PING PONG LTD.

Ping Pong Ltd.

Abstract

Given the importance of a firm's performance, which is of significant interest to many groups of people including management, shareholders and governments, this study aims to examine the impact of brand recognition and brand reputation on firm performance within the Ping Pong Ltd. context. The study findings suggest that brand reputation, in general, has a positive influence on a firm's value performance but no significant relationship with accounting performance. Brand recognition shows no significant relationship with both value and accounting performance measures controlling for the degree of internationalization of Ping Pong Ltd..

Chapter I: Introduction

In recent years, there has been tremendous and sustained growth in international business. Over 78,000 multinational enterprises (MNEs) as well as their 780,000 foreign affiliates have been identified by the United Nations in 2006 (United Nations, 2007), and about one third of world trade is within multinational companies (Friedman, 2006). In this borderless world, many companies compete not only domestically but also internationally against products and services from abroad. Daniels et al. (2007) summarized seven factors that induced globalization: (1) increase in and expansion of technology, (2) liberalization of cross-border trade and resource movements, (3) development of services that support international business, (4) growing consumer pressures on foreign goods and services, (5) increased global competition, (6) changing political situations, and (7) expanded cross-national cooperation.

The hospitality industry is not excluded from this trend of globalization. Seeking the growth opportunities, many domestically started hotels and restaurants have expanded their operations overseas. According to HOTELS Giants Survey 2008, the top 15 companies in most countries are operating 34,067 units in total from 31 (Four Seasons Hotels & Resorts) to 100 countries (InterContinental Hotels Group). The Standard & Poor's Restaurant Industry Survey (Basham and Menza, 2007) indicates that overseas expansion of fast-food chains is one of industry trends; McDonald's generated about two thirds of its revenue from overseas markets in 2006, and Yum! Brand generated about 42%. In their review of strategic management research in the hospitality industry, Olsen and Roper (1998) indicated internationalization as one of the four main areas of strategy research; others being strategic planning, competition and competitive advantage, and strategic implementation.

Observing the phenomenon of internationalization and its impacts on business organizations, scholars have developed theories as to why internationalization occurs and persists. Transaction cost theory and internalization theory are representative theories of internationalization, along with agency costs theory and imperfect capital market theory in economics literature ([Mishra and Gobeli, 1998], [Riahi-Belkaoui, 2004] and [Saudagaran, 2002]). However, the two traditional theories (i.e., transaction cost theory and internalization theory) were criticized by researchers in the 1990s partly due to the weakness of the logic itself and the limited explanatory power in the most recent business environments ([Kapler, 2007], [Kogut and Zander, 1993] and [Rugman and Verbeke, 2003]). Accordingly, new theories have emerged and these include the resource-based view (Barney, 1991), the evolutionary theory (Kogut and Zander, 1993), the theory of innovative enterprise ([Lazonick, 2002a] and [Lazonick, 2002b]), and the theory on the various advantages of internationalization ...