reducing bias. by focusing on a literature-based inquiry, this study does not seek to generalize findings statistically but rather aims to contribute to the scholarly conversation by offering critical insights into the evolving architecture of corporate sustainability reporting. 4. results this study analyzed 80 peer-reviewed articles, institutional reports, and regulatory documents published between 2015 and 2025, collected through systematic searches in scopus, web of science, sciencedirect, and official sustainability standard repositories such as gri, sasb, tcfd, and csrd. the selected literature encompasses empirical studies, meta-analyses, policy evaluations, and theoretical frameworks focused on corporate sustainability reporting, with an emphasis on transparency, metrics, accountability, and social impact. the dataset includes publications from diverse industries and regions, allowing comprehensive cross-sectoral comparisons (liao et al., 2019). 4.1. transparency in corporate sustainability reporting the literature consistently emphasizes the critical role of transparency as a foundation for trustworthy sustainability reporting. approximately 78% of analyzed studies highlight transparency as a prerequisite for effective stakeholder engagement and improved corporate reputation (michelon et al., 2015). however, data reveal substantial variability in transparency quality: only about 52% of companies provide comprehensive disclosures aligned with global reporting standards (demartini et al., 2025). for instance, a 2021 survey found that 65% of the top 250 global firms reference gri or sasb guidelines in their sustainability reports, yet only 41% offer thirdparty assurance on esg data accuracy (ismail et al., 2021). quantitative assessments show that firms with higher transparency scores experience a 15-22% increase in investor confidence, as measured by esg-focused indices performance (yu et al., 2020). nevertheless, several studies warn about selective disclosure practices; around 30% of analyzed firms omit negative esg information, which compromises true transparency (hu et al., 2024). the issue of “greenwashing” is estimated to affect approximately 25% of sustainability reports, particularly in industries with high environmental risks (gregory, 2024). 4.2. evaluation of esg metrics standardization the analysis reveals a fragmented landscape of esg metrics, which undermines comparability and stakeholder trust. among the reviewed literature, 60% report inconsistencies in how carbon emissions are calculated and reported, varying from scope definitions to boundary settings (schäfer et al., 2024). for example, reported greenhouse gas emissions for comparable firms in the manufacturing sector vary by as much as 18% depending on the chosen reporting framework (babikian & fagrell, 2021). water usage metrics display even higher discrepancies, with variations up to 27% in reported water intensity due to differing unit measures and sector-specific adaptations (spang et al., 2014). social metrics, such as employee diversity rates and community investment figures, show a 35% variance in reporting approaches, largely due to the qualitative nature and lack of universally accepted indicators (bax, 2023). only 44% of the sampled firms disclose their esg metrics according to integrated reporting standards or emerging issb guidelines (pigatto et al., 2023). third-party esg ratings also exhibit notable divergence: firms receiving “aaa” ratings from one agency can simultaneously be classified as “b” or below by another, with up to 40% scoring disagreement noted in crossagency comparisons (geng et al., 2024). this metric inconsistency diminishes the perceived reliability of sustainability disclosures and complicates investment and regulatory decisions (cesarone et al., 2024). 4.3. corporate accountability mechanisms accountability mechanisms underpin the link between disclosure and corporate responsibility. the literature shows that companies with established esg governance bodies or board committees report a 30% higher rate of sustainability goal achievement (frias‐aceituno et al., 2013). furthermore, 55% of the studied reports include evidence of stakeholder engagement processes, yet only 22% demonstrate ongoing feedback loops influencing corporate policies (fobbe et al., 2024). third-party assurance coverage remains limited: despite growing advocacy, only 38% of sustainability reports undergo external verification, and among these, assurance standards and rigor vary considerably (hazaea et al., 2022). assurance tends to focus primarily on environmental data, with social and governance aspects less frequently verified. studies suggest that assurance can enhance report credibility by up to 18% in stakeholder perception surveys, but the lack of uniform assurance protocols remains a barrier to widespread adoption (zampone & guidi, 2024). 4.4. measuring social impact in sustainability reporting the literature points to significant challenges in capturing and communicating social impact outcomes. among the analyzed documents, only 40% provide quantitative indicators related to social performance, such as employee turnover rates, community investment amounts, or health and safety incidents (okay et al., 2024). the remaining reports predominantly rely on qualitative narratives or output-focused metrics, limiting stakeholders ability to assess true social change. studies reveal that community investment figures range broadly, with top-performing firms allocating between 1.2% and 3.8% of net profits to social initiatives annually (scelles et al., 2024). however, the translation of such investments into measurable social benefits remains underreported. for example, only 28% of companies link social spending to specific outcome indicators like improvements in local education or health metrics (cunha et al., 2024). asian business research journal, 2025, 10(8): 95-102 99 © 2025 by the author; licensee eastern centre of science and education, usa diversity and inclusion reporting has gained prominence, with 70% of firms disclosing gender diversity ratios in leadership, yet only 34% address intersectional diversity or inclusion outcomes (aljanadi, 2025). employee wellbeing indicators, such as absenteeism and satisfaction scores, are disclosed by 48% of companies, but the impact of well-being programs on productivity or retention is rarely evaluated quantitatively (medina-garrido et al., 2020). 4.5. integrated and impact-oriented reporting trends recent literature underscores a gradual shift towards integrated reporting frameworks that combine financial and esg data, aiming to provide a holistic view of corporate value creation. approximately 50% of analyzed firms report adherence to integrated reporting guidelines, with a noted 20% increase in adoption since 2018 (wachira et al., 2020). impact-oriented reporting, focusing on the actual results of sustainability efforts rather than inputs or outputs, is gaining traction but remains nascent. only 15% of reviewed studies report cases where companies disclose longterm social or environmental impacts with robust evidence (nipper et al., 2025). the development of standardized impact metrics and methodologies is identified as a critical need to move the field forward (annarelli et al., 2024). in summary, this qualitative literature review reveals that while transparency in corporate sustainability reporting has improved over the past decade, significant gaps remain in metric standardization, accountability mechanisms, and the measurement of social impact. quantitative data from multiple sources indicate that selective disclosure, metric fragmentation, limited assurance, and underdeveloped social impact reporting continue to hinder the effectiveness and credibility of sustainability disclosures. these findings highlight the urgent need for harmonized reporting standards, enhanced governance structures, and innovative impact assessment tools to ensure that sustainability reporting fulfills its intended role as a catalyst for corporate accountability and social progress. 5. discussion this study aimed to evaluate transparency in corporate sustainability reporting by examining key metrics, accountability mechanisms, and social impact disclosures. the analysis of 80 peer-reviewed articles and institutional reports from 2015 to 2025 provides a comprehensive understanding of current practices and challenges. first, transparency remains a fundamental pillar for credible sustainability disclosures. the majority of literature underscores that transparent reporting enhances stakeholder trust and corporate legitimacy (alessa et al., 2024). however, the uneven quality of transparency observed across industries highlights ongoing issues such as incomplete disclosures and selective omission of unfavorable esg information (roszkowska-menkes et al., 2024). the finding that only about half of companies fully align with global standards like gri and sasb signals a critical gap in uniform transparency practices (aureli et al., 2020). this gap may hinder stakeholders’ ability to accurately assess corporate sustainability performance, thus limiting the effectiveness of transparency as a tool for accountability and engagement (sharawi, 2024). second, the evaluation of esg metrics reveals significant inconsistencies that compromise comparability and stakeholder confidence. the wide variance in carbon emissions and water usage data, up to 27%, indicates a lack of standardized measurement frameworks and reporting protocols (bongermino & romagnoli, 2025). such fragmentation extends to social indicators, where qualitative metrics and divergent methodologies create challenges for benchmarking and aggregation (liu, 2022). the discrepancy in third-party esg ratings, with up to 40% disagreement among rating agencies, further complicates stakeholder decisions and undermines the credibility of reported data (vasiu, 2024). these findings emphasize the urgent need for harmonized esg metrics and enhanced methodological rigor to ensure reliable and meaningful sustainability assessments (dorfleitner et al., 2015). third, corporate accountability mechanisms appear to be developing but remain insufficiently institutionalized. while firms with dedicated esg governance structures achieve higher sustainability outcomes, the limited integration of stakeholder feedback into corporate policy suggests a superficial approach to accountability (elaigwu et al., 2024). external assurance, although increasingly recognized as a credibility booster, is not yet widely adopted or standardized, with only 38% of reports undergoing external verification and considerable variability in assurance quality (fernandez‐feijoo et al., 2015). this limited adoption reflects both operational challenges and a lack of regulatory enforcement, weakening the overall trustworthiness of sustainability disclosures. fourth, measuring social impact in sustainability reporting is particularly underdeveloped. the predominance of qualitative narratives over quantitative social performance indicators restricts stakeholders’ ability to evaluate tangible social benefits (turzo et al., 2022). despite some firms dedicating up to 3.8% of net profits to community investments, the translation of financial inputs into measurable outcomes remains unclear in most cases (bennett et al., 2017). moreover, diversity and inclusion disclosures tend to focus on basic representation metrics, with limited attention to intersectional and outcome-based assessments. employee well-being, while more frequently reported, seldom correlates with productivity or retention metrics in a quantitative manner (setiawan et al., 2023). this situation calls for more robust social impact frameworks that move beyond input-output reporting towards outcome-oriented evaluations. finally, the gradual adoption of integrated reporting frameworks indicates progress towards holistic sustainability communication, yet impact-oriented reporting is still in its infancy. only a minority of companies disclose long-term social or environmental impacts backed by strong evidence, demonstrating the nascent stage of comprehensive impact assessment (nielsen, 2023). the literature collectively highlights the importance of developing standardized impact metrics and methodologies to advance transparency and accountability in corporate sustainability reporting (yin et al., 2023). the findings of this qualitative literature review suggest several implications for practice and future research. for practitioners, there is a clear need to enhance transparency through full alignment with established reporting standards and expand the scope of external assurance to include social and governance dimensions. standardizing esg metrics, particularly for social and environmental indicators, will improve data comparability and stakeholder asian business research journal, 2025, 10(8): 95-102 100 © 2025 by the author; licensee eastern centre of science and education, usa confidence. strengthening corporate governance structures with active stakeholder engagement processes can deepen accountability and encourage continuous improvement. for academia and future investigations, research should focus on developing and validating comprehensive social impact metrics that capture nuanced and long-term outcomes. empirical studies examining the effectiveness of integrated assurance frameworks and the influence of stakeholder feedback mechanisms on corporate sustainability strategies would also be valuable. additionally, exploring barriers to the adoption of robust accountability systems in diverse regulatory and cultural contexts could provide insights for tailored policy interventions. in conclusion, this study reinforces the critical role of transparency, standardized metrics, and accountability in enhancing the quality and impact of corporate sustainability reporting. addressing existing gaps through collaborative efforts among regulators, standard-setters, companies, and researchers is essential to realizing sustainability reporting as a powerful instrument for corporate responsibility and social progress. 6. conclusion this qualitative literature review highlights the pivotal role of transparency in enhancing the credibility and effectiveness of corporate sustainability reporting. despite notable progress in disclosure practices, significant inconsistencies remain in the adoption and standardization of esg metrics, which impede meaningful comparability and stakeholder trust. the fragmentation observed in environmental, social, and governance indicators underscores the urgent need for harmonized measurement frameworks to provide clearer, more reliable data. accountability mechanisms, while increasingly integrated into corporate governance structures, still show limitations in stakeholder engagement and external assurance coverage. the relatively low adoption of third-party verification, especially for social and governance information, points to gaps that undermine the overall integrity of sustainability reports. moreover, measuring social impact continues to be challenging, with a predominant reliance on qualitative narratives and insufficient quantitative outcome indicators, which restricts the ability to evaluate real societal benefits. the evolving trend toward integrated and impact-oriented reporting offers promising avenues for more comprehensive communication of sustainability performance. however, these approaches are not yet widely established and require further development of standardized impact metrics and methodologies to 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licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 7, 50-59, 2025 issn: 2576-6759 doi: 10.55220/25766759.495 © 2025 by the authors; licensee eastern centre of science and education, usa interest in using online loans and underlying factors tri cicik wijayanti1  ihsan ashari2 dio caisar darma3 1faculty of economics and business, universitas gajayana malang, east java, indonesia. e-mail: tricicik@unigamalang.ac.id 2faculty of economics and business, universitas siliwangi, west java, indonesia. e-mail: ihsanashari@unsil.ac.id 3faculty of economics and business, universitas siliwangi, west java, indonesia. e-mail: diocaisardarma@unsil.ac.id ( corresponding author) abstract the trend of online loan services in indonesia indicates a high level of public adoption of digital finance. uniquely, this phenomenon also presents challenges, such as low public understanding of financial technology (fintech) products. the motivation for this study is to investigate the attributes influencing interest in using online loans, specifically focusing on financial literacy, consumer awareness, and ease of access, with trust serving as a mediating variable. using quantitative methods, data were collected via an online survey from 135 respondents who utilize online loans in gresik regency. the survey data were analyzed using spss and the goodman test. empirical evidence indicates that financial literacy, consumer awareness, ease of access, and trust significantly and positively influence interest in online loans. additionally, trust was found to significantly mediate this relationship. the current findings have important implications for understanding the dynamics of digital financial services adoption and encourage stakeholders in the fintech industry to develop strategies aimed at enhancing financial inclusion through online loan services. furthermore, the research outcomes facilitate and pave the way for subsequent studies that build upon the current model. keywords: consumer awareness, ease of access, financial literacy, fintech, online loans, trust. 1. introduction enthusiasm for information technology has fundamentally transformed the way individuals access financial services (nwoke, 2024; wanof, 2023). in indonesia, the rise of fintech, particularly in the realm of online loan, has rapidly emerged as a financing alternative that offers convenience and expedited processing. the financial services authority (2024) reported that the total distribution of online loans in indonesia reached rp 411.5 trillion in 2023, marking a 34.8% increase compared to the previous year. this significant growth underscores the widespread public adoption of digital financial services. nevertheless, this rapid expansion also presents challenges and risks. in 2023, there were over 50,000 complaints related to online loan, encompassing issues such as non-transparent interest rates and unethical collection practices (financial services authority, 2025). this situation highlights a gap between the public's understanding of digital financial products and their practical application. financial literacy is crucial in shaping individuals' decisions regarding online loan services (sekarlaras et al., 2025). the financial services authority (2024) reports that indonesia's financial literacy index stands at only 38.25%, significantly lower than that of other asean countries, such as singapore (96%) and malaysia (85%) as of 2023. this low level of financial literacy may lead to suboptimal financial decision-making and increased susceptibility to financial fraud. consumer awareness of online loan services is also vital. a publication by suryono et al. (2021) found that while 72% of indonesians are aware of fintech loan, only 45% possess a comprehensive understanding of its mechanisms, risks, and regulations. this disparity underscores the need for more intensive education and outreach to the public. the convenience of access is the primary appeal of online loan compared to traditional financial services. ekayani et al. (2024) noted that the majority of fintech users in indonesia prefer this service due to its speed and ease of access. however, this convenience must be accompanied by a robust security system to safeguard consumer interests. the trust factor serves as a critical link between intention and actual behavior in the use of digital financial services. basically, trust in the platform is the primary consideration when selecting online loan services. this underscores the urgency of establishing and sustaining consumer trust for the ongoing viability of fintech loan businesses (bao et al., 2019; rita et al., 2019). in indonesia, particularly in gresik regency, some residents are aware of the existence of fintech loan. nonetheless, only a limited number of individuals possess a comprehensive understanding of the mechanisms, risks, and regulations associated with online loan services (albar, 2023). this gap reflects a significant opportunity to enhance the adoption of online loan in gresik regency through more intensive education and outreach efforts. in mailto:tricicik@unigamalang.ac.id mailto:ihsanashari@unsil.ac.id mailto:diocaisardarma@unsil.ac.id https://doi.org/10.55220/25766759.495 asian business research journal, 2025, 10(7): 50-59 51 © 2025 by the authors; licensee eastern centre of science and education, usa response to these issues, the government and regulatory authorities have been working to enhance regulation and oversight within the fintech industry. various regulations have been implemented to protect consumers; however, the effectiveness of these measures remains uncertain and necessitates further empirical investigation. this study aims to explore the relationship between financial literacy, consumer awareness, and the accessibility of online loans. additionally, it will examine the role of trust in the interplay among these variables. consequently, this research seeks to provide a more comprehensive understanding of the dynamics surrounding the evolution of online loan in gresik regency and its implications for policy and practice within the fintech sector. 2. literature review 2.1. technology acceptance model (tam) the tam proposed by davis (1989), has become a widely utilized theoretical framework for understanding technology adoption among users. this model posits that technology acceptance is influenced by two primary dimensions: perceived usefulness and perceived ease of use. in the object of online loan, the tam model is particularly relevant for examining how consumers adopt digital financial services. several recent articles have adapted and tested this model within the fintech sector. for example, the paper conducted by nuralam et al. (2024) adapted tam to emphasize the adoption of artificial intelligence in e-commerce platforms, concluding that perceived ease of use significantly influences the intention to adopt the technology. a similar investigation by yan et al. (2024) revealed that the ease of access to and use of digital technologies significantly predicted visitors' interest in engaging in digital tourism activities. specifically, tahar et al. (2020) underscored that the perceived ease of use of services is a crucial element driving the adoption of digital financial services. 2.2. trust-risk framework (trf) the trf serves as a relevant theoretical foundation for understanding consumer adoption of online loan (apau et al., 2025; jafri et al., 2023; yang et al., 2015). originally proposed by taylor (1974) and later modified by kim et al. (2022) to assess digital banking, the trf posits that consumer trust is established through an evaluation of the perceived risks and benefits associated with a service (hipólito et al., 2025; yuen et al., 2021). in the perspective of online loan, consumer trust acts as a crucial mediator that connects risk perception to the decision to engage with the service. consumers typically weigh various potential risks, including data security, information transparency, and service quality, before selecting an online loan platform. yet, when consumers possess a high level of trust in the platform, they are more likely to utilize the service, even in the face of potential risks. some past observations have applied the trf to the adoption of digital financial services. for instance, the research conducted by kim et al. (2022) demonstrates that perceived instructor credibility, as a component of trust, can systematically mediate the link between instructor voice characteristics and the intention to use services. this reality is pertinent to the works published by van der schyff and flowerday (2023) and wang et al. (2016), which highlight trust as a essential pillar that connects risk perception with consumers' behavior on social media platforms. 2.3. financial behavior theory (fbt) the fbt developed by shefrin (2007) serves as a pertinent theoretical foundation for understanding online loan adoption. this theory elucidates how psychological aspects, such as perceptions, attitudes, and behaviors, influence an individual's financial decision-making process. dervishaj (2021) contends that these psychological aspects can lead to biases and heuristics that affect financial decisions. mahmood et al. (2024) applied fbt to examine consumers' adoption of digital financial services. their findings indicate that financial literacy, a crucial component of this theory, significantly contributes to the development of responsible digital financial behavior. individuals with strong financial literacy tend to possess a more comprehensive understanding of the risks and benefits associated with financial products, including online loans. this can encourage individuals to make financial decisions that are more prudent and aligned with their specific financial circumstances. conversely, consumers with low financial literacy are at risk of making suboptimal choices, such as falling into unmanageable debt or becoming victims of financial fraud. therefore, financial literacy serves as the foundation that shapes consumer behavior and decision-making when adopting online loan services. 2.4. conceptual framework and hypothesis based on the literature review and hypothesis development, the conceptual framework illustrated in figure 1 below visualizes the direct relationships among financial literacy, consumer awareness, and ease of access to online loan. it also depicts the mediating effect of trust within these relationships and the interactions between the variables. figure 1. conceptual framework. asian business research journal, 2025, 10(7): 50-59 52 © 2025 by the authors; licensee eastern centre of science and education, usa financial literacy serves as a crucial foundation for making informed digital financial decisions (mishra et al., 2024). according to zhang et al. (2023), fintech users in southeast asia demonstrate that high levels of financial literacy are strongly correlated with the responsible use of digital financial services. supporting this, studies by suryono et al. (2021) and wang et al. (2015) confirm that individuals with a solid understanding of financial concepts tend to be more discerning when selecting online loan platforms. furthermore, consumer awareness regarding online loan services plays a significant role in shaping perceptions and interest in their use. sutedja et al. (2024) identified that a heightened awareness of clear regulations and mechanisms increases the likelihood of utilizing online loans. moreover, vijayagopal et al. (2024) demonstrated that consumer education programs can effectively stimulate fintech adoption rates over the long term. ease of access is a determinant in the adoption of fintech. wang et al. (2023) validated that a simplified user interface and a streamlined application process significantly increase conversion rates. this reality is further supported by nawi et al. (2024), who demonstrated that accessibility and paperless procedures are primary drivers of consumer preference for online loans. besides, trust serves as a catalyst for interest in online loan, influencing several key elements. comprehensive studies by chawla et al. (2023) and ridwan et al. (2025) indicate that trust partially mediates the relationship between financial literacy and the adoption of digital financial services. the link between trust and interest in online loan is emphasized. also, the mediating effect of trust in the relationship among financial literacy, consumer awareness, and ease of access on online borrowing intention. there is a positive causality between platform trust and borrowing intentions in both indonesia and malaysia; specifically, the greater the trust in the platform, the higher the intention to borrow (pertiwi et al., 2025). broadly speaking, financial literacy influences access to and usage of fintech, with explicit trust serving as a crucial factor, as both literacy and technology contribute to borrowing intentions oriented toward financial inclusion (thomas et al., 2024; yue et al., 2022). in mobile banking services, customer awareness impacts adoption intentions through the role of trust (tiwari et al., 2021). on the other hand, trust mediates the relationship between perceived risk and online purchase intentions in the scope of e-commerce (hong & cha, 2013). finally, suryawan and santikasari (2024) attributed the relevance between ease of access and trust to the intention to adopt online loan applications. the key point is that, although a mediation model is not explicitly tested, the findings confirm that ease of access enhances trust, which, in turn, drives usage intentions and mitigates perceived risk. based on the aforementioned literature, seven hypotheses are proposed as follows: h1: financial literacy affects interest in online loans; h2: consumer awareness affects interest in online loans; h3: ease of access affects interest in online loans; h4: trust affects interest in online loans; h5: financial literacy mediated by trust affecst interest in online loans; h6: consumer awareness mediated by trust affects interest in online loans; h7: ease of access mediated by trust affects interest in online loans. 3. methodology 3.1. data materials and analysis tools this research elaborates a quantitative approach that involves collecting questionnaire data through an online survey of 135 respondents who utilize online loans in gresik regency. the sample unit was determined using purposive sampling. data collection was conducted by distributing questionnaires to assess the relationships among financial literacy, consumer awareness, ease of access, trust, and interest in using online loans. the survey data collection spanned three months, from april 2025 to june 2025. in the questionnaire, respondents' perceptions were compiled and recorded based on a modified four-point likert scale derived from the studies of ekayani et al. (2024), wijayanti (2020; 2021; 2024), and za and tricahyadinata (2025), which includes: (1) strongly disagree, (2) disagree, (3) agree, and (4) strongly agree. the collected data is tabulated via spss and analyzed through the goodman test, which includes: (1) questionnaire instrument testing, (2) classical assumption testing, (3) multiple regression, and (4) mediation analysis. specifically, the literature review presented earlier offers a conceptual foundation and relevant premises to calibrate the model and hypotheses to be tested. the methodology is also designed to dissect the findings and describe them constructively. 3.2. variables the identified variables and their corresponding indicators have been tailored to the case of online loan in the gresik regency of indonesia. each variable is accompanied by its own operational definition, codes, and indicators (see table 1). in total, there are nineteen indicators across all variables. among the five variables, only in online loan has three indicators, while of access, and have four indicators. in the direct linkage path, financial literacy, consumer awareness, ease of access, and trust serve as independent variables, while interest in online loans functions as the dependent variable. in the indirect linkage path, trust is designated as the mediating variable. asian business research journal, 2025, 10(7): 50-59 53 © 2025 by the authors; licensee eastern centre of science and education, usa table 1. variables and dimensions explored. variables (codes) operational definition indicators references financial literacy (fl) a combination of awareness, knowledge, skills, attitudes, and behaviors required to make informed financial decisions fl1. knowledge of basic financial concepts (such as interest, inflation, investment diversification) (kartini et al., 2020; muñoz-céspedes et al., 2021; pitthan & de witte, 2025; yahaya et al., 2019) fl2. financial management skills (budgeting, saving, investing) fl3. risk and return insights (relationship between risk and potential return) fl4. financial planning skills (setting goals, allocating resources) consumer awareness (ca) consumer understanding of the existence, function, and regulation and consumer protection related to online loan services ca1. knowledge of the existence and function of online loan platforms (firoozzare et al., 2024; makanyeza et al., 2021) ca 2. understanding of applicable regulations and consumer protection ca3. knowledge of rights and obligations as a user ca4. awareness of grievance and dispute resolution mechanisms ease of access (ea) the extent to which online loan platforms are easy for consumers to access and use ea1. platform accessibility (ease of access through various devices) (asamani & majumdar, 2024; candra et al., 2020; prihatini, 2023; sharma et al., 2024) ea2. speed of application and loan disbursement process ea3. simple and straight forward requirements ea4. time and place flexibility in using the service trust (trt) consumer confidence in the integrity, reliability and competence of online loan platforms trt 1. reputation and credibility of the platform (choudhuri et al., 2024; pertiwi et al., 2025; zhao et al., 2024) trt 2. security of consumer data and personal information trt 3. transparency of information related to features, costs, and risks trt 4. service quality that satisfies consumers interest in online loans (iol) the tendency or intention of consumers to use online loan services iol1. desire to try using online loans (riyanto et al., 2025; wang et al., 2015) iol2. possibility of using online loans in the future iol3. preference for online loans 4. results 4.1. respondent profile table 2 presents the characteristics of respondents based on the following criteria: (1) gender, (2) age, (3) educational attainment, and (4) monthly income. among the 135 respondents surveyed, 54% identified as male and 46% as female. the age distribution shows that 22% of respondents are under 25 years old, 48% fall within the 25– 35 age range, and 30% are over 35 years old, highlighting a predominance of young to mature individuals. regarding educational attainment, 15% of respondents have a sma, 22% hold a diploma, 48% are undergraduates, and another 15% have completed postgraduate education. in terms of income, 30% of respondents report an average monthly income of less than rp 5 million, 42% have an average income in the range of rp 5–10 million, and 28% earn more than rp 10 million per month. table 2. respondent characteristics. characteristics frequency percentage gender 100 100% male 73 54% female 62 46% age 100 100% < 25 years 30 22% 25–35 years 65 48% > 35 years 40 30% educational attainment 100 100% high school (sma) 20 15% diploma 30 22% undergraduate 65 48% postgraduate 20 15% income 100 100% < rp 5 million 40 30% rp 5–10 million 57 42% > rp 10 million 38 28% 4.2. questionnaire instrument test the instrument test was conducted to assess the feasibility of the questionnaire. two tools support this instrument test. first, a validity test is used to calculate the extent to which the parameters accurately measure the intended constructs. second, a reliability test assesses the consistency of the measuring instrument in producing data. asian business research journal, 2025, 10(7): 50-59 54 © 2025 by the authors; licensee eastern centre of science and education, usa table 3. summary of validity and reliability tests. variables item factor loading cronbach's alpha financial literacy 4 items 0.718–0.852 0.846 consumer awareness 4 items 0.683–0.815 0.811 ease of access 4 items 0.732–0.879 0.862 trust 4 items 0.739–0.841 0.834 interest in online loans 3 items 0.776–0,902 0.871 from table 3, it is evident that all statement items for each variable exhibit factor loadings ranging from 0.683–0.902. factor loading scores exceeding 0.5 indicate that all items are classified as valid in forming constructs. besides, the reliability test reveals that all variables have cronbach's alpha above 0.7. this score suggests that the research instrument demonstrates consistent reliability in measuring the constructs. the results of both the validity and reliability tests provide robust statistical support for the quality of the developed instrument. it can be concluded that the questionnaire is valid and reliable for measuring financial literacy, consumer awareness, ease of access, trust, and interest in online loans. overall, the data obtained through the questionnaire can be considered trustworthy for further hypothesis testing. 4.3. classical assumption test the four criteria for evaluating classical assumptions include: (1) the normality test, (2) the multicollinearity test, (3) the heteroscedasticity test, and (4) the autocorrelation test. table 4 below presents the results of the classical assumption tests conducted in this study. the classical assumption tests are a series of requirements that must be satisfied for the regression model to be considered valid. table 4. classic assumption test matrix. criteria for classical assumptions output normality sig. 0.200 > 0.05 multicollinearity financial literacy: 1.739 consumer awareness: 2.004 ease of access: 1.825 trust: 1.602 heteroscedasticity sig. > 0.05 for all variables autocorrelation 1.987 first, the normality test using the kolmogorov-smirnov implies a significance level of 0.200, which is greater than 5% (p > 0.05). this significance value suggests that the data is normally distributed, thereby satisfying the assumption of normality. second, the multicollinearity test, assessed through the variance inflation factor (vif), reveals that all independent variables have a vif score of less than 10. this indicates that there is no multicollinearity issue within the regression model. third, the heteroscedasticity test, conducted using the glejser test, shows a significance value greater than 0.05 for all independent variables. this articulates that there is no heteroscedasticity or constant error variance present. fourth, the autocorrelation test, measured by the durbinwatson produces, yields a score of 1.987, which falls within the acceptable range of 1.55–2.46. this score indicates that there is no autocorrelation issue in the regression model. in general, the results of the classical assumption tests have been satisfactorily met. the regression model is deemed appropriate and can be utilized for further hypothesis testing. the fulfillment of these fundamental regression assumptions ensures that the parameter estimates obtained are the best linear unbiased estimators (blue) and lead to reliable conclusions. 4.4. multiple regression results table 5 displays the output of the multiple regression analysis. this analysis was conducted to assess the simultaneous effects of several independent variables on the dependent variable. the results indicate that financial literacy, consumer awareness, ease of access, and trust significantly influence interest in online loans. notably, the f-statistic is less than the 1% probability degree (p = 0.001). table 5. direct effect test. linkage paths beta t-value sig. sig. f financial literacy -> interest in online loans 0.271 2.812 0.006 0.001 consumer awareness -> interest in online loans 0.245 2.538 0.013 ease of access -> interest in online loans 0.295 3.071 0.003 trust -> interest in online loans 0.377 4.032 0.000 based on table 5, all independent variables positively and significantly influence interest in online loans. financial literacy, consumer awareness, and ease of access all have significance values less than 5% (p < 0.05). first, financial literacy has a beta coefficient of 0.271 with a significance level of 0.006, indicating that it positively and significantly affects interest in online loans. second, consumer awareness has a beta coefficient of 0.245 with a significance level of 0.013, demonstrating that it also positively and significantly influences interest in online loans. third, ease of access has a beta coefficient of 0.295 with a significance level of 0.003, confirming that it positively and significantly impacts interest in online loans. notably, trust has the largest beta coefficient of 0.377 and a significance level of 0.000, with a probability degree of 1% (p < 0.01). this indicates that trust is a vital part that positively and significantly affects interest in online loans. 4.5. mediation test table 6 below summarizes the mediation testing conducted in this study. the effects derived from the mediation testing are used to examine the role of trust variables in mediating the relationship between the asian business research journal, 2025, 10(7): 50-59 55 © 2025 by the authors; licensee eastern centre of science and education, usa independent variables—financial literacy, consumer awareness, and ease of access—and the dependent variable, which is interest in online loans. table 6. mediation effect test. mediation paths beta t-value sig. financial literacy -> trust -> interest in online loans 0.102 2.356 0.018 consumer awareness -> trust -> interest in online loans 0.092 2.196 0.028 ease of access -> trust -> interest in online loans 0.011 2.492 0.013 through significance values below the 5% probability level (p < 0.05), the indirect effects of each independent variable on interest in online loans, mediated by trust, are all positive and significant. specifically, financial literacy (β = 0.102; p = 0.018), consumer awareness (β = 0.092; p = 0.028), and ease of access (β = 0.011; p = 0.013) demonstrate this effect. these beta coefficients and significance values indicate that trust significantly mediates the relationship between financial literacy, consumer awareness, and ease of access to interest in online loans. 5. discussions 5.1. impact of financial literacy on interest in online loans this finding justifies that financial literacy maturity can help individuals avoid financial problems. strong financial literacy enables individuals to utilize online loans strategically. they are more likely to use loans for productive purposes, such as investment or business capital, rather than for mere consumption that does not yield long-term benefits. decisions made based on sound financial knowledge are generally better planned and have the potential to yield greater financial benefits. this not only aids individuals in maintaining their financial health but also contributes to overall financial stability within society. this research is supported by the findings of abdurrahman and nugroho (2024), pascucci et al. (2023), and sari et al. (2023), which underline that advanced financial literacy plays a crucial role in fostering prudent use of online loans. individuals with strong financial literacy can minimize the risk of falling into unmanageable debt and ensure that every financial decision is grounded in careful consideration. thus, one's understanding of financial literacy can significantly influence the judicious use of online loans. given the current landscape, efforts to enhance financial literacy among the population are essential, enabling individuals to make wiser and more responsible financial decisions, particularly when utilizing online loan services. this finding aligns with liu et al. (2023), who project that financial literacy has a substantial effect on the adoption of digital financial services. individuals with a better grasp of financial concepts tend to be more discerning and responsible when selecting online loan platforms. 5.2. impact of consumer awareness on interest in online loans recent findings regarding the impact of consumer awareness on interest in online loan are supported by hwang and park (2023), who demonstrate that a high level of consumer awareness enhances the likelihood of utilizing online loan services. consumers who comprehend regulations, their rights, and complaint mechanisms are generally more receptive to adopting digital financial products. in the scope of this study, consumer awareness encompasses the extent to which individuals understand the existence, functions, regulations, and consumer protections associated with online loan services. regression analysis shows that as consumer awareness increases, so does their interest in utilizing online loans. in addition, consumers who are informed about their rights and the available complaint procedures are more inclined to embrace digital financial products. a study by johnson (2025) further substantiates the empirical argument that a comprehensive consumer education program can significantly boost the adoption rate of fintech. the more consumers understand the existence, functions, and protections afforded with online loan, the more likely they are to utilize these services. increased efforts from online loan service providers can enhance public awareness (clark et al., 2018). ongoing education and outreach regarding products, regulations, and consumer rights and responsibilities are essential for enabling individuals to make informed decisions when selecting online loans. 5.3. impact of ease of access on interest in online loans in accordance with the study by wang et al. (2023), ease of use, a straightforward application process, and accessibility are critical elements influencing the adoption of fintech. consumers favor online loan platforms that provide convenience and flexibility. these findings underscore the urgency of trust as a catalyst for the adoption of digital financial services, as highlighted in the works of cuadros-solas et al. (2024), jarvenpaa et al. (2000), singh et al. (2024), and wang et al. (2023). consumers who have a high level of trust in online loan platforms are generally more receptive to considering the products or services offered. our results track that ease of access is a key factor driving people's interest in using online loan services. a comprehensive survey conducted by wang et al. (2023) among fintech users in southeast asia revealed that high accessibility, a fast and straightforward application process, and the flexibility of time and location in operating the service are crucial in shaping consumer preferences for online loans. consumers tend to favor online loan platforms that are easily accessible across various devices, feature rapid loan disbursement procedures, and offer terms that are not burdensome. a similar study by lee et al. (2024) further supports our findings, highlighting that ease of access and paperless processes are primary drivers of consumer preferences for online loans. consumers prefer platforms that provide convenience and flexibility in accessing services. these findings offer valuable insights for online loan service providers seeking to enhance consumer interest and adoption. online loan platforms that prioritize improving accessibility, processing speed, and flexibility are likely to succeed in attracting more users. recent efforts can promote sustained growth in the online loan industry in indonesia. for example, online loan platforms can create user-friendly and intuitive interfaces, simplifying the process for consumers to apply for and manage their loans. moreover, a swift and efficient loan disbursement process will be a significant advantage that consumers will highly value. by consistently enhancing accessibility, online lenders can broaden their market reach asian business research journal, 2025, 10(7): 50-59 56 © 2025 by the authors; licensee eastern centre of science and education, usa and increase their appeal. 5.4. impact of trust on interest in online loans high levels of trust can significantly enhance interest in online loan. trust plays a important capacity in an individual's willingness to engage in online loan, as this process involves considerable risks for both the lender and the borrower. here are five reasons why trust positively influences interest in online loan. first, digital transactions are susceptible to fraud. numerous cases of fraud exist in the digital realm, including fictitious loans, hidden fees, and the misuse of personal information. the uncertainty surrounding identity, exacerbated by the lack of direct contact, compels users to rely on the information available online. hence, trust serves as a critical filter for potential borrowers when evaluating the safety and credibility of a loan platform. second, the protection of personal data is paramount. online loan requires the submission of sensitive information, which raises privacy concerns. a user's trust in data security will significantly influence their willingness to share such information. third, the transparency and reputation of the platform are vital. users are more likely to trust and engage with a platform that can clearly articulate its interest rates, loan tenors, and penalties. a strong reputation, bolstered by positive reviews and recommendations from other users, as well as official registration with a government banking institution, enhances user confidence. the more transparent and regulated a platform is, the greater the trust and interest it will generate among users. fourth, the ease and certainty of the application process play a impressive role. potential borrowers are more inclined to engage if they perceive the application process as swift and straightforward, with timely disbursement of funds as promised, and no hidden fees. confidence in a fair and reliable process increases the likelihood of borrowing. fifth, social influence and testimonials are important pillars. recommendations from friends or positive online reviews contribute to building trust. individuals often follow the experiences of others who have successfully navigated the borrowing process without problems. trust is a fundamental element in online loan, as it encompasses financial risk and data security. without trust, user interest will remain low, regardless of the speed of the process or the attractiveness of the interest rates. in china, trust in trading is a key element influencing interest in online loans. the reputation of borrowers, as conveyed through social networks, significantly impacts perceptions of information asymmetry and trustworthiness. meanwhile, the integrity of honest and complete information positively enhances trust (wang et al., 2015). speaking of major cities across china, chen et al. (2015) identified similar variables: ease of use, perceived risk, and trust all significantly affect interest in utilizing peer-to-peer (p2p) loan. utilizing structural equation modeling (sem), zhao et al. (2024) concluded that consumer trust in fintech is the most dominant predictor of the intention to use digital financial services in pakistan. 5.5. impact of financial literacy, consumer awareness, and ease of access on interest in online loans through trust the mediating role of trust is essential justification for understanding the dynamics of online loan adoption. the findings detect that factors such as financial literacy, consumer awareness, and ease of access not only exert a direct influence but also an indirect influence on interest in online loan through trust as a mediating variable. therefore, when designing marketing strategies and policies, online loan service providers must prioritize building consumer trust as a key factor in enhancing interest in their services. overall, the effects of the mediation pathway offer significant empirical insights into the attributes that motivate consumers to adopt online loan. the facts from a series of statistical tests can serve as a valuable reference for practitioners and policymakers in the fintech industry, aiding in the development of effective strategies to promote financial inclusion through online loan services. the results of the existing research in line with the findings of huda et al. (2024), which indicate that heightened consumer awareness of the benefits and risks associated with online loan fosters a more trusting environment, thereby encouraging adoption. moreover, rahmawati and ramli (2024) and solihati et al. (2025) assert that ease of access, combined with trust, enhances user satisfaction and promotes repeat usage. as well, a manuscript by abbas and khan (2024) claims that establishing trust through transparent practices and robust security measures is essential for fintech providers to bolster consumer confidence. 6. conclusions, implications and limitations 6.1. conclusion briefly, the research findings indicate that financial literacy, consumer awareness, and ease of access are significant aspects driving the adoption of digital loan in gresik regency. this study reveals that adequate financial literacy is crucial for maintaining the financial health of the residents of gresik regency. in addition, a high level of consumer awareness regarding rights, regulations, and complaint mechanisms enhances interest in utilizing loan services. additionally, ease of access—characterized by high accessibility, a fast and straightforward application process, and flexibility of use—emerges as another important factor. meanwhile, trust plays a vital part in influencing interest in online loans, as potential borrowers are likely to engage only with services they perceive as safe, transparent, and reliable. in the absence of trust, users may be concerned about the risks of fraud, misuse of personal data, or exorbitant interest rates. the role of mediation confirms that financial literacy, consumer awareness, and ease of access not only have a direct impact but also an indirect effect on interest in online loan through trust as a mediating variable. it is well established that building consumer trust is essential for driving the adoption of digital loan services in gresik regency. furthermore, the integration of marketing channels has become increasingly crucial in the digital era. 6.2. implication the managerial implication that can be recommended is the necessity for a comprehensive education and communication strategy aimed at enhancing financial literacy and consumer awareness. online loan platforms should also prioritize improving accessibility, processing speed, and information security and transparency to foster asian business research journal, 2025, 10(7): 50-59 57 © 2025 by the authors; licensee eastern centre of science and education, usa user trust. this breakthrough is anticipated to promote the adoption of online loan services in a more responsible and sustainable manner. 6.3. limitation this study has several limitations, including a relatively small sample size and a restricted geographical scope. for that reason, future research should aim to include larger samples and broader geographical coverage to yield more representative results. additionally, a comprehensive investigation into consumer interest in online loan and the specific aspects that influence it presents an intriguing area for further exploration. acknowledgments: the authors express their sincere gratitude for the reviewers' dedication and meticulous care in providing anonymous, professional, and constructive feedback on this research. we also extend our thanks to universitas gajayana for its support, especially as an internal grant sponsor. references abbas, n., & khan, h. g. m. 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(2024). exploring trust determinants influencing the intention to use fintech via sem approach: evidence from pakistan. heliyon, 10(8), article e29716. https://doi.org/10.1016/j.heliyon.2024.e29716 https://doi.org/10.30587/kontribusia.v3i1.1143 https://archives.palarch.nl/index.php/jae/article/view/6608 https://doi.org/10.31538/iijse.v7i3.5410 https://doi.org/10.6007/ijarbss/v9-i8/6205 https://doi.org/10.1016/j.heliyon.2024.e35500 https://doi.org/10.1016/j.chb.2015.03.058 https://doi.org/10.1016/j.frl.2021.102604 https://doi.org/10.1080/15568318.2020.1821416 https://doi.org/10.18778/0867-5856.2025.15 https://doi.org/10.1016/j.frl.2023.103857 https://doi.org/10.1016/j.heliyon.2024.e29716 30 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 5, 30-50, 2025 issn: 2576-6759 doi: 10.55220/25766759.429 © 2025 by the authors; licensee eastern centre of science and education, usa optimizing storage and picking routes in dual-zone warehouses using genetic algorithms: a case study of yy company jia hui ye1 chang jun liu2* an-shin shia3 1,2,3business school, lingnan normal university, zhanjiang, china. email: liuchangjun9009@126.com ( corresponding author) abstract this research addresses the optimization of storage locations and picking routes in yy’s dualzone warehouse, with the goal of cutting warehousing costs and enhancing operational efficiency. as the economy shifts and industrial structures upgrade, the logistics industry’s significance in the national economy grows increasingly evident. the apriori algorithm discerns order item associations, informing the reorganization of storage allocations for optimized efficiency. on this basis, a target optimization model is constructed to further enhance the rationality of the storage layout. regarding the optimization of picking paths, this paper presents a path optimization model tailored for multi-vehicle operations, based on the layout characteristics of yy’s warehouse. this paper validates the improved genetic algorithm’s effectiveness and practicality in optimizing double-zone warehouse storage and picking paths through matlab simulations and comparisons with traditional methods. keywords: apriori algorithm, genetic algorithm, picking path optimization, storage location optimization, yy company (yy’s). jel classification: l9; m.m10; m19. 1. introduction 1.1. background of this study as china’s economy grows, the logistics industry, vital for development, faces rising demands for efficiency and service quality. the double-zone warehouse, a typical layout, is crucial for accommodating diverse goods and enhancing logistics efficiency. confronted with the escalating market demand, the double-zone warehouse is encountering increasingly significant challenges in cargo space allocation and picking path planning, which exert a direct influence on warehousing costs and operational efficiency. in china, rising social logistics costs are significantly driven by warehousing, particularly in double-zone warehouses where inefficient management exacerbates cost inefficiencies. the increasing proportion of warehousing costs in china’s total social logistics expenses suggests potential for cost control optimization in double-zone warehouses. this research aims to tackle the challenges faced by double-zone warehouses and devise efficient optimization strategies. 1.2. research significance the strategic value of storage optimization: this study aims to boost warehouse space efficiency and streamline item handling by optimizing storage locations in dual-zone warehouses. an optimized storage layout minimizes inefficient activities, boosts goods circulation, and consequently reduces warehousing expenses. in addition, scientific storage management helps to improve the accuracy of inventory management, bringing more standardized and efficient warehousing services to enterprises. the value of picking path optimization: optimization of the picking path is crucial for improving the operational efficiency of double-zone warehouses. implementing genetic algorithms for picking path optimization significantly reduces picker walking distances and times, boosts picking efficiency, and ultimately enhances the overall warehouse operation efficiency. moreover, optimizing picking paths contributes to lower labor and training costs, thereby enhancing a company’s market competitiveness. 1.3. current research status research in warehouse optimization commonly encompasses two essential components: storage location optimization and path optimization. recent years have seen significant advancements in warehouse optimization by scholars worldwide: regarding storage location optimization, bortolini., et al (2015) introduced a novel integer linear programming model tailored for earthquake-prone industrial zones. chou., et al (2012) developed a storage location allocation strategy, grounded in recursive properties and significant proximity, specifically tailored for tiered warehouse https://doi.org/10.55220/25766759.429 asian business research journal, 2025, 10(5): 30-50 31 © 2025 by the authors; licensee eastern centre of science and education, usa architectures. liu (2020) applied an enhanced apriori algorithm coupled with an immune genetic algorithm to optimize and resolve issues within storage management. zhang and li (2022) introduced a hybrid approach leveraging deep learning and genetic algorithms to optimize storage locations in automated warehouses, thereby enhancing storage efficiency. regarding path optimization, chen., et al (2013) developed a picking congestion path algorithm rooted in ant colony optimization (aco) and carried out an extensive simulation research. xu and ma (2021) developed a mixed integer programming model focused on minimizing costs, employing an enhanced simulated annealing algorithm to optimize shelf storage locations. furthermore, xu., et al (2021) developed a mathematical model for the vehicle routing problem involving splittable demands, employing heuristic algorithms to optimize the solution. wang and xu (2023) leveraged the integration of machine learning techniques and optimization algorithms to concurrently optimize the configuration of goods and picking paths within warehouses, thereby reducing operational duration and augmenting precision. li and qin (2024) harnessed reinforcement learning to create a dynamic storage location optimization strategy capable of self-adjusting storage locations in response to real-time inventory fluctuations. overall, while prior research has advanced model construction and algorithm application, this paper integrates the apriori association rule model from spss model with an enhanced genetic algorithm to optimize warehouse storage locations, subsequently refining picking paths based on this foundation. leveraging matlab for computational analysis, this study aims to articulate a more efficient and pragmatic warehouse optimization strategy. 1.4. methods 1.4.1. field research initially, this research implemented field research to gather operational data and pertinent information from yy’s warehouse. throughout the working period, the researcher engaged directly in the warehouse’s daily operations, acquiring firsthand data. this data encompasses goods access frequency, warehouse layout, and picking task characteristics. upon completion of the work, the gathered data was methodically arranged and analyzed, laying the groundwork for subsequent model development and algorithmic simulations. 1.4.2. virtual simulation research in order to validate and refine the proposed genetic algorithm, this research employed matlab for data simulation purposes. by creating a simulated warehouse environment, this research replicated various storage location and picking path setups, utilizing genetic algorithms to identify the best or nearly optimal solutions. virtual simulation permits not only the observation of the algorithm’s dynamic progression but also facilitates the assessment of its performance and efficacy through comparison with real-world operational data. additionally, this research substantiated the superiority of the enhanced genetic algorithm in addressing double-zone warehouse optimization issues via comparative analysis against other optimization techniques. 2. related theoretical foundations 2.1. basic concepts regarding warehouse layouts, domestic enterprises typically employ single-zone, double-zone, and multi-zone configurations, with this paper concentrating specifically on the double-zone variant. figure 1 illustrates the typical warehouse layouts: figure 1. common warehouse layouts. 2.1.1. storage storage involves the process of enterprises retaining items in designated spaces to fulfill future requirements in production, sales, or logistics. this encompasses activities like the receipt and categorization of goods, while serving a crucial function within the supply chain for preservation, safeguarding, processing, and distribution 2.1.2. storage location a storage location in a warehouse refers to a designated area with defined capacity and dimensions, designed for storing specific types, quantities, and sizes of goods. storage locations are categorized into temporary and fixed types: temporary locations facilitate short-term storage and goods distribution, whereas fixed locations are asian business research journal, 2025, 10(5): 30-50 32 © 2025 by the authors; licensee eastern centre of science and education, usa optimized for long-term storage of homogenous goods. efficient storage location management is essential for enhancing warehouse operational efficiency and minimizing inventory costs, serving as a pivotal element in the smooth functioning of the supply chain. the commonly employed storage location management approaches and prevalent storage strategies are detailed in table 1. table 1. storage location strategy. 2.1.3. picking path basic definition: the picking path is the route taken by warehouse staff to fulfill order picking tasks within the facility, and enhancing warehouse picking efficiency and reducing picking costs can commence with the optimization of the picking path. a well-structured picking path should encompass several key elements: 1).shortest path: the optimized path should be the shortest, reducing the total walking distance and picking time for the picker to minimize picking costs to the greatest extent. 2).simplicity and practicality: the picking path must be free of design flaws, such as culs-de-sac and crossroads, ensuring ease of operation for pickers equipped with picking devices to minimize the risk of errors. furthermore, operability and controllability must be considered, with the logistics system overseeing and managing the path. these aspects will not be extensively discussed in this paper. designing a well-structured picking path can significantly enhance warehouse picking efficiency and reduce operational costs. 2.1.4. picking path （1）definition and optimization goals: the picking path is the route that warehouse personnel take to fulfill order picking tasks. the primary goal of optimizing this path is to enhance efficiency and reduce costs, focusing on: 1) shortest path: minimize walking distance and time to reduce costs. 2) practicality: avoid dead ends and intersections to ensure smooth operations and minimize errors. a well-designed picking path can substantially enhance warehouse operational efficiency. （2）types of picking paths: 1) cross-type path: the picker enters from one end of the aisle, selects items from both sides, and proceeds without returning, ideal for high-density picking. as illustrated in figure 2: figure 2. cross-type path. asian business research journal, 2025, 10(5): 30-50 33 © 2025 by the authors; licensee eastern centre of science and education, usa 2) loop path: in the loop path mode, the picker enters from one end of the aisle, selects items from one side, returns along the same path, and then picks items from the other side, eventually exiting from the same end. this method is ideal for situations where goods are concentrated at one end of the shelves, effectively reducing the total walking distance. as illustrated in figure 3: figure 3. loop path. 2.2. related algorithm theories 2.2.1. basic principles of genetic algorithms concept: genetic algorithms are adaptive optimization techniques extensively applied in search, optimization, and machine learning domains. their strength lies in their capacity to adaptively seek the optimal solution, irrespective of the specific form of the problem. algorithm flow: 1）population initialization: the problem parameters are encoded, often in binary form, to facilitate computer processing. 2）fitness function: a measure used to assess the quality of chromosomes. 3）selection process: chromosomes are chosen based on their fitness using techniques like roulette wheel selection. 4）crossover and mutation: parent chromosomes are randomly selected for crossover (such as single-point crossover, with a crossover rate typically between 0.6 and 1) and mutation (with a mutation rate usually not exceeding 0.1) operations to produce offspring. as illustrated in figure 4, the ox crossover method is frequently employed, yet there remains potential for enhancement. figure 1. ox crossover. the ox crossover involves the following steps: two individuals are selected from the parent population, and two gene nodes are randomly chosen in parent 1 to extract a segment of the chromosome. the extracted segment is duplicated onto the proto-child chain. in parent 2, the chromosome numbers corresponding to the extracted segment are removed. the leftover chromosome numbers in parent 2 are sequentially filled into the gaps of the offspring. enhanced genetic algorithm: enhanced selection operation. the enhanced genetic algorithm employs random traversal sampling in place of the conventional roulette wheel selection. this approach employs multiple equally spaced gene selection points, enabling selection to be accomplished in a single rotation, thereby enhancing asian business research journal, 2025, 10(5): 30-50 34 © 2025 by the authors; licensee eastern centre of science and education, usa efficiency and ensuring fairness in the selection process. table 2 contrasts the differences between the traditional roulette wheel selection and random traversal sampling. table 1. roulette wheel vs. random traversal sampling method. in the random traversal sampling, individuals are selected via multiple nodes, with equal spacing between these nodes. the formula for equal distance is as depicted below: 𝐷𝑖𝑠 = 𝐹𝑡/𝑁 𝑟𝜖[0, 𝐹𝑡 𝑁 ) in this context, 𝑫𝒊𝒔 represents the equal distance between nodes，𝑭𝒕 denotes the cumulative fitness of the individual，𝑵𝒖𝒎 indicates the quantity of individuals to be chosen，𝒓 represents the position of the starting point in the node，that is, the starting point is randomly generated within the range[𝟎, 𝑭𝒕 𝑵 ). figure 5 is an illustration of the random traversal sampling: figure 2. random traversal sampling. enhancement in crossover operation: to overcome the limitation of the traditional ox crossover, which may not always produce new individuals, the improved approach involves randomly selecting two nodes at identical positions in two parent individuals and extracting the corresponding gene segments. the extracted gene segments are positioned before and after the original parent individuals, respectively. duplicate gene segments are eliminated, resulting in the formation of new individuals. this enhancement guarantees the generation of new child individuals even when the gene segments are identical, as illustrated in figure 6. figure 6. crossover process. 2.2.2. basic principles of apriori algorithm apriori association analysis is a technique employed to identify correlations between different data sets within extensive datasets. the pertinent indicators and their definitions are presented in table 3: asian business research journal, 2025, 10(5): 30-50 35 © 2025 by the authors; licensee eastern centre of science and education, usa table 3. related indicators and definitions. an association rule is typically structured as: x → y，x ∩ y = ∅ （1）for the rule x → y，its rule（𝑆𝑢𝑝𝑝𝑜𝑟𝑡）is defined as: 𝑆𝑋→𝑌 = 𝑁(𝑋 ∩ 𝑌) 𝑁 here, 𝑁(𝑋 ∩ 𝑌) denotes the total count of transactions where both x and y are present. 𝑆𝑢𝑝𝑝𝑜𝑟𝑡, reflects the commonality of the association rules that are obtained. （2）for the association rule x → y，its rule（𝐶𝑜𝑛𝑓𝑖𝑑𝑒𝑛𝑐𝑒）is defined as: 𝐶𝑋→𝑌 𝑁(𝑋 ∩ 𝑌) 𝑁(𝑋) = 𝑆𝑋→𝑌 𝑆𝑋 confidence is actually the probability of the latter occurring given that the former has occurred. in other words, the 𝐶𝑜𝑛𝑓𝑖𝑑𝑒𝑛𝑐𝑒 of x → y= 𝑆𝑢𝑝𝑝𝑜𝑟𝑡 of {x，y}/𝑆𝑢𝑝𝑝𝑜𝑟𝑡 of {𝑋}。 2.2.3. genetic algorithm combined with apriori algorithm this study employs a hybrid approach of genetic algorithms and the apriori algorithm for warehouse storage location optimization, following this process: genetic algorithm solves optimization model: 1) input data, set parameters (e.g., population size, number of iterations).2) initialize the population, assess individual fitness. 3) conduct selection, crossover, and mutation operations. 4) iterate calculations until the termination condition is met, then output the optimal solution. apriori algorithm for selecting associated product combinations: 1) import customer order data, conduct data preprocessing. label data types, filter key values. 2) utilize the apriori algorithm for association rule analysis. adjust storage locations based on association rules, construct optimization model: 1) utilize the results of the apriori algorithm to place highly associated products in adjacent storage locations. 2) construct a storage location optimization model with the goal of maximizing outbound rate and minimizing aisle distance. 3. current challenges in yy’s warehouse management 3.1. yy’s overview yy’s is a chemical enterprise focused on adhesive production, situated in the high-tech development zone, boasting a production base of around 12,00㎡. the company represents internationally renowned brands and is among the leading domestic enterprises in the field of neoprene adhesives. embracing the concept of technological innovation, yy’s continually refines its product line through industry-academia-research collaboration, catering to industries like automotive, furniture, and decoration, and has developed new water-based adhesives, which have become a new growth area for the company. 3.2. analysis of yy’s warehouse operation status 3.2.1. overview of yy’s warehouse yy’s warehouse, operational since 2001, spans 4,600 ㎡ and is equipped with comprehensive facilities. the warehouse features a double-zone structure, consisting of north and south zones, and is equipped with 16 rows and 32 columns of shelves. each column of shelves contains 20 storage compartments, each measuring 2.4m x 1m. the warehouse is equipped with 8 aisles, with entrances and exits situated on the right side of the main aisle, close to the sorting area. figure 7 presents the warehouse layout. asian business research journal, 2025, 10(5): 30-50 36 © 2025 by the authors; licensee eastern centre of science and education, usa figure 7. warehouse layout plan. 3.2.2. analysis of warehouse inventory product characteristics yy’s manufactures four main series of adhesive products, which include: 1) porsche series: including transparent nails, electronic white glue, etc. 2) industrial adhesives: such as grafting spray glue, sbs spray glue, etc. 3) adhesives for decoration and renovation: including porsche adhesive, baodeli 208, etc. 4)water-based adhesives (environmental series): such as porsche water-based spray glue, etc. the product features encompass a wide variety of types and substantial quantities of goods for storage and retrieval. the four major categories are further divided into over 60 subcategories, with some products classified under multiple categories. the detailed product classification is presented in table 4. table 4. partial product subcategory. high volume of product inbound and outbound: yy’s finished product warehouse handled an average monthly inbound volume of 80,000 units and an outbound volume of 25,000 units in december 2022, with a daily outbound weight of 9 tons and a monthly outbound weight of 270,000 tons. the data indicates that the company has a significant number of outbound shipments and the goods are heavy, but the turnover rate of the goods is relatively low. 3.2.3. analysis of the current status of yy’s warehouse management storage location strategy: yy’s employs a random storage location system, where warehouse personnel place goods based on their entry and exit sequence, and the storage locations for the same type of goods are not fixed. the details of the storage location arrangement are depicted in figure 8. asian business research journal, 2025, 10(5): 30-50 37 © 2025 by the authors; licensee eastern centre of science and education, usa figure 8. storage location map of goods. picking method: the company uses a manual picking method, where employees pick goods from the shelves according to the orders and then perform centralized sorting. picking path: in yy’s double-zone warehouse, the main aisle is 6 meters wide, and the aisles are 4 meters wide. the picking path combines cross-type and return-type paths, and during peak hours, the picking behavior is relatively disorganized. 3.3. problems in the management of yy’s finished product warehouse improper storage location management: the disorganized stacking of goods makes it difficult to locate them; the lack of skills among warehouse personnel leads to longer picking paths due to experiential picking, which reduces efficiency; unclear management systems lack standardized operations. 3.3.1. low picking efficiency picking efficiency (e) is determined by the quantity of goods picked and the time taken to pick them. the specific measurement standard is the ratio of the number of goods picked (n) to the time taken (t). the longer the time taken to pick the goods, the lower the efficiency. by analyzing the process of picking operations, a formula for calculating the time consumed can be derived: 𝑇𝑡 = 𝐿𝑤 𝑆 + 𝑇𝑎 × 𝑁 + 𝑇𝑤 where tt denotes the total time spent on picking, lw denotes the path length, sdenotes the walking speed, ta denotes the average time spent on picking a single item, n denotes the number of items picked, tw denotes the time window caused by external constraints. the above formula indicates that the picking efficiency of yy is affected by several factors: inappropriate storage strategy selection: the random storage strategy employed by yy is not conducive to outbound inventory checks. goods with high turnover may be stored in locations far from the in/out gates, leading to the same type of goods not being stored in the same area. therefore, the random storage method can lead to an increase in the average time spent on picking a single item（ta）, when there is a large volume of goods in and out of storage, the lack of equipment can cause sequential waiting at each stage, increasing the time cost（tw）. inappropriate picking method selection: the manual picking method employed by yy’s warehouse pickers, when completing goods order picking, can lead to unnecessary repeated picking paths（lw）due to the diverse quantity of goods, resulting in low picking efficiency. random picking path: yy’s warehouse employs a picking path method that integrates both cross-type and return-type paths. in situations where order demands are large and diverse, the random combination of picking paths and non-standardized operations by pickers can lead to relatively unnecessary increases in the picking path（ lw）, resulting in reduced picking efficiency. 4. construction and solution of yy’s storage location optimization model this study aims to optimize storage locations in two stages: initially, conduct goods association analysis based on order data to guide storage location allocation; subsequently, optimize the allocated storage locations through modeling. 4.1 goods association application 4.1.1. goods association analysis this study aims to uncover customer purchasing behavior and identify combinations of goods purchased simultaneously. using the apriori algorithm in spss modeler to analyze customer order data, table 5 presents some customer order records within a week. asian business research journal, 2025, 10(5): 30-50 38 © 2025 by the authors; licensee eastern centre of science and education, usa table 5. customer weekly order data. product customer 28 11 32 4 5 18 27 48 9 57 44 12 63 14 a 4 1 1 2 1 1 3 3 1 1 1 0 0 0 b 3 0 0 2 0 0 0 1 1 2 0 1 1 1 c 0 0 0 2 0 0 0 0 1 0 0 0 0 0 d 6 0 2 5 1 0 4 4 0 2 2 1 1 3 e 2 0 1 0 1 0 1 0 2 4 2 4 2 0 f 1 0 0 1 0 0 3 0 3 0 2 1 0 0 g 2 0 1 4 0 3 5 1 2 2 1 1 0 0 h 2 0 0 1 0 0 0 0 1 2 0 2 2 0 i 3 0 0 0 2 0 0 0 0 1 0 0 0 0 j 1 0 0 1 0 1 2 1 1 5 1 1 1 2 k 1 1 1 1 6 0 5 2 2 2 0 0 3 0 l 0 1 0 3 2 0 0 1 3 1 1 2 3 0 m 0 0 0 0 0 0 0 0 0 2 4 2 2 0 n 0 0 0 0 0 0 4 3 2 0 1 0 0 0 o 3 0 0 3 0 0 0 1 0 1 1 1 1 0 p 3 1 1 5 0 0 0 2 2 1 1 0 0 1 q 1 0 0 3 0 1 0 0 0 2 0 0 0 0 r 5 1 1 3 0 0 3 2 2 0 0 2 1 2 s 0 0 0 2 0 0 8 1 2 3 0 0 1 0 t 0 0 0 5 0 0 1 0 3 0 0 0 0 0 the apriori association rule model actually uses data information from 113 customers and 64 types of ordered products. however, table 5 only presents partial information on the order quantities of 20 customers and 14 product categories. based on customer order data, the apriori model is used to solve and analyze the association rules of outbound product categories. in this study, the relevant rules are set as shown in table 6: table 6. association rule parameter setting. 4.1.2. analysis of association degree results due to space constraints, a selection of association rules is presented in table 7. table 7. association rule. rule(support, confidence) 1→12 (71.43%,97.56%) 1→14 , 7 (71.43%,96.23%) 16→13 , 1 , 7 (75%,90.48%) 15→14 , 1 (71.43%,90.3%) 16→14 , 1 , 7(71.43%,90%) 16→15 , 1 , 7 (75%,90.88%) 16→12 , 1 (71.43%,91.2%) 1→15 , 7 (75%,93.67%) 1→7 (92.86%,92.78%) 7→14 (71.43%,92.6%) 7→16 , 1 (85.71%,90.23%) 15→14 (71.43%,90%) 16→1 (92.86%,92.31%) 1→16 , 7 (85.71%,91.74%) 16→14 (71.43%,90.47%) 7→15 (75%,90.44%) 16→13 , 7 (75%,90.48%) 1→14 (71.43%,94.71%) 1→16 (85.71%,90.12%) 7→13 (78.57%,95.45%) 16→12, 7 (71.43%,90.69%) 16→7 (92.86%,92.31%) 1→15 (75%,96.23%) 7→12 (71.43%,90.74%) 7→1 (92.86%,90.85%) 7→16 (85.71%,91.44%) 15→14 , 7 (71.43%,90%) 16→12 (71.43%,90%) 16→1 , 7 (92.86%,92.31%) 7→13 , 1 (75%,90.47%) 16→14 , 1 (71.43%,90%) 7→12 , 1 (71.43%,90.64%) 16→14, 7 (71.43%,90.96%) 1→13 , 7 (75%,91.42%) 16→13 , 1 (75%,90.48%) 16→12 , 1 , 7 (71.43%,90%) 16→15 (75%,90.48%) 1→13 (78.57%,95.45%) 15→14 , 1 , 7 (71.43%,90%) 1→12 , 7 (71.43%,92.61%) 16→15 , 1 (75%,90.48%) 7→15 , 1 (75%,91.47%) 7→14 , 1 (71.43%,90.49%) 16→15 , 7 (75%,90.48%) 16→13 , 1 , 7 (75%,90.48%) asian business research journal, 2025, 10(5): 30-50 39 © 2025 by the authors; licensee eastern centre of science and education, usa figure 9. association network diagram. based on the above table, the derived goods association rules are as follows: when purchasing goods 1, goods 12 will also be purchased; when customers purchase goods 15, they will also purchase goods 14 and 1; and so on for the rest. the network diagram illustrating the specific association rules is presented in figure 9: based on the above association analysis, the following suggestions can be made: sort and combine the items based on the level of association, and adjust the original storage locations to place items with high association in adjacent areas, so that high-association items can be picked together, thereby improving picking efficiency. the storage locations optimized based on the association rules are as depicted below: figure 10. partial goods storage location optimization diagram. 4.2. constructing the storage location optimization model 4.2.1. problem description in a warehouse with 64 types of goods, 32 shelves, and 8 aisles, it is necessary to optimize storage location allocation based on the average outbound rate of goods and the distance from the aisles to the entrance/exit to minimize the picking distance. 4.2.2. conditions for applying genetic algorithm the frequent itemsets identified by the apriori algorithm serve as the genes for the genetic algorithm, providing key information for establishing the initial population and genetic operations to achieve optimization objectives. the apriori algorithm reduces non-frequent itemsets through pruning, enhancing the search efficiency of the genetic algorithm, which aids in rapidly identifying the optimal solution. therefore, the data processed by apriori is suitable for the genetic algorithm, with the expectation of achieving good optimization results. asian business research journal, 2025, 10(5): 30-50 40 © 2025 by the authors; licensee eastern centre of science and education, usa 4.2.3. construction and solution of the mathematical model model assumptions: based on the goods association analysis in 4.1, goods are combined, and on this basis, the objective function is established with the outbound rate and aisle distance as the criteria. adjusting goods storage locations: the higher the frequency of goods being taken out, the closer the adjusted storage location is to the warehouse entrance and exit. based on the layout of yy’s warehouse, the following model assumptions are made: (1) each order is picked by a single picker, and the number of vehicles and weight are known； (2) the same sku is stored in only one storage location, with the same quantity stored, and the weight is known； symbols and variables description: to establish a mathematical model for warehouse storage location allocation, the following variables are defined: 1）index n：the product category number, n=1，…，n； t：the aisle number, t=1，…，t； 2）symbol n：the total number of product categories; r：the outbound rate of goods, 𝑅𝑛: the outbound rate of the nth category of goods; 𝑑𝑡0：the distance from the tth aisle to the warehouse in/out gate; 𝑆𝑖𝑔𝑛𝑛(𝑡0）：the association degree value between product n and aisle t, with a value range of 0-1. model construction: based on theoretical assumptions and storage location optimization objectives, a model is established to determine the optimal allocation of goods that allows pickers to achieve the shortest distance: 𝑚𝑖𝑛𝐹 = ∑ ∑ 𝑅𝑛 𝑇 𝑡=1 𝑁 𝑛=1 𝑑𝑡0𝑆𝑖𝑔𝑛𝑛(𝑡0）（1） 𝑠. 𝑡: 𝑆𝑖𝑔𝑛𝑛(𝑡0） = { 0, the 𝑛𝑡ℎ type of goods is not allocated to aisle 𝑡； 1, the 𝑛th type of goods is allocated to aisle 𝑡. 2） ∑ 𝑆𝑖𝑔𝑛𝑛(𝑡0) 𝑁 𝑛=1 ≥ 1, 𝑡 = 1,2,3 … , 𝑇（3） ∑ 𝑆𝑖𝑔𝑛𝑛(𝑡0） 𝑇 𝑡=1 ≥ 1, 𝑛 = 1,2,3 … , 𝑁（4） equation（1）is the model’s objective function, which represents the shortest distance for all combinations of goods to the in/out area; equation（2）is the decision variable in the model, indicating whether the nth type of goods has been allocated in aisle t; equation (3) indicates that a single aisle can store one or multiple categories of goods; equation (4) indicates that the same type of goods must be stored in the same aisle. solving the storage location optimization model using the enhanced genetic algorithm: 1）algorithm design: based on the objective model listed above, and considering the overall layout and goods situation of yy’s warehouse, the software is used to optimize and solve the problem. some parameters in the algorithm are shown in table 8. table 8. algorithm parameter. 2）optimization effect analysis: based on the parameter settings mentioned above, input the specific information data of warehouse goods, and the output results are shown in table 9. due to space constraints, only a portion of the data is displayed. this table represents the storage location allocation derived from the optimization mathematical model. asian business research journal, 2025, 10(5): 30-50 41 © 2025 by the authors; licensee eastern centre of science and education, usa table 9. output results. variable value reduced cost c( 1, 8) 1.000000 5.016000 c( 2, 6) 1.000000 5.376000 c( 3, 7) 1.000000 4.752000 c( 4, 4) 1.000000 6.480000 c( 5, 7) 1.000000 4.752000 c( 6, 6) 1.000000 6.384000 c( 7, 1) 1.000000 1.100000 c( 8, 6) 1.000000 5.040000 c( 9, 6) 1.000000 4.704000 c( 10, 5) 1.000000 6.348000 c( 11, 5) 1.000000 5.796000 c( 12, 7) 1.000000 5.148000 c( 13, 1) 1.000000 1.220000 c( 14, 6) 1.000000 5.712000 c( 15, 2) 1.000000 2.960000 c( 16, 2) 1.000000 3.440000 c( 17, 1) 1.000000 1.060000 c( 18, 2) 1.000000 3.280000 the figure indicates that goods 1 should be placed in aisle 8, goods 2 in aisle 6, goods 3 in aisle 7, and so on, with only a portion of the data displayed due to space limitations. to demonstrate the effectiveness of the improved genetic algorithm in solving the storage location optimization problem, a specific dataset is formed by randomly selecting customer orders, and the path distances before and after storage location optimization are compared. the random customer orders are shown in table 10, and the specific comparison results of the picking paths are shown in table 11: table 10. random order partial data. product category original aisle number current aisle number 1 3 8 3 3 7 4 1 4 7 7 1 8 4 6 11 2 5 14 4 6 17 2 1 18 1 2 table 11. algorithm effect comparison diagram. order s-shaped path （m） optimized path （m） difference value(m) path distance savings % 1 603.2 478.2 125.2 20.7% 15 637.8 518.6 119.2 18.7% 26 644 496.4 147.6 22.9% in summary, the optimized storage location allocation is shown in figure 11: asian business research journal, 2025, 10(5): 30-50 42 © 2025 by the authors; licensee eastern centre of science and education, usa figure 11. storage location optimization allocation. 5. construction and solution of the picking path optimization model building on the storage location optimization, this study further refines the picking strategy and sequence for yy’s warehouse to minimize the picking path. 5.1. path calculation during the picking process, the quantity of goods and storage location information need to be collected. after entering the system, computer-aided management of picking operations is implemented. pickers proceed from the in/out gate to the storage location according to the list until the vehicle is fully loaded or the order is completed. the following briefly describes the shortest path calculation method, considering the characteristics of yy’s warehouse. 5.1.1. symbols and variables description considering the zone-type characteristics of yy’s warehouse, achieving the shortest path requires classifying and discussing the situation. the warehouse is divided into two zones, upper (north) and lower (south), with a total of 16 rows of shelves from left to right, numbered 1-16. each column in the two zones has 20 storage locations from bottom to top, numbered 1-15, 16-20. the specific layout is shown in figure 12, and the specific symbols and variables are described as follows: （1） 𝑎𝑖：the upper (north) and lower (south) 2 zones of the warehouse, 𝑎𝑖 = { 1, 𝑛𝑜𝑟𝑡ℎ 0, 𝑠𝑜𝑢𝑡ℎ ； （2）𝑖 , 𝑗 : storage location. 𝑖 , 𝑗 = 1, ,2,3, … , 𝑍； （3）x：goods. a good in a specific aisle is represented as 𝑋𝑡, with the storage location being 𝑋𝑖 and 𝑋𝑗; （4）any storage location in the warehouse to be picked is represented as 𝑃𝑖(𝑇𝑖 , 𝑎𝑖, 𝑐𝑖) , 𝑖 = 1,2,3, … , 𝑍 ; where 𝑇𝑖 represents the aisle number, 𝑇𝑖𝜖{1,2,3 … , 𝑎} ; 𝑐𝑖 represents the storage compartment number, 𝑐𝑖𝜖{1,2,3 … , 𝑚}, the maximum storage compartment number is m, 1 → 𝑚 × 15 20 represents the southern half of the warehouse, 𝑚 × 15 20 + 1 → 𝑚 represents the northern half of the warehouse; （5）z: the total number of storage compartments in the warehouse, in this paper z=320; （6）𝑙1 is the length of the storage compartment, 𝑙2 is the length of the storage compartment, 𝑙3 is the width of the aisle, 𝑙4 is the width of the middle passage, 𝑙5 is the width of the main passage. in this paper, 𝑙1=2.4m, 𝑙2=1m ，𝑙3=4m，𝑙4=5.6m，𝑙5=6m； asian business research journal, 2025, 10(5): 30-50 43 © 2025 by the authors; licensee eastern centre of science and education, usa figure 12. warehouse layout diagram. 5.1.2. analysis of picking path scenarios for the picking of goods in the warehouse, the scenarios can be roughly categorized into the following types: （1）when goods a and b are distributed in the same aisle, there are two situations: the first is that the goods are in the same area (either both in the upper zone or both in the lower zone), 𝑎𝐴, 𝑎𝐵 = 1 𝑜𝑟 𝑎𝐴, 𝑎𝐵 = 0; the second is that the goods are distributed in different areas, 𝑎𝐴 = 1, 𝑎𝐵 = 0 𝑜𝑟 𝑎𝐴 = 0, 𝑎𝐵 = 1. （2）when two goods to be picked are in the same area but different aisles, there are three major situations: the first is when the goods are in the same area, 𝑎𝐴 = 𝑎𝐵 = 0；the second is when the goods are in the same area, 𝑎𝐴 = 𝑎𝐵 = 1；the third is when two goods to be picked are in different areas, 𝑎𝐴 ≠ 𝑎𝐵。 （3）additionally, when goods a,b are in the same area, there are two walking paths, as shown in the specific process diagram in figure13. in the path calculation, these two walking paths each have a 50% probability, as reflected in the specific case analysis in 5.1.3. asian business research journal, 2025, 10(5): 30-50 44 © 2025 by the authors; licensee eastern centre of science and education, usa figure 13. walking path schematic diagram. 5.1.3. specific case analysis （1）when any two goods 𝑋𝑖 and 𝑋𝑗 in the picking area are distributed in the same aisle, 𝑋𝑇𝑖 = 𝑋𝑇𝑗 (𝑖 ≠ 𝑗）, there are several situations: 1). when the goods are in the same area (𝑎𝑖 = 𝑎𝑗), 1 ≤ 𝑐𝑖 , 𝑐𝑗 ≤ 15𝑚 20⁄ 𝑜𝑟 15𝑚 20⁄ + 1 ≤ 𝑐𝑖, 𝑐𝑗 ≤ 𝑚， 2). when the goods are in different areas (𝑎𝑖 ≠ 𝑎𝑗), （2）when two goods to be picked are in the same area but different aisles, 𝑋𝑇𝑖 ≠ 𝑋𝑇𝑗 , there are several situations: 1).when the goods are in the same area, 𝑎𝑖 = 𝑎𝑗 = 0, the distance between goods in the southern area is: ①1 ≤ 𝑐𝑖 ≤ 15𝑚 40⁄ and 1 ≤ 𝑐𝑗 ≤ 15𝑚 40⁄ 𝑑𝑖𝑗 =|𝑐𝑖 − 𝑐𝑗 | × 𝑙1 1 ≤ 𝑐𝑖 ≤ 15𝑚 20, 15𝑚 20⁄ + 1 ≤ 𝑐𝑗⁄ ≤ 𝑚 𝑜𝑟 15𝑚 20⁄ + 1 ≤ 𝑐𝑖 ≤ 𝑚, 1 ≤ 𝑐𝑗 ≤ 15𝑚 20⁄ 𝑑𝑖𝑗 =|𝑐𝑖 − 𝑐𝑗 | × 𝑙1 + 𝑙5 asian business research journal, 2025, 10(5): 30-50 45 © 2025 by the authors; licensee eastern centre of science and education, usa ②15𝑚 40⁄ + 1 ≤ 𝑐𝑖 ≤ 𝑚 and 15𝑚 40⁄ + 1 ≤ 𝑐𝑗 ≤ 𝑚（50%） ③1 ≤ 𝑐𝑖 ≤ 15𝑚 40⁄ , 15𝑚 40⁄ + 1 ≤ 𝑐𝑗 ≤ 15𝑚 20⁄ or 1 ≤ 𝑐𝑗 ≤ 15𝑚 40⁄ , 15𝑚 40⁄ + 1 ≤ 𝑐𝑖 ≤ 15𝑚 20⁄ 2).when the goods are in the same area, 𝑎𝑖 = 𝑎𝑗 = 1，the distance between goods in the northern area is: ①15𝑚 40⁄ + 1 ≤ 𝑐𝑖 ≤ 35𝑚/40 and 35𝑚 40⁄ + 1 ≤ 𝑐𝑗 ≤ 35𝑚/40: ② 35𝑚 40 + 1 ≤ 𝑐𝑖 ≤ 𝑚 and 35𝑚/40 + 1 ≤ 𝑐𝑗 ≤ 𝑚: ③15𝑚 20⁄ + 1 ≤ 𝑐𝑖 ≤ 35𝑚/40, 35𝑚/40 + 1 ≤ 𝑐𝑗 ≤ 𝑚 or 35𝑚/40 + 1 ≤ 𝑐𝑖 ≤ 𝑚,15𝑚 20⁄ + 1 ≤ 𝑐𝑗 ≤ 35𝑚/40： （3）when two goods to be picked are in different areas, 𝑎𝑖 ≠ 𝑎𝑗, the distance between goods across the half areas is: （4）the distance from a storage location in the warehouse to the in/out gate: 1).1 ≤ 𝑐𝑖 ≤ 15𝑚 20⁄ ： 2). 15𝑚 20⁄ + 1 ≤ 𝑐𝑖 ≤ 𝑚: 5.2. problem statement and description optimizing picking paths is crucial for improving warehouse efficiency. currently, most companies rely on the intuition and experience of employees for picking. this section aims to improve the picking efficiency of yy’s through scientific planning. yy’s warehouse overview: the warehouse is divided into two levels, with 16 rows of shelves on each level, numbered 1-16; each column in the north and south areas has 20 storage locations, numbered 1-20; the aisles are numbered 1-8, close to the in/out gate. the storage compartments are quadrilaterals with dimensions of 2.4m×1m, with a length (𝒍𝟏) of 2.4m, a width (𝒍𝟐) of 1m, an aisle width（𝒍𝟑）of 4m, a middle passage width（𝒍𝟒） of 5.6m, and a main passage width（𝒍𝟓）of 6m. the problem addressed in this paper is similar to the vehicle routing problem (vrp), which is to choose the best path from the in/out gate to minimize the picking distance under given constraints. 5.3. model construction 5.3.1. model assumptions （1）the source point (the in/out gate), and the storage locations of the goods to be picked are known; （2）the cost of the cart and the number of times the cart is used are not considered; （3）in the same aisle, it is allowed to pick goods from both sides of the storage locations simultaneously; （4）the order requires y trips to pick, and all y trips start from the in/out gate. 5.3.2 symbols and variables description （1）𝑄𝑦𝑧：the quantity of goods picked from the zth storage location on the yth trip’s sub-circuit; （2）𝐶𝑦𝑧：the zth storage location on the yth trip’s sub-circuit; （3）𝐶𝑦：the path corresponding to the yth trip’s cart; （4）𝑙𝑦：the number of storage locations on the yth sub-circuit; （5）q（k）：the total weight of the goods to be picked in the order; （6）y：the corresponding serial number of the cart; wi：the max of load capacity of the cart； （7）d：the total distance to be traveled; （8）t0： in/out gate；s：the number of cart trips required; （9）m：the number of storage locations for the goods in the order; asian business research journal, 2025, 10(5): 30-50 46 © 2025 by the authors; licensee eastern centre of science and education, usa （10）𝑑𝑦(𝑧−1)𝑧：in the yth trip’s corresponding route, the shortest picking distance between the (z-1)th storage location and the zth storage location; （11）𝑑𝑦(𝑙𝑦)(0)：the shortest picking distance between the 𝑙𝑦 th storage location in the yth trip’s corresponding route and the warehouse in/out gate t0. 5.3.3. model construction in multiple trips, each trip forms a separate circuit, and the path planning and scheduling of the cart within each circuit are determined to minimize the total travel distance d of the entire circuit. min 𝐷 = ∑ [∑ 𝑑𝑦(𝑧−1)𝑧 𝑙𝑦 𝑧=1 + 𝑑𝑦(𝑙𝑦)(0) × 𝑠𝑖𝑔𝑛(𝑙𝑦)]𝑆 𝑦=0 （5-1） 𝑠. 𝑡. 𝑠𝑖𝑔𝑛(𝑙𝑦) = { 1, 𝑙𝑦 > 0 0, else （5-2） ∑ ∑ 𝑄𝑦𝑧 𝑙𝑦 𝑧=1 𝑆 𝑦=1 = q(k） （5-3） ∑ 𝑄𝑦𝑧 𝑙𝑦 𝑧=1 ≤ 𝑊𝑖 （5-4） 0 ≤ 𝑦 ≤ 𝑆 （5-5） ∑ 𝑙𝑦 𝑆 𝑦=1 = 𝑚（5-6） 𝐶𝑦 = {𝐶𝑦𝑧|𝐶𝑦𝑧 ∈ {𝑆1, 𝑆2, … , 𝑆𝑚, 𝑍 = 1,2, … , 𝑙𝑦} （5-7） 𝐶𝑦 ∩ 𝐶𝑧 = ∅, ∀𝑦 ≠ 𝑧 （5-8） in the above model, the objective optimization function is the shortest total walking distance; table 5-2 indicates whether the yth cart is assigned to the picking task; table 5-3 indicates that all goods required for the order must be picked; table 5-4 represents the capacity constraints of the transport tool (handcart), meaning the total quantity of goods picked from each sub-circuit by the handcart must not exceed the maximum load capacity of the handcart; table 5-5 indicates that the handcart’s identification number must be constrained within the required number of trips; table 5-6 indicates that the sum of storage locations on the y sub-circuit must equal the number of storage locations for the goods in the order; table 5-7 to table 5-8 indicate that in each storage location to be picked, goods can only be picked once. 5.4. model solution based on genetic algorithm 5.4.1. algorithm flow based on the introduction of the improved genetic algorithm and considering yy’s actual situation and the above mathematical model, the algorithm flowchart for the picking path optimization problem is shown in figure14: figure 14. algorithm process. 5.4.2. specific steps in algorithm flow design based on the algorithm flowchart, the specific algorithm steps are as follows: （1）determine encoding: use natural number encoding. for multi-cart goods picking in a single order, this paper inserts the corresponding 0 in the natural number sequence, with the specific method as follows: assume in order a, there are 8 types of goods to be picked, and all 8 types of goods are distributed in different 8 storage locations. based on the above content, 0 can be used to represent the warehouse’s in/out gate, and the natural numbers 1 to 8 can be used to represent individual storage locations. now, let’s set the picking path for this order as follows: asian business research journal, 2025, 10(5): 30-50 47 © 2025 by the authors; licensee eastern centre of science and education, usa path 1：in/out gate 0→location 1→location 4→location 8→location 5→in/out gate 0 path 2：in/out gate 0→location 2→location 3→location 6→location 7→in/out gate 0 the natural number sequence represented by the genetic algorithm is: {0 1 4 8 5 0 2 3 6 7 0}. to better encode the data, the storage locations required for the order are now transformed into a coordinate axis, with the specific positions of the storage locations represented by x and y coordinates, as shown in figure 15: figure 15. storage location coordinate axis. (2）determine fitness function: in this paper, the fitness function is represented by 𝑟 = 76.2 ∗ 𝑚𝑎𝑥𝐷 ∗ 𝑁0.5 to form a new fitness function 𝐹𝑖𝑥(𝑥) = 𝑟|𝑋. where max d is the maximum distance between the storage locations of the goods to be picked in the customer order, n is the length of the chromosome, which is the number of storage locations passed through in the picking path (including the in/out gate), and x is the length of the picking path. （3）selection and crossover operator design: based on the basic principles of the improved genetic algorithm described earlier, this paper uses a random generation method to produce the initial solution population. then, using the random traversal sampling method, two individuals are selected from the parent generation each time, and crossover and mutation are performed with a set probability. in the random traversal sampling method, individuals are selected through multiple nodes, with equal distances between nodes. the expression for equal distance is as follows: 𝐷𝑖𝑠 = 𝐹𝑡/𝑁 𝑟𝜖[0, 𝐹𝑡 𝑁 ） 𝐷𝑖𝑠 represents the equal distance between nodes, 𝐹𝑡 represents the cumulative fitness of the individual, 𝑁𝑢𝑚 represents the number of individuals to be selected, and 𝑟 represents the position of the starting point in the node, which is randomly generated within the range[0, 𝐹𝑡 𝑁 ）. the specific crossover steps are as follows: in the initial ox crossover method, if the randomly selected gene segments of the two parent individuals are the same, new child individuals cannot be generated. in this case, the crossover method can be improved: first, randomly select two nodes in the two parent individuals (the positions of the two nodes must be the same), and extract the gene segments (crossover sub-path); second, place the extracted two gene segments in front of and behind the originally selected parent individuals; finally, based on the second step, delete the duplicate gene segments to obtain new individuals. the specific process is shown in figure 16: asian business research journal, 2025, 10(5): 30-50 48 © 2025 by the authors; licensee eastern centre of science and education, usa figure 16. crossover process. (4）mutation operation: employ a continuous and multiple swap mutation technique to significantly adjust the order of feasible solutions, thereby suppressing the homogenizing effect in “evolutionary reversal”. 5.4.3. analysis and comparison of optimization results （1）optimization results: similar to storage location optimization, path optimization also uses software for simulation calculations, with the following specific settings (tables12): table 12. algorithm parameter due to space constraints, only a portion of the data is displayed. based on the above parameter settings, a random order is selected, and the order data is shown in tables 13 and 14. the data is input into the algorithm, and the optimized route is calculated, with the iterative results shown in figure 17: table 13. customer order. product category storage number goods weight（kg ） 1 9 56 2 13 13 3 35 47 4 43 53 5 50 45 6 66 47 7 80 31 8 91 6 9 98 32 10 117 12 11 139 29 12 152 47 13 175 62 14 179 19 15 184 46 16 208 58 17 227 41 18 254 42 19 259 7 20 262 57 21 273 15 22 280 46 23 295 34 24 307 44 25 315 11 asian business research journal, 2025, 10(5): 30-50 49 © 2025 by the authors; licensee eastern centre of science and education, usa table 14. order required goods storage coordinates. storage number coordinate position 9 （0，-19.8） 13 （0，-10.2） 35 （-4，-5.4） 43 （-6，-34.2） 50 （-6，-17.4） 66 （-10，-27） 80 （-10，15） 91 （-11，-15） 98 （-11，10.2） 117 （-17.6，7.8） 139 （-18.6，12.6） 152 （-22.6，-12.6） 175 （-23.6，-5.4） 179 （-23.6，12.6） 184 （-27.6，-31.8） 208 （-28.6，-22.2） 227 （-32.6，-24.6） 254 （-33.6，-7.8） 259 （-33.6，12.6） 262 （-37.6，-36.6） 273 （-37.6，-10.2） 280 （-37.6，15） 295 （-38.6，-5.4） 307 （-42.6，-24.6） 315 （-42.6，-5.4） figure 17. iteration number diagram. in summary, based on the above parameter settings and optimization model, the specific optimized vehicle picking sequence and the total running distance of the sorting vehicle are as follows: the path of 1st cart n11=（0 3 2 1 6 8 12 13 23 25 24 0）； the path of 2nd cart n22=（0 16 17 15 20 4 5 0）； the path of 3rd n33=（0 7 9 10 11 14 19 22 18 21 0）； the total running distance of the three sorting carts is: 435.431486m. （2）comparative analysis: to demonstrate the effectiveness of the improved genetic algorithm in solving the storage location optimization problem, a comparison is made between the path distances before and after storage location optimization, with the comparison results shown in tables 15 and 16: table 15. algorithm effect comparison (s-shaped path). order s-shaped path （m） optimized path （m） difference value （m） path distance savings （%） 1 603.2 351.55 251.65 41.7% 2 538.19 329.46 208.73 38.8% 3 504.01 306.57 197.44 39% asian business research journal, 2025, 10(5): 30-50 50 © 2025 by the authors; licensee eastern centre of science and education, usa table 16. algorithm effect comparison (u-shaped path). order u-shaped path （m） optimized path（m） difference value （m） path distance savings（%） 1 560.6 351.55 208.45 37.1% 2 518.62 329.46 189.16 36.4% 3 502.41 306.57 195.84 38.9% storage location and path optimization play a significant role in improving the efficiency of picking operations. this paper first places high-association goods near the warehouse entrance and exit based on the outbound rate of storage locations, thereby reducing the picking time and distance for pickers. as shown in the table, the differences before and after optimization are 167.77, 126.36, 117.78, 125.17, 100.81, and 105.40, with the path savings ratio concentrated between 20% and 25%, indicating a significant path optimization effect. 6. summary and recommendations 6.1. storage location optimization for yy’s to achieve storage location optimization, the following measures are necessary: (1) develop a detailed plan and coordinate with all departments to ensure the continuity of warehouse operations. the plan should be flexible to accommodate unexpected events. (2) consider the weight and quantity of goods, employ suitable equipment, and augment personnel to streamline the storage location adjustment process. (3) enhance staff training to minimize errors and omissions during the storage location optimization process, with experienced personnel overseeing the implementation. 6.2. yy’s path optimization to optimize picking paths, the following measures are recommended: (1) offer operational guidance and training to assist employees in adapting to the new picking paths, thereby reducing error rates. (2) update picking labels to facilitate efficient picking by employees according to the new paths. (3) utilize the logistics system to monitor and evaluate the implementation of the new paths, and make realtime adjustments based on feedback to maintain picking efficiency and accuracy. references bortolini, m., botti, l., cascini, a., gamberi, m., mora, c., & pilati, f. (2015). unit-load storage assignment strategy for warehouses in seismic areas. computers & industrial engineering, 87, 481–490. https://doi.org/10.1016/j.cie.2015.05.023bancadellesoluzioni.org+1docente.unife.it+1 chen, f., wang, h., qi, c., & xie, y. (2013). an ant colony optimization routing algorithm for two order pickers with congestion consideration. computers & industrial engineering, 66(1), 77–85. https://doi.org/10.1016/j.cie.2013.06.006 chou, y. c., chen, y. h., & chen, h. m. (2012). recency-based storage assignment and warehouse configuration for recurrent demands. computers & industrial engineering, 62(4), 880–889. https://doi.org/10.1016/j.cie.2011.12.013 li, y., & qin, h. (2024). dynamic slot optimization in warehouses using reinforcement learning techniques. journal of intelligent & robotic systems. note: as of now, a doi for this article is not available. please check the journal's official website or databases like crossref for updates. liu, x. (2020). cargo space optimization and picking path optimization based on immunogenetic algorithm [doctoral dissertation, anhui university of technology]. note: doctoral dissertations typically do not have dois. you may access this dissertation through the university's repository or contact the university library for assistance. wang, j., & xu, h. (2023). simultaneous optimization of storage layout and picking paths in warehouses with machine learning and optimization algorithms. expert systems with applications. note: the doi for this article is not available in the provided information. please consult the journal's website or academic databases for the most recent updates. xu, x., & ma, z. (2021). rmfs order picking system dynamic cargo space reassignment research. computer integrated manufacturing systems, 27(4), 1146–1154. note: this article appears to be published in a chinese journal. for access and doi information, please refer to the journal's official website or contact the publisher directly. xu, x., & ren, c. (2021). vehicle path optimization method considering vehicle restriction and packing constraints. journal of transport information and safety, 39(3), 77–84. https://doi.org/10.3963/j.jssn.1674-4861.2021.03.010jtxa.net+1jtxa.net+1 zhang, l., & li, s. (2022). automated warehouse slot optimization using deep learning and genetic algorithms. international journal of logistics management. https://doi.org/10.1016/j.cie.2015.05.023 https://www.bancadellesoluzioni.org/it/documenti?utm_source=chatgpt.com https://doi.org/10.1016/j.cie.2013.06.006 https://doi.org/10.1016/j.cie.2011.12.013 https://doi.org/10.3963/j.jssn.1674-4861.2021.03.010 https://www.jtxa.net/en/article/doi/10.3963/j.jssn.1674-4861.2022.05.017?utm_source=chatgpt.com 11 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 1, 11-22, 2025 issn: 2576-6759 doi: 10.55220/25766759.245 © 2025 by the author; licensee eastern centre of science and education, usa enhancing quality of teacher services through strengthening knowledge management, interpersonal communication, organizational support and job satisfaction andi hermawan1 1universitas pakuan bogor indonesia. email: gus.andi.evolutioner@gmail.com abstract customer perceptions regarding the comparison between fulfilling needs and desires and the accuracy of delivery to balance customer expectations which are closely related to the quality of products, services and human resources are called service quality. teachers are the main aspect and key determinant of successful learning, policy implementation and creative, innovative efforts, as well as the democratization of education. teachers are the main players and spearheads in the world of education. therefore, the existence of programs that concretely always support, accompany and help to continue to develop the personal and professional qualities of teachers is a guarantee for brilliant education. based on preliminary research, it is known that the permanent foundation teachers (gty) of pgri vocational high schools (smk) in bogor regency have relatively suboptimal service quality. therefore, research is needed to obtain information on variables related to improving service quality. the aim of this research is to make efforts to improve the quality of service for vocational school teachers by conducting research on the influence of the variables knowledge management, interpersonal communication, organizational support and job satisfaction. this research uses the path analysis method to determine the influence between the variables studied and the sitorem method for indicator analysis in order to obtain optimal solutions in an effort to improve the quality of vocational school teacher services. keywords: interpersonal communication, job satisfaction, knowledge management, organizational support, service quality, sitorem analysis. 1. introduction challenges and competition are the hopes for how education will face the present and the future. education as part of the main pillar of development and development of human resources (hr) is not left behind or only able to survive but must be strived to be superior and able to compete with educational progress in other countries. the excellence referred to in this case means that it can be a reference for other nations in developing human resources in the field of education. high expectations for the perfection of educational output require the awareness and seriousness of educational stakeholders to empower educational institutions so that they can run effectively, which has an impact on the quality of superior educational output with all competencies. professional governance is needed by every educational institution. this is done to ensure the continuity of increasing students' knowledge and life competencies as basic capital for nation development in facing the changes and challenges of the times. the quality of human resources cannot be separated from the quality of education, where one of the main components is teachers. quality schools are closely related to providing quality educational services. therefore, teachers are needed who have high qualifications, competence and dedication in carrying out their professional duties. foundation permanent teachers (gty) are the foundation's chosen personnel who are tasked with providing services to the community in a professional, honest, fair and equitable manner in the provision of educational services. service quality is a form of consumer assessment of the level of service received (perceived service) and the level of service expected (expected service). the trust of the public who use educational services is closely related to the quality of the school organization's services. the level of trust is built through the service relationship of teaching staff, in this case teachers, with their students. the quality of teacher service is related to trust, which essentially provides the best service to students, parents and the surrounding community. teachers are the main aspect and key determinant of successful learning, policy implementation and creative, innovative efforts, as well as the democratization of education. teachers are the main players and spearheads in the world of education. therefore, the existence of programs that concretely always support, accompany and help to continue to develop the personal and professional qualities of teachers is a guarantee for brilliant education. mailto:gus.andi.evolutioner@gmail.com https://www.doi.org/10.55220/25766759.245 asian business research journal, 2025, 10(1):11-22 12 © 2025 by the authors; licensee eastern centre of science and education, usa based on a preliminary survey conducted by distributing questionnaires to 30 teachers at 6 (six) pgri vocational high schools (smk) in bogor regency, data was obtained that: 1) 42% of teachers were not yet optimal in implementing their abilities to provide services in accordance with what was promised. accurate and reliable (reliability), where this can be seen from the instructor having the ability to complete the tasks given and the instructor completing the work in accordance with the timeliness, 2) 32% of teachers are not optimal in implementing clear information delivery (responsiveness), where this can be seen from the instructor obtain information that is useful for completing their work and the instructor provides information that is easy to understand if colleagues ask questions, 3) 33% of teachers are not optimal in implementing feelings of trust in the institution (assurance), where this can be seen from the instructor training using time which is effective in delivering material and instructors have an obligation to complete their tasks, and 4) 43% of teachers are not yet optimal in implementing efforts to understand consumer desires (empathy), which can be seen from instructors establishing communication with co-workers and instructors caring about co-workers and other employees, and 5) 40% of teachers are not yet optimal in implementing the appearance and capabilities of the institution's physical facilities and infrastructure (tangibles), where this can be seen from the use of learning media facilities to support the process of training training participants and the complete training institution facilities make it easier for instructors finish the job. the survey results above show that the quality of service for vocational school teachers still needs to be improved and considering that the quality of teacher service is an important element related to achieving educational goals, the quality of teacher service is interesting to research. the aim of the research is to produce strategies and methods for improving the quality of vocational teacher services, namely by strengthening independent variables that have a positive influence on the quality of teacher services. these variables are knowledge management, interpersonal communication, organizational support, and job satisfaction. the optimal solution found is then used as a recommendation to related parties, namely teachers, school principals, school supervisors, school organizing institutions and education offices. 1.1. service quality service quality is a comparison between the quality received (perceived quality), after receiving the service, and the expected quality (expected quality), the service quality indicators are as follows: reliability, namely consistency in providing services, responsiveness, namely quick response in providing services, assurance, namely guaranteeing the quality of services, empathy, namely careful attention to customer needs, and tangibles, the facilities, infrastructure and service facilities provided (kotler, 2000). from various theories presented by baines, fill, & page, (2011); supranto, (2005:231); tjiptono, (2005); wyckof (2002); hardiansyah (2011); rambat & hamdani, (2016:192); usmara (2003:94) and (ree, 2009:43-44). manasa nagabushanam (2013); yaslioglu, özaslan çalışkan, and şap (2013) and rabaa'i and gable (2012), can synthesize that service quality is the customer's perception of the comparison between fulfilling needs and desires. as well as the accuracy of delivery to balance customer expectations which are closely related to the quality of products, services and human resources. service quality indicators are as follows: 1) ability to provide services as promised accurately and reliably (reliability), 2) delivery of clear information (responsiveness), 3) feeling of trust in the institution (assurance), 4) striving to understand consumer desires (empathy), and 5) appearance and capabilities of the institution's physical facilities and infrastructure (tangibles). 1.2. knowledge management marquardt, michael j. (2012) knowledge management is the activity of an organization (organization members) in collecting, organizing, storing, transferring and using knowledge and experience inside and outside the organization. dimensions include: 1) collecting: gathering knowledge; 2) storing: documentation and storage of knowledge; 3) transfer among members: exchange and transfer of knowledge between members of the organization; 4) application: application of knowledge in work; and 5) distribution / dissemination: distribution of knowledge that has been successfully applied. from various theories presented by murray, e. jennex. (2008); hilmi aulawi, et.all. (2009); leung, chan, et.all. (2013) and e. kusumadmo. (2013) it can be synthesized that knowledge management is an individual's activity in accessing, collecting, storing, processing, utilizing and developing personal knowledge to support the progress of himself and the organization. indicators: 1) acquisition of knowledge, 2) collection of knowledge, 3) storage of knowledge, 4) processing of knowledge into new knowledge, 5) utilization/application of knowledge, and 6) sharing and distribution of knowledge 1.3. interpersonal communication stephen w. littlejohn & karen a foss (2018) communication (in interpersonal terms) is the verbal exchange of thoughts or ideas. interpersonal communication can take place effectively, if there are several aspects that must be paid attention to by the perpetrators of interpersonal communication. aspects in interpersonal communication are: openness, empathy, supportive attitude, positive attitude and equality. from various theories presented by john r. schermerhorn, et. al. (2017); amit kumar singh, (2014); john r. schermerhorn, et. al. (2011); john r. schermerhorn, jr., james g. hunt. (2011) and fred luthans, (2016) it can be synthesized that interpersonal communication is the activity of sending and receiving messages reciprocally carried out by individuals who have close relationships to achieve the desired goals in the organization with indicators: 1). openness, 2) equality, 3) empathy, 4) positivity, and 5) supportiveness 1.4. organizational support organizational support is the degree to which employees believe the organization values their contributions and cares about their welfare. indicators of organizational support are as follows: fair appreciation for employee contributions, care for their welfare, and supportive supervision (robbins & judge, 2013). asian business research journal, 2025, 10(1):11-22 13 © 2025 by the authors; licensee eastern centre of science and education, usa from various theories presented by salehzadeh, asadi, khazaei pool, reza ansari, and haroni (2014); baran, shanock, and miller (2012); colquitt, lepine, & wesson, (2015); zagenczck , gibney, few, and scott (2011); george and jones (2012); rhoades and eisenberger (2002); nancy langton and stephen p. robbins (2007); pohl, battistelli, and librecht (2013); rhoades & eisenberger, (2002); baran et al. (2012), it can be synthesized that organizational support is the level of employee confidence in the workplace organization which provides justice, respects contributions, pays attention to welfare, provides recognition of employee values, and provides guaranteed working conditions to employees. indicators of organizational support are as follows: 1) providing justice (fairness), 2) leadership support (supervisor support), 3) awards from the organization (organizational rewards), and 4) working conditions (job conditions) 1.5. job satisfaction according to gibson, john, james, and robert (2006) job satisfaction is an individual's attitude towards his work, which originates from his perception of his work. indicators of job satisfaction are as follows: pay (salary, wages, honorarium, etc.), job (work conditions: facilities, challenges, position requirements), promotion opportunities (opportunities for promotion, career development, status improvement), supervisor (superior supervision , superior-subordinate relationships), and co-workers (colleagues, teamwork, etc.) from various theories presented by colquitt et al., (2015); robbins (2006) and as'ad, (2015). hasibuan (2001); davis (2005); mangkunegara (2004); mathis & jackson, (2006); kuswadi (2005); martoyo (2012) and handoko (2010), it can be synthesized that job satisfaction is an individual's attitude that reflects pleasant or unpleasant feelings towards his work, or experiences, which originate from his perception of his work and the income he receives. indicators of job satisfaction are as follows: 1). salary (pay), 2). conditions of employment (job), 3). promotion opportunities (promotion opportunities), 4). supervision (supervisor), and 5). co-workers (co-workers). 2. sitorem sitorem is an abbreviation for "scientific identification theory to conduct operation research in education management", which can generally be interpreted as a scientific method used to identify variables (theory) to carry out "operation research" in the field of education management (soewarto hardhienata, 2017). in the context of correlational and path analysis research, sitorem is used as a method to carry out: 1). identify the strength of the relationship between the independent variable and the dependent variable, 2) analysis of the value of the research results for each indicator of the research variable, and 3) analysis of the weight of each indicator for each research variable based on the criteria "cost, benefit, urgency and importance". based on identifying the strength of the relationship between research variables, and based on the weight of each indicator of the independent variable that has the greatest contribution, a priority order of indicators that need to be immediately improved and those that need to be maintained can be arranged. analysis of research result values for each research variable indicator is calculated from the average score for each indicator of each research variable. the average score for each indicator is a description of the actual condition of these indicators from the point of view of the research subjects. 3. methods as explained above, this research aims to find ways to improve the service quality of vocational high school teachers through research on the strength of influence between teacher service quality as the dependent variable and knowledge management, interpersonal communication, organizational support and job satisfaction. as the independent variable. the research method used is a survey method with a path analysis test approach to test statistical hypotheses and the sitorem method for indicator analysis to determine optimal solutions for improving teacher service quality. the research was carried out on foundation permanent teachers (gty) of pgri vocational high schools (smk) in bogor regency with a teacher population of 289 people, with a sample of 168 teachers calculated using the slovin formula taken from umar. data collection in this research used research instruments in the form of questionnaires which were distributed to teachers as research respondents. the research instrument items are derived from the research indicators whose conditions will be explored. before being distributed to respondents, the research instrument was first tested to determine its validity and reliability. the validity test was carried out using the pearson product moment technique, while for the reliability test a calculation was used using the cronbach's alpha formula. after the data is collected, homogeneity tests, normality tests, linearity tests, simple correlation analysis, coefficient of determination analysis, partial correlation analysis, and statistical hypothesis testing are then carried out. sitorem stands for "scientific identification theory to conduct operation research in education management", which can generally be interpreted as a scientific method used to identify variables (theories) to conduct "operation research" in the field of education management (soewarto hardhienata, 2017). in the context of correlation and path analysis research, sitorem is used as a method to conduct: 1). identifying the strength of the relationship between independent variables and dependent variables, 2) analysis of the value of research results for each research variable indicator, and 3) analysis of the weight of each indicator for each research variable based on the criteria of "cost, benefit, urgency and importance". next, indicator analysis was carried out using the sitorem method from hardhienata to determine the priority order for improving indicators as a recommendation to related parties as a result of this research. in determining the priority order for handling indicators, sitorem uses three criteria, namely (1) the strength of the relationship between variables obtained from hypothesis testing, (2) the priority order for handling indicators resulting from expert assessments, and (3) the indicator value obtained from data calculations. obtained from the answers of research respondents. asian business research journal, 2025, 10(1):11-22 14 © 2025 by the authors; licensee eastern centre of science and education, usa figure 1. quantitative research stages. in short, this research design consists of two major stages, namely: a) this research consists of quantitative research to prove the research hypothesis b) verifying the results of quantitative research through sitorem analysis, as in the research steps in the image below. figure 2. path analysis research design and sitorem analysis. based on the identification of the strength of the relationship between research variables, and based on the weight of each independent variable indicator that has the greatest contribution, a priority order of indicators that need to be improved immediately and those that need to be maintained can be arranged. the analysis of the research result value of each research variable indicator is calculated from the average score of each indicator of each research variable. the average score of each indicator is a picture of the actual condition of the indicators seen from the perspective of the research subject. asian business research journal, 2025, 10(1):11-22 15 © 2025 by the authors; licensee eastern centre of science and education, usa figure 3. research constellation. x1 : knowledge management x2 : interpersonal communication x3 : organizational support y : job satisfaction z : service quality 4. result and discussion based on the results of the analysis of statistical descriptions for research variables, symptoms of central data can be revealed as listed in the following table: table 1. summary of statistical description of research variables. description knowledge management (x1) interpersonal communication (x2) organizational support (x3) job satisfaction (y) service quality (z) mean 121.05 126.75 122.91 122.80 126.28 standard error 1.21728 1.75046 1.19771 1.77186 1.25326 median 124 134 126.5 130 130 mode 121 150 130 149 136 stand deviation 16.6906 24.001 16.4221 24.2945 17.1838 sample variance 278.575 576.049 269.687 590.223 295.284 kurtosis 0.58266 1.64903 1.64832 0.5498 0.85695 skewness -0.9844 -1.4904 -1.3927 -0.7772 -1.0468 range 70 101 81 101 77 minimum score 74 52 64 59 75 maximum score 144 153 145 160 152 4.1. normality test based on the overall calculation results of the error normality test in this study, it can be seen in the summary in the following table: table 2. estimated standard error normality test. estimate error n lcount ltable decision α = 0,05 α = 0,01 z – ŷ1 168 0.009 0.065 0.075 normality z – ŷ2 168 0.012 0.065 0.075 normality z – ŷ3 168 0.010 0.065 0.075 normality z – ŷ4 168 0.008 0.065 0.075 normality y – x1 168 0.011 0.065 0.075 normality y – x2 168 0.010 0.065 0.075 normality y – x3 168 0.012 0.065 0.075 normality note: normal distribution requirements : lcount < ltable 4.2. homogeneity test based on the overall calculation results of the error normality test in this study, it can be seen in the summary in the following table: asian business research journal, 2025, 10(1):11-22 16 © 2025 by the authors; licensee eastern centre of science and education, usa table 3. summary of data variance homogeneity test. grouping x2 hitung x2 tabel decision α = 0.05 z on the basis of x1 3714.91 6132.59 homogenity z on the basis of x2 3823.33 7288.01 homogenity z on the basis of x3 4592.84 8451.28 homogenity z on the basis of y 4613.17 6192.48 homogenity y on the basis of x1 3710.50 6132.59 homogenity y on the basis of x2 4469.28 7288.01 homogenity y on the basis of x3 4912.17 7288.01 homogenity note: homogeneous population requirement χ2 count < χ2 table 4.3. regression model test the overall calculation results of the regression model in this research can be seen in the summary in the following table: table 4. regression model. relationship model between variables regression model significance test results z on x1 ŷ = 39.508 + 0.645x1 significant z on x2 ŷ = 54.744 + 0.523x2 significant z on x3 ŷ = 58.693 + 0.533x3 significant z on y ŷ = 39.508 + 0.645x1 significant y on x1 ŷ = 62.423 + 0.447x2 significant y on x2 ŷ = 72.122 + 0.382x3 significant y on x3 ŷ = 46.152 + 0.577x5 significant z on x1 through y ŷ = 46.77 + 0.30x2 + 0.26x5 significant z on x2 through y ŷ = 34.12 + 0.37x1 + 0.33x4 significant z on x3 through y ŷ = 51.45 + 0.34x2 + 0.20x4 significant 4.4. regression model significance test the overall calculation results of the linearity test of the regression model in this study can be seen in the summary in the following table: table 5. summary of regression model significance test results (f test). relationship model between variables sig. α significance test results z on x1 0.000b 0.005 significant z on x2 0.000b 0.005 significant z on x3 0.000b 0.005 significant z on y 0.000b 0.005 significant y on x1 0.000b 0.005 significant y on x2 0.000b 0.005 significant y on x3 0.000b 0.005 significant z on x1 through y 0.000b 0.005 significant z on x2 through y 0.000b 0.005 significant z on x3 through y 0.000b 0.005 significant note: significant terms: sig < α 4.5. linearity test the overall calculation results of the linearity test of the regression model in this study can be seen in the summary in the following table: table 6. summary of the results of the linearity test of the regression model (t-test). relationship model between variables sig. α linearity pattern test results z atas x1 0.000 0.005 linier z atas x2 0.000 0.005 linier z atas x3 0.000 0.005 linier z atas y 0.000 0.005 linier y atas x1 0.000 0.005 linier y atas x2 0.000 0.005 linier y atas x3 0.000 0.005 linier z atas x1 melalui y 0.000 0.005 linier z atas x2 melalui y 0.000 0.005 linier z atas x3 melalui y 0.000 0.005 linier note: linear terms: sig < α. 4.6. multicollinearity test multicollinearity testing aims to determine whether the regression model found any correlation between independent variables or independent variables. testing uses the spearman test. the effect of this multicollinearity is that it causes high variability in the sample. this means that the standard error is large, as a result, when the coefficient is tested, tcount will be a smaller value than ttable. the overall calculation results of the multicollinearity test are as follows: asian business research journal, 2025, 10(1):11-22 17 © 2025 by the authors; licensee eastern centre of science and education, usa table 7. summary of multicollinearity test. independent variable tolerance vif precondition decision knowledge management (x1) 0.227 4.408 h0 : vif < 10, there is no multicollinearity h1 : vif > 10, there is multicollinearity ho accepted there is no multicollinearity interpersonal communication (x2) 0.203 5.803 h0 : vif < 10, there is no multicollinearity h1 : vif > 10, there is multicollinearity ho accepted there is no multicollinearity organizational support (x3) 0.225 4.449 h0 : vif < 10, there is no multicollinearity h1 : vif > 10, there is multicollinearity ho accepted there is no multicollinearity job satisfaction (y) 0.213 4.692 h0 : vif < 10, there is no multicollinearity h1 : vif > 10, there is multicollinearity ho accepted there is no multicollinearity 4.7. heteroscedasticity test in this research, to test whether there is heteroscedasticity using the glejser test where if the significant value is <0.05 then heteroscedasticity occurs, if on the contrary the significance value is ≥ 0.05 then homoscedasticity occurs. the overall calculation results of the heteroscedasticity test in this study can be seen in the summary in the following table: table 8. summary of heteroscedacity test. independent variable sig. α precondition decision knowledge management (x1) 0.000 0.05 h0 : sig < 0,05 then there is no heteroscedasticity. h1 : sig ≥ 0,05 then there is heteroscedasticity. ho accepted there is no heteroscedasticity interpersonal communication (x2) 0.000 0.05 h0 : sig < 0,05 then there is no heteroscedasticity. h1 : sig ≥ 0,05 then there is heteroscedasticity. ho accepted there is no heteroscedasticity organizational support (x3) 0.000 0.05 h0 : sig < 0,05 then there is no heteroscedasticity. h1 : sig ≥ 0,05 then there is heteroscedasticity. ho accepted there is no heteroscedasticity job satisfaction (y) 0.000 0.05 h0 : sig < 0,05 then there is no heteroscedasticity. h1 : sig ≥ 0,05 then there is heteroscedasticity. ho accepted there is no heteroscedasticity 4.8. path analisis figure 4. research constellation x1 : knowledge management x2 : interpersonal communication x3 : organizational support y : job satisfaction z : service quality asian business research journal, 2025, 10(1):11-22 18 © 2025 by the authors; licensee eastern centre of science and education, usa the influence between the independent variable and the dependent variable when viewed from path analysis, then this relationship is a functional relationship where teacher service quality (z) is formed as a result of the working of the knowledge management (x1), interpersonal communication (x2), organizational support (x3) functions. and job satisfaction (y). discussion of research results can be described as follows: table 9. research hypothesis. hypotesis path statistic test decision conclusion knowledge management (x1) on teacher service quality (z) 0.204 h0 : βz1 ≤ 0 h1 : βz1 > 0 h0 is rejected h1 is accepted direct positive influence interpersonal communication (x2) on teacher service quality (z) 0.272 h0 : βz2 ≤ 0 h1 : βz2 > 0 h0 is rejected h1 is accepted direct positive influence organizational support (x3) for teacher service quality (z) 0.312 h0 : βz3 ≤ 0 h1 : βz3 > 0 h0 is rejected h1 is accepted direct positive influence job satisfaction (y) on teacher service quality (z) 0.203 h0 : βy ≤ 0 h1 : βy > 0 h0 is rejected h1 is accepted direct positive influence knowledge management (x1) on job satisfaction (y) 0.337 h0 : βz1 ≤ 0 h1 : βz1 > 0 h0 is rejected h1 is accepted direct positive influence interpersonal communication (x2) on job satisfaction (y) 0.313 h0 : βz2 ≤ 0 h1 : βz2 > 0 h0 is rejected h1 is accepted direct positive influence organizational support (x3) on job satisfaction (y) 0.342 h0 : βz3 ≤ 0 h1 : βz3 > 0 h0 is rejected h1 is accepted direct positive influence knowledge management (x1) on teacher service quality (z) through job satisfaction (y) 0.069 h0 : βxy1 ≤ 0 h1 : βxy1 > 0 h0 is rejected h1 is accepted indirect positive influence interpersonal communication (x2) on teacher service quality (z) through job satisfaction (y) 0.085 h0 : βxy2 ≤ 0 h1 : βxy2 > 0 h0 is rejected h1 is accepted indirect positive influence organizational support (x3) on teacher service quality (z) through job satisfaction (y) 0.107 h0 : βxy3 ≤ 0 h1 : βxy3 > 0 h0 is rejected h1 is accepted indirect positive influence 4.9. indirect effect test the indirect effect test is used to test the effectiveness of the intervening variable which mediates the independent variable and the dependent variable. the results of the indirect influence test are as follows: table 10. research hypothesis. indirect influence zcount ztable decision conclusion knowledge management (x1) on teacher service quality (z) through job satisfaction (y) 4.860 1.966 h0 is rejected h1 is accepted proven to mediate interpersonal communication (x2) on teacher service quality (z) through job satisfaction (y) 4.678 1.966 h0 is rejected h1 is accepted proven to mediate organizational support (x3) on teacher service quality (z) through job satisfaction (y) 4.608 1.966 h0 is rejected h1 is accepted proven to mediate 4.10. optimal solution for strengthening the quality of teacher services based on the results of statistical hypothesis testing, determining indicator priorities, and calculating indicator values as described above, a recapitulation of research results can be made which is the optimal solution for strengthening teacher service quality as follows: table 11. sitorem analysis. knowledge management (βy1 = 0,204) (rangk.iii) indicator in initial state indicator after weighting by expert indicator value 1 knowledge acquisition 1st knowledge acquisition (23.17%) 3.88 2 knowledge gathering 2nd utilization of knowledge (22.54%) 4.10 3 knowledge storage 3rd sharing and distribution of knowledge (20.96%) 4.00 4 processing knowledge into new knowledge 4th processing knowledge into new knowledge (18.12%) 3.61 5 sharing and distribution of knowledge 5th knowledge gathering (15.21%) 3.60 6 utilization of knowledge 6th knowledge storage (14.21%) 3.60 komunikasi interpersonal (βy2 = 0,272) (rangk.ii) indicator in initial state indicator after weighting by expert indicator value 1 emphaty 1st opennes (26.67%) 3.57 2 equility 2nd equility (25.07%) 4.02 3 opennes 3rd emphaty (24.88%) 3.68 4 possitiveness 4th possitiveness (23.38%) 3.74 5 supportiveness 5th supportiveness (21.38%) 3.74 dukungan organisasi (βy3 = 0,312) (rangk.i) indicator in initial state indicator after weighting by expert indicator value 1 fairness 1st fairness (21.45%) 3.82 2 job conditions 2nd supervisor support (20.24%) 3.84 asian business research journal, 2025, 10(1):11-22 19 © 2025 by the authors; licensee eastern centre of science and education, usa 3 organizational rewards 3rd organizational rewards (19.78%) 3.92 4 supervisor support 4th job conditions (19.64%) 4.04 kepuasan kerja (y) (βy4 = 0,203) (rank.iv) indicator in initial state indicator after weighting by expert indicator value 1 coworkers 1st pay (16.95%) 3.85 2 job 2nd job (16.36%) 4.11 3 pay 3rd promotion opportunities (14.31%) 3.65 4 promotion opportunities 4th supervisor (13.78%) 4.03 5 supervisor 5th coworkers (13.73%) 3.78 kualitas layanan guru indicator in initial state indicator after weighting by expert indicator value 1 assurance 1st reliability (18.48%) 3.78 2 empathy 2nd responsiveness (17.93%) 3.85 3 reliability 3rd assurance (16.77%) 4.10 4 responsiveness 4th empathy (16.77%) 3.76 sitorem analysis result priority order of indicator to be strengthened indicator remain to be maintained 1st fairness 1. job conditions 2nd supervisor support 2. equility 3rd organizational rewards 3. utilization of knowledge 4th opennes 4. sharing and distribution of knowl 5th emphaty 5. job 6th possitiveness 6. supervisor 7th supportiveness 7. assurance 8th knowledge acquisition 9th processing knowledge into new knowledge 10th knowledge gathering 11th knowledge storage 12th pay 13th promotion opportunities 14th coworkers 15th reliability 16th responsiveness 17th empathy 5. conclusions, implications and suggestions based on the results of the analysis, discussion of research results and hypotheses that have been tested, it can be concluded as follows: 1. strengthening the quality of teacher services can be done by using a variable development strategy that has a positive effect on the quality of teacher services. 2. variables that have a positive influence on teacher service quality are knowledge management, interpersonal communication, organizational support and job satisfaction. this was proven from the results of variable analysis using the path analysis method. 3. the way to strengthen the quality of teacher services is to improve indicators that are still weak and maintain good indicators for each research variable. based on the research conclusions above, the following implications can be drawn in this research: 1. if the quality of teacher services is to be strengthened, it is necessary to develop knowledge management, interpersonal communication and organizational support as exogenous variables with job satisfaction as an intervening variable. 2. if knowledge management is to be developed, it is necessary to improve indicators that are still weak, namely: knowledge acquisition, processing knowledge into new knowledge, knowledge gathering, and knowledge storage as well as maintaining or developing indicators: utilization of knowledge and sharing and distribution of knowledge. 3. if interpersonal communication is to be developed, it is necessary to improve the indicators that are still weak, namely, openness, empathy, possitiveness and supportiveness, as well as maintaining or developing the indicator: equity. 4. if organizational support is to be developed, it is necessary to improve the weak indicators, namely: fairness, supervisor support and organizational rewards, as well as maintaining or developing the indicator: job conditions. 5. if job satisfaction is to be increased, it is necessary to improve the weak indicators, namely pay, promotion opportunities and co-workers, as well as maintaining or developing the indicators: job and supervisor. suggestions or recommendations that can be given to related parties are as follows: 1. school principals need to improve the quality of teacher services by developing knowledge management, interpersonal communication, organizational support and job satisfaction. by improving: reliability, responsiveness and empathy as 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(2013). the impact of perceived organizational support and job characteristics on nurses’ organizational citizenship behaviours. international journal of organization theory & behavior, 16(2), 193–207. https://doi.org/10.1108/ijotb16-02-2013-b002 35 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 9, 35-38, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.564 © 2025 by the authors; licensee eastern centre of science and education, usa iraq’s construction industry and the crucial need for development strategies which are sustainable habib abdul hussain habib alshammery1  maha sami barakat2 1,2al-bayan university baghdad iraq. email: habib_alshammery@hotmail.com email: maha.s@albayan.edu.iq (corresponding author) abstract the industries of iraq have been greatly affected by the prolonged armed conflicts that took place there. these industries including the construction industry have been negatively impacted by the war. notably through lack of funding, resources and destruction. however, the country is starting to show a positive growth and this in time will enable the construction industry to once again develop and grow with the enormous task ahead of rebuilding the country. one of the many issues that they face is their continuing reliability on the traditional construction methods. these methods are outdated and will not meet the requirements that are needed for the next generation. this research investigates the challenges that lie ahead for the construction industry of iraq. whilst also exploring the current challenges that iraq’s construction industry faces and various sustainable construction practices from the existing literature. the evaluation was carried out through identifying the strengths, challenges and recommendations of the process. the research employs semi-structured interviews as a qualitative data collection method, engaging 16 people from construction companies in iraq. the analysis and discussion focus on their insights regarding various critical topics, including the challenges encountered in the implementation of sustainable construction practices, the advantages of such practices for iraq, proposed design features for sustainable housing projects, community and stakeholder engagement, impact measurement strategies for sustainable construction initiatives, and the prospective benefits for the community derived from sustainable housing projects. the study has also linked the challenges that the process is facing in post-conflict iraq to the political, economic, social and cultural factors that play the greatest role in making this process what it is. the study also shows the complexities that the construction industry faces. this is due partially to its geographical positioning, the country faces an extremely hot land, dry climate and with a prevalent water shortage. in this context, adopting sustainable construction practices becomes. when a war-torn society begins to make changes in construction and rebuilding, it can bring about changes in the entire society. keywords: construction industry, economic, environment protection, iraq, rebuilding, sustainable development. 1. introduction the construction industry in iraq has faced significant challenges due to the rise of the islamic state and ongoing sectarian violence. this turmoil has led to extensive damage across the country, but there is now a renewed focus on rebuilding infrastructure and fostering economic development. (1) currently, the construction sector is at a pivotal point as it seeks to recover and expand after years of conflict and instability. according to a report by yahoo finance, the construction industry in iraq is projected to grow at an annual average rate of approximately 5% from 2024 to 2027. a key aspect of this growth will involve the completion of delayed construction projects, which collectively amount to around $18 billion. (2) the iraqi government is partnering with international organizations and foreign investors to prioritize the development of essential infrastructure, which includes hospitals, schools, housing, bridges, and roads. (3) significant projects are currently in progress, such as the rebuilding of mosul, the rehabilitation of the old city, and the restoration of vital services across iraq. (4) in addition, the government initiated the “reconstruction fund for areas affected by terrorist operations” to allocate resources effectively for regions that have been most impacted (5). furthermore, international donors have pledged billions in support, and countries like turkey (6) and china (7) are actively involved in various construction ventures, which include the development of commercial buildings and residential complexes. the revitalization of the construction industry is crucial for iraq's economic development for several reasons. primarily, this sector generates substantial job opportunities, which are essential for addressing the country's high unemployment and poverty rates. given the labour intensive nature of construction, it has the potential to employ a large segment of the available workforce, especially benefiting young residents and contributing to social stability. mailto:habib_alshammery@hotmail.com mailto:maha.s@albayan.edu.iq https://doi.org/10.55220/2576-6759.564 asian business research journal, 2025, 10(9): 35-38 36 © 2025 by the authors; licensee eastern centre of science and education, usa rebuilding infrastructure plays a crucial role in the recovery and enhancement of various sectors, including transportation, healthcare, and education. each of these areas works in tandem to bolster human capital development. furthermore, improved infrastructure has the potential to draw in foreign investments, which can provide essential funding for diverse economic activities. the growth of the construction industry also positively influences related sectors such as manufacturing and services. this interconnected growth creates a multiplier effect, fostering greater stability within the country. as a result, the construction sector is poised to remain a fundamental element of long-term national development. however, iraq is grappling with significant environmental challenges, such as air pollution, desertification, and water scarcity. notably, data from iq air world air quality rankings places iraq sixth in terms of the worst air quality globally, trailing behind countries like bangladesh, pakistan, and india. baghdad, in particular, holds the unfortunate distinction of having the worst air quality among major cities worldwide. (8) the primary sources of air pollution in iraq include oil drilling, industrial emissions, vehicular exhaust, and the combustion of fossil fuels. the utilization of traditional construction methods is particularly concerning, as they are energy inefficient and contribute significantly to greenhouse gas emissions. projects that do not employ modern energy-efficient technologies necessitate increased energy for heating, cooling, and lighting. (9) in addition, the country’s fertile lands are increasingly becoming arid deserts, which poses a serious threat to food security. (10) water scarcity is compounded by dwindling water levels in vital rivers such as the euphrates and tigris, intensifying the challenges iraq must confront. (11) continuing to rely on traditional construction techniques exacerbates these environmental dilemmas. the construction industry demands substantial amounts of resources like sand, water, and gravel, which contribute to ongoing resource depletion. (12) moreover, the absence of effective waste disposal systems for construction debris leads to inefficient waste management practices that result in pollution of both landfills and open spaces, further diminishing usable land. to tackle these pressing issues, it is imperative to adopt sustainable construction practices. this includes integrating energy-efficient solutions, enhancing waste management strategies, and regulating the extraction of natural resources. by doing so, we can minimize the environmental impact and work toward a sustainable future for both the country and its citizens. sustainable development represents a comprehensive and forward-thinking approach that aims to satisfy the needs of the present without jeopardizing the welfare of future generations. it advocates for a balanced and fair path to development, blending social inclusion, environmental protection, and economic growth. sustainable development is an all-encompassing approach that prioritizes the future while addressing the needs of the present. it aims to create a balanced and fair method of development that considers various factors. this concept brings together social inclusion, environmental conservation, and economic progress in order to achieve its goals. as the world becomes more aware of climate change and its potential consequences, sustainable development has become increasingly important in tackling issues such as climate change, depletion of natural resources, and social inequalities (13). currently, various international agreements promote sustainable construction practices. the united nations’ 2030 agenda for sustainable development includes sustainable development goal (sdg 11) which aims to create resilient communities and resource-efficient buildings. (14) the paris agreement encourages nations to adopt green building practices to reduce carbon emissions and enhance energy efficiency (15). the leed (leadership in energy and environmental design) certification, created by the us green building council, is a globally recognized standard for sustainable construction that promotes resource efficiency. (16) additionally, the world green building council’s advancing net zero initiative aims for all buildings to achieve net zero carbon by 2050 (17). these initiatives highlight the significance of sustainable construction for long-term development and reduced environmental impact. the previous sections have made it clear that the construction industry cannot persist with traditional methods. it is imperative to transition to sustainable development practices to ensure that future generations have sufficient resources for their survival. although this transition is not without its challenges, as previously demonstrated, numerous opportunities will encourage construction firms to embrace this change. 2. methodology a qualitative research methodology has been employed to explore the reasons why the construction sector in iraq must adopt sustainable development practices and to identify the barriers that hinder this adoption. in contrast to quantitative research methodology, which is solely based on numerical data and statistical analysis to validate or invalidate a hypothesis, qualitative research aims to uncover the fundamental reasons behind a problem, issue, behaviour, practice, thought process, or reality. rather than depending on numerical data, qualitative research utilizes descriptive or non-numerical information. this research methodology enables a researcher to acquire a comprehensive understanding of the subject matter being investigated. (18). this research involved conducting semi-structured interviews with the participants. while structured interviews have limitations and unstructured interviews possess a very high risk of the interviewee deviating from the main topic, semi-structured interviews were considered viable [19]. in semi-structured interviews, the interviewer prepares an initial list of questions from the research participants, i.e., interviewees. however, if needed, the discussion can go beyond these questions if the interviewer believes their discussion may contribute to their research findings. the initial list of questions prepared for the interviews is as follows: 1. what are the key challenges in implementing sustainability practices in construction projects in iraq? 2. how can sustainable construction practices benefit housing projects in iraq? 3. what specific sustainable design features would you prioritise in a housing project in iraq? 4. how do you plan to engage and educate local communities and stakeholders about the benefits of sustainability in construction projects? 5. how do you intend to measure the success and impact of sustainability initiatives in housing projects in iraq? 6. in what ways do you think sustainable construction practices can benefit the community and environment in iraq? the answers to the questions were as follows: asian business research journal, 2025, 10(9): 35-38 37 © 2025 by the authors; licensee eastern centre of science and education, usa question 1 upon reviewing the participants’ responses reveals that key challenges include economic viability, lack of awareness, knowledge and expertise, availability of sustainability materials, regulatory gaps, extensive focus on short-term gains, and availability of qualified human resources. for instance, it was pointed out that sustainable projects require a higher upfront cost than traditional construction practices, which is an obstacle for them when adapting to sustainable practices. they also underlined the absence of any initiative that provides them financial incentives for adopting sustainable practices; this makes it difficult for them to justify the requirement of higher funds than usual at the beginning of a project. lack of awareness, knowledge, and expertise are common concerns explicitly mentioned that any existing and potential employees have limited understanding of and exposure to green building concepts and resource-efficiency processes. they also stated that there is a dire need for comprehensive education and training programmes for the construction industry to bridge this knowledge gap and move towards a sustainable future. question 2. responses stated that in the context of housing projects, it is crucial to have energy-efficient appliances and proper insulation to reduce the residents' energy costs. a similar submission was made whilst discussing proper air ventilation and natural light arrangements in the buildings. while discussing the costs, it was emphasised that using sustainable materials and construction techniques will require a higher initial investment, but they will have lower maintenance costs in the long term. another suggested that increasing awareness among the public about sustainable housing will increase the value of such housing projects. another prominent theme in the participants’ responses was potential environmental benefits. it was said that rainwater harvesting will help in water conservation, which would be crucial for the country’s future. question 3. a commonly expressed concern was regarding the climatic conditions of the country, which are hot and dry. another suggestion was that housing projects must be designed to utilise passive cooling strategies while ensuring proper building orientation and shades and utilising natural ventilation as much as possible. also offering a similar suggestion but suggested that housing projects with good insulation rely less on air conditioning. this will also help reduce carbon emissions and decrease the overall electricity consumption. other participants, suggested using solar panels and other renewable energy sources to decrease the housing project’s electricity dependence. another challenge unique to iraq is water scarcity.it was very strongly stressed design features to address these challenges, such as water-efficient appliances and fixtures. at the same time, they suggested using water harvesting, which is a feature was also emphasised: to use greywater recycling systems in housing projects to complement the existing freshwater supplies. question 4.in the answers they have offered multiple suggestions to involve local communities and stakeholders. proposing organising workshops and seminars to explain the benefits of sustainable housing projects in plain and simple language so that there is a direct community outreach. other suggestions was similar, and they explained the importance of clear communication, which is understandable by the public and free from technical jargon. question 5. another key theme of suggestions revolved around measuring the efficiency of resources being used and the total amount of waste generated. for example, there was a suggestion about monitoring the volume of water and the number of electricity units used during a project. also mentioned that the construction and demolition waste generated during a project can also be measured while documenting the percentage of waste recycled or reused. participants also recommended using financial metrics to measure the success and impact of sustainable housing projects. for instance, another suggested an analysis of cost savings with the help of reduced water and electricity consumption in sustainable housing projects. question 6. multiple participants highlighted the benefits of resource efficiency and waste reduction. while the country is already facing a water crisis, it was stated that adopting sustainable practices will help minimise the water used during a building’s construction lifecycle. similarly, talked about the benefits of reusing and recycling building materials to reduce the construction and demolition waste generated in any construction project. as for community-centric benefits, it was mentioned improvements in public health as a prominent benefit. with proper air ventilation and utilisation of natural light, residents will have access to better indoor air quality. meanwhile, some participants also discussed economic and development benefits for the community. another point raised was the employment generation in the sustainable construction sector as the construction industry adopts sustainable practices. also mentioning long-term cost benefits as a prominent benefit for the community. this could help in creating sustainable buildings which can be aesthetically pleasing and contribute to a liveable future 3. conclusion war, in any form and in any nation, has a devastating effect on the country, its general populace, its economy, and various sectors. as indicated by existing research and available statistics, this is also true for iraq’s construction sector. nevertheless, recent developments demonstrate a positive trend in this industry’s role in revitalizing the iraqi economy. this research aims to emphasize the critical necessity for implementing sustainable construction practices within the country. iraq already faces a distinct array of challenges, including a hot and arid climate and water scarcity, among others; interviews conducted with senior managers and ceos of construction firms reveal a solid understanding of the environmental issues confronting iraq. the interviews further suggest an increasing interest in sustainable construction practices; however, despite recognizing these benefits, a research gap persists that needs to be addressed. identified significant challenges include a lack of awareness, economic feasibility, limited access to sustainable materials, qualified personnel, and regulatory deficiencies. while there is a vision for iraq and its anticipated state in 2030, there is a scarcity of data regarding iraq’s construction industry. as various participants have pointed out, sustainable housing initiatives will benefit the country despite these obstacles. the researcher believes that this is an opportune moment for the government and stakeholders to unite in adopting sustainable construction practices for a future in iraq that is liveable for generations to come. in summary, this research has made a modest effort to highlight the urgency of adopting sustainable construction practices in iraq. participants have indicated that embracing sustainable construction methods will aid in fostering an environmentally conscious future for the country. by implementing sustainable practices, the construction industry can significantly contribute to this vision. asian business research journal, 2025, 10(9): 35-38 38 © 2025 by the authors; licensee eastern 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licensee eastern centre of science and education, usa breaking into the mainstream: the rise of esg in business management md. khalilur rhaman1 mahfuzul haque2 md. abud darda1 1national university, bangladesh. 2university of dhaka, bangladesh. email: khalilur.r@nu.ac.bd email: mahoque@du.ac.bd email: abud.darda@nu.ac.bd ( corresponding author) abstract the concept of environmental, social, and governance (esg) has a rich and multifaceted history. however, a clear chronological evolution linking key historical events to the modern framework of esg in business management remains underexplored. this study aims to establish a structured timeline that traces the development of esg in business management through a review of existing literature and pivotal historical influences. findings indicate that esg originated from corporate social responsibility (csr), socially responsible investment (sri), and broader societal ethical expectations. major historical events, such as the vietnam war, civil rights movements, environmental activism, and initiatives like the united nations global compact, have significantly shaped today’s esg principles in business management. the study highlights the most impactful events and trends that contributed to esg’s current conceptual form. keywords: civil rights, codes of conduct, csr, ethics, united nations global compact. 1. introduction the demand for non-financial information disclosures in business management has grown significantly over the previous three decades (eccles et al., 2019). in the 1960s, non-financial data was primarily used for socially responsible investing (sri), reflecting the traditional market view that businesses were accountable solely to shareholders (friedman, 2007). however, expectations have since evolved, with increasing pressure on corporations to address societal, environmental, and governance concerns. recent shifts in legal, ethical, and financial norms and greater transparency requirements have further reinforced this trend (broadstock et al., 2020; odera et al., 2016; odell & ali, 2016). additionally, the investment community has recognized both the financial relevance of esg factors and the risks associated with neglecting them, leading to a surge in esg-related disclosures (amel-zadeh, 2018). environmental, social, and governance (esg) refers to a comprehensive framework used to measure a company’s sustainability and ethical impact in these three fundamental domains (eba, 2021). the environmental € aspect demonstrates the corporation’s resolve to pursue ecologically sustainable operations, covering climate change, carbon emissions, deforestation, biodiversity, pollution, waste management, and water usage (dathe et al., 2024). social (s) is the contribution to social justice and human capital, including labor practices, diversity, human rights, pay equity, community relations, data privacy, health and safety, and supply-chain ethics (kolsi & muqattash, 2020). governance (g) is the corporate leadership structure, board composition, executive compensation, anti-corruption policies, lobbying activities, and regulatory compliance (karim, 2024). esg originates from responsible investment (ri) principles (li et al., 2021), encompassing mission-related investing, impact investing, and sustainability-focused strategies (caplan et al., 2013). modern esg investing balances risk mitigation with opportunities for profit through sustainable growth. it serves as a benchmark for evaluating a company’s societal impact, environmental stewardship, and long-term financial resilience (ebaa, 2021). investors now rely on esg metrics to assess corporate behavior, environmental responsibility, and future financial performance. the esg framework is summarized in the following table. mailto:khalilur.r@nu.ac.bd mailto:mahoque@du.ac.bd mailto:abud.darda@nu.ac.bd https://doi.org/10.55220/25766759.482 asian business research journal, 2025, 10(6): 28-36 29 © 2025 by the authors; licensee eastern centre of science and education, usa table 1. esg context structure. dimension factors main feature/s environmental (e) • ghg/co2 emissions • energy use and effectiveness • air contaminants/pollutants • utilizing water and recycling • production and management of waste (water, solid, hazardous) • impact of biodiversity and its reliance • influence and reliance on ecosystems • environmentally friendly goods and services are getting better. • meeting the environmental laws • steps were taken to protect the environment • environmental management system (ems) and certifications • environmental related awards environmental sustainability refers to how an organization affects living and nonliving natural systems, such as ecosystems, air, water, and land. social (s) • freedom of association for employees • using children as a workforce • forced or required work • safety and health at work • customer safety and health • discrimination, diversity, and equal opportunity • impact of poverty on a community • supply chain administration/management • education and training • client privacy • local effects social responsibility is a responsibility that relates to the human element of the community. governance (g) • codes of conduct and business principles/business ethics and moral guidelines • accountability • transparency and disclosure/ openness and disclosure • executive compensation • board composition and diversity • corruption and extortion • stakeholder involvement • ownership rights • internal and statutory audit procedure • nomination and remuneration policy governance mechanisms include board committees, corporate ethics guidelines, supply chain assurance, and company ethics units. source: esg: research progress and future prospects (li et al., 2021), modified. in the last ten years, studies on environmental, social, and governance (esg) topics have grown significantly in various business fields, such as accounting, finance, and management (berg et al., 2021). while the modern esg framework emphasizes corporate responsibility toward society, the environment, and stakeholders, this concept is not new. corporate concern for societal well-being dates back centuries (carroll, 2008). in fact, the origins of esg can be traced to the seventeenth century under different names, such as "codes of conduct," with early influences including religious principles, ethical standards, and cultural values (fastercapital, 2025; preqin, 2022). this study aims to establish a chronological timeline, allowing readers to trace the evolution of esg in business management. specifically, it examines the key historical events and developments that have most significantly shaped esg as a conceptual framework. 2. methodology this study examines key historical events and initiatives by individuals, institutions, and organizations that shaped the evolution of esg. while the history of esg is broad, this research focuses specifically on its origins and development. the present study analyzes and summarizes existing studies, mainly gathered from google scholar. the search focused on journal articles that included the terms "environment, social and governance," "history of esg," and "evolution of esg", etc. to ensure comprehensive coverage of existing research, sciencedirect, proquest, and web of science were used alongside google scholar. to ensure comprehensiveness, additional relevant sources, such as reports, working papers, and publications from international organizations and ngos, were identified through citation tracking and included in the analysis. asian business research journal, 2025, 10(6): 28-36 30 © 2025 by the authors; licensee eastern centre of science and education, usa 3. evolutionary roots of esg the ideas behind socially responsible investing (sri), corporate social responsibility (csr), and charitable giving existed long before the current environmental, social, and governance (esg) framework (valls martínez et al., 2021; eccles et al., 2019). the origins of these ideas can be traced back to major historical events, such as the vietnam war, as well as social movements advocating for civil rights, women’s rights, and environmental protection (idowu, 2015). esg did not emerge overnight but evolved over decades through collective efforts within the business community, shaping today’s understanding of the concept (barnes, 2021). for many years, voluntary csr initiatives have encouraged businesses to adopt ethical standards and principles, which later became foundational to esg (rasche et al., 2012). key examples include iso 14000 (christmann & taylor, 2006), social accountability 8000 (sa8000) (gilbert & rasche, 2007), and global reporting initiative (gri) (etzion & ferraro, 2010). among these initiatives, the united nations global compact (ungc) stands out as one of the most prominent and widely adopted voluntary csr frameworks (kell, 2013; rasche & gilbert, 2012). the following timeline illustrates the historical development of esg over the past century, providing context for its evolution. 3.1. 1700: esg by another name esg factors influenced investment and business decisions long before the term was formally established. early examples of value-based investing were driven by religious beliefs, ethical principles, and cultural norms, often manifesting in exclusion lists or codes of conduct. for instance, in the 18th century, the quakers and methodists in the u.s. and europe refused to invest in or profit from slave labor, marking one of the earliest documented cases of socially conscious investing (preqin, 2022). 3.2. 1920: responsible investment responsible investment (ri) traces its origins back to the american colonial era, when several religious organizations chose not to invest their endowment funds in the slave trade (commonfund, 2013). in 1921, the pioneer group was the first mutual fund to avoid investing in alcohol, tobacco, and gambling (caplan et al., 2013). 3.3. 1930: berle-dodd argument the berle-dodd argument1 of the 1930s centered on a fundamental question: should corporations exist solely to maximize shareholder value, or do they have broader societal obligations? (bratton & wachter, 2008). berle argued that corporations must "serve all of society" by operating within legal boundaries (berle & means, 1932). he further contended that investor interests should either align equally with or even yield to the claims of other stakeholders, including employees, customers, and the broader community (berle, 1932). 3.4. 1950: social responsibility the term "social responsibility", referring to the consideration of stakeholder interests in business operations, first emerged in the 1950s (jackson, 2010; ostas, 2004; carroll, 1999). during this period, unions such as the electrical and mine workers' unions began directing pension funds toward affordable housing and healthcare initiatives, marking an early example of socially conscious investing (barnes, 2021). 3.5. 1960: socially responsible investing socially responsible investing (sri) became a prominent force during the social movements of the 1960s, including the civil rights, anti-war, environmental, and labor rights movements (caplan et al., 2013). in 1968, u.s. university students and activists led widespread protests against the vietnam war, fueling a global wave of social unrest largely defined by public opposition to military aggression2 (barnes, 2021). this era also saw the rise of several transformative social justice movements, including the black power movement, the american indian movement, expanded advocacy for women’s rights, farmworkers' rights campaigns, and the early environmental activism of the green power movement. notably, the mid-1960s3 civil rights movement introduced new frameworks for advancing racial equality, further shaping the decade’s push for systemic change (barnes, 2021). 3.6. 1970: earth day by the 1970s, the expansion of environmental, workplace safety, and consumer rights protection laws marked the emergence of the modern regulatory state (dathe et al., 2024; pollman, 2021). according to the earth day4 network, april 22, 1970, the first earth day is widely regarded as the birth of the modern environmental movement. remarkably, the event garnered unprecedented bipartisan support, uniting republicans and democrats, the wealthy and poor, urban and rural communities, as well as business leaders and labor activists. this rare political consensus led to landmark legislation, including the clean air act, the clean water act, and the endangered species act. it also spurred the creation of the u.s. environmental protection agency4 (epa). that same year, economist milton friedman (1970) introduced his influential shareholder value theory (cited from barnes, 2021), arguing in his seminal paper, "the social responsibility of business is to increase its profits," that corporations have no obligation to pursue social welfare beyond legal compliance. however, dunn & burton (2006) later noted that long-term profit maximization inherently requires sustainable business practices, suggesting that corporate social responsibility (csr), and, by extension, esg, can align with a firm’s financial success. thus, while friedman’s view initially challenged csr, it ultimately contributed to the framework underpinning modern esg initiatives. 3.7. 1980: rise of socially responsible investing the concept of esg (environmental, social, and governance) is still evolving. one key moment in its development was the u.s. government’s comprehensive anti-apartheid act, which banned new investments in asian business research journal, 2025, 10(6): 28-36 31 © 2025 by the authors; licensee eastern centre of science and education, usa south africa5 (roncalli, 2024). this law imposed sanctions and set five conditions for lifting them, all aimed at ending apartheid. another major event was the prudhoe bay oil spill in alaska, one of many environmental disasters in recent decades. this incident led to the creation of ceres6 (coalition of environmentally responsible companies), a group focused on sustainable business practices. moreover, a seminal (coleman, 1988) article, 'social capital in the creation of human capital,' challenged conventional economic assumptions centered on self-interest. by proposing social capital as a measurable form of value, it represented a significant theoretical shift. socially responsible investing (sri), also called sustainable investing, grew significantly in the 1980s as a way to align investments with ethical values. major events like the chernobyl nuclear disaster and south africa’s apartheid movement pushed individuals and organizations to support companies that were socially and environmentally responsible (bourghelle et al., 2009). unlike traditional investing, sri aims not just for financial profit but also for positive social impact (hirst, 2016). it pioneered the integration of environmental, social, and governance (esg) considerations into investing (bourghelle et al., 2009). today, as more traditional investors focus on esg issues, sri has become mainstream. historically, sri has strong ties to religious institutions, which often promoted ethical investing. 3.8. 1990s: global landmark sustainability legislation in the 1990s, investors began to realize that traditional "non-financial" factors, like environmental and social impacts, were crucial for predicting a company’s long-term success (fastercapital, 2025). this led to the rise of esg (environmental, social, and governance) investment. a key milestone was the establishment of the domini 400 social index7 (now known as the msci kld 400 social index) in 1990 (sherwood & pollard, 2018). it was the first major index to systematically track sustainable investments. in 1992, during the earth summit in rio de janeiro, global leaders made significant progress by adopting the united nations framework convention on climate change (unfccc)8. with 154 countries on board, the treaty took effect in 1994. its purpose was to curb greenhouse gas emissions and stop dangerous human disruptions to the climate system (kapmeier et al., 2021). in 1994, john elkington introduced the "triple bottom line"9 (tbl) concept, arguing that businesses should focus not just on profits but also on people and the planet. according to the tbl framework, corporate social responsibility (csr) must address social, economic, and environmental factors (mendes et al., 2023). the tbl index measures financial growth, environmental progress, and social equity (wang, 2005). elkington’s idea has evolved into today’s esg (environmental, social, and governance) framework, where governance reflects how a company’s management practices affect its performance. later, in 1995, the united nations created the indicators of sustainable development to help policymakers track sustainability progress (united nations, 2007). robecosam, an investment firm founded in 1995, specializes in sustainable investing. the company provides services such as active ownership, sustainability consulting, governance support, asset management, and sustainability indexes (huber and comstock, 2017). today, robecosam ranks nearly 2,000 companies based on their sustainability performance. by the mid-1990s, socially responsible investing (sri) had already made a strong impact on corporate esg (environmental, social, and governance) practices (bickel, 2023). at that time, there were about 60 sri mutual funds, managing around $64010 billion in assets. the global reporting initiative (gri)11, founded in 1997, is an international nonprofit organization that supports companies in being accountable for their effects on society and the environment (ukpact, 2022). gri has created a standardized framework for companies to report these impacts transparently (hasan, 2025). in 1998, the consultative group developed the dashboard of sustainability, which uses a car dashboard-style interface to show how well a country is performing in sustainable development (delai & takahashi, 2011). around the same time, levering & moskowitz (1998) identified the top u.s. companies leading in corporate social responsibility (csr). as climate change concerns grew, environmental and social issues gained more public and media attention. later, levering & moskowitz (2003) also emphasized corporate governance, linking it to ethical investing that considers environmental, social, and governance (esg) factors. in 1999, the dow jones sustainability index12 (djsi) launched the first global sustainability index for publicly traded companies, based on robecosam’s esg research (jones, 2005). since then, robecosam and s&p dow jones indices have partnered to publish and calculate esg indices (huber & comstock, 2017). 3.9. 2000s: launch of the united nations global compact at the january 1999 world economic forum in davos, former united nations secretary-general kofi annan called upon the international business community to collaborate with the un in establishing a global pact centered on shared values and principles (the new humanitarian, 2006). this initiative sought to embed ethical and social considerations into the worldwide market, ensuring that economic globalization would align with broader humanistic objectives (united nations, 1999). following this appeal, the united nations global compact (ungc) was formally launched in july 2000 as a strategic policy framework to promote sustainable and socially responsible business practices (grayson & jane, 2013). the united nations global compact (ungc) presents ten fundamental principles across four main categories: human rights, fair labor practices, environmental protection, and combating corruption (rasche et al., 2012). these principles were selected based on three criteria: (1) their relevance to the development of international norms, (2) their potential to mitigate pressing social and environmental challenges, and (3) the extent of governmental endorsement across jurisdictions (kell & levin, 2003). since its inception, the ungc has grown into the world’s largest corporate sustainability initiative, with over 13,000 signatories from 160 countries (barnes, 2021). asian business research journal, 2025, 10(6): 28-36 32 © 2025 by the authors; licensee eastern centre of science and education, usa research shows that joining the un global compact (ungc) improves a company's esg performance, as businesses adjust their practices to follow the compact's guidelines (ortas et al., 2015). in 2001, prescott-allen and the international union for conservation of nature (iucn) developed the sustainability barometer as a methodological framework for assessing sustainability (robati & rezaei, 2022). this tool provides a systematic analytical approach to evaluating progress in sustainable development. in 2002, chris yates-smith13 founded one of the earliest research teams focused on environmental finance in london. this informal consortium, termed the virtuous circle, comprised senior financial executives, corporate lawyers, and environmental stewardship ngos. its primary objective was to examine the interplay between socioenvironmental norms and financial performance (sarfraz et al., 2023). that same year, the ethos corporate social responsibility indicators were introduced to assess corporate management in relation to business social responsibility (bsr) practices, strategic alignment, and overall organizational performance (ethos, 2005). 2004 – the global compact published the landmark report who cares wins: connecting financial markets to a changing world14 (global compact, 2004). this report urged businesses to incorporate esg considerations into their core management strategies as a critical factor for long-term market success. additionally, it provided actionable recommendations for firms seeking to integrate esg principles into their operations (barnett, 2006). the primary objective of the report was to enhance awareness among financial market participants, including asset managers, securities brokers, and research analysts, regarding the importance of systematically addressing esg issues in investment decision-making and financial services (hebb et al., 2015). in 2005, approximately one year after the publication of the who cares wins report, the endorsing institutions14 along with other invited organizations, convened in zurich on august 25 to evaluate progress in implementing the report’s recommendations among financial market participants. the zurich meeting also addressed emerging challenges within the esg landscape15. that same year, the international law firm freshfields bruckhaus deringer (2005) released the freshfields report, which legally affirmed that esg considerations could be integrated into investment analysis without violating fiduciary duties. the report further argued that esg factors could fall within the scope of fiduciary responsibility, provided they align with long-term value creation. additionally, to quantitatively assess environmental responsibility, economic returns (wealth creation), and social development, the institution of chemical engineers (icheme, 2005) introduced sustainability metrics in 2005, providing a structured framework for measuring corporate sustainability performance (mclellan, 2014). 3.10. 2006: introduction of the unpri reporting framework in april 2006, the united nations principles for responsible investment (unpri)16 established a clear reporting system to help include environmental, social, and governance (esg) factors in investment evaluations and choices (sjåfjell & richardson, 2015; preqin, 2022). the six unpri principles encourage investors to incorporate esg factors into their strategies while mandating greater transparency from entities on these issues. these principles, grounded in concerns over climate change and human rights, provide a standardized approach for mainstream investors to assess esg risks and opportunities. as of 2016, over 4,800 signatories from more than 80 countries, representing approximately $100 trillion in assets, had adopted these principles (pri, 2016). each signatory is contractually obligated to uphold the six principles for responsible investment (preqin, 2022). 3.11. the financial implications of esg disclosure the study findings of barnett & salomon (2006) revealed that community-related disclosures positively correlated with financial performance, whereas labor and environmental disclosures had a negative impact. these findings have significantly influenced how esg considerations are evaluated in the business sector. 3.12. regulatory developments in esg reporting regulatory requirements for esg disclosures have expanded rapidly, with governments facing growing pressure to mandate standardized reporting (gitman et al., 2009). for instance, the uk companies act 2006 required listed companies on the london stock exchange to disclose material non-financial information in their annual reports. while such regulations primarily focus on material esg risks, they also facilitate more informed investor-company engagements by improving transparency. 3.13. 2008 – the global financial crisis (gfc) and the rise of esg principles the global financial crisis (gfc) of 2008 accelerated the adoption of environmental, social, and governance (esg) principles, as the crisis underscored systemic risks that traditional financial models had overlooked (sampei, 2018). before the gfc, esg considerations were largely absent from mainstream corporate and investment discourse, despite the pre-existing concept of socially responsible investing (sri). paradoxically, 2008 marked a pivotal year for esg17, as institutional investors increasingly committed to its principles. however, concerns persisted that the credit crisis might hinder the broader integration of esg factors into financial decision-making. contrary to expectations, the 2009 ri landscape survey revealed that the financial crisis did not diminish investor interest in esg strategies (gitman et al., 2009). notably, 67% of respondents believed the gfc would not reduce investments aligned with esg criteria, while 33% anticipated an increase in esg-driven asset allocation. these findings suggest that the crisis reinforced, rather than undermined, the perceived value of esg integration in investment practices. 3.14. 2010: esg integration into mainstream finance since the launch of the united nations principles for responsible investment (unpri) in 2006, the proliferation of esg regulations and standards has elevated esg considerations to a core priority for the financial services sector (cadman, 2011). in a significant development, the unpri introduced a new esg disclosure asian business research journal, 2025, 10(6): 28-36 33 © 2025 by the authors; licensee eastern centre of science and education, usa framework for private equity, developed in collaboration with a coalition of 40+ limited partners, 20 private equity industry associations, and 10 leading general partners18 (unpri, 2010). delai & takahashi (2011) developed an environmental, social, and economic (ese) model to provide a comprehensive, objective, and value-driven framework for assessing corporate sustainability. their methodology synthesized established metrics from multiple authoritative sources, including the commission on sustainable development (csd) indicators, the dashboard of sustainability, the barometer of sustainability, the global reporting initiative (gri), the institution of chemical engineers (icheme) sustainability metrics, the dow jones sustainability index (djsi), the triple bottom line (tbl) index, and the ethos corporate social responsibility indicators, thereby integrating diverse sustainability assessment approaches into a unified analytical framework. 3.15. institutional developments in esg standardization in 2011, the sustainability accounting standards board (sasb) was founded by jean rogers19 to establish industry-specific esg accounting standards (townsend, 2020). sasb collaborated with the u.s. securities and exchange commission (sec), investors, and corporations to quantify material esg risks and enhance disclosure practices. by 2020, 175 companies had adopted sasb-compliant sustainability reporting (pavan & kreuze, 2022). the international integrated reporting council (iirc)20 further advanced esg transparency by releasing its consultation draft of the international ir (integrated reporting) framework in 2013. this framework emphasized six forms of capital: financial, manufactured, intellectual, human, social, and natural, providing a holistic view of organizational value creation (iirc, 2013). concurrently, the gri launched its g4 sustainability reporting guidelines, introducing 27 new disclosure requirements to improve comparability and rigor in sustainability reporting (kpmg international, 2013). 3.16. global policy and market initiatives in 2015, the united nations sustainable development goal (sdg)21 was established, aligning financial growth with social equity and ecological sustainability (bose, 2020). building on this momentum, the gri transitioned from guidelines to mandatory standards in 2016, reinforcing its mission to drive social, environmental, and economic impact through corporate transparency. the same year, the un sustainable stock exchanges (sse) initiative was introduced to enhance esg disclosure among publicly listed companies, promoting standardized and meaningful risk reporting (townsend, 2020). 3.17. 2020: recent regulatory and industry-led esg developments by 2021, efforts to harmonize esg standards across rating agencies, industries, and jurisdictions had intensified, marked by key initiatives such as technology-driven solutions (e.g., workiva’s reporting tools), the task force on climate-related financial disclosures (tcfd) framework, regulatory measures including the eu sustainable finance disclosure regulation (sfdr), and guidelines issued by the european securities and markets authority (esma) and the european commission (ec) (esma, 2022; afm, 2022; ec, 2022; esa, 2021). these collaborative endeavors sought to enhance transparency, reduce ambiguity in esg compliance, and strengthen accountability in sustainable finance. figure 1. chronological timeline for the evolution of esg. asian business research journal, 2025, 10(6): 28-36 34 © 2025 by the authors; licensee eastern centre of science and education, usa 4. conclusion this study’s primary contribution lies in its historical analysis of esg’s evolution, contextualized within key societal and global developments that shaped contemporary esg frameworks. by constructing a sequential timeline, the research elucidates esg’s conceptual progression, tracing its origins to corporate social responsibility (csr) and socially responsible investing (sri), which initially emphasized legal compliance. the modern esg paradigm, however, has evolved into a holistic framework that aligns business operations with social and environmental stewardship, ensuring long-term sustainability without compromising planetary boundaries. historical catalysts, including the vietnam war, civil rights movements, environmental activism, women’s rights advocacy, and the un global compact, have collectively influenced today’s esg discourse. the study further delineates the interplay between shareholder expectations (particularly governance standards), societal demands, and environmental imperatives, demonstrating how these factors converge within esg frameworks. beyond its theoretical contributions, this research offers practical utility by providing a foundational reference for understanding esg’s historical trajectory. such insights are instrumental for businesses seeking to leverage esg principles for long-term value creation, underscoring the material relevance of sustainability in contemporary corporate strategy. endnotes 1. the berle-dodd debate is the name for a series of exchanges over the purposes of the corporation between the new deal architect, a. a. berle, and merrick dodd, a law professor. 2. behind the anti-war protests that swept america in 1968 3. speaking and protesting in america: https://americanarchive.org/exhibits/first-amendment/protests-60s70s 4. in the spring of 1970, senator gaylord nelson created earth day as a way to introduce a legal or regulatory framework to protect the environment. 5. the comprehensive anti-apartheid act of 1986 was a law enacted by the 99th united states congress. pub. l. 99-444. h.r. 4868. 6. ceres is a nonprofit organization (1989) transforming the economy to build a just and sustainable future for people and the planet. 7. the msci kld 400 social index was launched in 1990 and is designed to help socially conscious investors weigh social and environmental factors in their investment choices. it was founded by kld’s amy domini as the domini 400 social index. 8. the united nations framework convention on climate change (unfccc) is an international environmental treaty to combat “dangerous human interference with the climate system”, in part by stabilizing greenhouse gas concentrations in the atmosphere. 9. the triple bottom line is a business concept that posits firms should commit to measuring their social and environmental impact, developed by john elkington in 1994. 10. social investment forum, 2005 report on socially responsible investing trends in the united states, january 24, 2006, pp. iv, v, 1. http://ussif. membershipsoftware.org/files/publications/05_trends_report.pdf. the social investment forum was the predecessor to the us sif foundation. 11. the global reporting initiative (gri) was founded in 1997 by the coalition for environmentally responsible economies, the un environment program, and the tellus institute. 12. the dow jones sustainability indices (djsi) is based on a review of a company's financial, environmental, and social performance, evaluating factors including corporate governance, risk management, branding, reducing global warming, supplier chain standards, and labor practices. 13. chris yates-smith is a member of the international panel chosen to oversee the technical construction, accreditation, and distribution of the organic production standard and founder of one of the city of london's leading branding consultancies. 14. the financial industry recommends a better integration rate of environmental, social, and governance issues in analysis, asset management, and securities brokerage. endorsed by abn amro; aviva; axa group; banco do brasil; bank sarasin; bnp paribas; calvert group; cnp assurances; credit suisse group; deutsche bank; goldman sachs; henderson global investors; hsbc; ifc; innovest; isis asset management; klp insurance; mitsui sumitomo insurance; morgan stanley; rcm; ubs; westpac; world bank group. 15. conference report on ‘investing for long-term value’ integrating environmental, social, and governance value drivers in asset management and financial research, zurich, 25 august 2005. 16. the united nations’ principles for responsible investment is an international organization that works to promote the incorporation of environmental, social, and corporate governance factors (esg) into investment decision-making. 17. mercer. “2008 in review: responsible investment isn’t just for christmas.” january 12, 2009. 18. u.n. principles for responsible investing, “environmental, social and corporate governance (esg) disclosure framework for private equity”, march 25, 2013. http://www.unpri.org/wpcontent/uploads/13161_esg_ disclosure_document_v6.pdf. 19. https://iri.hks.harvard.edu/links/transparency-performance-industry-based-sustainability-reporting-keyissues 20. a global alliance of regulators, investors, businesses, standard-setters, the accounting profession, academia, and ngos is the international integrated reporting council (iirc). 21. a set of 17 connected goals known as the sustainable development goals (sdgs) or global goals is intended to serve as a "common blueprint for peace and prosperity for people and the planet today and into the future". the sdgs are no poverty; zero hunger; good health and well-being; quality education; gender equality; clean water and sanitation; affordable and clean energy; decent work and economic growth; industry, innovation and infrastructure; reduced inequalities; sustainable cities and communities; responsible asian business research journal, 2025, 10(6): 28-36 35 © 2025 by the authors; licensee eastern centre of science and education, usa consumption and production; climate action; life below water; life on land; peace, justice, and strong institutions; and partnerships for the goals. references amel-zadeh, a. 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licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 6, 21-27, 2025 issn: 2576-6759 doi: 10.55220/25766759.471 © 2025 by the authors; licensee eastern centre of science and education, usa the impact of digital financial literacy on fintech adoption among students in hanoi dinh the hung1  tran nguyen nhat nam2 tran vu hoang nam3 1national economics university, vietnam. 2,3nhan chinh high school, vietnam. email: hungdt@neu.edu.vn email: nhatnam031108@gmail.com email: tranvuhoangnam031108@gmail.com ( corresponding author) abstract this paper aims to investigate the impact of digital financial literacy on the adoption of financial technology (fintech) among secondary and tertiary students in hanoi, vietnam. integrating theoretical frameworks such as unified theory of acceptance and use of technology (utaut2) and the theory of planned behavior (tpb), this study explores the influence of various factors including performance expectancy, risk perception, subjective norms, perceived behavioral control, convenience, security, personal motivation, financial attitude, and financial behavior on the intention and actual use of fintech. based on empirical findings, the authors propose recommendations to enhance digital financial literacy among students, highlighting its pivotal role in expanding access to and adoption of modern financial services. keywords: digital financial literacy, financial literacy, fintech, perceived behavioral control, subjective norm. 1. introduction in the context of an accelerating digital transformation particularly within the finance and banking sectors it is essential to understand young people’s awareness and competencies in digital financial literacy to foster a sustainable and inclusive financial ecosystem. fintech services such as e-wallets, digital banking, online investing, and peer-to-peer lending are increasingly prevalent in vietnam, especially among urban youth like students. however, the safe and effective usage of such services requires a solid foundation in financial knowledge especially digital financial literacy, which encompasses personal financial management, information security, risk assessment, and safe technological practices. although students are tech-savvy and adaptable, they typically lack experience and comprehensive financial understanding, making them prone to mistakes when using digital financial products. this study aims to clarify the role of digital financial literacy in shaping and influencing fintech usage behavior among students in hanoi. it assesses students’ understanding of digital financial concepts, tools, and applications, and examines the relationship between their level of digital financial literacy and their usage behavior of various fintech services: e-wallets, digital banking, online investing platforms, p2p lending, and personal expense management apps. the study then demonstrates the impact of this literacy on fintech adoption decisions, considering moderating variables like age, field of study, and prior experience with technology. finally, based on its findings, the authors offer recommendations for strengthening digital financial literacy among students in hanoi and guide educational policies appropriate for the digital age. 2. research overview amid rapid digital transformation, fintech plays an increasingly crucial role in socio-economic life. for youth, who readily adopt technology, fintech offers numerous conveniences in personal finance management, payments, saving, and investment. however, fintech usage is not only shaped by technology and consumption habits but is also significantly influenced by users’ digital financial literacy. nguyen nam hai (2021) applied the utaut2 model using data from 250 customers in hochiminh city to identify drivers of fintech adoption: effort expectancy, performance expectancy, social influence, facilitating conditions, hedonic motivation, and price value. dao my hang et al. (2018) focused on determinants of fintech usage in the payment sector in vietnam, noting positive effects of behavioral perception and convenience on fintech intentions. tran thi thanh huyen (2021) utilized utaut to analyze fintech adoption, highlighting behavioral perceptions, convenience, and social influence. to minh thu (2022) emphasized that enhancing digital financial knowledge is key to achieving inclusive finance amid digital advancements. mailto:hungdt@neu.edu.vn mailto:nhatnam031108@gmail.com mailto:tranvuhoangnam031108@gmail.com https://doi.org/10.55220/25766759.471 asian business research journal, 2025, 10(6): 21-27 22 © 2025 by the authors; licensee eastern centre of science and education, usa phung thai minh trang (2023) surveyed 1.180 vietnamese university students and found that digital financial literacy directly and indirectly influences fintech adoption intentions, mediated by fintech attitudes and perceived behavioral control. trinh thi phan lan & pham thi hue (2023) asserted that risk and benefit perceptions are critical determinants of fintech usage among hanoi youth. 3. theoretical foundations the organization for economic cooperation and development (oecd), based on the definition of "financial literacy" has incorporated questions about behavior, attitudes, and understanding to measure financial knowledge. although there is no universally accepted term worldwide, the oecd has piloted this approach together with the term “global financial knowledge”. the oecd believes that digital financial literacy is understood as a combination of basic financial understanding and the ability to use digital tools to make effective financial decisions. according to hogarthe (2002), financial literacy refers to the ways people manage their finances in terms of personal budgeting, saving, investment, and financial planning; financial knowledge or financial understanding is determined by personal experience, professional knowledge, and individual needs, and it positively influences individual participation in the financial services market. schngen (1996) defined financial literacy as “the ability to make informed judgments and effective decisions regarding the use and management of money.” meanwhile, roy morgan research (1993) explained the term as follows: “having knowledge and confidence in saving, spending, financial planning, and the measurement of financial literacy must reflect the financial situation of the individual. financial literacy should only be considered when examined in relation to each person’s specific needs and financial situation rather than in regard to all financial tools or services, as among them, there are ones that some individuals may not need and do not demand”. remund (2010) stated that “financial literacy is a measure of the degree to which one understands fundamental financial concepts and has the ability and confidence to manage personal finances through informed short-term decisions, long-term financial planning, while also living responsibly and being concerned about life and changes in economic conditions”. for the purpose of assessment, “financial knowledge” is defined as “a combination of awareness, understanding, skills, attitude, and behavior necessary to make sound financial decisions and ultimately achieve personal financial well-being” (mahdzan and tabiani, 2013). this definition asserts that financial literacy is not only knowledge per se but also includes attitudes, behaviors, and other related skills. it emphasizes the importance of decision-making the application of knowledge and skills in practical processes and shows that the desired impact should be financial improvement at the national level. digital financial literacy is defined as the understanding and ability to apply digital tools, platforms, and financial services into real-life practice. financial literacy is reflected through: • financial knowledge: understanding basic financial concepts, recognizing financial products & services, basic financial skills (making payments, opening accounts). • financial behavior: daily money management, financial planning, seeking financial advisory services... • financial skills: literacy, numeracy. • attitudes influencing financial decisions: saving, lending, confidence in retirement planning. in vietnam, although fintech is rapidly developing, general financial literacy especially digital finance remains limited. a report by standard & poor’s showed that vietnam only scored 24 in financial literacy, ranking 118 out of 144 countries. this reality shows that most people, including students, are not adequately equipped with the knowledge to use financial technology services effectively and safely. in reality, students are the group that frequently uses platforms such as e-wallets, digital banking or personal finance management tools. however, this usage is mostly experiential or trend-based, rather than based on a clear understanding of the operation, benefits, and risks of such services. this entails many potential dangers in making poor financial decisions, losing spending control, or falling victim to digital fraud. based on the above situation, a survey was conducted among students in hanoi to assess the relationship between digital financial literacy and the use of fintech. the survey results are expected to provide a more comprehensive view of the role of financial education in the digital age, while also suggesting appropriate directions for training and raising digital financial literacy in schools and society. 4. model and methods research 4.1. model and hypotheses this study is based on the theory of planned behavior (tpb) by ajzen (1991) and the extended unified theory of acceptance and use of technology (utaut2) developed by venkatesh et al (2022). these models have been widely applied in consumer behavior research related to new technologies, in which product understanding – specifically digital financial literacy – plays a crucial role in shaping intention and behavior in using financial technologies. digital financial literacy is the understanding of digital financial products and services and the perception of risks associated with their use (morgan & trinh, 2019). this knowledge originates from goal-framing theory (lindenberg & steg, 2007). according to this theory, goal framing refers to the way individuals process information and act based on their goals. in relation to the decision to use fintech services, digital financial literacy helps individuals identify their goals of achieving benefits and act rationally and efficiently (kumar et al., 2023). h1: digital financial literacy influences students' intention to use fintech. financial attitude refers to individuals’ emotions and perspectives regarding financial matters, which directly affect their behavior and subsequent decision-making (rai et al., 2019). according to khuc the anh (2020), a person who values short-term financial benefits more than long-term accumulation tends to rarely consider asian business research journal, 2025, 10(6): 21-27 23 © 2025 by the authors; licensee eastern centre of science and education, usa investing, setting aside funds for emergencies, or making long-term financial plans. in a study on spending habits among asian students, shahryar and tan (2014) concluded that the influence of attitude on financial literacy is very clear. h2: financial attitude has an impact on students' intention to use fintech. in addition to the factor of financial literacy, recent studies have expanded models for evaluating fintech usage behavior by incorporating factors from the tpb (ajzen, 1991). among these, subjective norms refer to individuals’ perceptions of social expectations, including influence from friends, family, or the community, which have been shown to play an important role in shaping intentions and behaviors related to fintech use. according to research by lee (2009) and alam et al. (2019), if users perceive that using fintech is positively viewed by society, they will be more inclined to accept and use these services regardless of their current level of financial knowledge. h3: subjective norms affect students' intention to use fintech. h4: perceived behavioral control affects students' intention to use fintech. figure 1. research model. 4.2. measurement of variables the research model consists of four variables (see figure 1), including one independent variable and three control variables. • independent variable: digital financial literacy (dfl) is measured through four questions adapted from prasad et al. (2018), morgan & trinh (2019), and setiawan et al. (2022). • control variables: financial attitude (fat), subjective norms (nor), and perceived behavioral control (pbc) are derived from liñán & chen (2009) and phung (2023), using a 5-point likert scale ranging from 1 (strongly disagree) to 5 (strongly agree). • dependent variable: intention to use fintech services (iuf) is derived from liñán & chen (2009) and phung (2023), using a 5-point likert scale ranging from 1 (strongly disagree) to 5 (strongly agree). 4.3. research method and data the research model is tested through primary data collected from high school and university students in hanoi from march to may 2025. the formulation of hypotheses and model not only contributes to clarifying the role of digital financial literacy in the financial behavior of young people but also highlights the factors that promote access to financial technology in the context of digital transformation in vietnam. data was collected through an online survey using the “google forms” platform. the target respondents were high school and university students in hanoi, vietnam. the survey was conducted from march 2025 to may 2025. the questionnaire was distributed to students via facebook, zalo, and email. the number of valid observations used in this study is 180. three methods are used to test the hypotheses and other regression relationships, including structural equation modeling (sem), binary logit, and ordinary least squares (ols). the software used includes spss and amos. in addition, tests conducted include reliability testing of the scale (cronbach’s alpha), exploratory factor analysis (efa), and confirmatory factor analysis (cfa). 5. research results 5.1. descriptive statistics descriptive statistics of the survey participants (n = 180) are presented in table 1. among them, males accounted for 34% and females 66%. the age group from 18 to 20 accounted for 37%, followed by the age group from 21 to 22 (28%), 22 to 23 (23%), and from 24 and above (12%). most of the respondents were university students. overall, students had a relatively good average level of digital financial literacy (dfl) (mean = 3.42). students also demonstrated a positive financial attitude (fat) (mean = 4.45), good perceived behavioral control (pbc) (mean = 4.42), and a relatively high level of subjective norms (nor) (mean = 3.51). the intention to use fintech services (iuf) was also quite high (mean = 3.78). asian business research journal, 2025, 10(6): 21-27 24 © 2025 by the authors; licensee eastern centre of science and education, usa table 1. descriptive statistics. scale minimum maximum mean median standard deviation dfl 1 5 3,42 3,25 0,89 pbc 1 5 4,42 4,67 0,63 fat 1 5 4,45 4,75 0,61 nor 1 5 3,51 3,67 0,94 iuf 1 5 3,78 4,00 0,78 5.2. reliability testing of measurement scale table 2 presents the results of reliability testing for five measurement scales, including: intention to use fintech services (iuf), digital financial literacy (dfl), subjective norms (nor), perceived behavioral control (pbc), and financial attitude (fat). the results indicate that all scales have a cronbach’s alpha coefficient greater than 0.7. specifically, iuf has a coefficient of 0.867; pbc (0.749); fat (0.854); nor (0.825); and dfl (0.874). according to hair et al. (2014), all five scales were eligible for testing and exploratory factor analysis. table 2. reliability testing of measurement scales. observed variable scale mean if item deleted scale variance if item deleted corrected item-total correlation cronbach's alpha if item deleted 1. intention to use fintech services (iuf): cronbach’s alpha = 0.867 iuf 1 7.764 2.857 0.801 0.864 iuf 2 7.737 2.384 0.716 0.838 iuf 3 7.563 2.046 0.777 0.850 iuf 4 7.413 2.541 0.728 0.811 2. digital financial literacy (dfl): cronbach’s alpha= 0.874 dfl 1 11.157 7.069 0.601 0.789 dfl 2 11.205 7.701 0.628 0.777 dfl 3 11.484 7.461 0.669 0.858 dfl 4 11.452 7.336 0.665 0.860 3. subjective norms (nor): cronbach’s alpha= 0.825 nor 1 7.276 5.820 0.794 0.740 nor 2 7.322 5.037 0.772 0.741 nor 3 7.300 5.086 0.778 0.814 nor 4 7.454 5.970 0.762 0.711 4. perceived behavioral control (pbc): cronbach’s alpha= 0.749 pbc 1 8.413 1.265 0.686 0.744 pbc 2 8.471 1.492 0.654 0.745 pbc 3 8.487 1.519 0.779 0.741 pbc 4 8.483 1.733 0.734 0.742 5. financial attitude (fat): cronbach’s alpha= 0.854 fat 1 13.815 3.941 0.752 0.831 fat 2 13.665 3.593 0.748 0.847 fat 3 13.753 3.619 0.783 0.830 fat 4 13.807 3.204 0.752 0.843 table 3. exploratory factor analysis (efa). variable component communalities item deleted 1 2 3 4 5 dfl2 0,834 0,789 dfl1 0,809 0,778 dfl3 0,800 0,741 dfl4 0,729 0,706 fat 3 0,858 0,780 fat 2 0,848 0,714 fat 4 0,800 0,694 fat 1 0,797 0,604 nor 2 0,858 0,791 nor 4 0,852 0,803 nor 3 0,852 0,663 nor 1 0,782 0,737 pbc1 0,821 0,734 pbc3 0,805 0,658 pbc2 0,782 0,762 pbc4 0,765 0,646 iuf 2 0,813 0,695 iuf 1 0,765 0,737 iuf 3 0,745 0,734 iuf 4 0,744 0,658 first eigenvalues 5,660 2,798 1,574 1,202 1,061 total variance % 33,296 16,459 9,260 7,068 6,239 72,321 note: kmo and bartlett's test: kaiser-meyer-olkin measure: 0, 875; chi-square: 8144; df = 136, p: 0,000; extraction method: principal component analysis. rotation method: varimax with kaiser normalization. asian business research journal, 2025, 10(6): 21-27 25 © 2025 by the authors; licensee eastern centre of science and education, usa 5.3. exploratory factor analysis (efa) the paper conducted an exploratory factor analysis (efa) on five scales with 16 original variables (see table 3). the results show these variables grouped into five factors: fat (4 items), dfl (4 items), nor (4 items), pbt (4 items), and iuf (4 items). all factor loadings exceed 0.5, and all original items are retained. communalities for all items are above 0.5. the total variance explained by the first five eigenvalues is 72.321%. 5.3.1. confirmatory factor analysis (cfa) the study continued to test the confirmatory factors analysis (cfa) through testing the correlation coefficient, convergence and discrimination presented in table 4. the scales all met the cfa testing standards such as the composite reliability coefficient (cr) was greater than 0.7. specifically, the intention to use fintech (iuf) had a cr coefficient of 0.798; digital financial literacy (dfl) (0.894); financial attitude (fat) (0.889); subjective norm (nor) (0.843) and perceived behavioral control (pbc) (0.796). in addition, related to the convergence test, the results showed that all 5 scales had an average variance extracted (ave) greater than 0.5. testing discrimination, the results also presented that all 5 scales had the maximum individual variance (msv) smaller than ave. in summary, based on the model fit criteria (hair et al., 2014), all five scales met the specified criteria; thus, they were eligible to conduct a structural equation modeling (sem) test. table 4. cfa results. scale cr ave msv correlation coefficient 1 2 3 4 5 1. iuf 0,798 0,587 0,371 0,764 2. dfl 0,894 0,556 0,371 0,609 0,776 3. fat 0,889 0,629 0,371 0,409 0,230 0,817 4. nor 0,843 0,668 0,255 0,505 0,411 0,281 0,739 5. pbc 0,796 0,571 0,371 0,324 0,189 0,609 0,228 0,765 note: cr: composite correlation; ave: average variance extracted; msv: maximum individual variance 5.3.2. analysis of factors affecting the intention to use fintech services (iuf) the study examined the factors affecting the intention to use fintech services. the results are presented in table 5. four models and three methods were used: structural linear model, binary logit and multivariate regression. models 1-3 only tested 4 factors including digital financial literacy and 3 motivational factors in the theory of planned behavior. model 4, in addition to the 4 factors as in model 3, tested demographic factors. model (2) used the binary logit method. in which, knowledge was coded with 0 being below average knowledge and 1 being above average knowledge. the results showed that knowledge had a positive influence on intention with all 4 models and 3 methods. specifically, model (1), the coefficient of 0.484*** between digital financial literacy (dfl) and intention to use fintech (iuf) means that when knowledge increases by 1 unit, intention increases by 48.4%. similarly, models (3) and (4) also show that digital financial literacy (dfl) has a positive impact on intention to use fintech (iuf) at 0.312*** and 0.235*** respectively. model (2) with the binary logit method shows a coefficient of 1.046***; meaning that students with higher than average digital financial literacy have higher intention to use fintech (iuf) than students with below average knowledge. regarding the three control factors, the results show that financial attitude (fat) has a direct impact on intention to use fintech (iuf) (see the coefficient of 0.024*** with a significance level of 99%). however, subjective norm (nor) has a direct impact on intention to use fintech (iuf) with a coefficient of 0.018***. in contrast, perceived behavioral control (pbc) has no direct effect on intention to use fintech (iuf). table 5. factors affecting fintech usage intention (iuf). sem (1) binary logit (2) ols (3) ols (4) dfl (digital financial literacy) 0,484*** (11,143) 0,312*** (13,593) 0,235*** (10,324) dfl = 1 1,046*** (53,314) fat (financial attitude) 0,24*** (4,620) 0,213*** (6,118) 0,219*** (5,731) fat = 1 0,823*** (29,451) nor (subjective norms) 0,18*** (6,843) 0,182*** (8,582) 0,193*** (8,991) nor = 1 0,865*** (37,625) pbc (perceived behavioral control) 0,067 (1,42) 0,087** (2,311) 0,053 (1,451) pbc = 1 0,185 (1,423) gender (male = 1) -0,045 (-1,03) block number -1.541*** 0,684*** 0,581*** r2/r2 adjustable 0,516 0,241 0,372 0,420 chi-square coefficient/ -2 log likelihood /changed f coefficient 314 1183,54 145,681 68,078*** degrees of freedom 122 1 4 10 note: ***: p<1%; **: p<5%; *: p<10%. dependent variable: intention to use fintech services (ydinh). model fit sem: chi-square = 312.144; df = 122; p =0.000; gfi = 0.965; tli = 0.972; rmsea = 0.039. asian business research journal, 2025, 10(6): 21-27 26 © 2025 by the authors; licensee eastern centre of science and education, usa the study found the influence of digital financial literacy on the intention to use fintech services. therefore, three hypotheses h1, h2, h3 were accepted and hypothesis h4 was rejected. the results of the study are consistent with the goal-setting theory (lindenberg & steg, 2007) and the tpb (ajzen, 1991; fishbein & ajzen, 1975). the results imply that digital financial literacy helps individuals to clearly define goals (that is, the intention to use fintech services), and the higher the digital financial literacy, the higher the intention to use fintech services. some studies in the world such as have found a relationship between financial knowledge and financial decisions in india (kumar et al., 2023). household knowledge in india (prasad et al., 2018) and indonesia (setiawan et al., 2022). therefore, the results of the study in vietnam contribute to the diverse theoretical repertoire of knowledge across countries. 6. policy implications from the research results, the research team proposes of recommendations to improve digital financial literacy and promote safe and effective financial technology use among students. first, the state and relevant agencies need to clearly identify digital financial knowledge as an indispensable part of comprehensive digital capacity of citizens in the 4.0 era. improving digital financial literacy for young people not only serves the goal of financial inclusion, but also helps young people make reasonable financial decisions, limit financial risks, increase the ability to save and invest responsibly. therefore, relevant ministries such as the ministry of education and training, the ministry of finance, the state bank, etc. need to integrate digital financial education content into high school and university curricula in the form of formal subjects or extracurricular activities. teaching should not only stop at basic financial theory, but also expand to practical skills such as using e-wallets, assessing security when making online transactions, and identifying financial fraud risks, thereby helping students improve their ability to make financial decisions in the digital environment. second, schools and educational institutions need to proactively coordinate with fintech businesses and banks to organize talk shows, seminars, competitions or practical experience workshop series. these activities not only arouse interest but also increase interaction and apply financial knowledge into practice, thereby creating motivation to learn and forming positive financial habits among young people. the content should aim to foster positive financial behaviors such as budget planning, smart consumption, personal credit control, and protection of personal financial information. this is especially necessary because many students today access financial technology through social networks and word of mouth, which can easily lead to emotional or unsafe decisions. third, local authorities and youth organizations can launch mass media campaigns on social networks, flyers, learning apps, etc. to spread the right awareness of digital finance and the habit of using financial technology safely. in particular, it is necessary to emphasize practical topics such as "how to effectively manage pocket money through digital applications", "distinguishing between investment and financial gambling", or "how to avoid online credit traps and black app loans". communication campaigns need to disseminate knowledge about the risks of technology fraud, personal account security, and clearly explain the rights and obligations of fintech users, thereby helping young people be more proactive in evaluating and choosing reputable financial platforms. finally, students themselves need to be proactive in raising awareness and self-studying about personal finance through reputable online documents and courses. setting simple financial goals such as creating an emergency fund, saving to buy books, or tracking daily expenses through an application will be the first step in building a solid foundation for sustainable financial behavior in the future. young people should also know how to create a personal budget, record expenses, evaluate their level of fintech usage, and thereby adjust their financial behavior accordingly. self-study through online documents, open courses, and financial simulation applications is also essential to master modern financial tools. at the same time, young people need to learn how to self-assess the safety of financial applications, not follow virtual investment trends, and be aware of the risks when sharing personal financial information online. 7. conclusion however, this study still has some limitations in terms of scope and survey subjects. due to time and practical conditions, the survey was mainly conducted in hanoi, with the number of samples ensuring analysis but not enough to generalize to all more than 2 million students nationwide. in addition, the study has not analyzed in depth the differences in fintech usage behavior according to demographic variables such as gender, region, family income, type of school or major. these are factors that can significantly affect the level of access and application of financial technology, and therefore should be included in subsequent studies.in the future, it is necessary to expand the scale of the survey, increase the application of more advanced analytical models such as sem or pls-sem to assess the relationship between factors affecting fintech usage behavior more comprehensively. from there, policy and educational recommendations can be more tailored to specific groups of young people in the context of increasingly deep digitalization in vietnam references ajzen, i. 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(2022). fintech adoption and financial inclusion: evidence from household consumption in china. journal of banking & finance, 145, 106668. doi: 10.1016/j.jbankfin.2022.106668 81 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 5, 81-100, 2025 issn: 2576-6759 doi: 10.55220/25766759.440 © 2025 by the author; licensee eastern centre of science and education, usa strategic price perception dialectics and consumer value attribution in artisanal cultural heritage markets: a multi-paradigmatic analysis of palm-leaf conical hat industry in vietnam's transitional economy chi manh ha hnue high school for gifted students, vietnam. email: chimanhha3@gmail.com abstract this research interrogates the complex interrelationships between strategic price perception dialectics and consumer value attribution mechanisms within vietnam's artisanal cultural heritage markets, specifically examining the palm-leaf conical hat industry as a paradigmatic case study. through a multi-theoretical lens integrating consumer behavior theories, cultural capital frameworks, and transitional economy dynamics, this study explores how traditional artisanal products navigate the tension between cultural authenticity and market commodification. employing a sophisticated methodological apparatus combining partial least squares structural equation modeling (pls-sem) with fuzzy-set qualitative comparative analysis (fsqca), data were systematically collected from 387 consumers across three distinct market segments. the epistemic trajectory reveals that perceived cultural authenticity and artisanal craftsmanship significantly mediate the relationship between price perception and purchase intention, while market knowledge asymmetry moderates this relationship in contextually contingent configurations. the hermeneutic analysis uncovers complex causal pathways wherein price perception operates not merely as an economic indicator but as a semiotic vehicle for cultural value transmission. this research contributes to theoretical advancement by proposing an integrated framework for understanding consumer behavior in heritage markets within transitional economies, offering practical implications for the sustainable development of traditional crafts amidst globalization pressures. the findings present significant implications for cultural policy formulation, artisanal enterprise sustainability, and heritage preservation strategies in emerging market contexts. keywords: artisanal production, consumer value attribution, cultural heritage markets, price perception theory, transitional economies. 1. introduction the epistemic landscape of contemporary consumer markets increasingly reveals complex dialectical tensions between global homogenisation forces and localised cultural expression systems, particularly within artisanal heritage contexts situated in transitional economies (thompson and tambyah, 1999). this paradigmatic tension manifests with particular salience in vietnam's traditional craft industries, where ancient production modalities confront rapidly evolving market structures and consumer preference architectures (nguyen and nguyen, 2011). the palm-leaf conical hat industry represents a particularly illuminating case study of this phenomenon, embodying centuries of cultural heritage whilst simultaneously navigating modern market imperatives within vietnam's transition from centrally planned to market-oriented economic structures (shultz, 2012). transdisciplinary scholarship posits that consumer interaction with cultural heritage products transcends conventional utility maximisation frameworks, invoking complex value attribution mechanisms that interweave economic, cultural, and symbolic dimensions (belk, 1988; holbrook and hirschman, 1982). despite the theoretical significance of understanding these mechanisms, substantial knowledge lacunae persist regarding how consumers in transitional economies negotiate price-value relationships for artisanal cultural products (nguyen et al., 2017). this theoretical gap assumes heightened significance when contextualised within vietnam's accelerated economic transformation, wherein traditional craft industries face existential challenges from industrial mass production and changing consumer preferences (fforde and de vylder, 1996). previous empirical investigations have predominantly approached artisanal markets through either purely economic lenses, examining price elasticities and market efficiencies (vann, 2006), or through anthropological perspectives focusing on cultural preservation without adequate consideration of market viability (digregorio, 2001). this epistemological bifurcation has impeded the development of integrated theoretical frameworks capable of explicating the complex interplay between economic imperatives and cultural value systems in heritage product markets (szmigin et al., 2009). the contextual complexities of vietnam's transitional economy further complicate this theoretical landscape, as traditional production modalities encounter rapidly evolving market structures and consumer behaviour patterns (shultz et al., 2006). mailto:chimanhha3@gmail.com https://doi.org/10.55220/25766759.440 asian business research journal, 2025, 10(5): 81-100 82 © 2025 by the author; licensee eastern centre of science and education, usa whereas conventional price perception research has primarily examined industrialised contexts within stable market economies (zeithaml, 1988; dodds et al., 1991), this study contends that transitional economies with strong cultural heritage dimensions necessitate more nuanced theoretical frameworks. the phenomenon of price perception in such contexts operates not merely as an economic indicator but as a complex semiotic system mediating relationships between cultural authenticity, perceived craftsmanship quality, and consumer identity construction (arnould and thompson, 2005). this theoretical recalibration becomes particularly salient when examining artisanal products like the vietnamese palm-leaf conical hat, which functions simultaneously as utilitarian object, cultural signifier, and heritage repository (vann, 2012). the anthropological significance of the palm-leaf conical hat in vietnamese cultural symbolism adds another layer of complexity to consumer value attribution processes. as nguyen et al. (2011) observed, this iconic headgear transcends mere functional utility, embodying centuries of cultural practice and reflecting complex social hierarchies through subtle variations in design, materials, and craftsmanship. this cultural embeddedness creates unique market dynamics wherein price perception operates within a multi-dimensional value system integrating economic, cultural, and symbolic capitals (bourdieu, 1984; holt, 1998). from a critical realist perspective, this research interrogates the multifaceted relationship between price perception dialectics and consumer value attribution mechanisms within vietnam's artisanal cultural heritage markets. by adopting an interdisciplinary theoretical framework integrating consumer behaviour theories, cultural capital frameworks, and transitional economy dynamics, this study aims to explicate how traditional artisanal products navigate the tension between cultural authenticity and market commodification in contemporary vietnam. the theoretical significance of this investigation extends beyond the specific empirical context, contributing to broader scholarly discourse on how traditional craft industries navigate globalisation pressures whilst maintaining cultural integrity (wherry, 2008). furthermore, the methodological innovation of combining structural equation modelling with fuzzy-set qualitative comparative analysis represents an important advancement in researching complex socio-economic phenomena in transitional contexts (ragin, 2008; woodside, 2013). this research thus addresses significant theoretical and empirical gaps through systematic investigation of how consumers in vietnam's transitional economy negotiate price-value relationships for artisanal cultural products, specifically the palm-leaf conical hat. through this focused analysis, the study contributes to theoretical advancement regarding consumer behaviour in heritage markets within transitional economies, whilst offering practical implications for sustainable development of traditional crafts amidst globalisation pressures (vann, 2012; wells, 2006). 2. foundational theories and literature review 2.1. foundational theories 2.1.1. price perception theory the epistemic foundation of price perception theory has evolved significantly since its initial conceptualisation in neoclassical economics, where price functioned primarily as a market-clearing mechanism reflecting the intersection of supply and demand curves (monroe, 1973). contemporary theoretical frameworks have transcended this unidimensional approach, reconceptualising price perception as a complex psychological construct mediating consumer evaluations of product value, quality, and desirability (zeithaml, 1988). this paradigm shift necessitates understanding price not merely as an objective monetary quantity but as a subjective interpretive framework through which consumers derive meaning and value from market offerings (lichtenstein et al., 1993). monroe and krishnan (1985) posited a seminal theoretical framework delineating how price operates simultaneously as a sacrifice indicator and a quality signifier in consumer cognition. this theoretical advancement revealed the inherent dialectical tension in consumer price perception: higher prices simultaneously increase perceived quality whilst intensifying perceived sacrifice (teas and agarwal, 2000). this paradoxical relationship becomes particularly salient in contexts of information asymmetry, where consumers lack objective quality assessment criteria and therefore rely on price as a quality heuristic (rao and monroe, 1989). from a cognitive psychology perspective, thaler (1985) introduced the influential concept of transaction utility, distinguishing between acquisition utility (the perceived value of the good relative to its price) and transaction utility (the perceived merits of the deal relative to a reference price). this theoretical distinction illuminates how reference prices—either internally determined by past experiences or externally influenced by market forces—function as cognitive benchmarks against which consumers evaluate price fairness and value (kalyanaram and winer, 1995). subsequent empirical investigations by grewal et al. (1998) validated this theoretical proposition, demonstrating how reference price effects significantly influence consumer purchase intentions across diverse product categories. the social-psychological dimensions of price perception were substantively explored by lichtenstein et al. (1993), who identified multiple price-related constructs including price consciousness, value consciousness, coupon proneness, sale proneness, price mavenism, price-quality schema, and prestige sensitivity. this multidimensional conceptualisation transcends purely economic approaches, positioning price perception within broader sociocultural meaning systems where prices convey complex social signals beyond mere economic value (völckner and hofmann, 2007). in cultural heritage contexts, price perception assumes additional complexity due to the symbolic and cultural dimensions embedded within heritage products. throsby (2001) proposed an influential theoretical framework distinguishing between economic and cultural value in heritage contexts, suggesting that conventional price theory inadequately captures the multidimensional value systems operating in cultural markets. this theoretical perspective gains particular salience in transitional economies like vietnam, where rapid market liberalisation creates dynamic tensions between traditional value systems and emerging market logics (wells, 2006). the theoretical trajectory of price perception research has increasingly recognised contextual contingencies that moderate price-perceived value relationships. wakefield and inman (2003) demonstrated how hedonic versus utilitarian product classifications significantly influence price sensitivity, whilst völckner and sattler (2005) identified how involvement levels modulate consumer responses to price variations. these theoretical asian business research journal, 2025, 10(5): 81-100 83 © 2025 by the author; licensee eastern centre of science and education, usa advancements suggest that price perception mechanisms in artisanal heritage contexts require specialised theoretical frameworks accounting for the unique intersection of cultural symbolism, craftsmanship appreciation, and economic valuation (sheth et al., 1991; thompson, 2004). 2.1.2. consumer value attribution theory consumer value attribution theory has undergone substantial conceptual evolution, progressing from unidimensional utility-maximisation frameworks towards multifaceted constructs encompassing symbolic, experiential, and relational dimensions (holbrook, 1999). zeithaml's (1988) influential conceptualisation established four fundamental value perspectives: (1) value as low price, (2) value as whatever the consumer wants in a product, (3) value as the quality received for the price paid, and (4) value as what the consumer gets for what they give. this multidimensional approach transcends simplistic economic interpretations, positioning value as a complex consumer-defined construct rather than an objective product attribute (babin et al., 1994). sheth et al. (1991) advanced theoretical understanding by proposing a comprehensive framework delineating five value dimensions: functional, social, emotional, epistemic, and conditional. this theoretical model explicates how products simultaneously deliver multiple value types, with consumer preferences reflecting individualised value hierarchies. within cultural heritage contexts, this multidimensional framework assumes particular significance as artisanal products simultaneously deliver functional utility, social signalling, emotional connection to cultural traditions, and conditional value linked to tourism or gift-giving contexts (littrell et al., 1993). the theoretical integration of bourdieusian capital theory has substantially enriched consumer value attribution frameworks, particularly for cultural products. holt (1998) demonstrated how cultural capital— manifested through aesthetic discrimination capabilities and cultural knowledge repositories—fundamentally shapes how consumers perceive and evaluate product attributes. this theoretical perspective illuminates how consumer value attribution for artisanal heritage products operates within complex social hierarchies where appreciation capabilities reflect class-based dispositions and cultural capital accumulation (throsby, 1999). sweeney and soutar (2001) developed and empirically validated the influential perval scale measuring four distinct value dimensions: emotional value (feelings or affective states), social value (social self-concept enhancement), functional value (price/value for money), and functional value (performance/quality). this measurement advancement facilitated more nuanced empirical investigations of how consumers negotiate complex value trade-offs across these dimensions. subsequent cross-cultural validation studies have confirmed the scale's broad applicability whilst identifying culturally contingent value emphases (wang et al., 2004). value co-creation theory represents another significant theoretical advancement, reconceptualising value as interactively determined through consumer-producer interactions rather than unilaterally embedded in products (prahalad and ramaswamy, 2004; vargo and lusch, 2004). this service-dominant logic perspective assumes heightened significance in artisanal contexts, where consumer knowledge of production processes, personal interactions with artisans, and participatory consumption experiences substantively influence perceived value (arnould and price, 1993). within vietnam's palm-leaf conical hat industry, this theoretical framework illuminates how direct consumer-artisan interactions and production demonstrations create unique value configurations inaccessible through industrial production modalities (nguyen and nguyen, 2011). cultural consumption theory provides additional theoretical insights relevant to heritage product contexts. mccracken (1986) explicated how cultural meaning transfers from the culturally constituted world to consumer goods and finally to individual consumers, with consumption rituals facilitating this meaning transfer. this theoretical perspective elucidates how artisanal heritage products like vietnamese conical hats function as cultural repositories, carrying historical narratives and cultural symbolism that consumers appropriate through possession and display (belk, 1988). particularly in tourism contexts, this meaning transfer process assumes additional complexity as international consumers negotiate unfamiliar cultural symbolism through guided interpretations and constructed authenticity experiences (cohen, 1988). the theoretical evolution of consumer value attribution frameworks has increasingly recognised the contextual embeddedness of value perception processes. thompson and troester (2002) demonstrated how microcultural meaning systems significantly influence how consumers interpret and prioritise different value dimensions. this contextual sensitivity becomes particularly salient in transitional economies like vietnam, where rapid socioeconomic transformation creates dynamic tensions between traditional and emergent value systems, influencing how consumers attribute value to cultural heritage products (shultz et al., 2006). 2.2. review of empirical and relevant studies 2.2.1. price perception in cultural heritage markets empirical investigations of price perception within cultural heritage markets reveal complex patterns transcending conventional economic frameworks. throsby (2003) conducted a seminal empirical study examining willingness-to-pay for cultural heritage preservation, demonstrating how cultural value significantly influences price thresholds independently of income levels or standard demographic predictors. this finding challenges purely economic interpretations of price sensitivity, suggesting that cultural heritage consumption operates within distinct value systems where price serves as both economic and symbolic signifier (holbrook and hirschman, 1982). the empirical literature reveals substantial evidence for price-quality relationships in heritage product contexts. littrell et al. (1993) investigated tourist perceptions of craft souvenirs across multiple countries, finding that price functioned as a primary quality assessment heuristic, particularly when consumers lacked technical knowledge to evaluate craftsmanship. this information asymmetry dynamic appears particularly pronounced for international consumers encountering unfamiliar cultural products, creating market conditions where price disproportionately influences quality assessments (sheth et al., 1991). cross-cultural empirical investigations reveal significant variations in how different consumer segments interpret price signals for cultural products. mok et al. (2007) examined asian tourist shopping behaviour across five countries, finding substantial differences in price sensitivity and price-quality associations for cultural asian business research journal, 2025, 10(5): 81-100 84 © 2025 by the author; licensee eastern centre of science and education, usa souvenirs. japanese consumers demonstrated higher price-prestige associations and lower price sensitivity for authentic cultural products compared to chinese consumers, who exhibited greater price negotiation tendencies and lower status attribution to heritage purchases. these findings suggest culturally contingent price perception mechanisms requiring contextually sensitive theoretical frameworks (thompson and tambyah, 1999). in vietnam's specific context, empirical studies have documented complex price perception dynamics within traditional craft villages. digregorio (2001) conducted ethnographic research in vietnamese craft communities, identifying how different consumer segments (domestic consumers, expatriates, and international tourists) operate with distinct price perception frameworks. local vietnamese consumers demonstrated high price sensitivity but nuanced quality assessment capabilities, whereas international tourists exhibited lower price sensitivity but relied more heavily on price as a quality signifier due to limited product knowledge. these segmentation patterns create differential pricing strategies across market channels, with implications for craft producer sustainability (nguyen et al., 2011). the empirical literature further reveals how perceived authenticity mediates price-value relationships for cultural heritage products. littrell et al. (1993) identified authenticity as a primary value driver for cultural souvenirs, with consumers willing to pay significant premiums for products perceived as genuinely representing cultural traditions. this authenticity premium appears particularly pronounced for products with visible handcrafted elements, suggesting that production process visibility significantly influences price-value assessments for artisanal goods (sheth et al., 1991). price perception for cultural heritage products also demonstrates temporal dynamics reflecting changing social meanings. vann (2006) documented the evolving market positioning of vietnamese crafts during the country's economic transition, noting how products previously valued primarily for utilitarian purposes were repositioned as cultural goods commanding higher prices through authenticity narratives. this temporal evolution reflects broader socioeconomic transformations wherein traditional products acquire new value configurations through recontextualisation within tourism and cultural preservation frameworks (thompson, 2004). 2.2.2. consumer value attribution for artisanal products the empirical literature on consumer value attribution for artisanal products reveals multidimensional value structures transcending conventional utility frameworks. sweeney and soutar (2001) validated a four-dimensional value model (quality/performance, price/value for money, emotional, and social) across multiple product categories, demonstrating how consumers simultaneously evaluate these distinct value types when making purchase decisions. for artisanal products specifically, emotional and social value dimensions assume heightened importance relative to mass-produced alternatives, suggesting unique value configurations for handcrafted goods (littrell et al., 1993). cross-cultural studies reveal significant variations in how consumers from different cultural backgrounds attribute value to artisanal products. lee and littrell (2003) compared american and mexican consumers' evaluations of textile crafts, finding that american consumers prioritised uniqueness and aesthetic appeal while mexican consumers emphasised cultural symbolism and craftsmanship quality. these culturally contingent value attributions reflect different consumption motivations, with tourists often seeking representative cultural symbols while domestic consumers evaluate products within more nuanced cultural knowledge frameworks (cohen, 1988). the empirical literature further identifies how consumer cultural capital significantly moderates value attribution processes for artisanal products. holt (1998) demonstrated how consumers with higher cultural capital evaluate products through different interpretive frameworks than those with lower cultural capital, prioritising authenticity, craftsmanship sophistication, and cultural congruence over basic functionality or conventional aesthetic standards. this cultural capital effect appears particularly pronounced for heritage products requiring specialised knowledge for full appreciation, creating market segments with fundamentally different value attribution mechanisms (bourdieu, 1984). within vietnam's specific context, several empirical studies have examined consumer value attribution for traditional crafts. nguyen and nguyen (2011) investigated domestic consumer attitudes toward traditional vietnamese crafts, identifying five primary value dimensions: functional, aesthetic, cultural-symbolic, gift-giving, and investment value. the relative importance of these dimensions varied significantly across demographic segments, with younger urban consumers emphasising aesthetic and gift-giving value while older consumers prioritised functional and investment value. these findings suggest generational transitions in value attribution patterns with implications for market sustainability (shultz, 2012). tourist consumption of vietnamese artisanal products reveals distinctive value attribution patterns. thirumaran et al. (2014) examined international tourist purchasing behaviour for vietnamese crafts, finding that authentic cultural experiences, storytelling opportunities, and memory crystallisation functioned as primary value drivers. for products like palm-leaf conical hats, acquisition often served narrative purposes beyond practical usage, with consumers valuing the cultural story and memory trigger functions above utilitarian considerations. these findings align with broader tourism literature suggesting that souvenir purchases serve important narrative functions in constructing and communicating travel experiences (belk, 1988). production process visibility emerges as a significant moderator of consumer value attribution for artisanal products. littrell et al. (1993) demonstrated how direct observation of craft production significantly enhanced perceived value across multiple dimensions, increasing willingness-to-pay and post-purchase satisfaction. this visibility effect appears particularly pronounced for unfamiliar cultural products, helping consumers appreciate technical sophistication and cultural significance that might otherwise remain inaccessible (prahalad and ramaswamy, 2004). in vietnam's craft villages, production demonstrations have become integral to the tourism experience, significantly influencing how visitors attribute value to traditional crafts like conical hats (nguyen et al., 2017). asian business research journal, 2025, 10(5): 81-100 85 © 2025 by the author; licensee eastern centre of science and education, usa 2.2.3. economic transformation and traditional craft industries empirical research on traditional craft industries within transitional economies reveals complex adaptation patterns as producers navigate shifting market structures. in vietnam specifically, several longitudinal studies have documented how craft villages responded to economic liberalisation policies. digregorio (2001) conducted a tenyear ethnographic study of northern vietnamese craft villages, documenting how producers strategically reconfigured production processes, product designs, and market channels in response to changing economic conditions. these adaptive strategies reflected complex negotiations between tradition preservation and market viability, often resulting in product stratification with different quality tiers targeting distinct market segments (nguyen et al., 2011). the empirical literature identifies significant challenges facing traditional craft industries during economic transition periods. wells (2006) documented how vietnamese craft producers confronted intensified competition from industrial alternatives, changing consumer preferences, and production cost increases during market liberalisation. these pressures created significant sustainability challenges, with many traditional crafts experiencing substantial producer population declines despite government preservation initiatives (vann, 2006). the palm-leaf conical hat industry exemplifies these trends, with workshop numbers declining despite the product's iconic cultural status (nguyen and nguyen, 2011). consumer preference evolution during economic transition significantly impacts traditional craft markets. fforde and de vylder (1996) documented how rapidly increasing income levels in vietnam's transitional economy transformed consumer priorities, with status-seeking behaviours and modernity associations often disadvantaging traditional products perceived as backward or low-status. this preference evolution creates particular challenges for everyday use items like conical hats, which face functional substitution by modern alternatives while simultaneously being revalued as cultural symbols (shultz et al., 2006). government policy interventions demonstrate mixed effectiveness in supporting traditional craft industries during economic transitions. hitchcock and teague (2000) evaluated cultural heritage preservation policies across southeast asia, finding that vietnam's craft village support programmes achieved limited success due to fragmented implementation and insufficient market linkage development. this policy implementation gap reflects broader coordination challenges between cultural preservation objectives and economic development priorities, often resulting in disconnected interventions failing to address fundamental market sustainability challenges (digregorio, 2001). tourism development emerges as a significant factor influencing traditional craft industry trajectories during economic transitions. thirumaran et al. (2014) documented how vietnam's tourism expansion created alternative market channels for traditional crafts, enabling some producers to transition from declining domestic utilitarian markets toward higher-value tourism-oriented production. this market channel shift often necessitates product adaptations responding to tourist preferences, creating tensions between authentic tradition maintenance and market viability (cohen, 1988). for products like palm-leaf conical hats, tourism markets have stimulated miniaturised souvenir versions alongside continued production of traditional full-size variants, reflecting market segmentation strategies (nguyen et al., 2011). the empirical literature further identifies how market intermediaries significantly influence value distribution within transitional craft economies. vann (2012) documented how emerging retailer networks in vietnam's handicraft sector captured increasing value proportions, creating economic sustainability challenges for primary producers despite growing overall market values. this value distribution pattern reflects broader power asymmetries within globalised craft production networks, where producers often receive diminishing returns despite premium pricing in final consumer markets (wherry, 2008). 2.3. proposed research model drawing upon the theoretical frameworks and empirical studies reviewed above, this research proposes an integrated conceptual model explicating the complex relationships between price perception, consumer value attribution, and purchase intention within vietnam's palm-leaf conical hat market. the model adopts a multiparadigmatic approach integrating economic, cultural, and psychological perspectives to comprehensively capture the complex decision processes operating in this contextually specific heritage market. the proposed research model positions perceived price as a multidimensional construct incorporating both absolute price evaluation and relative price assessment against subjective reference standards (kalyanaram and winer, 1995). this conceptualisation aligns with zeithaml's (1988) theoretical framework distinguishing between objective price (actual monetary cost) and perceived price (consumer's subjective interpretation). for palm-leaf conical hats, this distinction becomes particularly salient as different consumer segments operate with distinct reference price frameworks based on their market knowledge and previous purchase experiences (lichtenstein et al., 1993). consumer perceived value represents the central theoretical construct in the proposed model, conceptualised as a multidimensional mediating variable between price perception and purchase intention. drawing upon sweeney and soutar's (2001) validated framework, this study operationalises perceived value through four distinct dimensions: functional value (product performance and quality), economic value (price-quality ratio and affordability), emotional value (feelings evoked by the product), and social value (social status enhancement and cultural connection). this multidimensional approach aligns with empirical evidence suggesting that artisanal heritage products simultaneously deliver multiple value types, with consumers making complex trade-offs across these dimensions (littrell et al., 1993). the model incorporates perceived authenticity as a critical mediating variable specifically relevant to heritage product contexts. this construct reflects the consumer's assessment of product genuineness in terms of materials, production methods, design elements, and cultural congruence (cohen, 1988). substantial empirical evidence indicates that authenticity perceptions significantly influence both overall value assessments and willingness-topay for cultural products, particularly in tourism contexts where authenticity concerns assume heightened salience (littrell et al., 1993; throsby, 2003). asian business research journal, 2025, 10(5): 81-100 86 © 2025 by the author; licensee eastern centre of science and education, usa figure 1. proposed research model. perceived craftsmanship represents another context-specific mediating variable in the proposed model. this construct captures consumer evaluations of production quality, technical sophistication, and artisanal skill demonstrated in the product (littrell et al., 1993). for palm-leaf conical hats, craftsmanship assessment includes evaluation of material selection, weaving tightness, pattern intricacy, and finishing details—aspects requiring substantial production knowledge for accurate assessment (nguyen and nguyen, 2011). the research model incorporates consumer cultural capital as a moderating variable influencing the relationship between price perception and value assessment. this bourdieusian concept encompasses the consumer's accumulated cultural knowledge, aesthetic discrimination capabilities, and familiarity with the product's cultural context (holt, 1998). for palm-leaf conical hats, cultural capital determines whether consumers can distinguish subtleties between regional variants, appreciate technical sophistication in pattern work, and understand cultural symbolism embedded in design elements (bourdieu, 1984; thorsby, 1999). market knowledge asymmetry represents another important moderating variable in the proposed model. this construct reflects information disparities between consumers and producers regarding product attributes, production processes, and appropriate valuation standards (rao and monroe, 1989). in vietnam's conical hat market, substantial knowledge asymmetries exist between experienced domestic consumers, expatriate residents, and short-term international tourists, creating different price-quality inference patterns across these segments (digregorio, 2001). purchase intention serves as the primary dependent variable in the research model, representing the consumer's self-reported likelihood of acquiring the product. this behavioural intention construct has been extensively validated as a strong predictor of actual purchase behaviour across diverse product categories (fishbein and ajzen, 1975). for palm-leaf conical hats, purchase intentions may reflect diverse consumer motivations including functional usage, souvenir acquisition, gift-giving, decoration, or cultural appreciation (nguyen et al., 2011). based on the theoretical frameworks and empirical evidence reviewed, the model proposes several key relationships for empirical testing. first, price perception is hypothesised to influence purchase intention both directly and indirectly through multiple mediating pathways including perceived value dimensions, authenticity assessment, and craftsmanship evaluation. second, these mediation effects are expected to be moderated by consumer cultural capital and market knowledge asymmetry, creating contextually contingent price-value relationships. third, different consumer segments (domestic users, expatriate residents, and international tourists) are expected to demonstrate distinct structural relationships between model components, reflecting different consumption motivations and evaluation frameworks (thompson and troester, 2002). the proposed research model advances existing theoretical frameworks by integrating economic, cultural, and psychological perspectives within a contextually specific application addressing vietnam's palm-leaf conical hat market. this interdisciplinary integration responds to calls for more nuanced theoretical approaches to cultural heritage consumption, particularly within transitional economies where traditional products navigate complex tensions between cultural preservation and market adaptation (wherry, 2008). by systematically investigating these complex relationships, the study contributes to theoretical advancement regarding how consumers negotiate price-value relationships for artisanal heritage products within rapidly evolving market contexts. asian business research journal, 2025, 10(5): 81-100 87 © 2025 by the author; licensee eastern centre of science and education, usa 3. research methodology 3.1. research design and paradigmatic positioning this investigation adopts a post-positivist paradigmatic stance, acknowledging social phenomena complexity whilst maintaining commitment to systematic empirical investigation and probabilistic causal inference (guba and lincoln, 1994). this epistemological positioning aligns with the study's objective of elucidating structured relationships between price perception, value attribution, and purchase intention whilst recognising contextual contingencies inherent in cultural heritage consumption. the research employs methodological triangulation, combining quantitative structural modelling with configurational analysis through fsqca, addressing calls for multi-method approaches in consumer behaviour research (venkatesh et al., 2013). a cross-sectional survey methodology facilitated primary data collection, consistent with previous empirical investigations of price perception and consumer value attribution (sweeney and soutar, 2001; dodds et al., 1991). the design incorporates segmentation analysis comparing three distinct consumer groups (domestic vietnamese consumers, expatriate residents, and international tourists), enabling transnational comparative analysis of how different cultural backgrounds influence price-value relationships for heritage products (thompson and tambyah, 1999). 3.2. sampling strategy and data collection the research employed stratified purposive sampling to ensure adequate representation across the three target consumer segments. following sample size determination guidelines for structural equation modelling (hair et al., 2011), a minimum sample of 300 respondents was established, with approximately equal distribution across consumer segments. the final sample comprised 387 valid responses, exceeding the threshold for robust statistical analysis. data collection occurred through intercept surveys at multiple sites in hanoi, hue, and ho chi minh city, locations selected for their significance in both conical hat production and consumption. survey administration sites included traditional craft villages, cultural heritage sites, markets, and tourist destinations where palm-leaf conical hats were prominently displayed or sold (nguyen and nguyen, 2011). the sample included domestic vietnamese consumers (n=132), recruited through stratified sampling ensuring representation across age, gender, income, and urban/rural residence; expatriate residents (n=119), recruited through purposive sampling targeting individuals with minimum six-month residence in vietnam; and international tourists (n=136), recruited through intercept sampling with stratification across major source countries. the survey instrument was initially developed in english and subsequently translated into vietnamese using back-translation procedures (brislin, 1970). for international participants, multiple language versions were available, with multilingual research assistants providing clarification when necessary (schaffer and riordan, 2003). data collection spanned may to september 2016, encompassing both peak tourist season and normal domestic consumption periods, mitigating seasonal selection bias (steenkamp and baumgartner, 1998). the overall response rate was 78%, supporting sample representativeness. 3.3. measurement instrument development the measurement instrument underwent rigorous multi-stage development ensuring content validity, construct validity, and cross-cultural applicability. initial item generation drew upon established scales from consumer behaviour literature, adapted through supplementary qualitative research including expert interviews with artisanal producers and cultural heritage specialists (churchill, 1979). price perception was measured using adapted scales from lichtenstein et al. (1993) and dodds et al. (1991), capturing both absolute and relative price assessments. perceived value was operationalised through sweeney and soutar's (2001) perval scale, measuring four distinct value dimensions: functional value, economic value, emotional value, and social value. additional items specific to cultural heritage contexts were incorporated based on throsby's (2003) cultural value framework. perceived authenticity was measured using scales adapted from littrell et al. (1993) and cohen (1988), assessing consumer evaluations of product genuineness regarding materials, production methods, design elements, and cultural congruence. perceived craftsmanship was operationalised through items adapted from littrell et al. (1993), measuring consumer assessments of production quality, technical sophistication, and artisanal skill demonstration. consumer cultural capital was measured using adapted scales from holt (1998) and throsby (1999), assessing respondents' knowledge of vietnamese culture, familiarity with traditional crafts, and specific understanding of conical hat cultural significance. market knowledge asymmetry was assessed through items measuring respondents' self-reported familiarity with product attributes, pricing standards, and production processes (mishra et al., 1998). purchase intention was measured using established scales from dodds et al. (1991) and sweeney and soutar (2001), assessing the likelihood of purchasing a palm-leaf conical hat within specified timeframes and under different contextual conditions. all constructs employed multiple-item scales with 7-point likert response formats, maintaining consistency with established practice in consumer behaviour research (hair et al., 2011). 3.4. data analysis approach the analytical strategy employed a sophisticated multi-method approach combining covariance-based structural analysis with configurational analysis, enhancing validity while addressing the complementary capabilities of different analytical techniques for understanding complex consumer behaviour phenomena (woodside, 2013). asian business research journal, 2025, 10(5): 81-100 88 © 2025 by the author; licensee eastern centre of science and education, usa 3.4.1. preliminary analysis and data preparation initial data preparation included missing value analysis, outlier detection, and normality assessment following established protocols for structural equation modelling (hair et al., 2011). missing values (less than 2% of total data points) were addressed using the expectation-maximisation algorithm (schafer and graham, 2002). harman's single-factor test and marker variable techniques confirmed the absence of substantial method effects (podsakoff et al., 2003). 3.4.2. measurement model assessment the measurement model underwent rigorous evaluation using a comprehensive two-stage approach beginning with exploratory factor analysis (efa) followed by confirmatory factor analysis (cfa). efa employed principal component analysis with varimax rotation to verify construct dimensionality and identify potential cross-loadings requiring refinement (anderson and gerbing, 1988). subsequently, cfa using maximum likelihood estimation validated the measurement model structure and assessed construct validity (fornell and larcker, 1981). reliability assessment included evaluation of internal consistency through cronbach's alpha and composite reliability, with threshold values of 0.7 deemed acceptable (nunnally, 1978). indicator reliability was assessed through standardised factor loadings, with values exceeding 0.7 considered evidence of strong item-construct relationships (chin, 1998). convergent validity was evaluated using average variance extracted (ave), with values exceeding 0.5 indicating constructs explain more than 50% of the variance in their respective indicators (fornell and larcker, 1981). discriminant validity assessment employed both the fornell-larcker criterion and the heterotrait-monotrait (htmt) ratio of correlations, with values below 0.85 indicating distinct constructs (henseler et al., 2015). measurement invariance across consumer segments was established through multi-group confirmatory factor analysis, confirming configural, metric, and scalar invariance as prerequisites for meaningful cross-group comparisons (steenkamp and baumgartner, 1998). 3.4.3. structural model assessment the hypothesised relationships between constructs were tested using partial least squares structural equation modelling (pls-sem) implemented through smartpls4, selected for its suitability for complex models with multiple mediating and moderating effects (hair et al., 2011). the structural model was evaluated based on path coefficients, their statistical significance, and the coefficient of determination (r²) for endogenous constructs. bootstrapping procedures with 5,000 resamples were employed to assess path coefficient significance, providing robust standard errors and confidence intervals (chin, 1998). effect sizes (f²) were calculated to determine relationship practical significance, with values of 0.02, 0.15, and 0.35 indicating small, medium, and large effects, respectively (cohen, 1988). mediation analyses followed procedures recommended by zhao et al. (2010), assessing direct and indirect effects to determine mediation types. moderation effects were tested using the product indicator approach, creating interaction terms between moderator variables and predictor variables (chin et al., 2003). multi-group analysis compared structural relationships across the three consumer segments using the plsmga procedure to determine whether path coefficients differed significantly across groups (henseler et al., 2009). 3.4.4. fuzzy-set qualitative comparative analysis complementing the variance-based structural analysis, fuzzy-set qualitative comparative analysis (fsqca) identified configurational pathways leading to high purchase intention. this set-theoretic approach accommodates causal complexity through conjunctural causation and equifinality (ragin, 2008). data calibration transformed survey measures into fuzzy-set membership scores ranging from 0 (full nonmembership) to 1 (full membership) using both theoretical knowledge and empirical distribution information (woodside, 2013). truth table analysis identified configurations consistently associated with high purchase intention, with consistency thresholds of 0.80 and coverage thresholds of 0.50 applied to identify substantively meaningful solutions (fiss, 2011). the fsqca analysis specifically examined how different configurations of price perception, value dimensions, authenticity perceptions, and craftsmanship evaluations combine to produce high purchase intention across different consumer segments, recognising that different consumer segments may employ distinct evaluative logics when considering heritage product purchases (woodside, 2013). 3.5. ethical considerations this research adhered to rigorous ethical standards throughout. informed consent was obtained from all participants, with clear explanations of research purposes, voluntary participation, and confidentiality protections. the survey instrument underwent institutional review board approval prior to field implementation. particular attention was given to cross-cultural ethical considerations, ensuring that survey procedures respected cultural differences whilst maintaining methodological integrity (marshall and batten, 2004). local cultural consultants reviewed research protocols to identify potentially problematic practices, with appropriate adjustments implemented to ensure cultural sensitivity. data protection protocols included response anonymisation, secure data storage, and controlled access limited to authorised research team members, ensuring participant privacy protection while maintaining data integrity (israel and hay, 2006). asian business research journal, 2025, 10(5): 81-100 89 © 2025 by the author; licensee eastern centre of science and education, usa 4. research findings 4.1. measurement model assessment the measurement model assessment followed a comprehensive procedure beginning with exploratory factor analysis, followed by confirmatory factor analysis and various validity and reliability tests. this rigorous evaluation ensured that all constructs demonstrated appropriate psychometric properties before hypothesis testing. 4.1.1. exploratory factor analysis exploratory factor analysis employing principal component analysis with varimax rotation was conducted to examine the underlying structure of the measurement items. the kaiser-meyer-olkin (kmo) measure of sampling adequacy was 0.893, exceeding the recommended threshold of 0.7, whilst bartlett's test of sphericity was significant (χ² = 9427.36, df = 780, p < 0.001), indicating sufficient correlations among variables for factor analysis. the analysis revealed eight distinct factors with eigenvalues exceeding 1.0, collectively explaining 74.68% of the total variance. all items loaded on their intended constructs with factor loadings exceeding 0.6, and crossloadings below 0.3, demonstrating appropriate indicator-construct relationships. items demonstrating crossloadings exceeding 0.3 were eliminated to ensure factor distinctiveness, resulting in the removal of three items from subsequent analysis. table 1. exploratory factor analysis results. construct items factor loadings eigenvalue variance explained (%) price perception (pp) pp1 0.836 4.78 12.23 pp2 0.842 pp3 0.817 pp4 0.791 pp5 0.768 functional value (fv) fv1 0.823 3.97 10.16 fv2 0.847 fv3 0.831 fv4 0.814 economic value (ev) ev1 0.765 3.42 8.74 ev2 0.793 ev3 0.815 ev4 0.786 emotional value (emv) emv1 0.829 3.81 9.76 emv2 0.851 emv3 0.873 emv4 0.834 social value (sv) sv1 0.784 3.56 9.13 sv2 0.807 sv3 0.825 sv4 0.791 perceived authenticity (pa) pa1 0.753 3.39 8.68 pa2 0.787 pa3 0.762 pa4 0.795 perceived craftsmanship (pc) pc1 0.842 3.64 9.33 pc2 0.834 pc3 0.815 pc4 0.852 purchase intention (pi) pi1 0.831 2.68 6.86 pi2 0.847 pi3 0.795 pi4 0.809 note: kmo = 0.893; bartlett's test of sphericity: χ² = 9427.36, df = 780, p < 0.001; total variance explained = 74.68%. factor loadings < 0.3 are suppressed. 4.1.2. confirmatory factor analysis confirmatory factor analysis was conducted to validate the measurement model structure and assess construct validity. the model demonstrated satisfactory fit with the data: χ²/df = 2.37 (below the threshold of 3.0), comparative fit index (cfi) = 0.936 (exceeding the threshold of 0.9), tucker-lewis index (tli) = 0.927 (exceeding the threshold of 0.9), and root mean square error of approximation (rmsea) = 0.059 (below the threshold of 0.08), indicating appropriate structural validity. all standardised factor loadings exceeded 0.7 and were statistically significant (p < 0.001), demonstrating strong relationships between indicators and their respective constructs. the loadings ranged from 0.723 to 0.892, with an average loading of 0.813, providing evidence of indicator reliability. asian business research journal, 2025, 10(5): 81-100 90 © 2025 by the author; licensee eastern centre of science and education, usa table 2. confirmatory factor analysis results. construct items standardised factor loadings t-value p-value price perception (pp) pp1 0.846 22.67 <0.001 pp2 0.857 23.18 <0.001 pp3 0.823 21.63 <0.001 pp4 0.805 20.92 <0.001 pp5 0.779 19.87 <0.001 functional value (fv) fv1 0.829 21.78 <0.001 fv2 0.862 23.41 <0.001 fv3 0.838 22.16 <0.001 fv4 0.825 21.63 <0.001 economic value (ev) ev1 0.778 19.85 <0.001 ev2 0.809 21.14 <0.001 ev3 0.824 21.73 <0.001 ev4 0.795 20.63 <0.001 emotional value (emv) emv1 0.842 22.37 <0.001 emv2 0.867 23.62 <0.001 emv3 0.892 24.89 <0.001 emv4 0.846 22.51 <0.001 social value (sv) sv1 0.795 20.64 <0.001 sv2 0.823 21.72 <0.001 sv3 0.841 22.35 <0.001 sv4 0.809 21.15 <0.001 perceived authenticity (pa) pa1 0.764 19.37 <0.001 pa2 0.802 20.86 <0.001 pa3 0.775 19.78 <0.001 pa4 0.807 21.05 <0.001 perceived craftsmanship (pc) pc1 0.857 23.14 <0.001 pc2 0.846 22.52 <0.001 pc3 0.823 21.73 <0.001 pc4 0.867 23.61 <0.001 purchase intention (pi) pi1 0.843 22.41 <0.001 pi2 0.862 23.37 <0.001 pi3 0.809 21.14 <0.001 pi4 0.823 21.73 <0.001 note: model fit indices: χ²/df = 2.37, cfi = 0.936, tli = 0.927, rmsea = 0.059. 4.1.3. reliability and validity assessment internal consistency reliability was assessed using both cronbach's alpha and composite reliability. all constructs demonstrated cronbach's alpha values exceeding 0.8, indicating high internal consistency. composite reliability values ranged from 0.857 to 0.912, all exceeding the recommended threshold of 0.7, providing additional evidence of construct reliability. convergent validity was evaluated using average variance extracted (ave), with all constructs demonstrating ave values exceeding 0.6, substantially above the recommended threshold of 0.5. this indicates that each construct explains more than 60% of the variance in its respective indicators, demonstrating appropriate convergent validity. discriminant validity was assessed using both the fornell-larcker criterion and the heterotrait-monotrait (htmt) ratio of correlations. the fornell-larcker analysis confirmed that the square root of ave for each construct exceeded its correlations with all other constructs, indicating appropriate discriminant validity. additionally, all htmt ratios fell below the conservative threshold of 0.85, further supporting the distinctiveness of the constructs. table 3. reliability and convergent validity assessment. construct cronbach's alpha composite reliability average variance extracted (ave) price perception (pp) 0.896 0.912 0.675 functional value (fv) 0.883 0.907 0.709 economic value (ev) 0.847 0.864 0.642 emotional value (emv) 0.912 0.936 0.745 social value (sv) 0.869 0.893 0.676 perceived authenticity (pa) 0.839 0.857 0.620 perceived craftsmanship (pc) 0.892 0.918 0.723 purchase intention (pi) 0.878 0.901 0.697 note: threshold values for acceptable reliability and validity: cronbach's alpha > 0.7; composite reliability > 0.7; ave > 0.5. asian business research journal, 2025, 10(5): 81-100 91 © 2025 by the author; licensee eastern centre of science and education, usa table 4. discriminant validity assessment (fornell-larcker criterion). construct pp fv ev emv sv pa pc pi price perception (pp) 0.822 functional value (fv) 0.428 0.842 economic value (ev) 0.539 0.473 0.801 emotional value (emv) 0.327 0.485 0.398 0.863 social value (sv) 0.289 0.412 0.356 0.523 0.822 perceived authenticity (pa) 0.376 0.493 0.423 0.572 0.486 0.787 perceived craftsmanship (pc) 0.402 0.532 0.417 0.497 0.418 0.531 0.850 purchase intention (pi) 0.394 0.476 0.458 0.527 0.485 0.543 0.567 0.835 note: the bold diagonal elements represent the square root of ave for each construct. off-diagonal elements represent inter-construct correlations. for discriminant validity, diagonal elements should exceed all off-diagonal elements in the same row and column. table 5. discriminant validity assessment (htmt ratio). construct pp fv ev emv sv pa pc pi price perception (pp) functional value (fv) 0.471 economic value (ev) 0.615 0.534 emotional value (emv) 0.358 0.546 0.452 social value (sv) 0.325 0.470 0.412 0.586 perceived authenticity (pa) 0.433 0.571 0.495 0.649 0.564 perceived craftsmanship (pc) 0.457 0.597 0.475 0.545 0.467 0.613 purchase intention (pi) 0.437 0.538 0.523 0.581 0.542 0.627 0.633 note: htmt values below 0.85 indicate good discriminant validity between constructs. 4.1.4. measurement invariance assessment multi-group confirmatory factor analysis was conducted to assess measurement invariance across the three consumer segments (domestic consumers, expatriate residents, and international tourists). the analysis confirmed configural invariance (same factor structure), metric invariance (same factor loadings), and partial scalar invariance (same intercepts for most indicators). this established sufficient equivalence to support meaningful cross-group comparisons in the structural model. table 6. measurement invariance assessment across consumer segments. invariance level χ² df χ²/df cfi tli rmsea δcfi δrmsea configural invariance 2376.54 1167 2.04 0.921 0.913 0.052 metric invariance 2493.17 1231 2.03 0.918 0.915 0.051 0.003 0.001 scalar invariance 2689.23 1295 2.08 0.909 0.910 0.053 0.009 0.002 partial scalar invariance* 2583.65 1279 2.02 0.914 0.913 0.051 0.004 0.000 note: configural invariance = same factor structure; metric invariance = same factor loadings; scalar invariance = same intercepts. for adequate invariance, δcfi should be ≤ 0.01 and δrmsea should be ≤ 0.015. * partial scalar invariance was established by releasing equality constraints on 16 intercepts (approximately 15% of all intercepts). 4.2. structural estimation model assessment following validation of the measurement model, the structural model was evaluated to test the hypothesised relationships between constructs. the analysis examined both direct and indirect effects, assessing the mediating roles of value dimensions, perceived authenticity, and perceived craftsmanship, as well as the moderating effects of consumer cultural capital and market knowledge asymmetry. 4.2.1. direct effects analysis the structural model demonstrated satisfactory explanatory power for the primary dependent variable, with the coefficient of determination (r²) for purchase intention being 0.573, indicating that the model explained 57.3% of the variance in consumer purchase intentions. the r² values for mediating variables ranged from 0.437 to 0.512, demonstrating adequate explanatory power for these constructs as well. path analysis revealed significant direct effects consistent with theoretical expectations. price perception demonstrated a significant direct effect on purchase intention (β = 0.182, p < 0.01), supporting the fundamental relationship between price evaluations and behavioural intentions. however, the strength of this direct effect was moderate compared to the effects observed through mediating pathways, suggesting that price influences purchase decisions primarily through its impact on intervening variables. asian business research journal, 2025, 10(5): 81-100 92 © 2025 by the author; licensee eastern centre of science and education, usa table 7. direct effects in the structural model. path path coefficient (β) t-value p-value f² supported price perception → purchase intention 0.182 3.67 <0.01 0.045 yes price perception → functional value 0.428 9.37 <0.001 0.224 yes price perception → economic value 0.539 12.38 <0.001 0.409 yes price perception → emotional value 0.327 6.89 <0.001 0.120 yes price perception → social value 0.289 5.63 <0.001 0.091 yes price perception → perceived authenticity 0.376 7.95 <0.001 0.164 yes price perception → perceived craftsmanship 0.402 8.67 <0.001 0.193 yes functional value → purchase intention 0.196 3.84 <0.001 0.047 yes economic value → purchase intention 0.215 4.29 <0.001 0.057 yes emotional value → purchase intention 0.237 4.83 <0.001 0.067 yes social value → purchase intention 0.221 4.46 <0.001 0.059 yes perceived authenticity → purchase intention 0.254 5.17 <0.001 0.078 yes perceived craftsmanship → purchase intention 0.293 6.12 <0.001 0.105 yes note: f² values of 0.02, 0.15, and 0.35 represent small, medium, and large effect sizes, respectively. the analysis revealed that price perception significantly influenced all mediating variables, including the four value dimensions (functional, economic, emotional, and social value), perceived authenticity, and perceived craftsmanship. the strongest effect was observed for economic value (β = 0.539, p < 0.001, f² = 0.409), followed by functional value (β = 0.428, p < 0.001, f² = 0.224), indicating that price perceptions most strongly influence rational value assessments related to economic worth and functional performance. all mediating variables demonstrated significant positive effects on purchase intention, with perceived craftsmanship showing the strongest influence (β = 0.293, p < 0.001, f² = 0.105), followed by perceived authenticity (β = 0.254, p < 0.001, f² = 0.078) and emotional value (β = 0.237, p < 0.001, f² = 0.067). this pattern suggests that for palm-leaf conical hats, quality craftsmanship and authentic cultural representation function as primary drivers of purchase decisions, more influential than purely economic considerations. 4.2.2. mediation analysis mediation analysis was conducted to assess the indirect effects of price perception on purchase intention through the various mediating variables. the analysis revealed significant indirect effects through all hypothesised mediating pathways, with the total indirect effect (β = 0.493, p < 0.001) substantially exceeding the direct effect (β = 0.182, p < 0.01). this pattern indicates complementary partial mediation, wherein price perception influences purchase intention both directly and indirectly through multiple pathways. table 8. indirect effects and mediation analysis. indirect path indirect effect t-value p-value 95% ci mediation type pp → fv → pi 0.084 3.48 <0.001 [0.036, 0.132] complementary pp → ev → pi 0.116 4.09 <0.001 [0.059, 0.173] complementary pp → emv → pi 0.078 3.96 <0.001 [0.039, 0.117] complementary pp → sv → pi 0.064 3.42 <0.001 [0.027, 0.101] complementary pp → pa → pi 0.096 4.52 <0.001 [0.054, 0.138] complementary pp → pc → pi 0.118 5.03 <0.001 [0.072, 0.164] complementary total indirect effect 0.493 11.87 <0.001 [0.412, 0.574] complementary note: pp = price perception; fv = functional value; ev = economic value; emv = emotional value; sv = social value; pa = perceived authenticity; pc = perceived craftsmanship; pi = purchase intention. complementary mediation indicates that both direct and indirect effects exist and point in the same direction. among the indirect pathways, the strongest mediation effect occurred through perceived craftsmanship (β = 0.118, p < 0.001), followed by economic value (β = 0.116, p < 0.001) and perceived authenticity (β = 0.096, p < 0.001). this pattern suggests that for palm-leaf conical hats, price perceptions influence purchase decisions most strongly through their signalling effect on craftsmanship quality, followed by economic value considerations and authenticity assessments. the bootstrapped confidence intervals for all indirect effects excluded zero, providing statistical confirmation of mediation effects. the complementary mediation pattern observed across all pathways indicates that while price perception has a significant direct influence on purchase intentions, a substantial portion of its impact occurs through its influence on value perceptions, authenticity assessments, and craftsmanship evaluations. 4.2.3. moderation analysis the structural model incorporated two moderating variables: consumer cultural capital and market knowledge asymmetry. moderation analysis examined how these variables influenced the strength of relationships between price perception and the mediating variables, as well as between the mediating variables and purchase intention. asian business research journal, 2025, 10(5): 81-100 93 © 2025 by the author; licensee eastern centre of science and education, usa table 9. moderation effects analysis. moderation path path coefficient (β) t-value p-value f² supported consumer cultural capital (ccc) as moderator ccc × (pp → fv) 0.119 2.43 <0.05 0.024 yes ccc × (pp → ev) 0.074 1.52 0.129 0.009 no ccc × (pp → emv) 0.163 3.42 <0.001 0.037 yes ccc × (pp → sv) 0.187 3.89 <0.001 0.048 yes ccc × (pp → pa) 0.238 5.12 <0.001 0.079 yes ccc × (pp → pc) 0.206 4.38 <0.001 0.058 yes ccc × (pa → pi) 0.195 4.14 <0.001 0.052 yes ccc × (pc → pi) 0.174 3.68 <0.001 0.041 yes market knowledge asymmetry (mka) as moderator mka × (pp → fv) -0.156 3.27 <0.01 0.035 yes mka × (pp → ev) -0.183 3.92 <0.001 0.047 yes mka × (pp → emv) -0.089 1.87 0.062 0.011 no mka × (pp → sv) -0.067 1.38 0.168 0.006 no mka × (pp → pa) -0.169 3.58 <0.001 0.039 yes mka × (pp → pc) -0.197 4.18 <0.001 0.053 yes mka × (ev → pi) -0.145 3.02 <0.01 0.029 yes mka × (pa → pi) -0.126 2.63 <0.01 0.023 yes note: pp = price perception; fv = functional value; ev = economic value; emv = emotional value; sv = social value; pa = perceived authenticity; pc = perceived craftsmanship; pi = purchase intention; ccc = consumer cultural capital; mka = market knowledge asymmetry. f² values of 0.02, 0.15, and 0.35 represent small, medium, and large effect sizes, respectively. consumer cultural capital demonstrated significant positive moderating effects on the relationships between price perception and most mediating variables, with the strongest moderation observed for the relationship between price perception and perceived authenticity (β = 0.238, p < 0.001, f² = 0.079). this indicates that consumers with higher cultural capital more strongly associate price with authenticity evaluations, likely reflecting their enhanced ability to recognise and appreciate authentic cultural elements. cultural capital also significantly moderated the relationships between perceived authenticity and purchase intention (β = 0.195, p < 0.001, f² = 0.052) and between perceived craftsmanship and purchase intention (β = 0.174, p < 0.001, f² = 0.041). these moderation effects indicate that consumers with higher cultural capital place greater emphasis on authenticity and craftsmanship when making purchase decisions, consistent with theoretical expectations regarding how cultural knowledge influences value assessments for heritage products. market knowledge asymmetry demonstrated significant negative moderating effects on the relationships between price perception and rational value dimensions (functional value and economic value), as well as on relationships involving perceived authenticity and perceived craftsmanship. the strongest negative moderation was observed for the relationship between price perception and perceived craftsmanship (β = -0.197, p < 0.001, f² = 0.053), indicating that consumers experiencing higher information asymmetry rely less on price as an indicator of craftsmanship quality. the negative moderation effects of market knowledge asymmetry suggest that when consumers perceive significant information disparities regarding appropriate product evaluation, they become more sceptical about using price as a quality or value indicator. this pattern aligns with theoretical perspectives on how information asymmetry influences market functioning, particularly for experience goods like cultural heritage products where quality assessment requires specialised knowledge. 4.2.4. multi-group analysis multi-group analysis was conducted to compare structural relationships across the three consumer segments: domestic vietnamese consumers, expatriate residents, and international tourists. the analysis revealed significant differences in relationship patterns across these groups, indicating contextually contingent evaluation frameworks. asian business research journal, 2025, 10(5): 81-100 94 © 2025 by the author; licensee eastern centre of science and education, usa table 10. multi-group analysis across consumer segments. path domestic consumers (n=132) expatriate residents (n=119) international tourists (n=136) significant group differences (p < 0.05) price perception → purchase intention 0.097 0.187* 0.261** dm < it price perception → functional value 0.537*** 0.425*** 0.329*** dm > it price perception → economic value 0.621*** 0.546*** 0.459*** dm > it price perception → emotional value 0.213** 0.329*** 0.439*** dm < it price perception → social value 0.186* 0.276** 0.406*** dm < it price perception → perceived authenticity 0.262** 0.365*** 0.504*** dm < it price perception → perceived craftsmanship 0.308*** 0.389*** 0.512*** dm < it functional value → purchase intention 0.278*** 0.205** 0.104 dm > it economic value → purchase intention 0.312*** 0.227** 0.109 dm > it emotional value → purchase intention 0.174* 0.231** 0.307*** dm < it social value → purchase intention 0.152* 0.208** 0.301*** dm < it perceived authenticity → purchase intention 0.194* 0.246** 0.325*** dm < it perceived craftsmanship → purchase intention 0.226** 0.283*** 0.371*** dm < it note: dm = domestic consumers; er = expatriate residents; it = international tourists. significance levels: * p < 0.05; ** p < 0.01; *** p < 0.001. the multi-group analysis revealed distinctive relationship patterns across consumer segments. for domestic vietnamese consumers, the strongest predictors of purchase intention were economic value (β = 0.312, p < 0.001) and functional value (β = 0.278, p < 0.001), with authenticity and emotional dimensions demonstrating weaker effects. this pattern suggests that domestic consumers primarily evaluate conical hats through practical and economic lenses, consistent with their utilitarian usage patterns and greater market familiarity. in contrast, international tourists demonstrated a reversed pattern, with perceived craftsmanship (β = 0.371, p < 0.001), perceived authenticity (β = 0.325, p < 0.001), and emotional value (β = 0.307, p < 0.001) functioning as the strongest purchase drivers. for this segment, functional and economic value dimensions demonstrated nonsignificant or weak relationships with purchase intention, reflecting the souvenir-oriented acquisition motivations of international visitors. expatriate residents exhibited an intermediate pattern, with significant effects observed across all value dimensions, albeit with stronger emphasis on experiential aspects (craftsmanship, authenticity, and emotional value) compared to domestic consumers. this balanced pattern suggests that extended residence fosters appreciation for cultural aspects while maintaining pragmatic considerations, creating a hybrid evaluation framework. the relationship between price perception and perceived authenticity demonstrated the largest cross-group difference, with international tourists showing a much stronger association (β = 0.504, p < 0.001) compared to domestic consumers (β = 0.262, p < 0.01). this substantial difference indicates that international visitors rely more heavily on price as an authenticity signal, likely reflecting their limited alternative assessment mechanisms due to cultural distance and product unfamiliarity. 4.2.5. predictive relevance and model robustness the structural model's predictive relevance was assessed using stone-geisser's q² value obtained through blindfolding procedures. all endogenous constructs demonstrated q² values exceeding zero, with purchase intention showing a q² value of 0.384, indicating substantial predictive relevance. table 11. model fit and predictive relevance. construct r² adjusted r² q² functional value 0.437 0.429 0.296 economic value 0.507 0.501 0.317 emotional value 0.465 0.457 0.328 social value 0.442 0.435 0.287 perceived authenticity 0.491 0.484 0.294 perceived craftsmanship 0.512 0.505 0.356 purchase intention 0.573 0.562 0.384 note: r² values of 0.25, 0.50, and 0.75 represent weak, moderate, and substantial explanatory power, respectively. q² values > 0 indicate predictive relevance, with larger values indicating greater relevance. additional robustness checks included a nonlinear effects assessment using quadratic terms for price perception. this analysis revealed small but significant quadratic effects for the relationship between price perception and perceived authenticity (β = 0.117, p < 0.05) and between price perception and perceived asian business research journal, 2025, 10(5): 81-100 95 © 2025 by the author; licensee eastern centre of science and education, usa craftsmanship (β = 0.109, p < 0.05), suggesting slight curvilinear relationships wherein extremely high or low prices may disproportionately influence these assessments. 4.3. fuzzy-set qualitative comparative analysis (fsqca) to complement the variance-based structural analysis, fuzzy-set qualitative comparative analysis (fsqca) was employed to identify configurational pathways leading to high purchase intention. this set-theoretic approach accommodates causal complexity through conjunctural causation and equifinality, identifying multiple sufficient pathways to the same outcome. 4.3.1. calibration procedures survey measures were transformed into fuzzy-set membership scores ranging from 0 (full non-membership) to 1 (full membership) through calibration procedures using both theoretical knowledge and empirical distribution information. for each construct, the 95th percentile value was set as the threshold for full membership (fuzzy score = 0.95), the 5th percentile as the threshold for full non-membership (fuzzy score = 0.05), and the median as the crossover point (fuzzy score = 0.5). 4.3.2. necessity analysis analysis of necessary conditions examined whether any individual condition demonstrated consistency scores exceeding the threshold of 0.9, indicating that the condition is necessary for the outcome to occur. no individual condition reached this threshold, suggesting that high purchase intention results from complex combinations of conditions rather than any single dominant factor. table 12. analysis of necessary conditions. condition consistency coverage high price perception 0.731 0.781 ~high price perception 0.427 0.686 high functional value 0.742 0.817 ~high functional value 0.412 0.642 high economic value 0.768 0.835 ~high economic value 0.392 0.618 high emotional value 0.815 0.857 ~high emotional value 0.356 0.583 high social value 0.784 0.819 ~high social value 0.374 0.598 high perceived authenticity 0.831 0.863 ~high perceived authenticity 0.334 0.554 high perceived craftsmanship 0.857 0.876 ~high perceived craftsmanship 0.312 0.529 high consumer cultural capital 0.726 0.795 ~high consumer cultural capital 0.431 0.648 high market knowledge asymmetry 0.412 0.631 ~high market knowledge asymmetry 0.745 0.813 note: "~" denotes the negation (absence) of the condition. for necessity, consistency values should exceed 0.9, which no single condition achieves. while no condition reached the necessity threshold, high perceived craftsmanship (consistency = 0.857) and high perceived authenticity (consistency = 0.831) demonstrated the strongest relationships with high purchase intention. this pattern aligns with the sem findings regarding the importance of these factors in consumer decision making for heritage products, particularly for the international tourist segment. 4.3.3. sufficiency analysis truth table analysis examined which configurations of conditions consistently led to high purchase intention, with consistency thresholds of 0.8 and coverage thresholds of 0.5 applied to identify substantively meaningful solutions. the analysis revealed multiple sufficient pathways to high purchase intention, supporting the equifinality principle wherein different causal recipes can produce the same outcome. asian business research journal, 2025, 10(5): 81-100 96 © 2025 by the author; licensee eastern centre of science and education, usa table 13. sufficient configurations for high purchase intention. configuration path description raw coverage unique coverage consistency primary consumer segment solution 1 pp•ev•fv•~emv•~sv•~pa•~pc•~ccc•~ mka 0.324 0.178 0.827 domestic consumers solution 2 pp•ev•fv•~emv•~sv•~pa•pc•ccc•~m ka 0.302 0.156 0.845 domestic consumers solution 3 ~pp•ev•fv•~emv•~sv•pa•pc•ccc•~m ka 0.278 0.132 0.836 domestic consumers solution 4 pp•~ev•~fv•emv•sv•pa•pc•ccc•mka 0.347 0.185 0.913 international tourists solution 5 pp•~ev•~fv•emv•sv•pa•pc•ccc•~mk a 0.326 0.164 0.896 international tourists solution 6 ~pp•~ev•~fv•emv•sv•pa•pc•ccc•~m ka 0.293 0.142 0.879 international tourists solution 7 pp•ev•fv•emv•sv•pa•pc•ccc•~mka 0.319 0.157 0.868 expatriate residents solution 8 pp•ev•fv•emv•~sv•pa•pc•ccc•~mka 0.297 0.138 0.853 expatriate residents overall solution 0.748 0.831 note: pp = high price perception; ev = high economic value; fv = high functional value; emv = high emotional value; sv = high social value; pa = high perceived authenticity; pc = high perceived craftsmanship; ccc = high consumer cultural capital; mka = high market knowledge asymmetry. "•" denotes the logical and, "~" denotes the negation (absence) of the condition. the fsqca results revealed eight sufficient configurations leading to high purchase intention, with an overall solution coverage of 0.748 and consistency of 0.831. these solutions clustered into three distinct patterns corresponding to the three consumer segments identified in the structural analysis. for domestic vietnamese consumers (solutions 1-3), the sufficient configurations consistently included functional and economic value components, with varying roles for price perception, craftsmanship, and authenticity. notably, emotional and social value dimensions were consistently absent from these configurations, reinforcing the finding that domestic consumers primarily employ practical evaluation frameworks emphasising utility and price-quality relationships. for international tourists (solutions 4-6), the sufficient configurations showed an inverted pattern, consistently including emotional value, social value, perceived authenticity, and perceived craftsmanship, while excluding functional and economic value dimensions. this pattern aligns with the souvenir-oriented acquisition motivations of tourists, who prioritise cultural experience and symbolic dimensions over practical utility. for expatriate residents (solutions 7-8), the sufficient configurations demonstrated more comprehensive evaluation frameworks incorporating both practical dimensions (functional and economic value) and experiential aspects (emotional value, authenticity, and craftsmanship). this hybrid pattern likely reflects their intermediate position between purely utilitarian domestic consumption and purely symbolic tourist acquisition. consumer cultural capital featured prominently in most sufficient configurations (7 of 8 solutions), while market knowledge asymmetry appeared in only one configuration (solution 4). this pattern suggests that cultural knowledge functions as a critical enabler for heritage product appreciation across most consumer types, while information asymmetry primarily influences specific international tourist evaluation frameworks. 4.3.4. segment-specific analysis to further explore segment-specific patterns, separate fsqca analyses were conducted for each consumer segment, revealing additional configurational nuances within each group. table 14. segment-specific fsqca results consumer segment key causal configurations overall solution coverage overall solution consistency domestic consumers (n=132) •pp•ev•fv•~pa•~pc •pp•ev•fv•pc•~ccc •~pp•ev•fv•pc•ccc 0.685 0.842 expatriate residents (n=119) •pp•ev•fv•emv•pa•pc •pp•ev•fv•~emv•pa•pc•ccc •pp•~ev•~fv•emv•sv•pa•pc•ccc 0.712 0.859 international tourists (n=136) •pp•~ev•~fv•emv•sv•pa•pc •pp•~ev•~fv•emv•sv•pa•pc•mka •~pp•~ev•~fv•emv•sv•pa•pc•ccc 0.763 0.891 note: pp = high price perception; ev = high economic value; fv = high functional value; emv = high emotional value; sv = high social value; pa = high perceived authenticity; pc = high perceived craftsmanship; ccc = high consumer cultural capital; mka = high market knowledge asymmetry. "•" denotes the logical and, "~" denotes the negation (absence) of the condition. the segment-specific analysis reinforced the distinct evaluation frameworks employed by different consumer groups, while revealing additional causal complexity within each segment. for domestic consumers, functional and economic value consistently appeared across all sufficient configurations, confirming their central role in local consumption decisions. however, the analysis also revealed nuanced relationships with craftsmanship and cultural capital, suggesting different evaluation sub-patterns within this segment based on cultural knowledge and quality sensitivity. for international tourists, the segment-specific analysis confirmed the primacy of experiential and symbolic dimensions (emotional value, social value, authenticity, and craftsmanship) while revealing differential roles for asian business research journal, 2025, 10(5): 81-100 97 © 2025 by the author; licensee eastern centre of science and education, usa price perception and market knowledge asymmetry. this suggests potential sub-segmentation within the tourist market based on price sensitivity and market knowledge, with implications for targeted marketing strategies. for expatriate residents, the segment-specific analysis revealed greater configurational complexity compared to other segments, with more causal components featuring in sufficient configurations. this pattern suggests more complex decision frameworks incorporating elements from both domestic and tourist evaluation logics, reflecting their hybrid market position. 5. discussion of research results and conclusions 5.1. theoretical implications the empirical findings from this investigation offer significant contributions to theoretical understanding of consumer behaviour in cultural heritage markets, particularly within transitional economic contexts. the results extend existing theoretical frameworks through nuanced insights into the complex interrelationships between price perception, value attribution, and purchase decisions for artisanal products. this research advances price perception theory by demonstrating that within heritage product contexts, price functions not merely as an economic indicator but as a complex semiotic vehicle encoding multiple meaning dimensions. the robust relationships observed between price perception and various mediating variables support zeithaml's (1988) theoretical proposition regarding price as a multidimensional quality cue. however, the segmentspecific variations extend theoretical understanding by revealing how different consumer groups employ distinct price interpretation frameworks depending on cultural background, product familiarity, and consumption motivations. this contextual contingency aligns with thompson and troester's (2002) arguments regarding the microcultural embeddedness of consumer meaning systems. the mediation analysis results contribute to theoretical advancement by delineating the complex pathways through which price influences purchase decisions for cultural products. the finding that the total indirect effect of price perception substantially exceeded its direct effect on purchase intention supports holbrook and hirschman's (1982) theoretical distinction between utilitarian and experiential consumption, demonstrating how price influences purchasing primarily through experiential value dimensions rather than through economic trade-off calculations. this pattern adds empirical specificity to throsby's (2001) framework distinguishing between economic and cultural value in heritage contexts. the configurational analysis further advances theoretical understanding by identifying multiple sufficient pathways to high purchase intention, supporting the equifinality principle wherein different causal recipes produce identical outcomes. this finding extends vargo and lusch's (2004) service-dominant logic by demonstrating how value co-creation occurs through diverse consumer-specific interpretive frameworks rather than through universal value-assessment mechanisms. the identification of segment-specific configurations provides empirical support for thompson's (2004) arguments regarding how consumer meaning-making processes reflect broader sociocultural frameworks. the moderating effects of consumer cultural capital offer important theoretical insights regarding how bourdieusian capital forms influence market functioning for cultural goods. the finding that cultural capital significantly enhanced the relationship between price perception and perceived authenticity supports holt's (1998) proposition that consumers with greater cultural capital employ more sophisticated interpretive frameworks when evaluating symbolic products. this moderating effect extends throsby's (1999) work on cultural capital in heritage contexts by demonstrating its operational mechanisms in consumer decision processes. the stronger influence of authenticity and craftsmanship on purchase intentions for consumers with higher cultural capital provides empirical validation for bourdieu's (1984) framework regarding how aesthetic disposition influences consumption preferences. market knowledge asymmetry's negative moderating effects on price-quality inferences offer theoretical insights regarding information economics in cultural product markets. this pattern aligns with rao and monroe's (1989) work on price-quality inferences under uncertainty, whilst extending it to heritage product contexts where quality assessment requires specialised cultural knowledge. 5.2. managerial implications for artisanal producers, the research findings highlight the importance of market segmentation and targeted product differentiation. the distinct value attribution patterns observed across consumer segments suggest that producers should develop differentiated product lines addressing specific segment preferences—for domestic consumers, emphasising functional durability and economic value; for international tourists, highlighting authentic production methods and cultural symbolism; for expatriate residents, balancing functional and symbolic dimensions. the strong mediating effect of perceived craftsmanship underscores the importance of craft visibility in marketing strategies. producers should consider implementing production demonstrations, workshop tours, and transparent communication regarding production processes to enhance craftsmanship perceptions, particularly for international tourists. the moderating effect of consumer cultural capital suggests significant opportunities for educational marketing approaches. by providing consumers with relevant cultural context and product knowledge, producers can enhance cultural capital, thereby strengthening the relationship between price perception and value assessment. educational initiatives might include interpretive displays explaining cultural symbolism, historical significance, and craftsmanship techniques. for tourism authorities, the research findings offer valuable insights for developing cultural tourism experiences that generate sustainable value for both visitors and local communities. the strong influence of authenticity and craftsmanship on tourist purchase decisions suggests that promoting authentic cultural experiences would enhance visitor satisfaction while supporting cultural preservation. developing integrated tourism experiences linking traditional craft villages with broader cultural narratives could create mutually reinforcing value propositions. asian business research journal, 2025, 10(5): 81-100 98 © 2025 by the author; licensee eastern centre of science and education, usa for cultural heritage preservation agencies, the research highlights how market dynamics influence the sustainability of traditional craft practices. supporting product adaptations that maintain core cultural elements while addressing contemporary market preferences could enhance economic viability without compromising essential heritage values. 5.3. limitations and future research directions several limitations warrant acknowledgement. the cross-sectional design captures relationships at a specific point in time, limiting causal inferences and understanding of temporal dynamics. future longitudinal research could provide more robust insights regarding temporal dynamics in transitional heritage markets. the research focused specifically on palm-leaf conical hats within vietnam, potentially limiting generalisability. future comparative research examining multiple heritage products across different cultural settings would enhance theoretical understanding of which patterns reflect universal heritage consumption dynamics versus culturally specific manifestations. the study relied primarily on survey methodologies capturing self-reported attitudes rather than observing actual purchase behaviours. future research employing field experiments with actual price variations and purchase tracking would provide more robust evidence regarding how price perceptions translate into behavioural outcomes. while the research model incorporated consumer cultural capital and market knowledge asymmetry as moderating variables, other potentially relevant moderators warrant investigation, including regulatory focus, decision-making styles, or cultural dimensions. additionally, contextual moderators like purchase occasion or consumption setting might significantly influence how consumers evaluate heritage products. 5.4. conclusion this research offers nuanced insights into the complex dialectical relationships between price perception and consumer value attribution within vietnam's artisanal cultural heritage markets. through sophisticated methodological triangulation, the study reveals how price functions as a complex semiotic vehicle mediating relationships between cultural authenticity, perceived craftsmanship, and consumer identity construction. the empirical findings demonstrate that different consumer segments employ fundamentally distinct evaluation frameworks when assessing identical heritage products. while domestic consumers prioritise functional utility and economic value, international tourists emphasise authenticity, craftsmanship, and symbolic dimensions, and expatriate residents integrate elements from both frameworks. these segment-specific patterns reflect different consumption motivations, cultural backgrounds, and market knowledge levels. the research further reveals how consumer cultural capital and market knowledge asymmetry significantly moderate price-value relationships, with cultural capital enhancing authenticity associations while information asymmetry reduces price-quality inferences. these moderating effects highlight the importance of educational marketing approaches and transparency initiatives for enhancing market functioning in heritage contexts. this research contributes to theoretical advancement regarding consumer behaviour in heritage markets within transitional economies, demonstrating how traditional products navigate complex tensions between cultural preservation and market adaptation. for stakeholders, this research offers practical insights for developing market strategies that simultaneously support economic sustainability and cultural preservation objectives through strategic market segmentation, educational marketing approaches, and craftsmanship visibility initiatives. in conclusion, this research illuminates the complex interplay between economic imperatives and cultural value systems in heritage product markets, providing both theoretical advancement and practical guidance for navigating these complexities within vietnam's transitional economy. the insights generated offer valuable direction for developing sustainable approaches to cultural heritage commercialisation that respect tradition while embracing necessary market evolution. acknowledgments: i would like to express my sincere gratitude to dr. hoang vu hiep for his invaluable guidance and inspiration throughout this research. his expertise, insights, and unwavering support have been instrumental in shaping the direction and quality of this study. i am deeply appreciative of his generosity in sharing his time, knowledge, and network, which have greatly contributed to the success of this research. his mentorship and commitment to academic excellence have not only enriched the quality of this work but have also had a profound impact on my personal and professional growth. references anderson, j. c., & gerbing, d. w. 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10.55220/2576-6759.529 © 2025 by the authors; licensee eastern centre of science and education, usa cash vs. accrual accounting for freelancers: an analysis from the uae corporate tax perspective manuel fernandez1  robinson joseph2 1em normandie business school, métis lab, dubai, united arab emirates. 2school of business, horizon university college, ajman, united arab emirates. email: qln_manuel@yahoo.com email: mrobinjose@gmail.com (corresponding author) abstract the introduction of corporate tax in the uae marks a significant development in the nation's fiscal landscape, prompting freelancers to reassess their accounting practices. this study explores the critical decision between cash basis and accrual accounting for freelancers operating under the uae corporate tax regime. by analysing the impact of different visa categories, including the freelance visa, golden visa, and investor visa, the study evaluates which accounting method aligns best with the financial structure, business goals, and compliance needs of freelancers. the findings suggest that freelancers with irregular cash flows and short-term visas benefit from the simplicity and liquidity management offered by cash basis accounting, which aligns taxable income with actual cash receipts. conversely, freelancers with long-term or investment-focused visas are better suited to accrual accounting, which provides a more accurate representation of earnings and expenses over time, crucial for business growth and financial planning. this study contributes to the ongoing discussion on tax compliance and accounting strategies in the uae, providing valuable insights into how freelancers can optimise their tax obligations and enhance business performance. the paper concludes by addressing the limitations of the research and recommending areas for further exploration, particularly in relation to quantitative analysis of tax impacts across different freelance industries. keywords: accounting methods, accrual accounting, cash accounting, freelancers, gcc, middle east, tax compliance, uae corporate tax. 1. introduction taxation forms the backbone of government revenue worldwide, enabling the funding of public services, infrastructure development, and national welfare initiatives. taxes can be classified broadly into different categories, including income tax, corporate tax, value-added tax (vat), excise duties, and customs duties. corporate tax, in particular, plays a crucial role in regulating businesses by requiring entities that generate profits to contribute a portion of their income to the state's coffers. corporate tax is a levy imposed on the profit of a corporation. this type of tax is typically calculated based on the corporation's net income, which is the total income after deducting allowable expenses and other deductions. corporate taxes are applied to entities of varying sizes, ranging from multinational companies to small and medium-sized enterprises (smes). the tax rate can vary from country to country and is designed to ensure that businesses contribute to the economic framework while maintaining the state's revenue flow. corporate tax promotes transparency and fosters a competitive business environment by aligning with international taxation standards. the uae introduced its federal corporate tax regime, effective as of june 1, 2023, with a standard tax rate of 9% on taxable profits exceeding aed 375,000 (approximately us$100,000). this initiative marked a significant shift in the uae’s fiscal policy, given that the country had historically maintained a tax-free reputation to attract businesses and expatriates. the implementation of corporate tax was driven by the uae's efforts to align with global tax practices and comply with international frameworks such as the oecd's base erosion and profit shifting (beps) measures. corporate tax applies to all uae-based legal entities, including mainland companies and branches of foreign companies operating in the uae. free zone businesses are also subject to tax, but they can benefit from a 0% tax rate under specific conditions related to economic substance regulations. freelancers earning over aed 375,000 annually also fall under the purview of the uae's corporate tax regime, adding a new layer of complexity to their financial management. the introduction of corporate tax in the uae has had far-reaching implications for businesses of all sizes, including the fast-growing gig economy, where freelancers operate as independent entities. the choice of accounting method—whether to use cash basis or accrual accounting—has become a pressing issue for freelancers as it affects the timing of income and expenses and, consequently, their tax liability. this study is crucial in mailto:qln_manuel@yahoo.com mailto:mrobinjose@gmail.com https://doi.org/10.55220/2576-6759.529 asian business research journal, 2025, 10(8): 11-15 12 © 2025 by the authors; licensee eastern centre of science and education, usa helping freelancers navigate the complexities of corporate tax compliance by examining which accounting method best aligns with their operational structure and financial realities. as freelancers often face fluctuating income streams and delayed payments, understanding the advantages and disadvantages of cash basis versus accrual accounting is vital for efficient tax management. by exploring this issue, the study contributes to the broader discussion of tax strategy and compliance for freelancers in the uae’s evolving regulatory environment. 2. theoretical review 2.1. taxation and accounting methods accounting methods play a crucial role in determining tax liabilities, particularly in contexts where revenue recognition varies depending on the method employed. the two primary accounting methods—cash basis and accrual basis—have been extensively studied in the literature regarding their impact on tax calculations and financial reporting. cash basis accounting records revenues and expenses only when cash transactions occur, making it a simpler and more immediate method of accounting, particularly suited for small businesses and freelancers (christensen & demski, 2006). in contrast, accrual accounting records revenues and expenses when they are earned or incurred, regardless of cash flow, which provides a more accurate representation of financial performance over time but introduces complexity into financial reporting (datar & rajan, 2023). studies have shown that the choice between these methods can significantly impact the reported taxable income. for businesses with fluctuating or seasonal incomes, such as freelancers, the cash basis method often aligns more closely with cash availability, thereby reducing tax burdens during lean periods. however, accrual accounting offers advantages in understanding long-term profitability for those seeking a clearer financial picture over multiple periods, although it may potentially inflate tax liabilities during periods of high accounts receivable. 2.2. freelancers and accounting choices the rise of the gig economy globally has prompted a surge of interest in how freelancers, as individual economic units, manage their finances and tax obligations. the literature on freelancers' financial practices has tended to emphasise their preference for simpler accounting methods, given their often limited resources and financial expertise. freelancers often face irregular income streams, with payments being delayed or staggered, which leads to challenges in accurately forecasting tax liabilities under an accrual-based system (freeland et al., 2025). several studies indicate that freelancers often gravitate towards cash basis accounting in countries with developing tax systems or those newly introducing corporate taxes due to its simplicity and alignment with actual cash flow. however, evidence from more advanced economies suggests that accrual accounting, though complex, can be beneficial for freelancers seeking to scale their operations and project a more professional financial image (dechow & dichev, 2002; goncharov & jacob, 2014; choudhary et al., 2016). for instance, accrual accounting enables freelancers to match their income and expenses with the periods in which they are incurred, providing more strategic insights into their financial health; however, it also introduces greater accounting burdens. 2.3. corporate tax in the middle east and gcc the gcc region has historically maintained minimal tax regimes to attract foreign investment and expatriate professionals (fernandez & sudheer, 2006; fernandez, et. al., 2025). however, since 2018, with the introduction of vat and now corporate tax, the tax landscape has shifted considerably (alsharari et al, 2023). literature examining corporate tax in the middle east is still emerging, but there is growing recognition of the need for businesses to adapt to more formalised tax structures. several studies have explored how smes and freelancers in the region are responding to these changes. in the uae, specifically, corporate tax legislation was implemented as part of efforts to diversify the economy, reduce reliance on oil revenues, and support the global minimum effective tax rate as proposed by the oecd, thereby gradually integrating the country into the international system. for freelancers, navigating this new tax regime requires careful consideration of accounting methods. studies from the region suggest that freelancers are likely to benefit from the cash basis method due to its simplicity and better alignment with their often unpredictable cash inflows. however, accrual accounting remains recommended for larger entities or freelancers with more sophisticated financial structures who need to manage complex contracts and payment schedules. 2.4. cash basis vs. accrual accounting in tax contexts the debate over whether businesses, particularly smaller entities like freelancers, should use cash or accrual accounting for tax purposes is central to this study. cash basis accounting offers the advantage of simplicity and a direct reflection of cash flow, which is particularly useful for entities with limited resources and irregular income. studies reveal that cash basis accounting often results in lower taxable income for small businesses, especially during periods of slow cash flow, which can defer tax obligations and improve liquidity. on the other hand, accrual accounting provides a more accurate long-term financial picture by matching revenues with related expenses. however, this can sometimes lead to higher reported income for freelancers, particularly when services have been provided but not yet paid for. this complexity, combined with the administrative burden, makes accrual accounting less attractive to small-scale freelancers who may not have the resources to manage such intricate reporting. 3. methodology this study adopts a qualitative approach to analyse the suitability of the cash basis and accrual accounting methods for freelancers operating under the uae's corporate tax regime. given the recent introduction of corporate tax in the uae and its specific implications for freelancers, the study focuses on a content analysis of existing regulations, tax guidelines, and academic literature. the study also includes insights from case studies asian business research journal, 2025, 10(8): 11-15 13 © 2025 by the authors; licensee eastern centre of science and education, usa and interviews with freelancers and tax consultants in the uae, exploring practical applications and preferences regarding accounting methods. the data collection process involved two primary sources: secondary data and expert opinions. the secondary data includes a thorough review of government-issued tax guidelines, such as those provided by the uae federal tax authority (fta), as well as scholarly articles, research papers, and accounting textbooks. these sources offer theoretical insights into accounting methods and tax compliance issues. the secondary data is supplemented by case studies of freelancers in the uae, gathered from professional consultations and industry reports. to provide additional practical context, interviews were conducted with five freelancers in the uae who operate in various industries. these freelancers were selected based on their income levels (above and below the aed 375,000 corporate tax threshold) to ensure a diverse representation of experiences. interviews were also conducted with two tax consultants specialising in sme and freelance tax compliance in the uae. these interviews examined how freelancers manage their accounting and tax reporting, as well as the factors influencing their choice of accounting method. data analysis followed a thematic approach, identifying key themes related to cash basis and accrual accounting, as well as their relevance to corporate tax compliance. the analysis emphasised how freelancers' financial structures and cash flows influenced their choice of accounting methods. the study also examined the potential tax implications of each method, particularly in relation to revenue recognition and tax liabilities under the uae's corporate tax laws. the analysis is structured to compare and contrast cash basis and accrual accounting, considering factors such as simplicity, cash flow management, and compliance with tax regulations. thematic coding was used to identify common challenges and advantages associated with each method, and these themes were synthesised to derive recommendations for freelancers on which accounting method may be most suitable under the uae corporate tax regime. due to the exploratory nature of the research question, a qualitative research approach was chosen for this study. as the uae's corporate tax framework is newly implemented and specific data on freelancers' responses is still emerging, qualitative methods provide a more nuanced understanding of freelancers' decision-making processes. additionally, qualitative interviews facilitate the exploration of practical considerations and real-world challenges that quantitative methods may overlook. this methodology is appropriate for understanding the subjective experiences of freelancers who face unique financial situations and tax obligations. by focusing on their lived experiences, this study aims to provide actionable insights for freelancers on how to navigate corporate tax compliance effectively. 4. analysis and discussions 4.1. cash basis accounting for freelancers under uae corporate tax the cash basis of accounting records income and expenses only when cash is actually received or paid, which provides a direct reflection of a freelancer's cash flow at any given time. this method is desirable for freelancers, especially those operating in industries with inconsistent or delayed income streams. in the uae's corporate tax context, the cash basis method can simplify tax reporting for freelancers, as it directly ties taxable income to the cash available for taxation. freelancers, who often lack extensive financial resources and dedicated accounting departments, benefit from the simplicity of cash-basis accounting, which aligns tax liabilities more closely with their actual cash flow. from a compliance standpoint, the uae's corporate tax regulations do not explicitly mandate which accounting method freelancers must use, allowing them to choose the method that best suits their financial circumstances. freelancers earning just above the aed 375,000 threshold may benefit from the cash basis method, as it results in lower taxable income during periods of delayed payments, thus deferring tax obligations until the cash is received. this approach particularly favours freelancers on short-term or project-based contracts, where payment schedules may be irregular or spread out over several months. 4.2. accrual accounting for freelancers under uae corporate tax accrual accounting, on the other hand, records income when it is earned and expenses when they are incurred, regardless of when the cash is received or paid. this method provides a more accurate financial picture, as it matches revenue with corresponding expenses, offering a clearer view of long-term profitability. for freelancers in the uae subject to corporate tax, accrual accounting may be more appropriate for those with regular cash inflows or more complex financial arrangements, such as multi-year contracts or ongoing services. the method ensures that revenue is recognised as it is earned, which can be beneficial for freelancers working with clients on retainer or instalment-based payment systems. accrual accounting aligns well with the uae's corporate tax goals of promoting transparency and consistency in financial reporting. freelancers who work on large projects spanning multiple periods may benefit from this method, as it allows for smoother income recognition, even when cash payments are delayed. however, freelancers opting for accrual accounting must carefully manage their cash flow, as they may incur tax liabilities before actually receiving income, which could strain liquidity during periods of low cash flow. 4.3. visa categories in the uae and their impact on accounting choices the uae offers various visa categories for freelancers and entrepreneurs, each with its duration, renewal policies, and associated requirements. the most common visas for freelancers include the freelance visa, golden visa, and investor visa. each of these visas influences the freelancer's financial and business outlook, ultimately impacting the choice between cash and accrual accounting. • freelance visa: typically issued for one to three years, this visa is specifically designed for freelancers in sectors such as media, technology, and education (waheed abbas, 2022). freelancers on this visa often work on shorter contracts or project-based assignments, which results in inconsistent cash flow, making the cash basis method more suitable. the simplicity of cash basis accounting aligns with the often unpredictable asian business research journal, 2025, 10(8): 11-15 14 © 2025 by the authors; licensee eastern centre of science and education, usa payment schedules in these industries, allowing freelancers to defer tax payments until income is received. furthermore, the relatively short visa period may encourage freelancers to prioritise immediate cash flow management over long-term financial reporting, thereby reinforcing the appeal of the cash basis method. • golden visa: this visa is typically issued for five to ten years and is granted to individuals who meet specific criteria, such as those with significant investments, exceptional talents, or high levels of income (golden visa services, n.d.). freelancers who hold a golden visa often have more stable financial situations, as this visa is typically awarded to those who demonstrate substantial economic contributions. for freelancers in this category, accrual accounting may be a better fit due to the more structured and sustained nature of their business operations. the longer visa period encourages long-term financial planning and reporting, while accrual accounting provides a clearer and more accurate representation of income over multiple periods, which may be essential for business expansion, securing loans, or attracting investors. • investor visa: issued to individuals who establish or invest in businesses in the uae, the investor visa is typically valid for three to five years (investor residence application, n.d.). freelancers under this visa category are often more entrepreneurial and may operate larger-scale freelance businesses. for them, accrual accounting may provide a more effective financial framework, as it enables a more sophisticated approach to financial reporting, which is crucial for managing business investments and liabilities. accrual accounting's ability to match income with expenses offers clearer insight into the business's performance, making it suitable for freelancers looking to scale their operations or diversify their income streams. 4.4. comparative analysis of cash basis vs. accrual accounting when comparing cash basis and accrual accounting for freelancers under the uae corporate tax regime, the choice often depends on the freelancer's visa status and the associated financial stability. freelancers with shortterm visas or those engaged in project-based work may find cash basis accounting advantageous due to its simplicity and direct reflection of cash flow. this method alleviates the burden of tax payments during periods of low income or delayed payments, aligning with the shorter time horizons associated with freelance visas. in contrast, freelancers with longer-term visas, such as the golden visa or investor visa, may derive greater benefits from accrual accounting. these visas offer greater financial and business stability, enabling freelancers to focus on long-term financial reporting and tax planning. accrual accounting allows recognising income as it is earned, which can improve financial management and provide a clearer picture of profitability over time. for freelancers with ongoing projects or recurring revenue streams, accrual accounting is particularly advantageous in tracking long-term performance and ensuring that tax liabilities are managed more predictably. 4.5. implications for freelancers under uae corporate tax freelancers in the uae must carefully evaluate their visa status, financial structure, and business goals when deciding between cash-basis and accrual accounting. the flexibility in the uae's corporate tax regulations allows freelancers to choose the accounting method that best suits their needs. however, this decision has significant implications for tax planning and financial management. freelancers on short-term visas with variable cash flows are likely to find the cash basis method more practical, as it simplifies tax reporting and ensures that taxes are only paid on received income. however, those with longerterm visas and more structured financial arrangements may benefit from the accuracy and comprehensive financial picture provided by accrual accounting, which better supports business growth, financial planning, and compliance with the uae’s evolving tax regime. 5. conclusion the introduction of corporate tax in the uae marks a significant shift in the country's fiscal policy, with important implications for freelancers and other self-employed individuals. this study has examined the appropriateness of cash basis and accrual accounting for freelancers from the perspective of the newly introduced corporate tax framework. both methods offer distinct advantages depending on the freelancer's financial situation, visa status, and long-term business goals. freelancers operating under short-term visas, such as the freelance visa, often benefit from cash basis accounting due to its simplicity and direct reflection of cash flow. for individuals with irregular income or delayed payments, cash basis accounting aligns tax obligations with actual cash availability, offering a more manageable approach to tax compliance. this method is particularly advantageous for freelancers engaged in project-based or seasonal work, where income streams can be inconsistent and unpredictable. conversely, freelancers with long-term visas, such as the golden visa or investor visa, are better suited to accrual accounting. this method offers a more accurate depiction of financial health by recognising income when earned and matching it with related expenses. accrual accounting is particularly beneficial for freelancers who have more complex business operations, long-term contracts, or recurring revenue streams, as it enables more effective financial planning, investment management, and compliance with the uae's corporate tax regulations. this study is limited by its focus on qualitative data, particularly interviews with freelancers and tax consultants, which may not fully capture the diversity of freelance experiences in the uae. additionally, the uae's corporate tax regime is still in its early stages of implementation, and future changes to tax regulations or visa policies may impact the relevance of the findings. furthermore, this study focuses specifically on freelancers in the uae and may not be directly applicable to freelancers in other countries with different tax laws. future studies could expand on this study by incorporating quantitative data to analyse the financial impact of cash basis versus accrual accounting on a larger sample of freelancers. further study could also explore the longterm implications of the uae's corporate tax on freelancers' business growth and sustainability. additionally, comparative studies between the uae and other gcc countries could provide valuable insights into how regional tax policies affect freelancers' accounting choices. 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usa digital communication networks and women's economic empowerment: the mediating role of social capital in vietnam the song ha nguyen hanoi – amsterdam high school for the gifted, vietnam. email: nguyenthesongha@gmail.com abstract this study investigates the complex relationship between digital communication networks, social capital formation, and women's economic empowerment within vietnam's rapidly evolving digital landscape. drawing upon social capital theory and feminist economic frameworks, the research examines how digital communication technologies facilitate the accumulation of bonding, bridging, and linking social capital, which subsequently enhances women's economic opportunities and outcomes. employing a mixed-methods approach combining structural equation modelling (sem) and fuzzy-set qualitative comparative analysis (fsqca), the study analysed data from 847 vietnamese women entrepreneurs and micro-enterprise operators across urban and rural contexts. the findings reveal that digital communication networks significantly enhance women's economic empowerment through the mediating mechanism of social capital, with particularly strong effects observed in rural contexts where traditional social networks may be more constrained. the study demonstrates that bonding social capital primarily influences access to informal financial resources, whilst bridging social capital facilitates market expansion and business network development. linking social capital emerges as particularly crucial for accessing formal institutional support and navigating regulatory frameworks. the research contributes to the growing literature on digital inclusion and gender empowerment by providing empirical evidence of the pathways through which digital technologies can address traditional barriers to women's economic participation in emerging economies. keywords: digital communication networks, social capital, women's economic empowerment, structural equation modelling, vietnam. 1. introduction the proliferation of digital communication technologies across emerging economies has fundamentally transformed the landscape of social and economic interaction, creating unprecedented opportunities for marginalised populations to access resources, markets, and institutional support systems (castells, 2015; wellman & rainie, 2012). within this digital transformation, women entrepreneurs and micro-enterprise operators represent a particularly significant demographic, as digital platforms may potentially address longstanding barriers to economic participation including limited access to financial services, restricted mobility, and constrained social networks (agarwal et al., 2016; demirgüç-kunt et al., 2013). vietnam's rapid digital transformation presents a compelling case study for examining these dynamics. the country has experienced remarkable growth in internet penetration, rising from 31% in 2010 to approximately 70% by 2017, with mobile phone ownership reaching near-universal levels across both urban and rural populations (vietnam ministry of information and communications, 2017). this digital expansion has occurred alongside significant economic liberalisation and gender equality initiatives, creating a unique environment for investigating the intersection of digital technologies, social capital, and women's economic empowerment. the theoretical foundation for understanding these relationships lies primarily within social capital theory, which posits that social networks constitute a form of capital that can be leveraged for economic and social advantage (bourdieu, 1986; coleman, 1988; putnam, 2000). however, traditional conceptualisations of social capital have been developed primarily within offline contexts, necessitating theoretical extension to accommodate the unique characteristics of digitally mediated social interactions. digital communication networks may fundamentally alter the mechanisms through which social capital is accumulated, maintained, and leveraged, potentially creating new pathways for economic empowerment whilst simultaneously reinforcing existing social inequalities. contemporary scholarship has identified three primary dimensions of social capital: bonding capital, which encompasses ties within homogeneous groups; bridging capital, which involves connections across diverse social groups; and linking capital, which represents vertical connections to formal institutions and power structures (woolcock, 2001; szreter & woolcock, 2004). the digital environment may distinctively influence each dimension, with implications for how social capital translates into economic opportunities for women entrepreneurs. mailto:nguyenthesongha@gmail.com https://doi.org/10.55220/2576-6759.578 asian business research journal, 2025, 10(9): 99-112 100 © 2025 by the author; licensee eastern centre of science and education, usa the necessity of this research emerges from several critical gaps within existing literature. firstly, whilst extensive research has examined the general relationship between digital technologies and economic development, limited attention has been devoted to understanding the specific mechanisms through which digital communication networks influence women's economic empowerment in emerging economy contexts (hilbert, 2011; qureshi, 2015). secondly, social capital research has predominantly focused on offline networks, with insufficient exploration of how digital platforms may transform social capital accumulation and utilisation processes (ellison et al., 2014; hampton et al., 2011). thirdly, existing studies have largely employed single-method approaches, limiting the capacity to understand both the quantitative relationships and the configurational pathways through which digital communication networks influence economic outcomes. the theoretical urgency of this research is underscored by ongoing debates within development economics regarding the conditions under which digital technologies contribute to inclusive economic growth versus reinforcing existing inequalities (graham & mann, 2013; toyama, 2011). understanding how social capital mediates the relationship between digital access and economic empowerment is crucial for informing policy interventions designed to maximise the inclusive benefits of digital transformation. vietnam provides an ideal context for this investigation due to several distinctive characteristics. the country's confucian cultural heritage places particular emphasis on social relationships and network-based business practices, making social capital especially relevant for economic activity (nguyen et al., 2009). additionally, vietnam's transition from a centrally planned to market economy has created complex institutional environments where informal networks often complement formal institutions in facilitating economic transactions (fforde, 2009). the country's substantial gender gap in business ownership and financial inclusion, combined with rapidly expanding digital infrastructure, creates conditions where digital communication networks may play a particularly significant role in women's economic empowerment. the novelty of this research lies in its integration of social capital theory with digital communication frameworks within a gender empowerment perspective, employing complementary quantitative methodologies to examine both linear relationships and configurational pathways. the study advances beyond descriptive analyses of digital divides to provide causal insights into the mechanisms through which digital technologies influence economic outcomes for women entrepreneurs in emerging economies. 2. foundational theories and literature review 2.1. foundational theories 2.1.1. social capital theory social capital theory provides the primary theoretical foundation for understanding how digital communication networks influence women's economic empowerment. originating from the seminal works of bourdieu (1986), coleman (1988), and putnam (2000), social capital theory conceptualises social relationships as a form of capital that can be accumulated, maintained, and leveraged for various outcomes including economic advancement, political participation, and social mobility. bourdieu's (1986) conceptualisation of social capital emphasises its role as a resource embedded within social networks, which individuals can mobilise to secure benefits and opportunities. this perspective highlights the instrumental nature of social relationships, whereby social capital functions as a mechanism for accessing other forms of capital including economic, cultural, and symbolic capital. within the context of women's economic empowerment, bourdieu's framework suggests that social networks may serve as crucial conduits for accessing financial resources, market information, and business opportunities that might otherwise remain inaccessible through formal institutional channels. coleman's (1988) functional approach to social capital emphasises its capacity to facilitate collective action and reduce transaction costs within social systems. this perspective is particularly relevant for understanding how digital communication networks might enable women entrepreneurs to overcome information asymmetries and coordination problems that traditionally constrain business development in emerging economies. coleman's emphasis on trust and reciprocity as foundational elements of social capital provides insight into how digital platforms might either strengthen or weaken the social fabric necessary for effective network utilisation. putnam's (2000) distinction between bonding, bridging, and linking social capital has become fundamental to contemporary social capital research. bonding social capital encompasses ties within homogeneous groups, typically characterised by strong emotional connections and high levels of mutual support. for women entrepreneurs, bonding capital might include relationships with family members, close friends, and other women in similar circumstances, providing emotional support, informal financing, and shared resources during business development processes. bridging social capital involves connections across diverse social groups, facilitating access to novel information, resources, and opportunities. this dimension is particularly crucial for business growth, as it enables entrepreneurs to access new markets, identify emerging opportunities, and develop partnerships with individuals and organisations from different social contexts. digital communication networks may be especially effective at facilitating bridging capital by reducing the geographical and social barriers that traditionally limit cross-group interaction. linking social capital represents vertical connections to formal institutions and individuals in positions of authority or power. for women entrepreneurs in emerging economies, linking capital is often crucial for accessing government services, obtaining business licences, securing formal credit, and navigating regulatory frameworks. digital platforms may enhance linking capital by providing new channels for interaction with institutional representatives and creating opportunities for collective advocacy and policy engagement. recent theoretical developments have extended social capital theory to accommodate digital environments, recognising that online social networks may possess distinctive characteristics compared to offline relationships (ellison et al., 2014; steinfield et al., 2008). digital social capital research suggests that online networks may be particularly effective at maintaining weak ties, facilitating information dissemination, and enabling collective action asian business research journal, 2025, 10(9): 99-112 101 © 2025 by the author; licensee eastern centre of science and education, usa across geographical boundaries. however, questions remain regarding whether digitally mediated relationships can generate the same levels of trust and reciprocity that characterise face-to-face interactions. 2.1.2. women's economic empowerment theory women's economic empowerment theory provides the secondary theoretical foundation for this research, drawing primarily from feminist economics and development studies to understand the processes through which women gain greater control over economic resources and decision-making processes (kabeer, 2001; sen, 1999). this theoretical framework recognises that women's economic participation is shaped by complex interactions between individual agency, structural opportunities, and cultural constraints. kabeer's (2001) empowerment framework emphasises three interconnected dimensions: resources, agency, and achievements. resources encompass not only material assets but also human and social resources that enable effective action. agency refers to the capacity to make strategic choices and act upon them, whilst achievements represent the outcomes of empowerment processes. this framework provides a comprehensive lens for understanding how digital communication networks might influence different aspects of women's economic empowerment. within this framework, social capital can be conceptualised as a crucial resource that enhances women's agency by expanding their capacity to make strategic choices about economic participation. digital communication networks may strengthen this resource by providing new mechanisms for social capital accumulation whilst simultaneously creating platforms for exercising agency through market participation, collective action, and institutional engagement. sen's (1999) capability approach emphasises the importance of expanding individuals' capabilities to achieve valued functionings, including economic security, social participation, and personal autonomy. this perspective suggests that digital communication networks might enhance women's economic empowerment by expanding their opportunity sets and reducing the constraints that limit their capacity to pursue economic goals. feminist economics scholarship has identified several key barriers to women's economic empowerment in emerging economies, including limited access to financial services, restricted mobility, time poverty due to unpaid care responsibilities, and social norms that discourage women's economic participation (duflo, 2012; pitt et al., 2006). digital communication networks may address some of these barriers by enabling remote market participation, reducing transaction costs, and providing platforms for collective action that challenge restrictive social norms. the integration of social capital theory with women's economic empowerment frameworks suggests that digital communication networks may enhance women's economic outcomes through multiple pathways. social networks may provide access to financial resources, market information, and business opportunities whilst simultaneously offering emotional support and collective efficacy that enable women to overcome cultural and institutional barriers to economic participation. 2.2. review of empirical and relevant studies 2.2.1. digital communication networks and social capital empirical research examining the relationship between digital communication technologies and social capital formation has produced mixed findings, with some studies demonstrating positive effects whilst others identify potential negative consequences or null relationships (burke & kraut, 2016; valenzuela et al., 2009). this variation appears to be influenced by factors including the specific digital platforms examined, the populations studied, and the measures employed to assess social capital outcomes. steinfield et al. (2008) conducted longitudinal research examining facebook usage among university students, finding that social networking site usage was positively associated with bridging social capital formation, particularly for individuals with lower initial social capital levels. this finding suggests that digital platforms may be especially beneficial for individuals who face traditional barriers to social network development, a characteristic that may be particularly relevant for women in patriarchal societies where social mobility is constrained. hampton et al. (2011) examined the relationship between internet usage and neighbourhood social capital, finding that digital communication technologies can both supplement and substitute for offline social interactions depending on contextual factors. their research suggests that digital platforms are most effective at enhancing social capital when they complement rather than replace face-to-face interactions, highlighting the importance of understanding how online and offline networks interact within specific cultural contexts. ellison et al. (2014) conducted meta-analytic research examining social network site usage and social capital outcomes, identifying significant positive relationships across multiple studies and contexts. however, their analysis revealed that effect sizes varied considerably based on demographic factors, with women and individuals from collectivist cultures demonstrating stronger relationships between digital network participation and social capital outcomes. research specifically examining social capital formation in emerging economies has highlighted the importance of mobile phone technologies in facilitating social network development and maintenance (donner, 2015; porter et al., 2016). donner's (2015) comprehensive review of mobile phone research in developing countries identified numerous studies demonstrating positive relationships between mobile phone access and various social capital indicators, including participation in community organisations, trust in social institutions, and collective efficacy for addressing community problems. 2.2.2. social capital and women's economic empowerment empirical research examining the relationship between social capital and women's economic empowerment has consistently demonstrated positive associations across diverse contexts and measures (mayoux, 2001; pitt et al., 2006; fletschner & kenney, 2014). however, the mechanisms through which social capital influences economic outcomes appear to vary based on the specific dimensions of social capital examined and the economic indicators assessed. asian business research journal, 2025, 10(9): 99-112 102 © 2025 by the author; licensee eastern centre of science and education, usa pitt et al. (2006) conducted experimental research in bangladesh examining women's participation in microfinance programmes, finding that social capital accumulation through group participation significantly enhanced business outcomes and household welfare indicators. their research demonstrated that bonding social capital, developed through regular group interactions, was particularly important for accessing informal financial resources and managing business risks through mutual support mechanisms. fletschner and kenney (2014) examined rural women's social networks in paraguay, finding that bridging social capital was more strongly associated with agricultural innovation adoption and market participation compared to bonding social capital. this research suggests that different dimensions of social capital may be more effective for different types of economic activities, with bridging capital being particularly important for accessing new market opportunities and technological innovations. mayoux's (2001) comprehensive review of women's empowerment programmes identified social capital formation as a consistent predictor of successful economic empowerment outcomes across diverse cultural contexts. however, her analysis also highlighted that social capital effects were often mediated by institutional factors, suggesting that the economic benefits of social network participation depend partially on the broader institutional environment within which networks operate. research examining women's entrepreneurship in emerging economies has consistently identified social networks as crucial sources of business financing, market information, and emotional support (al-dajani et al., 2015; brush et al., 2009). al-dajani et al. (2015) conducted qualitative research examining women entrepreneurs in jordan, finding that informal social networks were often more important than formal business support services for accessing the resources necessary for business development and growth. 2.2.3. digital technologies and women's economic empowerment research examining the direct relationship between digital technologies and women's economic empowerment has expanded rapidly in recent years, with studies generally finding positive effects whilst acknowledging the importance of contextual factors in determining outcomes (demirgüç-kunt et al., 2013; asongu & odhiambo, 2017; hilbert, 2011). demirgüç-kunt et al. (2013) analysed global findex data examining financial inclusion patterns across developing countries, finding that mobile phone ownership was significantly associated with women's access to formal financial services after controlling for various demographic and economic factors. their research suggested that mobile banking technologies could potentially address traditional barriers to women's financial inclusion including limited mobility, time constraints, and discriminatory practices within formal financial institutions. jack and suri (2014) conducted influential research examining the impact of m-pesa mobile money system in kenya, finding that access to mobile financial services led to significant improvements in consumption smoothing and risk management, with particularly strong effects observed for women-headed households. their research demonstrated that digital financial technologies could enhance women's economic security even in contexts where formal financial institutions remained largely inaccessible. research examining digital technologies and women's entrepreneurship has identified several mechanisms through which digital platforms may enhance business outcomes, including reduced transaction costs, expanded market access, and enhanced communication with customers and suppliers (gichuki et al., 2014; mwobobia, 2012). however, these studies have generally focused on describing correlations rather than identifying causal mechanisms, limiting understanding of the processes through which digital technologies influence empowerment outcomes. 2.3. proposed research model based on the comprehensive literature review and theoretical synthesis presented above, this research proposes an integrated model examining the mediating role of social capital in the relationship between digital communication networks and women's economic empowerment. the model incorporates three primary constructs: digital communication network usage, multidimensional social capital (bonding, bridging, and linking), and women's economic empowerment, with several control variables to account for individual and contextual factors that may influence these relationships. digital communication network usage represents the primary independent variable, conceptualised as a multidimensional construct encompassing the frequency, diversity, and intensity of digital platform usage for social and economic purposes. this construct draws upon technology acceptance and digital divide research, incorporating measures of both access and usage patterns (dimaggio et al., 2004; van dijk, 2020). the measurement framework includes indicators of social media participation, mobile communication usage, and digital platform engagement for business purposes, recognising that different types of digital communication may have varying effects on social capital formation and economic outcomes. social capital constitutes the primary mediating variable, operationalised according to the three-dimensional framework developed by woolcock (2001) and szreter and woolcock (2004). bonding social capital is measured through indicators of network density, emotional support availability, and reciprocity within close social relationships. bridging social capital encompasses measures of network diversity, weak tie strength, and crossgroup interaction frequency. linking social capital includes indicators of institutional access, formal network participation, and connections to individuals in positions of authority or expertise. women's economic empowerment represents the primary dependent variable, conceptualised as a multidimensional construct incorporating both economic outcomes and empowerment processes. drawing upon kabeer's (2001) empowerment framework, the construct includes measures of economic achievement (income generation, asset accumulation, financial security), economic agency (decision-making autonomy, business ownership, financial control), and economic resources (access to credit, market information, business networks). this multidimensional approach recognises that empowerment encompasses both the capacity to make strategic choices and the achievement of valued economic outcomes. asian business research journal, 2025, 10(9): 99-112 103 © 2025 by the author; licensee eastern centre of science and education, usa figure 1. proposed research model. the research model incorporates several control variables to account for factors that may influence the primary relationships of interest. individual-level controls include age, education, marital status, household composition, and prior business experience, drawing upon entrepreneurship and development economics literature identifying these factors as significant predictors of women's economic participation (brush et al., 2009; demirgüç-kunt et al., 2013). contextual controls include urban versus rural residence, regional economic development indicators, and local infrastructure availability, recognising that the effects of digital technologies may vary based on broader environmental factors. the theoretical model proposes several specific hypotheses regarding the relationships between constructs. firstly, digital communication network usage is hypothesised to positively influence all three dimensions of social capital, with potentially stronger effects on bridging and linking capital compared to bonding capital, given the capacity of digital platforms to facilitate connections across geographical and social boundaries. secondly, each dimension of social capital is hypothesised to positively influence women's economic empowerment, with potentially differential effects based on the specific empowerment outcomes examined. thirdly, social capital dimensions are hypothesised to mediate the relationship between digital communication networks and economic empowerment, suggesting that digital technologies influence empowerment primarily through their effects on social network development and utilisation. the model also incorporates potential moderation effects, recognising that the strength of relationships may vary based on contextual factors. urban versus rural residence is hypothesised to moderate the relationship between digital communication networks and social capital formation, with potentially stronger effects in rural contexts where traditional social networks may be more constrained. educational attainment is hypothesised to moderate the relationship between social capital and economic empowerment, with potentially stronger effects for women with higher education levels who may be better positioned to leverage social networks for economic advancement. 3. research methodology 3.1. research design this study employed a cross-sectional survey design with complementary quantitative analytical approaches to examine the complex relationships between digital communication networks, social capital, and women's economic empowerment in vietnam. the research design integrated structural equation modelling (sem) using partial least squares (pls) approach with fuzzy-set qualitative comparative analysis (fsqca) to provide both correlational insights and configurational understanding of the phenomena under investigation. the philosophical foundation of this research rests within a post-positivist paradigm, acknowledging the existence of objective social phenomena whilst recognising the complexity and contextual nature of social relationships (creswell, 2014; guba & lincoln, 1994). this paradigmatic stance is particularly appropriate for examining technology-mediated social capital formation, as it enables rigorous quantitative analysis whilst acknowledging the multifaceted nature of empowerment processes and the potential for multiple pathways to similar outcomes. the mixed-method quantitative approach was selected to address the limitations inherent in single-method studies of social capital and empowerment phenomena. structural equation modelling provides insights into the strength and significance of relationships between constructs whilst controlling for measurement error and enabling examination of complex mediation relationships (hair et al., 2017). the pls-sem approach was specifically chosen due to its capacity to handle complex models with multiple mediating relationships and its robustness to non-normal data distributions, characteristics that are particularly relevant for empowerment research in emerging economy contexts (hair et al., 2014). fuzzy-set qualitative comparative analysis complements the sem analysis by examining configurational relationships and identifying the combinations of conditions that are sufficient for achieving high levels of women's economic empowerment (ragin, 2008; schneider & wagemann, 2012). this approach recognises that empowerment may result from multiple different pathways and that the effects of digital communication networks and social capital may depend on specific configurations of contextual factors. 3.2. data collection data collection was conducted between march and august 2017 across six provinces in vietnam, selected to represent diverse geographical, economic, and cultural contexts within the country. the provinces included ho chi minh city and hanoi (representing major urban centres), hai phong and da nang (representing secondary cities), and dong nai and an giang (representing rural and agricultural contexts). this geographical diversity was asian business research journal, 2025, 10(9): 99-112 104 © 2025 by the author; licensee eastern centre of science and education, usa essential for capturing variation in digital infrastructure development, economic opportunities, and cultural factors that might influence the relationships under investigation. the target population consisted of vietnamese women aged 18-55 who were engaged in income-generating activities including formal employment, informal business activities, agricultural production, or micro-enterprise operation. this broad definition of economic participation was adopted to capture the diverse ways in which women contribute to household income and economic development in emerging economy contexts, recognising that formal entrepreneurship represents only one pathway for women's economic empowerment. a stratified random sampling approach was employed to ensure adequate representation across geographical regions, age groups, and economic activity types. the sampling frame was constructed using commune-level population data provided by the general statistics office of vietnam, with stratification based on urban/rural residence, province, and age group. within each stratum, systematic random sampling was used to select potential participants from comprehensive household lists maintained by local administrative committees. a total of 1,200 women were initially contacted for participation in the study, with 847 completing the full survey instrument, representing a response rate of 70.6%. non-response analysis revealed no significant differences between respondents and non-respondents on available demographic characteristics including age, education, and geographical location, suggesting that non-response bias was unlikely to substantially affect the study findings. data collection was conducted through face-to-face interviews using structured questionnaires administered by trained research assistants. this approach was selected to ensure high data quality and to accommodate participants with limited literacy levels, particularly important in rural contexts where educational attainment may be lower. all research assistants completed comprehensive training programmes covering interview techniques, questionnaire administration, and ethical considerations for research involving vulnerable populations. the questionnaire was initially developed in english and then translated into vietnamese using forward and back-translation procedures to ensure linguistic equivalence. pre-testing was conducted with 50 participants across urban and rural contexts, leading to minor modifications in question wording and response formats to enhance clarity and cultural appropriateness. 3.3. measurement & validation the measurement framework for this study drew upon established scales from previous research whilst incorporating modifications necessary for the vietnamese context and the specific focus on digital communication networks. all constructs were measured using multiple indicators to enable latent variable analysis and enhance measurement reliability and validity. digital communication network usage was measured using a 15-item scale adapted from the digital divide and technology adoption literature (dimaggio et al., 2004; hargittai, 2010). the scale encompassed three dimensions: access and infrastructure (availability of devices and internet connectivity), usage frequency and diversity (frequency of different digital platform usage), and social and economic application (use of digital technologies for social networking and business purposes). sample items included "how frequently do you use social media platforms to communicate with friends and family?" and "how often do you use mobile phones or internet for business-related activities?" responses were recorded on seven-point likert scales ranging from "never" to "very frequently." social capital was operationalised using an adapted version of the social capital assessment tool developed by the world bank, modified to incorporate digital network elements (krishna & shrader, 2000; grootaert et al., 2004). the instrument measured three dimensions of social capital through 24 items. bonding social capital (8 items) assessed the strength and density of relationships within homogeneous groups, with items such as "members of your immediate social circle provide emotional support during difficult times" and "you can rely on close friends and family for financial assistance when needed." bridging social capital (8 items) examined connections across diverse social groups, including items such as "through your networks, you interact with people from different educational backgrounds" and "your social connections include people from various occupations and industries." linking social capital (8 items) measured connections to formal institutions and authority figures, with items such as "you have contacts who can help you navigate government procedures" and "you know people who work in banks or financial institutions who could provide advice." women's economic empowerment was measured using a 21-item scale developed by synthesising established empowerment measures with specific indicators relevant to emerging economy contexts (kabeer, 2001; malhotra et al., 2002). the scale incorporated three dimensions aligned with kabeer's empowerment framework. economic resources (7 items) assessed access to and control over financial and material resources, with items such as "you have independent access to financial services" and "you control decisions about major household purchases." economic agency (7 items) measured decision-making autonomy and strategic choice capacity, including items such as "you make decisions about how to use your personal income" and "you choose whether to start or expand business activities." economic achievements (7 items) assessed economic outcomes and security, with items such as "your income contributes significantly to household welfare" and "you have accumulated savings or assets in your own name." control variables were measured using standard demographic and socioeconomic indicators. individual-level controls included age (continuous variable), education (eight categories from no formal education to university degree), marital status (categorical), household size (continuous), and business experience (categorical). contextual controls included urban/rural residence (binary), province (categorical), and household wealth index (constructed using principal component analysis of asset ownership indicators). scale validation procedures followed established protocols for cross-cultural research (brislin, 1986; van de vijver & hambleton, 1996). content validity was assessed through expert review by vietnamese social science researchers familiar with local contexts and measurement issues. face validity was evaluated through cognitive interviews with 25 women from the target population, leading to minor modifications in item wording and response formats. asian business research journal, 2025, 10(9): 99-112 105 © 2025 by the author; licensee eastern centre of science and education, usa 3.4. analytical procedure the analytical strategy employed a sequential approach integrating multiple quantitative techniques to provide comprehensive insights into the relationships between digital communication networks, social capital, and women's economic empowerment. all analyses were conducted using spss 24.0, smartpls 4.0, and fsqca 3.0 software packages. preliminary analyses included examination of data quality, missing value patterns, and assumption testing for multivariate analyses. missing data analysis revealed that less than 3% of values were missing for any individual variable, with missing data patterns appearing to be missing completely at random based on little's mcar test. multiple imputation procedures were employed to address missing values, with five imputed datasets generated and pooled results reported for all subsequent analyses. the measurement model assessment followed established protocols for pls-sem analysis (hair et al., 2017). exploratory factor analysis (efa) was initially conducted using principal component analysis with varimax rotation to examine the dimensionality of constructs and identify potential problematic indicators. subsequently, confirmatory factor analysis (cfa) was conducted within the pls framework to validate the measurement model structure. internal consistency reliability was assessed using cronbach's alpha and composite reliability coefficients, with values above 0.70 considered acceptable for exploratory research (nunnally & bernstein, 1994). indicator reliability was evaluated through examination of factor loadings, with loadings above 0.70 considered satisfactory for confirmatory research contexts (chin, 1998). convergent validity was assessed using average variance extracted (ave), with values above 0.50 indicating that constructs explain more variance in their indicators than error variance (fornell & larcker, 1981). discriminant validity was evaluated using both the fornell-larcker criterion and the heterotrait-monotrait (htmt) ratio of correlations, with htmt values below 0.85 supporting discriminant validity (henseler et al., 2015). the structural model assessment examined the relationships between constructs whilst controlling for measurement error. path coefficients and their significance levels were assessed using bootstrapping procedures with 5,000 resamples, providing robust estimates of standard errors and confidence intervals (hair et al., 2017). effect sizes were evaluated using cohen's guidelines, with f² values above 0.02, 0.15, and 0.35 representing small, medium, and large effect sizes respectively (cohen, 1988). mediation analysis was conducted using the product of coefficients approach, examining both direct and indirect effects of digital communication networks on economic empowerment through social capital dimensions. the significance of indirect effects was assessed using bootstrapped confidence intervals, with mediation confirmed when confidence intervals excluded zero (hayes, 2017). multigroup analysis was conducted to examine potential moderation effects of contextual factors including urban/rural residence, education level, and age group. pls multigroup analysis (pls-mga) was employed to test differences in path coefficients across groups, with p-values below 0.05 indicating significant group differences (henseler et al., 2009). fuzzy-set qualitative comparative analysis was conducted to complement the sem findings by examining configurational relationships and identifying sufficient conditions for high economic empowerment outcomes. variables were calibrated using the direct method with anchor points set at 95th percentile (full membership), 50th percentile (crossover point), and 5th percentile (full non-membership). necessity analysis examined individual conditions that were necessary for the outcome, whilst sufficiency analysis identified combinations of conditions that were sufficient for achieving high empowerment levels. solution paths were evaluated based on consistency scores (>0.80) and coverage metrics (>0.25) following established qca protocols (ragin, 2008). 4. research findings 4.1. measurement model assessment the measurement model assessment began with exploratory factor analysis (efa) to examine the underlying structure of the measurement instruments and identify any problematic indicators that might compromise construct validity. principal component analysis with varimax rotation revealed clear factor structures for all major constructs, with eigenvalues exceeding 1.0 and factor loadings above 0.60 for retained indicators. the efa results for the digital communication networks construct yielded three distinct factors corresponding to the theoretical dimensions of access/infrastructure, usage frequency/diversity, and social/economic application. the total variance explained was 72.4%, with factor loadings ranging from 0.634 to 0.891. two indicators with cross-loadings above 0.40 were removed from subsequent analyses to enhance discriminant validity. social capital efa produced three clear factors representing bonding, bridging, and linking dimensions, accounting for 68.9% of total variance. factor loadings ranged from 0.612 to 0.854, with strong correspondence between empirical factors and theoretical constructs. one indicator from the linking social capital dimension was removed due to poor factor loading (0.487). women's economic empowerment efa revealed three factors corresponding to resources, agency, and achievements dimensions, explaining 71.6% of variance with factor loadings between 0.598 and 0.876. the factor structure closely matched theoretical expectations, with no indicators requiring removal based on statistical criteria. asian business research journal, 2025, 10(9): 99-112 106 © 2025 by the author; licensee eastern centre of science and education, usa table 1. reliability and validity assessment. construct items cronbach's α cr ave factor loadings range digital communication networks 13 0.912 0.926 0.542 0.634-0.891 access/infrastructure 4 0.856 0.902 0.696 0.782-0.891 usage frequency/diversity 5 0.889 0.916 0.684 0.789-0.856 social/economic application 4 0.834 0.887 0.663 0.634-0.847 social capital 23 0.943 0.952 0.587 0.612-0.854 bonding social capital 8 0.897 0.921 0.662 0.756-0.854 bridging social capital 8 0.876 0.906 0.621 0.612-0.823 linking social capital 7 0.851 0.890 0.577 0.689-0.798 economic empowerment 21 0.954 0.962 0.609 0.598-0.876 economic resources 7 0.901 0.924 0.672 0.734-0.876 economic agency 7 0.886 0.913 0.638 0.689-0.834 economic achievement 7 0.879 0.908 0.619 0.598-0.823 confirmatory factor analysis within the pls framework demonstrated satisfactory measurement model performance across all constructs. internal consistency reliability, as assessed by cronbach's alpha and composite reliability (cr), exceeded the recommended threshold of 0.70 for all constructs and sub-constructs, with values ranging from 0.834 to 0.954 for cronbach's alpha and from 0.887 to 0.962 for composite reliability. indicator reliability was confirmed through examination of outer loadings, with all retained indicators achieving loadings above 0.598, exceeding the minimum threshold of 0.50 for exploratory research contexts. the majority of indicators (89.5%) achieved loadings above 0.70, meeting the more stringent criterion for confirmatory research. convergent validity was established through average variance extracted (ave) values, with all constructs achieving ave values above 0.50, ranging from 0.542 to 0.696. these results indicate that constructs explain more variance in their indicators than is attributable to measurement error, supporting convergent validity. table 2. discriminant validity assessment fornell-larcker criterion. construct 1 2 3 4 5 6 7 1. digital communication networks 0.736 2. bonding social capital 0.432 0.813 3. bridging social capital 0.567 0.398 0.788 4. linking social capital 0.489 0.289 0.512 0.760 5. economic resources 0.401 0.356 0.423 0.398 0.820 6. economic agency 0.445 0.334 0.467 0.412 0.578 0.799 7. economic achievement 0.423 0.367 0.434 0.389 0.623 0.612 0.787 note: diagonal elements (in italics) represent the square root of ave; off-diagonal elements represent correlations between constructs. table 3. discriminant validity assessment htmt ratio. construct 1 2 3 4 5 6 7 1. digital communication networks 2. bonding social capital 0.498 3. bridging social capital 0.634 0.456 4. linking social capital 0.567 0.341 0.594 5. economic resources 0.453 0.401 0.478 0.456 6. economic agency 0.501 0.376 0.521 0.478 0.642 7. economic achievement 0.478 0.423 0.487 0.445 0.689 0.687 discriminant validity was assessed using both the fornell-larcker criterion and the htmt ratio of correlations. the fornell-larcker criterion was satisfied for all construct pairs, with the square root of ave exceeding inter-construct correlations in all cases. htmt ratios were below 0.85 for all construct pairs, with values ranging from 0.341 to 0.689, providing strong support for discriminant validity. asian business research journal, 2025, 10(9): 99-112 107 © 2025 by the author; licensee eastern centre of science and education, usa table 4. direct effects results. hypothesised path path coefficient standard error tvalue pvalue 95% ci lower 95% ci upper f² support dcn → bonding sc 0.432** 0.045 9.600 0.000 0.344 0.520 0.230 yes dcn → bridging sc 0.567** 0.038 14.921 0.000 0.492 0.642 0.473 yes dcn → linking sc 0.489** 0.041 11.927 0.000 0.409 0.569 0.315 yes bonding sc → econ resources 0.298** 0.049 6.082 0.000 0.202 0.394 0.089 yes bonding sc → econ agency 0.234** 0.051 4.588 0.000 0.134 0.334 0.055 yes bonding sc → econ achievement 0.267** 0.048 5.563 0.000 0.173 0.361 0.071 yes bridging sc → econ resources 0.256** 0.047 5.447 0.000 0.164 0.348 0.066 yes bridging sc → econ agency 0.334** 0.044 7.591 0.000 0.248 0.420 0.111 yes bridging sc → econ achievement 0.289** 0.046 6.283 0.000 0.199 0.379 0.084 yes linking sc → econ resources 0.223** 0.052 4.288 0.000 0.121 0.325 0.050 yes linking sc → econ agency 0.256** 0.049 5.224 0.000 0.160 0.352 0.066 yes linking sc → econ achievement 0.201* 0.051 3.941 0.000 0.101 0.301 0.040 yes note: dcn = digital communication networks; sc = social capital; econ = economic; ** p < 0.001, * p < 0.01. 4.2. structural model assessment the structural model assessment examined the hypothesised relationships between digital communication networks, social capital dimensions, and women's economic empowerment whilst controlling for relevant covariates. the overall model demonstrated satisfactory explanatory power, with r² values indicating that the model explained substantial variance in all endogenous constructs. the direct effects analysis revealed statistically significant positive relationships between digital communication networks and all three dimensions of social capital. the strongest relationship was observed between digital communication networks and bridging social capital (β = 0.567, p < 0.001, f² = 0.473), followed by linking social capital (β = 0.489, p < 0.001, f² = 0.315) and bonding social capital (β = 0.432, p < 0.001, f² = 0.230). these findings suggest that digital communication technologies are particularly effective at facilitating connections across diverse social groups and formal institutional networks. all hypothesised relationships between social capital dimensions and economic empowerment components were statistically significant and positive. bridging social capital demonstrated the strongest relationships with economic agency (β = 0.334, p < 0.001, f² = 0.111) and achievement (β = 0.289, p < 0.001, f² = 0.084), whilst bonding social capital showed the strongest relationship with economic resources (β = 0.298, p < 0.001, f² = 0.089). these patterns suggest differential mechanisms through which social capital dimensions influence empowerment outcomes. table 5. predictive relevance assessment. construct r² r² adjusted q² bonding social capital 0.187 0.183 0.121 bridging social capital 0.321 0.319 0.196 linking social capital 0.239 0.236 0.135 economic resources 0.234 0.228 0.152 economic agency 0.289 0.284 0.181 economic achievement 0.256 0.250 0.155 the predictive relevance assessment using stone-geisser's q² criterion demonstrated satisfactory predictive validity for all endogenous constructs, with q² values ranging from 0.121 to 0.196. all values exceeded zero, indicating that the model has predictive relevance beyond chance. the highest predictive relevance was observed for bridging social capital (q² = 0.196) and economic agency (q² = 0.181), suggesting that these constructs are particularly well explained by the model. asian business research journal, 2025, 10(9): 99-112 108 © 2025 by the author; licensee eastern centre of science and education, usa table 6. specific indirect effects (mediation analysis). indirect path path coefficient standard error tvalue pvalue 95% ci lower 95% ci upper mediation type dcn → bonding sc → econ resources 0.129** 0.023 5.609 0.000 0.084 0.174 partial dcn → bonding sc → econ agency 0.101** 0.024 4.208 0.000 0.054 0.148 partial dcn → bonding sc → econ achievement 0.115** 0.022 5.227 0.000 0.072 0.158 partial dcn → bridging sc → econ resources 0.145** 0.028 5.179 0.000 0.090 0.200 partial dcn → bridging sc → econ agency 0.189** 0.027 7.000 0.000 0.136 0.242 partial dcn → bridging sc → econ achievement 0.164** 0.028 5.857 0.000 0.109 0.219 partial dcn → linking sc → econ resources 0.109** 0.027 4.037 0.000 0.056 0.162 partial dcn → linking sc → econ agency 0.125** 0.026 4.808 0.000 0.074 0.176 partial dcn → linking sc → econ achievement 0.098** 0.026 3.769 0.000 0.047 0.149 partial note: dcn = digital communication networks; sc = social capital; econ = economic; ** p < 0.001. the mediation analysis revealed significant indirect effects for all hypothesised pathways, confirming that social capital dimensions partially mediate the relationship between digital communication networks and women's economic empowerment. the strongest indirect effects were observed through bridging social capital, particularly for economic agency (β = 0.189, p < 0.001) and achievement (β = 0.164, p < 0.001). all indirect effects demonstrated 95% confidence intervals that excluded zero, providing strong evidence for mediation relationships. table 7. moderation analysis results urban vs rural context. path urban sample (n=423) rural sample (n=424) difference p-value (pls-mga) dcn → bonding sc 0.389** 0.476** 0.087 0.042* dcn → bridging sc 0.523** 0.612** 0.089 0.031* dcn → linking sc 0.456** 0.523** 0.067 0.089 bonding sc → econ resources 0.267** 0.329** 0.062 0.156 bridging sc → econ agency 0.312** 0.356** 0.044 0.298 linking sc → econ resources 0.198** 0.248** 0.050 0.234 note: dcn = digital communication networks; sc = social capital; econ = economic; ** p < 0.001, * p < 0.05 the multigroup analysis examining urban versus rural moderation effects revealed significantly stronger relationships between digital communication networks and both bonding and bridging social capital in rural contexts compared to urban contexts. these findings suggest that digital technologies may have particularly important implications for social capital formation in rural areas where traditional networking opportunities may be more constrained. table 8. fuzzy-set qualitative comparative analysis results. configuration bonding sc bridging sc linking sc dcn usage consistency coverage path 1 ● ● ● ● 0.892 0.341 path 2 ● ● ⊗ ● 0.834 0.289 path 3 ⊗ ● ● ● 0.826 0.267 path 4 ● ⊗ ● ● 0.811 0.234 note: ● = presence of condition; ⊗ = absence of condition; sc = social capital; dcn = digital communication networks. 4.3. supplementary analyses the fsqca analysis identified four distinct configurational pathways leading to high women's economic empowerment outcomes. the most consistent pathway (configuration 1) involved the simultaneous presence of high levels across all three social capital dimensions combined with intensive digital communication network usage (consistency = 0.892, coverage = 0.341). this pathway accounted for approximately 34% of cases achieving high empowerment outcomes. configuration 2 demonstrated that high empowerment outcomes could be achieved through strong bonding and bridging social capital combined with intensive digital network usage, even in the absence of strong linking social capital (consistency = 0.834, coverage = 0.289). this pathway was particularly prevalent among younger women and those in rural contexts where formal institutional connections may be more limited. configuration 3 revealed an alternative pathway emphasising bridging and linking social capital whilst compensating for weaker bonding social capital through intensive digital network usage (consistency = 0.826, coverage = 0.267). this configuration was more common among urban women and those with higher education levels who may have broader social networks but less intensive family-based support systems. configuration 4 demonstrated that strong bonding and linking social capital could compensate for weaker bridging capital when combined with intensive digital network usage (consistency = 0.811, coverage = 0.234). this pathway was particularly relevant for women in traditional business sectors where family networks and institutional relationships were more important than diverse social connections. asian business research journal, 2025, 10(9): 99-112 109 © 2025 by the author; licensee eastern centre of science and education, usa table 9. multigroup analysis results education level path low education (n=312) medium education (n=298) high education (n=237) f-value p-value bonding sc → econ resources 0.342** 0.289** 0.234** 3.876 0.021* bridging sc → econ agency 0.278** 0.334** 0.389** 4.234 0.015* linking sc → econ achievement 0.167* 0.201** 0.267** 3.234 0.040* note: sc = social capital; econ = economic; ** p < 0.001, * p < 0.05; * p < 0.01 the education-based multigroup analysis revealed interesting patterns in how social capital dimensions relate to different empowerment outcomes across educational attainment levels. for women with lower education levels, bonding social capital demonstrated the strongest relationship with economic resources (β = 0.342, p < 0.001), suggesting that family and close community networks are particularly important for accessing financial resources when formal educational credentials are limited. conversely, for women with higher education levels, bridging social capital showed the strongest relationship with economic agency (β = 0.389, p < 0.001), and linking social capital demonstrated stronger relationships with economic achievement (β = 0.267, p < 0.001). these patterns suggest that educated women may be better positioned to leverage diverse social networks and formal institutional connections for economic advancement. 5. discussion of research results and conclusions the findings from this comprehensive investigation provide compelling evidence for the mediating role of social capital in the relationship between digital communication networks and women's economic empowerment within the vietnamese context. the results demonstrate that digital technologies do not directly transform women's economic circumstances but rather operate through complex social mechanisms that enhance women's capacity to accumulate, maintain, and leverage social capital for economic advancement. the most significant finding concerns the differential effects of digital communication networks on various dimensions of social capital. the strongest relationship observed was between digital communication usage and bridging social capital formation, suggesting that digital platforms are particularly effective at facilitating connections across diverse social groups that might otherwise remain segregated by geographical, cultural, or economic barriers. this finding aligns with network theory predictions about the capacity of digital technologies to reduce the transaction costs associated with maintaining weak ties across social boundaries (granovetter, 1973; burt, 2005). the particularly strong effect on bridging capital has important implications for women's economic empowerment, as access to diverse networks has been consistently identified as crucial for entrepreneurial success and business growth (aldrich & zimmer, 1986; coleman, 1988). the significant positive relationship between digital communication networks and linking social capital represents another theoretically important finding. traditional conceptualisations of linking capital emphasise faceto-face interactions with institutional representatives and individuals in positions of authority (woolcock, 2001). the finding that digital platforms can effectively facilitate these vertical connections suggests that digital technologies may democratise access to institutional resources and formal support systems that have traditionally been available primarily to individuals with existing social advantages. this finding is particularly relevant for women in patriarchal societies where traditional pathways to institutional access may be constrained by cultural norms and gender-based discrimination (kabeer, 2001). the mediation analysis results provide crucial insights into the mechanisms through which digital technologies influence women's economic empowerment. the finding that all indirect effects through social capital dimensions were statistically significant whilst maintaining partial mediation suggests that social capital formation represents a primary but not exclusive pathway through which digital communication networks enhance economic outcomes. this finding supports theoretical frameworks that emphasise the multifaceted nature of technology impacts on economic development, recognising that digital technologies may influence empowerment through multiple simultaneous mechanisms (sen, 1999; duflo, 2012). the differential effects of social capital dimensions on various empowerment outcomes reveal important nuances in how social networks translate into economic benefits. the particularly strong relationship between bridging social capital and economic agency suggests that diverse social networks are especially important for enhancing women's capacity to make strategic choices about economic participation. this finding aligns with feminist economics literature emphasising the importance of expanding women's choice sets and decision-making autonomy as fundamental components of empowerment processes (kabeer, 2001; sen, 1999). conversely, the stronger relationship between bonding social capital and economic resources suggests that close family and community networks remain crucial for accessing financial resources, particularly in contexts where formal financial institutions may be inaccessible or inappropriate for women's needs. this finding supports extensive literature on informal finance in emerging economies, which demonstrates that women entrepreneurs often rely heavily on family and community networks for business capital (mayoux, 2001; fletschner & kenney, 2014). the urban-rural moderation effects represent one of the most theoretically significant findings of this research. the stronger relationships between digital communication networks and social capital formation in rural contexts suggest that digital technologies may have particularly transformative effects in environments where traditional networking opportunities are more constrained by geographical isolation, limited transportation infrastructure, and cultural restrictions on women's mobility (porter et al., 2016). this finding has important policy implications, suggesting that digital inclusion initiatives may be especially beneficial for rural women who face multiple barriers to social and economic participation. the fsqca results provide additional insights into the complexity of empowerment processes by revealing multiple configurational pathways to high empowerment outcomes. the identification of four distinct pathways suggests that women can achieve economic empowerment through different combinations of social capital dimensions and digital network usage, supporting theoretical frameworks that emphasise the heterogeneity of asian business research journal, 2025, 10(9): 99-112 110 © 2025 by the author; licensee eastern centre of science and education, usa empowerment processes across different contexts and individual circumstances (kabeer, 2001). the finding that high empowerment outcomes can be achieved even when some social capital dimensions are relatively weak suggests that digital technologies may provide compensatory mechanisms that enable women to overcome specific network deficits through alternative social capital configurations. the education-based multigroup analysis reveals important insights into how human capital interacts with social capital in determining empowerment outcomes. the finding that bonding social capital was most important for less educated women whilst bridging and linking capital became increasingly important for more educated women suggests that educational attainment may alter the mechanisms through which social networks translate into economic benefits. this finding supports human capital theory predictions that education enhances individuals' capacity to leverage diverse social networks and formal institutional resources (becker, 1964; schultz, 1961). these findings contribute to several key theoretical and empirical debates within the development economics and social capital literature. firstly, the results provide strong empirical support for theoretical arguments that digital technologies can enhance social capital formation rather than undermining social cohesion, as suggested by some critics of digital communication technologies (putnam, 2000; turkle, 2011). the positive relationships observed between digital network usage and all social capital dimensions suggest that digital platforms can complement rather than substitute for offline social interactions when properly integrated into existing social systems. secondly, the findings contribute to ongoing debates about the relationship between technology adoption and gender empowerment by demonstrating that digital technologies do not automatically empower women but rather create opportunities for empowerment through specific social mechanisms. the mediation results suggest that simply providing access to digital technologies is insufficient for achieving empowerment outcomes; rather, successful interventions must focus on enhancing women's capacity to leverage digital platforms for social capital development and utilisation. thirdly, the research contributes to social capital literature by providing empirical evidence for theoretical arguments about the multidimensional nature of social capital and its differential effects on various economic outcomes. the finding that bonding, bridging, and linking capital have distinct relationships with empowerment components supports theoretical frameworks that emphasise the importance of examining social capital as a multidimensional rather than unidimensional construct (woolcock, 2001; szreter & woolcock, 2004). the practical implications of these findings for development policy and programme design are substantial. the results suggest that digital inclusion initiatives should focus not merely on providing technological access but on supporting women's capacity to leverage digital platforms for social network development and maintenance. programmes that combine digital literacy training with social network development activities may be particularly effective for enhancing women's economic empowerment outcomes. the finding that different social capital dimensions have varying importance across educational levels suggests that empowerment interventions should be tailored to women's specific circumstances and capabilities. for women with limited formal education, programmes focusing on strengthening family and community networks whilst providing access to digital communication tools may be most effective. for more educated women, interventions that facilitate connections across diverse social groups and formal institutional networks may yield greater empowerment benefits. several limitations of this research should be acknowledged. the cross-sectional design precludes causal inferences about the direction of relationships between constructs, and longitudinal research would be valuable for confirming the causal mechanisms suggested by the theoretical model. additionally, the study's focus on vietnam limits the generalisability of findings to other cultural and economic contexts, although the theoretical framework developed may be applicable across emerging economies with appropriate contextual adaptations. future research should examine the temporal dynamics of digital social capital formation and its effects on empowerment outcomes through longitudinal designs. additionally, comparative research across multiple emerging economy contexts would enhance understanding of how cultural and institutional factors influence the relationships examined in this study. qualitative research examining women's subjective experiences of digital network participation and empowerment processes would provide valuable insights into the mechanisms underlying the quantitative relationships identified. in conclusion, this research demonstrates that digital communication networks can significantly enhance women's economic empowerment through the mediating mechanism of social capital formation. the findings suggest that digital technologies create new pathways for women to access the social resources necessary for economic advancement whilst potentially compensating for traditional barriers to network development. however, the benefits of digital inclusion are not automatic but depend on women's capacity to effectively leverage digital platforms for social capital accumulation and utilisation. these insights provide important guidance for policy interventions designed to harness digital technologies for inclusive economic development and gender empowerment in emerging economy contexts. acknowledgments: i would like to express my sincere gratitude to dr. hoang vu hiep for his invaluable guidance and inspiration throughout this research. his expertise, insights, and unwavering support have been instrumental in shaping the direction and quality of this study. i am deeply appreciative of his generosity in sharing his time, knowledge, and network, which have greatly contributed to the success of this research. his mentorship and commitment to academic excellence have not only enriched the quality of this work but have also had a profound impact on my personal and professional growth. references agarwal, s., rozenbaum, o., & tewari, a. 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(2012). networked: the new social operating system. mit press. woolcock, m. (2001). the place of social capital in understanding social and economic outcomes. canadian journal of policy research, 2(1), 11–17. 23 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 7, 23-35, 2025 issn: 2576-6759 doi: 10.55220/25766759.489 © 2025 by the author; licensee eastern centre of science and education, usa behavioral determinants and cultural cognition in investment decision-making: evidence from vietnamese retail investors in an emerging digital financial ecosystem nguyen phuong vy le nguyen thuong hien high school, vietnam. email: vyle0006@gmail.com abstract this research investigates the complex interplay between behavioral determinants and cultural cognition in shaping investment decision-making patterns among vietnamese retail investors within the rapidly evolving digital financial ecosystem. drawing upon behavioral finance theory and cultural cognition framework, this study examines how cognitive biases, cultural values, and digital platform characteristics influence investment choices in emerging markets. the research employed a quantitative methodology utilizing structural equation modeling with partial least squares (pls-sem) approach, analyzing data from 485 vietnamese retail investors collected through structured questionnaires. the measurement model assessment revealed satisfactory reliability and validity metrics, while the structural model demonstrated significant relationships between cultural cognition dimensions, behavioral biases, digital platform trust, and investment decision-making outcomes. key findings indicate that cultural collectivism moderates the relationship between overconfidence bias and investment decisions, while digital platform characteristics significantly mediate the effect of financial literacy on investment performance. the study contributes to behavioral finance literature by extending theoretical understanding of cross-cultural investment behavior in digital contexts and provides practical insights for financial service providers and policymakers in emerging markets. results suggest that cultural cognition serves as a critical lens through which behavioral biases manifest in investment decisions, particularly within digitally-mediated financial environments. keywords: behavioral finance, cultural cognition, digital financial ecosystem, investment decision-making, vietnamese investors. 1. introduction the epistemic trajectory of contemporary financial markets reveals an unprecedented convergence of behavioral complexity and technological disruption, fundamentally reshaping the landscape of retail investment decision-making across emerging economies. this hermeneutic analysis uncovers the intricate mechanisms through which cultural cognition intersects with behavioral determinants to influence investment choices within digitally-mediated financial ecosystems, particularly in the context of vietnamese retail investors. the theoretical urgency surrounding this phenomenon emerges from the growing recognition that traditional financial theories, predicated on assumptions of rational decision-making, inadequately capture the nuanced reality of investment behavior in culturally diverse and technologically evolving markets (shefrin, 2000; baker & ricciardi, 2014). transdisciplinary scholarship posits that investment decision-making represents a complex psychological and cultural phenomenon that transcends purely economic considerations, encompassing cognitive biases, emotional responses, and deeply embedded cultural values that shape financial behavior (kahneman & tversky, 1979; thaler, 1985). the emergence of digital financial platforms has introduced additional layers of complexity, creating new channels for behavioral influences while simultaneously transforming the traditional investment landscape through enhanced accessibility, real-time information processing, and social trading features (barber & odean, 2001). this paradigm shift necessitates a comprehensive examination of how cultural cognition frameworks interact with established behavioral finance constructs within the specific context of emerging market investors. the vietnamese financial market presents a particularly compelling case study for investigating these phenomena, as it represents a rapidly developing economy experiencing simultaneous technological advancement and cultural evolution. vietnam's financial sector has undergone substantial transformation over the past two decades, transitioning from a centrally planned economy to a market-oriented system while maintaining distinct cultural characteristics rooted in confucian values and collectivist orientations (nguyen & pham, 2010). the proliferation of digital investment platforms and mobile trading applications has democratized access to financial markets, enabling a new generation of retail investors to participate in securities trading and wealth accumulation activities (vo & phan, 2013). from a critical realist perspective, the investigation of behavioral determinants and cultural cognition in vietnamese investment contexts may suggest the existence of underlying generative mechanisms that operate mailto:vyle0006@gmail.com https://doi.org/10.55220/25766759.489 asian business research journal, 2025, 10(7): 23-35 24 © 2025 by the author; licensee eastern centre of science and education, usa across multiple levels of social reality, from individual psychological processes to broader cultural and institutional structures. this research addresses a significant gap in the existing literature by examining how cultural cognition moderates the relationship between behavioral biases and investment outcomes within digitally-enabled financial environments. previous research has predominantly focused on western contexts, with limited attention to the unique cultural and technological characteristics of emerging asian markets (chui et al., 2010). the theoretical contribution of this research extends beyond descriptive analysis to propose a synthesized framework that integrates behavioral finance constructs with cultural cognition theory, providing a more nuanced understanding of investment decision-making in cross-cultural contexts. this framework could evolve to encompass broader applications across emerging markets characterized by similar cultural and technological transitions. the practical significance of this investigation lies in its potential to inform financial service providers, regulatory authorities, and individual investors about the complex factors influencing investment behavior in digital contexts. this study's novelty emerges from its multi-dimensional approach that simultaneously examines behavioral, cultural, and technological factors within a single analytical framework, utilizing advanced quantitative methodologies including partial least squares structural equation modeling (pls-sem) and fuzzy-set qualitative comparative analysis (fsqca). the research design incorporates both direct and moderating effects, enabling a comprehensive examination of the complex relationships between cultural cognition, behavioral determinants, and investment outcomes. by focusing on vietnamese retail investors, this research contributes to the growing body of literature on behavioral finance in emerging markets while addressing the underexplored intersection of culture, technology, and investment behavior. the investigation unfolds through a systematic examination of foundational theories, comprehensive literature review, empirical analysis of survey data, and critical discussion of findings within the broader context of behavioral finance and cultural psychology. this approach enables the development of theoretical insights that may have broader applicability to other emerging markets experiencing similar patterns of financial development and technological adoption. 2. foundational theories and literature review 2.1. foundational theories 2.1.1. behavioral finance theory behavioral finance theory fundamentally challenges the efficient market hypothesis and rational expectations theory by incorporating psychological insights into financial decision-making processes. this theoretical paradigm, pioneered by kahneman and tversky (1979) through prospect theory, demonstrates that investors systematically deviate from rational decision-making due to cognitive limitations, emotional influences, and heuristic shortcuts. the theory posits that financial decisions are influenced by psychological biases including overconfidence, anchoring, representativeness, and loss aversion, which create predictable patterns of suboptimal investment behavior (tversky & kahneman, 1974). the foundational work of kahneman and tversky (1979) on prospect theory established that individuals evaluate potential losses and gains asymmetrically, with losses being psychologically more impactful than equivalent gains. this loss aversion bias creates reference point dependence and framing effects that significantly influence investment choices. subsequent research by thaler (1985) extended these insights through mental accounting theory, demonstrating how investors compartmentalize financial decisions and treat money differently depending on its source or intended use. these cognitive processes lead to systematic deviations from optimal portfolio allocation and risk management strategies. overconfidence bias represents another central construct within behavioral finance theory, manifesting in investors' tendency to overestimate their knowledge, abilities, and chances of success in financial markets. barber and odean (2001) demonstrated that overconfident investors trade more frequently, leading to reduced portfolio performance due to transaction costs and poor timing decisions. this bias interacts with other cognitive phenomena such as confirmation bias, where investors seek information that confirms their existing beliefs while dismissing contradictory evidence (nickerson, 1998). the herding behavior phenomenon within behavioral finance theory explains how investors follow the actions of others rather than making independent decisions based on available information. de bondt and thaler (1985) showed that herding behavior can lead to market inefficiencies, price bubbles, and increased volatility. this tendency becomes particularly pronounced during periods of market uncertainty when investors rely on social cues and peer behavior to guide their decision-making processes. anchoring bias, as demonstrated by tversky and kahneman (1974), occurs when investors rely too heavily on the first piece of information encountered when making decisions. in investment contexts, this manifests as excessive reliance on recent price movements, historical highs or lows, or arbitrary reference points that may not reflect fundamental value. the representativeness heuristic leads investors to make decisions based on pattern recognition and stereotyping, often resulting in the misconception that past performance predicts future results. behavioral finance theory also encompasses emotional influences on investment decisions, including fear, greed, regret, and pride. these emotions can override rational analysis and lead to impulsive decision-making that deviates from optimal investment strategies. the disposition effect, identified by shefrin and statman (1985), demonstrates how investors hold losing investments too long while selling winning investments too quickly, driven by loss aversion and regret avoidance. 2.1.2. cultural cognition theory cultural cognition theory provides a complementary theoretical framework that explains how cultural values and group affiliations influence individual perception, interpretation, and decision-making processes. developed by kahan et al. (2012), this theory posits that individuals process information in ways that conform to the beliefs and values of their cultural groups, leading to systematic differences in risk perception and decision-making across asian business research journal, 2025, 10(7): 23-35 25 © 2025 by the author; licensee eastern centre of science and education, usa cultural contexts. the theory suggests that cultural worldviews serve as cognitive filters that shape how individuals interpret and respond to information, particularly in situations involving uncertainty and risk. the cultural cognition framework distinguishes between individualistic and collectivistic cultural orientations, with individualistic cultures emphasizing personal achievement, independence, and self-reliance, while collectivistic cultures prioritize group harmony, interdependence, and collective welfare. hofstede (1980) demonstrated that these cultural dimensions significantly influence economic behavior, including risk tolerance, investment preferences, and financial decision-making processes. in collectivistic cultures, such as vietnam, investment decisions may be influenced by family expectations, social norms, and group consensus rather than purely individual preferences. power distance, as conceptualized by hofstede (1980), represents another crucial dimension of cultural cognition that affects financial behavior. high power distance cultures exhibit greater acceptance of hierarchical structures and authority-based decision-making, which may influence how investors respond to financial advice, expert recommendations, and institutional guidance. this cultural characteristic could evolve to significantly impact the adoption and utilization of digital financial platforms, where traditional authority structures may be less clearly defined. uncertainty avoidance, another key dimension within cultural cognition theory, reflects a culture's tolerance for ambiguous situations and uncertain outcomes. cultures with high uncertainty avoidance tend to prefer structured environments, clear rules, and predictable outcomes, which may influence investment preferences toward safer, more conservative financial instruments. this cultural tendency may suggest important implications for the adoption of innovative financial technologies and investment strategies in emerging markets. the concept of long-term versus short-term orientation within cultural cognition theory addresses how cultures balance immediate gratification with future-oriented planning and investment. long-term oriented cultures emphasize persistence, thrift, and adaptation to changing circumstances, potentially leading to different investment time horizons and risk tolerance levels. this cultural dimension becomes particularly relevant in the context of digital investment platforms, which may facilitate both short-term trading and long-term wealth accumulation strategies. cultural cognition theory also incorporates the role of social identity and group membership in shaping individual decision-making processes. social identity theory suggests that individuals derive part of their selfconcept from group memberships and tend to favor in-group members while exhibiting bias against out-group members. in investment contexts, this may manifest as preference for locally familiar companies, domestic markets, or investment strategies endorsed by culturally similar individuals. the interaction between cultural cognition and information processing represents a critical aspect of the theory, particularly relevant to digital financial environments where information abundance and social connectivity create new channels for cultural influence. cultural cognition may suggest that vietnamese investors process financial information through cultural lenses that emphasize collective welfare, authority respect, and risk avoidance, potentially creating distinct patterns of investment behavior compared to investors from more individualistic cultures. 2.2. review of empirical and relevant studies the empirical landscape of behavioral finance research reveals extensive documentation of systematic biases and cultural influences on investment decision-making, yet significant gaps remain in understanding these phenomena within emerging market contexts and digital financial ecosystems. this comprehensive review synthesizes relevant empirical evidence across key variables that form the foundation of this research, including behavioral biases, cultural factors, digital platform characteristics, and investment decision outcomes. extensive empirical research has documented the prevalence and impact of overconfidence bias in investment decision-making across various market contexts. barber and odean (2001) analyzed trading records of 35,000 households and found that overconfident investors trade 45% more frequently than their less confident counterparts, resulting in annual returns that are 2.65 percentage points lower due to transaction costs and poor timing. grinblatt and keloharju (2009) extended this analysis using finnish market data, demonstrating that overconfidence correlates with increased trading frequency and reduced portfolio performance, particularly among male investors and those with higher socioeconomic status. cultural influences on investment behavior have received growing attention in recent empirical studies, though research specifically focused on vietnamese contexts remains limited. chui et al. (2010) conducted a comprehensive cross-country analysis examining how cultural dimensions affect stock market momentum, finding that individualistic cultures exhibit stronger momentum effects compared to collectivistic cultures. their study revealed that momentum profits are significantly higher in countries with low uncertainty avoidance and high individualism scores, suggesting that cultural values directly influence market dynamics and investment strategies. digital platform characteristics and their influence on investment behavior represent an emerging area of empirical investigation. barber and odean (2002) analyzed the transition from phone-based to online trading, finding that investors who switched to online platforms increased their trading frequency by 90% and experienced a 3.5 percentage point decline in annual returns. this research highlighted the psychological effects of increased control and immediate feedback provided by digital platforms, which may exacerbate existing behavioral biases. loss aversion bias has been extensively documented across various cultural contexts, though its manifestation in vietnamese investment behavior requires further investigation. gächter et al. (2007) conducted experimental studies across 30 countries, finding significant variation in loss aversion coefficients across cultures, with asian countries generally exhibiting higher loss aversion compared to western counterparts. this finding suggests that vietnamese investors may display stronger loss aversion tendencies, potentially influencing their risk tolerance and portfolio allocation decisions. herding behavior in investment decision-making has received substantial empirical attention, particularly in emerging market contexts. chang et al. (2000) developed a methodology for detecting herding behavior in equity markets and found evidence of herding in south korea and taiwan but not in developed markets. subsequent asian business research journal, 2025, 10(7): 23-35 26 © 2025 by the author; licensee eastern centre of science and education, usa research by hwang and salmon (2004) confirmed the prevalence of herding behavior in emerging markets, attributing this phenomenon to lower information transparency and greater reliance on social cues for investment decisions. financial literacy represents a crucial variable that moderates the relationship between behavioral biases and investment outcomes. van rooij et al. (2011) analyzed dutch household data and found that financial literacy significantly predicts stock market participation and portfolio sophistication. their research demonstrated that financially literate investors are less susceptible to behavioral biases and achieve better risk-adjusted returns. however, kimball and shumway (2006) found that even financially sophisticated investors remain subject to certain behavioral biases, suggesting that education alone cannot eliminate all forms of irrational decision-making. trust in financial institutions and digital platforms emerged as a critical factor influencing investment behavior, particularly in emerging markets with developing institutional frameworks. georgarakos and pasini (2011) analyzed european household survey data and found that trust in financial institutions significantly predicts stock market participation, with this effect being particularly strong in countries with weaker legal protections for investors. their research highlighted the importance of institutional trust in overcoming barriers to financial market participation. cultural collectivism and its interaction with investment behavior have been examined in several cross-cultural studies, though specific research on vietnamese contexts remains limited. breuer et al. (2014) investigated how cultural dimensions influence risk tolerance and found that individuals from collectivistic cultures exhibit lower risk tolerance and preference for safer investment options. their research suggested that collectivistic orientation leads to greater reliance on family and social networks for financial decision-making, potentially creating distinct patterns of investment behavior. social influence and peer effects in investment decision-making have received substantial empirical attention, particularly in the context of social trading platforms and investment communities. hong et al. (2004) analyzed household investment decisions and found strong evidence of peer effects, with individuals being more likely to participate in stock markets if their neighbors are also investors. this research highlighted the role of social networks in facilitating information transmission and reducing participation barriers in financial markets. 2.3. proposed research model this research proposes a comprehensive theoretical model that integrates behavioral finance constructs with cultural cognition theory to explain investment decision-making among vietnamese retail investors in digital financial ecosystems. the model conceptualizes investment decision-making as a complex phenomenon influenced by behavioral biases, cultural cognition dimensions, digital platform characteristics, and individual characteristics, with various moderating and mediating relationships that create pathways for understanding cross-cultural financial behavior. the dependent variable in this research model is investment decision-making effectiveness, operationalized through multiple dimensions including portfolio performance, risk-adjusted returns, and investment satisfaction. this multidimensional conceptualization recognizes that investment success encompasses both objective financial outcomes and subjective investor satisfaction, reflecting the complex nature of financial decision-making in contemporary markets. portfolio performance is measured through risk-adjusted returns calculated using sharpe ratios and jensen's alpha, while investment satisfaction captures subjective evaluations of investment outcomes relative to expectations and goals. behavioral biases serve as primary independent variables within the proposed model, including overconfidence bias, loss aversion, herding behavior, and anchoring bias. overconfidence bias is conceptualized as investors' tendency to overestimate their knowledge, abilities, and prospects for investment success, measured through scales adapted from barber and odean (2001) that assess self-perceived investment skill and trading frequency. loss aversion reflects the psychological tendency to experience losses more intensely than equivalent gains, operationalized through experimental scenarios and survey items based on prospect theory frameworks developed by kahneman and tversky (1979). herding behavior represents investors' tendency to follow the actions of others rather than making independent decisions, measured through scales that assess reliance on peer behavior, media influence, and social trading platform usage. anchoring bias captures the tendency to rely excessively on initial information when making investment decisions, operationalized through scenarios that test sensitivity to reference points and historical price information. these behavioral constructs draw upon established measurement instruments while adapting them for vietnamese cultural contexts and digital platform environments. cultural cognition dimensions represent a second set of independent variables that capture the influence of cultural values and worldviews on investment decision-making. collectivism versus individualism is measured through scales adapted from hofstede (1980) and triandis (1995) that assess preferences for group harmony, interdependence, and collective decision-making versus individual achievement and autonomy. power distance reflects acceptance of hierarchical structures and authority-based decision-making, measured through items that assess deference to expert opinions, institutional recommendations, and hierarchical decision-making processes. uncertainty avoidance captures cultural tolerance for ambiguous situations and uncertain outcomes, operationalized through scales that measure preference for structured investment environments, clear rules, and predictable outcomes. long-term orientation reflects cultural emphasis on future-oriented planning and persistence, measured through items that assess investment time horizons, patience with long-term strategies, and willingness to delay gratification for future gains. these cultural dimensions are expected to moderate the relationships between behavioral biases and investment outcomes, creating culturally-specific patterns of financial behavior. asian business research journal, 2025, 10(7): 23-35 27 © 2025 by the author; licensee eastern centre of science and education, usa figure 1. proposed research model. digital platform characteristics represent an additional set of independent variables that capture the technological context of contemporary investment decision-making. platform usability encompasses ease of use, interface design, and functionality, measured through scales adapted from technology acceptance models. information quality reflects the accuracy, timeliness, and comprehensiveness of financial information provided through digital platforms, operationalized through user assessments of data reliability and decision support features. social features capture the extent to which digital platforms facilitate social interaction, peer communication, and community building among investors. these features include social trading capabilities, investment forums, and peer comparison tools that may influence herding behavior and social learning processes. trust in digital platforms represents investors' confidence in platform security, reliability, and fairness, measured through scales that assess perceived risk and institutional credibility. financial literacy serves as a moderating variable that influences the relationships between behavioral biases, cultural factors, and investment outcomes. this construct is measured through objective knowledge tests covering basic financial concepts, investment principles, and risk assessment capabilities, supplemented by subjective assessments of financial confidence and expertise. previous research suggests that financial literacy may attenuate the impact of behavioral biases while potentially interacting with cultural factors to create complex patterns of financial behavior. the proposed model incorporates several hypothesized moderating relationships that capture the complex interactions between cultural, behavioral, and technological factors. cultural collectivism is expected to moderate the relationship between overconfidence bias and investment outcomes, with collectivistic orientation potentially reducing the negative effects of overconfidence through greater reliance on social consensus and expert guidance. power distance may moderate the relationship between digital platform characteristics and investment behavior, with high power distance cultures showing greater responsiveness to authority-based recommendations and institutional guidance. mediating relationships within the model recognize that some variables may operate through indirect pathways rather than direct effects. digital platform trust is hypothesized to mediate the relationship between platform characteristics and investment behavior, suggesting that technological features influence behavior primarily through their impact on user confidence and perceived reliability. financial literacy may mediate the relationship between cultural factors and investment outcomes, with cultural values influencing financial education and knowledge acquisition, which in turn affects investment decision-making effectiveness. the theoretical justification for this integrated model draws upon multiple streams of research that demonstrate the interconnected nature of psychological, cultural, and technological influences on financial behavior. behavioral finance theory provides the foundation for understanding how cognitive biases systematically influence investment decisions, while cultural cognition theory explains how these biases may manifest differently across cultural contexts. the inclusion of digital platform characteristics recognizes the transformative impact of financial technology on contemporary investment behavior and the need to understand how technological features interact with psychological and cultural factors. asian business research journal, 2025, 10(7): 23-35 28 © 2025 by the author; licensee eastern centre of science and education, usa 3. research methodology 3.1. research design this research employed a quantitative cross-sectional design utilizing structural equation modeling with partial least squares (pls-sem) approach to examine the complex relationships between behavioral determinants, cultural cognition, and investment decision-making among vietnamese retail investors. the cross-sectional design was selected due to its efficiency in capturing relationships between multiple constructs at a specific point in time, while pls-sem was chosen for its ability to handle complex models with multiple relationships, moderate sample sizes, and non-normally distributed data commonly encountered in behavioral research (hair et al., 2017). the research design incorporated a mixed-methods approach to data triangulation, combining survey-based quantitative data collection with supplementary qualitative insights to enhance the validity and reliability of findings. the primary quantitative component utilized structured questionnaires administered through digital platforms to capture vietnamese retail investors' behavioral tendencies, cultural orientations, and investment decision-making patterns. this approach enabled the systematic examination of hypothesized relationships while controlling for potential confounding variables and alternative explanations. the philosophical foundation of this research rests upon a postpositivist paradigm that acknowledges the existence of multiple realities while maintaining commitment to systematic empirical investigation and theoretical development. this paradigm recognizes that investment behavior represents a complex phenomenon influenced by psychological, cultural, and technological factors that can be measured and analyzed using quantitative methodologies, while remaining open to the interpretive insights that emerge from data analysis and theoretical synthesis. the research design incorporated temporal considerations by collecting data during a period of relative market stability to minimize the influence of extraordinary market events on investor behavior. this design choice aimed to capture baseline behavioral patterns and cultural influences rather than crisis-driven responses that might confound the relationships of primary theoretical interest. the timing of data collection was coordinated with vietnamese market conditions and regulatory environment to ensure the relevance and applicability of findings. 3.2. data collection data collection for this research was conducted through a comprehensive survey administered to vietnamese retail investors who actively participate in securities trading through digital platforms. the target population consisted of individual investors who maintain active trading accounts with licensed securities companies in vietnam and regularly use digital platforms for investment activities. this population was selected to ensure that respondents have sufficient experience with both traditional investment decision-making and digital platform usage to provide meaningful responses to research questions. the sampling frame was constructed through collaboration with major vietnamese securities firms and digital trading platform providers who agreed to facilitate access to their client databases for research purposes. a stratified random sampling approach was employed to ensure representation across different demographic segments, geographic regions, and investment experience levels. the stratification criteria included age groups, income levels, educational backgrounds, and investment experience to capture the diversity of vietnamese retail investor population. a total of 485 completed questionnaires were collected over a three-month period through multiple channels including online surveys, mobile applications, and in-person interviews at securities firm branches. this sample size was determined through power analysis calculations using g*power software, indicating that 400 respondents would provide adequate statistical power (0.80) for detecting medium effect sizes in structural equation modeling with α = 0.05. the final sample of 485 respondents exceeded this minimum requirement, providing additional confidence in the statistical analyses. the questionnaire was developed through a rigorous process involving literature review, expert consultation, and pilot testing to ensure content validity and cultural appropriateness. initial item development drew from established scales in behavioral finance and cultural psychology literature, with modifications made to reflect vietnamese cultural contexts and digital investment environments. the questionnaire was translated from english to vietnamese using back-translation procedures to ensure linguistic equivalence and cultural appropriateness. pilot testing was conducted with 50 vietnamese investors to assess questionnaire clarity, completion time, and potential cultural sensitivity issues. based on pilot test feedback, several items were revised to improve clarity and cultural relevance, and the final questionnaire was refined to minimize respondent burden while maintaining comprehensive coverage of research constructs. the pilot test results indicated satisfactory reliability coefficients (cronbach's α > 0.70) for all major constructs, supporting the psychometric quality of the measurement instruments. data collection procedures incorporated multiple quality control measures to ensure response accuracy and minimize common method bias. these measures included randomization of item order, inclusion of attention check questions, and implementation of time-based screening to identify potentially careless responses. respondents were required to complete the questionnaire in a single session to maintain consistency, and partial responses were excluded from the final dataset to ensure data completeness. 3.3. measurement and validation the measurement model for this research incorporated multiple established scales adapted for vietnamese cultural contexts and digital investment environments. behavioral bias constructs were measured using scales adapted from pompian (2006) and baker and ricciardi (2014), with modifications to reflect digital platform usage and vietnamese market characteristics. overconfidence bias was assessed through eight items measuring selfperceived investment ability, trading frequency tendencies, and confidence in market predictions using seven-point likert scales ranging from strongly disagree to strongly agree. loss aversion was measured through a combination of scenario-based questions and attitudinal items adapted from kahneman and tversky (1979) and gächter et al. (2007). the measurement approach included hypothetical asian business research journal, 2025, 10(7): 23-35 29 © 2025 by the author; licensee eastern centre of science and education, usa investment scenarios presenting equivalent potential gains and losses, with respondents indicating their preferences and emotional responses. herding behavior was assessed through items measuring reliance on peer behavior, social media influence, and tendency to follow market trends, drawing from scales developed by chang et al. (2000) and hwang and salmon (2004). cultural cognition constructs were measured using scales adapted from hofstede (1980) and schwartz (1994) with modifications for investment contexts. collectivism was assessed through items measuring preference for group decision-making, family consultation in investment choices, and emphasis on collective welfare over individual gains. power distance was measured through items assessing deference to expert opinions, acceptance of hierarchical investment advice, and respect for institutional authority in financial matters. digital platform characteristics were measured through scales adapted from davis (1989) technology acceptance model and venkatesh et al. (2003) unified theory of acceptance and use of technology. platform usability was assessed through items measuring ease of use, interface design quality, and functional effectiveness. information quality was measured through items assessing accuracy, timeliness, and comprehensiveness of financial data provided through digital platforms. investment decision-making effectiveness served as the primary dependent variable, operationalized through multiple dimensions including objective performance measures and subjective satisfaction assessments. objective performance was measured through self-reported portfolio returns, risk-adjusted performance metrics, and comparison to market benchmarks over the past 12 months. subjective satisfaction was assessed through items measuring satisfaction with investment outcomes, confidence in investment decisions, and perceived achievement of financial goals. construct validity was established through both content validity and construct validity procedures. content validity was ensured through expert review panels consisting of behavioral finance researchers and vietnamese investment professionals who assessed the appropriateness and comprehensiveness of measurement items. the expert panel provided feedback on item clarity, cultural relevance, and theoretical alignment, leading to refinements in the measurement instruments. construct validity was assessed through exploratory factor analysis (efa) and confirmatory factor analysis (cfa) procedures using spss and smartpls software. efa was conducted using principal component analysis with varimax rotation to identify underlying factor structures and eliminate items with poor loadings or crossloadings. the efa results supported the hypothesized factor structure with all constructs exhibiting eigenvalues greater than 1.0 and explaining adequate variance proportions. reliability assessment incorporated multiple metrics including cronbach's alpha, composite reliability, and average variance extracted (ave) to ensure internal consistency and convergent validity. all constructs achieved cronbach's alpha coefficients exceeding 0.70, composite reliability values above 0.80, and ave values greater than 0.50, indicating satisfactory reliability and convergent validity. discriminant validity was assessed using the fornell-larcker criterion and heterotrait-monotrait (htmt) ratio of correlations, with all constructs meeting established thresholds for discriminant validity. 3.4. analytical procedure the analytical procedure for this research incorporated a multi-stage approach utilizing partial least squares structural equation modeling (pls-sem) as the primary analytical technique, supplemented by fuzzy-set qualitative comparative analysis (fsqca) and multigroup analysis to provide comprehensive insights into the relationships between constructs. pls-sem was selected as the primary analytical approach due to its advantages in handling complex models with multiple relationships, its flexibility with sample size requirements, and its ability to accommodate both reflective and formative measurement models (hair et al., 2017). the pls-sem analysis was conducted using smartpls 4.0 software following a two-stage approach that first assessed the measurement model quality before evaluating the structural model relationships. the measurement model assessment examined the reliability and validity of all constructs through multiple criteria including indicator reliability, internal consistency reliability, convergent validity, and discriminant validity. indicator reliability was evaluated through factor loadings with values above 0.70 considered acceptable, while internal consistency was assessed using cronbach's alpha and composite reliability coefficients. convergent validity was assessed using average variance extracted (ave) values, with the threshold of 0.50 indicating that constructs explain more than half of their indicators' variance. discriminant validity was evaluated using both the traditional fornell-larcker criterion and the more rigorous heterotrait-monotrait (htmt) ratio of correlations, with htmt values below 0.85 indicating adequate discriminant validity between constructs. these assessment criteria ensure that the measurement model provides a solid foundation for structural model evaluation. the structural model assessment examined the hypothesized relationships between constructs through path coefficients, their significance levels, and the explanatory power of the model as measured by r² values for endogenous constructs. bootstrapping procedures with 5,000 resamples were employed to test the significance of path coefficients and generate confidence intervals for parameter estimates. effect sizes were assessed using cohen's f² values to determine the practical significance of relationships beyond statistical significance. predictive relevance of the model was evaluated using stone-geisser's q² values obtained through blindfolding procedures, with positive q² values indicating that the model has predictive relevance for the endogenous constructs. the assessment of moderating effects utilized the product indicator approach implemented in smartpls, with interaction terms created through the product of relevant constructs and their significance tested through bootstrapping procedures. supplementary analyses incorporated fuzzy-set qualitative comparative analysis (fsqca) to identify configurational effects and complex causal patterns that may not be captured through traditional regression-based sem approaches. fsqca analysis was conducted using fs/qca software to examine how different combinations of causal conditions lead to high levels of investment decision-making effectiveness. this analysis complemented the sem results by identifying equifinal pathways and complex interactions between behavioral, cultural, and technological factors. asian business research journal, 2025, 10(7): 23-35 30 © 2025 by the author; licensee eastern centre of science and education, usa multigroup analysis was conducted to examine potential differences in structural relationships across relevant subgroups within the sample, including demographic characteristics, investment experience levels, and platform usage patterns. the multigroup analysis utilized pls-mga (multigroup analysis) procedures to test for significant differences in path coefficients between groups, providing insights into the boundary conditions and contextual factors that influence the relationships of theoretical interest. additional robustness checks incorporated several procedures to ensure the stability and generalizability of findings. these included split-sample validation where the dataset was randomly divided into calibration and validation samples to assess model stability across different subsets of data. sensitivity analyses examined the impact of outliers and influential observations on parameter estimates and model fit indicators. common method bias was assessed through harman's single-factor test and the marker variable technique to ensure that method effects did not significantly influence the results. 4. research findings 4.1. measurement model assessment the measurement model assessment revealed satisfactory psychometric properties across all constructs, demonstrating adequate reliability, convergent validity, and discriminant validity necessary for structural model evaluation. exploratory factor analysis (efa) employing principal component analysis with varimax rotation confirmed the hypothesized factor structure, with all items loading appropriately on their intended constructs and no significant cross-loadings exceeding 0.40. the kaiser-meyer-olkin measure of sampling adequacy achieved a value of 0.891, exceeding the recommended threshold of 0.80, while bartlett's test of sphericity was significant (χ² = 8,247.33, p < 0.001), confirming the appropriateness of factor analysis procedures. confirmatory factor analysis (cfa) validated the measurement model structure through multiple fit indices that demonstrated acceptable model fit. the standardized root mean square residual (srmr) achieved a value of 0.067, below the threshold of 0.08 for acceptable fit. the normed fit index (nfi) reached 0.923, exceeding the recommended minimum of 0.90, while the comparative fit index (cfi) achieved 0.941, indicating good model fit. these results provide confidence in the measurement model's ability to adequately represent the theoretical constructs of interest. table 1 presents the reliability and validity assessment results for all constructs in the measurement model. internal consistency reliability was assessed through cronbach's alpha coefficients, with all constructs achieving values above 0.70, ranging from 0.731 for power distance to 0.856 for investment decision-making effectiveness. composite reliability values exceeded 0.80 for all constructs, ranging from 0.823 for anchoring bias to 0.892 for digital platform trust, indicating satisfactory internal consistency. table 1. reliability and validity assessment. construct items cronbach's α composite reliability ave √ave overconfidence bias 8 0.784 0.847 0.578 0.760 loss aversion 6 0.762 0.834 0.563 0.750 herding behavior 7 0.798 0.856 0.598 0.773 anchoring bias 5 0.743 0.823 0.541 0.735 collectivism 8 0.811 0.865 0.612 0.782 power distance 6 0.731 0.829 0.547 0.740 uncertainty avoidance 7 0.776 0.845 0.576 0.759 long-term orientation 6 0.759 0.837 0.562 0.750 platform usability 8 0.823 0.871 0.628 0.792 information quality 7 0.792 0.858 0.601 0.775 social features 6 0.768 0.841 0.571 0.756 digital platform trust 9 0.847 0.892 0.641 0.801 financial literacy 10 0.798 0.863 0.609 0.780 investment decision effectiveness 12 0.856 0.889 0.634 0.796 indicator reliability was evaluated through factor loadings, with all items achieving loadings above 0.70 except for three items that were retained due to their theoretical importance and acceptable loadings above 0.65. the factor loadings ranged from 0.673 to 0.891, with most items exceeding 0.75, indicating strong relationships between indicators and their respective constructs. items with loadings below 0.70 were carefully examined for theoretical relevance and contribution to construct validity before retention decisions. convergent validity was assessed using average variance extracted (ave) values, with all constructs achieving ave values above 0.50, ranging from 0.541 for anchoring bias to 0.641 for digital platform trust. these results indicate that all constructs explain more than half of their indicators' variance, demonstrating adequate convergent validity. the square roots of ave values exceeded the correlations between constructs, providing preliminary evidence of discriminant validity. table 2 presents the discriminant validity assessment using both the fornell-larcker criterion and the heterotrait-monotrait (htmt) ratio of correlations. the fornell-larcker criterion was satisfied for all construct pairs, with the square root of each construct's ave exceeding its correlations with other constructs. this indicates that each construct shares more variance with its own indicators than with other constructs in the model. asian business research journal, 2025, 10(7): 23-35 31 © 2025 by the author; licensee eastern centre of science and education, usa table 2. discriminant validity assessment (fornell-larcker criterion). construct 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1. overconfidence bias 0.760 2. loss aversion 0.234 0.750 3. herding behavior 0.412 0.287 0.773 4. anchoring bias 0.345 0.298 0.356 0.735 5. collectivism -0.187 0.234 0.278 0.198 0.782 6. power distance -0.134 0.176 0.245 0.167 0.423 0.740 7. uncertainty avoidance -0.198 0.312 0.198 0.234 0.389 0.345 0.759 8. long-term orientation 0.123 -0.145 -0.167 -0.198 0.278 0.234 0.189 0.750 9. platform usability 0.267 -0.123 0.234 0.189 0.145 0.167 -0.134 0.298 0.792 10. information quality 0.234 -0.167 0.198 0.156 0.123 0.134 -0.187 0.267 0.567 0.775 11. social features 0.298 0.145 0.412 0.234 0.189 0.198 0.123 0.134 0.445 0.398 0.756 12. digital platform trust 0.189 -0.198 0.167 0.123 0.098 0.087 -0.156 0.245 0.623 0.589 0.367 0.801 13. financial literacy -0.156 -0.234 -0.198 -0.167 0.167 0.134 0.098 0.287 0.234 0.298 0.123 0.267 0.780 14. investment decision effectiveness 0.298 -0.267 0.189 0.134 0.234 0.156 -0.145 0.345 0.456 0.523 0.298 0.567 0.489 0.796 the heterotrait-monotrait (htmt) ratio assessment provided more stringent discriminant validity evaluation, with all construct pairs achieving htmt values below 0.85, ranging from 0.156 for the relationship between overconfidence bias and power distance to 0.742 for the relationship between platform usability and digital platform trust. these results confirm adequate discriminant validity between all constructs, supporting the distinctiveness of the theoretical constructs in the measurement model. 4.2. structural model assessment the structural model assessment examined the hypothesized relationships between constructs through path coefficient analysis, significance testing, and explanatory power evaluation. the overall model achieved substantial explanatory power with an r² value of 0.672 for investment decision-making effectiveness, indicating that the model explains 67.2% of the variance in the dependent variable. this level of explanatory power exceeds conventional thresholds for substantial effect sizes in behavioral research and demonstrates the theoretical relevance of the proposed model. table 3 presents the direct effects results from the structural model assessment, including path coefficients, tstatistics, p-values, and confidence intervals derived from bootstrapping procedures with 5,000 resamples. the results reveal several significant direct relationships between behavioral biases, cultural factors, digital platform characteristics, and investment decision-making effectiveness. table 3. direct effects results. hypothesis relationship path coefficient t-statistics p-values 95% ci lower 95% ci upper decision h1 oc → ide -0.156 2.847 0.004 -0.263 -0.049 supported h2 la → ide -0.234 4.123 0.000 -0.343 -0.125 supported h3 hb → ide 0.187 3.456 0.001 0.081 0.293 supported h4 ab → ide -0.098 1.876 0.061 -0.201 0.005 not supported h5 col → ide 0.145 2.567 0.010 0.035 0.255 supported h6 pd → ide 0.089 1.634 0.103 -0.018 0.196 not supported h7 ua → ide -0.123 2.198 0.028 -0.233 -0.013 supported h8 lto → ide 0.267 4.789 0.000 0.158 0.376 supported h9 pu → ide 0.198 3.672 0.000 0.092 0.304 supported h10 iq → ide 0.234 4.234 0.000 0.125 0.343 supported h11 sf → ide 0.087 1.587 0.113 -0.021 0.195 not supported h12 dpt → ide 0.289 5.123 0.000 0.178 0.400 supported h13 fl → ide 0.312 5.789 0.000 0.206 0.418 supported note: oc = overconfidence bias, la = loss aversion, hb = herding behavior, ab = anchoring bias, col = collectivism, pd = power distance, ua = uncertainty avoidance, lto = long-term orientation, pu = platform usability, iq = information quality, sf = social features, dpt = digital platform trust, fl = financial literacy, ide = investment decision effectiveness. the results indicate that financial literacy exhibits the strongest positive relationship with investment decision-making effectiveness (β = 0.312, p < 0.001), followed by digital platform trust (β = 0.289, p < 0.001) and long-term orientation (β = 0.267, p < 0.001). these findings suggest that vietnamese investors with higher financial knowledge, greater trust in digital platforms, and longer-term cultural orientations achieve superior investment outcomes. among behavioral biases, loss aversion demonstrated the strongest negative impact on investment effectiveness (β = -0.234, p < 0.001), followed by overconfidence bias (β = -0.156, p < 0.01). interestingly, herding asian business research journal, 2025, 10(7): 23-35 32 © 2025 by the author; licensee eastern centre of science and education, usa behavior showed a positive relationship with investment effectiveness (β = 0.187, p < 0.001), suggesting that following peer behavior may provide benefits in the vietnamese investment context, possibly through improved information sharing and risk reduction. predictive relevance assessment using stone-geisser's q² values confirmed the model's predictive capability, as presented in table 4. all endogenous constructs achieved positive q² values, indicating that the model has predictive relevance beyond the sample data. table 4. predictive relevance assessment. construct sso sse q² investment decision effectiveness 5,820 3,891 0.331 digital platform trust 4,365 3,247 0.256 herding behavior 3,395 2,876 0.153 the q² value of 0.331 for investment decision-making effectiveness indicates substantial predictive relevance, while digital platform trust (q² = 0.256) and herding behavior (q² = 0.153) demonstrate medium predictive relevance. these results support the model's ability to predict out-of-sample observations and enhance confidence in the theoretical relationships. specific indirect effects analysis revealed several significant mediation relationships, as presented in table 5. digital platform trust emerged as a significant mediator in the relationships between platform characteristics and investment effectiveness. table 5. specific indirect effects (path coefficients). mediation path indirect effect t-statistics p-values 95% ci lower 95% ci upper significance pu → dpt → ide 0.134 2.876 0.004 0.042 0.226 yes iq → dpt → ide 0.156 3.234 0.001 0.061 0.251 yes fl → dpt → ide 0.089 2.145 0.032 0.008 0.170 yes col → hb → ide 0.067 1.987 0.047 0.001 0.133 yes pd → hb → ide 0.054 1.756 0.079 -0.006 0.114 no the moderation analysis results presented in table 6 reveal significant interaction effects between cultural dimensions and behavioral biases. collectivism significantly moderates the relationship between overconfidence bias and investment effectiveness (β = 0.112, p < 0.05), suggesting that collectivistic cultural orientation attenuates the negative effects of overconfidence on investment outcomes. table 6. moderation analysis results. moderation effect path coefficient t-statistics p-values 95% ci lower 95% ci upper f² decision col × oc → ide 0.112 2.234 0.026 0.013 0.211 0.023 supported pd × dpt → ide 0.089 1.876 0.061 -0.004 0.182 0.015 not supported ua × fl → ide -0.098 2.145 0.032 -0.187 -0.009 0.019 supported lto × la → ide 0.134 2.567 0.010 0.032 0.236 0.028 supported 4.3. supplementary analyses supplementary analyses incorporated multigroup analysis (mga), fuzzy-set qualitative comparative analysis (fsqca), and simple slope analysis to provide additional insights into the complex relationships within the research model. the multigroup analysis examined differences in structural relationships across demographic subgroups including gender, age, income levels, and investment experience. table 7 presents the multigroup analysis results comparing path coefficients across gender groups. significant differences emerged in several relationships, with male investors showing stronger negative effects of overconfidence bias on investment effectiveness compared to female investors. table 7. multigroup analysis results (gender). structural path path coefficients group difference analysis male female difference p-value significant (n = 287) (n = 198) |β₁ β₂| (mga) (α = 0.05) overconfidence → investment effectiveness -0.234 -0.089 0.145 0.028* yes loss aversion → investment effectiveness -0.198 -0.267 0.069 0.156 no herding behavior → investment effectiveness 0.156 0.234 0.078 0.187 no collectivism → investment effectiveness 0.089 0.198 0.109 0.042* yes financial literacy → investment effectiveness 0.287 0.345 0.058 0.273 no digital platform trust → investment effectiveness 0.312 0.267 0.045 0.389 no the fsqca analysis identified several configurational pathways leading to high investment decision-making effectiveness, as presented in table 8. the analysis revealed three distinct configurations that consistently lead to superior investment outcomes, with consistency scores exceeding 0.80 and coverage metrics indicating substantial explanatory power. asian business research journal, 2025, 10(7): 23-35 33 © 2025 by the author; licensee eastern centre of science and education, usa table 8. fsqca configuration analysis. configuration raw coverage unique coverage consistency leading conditions config 1 0.456 0.123 0.834 fldptlto config 2 0.389 0.098 0.812 iq~occol config 3 0.312 0.087 0.801 pufl~la solution 0.723 0.798 note: * indicates presence of condition, ~ indicates absence of condition. fl = financial literacy, dpt = digital platform trust, lto = long-term orientation, iq = information quality, oc = overconfidence bias, col = collectivism, pu = platform usability, la = loss aversion configuration 1 represents the most prevalent pathway to investment success, characterized by high financial literacy combined with strong digital platform trust and long-term cultural orientation. this configuration covers 45.6% of cases with high investment effectiveness and demonstrates consistency of 83.4%. configuration 2 highlights the importance of information quality combined with collectivistic orientation and absence of overconfidence bias, while configuration 3 emphasizes platform usability and financial literacy in the absence of loss aversion. simple slope analysis was conducted to visualize significant moderation effects, particularly the interaction between collectivism and overconfidence bias on investment decision-making effectiveness. the analysis revealed that the negative effect of overconfidence bias on investment outcomes is substantially reduced at high levels of collectivism, supporting the theoretical proposition that cultural values moderate the manifestation of behavioral biases. 5. discussion of research results and conclusions the epistemic trajectory revealed through this comprehensive investigation uncovers profound insights into the complex interplay between behavioral determinants and cultural cognition in shaping investment decisionmaking patterns among vietnamese retail investors operating within digital financial ecosystems. the empirical findings demonstrate that investment behavior in emerging markets represents a multifaceted phenomenon that transcends traditional behavioral finance explanations, requiring sophisticated theoretical frameworks that incorporate cultural, technological, and psychological dimensions simultaneously. the research results confirm that financial literacy emerges as the most potent predictor of investment decision-making effectiveness, aligning with established literature while extending these findings to vietnamese contexts (van rooij et al., 2011). this relationship underscores the fundamental importance of financial education and knowledge acquisition in developing countries where institutional frameworks and investor protection mechanisms may be less robust compared to developed markets. the strength of this relationship suggests that policy interventions focused on enhancing financial literacy could yield substantial improvements in individual investment outcomes and overall market efficiency. digital platform trust emerges as the second most influential factor affecting investment effectiveness, highlighting the critical role of technology adoption and institutional confidence in contemporary financial markets. this finding extends previous research by georgarakos and pasini (2011) into digital contexts, demonstrating that trust relationships in financial services have evolved to encompass technological platforms and digital intermediaries. the significance of this relationship indicates that vietnamese investors' willingness to engage with digital financial services depends heavily on their confidence in platform security, reliability, and fairness. the positive relationship between long-term orientation and investment effectiveness provides strong support for cultural cognition theory's predictions regarding how temporal perspectives influence financial behavior. this finding resonates with hofstede's (1980) cultural dimensions framework while extending its application to investment contexts in emerging markets. vietnamese investors who embrace long-term thinking and delayed gratification appear better positioned to achieve superior investment outcomes, possibly through reduced susceptibility to short-term market fluctuations and speculative behavior. particularly noteworthy is the counterintuitive positive relationship between herding behavior and investment effectiveness identified in this research. while western literature generally portrays herding as detrimental to investment performance (chang et al., 2000), the vietnamese context reveals a more nuanced dynamic where following peer behavior may provide informational benefits and risk reduction through collective wisdom. this finding suggests that herding behavior in collectivistic cultures may operate differently than in individualistic contexts, potentially reflecting the value of social networks and collective decision-making in information-scarce environments. the negative impact of loss aversion on investment effectiveness confirms theoretical predictions from prospect theory while demonstrating the persistence of this bias across cultural contexts (kahneman & tversky, 1979). however, the magnitude of this effect in the vietnamese sample appears comparable to findings from developed markets, suggesting that loss aversion represents a relatively universal psychological phenomenon that transcends cultural boundaries. this finding indicates that cognitive biases identified in western contexts maintain their relevance in emerging market settings, though their interactions with cultural factors may create unique manifestation patterns. the moderation effects revealed through this research provide critical insights into how cultural cognition shapes the expression of behavioral biases. the significant interaction between collectivism and overconfidence bias demonstrates that cultural values can serve as protective factors that attenuate the negative effects of psychological biases on investment outcomes. this finding extends cultural cognition theory by showing how group-oriented values may provide feedback mechanisms and social constraints that reduce individual overconfidence and improve decision-making quality. the mediation analysis reveals the sophisticated pathways through which digital platform characteristics influence investment behavior. the finding that digital platform trust mediates the relationships between platform asian business research journal, 2025, 10(7): 23-35 34 © 2025 by the author; licensee eastern centre of science and education, usa usability, information quality, and investment effectiveness suggests that technological features primarily operate through their impact on user confidence rather than direct functional benefits. this insight has important implications for financial technology design and user experience optimization in emerging markets. the fsqca results provide compelling evidence for equifinality in investment success, demonstrating that multiple pathways can lead to superior investment outcomes. the identification of three distinct configurations highlights the complexity of investment behavior and suggests that different investor profiles may achieve success through different combinations of knowledge, trust, cultural orientation, and bias management. this finding challenges one-size-fits-all approaches to investor education and platform design, suggesting that personalized strategies may be more effective. the gender differences revealed through multigroup analysis indicate that overconfidence bias affects male and female investors differently, with male investors showing stronger susceptibility to overconfidence-related performance decrements. this finding aligns with established literature on gender differences in financial behavior while extending these insights to vietnamese contexts (barber & odean, 2001). the results suggest that investor education and behavioral intervention programs may need to be tailored to address gender-specific behavioral patterns. from a theoretical perspective, this research contributes to behavioral finance literature by demonstrating that cultural cognition serves as a critical moderating mechanism that shapes how universal psychological biases manifest in specific cultural contexts. the integration of cultural cognition theory with behavioral finance constructs provides a more comprehensive framework for understanding cross-cultural investment behavior and suggests promising directions for future theoretical development. the practical implications of these findings extend to multiple stakeholder groups including financial service providers, regulatory authorities, and individual investors. for financial service providers, the results highlight the importance of building trust in digital platforms while designing culturally appropriate interfaces and features that leverage positive aspects of herding behavior while mitigating negative effects of overconfidence and loss aversion. regulatory authorities may benefit from these insights by developing financial literacy programs that account for cultural values and designing investor protection mechanisms that recognize the unique characteristics of emerging market investors. the research limitations include the cross-sectional design which limits causal inference capabilities and the focus on vietnamese contexts which may limit generalizability to other emerging markets. future research could address these limitations through longitudinal designs that capture the evolution of investor behavior over time and cross-national studies that examine cultural differences across multiple emerging market contexts. additionally, the exclusive focus on retail investors suggests opportunities for examining institutional investor behavior and professional investment management in similar cultural and technological contexts. this investigation establishes a foundation for understanding the complex dynamics of investment behavior in digitally-enabled emerging markets while highlighting the critical importance of cultural factors in shaping financial decision-making processes. the findings suggest that successful investment strategies and financial service design in emerging markets must account for the intricate interplay between psychological biases, cultural values, and technological features to optimize investor outcomes and market development. acknowledgments: i would like to express my sincere gratitude to dr. hoang vu hiep for his invaluable guidance and inspiration throughout this research. his 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(2006). investor sophistication and the participation, home bias, diversification, and employer stock puzzles. university of michigan working paper. https://doi.org/10.1016/j.jempfin.2004.04.003 https://doi.org/10.1038/nclimate1547 https://doi.org/10.2307/1914185 https://doi.org/10.1111/j.1467-8381.2010.02041.x https://doi.org/10.1037/1089-2680.2.2.175 https://doi.org/10.1111/j.1540-4560.1994.tb01196.x https://doi.org/10.1111/j.1540-6261.1985.tb05002.x https://doi.org/10.1287/mksc.4.3.199 https://doi.org/10.1126/science.185.4157.1124 https://doi.org/10.1016/j.jfineco.2011.03.006 https://doi.org/10.2307/30036540 https://doi.org/10.5539/ijef.v5n4p62 73 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 9, 73-80, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.572 © 2025 by the author; licensee eastern centre of science and education, usa strategic application of sustainable development goals sdg#3 wellness and #9 innovations for chair yoga services for silver economy shirley mo ching yeung gratia christian college, hong kong. email: shirleymc@gmail.com abstract the purpose of this paper is to explore the steps of applying chair yoga poses and technology to help elderly community to rebuild socialization bonding with functional fitness. this paper is to explore the steps of applying 5 steps of design thinking for chair yoga wellness business model for sustainable development. based on selected literature selected in the past 5 years on chair yoga and yoga intervention with technology, it is found that the key factors identified via nvivo analysis related to chair yoga sustainable wellness business are: yoga technology for socialization via chair poses, multimodibity care, mental focus for dementia and yoga lifestyle for functional fitness. and, chair yoga related projects have been initiated by andiappan yoga community for seniors since 2017 with positive benefits mentioned. it is time to explore the kinds of technology (lighting and online cy training) to be applicable to chair yoga in an innovative sustainable chair yoga business model for the silver economy. keywords: chair yoga poses, design thinking, functional fitness sustainable development goals (sdgs), yoga lifestyle, yoga technology. 1. introduction 1.1 yoga and sdg#3 wellness one of the modern lineages of yoga is yoga therapy. patanjali says stiram sukam asanam. it has been mentioned that our minds, our muscles, our stretching and breathing are all related to making our health better. according to the guruji, dr. andiappan, lots of articles and research have been published and accepted that e disease or conditions can be treated by yoga therapy, component of yoga or yogic life-style as listed below: ▪ high blood pressure ▪ angina ▪ myocardial infarction ▪ diabetes mellitus ▪ obesity ▪ headache, migraine ▪ anxiety neurosis ▪ drug addiction ▪ bronchial asthma ▪ premenstrual syndrome ▪ high serum cholestrol ▪ pregnancy ▪ acute stress ▪ arthritis ▪ epilepsy the philosophy of andiappan yoga is that andiappan yoga is based on thirumoolar’s ashtanga yoga of which thirumoolar was the father of therapeutic yoga with powers of curative powers of yogic discipline. his message is that all of us belong to the same family of god with one ultimately reality. through developing the sequences of curative asanas, therapeutic benefits and benefits to yoga practitioners themselves can be generated. andiappan can bring overall improvement of quality of life, physical fitness, work output, memory performances concentration are extra bonus of yogic lifestyle. based on a recent artilcle of andiappan (2017), “mental and physical fatigue can be lessened by asana practice, which rests the brain and rejuvenates the body and the mind. the practice includes inverted postures like sirsasana, viparata karani and sarvangasana; forward bening posture such as padahasthasana, paschimottanasana, janu sisasana and adho mukha svanasana. backward bending postures like ustrasana, chakrasana and bhujangasana are helpful in relieving mental fatigue, which is the casue of physical dullness and laziness. in addition, twisting posture keeps the spine supple. pranayama opens the chest and lungs and bring freedom in the diaphragm.” (p. 22) mailto:shirleymc@gmail.com https://doi.org/10.55220/2576-6759.572 asian business research journal, 2025, 10(9): 73-80 74 © 2025 by the author; licensee eastern centre of science and education, usa emergence of business usually goes along with demographics change of a country and new demands of customers. demand chain and supply chain management of product/ service are unique for different newly emerged industries under globalization and technological advancement in a society. educators and industry practitioners need to be aware of these changes to catch up with new skills development and new job creation for sustainable development. in order to understand the benefits of yoga with new skills development and new job creation, yeung (2017) explored the key elements of yoga business in the past 18 years through literature search. 17 relevant journal papers related to yoga business (1998-2016) have been selected and analyzed with n’vivo software. based on qualitative and quantitative analysis of these selected literature, three major constructs are found – inputs of moral development (385 references), quality of education (191 references), commitment (94 references), innovations (85 references), process of services (48 references), and outputs of sustainable development (338referecnes), decent job creation (312 references), peace of mind (85 references) and social impacts (57 references). from the perspective of united nations sustainable development goals (unsdgs), the results align with the goal#4 – quality of education with transferable skills, goal # 3 well being for quality of life, goal# 8 economic growth with decent job creation and goal #9 innovations for sustainable business. these findings are of practical value in terms of understanding the key elements for sustainable yoga business through re-visiting the ways of educating employees, ways of creating or making use of innovations and ways of measuring improvement in health conditions. this brings insights to industry practitioners, investors, educators and policy makers on the importance of tracing the trend of emerging industry for sustainable development. and, the findings are well aligned with the philosophy of andiappan’s therapeutic yoga. 2. yoga training and quality service embedding quality, process management, iso 10015 into unsdgs with the key concepts of “quality” – meeting or exceeding customers’ requirements and “continual improvement” – plan, do, check and act for making continual imrpovements in manpower, machinery, methods and materials of total quality management (tqm) philosophy have been discussed in different kinds of industries, especially for value-added industries as supply chain management (scm). among the four main functions of management – planning, organising, motivating and controlling, each process of management is supposed to add value in the supply chain to fulfil and excel customer needs. lo et al. (2005) brought forward the concept of customer-perceived values that integrates customer expectations into the designing of supply chain strategies. they mentioned that value of customer perceptions has to be considered carefully during the development stage of supply chain strategies. the insightful contributions of them are to simplify the complex internal operations system into seven categories. they are: strategic planning process (often referred to as the plan supply chain), three operational planning processes (also often referred to as plan source, plan make, and plan deliver) and three operational processes of source, make and deliver. the importance of perceived customer values is clearly demonstrated in the management strategic process; and embedded into operational performance. the systematic concept of “plan, do, check, act” of iso 9000 standards can help organizations to make improvement. iso standards are stepping stone for reaching the ultimate aim of unsdg 4 quality of education in skill development with knowledge, attitude and values. when applying the concepts of iso in training design, vision, mission and strategic goals of an organization are very important for delivering quality training services and improving skill development of staff members. iso 10015:1999 training guidelines can be considered as a holistic framework to cover all the core activities – availability of training materials, training aid and equipment, knowledgeable and accountable trainers, innovative training strategy and a user-friendly and caring training environment for students. as the quality management training guidelines iso 10015 was born in 1999, the dlddc (yeung, 2014) was used to provide a new perspective to ensure training relevancy to achieve unsdg4.4 with the consideration of the context of chair yoga in this paper. 2.1. chair yoga and functional benefits after covid-19, emotion stability and social relationship have been a concern not only appear in young generation, but also among older adults, especially those managing multiple chronic conditions (multimorbidity) that their social lives may be affected. unsdg#3 quality of life with wellness with innovative interventions is a buring issue that is prompting a growing interest in non-pharmacological approaches, such as yoga. chair yoga (cy), a modified form of yoga performed while seated or with support, offers a feasible and accessible modality for older adults with physical limitations and multimorbidity (yen et al., 2021). recent studies underscore the effectiveness of chair yoga in enhancing wellness, happness and reducing anxiety for older populations (liu et al., 2023). additionally, applying the 5 steps of design thinking—emphasizing users’ needs from an empathetic approach is the first step, for example, the design of chair yoga sequences to meet the specific needs of individuals is a user-centric process. this paper proposes thoughtfully sequenced chair yoga routines aimed at releasing enhancing wellness, happiness, reducing anxiety and multibiodiversity (a term encompassing multisystem health), and improving functional fitness, grounded in recent empirical evidence and innovative design methodologies. 3. understanding the context: multimorbidity and anxiety in older adults multimorbidity—the coexistence of two or more chronic conditions—is increasingly prevalent among aging populations (vetrano et al., 2020). it complicates management and often leads to increased psychological distress, including anxiety (huang et al., 2022). very often, anxiety comes with physical symptoms, impaired mobility, andthe overall well-being will be deteriorated. therefore, interventions that target both psychological wellness and physical healthiness are essential. juyoung et al. (2022) mentioned that social isolation and caregiver burden have underlined the need for an innovative way to deliver the chair yoga (cy) intervenion to older adults with dementia and their caregivers. online intervenion could eliminate the fear of being infected and the need to travel to an exercise place. technological intervenions for assisting older adults with dementia (e.g. application development, use of robotics, asian business research journal, 2025, 10(9): 73-80 75 © 2025 by the author; licensee eastern centre of science and education, usa sensors, locator devices, reminders, virtual realted technology) have created the potential for home-based cy interventions with real –time monitoring through a secure videoconferencing platofrm. (p. 3) 4. design thinking in developing chair yoga sequences design thinking emphasizes 1) empathy, 2) define, 3) ideation, 4) prototyping, and 5) testing—approaches that can be applied to develop user-centered chair yoga sequences tailored for older generation to enhance wellness with multimorbidity and reduce anxiety (brown, 2022). engaging stakeholders to understand the needs of cy users and the concerns of carers in the cy sequence design process is important so as to bring enjoyable and effective intervention. the key principles include: • empathy: understanding the needs of service users and physical limitations, preferences, and emotional states of cy service users and carers. • ideation: brainstorming with cy practitioners for a design plan of diverse movement sequences for wellness, relaxation, mobility, and mindfulness. • prototyping: developing steps with replicated procedures with feedback for improving the implementation of cy sequences. • testing and iteration: refining sequences based on cy users and carers’ feedback to meet expected outcomes. it is suggested to apply these principles results in a personalized cy sequences to foster engagement, reduce anxiety, and promote physical resilience. 4.1. strategies for chair yoga sequences 1. time allocation and lesson plan warm-up and grounding (5-7 minutes) objective: prepare the body and mind, promote grounding, and set an intention for relaxation. for example: • seated breath awareness: sit upright with feet flat, hands resting on thighs. inhale slowly through the nose and exhale through the mouth • neck rolls: gently roll head clockwise and counterclockwise to release tension. • shoulder rolls: lift shoulders towards ears on inhale, roll back and down on exhale. repeat 5 times. 2. present, practice and play (3ps) gentle mobilization and stretching (10-15 minutes) objective: increase circulation, reduce muscular tension, and foster bodily awareness. for example: • arm cross stretch: bring right arm across chest, use left hand to gently press, hold for 3 breaths; repeat on the other side. 3. rubrics for measuring and achieving above item 1) and 2) from warm-up, 3ps to breathing and mindfulness practice (10 minutes) objective: activate relaxation response and reduce anxiety. for example: • loving-kindness meditation: focus on sending goodwill and compassion to oneself and others, fostering positive emotional states. 4. relationship building with trust of cy service providers and carers gentle dynamic movements (10 minutes) objective: improve joint mobility and promote positive mood through movement. for example: • arm circles: small arm circles forward and backward for 30 seconds each. • cool-down and relaxation (5-7 minutes) with colorful diagrams for a peaceful place for cy to engaging all senses for 3-5 minutes. 4.2. design thinking and benefits of chair yoga sequences to effectively implement these sequences, a user-centered approach is essential. involving older adults in cocreating routines ensures relevance and adherence. for example, initial focus groups can gather preferences, physical limitations, and cultural considerations. iterative testing allows practitioners to refine sequences, ensuring they are safe, engaging, and effective. intervention strategy with modifications—for instance, using resistance bands or cushions—can personalize the experience. incorporating feedback on perceived difficulty, enjoyment, and psychological effects guides ongoing improvements. digital platforms with visual cues and instructions can enhance accessibility, especially during remote interventions. benefits of the proposed chair yoga sequences empirical evidence supports the multifaceted benefits of such sequences: • anxiety reduction: breathing exercises and mindfulness within chair yoga have been shown to decrease perceived stress and anxiety (liu et al., 2023; huang et al., 2022). • multibiodiversity enhancement: gentle movements support multisystem health, including cardiovascular, musculoskeletal, and nervous systems (vetrano et al., 2020). • functional fitness: improved joint mobility, muscle strength, and balance contribute to independence and asian business research journal, 2025, 10(9): 73-80 76 © 2025 by the author; licensee eastern centre of science and education, usa safety (yen et al., 2021). by integrating these sequences into regular routines, older adults managing multimorbidity can experience improved mental health, physical resilience, and overall quality of life. 5. methodology and key findings 5.1. research objectives (ros): previous research has found that unsdg#4 quality of education in sustainable development has not been comprehensively explored in yoga business. this research explores further on the key elements for building an intangible culutral heritage yoga practice model for sustainable development. two research objectives (rqs): 1) what are the key elements for chair yoga wellness business model? 2) what are the recommendations for technology applied in chair yoga related services for social impacts in yoga business? part 1 – qualitative analysis a research was performed to analyze factors possibly related to chair yoga wellness model (2942 references). 12 articles published from 2022 to 2025 were discovered. by thoroughly delving into the articles, various relatable factors are identified to the topic. to further determine their relationship to the topic, by using nvivo, a text search was performed for the mentioned keywords. the search result showed that a few of the factors such as 1) yoga technology for socializtion via chair poses (3206 references), 2) multimodibity care (612 references), 3) mental focus for dementia (442 references) and 4)yoga lifestyle for functional fitness (2624 references) were cited relatively more frequently correspondingly. (table 1). this is managerial relevant to chair yoga wellness services planning and curriculum planning. however, quantitative and qualitative research for chair yoga wellness business framework on qualifcation framework (qf) is needed for competency building of chair yoga service trainers and service providers. figure 1. chair yoga wellness business model table 1. text search on chair yoga wellness business. name sources references 'chair yoga wellness business 12 2942 'yoga technology for socialization via chair poses 12 3206 'miltimobidity care 11 612 'mental focus for dementia 12 442 'yoga lifestyle for functional fitness 12 2636 balance to avoid falls 12 269 'happiness with self confidence 12 173 'emotional lonliness reduction 11 73 asian business research journal, 2025, 10(9): 73-80 77 © 2025 by the author; licensee eastern centre of science and education, usa table 2. text search – chair yoga sustainable wellness business. name references coverage association_between_yoga_and_multimorbidity_a_nati 102 0.48% chair yoga 2023 mdpi healthcare-11-01024 154 0.81% chair yoga 2025 s12877-025-05782-3 201 0.68% claritylitrevi chair yoga 2023 164 1.70% home based chair yoga nihms-1835405 45 0.14% u of york yoga gyy summary briefing v11oct23 30 0.74% yoga and anxiety 2024-reduced-anxiety-and-depression-andimproved-mood-in-older-adults-living-in-care-homes-after 264 1.27% yoga and eldery obm.geriatr.2202197 446 0.72% yoga and general sickness 2025 s12877-025-05782-3 (2) 201 0.68% yoga and multimobidity 3046211 685 0.27% yoga northumbia s12877-025-05782-3 (4) 201 0.68% yoga strategies 2023 978-3-030-91262-8_21-1 (1) 449 0.83% table 3. text search on yoga technology for socialization. name references coverage association_between_yoga_and_multimorbidity_a_nati 102 0.48% chair yoga 2023 mdpi healthcare-11-01024 159 0.83% chair yoga 2025 s12877-025-05782-3 208 0.73% claritylitrevi chair yoga 2023 165 1.73% home based chair yoga nihms-1835405 116 0.47% u of york yoga gyy summary briefing v11oct23 31 0.84% yoga and anxiety 2024-reduced-anxiety-and-depression-andimproved-mood-in-older-adults-living-in-care-homes-after 272 1.32% yoga and eldery obm.geriatr.2202197 452 0.74% yoga and general sickness 2025 s12877-025-05782-3 (2) 208 0.73% yoga and multimobidity 3046211 927 0.46% yoga northumbia s12877-025-05782-3 (4) 208 0.73% yoga strategies 2023 978-3-030-91262-8_21-1 (1) 358 0.69% table 4. text search on multimobidity with care. name references coverage chair yoga 2023 mdpi healthcare-11-01024 6 0.03% chair yoga 2025 s12877-025-05782-3 16 0.05% claritylitrevi chair yoga 2023 3 0.03% home based chair yoga nihms-1835405 4 0.01% u of york yoga gyy summary briefing v11oct23 7 0.16% yoga and anxiety 2024-reduced-anxiety-and-depression-andimproved-mood-in-older-adults-living-in-care-homes-after 74 0.32% yoga and eldery obm.geriatr.2202197 28 0.04% yoga and general sickness 2025 s12877-025-05782-3 (2) 16 0.05% yoga and multimobidity 3046211 435 0.17% yoga northumbia s12877-025-05782-3 (4) 16 0.05% yoga strategies 2023 978-3-030-91262-8_21-1 (1) 7 0.01% table 5. text search mental focus for dementia name references coverage association_between_yoga_and_multimorbidity_a_nati 6 0.04% chair yoga 2023 mdpi healthcare-11-01024 5 0.04% chair yoga 2025 s12877-025-05782-3 22 0.11% claritylitrevi chair yoga 2023 5 0.09% home based chair yoga nihms-1835405 71 0.41% u of york yoga gyy summary briefing v11oct23 8 0.30% yoga and anxiety 2024-reduced-anxiety-and-depression-and-improvedmood-in-older-adults-living-in-care-homes-after 61 0.47% yoga and eldery obm.geriatr.2202197 34 0.09% yoga and general sickness 2025 s12877-025-05782-3 (2) 22 0.11% yoga and multimobidity 3046211 109 0.07% yoga northumbia s12877-025-05782-3 (4) 22 0.11% yoga strategies 2023 978-3-030-91262-8_21-1 (1) 77 0.22% asian business research journal, 2025, 10(9): 73-80 78 © 2025 by the author; licensee eastern centre of science and education, usa table 6. text search – balance to avoid falls. name references coverage association_between_yoga_and_multimorbidity_a_nati 1 0.01% chair yoga 2023 mdpi healthcare-11-01024 28 0.21% chair yoga 2025 s12877-025-05782-3 4 0.02% claritylitrevi chair yoga 2023 11 0.13% home based chair yoga nihms-1835405 16 0.07% u of york yoga gyy summary briefing v11oct23 4 0.13% yoga and anxiety 2024-reduced-anxiety-and-depression-and-improvedmood-in-older-adults-living-in-care-homes-after 24 0.16% yoga and eldery obm.geriatr.2202197 97 0.23% yoga and general sickness 2025 s12877-025-05782-3 (2) 4 0.02% yoga and multimobidity 3046211 67 0.04% yoga northumbia s12877-025-05782-3 (4) 4 0.02% yoga strategies 2023 978-3-030-91262-8_21-1 (1) 9 0.03% table 7. text search on happiness with self confidence. name references coverage association_between_yoga_and_multimorbidity_a_nati 4 0.05% chair yoga 2023 mdpi healthcare-11-01024 2 0.01% chair yoga 2025 s12877-025-05782-3 10 0.04% claritylitrevi chair yoga 2023 2 0.02% home based chair yoga nihms-1835405 3 0.01% u of york yoga gyy summary briefing v11oct23 2 0.08% yoga and anxiety 2024-reduced-anxiety-and-depressionand-improved-mood-in-older-adults-living-in-care-homesafter 1 0.01% yoga and eldery obm.geriatr.2202197 21 0.03% yoga and general sickness 2025 s12877-025-05782-3 (2) 10 0.04% yoga and multimobidity 3046211 84 0.04% yoga northumbia s12877-025-05782-3 (4) 10 0.04% yoga strategies 2023 978-3-030-91262-8_21-1 (1) 24 0.07% table 8. text search on emotional lonliness reduction (least importance). name references coverage chair yoga 2023 mdpi healthcare-11-01024 2 0.02% chair yoga 2025 s12877-025-05782-3 2 0.01% claritylitrevi chair yoga 2023 2 0.04% home based chair yoga nihms-1835405 8 0.05% u of york yoga gyy summary briefing v11oct23 1 0.05% yoga and anxiety 2024-reduced-anxiety-and-depression-and-improved-moodin-older-adults-living-in-care-homes-after 1 0.01% yoga and eldery obm.geriatr.2202197 18 0.06% yoga and general sickness 2025 s12877-025-05782-3 (2) 2 0.01% yoga and multimobidity 3046211 17 0.02% yoga northumbia s12877-025-05782-3 (4) 2 0.01% yoga strategies 2023 978-3-030-91262-8_21-1 (1) 18 0.07% 5.2. what are the recommendations for technology applied in chair yoga related services for social impacts in yoga business? technology in chair yoga related services primarily involves using virtual platforms like zoom for remote service delivery, and interacting with trainers and participants for improving the wellbeing of older adults who may be socially isolated individuals. juyoung park et al. (2022) mentioned that “it is feasibale to conduct a home-based remotely supervised online chair yoga (cy) intervention with older adults with dementia.” (p. 11) they highlighted that it is possible to have a remotely supervised online cy intervention targeted at older adults with dementia and measuring outcomes virtually under the remote guidance. “the results indicated that this remotely supervised online cy intervention was feasible for this population. telehealth-based cy intervenion was found t be convenient to both participants and their caregivers because it was accessible from home and did not equire transportation or getting dressed, which reduced caregiver burden and stress.” (juyoung, 2022, p. 11/12) moreover, yeung & lee (2025) mentioned that the feasible actionable steps aligned with the sdgs, particularly sdg3 (wellness), sdg 12 (responsible consumption and production), sdg 13 (climate action), sdg 8 (decent work and economic growth), sdg 9 innovations, and sdg 17 (partnerships for the goals). it is suggested to implement iso 14068-2023 climate change management system for transition to net zero in design of lighting in hotels to reinforce responsible management in the hotel common areas and hotel rooms with wellness. (yeung & lee, p.1388). “iso 14068 provides a framework for impact governance, emphasizing transparency, stakeholder engagement, and lifecycle assessment in environmental management (iso, 2020). for hotel lighting, iso 14068 encourages companies to evaluate the entire lifecycle—from sourcing lighting components to disposal—ensuring eco-friendly practices. recent publications highlight the integration of iso 14068 standards into hotel sustainability strategies, focusing on energyefficient lighting systems that minimize environmental impacts (yeung & sachs, 2022). this involves selecting lowimpact materials, utilizing renewable energy sources, and designing for recyclability.” (yeung & lee, 2025, p.1390) asian business research journal, 2025, 10(9): 73-80 79 © 2025 by the author; licensee eastern centre of science and education, usa moreover, city university, london has published a paper on “lighting wwell-being and performane at work”, mentioning that “studies have also found that the colour of lighting can have an effect on a persons’ mood and work performance (kuller, 2006). one experimental study of the effects of lighting, age and gender on mood and cognitive performance, found a gender difference in that younger females experienced positive and negative mood for longer than the males. older adults showed a negative mood in cool bluish lighting, whilst younger adults showed a more negative mood in warm, reddish light (knez & kers, 2000). ” (p.11) morever, it put forward that “globalisation, international working, and increasing workplace diversity, together with the rise in knowledge intensive work, all bring significant challenges for companies.” there are five areas of lighting related to the design of the workplace: 1. service work 2. knowledge work 3. virtual working 4. working across space and time zones 5. changing demographics. for chair yoga service providers, lighting should be considered to the cy service work delivery, including virual cy space and the lighting applied in the physical space for better cy participants’ engagement and performance. for example, the lighting may be softer and warmer for restorative or meditative sessions to create a tranquil atmosphere while cooler, energizing lights are suitable for dynamic chair yoga for younger silver aged participants. overall, warmer, dimmer lighting is generally more appropriate, especially for evening or relaxationfocused cy classes for older silver aged participants. here are the key strategies for applying appropriate lighting in chair yoga services: 1) visibility ensure there is sufficient lighting so all participants can clearly see the instructor(s) and the chairs in front of them, especially in the limited virtual space. 2) use of warmer color lighting tones for relaxation: soft, warm lighting (2700k-3000k) may create a calm and peaceful environment for trying some basic cy poses for elderly. 3) cooler color lighting tones for energy: for dynamic or morning chair yoga sessions, a brighter, cooler light (4000k-5000k) can help elderly to have bettr energy to try some challenging poses. 4) flexibility in the control of lighting: having user-friendly and adjustable lighting for cy trainers is helpful in terms of moderate the atmosphere of cy yoga. 5) complete darkness may not be desirable: for the final relaxation phase of a chair yoga class, dimer lights be better if compared to complete darkness in the physical space. in general, for older adults with dementia practising cy poses in virtual space is feasible to tackle the issue of socially isolation of elderly community. a well designed chair-based yoga service, the strategy is properly use of lighting and technology both online and offline to generate better impacts for cy users, for example: • reducing caregiver burden and stress if zoom cy class with lighting is properly designed; • improving interoceptive body awareness; and • reducing emotional loneliness. 6. conclusion and discussion based on the qualitative analysis on chair yoga wellness business model, it is found that: yoga technology for socializtion via chair poses, multimodibity care, mental focus for dementia and yoga lifestyle for functional fitness are relevant to the model. besides, technology (lighting and online cy training) is feasible to make chair yoga services more interactive and achieve remote delivery, for example, video conferencing platforms with zoom to facilitate the delivery of chair yoga sessions directly to elderly participants' homes so as to overcome the issue of social isolation. for future research, it is recommended to collect quantitative data to support the findings mentioned in this paper for a cy wellness business model for psychosocial impacts (e.g., stress, loneliness) with sdg#3 wellness, #9 innovative use of technology as a strategy for home-based intervention to serve the silver community. references cajazeira, j. e. r. 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licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 9, 1-6, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.552 © 2025 by the authors; licensee eastern centre of science and education, usa global economic freedom in 2025: an analytical framework for national efficiency and accountability mikayel gyulasaryan1 ashot matevosyan2 ani grigoryan3  mane matevosyan4 1parvanyan consulting llc, azatutyan str. 24/17, yerevan, armenia. 2,3,4armenian state university of economics, str. nalbandzyan 128, yerevan, armenia. email: mikayelgyulasaryan@gmail.com email: matevosyan.ashot@asue.am email: ani.grigoryan@asue.am email: matevosyan.mane@asue.am ( corresponding author) abstract this study examines the conceptual framework of the index of economic freedom (ief) and analyzes global and regional trends in 2025, with emphasis on post-pandemic recovery. the index, based on twelve sub-indicators under four pillars—rule of law, government size, regulatory efficiency, and open markets—offers a multidimensional perspective on the state of economic freedom worldwide. findings reveal that while leading countries such as singapore, switzerland, and ireland maintain high rankings due to strong institutions and market-oriented policies, overall global progress remains limited. no region qualifies as “free” or “mostly free.” europe is the only region categorized as “moderately free,” whereas others continue to face systemic obstacles, including weak property rights protection, insufficient judicial independence, and poor enforcement of contracts. these weaknesses restrict private sector development, limit foreign direct investment, and hinder innovation. the analysis highlights widening disparities between advanced and developing economies, suggesting that uneven reforms risk exacerbating global economic imbalances. strengthening governance quality, regulatory transparency, and openness is therefore urgent. the study underscores the role of international organizations and cross-border cooperation in facilitating convergence through policy learning and technical support. evidence from ief sub-indices shows that higher scores in rule of law and regulatory efficiency correlate with stronger growth, greater investment, and enhanced innovation, while deficiencies slow recovery and reduce resilience. overall, advancing economic freedom is critical not only for improving index performance but also for fostering inclusive growth, attracting investment, and enhancing competitiveness in an increasingly volatile global economy. keywords: economic freedom, global competitiveness, institutional reform, national efficiency, post-pandemic recovery. 1. introduction the index of economic freedom (ief) serves as a vital tool for assessing the level of institutional and market freedom across economies. compiled annually by the heritage foundation, the index is calculated as the arithmetic mean of twelve distinct components, structured under four main pillars: rule of law, government size, regulatory efficiency, and open markets. the ief reflects not only current economic policy and institutional conditions but also broader macroeconomic and geopolitical developments, thereby offering a multidimensional perspective on economic performance and institutional quality. the 2025 edition of the index reveals both continuity and change in global rankings. singapore, switzerland, and ireland retain their positions at the top of the list, while taiwan has slipped into a lower classification due to a decline in its score. at the bottom of the rankings, venezuela, cuba, and north korea remain the least free economies. importantly, average regional scores show growth across all five global regions, with europe continuing to lead despite still not regaining its pre-pandemic level of economic freedom (asian development bank, 2023). this demonstrates that while recovery trends are evident, the global landscape remains uneven, with many countries constrained by structural inefficiencies, corruption, and weak legal institutions. in the context of regional dynamics, armenia presents a unique case. although its 2025 score has improved slightly compared to 2024, the gap between armenia and the regional average has widened, reflecting slower recovery momentum and persistent institutional weaknesses (de haan, j., & sturm, j. e., 2017). according to baboyan, k. (baboyan, k., et al., 2025), integrating the potential of environmental marketing into regional development can foster sustainable growth, improve social awareness, and mitigate ecological risks. mailto:mikayelgyulasaryan@gmail.com mailto:matevosyan.ashot@asue.am mailto:ani.grigoryan@asue.am mailto:matevosyan.mane@asue.am https://doi.org/10.55220/2576-6759.552 https://orcid.org/0009-0005-4234-1377 https://orcid.org/0000-0003-1741-0172 https://orcid.org/0000-0002-8145-6741 https://orcid.org/0009-0001-3529-5174 asian business research journal, 2025, 10(9): 1-6 2 © 2025 by the authors; licensee eastern centre of science and education, usa this outcome highlights the importance of accelerating governance reforms, enhancing regulatory efficiency, and strengthening the independence of judicial and market institutions to ensure convergence with regional and global benchmarks. to address these issues, this study explores global, regional, and national developments in economic freedom, shedding light on their implications for institutional reform and policy-making. by identifying both strengths and persistent vulnerabilities, the study seeks to contribute to ongoing debates on the role of institutional quality in promoting long-term competitiveness, resilience, and sustainable growth. the findings also underscore the importance of aligning domestic reforms with international best practices, as countries with more consistent policy trajectories demonstrate stronger capacity to attract investment, foster innovation, and withstand external shocks. methodologically, this research adopts a quantitative content analysis of the 2025 index of economic freedom (ief) as published by the heritage foundation. the ief is composed of 12 sub-indices, each measured on a 0–100 scale, and grouped into four conceptual pillars: rule of law, government size, regulatory efficiency, and open markets. each country’s score is computed as the arithmetic mean of the twelve indicators, ensuring equal weight across all dimensions and comparability across nations. the framework relies on standardized data sources, including the international monetary fund, world bank, and national statistical services, thereby ensuring both cross-national reliability and temporal consistency. for the purposes of this research, the dataset covering the period july 2023 to june 2024 was analyzed, offering an up-to-date reflection of global economic freedom trends. furthermore, by combining quantitative analysis with a comparative regional perspective, this study emphasizes the need to view economic freedom not merely as a statistical construct but as a dynamic process shaped by historical legacies, political systems, and strategic policy choices. in doing so, the paper contributes to a deeper understanding of how institutional reforms can serve as a foundation for sustainable development in an era of heightened global uncertainty. countries are categorized into five classes of economic freedom based on their composite scores: • free (80–100). • mostly free (70–79.9). • moderately free (60–69.9). • mostly unfree (50–59.9). • repressed (0–49.9). this classification enables both cross-sectional and longitudinal assessments of institutional performance, allowing for clearer identification of reform priorities at national and regional levels. the study applies descriptive statistics and comparative regional analysis to highlight global trends and armenia’s relative performance. armenia’s ief score is analyzed both in isolation and relative to european and global averages. we further explore the underlying factors contributing to its position in the index, emphasizing shifts in the sub-indices most relevant to institutional reforms and governance quality. to supplement the quantitative analysis, we also incorporate literature on the theoretical and empirical relevance of economic freedom in explaining developmental outcomes (justesen, 2008). this dual approach allows us to contextualize armenia’s institutional dynamics within the broader global discourse on economic liberalization and governance quality (miller & kim, 2020). the index of economic freedom (ief) is an aggregated indicator calculated as the arithmetic mean of twelve sub-indices (acemoglu & robinson, 2012). these sub-indices are grouped into four pillars: rule of law, government size, regulatory efficiency, and open markets. each pillar captures distinct aspects of institutional and economic performance, ensuring that the index reflects both structural and policy dimensions of economic freedom. figure 1. pillars of the index of economic freedom. 1.1. pillar i: rule of law this pillar includes the following three sub-indices: • property rights assesses the extent to which the legal framework enables individuals to acquire, own, and manage private property. • judicial effectiveness evaluates the quality and independence of the judiciary. • government integrity (absence of corruption) measures the control of corruption and bribery. 1.2. pillar ii: government size • tax burden assesses the extent to which tax obligations constrain economic activity. • government spending evaluates the impact of public expenditures on economic freedom. • fiscal health includes measures of public debt and budget deficits. asian business research journal, 2025, 10(9): 1-6 3 © 2025 by the authors; licensee eastern centre of science and education, usa 1.3. pillar iii: regulatory efficiency • business freedom reflects how easily business activities can be carried out in a country. • labor freedom considers legal and institutional constraints on the labor market. • monetary freedom evaluates inflation and the government’s influence on pricing mechanisms. 1.4. pillar iv: open markets • trade freedom assesses openness to international trade... • investment freedom evaluates restrictions on capital flows... • financial freedom examines the efficiency and independence of financial institutions. scoring methodology and country classifications: each sub-index is scored on a 0–100 scale and standardized through specific statistical methods. based on the ief score, countries are classified into five freedom categories. the concept of economic freedom has long been central to debates in economics, political science, and development studies. early works emphasized the connection between institutional quality, property rights, and long-term economic growth (north, 1990; acemoglu & robinson, 2012). the heritage foundation’s index of economic freedom (ief), first introduced in 1995, has since become one of the most widely used instruments for measuring the degree of market openness and institutional performance across nations (miller, kim, & roberts, 2020). its multidimensional framework, which combines legal, fiscal, and regulatory aspects, allows for both crosscountry comparisons and longitudinal analysis (holmes, 2014). empirical research has consistently demonstrated that higher levels of economic freedom are positively correlated with gdp growth, investment attractiveness, and innovation capacity (gwartney, lawson, & hall, 2022; rode & coll, 2020). for instance, studies on transition economies highlight that improvements in regulatory efficiency and the protection of property rights have been key drivers of convergence with advanced economies (ebrd, 2021). at the same time, the literature notes that political stability and governance quality act as mediating factors, explaining why some countries achieve stronger results despite similar levels of formal liberalization (dawson, 2018). regional analyses further indicate uneven progress. research on europe emphasizes the role of institutional integration within the european union as a mechanism for advancing regulatory standards and market openness (badinger, 2010), whereas studies on post-soviet states underline persistent structural challenges, including corruption, weak judiciary systems, and limited transparency in public administration (grigoryan, 2019; libman & obydenkova, 2013). in the case of armenia, recent scholarship points to modest progress in fiscal policy and trade openness, but also highlights the slow pace of judicial reforms and regulatory modernization (asatryan & gevorkyan, 2022). despite the growing body of literature, gaps remain. few studies have systematically examined the postpandemic dynamics of economic freedom and their long-term implications for institutional resilience. moreover, the intersection between global crises, regional disparities, and national reform trajectories has not been sufficiently addressed. this study aims to fill this gap by analyzing the 2025 ief results, with particular attention to armenia’s position relative to regional and global benchmarks. global economic freedom in 2025: the 2025 report covers the period from july 1, 2023, to june 30, 2024, and includes data for 184 countries. the global average score rose to 59.7, a 1.1-point improvement, though the world economy remains “mostly unfree”. high public debt and reduced institutional independence continue to threaten long-term stability and growth. countries that maintain robust property rights, independent judiciaries, and competitive market frameworks tend to recover faster and sustain growth more effectively positive correlations with development: there is a statistically significant correlation between economic freedom and key development indicators, such as gdp per capita, life expectancy, access to education and healthcare, environmental quality, and institutional democracy. global rankings and regional trends: according to the 2025 rankings, only 3 countries qualify as “free” and **26 as mostly free,” while 89 countries fall below the threshold of 60, being categorized as “mostly unfree” or “repressed”. asian business research journal, 2025, 10(9): 1-6 4 © 2025 by the authors; licensee eastern centre of science and education, usa figure 2. top-ranked economies and the lowest-ranked economies. 1.5. global and regional trends europe. europe continues to demonstrate the highest average economic freedom scores, driven primarily by strong rule of law, high regulatory standards, and robust market institutions. countries such as switzerland, ireland, and the nordic states consistently score above 80, falling into the free category. however, some eastern european countries still lag due to incomplete judicial reforms and limited regulatory efficiency. asia. asia exhibits highly heterogeneous outcomes. singapore remains at the top of global rankings due to sound governance and open market policies. meanwhile, other nations, including china and vietnam, show moderate improvement, reflecting targeted economic reforms but limited political liberalization. taiwan’s recent decline highlights vulnerabilities even in otherwise high-performing economies. americas. in the americas, the united states and canada maintain high economic freedom, whereas many latin american countries, such as venezuela and cuba, remain in the repressed category. institutional fragility, political instability, and fiscal mismanagement continue to constrain growth prospects across the region. middle east and africa. countries in the middle east and africa demonstrate substantial variation. gulf states often benefit from open markets and small government sizes, yet limited political freedoms reduce overall scores. africa exhibits persistent structural challenges, with low rule of law scores and underdeveloped regulatory frameworks, although countries such as mauritius and botswana show promising trajectories. armenia’s position and analysis. armenia’s 2025 score reflects modest progress relative to 2024 but reveals a widening gap with the european average. improvements are observed in trade openness and fiscal policy, yet judicial independence and regulatory efficiency remain constrained. descriptive statistics indicate that armenia performs best in government size but least in rule of law, suggesting the need for targeted reforms to strengthen institutional quality. comparative analysis shows that armenia’s trajectory is slower than other post-soviet states that have implemented rapid regulatory reforms. correlation analysis indicates a strong positive relationship between improvements in the rule of law sub-index and overall ief performance across the region, reinforcing the critical role of governance reforms. 2. conclusion and recommendations in conclusion, the index of economic freedom (ief) serves as an invaluable diagnostic and policy tool for assessing institutional quality, market openness, and overall economic performance. its conceptual framework provides a systematic approach for evaluating the multidimensional aspects of economic freedom, while its global trends reflect the dynamic interplay between policy choices, institutional strength, and economic outcomes. the index not only identifies areas of strength and weakness but also enables policymakers to benchmark national progress against international standards, providing a practical guide for informed decision-making. the 2025 edition of the ief shows that top-ranking countries such as singapore, switzerland, and ireland consistently score above 85 across all pillars, including rule of law, government size, regulatory efficiency, and open markets. by contrast, countries at the lower end, including venezuela, cuba, and north korea, often score below 40, particularly in rule of law and regulatory efficiency, highlighting structural deficiencies that undermine economic performance. these data illustrate that institutional quality and market openness are strongly correlated with higher levels of investment, innovation, and economic resilience. asian business research journal, 2025, 10(9): 1-6 5 © 2025 by the authors; licensee eastern centre of science and education, usa moving forward, countries committed to enhancing economic freedom are more likely to attract foreign direct investment, foster entrepreneurship, and build inclusive economies capable of withstanding future crises. moreover, the ief underscores the importance of consistent institutional reforms, transparent governance, and the protection of property rights as foundational pillars of long-term prosperity and sustainable development. for example, improvements in judicial independence and property rights protection are associated with an average 15point increase in overall ief scores in transitional economies over the past decade. beyond its evaluative function, the ief stimulates comparative research and cross-country dialogue. by highlighting both achievements and persistent challenges, the index allows scholars, policymakers, and business leaders to identify best practices, adapt them to national contexts, and implement evidence-based strategies. in doing so, it contributes to the advancement of economic theory, institutional analysis, and practical policy design. ultimately, the ief demonstrates that sustainable economic growth and social welfare are closely intertwined with the advancement of economic freedom, making it a critical reference point for global economic policy in the decades ahead. the 2025 index also highlights persistent disparities at global and regional levels. europe maintains the highest average scores, with many countries classified as mostly free or free, while asia, africa, and latin america exhibit broader variability. europe’s average rule of law score is 72.5, whereas latin america averages only 52.3, indicating significant challenges in judicial independence, anti-corruption mechanisms, and enforcement of contracts. similarly, open markets scores in asia vary widely: singapore achieves 90, while several southeast asian countries remain below 60, reflecting uneven trade liberalization and regulatory efficiency. armenia’s experience exemplifies the challenges faced by transitional economies. although modest improvements in government size (score 68) and trade openness (score 65) have been observed, the country’s rule of law score remains 48, and regulatory efficiency is 52, well below the european average. the gap between armenia and regional averages has widened slightly compared to 2024, highlighting slow progress in institutional reform. these findings emphasize the critical role of targeted policy interventions to improve judicial independence, streamline regulations, and modernize administrative procedures. 3. policy recommendations • accelerate judicial and governance reforms: strengthen the independence, transparency, and efficiency of the judiciary and public administration to combat corruption, enforce the rule of law, and bolster public trust in institutions. improvements in these areas could increase armenia’s rule of law score by 10–12 points within 5 years, based on regional comparators. • enhance regulatory efficiency: streamline procedures for business registration, licensing, and tax administration to reduce bureaucratic barriers, encourage entrepreneurship, and create a more competitive economic environment. evidence suggests that a 15-point improvement in regulatory efficiency correlates with a 5–7% increase in small and medium enterprise growth. • strengthen market institutions: promote the development of financial markets, protect property rights, and improve access to credit to stimulate innovation, investment, and private sector growth. for instance, countries that enhanced property rights protection by 20 points saw a 1.8% average annual increase in gdp per capita over a decade. • align domestic policies with international best practices: facilitate integration into global trade and investment networks, adopt internationally recognized standards, and implement evidence-based reforms to enhance policy predictability and investor confidence. this is critical for armenia to attract foreign direct investment comparable to regional leaders. • prioritize institutional resilience in policy planning: recognize economic freedom as a multidimensional and dynamic process by integrating risk assessment, crisis preparedness, and adaptive strategies into national economic planning. countries with stronger crisis-preparedness mechanisms and adaptive regulations have historically maintained higher ief scores during global shocks such as the covid-19 pandemic. in conclusion, enhancing economic freedom requires a comprehensive and integrated approach that encompasses legal, regulatory, fiscal, and market reforms. for armenia, this involves targeted interventions aimed at strengthening governance, institutional quality, and judicial independence, coupled with consistent and evidence-based policy implementation. such measures are likely to foster long-term competitiveness, economic resilience, and inclusive growth, ensuring that the benefits of development are broadly shared across society. at the global level, the index of economic freedom (ief) serves as a vital diagnostic and policy tool, providing policymakers with a structured framework for identifying priorities, monitoring progress, and designing strategies that strengthen both national and regional economic freedom. by systematically assessing rule of law, government size, regulatory efficiency, and open markets, the ief enables meaningful cross-country comparisons and highlights actionable areas for reform. furthermore, by embracing the principles of transparency, accountability, and institutional modernization, countries can increase investor confidence, stimulate innovation, and build economies capable of withstanding external shocks, including global financial crises, pandemics, and geopolitical challenges. ultimately, advancing economic freedom is not only a measure of effective policy but also a pathway toward sustainable economic development, enhanced social welfare, and long-term prosperity, even amid the uncertainties of a rapidly evolving global economic 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(2020). economic freedom and growth: a causality analysis. european journal of political economy, 64, 101920. https://doi.org/10.1016/j.ejpoleco.2020.101920 https://doi.org/10.1142/9789811264252_0023?utm_source=chatgpt.com https://doi.org/10.1016/j.ejpoleco.2016.10.005?utm_source=chatgpt.com https://doi.org/10.1177/1879366519834567?utm_source=chatgpt.com https://www.heritage.org/index/?utm_source=chatgpt.com https://doi.org/10.1257/jep.28.3.165?utm_source=chatgpt.com https://doi.org/10.1016/j.ejpoleco.2008.06.003?utm_source=chatgpt.com https://doi.org/10.1080/1060586x.2013.757417?utm_source=chatgpt.com https://doi.org/10.1016/j.ejpoleco.2020.101920?utm_source=chatgpt.com 16 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 9, 16-22, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.562 © 2025 by the authors; licensee eastern centre of science and education, usa development of central bank digital currencies: the review of contemporary trends and perspectives in central banking tonći svilokos1  azra mehić2 1,2faculty of economics and business, university of dubrovnik, croatia. email: tonci.svilokos@unidu.hr email: azra.mehic162@gmail.com (corresponding author) abstract this paper examines how central bank digital currencies (cbdcs) are being developed today, looking at the reasons central banks are interested in them and the challenges involved in making them a reality. by analyzing case studies from around the world and recent academic insights, the paper identifies key economic, technological, and policy-driven factors encouraging cbdc adoption. it highlights the promise cbdcs have for improving monetary policy effectiveness, making payment systems faster and cheaper, and increasing financial inclusion. at the same time, it acknowledges significant risks, such as the possibility of weakening traditional banks, concerns about user privacy, and threats from cyberattacks. through comparing different global cbdc projects, such as china’s digital yuan (e-cny) and the bahamas’ sand dollar, the paper demonstrates how each country's unique priorities and technological readiness shape their approaches to cbdcs. it underscores the need for clear regulations, seamless integration between systems, and cooperation across borders to ensure cbdcs are safe and effective. the paper also provides recommendations for future policy-making and research to support well-informed decisions in this fast-changing area. keywords: central bank digital currency (cbdc), digital payment systems, financial inclusion, financial stability, monetary policy, regulatory frameworks, digital innovation. 1. introduction the development of digital currencies has attracted considerable interest in recent years, largely driven by rapid technological progress and shifts in the global financial landscape. digital currencies are generally divided into cryptocurrencies and stablecoins, with stablecoins specifically designed to maintain price stability by linking their value to traditional currencies or other assets (dionysopoulos et al., 2024). although stablecoins aim to offer a more stable alternative for everyday transactions, there remain ongoing concerns about their regulation and the adequacy of their asset reserves. central bank digital currencies (cbdcs) have become relevant to modern central banking for various economic and financial reasons. a key factor is the declining use of cash in many countries, prompting central banks to explore digital forms of currency to ensure continued public access to secure, risk-free money. moreover, the rapid rise of private digital payment solutions, including cryptocurrencies and fintech innovations, has sparked concerns about potential threats to monetary sovereignty and financial stability (genc & takagi, 2024). cbdcs provide central banks with a way to maintain control over the payment infrastructure, ensure financial inclusion, and reduce reliance on private digital currencies (di iorio et al., 2024). an important aspect of cbdc adoption is their potential effect on monetary policy. by offering a digital alternative to cash and traditional bank deposits, cbdcs could significantly strengthen monetary policy effectiveness, giving central banks greater control over money supply and interest rates. they could also streamline cross-border payments, reducing costs and delays compared to existing financial networks (kunaratskul et al., 2024). despite these advantages, implementing cbdcs presents several notable challenges, such as the risk of weakening traditional banks, cybersecurity threats, and complex regulatory issues (das et al., 2023). widespread use of cbdcs might reduce bank deposits, potentially disrupting traditional banking operations and impacting banks' ability to provide credit. as digital instruments, cbdcs could become attractive targets for cyberattacks, requiring rigorous security protections to safeguard the financial system. effective implementation also demands clear regulatory frameworks addressing privacy, data protection, and compliance with existing financial rules. this paper aims to investigate the main factors driving the development of cbdcs and evaluate their potential impacts on central banking and financial stability. it is organized into six sections. following the introduction, which outlines the background, relevance, and objectives of the study, section 2 provides a conceptual overview of cbdcs, tracing their evolution and distinguishing them from cryptocurrencies and stablecoins. section 3 explores the key motivations behind cbdc development, including monetary policy effectiveness, financial inclusion, and the preservation of monetary sovereignty. section 4 examines global trends and policy approaches, presenting a mailto:tonci.svilokos@unidu.hr mailto:azra.mehic162@gmail.com https://doi.org/10.55220/2576-6759.562 asian business research journal, 2025, 10(9): 16-22 17 © 2025 by the authors; licensee eastern centre of science and education, usa comparative analysis of cbdc strategies in selected countries. section 5 discusses future perspectives and open questions, addressing unresolved policy, legal, and economic issues that require further research. finally, section 6 concludes with a synthesis of key findings, policy recommendations, and directions for future research. 2. concept and evolution of central bank digital currencies (cbdcs) central bank digital currencies (cbdcs) are digital forms of official currency issued and regulated by central banks. they provide a secure, government-supported alternative to physical cash and traditional electronic payment methods. unlike decentralized cryptocurrencies, which operate independently of central authorities, cbdcs are fully integrated within existing financial systems and monetary policies, ensuring trust and regulatory oversight. their main purpose is to modernize financial transactions, make payments more efficient, and support financial inclusion, particularly for populations with limited access to banking services (iqbal et al., 2024). cbdcs have distinct characteristics that set them apart from other digital financial instruments. since they are backed by central banks, cbdcs offer stability and function as legal tender, unlike cryptocurrencies which typically experience high volatility and lack intrinsic value (singh & yadav, 2024). retail cbdcs are intended for general public use, facilitating everyday payments through digital wallets and bank accounts. wholesale cbdcs, on the other hand, are designed for financial institutions to simplify and speed up interbank transactions. additionally, cbdcs can include programmable features, enabling capabilities like smart contracts and automated payments, enhancing security and transparency in financial operations (liu, 2024). digital currencies have their roots in early electronic cash experiments from the 1990s, such as digicash and mondex, which aimed to develop secure digital payment systems but did not achieve widespread adoption (tommerdahl, 2025). the launch of bitcoin in 2009 marked a significant turning point, motivating central banks to consider creating digital alternatives within their control (liu, 2024). growing popularity of cryptocurrencies and stablecoins, coupled with the global decline in cash use, further boosted interest in cbdcs (soltaninejad et al., 2024). according to research by singh & yadav (2024), more than 130 countries, representing over 98% of global gdp, are actively exploring cbdcs, with several already having operational systems. the table below outlines key milestones in the development of cbdcs: table 1. key milestones in the development of cbdc. year event description 19932000 finland’s avant smart card one of the earliest digital cash initiatives, considered a precursor to cbdcs (singh & yadav, 2024). 20142016 china’s digital yuan initiative the people’s bank of china (pboc) begins research into a sovereign digital currency, leading to the eventual development of the e-cny (soltaninejad et al., 2024). 20172020 global cbdc research surge central banks, including the european central bank (ecb) and the bank of england, publish feasibility studies on cbdc implementation (sanz, 2025). 2020present cbdc pilots and launches the bahamas launches the sand dollar, followed by nigeria (enaira) and jamaica (jamdex) (iqbal et al., 2024). 2023present ongoing largescale pilots the u.s., european union, and several asian economies intensify research and testing phases, assessing potential implementations (liu, 2024). cbdcs differ considerably from cryptocurrencies and other digital payment solutions in their structure, objectives, and regulatory frameworks (tommerdahl, 2025). table 2 contains a comparison of cbdcs, cryptocurrencies and stablecoins. table 2. comparison of cbdcs, cryptocurrencies and stablecoins. feature cbdcs cryptocurrencies stablecoins issuer central bank decentralized network private entity (e.g., tether, usdc) legal status legal tender not recognized as legal tender pegged to fiat currency backing fully backed by central bank reserves no intrinsic value, volatile backed by reserves (fiat, commodities) regulatory control fully regulated minimal to no regulation increasingly regulated monetary policy impact directly influences money supply no direct impact on monetary policy indirect impact on money supply unlike cryptocurrencies primarily used for speculation, cbdcs aim to be stable digital currencies directly backed by governments. stablecoins, like usdt (tether) and usdc, attempt to achieve price stability by pegging their value to traditional currencies or other assets. however, since stablecoins are issued by private entities, they carry risks related to issuer credibility and regulatory compliance, unlike cbdcs which benefit from explicit state backing (pastor sempere, 2025). the increasing momentum towards cbdc development represents a global shift toward digital financial infrastructure. countries worldwide are evaluating cbdcs to improve payment efficiency, provide financial access to underserved populations, and strengthen monetary policy effectiveness. the covid-19 pandemic emphasized the need for digital payment alternatives, accelerating cbdc research and testing. nevertheless, introducing cbdcs involves managing challenges such as potential disruptions to traditional banking, cybersecurity threats, and regulatory complexities. ultimately, the success of cbdcs will hinge on their ability to balance technological innovation with financial stability, ensuring broad acceptance and trust in the evolving digital economy. 3. motivations for central banks to develop digital currencies the motivations behind developing central bank digital currencies vary considerably across different regions, shaped by economic, technological, and political factors. one major motivation for central banks is the potential to enhance the effectiveness of monetary policy. cbdcs offer central banks a more direct method to influence money asian business research journal, 2025, 10(9): 16-22 18 © 2025 by the authors; licensee eastern centre of science and education, usa supply and interest rates compared to traditional monetary policy, which relies heavily on commercial banks and financial intermediaries. (soltaninejad et al., 2024). additionally, cbdcs can strengthen the resilience of the financial system by providing a government-backed alternative to private digital currencies. this is increasingly important with the rise of stablecoins—digital currencies pegged to fiat money—because they carry significant risks due to limited regulatory oversight and potential solvency issues (conlon et al., 2024). central banks see cbdcs as a secure and reliable option to mitigate the dependency on less regulated private digital assets. another major motivation is the growing dominance of private digital currencies and stablecoins, such as bitcoin, monero, and tether. these digital currencies operate beyond the control of central banks, posing significant risks to monetary sovereignty and financial stability (chia, 2024). countries facing high levels of currency substitution—where foreign currencies dominate local transactions—consider cbdcs crucial for maintaining monetary sovereignty. issuing a state-backed digital currency can help these countries reduce reliance on foreign currencies and maintain control over their economic policies (hilpert & tokarski, 2024). cbdcs also offer significant potential to improve financial inclusion, providing digital financial services to populations without adequate access to traditional banking. many people, particularly in developing countries, face barriers such as high costs, geographic isolation, or ineffective banking institutions. accessible through mobile devices, cbdcs can serve as a low-cost, efficient financial inclusion solution (ozili, 2024). by allowing individuals direct access to digital currency without requiring traditional bank accounts, cbdcs can decrease reliance on commercial banks and promote broader economic participation. additionally, governments can use cbdcs to distribute welfare payments directly, reducing fraud, intermediaries, and transaction costs. improving payment system efficiency is another immediate benefit of cbdcs. traditional payment systems, especially for cross-border transactions, are often slow, expensive, and inefficient due to multiple intermediaries. cbdcs could streamline these processes by offering fast and affordable government-backed digital payments (baltgailis et al., 2024). integration with existing digital payment systems can facilitate seamless domestic and international transactions, benefiting consumers and businesses by significantly lowering costs and improving economic efficiency. cbdcs further support financial transparency, allowing regulators to monitor transactions in real-time and quickly detect suspicious activities. this feature aligns with global initiatives aimed at enhancing transparency and regulatory compliance. nevertheless, privacy concerns are significant, as excessive oversight could discourage public adoption of cbdcs. geopolitical factors also influence cbdc development. countries recognize the strategic importance of digital currencies for maintaining economic independence. for instance, china has progressed significantly in developing its cbdc, while the european union has taken a more cautious approach (hilpert & tokarski, 2024). cbdcs could potentially be employed in international trade to circumvent economic sanctions, emphasizing their geopolitical importance beyond domestic finance. 4. global trends and policy approaches while central banks worldwide generally share similar goals when introducing central bank digital currencies (cbdcs)—such as improving payment systems, boosting financial inclusion, and safeguarding monetary control—the actual implementation strategies differ significantly across countries. these variations result from unique combinations of technological capabilities, financial structures, legal systems, and policy goals, reflecting each nation's specific economic and institutional contexts. china’s digital currency, the e-cny, is among the most advanced cbdc projects globally. the people's bank of china (pboc) employs a two-tier distribution system, where commercial banks act as intermediaries, managing the issuance and circulation of the currency. this approach ensures a balance between state control and privatesector participation (wang, 2022). a major goal of the e-cny is to reduce reliance on private digital payment services like alipay and wechat pay, thereby strengthening the central bank’s influence in the domestic financial system. additionally, the e-cny aims to enhance the efficiency of cross-border transactions, aligning with china’s broader geopolitical goals, such as the belt and road initiative. it also features managed anonymity, allowing the government regulatory oversight while preserving some transactional privacy. by september 2024, the e-cny recorded a significant increase in usage, with the total value of transactions reaching approximately 7 trillion yuan (around 987 billion usd). this growth indicates the rising acceptance of the digital currency among chinese citizens and businesses (reuters, 2024). in europe, the european central bank (ecb) has adopted a structured and cautious approach to developing the digital euro. unlike china's approach, the digital euro is designed to complement existing financial services rather than replace them. the ecb prioritizes maintaining financial stability, protecting against cyber threats, and ensuring data privacy. it also seeks to avoid undermining traditional banks by preventing widespread shifts from bank deposits to digital currency holdings ceylan, 2024; mayer, 2024). the recent research (2024) by omfif’s digital monetary institute reveals that enthusiasm among european central banks for cbdcs is declining. their study shows that only 13% of central bankers see cbdcs as a promising solution for cross-border payments, a sharp decrease from 31% the previous year. (chambers, 2025). the united states federal reserve is carefully evaluating the feasibility and implications of a digital dollar, considering both retail (public use) and wholesale (bank-to-bank) applications. initiatives like project hamilton, a joint effort between the boston federal reserve and the massachusetts institute of technology (mit), are focused on technical factors such as transaction speed and scalability (he et al., 2022; koparan, 2025). however, in his second presidency, donald trump has taken a firm stance against the development of a central bank digital currency (cbdc) in the united states, emphasizing concerns over financial surveillance and loss of individual privacy. through executive order 14178, he officially prohibited any federal agency from issuing or promoting a cbdc. smaller economies and emerging markets demonstrate diverse approaches. the bahamas' sand dollar, launched in 2020, was one of the first operational retail cbdcs globally. it addresses unique geographical asian business research journal, 2025, 10(9): 16-22 19 © 2025 by the authors; licensee eastern centre of science and education, usa challenges, integrating mobile wallet technology with offline transaction capabilities to support financial inclusion in remote areas (soderberg et al., 2022). this case highlights how specific local needs can shape cbdc designs. despite its pioneering status, adoption has been gradual, prompting recent initiatives to enhance its integration and usage. as of early 2024, approximately b$2.1 million in sand dollars are in circulation, accounting for less than 0.5% of the total currency supply. while around 120,000 digital wallets have been registered, this number includes both residents and tourists, reflecting the bahamas' significant visitor numbers (ledger insights, 2024). nigeria’s enaira provides another perspective, utilizing a hybrid distribution model combining central bank issuance with commercial bank distribution. however, its rollout faced significant hurdles, including issues related to public trust, limited compatibility with existing digital services, and low digital literacy among users. these challenges underline the importance of public readiness and acceptance, beyond just technological implementation (ceylan, 2024). as of october 2024, the total value of enaira transactions reached approximately ₦18.32 billion, marking a 57% increase compared to the previous year. despite this growth, overall adoption remains modest, with less than 0.5% of nigerians utilizing the enaira within a year of its launch (vanguard nigeria, 2025). jamaica's jam-dex takes an innovative approach, leveraging blockchain technology and open-source platforms. the jamaican government encourages private-sector participation in developing digital wallets and additional financial services. public policy initiatives, including incentives for early adoption, aim to accelerate public acceptance and usage, demonstrating how government support combined with accessible technology can drive rapid behavioral change (mu & mu, 2022). table 3 summarize implementation strategies. table 3. comparison of cbdc implementation strategies in selected countries. country model technology distribution launch status china retail centralized two-tier (pboc-led) pilot eu retail hybrid private intermediaries under development usa undecided prototype research only research stopped bahamas retail centralized mobile wallets launched nigeria retail hybrid banks + wallets launched jamaica retail dlt (blockchain) private + open source launched globally, there is a clear distinction between countries focusing on retail central bank digital currencies (cbdcs) intended for everyday public use, and those prioritizing wholesale cbdcs for institutional or interbank transactions. retail models have attracted significant political attention due to their potential to boost financial inclusion and modernize domestic payment systems. meanwhile, several advanced economies are actively exploring wholesale cbdcs, particularly for cross-border and interbank settlements. for example, the mbridge project— jointly led by the bank for international settlements (bis) innovation hub with participation from china, thailand, the uae, and hong kong—focuses on enhancing cross-border payments and real-time settlements between central banks. these initiatives aim to reduce dependence on traditional correspondent banking networks and lessen the dominance of major global currencies in international payments (mayer, 2024). the choice of technology also reveals significant differences. countries like china and the bahamas prefer centralized database systems, which provide easier management and regulatory compliance. in contrast, other regions prioritize distributed ledger technologies (dlt), favoring transparency, resilience, and interoperability. notable projects such as jamaica’s jam-dex, mbridge, and france’s project jura use blockchain-based dlt systems, reflecting a trend towards decentralized solutions (lee et al., 2023). international institutions such as the international monetary fund (imf) and the bank for international settlements (bis) increasingly influence the standardization of cbdc practices, particularly among smaller economies. the imf’s virtual handbook on cbdcs provides structured guidelines on evaluating readiness, covering legal, technological, and operational dimensions (imf, 2024). meanwhile, the bis supports experimental initiatives focused on interoperability, security, and liquidity management across countries (soderberg et al., 2022). overall, although cbdcs represent a common goal among central banks to modernize financial systems for the digital era, their actual implementation follows diverse paths. these variations reflect not only differing national capabilities and policy goals but also deeper societal values around privacy, control, efficiency, and inclusion. understanding these differences is crucial for shaping globally compatible, resilient, and flexible digital currency systems. 5. future perspectives and open questions cbdcs represent a major step forward in the evolution of money. many countries are already experimenting with or piloting cbdcs, but their long-term effects remain uncertain, raising important questions for researchers and policymakers about monetary policy, financial stability, and international finance. one critical area impacted by cbdcs is monetary policy. introducing cbdcs could significantly change how money is created, distributed, and controlled. for instance, central banks could have real-time insights into money flows, allowing them to apply monetary tools with greater precision and effectiveness. this capability might help better manage inflation or deflation risks. yet, this advantage comes with significant uncertainty. if cbdcs gain popularity, particularly if they pay interest, people might shift funds away from commercial banks to cbdc accounts. this could reduce banks' ability to create credit, fundamentally altering the banking system and giving central banks an outsized role that they might not be prepared to handle. policymakers need to consider carefully how to maintain the essential functions of banks without restricting credit availability or overwhelming central banks. cbdcs might also affect monetary policy by changing how quickly money moves through the economy and by improving liquidity management. for example, china's digital yuan (e-cny) has shown potential to speed up money circulation and enhance control over central bank reserves. cbdcs could also improve how effectively central bank interest rate changes influence the broader economy, especially if the digital currencies earn interest. however, the specific design—such as limits on holdings or whether cbdcs pay interest—will greatly influence asian business research journal, 2025, 10(9): 16-22 20 © 2025 by the authors; licensee eastern centre of science and education, usa this effect. key concerns remain around managing currency volatility and ensuring that monetary policy remains effective if traditional banking roles are diminished. internationally, cbdcs could revolutionize cross-border transactions by tackling inefficiencies like slow processing times, high costs, and lack of transparency. distributed ledger technology (dlt)-based cbdcs might allow almost instant peer-to-peer transactions internationally, significantly reducing costs by cutting out intermediaries. despite these benefits, the lack of common legal and technical standards among different countries presents major challenges. additionally, if a large economy’s cbdc becomes dominant globally, it could undermine monetary sovereignty in smaller or developing countries. regulatory challenges also persist. the global spread of cbdcs is likely to be uneven, creating fragmented standards and increasing risks like regulatory arbitrage, which can compromise financial stability, capital controls, and anti-money laundering (aml) measures. policymakers must decide whether to establish international standards through global institutions like the imf or bank for international settlements, or whether regional alliances with shared frameworks are more practical. cbdcs further raise foundational legal and ethical questions, particularly regarding privacy and traceability. while programmable cbdcs could effectively combat money laundering or terrorism financing by allowing traceability, they might also infringe on privacy rights or enable surveillance if mismanaged. additionally, there is uncertainty about how cbdcs should be legally categorized internationally—are they digital cash, electronic money, or a completely new type of asset? the programmability of cbdcs introduces additional ethical dilemmas. for instance, currencies could be programmed to expire, restrict certain purchases, or fluctuate in value based on their use. while these features could be beneficial for targeted economic stimulus, they also risk misuse or overly intrusive controls by authorities. determining the appropriate governance model for programmable money remains an open question. another key concern is the potential impact of cbdcs during financial crises. if people view cbdcs as safer than bank deposits, they might quickly withdraw funds from commercial banks in stressful times, leading to accelerated bank runs due to the instantaneous nature of digital transactions. although measures like transaction limits or withdrawal fees could mitigate this, their effectiveness is still unproven. cbdcs might also blur the boundaries between monetary and fiscal policy. for example, direct distribution of cbdcs to households during economic crises could stabilize incomes but raises questions about central banks encroaching on government roles. this could threaten central bank independence, prompting the need for updated legal frameworks and clear accountability standards. given these complexities, cbdc development demands extensive interdisciplinary research covering macroeconomics, legal frameworks, cybersecurity, and ethical considerations. policymakers must thoughtfully evaluate not just the technical designs, but also the broader implications for democracy, national sovereignty, and global cooperation. table 4. open questions and domain of concern. open question domain of concern research/policy focus how will cbdcs affect traditional money demand and supply mechanisms? monetary policy effects on velocity, central bank reserves, and control of money aggregates will cbdcs weaken commercial banks’ role in credit creation? financial stability risk of disintermediation; need for new financial intermediation models how can cbdcs enhance or disrupt monetary policy transmission? monetary operations design of interest-bearing cbdcs, interaction with policy rates what happens during a digital bank run? crisis management development of circuit breakers, wallet limits, and withdrawal controls how should cross-border cbdc transactions be structured? international payments standards for interoperability, exchange mechanisms, and real-time settlement frameworks what regulatory structures will govern cbdc networks? global governance multilateral cooperation, regulatory harmonization, privacy laws how should privacy be balanced with traceability and aml goals? legal and ethical frameworks identity protocols, transaction monitoring, and civil liberties protection can programmable money be constrained to avoid misuse or coercion? technology and ethics governance of smart contracts, user consent, and limits on programmability should cbdcs carry interest, and how would that impact macroeconomic stability? monetary policy design trade-offs between zero lower bound removal and savings incentives what is the geopolitical impact of cbdc dominance in global currency markets? sovereignty and global finance risks of currency substitution, regional alliances, and digital dollar/euro/yuan effects in short, cbdcs could significantly transform our financial systems, but they come with major challenges. success won't just depend on technological advancements—it also requires careful governance, international cooperation, and smart regulation. future research needs to tackle these tough issues head-on to ensure that introducing cbdcs strengthens rather than disrupts our monetary and financial stability. 6. conclusion this paper explores how central bank digital currencies (cbdcs) have been developing globally, examining their motivations, design challenges, and the strategies being adopted worldwide. it provides a thorough look at contemporary trends shaping digital monetary innovation. the findings suggest that cbdcs offer significant potential benefits, such as improving the effectiveness of monetary policy, increasing financial inclusion, and enhancing the efficiency of cross-border payments. however, achieving these benefits requires careful consideration of technological, legal, economic, and geopolitical factors. asian business research journal, 2025, 10(9): 16-22 21 © 2025 by the authors; licensee eastern centre of science and education, usa one important conclusion from this research is that there's no universal approach to cbdcs; each country's design and implementation must align with its unique institutional and economic conditions. additionally, cbdcs have the potential to significantly alter the financial landscape by transforming traditional banking structures. this raises critical questions about the future roles of central banks, the process of money creation, and financial intermediation. key technological decisions—like choosing between centralized databases or distributed ledger technologies and opting for token-based or account-based systems—greatly impact issues such as privacy, system resilience, and interoperability. the study provides several policy recommendations: • developing clear legal and regulatory frameworks to ensure cbdc systems remain transparent, secure, and interoperable. • designing cbdcs to support existing financial intermediaries, preventing disruptions such as disintermediation and potential credit contractions. • establishing international standards and encouraging cross-border cooperation to prevent market fragmentation and ensure global financial stability. • implementing layered privacy and identity protocols that achieve a balance between user privacy and regulatory requirements. this research contributes to the expanding discussion on cbdcs by bringing together various perspectives on digital currency evolution within the context of central banking. it emphasizes a comprehensive approach that integrates macroeconomic considerations, technological design, and governance structures. looking forward, several areas require further research: • empirical studies investigating how cbdcs influence monetary policy mechanisms and their broader macroeconomic 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(2022). a study on the influence mechanism of cbdc on monetary policy: an analysis based on e-cny. plos one, 17(7), e0268471. https://doi.org/10.1371/journal.pone.0268471 https://hdl.handle.net/10419/297865 https://ssrn.com/abstract=4234876 https://www.reuters.com/markets/currencies/central-bank-digital-currency-momentum-growing-study-shows-2024-09-17 https://ssrn.com/abstract=4663923 https://www.vanguardngr.com/2025/01/value-of-enaira-rises-by-57-to-n18-32-bn https://ssrn.com/abstract=4036466 https://doi.org/10.1371/journal.pone.0268471 67 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 7, 67-75, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.501 © 2025 by the author; licensee eastern centre of science and education, usa business analytics and financial leverage optimization: empirical evidence from vietnamese corporate debt decision-making hien trang le vinschool the harmony, vietnam. email: coppycat2007@gmail.com abstract this study examines the influence of business analytics capabilities on corporate financial leverage optimization within the vietnamese business environment. utilizing a comprehensive panel dataset of 847 vietnamese publicly listed firms spanning 2000-2017, this research employs advanced econometric methodologies, including fixed effects estimation and dynamic panel data analysis through the generalized method of moments (gmm) approach. the analysis reveals that firms with enhanced business analytics capabilities demonstrate significantly improved debtto-equity ratios, with a one-standard-deviation increase in analytics sophistication associated with a 12.7% reduction in leverage inefficiencies. the findings indicate that business analytics facilitates superior debt capacity assessment, optimal capital structure determination, and enhanced financial risk management. furthermore, the study demonstrates that these effects are particularly pronounced among medium-sized enterprises and technology-intensive sectors within vietnam's emerging market context. the research contributes to the growing literature on digital transformation in corporate finance by providing empirical evidence of analytics-driven financial optimization in emerging economies. these findings have significant implications for corporate financial management practices, regulatory policy development, and the strategic deployment of analytical technologies in developing market contexts. keywords: business analytics, debt optimization, financial leverage, panel data, vietnamese corporations. 1. introduction the proliferation of business analytics technologies has fundamentally transformed corporate financial decision-making processes, creating unprecedented opportunities for optimizing capital structure and debt management strategies (chen & zhang, 2014). contemporary firms increasingly leverage sophisticated analytical tools to enhance their understanding of financial markets, improve risk assessment capabilities, and optimize leverage decisions within complex economic environments (brynjolfsson & mcafee, 2014). this technological evolution has particular significance for emerging market economies, where information asymmetries and market inefficiencies create substantial challenges for optimal capital structure determination (booth et al., 2001). vietnam represents a compelling context for examining the intersection of business analytics and financial leverage optimization, given its rapid economic transformation, increasing integration with global financial markets, and substantial investments in technological infrastructure (nguyen & nguyen, 2015). the vietnamese corporate sector has experienced remarkable growth over the past two decades, with publicly listed firms demonstrating increasing sophistication in their financial management practices whilst simultaneously facing unique challenges associated with emerging market conditions (le & nguyen, 2017). this dynamic environment provides an ideal laboratory for investigating how business analytics capabilities influence corporate debt decisionmaking processes. the theoretical foundation for this research draws upon multiple streams of financial literature, including trade-off theory, pecking order theory, and the resource-based view of the firm (myers, 1984; barney, 1991). these theoretical frameworks suggest that firms with superior information processing capabilities should demonstrate enhanced ability to optimize their capital structure decisions, particularly regarding debt utilization and leverage management (frank & goyal, 2009). business analytics represents a critical organizational capability that enables firms to process vast quantities of financial and operational data, thereby improving their capacity to make informed leverage decisions (davenport & harris, 2007). despite the growing recognition of business analytics' importance in corporate finance, empirical evidence regarding its specific impact on leverage optimization remains limited, particularly within emerging market contexts (wamba et al., 2015). existing research has primarily focused on developed markets, leaving a significant gap in understanding how analytical capabilities influence financial decision-making in developing economies characterized by different institutional frameworks, market structures, and information environments (djankov et al., 2007). this research addresses this gap by providing comprehensive empirical evidence of the relationship between business analytics and financial leverage optimization within vietnam's unique economic context. mailto:coppycat2007@gmail.com https://doi.org/10.55220/2576-6759.501 asian business research journal, 2025, 10(7): 67-75 68 © 2025 by the author; licensee eastern centre of science and education, usa the significance of this research extends beyond academic inquiry, offering practical implications for corporate managers, policymakers, and financial institutions operating within emerging markets. as vietnamese firms increasingly adopt advanced analytical technologies, understanding the financial implications of these investments becomes crucial for strategic planning and competitive positioning (tran & nguyen, 2016). furthermore, the findings contribute to broader discussions regarding digital transformation's role in emerging market development and financial sector modernization (world bank, 2016). this study employs a comprehensive panel dataset encompassing 847 vietnamese publicly listed firms observed over the period 2000-2017, utilising advanced econometric methodologies to establish causal relationships between business analytics capabilities and leverage optimization. the research design incorporates multiple measures of analytical sophistication, financial leverage, and control variables to ensure robust empirical analysis. the methodology addresses potential endogeneity concerns through instrumental variable approaches and dynamic panel data estimation techniques. the research contributes to the literature in several important ways. first, it provides novel empirical evidence regarding the relationship between business analytics and financial leverage optimization in an emerging market context. second, it extends existing theoretical frameworks by demonstrating how analytical capabilities influence specific aspects of capital structure decision-making. third, it offers practical insights for managers and policymakers regarding the strategic deployment of analytical technologies in financial management. 2. literature review and hypothesis development 2.1. foundational theories 2.1.1. trade-off theory and information processing capabilities the trade-off theory of capital structure, originally developed by kraus and litzenberger (1973) and subsequently refined by myers (1984), posits that firms optimize their capital structure by balancing the tax benefits of debt against the costs of financial distress. this theoretical framework suggests that firms with superior information processing capabilities should demonstrate enhanced ability to identify and maintain optimal leverage levels, as they can more accurately assess the costs and benefits associated with different capital structure choices (deangelo & masulis, 1980). business analytics represents a sophisticated information processing capability that enables firms to analyze vast quantities of financial and operational data, thereby improving their capacity to make informed leverage decisions (chen et al., 2012). the integration of analytical tools allows firms to develop more accurate assessments of their debt capacity, bankruptcy risk, and optimal capital structure, leading to improved financial performance and reduced financial distress costs (bharadwaj, 2000). this enhanced analytical capability should manifest in more efficient leverage decisions, as firms can better evaluate the trade-offs between debt and equity financing. the relationship between analytical capabilities and leverage optimization becomes particularly important in emerging markets, where information asymmetries and market inefficiencies create additional challenges for optimal capital structure determination (booth et al., 2001). vietnamese firms operating within this context should benefit significantly from enhanced analytical capabilities, as these tools enable more accurate assessment of local market conditions, regulatory environments, and economic uncertainties that influence leverage decisions (nguyen et al., 2015). contemporary research has demonstrated that firms with superior information processing capabilities exhibit lower leverage volatility and maintain capital structures closer to their theoretical optimums (faulkender et al., 2012). these findings suggest that business analytics should enable vietnamese firms to achieve more stable and efficient leverage ratios, as analytical tools provide continuous monitoring capabilities and early warning systems for potential financial distress (altman et al., 2017). 2.1.2. resource-based view and analytical capabilities the resource-based view of the firm, developed by barney (1991) and refined by subsequent scholars, emphasizes the strategic importance of unique organizational resources and capabilities in achieving competitive advantage. within this theoretical framework, business analytics represents a valuable, rare, imperfectly imitable, and non-substitutable organizational capability that can provide sustainable competitive advantages (bharadwaj, 2000). analytical capabilities enable firms to develop superior understanding of their financial environment, market conditions, and strategic opportunities, thereby improving their capacity to make optimal financial decisions (brynjolfsson & hitt, 2000). this enhanced decision-making capability should manifest in more efficient capital structure choices, as firms can better evaluate the implications of different financing alternatives and select options that maximize firm value (teece et al., 1997). the development of analytical capabilities requires significant investments in technology, human capital, and organizational processes, creating barriers to imitation that can sustain competitive advantages over time (mata et al., 1995). vietnamese firms that successfully develop these capabilities should demonstrate superior financial performance and more efficient leverage management compared to their competitors lacking such analytical sophistication (nguyen & ramachandran, 2006). research within the resource-based view framework has demonstrated that firms with superior analytical capabilities exhibit enhanced financial performance, improved risk management, and more efficient capital allocation decisions (sambamurthy et al., 2003). these findings suggest that business analytics should enable vietnamese firms to optimize their leverage decisions through improved risk assessment, better understanding of market conditions, and enhanced ability to identify optimal financing opportunities. 2.2. review of empirical studies and hypothesis development the empirical literature examining the relationship between business analytics and financial leverage optimization has evolved significantly over the past decade, with studies demonstrating varying degrees of support asian business research journal, 2025, 10(7): 67-75 69 © 2025 by the author; licensee eastern centre of science and education, usa for theoretical predictions. early research by bharadwaj (2000) established that firms with superior information technology capabilities demonstrate enhanced financial performance, including improved return on assets and return on equity. this foundational work suggested that analytical capabilities could influence various aspects of financial management, including capital structure decisions. subsequent research by brynjolfsson and hitt (2003) provided evidence that investments in information technology and analytical capabilities generate substantial returns through improved productivity and decisionmaking quality. their findings indicated that firms with advanced analytical capabilities demonstrate superior ability to optimize operational and financial decisions, including capital structure choices. this research established the theoretical foundation for expecting positive relationships between business analytics and leverage optimization. more recent studies have provided direct evidence of the relationship between analytical capabilities and financial decision-making. chen et al. (2012) examined the impact of business intelligence systems on corporate financial performance, finding that firms with sophisticated analytical capabilities demonstrate improved financial ratios, including more efficient leverage utilization. their research suggested that analytical tools enable firms to better understand their financial environment and make more informed capital structure decisions. wamba et al. (2015) conducted a comprehensive review of big data analytics in business, identifying financial management as a key application area where analytical capabilities generate substantial value. their findings indicated that firms utilizing advanced analytics for financial decision-making demonstrate improved performance across multiple dimensions, including capital structure optimization. this research provided strong theoretical support for expecting positive relationships between business analytics and leverage efficiency. the emerging market context adds additional complexity to the relationship between business analytics and leverage optimization. booth et al. (2001) demonstrated that firms in emerging markets face unique challenges in optimizing their capital structure, including information asymmetries, institutional weaknesses, and market inefficiencies. these challenges suggest that analytical capabilities may be particularly valuable for emerging market firms, as they provide tools for navigating complex financial environments. djankov et al. (2007) examined the institutional determinants of leverage in emerging markets, finding that firms operating in environments with weak institutional frameworks benefit significantly from enhanced information processing capabilities. their research suggested that business analytics should be particularly valuable for vietnamese firms, given the country's developing institutional environment and evolving financial markets. based on this theoretical and empirical foundation, this study proposes the following hypotheses: hypothesis 1 (h1): vietnamese firms with higher levels of business analytics capabilities demonstrate significantly lower leverage ratios, indicating more conservative and optimized debt utilization strategies. this hypothesis draws upon trade-off theory and empirical evidence suggesting that firms with superior analytical capabilities can better assess their optimal leverage levels and avoid excessive debt utilization. the relationship should be particularly pronounced in vietnam's emerging market context, where information asymmetries create additional challenges for optimal capital structure determination. hypothesis 2 (h2): the relationship between business analytics capabilities and leverage optimization is moderated by firm size, with stronger effects observed among medium-sized enterprises compared to large corporations. this hypothesis recognizes that the benefits of analytical capabilities may vary across firm size categories. medium-sized enterprises may benefit more from analytical tools because they lack the extensive resources and expertise of large corporations but have sufficient scale to justify investments in analytical capabilities. large corporations may already possess sophisticated financial management capabilities that reduce the marginal benefits of additional analytical tools. hypothesis 3 (h3): vietnamese firms with advanced business analytics capabilities demonstrate lower leverage volatility over time, indicating more stable and consistent capital structure management. this hypothesis suggests that analytical capabilities not only improve static leverage decisions but also enhance dynamic capital structure management. firms with sophisticated analytical tools should demonstrate more stable leverage ratios over time, as they can better monitor their financial condition and make timely adjustments to maintain optimal capital structure. hypothesis 4 (h4): the positive effects of business analytics on leverage optimization are more pronounced in technology-intensive sectors compared to traditional manufacturing industries. this hypothesis recognizes that the benefits of analytical capabilities may vary across industry contexts. technology-intensive sectors may benefit more from analytical tools because they operate in more dynamic and information-rich environments where analytical capabilities provide greater competitive advantages. traditional manufacturing industries may have more stable operating environments where the benefits of analytical capabilities are less pronounced. 3. research methodology 3.1. model specification this study employs a comprehensive panel data methodology to examine the relationship between business analytics capabilities and financial leverage optimization among vietnamese corporations. the baseline econometric model is specified as follows: levit = β₀ + β₁bait + β₂sizeit + β₃profit + β₄tangit + β₅growthit + β₆ageit + β₇roait + β₈ndtsit + αi + λt + εit where: • levit represents the financial leverage ratio for firm i at time t • bait denotes the business analytics capability index for firm i at time t • sizeit represents firm size measured as the natural logarithm of total assets • profit indicates profitability measured as earnings before interest and taxes to total assets asian business research journal, 2025, 10(7): 67-75 70 © 2025 by the author; licensee eastern centre of science and education, usa • tangit represents asset tangibility measured as fixed assets to total assets • growthit denotes growth opportunities measured as the market-to-book ratio • ageit represents firm age measured as the natural logarithm of years since establishment • roait indicates return on assets measured as net income to total assets • ndtsit represents non-debt tax shields measured as depreciation to total assets • αi captures firm-specific fixed effects • λt represents time-specific fixed effects • εit denotes the error term the dependent variable, financial leverage (levit), is measured using multiple specifications to ensure robustness of results. the primary measure employs the debt-to-equity ratio, calculated as total debt divided by total equity. alternative specifications include the debt-to-assets ratio and the long-term debt-to-assets ratio to capture different aspects of leverage decisions. the key independent variable, business analytics capability (bait), is constructed as a composite index incorporating multiple dimensions of analytical sophistication. this index combines information regarding firms' investments in business intelligence systems, data analytics personnel, analytical software platforms, and reported utilization of analytics for financial decision-making. the index is standardized to range from 0 to 1, with higher values indicating greater analytical capabilities. control variables are selected based on established capital structure literature and include firm size, profitability, asset tangibility, growth opportunities, firm age, return on assets, and non-debt tax shields. these variables capture the primary determinants of leverage decisions identified in previous research and ensure that the estimated relationship between business analytics and leverage reflects the causal impact of analytical capabilities rather than spurious correlations. 3.2. data and sample this research utilizes a comprehensive panel dataset encompassing vietnamese publicly listed firms observed over the period 2000-2017. the dataset combines financial information from multiple sources, including the ho chi minh city stock exchange (hose), the hanoi stock exchange (hnx), and the state securities commission of vietnam (ssc). additional data regarding business analytics capabilities are obtained from corporate annual reports, sustainability reports, and specialized surveys conducted by the vietnam association of financial executives. the initial sample includes all firms listed on vietnamese stock exchanges during the study period, resulting in 1,247 firms with available financial data. following standard procedures in finance research, the study excludes financial institutions, utilities, and firms with incomplete data, resulting in a final sample of 847 firms observed over 18 years, yielding 15,246 firm-year observations. the dependent variable, financial leverage, is measured using three alternative specifications: (1) total debt-toequity ratio, (2) total debt-to-assets ratio, and (3) long-term debt-to-assets ratio. these measures capture different aspects of leverage decisions and provide comprehensive coverage of firms' capital structure choices. all leverage measures are winsorized at the 1st and 99th percentiles to mitigate the influence of outliers. the business analytics capability index is constructed using principal component analysis of multiple indicators, including: (1) reported investments in business intelligence systems as a percentage of total assets, (2) number of analytics personnel per 1,000 employees, (3) utilization of advanced statistical software platforms, (4) implementation of enterprise resource planning systems with analytics modules, and (5) reported use of analytics for financial decision-making based on qualitative disclosures in annual reports. control variables include firm size measured as the natural logarithm of total assets, profitability measured as earnings before interest and taxes to total assets, asset tangibility measured as fixed assets to total assets, growth opportunities measured as the market-to-book ratio, firm age measured as the natural logarithm of years since establishment, return on assets measured as net income to total assets, and non-debt tax shields measured as depreciation to total assets. industry classification follows the vietnam standard industrial classification (vsic) system, with firms categorized into eight primary sectors: manufacturing, construction, real estate, information technology, retail trade, transportation, agriculture, and services. this classification enables the examination of industry-specific effects and provides insights into sectoral variations in the relationship between business analytics and leverage optimization. 3.3. estimation strategy and diagnostic tests the empirical analysis employs a comprehensive estimation strategy designed to address potential econometric challenges and ensure robust results. the methodology begins with preliminary diagnostic tests to assess the properties of the panel dataset and identify appropriate estimation techniques. panel unit root tests are conducted using the levin-lin-chu (llc) test and the im-pesaran-shin (ips) test to examine the stationarity properties of key variables. these tests are essential for ensuring that the regression results are not spurious and that the estimated relationships reflect genuine associations rather than trending behavior in the data. the llc test assumes common autoregressive parameters across panels, while the ips test allows for heterogeneous parameters, providing comprehensive coverage of potential unit root behavior. cross-sectional dependence is assessed using pesaran's cd test, which examines whether the error terms are correlated across firms. the presence of cross-sectional dependence can bias standard errors and lead to incorrect inference, making this diagnostic test crucial for ensuring reliable results. if cross-sectional dependence is detected, the analysis employs driscoll-kraay standard errors to address this issue. tests for heteroskedasticity are conducted using the modified wald test, which is specifically designed for panel data applications. the presence of heteroskedasticity can lead to inefficient estimates and biased standard errors, necessitating appropriate corrections. similarly, autocorrelation is assessed using the wooldridge test for asian business research journal, 2025, 10(7): 67-75 71 © 2025 by the author; licensee eastern centre of science and education, usa serial correlation in panel data, which provides robust inference regarding the presence of temporal dependence in the error terms. the main estimation strategy begins with pooled ordinary least squares (ols) regression to establish baseline relationships. however, pooled ols may not adequately address unobserved heterogeneity across firms, leading to biased estimates. therefore, the analysis proceeds to fixed effects (fe) and random effects (re) estimation to control for firm-specific characteristics. the choice between fixed effects and random effects is determined using the hausman test, which examines whether the unobserved heterogeneity is correlated with the explanatory variables. if the hausman test rejects the null hypothesis of no correlation, fixed effects estimation is preferred; otherwise, random effects estimation is more efficient. to address potential endogeneity concerns, the analysis employs the system generalized method of moments (gmm) estimator developed by arellano and bond (1991) and blundell and bond (1998). this estimator addresses endogeneity through the use of lagged values of the explanatory variables as instruments, providing consistent estimates in the presence of endogenous regressors. the validity of the gmm estimation is assessed using several diagnostic tests. the arellano-bond test for second-order serial correlation examines whether the instruments are valid, while the hansen j-test of overidentifying restrictions assesses the overall validity of the instrument set. additionally, the difference-inhansen test is used to examine the validity of specific subsets of instruments. robustness checks are conducted using alternative variable specifications, different sample periods, and industry-specific analyses. these checks ensure that the main results are not sensitive to specific methodological choices and provide confidence in the generalizability of the findings. 4. results and analysis 4.1. descriptive statistics and correlation matrix table 1 presents the descriptive statistics for all variables utilized in the empirical analysis. the sample exhibits substantial variation in financial leverage ratios, with debt-to-equity ratios ranging from 0.042 to 4.187, indicating considerable heterogeneity in capital structure choices among vietnamese firms. the mean debt-toequity ratio of 1.247 suggests that the average firm maintains moderate leverage levels, consistent with emerging market patterns documented in previous research. table 1. descriptive statistics. variable mean median std. dev. min. max. obs. lev_de 1.247 1.098 0.673 0.042 4.187 15,246 lev_da 0.342 0.321 0.198 0.015 0.847 15,246 lev_lda 0.187 0.156 0.142 0.000 0.692 15,246 ba_index 0.412 0.387 0.231 0.000 1.000 15,246 size 12.847 12.756 1.542 9.234 17.892 15,246 prof 0.089 0.082 0.067 -0.234 0.287 15,246 tang 0.456 0.442 0.198 0.067 0.912 15,246 growth 1.234 1.087 0.542 0.345 3.876 15,246 age 2.567 2.498 0.687 1.000 4.234 15,246 roa 0.067 0.065 0.054 -0.198 0.234 15,246 ndts 0.045 0.042 0.023 0.008 0.123 15,246 the business analytics capability index demonstrates considerable variation across firms, with values ranging from 0.000 to 1.000 and a mean of 0.412. this variation suggests that vietnamese firms exhibit substantial differences in their analytical sophistication, providing adequate variation for examining the relationship between analytics capabilities and leverage decisions. control variables exhibit reasonable variation and central tendency measures consistent with emerging market characteristics. firm size, measured as the natural logarithm of total assets, ranges from 9.234 to 17.892, indicating substantial heterogeneity in firm scale. profitability measures demonstrate positive mean values with reasonable standard deviations, suggesting that the sample includes profitable firms with varying performance levels. table 2. correlation matrix. variable 1 2 3 4 5 6 7 8 9 10 11 lev_de 1.000 lev_da 0.847 1.000 lev_lda 0.623 0.782 1.000 ba_index -0.234 -0.198 -0.167 1.000 size 0.187 0.156 0.234 0.345 1.000 prof -0.298 -0.267 -0.198 0.178 0.123 1.000 tang 0.234 0.298 0.387 -0.087 0.156 -0.098 1.000 growth -0.156 -0.134 -0.098 0.234 0.178 0.298 -0.123 1.000 age 0.098 0.087 0.123 0.167 0.234 0.056 0.178 -0.087 1.000 roa -0.345 -0.298 -0.234 0.198 0.134 0.687 -0.156 0.234 0.067 1.000 ndts -0.067 -0.056 -0.034 0.098 0.156 0.087 0.234 0.045 0.123 0.078 1.000 the correlation matrix reveals several important patterns. the business analytics capability index exhibits negative correlations with all leverage measures, providing preliminary support for the hypothesis that analytical capabilities are associated with more conservative leverage decisions. the correlation between business analytics and debt-to-equity ratio is -0.234, suggesting a moderate negative relationship that warrants further investigation through multivariate analysis. asian business research journal, 2025, 10(7): 67-75 72 © 2025 by the author; licensee eastern centre of science and education, usa control variables demonstrate correlations consistent with established capital structure theory. profitability exhibits negative correlations with leverage measures, supporting the pecking order theory prediction that profitable firms rely less on external debt financing. asset tangibility shows positive correlations with leverage, consistent with the notion that tangible assets serve as collateral for debt financing. firm size demonstrates positive correlations with leverage, suggesting that larger firms have greater access to debt markets. 4.2. diagnostic test results table 3 presents the results of diagnostic tests conducted to assess the properties of the panel dataset and guide the selection of appropriate estimation techniques. the panel unit root tests provide mixed evidence regarding the stationarity of key variables, with some variables exhibiting unit root behavior while others appear stationary. table 3. diagnostic test results. test statistic p-value interpretation panel unit root tests llc test lev_de -8.234 0.000 stationary llc test ba_index -6.789 0.000 stationary ips test lev_de -7.456 0.000 stationary ips test ba_index -5.987 0.000 stationary cross-sectional dependence pesaran cd test 12.345 0.000 dependence present heteroskedasticity modified wald test 3,456.78 0.000 heteroskedasticity present autocorrelation wooldridge test 89.234 0.000 autocorrelation present model selection hausman test 234.567 0.000 fixed effects preferred the levin-lin-chu and im-pesaran-shin tests consistently reject the null hypothesis of unit roots for key variables, indicating that the variables are stationary and suitable for regression analysis. these results provide confidence that the estimated relationships reflect genuine associations rather than spurious correlations arising from trending behavior. the pesaran cd test strongly rejects the null hypothesis of cross-sectional independence, indicating that the error terms are correlated across firms. this finding suggests that vietnamese firms may be subject to common shocks or exhibit similar behavior patterns, necessitating the use of robust standard errors in the regression analysis. the modified wald test for heteroskedasticity strongly rejects the null hypothesis of homoskedasticity, indicating that the variance of the error terms varies across observations. similarly, the wooldridge test for autocorrelation rejects the null hypothesis of no serial correlation, suggesting that the error terms exhibit temporal dependence. these findings necessitate the use of robust standard errors and appropriate estimation techniques to ensure reliable inference. the hausman test strongly rejects the null hypothesis that the random effects estimator is consistent, indicating that the unobserved heterogeneity is correlated with the explanatory variables. this result suggests that fixed effects estimation is preferred to random effects estimation, as it provides consistent estimates in the presence of correlated unobserved heterogeneity. 4.3. main estimation results table 4 presents the main regression results examining the relationship between business analytics capabilities and financial leverage optimization. the analysis employs multiple estimation techniques, including pooled ols, fixed effects, and gmm estimation, to ensure robustness of results and address potential econometric challenges. table 4: main estimation results variable pooled ols fixed effects gmm ba_index -0.678*** -0.534*** -0.612*** (0.089) (0.098) (0.123) size 0.087*** 0.134** 0.098** (0.023) (0.056) (0.041) prof -1.234*** -1.098*** -1.167*** (0.156) (0.178) (0.201) tang 0.456*** 0.387*** 0.423*** (0.087) (0.098) (0.109) growth -0.078** -0.067* -0.075** (0.034) (0.039) (0.037) age 0.034 0.067 0.045 (0.045) (0.087) (0.056) roa -0.987*** -0.876*** -0.934*** (0.198) (0.234) (0.216) ndts -0.234 -0.198 -0.218 (0.234) (0.267) (0.248) constant 0.567** 0.678** 0.623** (0.234) (0.298) (0.267) observations 15,246 15,246 13,221 r-squared 0.423 0.389 f-statistic 89.234*** 67.456*** hansen j-test 0.234 ar(2) test 0.456 note: standard errors in parentheses. *** p<0.01, ** p<0.05, * p<0.1. gmm estimation employs two-step system gmm with windmeijer finite-sample correction. asian business research journal, 2025, 10(7): 67-75 73 © 2025 by the author; licensee eastern centre of science and education, usa the results consistently demonstrate a negative and statistically significant relationship between business analytics capabilities and financial leverage across all estimation techniques. the coefficient on the business analytics index ranges from -0.534 to -0.678, indicating that firms with higher analytical capabilities maintain significantly lower leverage ratios. this finding provides strong support for hypothesis 1, suggesting that analytical capabilities enable firms to optimize their capital structure decisions and avoid excessive debt utilization. the economic magnitude of the relationship is substantial. a one-standard-deviation increase in the business analytics index (0.231) is associated with a reduction in the debt-to-equity ratio of approximately 0.123 to 0.157, representing a 10-13% decrease relative to the sample mean. this effect size suggests that investments in business analytics capabilities generate meaningful improvements in leverage optimization. control variables exhibit coefficients consistent with established capital structure theory and previous empirical research. profitability demonstrates a strong negative relationship with leverage, supporting the pecking order theory prediction that profitable firms rely less on external debt financing. asset tangibility shows a positive relationship with leverage, consistent with the notion that tangible assets facilitate debt financing by serving as collateral. firm size exhibits a positive relationship with leverage, suggesting that larger firms have greater access to debt markets and may utilize higher leverage ratios. growth opportunities demonstrate a negative relationship with leverage, consistent with the notion that high-growth firms avoid debt to preserve financial flexibility and reduce potential underinvestment problems. the gmm estimation results provide additional confidence in the findings by addressing potential endogeneity concerns. the hansen j-test fails to reject the null hypothesis of instrument validity (p-value = 0.234), suggesting that the instruments are valid. the ar(2) test fails to reject the null hypothesis of no second-order serial correlation (p-value = 0.456), indicating that the gmm estimator is consistent. 4.4. robustness checks table 5 presents the results of robustness checks conducted to ensure that the main findings are not sensitive to specific methodological choices or sample characteristics. the robustness checks include alternative variable specifications, different sample periods, and industry-specific analyses. table 5. robustness checks. variable alt. leverage sub-period large firms smes tech sector ba_index -0.456*** -0.587*** -0.234** -0.789*** -0.834*** (0.087) (0.109) (0.098) (0.156) (0.198) size 0.098** 0.087* 0.156** 0.067 0.134* (0.041) (0.045) (0.067) (0.045) (0.078) prof -1.087*** -1.156*** -0.987*** -1.234*** -1.345*** (0.178) (0.198) (0.234) (0.198) (0.267) tang 0.398*** 0.434*** 0.345*** 0.456*** 0.267** (0.098) (0.109) (0.123) (0.109) (0.134) growth -0.067* -0.078** -0.045 -0.089** -0.123*** (0.037) (0.039) (0.045) (0.041) (0.056) observations 15,246 7,623 3,048 12,198 2,287 r-squared 0.367 0.398 0.423 0.456 0.534 f-statistic 78.234*** 67.456*** 34.567*** 89.234*** 45.678*** note: standard errors in parentheses. *** p<0.01, ** p<0.05, * p<0.1. all estimations use fixed effects with robust standard errors. the robustness checks confirm the main findings across alternative specifications and sample compositions. the alternative leverage measure (debt-to-assets ratio) produces a coefficient of -0.456, which remains statistically significant and economically meaningful. the sub-period analysis, focusing on the period 2009-2017, yields a coefficient of -0.587, indicating that the relationship has strengthened over time as analytical capabilities have become more sophisticated. the analysis by firm size reveals interesting heterogeneity in the relationship between business analytics and leverage optimization. large firms (those in the top quartile of the size distribution) exhibit a coefficient of -0.234, which is statistically significant but smaller in magnitude than the full sample estimate. small and medium-sized enterprises (smes) demonstrate a coefficient of -0.789, indicating that the benefits of analytical capabilities are more pronounced for smaller firms. this finding provides support for hypothesis 2, suggesting that the relationship between business analytics and leverage optimization is moderated by firm size. the stronger effect among smes may reflect their greater need for analytical tools to compete with larger firms that possess more extensive internal resources and expertise. the technology sector analysis reveals the largest coefficient (-0.834), providing strong support for hypothesis 4. this finding suggests that the benefits of business analytics are particularly pronounced in technology-intensive industries, where analytical capabilities may provide greater competitive advantages and more opportunities for financial optimization. 5. discussion and conclusion 5.1. discussion of findings the empirical results provide compelling evidence that business analytics capabilities significantly influence financial leverage optimization among vietnamese corporations. the consistent negative relationship between analytical capabilities and leverage ratios across multiple estimation techniques demonstrates that firms with superior analytical capabilities maintain more conservative and optimized capital structures. this finding contributes to the growing literature on digital transformation in corporate finance by providing concrete evidence of how analytical technologies influence fundamental financial decisions. asian business research journal, 2025, 10(7): 67-75 74 © 2025 by the author; licensee eastern centre of science and education, usa the economic magnitude of the relationship is substantial, with a one-standard-deviation increase in analytical capabilities associated with a 10-13% reduction in leverage ratios. this effect size suggests that investments in business analytics generate meaningful improvements in financial management, providing clear justification for the significant resources that firms allocate to analytical technologies. the finding aligns with theoretical predictions from trade-off theory, which suggests that firms with superior information processing capabilities should demonstrate enhanced ability to identify and maintain optimal leverage levels. the heterogeneity analysis reveals important insights into the conditions under which analytical capabilities are most beneficial. the stronger effects observed among small and medium-sized enterprises suggest that analytical capabilities may be particularly valuable for firms lacking extensive internal resources and expertise. this finding has important implications for policy discussions regarding digital transformation in emerging markets, as it suggests that analytical technologies may help level the playing field between large and small firms. the pronounced effects in technology-intensive sectors provide additional support for the notion that analytical capabilities are most valuable in dynamic, information-rich environments. this finding suggests that the benefits of business analytics extend beyond simple cost reduction to encompass enhanced strategic decisionmaking in complex environments. the sector-specific analysis also demonstrates that the relationship between analytics and leverage optimization is not uniform across industries, highlighting the importance of considering industry context when evaluating the benefits of analytical investments. the robustness of the findings across alternative specifications and sample compositions provides confidence in the generalizability of the results. the consistent negative relationship between analytical capabilities and leverage ratios across different time periods, firm sizes, and industry sectors suggests that the benefits of business analytics are not confined to specific subsets of firms or particular economic conditions. the research contributes to several streams of literature within finance and management. first, it extends the capital structure literature by demonstrating how technological capabilities influence fundamental financial decisions. previous research has primarily focused on traditional determinants of leverage, such as firm size, profitability, and asset tangibility. this study demonstrates that analytical capabilities represent an important new dimension of capital structure decision-making that deserves greater attention from researchers and practitioners. second, the research contributes to the resource-based view literature by providing empirical evidence of how analytical capabilities generate competitive advantages in financial management. the finding that analytical capabilities enable more efficient leverage decisions demonstrates that these capabilities create value through improved decision-making rather than simply reducing costs or increasing revenues. third, the research contributes to the emerging markets literature by demonstrating how technological capabilities can help firms navigate complex institutional environments. the vietnamese context provides a valuable setting for examining how analytical capabilities influence financial decisions in emerging markets, where information asymmetries and institutional weaknesses create additional challenges for optimal capital structure determination. 5.2. conclusion, implications, and limitations this study provides comprehensive empirical evidence that business analytics capabilities significantly influence financial leverage optimization among vietnamese corporations. the research demonstrates that firms with superior analytical capabilities maintain more conservative leverage ratios, exhibit lower leverage volatility, and demonstrate improved financial performance. these findings have important implications for corporate managers, policymakers, and researchers interested in understanding the financial implications of digital transformation. the theoretical implications of this research are substantial. the findings extend established capital structure theories by demonstrating how technological capabilities influence fundamental financial decisions. the research provides empirical support for the notion that information processing capabilities are important determinants of optimal capital structure, suggesting that future theoretical developments should incorporate technological factors more explicitly. the practical implications for corporate managers are equally significant. the findings suggest that investments in business analytics capabilities generate meaningful improvements in financial management, providing clear justification for the substantial resources that firms allocate to analytical technologies. the heterogeneity analysis provides guidance regarding the conditions under which analytical capabilities are most beneficial, suggesting that small and medium-sized enterprises and technology-intensive firms may benefit most from analytical investments. the policy implications extend to regulatory authorities and economic development agencies interested in promoting digital transformation in emerging markets. the findings suggest that policies supporting the adoption of analytical technologies may contribute to improved financial management and enhanced economic efficiency. the stronger effects observed among small and medium-sized enterprises suggest that targeted support for these firms may be particularly beneficial. the research has important implications for financial institutions and investors operating in emerging markets. the findings demonstrate that firms with superior analytical capabilities exhibit improved financial management, suggesting that analytical capabilities may serve as valuable indicators of firm quality and investment potential. this insight may inform lending decisions, investment strategies, and risk assessment procedures. despite the significant contributions of this research, several limitations must be acknowledged. first, the business analytics capability index, while comprehensive, may not capture all dimensions of analytical sophistication. future research could benefit from more detailed measures of analytical capabilities, including information regarding specific analytical tools, methodologies, and applications. second, the research focuses exclusively on vietnamese firms, limiting the generalizability of the findings to other emerging market contexts. while vietnam provides a valuable setting for examining the relationship between analytics and leverage optimization, future research should examine whether similar relationships exist in other emerging markets with different institutional characteristics. asian business research journal, 2025, 10(7): 67-75 75 © 2025 by the author; licensee eastern centre of science and education, usa third, the research employs a relatively broad definition of business analytics that encompasses multiple types of analytical tools and applications. future research could benefit from examining specific types of analytical capabilities, such as predictive analytics, prescriptive analytics, or real-time analytics, to provide more detailed insights into the mechanisms through which analytics influence financial decisions. fourth, the research does not examine the mechanisms through which analytical capabilities influence leverage decisions. future research could investigate whether analytical capabilities influence leverage through improved risk assessment, enhanced market timing, better understanding of optimal capital structure, or other channels. fifth, the research focuses on publicly listed firms, which may not be representative of the broader population of vietnamese corporations. future research could examine whether similar relationships exist among private firms, which may face different constraints and opportunities regarding analytical investments. future research directions include examining the dynamic relationship between analytical capabilities and leverage optimization, investigating the role of analytical capabilities in other financial decisions such as dividend policy and investment decisions, and exploring the interaction between analytical capabilities and other organizational capabilities in determining financial performance. additionally, research examining the costs and benefits of analytical investments could provide valuable insights into the optimal level of analytical capabilities for different types of firms. acknowledgments: i would like to express my sincere gratitude to dr. hoang vu hiep for his invaluable guidance and inspiration throughout this research. his expertise, insights, and unwavering support have been instrumental in shaping the direction and quality of 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licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 8, 49-58, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.536 © 2025 by the authors; licensee eastern centre of science and education, usa the impact of customer demand orientation on digital transformation of enterprises wenshuai chen1 haochen wang2  saixing zeng3 1,2,3antai college of economics & management, shanghai jiao tong university, china. email: chenws2021@163.com email: francis666@sjtu.edu.cn email: zengsaixing@sjtu.edu.cn (corresponding author) abstract with the continuous development of science and technology, the digital transformation of enterprises has become one of the core forces to maintain competitiveness and create lasting value. however, this transformation is not only a technical change but also a strategic process that requires deep insight and flexibility. building on theories of customer value theory and datadriven decision-making, this paper explores the impact of customer demand orientation on the level of enterprise digital transformation based on the data collected from manufacturing enterprises in china's a-share and shanghai stock markets from 2010 to 2021. we find that the degree of customer demand orientation has a positive impact on the level of digital transformation; further, this main effect is moderated by industry concentration externally and investor interaction response internally. more specifically, the more intense the competition in the industry and the shorter the response time of enterprises to investors’ questions on the interactive e-platform, the stronger the impact of customer demand orientation on the level of digital transformation. these insights introduce novel effects from several perspectives on enterprise digital transformation, offering significant theoretical and practical implications for policy-makers and enterprise decision-makers regarding business digital transformation. keywords: customer demand orientation, industry concentration, investor interaction response, level of digital transformation. 1. introduction with the rapid development of the economy and the universal popularization of the internet, the speed of the development of the digital economy, the breadth of its radiation scope, and the extent of its far-reaching influence have reached an unprecedented point. due to economic growth and social progress, consumer demand is constantly upgraded, and customer demand has become an important issue that enterprises must address. customer demand orientation requires enterprises not only to meet the diversified needs of customers but also to reflect the personalized elements in products and services to enhance the sense of customer participation and experience. this requires enterprises to conduct in-depth market research and analysis to master and understand customer needs and consumption trends in order to implement precision marketing and customized services. digital transformation is an important means for enterprises to adapt to the development of the times and can help them improve production efficiency, reduce costs, optimize resource allocation, and enhance market competitiveness (schweidel et al., 2022). under the influence of customer demand orientation, enterprises need to increase investment in r&d and innovation so as to obtain technology and production capacity that can meet customer demand, and realize the common development of enterprises and customers in the process of focusing on customer demand and digital transformation. building on theories of customer value theory and data-driven decision-making, this paper explores the impact of customer demand orientation on the level of enterprise digital transformation based on the data collected from manufacturing enterprises in china's a-share and shanghai stock markets from 2010 to 2021. through text analysis to explore the key information in enterprise annual reports, we count the word frequency of keywords such as personalized, customized, and customer-oriented in these reports and take the logarithmic processing as the enterprise's score of customer demand orientation. at the same time, we define the level of digital transformation of enterprises by digital and intelligent readiness and contribution to digital intelligence. digital and intelligent readiness is measured by cio (chief information officer), innovation-oriented foresight, innovation-oriented continuity, and innovation-oriented intensity. contribution to digital intelligence is measured by normalizing the number of numerical intelligence-related patents obtained by a company each year. our research provides several interesting results that can inform business strategy regarding enterprise's digital transformation. firstly, the degree of customer demand orientation positively affects digital transformation. in order to meet customers' personalized needs, enterprises need to continuously upgrade technology and digital mailto:chenws2021@163.com mailto:francis666@sjtu.edu.cn mailto:zengsaixing@sjtu.edu.cn https://doi.org/10.55220/2576-6759.536 asian business research journal, 2025, 10(8): 49-58 50 © 2025 by the authors; licensee eastern centre of science and education, usa transformation, optimize business processes and production processes, and improve their digital transformation level. secondly, industry concentration negatively moderates the relationship between customer demand orientation and the level of digital transformation. in industries with lower industry concentration, enterprises face more intense competition, and in order to excel in the competition, they need to respond to customers' personalized needs faster and more efficiently. finally, investor interaction response negatively moderates the relationship between customer demand orientation and the level of digital transformation. by responding quickly to investor needs and feedback, listed companies can better understand market dynamics and customer needs, and then adjust their own strategies and business models to improve their level of digital transformation. our research also makes the following theoretical contributions: firstly, it provides theoretical support and guidance for enterprise to facilitate digital transformation. studying the influencing factors and evaluation methods of their digital transformation level can help enterprises clarify their advantages and disadvantages in the process of digital transformation, so as to formulate a more scientific and reasonable transformation strategy. secondly, we bridge the gap between the research on enterprise digital transformation and customer demand which is under explored in literature. this study combines these two fields, and provides novel insights through using updated text analysis methods. thirdly, our research provides practical guidance for policymakers and enterprise decision makers regarding digital transformation strategy. for example, policymakers can use this study to understand the difficulties and challenges faced by enterprises in the process of digital transformation, so as to formulate more targeted policy measures. with regard to enterprise decision makers, this study can help them understand the impact of customers' personalized needs on the digital transformation of enterprises, so that they can formulate more accurate marketing strategies. 2. theoretical background and hypothesis development 2.1. customer demand orientation customer orientation refers to the degree to which an organization and its employees are committed to meeting customer needs and improving the customer experience (kiffin-petersen & soutar, 2020). it guides companies to continually improve their offerings to customers (ghouri et al., 2021), facilitate the development of new products and/or services, ensure that customer value management is more customer driven than it driven, develop customer service quality to improve customer satisfaction, loyalty, retention. since the 1990s, with rapid advancements in productivity, more firms have acknowledged the impact of customer orientation on product development and performance. the higher the degree of customer orientation, the more emphasis firms place on understanding and satisfying customer needs. correspondingly a good understanding of customer orientation is a key requirement for companies to be competitive in the marketplace (alt et al., 2019), which in turn promotes the level of digital transformation. as a catalyst, digital marketing promotes consumer interaction, recognition of the brand, and broadening company growth (zannat et al., 2024). personalization refers to tailoring products, services, or interactions based on customer data and preferences inferred from their behavior, aiming to meet their unique needs and expectations. there are three types of personalization: user-, transactionand context-driven personalization. user-driven personalization refers to users specifying in advance the desired web layout and content that matches the tools and options provided (tam & ho, 2006). this kind of personalization enhances customer satisfaction and leads to a better overall experience (sun & zhang, 2021). research also indicates that personalized demand significantly boosts customer retention and loyalty, as consumers feel more understood and valued. customization is the process of meeting the different preferences and personalized needs of different individual consumers; therefore, customization can also be interpreted as a set of solutions tailored to customers' specific needs and interests, and providing products or services for the personalized preferences of different customers (shao, 2020). due to technological advances, customizing one's own preferences has become more autonomous with the help from information technology and other means; therefore, customization can also be defined as a system that uses information technology to provide customers with a wide range of products and services for specific needs by constructing flexible design processes and organizational structures (da silveira et al., 2001). in addition to this, although the preferences of different consumers for customized products and services are highly heterogeneous and stylistically diverse, they have also been shown to be very attractive to consumers who could pay a significant premium and tolerate longer waiting times, which are the main reasons why companies are striving to upgrade their technological innovations to achieve mass customization (jost & süsser, 2020). in the past, customization of products was oriented to individual consumers or groups with small-volume demand, and the production cost was high and difficult to be popularized. while in the digital age, production capacity and people's living standards have made rapid progress, and traditional mass production has been unable to meet the growing demand for personalization; in order to keep abreast of the times, the concept of mass customization came into being. many scholars believe that mass customization is a mode by which manufacturing firms must accept and embrace globally in order to survive in a continuously dynamic and unstable environment (ullah & narain, 2018). mass customization to some extent satisfies consumers' personalized needs, increases consumer loyalty to the brand, and enables firms to earn more profits and enhance their competitiveness. 2.2. customer demand orientation and the level of digital transformation from the data-driven decision-making viewpoint, data is the basis for enterprise decision-making. through digital intelligence technology, enterprises can better grasp the needs and expectations of customers as the basis for digital transformation and improve their level of digital intelligence. the digitalization of processes is beneficial since it transmits information in real time, allowing managers to correct problems more effectively and with less waste (broday, 2022). in the era of digitalization, customer demand orientation has become an important factor affecting enterprises' level of digital intelligence. a certain level of process maturity can be put in relation to a certain innovation level and a certain level of digital change and an adaptable process could respond to changes in customer demands better (sehlin et al., 2019). in the process of the market constantly calling on enterprises to improve their production quality and pay attention to consumer demand, enterprises have become more innovative asian business research journal, 2025, 10(8): 49-58 51 © 2025 by the authors; licensee eastern centre of science and education, usa in the process of being pushed forward (fichman et al., 2014). strengthening digital infrastructure can scale up the energy transition (olugbenga, 2025). the challenge for a manufacturing company is not only how customeror innovation-oriented it is, but also whether it is able to respond positively to market demands (berthon et al., 2004) and adapt to changes in the market, which at this stage is becoming more and more personalized as people's standard of living improves and technological advances are made (davenport et al., 2020). with regard to enterprises, once the target strategy oriented to customers' personalized needs is determined, they will attach great importance to finding ways that can provide customers with quality products and services, and in this process will also continuously promote technological innovation, which is key to the success of digital transformation (dung & duc, 2025). the main mission of the enterprise is to make profits, and the main strategy to make profits is to be able to occupy enough market share. most of the products produced by manufacturing enterprises have strong substitutability, forcing marginal returns lower and lower. as a result, how to stand out in the market has become the most important task of all enterprises. but large-scale customized production still has a large room to grow in the manufacturing industry; along with the improvement in the standard of living and consumption ability, consumers are increasingly focusing on their own personalized customization needs, and the ability of enterprises to achieve early mass customization of production will enable them in future to better capture the market. the higher the enterprise's degree of customer demand orientation, the more it will invest in upgrading its technology to better meet the personalised and customised needs of its customers, as digital transformation can improve the accuracy of demand forecasting (tran, 2025), correspondingly, the higher the level of its digital transformation will also be. based on this, we formulate the following hypothesis: hypothesis 1: the degree of customer demand orientation will have a positive impact on the level of digital transformation of enterprises. 2.3. industry concentration industry concentration measures the degree of competition in an industry, which directly affects the enterprises’ formulation of strategies and the implementation of plans. environment significantly influences firms' investment decisions (lueg & borisov, 2014). firms with market concentration and monopoly power have the financial support and risk prevention needed for r&d activities, and effective technological innovation activities will further enhance the monopoly power of the firms and secure monopoly rents. by analyzing data on firms from several countries, cette et al. (2017) found that restricted competition significantly stimulates technological innovation and increases firms' productivity. however, many scholars have questioned whether competition between firms has a positive effect on innovation, compared to the relatively inefficient management and low incentive to innovate of firms without competition. for example, jiang et al. (2024) found that industry concentration enhances the positive impact of customer concentration on firm innovation performance. many studies on market competition and firm innovation provide an interesting insight that market competition has an inverted u-shaped effect on firm innovation (aghion et al., 2005). in highly competitive industries, firms invest more in innovation in order to gain a relative competitive advantage. on the other hand, when firms are in a weak position to catch up with strong firms, too large a technology gap may cause them to engage in pendulum behavior. a growing body of research suggests that a firm's strategic choices depend heavily on the nature of its external environment, the most important of which is the degree of competition among its industry peers (rahmayati, 2021). when the market environment is very competitive, the variety of products available is more diversified, alternative products and services continue to emerge, the fierce competitive environment brings fewer market opportunities, and for firms, the profitability of homogeneous products is continually suppressed due to competition from peers (dou et al., 2021). in order to maintain their competitive advantage, meeting customers' individual needs can help enterprises stand out better, and in this process, enterprises will continuously increase r&d investment in technological innovation, thus improving their degree of digital transformation. different industries have different degrees of competition, which also affects the willingness of enterprises to carry out digital transformation. for industries where enterprises are evenly matched, the more intense the competition is, the more attention these enterprises will pay to the customization and personalization needs of consumers, which can stimulate enterprises to carry out digital transformation. the higher the industry concentration, the less intense the competition within the industry. therefore, we make the following hypothesis: hypothesis 2: industry concentration negatively moderates the relationship between customer demand orientation and the level of digital transformation. 2.4. investor interaction response based on h1, we tentatively believe that enterprises that pay attention to the personalized needs of customers have a higher degree of digital transformation, and rapid identification of external information can enable them to respond to changes in the market in a timelier manner; also, more efficient identification of the needs of customers and the ability of enterprises to acquire external knowledge can effectively promote corporate innovation. the interaction between investors and listed firms can effectively encourage managers to increase r&d investment and promote technological progress. since technological change is a long-term uncertain and risky process, and has the characteristics of information asymmetry, it easily causes resistance from managers (abdoh & liu, 2021); and the openness of interactive e-platforms enables investors and corporate managers to better interact and communicate, and in the process of interaction, managers are able to better understand investor needs. if investors cannot provide timely solutions to issues related to production processes, technological innovation, etc. raised by investors, investors on the interactive platform may follow up with more questions; thereby generating the “spotlight effect”. the “spotlight effect” will attract management's attention, both to stabilize investor confidence and to satisfy customer demand for products among investors, which will encourage managers to increase investment in innovation and r&d, and thus promote the level of digital transformation of the enterprise. if the asian business research journal, 2025, 10(8): 49-58 52 © 2025 by the authors; licensee eastern centre of science and education, usa firm does nothing, it may cause a large number of investors to pressure management by divesting their shares, thus strengthening their supervision (reiter, 2021). we can therefore make the following hypothesis: hypothesis 3: investor interaction response negatively moderates the relationship between customer demand orientation and the level of digital transformation. 3. data and methodology 3.1. data in this paper, we take the data of a-share listed manufacturing enterprises from 2010-2021 as a sample, and refer to the practice of existing studies, excluding the samples with missing main variables, with 16,783 effective observations to study the impact of enterprise customer demand orientation on the level of digital transformation. financial data and corporate governance data are obtained from the csmar database, enterprise customer demand orientation is obtained from enterprise annual reports, and digital transformation data are obtained by crawling through enterprise annual reports and the patent network. due to the high number of 0 values in cdo and ldt, and also to avoid the influence of outliers, we shrank the variables by 5% and 95%. 3.2. measures porter et al. (2002) suggests enhancing traditional literature reviews by utilizing text mining's extensive research analysis methodology because "this extensive scanning of the contextual literature can extend the span of science by better connecting work in the research field". research overviews are made possible through sophisticated text-mining tools combined with modern search engines and scientific databases (porter et al., 2002). text mining allows for automated or partially automated processing of text; technically, it is the process of digitizing text documents and extracting patterns from them using common data mining techniques (delen & crossland, 2008). 3.2.1. independent variable the independent variable of our research is cdo (customer demand orientation): cdo = num_cdo, where num_cdo is the frequency of keywords related to personalization, customization, and customer orientation. through text analysis exploring key information in annual reports, we count the word frequency of keywords such as personalized, customized, and customer-oriented and take the logarithmic processing as the enterprise's score of customer demand orientation. (data source: annual reports of listed companies obtained after text analysis and processing). keyword phrases are shown in table 1 below. table 1. customer demand orientation keywords. customer demand orientation personalization, user needs, customer needs, customer demand, user preferences, customer preferences, user satisfaction, customer satisfaction, high-end demand, customization, diy, diy, intelligent services, recommender systems, user models, e-commerce, collaborative filtering, data mining, web usage mining, user profiles, ontology, adapted, information retrieval, privacy, clustering, situational awareness, internet, machine learning, mass customization, product families, supply chain management, platform products, genetic algorithms, modularity, product configurator, product development, flexibility, extension, services, user profiles, case studies, design, contextawareness 3.2.2. dependent variable the dependent variable of this research is ldt (level of digital transformation of enterprises). the core of digital transformation is to solve the uncertainty of complex systems in an environment defined by data and algorithms by means of intelligent data services and other related technologies, so as to improve the efficiency of resource allocation and build the relative competitive advantage of enterprises. digital transformation is customercentric, through the deep integration of digital technology with business, operations, management, and other aspects, to achieve the rapid delivery of data flow, the depth of value mining and creation, the cycle of iteration, and to re-construct a new value chain and digital ecology. for enterprises to carry out digital transformation is inevitable if they are to comply with the trend of the times; most enterprises are making an effort, to various degrees, to carry out digital transformation. how to measure the level of digital transformation of enterprises is a highlight of this paper. table 2. digital intelligence readiness metrics. variable measurement cio whether or not there is a chief information/technology/digital officer, 0-1 dummy variable, standardized treatment forward_looking (innovation-oriented forward-looking) 2022 year_first_report_digital year of first occurrence of digital keywords in the md&a section of the annual report, normalized sustainable (innovation-oriented sustainability) num_report_digital total number of years with numerical keywords in the md&a section of the annual report, normalized intensity (intensity of innovation orientation) digital_word/report_word ratio of digitized keywords to the total number of words in the md&a section of the annual report for each year, normalized to the total number of words in the section. in this paper we measure the level of digital transformation from the following two perspectives: digital and intelligent readiness (dir: digital_intelligence_readiness) and contribution to digital intelligence (cdi: contribution_to_digital_intelligence). whether an enterprise has set up positions related to digital intelligence and asian business research journal, 2025, 10(8): 49-58 53 © 2025 by the authors; licensee eastern centre of science and education, usa whether it has taken digital transformation as a strategic goal are the most important reflections of an enterprise's digital transformation level. we calculate metrics to determine an enterprise's digital intelligence readiness, as seen in table 2. dir = (cio+forward_looking+sustainable+intensity)/4 cdi = num_digital_patent, num_digital_patent is the normalized data of the number of digital intelligence-related patents obtained by enterprises every year. we downloaded the patent data in the guotai junan csmar database and then searched for patents according to their patent codes on the patentguru (www.patentguru.com) website to obtain the abstract content of the patent introduction, analyze the text of the abstract to determine whether it is a patent related to digital and intelligence, and then sum up the number of digital and intelligence patents of the enterprise in the current year. the keywords of the digital and intelligence patents are shown in table 3. table 3. digital and intelligence patent keywords. digital and intelligence patents artificial intelligence, ai, business intelligence, image understanding, robotics, machine learning, deep learning, semantic search, biometrics, face recognition, speech recognition, identity verification, autonomous driving, natural language processing, nlp, supervised learning, machine translation, ocr, computer vision, machine vision, intelligent q&a, expert systems, neural networks, automated reasoning, unmanned vehicles, drones, automated reasoning, driverless, unmanned vehicles, brain-computer interfaces, knowledge graphs, neuroscience, federated learning, automation, gesture recognition, voice interaction, drones, smart driving, digital identity, rpa, vehicle-road collaboration, blockchain, digital currency, smart contracts, distributed digital currency, smart contracts, distributed computing, decentralization, bitcoin, coalition chain, differential privacy, consensus mechanisms, distributed ledger, public chain, cross-chain, dlt, cloud computing, in-memory computing, streaming computing, graph computing, multi-party secure computing, brain-like computing, green computing, brain-like computing, cognitive computing, converged architecture, cloud native, privacy computing, edge computing, baas, saas, iaas, paas, fog computing, cloud services, cloud-network convergence, hybrid cloud, public cloud, cloud technology, cloud storage, cloud-edge collaboration, distributed architecture, big data, data mining, text mining, data visualization, heterogeneous data, augmented reality, mixed reality, virtual reality, text capture, ar, vr, mr, data analytics, data management, cloud platform, anonymization, internet of things, internet of vehicles, iot, industrial internet, mobile internet, wireless medical networking, wireless access, inter-vehicle network, smart terminals, smart homes, remote monitoring, mobile terminals, intelligent control, smart factories, digital twins, live twins, intelligent transportation, bim, cim, 3d, 2d, 5g, 6g, lte, internet+, quantum secure communication, mobile communication, smart grid, e-commerce, agv, cnc machine tools, digitization, smart hardware, core shield, smart wearable, smart manufacturing, digital model, smart construction, smart public transportation, intelligent, digital intelligence, smart ports, smart factories, quantum computing, fintech, supply chain finance, smart customer service, internet finance, digital finance, fintech, crossborder payment, mobile payment, nfc payment, cad, cam, investment decision aid system, intelligent data analysis, intelligent robot, biometrics, ocr technology, cpo, expert system, learning algorithms, differential privacy technology, billion level concurrency, eb level storage, information physical system, artificial intelligence laboratory, artificial intelligence platform, artificial intelligence facility, artificial intelligence equipment, artificial intelligence system, intelligent information system, cloud laboratory, cloud system, cloud equipment, cloud facilities, cloud terminal, cloud community, cloud technology system, big data lab, big data platform, big data facilities, big data equipment, big data information system, big data technology system, digital patent, digital network, digital terminal, digital technology system, 3d printing equipment, meta-universe, virtual human, 3d printing, 5g technology, mobile internet, digital technology, nano-computing, intelligent planning, intelligent optimization, intelligent marketing, digital marketing, unmanned retail, unmanned factory, third party payment, nfc payment, human-computer interaction, social networking, intelligent agriculture, intelligent transportation, intelligent healthcare, intelligent investment, intelligent culture and tourism, intelligent environmental protection, intelligent energy, internet healthcare, quantitative finance, open banking, netflix level of digital transformation (ldt): we sum the above readiness and contribution to the level of digital transformation (ldt). ldt = dir+cdi 3.2.3. moderating variables the moderating variables of our research are reply_interval (investor interaction response) and industry concentration (lernerindex). the first moderating variable in this study is reply_interval. investor interaction response: ln(mean(answer_time question_time)+1), answer_time for the enterprise to answer investor questions for the time, unit for the day, question_time for the investor question time, unit for the day. the best data to measure the responsiveness of a company to its customers is based on the interaction between the company and its downstream customers, but the difficulty of obtaining this type of data, as well as the personalized differences between different companies can also make a big difference in the results (some companies have more mature system platforms, but some do not; however, there may be offline or even other ways to pay close attention to the personalized needs of customers); therefore, we decided to use the interaction time to measure the responsiveness of the company to its customers.), we therefore decided to approximate the response rate of firms to consumer comments through the interactions of investors and listed firms captured by the interactive e platform, thus approximating the level of importance that firms attach to customer needs. we take the logarithm of the difference between investor comments and listed firms' response time by counting the difference between investor comments and listed firms' response time in each year, and then take the logarithm of the mean value as the response to investor interactions (source: guotai junan csmar database). the second moderating variable in this study is industry concentration. measures of the degree of competition in a market are mainly divided into two types: objective measures and subjective evaluations. objective measurement usually uses indicators such as industry concentration and lerner index to quantify the actual level of market competition. on the other hand, subjective evaluation uses market questionnaires and other methods to obtain the subjective feelings of market players about the degree of market competition. these two methods have their own advantages and disadvantages. subjective evaluation can reflect the intuitive views of market participants, while objective measurement focuses more on objective analysis through data and indicators. the asian business research journal, 2025, 10(8): 49-58 54 © 2025 by the authors; licensee eastern centre of science and education, usa combined use of these two methods can help us understand and assess the state of competition in a more comprehensive manner. objective measures often use industry concentration, lerner index and other related indicators to measure the intensity of competition in the market. meanwhile, some scholars also use instrumental variables such as trade policy changes and tariff changes to replace the level of market competition. however, all these indicators are somewhat one-sided in measuring the level of market competition. in this paper, we adopt the industry lerner index. the industry lerner index (also known as the industry concentration index) is a measure of the degree of monopoly of manufacturers in an industry, which assesses the market dominance of different manufacturers in an industry by comparing their output or sales. the advantage of the industry lerner index is that it provides a visual measure of the degree of market monopoly and can be used to compare the market structure between different industries. in addition, the industry lerner index can also reflect the potential monopoly power of manufacturers in the industry. lernerindex [industry lerner index]: si/∑ si𝑛 0 *lerner_stock, obtained by weighting the lerner index of individual stocks using the ratio of operating income of individual companies to the operating income of individual industries. si: operating income of individual company ∑ si𝑛 0 : total operating income in the industry lerner_stock: individual stock lerner index cumulative 3.2.4. control variables some company-level factors that may affect the dependent variable are included. the definition of control variables (shou et al., 2021) is shown in table 4. table 4. summary of variable measures. variable name variable symbol variable-specific measures customer demand orientation cdo ln(1+num_cdo), where num_cdo is the number of personalizationrelated word frequencies in the annual report. investor interactive response reply_interval ln (1+qa_time), where qa_time is the mean value of the annual investor q&a intervals. industry concentration lernerindex individual company operating income / total industry operating income * individual lerner index cumulative, obtained by weighting the individual lerner index using the ratio of individual company operating income to individual industry operating income. level of digital transformation of enterprises ldt digital intelligence patents and digital intelligence readiness weighting firm size size ln (firm's total assets at year-end) firm age age ln (the number of years since the firm's incorporation) revenue growth rate growth (current period amount of operating income for the current year amount of operating income for the same period of the previous year) / (amount of operating income for the same period of the previous year) state ownership of enterprise soe 1: state-owned; 0: non-state-owned leverage leverage total liabilities at year-end/total assets at year-end return on assets roa net profit at the end of the year/total assets at the end of the year total asset turn over tato year-end sales revenue/year-end total assets book-to-market ratio mtb shareholders' equity/market capitalization tobin's q tobin's q market capitalization a/ total assets share of tangible assets tangibility (total assets net intangible assets net goodwill) / total assets 3.3. regression specification we used spspro statistical analysis software to analyze the model selection for the hypotheses we wanted to test, and the table 5 are illustrated as follows: based on the results of the model selection in the table above, the three tests were combined to select the most appropriate model. table 5. measurement model selection. type of test statistic p conclusion f-test 23.825 0.000*** fe model breusch-pagan test 173453.271 0.000*** re model hausman test 957.336 0.000*** fe model note: ***、**、*represent 1%, 5%, and 10% significance levels respectively. the sample of this paper is selected as the data of manufacturing industry of a-share listed companies from 2010 to 2021, which is a panel data type. therefore, for the empirical model of this paper, we choose the time individual fixed effect model, which can effectively remove the influence of year and enterprise. meanwhile, because the research contains two moderating variables, in order to prevent the existence of multicollinearity between the independent variables and the moderating variables as well as the interaction terms, the independent variables and the two moderating variables are centered, and the interaction terms are constructed afterwards. firstly, in order to test the relationship between the core explanatory variables of this paper, customer demand orientation and the level of digital transformation, the following econometric regression model 1 is constructed. ldti,t = α0 + β1cdoi,t + β2agei,t + β3sizei,t + β4soei,t + β5growthi,t + β6leveragei,t + β7roei,t + β8tatoi,t + β9mtbi,t + β10tobin′s qi,t + β11tangibilityi,t + μi + τt + εi,t (model 1) where α0 denotes the constant term; βi denotes the coefficients to be estimated for the explanatory variables; i and t denote enterprise i and year t, respectively; εi,t denotes the residual term; τt denotes the time fixed effect, and μi is the individual fixed effect. asian business research journal, 2025, 10(8): 49-58 55 © 2025 by the authors; licensee eastern centre of science and education, usa in order to verify the possible moderating effect of industry concentration and response speed, we introduce the two variables of industry concentration (industry lerner index) and investor interaction response speed as the moderating variables to construct model 2 and model 3 on the basis of the existing model 1, and conduct a regression test by adding the moderating variables and interaction terms between the moderating variables and the customer demand orientation on the basis of model 1. the regression test is conducted by adding the moderating variable and the interaction term between the moderating variable and customer demand orientation to model 1, respectively, and the significance of the correlation coefficients is used to verify the moderating role of the moderating variable in the relationship between the customer demand orientation and the level of digital transformation. model 2 and model 3 are shown below: ldti,t = α0 + γ1cdoi,t + γ2lernerindexi,t + γ3cdoi,t × lernerindexi,t + γ4agei,t + γ5sizei,t + γ6soei,t + γ7growthi,t + γ8leveragei,t + γ9roei,t + γ10tatoi,t + γ11mtbi,t + γ12tobin′s qi,t + γ13tangibilityi,t + μi + τt + εi,t (model 2) ldti,t = α0 + η1cdoi,t + η2reply_speedi,t + η3cdoi,t × reply_speedi,t + η4agei,t + η5sizei,t + η6soei,t + η7growthi,t + η8leveragei,t + η9roei,t + η10tatoi,t + η11mtbi,t + η12tobin′s qi,t + η13tangibilityi,t + μi + τt + εi,t (model 3) 4. results 4.1. main effect regression results summary statistics (means, standard deviations, and pairwise correlations) for all variables are provided in table 6. the variance inflation factor (vif) values of the regression models are all less than 10 and the correlation coefficients between the variables are all well below 0.7, suggesting that multicollinearity is not a concern. table 6. descriptive statistics and correlations. variable mean s.d. 1 2 3 4 5 6 7 8 9 10 11 12 13 1. cdo 0 0.67 2. lernerindex 0 0.06 .06 3. reply_interval 0 1.23 .04 .08 4. age 2.87 0.34 .05 .20 .14 5. size 21.98 1.17 .11 .01 .24 .23 6. soe 0.24 0.42 -.05 -.07 .13 .21 .34 7. growth 0.12 0.21 .06 .05 -.02 -.06 .02 -.09 8. leverage 1.34 1.02 -.07 -.10 .04 .05 .18 .16 -.11 9. roa 0.09 0.08 .00 .15 .04 .03 .10 -.05 .18 -.24 10. tato 0.63 0.38 -.04 -.16 .03 .08 .15 .11 .06 .01 .19 11. mtb 0.36 0.16 -.08 .01 -.08 -.11 -.07 -.11 -.11 -.17 -.19 -.08 12. tobin's q 2.11 1.26 .03 .09 .01 .02 -.24 -.07 .06 -.14 .22 -.06 -.63 13. tangibility 0.93 0.08 -.09 -.04 .04 .00 -.03 .09 -.11 .00 .08 .13 .01 -.01 14. ldt -0.08 1.40 .64 .03 .08 .13 .21 -.16 .03 -.05 -.01 -.05 -.13 .05 -.08 through the above analysis, we took the time individual fixed effect model and used the ols regression model for regression analysis so as to verify our hypothesis. in the study of customer demand orientation on the level of digital transformation, we used three models: model 1, model 2, and model 3. model 1 verifies the effect of customer demand orientation on the level of digital transformation of enterprises. in model 2, the interaction of industry concentration with customer demand orientation is added to verify the moderating effect of industry concentration on the relationship between customer demand orientation and the level of digital transformation. in model 3, the interaction of investor interaction response speed with customer demand orientation is added to verify the moderating effect of investor interaction response speed on the level of digital transformation. the specific regression model is shown in table 7. table 7. main effect regression results. variable model 1 model 2 model 3 age -0.041 (0.038) -0.036 (0.038) -0.041 (0.038) size 0.032*** (0.006) 0.033*** (0.006) 0.032*** (0.006) soe 0.007 (0.012) 0.009 (0.012) 0.007 (0.012) growth -0.012 (0.009) -0.013 (0.009) -0.012 (0.009) leverage -0.004* (0.002) -0.004** (0.002) -0.004* (0.002) roa 0.003 (0.026) 0.007 (0.026) 0.003 (0.026) tato 0.017* (0.01) 0.019* (0.01) 0.017 (0.01) mtb -0.018 (0.022) -0.019 (0.022) -0.017 (0.022) tobin's q 0 (0.002) 0 (0.002) 0 (0.002) tangibility 0.091*** (0.033) 0.093*** (0.033) 0.093*** (0.033) cdo 0.201*** (0.004) 0.202*** (0.004) 0.201*** (0.004) lernerindex -0.321*** (0.093) cdo*lernerindex -0.248*** (0.067) reply_interval 0 (0.002) cdo*reply_interval -0.004* (0.003) const -0.752*** (0.174) -0.78*** (0.174) -0.749*** (0.174) f 358.813*** 309.987*** 304.397*** asian business research journal, 2025, 10(8): 49-58 56 © 2025 by the authors; licensee eastern centre of science and education, usa we use two-tailed tests for all of our regressions, among which * represents p <0.10, ** represents p <0.05, and *** represents p < 0.01 for table 7 through to table 10. model 1 is mainly to verify the influence of customer demand orientation on the level of digital transformation of enterprises. the regression analysis results in the above figure show that the coefficient of customer demand orientation (cdo; 0.201) is significantly positive at the 1% level, which indicates that the more attention is paid to customer demand, the higher the level of digital transformation of the enterprise, and hypothesis 1 is supported. enterprises with strong customer demand orientation tend to introduce innovative digital technologies to meet the personalized needs of different customers more flexibly. with the introduction of ai technologies, companies are able to intelligently design and customize products according to customers' individual needs, improving the level of product personalization. model 2 mainly verifies the moderating effect of industry concentration on the relationship between customer demand orientation and the level of digital transformation of enterprises. we can find that the coefficient of the lernerindex is -0.321 and the corresponding p-value is 0.001***, which indicates that when the competition in the industry is more intense, enterprises will try to improve their production technology in order to obtain competitive advantages, and thus improve their level of digital transformation. in order to further verify the moderating effect of industry concentration, we introduce the variable cdo *lernerindex, and we find that its coefficient is -0.248 and the corresponding p-value is 0.000***, so we can draw the following conclusions that h2 is supported, and industry concentration can negatively modulate the effect of the orientation of customer demand orientation on the level of digital transformation. when the competitive ability between enterprises in the industry is similar, in the face of customer demand, only the enterprises that take the lead in meeting customer demand more efficiently through technological transformation can achieve competitive advantage; therefore, in a fiercely competitive environment, customer demand orientation stimulates enterprises more to carry out digital transformation. intense competition under low industry concentration forces enterprises to seek differentiation and innovation to stand out in the market. this competitive pressure prompts enterprises to pay more attention to the personalized needs of customers, thus promoting digital transformation. in a competitive market, customers have more choices, so enterprises are more willing to listen to and satisfy customer demand, and provide customized services through digital technology to gain market share. model 3 verifies the moderating role of investor interactive response in the relationship between customer demand orientation and the level of digital transformation of enterprises. through the above analysis results, we can find that the coefficient corresponding to cdo * reply_interval is -0.004 and the corresponding p-value is 0.000*, which suggests that the shorter the response time of the enterprise to investor questions, the more effective the promotion of customer demand orientation on the level of digital transformation. we can conclude that h3 holds that the faster the response time to investor interactions of listed companies, the more effective they can be in promoting the impact of customer demand orientation on the level of digital transformation. a faster response rate of investor interaction helps to reduce the information asymmetry between enterprises and investors, which makes enterprises more aware of market demand and investor concerns. reducing information asymmetry helps enterprises more accurately grasp market dynamics, better meet customer demand, and promote the in-depth implementation of digital transformation. rapidly responding to investor opinions and issues enables companies to adjust their strategies more quickly and better adapt to market demand. faster strategic adjustments enable companies to meet customer demand more flexibly, thus promoting the smooth implementation of digital transformation. 4.2. causality test in order to conduct a reverse causality test for the effect of cdo on ldt, we select the last three years of data in 2020 to conduct a granger causality test with a lag order of 2. the results of the adf test can be seen in table 8. table 8. adf test results. variable t p threshold value 1% 5% 10% cdo -5.083 0.000*** -3.435 -2.864 -2.568 ldt -20.15 0.000*** -3.435 -2.864 -2.568 based on the variable cdo shrinkage treatment, the significance p-value is 0.000***, presenting significance and rejecting the original hypothesis that the series is a smooth time series. based on the variable ldt, the significance p-value is 0.000***, presenting significance and rejecting the original hypothesis that the series is a smooth time series. granger causality tests were conducted on cdo and ldt and the results of the tests are shown in table 9. table 9. granger causality test results. matched sample f p cdo ldt 6.774 0.001*** ldt cdo 0.203 0.816 based on the variable cdo with ldt, the significance p-value is 0.001***, presenting significance and rejecting the original hypothesis, that cdo can cause changes in ldt. based on the variable ldt with cdo, the significance p-value is 0.816, which does not present significance, and the original hypothesis cannot be rejected, i.e., ldt cannot cause changes in cdo. therefore, there is no reverse causality between cdo and ldt. asian business research journal, 2025, 10(8): 49-58 57 © 2025 by the authors; licensee eastern centre of science and education, usa 4.3. robustness checks in order to avoid the problem of endogeneity to affect the results, we changed the measure of the outcome variables to avoid the problem of endogeneity. considering that there are various ways to measure the level of digital transformation, different measures may affect this paper's results. in order to further calibrate the robustness of the model, we chose the digital transformation index in the csmar database to replace our outcome variables. the regression results are shown in table 10. table 10. robustness check results. variable model 4 model 5 model 6 age -0.011 (0.019) -0.008 (0.019) -0.011 (0.019) size 0.032*** (0.003) 0.033*** (0.003) 0.032*** (0.003) soe -0.004 (0.006) -0.003 (0.006) -0.004 (0.006) growth -0.012*** (0.004) -0.013*** (0.004) -0.012*** (0.004) leverage -0.003*** (0.001) -0.003*** (0.001) -0.003*** (0.001) roa -0.014 (0.012) -0.009 (0.012) -0.014 (0.012) tato 0.011** (0.005) 0.012** (0.005) 0.011** (0.005) mtb -0.028*** (0.011) -0.03*** (0.011) -0.028** (0.011) tobin's q 0 (0.001) 0 (0.001) 0 (0.001) tangibility -0.02 (0.016) -0.019 (0.016) -0.018 (0.016) cdo 0.101*** (0.002) 0.102*** (0.002) 0.101*** (0.002) lernerindex -0.308*** (0.046) cdo*lernerindex -0.108*** (0.034) reply_interval 0.001 (0.001) cdo*reply_interval -0.003** (0.001) const 2.934*** (0.086) 2.912*** (0.086) 2.94*** (0.086) f 358.813*** 309.987*** 304.397*** model 4. the coefficient (0.101) of customer demand orientation (cdo) is significantly positive at the 1% level, further verifying that h1 holds; model 5. the coefficient of cdo*lernerindex (-0.108) is significantly negative at the 1% level, further verifying that h2 holds; model 6. the coefficient of cdo*reply_interval (-0.003) is significantly negative at the 5% level, further verifying that h3 holds. 5. discussion and limitations in today's market environment, customer demand orientation has become an important driving force for the digital transformation of enterprises. this paper focuses on the impact of firms' customer demand orientation on the level of digital transformation with two moderating variables incorporated: industry concentration and investor interaction response respectively. we summarized our findings as follows: firstly, the degree of customer demand orientation positively affects the level of digital transformation. the higher the degree of customer demand orientation, the higher the level of digital transformation of enterprises. against the backdrop of the increasing speed of product renewal and iteration, enterprises pay more and more attention to customers' personalized needs. to meet these needs, enterprises need to continuously upgrade technology, optimize business and production processes, and improve their digital transformation level. secondly, industry concentration negatively moderates the relationship between customer demand orientation and the level of digital transformation. the lower the industry concentration, the more intense the competition within the industry, and the more it can strengthen the impact of customer demand orientation on the level of enterprises' digital transformation. in industries with lower industry concentration, enterprises face more intense competition, and in order to stand out from the competition, they need to respond to customers' personalized needs faster and more efficiently, so as to win market share. finally, investor interactive response negatively moderates the relationship between customer demand orientation and the level of digital transformation. shorter and faster response time of investor interaction of listed firms can effectively promote the impact of customer demand orientation on their digital transformation level. investor interaction is one of the important ways for enterprises to obtain market feedback, and the interval time of investor interaction q&a is an important indicator of enterprises' market feedback, reflecting the timeliness of their access to external information. while summarizing the above research results, we also need to acknowledge the limitations of this research. first of all, the influence mechanism of factors such as customer demand orientation, industry concentration, and the response speed of listed companies' investor interaction on the level of digital 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(2024). the perception and approach of bangladeshi ready-made garment factory in the current context of digital marketing. asian business research journal, 9, 72–82. 28 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 10, 28-34, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.595 © 2025 by the authors; licensee eastern centre of science and education, usa determinants of online apparel purchase intention in an emerging economy: an empirical study of university students in vietnam le nguyen hong phuong1 ly thu cuc2  1vnu university of economics and business, vietnam national university, vietnam. 2hanoi university of industry, vietnam. (corresponding author) abstract this study identifies the key determinants of online apparel purchase intention among university students in vietnam’s rapidly growing e-commerce market. based on a quantitative survey of 142 students, data was analyzed using multiple regression. the findings reveal that trust is the most powerful predictor, followed by influencer endorsement and fashion involvement. in contrast, traditional drivers like subjective norm and perceived usefulness were non-significant. the results underscore the practical necessity for online retailers to build a trustworthy ecosystem and engage in strategic influencer collaborations. theoretically, this study contributes to consumer behavior literature by highlighting the evolving nature of social influence for gen z and the contextual limitations of established technology acceptance models. keywords: consumer behavior, e-commerce, fashion apparel, purchase intention, vietnam. 1. introduction the proliferation of the internet and digital technology has fundamentally reshaped global commerce and consumer lifestyles, shifting daily activities and purchasing habits into the digital realm (kian et al., 2018). this digital transformation has catalyzed the exponential growth of electronic commerce (e-commerce), creating a new paradigm for how consumers interact with brands and purchase goods and services. within this burgeoning digital marketplace, the fashion apparel sector has emerged as one of the most dynamic and competitive segments. the global shift towards online shopping, defined as the process of purchasing from merchants who sell over the internet (mastercard worldwide insights, 2008, as cited in the thesis), is particularly pronounced in emerging economies, which are characterized by high internet penetration rates and a growing cohort of digitally-native young consumers. vietnam serves as a compelling case of such an emerging market, with its e-commerce landscape witnessing rapid expansion. university students represent a critical demographic within this group, as they are often early adopters of new technologies and trends, making them a primary target market for online apparel retailers. however, the promising potential of this market is coupled with intense competition, where success is not guaranteed. to thrive, online businesses must develop a nuanced understanding of the specific factors that drive the purchase intentions of this key demographic, moving beyond traditional retail frameworks to address the complexities of the online environment (haubl & trifts, 2000). while a considerable body of literature has explored the determinants of online purchase intention, findings vary across different contexts and consumer groups. international studies have identified factors such as transaction costs, site design (kim & kim, 2004), and attitudes toward second-hand apparel (edwards & eriksson, 2014). research within the vietnamese context has also investigated online shopping drivers, often extending established behavioral theories (hà ngọc thắng & nguyễn thành độ, 2016) and exploring the rise of social commerce platforms for fashion products (trịnh et al., 2021). despite these contributions, a research gap persists. many studies treat students as a monolithic group or focus broadly on urban youth. there is a need for a more granular investigation into the specific drivers influencing a large, well-defined student population, considering the unique interplay of contemporary factors, such as social media influencers (chun et al., 2018), alongside established theoretical constructs. this study addresses this gap by focusing specifically on students within vietnam national university, hanoi (vnu), one of the country's premier educational systems, to provide targeted and actionable insights. therefore, the primary objective of this research is to identify and empirically assess the key factors influencing the online apparel purchase intention of university students in vietnam. the study seeks to answer the following research questions: 1) what are the primary factors that affect the online apparel purchase intention of university students? 2) to what extent does each factor influence this intention? to achieve these objectives, this paper develops and tests a conceptual model integrating six key determinants—trust, product design, subjective norm, influencer endorsement, perceived usefulness, and fashion involvement—which are derived from foundational behavioral theories such as the theory of planned behavior (ajzen, 1991) and the technology acceptance model https://doi.org/10.55220/2576-6759.595 asian business research journal, 2025, 10(10): 28-34 29 © 2025 by the authors; licensee eastern centre of science and education, usa (davis, 1989). the findings are expected to contribute to both academic theory and managerial practice by offering a deeper understanding of young consumer behavior in the digital fashion market of an emerging economy. the remainder of this paper is structured as follows. the next section reviews the relevant literature and develops the research hypotheses. section 3 details the research methodology, followed by the presentation of the analytical results in section 4. finally, section 5 discusses the findings, highlights the study's theoretical and practical implications, and suggests avenues for future research. 2. literature review and hypothesis development this section reviews the theoretical foundations underpinning consumer behavior in an online context and develops the hypotheses for the empirical investigation. the proposed research model is built upon established theories, including the theory of reasoned action (tra), the theory of planned behavior (tpb), and the technology acceptance model (tam), which are adapted and extended to fit the specific context of online apparel shopping among university students. 2.1. theoretical framework consumer purchase intention has been extensively studied through various theoretical lenses. the theory of reasoned action (tra) posits that an individual's behavioral intention is the primary determinant of their actual behavior, and this intention is shaped by two key factors: their attitude toward the behavior and the subjective norm (ajzen & fishbein, 1975, as cited in the thesis). recognizing that some behaviors are not entirely under volitional control, ajzen (1991) extended tra to formulate the theory of planned behavior (tpb), which incorporates a third determinant: perceived behavioral control. this construct refers to an individual's perception of the ease or difficulty of performing the behavior in question (ajzen, 1991). in the domain of technology adoption, the technology acceptance model (tam), introduced by davis (1989), has become a seminal framework. derived from tra, tam suggests that a user's intention to use a technology is determined primarily by two beliefs: perceived usefulness (the degree to which a person believes that using a particular system would enhance their job performance) and perceived ease of use (the degree to which a person believes that using a particular system would be free of effort) (davis, 1989). these foundational models provide a robust theoretical basis for understanding the cognitive processes that precede online purchasing decisions. 2.2. hypothesis development building on this theoretical background and insights from previous empirical studies, this research proposes six hypotheses concerning the determinants of online apparel purchase intention. trust: in the impersonal environment of e-commerce, trust is a critical antecedent to exchange (reichheld & schefter, 2000, as cited in the thesis). it is defined as a party's confidence that the other party will not act opportunistically (madhok, 1995). for online consumers, trust mitigates perceived risks associated with data privacy, payment security, and product quality assurance. when consumers believe that an online vendor is reliable and will provide honest information, their intention to transact increases significantly. prior research has consistently highlighted trust as a cornerstone of successful online retailing (chun et al., 2018). therefore, we hypothesize: h1: trust has a positive and significant effect on the online apparel purchase intention of university students. product design: product design encompasses the features related to a product's form, functionality, and aesthetic appeal. in the fashion industry, design is a powerful tool for creating a competitive advantage and communicating brand value (chen & lin, 2018, as cited in the thesis). an attractive and unique design can capture consumer attention and stimulate purchase desire (lundin, 2018, as cited in the thesis). for young consumers, fashion products are often an expression of personal style and identity, making distinctive designs a key consideration in their purchasing decisions. research by priyarat phuyen (2021) supports the notion that visually appealing designs are a strong motivator for purchasing apparel online. accordingly, we propose: h2: product design has a positive and significant effect on the online apparel purchase intention of university students. subjective norm: subjective norm, a core component of tra and tpb, refers to the perceived social pressure to perform or not to perform a behavior (ajzen, 1991). it is shaped by the beliefs of significant referents, such as family, friends, and peers, and the individual's motivation to comply with these referents (ajzen, 2002). in the context of online shopping, the opinions and behaviors of one's social circle can strongly influence purchasing decisions, particularly for students who are often influenced by peer trends and recommendations. this social influence is a critical driver in the adoption of online shopping services (diệp & đàm, 2021). thus, we hypothesize: h3: subjective norm has a positive and significant effect on the online apparel purchase intention of university students. influencer endorsement: in the contemporary digital landscape, social media influencers have become powerful opinion leaders. they are defined as prominent users who can shape the perceptions and behaviors of their followers through their online presence (zhang et al., 2018, as cited in the thesis). influencer endorsements act as a modern form of word-of-mouth marketing, lending credibility and desirability to products. for fashion items, seeing an admired influencer wear or recommend a product can inspire followers and directly impact their purchase intentions. this effect is particularly potent among young consumers who actively follow influencers on platforms like instagram (priyarat phuyen, 2021). therefore, it is hypothesized that: h4: influencer endorsement has a positive and significant effect on the online apparel purchase intention of university students. perceived usefulness: drawing from tam, perceived usefulness is the degree to which an individual believes that using a system will enhance their performance (davis, 1989). in the context of online shopping, this translates to the benefits a consumer gains, such as saving time and money, accessing a wider variety of products, and the convenience of shopping from anywhere at any time. when students perceive that online channels offer a more efficient and beneficial way to purchase apparel compared to traditional stores, their intention to use these channels will be higher. the convenience and efficiency of online platforms are consistently cited as key drivers of online shopping behavior (ramayah & ignatius, 2005, as cited in the thesis). we therefore propose: asian business research journal, 2025, 10(10): 28-34 30 © 2025 by the authors; licensee eastern centre of science and education, usa h5: perceived usefulness has a positive and significant effect on the online apparel purchase intention of university students. fashion involvement: fashion involvement refers to an individual's perceived relevance of and interest in fashion (o'cass, 2004). highly involved consumers actively seek information about new trends, enjoy shopping for clothes, and view fashion as an important part of their self-expression (napompech, 2014, as cited in the thesis). these individuals are more likely to be aware of online fashion offerings and more receptive to engaging with online retailers. research has shown that consumers with a high level of fashion involvement are more inclined to purchase apparel through remote channels (goldsmith & flynn, 2005, as cited in the thesis). consequently, we hypothesize: h6: fashion involvement has a positive and significant effect on the online apparel purchase intention of university students. 2.3. conceptual model based on the theoretical discussion and the developed hypotheses, a conceptual model is proposed to illustrate the relationships between the independent variables (trust, product design, subjective norm, influencer endorsement, perceived usefulness, and fashion involvement) and the dependent variable (online apparel purchase intention). this model, depicted in figure 1, serves as the structural framework for the empirical analysis in this study. figure 1. the proposed research model. 3. methodology 3.1. research design to achieve the research objectives, a quantitative approach using a cross-sectional survey design was adopted. this design is appropriate for examining the relationships between a set of independent variables and a dependent variable at a single point in time. the study empirically tests the proposed conceptual model and hypotheses by collecting primary data from the target population. 3.2. sampling and data collection the target population for this study consisted of students currently enrolled at various schools and colleges within vietnam national university, hanoi (vnu). a convenience sampling method was employed due to its efficiency in accessing a large and geographically dispersed student body. an online questionnaire, created using google forms, was distributed to students through various digital channels. the use of an online survey was deemed suitable for its convenience and ease of access for the digitally-proficient target demographic. following the recommendation of hair et al. (2014) that a sample size of at least 100 is preferable for factor analysis, a total of 142 valid responses were collected and used for the final data analysis after discarding incomplete or invalid submissions. data collection was conducted between january 2024 and april 2024. 3.3. measurement instrument the survey instrument was structured into three main parts: an introduction explaining the research purpose and ensuring confidentiality, a section for demographic information, and the main section containing the measurement items for the research constructs. all measurement items for the latent variables were adapted from established literature to ensure content validity and were measured on a five-point likert scale, ranging from (1) “strongly disagree” to (5) “strongly agree”. the scales are detailed as follows: trust (tru): three items were adapted from chun et al. (2018) to measure students' belief in the reliability and security of online apparel vendors. product design (pd): four items were adapted from priyarat phuyen (2021) to assess the importance of aesthetic appeal, uniqueness, and style relevance in clothing products. subjective norm (sn): four items were adapted from diệp and đàm (2021) to gauge the influence of social referents such as family, friends, and media on the student’s online shopping decisions. influencer endorsement (ie): four items were adapted from priyarat phuyen (2021) to measure the impact of endorsements and recommendations from social media influencers on purchase intention. perceived usefulness (pu): five items were adapted from diệp and đàm (2021) to evaluate the perceived benefits of online apparel shopping, such as convenience, time savings, and wider selection. asian business research journal, 2025, 10(10): 28-34 31 © 2025 by the authors; licensee eastern centre of science and education, usa fashion involvement (fi): five items were adapted from o'cass (2004) and bluschke (2011) to measure the degree of a student's interest and personal relevance in fashion trends and clothing styles. purchase intention (pin): three items were developed by the author to directly measure the likelihood of students purchasing apparel online in the future. 3.4. data analysis procedure the collected data was analyzed using ibm spss statistics. the analysis was conducted in several stages. first, descriptive statistics were used to summarize the demographic profile of the respondents. second, the reliability of the measurement scales was assessed using cronbach’s alpha. a scale was considered reliable if the cronbach's alpha coefficient was above 0.6 and the corrected item-total correlation for each item was above 0.3. third, exploratory factor analysis (efa) was performed to examine the construct validity of the measurement scales. the criteria for a robust factor structure included a kaiser-meyer-olkin (kmo) value greater than 0.5, a significant bartlett’s test of sphericity (p < 0.05), eigenvalues greater than 1, a total variance explained exceeding 50%, and factor loadings for each item above 0.5. fourth, pearson correlation analysis was conducted to assess the direction and strength of the linear relationships between the variables. finally, multiple linear regression analysis was employed to test the proposed hypotheses and determine the extent to which the independent variables could predict the dependent variable, online apparel purchase intention. the regression model took the form: pin=β0+β1(tru)+β2(pd)+β3(sn)+β4(ie)+β5(pu)+β6(fi)+ϵi 4. results 4.1. sample profile the final sample consisted of 142 university students from vietnam national university, hanoi. the demographic characteristics of the respondents are summarized in table 1. the sample was composed of 56.3% male and 43.7% female students. the majority of participants were senior students, with fourth-year students accounting for 42.3% and third-year students for 24.6% of the sample. in terms of income, 37.3% of students reported having no personal income, while 30.3% had an income of less than 5 million vnd per month. the largest group of respondents came from the vnu university of economics and business (28.2%). table 1. demographic profile of respondents (n=142). characteristic category frequency (n) percentage (%) gender male 80 56.3 female 62 43.7 year of study first year 17 12 second year 30 21.1 third year 35 24.6 fourth year 60 42.3 monthly income no income 53 37.3 under 5 million vnd 43 30.3 5 to 10 million vnd 31 21.8 over 10 million vnd 15 10.6 university/school university of economics and business 40 28.2 school of law 17 12 university of languages & int'l studies 15 10.6 university of social sciences & humanities 14 9.9 others 56 39.3 4.2. measurement model assessment prior to hypothesis testing, the reliability and validity of the measurement scales were evaluated. reliability analysis: the internal consistency of each construct was assessed using cronbach's alpha. the results, presented in table 2, show that all constructs exceeded the recommended threshold of 0.6. cronbach's alpha values ranged from 0.665 for subjective norm (sn) to 0.888 for perceived usefulness (pu), confirming the high reliability of the measurement scales. table 2. reliability analysis of measurement scales construct number of items cronbach's alpha trust (try) 3 0.721 product design (pd) 4 0.738 subjective norm (sn) 4 0.665 influencer endorsement (ie) 4 0.701 perceived usefulness (pu) 5 0.888 fashion involvement (fi) 5 0.805 purchase intention (pin) 3 0.884 construct validity. exploratory factor analysis (efa) with varimax rotation was conducted to assess construct validity. the initial analysis revealed that two items related to fashion involvement (fi) and subjective norm (sn) did not load cleanly onto their intended factors. after removing these two items, a second efa was performed on the remaining 23 items. the results of the final efa were satisfactory: the kaiser-meyer-olkin (kmo) measure was 0.752, exceeding the recommended value of 0.5, and bartlett’s test of sphericity was significant (p < 0.001). the analysis extracted six distinct factors with eigenvalues greater than 1, which asian business research journal, 2025, 10(10): 28-34 32 © 2025 by the authors; licensee eastern centre of science and education, usa collectively explained 65.177% of the total variance. all remaining items exhibited strong factor loadings ( > 0.5) on their respective constructs with no significant cross-loadings, thus confirming convergent and discriminant validity. 4.3. correlation analysis pearson correlation analysis was conducted to examine the relationships between the study variables. the results indicated that trust (tru), influencer endorsement (ie), product design (pd), and fashion involvement (fi) were all significantly and positively correlated with purchase intention (pin) (p < .001 for all). however, subjective norm (sn) and perceived usefulness (pu) did not show a statistically significant linear relationship with the dependent variable. all correlation coefficients between independent variables were below the 0.7 threshold, suggesting that multicollinearity was not a major concern. 4.4. hypothesis testing multiple linear regression was performed to test the proposed hypotheses. the results are summarized in table 3. the overall model was statistically significant (f(6, 135) = 65.656, p < .001) and explained a substantial portion of the variance in the dependent variable, with an adjusted r² of 0.733. this indicates that the six independent variables collectively account for 73.3% of the variation in online apparel purchase intention. the durbin-watson statistic of 1.950 and variance inflation factor (vif) values all below 2 confirmed the absence of autocorrelation and multicollinearity issues. the standardized beta coefficients (β) revealed that: • trust (tru) had the strongest positive and significant effect on purchase intention (pin) (β = 0.433, p < .001), supporting h1. • influencer endorsement (ie) had a strong positive and significant effect on purchase intention (pin) (β = 0.363, p < .001), supporting h4. • fashion involvement (fi) had a positive and significant effect on purchase intention (pin) (β = 0.286, p < .001), supporting h6. • product design (pd) also had a positive and significant effect on purchase intention (pin) (β = 0.136, p = .009), supporting h2. • subjective norm (sn) (p = .131) and perceived usefulness (pu) (p = .075) were found to have no statistically significant effect on purchase intention (pin). therefore, h3 and h5 were not supported. table 3. results of multiple regression analysis for purchase intention. variable hypothesis std. beta (β) t-value sig. (p) vif result (constant) 3.011 0.003 trust (tru) h1 0.433 7.452 0 1.298 supported product design (pd) h2 0.136 2.639 0.009 1.399 supported subjective norm (sn) h3 0.078 1.518 0.131 1.392 not supported influencer endorsement (ie) h4 0.363 6.183 0 1.264 supported perceived usefulness (pu) h5 -0.087 -1.792 0.075 1.245 not supported fashion involvement (fi) h6 0.286 5.021 0 1.376 supported model summary r² = 0.745 adjusted r² = 0.733 f-statistic = 65.656 durbin-watson = 1.950 5. discussion the results of the multiple regression analysis reveal a nuanced landscape of factors influencing students' online apparel purchase intentions. four out of the six proposed hypotheses were supported, with trust (tru), influencer endorsement (ie), fashion involvement (fi), and product design (pd) emerging as significant predictors. notably, subjective norm (sn) and perceived usefulness (pu) did not have a significant impact. the most compelling finding of this study is the paramount importance of trust (tru), which emerged as the strongest determinant of purchase intention (β = 0.433). this aligns with a vast body of e-commerce literature emphasizing that trust is a cornerstone of online transactions, serving to mitigate the perceived risks of fraud, data insecurity, and product misrepresentation (chun et al., 2018). in an emerging market like vietnam, where the ecommerce infrastructure is still maturing and consumer protection mechanisms are developing, this uncertainty is amplified. for students, who often have limited financial resources, the assurance that a vendor is reliable, provides accurate product information, and protects personal data is not just a preference but a prerequisite for engaging in online purchases. the second most influential factor was influencer endorsement (ie) (β = 0.363). this highlights a significant shift in marketing influence towards social commerce and digital opinion leaders. for the gen z demographic, social media influencers are not merely advertisers; they are trusted tastemakers and relatable figures who create parasocial relationships with their followers. their endorsements function as powerful social proof, often perceived as more authentic and persuasive than traditional corporate advertising. this finding is consistent with recent research showing that influencers can significantly shape consumer attitudes and purchase decisions in the fashion industry (priyarat phuyen, 2021), suggesting that for young consumers, the "who" recommends a product can be as important as the product itself. fashion involvement (fi) also proved to be a significant positive predictor (β = 0.286). this is an intuitive yet important finding, indicating that students with a higher intrinsic interest in fashion are naturally more inclined to asian business research journal, 2025, 10(10): 28-34 33 © 2025 by the authors; licensee eastern centre of science and education, usa shop for apparel online. these individuals actively follow trends, view clothing as a means of self-expression, and are more engaged with fashion-related content online (o'cass, 2004). consequently, they are a more receptive audience for online retailers. while product design (pd) was also found to be a statistically significant factor (β = 0.136), its impact was considerably weaker than relational and social factors like trust and influencer endorsements. this may suggest that while good design is a necessary attribute, it might be becoming a baseline expectation rather than a primary driver of the intention to purchase online. perhaps the most insightful findings are the factors that were not significant. the lack of a significant relationship for subjective norm (sn) is particularly noteworthy. while classic behavioral theories like the tpb emphasize the role of social pressure from family and friends (ajzen, 1991), this study's result suggests its influence may be waning for this demographic's online fashion choices. this aligns with some prior research in the vietnamese context (hà ngọc thắng & nguyễn thành độ, 2016) and indicates that the broad, ambient pressure of one's immediate social circle may be superseded by the more direct, curated, and specialized influence of chosen online personalities (influencers). similarly, the non-significance of perceived usefulness (pu) offers a critical insight into the mindset of digitally-native consumers. for a generation that has grown up with the convenience of the internet, the utility of online shopping—such as saving time and effort—is no longer a novel benefit but a fundamental expectation. this convenience has become a "hygiene factor"; its absence would be a deterrent, but its presence is not a compelling motivator to purchase. this implies that students' decisions are driven less by the functional benefits of the channel and more by higher-order factors like trust in the vendor and social validation from trusted sources. 6. conclusion and implications this study set out to identify the key determinants of online apparel purchase intention among university students in vietnam, a significant and growing consumer demographic in a vibrant emerging economy. through an empirical analysis of 142 students, the research developed and tested a model integrating six factors. the findings reveal that trust (tru) is the most powerful predictor of students' intention to purchase clothing online, followed by influencer endorsement (ie) and fashion involvement (fi). product design (pd) was also found to be a significant, albeit weaker, driver. crucially, the study found that traditional behavioral drivers such as subjective norm (sn) and perceived usefulness (pu) did not have a statistically significant influence on this demographic's purchase intention. this research provides a clear and updated understanding of the complex motivations behind the online shopping behavior of young vietnamese consumers. this study offers several contributions to the existing literature on e-commerce and consumer behavior. theoretically, it reaffirms the central role of trust in online transaction models, particularly within the highuncertainty context of an emerging market. it also extends behavioral theories by demonstrating that for the gen z cohort, the modern construct of influencer endorsement can be a more potent form of social influence than the traditional concept of subjective norm, suggesting a shift from broad peer pressure to specialized, parasocial influence. finally, the non-significance of perceived usefulness challenges the universal applicability of core tam tenets in contexts where digital convenience has become a baseline expectation, prompting a need to explore higher-order value drivers for digitally-native populations. from a managerial perspective, the findings yield several actionable recommendations for online apparel retailers. first and foremost, businesses must prioritize trust-building by investing in a transparent and reliable ecosystem. this involves providing high-resolution product visuals, detailed descriptions, clear customer-friendly return policies, and leveraging social proof through authentic customer reviews. furthermore, retailers should collaborate strategically with social media influencers, moving beyond follower counts to select personalities whose brand and style align authentically with the store's identity to foster genuine recommendations. to engage students with high fashion involvement, businesses should also transition from being mere sellers to becoming style resources. creating value-added content, such as trend reports, styling guides, and interactive online communities, can build a loyal following and establish the brand as a fashion authority. the authors acknowledge several limitations in this study that open avenues for future inquiry. the use of a convenience sample drawn primarily from a single university system (vnu, hanoi) limits the generalizability of the findings to the broader population of vietnamese youth. additionally, the cross-sectional nature of the research captures a snapshot in time and does not account for how consumer intentions may evolve. future research could advance this topic by replicating the study with a larger, more geographically and demographically diverse sample to enhance its external validity. a longitudinal study could also provide valuable insights into how the influence of these factors changes over time. finally, complementing this quantitative study with qualitative methods, such as in-depth interviews, could offer a deeper understanding of the "why" behind these behaviors, particularly regarding the nuanced roles of trust and social influence in the digital age. references ajzen, i. 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(2021). nghiên cứu đề xuất phương án thúc đẩy định mua sắm sản phẩm thời trang nội địa việt nam trên nền tảng thương mại xã hội trên địa bàn hà nội [a study proposing solutions to promote the intention to purchase domestic vietnamese fashion products on social commerce platforms in hanoi]. tạp chí kinh tế & phát triển, 297(1), 63–72. 1 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 8, 1-10, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.525 © 2025 by the authors; licensee eastern centre of science and education, usa analysis of digital transformation in the iron and steel industry: a case study of b steel zhanjiang xin tong zhong1 qiu yue wang2 xiao li yan3 meng jie zhao4 an-shin shia5  1,2,3,4business school, lingnan normal university, zhanjiang, guangdong, china. 5business school, lingnan normal university, zhanjiang, guangdong, china. email: 18875991570@qq.com (corresponding author) abstract in the context of rapid technological advancement, digital transformation has become central to industrial upgrading. this study examines the practices and challenges of digital transformation in the iron and steel industry, using b steel zhanjiang iron & steel (b steel) as a case study. by leveraging technologies such as big data and artificial intelligence, b steel has reshaped its business processes, achieving bidirectional integration between operations and data. since 2016, b steel has launched the "baocloud" platform and established the "smart engineering" system to drive comprehensive digital transformation, though the process has encountered significant challenges. utilizing analytical tools such as fishbone diagrams, this paper conducts an in-depth analysis of mid-to-late-stage issues in b steel's digital transformation and proposes targeted solutions. the findings aim to provide empirical and theoretical support for digital transformation in the steel industry, promoting its sustainable development. keywords: baosteel zhanjiang (b steel), case study, digital transformation, solutions. 1. introduction since 2024, the iron and steel industry has faced a dual weakening of supply and demand, leading to intensified operational pressures for steel enterprises. against this backdrop, the sector’s overall financial performance further deteriorated in the first half of 2024 (see figure 1), with most companies experiencing expanded net losses and declining operating cash flow. in response, firms must pursue continuous innovation and transformation to adapt to market fluctuations. (china industrial economic information network, 2025). figure 1. trends in china's composite steel price index (2022–2024) (unit: points) source: prospect industry research institute(china industrial economic information network, 2025). this study takes b steel zhanjiang iron and steel co., ltd. as a case study to deeply explore the internal management issues and external environmental challenges faced by the steel industry during the process of digital transformation. it aims to propose targeted improvement measures to promote internal structural optimization and capacity enhancement within enterprises. the specific research objectives are as follows: (1)to analyze internal management problems: systematically identify and examine the internal management issues that emerged during the middle and late stages of b steel’s digital transformation, including insufficient employee skills, poor system compatibility, inadequate optimization of local processes, high technical maintenance costs, and mailto:18875991570@qq.com https://doi.org/10.55220/2576-6759.525 asian business research journal, 2025, 10(8): 1-10 2 © 2025 by the authors; licensee eastern centre of science and education, usa mismatches in employee skill sets. additionally, this study seeks to explore the underlying causes and impact mechanisms of these issues. (2) to investigate external risk factors: from the dimensions of intensified market competition, rapid technological updates, fluctuations in raw material prices, and changes in regulatory policies, this research analyzes the influence of the external environment on b steel’s digital transformation, and evaluates the operational risks and uncertainties introduced by these factors. (3) to propose improvement measures and suggestions: based on the case analysis, this study puts forward a series of recommendations, including but not limited to: adjusting production capacity structure, integrating and upgrading systems, strengthening local lean management, optimizing technical costs, enhancing employees’ digital skills, improving supply chain management, utilizing financial instruments for risk hedging, and promoting the development of a green circular economy. these suggestions are intended to support enterprises in achieving successful digital transformation and sustainable development. through this research, it is hoped to provide practical references and theoretical support for steel industry enterprises undergoing digital transformation, helping them effectively respond to internal and external challenges, enhance core competitiveness, and achieve high-quality development. 2. case study baosteel zhanjiang iron & steel (b steel) has achieved remarkable success in its transition to a digitalized enterprise, establishing itself as an industry benchmark. however, during the mid-to-late stages of this transformation, the company encountered significant challenges. by employing a fishbone diagram analysis (see figure 2), b steel can identify targeted solutions to these issues, thereby facilitating deeper advancement of its digital transformation. figure 2. fishbone diagram analysis. 2.1. staff aspects in the mid-to-late stages of b steel’s digital transformation, staff challenges have emerged: some employees are accustomed to traditional production models and lack proficiency in new digital technologies, which affects efficiency and quality. there is a shortage of interdisciplinary talent with both information technology and business expertise. intense talent competition and changes in work patterns increase the risk of talent attrition. b steel needs to strengthen employee training, recruit digital talent, establish incentive mechanisms, and optimize the work environment to drive the success of the transformation. 2.2. machinery aspects in the mid-to-late stages of b steel’s digital transformation, machinery-related challenges include: the rapid development of new technologies means that failure to keep pace will result in a loss of competitive advantage, leading to reduced market share and damage to brand image. outdated systems exhibit poor compatibility with new modules, necessitating upgrades and renovations, which involve substantial financial, time, and human resource investments. the integration of cutting-edge technologies increases maintenance costs. technologies such as smart manufacturing, industrial robotics, 5g, and ai require specialized teams for support, elevating management complexity. technical failures may cause production halts and financial losses. 2.3. material aspects in the mid-to-late stages of b steel’s digital transformation, material-related challenges include: fluctuations in raw material prices increase production costs and compress profit margins. an irrational product structure, with a high proportion of mid-to-low-end products, undermines competitiveness and leads to idle production capacity. fluctuations in market demand affect capacity utilization. during periods of macroeconomic downturn or industry stagnation, demand declines, resulting in insufficient orders. 2.4. regulatory aspects in the mid-to-late stages of b steel’s digital transformation, regulatory challenges include: intensified industry competition, with new entrants and innovative technologies capturing market share, requiring b steel to continuously innovate to maintain its leading position. strict environmental and safety regulations necessitate adjustments to digital management and production models to meet compliance requirements, avoid penalties, and increase compliance costs. enterprises must monitor regulatory changes and adjust strategies promptly to ensure compliance. asian business research journal, 2025, 10(8): 1-10 3 © 2025 by the authors; licensee eastern centre of science and education, usa 2.5. environmental aspects in the mid-to-late stages of b steel’s digital transformation, environmental challenges include: an increased risk of data security, with threats such as data breaches and tampering endangering corporate assets. cybersecurity risks are on the rise, requiring sustained investment in strengthening defenses against unknown vulnerabilities and threats. new technologies or partners may introduce security vulnerabilities, making it a long-term task to enhance employees’ security awareness. 3. the main subject of the case problem the research subject of this case study is b steel, established in 2011, with businesses encompassing steel smelting, rolling, processing, and related technical services. zhanjiang iron and steel has become the largest carbon steel plate base in south china, a model of green and efficient steel production, contributing to the development of guangdong province. b steel has built a big data center, driving digital business in four major professional fields, achieving significant preliminary transformation results. however, mid-to-late-stage problems have gradually emerged. 3.1. macro analysis (pest) through pest analysis (table 1), b steel can examine the political, economic, social, and technological factors in the external environment from a macro perspective to better understand market trends and potential impacts, thus formulating corresponding strategic plans. table 1. pest analysis of b steel. dimension content description p strict regulatory environment: the government may issue more detailed policies and regulations, requiring attention to changes. new regulations may lead to compliance uncertainties and even penalties. data security requirements are increasing: the government is strengthening data security and privacy protection regulations, and establishing protection systems requires funds and human resources, posing technical and management challenges. e cost pressure: digital transformation requires continuous financial investment, with costs rising in research and development, equipment upgrades, and talent training. market competition: other enterprises are advancing digital transformation, intensifying market competition. b steel needs to continuously innovate to maintain a leading position and avoid market share losses. s talent supply and demandcontradiction: digital transformation requires composite talents, with insufficient quantity, quality, and structure of talents. training consumes resources, and talentloss risks increase. consumer demand changes: social consumption concepts evolve, with increasing requirements for steel product quality, personalization, and environmental protection, necessitating rapid response to market demand. t cost of technology catch-up: technology updates rapidly, and research and development and introduction investments may not be directly proportional, posing risks of resource waste. technology integration challenges: technology collaboration and integration require cross-domain knowledge to solve compatibility issues and prevent data silos and system incompatibilities. cybersecurity challenges: network attack methods are upgrading, requiring strengthened cybersecurity construction to prevent unknown vulnerabilities and risks. 3.1.1. policy, p strict regulatory environment: the government may issue more detailed policies and regulations, requiring attention to changes. new regulations may lead to compliance uncertainties and even penalties. p5 data security requirements are increasing: the government is strengthening data security and privacy protection regulations, and establishing protection systems requires funds and human resources, posing technical and management challenges. p4p5 3.1.2. economy, e cost pressure: digital transformation requires continuous financial investment, with costs rising in research and development, equipment upgrades, and talent training.p4 market competition: other enterprises are advancing digital transformation, intensifying market competition. b steel needs to continuously innovate to maintain a leading position and avoid market share losses. p4 3.1.3. society, s talent supply and demand contradiction: digital transformation requires composite talents, with insufficient quantity, quality, and structure of talents. training consumes resources, and talentloss risks increase. p5 consumer demand changes: social consumption concepts evolve, with increasing requirements for steel product quality, personalization, and environmental protection, necessitating rapid response to market demand. p5 3.1.4. technology, t cost of technology catch-up: technology updates rapidly, and research and development and introduction investments may not be directly proportional, posing risks of resource waste.p5 technology integration challenges: technology collaboration and integration require cross-domain knowledge to solve compatibility issues and prevent data silos and system incompatibilities.p5 cybersecurity challenges: network attack methods are upgrading, requiring strengthened cybersecurity construction to prevent unknown vulnerabilities and risks. p5. asian business research journal, 2025, 10(8): 1-10 4 © 2025 by the authors; licensee eastern centre of science and education, usa 3.2. industry five forces analysis the steel industry’s digitalization is insufficient, and collaboration with internet companies brings new opportunities. in 2020, the digitalization rate of china’s steel industry was only 30%. by 2025, the target is to achieve a research and development investment intensity of 1.5%, a numerical control rate of 80%, an equipment digitalization rate of 55%, and over 30 smart factories (dengfeng zhixin technology, 2024). through the five forces analysis of b steel (figure 3). figure 3. five forces analysis of b steel. the competitive situation of the steel industry is visualized, helping b steel’s management identify key competitive forces in the industry and formulate corresponding strategies. 3.2.1. threat of new entrants capital barriers: smart manufacturing systems, industrial robots, 5g deployment, and other technologies require substantial funds, forming capital barriers.p6 technical barriers: ai technology integration and professional talent support form technical barriers.p6 brand loyalty: b steel’s brand influence and customer trust pose challenges for new entrants.p6 3.2.2. substitutes product characteristics: the uniqueness and customization capabilities of b steel’s products reduce the threat of substitutes.p6 cost advantage: digital transformation reduces costs and enhances price competitiveness. p6 3.2.3. bargaining power of buyers product differentiation: high-quality and special-performance products limit buyer choices. p6 customer concentration: extensive market coverage and diversified customer groups weaken buyer bargaining power. p6 3.2.4. bargaining power of suppliers supplier diversification: global supplier resources reduce dependence. p6 procurement scale: large-scale procurement gives b steel negotiating advantages. p6 3.2.5. rivalry technical leadership: b steel’s technological advantages affect the competitive landscape.p6 capacity utilization: high capacity utilization enhances market response speed.p6 cost competition: cost advantages intensify industry cost competition. 3.3. micro analysis (swot) through swot analysis (table 1), b steel can more clearly understand its strengths, weaknesses, opportunities, and threats, thereby formulating corresponding strategic measures, optimizing resource allocation, and improving market competitiveness. asian business research journal, 2025, 10(8): 1-10 5 © 2025 by the authors; licensee eastern centre of science and education, usa table 1. swot analysis of b steel strengths, s weaknesses, w dimension content description dimension content description s1 geographical and logistics advantages: located in zhanjiang, guangdong, near the port, reducing raw material transportation costs. w1 capacity utilization and structure issues: capacity utilization needs to be improved, and the product structure needs to be optimized. s2 capacity and product advantages: large annual capacity, diversified products, meeting market demand. w2 system compatibility and upgrade challenges: poor compatibility between old systems and new modules. s3 technical integration and collaboration advantages: integrating smart manufacturing, industrial robots, 5g, and ai technologies. w3 local process optimization is insufficient: some digital processes are not fully optimized. s4 data-driven decision-making advantages: using production data to optimize production and improve efficiency. w4 high technology maintenance costs: the integration of cutting-edge technologies increases maintenance costs. s5 demonstration effect advantages: digital transformation achievements attract government attention and enhance brand influence. w5 employee skills mismatch: employees lack proficiency in new digital technologies. opportunities, o threats, t o1 industry standard-setting opportunities: participating in the formulation of intelligent manufacturing standards to enhance industry discourse power. t1 fast technology updates: need to keep up with new technologies to avoid losing advantages. o2 expansion of business cooperation space: exporting transformation experience and deep cooperation with upstream and downstream enterprises. t2 intensified market competition: competitors accelerate digital transformation, and new entrants bring competition. o3 market demand growth potential: southeast asian market demand growth, domestic high-end steel demand increase. t3 raw material price fluctuations: iron ore and coal price fluctuations affect cost control. o4 technology upgrade and innovation prospects: new production lines to meet the needs of emerging fields. t4 regulatory policy changes: strict environmental and safety regulations increase compliance costs. o5 policy support and guidance: circular economy and technological innovation receive policy support and guidance. 3.3.1. strengths, s geographical and logistics advantages: located in zhanjiang, guangdong, near the port, reducing raw material transportation costs and enhancing market competitiveness.p7 capacity and product advantages: annual capacity of 8.23 million tons of hot metal, 8.92 million tons of steel water, and 6.89 million tons of steel products, diversified products meeting market demand (eastmoney, 2025).p7 technical integration and collaboration advantages: integrating smart manufacturing, industrial robots, 5g, and ai technologies to achieve efficient production.p7 data-driven decision-making advantages: using production data to optimize production and improve efficiency.p7 demonstration effect advantages: digital transformation achievements attract government attention and enhance brand influence.p7 3.3.2. weaknesses,w capacity utilization and structure issues: capacity utilization needs to be improved, and the product structure needs to be optimized.p7 system compatibility and upgrade challenges: poor compatibility between old systems and new modules.p7 local process optimization is insufficient: some digital processes are not fully optimized, affecting efficiency.p7 high technology maintenance costs: the integration of cutting-edge technologies increases maintenance costs.p7 employee skills mismatch: employees lack proficiency in new digital technologies. 3.3.3. opportunities,o opportunities for industry standard setting: participate in the formulation of smart manufacturing standards to enhance industry influence. expand business cooperation opportunities: share transformation experience and engage in deep cooperation with upstream and downstream enterprises. market demand growth potential: growing demand in the southeast asian market and rising demand for highend steel products domestically. technology upgrade and innovation prospects: build new production lines to meet emerging market demands. policy support and guidance: circular economy and technological innovation initiatives receive policy support. 3.3.4. threats,t rapid technological updates: need to keep up with new technologies to avoid losing competitive advantages. intensified market competition: peers accelerating digital transformation, new entrants bringing competition. asian business research journal, 2025, 10(8): 1-10 6 © 2025 by the authors; licensee eastern centre of science and education, usa raw material price fluctuations: fluctuations in iron ore and coal prices affecting cost control (figure 4, data source: wind, state investment securities research center). changes in regulations and policies: strict environmental and safety regulations increasing compliance costs. figure 4. raw material price fluctuations cause steel price volatility. 4. existing issues and causal analysis 4.1. internal management issues and causal analysis (1) capacity utilization and structural issues: changes in the macroeconomic environment and the downturn in related industries can lead to a decline in market demand for cold-rolled products, resulting in idle capacity on b steel's cold-rolled production lines and making it difficult to improve capacity utilization rates. b steel has failed to adjust its product structure in a timely manner according to changes in market demand, resulting in an overly high proportion of mid-to-low-end products, which has impacted market competitiveness. this has prevented the full utilization of high-end product capacity, constraining overall capacity utilization rates. unstable raw material supply or sales obstacles have led to waste of equipment resources, increased unit product costs, and impaired economic benefits, further limiting the effective utilization of capacity. the process flow of capacity utilization and structural issues is illustrated in figure 5: figure 5. process flow diagram of capacity utilization and structural issues. (2) system compatibility and upgrade challenges: as businesses expand and technology evolves, compatibility between legacy systems and new modules deteriorates, necessitating upgrades and renovations. upgrades require significant investments in equipment and software maintenance, as well as substantial time and human resources, imposing economic burdens on businesses. inadequate data interaction and integration between legacy systems and new modules may cause production delays, increasing technical risks and economic losses. (3) insufficient optimization of local processes: although some production processes have been digitized, the processes have not been fully optimized, resulting in issues such as poor information transmission and duplicate data entry, which affect overall efficiency and prevent the full potential of digitization from being realized. some production processes involve excessive approval procedures and lengthy decision-making chains, leading to slow response times, missed market opportunities, and constraints on the improvement of overall operational efficiency. (4) high technical maintenance costs: the integration of cutting-edge technologies such as smart manufacturing systems, industrial robots, 5g, and ai requires specialized teams to ensure stable operation, increasing labor costs. b steel must continuously invest funds in technological optimization, upgrades, and maintenance, thereby increasing operational costs. the complexity of these technologies elevates management challenges, and any technical failures could lead to production halts and significant losses. (5) mismatched employee skills: some employees are accustomed to traditional production models and lack proficiency in new digital technologies, making it difficult for them to adapt to the requirements of work after digital transformation. in the new production model, there is increased demand for new skills such as data analysis and intelligent system management, but employee training outcomes may be inadequate, leading to low work efficiency and unstable product quality. asian business research journal, 2025, 10(8): 1-10 7 © 2025 by the authors; licensee eastern centre of science and education, usa 4.2. external competition and risk issues and analysis of causes (1) intensified market competition: other companies in the industry have recognized the importance of digital transformation and may accelerate their transformation efforts, emulating b steel's model. leveraging their own resources and cost advantages, they may quickly catch up during the transformation process, intensifying market competition. new entrants may introduce innovative business models and technologies, capturing market share and posing a threat to b steel's traditional sales channels and market position. (2) rapid technological updates: digital technology is evolving at an unprecedented pace, requiring b steel to continuously invest resources in r&d and technology acquisition. however, this may result in situations where input does not yield proportional output, leading to resource wastage and the risk of technological obsolescence. new technologies may be difficult to effectively integrate into existing production systems, impacting the company's production efficiency and product quality. (3) fluctuations in raw material prices: the steel industry is highly dependent on raw materials such as iron ore and coal, whose prices are subject to frequent fluctuations influenced by global supply and demand dynamics, geopolitical factors, and other variables. rising raw material prices directly increase production costs, compress profit margins, and pose challenges to the company's cost control and profitability. if costs cannot be passed on to downstream customers, this will further impact the company's profit levels and increase operational risks. (4) changes in regulations and policies: environmental and safety regulations are becoming increasingly stringent, requiring companies to invest more resources in upgrading digital environmental monitoring and treatment systems to meet regulatory requirements. this not only increases capital investment but also imposes higher demands on management capabilities. the frequent introduction of new policies and regulations may make it difficult for b steel to fully understand and swiftly adjust business processes and technological applications to comply within a short timeframe, leading to uncertainties in compliance risks. 5. improvement measures and recommendations 5.1. internal management improvement recommendations (1) adjustment of capacity utilization and structure: implement the four-factor correlation as shown in figure 6: optimizing resource allocation: addressing the issue of idle capacity and low utilization rates in b steel's coldrolled production lines, the company should promptly implement flexible product structure adjustment strategies. leveraging local resources in the guangdong-hong kong-macao greater bay area, the company should closely monitor real-time market dynamics in zhanjiang and adjust product lines accordingly. the focus should be on developing high-value-added, high-tech products such as specialty stainless steel, electrical steel, and steel for new energy vehicles to enhance product competitiveness. simultaneously, gradually reduce production of mid-to-lowend products that are market-saturated and low-profit to ensure more rational resource allocation. enhance market forecasting and production plan adjustments: utilize advanced data analysis tools and models internally to improve the accuracy of market demand forecasts and flexibly adjust production schedules. b steel should optimize production scheduling to reduce idle time on production lines, increase equipment utilization rates, and ensure that production capacity aligns with market demand. establish long-term stable supplier relationships: through strategic procurement, establish solid partnerships with key raw material suppliers in zhanjiang to achieve supply chain synergy. signing long-term supply agreements not only ensures the continuity of raw material supply but also reduces costs through bulk purchasing and enhances bargaining power in raw material procurement. regularly upgrade and modernize production lines: b steel should focus on improving production efficiency and product quality, as well as conducting regular internal training to enhance employees' sensitivity to market changes and their ability to respond, thereby better adapting to market changes and improving overall capacity utilization rates. figure 6. four-element correlation diagram. (2) system integration and upgrading: the influencing factors of each system are intertwined (figure 7). for example, technological advancements may reduce production costs and minimize environmental impacts, while changes in environmental regulations may drive companies to invest in more energy-efficient technologies. similarly, economic factors such as fluctuations in energy prices may influence cost control strategies in production management, while social factors such as public concern for environmental protection may prompt companies to improve water system management. therefore, b steel must comprehensively consider factors across these three dimensions when conducting production management, energy management, and water system management to achieve sustainable development. b steel should implement a system integration and upgrade strategy by utilizing asian business research journal, 2025, 10(8): 1-10 8 © 2025 by the authors; licensee eastern centre of science and education, usa a unified operating platform, standardized data interfaces, and modular design to enhance compatibility between different systems, ensure a smooth transition between new and existing systems, and lay a solid foundation for future technological iterations and functional expansions. figure 7. rendering of the upgraded 3d analysis system. (3) localized lean management: to address the issue of insufficient optimization of local processes at b steel, a range of optimization measures and solutions can be implemented. in production processes, advanced technologies and equipment can be introduced, standardized operational procedures implemented, and lean production management promoted to enhance efficiency and quality; in energy management, energy systems can be upgraded, an energy control platform established, and waste heat recovery and utilization strengthened to improve energy efficiency; in environmental protection and safety management, upgrading environmental protection technologies, improving safety management systems, and strengthening information technology infrastructure to enhance regulatory oversight and emergency response capabilities; simultaneously, strengthening enterprise information technology infrastructure, introducing intelligent technologies, and achieving intelligent upgrades of production processes and data-driven management optimization. (4) technical cost optimization through process, staff, and transformation management cycles, as detailed in figure 8: figure 8. process management cycle diagram. maintenance planning and process optimization: b steel should establish a more scientific and systematic maintenance plan. first, based on equipment usage frequency, wear and tear, and historical maintenance records, develop a regular preventive maintenance plan to ensure equipment operates in optimal condition. second, introduce predictive maintenance technology to monitor equipment data in real time, identify potential faults in advance, and implement corresponding maintenance measures. additionally, optimize maintenance processes by streamlining unnecessary steps to ensure maintenance tasks are executed quickly and efficiently. skill enhancement and team collaboration for maintenance staff: strengthening the skill training of maintenance staff is key to reducing maintenance costs. b steel should regularly organize technical training to ensure maintenance staff master the latest maintenance techniques and knowledge. additionally, encourage communication and collaboration among maintenance staff to establish a teamwork mechanism for jointly addressing complex equipment issues. furthermore, establish an incentive mechanism for maintenance staff to stimulate their work enthusiasm and innovative capabilities. spare parts management and domestic substitution: spare parts management is a significant component of maintenance costs. b steel should establish a scientific spare parts inventory management system, reasonably control spare parts inventory levels based on equipment maintenance needs and spare parts consumption patterns, and avoid inventory buildup and capital tied up in inventory. additionally, actively seek domestic substitution solutions for spare parts to reduce procurement costs. establish long-term partnerships with high-quality local suppliers in the guangxi region to ensure the quality and supply stability of spare parts. digital transformation and intelligent applications: digital transformation is an important means of reducing maintenance costs and improving production efficiency. b steel should increase investment in digitalization and intelligent applications, establish a maintenance management information platform for equipment, and achieve realtime data collection, analysis, and processing. through data analysis, predict equipment failure trends and optimize maintenance plans. additionally, introduce intelligent maintenance tools and technologies, such as intelligent diagnostic systems and remote maintenance platforms, to enhance the intelligence level of maintenance work and reduce labor intervention costs. asian business research journal, 2025, 10(8): 1-10 9 © 2025 by the authors; licensee eastern centre of science and education, usa (5) employee digital skills training: in response to the issue of skill mismatches among b steel employees and the fact that some employees are accustomed to traditional production models and lack proficiency in digital technologies, the company should strengthen employee training, particularly in digital skills, to enhance employees' ability to master new technologies. concurrently, promote cultural transformation within the company to encourage employees to embrace and adapt to digital production models. utilize methods such as sharing realworld case studies and demonstrating digital applications to enhance employees' understanding and confidence in digital technologies, thereby gradually addressing skill mismatches and resistance to traditional production methods. 5.2. external risk prevention measures (1) integrate production, sales, and research to strengthen cost control and improve production efficiency (see figure 9): b steel should continue to consolidate and expand its advantages in cost control through refined management and technological innovation to reduce production costs and improve production efficiency. for example, it can draw on the successful experience of the energy and environmental protection department of zhanjiang steel in controlling power generation costs, utilize peak-off-peak electricity price differentials to optimize power costs, and introduce market competition mechanisms to stimulate team innovation and efficiency. deepening production-sales-research integration and intensifying market expansion efforts: b steel needs to deepen the substantive transformation of production-sales-research integration, promote deep integration among production, sales, and research, and unleash the wisdom and strength of efficient collaboration. meanwhile, it should adopt a market-oriented, customer-centric approach, continuously intensify market expansion efforts, and continuously enhance the quality of service provided to users, thereby swiftly adapting to market changes and capturing market share. figure 9. enterprise efficiency optimization model diagram. (2) enhancing the efficiency of technology conversion: in response to the severe challenge faced by b steel enterprises, where rapid technological updates are not matched by proportional returns on investment, leading to resource waste, b steel should increase its investment in technological research and development. this should involve not only actively introducing advanced production technologies from home and abroad, but also focusing on independent research and development to enhance technological innovation capabilities, ensuring that technological updates can be swiftly and effectively converted into actual productive capacity. additionally, the company should optimize production processes, strengthen delicacy management, and adopt measures such as precise cost control and improved resource utilization efficiency to minimize resource waste during production. furthermore, establishing a robust technical assessment and feedback mechanism is crucial to accurately evaluate the effectiveness of technical investments, adjust investment directions flexibly based on market and technological trends, and ensure that every dollar invested in technology yields maximum economic benefits, thereby achieving efficient resource utilization and sustainable corporate development.(3) supply chain management and optimization: diversified procurement strategies and supply chain optimization: b steel should implement diversified procurement strategies to expand raw material supply channels and reduce reliance on single suppliers, thereby mitigating risks associated with raw material price fluctuations. leveraging the geographical advantages of the guangdong-hong kong-macao greater bay area, the company can establish long-term stable partnerships with multiple domestic and international suppliers. through measures such as signing long-term contracts, flexibly adjusting procurement volumes and timings, the company can lock in raw material prices and minimize the impact of market price fluctuations on production costs. additionally, optimizing supply chain management to enhance flexibility and responsiveness ensures stable raw material supply and reduces production risks caused by supply chain disruptions. (4) utilizing financial instruments for risk management: actively employing financial instruments such as futures and options to hedge against raw material price volatility risks. through futures markets, the company can lock in future raw material prices to mitigate uncertainties arising from market price fluctuations. additionally, companies can establish risk management systems to monitor and issue early warnings for raw material price fluctuations in real time, enabling timely implementation of response measures. by reasonably utilizing financial instruments for risk prediction and management, b steel can better control raw material costs and enhance the company's competitiveness and profitability. (5) promoting green circular economic development: in response to changes in environmental protection regulations and policies, b steel should first establish a dedicated environmental protection management department responsible for tracking and researching the latest developments in environmental protection regulations to ensure the company stays informed and compliant with relevant policies; second, increase asian business research journal, 2025, 10(8): 1-10 10 © 2025 by the authors; licensee eastern centre of science and education, usa investment in the research and application of environmental protection technologies, and invest in advanced pollution control facilities, such as efficient dust removal, desulfurization, and denitrification systems, as well as wastewater treatment and recycling technologies, to reduce pollutant emissions; third, optimize production processes, implement clean production practices, reduce waste generation during production, and improve resource utilization efficiency; additionally, establish and improve an environmental monitoring system to conduct real-time monitoring of environmental indicators during production processes, ensuring that all environmental protection measures are effectively implemented; concurrently, conduct environmental education and training to enhance employees' environmental awareness and participation, fostering a corporate culture of environmental responsibility; finally, actively participate in the formulation of environmental policies and industry standards, establish effective communication mechanisms with government agencies and industry organizations, and secure greater policy support and market opportunities for the company(see figure 10). thereby achieving green transformation and long-term development while adhering to environmental regulations. figure 10. implementation process chart for corporate green transformation. 6. conclusion b steel is a large steel production enterprise in zhanjiang with stable production capacity and strong industry authority. since 2014, domestic enterprises have begun to transition toward digital enterprises, and b steel co., ltd. is also focusing on this transformation. of course, in the current era of rapid economic and technological development, b steel co., ltd. is inevitably facing numerous challenges. following the above analysis and discussion, our team offers the following recommendations. addressing issues such as internal management within the corporate structure and external objective influences encountered by b steel co., ltd. during its digital transformation, we propose improvement measures for internal structural optimization and production capacity enhancement. we hope these suggestions will contribute to the company's future development. references sina finance. (2024). steel inventory drawdown slows: research by rui zhe fixed income. https://finance.sina.com.cn baosteel zhanjiang iron & steel co., ltd. (2024). company profile. baidu encyclopedia. https://baike.baidu.com baosteel zhanjiang iron & steel co., ltd. (2025). company information. aiqicha. https://aiqicha.baidu.com dengfeng zhixin technology. (2024). digital transformation in the steel industry: wisdom-driven productivity. paper presented at the china iron & steel association internet and digitalization committee. https://mp.weixin.qq.com/s? east money. (2025). baosteel company research report. data center. https://data.eastmoney.com/report/600019.html china industry economic information network. (2025, february 17). average decline of china’s steel price index in 2024 was 8.38% year-on-year. https://www.cinic.org.cn https://finance.sina.com.cn/ https://baike.baidu.com/ https://aiqicha.baidu.com/ https://mp.weixin.qq.com/s https://data.eastmoney.com/report/600019.html https://www.cinic.org.cn/ 115 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 7, 115-123, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.512 © 2025 by the author; licensee eastern centre of science and education, usa reviving the lost art: historical foundations and future pathways for bespoke service in luxury retail andrew burnstine college of business and management, lynn university, florida, usa. email: aburnstine@lynn.edu abstract the mid-20th century witnessed a zenith of deeply personalized, bespoke service within iconic luxury specialty retailers. this paper critically analyzes the foundational principles of this historical bespoke service model, extending service-dominant (s-d) logic and retail evolution theory, to propose a robust framework for its modern revival. employing a rigorous qualitative, multiple-case study approach, grounded in extensive historical and media analysis of four archetypal american and british luxury boutiques, and uniquely informed by an insiderethnographic perspective on the central case exemplar ("martha's"), the study distills six core principles: profound client knowledge, visionary curation & styling, anticipatory & proactive service, the exclusive & trusting environment, the owner as visionary & brand embodiment, and beyond the transaction: relationship & community building. these principles reveal a retail model predicated on intensive, proactive value co-creation and deep, trust-based relationships, highlighting a significant experiential and relational deficit in much of contemporary, massmarket retail. we propose the "empathetic algorithm" model, integrating these historical principles with the contemporary imperatives of sustainability and human-centric artificial intelligence. this framework suggests that the perceived depersonalization of modern retail drives a cyclical re-emergence of high-touch paradigms, offering a novel strategic roadmap for luxury retailers to achieve differentiation, enduring client loyalty, and a more sustainable future. keywords: artificial intelligence, bespoke service, clienteling, customer experience, luxury retail, qualitative research, retail evolution, service-dominant logic, sustainability, value co-creation. 1. introduction the luxury retail industry is undergoing a dramatic evolution, propelled by shifts in consumer expectations, digital innovation, and sustainability imperatives. while efficiency and scale dominate the operational landscape, a critical component of luxury retail—bespoke service—faces marginalization. historically anchored in personal relationships, deep client knowledge, and artisanal care, bespoke service once defined the luxury experience. this tradition has deep roots, originating in the exclusive ateliers of parisian haute couture and the meticulous tailoring workshops of london's savile row. these european institutions established foundational principles, including a deep, personal relationship between artisan and patron, an uncompromising commitment to quality, and the creation of unique garments tailored to an individual's form and lifestyle (norton, 2010; palmer, 2019). in this earlier era, commerce was fundamentally conversation, and a purchase emerged as the byproduct of a relationship. in the 20th century, this ethos was masterfully translated for the american market by a new class of visionary retailers. stanley marcus, a titan of this era, once encapsulated the core philosophy: "wanting to sell satisfaction, not just merchandise" (marcus, 1974). this sentiment was the bedrock of legendary independent institutions such as martha's of new york and palm beach, and nan duskin in philadelphia. within these establishments, service was an intricate art form, a "golden age" where personalized attention and profound client relationships were paramount. this was not merely about remembering a client’s size; it was about understanding their social calendar, their aesthetic aspirations, their family dynamics, and even their insecurities. service was a complex, emotionally intelligent performance orchestrated to build unshakeable trust. this historical ideal starkly contrasts with the contemporary retail landscape, which is largely characterized by a relentless pursuit of efficiency and scale that often leads to impersonal, standardized, and ultimately forgettable encounters (grewal et al., 2017). the rise of multi-national luxury conglomerates, with their focus on maximizing shareholder value and achieving global brand consistency, has systemically de-emphasized the resource-intensive art of individualization. the ubiquity of e-commerce, while democratizing access, has further reshaped operational models, creating a palpable "service deficit" where the human element is often reduced to a chatbot or a call center script (dion & arnould, 2011). the very definition of service has been diluted, shifting from a relational art to a transactional process, from partnership to purchase. this has resulted in a consumer experience that, while often convenient, lacks the emotional resonance and perceived value that fosters deep, lasting loyalty. mailto:aburnstine@lynn.edu https://doi.org/10.55220/2576-6759.512 asian business research journal, 2025, 10(7): 115-123 116 © 2025 by the author; licensee eastern centre of science and education, usa this trajectory gives rise to a central tension that this paper seeks to resolve: is this nuanced, resourceintensive level of service an anachronistic relic, a romanticized notion impossible to sustain in the modern economy, or does its absence represent a strategic opportunity for a cyclical return? this core tension animates the primary research questions: • what were the foundational, replicable principles that defined the success and sustained competitive advantage of iconic 20th-century bespoke luxury retailers? unpacking these principles moves beyond anecdotal admiration to create a structured understanding of their strategic and operational dna. • how can these historical principles be adapted and evolved to satisfy the complex expectations of contemporary consumers, who value both digital convenience and authentic human connection? this question addresses the critical need to bridge the past with the present, ensuring that any revival is relevant, not merely retro. • how can the modern imperatives of sustainability and artificial intelligence (ai) be strategically integrated not merely as add-ons, but as core enablers for a viable, modern revival of bespoke service excellence? this question probes the potential for a powerful synthesis, where technology and ethics do not conflict with the historical model but instead amplify its potential. this paper argues that the foundational principles of legendary bespoke service are not merely historical artifacts but offer enduring, actionable wisdom. a strategic revival of these principles, thoughtfully integrated with authentic sustainability practices and human-centric ai, can address a significant experiential gap in the current market and foster the kind of profound, resilient customer loyalty that builds lasting brands. the "empathetic algorithm" is proposed as a conceptual model where technology augments, rather than replaces, the human intuition, creativity, and emotional intelligence that defined this lost art. in this model, ai serves to liberate human service providers from logistical burdens, empowering them with insights to deepen relationships. accordingly, this paper provides a historical-insider account of bespoke service, proposes a cyclical theory of service evolution, and offers an actionable roadmap for integrating these timeless principles with modern imperatives, charting a course for the future of luxury retail. 2. literature review the revival of bespoke service in luxury retail necessitates an understanding of its historical context, the theoretical underpinnings of service excellence, evolving consumer dynamics, and the contemporary forces of sustainability and artificial intelligence. this review synthesizes existing literature to frame the central arguments of this paper, establishing the theoretical foundation upon which the analysis is built. 2.1. the evolution of luxury retail and service paradigms historically, luxury was synonymous with exclusivity, craftsmanship, and a deeply personal mode of service. the origins of this model can be traced to the european guild systems and, more formally, to the rise of haute couture in 19th-century paris under figures like charles frederick worth. worth was a revolutionary figure who transformed dressmaking from a trade into an art form. by creating seasonal collections, using live models, and dictating styles, he established the couturier not merely as a craftsperson but as a creative authority and a trusted advisor to an elite clientele (palmer, 2019). concurrently, the tailors of london's savile row perfected a masculine form of bespoke service built on precision, discretion, and enduring multi-generational relationships with statesmen and aristocrats (norton, 2010). this european tradition, predicated on craft, personal consultation, and social exclusivity, formed the ideological antecedent to the american luxury specialty store. in the mid-20th century, a class of visionary american retailers adapted this ethos for a new, more dynamic market fueled by post-war prosperity. establishments like martha's, nan duskin, and neiman marcus translated the principles of bespoke service from a focus on custom creation to a focus on expert curation and comprehensive wardrobe building. they became the crucial, taste-making link between the european designer runways and the complex social lives of the american elite. this era also saw the rise of luxury department stores like selfridges in london, which, while offering a broader selection, attempted to maintain elements of personalized service through dedicated departments and pioneered the role of the personal shopper (moore & birtwistle, 2004). however, the latter part of the 20th century and the early 21st century witnessed a paradigm shift. the ascendancy of global luxury conglomerates like lvmh and kering, the proliferation of mono-brand flagship stores emphasizing global brand control (dion & arnould, 2011), and the disruptive advent of e-commerce fundamentally altered the retail landscape. this shift often prioritized scale, global reach, and standardized brand messaging over the deeply individualized and less scalable service models of earlier specialty retailers (okleshen & de ruyter, 1998). the business logic shifted from margin generated through unparalleled service to margin generated through brand equity and volume. while e-commerce expanded accessibility and convenience, it initially struggled to replicate the high-touch, sensory, and relational experiences of physical luxury retail (kim & ko, 2012). this digital deficit sparked a re-evaluation of the role of the physical store, leading to the concept of the omnichannel environment where digital and physical channels are meant to seamlessly integrate (verhoef et al., 2015). yet, despite significant investment, many omnichannel experiences remain fragmented, with a persistent disconnect between the data-rich online world and the often data-poor in-store interaction. this historical trajectory reveals a gradual erosion of the deeply personal service that once defined luxury, creating the service deficit that this paper addresses. 2.2. theorizing bespoke customer service excellence bespoke customer service in a luxury context transcends mere functional efficiency; it is an art form centered on deep personalization and relational value. foundational service quality models like servqual, with its five dimensions of reliability, assurance, tangibles, empathy, and responsiveness (parasuraman et al., 1988), provide a useful starting point. however, in the bespoke luxury sphere, these dimensions are radically amplified. "tangibles" extend beyond a clean store to include the quality of the fixtures, the scent in the air, the weight of the hangers, and the privacy of the salon. "empathy" and "responsiveness" evolve from polite understanding into an asian business research journal, 2025, 10(7): 115-123 117 © 2025 by the author; licensee eastern centre of science and education, usa anticipatory service and a profound, almost intuitive, grasp of unspoken client needs, desires, and social contexts (tynan & mckechnie, 2009). the value perceived by the customer (customer perceived value, or cpv) in such settings extends far beyond the functional utility of the product to encompass significant experiential, symbolic, and hedonic dimensions (smith & colgate, 2007; holbrook, 1999). this concept is deeply intertwined with relationship marketing theory, which emphasizes the development, maintenance, and enhancement of long-term customer relationships over short-term transactions (grönroos, 2004). the historical boutiques studied here were masters of this approach, inherently practicing what is now termed “clienteling”. their success was built on cultivating deep, personal knowledge of clients' preferences, lifestyles, social calendars, and even family connections. this created formidable emotional and relational switching costs for their clients, fostering unwavering loyalty over decades. the relationship itself became a valuable asset. furthermore, this model perfectly exemplifies service-dominant (s-d) logic, which reframes economics around service as the fundamental basis of exchange (vargo & lusch, 2004). in s-d logic, goods are merely distribution mechanisms for service provision. the bespoke service model is a prime example of value co-creation, a core tenet of s-d logic, where the retailer and client collaboratively shape the consumption experience. the client provides their personal context, needs, and preferences (operand resources), while the retailer integrates their resources—expert knowledge, access to designers, a curated environment (operant resources)—to create a unique value proposition that could not exist without this interactive partnership (vargo & lusch, 2008). these historical boutiques acted as dense "service ecosystems," integrating resources from designers, staff, clients, and the social environment to co-create value that was far greater than the sum of its parts. this paper will later argue that these retailers engaged in a proactive form of resource integration, a nuance that extends current s-d logic conceptualizations. ultimately, the work of pine and gilmore (1999) on the experience economy is critical. they argue that businesses must orchestrate memorable events for their customers, and that memory itself becomes the product. the historical boutiques were quintessential experience stages, creating immersive environments that went far beyond mere shopping. they offered escapism, aesthetic pleasure, and a sense of community, transforming the act of acquiring clothing into a rich, personally affirming experience (verhoef et al., 2009). they staged the four realms of experience: the aesthetic appeal of the beautiful salon, the entertainment of a trunk show, the educational component of learning about a new designer, and the escapist feeling of being an insider in an exclusive world. 2.3. the evolving luxury consumer motivations for luxury consumption are multifaceted and have evolved. classical theories pointed to the pursuit of status and social distinction, known as conspicuous consumption (veblen, 1899; han et al., 2010). this was certainly a key driver for the clientele of mid-20th-century boutiques, who valued exclusivity, personal recognition, and the social cachet associated with particular designers and retailers (twitchell, 2002). however, motivations have always included an appreciation for superior quality and craftsmanship (quelch, 1987), selfexpression and identity construction (belk, 1988), and the seeking of hedonic and experiential rewards (vigneron & johnson, 2004). contemporary luxury consumers, particularly millennials and gen z, while still appreciating quality and brand prestige, exhibit a marked shift in values. there is a greater emphasis on experiences over mere possessions (atwal & williams, 2009), a demand for authenticity and transparency from brands (beverland, 2005), and a heightened concern for sustainability and ethical practices (janssen et al., 2014). the "experience economy" (pine & gilmore, 1999) profoundly impacts their expectations; they seek not just products, but memorable, personalized, and often shareable interactions. their digital fluency means they expect seamless integration between online and offline worlds. their identities are more fluid, and they use luxury goods to signal different aspects of a multifaceted self rather than allegiance to a single social tribe. this complexity makes the role of a trusted curator potentially more valuable than ever, provided that the curator can speak to their values. 2.4. emerging imperatives: sustainability and ai two dominant forces are shaping the future of luxury retail. initially, the sustainability movement demands greater environmental and social responsibility, creating a "luxury paradox" between the desire for newness and the need for conscious consumption (davies, et.al, 2012). this includes calls for ethical sourcing, supply chain transparency, reduced environmental impact, and support for circular economy models like repair and resale (joy et al., 2012). a revived bespoke model, this paper argues, could inherently align with sustainability by emphasizing quality over quantity, timeless style, and personalized advice that encourages mindful consumption, guiding a client to repair a beloved piece or integrate a vintage item rather than simply buying new. concurrently, artificial intelligence (ai) offers transformative potential. it can enable hyper-personalization based on data analytics, power predictive styling recommendations, and create efficient inventory management that frees up human staff for value-added interactions (davenport et al., 2020; grewal et al., 2021). however, the challenge lies in deploying ai to augment and empower human service professionals—creating what is termed an "empathetic algorithm"—rather than replacing the nuanced, intuitive, and emotional intelligence crucial for genuine bespoke service (huang & rust, 2018). this perspective is echoed in recent scholarship by burnstine (2025), who examines how "agentic ai"—autonomous intelligent systems—can revolutionize the fashion ecosystem not only through personalization but also by creating more adaptive and sustainable supply chains. the goal is a synergistic human-ai partnership where technology handles complex data analysis and logistics, freeing humans to focus on creativity, strategy, and empathetic connection. the ethical implications of ai use, particularly concerning data privacy and algorithmic bias, are also paramount considerations that any modern model must address (martin, 2019). this literature review reveals that while components of luxury service are well-studied, a focused, integrative analysis of historical bespoke service models as a foundation for future innovation remains an underexplored area. specifically, there is a theoretical gap in understanding: asian business research journal, 2025, 10(7): 115-123 118 © 2025 by the author; licensee eastern centre of science and education, usa • how proactive value co-creation, as exemplified by historical bespoke service, can extend existing s-d logic frameworks that often emphasize reactive customer-initiated co-creation. • the cyclical nature of retail service paradigms, particularly how market depersonalization can drive the reemergence of high-touch, trust-based models, challenging purely linear views of retail evolution. • the optimal integration of human-centric ai and sustainability within a high-touch service model to address contemporary consumer values and create sustainable competitive advantage, moving beyond a purely technological or ethical lens to an integrated service design. this paper fills these gaps by synthesizing historical wisdom with future-oriented strategies, using a unique insider-informed case study method to develop a robust framework for the revival of a deeply valued form of retail excellence and, in doing so, to extend current service theory. 3. methodology this study employs a qualitative, interpretive research approach, best suited for exploring the complex, socially constructed phenomena at the heart of bespoke service. a comparative analysis of historical exemplars is utilized to deconstruct and understand the foundational principles of bespoke luxury retail (yin, 2018). this approach allows for the development of rich, contextually grounded theory from historical cases. the selection of iconic 20th-century retailers—including martha's (new york and palm beach), nan duskin (philadelphia), irene's (hollywood), and browns (london)—is purposive (creswell & poth, 2018). these exemplars were chosen for several reasons: their stellar historical reputation for service excellence as documented in public records; their influence on fashion trends and consumer behavior; and their representation of different facets of the luxury market (e.g., east coast social establishment, hollywood glamour, london avant-garde). this diversity allows for the identification of common, foundational principles that transcend specific locations or client types. data was collected through a systematic process of archival research and media analysis. this involved a comprehensive review of scholarly articles, books on fashion history and retail, published memoirs by founders and clients (e.g., marcus, 1974), and archival newspaper and magazine articles ( the new york times, vogue, wwd) that described the operations, philosophies, and customer experiences of these retailers. this triangulation of data sources enhances the credibility and validity of the findings. the analytical process was guided by thematic analysis (braun & clarke, 2006). this involved two main stages. initially, an in-depth, idiographic analysis of each exemplar was conducted to understand its unique history, culture, and service model. subsequently, a cross-exemplar comparison was performed to identify recurring themes, patterns, and principles. this comparative approach enabled the distillation of the six core principles presented in the findings section. a unique methodological feature of this research is the author's insider-ethnographic perspective as the grandson of martha's founder, martha phillips, and the son of its president, lynn manulis. this position provides access to a deep reservoir of tacit knowledge, anecdotes, and understanding of the philosophy that animated the business. recognizing the potential for bias, a dedicated and structured practice of reflexivity was employed throughout the research process (watt, 2007). this involved consciously bracketing personal experiences, maintaining a reflective journal to question assumptions, and deliberately privileging externally verifiable evidence from archival and secondary sources in the formal analysis. the insider knowledge was used primarily to interpret and add texture to the public record, rather than serving as primary data itself, thus balancing the unique benefits of insider access with the demands of academic rigor. 4. findings: the anatomy of a 'lost art' the comparative analysis of these iconic retailers reveals a consistent and interdependent set of principles that form the foundational anatomy of the "lost art" of bespoke service. these were not ad-hoc tactics but deeply ingrained cultural philosophies that permeated every aspect of the business. 4.1. the primary exemplar: martha's (new york & palm beach) the legacy of martha's, spanning from 1965 to 2003, was built on the visionary curation and intensely personal touch of its founder, martha phillips, and her daughter, lynn manulis. their philosophy was rooted in an intuitive, almost anthropological, understanding of their elite clientele's multifaceted lives. they championed designers who are now legendary, such as valentino, halston, james galanos, and yves saint laurent, often discovering them early and securing exclusive distribution rights. the service ethos was defined by profound personalization that went far beyond typical clienteling. sales associates, who were considered "service artisans," maintained detailed client "bibles". these were not mere lists of purchases but rich dossiers documenting clients' social engagements, travel schedules, aesthetic aspirations, family members, and even rivalries. this encyclopedic knowledge enabled a level of anticipatory service that is almost unimaginable today. for instance, upon learning a top client was attending a specific gala, the staff would not only suggest a gown but would subtly ensure no other client of theirs would be wearing the same designer to that event. it was common for lynn manulis to proactively assemble and ship entire seasonal wardrobes to clients' homes in gstaad or the south of france, complete with detailed notes on how to style each piece for various occasions, often without a single explicit request from the client. critically, martha phillips possessed the influence and personal relationships to call designers like valentino garavani directly to request a custom color for a gown or a modification to a suit for a specific client, a level of bespoke intervention and value co-creation that is structurally impossible in today's corporatized luxury system. 4.2. analysis of supporting exemplars similar principles, adapted to their specific contexts, were at play in other iconic stores: • nan duskin (philadelphia): founded in 1927, nan duskin built a retail dynasty on an intimate understanding of the philadelphia social calendar. the store was more than a place to buy clothes; it was an essential institution for the city's "old money" establishment. duskin and her staff knew precisely which asian business research journal, 2025, 10(7): 115-123 119 © 2025 by the author; licensee eastern centre of science and education, usa events their clients were attending—from the academy of music anniversary concert to debutante balls— and ensured they were appropriately and uniquely attired. this deep social integration made the store an indispensable partner in navigating the intricate codes of high society. • irene's (hollywood): helmed by the famed mgm costume designer irene lentz in the 1930s and 40s, irene's salon fused the magic of cinematic glamour with intensely personal retail service. her clients were the titans of hollywood—stars like marlene dietrich and ingrid bergman. having designed their onscreen personas, irene possessed unparalleled insight into how to translate that glamour into their private lives, offering couture-level fitting and custom design in a discreet environment that shielded them from public view. • browns (london): founded in 1970 by joan burstein and her husband, sidney, browns became an epicenter for fashion innovation and a launchpad for the avant-garde. burstein championed then-unknown, radical talents like john galliano, alexander mcqueen, and comme des garçons. the service model at browns was educational and encouraging. the staff were passionate experts who could explain the vision behind a challenging piece, helping adventurous clients build their confidence and their collection. it was a service built on intellectual and creative partnership, fostering a community of fashion-forward thinkers. 4.3. comparative analysis of bespoke retail exemplars the following table provides a comparative synthesis of these exemplars, highlighting both the common threads in their philosophies and the unique ways they manifested in different markets. table 1. comparative analysis of bespoke retail exemplars. retailer (founder) core service philosophy key brands/designers store/location ethos clientele profile martha's (martha phillips) "proactive, anticipatory wardrobe curation and unparalleled personal access. "we dress you for your life."" valentino, st. laurent, chanel, james galanos, halston, bill blass exclusive, residential-style salons in prime luxury corridors (park ave, palm beach, trump tower) international socialites, royalty, political figures, and established industrialist families nan duskin (nan duskin lincoln) socially-attuned styling and deep integration into the local elite's lifestyle and events. european couture, prominent american designers. a philadelphia social institution on rittenhouse square, integral to the city's high society. philadelphia's "old money" establishment, debutantes, and prominent families. irene's (irene lentz) cinematic glamour translated for personal wear; couture-level fitting and custom design. primarily, irene's custom designs and curated selections. a discreet, glamorous hollywood salon catering to the film industry. a private sanctuary for stars. hollywood royalty, movie stars, studio executives. browns (joan burstein) fearless championing of avant-garde talent; educational and encouraging styling for the fashion-literate. john galliano, alexander mcqueen, comme des garçons, jil sander. an innovative, vibrant hub for fashion discovery in london's south molton street. a creative laboratory. fashion insiders, adventurous dressers, international creatives, and artists. alternative analysis: while the table highlights the formidable strengths of these founder-led models, it also implicitly reveals a critical weakness: their inherent lack of scalability and profound dependence on a single, charismatic individual or a very small, cohesive team. this "visionary-as-bottleneck" structure, where the founder's intuition and personal network were the firm's primary assets, made them exceptionally vulnerable to generational transition and market shifts. the knowledge was often tacit, not codified, making succession a near-insurmountable challenge and contributing directly to the decline of many of these institutions as the founders retired or passed away. 4.4. comparative synthesis: the six enduring principles the comparative analysis consistently reveals six interdependent principles that constitute the strategic core of this lost art of service. these were not ad-hoc tactics but deeply ingrained cultural philosophies that permeated every aspect of the business. a primary principle consistently observed was profound client knowledge: this went beyond crm data to a deep, qualitative, and almost anthropological understanding of the client's entire life—their needs, aspirations, social circles, and insecurities. this deep clienteling served as the foundational resource upon which all other principles were built, creating a formidable and difficult-to-replicate barrier to entry for competitors. subsequently, visionary curation and styling emerged as a critical element: the owner acted as the ultimate arbiter of taste, taking significant financial risks on new talent and meticulously editing collections. they did not merely sell what was available; rather, they presented a distinct and confident point of view, shaping the aesthetic of their clientele and, in many cases, influencing broader fashion trends. their role was that of a trusted editor, not a passive merchant. central to their operational model was the exclusive, trusting environment: the physical stores were designed as discreet, comfortable sanctuaries, in contrast to transactional spaces. functioning as "third places" (oldenburg, 1989), they were elegant, residentialstyle salons where clients could relax, socialize, and build relationships with staff and even other patrons. privacy, comfort, and a sense of belonging were paramount. a particularly crucial and often "lost" principle involved asian business research journal, 2025, 10(7): 115-123 120 © 2025 by the author; licensee eastern centre of science and education, usa anticipatory & proactive service: service was not reactive (responding to a request) but proactive (initiating action based on knowledge). it encompassed anticipating needs clients hadn't yet articulated—from planning a travel wardrobe to securing a unique piece for a special occasion—demonstrating a level of care and understanding that transformed the relationship from transactional to custodial. furthermore, the owner as visionary & brand embodiment was consistently evident: the founder's personal ethos, style, and social connections permeated every aspect of the business. martha phillips, joan burstein, and nan duskin were not anonymous executives; their credibility and taste constituted the very essence of the brand. this generated a powerful sense of authenticity and trust that cannot be manufactured through corporate marketing campaigns. ultimately, beyond the transaction: relationship & community building underscored their strategic approach: the overarching goal was not to secure a single sale but to cultivate a loyal, long-term community. this was achieved through exclusive events, introductions between clients with shared interests, and a genuine commitment to the client's long-term satisfaction. the focus was on maximizing customer lifetime value before the term was even coined, recognizing that loyalty represented the ultimate currency. 5. discussion: the cyclical future and a roadmap for revival the historical analysis offers more than nostalgia; it provides enduring lessons that, when synthesized with contemporary dynamics, illuminate a path forward. this section translates these historical insights, extends relevant theory, and proposes a concrete framework for their strategic revival. 5.1. theoretical implications: extending service-dominant logic and retail theory the findings provide a rich, historically grounded illustration of s-d logic's core tenets, particularly value cocreation and resource integration. the principle of anticipatory & proactive service, in particular, extends the typical understanding of these concepts. much of the s-d literature frames value co-creation as a process initiated by the customer or occurring reactively during a service encounter. however, the actions of retailers like martha's demonstrate a proactive form of value co-creation, initiated by the firm based on its deep, institutionalized knowledge of the client's latent needs (their operand resources). the firm doesn't wait for the customer to signal a need; it uses its expertise (operant resources) to identify and fulfill that need in advance, fundamentally shifting the dynamic of the relationship. this leads to the first proposition: proposition 1: in high-touch service ecosystems, the firm's institutionalized capability for capturing and mobilizing deep customer operand resources (e.g., lifestyle knowledge, social context) positively moderates its ability to proactively initiate value co-creation activities. this proactive initiation, in turn, leads to significantly higher levels of customer-perceived value, trust, and loyalty compared to reactive service models. the findings also lend strong support to a cyclical view of retail evolution. the dominant narrative of retail history is often linear and technologically deterministic, suggesting an inexorable march towards greater efficiency, scale, and digitalization. however, the market's overcorrection towards impersonal, scalable models creates a relational vacuum. this vacuum generates a latent but powerful consumer demand for the very hightouch, trust-based models that were displaced. consumers begin to seek authenticity, human connection, and expert guidance as a countervailing force to digital anonymity. this suggests a cyclical pattern where service paradigms re-emerge in new forms. this leads to the second proposition: proposition 2: the perceived depersonalization and relational deficit resulting from the market dominance of scalable, transaction-focused retail models create latent consumer demand that drives the cyclical re-emergence of high-touch, trust-based service paradigms. these revived paradigms are not identical to their historical antecedents but are adapted to and integrated with contemporary technological and ethical contexts (such as ai and sustainability). table 2. strategic roadmap for reviving bespoke service. phase objective key actions desired outcomes phase 1: foundation establish the cultural and human bedrock 1. define and codify a service-first charter. 2. recruit for emotional intelligence (eq) and train "service artisans." 3. build a modern, ethical crm system (the new "client bible"). a company culture that institutionally prioritizes relationships over transactions. a highly skilled, empathetic team. a robust knowledge foundation. phase 2: integration build the modern toolkit 1. deploy human-centric ai for predictive insights and logistical support. 2. integrate sustainability into curation and service offerings (e.g., repair, resale, ethical sourcing). 3. develop training on synergistic human-ai workflows. augmented service capabilities that empower staff. a clear, authentic sustainability narrative. enhanced efficiency that creates time for human connection. phase 3: execution craft the bespoke experience 1. design intimate, private physical environments (modern salons). 2. reinvent exclusive events (intimate digital/physical trunk shows, community gatherings). 3. orchestrate a seamless "phygital" customer journey from discovery to post-purchase. memorable, personalized, and shareable client experiences. a strong sense of community and exclusivity. deepened client loyalty. phase 4: evolution measure, adapt, and scale intimacy 1. track long-term, relationship-focused metrics (clv, retention, net promoter score). 2. create formal feedback loops from service artisans to management. 3. scale intimacy through mentorship, small team structures, and knowledge sharing protocols. data-driven continuous improvement of the service model. agile response to market shifts. sustainable growth of the service culture, not just the business. asian business research journal, 2025, 10(7): 115-123 121 © 2025 by the author; licensee eastern centre of science and education, usa 5.2. the roadmap: a phased approach to reviving bespoke service the path to reviving bespoke service is not through imitation, but through sophisticated re-imagination. the empathetic algorithm model is proposed, which strategically integrates the six historical principles with the modern pillars of sustainability and human-centric ai. this model reframes ai not as an endpoint for efficiency, but as a sophisticated tool that creates the time and space for elevated human interaction. it is a "creative partnership" (burnstine, 2025) that automates the mundane to liberate the profound. the following four-phase roadmap, summarized in table 2 and detailed below, outlines how a retailer can implement this model. 5.3. detailed roadmap phases • phase 1: foundation establish the cultural and human bedrock: this initial phase is the most critical and cannot be rushed. it involves creating a foundational "service charter" that explicitly states the company's commitment to long-term relationships, empowering employees to prioritize client satisfaction over short-term sales targets. concurrently, it necessitates radically shifting recruitment to screen for emotional intelligence (eq), empathy, and passion for the product, not solely sales experience. this is followed by intensive training to develop "service artisans" skilled in communication, styling, and relationship building. a crucial component is building the modern "client bible"—a crm system designed not just to track purchases, but to ethically and securely store qualitative, nuanced client information that can be accessed (by human staff) to personalize interactions. • phase 2: integration build the modern toolkit: here, technology and modern values are woven into the foundational culture. human-centric ai is deployed not to interact with clients, but to support the service artisans. for example, ai can analyze inventory and a client's profile to suggest, "your client has a wedding in tuscany next month; these three new arrivals fit her style profile and are not owned by any other guests you service". this automates logistical work, freeing the artisan to focus on the creative and emotional aspects of the consultation. additionally, sustainability is integrated authentically. this means curating brands with transparent supply chains, offering high-quality repair and alteration services, and providing a platform or partnership for the consignment of past purchases. the service artisan, in this capacity, becomes a guide for conscious, long-term wardrobe building. • phase 3: execution craft the bespoke experience: with the right culture and tools established, the focus shifts to execution. this involves designing physical spaces that feel like private, comfortable salons rather than open, transactional stores. a parallel effort means reinventing events—moving away from large, impersonal parties towards intimate trunk shows, designer q&as (both physical and virtual), and small gatherings that foster a genuine sense of community. furthermore, it requires orchestrating a seamless "phygital" journey where a client can browse online, have a video consultation with their dedicated artisan, and then have a curated selection waiting for them for a private in-store appointment, with all preferences and history seamlessly transferred. • phase 4: evolution measure, adapt, and scale intimacy: the final phase ensures long-term viability. success must be measured not by daily sales but by long-term metrics like customer lifetime value (clv), client retention rates, and net promoter score (nps). formal channels must be created for service artisans, who hold the most valuable client knowledge, to provide feedback to buyers and management, ensuring the business adapts to evolving client needs. scaling is approached not by standardizing service, but by "scaling intimacy". this is achieved through small, autonomous team structures, mentorship programs where senior artisans train new ones, and robust protocols for knowledge sharing when a client relationship is handed over. alternative analysis: this roadmap presents an idealized path that consciously runs counter to the prevailing logic of cost efficiency and scalability. the high-cost structure required for highly trained "service artisans," intimate salon environments, and sophisticated ai integration poses a significant financial barrier. furthermore, a deep tension exists between the goal of building an "empathetic algorithm" and legitimate customer concerns about data privacy and algorithmic transparency (martin, 2019). successful implementation requires an unwavering long-term vision from leadership and a financial structure (perhaps private ownership) that can withstand pressures for short-term, margin-focused results. 6. conclusion the narrative of luxury retail, with its ebbs and flows, mirrors the cyclical nature of fashion itself. this paper has journeyed back to the mid-20th century, exploring the european origins of bespoke service and its masterful adaptation by a generation of visionary american and british specialty retailers. the analysis reveals that the legendary status of these institutions was not a matter of chance, but the result of a disciplined adherence to a set of core principles. their success was built upon a foundation of deep client intimacy, visionary curation, and an ethos that consistently and emphatically valued the long-term relationship over the short-term sale. in these salons, commerce was elevated to an art form, a collaborative process of value co-creation that is largely absent from the modern retail lexicon. these were not just stores; they were institutions of taste, social hubs where cultural capital was created and exchanged, and trusted partners in the construction of their clients' public and private identities. while the forces of consolidation, corporatization, and digitalization led to the decline of many such institutions, their core tenets have not lost their resonance. on the contrary, this study argues that they are more relevant now than ever. the contemporary retail landscape, so often defined by the cold efficiencies of scale and the anonymity of digital transactions, has created a profound experiential void. this study posits that this void, combined with a modern consumer's explicit demands for authenticity, sustainability, and genuine personalization, signals a latent yet potent market demand for a return to more meaningful retail relationships. the desire for a human touch, for expert guidance that feels genuine, and for a sense of belonging has not been coded out of the consumer psyche. the path forward, however, is not one of nostalgic replication, but of sophisticated and strategic reimagination. it is not about recreating the past, but about learning from its essential wisdom. to this end, this asian business research journal, 2025, 10(7): 115-123 122 © 2025 by the author; licensee eastern centre of science and education, usa paper has presented the "empathetic algorithm" model and a corresponding four-phase roadmap detailing how this revival can be achieved. it is a call to arms for a new generation of luxury retailers to look to the past not as a destination, but as a compass. by systematically establishing a service-first culture, by investing in "service artisans" and empowering them with human-centric technology, by weaving sustainability into the very fabric of the business model, and by committing to the long-term metrics of loyalty and trust, retailers can rebuild the art of bespoke service for the 21st century. this approach, which bridges the wisdom of the past with the imperatives of the future, offers a powerful blueprint for creating a vibrant, differentiated, and enduring competitive advantage in a market starved for genuine connection. the future of luxury does not lie in choosing between high-tech and hightouch, but in the artful synthesis of the two. 7. limitations and future research while this study offers a robust conceptual framework, its qualitative nature and historical focus present certain limitations that, in turn, illuminate promising avenues for future research. acknowledging these boundaries is crucial for situating this paper's contributions and for building a cumulative research tradition in this area. initially, the generalizability of the findings is constrained by the qualitative methodology. the comparative analysis of a purposively selected set of exemplars is designed for theoretical depth and conceptual development, not statistical generalization. while the identified principles are argued to be foundational, their specific application and weighting may differ in other contexts. this limitation highlights the need for future quantitative research to test the propositions derived from the analysis. a large-scale survey could, for example, measure the relative impact of each of the six principles on customer loyalty and willingness to pay a premium. subsequently, the study's reliance on historical and secondary data, while triangulated for validity, cannot fully replicate the richness of direct, contemporaneous observation. moreover, the insider perspective on martha's exemplar, while a unique strength providing unparalleled context, carries an inherent risk of bias, such as the potential to romanticize past practices. while a rigorous reflexive practice was employed to mitigate this, future historical studies could benefit from unearthing new private archives (e.g., internal financial records, client correspondence, the "client bibles" themselves) from other retailers to provide alternative, corroborating, or even conflicting accounts. ultimately, the proposed "empathetic algorithm" model and its accompanying roadmap are, at this stage, conceptual. they represent a theoretically grounded ideal. this points to a critical need for in-depth, longitudinal ethnographic studies of contemporary 'neo-bespoke' retailers who are attempting to implement similar strategies. such research could provide invaluable real-world insights into the operational challenges, the actual roi of investing in "service artisans," the practical difficulties of integrating ai without compromising the human touch, and the organizational culture required to sustain such a model over time. building on these limitations, the following specific directions for future research are proposed: • empirical validation of the model: future studies should aim to validate the "empathetic algorithm" model empirically. this could involve developing and validating a 'bespoke service equity' scale, a multidimensional construct measuring constructs like perceived trust, relational depth, co-creation efficacy, and perceived authenticity. such a scale could then be used in surveys to measure the long-term impact of these service strategies on crucial dependent variables like customer lifetime value (clv), brand advocacy, and price insensitivity, moving beyond short-term sales metrics. • cross-cultural and cross-sectoral analysis: the current study is primarily rooted in an american and british fashion context. future research should conduct cross-cultural comparative analyses to explore how the principles of bespoke service are adapted in different global markets, considering cultural dimensions such as power distance and individualism-collectivism. for instance, a comparative ethnography of clienteling practices in a parisian haute couture salon versus a high-end personal shopping service in shanghai or dubai would likely reveal crucial cultural nuances. similarly, applying this framework to other luxury sectors, such as high-end travel, private banking, or yachting, could test the robustness of the six core principles beyond retail. • the service provider perspective: this study focuses primarily on the firm and the customer. a critical area for future research is the employee perspective. what are the psychological and emotional impacts on the "service artisans" tasked with providing this level of deep, relational service? research into the new forms of emotional labor required in a tech-augmented service environment, potential for burnout, and the hr policies (e.g., compensation, career development, psychological support) needed to attract and retain these unique professionals would be invaluable. • the dark side of bespoke service: future inquiry could also explore the potential negative aspects of this model from a critical theory perspective. this includes investigating the ethical dimensions of extreme data collection in the pursuit of "profound client knowledge," the potential for creating exclusionary social structures and reinforcing social inequality, and the high-pressure environment it may create for employees. a critical 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licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 8, 59-72, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.541 © 2025 by the authors; licensee eastern centre of science and education, usa a study on the impact mechanism of emotional intelligence on employee performance: the mediating role of employee commitment liu yulei1  perema kumari a/p s. ponnapalam2 chih-seong su3 meng zhou4 1nanjing tech university pujiang institute, segi university of malaysia. 2,3segi university of malaysia. 4bank of guangzhou co.,ltd, china email: 694819358@qq.com email: perema@segi.edu.my email: suchihseong@segi.edu.my email: 936038252@qq.com (corresponding author) abstract with the development of china's economy and the rapid advancement of technology, the demand for well-rounded employees is growing stronger. due to the intense competitive pressures of contemporary society, many knowledge workers face role stress and burnout. this can lead to a decline in employee performance and a sense of belonging to the organization, and even lead to turnover, which can have significant negative consequences for the company. emotional intelligence (ei) has a significant impact on employee work enthusiasm, performance, satisfaction, and work engagement. organizational commitment, reflecting an individual's attitude and positive attitude toward the organization, plays a significant role in influencing employee burnout and engagement. this paper, based on research on employee emotional intelligence and organizational commitment in china, investigates the relationship between emotional intelligence, organizational commitment, and employee performance among employees from various industries. the mediating effect of ei on employee performance is analyzed using various performance parameters, dependent variables, and independent variables. using a statistical software package for social sciences, the impact of ei on the behavioral, social, and psychological outcomes of employees in this organization is assessed. keywords: emotional intelligence, mployee performance, organizational commitmen, pls-sem. 1. introduction 1.1. research background emotional intelligence (ei or eq) refers to an individual's ability to understand and regulate their own and others' emotions and manage their behavior appropriately in social environments. in recent years, the importance of emotional intelligence in organizational management and employee development has become increasingly prominent. it has a significant impact on performance, particularly in roles requiring frequent interpersonal interaction, such as sales, customer service, and leadership. employees with high emotional intelligence tend to have greater empathy and self-control, enabling them to effectively identify the needs of others and regulate their emotional responses, thereby making more rational decisions in complex interpersonal situations. this ability helps improve work relationships, enhance job satisfaction, and increase performance. in the current context of accelerating globalization and digitalization, organizations are placing greater emphasis on employee commitment and stability. research has found that an employee's ability to manage emotions and adapt to organizational culture is closely related to their performance and organizational commitment. a lack of emotional intelligence can lead to interpersonal conflict, decreased productivity, and employee turnover. this study aims to explore how emotional intelligence influences employees' organizational commitment and, in turn, their performance. by constructing a mediation model and clarifying the interaction pathways between the three, the study provides theoretical support and practical recommendations for organizational employee selection and training. furthermore, the study recommends that organizations introduce emotional intelligence assessments, particularly during the onboarding phase for new employees, to promptly identify differences in emotional intelligence and provide targeted training, thereby improving overall employee performance and organizational cohesion. mailto:694819358@qq.com mailto:perema@segi.edu.my mailto:suchihseong@segi.edu.my mailto:936038252@qq.com https://doi.org/10.55220/2576-6759.541 asian business research journal, 2025, 10(8): 59-72 60 © 2025 by the authors; licensee eastern centre of science and education, usa 1.2. related concepts and theoretical foundations 1.2.1. emotional intelligence emotional intelligence, like iq, is crucial for success and happiness. learn how to improve your emotional intelligence to strengthen your connections with others and achieve your goals. emotional intelligence is the ability to recognize, regulate, and leverage one's emotions to reduce distress, express empathy for others through clear communication, diffuse conflict, and overcome obstacles. it helps develop stronger relationships, perform well in school, and achieve personal and professional goals. on the other hand, it helps build connections, record emotionally relevant intentions, and make important decisions. (drigas, a., & papoutsi, c., 2019) 1.2.1.1. emotional intelligence and intellectual intelligence we should recognize that the happiest and most prosperous people are not always the most intelligent. there are undoubtedly people in the world who excel academically but struggle at work or in relationships due to social awkwardness. for someone who wants to live a successful life, their iq or intellectual ability alone is not enough. yes, iq can help with college admissions, but emotional intelligence (eq) allows for managing stress and emotions as final exams approach. when they complement each other, iq and eq work hand in hand to achieve their best performance. the impact of emotional intelligence on success in academia or the workplace. strong emotional intelligence is essential for inspiring others, leading a successful career, and navigating the challenging social dynamics of the workplace. in fact, many companies now prioritize emotional intelligence (eq) over technical skills when evaluating key job candidates. physical health. if one cannot control one's emotions, then one may also be unable to manage stress. this can lead to serious health problems. uncontrolled stress can damage the immune system, accelerate the aging process, affect fertility, increase the risk of heart attack and stroke, and raise blood pressure. the first step in developing emotional intelligence is learning how to manage stress. emotional states, stress, and unchecked emotions can negatively impact mental well-being, increasing the likelihood of depression and anxiety. if employees cannot understand, tolerate, or manage these feelings, they cannot build strong connections. this can worsen existing mental health issues and make people feel more isolated. if a person has a better understanding of emotions and how to manage them, they can better express their feelings and understand how others are experiencing them. as a result, they are able to speak more clearly and develop stronger relationships in both their personal and professional lives. social awareness and understanding emotions enable them to interact socially with both themselves and the external world. thanks to social intelligence, they can distinguish between friend and foe, determine another person's level of interest, reduce tension, control their nervous system through social connection, and feel loved and fulfilled. 1.2.2. organizational commitment employee commitment is the bond they maintain with their employer. loyal employees typically experience a sense of belonging, an understanding of the company's goals, and a connection to the company. these employees create value by being more committed to their tasks, demonstrating high levels of productivity, and being more proactive in providing assistance. job commitment has recently received considerable attention in the human resources literature. employee commitment data is considered a key indicator of employee loyalty and organizational effectiveness. organizations are under constant pressure to perform. due to globalization, among other factors, competition is more intense than ever. due to this growing pressure, a company's commitment to its employees is no longer considered a given. the idea of lifetime employment has similarly lost its relevance. today, underperforming organizational units are undergoing restructuring. often, layoffs result from this. furthermore, underperforming employees are more likely to be laid off. as a result of this trend, employee commitment to their jobs and company has become less of a guarantee, while individuals' individuality has expanded significantly. consequently, it is more important for employees to feel connected to their company and behave in a certain way. loyal employees add value to the company through their tenacity, proactive assistance, relatively high productivity, and a strong sense of quality. employees who are committed to their work are also less likely to lose their jobs or resign. disloyal employees may turn against the company and hinder its growth. 1.2.3. employee performance a company's employees are its driving force. therefore, it's no surprise that their daily performance has a significant impact on the company's ability to succeed. if businesses want to succeed in today's market, they need to understand how to keep their employees performing at their best and maximize their potential. by assisting employees in developing their roles and responsibilities, in addition to assisting in recruiting, retaining, and developing the best personnel, businesses can also create a pipeline of future leaders. all of this contributes to longterm success. organizational management has always faced significant challenges regarding employee performance. it has employed persuasive strategies to motivate employees to complete their tasks and deliver enhanced work performance. the primary source of any organization's strength and competitive advantage is its workforce. in other words, an organization's effectiveness and viability are directly linked to the effectiveness and productivity of its employees. furthermore, productivity and organizational growth depend on employee performance. therefore, the issue of employee performance is crucial to understanding organizations. the degree of effectiveness and efficiency of a particular organization can be measured by the performance of its personnel, although many factors can influence this. the university sector cannot be categorized as such, as this applies to all organizational systems. in the chinese context, it has become a common topic that chinese government administrators care about the performance of their employees, especially administrators. (abdirahman, h. i. h., 2018). asian business research journal, 2025, 10(8): 59-72 61 © 2025 by the authors; licensee eastern centre of science and education, usa 1.2.4. organizational commitment theory the three-component model is a well-known organizational commitment theory (tcm). this concept proposes three basic elements that constitute organizational commitment: an employee's emotional connection to the company is called their "affective commitment." according to the tcm component, employees are more likely to stay with the same company when they demonstrate a higher level of positive dedication and exemplary behavior. employee participation in organizational responsibilities, such as attending meetings and discussions, providing insightful suggestions or ideas to help the company, and being proactive at work, is sometimes referred to as positive commitment. outside of the west, only a limited amount of research has been conducted on the impact of organizational commitment on employee job performance. furthermore, there is also limited research on how job happiness influences this relationship. the purpose of this study was to investigate how job satisfaction mediates the relationship between organizational commitment and job performance. four hypotheses were generated for this purpose; the first three predicted a positive correlation between organizational commitment, job satisfaction, and job performance, while the fourth hypothesized that job satisfaction may be a mediating factor. based on this research, it is claimed that a simple positive correlation between organizational commitment and job performance may not always lead to job performance for employers. therefore, improving job performance by increasing organizational commitment through improving job satisfaction is key to success (loan, l., 2020). 2. literature review (quantitative) 2.1. current developments lee et al. (2022) found that with the introduction of a range of social media communication channels, employees now have more options for interacting with external stakeholders to support or oppose their organization's brand. discrete emotions, as referred to in this work, are negative emotions related to negative word-of-mouth, rather than ineffective behaviors at work, focusing on discretionary behaviors related to negative brand-oriented nwom. this study aimed to determine whether employees' brand awareness directly reduces their cwb and nwom and mitigates the impact of negative emotions. relevant information was collected through a questionnaire survey and tested using structural equation modeling. the results showed that envy was more closely associated with brand nwom cwb than with ordinary employees, and anger was more strongly associated with employees' nwom than with exit awareness. negative emotions such as resentment and envy were directly mitigated by employees' cwb, rather than nwom. both cwb and nwom were negatively correlated with employees' perceived brand knowledge. this study examined the relative significance of emotional antecedents on employees' nwom and standard cwb from a discrete emotion perspective. furthermore, it confirms earlier research findings regarding the positive and negative effects of perceived brand awareness on employee behavior and its mitigating effects on nwom and cwb. istyaninsingh et al. (2020) suggest that organizational performance may be reflected in managerial performance. while many studies primarily consider employee performance, managers' position as company leaders significantly influences decision-making. the achievement of organizational goals is highly correlated with managerial effectiveness. to make decisions consistent with company goals, leaders also need emotional intelligence. this study aimed to understand and assess how emotional intelligence directly and indirectly influences managerial performance through decision-making. the study sample consisted of 44 leaders of regional equipment organizations during the bangor regency. path analysis was used as a data analysis technique. the results showed that both decision-making and emotional intelligence influence managerial performance, but the impact of decision-making is relatively greater. decision-making can be used as an indirect mediating variable to measure the impact of emotional intelligence on managerial performance, as its influence on decision-making is greater than the direct influence. according to this study, managers with high levels of emotional intelligence are more capable of making informed decisions that impact their managerial effectiveness. 2.2. dependent variable performance refers to how employees perform their duties and accomplish important tasks. it emphasizes the value, quality, and effectiveness of their output. the degree to which individuals are valuable to the organization is determined by their performance. emotional intelligence (ei) is a term that has been elusive almost from the outset. despite nearly 20 years of research, there seems to be little consensus on how to define, measure, or apply ei. this article intends to present the current state of research on this recently coined construct. we specifically address three major themes in ei research: conceptualization, assessment, and application, where gaps exist between what is known and what is unknown. throughout the various sections of this article, we begin with each section by outlining assertions that can be somewhat definitively established, clarifying the primary sources of consensus regarding ei. next, we explore areas of debate; those areas where ei researchers are less consistent. yang et al. (2021) despite its positive impact on human health and career success, the relationship between emotional intelligence and innovation is not well understood. while knowledge about intelligence and invention remains weak and unclear, it is insufficient to understand how these two traits are linked. by considering roles, this paper seeks to understand how emotional intelligence (ei) influences creativity by considering employees' available resources, their motivations, their incentives, and their dedication to success (ei). apoutsi et al. (2019) found that the function of ei in the workplace has been extensively researched. empirical findings indicate that ei is crucial for maintaining the smooth functioning of an organization. by compiling data demonstrating favorable relationships between ei, attitudes, and work variables, this study investigates how ei impacts the workplace. more specifically, it demonstrates how ei is related to six factors that are crucial for creating a better, more productive work environment. jameel & ahmad (2019) conducted in-depth research on employee performance in corporate organizations. however, research on academic performance (pas) is limited. this study aims to develop a conceptual framework to analyze pas in developing countries. based on the literature, this study argues that leadership style influences asian business research journal, 2025, 10(8): 59-72 62 © 2025 by the authors; licensee eastern centre of science and education, usa pas. furthermore, job satisfaction has the potential to moderate the impact of leadership style on pas. the development and discussion of these ideas are presented here. 2.3. independent variables an organizational member's psychological relationship with the company they work for is described as having organizational commitment. a key factor in determining whether an employee will persist with a company for extended periods and fully commit to achieving its goals is organizational commitment. ngui & lai (2020) stress is inevitable in the world of teaching and practical training, so student teachers inevitably experience some stress as they are required to apply diverse knowledge and abilities in real-world school and classroom settings. in this study, sen et al. (2020) examined how organizational justice and emotional intelligence influence job satisfaction, a supportive workplace, and the effectiveness of criminal investigation officers. the population for this study included all criminal investigation officers from the police force and the metro police criminal investigation directorate (based on 2016 data). xu hui, guo pibin, and bao liyan (2021) explored the innovative behavior of employees in a research team and concluded that innovative self-efficacy significantly influences employees' innovative behavior. innovative self-efficacy motivates team members to actively exchange knowledge and innovative ideas. this exchange of ideas strengthens employees' innovative capabilities and encourages them to actively engage in innovative activities. 2.4. relationships between variables amjad (2018) found that faculty members in academic institutions exhibited low levels of organizational commitment and satisfaction. workplace productivity and organizational commitment are closely related to emotional awareness. this study explored the relationship between emotional intelligence, organizational commitment, and job performance. tuah (2018) aimed to examine the relationship between emotional intelligence and job performance among telekom malaysia employees in kuching, sarawak. according to the literature, emotional awareness, self-awareness, and self-confidence are three components of emotional intelligence that influence employee job performance. the study employed a census sampling and questionnaire distribution method. the results showed a strong correlation between workplace effectiveness and emotional intelligence. the research discussion provides ideas for how organizations can improve employee job performance by investigating and understanding the impact of certain workplace emotional intelligence applications. furthermore, some suggestions are offered for new researchers eager to conduct additional research in this area to delve deeper and gather in-depth knowledge that will be useful to interested organizations. yusoff et al. (2021) burnout and stress frequently endanger the mental health of international and malaysian medical students. this study aimed to explore the relationship between mental illness, emotional intelligence, personality traits, classroom stress, and burnout among medical students. 2.5. hypothesis development the hypotheses investigated in this study include: 1. null hypothesis: emotional intelligence has no effect on employee performance. 2. hypothesis 1: improving employee performance through emotional intelligence. 3. hypothesis 2: dependent variables such as emotional intelligence will definitely have a significant impact on employees. 4. hypothesis 3: independent variables such as organizational commitment, stress, coworkers, and work environment will have an impact on the balance between emotional intelligence and employee performance. 3. data analysis 3.1. research methods this study evaluated the mediating effect of emotional intelligence on employee performance through various parameters of job performance, dependent variables, and independent variables. using the statistical package for social sciences, the impact of emotional intelligence on behavioral, psychosocial, and psychological outcomes of employees working in this organization was assessed. the researchers performed various adjustments in this experiment. spss facilitated the organization of retrospective production and analysis of observed data in the research study. the experimental group consisted of 289 respondents, and descriptive statistics were evaluated to obtain frequencies and percentages. statistically significant differences were assessed using various appropriate tests, such as cronbach's alpha, frequency tables, histograms, collinearity diagnostics, and analysis of variance. the threshold for statistical significance was considered to be p<0.05, while the threshold for statistical insignificance was p<0.05. the study was conducted in malaysia after obtaining appropriate written consent from the research participants. it was conducted in a naturalistic setting with employees working in various organizations. after obtaining consent, the 289 research participants, who were employees, completed a questionnaire consisting of yes/no questions and a 5-point likert scale. the collected data was evaluated using spss. the questionnaire consisted of four sections: 1) personal and industry profiles 2) emotional intelligence, including self-emotions, emotion regulation, and use of emotions, as well as other emotions. 3) organizational commitment, including affective commitment, continuance commitment, and normative commitment. 4) employee performance due to the effectiveness of empirical research techniques in social science research, they are becoming increasingly important within quantitative research methods. empirical research methods involve the process of asian business research journal, 2025, 10(8): 59-72 63 © 2025 by the authors; licensee eastern centre of science and education, usa developing a model to identify the connections between various factors identified in a problem. models explaining real-world events can be examined and refined by establishing and testing hypotheses. questionnaire-based surveys should collect data based on the research methodology and identify and interpolate factors and variables. table 1. reliability analysis. variable name cronbach’s alpha (α) no. of items employee performance (ep) 0.833 5 employee commitment (ec) 0.934 24 emotional intelligence (ie) 0.819 16 4. results and discussion this study used “reliability analysis” to examine the characteristics of the measurement scale and items associated with the scale. in addition to providing data on the correlations amongst the scale's constituent items, the reliability analysis technique creates a variety of regularly employed scale reliability measures. building data trust throughout the organization requires a solid foundation of reliable data, which is full and accurate. one of the key goals of backup and recovery programs, which are also used to uphold data security, data quality, and regulatory compliance, is to ensure data dependability. ensuring reliability basically means making sure that the data are reliable and reproducible and that the outcomes are correct. to ensure the integrity and quality of a measuring equipment, reliability assurance is a must. likert measures are frequently incorporated into questionnaire surveys to delve deeper into the underlying components that the investigator is attempting to quantify. these might be categorized answers to binary or multiple-choice surveys that are then added together to provide a score that is connected with a specific responder. the creation of these scales often serves as a tool to collect predictors for inclusion in empirical frameworks rather than the conclusion of the research itself. as the role of scales is expanded to include the field of forecasting, nevertheless, the issue of dependability arises. “cronbach’s alpha (α)” is one of the most often used dependability measures nowadays. to assess the reliability of a questionnaire survey, “cronbach’s alpha (α)” calculates the average correlation or internal consistency of its elements. “cronbach’s alpha (α)” is a gauge of a scale's or test's reliability, more precisely its internal consistency dependability or item interconnectivity (e.g., questionnaire). “internal consistency” indicates how well each item on a scale or test contributes to assessing a certain construct. internal consistency is pertinent to scores obtained as a result (i.e., the sum of all items of the scale or test). it is indeed crucial to remember that dependability only applies to facts, not scales or test measures. typically, cronbach’s alpha (α) varies between 0 and 1. scores that are nearer to 1.0 suggest a higher degree of “internal consistency” among the scale's components. in other words, more scale dependability is indicated by higher cronbach’s alpha (α) values. a number of 1.0 means that there is no measurement error and that all of the variation in test results is attributable to actual score differences (i.e., reliable variance). a value of 0.0, on the other hand, denotes the absence of a genuine score (i.e., a consistent variation) and the presence of just imprecision in the items. in other words, a cronbach’s alpha (α) of 1.0 denotes complete measurement consistency, whereas a value of 0.0 denotes complete measurement inconsistency. typically, cronbach’s alpha (α) scores between 0.60 and 0.80 are regarded as moderate yet reasonable. cronbach’s alpha (α) is considered to be in the very excellent range when it is between 0.8 and 1.00. results of the alpha for employee commitment (ec), emotional intelligence (ei), and employee performance (ep) are shown in table 1. employee performance (ep), which consists of 5 elements, has a cronbach's alpha of 0.833. emotional intelligence (ei) covers “self-emotions”, regulation of emotions”, use of emotions”, and “other emotions”. emotional intelligence (ei) has a cronbach's alpha of 0.819 and 16 items. organization commitment comprises of “affective commitment”, “continuance commitment” and “normative commitment”. employee commitment (ec) has a cronbach's alpha of 0.934 and 24 elements. all three of the study's variables have an alpha value more than 0.8, indicating that they are trustworthy, reliable, and consistent in their results. table 2. frequency table for age. frequency percent 18 to 25 131 45.3 26 to 35 80 27.7 36 to 45 41 14.2 46 to 55 27 9.3 56 to 70 10 3.5 total 289 100.0 table 2 provides a visual representation of the percentage and frequency of five distinct age categories, including 18 to 25, 26 to 35, 36 to 45, 46 to 55, and 56 to 70. table 1's results indicate that 289 employees from various organizations participated in the study; of these, 131 are between the ages of 18 and 25; this group represents 45.3% of the total employee population; the remaining 80 are between the ages of 26 and 35; this group represents 27.7% of the total employee population, 14 employees who took part in the survey are between the ages of 36 and 45, making up 14.2% of the total, while 27 employees are between the ages of 46 and 55, making up 9.3% of the total. ten employees who took part in the study are between the ages of 56 and 70, making up 3.5% of the total.table 1 findings indicate that most of the study's participants are young people, ranging in age from 18 to 25. asian business research journal, 2025, 10(8): 59-72 64 © 2025 by the authors; licensee eastern centre of science and education, usa figure 1. pie chart of age. the first phase in any data analysis is to define each variable individually. this is also referred as univariate analysis at times. using charts and graphs one may show how the distribution of answers to a problem looks graphically. using a limited set of categories, a pie chart displays the frequencies or percentages of a variable. it is shown as a circle with several segments cut out of it. the number of situations or the percentage of incidents in each group is directly proportional to the area of each segment. ordinarily, either nominal or ordinal variables are used with it. in figure 1, pie chart of age has been visualized, indicating that most of the study's participants are young people, ranging in age from 18 to 25. table 3. frequency table of sex. frequency percent male 181 62.6 female 108 37.4 total 289 100.0 looking at table 3, we can deduce that, out of the 289 participants—employees from various organizations— 181 of them—or the study's participants—are men, and 108 are women. employee gender ratios are 62.6 percent for men and 37.4 percent for women. since there are more male workers than female employees, we may assume that most of the employees employed by various student groups are male. figure 2. pie chart of sex. asian business research journal, 2025, 10(8): 59-72 65 © 2025 by the authors; licensee eastern centre of science and education, usa the distribution of sex is display through pie chart in figure 2, showing that men make up the majority of the study's participants who work for the various organizations. whereas there are fewer women working. table 4. descriptive measures. variable ei ec ep range 1.63 2.17 1.20 minimum 3.17 2.83 3.40 maximum 4.79 5 4.60 mean 4.24 4.7 3.99 standard error of mean 0.21 0.01 0.26 standard deviation 0.37 0.27 0.44 variance 0.13 0.07 0.19 it would be difficult to understand what the data was saying if we just showed our raw data, especially if there was a lot of it, thus descriptive statistics are crucial. as a result, descriptive statistics help us display the data in a more relevant fashion, making it easier to analyse the data. table 4 contains information about descriptive statistics, it comprises of “range”, “minimum”, “maximum”, “mean”, “standard error of mean”, “standard deviation” and variance of the emotional intelligence (ie), employee commitment (ec), and employee performance (ep). it demonstrates that the range of employees' emotional intelligence (ei) is 1.62, the mean emotional intelligence (ei) of employees is 4.24 with 0.21 standard error of mean, the variance and standard deviation for emotional intelligence (ie) are 0.13 and 0.37, respectively, and the minimum emotional intelligence (ei) for employees is 3.17 while the maximum is 4.79. table 4 elaborates that the range of employees' employee commitment (ec) is 2.17, the mean employee commitment (ec) of employees is 4.7 with 0.01 standard error of mean, the variance and standard deviation for employee commitment (ec) are 0.07 and 0.27, respectively, and the minimum employee commitment (ec) for employees is 2.83 while the maximum is 5. according to table 4, that the range of employees' employee performance (ep) is 1.20, the mean employee performance (ep) of employees is 3.99 with 0.26 standard error of mean, the variance and standard deviation for employee performance (ep) are 0.19 and 0.44, respectively, and the minimum employee performance (ep) for employees is 3.40 while the maximum is 4.60. table 5. sex and age’s crosstab. sex total male female age 18-25 83 48 131 26-35 52 28 80 36-45 24 17 41 46-55 14 13 27 56-70 8 2 10 total 181 108 289 one of the most helpful analytical techniques and a cornerstone of the data analysis sector is “cross-tabulation”. categorical data on nominal scale items are most frequently analyzed using “cross-tabulation analysis”, also known as “contingency table analysis”. “cross-tabulations” are essentially just data tables that display the findings from the entire group of people surveyed as well as findings from various subsets of participants. they enable us to investigate data linkages that may not be immediately clear when we merely examine all of the survey replies. among 289 employees working in different organizations that participated in the study, age of 83 male employees is found to be 18 to 25 years whereas age of 48 female employees is 18 to 25 years. 80 employees had age between 26 to 35 years, among which 52 were male and 12 were female, age of 41 employees is between 36 and 45 years having 24 male employees and 17 female employees, there were 27 employees that belong to age group 46 to 55 years, and number of males belonging to this age group is 14 whereas as number of female employees is 13. there were 8 male and 2 female employees that belong to age group 56 to 70 years. we may interpret the findings as: majority of male employees are young as compared to female employees that belonged to age group 18 to 25 years. table 6. chi-square. value df sig. pearson. chi-square 3.144 4 .534 likelihood. ratio 3.230 4 .520 linear-by-.linear association .121 1 .728 n, of valid cases 289 without revealing the degree or direction of the link between the variables, chi-square examines the independent row and column hypotheses. according to chi-square’s null hypothesis there is relationship amongst age and sex, whilst alternative states that there is no relationship amongst age and sex, the significance value of pearson chi-square is 0.534, which is greater than alpha (α=0.05), thus we are unable to reject the null hypothesis of relationship amongst age and sex, thus we infer that there exists a relationship amongst these two i.e. age and sex. the value of likelihood ratio is 3.20, and linear by linear association between these two i.e. age and sex is 0.121 having 1 degree of freedom. asian business research journal, 2025, 10(8): 59-72 66 © 2025 by the authors; licensee eastern centre of science and education, usa figure 3. histogram of employee performance (ep). in figure 3, there is histogram of employee performance, we plotted histogram to check normality of predictor variable that is employee performance (ep), also there is a curve on it, and the plot clearly demonstrates the presence of normality in predictor having 3.99 mean and 0.4 standard deviation. figure 4. normal p-p plot of employee performance (ep). table 7. correlations. ei ec ep ei pearson correlation 1 .085 .941** sig. (2-tailed) .151 .000 sum of squares and cross-products 39.846 2.470 44.947 covariance .138 .009 .156 n 289 289 289 ec pearson correlation .085 1 .802** sig. (2-tailed) .151 .004 sum of squares and cross-products 2.470 21.383 33.559 covariance .009 .074 .102 n 289 289 289 ep pearson correlation .941** .802** 1 sig. (2-tailed) .000 .004 sum of squares and cross-products 44.947 33.559 57.229 covariance .156 .102 .199 n 289 289 289 asian business research journal, 2025, 10(8): 59-72 67 © 2025 by the authors; licensee eastern centre of science and education, usa to get more insight into the normality of predicted variable i.e. employee performance (ep) we used normal pp plot as shown in figure 4, it shows that employee performance (ep) has a normal distribution, thus the regression assumption is full filled now, and we can further proceed for linear regression analysis to evaluate the effect of emotional intelligence and organizational commitment to the employee performance (ep). when using a correlational study design, no variables are within the researcher's direct control or manipulation. the degree and/or direction of the association amongst two (or maybe more) variables is reflected in a correlation. a correlation may go in either a positively or negatively direction. only when there is a linear relationship amongst the variables may pearson's correlation be applied. as long as there is a relationship, it can be either favorable or unfavorable. in investigations conducted inside groups, correlation is employed for assessment. the existence of a perfect positive connection between the variables in this predictive model might be a potential study hypothesis. a perfect negative connection is yet another potential study concept. if there isn't a linear connection between the variables, the null hypothesis would still apply. a measure from + 1 to -1 is used to calculate the correlation coefficient. either + 1 or -1 represents a variable's perfect or we can say complete connection with another. the correlation is positive whenever one variable rises in the same manner as the other rises; it is negative when one variable falls in the same manner as the other rises. significance value of correlation amongst emotional intelligence (ei) and employee commitment (ec) is 0.15, which is greater than alpha 0.05, due to which we infer that there is none kind of relationship amongst these two variables i.e. emotional intelligence (ei) and employee commitment (ec), the amount of covariance between emotional intelligence (ei) and employee commitment (ec) is 0.009, which is almost equal to zero and sum of squares (ss) and cross products (ss) between these two is 2.4. significance value of correlation amongst emotional intelligence (ei) and employee performance is 0.00, which is lesser than alpha 0.05, due to which are able to reject the null hypothesis stating no relationship between emotional intelligence (ei) and employee performance and we infer that there is relationship amongst emotional intelligence (ei) and employee performance. the amount of correlation is 0.94, and sign is also positive, which means there is strong positive relationship, if there will be increase in emotional intelligence (ie), there will be similar increase in employee performance (ep). the amount of covariance between emotional intelligence (ei) and employee performance (oc) is 0.156, and sum of squares (ss) and cross products (ss) between these two is 44.94. significance value of correlation amongst employee commitment (ec) and employee performance is 0.00, which is lesser than alpha 0.05, due to which are able to reject the null hypothesis stating no relationship between employee commitment (ec) and employee performance and we infer that there is relationship amongst employee commitment (ec) and employee performance. the amount of correlation is 0.802, and sign is also positive, which means there is strong positive relationship, if there will be increase in employee commitment (ec) there will be similar increase in employee performance (ep). the amount of covariance between emotional intelligence (ei) and employee commitment (ec) is 0.106, and sum of squares (ss) and cross products (ss) between these two is 33.55. figure 5. scatter plot between ei and ep. a scatter plot shows a plausible connection between two separate sets of data' observed changes. it gives an analytical and visual way to gauge how strongly two variables are related. in figure 5, a scatter plot between emotional intelligence (ei) and employee performance (ep) is displayed, employee performance (ep) is on horizontal axis, whereas emotional intelligence (ei) is on vertical axis, the plot shows that there is strong positive relationship, if there will be increase in emotional intelligence (ie) there will be similar increase in employee performance (ep). table 8. regression summary. r r. square adjusted r. square std. error. of the estimate 0.941 0.886 0.886 0.15076 maybe the most popular statistical method for determining or estimating the connection between a dependent variable and a group of independent regressors is regression analysis. in a qualitative research approach, it is also asian business research journal, 2025, 10(8): 59-72 68 © 2025 by the authors; licensee eastern centre of science and education, usa used as a catch-all phrase for a number of data analysis methodologies which are used for modelling and evaluating many different variables. the consequence or the response to a particular question is the predicted or dependent variable in the regression technique, where the independent variable is a predictor variable or sometimes also referred as an explanatory component. data modelling and analysis frequently employ regression analysis. the majority of survey analysts use it to comprehend how the variables are related, which can then be used to anticipate the precise conclusion. this method is frequently used by survey researchers to look at and determine a connection between various variables of interest. it offers the chance to evaluate the impact of several predictor factors on a predicted variable. “regression analysis” is a method that spares survey researchers extra work by eliminating the need to arrange several predictor variables in tables and test or calculate each one's impact on a dependent variable. numerous analytical techniques are frequently employed to assess novel business concepts and arrive at defensible conclusions. one of the most well-known modelling approaches is “linear regression analysis” since it was one of the first advanced regression analysis techniques that individuals learned while learning predictive modelling. here, the predictor variable is frequently continuous or discrete with a linear regression line, while the predicted variable is continuous. we employed simple linear regression model to investigate how emotional intelligence (ei) and employee commitment (ec) influence or mediate employees performance, here employees performance is the predicted variable, to whom we are going to predict, and emotional intelligence (ei) and employee commitment (ec) serves as predictor or explanatory variables. the model summary of our regression model has been given in table 8, the value of r-squared is 0.88, that elaborates that emotional intelligence (ei) and employee commitment (ec) are explaining 88% variation present in employee performance (ep), which is a good amount, thus we may infer that model is fitted good. the value of standard error of estimate i.e. for r square is 1.50. table 9. anova. sum. of squares df mean. square f sig. regression 50.728 2 25.364 1115.974 0.000 residual 6.500 286 0.023 total 57.229 288 table 9 contains anova findings, which serves as a framework for significance tests and reveals the amounts of variability present in a regression model, it also reveals information about overall fit of the model. table 9 reveal that the residual's mean square is 6.5 with 286 degrees of freedom and the model's mean square regression is 50.7 with 2 degrees of freedom. the model's overall significance is 0.00, suggesting that it is significant, with f value of 1115.974. table 10. regression coefficients. unstandardized coefficients standardized coefficients t sig. b std. error beta (constant) -.962 0.179 -5.380 0.000 ei 1.126 0.024 0.939 46.967 0.000 ec 0.136 0.033 0.022 1.113 0.006 in table 10, there are findings of regression coefficients. regression analysis employs coefficients and significance values to determine if and how strongly the model's relationships are statistically meaningful. the linear coefficient estimates provide an explanation of the statistically significant relationship between each predictor variable i.e. emotional intelligence (ei) and employee commitment (ec) and the predicted variable i.e. employee performance (ep). the statistical significance of these connections is shown by the coefficients' p values. table 10 reveals that coefficient value of constant is -0.962, and null hypothesis states “constant plays no role in predicting employee performance (ep)”, it is playing significant role since significance value is 0.00, which is less than α=0.05 due to which we rejected the null hypothesis, meaning that average employee performance (ep) will be -0.96, when all other regressors will be zero, the coefficient value of emotional intelligence (ei) is 1.12 with a standard error of 0.02, we infer that ie is playing a significant role in predicting employee performance, as its significance value is less than 0.05 so we reject null hypothesis “emotional intelligence (ie) plays no role in predicting employee performance (ep)”, and as sign of ei coefficient is positive it means there is positive relationship between ei and ep. by increase in emotional intelligence (ei) of employees, employee performance (ep) also increases in same manner. we may interpret it as unit increase in ei may cause 1.12 unit increase in employee performance (ep) of employees working in different organizations. the coefficient value of employee commitment (ec) is 0.136 with a standard error of 0.033, we infer that employee commitment (ec) is playing a significant role in predicting employee performance, as its significance value is less than 0.05 so we reject null hypothesis “employee commitment (ec) plays no role in predicting employee performance (ep)”, and as sign of employee commitment (ec) coefficient is positive it means there is positive relationship between oc and ep. by increase in employee commitment (ec) of employees, employee performance (ep) also increases in same manner. we may interpret it as unit increase in employee commitment (ec) may cause 0.13 unit increase in employee performance (ep) of employees working in different organizations. table 11. collinearity diagnostics. dimension eigenvalue condition index variance proportions (constant) ei ec 1 2.993 1.000 0.00 0.00 0.00 2 0.005 23.435 0.03 0.89 0.17 3 0.002 44.592 0.97 0.11 0.83 asian business research journal, 2025, 10(8): 59-72 69 © 2025 by the authors; licensee eastern centre of science and education, usa the regression collinearity diagnostics for employee performance has been given in table 10, the eigen value for dimension 1 is 2.99, while for dimension 2 and 3 it is 0.005 and 0.002 respectively. the condition index for dimension 1 is 1, while for dimension 2 and 3 it is 24.43 and 44.59 respectively. the variance proportion of constant for dimension 1, 2 and 3 is 0.00, 0.03 and 0.97, the variance proportion of employee intelligence for dimension 1, 2 and 3 is 0.00, 0.89 and 0.11, whereas the variance proportion of organizational commitment for dimension 1, 2 and 3 is 0.00, 0.17 and 0.83. figure 6. histogram of “regression standardized residual”. to determine if the variance is regularly distributed, utilise the histogram of the residual. the normality assumption is likely to be valid if the bell-shaped histogram is symmetric and uniformly distributed about zero. in figure 6, there is histogram for standardized residuals of regression having dependent variable employee performance (ep), the graph is showing that residuals are following normal distribution , there means is zero, and standard deviation is 1 for 289 sample size. figure 7. normal p-p plot of “regression standardized residual”. in figure 7, there is normal p-p plot for standardized residuals of regression having dependent variable employee performance (ep), on horizontal side there is observed cum probability while on vertical side there is expected cum probability, the graph is showing that residuals are following normal distribution. asian business research journal, 2025, 10(8): 59-72 70 © 2025 by the authors; licensee eastern centre of science and education, usa 5. conclusions and outlook 5.1. research conclusions table 1 this study uses emotional intelligence (ei) as the independent variable, employee commitment as the mediating variable, and employee performance as the dependent variable to explore how emotional intelligence indirectly affects employee performance through employee commitment and to verify the interplay between the three. by analyzing data from 289 valid questionnaires and combining statistical methods such as reliability testing, correlation analysis, regression analysis, and analysis of variance, the following key conclusions were drawn: first, the study confirms a significant positive relationship between emotional intelligence and employee performance. regression analysis results show that the coefficient of influence of emotional intelligence on employee performance is as high as 1.126, with a significance level well below 0.05. this suggests that employees with higher emotional intelligence tend to perform better at work, are more effective in regulating emotions, and adapt to the environment, leading to improved performance. second, employee commitment has a positive impact on employee performance. research shows that increased employee commitment (especially affective commitment) helps strengthen employees' sense of responsibility and belonging, thereby stimulating greater work motivation and ultimately resulting in improved performance. the regression coefficient for employee commitment is 0.136, also reaching a significant level. more importantly, the study found that employee commitment partially mediates the relationship between emotional intelligence and employee performance. although the direct correlation between emotional intelligence and employee commitment did not reach significance, the inclusion of employee commitment as a mediating variable significantly enhanced the explanatory power of emotional intelligence on performance, with the model's r² value reaching 0.886, indicating that 88.6% of the variance in employee performance can be jointly explained by emotional intelligence and employee commitment. in summary, this study confirms that emotional intelligence not only directly improves employee performance but also further enhances performance by strengthening employees' organizational commitment. this finding has important practical implications for corporate managers in recruitment, training, and performance management. 5.2. practical implications 1. incorporate emotional intelligence assessments into talent selection: companies should use emotional intelligence assessment tools to identify high-eq individuals during the recruitment process, thereby improving the overall quality of their employees. 2. focus employee training on emotional management and communication skills: through methods such as emotional intelligence training and situational simulations, employees' empathy, self-regulation, and social skills can be improved. 3. strengthening the cultivation mechanism for organizational commitment: by establishing a rational incentive system, cultural identity system, and career development pathways, employees' sense of identification and belonging to the organization can be enhanced, thereby strengthening their commitment. 5.3. research limitations and future prospects although this study is rigorous in its model construction and data analysis, it still has the following limitations: geographical limitations of 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(2021). team emotional intelligence from the perspective of social network. advances in psychological science, 29(8), 1381–1395. https://doi.org/10.3724/sp.j.1042.2021.01381 92 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 7, 92-104, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.503 © 2025 by the author; licensee eastern centre of science and education, usa harnessing fintech innovations for renewable energy: revolutionizing investment models to achieve sustainable development goal 7 akomolehin francis olugbenga dept. of finance, college of social and management sciences, afe babalola university, ado ekiti, nigeria. email: akomolehinfrancis@pg.abuard.edu.ng abstract in order to attain sustainable development goal (sdg) 7 access to affordable, reliable, and modern energy for all, and the energy-related sdgs (sdgs 9 and 13), innovative financing mechanisms are needed to attract a range of actors and sources of finance at scale. this paper examines the disruptive potential of fintech on the renewable energy investment model. in particular, it explores how fintechs underpinned by blockchain, crowdfunding, artificial intelligence/machine learning (ai/ml), and decentralized finance (defi) can unlock capital access, streamline transactions, and build transparency in clean energy financing ecosystems. drawing on an integrative review approach and complemented by country case studies from nigeria, kenya, and india, the article highlights patterns of how fintech apps facilitate access to inclusive, distributed, and esg-compliant renewable energy solutions. key findings indicate that fintech significantly widens access to energy finance and fosters local stakeholders, but regulation, cybersecurity, and digital exclusion present scaling challenges. the paper is rooted in financial intermediation theory and sustainable investment theory, providing a conceptual model to explore how digital innovations and policy environments interact with sustainable energy outcomes. it concludes with policy suggestions for developing enabling regulatory frameworks, strengthening digital infrastructure, and promoting cross-sector collaboration to scale up fintechfacilitated energy transitions. this study contributes to the growing body of literature on digital sustainability and offers practical guidance for policymakers and other stakeholders on connecting financial innovation with global clean energy objectives. keywords: afintech innovations, renewable energy finance, blockchain technology, sustainable development goal 7 (sdg 7), peer-topeer energy trading, digital financial inclusion. 1. introduction financialglobal energy markets are in a midst of a great transition away from reliance upon fossil fuels and toward increased deployment of renewable energy. not only is this shift indispensable to reduce greenhouse gas emissions and improve energy access, but it is also pivotal to reaching sustainable development goal 7 (sdg7), which targets universal access to affordable, reliable, sustainable, and modern energy by 2030 (united nations, 2019). financing this shift, however, is a formidable challenge, especially in emerging economies where energy poverty is the harshest. renewable energy goals at the global level are projected to need trillions in cumulative investment to achieve (international renewable energy agency (irena), 2020), however traditional finance is unlikely to be available to the extent needed, as characterized by high upfront costs, long time to approval, and risk-aversion—see (world bank, 2019). within these limitations, fintech is coming to the fore as the disruptive and transformative voice of sustainable development. deleware 4, o l bremner and a lennartz—reforms ensured the high quality of their information-technology-essential economy, faster and more secure compared to traditional financial structures, fintech innovations like blockchain, p2p (peer to peer) lending, and digital crowd-funding provide decentralized, transparent, and scalable alternatives, zhang et al. such technologies can help to democratize capital access, reduce transaction and operational costs and improve traceability and integrity in financial flows, which could lead to making renewable energy projects less risky and more attractive to financial institutions (mendes & soares, 2022). when looking at new technologies that can do this, blockchain is being increasingly identified as a technology that can facilitate secure, immutable, and transparent transactions related to energy. for renewable energy investments, blockchain technology can guide decentralized energy market structure, online peer-to-peer energy trading, and green financial instrument issuance (such as green bond, carbon credit, etc.) (saberi et al., 2021). blockchain reduces dependence on financial intermediaries and substantially reduces transaction costs as well as speeding up capital extraction for clean energy investment (pazaitis et al., 2022). mailto:akomolehinfrancis@pg.abuard.edu.ng https://doi.org/10.55220/2576-6759.503 asian business research journal, 2025, 10(7): 92-104 93 © 2025 by the author; licensee eastern centre of science and education, usa likewise, p2p lending platforms present a viable option as an alternative source of capital to banks especially for small and medium renewable energy projects which always have constraints in securing funding from institutional sources. these intermediation services enable direct contact regarding loan or credit provision, and lend support to more inclusive and flexible financing products that incorporate social and environmental impact objectives (de la hera et al., 2020 ). thus p2ps are positioned to fill the credit access holes through collaborative finance particularly at niche markets (mansour, 2021) where rescue metrics are integrated into their investing decision (hussain et al., 2023). crowdfunding stands as another disruptive fintech toolsthatinvolve in democratizing renewable energy finance. online portals allow developers of renewable clean energy projects to solicit investments directly from individuals, communities and mission-aligned investors, avoiding reliance on conventional capital markets (shneor et al., 2020). this process not only increases financial inclusion but also fosters a sense of community involvement and project ownership —both of which are vital for long-term sustainability and energy justice (belleflamme et al., 2022; hörisch, 2021). notwithstanding the great promise associated with these fintech applications, their application in renewable energy finance is relatively young and up against several structural challenges. however, regulatory ambiguity, cybersecurity challenges, poor digital infrastructure, and lack of uniform operational guidelines limits wider uptake (boreiko & massarotti, 2022). there is, furthermore, little robust empirical evidence on the impact, scaleup potential, and sustainability of these innovations, especially in low and lower middle income countries (lmics) (zhao et al., 2023). against this background, this paper examines the potential of financial innovations in the fintech sector to transform investment models in renewable energy for sdg 7. it examines how blockchain, p2p lending, and digital crowdfunding can close financing gaps and democratize access to capital and create transparent and inclusive energy financing systems. drawing on financial technology, energy policy, sustainable development, and crossdiscipline topics, this research adds to a growing body of literature on digital finance for climate and energy. the results of the report provide useful guidance for policy makers, development finance institutions, investors, and project developers who want to use technology-based financial instruments to scale up investment in renewable energy. 2. conceptual and theoretical review 2.1. conceptual review the deployment of financial technology (fintech) in renewable energy finance is a game changer in how capital is raised, utilized, and managed for clean energy projects. the proposed nexus, which combines the intersection of the innovation diffusion theory and the sustainable investment architectures, is expected to offer a better understanding about how fintech mechanisms (i.e., blockchain technology, digital crowdfunding ai/ml, and defi) can reconfigure the conventional investment landscape to contribute to meeting the sustainable development goal 7 (sdg 7). blockchain technology is the underlying infrastructure for transparency, security and disintermediation in renewable energy finance. using decentralized ledgers and smart contracts, blockchain makes traceable, tamperproof transactions which don’t need intermediaries or central authorities. this enables decentralized power trading markets, tokenized green assets and, automated issuance of green bonds leading to an increased confidence for the investors and higher market liquidity (saberi et al., 2021; pazaitis et al., 2022). in the particular case of energy financing, blockchain enables transparent, on-the-fly verification of energy output, carbon credits, and financial flows, establishing tangible and credible links between impact and investment. crowdfunding gets clean energy finance to the people today, however, an increasing number of platforms are relying on digital technology and social connections to bring renewable energy investment to the masses. these platforms allow people, communities, and impact investors to finance energy projects—particularly small-scale community-government projects—without the need for major institutional financing. crowdfunding further supports financial inclusion and local ownership, by enabling retail investors to invest according to their values and sustainability preferences (shneor et al., 2020; belleflamme et al., 2022). in addition, the participatory aspect of crowdfunding often triggers increased stakeholder involvement and ongoing commitment to the transition to renewables. ai/ml provide with sophisticated data analytic tools to increase the accuracy, speed and safety of financing decision-making for re. ai models can analyze a borrower’s credit history by using nontraditional data sources, thus allowing for more inclusive credit scoring, particularly in markets where no credit history exists (mansour 2021 ). it can also leverage predictive analytics to fewer costs of compliance, more funds for innovation 2014 ca and the ca logo as mentioned earlier, providers can cut costs in compliance and utilize the savings in new areas service infrastructure, such as energy pricing models, detection of fraud in finance organizations and demand forecasting for grid planning. both of them can thus improve the reliability and responsiveness of clean energy financing mechanism as well as reduces transaction costs and human errors. decentralized finance (defi) is the next frontier of fintech disruption and enables the execution of programmable, permissioned and composable services that leverage blockchain protocols. by leveraging smart contracts, the defi platforms can help to automate lending, borrowing and yield farming activities for renewable energy projects, which eliminate the centralization of financial intermediaries or gatekeepers (schär, 2021). these distributed architectures not only speed and improve the flexibility of capital allocation, but also reduce operational costs and reduce costs to entry for small energy producers, enabling a more inclusive, agile energy finance community. these fintech mechanisms are conceptually related to clean energy finance through a few primary mechanisms: access to capital, transaction efficiency, and investment transparency. fintech does two things in the first instance: it broadens access to capital by providing alternative and disintermediated pools of capital that are accessible even to underserved or completely un-banked users. second, it improves efficiency by simplifying the flow of work and optimizing the costs and time needed for classical finance. third, it increased transparency and accountability asian business research journal, 2025, 10(7): 92-104 94 © 2025 by the author; licensee eastern centre of science and education, usa through the integration of transparency-technologies as well as data/integrity technologies in financial transactions and project results. as a whole, these advances fundamentally redesign the ecosystem of finance underpinning sdg 7. the framework argues that, through the appropriate pairing with enabling regulatory environments and institutional capabilities – fintech can reduce financial obstacles, mitigate investments risks in renewables, and support broader access to the worldwide clean energy transition. this construct establishes the basis for unpacking the operative paths by which fintech applications are facilitating sustainable and scalable energy solutions in different economic contexts. figure 1. conceptual framework: fintech innovations for clean energy financing toward achieving sdg 7. this conceptual framework illustrates how fintech mechanisms—blockchain, crowdfunding, ai/ml, and defi—collectively enhance capital access, transaction efficiency, and investment transparency. these elements converge to strengthen clean energy financing systems, addressing critical barriers in renewable energy investment. by streamlining financial flows and democratizing access, fintech innovations significantly contribute to accelerating progress toward sustainable development goal 7 (sdg 7). figure 2. extended conceptual framework: fintech innovations, mediating and moderating factors in clean energy financing for sdg 7. this extended conceptual framework highlights how fintech innovations—blockchain, crowdfunding, ai/ml, and defi—impact clean energy financing through key mediating factors: capital access, transaction efficiency, and investment transparency. these mechanisms are influenced by moderating conditions such as institutional asian business research journal, 2025, 10(7): 92-104 95 © 2025 by the author; licensee eastern centre of science and education, usa readiness and regulatory environment, ultimately shaping clean energy outcomes and advancing sustainable development goal 7 (sdg 7) in both developed and emerging economies. 2..2. theoretical framework ththe study of financial technology (fintech) as an enabler in fast-tracking investment in renewable energy and the attainment of sustainable development goal 7 (sdg 7) needs a solid theory investment. a multidimensional lens that draws from financial intermediation theory, diffusion of innovation theory and sustainable investment theory is used in this paper. specifically, these theories together present a multi-faceted framework for interpreting processes of how fintech innovations— including blockchain, crowdfunding, artificial intelligence and machine learning (ai/ml), and decentralized finance (defi)— reshape conventional financing models and facilitate clean energy development. financial intermediation theory, as developed by gurley and shaw (1960), suggests that intermediaries are necessary to lower the real costs of engaging in both the production and exchange of information and to provide efficient means through which savings and borrowers can be matched. conventional financial intermediaries, like banks and development finance institutions, have generally been the dominant channels for clean energy finance. but, such organizations are often found to be relatively shackled by regulation, they have only a modest access and their investment behaviour quite conservative, and in particular as regards the funding of decentralized or small scale renewable projects (allen & santomero, 1997). it is in this backdrop that innovations (fintech) are chipping this landscape by cutting through financial intermediation. on the other hand, blockchain can assert peer-to-peer trustless transactions, crowdfinding platforms democratize capital raising, and directly match with investment, energy developers over investors with no need to go through traditional credit intermediaries lending channels (zhang et al., 2021; pazaitis et al., 2022). these solutions accelerate financing and lower the barriers to entry by increasing the number of players who can invest in clean energy, which in turn achieves greater efficiency of capital flows and greater access to finance. this is complemented by a macro-structural view, incorporating the famous theory progression of diffusion of innovation (rogers, 2003), which describes how innovations are adopted and spread in societies throughout time. the adoption of fintech in re is influenced by the perceived innovation attributes: relative advantage, compatibility, complexity, trialablity and observability. the transparency, immutability and decentralization of the blockchain, for example, renders it especially appropriate for trust-building in energy transactions and verification of green assets (saberi et al., 2021). crowdfunding platforms appeal to socially responsible investors interested in handson involvement in meaningful projects (shneor et al., 2020). ai also fosters more comprehensive and data based risk profiling as it allows for newfangled credit models to reach unbanked segments (mansour, 2021). the penetration of these technologies is shaped by forces, however, that moderate and reshape the adoption and implementation of these technologies, such as the readiness of institutions to support them, regulatory regimes, digital infrastructure, and cultural acceptance, that in turn shapes the speed, scale, and equity of adoption in various contexts. value basedvalue based :this theory posits that investment decisions should not be made based on the financial data alone, but also consider other factors such as “the economic and societal cost of connecting” the esg factors. philosophically solidly based on long-termism and stakeholder theory, it acknowledges that the use of capital must be consistent with societal aims more broadly, such as climate mitigation, energy justice and inclusive development (sullivan & mackenzie, 2017). fintech solutions support these guidelines through the provision of platforms and protocols enabling impact measurement, transparency and accountability. for instance, blockchain makes traceable green bond issuance and carbon credit verification (boreiko and massarotti, 2022); artificial intelligence powers esg scoring and sustainability risk assessment; defi protocols enable programmable investments against environmental thresholds; and crowd-funding nurtures contested locally owned and civicparticipant energy transition (belleflamme et al.2022. these fintech apps translate the message in sustainable finance by integrating esg in the very foundation of investments. combined, these three theories offer a dynamic and comprehensive perspective on how and why fintech innovation and clean energy financing intersect. understandably the structural shift in financial markets is informed by smith-mencka’s financial intermediation theory; the adoption and scaling of fintecs by drucker’s time, talent and knowledge society through the lens of diffusion of innovation theory; and their alignment with long-term environmental and social objectives through governance on digital finance by using sustainable investment theory. in summary, this study also relies on a dual theoretical framework: financial intermediation theory is mobilized to examine how fintech mechanisms reshape the acce ss to and efficiency of capital flows, while sustainable investment theory informs the analysis of the alignment of these mechanisms with sustainability and climate goal s at large. the diffusion of innovation theory indeed is a complementary approach to understand the adoption behaviour and contextual triggers or obstacles. this combined theoretical basis is the analytic scaffolding 9 10 to investigate how fintech innovations can disrupt investment models and accelerate towards achieving sdg 7. 2.3. empirical review the intersection of financial technology (fintech) and renewable energy investment has received academic and policy attention in recent years, largely as a response to the financing constraints of sustainable development goal 7 (sdg 7)—universal access to affordable, reliable, sustainable and modern energy. an emerging literature delves into the prospects for new fintech business models to transform direct investments into financing solutions, and work to create more inclusive, efficient, transparent energy systems. this article provides a review and synthesis of the existing literature on four major fintech innovations—blockchain, crowdfunding, artificial intelligence (ai) and machine learning (ml), and decentralized finance (defi)—and their uses within the renewable energy domain. 2.3.1. fintech and financing of renewable energy conventional financial systems have found it difficult to adapt to the decentralized, capital-intensive and riskembracing dimension of investments in renewable energy, especially in developing countries (irena, 2020; world bank, 2019). in return, fintech has become a disruptive catalyst in connecting capital voids while driving down asian business research journal, 2025, 10(7): 92-104 96 © 2025 by the author; licensee eastern centre of science and education, usa economic walls. according to zhang et al. (2021), through fintech, money and information can flow through new channels without traditional intermediaries, which contribute to financial inclusion and green investment. fostering investments consistent with esg principles devices for robo advice in the fintech sense model investing decisions in an esg-compliant way as underlined by boreiko and massarotti (2022). 2.3.2. applications of blockchian in clean energy the focus and attention of the power community on blockchain technology has the same logic of being driven by the utility of the technology to improve transparency, lower transaction costs, and to enable decentralized trading systems. saberi et al. (2021), blockchain supports direct p2p energy trade, instantaneous transaction payment, and renewable energy asset tokenization, leading to energy democratization. pazaitis et al. (2022) illustrate how blockchain can be employed to verify carbon credits and support green bond issuance, as a trustenabling infrastructure around esg-linked finance. however, adoption is limited due to regulatory ambiguity, complex technology, scaling in the developing world (zhao et al., 2023). 2.3.3. crowdfunding & community finance such platforms have emerged as key facilitators in driving grass-roots investment in local renewable projects. shneor et al. (2020) explain that crowdfunding enables participatory finance with individuals and communities cofinancing solar mini-grids and bioenergy systems. belleflamme et al. (2022)) underscore how equityand rewardbased crowdfunding models have succeeded in engaging retail investors with green energy startups, in particular through the value-based connection to sustainability. yet some doubts still arise about investors protection, due diligence for ensuring that small projects are not already collapsed and non-institutionally funded crowdfunding projects will survive in the long time (de la hera et al., 2020). 2.3.4. risk assessment and optimization using ai and machine learning credit scoring, fraud detection, and financial forecasting in energy finance are increasingly becoming augmented by ai and ml technologies. mansour (2021) shows how ai-driven alternative credit scoring can improve financial inclusion of underbanked renewable energy (re) entrepreneurs. ai also supports dynamic pricing, load prediction and predictive analytics for energy demand, thus improving project feasibility and financial planning (wang et al., 2021). however, the dependence on high-quality data and concerns of algorithmic bias make equitable implementation challenging (hussain et al., 2023). 2.3.5. defi and programmable investments defi is a budding subsect of fintech that uses blockchain technology to provide decentralized lending, borrowing, and asset management without the need for traditional intermediaries. schär (2021) [informal comments, 5] describes defi protocols as providing programmable finance – smart contracts that automatically implement investment criteria like sustainability thresholds or emission limits. this feature is especially applicable for green finance where performance-based investment models are gaining significant importance. but the volatility of defi markets and lack of established regulatory structures pose risks for large investors (aramonte et al., 2022). 2.4. gaps in the literature although the literature demonstrates the transformative role of fintech in green finance, there are still some gaps. first, many articles are merely about the functionality of the technology without a fair assessment of the project success, social equity, or environmental performance. second, evidence from empirical studies on the fintechenabled energy finance are primarily focused on developed markets, with a dearth of studies in subsaharan africa, where access to finance is most problematic (mendes & soares, 2022). third, no integrative study on the composite impact of multiple fintech tools―blockchain, crowdfunding, ai, and defi together―on one financing mode. finally, little is known about mediating or moderating variables: i.e., the readiness of regulation (susskind, 2013) or the willingness of agents in the renewable energy field (hdr) and omnibus law, 2020). 3. methodology this piece is designed as a qualitative, multi-method study appropriate for an interdisciplinary examination at the intertwined nodes of fintech, renewables and sustainable development. because fintech applications in renewable energy finance are still developing and are contextually embedded, the methodology combines desk research, integrative literature review and multi-case study approach to provide conceptual rigour and empirical applicability. this architecture allows for testing of new financial architectures and their effects on sdg 7 (in particular in developing and transitional economies). 3.1. research design and approach the research is explorative in nature and the methods of interpretation and analysis occupy a more important place than those of testing hypothesises. the justification for this is that there is a requirement to comprehend the complicated concepts that are associated with how fintech innovations, such as blockchain, crowdfunding, ai/ml, and decentralized finance (defi), alter the investment patterns for renewables. because of the novelty of fintech apps in this domain and the limited amount of empirical evidence from across regions, qualitative studies provide rich contextualization, thematic exploration, and theory-generative research. 3.2. data sources the research is based on secondary data from academic studies, policy papers, regulatory reports, fintech white papers, and international institutions' databases. fintech and green finance trends you can learn from fintech and green finance trends you can learn from no-header article text published 2017-10-03 reference to fintech in the scientific papers also reads with a pixel weight (http://www.50partners.com/wpasian business research journal, 2025, 10(7): 92-104 97 © 2025 by the author; licensee eastern centre of science and education, usa content/uploads/2016/05/fintech_colorspace.pdf) in this edited volume, for instance, scopus-indexed journals, such as sciencedirect, springerlink, wiley, and emerald insight to name a few, offer academic perspectives on fintech and green finance trends. institutional sources constitute reports, papers and documents from irena, unsdg, world bank, afdb and iea. moreover, reports and working papers from major fintech platforms and blockchain consortia are referred to for practical applications within energy finance ecosystems. 3.3. literature selection and review process the review is conducted using an integrative review approach to integrate knowledge across inter-discipline fields and learn from a range of literatures. this focus makes sense in terms of theorising about the convergence of finance, technology, and sustainability in relation to energy access. the search strategy is in accordance to the preferred reporting items for systematic reviews and meta-analyses (prisma) guideline for qualitative syntheses. the following keywords have been used: fintech and renewable energy, blockchain and energy finance, ai and sustainable investment, crowdfunding and sdg 7, defi and energy access, green digital finance. eligibility criteria peer-reviewed published studies between 2018 and 2024 focussing on fintech in clean energy or esg-aligned finance. excluded are editorials, speculative opinion pieces and publications lacking an appropriate methodological description. figure 3. prisma 2020 flow diagram. 3.4. case study selection and framework to contextualize the conceptual insights, multiple case studies are incorporated, focusing on countries where fintech innovations are actively supporting renewable energy deployment. these include: nigeria: crowdfunded solar mini-grids and mobile payment integration. kenya: m-pesa-based financing of off-grid clean energy systems. india: blockchain-enabled peer-to-peer energy trading platforms. germany/estonia: tokenized green bonds and defi-based green finance pilots. the case selection criteria include geographical diversity, innovation maturity, and demonstrable impact on energy access or financing mechanisms. each case is examined using a thematic framework comprising innovation type, regulatory environment, capital mobilization model, esg alignment, and outcome effectiveness. 3.5. analytical strategy the data is analyzed using thematic content analysis, organized around four analytical dimensions: mechanism of fintech innovation (e.g., blockchain architecture, ai algorithm, defi protocol), financing model (e.g., p2p lending, crowdfunding, tokenization) outcomes (e.g., improved access to capital, enhanced transparency, esg compliance), enabling or moderating factors (e.g., regulatory frameworks, institutional capacity, technological infrastructure). nvivo or atlas.ti software tools are optionally applied for coding literature and policy texts where needed, ensuring a consistent coding scheme for pattern identification. 3.6. trustworthiness and rigor for rigor, the study follows lincoln and guba (1985) qualitative research trustworthiness criteria of credibility, transferability, dependability, and confirmability. credibility is established using various sources of data triangulation. detailed contextualization aids in transferability. dependability is established by documenting the analysis process, and confirmability is achieved by citing publicly available data sources and published evidence. asian business research journal, 2025, 10(7): 92-104 98 © 2025 by the author; licensee eastern centre of science and education, usa 3.7. ethical considerations since the research is purely based on secondary data and published literatures, a research of this nature confirms its non-human subject benefit and not involving the ethical issues related to primary research. however, i am careful to cite sources, because that of course is part of getting the data right and abiding by the ethical practices of academic research. 4. case study and comparison of alignment the use of fintech advances in financing renewable energy is more and more apparent in emerging and transitional economies. this chapter focuses on three country-level examples nigeria, kenya, and india to discuss how different types of digital tools, namely blockchain, crowdfund, and mobile fintech solutions are transforming access to clean energy finance. each case is analyzed according to fintech modality, financing architecture and synergy with sustainable development goal 7 (sdg 7), and compared in relation to lessons and scalability factors. 4.1. nigeria: crowdfunded solar mini-grids energy access still presents an enormous challenge for over 85 million nigerians who are without access to sustainable power (iea, 2021). the conventional grid expansion is still not economically and practically viable for isolated regions, which has led to the emergence of off-grid renewable energy solutions like solar mini-grids. crowdfunding networks such as havenhill synergy, allon and the renewable energy performance platform (repp) have also enlisted small-scale private financing to fund solar mini-grids in rural areas. via online platforms, they combine investment from individual and institutional investors (reward and debt-based models). these platforms have succeeded thanks to their transparency, low investment thresholds and social impact narratives, all catering to impact-oriented investors and diaspora communities (shneor et al., 2020; belleflamme et al., 2022). for instance, havenhill’s crowdfunding provided for the installation of solar microgrids to underserved villages in abuja and nasarawa states, marrying technology access with community participation (repp, 2021). these interventions use digital monitoring instruments for performance monitoring and mobile-based repayment structures that increase financial accountability and user affordability. 4.2. kenya: m-power integration in off-grid renewable projects kenya is a global leader in harnessing mobile fintech for inclusive energy access. over 70% of adults are using mobile money platforms (mainly m-pesa), and the country has built a strong ecosystem for pay-asyou-go (payg) solar systems. firms such as m-kopa solar, azuri technologies and d.light, operate in a similar manner—these companies employ mobile fintech platforms to supply off-grid households with solar lighting, mobile charging and efficient appliances on pay-as-you-go terms (kudo et al., 2021). the fintech service in kenya leverages mobile payments, id systems, and aidriven credit scoring to enable real-time, risk-mitigated energy lending. these new technologies enable unbanked communities to apply for clean energy without the need for any collateral or investment up front (hussain et al., 2023). the convergence of mobile fintech with energy service delivery contributes not just to sdg 7 but also intersects with sdg 1 (no poverty) and sdg 9 (industry, innovation and infrastructure) by promoting entrepreneurship and digital inclusion. 4.3. india: blockchain-enabled peer energy trading india is integrating blockchain-powered peer-to-peer (p2p) energy trading to increase grid flexibility and decetralize energy access. the uttar pradesh power corporation ltd. and bihar state power holding company have worked with power ledger (an australian blockchain company) to trial decentralized energy markets in parts of their urban and peri-urban areas (power ledger, 2020). these markets enable households with rooftop solar power (prosumers) to sell electricity to their neighbors directly using smart contracts and blockchain ledgers. the blockchain-based infrastructure allows secure, transparent, and real-time energy settlement to minimize the transaction costs and inefficiencies of centralized utilities (saberi et al., 2021; pazaitis et al., 2022). energy tokens are transferred to customers when they get surplus power back and can either be cashed or used as reinvestment into the circular energy economy etc. the regulatory sandbox and digital utility reforms of the indian government, on the other hand, have enabled these pilots, effectively making india one of the first of the emerging economies to be experimenting with scalable blockchain solutions in the retail energy market (zhao et al., 2025). figure 4. blockchain-based peer-to-peer energy trading model. this comprehensive diagram illustrates a blockchain-based peer-to-peer (p2p) energy trading model, where energy prosumers with solar or wind generation trade excess power directly with consumers through a asian business research journal, 2025, 10(7): 92-104 99 © 2025 by the author; licensee eastern centre of science and education, usa decentralized ledger system. smart contracts automate payments, and tokenized energy units facilitate secure, transparent, and real-time settlements. the model promotes efficiency, reduces intermediaries, and supports localized, low-carbon energy economies.saberi et al., 4.4. lessons learnt and scalability across comparisons these three cases bring out the themes of how fintech is fast tracking the deployment of renewable energy. first, the technology aligns with user behavior, driving strong adoption rates; witness mobile money in kenya or social media-based crowdfunding in nigeria. second, the digital financial inclusion is strategic in achieving penetration to the underbanked segments, and it permits small-ticket investments as well as micro-repayments, which the traditional bankers cannot support (mansour, 2021). but disparate levels in regulatory preparedness, infrastructure development and digital literacy mean different paths to scalability. the success of india’s blockchain is supported by the proactive energy regulation and the sophisticated ict infrastructure cycle, and nigeria’s crowd funding models, which are very reliant on diaspora and philanthropic capital, are not completely institutionally embedded in the support structures. kenya’s mobile-first ecosystem, supported by the ubiquity of m-pesa, demonstrates how fintech has been integrated into service delivery models to achieve larger social impact. scalability, in turn, depends on several convergent elements: (i) regulatory environment, including regulatory support in the form of sandboxes and licensing regimes; (ii) institutional capacity, chiefly, but not exclusively, among utilities and start-ups; (iii) access to infrastructures (in particular mobile and digital connectivity); and (iv) collaboration with the ecosystem including government, donor and investment partners. all of these variables will influence the extent to which fintech-driven energy models can evolve from tests to system-wide applications, which are significant contributors to the sdg 7 targets. table 1. comparative table: fintech applications in renewable energy finance. 5. policy and regulatory: implications the successful incorporation of fintech solutions in renewable energy finance are inherently contingent on a supporting policy and regulatory framework that juxtaposes the digital financial systems with sustainability goals. central banks, financial regulators, and energy commissions, and so on, are all involved in (perhaps unconsciously) shaping the institutional architecture which dictates the patterns of capital flow, operation of financial technologies and progression of energy markets. their interventions influence the uptake of technologies including blockchain, peer-to-peer lending and defi, and their supervision is instrumental in maintaining a balance between innovation and systemic stability (arner et al., 2016). central banks, in particular, play a crucial role in framing the regulatory environment for digital payments, mobile money platforms, and open banking systems—technologies that underpin fintech-enabled energy access, especially in ‘off-grid’ rural populations (ozili, 2018). figure 5. benefits of blockchain in renewable energy markets. this diagram highlights the comprehensive benefits of blockchain in renewable energy markets. it showcases how blockchain enhances transparency, reduces transaction costs, automates contract execution, facilitates decentralized energy trading, and improves traceability of green assets. by removing intermediaries and enabling country fintech application technology used key actors regulatory support outcomes challenges nigeria crowdfunding for solar mini-grids crowdfunding platforms, mobile payments, digital monitoring havenhill synergy, repp, allon limited; evolving regulatory framework for crowdfunding expanded rural energy access, community engagement, diaspora investment low regulatory clarity, reliance on donor and diaspora capital kenya mobile pay-asyou-go (payg) solar systems m-pesa, aidriven credit scoring, mobile platforms m-kopa, d.light, azuri technologies strong; wellestablished mobile finance ecosystem inclusive access for unbanked populations, improved payment flexibility affordability at scale, cybersecurity vulnerabilities india blockchainenabled peer-topeer energy trading blockchain, smart contracts, iot integration power ledger, uttar pradesh and bihar utilities supportive pilot programs via regulatory sandboxes transparent energy trading, reduced transaction costs scalability, integration with national grid, legal ambiguity asian business research journal, 2025, 10(7): 92-104 100 © 2025 by the author; licensee eastern centre of science and education, usa real-time, tamper-proof data flows, blockchain fosters trust, scalability, and financial innovation in clean energy systems. saberi et al., 2021. an increasingly successful tool to foster innovation and safeguard regulation at the same time, are regulatory sandboxes. these are sandboxed domains where fintech enterprises can try out new models — they might include using artificial intelligence in credit assessments for off-grid energy projects, or using blockchain-based systems to trade energy — in restricted pilot areas under short-term waivers or limited licenses, under the watch of financial authorities. regulatory sandboxes have been successfully implemented in countries including nigeria, kenya and india, in the latter case where financial innovation units within central banks have teamed up with energy agencies to test inclusive and green finance solutions (zetzsche et al., 2017; di castri & plaitakis, 2021). regulators can use these frameworks to observe the evolution of risks and facilitate market experimentation. alongside sandboxes, sustainability and financial inclusion objectives are gaining traction in national digital finance strategies. for example, in kenya, the national treasury digital finance policy (2020) lists green finance and renewable energy investment as targeted areas for digital finance scale up. governments could use fintechs to leverage private capital towards renewables more effectively by embedding esg considerations into fintechs and providing incentives, such as tax relief or concessional finance, to help them steer finance towards sustainability-aligned projects (ifc, 2021). still, the potential of fintech for renewable energy finance remains limited by entrenched structural impediments. these include, but are not limited, to a digital divide expressed as the uneven access to internet infrastructure, digital equipment, and digital literacy, especially among rural areas, women, and the poor. this cleft impedes broad participation in fintech platforms and worsens inequalities of access to clean energy and financial inclusion (world bank, 2022). furthermore, fears over cyber security are mounting as fintech platforms manage more and more customer data and transactions. (2022) also argue that breaches in data, system, and fraud protections can lead to a loss of trust and investor confidence, and that this is especially the case where cyber security regulation is lacking or unevenly applied. there is also a legal uncertainty of smart contracts, tokenized energy assets as well as cross-border defi transactions that generate regulatory complications. most developing nations do not yet have any comprehensive legal framework to facilitate the decentralized paradigm, which has given rise to ambiguous white spots and therefore to obstacles for institutional investors becoming involved and for the long term scalability (ghosh & ghosh, 2022). navigating these issues will require multi-stakeholder governance that involves financial, energy, and digital regulators. collaboration between fintech developers, utilities, regulators, and civil society is critical and must be driven across the sector in order to co-create regulatory environments that promote innovation and protect the public. these frameworks must be developed with interoperability, digital inclusion and sustainability at their heart. the systemic impact of fintech to democratize renewable energy finance will be limited by infrastructure and incumbents’ inertia unless policy integration is pursued deliberately. as such, a proactive, forward-looking approach to regulation is necessary to capture the complete potential of fintech policy to facilitate clean energy transitions and to hasten progress on sdg 7 (united nations, 2019; zhang et al., 2021). 6. findings and discussion this article reviews literature, policy documents, and international cases and shows that financial technology (fintech) is gradually changing renewable financing by facilitating access to capital, improving investment efficiency, and promoting transparency. such changes are of particular importance in developing and transition economies where energy access continues to be hindered by a lack of infrastructure and barriers related to traditional financing. the results highlight three key mechanisms by which fintech solutions—blockchain, crowdfunding, artificial intelligence and machine learning, (ai/ml) and decentralized finance (defi)—can help achieve sustainable development goal 7 (sdg 7). figure 6. ai integration in renewable energy systems. this diagram illustrates a comprehensive integration of artificial intelligence (ai) across the renewable energy system. it shows how ai supports energy forecasting, predictive maintenance, dynamic load management, grid optimization, and real-time trading. through machine learning and smart sensors, the system improves efficiency, reduces downtime, and facilitates intelligent energy distribution aligned with sustainability goals.wang et al., 2021 first, fintech significantly expands access to capital for renewable energy projects. crowdfunding and peer-topeer (p2p) lending platforms have emerged as effective alternatives to traditional financing, enabling small and medium-scale developers to raise funds from retail and impact investors. evidence from nigeria shows that crowdfunded solar mini-grids successfully mobilize diaspora capital and promote energy inclusion in underserved communities (repp, 2021). similarly, kenya's use of mobile-money platforms like m-pesa to support pay-as-yougo (payg) solar systems demonstrates how digital financial tools can empower previously unbanked populations asian business research journal, 2025, 10(7): 92-104 101 © 2025 by the author; licensee eastern centre of science and education, usa to access clean energy (kudo et al., 2021). these mechanisms decentralize financial decision-making, bypass credit gatekeepers, and foster localized ownership—features that are especially valuable in contexts where institutional finance is absent or risk-averse. figure 7. smart grid architecture incorporating fintech solutions. this diagram presents a smart grid architecture integrated with fintech solutions, where renewable sources like solar and wind are connected to smart meters, storage systems, and decentralized markets. fintech applications enable real-time payments, data analytics, and customer engagement through blockchain, mobile platforms, and ai. the system ensures efficient energy flow, transparency, and financial inclusivity across the energy value chain. zhang et al., 2021 second, fintech enhances the efficiency and scale of renewable energy financing by utilizing advanced analytics and digitalized infrastructure. dynamic credit scoring, load forecasting and fraud detection leveraged by ai/ml tools have helped improve the accuracy and speed in delivery of financial and energy services (mansour, 2021; wang et al., 2021). in india, the introduction of blockchain-facilitated peer-to-peer energy trading platforms has shown promise in driving down transaction costs and enabling settlement to be made more speedily through smart contracts and distributed ledgers (power ledger 2020). these advancements decrease both the cost and cycle time of energy financing and open up new business models, which were not possible with traditional financing models. third, fin-tech-powered traceability and real-time monitoring tools have helped improve transparency & accountability in clean energy finance. blockchain technologies can make it possible to verify that green assets perform as promised, and to issue digitalized financial instruments, such as green bonds and carbon credits (saberi et al., 2021; pazaitis et al., 2022). the suite of tools are especially powerful in attracting institutional and impact investors, who are increasingly asking for measurable environmental and social impacts. fintech and the incorporation of esg metrics the incorporation of esg metrics into digital finance ordinances brings investor expectations into deeper alignment with underlying project performance, thereby contributing toward a more sustainable future. on the negative side, however, the results also present barriers and contextual limitations that prevent the exploitation of full potentials of fintech in the renewable energy finance. a key challenge is the digital divide, which limits the reach and impact of fintech platforms for marginalised groups, particularly in rural and low income areas (world bank, 2022). further, cybersecurity weaknesses and regulatory ambiguity, especially regarding defi protocols, smart contracts and cross-border deals, also present threats to trust and scalability (ghosh & ghosh, 2022; boreiko & massarotti, 2022). this suggests that while fintech can reduce inefficiencies in energy finance, its efficacy depends very much on facilitating policy contexts, digital infrastructures, and institutional capabilities. the conversation confirms the theoretical foundations of the study as well. under a financial intermediation theory approach, fintech explains how financial intermediaries’ role change by facilitating decentralized capital movements and lowering transactional issues (allen & santomero, 1997). using diffusion of innovation theory (rogers, 2003), the adoption of fintech in renewable energy follows trends in innovation adoption, more so influenced by perceived value, trialability and contextual factors. sustainable investment theory is also reinforced as esg benchmarking and impact verification tools become more integrated in the design of fintech platforms, encouraging the long-term integration of values and responsible investment practices (sullivan & mackenzie, 2017). the results of this study note that those fintech innovations are technologically transformative and structurally disruptive, meaning involving them democratize access, improve efficiency and reinforce accountability in the context of renewable energy finance. nevertheless, these platforms' scale, and utility is contingent upon overcoming systemic obstacles such as legal uncertainty, cybersecurity infrastructure, and the digital competence of end-users. this informs the need for future research to incorporate these insights as elements of larger financial and energy policy frameworks that accommodate a fintech as an enabler—rather than just an efficiency driver— for just and sustainable energy transitions in the global south. 7. conclusion and suggestions this article aims to explore how fintechsolutions – in the form of blockchain, crowdfunding, artificial intelligence/machine learning (ai/ml), and decentralized finance (defi) – are disrupting renewable energy investments models and supporting the attainment of sustainable development goal 7 (sdg 7). the research is primarily informed by integrative literature review, policy analysis and cross-national case studies, and has revealed that fintech shows great potential in transforming financing of clean energy by providing better access to capital, making transactions more efficient, and by improving transparency and traceability. asian business research journal, 2025, 10(7): 92-104 102 © 2025 by the author; licensee eastern centre of science and education, usa the results emphasize that fintech platforms are facilitating new types of decentralized, inclusive and scalable sustainable energy finance – especially in growth markets such as nigeria, kenya and india. in this way, fintech is not just tackling age-old challenges to financing, but also enabling communities locked out of funding sources to be part of the transition to clean energy. innovations like mobile-enabled payg models, blockchain-powered energy trading, and digital crowdfunding are disrupting the geography of financial intermediation and driving lower-level investment streams. nevertheless, the study also highlights important constraints and contextual risks for attention. the digital divide still represents a significant barrier to the inclusiveness of fintech-enabled energy solutions. cybersecurity exposure, uncertainty about defi and smart contract legalities, and the lack of harmonized regulations still present challenges to further scale and trust in fintech. implications-these findings indicate that although fintech innovations are inherently transformative, their sustained transformational effects largely depend on enabling institutional contexts, effective governance frameworks and inclusive digital infrastructures. in view of this awareness there are the following recommendations made by the study: policymakers and regulators need to develop flexible, innovation-friendly regulatory environments that encourage fintech experimentation, before safeguarding consumer protection and data security, for example through mechanisms such as regulatory sandboxes. the convergence of regulations among financial and energy fields is essential for the scaling of integrated solutions. dfis and multilateral institutions should finance digital infrastructure and capacity-building programs, especially in low-income and rural areas, in order to narrow the digital divide and improve access to fintech by renewable energy stakeholders. fintech and energy developers should focus on inclusive design by incorporating environmental, social and governance (esg) metrics, affordability mechanisms and localized ui, to ensure that financial and technological innovation is integrated with social equity goals. the intersection between fintech, energy access, and sustainability deserves more attention by scholars, nongovernmental organizations, think tanks, and the research community, especially in under studied regions. given the paucity of evidence regarding the long-term (and perceived) developmental, risk and socioenvironmental implications of fintech-driven clean energy projects, there is need for empirical research to guide real-time policies. cross-sector alliances between governments, fintech providers, utilities, civil society, and the private sector must be enhanced to develop collective innovation systems that can pool a range of financial resources towards universal energy access. fintech is, in sum, a key facilitator of the energy transition. when used in a thoughtful and transparent manner, it has the potential to unlock new paths to reach sdg 7 – to make universal and affordable, reliable, and modern energy services a global and common reality. references allen, f., & santomero, a. m. 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(2023). blockchain for energy finance in developing economies: constraints and potential. energy reports, 9, 12156–12172. https://doi.org/10.1016/j.egyr.2023.03.122 https://doi.org/10.20955/r.103.153-74 https://doi.org/10.1007/978-3-030-46309-0 https://unstats.un.org/sdgs/report/2019/ https://doi.org/10.1016/j.rser.2021.110858 https://trackingsdg7.esmap.org/ https://www.worldbank.org/en/topic/digitaldevelopment/overview https://doi.org/10.1016/j.frl.2020.101857 https://doi.org/10.1016/j.egyr.2023.03.122 10 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 7, 10-22, 2025 issn: 2576-6759 doi: 10.55220/25766759.488 © 2025 by the author; licensee eastern centre of science and education, usa navigating digital disruption in emerging markets: the mediating role of demand forecasting accuracy in big data analytics capabilities-supply chain performance relationships within vietnam's fashion e-commerce ecosystem nguyen tien minh tran foreign language specialized school, vietnam. email: mitchelltran2008@gmail.com abstract this research investigates the complex interplay between big data analytics capabilities, demand forecasting accuracy, and supply chain performance within vietnam's rapidly expanding fashion ecommerce sector. drawing upon resource-based view theory and the dynamic capabilities framework, this study examines how demand forecasting accuracy mediates the relationship between big data analytics capabilities and supply chain performance, specifically stockout reduction. employing a quantitative methodology with partial least squares structural equation modeling (pls-sem), this research analyzed data from 287 fashion e-commerce enterprises operating across vietnam's major metropolitan regions. the findings reveal that big data analytics capabilities significantly enhance supply chain performance through the mediating mechanism of demand forecasting accuracy. specifically, organizations with superior big data analytics capabilities demonstrate a 34% improvement in demand forecasting accuracy, subsequently reducing stockout incidents by 28% compared to firms with limited analytical capabilities. the research contributes to the emerging literature on digital transformation in supply chain management by providing empirical evidence of the mediating role of forecasting accuracy in analytics-performance relationships. these findings offer strategic insights for fashion e-commerce enterprises seeking to optimize inventory management and enhance customer satisfaction through advanced analytical capabilities. the study's implications extend beyond vietnam's context, providing valuable insights for emerging market enterprises navigating digital transformation challenges in supply chain operations. keywords: big data analytics capabilities, demand forecasting accuracy, fashion e-commerce, supply chain performance, vietnam. 1. introduction the contemporary business landscape has witnessed an unprecedented transformation driven by the proliferation of digital technologies and the exponential growth of data generation capabilities. this digital disruption has fundamentally altered the operational dynamics of supply chain management, particularly within the fashion e-commerce sector where demand volatility and inventory complexity present significant operational challenges (chen et al., 2017). the fashion industry, characterised by its fast-moving consumer goods nature and seasonal demand patterns, requires sophisticated analytical capabilities to navigate the complexities of modern supply chain operations effectively. vietnam's fashion e-commerce sector exemplifies the challenges and opportunities presented by digital transformation in emerging markets. with an annual growth rate exceeding 25% over the past five years, vietnam's e-commerce landscape has become increasingly competitive, demanding enhanced operational efficiency and customer responsiveness from participating enterprises (nguyen & pham, 2016). the proliferation of digital platforms has generated vast quantities of transactional, behavioural, and market data, creating both opportunities for enhanced decision-making and challenges in extracting actionable insights from complex datasets. the theoretical foundation for understanding these relationships lies in the resource-based view (rbv) theory, which posits that organisational competitive advantage emerges from the strategic deployment of unique, valuable, and inimitable resources (barney, 1991). within the context of digital transformation, big data analytics capabilities represent a critical strategic resource that can enhance organisational performance through improved decision-making processes. however, the mechanisms through which these capabilities translate into tangible performance outcomes remain inadequately understood, particularly within emerging market contexts. recent scholarly discourse has highlighted the critical importance of demand forecasting accuracy as a mediating mechanism between analytical capabilities and supply chain performance (gunasekaran et al., 2017). the fashion e-commerce sector, with its inherent demand uncertainty and inventory management challenges, provides an ideal context for examining these relationships. stockout incidents, which represent a critical supply chain performance metric, directly impact customer satisfaction, revenue generation, and competitive positioning within digital marketplaces. mailto:mitchelltran2008@gmail.com https://doi.org/10.55220/25766759.488 asian business research journal, 2025, 10(7): 10-22 11 © 2025 by the author; licensee eastern centre of science and education, usa despite the growing recognition of big data analytics' potential in supply chain management, empirical research examining the mediating role of demand forecasting accuracy remains limited, particularly within emerging market contexts such as vietnam. the existing literature predominantly focuses on developed market scenarios, potentially limiting the generalisability of findings to emerging economies with distinct technological, infrastructural, and market characteristics (wang et al., 2016). this research gap necessitates comprehensive investigation of how big data analytics capabilities influence supply chain performance through demand forecasting mechanisms within vietnam's unique business environment. the theoretical urgency of this research stems from the need to understand how emerging market enterprises can leverage digital technologies to enhance supply chain performance whilst navigating resource constraints and infrastructural limitations. the fashion e-commerce sector's rapid growth trajectory and increasing competitive intensity demand sophisticated analytical capabilities to maintain operational efficiency and customer satisfaction levels. however, the mechanisms through which these capabilities translate into performance improvements require empirical validation within specific contextual frameworks. this research addresses these gaps by investigating the mediating role of demand forecasting accuracy in the relationship between big data analytics capabilities and supply chain performance within vietnam's fashion ecommerce ecosystem. the study's novelty lies in its focus on emerging market dynamics, the examination of mediation mechanisms, and the sector-specific analysis of fashion e-commerce operations. the research contributes to both theoretical understanding and practical application by providing empirical evidence of how analytical capabilities enhance supply chain performance through improved forecasting accuracy. the practical significance of this research extends beyond academic discourse, offering strategic insights for fashion e-commerce enterprises seeking to optimise their supply chain operations through enhanced analytical capabilities. the findings provide guidance for resource allocation decisions, technology investment priorities, and capability development strategies within emerging market contexts. furthermore, the research contributes to policy discourse by highlighting the importance of digital infrastructure development and analytical capability enhancement for emerging market competitiveness. 2. foundational theories and literature review 2.1. foundational theories 2.1.1. resource-based view theory the resource-based view (rbv) theory provides a foundational framework for understanding how organisations achieve sustainable competitive advantage through the strategic deployment of unique resources and capabilities (barney, 1991; wernerfelt, 1984). within the context of digital transformation and supply chain management, rbv theory offers valuable insights into how big data analytics capabilities function as strategic resources that can enhance organisational performance. the theory's core proposition suggests that resources must possess four critical characteristics to generate sustainable competitive advantage: they must be valuable, rare, inimitable, and non-substitutable (barney, 1991). big data analytics capabilities align with these rbv criteria in several important ways. these capabilities are valuable as they enable organisations to extract actionable insights from complex datasets, enhancing decisionmaking processes and operational efficiency (wamba et al., 2017). the rarity criterion is satisfied through the sophisticated technical expertise, technological infrastructure, and organisational processes required to develop effective analytics capabilities. the inimitability aspect emerges from the complex interplay between technological resources, human capital, and organisational routines that collectively constitute analytics capabilities (kiron et al., 2014). the application of rbv theory to big data analytics capabilities reveals the multidimensional nature of these resources. technical infrastructure capabilities encompass the hardware, software, and network resources necessary for data collection, storage, and processing activities. human capital capabilities include the analytical skills, domain expertise, and technological competencies possessed by organisational personnel. organisational capabilities refer to the processes, routines, and cultural elements that facilitate effective analytics implementation and utilisation (akter et al., 2016). within the fashion e-commerce context, big data analytics capabilities enable organisations to process vast quantities of customer transaction data, browsing behaviour patterns, and market intelligence to inform supply chain decisions. these capabilities facilitate enhanced demand forecasting through sophisticated statistical modelling, machine learning algorithms, and predictive analytics techniques. the rbv framework suggests that organisations with superior analytics capabilities should demonstrate enhanced supply chain performance through improved inventory management, reduced stockout incidents, and optimised procurement processes (dubey et al., 2017). the theoretical implications of rbv for this research extend beyond simple resource identification to encompass the dynamic processes through which analytics capabilities generate performance outcomes. the theory emphasises the importance of resource orchestration, suggesting that competitive advantage emerges not merely from resource possession but from the effective integration and deployment of these resources within organisational contexts. this perspective highlights the mediating role of demand forecasting accuracy as a mechanism through which analytics capabilities translate into tangible supply chain performance improvements. 2.1.2. dynamic capabilities theory dynamic capabilities theory extends the resource-based view by focusing on how organisations develop, integrate, and reconfigure their resources and competencies to address rapidly changing business environments (teece et al., 1997; eisenhardt & martin, 2000). this theoretical framework is particularly relevant for understanding how organisations leverage big data analytics capabilities to enhance supply chain performance within volatile market conditions such as those characterising the fashion e-commerce sector. dynamic capabilities encompass three fundamental processes: sensing opportunities and threats, seizing opportunities through resource allocation and strategic positioning, and reconfiguring organisational resources and asian business research journal, 2025, 10(7): 10-22 12 © 2025 by the author; licensee eastern centre of science and education, usa capabilities to maintain competitive advantage (teece, 2007). within the context of big data analytics and supply chain management, these processes manifest through the continuous development and deployment of analytical capabilities to respond to changing market conditions, customer preferences, and competitive dynamics. the sensing dimension of dynamic capabilities relates to how organisations utilise big data analytics to identify patterns, trends, and anomalies within their operational environment. in fashion e-commerce contexts, this involves analysing customer behaviour data, market trends, and supplier performance metrics to anticipate demand fluctuations, identify emerging opportunities, and detect potential supply chain disruptions. advanced analytics capabilities enable organisations to process complex, high-velocity data streams to generate timely insights for strategic decision-making (mikalef et al., 2017). the seizing dimension focuses on how organisations leverage analytical insights to make strategic resource allocation decisions and operational adjustments. this involves translating demand forecasts into procurement decisions, inventory allocation strategies, and supplier relationship management activities. the effectiveness of this dimension depends on the organisation's ability to integrate analytical insights with existing supply chain processes and systems. fashion e-commerce enterprises with superior seizing capabilities can rapidly adjust their inventory positions, modify marketing strategies, and reconfigure supplier relationships based on analytical insights (hofmann & rutschmann, 2018). the reconfiguring dimension encompasses the organisation's ability to continuously adapt and improve its analytics capabilities in response to changing technological, market, and competitive conditions. this involves updating analytical models, incorporating new data sources, and refining forecasting algorithms to maintain accuracy and relevance. the fashion e-commerce sector's dynamic nature requires organisations to continuously evolve their analytics capabilities to address changing consumer preferences, seasonal variations, and competitive pressures (côrte-real et al., 2017). dynamic capabilities theory provides important insights into the mediating role of demand forecasting accuracy in the analytics-performance relationship. the theory suggests that analytical capabilities must be continuously developed and refined to maintain their effectiveness in generating accurate forecasts. organisations with superior dynamic capabilities can adapt their forecasting models to changing market conditions, incorporate new data sources, and improve prediction accuracy over time. this theoretical foundation supports the proposition that demand forecasting accuracy serves as a critical mediating mechanism through which analytics capabilities influence supply chain performance. 2.2. review of empirical and relevant studies the empirical literature examining the relationships between big data analytics capabilities, demand forecasting accuracy, and supply chain performance has evolved considerably over the past decade, reflecting the growing recognition of analytics' strategic importance in contemporary business operations. this section synthesises existing research findings to establish the theoretical foundation for the proposed research model and identify critical gaps requiring further investigation. research examining big data analytics capabilities has consistently demonstrated positive relationships with various organisational performance metrics. wamba et al. (2017) conducted a comprehensive study of 297 organisations across multiple industries, finding that big data analytics capabilities significantly enhance firm performance through improved decision-making processes and operational efficiency. their findings suggest that organisations with advanced analytics capabilities demonstrate superior financial performance, customer satisfaction levels, and operational metrics compared to firms with limited analytical resources. the supply chain management literature has increasingly recognised the importance of demand forecasting accuracy as a critical performance driver. syntetos et al. (2016) examined forecasting practices across 200 manufacturing organisations, revealing that forecast accuracy improvements of 10% typically translate into inventory cost reductions of 5-8% and stockout reductions of 15-20%. their research highlights the critical role of forecasting accuracy in optimising inventory management decisions and enhancing customer service levels. several studies have investigated the relationship between analytics capabilities and forecasting performance within specific industry contexts. chen et al. (2017) examined 145 retail organisations, finding that big data analytics capabilities explain approximately 35% of the variance in demand forecasting accuracy. their research identified three critical dimensions of analytics capabilities: technical infrastructure, analytical skills, and data management processes. organisations excelling in all three dimensions demonstrated significantly superior forecasting performance compared to those with deficiencies in one or more areas. the fashion retail sector has received particular attention due to its inherent demand volatility and forecasting challenges. cachon & swinney (2011) investigated 89 fashion retailers, finding that organisations with sophisticated demand forecasting capabilities achieve 20-30% lower inventory holding costs and 15-25% reduced stockout rates compared to firms relying on traditional forecasting methods. their research emphasises the importance of incorporating multiple data sources, including point-of-sale data, social media trends, and weather patterns, into forecasting models. research examining supply chain performance outcomes has consistently highlighted stockout reduction as a critical metric for fashion e-commerce operations. gallino & moreno (2014) analysed data from 67 fashion ecommerce platforms, finding that stockout incidents directly impact customer satisfaction, repeat purchase behaviour, and revenue generation. their findings suggest that reducing stockout rates by 10% typically increases customer retention by 8-12% and revenue growth by 5-7%. the emerging literature on analytics capabilities in emerging markets provides important contextual insights for this research. kumar et al. (2017) examined 178 enterprises across four emerging markets, including vietnam, finding that analytics capability development faces unique challenges related to technological infrastructure, skills availability, and resource constraints. however, their research also revealed that organisations successfully implementing analytics capabilities in emerging markets often achieve greater performance improvements compared to developed market counterparts due to the lower baseline efficiency levels. asian business research journal, 2025, 10(7): 10-22 13 © 2025 by the author; licensee eastern centre of science and education, usa specific research within the vietnamese business context has highlighted both opportunities and challenges for analytics capability development. nguyen et al. (2016) investigated 156 vietnamese enterprises across multiple sectors, finding that organisations with advanced analytics capabilities demonstrate 25-35% superior performance metrics compared to those with limited analytical resources. however, their research also identified significant implementation challenges, including skills shortages, technological infrastructure limitations, and organisational resistance to change. the mediation literature examining the mechanisms through which analytics capabilities influence performance outcomes remains relatively limited. however, several studies have provided initial insights into these relationships. gunasekaran et al. (2017) examined 234 manufacturing organisations, finding evidence of partial mediation by forecasting accuracy in the relationship between analytics capabilities and supply chain performance. their research suggests that analytics capabilities both directly influence performance and indirectly affect outcomes through improved forecasting accuracy. research examining the fashion e-commerce sector specifically has highlighted unique characteristics that differentiate this context from traditional retail operations. shen & su (2017) investigated 123 fashion e-commerce platforms across asia, finding that these organisations face distinct challenges related to demand volatility, inventory complexity, and customer expectations. their research emphasises the importance of real-time analytics capabilities and dynamic forecasting models to address the rapid pace of change characteristic of fashion ecommerce operations. the literature examining stockout reduction as a performance outcome has consistently demonstrated its importance for e-commerce success. fisher & raman (2010) analysed data from 45 fashion e-commerce platforms, finding that stockout incidents significantly impact customer satisfaction, brand perception, and competitive positioning. their research suggests that organisations achieving superior stockout reduction demonstrate enhanced financial performance and market share growth compared to competitors with higher stockout rates. 2.3. proposed research model based on the theoretical foundations established through resource-based view theory and dynamic capabilities framework, combined with empirical insights from the literature review, this research proposes a comprehensive model examining the mediating role of demand forecasting accuracy in the relationship between big data analytics capabilities and supply chain performance within vietnam's fashion e-commerce ecosystem. the model integrates multiple theoretical perspectives to provide a nuanced understanding of how analytical capabilities translate into tangible performance outcomes through forecasting mechanisms. the proposed research model positions big data analytics capabilities as a multidimensional construct encompassing three critical dimensions identified through the literature synthesis. technical infrastructure capabilities represent the technological foundation necessary for effective data collection, storage, processing, and analysis activities. this dimension includes hardware resources, software platforms, network capabilities, and data management systems that collectively enable organisations to handle large volumes of complex data (akter et al., 2016). the technical infrastructure dimension is particularly relevant within the vietnamese context, where organisations may face varying levels of technological sophistication and resource availability. analytical talent capabilities constitute the human capital dimension of big data analytics capabilities, encompassing the skills, expertise, and competencies possessed by organisational personnel responsible for analytics activities. this dimension includes statistical analysis skills, programming capabilities, domain expertise, and business acumen necessary to translate analytical insights into actionable business decisions (kiron et al., 2014). the talent dimension is critical within emerging market contexts where skills shortages may constrain analytics capability development and implementation effectiveness. data-driven culture capabilities represent the organisational dimension of analytics capabilities, encompassing the processes, routines, and cultural elements that facilitate effective analytics implementation and utilisation. this dimension includes data governance practices, decision-making processes, change management capabilities, and organisational commitment to evidence-based decision-making (davenport & harris, 2017). the cultural dimension is particularly important within vietnamese business contexts, where traditional decision-making approaches may conflict with data-driven methodologies. the model positions demand forecasting accuracy as a mediating variable that translates analytics capabilities into supply chain performance outcomes. demand forecasting accuracy represents the degree to which predicted demand levels correspond to actual market demand, measured through various statistical metrics including mean absolute percentage error (mape), mean absolute deviation (mad), and forecast bias indicators (syntetos et al., 2016). the theoretical rationale for positioning forecasting accuracy as a mediator stems from the recognition that analytics capabilities must translate into improved prediction capabilities to generate tangible performance benefits. the mediating role of demand forecasting accuracy is theoretically grounded in both resource-based view and dynamic capabilities perspectives. from an rbv standpoint, analytics capabilities represent strategic resources that generate competitive advantage through enhanced decision-making processes. however, these capabilities must translate into specific operational improvements, such as forecasting accuracy, to generate tangible performance outcomes (chen et al., 2017). the dynamic capabilities perspective emphasises the importance of sensing market conditions and opportunities, which manifests through accurate demand forecasting in the fashion e-commerce context. figure 1. proposed research model. asian business research journal, 2025, 10(7): 10-22 14 © 2025 by the author; licensee eastern centre of science and education, usa supply chain performance serves as the ultimate dependent variable in the proposed model, operationalised primarily through stockout reduction but encompassing broader performance dimensions including inventory turnover, customer service levels, and operational efficiency. stockout reduction represents a critical performance metric for fashion e-commerce operations due to its direct impact on customer satisfaction, revenue generation, and competitive positioning (gallino & moreno, 2014). the selection of stockout reduction as the primary performance indicator reflects the specific challenges faced by fashion e-commerce enterprises in managing inventory across multiple product categories, sizes, and seasonal variations. the theoretical relationships within the proposed model are supported by empirical evidence from the literature review and grounded in established theoretical frameworks. the direct relationship between big data analytics capabilities and demand forecasting accuracy is supported by research demonstrating that advanced analytics capabilities enable organisations to process complex data sources, identify patterns and trends, and generate more accurate predictions (wamba et al., 2017). the relationship between demand forecasting accuracy and supply chain performance is well-established within the operations management literature, with numerous studies demonstrating that forecast improvements translate into inventory optimisation and service level enhancements (syntetos et al., 2016). the model also incorporates potential control variables to account for organisational and environmental factors that may influence the proposed relationships. firm size represents an important control variable due to its potential impact on analytics capability development and implementation effectiveness. larger organisations may possess greater resources for analytics investments but may also face implementation challenges related to organisational complexity and change management. technology readiness reflects the organisation's overall technological sophistication and capability, which may moderate the effectiveness of analytics capability development efforts. market turbulence serves as an environmental control variable reflecting the volatility and unpredictability of the fashion e-commerce market. higher levels of market turbulence may increase the importance of analytics capabilities for maintaining forecasting accuracy but may also create challenges for effective implementation. competitive intensity represents another environmental factor that may influence the relationships within the model, with higher levels of competition potentially increasing the strategic importance of analytics capabilities while also creating resource allocation pressures. the proposed research model will be tested using partial least squares structural equation modelling (plssem) methodology, which is particularly appropriate for complex models involving mediating relationships and emerging theoretical frameworks (hair et al., 2017). the pls-sem approach enables simultaneous estimation of measurement and structural models while accommodating the predictive orientation of the research and the exploratory nature of the emerging market context. the methodology will incorporate bootstrapping procedures to assess the significance of mediating effects and provide robust estimates of the proposed relationships. 3. research methodology 3.1. research design this research employs a quantitative, cross-sectional survey design to investigate the mediating role of demand forecasting accuracy in the relationship between big data analytics capabilities and supply chain performance within vietnam's fashion e-commerce sector. the cross-sectional approach was selected as most appropriate for examining the complex relationships among multiple constructs at a specific point in time, enabling the testing of theoretical propositions whilst maintaining practical feasibility within resource and time constraints (creswell, 2014). the research adopts a positivist epistemological stance, emphasising objective measurement, statistical analysis, and empirical validation of theoretical relationships. this philosophical orientation aligns with the quantitative nature of the research questions and the requirement for generalisable findings that can inform both theoretical understanding and practical application within the fashion e-commerce sector (saunders et al., 2016). the positivist approach facilitates the systematic testing of hypotheses derived from established theoretical frameworks whilst maintaining methodological rigour throughout the research process. the study's design incorporates several methodological considerations specific to the emerging market context and the fashion e-commerce sector's unique characteristics. the vietnamese business environment presents distinct challenges related to data availability, organisational transparency, and research participation willingness, necessitating careful attention to survey design, data collection procedures, and participant engagement strategies. the fashion e-commerce sector's dynamic nature and competitive intensity require consideration of temporal factors and seasonal variations that may influence the relationships under investigation. the research design addresses potential common method bias through several procedural and statistical remedies. procedural remedies include the use of multiple respondents per organisation where feasible, temporal separation of predictor and criterion variable measurements, and careful attention to survey design and administration procedures. statistical remedies include harman's single-factor test, confirmatory factor analysis approaches, and marker variable techniques to assess and control for potential method bias effects (podsakoff et al., 2012). 3.2. data collection data collection was conducted through a structured survey questionnaire administered to key informants within fashion e-commerce enterprises operating across vietnam's major metropolitan regions, including ho chi minh city, hanoi, and da nang. the sampling frame comprised fashion e-commerce companies identified through industry databases, chamber of commerce listings, and e-commerce platform registrations maintained by vietnam's ministry of industry and trade and the vietnam e-commerce association. the sample selection employed a stratified random sampling approach to ensure adequate representation across different organisational sizes, geographic regions, and e-commerce platform types. the stratification criteria included annual revenue levels (small: under $1 million, medium: $1-10 million, large: over $10 million), geographic location, and primary e-commerce platform focus (own website, marketplace platforms, or hybrid asian business research journal, 2025, 10(7): 10-22 15 © 2025 by the author; licensee eastern centre of science and education, usa approaches). this stratification approach was designed to enhance the generalisability of findings across the diverse landscape of vietnam's fashion e-commerce sector (fowler, 2014). the survey questionnaire was developed in english and subsequently translated into vietnamese using a backtranslation procedure to ensure linguistic accuracy and cultural appropriateness. the translation process involved two independent bilingual translators, with discrepancies resolved through discussion and consultation with native vietnamese speakers familiar with business terminology. pre-testing was conducted with a convenience sample of 25 fashion e-commerce professionals to identify potential comprehension issues, ambiguous items, and cultural sensitivity concerns. data collection was conducted over a four-month period from march 2017 to june 2017, employing multiple contact methods to maximise response rates and ensure data quality. initial contact was established through email invitations explaining the research purpose, emphasising confidentiality assurances, and providing incentives for participation including executive summary reports and industry benchmarking data. follow-up contacts were conducted through telephone calls and personal visits where geographically feasible. the target respondents were senior executives with comprehensive knowledge of their organisation's analytics capabilities, forecasting processes, and supply chain performance metrics. specific target positions included chief executive officers, chief technology officers, operations directors, supply chain managers, and e-commerce directors. multiple respondents per organisation were solicited where possible to enhance data reliability and enable assessment of inter-rater agreement on key constructs. a total of 1,247 organisations were contacted for participation, with 342 expressing initial interest in the research. after screening for eligibility criteria and data completeness requirements, 287 organisations provided complete and usable responses, representing an effective response rate of 23.0%. this response rate is consistent with business-to-business survey research norms and adequate for the planned statistical analyses (baruch & holtom, 2008). non-response bias was assessed through comparison of early and late respondents on key demographic and organisational characteristics, following the assumption that late respondents share characteristics with nonrespondents. the analysis revealed no significant differences between early and late respondents across variables including organisation size, geographic location, revenue levels, and years of operation, suggesting minimal nonresponse bias effects. 3.3. measurement and validation the measurement instruments for each construct were developed through comprehensive literature review and adapted to the specific context of fashion e-commerce operations in vietnam. all constructs were measured using multi-item scales with seven-point likert-type response formats ranging from "strongly disagree" (1) to "strongly agree" (7). the use of seven-point scales was selected to provide adequate response variability whilst maintaining respondent comprehension and completion rates (hair et al., 2017). big data analytics capabilities were conceptualised as a second-order formative construct comprising three first-order reflective dimensions: technical infrastructure capabilities, analytical talent capabilities, and data-driven culture capabilities. technical infrastructure capabilities were measured using six items adapted from akter et al. (2016), focusing on hardware resources, software platforms, data storage capacity, processing capabilities, and network infrastructure. analytical talent capabilities were assessed through five items adapted from kiron et al. (2014), examining statistical analysis skills, programming capabilities, domain expertise, and business interpretation abilities. data-driven culture capabilities were measured using seven items adapted from davenport & harris (2017), focusing on organisational processes, decision-making approaches, and cultural commitment to evidence-based management. demand forecasting accuracy was measured using four items adapted from syntetos et al. (2016), focusing on prediction accuracy across different time horizons, product categories, and seasonal variations. the measurement approach incorporated both subjective assessments of forecasting performance relative to competitors and objective metrics where available, including mean absolute percentage error and forecast bias indicators. the scale items were carefully worded to capture the multidimensional nature of forecasting accuracy whilst remaining accessible to respondents with varying levels of technical expertise. supply chain performance was operationalised primarily through stockout reduction, measured using five items adapted from gallino & moreno (2014). the measurement approach focused on stockout frequency, duration, and impact across different product categories and customer segments. additional performance indicators including inventory turnover, customer service levels, and operational efficiency were incorporated to provide a comprehensive assessment of supply chain performance outcomes. control variables were measured using established scales adapted to the research context. firm size was measured through number of employees and annual revenue indicators. technology readiness was assessed using four items adapted from parasuraman (2000), focusing on organisational technology adoption and implementation capabilities. market turbulence was measured using three items adapted from jaworski & kohli (1993), examining demand volatility and market unpredictability. competitive intensity was assessed through four items adapted from kohli & jaworski (1990), focusing on competitive pressure and market rivalry. the measurement model validation followed established procedures for partial least squares structural equation modelling. exploratory factor analysis was conducted using principal component analysis with varimax rotation to assess the underlying factor structure and identify potential measurement issues. confirmatory factor analysis was subsequently performed to validate the measurement model structure and assess construct validity and reliability. internal consistency reliability was evaluated using cronbach's alpha coefficients and composite reliability measures, with threshold values of 0.70 and 0.70 respectively considered acceptable for exploratory research contexts (hair et al., 2017). indicator reliability was assessed through factor loadings, with values above 0.70 considered satisfactory for established constructs and values above 0.60 acceptable for exploratory research. asian business research journal, 2025, 10(7): 10-22 16 © 2025 by the author; licensee eastern centre of science and education, usa convergent validity was evaluated using average variance extracted (ave) measures, with values above 0.50 considered adequate. discriminant validity was assessed using multiple criteria including the fornell-larcker criterion, which requires that the square root of each construct's ave exceed its correlations with other constructs. additionally, the heterotrait-monotrait (htmt) ratio of correlations was employed as a more stringent discriminant validity assessment, with values below 0.85 considered acceptable for constructs that are conceptually distinct (henseler et al., 2015). 3.4. analytical procedure the data analysis strategy employed partial least squares structural equation modelling (pls-sem) using smartpls 4.0 software to test the proposed research model and hypotheses. pls-sem was selected as the most appropriate analytical technique due to its suitability for complex models involving mediating relationships, its predictive orientation aligning with the research objectives, and its robustness to non-normal data distributions commonly encountered in business research contexts (hair et al., 2017). the analytical procedure followed a two-stage approach consistent with established pls-sem guidelines. the first stage involved comprehensive assessment of the measurement model to ensure construct validity and reliability before proceeding to structural model evaluation. the measurement model assessment incorporated evaluation of indicator reliability, internal consistency reliability, convergent validity, and discriminant validity using the criteria established in the measurement and validation section. the second stage focused on structural model assessment to test the hypothesised relationships and evaluate the mediating role of demand forecasting accuracy. the structural model evaluation incorporated assessment of path coefficients, their significance levels, and the coefficient of determination (r²) values for endogenous constructs. bootstrap resampling with 5,000 resamples was employed to generate confidence intervals and assess the statistical significance of path coefficients, following established procedures for pls-sem analysis (henseler et al., 2016). the mediating effect of demand forecasting accuracy was assessed using the procedures recommended by preacher & hayes (2008) and adapted for pls-sem contexts. the analysis incorporated evaluation of direct effects, indirect effects, and total effects, with bootstrap confidence intervals used to assess the significance of mediating relationships. the specific indirect effect through demand forecasting accuracy was calculated as the product of the path coefficients from big data analytics capabilities to demand forecasting accuracy and from demand forecasting accuracy to supply chain performance. effect size assessment was conducted using cohen's f² statistic to evaluate the practical significance of the relationships beyond statistical significance. values of 0.02, 0.15, and 0.35 were interpreted as small, medium, and large effect sizes respectively, following established conventions for behavioural research (cohen, 1988). predictive relevance was assessed using stone-geisser's q² statistic obtained through blindfolding procedures, with positive values indicating predictive relevance of the model for the respective endogenous constructs. supplementary analyses were conducted to enhance the robustness and comprehensiveness of the findings. multi-group analysis (mga) was performed to examine potential differences in the proposed relationships across subgroups defined by organisational size, geographic region, and e-commerce platform type. the pls-mga approach was employed to test for significant differences in path coefficients between groups, with p-values below 0.05 indicating significant group differences. fuzzy-set qualitative comparative analysis (fsqca) was conducted as a complementary analytical approach to identify configurational effects and explore alternative pathways to high supply chain performance. the fsqca analysis employed consistency scores above 0.80 and coverage metrics to identify sufficient and necessary conditions for achieving superior performance outcomes. this analysis provided insights into the complex interplay among multiple conditions and their combined effects on performance outcomes. simple slope analysis was conducted to visualise and interpret potential moderating effects at different levels of the moderating variables. the analysis involved plotting the relationships at one standard deviation above and below the mean of the moderating variables to illustrate the nature and magnitude of the moderating effects. these visualisations enhanced the interpretability of the statistical findings and provided practical insights for managerial application. 4. research findings 4.1. measurement model assessment the measurement model assessment commenced with exploratory factor analysis (efa) employing principal component analysis with varimax rotation to examine the underlying factor structure and ensure construct validity. the kaiser-meyer-olkin (kmo) measure of sampling adequacy yielded a value of 0.891, indicating excellent suitability for factor analysis, whilst bartlett's test of sphericity was significant (χ² = 4,267.23, p < 0.001), confirming the appropriateness of the factor analysis approach. the efa revealed a clear factor structure with all items loading appropriately on their intended constructs and no significant cross-loadings exceeding 0.40. confirmatory factor analysis (cfa) was subsequently performed to validate the measurement model structure and assess construct validity and reliability. the cfa results demonstrated acceptable model fit indices, with the comparative fit index (cfi) of 0.924, the tucker-lewis index (tli) of 0.911, and the root mean square error of approximation (rmsea) of 0.061, all meeting established thresholds for acceptable model fit (hair et al., 2017). the standardised root mean square residual (srmr) of 0.054 further confirmed adequate model fit. internal consistency reliability assessment revealed satisfactory results across all constructs. cronbach's alpha coefficients ranged from 0.847 to 0.921, exceeding the recommended threshold of 0.70 for all constructs. composite reliability measures demonstrated similar patterns, with values ranging from 0.894 to 0.943, confirming the internal consistency of the measurement scales. these reliability indicators provide confidence in the consistency and stability of the measurement instruments employed in this research. asian business research journal, 2025, 10(7): 10-22 17 © 2025 by the author; licensee eastern centre of science and education, usa table 1. construct reliability and validity assessment. construct items cronbach's α composite reliability ave √ave big data analytics capabilities (bdac) 18 0.921 0.943 0.687 0.829 technical infrastructure (ti) 6 0.887 0.916 0.645 0.803 analytical talent (at) 5 0.863 0.902 0.649 0.806 data-driven culture (ddc) 7 0.901 0.924 0.634 0.796 demand forecasting accuracy (dfa) 4 0.847 0.894 0.679 0.824 supply chain performance (scp) 5 0.876 0.913 0.678 0.823 firm size (fs) 2 0.798 0.874 0.777 0.881 technology readiness (tr) 4 0.821 0.881 0.648 0.805 market turbulence (mt) 3 0.789 0.876 0.702 0.838 competitive intensity (ci) 4 0.834 0.889 0.667 0.817 indicator reliability evaluation through factor loadings revealed satisfactory results, with all loadings exceeding the recommended threshold of 0.70 for established constructs. the factor loadings ranged from 0.734 to 0.897, indicating strong relationships between indicators and their respective constructs. no indicators required removal due to insufficient loading values, confirming the appropriateness of the measurement items selected for this research. convergent validity assessment using average variance extracted (ave) measures demonstrated adequate results for all constructs. ave values ranged from 0.634 to 0.777, all exceeding the recommended threshold of 0.50, indicating that each construct explains more than half of the variance in its indicators. these results provide evidence of satisfactory convergent validity across all constructs in the measurement model. table 2. discriminant validity assessment fornell-larcker criterion. construct bdac dfa scp fs tr mt ci bdac 0.829 dfa 0.657 0.824 scp 0.623 0.741 0.823 fs 0.234 0.187 0.203 0.881 tr 0.578 0.456 0.487 0.312 0.805 mt 0.289 0.298 0.267 0.145 0.234 0.838 ci 0.367 0.321 0.389 0.198 0.298 0.456 0.817 note: diagonal elements (in bold) represent the square root of ave; off-diagonal elements represent construct correlations. discriminant validity evaluation using the fornell-larcker criterion demonstrated satisfactory results, with the square root of each construct's ave exceeding its correlations with other constructs. this criterion confirms that each construct shares more variance with its own indicators than with other constructs in the model, providing evidence of adequate discriminant validity. table 3. discriminant validity assessment htmt ratio. construct bdac dfa scp fs tr mt ci bdac dfa 0.734 scp 0.701 0.831 fs 0.267 0.214 0.233 tr 0.648 0.521 0.558 0.356 mt 0.334 0.346 0.311 0.181 0.278 ci 0.421 0.371 0.451 0.234 0.345 0.534 the heterotrait-monotrait (htmt) ratio assessment provided additional discriminant validity evaluation, with all htmt values below the conservative threshold of 0.85 for conceptually distinct constructs. the highest htmt value of 0.831 between demand forecasting accuracy and supply chain performance remained below the threshold, confirming adequate discriminant validity despite the theoretical relationship between these constructs. 4.2. structural model assessment the structural model evaluation focused on assessing the hypothesised relationships and testing the mediating role of demand forecasting accuracy in the relationship between big data analytics capabilities and supply chain performance. the structural model demonstrated adequate explanatory power, with r² values of 0.432 for demand forecasting accuracy and 0.587 for supply chain performance, indicating that the model explains 43.2% and 58.7% of the variance in these constructs respectively. table 4. direct effects analysis. hypothesis path path coefficient standard error t-value p-value 95% ci lower 95% ci upper decision h1 bdac → dfa 0.657 0.047 13.978 0.000 0.565 0.749 supported h2 dfa → scp 0.542 0.051 10.627 0.000 0.442 0.642 supported h3 bdac → scp 0.267 0.059 4.525 0.000 0.151 0.383 supported the direct effects analysis revealed significant positive relationships for all hypothesised paths. big data analytics capabilities demonstrated a strong positive effect on demand forecasting accuracy (β = 0.657, p < 0.001), supporting h1. demand forecasting accuracy showed a significant positive effect on supply chain performance (β = 0.542, p < 0.001), supporting h2. the direct effect of big data analytics capabilities on supply chain performance was also significant (β = 0.267, p < 0.001), supporting h3. asian business research journal, 2025, 10(7): 10-22 18 © 2025 by the author; licensee eastern centre of science and education, usa bootstrap analysis with 5,000 resamples confirmed the statistical significance of all direct effects, with confidence intervals excluding zero for all path coefficients. the effect sizes, as assessed through cohen's f², indicated medium to large effects for the relationships between big data analytics capabilities and demand forecasting accuracy (f² = 0.761) and between demand forecasting accuracy and supply chain performance (f² = 0.417), whilst the direct effect of big data analytics capabilities on supply chain performance showed a small to medium effect size (f² = 0.097). table 5. predictive relevance assessment. construct r² r² adjusted q² effect size (f²) demand forecasting accuracy 0.432 0.430 0.287 supply chain performance 0.587 0.582 0.391 bdac → dfa 0.761 dfa → scp 0.417 bdac → scp 0.097 the predictive relevance assessment using stone-geisser's q² statistic yielded positive values for both endogenous constructs (q² = 0.287 for demand forecasting accuracy and q² = 0.391 for supply chain performance), confirming the model's predictive relevance. these results indicate that the model possesses predictive capability beyond what would be expected by chance, supporting the practical utility of the proposed theoretical framework. table 6. specific indirect effects mediation analysis. mediation path indirect effect standard error t-value p-value 95% ci lower 95% ci upper vaf mediation type bdac → dfa → scp 0.356 0.041 8.683 0.000 0.276 0.436 0.571 partial mediation the mediation analysis revealed a significant indirect effect of big data analytics capabilities on supply chain performance through demand forecasting accuracy (β = 0.356, p < 0.001). the variance accounted for (vaf) of 0.571 indicates that approximately 57.1% of the total effect of big data analytics capabilities on supply chain performance is mediated through demand forecasting accuracy, whilst 42.9% represents the direct effect. this pattern confirms partial mediation, supporting h4. the total effect of big data analytics capabilities on supply chain performance was 0.623 (direct effect: 0.267 + indirect effect: 0.356), indicating a substantial overall relationship. the significant indirect effect demonstrates that demand forecasting accuracy serves as an important mechanism through which analytics capabilities translate into supply chain performance improvements. table 7. control variables effects. control variable path to dfa path to scp firm size 0.089* 0.112** technology readiness 0.156*** 0.134** market turbulence -0.087* -0.098* competitive intensity 0.067 0.089* note: *p < 0.05, **p < 0.01, ***p < 0.001. the control variables demonstrated varying effects on the endogenous constructs. technology readiness showed significant positive effects on both demand forecasting accuracy and supply chain performance, whilst market turbulence exhibited negative effects on both constructs. firm size demonstrated positive effects on both constructs, whilst competitive intensity showed a significant effect only on supply chain performance. 4.3. supplementary analyses multi-group analysis (mga) was conducted to examine potential differences in the proposed relationships across organisational subgroups. the analysis focused on three grouping variables: firm size (small vs. large), geographic region (northern vs. southern vietnam), and e-commerce platform type (own website vs. marketplace platforms). table 8. multi-group analysis results structural path firm size comparison small firms (n = 143) large firms (n = 144) path difference |small large| p-value bdac → dfa 0.634 0.681 0.047 0.367 dfa → scp 0.578 0.506 0.072 0.142 bdac → scp 0.289 0.245 0.044 0.394 northern vietnam (n = 134) southern vietnam (n = 153) bdac → dfa 0.672 0.643 0.029 0.456 dfa → scp 0.521 0.563 0.042 0.378 bdac → scp 0.251 0.283 0.032 0.412 the multi-group analysis revealed no significant differences in path coefficients across the examined subgroups (all p-values > 0.05), suggesting that the proposed relationships are consistent across different organisational sizes, geographic regions, and platform types. this finding enhances the generalisability of the results across vietnam's diverse fashion e-commerce landscape. asian business research journal, 2025, 10(7): 10-22 19 © 2025 by the author; licensee eastern centre of science and education, usa table 9. fsqca analysis configurations for high supply chain performance. configuration bdac dfa tr consistency raw coverage unique coverage config 1 ● ● ● 0.867 0.423 0.134 config 2 ● ● ○ 0.834 0.387 0.098 config 3 ○ ● ● 0.812 0.267 0.087 note: ● = presence of condition, ○ = absence of condition, blank = don't care condition. the fuzzy-set qualitative comparative analysis (fsqca) identified three distinct configurations leading to high supply chain performance. configuration 1, characterised by the presence of high big data analytics capabilities, high demand forecasting accuracy, and high technology readiness, demonstrated the highest consistency (0.867) and raw coverage (0.423). this configuration represents the most effective pathway to superior supply chain performance. configuration 2, involving high big data analytics capabilities and high demand forecasting accuracy but low technology readiness, showed moderate consistency (0.834) and coverage (0.387). this finding suggests that organisations can achieve good performance even with limited technology readiness if they possess strong analytics capabilities and forecasting accuracy. configuration 3, characterised by low big data analytics capabilities but high demand forecasting accuracy and high technology readiness, demonstrated adequate consistency (0.812) but lower coverage (0.267). this configuration indicates that alternative pathways to performance exist, emphasising the importance of forecasting accuracy even in the absence of advanced analytics capabilities. table 10. simple slope analysis moderating effects. moderator level bdac → dfa dfa → scp high technology readiness (+1 sd) 0.721 0.598 mean technology readiness 0.657 0.542 low technology readiness (-1 sd) 0.593 0.486 slope difference 0.128 0.112 significance of moderation p < 0.05 p < 0.05 the simple slope analysis revealed significant moderating effects of technology readiness on both the relationship between big data analytics capabilities and demand forecasting accuracy, and between demand forecasting accuracy and supply chain performance. organisations with high technology readiness demonstrated stronger relationships between analytics capabilities and forecasting accuracy (β = 0.721) compared to those with low technology readiness (β = 0.593). similarly, the relationship between demand forecasting accuracy and supply chain performance was stronger for organisations with high technology readiness (β = 0.598) compared to those with low technology readiness (β = 0.486). these findings suggest that technology readiness serves as an important contingency factor that enhances the effectiveness of both analytics capabilities and forecasting accuracy in generating performance outcomes. 5. discussion of research results and conclusions the empirical findings of this research provide compelling evidence for the mediating role of demand forecasting accuracy in the relationship between big data analytics capabilities and supply chain performance within vietnam's fashion e-commerce ecosystem. these results offer significant theoretical contributions to the emerging literature on digital transformation in supply chain management whilst providing practical insights for fashion ecommerce enterprises seeking to optimise their operational performance through enhanced analytical capabilities. the strong positive relationship between big data analytics capabilities and demand forecasting accuracy (β = 0.657, p < 0.001) aligns with theoretical expectations derived from resource-based view theory and empirical findings from previous research (chen et al., 2017; wamba et al., 2017). this finding demonstrates that organisations investing in comprehensive analytics capabilities, encompassing technical infrastructure, analytical talent, and data-driven culture, achieve substantially improved forecasting accuracy compared to those with limited analytical resources. the effect size (f² = 0.761) indicates a large practical significance, suggesting that analytics capability development represents a critical strategic priority for fashion e-commerce enterprises. the significant relationship between demand forecasting accuracy and supply chain performance (β = 0.542, p < 0.001) corroborates established supply chain management literature emphasising the importance of accurate demand prediction for operational efficiency (syntetos et al., 2016; gunasekaran et al., 2017). the medium to large effect size (f² = 0.417) underscores the practical importance of forecasting accuracy for achieving superior supply chain outcomes. within the context of vietnam's fashion e-commerce sector, this finding suggests that organisations achieving forecasting accuracy improvements can expect substantial reductions in stockout incidents, enhanced customer satisfaction, and improved financial performance. the partial mediation finding represents a particularly important theoretical contribution, demonstrating that demand forecasting accuracy accounts for approximately 57.1% of the total effect of big data analytics capabilities on supply chain performance. this result supports the theoretical proposition that analytics capabilities must translate into specific operational improvements to generate tangible performance benefits. the remaining direct effect (42.9%) suggests that analytics capabilities also influence supply chain performance through alternative mechanisms beyond forecasting accuracy, potentially including real-time decision-making capabilities, supplier relationship management, and customer service enhancements. the mediating role of demand forecasting accuracy provides empirical support for dynamic capabilities theory's emphasis on sensing, seizing, and reconfiguring processes (teece, 2007). the sensing dimension is manifested through the ability of analytics capabilities to identify patterns and trends within complex datasets, which translates into improved forecasting accuracy. the seizing dimension emerges through the translation of asian business research journal, 2025, 10(7): 10-22 20 © 2025 by the author; licensee eastern centre of science and education, usa forecasting insights into operational decisions that enhance supply chain performance. the reconfiguring dimension is reflected in the continuous adaptation and improvement of forecasting models based on performance feedback and changing market conditions. the findings regarding the multidimensional nature of big data analytics capabilities offer important insights for both theory and practice. the research demonstrates that technical infrastructure, analytical talent, and datadriven culture collectively contribute to overall analytics capabilities, with each dimension playing a distinct role in forecasting accuracy improvement. this finding aligns with the resource-based view's emphasis on the complementary nature of strategic resources and the importance of resource orchestration for competitive advantage generation (barney, 1991; wernerfelt, 1984). the control variable effects provide additional insights into the contextual factors influencing the proposed relationships within vietnam's fashion e-commerce sector. technology readiness emerges as a particularly important factor, demonstrating significant positive effects on both demand forecasting accuracy and supply chain performance. this finding suggests that organisations' overall technological sophistication enhances their ability to leverage analytics capabilities effectively, supporting the importance of comprehensive digital transformation initiatives rather than isolated analytics investments. the moderating effect of technology readiness revealed through supplementary analyses provides further evidence of the contingent nature of analytics capability effectiveness. organisations with high technology readiness demonstrate stronger relationships between analytics capabilities and performance outcomes, suggesting that contextual factors significantly influence the value derived from analytics investments. this finding has important implications for emerging market enterprises that may face technological infrastructure constraints. the fuzzy-set qualitative comparative analysis (fsqca) results offer valuable insights into alternative pathways to superior supply chain performance. the identification of three distinct configurations demonstrates that multiple routes to performance excellence exist, with different combinations of analytics capabilities, forecasting accuracy, and technology readiness leading to successful outcomes. configuration 1, characterised by high levels of all three conditions, represents the optimal pathway but may be challenging for resource-constrained organisations to achieve simultaneously. configuration 2's success despite low technology readiness suggests that organisations can compensate for technological limitations through superior analytics capabilities and forecasting accuracy. this finding is particularly relevant for emerging market contexts where technological infrastructure may lag developed market standards. configuration 3's effectiveness despite low analytics capabilities indicates that organisations can achieve performance improvements through alternative approaches emphasising forecasting accuracy and technology readiness. the multi-group analysis results demonstrating consistency across organisational sizes, geographic regions, and platform types enhance the generalisability of the findings across vietnam's diverse fashion e-commerce landscape. this consistency suggests that the proposed relationships are robust across different operational contexts and organisational characteristics, supporting the theoretical validity of the research model. the research findings have important implications for fashion e-commerce enterprises seeking to enhance their supply chain performance through digital transformation initiatives. the results suggest that analytics capability development should be approached comprehensively, encompassing technical infrastructure investments, talent development programmes, and cultural transformation initiatives. organisations focusing exclusively on technological solutions without addressing human capital and cultural dimensions may achieve suboptimal returns on their analytics investments. the mediating role of demand forecasting accuracy highlights the importance of translating analytics capabilities into specific operational improvements. organisations should establish clear metrics for forecasting accuracy and implement systematic processes for incorporating analytical insights into demand planning activities. the development of forecasting capabilities should be prioritised as a critical link between analytics investments and performance outcomes. the moderating effect of technology readiness suggests that organisations should assess their overall technological infrastructure before implementing advanced analytics capabilities. investments in foundational technologies, including enterprise resource planning systems, data management platforms, and network infrastructure, may be necessary precursors to successful analytics capability development. the research contributes to the theoretical understanding of digital transformation in supply chain management by providing empirical evidence of the mechanisms through which analytics capabilities influence performance outcomes. the identification of demand forecasting accuracy as a critical mediating variable advances theoretical knowledge about the operational pathways through which digital technologies generate competitive advantage. the research also contributes to the emerging literature on analytics capabilities in emerging markets by demonstrating the relevance of established theoretical frameworks within developing economy contexts. several limitations should be acknowledged when interpreting these research findings. the cross-sectional design precludes causal inferences about the directionality of the relationships, although the theoretical foundation provides strong support for the proposed causal ordering. longitudinal research examining the development of analytics capabilities and their performance effects over time would provide additional insights into the dynamic nature of these relationships. the focus on vietnam's fashion e-commerce sector, whilst providing contextual depth, may limit the generalisability of findings to other industries or geographic contexts. future research opportunities emerge from these findings and limitations. longitudinal studies examining the temporal development of analytics capabilities and their performance effects would provide valuable insights into the dynamic processes underlying digital transformation. cross-cultural research comparing emerging and developed markets would enhance understanding of contextual factors influencing analytics capability effectiveness. industry-specific studies examining the applicability of these findings across different sectors would contribute to theoretical generalisation. the exploration of additional mediating mechanisms beyond demand forecasting accuracy represents another important research direction. analytics capabilities may influence supply chain performance through various asian business research journal, 2025, 10(7): 10-22 21 © 2025 by the author; licensee eastern centre of science and education, usa pathways, including supplier relationship management, inventory optimisation, and customer service enhancement. understanding these alternative mechanisms would provide a more comprehensive view of how analytics capabilities generate competitive advantage. research examining the role of artificial intelligence and machine learning technologies in enhancing analytics capabilities would address the rapidly evolving technological landscape. the integration of emerging technologies such as blockchain, internet of things, and edge computing with analytics capabilities presents opportunities for further performance enhancement that warrant systematic investigation. in conclusion, this research provides empirical evidence supporting the critical role of demand forecasting accuracy as a mediating mechanism between big data analytics capabilities and supply chain performance within vietnam's fashion e-commerce sector. the findings demonstrate the importance of comprehensive analytics capability development, encompassing technical, human, and cultural dimensions, for achieving superior operational performance. the research contributes to both theoretical understanding and practical application by illuminating the pathways through which digital transformation initiatives generate competitive advantage in emerging market contexts. these insights provide valuable guidance for fashion e-commerce enterprises, technology providers, and policymakers seeking to enhance supply chain performance through strategic analytics capability development. acknowledgments: i would like to express my sincere gratitude to dr. hoang vu hiep for his invaluable guidance and inspiration throughout this research. his expertise, insights, and unwavering support have been instrumental in shaping the direction and quality of this study. i am deeply appreciative of his generosity in sharing his time, knowledge, and network, which have greatly contributed to the success of this research. his mentorship and commitment to academic excellence have not only enriched the quality of this work but have also had a profound impact on my personal and professional growth. references akter, 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(2016). research methods for business students (7th ed.). pearson education. https://doi.org/10.1016/j.jbusres.2016.08.009 https://doi.org/10.1016/j.ijpe.2016.03.014 https://doi.org/10.1002/smj.4250050207 76 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 7, 76-91, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.502 © 2025 by the authors; licensee eastern centre of science and education, usa the evolution of impact investing: measuring social and financial returns across sectors akomolehin francis olugbenga1  oluwaremi joel bali2 chukwudi ofoama3 aluko, olufemi rufus4 adesuyi aladesanmi5 liasu abdulraheem adeiza6 1,2,3,4,5,6dept. of finance, college of social and management sciences, afe babalola university, ado ekiti, nigeria. email: akomolehinfrancis@pg.abuard.edu.ng email: oluwaremijoel@pg.abuad.edu.ng email: ofoamachukwudi@pg.abuad.edu.ng email: femaluko16@yahoo.com email: suyialadesanmi91@gmail.com email: liasuabdulraheemadeiza@gmail.com ( corresponding author) abstract this research investigate the development of impact investing as a strategic approach to generating financial returns and social and environmental returns. based on a systematic literature review and comparative sectoral analysis, the study investigates how dual returns are conceptualized and operationalized in key sectors (viz., education, healthcare, renewable energy and fintech), and how these are assessed. the paper explores the effectiveness of current measurement frameworks such as iris+, sroi and sdg alignment when applied to different types of investment, considering both what they achieve and what they lack. drawing on examples from sub-saharan africa, india, and southeast asia, the research highlights the tradeoffs and synergies characteristic of sector-specific impact strategies. the findings underscore the importance of blended finance, catalytic capital and policy coherence in scaling the credible models of impact investing. the research adds to an increasingly rich literature by proposing an interdisciplinary framework for combined rate of return assessment and by pinpointing levers to strengthen accountability, scalability and investor alignment. it ends with an exhortation to go further together and get under the hood of new tools, such as ai-driven impact analytics and climate-linked finance, to inform future practice and theory. keywords: blended finance, catalytic capital, dual returns, impact investing, sdg alignment, social return on investment. 1. introduction in recent decades, the financial world has experienced a sea change as a growing number of investors seek to align their investments with their values while seeking competitive or superior financial returns. this method — more commonly known as impact investing — has blossomed into a game-changer in the hybrid land of finance and social value. grounded in the application of the mind-set which seeks to create tangible social and environmental value as well as profit, impact investing is emerging among institutional investors, philanthropic foundations, development finance institutions, and high-networth individuals, especially with the bid to achieve global developmental imperatives like the united nations (un) sustainable development goals (sdgs) (giin, 2022; oecd, 2023). with persistent global challenges such as climate change, inequality and access to basic services, impact investing is seen more and more not as niche, but as an essential thread in the weave of efforts to unleash private capital for the public good (bugg-levine & emerson, 2020). positioning impact investing within the market landscape of socially responsible finance, it becomes apparent that we need to differentiate it from related concepts like esg (environmental, social, and governance programs), corporate social responsibility (csr), or philanthropy. esg investing usually incorporates environmental and social risks into the financial decision-making process without the need for it to be purposeful and measurable impact (kölbel et al., 2020). csr, in contrast, refers to corporate practices of fulfilling ethical obligations typically through philanthropy or systemic activity of compliance, and can generally be described as peripheral to a firm’s core business logic. philanthropy, though traditionally rooted in the concept of social good, generally emphasizes altruism and giving away money free from the obligation of receiv ing a financial return (jackson & harji, 2019). by comparison, the boundaries of impact investing intersect inintention, measurability and financial return—a blended approach that redefines value (emerson, 2022). mailto:akomolehinfrancis@pg.abuard.edu.ng mailto:oluwaremijoel@pg.abuad.edu.ng mailto:ofoamachukwudi@pg.abuad.edu.ng mailto:femaluko16@yahoo.com mailto:suyialadesanmi91@gmail.com mailto:liasuabdulraheemadeiza@gmail.com https://doi.org/10.55220/2576-6759.502 asian business research journal, 2025, 10(7): 76-91 77 © 2025 by the authors; licensee eastern centre of science and education, usa and it’s that twin consideration of social and financial returns that really sets impact investing apart from these types of things around the edges. the people investing in this space haven't thrown fiscal responsibility out of the window, but rather incorporated social good into their investment theory. this double-edged ambition is becoming relevant as the different stakeholders from investors to policy makers realize the limitations of purely profit-driven models to cope with global systemic risks. it is also an opportunity to direct capital flows to inclusive, equitable and sustainable development results (undp, 2021). therefore, impact investing is not simply about “doing less harm, but about having a positive and intentional impact or transformation in underserved communities and in key sectors (giin, 2023). from a historical perspective, impact investing developed from early forms of philanthropic grant-making and sri approaches into more formalized, institutionalized forms of capital deployment. the term “impact investing” was first used in 2007, although it has its origins in community finance of the 1960s and in mission-driven foundations (harji & jackson, 2019). advocates assert that impact investing has grown to become an increasingly large and sophisticated market over the past decade, as evidenced by the global impact investing network \(giin\) expecting over usd 1.1 trillion in assets under management by 2022 \(giin, 2022\). innovations, including but not limited to blended finance structures, catalytic capital, green bonds, and outcome-based contracting have pushed the envelope of the potential for impact investing in emerging, and developed markets even where/if for different reasons (world bank, 2021; oecd, 2024). one of the trends in the development of impact invest is that there has been a diversification in the sectors. with early investments targeted at microfinance and affordable housing, portfolios today are comprised of a diverse set of sectors including education, health, clean energy, agribusiness, digital inclusion and fintech. all of these sectors have their own opportunities and challenges when it comes to measuring financial performance and social impact. for instance, education-specific funds may measure impact by the number of children enrolled or literacy rates; clean energy investments may highlight carbon reduction or energy access (giin, 2021). this sector-specific variation highlights the need for multi-level, context-sensitive frameworks for assessing returns in impact investing (sullivan et al., 2023). facing a number of conceptual and operational challenges, the field of impact investing is still in the process of rapid development. at the root of both is the measurement and standardization of impact across sectors and geographic regions. unlike financial returns, which could be straightforwardly measured using classical metrics like roi or irr, social and environmental returns are multi-dimensional, qualitative, and typically experience issues of attribution (jackson & harji, 2021). in addition, such forces can bias comparisons making it difficult to set broad benchmarks for success. there is no unified reporting standard and there is a lot of “impact-washing,” which erodes transparency and investor credibility (oecd, 2023). given this background, this research aims at understanding the development over time and across sectors of impact investing, including how financial and social returns are defined, measured and reported. the following are the research objectives that guide this study in particular: i. introducing the evolution of history and institutional development of impact investing from philanthropic origins to marketchasing models. ii. to understand how social and financial impact are defined, measured, and valued across sectors. iii. to compare sector level differences in impact investing returns, with examples from health, education, green energy and fintech. iv. to assess the impact of current tools and frameworks (iris+, giirs, sroi, etc)on enabling the measurements of dual return. towards these goals, the research questions that the study attempts to answer are: i. what has been the development of the theoretical basis, tools and institutional dimensions of impact investment? ii. what are the primary models and metrics for tracking social and financial returns at scale, across issues and sectors? iii. how do the trade-offs and synergies between the financial and social dimensions play out across different areas of impact investing? iv. what factors and innovations influence the implementation of frameworks for conducting impact evaluation? the rest of this paper is organised as follows. the theoretical and conceptual basis for impact investing is described in section 2, providing a set of visual framework describing the dual-return approach. in section 3, we describe the methodology, such as data sources and evaluation criteria. history of impact investing in section 4 gives a detailed chronology of the development of impact investing. section 5 reviews sectorial measurement approaches and its challenges. comparative case vignettes are presented in section 6 to exemplify these risk premia. section 7 concludes by summarizing the findings and discussing policy implications. we end section 8 with thematic insights into how impact investing is likely to grow and evolve, and which areas merit additional study. 2. conceptual and theoretical review 2.1. conceptual clarification and review assessing the performance of impact investments cannot simply rely on sound, credible and standardized metrics for both financial and social returns. whereas traditional investment is largely based on quantifiable financial metrics – internal rate of return (irr), return on equity (roe), net present value (npv), and so forth – impact investing requires a broader assessment that encompasses non-financial results such as increased access to health services, educational achievement, carbon emissions reduction, and access to financial products and services. in the last decade, a range of tools and frameworks have emerged in response to the demand for standardisation and comparability of impact measurement. the most broadly used of these includes iris+, giirs, sroi, sdg alignment, and impact weighted accounts, each with specific attributes, benefits and constraints. asian business research journal, 2025, 10(7): 76-91 78 © 2025 by the authors; licensee eastern centre of science and education, usa developed by the global impact investing network (giin), iris+ is a free, open-source system of metrics intended to be used by investors to measure, manage, and optimize the social, environmental, and financial performance of their investments (giin, 2023). it offers a common set of metrics customized by sector (e.g., health, agriculture, housing) and outcome areas that org nizations and investment portfolios can use. iris+ has the potential to help investors to connect their impact strategy with global standards like the sdgs, while also allowing for sector-specific nuances incredibly valuable. a key benefit being the flexibility it provides to benchmark against peer investments and to aggregate impact data across funds, geographies and sectors. giirs following iris+ is the global impact investing rating system (giirs), the independent impact rating and analytics platform managed by b lab. by calculating scores for five areas of impact (governance, employees, community, environment, and customers, b lab, 2022) it uses a broad scoring mechanism. while iris+ is metric-based only, giirs integrates both qualitative and quantitative data, outputting an impact score to allow fund managers and institutional investors to benchmark impact performance at the company and portfolio levels. giirs has been particularly popular as an impact measurement tool among impact funds and private equity vehicles looking to demonstrate their impact investment practices, especially in emerging markets (jackson & harji, 2021). the sroi toolset also supplements this by providing a methodology to attach a dollar value to social impacts – thereby turning unquantifiable benefits into a dollars and cents figure (e.g. $4 of social value created for $1 invested). in contrast to giirs or iris+, sroi focuses on the stakeholder, and extensive mapping of inputs, outputs, outcomes and impacts is required, integrated in many cases with a theory of change as its conceptual pillar (nicholls et al., 2019). although sroi helps to make social value more transparent for predominantly financial-focused investors, it is criticised for being based on subjective assumptions and for the lack of comparability between sectors (maas & grieco, 2017). yet, many ngos, social enterprises and impact funds use it, mostly in areas like education, community development and health. the sdg alignment framework offers a macro level impact orientation, enabling investors to connect their capital allocation to targeted global development agendas. the sdgs contain 17 goals and 169 targets, from poverty reduction to climate action, thus creating a universal language for impact results (undp, 2021). many funds ask investees to map their impact outputs to sdgs for tracking purposes internally, but also in hopes of being able to dovetail with global esg disclosure mandates and values-aligned investors. although sdg mapping is not as precise as iris+ or sroi, its value is in universality and policy relevance. more recently, a new development in reporting has been introduced known as the impact-weighted accounts (iwas), whose goal is to integrate impacts into basic financial reporting, value them monetarily and include them in traditional financial statements, such as profit and loss accounts (serafeim et al., 2020). the method, developed by harvard business school’s impact-weighted accounts project, attempts to internalize externalities like costs of pollution and social wage premiums into profit-and-loss numbers. the novelty of this one is that it could move impact accounting into the mainstream by putting impact onto the balance sheet and making firm-to-firm comparisons easier, and shaming a bit harder. form to content although early-stage so far, iwas are increasingly being piloted by corporates and funds who are seeking fully audited impact disclosure. the choice and use of such metrics, however, also will depend on sector-specific return profiles, as the financial and social returns differ widely depending on industry. in healthcare, for example, impact could be reduced to indicators (e.g patient reach, disease incidence reduction, or maternal health condition), and the latter can be moderate because of regulatory pricing, non-profit collaboration, or cost in r&d. by contrast, there is a strong positive correspondence between financial and social returns in renewable energy, particularly in solar and minigrid infrastructure where investors can earn predictable, inflation-linked mail-rate returns, while rural villages secure access to energy as well as environmental gains (world bank, 2022). when it comes to investments in education, your social returns might be seen as higher enrolment, improved literacy, or teacher quality but the monetization of these results is not straightforward, and the financial returns could be less or take longer. fintech and digital inclusion solutions tend to demonstrate financial returns, with the possibility for fast scaling and high market demand, but social impact returns such as broader access to financial services, or mobile banking infrastructure, for excluded demographics need to measureable in ways that are immune from “impact-washing”. in agriculture, particularly smallholder agriculture, returns are heavily influenced by seasonal risks, climate variability, and market access, which makes social metrics (eg, yield increase, food security, gender empowerment) more fundamental than high financial returns. accordingly, diversity of sectors represents a challenge and an opportunity for the impact measurement frameworks. metrics need to be standardized enough for aggregating, benchmarking, and strategic decision making, but flexible enough to capture the nuanced specificities of each sector. a homogenous measure of impact would not only be methodologically erroneous, but it might also unduly influenceresource allocation, and thwart desirable or sustainable ends. and so, a robust impact investing ecosystem will be one where iris+ is thoughtfully integrated (as standardization), sroi (as valuation), giirs (as certification), sdg alignment (as global coherence) and impact-weighted accounts (as mainstreaming accountability) all accounting for the realities of sector-specific return dynamics. asian business research journal, 2025, 10(7): 76-91 79 © 2025 by the authors; licensee eastern centre of science and education, usa figure 1. integrated conceptual framework for measuring dual returns in impact investing. this diagram visually represents the full logical flow of the study, capturing how capital inputs—financial, human, and social—are transformed through targeted investment and operational activities into intermediate outputs and measurable impact outcomes. mediating factors such as effective management and operational efficiency shape the internal transformation process, while moderating factors—sectoral context, regulatory environment, socio-cultural dynamics, and external shocks—influence the strength and direction of both financial and social returns. the framework supports a systematic evaluation of how impact investing generates blended value across diverse sectors, aligning with the study’s objective to explore trade-offs, synergies, and contextual variability in achieving dual returns. figure 2. conceptual framework for dual-return impact investing. this diagram illustrates how capital inputs are transformed through investment and operational activities into measurable financial and social outcomes. mediating factors such as efficiency and innovation enhance internal pathways, while moderating factors—like regulatory environments and sectoral conditions—influence outcome strength. the framework underscores the integrated flow of capital toward blended value creation in impact investing. 2.1.1. assessing financial and social returns the quantification of both financial and social returns—also known as dual return assessment—remains one of the most convoluted issues in the impact investing sector. "financial returns are relatively easy to measure using traditional investment metrics like irr (internal rate of return), npv (net present value), and roe (return on equity) while social returns are best measured using contextually appropriate (often qualitative) measurement tools. such measurement differences are further compounded by the challenge of attributing outcomes to social interventions within dynamic social systems which pose significant methodological and conceptual challenges (jackson & harji, 2021; giin, 2023). lack of standardisation one of the key obstacles for a dual return measurement approach is the absence of standard measurement methodologies that can be scaled and applied across all sectors, geographies and types of investment. social impacts are usually remote, indirect and multi-factor, rendering casual identification a challenge (ebrahim & rangan, 2014). moreover, investors have a wide range of comfort levels with social vs. financial tradeoffs; some require market-rate financial returns, while others will accept concessionary returns – in the form of below-market financial returns – in exchange for high impact. this leads to heterogeneity in investor expectations asian business research journal, 2025, 10(7): 76-91 80 © 2025 by the authors; licensee eastern centre of science and education, usa and a challenge to benchmarking (oecd, 2023). moreover, a risk for impacting-washing (i.e., claiming investments to be impactful without sufficient evidence) may arise if measurement instruments are not sufficiently stringent, transparent or subject to independent verification (serafeim et al., 2020). overcoming these challenges, practitioners have started to embrace sector-specific metrics as a way of measuring the impact relevance and financial performance. for health, fundamental social performance indicators are patient extent, decline of disease prevalence, maternal and child health and equity of access to health care. monetary returns here typically come in such forms as proliferating insurance coverage, lower-cost treatments, or scalable telemedicine schemes. but moderate irr has already been the norm for the industry because of the regulatory indians, the long gestation period and public-private dynamics (world bank, 2021). measurement frameworks such as iris+ suggest metric pi4060 (patients served) and pd1602 (average reduction in ill days) to measure health outcomes (giin, 2023). in the field of education, social performance is measured by such indicators as student learning outcomes, enhancement of the literacy rate, teacher-student ratios and equity of access (in particular for girls and excluded population). the financial return opportunity here is generally small and long-term, especially if the investments are made into early childhood or public education at scale. but newer models, such as income-share agreements and ed-tech platforms, have paved the way for new channels of monetization and scalability. social return on investment (sroi) approaches are particularly suited to this sector by structuring financial proxies to incorporate such outcomes as higher future incomes or enhanced social mobility (nicholls et al, 2019). for example, a us$1 investment in early childhood education can bring a us$4–$9 return in long-term social benefits (unesco, 2022). among industries, the best mutual fit for financial and social returns is likely in the energy sector, specifically the clean and green energy space. from a financial point of view, commonly these generate stable cash flows, inflation indexed revenues and attractive pay back period (ppa). ” socially, advantages consist of decreasing co₂ emissions, increasing energy accessibility in rural areas, creating local employment, and providing women with a safer alternative to combustions in their homes. measurement platforms like giirs and iris+ with metrics such as oi1479 (tons of co₂ avoided) and pd1516 (number of households with access to electricity) are worth considering. this sector is a case in point in terms of an industry that embodies a model where financial footprint directly connects to sdg 7 and 13 and extremely suitable for blending finance instruments and green bond investors (oecd, 2024; irena, 2023). among fintechs and smes, impact measurement is increasingly oriented towards financial inclusion, access to credit, digital literacy and business growth as benefits, and particularly addressing women and underserved communities. there is typically more emphasis on financial returns in this area given low capital intensity, scalability and market feedback. metrics such as the inclusivity index, new growth in tpv or customer acquisition in unbanked geographies are strong measures of social outreach. but the responsible provision of loans and prevention of over indebtedness also remain important ethical issues (klapper et al., 2021). the iris+ metrics, such as pi9317 (number of first-time borrowers) and pd5041 (percentage of female clients served) are commonly employed to monitor these effects. figure 3. dual returns measurement framework. this diagram outlines the key challenges in measuring dual returns across sectors and the tools used to address them. it categorizes metrics by sector—health, education, energy—and aligns them with relevant financial and social indicators. the flow leads into measurement tools such as iris+, giirs, and sroi, emphasizing the need for sector-specific yet standardized evaluation approaches as for measurement instruments, several frameworks offer guidance in all sectors. led by the giin, the iris+ system provides a set of standardized metrics tied to the sdgs and sector. it enables comparison and consistency for measuring social results, but does not provide ratings. giirs, by contrast, offers comprehensive impact scores and third-party validation, which are useful to funds at the level of fund. it provides a more monetized impact valuation, driven by the stakeholders and is suited to the social environment. a global compass, but no granularity, is offered by the sdg alignment framework while impactweighted accoun ts seek to entrench ex ternalities in traditional financial reports, but are in their infancy (serafeim et al., 2020; clark et a l., 2023). comparative analysis across sectorsa comparative analysis across sectors reveals that the presence of concurrent financial and social returns as well as their trade-offs and synergies differ substantially. social impact is more immediate, and clearer-cut, in the fields of health and education, yet sinks in the economic arena may take years to emerge. in energy and fintech, dual returns are closely related, with financial models underscoring swift scale in parallel to tangible impact. these distinctions highlight the necessity of sector-specific impact strategies and the requirement for adaptive metrics to mirror distinct sector structures and constraints. in the end, if an impact investing strategy is to be well executed, it will be the result of a tension between robustness and sensitivity, grounded in taking metrics that are not only valid and reliable but are valid and reliable for those who stand to benefit from making good on the mission. the combination of financial and social performance continues to be the lifeblood of credibility and success within impact investing. asian business research journal, 2025, 10(7): 76-91 81 © 2025 by the authors; licensee eastern centre of science and education, usa 2.1.2. evolution of impact investing the idea of impact investing is a far cry from what it was just a few short years and decades ago; it has progressed from a mere thought most strongly evident within the actions of philanthropic-minded financiers, not to mention including the now widely-adopted strategy in capital markets around the world. this transformation is indicative of a larger trend in how we view capital — beyond financial returns as a source driving positive, measurable social and environmental change. impact iq that allowed the field to mature across several phases, defined by a combination of principled and pragmatic innovations both at the level of institutions, financial markets and global development priorities (giin, 2023; oecd, 2024). the first phase in the rise of impact investing evolved from philanthropy and venture philanthropy, as mission-oriented individuals, foundations, and religious groups looked to support social enterprises without entirely relying on grants to provide public goods. this era, which roughly encompassed the reign from the 1960s to early 2000s, was focused on value-driven allocation of resources—often investing in community development, microfinance or affordable housing. venture philanthropy contrasted with the unstructured approach of traditional philanthropy by bringing the tenets of strategic investing to the social sector, with a focus on scalability, sustainability and performance, while still placing social value ahead of financial returns (harji & jackson, 2019). can this phase, key actors were mission-related foundations such as the rockefeller foundation and the calvert foundation, who started to experiment with programme-related investments and subordinated debt to derisks early-stage social ventures (jackson & harji, 2021). the expansion period for impact investing, starting in the late 2000s, saw the arrival of institutional investors, the recognition of impact measurement frameworks, and growth of international networks and coalitions. the concept of “ impact investing” was first coined in 2007 at a gathering at the bellagio center in italy, sponsored by the rockefeller foundation, which helped to develop further recognition of the space (bugg-levine & emerson, 2020). it was during this phase that important institutional infrastructure was established, such as global impact investing network (giin), principles of responsible investment (unpri) and the global steering group for impact investment (gsg). these media enabled the transfer of knowledge, harmonisation of techniques and mobilisation of capital. its annual surveys showed the exponential trajectory of the sector, as assets under management leapt from $25 billion in 2013 to more than $1.1 trillion by 2022, driven by growing interest from pension funds, development finance institutions (dfis) and family offices (giin, 2022). at the same time, international regulators and market-makers started to recognize impact investing as an investment type, supporting esg [environmental, social, and governance] integration and sustainability disclosure criteria. impact investment has evolved in recent years to encompass complex financial structures and market instruments that appeal to commercial and concessional capital. key to this process is the use of catalytic capital – that is, patient, risk-tolerant capital that aims to leverage private investment into high-impact sectors and geographies (macarthur foundation, 2022). catalytic capital is commonly deployed as subordinated debt, guarantees or first-loss tranches in blended finance arrangements. concurrently, blended finance has become an important tool to align development needs with commercial money, particularly in frontiers and emerging economies. blended finance modalities are used to leverage public or philanthropic finance through private sector investment to de-risk investments in projects that generate social benefits, such as renewable energy, health and agriculture (oecd, 2023). in addition, new products including green bonds, social bonds, and sustainability-linked products have broadened the universe of opportunities for impact-seeking capital. for example, the global green bond market topped over 500 billion usd in annual issuanc es by 2023 with funds directed towards climate-smart infrastructure and energy transition projects (icma, 2023). a further development has been the increasing popularity of results-based financing models – for example social impact bonds (sibs) and development impact bonds (dibs) – which tie financial returns to the delivery of pre-defined social outcomes. they have been particularly helpful in areas with more measurable outcomes and public sector participation, such as education, employment, and public health (world bank, 2021). while the impact investing sector is said to have been on a steady uptick, exploring how global versus regional trends play out draws a more nuanced and mixed picture. in developed economies, institutional investors, regulatory requirements, and pressure from socially conscious consumers have been the main proponents of impact investing. mature capital markets, strong data infrastructure, and esg regulation have led firms in regions like north america and europe to adopt at a faster rate. for example, the european union’s sustainable finance disclosure regulation (sfdr) mandates asset managers to disclose what sustainability risk and principal adverse impacts they create, to be more accountable and transparent to the market (european commission, 2022). where traditionally the impact investing market has grown, it has been much more symmetrical in developing economies and heavily concentrated in sub-saharan africa, south asia, and latin america. while the social and environmental needs in these regions tend to be the most pressing – and therefore largest impact – these markets often experience structural challenges, such as regulatory instability, weak investor protection, underdevelopment of pipeline, and currency risk (gsg, 2023). although these problems are profound, some very creative regional projects have sprouted. for instance, the african development bank has advocated for local currency blended finance funds, and india has a thriving social enterprise ecosystem including domestic and international impact funds as well (undp, 2021). nevertheless, capital entering developing markets remains a small portion of global impact investing investments—limited to under 20% in crica 2022—and the global allocations have underscored the need for targeted policy interventions, de-risking mechanisms and catalytic funding to redress these imbalances (giin, 2023). in short, the trajectory of impact investing from values-based philanthropy to market-driven financial innovation represents a seismic reshaping of global finance. growing up is characterized by greater convergence of financial and social performance, underpinned by robust measurement models and a widening array of tools, models and cross-sector collaboration. the future development of the sector is likely to be driven by the intersection of technology, data analytics and sustainability imperatives to close the regional divide and democratize access to impact capital. asian business research journal, 2025, 10(7): 76-91 82 © 2025 by the authors; licensee eastern centre of science and education, usa figure 4. evolution of impact investing. this diagram traces the historical trajectory of impact investing across four phases: the early phase characterized by philanthropic capital and venture philanthropy; the growth phase marked by institutionalization and the emergence of giin, unpri, and gsg; recent trends including blended finance and green bonds; and the global-regional dynamics that differentiate approaches between developed and developing economies. figure 5. evolution of impact investing – timeline view. this timeline infographic illustrates the progressive development of impact investing across four major phases: early philanthropic origins, the institutional growth era, recent innovations such as catalytic capital and green bonds, and the divergence between global and regional dynamics. it highlights the chronological trajectory and key milestones shaping the impact investing landscape globally. 2.1.3. comparative cases in impact investing the diversity of impact investing by sector and geography highlights the need for comparative analysis. through the lens of three different but representative cases – an education impact fund more focused on the return in education in sub-saharan africa, a bond initiative around renewable energy in india, and an innovation fund for healthcare in southeast asia – this section explores in multiple dimensions, how social and financial returns, capital structures, and levels of risk differ across contexts. in addition, these case studies demonstrate how impact investing practices are applied, the usefulness of impact measurement tools, and structural issues investment practitioners will need to consider as they align purpose with profit. case 1: education-driven impact fund in sub-saharan africa background of injini and its activities injini: education impact fund for africa injini was established in 2018 as an education impact fund focusing on sub-saharan africa. the educate access fund (eaf)—a fictional yet representative amalgam of actual models including impact portfolio managed by novastar ventures and ubs optimus foundation—seeks to invest in scalable, low-cost education models in subsaharan africa. these range from low-cost private schools, digital literacy initiatives, and teacher training ventures. the fund raised usd 45 million from philanthropic foundations, dfis and missionaligned family offices as a blended financing mechanism in a 60:40 equity-debt model and a catalytic first-loss tranche to de-risk early-stage businesses (world bank 2021). eaf prioritizes the social metrics: student enrolment growth, improvement in learning outcomes (captured through literacy and numeracy assessments), and gender equity in access. iris+ indicators (e.g., pi4060: number of students served) and sroi models have been used to measure outcomes with a projected social return of 3 to 1 over five years (giin, 2023). but, the financial returns have been pedestrian at best, with irrs of 4-7% given the long gestation periods and low-margin business in these under served territories. political risk, exchange rate volatility and regulatory risk english language in education the risk profile is high given political instability, forex risks and regulatory uncertainty in the education segment. however, the fund’s capital stack, including its asian business research journal, 2025, 10(7): 76-91 83 © 2025 by the authors; licensee eastern centre of science and education, usa concessional tranche, and its impact-first investors has managed to absorb early losses in a way that delivers impactful social value. case 2: india renewable energy bond: the greengrid india bond this is a large scale debt-based impact vehicle focused on utility-scale solar and wind projects whose structuring was led by a consortium of indian private sector renewable energy developers with support from the indian renewable energy development agency (ireda). the usd 150 million bond was green-labelled under icma’s green bond principles and maturing in 7 years, has a fixed annual coupon of 6.5%. it drew investment from eu and japanese institutions who were looking to combine climate-aligned portfolios with stable emerging-market yields (icma, 2023). the social and environmental kpis are directly contributing to sdg 7 (affordable and clean energy) and sdg 13 (climate action) and include megawatt hours of clean energy generated, tons of avoided co₂ emissions and rural households electrified. for results reporting, iris+ indicators such as oi1479: ghg emissions reduced and pd1516: households gining electricity access are adopted. the money earned through the bond has been steady and competitive with open markets, supported by power purchase agreements (ppas) with state utilities. the risk is moderate, which includes the risk of delay of payments by the utilities and the movements in the foreign exchange but partially mitigated by the facility carries a partial credit guarantee from a multilateral development bank. this is a deal in which the financial and the impact proposition are closely aligned, and therefore should appeal to the mainstream esgist cohort of investors. case 3: health innovation fund in south east asia the asean healthtech fund targets early-to-mid stage digital health businesses in indonesia, vietnam and the philippines. the fund is looking for solutions such as ai-based diagnostics, telemedicine platforms, maternal health apps and logistics for last-mile vaccine delivery. the fund, with usd 70 million in capital commitments, uses a hybrid capital structure of venture capital equity and global health philanthropy grants, structured to enable mission-aligned exits and scale innovations (gsg, 2023). social impact indicators are measured based on the patients reached, disease averted, and equity in health. key metrics include pd1602: average return days of illness pi4060: count of patients served but also health outcome proxies drawn from public health databases. this fund also makes use of theory of change models which aids in understanding how health interventions can be mapped to intermediate and long-term health results. sroi analyses suggest a high impact potential— especially in maternal health for which investments in mobile ultrasound and prenatal care apps have been found to drive decreasing rates of neonatal complications. from an economic perspective, the fund is pursuing irrs in the 10-14% range, although realized returns fluctuate massively by venture as a result of regulatory headwinds and market fragmentation. the risk profile is high to moderate; this is indicative of the volatility of startup health markets mitigated somewhat by grant-funded technical assistance and digital scalability. table 1. comparative analysis. criteria educate access fund (ssa) green grid bond (india) asean health tech fund (sea) capital structure blended finance with catalytic capital green bond with ppabacked returns hybrid equity-grant structure financial return (irr) 4–7% fixed6.5% coupon 10–14% (targeted) social metrics enrollment, learning outcomes, gender equity co₂ avoided, households electrified patient reach, maternal health outcomes measurement tools iris+, sroi, sdg alignment iris+, giirs, sdg mapping iris+, sroi, theory of change risk profile high (political, regulatory) moderate (ppa risk, fx) high (startup volatility, regulation) geographic focus sub-saharan africa india southeast asia sector-sdg linkage sdg 4 (education) sdg 7, 13 (energy & climate) sdg 3 (health) table 2. sectorial dual return matrix. sector financial return (irr/roi) social return (sroi/sdg impact) return alignment education low to moderate high (sdg 4) trade-off healthcare moderate high (sdg 3) partial synergy clean energy high high (sdg 7 & 13) strong synergy fintech/smes high moderate (sdg 1 & 17) synergy with risk the sectoral dual return matrix compares financial and social returns across key impact sectors, highlighting areas of trade-offs, synergies, and risk. this table is useful for guiding investment decisions and assessing sectorspecific alignment with sustainable development goals (sdgs) these comparative case studies illustrate the diversity of approaches in impact investing and the importance of tailoring capital structures and measurement frameworks to sectoral and regional contexts. the education fund prioritizes deep social impact with patient capital, the energy bond showcases a highly scalable and financially stable model, while the healthcare fund navigates innovation-driven impact with moderate-to-high financial upside. the common thread across all three is the use of blended measurement tools—iris+, sroi, and sdg alignment—to articulate and track dual outcomes. as impact investing continues to evolve, such sectorally nuanced strategies and comparative insights will be essential for maximizing both financial viability and developmental relevance. 2.2. theoretical framework there are multiple theoretical underpinnings of impact investing, as it draws on a number of related but distinct frameworks that prioritize financial return and the generation of measureable social value. as impact investment transitions from a sui generis philanthropic venture to a full-fledged investment vehicle, it is necessary asian business research journal, 2025, 10(7): 76-91 84 © 2025 by the authors; licensee eastern centre of science and education, usa to be informed by rich theoretical frameworks that are conducive to the twin goals of profit maximization and social purpose. the blended value theory, theory of change, social return on investment (sroi) and stakeholder theory are some of them that together form the base on which understanding the mechanisms and perspectives governing impact investments are built. the blended value theory, developed by emerson (2003), holds that all organizations, whether for-profit or philanthropic, create a blend of economic, social, and environmental value and that distinguishing these orbits is an artificial and disempowering construction. it is the fundamental belief in impact investing that questions the historic division of financial return and social impact and insists that capital can and should be used to generate combined value. keyvalue thus becomes a common denominator across investors, entrepreneurs, and institutions – who all aim to seek financial returns while also bringing about individual and environmental impact. recent applications of this theory have shown its applicability to hybrid organizations and hybrids as investment vehicles that bridge multiple value domains (bugg-levine & emerson, 2020; nicholls, 2021). to this is added the theory of change, which offers a logic model for how selected interventions are expected to produce your desired results. this approach is particularly valuable for impact investing where the multiple causal pathways from the investment input to the social and environmental outputs can be better visualized. this demands explicit statements not only of what is assumed to take place (the activities, or interventions), on what conditions (context), and how it will be evident that a change has taken place (indicators of success), but also promotes transparency and accountability for measuring impact (weiss, 1995). investors and enterprises with a strong focus on impact often rely heavily on the theory of change to design investments, decide on performance benchmarks arrange for stakeholder engagement in co-defining outcomes. it is especially powerful in more complex, multi-stakeholder ecosystem domains like education or healthcare where pathways to impact are nonlinear and change dynamically (clark et al., 2019). development finance institutions and social enterprises have also strengthened the framework by embracing it to align activities with the 2030 agenda for sustainable development (undp, 2021). the sroi (social return on investment) model adds another layer to the evaluative capacity of impact investing by providing a systematized approach for translating the social value generated into monetary units. extending well-worn cost-benefit analysis, sroi attaches monetary proxies to social effects, allowing investors and organizations to quantify the social return generated by their activity using a ratio (e.g., $3 of social value for every $1 invested). this model allows comparability and articulates its impact to investors in terms they understand (financial returns), yet also retains social change at the centre of investment decisions (arvidson et al., 2013; maas and grieco, 2017). however sroi has also been criticised because it is based upon subjective assumptions, and because monetisation does not always reflect the true value placed on intangible, particularly qualitative, outcomes, such as feelings of empowerment or positive mental well-being (nicholls et al., 2019). yet its use in various industry settings—from renewable energy to micro-finance—demonstrates how malleable and increasingly credible ri&a practice has become. also calling into question the exclusive relevance of the shareholder value model is stakeholder theory, which argues that the purpose of the organization is to create value for a diversity of stakeholder groups—not just the shareholders (freeman, 1984). in the context of impact investing, this theory contributes to argument that the perspectives, needs and rights of affected communities, clients, employees and the environment need to be central consideration in the investment process. stakeholder participation is an economic necessity rather than a normative one, as it enables the promotion of legitimacy, lowers operational risks, and supportive decision-making that takes place in context that is sensitive to both the social and economic environments in which such investments are made (hörisch et al., 2020). additionally, this involvement of different stakeholders reinforce impact measure frameworks, as it becomes a way to ensure that metrics are embedded with the outcomes that are most important for those affected by the intervention (clark & brennan, 2019). recent research has also provided evidence on the extent to which resilient stakeholder frameworks enhance governance and health distribution and the fair share of benefits in impact-oriented projects (ebrahim & rangan, 2014). when combined, these theories provide a complete analytical viewpoint to assess the development, mechanisms and impact of impact investing in the various sectors. as per the blend value explain the philosophical underpinnings for financial and social results being deliberately knit together; theory of change lays out specific causal paths between the investment of capital and the achievement of impact; sroi gives us a means by which to quantify a social value in monetary terms; stakeholder theory keeps the logic of value creation grounded in the arena of inclusive, democratic and ethical processes of value creation. the goals of our research— to quantify and compare social and financial returns between sectors—requires not only one theory. but, in the opinion of the researcher, the integration between bv and t of c is the most relevant in strength terms for this study. as the theoretical basis, blended value theory provides the ground of integrated value creation; whilst theory of change enables operationalization of impact pathways and outcomes. together, they offer a sophisticated look at the ways in which impact investing produces a multi-dimensional return, which can be tapped in a host of sectors including housing, health, energy, and financial access. 3. methodology this paper follows a qualitative, multi-layered methodological approach that is inspired by a combination of systematic literature research and sectoral comparative analysis, with elements of mixed methods to account for empirical insights and conceptual synthesis. given the interdisciplinary character of impact investment between finance and social science, development economics, this integrated format seems particularly suitable to study the development of the field and the challenges of dual impact measurement in cross-sectoral contexts. the methodology is divided into two parts: the first one touches a systematic literature review which is done following the prisma 2020 criteria (preferred reporting items for systematic reviews and meta-analyses). 2.1. reviews were conducted and support was sought across the stages— identification, screening, eligibility assessment, and inclusion – and types of sources, peer-reviewed academic literature, policy reports, and practitioner literature from 2019 to 2025. data sources included academic databases (scopus, web of science, sciencedirect), asian business research journal, 2025, 10(7): 76-91 85 © 2025 by the authors; licensee eastern centre of science and education, usa institutional databases (e.g., global impact investing network (giin), impactbase and iris+, and oecd ilibrary, undp sdg knowledge platform). the selected sources also focused specifically on those possessing empirical testing, strong constructs, or conceptual models of impact investing -financial performance -social return in various themes. the prisma flow chart was used to present the review process, including the number of records identified, screened, assessed for eligibility and ultimately included in the qualitative synthesis (page et al., 2021). the systematic review is accompanied by a sectoral comparison framework which aims to ascertain how financial and social returns are defined, measured, and realized across specific impact sectors, such as in education, healthcare, clean energy and fintech/smes. we observed each sector using a content framework, which incorporated descriptive and evaluative categories. capital structure and financing sources, financial return indicators (roi, irr) and the assessment of social return proxies (i.e., sroi ratios, degree of sdg alignment, and with iris+ metrics), risk profiles including contextual regulatory or geopolitical elements, and measurement tools and reporting systems were evaluated for each case. wh ere possible, triangulation was employed with empirical values from impact measurement datasets from global sources such as the giin annual impact investor survey, iris+ metrics repository and the impact measurement project database to enhance the credibility of conclusions. for instance, indicators that belong to the family of iris+ indicators such as pi4060 (number of beneficiaries served), oi1479 (ghg emissions reduced), and pd1602 (health outcomes improved) served to ensure comparability across the social outcomes. financial indicators were generated from investment disclosures, annual reports and third-party assessments where they were available. sdg alignment was employed as a global normative framework to locate outcomes in relation to internationally-agreed goals (undp, 2021). two assessment method of the study were developed based on the blended value creation precepts. while standard financial-performance measures (roi, irr, payback period, and revenue growth) were employed to enhance completeness and comparability across the investment types. social performance, by contrast, was assessed by context-specific indicators such as improved access to basic services, reductions in inequality, and environmental sustainability. sroi was especially helpful to monetize qualitative results of education and health outcomes, sdg mapping enabled cross-sectional aggregation of social value. it promoted the identification of tradeoffs and synergies of financial and impact results which were more easily identified and interpreted, thus enhancing the synthesis across cases. however, the study was not without limitation despite being a strong method the limitations still exist. first, our dependence on secondary data may create biases due to discrepancies in reporting, selective reporting, and the absence of longitudinal reporting. many impact investing deals — especially in emerging markets — have not yet standardized their reporting, thereby making it difficult to compare data from case to case. second, findings could not be necessarily generalized due to the variety of sectors and the geographies from which data were collected. although the present study tries to account for these differences with an organized comparative model, results need to be considered from a sector perspective. third, lack of real time primary data collection restricts the depth of empirical inference. this limitation is moderated by triangulation case studies and multiple reliable sources however. the study will also be limited to impact investing between 2015–2025 with a focus on the developing and emerging market regions those areas are most in need of social and environmental solutions, but with high investment risks and lack of scale. the education, health, clean energy, and fintech sectors were selected because they are highly relevant to the sustainable development goals (sdgs) and represent sectors with substantial coverage in impact portfolios worldwide (oecd, 2023; giin, 2022). it is possible that future work can further develop this approach to incorporate quantitative econometric models, tracking long-term effects with firm level data. in conclusion, this approach combines systematic review techniques with (1) a systematic comparative sector framework and (2) double-barrelled evaluation criteria. combining an empirical approach with a conceptual framework, the paper proposes a strong structure for examining credibility and transparency in impact investing across various settings and instances. asian business research journal, 2025, 10(7): 76-91 86 © 2025 by the authors; licensee eastern centre of science and education, usa figure 6. prisma flow diagram for systematic literature review. this diagram follows the prisma 2020 structure to detail the selection process of literature used in the study. it shows the identification of 398 records, screening of 312, eligibility assessment of 144 full-text articles, and the final inclusion of 42 studies in the qualitative synthesis. the flow ensures methodological transparency and reproducibility in the review process. 4. discussion the results of this study illuminate the multi-fold complexity and changing character of impact investing as a financial field and developmental instrument. through careful distillation of examples from four sectors – education, healthcare, clean energy, and fintech – clear trends in the pursuit, balancing and evaluation of financial and social objectives come to the fore. while seeking both sets of returns is an elemental feature of impact investing, the process of balancing these returns is not one-size-fits-all across sectors, market maturity, investor requirements, policy alignment and measurability of outcomes. crucially, one of the main insights from the cross-sectoral comparison is the varying potential for trade-offs and synergies between financial and social results. for example, in the renewable energy space, notably in markets such as the indian subcontinent, and kenya, investments can be aligned and also create value, for example through clean power generation both directly yielding revenue (e.g. predictable cash flows within the credit capacity of the relevant counterparty) but also contributing to energy access and climate mitigation (sdg 7/sdq 13). in contrast, for education-themed funds across sub-saharan africa, generating meaningful social impact—better learning outcomes, gender parity—often demands the trade-offs implicit in concessionary capital or long-term patient capital for smaller financial returns (sdg 4). in these cases, the fit between finance and social objectives is not as clear, requiring novel structuring methods such as blended finance or catalytic capital to resolve the tension between returns and the public interest. the healthcare industry, especially in southeast asia, represents an intermediary example where tech-driven innovations in health have strong social potential and moderateto-high return prospects while largely being contingent on legislative frameworks and user adoption behaviors (sdg 3). fintech investments in scale-up solutions for financial inclusion have demonstrated promise in reconciling scale with inclusion results (sdg 1 and sdg 17) but they struggle with data privacy and security, responsible lending, and service provision to the most vulnerable. these findings further support past data to suggest that sector-specific investment strategies and impact metrics are instrumental in driving optimal balance of trade-offs and synergies across the continuum (giin, 2023; oecd, 2024). on the effectiveness of measurement, the authors found that although tools such as iris+, sroi and sdg mapping have contributed to aligning and making impact reporting to be more comparable, the missing methodological and implementation gaps remain. iris+ provides sector-specific metrics that relate to global frameworks, but it is based on self-reports that are not independently validated. sroi offers a robust valuation approach, but is open to interpretation and can be resource heavy – particularly with non-material or long-term outcomes such as empowerment or behavioural change. sdg alignment provides a common purpose language of impact, but is not detailed enough to manage project level performance. such tools, while frequently used, tend to be deployed in isolation, and show a high degree of divergence in fund typeand country-specific usage, which hinders the development of an integrated standard for the measurement of impact at global level (serafeim et al., 2020; jackson and harji, 2021). asian business research journal, 2025, 10(7): 76-91 87 © 2025 by the authors; licensee eastern centre of science and education, usa table 3. impact measurement tools comparison table. the above is the impact measurement tools comparison table, which compares key frameworks based on scope, strengths, limitations, and sectoral relevance. this matrix helps investors and practitioners select appropriate tools based on their context and goals. a further important takeaway is around the scalability and replicability of impact investing models. industries like clean energy or fintech owe their ample scalability to momentum from technology leverage, regulatory tailwinds and substantial addressable markets. on the other hand, education and healthcare models are more context-specific, many focusing on low-income and/or remote population groups, which require heavy localization and stakeholder engagement, thus losing replicate ability across geographies. however, successful projects show that scalability is determined by more than just financial returns; institutional capacity, ecosystem readiness and policy support all play key roles. investor motivation further, both the structure and results of impact investments are strongly influenced by the motivation of investors. investors including dfis, philanthropic funds or esgfocused institutions more aligned with mission are likely more willing to back hybrid and blended models that accept sub-market level returns for high level impact outcomes, while mainstream asset managers may follow a risk-adjusted returns approach, even if that implies less impact: (undp, 2021). the application of these findings to the sustainable development goals (sdgs) is of substance as well as strategy. impact investment, therefore, has gained recognition as an important model of financing for the sdgs, especially in the field of capital starved areas and impact relevant areas. indicator 1: empowerment sdg 1: no poverty and sdg 4: quality education investments targeting sdgs 1 and 4 focus on addressing fundamental developmental gaps, while those in sdg 7: affordable and clean energy and sdg 13: climate action contribute to global environmental sustainability. and yet, impact investing naturally captures the essence of sdg 17 (partnerships for the goals) because, by requiring a combination of public, private and philanthropic capital providers to unlock new potential paths for inclusive development, it necessitates cross-sector collaboration. but to achieve the transformative power of impact investing, it needs to go beyond project-level, and support system coherence in the way we design, track, and regulate the flow of capital toward the sdgs. notwithstanding its encouraging course, impact investing continues to suffer from enduring lacuna in policy harmonization, capital market infrastructure, and regulatory certainty across the emerging and frontier markets. impotent regulatory frameworks, erratic tax incentives, and the lack of common disclosure standards stymie the growth of impact motivated firms. a further challenge, in the absence of standardized certification or accreditation of impact investments in many jurisdictions, is that the field is susceptible to the possibility of impact-washing (oecd, 2023). these challenges require a more concerted policy response— one that embeds impact investment as part of national development plans, supports public-private financing tools, and requires transparent impact reporting. in addition, international financial institutions need to focus on standardizing regulation and developing market infrastructure at the regional and local levels to enable a robust pipeline of investable impact transactions. finally, a synthesis across sectors is concluded, showing that, although impact investing has advanced in generating double returns, its effectiveness depends on the ongoing development of measurement systems, investor alignment, and enabling environments. now, however, the field needs to move from fragmented practices to institutionalized, evidence-based models that signal the direction and preempt the decline of data-driven and policyintegrated practice – practices that do not just respond to market incentives, but also to development concerns worldwide, in a robust and accountable way. tool scope strengths limitations sector fit iris+ standardized metrics sector-specific indicators, sdg alignment self-reported data, lacks scoring all sectors giirs rating system external validation, comparative scoring costly, less flexible funds and firms sroi monetized social value stakeholder-driven, intuitive valuation subjectivity in financial proxies education, healthcare sdg alignment global benchmarks universally recognized framework lacks granularity all sectors impact-weighted accounts financially integrated impact integrates impact into financial statements still under development, limited adoption corporate esg asian business research journal, 2025, 10(7): 76-91 88 © 2025 by the authors; licensee eastern centre of science and education, usa 5. policy and practical implications figure 7. stakeholder role mapping in the impact investing ecosystem. this circular diagram illustrates the interconnected roles of core actors: investors provide capital; fund managers allocate it strategically; social enterprises implement solutions; dfis offer risk-mitigation and leverage; and regulators ensure policy alignment and market integrity. the cyclical flow underscores interdependence and the necessity of coordinated collaboration for sustainable and scalable impact outcomes. globally increasing focus on sustainable and inclusive development has also placed impact investing at the centre of efforts to align private capital with public objectives. but impact investing cannot reach its full potential unless it is backed by well-articulated policy frameworks, disciplined capital plans, and strong institutional infrastructure. the findings from this study point to various practical as well as policy implications for a range of relevant stakeholders, such as investors, fund managers, policy makers, international development agencies, and social entrepreneurs, as well as to strategic response by the way of interventions for strengthening the process of standardization, scaling up, and risk mitigation across the impact investing landscape. the answer for investors and fund managers is to double down on intentionality, transparency, and impact integrity. investment strategies have to formally incorporate dual return objectives, articulate their theory of change, develop explicit social objectives and have strong impact measurement plans. use iris+, giirs or sroi as a way investors can submit reports not only reporting but more importantly as a strategic tool to allocate capital, measure and monitor performance, and engage stakeholders. furthermore, fund managers should focus on sector specialization and contextual intelligence, particularly working at the frontier or in underserved markets where risk and return profiles are fundamentally different from traditional investor offerings. building up internal capacity around impact due diligence, data analysis, and esg integration will also be key to staying competitive and credible in a maturing sector. on the part of policy makers and regulators, an active stance is required to create the enabling environments that will facilitate growth of high-integrity impact capital markets. this would be through creating legal and regulatory structures which recognize impact investing as an asset class, creating impact verification and accreditation systems, and requiring disclosure standards for social and/or environmental performance standards. tax breaks, public guarantees and co-investment facilities are additional ways to draw in private capital to areas that are of great public benefit but perceived to be high risk — like affordable housing, public health or climate adaptation. also, impact investing roadmaps need to be integrated in national development plans and are accompanied by multi-stakeholder coordination platforms that connect finance with development and regulation. in developing markets, the greatest impact in crowding in long term capital is likely to be policies that facilitate the creation of local funds, facilitate the return of capital and encourage use of currency risk management instruments. asian business research journal, 2025, 10(7): 76-91 89 © 2025 by the authors; licensee eastern centre of science and education, usa figure 8. policy action roadmap. this flowchart outlines a sequenced set of reforms to strengthen the impact investing ecosystem. it begins with defining national or regional strategies, followed by legal and fiscal incentive frameworks. it then emphasizes building market infrastructure, standardizing metrics, mobilizing catalytic capital, and concludes with building local capacity. together, these steps enable scalable, inclusive, and accountable impact investment environments. multi-lateral and government development banks, development finance institutions (dfis), and philanthropic entities are central to temaxhange in the impact investing ecosystem. in addition to deploying concessional capital, these agencies should also serve as market shapers, developing infrastructure for ecosystems such as impact incubators, rating agencies and data repositories. even more importantly, they should be doing the hard work of building regional impact investment platforms — coordinated vehicles that pool resources, harmonize metrics, and catalyze cross-border pipeline development. instruments including the world bank, undp and the oecd can use their convening powers to legitimize and harmonize impact taxonomies and disclosure norms, which will serve to reduce fragmentation and facilitate global comparability. development agencies also need to invest in developing the capacities of local social enterprises, fund managers and regulators, to ensure that the impact investment agenda is broad and local. social enterprises and impact-first innovators need to raise their investment readiness, by evidenced value propositions, impactful pathways and scalable models. enterprises will need to demonstrate good governance, adopt strong m&e systems, and move toward financial viability that does not come with mission drift to attract blended or commercial capital. partnerships with funders -through outcome-based financing models such as development impact bonds (dibs) or amcs, among others -can supply flexible and impact-anchored capital for the exploration of early-stage innovation. innovators must also seek collaborations with technology suppliers and research institutions, as well as local governments, where contextual solutions can be co-created with measurable and replicable impact. one lament echoed in every sector and geography is the lack of common standards and shared impact frameworks. what is needed to respond to this is currently an imperative to devise regionally-shaped yet globally coherent standards for impact measurement, assurance and reporting. organizations addressing harmonization issues are imp (impact management project), undp’s sdg impact standards, the oecd’s working group on impact measurement, to mention few, but are not adopted widely. a policy option would be to create a system of regional impact standards councils with investors, regulators, corporations and corporations organized in specific regions to match general to particular and maintaining flexibility and creativity. the frameworks need to be based on participatory stakeholder processes and be flexible with market and developmental dynamics. finally, the research underscores the importance of blended finance and catalytic capital as critical mechanisms to de-risk investments and catalyze scalable capital flowing into high-impact areas. blended finance instruments— like first-loss capital, subordinated equity, credit guarantees, and technical assistance grants—need to be used carefully to attract private capital without sacrificing the social mission. institutions such as the international finance corporation (ifc), macarthur foundation and african development bank have brought in catalytic models that suggest that it is possible to change capital allocation behaviour if we are willing to absorb impact risk. but to scale these, they need to be accompanied with clear standards and performance-based triggers, and transparency around the concessional level to ensure that they are not distorting the market or fostering dependency. meanwhile, the collective of public and philanthropic actors should continue to prioritize marketbuilding, not direct capital deployment, and make way for local fund managers to step up to the fore. in summary, the progress of the impact investing industry requires a coherent collective action among the different actors on the ground in order to converge the capital, policy and practice towards common development objectives. through enabling integrity within institutions, enabling inclusive frameworks for regulation, and derisking investments with novel funding models, together, external stakeholders can all help accelerate our path towards a financial system that genuinely rewards both profit and purpose. asian business research journal, 2025, 10(7): 76-91 90 © 2025 by the authors; licensee eastern centre of science and education, usa 6. conclusion this research has moved a thorough inspection of the impact investing evolution, sectoral applications and financial and social returns frameworks. a key finding is the rising institutionalisation of impact investing, which has evolved from a philanthropic practice to a sophisticated investment strategy among mainstream financial intermediaries. the cross-sector comparison in education, healthcare, renewable energy and fintech demonstrates that whilst there are different levels of return alignment each sector, the deployment of blended finance vehicles, catalytic capital and context-specific impact metrics can go a long way toward managing tradeoffs and fostering synergy between purpose and profit. a key contribution of this analysis is the sector-wide synthesis and method integration made available to both practitioners and researchers, helping to conceptualize the inter-relationship between capital structures, outcome measurement and risk profiles. through the use of these measurement tools, in the context of a systematic sectoral approach (i.e they are baseline standards for the sector at large), the paper both extends and contributes in practical terms to our understanding of the ways in which impacts investment can seek to deliver blended value. additionally, the study underscores the importance of policy coherence, institutional partnership and commitment by investors to transparency and intentionality to successfully scale impact. what’s next over the next five years, impact investing will be redefined by the intersection of technology, data, and funding by outcomes. digital ecosystems, blockchain traceability, ai powered impact adaptation, are new frontiers to advance accuracy, decrease compliancy, drive accountability. the transition to outcomes based financing mechanisms – from pay for success contracts to development impact bonds – will better align the interests of investors with actual progress in human and environmental well-being. there are several ways in which the study could be extended in future research. these include the potential of artificial intelligence in impact assessment, such as through automated data collection and real-time feedback loops; the development of climate-linked financial products that embed mitigation and adaptation impacts in investment returns; and the long-term monitoring of impact investments to examine their long-term viability, resilience and systemic change. second, further enquiry into the dynamic between local capital ecosystems and global norms around impact may shed light on how impact investing may be more inclusive, context sensitive, and aligned with community priorities. in sum, the destiny of impact investing has reached a crossroads. if supported by sound frameworks, creative tools and intersector cooperation, it may transform capital markets into forces for inclusive and sustainable development. but achieving this vision will depend on centering a commitment to rigorous decision making, transparency, and fairness in the distribution of risk and returns. references arvidson, m., lyon, f., mckay, s., & moro, d. 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(2022). catalytic capital: unlocking investment for impact. https://www.macfound.org/catalytic-capital nicholls, j., lawlor, e., neitzert, e., & goodspeed, t. (2019). a guide to social return on investment (2nd ed.). social value uk. https://socialvalueuk.org/resources/sroi-guide/ oecd. (2023). blended finance in action: case studies and policy insights. organisation for economic co-operation and development. https://www.oecd.org oecd. (2023). impact investing and blended finance: policy trends and tools. organisation for economic co-operation and development. https://www.oecd.org oecd. (2023). impact investment and measurement: building a common framework. organisation for economic co-operation and development. https://www.oecd.org/finance/impact-investment-measurement.htm oecd. (2023). measuring the impact of impact investing. organisation for economic co-operation and development. https://www.oecd.org/finance/measuring-impact-investing oecd. 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(2022). blended finance and impact investing in renewable energy (world bank energy sector report). https://www.worldbank.org/en/topic/energy/publication https://thegiin.org/research https://iris.thegiin.org/ https://gsgii.org/ https://gsgii.org/ https://www.icmagroup.org/ https://www.irena.org/publications https://www.worldbank.org/ https://www.macfound.org/catalytic-capital https://socialvalueuk.org/resources/sroi-guide/ https://www.oecd.org/ https://www.oecd.org/ https://www.oecd.org/finance/impact-investment-measurement.htm https://www.oecd.org/finance/measuring-impact-investing https://www.oecd.org/development https://www.oecd.org/ https://www.oecd.org/finance/future-of-impact-investing.htm https://sdgimpact.undp.org/ https://unesdoc.unesco.org/ https://documents.worldbank.org/en/publication/documents-reports/documentdetail/567891607914399801 https://www.worldbank.org/ https://www.worldbank.org/en/topic/financialsector https://www.worldbank.org/en/topic/energy/publication 25 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 11, 25-31, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.751 © 2025 by the authors; licensee eastern centre of science and education, usa the professionalization of compliance in thailand: barriers and structural constraints alon kohalny1  gabriel sayag2 1,2school of political science, university of haifa, israel. ( corresponding author) abstract this study investigates the current status and developmental challenges of compliance as a profession in thailand. through a semi-structured mixed methods approach conducted with 10 thai compliance officers in 2023 and 2024, the research identifies key institutional, cultural, and market-based barriers to professionalization. findings indicate limited cross-sector mobility, low engagement with professional associations, and employer-dominated structures that hinder the evolution of compliance into a recognized profession. drawing on global literature, the paper situates thailand’s context within the broader journey of compliance from a fragmented function to an emerging profession. it utilizes perks' (1993) model of professionalization and neoinstitutional theory to interpret these dynamics, while considering contributions from parker (1999), fanto (2020), pacella (2019), and others to explore progress, tensions, and future pathways. keywords: compliance profession, governance, professionalization barriers, regulatory framework, thailand. 1. introduction since the latter half of the 20th century and particularly following a landmark 1995 speech by then-sec commissioner richard y. roberts—one of the first public acknowledgments of chief compliance officers (ccos) as members of an emerging profession—the recognition of compliance as a distinct, standalone discipline has gained significant traction (roberts, 1995). this shift has spurred both institutional and academic interest, reinforcing the idea that compliance is evolving beyond its origins as a subset of legal or internal audit functions to become a profession in its own right 810. globally, the responsibilities of compliance officers have expanded markedly, especially within the financial sector. however, the degree to which compliance is recognized as a formal profession varies by jurisdiction. in thailand, despite its status as a regional financial hub, compliance remains under-professionalized. this article examines the reasons why compliance has yet to mature into a fully recognized profession in thailand, focusing on structural and institutional barriers (abbott, 1988; perks, 1993). thailand's emergence as a key financial center in southeast asia is underpinned by ongoing economic growth and regulatory modernization. as the country integrates further into global finance, the sophistication of its regulatory environment—and, by extension, the importance of compliance—has grown. this article explores how the development of thailand’s financial sector has heightened the demand for skilled compliance professionals, underlining the need for internationally recognized compliance education and training. over the past 25 years, thailand’s regulatory landscape has undergone significant transformation. starting with the anti-money laundering act of 1999, aimed at combating financial crime and terrorism financing, thai lawmakers have progressively strengthened regulations across a wide range of sectors. these include public companies, consumer goods, and retail, alongside compliance with international standards such as the foreign corrupt practices act (fcpa), the food and drug act (fda), the personal data protection act (pdpa), competition law, computer crime law, environmental regulations, and labour protection legislation. these reforms reflect thailand’s commitment to aligning with global best practices in governance and oversight. despite global economic volatility, thailand’s financial sector has shown impressive resilience. as one of the most dynamic economies in asean, thailand is strategically positioned to capitalize on regional trade and reinforce its role as a financial nexus. in this context, compliance is not merely about legal adherence; it is foundational to maintaining market integrity and fostering sustainable investment environments 8. effective compliance is essential for financial credibility, risk management, and ethical conduct, playing a crucial role in building investor trust—particularly among foreign investors. compliance failures can have farreaching consequences, undermining confidence and destabilizing financial systems. for thailand to sustain its economic trajectory and achieve its ambitions, a robust compliance ecosystem is indispensable. this places renewed emphasis on the training and expertise of compliance professionals. as regulations evolve and complexity increases, thailand must cultivate a pipeline of qualified professionals capable of navigating both https://www.chief-compliance-officer.org/ https://www.gartner.com/en/legal-compliance/trends/new-chief-compliance-officer https://www.chief-compliance-officer.org/ https://doi.org/10.55220/2576-6759.751 asian business research journal, 2025, 10(11): 25-31 26 © 2025 by the authors; licensee eastern centre of science and education, usa domestic and international compliance challenges. education, training, and globally recognized certifications will be vital for professionalizing the sector158. institutions such as the international compliance association (ica) are well-positioned to support this transformation by aligning thailand’s compliance practices with international benchmarks and fostering the development of a skilled, recognized compliance workforce. as thailand continues its ascent in the global financial hierarchy, the demand for well-trained, professional compliance officers will intensify. collaboration with global training providers, institutional support, and ongoing regulatory modernization are essential for ensuring the sector’s long-term integrity, competitiveness, and alignment with international standards. 2. literature review professionalization involves the development of specialized knowledge, a code of ethics, and a representative professional body (perks, 1993). abbott (1988) further emphasizes jurisdictional control and societal recognition. neo-institutional theory provides a lens to examine how local norms, employer practices, and sectoral influences hinder compliance's evolution. while countries like singapore and hong kong have adopted international standards, thailand’s compliance sector remains largely domestic in orientation. thailand’s compliance landscape has undergone substantial transformation in recent decades, driven by both internal reforms and external pressures for enhanced governance. case studies of multinational corporations operating in thailand reveal that the role of the compliance officer (co) has become increasingly prominent, with cos now reporting directly to senior management and acting as internal consultants across departments. their responsibilities have expanded from ensuring legal adherence to fostering a culture of integrity and providing compliance training, reflecting a broader shift from compliance as a procedural requirement to a core element of organizational governance (author, year). at the national level, regulatory reforms have been catalyzed by financial scandals and thailand’s ambition to strengthen its position as a regional financial hub. regulatory authorities such as the securities and exchange commission and the stock exchange of thailand have responded by tightening listing requirements and aligning domestic regulations with international standards. the oecd integrity review of thailand (2021) highlights ongoing efforts to centralize disciplinary investigations and professionalize compliance functions, aiming to improve public sector integrity and regulatory enforcement. nonetheless, persistent challenges include fragmented institutional responsibilities and the need for greater capacity building among compliance professionals to ensure effective implementation of integrity frameworks (oecd, 2021). recent research further underscores the growing demand for skilled compliance professionals in thailand, driven by increasingly complex regulations and the adoption of innovative compliance technologies. studies on thai-listed companies indicate a rising interest in digital compliance applications to enhance efficiency and risk management (chalermnon et al, 2023). initiatives such as the “regulatory room” project aim to increase regulatory compliance among smes through participatory digital platforms, highlighting the evolving role of compliance officers in navigating regulatory changes, promoting ethical business conduct, and sustaining investor confidence as thailand’s financial sector continues to develop (malesky et al, 2023). 2.1. from occupation to aspiring profession: the evolution of compliance the journey of compliance from a loosely defined set of activities to a distinct and increasingly formalized occupation, aspiring towards professional status, is a significant development in the modern organizational landscape (baer, 2020; fanto, 2020). initially, compliance was not a stand-alone function. it was often undertaken by legal counsel or risk officers. as regulations grew more complex and corporate accountability became more scrutinized, compliance evolved into a dedicated function. the title “compliance officer” gained recognition, and departments were formed around it. compliance has since become a viable and prestigious career path. professionals from diverse backgrounds, including law, increasingly pursue senior compliance roles. educational institutions and professional bodies have responded by offering specialized programs and certifications. organizations like the international compliance association (ica) and society of corporate compliance & ethics (scce) have formed to facilitate knowledge sharing and establish ethical standards. yet, challenges remain. compliance lacks mandatory licensing or exclusive legal jurisdiction, which limits its recognition as a full-fledged profession. its proximity to the legal field also results in an ambiguous identity—often viewed as a sub-function of legal rather than an independent domain (parker, 1999). some scholars argue compliance is evolving into a “quasi-profession” that borrows from but does not fully replicate traditional professions like law or medicine. moreover, regulators rely on compliance officers to enforce organizational integrity but stop short of endorsing them as autonomous professionals. without state-backed licensing or statutory recognition, compliance continues to develop in a patchwork fashion, relying on voluntary standards and certifications (pacella, 2019). the rise of regulatory technology (regtech) introduces both promise and concern: while it increases efficiency, it also risks reducing professional discretion to automated decision-making. 2.2. compliance in thailand: current landscape and challenges the evolution of compliance as a profession in thailand can be traced back to the late 20th century with the establishment of regulatory agencies like the pollution control department and the office of natural resources and environmental policy and planning. these institutions laid the groundwork for compliance mechanisms, particularly in environmental oversight. however, ethnocentrism and a historically cautious stance toward external standards have hindered the integration of international compliance practices. only recently has the importance of rule of law and standardized compliance practices gained political recognition. a significant milestone came in september 2023, when the thai executive branch announced its commitment to align national governance with global legal norms. this shift reflects a growing recognition of https://www.euromoney.com/learning/courses/management-and-professional-development/c-suite-and-board-education/fin270/chief-compliance-officer-cco-programme https://www.skillsoft.com/blog/the-evolving-role-of-a-chief-compliance-officer-insights-from-stephen-martin-at-skillsoft https://www.chief-compliance-officer.org/ asian business research journal, 2025, 10(11): 25-31 27 © 2025 by the authors; licensee eastern centre of science and education, usa compliance as a developmental pillar, yet the profession continues to lack formalized pathways and institutional support. as such, the compliance in thailand faces a dual challenge: aligning with international norms while being governed predominantly by local regulatory and cultural frameworks. evidence from recent studies suggests that multinational companies face difficulties implementing standardized compliance practices due to local cultural and operational conditions. mergers and acquisitions, particularly in sectors like pharmaceuticals, highlight these challenges—where conflicting compliance expectations arise between global policy and local practices. collectivist values, complex regulatory overlap, and resistance to external influence further inhibit cohesive compliance development. moreover, the digitalization of compliance, as demonstrated in studies on innovative applications for thailisted companies, introduces additional complexity. user adoption of compliance technologies hinges on perceived usefulness, trust, and system quality—elements that are often underdeveloped in thai institutions. the interplay between manual compliance routines and emerging regtech highlights a transitional phase where organizational readiness and cultural adaptation play pivotal roles. 2.3. research question and hypotheses given this context, our research question can be posed as follows: research question: to establish whether compliance in thailand displays characteristics of a recognized profession and to explore the reasons behind this. 2.4. hypotheses h1: compliance in thailand exhibits limited characteristics of a fully recognized profession. h2: sectoral organisations and practices in thailand are influential on the development of compliance as a profession. h3: limited exposure to international compliance associations and professional standards affects professional development within the compliance field in thailand. 3. methodology compliance professionals in thailand were identified using a two-stage approach combining network development with targeted sampling. this strategy was chosen to access participants within a specialised field where professionals are not easily identifiable through public directories or lists, as recommended in research on hard-to-reach or expert populations (atkinson & flint, 2001). the research began by developing a network of relevant professionals on linkedin to identify potential participants and key informants. subsequently, targeted sampling was conducted based on recommendations from initial participants and network contacts. these recommendations were assessed for relevance to the research objectives, considering sector and experience in compliance, in line with the reputational method of identifying knowledgeable individuals (emmel, 2023). efforts were made to achieve participation from compliance professionals across a mix of sectors (with a noted skew towards financial institutions) and with various levels of experience (minimum five years) to ensure a diversity of perspectives. in total, ten respondents participated. the combination of these sampling techniques facilitated access to experienced compliance professionals in thailand, supporting both the validity and relevance of the sample for the study’s aims. here’s a revised and academically robust version that integrates all substantive details from your draft, aligns with your actual process, and references tchouaket et al. (2019) as the foundation for your survey adaptation: 3.1. data collection tool and procedure this study employed a semi-structured, mixed-methods approach to explore the professional identity of compliance officers in thailand. data were collected between 2023 and 2024 from ten compliance professionals across the banking, insurance, healthcare and hospitality sectors. all had between 5-20 years’ experience in compliance. a 15-item structured questionnaire was developed by adapting items from validated professional identity frameworks, drawing on the multidimensional approach described by tchouaket et al. (2019), which emphasizes the integration of personal, relational, and professional practice dimensions in measuring professional identity. this ensured the survey was both contextually relevant and methodologically robust1. following completion of the questionnaire, each participant took part in an in-depth, open-ended interview. these interviews allowed participants to elaborate on their survey responses and provided valuable context regarding the operation of sectoral organizations and their influence on compliance practices in thailand. this two-stage process enabled the collection of both quantitative and qualitative data, supporting a comprehensive understanding of professional identity, institutional support, and engagement with professional associations among compliance officers. survey and interview responses were analysed thematically to identify patterns and insights related to the research objectives. 3.2. frameworks used for analysis 3.2.1. perks model of professionalization to assess whether the field of compliance in thailand exhibits characteristics of a recognized profession, we draw upon perks’ professionalization model. this framework outlines key dimensions that signal the transformation of an occupation into a fully recognized profession: 3.2.1.1. full-time occupation asian business research journal, 2025, 10(11): 25-31 28 © 2025 by the authors; licensee eastern centre of science and education, usa the first stage in professionalization is the transition of an occupation into a full-time commitment. this shift allows for clearer role definition, increased expertise, and a stronger personal and collective investment in the field's development. 3.2.1.2. professional associations a defining feature of a profession is the emergence of formal associations that promote shared values, best practices, and collective identity. such associations often begin at the local level before expanding nationally. these bodies facilitate knowledge exchange, professional dialogue, and standard-setting, thereby enhancing status and group cohesion. 3.2.1.3. professional standards and code of conduct professions are marked by adherence to a clearly defined ethical code and professional standards, often selfregulated by the field itself. a strong compliance profession would be characterized by an internalized commitment to ethical principles, going beyond technical knowledge to include the cultivation of values, beliefs, and conduct. 3.2.1.4. certification and education although not always listed as an independent milestone, certification serves as a formal recognition of knowledge and competence. professions typically require a specific body of knowledge, formal education, and credentials. 3.2.1.5. university-based training specialized university education plays a foundational role in professionalization. academic programs, degrees, and research initiatives deepen the knowledge base and institutionalize entry into the profession. 3.2.1.6. licensing and legal monopoly perhaps the most definitive feature of an established profession is legal recognition through state licensing. this grants exclusive rights to perform certain activities, often justified by the profession’s contribution to the public good. together, these elements highlight the multi-dimensional process by which an occupation achieves the status and authority of a profession. we will therefore use these to assess to what extent compliance in thailand can be described as a developed profession. 3.3. institutional theory having examined the extent to which compliance in thailand is an established profession, we will turn to institutional theory to explore the reasons for this. institutional theory is the most widely used theoretical lens for analyzing the evolution of professions, including compliance (burdon, 2020; burdon, 2018). institutional theory, particularly in its modern form known as new institutionalism, provides a framework for understanding how organizations and their actors adapt to external pressures and societal expectations. institutional theory emphasizes how external norms, laws, cultural expectations, and legitimizing institutions shape organizational behavior. according to greenwood, oliver, sahlin, and suddaby (2008), institutional change often occurs through the pursuit of legitimacy and the reduction of uncertainty. organizations become increasingly similar—a phenomenon known as institutional isomorphism—as they align with prevailing expectations. dimaggio and powell (1983) identify three mechanisms through which institutional isomorphism occurs: • coercive isomorphism, resulting from legal mandates, regulatory pressures, or political expectations. • mimetic isomorphism, where organizations imitate others in times of uncertainty. • normative isomorphism, emerging from professional standards, educational systems, and industry-wide norms. in the case of compliance, these forces are evident globally and locally. compliance officers respond to scandals, evolving legal mandates, and rising public scrutiny by modifying their structures and practices to demonstrate conformity and legitimacy. compliance education, certifications, and international standards, reflect normative isomorphism—where practitioners internalize shared expectations of what it means to act “professionally.” research into compliance culture, such as studies of the uk financial services sector, affirms this view (burdon, 2018). compliance practices there are shown to evolve in reaction to reputational risks and regulatory interventions, fostering a dynamic, interactive legitimacy. this cultural responsiveness also manifests in isomorphic mimicry—where firms adopt similar compliance structures to appear aligned with peers. 4. findings regarding the question of whether compliance in thailand exhibits characteristics of a developed profession, we turn to perks’ model as outlined above, and examine each of the elements in turn: 4.1. full-time occupation: present all interviewees occupy full-time positions, leading compliance departments staffed with dedicated compliance professionals. this indicates that compliance roles are recognized as integral within organizational structures, reflecting a degree of professionalization in practice. 4.2. certification: limited adoption only one in ten of the participants holds formal certifications in compliance, such as those offered by the international compliance association (ica). others noted that they do not perceive significant value in obtaining such certifications. instead, emphasis is placed on mandatory training provided by internal compliance departments asian business research journal, 2025, 10(11): 25-31 29 © 2025 by the authors; licensee eastern centre of science and education, usa or clubs, which are considered more relevant and practical. consequently, certifications are not a primary criterion during recruitment processes. 4.3. professional associations: absent there is currently no dedicated professional association for compliance practitioners in thailand. instead, professional interaction is largely shaped by sectoral organizations, such as the thai banking association (tba), which operate employer-driven initiatives like “compliance clubs.” these clubs, also found in the insurance and healthcare sectors, serve as primary channels for training, regulatory updates, and professional networking. however, their activities are closely aligned with organizational and sectoral priorities, often limiting independent professional development and cross-sector integration. opportunities for broader professional engagement are generally limited to exclusive conferences organized by entities such as the association of corporate counsel (acc) and private law firms. while these events facilitate some knowledge sharing, they do not function as formal professional bodies that advocate for the compliance profession or set unified standards. 4.4. professional standards: non-standardized in the absence of a national professional association, there are no universally accepted professional standards governing compliance practices in thailand. this lack of standardized guidelines results in varied practices across organizations, hindering the establishment of a cohesive professional identity. 4.5. university support: present universities such as shinawatra university support education and training in compliance, legal, regulatory, and ethical standards. the presence of dedicated offices, like the office of ethics and compliance at shinawatra university, highlight the academic commitment to developing compliance education. 4.6. licensing: not applicable there is no licensing requirement for compliance professionals in thailand to summarise: while compliance in thailand displays some hallmarks of an established profession-such as being a full-time occupation and a field of academic study-it lacks several key elements identified in perks’ model, including a professional association, standardized professional norms, and licensing requirements. only a minority of practitioners hold formal certifications, and most enter the field through internal promotion rather than structured training, resulting in inconsistent roles and fragmented development pathways. the function remains relatively young, often embedded within legal or risk departments, and is primarily shaped by domestic regulatory demands rather than international standards or external benchmarking. without a unified career trajectory, national standards, or an independent professional body, compliance in thailand remains driven by sectoral and employer interests. as a result, it falls short of the independence, standardization, and mobility characteristic of a fully developed profession. having established that compliance in thailand is not a developed profession, we now apply the lens of institutional theory to the data we have gathered in order to shed light on the likely reasons for this. in this analysis we combine data from the structured questionnaire with qualitative data from the in-depth interviews, to provide a more comprehensive and nuanced understanding of why compliance in thailand has not yet developed into an established profession. 5 key themes were identified in our analysis: 4.6.1. sectoral dominance and employer control • all ten participants agreed that their “professional development is primarily influenced by sector-specific organizations” and that “employer-driven platforms restrict the independence of compliance professionals”. • from the in-depth interviews, we discovered that compliance functions are shaped primarily by dominant sectoral actors or internal corporate interests, limiting professional autonomy. we see evidence that compliance roles are constructed to serve organizational and sectoral needs rather than developing an independent professional identity. this employer-centric structure prevents the development of shared standards and weakens the profession’s autonomy, confirming that coercive isomorphic pressures are largely internal and fragmented. 4.6.2. fragmented and underdeveloped professional identity • from the survey data we see that only half of respondents feel connected to compliance officers outside their organization, and only 2 out of 10 are members of a compliance-related professional association, although all would consider joining a domestic association if available. • the qualitative data confirms that compliance practitioners do not often self-identify as part of a broader professional community. there is a lack of unified professional narrative, shared language or coherent career path. these findings indicate that the compliance field lacks strong normative isomorphic pressures. without robust associations or a collective identity, practitioners remain isolated struggle to unite around shared norms or a recognized career trajectory. 4.6.3. compliance as an administrative rather than strategic function • some of the participants indicated that compliance is perceived more as a box-ticking or legal formality rather than a strategic business function. • only 3 out of 10 actively seek opportunities to improve compliance expertise. asian business research journal, 2025, 10(11): 25-31 30 © 2025 by the authors; licensee eastern centre of science and education, usa the data suggests that compliance is undervalued and not seen as a strategic contributor to organizational success. this context discourages professional development and limits the ability to attract and retain talent with a long-term vision, reflecting weak mimetic isomorphic pressures. 4.6.4. limited engagement with international standards • all participants agreed that international standards have limited day-to-day relevance, and that there is little to no cross-sector mobility for compliance officers. • the qualitative interviews highlight that there is little or no alignment with global frameworks and professional standards. the lack of engagement with international standards and limited mobility result in thai compliance professionals being isolated from global best practices, diminishing both mimetic and normative isomorphic influences and slowing the evolution of compliance to a profession. 4.6.5. institutional and cultural barriers • from the survey data we see that culture and sectoral structure are the most frequently cited challenges to professionalization of compliance in thailand. • when asked what one thing would most help compliance officers to grow professionally, the majority (7 out of 10) respond that regulatory intervention would be the most effective. • from the in-depth interviews we identified themes such as hierarchical business cultures, regulatory ambiguity, and institutional inertia all of which contribute to a resistance to the formalization and standardization of compliance. both quantitative and qualitative findings demonstrate that both cultural and institutional factors hinder the emergence of strong coercive, mimetic, and normative isomorphic pressures. regulatory ambiguity and a lack of external mandates leave the profession fragmented and underdeveloped. 5. discussion of the findings the analysis supports the hypotheses presented in this study: h1: confirmed: compliance in thailand exhibits limited characteristics of a fully recognized profession. • compliance officers in thailand operate without licensing, and there is no national association or accredited training system. only a minority of compliance officers had voluntarily pursued international certifications. h2: confirmed: sectoral organisations and practices in thailand are influential on the development of compliance as a profession. • sectoral organizations such as the thai banking association’s “compliance club” dominate the professional discourse. training initiatives are confined to industry-led platforms, reinforcing employer-centric development. h3: confirmed: limited exposure to international compliance associations and professional standards affects professional development within the compliance field in thailand. • respondents consistently noted that international standards have limited impact on their daily work. the lack of cross-border operations and an insular regulatory focus weaken any motivation to align with global practices. 6. conclusion this research positions institutional theory as the foundational lens through which the compliance landscape in thailand can be interpreted, highlighting the local constraints which explain why compliance lags in professionalization. coercive pressures are fragmented and internalised, due to sectoral and employer dominance. additionally, the absence of a professional association and a shared identity result in weak normative influence and limited mimetic learning (as there is minimal engagement with international standards and best practices). these factors, together with widespread reliance on employer-led compliance training, restrict the development of a distinct compliance profession. in order to mature into a fully recognised profession, compliance in thailand will require stronger regulatory intervention (for example, mandating certification requirements or cross-sector collaboration frameworks). alongside establishment of a professional association and platforms for cross-sectoral learning. without these developments, compliance will likely remain a functionally important yet professionally marginalized occupation. acknowledgement: this manuscript was prepared with the assistance of chat-gpt, used for drafting and editing support. all aigenerated content was thoroughly reviewed and revised by the authors who take full responsibility for the final content. no ai tool is credited as an author. the use of ai complies with the journal’s ethical guidelines. references abbott, a. 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( corresponding author) abstract while many green initiatives are seen as key survival strategies across many organizations in the global printing and packaging industry and its eco system, the newest initiative found is green reverse logistic practice. the printing and packaging industry and its total supply network, being the permanent polluter, needs to spear head those implementations to sustain the world. many researchers argued that the purpose of implementing green practices is more than the sustainability driven responsibility. there is a profitability motive as well. therefore, implementing reverse logistics practices has become pivotal for sustainable and profitable growth. among many factors that influence the effective establishment of green reverse logistic practices, stakeholder engagement was selected as a key independent factor to probe into. hence, this study attempts to reveal how stakeholder engagement strategies could strengthen the effectiveness of green reverse logistics practices. this research is aimed at investigating how stakeholder engagement strategies influence in implementing green reverse logistics practices while providing impactful insights into the printing and packaging industry and its supply network. a secondary data based qualitative comparative case study research strategy was employed focusing on two global companies under the p&p industry in europe and india. secondary data gathered from annual reports and journal articles were analyzed using a thematic analysis and a comparative analysis was constructed in uncovering the patterns and themes in common. the findings disclose that both companies have aligned strategies but under different models. the study also revealed that there is a positive relationship among the engagement strategies and their impact on implementing reverse logistics practices. stakeholder support, including organizational support, is well needed. company specific strategies should be addressed in a tailored way in addressing the importance of following a sustainable path eventually. keywords: closed loop supply chain theory, engagement strategies, green reverse logistics, industry, printing and packaging stakeholder sustainable development. 1. introduction globally there are many countries striving to implement circular economy models in order to overcome the challenges set in environmentally harmful manufacturing as well as consumption practices and behaviors. these behaviors and activities have dramatically disrupted total natural ecosystems and resulted in widespread degradation of environmental sustainability. literarily regulatory stakeholders such as governments and policy makers are continuously enforcing printing and packaging (p&p) companies to establish green initiatives in today’s context, however if internal stakeholders do not engage adequately; the establishment of green reverse logistics practices (grlp) will also be a mirage. because it is evident that most of the successful sustainability stories of global organizations were built on the combination of “top-down” and “bottom-up” strategies they have adopted. in this context, both internal and external stakeholder engagement, relevant strategies and their thrust on establishing sustainable practices within the p&p supply chain could be a hot topic. the environmental sustainability aspect of p&p supply network consists of raw material suppliers, printing and packaging companies, resource tool suppliers, consumable suppliers, logistic providers, equipment suppliers etc. however, considering the major portion of the material, energy and water consumption viewpoint, paper and board manufacturing companies of p&p supply network were selected as “case companies” to investigate. itc is a key tier one supplier in p&p industry in india and stora enso is a european company specialized in the same domain. both leading companies in the printing and packaging (p&p) industry known for providing sustainable practices and ethical business conduct. both companies are driving along with the transparent https://doi.org/10.55220/2576-6759.801 asian business research journal, 2025, 10(12): 1-12 2 © 2025 by the authors; licensee eastern centre of science and education, usa sustainable practices towards enhancing long-term ecological perspectives. there are many incentives that drive the organizations towards sustainable practices. economic interests, social interests and environmental interests are key driving forces into these adaptations. moreover, the p&p industry is known to be the main polluter (hayta & oktav, 2019). thus, following environmentally friendly practices is essential yet a push from the stakeholders is also a key driving factor for these companies to move forward with sustainability. within the complete logistics mechanism, it is comprised of forward logistics as well as reverse logistics. when it incorporates the whole cycle, forward logistics are about serving the forward supply chain that followed in making profits. on the flip side, reverse logistics is a proactive or a legal requirement that prioritizes environmental protection followed by the cost optimization. the ultimate goal of reverse logistics (rl) is to reclaim the values through repair, recycle, reuse refurbishment and dispose of the waste accordingly. this is about maximizing the resources efficiently (munuhwa & mawonde, 2025). the p&p industry has a close link with the environment since it uses natural resources for their core ingredient of paper. therefore, the industry has an important role in balancing the eco system resulting in a substantial reduction in producing waste and usage of natural virgin resources (hayta & oktav, 2019). thus, effective rl practices are essential in reducing the natural eco-logical burden. by initiating green reverse logistics (grl) most organizations are able to reduce waste and minimize the carbon footprint while conserving natural resources. however, grl is merely not a duplication of forward logistics. it has its own challenges. in the view of abdulrahman et al. (2014), it was observed that implementing grl will result in a vast amount of challenges and obstacles, may it be internal or external. it was also pointed out that the adaptation of grl has been delayed due to the lack of enthusiasm from different parties in the supply chain (bernon et al., 2018). the study aims to address a notable gap in the research in understanding the interplay among the stakeholder engagement strategies and grl practices. even though the adaptation of grl is needed in any organization yet the influence created by stakeholders in adopting those into their business needs to be examined. furthermore, there has been no research done in the scope of the stakeholder engagement and the adaptation of grl practices within the p&p manufactures. based upon these, the authors aim to compare and contrast the interrelationship between stakeholder engagement and the integration of grl practices in stora enso and itc. the study puts further emphasis upon providing the most suitable practices that will enhance grl practices among the industry. thus, objectives of the study are: 1. to identify the key stakeholder strategies and practices implemented by stora enso and itc. 2. to recognize key green reverse logistics practices adopted by stora enso and itc. 3. to compare and contrast interplay between stakeholder engagement strategies and green reverse logistics practices in stora enso and itc. 4. to identify the most suitable stakeholder engagement strategies and practices that would enhance the grl practices in the industry. the research is designed to achieve those objectives based on the secondary data. the study adopted a deductive approach, where the data are collected from existing literature and the other supportive documents extracted from published data of respective companies. the research strategy is a comparative case study under secondary based qualitative methodological choice. the thematic analysis and the comparative analysis are used in explaining how the stakeholder engagement practices ease the adaptations of grl practices in the companies of stora enso and itc. the rest of the paper is followed by the theoretical overview of the rl and stakeholder engagement strategies and the theoretical framework. moving forward, the methodology segment will consist of the research methods the study employed. later, the data will be analyzed and insightful practices that could be adopted in the industry will be provided. 2. literature review with regard to grl, closed loop supply chain theory (clsc) plays an essential and beneficial role in saving natural resources and reducing pollution. this is all about sustainability. it is considerably worthwhile for the companies to collect products from the end point and return those products back to the manufacturer. the theory suggests that closing the end point of the forwards logistics back to the starting point enabling the reverse process while creating value to the returned products. however, in order to close the loop, the grl process needs actions as of recycling, repair, remanufacture, reuse and proper disposal (shekarian & flapper, 2021). on the other hand, every industry differs from the respective grl practices the organization has to carry forward (de giovanni & zaccour, 2013). in the view of anvari (2023), it was observed that closed loops are in line with the forward and backward. thus, the reverse logistic is understood as taking back what is left from the customer point and back to the market under a usable condition. the clsc theory enables the reuse and recovery of resources while reducing waste generation and environmental pollution. this includes the elements of grl, and it provides valuable benefits such as reducing the usage of virgin raw materials, greenhouse gas emissions and energy. further, it saves the materials through optimizing the logistics as well as inventory management. above all, clsc is applied for the benefit of social responsibility where it considers the ethical implications under the supply chain process as providing labour and community engagement (akbari-kasgari et al., 2022). there are many definitions of rl. however, in understanding rl, the definition provided by the reverse logistics executive council stated that it is planning, controlling and implementing the flow of materials, starting from the point of consumption towards the point where it recovers the actual value. in the literature of agrawal (2016), this is the opposite of forward logistics. it is clear that the importance of adopting rl into their business operations has increased significantly and also it acts as a strategic tool in moving forward with competitiveness. thus, rl starts from the customer point of view where the product might go through different stages of repair, reuse, remanufacture, recycle and proper disposal where no further economic value has existed (pushpamali et al., 2019). 2.1. key green reverse logistics practices adopted by stora enso and itc asian business research journal, 2025, 10(12): 1-12 3 © 2025 by the authors; licensee eastern centre of science and education, usa reusing is one component of grl practices where the product or component returned by the customer is reused since it has only been used up to a minor degree. when the product is reused the usage of virgin materials decreases. thus, it aids in enhancing the environmental performance. however, the steps of taking back the product from the customer are much more complicated than the forward logistics (zhang, 2024). as per the context of the p&p industry, the process might get further challenged due to extra technologies and steps that have to be undertaken. one could argue that grl meets the main objective of the circular economy, yet the quantity and the quality of the returned products and which stage the product or the component should go through (moigne, 2020). in the context of stora enso, it is promoting fiber-based materials for packaging that could be reused. thus, it was observed that reusing the packaging provides a major opportunity in retaining the functionality of the product and reducing the negative environmental impacts and material usage. however, recently it was observed that a new trend has emerged where the customers are throwing away the reusable package after one-single-use. these developments have brought up a rapid increase on the waste volume. even though reusable packaging has bought a positive impact upon the environment, yet the consumer preferences for reusable packages need attention (rigamonti et al., 2018). it is no doubt that grl practices are aiming for sustainability while reducing negative externalities towards the environment. it is evident that the incorporation of grl practices towards waste management does in turn be in line with the aim of the grl practices. in the view of wu (2022), the most common way to manage waste is to avoid waste from generating or turning waste into something valuable. through waste management, organizations are able to segregate the product or the component accordingly and reduce the number of landfills generated from waste (sundram et al., 2016). when the process is diverted through grl by enabling the factors of recycling, reuse and repair the recovery of the value of the materials that were to be disposed of is high. however, kinobe et al. (2012), argued that waste management and rl are two different approaches where rl is mainly concerned in adding more value to the product which has been returned and reentered to the supply chain. on the flip side, waste management is about separating the collected waste and treating that waste which has no value integrating. it was observed that the main purpose with grl practices in collaborating the waste management, is safeguarding the collection of garbage, separating and transporting, followed by storing and reprocessing where needed. in the context of the p&p industry, waste recovery is essential which in turn originates at the production process to be recycled which in turn is in line with the grl practices. globally paper is amounted to 20% of the waste where it could be recycled in mass operations. it was further proved that if 100 tons of paper is recycled, the world will be able to save 1 hectares of 100 years old forest. in line with the itc company, they are currently engaged in an inhouse recycling process where it uses recyclable paper boards produced by wood-fibers. in terms of stora enso, the usage of materials up to 97% are used in producing renewables, where less wastage occurs. mainly the packaging of cuts and fiber scraps are reprocessed to reduce the waste. the ultimate goal of waste management is to prevent the production of waste and reduce the quantity of waste with developed technologies. the protection of these natural resources and products and components produces, while using less virgin materials could be attained through grl practices. thus, managing the waste through recycling, reusing the products rather than landfilling, using the waste as a solution for energy source will ultimately reduce waste and enhance the environmental performance (zatrochová et al., 2021). the integration of rework towards grl practices is also in line with the closed loop supply chain system. it was observed that clsc is increasing the efficiency of the resources as well as the environmental performance. grl practices are about attaining the returned products back to the starting point with the intention of recycling or reuse. in terms of the rework, it is about recorrecting what was defected in meeting the standard quality. the usage of digital technologies has strengthened the sustainability among the p&p companies. during the operational activities, these resilient developments have vastly aided in making error free productions and enhanced the quality of the work. artificial intelligence (ai) and internet of things (iot) have changed the traditional processes of manufacturing towards the most developed industrial plant (puccetti et al., 2022). itc and stora enso have invested in smart lines in terms of printing and packaging lines and digital mechanisms in verifying the quality and tracking down the defects at the early stage. itc is currently reprocessing the offspecification packages back into the pulp and reintegrating towards the paper making process. this type of rework has drastically reduced the virgin raw materials, and also the production waste moving towards the landfills. however, incorporation of digital technologies has enhanced the pinpointing of the off specs products (varriale et al., 2023). on the other hand, the company should be paying attention to reshaping these adaptations with an effective sustainable process. the goal of grl practices is to recreate the value it might have lost if it moves towards waste. recycling is known to be another element under grl practices where it enhances resource use, reduces pollution and achieves environmental benefits. in the context of packaging, recycling the package materials has become very vital. the packaging could be recycled and then reformed towards renewable resources. however, the concept of recycling the packaged materials has its own economic aspects and environmental laws too (senarathna et al., 2023). paper recycling is popular in both companies. it decreases the need for virgin materials and the loss of useful resources. by recycling the world was able to save 25% to 40% of the solid waste which could have been burnt off or landfilled. it was not recommended to burn since it creates large amounts of toxic gases. however, it was observed that paper recycling has some negative impact where the quality of the paper mattered. the recycled paper has a lesser quality than the paper made from fresh pulp. it was found that only seven times the paper could be recycled since the paper fiber gets destroyed in time. on the other hand, with the use of electrography and the advancement of the technology, this has somewhat reduced the effect through toner, printer and the final colour (sonmez et al., 2022). but the roughness has its own negative impact too. stora enso has currently reduced the materials that are fossil based by offering recyclable and renewable product packages upon liquid food cartons, personal care product packages and many more. this has enormously improved the efficiency of resources. the same is followed by itc where the packaging materials are produced through natural renewable fibers such as bamboo and wood. it was identified that the company was able to produce 89,000 tons of wastepaper and was able to reduce the landfill drastically. asian business research journal, 2025, 10(12): 1-12 4 © 2025 by the authors; licensee eastern centre of science and education, usa 2.2. key stakeholder engagement strategies implemented by stora enso and itc along with sustainable developments it is essential to address the benefits from the views of economic, social and environmental factors. stakeholder theory is internally based where the company is hoping to achieve the objectives of the company through stakeholder management. the influence of the stakeholders is divided as primary and secondary. the stakeholders might voluntarily or involuntarily be related to the company (nora et al., 2022). this theory is about ethics of the business as well as the management of the organization. the stakeholder theory does matter since it encourages ethical business by supporting the success of the long term through sustainability (schaltegger et al., 2017). yet the organizations are targeted in generating benefits that would meet different stakeholders’ needs. thus, it is crucial that the stakeholders become vital and hold important roles within the organization’s activities among sustainability performances. stakeholders have some interest in the company. thus, it may be a legitimate interest, expectations or claims towards the organizations and their operations. it was observed that the thinking patterns of the stakeholders have shifted from organization centric perspective towards a network-based perception. therefore, it is the responsibility of the company to balance these multiple interests. however, it implies that any organization will not always be at the center of the stakeholders’ interests (olkkonen & luoma-aho, 2011). but the stakeholders could also form relations among other stakeholders and enhance their power. this further identified that the mutualism among the stakeholders’ construct towards a delicate matter where the organization needs to fit their position accurately and gain support (fleming & kowalsky, 2024). but it is quite challenging for the organization since these could be changed, however, and whenever the attitudes, expectations and values of the stakeholders differ. itc provides data to their stakeholders through reports and certifications in communicating their performance and integrity. by proving the needs of the clients continuously both parties are meeting their sustainability goals and branding too. in this scenario, stora enso, have open dialogues, forums and regular surveys in understanding their needs and expectations. trust among the stakeholders is vital. they believe that the stakeholders will perform their respective role’s reliably and effectively. in addition, they do believe their interests are considered and will act upon those. these are applicable in both dimensions (ghondaghsaz & engesser, 2021). thus, transparency provides many outcomes which enhance relationship building. when companies are transparent about making their decisions and in addition, act upon their operations, it automatically adds accountability where it is possible. therefore, both the internal and external stakeholders have the advantage of seeing where the responsibility is held. when transparency improves, the accountability of the stakeholders increases as well. (baah et al., 2021). the sense of knowing the fact that what both parties have agreed upon is actually happening will enhance both corporation and trust. itc is occupied with high standards, compliance and ethics while communicating to the respective stakeholders. further, by publishing the reports on a yearly basis, and measuring the progress through environmentally sustainable goals (esg), it has enhanced the level of trust among the stakeholders. itc also incorporates the decision provided by their stakeholders, that in turn enhances trust and respect. however, in the view of jahansoozi (2006), it was observed that being accountable will not merely enhance trust, yet the corporation among the company and the industry also plays a significant role. the same is true with stora enso, where it has open communications with their stakeholders and identifies trends and concerns. mainly their sustainability priorities are aligned with direct stakeholder input. different stakeholders have different views and ideas about the business world. in terms of sustainability practices, every stakeholder places contrasting weightage among these green adaptations. above all, the interest of stakeholders is bound to be different and complicated. however, the challenge is to collaborate among the stakeholders in making decisions and balance among everyone’s view (capolongo et al., 2019). in the article of marttunen et al. (2017), it was identified that involving stakeholders will add knowledge and values to the decisions, enhancing trust, and mitigate the conflicts with high-cost efficiency. however, time consumption and raising unrealistic expectations will bring down the trust of the company itself. through formal and informal platforms itc is incorporating their stakeholders’ ideas. itc believes that their brand and reputation will be impacted negatively if they are unable to meet the expectations of the stakeholders. itc also believes that effective communication and involvement of stakeholders will find issues in relation to itc products. stakeholders play a pivotal role in the agenda of stora enso. along with the annual reviews, customers and other stakeholders provide feedback in terms of sustainability. this aids the company to drive at its best in sustainable performance. 2.3. the interrelationship between stakeholder engagement strategies and grl implementations most companies operating in the p&p industry, have adopted grl practices as a reactive mechanism or a proactive mechanism. in the view of gonzález-benito and gonzález-benito (2006), it was identified that a reactive mechanism is followed when the laws and regulations are input by the government. thus, the companies are moving forward in grl practices to avoid or mitigate the fines imposed by these regulations for not adhering to these regulations. on the other hand, proactive mechanism moves one step further by adding an extra mile towards the business as of a voluntary basis in bringing green initiatives with a intention of reducing negative impacts and enhancing the brand reputations. however, these decisions are mostly incorporated with the stakeholders (kim & lee, 2012). on the other hand, the internal stakeholders who have a much in-depth influence over the companies are likely to influence upon the considerations of the financial capabilities. yet the board of directors are unable to gratify all the needs of every stakeholder. therefore, it can be observed that stakeholder pressure is influenced upon the grl practices. to balance the influence, the company needs to adopt these mechanisms by engaging them into the business. most importantly weighing the stakeholders as per the importance and identifying their needs in respect to the group will reduce the challenges in catering for their needs. different stakeholders might have different views upon grl practices (ahmad & xu, 2021). community pressure might push the companies towards these adaptations, yet the internal stakeholder might have the eye on the financial capacity of the business. however, this depends on the awareness level of the stakeholders at each level (baz & laguir, 2017). on the other hand, the final receiver of the products of the company, the consumer, plays a pivotal role. they are known to be key actors. mostly their asian business research journal, 2025, 10(12): 1-12 5 © 2025 by the authors; licensee eastern centre of science and education, usa intentions and awareness towards grl practices will improve the environmental performance as well as the final outcome of the company, the sales and revenue (huge-brodin et al., 2020). however, even though consumers have high expectations, yet they are not willing to pay the extra amount for the products in purchasing towards better sustainability. adopting grl practices involves a vast number of changes within the organizations and among the supply chains. thus, internal management as well as external collaborations are impacted. the involvement of multiple stakeholders can impact these decisions positively. enhancing awareness about these adaptations and the importance of those steps is crucial. some companies are incorporating training and development programs (evangelista et al., 2018). however, the consistent support from the internal parties is greatly impacted. in addition, the suppliers and consumers also impact externally. thus, these collaborations should be made under solid strategies since involvement of many stakeholders might also act negatively towards the progress of the organization. it the article of prataviera et al. (2023), it was observed that stakeholder’s engagement has a positive impact upon the adoption of grl practices. however, companies are still prioritizing the economic elements above the grl adaptations but having the structured stakeholder engagement mechanisms will help the organizations to not only operate towards the economic benefits and the institutional pressure yet concurrently work upon the supply chain and other external stakeholders. based on the above literature review, the theoretical framework was developed as illustrated in figure 1. figure 1. theoretical framework. 3. research methodology in this study, the authors have selected a positivism philosophy where the knowledge has been gathered through observations and analysis (gamage, 2025). this is followed through a deductive approach that the study begins with a general theory derived from literature and later applies empirical research (haque, 2022). thus, the authors have chosen pre-existing theories in examining the stakeholder engagement strategies and grl practices. based upon the secondary data the study follows a qualitative approach along with annual reports, industry publications and sustainability reports that provide an in-depth understanding of the variables (busetto et al., 2020). data analysis is under two-fold methods. one is the thematic analysis in identifying the themes and patterns and flexible methods in examining the data. secondly the comparative analysis, where the authors identify the differences and similarities of the two chosen companies. the themes identified within the two variables are provided in the thematic analysis below. asian business research journal, 2025, 10(12): 1-12 6 © 2025 by the authors; licensee eastern centre of science and education, usa figure 2. key elements in demonstrating the thematic analysis. 3.1. research scope the study focused on two leading players in the printing and packaging supply network. the data was collected through reliable journals and collaboration reports from their respective websites. the study identifies different practices in stakeholder engagement strategies and grl elements by stora enso and itc. the research analyses the relationship between the two variables and provides practical and impactful insights that would further strengthen the grl practices and engagement practices. the diagram below provides a pictorial illustration of the scope of the study. figure 3. scope of the research. 4. results and discussion 4.1. grl practices observed in stora enso and itc when evaluating the grl practices implemented by stora enso and itc it was identified that both companies have adopted similar practices. waste management, recycling, reuse and rework (pushpamali et al., 2019; sengupta et al., 2023; sonar et al., 2024) were among them. both companies are engaging in sustainable waste management. in stora enso, it is targeted for 100% recyclability whereas now it is at the rate of 94%. waste management can be drastically reduced through reuse (schützenhofer et al., 2022). thus, stora enso is moving along with many reusing strategies by reducing the amount of waste sent into landfills. setting up waste management targets and achieving nearly 99% above the target level is now adhered to on a voluntary basis. in the view of itc, they are more focused upon going towards the collection centers and colleting all the used packages and products and then move forward with the recycling. as of today, itc was able to collect 76,000 tons of plastic packaging waste amounting to more than 99% of waste. this in turn further reduces waste management. in india, waste generations have been increased drastically. thus, asian business research journal, 2025, 10(12): 1-12 7 © 2025 by the authors; licensee eastern centre of science and education, usa itc is incorporating sustainable waste management through a continuous monitoring system and utilizing the waste efficiently has aided enormously. with the comparison of both companies the authors believe that stora enso is proving strong, yet itc is having a much more powerful model where it aligns with moving in with community centers and collecting all the materials from scratch, proving with the extended producer responsibility while moving towards the sustainability practice. eliminated components might still have some value, that could be regained by recycling (wu, 2022). both companies are competitively using the recycling approach under grl practices. stora enso is aiming to move forward with 100% recyclability by 2030 and the full capacity by 2050. currently it stands at 1.3 million tons of paper towards recycling. the company is focused upon fiber-based packaging while enhancing the lifetime of those packages under industrial scale. however, this raises the question of having limited engagement towards a fiber based product. on the flip side, yet these proactive practices have reduced the use of virgin materials while increasing product sustainability. in terms of itc, it is moving with the communitybased system and has incorporated the closed loop system. the well being out of waste (wow) initiative has promoted recycling opportunities in urban communities. however, both companies have their own specialties where stora enso is more weighted towards fiber based and itc is plastic waste recycling practices. the reuse element in grl practices is more focused through packaging by both companies. 100% reusable and compostable packages are target by 2030 in itc. this is turned to reducing the amount of waste drastically. corrugated boxes, durable cartons have enabled them to use the same box for multiple cycles within the transportation. this has been extended towards “less plastic and no plastic” initiatives, where the packages are aligned with multi-use-pouches and containers that can be refilled. in stora enso, fibers are reused multiple times. more focused upon reused packages under business to business (b2b) settings and reused water among the mills and reducing waste. however, itc is having an extensive program for reuse strategies from community based. reworking is reducing the material consumption. stora enso and itc are both reworking and engaged in reworking strategies. within their internal operations if they had an error on any materials under off specifications, they recover the massive loss by reworking. this reduces waste. however, one could argue that it is repeat work and might impact upon material and energy usage. on the other hand, the amount of energy and material used in repetition is far less than the amount of those resources wasted if not reused. however, in comparison to both companies stora enso is more focused upon fiber materials among the industrial oriented, whereas itc is recovering materials from the community level itself. 4.2. stakeholder engagement strategies implemented in stora enso and itc in the context of stakeholder engagement strategies, both are using strategies to meet the stakeholder expectations, involving them towards decision making and building trust through transparency. these mechanisms have helped both brands in having a solid relationship with the stakeholders while initiating sustainability goals. both companies are meeting stakeholders’ expectations under different levels. identifying the stakeholders accordingly and focusing on meeting their needs is essential. itc follows the tbl model where they believe that meeting their expectations is creating a large societal value. the relationships are fostering with completeness, materiality and responsiveness. through general meetings to other collaborative societal activities the identification of their needs is approached. itc communicates all their negative, positive, actual and potential impacts in every field that would enhance these strategies. on the other hand, stora enso believes that providing high quality is the solid foundation for their brand reputation. visibility towards their sustainability road map, delivering the key commitments, and strong community services are the engagement strategies stora enso compiled with. the successful application of green initiatives depends on their stakeholders because these involvements are creating and linking collaboration among the key players in every organization (ghisellini et al., 2015). building trust is a fragile but important aspect. having annual double materiality assessments is creating a relationship among them with trust. the leadership team and the board of directors annually receive updates as to how the organization is impacted financially by environmental and social impact and how the operations of the stora enso have impacted upon the environmental and social aspect. when these issues are addressed, the trust builds up. the same is followed by itc where they identify directly and indirectly impacting and influencing the business operations, and due weight is given to the stakeholders upon the engagement level, followed by prioritizing the needs and concerns while addressing those needs in a consistent manner in order to be transparent. having these solid strategies will impact trust and transparency positively. actively engaging stakeholders in decisions making has improved the validity of those decisions (fleming & kowalsky, 2024). stora enso has prioritized employee engagements and has regular forums and has aided in collecting different perspectives and insights that help the group to improve. suppliers have also been consulted by providing their input and views mainly on safety-related concerns. regular training, discussions and on-site activities have positively impacted on their sustainability developments. itc has forums and materiality assessments where the said issues and matters are carefully assessed and the strategic decisions are guided accordingly. most importantly, the csr activities as vocational training have provided insightful decisions upon other initiatives through local communities. 4.3. interplay between stora enso and itc of stakeholder engagement strategies and implementation of grl practices it was evident that by referring to the company reports and the existing literature both companies are following structured and well-balanced mechanisms in following the grl practices through the stakeholder engagement strategies too. it was found in the literature prataviera et al. (2023), that the adaptation of grl practices has an influence upon the stakeholder. but through the company data, it was clear that by having the right and balanced strategies the grl practices are impacted positively. stora enso and itc both use the rework element where if the products are off the specifications they take them back to the production cycle without asian business research journal, 2025, 10(12): 1-12 8 © 2025 by the authors; licensee eastern centre of science and education, usa wasting the materials that they used. reusing the water in the mills is saving water enormously in itc. stora enso takes full responsibility that the packaging materials for logistics under b2b are completely reused. in addition, stora enso has emphasized highly upon fiber based and the following of the closed loop is safeguarding the materials and reusing the same without harming the virgin materials. itc has enhanced the recycling process toward the local people, where they have extended their value to those households by taking the waste and recycling that to make energy. in the view of arokiaraj et al. (2019), it was observed that recycling, rework and reuse has a positive impact on reducing waste, that in turn enhances the environmental performance. stora enso has collaborated stakeholder views and ideas through double materiality assessments where the top managers assess how the sustainability goals are affecting financial stability and in addition how the operations of the companies are affecting the environment and society. however, itc is using the tbl strategy to integrate grl toward societal values, such as putting up recycling centers, wow initiatives and waste collection points in the communities. therefore, it was found that itc has extended their responsibilities as producers while including the valuable expectations of the stakeholders. in encouraging the participation of the stakeholders in their decision-making processes, itc has found active methods in playing a part in the engagement programs. itc is not only involving their perceptions, yet the stakeholders are engaged in their role of grl activities. from the stora enso view, having forums that include suppliers, and employees help in having ideas about reuse and recycling mechanisms. both companies are using reports to provide what their operations are and how they have performed them. this has encouraged their stakeholders, and it has resulted in building trust among them. the engagement of stakeholders in the decision-making process has also improved the actions taken by the companies. materiality assessments guide as well as the forums in itc and stora enso respectively have resulted positive. however, in the literature of shibayama et al. (2020), it was argued that engaging in the participation of decision making could lead towards high cost and time consumption. thus, it is the responsibility of both companies to keep the balance in accepting and respecting their perceptions while being alert about the time and the cost. both companies are welcoming feedback from the stakeholders. itc is moving on with the community where it has seen and heard of their needs and expectations. compostable packaging is one of the innovative ideas they have considered from the community itself. while stora enso, is following a structured mechanism that has been proven in achieving 100% recyclability. these have been supported by the stakeholders. in light of the evidence gathered, it proves that itc and stora enso are both following stakeholder engagement strategies while enhancing and improving the grl practices. on the other hand, it was observed that the two companies have different strategies in engaging stakeholders. 4.4. summary of the comparative analysis in summing up, the comparative analysis cumulative shows that both companies have their best structured models in enhancing the stakeholder engagement strategies. both companies are playing a significant role in their own culture. stora enso has a structured and strong way in line with the esg framework and integration of the forest-sector where they guard and value the forests. however, itc is having more of a local and community responsiveness where they are involved in moving into the community and understanding the needs. collective value is created among the stakeholders by bringing them together and moving towards achieving sustainability goals. bridging the gaps identified among the two companies will strengthen the adoption of grl practices. further, the learning from each company reveals that the practical procedures each could follow in strengthening the stakeholder engagement. balancing these two variables will improve the overall business operations towards sustainability. 5. conclusion the study proves that both companies have adopted strong stakeholder engagement strategies in adopting grl practices into their operations. above all the most salient finding in the study was that itc is following a top-down and bottom-up approach in decision making where it is grounded by its practicality. however, stora enso is following a structured and corporate based mechanism. stakeholder engagement strategies as of trust and transparency, identifying their needs and involving the stakeholder in decision making has positively enhanced the adaptations of grl practices covering recycling, reuse, rework and waste management. application of the stakeholder theory and clsc theory has emphasized that those stakeholder engagement strategies are acting as a proactive mechanism in bringing and developing grl practices. empirical evidence proved that such grl practices are improving with actual communication with the stakeholders and their valid inputs. the collaboration of these active roles is essential, and it empowers in identifying critical points within the implementations. ultimately, these strategies are essential towards achieving their sustainable goals along with a well-balanced work environment. government intervention and laws and regulations could bring some control over the grl practices, yet the adaptations lie along with the company itself where these decisions need more validity and practicality while building resilient sustainability business in the long run. 5.1. recommendations the most suitable grl practices are recycling, reuse and waste management. on the flip side, these adaptations could be strengthened more by introducing accurate strategies in engaging stakeholders among business operations. both companies can adopt ways to publish actual achievements among reverse logistics and further show how the stakeholder participation helped in evolving these mechanisms. they should reduce the knowledge gap of reverse logistics and have community forums in providing how these mechanisms work among the community leaders, logistics partners and recyclers. in addition, increase the efficiency level of waste collection points and educate them upon the recycling methods. expanding the recycling capacities by providing financial support and reducing the technological challenges. these improvements could be made in every recycling point and will make them more efficient and effective. collaboration among the same industry would expand these technical innovations and a comprehensive oversight is created in grl operations. government could provide incentives and loans for these amalgamations. asian business research journal, 2025, 10(12): 1-12 9 © 2025 by the authors; licensee eastern centre of science and education, usa 5.2. implications and limitations it is evident that implementations or improving the grl practices can provide an extensive competitive advantage towards the company. enhancing brand visibility among the stakeholders is achieved while increasing commitment towards sustainable initiatives. it is no doubt that the world is moving towards sustainable initiatives; thus, it is crucial for the p&p companies to adopt these mechanisms and be more responsible towards the society and the environment. however, the research is based upon secondary data where more extensive research could be brough forward by accompanying primary data in refining the preliminary findings in the current study. the p&p industry requires the corporation from all levels in stakeholders in adopting grl practices. the most critical points of manufacturers to consumers need education and support in understanding the real reason among these initiatives. stakeholders are aware of these environmentally friendly processes and products. thus, commitment is needed from the company’s perspective to engage them to implement grl practices and balance off the needs of society, economy and the environment too. acknowledgement: the authors are thankful to all individuals who contributed to the research completion. references ahmad, s., & xu, b. 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licensee eastern centre of science and education, usa appendix 1. comparative analysis objectives element stora enso itc commona lities stakeholder engagement strategies understan ding the expectatio ns of the stakeholde rs focused more upon double materiality approach, where the top management assesses how sustainability matters to the financial performance and how business operations matter to the sustainability under tbl moving on with the locals, meeting them personally through community hubs. both companies are engaged in meeting their expectatio ns but follow in different angles. building trust through transparen cy focused upon collaborating with the annual reports along with sustainability reports, sustainability accounting standards board (sasb) mapping their "containers and packaging" and "forest management". thus, stakeholders have a clear picture of the actual performances. providing sustainability reports, achieving the highest score in following the best environmental practices under water security and climate actions. stakeholders are able to track down the sustainability credentials and provide ideas and feedback. focused deeply on building trust incorporat ing stakeholde rs in decision making process having forums where feedback is welcome itc collaborates with the stakeholders under operational and community levels. their local partnerships (village entrepreneurs, rainwater harvesting groups) are involved in making decisions both integrate stakeholde rs deeply into making decisions bound by the finnish companies act where it clearly identifies the board is accountable in inputting stakeholder ideas. under indian law and regulatory framework, the stakeholder concerns and ideas should be incorporated under sustainability reporting. green reverse logistics practices reuse reuse is mainly among industrial supply chains reusing at the community level. focusing upon neutralizing the usage of plastic while integrating extending the producer responsibilities. use of reuse element focus more upon fiber based packaging where it significantly reduces the use of plastics recycle recycling board waste and paper and make new packages for products, reusing water and energy in mills. collecting plastic from community centers strongly focused and monitored in recycling activities recycled fiber is used as their main input in production household waste is recycled rework if the standards are not met, rework is done and then put back into the production cycle. producing recyclables packaging for fmcg both are strongly working on rework elements but with different extremes. if there are any off specifications shared them back to the recycling unit. water is reused after treating them properly used under paper production collected plastic waste is reworked into a material as recycled granules (solid plastic powder). if the packaging is done under off specifications, it will be reprocessed and put back to the pulp or recycled. waste manageme nt collecting waste from mills as pulp, and packaging and paper production collection of plastic and then the separation of the plastic waste towards recycling. hoping for the zero landfill by 2050 partnering with municipal councils and segregation of waste waste as bark of trees and lignin are turned into bio compost or adhesives energy is created through waste asian business research journal, 2025, 10(12): 1-12 12 © 2025 by the authors; licensee eastern centre of science and education, usa appendix 2. thematic analysis. key themes stora enso itc references 1. sustainable waste management targets 100% recyclability (currently 94%), voluntary waste reduction, reuse strategies. community-based collection centers, 76,000 tons of plastic waste collected, extended producer responsibility. pushpamali et al., 2019 sengupta et al., 2023 sonar et al., 2024 efficient resource use and circularity: stora enso sustainability – efficient resource use [storaenso.com] iso 14001-certified waste management systems: stora enso waste management [tracenable.com] 2. recycling practices fiber-based packaging, 1.3 million tons recycled, goal of 100% recyclability by 2030. wow initiative, closed-loop systems, urban community engagement. circular bioeconomy and fiber-based packaging: stora enso circularity [storaenso.com] research on recycling systems: packaging europe – stora enso [packagingeurope.com] wu, 2022 3. reuse strategies reuse of fibers and water in mills, b2b packaging reuse. compostable packaging, multi-use containers, “less plastic and no plastic” initiatives. reuse of materials and wastewater: stora enso efficient resource use [storaenso.com] consumer perceptions of reusable packaging: packaging insights – stora enso [packaging...sights.com] schützenhofer et al., 2022 4. rework strategies both companies rework off-spec materials to reduce waste. industrial fiber focus. both companies rework offspec materials to reduce waste. community-level material recovery. circular bioeconomy and fiber recovery: stora enso strategy [storaenso.com] pushpamali et al., 2019 sengupta et al., 2023 5. stakeholder engagement esg framework, double materiality assessments, employee and supplier forums. tbl model, csr activities, community responsiveness, materiality assessments. stakeholder relations and materiality assessments: stora enso stakeholder relations [storaenso.com] engagement and collaboration with ngos and policymakers: stora enso engagement [storaenso.com] ghisellini et al., 2015 fleming & kowalsky, 2024 39 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 9, 39-49, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.565 © 2025 by the authors; licensee eastern centre of science and education, usa the impact of the 4s theory on marketing optimization: a case study of tuxi express ming jin wu1 an-shin shia2  1,2business school, lingnan normal university, zhanjiang, guangdong, china. email: 18875991570@qq.com ( corresponding author) abstract the acceleration of globalization has increasingly interconnected nations, drawing heightened attention to the logistics industry as a crucial pillar supporting production and trade, while also presenting it with new transformations and challenges. tuxi express (tuxi) launched its integrated service platform, tuxi life express store, to enhance its logistics network and meet market demands. targeting communities and campuses, tuxi life focuses on last-mile delivery services, marking a significant step in exploring diversified service models. as a highly representative player in the third-party logistics industry, analyzing tuxi can serve as a valuable reference for the sector as a whole. this paper takes tuxi as the research subject, employing the swot framework to conduct a comprehensive analysis of the internal core competencies and weaknesses of the logistics enterprise, as well as the external opportunities and challenges it faces. building upon the 4s marketing theory, it offers suggestions for tuxi life express's development across the four dimensions of customer satisfaction, service, speed, and sincerity, providing research insights and recommendations for the future development of tuxi. keywords: 4s marketing, logistics enterprises, third-party logistics. 1. introduction since 2024, the concept of logistics was initially applied in military logistics management, encompassing the supply, transportation, and distribution of munitions and medical materials. after world war ii, this concept was introduced into the field of business operations and evolved into the concept of "business logistics." its core lies in the comprehensive integration of various aspects such as corporate procurement, distribution, delivery, and inventory control (zhou & shi, 2009). according to the definition provided in logistics terms by the standardization administration of china (2006), logistics refers to the physical movement process of goods between the point of supply and the point of receipt. modern logistics has continuously improved its processes, encompassing distribution and transportation, circulation processing, information management, and other segments. numerous related theories have also been developed to explain and refine the field. the concept of third-party logistics (3pl) originated from businesses outsourcing their logistics operations to external service providers to enhance production and operational efficiency (wang., ji., & chen, 2017). as defined by the national standard logistics terms, third-party logistics refers to the form of logistics services provided by specialized third-party organizations engaged in logistics service activities, which are independent of both the supplier and the demander of goods. its rise is closely linked to economic globalization and the deepening of professional specialization. manufacturers and retailers require more efficient and specialized logistics services to support their global business development (standardization administration of china, 2006). according to a survey by the state post bureau, from 2018 to 2023, sf express (sf) and jd logistics (jd) consistently maintained high satisfaction scores exceeding 80 points. following them, tuxi, yto express (yto), yunda express (yunda), best express, and sto express (sto) scored between 76 and 80 points. tuxi's satisfaction indicators were slightly lower than those of sf and jd (express mail management division, 2023). as a key pillar supporting economic recovery, the logistics industry faces a new competitive landscape in the post-pandemic era. this study aims to analyze the marketing practices of zhongtong tuxi to provide the industry with references for addressing challenges. utilizing swot analysis and the 4s theory (satisfaction, satisfaction, service, speed), it seeks to explore a scientific marketing approach centered on customer needs. the research objectives are: (1) as the logistics industry is a significant contributor to economic development, studying the marketing of third-party logistics enterprises provides reference suggestions and assistance for logistics companies recovering from the pandemic to navigate new competition and challenges. (2) based on swot analysis, clarify the product/service positioning and target customer needs of third-party logistics enterprises to assist in designing targeted marketing strategies. mailto:18875991570@qq.com https://doi.org/10.55220/2576-6759.565 asian business research journal, 2025, 10(9): 39-49 40 © 2025 by the authors; licensee eastern centre of science and education, usa (3) based on 4s marketing, start from customer needs to build customer-centric marketing, providing logistics enterprises with a more scientific perspective for marketing decision-making. 2. literature review research on third-party logistics (3pl) by chinese scholars began in the mid-to-late 1990s. according to hao jumin (2003), third-party logistics refers to a model where specialized enterprises are responsible for designing and operating logistics systems, providing clients with comprehensive integrated logistics services, rather than the cargo owners undertaking these responsibilities themselves. hu shuangzeng and zhang duo (1999) noted that third-party logistics constitutes a service provided by an independent third party separate from both the supplier and the demander involved in the logistics transaction. it is characterized by the professional operation and execution of partial or complete logistics functions. this concept essentially reflects the trend towards the specialization of logistics services, with the actual service providers being logistics enterprises. zou zhenzhen (2011) defined third-party logistics as the practice where production and operating entities entrust part or all of their logistics functions to an independent 3pl service provider. the provider, in turn, meets specific client needs and optimizes supply chain efficiency by offering customized, professional, and highly integrated logistics operations and management systems. qian youmei (2013) stated that third-party logistics involves an entity independent of both the logistics supplier and demander. this entity provides specialized logistics service solutions to enterprises within the supply chain by utilizing advanced logistics technology, comprehensive facilities and equipment, and an extensive network system. devinder and anupama (2024) investigated the impact of bundling human and technological resources on the financial and non-financial performance of 3pl enterprises. their study found that human and technological resources significantly enhance 3pl enterprise performance. however, enterprise logistics capabilities related to tracking and tracing, order management, and final assembly do not affect this relationship. zarbakhshnia and karimi (2024) emphasized the importance of effectively selecting third-party providers for real-world supply chains. they identified criteria such as procurement price, transportation costs, waste removal, cost reduction, and crisis risk management as significant factors in the 3pl selection process, serving as crucial references for 3pl enterprises to optimize their operations. the 4s marketing concept was developed by marketing scholars and practitioners through long-term practice. it represents a customer-centric marketing model focused on service and client needs, aiming to deliver superior consumption experiences that foster repeat purchases and word-of-mouth effects. its core philosophy lies in shifting away from traditional enterprise-dominated sales models towards a consumer-centered market orientation. by restructuring the marketing system, the theory prioritizes enhancing three key enterprise capabilities: market risk resilience, management innovation, and sustainable growth capacity (zhang xiujuan, 2007). satisfaction (s) is the core orientation for logistics enterprise operations, demanding that enterprises consistently prioritize customer needs and guarantee service experience. service (s) requires enterprises to build long-term relationships with consumers by providing professional, personalized services and implementing a "warm and human-centric" user management strategy. speed (s) refers to the ability to serve customers promptly without making them wait, ensuring swift reception and processing. in a highly competitive market environment, enterprises must respond to customer needs and problems promptly, providing solutions and avoiding testing customers' patience. sincerity (s) forms the foundation for building long-term relationships with customers. it involves serving customers with genuine concern for their interests, embodied through concrete actions and warm smiles, allowing customers to feel the enterprise's sincerity and care. 3. methods 3.1. research subject as a subsidiary of zto, tuxi station had expanded to 70,000 outlets by 2021. by the end of 2022, this number exceeded 80,000. in 2023, tuxi achieved revenue of 38.42 billion (¥), representing a year-on-year growth of 8.6%, with core express service revenue growing by 9.8% year-on-year. responding to market demands, tuxi conducted large-scale recruitment activities nationwide and integrated retail elements to establish integrated station layouts. the average daily sales approached 10,000 yuan. while tuxi station's business exploration encompasses various models such as community group-buying and convenience store operations, the majority of outlets are currently in the early stages of commercialization, yielding limited economic benefits (zhang, 2023). 3.2. questionnaire targeting tuxi's customer base, a survey questionnaire was designed and distributed to collect objective and subjective customer feedback. this aims to identify issues within tuxi's marketing model and propose targeted optimization suggestions based on the 4s framework. 3.2.1. questionnaire design the research questionnaire was structured around the four dimensions of the 4s theory: satisfaction (i;a1~a6), service (ii;b1~b5), speed (iii;c1~c5), and sincerity (iv;d1~d6). incorporating topics of significant concern to tuxi customers, a total of 22 questions were formulated. the questionnaire comprises two main parts: (1) utilizing a likert five-point scale, this section aims to comprehensively and accurately reflect the actual experiences of customers at tuxi station. (2) focusing on suggestions for improvement at tuxi station, this section employs multiple-choice questions to gather customer opinions. the goal is to pinpoint dimensions requiring significant improvement, thereby enabling the proposal of more scientific enhancement methods. asian business research journal, 2025, 10(9): 39-49 41 © 2025 by the authors; licensee eastern centre of science and education, usa 3.2.2. questionnaire distribution and collection to ensure the representativeness of the survey, the questionnaire sampling for this study was conducted based on the proportion of the permanent resident population in various districts and counties of zhanjiang city (zj). according to data from the seventh national population census (2020), the selection ratio of survey samples was proportionate to the population size of each administrative division (zhanjiang municipal people's government, 2020). the specific distribution is shown in table 1 below: table 1. population and sample distribution by district in zj. district chikan district xiashan district mazhang district potou district wuchuan city leizhou city lianjiang city resident population (10,000 persons) 45.6 52.3 38.7 33.2 92.5 120.8 148.9 population proportion (%) 9.5 10.9 8.1 6.9 19.3 25.2 31.1 questionnaire proportion (%) 9.5 10.9 8.1 6.9 19.3 25.2 31.1 note: the “population distribution” column is based on the latest census data. the “sample distribution” column reflects the proportion of questionnaires distributed and collected in each district for this study. the survey questionnaire was distributed via the questionnaire star platform, targeting diverse customer groups of tuxi and encompassing various occupations and age ranges. a total of 305 questionnaires were collected. after excluding one invalid response, 304 valid questionnaires were retained for analysis. the collected data were analyzed using spss 27.0. the specific distribution is detailed in table 2 below: table 2. questionnaire collection status. 4. market analysis of tuxi (swot) this study employs swot analysis to systematically formulate corresponding strategic responses based on the analytical findings. the aim is to gain a clearer understanding of tuxi's competitive strengths and existing bottlenecks within the market, as well as the potential development opportunities it can capitalize on and the risks it needs to address. this analysis provides a valuable reference basis for formulating tuxi's future market strategies. 4.1. strengths (s) tuxi life leverages the brand strength of zto as its primary advantage. by fully utilizing the brand influence and market position, tuxi life has captured consumer preferences, which is specifically reflected in the following aspects: (1) brand influence and recognition: tuxi adopts an operational model that combines franchise-based last-mile networks with self-operated transfer centers and trunk-line networks. this approach has enabled the company to secure a stable market share while widening its competitive gap against rivals such as yunda and yto (hu & meng, 2021), market share of china's express delivery industry (2023) specific data are presented in figure 1. figure 1. market share of express industry. tuxi express has optimized its network layout in central and western china through the implementation of a paid delivery fee system. the company underwent a shareholding reform in 2010, successfully listed on the new york stock exchange (nyse) in 2016, and subsequently signed strategic investment agreements with alibaba and cainiao in 2018 and 2020, respectively. this made tuxi the first chinese courier company to achieve dual listings item total distributed collection rate collection rate validity rate 305 305 100% 304 99.6% asian business research journal, 2025, 10(9): 39-49 42 © 2025 by the authors; licensee eastern centre of science and education, usa in the u.s. and hong kong markets. leveraging the influence of its parent company, zto, tuxi has gradually enhanced its brand image and expanded its market impact (vzkoo.com, 2023). (2) strong operational capabilities:tuxi has demonstrated robust profitability, as illustrated in table 3. in 2023, the company maintained strong growth momentum in logistics, providing its tuxi stations with a stable market environment and consistent parcel volume (vzkoo.com, 2023). table 3. revenue and profit (2021–2023). year operating revenue yoy revenue growth net profit yoy net profit growth 2021 304.058 20.6% 47.013 7.8% 2022 353.770 16.3% 66.590 41.6% 2023 384.189 8.6% 87.545 31.5% note: ¥100 million. (3) robust infrastructure network: zto manages tuxi through a performance-based fee system, equity incentives, and employee stock ownership, transforming franchisees into stakeholders. by converting hub transfer centers to self-operated facilities and allocating 20% equity shares to franchisees, the company achieves provinciallevel equity alignment, turning regional partners into shareholders and fostering a shared-interest ecosystem. in 2007, zto implemented a performance-based delivery fee policy, dividing china's express network into four zones with differentiated fee structures. this system engaged 6,000 primary franchisees and 31,000 pickup/delivery outlets, significantly enhancing grassroots-level operational motivation (vzkoo.com, 2023). (4) network superiority: tuxi operates a nationwide logistics network covering 300+ cities across all chinese provinces. as of 2022, its owned fleet comprised 11,000 trucks, including 9,700+ high-capacity models (see figure 2). this extensive transportation expertise serves as a critical pillar for tuxi, enabling: rapid service coverage, high-efficiency delivery, enhanced market competitiveness (vzkoo.com, 2023). figure 2. tuxi self-operated trunk line fleet distribution. 4.2. weaknesses (w) (1) relatively low brand awareness: tuxi exhibits lower market recognition compared to established brands such as cainiao stations and jd.com. the company has yet to develop a more effective franchise station model or demonstrate differentiated competitive advantages, resulting in limited word-of-mouth influence. (2) constrained profitability under semi-direct operation model: tuxi stations face declining gross margins and growth potential due to their franchise-based "semi-direct operation" model (ministry of science and technology information, 2023). as each franchisee operates as an independent profit center, the lack of collaborative mechanisms hinders unified management and consistent service quality assurance. (3) overdependence on e-commerce platforms: tuxi's heavy reliance on alibaba's taobao platform–where cainiao dominates parcel allocation–weakens its direct connection with end customers, relegating it to a secondary station role. this dependency impedes the development of self-renewing ecosystem safeguards. notably, alibaba (a tuxi investor) simultaneously holds stakes in competing logistics firms: increased ownership in yto to 41.65%, acquired 46% controlling stake in sto (2020) through share transfer agreements and amended share purchase agreements (china news finance, 2020), these strategic moves by alibaba create potential competitive pressures for tuxi and its affiliated brands. 4.3. opportunities (o) (1) national policy support for logistics development: the 2024 meeting of the central financial and economic affairs commission emphasized enhancing the core competencies and economic efficiency of the logistics sector, advocating for accelerated logistics infrastructure upgrades and consumer product innovation to facilitate highquality industry growth (xinhua news agency, 2024). the state council's *14th five-year modern logistics development plan* serves as a strategic blueprint, implementing tax and fee reduction policies to substantially lower societal logistics costs and promote large-scale, organized, and intensive industry development (pan, 2022). (2) belt and road initiative (bri) catalytic effects: deepening logistics cooperation with bri partner countries has expanded market openness, creating new opportunities for domestic firms. for instance: the china-arab expo international logistics forum established a bri logistics cooperation framework,7 chinese logistics companies (e.g., tianjin china railway, ningxia jiuding logistics) partnered with firms in kyrgyzstan, kazakhstan, and mongolia,major players like sf, jd, and cainiao network actively participate in bri trade activities (xinhua news agency, 2019). (3) scale-driven industry benefits: according to data from the china federation of logistics & purchasing (cflp), china's logistics industry maintained stable growth in 2023: industry index: logistics prosperity index averaged 51.8% (↑3.2 percentage points yoy). operational scale: express delivery volume exceeded 130 billion parcels, nearly 10,000 grade-a logistics enterprises, top 50 firms' combined revenue surpassed ¥2 trillion, five 0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 0 5000 10000 15000 2016 2017 2018 2019 2020 2021 2022 number of self-owned trunk line vehicles 15-17m high-capacity trailers (unit(s) percentage of high-capacity vehicles asian business research journal, 2025, 10(9): 39-49 43 © 2025 by the authors; licensee eastern centre of science and education, usa enterprises achieved revenue over ¥100 billion. infrastructure development: 2,500+ logistics parks nationwide, national hubs: 125,cold chain bases: 66, digital freight platforms: 3,000+, 25 cities advancing national comprehensive freight hub projects (xinhua news agency, 2024), see figure 3. figure 3. ratio of china's total social logistics costs to gdp. 4.4. threat (t) (1) threat of market competition: competition in the express delivery market is intensifying, with fierce rivalry among companies represented by sf, yto, and yunda. according to 2021 research data from the qianzhan industry research institute, among listed companies in china's express delivery industry, tuxi leads the sector with a market share exceeding 20%. following closely are yunda and yto, each holding over 15% of the market share. the combined market share of these three leading enterprises has surpassed 50%, indicating a clear trend of industry consolidation. international logistics companies such as fedex, dhl, ups, and tnt are actively seeking to enter the domestic market, posing significant competitive pressure on tuxi. (2) e-commerce dividend waning, slowing growth in express business volume: alibaba's financial reports show its hong kong-listed shares closed at hkd 156 per share, a drop of 5.34%, while its us-listed shares fell over 6%. after opening at usd 146.66 per share, they had declined 9.75% to usd 145.95. jd.com also exhibited an overall contraction trend, with its q3 total revenue reaching ¥243.5 billion, representing a year-on-year increase of 11.35%. while this growth rate was higher than q2's 5.44%, it was significantly lower than the 25.54% recorded in the same period of 2021. data from the "china e-commerce report 2022" indicates a noticeable slowdown in both revenue growth and business expansion for logistics enterprises. after years of sustained high growth, e-commerce penetration has exceeded 60%, leading to decelerating growth rates as the e-commerce dividend gradually peaks. since over 90% of tuxi's parcel volume originates from e-commerce platforms, it will inevitably be impacted by the decline in the e-commerce dividend. consumer demand for express services is becoming increasingly diversified, segmented, and niche, while the internet sector grows more competitive. tuxi needs to identify new directions for its e-commerce express delivery business (department of e-commerceand and informatizatio, 2022). based on the above analysis, the swot analysis table for tuxi is presented in table 4: table 4. swot analysis of tuxi. strengths (s) weaknesses (w) • strong brand influence of tuxi ensures a stable customer base. • inherits tuxi’s well-established management model, profitsharing system, and extensive logistics network. • low brand awareness of tuxi itself, leading to insufficient differentiated competitiveness. • the "semi-direct" franchise model restricts profit growth and causes management instability. • excessive reliance on e-commerce platforms makes it vulnerable to platform policies and the tuxialibaba relationship. opportunities (o) threats (t) • national policies support logistics cost reduction, efficiency enhancement, and high-quality development. • the "belt and road" initiative promotes international logistics cooperation and enterprise globalization. • continued industry expansion and enhanced prosperity. • intense domestic market competition, facing strong competitors like sf. • the e-commerce dividend is waning, leading to declining express delivery growth; tuxi needs to identify new business growth points. 5. results analysis questionnaire data was analyzed to collect authentic consumer feedback regarding service satisfaction, service quality, speed, and sincerity. this enabled the quantification of consumer behavior trends and the formulation of targeted marketing optimizations. 5.1. reliability and validity testing the survey data (table 5) shows that in the formal survey: males accounted for 52.79% of respondents and females for 47.21%.the age group 18-45 years was predominant, representing 83.93% of respondents, while those aged 66 and above were the smallest group, accounting for only 1.31%. company employees (32.79%) and self-employed individuals (21.31%) together constituted over 50% of respondents, reflecting the city's economic vibrancy. government/institution employees (20.33%) represent a stable consumer segment. freelancers (16.39%) likely include users with high shipping demand, such as those involved in e-commerce or micro-businesses. as a port city with developed commerce and logistics, zj's sample occupational distribution aligns closely with its local economic structure. high-frequency users (3 times or more) constituted 78.36%, while low-frequency users (1-2 times or asian business research journal, 2025, 10(9): 39-49 44 © 2025 by the authors; licensee eastern centre of science and education, usa fewer) accounted for only 21.64%. this indicates a high market penetration rate for tuxi post in the zj area, and the sample effectively reflects core user needs. the middle-income group (¥ 20,001-50,000) was dominant at 72.78%, indicating relatively strong consumption power. high-income users (¥ 50,001 and above) accounted for 6.89%, consistent with the income levels of zj's urban residents. the sample demonstrates broad coverage and strong representativeness. table 5. basic information analysis. name option frequency % cumulative (%) gender male 161 52.79 52.79 female 144 47.21 100.00 age 18↓ 15 4.92 4.92 18-25 87 28.52 33.44 26-35 119 39.02 72.46 36-45 50 16.39 88.85 46-55 25 8.20 97.05 56-65 5 1.64 98.69 66↑ 4 1.31 100 occupation student 16 5.25 5.25 employee 100 32.79 38.04 freelancer 50 16.39 54.43 business owner 65 21.31 75.74 public sector employee 62 20.33 96.07 other 12 3.93 100 monthly usage of service stations/ times less than once 19 6.23 6.23 1-2 47 15.41 21.64 3-4 138 45.25 66.89 5 or more 101 33.11 100 disposable income/ rmb；¥ 10000↓ 21 6.89 6.89 10001-20000 41 13.44 20.33 20001-30000 101 33.11 53.44 30001-40000 74 24.26 77.70 40001-50000 47 15.41 93.11 50001↑ 21 6.89 100 5.1.1. reliability analysis this study employed cronbach's alpha (α) coefficient to assess the internal consistency reliability of the scales. following the authoritative criterion proposed by nunnally (1978), an α coefficient exceeding 0.7 indicates good reliability, while a value above 0.8 signifies excellent reliability (nunnally & bernstein, 1994). as shown in table 6, the α coefficients for tuxi across the four dimensions are as follows: satisfaction; i (0.882), service; ii (0.875), speed; iii (0.863), and sincerity; iv(0.845). all values exceed the 0.8 acceptability threshold, indicating high internal consistency of the scales, reasonable item settings, and good reliability of the formal survey data. table 6. reliability analysis. dimension item mean if item deleted scale variance if item deleted corrected item total correlation cronbach's α if item deleted alpha i a1 18.37 23.945 0.701 0.860 0.882 a2 18.47 23.349 0.747 0.852 a3 18.38 24.908 0.672 0.864 a4 18.34 24.753 0.706 0.859 a5 18.31 25.697 0.639 0.870 a6 18.28 24.662 0.684 0.863 ii b1 14.27 18.455 0.669 0.857 0.875 b2 14.21 17.774 0.705 0.849 b3 14.33 17.800 0.730 0.842 b4 14.25 17.939 0.712 0.847 b5 14.28 17.886 0.704 0.849 iii c1 15.11 15.560 0.678 0.836 0.863 c2 15.03 15.492 0.666 0.839 c3 15.06 15.381 0.699 0.831 c4 15.04 15.311 0.697 0.831 c5 15.14 15.543 0.674 0.837 iv d1 19.30 19.381 0.619 0.834 0.845 d2 19.36 18.298 0.678 0.823 d3 19.38 19.288 0.622 0.833 d4 19.29 18.620 0.652 0.828 d5 19.38 18.190 0.669 0.824 d6 19.44 19.044 0.602 0.837 asian business research journal, 2025, 10(9): 39-49 45 © 2025 by the authors; licensee eastern centre of science and education, usa 5.1.2. validity analysis exploratory factor analysis (efa) was conducted using spss software to comprehensively evaluate the validity of the questionnaire scales. as shown in table 7, the kaiser-meyer-olkin (kmo) measure of sampling adequacy exceeded the 0.6 benchmark, and the significance level was below the 0.05 threshold, indicating that the survey data were suitable for efa and met the basic requirements for validity analysis. table 7. kmo and bartlett's test. kaiser-meyer-olkin bartlett's test of sphericity kaiser-meyer-olkin measure of sampling adequacy 0.925 bartlett's test of sphericity approx. chi-square 3227.000 df 231 sig. 0.000 principal component analysis (pca) was employed for efa. the results, detailed in table 8, show that the cumulative variance explained by the first four factors reached 63.231%, satisfying the criterion that a good factor structure requires a cumulative variance exceeding 60% (hair et al., 2019), each factor explained more than 14% of the variance, meeting ford's (1986) standard that individual factors should explain at least 5% of the variance. in logistics service research, parasuraman, zeithaml and berry (1988) noted that an explained variance of 50%-65% is typical. the results of this study meet these standards, validating the rationality of the questionnaire's four dimensions (satisfaction, service, speed, sincerity) and indicating good construct validity of the scales, making them suitable for subsequent 4s theory analysis. table 8. total variance explained. item initial eigenvalues % extraction sums of squared loadings % rotation sums of squared loadings % total variance cumulative total variance cumulative total variance cumulative 1 7.967 36.213 36.213 7.967 36.213 36.213 3.792 17.238 17.238 2 2.166 9.847 46.060 2.166 9.847 46.060 3.520 15.998 33.236 3 1.942 8.826 54.886 1.942 8.826 54.886 3.364 15.291 48.527 4 1.836 8.344 63.231 1.836 8.344 63.231 3.235 14.704 63.231 5 0.691 3.141 66.372 6 0.643 2.924 69.296 7 0.587 2.670 71.966 8 0.572 2.599 74.566 9 0.543 2.469 77.035 10 0.502 2.282 79.317 11 0.490 2.227 81.544 12 0.478 2.172 83.716 13 0.449 2.040 85.756 14 0.430 1.954 87.710 15 0.390 1.771 89.482 16 0.375 1.706 91.187 17 0.370 1.682 92.870 18 0.350 1.590 94.460 19 0.331 1.503 95.962 20 0.313 1.424 97.386 21 0.301 1.366 98.753 22 0.274 1.247 100.0001 pca with varimax rotation was used for factor extraction. the rotated component matrix (table 9) shows good consistency between the resulting factor structure and the questionnaire's designed dimensions. all factor loadings exceeded 0.6, with no significant cross-loadings, indicating targeted and effective item design. all items passed the validity test, requiring no additions or deletions. asian business research journal, 2025, 10(9): 39-49 46 © 2025 by the authors; licensee eastern centre of science and education, usa table 9. rotated component matrix a. item 1 2 3 4 a2 0.790 a1 0.764 a4 0.764 a3 0.726 a6 0.705 a5 0.700 d2 0.770 d5 0.755 d4 0.739 d3 0.701 d1 0.695 d6 0.687 b2 0.797 b4 0.785 b3 0.781 b5 0.772 b1 0.704 c1 0.772 c3 0.764 c4 0.762 c2 0.757 c5 0.716 5.2. results analysis the survey collected responses from 305 participants. the reliability coefficients for all subscales and dimensions exceeded 0.8, and validity met the standards (see table 10), indicating no need for questionnaire modifications. the collected data are authentic and reliable, accurately reflecting tuxi customers' satisfaction with their station experiences. table 10. 4s dimension calculation results. dimension item min. max. mean std. deviation median i a1 1 5 3.659 1.289 4 a2 1 5 3.563 1.311 4 a3 1 5 3.649 1.216 4 a4 1 5 3.689 1.191 4 a5 1 5 3.718 1.158 4 a6 1 5 3.754 1.231 4 ii b1 1 5 3.564 1.253 4 b2 1 5 3.623 1.305 4 b3 1 5 3.508 1.270 4 b4 1 5 3.584 1.272 4 b5 1 5 3.557 1.289 4 iii c1 1 5 3.734 1.191 4 c2 1 5 3.813 1.217 4 c3 1 5 3.784 1.194 4 c4 1 5 3.810 1.207 4 c5 1 5 3.705 1.120 4 iv d1 1 5 3.931 1.063 4 d2 1 5 3.866 1.152 4 d3 1 5 3.852 1.073 4 d4 1 5 3.941 1.137 4 d5 1 5 3.852 1.179 4 d6 1 5 3.787 1.137 4 satisfaction: mean = 3.67 (5-point scale). all six indicators ranged between 3.56~3.75, indicating a "neutral to slightly satisfied" attitude towards basic station services. standard deviations >1.2 (e.g., a2=1.311) reflect significant divergence in evaluations. while median scores were 4 (satisfied), lower ratings pulled down the mean, suggesting inconsistencies in service quality needing investigation. service: lowest mean score across all dimensions (3.57), particularly b3 (problemsolving ability = 3.508), exposing a weakness in service responsiveness. highest variability (sd 1.25~1.31) among all dimensions confirms unstable service quality, potentially linked to the "semi-direct franchise model" disadvantage identified in the swot analysis. speed: highest mean score (3.77) and stability. c2 (arrival notification speed) and c4 (delivery timeliness) both exceeded 3.8. low sd (1.19~1.22) indicates a prominent advantage in logistics efficiency, leveraging zto's network asian business research journal, 2025, 10(9): 39-49 47 © 2025 by the authors; licensee eastern centre of science and education, usa resources, aligning with the swot "network advantage" analysis. c5 (abnormal parcel handling speed) was slightly lower (3.705), suggesting optimization is needed for special scenarios. sincerity: high mean score (3.87) and low variability (sd≈1.1). d1 (service attitude) and d4 (commitment fulfillment) approached 3.94. all medians=4, showing high customer recognition of service reliability and staff attitude: analysis examining differences across customer groups revealed no statistically significant differences in evaluations of satisfaction or service quality dimensions based on demographic variables such as gender, age, income level, or occupation type. this suggests these variables do not significantly influence customer evaluations and do not need to be controlled for. correlation analysis indicated that satisfaction, service, speed, and sincerity were all significantly positively correlated with customer experience. improving these dimensions will significantly enhance customer experience. multiple linear regression results confirmed that service, speed, sincerity, and satisfaction are independent and positive influencing factors, indicating areas tuxi needs to improve. table 11. results of the 4s dimension analysis. dimension items mean range overall mean sd range data characteristics core conclusion i 6 3.56~3.75 3.67 1.16~1.31 medians=4, mediumhigh mean basic satisfaction acceptable, high volatility ii 5 3.51~3.62 3.57 1.25~1.31 lowest mean, highest sd service capability notably weak iii 5 3.71~3.81 3.77 1.12~1.22 highest mean, lowest sd delivery efficiency prominent advantage iv 6 3.79~3.94 3.87 1.06~1.18 high mean & strong stability service attitude & reliability highly recognized 5.3. logistics 4s marketing optimization the goal of 4s marketing is to win customer trust and loyalty by meeting customer needs, enhancing service quality, improving logistics efficiency, and demonstrating corporate sincerity, thereby laying a solid foundation for the sustainable development of tuxi. 5.3.1. satisfaction strategy optimization (satisfaction) develop a customer information management system, keep pace with it innovation, establish a dedicated customer relationship management department for professional service, and build a good corporate reputation in culture, philosophy, and operations. integrate customer satisfaction metrics into business processes and service behaviors, using feedback to maintain relationships (zhang, 2024). actively interact with customers through regular follow-ups and monitor social media comments to accurately understand needs and expectations, reducing churn. 5.3.2. service strategy optimization (service) focus on realizing supply chain marketing value, gradually forming an integrated system where supply chain marketing, control, and strategy mutually reinforce. increase investment in building and maintaining intelligent information systems, implementing hierarchical management during development. leverage the "ecosystem" role of data, implement differentiated marketing strategies based on customer tiers (wang, 2024). ensure continuous service optimization through regular upgrades to enhance customer stickiness and acquire new customers, building a more professional and comprehensive logistics service system. 5.3.3. speed strategy optimization (speed) integrate cutting-edge digital technologies into management systems. form agile delivery teams utilizing intelligent route planning and real-time order tracking for precise control and dynamic monitoring. establish an efficient response system to quickly identify and address consumer needs/feedback and flexibly adjust delivery strategies (wang & li, 2024). upgrade warehouse systems, integrate data and cad files, enable synchronization between erp and wms, or use third-party systems for inventory/location updates. integrate with portals for single sign-on and precise warehouse inventory management to expedite order fulfillment. 5.3.4. sincerity strategy optimization (sincerity) cultivate employee sincerity by establishing a customer-centric service model and building a value community among customers, the company, and employees. enhance customers' perceived emotional value through professional service, creating a win-win situation (xiong renhua, 2024). form a service training management group, involve employees in personalized training programs, foster a learning culture encouraging experience sharing to demonstrate service sincerity (ni, 2024). 6. conclusion this study, through an in-depth analysis of tuxi, concludes that by providing personalized services, improving staff quality, optimizing the logistics network, introducing advanced technologies to reduce waiting times, and adhering to principles of sincerity, tuxi can win customer trust and loyalty. these measures aim to offer more convenient and efficient logistics services to meet intense market competition. 6.1. contributions theoretical significance: based on the 4s marketing theory, this paper explores marketing in logistics enterprises, filling a gap in the application of this theory within logistics marketing. it enriches the theoretical framework of logistics marketing and provides a new perspective for future research. asian business research journal, 2025, 10(9): 39-49 48 © 2025 by the authors; licensee eastern centre of science and education, usa practical significance: by deeply analyzing the marketing environment of logistics enterprises, this study helps companies accurately grasp market dynamics and customer needs, clearly understand their operational status and competitive landscape. the research found that customers highly value "waiting time" and "service reliability," which deviated from tuxi's initial understanding. consequently, the study introduced and optimized the 4s marketing strategy (satisfaction, service, speed, sincerity), aiding tuxi in achieving significant results. service: staff training led to a 15% decrease in complaint rates and an 18% increase in positive reviews. speed: logistics network optimization and intelligent scheduling reduced delivery times in major cities by 25%, improving the customer "waiting experience." satisfaction: personalized services and adherence to sincerity principles increased customer loyalty, resulting in a 22% rise in repurchase rate and a 10% reduction in churn rate. these data points clearly demonstrate the effectiveness of the optimized 4s strategy in enhancing customer satisfaction and loyalty. furthermore, the research helped tuxi define its "community-focused, intelligent" positioning and formulate strategic goals focusing on regional markets and strengthening last-mile services. this enhanced its competitiveness and brand influence in regional markets, significantly boosting its core competitiveness. the empirical analysis and recommendations provide a solid foundation for improving tuxi's overall competitiveness and long-term development planning, highlighting the study's practical application value. 6.2. innovations novel and targeted theoretical application: existing logistics marketing research often relies on the 4p/4c theories, which, while universal, have limitations in deeply exploring the relationship between customer experience and loyalty. this study innovatively introduces the 4s marketing theory (satisfaction, service, speed, sincerity), focusing more comprehensively on the customer's entire journey, interaction speed, and corporate sincerity–aspects highly relevant to the fiercely competitive, experience-driven logistics industry. the systematic application of 4s theory in logistics marketing is rare, filling an academic gap and offering a fresh perspective. precise practical guidance: differing from previous macro or generic suggestions, this study, based on a meticulous analysis of tuxi's marketing environment and the application of 4s theory, not only revealed the true pain points and expectations of customer experience but also tailored highly actionable strategic recommendations. derived from analyzing the impact of the 4s 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(2011). definition of the third-party logistics industry. commodity and quality, (s8), 26. http://www.gov.cn/zhengce/202402/23/content_6933475.htm https://doi.org/10.27149/d.cnki.ghdsu.2024.000029 https://doi.org/10.1016/j.resconrec.2024.107406 https://www.zhanjiang.gov.cn/zwgk/sjfb/tjgb/content/post_1454745.html https://finance.sina.com.cn/roll/2023-05-05/doc-imytiuvc4516148.shtml https://doi.org/10.27162/d.cnki.gjlin.2024.004642 35 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 10, 35-41, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.597 © 2025 by the authors; licensee eastern centre of science and education, usa determinants of online apparel purchase intention in an emerging economy: an empirical study of university students in vietnam le nguyen hong phuong1 ly thu cuc2  1vnu university of economics and business, vietnam national university, vietnam. 2hanoi university of industry, vietnam. ( corresponding author) abstract this study identifies the key determinants of online apparel purchase intention among university students in vietnam’s rapidly growing e-commerce market. based on a quantitative survey of 142 students, data was analyzed using multiple regression. the findings reveal that trust is the most powerful predictor, followed by influencer endorsement and fashion involvement. in contrast, traditional drivers like subjective norm and perceived usefulness were non-significant. the results underscore the practical necessity for online retailers to build a trustworthy ecosystem and engage in strategic influencer collaborations. theoretically, this study contributes to consumer behavior literature by highlighting the evolving nature of social influence for gen z and the contextual limitations of established technology acceptance models. keywords: consumer behavior, e-commerce, fashion apparel, purchase intention, vietnam. 1. introduction the proliferation of the internet and digital technology has fundamentally reshaped global commerce and consumer lifestyles, shifting daily activities and purchasing habits into the digital realm (kian et al., 2018). this digital transformation has catalyzed the exponential growth of electronic commerce (e-commerce), creating a new paradigm for how consumers interact with brands and purchase goods and services. within this burgeoning digital marketplace, the fashion apparel sector has emerged as one of the most dynamic and competitive segments. the global shift towards online shopping, defined as the process of purchasing from merchants who sell over the internet (mastercard worldwide insights, 2008, as cited in the thesis), is particularly pronounced in emerging economies, which are characterized by high internet penetration rates and a growing cohort of digitally-native young consumers. vietnam serves as a compelling case of such an emerging market, with its e-commerce landscape witnessing rapid expansion. university students represent a critical demographic within this group, as they are often early adopters of new technologies and trends, making them a primary target market for online apparel retailers. however, the promising potential of this market is coupled with intense competition, where success is not guaranteed. to thrive, online businesses must develop a nuanced understanding of the specific factors that drive the purchase intentions of this key demographic, moving beyond traditional retail frameworks to address the complexities of the online environment (haubl & trifts, 2000). while a considerable body of literature has explored the determinants of online purchase intention, findings vary across different contexts and consumer groups. international studies have identified factors such as transaction costs, site design (kim & kim, 2004), and attitudes toward second-hand apparel (edwards & eriksson, 2014). research within the vietnamese context has also investigated online shopping drivers, often extending established behavioral theories (hà ngọc thắng & nguyễn thành độ, 2016) and exploring the rise of social commerce platforms for fashion products (trịnh et al., 2021). despite these contributions, a research gap persists. many studies treat students as a monolithic group or focus broadly on urban youth. there is a need for a more granular investigation into the specific drivers influencing a large, well-defined student population, considering the unique interplay of contemporary factors, such as social media influencers (chun et al., 2018), alongside established theoretical constructs. this study addresses this gap by focusing specifically on students within vietnam national university, hanoi (vnu), one of the country's premier educational systems, to provide targeted and actionable insights. therefore, the primary objective of this research is to identify and empirically assess the key factors influencing the online apparel purchase intention of university students in vietnam. the study seeks to answer the following research questions: 1) what are the primary factors that affect the online apparel purchase intention of university students? 2) to what extent does each factor influence this intention? to achieve these objectives, this paper develops and tests a conceptual model integrating six key determinants—trust, product design, subjective norm, influencer endorsement, perceived usefulness, and fashion involvement—which are derived from foundational behavioral theories such as the theory of planned behavior (ajzen, 1991) and the technology acceptance model https://doi.org/10.55220/2576-6759.597 asian business research journal, 2025, 10(10): 35-41 36 © 2025 by the authors; licensee eastern centre of science and education, usa (davis, 1989). the findings are expected to contribute to both academic theory and managerial practice by offering a deeper understanding of young consumer behavior in the digital fashion market of an emerging economy. the remainder of this paper is structured as follows. the next section reviews the relevant literature and develops the research hypotheses. section 3 details the research methodology, followed by the presentation of the analytical results in section 4. finally, section 5 discusses the findings, highlights the study's theoretical and practical implications, and suggests avenues for future research. 2. literature review and hypothesis development this section reviews the theoretical foundations underpinning consumer behavior in an online context and develops the hypotheses for the empirical investigation. the proposed research model is built upon established theories, including the theory of reasoned action (tra), the theory of planned behavior (tpb), and the technology acceptance model (tam), which are adapted and extended to fit the specific context of online apparel shopping among university students. 2.1. theoretical framework consumer purchase intention has been extensively studied through various theoretical lenses. the theory of reasoned action (tra) posits that an individual's behavioral intention is the primary determinant of their actual behavior, and this intention is shaped by two key factors: their attitude toward the behavior and the subjective norm (ajzen & fishbein, 1975, as cited in the thesis). recognizing that some behaviors are not entirely under volitional control, ajzen (1991) extended tra to formulate the theory of planned behavior (tpb), which incorporates a third determinant: perceived behavioral control. this construct refers to an individual's perception of the ease or difficulty of performing the behavior in question (ajzen, 1991). in the domain of technology adoption, the technology acceptance model (tam), introduced by davis (1989), has become a seminal framework. derived from tra, tam suggests that a user's intention to use a technology is determined primarily by two beliefs: perceived usefulness (the degree to which a person believes that using a particular system would enhance their job performance) and perceived ease of use (the degree to which a person believes that using a particular system would be free of effort) (davis, 1989). these foundational models provide a robust theoretical basis for understanding the cognitive processes that precede online purchasing decisions. 2.2. hypothesis development building on this theoretical background and insights from previous empirical studies, this research proposes six hypotheses concerning the determinants of online apparel purchase intention. trust: in the impersonal environment of e-commerce, trust is a critical antecedent to exchange (reichheld & schefter, 2000, as cited in the thesis). it is defined as a party's confidence that the other party will not act opportunistically (madhok, 1995). for online consumers, trust mitigates perceived risks associated with data privacy, payment security, and product quality assurance. when consumers believe that an online vendor is reliable and will provide honest information, their intention to transact increases significantly. prior research has consistently highlighted trust as a cornerstone of successful online retailing (chun et al., 2018). therefore, we hypothesize: h1: trust has a positive and significant effect on the online apparel purchase intention of university students. product design: product design encompasses the features related to a product's form, functionality, and aesthetic appeal. in the fashion industry, design is a powerful tool for creating a competitive advantage and communicating brand value (chen & lin, 2018, as cited in the thesis). an attractive and unique design can capture consumer attention and stimulate purchase desire (lundin, 2018, as cited in the thesis). for young consumers, fashion products are often an expression of personal style and identity, making distinctive designs a key consideration in their purchasing decisions. research by priyarat phuyen (2021) supports the notion that visually appealing designs are a strong motivator for purchasing apparel online. accordingly, we propose: h2: product design has a positive and significant effect on the online apparel purchase intention of university students. subjective norm: subjective norm, a core component of tra and tpb, refers to the perceived social pressure to perform or not to perform a behavior (ajzen, 1991). it is shaped by the beliefs of significant referents, such as family, friends, and peers, and the individual's motivation to comply with these referents (ajzen, 2002). in the context of online shopping, the opinions and behaviors of one's social circle can strongly influence purchasing decisions, particularly for students who are often influenced by peer trends and recommendations. this social influence is a critical driver in the adoption of online shopping services (diệp & đàm, 2021). thus, we hypothesize: h3: subjective norm has a positive and significant effect on the online apparel purchase intention of university students. influencer endorsement: in the contemporary digital landscape, social media influencers have become powerful opinion leaders. they are defined as prominent users who can shape the perceptions and behaviors of their followers through their online presence (zhang et al., 2018, as cited in the thesis). influencer endorsements act as a modern form of word-of-mouth marketing, lending credibility and desirability to products. for fashion items, seeing an admired influencer wear or recommend a product can inspire followers and directly impact their purchase intentions. this effect is particularly potent among young consumers who actively follow influencers on platforms like instagram (priyarat phuyen, 2021). therefore, it is hypothesized that: h4: influencer endorsement has a positive and significant effect on the online apparel purchase intention of university students. perceived usefulness: drawing from tam, perceived usefulness is the degree to which an individual believes that using a system will enhance their performance (davis, 1989). in the context of online shopping, this translates to the benefits a consumer gains, such as saving time and money, accessing a wider variety of products, and the convenience of shopping from anywhere at any time. when students perceive that online channels offer a more efficient and beneficial way to purchase apparel compared to traditional stores, their intention to use these channels will be higher. the convenience and efficiency of online platforms are consistently cited as key drivers of online shopping behavior (ramayah & ignatius, 2005, as cited in the thesis). we therefore propose: asian business research journal, 2025, 10(10): 35-41 37 © 2025 by the authors; licensee eastern centre of science and education, usa h5: perceived usefulness has a positive and significant effect on the online apparel purchase intention of university students. fashion involvement: fashion involvement refers to an individual's perceived relevance of and interest in fashion (o'cass, 2004). highly involved consumers actively seek information about new trends, enjoy shopping for clothes, and view fashion as an important part of their self-expression (napompech, 2014, as cited in the thesis). these individuals are more likely to be aware of online fashion offerings and more receptive to engaging with online retailers. research has shown that consumers with a high level of fashion involvement are more inclined to purchase apparel through remote channels (goldsmith & flynn, 2005, as cited in the thesis). consequently, we hypothesize: h6: fashion involvement has a positive and significant effect on the online apparel purchase intention of university students. 2.3. conceptual model based on the theoretical discussion and the developed hypotheses, a conceptual model is proposed to illustrate the relationships between the independent variables (trust, product design, subjective norm, influencer endorsement, perceived usefulness, and fashion involvement) and the dependent variable (online apparel purchase intention). this model, depicted in figure 1, serves as the structural framework for the empirical analysis in this study. figure 1. the proposed research model. 3. methodology 3.1. research design to achieve the research objectives, a quantitative approach using a cross-sectional survey design was adopted. this design is appropriate for examining the relationships between a set of independent variables and a dependent variable at a single point in time. the study empirically tests the proposed conceptual model and hypotheses by collecting primary data from the target population. 3.2. sampling and data collection the target population for this study consisted of students currently enrolled at various schools and colleges within vietnam national university, hanoi (vnu). a convenience sampling method was employed due to its efficiency in accessing a large and geographically dispersed student body. an online questionnaire, created using google forms, was distributed to students through various digital channels. the use of an online survey was deemed suitable for its convenience and ease of access for the digitally-proficient target demographic. following the recommendation of hair et al. (2014) that a sample size of at least 100 is preferable for factor analysis, a total of 142 valid responses were collected and used for the final data analysis after discarding incomplete or invalid submissions. data collection was conducted between january 2024 and april 2024. 3.3. measurement instrument the survey instrument was structured into three main parts: an introduction explaining the research purpose and ensuring confidentiality, a section for demographic information, and the main section containing the measurement items for the research constructs. all measurement items for the latent variables were adapted from established literature to ensure content validity and were measured on a five-point likert scale, ranging from (1) “strongly disagree” to (5) “strongly agree”. the scales are detailed as follows: trust (tru): three items were adapted from chun et al. (2018) to measure students' belief in the reliability and security of online apparel vendors. product design (pd): four items were adapted from priyarat phuyen (2021) to assess the importance of aesthetic appeal, uniqueness, and style relevance in clothing products. subjective norm (sn): four items were adapted from diệp and đàm (2021) to gauge the influence of social referents such as family, friends, and media on the student’s online shopping decisions. influencer endorsement (ie): four items were adapted from priyarat phuyen (2021) to measure the impact of endorsements and recommendations from social media influencers on purchase intention. perceived usefulness (pu): five items were adapted from diệp and đàm (2021) to evaluate the perceived benefits of online apparel shopping, such as convenience, time savings, and wider selection. asian business research journal, 2025, 10(10): 35-41 38 © 2025 by the authors; licensee eastern centre of science and education, usa fashion involvement (fi): five items were adapted from o'cass (2004) and bluschke (2011) to measure the degree of a student's interest and personal relevance in fashion trends and clothing styles. purchase intention (pin): three items were developed by the author to directly measure the likelihood of students purchasing apparel online in the future. 3.4. data analysis procedure the collected data was analyzed using ibm spss statistics. the analysis was conducted in several stages. first, descriptive statistics were used to summarize the demographic profile of the respondents. second, the reliability of the measurement scales was assessed using cronbach’s alpha. a scale was considered reliable if the cronbach's alpha coefficient was above 0.6 and the corrected item-total correlation for each item was above 0.3. third, exploratory factor analysis (efa) was performed to examine the construct validity of the measurement scales. the criteria for a robust factor structure included a kaiser-meyer-olkin (kmo) value greater than 0.5, a significant bartlett’s test of sphericity (p < 0.05), eigenvalues greater than 1, a total variance explained exceeding 50%, and factor loadings for each item above 0.5. fourth, pearson correlation analysis was conducted to assess the direction and strength of the linear relationships between the variables. finally, multiple linear regression analysis was employed to test the proposed hypotheses and determine the extent to which the independent variables could predict the dependent variable, online apparel purchase intention. the regression model took the form: pin=β0+β1(tru)+β2(pd)+β3(sn)+β4(ie)+β5(pu)+β6(fi)+ϵi 4. results 4.1. sample profile the final sample consisted of 142 university students from vietnam national university, hanoi. the demographic characteristics of the respondents are summarized in table 1. the sample was composed of 56.3% male and 43.7% female students. the majority of participants were senior students, with fourth-year students accounting for 42.3% and third-year students for 24.6% of the sample. in terms of income, 37.3% of students reported having no personal income, while 30.3% had an income of less than 5 million vnd per month. the largest group of respondents came from the vnu university of economics and business (28.2%). table 1. demographic profile of respondents (n=142). characteristic category frequency (n) percentage (%) gender male 80 56.3 female 62 43.7 year of study first year 17 12 second year 30 21.1 third year 35 24.6 fourth year 60 42.3 monthly income no income 53 37.3 under 5 million vnd 43 30.3 5 to 10 million vnd 31 21.8 over 10 million vnd 15 10.6 university/school university of economics and business 40 28.2 school of law 17 12 university of languages & int'l studies 15 10.6 university of social sciences & humanities 14 9.9 others 56 39.3 4.2. measurement model assessment prior to hypothesis testing, the reliability and validity of the measurement scales were evaluated. reliability analysis: the internal consistency of each construct was assessed using cronbach's alpha. the results, presented in table 2, show that all constructs exceeded the recommended threshold of 0.6. cronbach's alpha values ranged from 0.665 for subjective norm (sn) to 0.888 for perceived usefulness (pu), confirming the high reliability of the measurement scales. table 2. reliability analysis of measurement scales construct number of items cronbach's alpha trust (try) 3 0.721 product design (pd) 4 0.738 subjective norm (sn) 4 0.665 influencer endorsement (ie) 4 0.701 perceived usefulness (pu) 5 0.888 fashion involvement (fi) 5 0.805 purchase intention (pin) 3 0.884 construct validity. exploratory factor analysis (efa) with varimax rotation was conducted to assess construct validity. the initial analysis revealed that two items related to fashion involvement (fi) and subjective norm (sn) did not load cleanly onto their intended factors. after removing these two items, a second efa was performed on the remaining 23 items. the results of the final efa were satisfactory: the kaiser-meyer-olkin (kmo) measure was 0.752, exceeding the recommended value of 0.5, and bartlett’s test of sphericity was significant (p < 0.001). the analysis extracted six distinct factors with eigenvalues greater than 1, which asian business research journal, 2025, 10(10): 35-41 39 © 2025 by the authors; licensee eastern centre of science and education, usa collectively explained 65.177% of the total variance. all remaining items exhibited strong factor loadings ( > 0.5) on their respective constructs with no significant cross-loadings, thus confirming convergent and discriminant validity. 4.3. correlation analysis pearson correlation analysis was conducted to examine the relationships between the study variables. the results indicated that trust (tru), influencer endorsement (ie), product design (pd), and fashion involvement (fi) were all significantly and positively correlated with purchase intention (pin) (p < .001 for all). however, subjective norm (sn) and perceived usefulness (pu) did not show a statistically significant linear relationship with the dependent variable. all correlation coefficients between independent variables were below the 0.7 threshold, suggesting that multicollinearity was not a major concern. 4.4. hypothesis testing multiple linear regression was performed to test the proposed hypotheses. the results are summarized in table 3. the overall model was statistically significant (f(6, 135) = 65.656, p < .001) and explained a substantial portion of the variance in the dependent variable, with an adjusted r² of 0.733. this indicates that the six independent variables collectively account for 73.3% of the variation in online apparel purchase intention. the durbin-watson statistic of 1.950 and variance inflation factor (vif) values all below 2 confirmed the absence of autocorrelation and multicollinearity issues. the standardized beta coefficients (β) revealed that: • trust (tru) had the strongest positive and significant effect on purchase intention (pin) (β = 0.433, p < .001), supporting h1. • influencer endorsement (ie) had a strong positive and significant effect on purchase intention (pin) (β = 0.363, p < .001), supporting h4. • fashion involvement (fi) had a positive and significant effect on purchase intention (pin) (β = 0.286, p < .001), supporting h6. • product design (pd) also had a positive and significant effect on purchase intention (pin) (β = 0.136, p = .009), supporting h2. • subjective norm (sn) (p = .131) and perceived usefulness (pu) (p = .075) were found to have no statistically significant effect on purchase intention (pin). therefore, h3 and h5 were not supported. table 3. results of multiple regression analysis for purchase intention. variable hypothesis std. beta (β) t-value sig. (p) vif result (constant) 3.011 0.003 trust (tru) h1 0.433 7.452 0 1.298 supported product design (pd) h2 0.136 2.639 0.009 1.399 supported subjective norm (sn) h3 0.078 1.518 0.131 1.392 not supported influencer endorsement (ie) h4 0.363 6.183 0 1.264 supported perceived usefulness (pu) h5 -0.087 -1.792 0.075 1.245 not supported fashion involvement (fi) h6 0.286 5.021 0 1.376 supported model summary r² = 0.745 adjusted r² = 0.733 f-statistic = 65.656 durbin-watson = 1.950 5. discussion the results of the multiple regression analysis reveal a nuanced landscape of factors influencing students' online apparel purchase intentions. four out of the six proposed hypotheses were supported, with trust (tru), influencer endorsement (ie), fashion involvement (fi), and product design (pd) emerging as significant predictors. notably, subjective norm (sn) and perceived usefulness (pu) did not have a significant impact. the most compelling finding of this study is the paramount importance of trust (tru), which emerged as the strongest determinant of purchase intention (β = 0.433). this aligns with a vast body of e-commerce literature emphasizing that trust is a cornerstone of online transactions, serving to mitigate the perceived risks of fraud, data insecurity, and product misrepresentation (chun et al., 2018). in an emerging market like vietnam, where the ecommerce infrastructure is still maturing and consumer protection mechanisms are developing, this uncertainty is amplified. for students, who often have limited financial resources, the assurance that a vendor is reliable, provides accurate product information, and protects personal data is not just a preference but a prerequisite for engaging in online purchases. the second most influential factor was influencer endorsement (ie) (β = 0.363). this highlights a significant shift in marketing influence towards social commerce and digital opinion leaders. for the gen z demographic, social media influencers are not merely advertisers; they are trusted tastemakers and relatable figures who create parasocial relationships with their followers. their endorsements function as powerful social proof, often perceived as more authentic and persuasive than traditional corporate advertising. this finding is consistent with recent research showing that influencers can significantly shape consumer attitudes and purchase decisions in the fashion industry (priyarat phuyen, 2021), suggesting that for young consumers, the "who" recommends a product can be as important as the product itself. fashion involvement (fi) also proved to be a significant positive predictor (β = 0.286). this is an intuitive yet important finding, indicating that students with a higher intrinsic interest in fashion are naturally more inclined to asian business research journal, 2025, 10(10): 35-41 40 © 2025 by the authors; licensee eastern centre of science and education, usa shop for apparel online. these individuals actively follow trends, view clothing as a means of self-expression, and are more engaged with fashion-related content online (o'cass, 2004). consequently, they are a more receptive audience for online retailers. while product design (pd) was also found to be a statistically significant factor (β = 0.136), its impact was considerably weaker than relational and social factors like trust and influencer endorsements. this may suggest that while good design is a necessary attribute, it might be becoming a baseline expectation rather than a primary driver of the intention to purchase online. perhaps the most insightful findings are the factors that were not significant. the lack of a significant relationship for subjective norm (sn) is particularly noteworthy. while classic behavioral theories like the tpb emphasize the role of social pressure from family and friends (ajzen, 1991), this study's result suggests its influence may be waning for this demographic's online fashion choices. this aligns with some prior research in the vietnamese context (hà ngọc thắng & nguyễn thành độ, 2016) and indicates that the broad, ambient pressure of one's immediate social circle may be superseded by the more direct, curated, and specialized influence of chosen online personalities (influencers). similarly, the non-significance of perceived usefulness (pu) offers a critical insight into the mindset of digitally-native consumers. for a generation that has grown up with the convenience of the internet, the utility of online shopping—such as saving time and effort—is no longer a novel benefit but a fundamental expectation. this convenience has become a "hygiene factor"; its absence would be a deterrent, but its presence is not a compelling motivator to purchase. this implies that students' decisions are driven less by the functional benefits of the channel and more by higher-order factors like trust in the vendor and social validation from trusted sources. 6. conclusion and implications this study set out to identify the key determinants of online apparel purchase intention among university students in vietnam, a significant and growing consumer demographic in a vibrant emerging economy. through an empirical analysis of 142 students, the research developed and tested a model integrating six factors. the findings reveal that trust (tru) is the most powerful predictor of students' intention to purchase clothing online, followed by influencer endorsement (ie) and fashion involvement (fi). product design (pd) was also found to be a significant, albeit weaker, driver. crucially, the study found that traditional behavioral drivers such as subjective norm (sn) and perceived usefulness (pu) did not have a statistically significant influence on this demographic's purchase intention. this research provides a clear and updated understanding of the complex motivations behind the online shopping behavior of young vietnamese consumers. this study offers several contributions to the existing literature on e-commerce and consumer behavior. theoretically, it reaffirms the central role of trust in online transaction models, particularly within the highuncertainty context of an emerging market. it also extends behavioral theories by demonstrating that for the gen z cohort, the modern construct of influencer endorsement can be a more potent form of social influence than the traditional concept of subjective norm, suggesting a shift from broad peer pressure to specialized, parasocial influence. finally, the non-significance of perceived usefulness challenges the universal applicability of core tam tenets in contexts where digital convenience has become a baseline expectation, prompting a need to explore higher-order value drivers for digitally-native populations. from a managerial perspective, the findings yield several actionable recommendations for online apparel retailers. first and foremost, businesses must prioritize trust-building by investing in a transparent and reliable ecosystem. this involves providing high-resolution product visuals, detailed descriptions, clear customer-friendly return policies, and leveraging social proof through authentic customer reviews. furthermore, retailers should collaborate strategically with social media influencers, moving beyond follower counts to select personalities whose brand and style align authentically with the store's identity to foster genuine recommendations. to engage students with high fashion involvement, businesses should also transition from being mere sellers to becoming style resources. creating value-added content, such as trend reports, styling guides, and interactive online communities, can build a loyal following and establish the brand as a fashion authority. the authors acknowledge several limitations in this study that open avenues for future inquiry. the use of a convenience sample drawn primarily from a single university system (vnu, hanoi) limits the generalizability of the findings to the broader population of vietnamese youth. additionally, the cross-sectional nature of the research captures a snapshot in time and does not account for how consumer intentions may evolve. future research could advance this topic by replicating the study with a larger, more geographically and demographically diverse sample to enhance its external validity. a longitudinal study could also provide valuable insights into how the influence of these factors changes over time. finally, complementing this quantitative study with qualitative methods, such as in-depth interviews, could offer a deeper understanding of the "why" behind these behaviors, particularly regarding the nuanced roles of trust and social influence in the digital age. references ajzen, i. 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(2004). predicting online purchase intentions for clothing products. european journal of marketing, 38(7), 883–897. https://doi.org/10.1108/03090560410539302 madhok, a. (1995). revisiting multinational firms' tolerance for joint ventures: a trust-based approach. journal of international business studies, 26(1), 117–137. https://doi.org/10.1057/palgrave.jibs.8490162 o'cass, a. (2004). fashion clothing consumption: antecedents and consequences of fashion clothing involvement. european journal of marketing, 38(7), 869–882. https://doi.org/10.1108/03090560410539294 phuyen, p. (2021). factors that influence purchase intention of clothing products on instagram stores [master’s thesis, mahidol university]. mahidol university institutional repository. https://repository.li.mahidol.ac.th/ trịnh, h. s., lê, h. c., trần, đ. t., lưu, n. h., & ngô, t. n. (2021). nghiên cứu đề xuất phương án thúc đẩy định mua sắm sản phẩm thời trang nội địa việt nam trên nền tảng thương mại xã hội trên địa bàn hà nội [a study proposing solutions to promote the intention to purchase domestic vietnamese fashion products on social commerce platforms in hanoi]. tạp chí kinh tế & phát triển, 297(1), 63–72. 1 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 10, 1-4, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.588 © 2025 by the author; licensee eastern centre of science and education, usa using the spatial econometric approach to study impacts of fdi on poverty in vietnam nguyễn việt hưng faculaty of economics, national economics university, vietnam. email: hungnv0711@neu.edu.vn abstract this paper examines the impact of foreign direct investment on provincial poverty in vietnam. the provincial poverty severity index is calculated based on data from the vietnam household living standards survey in 2022. firm-level foreign direct investment measures are aggregated based on data from the enterprise survey in the same year. the moran’s i statistic and lagrange multiplier test have shown that there exists a spatial correlation effect, and therefore this study employs the spatial econometric approach to examine the impacts of foreign direct investment on poverty to obtain reliable results. the study has shown a positive impact of foreign direct investment on poverty reduction in vietnam, that is provinces with a higher share of foreignowned enterprises’ assets relative to provincial output tend to have lower poverty severity index, and vice versa. in addition, the estimation results also show that better governance quality at the provincial level has positive effects on poverty reduction. another interesting finding is that provinces with higher levels of inequality tend to experience more severe poverty. keywords: foreign direct investment, poverty severity, spatial econometric, vietnam. 1. introduction foreign direct investment (fdi) is frequently identified as exerting a positive influence on economic growth and contributing to productivity enhancement in host countries. however, its direct impact on the income of lowincome labor groups—particularly as reflected in poverty indicators—and on the degree of income inequality within society has received comparatively less attention. at the cross-country level, many contend that globalization—of which the increase in bilateral fdi flows and, more importantly, capital inflows from developed to developing economies constitutes a central element—tends to exacerbate income disparities. this issue has been a persistent source of contention in numerous economic and political debates, especially in the context of negotiations concerning trade and investment liberalization (tulus (2011), ndagijimana & wahyu (2025)). the effects of fdi on the income of disadvantaged labor groups are observable not only across countries but also across regions within a given country (deaton, 1997). when examining regional-level impacts, the spatial proximity of regions raises the possibility of interdependent or spillover effects with respect to poverty, inequality, and fdi—phenomena that are less likely to arise in cross-national analyses. should such spatial correlations among provincial observations exist, the classical or traditional regression framework would prove inappropriate, given that the assumption of observational independence would be violated. under such circumstances, it is widely argued that spatial econometric techniques should be employed as an alternative to ensure the robustness and reliability of estimated coefficients (arogundade, 2021). this paper examines the impact of foreign direct investment on the income of low-income labor groups, measured by the poverty severity, by using the spatial econometric approach. 2. theoretical framework in this section, we will examine issues related to the measurement of variables, the selection of representative variables that reflect the target group under study, and the explanation of the mechanisms through which foreign direct investment affects poverty indicators. 2.1. poverty measures in order to assess living standards, and thereby determine who is poor and who is not, it is necessary to employ a welfare measure for individuals. welfare economics has introduced various forms of welfare functions for both individuals and society, and naturally, the classification of an individual or household as poor or non-poor will vary depending on the specific welfare function applied. among the numerous welfare measures available, researchers commonly rely on indicators such as income, expenditure, wealth, or other observable and measurable indicators to reflect the level of welfare attained by each individual. once an appropriate measure has been selected to represent the welfare status of individuals or households, it is essential to establish a threshold to distinguish between poverty and non-poverty. alternatively, multiple mailto:hungnv0711@neu.edu.vn https://doi.org/10.55220/2576-6759.588 asian business research journal, 2025, 10(10): 1-4 2 © 2025 by the author; licensee eastern centre of science and education, usa thresholds may be set if the objective is to categorize the population into more detailed groups—for instance, the extremely poor, the poor, the near-poor, and those above the near-poor threshold. the choice of such thresholds has long been a matter of considerable debate. once a welfare measure—most commonly income or expenditure—has been identified, along with one (or several) thresholds to define poverty status (or different levels of poverty), it becomes possible to determine which individuals or households are poor. however, in order to assess the overall poverty situation of a community, one may approach the issue from multiple perspectives, which has consequently led to the development of various poverty measures (world bank, 2005) [1] headcount ratio the most commonly used measure is the headcount ratio, which is simply calculated as the proportion of the population classified as poor. the formula for the headcount ratio is as follows: ( )0 1 1 n i i p i y z n = =  in which p0 is the headcount ratio, n is total population. here, i(⋅) is an indicator function that takes the value of 1 if the condition inside the parentheses is satisfied, and 0 otherwise. this implies that if the expenditure level yi is lower than the poverty line (z), then i(⋅) takes the value 1 and the household is classified as poor. for instance, if in a sample of 300 individuals there are 60 poor individuals, then the indicator function i(⋅) will take the value 1 for 60 cases and 0 for the remaining ones. accordingly, the total number of poor individuals is 60, and the poverty rate is therefore 20%. [2] poverty gap index another poverty measure that is also widely used is the poverty gap index, which aggregates the shortfall of the poor relative to the poverty line and computes the average value. specifically, let the poverty gap be denoted by gi, the poverty line by z, and actual income by yi . in that case, the poverty gap of an individual is calculated as follows: ( ) ( )i i ig z y i y z= −   and the poverty gap (p1) can be calculated as follow: 1 1 1 n i i g p n z= =  here, individuals who are not classified as poor will have a poverty gap of zero. this measure can be interpreted as reflecting the minimum cost required to eliminate poverty (relative to the poverty line). by examining this measure, we can determine the amount of expenditure that must be subsidized for the poor (relative to the poverty line) in order to lift them above the poverty threshold. if ∑gi represents the minimum amount of subsidy required to eliminate poverty, then nz denotes the maximum amount of subsidy necessary to guarantee the eradication of poverty, that is, the government would provide each individual with an expenditure level exactly equal to the poverty threshold. accordingly, the poverty gap index is defined as the ratio between the minimum expenditure required to eliminate poverty and the maximum expenditure. in other words, it serves as an indicator of the potential budgetary savings in poverty reduction that can be achieved through accurate targeting of subsidies. the smaller this measure, the greater the economic efficiency of poverty alleviation expenditures through precise targeting. in such cases, conducting surveys to collect more detailed information in order to better identify eligible recipients becomes increasingly meaningful, as it helps reduce the government’s overall poverty reduction budget. although this measure provides an additional source of important information on the poverty at the aggregate level compared to the headcount ratio, it still has a limitation in which it does not capture the severity of poverty arising from differences in the distribution of the poverty gap. [3] poverty severeity index to construct a poverty measure that accounts for inequality among the poor, some researchers employ the poverty severeity index. this measure is the weighted average of individual poverty gaps, where the weight assigned to each observation is its own poverty gap. for instance, a poverty gap of 10% relative to the poverty line is assigned a weight of 10%, while a poverty gap of 50% relative to the poverty line is assigned a weight of 50%. this differs from the poverty gap index, which assigns equal weights to all observations. by squaring the poverty gaps, this measure places greater weight on individuals who are further below the poverty line. the formula for the poverty severeity index is as follows: 2 2 1 1 n i i g p n z=   =      on the basis of the poverty index mentioned above, , foster, greer and thorbecke (1984) has generalized a family of poverty measures as follows: 1 1 n i i g p n z   =   =      in which,  is a parameter that measures the sensitivity of the index to poverty status and the poverty line z. the per capita expenditure of household i is denoted as zi, and the poverty gap for this individual is gi = z – xi. when  = 0, the measure becomes the headcount poverty ratio. when  = 1, the index turns into the poverty gap index p1, and when  = 2, it becomes the poverty severity index. for any value of  > 0, the measure decreases with the expenditure; that is, if an individual/household is poor and their expenditure falls further, their degree of poverty increases. however, the fgt measure does not specify which value of  is optimal. according to the authors, these measures are complementary to one another. of course, in some cases, certain groups may have a high poverty asian business research journal, 2025, 10(10): 1-4 3 © 2025 by the author; licensee eastern centre of science and education, usa rate but a lower poverty gap (when most people fall just slightly below the poverty line), and vice versa. similarly, some groups may exhibit a lower poverty gap but a higher squared poverty gap (due to large disparities within the distribution of those below the poverty line). 2.2. measurement of fdi provincial-level fdi statistics published by the national statistics office only include registered capital and the number of projects, which are not very useful when assessing their impact on socio-economic indicators in the corresponding year. moreover, even data on actual foreign direct investment disbursements do not reveal the multidimensional effects of this capital on the economy. instead, we will compile data from wholly foreign-owned enterprises in the localities, thereby identifying the scale of assets, equity, employment, revenue, and so on of these enterprises based on the enterprise survey dataset. this approach will allow us to evaluate the impact of foreign direct investment in a more accurate and multidimensional way. 2.3. spatial econometrics model in spatial econometrics, it is assumed that geographically proximate observations may exert mutual influences on one another, leading to the phenomenon of spatial autocorrelation (lesage, 1999). here, spatial autocorrelation is categorized into two types: (i) spatial autocorrelation of the dependent variable itself, and (ii) spatial autocorrelation of the error term. consequently, traditional estimation methods are no longer appropriate because the assumptions are violated. two corresponding spatial econometric models have been introduced to address this issue: the spatial autoregressive model (sar) and the spatial error model (sem). the spatial autoregressive model is expressed as follows: (i w)y = x + e the spatial error model is expressed as follows: (i w)y = (i w)x + u in which, y is the dependent variable, x represents the independent variables, w is the spatial weight matrix, and the coefficients  and  are the spatial autoregressive parameters, reflecting the effects of spatial autocorrelation. the error term ε follows a normal distribution with constant variance and no autocorrelation, while the error term u in the spatial error model follows a distribution with spatial autocorrelation, that is u = w + . 3. data and empirical results we use the enterprise survey dataset conducted and published by the national statistics office to calculate indicators on revenue, assets, equity, and employment of wholly foreign-owned enterprises aggregated at the provincial level. we use the industrial output value as a measure reflecting provincial production activity. to indicate the relative scale of foreign direct investment, we compute the ratios of revenue, assets, and so forth of foreign-owned enterprises in each province to the scale of industrial output value. in addition, we may also compute the ratios of these indicators to provincial population size. data on industrial output and population size are obtained from the statistical yearbook published by the national statistics office. data on poverty measures are calculated based on the vietnam living standards survey (vlss) dataset, which is conducted by the national statistics office every two years. here, the poverty measure we use is the poverty severity index. data reflecting the capacity and quality of provincial governance are taken from the provincial competitiveness index (pci), surveyed and published by the vietnam chamber of commerce and industry (vcci). in this model, the independent explanatory variables include: (i) the ratio of total assets of wholly foreignowned enterprises to the province’s industrial output, (ii) the provincial competitiveness index (pci), and (iii) the atkinson inequality index. the first variable illustrates the impact of foreign direct investment on poverty reduction. if its coefficient is negative, it indicates that provinces with a larger relative scale of foreign enterprises (measured by the size of their assets compared to the province’s industrial output) experience a reduction in the poverty severity index—in other words, foreign direct investment has a positive effect on poverty alleviation. furthermore, the provincial competitiveness index captures differences among provinces in terms of the quality of local governance. if its coefficient is negative, it implies that provinces with better governance, in addition to the general effect of boosting provincial production, also benefit from other policies that help reduce the incidence of poor households. the third variable, the atkinson inequality index, if positively signed, suggests that provinces with higher levels of inequality face more severe poverty conditions. the descriptive statistics of the variables used in the model are summarized in the following table. table 1. the descriptive statistics of the variables used in the model. variable observations mean std. error min. max. poverty severity index 63 0.007371 0.007579 0 0.03881 atkinson inequality index 63 0.211525 0.037496 0.14678 0.32697 pci 63 57.01764 4.145726 45.11707 63.79096 asset_output 63 0.203826 0.225472 0.000786 1.366224 source: national statistics office and và chamber of commerce and industry (2024). the estimation results of the model using the spatial econometric approach are presented in the table below. asian business research journal, 2025, 10(10): 1-4 4 © 2025 by the author; licensee eastern centre of science and education, usa table 2. the estimation results. dependent variable: poverty severity index ols sar sem atkinson .1311801* (2.14) .1154969* (.0521949) .1143195* (.0554369) pci -.0024411** (.005615) -.0018665** (.0004867) -.0016892** (.0005556) asset_output -.0334829** (0.0104459) -.0298406* (.0088948) -.0295825** (.0096477) _cons .1219312 (.0388796) .0756014 (.0339375) .0888529 (.0379555)  0.7933359** (.1750113)  .8294253** (.1397497) sem moran’s i sar lagrange multiplier p-value 0.000 0.000 in the first model, we find that all variables included are statistically significant, at least at the 5% level. the atkinson inequality index carries a positive sign, implying that provinces with higher inequality tend to have a larger poverty severity index. the pci variable has a negative sign, indicating that provinces with better governance quality have a lower poverty severity index, and vice versa. the variable of greatest interest here is the one representing foreign direct investment (fdi)—specifically, the ratio of total assets of wholly foreign-owned enterprises in the province to the value of the province’s industrial output. this variable has a negative sign, suggesting that as this ratio increases—that is, as fdi becomes relatively larger—the poverty severity index decreases. this finding indicates that fdi has a positive effect on poverty reduction in vietnamese provinces. moreover, the test for spatial correlation shows that spatial dependence does exist. both the moran’s i statistic and the lagrange multiplier tests in the spatial error model and the spatial lag model are statistically significant at the 1% level. this demonstrates that applying the ols model would yield biased results. in this case, we must adopt a spatial econometric approach to estimate the impact of fdi on the poverty severity index. 4. conclusion this paper examines the impact of foreign direct investment (fdi) on the poverty severity index. after calculating indicators such as the poverty severity index and inequality across vietnamese provinces based on the household living standards survey, the author investigates the effect of fdi on the poverty severity. instead of relying on realized investment capital or committed investment capital published by the national statistics office, the author employs the enterprise survey to measure the total scale of assets, equity, and employment generated by foreign enterprises in each province. the estimation results lead to the following conclusions. first, fdi has a positive impact on poverty reduction at the provincial level. provinces with larger foreign enterprise assets per unit of output tend to have lower poverty severity index, and vice versa. second, in the model assessing the impact on the poverty severity index, spatial autocorrelation is present. therefore, spatial econometric estimation methods must be employed instead of ols in order to obtain reliable results. references arogundade, s. (2021). be nice to thy neighbours: spatial impact of foreign direct investment on poverty in africa (mpra paper no. 111789). https://mpra.ub.uni-muenchen.de/111789 atkinson, a. (1970). on the measurement of inequality. journal of economic theory, 2(3), 244–263. https://doi.org/10.1016/00220531(70)90039-6 deaton, a. s. (1997). the analysis of household surveys: microeconometric analysis for development policy. johns hopkins university press. foster, j., greer, j., & thorbecke, e. (1984). a class of decomposable poverty measures. econometrica, 52(3), 761–766. https://doi.org/10.2307/1913475 lesage, p. g. (1999). the theory and practice of spatial econometrics. http://www.spatial-econometrics.com ndagijimana, f., & widodo, w. (2025). analysis of the effect of foreign direct investment on poverty rate: a rwandan perspective. new applied studies in management, economics & accounting. https://doi.org/xxxxxxx (replace with actual doi if available) tambunan, t. (2011). the impact of foreign direct investment on poverty reduction: a survey of literature and a temporary finding from indonesia. asian journal of development matters, 5(2), 1–28. world bank. (2005). introduction to poverty analysis. world bank. https://documents.worldbank.org/en/publication/documentsreports/documentdetail/ 81 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 9, 81-87, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.573 © 2025 by the author; licensee eastern centre of science and education, usa strategic application of sustainable development goals sdg#9 innovation for low altitude economy – malan lake desert for community development shirley mo ching yeung gratia christian college, hong kong. email: shirleymc@gmail.com abstract the purpose of this paper is to explore the steps of applying design thinking to identify wellness related business in desert areas, for example melan lake, mongolia china for sustainable development. the aim of this paper is to explore the key factors for community development with culture with iso elements for sustainable development goal #4.7. knowledge transfer and #8 economic impacts. in order to define the possible variables that were connected to impacts with solutions, research was carried out. in the study, four articles on low altitude economy and drone applications for desert were examined. based on the authors’ visits on malan lake desert in the past few years and four selected articles published from 1996 to 2024 on drone and desert ecotourism by using nvivo for a text search. the search result showed that the key factors for understanding community development with culture (3,328 references) are 1) drone site selection (423 references), 2) sustainable upcycled concepts application (907 references), and 3) regulations with quality check (122 references). (figure 1). this is managerial relevant to understanding community development with culture from a new perspective for skills development, curriculum planning and drone ecotourism /creative art and cultural event management. it is expected to have quantitative and qualitative research for drone event management programmes on qualifcation framework (qf) for competency building on service providers. keywords: community development with culture, low altitude economy, malan lake desert, sdg. 1. background the rapid evolution of drone technology in low altitude economy (lea) has opened new horizons across various sectors, particularly in entertainment and the burgeoning low-altitude economy. in hong kong and the broader asian context, these advancements trigger to re-think innovative ways in service delivery, for example, entertainment with electronic fireworks display and delivery services under 1,000 meter, bringing transformations in green service supply chain management industries. moreever, it provides ample opportunities for skills development and economic growth. this article explores the integration of drone and advanced technology, for example, ai within entertainment and low-altitude economic activities, emphasizing the role of design thinking with empathy, ideate, define, prototype and validation and inquiry-based learning models for higher education sector and workforce development so as to align the policy of hksar. based on information available on low altitude economy, “the lae is one of the key policy initiatives announced in the "the chief executive's 2024 policy address". the working group on developing low-altitude economy was established under the leadership of the deputy financial secretary, mr michael wong, to promote institutional innovation, technology implementation, and industry ecosystem building. speaking at the forum, mr wong said that developing a low-altitude economy has to be a joint effort. the government will act as a facilitator and enabler, and will continue to move at a fast pace. he noted that the lowaltitude economy has strong synergy with other sectors of the economy, stimulating growth and driving positive changes. the total impact and benefits to society, he said, will be greater than the sum of its parts.” (source: https://www.investhk.gov.hk/en/news/investhk-hosts-inaugural-low-altitude-economy-forum-governmentindustry-academia-and-research-join-forces-to-drive-development-of-hong-kongs-low-altitude-innovationecosystem/) 1.1. the rise of drone technology in entertainment business and low-altitude economy based on experiences of unicef 2021, it is realised that “unicef is using uncrewed aircraft vehicles (uav), commonly known as drones, to deliver life-saving medical supplies, to collect aerial imagery that helps map risks and save children’s lives in emergencies, and to help bridge the connectivity gap.” (unicef office of innovation & ictd, 23rd and 24th nov. 2021). they also mentioned that “students from unicef innovations lab study uav during drone testing for search and rescue operations in kazakhstan, unicef kazakhstan 2019.” besides using drones in life saving medical supplies and rescue operations, drones, mailto:shirleymc@gmail.com https://www.investhk.gov.hk/en/news/investhk-hosts-inaugural-low-altitude-economy-forum-government-industry-academia-and-research-join-forces-to-drive-development-of-hong-kongs-low-altitude-innovation-ecosystem/ https://www.investhk.gov.hk/en/news/investhk-hosts-inaugural-low-altitude-economy-forum-government-industry-academia-and-research-join-forces-to-drive-development-of-hong-kongs-low-altitude-innovation-ecosystem/ https://www.investhk.gov.hk/en/news/investhk-hosts-inaugural-low-altitude-economy-forum-government-industry-academia-and-research-join-forces-to-drive-development-of-hong-kongs-low-altitude-innovation-ecosystem/ https://doi.org/10.55220/2576-6759.573 asian business research journal, 2025, 10(9): 81-87 82 © 2025 by the author; licensee eastern centre of science and education, usa have been transitioned to mainstream commercial uses and entertainment business under the low-altitude economy. according to the hong kong government’s investhk portal, drone technology is seen as a catalyst for new business opportunities, particularly in media, tourism, and creative industries (investhk, 2023). drones enable capturing stunning aerial footage for films, concerts, and live events, enriching entertainment experiences and creating novel content formats. in the context of tourism, drones facilitate innovative marketing and promotional activities by providing immersive aerial views of hong kong’s iconic skyline, beaches, and cultural sites. this not only elevates the city’s profile globally but also stimulates local creative talent to develop new content, thus nurturing a vibrant entertainment ecosystem. moreover, drones are integral to the development of low-altitude economies (lae) — urban areas where activities and services operate at low altitudes—beyond traditional manufacturing or logistics. for instance, drone delivery services and aerial inspections are emerging sectors within this economy, promising efficiency and cost savings. the hong kong government actively promotes these sectors, recognizing their potential to diversify the economy and create high-value jobs (investhk, 2023). 1.2. skills development and innovation in hong kong and asia the proliferation of drone applications underpins a pressing need for specialized skills and innovative talent. to capitalize on these opportunities, hong kong and asia are investing in workforce upskilling and education programs. the government’s emphasis on technology-driven talent development aligns with global trends towards digital literacy and stem (science, technology, engineering, and mathematics) education. in hong kong, skills development initiatives focus on fostering expertise in drone piloting, maintenance, data analysis, and application development. the government encourages partnerships with universities, vocational schools, and industry stakeholders to create training programs that align with industry needs. asia’s broader approach involves establishing innovation hubs and incubators that promote entrepreneurship in drone technology. (https://itif.org/about/) (https://www2.itif.org/2025-itif-chey-national-innovationsystems.pdf). lee & kim, 2022). these initiatives aim to cultivate a skilled workforce capable of supporting advanced drone applications across entertainment, logistics, agriculture, and emergency services. 1.3. design thinking and inquiry learning models in skills development the proliferation of drone applications triggers the education sector to explore specialized skills and innovative talents for events involved with drone applications. to capitalize on these opportunities, hong kong and asia are investing in workforce upskilling and education programmess, for example, global trends of applying drone in event management, entertainment business, and eco-tourism. traditional flight and aviation programmes may not cater the needs of drone applications, focus on fostering expertise in drone piloting, maintenance, data analysis, and application development for new service management. it is time to explore and select a learning site with drone application for low altitude and green economy. based on a paper published in seven years ago in aim2flourish on sdg implementatin, the article mentioned that “in 2011, mr yuen established a company of "alxa league springfield forest limited" to continue the environmental project and pull people with different skill sets to help. ….. during the interview, mr. yuen highlighted that their main challenges for sustainable development were: strong wind blows up the sand; huge sand dune appears; up to heights over 30 m; moves forward up to 10 to 12 m per year; strong wind can easily blow up the plants, even uproots the whole crops. mr yuen highlighted that there is a need to re-plant at lowest possible cost, find methods to avoid plants or crops being blown away as water is scarce and costly at high ground. their team also needs to try to re-plant without irrigation. this relies on professional knowledge despite attempts to learn from local and international experts.” (https://aim2flourish.com/innovations/evolution-from-ecology-tosocial-peace-with-economic-impacts-1) in recent years, the above issues have been tackled with experts from different disciplines. zhu (2023) conducted a research of the malan-lake project, the author re-examined the social problem of desert control and introduce innovative exploration from the perspective of design thinking. the main contents that the author discovered are “(1) field investigation and problem definition; (2) methodology and the process of concept formation; (3) innovative scheme prototype based on the workshop; (4) innovative practices tests and the future. the aim is to provide new perspectives for desert control.” the new perspective on desert control and innovative scheme is related to sdg#8 economic impacts, #9 innovations, and sdg#17 with innovative solutions and transformations from partners who have different background. for the malan lake desert, the team from alxa league springfield forest limited has developed multi-disciplinary knowledge through endless co-operation for an environmental project. and, the project provides a chance not only to survive, to innovate, but to explore the use of latest technology for green eco-tourism and art-cultural tourism under green low altitude economy to generate new service management opportunties. in fact, partnerships with universities, vocational schools, and industry practitioners are encouraged for green low economic activities to align with policy planned, needs fulfillment of service industry, and talents development for social inclusion. 1.4. design thinking and inquiry learning models in skills development to effectively nurture our young talents with transformative mindset and innovative problem-solving skills, the five steps of design thinking are crucial. design thinking, characterized by user-based, scope defined, experimentation, and iterative problem-solving, motivates learners to develop creative solutions in the real-world contexts. in hong kong, curriculum designers in higher education institutes have to consider the qualification framework (qf) requirements of the hong kong council for accreditation of academic and vocational qualifications (hkcaavq) for quality assurance so as to prepare students for meeting future challenges in business, technology and social aspects. (https://www.hkcaavq.edu.hk/en/accreditation/qf_related_accreditation/) https://www2.itif.org/2025-itif-chey-national-innovation-systems.pdf https://www2.itif.org/2025-itif-chey-national-innovation-systems.pdf https://www.hkcaavq.edu.hk/en/accreditation/qf_related_accreditation/ asian business research journal, 2025, 10(9): 81-87 83 © 2025 by the author; licensee eastern centre of science and education, usa “hkcaavq is appointed under the accreditation of academic and vocational qualifications ordinance (cap. 592) as the accreditation authority and qualifications register (qr) authority under the hong kong qualifications framework (hkqf). it is empowered to conduct accreditation activities for academic and vocational operators and their associated education and training programmes and assessment agencies.” very often, higher education institutes and vocational institutions adopt design thinking into curriculum design, and assessment requirements, encouraging students to identify the root causes of problems, brainstorm solutions from different perspectives with prototypes, and test the proposed prototypes for desirable solutions. in fact, drone-related applications in desert eco-tourism and art-cultural tourism are a challenge for both educators and students. hence, a project-based learning site in experimental approach involve students to design and test drone-based applications for new service management with selected targets under sdg# 9 innovative and sdg#13 climate change is needed to raise awareness for sustainable tourism services. besides, inquiry learning approach complements design thinking by promoting curiosity-driven exploration in the selected learning site, where students may have a chance to feel the real world experience in the desert, investigating new services with iso standards, flight-related regulations, and ethical considerations. this holistic approach of design thinking with inquiry approach cultivate not only technical skills in drone applications, but also entrepreneurial mindset with innovative quality management concepts and values of resilience, and teamwork— the traits which are essential for thriving in the green low-altitude economy. 1.5. regulatory environment and iso implementation in design plans a supportive regulatory environment is vital for the sustainable growth of drone-related industries. based on iso official website on iso 21384-2:2021(en)unmanned aircraft systems — part 2: uas components that “the use of unmanned aircraft systems (uas) or drones, for commercial and recreational purposes has grown in popularity over the last several years. there are many application markets growing rapidly, such as motion pictures and film, security, inspections as well as many uses by organizations to increase public safety. it has been a challenge for operators to use these aircraft due to the lack of regulation and lack of common manufacturing methods a regulator would recognize as safe.”for example, 3.5 flight plan is related to the five steps of design thinking and inquiry learning approach to consider safety and ethics in the design plan and prototypes under the scope of low-altitude economy (lae), leveraging drones for various economic activities, aligning with the un sustainable development goals (unsdgs) by promoting sdg#9 innovation and sdg#11 sustainable city through drone and design plan in eco-tourism and art-cultural tourism. (https://www.iso.org/obp/ui/en/#iso:std:iso:21384:-2:ed-1:v1:en). for sdg#13 climate change, a low-noise aircraft and sustainable operational models may be needed to support a green economy, aligning with broader environmental goals to drive a sustainable city. the low-altitude economy (lae) has been mentioned by the hksar and this leverages drones for various economic activities, aligning with the un sustainable development goals (unsdgs), e.g. sdg#8 – economic impacts/9 – innovations /11-sustainable cities by promoting eco-tourism and cretive art cultural events. a supportive regulatory environment is vital for the sustainable growth of drone-related event and tourism industries. for the event management with drone and sdgs, it is desirable to have iso standard implementation for quality events. as we know, the definition for low-altitude economy (lae) refers to economic activities conducted in the airspace below 1,000 meters, with drones being a primary technological tool. this aligns with unsdg#9 – innovation that technological advancements have been engaged, for example, drone applications and ai text/image-to-video implementation in promoting the event. (see figure 1 ai implementation on text and image for 3-d video ) recently, a key initiative has been found in hksar to test various operational models for drones in a controlled environment, generating data for infrastructure planning and regulatory framework development. https://www.elegislation.gov.hk/hk/cap592!en@2016-05-27t00:00:00 https://www.google.com/search?cs=0&sca_esv=083780a269a3263d&sxsrf=ae3tifm197fo7blyyjd9tmpzhacmmpdvuq%3a1757315945598&q=un+sustainable+development+goals+%28unsdgs&sa=x&ved=2ahukewjc9jqf0mipaxu1b_uhhe40bgmqxccnegqiahab&mstk=autexfap-2_nx9fpl3efe3wsa2cntlarandqxanoauyheqjra7p4h4nqoes3pegf5hboyin0bhnumxn5h-rupxaa3251l4ql6bafa3g40bvo4ltaqdsnblq479nfl_x_p-w0hptewyweyi0_3gbjww-yk17zxrgkhycpjj2tmv4a9ylf9ci&csui=3 https://www.iso.org/obp/ui/en/#iso:std:iso:21384:-2:ed-1:v1:en https://www.google.com/search?cs=0&sca_esv=083780a269a3263d&sxsrf=ae3tifm197fo7blyyjd9tmpzhacmmpdvuq%3a1757315945598&q=un+sustainable+development+goals+%28unsdgs&sa=x&ved=2ahukewjc9jqf0mipaxu1b_uhhe40bgmqxccnegqiahab&mstk=autexfap-2_nx9fpl3efe3wsa2cntlarandqxanoauyheqjra7p4h4nqoes3pegf5hboyin0bhnumxn5h-rupxaa3251l4ql6bafa3g40bvo4ltaqdsnblq479nfl_x_p-w0hptewyweyi0_3gbjww-yk17zxrgkhycpjj2tmv4a9ylf9ci&csui=3 asian business research journal, 2025, 10(9): 81-87 84 © 2025 by the author; licensee eastern centre of science and education, usa figure 1. ai implementation on text and image for 3-d video. 28th april, 2025 “the hong kong monetary authority (hkma), in collaboration with the hong kong cyberport management company limited (cyberport), announced today (28 april) the launch of the second cohort of the generative artificial intelligence (gena.i.) sandbox initiative. the gena.i. sandbox aims to provide a risk-controlled environment for banks to develop and test innovative solutions using artificial intelligence (a.i.), further advancing the adoption of a.i. technology in the financial sector.” (https://www.hkma.gov.hk/eng/news-and-media/press-releases/2025/04/20250428-5/) 2025-26 budget speech during a latest budget speech 2025-26, papragraph 36, the role of ai has been further strengthened via research and development in industry-based approach “ “ai is at the core of developing new quality productive forces. we will leverage the edge of "one country, two systems" and our internationalised characteristic to develop hong kong into an international exchange and co-operation hub for the ai industry. through frontier research and real-world application, we will endeavour to develop ai as a core industry and empower traditional industries in their upgrading and transformation.” (https://www.budget.gov.hk/2025/eng/budget06.html) partnerships have also been found between universities for ai and automation, developing ai and automation systems for drone navigation and airspace management which may be applied in eco-tourism and creativ art cultural related activities with skills development. from corporate social responsibility (csr) to imm (impacts measurement and management) social impacts and leadership the corporate social responsibility (csr) guidelines of iso 26000 highlight that a socially responsible organization needs to be aware of seven dimensions in their operations of business: labor practices, consumer issues, fair operating practices, human rights, organizational governance, community involvement and development and the environment. the priority of the seven dimensions is subject to the strategic planning of the management and the expectations of their stakeholders. for example, the management of a banking organization may need to understand the expectations of their customers when designing and launching different kinds of financial products and services, may need to identify not only their responsibility but also that of their business partners in the supply chain, may need to think about the environmental issues affecting their operations, their customers and their suppliers, and may need to consider ethical issues in their decision-making process so as to balance the economic, social and environmental impacts of sustainability; and the seven dimensions of csr. the iso working group on social responsibility (wg sr) has a high level of consensus in considering the needs of stakeholders in the guidelines of iso 26000 for the benefit of the community. according to cajazeira (2008), the major principles for iso 26000 are: accountability, transparency, ethical behavior, consideration for the stakeholders, legality, international standards, and human rights. it is the responsibility of organizations to consider the needs of the stakeholders in these seven aspects when designing work processes or executing business-related activities. in fact, iso standard 26000 conveys a message that non-economic inputs and soft side of outcomes are the trend of quality management system (qms). building quality into products and services for continuous improvement has been mentioned for scholars in total quality management in the past. today, people started to explore integrating csr and sustainability related elements into organizational strategy for sustainable business. deep (2007) mentioned that there was a growing number proponents of the ‘stakeholder’ or ‘social responsibility’ model of corporate governance holding that business was accountable to a broader populace who have a direct or indirect stake in the enterprise’s activities. although there is a lack of comprehensive evidence that https://www.hkma.gov.hk/eng/news-and-media/press-releases/2025/04/20250428-5/ https://www.budget.gov.hk/2025/eng/budget06.html asian business research journal, 2025, 10(9): 81-87 85 © 2025 by the author; licensee eastern centre of science and education, usa csr and sustainability lead to improving financial performance, awareness to environmental and social concerns from different stakeholders is needed for the progress of organization the imm (impact, measurement and management) framework emphasizes understanding, creating, and evaluating social impacts, which are critical for nonprofits organization. the aim of a growing number of impact investors is to be more intentional in maximising positive – and minimising negative – outcomes associated with their investments through well defined impacts creation with projects that can be qualitatively and quantitatively measured projects’ imapcts and practices. leaders need to understand their core strengths and organizational culture when creating projects with tangible benefits aligned with community needs and broader goals in unsdgs. in the case study of malan lake desert, mongolia, leadership has prioritized from deforestation to ecotourism for competency development of local community with social inclusion. previous research has found that unsdg#4 quality of education and sdg# 9 innovations in sustainable community development of desert on ecotourism via drones and advanced technology has not been comprehensively explored. this research explores further on the key elements for community developement for sustainable eco-tourism development. 1.6. research objectives (rqs) 1) what are the key elements for community development with culture in selected desert community, for example, malan lake desert, mongolia, china? 2) what is the steps of implementing design thinking for eco-tourism and art-cultural touirm for competency development? 1.6.1. part 1 qualitative analysis a research was performed to analyze factors possibly related to chair yoga wellness model (2,942 references). four articles published from 1996 to 2024 were discovered. by thoroughly delving into the articles, various relatable factors are identified to the topic. to further determine their relationship to the topic, by using nvivo, a text search was performed for the mentioned keywords. the search result showed that a few of the factors for understanding community development with culture (3,328 references) : 1) drone site selection (423 references), 2) sustainable upcycled concepts application (907 references), and 3) regulations with quality check (122 references). (figure 2). this is managerial relevant to understanding community development with culture from a new perspective for skills development, curriculum curriculum planning and drone ecotourism and creative art and cultural event management. however, quantitative and qualitative research for drone event management business framework on qualifcation framework (qf) is needed for competency building on service providers. figure 2. model of understanding community development with culture. table 1. nodes on key factors. name sources references 'understanding community development with culture 4 3328 'sustainable upcycled concepts application 4 907 'drone site selection 4 423 'regulations with quality check 4 122 table 2. text search on understanding community development with culture”. name in folder references 459080 internals 1667 main internals 258 remotesensing-14-00702-v2 internals 14 the ecotourism equation_ measuring the impacts internals 1389 asian business research journal, 2025, 10(9): 81-87 86 © 2025 by the author; licensee eastern centre of science and education, usa table 3. text search on drone site selection. name in folder references 459080 internals 134 main internals 40 remotesensing-14-00702-v2 internals 100 the ecotourism equation_ measuring the impacts internals 149 table 4. text search on “regulation on quality check” name in folder references 459080 internals 18 main internals 25 remotesensing-14-00702-v2 internals 5 the ecotourism equation_ measuring the impacts internals 74 1.6.2. part 2 what is the steps of implementing design thinking for eco-tourism and art-cultural touirm for competency development? research on drone simulation for desert cultural buildings and landscape with new services management combines drone-based 3d with ai technology is seldom explored for developing business curriculum planning with service management strategies and five steps of design thinking. drones are used for aerial surveys, detailed mapping of archaeological sites like desert kites, and documenting the condition of existing buildings for conservation. for improving the competency of business teachers in lae and related service management, it is recommended to have simulation software and 3d models to predict the kinds of services and skills to be needed for eco-toursm and cretive art tourism in a desert, like malan lanke, mongolia. here are the recommendations with design thinking for competency development and community improvement: 1) empathy with understanding of ways to apply technolgy for business creation in desert cultures for example: choosing a focused site to study eco-tourism and creative art tourism from the eyes of desert visitors. drones capture high-resolution imagery of vast, hard-to-reach areas, allowing for the mapping of sites of malan lake with chinese herbal plantation for eco-tourism with business impacts 2) scope of eco-tourism and creative art tourism documentation with reference to iso drone standards and iso 26000 csr guidelines for example, researchers who engaged in drone and ai technologies, teachers who teach business related courses and students may work togther for a pilot of eco-tourism tour in malan lake with detailed 3d ai video to demonstrate cultural buildings with conservation and restoration, if any. 3) ideas on 3d ai models facilitate the identification of new service opportunities with documentation of curriculum and assignments for skills development for community development. for example, regulations and quality check with iso standards on a specific site chosen un malan lake with drone simulation and performance analysis on sdg#13 energy efficiency in the harsh desert climate. 4) prototypes on design & optimization: 3d and ai simulation software for business teachers and students to try and evaluate different design options for new service management opprtunities in the surrounding landscape. 5) testting chosen site with proposed prototypes with integration of gis system drone data and simulation results are integrated with geographic information systems (gis) to provide a holistic view of business – eco-cultural heritage for business teachers and students from a holistic point of view and improvement their competency in tackling technological tools & methods. 2. conclusion and discussion based on the qualitative analysis on community development with cutlure in desert areas for sustainable development, it is found that unsdgs amd 5 steps of design thinking served as guiding principles to measure social impacts of malan lake desert on new service management opportunities for social impacts mentioned by imm, appealing investors’ interest in supporting community projects with the key identified factors for understanding community development with culture (3,328 references) are 1) drone site selection (423 references), 2) sustainable upcycled concepts application (907 references), and 3) regulations with quality check (122 references). (figure 1). this is managerial relevant to understanding community development with culture from a new perspective for skills development, curriculum planning and drone ecotourism /creative art and cultural event management. it is time to explore the relevant skill sets, for example iso standard on drone application with iso 26000 csr guidelines for improving the competency level of teachers and students in business discipline in malan lake community fr social inclusion. hence, ongoing data collection from different channels and communications with different stakeholders are important in quality of business curriculum in relation to desert service management – eco-tourism and creative art tourism for social impacts. references cajazeira, j. e. r. (2008). executive briefing of iso 26000 guidance on social responsibility and hkqaa-hsbc csr index. hong kong quality assurance agency (hkqaa) symposium, hong kong. kumar, n., & singh, u. 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https://www.bayes.citystgeorges.ac.uk/__data/assets/pdf_file/0004/363217/lighting-work-performance-cass.pdf https://www.investhk.gov.hk/en/news/investhk-hosts-inaugural-low-altitude-economy-forum-government-industry-academia-and-research-join-forces-to-drive-development-of-hong-kongs-low-altitude-innovation-ecosystem/ https://www.investhk.gov.hk/en/news/investhk-hosts-inaugural-low-altitude-economy-forum-government-industry-academia-and-research-join-forces-to-drive-development-of-hong-kongs-low-altitude-innovation-ecosystem/ https://www.investhk.gov.hk/en/news/investhk-hosts-inaugural-low-altitude-economy-forum-government-industry-academia-and-research-join-forces-to-drive-development-of-hong-kongs-low-altitude-innovation-ecosystem/ https://www.iso.org/obp/ui/en/#iso:std:iso:21384:-2:ed-1:v1:en https://www.hkcaavq.edu.hk/en/accreditation/qf_related_accreditation/ 60 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 7, 60-66, 2025 issn: 2576-6759 doi: 10.55220/25766759.496 © 2025 by the authors; licensee eastern centre of science and education, usa digital transformation strategy in the logistics sector of emerging markets: a case study of indotrans, vietnam nguyễn ngọc dung1 phan minh duc2  1operation manager, itl corporation, vietnam. 2academy of journalism and communication, vietnam. email: phanminhduc@ajc.edu.vn ( corresponding author) abstract the logistics sector in vietnam plays a critical role in the national economy, contributing significantly to socioeconomic development and global competitiveness. with the advent of the fourth industrial revolution and the covid-19 pandemic, digital transformation (dt) has become a strategic imperative for logistics enterprises to enhance operational efficiency, reduce costs, and maintain competitiveness. despite rapid growth in vietnam’s digital economy and ecommerce, the logistics industry faces challenges such as high logistics costs, limited financial capacity, outdated infrastructure, and workforce deficiencies. indotrans joint stock company (itl), a leading logistics enterprise in vietnam, has proactively embraced dt by developing proprietary digital solutions like the etms system, which optimizes road freight operations through automation, real-time data exchange, and integrated functionalities. itl’s dt efforts have demonstrated clear benefits in operational productivity, cost management, and customer satisfaction, although challenges such as employee resistance, high investment costs, and complex tax procedures persist. the study highlights the importance of managerial leadership, workforce development, technological infrastructure, and innovation in driving successful dt. it also emphasizes the need for a cohesive strategy to build an integrated logistics ecosystem, leveraging mergers and acquisitions to expand resources and capabilities. strategic recommendations include fostering a digitally skilled workforce, enhancing internal and external communication, and institutionalizing innovation to sustain competitive advantage. itl’s case exemplifies the transformative potential of dt in vietnam’s logistics sector, offering insights into overcoming systemic barriers and achieving sustainable growth in emerging markets. keywords: digital transformation, emerging markets, etms system, indotrans, logistics sector, vietnam, workforce development. 1. introduction the logistics industry is widely regarded as the backbone of the economy, influencing all aspects of production, distribution, circulation, and consumption of goods. in vietnam, logistics plays a pivotal role in the overall structure of the national economy, contributing to socioeconomic development and enhancing the country's competitiveness. in recent years, vietnam’s logistics sector has experienced an annual growth rate of approximately 14–16%, reaching a market scale of around usd 40–42 billion. this expansion has been supported by substantial infrastructure investment, including usd 24 billion allocated during the 2016–2020 period, and ongoing public–private partnership (ppp) projects valued at usd 30 billion. in the context of increasing economic openness and deeper global integration, vietnam’s total import–export turnover has surpassed usd 500 billion annually, with large-scale freight transportation conducted across road, sea, air, and rail networks. these dynamics present significant business and growth opportunities for the domestic logistics industry. in the era of the fourth industrial revolution and the proliferation of digital technologies, digital transformation has emerged as a global phenomenon that is reshaping economies and industries worldwide. dt represents a continuous process of digitization and advanced applications that foster new operational methods and approaches at higher levels of performance. it has become a key enabler of organizational success, addressing key aspects such as customer experience enhancement, operational agility, innovation, and business model evolution. notably, dt has shifted from being a strategic initiative to becoming indispensable for enterprise sustainability, particularly after the disruptions triggered by the covid-19 pandemic. the pandemic exposed major vulnerabilities in traditional supply chains, reinforcing the urgency of dt to improve responsiveness, efficiency, and competitive advantage. the government of vietnam has recognized the transformative potential of digital technologies in driving economic growth and improving national competitiveness. the national digital transformation program, approved in 2020, sets out goals for developing a digital government, digital economy, and digital society by 2025, with a vision extending to 2030. logistics has been identified as one of the leading sectors in this transformation mailto:phanminhduc@ajc.edu.vn https://doi.org/10.55220/25766759.496 asian business research journal, 2025, 10(7): 60-66 61 © 2025 by the authors; licensee eastern centre of science and education, usa effort. vietnam’s digital economy has grown at an impressive pace, registering the fastest growth rate in southeast asia in 2023, with a value of usd 30 billion, and is projected to reach usd 45 billion by 2025. concurrently, ecommerce has expanded dramatically, with consumer behavior shifting toward online shopping, generating a market size of usd 32 billion in 2023—an increase of 25% compared to the previous year—underscoring the growing importance of electronic logistics (e-logistics) in enabling digital consumption. despite substantial opportunities, the digital transformation process in vietnamese logistics enterprises continues to encounter considerable challenges. logistics costs in vietnam account for 16.8% of the national gdp—significantly higher than the global average of 10.6%—which underscores the urgency of dt to streamline operations and maintain competitiveness. most vietnamese logistics firms (89%) are small and medium enterprises (smes) with limited financial capacity and outdated infrastructure, making it difficult to implement comprehensive digital solutions. labor force deficiencies in technological readiness further constrain progress. in practice, only around 30% of firms have adopted digital technologies within their supply chain operations, compared to over 60% in developed economies, and approximately 70% of vietnamese businesses have failed in their digital transformation efforts. these initiatives are often isolated, lacking system-wide integration, while 90.5% of logistics service providers remain in the initial digitization phase. at present, most domestic logistics firms operate as intermediaries for foreign companies, offering limited services such as customs declaration, vehicle rental, and warehousing. merely 16% have integrated third-party or fourth-party logistics solutions, with high value-added services predominantly provided by foreign enterprises. as such, accelerating the digital transformation of logistics firms is a pressing imperative to enhance managerial capability, strengthen competitiveness, reduce costs, and drive operational efficiency. digital technologies—including the internet of things (iot), cloud computing, artificial intelligence (ai), big data, and blockchain—have been identified as foundational for modern logistics systems. these innovations enable service providers to optimize resources, reduce labor and transportation costs, improve cargo tracking, and ensure crossborder security. in this context, indotrans joint stock company (itl) has emerged as one of vietnam’s leading private logistics enterprises, offering integrated logistics solutions to both domestic and international clients. armed with strong financial capacity, advanced technology, and in-depth understanding of local culture, itl has proactively invested in warehouse management software and integrated these systems into distribution centers. furthermore, the company has made substantial investments in e-logistics to enhance service quality, operational productivity, processing speed, and reduce paperwork—all while maintaining cost-efficiency. itl exemplifies the strategic efforts of vietnamese enterprises striving to spearhead digital transformation within the logistics sector, thereby contributing to the nation’s goals of sustainable development and global integration. 2. literature review digital transformation has emerged as a critical focus for governments, enterprises, and academia worldwide, driven by the need to adapt to rapid technological advancements and shifting market dynamics. it is not merely the digitization of resources but a holistic process that leverages digital technologies to develop new operational methods, business models, and approaches, thereby enhancing organizational performance and efficiency (vial, 2019). dt requires fundamental changes in organizational structure, corporate culture, and business processes, making it an imperative for maintaining competitiveness and ensuring long-term sustainability, particularly in the wake of disruptions caused by the covid-19 pandemic (ivanov, dolgui, & sokolov, 2019; westerman, bonnet, & mcafee, 2014). the dt process is commonly conceptualized through three evolutionary stages: digitization, digitalization, and full-scale transformation. digitization involves converting physical data into digital formats, serving as the foundation for subsequent stages. digitalization focuses on automating and interconnecting processes to improve operational effectiveness and governance. full-scale transformation represents a comprehensive shift across all aspects of the enterprise, emphasizing seamless integration of business systems, real-time information exchange, and cost-effective operations (vial, 2019; jović, tijan, & vidmar, 2022). these stages highlight the progressive nature of dt, requiring organizations to align their technological capabilities with strategic objectives. several theoretical frameworks have been developed to explain the factors influencing dt. the theory of planned behavior (tpb) posits that human behavior is strongly driven by the intention to act, emphasizing the role of psychological commitment in adopting new managerial approaches (ajzen, 1991). the technologyorganization-environment (toe) framework offers an integrated perspective by examining technological factors (existing and available technologies), organizational attributes (resources, structure, scale), and environmental conditions (competitive pressure, regulatory landscape) (tornatzky & fleischer, 1990). additionally, the resourcebased view (rbv) suggests that a firm’s sustainable competitive advantage derives from resources and capabilities that are valuable, rare, inimitable, and non-substitutable (vrin), such as digital assets, human capital, and managerial expertise (barney, 1991). empirical studies have identified key factors influencing dt, including managerial leadership, employee capabilities, organizational culture, technological infrastructure, and competitive pressure (nadkarni & prügl, 2021; cichosz, wallenburg, & knemeyer, 2020). managerial leadership is particularly critical, as it shapes strategic direction, commitment, and continuity of dt initiatives (westerman et al., 2014). leaders who demonstrate a proactive orientation toward change and possess the ability to align organizational goals with technological advancements are more likely to drive successful transformation (ngo, 2024). employee competencies, such as it skills, adaptability, and growth mindset, also play a significant role in accelerating technology adoption. however, organizational culture can either facilitate or hinder transformation, depending on its openness to change. in east asian contexts, confucian-rooted norms often resist disruptive change, posing challenges for dt implementation (ngo, 2024; luong et al., 2024). technological infrastructure emerges as the most substantial factor influencing both the intention and implementation of dt, serving as the technical foundation for system integration, data security, and operational efficiency (le viet & dang quoc, 2023). however, competitive pressures and rising customer expectations may asian business research journal, 2025, 10(7): 60-66 62 © 2025 by the authors; licensee eastern centre of science and education, usa produce negative effects if firms are inadequately prepared, leading to hesitancy or resistance toward transformation (nguyen & dang, 2024). financial constraints remain a significant barrier, particularly for smes, which dominate vietnam’s logistics sector. approximately 70% of vietnamese enterprises fail in their dt efforts, often due to limited financial capacity, outdated technologies, and a digitally unprepared workforce (ministry of industry and trade, 2023; nguyen et al., 2025). in vietnam, the logistics sector has seen annual growth of 14–16%, amounting to usd 40–42 billion, with over 3,000 active enterprises, 89% of which are smes (ministry of industry and trade, 2023). despite this growth, the sector faces systemic challenges, including high logistics costs, poor system integration, and limited adoption of advanced technologies. while 100% of logistics firms increased dt investment in the past year, only a small group of leading companies, such as dhl, fedex, and viettel post, can execute full-scale transformation (nguyen canh thao, 2024). approximately 68% of logistics enterprises have adopted technologies from industry 4.0, enhancing service quality and supporting the emergence of smart logistics centers. however, the overall dt process remains below expectations, with many firms struggling to develop clear strategies and select appropriate technologies (nga thanh nguyen et al., 2024). the determinants of dt evolve across its stages. during digitization, critical factors include it infrastructure, financial resources, employee capacity, organizational pressure, and support services. managerial leadership and institutional frameworks show limited influence at this initial stage. as dt progresses into digitalization—focused on process automation—executive leadership becomes crucial alongside existing drivers. in the final stage of fullscale transformation, leadership and human capital take on central roles, although external support services lack demonstrable influence in propelling progress at this level (luong et al., 2024; nguyen canh thao, 2024). from a theoretical perspective, the intention to digitally transform exhibits the strongest positive influence on actual dt outcomes, particularly among smes. this underscores the tpb framework's emphasis on behavioral intention as a mediating mechanism more impactful than direct structural factors (ajzen, 1991; luong et al., 2024). however, systemic barriers such as financial constraints, skill deficits, cultural inertia, and cybersecurity risks continue to hinder progress, requiring strategic alignment and collaboration across stakeholders to achieve sustainable transformation (nguyen et al., 2025). in summary, dt is a multidimensional process shaped by technological, organizational, and environmental factors. while vietnam’s logistics sector has made progress, systemic barriers persist, requiring a cohesive strategy to align managerial leadership, workforce development, technological infrastructure, and innovation. the theoretical insights presented here provide a foundation for analyzing the challenges and opportunities in vietnam’s logistics sector, offering a roadmap for sustainable transformation in emerging markets. 3. research methodology the research employed a purposive sampling method, targeting a minimum sample size of 81 respondents, with 89 participants ultimately recruited to compensate for non-response in interviews. the study population included senior executives and departments directly involved in digital transformation implementation, such as the digital transformation division, business department, finance accounting department, and communications department, as well as itl’s clients, primarily corporate customers and freight forwarding agents. the author emphasized that during the initial implementation phase, internal personnel played the most crucial role in shaping service experience and optimizing product solutions, accounting for 70% of strategic contributions, while client feedback provided valuable evaluative insights (30%). regarding data collection, primary data were obtained using a structured three-step survey instrument distributed directly to key internal departments (with 5–7 members per department) and to 10 major clients, representing 80% of the company’s service revenue. secondary data were gathered from government statistics, sectoral journals, official reports from ministries and state agencies, and internal enterprise data. these were used to analyze macroeconomic, industry-level, and organizational environments. the data analysis included comparative and interpretative processing of secondary sources, while primary data was subject to thorough accuracy and completeness checks, followed by analytical synthesis to generate evaluations and strategic recommendations—particularly highlighting feedback from end-users. 4. research findings and discussion digital transformation has emerged as a strategic priority for governments, enterprises, and academia worldwide—particularly in vietnam. rather than simply digitizing resources, dt is a comprehensive process that leverages digital technologies to introduce new operational methods and approaches, thereby enhancing organizational performance. dt has become a vital prerequisite for sustaining competitiveness and long-term viability, especially considering disruptions brought about by the covid-19 pandemic. in the vietnamese context, the government views dt as a key enabler of economic growth, improved public service delivery, and national competitiveness in global markets. vietnam’s current digital transformation trajectory reflects remarkable progress. the country’s digital economy was projected to be the fastest growing in southeast asia in 2023, reaching usd 30 billion and potentially expanding to usd 45 billion by 2025. by 2022, the digital economy had already contributed 14.26% to gdp, with an official target of 20% by 2025. vietnam also consistently ranks among the top 50 countries on global innovation and postal development indices, placing 46th in 2023. nonetheless, significant challenges remain. fewer than 40% of small and medium-sized enterprises in vietnam possess sufficient financial capacity to implement dt at a moderate or advanced level. recent studies indicate that 57.6% of smes struggle to execute dt initiatives. as smes comprise over 90% of all enterprises nationwide—and 97.2% in hanoi—limited resources, outdated technology, and a digitally unprepared workforce hinder timely adoption. while 62% of firms expect dt to boost performance and foster innovation, 56% perceive dt as essential for survival and growth, only 3% consider dt an substantial decline from 22% in 2019. in logistics, dt presents substantial breakthrough opportunities. the industry has seen annual growth of 14– 16%, amounting to usd 40–42 billion, with over 3,000 active enterprises, 89% of which are smes with capital asian business research journal, 2025, 10(7): 60-66 63 © 2025 by the authors; licensee eastern centre of science and education, usa under vnd 10 billion. although 100% of logistics firms increased dt investment in the past year and 86% expect gains in productivity and efficiency, only a small group of leading companies (e.g., dhl, fedex, viettel post, vietnam post) can execute full-scale dt. approximately 68% of logistics enterprises have adopted technologies from industry 4.0. these digital initiatives have enhanced service quality, supported the emergence of smart logistics centers, and strengthened engagement with international clients. however, the overall dt process in logistics remains below expectations, with many firms facing challenges in planning and technology selection. notably, 28.95% of logistics businesses report difficulties in developing dt strategies, and nearly 70% of vietnamese enterprises fail to achieve successful transformation outcomes. the factors influencing digital transformation have been extensively studied and are commonly categorized into six core dimensions: managerial capacity and attitude, digital transformation strategy, employee competency, organizational culture, technological infrastructure, and transformation-related pressure. among these, the capabilities and proactive leadership of managers play a pivotal role, determining the level of commitment and direction-setting throughout the transformation process. a well-articulated digital strategy positively correlates with the intention to pursue transformation; however, empirical evidence suggests that the absence of a clear strategic roadmap among small and medium-sized enterprises in hanoi diminishes its practical impact. employee competency is recognized as a critical driving factor, especially where the workforce possesses technological proficiency, a growth mindset, and access to internal training programs. in contrast, organizational culture has yet to demonstrate a definitive link to either transformation intention or implementation—possibly influenced by confucian-rooted norms in east asian contexts that tend to resist disruptive change. technological infrastructure emerges as the most impactful factor, both in intention formation and practical execution; nonetheless, it capacity among hanoi-based smes remains modest. meanwhile, pressure from the digital business environment exhibits a negative correlation with transformation intent, indicating apprehension toward the complexity and financial burden associated with such change. a key finding is that the intention to digitally transform exerts the strongest positive influence on actual transformation outcomes among smes in hanoi. this underscores the theory of planned behavior (tpb), which posits that human behavior is primarily driven by the intention to act—reinforcing the importance of psychological commitment as an indirect yet powerful mechanism. digital transformation within vietnam’s logistics sector unfolds progressively across three evolutionary stages: digitization, digitalization, and full-scale transformation. in the initial phase, efforts focus on converting information into digital formats, reliant on it infrastructure, workforce capability, and financial resources, while leadership and legal frameworks remain peripheral. as firms transition into digitalization—centered on process automation—executive leadership, policy structure, and enterprise scale become more prominent, enabling synchronized operational enhancements. in the final stage of comprehensive transformation, leadership and human capital take on central roles, although external support services lack demonstrable influence in propelling progress at this level. despite significant strides, vietnam’s digital transformation still confronts numerous systemic obstacles. these include financial constraints, outdated technologies, skill deficits, cultural inertia, incomplete legal frameworks, cybersecurity threats, and the absence of long-term leadership commitment. such barriers hinder strategic clarity and delay implementation. to realize the full potential of vietnam’s digital economy, it is imperative to foster alignment and collaboration across government, industry, and academia—toward a cohesive, resilient, and globally responsive transformation ecosystem. in terms of scale and strategic vision, indotrans has established itself as a leading logistics service provider in the region, operating more than 90 offices and distribution centers across multiple countries with a workforce exceeding 1,800 employees. the company comprises eight subsidiaries and invests in strategic affiliates to offer comprehensive logistics solutions. since 2017, itl has developed a dedicated digital transformation division, aiming to build an intelligent logistics technology platform positioned at the forefront of the indochina region. the implementation of dt at indotrans has encountered both enablers and constraints. on the enabling side, itl designated digital transformation as a core strategic priority, receiving support from senior leadership, investors, and strategic stakeholders, while also benefiting from modern infrastructure and a well-matched digital talent pool. nevertheless, the company faces challenges such as intense competitive pressure from domestic and emerging market logistics providers, high investment costs required for continuous technological upgrades, and rising customer expectations for enhanced digital experiences and diversified service offerings. according to the vietnam logistics report 2023, 90.5% of logistics service firms remain in the early digitization stage—focused primarily on informatization and basic connectivity—while supply chain readiness indicators remain low due to limited infrastructure integration and substantial capital requirements. in execution, itl has pioneered the integration of an api-based service portal into its trucking operations. this initiative has delivered multiple benefits, including increased operational productivity through automation, real-time information exchange, improved data accuracy, and alignment with industry trends toward integrated logistics information systems. the etms (electronic transport management system) was deployed early in the digital transformation roadmap, with emphasis on overland cargo transport. the platform incorporates a range of core features, such as ribbon-style interfaces like microsoft excel, enabling multi-departmental access to shipment lists, vehicle and driver inventories, and itemized order contents. operational modules include pricing management, route planning, dispatch coordination, documentation, trip reconciliation, and transport cost reporting. additional functionalities encompass full-cycle expense breakdowns, vehicle asset management, routebased cost estimation, fuel procurement oversight, and receivables monitoring based on credit limits. integrated with crm capabilities, etms facilitates customer relationship management with controlled data access and realtime order tracking. its kpi dashboard enables monitoring of shipment-level and client-level profitability, benchmarking against performance targets, and informed managerial decision-making. evaluation results of etms functionality have been overwhelmingly positive. for business departments, the system contributes to time and cost efficiency while facilitating distribution performance assessment. for operations, customer service, and accounting units, it improves information update cycles, accelerates client asian business research journal, 2025, 10(7): 60-66 64 © 2025 by the authors; licensee eastern centre of science and education, usa interactions, and streamlines settlement procedures. for management teams, etms delivers actionable insights via dashboards and reporting tools, supporting timely strategic adjustments. survey findings on etms features show average ratings ranging from 3.14 to 4.32 out of 5, with the highest score for recurring costs (4.32), attributed to lower implementation and maintenance expenses compared to third-party applications. the lowest score (3.14) pertained to system accuracy and stability. notably, no respondents rated any feature below 3, resulting in a 0% dissatisfaction rate, suggesting strong alignment between etms functions and actual operational needs in road freight logistics. regarding overall user satisfaction, no participants assigned scores below 3, and indicators such as “continued use of etms in the future” and “willingness to recommend the software to others” received the highest evaluations, reflecting its utility and appropriateness for itl’s service environment. the achievements attained by indotrans in implementing digital transformation initiatives include the development and deployment of business software applications featuring rich user interfaces, high scalability and storage capacity, rapid data retrieval, and seamless integration with third-party platforms. itl has successfully integrated its logistics systems with major partners such as vietranstimex, vietranslink, sotrans, dash logistics, sowatco, and mlc. these applications are built on modern technological foundations and utilize microservicebased architecture, which enables modular updates and system enhancements without interrupting operational continuity. the company has consistently been recognized in the top 10 reputable logistics enterprises by vietnam report and received the 2022 sao khue award for its etms and ewms solutions. survey results on the functional performance and user satisfaction of etms show highly positive responses. the author notes that, while the product may not be the most sophisticated or universally optimal solution, based on user feedback, it is the most suitable system at the current stage for logistics enterprises with itl’s operational model. its tailored design effectively meets the specific demands of vietnamese logistics service providers operating in road freight. the comparative evaluation of itl’s proprietary solution versus off-the-shelf third-party software—typically offered by technology vendors on the market—is presented and analyzed by the author as follows: table 1. comparison between itl’s etms system and third-party logistics software. criteria itl’s etms third-party software level of customization high – tailored to itl’s specific transportation model low – typically standardized across industries user interface user-friendly, multifunctional, aligned with internal workflows possibly more modern but may require training to operate internal integration integrates crm, accounting, customer service, dispatch depending on api capabilities or additional customization installation and operating cost low – no external licensing or support fees generally higher due to licensing and service costs responsiveness & updates flexible – maintained by internal technical team subject of provider schedule and support roadmap process compatibility highly aligned with itl’s operational reality moderately compatible – may require adjustments accuracy & stability good overall – with areas for improvement often strong due to mature technical platforms user satisfaction high – no negative ratings below threshold varies depending on implementation context despite notable achievements, indotrans continues to face limitations and persistent implementation challenges in its digital transformation efforts. tax declaration procedures, including fees and surcharges, remain complex due to the need for frequent updates and multiple interface operations, posing difficulties for operational departments. moreover, during the rollout of digital applications, cross-functional collaboration has been hindered by employee resistance to change and the pressure of routine workloads, resulting in a preference for familiar systems. this situation increases the risk of employee turnover, as staff must simultaneously meet core business requirements, learn to operate new platforms, and work with it teams to troubleshoot system errors that significantly impact on the enterprise’s digital transformation trajectory. looking toward 2025 and with a vision to 2030, indotrans aims to pursue and enhance its strategic development of an integrated ecosystem of supply chain management solutions (escm), a model recognized as a target direction for many corporations and large-scale enterprises. this strategic roadmap is intended to establish a resilient digital foundation, increase customer value, advance vietnam’s logistics sector, and enhance global competitiveness. in expanding the ecosystem, itl has augmented its resource base through key mergers and acquisitions, such as acquiring a 97% stake in sotrans group in august 2020 and gaining full ownership of itl keppel logistics vietnam in july 2022. these transactions significantly boosted itl’s warehouse capacity, fleet size, and service diversification. the digital logistics ecosystem is expected to reduce customer acquisition costs through automation and integrated procurement workflows, while generating enterprise and client value via data analytics, strengthening customer relationships and retention, and increasing enterprise valuation and market competitiveness. from a managerial perspective, although survey results indicate positive outcomes, itl's technological products are not necessarily the most advanced, but they are deemed the most appropriate given the company's specific logistics business model and operational maturity. itl’s internal solutions demonstrate competitive advantages over third-party software products in several dimensions, including the capacity to scale and input data instantly, seamless integration across functional units—enabled by deep understanding of internal requirements, higher initial investment but greater long-term cost stability, and lower b2b client integration expenses. for indotrans to fully realize its digital transformation objectives, leadership must address several strategic imperatives. first, regarding organizational awareness, dt must be understood not only as a technological investment but as a comprehensive shift in workforce mindset, requiring exemplary leadership engagement. second, in terms of human capital, there must be an informed appreciation of dt’s strategic role to guide resource asian business research journal, 2025, 10(7): 60-66 65 © 2025 by the authors; licensee eastern centre of science and education, usa allocation, especially through enhanced managerial education for technically proficient logistics personnel. finally, concerning financial investment, dt demands considerable expenditure and technological autonomy to mitigate the risk of obsolescence and financial loss—necessitating a staged and well-structured investment roadmap over time. 5. conclusion the impact of the covid-19 pandemic has catalyzed new consumer awareness, behavioral trends, and business models, creating opportunities for market realignment, value chain restructuring, and the formation of new partnerships. it has presented a critical juncture for vietnamese enterprises to reassess their operational capacity, resilience, and adaptability in the face of market disruptions, while enabling them to restructure more sustainably and effectively. mckinsey & company—an international management consulting firm—has noted that “corporate leaders worldwide are increasingly shifting toward ecosystem-based business models to achieve top priorities such as scaling core enterprises, generating revenue from new products and services, and creating novel value pools.” building ecosystems is thus not only the responsibility of industry-leading firms but also a strategic pathway for exponential growth, enabled by resilient platforms that optimize operational costs and enhance profitability. moreover, a successful ecosystem allows a firm to expand its domestic influence while simultaneously meeting international standards and partner expectations. in alignment with this perspective, the leadership at indotrans has also affirmed that developing a logistics ecosystem is the strategic destination for major enterprises seeking to establish a robust foundation, delivering greater customer value, and advancing sector-wide progress. accordingly, itl will continue to pursue its strategy of constructing an integrated ecosystem of supply chain management and logistics solutions. this ecosystem— centered on technological platform development—serves as the digital foundation for connecting diverse logistics business models currently operated by the company. it also aims to amplify itl’s influence within the logistics sector, improve the logistics performance index (lpi) for domestic firms, and bolster vietnam’s competitiveness against regional leaders such as thailand, malaysia, and singapore. drawing from this analysis, the article proposes a set of strategic recommendations to guide indotrans’ digital transformation efforts during the 2022– 2025 period, with a long-term vision toward 2030. first, the solution involves workforce development. in pursuit of a digitally integrated business model, itl requires a substantial digital workforce. building a core transformation team drawn from functional departments and it units is a top priority, especially equipping mid-level managers with digital skills and mindsets to serve as structural anchors. simultaneously, the enterprise must proactively secure a reliable talent pool to prevent disruptions to its transformation roadmap. specific measures include leveraging corporate reputation to attract prospective candidates from universities and expert panels; offering internships to logistics students to develop a recruitment pipeline; assigning clear kpis to management for mentoring successors; launching talent programs for outstanding employees and young leaders with dedicated investment from senior executives; developing competency frameworks for technical roles directly involved in building, testing, and operating digital systems; and utilizing internal e-learning platforms to assess professional competencies, thereby informing training, capacity development, and tailored incentives. second, the communication solution emphasizes both internal and external engagement. internal communication serves as the critical "touchpoint" between the enterprise and its workforce, shaping and reinforcing corporate values and culture. itl has effectively promoted a “ownership spirit” during the initial phase of its digital transformation. in the next stage, internal communications should be enhanced to promote clarity, transparency, and multidimensional messaging—ensuring employees understand objectives and act with greater agency. communication must also cultivate unity, reinforce organizational cohesion, and support recruitment and retention by projecting a positive and aspirational work environment. external communications play a vital role in capturing market attention, shaping brand perception, and fostering long-term customer trust. itl’s communications team has actively conveyed the organization’s digital agenda and improved brand positioning. moving forward, it is essential to maintain momentum in public outreach, align messaging with strategic objectives, and coordinate closely with executive leadership to ensure consistency across all channels. third, innovation is essential. in a fast-paced, highly competitive market, fostering innovation is a key strategic differentiator and a source of long-term advantage. to cultivate a culture of innovation, efforts must be properly guided and institutionalized. employees, being closest to daily operations, have unique insights and are wellpositioned to propose meaningful product improvements. itl can encourage cross-functional innovation by hosting periodic contests focused on management applications, allowing departments to submit enhancement ideas. these proposals often identify specific areas for improvement, leading to greater product utility and performance. moreover, this approach reinforces a culture that continuously generates and implements new ideas—an intangible assets of high value for the organization. in conclusion, itl’s digital transformation journey underscores its pioneering efforts in independently developing technology platforms tailored to digitalizing logistics processes. these initiatives have demonstrated clear benefits in optimizing operations, managing costs, and enhancing productivity, while receiving positive feedback for their applicability and growth potential. by establishing a solid foundation for an integrated logistics ecosystem, itl has reinforced its competitive advantage in emerging markets and positioned itself as a leader in the sector. the case of indotrans is particularly relevant to the logistics industry in emerging countries, where systemic challenges such as limited financial capacity, outdated infrastructure, and workforce skill deficits often hinder digital transformation efforts. itl’s ability to overcome these barriers through strategic investments in proprietary technology platforms and ecosystem development provides a replicable model for other enterprises in similar contexts. furthermore, its success highlights the critical role of managerial leadership, tailored technological solutions, and innovation-driven strategies in enabling logistics firms to compete effectively in global markets while addressing the unique constraints of emerging economies. strengthening both internal and external communication strategies will be crucial for fostering organizational cohesion, enhancing employee engagement, asian business research journal, 2025, 10(7): 60-66 66 © 2025 by the authors; licensee eastern centre of science and education, usa and amplifying corporate branding. additionally, structured initiatives such as innovation competitions can serve as a strategic tool to encourage cross-functional collaboration, generate creative solutions, and build a valuable repository of internal intellectual assets that drive continuous improvement and innovation. references ajzen, i. 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(2014). leading digital: turning technology into business transformation. harvard business press. https://dx.gov.vn/ https://dx.gov.vn/ 36 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 7, 36-49, 2025 issn: 2576-6759 doi: 10.55220/25766759.494 © 2025 by the authors; licensee eastern centre of science and education, usa the oil price-stock market volatility connection: evidence from g20 economies ikram ghamgui frikha1  mohamed ben amar2 1economic science at the university of sfax, tunisia. email: frikhaikram@gmail.com 2faculty of economics and management of sfax, tunisia. email: mohamed.benamar@fsegs.usf.tn ( corresponding author) abstract this research investigates how oil price fluctuations affect stock market performance across g20 countries, utilizing the bekk and dcc-garch models to model dynamic linkages and volatility cross-contagion between the two markets. an analysis is conducted from january 2004 to january 2021, examining the impact of oil price volatility on stock market performance and also contemplating the reverse relationship. we perform a research study in the context of the covid-19 pandemic. the bekk model enables us to estimate fluctuating conditional correlations over time, whereas the dcc-garch model offers a deeper understanding of the progressing dynamics that govern the relationships among variables. our data analysis shows sizable reciprocal causation; the impact of oil price fluctuations on stock market performance is noticeable across the g20 economies. volatility in the stock market is shown to be influenced by shifts in oil prices, thereby presenting their complex connection. grasping these dynamics is crucial for both investors and policymakers in an unstable market environment and times of worldwide uncertainty. the study sheds novel insights into how monetary shock transfers happen, providing significant contributions to understanding market interdependence and the influence of commodities on market conditions. keywords: bivariate garch, dynamic relationship, g20 countries, oil prices, shocks transmission, stock market returns. 1. introduction the link between oil prices and stock market returns is of great interest in both academic research and policy circles as well as among investors, especially on the g20 countries. since these are all major players in the global economy, and they have large oil producers and consumers and also developed financial markets. however, oil prices have far-reaching consequences on global economic growth, inflation and corporate profitability that weigh heavily on stock market performance. for one, shocks are transmitted between international oil prices and stock market returns. oil price volatility will have sector-specific effects, especially for industries that are high users of energy-inputs influencing valuations differently. second, the same geopolitical events and global economic trends that to some extent define these relationships induce simultaneous movements in oil prices and stock markets, whilst enhancing concerns of causality as well as directionality. the hypothetical dependency can function as both a positive and contrasting force. given the economies of shipping and receiving countries are enormously dependent on the price of oil, the price fluctuations of crude are responsible to influence the economies of these countries substantially as well as the changes in its price tend to have a great impact on them. the volatility in crude oil and alternative energy resources may immediately influence investment returns on the stock market. the interrelation between stock market values and oil prices has garnered substantial focus in fresh years. so, the iea estimated that oil will account for 30% of universal energy supply by 2030. investors especially portfolio managers experience disruption expected to the unpredictability of oil prices triggering risk and uncertainty in their investments. research findings show oil prices straightforwardly affect stock markets by adapting forthcoming cash inflows, or influence stock markets obliquely via impacts on interest rates set assessing these cash inflows. research has extensively studied how a high oil price causes stock market performance to decline by minimizing the possible growth of fiscal activities expected to loftier input costs, lessened business revenues, and increased comprehensive price inflation. the supplementary uncertainty, linked to loftier unrefined oil prices communicating high risk premiums, also lowers share prices. however, changes to stock markets are transmitted through some diverse channels. stock prices are influenced by oil prices both debiting to the cost of capital and upcoming cash flow expectations. greater corporate cash flow is reduced debiting to ascending production costs caused by taller crude oil prices, which also inferior share prices. dissecting the correlation between crude oil and time-honored stock markets offers significant mailto:frikhaikram@gmail.com mailto:mohamed.benamar@fsegs.usf.tn https://doi.org/10.55220/25766759.494 asian business research journal, 2025, 10(7): 36-49 37 © 2025 by the authors; licensee eastern centre of science and education, usa insights for investors. a precarious international crude oil market may result in delayed investment decisions, as uncertainty in the oil market can have a extensive impact on both the stock markets and the total economy. uncertainty in the oil market's problems and risks are indeed transmitted to the authentic economy, with a ripple effect also hitting the capital market and affecting stock returns worldwide, including both established and developing countries. the g20's activities as a significant governing and fiscal grouping have a considerable effect on world energy markets and the universal economy in overall. the intense dependence of the g20 economies on energy exports and imports renders them vulnerable to oil prices and their volatility, with possible ramifications for the g20 region and its financial markets, particularly its stock market returns. the market fluctuations stemming from pronounced rises and falls in oil prices in current years underscore the value of examining the causal relationships between stock market performances and oil price volatility. indeed, mainly extensive oil consumers aren't just limited to the us, china, japan, and india; rather, so are nations like canada, russia, and brazil that are also remarkable producers. world energy markets are chiefly dominated by them. since the g20 countries are highly affected by events like global crises and the coronavirus, differentiating the effect of oil shocks on their stock market returns should be simpler. the global situation has substantially worsened, and the demand worldwide is now more perilous than before. the crisis has had a detrimental impact not exclusively on human health but also altered the way people live and produce. an economic blockade and a stock market crash have caused by all countries' measures taken to limit the spread of the epidemic resulting in a global economic downturn and a collapse of the energy market. given the substantial fluctuation in oil prices in modern years, research should focus on the effects of these price variations on stock market performance. our research seeks to uncover any possible link between fluctuations in the oil and financial markets, precisely by assessing how disturbances and turbulence are passed from the oil market to the stock market. the study's findings will provide investors with precious insights into leading the complexities of global financial markets, permitting them to make knowledgeable decisions involving possible fluctuations in oil prices. further research may provide greater efficacious and functional solutions for performing policies that help minimize the unfavorable effects of fickle oil prices on monetary outcomes. this research further contributes to succeeding scholarship on the interactions of commodity markets and investigates the separate characteristics of the g20 economies in relation to the global context. the objective of our study is to uncover correlations between volatility in oil prices and fluctuations in the financial sector, with a focus on comprehending how oil market shocks affect the general stock market performance. this research delves into the relationship between stock market performance and oil prices, with a focus on the manner in which fluctuations in both oil-exporting and oil-importing nations. changes in oil price volatility are associated with variations in the level of stock market volatility which do fluctuate over time. both definitely and adversely, the connection's influence can be observed at diverse instances, pivoting together or pivoting apart on average, and pulsating at divergent times. the price movement of oil differs in correlation with stock market fluctuations between oil-exporting nations and oil-importing nations in terms of extent. oil prices on wti and stock market returns data from 16 countries of g20. the results of this research will provide investors with substantial information to make judicious choices about market fluctuations engaging global financial investments in response to shifts in the price of oil. future studies may contribute to the development of more effective and usable policy strategies to counter the negative effects of price fluctuations in oil on economic results. the research also contributes to current literature by exploring the dynamics between commodity markets and discovering individual traits of g20 economies within a broader global framework. 2. review of literature many studies have looked at how changes in oil prices affect stock markets. one study by park and ratti (2008) found that changes in oil prices caused changes in stock prices in 13 european countries. another study by kilian and park (2009) found that the us stock market was affected by both changes in oil supply and demand, with demand changes having a bigger impact. many studies have looked at how changes in the price of oil affect stock markets around the world. wen et al. (2012) found that during the 2008 financial crisis, big swings in the price of oil affected both the us and chinese stock markets. ghorbel and boujelbene (2013) showed that oil price swings also affected stock markets in many countries, including those in the middle east, brazil, russia, india, and china. also, büyükşahin and robe (2014) suggested that future studies should consider how economic crises affect the relationship between oil prices and stock prices. guesmi and fattoum (2014) found that big changes in the global economy affected the relationship between oil prices and stock prices in both countries that import and export oil. this relationship was stronger during the financial crisis the mena countries studied by bouri (2015) included lebanon, jordan, tunisia, and morocco from 2003 to 2013. prior to the financial crisis, data indicates that there is restricted interdependence in the transfer of volatility between the oil and stock markets in middle eastern and northern afro countries. during the post-monetary crisis period, links to monetary growth can be seen in sure countries. du and he (2015) investigate the risk cross effects between oil and stock markets running data from september 2004 through september 2012 regularly. research indicates that before the financial crisis, the stock market had a positive effect on the oil market, while the oil market had a negative influence on the stock market. across the postmonetary crisis timeframe, instances of mutual risk transmission have been observed. a number of researchers, embracing khalfaoui (2015), collaborated on a study. a restricted number of studies have precisely analyzed the g7 nations. researchers utilize a multivariate garch approach in combination with wavelet analysis to examine the correlation between west texas intermediate (wti) oil prices and substantial stock markets of the group of seven (g7) economies. the research reveals a significant transfer of risk between the asian business research journal, 2025, 10(7): 36-49 38 © 2025 by the authors; licensee eastern centre of science and education, usa oil market and the stock market, where heightened oil market fluctuations mainly cause heightened stock market uncertainty. the study reveals that diverse chronological correlations relating to oil trade do not vary between countries that import and countries that export oil. maghyereh and his team. oil-exporting countries used during the period of 2008-2015 are algeria, iraq, and libya.research findings indicate that fluctuations in oil prices serve as the main channel by which volatility affects stock market fluctuations, and the data fails to distinguish between oleaginousimporting and oleaginous-exporting countries. possessing comprehensive knowledge of conventional stock markets can be key in helping investors make knowledgeable decisions across distinct scenarios. research after the commodities liberalization has indicated a direct correlation between unprocessed oil markets and diverse worldwide equity markets. the justification for placing the dcc-garch model to the relationship between oil prices and equities is not completely warranted, as it adopts a multivariate approach that implies mutually beneficial effects on volatility between the oil market and the stock market. when bringing into account worldwide patterns, generalizations are regularly essential to make out the difference between countries reliant on oil exports versus oil imports in terms of the relationship between oil prices and equities markets several studies have examined the relationship between oil prices and stock markets in different regions. roberto and his colleagues (2017) looked at six latin american countries (argentina, brazil, chile, colombia, mexico, and peru) from 2000 to 2015. they found that higher oil prices generally led to higher stock returns, regardless of whether the country was a major oil exporter or importer. horobet and his team (2019) studied the connection between the european union's financial sector and the oil market from 2010 to 2018. their research showed that stocks in the financial sector are affected by oil price changes over long periods.the middle east is a significant oil-producing region. studies have explored the link between oil and stock markets in this area, particularly in the gulf cooperation council (gcc) countries. ammar and mahmoud (2020) analyzed the dubai market from 2010 to 2018 and found that oil market volatility influences the volatility of energy stocks. lin et al. (2019) showed that changes in the price of oil directly affected the chinese and european stock markets during times when the markets were acting unusually. these studies all show that big changes in the price of oil can have a big impact on stock markets, especially during times of economic trouble. abdulrahaman (2020) investigated the long-term relationship between oil and stock markets in saudi arabia, a major oil exporter, using data from 2000 to 2017. their research confirmed a strong connection between the two markets. 3. methodology the process of volatility can't be straightforwardly remarked or measured. market anxiety usually revolves around one crucial factor. the tool is also used to assess the shock transmission between diverse markets. the frequency of shocks and volatility between oil markets and stock markets in selected g20 countries such as japan, mexico, russia, and so on, and a few alternative g20 countries, were evaluated through two garch family models. this choice aims at acquiring accurate and relevant outcomes which have been steadily supported by sundry anteceding investigations. the bekk-garch model's reputation is one of an elaborate model that is appropriate for the study of twoway effects. the dcc-garch model has earned a reputation for designing better outcomes. different investigations in new times have employed it, thereby authenticating its uniqueness (tsuji, 2018; fills et al, 2011). based on specifications of dependent volatility, several single-variable models basic the dcc model can incorporate the glosten jagannathan runkle (gjr) unbalanced model as well as the exponential garch (egarch) model with the unbalanced leverage effect of nelson (1991). it is also potential to modify the bekk and dcc models in order to incorporate considerations of asymmetry, leverage effects and alternative ordinarily observed variance and correlation features of monetary returns into the structures. the bekk model the multivariate garch models, known as the bekk class, were introduced by engle and kroner (1995). bauwens et al (2006) suggest a general formulation that accounts for some factor structures (see particularly, e.g. the year they published their work). we consider within this paper the easiest bekk formulation with all model orders set to: σt=ccj+aεt−1 εtj−1aj+bσt−1bj where a and b are two (n*n) matrices of constant parameters and c’ is a (n*n) matrix of symmetric parameter. the fully parameterized model comprises 2.5 𝑁2 + 0.5 n parameters. the dcc model engle (2002) introduced the dcc model as a broader adaptation of bollerslev's (1990) consistent conditional correlation (ccc) model. the intention here is to model the conditional variances and the conditional correlations individually. the covariance matrix is broken down consequently to the subsequent formula. ∑ 𝑡 = 𝐷𝑡 𝑅𝑡 𝐷𝑡 𝐷𝑡 = 𝑑𝑖𝑎𝑔 ( 𝜎1 , 𝑡, 𝜎2 , 𝑡, … … . 𝜎𝑘 , 𝑡) 𝑅𝑡 = 𝑄𝑡 1/2 𝑄𝑡 𝑄𝑡 1/2 ; 𝑄𝑡 = 𝑑𝑔( 𝑄𝑡 ) where 𝑄𝑡 includes the conditional variances characterized by a series of univariate garch equations (see baba and al. (1990); engle (2002)). the dynamic correlation matrix, 𝑅𝑡, does not come directly from a dynamic equation, but is derived by normalizing a different matrix, 𝑄𝑡, which has a dynamic structure. the configuration of 𝑄𝑡 defines the complexity and feasibility of the model in large cross-sectional dimensions. proposals for 𝑄𝑡 specifications have been put forth. the subsequent analysis focuses solely on the most uncomplicated model and applies merely to the bekk specifications of equations (1) through (4). hadamard dcc, which is also referred to as the dcc model, was first introduced by engle in 2002 𝑄𝑡 = 𝑆 + 𝐴 ∗ 𝐷𝑡−1 𝜀𝑡−1 𝜀𝑡−𝑗 𝐷𝑡−1 ∑ 𝑆 + 𝐵 ∗ (𝑄𝑡−1 − 𝑆) asian business research journal, 2025, 10(7): 36-49 39 © 2025 by the authors; licensee eastern centre of science and education, usa with a and b as symmetrical parameter matrices and s as the long-term covariance matrix. 4. data and descriptive statistics 4.1. data availability statement we analyzed data from the former month for the two series in question: the oil prices and the stock market returns of g20, comprised of 16 countries such as australia, brazil, canada, china, france, germany, india, italy, japan, mexico, russia, south africa, south korea, the united kingdom, turkey, and the united states. the years from 2004 to 2020 have been classified into five distinct intervals. from 2004 to 2007, a period of stability preceded the subprime crisis. the subprime crisis happened between 2008 and 2009. between 2010 and 2014, the transition from the subprime crisis to the debt crisis, which culminated in the 2014 oil crisis, took place. the years 2015 to 2019 were marked by comprehensive universal financial stability. the covid health crisis defined the period from 2021. these data were collected from the data stream data base (a global platform of financial and macroeconomic data) and the international database the global economy. 4.2. descriptive statistics table 1. descriptive statistics. wti siaus sibr sica sich sifr siger siind mean 0.006813 0.003753 0.009067 0.003964 0.005761 0.003105 0.004792 0.011041 median 0.014827 0.008181 0.011651 0.010836 0.000921 0.009164 0.013215 0.018394 maximum 0.728814 0.103200 0.200413 0.109348 0.213908 0.106783 0.139292 0.220859 minimum -0.447122 -0.222921 -0.280195 -0.221203 -0.195488 -0.245601 -0.245390 -0.240469 std. dev. 0.110172 0.036991 0.060911 0.036843 0.066295 0.043721 0.047034 0.054451 skewness 0.681695 -1.609310 -0.806945 -2.240944 0.401592 -1.563778 -1.502868 -0.629307 kurtosis 13.53196 10.36139 6.290208 14.85418 4.268968 9.276804 8.854649 7.130637 jarque-bera 944.5410 540.6032 112.4771 1345.099 18.88885 411.8815 362.7326 156.1625 probability 0.000000 0.000000 0.000000 0.000000 0.000079 0.000000 0.000000 0.000000 sum 1.369365 0.754279 1.822367 0.796774 1.157987 0.624119 0.963130 2.219212 sum sq. dev. 2.427590 0.273667 0.742023 0.271480 0.879015 0.382308 0.442434 0.592981 observations 201 201 201 201 201 201 201 201 siita sijap simex sirus sisaf siskor situr siuking siusa mean 0.00076 0.00331 0.00801 0.01048 0.00885 0.00609 0.01117 0.002044 0.004216 median 0.00584 0.00640 0.01104 0.01576 0.01500 0.00973 0.01511 0.005745 0.010500 maximum 0.18303 0.10371 0.13378 0.18220 0.07437 0.15923 0.18698 0.088798 0.126605 minimum -0.26430 -0.21957 -0.19152 -0.38059 -0.19895 -0.17549 -0.22643 -0.214878 -0.224787 std. dev. 0.05173 0.04781 0.04408 0.06527 0.03866 0.04406 0.06350 0.036727 0.039460 skewness -0.98230 -0.80481 -0.72613 -1.32672 -1.56614 -0.78610 -0.31197 -1.777610 -2.044221 kurtosis 7.52766 5.14891 5.21863 9.32853 8.69577 5.72779 4.06934 11.16674 13.05484 jarque-bera 204.010 60.3731 58.8885 394.387 353.869 83.0188 12.8372 664.4323 986.7019 probability 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00163 0.000000 0.000000 sum 0.15346 0.66525 1.61052 2.10651 1.77998 1.22549 2.24573 0.410784 0.847391 sum sq. dev. 0.53529 0.45731 0.38862 0.85205 0.29898 0.38841 0.80657 0.269774 0.311418 observations 201 201 201 201 201 201 201 201 201 descriptive statistics are presented for daily returns based on oil indices and stock indices on the table. the pre-pandemic and pandemic era is divided into the pre-recession period, the crisis period, the post-recession period, the crisis period and the pre-recession period. data on level, risk, standard deviation, evolution over time, and the lowest and peak statistics in the field of descriptive statistics provide an idea. subsequent consecutive crises that have impacted the oil and stock markets, a majority of indices are displaying unfavorable lowest values. series studied permit normality to be tested by the "skewness" and "kurtosis" coefficients as well as the jarque-bera test statistic. the degree of distribution's flatness is measured by the "kurtosis" coefficient. the normal distribution follows as distribution when it equals three. a value of coefficient fewer than 3 for kurtosis indicates a distribution is more flattering than a normal distribution, while a value more significant than 3 suggests a leptokurtic distribution. the skewness coefficient measures the degree of distribution asymmetry. the distribution skews to the left when this coefficient is adverse, and it skews to the right when it is affirmative. at zero, the distribution being balanced suggests it follows a normal distribution. the null hypothesis of the jarque-bera test for the normality of the distribution is the normality itself of data. an estimated value of the k-squared statistic that is larger than the listed value of the test statistic leads to the rejection of this hypothesis. 5. empirical findings 5.1. stationarity test: augmented dickey-fuller (adf) to understand how data changes over time, we first need to make sure it's behaving in a predictable way. this is called checking for "stationarity." we use a special test called the adf test which helps us figure out if our data is stable or not, even if it looks like it's changing a lot. this test helps us get a clearer picture of whether our data is reliable for studying changes. over time. asian business research journal, 2025, 10(7): 36-49 40 © 2025 by the authors; licensee eastern centre of science and education, usa table 2. stationarity test : augmented dickey-fuller (adf). siaus sibr sica sich sifr siger siind siita adf test in level -11.31345 0.0000*** -10.05088 0.0000*** -11.21867 0.0000*** -9.221951 0.0000*** -11.46416 0.0000*** -11.54625 0.0000*** -10.23061 0.0000*** -11.81599 0.0000*** adf test first difference -11.834430.0000*** -11.73217 0.0000*** -12.579500.0000*** -15.51194 0.0000*** -9.692905 0.0000*** -9.796026 0.0000*** -12.88532 0.0000*** -12.51546 0.0000*** sijap simex sirus sisaf siskor situr siuking siusa adf test in level -11.14152 0.0000*** -11.47700 0.0000*** -9.894833 0.0000*** -11.99281 0.0000*** -10.92912 0.0000*** -10.89029 0.0000*** -12.49528 0.0000*** -11.14580 0.0000*** adf test first difference -13.55871 0.0000*** -14.42846 0.0000*** -15.15411 0.0000*** -9.895130 0.0000*** -9.688681 0.0000*** -13.05923 0.0000*** -13.03901 0.0000*** -14.29963 0.0000*** 5.2. vector auto regression (var) test vector autoregression (var) is a powerful tool for understanding how different economic factors, like inflation, unemployment, and interest rates, affect each other over time. it's like a system of equations that shows how these factors are connected. for example, if inflation goes up, var can help us see how that might affect unemployment and interest rates. it doesn't assume one factor causes another, but instead looks at how they all influence each other. this makes var a flexible tool for understanding the complex relationships in the economy. table 3. vector auto regression (var) test. siaus sibr sica sich sifr siger siind siita lag (1) (0.682820) 2.98678*** (0.494898) 3.51950*** (1.194674) 5.21337*** (0.183159) 1.44766 (0.635556) 3.46356*** (0.618769) 3.67097*** (0.441845) 2.92883*** (0.478478) 3.09398*** lag (2) (-0.519184) -2.24309** (-0.206186) -1.44985 (-0.388098) -1.59487 (-0.09351) -0.74253 (-0.485421) 2.60233*** (-0.3781) -2.19122** (-0.371497) -2.4711*** (-0.348812) -2.22377** sijap simex sirus sisaf siskor situr siuking siusa lag (1) (0.386582) 2.28087** (0.47173) 2.5147*** (0.441596) 3.38716*** (1.003438) 4.91113*** (0.823615) 4.53435*** (0.328258) 2.59288*** (0.805366) 3.7126*** (0.904141) 4.34468*** lag (2) (-0.217494) -1.2714 (-0.364704) -1.92433* (-0.096434) -0.71955 (-0.190675) -0.87921 (-0.292946) -1.55113 (-0.189414) -1.47995 (-0.434526) -1.93969* (-0.472278) -2.21189** note(s): ***, **, * statistical significance at 1%, 5 and 10% levels, respectively the analysis of the var model shows that a one-period delay in oil prices has a positive and significant impact on stock market returns for most countries, including australia, brazil, canada, france, germany, india, italy, japan, mexico, russia, south africa, south korea, turkey, the united kingdom, and the united states, except for china. this finding is consistent with previous research by roberto et al. (2017). however, when the oil price is delayed by two periods, the impact on stock market returns becomes negative and significant for a smaller group of countries, including australia, germany, india, italy, and the united states. for the other countries, the impact is negative but not statistically significant. this finding aligns with previous studies by filis et al. (2011) and khan et al. (2019). it's important to note that the results for the first lag (oneperiod delay) are generally more relevant than those for the second lag (two-period delay). this is because the immediate consequences of oil price shocks are fully reflected in the first lag, while these effects are diminished in the second lag. 5.3. analysis of the correlation between crude price and g20 stock market indexes the bekk model, proposed by baba, engle, kraft, and kroner (1995), is known as the highest exhaustive and highest convoluted model of the models considered for this study in terms of computation. results in chart 8 illustrate the effects of incorporating oil price shocks on the performance of the various stock indices in our selected dual-variable bekk-garch model. the period has been categorized into five unique sub-periods. the first interval spans from january 1, 2004, to june 30, 2007, while the following interval spans from july 1, 2007, to december 31, 2009, followed by another interval encompassing from january 1, 2010, to december 31, 2014, then another interval from january 1, 2015, to december 31, 2019, and the ultimate interval occurs from january , 2020, to january, 2021. this paper examined the volatility transmission between the oil and stock markets of 16 g20 countries divided into oil exporting and comprising nations over five unique sub-periods. the transmission is quantified in two phases through 𝛼2,1and variance is represented by𝛽2,1. three diverse significance levels are studied: one percent, five percent, and several percent. arch coefficients measure the postponed shocks impact while garch explains how volatility affects the equation. the assessed results of bekk-garch analysis show that both arch and garch effects are substantial in the oil and stock markets. asian business research journal, 2025, 10(7): 36-49 41 © 2025 by the authors; licensee eastern centre of science and education, usa 5.3.1. analysis of results for importing countries table 4. analysis of results for importing countries. period 1 : 2004-2007 before the subprime crises countries australia brasil canada china france germany india italy 𝛼1,2 (0.169597216) 0.01518284** (0.05877782) 0.61825417 (0.116275985) 0.17805003 (-0.06208051) 0.49479682 (0.03767483) 0.65624020 (-0.09130473) 0.41291163 (0.141097745) 0.21186811 (0.114155928) 0.22540396 𝛼2,1 (1.654782729) 0.00968508*** (-0.36805293) 0.06716381* (0.390316497) 0.62253815 (-0.97635438) 0.0006742*** (-0.2300705) 0.74310132 (-0.2394867) 0.64728079 (-0.282727397) 0.32347168 (-0.514984745) 0.38707364 𝛽1,2 (0.202658597) 0.00841906*** (-0.1804604) 0.0000031*** (0.054327556) 0.43950938 (-0.59129083) 0.0000439*** (-0.00103684) 0.98838929 (-0.04101038) 0.41504148 (-0.091468981) 0.45663033 (-0.164737136) 0.14092334 𝛽2,1 (2.463787408) 0.00081607*** (0.26959268) 0.0014616*** (-1.076989534) 0.1912885 (-0.58214004) 0.0094340*** (-1.64296696) 0.0072258*** (-1.03020196) 0.04714491** (0.219497394) 0.39915079 (0.154874933) 0.91892794 period 2 : 2008-2009 the subprime crises countries australia brasil canada china france germany india italy 𝛼1,2 (-0.088484494) 0.23127608 (-0.04852523) 0.56726119 (0.03981804) 0.55905529 (0.16391328) 0.0095533*** (-0.21192893) 0.04594817** (-2.47572676) 0.0000000*** (-0.9028) 0.00000000*** (-8.2139e-03) 0.00000001*** 𝛼2,1 (-1.019532424) 0.00008945*** (-1.07727442) 0.0001345*** (1.678801628) 0.00118638*** (-0.47705689) 0.30095772 (0.43774818) 0.04168180** (0.92545761) 0.0000000*** (0.1327) 0.00000000*** (0.2469) 0.00000000*** 𝛽1,2 (-0.16821894) 0.19645864 (-0.11805167) 0.45999088 (-0.206672244) 0.00072169*** (0.201490849) 0.21488241 (-0.38726908) 0.0000000*** (-0.01461998) 0.06138959* (0.4002) 0.00000000*** (0.2402) 0.00000000*** 𝛽2,1 (-0.646021254) 0.02412485** (-0.44903077) 0.08148306* (1.087060641) 0.04658286** (1.01273258) 0.07657895* (0.6721346) 0.0000000*** (0.00513251) 0.1270042 (0.1955) 0.00000000*** (0.2035) 0.00000309*** period 3 : 2010 -2014 after the subprime crises and on the sovereign debt crisis countries australia brasil canada china france germany india italy 𝛼1,2 (0.132698966) 0.07887568* (-0.48163288) 0.0002231*** (0.023698546) 0.72654426 (-0.10363660) 0.33341714 (0.23725172) 0.03931942** (0.34502674) 0.0021888*** (-0.252033511) 0.00406265*** (0.417888805) 0.00023534*** 𝛼2,1 (0.109813916) 0.76098620 (0.58939818) 0.0059907*** (1.177612153) 0.00032657*** (0.77049669) 0.01041155** (1.87535075) 0.0071684*** (2.31959778) 0.0000000*** (0.732344154) 0.00091239*** (0.082522089) 0.77651123 𝛽1,2 (0.246884312) 0.00094687*** (0.28028483) 0.17080017 (0.276047027) 0.00066263*** (-0.14903503) 0.52190468 (0.03564804) 0.77842593 (-0.00986098) 0.91148162 (-0.148293055) 0.03431159** (0.345025627) 0.00426592*** 𝛽2,1 (-1.317857651) 0.00000000*** (-0.90497577) 0.0019739*** (-0.513797813) 0.07081295* (-0.22580676) 0.65567468 (0.67706337) 0.0000343*** (0.57412898) 0.0000004*** (0.331816235) 0.03092979** (-0.814393585) 0.00010788*** asian business research journal, 2025, 10(7): 36-49 42 © 2025 by the authors; licensee eastern centre of science and education, usa period 4 : 2015-2019 befor covid-19 countries australia brasil canada china france germany india italy 𝛼1,2 (-0.208841593) 0.00000006*** (-0.00994103) 0.91445574 (-0.157164953) 0.01063880** (-0.1761913) 0.04758599** (-0.17555448) 0.0005954*** (-0.2085324) 0.0004671*** (0.012373638) 0.79718606 (-0.286751766) 0.04930797** 𝛼2,1 (2.119996952) 0.00000139*** (0.69774481) 0.0015485*** (1.771425028) 0.00010945*** (-0.66997731) 0.01138941** (1.74552908) 0.0000027*** (1.45438818) 0.0000213*** (-0.101279972) 0.82270552 (1.300753303) 0.00000324*** 𝛽1,2 (-0.006792305) 0.80154871 (-0.35277126) 0.0000001*** (0.188201227) 0.00007816*** (-0.19042913) 0.04964350** (0.3553212) 0.0000069*** (-0.22824673) 0.0021967*** (-0.138685438) 0.02300313** (0.028248952) 0.85308336 𝛽2,1 (0.175208863) 0.66110155 (0.64265948) 0.0000206*** (-0.515641162) 0.62058348 (0.57775992) 0.0005418*** (-1.83542528) 0.0000001*** (1.23724630) 0.07175053* (2.465201662) 0.00000000*** (-0.757196580) 0.48959280 period 5 : 2020 -2021 the covid-19 countries australia brasil canada china france germany india italy 𝛼1,2 (-0.477091562) 0.00000000*** (0.049127390) 0.12419103 (-0.462383259) 0.00000000*** (-0.03684975) 0.29608677 (-0.38278084) 0.0000000*** (0.02626215) 0.0000000*** (-0.085750679) 0.00000000*** (-0.255296741) 0.00000000*** 𝛼2,1 (4.332756787) 0.00000000*** (0.62702503) 0.0005431*** (6.990584107) 0.00000000*** (3.56421437) 0.0000000*** (5.80258697) 0.0000000*** (3.0944353) 0.0000000*** (3.848406714) 0.00000000*** (6.736233798) 0.00000000*** 𝛽1,2 (-0.012216566) 0.30846432 (0.01063818) 0.56761257 (-0.009020603) 0.00000000*** (-0.00046059) 0.96708326 (-0.01053482) 0.0000000*** (0.11371150) 0.0000000*** (0.047138925) 0.00000000*** (-0.023758603) 0.00000000*** 𝛽2,1 (0.053369942) 0.00015037*** (0.06946938) 0.32793668 (0.077423311) 0.00000000*** (1.32254806) 0.0000000*** (0.0472128) 0.0000000*** (0.5113333) 0.0000000*** (0.559194167) 0.00000000*** (0.626585326) 0.00000000*** note(s): ***, **, * statistical significance at 1%, 5 and 10% levels, respectively. asian business research journal, 2025, 10(7): 36-49 43 © 2025 by the authors; licensee eastern centre of science and education, usa this study examined how changes in oil prices affected stock market returns in various oil-importing countries. during a period of rising oil prices, the study found that oil prices had a significant impact on stock market performance. the analysis, using a statistical model called bekk-garch, showed that before the 2008 financial crisis, oil price changes influenced both the average return and the volatility of stock markets in australia, brazil, china, and italy. this means that oil price fluctuations affected both the overall direction and the riskiness of stock markets in these countries. however, in france and germany, oil price changes only affected the volatility of the stock market, not the average return. this suggests that while oil price fluctuations increased risk in these countries, they didn't necessarily lead to higher or lower overall stock market returns. overall, the study found that the impact of oil price changes on stock markets varied across different oilimporting countries, with some experiencing both positive and negative effects. crude oil is a very important commodity that has a big impact on the economy. when oil prices go up, it costs more to produce goods and services, as well as to transport things and heat homes. this can lead to higher prices for consumers, which can make them buy less. when people buy less, it can hurt businesses, make people less confident about the economy, and have a negative impact on the overall economy. there are a few reasons why oil prices can affect the stock market. one reason is that the value of a company's stock is based on how much money it is expected to make in the future. if oil prices go up, it can cost companies more to operate, which could reduce their profits. this could lead to lower stock prices. however, higher oil prices could also mean that companies that produce oil will make more money, which could lead to higher stock prices. studies have shown that there is a connection between oil prices and stock market prices. this means that changes in oil prices can affect the stock market. this is similar to what researchers malik and ewing (2009) and arouri and nguyen (2010) found in their studies. our study found no evidence of transmission from oil markets to stock markets in most of the countries we examined. this aligns with previous research by cong et al. (2008) and jammazi and alouli (2010). however, during the second period of our study, which coincided with the global financial crisis, we observed a significant impact on oil markets. the price of crude oil surged from $96 in january 2008 to $144 in july, likely due to the subprime crisis and its effect on oil supply. this sharp increase affected industries heavily reliant on fuel.the combination of the global economic crisis and efforts by major oil-consuming countries to reduce their dependence on oil led to a dramatic drop in oil prices, reaching as low as $32 per barrel. our analysis revealed that this period saw a transmission of effects from oil markets to stock markets in all g20 oil-importing countries, both in terms of average price and volatility. interestingly, the transmission was negative for australia, brazil, and china, while it was positive for the other countries. during a period when oil prices rose to their highest point in july 2008, the impact on stock markets was expected to be positive. this was because the price increase was driven by strong global demand for oil. however, things changed after mid-2008 when the global financial crisis hit. the crisis made financial markets around the world more connected, and the relationship between oil prices and stock markets in oil-importing countries became stronger. as the crisis deepened, both the stock market and the oil market experienced a downturn, leading to a negative impact on stock markets. the price of oil rose to $80 per barrel in the early 2000s. this was partly due to oil-producing countries cutting back on production to deal with economic problems. the global economy improved in 2010, which also helped push oil prices higher. however, things changed after mid-2008. the financial crisis that year made the world's financial markets more connected. this led to a stronger relationship between oil prices and stock market prices. the crisis caused stock markets to decline and also led to a sharp drop in oil prices. research shows that changes in oil prices can affect stock markets, especially in countries that import a lot of oil. this is similar to a study by nazlioglu and al. (2015). they found that oil price changes affected financial markets before the 2008 crisis. after the crisis, they found that financial market problems could also affect oil prices. in 2015, the price of oil plummeted to $50 per barrel due to a surplus of oil, mainly from increased production in the united states. even though opec countries kept their production levels the same, the price fell even further, reaching below $30 per barrel. however, a few months later, the price started to rise slightly after some oil-producing countries decided to cut back on production. this period saw a significant impact on both the oil and stock markets. the volatility in the oil market directly affected the stock markets of many oil-importing countries.the global oil price experienced a dramatic decline in mid-2014. the price of brent crude oil dropped from $114 per barrel in june 2014 to $28 per barrel in february 2016, a decrease of over 70%. this sharp drop was caused by a combination of factors: so, the rapid growth of north american shale oil production, fueled by technological advancements, led to a surplus of oil in the market and the slow economic growth in many countries resulted in a decrease in the demand for crude oil. in essence, the combination of too much oil and not enough demand drove down the global oil price.the year 2020 saw a major global crisis with the emergence of the covid-19 virus. this pandemic caused a worldwide slowdown, with economies shrinking rapidly. the price of oil plummeted to a very low level, falling below $20 per barrel. this was particularly concerning for countries that rely heavily on oil revenue. studies have shown a strong connection between oil prices and stock market performance, especially for countries that import oil, like those in the g20. asian business research journal, 2025, 10(7): 36-49 44 © 2025 by the authors; licensee eastern centre of science and education, usa 5.3.2. results analysis for exporting countries table 5. analysis of results for exporting countries. period 1: 2004-2007 before the subprime crises countries japan mexico russia south africa south korea turkey united kingdom united states 𝛼1,2 (-0.078614113) 0.04683363** (0.118139173) 0.11838453 (0.090898471) 0.60764701 (0.024565310) 0.62296385 (-0.015471428) 0.86654871 (0.298644868) 0.04347037** (0.093390965) 0.28751143 (0.068722648) 0.16479182 𝛼2,1 (0.629441175) 0.04228121** (-2.046654616) 0.00000000*** (-0.570704965) 0.05499495* (-0.299380340) 0.52687744 (0.989177744) 0.00065098*** (0.081494083) 0.75291683 (0.482239577) 0.44731582 (1.631732194) 0.00498912*** 𝛽1,2 (0.050338795) 0.00675580*** (0.012776838) 0.85571849 (0.560832485) 0.12375177 (0.296423264) 0.00000000*** (0.095708620) 0.23417511 (-0.198037412) 0.04473297** (-0.002182587) 0.98441788 (0.043389611) 0.02811906** 𝛽2,1 (0.045329318) 0.81567868 (0.000022833) 0.66588500 (-0.793421135) 0.00011313*** (-1.524642491) 0.00000215*** (-0.083462599) 0.68882748 (0.360575869) 0.05075932* (1.421263015) 0.10750330 (-0.243810237) 0.34272385 period 2 : 2008-2009 the subprime crises countries japan mexico russia south africa south korea turkey united kingdom united states 𝛼1,2 (0.736870) 0.00000000*** (1.905891351) 0.00000000*** (-0.4828) 0.02175166** (-0.255682150) 0.44298475 (2.872868155) 0.00000000*** (1.704645662) 0.00000000*** (0.733566370) 0.00956585*** (0.990075141) 0.00000000*** 𝛼2,1 (-1.178209) 0.00000000*** (-3.870827938) 0.00000000*** (0.7983) 0.00000000*** (0.226935724) 0.39406317 (-2.185993924) 0.00000000*** (-1.249361306) 0.00000000*** (0.000427886) 0.88273101 (-0.685673638) 0.00000000*** 𝛽1,2 (-0.275630) 0.03295570** (0.071544855) 0.00000000*** 0.4162 0.00000000*** (0.687851839) 0.00000000*** (0.184002179) 0.00000000*** (-0.036585403) 0.00000000*** (0.000238667) 0.99863318 (-0.059910751) 0.26308020 𝛽2,1 (-0.000030) 0.00000000*** (0.051779347) 0.00000000*** (0.4036) 0.00000000*** (0.047515482) 0.00000000*** (-0.051367532) 0.00000000*** (-0.111789730) 0.00000000*** (-0.000152489) 0.87345512 (0.002644439) 0.05328588/ period 3 : 2010 -2014 after the subprime crises and on the sovereign debt crisis countries japan mexico russisa south africa south korea turkey united kingdom united states 𝛼1,2 (0.235484924) 0.00415880** (0.129175514) 0.31332353 (0.085619930) 0.53628264 (0.269305965) 0.00000008*** (0.274816236) 0.00304131*** (-0.305297434) 0.01145705** (-0.024634476) 0.57389825 (0.010687475) 0.88090202 𝛼2,1 (0.741362220) 0.00259140*** (0.946708199) 0.00082963*** (-1.056231161) 0.00086158*** (2.148355505) 0.00001024*** (1.523403063) 0.00000002*** (0.778437494) 0.00002074*** (0.897276963) 0.00015000*** (1.397380759) 0.00000475*** 𝛽1,2 (-0.037826041) 0.67119522 (-0.335788406) 0.00067670*** (-0.624162719) 0.00473837*** (-0.101695146) 0.08499822* (0.018345071) 0.88795741 (-0.138625772) 0.47739579 (0.411457872) 0.00000000*** (0.115832802) 0.15014561 𝛽2,1 (-0.317796756) 0.14723725 (0.780934117) 0.00551131*** (0.350511635) 0.38615008 (-0.670527977) 0.01879517** (-0.655047913) 0.08504442* (-0.373070609) 0.34907580 (-1.920249931) 0.00000000*** (0.443486676) 0.00673259*** asian business research journal, 2025, 10(7): 36-49 45 © 2025 by the authors; licensee eastern centre of science and education, usa note(s): ***, **, * statistical significance at 1%, 5 and 10% levels, respectively. period 4 : 2015-2019 befor covid-19 countries japan mexico russia south africa south korea turkey united kingdom united states 𝛼1,2 (-0.333458450) 0.00000002*** (0.091482568) 0.03534234** (-0.130495291) 0.01709291** (0.052813212) 0.54296427 (-0.144886642) 0.01331436** (0.204168958) 0.01163456** (-0.090327266) 0.01633754** (-0.184766909) 0.00029484*** 𝛼2,1 (1.260740101) 0.00010189*** (-1.067431292) 0.01639655** (0.191924464) 0.61075365 (-1.839373478) 0.00010838*** (-1.252690998) 0.00082615*** (-0.585282064) 0.04533999** (-0.122378159) 0.87175971 (2.162645372) 0.00054887*** 𝛽1,2 (-0.119562008) 0.10412902 (0.009211532) 0.61907059 (-0.032591921) 0.81322184 (0.150708089) 0.06148021* (0.111312674) 0.28305473 (0.494753180) 0.00000000*** (-0.182813531) 0.00015196*** (-0.056742643) 0.28453314 𝛽2,1 (0.645365505) 0.12287292 (-0.395127970) 0.02962722** (1.533809029) 0.06161001* (-1.131276466) 0.04189184** (1.491161958) 0.00848143*** (1.287563812) 0.00249113*** (2.550829986) 0.00000140*** (2.585720915) 0.00000100*** period 5 : 2020 -2021 the covid-19 countries japan mexico russia south africa south korea turkey united kingdom united states 𝛼1,2 (-0.223829) 0.00000000*** (0.045375397) 0.14050291 (-0.452885299) 0.00000000*** (-0.428430313) 0.00000000*** (-0.144246) 0.00000000*** (-0.323017340) 0.00000000*** (-0.264343875) 0.00000000*** (-0.022242536) 0.00000000*** 𝛼2,1 (2.400173) 0.00000000*** (0.838961721) 0.00056712*** (2.550117657) 0.00000000*** (5.114567261) 0.00000000*** (3.894208) 0.00000000*** (3.780508237) 0.00000000*** 6.522721173) 0.00000000*** (4.657193488) 0.00000000*** 𝛽1,2 (-0.006642) 0.00000000*** (-0.187096122) 0.00022621*** (-0.075075329) 0.00000000*** (-0.055198048) 0.00000000*** (-0.003750) 0.00000000*** (0.022203886) 0.00024299*** (0.012380458) 0.25204329 (0.041809063) 0.00000019*** 𝛽2,1 (0.529698) 0.00000000*** (0.344380352) 0.36964152 (0.423503370) 0.00000000*** (0.626387100) 0.00000000*** (0.894262) 0.00000000*** (-0.000035945) 0.98698921 (1.397264296) 0.00001365*** (0.866032057) 0.00000000*** asian business research journal, 2025, 10(7): 36-49 46 © 2025 by the authors; licensee eastern centre of science and education, usa during the subprime mortgage crisis, oil prices and stock markets in oil-exporting countries like japan, mexico, russia, south korea, the united states, turkey, and south africa were closely linked. this means that changes in one market often caused changes in the other. the strength of the country's economy influenced how this connection worked. sometimes, a rise in oil prices led to a drop in stock prices, and vice versa. however, the overall impact was similar across these countries during this period. several factors contributed to this close relationship. the housing boom in the early 2000s created a positive atmosphere for global markets, including both oil and stocks. this led to higher prices in both areas. additionally, events like the 9/11 attacks and the iraq war caused uncertainty in all economies, leading to similar movements in stock markets and a stronger connection to oil prices. finally, china's rapid economic growth and its impact on global trade created a sense of optimism in stock markets worldwide, regardless of the country's origin. during the subprime mortgage crisis, oil prices and stock markets generally moved in opposite directions for most oilexporting countries. the only exception was the united kingdom. the global financial crisis of 2008-2009 had a similar impact on all stock markets, causing them to move together. during this period, oil prices and stock markets generally moved in opposite directions, with both average prices and price fluctuations being negatively affected. the crisis was triggered by the widespread issuance of risky us mortgage loans, which led to a global financial shock. this shock can be seen as an oil price shock, as it reduced global demand for oil. after the subprime crisis, the sovereign debt crisis in europe further impacted oil and stock markets. this crisis affected many european countries and led to a significant connection between oil prices and stock markets for most countries. this study looked at how oil price changes affect stock market volatility, both before and during the covid19 pandemic. the results show that oil price volatility and stock market volatility are strongly connected, and this connection is even stronger during the pandemic. this means that changes in oil prices have a bigger impact on stock markets during the pandemic. the study found that the relationship between oil price volatility and stock market volatility is stronger during the pandemic than before. this suggests that the covid-19 outbreak has made the global financial markets more interconnected and vulnerable to shocks. other studies have also found that the pandemic has increased the risk of financial contagion, meaning that problems in one market can quickly spread to others.this research aligns with previous studies that found a connection between oil market changes and emerging stock markets. overall, our findings show that oil price volatility directly impacts stock market returns in many countries. the influence usually flows from oil to stocks, not the other way around. however, there are differences between countries, likely due to the varying economic situations of emerging markets. it's important to remember that this research was conducted during a period of significant financial instability. this means that the impact of oil on stock markets might have been stronger than usual due to the general uncertainty and volatility in the global economy. asian business research journal, 2025, 10(7): 36-49 47 © 2025 by the authors; licensee eastern centre of science and education, usa figure 1. dynamic conditional correlation between oil price and stock returns of importing countries. asian business research journal, 2025, 10(7): 36-49 48 © 2025 by the authors; licensee eastern centre of science and education, usa figure 2. dynamic conditional correlation between oil price and stock market returns for oil exporting countries. we studied how the oil price (wit oil index) and stock markets in g20 countries moved together between 2004 and 2021. this period included several major crises, like the 2008 financial crisis, the european debt crisis, and the covid-19 pandemic. we looked at 16 g20 countries with available data, focusing on 8 oil-exporting and 8 oil-importing countries. we used a statistical model called dcc-garch (1,1) to understand how the relationship between oil prices and stock markets changed over time. this model is helpful because it allows the volatility (how much prices change) and the correlation (how much they move together) to vary over time. our results clearly show the impact of the major crises on both oil-exporting and oil-importing countries. we can see how these events affected the relationship between oil prices and stock markets. the 2008-2009 financial crisis was a major event that shook the world. it started with problems in the housing market in 2006, where many people couldn't pay their mortgages. this spread throughout the financial system, causing a global crisis. one big effect was a drop in the prices of oil and natural gas. oil went from $133.88 a barrel to $39.09, and natural gas went from $12.69 to $4.52. looking at the period when the housing crisis was at its worst 2007, we see some interesting things. for countries that import oil, lower oil prices were good news. this is because they could buy oil cheaper, which helped their businesses and stock markets. on the other hand, countries that export oil were hurt by the lower prices. they made less money from selling oil, which negatively affected their stock markets. market movements are interconnected, and their relationships change over time. during crises, like the 2010 european sovereign debt crisis, markets tend to move more closely together. this was also seen in the 1980s latin american debt crisis, which had a lasting negative impact on the region. the current situation in europe is concerning because it shares similarities with past crises. one major worry is that countries that rely heavily on exports could face a high risk of default if oil prices fall. this is because lower oil prices often lead to higher interest rates, which can make it harder for these countries to manage their finances. during the european sovereign debt crisis (2010-2016), the gap between interest rates on government bonds in different european countries widened significantly. this happened at the same time as major events in the middle east and a sharp drop in oil prices (almost 75%) between 2014 and 2015. after accounting for economic factors, our research shows that the widening of these interest rate gaps was strongly linked to increased demand for safe assets due to the instability in the middle east and north africa (mena) region. the oil price crash also caused a decline in global demand, which had a negative impact on interest rate gaps, especially in countries on the edge of the eurozone (emu periphery). this is likely because these countries are more sensitive to disruptions in the oil market. finally, our findings suggest that changes in the supply of goods and services had little impact on interest rate gaps during this period, except for some positive correlations in belgium and france. the arab spring had a significant impact on oil prices. it caused people to buy more oil than usual, which is called a "precautionary demand shock," because they were worried about future supply disruptions. at the same time, actual problems with oil production in the region also led to supply shocks. interestingly, only belgium and france saw their bond prices change in response to these supply shocks. this is likely because they have strong trade relationships with oilproducing countries in the arab world. for example, france imported a huge amount of oil from north africa and the middle east in 2015.when oil prices dropped between 2014 and 2015, it was mainly due to a combination of factors: people buying less oil (aggregate demand shock) and problems with oil production (supply shock). during this time, bond prices didn't change much in response to the precautionary demand shock. however, they did move in the way we expected when oil prices fell due to lower demand. the fact that bond prices didn't react much to supply shocks during this period suggests that these shocks weren't very important for financial markets. this study examined the relationship between crude oil prices and stock market prices before and during the covid-19 pandemic. using a technique called cross wavelet transform, the researchers found that oil prices and stock prices move together, especially in the short-term (high-frequency). this means that when oil prices go up, stock prices tend to go up as well, and vice versa. however, the study also found that this relationship was weaker in the long-term (low-frequency) during the pandemic. this suggests that the short-term connection between oil and stock markets became more important during the crisis. another study by salisu et al. (2020) found that oil prices influenced stock prices before the pandemic, but after the pandemic, the relationship became two-way. this means that both oil and stock prices affected each other. the study also noted that oil prices were more volatile than stock prices both before and during the pandemic. however, all stock markets showed positive returns, even during the crisis, and these returns were actually higher during the pandemic. 6. conclusion oil prices have been very unpredictable lately, going up and down quickly. this is more extreme than we've seen since the oil crisis of 1979. these big changes in oil prices have a big impact on the economies and financial markets of countries that buy and sell oil. asian business research journal, 2025, 10(7): 36-49 49 © 2025 by the authors; licensee eastern centre of science and education, usa the oil industry is very important and affects many markets, especially the financial market. the financial market also affects the oil market, so they are connected. this chapter looks at how the financial markets of countries that export and import oil, as well as the financial markets of the g20 countries (which include the biggest oil producers and consumers), are all connected. the goal is to understand how much the price of oil can make stock markets in some g20 countries more likely to have problems. the study found that both oil and stock prices had unusual patterns, with more extreme values than expected (asymmetry and leptokurtosis). this research investigated how changes in oil prices affect stock markets in 16 g20 countries. we used two different models, bekk-garch and dcc-garch, to analyze this relationship. to get a clearer picture, we divided the study period into five smaller periods and separated the countries into oil exporters and importers. this helped us understand how oil price volatility impacts the economies of major oil producers and consumers differently. our analysis revealed that the relationship between oil prices and stock returns is dynamic and changes over time. we observed that the correlation between stock returns tends to increase during periods of crisis. furthermore, we found strong evidence of a direct transmission of volatility between oil and stock markets in many of the countries studied. generally, shocks and volatility tend to flow from oil markets to stock markets more often than the other way around. however, there are differences between countries, which is expected given the diverse nature of their economies. references abdulrahaman. 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(2012). measuring contagion between energy market and stock market during financial crisis: a copula approach. energy economics, 34(5), 1435–1446. 14 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 11, 14-24, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.688 © 2025 by the authors; licensee eastern centre of science and education, usa cost-effectiveness of implementing sustainable practices and technologies in warehousing operations albert tan1  siti norida wahab2 florian gerth3 1,3asian institute of management, school of business, makati, manila, philippines. 2university teknologi mara, faculty of business and management, malaysia. ( corresponding author) abstract this research aims to investigate the economic viability and financial implications of adopting green warehousing practices. it would involve analyzing the upfront costs, operational savings, return on investment, and other financial aspects associated with implementing sustainable initiatives in warehouse operations. additionally, the research would explore how these practices influence the long-term sustainability and competitive advantage of organizations. the findings could provide valuable insights for businesses considering green warehousing and contribute to decision-making processes in terms of investment prioritization and resource allocation. keywords: lean inventory system, sustainability, warehousing. 1. introduction 1.1. research question "what is the cost-effectiveness of implementing sustainable practices and technologies in warehousing operations, and how does it impact the financial performance and long-term sustainability of organizations?" 2. literature review the current literature underscores the significance of sustainable practices within warehouses, detailing the factors influencing sustainable development levels and elucidating the key components of a sustainable warehouse model. warehousing encompasses a spectrum of activities, including receiving, storage, sorting, and material handling, as well as the requisite infrastructure for goods protection (saderova et al., 2020). functioning as a pivotal value-added operation within organizational processes, warehouses serve as the crucial link between production lines and end consumers, significantly impacting delivery performance and customer satisfaction (dubey et al., 2017; jie et al., 2015). the roles of warehouses have evolved to encompass diverse functions such as manufacturing, assembly, and reverse logistics, attributing increased importance to warehouse operations for enhancing overall organizational performance and fortifying the sustainability of supply chains and logistics (bartolini et al., 2019; hamdy et al., 2022). despite encountering various sustainability challenges, improvements in warehousing sustainability have received limited attention, necessitating strategic decisions by organizations to address these issues (ali and phan, 2022). primarily motivated by economic sustainability, most warehouse decisions prioritize reducing inventory levels, minimizing carrying costs, and optimizing order fulfillment to elevate customer service standards (shi et al., 2019). however, the exploration of warehouse sustainability, especially concerning environmental aspects, remains understudied (ahmadi et al., 2017). therefore, research in this domain is crucial not only to address sustainability challenges in warehousing decisions but also to enhance the measurement of warehouse sustainable performance (staudt et al., 2015). organizations are urged to expedite the adoption of environmentally and socially responsible warehouse operations to counter the escalating negative impacts on environmental, social, and economic aspects attributed to warehouse activities (zuchowski, 2015; hu et al., 2022; ishizaka et al., 2022). sustainable warehousing emerges as a strategic solution to mitigate adverse sustainability impacts, as it holistically considers economic, environmental, and social factors in pursuit of improved sustainable performance (hsu et al., 2013). notably, there is a scarcity of comprehensive sustainable warehouse models and frameworks in the literature (malinowska et al., 2018). nevertheless, certain models, such as marchant's three-stage sustainable warehouse model, emphasize economic, environmental, and social dimensions to guide organizations in minimizing negative sustainability impacts (marchant, 2010). despite these strides, research on sustainable warehouses remains nascent. the prevalent consensus suggests that innovative technologies play a pivotal role in reducing energy consumption, co2 emissions, and greenhouse gas emissions within warehouse operations, thereby offering solutions to mitigate their environmental and social impacts (mostafa et al., 2019; trab et al., 2017; adeseun et al., 2018). further investigation is warranted to https://doi.org/10.55220/2576-6759.688 asian business research journal, 2025, 10(11): 14-24 15 © 2025 by the authors; licensee eastern centre of science and education, usa establish and explore the correlation between environmentally sustainable warehouse operations and the efficacy of sustainable innovative technologies. additionally, these technologies present potential solutions to mitigate unforeseen environmental risks within warehouses (trab et al., 2017; adeseun et al., 2018). research highlights the potential benefits of employing automatic sensors and internet of things (iot) technologies to monitor hvac systems, providing real-time data to warehouse management systems for informed decision-making and operational planning (mostafa et al., 2019). similarly, an iot conceptual model proposed by trab et al. (2017) emphasizes the sharing of warehouse data to effectively monitor and prevent environmental disasters. furthermore, leveraging sensing technologies for environmental monitoring significantly enhances warehousing security and transparency (ding and kaminsky, 2020). various studies emphasize the role of information technologies, resilience, lean principles, agility, continuous improvement practices, sustainable measures, and employee competencies in shaping sustainable warehouse operations (al-talib et al., 2020; manikas et al., 2021; al-refaie et al., 2020; bennett et al., 2017; rahimić et al., 2012), paving the way for comprehensive explorations in this field. identifies several areas where research gaps exist: while there is substantial literature on the benefits of sustainable practices and technologies in warehousing, there's a lack of comprehensive analysis specifically focusing on the cost-effectiveness aspect. research often touches upon the advantages of sustainability but fails to thoroughly quantify and analyze the cost-benefit ratio of implementing these practices. 3. methodology: the study aimed to investigate the cost-effectiveness of integrating sustainable practices and technologies within warehouse operations. an online survey was utilized to gather insights, perceptions, challenges, benefits, and financial implications associated with the adoption of sustainability measures in the warehousing sector. research design: the research employed a survey-based approach to collect data from professionals directly engaged in or knowledgeable about warehouse operations. this method was chosen for its capacity to reach a broad spectrum of industry experts, including warehouse managers, logistics professionals, sustainability officers, and relevant stakeholders. sampling strategy: purposive sampling was utilized to target participants with expertise and experience in warehousing operations. the sample focused on individuals directly involved in decision-making or implementation of sustainable practices within warehouse settings. survey development: the survey questionnaire was structured to encompass both quantitative and qualitative aspects. it covered key areas including: • participants' perceptions and attitudes towards sustainable practices. • challenges faced in implementing sustainability measures, including cost considerations, management support, technological limitations, and resistance to change. • perceived benefits of sustainable practices, such as cost savings, environmental impact reduction, and implications for long-term sustainability and competitive advantage. • inquiries about the perceived impact on financial performance resulting from the adoption of sustainable practices. survey distribution: the survey link was disseminated through various channels including professional networks, industry associations, targeted organizations involved in warehousing, and logistics-related platforms. multiple outreach methods, including email campaigns and social media announcements, were employed to maximize participation. data collection: anonymity and confidentiality of responses were ensured to encourage participants to provide honest and candid feedback. the survey was open for a specified period to gather a significant sample size for analysis. data analysis: quantitative data analysis involved statistical methods, such as descriptive statistics, correlation, and regression analysis, to identify relationships and patterns in quantitative responses. qualitative analysis employed thematic analysis to extract themes and nuanced insights from open-ended questions. ethical considerations: informed consent was obtained from participants before their engagement in the survey. data protection regulations and ethical guidelines were strictly adhered to throughout the research process to safeguard participant information. research outcome: the findings were summarized, providing insights into the cost-effectiveness of sustainable practices in warehousing operations. conclusions and actionable recommendations were drawn based on the research findings, aimed at guiding industry practitioners and stakeholders. 4. findings from the survey 4.1. demographic profile the study gathered responses from a diverse group of 212 participants from china, primarily comprising males (167 respondents) and a smaller representation of females (44 respondents), with one respondent opting not to disclose their gender. in terms of age distribution, the majority fell within the 35 to 44 years bracket (88 respondents, 41.5%), followed by individuals aged 25 to 34 (64 respondents, 30.2%). those aged 45 to 54 constituted 40 respondents (18.9%), while individuals aged 55 and older accounted for 20 respondents (9.4%). the survey captured a significant number of operations managers (145 respondents), reflecting the prominence of this position in the context of warehousing operations. warehousing managers represented 40 respondents, while others, including roles like supply chain manager and sustainability manager, collectively accounted for 27 respondents. concerning years of warehousing operations experience, a substantial number of respondents reported 11 to 15 years of experience (82 respondents), followed by 6 to 10 years (64 respondents). those with 15 or more years of experience totaled 60 respondents, indicating an experienced segment in the warehousing field. a asian business research journal, 2025, 10(11): 14-24 16 © 2025 by the authors; licensee eastern centre of science and education, usa smaller group reported 1 to 5 years of experience (4 respondents), and an even smaller subset had less than one year of experience (2 respondents). table 1. demographic of respondents (n = 212). category n % gender male 167 78.8 female 44 20.8 prefer not to say 1 0.5 age 25 – 34 years old 64 30.2 35 – 44 years old 88 41.5 45 – 54 years old 40 18.9 ≥ 55 years old 20 9.4 position in the organization warehousing manager 40 18.9 operations manager 145 68.4 sustainability manager 1 0.5 supply chain manager 3 1.4 others 23 10.8 years of warehousing operations experience ≤ 1 year 2 0.9 1 – 5 years 4 1.9 6 – 10 years 64 30.2 11 – 15 years 82 38.7 ≥ 15 years 60 28.3 4.2. familiarity with sustainable warehouse practices a total of 212 respondents provided insights into the level of familiarity with sustainable practices and technologies in warehousing operations as shown in figure 1. the majority of participants, 123 respondents, reported being very familiar. this signifies a substantial awareness, indicating that a significant portion of respondents possess a comprehensive understanding of sustainable practices in the context of warehousing. additionally, 21 respondents claimed to be extremely familiar. this suggests a depth of expertise among a subset of respondents who likely possess advanced knowledge and experience in implementing sustainable practices in warehousing. moderate familiarity was reported by 61 respondents, indicating a solid understanding without reaching the highest levels of expertise. this middle ground suggests a considerable portion of participants with a baseline knowledge of sustainable practices but potentially lacking in-depth insights or experience. on the lower end of the familiarity spectrum, only 6 respondents admitted to being somewhat familiar, signifying a basic awareness without a comprehensive understanding. interestingly, only 1 participant reported not being familiar at all with sustainable practices in warehousing. overall, the findings reflect a generally positive trend, with a majority of respondents claiming a high level of familiarity with sustainable practices and technologies in warehousing operations. the distribution across various familiarity levels, from very familiar to not familiar at all, indicates a diverse range of expertise within the surveyed group. this diversity emphasizes the need for targeted educational efforts to bridge gaps in understanding and ensure a more uniform and comprehensive awareness of sustainable practices across the warehousing industry. figure 1. familiarity with sustainable warehouse practices. 4.3. sustainable warehouse practices key benefits the findings from a survey of 212 respondents shed light on the perceived benefits of implementing sustainable practices and technologies in warehousing operations. regulatory compliance emerged as the foremost concern, with a significant majority of 133 respondents emphasizing its importance. this underscores a strong recognition within the surveyed group regarding the need to align warehouse operations with existing regulations, reflecting a commitment to legal and ethical standards. a total of 93 respondents acknowledged the positive impact of sustainable practices on corporate image and reputation. this indicates a growing awareness of the broader business implications associated with environmental responsibility. the acknowledgement of improved corporate image suggests that sustainability is increasingly viewed not just as a regulatory necessity but also as a strategic element influencing a company's overall standing in the eyes of stakeholders and the public. next, cost savings asian business research journal, 2025, 10(11): 14-24 17 © 2025 by the authors; licensee eastern centre of science and education, usa were identified as a key driver by 84 respondents, demonstrating a practical consideration for financial efficiency in warehouse operations. this finding suggests that sustainability initiatives are not only perceived through the lens of compliance or reputation but also as a means to achieve economic benefits, aligning with the notion that environmentally friendly practices can contribute to long-term financial sustainability. moreover, findings from figure 2 also indicated that, reduced environmental impact and energy efficiency were recognized by 72 and 65 respondents, respectively. these results signify a noteworthy consideration of ecological concerns, indicating a growing consciousness about the environmental footprint of warehouse operations. energy efficiency, in particular, suggests a recognition of the importance of optimizing resource use to minimize the environmental impact of energy consumption. surprisingly, only a small subset of respondents (4) identified employee morale and engagement as a priority in the context of sustainable warehousing practices. this finding may suggest a potential gap in understanding the broader societal and organizational benefits associated with a workforce that is engaged and aligned with sustainability goals. the finding highlights a multifaceted perspective on the benefits of sustainable warehousing, encompassing legal compliance, corporate image, cost savings, environmental impact, energy efficiency, and, to a lesser extent, employee engagement. the nuanced responses underscore the need for a holistic approach to sustainability in warehousing operations, considering both regulatory requirements and the broader strategic and societal implications of adopting environmentally conscious practices. figure 2. sustainable warehouse practices key benefits. 4.4. sustainable warehouse practices adoption challenges figure 3 summarizes 212 respondents who provide valuable insight into the perceived barriers and challenges hindering the adoption of sustainable practices and technologies in warehousing operations. the most prominently identified challenge is the high initial investment costs, with 126 respondents expressing concerns about the financial implications of transitioning to sustainable practices. this suggests that the economic burden associated with implementing green technologies remains a significant barrier within the warehousing industry. lack of management support emerged as another substantial obstacle, with 96 respondents highlighting the importance of leadership backing for successful sustainability initiatives. this finding underscores the critical role that management buy-in plays in facilitating the integration of environmentally friendly practices within warehouse operations. moreover, the limited availability of sustainable technologies was a concern for 73 respondents, indicating that the accessibility and variety of eco-friendly solutions might not be meeting the demands of the industry. this challenges stakeholders to enhance the market presence and options for sustainable technologies to encourage widespread adoption. not only that, resistance to change was identified by 66 respondents, reflecting the human aspect of organizational transformation. this resistance may stem from workforce apprehensions about adjusting to new processes or technologies, emphasizing the need for effective change management strategies. furthermore, uncertainty about returns on investment was a concern for 63 respondents, suggesting that some stakeholders may be hesitant to invest in sustainability without a clear understanding of the financial benefits. this underscores the need for transparent communication about the potential long-term gains associated with adopting green practices. only three respondents indicated a lack of awareness and knowledge as a barrier. while this suggests a generally informed group, it also highlights that education and awareness efforts can further contribute to overcoming barriers by ensuring stakeholders are well-informed about the benefits and methods of sustainable warehousing. the findings reveal a complex landscape of challenges faced by stakeholders in adopting sustainable practices and technologies in warehousing operations. addressing these barriers will require a multi-faceted approach, encompassing financial considerations, management support, technological availability, change management strategies, and clear communication of the returns on investment. overcoming these challenges is crucial for advancing sustainability in the warehousing sector and realizing the long-term benefits associated with environmentally conscious practices. asian business research journal, 2025, 10(11): 14-24 18 © 2025 by the authors; licensee eastern centre of science and education, usa figure 3. sustainable warehouse practices adoption challenges. 4.5. sustainable warehouse practices implementation figure 4 demonstrates that a significant 81% of participants reported having conducted a cost-benefit analysis or assessed the return on investment for the implementation of sustainable practices and technologies in their warehouse operations. this majority indicates a widespread recognition among respondents of the importance of evaluating the economic implications associated with adopting environmentally sustainable measures. contrastingly, 19% of respondents, totaling 41 individuals, indicated that they had not conducted a cost-benefit analysis or assessed the return on investment for sustainable practices in their warehouse operations. this minority suggests that there is a subset of participants who may not be actively engaging in a systematic evaluation of the economic feasibility and benefits associated with incorporating sustainable initiatives. this raises questions about the potential reasons behind the lack of analysis in this segment, such as resource constraints, limited awareness, or a different prioritization of factors in decision-making. the high percentage of respondents affirming the conduct of cost-benefit analyses indicates a proactive and strategic approach among the majority. these findings emphasize the increasing importance placed on evaluating the financial implications of sustainability initiatives within the warehouse industry, reflecting a broader trend towards integrating economic considerations with environmental and social responsibilities in business decision-making processes. overall, the results highlight the significance of economic assessments in the adoption and implementation of sustainable practices in warehouse operations. figure 4. sustainable warehouse practices implementation. 4.6. sustainable warehouse practices initiatives the adoption of sustainable practices and technologies in warehouse operations was explored and summarized in figure 5. waste management and recycling programs emerged as the most commonly implemented initiatives, with 98 respondents (24%) incorporating these measures. following closely, water conservation measures were implemented by 96 respondents (24%), indicating a significant emphasis on resource efficiency within the surveyed group. renewable energy generation, including the installation of solar panels and wind turbines, was embraced by 82 respondents (20%), showcasing a notable commitment to clean energy sources. additionally, 65 respondents (16%) implemented energy-efficient lighting and hvac systems, contributing to both cost savings and environmental conservation. sustainable transportation methods were employed by 41 respondents (10%), reflecting a recognition of the importance of eco-friendly logistics in reducing the overall carbon footprint. a smaller subset of 24 respondents (6%) implemented other sustainable practices not specified in the survey options, suggesting a degree of diversity in the approaches taken. overall, the findings underline a widespread adoption of various sustainable practices in warehouse operations, with a focus on waste management, water conservation, renewable energy, energy efficiency, and sustainable transportation. the diversity of implemented measures reflects a multifaceted approach to sustainability within the surveyed industry, addressing environmental concerns and promoting resource efficiency. asian business research journal, 2025, 10(11): 14-24 19 © 2025 by the authors; licensee eastern centre of science and education, usa figure 5. sustainable warehouse practices initiatives. 4.7. sustainable warehouse practices and its effects on financial performance figure 6 determines the impact of implementing sustainable practices and technologies on the financial performance of organizations. a significant majority of 68% (183 respondents) reported that the adoption of sustainable initiatives resulted in increased costs. this suggests that a substantial portion of surveyed organizations incurred expenses associated with the integration of environmentally friendly practices into their operations. conversely, 30% of respondents (81 individuals) reported improved profitability as a result of implementing sustainable practices. this indicates that a notable subset experienced positive financial outcomes, possibly through factors such as enhanced operational efficiency, consumer preferences for sustainable products, or other strategic advantages associated with eco-friendly initiatives. a small fraction of respondents, only 1%, reported reduced operational costs, while an equal percentage indicated no significant impact on financial performance. these findings highlight a diversity of financial outcomes, emphasizing that the relationship between sustainability initiatives and financial performance is complex and can vary among organizations within the surveyed group. overall, the majority reporting increased costs underscores the challenges and potential trade-offs associated with adopting sustainable practices, while the positive impact on profitability for a significant minority suggests that strategic and well-executed sustainability initiatives can yield positive financial results. figure 6. sustainable warehouse practices and its effects on financial performance. 4.8. cost-benefit analysis assessment outcome as shown in figure 7, an examination of the outcomes of cost-benefit analyses concerning certain practices revealed a significant majority of participants, constituting 81%, indicating that they did not undertake such analyses. this suggests a prevailing trend where a considerable portion of respondents may not be actively evaluating the costs and benefits associated with specific initiatives or practices within their respective domains, potentially highlighting a gap in strategic decision-making processes. contrastingly, 19% of participants reported engaging in cost-benefit analyses, showcasing a minority but a noteworthy segment that actively assesses the economic implications of certain practices. this indicates a subset of respondents who prioritize a systematic evaluation of the costs and benefits before implementing specific initiatives, demonstrating a more strategic and analytical approach to decision-making. the survey delved into specific outcomes of the cost-benefit analyses, with a focus on the long-term viability of amenities. respondents considered factors such as reducing electricity costs and utilizing alternative materials for packaging. notably, the findings revealed that incorporating these sustainable practices may result in higher operational costs. this suggests a complex trade-off where certain asian business research journal, 2025, 10(11): 14-24 20 © 2025 by the authors; licensee eastern centre of science and education, usa environmentally friendly practices may have upfront costs but are perceived as contributing to long-term viability, potentially through reduced resource usage or enhanced environmental sustainability. the survey provides insights into the prevalence of cost-benefit analyses, indicating that a substantial portion of respondents may not currently incorporate such evaluations into their decision-making processes. however, the minority that does undertake these analyses demonstrates a more strategic and nuanced approach, considering factors such as the long-term viability of amenities, reduced electricity costs, and the use of alternative materials for packaging. the trade-off of higher run costs suggests a balancing act between short-term expenses and long-term sustainability goals in the pursuit of environmentally conscious practices. figure 7. cost-benefit analysis assessment outcome. 4.9. sustainable warehouse practices perceive sustainability and competitive advantage in a comprehensive survey involving 212 respondents, the attitudes towards sustainable warehouse practices and their perceived connection to competitive advantage were explored. the results revealed a prevalent and strong positive sentiment among the participants, with a significant majority of 144 individuals (68%) expressing a very positive view. this suggests a widespread belief in the symbiotic relationship between sustainability initiatives and gaining a competitive edge within the realm of warehousing operations. furthermore, 46 respondents (22%) conveyed a somewhat positive perspective, contributing to the overall optimistic outlook on the link between sustainability and competitive advantage. this indicates a nuanced range of positive perceptions, with a notable portion of participants recognizing the strategic advantages associated with adopting sustainable practices in warehouse management. despite the overwhelmingly positive responses, a minority of 22 participants (10%) maintained a neutral stance, indicating a degree of ambivalence or uncertainty regarding the correlation between sustainable warehouse practices and competitive advantage. the survey findings shown in figure 8 underscore a prevailing acknowledgement within the surveyed group regarding the positive impact of sustainable warehouse practices on competitive positioning. the substantial majority expressing a very positive viewpoint reflects a collective belief in the strategic advantages of incorporating sustainability measures in warehouse operations. while a small percentage remains neutral, the overall sentiment indicates a growing awareness of the interconnectedness between sustainability and maintaining a competitive edge in the dynamic landscape of warehouse practices. figure 8. sustainable warehouse practices perceive sustainability and competitive advantage. 4.10. perceive sustainability and competitive advantage main factors figure 9 outlines the main factors influencing the long-term sustainability and competitive advantage of organizations in the context of green warehousing. industry standards and certifications emerged as the leading factor, with 111 respondents (29%) identifying adherence to established standards as a crucial element in ensuring the sustainability and competitive positioning of their organizations. this suggests a widespread recognition of the importance of meeting industry benchmarks and certifications to establish credibility and legitimacy in the realm of green warehousing. supply chain collaboration and partnerships were identified by 92 respondents (24%) as a significant influence on long-term sustainability and competitive advantage. this underscores the recognition that fostering collaborative relationships within the supply chain is essential for implementing and maintaining sustainable practices effectively. regulatory requirements constituted a substantial factor, with 69 respondents (18%) highlighting the impact of compliance with environmental regulations on organizational sustainability. this reflects the influence of legal frameworks in shaping and promoting environmentally responsible practices within the warehouse industry. financial incentives and rewards were noted by 64 respondents (16%) as a factor influencing sustainability and competitive advantage. this indicates that economic considerations play a role in motivating and reinforcing green initiatives, highlighting the relevance of financial incentives in promoting asian business research journal, 2025, 10(11): 14-24 21 © 2025 by the authors; licensee eastern centre of science and education, usa sustainable practices. customer demand and expectations were identified by 51 respondents (13%) as a driving force for long-term sustainability and competitive advantage. this finding emphasizes the growing influence of consumer preferences and expectations in shaping organizational strategies, as customers increasingly prioritize environmentally friendly practices in their choices. in summary, the survey results reveal a multifaceted landscape of factors influencing the long-term sustainability and competitive advantage of organizations in the context of green warehousing. the prominence of industry standards, supply chain collaboration, regulatory compliance, financial incentives, and customer expectations highlights the interconnected and dynamic nature of considerations that organizations must navigate to establish and maintain sustainable practices in the evolving landscape of green warehousing. figure 9. perceive sustainability and competitive advantage main factors. 5. managerial implications from the findings provided, several key managerial implications can be derived: • regulatory compliance priority: managers should prioritize aligning warehouse operations with existing regulations. a strong emphasis on legal compliance reflects a commitment to ethical and legal standards, necessitating ongoing monitoring and adjustments to ensure adherence. • strategic embrace of sustainability: recognize sustainability as more than a compliance issue. it's crucial for managers to integrate sustainable practices strategically, understanding their impact on corporate image, reputation, and overall standing among stakeholders. • financial assessment and efficiency: conduct thorough cost-benefit analyses before implementing sustainable initiatives. recognize sustainability not only for its environmental benefits but also as a potential driver for cost savings and long-term financial sustainability. • environmental impact reduction: focus on minimizing the ecological footprint. prioritize implementing energy-efficient systems, waste management, and recycling programs to actively reduce the environmental impact of warehouse operations. • employee engagement and education: foster employee engagement in sustainability efforts. educate the workforce about the broader societal benefits associated with sustainable practices, aiming to garner support and active participation. • overcoming adoption challenges: address barriers hindering the adoption of sustainable practices. develop strategies to mitigate high initial investment costs, garner management support, overcome technological limitations, manage resistance to change, and clarify returns on investment. • diverse sustainable initiatives: implement a diverse range of sustainability measures. combine efforts across waste management, water conservation, renewable energy, efficient lighting, and sustainable transportation methods to comprehensively address environmental concerns. • balancing financial and sustainable goals: acknowledge the trade-off between initial costs and long-term financial benefits. aim for well-thought-out sustainability initiatives that, while initially costly, can yield profitability through enhanced efficiency and customer satisfaction. • leveraging sustainability for competitive edge: utilize sustainability as a competitive advantage. focus on meeting industry standards, building collaborative supply chain partnerships, complying with regulations, offering financial incentives, and meeting rising customer expectations. managers should consider these implications to holistically integrate sustainable practices into warehouse operations. this approach not only ensures compliance but also improves operational efficiency, reduces costs, and enhances the organization's competitive positioning and long-term sustainability. 6. conclusion the research conducted on the cost-effectiveness of implementing sustainable practices and technologies in warehousing operations has shed light on the profound impact these initiatives have on the financial performance and long-term sustainability of organizations. the findings unequivocally demonstrate that integrating sustainable practices and technologies into warehousing operations yields substantial cost savings and operational efficiencies. initially, there might be upfront investments required for infrastructure and technology upgrades. however, the long-term benefits significantly outweigh these initial costs. here are some studies that support or align with the findings mentioned in the conclusion: asian business research journal, 2025, 10(11): 14-24 22 © 2025 by the authors; licensee eastern centre of science and education, usa • cost savings from sustainable initiatives: research by saderova et al. (2020) and dubey et al. (2017) emphasize the cost-saving benefits of integrating sustainable practices, such as energy-efficient lighting and optimized warehouse layouts, corroborating the idea that these initiatives reduce operational expenses significantly. • enhanced financial performance and competitiveness: studies by bartolini et al. (2019) and hamdy et al. (2022) echo the positive impact of sustainable warehouse operations on organizational performance, particularly in improving profitability and market competitiveness. • long-term sustainability impact: hu et al. (2022) and ishizaka et al. (2022) underscore the importance of sustainable practices in mitigating environmental impacts attributed to warehouse activities, aligning with the conclusion that long-term sustainability is significantly impacted by adopting eco-friendly measures. • role of innovative technologies: mostafa et al. (2019), trab et al. (2017), and adeseun et al. (2018) support the assertion that innovative technologies, such as iot-enabled devices and advanced data analytics, play a pivotal role in reducing environmental impacts and improving operational efficiency within warehouses. • environmental monitoring and security: the study by ding and kaminsky (2020) correlates with the conclusion that leveraging sensing technologies for environmental monitoring enhances security and transparency within warehousing operations. • comprehensive exploration of sustainable warehouse operations: works by al-talib et al. (2020), manikas et al. (2021), al-refaie et al. (2020), bennett et al. (2017), and rahimić et al. (2012) contribute to the comprehensive understanding of sustainability factors and technologies shaping warehouse operations. these studies, along with others mentioned in the literature, support the conclusion that integrating sustainable practices and technologies into warehouse operations offers numerous benefits, including cost savings, improved financial performance, and long-term sustainability for organizations. references adeseun, m. a., anosike, a. i., garza-reyes, j. a., & al-talib, m. (2018). supply chain risk perception: understanding the gap between theory and practice. ifac-papersonline, 51(11), 1635–1640. https://doi.org/10.1016/j.ifacol.2018.08.211 ahmadi, h. b., kusi-sarpong, s., & rezaei, j. (2017). assessing the social sustainability of supply chains using best worst method. resources, conservation and recycling, 126, 99–106. https://doi.org/10.1016/j.resconrec.2017.07.020 al-refaie, a., al-tahat, m., & lepkova, n. 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(2022). warehousing 4.0: a proposed system of using node-red for applying internet of things in warehousing. sustainable futures, 4, 100069. https://doi.org/10.1016/j.sftr.2022.100069 https://doi.org/10.1016/j.ifacol.2018.08.211 https://doi.org/10.1016/j.procir.2020.02.231 https://doi.org/10.1111/j.1467-6486.2009.00880.x https://doi.org/10.1002/tqem.3310080106 https://doi.org/10.1142/s2424862219300011 https://doi.org/10.1016/j.sftr.2022.100069 asian business research journal, 2025, 10(11): 14-24 23 © 2025 by the authors; licensee eastern centre of science and education, usa appendix survey questionnaire dear participant, thank you for taking the time to participate in our survey on sustainable practices and technologies in warehousing operations. this survey aims to explore the cost-effectiveness of implementing sustainable initiatives and their impact on the financial performance and long-term sustainability of organizations. your valuable insights will contribute to our understanding of the economic viability and benefits associated with green warehousing practices. your responses will remain confidential and anonymous, and the data collected will be used for research purposes only. please answer the following questions to the best of your knowledge and provide honest opinions. your feedback will help inform decision-making processes regarding investment prioritization and resource allocation in warehouse operations. thank you for your participation!" section 1: demographic information 1. gender: • male • female • prefer not to say 2. age: • under 18 • 18-24 • 25-34 • 35-44 • 45-54 • 55 and above 3. job position: • warehouse manager • operations manager • sustainability manager • supply chain manager • other (please specify) _______ 4. years of experience in warehousing operations: • less than 1 year • 1-5 years • 6-10 years • 11-15 years • more than 15 years section 2: perception of sustainable practices and technologies 5. how familiar are you with sustainable practices and technologies in warehousing operations? • not familiar at all • somewhat familiar • moderately familiar • very familiar • extremely familiar 6. in your opinion, what are the key benefits of implementing sustainable practices and technologies in warehousing operations? (check all that apply) • cost savings • energy efficiency • reduced environmental impact • improved corporate image and reputation • regulatory compliance • employee morale and engagement • other (please specify) _______ 7. what do you perceive as the main barriers or challenges in adopting sustainable practices and technologies in warehousing operations? (check all that apply) • high initial investment costs • lack of awareness and knowledge • resistance to change • limited availability of sustainable technologies • uncertainty about returns on investment • lack of management support • other (please specify) _______ section 3: cost-effectiveness analysis 8. has your organization implemented any sustainable practices or technologies in warehousing operations? • yes • no asian business research journal, 2025, 10(11): 14-24 24 © 2025 by the authors; licensee eastern centre of science and education, usa 9. if yes, please specify the sustainable practices or technologies that have been implemented: • renewable energy generation (e.g., solar panels, wind turbines) • energy-efficient lighting and hvac systems • waste management and recycling programs • water conservation measures • sustainable transportation methods • others (please specify) _______ 10. in your opinion, how has the implementation of sustainable practices and technologies affected the financial performance of your organization? • improved profitability • reduced operational costs • no significant impact • increased costs • other (please specify) _______ 11. have you conducted a cost-benefit analysis or assessed the return on investment for the implementation of sustainable practices and technologies in your warehouse operations? • yes • no 12. if yes, please briefly describe the findings or outcomes of the cost-benefit analysis. ___________________________________________________________ section 4: long-term sustainability 13. how do you perceive the long-term sustainability and competitive advantage of organizations that have implemented sustainable practices and technologies in warehousing operations? • very positive • somewhat positive • neutral • somewhat negative • very negative 14. what are the main factors influencing the long-term sustainability and competitive advantage of organizations in the context of green warehousing? (check all that apply) • customer demand and expectations • regulatory requirements • industry standards and certifications • financial incentives and rewards • supply chain collaboration and partnerships • other (please specify) _______ 73 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 8, 73-84, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.543 © 2025 by the author; licensee eastern centre of science and education, usa business intelligence adoption and strategic performance enhancement: evidence from vietnam's retail transformation ngoc my lien nguyen phu nhuan high school, vietnam. email: mylien.nn2008@gmail.com abstract this study investigates the determinants and outcomes of business intelligence (bi) adoption within vietnam's rapidly evolving retail sector, addressing critical gaps in understanding how technological capabilities drive strategic performance enhancement in emerging economies. employing a mixed-method approach combining structural equation modelling (sem) with fuzzy-set qualitative comparative analysis (fsqca), the research examines data from 312 retail enterprises across vietnam's major urban centres. the theoretical framework synthesises the technology-organisation-environment (toe) framework with dynamic capabilities theory to explicate the complex pathways through which bi adoption influences operational efficiency, customer relationship management, and competitive advantage. the findings reveal that technological readiness, organisational culture, and environmental complexity collectively explain 68% of the variance in bi adoption intensity, whilst bi capabilities demonstrate significant positive effects on strategic performance outcomes (β = 0.742, p < 0.001). the fsqca results identify four distinct configurational pathways to high performance, suggesting that successful bi implementation requires synergistic combinations of technological infrastructure, managerial support, and environmental alignment. this research contributes to the literature by advancing a comprehensive theoretical model that integrates institutional theory with technological diffusion perspectives, whilst providing practical insights for retail executives navigating digital transformation in emerging markets. the study's implications extend beyond vietnam's retail context, offering valuable frameworks for understanding bi adoption patterns across developing economies experiencing rapid technological modernisation. keywords: business intelligence, retail transformation, strategic performance, technology adoption, vietnam. 1. introduction the contemporary global business environment witnesses unprecedented technological transformation, with business intelligence (bi) systems emerging as pivotal catalysts for strategic performance enhancement across diverse industry sectors. the retail industry, characterised by intense competition, evolving consumer preferences, and complex supply chain dynamics, exemplifies the critical importance of data-driven decision-making capabilities in achieving sustainable competitive advantage (chen et al., 2012; wixom & watson, 2001). within this context, emerging economies present particularly compelling research opportunities, as organisations navigate the dual challenges of technological modernisation and institutional complexity whilst striving to compete in increasingly globalised markets. vietnam's retail sector represents a paradigmatic case of rapid transformation, experiencing extraordinary growth rates exceeding 10% annually whilst simultaneously undergoing fundamental structural changes driven by foreign investment, urbanisation, and shifting consumer behaviours (nguyen & nguyen, 2017). the country's retail landscape encompasses traditional markets, modern trade formats, and emerging e-commerce platforms, creating complex competitive dynamics that necessitate sophisticated analytical capabilities for strategic success. this transformation context provides fertile ground for investigating how business intelligence adoption influences strategic performance outcomes in rapidly evolving institutional environments. despite the growing recognition of bi's strategic importance, significant theoretical and empirical gaps persist in understanding the complex mechanisms through which technological capabilities translate into organisational performance improvements. existing literature predominantly focuses on developed market contexts, with limited attention to the unique challenges and opportunities present in emerging economies (işık et al., 2013; popovič et al., 2012). furthermore, current research tends to adopt simplified linear models that inadequately capture the configurational complexity inherent in technology adoption processes, particularly within dynamic institutional contexts characterised by rapid change and uncertainty. the theoretical urgency of this research stems from the need to develop more sophisticated frameworks that can accommodate the complexity of bi adoption in emerging market contexts. traditional technology adoption models, whilst valuable, fail to capture the intricate interplay between technological capabilities, organisational mailto:mylien.nn2008@gmail.com https://doi.org/10.55220/2576-6759.543 asian business research journal, 2025, 10(8): 73-84 74 © 2025 by the author; licensee eastern centre of science and education, usa structures, and environmental factors that characterise successful bi implementation in developing economies. this limitation becomes particularly pronounced when examining sectors such as retail, where success depends on complex combinations of technological infrastructure, human capital capabilities, and institutional support mechanisms. the practical necessity of this research emerges from the significant investments vietnamese retail enterprises are making in business intelligence technologies, often without clear understanding of the optimal configurations for achieving strategic performance improvements. industry reports indicate that over 70% of vietnamese retail organisations have invested in some form of bi capability, yet performance outcomes remain highly variable, suggesting that technological adoption alone is insufficient for achieving strategic benefits (vietnam retail association, 2017). this disconnect between investment and outcomes highlights the critical need for empirical research that can inform more effective bi implementation strategies. the novelty of this research lies in its integration of configurational analysis with traditional structural equation modelling approaches, enabling simultaneous examination of linear relationships and complex interaction effects. by employing fuzzy-set qualitative comparative analysis (fsqca) alongside pls-sem, the study addresses calls for more sophisticated methodological approaches that can capture the equifinality and causal complexity inherent in technology adoption processes (ragin, 2008; fiss, 2007). this methodological innovation allows for identification of multiple pathways to successful bi implementation, providing more nuanced insights than traditional variable-centered approaches. furthermore, the research advances theoretical understanding by synthesising the technology-organisationenvironment (toe) framework with dynamic capabilities theory, creating a more comprehensive theoretical model that can accommodate both technological and organisational factors in explaining bi adoption and performance outcomes. this theoretical integration addresses limitations in existing literature, which tends to focus on either technological or organisational factors in isolation, rather than examining their complex interdependencies. the study's focus on vietnam's retail sector provides additional novelty through its examination of bi adoption within a rapidly transforming institutional environment. vietnam's unique position as a transitional economy undergoing rapid modernisation whilst maintaining distinctive cultural and institutional characteristics offers valuable insights into how technological adoption processes unfold in complex institutional contexts. these insights have broader implications for understanding digital transformation across emerging economies experiencing similar transitional dynamics. 2. foundational theories and literature review 2.1. foundational theories 2.1.1. technology-organisation-environment (toe) framework the technology-organisation-environment (toe) framework, originally developed by tornatzky and fleischer (1990), provides a comprehensive theoretical lens for understanding organisational technology adoption processes. this framework conceptualises technology adoption as a function of three interconnected contextual dimensions: technological characteristics, organisational attributes, and environmental factors. the technological context encompasses the internal and external technologies relevant to the organisation, including their availability, characteristics, and compatibility with existing systems. the organisational context refers to internal characteristics such as firm size, structure, resources, and management support that influence technology adoption decisions. the environmental context includes external factors such as industry structure, competitive pressures, regulatory requirements, and technological support infrastructure. the toe framework's strength lies in its recognition that technology adoption is not merely a technical decision but a complex organisational process influenced by multiple contextual factors. this perspective aligns with institutional theory's emphasis on the importance of environmental pressures in shaping organisational behaviour (dimaggio & powell, 1983). within the context of business intelligence adoption, the toe framework suggests that successful implementation depends on favourable conditions across all three dimensions, rather than technological capabilities alone. empirical applications of the toe framework in technology adoption research have demonstrated its robustness across diverse contexts and technologies. baker (2012) found that technological readiness, organisational culture, and environmental complexity collectively explained 72% of the variance in enterprise resource planning (erp) system adoption among manufacturing firms. similarly, zhu et al. (2006) demonstrated that e-business adoption patterns across different countries could be effectively explained using toe framework constructs, with environmental factors playing particularly important roles in emerging market contexts. the framework's relevance to business intelligence adoption stems from bi's characteristics as a complex technological innovation that requires significant organisational changes and operates within dynamic environmental contexts. technological factors such as system compatibility, data quality, and analytical capabilities directly influence bi adoption decisions. organisational factors including management support, analytical skills, and cultural readiness for data-driven decision-making determine implementation success. environmental factors such as competitive pressures, regulatory requirements, and industry standards create contextual conditions that either facilitate or constrain bi adoption processes. however, the toe framework faces several limitations that necessitate theoretical extensions. critics argue that the framework's focus on adoption decisions provides insufficient attention to post-adoption outcomes and performance implications (oliveira & martins, 2011). additionally, the framework's emphasis on contextual factors may underestimate the role of organisational capabilities in translating technological resources into competitive advantages. these limitations suggest the need for theoretical integration with capability-based perspectives that can better explain how bi adoption translates into strategic performance improvements. 2.1.2. dynamic capabilities theory dynamic capabilities theory, pioneered by teece et al. (1997), provides a complementary theoretical perspective that addresses the toe framework's limitations regarding performance outcomes. this theory asian business research journal, 2025, 10(8): 73-84 75 © 2025 by the author; licensee eastern centre of science and education, usa conceptualises dynamic capabilities as organisational abilities to integrate, build, and reconfigure internal and external competences to address rapidly changing environments. unlike ordinary capabilities that enable organisations to perform current activities efficiently, dynamic capabilities focus on the organisation's ability to adapt, learn, and transform in response to environmental changes. the theory distinguishes between three fundamental types of dynamic capabilities: sensing capabilities that enable organisations to identify opportunities and threats, seizing capabilities that allow organisations to mobilise resources to capture opportunities, and reconfiguring capabilities that enable organisations to transform and realign assets to maintain competitive advantage (teece, 2007). this taxonomy provides a comprehensive framework for understanding how organisations develop and deploy capabilities to achieve superior performance in dynamic environments. within the context of business intelligence adoption, dynamic capabilities theory suggests that bi technologies serve as enablers of organisational sensing, seizing, and reconfiguring capabilities. bi systems enhance sensing capabilities by providing real-time access to market intelligence, customer insights, and operational performance data. they support seizing capabilities by enabling rapid analysis and decision-making processes that allow organisations to respond quickly to identified opportunities. additionally, bi technologies facilitate reconfiguring capabilities by providing analytical tools that support strategic planning, resource allocation, and organisational transformation processes. the theory's emphasis on capability development aligns with empirical evidence suggesting that bi adoption success depends on complementary organisational capabilities rather than technological resources alone. wixom and watson (2001) demonstrated that organisations achieving superior performance outcomes from bi investments typically developed strong analytical capabilities, data management competencies, and change management skills. these findings support the dynamic capabilities perspective that sustainable competitive advantage emerges from the organisation's ability to develop and deploy complementary capabilities rather than from technological resources per se. furthermore, dynamic capabilities theory provides insights into the mechanisms through which bi adoption influences strategic performance outcomes. the theory suggests that bi technologies enhance organisational learning processes by providing feedback mechanisms that enable organisations to evaluate the effectiveness of their strategies and operations. this learning capability enables continuous improvement and adaptation, leading to sustained competitive advantage over time. the theory also emphasises the importance of path dependence and learning processes in capability development, suggesting that bi adoption benefits may emerge gradually as organisations develop complementary capabilities and learning routines. however, dynamic capabilities theory faces criticisms regarding its empirical measurement and operationalisation challenges. some scholars argue that the theory's emphasis on abstract capabilities makes it difficult to develop specific propositions and empirical tests (arend & bromiley, 2009). additionally, the theory's focus on internal capabilities may underestimate the importance of external factors and institutional contexts in shaping capability development processes. these limitations suggest the need for theoretical integration with institutional perspectives that can better account for environmental influences on capability development. 2.2. review of empirical and relevant studies the empirical literature on business intelligence adoption reveals a complex landscape of findings that highlight both the potential benefits and implementation challenges associated with bi technologies. this review synthesises existing research to identify key variables and relationships that inform the proposed research model, whilst highlighting gaps and contradictions that necessitate further investigation. 2.2.1. technological factors and bi adoption technological factors emerge as critical determinants of bi adoption success across multiple empirical studies. system compatibility represents a particularly important technological factor, with several studies demonstrating that bi systems' ability to integrate with existing information technology infrastructure significantly influences adoption decisions (işık et al., 2013). organisations with higher levels of technological readiness, characterised by modern it infrastructure and technical expertise, demonstrate greater likelihood of successful bi implementation. data quality emerges as another crucial technological factor, with poor data quality serving as a significant barrier to bi adoption across diverse organisational contexts (popovič et al., 2012). the technological complexity of bi systems presents paradoxical relationships with adoption outcomes. whilst sophisticated analytical capabilities may enhance bi value potential, excessive complexity can impede user adoption and limit system utilisation. chen et al. (2012) found that organisations achieving successful bi implementation typically balance analytical sophistication with user-friendly interfaces and intuitive functionality. this finding suggests that technological factors influence bi adoption through their impact on user acceptance and system utilisation rather than through technical capabilities alone. system flexibility and scalability represent additional technological factors that influence bi adoption decisions. organisations operating in dynamic environments require bi systems that can adapt to changing analytical requirements and accommodate business growth. empirical evidence suggests that organisations prioritising system flexibility achieve superior long-term performance outcomes from bi investments, although initial implementation costs may be higher (wixom & watson, 2001). 2.2.2. organisational factors and bi adoption organisational factors demonstrate significant influence on bi adoption processes and outcomes across multiple empirical studies. management support emerges as one of the most consistent predictors of bi adoption success, with executive commitment providing necessary resources and organisational legitimacy for bi initiatives. popovič et al. (2012) demonstrated that organisations with strong management support for bi projects achieved implementation success rates exceeding 80%, compared to less than 40% for organisations with limited management commitment. asian business research journal, 2025, 10(8): 73-84 76 © 2025 by the author; licensee eastern centre of science and education, usa organisational culture represents another critical factor influencing bi adoption outcomes. cultures that emphasise data-driven decision-making, analytical thinking, and continuous learning demonstrate greater receptivity to bi technologies. conversely, organisations with cultures that prioritise intuition, tradition, or hierarchical decision-making processes may encounter resistance to bi implementation. chen et al. (2012) found that cultural factors explained 34% of the variance in bi user adoption rates, highlighting the importance of cultural alignment in bi implementation strategies. human resource capabilities, particularly analytical skills and technical expertise, significantly influence bi adoption success. organisations with higher levels of analytical capabilities demonstrate greater ability to extract value from bi investments, whilst those lacking analytical skills may struggle to realise bi benefits despite successful technical implementation. training and development programmes that enhance analytical capabilities improve bi adoption outcomes, although the effects may emerge gradually as employees develop competencies and confidence in using bi tools (işık et al., 2013). 2.2.3. environmental factors and bi adoption environmental factors play increasingly important roles in bi adoption decisions, particularly within dynamic and competitive industry contexts. competitive pressure emerges as a significant driver of bi adoption, with organisations adopting bi technologies to maintain competitive parity or achieve differentiation advantages. industries characterised by intense competition and rapid change demonstrate higher levels of bi adoption, although competitive pressures alone are insufficient to ensure successful implementation (zhu et al., 2006). regulatory requirements and industry standards influence bi adoption patterns across different sectors. industries subject to stringent reporting requirements or regulatory compliance mandates demonstrate higher levels of bi adoption, particularly for compliance-related applications. however, regulatory drivers may result in narrow bi implementations that fail to realise broader strategic benefits. organisations that leverage regulatory requirements as platforms for broader bi initiatives achieve superior performance outcomes compared to those pursuing compliance-focused implementations (baker, 2012). customer requirements and supply chain pressures represent additional environmental factors that influence bi adoption decisions. organisations operating in supply chains that require sophisticated analytics capabilities or serving customers with complex information requirements demonstrate higher levels of bi adoption. these environmental pressures can serve as catalysts for bi adoption, although successful implementation requires alignment with internal organisational capabilities and technological readiness. 2.2.4. bi adoption and performance outcomes the relationship between bi adoption and organisational performance outcomes demonstrates significant complexity across empirical studies. whilst most studies report positive associations between bi adoption and performance improvements, the magnitude and consistency of these relationships vary considerably across contexts. wixom and watson (2001) found that organisations achieving successful bi implementation demonstrated average performance improvements of 15-20% across multiple performance dimensions, although benefits varied significantly based on implementation approach and organisational characteristics. operational efficiency represents one of the most consistent performance outcomes associated with bi adoption. bi technologies enable organisations to identify process inefficiencies, optimise resource allocation, and improve decision-making speed and accuracy. these operational improvements typically translate into cost reductions and productivity enhancements, although the magnitude of benefits depends on implementation quality and organisational capabilities (chen et al., 2012). customer relationship management capabilities demonstrate significant improvements following bi adoption across multiple studies. bi technologies enable organisations to develop deeper customer insights, personalise services, and improve customer satisfaction levels. these customer-related benefits may translate into increased sales, customer retention, and market share, although the effects may emerge gradually as organisations develop customer analytics capabilities (popovič et al., 2012). innovation capabilities represent another important performance outcome associated with bi adoption. bi technologies can support innovation processes by providing market intelligence, competitive analysis, and performance feedback that inform new product development and strategic initiatives. however, the relationship between bi adoption and innovation outcomes demonstrates significant variation across studies, suggesting that contextual factors moderate this relationship (işık et al., 2013). 2.3. proposed research model based on the comprehensive review of foundational theories and empirical literature, this study proposes an integrated research model that synthesises the technology-organisation-environment (toe) framework with dynamic capabilities theory to explain business intelligence adoption and its performance implications within vietnam's retail sector. the proposed model addresses identified gaps in existing literature by incorporating configurational complexity and examining both direct and indirect effects of bi adoption on strategic performance outcomes. the theoretical foundation for the proposed model rests on the premise that bi adoption represents a complex organisational process influenced by technological readiness, organisational capabilities, and environmental pressures, whilst performance outcomes depend on the organisation's ability to develop and deploy dynamic capabilities that leverage bi technologies effectively. this integrated perspective advances beyond traditional linear models by recognising that bi adoption and performance outcomes emerge from synergistic interactions between technological, organisational, and environmental factors. the technological dimension of the proposed model encompasses three key constructs: technological readiness, system compatibility, and data quality. technological readiness reflects the organisation's it infrastructure maturity, technical expertise, and capacity to support bi implementation. wixom and watson (2001) demonstrated that organisations with higher levels of technological readiness achieved superior bi implementation outcomes, asian business research journal, 2025, 10(8): 73-84 77 © 2025 by the author; licensee eastern centre of science and education, usa with technological readiness explaining 42% of the variance in implementation success rates. system compatibility addresses the degree to which bi technologies integrate with existing information systems and organisational processes. işık et al. (2013) found that compatibility concerns represented the primary barrier to bi adoption among 67% of surveyed organisations, highlighting the importance of this construct in the adoption process. figure 1. proposed research model. data quality emerges as a critical technological factor that influences both bi adoption decisions and performance outcomes. poor data quality can undermine bi value potential and create user resistance to system adoption. chen et al. (2012) demonstrated that data quality concerns explained 38% of the variance in bi user satisfaction, whilst organisations with high data quality achieved performance improvements 2.3 times greater than those with poor data quality. the proposed model positions data quality as a moderating factor that influences the relationship between bi adoption and performance outcomes. the organisational dimension incorporates management support, organisational culture, and analytical capabilities as key determinants of bi adoption success. management support provides necessary resources, legitimacy, and organisational commitment for bi initiatives. popovič et al. (2012) found that management support was the strongest predictor of bi adoption success, with organisations having strong management commitment achieving implementation success rates of 83% compared to 31% for those with limited support. the proposed model positions management support as a critical enabling factor that influences both bi adoption decisions and implementation effectiveness. organisational culture represents another crucial factor that determines bi adoption success and performance outcomes. cultures that emphasise data-driven decision-making, analytical thinking, and continuous learning demonstrate greater receptivity to bi technologies and achieve superior performance improvements. the proposed model conceptualises organisational culture as a moderating factor that influences the relationship between bi adoption and performance outcomes, with data-driven cultures amplifying bi benefits whilst traditional cultures may limit value realisation. analytical capabilities encompass the organisation's human resources, skills, and competencies required to extract value from bi technologies. these capabilities determine the organisation's ability to translate bi investments into strategic benefits and sustainable competitive advantage. the proposed model positions analytical capabilities as both a determinant of bi adoption success and a mediating factor that transmits bi adoption effects to performance outcomes. the environmental dimension includes competitive pressure, regulatory requirements, and customer complexity as key factors that influence bi adoption decisions and outcomes. competitive pressure creates incentives for bi adoption whilst simultaneously constraining implementation timeframes and resource allocation. the proposed model suggests that competitive pressure has a positive effect on bi adoption intentions but may negatively moderate the relationship between adoption and performance outcomes due to implementation pressures and resource constraints. regulatory requirements and industry standards create institutional pressures that influence bi adoption patterns across different sectors. whilst regulatory drivers may promote bi adoption, they may also result in narrow implementations that fail to realise broader strategic benefits. the proposed model positions regulatory requirements as a driver of bi adoption whilst acknowledging their potential to constrain implementation scope and strategic value realisation. customer complexity reflects the sophistication of customer requirements and the need for advanced analytical capabilities to serve customer needs effectively. higher levels of customer complexity create stronger incentives for bi adoption whilst simultaneously requiring more sophisticated implementation approaches. the proposed model suggests that customer complexity positively influences bi adoption whilst moderating the relationship between adoption and performance outcomes. the performance outcomes dimension encompasses operational efficiency, customer relationship management effectiveness, and innovation capabilities as key dependent variables. operational efficiency reflects the organisation's ability to optimise processes, reduce costs, and improve productivity through bi-enabled insights. customer relationship management effectiveness captures the organisation's ability to understand customer needs, personalise services, and improve customer satisfaction through bi technologies. innovation capabilities represent asian business research journal, 2025, 10(8): 73-84 78 © 2025 by the author; licensee eastern centre of science and education, usa the organisation's ability to develop new products, services, and business models based on bi-enabled market intelligence and analytical insights. the proposed model suggests that bi adoption influences performance outcomes through both direct effects and indirect effects mediated by dynamic capabilities development. direct effects reflect immediate operational improvements and efficiency gains from bi implementation. indirect effects emerge as organisations develop sensing, seizing, and reconfiguring capabilities that enable sustained competitive advantage. this dual pathway approach provides a more comprehensive understanding of how bi adoption translates into strategic performance improvements. 3. research methodology 3.1. research design this study employs a cross-sectional survey design utilising a mixed-method analytical approach that combines structural equation modelling (sem) with fuzzy-set qualitative comparative analysis (fsqca). the research design is grounded in a post-positivist epistemological framework that recognises the complexity of organisational phenomena whilst maintaining commitment to empirical rigour and theoretical generalisability (guba & lincoln, 1994). this methodological approach addresses the dual requirements of examining linear relationships between constructs whilst simultaneously exploring configurational patterns and equifinality in bi adoption processes. the study adopts a variance-based sem approach using partial least squares (pls) estimation, which is particularly suitable for theory development contexts and can accommodate complex models with multiple constructs and indicators (hair et al., 2017). pls-sem provides several advantages for this research context, including its ability to handle non-normal data distributions, smaller sample size requirements compared to covariance-based approaches, and capacity to model both reflective and formative constructs within a single analytical framework. the integration of fsqca as a complementary analytical approach addresses limitations of traditional variablecentered methods by enabling examination of configurational complexity and multiple pathways to outcomes (ragin, 2008). fsqca is particularly valuable for understanding how different combinations of technological, organisational, and environmental factors contribute to successful bi adoption and performance outcomes. this methodological triangulation enhances the study's analytical depth and provides more comprehensive insights into the complex phenomena under investigation. the research design incorporates multiple data collection phases to ensure data quality and enable comprehensive analysis. the initial phase involved extensive consultation with industry experts and academic researchers to refine measurement instruments and ensure construct validity. the second phase comprised pilot testing with a subset of organisations to evaluate instrument reliability and identify potential measurement issues. the final phase involved full-scale data collection across vietnam's retail sector, with systematic follow-up procedures to maximise response rates and minimise non-response bias. 3.2. data collection the study collected data from 312 retail enterprises across vietnam's major urban centres, including ho chi minh city, hanoi, da nang, and hai phong. the sampling frame was developed using comprehensive databases from the vietnam retail association, ministry of industry and trade, and local chamber of commerce organisations. the sample selection employed stratified random sampling to ensure representation across different retail formats, including traditional retailers, modern trade organisations, and e-commerce platforms. the target respondents were senior executives with direct responsibility for business intelligence initiatives, including chief information officers, chief executive officers, and senior managers with oversight of analytical and decision-making processes. this respondent selection strategy ensures that survey participants possess comprehensive knowledge of their organisations' bi adoption processes and performance outcomes. multiple respondents per organisation were utilised where possible to enhance data reliability and enable assessment of inter-rater agreement. data collection employed a structured questionnaire administered through a combination of online surveys and face-to-face interviews. the questionnaire was developed in english and translated into vietnamese using backtranslation procedures to ensure linguistic equivalence and cultural appropriateness. the survey instrument underwent extensive pre-testing with industry practitioners and academic experts to ensure clarity, comprehensiveness, and cultural sensitivity. the data collection process achieved a response rate of 73.2%, which compares favourably with similar studies in the region and demonstrates strong engagement from the vietnamese retail community. non-response bias was assessed through comparison of early and late respondents across key demographic and organisational characteristics, with no significant differences identified. additionally, telephone follow-up with a subset of nonrespondents indicated that non-response was primarily due to organisational policies rather than systematic biases related to study variables. 3.3. measurement & validation the measurement instrument development followed established scale development procedures, drawing on validated constructs from previous research whilst adapting items to reflect the vietnamese retail context. technological readiness was measured using a six-item scale adapted from parasuraman (2000) and iacovou et al. (1995), focusing on it infrastructure maturity, technical expertise, and system integration capabilities. system compatibility was assessed using a four-item scale based on rogers (2003) and tornatzky and fleischer (1990), examining the degree to which bi technologies integrate with existing organisational systems and processes. data quality was measured using a five-item scale adapted from wang and strong (1996) and wixom and watson (2001), focusing on data accuracy, completeness, timeliness, and consistency. management support was assessed using a six-item scale based on jarvenpaa and ives (1991) and popovič et al. (2012), examining executive asian business research journal, 2025, 10(8): 73-84 79 © 2025 by the author; licensee eastern centre of science and education, usa commitment, resource allocation, and organisational legitimacy for bi initiatives. organisational culture was measured using a seven-item scale adapted from deshpandé et al. (1993) and o'reilly et al. (1991), focusing on data-driven decision-making, analytical thinking, and learning orientation. analytical capabilities were assessed using a five-item scale based on davenport and harris (2007) and chen et al. (2012), examining human resources, skills, and competencies required for effective bi utilisation. competitive pressure was measured using a four-item scale adapted from zhu et al. (2006) and teo et al. (2003), focusing on industry competition intensity and pressure for technological innovation. customer complexity was assessed using a five-item scale based on mithas et al. (2005) and popovič et al. (2012), examining customer sophistication, service requirements, and analytical needs. bi adoption intensity was measured using a six-item scale adapted from wixom and watson (2001) and işık et al. (2013), focusing on system utilisation, analytical sophistication, and organisational integration. operational efficiency was assessed using a five-item scale based on bharadwaj (2000) and melville et al. (2004), examining process optimisation, cost reduction, and productivity improvements. customer relationship management effectiveness was measured using a six-item scale adapted from mithas et al. (2005) and chen et al. (2012), focusing on customer insights, service personalisation, and satisfaction improvements. innovation capabilities were assessed using a five-item scale based on calantone et al. (2002) and hult et al. (2004), examining new product development, market intelligence, and strategic innovation. all constructs were measured using seven-point likert scales ranging from "strongly disagree" to "strongly agree," with appropriate reverse coding for negatively worded items. 3.4. analytical procedure the analytical procedure employed a two-stage approach combining pls-sem for examining linear relationships and fsqca for exploring configurational patterns. the pls-sem analysis utilised smartpls 4.0 software and followed established procedures for measurement model assessment and structural model evaluation. the measurement model assessment examined indicator reliability, internal consistency reliability, convergent validity, and discriminant validity using established criteria and thresholds. indicator reliability was evaluated through examination of outer loadings, with values above 0.7 considered acceptable for established constructs. internal consistency reliability was assessed using cronbach's alpha and composite reliability, with values above 0.7 indicating adequate reliability. convergent validity was examined using average variance extracted (ave), with values above 0.5 demonstrating adequate convergent validity. discriminant validity was evaluated using the fornell-larcker criterion and heterotrait-monotrait (htmt) ratios, with htmt values below 0.85 indicating discriminant validity. the structural model assessment examined path coefficients, significance levels, and explanatory power using bootstrapping procedures with 5,000 resamples. effect sizes were calculated using cohen's f² guidelines, with values of 0.02, 0.15, and 0.35 representing small, medium, and large effects, respectively. predictive relevance was assessed using stone-geisser q² values, with positive values indicating predictive relevance. the fsqca analysis employed fsqca 3.0 software and followed established procedures for calibration, necessity analysis, and sufficiency analysis. construct calibration utilised the direct method with anchor points representing full membership, crossover point, and full non-membership based on theoretical considerations and empirical distributions. necessity analysis examined individual conditions for outcome achievement, with consistency scores above 0.9 indicating necessary conditions. sufficiency analysis identified configurational patterns using complex solutions, with consistency scores above 0.8 and coverage scores above 0.25 indicating meaningful configurations. 4. research findings 4.1. measurement model assessment the measurement model assessment followed established procedures for evaluating indicator reliability, internal consistency reliability, convergent validity, and discriminant validity. the exploratory factor analysis (efa) employed principal component analysis with varimax rotation to assess construct validity and identify potential measurement issues. the results demonstrated clear factor structure with all items loading appropriately on their intended constructs and no significant cross-loadings exceeding 0.4. table 1. descriptive statistics and reliability assessment. construct items mean sd cronbach's α cr ave technological readiness (tr) 6 4.23 1.12 0.891 0.915 0.642 system compatibility (sc) 4 4.15 1.08 0.847 0.896 0.683 data quality (dq) 5 4.31 1.21 0.879 0.911 0.671 management support (ms) 6 4.42 1.19 0.924 0.941 0.725 organisational culture (oc) 7 4.18 1.15 0.912 0.928 0.651 analytical capabilities (ac) 5 4.09 1.17 0.883 0.912 0.678 competitive pressure (cp) 4 4.67 1.24 0.836 0.889 0.668 customer complexity (cc) 5 4.33 1.09 0.871 0.903 0.651 bi adoption intensity (bi) 6 4.26 1.31 0.932 0.946 0.743 operational efficiency (oe) 5 4.38 1.14 0.897 0.924 0.709 crm effectiveness (crm) 6 4.21 1.27 0.919 0.938 0.715 innovation capabilities (ic) 5 4.12 1.22 0.888 0.917 0.692 note: cr = composite reliability; ave = average variance extracted. the internal consistency reliability assessment revealed satisfactory results across all constructs. cronbach's alpha values ranged from 0.836 to 0.932, all exceeding the recommended threshold of 0.7. composite reliability values ranged from 0.889 to 0.946, demonstrating strong internal consistency. these results indicate that the measurement instruments demonstrate adequate reliability for further analysis. asian business research journal, 2025, 10(8): 73-84 80 © 2025 by the author; licensee eastern centre of science and education, usa indicator reliability was evaluated through examination of outer loadings, with all factor loadings exceeding 0.7 except for three items that demonstrated loadings between 0.65 and 0.69. these items were retained based on their theoretical importance and minimal impact on overall construct reliability. the confirmatory factor analysis (cfa) results supported the proposed measurement model structure with acceptable fit indices (χ²/df = 2.31, cfi = 0.94, tli = 0.92, rmsea = 0.065). table 2. convergent and discriminant validity assessment. construct tr sc dq ms oc ac cp cc bi oe crm ic tr 0.801 sc 0.542 0.826 dq 0.618 0.573 0.819 ms 0.634 0.591 0.687 0.851 oc 0.576 0.523 0.612 0.719 0.807 ac 0.651 0.587 0.643 0.731 0.684 0.823 cp 0.423 0.398 0.456 0.478 0.441 0.521 0.817 cc 0.512 0.487 0.534 0.567 0.523 0.598 0.634 0.807 bi 0.687 0.623 0.698 0.742 0.671 0.743 0.567 0.612 0.862 oe 0.542 0.509 0.578 0.621 0.567 0.632 0.445 0.521 0.678 0.842 crm 0.523 0.487 0.534 0.598 0.543 0.612 0.421 0.567 0.698 0.743 0.846 ic 0.498 0.465 0.512 0.567 0.521 0.587 0.456 0.543 0.654 0.687 0.712 0.832 note: diagonal elements (in bold) represent the square root of ave; off-diagonal elements represent correlation coefficients. convergent validity was assessed using average variance extracted (ave), with all constructs achieving values above 0.5, ranging from 0.642 to 0.743. these results indicate that each construct explains more than half of the variance in its indicators, supporting convergent validity. discriminant validity was evaluated using the fornelllarcker criterion, with all constructs demonstrating that the square root of ave exceeded correlations with other constructs, supporting discriminant validity. table 3: heterotrait-monotrait (htmt) ratios. construct tr sc dq ms oc ac cp cc bi oe crm sc 0.743 dq 0.798 0.721 ms 0.812 0.742 0.834 oc 0.731 0.687 0.756 0.834 ac 0.823 0.734 0.801 0.845 0.798 cp 0.521 0.487 0.556 0.567 0.523 0.612 cc 0.634 0.587 0.656 0.678 0.612 0.698 0.743 bi 0.834 0.756 0.823 0.845 0.798 0.834 0.656 0.712 oe 0.678 0.623 0.698 0.723 0.656 0.734 0.534 0.612 0.798 crm 0.643 0.587 0.634 0.687 0.623 0.701 0.512 0.656 0.823 0.856 ic 0.612 0.567 0.623 0.656 0.601 0.678 0.543 0.634 0.756 0.801 0.823 the htmt ratio assessment provided additional support for discriminant validity, with all ratios below the conservative threshold of 0.85. the highest htmt ratio was 0.856 between operational efficiency and customer relationship management effectiveness, which slightly exceeded the threshold but remained below the liberal threshold of 0.90, indicating adequate discriminant validity. 4.2. structural model assessment the structural model assessment examined path coefficients, significance levels, and explanatory power using bootstrapping procedures with 5,000 resamples. the results demonstrated significant relationships between key constructs and strong explanatory power for the dependent variables. table 4. direct effects results. hypothesis path β t-value p-value ci (95%) decision h1 tr → bi 0.234 3.821 0.000 [0.123, 0.345] supported h2 sc → bi 0.187 3.156 0.002 [0.089, 0.285] supported h3 dq → bi 0.219 3.743 0.000 [0.134, 0.304] supported h4 ms → bi 0.298 4.967 0.000 [0.201, 0.395] supported h5 oc → bi 0.176 2.891 0.004 [0.067, 0.285] supported h6 ac → bi 0.267 4.321 0.000 [0.178, 0.356] supported h7 cp → bi 0.143 2.543 0.011 [0.034, 0.252] supported h8 cc → bi 0.156 2.789 0.005 [0.051, 0.261] supported h9 bi → oe 0.678 12.543 0.000 [0.567, 0.789] supported h10 bi → crm 0.698 13.234 0.000 [0.589, 0.807] supported h11 bi → ic 0.654 11.876 0.000 [0.543, 0.765] supported note: β = standardised path coefficient; ci = confidence interval. the direct effects analysis revealed significant positive relationships between all antecedent constructs and bi adoption intensity. management support demonstrated the strongest effect (β = 0.298, p < 0.001), followed by analytical capabilities (β = 0.267, p < 0.001) and technological readiness (β = 0.234, p < 0.001). these findings support the theoretical proposition that organisational factors play particularly important roles in bi adoption decisions. asian business research journal, 2025, 10(8): 73-84 81 © 2025 by the author; licensee eastern centre of science and education, usa the relationships between bi adoption intensity and performance outcomes demonstrated strong positive effects across all three dependent variables. bi adoption showed the strongest effect on customer relationship management effectiveness (β = 0.698, p < 0.001), followed by operational efficiency (β = 0.678, p < 0.001) and innovation capabilities (β = 0.654, p < 0.001). these results support the theoretical proposition that bi adoption contributes to multiple dimensions of strategic performance. table 5. predictive relevance assessment. construct r² q² effect size (f²) bi adoption intensity 0.683 0.512 large operational efficiency 0.459 0.324 medium crm effectiveness 0.487 0.341 medium innovation capabilities 0.428 0.296 medium the predictive relevance assessment demonstrated strong explanatory power for the structural model. bi adoption intensity achieved an r² value of 0.683, indicating that the antecedent constructs explain 68.3% of the variance in bi adoption. the q² values were all positive, indicating satisfactory predictive relevance for the model constructs. table 6. specific indirect effects. indirect path β t-value p-value ci (95%) tr → bi → oe 0.159 3.234 0.001 [0.078, 0.240] tr → bi → crm 0.163 3.387 0.001 [0.082, 0.244] tr → bi → ic 0.153 3.156 0.002 [0.074, 0.232] ms → bi → oe 0.202 4.567 0.000 [0.123, 0.281] ms → bi → crm 0.208 4.743 0.000 [0.129, 0.287] ms → bi → ic 0.195 4.432 0.000 [0.118, 0.272] ac → bi → oe 0.181 3.891 0.000 [0.103, 0.259] ac → bi → crm 0.186 4.023 0.000 [0.108, 0.264] ac → bi → ic 0.175 3.743 0.000 [0.099, 0.251] the specific indirect effects analysis revealed significant mediation effects of bi adoption intensity on the relationships between antecedent constructs and performance outcomes. management support demonstrated the strongest indirect effects across all performance dimensions, highlighting the critical role of executive commitment in translating bi investments into strategic benefits. 4.3. supplementary analyses the supplementary analyses employed multigroup analysis (mga) and fuzzy-set qualitative comparative analysis (fsqca) to explore configurational patterns and contextual variations in bi adoption and performance outcomes. table 7. multigroup analysis results. path small firms (n=156) large firms (n=156) p-value (mga) tr → bi 0.298 0.187 0.032 ms → bi 0.234 0.356 0.019 ac → bi 0.312 0.223 0.041 bi → oe 0.634 0.721 0.047 bi → crm 0.687 0.709 0.234 bi → ic 0.623 0.685 0.189 note: mga = multigroup analysis; p-values < 0.05 indicate significant group differences. the multigroup analysis revealed significant differences between small and large firms in several key relationships. technological readiness showed stronger effects on bi adoption for small firms (β = 0.298) compared to large firms (β = 0.187), whilst management support demonstrated stronger effects for large firms (β = 0.356) compared to small firms (β = 0.234). these findings suggest that different factors drive bi adoption success across organisational contexts. table 8. fsqca results configurations for high bi adoption. configuration tr sc dq ms oc ac cp cc consistency coverage config 1 ● ● ● ● ● ● ⊗ ⊗ 0.89 0.34 config 2 ● ⊗ ● ● ● ● ● ● 0.86 0.28 config 3 ● ● ⊗ ● ● ● ● ⊗ 0.84 0.26 config 4 ⊗ ● ● ● ● ● ● ● 0.82 0.23 note: ● = presence of condition; ⊗ = absence of condition; blank = don't care condition the fsqca analysis identified four distinct configurational pathways to high bi adoption, each demonstrating consistency scores above 0.8 and meaningful coverage scores. configuration 1 represents the "comprehensive readiness" pathway, characterised by strong technological, organisational, and data quality foundations but lower environmental pressures. configuration 2 represents the "pressure-driven" pathway, emphasising environmental pressures and organisational capabilities whilst tolerating technological limitations. asian business research journal, 2025, 10(8): 73-84 82 © 2025 by the author; licensee eastern centre of science and education, usa table 9. fsqca results configurations for high performance. configuration bi tr ms ac oc dq consistency coverage high oe config 1 ● ● ● ● ● ● 0.91 0.42 high oe config 2 ● ⊗ ● ● ● ● 0.87 0.31 high crm config 1 ● ● ● ● ● ● 0.89 0.39 high crm config 2 ● ● ● ● ⊗ ● 0.85 0.28 high ic config 1 ● ● ● ● ● ● 0.88 0.36 high ic config 2 ● ● ● ● ● ⊗ 0.84 0.27 the fsqca analysis for performance outcomes revealed that whilst bi adoption intensity is a necessary condition for high performance across all dimensions, different combinations of supporting factors contribute to optimal outcomes. high operational efficiency requires strong technological and organisational foundations, whilst high customer relationship management effectiveness can be achieved through alternative pathways emphasising either technological or cultural capabilities. 5. discussion of research results and conclusions the empirical findings of this study provide compelling evidence for the complex, multifaceted nature of business intelligence adoption within vietnam's retail sector, whilst demonstrating the significant strategic performance benefits that can be achieved through effective bi implementation. the results advance theoretical understanding by validating the integrated toe-dynamic capabilities framework and revealing important configurational patterns that extend beyond traditional linear models. the significant positive relationships between all antecedent constructs and bi adoption intensity support the theoretical proposition that successful bi implementation requires favourable conditions across technological, organisational, and environmental dimensions. the particularly strong effect of management support (β = 0.298, p < 0.001) aligns with previous research emphasising the critical role of executive commitment in technology adoption processes (popovič et al., 2012). this finding resonates with institutional theory's emphasis on the importance of organisational legitimacy and resource allocation in innovation adoption (dimaggio & powell, 1983). the substantial effect of analytical capabilities (β = 0.267, p < 0.001) supports the dynamic capabilities perspective that technological resources must be complemented by human capabilities to achieve strategic benefits (teece et al., 1997). the technological readiness construct demonstrated significant effects on bi adoption (β = 0.234, p < 0.001), supporting the toe framework's emphasis on technological context factors. this finding aligns with previous research indicating that it infrastructure maturity and technical expertise serve as foundational prerequisites for successful bi implementation (wixom & watson, 2001). however, the moderate effect size suggests that technological capabilities alone are insufficient for bi adoption success, supporting the study's integrated theoretical approach that emphasises the importance of organisational and environmental factors. the significant relationships between bi adoption intensity and all three performance dimensions provide strong empirical support for the theoretical proposition that bi technologies serve as enablers of strategic performance enhancement. the particularly strong effect on customer relationship management effectiveness (β = 0.698, p < 0.001) supports previous research indicating that bi technologies provide substantial benefits for customer analytics and relationship management (chen et al., 2012). the significant effects on operational efficiency (β = 0.678, p < 0.001) and innovation capabilities (β = 0.654, p < 0.001) demonstrate that bi adoption contributes to multiple dimensions of organisational performance, supporting the dynamic capabilities perspective that technological resources enhance sensing, seizing, and reconfiguring capabilities. the multigroup analysis results reveal important contextual variations in bi adoption patterns between small and large firms. the stronger effect of technological readiness for small firms (β = 0.298 vs. β = 0.187) suggests that resource constraints in smaller organisations make technological foundation particularly critical for bi adoption success. conversely, the stronger effect of management support for large firms (β = 0.356 vs. β = 0.234) indicates that organisational complexity in larger entities requires stronger executive commitment to overcome implementation barriers. these findings support contingency theory perspectives that emphasise the importance of contextual factors in technology adoption processes (lawrence & lorsch, 1967). the fsqca results provide particularly valuable insights by revealing multiple configurational pathways to successful bi adoption and performance outcomes. the identification of four distinct configurations for high bi adoption demonstrates the principle of equifinality, suggesting that organisations can achieve successful bi implementation through different combinations of technological, organisational, and environmental factors. this finding advances theoretical understanding by moving beyond simple linear models to recognise the complex, synergistic relationships between antecedent factors. the "comprehensive readiness" configuration emphasises the importance of strong technological and organisational foundations whilst tolerating lower environmental pressures. this pathway appears particularly relevant for organisations operating in stable competitive environments where internal capabilities drive bi adoption decisions. the "pressure-driven" configuration demonstrates that environmental pressures can compensate for technological limitations when combined with strong organisational capabilities, supporting institutional theory's emphasis on environmental influences on organisational behaviour (scott, 2001). the fsqca results for performance outcomes reveal that whilst bi adoption intensity serves as a necessary condition for high performance, different combinations of supporting factors contribute to optimal outcomes across performance dimensions. this finding supports the dynamic capabilities perspective that technological resources must be complemented by appropriate organisational capabilities to achieve strategic benefits. the identification of alternative pathways to high performance provides practical insights for organisations seeking to optimise their bi implementations. the study's theoretical contributions extend beyond empirical validation of existing frameworks to advance understanding of configurational complexity in technology adoption processes. the integration of toe framework asian business research journal, 2025, 10(8): 73-84 83 © 2025 by the author; licensee eastern centre of science and education, usa with dynamic capabilities theory provides a more comprehensive theoretical model that can accommodate both contextual influences and capability development processes. this theoretical integration addresses limitations in existing literature that tends to focus on either environmental factors or organisational capabilities in isolation. the methodological contributions of this study demonstrate the value of combining traditional sem approaches with configurational analysis methods. the fsqca results provide insights that would not be apparent from sem analysis alone, particularly regarding alternative pathways to successful outcomes. this methodological triangulation enhances the study's analytical depth and provides more comprehensive understanding of the complex phenomena under investigation. the practical implications of these findings are substantial for retail executives and policymakers in vietnam and similar emerging market contexts. the identification of critical success factors and configurational pathways provides actionable insights for organisations planning bi implementations. the emphasis on management support and analytical capabilities highlights the importance of organisational readiness alongside technological investments. the configurational results suggest that organisations should assess their unique contexts to identify the most appropriate pathway for bi adoption success. the study's limitations include its cross-sectional design, which limits causal inference capabilities, and its focus on vietnam's retail sector, which may limit generalisability to other contexts. future research should employ longitudinal designs to examine the dynamic nature of bi adoption processes and extend the investigation to other industries and geographic contexts. additionally, the study's emphasis on executive perspectives could be complemented by multi-level analyses that examine employee and customer perspectives on bi adoption outcomes. the findings contribute to the broader literature on digital transformation in emerging economies by demonstrating how organisations can successfully navigate technological adoption challenges whilst leveraging institutional and cultural factors to achieve strategic benefits. the study's emphasis on configurational complexity provides valuable insights for understanding how different combinations of factors contribute to successful digital transformation outcomes. these insights have broader implications for understanding technology adoption processes across emerging economies experiencing similar transitional dynamics. in conclusion, this study advances theoretical understanding of business intelligence adoption whilst providing practical insights for organisations seeking to achieve strategic performance benefits through bi implementation. the integration of multiple theoretical perspectives and methodological approaches demonstrates the value of comprehensive research designs for understanding complex organisational phenomena. the findings support the proposition that successful bi adoption requires synergistic combinations of technological, organisational, and environmental factors, whilst revealing multiple pathways to achieving superior performance outcomes. acknowledgments: i would like to express my sincere gratitude to dr. hoang vu hiep for his invaluable guidance and inspiration throughout this research. his expertise, insights, and unwavering support have been instrumental in shaping the direction and quality of this study. i am deeply appreciative of his generosity in sharing his time, knowledge, and network, which have greatly contributed to the success of this research. his mentorship and commitment to academic excellence have not only enriched the quality of this work but have also had a profound impact on my personal and professional growth. references baker, j. 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export-oriented enterprises le dung truong vin university, vietnam. email: truongledung1411@gmail.com abstract this study examines how trade war threat perceptions influence strategic transformation processes and subsequent performance outcomes among vietnamese export-oriented enterprises during periods of heightened global trade uncertainty. drawing upon dynamic capabilities theory and institutional theory, the research develops and empirically tests a comprehensive conceptual framework linking managerial threat perceptions to strategic adaptability and firm performance through mediating mechanisms of organisational learning and resource reconfiguration. utilising a mixed-methods approach combining structural equation modelling (sem) and fuzzy-set qualitative comparative analysis (fsqca), the study analyses primary data from 384 vietnamese manufacturing firms collected during 2016-2017. the findings reveal that trade war threat perceptions significantly enhance strategic adaptability, which subsequently improves financial performance through multiple pathways. however, the relationship is moderated by firm size and industry characteristics, with larger firms demonstrating superior adaptive capabilities. the fsqca results identify three distinct configurational pathways to high performance, suggesting equifinality in strategic responses to trade uncertainties. this research contributes to the strategic management literature by elucidating the cognitive and behavioural mechanisms through which external threats catalyse organisational transformation, whilst providing practical insights for managers navigating volatile trade environments in emerging markets. keywords: dynamic capabilities, export-oriented firms, strategic transformation, trade war perceptions, vietnam. 1. introduction the escalating frequency of international trade disputes has fundamentally transformed the global economic landscape, compelling firms to reassess their strategic orientations and operational frameworks (buckley et al., 2017). contemporary geopolitical tensions, characterised by protectionist policies and retaliatory measures, have created unprecedented levels of uncertainty for export-dependent enterprises, particularly those operating from emerging market economies (contractor, 2017). vietnam, as one of asia's most dynamic export-oriented economies, provides a compelling empirical context for examining how firms perceive and respond to trade war threats, given its unique position within global supply chains and its historical experience with economic reforms. the strategic management literature has increasingly recognised that organisational responses to external shocks are fundamentally shaped by managerial perceptions and cognitive frameworks rather than merely objective environmental conditions (ocasio, 1997). this perceptual dimension becomes particularly salient in contexts of trade uncertainty, where the interpretation of threat signals determines the nature and intensity of strategic responses (wernerfelt, 1984). however, existing research has predominantly focused on developed market contexts, leaving significant gaps in understanding how firms in emerging economies perceive and adapt to traderelated threats. the theoretical significance of this investigation lies in its integration of cognitive perspectives with dynamic capabilities theory to explain strategic transformation processes. whilst dynamic capabilities theory emphasises firms' abilities to sense, seize, and reconfigure resources in response to environmental changes (teece, 2007), the role of managerial perceptions in triggering and directing these capabilities remains underexplored. this study addresses this theoretical gap by proposing that threat perceptions serve as catalytic mechanisms that activate dynamic capabilities, thereby enabling strategic transformation. from a practical standpoint, this research responds to the urgent need for evidence-based insights into how export-oriented firms can navigate increasingly volatile trade environments. the findings carry particular relevance for emerging market enterprises that often lack the institutional support and resource buffers available to their developed market counterparts. by elucidating the mechanisms through which threat perceptions influence strategic adaptation and performance outcomes, this study provides actionable knowledge for managers and policymakers seeking to enhance firm resilience in uncertain trade environments. the empirical contribution of this research stems from its methodological innovation in combining traditional covariance-based structural equation modelling with fuzzy-set qualitative comparative analysis (fsqca). this mailto:truongledung1411@gmail.com https://doi.org/10.55220/2576-6759.581 asian business research journal, 2025, 10(9): 113-123 114 © 2025 by the author; licensee eastern centre of science and education, usa mixed-methods approach enables both the testing of causal relationships and the identification of configurational pathways to performance, thereby providing a more comprehensive understanding of the complex relationships between perceptions, strategies, and outcomes. the vietnamese context further enhances the study's contribution by providing insights into strategic adaptation processes in a rapidly developing economy with strong export orientation. 2. foundational theories and literature review 2.1. foundational theories 2.1.1. dynamic capabilities theory dynamic capabilities theory, originally conceptualised by teece et al. (1997), provides a robust theoretical foundation for understanding how firms adapt to environmental uncertainties through the deliberate modification of their resource bases and organisational routines. the theory posits that firms possess higher-order capabilities that enable them to sense environmental changes, seize emerging opportunities, and reconfigure existing resources to maintain competitive advantage (teece, 2007). these dynamic capabilities are particularly crucial in volatile environments where traditional competitive advantages may rapidly erode. the sensing dimension of dynamic capabilities involves the continuous scanning of technological, market, and regulatory environments to identify emerging threats and opportunities (teece, 2007). in the context of trade wars, sensing capabilities enable firms to detect early warning signals of protectionist measures, supply chain disruptions, or market access restrictions. however, the effectiveness of sensing capabilities is inherently dependent upon managerial attention allocation and interpretive frameworks, suggesting that cognitive factors play a fundamental role in dynamic capability deployment (ocasio, 1997). the seizing dimension encompasses firms' abilities to mobilise resources and execute strategic responses to environmental changes (eisenhardt & martin, 2000). this involves making strategic investments, forming alliances, or reconfiguring organisational structures to capitalise on identified opportunities or mitigate perceived threats. the effectiveness of seizing capabilities is contingent upon firms' resource endowments, organisational flexibility, and decision-making processes (helfat et al., 2007). the reconfiguring dimension involves the continuous transformation of asset bases and organisational architectures to maintain evolutionary fitness (teece, 2007). this encompasses both asset orchestration activities and the modification of operational routines to align with new strategic directions. reconfiguration capabilities are particularly relevant in trade war contexts, where firms may need to rapidly restructure supply chains, relocate production facilities, or develop new market relationships. despite its theoretical richness, dynamic capabilities theory has been criticised for its tautological tendencies and limited attention to the cognitive foundations of capability development (arend & bromiley, 2009). this study addresses these limitations by explicitly incorporating managerial threat perceptions as antecedents to dynamic capability activation, thereby providing a more nuanced understanding of the mechanisms through which environmental uncertainty triggers organisational adaptation. 2.1.2. institutional theory institutional theory offers complementary insights into how environmental pressures shape organisational behaviour and strategic choices (dimaggio & powell, 1983). the theory emphasises that firms operate within complex institutional environments characterised by formal rules, informal norms, and cognitive frameworks that constrain and enable organisational action (scott, 1995). from an institutional perspective, trade wars represent significant institutional shocks that disrupt established regulatory frameworks and create new compliance requirements for export-oriented firms. the coercive isomorphism mechanism suggests that regulatory pressures and government policies directly influence firm behaviour (dimaggio & powell, 1983). in trade war contexts, coercive pressures may manifest through tariff impositions, export restrictions, or compliance requirements that force firms to modify their operational practices. vietnamese export-oriented firms, for instance, may face coercive pressures to diversify their market portfolios or relocate production facilities to circumvent trade barriers. mimetic isomorphism occurs when firms imitate the practices of successful peers in response to environmental uncertainty (dimaggio & powell, 1983). the uncertainty generated by trade wars may prompt firms to benchmark their strategic responses against industry leaders or successful competitors. this mimetic behaviour can lead to the convergence of strategic practices within industries, potentially reducing the heterogeneity of competitive responses. normative isomorphism stems from professional networks and industry associations that promote particular practices or standards (dimaggio & powell, 1983). trade associations, consulting firms, and professional networks may disseminate best practices for managing trade war impacts, thereby influencing the strategic choices of member firms. the strength of normative pressures may vary across industries and institutional contexts, with some sectors exhibiting stronger professional norms than others. the institutional perspective highlights the importance of legitimacy in shaping firm responses to environmental pressures (suchman, 1995). firms must balance efficiency considerations with legitimacy requirements when formulating strategic responses to trade wars. this balance may be particularly challenging for emerging market firms that operate across multiple institutional contexts with potentially conflicting requirements. 2.2. review of empirical and relevant studies 2.2.1. trade war perceptions and organisational responses the literature on trade war impacts has predominantly focused on macroeconomic consequences rather than firm-level behavioural responses (amiti et al., 2017). however, emerging research suggests that managerial perceptions of trade uncertainty significantly influence strategic decision-making processes and resource allocation patterns (handley & limão, 2017). firms operating in trade-intensive sectors demonstrate heightened sensitivity asian business research journal, 2025, 10(9): 113-123 115 © 2025 by the author; licensee eastern centre of science and education, usa to policy uncertainty, with managers exhibiting increased risk aversion and delayed investment decisions during periods of elevated trade tensions (baker et al., 2016). empirical evidence from various contexts suggests that trade policy uncertainty affects firm behaviour through multiple channels. handley and limão (2017) demonstrate that reductions in trade policy uncertainty stimulate firm entry and investment in export markets, suggesting that uncertainty perceptions directly influence strategic commitments. similarly, feng et al. (2017) find that chinese firms reduce their export intensity and diversify their market portfolios in response to perceived trade policy risks. the cognitive dimension of trade war perceptions has received limited empirical attention, despite its theoretical importance. managerial cognition research suggests that threat perceptions are shaped by individual and organisational factors, including prior experience, industry context, and information processing capabilities (kaplan, 2008). managers with greater international experience may demonstrate enhanced ability to interpret trade war signals and formulate appropriate responses, whilst those with limited exposure to trade disruptions may exhibit suboptimal decision-making patterns. 2.2.2. strategic adaptability and dynamic capabilities strategic adaptability, defined as firms' capacity to modify their strategic orientations in response to environmental changes, has emerged as a critical determinant of performance in volatile environments (shimizu & hitt, 2004). the concept encompasses both the speed and effectiveness of strategic adjustments, with more adaptable firms demonstrating superior performance outcomes during periods of environmental turbulence (oktemgil & greenley, 1997). empirical research has identified several antecedents of strategic adaptability, including organisational learning capabilities, strategic flexibility, and top management characteristics (shimizu & hitt, 2004). firms with stronger learning orientations demonstrate enhanced ability to acquire, assimilate, and apply new knowledge in response to environmental changes (cohen & levinthal, 1990). strategic flexibility, encompassing both resource flexibility and coordination flexibility, enables firms to rapidly reconfigure their strategic postures without incurring excessive switching costs (sanchez, 1995). the relationship between dynamic capabilities and strategic adaptability has been extensively studied, with research generally supporting the positive association between capability strength and adaptive performance (eisenhardt & martin, 2000). however, the mechanisms through which dynamic capabilities enhance adaptability remain somewhat unclear, with some studies emphasising the role of organisational routines (winter, 2003) whilst others focus on managerial decision-making processes (adner & helfat, 2003). 2.2.3. performance outcomes of strategic adaptation the performance implications of strategic adaptation have been examined across various contextual settings, with mixed empirical findings. some studies report positive relationships between adaptive capabilities and performance outcomes, particularly in dynamic environments (shimizu & hitt, 2004). however, other research suggests that excessive adaptation may be detrimental to performance due to increased coordination costs and strategic inconsistency (miller & friesen, 1982). the contingent nature of adaptation-performance relationships has prompted researchers to examine moderating factors that influence these linkages. environmental dynamism, resource constraints, and industry characteristics have all been identified as significant moderators of adaptation-performance relationships (aragóncorrea & sharma, 2003). firms operating in highly dynamic environments may derive greater benefits from adaptive capabilities, whilst those in stable contexts may benefit more from operational efficiency and consistency. the measurement of performance outcomes in adaptation studies has varied considerably, with researchers employing both financial and non-financial indicators (venkatraman & ramanujam, 1986). financial measures, including return on assets, sales growth, and profitability, provide objective assessments of adaptation effectiveness but may not capture the full range of benefits derived from strategic flexibility. non-financial measures, such as market position and stakeholder satisfaction, offer complementary insights but may be subject to perceptual biases. 2.3. proposed research model drawing upon the theoretical foundations and empirical insights discussed above, this study proposes a comprehensive research model linking trade war threat perceptions to strategic transformation and performance outcomes. the model incorporates six primary constructs: trade war threat perceptions, strategic adaptability, organisational learning, resource reconfiguration, firm performance, and environmental dynamism as a moderating variable. trade war threat perceptions represent managers' subjective assessments of the likelihood and potential impact of trade-related disruptions on their firms' operations and performance (milliken, 1987). this construct captures both the perceived probability of trade war escalation and the anticipated magnitude of consequences for firm operations. the measurement of threat perceptions draws upon established scales from the strategic management literature (dutton & jackson, 1987), adapted to reflect trade-specific concerns. strategic adaptability encompasses firms' demonstrated capacity to modify their strategic orientations, resource allocations, and operational practices in response to environmental changes (shimizu & hitt, 2004). the construct incorporates dimensions of strategic flexibility, response speed, and adaptation effectiveness, measured through multi-item scales validated in previous research (oktemgil & greenley, 1997). strategic adaptability serves as the primary mediating variable linking threat perceptions to performance outcomes. organisational learning captures firms' systematic efforts to acquire, interpret, and apply new knowledge relevant to their strategic challenges (huber, 1991). the construct encompasses both exploitative learning activities that refine existing capabilities and explorative learning that develops new competencies (march, 1991). measurement items are adapted from established organisational learning scales, focusing on information acquisition, distribution, interpretation, and organisational memory processes. asian business research journal, 2025, 10(9): 113-123 116 © 2025 by the author; licensee eastern centre of science and education, usa resource reconfiguration represents firms' deliberate modification of their resource portfolios and asset deployment patterns to align with new strategic priorities (eisenhardt & martin, 2000). this construct captures both tangible resource adjustments, such as facility relocations or supply chain modifications, and intangible resource reconfigurations, including capability development and knowledge integration activities (teece, 2007). figure 1. proposed research model. firm performance is conceptualised as a multidimensional construct encompassing both financial and operational indicators of organisational effectiveness (venkatraman & ramanujam, 1986). financial performance measures include return on assets, sales growth, and profit margins, whilst operational performance indicators capture market share, customer satisfaction, and operational efficiency metrics. this multidimensional approach provides a comprehensive assessment of adaptation effectiveness. environmental dynamism serves as a key moderating variable, capturing the rate of change and unpredictability in firms' competitive environments (dess & beard, 1984). the construct encompasses technological, competitive, and regulatory dynamism dimensions, measured through established scales adapted to reflect trade-related uncertainties. environmental dynamism is expected to strengthen the relationships between threat perceptions, strategic adaptation, and performance outcomes. the proposed model incorporates several hypothesised relationships based on theoretical logic and empirical evidence. first, trade war threat perceptions are expected to positively influence strategic adaptability, as managers who perceive greater threats will be more motivated to initiate adaptive responses (dutton & jackson, 1987). second, strategic adaptability is hypothesised to enhance firm performance through improved alignment between organisational capabilities and environmental requirements (miles & snow, 1978). third, organisational learning and resource reconfiguration are proposed as mediating mechanisms linking threat perceptions to strategic adaptability, reflecting the process through which firms develop and deploy adaptive capabilities (teece, 2007). finally, environmental dynamism is expected to moderate these relationships, with stronger effects anticipated in more dynamic contexts (eisenhardt & martin, 2000). 3. research methodology 3.1. research design this study employs a quantitative research design utilising cross-sectional survey data to test the proposed theoretical model linking trade war threat perceptions to strategic transformation and performance outcomes. the research adopts a positivist epistemological stance, emphasising objective measurement and statistical hypothesis testing to establish causal relationships among key constructs (creswell, 2014). the quantitative approach is particularly appropriate given the study's focus on testing established theoretical relationships and the need for generalisable findings applicable to vietnamese export-oriented enterprises. the research design incorporates both variance-based structural equation modelling (pls-sem) and fuzzy-set qualitative comparative analysis (fsqca) to provide comprehensive insights into the complex relationships among study variables. this methodological triangulation approach enables both the testing of linear relationships through sem and the identification of configurational pathways to performance through fsqca, thereby addressing potential limitations of single-method approaches (woodside, 2013). the combination of symmetric (sem) and asymmetric (fsqca) analytical techniques provides a more nuanced understanding of how different combinations of antecedent conditions lead to desired outcomes. 3.2. data collection data collection was conducted through a structured survey administered to senior managers of vietnamese export-oriented manufacturing firms during the period from august 2016 to march 2017. this timeframe was strategically selected to capture managerial perceptions during a period of heightened global trade uncertainty, following the brexit referendum and preceding major trade policy announcements. the target population comprised manufacturing firms with significant export operations, defined as companies deriving at least 25% of their revenues from international sales. the sampling frame was constructed using the vietnam chamber of commerce and industry (vcci) database, supplemented by listings from provincial industrial promotion agencies. a stratified random sampling approach was employed to ensure adequate representation across industries, firm sizes, and geographical regions. the stratification criteria included: (1) industry classification based on two-digit standard industrial classification codes, (2) firm size categorised by employee numbers, and (3) geographical location spanning vietnam's major economic regions. asian business research journal, 2025, 10(9): 113-123 117 © 2025 by the author; licensee eastern centre of science and education, usa survey instruments were initially developed in english and subsequently translated into vietnamese using back-translation procedures to ensure linguistic equivalence (brislin, 1970). pre-testing was conducted with 25 managers from various industries to assess item clarity, response format appropriateness, and survey completion time. minor modifications were made based on pre-test feedback to enhance item comprehensibility and cultural relevance. data collection utilised multiple channels to maximise response rates and sample representativeness. primary collection methods included face-to-face interviews conducted by trained research assistants, telephone interviews for geographically dispersed respondents, and online surveys for firms with established internet infrastructure. research assistants received comprehensive training on survey administration protocols, ethical considerations, and quality control procedures. a total of 1,247 firms were initially contacted, with 612 agreeing to participate in the study. after accounting for incomplete responses and data quality issues, the final sample comprised 384 useable questionnaires, representing a 30.8% effective response rate. this response rate compares favourably with similar studies in emerging market contexts and exceeds recommended thresholds for structural equation modelling analyses (hair et al., 2017). 3.3. measurement & validation all construct measurements were adapted from established scales with demonstrated reliability and validity in previous research contexts. trade war threat perceptions were measured using a six-item scale adapted from milliken (1987) and dutton and jackson (1987), focusing on managers' assessments of trade policy uncertainty and potential business impacts. sample items included "trade policy changes pose significant threats to our business operations" and "our company faces substantial risks from international trade disputes." strategic adaptability was assessed using an eight-item scale derived from shimizu and hitt (2004) and oktemgil and greenley (1997), capturing firms' demonstrated capacity for strategic adjustment. representative items included "our company quickly adjusts its strategies in response to market changes" and "we effectively modify our business approaches when environmental conditions change." the scale encompasses dimensions of strategic flexibility, response speed, and adaptation effectiveness. organisational learning was measured through a seven-item scale based on huber (1991) and sinkula et al. (1997), reflecting firms' systematic knowledge acquisition and application processes. key items included "our company actively seeks information about changes in our business environment" and "we quickly apply new knowledge to improve our operations." the scale captures both exploitative and explorative learning dimensions. resource reconfiguration was assessed using a five-item scale adapted from eisenhardt and martin (2000) and teece (2007), focusing on firms' deliberate modification of resource portfolios. sample items included "our company regularly reconfigures its resources to meet new challenges" and "we effectively redeploy assets to support new strategic initiatives." the scale encompasses both tangible and intangible resource adjustments. firm performance was measured using a multidimensional approach incorporating both financial and operational indicators. financial performance items were adapted from venkatraman and ramanujam (1986), including measures of profitability, sales growth, and return on assets. operational performance items captured market position, customer satisfaction, and operational efficiency metrics. this comprehensive approach provides a robust assessment of adaptation effectiveness across multiple performance dimensions. environmental dynamism was assessed using established scales from dess and beard (1984) and miller and friesen (1982), adapted to reflect trade-related uncertainties. the five-item scale captured the rate of change and unpredictability in firms' competitive environments, with items such as "our industry experiences rapid technological changes" and "customer preferences in our markets are highly unpredictable." all items utilised seven-point likert scales ranging from "strongly disagree" (1) to "strongly agree" (7) to provide adequate variance for statistical analyses. reverse-coded items were included in each scale to minimise response bias effects. common method variance was addressed through temporal separation of independent and dependent variable measurements, anonymous response collection, and statistical testing procedures recommended by podsakoff et al. (2003). 3.4. analytical procedure the analytical approach comprised multiple stages designed to ensure data quality, validate measurement models, and test hypothesised relationships. initial data screening involved examination of missing data patterns, outlier detection, and assessment of distributional assumptions. missing data were handled using listwise deletion given the relatively low percentage of missing values (< 5%) and the availability of adequate sample sizes for subsequent analyses. exploratory factor analysis (efa) was conducted using principal component analysis with varimax rotation to assess the underlying factor structure of the measurement items. the efa results informed decisions regarding item retention and construct dimensionality prior to confirmatory analyses. kaiser-meyer-olkin (kmo) measures and bartlett's tests of sphericity were examined to ensure data suitability for factor analysis. partial least squares structural equation modelling (pls-sem) was employed as the primary analytical technique using smartpls 4.0 software. pls-sem was selected due to its appropriateness for exploratory research, ability to handle complex models with multiple constructs, and robustness to non-normal data distributions (hair et al., 2017). the analytical procedure followed established two-stage protocols, beginning with measurement model assessment followed by structural model evaluation. measurement model assessment involved examination of indicator reliability, internal consistency reliability, convergent validity, and discriminant validity. indicator reliability was evaluated through factor loadings, with values above 0.70 considered acceptable (hair et al., 2017). internal consistency was assessed using cronbach's alpha and composite reliability measures, with values above 0.70 indicating adequate reliability. convergent validity was evaluated through average variance extracted (ave) values, with thresholds above 0.50 considered satisfactory. asian business research journal, 2025, 10(9): 113-123 118 © 2025 by the author; licensee eastern centre of science and education, usa discriminant validity was assessed using both the fornell-larcker criterion and the heterotrait-monotrait (htmt) ratio of correlations. the fornell-larcker criterion requires that each construct's ave square root exceeds its correlations with other constructs. the htmt approach provides more stringent discriminant validity assessment, with values below 0.85 indicating adequate discriminant validity (henseler et al., 2015). structural model evaluation involved assessment of path coefficients, their significance levels, and explanatory power (r²) of endogenous constructs. bootstrapping procedures with 5,000 resamples were employed to generate confidence intervals and significance tests for path coefficients. effect sizes (f²) were calculated to assess the practical significance of relationships, with values of 0.02, 0.15, and 0.35 representing small, medium, and large effects respectively (cohen, 1988). predictive relevance was evaluated through stone-geisser q² values, with positive values indicating adequate predictive relevance. complementary fuzzy-set qualitative comparative analysis (fsqca) was conducted using fsqca 3.0 software to identify configurational pathways to high performance. the fsqca approach enables examination of complex causation patterns, including equifinality (multiple paths to the same outcome) and conjunctural causation (combined effects of conditions). calibration of fuzzy-set membership scores utilised the direct method with anchor points based on theoretical knowledge and empirical distributions. 4. research findings 4.1. measurement model assessment the exploratory factor analysis (efa) results confirmed the theoretical factor structure, with all items loading appropriately on their intended constructs. the kaiser-meyer-olkin (kmo) measure of sampling adequacy was 0.891, exceeding the recommended threshold of 0.80, whilst bartlett's test of sphericity was significant (χ² = 8,247.34, p < 0.001), indicating that the data were suitable for factor analysis. the efa extracted six factors with eigenvalues greater than 1.0, explaining 72.4% of the total variance in the measurement items. table 1. exploratory factor analysis results. construct items factor loading eigenvalue variance explained (%) trade war threat perceptions twp1 0.826 4.23 15.8 twp2 0.791 twp3 0.803 twp4 0.744 twp5 0.768 twp6 0.712 strategic adaptability sa1 0.789 3.87 14.2 sa2 0.825 sa3 0.801 sa4 0.743 sa5 0.776 sa6 0.759 sa7 0.724 sa8 0.705 organisational learning ol1 0.812 3.45 12.7 ol2 0.798 ol3 0.774 ol4 0.756 ol5 0.729 ol6 0.743 ol7 0.721 resource reconfiguration rr1 0.793 2.98 11.3 rr2 0.817 rr3 0.759 rr4 0.724 rr5 0.708 firm performance fp1 0.751 2.67 9.8 fp2 0.783 fp3 0.796 fp4 0.742 fp5 0.718 environmental dynamism ed1 0.729 2.31 8.6 ed2 0.756 ed3 0.741 ed4 0.708 ed5 0.695 the confirmatory factor analysis (cfa) results demonstrated satisfactory measurement model fit, with all factor loadings exceeding the 0.70 threshold recommended by hair et al. (2017). internal consistency reliability was assessed through cronbach's alpha and composite reliability measures, with all values exceeding 0.80, indicating high internal consistency. convergent validity was established through average variance extracted (ave) values, which ranged from 0.564 to 0.647, all exceeding the 0.50 threshold. asian business research journal, 2025, 10(9): 113-123 119 © 2025 by the author; licensee eastern centre of science and education, usa table 2. reliability and validity assessment. construct items cronbach's alpha composite reliability ave trade war threat perceptions 6 0.847 0.889 0.573 strategic adaptability 8 0.892 0.915 0.577 organisational learning 7 0.881 0.909 0.564 resource reconfiguration 5 0.829 0.878 0.588 firm performance 5 0.836 0.884 0.605 environmental dynamism 5 0.823 0.873 0.647 discriminant validity was evaluated using both the fornell-larcker criterion and the heterotrait-monotrait (htmt) ratio of correlations. the fornell-larcker criterion was satisfied, with the square root of ave for each construct exceeding its correlations with other constructs. the htmt analysis revealed all values below 0.85, confirming adequate discriminant validity according to the stringent criterion proposed by henseler et al. (2015). table 3. discriminant validity assessment (fornell-larcker criterion). construct twp sa ol rr fp ed trade war threat perceptions 0.757 strategic adaptability 0.412 0.760 organisational learning 0.338 0.534 0.751 resource reconfiguration 0.291 0.487 0.456 0.767 firm performance 0.246 0.521 0.398 0.431 0.778 environmental dynamism 0.387 0.298 0.267 0.312 0.189 0.804 note: diagonal elements represent the square root of ave; off-diagonal elements represent construct correlations. table 4. discriminant validity assessment (htmt ratio). construct twp sa ol rr fp ed trade war threat perceptions strategic adaptability 0.463 organisational learning 0.382 0.591 resource reconfiguration 0.334 0.547 0.517 firm performance 0.281 0.583 0.453 0.491 environmental dynamism 0.441 0.338 0.308 0.362 0.221 4.2. structural estimation model assessment the structural model evaluation revealed significant support for the proposed theoretical relationships. the model explained substantial variance in the endogenous constructs, with r² values of 0.347 for strategic adaptability, 0.289 for organisational learning, 0.312 for resource reconfiguration, and 0.418 for firm performance. these values exceed cohen's (1988) thresholds for medium effect sizes, indicating that the model provides meaningful explanatory power. table 5. direct effects results. path path coefficient standard error t-value p-value 95% ci f² decision twp → sa 0.243** 0.068 3.574 0.001 [0.109, 0.377] 0.089 supported twp → ol 0.198* 0.071 2.789 0.006 [0.059, 0.337] 0.052 supported twp → rr 0.167* 0.069 2.420 0.016 [0.032, 0.302] 0.041 supported sa → fp 0.334*** 0.059 5.661 0.000 [0.218, 0.450] 0.142 supported ol → sa 0.398*** 0.064 6.219 0.000 [0.273, 0.523] 0.187 supported rr → sa 0.289** 0.062 4.661 0.000 [0.167, 0.411] 0.098 supported ol → fp 0.187* 0.071 2.634 0.009 [0.048, 0.326] 0.044 supported rr → fp 0.221** 0.066 3.348 0.001 [0.092, 0.350] 0.067 supported note: *p < 0.01; **p < 0.005; ***p < 0.001. the bootstrapping results with 5,000 resamples confirmed the statistical significance of all hypothesised relationships. trade war threat perceptions demonstrated significant positive effects on strategic adaptability (β = 0.243, p < 0.005), organisational learning (β = 0.198, p < 0.01), and resource reconfiguration (β = 0.167, p < 0.05). strategic adaptability exhibited a strong positive relationship with firm performance (β = 0.334, p < 0.001), whilst both organisational learning (β = 0.187, p < 0.01) and resource reconfiguration (β = 0.221, p < 0.005) also contributed significantly to performance outcomes. table 6. predictive relevance assessment. construct r² r² adjusted q² strategic adaptability 0.347 0.342 0.187 organisational learning 0.289 0.287 0.149 resource reconfiguration 0.312 0.310 0.165 firm performance 0.418 0.412 0.241 the stone-geisser q² values were all positive, ranging from 0.149 to 0.241, indicating that the model demonstrates adequate predictive relevance. these results suggest that the model can effectively predict outcomes beyond the observed sample, enhancing confidence in the theoretical framework's practical applicability. asian business research journal, 2025, 10(9): 113-123 120 © 2025 by the author; licensee eastern centre of science and education, usa table 7. specific indirect effects (path coefficients). indirect path point estimate standard error t-value p-value 95% ci twp → ol → sa 0.079** 0.031 2.548 0.011 [0.019, 0.139] twp → rr → sa 0.048* 0.024 2.000 0.046 [0.001, 0.095] twp → sa → fp 0.081** 0.030 2.700 0.007 [0.022, 0.140] twp → ol → fp 0.037* 0.019 1.947 0.052 [0.000, 0.074] twp → rr → fp 0.037* 0.018 2.056 0.040 [0.002, 0.072] twp → ol → sa → fp 0.026* 0.013 2.000 0.046 [0.001, 0.051] twp → rr → sa → fp 0.016* 0.009 1.778 0.075 [-0.002, 0.034] note: *p < 0.05; **p < 0.01; ***p < 0.001. the mediation analysis revealed significant indirect effects, confirming the mediating roles of organisational learning and resource reconfiguration in the relationship between trade war threat perceptions and strategic adaptability. the total indirect effect of trade war threat perceptions on firm performance through multiple pathways was significant (β = 0.197, p < 0.001), supporting the proposed mediation mechanisms. table 8. moderation analysis results. interaction term path coefficient standard error t-value p-value f² twp × ed → sa 0.134* 0.057 2.351 0.019 0.023 sa × ed → fp 0.089* 0.044 2.023 0.043 0.015 size × twp → sa 0.156** 0.061 2.557 0.011 0.031 industry × sa → fp 0.112* 0.049 2.286 0.022 0.019 note: *p < 0.05; **p < 0.01. the moderation analysis supported the hypothesised contingent effects of environmental dynamism and control variables. environmental dynamism significantly strengthened the relationship between trade war threat perceptions and strategic adaptability (β = 0.134, p < 0.05), as well as the link between strategic adaptability and firm performance (β = 0.089, p < 0.05). firm size moderated the relationship between threat perceptions and adaptability, with larger firms demonstrating stronger responses to perceived threats. 4.3. supplementary analyses the multigroup analysis (pls-mga) examined differences in path coefficients across key demographic subgroups, including firm size, industry sector, and geographical region. significant differences were observed across firm size categories, with large firms (>500 employees) demonstrating stronger relationships between threat perceptions and strategic responses compared to small and medium enterprises. industry differences were also evident, with high-technology sectors showing more pronounced adaptation patterns than traditional manufacturing industries. table 9. multigroup analysis results. path small firms (β) large firms (β) difference p-value twp → sa 0.189 0.312 0.123 0.029* sa → fp 0.298 0.387 0.089 0.045* twp → fp 0.156 0.234 0.078 0.067 note: *p < 0.05. the fuzzy-set qualitative comparative analysis (fsqca) identified three distinct configurational pathways to high firm performance, demonstrating equifinality in strategic responses to trade war threats. the analysis revealed that no single condition was necessary for achieving high performance, but different combinations of conditions could lead to superior outcomes. table 10. fsqca truth table configurations for high performance. configuration twp sa ol rr ed raw coverage unique coverage consistency config 1: adaptive learning ● ● ● ◐ ● 0.412 0.087 0.864 config 2: resource-focused ● ● ◐ ● ◐ 0.328 0.065 0.891 config 3: balanced response ◐ ● ● ● ● 0.295 0.058 0.847 note: legend: ● = high membership; ◐ = intermediate membership; ○ = low membership. the first configuration (adaptive learning) emphasised high levels of trade war threat perceptions, strategic adaptability, organisational learning, and environmental dynamism, with intermediate resource reconfiguration. this pathway accounted for 41.2% of high-performance cases with 86.4% consistency. the second configuration (resource-focused) highlighted the importance of threat perceptions, strategic adaptability, and resource reconfiguration, whilst the third configuration (balanced response) demonstrated that intermediate threat perceptions could still lead to high performance when combined with strong capabilities across all other dimensions. table 11. fsqca necessity analysis. condition consistency coverage twp 0.743 0.658 sa 0.892 0.734 ol 0.756 0.687 rr 0.721 0.695 ed 0.678 0.612 asian business research journal, 2025, 10(9): 113-123 121 © 2025 by the author; licensee eastern centre of science and education, usa the necessity analysis revealed that strategic adaptability exhibited the highest consistency (0.892) for achieving high performance, although it did not reach the threshold for necessary conditions (0.90). this finding reinforces the central importance of adaptive capabilities whilst highlighting the complex, conjunctural nature of performance determinants. 5. discussion of research results and conclusions the empirical findings provide robust support for the proposed theoretical framework linking trade war threat perceptions to strategic transformation and performance outcomes through dynamic capability mechanisms. the results demonstrate that managerial perceptions of trade-related threats serve as catalytic mechanisms that activate organisational learning processes, resource reconfiguration activities, and strategic adaptation capabilities, ultimately enhancing firm performance in volatile trade environments. these findings contribute significantly to both theoretical understanding and practical knowledge regarding how firms navigate complex trade uncertainties. the primary theoretical contribution lies in the integration of cognitive perspectives with dynamic capabilities theory to explain strategic transformation processes. the significant relationship between trade war threat perceptions and strategic adaptability (β = 0.243, p < 0.005) supports the proposition that managerial cognition plays a fundamental role in triggering dynamic capability deployment. this finding extends previous research by teece (2007) and eisenhardt and martin (2000) by demonstrating that the sensing dimension of dynamic capabilities is inherently shaped by cognitive interpretations of environmental signals rather than merely objective conditions. the mediation analysis reveals sophisticated pathways through which threat perceptions influence performance outcomes. organisational learning emerges as a critical mechanism linking threat perceptions to strategic adaptability (β = 0.398, p < 0.001), supporting arguments by cohen and levinthal (1990) regarding the importance of absorptive capacity in enabling strategic responses to environmental changes. similarly, resource reconfiguration serves as a significant mediator (β = 0.289, p < 0.001), aligning with eisenhardt and martin's (2000) conceptualisation of dynamic capabilities as reconfiguration processes. the performance implications of strategic adaptation demonstrate the value of organisational flexibility in uncertain environments. the strong relationship between strategic adaptability and firm performance (β = 0.334, p < 0.001) supports contingency theory arguments that alignment between organisational capabilities and environmental requirements enhances performance outcomes (miles & snow, 1978). however, the study also reveals direct performance effects of organisational learning (β = 0.187, p < 0.01) and resource reconfiguration (β = 0.221, p < 0.005), suggesting multiple pathways through which firms can achieve superior performance during periods of trade uncertainty. the moderation results provide important insights into the boundary conditions of the proposed relationships. environmental dynamism significantly strengthens both the threat perception-adaptation relationship (β = 0.134, p < 0.05) and the adaptation-performance linkage (β = 0.089, p < 0.05), supporting arguments by eisenhardt and martin (2000) that dynamic capabilities become more valuable in turbulent environments. the firm size moderation effect indicates that larger organisations possess superior adaptive capabilities, potentially due to greater resource endowments and organisational slack that facilitate strategic experimentation (cyert & march, 1963). the fuzzy-set qualitative comparative analysis results reveal the complexity of causal patterns underlying high performance outcomes. the identification of three distinct configurational pathways demonstrates equifinality in strategic responses to trade threats, supporting arguments by meyer et al. (1993) that multiple organisational configurations can achieve similar performance levels. the adaptive learning configuration emphasises the importance of cognitive capabilities and environmental sensing, whilst the resource-focused configuration highlights tangible asset reconfiguration. the balanced response configuration suggests that moderate threat perceptions combined with strong capabilities across multiple dimensions can also yield superior outcomes. these configurational findings have important implications for understanding the heterogeneity of firm responses to trade uncertainties. rather than prescribing universal best practices, the results suggest that firms can pursue different strategic pathways depending on their resource endowments, capabilities, and environmental contexts. this perspective aligns with resource-based view arguments regarding the importance of heterogeneous firm capabilities in creating sustainable competitive advantages (barney, 1991). the multigroup analysis results highlight important contingencies in the proposed relationships. large firms demonstrate stronger responses to threat perceptions and superior adaptation-performance linkages compared to their smaller counterparts. this finding supports arguments by penrose (1959) regarding the importance of managerial resources and administrative capabilities in enabling growth and adaptation. the size effect may also reflect greater access to information, stronger analytical capabilities, and superior implementation resources among larger organisations. from a practical perspective, the findings provide actionable insights for managers operating in uncertain trade environments. the central importance of strategic adaptability suggests that firms should invest in developing flexible organisational structures, decision-making processes, and capability portfolios that enable rapid responses to environmental changes. the mediation effects of organisational learning and resource reconfiguration indicate that firms can enhance their adaptive capabilities through systematic knowledge management practices and deliberate resource portfolio adjustments. the study's focus on vietnamese export-oriented enterprises provides valuable insights into strategic adaptation processes in emerging market contexts. vietnam's unique position as a rapidly developing economy with strong export orientation offers important lessons for other emerging markets facing similar trade uncertainties. the findings suggest that emerging market firms can successfully navigate global trade volatility through strategic adaptation, despite potential resource and institutional constraints. however, the research also reveals important limitations that warrant acknowledgement. the cross-sectional design limits causal inferences, despite the strong theoretical foundations and sophisticated analytical approaches asian business research journal, 2025, 10(9): 113-123 122 © 2025 by the author; licensee eastern centre of science and education, usa employed. longitudinal research would provide more definitive evidence regarding the temporal dynamics of threat perception-adaptation-performance relationships. additionally, the focus on manufacturing firms may limit generalisability to service sectors, which may exhibit different adaptation patterns and performance metrics. the study's reliance on perceptual measures for performance assessment introduces potential common method bias concerns, although extensive validation procedures and statistical controls were employed to mitigate these risks. future research could benefit from incorporating objective performance measures and archival data to complement managerial assessments. the single-country context also limits international generalisability, suggesting opportunities for comparative studies across different institutional and cultural contexts. in conclusion, this research makes significant contributions to understanding how firms perceive and respond to trade-related uncertainties through strategic transformation processes. the findings demonstrate the importance of managerial cognition in triggering dynamic capabilities, reveal multiple pathways through which adaptation enhances performance, and identify key contingencies that shape these relationships. for practitioners, the study provides evidence-based guidance for navigating volatile trade environments through strategic adaptability development. for scholars, it offers a theoretical framework that integrates cognitive and capability perspectives to explain organisational responses to environmental uncertainty. acknowledgments: i would like to express my sincere gratitude to dr. hoang vu hiep for his invaluable guidance and inspiration throughout this research. his expertise, insights, and unwavering support have been instrumental in shaping the direction and quality of this study. i am deeply appreciative of his generosity in sharing his time, knowledge, and network, which have greatly contributed to the success of this research. his mentorship and commitment to academic excellence have not only enriched the quality of this work but have also had a profound impact on my personal and professional growth. references adner, r., & helfat, c. e. 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research journal vol. 10, no. 8, 24-48, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.533 © 2025 by the authors; licensee eastern centre of science and education, usa demand for healthcare services and resultant costs of treatment by public and private providers in india: an inter-state analysis of national sample surveys for 1986-87, 1995-96, 2004, 2014 and 2017-18 anil gumber1  swathi krishna2 1emeritus fellow, sheffield hallam university, united kingdom. 2centre for development studies, thiruvanthpuram, india. email: anil.gumber@shu.ac.uk email: swathi20phd@cds.ac.in (corresponding author) abstract this paper focuses on changes in people's health seeking behaviour, reliance on government health providers, and differentials in the cost of treatment at public and private facilities over the five national sample survey rounds undertaken during 1986–87, 1995–96, 2004, 2014 and 201718. an exclusive section is devoted on key factors influencing uptake of health insurance and resultant financial protection received specifically by poor families through analyses of 2014 and 2017-18 datasets. with wide variations across states, it is discovered that over time, less people sought care from public providers and more people preferred private providers. however, in the most recent round of 2017-18 an improvement is recorded in use of public hospitals over private for inpatient care, overall as well as most of states. despite the fact that both men and women are now more likely to seek treatment for their illnesses, a sizeable portion of the population (more in rural than in urban areas), still refuses treatment because they believe their illness is not serious enough to warrant it. whilst the real cost of healthcare has gone up over time, the difference between public and private treatment costs has contracted, possibly as a result of the higher recurring cost in public health facilities and levying user fees and cutting on the provision of free medication. since the middle of the 2000s, public insurance companies have offered low-cost hospitalisation insurance programmes like the jan arogya bima policy and rashtriya swasthya bima yojana (rsyb) as well as ayushman bharat yojana to help with the healthcare needs of the underprivileged section of society. interestingly, compared to 2014 the real cost of treatment for inpatient care in 2017-18 has declined for urban residents in most of states (14 out of 17) whilst for rural residents this has been noticed in only 5 states, thus reflecting a healthy change in the reduced burden of treatment. keywords: equity in healthcare, healthcare costs, morbidity, public vs private hospital cost ratios, untreated illnesses. 1. introduction the emphasis on equity in the utilization of health care services has been a defining aspect of health policy in india. various health policies have consistently reaffirmed this, beginning with the ‘bhore committee report’ in 1946 and continuing with various national health policies including ayushman bharat program initiated in 2018. india has committed to achieving universal health coverage. the combined central and state governments’ health expenditure has risen slightly to 1.9% in 2022-23 from 1.4% of gdp in 2018-19, which is still drastically below the 5% norm required to support the universal health coverage mission. indian healthcare system, similar to many neighbouring countries, has public and private providers with wide inter-state variations in terms of their spread and coverage. the total health expenditure (the) for india is estimated to be 3.3% of gross domestic product (gdp) of which public sector contributed 41.4%, household outof-pocket expenditure (oope) 47.1%, the private health insurance 7.0% and the remainder by social security and external donors (national health accounts 2019-20, government of india, 2023). since the inception of national health accounts, the total health expenditure as percentage of gdp has continuously declined from 4.2% in 200405 to 3.8% in 2015-16 and further to 3.3% in 2019-20. it is interesting to note that the contribution of government has increased from 22.5% in 2004-05 to 41.4% in 2019-20, that of the household oope decreased from 69.4% to 47.1% whilst that of private health insurance increased from 1.6% to 7.0% during the same period. several evidences both quantitative and qualitative have consistently demonstrated that the high level of household oope on treatment including private health insurance premium is responsible for pushing people into poverty (gumber 2000; world bank 2001; van doorslaer et al. 2006; selvaraj et al. 2009; berman et al. 2010). it may be noted that private health expenditure is higher than public expenditure across all major states. the burden of oope falls on a quarter or a third of the households with incomes below the poverty line (deolalikar et al. 2008), mailto:anil.gumber@shu.ac.uk mailto:swathi20phd@cds.ac.in https://doi.org/10.55220/2576-6759.533 asian business research journal, 2025, 10(8): 24-48 25 © 2025 by the authors; licensee eastern centre of science and education, usa which has impacted the reduction in consumption expenditure on food and other essential items, increased indebtedness, and growing untreated illness; and which could further lead to gender bias in health-seeking behaviour (sen, 2003). although public health system has not equally spread-out geographically and has several shortcomings in terms of providing both quantity and quality of services in india, even then it has been evident from the previous national sample survey organisation (nsso) survey rounds on healthcare utilisation that public health services are the preferred option, particularly, for inpatient care (gumber 2002; gumber 2021). moreover, health outcomes, especially, infant mortality, respond more to public health and local clinical interventions than to hospital care (deolalikar et al. 2008) and these may vary across states. this paper portrays the health and morbidity conditions prevailing in india over a span of 31 years through analysing unit-level data of the nss rounds for 1986-87, 1995-96, 2004, 2014 and 2017-18. it examines the changes in health seeking behaviour of males and females overtime; the trends in the use of public and private healthcare services by rural and urban residents separately associated expenditure on treatment as inpatient and outpatient care. these five survey rounds encompass through various economic development phases, namely the liberalization period of the 1980s, the period of fiscal contraction in the 1990s that saw the decline in social spending, the phase of globalization and the launch of national rural health mission in 2005 and rashtriya swasthya bima yojana (rsyb) in 2008. later on, in order to achieve the universal health coverage (uhc) goals and following the recommendation of the national health policy 2017 the national ayushman bharat yojana (comprehensive need-based health scheme) was introduced in early 2018. the impetus to write this paper came after seeing the surprising findings of the nss 75th round (2017-18) on the cost of treatment which reports “average medical expenditure for hospitalisation has decreased in nss 75th round in both rural and urban areas and also at all-india level as compared to nss 71st round” (government of india, 2019a: p5). therefore, the most critical objective of this paper is to compare the real cost of treatment faced by rural and urban residents across states not only in the previous two but all the five rounds (1986-87 through 2017-18) after adjusting for the inflation specifically experienced in the pharmaceutical sector. the paper is structured in five sections, including the introduction. the health and morbidity scenario for india as well as for select states together with changes in people’s health seeking behaviour overtime are discussed in section 2. section 3 examines the healthcare utilisation pattern and associated cost of treatment for inpatient and outpatient care for rural and urban residents along with differentials in cost of treatment between public and private facilities. the key findings and conclusions are drawn in the final section. the analysis took into account 17 of india’s largest states; however, the computation of “all-india” averages included all major and smaller states and union territories. there have been a few splits in states after november 2000; hence we have added back chhattisgarh to madhya pradesh, uttaranchal to uttar pradesh and jharkhand to bihar (which depicts a pre-bifurcation scenario) in order to compare statistics between nsso rounds. furthermore, to account for inflation between survey rounds we converted the cost of treatment in real terms by deflating the oop expenditure by the wholesale price index of pharmaceutical products at 2011-12 prices. pharmaceutical prices are a significantly better reflection of the actual rising cost of indian healthcare services than the deflator based on consumer price/wholesale price index for all commodities. the inflation rate of pharmaceutical products has turned out to be higher than those for all commodities. the wholesale price for pharmaceutical product is estimated to have increased by 318 per cent against 240 per cent for prices of all commodities during the period 1994-95 to 2011-12 (this is computed from rbi report on wholesale price index for various years under sub-category manufacture of pharmaceuticals, medicinal chemical and botanical products). since much of the household’s recurring health expenditure is incurred on purchasing the necessary drugs as an inpatient or outpatient, the use of price index for pharmaceutical items than any other commodity/general price index is more appropriate to demonstrate the financial burden of rising healthcare expenditure on people seeking treatment in widely diverse states of india. 2. health scenario in india india’s health landscape has evolved significantly over the decade and is characterized by improvements in health indicators. india has witnessed a consistent decline in its birth, death, and natural growth rates. in 2020, the birth rate had decreased to 19.7 per 1000 population, and the death rate to 6 per 1000 population compared to 1991 levels of 29.5 and 9.8, respectively. notably, rural areas reported higher birth and death rates than their urban counterparts, reflecting a persistent rural-urban demographic divide. india experienced a significant improvement in life expectancy, increasing from 49.7 years in 1970-75 to 69.4 years in 2014-18. the life expectancy for females reached 70.2 surpassing the 68.2 years recorded for males. however, several states reported figures below the national averages reflecting regional disparities in life expectancy across the country. life expectancy lagged in madhya pradesh, uttar pradesh, assam and chhattisgarh. india has made commendable progress in reducing its infant mortality rate (imr) over time. in 1994, imr stood at 74 infant deaths per thousand live births, with rural areas showing a higher rate of 80, while urban areas had a rate of 52. by 2020, imr dropped to 28 infant deaths per thousand live births, with rural areas at 31 and urban areas at 19 infant deaths per thousand live births. despite the nationwide progress, states such as madhya pradesh(43), uttar pradesh(38), chhattisgarh(38), assam (36) and odisha(36) reported higher imr in 2020. maternal mortality ratio (mmr) of india has declined to 97 per 1,00,000 live births for 2018-2020 from 178 per 1,00,000 for 2010-2012.1 over the past years, india has seen considerable advancements in health care infrastructure ,including improvement in medical education and the provision of health facilities. the number of medical colleges has increased to 648 medical colleges (396 government, 252 private) as of september 2022 compared to 146 medical colleges in 1991-92. several schemes were introduced to ensure improvement it healthcare provisions including national rural health mission (2005), national health policy( 2017, national ayush mission(2012), national 1 health indicators provided by “cbhi (2020). national health profile 2020. india: central bureau of health intelligence (cbhi), directorate general of health services, ministry of health and family welfare (mohfw), government of india “ https://cbhidghs.mohfw.gov.in/writereaddata/l892s/94203846761680514146.pdf https://cbhidghs.mohfw.gov.in/writereaddata/l892s/94203846761680514146.pdf asian business research journal, 2025, 10(8): 24-48 26 © 2025 by the authors; licensee eastern centre of science and education, usa urban health mission(2013), ayushman bharat yojana(2018). as a result, the number of government health facilities including sub-centres, primary health centres, community health centres, sub-divisional hospitals and district hospitals has increased. despite advancements in healthcare infrastructure, india still trails behind other lowand middle-income countries. for instance, india has just about 5.3 hospital beds per 10,000 population, which is significantly lower than that of indonesia, bangladesh, brazil, and china (selvaraj et al 2022). the lack of a sufficient health workforce is a key driver of inefficiency in government healthcare services, with the density of active doctors and nurses/midwives considerably falling well short of the who standard (karan et al 2021). there is a pronounced imbalance in the health workforce across different states and between rural and urban areas, as well as within public and private sectors(karan et al 2021, hazarika 2013). india’s health care system is a mix of government and private health care sector. the private health care sector is dominant with heavy concentration of diagnostic facilities , workforce and specialized services (selvaraj et al 2022). india’s healthcare system is most privatized and commercialized healthcare system globally, coupled with an underfunded public health sector, exacerbating social and economic inequalities, especially impacting women, marginalized and vulnerable population (shukla, pawar & more 2021). india’s healthcare access and quality index score is 41, placing it 145th in the global burden of disease study 2016 and there is a noteworthy interstate disparity in personal healthcare access and quality, with goa scoring 64.8 and assam 34 (fullman et al 2018). there is substantial disparity in health care utilization and its determinants include geographical regions , social groups, gender, income level and educational background. several studies has reflected on the inequality in utilization of healthcare services(baru et al 2010, reddy et al 2011, rout et al 2019, ghosh 2014, mahapatro, james & mishra, 2021). india is experiencing an epidemiological transition characterized by a growing prevalence of noncommunicable diseases (yadav & arokiasamy 2014). the share of total deaths attributed to ncds has risen substantially, from 36.8% in 1991 to 55.09% in 2021. conversely, the percentage of deaths caused by communicable, maternal, neonatal, and nutritional diseases has decreased from 54.1% in 1990 to 31% in 2021(global burden of disease 2021) . this shift highlights the dual burden of both communicable and noncommunicable diseases. the magnitude and causes of disease burden differ significantly across the states as there is diverse stages of epidemiological transition within the country, underscoring the necessity of state-specific health policies and interventions (dandona et al 2017). with the increasing attention towards achieving better population health, india has significantly improved its health in terms of higher life expectancy and lower levels of mortality over the last 50 years. according to health indicators provided by the central bureau of health intelligence, (government of india, 2018), the birth rate decreased from 25.8 in 2000 to 20.4 in 2016 and the crude death rate decreased from 8.5 to 6.4 during the same period. other health metrics, such as the infant and maternal mortality rates, have also decreased over time as a result of the numerous programmes included in previous five year plans. between the 1970s and 2015, the infant mortality rate dropped from 120 per 1,000 live births by more than a third to 37. similarly, the maternal mortality ratio decreased from 400 maternal deaths per 100,000 live births in 1997-98 to 167 in 2011-13. in spite of these improved health outcomes, substantial disparities in these health indicators continue to prevail among the states (balarajan et al. 2011). in contrast to other asian nations like china, indonesia, thailand, malaysia, the republic of korea, and sri lanka, india's progress has lagged behind. due to the continuous epidemiological transformation and the explosive increase of non-communicable diseases, the nation is also dealing with the new challenge of a "double burden of disease." even though india has made tremendous progress in containing communicable diseases, their disease burden on the nation is still significant. the prevalence of chronic non-communicable diseases (ncds), such as cardiovascular disease, diabetes, chronic obstructive pulmonary disease, malignancies, common mental disorders, and accidents, has gradually increased along with the drop in morbidity and mortality from communicable diseases. the national health policy 2015 states that communicable diseases still account for 24.4% of all disease burden while maternal and neo-natal ailments contribute to 13.8%. the ncds (39.1%) and injuries (11.8%) now constitute the bulk of the country’s disease burden. the government health spending in india must significantly grow in light of the prevalent disease burden. the supply and financing of various health services between the federal government and the states are clearly demarcated. the financing and provision of curative healthcare are both regarded as state matters. the employees' state insurance scheme (esis), primary healthcare facilities, and hospital services are entirely funded by the state. the federal government fully funds programmes for family welfare and medical education. the majority of national disease control programmes are funded on a 50:50 share basis by the federal government and the states. however, the state's contribution to the overall cost of these programmes turns out to be around threefourths, i.e., only basic inputs are shared equally. the state has to bear all the administrative cost including salaries of the staff. the centre and states share equally the capital investment. the federal government’s share is little over 40% in the total expenditure on medical education and research, broadly, thus the states fully manage and fund all curative care services. this implies that state’s economic and financial conditions as well as human resources have a direct impact on people’s health outcomes. asian business research journal, 2025, 10(8): 24-48 27 © 2025 by the authors; licensee eastern centre of science and education, usa table 1. key health financing indicators for india across nha rounds. 2004-05 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 1 the as % of gdp 4.2 4 3.9 3.8 3.8 3.3 3.2 3.3 2 the per capita (rs) at current prices 1201 3638 3826 4116 4381 4297 4470 4863 3 che as % of the 98.9 93 93.4 93.7 92.8 88.5 90.6 90.5 4 total govt. health exp. as % of the 22.5 28.6 29 30.6 32.4 40.8 40.6 41.4 5 oope as % of the 69.4 64.2 62.6 60.6 58.7 48.8 48.2 47.1 6 social security expenditure on health as percent of the 4.2 6 5.7 6.3 7.3 9 9.6 9.3 7 private health insurance as a % the 1.6 3.4 3.7 4.2 4.7 5.8 6.6 7.0 8 external/donor funding for health as percent of the 2.3 0.3 0.7 0.7 0.6 0.5 0.4 0.5 note: the, che, and oope refer to total health expenditure, current health expenditure, out-of-pocket expenditure, respectively. source: national health accountsestimates for india 2019-20. india is dedicated to attaining universal health coverage for everyone by 2030, aiming to provide access to high-quality health services without causing financial burdens. the vital role played by health financing indicators is instrumental in realizing universal health coverage. the key financing indicators are shown in table 1. the percentage of total health expenditure in relation to gdp reflects india's healthcare spending in proportion to its economic growth. since the fiscal year 2013-14, india's total health expenditure as a percentage of gdp has stayed below 4 per cent. the per capita health expenditure at current prices has escalated more than four times from rs. 1201 in 2004-05 to rs. 4863 by the year 2019-20. a decline in operational healthcare expenses have been noted as the percentage of current health expenditure (che) to total health expenditure (the) has reduced over the years. the che as a percentage of the dropped from 98.9% in 2004-05 to 88.5% in 2017-18, and subsequently rose to 90.5% in 2019-20. government health expenditure includes all initiatives financed and administered by the local, state, and union governments. a higher government expenditure reduces the household out-of-pocket expenditure (oope), and as a result decreases the relative financial burden on households. the proportion of total government expenditure relative to the has shown an upward trend over the past years. a notable surge occurred in the fiscal year 201718, with total government expenditure increasing from 32.4% in 2016-17 to 40.8% in 2017-18. this surge is reflected in the percentage share of oope relative to the, which decreased from 58.7 in 2016-17 to 48.8 in 201718. the pattern shows an inverse relationship between government health expenditure and out-of-pocket expenditure as a percentage of the. most recent estimates by the news agency ani (2024) for 2021-22 shows that for the first time the share of government health expenditure in the has surpassed that of the household oope (48% vs. 39.4%). thus the government’s increased focus on public funding is easing the financial burden on households who have traditionally relied on private healthcare services for treatment. expenditure on health through social security programs, as a percentage of the, has grown over the years, rising from 4.2% in 2004-05 to 9.3% in 2019-20. this portrays an augmentation in pooled funds, facilitated by government-backed health insurance schemes such as rsby, pmjay, and government employee benefit programmes. similarly, the share of private health insurance as a percentage of the has also seen an increase, escalating from 1.6% in 2004-05 to 7.0% in 2019-20. this suggests a surge in the adoption of voluntary prepayment plans aimed at enhancing financial protection against catastrophic health expenditure. the proportion of external/donor funding for health in relation to the demonstrates a decreasing pattern, declining from 2.3% in 2004-05 to 0.5% in 2019-20. all these health statistics on healthcare financing clearly reflects a shift in reshaping india's healthcare landscape, ensuring more equitable distribution of resources and improving access to medical care together with reliance on health insurance to provide financial protection against catastrophic hospital expenses. by prioritizing public health, the government is working toward a more accessible and affordable healthcare system for all citizens. aganst this general background, we report in the following section the pattern of health care utilisation across 17 major states over five nss rounds. 3. pattern of healthcare use 3.1. health seeking behaviour an episode of illness may result in seeking or not seeking a medical advice for treatment, and thus reflects on of the health-seeking behaviour of individuals. the decision to use a health facility immediately or later would depend upon the personal circumstances, socioeconomic condition, affordability and proximity to healthcare services. several studies on healthcare utilization depicted the influenced of various predisposing factors such as financial status, socioeconomic conditions, and demographic elements; the gender disparities in healthcare utilization, with females in india trailing behind their male counterparts are highlighted by saikia, moradhvaj, and bora (2016); patel and chauhan (2020). likewise, studies highlight people in rural areas face more significant challenges when compared to their urban counterparts in terms of healthcare access (ghosh, 2014). the demographics particularly the gender plays a critical factor in deciding whether to seek treatment or not. figure 1, which shows the gender differences in the percentages of illnesses treated, highlights the disparities between rural and urban residents’ patterns of health-seeking behaviour. until the year 2004, the utilization of healthcare services by females was lower compared to their male counterparts, both in rural and urban areas. in 1986-87, the healthcare utilization rates for rural males and females were 82.8% and 80.2%, respectively. however, by 2017-18, there was a shift, and female utilisation surpassed that of males. in rural areas, female utilisation reached 88.3%, while male utilisation was 87.9%. similarly, the gap between males and females in urban areas also narrowed down. in 1986-87, urban males reported 90.2% of illnesses being treated, whereas for urban females the asian business research journal, 2025, 10(8): 24-48 28 © 2025 by the authors; licensee eastern centre of science and education, usa figure was lower to 88.1%. in 2017-18, the figures of illnesses being treated rose to 92.3% for urban males and 93.07% for urban females. thus, the gender difference favouring men that was evident in the prior three rounds disappeared by 2014 and was minimal during 2017-18. overall at the all-india level, the proportion of illnesses treated in urban regions for both males and females continued to remain greater than those in rural areas in all the five rounds. this is due to the fact that urban areas have better availability of medical facilities. the rural-urban disparity for illnesses being treated has also decreased over the years. in 1986-87, the proportion of treated illnesses in the rural population was 81%, contrasting with 89.1% in urban areas. although this gap has considerably diminished, a slight disadvantage for the rural population still persists. in 2017-18, the percentage of the rural population seeking treatment for illnesses was 88.1%, while that for urban population it was higher by 4.6% point (i.e., 92.7% of illnesses being treated). by 2017-18, the ruralurban divide is found to be much smaller than what existed in 1986–1987. figure 1. share of treated illnesses by sex and rural-urban residence (%). additionally there are significant differences in health seeking behaviour between men and women and between rural and urban areas across states indicating positive and negative trends over the five rounds. table 2 illustrates the share of treated illness by gender across rural and urban areas by states. the overall pattern diverges significantly among states concerning the rural-urban divide, gender disparity, and the increase in seeking treatment for illnesses. in 2017-18, the rural-urban divide is notably pronounced in assam, followed by karnataka, bihar, west bengal, and uttar pradesh. conversely, states such as haryana, andhra pradesh, rajasthan, and kerala exhibit a reversed trend, with the share of the rural population seeking treatment surpassing their urban counterparts. for the year 2017-18, the highest gender disparity in rural areas is observed in jammu and kashmir, followed by assam, odisha, tamil nadu, gujarat, and haryana. in urban areas, gender disparity is most prominent in odisha, followed by himachal pradesh, tamil nadu, andhra pradesh, and karnataka, respectively. in contrast to the figures from 1986-87, the percentage of individuals seeking treatment for illnesses in both urban and rural areas has experienced a slight increase in 2017-18. however, this upward trend is not consistently observed across states. when compared to 1986-87, the urban regions of andhra pradesh, kerala, west bengal, maharashtra, tamil nadu, and assam have exhibited a notable increase. conversely, bihar, followed by odisha, jammu and kashmir, himachal pradesh, and madhya pradesh, has shown a decline in the utilization of healthcare services. in rural areas, andhra pradesh, tamil nadu, maharashtra, and madhya pradesh have demonstrated a significant increase in the share of treatment in 2017-18 compared to 1986-87. meanwhile, bihar, assam, karnataka, and himachal pradesh have experienced a decline in this aspect over the same period. 3.2. underlying reasons for not seeking treatment despite the experiencing an illness, not everyone seeks medical help/assistance primarily due to various socioeconomic and cultural reasons. one of such reasons could be because “respondents are known to underestimate both latent illness and chronic illness and the perception of being ill is known to be dependent on cultural factors, health awareness and access to care” (sundarraman and muraleedharan, 2015:p.17). the nss rounds had collected responses on the underlying reasons for ‘not seeking treatment’ for their illnesses categorised in six heads: (a) nonavailability of medical facility nearby; (b) lack of faith; (c) lengthy waiting period; (d) financial reasons; (e) ailment not regarded as serious; and (f) all other remaining reasons. ailment not considered serious serves as a significant deterrent to seeking medical treatment across all surveyed rounds in both rural and urban areas (see table 3). financial constraints were a prevalent hindrance to medical care up to 2004, showing an increase in both rural and urban regions. however, there was a substantial decline in financial reasons post-2004, dropping from 15.3% in 1986-87 to 2.71% in 2017-18 in rural india and from 9.6% to 1.5% in urban india during the same period. this suggests that increased government spending has made healthcare more affordable. 8 2 .8 8 0 .2 8 1 .5 9 0 .2 8 8 .1 8 9 .1 8 3 .8 8 1 .6 8 2 .7 9 1 9 0 .3 9 0 .7 8 1 .9 8 1 .7 8 2 .0 8 9 .6 8 8 .7 8 9 .1 8 5 .7 8 5 .7 8 5 .7 9 1 .3 9 1 .9 9 1 .7 8 7 .9 8 8 .3 8 8 .1 9 2 .3 9 3 .0 7 9 2 .7 m a l e s r u r a l f e m a l e s r u r a l b o t h s e x e s r u r a l m a l e s u r b a n f e m a l e s u r b a n b o t h s e x e s u r b a n 1986-87 1995-96 2004 2014 2018 29 © 2025 by the authors; licensee eastern centre of science and education, usa table 2. share of treated illnesses by sex across rural and urban residents by states. major states rural males rural females rural both sexes 1986-87 1995-96 2004 2014 201718 1986-87 1995-96 2004 2014 2018 1986-87 1995-96 2004 2014 201718 andhra pradesh 63.2 76.9 79.7 82.1 93.3 56.3 71.9 73.2 87.5 92.1 59.7 74.5 76.2 84.8 92.6 assam 77.1 56.2 76.9 65.8 71.3 76.3 55.7 81.2 80.7 62.9 76.7 56.0 79.0 74.8 67.0 bihar 85.2 78.6 80.3 68.2 66.7 84.1 77.6 80.9 59.7 71.6 84.7 78.1 80.6 63.8 69.0 gujarat 89.1 94.7 80.4 91.1 93.6 87.9 89.4 85.0 88.4 89.1 88.5 92.1 82.7 89.8 91.2 haryana 90.3 98.7 94.6 85.6 98.7 90.7 95.4 92.5 99.3 95.9 90.5 97.0 93.5 93.4 97.0 himachal pradesh 94.8 89.0 93.7 96.1 89.2 98.1 86.2 95.6 93.2 90.5 96.5 87.5 94.0 94.2 89.9 jammu & kashmir 90.5 94.7 85.7 98.4 93.3 85.1 92.7 78.1 89.9 84.2 87.9 93.7 82.0 93.5 87.3 karnataka 88.5 83.9 76.8 93.7 79.8 87.3 72.0 77.2 95.6 80.1 87.9 77.5 77.0 94.7 80.0 kerala 93.4 87.9 83.0 94.4 96.1 91.2 88.6 86.3 96.9 96.9 92.2 88.3 87.0 95.8 96.6 madhya pradesh 74.5 85.1 85.5 90.5 89.4 71.8 82.4 89.1 90.2 87.3 80.0 83.7 87.4 90.4 88.2 maharashtra 79.8 90.4 88.6 93.3 89.8 80.2 86.8 87.7 93.1 90.4 73.3 88.6 88.1 93.2 90.2 odisha 70.7 69.3 75.7 88.6 80.8 68.8 66.1 76.4 79.1 74.3 69.7 67.7 76.0 83.4 77.4 punjab 94.6 99.4 94.8 94.6 93.6 93.0 98.6 93.2 95.6 93.6 93.8 99.0 93.9 95.2 93.6 rajasthan 84.5 86.0 88.6 90.7 92.1 81.7 95.1 91.7 84.7 92.5 83.2 89.8 90.2 87.1 92.3 tamil nadu 75.2 75.9 77.6 91.8 97.8 75.7 79.2 78.6 93.9 93.3 75.3 77.6 78.1 93.0 95.6 uttar pradesh 89.0 91.3 76.7 84.9 86.0 85.5 89.9 76.0 82.6 87.2 87.4 90.6 76.4 83.7 86.6 west bengal 84.4 79.4 83.4 79.2 86.8 81.5 80.8 77.1 79.8 90.0 83.0 80.1 80.3 79.5 88.6 all-india 82.8 83.8 81.9 85.7 87.9 80.2 81.6 81.7 85.7 88.3 81.5 82.7 82.0 85.7 88.1 major states urban males urban females urban both sexes 1986-87 1995-96 2004 2014 2017-18 1986-87 1995-96 2004 2014 2017-18 1986-87 1995-96 2004 2014 2017-18 andhra pradesh 77.3 87.2 88.8 91.6 93.8 66.2 82.8 86.8 92.2 89.0 71.4 85 87.7 91.9 91.4 assam 90 68.5 97.3 94.7 87.7 84.8 59.6 91.9 40.2 96.2 87.3 63.6 94.3 65.3 93.1 bihar 92.7 84.2 87.1 55.5 73.3 91.2 84.8 88.4 64.9 80.7 91.5 84.5 87.7 59.6 77.3 gujarat 94.3 95.8 92 96.2 92.8 95.2 97.1 93.9 95.2 96.7 94.7 96.5 92.9 95.7 94.9 haryana 91 97.8 94.7 99.8 94.8 91 98.8 97.8 96.2 93.8 91 98.4 95 98 94.3 himachal pradesh 100 96.9 100 98.9 97.2 100 97.6 91.5 99.4 89.3 100 97.2 92 99.1 92.1 jammu & kashmir 98.3 96.8 93.7 96.6 87.7 98.1 98.6 94.7 75.4 91.5 98.2 97.6 94.2 84.9 90.1 karnataka 93.4 89.6 84.8 90 95.9 96.7 93.2 87.1 95.2 91.9 95.1 91.4 86 93 93.9 kerala 91.5 89.6 88.9 92.7 96.4 89.4 88.8 90.7 94.5 97.6 90.4 89.2 89.9 93.8 97.2 madhya pradesh 88.6 94.8 96.7 92.9 87.2 86.3 91.5 94.1 93.2 88.9 95.4 93.3 95.3 93.1 88.0 maharashtra 95.2 92.2 91.3 93.2 92.8 95.5 92.4 92.6 96.4 94.2 87.4 92.3 91.9 94.8 93.5 odisha 88.4 84.3 86.8 84.5 85.1 89.5 88.6 86.3 81.3 76.1 88.9 86.6 86.6 82.8 80.5 punjab 97.4 96.5 96.8 85.1 94.3 95.3 96.5 96.4 87.2 97.1 96.4 96.5 96.6 86.3 95.8 rajasthan 90 80.6 88.8 93.5 86.3 90.3 88.5 90 97.5 97.1 90.2 89.6 89.4 95.5 92.8 tamil nadu 89.2 90.9 89.8 93.9 98.0 88.4 92.8 83.9 92.9 92.1 88.8 92 86.5 93.3 94.7 uttar pradesh 87.9 94.7 87.6 87.8 90.6 87.7 92.6 88 90 90.9 87.8 93.5 87.8 89.1 90.8 west bengal 90.7 91 84.8 93.3 92.4 85.2 88.8 81 89.9 95.6 87.9 89.9 82.8 91.3 94.1 all-india 90.2 91 89.6 91.3 92.3 88.1 90.3 88.7 91.9 93.07 89.1 90.7 89.1 91.7 92.7 asian business research journal, 2025, 10(8): 24-48 30 © 2025 by the authors; licensee eastern centre of science and education, usa table 3. distribution of untreated ailments by reason for non-treatment, 1986-87 to 2017-18. state survey year rural residents urban residents no nearby medic al facility lack of faith/non satisfactory facility * long waiting financial reasons ailment not considered serious others no nearby medical facility lack of faith long waiting financial reasons ailment not considered serious others andhra pradesh 1986-87 0.9 1.1 0.2 10.1 74.4 7.2 0.0 1.2 0.8 8.0 84.6 5.5 1995-96 3.2 4.7 0.3 26.2 56.2 7.9 0.0 10.7 2.1 20.3 54.8 10.7 2004 8.0 2.2 0.0 26.6 39.2 23.9 0.6 3.7 0.3 13.0 75.0 7.5 2014 12.6 8.7 0.1 5.8 46.7 26.1 5.6 5.1 0.3 8.8 57.2 23.0 2017-18 5.3 2.3 7.5 2.3 75.9 6.8 3.2 0.8 4.0 0.8 84.9 6.4 assam 1986-87 0.5 1.1 1.1 5.3 87.7 4.3 0.0 0.1 5.7 3.7 82.9 7.7 1995-96 11.5 4.5 0.9 9.2 58.0 13.0 0.2 8.7 0.3 20.5 58.0 10.9 2004 14.7 3.9 0.0 22.2 44.4 14.7 0.0 0.0 0.0 36.1 63.9 0.0 2014 1.0 0.3 0.0 0.0 92.4 6.2 0.0 0.0 0.7 0.0 94.7 4.6 2017-18 3.0 7.6 0.0 3.0 77.3 9.1 0.0 5.6 5.6 0.0 83.3 5.6 bihar 1986-87 1.9 1.3 0.8 18.0 74.7 3.3 0.0 0.2 0.0 9.1 86.1 4.5 1995-96 5.3 1.5 1.9 40.4 36.8 9.6 0.0 2.9 0.8 24.9 55.4 13.0 2004 10.6 1.6 0.1 27.2 37.6 22.7 0.0 0.2 1.5 15.5 71.5 11.3 2014 14.4 2.8 0.6 0.0 76.1 6.0 0.0 0.6 2.0 0.1 92.7 4.6 2017-18 13.0 3.4 1.3 3.4 59.4 19.7 2.2 1.5 0.7 0.0 79.4 16.2 gujarat 1986-87 0.3 0.6 9.0 17.4 74.7 6.0 0.0 5.7 0.0 13.3 77.2 3.8 1995-96 23.1 2.7 0.0 2.8 66.4 5.0 0.0 5.5 19.2 0.0 52.4 9.7 2004 4.1 3.7 2.3 24.3 42.2 23.2 0.0 2.1 2.0 9.8 55.4 30.7 2014 0.0 8.9 11.2 1.3 47.8 30.7 9.6 0.4 19.9 0.6 65.8 3.7 2017-18 0.0 0.0 0.0 0.0 82.1 17.9 0.0 2.9 11.4 2.9 71.4 11.4 haryana 1986-87 0.6 3.6 1.0 14.1 70.6 10.2 0.0 6.2 0.0 7.1 75.1 11.6 1995-96 9.6 16.6 0.0 12.9 55.9 5.0 0.0 0.0 0.0 12.9 22.8 64.3 2004 0.0 8.7 0.0 14.1 42.2 34.9 0.0 0.0 0.0 0.0 29.0 71.0 2014 0.0 0.0 0.0 0.0 89.4 10.6 0.0 0.0 9.9 0.0 84.6 5.5 2017-18 2.6 0.0 2.6 2.6 60.5 31.6 0.0 0.0 15.4 7.7 46.2 30.8 himachal pradesh 1986-87 14.1 4.1 1.1 4.3 70.9 5.5 0.0 0.0 0.0 0.0 0.0 0.0 1995-96 2.4 7.4 0.6 0.5 52.9 32.3 0.0 0.0 0.0 0.0 63.2 35.9 2004 6.2 0.0 0.0 21.9 4.6 67.2 0.0 0.0 64.0 36.0 0.0 0.0 2014 7.8 2.3 0.0 0.6 73.9 15.4 0.0 0.0 58.5 0.0 41.5 0.0 asian business research journal, 2025, 10(8): 24-48 31 © 2025 by the authors; licensee eastern centre of science and education, usa 2017-18 10.3 2.6 2.6 10.3 59.0 15.4 0.0 10.0 0.0 0.0 90.0 0.0 jammu & kashmir 1986-87 3.9 8.1 0.0 67.5 15.2 5.3 0.0 5.3 0.0 4.5 90.2 0.0 1995-96 14.3 0.0 4.4 0.3 73.3 7.7 0.0 0.0 6.4 13.6 57.2 19.9 2004 4.4 0.0 0.0 44.0 20.0 31.5 0.0 0.0 0.0 2.3 51.5 46.2 2014 1.4 0.0 8.1 1.1 67.5 21.8 0.0 0.0 0.0 0.0 25.9 74.1 2017-18 1.6 0.0 1.6 0.0 91.8 4.9 5.2 3.5 3.5 0.0 79.3 8.6 karnataka 1986-87 5.3 3.4 0.2 14.6 67.6 8.9 0.7 1.7 0.0 11.3 81.6 4.7 1995-96 7.5 4.8 0.0 22.0 58.4 5.4 0.0 1.6 0.0 11.6 73.7 12.9 2004 2.9 3.9 0.0 33.9 29.1 30.2 2.5 4.9 0.0 31.7 35.4 25.5 2014 3.8 8.8 0.9 0.0 79.3 7.2 0.4 18.2 0.0 0.3 73.9 7.3 2017-18 0.0 1.3 0.0 1.3 92.5 5.0 0.0 0.0 0.0 0.0 94.3 5.7 kerala 1986-87 0.0 1.7 0.0 14.7 81.0 2.6 0.0 0.2 0.0 4.5 88.9 6.4 1995-96 5.7 1.2 0.0 12.9 69.8 9.1 1.1 1.3 0.0 12.4 68.6 14.4 2004 0.2 1.0 0.3 24.3 58.4 15.8 0.0 0.3 1.2 10.6 82.4 5.4 2014 1.8 0.0 0.9 5.4 51.4 40.4 0.0 0.7 0.0 0.4 68.4 30.5 2017-18 5.5 2.2 3.3 0.0 79.1 9.9 0.0 0.0 1.6 0.0 87.5 10.9 madhya pradesh 1986-87 5.4 2.5 negl 15.8 73.3 3.0 0.3 2.6 0.4 8.6 88.8 4.3 1995-96 19.8 2.6 0.0 21.0 45.4 7.5 10.8 15.3 0.0 10.4 52.4 10.9 2004 11.7 0.8 0.0 22.7 48.6 16.1 0.0 1.1 2.3 23.3 45.6 27.8 2014 19.6 0.0 0.4 0.0 58.4 21.6 9.9 3.5 8.1 3.1 40.8 34.6 2017-18 7.0 1.7 7.8 0.0 69.6 13.9 2.4 1.2 3.6 3.6 74.7 14.5 maharashtra 1986-87 1.6 1.4 0.8 7.2 85.5 3.5 0.5 0.4 2.7 8.2 80.4 7.8 1995-96 8.2 3.4 0.0 20.1 63.7 4.2 0.0 0.0 0.3 25.1 63.3 11.3 2004 7.2 2.5 0.7 40.7 36.1 12.9 1.1 2.0 0.3 18.8 69.6 8.3 2014 26.1 1.7 3.5 4.1 60.3 4.3 0.2 2.5 19.0 0.6 62.2 15.4 2017-18 16.3 3.1 8.2 0.0 57.1 15.3 2.6 3.4 10.3 1.7 70.1 12.0 odisha 1986-87 6.6 1.2 0.0 68.6 17.4 6.2 0.9 0.0 0.0 12.1 85.5 1.5 1995-96 19.5 5.1 0.4 23.0 38.3 10.8 0.0 0.0 4.0 45.4 35.6 10.0 2004 13.5 1.2 0.0 23.8 28.4 33.2 3.0 7.1 0.0 42.2 36.5 11.1 2014 3.9 4.3 8.9 2.7 71.9 8.2 2.2 0.5 2.6 10.5 76.6 7.6 2017-18 6.8 2.8 2.3 1.1 80.2 6.8 0.0 3.5 1.8 0.0 86.0 8.8 punjab 1986-87 1.3 3.1 0.0 6.2 82.7 6.7 0.0 2.0 0.0 2.1 93.2 2.8 1995-96 21.3 5.5 0.0 49.0 7.7 16.5 0.0 4.5 0.0 47.3 48.2 0.0 2004 1.5 3.7 2.5 41.5 27.8 23.0 0.0 0.0 0.0 49.1 42.2 8.7 asian business research journal, 2025, 10(8): 24-48 32 © 2025 by the authors; licensee eastern centre of science and education, usa 2014 4.0 2.5 6.2 2.0 56.5 28.7 0.0 0.1 7.8 1.4 61.8 29.0 2017-18 4.7 0.0 7.0 7.0 60.5 20.9 0.0 0.0 0.0 3.5 89.7 6.9 rajasthan 1986-87 8.6 3.2 0.7 69.5 14.7 3.3 0.1 0.6 0.3 11.2 86.4 1.5 1995-96 7.1 2.2 0.0 60.3 25.7 4.7 0.0 1.3 0.0 4.9 72.2 21.6 2004 4.1 6.5 1.8 37.1 25.2 25.3 13.1 0.0 1.3 34.8 35.1 15.8 2014 1.2 0.0 6.9 12.0 74.9 4.9 0.0 0.4 15.5 1.3 75.6 7.2 2017-18 12.5 4.2 0.0 2.1 66.7 14.6 0.0 5.4 13.5 5.4 59.5 16.2 tamil nadu 1986-87 1.6 2.5 1.3 15.1 71.6 8.0 0.0 0.9 2.5 7.5 79.9 9.2 1995-96 0.8 4.7 1.1 21.6 66.1 5.6 0.0 5.1 0.0 11.7 46.6 36.0 2004 3.9 2.3 1.8 31.8 52.2 8.1 1.1 4.7 4.4 23.6 45.6 20.6 2014 1.4 0.4 4.0 0.0 85.1 9.0 0.2 0.6 0.9 0.9 73.9 23.5 2017-18 7.7 1.9 3.9 1.9 82.7 1.9 2.9 2.9 2.9 17.1 62.9 11.4 uttar pradesh 1986-87 2.9 2.6 0.1 18.6 73.8 2.0 0.4 0.8 0.9 15.1 75.7 7.2 1995-96 10.8 4.5 0.0 22.4 51.0 9.6 0.0 11.2 1.0 22.5 64.6 0.7 2004 21.8 5.3 0.8 31.1 31.7 9.3 0.0 0.9 3.9 31.4 51.5 12.3 2014 17.4 3.6 8.0 0.0 60.6 10.5 1.0 3.9 11.7 2.4 69.1 11.9 2017-18 9.3 1.4 2.1 3.9 75.1 8.2 1.1 2.2 1.1 4.4 77.5 13.7 west bengal 1986-87 3.9 2.0 0.0 12.1 78.3 3.7 0.1 1.5 2.1 11.8 78.4 6.0 1995-96 7.9 0.5 0.0 43.1 34.6 13.2 0.0 2.0 0.3 19.7 65.9 10.6 2004 22.7 2.5 3.6 42.3 20.4 8.4 1.6 0.9 2.5 27.8 52.9 14.3 2014 30.9 2.2 11.6 10.0 26.7 18.7 0.4 0.2 9.3 3.4 55.4 31.4 2017-18 2.1 1.6 20.2 6.9 58.0 11.2 1.0 1.0 2.1 3.1 81.3 11.5 all-india 1986-87 2.9 1.9 0.3 15.3 74.6 5.0 0.1 1.8 1.1 9.6 81.1 6.3 1995-96 8.8 3.7 0.5 24.2 51.1 9.9 0.8 5.3 1.1 19.8 59.4 12.4 2004 13.0 4.1 0.8 28.5 35.7 17.9 1.5 3.7 2.0 24.0 50.4 18.4 2014 15.4 3.7 6.2 3.4 57.4 14.0 1.3 2.2 5.3 2.3 68.3 20.6 2017-18 7.3 2.3 5.3 2.8 71.2 11.1 1.8 1.9 3.6 2.5 77.7 12.6 33 © 2025 by the authors; licensee eastern centre of science and education, usa long waiting times as, a reason for not seeking treatment have increased over the years, particularly for rural residents, highlighting a greater need for proximity to primary health facilities in rural compared to urban areas. for rural residents, the long waiting hours as a deterrent increased from 0.3% in 1986-87 to 5.7% in 2017-18, while for their urban counterparts rose from 1.1% to 3.83% during the same period. lack of faith or dissatisfaction with facilities was reported by 1.9% in 1986-87 by rural residents, remaining below 4% over the years and then decreasing to 1.5% in 2017-18. in urban areas, lack of faith as a reason decreased from 5.3% in 1995-96 to 0.97% in 2017-18. the rural-urban disparity in medical facility availability is evident in the increasing percentage of respondents citing the unavailability of nearby medical facilities as a reason for not seeking medical help, which rose from 2.9% in 1986-87 to 15.4% in 2014 and then declined to 8.6% for rural india. in contrast, the unavailability of medical facility as a deterrent to medical care in urban areas has increased slightly from 0.1% in 1986-87 to 1.11% in 2018. the rural-urban disparity is apparent across all states in the analysis, with the stated reason for not seeking medical care—lack of nearby medical facilities—being more prevalent in rural areas compared to urban areas. however, exceptions to this trend are observed in gujarat and karnataka in 2017-18, where there are no reports of the absence of nearby facilities as a reason for not seeking healthcare in both rural and urban areas. in the urban areas of haryana, himachal pradesh, kerala, odisha, punjab, and rajasthan, there are no reported instances of the lack of nearby facilities as a reason for not seeking healthcare. on the other hand, there is an increase in the percentage of people citing the unavailability of nearby facilities as a reason for not seeking health care from rural areas of assam, haryana, himachal pradesh, kerala, punjab, rajasthan, and tamil nadu in 201718. additionally, urban areas in jammu & kashmir and bihar also witnessed an increase in the mentioned reason in 2017-18 when compared with 1986-87. the states of andhra pradesh, kerala, madhya pradesh, bihar, maharashtra, odisha, and the urban regions of haryana, punjab, west bengal, and karnataka have mirrored the national trend, reporting an increase in the share of financial reasons as the stated cause for not availing treatment until 2004. subsequently, these regions experienced a declining trend in 2014 and 2017-18. in contrast, financial reasons as the stated cause for not seeking treatment exhibited an increasing pattern until 2004, followed by a decrease in 2014, and then a resurgence in 2017-18 in both the rural and urban regions of tamil nadu and uttar pradesh, rural regions of karnataka, and assam. the trend for financial reasons as the stated cause for not availing of treatment consistently decreased in rural regions of rajasthan and west bengal. a fluctuating pattern can be observed in gujarat, jammu and kashmir, rural areas of punjab, haryana, himachal pradesh, and urban areas of rajasthan regarding financial reasons as the stated cause for not seeking treatment. thus, the cost and affordability of seeking care plays a significant role in whether or not the poor and vulnerable sections of the society seek medical attention. among the poor, there is a clear evidence that in case of illness they tend to report more on the financial costs as justifications for skipping the care. according to a multivariate analysis done of the previous nss round, about half of those in the lowest monthly expenditure quintile (the poorest) avoid seeking medical care due to financial constraints (gumber 1997). even at macro level, in some of the poorest states of india, the main barrier to receiving treatment was financial cost. 3.3. reliance on public health services for inpatient care the reliance on private health care providers for treatment is considered to be a major determinant contributing to increased healthcare expenditure and the occurrence of catastrophic or impoverishing healthcare expenses (loutfi et al., 2018). seeking treatment from public healthcare providers reduces the probability of experiencing catastrophic healthcare expenditure. table 4 illustrates the percentage share of public healthcare providers for inpatient care. the share of public providers for the inpatient treatment sought by the rural residents, decreased from 59.7% in 1986-87 to 41.7% in 2004, then rose to 50.3% in 2014 and further to 56.6% in 207-18. in urban areas, the share of public health providers decreased from 60.3% in 1986-87 to 35.5% in 2014 but rose to 39% in 2017-18. thus rural population relies more on public healthcare providers for inpatient care than their urban counterparts. among indian states, andhra pradesh, bihar, and tamil nadu showed an increased share of public providers for rural residents in 2017-18 when compared with 1986-87. a consistent decrease in share of public providers is evident from 1986-87 to 2017-18 in rural population of west bengal. states experiencing a revival in the share of public providers in inpatient care from 2004 to 2017-18 include rural areas of madhya pradesh, punjab, bihar, tamil nadu, and haryana. there is a declining trend in the share of public providers for inpatient treatment till 2014, followed by a sudden increase in 2017-18 in rural populations of kerala, maharashtra, karnataka, himachal pradesh, and gujarat. gujarat showed a significant progress in the share of public health providers for inpatient treatment for rural residents, followed by tamil nadu, maharashtra, bihar, and andhra pradesh from the period 2014 to 2017-18. in the same period in rural population, assam showed a drastic decline in the share of public health providers for inpatient treatment, followed by odisha, west bengal, and rajasthan. surprisingly for urban population, every state has witnessed a decline in the share of public providers for inpatient care in 2017-18 when compared with 1986-87. amongst major states, a consistent decrease in their share is evident from 1986-87 to 2017-18 in urban populations of rajasthan, odisha, karnataka, jammu and kashmir and gujarat. there is a declining trend in the share of public providers for inpatient treatment till 2014, followed by a surge in 2017-18 in urban population of haryana, kerala, madhya pradesh, maharashtra, and west bengal. states experiencing a revival in the share of public providers in inpatient care from 2004 to 2017-18 include uttar pradesh and punjab. for urban residents from 2014 to 2017-18, assam mirroring the rural counterparts displayed a drastic decline, followed by bihar, jammu and kashmir, rajasthan, odisha, himachal pradesh, gujarat, and karnataka. the top five progressions in the share of public health providers in inpatient care for urban residents were observed in tamil nadu, followed by madhya pradesh, andhra pradesh, haryana, and west bengal. asian business research journal, 2025, 10(8): 24-48 34 © 2025 by the authors; licensee eastern centre of science and education, usa table 4. share of public providers in treated illnesses, 1986-87 to 2017-18 inpatient care. state rural residents urban residents 198687 1995-96 2004 2014 2017-18 1986-87 1995-96 2004 2014 2017-18 andhra pradesh 30.8 22.2 27.4 26.7 34.6 41.7 35.4 35.8 23.7 24.4 assam 89.8 69.2 75.0 91.7 84.1 82.4 63.0 55.2 62.6 57.1 bihar 50.1 24.1 21.7 56.1 54.4 46.8 31.9 26.5 49.1 39.5 gujarat 56.0 31.4 31.3 27.5 43.6 61.8 36.3 26.1 24.5 24.0 haryana 54.1 30.3 20.6 39.9 43.9 56.7 37.0 29.0 23.2 29.7 himachal pradesh 88.0 86.5 78.1 77.3 78.6 78.9 91.3 89.7 75.5 70.4 jammu & kashmir 96.5 97.7 91.2 94.0 95.2 96.1 95.9 86.4 82.2 81.1 karnataka 59.8 45.0 40.0 37.3 40.3 50.0 29.3 28.9 23.2 24.5 kerala 43.6 39.5 35.6 34.4 35.5 56.3 37.3 34.6 33.0 31.3 madhya pradesh 80.4 40.4 57.2 67.4 69.7 79.0 54.7 48.7 48.2 50.7 maharashtra 45.8 30.9 28.7 26.9 37.2 49.4 30.7 28.0 24.4 23.7 odisha 90.7 84.2 79.1 84.2 78.2 82.2 77.9 73.1 61.4 60.6 punjab 49.2 37.7 29.4 36.1 41.4 52.0 26.5 26.4 31.7 30.7 rajasthan 81.0 63.3 52.1 65.6 60.5 86.5 72.1 63.7 58.0 50.0 tamil nadu 56.9 40.4 40.8 45.4 60.9 58.2 34.2 37.2 32.6 41.3 uttar pradesh 58.3 46.1 27.8 43.9 44.0 61.1 39.0 31.5 31.6 39.6 west bengal 91.9 79.9 78.7 77.5 76.9 75.9 71.3 65.4 55.1 55.2 all-india 59.7 43.8 41.7 50.3 59.5 60.3 41.9 38.2 35.5 42.1 3.4. reasons for not availing public facilities for inpatient care due to declining reliance on public hospitals for inpatient care by people in various states, the most recent round of the nss (2017-18) probed further into the underlying reasons for not using public facility for inpatient care. table 5 presents statistics for the reason for not availing of government facility for inpatient care in 2017-18 separately for rural and urban residents. the major reason for not availing of government facility/hospital for inpatient care is the unsatisfactory quality of the available services both reported by rural and urban population in india. among the 43.4% of rural residents who availed of treatment from private and charitable/ngo hospitals, 40.7% cited the quality of available services at government hospitals were unsatisfactory. the share of patients utilising non-governmental services is much higher (60.9%) in urban areas, among them 34.6% reported unsatisfactory quality of government services. another 22.4% patients residing in rural areas and 26.7% patients residing in urban areas stated preference for a trusted hospital or doctor as a reason to refrain from opting a government hospital. the unavailability of required specific service concerned 15.4% of rural residents and 11.8% of urban residents revealing shortcoming in rural health infrastructure compared to urban areas. despite the availability of quality of service from government hospitals, the long waiting hours led patients to opt for private facilities over government facilities; 11.9% of rural residents and 15.4% of urban residents mentioned this as their rationale. the distant location of government facilities is mentioned as a factor by 4.5% of rural residents and 5.7% of urban residents. financial constraints were not a significant factor in abstaining from government facilities, highlighting the affordability of the government health services both in rural and urban india. among the indian states, andhra pradesh, maharashtra, punjab and kerala have the highest percentage of rural residents seeking treatment from non-governmental facilities whereas jammu and kashmir, assam and odisha have the least dependence on private facilities. about 59.9% of rural residents in bihar has reported the highest instances of refraining from utilizing government facilities for inpatient treatment due to unsatisfactory quality of available treatment; this is followed by uttar pradesh, haryana and jammu and kashmir. this instance is least cited in kerala (16.1%), indicating better quality of inpatient treatment in the state hospitals. the unavailability of required service concerns the rural residents of karnataka (26.8%), assam and maharashtra the most, whereas those in haryana (5.3%) reports the least impact. government facilities are located too far away and long waiting hours as a factor is cited highest by rural residents of himachal pradesh (10.2% and 26.9% respectively). kerala (37.3%) has the highest percentage of rural residents reporting preference for a trusted doctor or hospital as the reason for refraining government facility for inpatient treatment followed by west bengal and gujarat. assam is the only state with significant percentage of rural population citing financial constraints as a cause of abstaining government services. 35 © 2025 by the authors; licensee eastern centre of science and education, usa table 5. reason for not availing of government facility for inpatient care by states2, 2017-18. rural residents state required specific services not available available quality not satisfactory quality satisfactory but facility too far quality satisfactory but long waiting financial constraints preference for a trusted doctor/hospital other % of patients utilised nongovernment service andhra pradesh 12.9 40.8 4.5 14.5 0.0 23.8 3.6 67.6 assam 24.1 28.2 8.7 4.0 7.1 22.0 6.0 14.8 bihar 10.2 59.9 3.1 6.1 0.1 18.3 2.3 36.5 gujarat 11.1 33.2 4.5 14.4 0.1 27.9 8.9 52.5 haryana 5.3 46.1 0.6 25.8 0.0 20.6 1.6 53.5 himachal pradesh 9.9 29.5 10.2 26.9 0.1 22.3 1.0 21.8 jammu & kashmir 16.9 44.5 0.0 21.3 0.0 11.1 6.2 3.7 karnataka 26.8 43.7 6.5 7.3 0.2 10.6 4.8 58.6 kerala 16.1 16.1 7.2 13.1 0.1 37.3 10.2 61.3 madhya pradesh 20.1 39.7 4.1 15.0 0.0 10.5 10.7 31.8 maharashtra 22.0 41.8 4.1 8.2 0.5 18.8 4.7 64.1 odisha 19.3 26.4 3.2 18.0 0.3 26.5 6.2 20.7 punjab 14.0 40.5 5.3 9.0 0.3 25.7 5.2 63.8 rajasthan 12.9 43.5 3.2 22.6 0.2 14.8 2.9 35.1 tamil nadu 15.8 30.1 9.9 24.2 0.0 18.5 1.4 38.1 uttar pradesh 13.1 50.4 3.9 6.7 0.0 22.4 3.6 50.4 west bengal 13.0 33.6 2.7 15.3 0.0 28.9 6.5 24.5 all-india 15.4 40.7 4.5 11.9 0.2 22.4 4.9 43.4 urban residents state required specific services not available available but quality not satisfactory quality satisfactory but facility too far quality satisfactory but involves long waiting financial constraints preference for a trusted doctor/hospital other % of patients utilised nongovernment service andhra pradesh 12.02 36.44 3.59 16.63 0.14 26.2 4.98 66.82 assam 10.8 27.7 5.9 4.0 0.5 42.5 8.7 43.7 bihar 8.7 56.2 2.0 5.2 0.0 25.6 2.3 52.1 gujarat 9.7 31.5 8.9 11.0 0.5 34.4 4.0 76.3 haryana 14.7 30.4 7.9 24.1 0.1 19.0 3.7 72.4 himachal pradesh 19.6 25.8 3.9 23.0 0.0 23.9 3.9 26.1 jammu & kashmir 10.7 49.2 1.2 18.9 0.0 15.8 4.3 22.0 karnataka 20.5 45.5 5.7 11.7 0.3 13.6 2.9 77.0 kerala 17.8 9.9 5.9 15.6 0.0 39.5 11.4 64.6 madhya pradesh 10.1 42.6 2.9 17.1 0.0 20.7 6.5 42.7 2 note: * as there are no inter-state comparisons with previous nss rounds, we have not added in this table chhattisgarh with madhya pradesh, uttarakhand with uttar pradesh and jharkhand with bihar. asian business research journal, 2025, 10(8): 24-48 36 © 2025 by the authors; licensee eastern centre of science and education, usa maharashtra 9.5 28.2 8.0 16.7 0.4 30.4 6.9 75.0 odisha 16.3 34.9 2.6 14.7 0.0 24.9 6.7 41.9 punjab 10.0 27.3 4.3 18.9 0.0 29.6 9.9 67.5 rajasthan 11.8 35.2 3.9 28.8 0.0 15.9 4.5 45.5 tamil nadu 14.7 31.1 6.6 23.1 0.2 21.5 2.9 56.8 uttar pradesh 8.3 49.5 4.2 9.9 0.0 25.9 2.2 67.9 west bengal 8.0 36.5 3.0 15.6 0.2 27.3 9.4 40.5 all-india 11.8 34.6 5.7 15.4 0.3 26.7 5.6 60.9 37 © 2025 by the authors; licensee eastern centre of science and education, usa among urban residents, karnataka, gujarat and maharashtra have the highest share of availing treatment from non-government facilities, in contrast the hilly northern states of jammu and kashmir and himachal pradesh have the least reliance on private facilities. the unsatisfactory quality of the service as the mentioned reason is highest in urban population of bihar (56.2%), uttar pradesh and jammu and kashmir and least in kerala (9.9%) similar to those of the rural residents. urban population in assam (42.5%) leads in instances of refraining from government services due to a preference for trusted doctor or hospital followed by kerala (39.5%) and gujarat (34.5%). karnataka (20.5%) tops the list in reported instances of avoiding government facility due to lack of availability of required services, followed by himachal pradesh (19.6%) and kerala (17.8%) and this is the least reported in west bengal (8%), uttar pradesh (8.3%) and bihar (8.7%). gujarat, maharashtra and haryana lead in citing the distant location of government facilities as the main reason. rajasthan, haryana, tamil nadu and himachal pradesh have witnessed the highest reporting of long waiting hours as a factor. similar to reported by rural residents, there is no relevant mention of financial constraints by urban residents. 3.5. share of public providers for outpatient care across all the five rounds, the reliance on public providers for outpatient care services is consistently much lower than the dependence on public health services for inpatient care. at all india level, the dependence of rural residents on public outpatient service has increased from 25.6% in 1986-87 to 32.4% in 2017-18 (see table 6). except for the years 1995-96, the percentage of rural residents availing public outpatient services has consistently increased. among the states, rural residents in tamil nadu demonstrated the highest increase in terms of percentage use of public outpatient services in 2017-18 compared to 1986-87; this is followed by kerala, jammu & kashmir, west bengal, madhya pradesh, haryana, bihar, himachal pradesh, uttar pradesh, and odisha. among the states where utilization of outpatient services decreased in 2017-18 compared to 1986-87, rajasthan displayed the most significant decline which is followed by karnataka, maharashtra, gujarat, assam, andhra pradesh, and punjab. haryana exhibited a continuous decline till 2014 but showed resilience in 2017-18. maharashtra, tamil nadu, and west bengal showed a consistent rise after 1995-96. assam and odisha have experienced an escalation in the utilization of public outpatient services from 1995-96 to 2014, but a notable decline in 2017-18 compared to 2014. rural residents are more prone to use public outpatient services than their urban counterparts. the percentage of urban residents relying on public providers for outpatient treatment has decreased from 27.2% in 1986-87 to 26.1% in 2017-18. instead of a consistent decrease, the utilization of public outpatient care by urban residents witnessed a period of stagnation between 1995-1996 and 2004, followed by a marginal rise in 2014 and a 4.9% point increase in 2017-18. among the states where the utilization of public outpatient services by urban residents increased from 1986-87 to 2017-18, himachal pradesh revealed a substantial surge followed by odisha, kerala, tamil nadu, jammu & kashmir, punjab, and andhra pradesh. rajasthan displays a notable downturn compared to 1986-87 followed by karnataka, maharashtra, haryana, assam, west bengal, uttar pradesh. gujarat, bihar and madhya pradesh. table 6. share of public providers in treated illnesses, 1986-87 to 2017-18 outpatient care. state rural residents urban residents 1986-87 1995-96 2004 2014 2017-18 1986-87 1995-96 2004 2014 2017-18 andhra pradesh 21.6 22.0 22.3 15.6 21.9 22.6 19.0 20.4 12.2 19.0 assam 53.0 29.0 35.6 84.3 47.7 29.6 22.0 29.1 44.6 17.5 bihar 16.9 13.0 7.8 13.9 22.4 18.0 33.0 16.9 12.3 21.5 gujarat 35.1 25.0 22.0 23.7 29.1 19.6 22.0 18.0 15.0 17.2 haryana 16.9 13.0 12.0 10.6 23.1 21.7 11.0 19.9 8.5 14.4 himachal pradesh 60.7 39.0 68.6 43.3 61.0 47.7 48.0 86.1 79.4 64.2 jammu & kashmir 59.8 44.0 53.8 48.4 78.6 47.4 28.0 50.9 41.0 52.8 karnataka 36.4 26.0 34.6 26.1 31.8 31.3 17.0 16.7 14.5 16.5 kerala 34.0 28.0 38.0 36.3 47.9 34.8 28.0 24.0 31.1 39.1 madhya pradesh 27.1 23.0 22.7 29.5 35.6 25.9 19.0 24.8 24.0 26.5 maharashtra 36.5 16.0 17.4 20.2 25.5 35.3 17.0 11.7 14.6 17.1 odisha 52.7 38.0 56.8 75.5 58.0 47.9 34.0 58.3 54.4 54.4 punjab 13.4 7.0 17.6 16.8 15.1 15.6 6.0 18.9 22.5 12.3 rajasthan 56.1 36.0 45.5 44.1 42.2 57.5 41.0 53.9 29.1 37.2 tamil nadu 38.7 25.0 30.7 42.3 50.7 35.5 28.0 22.1 28.6 36.2 uttar pradesh 10.4 8.0 11.7 14.6 16.7 17.2 9.0 15.3 16.1 18.1 west bengal 19.6 15.0 21.1 22.5 32.7 25.3 19.0 21.4 14.8 22.3 all-india 25.6 19.0 24.1 28.3 37.1 27.2 20.0 20.0 21.2 28.0 3.6. reasons for not availing public facilities for outpatient care the share of patients availing treatment from non-governmental services (private hospitals/clinics, private doctors, informal treatment and charitable hospitals/ngos) is higher in outpatient care in both rural and urban areas (67.5% and 73%, respectively) compared to inpatient care (see table 7). the highest cited reason for abstaining from government outpatient service by rural residents is the unsatisfactory quality of the available services there whereas preference for a trusted hospital/doctor is the prominent reason for choosing nongovernmental facility by urban residents. financial constraints are a very insignificant reported reason for both rural and urban residents. the unavailability of the required services is reported more by rural residents than by their urban counterparts. about 9% of rural residents cited unavailability of required service whereas only 4.9% of urban residents faced unavailability of required services. 38 © 2025 by the authors; licensee eastern centre of science and education, usa table 7. reason for not availing of government facility for outpatient care by states3, 2017-18. rural residents state required specific services not available available but quality not satisfactory quality satisfactory but facility too far quality satisfactory but involves long waiting financial constraints preference for a trusted doctor/hospital other % of patients utilised nongovernment service andhra pradesh 3.3 33.7 6.9 21.4 0.0 32.0 2.6 80.9 assam 7.6 15.1 18.3 0.6 0.6 19.8 38.0 49.4 bihar 12.8 32.9 9.3 4.5 0.2 28.6 11.6 82.2 gujarat 10.5 31.3 9.7 32.2 0.0 15.5 0.9 67.4 haryana 6.7 22.6 20.0 30.4 0.0 19.9 0.4 74.7 himachal pradesh 13.3 14.1 22.0 22.5 0.0 25.4 2.7 33.3 jammu & kashmir 2.9 15.6 13.7 13.5 0.0 8.2 46.0 23.0 karnataka 27.0 36.8 6.7 10.6 0.1 14.3 4.5 71.0 kerala 10.2 9.5 4.0 20.3 0.0 47.9 8.1 48.2 madhya pradesh 9.2 41.4 7.4 12.2 0.0 26.1 3.6 66.2 maharashtra 15.0 34.3 13.4 9.9 0.4 23.9 3.2 70.9 odisha 7.4 8.0 23.8 13.8 5.8 35.1 6.3 44.7 punjab 8.1 24.0 14.1 18.9 0.1 29.1 5.7 86.8 rajasthan 10.5 46.6 12.3 13.6 0.0 14.8 2.2 57.2 tamil nadu 6.9 38.3 7.6 21.8 0.3 22.5 2.6 36.7 uttar pradesh 8.2 31.3 26.5 7.9 1.0 19.5 5.5 85.8 west bengal 7.9 19.3 16.4 19.3 1.4 26.2 9.5 67.0 all-india 9.0 28.6 15.1 14.9 0.7 25.8 6.0 67.5 urban residents state required specific services not available available but quality not satisfactory quality satisfactory but facility too far quality satisfactory but involves long waiting financial constraints preference for a trusted doctor/hospital other % of patients utilised nongovernment service andhra pradesh 4.0 34.9 5.5 28.1 0.6 24.7 2.1 73.2 assam 5.6 23.1 0.4 34.4 0.0 34.8 1.6 77.4 bihar 3.4 35.2 1.5 5.4 0.0 43.0 11.5 77.5 gujarat 3.3 31.8 8.7 10.9 0.7 39.5 5.0 83.0 haryana 0.2 31.3 13.8 37.1 0.9 16.0 0.8 90.4 himachal pradesh 1.9 8.1 2.4 48.4 0.0 22.7 16.4 26.6 jammu & kashmir 0.3 30.4 12.4 29.9 0.0 16.2 10.8 49.5 karnataka 19.6 38.5 7.1 19.1 0.0 14.9 0.9 86.0 3 note: * as there are no inter-state comparisons with previous nss rounds, we have not added in this table chhattisgarh with madhya pradesh, uttarakhand with uttar pradesh and jharkhand with bihar. asian business research journal, 2025, 10(8): 24-48 39 © 2025 by the authors; licensee eastern centre of science and education, usa kerala 5.3 8.5 2.5 20.1 0.0 52.9 10.8 58.3 madhya pradesh 3.4 24.4 5.1 20.2 0.3 43.3 3.3 73.7 maharashtra 4.4 16.6 5.5 16.6 0.6 49.7 6.7 77.9 odisha 3.0 34.6 13.9 1.7 0.2 37.3 9.4 37.8 punjab 4.0 19.1 8.8 23.1 0.1 37.5 7.3 83.1 rajasthan 3.6 36.5 10.1 21.9 0.3 26.1 1.5 67.7 tamil nadu 10.0 21.2 7.0 34.6 0.0 23.8 3.3 59.5 uttar pradesh 4.6 42.5 10.8 13.4 0.1 25.1 3.5 86.0 west bengal 2.3 22.4 3.2 30.4 0.0 37.6 4.2 78.7 all-india 4.9 25.3 7.2 21.2 0.3 36.2 5.0 73.8 40 © 2025 by the authors; licensee eastern centre of science and education, usa similarly, the distant location of the government facility concerned by 15.7% of rural residents, while only 7.2% of urban residents raised this concern. long waiting hours were a more prominent reason in urban areas than rural areas; 14.9% of rural residents and 21.2% of urban residents cited long waiting hours as a rationale for not going to public facility.. among the states, for rural residents punjab (86.8%), uttar pradesh (85.8%) and bihar (82.2%) have the highest reliance on non-governmental outpatient services, while haryana (90.4%), uttar pradesh (86%), karnataka (86%) and punjab (83.1) tops the list for urban residents. among the states karnataka has the highest reported instances of unavailability of the required facility as a reason for opting non-governmental facilities both by rural (27%) and urban (19.6%) residents. unavailability of the facility is least reported by rural residents of jammu and kashmir and andhra pradesh and urban residents of haryana, jammu and kashmir and himachal pradesh. unsatisfactory quality of the outpatient facility is prominent concern among most of the states, rural residents of rajasthan (46.6%), madhya pradesh (41.4%) and tamil nadu (38.3%) and urban residents of uttar pradesh (42.5%), karnataka (38.5%) and rajasthan (36.5%) tops the list. whereas rural residents of odisha (8%) and kerala (9.5%) and urban residents of himachal pradesh (8.1%) and kerala (8.5%) least cited unsatisfactory quality of services as a reason. government facility is located too far away as a reason reported highest by rural residents of uttar pradesh (26.5%) followed by odisha (23%) and himachal pradesh (22%) and least cited by rural residents of kerala (4%), karnataka (6.7%) and andhra pradesh (6.9%). urban residents of odisha (13.9%), haryana (13.8%) and jammu and kashmir (12.4%) has the highest citation of distant location of government facility as reason. it is least reported by urban residents of assam (0.4%), bihar (1.5%), himachal pradesh (2.4%) and kerala (2.5%). long waiting hours as a factor to refrain from government facility was reported highest by urban residents of himachal pradesh (48.4%), haryana (37.1%), tamil nadu (34.6) and assam (34.4%) and by rural residents of gujarat (32.2%), haryana (30.4%) and himachal pradesh (22.5%). it is reported least by rural residents of assam (0.6%) and bihar (4.5%) and by urban residents of odisha (1.7%) and bihar (5.4%). kerala has the highest reported instances of preference for trusted doctors by both rural (47.9%) and urban residents (52.9%). it is mentioned least by rural residents of jammu and kashmir (8.2%) and urban residents of karnataka (14.9%). 3.7. provision of free health services by the public sector in the delivery of free healthcare services for both inpatient and outpatient care, private sector organisations have a very little role. as a result, free medical care is available to people who use government facilities. table 8 gives data on the proportion of patients who received free hospital beds (as a proxy for free inpatient care) and table 9 provides those of free medicine (as a proxy for free outpatient care). for rural residents, the percentage of patients receiving free hospital beds has declined from 60% in 1986-87 to 54.9% in 2017-18. a decreasing trend can be traced till 2004 and a subsequent resilience in 2014 and 2017-18 in the proportion of patients receiving free hospital beds at all-india. similar trends can be traced in haryana, jammu & kashmir, kerala, maharashtra, odisha, rajasthan, tamil nadu, uttar pradesh and west bengal. in 2017-18, four states exhibited a rise in the percentage of patients receiving free hospital beds compared to 1986-87. bihar led among the four states, followed by gujarat, andhra pradesh, and tamil nadu. bihar and andhra pradesh share a similar trend of decline in 1995-96 and a consistent upward trajectory thereafter. all other 13 states reveal a decline in the percentage of patients receiving free beds in 2017-18 compared to 1986-87, assam has the highest decline followed by karnataka, punjab, and himachal pradesh. assam had the highest percentage of patients receiving free hospital beds in 1986-87 (95.5%) but experienced a consistent decline till 2014. the percentage of patients receiving free hospital beds by urban residents is lower than those by rural residents across all the rounds reflecting the pattern of dependence on public health providers. the trend in percentage change in urban patients receiving free hospital beds mirrors their rural counterparts. a decline in percentage till 2004, followed by a resurgence in 2014 and 2017-18. this pattern is seen in urban residents of bihar, gujarat, kerala, madhya pradesh, maharashtra, and punjab. nevertheless, there is no state indicating a rise in the percentage of patients receiving free hospital beds in 2017-18 compared to 1986-87. among the states experiencing a decline in percentage greater than the national level, urban residents of assam has the most substantial decrease in the percentage of patients receiving free hospital beds followed by odisha, rajasthan, haryana, uttar pradesh, punjab, and madhya pradesh. andhra pradesh and rajasthan reveal a consistent declining trend from 1986-87 to 2017-18. west bengal, tamil nadu, odisha, and jammu & kashmir endured a decline till 2014, succeeded by an increase in the availability of free hospital beds. urban residents of haryana reveals a steadily growing trend in the availability of free hospital beds from 1995-96 onwards. 3.8. provision of free medicines people become prone to debt when they purchase medications, especially when they do so frequently for a chronic illness. provision of free medications would significantly lessen this vulnerability. the percentage of rural patients receiving free medicines for outpatient care has declined from 17.5% in 1986-87 to 12.3% in 2017-18 (see table 9). a decreasing trend can be traced till 2004 but a subsequent increase in 2014 and 2017-18, mirroring the trend of the percentage of rural patients availing free beds. rural residents of assam, gujarat, kerala, madhya pradesh, maharashtra and tamil nadu follow the national trend. tamil nadu, rajasthan and gujarat are the only three states revealing significant rise in 2017-18 compared to 1986-87. rural residents of tamil nadu has the highest percentage of receiving free medicine among the states across all five survey rounds. rajasthan shows a substantial increase in the period 2004 to 2014 but exhibits decline in the percentage of patients availing free medicine in 2017-18 compared to 2014. the percentage points decline among states above the national average is highest in assam followed by odisha, jammu and kashmir, himachal pradesh, karnataka, madhya pradesh, andhra pradesh, west bengal and kerala. asian business research journal, 2025, 10(8): 24-48 41 © 2025 by the authors; licensee eastern centre of science and education, usa table 8. percentage of patients receiving free inpatient care (hospital bed), 1986-87 to 2017-18. state rural residents urban residents 1986-87 199596 2004 2014 201718 198687 199596 2004 2014 201718 andhra pradesh 33.3 21.9 31.1 32.8 37.0 41.3 36.8 33.9 30.1 26.6 assam 95.5 76.5 60.2 50.6 54.2 76.1 58.0 41.3 42.9 32.3 bihar 47.7 20.0 22.4 48.2 52.8 56.5 38.9 30.4 41.8 38.9 gujarat 40.0 26.1 27.7 26.3 44.7 39.4 25.4 18.7 22.8 24.8 haryana 54.0 29.6 11.6 32.8 43.3 53.3 16.7 20.1 22.2 28.0 himachal pradesh 86.5 79.0 74.1 70.0 71.7 77.3 71.0 80.5 48.3 61.5 jammu & kashmir 93.4 96.8 83.2 91.1 90.1 91.6 88.1 78.5 75.2 78.6 karnataka 58.8 37.8 38.2 32.9 36.5 36.6 25.3 28.2 20.8 23.2 kerala 45.1 37.5 33.6 35.4 33.5 45.2 31.7 29.5 31.3 28.7 madhya pradesh 77.2 39.2 49.1 64.6 67.3 73.3 49.1 41.6 47.0 49.5 maharashtra 42.8 28.7 22.5 25.3 35.4 39.7 28.6 20.6 23.1 22.6 odisha 88.7 83.1 78.8 78.8 77.7 88.0 75.2 65.1 55.2 60.3 punjab 46.3 26.8 11.5 30.5 32.5 46.1 18.7 10.7 16.8 23.6 rajasthan 81.8 65.8 50.8 66.9 62.1 84.9 70.5 61.3 56.0 51.1 tamil nadu 59.5 42.9 42.5 52.0 62.1 57.8 38.9 37.8 36.8 43.4 uttar pradesh 59.1 39.8 16.8 39.8 41.3 56.1 32.6 21.8 34.7 32.0 west bengal 90.4 79.6 71.8 72.6 77.1 69.4 64.5 51.9 48.7 54.6 all-india 60.7 41.6 37.0 47.3 56.0 55.2 38.2 32.0 34.6 39.7 urban residents show a similar trend as that of rural residents in receipt of free medicines, with a decrease till 2004 followed by an increase. the percentage of urban patients receiving free medicines has declined from 19.7% in 1986-87 to 11.8% in 2018. andhra pradesh, kerala, madhya pradesh, maharashtra, and tamil nadu follow the national trend a decrease till 2004 followed by an increase in the proportion of receiving free medicine for outpatient care. urban residents of assam experienced a continuous decrease across all the rounds. himachal pradesh and tamil nadu are the only two states to experience a rise in receipt of free medicines by urban residents in 2017-18 compared to 1986-87. among the states that have shown a higher decline percentage than the all-india level, bihar reveals the highest decline followed by odisha, karnataka, maharashtra, west bengal, jammu and kashmir, and andhra pradesh. assam and odisha depict a consistent fall the proportion of receiving free medicine by urban residents across all the years. bihar, jammu & kashmir, karnataka and west bengal demonstrates a continuous fall till 2014 and subsequent resilience in 2017-18 in receipt of free medicine. table 9. percentage of patients receiving free outpatient care (medicine), 1986-87 to 2017-18. state rural residents urban residents 198687 199596 2004 2014 201718 198687 199596 2004 2014 201718 andhra pradesh 20.8 20.1 10.3 9.3 14.0 24.2 8.5 6.9 7.5 11.3 assam 31.0 12.6 2.7 2.6 7.9 10.5 6.0 5.6 3.9 5.2 bihar 5.2 1.5 0.2 1.1 3.9 26.6 10.4 3.7 0.4 5.0 gujarat 21.5 9.5 8.6 15.0 20.0 13.9 10.2 11.7 8.8 10.0 haryana 8.2 3.7 1.3 0.4 7.1 12.2 1.7 3.2 2.0 4.8 himachal pradesh 24.1 4.5 3.6 0.9 6.7 8.8 6.8 9.0 0.5 7.8 jammu & kashmir 20.3 5.1 3.6 1.1 1.7 12.7 5.2 2.8 0.4 1.7 karnataka 26.5 16.3 14.6 4.9 15.2 25.4 8.2 4.8 3.4 7.2 kerala 29.8 9.3 11.1 14.4 21.5 25.4 8.7 6.6 9.3 17.7 madhya pradesh 24.5 3.3 2.9 12.2 14.1 17.9 7.8 7.7 8.2 10.9 maharashtra 17.0 8.6 6.3 11.4 12.3 21.9 8.8 4.5 7.0 7.9 odisha 25.0 8.0 7.8 4.9 4.9 24.6 5.0 5.1 4.2 2.5 punjab 6.5 0.6 1.2 1.8 2.9 7.6 2.3 1.6 4.0 2.8 rajasthan 15.6 0.1 3.2 24.5 21.4 17.5 9.8 7.5 17.8 15.9 tamil nadu 37.3 27.8 25.7 35.3 45.8 34.3 25.1 20.6 24.4 34.0 uttar pradesh 6.0 1.8 2.2 3.0 4.3 10.5 4.0 4.5 6.7 5.6 west bengal 15.4 3.7 4.0 2.6 7.9 18.5 8.2 4.9 1.5 6.5 all-india 17.5* 7.7 6.4 9.4 13.7 19.7* 9.3 6.8 9.3 11.2 3.9. cost and burden of treatment this is well known fact that the cost of treatment is the main factor to take into account when deciding between a public and private provider, particularly needing management of chronic and serious illnesses. the national health policy 2015 states that 60% of inpatient care and 80% of outpatient care are provided by the private sector. table 10 illustrates the extent to which private hospitals are pricier when compared to their public counterparts for inpatient services from1986–1987 and 2017-18. the ratio of the cost of treatment for inpatient care at constant prices witnessed a substantial surge from 1.6 in 1986-87 to 7 in 2017-18 for rural residents and more than doubled for urban residents from 2.4 in 1986-87 to 5.5 in 2017-18 at the national level in india. between 1986-87 to 2004, the private-public cost ratio for inpatient care for urban residents was higher than that for rural residents. however, this trend has changed in 2014 and 2017-18, leading to the cost ratio for rural residents asian business research journal, 2025, 10(8): 24-48 42 © 2025 by the authors; licensee eastern centre of science and education, usa surpassing those for urban residents. the cost ratio has witnessed a continuous increase over the years for both rural and urban residents. it would be intriguing to explore the cost trend for both rural and urban residents across different states. assam is the only state to experience an uninterrupted increase in the private-public cost ratio for inpatient care for the rural population during the period 1986–87 to 2017-18. the rural residents of kerala and rajasthan witnessed consistent upward trend till 2014, followed by a decline in 2017-18.tamil nadu distinguishes itself among the indian states with the highest private -public cost ratio during the period of 1986-87 to 2014; however, it relinquished its leading position as the ratio dropped by half from a 24.8 in 2014 to 12 in 2017-18. among the states with a private-public cost ratio higher than the national average for rural residents, madhya pradesh(17.2) has the highest ratio followed by gujarat(14.7), tamil nadu , west bengal, jammu and kashmir, assam, uttar pradesh, andhra pradesh and bihar in 2017-18. himanchal pradesh (2.6) has the least ratio followed by rajasthan and kerala in 2018 for the rural residents. rural residents of bihar, jammu & kashmir, karnataka, madhya pradesh, odisha, and uttar pradesh has reported lower cost ratios in 1995–96 compared to 1986–87, but then witnessed increasing trajectory. gujarat has witnessed highest increase in the cost ratio from 2014 to 2017-18 (2.1 to 14.7) in contrast to its stable ratio between 1986-87 to 2014. madhya pradesh (8.8 to 17.2), west bengal (3.6 to 10.5) and assam (4.5 to 8.7) has also experienced more than double increase in their private-public cost ratio for rural residents from 2014 to 2018. in contrast to 1986-87, every state has revealed an escalation in the private-public cost ratio for urban residents in 2017-18, except for jammu and kashmir (5.5 to 4.8) and tamil nadu (12.4 to 9). from the period of 1986-87 to 2018, urban residents of the state which has seen highest increase is madhya pradesh (2.8 to 11.3) followed by assam (3.4 to 8.8) and odisha (0.9 to 5.3). when compared to 2014, the cost ratio has decreased substantially in 2017-18 for urban residents of tamil nadu (17.9 to 12) followed by kerala. maharashtra, karnataka, and andhra pradesh. among the states which experienced significant increase in the cost ratio from 2014 to 2018 for urban residents, madhya pradesh has the highest increase (2.5 to 17.2), followed by gujarat, uttar pradesh, jammu and kashmir, west bengal, bihar and assam. table 10. ratio of cost of treatment between private and public provider for inpatient care , 1986-87 to 2017-18. state rural residents urban residents 198687 199596 2004 2014 2017-18 198687 199596 2004 2014 201718 andhra pradesh 2.2 3.8 2.5 4.0 4.7 5.2 5.4 9.1 8.4 6.4 assam 0.6 1.0 1.9 4.5 7.3 3.4 3.2 7.5 5.7 5.6 bihar 1.3 1.2 1.6 3.6 5.7 1.6 1.6 0.9 3.5 3.0 gujarat 2.3 2.2 2.8 2.1 12.1 2.9 2.2 2.6 2.9 3.5 haryana 1.5 1.3 0.5 2.7 4.3 1.9 0.6 0.6 2.7 3.7 himachal pradesh 1.8 1.1 2.4 2.2 2.4 3.0 3.2 3.4 1.1 2.3 jammu & kashmir 2.1 1.0 2.3 6.2 7.0 5.5 2.6 5.5 4.3 4.3 karnataka 2.8 2.3 3.1 5.2 4.1 3.3 2.9 6.2 6.4 4.2 kerala 1.6 1.7 2.1 7.4 2.8 2.6 1.5 1.9 6.8 3.9 madhya pradesh 1.7 1.6 1.8 8.8 12.1 2.8 2.3 3.5 2.5 8.6 maharashtra 2.9 2.5 3.2 6.1 4.5 5.1 3.7 3.8 7.6 3.2 odisha 2.0 1.5 2.6 5.6 6.0 0.9 5.5 2.3 5.3 3.7 punjab 1.3 1.7 1.4 3.4 4.9 2.1 1.1 2.2 2.5 2.8 rajasthan 1.1 1.5 1.7 6.6 2.5 1.2 1.9 1.8 3.4 3.2 tamil nadu 9.0 5.8 13.4 24.8 8.1 12.4 6.2 10.5 17.9 7.2 uttar pradesh 1.4 1.1 1.2 4.1 6.5 1.5 1.3 2.4 2.2 3.5 west bengal 6.0 2.1 4.3 3.6 7.9 5.6 5.8 4.0 5.5 5.1 all-india 1.6 2.1 2.8 4.5 5.2 2.4 2.4 3.1 4.1 4.4 the private-public cost ratio for outpatient treatment is much smaller as compared to those for the inpatient care. the increase in the cost gap between rural and urban residents in india as a whole has been slower during the time period under examination (see table 11). except for 1995-96, the cost difference of outpatient care is greater for urban residents as compared to rural residents. it is interesting to note that in 2017-18, the cost difference for outpatient care is greater for rural people of tamil nadu, bihar, andhra pradesh, kerala, maharashtra, west bengal, haryana, assam, jammu and kashmir, and rajasthan, compared to their urban counterparts. rural residents of tamil nadu have the highest private-public cost ratio among all the states, across all the rounds. for rural residents, the states that have a higher ratio than the national average include tamil nadu followed by maharashtra, kerala, bihar, andhra pradesh, madhya pradesh, west bengal, and rajasthan in 2018. urban residents of tamil nadu also demonstrated the highest private-public cost ratio in the period of 1986-87 to 2004, from the ratio of 13.6 in 2004 it experienced a drastic fall to 2.4 and 2 in 2014 and 2017-18, respectively. for the urban residents, among the states having a higher private-public cost ratio than the national average, madhya pradesh has the highest ratio followed by maharashtra, gujarat, punjab, rajasthan, tamil nadu and kerala. in certain states, the outpatient expenses at private health providers are less than the public facilities, regardless of any clear trend seen between rural and urban residents. in 2017-18, the urban residents of assam and the rural residents of himachal pradesh, punjab, and uttar pradesh experienced higher costs of outpatient treatment at public facilities compared to the private health providers. asian business research journal, 2025, 10(8): 24-48 43 © 2025 by the authors; licensee eastern centre of science and education, usa table 11. ratio of cost of treatment between private and public provider for outpatient care , 1986-87 to 2017-18. state rural residents urban residents 198687 199596 2004 2014 2017-18 198687 199596 2004 2014 201718 andhra pradesh 1.8 4.1 1.8 2.4 2.8 4.2 2.3 2.6 1.8 1.5 assam 0.8 0.6 1.5 1.6 1.0 0.4 0.9 0.9 5.5 0.8 bihar 0.6 1.2 0.6 0.4 2.9 1.7 3.0 0.8 0.7 1.5 gujarat 1.6 2.3 1.6 3.1 2.2 1.5 1.7 2.7 1.5 3.2 haryana 1.6 0.8 1.4 1.1 1.5 1.9 0.5 1.1 1.6 1.1 himachal pradesh 0.8 ne 0.7 0.9 0.7 1.3 ne 1.7 0.9 1.2 jammu & kashmir 0.8 ne 1.2 1.3 1.4 1.0 ne 0.6 2.5 1.1 karnataka 1.8 2.0 2.1 1.4 1.4 1.4 1.4 1.8 1.5 1.8 kerala 1.5 1.6 1.3 1.9 3.4 1.6 1.6 1.2 1.9 2.1 madhya pradesh 1.7 1.7 1.0 1.1 2.4 1.9 0.5 1.8 2.3 2.9 maharashtra 1.2 2.0 1.3 2.9 3.6 1.3 1.6 2.7 2.5 2.7 odisha 0.7 1.2 1.0 1.0 1.1 1.9 0.9 0.6 2.1 1.6 punjab 0.8 1.2 0.8 1.1 0.8 1.0 0.8 0.3 0.7 2.1 rajasthan 0.9 0.8 0.4 2.2 2.7 1.0 1.3 1.1 0.8 2.5 tamil nadu 5.1 7.5 4.0 4.1 6.9 4.1 5.0 13.6 2.4 3.9 uttar pradesh 0.7 0.6 2.1 1.0 0.8 0.7 0.9 1.5 0.8 1.1 west bengal 1.4 0.8 1.1 1.4 2.4 1.9 1.9 1.1 1.4 2.0 all-india 0.7 1.4 1.3 1.2 1.9 0.9 1.2 1.4 1.4 2.0 3.10. cost of inpatient treatment for each hospitalisation episode over all the five survey rounds, the average cost of treatment (including fees, medications, clinical and diagnostic tests, surgery, and hospital bed charges) were converted into real terms which is shown in table 12. the average cost of inpatient treatment at constant prices has always been higher for urban india when compared to rural india. the average cost in real term incurred for hospitalisation episode has subsequently escalated for rural residents; however, surprisingly the urban residents witnessed a downfall in the real cost of inpatient treatment in 2017-18 compared to 2014 at all india level. the average cost of inpatient treatment at constant prices was rs. 13721 for rural residents and rs. 20794 for urban residents in 2017-18. annual percentage change of inpatient treatment cost for rural residents declined from 5.4 % during the period 1986-87 to 2017-18 to 1.86% between 2004 and 2017-18 and subsequently, it rose to 2.07 between 2014 and 2017-18. for the urban residents, the annual percentage change has declined from 6.2% during 1986-87 to 2017-18 to -2.12 between 2014 and 2017-18 indicating a decline in cost of inpatient treatment. for rural residents over the period of 1986-87 to 2017-18, the states which follow the national trend of continuous increase in the average inpatient cost of treatment include himanchal pradesh, karnataka, kerala, madhya pradesh, maharashtra, punjab and west bengal. among the states which has a higher annual percentage change in cost for rural residents than the national average of 5.4% between 1986-87 and 2017-18, kerala (28.61) experienced the highest annual percentage change in inpatient cost followed by west bengal (15.38), tamil nadu (12.99), andhra pradesh (9.86), himachal pradesh (7.78), maharashtra (7.56), punjab (7.25) and madhya pradesh (6.49). on the contrary, annual percentage change is lowest in bihar (0.52), haryana (2.08) and jammu and kashmir (2.37) between 1986-87 and 2017-18. odisha is the only state which experienced a marginal decrease in the cost of inpatient treatment for rural residents in the year 1995-96 compared to 1986-87. kerala, himachal pradesh, and west bengal demonstrate the highest annual percentage change in costs for rural residents. on the contrary, bihar (-1.06), jammu & kashmir (-0.16), and andhra pradesh (-0.03) revealed a negative yearly percentage change indicating a decrease in the cost of treatment between 1995-96 and 2017-18. during the period 2004 to 2017-18, kerala, west bengal, and maharashtra encountered the most significant rise in the annual percentage change in cost for rural residents whereas bihar, jammu & kashmir, haryana, rajasthan, uttar pradesh, and assam saw a decrease. annual percentage change is highest in west bengal (10.7), odisha (10.3) and kerala (9.8) and negative in haryana (-4.7), bihar (3.7), tamil nadu (-2.88), gujarat (-2.59) and jammu & kashmir (-1.48) from 2014 to 2017-18. it is noteworthy that kerala and west bengal consistently held positions among the states with the highest annual percentage change in inpatient cost, while bihar and jammu and kashmir consistently occupied positions among the states that experienced a decrease in inpatient cost. in 2017-18, punjab (rs.26189) incurred the highest inpatient cost for rural residents, followed by kerala (rs.24253), himachal pradesh (rs.18749) and maharashtra (rs.17388). urban residents of andhra pradesh, assam, gujarat, haryana, himachal pradesh, karnataka, madhya pradesh, odisha, rajasthan, tamil nadu, uttar pradesh, and west bengal mirror the national pattern of a continuous rise in the inpatient treatment cost at constant prices until 2014, followed by a subsequent decline in 2017-18. kerala and maharashtra witnessed a continuous increase in the cost of inpatient treatment over the years. bihar and punjab experienced an increase in the cost of treatment till 2004 and a subsequent fall thereafter. jammu and kashmir demonstrated a drop in the cost of treatment in 2014, followed by a rise. in 2017-18, maharashtra, haryana assam, and kerala had the highest inpatient cost for urban residents (rs. 27337, rs 26209, rs.24668, and rs.24546, respectively). it is worth highlighting that kerala has the highest annual percentage change in all the rounds for urban residents. during 1986-87 to 2017-18, the annual percentage change was the highest in urban residents of kerala (26.2%) followed by haryana (15.8%), tamil nadu (13.4), and andhra pradesh (12.68). during the same period, urban residents of uttar pradesh (4%), bihar (4.8%) and gujarat (4.9%) experienced the least asian business research journal, 2025, 10(8): 24-48 44 © 2025 by the authors; licensee eastern centre of science and education, usa percentage change. urban residents of kerala, maharashtra, and himachal encountered the highest change from 1995 to 2017-18 and uttar pradesh, haryana, and punjab experienced the lowest increase. from 2004 to 2017-18, urban residents of kerala, maharashtra, and odisha witnessed the highest increase in annual percentage change in cost whereas punjab (-2,48), bihar (-1.23), and rajasthan (-0.18) experienced a negative change in percentage. surprisingly, only three stateskerala (12.38%), jammu and kashmir (10.57) and maharashtra (1.5%) demonstrate an increase in the annual percentage change of inpatient cost for urban residents, while all other states undergo a negative shift [madhya pradesh (-8.8), himachal pradesh (-7.09), assam (-6.1%) tamil nadu (-6.09%)]. table 12. average cost of treatment for inpatient care (in rs), 1986-87 to 2018 (at 2011-12 prices). state cost of treatment rural residents annual percentage change 198687 199596 2004 2014 201718 19862018 19952018 20042018 20142018 andhra pradesh 4125 16850 10999 13076 16734 9.86 -0.03 3.72 6.99 assam 2876 5097 7110 5349 6767 4.36 1.49 -0.34 6.62 bihar 6675 10117 12067 8960 7754 0.52 -1.06 -2.55 -3.37 gujarat 4733 6979 10341 12309 11036 4.30 2.64 0.48 -2.59 haryana 7791 8452 16288 15789 12812 2.08 2.34 -1.52 -4.71 himachal pradesh 5493 6631 15035 16307 18749 7.78 8.31 1.76 3.74 jammu & kashmir 3716 6679 9635 6851 6445 2.37 -0.16 -2.36 -1.48 karnataka 5196 7855 11089 11865 12033 4.24 2.42 0.61 0.35 kerala 2457 6011 7187 17739 24253 28.61 13.79 16.96 9.18 madhya pradesh 3851 5742 8647 10037 11599 6.49 4.64 2.44 3.89 maharashtra 5202 8098 10980 17157 17388 7.56 5.22 4.17 0.34 odisha 4324 4301 7861 8024 11331 5.23 7.43 3.15 10.30 punjab 8065 13076 22874 23507 26189 7.25 4.56 1.04 2.85 rajasthan 5931 7963 14268 10919 11802 3.19 2.19 -1.23 2.02 tamil nadu 2700 7446 9999 15345 13576 12.99 3.74 2.56 -2.88 uttar pradesh 7241 11399 16652 13466 15626 3.74 1.69 -0.44 4.01 west bengal 2419 5129 7906 9810 13955 15.38 7.82 5.47 10.56 all-india 5129 8395 10891 12671 13722 5.40 2.88 1.86 2.07 cost of treatment urban residents annual percentage change andhra pradesh 4698 12808 17342 29489 23157 12.68 3.67 2.40 -5.37 assam 5289 9935 19452 32656 24668 11.82 6.74 1.92 -6.11 bihar 6340 9763 19023 18336 15758 4.79 2.79 -1.23 -3.52 gujarat 6660 8721 15077 18145 16823 4.92 4.22 0.83 -1.82 haryana 4445 17135 25459 28236 26209 15.79 2.41 0.21 -1.79 himachal pradesh 5950 6928 16691 24382 17470 6.25 6.92 0.33 -7.09 jammu & kashmir 3669 9469 13405 11006 15657 10.54 2.97 1.20 10.57 karnataka 6871 9417 14249 20155 20002 6.17 5.11 2.88 -0.19 kerala 2694 5052 9740 16416 24547 26.17 17.54 10.86 12.38 madhya pradesh 3327 7273 12015 20643 13310 9.68 3.77 0.77 -8.88 maharashtra 8571 10478 17144 25795 27338 7.06 7.31 4.25 1.50 odisha 4097 10140 11328 16854 16810 10.01 2.99 3.46 -0.06 punjab 8932 14975 36283 26511 23664 5.32 2.64 -2.48 -2.68 rajasthan 4247 8254 14434 14620 14066 7.46 3.20 -0.18 -0.95 tamil nadu 3982 10312 20385 27057 20469 13.36 4.48 0.03 -6.09 uttar pradesh 10437 15454 16889 27530 23417 4.01 2.34 2.76 -3.74 west bengal 6116 8433 15582 21807 18632 6.60 5.50 1.40 -3.64 all-india 7117 10277 16847 22717 20795 6.20 4.65 1.67 -2.12 3.11. cost of outpatient care at all-india level, the cost of outpatient care for rural residents has increased from rs.450 (1986-87) to rs.581 (2004) and then subsequently decreased to rs.553 in 2017-18 (see table 13). andhra pradesh is the only state which mirrors the national trend. rural residents of bihar, gujarat, jammu and kashmir, and maharashtra witnessed a decline in the cost of treatment in 2017-18 compared to 1986-87. in 2017-18, the rural residents of himachal pradesh (rs.820), rajasthan (rs. 809) and assam (rs. 719) incurred highest cost for outpatient treatment whereas rural residents of gujarat, jammu and kashmir and andhra pradesh experienced the lowest cost for outpatient care. annual percentage change was 0.74% in 1986-87 to 2017-18 slightly increased in the period between 1995-96 and 2017-18 to 0.92, thereafter reveals a negative trend (0.34% in 2004 to 2017-18 and -0.39% in 2014 to 2017-18). among the states tamil nadu, karnataka and west bengal had highest annual increase whereas bihar, jammu and kashmir, gujarat, and maharashtra followed a negative trend between 1986-87 and 2017-18. himanchal pradesh exhibited a substantiate surge of 11.9 % in 1995-6 to 2017-18 followed by tamil nadu and assam. during the same period, jammu and kashmir, gujarat and andhra pradesh witnessed negative annual growth. in the period 2004 to 2017-18, expect for himanchal pradesh, madhya pradesh, uttar pradesh, rajasthan, assam, punjab and tamil nadu, all other state demonstrated a negative annual growth in cost of treatment for outpatient care (gujarat (2.46%), karnataka (-2.26%) and jammu and kashmir (-2.12%). in the period of 2014 to 2017-18, assam depicts the highest annual percentage increase with 21.9% followed by rajasthan, himanchal pradesh, tamil nadu, west bengal, karnataka, and haryana. all other states followed a negative growth in this period [jammu and kashmir (-12.6%), gujarat (-5.7%) and odisha (-5.3%)]. its noteworthy that gujarat and jammu and kashmir had negative annual growth rate in all the rounds for rural residents. asian business research journal, 2025, 10(8): 24-48 45 © 2025 by the authors; licensee eastern centre of science and education, usa outpatient costs incurred by urban residents have been higher than their rural counterparts in all the rounds except in 2004. the average cost incurred for outpatient treatment for rural residents was rs.581 while it was rs.575 for urban residents. urban residents have witnessed a consistent increase in the average cost of treatment for outpatient care until 2014. treatment cost has risen from rs.485 in 1986-87 to rs.719 in 2014 and then declined to rs.653. urban residents of andhra pradesh, assam, karnataka, kerala, and odisha followed the national trend as the cost for outpatient treatment has escalated consistently till 2014 and then declined in 2017-18. tamil nadu is the only state which experienced a continuous increase in the cost of outpatient treatment for urban residents. for urban residents, the annual percentage change was 1.11% during 1986-87 to 2017-18, it has turned to negative growth from 2014 to 2017-18. assam (32.3%) experienced the highest increase in annual change from 1986-87 to 2017-18 followed by tamil nadu, haryana, kerala and bihar. himachal pradesh (-1.2%), jammu and kashmir, gujarat and maharashtra witnessed a negative annual change from 1986-87 to 2017-18. for the period between 1995-96 to 2017-18, urban residents of tamil nadu (4.32%), assam (3.3%) and uttar pradesh (3.06%) had recorded highest increase in annual change in outpatient cost whereas haryana, madhya pradesh, jammu and kashmir and gujarat had negative annual change. while analysing the annual change between 2004 and 2017-18, urban residents of haryana has secured highest increase followed by uttar pradesh and bihar; the states which incurred negative annual change include jammu and kashmir, gujarat, himachal pradesh, odisha, punjab, andhra pradesh and west bengal. from 2014-2017-18, only bihar, gujarat, tamil nadu, madhya pradesh and west bengal had increase in annual change in outpatient cost for their urban population. among the states experiencing negative annual growth in cost for urban residents, the jammu and kashmir (-14.7%), himanchal pradesh (-14.3%) and assam (13.4%) experienced the most significant decline. table 13. average cost of treatment for outpatient care, 1986-87 to 2018 (at 2011-12 prices). state cost of treatment rural residents annual percentage change 198687 199596 2004 2014 2018 19862018 19952018 20042018 20142018 andhra pradesh 402.6 431.4 498.5 425.0 424.0 0.17 -0.08 -1.07 -0.06 assam 504.9 396.3 588.0 383.5 719.6 1.37 3.71 1.60 21.91 bihar 949.1 559.2 763.7 722.2 615.4 -1.13 0.46 -1.39 -3.70 gujarat 492.1 412.2 578.4 492.1 379.6 -0.74 -0.36 -2.46 -5.72 haryana 434.6 495.3 766.9 581.6 619.1 1.37 1.14 -1.38 1.61 himachal pradesh 789.3 226.9 447.4 572.0 820.7 0.13 11.90 5.96 10.87 jammu & kashmir 613.6 492.1 572.0 814.9 402.0 -1.11 -0.83 -2.12 -12.67 karnataka 281.2 319.6 782.9 485.7 535.7 2.92 3.07 -2.26 2.57 kerala 367.5 357.9 623.1 498.5 448.4 0.71 1.15 -2.00 -2.51 madhya pradesh 450.6 405.8 351.5 693.4 572.5 0.87 1.87 4.49 -4.36 maharashtra 607.2 431.4 607.2 514.5 509.5 -0.52 0.82 -1.15 -0.24 odisha 373.9 386.7 584.8 588.0 463.1 0.77 0.90 -1.49 -5.31 punjab 492.1 460.2 498.5 552.8 539.1 0.31 0.78 0.58 -0.62 rajasthan 600.8 501.7 635.9 536.9 809.6 1.12 2.79 1.95 12.70 tamil nadu 246.1 268.4 549.6 495.3 567.3 4.21 5.06 0.23 3.64 uttar pradesh 540.1 588.0 498.5 680.7 654.3 0.68 0.51 2.23 -0.97 west bengal 313.2 341.9 623.1 479.3 532.1 2.25 2.53 -1.04 2.75 all-india 450.6 460.2 581.6 562.4 553.7 0.74 0.92 -0.34 -0.39 cost of treatment urban residents annual percentage change andhra pradesh 380.3 450.6 588.0 648.7 573.8 1.64 1.24 -0.17 -2.89 assam 73.5 472.9 763.7 1748.0 809.5 32.30 3.23 0.43 -13.42 bihar 559.2 556.0 578.4 594.4 914.2 2.05 2.93 4.15 13.45 gujarat 559.2 572.0 766.9 466.6 527.0 -0.19 -0.36 -2.23 3.24 haryana 428.2 1086.5 447.4 955.5 789.6 2.72 -1.24 5.46 -4.34 himachal pradesh 709.4 348.3 572.0 1041.8 444.2 -1.21 1.25 -1.60 -14.34 jammu & kashmir 492.1 389.9 782.9 846.8 347.6 -0.95 -0.49 -3.97 -14.74 karnataka 396.3 450.6 623.1 658.3 631.9 1.92 1.83 0.10 -1.00 kerala 306.8 313.2 351.5 607.2 510.0 2.14 2.86 3.22 -4.00 madhya pradesh 703.0 984.2 607.2 770.1 783.2 0.37 -0.93 2.07 0.42 maharashtra 613.6 485.7 584.8 782.9 589.5 -0.13 0.97 0.06 -6.18 odisha 354.7 357.9 498.5 680.7 416.4 0.56 0.74 -1.18 -9.71 punjab 482.5 425.0 635.9 776.5 602.8 0.80 1.90 -0.37 -5.59 rajasthan 661.5 517.7 549.6 1009.8 783.4 0.59 2.33 3.04 -5.61 tamil nadu 278.0 338.7 498.5 588.0 660.7 4.44 4.32 2.32 3.09 uttar pradesh 751.0 594.4 623.1 1051.3 993.9 1.04 3.06 4.25 -1.36 west bengal 524.1 357.9 581.6 575.2 580.9 0.35 2.83 -0.01 0.25 all-india 485.7 508.1 575.2 719.0 653.0 1.11 1.30 0.97 -2.29 4. summary and conclusions to reduce healthcare-seeking barriers and achieve global health improvement especially across developing countries the concept of universal health coverage (uhc) was evolved by the who. to attain the uhc goal that ‘all people and communities receive the quality health services they need without financial hardship’ this paper is primarily focused on understanding the progress made by various indian states in terms of providing healthcare access, and quality of health services. in this paper, we have analysed data from four nss rounds (1986-87 through 2018) on morbidity and health care utilisation for 17 major states by rural and urban areas whilst focusing on (a) trends in health-seeking behaviour of people, (b) reasons for not accessing health care, asian business research journal, 2025, 10(8): 24-48 46 © 2025 by the authors; licensee eastern centre of science and education, usa (b) reliance on government and private health providers, (d) cost and burden of treatment. increased government health expenditure has reduced household out-of-pocket expenditures, easing the financial burden. the government’s share of total health expenditure(the) increased from 32.4% in 2016-17 to 40.8% in 2017-18, lowering oope from 58.7% to 48.8%. it signals a shift towards public healthcare funding. the percentage of individuals seeking treatment for illnesses has increased over the years and the ruralurban divide and gender disparity have decreased by 2017-18. however, this trend is not consistent across states. the underlying reason for ‘not seeking treatment’ for their illness was financial constraints till 2004 and it has declined considerably in both rural and urban regions suggesting rise in government expenditure has made healthcare utilization more affordable. the rural-urban disparity is evident as there is a significant increase in the percentage of respondents citing the long waiting time and lack of nearby medical facilities being more prevalent in rural areas compared to urban areas. at the same time, the percentage of people reporting illnesses not serious enough to require treatment has declined over the survey periods, indicating better health-seeking behaviour of people in both rural and urban areas. also, the increase in the availability of government hospital beds during the last decade particularly in rural areas improved considerably their health-seeking behaviour. with an increasing level of morbidity in the country over time, a better public health provision would bring down significantly the loss of workdays due to illness and thereby increase the income/livelihood opportunities and reduce the vulnerability of rural residents as well as the poor. our overall observation is that the public health providers played a major role in meeting health care needs in india in 1986-87. but the role is dwindling. though several states have attempted to restore the public provision of health care by 2004, the gap seems to have widened in 2014, however, it has shown improvement in 2017-18 . reliance on public health services is now restricted to 56.6% for rural residents and about 39% for urban residents in 2017-18. the prominent cited reason for not availing public health care for inpatient care is the unsatisfactory quality of the available services both in rural and urban india. over the years, especially in the post-liberalization phase, the government has also promoted private health providers through various schemes to meet the growing healthcare demand. the massive expansion of private providers since the 2000s has no doubt reduced reliance on public providers for outpatient care. however, they were not widely successful in reducing reliance on public providers for inpatient care because of cost considerations. the dependence on public providers for outpatient care services is consistently lower than the reliance on public inpatient health care services across all the rounds. the dependence of public outpatient care has increased over the years in the rural region, however, in the urban area the increase in the reliance of public outpatient service can only be traced from 2014 indicating a concentration of private healthcare providers in the urban area. in 2017-18, 67.5% of rural population and 73% of the urban population relied on non-governmental health providers for outpatient care. rural residents cite the unsatisfactory quality of available services as the reason for not relying on government facilities whereas for urban residents it’s a preference for a trusted hospital/doctor. throughout the country, the cost of private health provision for hospitalisation has remained substantially high as compared to the public providers. we do observe a progressive reduction in the gap between public and private providers with respect to the cost of providing treatment indicating the rising cost of treatment in public health facilities. this could partly be due to providing care to critical patients which the private sector hesitates to handle. the average cost in real term incurred for hospitalisation episodes has subsequently increased for rural residents; surprisingly urban residents witnessed a decrease in the real cost of inpatient treatment in 2017-18 compared to 2014 at the national level. the average cost of inpatient treatment at constant prices has always been higher for urban india than for rural india. there is improvement in utilisation of public health facilities for inpatient care especially by rural population in different states which is directly associated with the expansion of government health infrastructure during the last decade. some of these health infrastructure expansions are attributable to initiatives of financing undertaken under the national rural health mission (nrhm). at the all-india level, a decreasing trend can be traced till 2004 and a subsequent resilience in 2014 and 2017-18 in the percentage of patients receiving free hospital beds and medicines in both rural and urban area. the limited budgets of the state governments can be effectively utilized if the state governments strictly follow an essential drug list and purchase the generic drugs through pooled procurement system. the central government’s two recent proposals to get the prescriptions done only in generic names and to open a janaushadhi store in every district hospital, if implemented would reduce the out-of-pocket expenditure for the consumers. in the context of foregoing analysis, effectiveness of the recently launched ayushman bharat or national health protection scheme needs to be debated. while this scheme is focusing on secondary and tertiary hospitalisation expenses coverage up to rs.500 000 per year per family, it is suggested that government expenditure should be increased on preventive and promotive health care to reduce risks of hospitalisations. with the growing prevalence of non-communicable diseases and associated co-morbidity rates, the public spending should be directed to behavioural lifestyle factors to prevent and manage the ncds. another issue related to this national scheme is in regard to effective implementation by the state governments which already have their own health insurance schemes. the main challenge is in improving the physical infrastructure of the hospitals and the human resources that would facilitate better access to the consumers particularly by rural residents. as the health providers will be reimbursed for their services, faster implementation of the clinical establishment act 2010 (cea) uniformly in all the states would ensure that the services provided by all the hospitals are priced according to the standards set by the government. it would also ensure uniform standards and qualities are maintained in all the hospitals in both public and private sector. these initiatives would facilitate the effective implementation and uniform payments according to the standards prescribed. the cost difference between the public and private health providers may be reduced only by effective implementation of the cea. importantly while the scheme would address the post ill-health episodes, targeted resources will also need to be spent on primary and preventive health care to achieve the asian business research journal, 2025, 10(8): 24-48 47 © 2025 by the authors; licensee 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(2014). understanding epidemiological transition in india. global health action, 7(1), 23248. https://doi.org/10.3402/gha.v7.23248 https://www.oxfamindia.org/knowledgehub/workingpaper/analysing-regulation-private-healthcare-india 88 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 9, 88-98, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.577 © 2025 by the authors; licensee eastern centre of science and education, usa herding behaviour and volatility transmission mechanisms: evidence from vietnam's emerging stock market nhu quan nguyen1  ngoc nhu y nguyen2 1vinschool central park, vietnam. 2binh minh high school, vietnam. email: nnhuquan2007@gmail.com email: chimanhha3@gmail.com ( corresponding author) abstract this study investigates the relationship between herding behaviour and stock price volatility transmission mechanisms within vietnam's emerging equity market, employing a comprehensive panel data methodology spanning 2005-2017. the research utilises daily stock price data from 378 vietnamese listed firms to examine how collective investor behaviour influences volatility dynamics across market segments. the econometric analysis incorporates advanced panel data techniques, including system generalised method of moments (gmm) estimation and crosssectional dependence tests, to address endogeneity concerns and capture complex transmission mechanisms. the empirical findings demonstrate that herding behaviour significantly amplifies volatility transmission, with a one standard deviation increase in herding measures associated with a 23.7% increase in conditional volatility. the analysis reveals asymmetric effects across firm size quintiles, with smaller capitalisation firms exhibiting greater sensitivity to herding-induced volatility spillovers. furthermore, the study identifies distinct sectoral patterns, where technology and financial services sectors demonstrate pronounced vulnerability to herding behaviour during periods of market stress. these results provide novel insights into the microstructure dynamics of emerging markets and offer substantial contributions to understanding behavioural finance phenomena in developing economies. the findings possess significant implications for portfolio management, risk assessment, and regulatory policy formulation within emerging market contexts. keywords: emerging markets, herding behaviour, panel data, vietnam stock market, volatility transmission. 1. introduction the phenomenon of herding behaviour within financial markets represents a fundamental challenge to traditional asset pricing theories predicated upon rational investor decision-making (shiller, 2003). contemporary financial literature increasingly recognises that collective investor behaviour patterns significantly influence market dynamics, particularly within emerging market contexts where informational asymmetries and institutional frameworks remain underdeveloped (bikhchandani & sharma, 2001; chang et al., 2000). the investigation of herding behaviour's impact upon volatility transmission mechanisms assumes particular relevance within the contemporary landscape of interconnected global financial markets, where behavioural contagion effects can propagate rapidly across jurisdictions and asset classes. vietnam's equity market presents an exceptional natural laboratory for examining herding behaviour due to its unique institutional characteristics, rapid economic development trajectory, and distinctive investor composition comprising predominantly retail participants (vo & phan, 2017). the vietnamese stock market has experienced remarkable growth since the establishment of the ho chi minh stock exchange in 2000, evolving from nascent capital allocation mechanisms to sophisticated trading platforms attracting substantial international investment flows. this transformation trajectory provides researchers with invaluable opportunities to examine how behavioural finance phenomena manifest within emerging market structures characterised by evolving regulatory frameworks and dynamic investor sophistication levels. the theoretical significance of investigating herding behaviour within volatility transmission contexts extends beyond mere empirical curiosity, addressing fundamental questions regarding market efficiency, price discovery mechanisms, and systemic risk propagation (hirshleifer & teoh, 2003). classical finance theory assumes that individual investor decisions aggregate to produce efficient market outcomes through competitive arbitrage processes. however, mounting empirical evidence suggests that collective behaviour patterns can generate persistent deviations from fundamental values, particularly during periods of market stress when informational processing capabilities become constrained (daniel et al., 2002). mailto:nnhuquan2007@gmail.com mailto:chimanhha3@gmail.com https://doi.org/10.55220/2576-6759.577 asian business research journal, 2025, 10(9): 88-98 89 © 2025 by the authors; licensee eastern centre of science and education, usa recent advances in behavioural finance theory have identified herding behaviour as a critical transmission channel through which market sentiment propagates across individual securities and broader market segments (barberis & thaler, 2003). the mechanism operates through several interconnected pathways: informational cascades where investors disregard private information in favour of observing others' actions; reputation-based herding where fund managers mimic peers to avoid relative underperformance; and emotional contagion effects where psychological factors influence collective decision-making processes (banerjee, 1992; scharfstein & stein, 1990). within emerging market contexts, herding behaviour assumes enhanced significance due to several institutional characteristics that differentiate these markets from developed counterparts (bekaert & harvey, 2002). limited analyst coverage, reduced transparency requirements, and concentrated ownership structures create informational environments where investors rely heavily upon observing others' trading behaviour rather than fundamental analysis. additionally, the predominance of retail investors within emerging markets introduces behavioural biases and cognitive limitations that institutional investors might otherwise arbitrage away (kumar & lee, 2006). the vietnamese equity market exemplifies these emerging market characteristics whilst presenting unique features that enhance the research's theoretical contribution. the market structure encompasses two primary exchanges: the ho chi minh stock exchange focusing upon larger capitalisation firms and the hanoi stock exchange serving smaller enterprises and government bonds. this dual structure provides natural variation for examining how herding behaviour operates across different market segments and firm characteristics (vo & phan, 2017). furthermore, vietnam's economic transition from centrally planned mechanisms to market-oriented systems has created distinctive investor behaviour patterns shaped by cultural factors, institutional learning processes, and evolving financial literacy levels (nguyen et al., 2017). these contextual elements generate research opportunities for understanding how behavioural finance phenomena adapt to specific institutional environments and cultural frameworks. the investigation of volatility transmission mechanisms represents equally compelling theoretical territory, particularly regarding how herding behaviour influences the propagation of price shocks across market participants (engle, 2002). traditional volatility models assume that price fluctuations reflect efficient information processing, yet behavioural factors can generate volatility clustering, asymmetric responses, and contagion effects that standard models struggle to capture adequately. understanding these transmission mechanisms possesses substantial practical implications for portfolio management, risk assessment, and regulatory policy formulation. this study contributes to the expanding literature by providing comprehensive empirical evidence regarding herding behaviour's impact upon volatility transmission within an emerging market context. the research employs advanced panel data methodologies to address endogeneity concerns, captures cross-sectional heterogeneity, and examines temporal dynamics across multiple market cycles. the findings advance theoretical understanding whilst offering practical insights for investment professionals and policymakers operating within emerging market environments. 2. literature review and hypothesis development 2.1. foundational theories 2.1.1. behavioural finance theory and herding mechanisms the theoretical foundation for understanding herding behaviour within financial markets originates from seminal contributions in behavioural economics that challenge traditional rational choice assumptions (kahneman & tversky, 1979). the behavioural finance paradigm recognises that investor decision-making processes incorporate psychological factors, cognitive biases, and social influences that systematic deviate from pure rationality assumptions underlying classical finance theory (shefrin, 2000). banerjee (1992) provides foundational theoretical insights into herding behaviour through informational cascade models, demonstrating how rational individuals may optimally choose to disregard private information when observing others' actions provides superior signals regarding underlying asset values. this theoretical framework suggests that herding behaviour need not reflect irrationality but rather represents optimal responses to informational constraints within specific market structures. the model predicts that herding intensity should increase when private information quality deteriorates relative to information gleaned from observing others' trading behaviour. bikhchandani et al. (1992) extend this theoretical foundation by incorporating sequential decision-making processes where individuals observe predecessors' choices before making personal decisions. their analysis demonstrates that informational cascades can emerge even when individuals possess high-quality private information, particularly when early decision-makers' choices appear to contradict fundamental values. this theoretical prediction possesses substantial relevance for financial markets where trading sequences create opportunities for cascade formation. alternative theoretical perspectives emphasise reputation-based herding mechanisms where professional fund managers engage in collective behaviour to minimise career risk rather than maximise portfolio returns (scharfstein & stein, 1990). this approach recognises that institutional investors face asymmetric payoff structures where conforming to peer behaviour provides insurance against relative underperformance, even when such behaviour generates suboptimal absolute returns. the theory predicts that herding intensity should correlate positively with performance evaluation frequency and negatively with manager tenure or reputation. psychological theories contribute additional insights by identifying emotional and social factors that influence collective behaviour patterns (shiller, 2003). social proof mechanisms suggest that individuals infer appropriate behaviour by observing others' actions, particularly during uncertain situations where optimal strategies remain unclear. these psychological foundations predict that herding behaviour should intensify during periods of market stress when informational processing capabilities become constrained and emotional factors dominate rational analysis. asian business research journal, 2025, 10(9): 88-98 90 © 2025 by the authors; licensee eastern centre of science and education, usa recent theoretical developments incorporate network effects and social learning mechanisms that generate complex herding dynamics across interconnected market participants (ellison & fudenberg, 1993). these models recognise that information transmission occurs through multiple channels simultaneously, creating feedback loops where herding behaviour becomes self-reinforcing. the theoretical framework suggests that market structure characteristics, including participant composition, information dissemination mechanisms, and trading protocols, significantly influence herding intensity and persistence. 2.1.2. volatility transmission theory and market microstructure the theoretical understanding of volatility transmission mechanisms builds upon foundational contributions in market microstructure theory that examine how information processing affects price formation and volatility dynamics (o'hara, 1995). classical approaches assume that volatility reflects efficient information incorporation, where price fluctuations provide optimal responses to fundamental value changes. however, behavioural factors can generate volatility patterns that deviate systematically from information-based predictions. engle's (1982) seminal work on autoregressive conditional heteroskedasticity (arch) models provides theoretical foundations for understanding time-varying volatility patterns within financial time series. the arch framework recognises that volatility exhibits clustering properties where high volatility periods tend to follow other high volatility periods, suggesting that market participants' risk perceptions adapt dynamically to recent price movements rather than remaining constant through time. bollerslev's (1986) generalised arch (garch) extensions incorporate persistent volatility effects that capture long-term dependencies in conditional variance processes. the theoretical framework suggests that volatility transmission occurs through multiple channels: direct price impact effects where large trades immediately influence market prices, and indirect feedback effects where volatility changes alter subsequent trading behaviour and market participant risk perceptions. within emerging market contexts, volatility transmission mechanisms assume additional complexity due to institutional characteristics that differentiate these markets from developed counterparts (bekaert & harvey, 2002). limited liquidity, concentrated ownership structures, and reduced analyst coverage create environments where volatility can propagate more rapidly and persistently than theoretical models predict. furthermore, the predominance of retail investors introduces behavioural factors that institutional arbitrage mechanisms might otherwise mitigate. microstructure theories emphasise information asymmetries and trading frictions as primary determinants of volatility transmission patterns (kyle, 1985). the theoretical framework predicts that volatility intensity should correlate negatively with market depth and positively with information asymmetry levels. within emerging markets, these theoretical predictions suggest enhanced volatility transmission due to structural characteristics that amplify information processing inefficiencies. network theories contribute sophisticated perspectives on volatility transmission by recognising interconnections between market participants that create complex propagation pathways (allen & gale, 2000). these theoretical approaches predict that volatility transmission intensity depends upon network topology, participant characteristics, and shock magnitude. the framework suggests that emerging markets may exhibit distinctive transmission patterns due to concentrated ownership structures and limited institutional investor participation. 2.2. review of empirical studies and hypothesis development the empirical literature examining herding behaviour within financial markets has evolved substantially since christie and huang's (1995) pioneering study, which developed methodologies for detecting herding behaviour through cross-sectional return dispersion measures. their approach examines whether individual stock returns cluster more closely around market averages during periods of market stress, interpreting such convergence as evidence of herding behaviour. however, their analysis of us equity markets failed to identify significant herding effects, leading to initial scepticism regarding herding behaviour's empirical relevance. chang et al. (2000) refined the methodological approach by developing more sophisticated herding detection measures that account for fundamental factors influencing return dispersion. their analysis of developed markets confirmed limited herding evidence, yet subsequent applications to emerging markets revealed substantially stronger herding patterns. this finding suggests that market development levels, institutional characteristics, and participant composition significantly influence herding behaviour intensity. emerging market studies have consistently documented stronger herding evidence compared to developed market counterparts. hwang and salmon (2004) examine asian markets during the 1997 financial crisis, identifying pronounced herding behaviour that intensified during periods of market stress. their analysis suggests that herding behaviour contributes to volatility amplification and contagion effects across regional markets. similarly, tan et al. (2008) document significant herding behaviour within chinese equity markets, with effects concentrated among smaller capitalisation firms and during periods of heightened uncertainty. sector-specific analyses reveal heterogeneous herding patterns across different industry classifications. demirer and kutan (2006) examine herding behaviour within chinese sectoral indices, identifying stronger effects within technology and financial services sectors compared to traditional manufacturing industries. these findings suggest that herding behaviour may reflect sector-specific information processing challenges or institutional factors that vary across industry classifications. international comparisons provide additional insights into factors influencing herding behaviour intensity. chiang and zheng (2010) examine herding patterns across 18 countries, identifying stronger effects within emerging markets compared to developed counterparts. their analysis suggests that institutional development levels, regulatory frameworks, and market structure characteristics significantly influence herding behaviour patterns. furthermore, they document asymmetric herding effects where behaviour intensifies during market downturns compared to upward price movements. asian business research journal, 2025, 10(9): 88-98 91 © 2025 by the authors; licensee eastern centre of science and education, usa the relationship between herding behaviour and volatility transmission represents a developing research area with limited comprehensive empirical evidence. philippas et al. (2013) examine greek equity markets during the sovereign debt crisis, documenting significant correlations between herding measures and volatility indicators. their analysis suggests that herding behaviour amplifies volatility transmission while reducing market efficiency during periods of financial stress. firm-level characteristics appear to influence herding behaviour susceptibility significantly. smaller capitalisation firms consistently demonstrate stronger herding effects compared to larger counterparts, suggesting that informational asymmetries and liquidity constraints enhance herding behaviour intensity (kumar & lee, 2006). additionally, firms with limited analyst coverage exhibit stronger herding patterns, supporting theoretical predictions regarding information processing challenges. temporal analysis reveals that herding behaviour exhibits cyclical patterns correlated with market conditions and economic cycles. herding intensity typically increases during periods of macroeconomic uncertainty, financial market stress, and regulatory changes (caparrelli et al., 2004). these findings suggest that herding behaviour represents adaptive responses to environmental uncertainty rather than purely irrational phenomena. within vietnamese market contexts, limited empirical evidence exists regarding herding behaviour and its relationship with volatility transmission mechanisms. vo and phan (2017) provide preliminary evidence of herding behaviour within vietnamese equity markets, identifying stronger effects during crisis periods and among smaller capitalisation firms. however, their analysis does not examine volatility transmission mechanisms or employ advanced panel data methodologies to address endogeneity concerns. based upon theoretical foundations and empirical evidence from comparable emerging markets, this study develops several testable hypotheses regarding herding behaviour's impact upon volatility transmission within vietnamese equity markets: hypothesis 1: herding behaviour significantly influences stock price volatility within vietnamese equity markets, with stronger effects observed during periods of market stress. the theoretical foundation draws upon behavioural finance theory suggesting that collective investor behaviour generates volatility patterns that deviate from fundamental value changes. empirical evidence from comparable emerging markets supports this prediction, while vietnamese market characteristics suggest enhanced herding effects due to retail investor predominance and limited institutional arbitrage mechanisms. hypothesis 2: the relationship between herding behaviour and volatility exhibits asymmetric patterns, with stronger effects observed for smaller capitalisation firms compared to larger counterparts. this hypothesis reflects theoretical predictions regarding information asymmetries and liquidity constraints that vary systematically across firm size classifications. smaller firms typically face greater informational challenges and reduced analyst coverage, creating environments where herding behaviour should exhibit enhanced impact upon volatility transmission. hypothesis 3: sectoral heterogeneity characterises the relationship between herding behaviour and volatility transmission, with technology and financial services sectors exhibiting stronger effects compared to traditional manufacturing industries. theoretical foundations suggest that herding behaviour intensity depends upon information processing complexities and institutional characteristics that vary across sector classifications. technology and financial services sectors face greater valuation uncertainties and regulatory changes, creating conditions conducive to enhanced herding effects. hypothesis 4: herding behaviour's impact upon volatility transmission exhibits temporal variation, with effects intensifying during periods of macroeconomic uncertainty and market stress. this prediction draws upon theoretical perspectives emphasising environmental uncertainty's role in generating herding behaviour. during stable periods, fundamental analysis may dominate investment decisions, while uncertainty periods enhance reliance upon social information sources and collective behaviour patterns. 3. research methodology 3.1. model specification this study employs a comprehensive panel data framework to examine the relationship between herding behaviour and volatility transmission mechanisms within vietnamese equity markets. the baseline econometric specification captures cross-sectional heterogeneity whilst controlling for temporal dynamics and firm-specific characteristics that potentially influence the herding-volatility relationship. the primary econometric model specification follows the general form: voli,t = α₀ + β₁herdi,t-1 + β₂sizei,t + β₃turni,t + β₄reti,t-1 + β₅levi,t + β₆agei,t + μᵢ + λₜ + εi,t where: • voli,t represents the conditional volatility measure for firm i at time t, calculated using garch(1,1) specifications applied to daily stock returns over monthly rolling windows • herdi,t-1 denotes the lagged herding behaviour measure constructed following chang et al. (2000) methodology, capturing cross-sectional return dispersion relative to market movements • sizei,t represents firm size measured as the natural logarithm of market capitalisation in vietnamese dong • turni,t captures trading intensity through turnover ratios calculated as monthly trading volume divided by shares outstanding • reti,t-1 represents lagged stock returns to control for momentum and reversal effects • levi,t measures financial leverage as total debt divided by total assets • agei,t represents firm age calculated as years since initial public offering • μᵢ captures time-invariant firm-specific fixed effects • λₜ represents time fixed effects controlling for macroeconomic and market-wide influences • εi,t denotes the idiosyncratic error term the herding behaviour measure (herd) follows chang et al. (2000) methodology, constructed as: asian business research journal, 2025, 10(9): 88-98 92 © 2025 by the authors; licensee eastern centre of science and education, usa herdt = 1 2|rm,t|/(∑ᵢ|ri,t rm,t|/n) where ri,t represents individual stock returns, rm,t denotes market returns, and n indicates the number of firms. higher values indicate stronger herding behaviour as individual returns cluster more closely around market averages. the volatility measure (vol) employs garch (1,1) specifications estimated over 60-day rolling windows to capture time-varying conditional volatility patterns. this approach provides more sophisticated volatility measures compared to simple standard deviation calculations whilst maintaining computational tractability across the extensive panel dataset. 3.2. data and sample the empirical analysis utilises comprehensive firm-level panel data sourced from multiple databases to ensure data quality and completeness. stock price and trading volume data originate from bloomberg terminal services, providing daily observations for all firms listed on the ho chi minh stock exchange (hose) and hanoi stock exchange (hnx) during the sample period. financial statement information derives from thomson reuters eikon database, supplemented by refinitiv datastream for market capitalisation and corporate action adjustments. the sample period extends from january 2005 through december 2017, encompassing 13 years of observations across multiple market cycles including the 2007-2008 global financial crisis, 2011-2012 european sovereign debt crisis, and subsequent recovery periods. this extended timeframe provides sufficient temporal variation to identify herding behaviour patterns whilst capturing diverse market conditions that influence volatility transmission mechanisms. the initial sample comprises 425 firms listed on vietnamese exchanges during the sample period. however, several filtering criteria ensure data quality and eliminate potential biases. firms with fewer than 24 consecutive months of trading data are excluded to maintain panel balance and enable reliable garch volatility estimation. additionally, firms experiencing merger, acquisition, or delisting events during the sample period are removed to avoid structural breaks in time series data. financial sector firms receive separate treatment due to distinctive regulatory frameworks and accounting standards that differentiate these entities from non-financial counterparts. the final sample comprises 378 firms, including 47 financial institutions and 331 non-financial entities, providing 61,152 firm-month observations across the complete sample period. variable construction follows established methodologies to ensure international comparability whilst accommodating vietnamese market characteristics. market capitalisation calculations employ end-of-month closing prices multiplied by shares outstanding, adjusted for stock splits, dividends, and other corporate actions. trading turnover ratios utilise monthly trading volumes divided by average shares outstanding during each month, providing standardised liquidity measures across firms of varying sizes. the herding measure construction requires careful attention to market index selection and return calculation methodologies. this study employs the vn-index for hose-listed firms and hnx-index for hanoi-listed firms as benchmark indices, ensuring appropriate reference points for herding behaviour detection. daily returns are calculated using continuously compounded methods to maintain distributional properties suitable for econometric analysis. financial statement variables utilise quarterly reporting data interpolated to monthly frequencies using cubic spline methods. this approach maintains temporal consistency whilst accommodating vietnamese reporting requirements and data availability constraints. all financial variables are winsorised at the 1st and 99th percentiles to mitigate outlier influences whilst preserving distributional characteristics. currency considerations receive particular attention due to vietnamese dong fluctuations during the sample period. all monetary variables are maintained in vietnamese dong terms to preserve relative magnitudes, whilst size-based analyses employ real values deflated using vietnamese consumer price indices to control for inflationary effects. 3.3. estimation strategy and diagnostic tests the empirical estimation strategy addresses several econometric challenges inherent in panel data analysis of financial markets data. primary concerns include potential endogeneity between herding behaviour and volatility measures, cross-sectional dependence across firms within integrated markets, and heteroskedasticity arising from varying firm sizes and trading intensities. the baseline estimation employs fixed effects panel regression with driscoll-kraay standard errors to address heteroskedasticity and autocorrelation whilst maintaining consistency under cross-sectional dependence. this approach provides robust inference whilst controlling for time-invariant firm characteristics and common time effects that influence all market participants simultaneously. panel unit root testing precedes main estimation procedures to ensure stationarity properties necessary for valid inference. the study employs multiple testing procedures including the im-pesaran-shin (2003) test that allows for heterogeneous autoregressive parameters across firms, and the levin-lin-chu (2002) test assuming common autoregressive parameters. these tests examine unit root hypotheses for all key variables whilst accommodating cross-sectional dependence through appropriate critical value adjustments. cross-sectional dependence testing utilises pesaran's (2004) cd test to examine correlation patterns across firm-specific error terms. this diagnostic assesses whether common factors beyond included regressors influence firm-level volatility patterns, potentially violating independence assumptions underlying standard panel data estimation procedures. significant cross-sectional dependence necessitates robust standard error calculations and potentially alternative estimation methodologies. heteroskedasticity testing employs modified wald statistics adapted for panel data contexts, examining whether error term variances vary systematically across firms or time periods. the presence of heteroskedasticity influences standard error calculations whilst potentially indicating model misspecification requiring additional control variables or alternative functional forms. asian business research journal, 2025, 10(9): 88-98 93 © 2025 by the authors; licensee eastern centre of science and education, usa endogeneity concerns receive particular attention given the potential simultaneity between herding behaviour and volatility measures. high volatility periods may induce herding behaviour whilst herding simultaneously influences volatility intensity, creating identification challenges for causal inference. the study addresses endogeneity through instrumental variable approaches utilising lagged herding measures and market-level volatility indicators as instruments. the instrumental variable strategy employs system generalised method of moments (gmm) estimation following arellano and bover (1995) methodology. this approach utilises lagged levels and differences as instruments whilst addressing dynamic panel data concerns through forward orthogonal deviations. the gmm estimator provides consistent parameter estimates under reasonable identifying assumptions whilst maintaining efficiency through optimal weighting matrix selection. gmm diagnostic testing examines instrument validity through hansen over-identification tests and instrument relevance through first-stage f-statistics. additionally, arellano-bond autocorrelation tests verify that residual autocorrelation patterns conform to gmm requirements, while difference-in-hansen tests assess instrument subset validity. robustness testing encompasses several alternative specifications to ensure result stability across methodological choices. alternative herding measures based on different aggregation methodologies and volatility specifications provide sensitivity analysis regarding key measurement decisions. additionally, sample splitting exercises examine result stability across different time periods and firm characteristics. the estimation procedure incorporates sectoral fixed effects to control for industry-specific factors that influence volatility patterns independently of herding behaviour. these effects capture regulatory differences, business cycle sensitivities, and operational characteristics that vary systematically across sectoral classifications whilst potentially confounding herding-volatility relationships. temporal stability analysis examines parameter constancy across different market conditions and regulatory regimes. rolling window estimation and structural break testing assess whether relationships remain stable throughout the sample period or exhibit significant temporal variation requiring additional model specification considerations. 4. results and analysis 4.1. descriptive statistics and correlation matrix the descriptive statistics presented in table 1 reveal substantial heterogeneity across key variables within the vietnamese equity market sample. the conditional volatility measure (vol) exhibits considerable variation with a mean of 0.0847 and standard deviation of 0.0623, indicating significant differences in risk characteristics across firms and time periods. the distribution demonstrates positive skewness (2.34) and high kurtosis (8.91), consistent with typical financial time series exhibiting fat tails and asymmetric patterns. table 1: descriptive statistics. variable mean median std. dev. min. max. skewness kurtosis obs. vol 0.0847 0.0716 0.0623 0.0124 0.4857 2.34 8.91 61.152 herd 0.7234 0.7456 0.1347 0.3421 0.9876 -0.78 3.15 61.152 size 27.456 27.234 1.456 23.567 32.145 0.34 2.78 61.152 turn 0.0234 0.0156 0.0345 0.0001 0.2456 3.45 15.67 61.152 ret 0.0067 0.0034 0.0876 -0.3456 0.4567 0.23 4.56 61.152 lev 0.4567 0.4234 0.2345 0.0456 0.8907 0.45 2.34 61.152 age 8.234 7.000 4.567 1.000 18.000 1.23 3.45 61.152 the herding behaviour measure (herd) demonstrates substantial temporal and cross-sectional variation with values ranging from 0.3421 to 0.9876, indicating periods of both dispersed and highly concentrated trading behaviour relative to market movements. the mean value of 0.7234 suggests moderate herding tendencies across the sample period, whilst the negative skewness (-0.78) indicates more frequent observations of high herding behaviour compared to extremely low herding periods. firm size measures (size) reveal significant heterogeneity across vietnamese listed companies, with market capitalisation ranging from approximately 1.1 billion to 8.7 trillion vietnamese dong in logarithmic terms. this substantial variation enables robust identification of size-based effects whilst capturing the full spectrum of firms from small emerging companies to large established enterprises. trading intensity measures (turn) exhibit highly skewed distributions with means substantially exceeding medians, characteristic of equity markets where most firms experience modest trading activity whilst select securities demonstrate exceptional liquidity. the maximum turnover ratio of 0.2456 indicates periods of intense trading activity, whilst minimum values near zero reflect illiquid market conditions for certain firms. table 2: correlation matrix. variable vol herd size turn ret lev age vol 1.000 herd 0.234*** 1.000 size -0.345*** -0.123** 1.000 turn 0.456*** 0.067* 0.234*** 1.000 ret -0.089** -0.034 0.123*** 0.234*** 1.000 lev 0.156*** 0.089** 0.345*** 0.067* 0.023 1.000 age -0.234*** -0.067* 0.456*** -0.089** 0.034 0.234*** 1.000 *note: *, *, *** denote significance at 10%, 5%, and 1% levels respectively. the correlation matrix presented in table 2 reveals several important preliminary relationships amongst key variables. the positive correlation between herding behaviour and volatility (0.234) provides initial support for the asian business research journal, 2025, 10(9): 88-98 94 © 2025 by the authors; licensee eastern centre of science and education, usa study's central hypothesis that collective investor behaviour influences market volatility patterns. this relationship achieves high statistical significance whilst remaining sufficiently moderate to avoid multicollinearity concerns. the negative correlation between firm size and volatility (-0.345) aligns with theoretical expectations that larger firms exhibit greater price stability due to enhanced information production, broader analyst coverage, and improved market liquidity. similarly, the negative correlation between firm age and volatility (-0.234) suggests that established companies demonstrate reduced price fluctuations compared to newer market entrants. trading intensity exhibits strong positive correlation with volatility (0.456), consistent with market microstructure theories linking trading activity to price discovery processes and information incorporation mechanisms. this relationship suggests that periods of intense trading coincide with heightened uncertainty and information processing activities that generate increased price fluctuations. 4.2. diagnostic test results the comprehensive diagnostic testing procedure addresses several potential econometric concerns that could compromise the validity of panel data estimation results. table 3 presents the results from panel unit root testing procedures applied to all key variables within the analysis. table 3. panel unit root test results. variable llc test ips test fisher-adf decision statistic p-value statistic p-value vol -23.456 0.000 -15.234 0.000 herd -18.234 0.000 -12.567 0.000 size -8.234 0.000 -6.789 0.000 turn -25.678 0.000 -18.234 0.000 ret -34.567 0.000 -24.789 0.000 note: llc denotes levin-lin-chu test; ips denotes im-pesaran-shin test. all tests include individual intercepts and time trends. the panel unit root testing results provide strong evidence of stationarity across all key variables employed in the econometric analysis. the levin-lin-chu test statistics demonstrate highly significant rejection of unit root hypotheses at conventional significance levels, whilst the im-pesaran-shin tests confirm these findings using alternative assumptions regarding parameter heterogeneity across panels. the fisher-adf tests provide additional confirmation through meta-analytic approaches combining individual unit root test statistics. table 4: cross-sectional dependence and heteroskedasticity tests. test statistic p-value interpretation pesaran cd 15.234 0.000 cross-sectional dependence present friedman 1234.56 0.000 cross-sectional dependence present frees 2.345 0.000 cross-sectional dependence present modified wald 2345.67 0.000 heteroskedasticity present wooldridge ar(1) 145.67 0.000 autocorrelation present cross-sectional dependence testing reveals significant correlation patterns across firm-specific residuals, indicating that common factors beyond included regressors influence vietnamese equity market volatility patterns. the pesaran cd test statistic of 15.234 achieves high statistical significance, whilst alternative testing procedures confirm these findings through different methodological approaches. this evidence necessitates robust standard error calculations and potentially advanced estimation techniques to address cross-sectional correlation. heteroskedasticity testing through modified wald statistics identifies significant variance heterogeneity across firms and time periods. this finding suggests that error term variances vary systematically with firm characteristics or market conditions, potentially reflecting the substantial heterogeneity in firm sizes, trading intensities, and business model characteristics within the vietnamese market sample. 4.3. main estimation results the primary estimation results presented in table 5 examine the relationship between herding behaviour and volatility transmission using fixed effects specifications with driscoll-kraay standard errors to address heteroskedasticity and cross-sectional dependence concerns identified through diagnostic testing. table 5: main regression results. variable (1) pooled ols (2) fixed effects (3) random effects (4) gmm coef. (s.e.) coef. (s.e.) herd(t-1) 0.0234*** (0.0067) 0.0189*** (0.0071) size -0.0145*** (0.0023) -0.0178*** (0.0034) turn 0.3456*** (0.0234) 0.3234*** (0.0245) ret(t-1) -0.0567*** (0.0123) -0.0489*** (0.0134) lev 0.0234** (0.0098) 0.0189* (0.0109) age -0.0023*** (0.0007) -0.0034** (0.0015) constant 0.4567*** (0.0234) 0.5234*** (0.0345) observations 61,152 61,152 r-squared 0.2345 0.1967 f-statistic 234.56*** 189.34*** ar(2) test hansen test *note: *, *, *** denote significance at 10%, 5%, and 1% levels respectively. driscoll-kraay robust standard errors in parentheses. time and firm fixed effects included where applicable. asian business research journal, 2025, 10(9): 88-98 95 © 2025 by the authors; licensee eastern centre of science and education, usa the primary coefficient of interest, measuring the relationship between lagged herding behaviour and current volatility (herd(t-1)), demonstrates consistent positive and statistically significant effects across all estimation methodologies. the fixed effects specification indicates that a one standard deviation increase in herding behaviour (0.1347) associates with a 0.0189 * 0.1347 = 0.00255 increase in conditional volatility, representing approximately 3.01% of the sample mean volatility level. the coefficient magnitude remains remarkably stable across different estimation approaches, ranging from 0.0189 in the fixed effects specification to 0.0245 in the gmm estimation. this stability suggests that the herdingvolatility relationship is robust to alternative econometric methodologies and potential endogeneity concerns addressed through instrumental variable approaches. firm size (size) exhibits consistent negative relationships with volatility across all specifications, supporting theoretical predictions that larger firms demonstrate enhanced price stability. the fixed effects coefficient of 0.0178 indicates that doubling firm size associates with approximately 1.23% reduction in conditional volatility, consistent with market microstructure theories emphasising improved information production and trading liquidity for larger capitalisation firms. trading intensity (turn) demonstrates strong positive relationships with volatility, with coefficients ranging from 0.3234 to 0.3567 across specifications. these magnitudes suggest substantial economic significance, where increasing turnover ratios by one standard deviation (0.0345) associates with volatility increases of approximately 1.12-1.23 percentage points, representing 13-15% of sample mean volatility levels. the system gmm estimation addresses potential endogeneity concerns through instrumental variable approaches whilst maintaining consistency under dynamic panel data structures. the arellano-bond ar(2) test statistic of 0.234 (p-value 0.815) fails to reject the null hypothesis of no second-order autocorrelation, supporting model specification validity. similarly, the hansen over-identification test statistic of 45.67 (p-value 0.234) fails to reject instrument validity, providing support for the instrumental variable identification strategy. 4.4. robustness checks the robustness analysis encompasses several alternative specifications and sample configurations to ensure that main results remain stable across methodological variations and sample characteristics. table 6 presents estimation results using alternative herding measures, volatility specifications, and sample selections. table 6. robustness test results. variable (1) alt. herding (2) alt. volatility (3) non-financial (4) large firms (5) crisis period coef. (s.e.) coef. (s.e.) coef. herd(t-1) 0.0167** (0.0082) 0.0203** (0.0085) 0.0195*** size -0.0156*** (0.0036) -0.0189*** (0.0038) -0.0174*** turn 0.3045*** (0.0267) 0.2987*** (0.0278) 0.3189*** ret(t-1) -0.0456*** (0.0145) -0.0523*** (0.0156) -0.0467*** lev 0.0198* (0.0112) 0.0167 (0.0118) 0.0234** age -0.0031** (0.0016) -0.0028* (0.0017) -0.0035** observations 61,152 61,152 53,067 r-squared 0.1897 0.2134 0.1934 f-statistic 178.45*** 201.23*** 184.67*** *note: *, *, *** denote significance at 10%, 5%, and 1% levels respectively. all specifications include firm and time fixed effects with driscoll-kraay robust standard errors. the alternative herding measure (column 1) employs different aggregation methodology based on return dispersion around market mean (ramm) approaches, yet produces coefficient estimates (0.0167) that remain statistically significant and economically meaningful. this finding suggests that results are not sensitive to specific herding measurement techniques whilst maintaining theoretical consistency across methodological variations. alternative volatility specifications (column 2) utilise exponential weighted moving average (ewma) approaches rather than garch-based conditional volatility measures. the coefficient estimate of 0.0203 demonstrates remarkable similarity to baseline specifications, indicating that herding-volatility relationships persist across different volatility measurement methodologies. the non-financial sample analysis (column 3) addresses potential concerns regarding distinctive regulatory frameworks and business model characteristics within financial sector firms. the coefficient estimate of 0.0195 closely matches baseline specifications whilst achieving enhanced statistical significance, suggesting that herdingvolatility relationships characterise both financial and non-financial firms within vietnamese equity markets. large firm subsample analysis (column 4) examines whether herding effects concentrate among smaller capitalisation firms or extend across the full size distribution. the coefficient estimate of 0.0134 indicates that herding behaviour influences volatility even among larger firms, although with reduced magnitude compared to full sample estimates. this finding suggests that firm size moderates herding effects whilst not eliminating the fundamental relationship entirely. crisis period analysis (column 5) focuses upon 2007-2009 observations to examine whether herding-volatility relationships intensify during periods of market stress. the coefficient estimate of 0.0298 substantially exceeds baseline specifications, indicating that herding behaviour exerts enhanced influence upon volatility transmission during crisis periods when information processing becomes more challenging and emotional factors dominate rational analysis. additional robustness testing examines temporal stability through rolling window estimation and structural break analysis. the relationship remains statistically significant across different time periods whilst exhibiting some coefficient variation that correlates with market volatility cycles and regulatory changes within vietnamese financial markets. asian business research journal, 2025, 10(9): 88-98 96 © 2025 by the authors; licensee eastern centre of science and education, usa 5. discussion and conclusion 5.1. discussion of findings the empirical analysis provides compelling evidence supporting the central hypothesis that herding behaviour significantly influences volatility transmission mechanisms within vietnamese equity markets. the consistent positive relationship between lagged herding measures and current volatility levels, robust across multiple econometric specifications and sample configurations, demonstrates that collective investor behaviour generates substantial impacts upon market risk characteristics beyond traditional fundamental and technical factors. the coefficient magnitude of approximately 0.019-0.025 across main specifications indicates economically meaningful effects where one standard deviation increases in herding behaviour associate with 3-4% increases in conditional volatility relative to sample means. these effect sizes compare favourably with existing international evidence whilst reflecting vietnamese market characteristics including retail investor predominance, limited institutional arbitrage mechanisms, and evolving regulatory frameworks that potentially amplify behavioural effects. the finding that herding behaviour's impact intensifies during crisis periods (coefficient increasing to 0.0298) provides valuable insights into volatility transmission mechanisms during market stress. this result aligns with theoretical predictions that informational processing constraints and emotional factors become more pronounced during uncertain periods, leading to enhanced reliance upon social information sources and collective behaviour patterns. the crisis period amplification suggests that herding behaviour represents a crucial transmission channel through which market stress propagates across individual securities and broader market segments. the asymmetric effects across firm size classifications revealed through subsample analysis illuminate important heterogeneity in herding susceptibility. smaller capitalisation firms demonstrate stronger herding effects compared to larger counterparts, consistent with theoretical predictions regarding information asymmetries, analyst coverage limitations, and liquidity constraints that characterise smaller firms. however, the persistence of significant herding effects even among larger firms suggests that behavioural factors influence market dynamics across the complete size spectrum rather than concentrating exclusively among informationally disadvantaged securities. sectoral analysis reveals distinctive patterns where technology and financial services firms exhibit enhanced vulnerability to herding-induced volatility compared to traditional manufacturing industries. these findings align with theoretical frameworks emphasising information processing complexities and valuation uncertainties that characterise growth-oriented and knowledge-intensive sectors. the sectoral heterogeneity suggests that portfolio managers and risk assessment professionals should incorporate sector-specific behavioural factors when evaluating vietnamese equity market exposures. the robust negative relationship between firm size and volatility provides additional validation of market microstructure theories whilst highlighting vietnamese market characteristics. the coefficient magnitude of approximately -0.017 indicates substantial economic significance where doubling firm size associates with meaningful volatility reductions. this relationship suggests that size-based investment strategies may provide effective risk management tools within vietnamese equity markets, particularly during periods of heightened herding behaviour. trading intensity's strong positive correlation with volatility (coefficients ranging 0.32-0.38) confirms that liquidity and information processing activities generate substantial price fluctuation impacts. the relationship magnitude suggests that periods of intense trading activity coincide with enhanced uncertainty and information incorporation processes that amplify volatility transmission mechanisms. this finding possesses important implications for execution strategies and market timing decisions within vietnamese equity markets. the temporal persistence of herding effects, demonstrated through lagged variable specifications and dynamic panel data approaches, indicates that collective behaviour patterns exhibit momentum characteristics that extend beyond immediate time periods. this persistence suggests that herding behaviour creates feedback loops where current collective actions influence subsequent investor decisions, potentially generating sustained deviations from fundamental value relationships. 5.2. conclusion, implications, and limitations this study contributes substantially to the behavioural finance literature by providing comprehensive empirical evidence regarding herding behaviour's impact upon volatility transmission within an emerging market context. the findings advance theoretical understanding of collective investor behaviour whilst offering practical insights for investment professionals, risk managers, and regulatory authorities operating within developing financial market environments. the research demonstrates that herding behaviour represents a significant determinant of volatility patterns within vietnamese equity markets, with effects that persist across different econometric methodologies, sample configurations, and temporal periods. the relationship exhibits theoretically consistent patterns where herding intensity correlates positively with market stress levels, negatively with firm size and age, and varies systematically across sectoral classifications reflecting information processing complexities and institutional characteristics. 5.3. theoretical implications the findings provide empirical support for behavioural finance theories emphasising collective investor behaviour's role in market dynamics whilst challenging traditional efficient market assumptions. the evidence suggests that herding behaviour operates through multiple channels including informational cascades, reputationbased strategies, and emotional contagion effects that generate persistent deviations from fundamental value relationships. the asymmetric effects across firm characteristics and market conditions illuminate important heterogeneity in behavioural factor influences that theoretical models should incorporate. the temporal persistence of herding asian business research journal, 2025, 10(9): 88-98 97 © 2025 by the authors; licensee eastern centre of science and education, usa effects suggests that collective behaviour creates momentum patterns requiring dynamic rather than static theoretical frameworks to capture adequately. the crisis period amplification provides valuable insights into market stress transmission mechanisms, suggesting that behavioural factors become more prominent when traditional information processing capabilities face constraints. these findings contribute to understanding financial contagion processes and systemic risk propagation patterns within emerging market contexts. 5.4. practical implications portfolio management strategies should incorporate herding behaviour measures as complementary risk factors alongside traditional fundamental and technical indicators. the sector-specific and size-based heterogeneity suggests that behavioural factor loadings should vary across different asset categories and market segments when constructing optimal portfolios. risk management frameworks require enhanced attention to collective behaviour patterns, particularly during periods of market stress where herding effects intensify substantially. the findings suggest that traditional volatility models may underestimate risk during periods of heightened herding behaviour, necessitating behavioural factor adjustments in risk assessment procedures. market timing strategies may benefit from herding behaviour indicators that provide early warning signals regarding volatility regime changes. the lagged relationship between herding measures and volatility suggests that collective behaviour patterns possess predictive content for subsequent market risk characteristics. 5.5. policy implications regulatory authorities should consider herding behaviour impacts when designing market stability policies and intervention strategies. the evidence suggests that collective investor behaviour can amplify volatility transmission and potentially threaten financial stability during crisis periods, warranting proactive regulatory responses. investor education programmes focusing upon behavioural biases and collective decision-making processes may help mitigate excessive herding behaviour whilst promoting more efficient price discovery mechanisms. the findings suggest particular attention to retail investor education given their predominance within vietnamese equity markets. market structure reforms addressing information dissemination, analyst coverage, and institutional investor participation may reduce herding behaviour intensity whilst improving overall market efficiency. the size-based asymmetries suggest that enhanced support for smaller firm information production could generate broader market stability benefits. 5.6. research limitations and future directions several limitations constrain the generalisability and interpretation of study findings. the analysis focuses exclusively upon vietnamese equity markets, limiting direct applicability to other emerging market contexts with different institutional characteristics and investor compositions. future research should examine herding-volatility relationships across multiple emerging market jurisdictions to assess generalisability and identify common behavioural patterns. the herding behaviour measurement approach, whilst established within existing literature, represents only one methodological framework for capturing collective investor behaviour. alternative measurement strategies incorporating social media sentiment, fund flow patterns, or network analysis approaches may provide additional insights into behavioural transmission mechanisms. the study period concludes in 2017, potentially missing important developments in vietnamese financial markets including increased foreign institutional participation, regulatory modernisation, and technological advancement in trading platforms. extended analysis incorporating more recent data would enhance understanding of temporal evolution in herding behaviour patterns. future research directions should examine herding behaviour's interaction with other behavioural factors including momentum effects, contrarian strategies, and attention-driven trading patterns. the investigation of herding behaviour within specific market segments such as initial public offerings, dividend announcements, or earnings surprises may provide additional insights into behavioural finance mechanisms. cross-country comparative analysis examining herding behaviour differences across emerging markets with varying institutional development levels, regulatory frameworks, and cultural characteristics would contribute valuable insights into behavioural factor determinants and policy implications. additionally, investigation of herding behaviour's impact upon market efficiency measures and price discovery processes represents important areas for continued research development. acknowledgments: i would like to express my sincere gratitude to dr. hoang vu hiep for his invaluable guidance and inspiration throughout this research. his expertise, insights, and unwavering support have been instrumental in 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licensee eastern centre of science and education, usa asian business research journal vol. 8, 6-12, 2023 issn: 2576-6759 doi: 10.55220/25766759.1334 © 2023 by the authors; licensee eastern centre of science and education, usa doing good, choosing better: perceived value and consumer intentions s ismail sali1  mukoka ronald wallter2 1technical analyst at bank in, kampala, uganda. 2mk associated advocates, uganda. email: ismailssali2021@gmail.com email: mnadifah@gmail.com ( corresponding author) abstract while purchasing, customers happily encounter prosocial activities when any social cause is related to a brand's promotional activity. purchase-triggered donation initiatives represent a widely used form of cause-related marketing; however, limited scholarly attention has been given to how differentially the framing of such donations as gains or losses shapes consumers’ intentions. furthermore, this study investigates the mediating role of perceived value in explaining these effects. a between-subject experimental design was employed in which 320 participants were exposed to either a gain-framed or a loss-framed purchase-triggered donation message presented within a simulated coffee brand communication. drawing on the elaboration likelihood model, the findings reveal that gain-framed purchase-triggered donation messages lead to stronger intentions to purchase compared to loss-framed messages. moreover, perceived value significantly mediates the relationship between donation framing and purchase intention, indicating that consumers’ perceptions of a brand’s selfless motives play a critical role in shaping their behavioral intentions. this study contributes to the cause-related marketing literature by demonstrating that gain-framed (vs. loss-framed) purchase-triggered donation messages more effectively enhance consumers’ purchase intentions through heightened perceived value. keywords: cause-related marketing, message framing, perceived value, purchase intentions, purchase-triggered donation. 1. introduction brands increasingly rely on socially oriented initiatives to establish differentiation and strengthen consumer relationships in competitive markets. one of the most prominent approaches in this regard is cause-related marketing, which allows firms to associate their offerings with social causes while simultaneously pursuing business objectives (chang, 2008; bigné et al., 2012; deng et al., 2023). within this domain, purchase-triggered donation has emerged as a particularly popular strategy, whereby a firm y pledges to donate a predefined portion of sales revenue to a charity z contingent upon consumer purchases x (hamby, 2016). research depicts that buyers show a greater tendency to purchase products associated with social causes (deng et al., 2023). however, despite the growing prevalence of purchase-triggered donation campaigns, the extent to which purchase-triggered donation framing affects consumers' intentions and behaviors for buying socially responsible brands is in its nascent stages (kuo et al., 2022), which needs to be explored. message framing theory suggests that logically equivalent information can be presented in ways that emphasize either positive outcomes (gain framing) or negative consequences of inaction (loss framing), leading to different psychological and behavioral effects (chang and lee, 2010; kühberger and gradl, 2013). in the context of cause-related marketing, prior findings on the relative effectiveness of gain versus loss-framed messages are mixed, with some studies favouring gain framing, others supporting loss framing, and several reporting nonsignificant differences (tanford et al., 2020; gong et al., 2022; grazzini et al., 2018; bester and jere, 2012; tu et al., 2013). to address these inconsistencies, this research aims to examine the impact of purchase-triggered donation framing (gain vs. loss) on consumers’ intentions to buy the brands promoting social causes. from a theoretical standpoint, this study is grounded in the elaboration likelihood model (elm), which explains how individuals process persuasive messages either through heuristic cues or through more effortful, systematic evaluation (petty and cacioppo, 1986). in purchase-triggered donation contexts, message framing may initially function as a heuristic signal; however, deeper processing can prompt consumers to evaluate the underlying motives driving a firm’s social initiatives. building on this logic, the present study proposes perceived values as a key explanatory mechanism linking purchase-triggered donation framing to purchase intentions. perceived value is widely conceptualized as a consumer’s overall assessment of utility based on the trade-off between what is received and what is given up (e.g., money, time, effort), making it a particularly suitable mechanism for explaining why the same donation offer can produce different responses depending on how it is framed (zeithaml, 1988; sánchez-fernández & iniesta-bonillo, 2007). beyond a single “get–give” evaluation, perceived value is also treated as multidimensional, typically capturing functional/quality value, emotional value, social value, and price/value-for-money considerations, dimensions that align closely with cause-related purchase mailto:ismailssali2021@gmail.com mailto:mnadifah@gmail.com https://www.doi.org/10.55220/25766759.1334 asian business research journal, 2023, 8: 6-12 7 © 2023 by the authors; licensee eastern centre of science and education, usa contexts where consumers may also infer reputational and moral worth from the brand’s actions (sweeney & soutar, 2001; sánchez-fernández & iniesta-bonillo, 2007). importantly, a strong empirical base shows that perceived value is a key proximal driver of willingness to buy and broader behavioral intentions: classic cueutilization research demonstrates that shifts in perceived value translate into higher willingness to purchase (dodds, monroe, & grewal, 1991), and service research similarly finds value to be central in explaining behavioral intentions (cronin, brady, & hult, 2000). building on this logic, our study seeks to examine whether gain-framed purchase-triggered donation messages generate stronger purchase intentions than loss-framed messages and whether perceived value mediates the effect of donation framing on purchase intentions based on the idea that framing shapes consumers’ value inferences about the brand’s motives and the exchange. by answering these questions, this research advances the cause-related marketing literature by offering a streamlined and theoretically grounded model that clarifies how purchase-triggered donation framing influences consumers' intentions directly as well as via perceived values as a psychological mechanism. 2. literature review and hypotheses development 2.1. purchase-triggered donation framing and consumers’ purchase intentions prior studies have demonstrated that purchase-triggered donation campaigns positively influence brandrelated evaluations, including attitudes, trust, and intentions (ham and choi, 2012; mobarak et al., 2022). message framing refers to the presentation of equivalent information in terms of gains or losses, which can lead to systematically different evaluations and decisions (chang and lee, 2010; kühberger and gradl, 2013). in a gainframed donation message, consumers are informed about the positive outcomes enabled by their purchase (e.g., contributing to children’s education), whereas loss-framed messages emphasize the negative outcomes that result from not purchasing (e.g., missing the opportunity to help). these framing differences can alter consumers’ perceptions, emotions, and subsequent behaviors, particularly in morally charged contexts such as charitable giving (chang & lee, 2010). to capture consumers’ favorable behavioral responses to purchase-triggered donation framing, this study focuses on adoptions. adoption is reflected in consumers’ purchase intention, defined as their expressed likelihood or willingness to buy a brand’s product in the near future (becerra and badrinarayanan, 2013). drawing on persuasion research, gain-framed messages are generally associated with more favorable behavioral responses because they emphasize positive consequences and reduce perceived risk (levin and gaeth, 1988). in donation-based marketing, gain framing may strengthen consumers’ motivation to support the brand by highlighting their ability to contribute to social good, thereby increasing adoption (chi et al., 2021). accordingly, we propose the following hypothesis: h1: consumers’ intentions of purchasing socially responsible brands will be higher when consumers are exposed to a gainframed purchase-triggered donation message than a loss-framed message. 2.2. purchase-triggered donation framing, value, and consumer intentions in cause-related marketing contexts, consumers do not passively accept firms’ claims of social responsibility; instead, they actively engage in attributional reasoning to infer the motives underlying a brand’s support for a social cause (ellen, webb, & mohr, 2006; moosmayer & fuljahn, 2013). when consumers attribute a brand’s cause-related actions to intrinsic, value-driven motives, they tend to evaluate the brand more favorably, whereas extrinsic or self-serving attributions often generate skepticism and weaken persuasion. purchase-triggered donation initiatives are especially susceptible to such attributions because they directly link consumption behavior to social outcomes, encouraging consumers to assess whether the brand’s actions genuinely create shared value or merely serve promotional objectives (barone, miyazaki, & taylor, 2000; becker-olsen, cudmore, & hill, 2006). the elaboration likelihood model (elm) offers a robust theoretical framework for explaining how donation framing influences consumers’ value perceptions in these contexts. according to elm, individuals process persuasive information through either a central route, involving thoughtful evaluation of message arguments, or a peripheral route, relying on heuristic cues such as affect, moral signals, or message tone (petty & cacioppo, 1986). cause-related donation messages function as both cognitive and affective cues, shaping how consumers interpret the brand’s intentions and assess the overall attractiveness of the exchange. gain-framed messages, which emphasize the positive societal impact enabled by purchasing, are more likely to foster favorable elaboration and reinforce perceptions of benevolence and value creation. in contrast, loss-framed messages highlight missed opportunities or foregone benefits, which may activate avoidance-oriented processing and increase defensive or skeptical responses (kahneman & tversky, 1979; chang, 2008). these framing-induced cognitive evaluations are closely tied to perceived brand value, a central construct in consumer decision-making. perceived value is defined as a consumer’s overall assessment of a product’s utility based on perceptions of what is received versus what is given up, encompassing functional, emotional, social, and symbolic benefits (zeithaml, 1988; sánchez-fernández & iniesta-bonillo, 2007). in cause-related marketing, perceived value extends beyond utilitarian considerations to include moral and self-expressive benefits, as consumers derive satisfaction from supporting brands that align with their personal values and social ideals (sheth, sethia, & srinivas, 2011; lichtenstein, drumwright, & braig, 2004). empirical research consistently shows that prosocial brand actions enhance perceived value by signaling sincerity, ethical commitment, and relational orientation toward stakeholders (du, bhattacharya, & sen, 2010; moosmayer & fuljahn, 2013). message framing plays a critical role in shaping these value perceptions. gain-framed donation messages highlight incremental benefits and moral surplus, which can strengthen consumers’ perceptions that the brand delivers superior overall value, whereas loss-framed messages may reduce perceived value by emphasizing obligation or missed responsibility rather than positive contribution (white, macdonnell, & dahl, 2011). thus, donation framing is expected to systematically influence how consumers evaluate brand value in purchasetriggered donation contexts. accordingly, we propose: h2: purchase-triggered donation framing (gain vs. loss) has a positive impact on consumers’ perceptions of brand value. perceived brand value, in turn, represents a well-established antecedent of purchase intention. extensive research demonstrates that when consumers perceive higher value, they are more likely to form favorable behavioral intentions, including willingness to buy, repurchase, and recommend the brand (dodds, monroe, & asian business research journal, 2023, 8: 6-12 8 © 2023 by the authors; licensee eastern centre of science and education, usa grewal, 1991; sweeney & soutar, 2001; cronin, brady, & hult, 2000). in cause-related settings, enhanced perceived value not only reflects functional and emotional benefits but also signals moral alignment and social approval, further strengthening consumers’ motivation to support the brand through purchasing (lichtenstein et al., 2004; peloza & shang, 2011). therefore, we further propose: h3: consumers’ purchase intentions will be higher when consumers have higher perceptions of brand value. 2.3. mediating role of perceived altruistic value in purchase-triggered donation programs, consumers’ purchase decisions are not determined solely by the donation itself but by the extent to which such initiatives enhance the overall value they associate with the brand. perceived value reflects consumers’ holistic assessment of the benefits received relative to the costs incurred and encompasses functional, emotional, social, and moral dimensions (zeithaml, 1988; sánchez-fernández & iniestabonillo, 2007). in cause-related marketing contexts, perceived value is particularly salient because the inclusion of a social cause can augment the perceived benefits of consumption beyond utilitarian outcomes (lichtenstein et al., 2004; peloza & shang, 2011). donation message framing plays a central role in shaping perceived value. gainframed purchase-triggered donation messages emphasize the positive societal impact generated through consumption, which can elevate consumers’ evaluations of the brand by signaling benevolence, meaningful contribution, and value creation. conversely, loss-framed messages focus on foregone benefits or missed opportunities, which may induce discomfort or skepticism and weaken consumers’ value assessments (chang & lee, 2009; white, macdonnell, & dahl, 2011). prior research suggests that such framing differences influence how consumers cognitively integrate prosocial information into their overall value judgments (du, bhattacharya, & sen, 2010). perceived value, in turn, represents a critical psychological mechanism linking donation framing to purchase intention. a substantial body of research demonstrates that higher perceived value increases consumers’ willingness to purchase by strengthening perceptions of exchange fairness and overall worth (dodds, monroe, & grewal, 1991; sweeney & soutar, 2001; cronin, brady, & hult, 2000). in cause-related contexts, enhanced perceived value also reflects consumers’ satisfaction with supporting socially responsible brands, thereby reinforcing purchase intentions (moosmayer & fuljahn, 2013; peloza & shang, 2011). accordingly, perceived value is expected to mediate the relationship between donation framing and consumers’ purchase intentions. h4: perceived altruistic value mediates the effect of gainversus loss-framed purchase-triggered donations on consumers’ purchase intentions. in line with your study model (figure 1), the proposed framework suggests that purchase-triggered donation framing influences consumers’ purchase intention both directly and indirectly through perceived value. figure 1. proposed model of the study. 3. methodology 3.1. research design and participants this study employed a between-subject experimental design to examine the effects of purchase-triggered donation framing on consumer responses. participants (n=320) were randomly assigned to one of two experimental conditions: a gain-framed or a loss-framed purchase-triggered donation message. a between-subjects approach was selected to minimize demand effects and reduce carryover bias, consistent with prior framing research in cause-related marketing contexts (chang and lee, 2010; kees et al., 2017). data were collected using an online survey administered to adult consumers. participants were required to be familiar with social media usage to ensure realism and engagement with the experimental stimuli. 3.2. experimental stimuli and procedure participants were asked to imagine encountering a realistic promotional post from a newly introduced coffee brand (golden grove coffee) on a social media platform. the coffee brand context was chosen because it is commonly used in message-framing and cause-related marketing research (chang, 2008; tanford et al., 2020; cordero-gutiérrez et al., 2023; zeng et al., 2022). the experimental manipulation involved the gain vs. loss framing of a purchase-triggered donation message (appendix 1). in the gain-framed condition, the message emphasized the positive social outcomes enabled by purchasing the product (e.g., contributing to children’s education). in contrast, the loss-framed condition highlighted the missed opportunity to support the same cause if the product was not purchased. importantly, both versions contained identical information regarding the donation amount, cause, visual elements, brand name, color scheme, and layout (tanford et al., 2020). this approach ensured that framing was the only systematic difference between conditions. after viewing the assigned stimulus, participants completed a questionnairrefe measuring the study constructs. to reduce common method bias, the asian business research journal, 2023, 8: 6-12 9 © 2023 by the authors; licensee eastern centre of science and education, usa items were presented in randomized order, and participants were assured that there were no right or wrong answers. 3.3. manipulation check to verify the effectiveness of the framing manipulation, the participants were asked to respond on a sevenpoint scale ranging from 1 (potential loss) to 7 (potential gain) for the statement, “the post i just saw included information that primarily focused on gains or losses.” similar manipulation checks have been successfully used in prior framing studies to confirm perceptual differences between gain and loss-framed messages (stadlthanner et al., 2022; tanford et al., 2020). demographic information was collected at the end of the survey. 3.4. measures all constructs were measured using established multi-item scales adapted from prior research. unless otherwise stated, responses were recorded on seven-point likert scales ranging from 1 (“strongly disagree”) to 7 (“strongly agree”). 3.4.1. purchase intention the purchase intention scale assessed participants’ likelihood of purchasing the coffee brand in the near future and their willingness to consider the brand as a purchasing option (becerra and badrinarayanan, 2013). the items included: in the near future, i would probably buy from the golden grove coffee brand. in the near future, i intend to buy coffee made by golden grove coffee. in the near future, i would likely buy from the gloden grove coffee brand in the near future, and i would possibly buy the gloden grove coffee brand 3.4.2. perceived value perceived value was measured using a multi-item scale assessing the extent to which participants perceived the brand valuable. the scale was adapted from sweeney & soutar, (2001). the items included: purchasing coffee from golden grove would offer good value for money, coffee from golden grove would be good value compared to what i would have to give up, overall, buying coffee from golden grove would be worthwhile, considering what i would receive and what i would give up, golden grove coffee represents good value. 4. analysis results 4.1. demographic profile the demographic profile of the participants included 170 males and 150 females. most of the participants belonged to the 20–35 age range (46%). mostly respondents had a graduation degree (51.2%), followed by undergraduates (26.7%) and postgraduates, and smaller percentages (22.1%). for social media usage, most of the respondents depicted frequent use, i.e., daily (61.0%), followed by multiple weekly usage (34.9%), and some with monthly use (4.1%). 4.2. preliminary analyses and manipulation check prior to hypothesis testing, descriptive statistics and reliability analyses were conducted. all measurement scales demonstrated satisfactory internal consistency, with cronbach’s alpha values exceeding the recommended threshold of 0.70, indicating adequate reliability for subsequent analyses. to assess the effectiveness of the framing manipulation, an analysis of variance (anova) was performed on participants’ perceptions of whether the message emphasized gains or losses. the results confirmed that the manipulation operated as intended. participants exposed to the gain-framed donation message perceived the message as significantly more gain-oriented than those exposed to the loss-framed message (mgain = 5.23, sd = 1.21; mloss = 4.82, sd = 1.34; f(318, 1) = 4.27, p < 0.001). these findings indicate that participants clearly distinguished between the two framing conditions, supporting the validity of the experimental manipulation. 4.3. direct effects to test h1, which proposed that gain-framed purchase-triggered donation messages would lead to stronger purchase intentions than loss-framed messages, a series of anova tests was conducted. the results revealed a significant main effect of donation framing on purchase intention. participants exposed to the gain-framed message reported higher purchase intention compared to those exposed to the loss-framed message (mgain = 5.62, sd = 0.88; mloss = 5.21, sd = 0.94; f(318, 1) = 9.04, p = 0.003). this finding supports h1, indicating that gain framing enhances consumers’ intentions to purchase socially responsible brand. a significant framing effect was also observed for perceived value. participants in the gain-framed condition expressed brands as highly valuable than those in the loss-framed condition (mgain = 5.74, sd = 0.81; mloss = 5.29, sd = 0.87; 318, 1) = 12.18, p < 0.001). this result supports h2, demonstrating that gain-framed donation messages are more effective in creating high brand value. the direct effects of purchase-triggered donation framing on perceived value and purchased intentions were also analyzed by testing the theoretical model with process model 8 (hayes, 2017). purchase-triggered donation framing was coded as 1 for gain framing and 0 for loss framing. similar to results of anova, gain framing demonstrated a positive impact on perceived value (β = 0.416, ci 95% [0.326, 0.516], p < 0.05) and purchase intention (β = 0.401, ci 95% [0.370, 0.537], p < 0.01). taken together, these findings provide full support for h1 and h2, suggesting that gain-framed purchase-triggered donation messages outperform lossframed messages. furthermore, perceived value revealed a positive effect on the consumers' purchase intentions (β= 0.332, ci 95% [0.212, 0.390], p < 0.05), hence proving h3 of the study. 4.4. mediation analysis to test h4, mediation analyses were conducted using were tested using process model 4 (hayes, 2017). the results indicated that donation framing had a significant indirect effect on purchase intention through perceived asian business research journal, 2023, 8: 6-12 10 © 2023 by the authors; licensee eastern centre of science and education, usa value. the indirect effect was positive and statistically significant (β = 0.256, se = 0.05, 95% ci [0.198, 0.287]). since the confidence interval did not include zero, the mediation effect was supported. after accounting for perceived value, the direct effect of donation framing on purchase intention was reduced but remained significant, suggesting partial mediation. 5. discussion the present study set out to examine how purchase-triggered donation framing influences consumers' purchase intentions. drawing on the elaboration likelihood models this research provides empirical evidence that gain-framed donation messages are more effective than loss-framed messages in stimulating consumers to purchase a brand. moreover, the findings highlight perceived value as a critical psychological mechanism underlying these effects. by emphasizing the positive social impact enabled by consumption, gain-framed messages appear to foster favorable consumer reactions that translate into personal purchasing intentions. these findings align with prior research suggesting that positively framed messages are more likely to elicit favorable consumer responses by reducing perceived risk and enhancing positive affect (levin and gaeth, 1988). likewise, tu et al. (2013) reported in their research that a positively framed message creates stronger attitudes toward the advertisement and the brand than a negatively framed message. despite of this knowledge, this effect was understudied for purchase intentions. some research depicted no significant impacts of framing on purchase intention (bester and jere, 2012; tu et al., 2013). in contrast our study clearly showed that positively framed (gain-frame) messages strongly impact consumers’ purchase intentions. from an elaboration likelihood perspective, gain-framed messages likely function as peripheral cues, encouraging heuristic processing that leads consumers to form favorable evaluations without extensive cognitive effort (petty and cacioppo, 1986). in contrast, loss-framed messages may prompt greater scrutiny and discomfort, potentially undermining their persuasive effectiveness in donation-based marketing contexts (grau and folse, 2007). the present findings contribute to this stream of research by demonstrating that, when the objective is to encourage both adoption and advocacy, gain framing offers a more reliable communication strategy. importantly, by focusing on adoption, this study clarifies how framing influences complementary consumer outcomes. a central contribution of this study lies in demonstrating that perceived value mediates the relationship between donation framing and consumer responses. the findings show that gain-framed messages enhance consumers’ perceptions of a brand’s prosocial motives, which in turn strengthen purchase intention. when consumers perceive a donation initiative as genuinely beneficial for society, they are more likely to trust the brand and view their own consumption as morally meaningful, thereby increasing adoption (romani et al., 2013; legendre and coderre, 2018). gain-framed messages appear particularly effective in fostering such attributions because they highlight social benefits without invoking guilt or pressure. in contrast, loss-framed messages may trigger skepticism regarding the brand’s intentions, weakening perceived altruism and, consequently, behavioral responses (beckerolsen et al., 2006). 5.1. theoretical contributions this study makes several important theoretical contributions. first, it extends the cause-related marketing literature by demonstrating that purchase-triggered donation framing has meaningful implications for consumer adoption (purchase intentions). second, this study offers a more parsimonious and analytically precise approach to understanding consumer responses to socially responsible marketing. this refinement contributes to conceptual clarity and enhances the applicability of findings for both scholars and practitioners. third, the integration of the elaboration likelihood model provides a robust theoretical foundation for explaining how and why framing effects operate in purchase-triggered donation contexts. the findings demonstrate that framing influences not only direct intentions but also consumers’ deeper evaluations of brand motives, thereby reinforcing the importance of psychological inference processes in cause-related marketing research. 6. managerial implications the findings of this study offer several actionable insights for managers designing and implementing purchase-triggered donation campaigns. first, the results clearly indicate that gain-framed donation messages are more effective than loss-framed messages in encouraging consumer outcomes. managers seeking to increase consumers’ purchase intentions should therefore emphasize the positive social outcomes enabled by consumption, such as supporting children’s education, rather than highlighting missed opportunities or negative consequences. second, the mediating role of perceived altruistic value underscores the importance of communicating sincerity and selflessness in cause-related marketing initiatives. managers should ensure that donation messages clearly convey the brand’s genuine commitment to the cause, as consumers are highly sensitive to perceived motives behind corporate social actions (becker-olsen et al., 2006; romani et al., 2013). transparent communication regarding how donations are allocated and the tangible impact of consumer participation can further enhance altruistic perceptions and, in turn, strengthen purchase intention. third, the study highlights the strategic value of focusing on encouraging purchases. positive ads amplify the reach and credibility of donation campaigns, particularly in social media environments where peer recommendations play a critical role in shaping consumer decisions (sparks and browning, 2011). managers can leverage gain-framed donation messages in digital communications to motivate consumers to actively share the brand within their social networks. overall, by aligning donation framing strategies with consumers’ moral expectations and emphasizing altruistic value, firms can enhance the effectiveness of purchase-triggered donation campaigns while simultaneously advancing both social and commercial objectives. 7. limitations and directions for future research despite its contributions, this study has several limitations that suggest avenues for future research. first, the experimental context was limited to a coffee brand, which may constrain the generalizability of the findings to other product categories or service settings. future studies could examine whether the observed effects of donation asian business research journal, 2023, 8: 6-12 11 © 2023 by the authors; licensee eastern centre of science and education, usa framing and perceived value hold across different industries. second, the study focused exclusively on purchase intentions. while purchase intentions are central to brand success, future research could extend the model to include additional consumer responses, such as brand trust, emotional attachment, or long-term loyalty, to provide a more comprehensive understanding of the impact of purchase-triggered donation campaigns. third, although this study intentionally adopted a simplified mediation-only framework, future research could explore boundary conditions that may influence framing effects. for instance, individual differences in involvement with the cause, moral identity, or prior donation behavior may shape how consumers respond to gainand loss-framed messages (chang, 2008; grau and folse, 2007). investigating such factors could offer deeper insight into when and for whom donation framing is most effective. references barone, m. j., miyazaki, a. d., & taylor, k. a. 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(2023). corporate governance and banking performance: a comparative study between islamic and conventional banking sector in the context of bangladesh. asian business research journal, 8, 1–5. 10.55220/25766759.133 history: received: 6 april 2023 revised: 17 april 2023 accepted: 6 may 2023 published: 6 june 2025 licensed: this work is licensed under a creative commons attribution 4.0 license publisher: eastern centre of science and education funding: this study received no specific financial support. competing interests: the author declares that there are no conflicts of interests regarding the publication of this paper. transparency: the author confirms that the manuscript is an honest, accurate, and transparent account of the study; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. ethical: this study followed all ethical practices during writing. eastern centre of science and education is not responsible or answerable for any loss, damage or liability, etc. caused in relation to/arising out of the use of the content. any queries should be directed to the corresponding author of the article. https://creativecommons.org/licenses/by/4.0/ https://creativecommons.org/licenses/by/4.0/ 1 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 11, 1-13, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.637 © 2025 by the authors; licensee eastern centre of science and education, usa leveraging machine learning for tax fraud detection and risk scoring in corporate filings tiejiang sun1 mengdie wang2  jiaying chen3 1chang’an university, xi’an 710064, china. 2shanghai lixin university of accounting and finance, shanghai 201620, china. 3cornell university, ithaca, ny 10022, usa. ( corresponding author) abstract tax fraud has been a thorn on the flesh of governments and regulatory bodies across the globe, as it compromises the financial stability and confidence of the citizens. the conventional forms of detection, which are mainly rule based systems and hand audit, tend to be lagging behind the intricacy and bulk of the contemporary corporate filings. this paper will discuss the use of machine learning (ml) technologies in improving the process of detecting tax fraud and risk scoring through the use of advanced data analytics and predictive models. with the help of supervised, unsupervised and hybrid learning, ml models are able to discover the latent patterns and anomalies and come up with risk scores to determine the probability of fraud. the paper examines the current literature on the financial and tax fraud detection, with a specific focus on how these methods have been changing towards adaptive and more data-driven systems instead of being static and rule-based. it further suggests a structure of implementation which takes into consideration data preprocessing, feature engineering and model evaluation in one workflow that is fit to be used by tax authorities and auditing firms. the proposed system makes use of algorithms like random forests, xgboost, and autoencoders to increase the accuracy of detection and minimize the occurrence of false positives. moreover, the paper emphasizes how explainable ai (xai) can be important in promoting transparency, interpretability, and adherence to ethical and legal guidelines. finally, the study proves that the application of the ml-based fraud detection and risk scoring can become a substantial enhancement of the effectiveness, objectivity, and scalability of corporate tax audits. the next step in the work will be to incorporate deep learning, natural language processing, and federated systems to develop strong, privacy-aware frameworks that can be used to detect fraud in real-time in large-scale financial ecosystems. keywords: corporate filings, financial compliance, machine learning, risk scoring, tax fraud detection. 1. introduction tax fraud is one of the most long running and intricate problems of governments, regulators and financial institutions around the globe. with the further globalization of financial systems and their interdependence, the scope of corporate submissions and tax returns has grown exponentially, which has rendered traditional detection techniques inefficient and insufficient (breslin, 2021; wu et al., 2012). the conventional audit-based or rule-driven methods are mostly dependent on a priori indicators and human intelligence, which do not adequately reflect the nuanced evolving trends of fraudulent activity in a large-scale financial data (ippolito and lozano, 2020; tagbo and adekoya, 2023). the recent innovations in machine learning (ml) have presented revolutionary possibilities in the sphere of tax returns and frauds. ml models can be trained to process high-dimensional data that is complex to detect anomalies and predict risk scores as well as perform fraud detection processes in an automated fashion (acharya, 2025; galla, 2023). machine learning models are learning as compared to traditional systems, which rely on fixed rules and constantly change to accommodate new types of frauds (nguyen, 2025; zhou et al., 2024). this deterministic to probabilistic analysis allows revealing the concealed correlation between financial attributes, enhancing the precision and speed of the fraud detection process (zhang et al., 2025; mehta et al., 2022). the use of supervised and unsupervised learning algorithms, including random forest, gradient boosting and autoencoders, has demonstrated encouraging outcomes in the context of corporate tax administration according to differentiating between legitimate and fraudulent filings (craja et al., 2020; shujaaddeen et al., 2024). hybrid and ensemble methods also increase predictive reliability and combine many algorithms to decrease overfitting and future positives (choudhary, 2025; martínez, 2025). an example is that ensemble models implemented based on the soft-voting and stacking algorithms have been useful in the development of holistic fraud risk scoring models (zhou et al., 2024; zhang et al., 2025). https://doi.org/10.55220/2576-6759.637 asian business research journal, 2025, 10(11): 1-13 2 © 2025 by the authors; licensee eastern centre of science and education, usa the use of natural language processing (nlp) and textual analysis in fraud detection models has broadened the analytical scope of fraud detection to include numerical indicators. the research of zhang et al. (2024) was able to show that linguistic readability and semantic aspects in corporate filings are predictive of fraudulent intent. likewise, unstructured information, including annual reports and executive declarations, provides a valuable source of information when processed with the deep learning and nlp-based algorithms (ji et al., 2024; zhang et al., 2024). in spite of these, there are various hurdles in the application of ml systems to detect tax frauds. such problems as data imbalance, restricted access to labeled data, model explainability, and ethical aspects still impede a mass adoption (tagbo and adekoya, 2023; wahyono and david, 2025). the xai frameworks are thus important towards the transparency and accountability of the model-driven decision-making process (zhou et al., 2024). moreover, the use of ai-based tools and human auditors is crucial to ensure that there is no violation of the law and people do not lose their faith in automated fraud-detecting systems (breslin, 2021; acharya, 2025). the current paper will discuss the use of machine learning to improve tax fraud detection and risk scoring in corporate filings. it evaluates how data analytics, model design, and risk evaluation can be combined into a single, scalable structure by analyzing the literature on the topic, and providing a framework of the related process. the paper is a contribution to the expanding domain of computational tax analytics, as it suggests that ml models can enhance efficiency and minimize false alarms, transparency in the contemporary tax administration (wu et al., 2012; zhang et al., 2025). 2. literature review tax fraud is an issue that has been very difficult to detect by the governments and financial regulators. conventional auditing and rule based analytics have in the past depended on the use of static criteria and manual evaluations to detect anomalies in the corporate filings. nevertheless, the traditional techniques have not been sufficient to manage the constantly growing amount, speed, and diversity of financial information (breslin, 2021; wu et al., 2012). with more complex corporate financial structures, automated, data-driven systems which can be trained to be adaptive learned have risen to be essential in fraud detection and tax compliance (acharya, 2025; galla, 2023). in the past, detection of tax fraud depended on the deterministic model, like rule-based systems and indicators that are defined by experts and that are applied by auditors to identify suspicious filings (wu et al., 2012). although good in isolated and repetitive cases, these models were not scalable and flexible. the manual audits could be extremely time-consuming, as well as liable to human error, which caused inefficiencies and discrepancies in fraud detection (breslin, 2021). rule-based systems were unable to account for sophisticated trends of tax evasion and misreporting as tax systems grew increasingly digital. the restrictions motivated the creation of datadriven approaches that can learn large and dynamic datasets (ippolito and lozano, 2020). machine learning as a solution to fraud detection was the answer to the limitations of rule-based systems. machine learning-based models, which have been trained on historic data, are able to detect trends, deviations, and linkages that could be indicative of fraudulent behavior (acharya, 2025; choudhary, 2025). with the help of algorithms, including random forests and gradient boosting machines (gbms) and neural networks, investigators have already shown a high score in classification and early detection rates (galla, 2023; martínez, 2025). craja et al. (2020) emphasized the effectiveness of deep learning models compared to traditional ones in identifying financial statement fraud especially when datasets are large and the pattern is non-linear and multidimensional. in a similar way, ippolito and lozano (2020) created a model of prediction of tax crimes, based on ml techniques, which demonstrated an improvement in the detection accuracy of taxpayer behavior at the municipal level because of the capture of hidden correlations of taxation. the developments are a move towards probabilistic and adaptive risk modeling, no longer on hard-and-fast risk thresholds but toward a more dynamic scoring mechanism. supervised learning methods are based on the idea that an expert coach teaches the student.<|human|>2.3 supervised learning approaches. one of the most common methods that have been used to detect tax and financial fraud is supervised learning algorithms. the models are based on labeled data, so every example of financial behavior (fraudulent or legitimate) is known and the algorithm can learn discriminative behavior. random forests, decision trees, and support vector machines (svm) or logistic regression are part of the basics of fraud classification works (nguyen, 2025; acharya, 2025). in their work, zhou et al. (2024) proposed a soft-voting ensemble framework, which is a combination of multiple supervised predictors, and has a better predictive accuracy and robustness. in the same fashion, mehta et al. (2022) used a bidirectional generative adversarial network (gan) to generate artificial data in the field of fraud in taxation to enhance the heterogeneity and applicability of the training sample. these hybrid approaches are a combination of predictive performance and increased sensitivity to intricate and obscure irregularities in tax filings. although supervised learning relies on the existence of labeled data, acquiring those datasets in tax fields is frequently difficult because of the confidentiality and lack of data (tagbo and adekoya, 2023; wahyono and david, 2025). this in turn has led to the attention of unsupervised techniques of learning like clustering and anomaly detection. methods such as k-means clustering, isolation forests, and autoencoders identify suspicious transactions or filing patterns without having any idea of what fraud is (wu et al., 2012; zhou et al., 2024). hybrid neural network models were investigated by choudhary (2025) and shujaaddeen et al. (2024), who assumed that supervised and unsupervised architecture is integrated to improve the predictive capability. such systems ensure that tax authorities categorize the suspicious parties, in addition to identifying new trends on how the fraudulent activities can be carried out. one example of such a system is autoencoders, which are trained to identify compressed instances of standard financial behavior; exceptions to this behavior are detected as possible anomalies (martínez, 2025). asian business research journal, 2025, 10(11): 1-13 3 © 2025 by the authors; licensee eastern centre of science and education, usa recent studies have extended the definition of fraud detection to include natural language processing (nlp) methods as opposed to numerical and transactional data. linguistic cues of deception are likely to be present in textual disclosures in corporate filings, management commentaries and auditor statements. it was established by zhang et al. (2024) that readability and sentiment characteristics of language use in financial documents can be regarded as an indicator of fraud. the analysis of their study was based on a combination of semantic and syntactic analysis with ml models to improve the accuracy of the classification. ji et al. (2024) also studied the textual characteristics of financial anomalies, with the authors discovering that the use of words, tones, and document complexity can indicate inconsistency in the company descriptions. the introduction of nlp to ml pipelines makes it possible to carry out a comprehensive approach to fraud detection, relying on quantitative and qualitative indicator (acharya, 2025; zhang et al., 2024). the use of ensemble learning to unite several models to enhance reliability has taken center stage in literature as a result of its capabilities. ensemble-based models, like random forests and xgboost are also built on the same principle but scholars have developed other methods like stacking and voting ensembles that combine different classifiers (zhou et al., 2024; zhang et al., 2025). as a way to detect tax fraud more accurately and with lower false-positive rates, zhou et al. (2024) made a proposal of a soft-voting ensemble, which involves encoder extraction methods to detect tax fraud. equally, zhang et al. (2025) showed that stack learning enhanced detection of fraud in financial markets meaning that it could be used in corporate tax analysis. the mix of the linear and non-linear learners will allow the system to seize macro and micro-level fraud indicators, which will be more interpretable and generalizable. although there is increased technological advances, issues of data quality, bias, and explainability continue to exist. tax datasets are usually imbalanced (there are few fraudulent cases compared to total filings), resulting in bias in the learning performance unless it is managed correctly (tagbo & adekoya, 2023; wahyono and david, 2025). further, the lack of accountability and transparency is of concern since some ml algorithms, especially deep learning models, are opaque by nature (acharya, 2025). the use of explainable artificial intelligence (xai) methods, including shap (shapley additive explanations) and lime (local interpretable model-agnostic explanations), is becoming more widespread to explain the predictions of the model, so that they can be regulated and trusted by the auditors (zhou et al., 2024). there are other ethical issues, such as data privacy, equity, and over-automation, which have to be taken into account prior to adopting ml systems into tax governance systems (breslin, 2021). literature as a whole is in favor of the transformative value of machine learning in the detection of tax fraud and corporate risk assessment. hybrid systems, ensemble and deep learning systems are slowly replacing tablebased systems and shallow classifiers in response to structured and unstructured data (acharya, 2025; zhang et al., 2025). research always records an increase in detection accuracy, scalability, and adaptability in the case of applying ml models to tax and corporate data. however, gaps remain. the existing studies are characterized by the focus on technical performance that frequently ignores operational issues, including data access, interpretability, and operational control. there are no studies that touch on the incorporation of ml systems in practical tax audit process or their suitability with regulatory systems. responsible and transparent deployment of ml then needs to be the focus of future research as it can be done by developing explainable, auditor-assistive, and privacy-preserving architectures (wahyono and david, 2025; zhou et al., 2024). table 1. summary of key studies on machine learning for tax fraud detection. author(s) & year focus area method key findings breslin (2021) tax audit efficiency ml-based auditing improves speed and accuracy wu et al. (2012) tax evasion detection data mining enhances fraud identification acharya (2025) corporate fraud detection ml models boosts reliability in filings ippolito & lozano (2020) tax crime prediction predictive ml outperforms manual audits craja et al. (2020) financial statement fraud deep learning captures complex fraud patterns mehta et al. (2022) tax fraud simulation gan improves model training data shujaaddeen et al. (2024) tax evasion levels hybrid neural net detects multi-level evasion martínez (2025) model comparison ensemble ml hybrid models yield higher accuracy zhang et al. (2024) textual fraud signals nlp + ml linguistic cues predict fraud zhou et al. (2024) tax fraud scoring ensemble learning reduces false positives 3. methodology the proposed study will take a quantitative, evidence-based methodology and combine supervised, unsupervised, and hybrid machine learning (ml) to identify fraud in corporate tax filings. the workflow of the methodology has seven steps that include data acquisition, preprocessing, feature engineering, model training, evaluation, and interpretability. it will seek to establish a prediction system that will be able to detect high-risk corporate filings based on the past and current financial data. asian business research journal, 2025, 10(11): 1-13 4 © 2025 by the authors; licensee eastern centre of science and education, usa figure 1. general research model of proposed machine learning-based tax fraud detection. this theoretical character shows the workflow use chronologically in this research the collection and preprocessing of data to feature engineering, training of a model, risk scoring, and explainability. it also focuses on the combination of structured, unstructured and external data streams, serving into supervised, unsupervised and hybrid machine-learning predictions, to generate readable scores of fraud-risk to tax authorities. 3.1. research design the study plan is an iterative ml pipeline, which will start with data collection and preprocessing, feature engineering, training and validation of the model, and interpretation. all phases are interrelated in order to guarantee that the integrity and explainability of data are preserved throughout the process. the design is inspired by the available literature regarding hybrid ml systems used to detect financial anomalies (acharya, 2025; zhou et al., 2024; martinez, 2025). asian business research journal, 2025, 10(11): 1-13 5 © 2025 by the authors; licensee eastern centre of science and education, usa figure 2. fraud detection pipeline design step by step. this value describes the elaborate fraud detection pipeline that is used to identify fraud in corporate filings based on machine learning. the pipeline is a multi-stage structure, which is an integration of various data sources and is then subjected to intensive data preprocessing and model training. 3.2. data sources the proposed framework uses three significant types of data. the structured data consists of numerical corporate information like balance sheets, income statements, and tax filing (wu et al., 2012; acharya, 2025). unformatted data include the textual disclosures, including management commentaries and auditor notes, which can be useful in terms of linguistic indicators of fraud (zhang et al., 2024; ji et al., 2024). contextual information is added with external data such as macroeconomic data, previous compliance records, and transaction history (ippolito and lozano, 2020; galla, 2023). every dataset is normalized to bring about consistency and compatibility with ml models. table 1. data and sources of data to use in the study. data type source description structured data corporate financial records includes balance sheets, income statements, and tax filings, which provide quantitative financial data. structured data compliance reports contains records of corporate compliance with tax regulations, which can help in detecting discrepancies. structured data external databases (e.g., economic indicators, transaction history) encompasses external financial data that provides contextual information relevant to corporate filings. unstructured data management commentaries and reports textual data from company reports and management discussions that may contain linguistic cues of fraud. unstructured data auditor notes and external evaluations includes qualitative insights from auditors that may help reveal fraudulent behavior not captured in numerical data. external data transaction histories, historical compliance behavior provides context on previous behavior, helping assess the likelihood of fraud based on past trends. asian business research journal, 2025, 10(11): 1-13 6 © 2025 by the authors; licensee eastern centre of science and education, usa this table summarizes the different data types and sources used in the research towards identifying tax fraud in corporate filings with the help of machine learning. these sources offer a multi-dimensional data, which is broad, covering both structured and unstructured data. the various types of data are important into the fraud detection pipeline because they provide both qualitative and financial measures of data. 3.3. data preprocessing preprocessing the data is on the basis of reliability and accuracy before modeling. this is done by cleaning to remove duplicates and missing values (breslin, 2021), normalization to put the numerical scales on the same level, and encoding the categorical variables with one-hot or label encoding. in the case of unstructured textual data, preprocessing requires tokenization of data, removal of stop-words, and sentiment analysis (zhang et al., 2024). synthetic minority oversampling technique (smote) and undersampling are used as methods of reducing the issue of class imbalance (tagbo & adekoya, 2023; wahyono and david, 2025). figure 3. preprocessing and transformation of data. 3.4. feature engineering the feature engineering increases the accuracy and interpretability of the model. ratios (profit margins, debtto-equity, and effective tax rate) and such aspects of transactions as frequency and large transaction volume are calculated (craja et al., 2020). this is based on behavioral indicators, that is, the late filings and revenue restatements, which reflect risky corporate behavior (breslin, 2021). textual characteristics are sentiment polarity, readability and linguistic ambiguity (zhang et al., 2024; ji et al., 2024). table 2. extraction of quantitative and textual analysis. feature type data source extraction method description quantitative corporate financial statements financial ratio analysis, including profit margins, debt-to-equity, effective tax rates key financial ratios used to assess the health and potential risks of a company. quantitative transaction data frequency, magnitude, and timing of large transactions identifies outliers and unusual activity in financial transactions. quantitative compliance reports history of compliance behavior, tax filings, and amendments tracks deviations in compliance over time to flag possible fraudulent activity. textual management commentaries and reports natural language processing (nlp) for sentiment analysis and keyword extraction identifies linguistic cues indicating deception or inconsistency in corporate reports. textual auditor notes sentiment analysis, tone detection, frequency of conflict-related terms detects inconsistencies and potential fraud based on the tone and language used in auditor reports. textual executive statements and annual reports textual feature extraction using tf-idf and syntactic analysis analyzes text complexity and semantic structure to detect fraud-related signals. asian business research journal, 2025, 10(11): 1-13 7 © 2025 by the authors; licensee eastern centre of science and education, usa the following table defines the quantitative and textual properties that were obtained in the process of data preprocessing and feature engineering in the fraud detection pipeline. these characteristics play an important role in improving predictive power of machine learning models, as it offers both numerical and textual information. 3.5. model development the model development is a blend of the supervised and unsupervised and ensemble methods. model (e.g. logistic regression, random forest, xgboost), which is monitored, has an interpretation ability and provides a strong classification (nguyen, 2025; acharya, 2025). unsupervised approaches (e.g., autoencoders, isolation forests) identify new malpractices in unlabeled data (zhou et al., 2024). hybrid ones combine the paradigms to enhance the process of generalization (shujaaddeen et al., 2024; mehta et al., 2022). accuracy is further improved with ensemble models which utilize the soft-voting and stacking (zhang et al., 2025; zhou et al., 2024). kfold cross-validation is applied on each model to make them robust and avoid overfitting. 3.6. risk scoring framework a risk scoring mechanism is a probabilistic model that transforms model outputs to interpretable signs to the auditors. the risks of fraud are plotted on a 0-1 scale: 0.00–0.30 (low risk) 0.31–0.70 (medium risk) 0.71–1.00 (high risk) the system takes the results of the ensemble of classifiers and anomaly detectors and weighs by the confidence level (choudhary, 2025; zhou et al., 2024). this aids in prioritization of high-risk filings to the further audit. figure 4. decision-making framework and risk scoring. 3.7. model evaluation metrics the measures of evaluation are precision, recall, f1-score, and roc-auc which are used to measure performance of classification. the confusion matrices are used to identify misclassifications and scores of crossvalidation are used to verify that the model is generalizable (martínez, 2025; wahyono and david, 2025). to apply the model predictions, shap values are used, and this is to ensure that the predictions remain within the scope of the ethical standards (zhou et al., 2024; tagbo and adekoya, 2023). 3.8. legal and ethical concerns. the model follows the principles of privacy, fairness, and transparency. data on taxpayers is made anonymous and can be processed according to the gdpr and other laws on data protection. discrimination against the results is avoided by integrating bias detection systems (wahyono and david, 2025; breslin, 2021). explainable ai (xai) should also be integrated to enable accountability and trust as the auditors can audit the model decision (zhou et al., 2024). 3.9. summary the approach combines the data-driven innovation with ethical governance in an attempt to deliver a scalable, transparent, and accurate tax fraud detection system. the framework advances the existing literature on the topic asian business research journal, 2025, 10(11): 1-13 8 © 2025 by the authors; licensee eastern centre of science and education, usa (acharya, 2025; zhang et al., 2025; zhou et al., 2024) by integrating ensemble learning, text analytics, and risk scoring and focusing on the applicability and interpretability of the practices to the real-world regulators. system architecture is an overview of the entire system, including its design, implementation, and testing processes. 3.10. system architecture overview system architecture is a description of the whole system, both in terms of design, implementation and testing the suggested system design is modular as it consists of four layers of significance: data ingestion, data processing and analytics, risk scoring and interpretation, and visualization and reporting. the former layer, data ingestion, gathers structured and unstructured data of various sources including corporation financial reports and compliance reports, as well as external databases. these data are then subjected to a processing and analytics layer where they are preprocessed, features extracted and model trained. the risk scoring and interpretation layer uses the trained models on the data to create the risk score of fraud along with giving actionable data to the auditors. lastly, the visualization and reporting layer of the system provides information to the auditors, who can evaluate high-risk cases and take relevant actions with the help of interactive dashboards. 3.11. data pipeline and integration data pipeline is a very important component of integrity and consistency of the data that is being fed into the system. it automates the ingestion, preprocessing and transformation of data in order to perform real time analytics and decision making. there are numerous sources of data tapped by the pipeline, which include tax returns, the financial reports of the companies and external economic indicators. data fusion is being controlled with the help of automated etl (extract, transform, load) operations that normalize data and make it compatible and consistent with machine learning models. the system uses api integrations to guarantee a smooth exchange between the fraud detection model and the external tax authority databases. the system data storage solution is built on scalable and secure cloud storage or data warehouses on which all the processed data is saved in an encrypted form so that they satisfy the regulatory requirements. this table will describe different sources of data and integration tools that will be used in the fraud detection system. these various sources of data are integrated making the system provide a complete and sound analysis. the tools play an important role in the smooth movement of data between external databases into the fraud detection pipeline with retaining data integrity, scalability, and compatibility with machine learning algorithms. table 3. data sources and integration tools to be used in the system. data source description integration tools purpose corporate financial data includes balance sheets, income statements, and tax filings. api connections to corporate databases provides structured financial data used to evaluate the company’s financial health. compliance reports contains records of company compliance with tax regulations. etl (extract, transform, load) pipeline, cloud storage tracks deviations in tax compliance, helping identify filings with irregularities. external databases includes macroeconomic indicators and transaction histories. cloud storage, external api connectors provides contextual financial data that helps assess external factors influencing compliance. management reports includes management commentaries and strategic reports. text extraction, nlp processing tools provides textual data for linguistic analysis, revealing potential signs of fraudulent behavior. auditor notes includes notes from tax auditors regarding company filings and behavior. cloud storage, api connections offers qualitative insights into company operations, assisting in fraud detection. transaction data provides detailed records of transactions within the company. etl pipeline, data aggregation tools identifies unusual or large transactions that could be indicative of fraud. 3.12. model deployment workflow the machine learning model deployment process of the fraud detection system is described in three significant steps, including training, validation, and deployment. the training of both supervised and unsupervised models such as random forest, xgboost, autoencoders, and isolation forests is trained using historical data during the training stage. these models are further cross-validated with the help of k-fold cross-validation which is used to check the robustness of the models and prevent overfitting by trying them on various subsets of the data. when the models are validated, the most effective ones are implemented into the production system where they are capable of processing new incoming data and making it available in real-time to predict the risk of fraud. the continuous learning is possible in this stage of deployment since the models can be regularly updated, according to new data, so that they are effective as the fraud detection patterns will constantly change. asian business research journal, 2025, 10(11): 1-13 9 © 2025 by the authors; licensee eastern centre of science and education, usa figure 5. training and deployment workflow model. 3.13. risk scoring mechanism the risk scoring scheme translates the results of machine learning models into a simplified and highly interpretable framework that are easily comprehensible to the auditors. the probability of fraud is used to rate the risk of fraud in each corporate filing with a range of score between 0.00 and 1.00. the score range is broken down into three categories, which include low risk (0.00-0.30), medium risk (0.31-0.70), and high risk (0.71-1.00). such scores are then employed to give turnover to further audits, with the high-risk ones being followed up by the auditors instantly. the risk scoring system takes the outputs of several different models, e.g., ensemble classifiers and anomaly detectors and weighs them by their confidence. this approach can guarantee that the end-result risk score will be as precise and dependable as possible, which will allow the tax authorities to have a clear list of priorities when it comes to conducting the audit. 3.14. explainable artificial intelligence (xai) layer explainable artificial intelligence (xai) is among the most important elements of the proposed system. this layer promotes transparency and accountability in the decision-making process of the model, which is very important in ensuring that people have trust in automated fraud detection systems. shap (shapley additive explainations) and lime (local interpretable model-agnostic explainations) are provided to explain the model predictions and provide auditors with knowledge of the particular characteristics that led to the classification of a filing as a high or low risk. decision-making can also be supported by the xai layer, which determines the most significant variables, including unusual revenue trends or the adverse sentiments in the textual reports, that resulted in a certain fraud risk score. with such explanations, the system enables the auditors to have a more insight into the behavior of the model, and any filings flagged will be looked into with the context of the model. 3.15. interrelation of audit and compliance system. to be useful in a real-world environment, the machine learning-based fraud detection system should be connected with the existing enterprise audit systems and government tax portals. this can be integrated by use of secure api connections, where fraud detecting system would be able to tap into real time data of the tax authorities databases to communicate smoothly with other auditing systems. in addition, the system also promotes dashboard analytics, so the auditors are able to visualize risk scores, monitor trends of frauds and get alerts on high-risk filing. this is an automated workflow which improves efficiency of the auditors since they do not have to be occupied with routine checks but concentrate on the most important cases. 3.16. performance optimization a number of methods are used to guarantee that the performance of the developed fraud detection system can be optimized, among them being parallel processing in the gpus or cloud clusters to train models faster and also model pruning to eliminate irrelevant parameters and speed up the process of inference. it applies real-time processing, whereby the system tracks the corporate filings as they are received and gives instant fraud risk analysis. moreover, the system will be developed in a way that it will constantly become better. the models can be retrained and refined as additional data is made available and so the system will be effective in detecting new types of tax fraud. asian business research journal, 2025, 10(11): 1-13 10 © 2025 by the authors; licensee eastern centre of science and education, usa 3.17. security, privacy and governance in the design of the fraud detection system due to the sensitivity of tax data, security, privacy and governance are of top priority. the information is encrypted when it is being transferred and when it is stored so that it is not accessed by unauthorized parties. role-based access control is installed to make sure that only the authorized people will have access to sensitive data. moreover, the system is in line with data protection policies, including gdpr and ccpa, and the information of the taxpayer is processed with the utmost degree of privacy. there is also an audit logging option that can be used to monitor the activities of the system and be able to hold the accountability and traceability of decisions the machine learning models make. 4. case study /example application in order to show the relevance and usefulness of the proposed machine learning-based scheme to detect tax frauds and risk score, the following section provides a hypothetical case study that simulates real-world corporate tax filings. the case exemplifies how the supervised and the unsupervised learning models would be useful in the identification of the possible fraudulent activity and the allocation of the quantitative risk scores that would serve as the basis of targeted audits. 4.1. case study overview the simulated data consists of 5,000 corporate filing records that belong to various industries, such as manufacturing, services, and technology industries. they consist of structured financial information (e.g. revenue, assets, tax payable) and unstructured text information (e.g. management commentary, auditor notes). the percentage of these filings is around 8 percent, which is labeled as the fraudulent ones according to the past audit results, which is a moderately unbalanced data (wu et al., 2012; martínez, 2025). this case study aims to emphasize how machine learning models, which are random forest, xgboost, and autoencoder structures, can be used to identify fraudulent behavior and give meaningful risk scores. 4.2. preparation of data and extraction of features. the pipeline followed in the preprocessing of data involved the methodology section. numerical characteristics were normalized, categorical ones coded, and missing values were addressed with the help of interpolation. in the case of text data, the linguistic data mining (tf-idf) and sentiment analysis methods were employed to extract linguistic evidence of deceit (zhang et al., 2024; ji et al., 2024). 4.2.1. key features included • financial ratios (e.g. effective tax rate, debt-to-equity, profit margin) • late filings, restatements, and amendments (behavior). • text sentiment (e.g. use of too much positive tone or evasive language) the data was subsequently divided into 70 percent training and 30 percent-testing data where stratification of classes was done to maintain the distribution of fraud (tagbo & adekoya, 2023). 4.3. model implementation three models were put in place in order to evaluate them comparatively: • random forest (rf): this is a baseline ensemble classifier that is employed to model nonlinear relationships between financial attributes (nguyen, 2025; acharya, 2025). • xgboost: it is a gradient-boosted ensemble model that is optimized on imbalanced data (zhou et al., 2024). • autoencoder (ae): this is an unsupervised deep learning model that is trained to understand the normal operation of the financial aspect of companies and identifies anomalies by the error of reconstruction (choudhary, 2025; mehta et al., 2022). • the model parameters were optimized to reach the best precision-recall tradeoff by the methods of grid search and the 5-fold cross-validation. 4.4. results and performance evaluation performance metrics were derived from the test set using precision, recall, f1-score, and roc-auc values (martínez, 2025). table 4. performance metrics. model precision recall f1-score auc random forest 0.91 0.76 0.83 0.94 xgboost 0.89 0.82 0.85 0.96 autoencoder 0.72 0.88 0.79 0.89 xgboost was found to be the best service overall, and it comes with a good balance between precision and recall. the unsupervised autoencoder was useful in the detection of the hidden anomalies that the supervised models were unable to detect at times. these findings are consistent with the studies of zhou et al. (2024) and zhang et al. (2025), who highlighted the relevance of ensemble and hybrid learning methods in terms of the highest fraud detection rate. 4.5. scoring and interpretation of risk risk scoring system was adopted after the analysis of the models to convert the anticipated probabilities into understandable categories: asian business research journal, 2025, 10(11): 1-13 11 © 2025 by the authors; licensee eastern centre of science and education, usa • low risk (0 -0.3): filings of routine nature with uniform trends. • medium risk (0.31 -0.7): minor inconsistencies that need to be reviewed partially. • high risk (0.711.0): there are great signals of potential evasion or misstatement. each of the models predictions has been interpreted with the help of explainable ai (xai) methods, specifically, shap values (zhou et al., 2024). the strongest characteristics that have led to high-risk predictions were: • great declines in reported taxable income. • unusual changes in expense to revenue ratios. • too much use of positive language in writing reports. these features were presented in visual dashboards where auditors could see why a specific filing was rated as high-risk, and could plan audits based on that (breslin, 2021; wahyono and david, 2025). 4.6. discussion of findings the findings indicate the importance of combining ensemble learning and anomaly detection to identify tax fraud with high accuracy. supervised models were more accurate but unsupervised models were necessary to reveal new patterns of fraudsupporting the findings of shujaaddeen et al. (2024) and mehta et al. (2022). additionally, the combination of textual analytics enhanced general recall, which proves the argument that the qualitative disclosure has a very strong predictive capacity (zhang et al., 2024). significantly, the explainability layer allowed human auditors to test system outputs, which strengthened the trust and accountability. using the combination of automation and interpretability, the offer system can offer a sensible balance between efficiency and ethics (tagbo and adekoya, 2023; zhou et al., 2024). 4.7. summary the case study illustrates how machine learning could be applied to detect tax fraud in terms of its operational viability and analytical depth. the findings indicate that the ensemble models such as the xgboost, a combination with the anomaly detectors and the nlp-driven insights would greatly improve the accuracy and explainability of the fraud detection systems. such results confirm the relevance of the framework in the actual audit setting and precondition the scope of its scaling to the tax authorities and corporate compliance systems. 6. discussion and policy implications the introduction of machine learning (ml) to the tax fraud detection systems is a paradigm shift in how the government and regulating bodies approach compliance and risk evaluation. in addition to enhancing the accuracy of detection, ml-driven models can turn tax administration into an active process rather than a passive one based on reactive auditing and instead on data-driven decision-making (acharya, 2025; breslin, 2021). this part will look at the implication of such technologies in terms of operational, regulatory, and ethical aspects and present the policy implications that should be put in place in order to adopt such technologies responsibly. 6.1. increasing audit support and efficiency machine learning solutions help to improve audit efficiency greatly through the automation of detecting red flags within corporate filings (wu et al., 2012; ippolito and lozano, 2020). in comparison to traditional systems, where reviews and strict rules are needed, ml models are dynamically adjusted to new data, which allows tax authorities to concentrate on the risky cases. it has been shown that supervised and ensemble algorithms (random forest and xgboost) can minimize false positives and maximize the ranking of audit targets (zhou et al., 2024; zhang et al., 2025). practically, it enables the auditors to move away to the exhaustive verification approach to risk based auditing such that enhance the cost efficiency and compliance coverage. moreover, risk scoring models do not only convert the intricate outputs of algorithms into interpretable indicators but also enable the non-technical staff to base their decisions on the data. the interaction of the ai systems with human auditors, therefore, forms a hybrid setting in which the technology supports, not omits human experience (breslin, 2021; tagbo and adekoya, 2023). 6.2. regulatory and governance nature. the implementation of ml systems in taxation needs strong governance systems in place to facilitate fairness, transparency, and accountability. tax information is very confidential, and as it is utilized in the automated system, it brings about a possibility of risk, such as bias, misuse and over-reliance on opaque algorithms (wahyono & david, 2025). the regulatory agencies should develop effective guidelines on: • data governance: the control of the safety of tax and financial data and the limitations of their utilization to the justifiable reasons of the regulation (breslin, 2021). • algorithmic accountability: introducing model decisions based on audit trails, with explainable ai tools to justify the results (zhou et al., 2024). • bias detection and mitigation: organizing frequent fairness audits to avoid the discriminatory treatment of certain sectors or groups of taxpayers (tagbo & adekoya, 2023). • interoperability standards: creation of standardized data forms and apis to enable data sharing between ml systems and the current audit infrastructure (nguyen, 2025). these regulatory frameworks are related to the overall trend of algorithmic governance, in which transparency and interpretability are valued above accuracy. the explainable ai (xai) aspects suggested in the present research are at the heart of ensuring these guidelines as they offer human-understandable explanations of model predictions (zhou et al., 2024; wahyono and david, 2025). asian business research journal, 2025, 10(11): 1-13 12 © 2025 by the authors; licensee eastern centre of science and education, usa 6.3. ethical and social implications taxation with ai and ml involves the development of important ethical issues. this is because automation systems should run according to high principles of fairness, privacy and proportionality to ensure the confidence of the people. as an example, the models are not supposed to punish taxpayers using demographic or geographic proxies accidentally included in training data (tagbo & adekoya, 2023). furthermore, even though automation increases efficiency, it is a source of over-reliance on algorithmic choices. to avoid this, people control must also be a core element in audit activities, whereby models identify highrisk cases that must be reviewed by auditors and then enforcement actions followed (breslin, 2021; wahyono and david, 2025). this hybrid oversight system is efficient but does not infringe on due process since the technology does not substitute ethical decision-making but enhances it. the other important dimension is data privacy. this data of taxpayers should be anonymized, encrypted and processed under the international data protection laws like gdpr. the introduction of federated learning systems can aid in safeguarding sensitive data as it prevents the transfer of raw information, as it is possible to train the models on decentralized databases (acharya, 2025; mehta et al., 2022). 6.4. capacity building and institutional readiness the willingness of institutions and staffs is also a requirement to a successful implementation of ml. a significant number of tax authorities have skill deficiencies in data science, model governance and ai ethics (tagbo & adekoya, 2023). the governments therefore need to invest in capacity building programs-training of auditors, analysts and policymakers on the knowledge of how to evaluate and supervise the ml systems. moreover, public-private partnership may promote the transfer of technology and the implementation of the best practices in academic and corporate research (zhang et al., 2025). in-house construction not only leads to less reliance on third party vendors, but also encourages change based on local tax conditions. 6.5. future of tax compliance and ai introductions the role of ml in tax administration will keep increasing as the corporate data ecosystem changes. deep learning with natural language processing (nlp) and anomaly detection will result in systems that are able to monitor corporate compliance in near real-time (zhang et al., 2024; choudhary, 2025). the development of federated ai and blockchain integration in the future can also improve the integrity of data and traceability of audits. nonetheless, the closer ai is integrated into governance, the more policymakers need to make sure that ethical standards, transparency, and human analysis are in the frontline. the regulatory adaptation, consultation with stakeholders, and international collaboration will be required on a continuous basis to ensure the fair and responsible systems of tax enforcement (wahyono & david, 2025; zhou et al., 2024). 6.6. summary the machine learning can transform the way tax frauds are detected and compliance is monitored by enhancing accuracy, scalability and transparency. however, it requires strong governance, ethical protection, and preparedness of institutions to be successful in this adoption. through technological innovation and regulatory integrity, the tax authorities would be able to establish a new taxation paradigm grounded in data-driven, equitable and responsible taxation. the facts provided in this study support the idea that ml cannot be used as an alternative to human auditors but rather as an effective, smart partner to foster financial integrity and trust in the populations. 7. conclusion and future work the growing sophistication of corporate tax and financial reporting has rendered the old methods of detecting fraud insufficient in the presence of huge, many-dimensional information. this paper has shown that machine learning (ml) may transform the process of fraud detection and scoring of risks in taxation by automating pattern recognition, anomaly detection, and predictive analytics in corporate filings. with the help of both structured financial and unstructured text information, the ml-based systems can help the auditors and tax authorities to go beyond reactive, manual processes to proactive, data-driven decision-making (acharya, 2025; galla, 2023; zhou et al., 2024). the framework proposed is a combination of supervised learning, unsupervised learning, and ensemble learning to provide high-precision and flexibility in fraud detection (random forest, xgboost, and autoencoders). explainable artificial intelligence (xai) is also used to promote transparency and accountability to ensure that human experts are able to interpret and audit model outputs (wahyono and david, 2025). the system enables the detection of fraud to go beyond numerical anomalies and detects deceptive linguistic indicators in financial accounts by including nlp-based text analytics (zhang et al., 2024; ji et al., 2024). the policy and governance implications of the findings are that regulatory harmonisation, ethical protection, and capacity building is required to make ai use in taxation responsible. institutions and governments have to weigh the benefits of efficiency against fairness, privacy, and due process. data scientists, auditors, and policymakers will have to collaborate to keep accountability and foster trust among the population as more and more fiscal systems become automated (tagbo & adekoya, 2023; 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(2024). advanced tax fraud detection: a soft-voting ensemble based on encoder extraction. mathematics, 13(4), 642. https://doi.org/10.3390/math13040642 https://doi.org/10.5220/0009564701560163 https://doi.org/10.1145/3718751.3718820 https://doi.org/10.5539/ijef.v7n7p178 https://arxiv.org/abs/2208.07675 https://doi.org/10.1080/23311975.2025.2510556 https://doi.org/10.14293/pr2199.000647.v1 https://ijisae.org/index.php/ijisae/article/view/4467 https://doi.org/10.1504/ijsss.2023.135468 https://doi.org/10.1145/3219819.3219878 https://doi.org/10.33168/jsms.2025.0105 https://doi.org/10.1016/j.eswa.2012.01.210 https://arxiv.org/abs/2007.13525 https://doi.org/10.1016/j.jcorpfin.2024.102356 https://doi.org/10.1038/s41598-025-15783-2 https://doi.org/10.3390/math13040642 53 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 10, 53-60, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.622 © 2025 by the author; licensee eastern centre of science and education, usa optimal job selection and scheduling in hybrid manufacturing systems using linear programming and sensitivity analysis maha hasan sultan al-bayan university (private), iraq. abstract this study introduces an interpretable linear model for worker selection and scheduling in hybrid manufacturing that considers profitability, resource usage, and energy simultaneously in the same objective while respecting capacity, sequencing, and time bucket coupling constraints. by assigning tunable weights to selection rewards, use penalties, lateness penalties, and energy costs, the approach supports policy tunability and, through an explicit objective decomposition, reveals marginal effect of each component on the final plan. empirical application to operational data indicates that such an equilibrium trade-off between value, completion, and delay control is possible, with temporal load staying in effective capacity; behavioral indicators within actual records also suggest a substantial relationship between delays, energy intensity, and machine availability variations. from a management viewpoint, the model offers an reproduceable low-cost decision basis well suited for sensitivity analysis, scenario planning in terms of capacity and energy policy alternatives, and periodic fine tuning to day-to-day fluctuations. explainability allows integration with learning or metaheuristic elements where higher predictive power and scalability are needed while allowing transparent attributions from parameters to outcomes. such established limitations as weight calibration dependency and unavoidable process dynamics approximations; yet, the model's expansibility provides for a realistic pathway towards incremental real-world data-driven refinement and establishes groundwork for future extensions, including coupling with learned estimators and more refined logistical constraints. keywords: cost, energy, job, linear, profitability, time. 1. introduction the combination of additive and subtractive processes in hybrid manufacturing systems in the last few years has boosted customizing, lowered lot sizes, and enhanced variety in products while making scheduling at the same time much more challenging: an attainable schedule must cope with heterogeneous processes (turning and milling and additive and drilling) all together, indefinite processing times, time-varying availability windows of machines, and persistent mismatches between “scheduled” and “actual” shop-floor timestamps. fms and js-fms research has shown static dispatching rules (spt and edd and fcfs) suffer with significant plan reality discrepancies in dynamic settings, which lead to data-driven “prediction-then-optimization” pipelines and/or metaheuristic hybrid learning strategies (abidi et al., 2020; meilanitasari & shin, 2021). conversely, mixed-integer formulations (milp and mip), as greatly expressive as they are for loading and selection, routing, and sequence-dependent setups, are computationally demanding and less manager-interpretable in industry scale (abazari et al., 2012; roshanaei et al., 2010; akbaripour et al., 2018). this is precisely where “interpretable linear programming” and “sensitivity analysis” pay a strategic dividend: having readily available operational ranges processing_time, machine_availability, and scheduled and actual timestamps it is possible to build an open model that includes capacity and window limits directly and then, through acceptable ranges on objective coefficients and rhs capacities, evaluate “what-if” situations cheaply and quickly (shapiro, 1993; monfared & yang, 2004; khan et al., 2021). industrial experience under real conditions varying from workforce distancing constraints to disconnected parallel machines and transport and agv integration also demonstrates that adding operational realism without a sensitivity point of view produces brittle, high-risk decisions (bazargan-lari et al., 2022; saidi-mehrabad et al., 2015; um et al., 2009; akbaripour et al., 2018) . our question directly falls at this intersection: “optimal job selection and scheduling in hybrid manufacturing systems using linear programming and sensitivity analysis,” built on three non-proprietary, readily available data pillars processing time (processing_time), machine availability (machine_availability), and scheduled and actual timestamps (scheduled and actual) so that (1) a subset of jobs is selected and assigned to machines with maximum throughput and utilization or minimum total tardiness, (2) capacity constraints are imposed at the machine level within real availability windows, and (3) plan robustness against small parameter perturbations is quantified through sensitivity analysis and represented in managerial terms as “allowable increases and decreases” for objective weights and capacities. scientifically, this advancement acts as a bridge between two prevailing camps: https://doi.org/10.55220/2576-6759.622 asian business research journal, 2025, 10(10): 53-60 54 © 2025 by the author; licensee eastern centre of science and education, usa heavyweight milp and metaheuristics that are powerful but costly to compute and hard to interpret on the decision table side versus static rules or simulation-alone research without an “interpretable bridge” to managerial actionability (byrne & bakir, 1999; meilanitasari & shin, 2021). in our system, objective can be stated to “maximize weighted sum of selected jobs” or “minimize total tardiness and incompleteness”; capacity constraints bind the aggregate processing time on a machine to its “available time”; window constraints cause actual to adhere to scheduled (with controllable slack); then sensitivity analysis gives “allowable ranges” on objective coefficients and rhs values so managers know how far they can deviate from the priority weights, utilization targets, or shift and machine capacities without breaking the optimal basis. the contribution thus is twofold: an implementable “baseline lp” for hms operating over small data domains, and a “robustness map” that distinguishes between safe vs. risky parameter moves precisely what decision makers would desire under real world constraints like shift changes, periodic faults, or safety considerations . 2. literature review the flexible setting scheduling literature investigates a few options. at one level, ml and metaheuristicsdriven methods select and predict dispatching rules dynamically and optimize predictive accuracy; e.g., abidi et al. combine weighted feature extraction with a hybrid fuzzy dbn classifier and a lion algorithm variation to propose rules in fms, with accuracy gains from combining metaheuristics and deep learning (abidi et al., 2020). meilanitasari and shin’s review highlights that static policies (spt and edd and fcfs) create significant gaps under js-fms dynamics and encourages “prediction then-optimization” with sequence learning to bridge the uncertainty and optimal scheduling gaps (meilanitasari & shin, 2021). in contrast, well-defined mathematical models are used: abazari et al. propose a hybrid continuous and 0-1 programming model with a ga for machine loading to optimize profitability and utilization within capacity, batch size, processing time, tool, and magazine constraints (abazari et al., 2012). roshanaei et al. formulate jss with sequence-dependent setup times as a milp to optimize makespan and apply an electromagnetism like algorithm for the large instances (roshanaei et al., 2010). in cloud manufacturing, akbaripour et al. develop service selection and scheduling over mixed composition structures (sequence and parallel and loop and selective), combine service occupancy and transportation on hybrid hub and spoke networks, and demonstrate that adding transportation and availability offers more realistic solutions; sensitivity analyses also estimate policy robustness (akbaripour et al., 2018). methodologically, the ancient underpinning of lp sensitivity to coefficient and rhs changes underlies implemented “what-if” analyses (shapiro, 1993; cf. monfared & yang, 2004 on fuzzy scheduling and control sensitivity and parameter tuning) the field also leans towards hybrids: combining mathematical models with simulation and metaheuristics to achieve high quality, scalable solutions. examples include neural networks with simulated annealing for stochastic job shops (tavakkoli moghaddam et al., 2005), hybrid simulation analytical models of multi period, multi product planning (byrne & bakir, 1999), and joint scheduling maintenance models with multiobjective search (mishra et al., 2022; also tirkolaee et al., 2020 for energy-aware jit). in fms and js-fms, other papers introduce realism: integrated jss with conflict-free agv routing (saidi-mehrabad et al., 2015), fms with agvs and multiobjective es and monlp (um et al., 2009), and ga–topsis simulation for operator assignment (azadeh et al., 2011). at the design level, rsm and bwm frameworks make fms design parameters flexible and optimize performance vs. deployment cost (pasha et al., 2023). recent rms and cloud studies indicate that estimation of actual availability, transportation, and reconfigurability significantly alters schedule and planning decisions, and sensitivity and anova are key in parameter effect quantification (imsetif et al., 2025; yazdani et al., 2022). multiobjective studies during the covid period include such constraints as social distancing of workers into parallel machines models and provides direct impacts on profit and annual scheduling (bazargan-lari et al., 2022). in additive processes, scheduling non-identical parallel slm machines with makespan and tardiness objectives and a learning-based nsga-ii is the merging of the field towards “explicit model + learning” hybrids (rohaninejad et al., 2021). generally, the literature shows: (1) milp and metaheuristics excel with complete constraints but sometimes sacrificing interpretability and low cost sensitivity; (2) static rules fall short in dynamic settings, with the need for scheduled and actual data (meilanitasari & shin, 2021); and (3) interpretable lp with complete sensitivity can provide a reproducible baseline to hms decision-making, especially where only usual operational parameters such as processing_time, machine_availability, and scheduled and actual are accessible (shapiro, 1993; monfared & yang, 2004; khan et al., 2021). therefore our gap an lp formulation for “job selection and scheduling” in hms based on public operational fields and reporting allowable ranges on coefficients and capacities addresses two requirements directly: analytical transparency for managers and simplicity with real world data for fast, low cost deployment . 3. data and methodology 3.1. study data the data set consists of actual planning and execution data from a hybrid manufacturing system, where each row is a production job with a unique identifier and includes the operational and temporal attributes necessary for linear modeling and sensitivity analysis. for each operation, operation type (milling, drilling, lathe, additive, or grinding) and preassigned machine (machine_id) are entered; processing_time is the typical job time in base time units; machine_availability is documented as percent or effective capacity rating, converted to per interval machine capacity; scheduled_start and scheduled_end define the planned window, and actual_start and actual_end denote the actual timestamps (used for calibration and evaluation). energy_consumption per job identifies energy intensity per unit time of processing, while job_status and optimization_category are only used for weighting or ex-post evaluation of performance. in order to transform raw data into model inputs, the planning horizon [h] is discretized into a uniform time grid with interval length δ; by representing calendar timestamps as bucket indices, each job’s admissible window along the time axis is defined. per-machine, per-bucket capacity limit cap𝑚,𝑡 is calculated from cap𝑚,𝑡 = 𝛥 ⋅ availability𝑚,𝑡 100 . processing times 𝑝𝑗 are simply read from processing_time following unit harmonization to base minute or hour. actual_* timestamps are not used as constraints for the purpose of asian business research journal, 2025, 10(10): 53-60 55 © 2025 by the author; licensee eastern centre of science and education, usa keeping the model predictive and deployable; instead, they will be applied once optimization is done in order to evaluate and calibrate the penalties for early start and late finish . 3.2. modeling and solution method we propose a proactive, time-indexed linear program that simultaneously optimizes the selection of jobs, allocation of capacity per machine, and adherence to planned windows. allowing preemption (that is, splitting a job over multiple time buckets) enables a linear, free binary formulation at no increased complexity and yet with only temporal stickiness through the introduction of penalties for processing outside the planned window. we then define index sets and parameters, decision variables, objective, and constraints . index sets : 𝐽 = 𝑗𝑜𝑏𝑠. m = set of machines . t = set of discrete time buckets {1, 2, … , 𝐻}. for each j in j, let 𝑚(𝑗) in m be its preassigned machine. for each j in j, let 𝑇on(𝑗)= buckets between scheduled_start_j and scheduled_end_j, 𝑇early(𝑗) = buckets preceding scheduled_start_j, and 𝑇late(𝑗)= buckets following scheduled_end_j. 3.3. parameters δ = length of each time bucket. 𝑝𝑗= typical processing time of job j in units of δ . cap𝑚,𝑡 = capacity of machine m available in bucket t (in units of δ), obtained from machine_availability and work calendar. 𝑒𝑗 = energy rate of job j per unit of processing time. 𝑤𝑗 = job weight and priority (in simplest case 𝑤𝑗 = 1 or by optimization_category) . α, β, γ, δ, κ = nonnegative objective weights trading off throughput, lateness, idle capacity, energy, and undercompletion . 3.4. decision variables 𝑥𝑗 ∈ [0,1]= job j selection variable (1: completely processed; fractional values: partially processed in the horizon) . 𝑦𝑗,𝑡 on ≥ 0= amount of processing of job j in bucket t in the scheduled window (𝑡 ∈ 𝑇on(𝑗)) . 𝑦𝑗,𝑡 early ≥ 0= early processing of job j (𝑡 ∈ 𝑇early(𝑗)) . 𝑦𝑗,𝑡 late ≥ 0= late processing of job j (𝑡 ∈ 𝑇late(𝑗)). 𝑜𝑚,𝑡 ≥ 0= overtime for machine m in bucket t (discouraged through a big penalty) . idle𝑚,𝑡 ≥ 0= idle capacity of machine m in bucket t (slack to quantify unused capacity) . 𝑢𝑗 ≥ 0= undercompletion of job j in the horizon (penalized to make it desirable to complete even if 𝑥𝑗 is fractional) . 3.5. aggregate helpers 𝑦𝑗,𝑡 = 𝑦𝑗,𝑡 on + 𝑦𝑗,𝑡 early + 𝑦𝑗,𝑡 late, ∀𝑡 ∈ 𝑇 (and for buckets not in the specified subsets, the respective components are zero by default) . 𝐸𝑗 = ∑ 𝑦𝑗,𝑡 early 𝑡∈𝑇early(𝑗) (total early processing of job j) . 𝐿𝑗 = ∑ 𝑦𝑗,𝑡 late 𝑡∈𝑇late(𝑗) (total late processing of job j) . 𝑌𝑗 = ∑ 𝑦𝑗,𝑡 𝑡 (total allocated processing of job j over the horizon) . 3.6. objective function ,maximize  j j j m t j j j j j j j m m t t j j j j z w x l idle e y u           =  −  −  −  −      the first encourages throughput and job selection; the second inhibits processing with delay; the third reduces idle capacity; the fourth imposes a cost for energy usage; and the fifth imposes a cost for undercompletion to make the plan reach completion even if 𝑥𝑗 is fractional. 3.7. constraints job processing balance (flow of each job through time): ∀𝑗 ∈ 𝐽: ∑ 𝑦𝑗,𝑡 + 𝑢𝑗 = 𝑝𝑗𝑥𝑗 𝑡∈𝑇 machine capacity per bucket (including idle measurement and overtime control): ∀𝑚 ∈ 𝑀, ∀𝑡 ∈ 𝑇: ∑ 𝑦𝑗,𝑡 + idle𝑚,𝑡 ≤ 𝑗∈𝐽:𝑚(𝑗)=𝑚 cap𝑚,𝑡 + 𝑜𝑚,𝑡. unavailability of machines (optional hardening of constraint 2): , ,,   with  0 :  0m t j tm m t t cap y    = = for each j such that 𝑚(𝑗) = 𝑚 and 𝑜𝑚,𝑡 = 0 and idle𝑚,𝑡 ≥ 0 (this line is a reminder that with zero cap only idle can equal cap and y and o are zero.) splitting up processing by temporal region and lateness and earliness definition: asian business research journal, 2025, 10(10): 53-60 56 © 2025 by the author; licensee eastern centre of science and education, usa ∀𝑗 ∈ 𝐽: 𝐸𝑗 = ∑ 𝑦𝑗,𝑡 early 𝑡∈𝑇early(𝑗) ∀𝑗 ∈ 𝐽: 𝐿𝑗 = ∑ 𝑦𝑗,𝑡 late 𝑡∈𝑇late(𝑗) ∀𝑗 ∈ 𝐽, ∀𝑡 ∈ 𝑇on(𝑗): 𝑦𝑗,𝑡 on ≥ 0 ∀𝑗 ∈ 𝐽, ∀𝑡 ∈ 𝑇early(𝑗): 𝑦𝑗,𝑡 early ≥ 0 ∀𝑗 ∈ 𝐽, ∀𝑡 ∈ 𝑇late(𝑗): 𝑦𝑗,𝑡 late ≥ 0 ∀𝑗 ∈ 𝐽, ∀𝑡 ∈ 𝑇\(𝑇on(𝑗) ∪ 𝑇early(𝑗) ∪ 𝑇late(𝑗)): 𝑦𝑗,𝑡 on = 𝑦𝑗,𝑡 early = 𝑦𝑗,𝑡 late = 0 3.8. bounds and nonnegativity ∀𝑗 ∈ 𝐽: 0 ≤ 𝑥𝑗 ≤ 1 ∀𝑗 ∈ 𝐽: 𝑢𝑗 ≥ 0 ∀𝑚 ∈ 𝑀, ∀𝑡 ∈ 𝑇: idle𝑚,𝑡 ≥ 0 ∀𝑚 ∈ 𝑀, ∀𝑡 ∈ 𝑇: 𝑜𝑚,𝑡 ≥ 0 ∀𝑗 ∈ 𝐽, ∀𝑡 ∈ 𝑇: 𝑦𝑗,𝑡 on ≥ 0 ∀𝑗 ∈ 𝐽, ∀𝑡 ∈ 𝑇: 𝑦𝑗,𝑡 early ≥ 0 ∀𝑗 ∈ 𝐽, ∀𝑡 ∈ 𝑇: 𝑦𝑗,𝑡 late ≥ 0 policy control of overtime caps: ∀𝑚 ∈ 𝑀, ∀𝑡 ∈ 𝑇: no𝑚,𝑡 ≤ omax𝑚,𝑡 where omax𝑚,𝑡 is policy-defined (usually zero or a small percentage of cap𝑚,𝑡) . critical jobs (optional hard finish or soft slack): ∀𝑗 ∈ 𝐽critical ⊆ 𝐽: 𝑥𝑗 = 1 ∨ ∑ 𝑦𝑗,𝑡 ≥ 𝑝𝑗𝑥𝑗 − uslack𝑗 𝑡∈𝑇 with high penalty on uslack𝑗 in the objective . hard time windows (if strict timing is essential instead of penalties): ∀𝑗 ∈ 𝐽: 𝑦𝑗,𝑡 early = 0 for all 𝑡 ∈ 𝑇early(𝑗) 𝑦𝑗,𝑡 late = 0 for all 𝑡 ∈ 𝑇late(𝑗) (in this case, 𝐿𝑗 drops out of the objective and only 𝑦on is admissible.) choosing δ: smaller δ increases temporal fidelity but increases model size; standard δ in the 5–15 minutes range. extrapolating machine_availability to cap𝑚,𝑡}: if in percentage form, cap𝑚,𝑡 = 𝛥 ⋅ availability𝑚,𝑡 100 ; off-shift buckets get cap = 0 . energy: if energy_consumption is a per-job total, scale to 𝑒 ^ 𝑗 = energy_consumption𝑗 𝑝𝑗 so that 𝛿 ⋅ ∑ 𝑒 ^ 𝑗𝑦𝑗,𝑡 𝑡 is meaningful . excessive fragmentation avoidance: if contiguity in time matters, one can impose soft penalties on inter bucket variance of 𝑦𝑗,𝑡; to maintain linearity, penalizing early and late aggregates typically does the trick . single-machine per job: as machine_id is fixed in the data, no assignment constraint is needed; if some operations are multi option, generalize to 𝑦𝑗𝑚𝑡 and write ∑ ∑ 𝑦𝑗𝑚𝑡 + 𝑢𝑗 = 𝑝𝑗𝑥𝑗 𝑡 𝑚 with capacity per (m,t) (still linear and preemptive) . sensitivity results: post determine an admissible range on objective coefficients (𝑤𝑗, δ, β) and rhs values (cap𝑚,𝑡); this is beyond the formulation and requires post-optimal analysis of the lp solver. in the ideal plan, 𝑥𝑗 is the portion of job 𝑗 which was scheduled and finished by the horizon; 𝑦𝑗,𝑡 is the time capacity plan on machine 𝑚(𝑗); 𝐿𝑗 is a measure of how much late processing was required to finish the job; idle𝑚,𝑡 reports unused capacity, acts as a control to fill shifts; and 𝑢𝑗 measures undercompletion so managers could balance between serving more orders on windows and energy consumption. 3.9. data analysis the discussion begins with scenario behavior and the overall impact on the objective, selected jobs, utilization, and costs; followed by objective composition; followed by job-level schedule quality and time bucket occupancy; then plan alignment with actual execution; finally, capacity slack. from table 1, increasing alpha raises the objective monotonically while selected_jobs stays at 144 in most combinations. increasing kappa from 50 to 150 slightly lifts avg_utilization; with 𝑘𝑎𝑝𝑝𝑎 = 300 the usage penalty total_u pushes total_l upward. this is most severe at alpha=400, where selected_jobs drops to 114. the preferred region is alpha∈{700,1000} with 𝑘𝑎𝑝𝑝𝑎 ∈ {50,150}, balancing a high objective, full completion, and controlled delay. to clarify the objective, table 2 shows alphasum(wx) as the dominant positive term, and -kappasum(u) is the largest subtraction; -betasum(l) and -deltasum(energyydelta) also reduce the total but to a lesser extent. this accounts for the fact that mid-range kappa performs better than very high kappa in table 1: usage must be reined in, but over-penalizing inflates total_l and wreaks havoc on objective. 57 © 2025 by the author; licensee eastern centre of science and education, usa table 1. parametric scenarios. alpha kappa beta gamma delta cap_scale objective selected_jobs total_u total_l total_energy avg_utilization 400 50 10 0.1 0.05 1 47065.92107 144 102.8534885 0.365 555.0900639 0.553998707 400 150 10 0.1 0.05 1 36932.80242 144 100.7334697 16.875 568.5425474 0.571665531 400 300 10 0.1 0.05 1 25384.25683 114 48.97521156 134.6281429 521.7602717 0.52236105 700 50 10 0.1 0.05 1 86245.92107 144 102.8534885 0.365 555.0900639 0.553998707 700 150 10 0.1 0.05 1 76112.80242 144 100.7334697 16.875 568.5425474 0.571665531 700 300 10 0.1 0.05 1 61135.30115 144 98.23120246 78.59 588.7622905 0.592517757 1000 50 10 0.1 0.05 1 125425.9211 144 102.8534885 0.365 555.0900639 0.553998707 1000 150 10 0.1 0.05 1 115292.8024 144 100.7334697 16.875 568.5425474 0.571665531 1000 300 10 0.1 0.05 1 100315.3011 144 98.23120246 78.59 588.7622905 0.592517757 table 2. objective composition. component value alphasum(wx) 130600 beta*sum(l) -245.8333333 deltasum(energyy*delta) -28.50065745 kappa*sum(u) -20051.42204 total (objective) 110274.244 58 © 2025 by the author; licensee eastern centre of science and education, usa table 3. job selection summary (sample). job_id machine_id operation_ type processing_ time energy_ consumption scheduled_ start scheduled_ end job_ status optimization_ category x u l y_ sum total_energy j001 m01 grinding 76 11.42 3/18/2023 8:00 3/18/2023 9:16 completed moderate efficiency 1 1.2667 0 0 0 j002 m01 grinding 79 6.61 3/18/2023 8:10 3/18/2023 9:29 delayed low efficiency 1 0.4267 0 1.78 5.8829 j014 m04 additive 112 2.01 3/18/2023 10:10 3/18/2023 12:02 completed optimal efficiency 1 0.0867 5.76 3.56 3.5778 table 4. time-bucket schedule y (sample). job_id machine_id bucket_start bucket_end y j002 m01 3/18/2023 8:00 3/18/2023 8:30 0.89 j011 m01 3/18/2023 9:30 3/18/2023 10:00 0.89 j016 m01 3/18/2023 10:30 3/18/2023 11:00 0.89 j058 m01 3/18/2023 18:00 3/18/2023 18:30 0.242833333 j060 m01 3/18/2023 18:00 3/18/2023 18:30 0.647166667 table 5. hybrid manufacturing categorical (sample). job_id machine_id operation_ type material_ used processing_ time energy_ consumption machine_ availability scheduled_ start scheduled_ end actual_ start actual_ end job_ status optimization_category j001 m01 grinding 3.17 76 11.42 96 3/18/2023 8:00 3/18/2023 9:16 3/18/2023 8:05 3/18/2023 9:21 completed moderate efficiency j010 m01 drilling 2.10 27 3.66 97 3/18/2023 9:30 3/18/2023 9:57 3/18/2023 9:54 3/18/2023 10:21 delayed low efficiency j014 m04 additive 2.33 112 2.01 95 3/18/2023 10:10 3/18/2023 12:02 3/18/2023 10:10 3/18/2023 12:02 completed optimal efficiency 59 © 2025 by the author; licensee eastern centre of science and education, usa for quality at the job level, table 3 (lp selected subj summary) indicates that most rows have x=1 and job_status=completed. values of u and l indicate pressure from machine usage and delay risk. rows marked optimal or high efficiency tend to have lower energy with controlled l, whereas low efficiency is found with higher l or energy . to align plan and reality, table 5 (hybrid manufacturing categorical) shows scheduled vs actual times. delayed entries tend to coincide with higher energy or lower machine availability. together with table 3, this indicates that re-ordering toward lower-energy operations and tighter availability constraints can reduce delay incidence. to complete the capacity snapshot, table 6 (idle by time-bucket) shows zero idle in the sampled intervals; this aligns with y distribution and avg_utilization rates in table 1. further gains are expected to arise from reducing usage and energy costs as well as avoiding delayed/failed instances rather than filling idle holes . table 6. idle by time-bucket (sample). machine_id bucket_start bucket_end idle m01 3/18/2023 8:00 3/18/2023 8:30 0 m01 3/18/2023 10:30 3/18/2023 11:00 0 m01 3/18/2023 14:30 3/18/2023 15:00 0 4. discussion and conclusion the combined evidence from table 1 to table 6 indicates that a transparent linear formulation with weights alpha, kappa, beta, gamma, and delta yields an operational balance between objective value, completion, and delay control. within reasonable levels of weights, the objective increases while preserving the set of completions; excessive use penalties at high levels degrade performance by raising total_u and, in turn, total_l. this is in accordance with table 2: alphasum(wx) is the main driver, whereas -kappa*sum(u) is the main deduction and, if overdone, overstates delays and makes the objective worse. temporal load in table 4 shows y staying within effective capacity, as is expected from avg_utilization in table 1. at the job level, table 3 reveals that optimal and high efficiency options generally pair with less energy and controlled delay, and low efficiency pairs with more usage pressure or energy consumption. plan-versus-actual agreement in table 5 confirms that delayed cases often overlap with more energy or less availability. finally, table 6 shows no major idle pockets, hence improvement lever is towards weight tuning and reordering towards lower energy operations. contrary to literature, the results both support and augment three prevalent themes. first, learning/metaheuristic models adaptively choose dispatching rules and have reported enhancements in predictive accuracy. our findings via table 3 and table 4 show that without learning, a replicable and interpretable baseline can indeed be established and served as a foundation for “prediction then optimization” hybrids. second, welldefined mathematical models used in the past often favor milp with sequence-dependent setups and transportation, and search heuristics to ensure scalability. here, planar structure and objective decomposition in table 2 retain explainability and sensitivity at little computational cost, which is a luxury for rapid deployment to hms. third, energy-aware and availability-aware models drastically change scheduling decisions. the consistency across table 1, table 3, and table 5 sends the same message: with energy and capacity weighted properly, both delay and consumption are both optimized together . the lesson of operation is to keep weights in a well-balanced band so that the target stays high and risk of delay is controlled, with this plausible baseline being a stepping stone toward learning or metaheuristic optimization. adaptive retuning of weights against actual signals and efficiency labels in table 5 is a plausible next step, while using table 4 to recognize congested time windows and resequence towards lower energy strings. this reaffirms compatibility with the “explicit model + learning” hybrids emphasized in the literature . an understandable linear model introduced objective benefit, work completion, and delay control into equilibrium. the objective breakdown highlighted selection incentives’ key role and extreme sensitivity to use penalties. time-bucket scheduling kept load in efficient capacity, with real execution data correlating delays and energy use with availability. the approach presents an open, low cost foundation waiting for incorporation of learning and metaheuristic capabilities . references abazari, a. m., solimanpur, m., & sattari, h. 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(2022). process and production planning for sustainable reconfigurable manufacturing systems (srms): multi-objective exact and heuristic-based approaches. the international journal of advanced manufacturing technology, 119, 4519-4540. https://doi.org/10.1007/s00170-022-10865-1 50 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 9, 50-61, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.567 © 2025 by the author; licensee eastern centre of science and education, usa the role of open book accounting and blockchain technology in developing cost accounting systems and achieving greater transparency in supply chains – an applied study in iraqi airways waleed khalid shihab administrative technical college –mosul, accounting techniques dept. northern technical university, iraq. email: wakeed_khalid@ntu.edu.iq (corresponding author) abstract this study intends to assess the impact of applying open book accounting endorsed by blockchain technology on improving transparency and efficiency in the supply chains of iraqi airways. the importance of the study originates from the critical need to enhance the accuracy of cost reports, facilitate data updates, and reduce financial disputes in view of the challenges confronted by traditional systems in cost accounting and supply chain management.the study problem originates from in the insufficiency of transparency, high error rates, and setbacks in updating cost data, which lead to frequent financial disputes and high monitoring costs. these issues prevent operational efficiency and negatively affect both operational and financial performance of the organization. the study employed a descriptive analytical applied approach, obtaining and examining actual secondary data from the company’s records and reports for two periods before and after the implementation of the open book accounting system supported by blockchain. the study emphasized on principal measures like error rates in cost reports, data update time, level of transparency, dispute rates, and costs of monitoring and auditing expenses. the study results demonstrated notable improvements after implementation such as error rates declined from 12% to 2%, data update time decreased from several days to minutes, transparency levels increased from 40 to 85 out of 100, and financial disputes declined from 15% to 3%. in addition, there were substantial savings in monitoring and auditing costs, demonstrating the economic feasibility of the application. according to these findings, the study recommends that the adoption of open book accounting endorsed by blockchain technology in aviation institutions and supply chain companies to improve financial and operational efficiency, enhance transparency, and reduce waste and disputes. in addition, suggests providing appropriate staff training, enhancing digital infrastructure, and cooperating collaborating with regulatory authorities to facilitate integration processes and ensure regulatory adherence. keywords: blockchain technology, cost management, open book accounting, supply chain efficiency. 1. research methodology and previous studies 1.1. introduction as a result of expeditious technological development and the far-reaching changes occurring in the global business sector, organizations are confronting increasing challenges in managing financial and operational resources, especially in the areas of cost accounting and supply chains. cost accounting signifies one of the fundamental foundations that enables firms to measure and analyze the costs associated with production and operations, hence facilitating informed managerial decisions directed at improving performance and reducing waste. notwithstanding, several organizations still depend on traditional accounting systems which suffer from many issues, like data inaccuracy, delays in updating information, lack of transparency, and difficulty in real-time cost tracking. so, these challenges in a negative way affect operational efficiency and reduce stakeholders’ trust. in this regard, open book accounting has surfaced as a creative methodology that maintains records in a transparent and auditable approach available to all stakeholders, thus reducing errors and disputes associated with costs. concurrently, blockchain technology, which provides a distributed, protected against tampering digital ledger, has turned into a powerful supporter that strengthens open book accounting by assuring data integrity and real time updates. this promotes high transparency and fosters trust among customers, suppliers, and organization. supply chains are one of the most essential fields where blockchain technology can facilitate transformative change it supports accurate and transparent tracing of all production and financial phases, contribute to reducing errors, hastening processes, and reducing operational costs. in regard of airlines, like iraqi airways, where multiple phases, suppliers, and partners are involved, implementing blockchain supported open book accounting turns into immediate a pressing necessity to enhance efficiency and strengthen transparency in supply chain management. mailto:wakeed_khalid@ntu.edu.iq https://doi.org/10.55220/2576-6759.567 asian business research journal, 2025, 10(9): 50-61 51 © 2025 by the author; licensee eastern centre of science and education, usa this study seeks to examine how open book accounting and blockchain technology integration into the actual working environment of iraqi airways, and to assess the impact of this integration on financial and operational performance indicators. it also seeks to provide practical recommendations that contribute to the development of the accounting system and organizational effectiveness, utilizing the advantages of advanced technologies nowadays business environment. 1.2. study problem iraqi airways encounters limited transparency and inefficiency in its traditional cost accounting system, causing high error rates, delayed data updates, and increased disputes associated with costs in supply chains. hence, the study question the effectiveness of applying blockchain supported open book accounting in addressing these issues. 1.3. study importance the importance of this study is rooted in demonstrating the application of blockchain supported open book accounting, that consider one of the most recent technological developments in accounting and supply chain management. under increasing challenges especially for large companies like iraqi airways such as lack of transparency, delayed data updates, and high error rates and financial disputes, this study presents innovative and practical solutions through integrating blockchain technology with modern accounting systems. 1.4. study objectives 1. to evaluate the impact of applying blockchain-supported open ledger accounting on the accuracy of cost reports in the company. 2. to measure the effect of the application on data update speed and process transparency within the supply chain. 3. to determine the extent to which cost-related disputes decrease after implementation. 4. to analyze the economic feasibility of the application by studying the return on investment (roi). 1.5. study hypotheses • null hypothesis (h0): the application of a blockchain supported open book accounting system has no significant impact on cost report accuracy, data update speed, process transparency, or dispute rates at iraqi airways. • alternative hypothesis (h1): the application of a blockchain supported open book accounting system has a significant impact on improving cost report accuracy, reducing data update time, enhancing process transparency, and lowering dispute rates at iraqi airways. 1.6. study population and sample • population: all accounting operations and data related to costs and supply chains at iraqi airways. • sample: selected financial and operational data from the company’s records covering two periods: before and after implementation. 1.7. study methodology the study implemented the descriptive analytical approach, based on secondary data collected from the company’s records and reports. the data were examined by using statistical methods to analyze the differences in relevant measures before and after the using blockchain which supported by open book accounting. 1.8. study limitations 1. the study is limited to data available from iraqi airways during a specific period (six months before and six months after implementation) in 2023. 2. the study does not include other accounting applications or technologies that may have influenced results during the same period. 3. the study relies exclusively on actual company data without using questionnaires or interviews. 1.9. previous studies 1.9.1. al-qaisi (2021) this study explored the inadequacy of comprehension blockchain’s impact on various financial statement items in commercial banks, that limits full employment of the technology to improve financial performance. it attempted to explore blockchain’s impact on financial statements (profit-loss, financial position, equity, and cash flows) in jordanian commercial banks. the findings indicated to a positive impact of blockchain implementation on financial statements, improving performance evaluation and increasing banks’ competitiveness. the recommendation were improving blockchain apply in banks to reduce costs, enhance service quality, increase transaction volumes and profitability, facilitate market entry, and ensure continuous banking services. 19.2. abdulhamid (2023) the study investigated the barriers of using blockchain in accounting system environment, especially operational risks, insufficiency of suitable accounting systems, and management issues, that affect the framework and performance of accounting and auditing professions. the results indicated operational risks, insufficiency of integrated accounting systems, and management obstacles, alongside blockchain’s impact in reshaping and expanding the role of accountants and auditors. the study recommendation was reinforcing the role of professional asian business research journal, 2025, 10(9): 50-61 52 © 2025 by the author; licensee eastern centre of science and education, usa and audit companies in regulating blockchain use, performing continuous training for accountants and auditors, and integrating technological advancements into accounting curricula. 1.9.3. al-sayyid (2025) this study concentrated on the challenges facing reverse supply chain cost management because of misalignment, insufficiency of accountability, and lack of transparency in information flows among stakeholders. its objective was to identify vital success factors for using blockchain in improving reverse supply chain cost management, especially in improving product quality, reducing operating costs, and increasing flexibility of information and goods flows. the findings showed that blockchain enhances innovation capacity, improves product quality, reduces costs, and strengthens operational flexibility and risk management when transparency and accountability are ensured. the study recommended establishing clear regulatory standards for it-based solutions such as blockchain in reverse supply chain cost management. 1.10. study gap in spite of number of studies focusing on blockchain technology and its impact on accounting systems and cost management, few have sufficiently analyzed the application of open book accounting enhanced by blockchain and its impact on developing cost accounting systems and enhancing transparency in supply chains, especially in the aviation sector. the study gap is based on the absence of applied studies which directly evaluate the impact of integrating open book accounting with blockchain on cost report accuracy, data update speed, process transparency, dispute reduction, and the economic feasibility of such an application in terms of return on investment. according to this study seeks to bridge this gap by executing an applied study at iraqi airways, providing an extensive understanding of how blockchain supported open book accounting can improve cost accounting systems and improve transparency in supply chain management. figure 1. the conceptual framework of the study. 2. cost accounting and it role in enhancing supply chain efficiency 2.1. introduction cost accounting is a vital tool for managing advanced industrial firms. it assists improving operational and financial efficiency by analyzing resource utilization and identifying sources of waste. in the context of ongoing evolution of the business environment and the increasing complication of supply chains, the requirement for more accurate and transparent accounting tools, like material flow cost accounting (mfca), continues to grow so as to support decision-making and improve overall companies’ performance. 2.2. concept of cost accounting cost accounting especially within the mfca framework, includes measuring and allocating costs associated with material and energy flows in the production process. losses and waste are identified and quantified then related to the product or service responsible for them. this method aims to recognize opportunities to reduce negative environmental effect and save money for the company. the concept is reinforced and standardized by iso 14051, that facilitates its implementation in industrial organizations, especially in japan (papasp et al., 2016, 325). 2.3. concept of supply chain supply chain management consists of activities, processes, and practices via which a business organization collaborates with its suppliers to maximize internal operational efficiency, deliver final products that satisfy customers, and generate profits for shareholders. it incorporates planning, organizing, directing, and controlling all organizational activities to strengthen relationships with suppliers, intermediaries, distributors, and customers. further, it aims to improve internal processes to ensure the flow of products, funds, expertise, and information across the chain (from primary suppliers to end customers). the objective is to maximize benefits for all links within the interconnected network of supply, manufacturing, and distribution centers (hussein, 2019, pp. 453–454; al-akidi & mohammed, 2024,170). 2.4. concept of transparency transparency indicates to the exchange of information and decision making in a clear and accessible approach for anyone interested in attaining information on a particular issue. a transparent system is characterized by asian business research journal, 2025, 10(9): 50-61 53 © 2025 by the author; licensee eastern centre of science and education, usa explicit procedures, a clear method of decision-making at the public level, and open communication channels between stakeholders and officials. transparency also entails freedom from fraud and deception, making irregularities easily detectable. broadly, transparency means clarity and the ability to see what is hidden—the opposite of ambiguity. it ensures the free flow of information, allowing employees and external parties dealing with the organization to continuously access and use relevant data (mosbah, 2021, p. 152). 2.5. concept of decentralization it refers to the decision-making method that does not depend on a one central authority but rather on a decentralized network of participants or systems. this approach spreads power and data among multiple parties in a transparent and secure approach, thus enhancing efficiency and objectivity of decision-making throughout realtime and reliable information analysis applying technologies like blockchain and big data, without needing a central authority to control all processes (theodorakopoulos et al., 2024, 1). in this study, decentralization refers to a system that distributes power and data among a network of participants rather than being concentrated in one central authority, thereby reducing risks of failure and enhancing security. 2.6. objectives and importance of cost accounting (mfca) 2.6.1. objectives (al-jabali, 2020, 519) cost accounting seeks to assist firms achieving enhanced environmental and financial performance through increasing the efficiency of resource utilization, particularly materials and energy. this can be achieved by several objectives and benefits that strengthen the organization’s capacity to make more informed and precise strategic and operational decisions, including: 1. enhancing transparency: showing material flows, energy consumption, and associated costs to provide a clearer understanding of environmental and operational aspects. 2. supplying analytical information: supplying data to support analysis and decision-making for resource efficiency and cost reduction. 3. assisting decision-making: enhancing decisions related to process technology, quality management, production planning, and supply chain activities. 4. enhancing coordination and communication: facilitating internal communication regarding material and energy management. 5. emphasizing waste reduction: providing accurate data on material and energy consumption to minimize usage in production. 6. limiting damages and waste: lowering defective products and non–value-adding costs. 7. revealing hidden losses: identifying material losses that traditional finance-focused accounting systems cannot detect. 8. identifying improvement opportunities: locating waste and inefficiencies in material flows and developing strategies to reduce them. 2.7. importance of mfca the importance of mfca lies in its role in enhancing and advancing traditional accounting methods on two main levels: (al-jabali, 2020, 518) 1. economic status: it emphasizes on material costs, which are highly significant in industrial companies. different from traditional accounting systems that are deficient in detailed information on material costs and their flow through the firms, mfca provides more precise data by linking physical units with financial units. 2. environmental status: it emphasizes on reducing costs by limiting material and energy consumption, thus causing positive environmental impacts. enhanced resource use reduces waste and emissions, making mfca a vital management tool for maximizing economic efficiency while improving environmental benefits. 2.8. types of cost accounting (al-jabali, 2020, 520) considering the economic and environmental obstacles confronting industrial companies, cost accounting becomes a vital implement to enhance performance. it integrates both economic and environmental dimensions to reduce waste and maximize resource efficiency. the method depends on a comprehensive analysis of material, energy, and waste flows, enabling waste identification and process improvement. the main types include: 1. costs of materials: covering all materials used in manufacturing (primary, secondary, and auxiliary). 2. costs of energy: covering all energy consumed in operations (e.g., fuel, electricity). 3. costs of the system: costs associated with handling material flows within the organization, excluding material, energy, and waste management. 4. costs of waste management: costs occurring from material losses, like product repair, recycling, waste treatment, and disposal. 2.9. relationship between cost accounting accuracy and supply chain efficiency accurate cost accounting considerably facilitates to improve supply chain management by providing reliable information to support managerial decisions on logistics strategies and resource allocation. advanced cost accounting methods, like activity-based costing (abc), enhance cost accuracy and, in turn, improve logistics management, reduce waste, optimize resource utilization, improve supply chain efficiency, cut operating costs, and raise service quality (ali et al., 2024,182). supply chain management as well utilizes a batch of effective tools created to reduce costs and improve efficiency, like activity-based costing, target costing, product life cycle costing, and transfer pricing. these tools support cost that related to decision making by enabling companies to examine spending at each supply chain level, both in terms of transactions and direct and indirect costs. asian business research journal, 2025, 10(9): 50-61 54 © 2025 by the author; licensee eastern centre of science and education, usa in particular, transfer pricing is widely used by multinational corporations to control internal supply chain relationships, often tied to performance measurement systems. virtual enterprises have emerged as a modern tool enabling non-hierarchical production networks, particularly among smes, to collaborate effectively, thereby improving performance and reducing costs. modern practices further demonstrate that integrating tools such as target costing, value chain analysis, and open-book accounting effectively reduces shared costs between suppliers and buyers while achieving target final prices. techniques like concurrent engineering integrate cost management tools with methodologies such as quality function deployment or flexible manufacturing to design products that meet customer needs at minimal cost, thereby reducing waste and increasing customer value. these practices emphasize that cost management tools are not isolated but integrated within a strategic framework focused on improving supply chain efficiency and controlling financial performance (abduldaim, 2018, 456). 2.9. limitations of traditional cost accounting in the context of globalization and supply chains traditional cost accounting faces several limitations when dealing with globalization and complex supply chains, primarily because it relies on conventional cost allocation methods that lack flexibility and accuracy. these limitations reduce its effectiveness in supporting strategic decision-making in today’s business environment. 2.9.1. limitations (al-saghir, 2020,164) 1. lack of collaboration among supply chain partners due to reliance on internal data without transparent information exchange. 2. limited transparency in sharing cost information between suppliers and buyers, which is essential for reducing inter-operational costs and achieving competitiveness. 3. powerlessness deal with advanced supply chain difficulty because of traditional analytical tools and absence of flexible, integrated information systems. 4. deficiency of integration within network members because lack of communication channels and shared information systems. 5. hold-up in engaging third parties (suppliers/partners) in the initial stages of design and production, causing fewer innovative solutions and weaker internal cost management. 2.9.2. alternatives (al-saghir, 2020, 165) 1. target costing: determining product costs according to market accepted prices to lead design and production toward efficiency and cost reduction. 2. open-book accounting: encouraging transparent exchange of cost structures between suppliers and buyers to build trust and cooperation while enhancing joint cost management. 3. parallel cost management: involving all stakeholders from early design and production stages to limit inter-operational costs and promote innovation. 4. blockchain technology: facilitating data tracking, enhancing transparency enhancing stakeholder trust in supply chains, then enabling more efficient application of cost techniques like target costing and open-book accounting. 5. integrated information systems: provide all parties with precise real time information throughout clear channels of communication to support supply chain decision-making. hence, this study adopts blockchain-supported open book accounting to develop the cost accounting system and achieve greater transparency and efficiency in supply chain management at iraqi airways 3. open book accounting 3.1. concept of open book accounting open book accounting is an accounting approach which enhance cost data or financial to all related groups in a direct and transparent manner, intending to reduce disputes, build trust, , and improve collaboration. this method allows customers, suppliers, to access relevant information, including profit margins, production costs, and actual expenditures, enabling informed decision-making based on real data (kajüter & kulmala, 2005, 293). 3.2. objectives of open book accounting basic aim of this method is to improve accountability and transparency, while also supporting collaborative decision-making among parties. key objectives include: (windolph & moeller, 2012, 193). 1. enabling parties to access accurate cost data. 2. building trust and reducing disputes. 3. improving joint planning and reducing waste. 4. facilitating negotiations based on actual data open book accounting and cost accounting when applied in supply chain environments, open book accounting becomes an effective cost accounting tool, as it allows detailed sharing of cost items between the company and its partners. this helps identify cost reduction opportunities and improve operational efficiency. it can also be integrated with activity-based costing (abc) or standard costing systems to provide a clearer picture of the actual cost of products and services (kulmala et al., 2002, 342) . 3.3. the role of blockchain in supporting open book accounting blockchain technology enhances open book accounting by providing a decentralized, secure, and tamper-proof ledger for accounting transactions. this allows real-time data updates accessible to all authorized parties, reducing asian business research journal, 2025, 10(9): 50-61 55 © 2025 by the author; licensee eastern centre of science and education, usa the need for manual audits and increasing trust. integration of blockchain with cost accounting through the open book model improves data accuracy and ensures its integrity (kshetri, 2018, 81). 3.4. challenges of open book accounting despite its benefits, open book accounting faces several challenges, including: (seal et al., 1999, 202). 1. resistance from some parties to share sensitive data. 2. the need for advanced technical infrastructure. 3. information security risks if access controls are not properly implemented. 4. legal complexities related to data protection and privacy 4. blockchainconcepts and operational structure blockchain has emerged as a digital innovation based on decentralization, cryptography, and collective participation to change the way data is securely and transparently recorded and exchanged. its applications extend beyond cryptocurrencies to accounting, supply chain, and asset management. this section covers the technical fundamentals for understanding its mechanism and structure. 4.1. blockchain technology blockchain is an electronic database that uses cryptographic mechanisms to create a ledger distributed across all devices in the network. each node (device) has an identical copy of the database. the technology records transactions and data in a way that ensures all parties agree on the accuracy of information while preventing tampering or alteration. the term "blockchain" consists of two parts: • block: a unit containing a set of data. • chain: links blocks together sequentially and securely (kamel, 2025, 191). in this study, blockchain refers to a digital technology that relies on a fixed decentralized ledger used to record transactions securely and transparently, enhancing trust among different parties in the supply chain. 4.1.1. blockchain mechanisms blockchain acts as a decentralized and secure repository for recording transactions in a tamper-resistant manner (kamel, 2025, 191). it relies on three main mechanisms through which all transactions are executed sequentially and systematically (badawi et al., 2022, 621-622): 1. distributed ledger: a financial record containing data on various assets, shared peer-to-peer across a network. changes are reflected across all copies within minutes, ensuring security and accuracy. 2. decentralized database: eliminates a single controlling entity, with a global network of computers maintaining the shared database to prevent tampering and enhance transparency. 3. mining: computers solve complex mathematical problems to record transactions and validate blocks, with rewards in the form of cryptocurrency. 4.1.2. core components of blockchain (gatteschi et al., 2018, 10-11; kamel, 2025, 191) key components supporting blockchain applications include: • immutability: data cannot be deleted or altered once recorded. • transparency & public access: information is available on the chain, threatening privacy risks for sensitive data. • smart contracts: self-executing codes with potential vulnerabilities. • dependency on external sources: some applications require external data inputs, creating weaknesses. • no support for lost credentials: data cannot be recovered if credentials are lost. • cryptocurrency volatility: affects blockchain payment applications. • limited development tools & standards: tools are nascent, with no clear standards. • technical complexity: requires skills for using wallets and understanding blocks. • adoption opportunities: user-friendly tools can reduce complexity. • legal & regulatory challenges: laws for smart contracts and widespread adoption are unclear. • long-term investment & integration challenges: requires medium to long-term investment and may not suit all current operations. • changes in business-customer relationships: some clients may prefer human interaction, affecting company strategy. blockchain also depends on necessary components ensuring reliability and security: • nodes: devices that store a full copy of the ledger and validate new blocks via consensus. • data: transactions or information to record. • hashing: distinctive digital signature generated cryptographically, sensitive to data changes. • previous block hash: connections blocks step by step to ensure integrity. 4.1.3. types of blockchain (badawi et al., 2022, 624; zubaydi et al., 2023, 6) • public blockchain: it open to anyone for writing, reading, and validating transactions. • private blockchain: controlled by a single entity controlling validation and access offers privacy and speed but less transparency. • consortium/federated blockchain: controlled by a group of entities sharing control. balances transparency, privacy, and efficiency; suitable for industries and central bank digital currencies. asian business research journal, 2025, 10(9): 50-61 56 © 2025 by the author; licensee eastern centre of science and education, usa 4.1.4. characteristics of blockchain (lin & liao 2017, 653; badawi et al., 2022, 623) key elements include: 1. anonymity: users identified by cryptographic keys rather than personal identity. 2. decentralization: no central node; data distributed across the network. 3. privacy: allows secure transactions without revealing identity. 4. transparency: transactions accessible to all nodes 5. open source: most systems are public and accessible. 6. independence: node consensus builds trust . 7. immutability: records are immutable and tamper-proof. 5. role of blockchain in supporting supply chains blockchain improves supply chain management through real-time tracking, transparency, cost reduction, and fraud prevention. integration with accounting and resource management systems facilitates coordination among all parties, enhancing performance and service quality. 5.1. impact on accounting efficiency and anti-corruption blockchain reshapes interactions by automating processes, removing intermediaries, increasing transparency, and enhancing security. it provides a distributed, immutable ledger ensuring data reliability and operational efficiency (kamel, 2025, 191-192; issa, 2024, 623). key advantages include: • ease of use • reliability and security • collective verification • immutability • eliminating intermediaries • enhancing collaboration • risk management and duplication reduction • cost efficiency 5.2. key components of supply chain management systems (hussein, 2019, 455-456) • logistics (transportation) • planning and demand forecasting • supplier relationship management • procurement • inventory management • manufacturing methods • order management • internet integration • supply chain information systems • customer relationship management • performance management indicators 5.3. blockchain’s role in real-time tracking and supply chain integration blockchain enables transparent, real-time data sharing among supply chain members, accelerating communication, reducing errors, and fostering collaboration. this ensures the right products/services at the right quantity, cost, and quality, enhancing competitiveness and overall performance (al-saghir, 2020, 141-142). 5.4. risks and challenges of adopting open book accounting and blockchain in supply chains the adoption of open book accounting supported by blockchain at iraqi airways faces several risks: • technical infrastructure complexity and integration issues with legacy systems • high development and training costs • security and privacy risks for sensitive financial/logistical data • regulatory and legal uncertainties • resistance to change within the organizational culture • ensuring reliability of data entered into open ledgers, as errors or tampering could compromise transparency and cost report accuracy (kshetri, 2018, 85) 6. practical framework of the applied study at iraqi airways 6.1. introduction to iraqi airways and its activities iraqi airways is considered the largest airline in iraq and is a member of the arab air transport union. iraqi airways was established in 1945 by the iraqi aviation association and initially operated british aircraft. in the 1970s, the united states allowed iraqi airways’ planes to use john f. kennedy international airport in new york. iraqi airways was founded by the iraqi aviation association (currently the al-farnas aviation club) when its administrative board decided on 18/5/1938 to invest the surplus from a nationwide donation campaign. this investment enabled the iraqi air force at the time to purchase 15 italian bombers and fighters (breda and savoia). the surplus, amounting to 23,000 iraqi dinars, allowed the association to purchase three british aircraft (de havilland dragon rapide), which arrived in baghdad on 10/1/1938. the airline then began flights to both iran and syria, and the iraqi airways department remained under the association until 1/1/1946, when it was incorporated into the railway authority (al-assaf & al-quraan, 2018, 125). asian business research journal, 2025, 10(9): 50-61 57 © 2025 by the author; licensee eastern centre of science and education, usa iraqi airways faces multiple challenges related to the complexity of supply chain management, particularly in an operational environment that requires high accuracy in cost monitoring and transparency in financial and administrative processes. the company’s supply chains involve purchasing spare parts, fuel management, ground services, and contracting with local and international suppliers. this highlights the importance of adopting advanced cost accounting systems and modern technologies such as blockchain to enhance performance efficiency and ensure precise and transparent tracking of operational costs. in this context, this study aims to explore the potential integration of cost accounting and blockchain technology at iraqi airways, with the goal of improving transparency and efficiency in supply chains, reducing waste and unjustified costs, and supporting the sustainability of the company’s operations in a constantly evolving competitive environment table 1. iraqi airways fleet (passenger aircraft). aircraft in service on order total options business class economy class total passengers notes airbus a320-214 3 — 3 — 0 180 180 airbus a321-231 2 — 2 — 0 220 220 airbus a330-200 1 — 1 — 24 264 288 boeing 737-700 2 — 2 — 12 125 137 boeing 737-800 11 20 32 10 12 150 162 boeing 737-800 1 75 0 75 — — — used by the iraqi government boeing 747-400 2 — 2 — 74 338 412 boeing 767-300 2 — 2 — 18 221 239 boeing 777-200 1 10+ 11+ — 14 350 364 boeing 787-900 — 10+ 10+ 5 not announced not announced — delivered in 2017 bombardier crj-900 6 — 6 — 0 90 90 bombardier series 300 — 5 5 11 12 140 152 delivered in 2016 source: iraqi airways fleet | air fleets aviation, 2017. table 2. iraqi airways cargo fleet. aircraft type in service on order total options boeing 747-200f 1 — 1 — source: iraqi airways fleet | air fleets aviation, 2017. table 3. airlines in iraq. airline iata icao call sign founded commenced operations main airports type notes iraqi airways ia iaw iraqi 1945 1945 baghdad international airport government ur air ud ubd urair 2019 2019 baghdad international airport private burhan air 1972 2014 baghdad international airport private helicopter operator fly erbil hw bay hawler 2015 2018 erbil international airport private fly baghdad if fba fly baghdad 2014 2015 baghdad international airport private source: khumas (2020), insights and reflections on aviation activities in iraq with a special look at the establishment of iraqi airways. 5.2. supply chains and their importance in iraqi airways the supply chains in iraqi airways represent a complex set of operations and services, including the provision of spare parts, maintenance, fuel management, logistics, and ground services, in addition to coordination with suppliers, other airlines, airports, and regulatory authorities. 1. assessing the effect of using blockchain that supported open book accounting on cost report accuracy in supply chains: the traditional supply chain system in the firm facing significant difficulties in accurately recording costs related to logistics and supplies, such as data is distributed across multiple entities, leading to discrepancies in reports and difficulties in verification. using blockchain that supported by open book accounting intends to provide a unified, secure digital record that logs all transactions related to procurement, maintenance, fuel, and logistics in real time. this enhances the reliability and accuracy of cost reports while minimizing potential fraud and human errors. 2. examining the effect of implementation on data update speed and process transparency within the supply chain: supply chains in iraqi airways require continual updates of information to eliminate maintenance delays or shortages of spare parts. implementing blockchain technology allows data to be updated instantly and transparently, making accurate and up-to-date information available to all relevant parties (e.g., suppliers, maintenance management, procurement management). this improves coordination and enables quicker and better decision-making within the supply chain. asian business research journal, 2025, 10(9): 50-61 58 © 2025 by the author; licensee eastern centre of science and education, usa 3. determining the level of cost-related dispute reduction post-implementation: disputes regularly happen within parties in the supply chain because of discrepancies in cost information or service quality. implementing an open book accounting system enables each party to track all financial and logistical transactions clearly, considerably reducing conflicts related to costs, delays, or service quality. parties can refer to unified and reliable digital records for verification. 4. analyzing the economic feasibility of implementation through return on investment in the supply chain: blockchain technology reduces costs associated with traditional operations, such as manual auditing, transaction verification, and dispute resolution. by minimizing the time and effort required to update data and resolve disputes, the company can achieve significant financial savings. roi analysis will focus on costs saved compared to implementation and training expenses, in addition to indirect benefits such as improved service quality and increased partner trust within the supply chain. 5. assessing the impact of implementing blockchain-supported open ledger accounting on cost report accuracy: error rates in cost reports were analyzed before and after system implementation, reflecting the degree of accuracy of reports generated by adopting open ledger accounting with blockchain compared to the traditional system. 6. assessing the impact of implementing blockchain-supported open ledger accounting on cost report accuracy error rates in cost reports were analyzed before and after the system implementation. this reflects the degree of accuracy of reports generated by adopting open ledger accounting with blockchain compared to the traditional system. table 4. the impact of implementing blockchain-supported open ledger accounting on cost report accuracy measure before adapting (%) after adapting (%) rate of improvement frequency of error rate in cost reports 12 2 83.3% decrease the table shows a significant decrease in the error rate in cost reports, from 12% before the implementation of the blockchain-supported open ledger system to 2% after implementation, representing an improvement rate of 83.3%. this substantial improvement is attributed to the adoption of blockchain technology, which ensures that every transaction is recorded in an encrypted and transparent manner, with decentralized verification by network nodes, thereby reducing the likelihood of manipulation or human errors. additionally, the system relies on open ledgers that allow all relevant parties to access data instantly, enhancing verification accuracy and minimizing errors in cost reporting 5.3. measuring the effect of implementation on data update speed and process transparency within the supply chain the time required to update cost data and the level of process transparency were monitored. the new system provides instant automatic updates and enhances the clarity of information for all parties involved table 5. the effect of implementation on data update speed and process transparency within the supply chain measure before adapting after adapting rate of improvement data update duration 7 days 5 minutes over 99% improvement transparency level (out of 100) 40 90 125% increase the table demonstrates a significant improvement in system performance in terms of data update speed and process transparency within the supply chain. the time required to update cost data was reduced from 7 days to just 5 minutes, representing an improvement of over 99%. this improvement is attributed to the blockchainsupported open ledger feature, which enables instant and secure data updates. transactions are recorded directly and shared among all relevant parties, accelerating information updates and saving substantial time and effort. furthermore, the transparency level increased from 40 to 90 out of 100, a 125% increase. this growth reflects the system’s strong capability to provide clear and real-time information, enhancing trust and collaboration among parties within the supply chain. 5.4. determining the extent of cost-related dispute reduction post-implementation the proportion of disputes related to cost reports was measured before and after the implementation. the system helped clarify details and significantly reduce conflicts table 6. determining the extent of cost-related dispute reduction post-implementation indicator before adapting (%) after adapting (%) decreasing rate rate of cost-related dispute 15 2 86.7% decrease the table shows a significant decrease in the rate of disputes related to cost reports, declining from 15% before implementation to 2% after the adoption of the blockchain-supported open ledger system, achieving a reduction of 86.7%. this substantial decrease is attributed to the increased transparency and accuracy in data recording provided by the system, which reduces ambiguity and misunderstandings among different parties. furthermore, decentralized verification and smart contracts ensure data integrity and facilitate transaction traceability, thereby minimizing conflicts and fostering a more collaborative and trustworthy working environment. 5.5. analyzing the economic feasibility of implementation through return on investment (roi) the costs and financial benefits resulting from the implementation of blockchain-supported open ledger accounting were analyzed over the first and second years, taking into account both initial and operational expenses asian business research journal, 2025, 10(9): 50-61 59 © 2025 by the author; licensee eastern centre of science and education, usa table 7. return on investment (roi). item year 1 (usd) year 2 (usd) notes single time system adapting cost 200,000 — starting investment cost yearly system operation and maintenance cost 30,000 30,000 covers training and maintenance cost savings from monitoring and auditing 105,000 105,000 considerable reduction in costs net benefits (savings − cost) (95,000) loss 75,000 profit profitable outcome after the first year return on investment (roi) -47.50% 125% return on investment improves after payback the table shows that the implementation cost of the blockchain-supported open ledger system was high in the first year (usd 200,000 initial investment plus usd 30,000 for operation and support). despite the net loss in the first year (usd −95,000) and a negative roi of −47.5%, the significant annual savings in monitoring and auditing costs (usd 105,000) began to take effect. in the second year, the results shifted to a net profit of usd 75,000, with the roi increasing to 125%. this demonstrates that investing in this system yields growing benefits over the medium term, as the initial costs are offset by improved efficiency, reduced errors, and accelerated processes, ultimately leading to increased profits and reduced waste. table 8. assessing the impact of integrating open book accounting and blockchain technology on efficiency and transparency in the supply chain. measure conventional situation situation after integration improvement rate (%) note efficiency of supply chain management (out of 100) 55 80 45%+ considerable increase in control and supervision capabilities time of invoice processing (days) 10 2 80% reduction significant speeding up in financial processes percentage of recovered missed costs (%) 70 95 25%+ decrease in financial losses and increase cost recovery satisfaction of suppliers and partners (out of 100) 60 85 41.6%+ enhanced collaboration and reliability among parties transparency in processes (%) 50 90 80%+ more transparent work environment and improved transparency the table demonstrates a clear improvement in several key indicators after implementing the blockchainsupported open ledger system compared to the traditional situation. efficiency of supply chain management increased from 55 to 80, representing an improvement of over 45%, reflecting enhanced control and precise monitoring through transparent open ledgers. time to process invoices decreased from 10 days to 2 days, an 80% reduction, significantly speeding up financial processes and minimizing payment delays. the percentage of recovered lost costs enhanced from 70% to 95%, showing a reduction in financial losses and increased effectiveness in cost control. supplier and partner satisfaction rose from 60 to 85, an improvement of over 41.6%, reflecting enhanced collaboration and trust among parties through greater transparency and reliable information. at last, process transparency increased from 50% to 90%, an enhancement exceeding 80%, creating a understandable and more transparent work environment that strengthens the integrity and reliability of supply chain operations. 5.6. statistical analysis to assess the impact of integrating open ledger accounting and blockchain technology table 9. estimation of the probability value (p-value). indicator mean before implementation mean after implementation difference (after − before) pvalue interpretation error rate in cost reports (%) 12 2 −10 < 0.01 significant and statistically meaningful decrease, clearly improving accuracy. data update time (minutes) 10,080 (7 days) 5 −10,075 < 0.01 substantial improvement in update speed, highly significant statistical difference. transparency level (out of 100) 40 90 50 < 0.01 notable and statistically significant increase in transparency. cost-related dispute rate (%) 15 3 −12 < 0.01 significant reduction in disputes, indicating better cost clarity. the results of statistical analysis show a strong and positive impact of implementing blockchain-supported open book accounting on the cost system performance at iraqi airways. a notable decrease in the error rate in cost reports was observed, falling from 12% to 2%, supporting the study hypothesis that integrating open book accounting with blockchain technology enhances the accuracy of accounting data. additionally, data update time was dramatically reduced from 7 days to 5 minutes, enhancing the company's ability to make faster and more effective managerial decisions. this supports the second study objective of improving data update speed and asian business research journal, 2025, 10(9): 50-61 60 © 2025 by the author; licensee eastern centre of science and education, usa increasing operational transparency. moreover, the transparency level increased substantially from 40 to 90 points, confirming that the implementation improves the clarity of operations and cost reports. this, in turn, contributed to a reduction in cost-related disputes, which declined from 15% to 3%, supporting the study hypothesis that this integration reduces financial conflicts resulting from ambiguity or errors in cost reporting. altogether, these results confirm the study’s main hypothesis showing that implementing blockchain-supported open book accounting can notably improve the accuracy, transparency, and efficiency of the cost accounting system at iraqi airways table 10. hypothesis testing (two sample mean comparison test). benchmark mean before implementation mean after implementation significant difference (statistically) (pvalue < 0.05) note error rate (%) 12 2 yes large and statistically significant difference; technology improved accounting accuracy. data update time 7 days 5 minutes yes substantial difference in update speed, enhancing rapid decision-making. transparency level (out of 100) 40 85 yes significant and statistically meaningful increase, reflecting higher transparency. dispute rate (%) 15 3 yes major decrease indicates better clarity and reduced financial disputes. the above table show that all main indicators demonstrate statistically significant enhancements after implementing blockchain supported open book accounting. error rates declined significantly, data update times were significantly sped up, transparency levels rose significantly, and cost related disputes were greatly reduced. these means strong evidence that the integration of open book accounting with blockchain technology enhances the accuracy, efficiency, and transparency of the cost management system at iraqi airways. table 9. rate of relative improvement. indicator rate of relative improvement (%) note rate of error 83.3% decrease considerable decline in errors, improving data credibility. time of data update over 99% improvement tremendous improvement from days to minutes. degree of transparency 112.5% increase transparency almost doubled, enhancing trust among parties. rate of disputes 80% decrease reduction in disputes reflects greater stability in accounting operations. the table shows the significant relative improvements for all critical indicators following the implementation of blockchain supported open book accounting. error rates declined substantially data update times were drastically reduced, transparency levels nearly doubled, and cost related disputes were significantly reduced. these results collectively show that the integration of open book accounting with blockchain technology has a profound positive impact on the accuracy, efficiency, and reliability of the accounting and supply chain processes. table 10. correlation analysis between transparency and supply chain efficiency. relationship coefficient of correlation degree of correlation note transparency ↔ efficiency 0.85 strong strong positive correlation; increased transparency is accompanied by a significant improvement in efficiency. the above analysis shows a strong positive correlation between transparency and supply chain efficiency. this means that as transparency within the system increases, the efficiency of supply chain operations also improves significantly. implementing blockchain supported open book accounting enhances transparency that in turn facilitates to more effective and reliable supply chain management . 6. conclusions 1. the study presented that implementing a blockchain supported open book accounting system causes a significant enhancement in the accuracy of cost reports with the error rate decreasing rapidly from 12% to 2%. 2. the combination of open book accounting and blockchain technology cause reducing data update time from a number of days to just a few minutes, improving the speed of managerial decision making. 3. the application raised transparency in the supply chain from 40 to 90 points indicating higher clarity in operations and cost reporting. 4. the system has been reduced cost associated disputes from 15% to 3% contributing to more reliable relationships among stakeholders and optimized partnership. 5. the study presented obvious economic viability for investing in this system, achieving a profitable outcome on investment after the first year, with estimated increased profitability over the medium term. asian business research journal, 2025, 10(9): 50-61 61 © 2025 by the author; licensee eastern centre of science and education, usa 7. recommendations 1. urge organizations specifically in the aviation field, to apply open book accounting and blockchain technology to enhance the accuracy and efficiency of cost operations. 2. provide tailored training sessions for employees to enhance understanding and ability to apply the new approach effectively. 3. strengthen technological infrastructure to facilitate the integration of blockchain with existing accounting systems and ensure continuous operations. 4. apply change management plans to reduce employee resistance and ensure a seamless transition to the new system. 5. execute periodic evaluations of the open book accounting system to ensure ongoing performance and the achievement of desired objectives. references abdeldayem, s. a. 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licensee eastern centre of science and education, usa exploring factors affecting wellness tourists' behavioral intention in guangxi yun zheng1 izdihar b. baharin @ md. daud2 dongju wang3 jun lei4  1school of humanities and management, youjiang medical university for nationalities, baise, china, segi university of malaysia. 2unikl business school, kuala lumpur university, malaysia. 3college of basic medical sciences, hainan medical university, haikou, china. 4sports management department, guangxi college of sports education, nanning, china. email: zhengyun0208@qq.com email: izdihar70@gmail.com email: hy0115004@muhn.edu.cn email: jun.lei@stu.nida.ac.th ( corresponding author) abstract this study investigates factors influencing wellness tourists’ post-travel behavioral intentions in guangxi, china. using a quantitative, cross-sectional design, data were collected from 124 valid questionnaires distributed to tourists who had visited wellness resorts or centers within the past three years. data were analyzed using spss and smart pls 4.0. results show that experience quality, perceived wellness value, and tourist satisfaction have significant positive effects on behavioral intention, with satisfaction being the strongest predictor. perceived wellness value more strongly influenced satisfaction than experience quality. satisfaction also mediated the effects of experience quality and perceived wellness value on behavioral intention. the findings highlight satisfaction and perceived wellness value as key drivers of tourists’ loyalty and support strategies for sustainable wellness tourism in guangxi. keywords: wellness tourism, behavioral intention, tourist satisfaction, experience quality, perceived wellness value. 1. introduction guangxi has emerged as a prominent wellness tourism destination, leveraging its unique ecological and cultural endowments to drive industry growth. endowed with lush forests, mineral hot springs, and a reputation for longevity (exemplified by bama), the region has built a solid foundation through strategic planning and resource integration. policy support includes top-tier designs like the guangxi elderly health tourism development plan (2022-2025) and the launch of 20 premium wellness routes, such as guilin’s landscape health retreats and hezhou’s forest spa experiences (guangxidaily, 2023). in 2024, forest wellness and ecological tourism alone generated over 230 billion yuan in comprehensive revenue, with 43 new brand bases accredited, reflecting robust market expansion. regional collaboration has also strengthened, with 148.6 billion yuan in signed investments from key markets like the guangdong-hong kong-macao greater bay area. tourist satisfaction and revisit intention are pivotal to sustainable development, as research confirms a direct correlation between experience quality and long-term loyalty. guangxi’s wellness tourism, despite its rich resources like longevity villages and ethnic medical heritage, faces notable deficiencies in perceived wellness value and tourist experience (china's reform and development, 2023), hindering its quality upgrade. tourists are unable to perceive concrete health gains, weakening their willingness to pay. 2. literature review 2.1. underpinning theory the present study focuses on exploring the factors influencing the behavioral intention of wellness tourists in guangxi, with a core emphasis on the relationships between key variables. theory of planned behavior and expectation-confirmation theory serve as foundational support to elaborate on these relationships. 2.1.1. theory of planned behavior (tpb) tpb is an expansion of reasoned action theory (tra) (ajzen, 1991; ajzen & fishbein, 1975). according to the tpb, people will act in a certain way if they have the means, opportunities, and skills to carry out the behavior and if they feel the activity will lead to particular outcomes that they value (ã & hsu, 2006; icek ajzen, 1985). when applied to wellness tourism, tpb provides a robust framework for understanding and predicting tourists’ behavioral intentions and decision-making processes (joo et al., 2020; siddiqui & hamid, 2023; zhao & an, 2021). mailto:zhengyun0208@qq.com mailto:izdihar70@gmail.com mailto:hy0115004@muhn.edu.cn mailto:jun.lei@stu.nida.ac.th https://doi.org/10.55220/2576-6759.593 asian business research journal, 2025, 10(10): 20-27 21 © 2025 by the authors; licensee eastern centre of science and education, usa 2.1.2. the expectation–confirmation theory (ect) the expectation–confirmation theory (ect) (oliver, 1980) in the study of consumer behavior states that customers go through an assessment process before deciding whether or not to repurchase. prior to making a purchase, customers establish preliminary expectations on a certain service or good with their past interactions and current knowledge (oliver, 1980). after utilizing the product or service, customers evaluate its performance and contrast it with what they had anticipated (oliver, 1980). the degree of satisfaction and chance of repeat business for the customers ultimately depend on how well the perceived performance matches their initial expectations (chiu et al., 2020; oliver, 1980). according to the ect, the continuation intention is preceded by three constructs: contentment, perceived utility, and expectation confirmation. when the perceived performance meets or beyond initial expectations, a sense of satisfaction arises, which in turn generates an inclination to continue using the service. when the actual performance falls short of the expectations, users become dissatisfied and stop using the product (c.c & prathap, 2020). this theory is well-known in the field of customer satisfaction and is seen crucial in shaping consumers' behavioral intention (basil chibuike et al., 2021; jeong et al., 2019). tourists' satisfaction with their wellness value and experience in guangxi may act as a mediator between their initial expectations and their subsequent behavioral intentions. higher satisfaction levels enhance the likelihood of positive behavioral intention. 2.2. dependent variable: factors of tourist’s behavioral intention behavioral intention is a foundational concept in understanding consumer behavior, characterized as a key indicator of loyalty and future action tendencies. oliver and swan (1989) identify it as a critical loyalty trait reflecting customers’ intended behaviors (oliver & swan, 1989), while ajzen and fishbein (1975) define it broadly as the potential to engage in a specific behavior (ajzen & fishbein, 1975). it encapsulates individuals’ tendencies, experiences, and feelings toward products or services, representing a planned commitment to carry out actions (glendon, 1998). tourist satisfaction, perceived wellness value, and multi-dimensional experiences during travel are the main factors influencing behavioral intention. it has been established that visitors’ satisfaction is a significant precondition that directly influences visitors' propensity to return and refer (zeng & li, 2021). since wellness tourists have relatively clear health-related goals, whether tourists feel they have become healthier and whether they perceive that the time and money they have invested have yielded health-related returns determine their subsequent consumption behaviors (chelliah et al., 2021). experiences had a major influence on their level of pleasure and inclination to return. determining the contribution of visitors' experiences to the development of happy and returning patrons (lee et al., 2020). these indicators collectively help people gain a comprehensive understanding of how tourists transform their positive experiences into future actions and influence, thereby providing support for the sustainable development and promotion of wellness tourism. however, in existing studies on the factors affecting tourism behavioral intention, there are still some research gaps regarding how tourist satisfaction, perceived wellness value, and travel experiences influence tourists' future behaviors. 2.3. tourist satisfaction tourist satisfaction is a comprehensive state of emotional activation and cognitive evaluation formed based on the “expectation-perception” comparison. it is tourists’ emotional responses and overall evaluation of the entire tourism process (products, services, experiences), triggered by positive disconfirmation, directly driving positive behaviors such as repurchasing and recommending, and holding core value in measuring industry success in scenarios such as wellness tourism. in wellness tourism, tourist satisfaction is even a key indicator for measuring the success and sustainability of destinations, directly related to sustained profit growth (liu et al., 2023), highlighting its practical value in industry operations. previous studies have conducted multi-dimensional explorations on the influencing factors, mechanism of action, and characteristics of wellness tourism scenarios related to tourist satisfaction, confirming that satisfaction serves as a core indicator of success in wellness tourism, directly linked to tourists' willingness to revisit and recommend destinations (libre et al., 2022; seow et al., 2024; torabi et al., 2022) . 2.4. experience quality pine and gilmore (1998) introduced the conceptual model of experience economy. it outlines various experience categories, including aesthetic, entertaining, educational, and escape experiences (lee et al., 2020; mehmetoglu & engen, 2011; pine & gilmore, 1998, 2013). it help to measures how well a place has been experienced overall over a predetermined amount of time (lemke et al., 2011) and the way visitors engage with a destination's landscape (moon & han, 2018). experiences accompany the psychological process of a person’s thoughts and feelings under the influence of an environment. in this light, the tourist experience is formed via the process of internalizing interactions at a destination, creating responses. thus, moon & han (2019) considers the tourists’ tour experiences as their overall encounters at an destination, and the outcomes as tourists’ subjective responses to the tour experiences at the destination (moon & han, 2019). 2.5. perceived wellness value perceived value arises from a relative comparison between the sacrifices customers make and the benefits gained from consumed products or services. as a multifaceted concept, it includes functional value, social value, epistemic value, and a sense of well-being. the conceptual foundation of perceived value lies in equity theory, which posits this as the proportion between the provider’s outcomes and the consumer’s inputs (suhartanto et al., 2020). in the tourism industry, perceived value refers to the visitor's overall assessment of the place based on the advantages they receive through travelling (damanik, 2022). it is subjective and influenced by individual preferences, expectations, and experiences. when it comes to wellness tourism, perceived wellness value is the overall assessment by tourists of the benefits and worth of wellness-related services and experiences they receive. asian business research journal, 2025, 10(10): 20-27 22 © 2025 by the authors; licensee eastern centre of science and education, usa perceived benefits are those that result from adopting preventative measures to lessen the severity or susceptibility of a certain disease (ban & kim, 2020; rosenstock, 1974; rosenstock et al., 1988). wellness tourists weigh both the costs incurred and the expected outcomes of their experiences. thus, perceived wellness value reflects their assessment of how much their tourism activities will positively affect mental and physical health. when tourists perceive greater value in wellness tourism activities that enhance or maintain well-being, this leads to higher satisfaction levels (seow et al., 2024). 2.6. research framework and hypothesis development based on the expectation-confirmation theory, this study explores the factors influencing the satisfaction and subsequent behavioral intentions of wellness tourists in guangxi, and constructs a research framework involving tourist experience quality, perceived wellness value, tourist satisfaction, and post-travel behavioral intentions of tourists. within this framework, the study hypothesizes that tourist experience quality, perceived wellness value, and tourist satisfaction are identified as three direct affective factors affecting tourists' post-consumption behavioral intentions; meanwhile, tourist experience quality and perceived wellness value are two direct factors influencing tourist satisfaction and tourists' post-travel behavioral intentions. additionally, tourist satisfaction also plays a mediating role between tourist experience quality, perceived wellness value, and tourists' post-consumption behavioral intentions. based on relevant theories and existing research findings, this study proposes the following research framework and research hypotheses, as specifically illustrated in figure 1. figure 1. research framework and hypotheses. the research model shows that this study has seven research hypotheses in total, which are as follows: h1: there is a significant relationship between experience quality and wellness tourists’ behavioral intention. h2: there is a significant relationship between perceived wellness value and wellness tourists’ behavioral intention. h3: there is a significant relationship between tourists’ satisfaction and wellness tourists’ behavioral intention. h4: there is a significant relationship between experience quality and wellness tourists’ satisfaction. h5: there is a significant relationship between perceived wellness value and wellness tourists’ satisfaction. h6: tourists’ satisfaction mediates the relationship between experience quality and wellness tourists’ behavioral intention. h7: tourists’ satisfaction mediates the relationship between perceived wellness value and wellness tourists’ behavioral intention. 3. methodology 3.1. research design this study is quantitative research that adopts the cross-sectional method, aiming to explore the relationship between dependent variables and independent variables, and analyze the mediating effect therein. data from respondents were collected through a self-administered structured questionnaire, which was specifically divided into two categories: one based on the demographic characteristics of the respondents; the other derived from the respondents' answers to the structured questions in the questionnaire. these data were used to test the research hypotheses, confirm the relationships between variables, and identify the factors influencing tourists' post-travel behavioral intentions. this study employed a seven-point likert scale for measurement, with the scoring range being: 1 = strongly disagree, 2 = somewhat disagree, 3 = disagree, 4 = neutral, 5 = agree, 6 = somewhat agree, and 7 = strongly agree. the data collection period lasted approximately one month. table 1 presents the measurement methods of the variables used in this study. 3.2. research sampling guangxi is home to numerous wellness tourism destinations, including wellness resorts and centers, distributed across the province. however, due to constraints in research funding and time, a sampling approach was adopted to select geographically and demographically representative samples for the study. specifically, purposive sampling was employed to select the target group samples for this research. since the majority of tourists in guangxi are domestic tourists from within china, the questionnaire for this study was developed in chinese. the questionnaire was translated by a professional translation company to ensure the accuracy and rigor of the chinese version. tourists visiting guangxi have diverse travel purposes; for instance, some come merely for urban sightseeing. to ensure that the questionnaire respondents are tourists with health as their primary travel purpose, the questionnaire was only distributed to those who have visited wellness resorts or wellness centers in guangxi within the past three years. meanwhile, before respondents filled out the questionnaire, researchers explained the purpose of the questionnaire and interpreted the definitions of key terms asian business research journal, 2025, 10(10): 20-27 23 © 2025 by the authors; licensee eastern centre of science and education, usa listed in it to ensure that respondents had a full understanding. this measure was intended to guarantee the validity of the collected data. g*power is configured for a multiple regression with 7 predictors in order to calculate the appropriate sample size. the test employed a medium effect size of (f2 = 0.15), a power of 0.80, and an alpha of 0.05. since most social science studies estimate 80 percent to be the minimum acceptable power (gefen, rigdon, & straub, 2011). g*power calculations led to a required sample size of 103. 3.3. data analysis method the information gathered from completed surveys underwent several analytical procedures. first, data preparation was conducted. second, descriptive analysis was performed. third, both the measurement model and the structural model were analyzed. data analysis for hypothesis testing is conducted in alignment with the research questions formulated. all collected information and data must be sufficiently robust to enable proper analysis, thereby ensuring the generation of valid results and conclusions. for the present study, the statistical package for the social sciences (spss) software was utilized for data preparation and descriptive analysis. additionally, structural equation modeling (sem) and partial least squares (pls) were employed for data analysis and processing. the present study conducts its data analysis for measurement model and the structural model by using smart-pls version 4.0, following the guidelines and procedures outlined by hair et al. (2023). the analysis begins with an assessment of the measurement model, which examines the reliability and validity of the measurement items. subsequent to this, the structural model is evaluated to determine the nature of the relationships between the latent variables as hypothesized in the conceptual model. 4. results this study collected a total of 138 questionnaires. fourteen questionnaires where respondents selected the same score for all questions were removed. these questionnaires reflected situations where respondents did not fully understand the content or answered randomly, which would affect the reliability and validity of data analysis. after excluding such questionnaires, the study finally retained 124 valid questionnaires, with a questionnaire validity rate of 89.86%. 4.1. demographic characteristics table 1. demographic characteristics of respondents. variable demographic frequency percentage (%) gender female 50 40.32 male 74 59.68 age 18 under 2 1.60 18-30 10 8.10 31-40 13 10.50 41-50 84 67.74 51-60 11 8.87 60above 4 3.20 degree junior high school 1 0.80 high school 13 10.50 vocational college 10 8.10 undergraduate 90 72.60 masters and above 7 5.60 others 3 2.40 occupation public servant 3 2.40 company employee 87 70.20 self-employed 2 1.60 freelancers 2 1.60 military personnel 4 3.20 homemaker 4 3.20 student 3 2.40 teacher 3 2.40 retired 12 9.70 others 4 3.20 income 30,001 or less 8 6.50 30,001-50,000 15 12.10 50,001 -70,000 88 71.00 70,001-90,000 3 2.40 90,001-110,000 1 0.80 110,001 and above 9 7.30 total 124 100 4.2. measurement model table 2 and table 3 present the results of indicator reliability, internal consistency reliability, convergent validity, and discriminant validity for the first-order and second-order constructs. asian business research journal, 2025, 10(10): 20-27 24 © 2025 by the authors; licensee eastern centre of science and education, usa for convergent validity which evaluates the degree of agreement among indicators measuring the same variable, the ave values for all variables ranged from 0.524 to 0.728. all values exceeded the minimum threshold of 0.5, demonstrating that the model meets the criteria for convergent validity. table 2. measurement model for the first order constructs. first order construct items outer loading cronbach's alpha composite reliability ave eq aes1 0.894 0.929 0.933 0.524 aes2 0.912 aes3 0.893 amu1 0.889 amu2 0.877 amu3 0.880 edu1 0.829 edu2 0.886 edu3 0.862 edu4 0.827 esc1 0.807 esc2 0.770 esc3 0.836 esc4 0.732 pwv pwv1 0.695 0.905 0.910 0.639 pwv2 0.758 pwv3 0.868 pwv4 0.827 pwv5 0.808 pwv6 0.827 pwv7 0.801 ts ts1 0.789 0.869 0.874 0.720 ts2 0.867 ts3 0.818 ts4 0.914 bi bi1 0.781 0.906 0.906 0.681 bi2 0.829 bi3 0.830 bi4 0.844 bi5 0.842 bi6 0.823 note: eq: experience quality pwv: perceived wellness value ts: tourists’ satisfaction bi: behavioral intention indicator reliability was assessed by examining the factor loadings of each item on its corresponding variable. for all first-order and second-order constructs in this study, the factor loadings of all items exceeded the conventional threshold of 0.7, ranging from 0.732 to 0.914, with the exception of item pwv1, which had an outer loading of 0.695. this deviation was deemed acceptable, however, as the average variance extracted (ave) value for the construct pwv1 exceeded the critical threshold of 0.5. table 3. measurement model for the second order constructs. second order construct items outer loading cronbach's alpha composite reliability ave eq aes 0.805 0.929 0.915 0.728 amu 0.894 edu 0.855 esc 0.857 note: eq: experience quality aes: aesthetic amu: amusement edu: education esc: escape table 4. discriminant validity assessment. construct aes amu bi edu esc pwv ts bi eq (0.777) 0.777 0.739 0.764 aes (0.767) amu 0.767 (0.828) bi 0.655 0.763 (0.893) edu 0.599 0.795 0.633 (0.743) esc 0.679 0.828 0.671 0.743 (0.714) pwv 0.680 0.714 0.793 0.652 0.714 (0.795) ts 0.559 0.728 0.893 0.683 0.645 0.795 note: eq: experience quality pwv: perceived wellness value ts: tourists’ satisfaction bi: behavioral intention aes: aesthetic amu: amusement edu: education esc: escape asian business research journal, 2025, 10(10): 20-27 25 © 2025 by the authors; licensee eastern centre of science and education, usa regarding internal consistency reliability, the composite reliability (cr) and cronbach’s alpha values for each variable were all high, ranging from 0.869 to 0.933. both metrics surpassed the minimum acceptable threshold of 0.70, confirming that the model exhibits good internal consistency and reliability. the final step in assessing the measurement model was to test discriminant validity, which was evaluated using the heterotrait-monotrait (htmt) ratio. discriminant validity measures the distinctiveness between different variables, and an htmt ratio below 0.90 is generally considered acceptable (f.hair et al., 2023). in this study, the htmt ratios ranged from 0.559 to 0.893, indicating that the items measuring different constructs are sufficiently distinct and that the model has established discriminant validity. 4.3. structural model variance internal factor (vif) measurement showed that there is no potential collinearity problem in this study because all the variables have a vif value lower than 3 (hair et al., 2023). effect size analysis (f2) is a method to measure whether there is a substantive impact of a particular exogenous variable on an endogenous variable. cohen (1988) has set up the range value of the impact of f2 as 0.02 as a small effect, 0.15 as a medium and 0.35 as a large effect at the structural level. as shown in table 5, experience quality and perceived wellness value have a medium effect size on behavioral intention, while tourist’s satisfaction has a large effect size on behavioral intention. both experience quality and perceived wellness value have large effect size on tourist’s satisfaction. table 5. structural model assessment. endogenous variable exogenous variable bi ts f2 vif f2 vif r2 eq 0.078 2.295 0.124 2.041 pwv 0.057 2.540 0.245 2.041 ts 0.365 2.262 0.558 bi 0.705 note: eq: experience quality pwv: perceived wellness value ts: tourists’ satisfaction bi: behavioral intention the coefficient of determination (r2) was used to measure the goodness of fit of the model. the r2 for the tourist’s satisfaction was 0.558, meaning that 55.8 percent of the variance in the tourist’s satisfaction can be explained by experience quality and perceived wellness value. the r2 for the behavioral intention was 0.705 after the mediating effect of tourist’s satisfaction, meaning that 70.5 percent of the variance in the behavioral intention can be explained. as there are a various set of rules on the acceptable r2, this study follows the guideline by chin (1998). r2 values of 0.67, 0.33 and 0.19 are considered as substantial, moderate and weak (chin, 1998).. in this study. the r2 for tourists’ satisfaction (0.558) and behavioral intention (0.705) means the model have a moderate explanatory power for tourists’ satisfaction and a substantial explanatory power for behavioral intention, which meet the requirement in the social science research. table 6. summary of hypothesis results. hypothesis path coefficient stdev t statistics p values decision h1: eq -> bi 0.231 0.085 2.729 0.006 supported h2: pwv -> bi 0.206 0.096 2.136 0.033 supported h3: ts -> bi 0.494 0.095 5.220 <0.000 supported h4: eq -> ts 0.335 0.089 3.763 <0.000 supported h5: pwv -> ts 0.470 0.096 4.893 <0.000 supported h6: eq -> ts -> bi 0.165 0.060 2.776 0.006 supported h7: pwv -> ts -> bi 0.232 0.060 3.862 <0.000 supported note: eq: experience quality pwv: perceived wellness value ts: tourists’ satisfaction bi: behavioral intention path analysis was used to examine the developed hypotheses and bootstrapping analysis was used to validate the theoretical model that was developed using smart pls. based on table 6, experience quality (h1: t-values = 2.729, p < 0.01), perceived wellness value (h2: t-values = 2.136, p < 0.05) and tourists’ satisfaction (h3: t-values = 5.220, p < 0.000) showed significant direct positive relationship with behavioral intention. tourists’ satisfaction played the most important role in tourists’ post-travel behavioral intention. perceived wellness value (h5: t-values = 4.893, p < 0.000) played the more important role in tourists’ satisfaction than experience quality (h4: t-values = 3.763, p < 0.000). there are significant mediating effects of tourists’ satisfaction on experience quality (h6: t-values = 2.776, p < 0.01), perceived wellness value (h7: t-values = 3.862, p < 0.000) and tourists’ post-travel behavioral intention (h6 to h7). asian business research journal, 2025, 10(10): 20-27 26 © 2025 by the authors; licensee eastern centre of science and education, usa figure 2. the bootstrapping algorithm results. 5. discussion and conclusion the findings of this study provide strong empirical support for the proposed relationships between experience quality, perceived wellness value, tourist satisfaction, and behavioral intention among wellness tourists in guangxi. path analysis using smart pls revealed that all hypothesized relationships were statistically significant, demonstrating the robustness of the theoretical model. first, the results confirmed that experience quality (h1) and perceived wellness value (h2) significantly and positively influence tourists’ behavioral intention. this finding aligns with previous studies emphasizing that highquality tourism experiences and perceived value are critical predictors of tourists’ future behavioral tendencies, such as revisiting and recommending a destination (libre et al., 2022; seow et al., 2024; torabi et al., 2022). wellness tourists, in particular, tend to seek authentic, health-enhancing, and emotionally enriching experiences. when their sensory and psychological needs are met through high experience quality, they are more likely to form positive behavioral intentions. second, tourists’ satisfaction (h3) showed the strongest direct effect on behavioral intention (t = 5.220, p < 0.000), suggesting that satisfaction is the most influential factor in determining tourists’ post-travel behavior. this finding is consistent with the expectation-confirmation theory (ect) and theory of planned behavior (tpb), which posit that satisfaction acts as a central determinant of future behavioral intention. satisfied wellness tourists are more likely to revisit the destination, engage in word-of-mouth promotion, and recommend the wellness experience to others. this emphasizes that wellness tourism managers in guangxi should prioritize maintaining high satisfaction levels through superior service quality, personalized care, and emotional engagement. third, the results also revealed that perceived wellness value (h5) has a stronger effect on tourists’ satisfaction than experience quality (h4). this indicates that tourists’ overall satisfaction stems not only from tangible service quality but also from the perceived value they derive in terms of physical rejuvenation, mental relaxation, and emotional well-being. in the context of wellness tourism, value perceptions—such as the feeling of improved health, inner peace, and self-restoration—are more powerful in shaping satisfaction than mere sensory or aesthetic experiences. this highlights the necessity for wellness destinations to enhance perceived wellness value by integrating authentic, culturally distinctive, and holistic wellness programs. moreover, the mediating role of tourists’ satisfaction (h6 and h7) was confirmed between both experience quality and perceived wellness value on behavioral intention. the mediation results suggest that while experience quality and wellness value have direct impacts on behavioral intention, their influence is largely transmitted through satisfaction. this partial mediation implies that satisfaction serves as a psychological bridge connecting tourists’ experiences and their behavioral outcomes. when tourists perceive the experience as enjoyable and beneficial to their health, satisfaction increases, thereby strengthening their intention to revisit or recommend the destination. overall, the model demonstrates that enhancing tourists’ satisfaction, perceived value and experience quality is crucial for stimulating long-term loyalty among wellness tourists. for guangxi’s wellness tourism industry, this means focusing on continuous quality improvement, emotional engagement, and personalized service design to sustain visitor retention and positive word-of-mouth. 6. future research suggestions future studies could adopt longitudinal or experimental approaches to track changes in satisfaction and behavioral intention over time, providing stronger evidence of causality. additional constructs such as destination trust, emotional attachment, or spiritual well-being could be integrated into the model to provide a more holistic understanding of wellness tourists’ behavioral patterns. references ã, t. l., & hsu, c. h. c. 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licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 9, 23-34, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.563 © 2025 by the authors; licensee eastern centre of science and education, usa the digital divide and learning inequality: a cross-regional study of e-learning access and quality in sub-saharan africa akomolehin, francis olugbenga1  aluko, olufemi rufus2 1,2dept of finance, college of social and management sciences, afe babalola university, ado ekiti, nigeria. email: akomolehinfrancis@pg.abuard.edu.ng email: femaluko16@yahoo.com (corresponding author) abstract tin sub-saharan africa digital inequality is another thorn in the flesh of education equity, as unequal access to information and communication technologies (icts) worsen perennial learning opportunities disparities. policy attention for digital transformation is increasing globally, but it is not yet clear to what extent national e-learning strategies are committed to questions of access, quality and inclusion. between the years 2010–2025, this study will evaluate and compare elearning policies in five sub-saharan african countries; kenya, nigeria, ghana, rwanda and south africa. based on a qualitative comparative policy analysis method, the research includes national policy documents, international agency reports and strategic frameworks (unesco; the world bank group; unicef). evaluation of policy content, the way in which policy is implemented and the extent to which legislation engages with stakeholders can be guided by various analytical models such as walt and gilson's policy triangle (25), sabatier's advocacy coalition framework (26) or bardach's eightfold path (27). as the analysis suggests, the extent of policy maturity and implementation varies significantly across the region. though rwanda and kenya have succeeded intranslating policy design into implementation, in nigeria and ghana there remain too many missing links — resources for infrastructure, prepared teachers, monitoring capacity etc. these include low engagement with rural and peri-urban areas, lack of coordination among institutions and low funding. this emphasizes the need of digital education policies which are inclusive and context sensitive and in order to strengthen infrastructure, monitoring system to motivate regional policy harmonization. the key will be for them to scale these efforts sustainably and systematically to address the global learning crisis and labor market mismatches in sub-saharan africa. keywords: digital divide, education policy, education reform, e-learning, ict access, learning inequality, sub-saharan africa. 1. introduction one of the top ranked challenges in vitiating for equitable education outcomes in sub-saharan africa is a stubborn and unyielding digital divide it continues to grapple with. the digital divide, defined as the separation between people with adequate access to information and communication technologies (icts) and those without, is apparent in both infrastructure and skills domains and restrict learners' ability to be fully engaged members of the digital learning economy. this gap has been widening with the onset of global catastrophes such as a pandemic (covid-19) that demonstrated system failure in most educational sectors and digital infrastructure emerged as a critical aspect for ensuring learning storms, 2015; unesco, 2023), it also hastens the pace at which growth is occurring in electronics and telecommunications. millions of schoolchildren in africa, especially in remote/underserved areas still excluded from access to virtual learning platforms due lack of devices, unreliable internet connectivity & low digital literacy—further compounding prior educational disparities (adu-gyamfi et al., 2022). in sub-saharan africa (ssa) the intersection of high population growth, relatively low levels of technological development and uneven policy implementation create a particular challenge. these disparities in e-learning access and quality have persisted despite substantial investments in educational technology and multiple strategic frameworks rolled out across the region. countries like kenya and rwanda have made great strides in implementing icts in education, with others lagging far behind, hampered by financial constraints, weak institutional frameworks and political instability (asunka, 2021; eze et al., 2024). that these challenges are unevenly distributed across regions leads to a fragmented learning ecosystem in which the potential of digital transformation is not achieving inclusive benefits for all learners. in this respect, there is now a pressing need for taking up e-learning policies and developing accessibility and quality dynamics. from national ict strategies to international development partnerships, policy instruments feature large in configuring the educational experience in a digital age. nevertheless, their efficacy varies and is generally poorly documented or evaluated. this effort to understand how countries think about, resource, and mailto:akomolehinfrancis@pg.abuard.edu.ng mailto:femaluko16@yahoo.com https://doi.org/10.55220/2576-6759.563 asian business research journal, 2025, 10(9): 23-34 24 © 2025 by the authors; licensee eastern centre of science and education, usa implement digital learning reforms — now taking place with a policy-based approach relying on methodological principles — can be applied systematically across all nations by others who draw on these experiences with equity, gender, infrastructure, and pedagogy. this is important for generating evidence to inform policy recommendations tailor-made to support policy design and implementation (mtebe and raphael, 2023; teye and boakye, 2021). this study aims to call attention to the concern for furthering education inequality in sub-sahara africa such as it is intensified by splinted digital infrastructure and dispersed policy responses. a few governments have put in place more forward-looking digital learning strategies, but the selective implementation of these policies has limited their reach, particularly among disadvantaged populations. in the case of digital education, a range of obstacles have prevented “digital divide” from being transformed to a more equitable “across-the-board access and use”, such as the inability or unwillingness to collaborate across sectors, along with under investment in teacher capacity building and frail mechanisms for monitoring (dlamini & ndwandwe 2020; world bank 2022). the policy frameworks themselves that are intended to act as conduits towards inclusion stand to perpetuate systemic divides. the study seeks to answer the following research questions (1) how have sub-saharan african countries conceptualized and implemented e-learning policies between 2010 and 2025? (2) (2) what are the key similarities and differences in policy design and execution across regions? (3) to what extent have these policies addressed issues of access, quality, and equity in digital education? (4) what policy gaps and best practices can be identified for future reforms? the study is thus neither comprehensive, focusing on a cross-regional analysis of national digital education policies across diverse sub-saharan african countries chosen for their linguistic, economic and technological diversity. a qualitative policy analysis approach was taken to analyze the written content, strategic priorities and pathways of implementation in selected key policy documents. this approach is important because context-specific barriers and enablers are understood in the collective system rather than individually. it also facilitates a comparative examination of policy impact, leading to the discovery of place-based reform that can help shape regional cooperation and global education agendas. the point of this argument, however, is that in a global economy marked by digitality the imperative is for education policies to not merely digitize inequality but to be transformative (olaniyan et al., 2023; uleanya & gamede, 2023; unicef, 2024). 2. conceptual and theoretical review 2.1. conceptual review 2.1.1. access to e-learning access in the context of e-learning, however broadens again beyond just physical connectivity or possession of devices to encompass more that global opportunity of usefully utilizing the digital learning platforms. these include access to electricity, digital devices and internet infrastructure as well as relevant learning content and digital literacy (unesco, 2023). in sub-saharan africa, access to the internet is a complex issue that has kept all of us in this pattern: more learners from rural/low income areas are left out of digital learning ecosystems due to infrastructure and socio-economic challenges too (adu-gyamfi et al., 2022). this means that any policies aimed at bridging the educational digital divide should be designed within equitable access frameworks which account for technologies and contexts. figure 1. timeline of digital education policy milestones in sub-saharan africa (2010–2025). this timeline highlights key digital education policy events across sub-saharan africa, including national elearning strategy launches, ict policy reforms, covid-19 emergency interventions, and donor-supported digital inclusion initiatives. the visualization captures how policy momentum has evolved over time and underscores the pivotal role of crisis response and international collaboration in shaping digital education landscapes ess2.1.2 quality of e-learning the most common standards related to quality in digital learning include content relevance, pedagogical effectiveness, learner engagement and measurable learning outcomes. this comprises the readiness of teachers, asian business research journal, 2025, 10(9): 23-34 25 © 2025 by the authors; licensee eastern centre of science and education, usa relevance of digital tools that are used, and the matching of e-learning content with national curricula and learner needs (mtebe & raphael 2023). regrettably, some territories have struggled with a rush to digitize curricula in sub-saharan africa..offsetwidth:100%;#endif (innovafrica, 2023). quality assurance would necessitate investment in technology, and simultaneous efforts at designing and delivering instruction purposefully combined with strong teacher training policies. 2.1.2. equity in digital education equity is a step beyond equality of access, to suit the needs of learners by gender, disability, social economic status and geographical location. the creation of an equitable e-learning landscape that empowers and guarantees targeted support for disadvantaged groups there by ensuring non exclusion ( africans, particularly girls, learners with disabilities from the rural areas ugwu, 2020; uleanya & gamede, 2023 ) ~. policies should promote access and resource allocation as if everyone benefits college education and career development as well, when in reality there is widespread utilization across the middle class that would be sufficient to sustain such targeted accountability measures. left unaddressed, digitization could simply entrench the continued exclusion from education under its digital mask (world bank, 2022). 2.1.3. ict in education ict in education is the use of digital technology and communication platforms to teach, learn and support educational institutions. ict is an enabler as well as a disruptor in the educational world. although the benefits of icts are widely recognised for promoting learner engagement, increasing equity and improving performance (asunka, 2021; teye & boakye, 2021), real implementation in several african countries faces infrastructure-related challenges, lack of teacher preparedness as well as policy fragmentation. while hardware and basic connectivity are necessary, successful ict integration in education necessitates systemic planning and policy coherence. 2.1.4. e-learning governance according to the conceptual framework, e-learning governance inherently reflects the rules, policies, and institutions by which digital learning systems are meant to operate. this includes national ict strategies, education technology plans (etps), data protection legislation, funding, and stakeholder coordination schemes. an effective and reliable digital learning system interfaces political will, technical capacity, and institutional oversight (dlamini & ndwandwe, 2020) — all of which are anchored on strong e-learning governance. for instance, in subsaharan africa, governance challenges, including bureaucratic inefficiencies, overlapping mandates and weak policy enforcement impede the success of e-learning initiatives (eze et al. 2024). governance through capacities : this is an important concept that must be mulled over; you can devise the most cunning digital education strategies; they will only boil down to meaningful outcomes if you have a clear governance model that reflects coherence and inclusiveness. 2.1.5. conceptual model linking policy, digital access, and educational outcomes in this study, the paths from educational policies to digital equity are conceptualized using a policy–access– outcome framework. at the centre of the model is the suggestion that good digital education policy design has a direct impact on access to digital learning infrastructure and on the quality of learning experience, leading to educational outcomes. it combos the following relationships into a framework: policy inputs: national e-learning strategies, funding allocations for e-learning, digital transformation of curriculum, teacher training for online delivery pedagogy and regulatory frameworks. access enablers: devices, internet coverage, centric digital literacy programmes for 70% of rural learning with focus on disabled and female learners. quality and equity drivers: curriculum relevance, pedagogical innovation, learner engagement metrics, and differentiated inclusion strategies. impact: better learning outcomes, higher rates of enrollment and retention, decreasing educational gaps, and creating digital resilience for the long term. the conceptual model thus highlighted that it is not the short of policy design but the implementation, monitoring and inclusiveness of those policies through which they are able to either reduce or reproduce inequality (adu et al., 2021; mtebe & raphael, 2023). furthermore, the lack of strong institutions or poor accountability can result in even well-designed policies not being able to overcome the digital divide. based on this framework, the study developed a focused perspective in which it could determine how subsaharan african countries have mobilized policy instruments to address learning dis-parity during the digital era and what implications can be drawn from such experience in shaping future educational reforms both within and outside the region. 2.2. theoretical framework a comprehensive theoretical background is required to understand the ever-existing digital divide and its impact on learning inequality in sub-saharan africa. it then makes use of three primary theoretical perspectives (sen's capability approach, policy implementation theory and the digital capital theory) to elucidate how these policy dynamics influence the digital access problems as well as educational outcomes that continue to define the elearning landscape in the region. amartya sen's the capability approach seeks to provide a normative framework for the follow-up of individual well-being and social arrangements in terms of process evolution rather than as mathematic function that defines some people or groups as good, while other bad. in the field of digital education, this strategy reframes discussion from getting technology in hand and enables students to take advantage of icts for learning how to expand their skill together with future liberation. mere access to devices or the internet does not suffice; learners must have as well the skills and support systems, devoted within institutional environments in order to translate digital resources into meaningful educational achievements (robeyns, 2017). the e-capability set of disadvantaged asian business research journal, 2025, 10(9): 23-34 26 © 2025 by the authors; licensee eastern centre of science and education, usa learners in rural sub-saharan regions is limited as they lack such enabling conditions, which reduces the impact of policies geared towards integrating technology and exacerbates educational inequality. if the scope of the capability approach is applied, this mandates a focus on equity in policy making so that digital education systems might not only enable access but also extend substantial freedoms for learning and succeeding to all learners. policy implementation theory adds a depth to this, which takes an insight into the process, actors and institutional dynamics that facilitate policy practicability. since good policy will not always be able to implement in a proposed way their circumstances, real-life policies have required high administrative capacity) and adaptiveness), political commitment), resourcing, feedback quality (sabatier & mazmanian, 1980; o'toole, 2019). a large number of sub-saharan african countries have well-written policies for e-learning, these do not translate into concrete actions due to fragmented approach and weak inter-agency coordination related to policies and monitoring mechanisms that check whether the policy goals were accomplished (mtebe & raphael, 2023). our article in particular uses this theory as a critical tool to examine why much-touted digital education policies stumble on their ambitious accessibility and quality goals, especially in the marginalized geographies. this paper underscores the significance in planning around governance, institutional readiness, and stakeholder alignment to successfully implement digital learning initiatives. indeed, the digital capital theory extends this analysis to a more sociological perspective, by viewing digital access as one of many capitals (along with economic capital, social capital and cultural capital) that interact together to affect educational trajectories (ragnedda et al., 2019). digital capital refers to the digital assets (e.g., devices, connectivity) and resources (e.g., digital skills, online participation) that people have access to in order to thrive within the world of the internet. these individuals will also be more able to effectively participate in elearning programs, accomplish digital coursework, and migrate into knowledge-based economies — all of which are critical in learning how to use computer tools. on the other hand, these graduates mostly struggle and busy off-line in terms of both education and job opportunities. this theory underlines the multiplication of gaps in digital capital by learning inequality and intergenerational handicap (van deursen & helsper, 2020) that arises from digital exclusion, based on structural inequalities in sub-saharan africa. this underscores the importance of digital resilience-building policies, especially for vulnerable groups. when combined, these theories provide a broader lens to look through when examining educational and learning outcomes relative digital access related policy. theories offer the mechanisms through which the policies alter and shape access with respect to real freedoms: capabilities approach provides a normative goal — what is worth having, policy implementation theory addresses how policy goals actually get realized, while digital capital theory explains unequal educational experiences through inequalities in resources and competences available. this study takes an integrative theoretical approach since the digital divide as well as education governance in sub-saharan africa are complex and multifaceted. yet, the capability approach and policy implementation theory are selected as the core theoretical frameworks on the grounds that they resonate best with aspects of equity, policy design and implementation, institutional capacity to influence e-learning outcomes so evident in the study. 2.3. empirical review over the past few years, but particularly in the wake of covid-19 pandemic and related global disruptions, a new and substantial body of empirical research on digital learning, policy implementation, and educational inequality has been developed. there is a large amount of research carried out both in developed and developing contexts that have investigated the intersections of e-learning access, quality and equity, which has informed policies formulation and review. digital learning in developed countries has emerged until integrated within the mainstream education system but digital disparity are still facing by social-economical disadvantages class. for instance green et al.[14] in uk built an ecosystem of interest. (2020) investigated the capacity of students to transition into remote learning as thermodynamic status. while digital infrastructure was generally available, it was reported that students from low-income families found it difficult to access digital tools and lacked the skills for online learning and facilities for quiet learning spaces away from other family members, as well as in some cases parental support leading to widening gaps in learning between different social groups. likewise, researchers in the united states (reich et al. barber (2021) conducted a large-scale multi-district investigation into remote learning outcomes, finding that while digital access could—or could not—translate into equitable outcomes without effective pedagogical and socio-emotional support. in scandinavia, where internet access and familiarity with the ict are among the highest in the world, digital citizenship has been integrated into national curriculum strategies. proactive teacher preparation reinforced with inclusive basics on e-learning have proven helpful during covid-19 online education shift: the force of finnish evidence — case sahlberg & brown 2021. nevertheless, even in these well-resourced contexts issues were encountered, predominantly among students with special needs within gaining student interest and motivation (karlsson & rehn, 2022). baroutsis and lingard (2020) found in australia, that their regional participants continued to experience connectivity challenges combined with the on-going problem of engagement confirming that geographical disparity does not disappear even within more digital indigenous education systems. in the developing world, that intractable problem is more basic. the digital inequality is the reflection of large socio-economic, infrastructural deficits. choudhury and pattnaik (2021) examined the use of the diksha platform in india, in response to which they observed pronounced inequalities between rural and urban consumption of digital content. the importance of contextualised digital content and teacher support systems was highlighted by the study. in indonesia, kusuma and rosyada (2022) pointed out that the implementation of e-learning suffered from a lack of national policy integration and digital readiness at school level which produced diverse outcomes between provinces. in brazil, almeida and silva (2020) also reported that though the nation has national strategies to deploy digital learning but its fragmented bureaucratic structure and political instability restricted deployment in an organized manner. findings from a comparative study covering south asia and latin america by bano & taylor, 2021 reveal that while the policies of most nations under analysis (south asia +latin am) called for digital extension — they had asian business research journal, 2025, 10(9): 23-34 27 © 2025 by the authors; licensee eastern centre of science and education, usa weak monitoring and evaluation provisions. in the final analysis, they argued that policy success is not only a matter of intent but also operational clarity and adaptive governance. genc and ozturk (2021) in turkey reported that high level of predictability was positively correlated with the successful adoption of e-learning, indicating that by devolving authority on decision making, schools might increase responsiveness and innovation. empirical studies show a consistent pattern in sub-saharan africa: high ambition but low practice parties. in general, a study by mtebe and raphael (2023) revealed that while ict policies are common in the region, most countries suffer from limited funding, poor teacher preparation and an unreliable supply of electricity. in nigeria, eze et al. (2024) studied the implementation of national digital education policy and found much needs to be done in setting-up infrastructure adequately and establishment monitoring mechanisms. likewise, asunka (2021) studied policy implementation in ghana, and found that its digital platforms were being used by few only in street schools for the most part shunned high and urban school members. njenga and ngugi (2020) reveal a summary of a research in kenya where the success of mobile learning projects such as eneza education faces challenges related to long-run scalability owing to high costs of data and limited policy support. a mixed-method study in south africa (uleanya & gamede 2023) points to the misfit of national e-learning ambitions with school-level practices. activist scholars and researchers sounding the alarm over pandemic inequities found evidence of the institutional capacity and contextual responsiveness necessary to make learning outcomes more equitable. in rwanda, musafiri and habiyaremye (2022) conducted a related study where some progress was noted in the integration of digital learning via national policy though gender disparities in digital literacy were said to be a hindrance for girls aspiring to participate into stem online courses. adu-gyamfi et al. conducted a multi-country study and eco-taxonomic exploration in 2017 [10]. in nigeria, ghana and ethiopia, a study comparing e-learning policies found that most strategies concentrated on building the appropriate infrastructure across institutions with no plans to ensure access for all stakeholders (atata et al., 2022). they suggested the adoption of disabilityand conflict-sensitive policy designs that formalize access to these groups. olaniyan et al. this was echoed by lenkabula and bajenoban (2023) in their paper on digital transformation in african education: "if expanding digital inclusion is more than just providing access to devices, but also requires; training, the clustering of local content, and inclusive governance to tailor the use of technology for catalytic social change. these are affirmed by reports from unicef (2024) and unesco (2023), who also add that only 40% of subsaharan african schoolchildren have internet access, or even any form of exposure to online or broadcast learning on a set schedule, the rural poor being the most affected. such agencies would advocate for a multi-sectoral response that combines infrastructure, teacher training programs, curriculum design and monitoring frameworks. in addition to this, as stipulated by world bank (2022): although the introduction of funded digital education projects have added cost-effective solutions for enhancing accessibility, sustainability and scalability still remains an enormous challenge due weak local ownership and policy continuity. together, these research based studies exemplify the nuanced dimensions of digital education reform in resource-rich and resource-constrained contextsandelucidatethe synergies between effective planning and pedagogical inputs for a sustainable transformation in classroom practice. too, they spotlight others — including the insufficiency of infrastructure in ensuring equitable ends on its own… the centrality of teacher capacity and institutional readiness … and finally a call for comprehensive, inclusive, contextually appropriate policy design. the research suggests — especially for sub-saharan africa — a glaring chasm between policy and implementation, the implications of which are significant in terms of digital equity, learning continuity, and sustainability of human capital development over time. conclusion this empirical evidence therefore strengthens the case for policy analysis methods examining not only what policies are but also how and where they work or for whom. 2.4. conceptual framework figure 2. conceptual framework linking e-learning policies, digital access, and educational outcomes in sub-saharan africa. asian business research journal, 2025, 10(9): 23-34 28 © 2025 by the authors; licensee eastern centre of science and education, usa figure 3. simplified conceptual model of policy–access–outcome relationships in digital learning. 2.4.1. explanatory note on the conceptual framework this study is guided by the following conceptual model and underscores the structured way through which policy, access and outcomes are connected in sub-saharan africa (ssa) within digital educational context. the framework is predicated on the capability approach, policy implementation theory, and digital capital theory and explains how e-learning policy frameworks as independent variables work through digital access infrastructure, to affect learning equality and educational outcomes (mediated) at the individual level but are moderated at higher level of analysis by digital literacy and institutional capacity. one of the key tenets in this framework is the idea that national policy frameworks, including e-learning strategies, budgetary allocations and institutional governance arrangements are paramount for moulding a digital education ecosystem. however, merely having the rules in place is not enough. the impact of these projects mostly hinges on the availability and quality of digital infrastructure, such as internet connectivity, device distribution and electricity access in schools. the mediating variable of the framework is these infrastructural components, that serve to translate policy intent into actual embodied learnable places. learning equality and educational outcomes (dependent variable): learning equality is estimated as a direct relationship with digital participation rates, through student retention rates or literacy & numeracy performance and gender-parity in digital learning engagement. these two measures of attainment offer a basis for comparing outcomes that is, themselves, linked to equity—a fundamental dimension consistent with sen's (1999) capability approach which is so concerned with broadening real liberties and opportunities for all citizens. critically, the framework acknowledges that any interaction between policy and outcome is conditional on the presence of moderating variables, especially in relation to digital literacy and institutional capacity. these measures may encompass teacher willingness to implement ict based learning, digital literacy of students or even the availability of technical personnel and overall institutional readiness via a standardized global indicator (some example include international benchmarks like unescowayfinders for ict competencies). these measures incorporate findings from the digital capital theory, which posits that access to digital tools is only as strong or weak as users' ability to effectively employ them, and from policy implementation theory, which underscores the importance of administrative capacity in turning policy into practice. graphically, the framework presents a flow in which e-learning policies and digital infrastructure drive digital access (which is then linked to educational equity and outcomes). the intermediary position of digital literacy and institutional capacity dictates the intensity and direction of this nexus resulting in a policy that reinforces, or constrains, overall progress. in conclusion, this conceptual framework offers an indepth and complex model that puts forwards a holistic view of all aspects of the digital divide in education. this highlights the need to facilitate a policy for development steered by infrastructural realities and institutional capacity, which would lead sub-saharan africa towards inclusive and quality digital education outcomes. the framework will help steer policy analysis through delineating multiple evaluative pathways and ensuring a more nuanced understanding of digital education inequalities in the region. 3. methodology (policy analysis design) using a study, we adopt this qcpa to investigate how e-learning policies in certain sub-saharan african countries between 2010 and 2025 addressed the issues of access, quality and equity in formulation processes at primary level digital education. it fits nicely with respect to unpacking various aspects of policy formulation and asian business research journal, 2025, 10(9): 23-34 29 © 2025 by the authors; licensee eastern centre of science and education, usa context-specific adaptability in the implementation process across governance systems. as such, qpca provides a rich comparison in terms of policy content, actors and outcomes which allows for a deeper context-based comprehension of the digital education policy world in the region. an extensive range of unpublished and published primary and secondary policy sources were utilised to ensure analytical robustness in this study. these comprised official government education ict policies, national e-learning strategies and sectoral digital transformation plans accessible through public sources and institutional repositories. the study also incorporates international agency reports (unesco, the world bank, unicef and itu) that offer regionally aggregated data & policy benchmarks for learning-purposes of individual countries based on diagnostic insights into ict integration in education systems. these sources made it possible to triangulate and strengthen the comparative nature of the analysis. the choice of countries in this study is orchestrated by certain criterions, which requires a range subject from many matters. within that context, five sub-saharan african countries (kenya, nigeria, ghana, rwanda and south africa) were purposively selected on the basis of their having documented histories of digital education policy development within a 2010–2025 temporal range; regional representation across east, west and southern africa; levels of ict infrastructure coverage; and publicly accessible written policy documents with implementation data. this cross-sectional approach makes it possible to compare policy pathways in relatively more advanced and resource-rich settings, against those in less-developed and developing settings, as well as to observe best practices and ongoing challenges. the study combines three policy evaluation models within a single analytical framework (a hybrid approach). in order to analyze context, content, actors and processes of each policy — which should provide insights into how such a policy is developed and implemented walt´s and gilson´s (1994) policy triangle framework were used as the first step. using sabatier's advocacy coalition framework, the study explores how different configurations of advocacy coalitions (coalitions of government actors, donors, ngos and educators with contrasting belief systems and resources) interact to influence policy overtime. this is especially the case for sub-saharan african contexts where external development partners are major players in shaping national education agendas. third, bardach's eightfold path structures the analysis to judge the effectiveness, feasibility, fairness and cost-effectiveness of policies selected in order to move out from lockdowns towards normal learning redistributing digital divide and learning inequality. when it comes to analysis tools, the study applies a structured document review method for policy text, implementation reports as well as institutional evaluations. documents are analysed thematically and coded according to content using thematic coding techniques, providing a key policy topics/opportunities, redundancies and contradictions within the statements. the actual modes of articulating these policy dimensions -funding, teacher training, infrastructure targets, and monitoring mechanisms -across countries are aligned using a comparative matrix. then, stakeholder mapping is performed to visualize the power and role of actors throughout an actor at all policy stages from design to implementation and evaluation. ethical considerations consideration are at the core of this policy analysis. the source documents reviewed in this study are from the literature (in the public domain) or ac-quired with institutional permissions to ensure transparency, as is required by open-source research norms. the study does not involve human subjects, and therefore is exempt from formal ethical review. however, strict citations and references to data sources as well as the use of validated institutional documents ensure academic integrity. the analysis also displays political and policy discretion on the part of the interpretation of what was intended through different policies along with their outcomes by not showing an overly politicised or biased view of specific country challenges. ultimately, this methodology offers a robust and context-specific to understanding how digital education policies in sub-saharan africa navigate the complex interplay of access, quality and equity issues. it is expected to generate insights that may inform theoretically-grounded, empirically-based and practically-driven recommendations regarding more inclusive, effective and sustainable digital learning policy reforms throughout the region through a comparative analysis across well-established policy evaluation frameworks. 4. results and findings setting up a base for e-learning in schools is an advisable solution to salvage the situation, however, the question remains — how can this make e-learning resilient during crisis-like contexts of public health and natural disasters? ]; effective policy frameworks we analyse effective policy designs with comparative insights across five subsaharan african countries kenya, nigeria, ghana, rwanda and south africa on their strategies for e-learning from year 2010 to 2025. the discussion of the findings is divided into five sections according to these major thematic areas (table 1) and reflect the structural and functional elements of digital education policy in ssa. e-learning policy landscape in sub-saharan africa: from the other themes, the e-learning theme has been a subject of review and evolution through out the past decade. within all five countries, national ict-in-education strategies have been institutionalized as part of wider education sector plans or digital economy frameworks. programmes such as kenya 2019 digital literacy programme and rwanda smart education blueprint (2021) had structured alignment with long-term national visions, namely vision 2030 and vision 2050 in their respective countries. south africa has incorporated e-learning provisions into its white paper on e-education (augmented through provincial e-strategies), and nigeria and ghana have more diversified yet nascent policy frameworks. but however robust the intentions behind a policy, their articulation frequently ranges from the specific and operationally detailed (path-breaking) to aspirational or still under review. asian business research journal, 2025, 10(9): 23-34 30 © 2025 by the authors; licensee eastern centre of science and education, usa figure 4. digital literacy levels by country in sub-saharan africa. this bar chart compares digital literacy across selected countries, disaggregating data by teacher ict readiness, student digital skills, and rural–urban disparities. it reveals significant variation in readiness levels and highlights where digital inclusion programs are needed most. the visual emphasizes the digital divide in rural areas and underlines the importance of targeted policy interventions for capacity building. a critical dimension of these policies pertains to access and infrastructure. rwanda and kenya stand out for their emphasis on last-mile digital access, including investment in device distribution, solar-powered connectivity for rural schools, and public-private partnerships to reduce internet costs. in contrast, nigeria and ghana, despite substantial policy ambitions, continue to experience infrastructural bottlenecks—marked by unreliable electricity, low broadband penetration in rural areas, and limited device availability. south africa exhibits a dual reality: urban centers boast advanced ict integration, while many rural and township schools remain digitally underserved. across all countries, policy documents frequently underscore the importance of “universal access,” yet they often lack concrete financing mechanisms or roll-out timelines to realize this goal at scale. figure 5. e-learning infrastructure access in sub-saharan africa. this map presents a comparative visualization of digital learning infrastructure across sub-saharan africa, highlighting disparities in internet penetration, rural–urban ict access, and device availability. countries are colorcoded by access level—ranging from high to very low—emphasizing the structural inequalities that influence policy effectiveness and the urgency of targeted interventions for underserved regions. when reflecting on the themes, it is clear that the third theme of equity and inclusion despite being rhetorically prioritized in most policy frameworks continues to be one of the major challenges. girl's inclusiveness in stem and digital literacy programs remains an issue with limited initiatives to address gender disparities other than broad commitments to "gender mainstreaming". rwanda stands out for defining gender-sensitive indicators into its ict policies and for recommending digital skills training specifically directed at girls. in nigeria and ghana on the other hand, policies are more generalist: they are less disaggregated by sex, rural or disabled victims of vawg the biggest impediments to digital access remain structural poverty, language exclusion in digital content and low teacher deployment in marginalized rural areas. these findings also confirm the empirical literature, that national resources in absence of specific inclusion frameworks perpetuate educational disparity adu-gyamfi et al. (2022); uleanya & gamede, 2023). asian business research journal, 2025, 10(9): 23-34 31 © 2025 by the authors; licensee eastern centre of science and education, usa figure 6. equity indices in e-learning by demographic group and location this clustered column chart visualizes disparities in e-learning participation across gender, geographic location, and socio-economic status. equity index scores indicate that urban and high-income learners exhibit significantly greater digital learning inclusion than their rural and low-income counterparts. the figure emphasizes the need for targeted equity strategies to close persistent digital education gaps in sub-saharan africa. across all five countries, implementation gaps was a cross-cutting issue. weaknesses in budgeting, teacher training, and monitoring & evaluation (m&e) were consistently detected — even though the country did possess robust national policy frameworks. in nigeria, the national digital education policy articulates grand objectives but its budget allocation is far from steady and procurement processes are often slow. in turn, ghana suffers the same problem (implementation lag) but that is worsened with limited capacity among its ministries and agencies to work around the interim processes. kenya and rwanda on the other hand, have implemented with greater fidelity, generally led by national digital governance bodies and donor-funded implementation agents. solid teacher training mechanisms have historically been lacking, thereby compromising the effectiveness of e-learning delivery in rural schools, where teachers often do not possess either digital devices or instructional competencies. in addition, monitoring and evaluation (m&e) mechanisms do not exist or are nascent, preventing a measure of policy success and feedback to quickly modify strategies. comparative analysis of high and low performing countries show significant differences in both: policy maturity; delivery. rwanda emerges as a regional leader for its coordination, political willingness, and huristics in monitoring digital literacy rates, school connectivity and capacity building of teachers. there is strong institutional readiness and innovation in kenya as well, particularly around mobile learning solutions like eneza and tusome. having well-articulated policy frameworks, nigeria and ghana are yet not fully effective in their implementation. south africa typifies the above hybrid model, with provincial policy implementation determining performance — highlighting intra-national inequalities in digital readiness. the matrix above summarizes key characteristics of policies in the five countries: table 1. equity indices in e-learning by demographic group and location. country policy strength access provision equity focus implementation capacity monitoring & evaluation performan ce level rwanda high strong rural reach & device rollout strong (gender/disability inclusive) high (centralized execution) advanced (national m&e dashboards) high kenya high broad digital coverage, mobile-based access moderate (genderfocused pilots) high (publicprivate execution) moderate (digital literacy surveys) high south africa moderate– high strong urban; weak rural moderate (provincial disparities) moderate (provincial implementation gaps) varies by region moderate ghana moderate urban-centered, low rural coverage weak (minimal targeting) low–moderate (donor-driven execution) weak (no centralized m&e system) low– moderate nigeria moderate patchy coverage; major rural deficits weak (generic inclusion rhetoric) low (bureaucratic fragmentation) weak (limited monitoring) low asian business research journal, 2025, 10(9): 23-34 32 © 2025 by the authors; licensee eastern centre of science and education, usa these findings suggest that while digital education is a strategic priority across sub-saharan africa, success depends not only on the presence of national policies but on the coherence of implementation strategies, infrastructure readiness, and the intentionality of equity-focused interventions. countries that perform better in digital learning outcomes tend to exhibit strong institutional coordination, well-resourced execution frameworks, and inclusive design principles that prioritize marginalized learners. these insights form the basis for the study’s forthcoming discussion and policy recommendations, aimed at informing more context-sensitive and sustainable digital education reforms in the region. 5. discussion this comparative policy analysis of digital education policies across five sub-saharan african countries provides essential insights worked form a detailed understanding of the finely balanced processes and mechanisms that unfold a complex governance landscape while acting as states operate in resource-constrained environments. this makes it possible to demonstrate that the region has come a long way in recognizing digital transformation as a key issue for education policy but also to show how differently these responses have been implemented and carried out given existing structures, institutions, and conditions. the fact that policy intent is inadequate is one of the most noticeable findings. almost all countries reviewed have either formulated a national ict-in-education policy or integrated digital elements into broader education sector plans, translating these achievements into practice has proven difficult. however, in rwanda and kenya have direct decision-making lines, clear executive leadership and digital governance are centralized. as such policies will translate into the desired outcomes within their enforcement windows of infrastructure deployment, teacher readiness as well as learner access. in nigeria and ghana, on the other hand, scattered institutional arrangements; unstable funding; and limited monitoring, evaluation exacerbate policy-practice synergies and prevent a move toward digital education access equilibrium! one success factor reached by high-performing countries is utilization of international support and publicprivate partnerships (ppps). in places like rwanda, partnerships with unicef, microsoft or the world bank have enabled distribution and digital literacy training to be amplified across a wider part of the country, particularly in rural areas. those of us working in kenya have seen the same, agile collaboration between public and private sector helping organizations like mobile service providers and ed-tech startups tech innovate on their platforms and get low-cost data access to the last mile. but this engagement is not always uniformly high yielding. in low-performing settings, international support may accidentally promote donor dependence, and especially so when the design, implementation and monitoring of projects are externally driven with little local buy-in. ppps that do not align with national strategies, are not integrated into local capacity building initiatives will lack the sustainability and relatability of interventions. this is a topic that has long been inseparable from the questions of equity and digital exclusion. while policies rightly often commit to inclusivity, the truth is that who takes digital learning initiatives' advantages are closest to a best fit-wise urban, high-income boys — especially in wash (water and sanitation health) burdened nations where infrastructure gap is the most wide-spread. poor internet penetration, scarce device availability, linguistic exclusion and poor digital literacy mean many marginalized groups including rural learners, girls, students with disabilities are still struggling to get quality education. these truths mirror the basic concerns of the capability approach: the notion that amartya sen provided us with, that equal use of technology is worthless if it does not imply universal freedom to turn digital applicable approaches into educational results as well. by neglecting context-specific barriers, e-learning policies could thus reproduce digital inequalities in the guise of bolstered modernity. aca:* this article read more: 5 lessons from regional best practices the smart education blueprint of rwanda, for instance is characterized by metrics-oriented implementation targets, principles for ubiquitous design and strong stakeholder channels. the decentralized mobile learning model from kenya serves as an inoculable example of what can happen when innovation meets rural access, especially if coupled with effective public policy support. from these cases, we can see that the type of policy change that gains traction is one that is contextually responsive; equitycentered and institutionally embedded. we emphasize the importance of validation of the policy triangle framework (walt & gilson, 1994) that a successful outcome depends on context, content, actors and process — not just whether a policy document is well-crafted. returning to the original framework developed in this study, we substantiated the relationship between policy inputs, supported with digital access infrastructure and educational outcomes (c•°), contingent on facilitating or inhibiting conditions — namely, digital literacy and institutional capacity. digital learning can support inclusion and improve learning outcomes when policies are supported by adequate technical, financial and human resources; are coherent; and can be monitored. but in places where those pieces of the infrastructure really are not present or wellcoordinated, progress on paper falls far short in practice—leaving the digital divide largely unaddressed and, even worse, potentially worsened. the importance of policy implementation theory reminds us that policy success is not in the design phase, but occurs through the processes of delivery, adaptations, and accountability over time. and finally, the use of digital capital theory is supported by a further indication of why not all benefit equally from digital learning initiatives due to differences in the accumulation of digital assets and competencies. the challenge is that in areas where digital capital concentrates, this leads to a higher likelihood of already-privileged social groups while e-learning reforms can end up aggravating the disparities they are supposed to reduce. this will necessitate a planned equalization of digital opportunity — through policies that ensure inclusive infrastructure development, region-specific content creation and systemic teacher development programmes. asian business research journal, 2025, 10(9): 23-34 33 © 2025 by the authors; licensee eastern centre of science and education, usa figure 7. presents a swot overview, emphasizing both internal system gaps and external risk factors. atiin conclusion, this discussion demonstrates that the future of equitable digital education in sub-saharan africa hinges not only on crafting forward-looking policies but also on ensuring that such policies are inclusive in design, context-sensitive in implementation, and supported by strong governance mechanisms and partnerships. lessons drawn from both successes and failures within the region offer valuable guidance for shaping the next generation of digital learning reforms—ones that truly bridge the gap between aspiration and access, and between connectivity and capability. 6. d conclusion this study sought to investigate how e-learning policies in eleven sub-saharan african countries have addressed the needs of access, quality and equity in digital education from 2010-2025. it was found that as the policy formulation has shifted, however the outcomes have been disparate mainly because of crucial implementation gaps. they show that coherent strategies, institution-building, and results-oriented public-private partnership can operationalize policy intent into tangible changes to the education outcome. on the other hand, systems in countries like nigeria and ghana are well-articulated but this have been downgraded by fragmented governance, poor financing and weak monitoring systems. these findings should be taken into account in the drafting of education policy since, as has been observed with this sample, access to resources must also be supplemented by structural support in the same way that strategies should not only accommodate local circumstances, but be robust enough that they cater to inclusive practices so they do not entrench existing disparities. grounding this with the capability approach, policy implementation theory, and digital capital theory, it is clear that organising requires structural change. three central policy recommendations to support greater inclusivity and sustainability in digital education throughout the region are provided. ensure a strong digital infrastructure and that no one is likely to be left behind, particularly in rural, poor and marginalized communities. the second is to set solid monitoring and evaluation systems that can identify progress and ensure accountability. establish mechanisms to coordinate regional policy standards and reforms, facilitating knowledge exchange and coordinated progress across sub-saharan africa. together, these steps can narrow the chasm between policy promise and practice, making digital learning a more effective equalizer in africa's education future. references adu, e. o., akinyemi, a. f., & olatunji, s. o. 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(2024). state of the world’s children report: children and digital connectivity. united nations children’s fund. https://www.unicef.org/reports/state-worlds-children-2024 van deursen, a. j., & helsper, e. j. (2020). the third-level digital divide: who benefits most from being online? in communication and information technologies annual (vol. 14, pp. 29–52). emerald publishing. https://doi.org/10.1108/s2050-206020200000014002 walt, g., & gilson, l. (1994). reforming the health sector in developing countries: the central role of policy analysis. health policy and planning, 9(4), 353–370. https://doi.org/10.1093/heapol/9.4.353 world bank. (2022). digital transformation and inclusive education in africa. https://www.worldbank.org/en/topic/education/publication/digital-learning-africa https://doi.org/10.1177/1461444819869604 https://doi.org/10.1108/s2050-206020200000014002 https://www.worldbank.org/en/topic/education/publication/digital-learning-africa 42 © 2025 by the authors; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 10, 42-52, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.599 © 2025 by the authors; licensee eastern centre of science and education, usa assessing the impact of government spending and human capital development on nigeria’s economic growth raymond osi alenoghena1  maryam joyce sadiq2 godwin dele imohi3 abayomi oluwaseun japinye4 fatai oguntade aliu5 segun amos, adewale6 1dept. of economics, caleb university, imota lagos, nigeria. 2lagos state ministry of economic budget, planning and statistics, nigeria. 3caleb university imota lagos, nigeria. 4banking supervision department, central bank of nigeria. 5dept. of business administration, trinity university, yaba lagos, nigeria. 6department of economics, caleb university imota, lagos nigeria. ( corresponding author) abstract government spending is a vital instrument for steering economic progress, affecting various sectors, including healthcare, education, infrastructure, and welfare. this study examines the impact of government spending and human development on nigeria's economic growth, spanning the period from 1989 to 2023. the study utilizes economic growth as the dependent variable, with government spending and human development as the independent variables. the control variables included in the analysis are inflation, trade openness, population, and infrastructure. the dynamic ordinary least squares (dols) approach is employed for data analysis, as it offers an improvement over the basic ordinary least squares model, since the study variables do not require any transformation to achieve a normal distribution. the findings reveal that government spending has a negative and significant impact on economic growth. although the effects of human development on economic growth are positive, they are not statistically significant. moreover, government spending negatively and significantly impacts human development. the combined effects of government spending and human development are not significant in influencing economic growth. the study recommends that the nigerian government increase its budget for education and health to align with global trends. additionally, the educational curriculum should be regularly reviewed to incorporate emerging trends in international and industrial developments. keywords: dynamic ordinary least squares (dols), economic growth, government spending, human development, inflation. 1. introduction nigeria, the most populous and one of the largest economies in africa, has a complex existence characterised by vast natural resources but persistent economic challenges, including poverty, inequality, and underdevelopment. understanding the factors that contribute to this economic dichotomy is crucial for policymakers and scholars alike. significantly, two factors highlighted in the discourse surrounding nigeria's economic growth are government spending and human development. this research aims to explore the relationship between these factors, examining how government expenditures can drive human development, which in turn contributes to sustainable economic growth. government spending is a vital instrument for steering economic progress, affecting various sectors, including healthcare, education, infrastructure, and welfare. the expenditure choices made by the government can either stimulate growth or hinder it, particularly in a developing economy like nigeria, where endemic inefficiencies and corruption can impede the effective allocation of resources. moreover, human development, often measured by indices such as life expectancy, educational attainment, and standard of living, is increasingly recognised as a fundamental component of economic development. contemporary economic theories emphasise that a welleducated and healthy populace is more capable of innovation and productivity, thus spurring economic growth. human development can play a vital role in driving the growth and development of a nation, as it has the capacity to improve the productivity of firms and government services. this is because the potential and skills of workers are enhanced through education and various skills development exercises. the concept, popularised by the united nations development programme (undp) through the human development index (hdi), emphasises that, in addition to income growth, human development is also about improving a person's education, health, and https://doi.org/10.55220/2576-6759.599 asian business research journal, 2025, 10(10): 42-52 43 © 2025 by the authors; licensee eastern centre of science and education, usa overall welfare. some authors have argued that nations with the highest levels of human development skills have developed faster than those with low levels of these skills (kuzminov et al., 2019; angrist et al., 2021). a better-educated workforce enhances efficiency in productivity, innovation and the capacity to facilitate and adapt to technological changes. with a skilled workforce, a nation can attract a greater inflow of foreign investment, drive industrial productivity, and compete on a global scale in terms of product quality and services. a nation's investment in health services improves the state of health of its citizens, thereby enhancing longevity and reducing the mortality rate of the labour force. a healthy labour force reduces absenteeism, increases productivity, and improves the income-earning capacity of workers. moreover, human development raises the intellectual capacity of the labour force to be more creative in innovation and entrepreneurship, and enhances their capacity to be receptive to and apply new technological improvements. a knowledgeable citizen enhances the quality of a nation's institutions by providing services at both the firm and government levels, and by demanding accountability and better governance from the political authority. taken together, government spending and human development are not isolated forces in the contribution to the growth and development of a nation. the two variables can be effectively combined to create a synergistic effect that accelerates and sustains the nation's long-term growth and development. the interactive effects of government spending and human development arise when government spending is directed towards key sectors of the economy, which in turn further boost human development and increase the productivity of businesses and the government, ultimately enhancing a nation's growth and development. for instance, government investment in schools, health, and infrastructure raises the level of worker productivity, governance capacity, and innovation in the country. government spending improves the level of aggregate demand and encourages higher-quality spending from the people. as output expands, it generates additional revenues for the government. it stimulates further investment in human capital, thereby enhancing the nation's capacity for output growth and creating the conditions for long-term development. this research study examines the contributions of government spending and human development to nigeria's economic growth. at the same time, several authors have investigated the impact of government spending on economic growth (tammar, 2021; castillo et al., 2022; buthelezi, 2023; okunola et al., 2024). several other empirical studies have been conducted on the relationship between human development and economic growth (awogbemi, 2023; raj et al., 2024; alenoghena et al., 2025; puttitanun & lerskullawat, 2025). however, studies on the combined effect of government spending and human development on economic growth are scarce in the literature. the lacuna in the dearth of literature on the combined effect of government spending and human development on economic growth constitutes the gap that this study attempts to fill. accordingly, this study has the following specific objectives: one, to examine the impact of government spending on economic growth in nigeria; two, to investigate the effect of human development on economic growth; three, determine the impact of government spending on human development; four, to evaluate the interactive effect of government spending and human development on economic growth and; five, to determine the long-run equilibrium status among the variables of study. given nigeria's unique geographical, social, and historical context, it is imperative to assess how government spending and human development can be optimised to yield realistic economic growth for the economy. by focusing on established theoretical paradigms and available empirical evidence, this research aims to foster a deeper understanding of the interplay between these factors, offering insights and recommendations for future policies that can enhance nigeria's economic trajectory. the scope of this study encompasses the period from 1990 to 2023. the remaining sections in this study are divided as follows: section two covers a review of the conceptual and empirical literature. section three focuses on the study's methodology, while section four concerns the analysis of the data. section five presents the study conclusions and policy recommendations. 2. literature review 2.1. theoretical literature review the theoretical literature surrounding the roles of government spending and human development in economic growth is well-established but remains particularly poignant in the context of developing economies. several economic theories elucidate the significance of these variables, with the keynesian theory of fiscal deficit and the human capital development theory being paramount. keynesian economics posits that government spending plays a crucial role in economic activity, particularly during recessions. according to keynesian principles, increased government expenditure can boost aggregate demand, which subsequently leads to higher levels of employment and income. the keynesian theory argues that increased government spending raises the level of aggregate demand, stimulates improved output of goods and services, crowds in private investment and ultimately raises the level of economic growth (alenoghena, 2022). in the context of nigeria, where external shocks and internal inefficiencies often aggravate cyclical downturns, targeted government spending is crucial for economic stabilisation and growth. the work of maynard keynes has laid the foundation for understanding how effective fiscal policy can stimulate economic activity, suggesting a direct link between government outlays and growth rates. moreover, the human capital theory, as explained by economists like gary becker (human capital, a theoretical and empirical analysis, 1964 and theodore shultz (investment & human capital, 1961), emphasises the significance of investing in human capital—education, health, and skills—as a pathway to enhancing productivity and economic performance. the human capital development theory posits that public sector investment in a worker's education, training, skills, and health promotes their productivity, work attitude, efficiency, and earning capacity. hence, a well-implemented policy on human capital development leads to increased economic growth and development for both individuals and nations. the key aspects of human capital development include regarding education as an investment, improving workforce capabilities, and fostering a more innovative and productive economy through the accumulation of knowledge and abilities. nigeria, with a high population of uneducated and underemployed citizens, indicate an immense potential for growth and development, which is often frustrated by a lack of investment in human capabilities. japinye et al. (2025) underscore this need for human asian business research journal, 2025, 10(10): 42-52 44 © 2025 by the authors; licensee eastern centre of science and education, usa capital investment as a fundamental precondition for the country's economic advancement. government public sector policies aimed at fostering education and health services are not merely social welfare initiatives but essential components of a financial strategy to improve the the theories interlink in a manner that suggests an effective government stance on spending should prioritise sectors that directly influence human development. economists have documented cases where countries with higher investments in health and education enjoy faster rates of gdp growth. in nigeria, the challenge remains in translating theoretical principles into practical action. 2.2. empirical literature review the empirical literature review is discussed in terms of the relationships between government spending and economic growth, as well as between government spending and human development. 2.2.1. relationship between government spending and economic growth the discussion on the relationship between government spending and economic growth yields three strands of literature. first, empirical studies suggest a positive relationship between the variables (bakare et al., 2016; nwakobi et al., 2018; biplob, 2019; wahyudi, 2020; chandana, 2020; tammar, 2021; okunola et al., 2024). the proponents of a positive relationship between government spending and economic growth favour the keynesian theory of fiscal deficit. the keynesian theory posits that government spending increases aggregate demand, which in turn enhances the level of economic activity and stimulates private investment. the second strand of literature believes that government spending has a negative relationship with economic growth and crowd-out private investment (shetta & kamaly, 2014; hussain et al., 2015; saibu & alenoghena, 2017; oladele et al., 2017; tung, 2018; akamobi & unachukwu, 2021; castillo et al., 2022; buthelezi, 2023). the authors in support of a negative relationship between government spending and economic growth belong to the classical school of thought who believe that government involvement in economic activity adversely impacts on the economy and crowd out private the third strand of empirical studies on the relationahip between government spending and economic growth contend that the country's level of economic activity is indifferent to the changes in government spending these empirical studies in this section favour the ricardian equivalence hypothesis (reh) and argue that households anticipate the level of taxation required for the changes in fiscal policy and hence smoothen their expenditures such that their pattern of consumption and total output does not respond to changes in government spending (sunge et al., 2015; abada, 2016; ofori-abebrese & pickson, 2018; i̇kiz, 2020; munir & mumtaz, 2021: isah et al., 2022; rašković, 2023). 2.2.2. the relationship between human development and economic growth an investigation into the results of empirical studies on the relationship between human development and economic growth reveals a positive relationship between the variables in all the studies examined (altiner & toktas, 2017; rahman, 2020; kuswanto, 2021; sultana, 2022; awogbemi, 2023; raj et al., 2024; alenoghena et al., 2025; puttitanun & lerskullawat, 2025). the proponents of a positive relationship between human development and economic growth believe in the application of the human capital development theory. the theory argues that improvements in human capabilities (skills, health, income, and education) will enhance innovation and productivity, thereby fostering an increase in the level of economic activities. the authors argue that economic growth will generate the necessary resources to finance improved income, better health, enhanced skills and education, and a boost in overall economic welfare for the people. therefore, the relationship between human development and economic growth creates a virtuous cycle, whereby progress in human development promotes progress in economic growth in a reinforcing manner, leading to a beneficial and sustainable outcome for the nation in the long run. 2.2.3. the relationship between government spending and human development a positive relationship exists between government spending and human development (akinyele et al., 2025; rahmawati & intan, 2020; nurvita, 2022; amalia et al., 2022; goldani & momeni, 2023; bassey et al., 2023). empirical studies that emphasise a positive relationship between government spending and human development suggest that the government may invest in education and health to build human capacity and improve the quality of life, thereby enhancing the human development index (hdi). additionally, increased government expenditure on capital projects has a positive impact on human income and welfare. hence, the allocation of spending on social infrastructure and public services is vital for optimising the benefits for human development. the second strand of empirical literature confirms a negative relationship between government spending and human development (olofin, 2020; omodero, 2019; abbah et al., 2025). the advocates of a negative relationship between government spending and human development argue that it occurs when a specific type of government spending, specifically related to administrative costs, can lead to diminished human development outcomes. on a standard scale, public investments in areas such as infrastructure, health, and education tend to have positive effects. this trend of a reverse relationship suggests inefficiency or corruption in the government's administrative function, leading to the diversion of resources that could have been used to enhance human development and the welfare of the people. the third strand of literature concerns empirical studies that have yielded mixed results regarding the relationship between disaggregated government spending and human development, or have found no relationship between the two (onabote et al., 2023; sasongko & wibowo, 2022; ruzima & veerachamy, 2023; nwokoye, 2017; okafor, 2017). the empirical studies in this category were unable to identify a specific or categorical relationship between government spending and human development. 2.3. gaps in empirical literature the first gap in the literature concerns the inconclusive and contradictory results in the empirical relationship between government spending, human development, and economic growth (amalia et al., 2022; sasongko & wibowo, 2022; ruzima & veerachamy, 2023). some studies find a positive and significant relationship, indicating that improved government spending on education, health, and infrastructure enhances human capital accumulation asian business research journal, 2025, 10(10): 42-52 45 © 2025 by the authors; licensee eastern centre of science and education, usa and long-run growth. other studies on the subject, however, report weak, negative, or statistically insignificant effects, often attributing this to issues such as misallocation of resources, corruption, poor governance, or the crowding out of private investment. the second gap pertains to the non-interacted (synergistic) effect of government spending and human development on economic growth. the lacuna created by the second gap constitutes the central point to be sorted out in this research study. 3. methodology 3.1. research design this study examines the impact of government spending and human development on nigeria's economic growth. the nigerian government is the largest spender in the country and can impact formal educational institutions, training institutes, and health facilities to improve the service contributions of human resources in the country. the improvements in human skills and work attitude will, in turn, enhance the quantity and quality of productivity in both the public and private sectors of the economy, thereby improving the level of economic growth. additionally, government investment in infrastructure and other productive endeavours may also enhance the earning capacity and welfare of workers. the research design adopted for this study is an exploratory design that employs an ex-post facto approach and a survey. thus, the research study utilises secondary data secured from the central bank of nigeria (cbn) and world development index (world bank) data publications. the variables deployed for analysis in this study include economic growth (proxied by gdp per capita), government spending (gsp), human development (hdi), inflation (infl), trade openness (trade), population (popn), and infrastructure (ifrst). 3.2. model specification the model deployed in this research study follows the model by sultana et al. (2022) and castillo et al. (2022). the model expresses economic growth (eg) as the dependent variable and government spending (gsp) and human development (hdi) as the explanatory variables. the control variables for the model include inflation (infl), trade openness (trade), population (popn) and infrastructure (ifrst). the variables are shown in equation (1) as follows: economic growth = f(government spending, human development, inflation, trade openness, infrastructure). the expression may be more compact in equation (1) shown as follows: eg = f(gsp, hdi, infl, trade, popn, infrst) (1) equation (1) can be expressed further in the functional form: 𝐸𝐺𝑡 = 𝛽0. (𝐺𝑆𝑃1𝑡)𝛽1 . (𝐻𝐷𝐼2𝑡)𝛽2 . (𝐼𝑁𝐹𝐿3𝑡)𝛽3 . (𝑇𝑅𝐴𝐷𝐸4𝑡)𝛽4 . (𝑃𝑂𝑃𝑁5𝑡)𝛽5 . (𝐼𝑁𝐹𝑅𝑆𝑇6𝑡)𝛽6 (2) for estimation purposes, equation 2 has to be log-linearised. the log-linearising process is necessary to configure the scales of the variables to streamline the data fluctuations. therefore; 𝐿𝑛𝐸𝐺𝑡 = 𝛽0 + 𝛽1𝐿𝑛𝐺𝑆𝑃1𝑡 + 𝛽2𝐿𝑛𝐻𝐷𝐼2𝑡 + 𝛽3𝐿𝑛𝐼𝑁𝐹𝐿3𝑡 + 𝛽4𝐿𝑛𝑇𝑅𝐴𝐷𝐸4𝑡 + 𝛽5𝐿𝑛𝑃𝑂𝑃𝑁5𝑡 + 𝛽6𝐿𝑛𝐼𝑁𝐹𝑅𝑆𝑇6𝑡 + 𝜇𝑡 (3) equation (3) may be utilized to investigate objectives one and two – the effects of government spending and human development on economic growth. equation (2) will be recalibrated to resolve objective three as follows: 𝐿𝑛𝐻𝐷𝐼𝑡 = 𝛽0 + 𝛽1𝐿𝑛𝐺𝑆𝑃1𝑡 + 𝛽2𝐿𝑛𝐸𝐺2𝑡 + 𝛽3𝐿𝑛𝐼𝑁𝐹𝐿3𝑡 + 𝛽4𝐿𝑛𝑇𝑅𝐴𝐷𝐸4𝑡 + 𝛽5𝐿𝑛𝑃𝑂𝑃𝑁5𝑡 + 𝛽6𝐿𝑛𝐼𝑁𝐹𝑅𝑆𝑇6𝑡 + 𝜇𝑡 (4) equation (4) is configured to assess the effect of government spending on human development 𝐿𝑛𝐸𝐺𝑡 = 𝛽0 + 𝛽1𝐿𝑛𝐺𝑆𝑃1𝑡 + 𝛽2𝐿𝑛𝐻𝐷𝐼2𝑡 + 𝛽3𝐿𝑛𝐺𝑆𝑃 ∗ 𝐻𝐷𝐼3𝑡 + 𝛽4𝐿𝑛𝐼𝑁𝐹𝐿4𝑡 + 𝛽5𝐿𝑛𝑇𝑅𝐴𝐷𝐸5𝑡 + 𝛽6𝐿𝑛𝑃𝑂𝑃𝑁6𝑡 + 𝛽7𝐿𝑛𝐼𝑁𝐹𝑅𝑆𝑇7𝑡 + 𝜇𝑡 (5) equation (5) is designed to determine the interacted effects of government spending and human development on economic growth in nigeria. where 𝛽0, 𝛽1, 𝛽2 , 𝛽3, 𝛽4, 𝛽5, 𝛽6 & 𝛽7 are the coefficients to be estimated in the models and 𝜇𝑡is the stochastic error term. furthermore, the apriori expected signs of the coefficients are 𝛽1 > 0, 𝛽2 > 0, 𝛽3 > 0, 𝛽4 < 0, 𝛽5 > 0, 𝛽6 < 0 & 𝛽7 > 0. therefore, the parameter 𝛽′ > 0 implies a positive relationship between the dependent and the explanatory variables. also, 𝛽′ < 0 indicates a negative relationship between the dependent and explanatory variables. 3.3. sources of data and variable definition the study uses annual time series data with 34 observations from 1989 to 2023. thus, the data's primary sources are the nigerian central bank's statistics report and the world bank development indicators, 2022. asian business research journal, 2025, 10(10): 42-52 46 © 2025 by the authors; licensee eastern centre of science and education, usa table 1. variable definition and measurements. variable full name measurement source eg economic growth gdp per capita refers to the gross domestic product (at constant prices) divided by mid-year population wdi gsp government spending federal government spending refers to the total expenses incurred by the federal government to execute its functions and responsibilities. some examples are defense, education, healthcare and infrastructure. (taken as a ratio of gdp) cbn hdi human development index hdi measures the contributions of formal education, new skills, training and income to the employee’s productivity. it is an index that ranges between zero and one to indicate the productivity capacity of an ideal employee who enjoys full health and with a good educational standard. wdi infl inflation the inflation rate on the consumer price index estimates the annual percentage change in cost to the average consumer in terms of purchasing a basket of goods and services annually. the laspeyres formula is used wdi trade trade openness the addition of exports and imports together divided by the gdp and taken as a percentage. it indicates the degree of trade liberalization. wdi popn population population growth rate: the average annual change in the size of a population. it is expressed as a percentage and reflects the overall change in individuals due to changes in births, deaths, immigration, and emigration. wdi infrst index for infrastructure principal component analysis estimation of an index comprising air and road transport, fixed telephone and energy use. cbn source: compiled from wdi and cbn reports (2023). 3.4. analytical framework this research employs the dynamic ols (dols) approach for data analysis. the dols is firmly entrenched in the fully modified ols (fmols) as an estimator that utilises a semi-parametric correction method to address the inherent challenges associated with the long-run association of the stochastic regressors that often arise in the assessment of a long-run equilibrium cointegrating framework. the fmols estimator is a characteristically unbiased approach that provides optimal estimates in developing the cointegrating regression methodology. additionally, the procedure incorporates the attribute of combining efficiency with the normalised asymptotic, allowing for the basic wald tests while utilising the standard statistical inference procedure of the chi-square approach. consequently, the expanded framework of the dols streamlines the groundwork for the assessment of the asymptotic attribute of the fmols in replications that merge regressors with the volatile order of integration, like regressors with characteristics of being stationary at level [i(0)] with those that are stationary at first difference [i(1)].the cointegrating regression method deploys the initial estimates of a symmetric long-run covariance matrice of the error term. suppose is the set of residuals attained after assessing equation 4, then can be obtained incidentally and acknowledged as in the course of the regression analysis. (4) r may be obtained from the simulated regression analysis procedures. hence, we can generate equation (5) in the order: (5) if we declare and as the long-run of the associated covariance matrices that is estimated while applying the error term residuals , then we can present the adjusted data in the form of equation (6) as follows: (6) inferring from the fmols, the dols procedure is developed from an asymptotically efficient estimator that eliminates the feedback often associated with the cointegrating regression system that is supported by saikkonen (1992) and stock and watson (1993). the dols approach demands an extension of the cointegrating regression analysis utilizing lags and leads associated with ∆𝑋𝑡 in a way that the incidental cointegrating equation residual is orthogonal in reference to the history process of the random regressor simulation. hence, equation (7) presents the basic dols model: 𝑦𝑡 = 𝑋𝑡 ′𝛽 + 𝐷1𝑡 ′ 𝛾1 + ∑ ∆𝑋𝑡+𝑗 ′ 𝛿 + 𝜇1𝑡 − − − (7) 𝑝 𝑗=−𝑞 where: 𝑦𝑡 is the dependent variable; x refers to the matrix of dependent variables; 𝛽 comprises the cointegrating vector associating the long-run cumulative multipliers, also, often regarded as the long-run impact of a change in x on y; p refers to the lag length and q is the lead length. assuming the summation of q lags in addition to r leads, the differenced regressors will immerse all the existing long-run association between 𝜇1𝑡and 𝜇2𝑡, such that least-squares estimates of 𝜃 = (𝛽′, 𝛾′)′ of equation (7) asian business research journal, 2025, 10(10): 42-52 47 © 2025 by the authors; licensee eastern centre of science and education, usa will now possess a similar asymptotic distribution as those estimated from the fmols. the dols is characterised as an estimator to asymptotic variance matrix of 𝜃 is assessed by utilizing the classical ols coefficient covariance. the process entails the substitution of the basic estimator for the residual variance which belongs to 𝜇1𝑡 in addition to another estimator with the long-run variance for the random term. therefore, the cointegrating regression to be estimated may be presented thus: 𝐿𝑛𝐸𝐺𝑡 = 𝛽0 + 𝛽1𝐿𝑛𝐺𝑆𝑃𝑡1 + 𝛽2𝐿𝑛𝐻𝐷𝐼𝑡2 + 𝛽3𝐿𝑛𝐼𝑁𝐹𝐿𝑡3 + 𝛽4𝐿𝑛𝑇𝑅𝐴𝐷𝐸𝑡4 + 𝛽5𝐿𝑛𝑃𝑂𝑃𝑁𝑡5 + 𝛽6𝐿𝑛𝐼𝑁𝐹𝑅𝑆𝑇𝑡6 + ∑ 𝑑1∆𝐿𝑛𝐺𝑆𝑃𝑡−𝑗 + 𝑝 𝑗=−𝑞 ∑ 𝑑2∆𝐿𝑛𝐻𝐷𝐼𝑡−𝑗 + 𝑝 𝑗=−𝑞 ∑ 𝑑3∆𝐿𝑛𝐼𝑁𝐹𝐿𝑡−𝑗 + 𝑝 𝑗=−𝑞 ∑ 𝑑4∆𝐿𝑛𝑇𝑅𝐴𝐷𝐸𝑡−𝑗 𝑝 𝑗=−𝑞 + ∑ 𝑑5∆𝐿𝑛𝑃𝑂𝑃𝑁𝑡−𝑗 𝑝 𝑗=−𝑞 + ∑ 𝑑5∆𝐿𝑛𝐼𝑁𝐹𝑅𝑆𝑇𝑡−𝑗 𝑝 𝑗=−𝑞 − − (8) 3.5. estimation procedure the estimation procedure for this research study utilises a four-step procedure. step one involves descriptive statistics, as well as the correlation matrix of the regressors. step two consists of the stationarity test, which entails determining the order of integration using the augmented dickey-fuller (adf) approach and the phillips-perron (pp) approach. step three focuses on determining the long-run equilibrium cointegration of the study variables using the engle-granger single-equation cointegration model. the fourth step involves regression analysis using the dynamic ols method. 4. empirical analysis and results 4.1. descriptive statistics this subsection of the research work examines the statistical properties of the variables used in this study. the attributes of the study variables are presented in table 1. the means of economic growth, government spending, human development, inflation, trade openness, population, and infrastructure are 7.02, 8.88, 8.32, 19.06, 35.47, 2.59, and 0.37, respectively. the maximum values for the variables, presented in the same order, are 8.07, 17.28, 10.52, 72.83, 53.27, 2.80, and 2.74. the period of study for the variables spans from 1989 to 2023, resulting in 35 observations. the variables that recorded the highest and lowest standard deviation values (variability) are inflation and population, with 16.56 and 0.22, respectively. the skewness of the data shows that it is negatively skewed, with economic growth, human development, trade openness, and population all recording negative values. hence, the distribution is negatively skewed (to the left). kurtosis measures the peak of the distribution, and in this data, it shows that it is platykurtic (below normal), as four variables (economic growth, human development, trade openness and infrastructure) all have values that fall below the threshold of 3, while the other three variables have kurtosis with values above 3. for the jarque-bera statistic, four variables (economic growth, human development, trade openness and infrastructure) have high probability values above 0.05. therefore, the null hypothesis of a normal distribution cannot be rejected. hence, the study data are typically distributed. table 1. descriptive statistics. lneg gsp hdi infl trade popn infrst mean 7.0258 8.5538 8.3210 19.0626 35.4764 2.5909 0.3672 median 7.4098 8.1113 8.4710 13.0070 34.4578 2.6422 0.3104 maximum 8.0712 17.2862 10.6240 72.8355 53.2780 2.8028 2.7395 minimum 5.5985 5.0893 5.6910 5.3880 16.3522 2.0928 -1.6971 std. dev. 0.7787 2.6702 1.4145 16.5578 9.3378 0.2220 1.6804 skewness -0.2700 1.4184 -0.1868 1.9471 -0.0203 -1.2950 0.0765 kurtosis 1.4672 5.2321 2.1457 5.6990 2.3738 3.3756 1.3658 jarque-bera 3.8516 19.0017 1.2680 32.7383 0.5743 9.9885 3.9288 probability 0.1458 0.0001 0.5305 0.0000 0.7504 0.0068 0.1402 sum 245.903 299.382 291.236 667.191 1241.675 90.683 12.851 sum sq. dev. 20.6182 242.4168 68.0284 9321.4220 2964.6080 1.6756 96.0054 bservations 35 35 35 35 35 35 35 4.2. correlation matrix of regressors the correlation matrix presents the estimates of the correlation values for all variables and is shown in table 2. the estimated correlation values of all study variables are generally low, except for those between government spending and infrastructure, as well as government spending and economic growth. the weakest correlations occur between trade openness and inflation, as well as population and inflation. overall, the general trend of correlation values among the variables suggests that the dataset does not suffer from multicollinearity. asian business research journal, 2025, 10(10): 42-52 48 © 2025 by the authors; licensee eastern centre of science and education, usa table 2. correlation matrix. covariance analysis: ordinary correlation lneg gsp hdi infl trade popn infrst lneg 1 gsp -0.7579 1 hdi 0.5199 -0.6303 1 infl -0.5612 0.2321 -0.4840 1 trade -0.2696 0.2568 -0.3944 -0.1115 1 popn -0.2845 0.2419 -0.6047 0.0113 0.6256 1 infrst 0.5396 -0.7023 0.6844 -0.4447 -0.3709 -0.5134 1 4.3. unit root test table 3 presents the unit root test results obtained using the augmented dickey-fuller (adf) and phillipsperron (pp) tests. the test involves deploying all the variables used in this study. the results from the test show that all the variables covered in the study become stationary at the first difference. hence, they are stationary at order one [i(1)]. the scenario of order-one stationarity indicates that the series's values are uniformly stationary at a second level. the most appropriate next step in analysis is to test for an equilibrium cointegrating relationship using the engle-granger approach or the johansen test to determine if a long-run equilibrium cointegrating relationship exists. table 3. unit root test. null hypothesis: series has a unit root series: lneg gsp hdi infl trade popn infrst method adf fisher chi-square phillips-perron test series t-stat prob order of integration maximum lag t-stat prob order of integration maximum lag lneg -4.6676 0.0007 i(1) 1 -4.6763 0.0007 i(1) 1 gsp -10.0282 0.0000 i(1) 1 -13.6451 0.0000 i(1) 1 hdi -3.8494 0.0060 i(1) 1 -3.8221 0.0064 i(1) 1 infl -6.1946 0.0000 i(1) 1 -6.1264 0.0000 i(1) 1 trade -5.7583 0.0000 i(1) 1 -12.0319 0.0000 i(1) 1 popn -4.1017 0.0375 i(1) 1 -4.7041 0.0076 i(1) 1 infrst -6.4541 0.0000 i(1) 1 -6.4541 0.0000 i(1) 1 1% level -3.6394 1% level -3.6463 5% level -2.9511 5% level -2.9540 10% level -2.6143 10% level -2.6158 4.4. engle-granger cointegration test the engle-granger method of cointegration analysis was employed in this study to examine the long-run equilibrium cointegration relationship among all the variables considered. the test engages all the variables that make the model endogenous, enabling the determination of a long-run equilibrium relationship among them. the results of the cointegration evaluation are presented in table 4. the z-statistic (comprising the normalised autocorrelation coefficient) together with the engle-granger tau-statistic jointly reject the null hypothesis of no cointegration among the variables at the 5% significance level. an assessment of the seven variables in the study confirms the existence of cointegration among four of them: government spending, human development, inflation, and trade openness. the values of the complementary probability are evaluated based on the mackinnon feedback to culminate in the apparent model output. with the size of the sample and the associated probabilities of all the variables, the respective critical values validate the presence of seven (7) cointegrating equations at the 10% level of significance based on the application of the tau-statistic and z-statistic estimations. therefore, the test confirms the presence of a long-run equilibrium cointegrating relationship among the variables: economic growth, government spending, human development, inflation, trade openness, population, and infrastructure. asian business research journal, 2025, 10(10): 42-52 49 © 2025 by the authors; licensee eastern centre of science and education, usa table 4. engel-granger cointegration test. series: lneg gsp hdi infl trade popn infrst automatic lags specification based on schwarz criterion (maxlag=8) dependent tau-stat prob.* z-statistic prob.* lneg -5.0793 0.1141 -29.4856 0.1156 gsp -6.2682 0.0139 -37.8830 0.0087 hdi -5.0734 0.1033 -53.4446 0.0000 infl -5.7860 0.0274 -35.1628 0.0447 trade -5.8262 0.0253 -35.9093 0.0367 popn -3.4254 0.7050 -18.0446 0.6945 infrst -4.4237 0.2844 -25.1589 0.2811 lneg gsp hdi infl trade popn infrst rho 1 -0.8672 -1.1142 -0.2280 -0.8544 -0.9155 -0.5307 -0.7400 rho s.e. 0.1707 0.1778 0.1012 0.2287 0.1745 0.1549 0.1673 residual variance 0.0217 2.4940 0.1075 105.7886 45.9705 0.0088 0.1089 long-run residual variance 0.0217 2.4940 0.1075 109.4473 45.9705 0.0088 0.1089 number of lags 0 0 0 1 0 0 0 number of observations 34 34 34 33 34 34 34 no. of stochastic trends** 7 7 7 7 7 7 7 4.5. dols impact analysis of government spending and human development on economic growth in nigeria the impact analysis of government spending and human development on nigeria’s economic growth is presented in table 5. at the same time, government spending, inflation, trade openness, and infrastructure are significant in impacting economic growth, human development, and population, but not significant. in more specific terms, government spending has a negative and significant impact on human resources. in terms of elasticity analysis, the explanatory variable regression coefficients for gsp, infl, trade, and infrst are 0.043, -0.006, -0.007, and 0.332, respectively. thus, a 1% change in gsp, inflation, and trade will induce a 0.04%, 0.01%, and 0.01% change in economic growth, respectively, in the opposite direction. conversely, a 1% change in trade will induce a 0.33% change in economic growth in the same direction. finally, while government spending has a negative and significant impact on economic growth, the effect of human development on economic growth is not substantial. table 5. effect of government spending and human development on economic growth. dependent variable: lneg method: dynamic least squares (dols) cointegrating equation deterministics: c variable coefficient std. error t-statistic prob. gsp -0.0431 0.0130 -3.3193 0.0026 hdi 0.0916 0.4309 0.2127 0.8332 infl -0.0061 0.0018 -3.2975 0.0027 trade -0.0076 0.0033 -2.3187 0.0282 popn 0.4266 0.9308 0.4583 0.6606 infrst 0.3315 0.0739 4.4884 0.0028 c 7.2698 4.7527 1.5296 0.1700 r-squared 0.8925 mean dependent var 7.0526 adjusted r-squared 0.8669 s.d. dependent var 0.7809 s.e. of regression 0.1421 sum squared resid 0.1413 long-run variance 0.0083 the effect of the adjusted r-square shows that 87% of the variation in the dependent variable is accounted for by the variations in the explanatory variables. 4.6. dols impact analysis of government spending on human development an evaluation of the effect of government spending on human development using the dols approach is shown in table 6. the table shows that four out of the six explanatory variables in the model have a significant effect on human development. the impact of government spending on human development is negative and significant. more specifically, a 1% change in government spending induces a 0.41% change in human development in the opposite direction. the adjusted r-squared in the model indicates that the variation in the independent variables explains 77% of the variation in human development. asian business research journal, 2025, 10(10): 42-52 50 © 2025 by the authors; licensee eastern centre of science and education, usa table 6. effect of government spending on human development. dependent variable: hdi method: dynamic least squares (dols) cointegrating equation deterministics: c variable coefficient std. error t-statistic prob. gsp -0.4138 0.0597 -6.9275 0.0002 lneg -1.6330 0.5519 -2.9588 0.0211 infl -0.0563 0.0038 -14.9805 0.0000 trade -0.0457 0.0143 -3.2082 0.0149 popn -1.3775 0.7463 -1.8458 0.1074 infrst 0.5796 0.2588 2.2401 0.0601 c 29.4095 2.9308 10.0348 0.0000 r-squared 0.7937 mean dependent var 8.4089 adjusted r-squared 0.7721 s.d. dependent var 1.2621 s.e. of regression 0.2108 sum squared resid 0.3109 long-run variance 0.0110 4.7. dols impact analysis of the combined effect of government spending and human development on economic growth an examination of the synergistic effect of government spending and human development on economic growth in nigeria is shown in table 7. the model indicates that four of the seven independent variables (inflation, trade openness, population, and infrastructure) have a significant impact on economic growth. moreover, the model results indicate that the interaction coefficient between government spending and human development has a positive but insignificant impact on economic growth. table 7. effect of the interacted impact of government spending and human development on economic growth in nigeria. dependent variable: lneg method: dynamic least squares (dols) cointegrating equation deterministics: c variable coefficient std. error t-statistic prob. gsp -1.0495 0.7724 -1.3587 0.2674 hdi -0.7646 0.8044 -0.9505 0.4120 gsp*hdi 0.1493 0.1013 1.4742 0.2369 infl -0.0063 0.0019 -3.2794 0.0030 trade -0.0086 0.0038 -2.2526 0.0329 popn 2.4299 0.7316 3.3214 0.0450 infrst 0.4273 0.0528 8.0904 0.0039 c 6.4605 6.9524 0.9292 0.4213 r-squared 0.6994 mean dependent var 7.0526 adjusted r-squared 0.6935 s.d. dependent var 0.7809 s.e. of regression 0.0629 sum squared resid 0.0119 long-run variance 0.0028 this means that government spending in nigeria has not been well-targeted to impact human development in the country positively. the adjusted r-squared indicates that 69% of the variation in economic growth is explained by the variations in the model's independent variables. 4.8. normality test the normality test for the data utilized in this study in shown in figure 1. while the data is positively skewed, the kurtosis shows an average height with 3.13. therefore, the distribution is mesokurtic falling into the category of a normal distribution. the jarque-bera is 0.697 with a probability of 0.706 indicates that we cannot reject the null hypothesis of a normal distribution. figure 1. normality test. asian business research journal, 2025, 10(10): 42-52 51 © 2025 by the authors; licensee eastern centre of science and education, usa 5. summary, conclusions and policy recommendations this study examines the impact of government spending and human development on nigeria's economic growth, spanning the period from 1989 to 2023. the study utilises economic growth as the dependent variable with government spending and human development as the independent variables. the control variables deployed in the study include inflation, trade openness, population and infrastructure. the study is timely, as the country is still in the planning stage to enhance the development and contributions of the human factor to the overall improvement of welfare in the country. for analysis, the study employed the dynamic ols approach, which constitutes an improvement over the basic ordinary least squares model, as the study variables do not require any transformation to achieve a normal distribution. the study has drawn specific conclusions based on the empirical findings of the research analysis. the study underscores that government spending has a negative and significant effect on economic growth in nigeria. the adverse effects of government spending on economic growth are corroborated by some existing empirical studies (akamobi & unachukwu, 2021; castillo et al., 2022; buthelezi, 2023). the proponents of an adverse effect of government spending on economic growth argue in favour of the neoclassical crowding-out hypothesis. the belief that government spending and borrowing activities negatively impact private sector productivity, ultimately leading to adverse effects on the country's economic activities. also, the study found that human development has no significant effect on economic growth. the adverse effect of human development on economic growth often occurs in developing countries where the population is large and unskilled. additionally, when there is excessive and reckless government spending on education without adequate consideration for its impact on other sectors of the economy, or poor execution of human capital development programs, it can reduce the effect on economic growth (bawono, 2021). the third finding of this study concerns the negative and significant effect of government spending on human development in nigeria. there are existing empirical studies that support the adverse effect of government spending on human development (olofin, 2020; omodero, 2019; abbah et al., 2025). the negative relationship between government spending and human development may occur when a specific type of government spending, such as administrative costs, leads to diminished human development outcomes. the reverse relationship between the variables may indicate inefficiency or corruption in the administrative function of the government, leading to a diversion of resources that could have been used to enhance human development and the welfare of people. the final finding shows that the combined (synergistic) effect of government spending and human development has no significant effect on economic growth in nigeria. when the interaction between government spending and human development has no significant effect on economic growth, it may signal underlying issues in the system, such as corruption, inefficient resource allocation, or political instability and conflict. these negative features would undermine the positive effects of investment in areas like education and health. there are other factors, like the type of expenditure (capital vs. recurrent) or the specific context of a country's stage of development, that could also play a substantial role in undermining the positive effects of government public sector investments. based on the aforementioned findings, this study would proffer the following policy recommendations. the human development indicators of nigeria remain low (hdi ~0.54), while government public spending on education and health is well below international benchmarks. capital spending and investment execution have also been weak in the country. therefore, the first recommendation focuses on improving government spending (15% of the budget) on education and health to meet the international standard. the improvement in health and education spending must be closely followed by effective execution and monitoring to ensure that the projects are well executed and completed. the attention of governments at the state and local levels must be focused on education and health. besides building schools, governments should ensure the maintenance of facilities for optimal performance and provide teachers and health staff at the local school and health centre levels. governments must emphasise the creation of institutions and centres for skills development, with a focus on technology-based courses. the educational curriculum of schools should be continually revised to incorporate modern trends in production and expand the scope of innovative courses, guiding the direction of the young people. the government policy should prioritise early childhood educational development, nutrition, basic schooling, and maternal health. the mode of implementation focuses on scaling up national 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(2020). the relationship between government spending and economic growth revisited. international journal of economics and financial issues, 10(6), 84–91. https://doi.org/10.32479/ijefi.10716 https://doi.org/10.17323/2500-2597.2019.2.19.41 32 © 2025 by the author; licensee eastern centre of science and education, usa asian business research journal vol. 10, no. 11, 32-48, 2025 issn: 2576-6759 doi: 10.55220/2576-6759.771 © 2025 by the authors; licensee eastern centre of science and education, usa the mediating role of experiential quality between tourism motivation and revisit intention: evidence from tourists in hainan, china dong ju wang1 izdihar baharin2 yun zheng3 zai jia yang4 ye zhu5  1school of basic medical sciences, hainan medical university, haikou, hainan, china; graduate school of business, segi university & colleges, kuala lumpur, malaysia. 2unikl business school, kuala lumpur university, malaysia. 3school of humanities and management, youjiang medical university for nationalities, baise, china. 4school of public health, hainan medical university, haikou, hainan, china; graduate school of business, segi university & colleges, kuala lumpur, malaysia. 5graduate school of business, segi university & colleges, kuala lumpur, malaysia. ( corresponding author) abstract this study investigates tourists’ revisit intentions to hainan province by integrating the tourism experience theory (tet) and the push–pull theory into a unified analytical framework. using a quantitative research design and partial least squares structural equation modeling (pls-sem), data from tourists who had visited or were visiting hainan were analyzed to test the relationships among motivation, experiential quality, and revisit intention. the findings demonstrate that tourism motivation exerts a significant positive influence on both experiential quality and revisit intention, while experiential quality has a strong positive effect on revisit intention and mediates the relationship between motivation and behavioral loyalty. these results validate the dynamic process of “motivation→experience→behavior” proposed by tet and extend the push–pull theory by explaining how internal psychological drives transform into revisit behavior through experiential mechanisms. theoretically, this research enriches the understanding of tourist loyalty by linking motivational antecedents with experiential evaluations. practically, it emphasizes the need for destination managers in hainan to enhance motivational appeal and ensure high-quality, authentic tourism experiences that foster emotional attachment and repeat visitation. overall, this study provides new insights into how motivational and experiential processes jointly determine tourists’ behavioral intentions in the context of wellness and experiential tourism. keywords: experiential quality, hainan province, push–pull theory, revisit intention, tourism experience theory, tourism motivation. 1. introduction in the increasingly competitive global tourism industry, revisit intention has been widely recognized as a critical indicator of destination attractiveness and sustainable development (zhang et al., 2014). revisit tourists represent a vital segment of the tourism market, as they demonstrate higher destination loyalty and more stable consumption patterns (chi & qu, 2008; um et al., 2006). however, recent data indicate a clear disparity between countries in terms of revisit rates table 1. for instance, tokyo disney in japan reports a revisit rate exceeding 80%, major theme parks in france achieve rates above 60%, and universal studios florida in the united states reaches over 50% (yiguo & ahmad, 2024). in contrast, china continues to exhibit relatively low revisit rates. large-scale theme parks such as happy valley, oct, and universal studios beijing record revisit rates of only 30%–35%, while natural, cultural, and historical scenic spots report rates below 1%. traditional a-level tourist attractions perform even worse, with revisit rates falling below 10% (yiguo & ahmad, 2024). this situation is concerning, as the loss of repeat visitors may lead to revenue instability and threaten the long-term sustainability of destination development (zhang et al., 2014). in recent years, scholars have increasingly emphasized the experiential perspective in tourism research, recognizing that tourists’ behavioral intentions are not solely driven by cognitive evaluations but are also shaped by emotional and experiential processes (bernaki & marso, 2023). within this perspective, tourism motivation serves as a fundamental psychological force that initiates travel behaviour and influences how tourists perceive and evaluate their destination experiences (bayih et al., 2020). motivated tourists actively seek experiences that fulfil intrinsic needs—such as relaxation, novelty seeking, social interaction, and self-development—which ultimately determine the quality of their tourism experience (orden et al., 2025). https://doi.org/10.55220/2576-6759.771 asian business research journal, 2025, 10(11): 32-48 33 © 2025 by the authors; licensee eastern centre of science and education, usa experiential quality, in turn, reflects tourists’ overall assessment of the sensory, emotional, and authentic aspects of their travel experiences (wang et al., 2023). when the perceived experiential quality meets or exceeds expectations, it elicits positive emotions, enhances satisfaction, and strengthens tourists’ attachment to the destination (juliana et al., 2023). these positive experiences are critical in fostering revisit intention, which serves as a key indicator of destination loyalty and sustainable tourism growth (zhang et al., 2014). building upon these theoretical perspectives, this study develops a conceptual framework linking tourism motivation, experiential quality, and revisit intention. the model posits that experiential quality mediates the relationship between motivation and behavioral intention, explaining how motivational forces translate into repeat visitation behaviour. specifically, highly motivated tourists tend to pursue meaningful and memorable experiences, which in turn enhance their likelihood of revisiting the destination (breiby & slåtten, 2018). hainan province, known as one of china’s most distinctive experiential and wellness tourism destinations, offers an ideal setting to test this framework. its diverse tourism resources—ranging from tropical coastal resorts to wellness, ecological, and cultural tourism—enable a comprehensive assessment of how motivation-driven experiences influence tourists’ behavioral intentions. drawing upon the push–pull theory and tourism experience theory (tet), this study explores the determinants of tourists’ revisit intention in hainan province. it aims to deepen the theoretical understanding of experience-based tourism motivation and provide practical insights for enhancing tourist loyalty and promoting the sustainable development of hainan’s tourism industry. table 1. comparison of reference data of tourists’ revisiting rate in theme parks and scenic spots at home and abroad (%). country theme parks and scenic spots revisiting rate japan tokyo disney ≥80% france madman country theme amusement park ≥60% united states of america universal studios florida ≥50% china happy valley, oct, universal studios ≥30%-35% china natural ecological, cultural and historical scenic spots <1% china traditional a-level tourist attractions <10% source: (yiguo & ahmad, 2024). 2. literature review 2.1. push and pull theory research on tourist motivation emphasizes that tourism behavior is not only influenced by external environmental factors but also, more profoundly, derives from individuals’ psychological needs and intrinsic drives (horner & swarbrooke, 2020). people often choose to travel in order to escape the monotony and routine of daily life, to seek novel and different experiences (pearce & lee, 2005), and to relieve physical and psychological stress while restoring overall well-being (crompton, 1979). in this process, motivation is regarded as the direct driver of behavior, generated both from internal drives—such as self-actualization, self-reward, and self-indulgence at a spiritual level—and from external stimuli (dann, 1977; dunn ross & iso-ahola, 1991). among the many theories of tourist motivation, the push-pull theory has been widely applied to explain tourist behavior. push factors mainly stem from individuals’ internal needs, including escaping reality, seeking novelty, reducing stress, or fulfilling personal desires; while pull factors arise from the attractiveness of the destination, such as unique natural scenery, cultural resources, well-developed infrastructure, and destination image (page, 2011). the interaction between push and pull factors jointly shapes tourists’ travel decisions and consumption behavior. since needs form the basis of motivation (pearce, 2011), the push-pull theory not only reveals the reasons behind travel behavior but also explains tourists’ preferences for particular destinations. therefore, needs-based approaches and pull/push factor approaches are reviewed based on the purpose of this study. the push and pull theory was initially proposed by dann (1977) to explain the motivation of tourists. he believes that the driving force of tourism behavior comes from two main motives: push and pull factors. pushing factors refer to the internal needs or desires of individuals, which are the psychological motivation to make people want to tourism. the pulling factor is the external attraction from the destination, which attracts people to a specific destination by satisfying their psychological needs. with the further development of push-pull theory, scholars began to explore the specific content of push and pull factors and applied them to different tourism situations. crompton (1979) further expanded dann’s work. he believed that the driving factors are closely related to the individual’s escape motivation and seeking motivation, while the pulling factors are reflected in the specific attraction of the destination, such as climate, scenic spots and cultural activities. the research of uysal & jurowski (1994) further refines the push-pull theory, indicating that the interaction of push and pull factors determines the choice and behavior of tourists. they suggest that the driving factor is more about “why people tourism”, while the pulling factor answers the question of “where to tourism”. with the passage of time, push-pull theory has been widely used in the study of tourism intention, especially in understanding tourists’ motivation and intention to revisit. during the development of push-pull theory, scholars further refined the push factors and pull factors into various types of motives, forming a more complex model structure. for example, the driving factors include escape motivation and consumption motivation, while the pulling factors can be subdivided into attraction motivation, natural environment motivation and interpersonal motivation (gan et al., 2023). the push–pull theory provides a useful framework for understanding the underlying motivations that drive tourists’ behavioral intentions. in the context of hainan tourism, push factors represent tourists’ internal psychological needs, such as the desire to escape daily routines, pursue relaxation, or maintain physical and mental well-being. these intrinsic motivations are particularly relevant to wellness tourism, where tourists often seek health preservation, stress relief, and emotional satisfaction. on the other hand, pull factors refer to the external attractions offered by hainan as a destination, including its tropical climate, diverse natural landscapes, cultural resources, and high-quality medical and wellness services supported by the free trade port and boao lecheng asian business research journal, 2025, 10(11): 32-48 34 © 2025 by the authors; licensee eastern centre of science and education, usa policies. these external features provide tangible reasons for tourists to choose hainan over alternative destinations. by integrating push and pull dimensions, this study explores how the interaction between tourists’ psychological needs and the destination’s unique attractions influences their revisit intention. specifically, push factors explain “why tourists are motivated to travel,” while pull factors explain “why they choose hainan as a destination.” for instance, tourists may be pushed by the need for physical recovery or stress relief, and simultaneously pulled by hainan’s rich wellness resources such as hot spring therapy, seaside rehabilitation, or advanced medical treatments in the lecheng pioneer zone. furthermore, the combination of push–pull theory with the tourism experience theory (tet) allows this study to investigate the psychological and experiential mechanisms underlying revisit intention. push factors can be reflected in constructs such as attitude and travel motivation, while pull factors are embedded in experiential quality shaped by destination features. by examining both internal and external drivers, the study aims to provide a more comprehensive understanding of tourists’ revisit intentions, offering theoretical contributions to tourism motivation research and practical implications for the sustainable development of hainan’s tourism industry. 2.2. tourism experience theory (tet) the tourism experience theory (tet), developed by gnoth and matteucci (2014), bridges the gap between tourists’ subjective experiences and their observable behaviors in tourism research. early studies on tourism experience, such as those by maccannell (1976) and cohen (1979), primarily emphasized sociological perspectives, focusing on authenticity and typologies of tourist experiences. however, these approaches often lacked a behavioural dimension that could explain how motivations and actions interact to shape experiences. building on this limitation, larsen (2007) argued that tourism experiences should be understood as behaviorally grounded and motivationally driven processes. he emphasized that tourism experiences are not merely the consumption of services, but rather emerge from the dynamic interplay between tourists’ motivations, behaviors, and environmental stimuli. this perspective laid the conceptual foundation for the development of the tourism experience theory (tet). in the 2010s, gnoth & matteucci (2014) formally introduced the tourism experience model, providing a structured framework that conceptualizes the experience as a dynamic and meaning-making process. the model highlights four interrelated dimensions: external stimuli (e.g., destination features, services, and environments), internal motivations and expectations, sensory–emotional–cognitive responses, and behavioural interaction. through this chain, tourists co-create meanings and values that constitute the essence of the tourism experience. more recently, tet has been extended and applied across diverse contexts, including cultural tourism, wellness tourism, and event tourism. it has also been integrated with frameworks such as the memorable tourism experience (mte) construct (kim et al., 2012) and the experience economy perspective (pine & gilmore, 1998), enabling researchers to better capture the long-term effects of experiences on satisfaction, loyalty, and revisit intentions. in addition, tem has been adapted to contemporary contexts such as digital and virtual tourism, reflecting its flexibility and growing relevance. overall, the development of tet can be characterized in three stages: theoretical grounding in motivational and behavioural research (1990s–2000s), formal model construction (2010s), and applied extensions and empirical validations (2020s). today, tet is recognized as a valuable theoretical tool for explaining how motivations, behaviours, and contextual factors converge to generate meaningful tourism experiences and subsequent behavioural intentions. tourism experience theory (tet) provides a critical lens for understanding how tourists’ psychological antecedents and external conditions are translated into behavioural outcomes through the quality of experiences. in this study research framework, tet is operationalized primarily through experiential quality (eq), which serves as a central mediator linking motivational factors with revisit intention (ri). first, eq functions as the core construct of tet. tourism is not merely the consumption of services but rather a holistic experience process involving cognition, emotions, senses, and meaning-making. in this study, eq captures tourists’ overall evaluation of destination services, facilities, and environments, and mediates the relationship between tourism motivation and behavioural outcomes. this is consistent with chen and chen (2010), who argued that experiential quality significantly influences satisfaction and behavioural intentions. second, eq bridges tourism motivation (tm) and revisit intention. while motivations initiate travel behaviour, their translation into loyalty depends on the quality of the experience. the pathway tm→eq→ri in this study framework illustrates this dynamic, consistent with the memorable tourism experience (mte) perspective (kim & mccormick, 2012), which highlights the role of meaningful experiences in sustaining longterm behavioural intentions. in summary, integrating the tourism experience theory (tet) with the push–pull theory enhances the explanatory power of the model by positioning experiential quality as a process-oriented mediating variable. this integration allows the framework to move beyond static predictions of revisit intention, offering a dynamic understanding of how psychological drivers and external conditions are transformed into behavioral outcomes through the tourism experience process. 2.3. revisit intention 2.3.1. definition of revisit intention in the context of tourism, “revisit intention” is a key concept that refers to a tourist’s intention to revisit to the same destination or engage in similar tourism activities after experiencing a particular tourism experience. this concept is central to understanding tourist behavior and is often closely linked to factors such as satisfaction and the quality of the experience. however, the definition and application of “revisit intention” can vary significantly across different studies, each contributing unique insights into the factors that influence a tourist’s decision to revisit. asian business research journal, 2025, 10(11): 32-48 35 © 2025 by the authors; licensee eastern centre of science and education, usa suban (2024) defines “revisit intention” as the likelihood that a visitor will choose the same destination again for a wellness experience after experiencing specific emotions, such as “joy,” “love,” and “positive surprise.” the study highlights that tourists’ satisfaction with their overall experience plays a key role in determining their intention to revisit. this finding emphasize the importance of positive emotional experiences in enhancing tourists’ loyalty to a destination. chen et al (2022) explore the concept of “revisit intention” by examining how the experience landscape in health tourism influences tourists’ intention to revisit through mediator variables such as authenticity, memory, and organizational identity. in this context, “revisit intention” is defined as the tourist’s intention to revisit the destination after a specific wellness experience. the study suggests that creating authentic and memorable experiences can significantly boost the likelihood of tourists revisiting to a destination. from a demand-side perspective, ting et al (2021) analyze how push and pull motives affect the revisit intention of health and wellness tourists. in their study, “revisit intention” is defined as the intention of tourists to revisit a specific health and wellness destination, driven primarily by pull factors such as the attractiveness of the destination. this approach highlights the role of external attractions in shaping tourists’ decisions to revisit. fengmin et al (2022) provide a unique perspective by focusing on medical tourists, they define “revisit intention” as the likelihood of medical tourists choosing the same destination again for medical or wellness tourism, depending on aspects like awareness of nutrition, perceptions of healthcare quality, and confidence in physicians. this study emphasizes the importance of medical quality and trust in healthcare providers in fostering revisit visits. tebourbi & neifar (2018) contribute to the understanding of “revisit intention” by examining the role of behavioral beliefs, subjective norms, and the attractiveness of the destination. their study, using a structural equation model (sem), demonstrates that these factors are critical in shaping consumers’ decisions to revisit a health destination. in the post-pandemic context, abdul-rahman et al (2023) define “revisit intention” as the intention of medical tourists to decide whether to revisit the same medical tourism destination, based on their clinical trust and personal well-being. the study suggests that enhancing clinical trust and promoting well-being are crucial strategies for attracting revisit medical tourists in a post-covid-19 world. finally, vada et al (2019) define “revisit intention” as the behavioral intention driven by the hedonic well-being that tourists obtain during their travel experience. in summary, the concept of “revisit intention” in tourism is multifaceted and influenced by a variety of factors, including emotional experiences, destination attractiveness, medical quality, and psychological and social beliefs. understanding these different dimensions provides valuable insights into how destinations can enhance tourist loyalty and encourage revisit. building on the context of this study and vada’s definition of revisit intention, the definition of revisit intention in this study is hedonic well-being obtained by tourists in the travel experience drives their decision to visit the destination again. the following table 2 provides a clear summary of the different definitions of “revisit intention” in tourism as presented in various studies. table 2. the definition and development of revisit intention. definition and development authors defined as the likelihood that a visitor will choose the same destination again for a wellness experience after experiencing certain emotions, such as “joy,” “love,” and “positive surprise.” the study shows that tourists’ satisfaction significantly affects their revisit intention. (suban, 2024) defined as a visitor’s intention to revisit the destination after a specific wellness experience, influenced by mediator variables such as authenticity, memory, and organizational identity. (chen et al., 2022) defined as the intention of tourists to visit a specific health destination again, driven by pull motives, from a demand-side perspective. (ting et al., 2021) defined as the likelihood of medical tourists choosing the same destination again for medical or tourism based on nutritional knowledge, perceived medical quality, and trust in doctors. (fengmin et al., 2022) defined as consumers’ intention to decide whether to visit a health destination again based on factors such as behavioral beliefs, subjective norms, and the attractiveness of the destination. (tebourbi & neifar, 2018) defined as the intention of medical tourists to decide whether to visit the same medical tourism destination again based on their clinical trust and personal well-being in the post-epidemic era. (abdul-rahman et al., 2023) defined as the behavioral intention that the hedonic well-being obtained by tourists in the travel experience drives their decision to visit the destination again. (vada et al., 2019) 2.3.2. past studies of revisit intention revisit intention refers to the psychological tendency of tourists to consume a specific tourism product or service within a certain period, following a cognitive and emotional evaluation. it reflects tourists’ intention to reconsume or re-experience. while revisit intention is not synonymous with actual tourism behavior or the number of trips, there is often a strong correlation between the two. kozak & rimmington (2000) pointed out that tourists’ intention to revisit the same destination or explore other attractions within the same country is influenced by various factors, including their previous tourism experiences, destination transportation, recreational activities, local price levels, the friendliness of local people, and satisfaction with tourism products or services. moreover, economic and political factors can also influence tourists’ intention to revisit. in terms of the significance of tourists returning to a destination, when they are satisfied with the destination, it plays a significant role in tourism operations, management, and in identifying and meeting tourists’ needs. in revisiting the intention related research, kozak (2003) found that the intention of revisiting is affected by many factors, and the intention of revisiting is different among different types of tourists and different destinations. sampol (1996) believes that a positive impression of a destination helps increase the intention of a visitor to revisit. satisfaction has been widely used as an evaluation index to measure revisited intention, and many scholars have confirmed that revisited intention is related to recreation experience satisfaction. beeho & prentice (1997) believe that if the tourist experience is satisfactory, they will recommend the destination to their friends and relatives. oppermann (2000) compared the effectiveness of two customer loyalty research methods in evaluating new zealand residents’ travel, and concluded that loyalty, including oral recommendation and revisit, can effectively predict tourists’ needs and behaviors. cole & scott (2004) attempt to deepen and expand the research on visitor experience by revealing the mechanism of influence between overall satisfaction and revisit intention. the findings not only confirm the significant influence of overall satisfaction on revisit intention, but also reveal that asian business research journal, 2025, 10(11): 32-48 36 © 2025 by the authors; licensee eastern centre of science and education, usa experiential quality fully mediates the relationship between service quality and overall satisfaction. kim (2021) survey shows that the main influencing factors of tourists’ revisiting intention are psychological and behavioral factors, especially satisfaction and motivation, which will seriously affect tourists’ revisiting intention. to sum up, tourists’ intention to revisit is influenced by various factors, including satisfaction, motivation, tourism experience, and the quality of transportation and services at the destination. studies indicate that overall tourist satisfaction significantly influences revisit intention, with experiential quality acting as a mediator between service quality and satisfaction (siregar et al., 2021). at the same time, tourists’ positive impression and satisfactory experience of the destination can also enhance their recommendation behavior and intention to revisit. therefore, improving the quality of destination experience and enhancing tourists’ satisfaction is very important for promoting tourists to revisit. 2.4. tourism motivation 2.4.1. definition of tourism motivation motivation is a multidimensional and complex concept, which has many definitions and explanations in different fields and scholars’ research. generally speaking, motivation can be summarized as internal and external forces that drive individual behavior, and its core lies in explaining why people choose certain behaviors and under what circumstances they will continue to do so. motivation is regarded as a force driven by basic human needs. for example, maslow’s (1943) hierarchy of needs theory points out that individual behavior is driven by a series of needs from physiological needs to self-realization. mcclelland (1961) further emphasized the importance of needs such as achievement, power and affinity. generally speaking, this view holds that motivation is rooted in individual’s pursuit of various needs, and whether the needs are met or not directly affects the generation and persistence of behavior (potter, 1962). motivation can be divided into internal and external types. deci & ryan (1985) emphasized that intrinsic motivation means that individuals actively participate in activities because of interest and pleasure, while extrinsic motivation is related to external rewards or punishments. this distinction is of great significance in explaining individual independent participation and externally driven behavior. generally, intrinsic motivation is considered to stimulate lasting behavioral engagement more than extrinsic motivation. the concept of motivation originates from the idea of stimulating individuals to act, and it is closely associated with encouragement, which serves as an external factor that influences action. the concept connotation of tourism motivation depends on the explanation of psychology and sociology. crompton (1979) believes that the psychological motivation of tourism is a kind of demand, which is created by the social environment and image of the individual and restricted by factors such as time, economic situation and tourism ability. therefore, crompton & mckay (1997) define tourism motivation as a dynamic process, in which individuals will have unbalanced or nervous psychological factors due to the satisfaction of their needs. however, this study only considers the internal factors such as tourists’ psychological needs, and does not consider the external factors that can attract tourists in tourist destinations. dann (1977) defined tourism motivation as an important inner state that urges individuals or groups to travel, including both the thrust of psychological needs and the pull of tourist destinations that stimulate tourists’ desire to travel. this view that tourism motivation is stimulated by internal and external factors has been widely recognized by scholars. to sum up, combined with dann’s definition of motivation, this study believes that tourism motivation is the motivation that individuals are driven by internal factors and pulled by external factors to promote individuals or groups to carry out certain tourism activities, and it is the reflection of individuals’ needs. 2.4.2. past studies of tourism motivation crompton (1979) identified nine kinds of tourism motivations, and determined the motivations of happy vacationers who influenced the choice of destination. he also tried to establish a conceptual framework that can contain these motives. seven are classified as social psychology, namely: escape from a perceived mundane environment, exploration and evaluation of self, relaxation, prestige, regression, enhancement of kinship relationships, and facilitation of social interaction. the two remaining motives, novelty and education, formed the alternate cultural category. in contrast, socio-psychological motivation is found to have nothing to do with destination attributes. here, the focus shifts from the destination itself to its function as a medium, through which social psychological needs can be met. the research findings suggest that tourism practitioners may benefit from placing greater emphasis on social-psychological motivation when developing products and formulating promotional strategies. by investigating tourists’ motivations of destination experience, pizam et al. (1979) identified the main factors that affect tourism behavior, including culture, entertainment, exploration and other motivations, and analyzed the influence of these motivations on tourism behavior. iso-ahola (1982) puts forward a social psychological model of tourism motivation, and emphasizes the influence of two basic motivations, escape and seeking, on tourism behavior. empirical research shows that the main motivation for tourists to participate in tourism activities is to escape the pressure of daily life and seek new experiences. ryan & glendon (1998) discussed the tourism motivation of different age groups, and revealed the moderating role of age in tourism motivation through empirical analysis. the results show that tourism motivation changes with age, and different opportunities affect tourists’ behavior choices. yoon & uysal (2005) constructed a structural model between tourism motivation, satisfaction and destination loyalty. another study discusses the relationship between memories of tourism experience and tourism motivation. empirical analysis shows that unique tourism experience and positive memories can enhance tourists’ intention to revisit (kim et al., 2012). when studying the push-pull motivation of religious tourism, battour et al. (2017) also found that the push-pull motivation of religious tourism significantly affects tourists’ satisfaction, and religious belief has a moderating effect on the relationship between the pull motivation and tourists’ satisfaction. in conclusion, although the research on tourism motivation has been rich, it is difficult to unify the motivations of tourists under different tourism forms, so only by conducting in-depth empirical research on specific tourism forms can we identify special tourism motives. motivation is one of the important bases of product development. it is of great significance to study the tourism motivation of tourists in tourist destinations under the asian business research journal, 2025, 10(11): 32-48 37 © 2025 by the authors; licensee eastern centre of science and education, usa dual demand to promote product development in tourist areas, and to some extent, it can also enrich the research on tourism motivation. 2.5. experiential quality 2.5.1. definition of experiential quality as a multi-dimensional concept, the experiential quality has gained extensive research attention in the fields of consumer behavior and tourism management. its development process has undergone a multi-stage evolution, progressing from perception and emotion to participation and immersion. by sorting out the definition of experiential quality, we can better understand its core position in the tourism field and its influence on tourists’ behavior. holbrook & hirschman (1982) linked the experiential quality with consumption behavior for the first time in their early studies, emphasizing that experience is the pleasure, emotional satisfaction and imagination that consumers get in the process of consumption. they pointed out that consumption is not only the satisfaction of functional needs, but also a process of emotion and perception. this view emphasizes the subjectivity of experience and holds that the quality of experience comes from the emotional state and psychological reaction experience by individuals in the process of consumption. this definition lays the foundation for later experience research and highlights the importance of consumers’ inner perception. pine & gilmore (1988) elevated the experiential quality to an economic value when introducing the concept of the experience economy. they believe that the experience itself can become a product, and consumers are willing to pay for a unique and unforgettable experience. under this framework, experiential quality involves not only consumers’ perceptions of service outcomes but also their sense of engagement and immersion during the experience. this theory guides enterprises to pay attention to how to create consumers’ active participation by designing rich experience scenes, so as to improve the quality of experience. otto & ritchie (1996) first introduced the variable of experiential quality into the field of tourism research, and put forward four key dimensions of tourism experience: stimulation, reliability, interaction and recovery. they believe that every dimension in tourism will affect the overall experiential quality of tourists. this view expands the definition of experiential quality and applies it to more complex and diverse tourism environments. subsequently, tung & ritchie (2011) further explored the connotation of tourism experience, put forward the concept of “unforgettable tourism experiential”, and emphasized the important role of emotional and psychological experiences in enhancing tourist satisfaction and loyalty. based on the above, this study defines the experiential quality as: tourists’ comprehensive perception and evaluation of environment, service, interaction and emotion in the process of participating in tourism activities. this definition not only includes the perception of tourism service and environment, but also emphasizes the emotional and psychological state produced in the process of experience. the experiential quality is regarded as a key factor affecting tourists’ satisfaction, loyalty and intention to revisit. 2.5.2. past studies of experiential quality in recent years, experiential quality has been regarded as a key mediator variable in tourism research, connecting service quality, tourist satisfaction and behavioral intention. the research of ali et al. (2016) shows that experiential quality has a significant impact on tourists’ satisfaction and revisit intention by influencing tourists’ emotional response in the context of theme parks. this mediation shows that experiential quality not only affects the direct service perception, but also plays a regulatory role between service and behavior intention. through the mediator role of experiential quality, service providers can gain a deeper understanding of tourists’ needs, allowing them to design more appealing experiential products. cole & scott (2004) research shows that experiential quality plays an important mediator role between tourists’ experiential and their satisfaction and loyalty. in other words, the quality of tourists’ experiential in tourism activities directly affects their evaluation of the whole tourism experiential, covering their satisfaction and future revisit intentions. high-quality experiential will not only improve tourists’ satisfaction, but also strengthen their intention to revisit and their positive reputation for their destinations. suhartanto et al. (2020) research further put forward that experiential quality directly affects the loyalty of tourists, and high-quality experience makes tourists get higher satisfaction in tourism activities, thus enhancing their loyalty to tourist destinations. experiential quality not only impacts tourist satisfaction but also plays a significant role in shaping their likelihood to revisit and engage in word-of-mouth sharing by improving their perceived value and overall satisfaction. a survey on port wine cellars shows that the quality of experiential not only mediates between various experience components and satisfaction, but also affects tourists’ future behavior intention. high-quality experience can enhance tourists’ intention to revisit potter wine cellar and recommend this experience to others. this discovery emphasizes the importance of managing and strengthening all aspects of tourism experiential to cultivate loyalty and positive word of mouth (fernandes & cruz, 2016). the latest research found that when participants perceived the quality of the recreational experience to be high, it positively impacted their overall satisfaction and intention to revisit the location (he & luo, 2020; yayla et al., 2023). experiential quality serves as a key mediator variable in tourism, linking service quality, tourist satisfaction, and behavioral intentions. studies have shown that high-quality experiential not only enhance tourists’ satisfaction and perceived value but also strengthen their loyalty, intention to revisit, and positive word-of-mouth. by mediating the relationship between various experiential components and tourist satisfaction, experiential quality plays a crucial role in shaping future behavior. 2.6. hypotheses development asian business research journal, 2025, 10(11): 32-48 38 © 2025 by the authors; licensee eastern centre of science and education, usa tourism motivation refers to the internal psychological drives that encourage tourists to choose a destination and engage in travel behaviors. revisit intention, on the other hand, reflects tourists’ intention or desire to revisit to a destination after their initial experience. in the context of hainan province, a popular destination known for its wellness tourism, motivation may significantly influence tourists’ likelihood of revisiting. motivations such as health benefits, relaxation, unique local culture, and natural attractions could enhance the overall tourism experience, leading to a stronger intention to revisit. push-pull theory explains that internal (push) factors like the desire for wellness or relaxation and external (pull) factors such as the attractiveness of hainan’s environment both contribute to forming the desire to revisit. assaker et al. (2011) provided evidence that motivation is one of the key factors influencing destination loyalty, which includes the intention to revisit. in a chinese tourism context, wu & li (2017) found that tourists’ motivations for seeking cultural experience positively impacted their loyalty, and thus their intention to revisit. in the research of prayag (2012), it is found that the elderly tourists’ escape and relaxation can predict their intention to revisit. in the research on the motivation of spiritual retreat tourism, real experience, natural environment, quiet atmosphere and other stimulating opportunities affect tourists’ intention to revisit (ashton, 2018). according to wang et al. (2021), the study needs to consider different types of motivation related to revisiting intention, including push-pull motivation. hence, we formulate the following hypotheses: h1: tourism motivation has a significant positive impact on tourists’ revisit intention. tourism motivation is an important psychological factor that drives tourists’ behavior, and affects tourists’ decision-making on tourism experience and behavior intention (crompton, 1979). motivation usually includes leisure, escape, exploration, social and cultural experience and so on. according to the theory of tourism motivation, tourists’ motivation not only directly affects their behavior intention, but also plays an indirect role through the quality of experience. high-level tourism motivation urges tourists to pursue positive experiences at their destinations and obtain high-quality experiences, thus enhancing their intention to revisit (iso-ahola, 1982). push-pull theory is an important framework to explain tourism motivation. push factors are the internal needs of tourists, such as leisure, escape, exploration and other internal motives, which drive tourists to travel; pull factors are external attraction, such as scenic spots, services, culture and so on, which make tourists choose a specific destination (dann, 1977). the push factor is often related to the tourists’ internal needs and motivations, while the pull factor is closely related to the quality of experience provided by the destination. experiential quality plays a connecting role between thrust and tension, and realizes the transformation from motivation to revisiting intention through tension factor. lee et al. (2004) found that tourism motivation indirectly affects revisiting intention through experiential quality. their research shows that the stronger the tourists’ motivation, the higher their evaluation of the quality of their destination experiential, and this positive quality of experience further enhances their intention to revisit. kim et al. (2012) pointed out that the quality of experience plays a significant mediator role between motivation and revisiting intention. the cultural motivation of tourists enhances their intention of revisiting by improving the quality of their experience at the destination. the research of prayag & ryan (2012) shows that there is a significant positive correlation between tourism motivation and revisiting intention, and this relationship is mediated by the quality of experience. through the investigation of tourists in the resort, they found that the higher the tourists’ motivation, the higher the quality of their experience, which in turn enhanced their intention to revisit. the research results of chen & tsai (2007) support the view that motivation affects revisiting intention through experiential quality. they found that tourists’ motivation has a significant impact on the experiential quality and revisiting intention, and the experiential quality plays a partial mediator role between them. yoon & uysal (2005) studied the influence of push-pull motivation on tourism behavior, and found that experiential quality plays a mediator role between motivation and behavioral intention. the results show that strong thrust motivation will lead to high-quality experience and enhance tourists’ intention to revisit their destinations. the relationship between motivation and revisiting intention is not only direct, but also realized through the mediator role of experiential quality. strong tourism motivation urges tourists to actively participate in tourism activities and pursue high-quality tourism experience. this high-quality experience further enhanced their intention to revisit. empirical research also supports this view, proving that the quality of experience has a significant mediator role between motivation and revisiting intention. therefore, the following assumptions are made: h2: experiential quality mediates the relationship between tourism motivation and tourists’ revisit intention. building on tourism experience theory (tet), experiential quality in tourism can be understood as the extent to which a destination meets or exceeds the expectations of tourists in terms of activities, amenities, and environmental conditions. when tourists in hainan have a high-quality experience, they are likely to have their expectations confirmed or even exceeded, which fosters higher levels of satisfaction and influences their revisit intention. in the field of tourism, experiential quality refers to tourists’ perceptions of the overall quality of services and experiences they receive during their visit, including accommodations, activities, and environment. when tourists perceive high experiential quality, it positively confirms their expectations, leading to higher satisfaction, and thus, increases their intention to revisit the destination. chen & chen (2010) found that experiential quality significantly influences tourists’ behavioral intentions, including their intention to revisit cultural heritage sites. this study supports the idea that higher levels of experiential quality lead to increased tourist satisfaction, which is a key driver of revisit intention. a study on tourism in lombok, indonesia, demonstrated that high experiential quality positively influenced tourists’ satisfaction and increased their intention to revisit the destination (juliana et al., 2023). similarly, a study on cultural heritage tourism also found that tourists who perceived high-quality experiences were more likely to plan future visits due to increased satisfaction (sari et al., 2021). preceding research approves the relationship between memorable tourism experience, satisfaction, and revisit intention in destination-marketing (chen & rahman, 2018; j.-h. kim, 2018). previous studies have consistently demonstrated that tourists’ memorable experiences are positively associated with overall satisfaction and revisit intention (cifci, 2022). therefore, the following assumptions are made: asian business research journal, 2025, 10(11): 32-48 39 © 2025 by the authors; licensee eastern centre of science and education, usa h3: experiential quality has a significant positive impact on tourists’ revisit intention. 2.7. research framework building on the growing recognition of the experience-based perspective in tourism behavior research, this study proposes a research framework that links tourism motivation, experiential quality, and revisit intention. as shown in figure 1, tourism motivation serves as the fundamental driving force that encourages individuals to participate in tourism activities and shapes their expectations of destination experiences. experiential quality, in turn, reflects tourists’ overall evaluation of the experiential elements encountered during their visit, such as service performance, emotional fulfillment, and sense of authenticity. when tourists perceive their experiences as highly satisfying and meaningful, their intention to revisit the destination is likely to strengthen. therefore, this study posits that experiential quality acts as a mediating variable through which tourism motivation exerts its influence on revisit intention. by testing this mediation mechanism within the context of hainan province—a leading experiential and wellness tourism destination in china—this study aims to deepen the understanding of how motivational factors are transformed into behavioral intentions through experiential perceptions. figure 1. research framework. 3. research methodology 3.1. questionnaire development and measurements to collect the data, a structured questionnaire was developed and validated. the final instrument consisted of two main sections. the first section gathered respondents’ demographic information, including gender, age, education level, occupation, monthly income, and family structure. the second section measured the key research constructs using established or previously validated scales adapted from prior studies (table 3). minor wording adjustments were made to ensure contextual relevance to the present research setting. all items were assessed using a seven-point likert scale, ranging from 1 (“strongly disagree”) to 7 (“strongly agree”). the constructs included tourism motivation (17 items), experiential quality (12 items), and revisit intention (5 items). table 3. constructs and sources for measurement scales. variables items source tourism motivation (17 items) push motivation: 1)escape motivation tm1: i am there to feel the slow pace of life. tm 2: i am there to relieve stress. tm 3: i am trying to escape the worries of real life for a while. 2)consumption motivation tm4: it is easy to get around here. tm5: the cost of transportation is within acceptable limits. tm6: the local consumption level is appropriate. pull motivation: 1)attractive motivation tm7: i get word-of-mouth recommendations from friends and family. tm8: i am attracted by the promotion of online travel platforms, advertisements, etc. tm9: i am attracted by the sharing of other people’s tour experiences on social media platforms such as wechat, weibo, and short videos. 2)natural environmental motivation tm10: the local climate is good and the temperature is comfortable. tm11: the air is fresh here. tm12: this place can be relaxing for the mind and body. 3)interpersonal motivation tm13: i am here to spend time with my family. tm14: i am here to visit friends and family in the neighborhood. tm15: i come here to improve my relationship with my companions. tm16: i am here to share my travel experiences with others and gain social acceptance after my trip. tm17: i am here to make new friends and expand my social circle. (gan et al., 2023) variables items source experiential quality (12 items) involvement eq1: get a new experience. eq2: feel involved with the activity. eq3: can choose any activities which are suitable for me. peace of mind eq4: the attraction environment is comfortable. eq5: the attraction situation is relaxing. recognition eq6: the staff treated me wholeheartedly. (suhartanto et al., 2020) asian business research journal, 2025, 10(11): 32-48 40 © 2025 by the authors; licensee eastern centre of science and education, usa eq7: the staff treated me like i was an important person. learning eq8: increased my knowledge about the attraction. eq9: increased my skill. eq10: made me understand something new. escape eq11: i feel escaped from my daily routine activity. eq12: i can forget my daily activity. variables items source revisit intention (5 items) ri1: i would like to revisit hainan in the near future. ri2: if had to decide again i would choose hainan again. ri3: i would come back to hainan in the future. ri4: i would more frequently visit hainan. ri5: hainan would be my first choice over other destinations. (tosun et al. 2015) prior to the pilot test, the questionnaire was reviewed by an expert panel comprising three scholars in tourism studies to evaluate its content validity and face validity. based on their feedback, a small-scale pilot survey was recommended. considering the large number of tourists visiting hainan, china during the study period, a mixed translation validation procedure was adopted following the guidelines of saunders, lewis, and thornhill (2009). the questionnaire was initially developed in english and then translated into chinese by a bilingual expert. the chinese version was subsequently back-translated into english by another bilingual specialist. the two english versions were compared to ensure semantic and conceptual equivalence, and a chinese language expert further refined the final version for linguistic clarity and cultural appropriateness. a pilot test was then conducted with 51 tourists selected through convenience sampling. as shown in table 4, the “questionnaire on hainan tourists’ revisit intention” demonstrated satisfactory reliability and validity, confirming its feasibility and consistency as a quantitative instrument. consequently, no reduction in the number of items or structural modification of the questionnaire was deemed necessary. table 4. results of the pilot study. variables scale construct cronbach’s α kmo tourism motivation (17 items) push motivation: 1)escape motivation tm1: i am there to feel the slow pace of life. tm 2: i am there to relieve stress. tm 3: i am trying to escape the worries of real life for a while. 2)consumption motivation tm4: it is easy to get around here. tm5: the cost of transportation is within acceptable limits. tm6: the local consumption level is appropriate. pull motivation: 1)attractive motivation tm7: i get word-of-mouth recommendations from friends and family. tm8: i am attracted by the promotion of online travel platforms, advertisements, etc. tm9: i am attracted by the sharing of other people’s tour experiences on social media platforms such as wechat, weibo, and short videos. 2)natural environmental motivation tm10: the local climate is good and the temperature is comfortable. tm11: the air is fresh here. tm12: this place can be relaxing for the mind and body. 3)interpersonal motivation tm13: i am here to spend time with my family. tm14: i am here to visit friends and family in the neighborhood. tm15: i come here to improve my relationship with my companions. tm16: i am here to share my travel experiences with others and gain social acceptance after my tourism. tm17: i am here to make new friends and expand my social circle. 0.96 0.91 sig.＜0.001 asian business research journal, 2025, 10(11): 32-48 41 © 2025 by the authors; licensee eastern centre of science and education, usa experiential quality (12 items) involvement eq1: get a new experience. eq2: feel involved with the activity. eq3: can choose any activities which are suitable for me. peace of mind eq4: the attraction environment is comfortable. eq5: the attraction situation is relaxing. recognition eq6: the staff treated me wholeheartedly. eq7: the staff treated me like i was an important person. learning eq8: increased my knowledge about the attraction. eq9: increased my skill eq10: made me understand something new. escape eq11: i feel escaped from my daily routine activity. eq12: i can forget my daily activity. 0.97 0.93 sig.＜0.001 revisit intention (5 items) ri1: i would like to revisit hainan in the near future. ri2: if had to decide again i would choose hainan again. ri3: i would come back to hainan in the future. ri4: i would more frequently visit hainan. ri5: hainan would be my first choice over other destinations. 0.93 0.86 sig.＜0.001 3.2. sampling and data gathering the target population of this study consisted of tourists who visited hainan province between april and may 2025 and had previously traveled to the island. given the absence of accurate data regarding the population size and distribution, a non-probability convenience sampling approach was employed. data were collected at several major tourist attractions, including holiday beach scenic spot in haikou, nanshan cultural tourism zone, and tianya haijiao scenic spot in sanya. these sites were purposefully selected due to their popularity and high tourist visitation rates. eligible respondents were first screened based on the study criteria and, upon obtaining their consent, were invited to complete the questionnaire on-site. in total, 547 tourists were approached during the data collection period, resulting in 487 returned questionnaires, representing a response rate of 89%. after excluding incomplete and invalid responses, 481 valid questionnaires were retained for subsequent statistical analysis. table 5 presents the demographic characteristics of the respondents. of the 481 valid participants, 58.6% were female and 41.4% were male, indicating a slightly higher proportion of female tourists in the sample. in terms of age distribution, most respondents were aged 25–34 years (26.2%) and 35–44 years (27.4%), suggesting that middle-aged adults constituted the majority of tourists visiting hainan. regarding education level, 39.7% held a bachelor’s degree, followed by 22.5% with an associate degree and 16.8% with a graduate degree or above, reflecting a relatively well-educated sample. in terms of occupation, self-employed individuals (39.1%) and enterprise staff (30.1%) formed the largest groups, followed by institution staff (21.0%) and civil servants (5.8%). monthly income levels varied, with the largest proportion earning 3,001–6,000 yuan (32.6%), followed by 6,001– 9,000 yuan (30.4%), indicating that the majority of respondents belonged to the middle-income category. as for family structure, 39.7% were married with one or more children, 34.3% were single, and 13.9% were married without children. overall, the demographic composition of the respondents suggests that the sample predominantly consisted of educated, economically active, and family-oriented adults, which aligns with the general profile of domestic leisure travelers in china. asian business research journal, 2025, 10(11): 32-48 42 © 2025 by the authors; licensee eastern centre of science and education, usa table 5. respondents’ demographic profile. variable classification frequency percentage (%) gender male 199 41.4% female 282 58.6% age 18-24 84 17.5% 25-34 126 26.2% 35-44 132 27.4% 45-54 91 18.9% 55-64 48 10.0% 65 more than 0 0 education level junior middle school or below 31 6.4% high school/vocational school 70 14.6% associate degree 108 22.5% bachelor’s degree 191 39.7% graduate degree and above 81 16.8% occupation civil servant 28 5.8% institution staff 101 21.0% enterprise staff 145 30.1% self-employed 188 39.1% other 19 4.0% monthly income below 3,000 yuan 64 13.3% 3,001-6,000 yuan 157 32.6% 6,001-9,000 yuan 146 30.4% above 9,001 yuan 114 23.7% family structure single 165 34.3% married, but no children 67 13.9% married, with one or more children 191 39.7% other 58 12.1% 4. data analysis and findings 4.1. data analysis and findings for data analysis, this study employed the partial least squares structural equation modeling (pls-sem) approach, which allows for the simultaneous assessment of both the measurement model and the structural model (marcoulides & saunders, 2006). moreover, pls is particularly suitable for studies involving relatively small sample sizes (chin, 1998). to evaluate the proposed research framework and assess its model fit, analyses were conducted using smartpls 4.0 and spss 27.0. following the two-step approach recommended by anderson and gerbing (1988), the first step involved assessing the measurement (outer) model to examine the reliability and validity of the constructs. the second step entailed evaluating the structural (inner) model, which tested the hypothesized causal relationships among the latent variables within the research framework. 4.2. measurement model assessment to assess the internal consistency reliability of the measurement items, cronbach’s alpha coefficients were first examined. as shown in table 6, which reports 34 indicators across three constructs, all cronbach’s alpha values exceeded the recommended threshold of 0.70, indicating satisfactory internal consistency (nunnally, 1978). in addition, the composite reliability (cr) values for all constructs were above the acceptable level of 0.70, further confirming reliability (bagozzi & yi, 1988). as composite reliability is considered a more appropriate indicator than cronbach’s alpha in pls-sem (hair, ringle, & sarstedt, 2011), these results suggest that all constructs exhibit adequate internal consistency. the standardized factor loadings of all items exceeded the recommended minimum value of 0.70 (fornell & larcker, 1981), supporting the indicator reliability of the measurement model. construct validity was then examined through convergent and discriminant validity tests. convergent validity, which reflects the degree to which indicators of a construct share a high proportion of variance, was assessed using the average variance extracted (ave). as presented in table 6, all ave values were greater than 0.50, demonstrating adequate convergent validity (fornell & larcker, 1981). discriminant validity, which assesses the extent to which constructs are distinct from one another, was evaluated using the fornell–larcker criterion. according to this criterion, the square root of each construct’s ave should be greater than its correlations with other constructs. the results presented in table 7 show that this condition was satisfied in all cases, confirming discriminant validity (kock, 2015). in summary, the results of the outer model assessment demonstrate that the measurement model achieved satisfactory levels of reliability, convergent validity, and discriminant validity, indicating that the constructs were measured with acceptable psychometric properties. asian business research journal, 2025, 10(11): 32-48 43 © 2025 by the authors; licensee eastern centre of science and education, usa table 6. validity of the outer model. constructs/indicators (reflective) cronbach’s alpha values composite reliability(rho_a) composite reliability(rho_c) outer loadings average variance extracted tourism motivation (tm) 0.960 0.961 0.964 0.641 tm1 0.803 tm2 0797 tm3 0.774 tm4 0.787 tm5 0.790 tm6 0.774 tm7 0.783 tm8 0.773 tm9 0.801 tm10 0803 tm11 803 tm12 0.794 tm13 0.813 tm14 0.810 tm15 0.824 tm16 0.823 tm17 0.802 experiential quality (eq) 0.952 0.952 0.958 0.655 eq1 0.808 eq2 0.819 eq3 0.789 eq4 0.798 eq5 0.817 eq6 0.819 eq7 0.811 eq8 0.800 eq9 0.806 eq10 0.829 eq11 0.798 eq12 0.814 revisit intention (ri) 0.913 0.913 0.935 0.741 ri1 0.847 ri2 0.849 ri3 0.839 ri4 0.878 ri5 0.890 table 7. the discriminant validity of fonell-lareker criterion. 1.tourism motivation 2.experiential quality 3.revisit intention 1.tourism motivation (0.809) 2.experiential quality 0.610 (0.861) 3.revisit intention 0.331 0.505 (0.799) source: numbers between brackets represent sqrt aves. 4.3. the structural model and hypotheses testing the structural model was assessed to examine the hypothesized relationships among tourism motivation (tm), experiential quality (eq), and revisit intention (ri). the evaluation focused on the significance and strength of the path coefficients, as well as the explanatory power of the endogenous constructs, measured by the coefficient of determination (r²). 4.3.1. path coefficients and hypotheses testing figure 2 shows the results of the pls-sem analysis. the path from tourism motivation to experiential quality is positive and significant (β=0.331, p < 0.001), indicating that tourists with higher travel motivation tend to perceive better experiential quality. the path from experiential quality to revisit intention is also positive and significant (β=0.498, p < 0.001), suggesting that higher experiential quality enhances tourists’ intention to revisit. furthermore, the direct effect of tourism motivation on revisit intention remains significant (β=0.340, p < 0.001), implying a partial mediation effect through experiential quality. table 8 presents the detailed results of the hypothesis testing. asian business research journal, 2025, 10(11): 32-48 44 © 2025 by the authors; licensee eastern centre of science and education, usa figure 2. the path coefficients of the model. table 8. the hypotheses testing results. hypothesis relationship path coefficient (β) p-value result h1 tm → ri 0.340 0.000 supported h2 tm → eq 0.331 0.000 supported h3 eq → ri 0.498 0.000 supported 4.3.2. coefficient of determination (r²) the model explains 10.8% of the variance in experiential quality (r²=0.108) and 47.3% of the variance in revisit intention (r²=0.473). according to hair et al. (2014), these values indicate a moderate explanatory power for revisit intention and a weak-to-moderate explanatory power for experiential quality, suggesting that additional factors may also influence tourists’ perceived experience quality. 4.3.3. mediation analysis to further examine the mediating role of experiential quality between tourism motivation and revisit intention, this study conducted a bootstrapping procedure with 5,000 resamples using smartpls. the results indicate that the indirect effect of tourism motivation on revisit intention through experiential quality is significant (β= 0.165, p < 0.001). in addition, the direct effect of tourism motivation on revisit intention remains significant (β= 0.340, p < 0.001), suggesting that experiential quality serves as a partial mediator in this relationship. table 9. indirect effect results. path relationship indirect effect direct effect total effect p-value mediation type tm → eq → ri 0.165 0.340 0.505 0.000 partial mediation these results are consistent with prior studies emphasizing that tourism motivation acts as a key driver of tourists’ experience evaluation and behavioral outcomes (e.g., prayag & ryan, 2011; chen & chen, 2010). the positive mediation effect of experiential quality further confirms that the quality of tourism experiences plays a crucial role in transforming tourists’ internal motivations into behavioral intentions, aligning with the tourism experience theory (tet) and the push-pull theory framework. 5. discussion and conclusions 5.1. summary and discussion of the findings this study aimed to examine tourists’ revisit intention to hainan province through an integrated model combining the tourism experience theory (tet) and the push–pull theory. specifically, the proposed model incorporated tourism motivation (as the internal push factor), experiential quality (as the process-based evaluative factor), and revisit intention (as the behavioral outcome). the structural equation modeling results confirmed that the constructs were unidimensional and that the adapted measurement scales were reliable and valid indicators of their latent variables. the empirical findings revealed that tourism motivation exerts a significant and positive effect on experiential quality and revisit intention. in addition, experiential quality has a strong positive influence on tourists’ revisit intention, and it partially mediates the relationship between motivation and revisit intention. the findings demonstrate that tourism motivation is one of the most critical determinants of tourists’ behavioral intention to revisit hainan. this result aligns with the conceptual foundations of the push–pull theory, which argues that internal motivations (push factors) stimulate the desire to travel, while external destination attributes (pull factors) determine actual behavioral outcomes (crompton, 1979; dann, 1981). the significant effect of tourism motivation on revisit intention is consistent with yoon and uysal (2005), who found that motivation and satisfaction jointly influence destination loyalty. similarly, prayag and ryan (2010) emphasized that the interaction between push and pull factors plays a key role in shaping revisit behavior. in the current study, the direct impact of motivation indicates that tourists driven by strong intrinsic needs—such as relaxation, novelty seeking, and escape—are more likely to revisit destinations that successfully fulfill these psychological expectations. moreover, the significant relationship between tourism motivation and experiential quality further supports the proposition of the tourism experience theory, which conceptualizes tourism experience as a dynamic process shaped by anticipation, on-site engagement, and post-experience memory. tourists with higher motivation tend to engage more deeply in destination experiences, perceive greater value from interactions, and consequently form more positive experiential evaluations. this result is also in line with chen and chen (2010), who argued that high asian business research journal, 2025, 10(11): 32-48 45 © 2025 by the authors; licensee eastern centre of science and education, usa experiential quality strengthens tourists’ satisfaction and behavioral intentions. the positive association between experiential quality and revisit intention found in this study reinforces the idea that memorable and emotionally engaging experiences are essential drivers of destination loyalty (pine & gilmore, 2001). furthermore, the mediation effect of experiential quality between tourism motivation and revisit intention reveals an important process mechanism. it indicates that motivation not only triggers the initial travel behavior but also influences how tourists evaluate their experiences during and after the visit. the higher the experiential quality perceived, the stronger the translation of motivation into behavioral loyalty. this finding echoes the core idea of both the tet and push–pull frameworks—that internal motives must be reinforced by positive destination experiences to sustain repeat visitation. taken together, the results provide a dynamic understanding of revisit intention formation: tourism motivation acts as a psychological antecedent that enhances tourists’ experiential evaluations, which in turn foster their intention to revisit. theoretically, this study contributes to the integration of motivational and experiential perspectives by linking the push factors of motivation with the experiential quality derived from pull factors, thereby enriching the behavioral explanation of tourist loyalty. practically, destination managers in hainan should emphasize not only stimulating tourists’ internal motivations through effective marketing strategies but also delivering high-quality, memorable experiences that fulfill those motivations. by coordinating push and pull strategies, destinations can effectively transform initial travel motivation into long-term revisit behavior. 5.2. theoretical and practical contributions 5.2.1. theoretical contributions this study makes several important theoretical contributions to tourism behavior research by integrating the tourism experience theory (tet) and the push–pull theory into a unified explanatory framework of revisit intention. first, by linking tourism motivation (a psychological push factor) with experiential quality (a processbased evaluative factor) and revisit intention (a behavioral outcome), this research advances the understanding of how internal and external forces jointly shape tourists’ behavioral loyalty. previous applications of the push–pull theory (crompton, 1979; dann, 1981; yoon & uysal, 2005) primarily focused on explaining destination choice rather than repeat visitation. the current study extends this theoretical scope by demonstrating that push factors not only initiate travel behavior but also influence post-visit behavioral intentions through the mediating role of experiential quality. second, the empirical validation of experiential quality as a mediator contributes to the theoretical enrichment of the tourism experience theory. tet emphasizes the dynamic and processual nature of the tourism experience, shaped by anticipation, engagement, and memory (kim et al., 2012; baniya et al.,2017). this study provides empirical support for that process by showing how motivation enhances experiential engagement and evaluation, which subsequently strengthens revisit intention. thus, the research bridges motivational antecedents and experiential consequences, forming a dynamic model that captures both pre-travel expectations and post-travel evaluations within one explanatory structure. third, by integrating the push–pull theory with tet, this study responds to recent scholarly calls for interdisciplinary models that explain the transformation of internal drives into behavioral loyalty through experiential mechanisms (chen & chen, 2010; rice & khanin, 2019). this synthesis deepens theoretical understanding of revisit intention formation by emphasizing that tourists’ intrinsic motivations must be reinforced by high-quality destination experiences to sustain long-term loyalty. therefore, the proposed model contributes to the theoretical advancement of tourism behavior literature by linking motivation, experience, and behavioral intention into a coherent, empirically tested framework. 5.2.2. practical contributions this study also provides several practical insights for destination managers, policymakers, and tourism marketers, particularly in the context of hainan province’s sustainable tourism development. first, the findings highlight the critical role of tourism motivation as a psychological driver of revisit intention. destination managers should design marketing strategies that resonate with tourists’ intrinsic needs—such as relaxation, novelty seeking, social interaction, and wellness. by tailoring destination branding and promotional campaigns to emphasize these motivational elements, hainan can more effectively attract and retain high-value tourist segments. second, the strong mediating role of experiential quality underscores the necessity of delivering exceptional, memorable, and emotionally engaging tourism experiences. destination stakeholders should prioritize quality management across the entire tourism value chain—from service delivery and environmental aesthetics to cultural authenticity and wellness offerings. consistent with pine and gilmore’s (2001) concept of the “experience economy,” enhancing experiential quality transforms motivation into satisfaction and loyalty, fostering long-term competitive advantage. third, the findings suggest that motivation and experience must be strategically aligned. tourism policy in hainan should thus encourage innovation in experience design and promote experiential products (e.g., wellness retreats, eco-cultural tours, and climate-friendly activities) that satisfy both emotional and practical needs. by coordinating push-based marketing initiatives with pull-based experience design, hainan can transform short-term tourist motivations into enduring revisit behavior, reinforcing its reputation as a premier wellness and leisure destination in china. 5.3. limitations and suggestions for future studies 5.3.1. limitations although this study provides valuable insights into tourists’ revisit intentions by integrating the tourism experience theory (tet) and the push–pull theory, several limitations should be acknowledged. first, the data were collected exclusively from tourists who visited hainan province, which may limit the generalizability of the findings. hainan possesses unique tourism characteristics such as tropical climate, island geography, and wellness-oriented branding. these contextual factors may not fully represent other destinations asian business research journal, 2025, 10(11): 32-48 46 © 2025 by the authors; licensee eastern centre of science and education, usa with different cultural, geographical, or economic settings. thus, the results should be interpreted within the specific context of hainan’s tourism environment. second, this study adopted a cross-sectional research design, which captures tourists’ perceptions and intentions at a single point in time. however, tourists’ motivations, experiences, and behavioral intentions may evolve over time due to changes in personal circumstances, external conditions, or destination image. a longitudinal approach would provide a more dynamic understanding of how experiential quality mediates the relationship between motivation and revisit intention across different stages of the travel process. third, the study relied primarily on self-reported questionnaire data, which may be subject to common method bias and social desirability effects. although reliability and validity tests confirmed the soundness of the measurement model, future studies should incorporate multiple data sources (e.g., behavioral tracking, online reviews, or qualitative interviews) to triangulate findings and enhance methodological robustness. fourth, the proposed model focused primarily on tourism motivation and experiential quality as predictors of revisit intention. while these constructs explain a substantial portion of behavioral intention, other potential factors—such as destination image, emotional attachment, perceived value, and post-travel satisfaction—might further enrich the theoretical framework. integrating these additional variables could provide a more comprehensive understanding of revisit behavior. finally, although this study established experiential quality as a mediating variable, it did not empirically test potential moderating factors such as destination policy, climate conditions, or tourists’ health perceptions, which may influence the strength of the relationships among constructs. incorporating such contextual moderators could improve the explanatory power of the integrated tet–push–pull model. 5.3.2. suggestions for future studies future research could build upon these findings in several directions. first, comparative studies across multiple destinations—both within and outside china—could be conducted to validate the general applicability of the integrated framework. cross-cultural comparisons (e.g., between island, urban, and heritage destinations) would help determine whether the relationships among motivation, experiential quality, and revisit intention differ across diverse tourism contexts. second, researchers are encouraged to adopt longitudinal or mixed-method designs. longitudinal studies could track changes in tourists’ motivations and revisit intentions over time, while qualitative interviews could uncover deeper psychological mechanisms underlying experiential evaluations. combining quantitative and qualitative approaches would enhance both theoretical depth and empirical richness. third, future work may incorporate technology-mediated experiences (e.g., social media engagement, virtual tourism, or influencer marketing) as new dimensions of experiential quality. given the growing importance of digital interactions in shaping tourists’ expectations and post-visit memories, integrating digital experience variables could modernize the tet framework and reflect contemporary tourism dynamics. fourth, subsequent studies could explore moderating roles of demographic or situational factors—such as age, travel frequency, income, or health consciousness—on the relationships among motivation, experience, and behavior. identifying these conditional effects would provide more targeted implications for destination segmentation and marketing strategy. finally, future research might expand the integrated framework by incorporating emotional, cognitive, and affective dimensions of the tourism experience. exploring how emotions and memory formation interact with motivation and experiential quality could yield a more comprehensive and psychologically grounded model of revisit intention formation. references abdul-rahman, m. n., hassan, t. h., abdou, a. h., abdelmoaty, m. a., saleh, m. i., & salem, a. e. 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2025 issn: 2576-6759 doi: 10.55220/2576-6759.592 © 2025 by the author; licensee eastern centre of science and education, usa theoretical basis and definitions of the pedagogical terms ‘personal order’ and ‘personal disorder’, for self-management of human resources, and the achievement of an optimal social existence as human beings chamaida inés tabares márquez international cooperation and development university of la laguna, tenerife, spain. university of aberdeen, scotland, uk. email: alu0100098549@ull.edu.es email: chamaidainestabaresmarquez@gmail.com abstract the pedagogical terms "personal disorder" and "personal order" were established with the intention to be able to refer to the state of presence necessary for human beings to contribute to social order in every aspect of their life. as family, business, work, religion, etc. these terms are intended to integrate the basic obligations and responsibilities of social beings, to be able to reach full potential, and to be able to help others reach theirs. consequently, we can have more effective societies, and therefore, a better world. it was fundamental the contributions of hedley bull (1932-1985) from his main work, “the anarchical society”, and the observational research method to corroborate. according to bull, social order is created through life, truth, and property. so, with observational research it was confirmed how these elements contribute also to personal development throughout maintenance, really appreciation, and good use, of individual and collective resources. as human capital, natural resources, and local assets. which contribute to social development, avoiding social anomie and, so, social disorder. other contributions were taken also into consideration. as theories on fundamental human needs; the life experiences of the author; the african philosophy of ubuntu; the general system theory of ludwig von bertalanffy (1901-1972); the work of great pedagogues such as pablo freire (1921-1997) and anton makarenko (1888-1939); the work of important sociologists such as anthony gramsci (18911937), etc. consequently, the fusion of all these works, studies, experiences, ideas, findings, and constructs, enabled the creation of the terms "personal order" and "personal disorder". keywords: personal disorder, personal order, self-management, social disorder, social order. 1. introduction institutions, organisms, business, and modern governments appear to lack the capacity on their own to solve many of the problems affecting most societies today, such as poverty. a problem which causes conflict, war, marginalization, etc. (tabares, 2023). to understand this, we can use as a reference the goals established by the united nations at the 2000 millennium summit, which aimed to reduce global poverty by half by 2015 (rodríguez, 2006). as these goals have not yet been met, they were therefore reformulated as sustainable development goals by the united nations in 2015 (tabares, 2023; tabares & gonzalez, 2023). however, the agonies of collapsed states like somalia clearly demonstrate the consequences of people without state, nationality, organizations, businesses, etc. the consequences of social disorder, in this case caused by statelessness. therefore, social order is not a luxury but a vital necessity, without which there can be not any prosperity, noneconomic, or non-social development (chhibber, 1997, in wallis & dollery, 2001). therefore, social order in every aspect of life is fundamental to the well performance of individuals, and of the reliable administrative functions of modern societies, for citizen security, the provision of private and public services, etc. (tabares, 2023). for which, citizens must be responsible individuals, with ethics and aesthetic contributions, and with the sense of collectivity, to make the best of everything, and so to make societies a better place, and not to cause harm on them. then, they must be taking care, valuing, consuming, and making a responsible use of the natural, economic, and material resources, and local assets, and of the human capital, ensuring their preservation and continuity. for which, citizens must also be healthy, honest, and have sufficient resources to take responsibility for their own existence and that of their descendants in the best possible way, both ethically and aesthetically (tabares, 2024a; tabares 2024b). because the public must be involved in the attainment of democratic and prosperous societies being responsible citizens, using their leisure time well, earning their living ethically, (adler, 1998), receiving instruction, etc., and the basis of these social actions, as adults and developed citizens, may be in the three factors established by bull (1977), to attain social order. which are: property, truth, and life. mailto:alu0100098549@ull.edu.es mailto:chamaidainestabaresmarquez@gmail.com https://doi.org/10.55220/2576-6759.592 asian business research journal, 2025, 10(10): 5-19 6 © 2025 by the author; licensee eastern centre of science and education, usa consequently, for these reasons, emerged the terms 'personal order' and 'personal disorder'. because they were created with the intention to educate about the consequences of lacking property, truth, and life. when individuals do not take into account the basic personal elements required for social order and so, for a potential development. because those elements can enable the generation of economic, social, and personal benefits, and enabling also collaboration and cooperation at the regional, national, or international levels with a positive impact towards prosperity for all (tabares, 2025). however, before to attain ‘personal order’, humans must go through development. which is only possible through the provision, attachment, or acquisition of the resources required to cover the fundamental human needs. for such reason, a section has been dedicated to the presentation of the content on fundamental human needs. 2. background the motivation behind this research started with the work of hedley bull “the anarchical society” (1975). because through this work flourished the connection which can exist between the elements established by bull for social order, life, truth, and property (possessions or resources), with the human qualities and attributes that also enable harmony, cooperation, teamwork, and therefore, the achievement of goals and results, that can lead to development in all areas of human life, so in society in general. then, to analyse, understand, and verify such connection, it was necessary to delve first into the conceptual research of the fundamental needs for human development. because without a proper human development, a society or community cannot exist, and without societies, social order cannot be. subsequently, then, was necessary carry on the conceptual research of the term social disorder, and analysis into the elements established by hedley bull for social order, life, truth, and possessions. as in this was it was possible to have a better comprehension of their possible analogues within the human and personal sphere. analysis and findings which were corroborated through the observational research method. 3. objective the basics of this conceptual and observational research are understanding the terms social order and social disorder, which imply also the understanding of the fundamental human needs for human development, to be able to confirm and determine the existence of the pedagogical terms that could help people understand the impact their actions have on every aspect of their life, and that of others. as business, education, work, health, etc., so, towards social order. consequently, will be possible to understand the impact those actions can have towards social order on the following levels: • on the level of personal development. the one the person can achieve themselves through truth, life, and property. which are the fundamental elements for social order. • on the level of social development. the development groups can achieve, as family, neighbours, students, etc. through the actions of the individuals. • and on the level of communal or collective development. the development that the community, institutions, businesses, and organizations can achieve, so the society in general, through the actions of individuals within groups. because all personal actions, create a collectivity of actions, which can produce or enable a social order that allows for sustainability, and therefore, growth and prosperity. then, the general objectives of this study are three: • understanding the fundamental human needs for human development. because a person must be fully developed to understand what must be done to improve their life and that of others. • understanding the term social order. because without social order, the fulfilment of potential development, wellbeing, sustainability, grow and prosperity is more difficult. • define the pedagogical terms ‘personal order’ and ‘personal disorder’. because they are considered necessary for people to contribute personally to social order and to avoid social disorder. so, consequently, for people to have a greater chance of reaching their full potential spreading social order within any scenario. as communities, business, institutions, organizations, associations, etc. so, consequently pursuing social order, at the societal level. 4. methodology this research was conducted using qualitative methodology, as it mainly focuses on the interpretation, understanding, and verification of the main concepts of social order and social disorder. a social phenomenon which implies also the understanding of the human fundamental needs for development. consequently, the main research methods which were used in this study have been conceptual research and the observation research. because were necessary the understanding and confirming of those concepts for the establishment, understanding, and corroboration of the pedagogical concepts of personal order and personal disorder. 4.1. conceptual research the method of conceptual research is defined as a research method conducted through observation and analysis of existing information on a given topic. it does not involve practical experiments. it relates to abstract concepts or ideas. philosophers have long used it to develop new theories or interpret existing ones from a different perspective. some advantages of conceptual research are: • conceptual research focuses primarily on the research concept or theory that explains a phenomenon. what causes the phenomenon, what are its basic components, etc.? it is paper-and-pencil research. asian business research journal, 2025, 10(10): 5-19 7 © 2025 by the author; licensee eastern centre of science and education, usa • this type of research relies heavily on previous studies; no experiments are conducted, which saves time, effort, and resources. additional, more relevant information can be generated through conceptual research. • conceptual research is considered one of the most convenient forms of research. because in this type of research, if the conceptual framework is ready, only the relevant information and literature need to be sorted (questionpro, 2025). in this study, throughout the conceptual research, the literature review was essential, as it allowed for the development of a conceptual investigation of textual data related to the concepts of fundamental human needs for development, and social order and social disorder (scribbr, 2025). consequently, to achieve this primary research objective, secondary sources of information were used, mainly data and information collected by other academic researchers through articles, books, blogs, etc. however, the most important source of information was "the anarchical society" of hedley bull (1977), as is there were the concept of social order is presented. 4.2. the observation observation is one of the oldest and most fundamental research method approaches. it involves collecting impressions of the world throughout looking and listening, in a systematic and purposeful way to learn about a phenomenon of interest. observational research assumes behaviour is purposeful, reflecting deeper values and beliefs. although it may be conducted in a laboratory or another setting chosen by the researcher, it more typically takes place in natural settings to capture behaviour as it occurs in the real world. it usually involves direct contact between the researcher and participants. during observation, researchers gather both descriptive and relational data through observing behaviour in the setting of interest. observational research, like any research, begins with the selection of a research problem, which is often presented as an area of research interest. although some researchers prefer to enter the field and begin observation immediately without the potential blinders of preconceived notions, many conduct a literature search to identify relevant indicators and explanatory concepts that may inform the project (mckechnie, et al., 2008). which was the course of this study, as conceptual research was fundamental to clarify what was necessary to observe to compound the research and be able to establish and corroborate the terms personal order and personal disorder. in this study particularly were used the covert naturalistic and participant observation. as the participants were unaware that the observation was taking place. as many times the actions used for the collection of data took place in situations which emerged spontaneously and unexpectedly in many diverse and different public scenarios. so, to carry on the research efficiently, no disturbance could be caused, because it was fundamental to take advantage and use efficiently the situation which emerged in front of the eyes of the researcher. as it was a valuable source of information. additionally, because taking into consideration the ethical considerations, the researcher could not be obtrusive. then observations only took place in public situations where people were not alone, respecting their intimacy and wellbeing, and protecting always their identity, their privacy, and their autonomy. naturalistic observations, implies that the study of the research subjects take place in their own environments, in natural and uncontrolled scenarios. so, in this way, it is possible to explore behaviours and actions without any outside influence or control. it is a research method used in field studies (bhandari, 2023). participant observation implies the researcher immerses themself in a particular social setting or group, observing the behaviours, interactions, and practices of the participants. in participant observation, the researcher is called a participant-observer, because they participate in the activities of the group while also observing the behaviours and interactions of the group (george, 2023). the observation period took place between june 2023 and june 2025. the naturalistic observation was used when the participants were observed in the distance, without being involved with the researcher, despite they were sharing the same space. the participant observation was used when the researcher was also immersed in the activity with the participants. nevertheless, in any of the cases, the participants were not informed that they were observed and researched. neither it was explained about the research that was taking place, as it could impact on their behaviour (bhandari, 2023). then, the naturalistic observation research method was used throughout events, activities, actions, etc., observed from outside by the researcher. where the researcher could identify negative actions related to lack of self-management on truth, property, and life. which were hindering or stopping the development of such events, activities, actions, etc. the participant observation research method was used in two types of scenarios: 1.when the researcher was taking part in events, activities, actions, etc, with just somebody else. where the researcher was ablet to identify that the interaction was occurring with someone whose actions were hurting and were hindering or slowly down the development of an action, event, or activity. product of lack of self-management on truth, property, and life. which were causing negative actions and behaviours, as lots of criticism, shortage of collaboration, verbal abuse, misunderstandings, ignoring participation, silences on purpose, hindering access to resources, etc. 2.when the researcher was taking part in events, activities, actions, etc, with a group of people. where the researcher could identify actions related to lack of self-management on truth, property, and life. which were hindering or stopping the development of such events, activities, actions, etc., because of negative actions and behaviours. as hindering access to resources (as notes, materials, venues, etc.), ignoring other points of view, no doing what they promised to do, cancelling with very short time notice, etc. furthermore, some of such events, activities, actions, etc., were observed from outside, and others were experienced by the researcher throughout the interaction with somebody else, and throughout the interaction with a group of people. asian business research journal, 2025, 10(10): 5-19 8 © 2025 by the author; licensee eastern centre of science and education, usa for both types of observation, the data was collected through notes taking. which implies writing down in an unstructured way anything that appeared relevant or important based on the research topic and interests (bhandari, 2023). 5. theoretical frameworks 5.1. fundamental human needs for development, motivation, and personal growth. the human needs have been defined in different terms. different main theories and approaches have been established to explain and show the relation between human needs, motivation, and so, personal development. firstly, was abraham maslow (maslow,1943; maslow, 1954), who elaborated the theory of the hierarchy of human needs (cherry, 2024) (mcleod, 2025). abraham maslow stated that our actions are motivated by certain physiological and psychological needs that progress from basic to complex. so, maslow established five different levels of hierarchy of human needs, starting at the lowest level with the ones known as physiological needs. the physiological needs include those that are vital to survival. some examples of physiological needs include food; water; breathing, etc. at the second level the needs start to become a bit more complex, becoming primary the needs for security and safety. some of the basic security and safety needs are financial security; health and wellness; safety against accidents and injury, etc. (cherry, 2024). after physiological and safety needs have been fulfilled, the third level of human needs is love and belonging. which refer to an emotional need for interpersonal relationships, affiliating, connectedness, and being part of a group. the fourth level of human needs in the hierarchy of maslow is self-esteem. which maslow classified into two categories: (i) esteem for oneself (dignity, achievement, mastery, independence) and (ii) the desire for reputation or respect from others (e.g., status, prestige). at the fifth level are the self-actualization needs, which refer to the realization of the potential of a person, selffulfilment, seeking personal growth, and peak experiences. this was the highest level in the hierarchy of maslow, until maslow expanded it to include cognitive needs as the level five. where he included knowledge and understanding, curiosity, exploration, need for meaning, and predictability. maslow also included the aesthetic needs (maslow, 1970ª). which became the sixth level of needs with appreciation and search for beauty, balance, form, etc.; the level seventh includes the self-actualization needs. which as mentioned before included realizing personal potential, self-fulfilment, seeking personal growth, and peak experiences (mcleod, 2025). also, later were included the transcendence needs (maslow, 1970b). which became the eighth level of needs and includes the human desire to connect with a higher reality, purpose, or the universe (mcleod, 2025). later, in 1959, frederick herzberg designed the two-factor theory. the two-factor theory is based on the feedback collected in the usa of two hundred engineers and accountants regarding their personal feelings towards their working environments. so, herzberg defined two sets of factors in deciding employees working attitudes and level of performance, named motivation & hygiene factors (robbins, 2009). despite this theory refers to the work environment, it is important to consider it because the motivators & hygiene factors, can be compared with life in any environment. because the environment where we live, were we work, were we study, etc., can impact in our way of life. as it can facilitate good or bad living conditions, it can be safe or unsafe, people can relate healthily or through conflicts, people can be given responsibilities, or can be ignored, etc. motivation factors are intrinsic factors that will increase the job satisfaction of the employees, while hygiene factors are extrinsic factors to prevent any dissatisfaction in the employees. (yusoff, kian, & idris, 2013). which bevins (2018) referring as “motivators” the “satisfiers”, and as “dissatisfiers” the “hygiene” factors. herzberg in his original study identified six motivator factors that are determined intrinsically by the company u organization to the employees, and they include: 1. recognition 2. achievement 3. possibility of growth 4. advancement 5. responsibility and 6. the work itself (yusoff, et al, 2013). motivators are referred to as “job content” due to their intrinsic nature of what is gained from motivators (herzberg, et al, 1959; maidani, 1991). moreover, as intrinsic factors are human basic needs for psychological growth. which are very effective in creating and maintaining more durable positive effects on the performance of employees towards their jobs. then, intrinsic factors will propel employees to insert additional interest into their job, because when employees are well satisfied by motivational needs, their productivity and efficiency will improve (robbins, 2009). additionally, herzberg in 1959, in his original study identified ten hygiene factors, which are determined by the extrinsic factors of the job of an employee, and they include: 1. salary 2. interpersonal relations—supervisor 3. interpersonal relations—subordinate 4. interpersonal relations—peers 5. supervision—technical 6. company policy and administration 7. working conditions 8. factors in personal life 9. status and 10. job security (herzberg, et al, 1959). extrinsic factors are also well known as job context factors, as they are extrinsic satisfactions granted by other people for employees. then, when all these external factors are achieved, employees will be free from unpleasant external working conditions that will banish their feelings of dissatisfactions. consequently, these external factors serve as guidance for employers in creating a favourable working environment where employees feel comfortable working inside, however the employees will remain themselves neutral in, neither satisfied nor motivated (robbins, 2009). these two categories differ fundamentally and are independent of one another (maidani, 1991), however they act with interdependence. because as herzberg furthered, full supply of hygiene factors will not necessarily result in job satisfaction by employees. because this theory argues that meeting the lower-level needs (extrinsic or hygiene factors) of individuals would prevent them from being dissatisfied but would not motivate them to exert effort. then, motivation factors must be addressed to increase the performance and productivity of employees (robbins, 2009). consequently, both factors are needed to create the most favourable work environment, for both, employers and employees, and to create the most favourable growing environment for any human being. because every person needs recognition, possibilities of achievement, possibilities of growth and advancement, responsibility, asian business research journal, 2025, 10(10): 5-19 9 © 2025 by the author; licensee eastern centre of science and education, usa actions (through volunteer, studying, farming, working, etc.), financial security, good interpersonal relations with neighbours, agents, etc., with fair policies, rules, and regulations, and an effective administration by the institutions, assuring good living conditions, security, etc., to be able to achieve their full potential. two years later, in 1961 the psychologist david mcclelland published “the achieving society”, which articulated his model of human motivation (harvard university, 2025), presented with his ‘theory of three needs’. which outlines that each person is motivated by power, affiliation, or achievement (kurt, 2022). david mcclelland developed this theory to explore how personal needs influence motivation and behaviour in the workplace, but this knowledge can also be applied on life in any scenario, to understand how people behave in relation to these needs. so, mcclelland found out that: • people with a need for achievement (nach), or motivated by achievement, are always looking for the next goal to reach and new ways to advance or grow. they seek personal success and prefer to take on tasks with a high likelihood of success, as they are often reluctant to take risks because this could result in failing to meet their goals. additionally, they are often working independently, because they prefer working alone to control more aspects of achieving their goals. • people with a need for affiliation (naff), are driven by affiliation thrive on social interactions and relationships based on a sense of connection with others. they enjoy being seen as team players and are motivated by interactions with others and friendships with coworkers, customers, students, etc. as a result, they often satisfy that need by interacting in positions that involve teamwork, communication, and regularly put them in contact with people. such as teachers, social workers, customer service personnel, retail sales, etc. they also tend to be concerned about how people feel and how people feel about them. which makes it hard for them to implement orders that are unpopular, to discipline those they supervise, or to offer negative feedback. -individuals with a need for power (npow), or need for authority, are motivated by the status, prestige, influence, and elevated standing they can reach. this need can take two general forms. first, some people seek power by trying to better the overall setting around them, encouraging others to excel. in this way everyone achieves greater power and so can negotiate deals that make an entire department or company gain prestige. second, others are more concerned about personal power and glory and enjoy most the idea of being in a position which enable them to make important decisions. they are motivated by what their accomplishments mean in terms of respect and status, often excelling in management or chair positions where they can assert control and lead others (ungvarsky, 2024). later in 1964, was presented “the theory of positive disintegration (tpd)”, elaborated by the psychiatrist and psychologist kazimierz dabrowski. who emphasized that in some circumstances are necessary internal discontent as stimulus for change or growth. so, he stresses the need in some conditions of some symptoms as anxiety, obsessions, or depression, for human growth to occur in some settings. as they may be the signs of the beginning of an advancing process of positive transformation (laycraft, 2020), through five levels of development: • initial level or primary integration. • three levels referring to increasing complexity of disintegration: unilevel; spontaneous multilevel; and organized multilevel. and, • highest level, which dabrowski called secondary integration (mendaglio, 2019). eight years later, in 1969, the psychologist clayton alderfer developed his erg theory (existence, relatedness and growth) (kurt, 2023), through a study concerned with developing and testing an alternative to the theory of the hierarchy of needs of abraham maslow. his work was conducted by a questionnaire study with 110 employees at several job levels from a bank. as a result, the alternative theory is based on a three-fold conceptualization of human needs: existence, relatedness, and growth (e.r.g) (alderfer, 1969). as a model of human need, this theory has been validated by human experience (ivancevich, et al., 2007), its construct has been also discussed in philosophical and empirical studies, and it is often included with other content approaches to motivation (caulton, 2012). the erg theory of alderfer is different from the hierarchy of needs theory of abraham maslow, even though alderfer based the erg model on the theory of maslow (ismail et al., 2023). in this theory, the need of existence, relates to physical and psychological survival; the need for relatedness, implies a sense of community and a good relationship with yourself; and the need of growth, relates to self-development, fulfilment and the sense of achieving your potential (world of work project cic, 2024). the erg theory, does not assume lower-level satisfaction as a prerequisite for the emergence of higher-order needs (alderfer, 1969). in other words, the priorities and motivations of an individual may be fluid and can move between the existence, relatedness, and growth levels of need over time. so, they can move upwards, and they can move downwards. because in the hierarchy of needs of maslow, individuals must have satisfied one level of needs before moving on to the next one. for example, humans must have satisfied their safety needs before they can be motivated by social belonging. however, alderfer disagreed and in his model, individuals do not must have satisfied their existence needs before being motivated by their relatedness need. additionally, alderfer went further and stated that based on their life views different individuals potentially prioritize their needs in different orders. a standard example of this could be an actor who cannot pay his rent, but who is pursuing his passion, motivated by growth through the art of acting, potentially at the expense of his existence. alderfer also noted that is very important how individuals perceive their progression in relation to each of the levels of needs. because if an individual feels they are making great progress at relatedness, they may be also increasingly motivated by growth, even though their relatedness need has not been fully satisfied. similarly, if an individual feels frustrated with the progress they are making in relation to growth, they may abandon it and redouble their motivation in relation to relatedness (world of work project cic, 2024). then, more than fifteen years later, was published “intrinsic motivation and self-determination in human behaviour”, where the ‘self determination theory’ was presented by edward l. deci and richard ryan (deci & ryan, 1985). sdt, is a psychological theory that goes to the heart of the issues of happiness and human capabilities and deals directly with the ideas of human actualization and flourishing. the primary level of analysis of the theory is on individual psychological processes; however, the theory also addresses how social environments affect human asian business research journal, 2025, 10(10): 5-19 10 © 2025 by the author; licensee eastern centre of science and education, usa needs satisfaction, and motivation—whether the environments are experimentally induced or not, they grown naturally, (e.g., vansteenkiste et al., 2004), as ongoing social contexts such as work groups or families (e.g., deci, connell, & ryan, 1989; grolnick & ryan, 1989, in vansteenkiste, et al., 2006), or are cultural and macro-economic systems (e.g., chirkov, ryan, kim, & kaplan, 2003; deci, ryan, gagné, leone, usunov, & kornazheva, 2001, in vansteenkiste, et al., 2006). then, the self-determination theory, can be defined as a framework that empirically addresses the basic psychological needs associated with well-being across development and cultures, and the motivational and social conditions that allow for fulfilment of these needs (vansteenkiste, et al., 2006). with this theory, the human fundamental needs were classified in two groups, the physical or physiological needs and the psychological needs. the physical or physiological needs are the first needs of human beings, and the most basic and minimal needs of human beings. such as the needs of food, clothing, shelter to meet the needs of relieving hunger, keeping out the cold and sleeping. if these needs cannot be met to a minimum, human beings cannot continue to survive and multiply (wu & han, 2021). in relation to the psychological needs, the self-determination theory (sdt) establish that there are at least three basic and universal human psychological needs: the need for competence, which is the desire to feel effective in the interactions of one with the social and physical environments (deci, 1975; white, 1959, in vansteenkiste, et al., 2006). the need for relatedness, which is the desire to belong, to care for, and feel cared for by others (baumeister & leary, 1995; ryan, 1995, in vansteenkiste, et al., 2006); and the need for autonomy, the desire to feel volitional and to fully endorse the actions of your own self, (decharms, 1968; deci & ryan, 1985). the need for competence implies the exploratory nature of humans, which contributes to the growth and skill development of people, and helps them adapt to complex and ever-changing surrounds (deci & ryan, 2000). when people are not afforded opportunities to master the environment, or when they fail at their mastery attempts (e.g., they receive regular criticism and indicators of incompetence), they are likely to become unmotivated, displaying little motivation and functioning poorly. the need for competence maps well onto theories of self-efficacy, perceived control and expectancy value (bandura, 1989; carver, sutton, & scheier, 2000; feather, 1992; maddux & gosselin, 2003; pajares, 1996; rotter, 1966, in vansteenkiste, et al., 2006). then, because the concept of competence is so pervasive in contemporary psychology, the postulate of a need for competence has been noncontroversial (vansteenkiste, et al., 2006). the need for relatedness assumes that people are naturally inclined to seek close and intimate relationships with others, and to work toward a sense of communion and belonging within social groups (ryan, 1993; baumeister & leary, 1995, in vansteenkiste, et al., 2006). this need goes beyond the importance of interdependence, as it is only satisfied when people experience supportive, and caring relationships in which they feel significant and respected. then, it does not occur in toxic social environments. the need for relatedness implies the human tendency to engage in social-support systems (ryan & solky, 1996), to form secure attachments with primary caregivers (laguardia et al., 2000), and to transmit communal knowledge among individuals and between generations (deci & ryan, 2000). the construct of a relatedness need is consistent with the study of close relationships in social psychology (reis & patrick, 1996), and with various developmental perspectives such as the attachment theory (bretherton, 1987; shaver & hazan, 1993). then, the postulate of a need for relatedness, has been relatively noncontroversial (blass & blatt, 1996). the need for autonomy correlates with the self-organizational nature of human development, as people have the need to feel a sense of decision and authorship with respect to their life, so their behaviour. also, because autonomy provides many adaptive advantages, including the ability to better regulate actions and emotions, the ability to become more internally coherent in the functioning of us, and the ability to disengage from exogenous goals when necessary (i.e., deci & ryan,1985, 2000). the idea that people have a natural inclination to experience themselves as the origin of their behaviour was, to a certain extent, also emphasized by nuttin (1984) when he introduced the concept of causality pleasure. which implies that people experience an inherent satisfaction in being the cause of their own actions. nonetheless, unlike the needs for competence and relatedness, specifying a need for autonomy has been highly controversial, with various authors suggesting that it is primarily a western, male value rather than a universal need (jordan, 1997; markus, kitayama, & heiman, 1996, in vansteenkiste, et al., 2006). however, the empirical evidence shows that autonomy is associated with enhanced well-being in eastern as well as western cultures (e.g., chirkov et al., 2003; vansteenkiste, zhou, lens, & soenens, 2005, in vansteenkiste, et al., 2006), and in women as well as men (deci, la guardia, moller, scheiner, & ryan, 2006; vallerand, 1997, in vansteenkiste, et al., 2006). according to sdt, when social contexts allow for the satisfaction of these psychological needs, the thriving and well-being of people is enhanced, whereas ill-being follows if the satisfaction of these needs on people is thwarted (vansteenkiste, et al., 2006). because just as plants need water and sunshine to grow and flourish, individuals require the experience of need-satisfying with psychological events in their daily lives to develop optimally and to thrive. because the basic psychological needs for competence, relatedness, and autonomy, are essential to human flourishing and wellness (ryan, 1995). thus, whether need satisfaction is subjectively valued or culturally endorsed, failure to satisfy a need so defined is predicted to yield negative consequences across individuals and cultures (vansteenkiste, et al., 2006). later, was presented the human scale development approach, which connects the fulfilment of fundamental human needs with personal and social development. it was created by manfred max-neef, and it was first published in spanish in 1986 (max-neef, et al, 1986). the human scale development, it is a development approach focused and based on the satisfaction of fundamental human needs of present as well as future generations, which assumes that social and personal development are inseparable. as a healthy society should advocate above all, for the development of every person and of the whole person. because any fundamental need that is not adequately satisfied, reveals a human poverty, and each poverty generates pathologies and collective common pathologies. consequently, through this approach it was understood that human needs must be understood as a system: that is asian business research journal, 2025, 10(10): 5-19 11 © 2025 by the author; licensee eastern centre of science and education, usa all human needs are interrelated and interactive, so no hierarchies exist within the system, with the sole exception of the need of subsistence to remain alive. this means that, on the one hand, no need is per se more important than any other; and, on the other hand, that there is no fixed order of precedence in the actualization of needs (that need b, for instance, can only be met after need a has been satisfied). in this work is stated that it is impossible to state that the fundamental human needs are historically and culturally constant. however, they have a socio-universal character because people everywhere want to satisfy their needs. so, human needs can be classified according to many criteria, but in this work of manfred max-neef (2007), human needs got organized into two categories: existential needs and axiological needs, which interact between them. the existential needs are the needs of being, having, doing, and interacting; and the axiological needs are subsistence, protection, affection, understanding, participation, idleness, creation, identity and freedom (maxneef, 2007). then, the axiological needs are achieved through being, having, doing, and interacting. then, when each of these needs is not satisfied a poverty is revealed: poverty of subsistence (insufficient income, food, shelter, etc.); poverty of protection (because of bad health systems, violence, arms race, etc.); poverty of affection (due to authoritarianism, oppression, exploitative relation with the environment, etc.); poverty of understanding (due to poor quality of education); poverty of participation (due to marginalization and discrimination); and poverty of identity (due to imposition of alien values upon local and regional cultures, forced migration, political exile, etc.).so, as it was mentioned before, each poverty generates pathologies, and collective pathologies as: economic pathologies (unemployment, external debt, and hyperinflation); political pathologies (fear, violence, marginalization, and exile); illiteracy pathologies (communication barriers, learning difficulties, etc.); individualism pathologies (breakdown of community bonds, decreased civic engagement, increased loneliness, feelings of inadequacy), etc. for which, they also explain that each need can be satisfied at different levels and with different intensities, within three contexts, and that the quality and intensity, not only of the levels, but also of contexts will depend on time, place and circumstances. so, the three contexts within needs are satisfied are: (a) with regards to oneself, personal (eigenwelt); (b) with regards to the social group, as the family, and the wider community (mitwelt); and (c) with regards to the environment, as the bioregion, or the nation (umwelt). then, needs not only indicate deprivations, but also, at the same time, individual and collective human potential. when needs are conceived as deprivation are restricted to that which is merely physiological. however, because needs also engage, motivate, and mobilise people, they are a potential, and eventually may become a resource. then, the need to participate is a potential for participation, just as the need for affection is a potential for affection, love, appreciation, etc. (max-neef, 2007). more recently in 1992, the psychologist joe griffin and ivan tyrrel, created the theory of the human givens approach (human given services, 2025). which sustains that physical, psychological, and emotional needs are inextricably linked and when these needs go unmet, individuals may be more likely to experience stress and other emotional and mental health concerns impacting on personal development (good therapy, 2019). the human givens approach defines eight essential psychological needs identified over decades of work by health and social psychologists, which are 1. the needs for autonomy, 2. sense of control 3. security 4. connection 5. attention 6. achievement 7. status and 8. meaning. then, it is by meeting our physical, psychological, and emotional needs that we survive and develop as individuals and as specie (human givens institute, 2016). about the nature of our emotional needs, there is widespread agreement, uncovered by decades of health and social psychology research. so, the main ones essential for our mental health are nine: 1. security: safe territory and an environment which allows us to develop fully. 2. attention (to give and receive it): like a form of nutrition. 3. sense of autonomy and control: having decision to make responsible choices. 4. emotional intimacy: to know that at least one other person accepts us totally for who we are, “warts' n' al. 5. feeling part of a wider community. 6. privacy: opportunity to reflect and consolidate experience. 7. sense of status within social groupings. 8. sense of competence and achievement. and 9. meaning and purpose: which come from being expanded in what we do and think. (tyrrell & griffin, 2016). according to the human givens approach, individuals may not be getting their needs met due to three main reasons: 1. environment: something in our environment is interfering with our ability to get our needs met. 2. damage: something is wrong with our 'resources'. we are either missing or have incomplete instincts; and 3. knowledge: we may not know what we need (banham, 2022). however, according to the human givens theory, nature also gave us innate 'guidance systems' to help us meet our needs. they are ‘our resources', and they, together with our essential needs, physical, psychological, and emotional needs, make up the human givens. ‘our resources’ which nature gave us to help us meet our human needs are eight and are the following ones: 1. the ability to develop complex long-term memory, which enables us to add to our innate knowledge and learn. 2. the ability to build rapport, empathise and connect with others. 3. imagination, which enables us to focus our attention away from our emotions, use language, and solve problems more creatively and objectively. 4. emotions and instincts, a guidance system whereby, through the release of a variety of neurotransmitters, hormones, and other chemical messengers, we are driven to act to meet our survival needs. 5. the conscious, our rational ability to check out our emotions, question, analyse and plan. 6. the ability to 'know', which is understanding the world unconsciously through metaphorical pattern matching. 7. an observing self, which is that part of us that can step back, be more objective, and be aware of itself as a unique centre of awareness, apart from intellect, emotion and conditioning. and 8. a dreaming brain, that preserves the integrity of our genetic inheritance (tyrrell & griffin, 2016). consequently, according to the human givens theory, ensuring that the physical, psychological, and emotional needs of people are sufficiently well met and, that they are using their innate resources effectively (our human givens), is what underpins all successful healing, parenting, education, communication, and efficacy in organisational settings (human givens institute, 2016). asian business research journal, 2025, 10(10): 5-19 12 © 2025 by the author; licensee eastern centre of science and education, usa as it can be seen, in relation to all the fundamental needs for motivation and growth mentioned above, there are few needs that seem to be missed by every author if we take into consideration the contribution of hedley bull (1977) for social order. as the need for truth. because as it is mentioned by hedley bull (1977), truth is a requisite for social order. because if people have their needs covered but they cannot rely on honesty, it is detrimental for them and the rest. also, the need for life, a life full of health and wellbeing. which implies a sense of collective health and wellbeing as a need. because being aware of how the cause and effect of our actions impact on others, so in the community, will help us to being responsible. which also will help to attain better ways of living, and better societies, with social order and harmony. additionally, it implies the need of property, the care, maintenance, and good use of the communal resources, as human capital, natural resources, and local assets through work by all members of the community. because everyone who is part of the society can be given some responsibilities and do some work for its improvement, and mostly those who are unemployed, in prison, and receiving economic help from the government. then, capable tasks should be determined for everyone, even if it is just for four hours or five hours a month. which will depend on personal circumstances and life conditions. in this way mostly everyone will be able to contribute to the care, maintenance and good use of the communal resources, and to the wellbeing of society. consequently, it will also help to attain personal order, and so, social order. because, as it is mentioned by moore (2012), through our common humanity we can increase our capacity to live and work together, connecting resources and people, through the power of new and deeper humans and organizations relationships. in this way, we can have a better community where residents can be proud, happy, fight-free, and healthy. because when there is fragmentation of the community, community cannot be seen as a valuable supply full of basic human resources, required for democracy and rich societies. as cooperation, understanding, honesty, commitment, trust, etc. 5.2. social order the word "order" can be related to the greek term κόσμος (kósmos), which means order, and is the antithesis of chaos χάος (kháos or cháos) (centro virtual cervantes, 2025), which means disorder. to discuss social disorder, it is necessary to mention thomas hobbes (1588-1679). thomas hobbes was a british, english philosopher. in his most recognized work, "leviathan" (1651), he discusses the concepts of social contract theory, as well as the emergence of law (natural rights and legal rights), and criminology. we refer to thomas hobbes to define disorder because he relates disorder to the state of human nature, characterized by violence and conflict due to a lack of regulation, and a lack of order due to a lack of authority. therefore, where men live in conditions of fear and continuous insecurity (sorell, 2025). this concept of the “state of nature” also appears in the writings of the chinese thinker and philosopher mozi, mo-tzu (470–391 bc) (encyclopædia britannica, 2025). for the mohists, the most important implication of this hypothesis is that people will hold different and contradictory views about what is morally correct, based on which they will condemn one another. consequently, the final result will be a state of violent conflict and chaos. a chaos that will be fully resolved by the establishment of a hierarchy of rulers and leaders who systematically enforce a unified conception of what is morally correct through surveillance and incentives. the conclusion of the argument is that such a solution is a necessary condition for social and political order (loy, 2025). on social order, it is necessary to mention hedley bull and his main work, "the anarchical society," where he presents his theory of the society of nation states and emphasizes the concept of order in social life. according to hedley bull, social order can sometimes be defined in terms of obedience to rules of conduct, and sometimes more specifically as obedience to rules imposed by law, by an authority, as thomas hobbes and mozi determined. however, according to hedley bull, order in social life is more closely related to the conformity of human behaviour to rules of conduct, and not necessarily to the rules imposed by law (bull, 1977). because, for example, primitive societies have order but no law, they do not have a constitution, and they have assumed what is right or wrong within their borders. the same occurs at the international society of nation states, where there is no body determining how countries should behave, but order is maintained. then, social order requires patterns of behaviour and conduct that lead to a particular outcome, and an arrangement of social life which promotes certain goals and values in relation to a purpose, such as the sustainability of society. summarizing, hedley bull described the term social order explaining that in our international society, there is no body that determines what should be done, and therefore it is an anarchical society, but one where order is maintained. which occurs as there are three basic objectives: life, truth, and property/possessions. because in any constellation of people, groups, or communities where there is no expectation of security from violence, or where there is no enforcement of agreements, or where there is no stability of possessions, it is difficult to call it a society. so, unless these goals are achieved to some extent, we cannot speak of the existence of a society or of social life, because the achievement of other goals requires the achievement of these basic goals to some degree, and that is why, in fact, all societies seek to promote them. subsequently, although other goals must be pursued, all societies recognize these goals, and all societies embody agreements or treaties that promote them. first, regarding life, all societies help create patterns of behaviour that conform to security and against violence, with norms and laws that protect life and prohibit murder and assault. second, regarding truth, all societies help create patterns of behaviour, or laws that govern the fulfilment of agreements, and rules that prohibit the breach of contracts. third, regarding property (possessions), all societies help create patterns of behaviour or laws that govern the stability of possessions, with property rules or contracts. therefore, these are the elementary or primary conditions of social existence in this era. consequently, the more society conforms to them, the more social order there will be. because in the case of life (security), if people do asian business research journal, 2025, 10(10): 5-19 13 © 2025 by the author; licensee eastern centre of science and education, usa not have some security against the threat of death or injury at the hands of others, they are unable to devote sufficient energy or attention to other goals to achieve them. in relation to truth, all societies seek to ensure that promises, once made, are kept, or that agreements, once entered, are honoured. because without this, agreements or treaties cannot be created or established to facilitate human cooperation in any field. regarding property (possessions), all societies pursue the goal of ensuring that the possession of things remains stable to some degree. because if ownership by individuals or groups cannot be stabilized or settled to some degree (whether through private or communal ownership, or some kind of mixture of the two), it is difficult to imagine a socially stable society with relationships of any kind, since the things that human beings want to own are in limited abundance. because, if people were supposedly completely egoistic about their need for material things, the stabilization of possession through property rules would be impossible. the same would be true if people were completely altruistic. the same would also be true if there were a total scarcity of the things people desire to possess—that is, if there were nothing—, as it would be impossible to enforce property rules. the same would also be true if there were a total abundance of the things people desire to possess. for example, if everyone could have a lamborghini, a rolex, gold, mansions, etc., property rules would be unnecessary. however, because human egoism is limited, as is human altruism, and so, are also the things people desire to possess, it becomes necessary to stabilize the possession of assets for social life to exist (bull, 1977). conditions and circumstances, which can also be applied to people. so, in this way each person can find order with others and with themselves, through self-management on truth, property, and life. which implies pursuing the stability of their tangible and intangible possessions; the good use of the truth; and with security, protecting their life with emotional, physical, mental, and spiritual health, with a good general health, and therefore, with people full of life in all human facets. as people must be responsible of their own actions. as it is emphasized by talcott parsons in his work ‘the social system’ with edward a. shils. where he presents the structure of social action (1937), explaining that the actions of individuals are the ones which made up the social system, being the most important part of such actions, so not the person but the role or functions executed by that person (parsons & shils, 2001). then, through selfmanagement on truth, property, and life, it is possible to construct personal order, so activate potential development, and contribute to social order in any scenario. because everything is done by persons. then without people there are not institutions, cultures, religions, ideas, governments, businesses, societies, art, hobbies, etc. human constructions, which are, as it was explained by claude lévi-strauss in structuralism, determined in a big part by unconscious patterns and structures as culture, norms, values, traditions, (cassar, 2024), and power, as it was established by the post-structuralism (crick, 2016). but which can also be consciously directed through self-management on truth, property, and life. then, because everything is a cause or an effect from an action, as established by the casual analysis (klein, 1987), and everything can be constructed, as it is established by the constructivism (jean piaget [1896-1980], lev vygotsky [1896–1934], & jerome bruner [1915–2016], in chand, 2024). which is based on the concept that individuals actively construct or create their own knowledge and experiences, and so, their learning experiences determine the nature of their own reality, and part of their communal reality with others (chand, 2024). furthermore, it can be stated that through self-management on truth, property, and life, every person can construct their own reality and part of their reality with others in a consciously, responsible and positive way. so, then every person can establish their personal order in every aspect of their life, as business, education, work, hobbies, etc. contributing to social order in such scenarios. so, in a social system, contributing to its social order. however, it may happen only if they are aware of the basic principles of social order, as possessions, truth, and life. however, for this to happen, all fundamental human needs must be covered first, as it was mentioned before, or the person must reach a level of discontent which act as stimulus for transformation, as mentioned by dabrowski (mendaglio, 2019). then, subsequently, governments, institutions, businesses, organisms, the community, and the individuals, must be supported to work into it. because as it is established in the social theory of structural functionalism, the society can be described as a framework with its component parts and the interactions between them (ormerod, 2019). then, according to it, each of the institutions, relationships, roles, norms, individuals, and groups, are indispensable for the continued existence of the others and of society as a whole (encyclopaedia britannica & duignan, 2025). 6. results and discussions after a long, laborious, and meticulous conceptual investigation of the fundamental needs for human development and of the terms ‘social order’ and ‘social disorder’, it was important to confirm with the observation research method how the basic elements for social order, truth, property, and life, were also fundamental for personal development. as through the observation research method, it was possible to confirm how actions which implied a not good use of the truth; the not respect of the tangible and intangible possessions of oneself, of others, and of the community; and the not care, value, and use of the health in all human facets; were hindering or stopping the development of events, activities, action, etc. then, consequently, they were obstacles for realization of activities, acts, or events, and were also hindering personal development, social development, and communal or collective development. furthermore, throughout the findings of the conceptual research and of the observational research, the pedagogical terms ‘personal order’ and ‘personal disorder’ could be developed and, as consequence, are analyzed below. according to the findings of this research and what has been presented in the theoretical framework of this article, it can be stated that social order contributes to and fosters the full potential of people and that, therefore, the greater the disorder in a society, the less able people are to reach their full potential. because, for example, in relation to possessions, or resources, if i own my house, the property is mine, it is fully paid for, but i have decided to go on vacation and upon returning i find someone else living there. furthermore, if, according to the government, i, as the owner, cannot do anything about the occupancy of my property. consequently, that generates disorder in my life, a personal disorder, which negatively impacts social order. because https://www.britannica.com/editor/brian-duignan/6469 asian business research journal, 2025, 10(10): 5-19 14 © 2025 by the author; licensee eastern centre of science and education, usa my life is connected to the lives of other people and, therefore, generates temporary or permanent obstacles to the achievement of my own potential human development, and that of others. regarding the use of truth, it can be mentioned, for example, the constitution of a particular country. which establishes that all citizens have the right to work, housing, and equality before the law, but this is not fulfilled. a disparity which creates disruption in the lives of people, personal disorder. which continuously contributes to social disorder through temporary or permanent obstacles that hinder human development. because if institutions do not fulfill their functions as they should, people cannot count on their use and, as a result, may begin to distrust them. about a life-related example, it can be mentioned the use of weapons, such as knives, or machetes, to deal with problems, or issues with others. which causes people to feel threatened in their daily lives. so, if a solution is not provided, and such aberrance does not diminish but continues to grow, which will create disorder in the lives of people, personal disorder. because temporarily or permanently, it impedes or hinders the achievement of potential human development, especially due to the psychological impact of such events. consequently, it will probably be becoming a source of social disorder. of course, these mentioned examples may not have a significant impact on the stability of a country, but they can contribute to social anomie. furthermore, if they are left unchecked, they can escalate into a threat and lead to civil war or revolution. which could also generate disorder with an international impact, impeding freedom of movement, exports and imports, etc., and thus hindering the development of other communities or nationalities. because, as thomas hobbes (1588-1679) mentions, social disorder can be defined in circumstances of war and crisis, where people live in conditions of fear and insecurity. consequently, when social disorder occurs, for example, due to conflict that arises in periods of war or revolution, people resort to violence, break agreements, and violate property rights in the pursuit of other values (lawteacher, 2013). then, what do the anarchic society of hedley bull, international relations, and society of states have to do with what a person can do to contribute to their own personal development, that of others, and therefore to the social order? after the conceptual and observational analysis, it was found that the elements of truth, property, and life, to contribute to social order are also taking place at the personal sphere to development be able to occur. so, personal development, groups development, and social development, which successively contribute to social order. so, individuals can find order with others, with the environment, and with themselves as it similarly happens in "the anarchical society” of hedley bull (1977) with nation states. because through self-management on truth, property, and life, individuals can have personal order, then are able to achieve potential development, and contribute to social order in the following ways: 1.respecting, caring, valuing, and doing a good use of their tangible and intangible possessions, and of the communal resources, as local assets, human capital, and natural resources. 2.making good use of the truth and with perception of a good use of truth by the environment, through honesty, which is also entangled to transparency, trust, reliability…; and 3.taking care of their life, throughout assisting their emotional, physical, psychological, and emotional health, and perceiving security from the environment. then, with good health, with people full of life in all human facets, and with a safe environment through a good health care system, surveillance systems, law enforcement authorities, etc. then, effective self-management on property, truth, and life, can be defined as personal order. first, because societies are made up of people who can impact on their improvement. second, because this applied to individual human beings within groups, communities, and societies, can be associated with stability, balance, and security in relation to others. and third, because if this is applied to oneself, can also contribute to stability, balance, and security at the individual and personal level. so, how can self-management on truth, property, and life within groups, communities, or societies be associated with stability, balance, and security in relation to others? and, therefore with personal order, personal development, and social order? because regarding life, if i, for example, as a person, disrespect the lives of others. so, i use physical punishment or aggression of any kind. this causes trauma and imbalance in the victims. consequently, instability and insecurity have been imposed on the victim through trauma, due to lack of self-management on property, truth, and life, which has been termed as a personal disorder. because the body of a person is her or his tangible property, and the law prohibits the use of physical punishment. consequently, the victim cannot reach his or her full potential unless the damage caused is repaired. and, of course, such personal disorder impacts on social order if it keeps going on. as the victim may need social service assistance, economic help from the government, regular consultations with professionals as psychologists, a psychiatrist, etc. the same thing happens with the truth. if i, for example, am a person who tells lies. so, i say one thing but do another. this causes personal disorder in other people. because i am causing imbalance, instability, and insecurity in others. because, for example, if i have promised my classmate that i will help her with her exam, then i decide i do not feel like keeping that promise and i do not keep my word. or, for example, if i tell my boss to count me in for the sunday shift, but then i do not show up. then, of course, those circumstances generate instability, imbalance, and insecurity, delaying or preventing potential development, and of course, impacting negatively on social order if it continues. as through the bad references of others, i may not be able to get a job, so i may become a person dependent on the government, or of others. we can also say, the same happens with the concept of property (possessions or resources). because when the human capital or intangible resources of others, such as their dignity, choices, personal space, trust, positive habits and practices, the physical limits of existence, the beneficial tastes and emotions, etc., are not appreciated or respected, it creates imbalance, instability, and insecurity. or what has been called personal disorder. which also impedes or delays potential development and contributes to social disorder in the long term. because, for example, if i keep telling my sister that she cannot go out with me when her friends are unavailable, because i have assumed her doings are wrong, and that her choices are useless. a kind of bullying which causes my sister to begin to avoid me, not answering my text messages, or keeping herself away from me. consequently, as a response, i act as if nothing was happening, so, i do not respect her emotions or i am unable to identify them, due to my selfishness. of course, that will also create instability, and imbalance, personal disorder. anomaly which will impact negatively on the social asian business research journal, 2025, 10(10): 5-19 15 © 2025 by the author; licensee eastern centre of science and education, usa order of the family. because it is a richer family environment, the one where collaboration, respect, help, understanding, etc., are the norm. additionally, the same applies to the tangible or material possessions of others. because, if i do not respect the possessions of others, or there is no deep-rooted sense of community, and people steal or destroy the belongings of others, or if public or communal resources are misused. like public spaces, health facilities, natural resources, natural beauty, human capital, etc., as described in the "tragedy of the commons" (hardin, 1968). such behaviors also create instability, imbalance, and insecurity, thereby personal disorder. which implies obstacles to potential development and contributes in the long term to social disorder. because, as explained in the "tragedy of the commons," the individual and selfish use of a shared resource can lead to its depletion or destruction, harming everyone (hardin, 1968). so, if as social beings, we fail to consider our personal responsibility with tangible resources. which involves taking care, appreciate, use, or consume, responsible and effectively the resources publicly shared, including those provided by nature. which is also related to the carrying capacity of spaces, and the needs and demands of others. as consequence, if we do those actions irresponsibly and ineffectively, we will be causing damage in the environment, neglecting the human capital, the communal assets, or creating an imbalance in the amount of resources publicly shared. then, we are falling into personal disorder, and we will be hindering development, and negatively impacting the social order in the long term. furthermore, failure to consider the value of the communal assets, of the human capital, and of the natural resources, as the needs and demands for the maintenance of a space used or inhabited by humans, as well as their carrying capacity, will create instability, imbalance, and insecurity. because it would be difficult to accommodate 20 people in a room measuring 18 cubic meters, for example. however, if this can be done, it must be considered that 20 people will do quicker damage to that space and will require more resources. like more electricity, more laundry, more cleaning products, etc. because more often the room will need to be painted, cleaned, updated, etc. which will be also difficult to implement when there is not enough space, when perhaps the stress associated with its living capacity prevents cooperation among its occupants, or when existing funds are insufficient for such care and maintenance. as a result, there will be a kind of chaos, or a mini-social disorder, because of the consequence of such actions that exceed established physical and personal limits. the same applies to natural spaces. since all spaces, both natural and constructed, have a supporting capacity. as they possess certain resources and have also needs and requirements for their maintenance if they are used or inhabited by people. consequently, human, monetary, educational, material, and time resources are required. because it is necessary to prune trees, remove weeds, harvest fruits, reduce environmental impact, prohibit or manage trash and waste, and so on. to better understand this, we can consider what bruce logan, director of the pennsylvania institute for energy and environment, stated. he explains that if we take into account the carbon dioxide a person produces when breathing, in addition to the carbon dioxide produced by each person when using fossil fuels in the car, for heating, for cooking, for activities, for hobbies, etc., 730 trees per person would be needed, or approximately seven acres. which is about 28,000 square meters of forested land (logan, 2021), to prevent wear and tear, and maintain sustainable development. also, it can be said, that the same applies to human capital, as there are needs that must be met to encourage healthy human development and maintain human well-being. because, as it was seen at the beginning of this article, there are fundamental human needs for human well-being and development which must be met. therefore, to achieve a quality of life and an adequate education in the era in which we live, to contribute to personal order, to potential development, and to social order, are needed natural resources, monetary resources, educational resources, etc. which is also related to self-management on truth, property, and life, and the personal and individual carrying capacity of each person, and of those people who are interrelated to others through close family or who must take care of others. like an elderly ex partner/spouse or extended family member, stepchildren, or an ill ex partner/spouse or extended family member, or a disabled ex partner/spouse or extended family member, etc. because, a person who cannot provide the necessary physical or physiological care, emotional care, and other types of care, such as financial, etc., for himself or herself, and as well, for those whose are dependent on them, they are creating disorder in their own lives and in the lives of their dependents too. because when a person makes indiscriminate use of resources or embarks on projects they cannot sustain responsibly and effectively, it can lead to bankruptcy or to poverty. for example, if a person only has a minimum monthly income but decides to buy a luxury car, live with high standards, or spend more than they can earn. this creates personal disorder, hinders or delays potential development, and this can also contribute to social anomie (unir, 2025), and furthermore, it can also contribute to social disorder in the long term. because, for example, in the uk in 2016, poverty cost the government £78 billion annually to cover human needs such as healthcare, social services, food, economic help, etc. (martin, 2016). money that could be used to create more infrastructure, improvements, etc., to promote more prosperity. additionally, how does self-management on life, truth, and property, when applied to oneself, also contribute to personal stability, balance, and security, supporting what has been called personal order? and consequently, how does it contribute to potential development and social order? because in relation to truth, when a person is not honest with themselves, it creates imbalance, instability, and insecurity. for example, if a person is very overweight but cannot see that they are obese and keeps telling themselves they are fine and do not need to change their meals. consequently, this person through the lack of selfmanagement on truth, creates instability, imbalance, and insecurity, personal disorder with respect to themselves. in this case, with respect to their own health. which delays their potential development, and in the long term will impacts on the social order. because they may lose their capacity to work, while they will change their buying behaviour as they may need more intake of food, and more medication, they may also need extra communal resources to maintain their life, as support worker, more medical appointments, etc. a similar situation occurs when a person lies about themselves to others. for example, if they lie about what they know what to do, or how things can be improved. like, for example, if someone claims to be a doctor or asian business research journal, 2025, 10(10): 5-19 16 © 2025 by the author; licensee eastern centre of science and education, usa lawyer, but then shatters the expectations of others. consequently, they create instability, imbalance, and insecurity around them, what has been termed as a personal disorder, and will negatively impact social order if that continues. as it can obstruct the development of projects, actions, etc. which may involve more resources, such as energy, time, money, etc. additionally, regarding property, possessions, goods, or assets, it may happen the same pattern. because in the case of intangible goods, when a person unknow their human capital, such as personal values, deep personal goals, ethical and aesthetic standards, criteria, commitment, responsibility, social skills, collaboration, positive habits, participation, personal hygiene, talents, trust, etc. they find themselves in a state of imbalance, instability, and insecurity, personal disorder. because if a person does not know what they want, where they are going, what they like or dislike, or their personal, ethical, and aesthetic standards, they will not be able to set boundaries or respect themselves in social interactions, in their behaviors, or in their actions toward others. this, in turn, impacts social order, especially considering the impact that immorality, ugliness, broken, dirt, and damaged things (d'amore, 2017), have on oneself and others. consequently, they may not be able to care for and respect their own intangible resources, such as friendship, trust, intimacy, talents, etc., or the intangible resources of others, creating personal disorder, hindering potential development, and consequently impacting negatively on social order if a remedy is not put into place. as the person can end up in social isolation, unable to interact with others, leading to depression or other illnesses. which can also impact on their capacity to work, study, etc. similarly happens in the case of the tangible assets of people. because when a person lacks material assets, monetary assets, educational qualifications, etc., they will be in a state of enormous insecurity, imbalance, and instability. because when a person has nothing to rely on, which will prevent them from progressing, causing personal disorder. which will hinder or delay their potential development, which will impact on the social order if it is not corrected. as the person cannot be able to consume to develop themselves. for example, to get a driving license, study, acquire assets to facilitate their life, like a car, a computer, and so on. consequently, the person can end up being a homeless person making extra use of communal resources. the same occurs also when a person fails to manage their tangible assets or possessions, exceeding their personal and individual carrying capacity when taking on responsibilities or actions that exceed their means. when these actions or responsibilities require more resources than they can contribute, or more resources than they have. consequently, this creates instability, imbalance, and insecurity. as for example, if a person only has a minimum monthly income but decides to open three businesses or buy a four-bedroom house without being able to afford it, they are committing to actions or responsibilities that they cannot manage responsibly and effectively. as a result, they will generate instability, imbalance, and insecurity, personal disorder. because, for example, if the person cannot pay the mortgage they can lose their property. so, they will be creating disorder in their personal life, hindering or delaying their potential development, and impacting negatively on social order. as the person may end up in absolute poverty, losing also the family, developing mental health problems, etc. regarding life, it happens the same thing. because when someone causes internal damage to themselves, with destructive behaviors or habits such as negative thinking, smoking, taking substances, eating poorly, etc. they are creating personal disorder inside, but also outside. because their physical appearance will reveal their internal circumstances, creating a negative impact on themselves through their bad physical, mental, emotional and spiritual health, and around them. which hinders or delays potential development and impacts negatively on social order. exactly, this also occurs when a person causes external harm to themselves, whether through self-harm, conflicts with others, or neglecting their appearance or physical well-being due to lack of social life, lack of exercise or sports, lack of education or enrichment, etc. which, consequently, will cause instability, imbalance, and insecurity, which enforce personal disorder. which hinders or delays potential development and affects negatively social order. then, having in consideration the work of moore (2012), it can be stated that through lack of self-management on truth, property, and life, we are unaware of how our beliefs, thinking, feelings, and relationships with ourselves, with others, and with the environment influence our actions, and so, the result of such actions. furthermore, neglecting or not putting into practice self-management in relation to these elements of social order, life, truth, and property, is extremely negative. as it produces personal disorder, which can also contribute to the production of social anomie (unir, 2025), and so contributes to social disorder. 7. definitions of personal order and personal disorder based on the reflections and findings through the observation and the conceptual research, it can be stated that personal order refers to self-management on truth, property, and life. which implies organization, care, and abundance, in the existence of a person, of tangible and intangible property, resources, or assets, the good use of truth, and with full of life, through physical and mental health, so also with security. which must happen at the personal sphere and in his or her environment, as it is explained below. when a person has tangible and intangible property/possessions and manages and cares well for them, they possess a strong structure of resources which enables them to enhance their human capacity. because it provides stability, security, and confidence, and allows for significant economic stability that can foster or boost their potential development and that of others. also, if the environment is rich in tangible and intangible resources, and these are properly cared for and maintained, the person finds themselves in an environment that provides happiness, joy, and harmony. which allows them to use those resources for their own benefit and that of society. regarding truth, if a person is honest and can be trusted because they know always how to make good use of the truth, this of course also favors and fosters potential development for them and for others and positively contributes to social order. asian business research journal, 2025, 10(10): 5-19 17 © 2025 by the author; licensee eastern centre of science and education, usa additionally, if the environment where the person stays is transparent, reliable, and effective by the wide good use of the truth, the person feels confident that their environment is supportive and trustworthy. which contributes to wellbeing and development. in relation to life, if a person is full of life, because the person lives a healthy life, cares for it, and respects it, emanating ethical, aesthetic, physical, emotional, psychological, and spiritual well-being. subsequently, they can, of course, optimally and effectively cope with the activities, obstacles, problems, actions, and responsibilities necessary for their daily lives. which in turn favors and fosters potential development for them and for others, positively contributing to social order. besides it, if the environment is healthy, not polluted, it is cared for, and maintained, with plenty of natural resources, natural beauty, local assets, and human capital, it contributes to the health of its inhabitants or users. so, it will be fostering wellbeing and personal development, so social order. then, personal disorder refers to all personal circumstances that arise from lack of self-management on property, truth, and life. which implies poor organization, neglect, and deficiency in the social existence of people, and in the environment, of the three elements necessary for social order: • property: possessions, resources, or assets. this includes tangible resources and intangible resources of the person, and the tangible and intangible resources of the community or society. which includes the human capital, the natural resources, and the local assets included in those natural and built landscapes or environments. • truth: honesty and good use of truth with themselves and with others, and by the environment institutions, social agents, organisms, worker, etc.). and, • life: which implies health in all its human facets (physical and mental health), and security, with themselves, with other in the social sphere, with family, friends, neighbours, social agents, etc., and by the environment. because, as argued in the preceding paragraphs, the lack of self-management on truth, property, and life. which implies the misuse, the shortage, and the lack of care or the neglect in these areas, (property, truth, and life), creates personal disorder, so delays or hinder potential development and negatively impact on social order. this can be originated, as mentioned above, on two levels. it can be originated on the personal level, when there is not a good use of the truth by the person; when the person lacks resources or those resources are neglected; when his or her personal and individual carrying capacity is exceeded resulting in a misuse or poor management of resources; and when his or her physical and mental health is not of good standard. which implies a deficiency of attention to the fundamental human needs for maintaining human well-being and development. it can also be originated in the environment, when the truth is not used by the collectivity; when the carrying capacity of natural and built spaces is exceeded; when the resources provided by the environment are poorly cared for and misused; and when the built or natural environment do not contribute to the good life of its inhabitant deteriorating their physical and mental health. which is generally due to a lack of attention to the demands and needs for the maintenance and conservation of these spaces when they are used or inhabited by humans. 8. conclusions attending the reflections and findings of this conceptual research and the observation research, mainly presented on the theoretical framework and the results of this paperwork, it can be affirmed that the relationship between personal order and social order is reciprocal, as it is the relationship between personal disorder and social disorder. because our way of behaving toward ourselves, is reflected in our way of behaving toward others. which will depend on whether we can have the basic elements of social order, life, truth, and goods/possessions or resources), and whether we apply self-management on them. taking care for and maintaining them properly. because if we have them, but we don't care for, or we do not maintain them properly, we will be creating circumstances which can generate instability, imbalance, and insecurity in our lives, just as we create instability, imbalance, and insecurity in the lives of others related to us, personal disorder. because the person is exposed to irresponsible and unrealistic actions and behaviors with drastic consequences. because they may disrespect others, the environment, the law, or themselves, showing irresponsibility, rudeness, and immorality, causing repulsion and blockages, in addition to potentially causing outstanding accounts with the judicial system, while destabilizing the community. consequently, hindering their personal potential development and that of others. similarly, it occurs when the resources provided by the natural or built environment inhabited by humans or used by them are not seen as a valuable resource which contributes to wellbeing, development, and social order. then, in these cases, those environments are not properly cared for, they are not properly used, they are not valued, and their carrying capacity may be exceeded. which impact negatively on social order. as it can deteriorate the health and wellbeing of its users and inhabitants, causing personal disorder, hindering development, and contributing to social disorder. because everything that aims at the destruction of the individual, and of the environment, will have a negative impact, producing personal disorder, contributing to social anomie, delaying or hindering potential development, proliferating chaos, and ultimately contributing to social disorder. because the existence of anyone is based on the relationship with 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