Journal of Business and Behavioral Sciences Volume 23, Number 1 issn 1946-8113 Spring 2011 inthis issue

The futures market does exhibit strong evidence of efficiency for all the three commodities in all the markets. There is evidence that when a long run relationship between futures and spot price exists, the adjustment towards the equilibrium is generally made by the spot prices in all the three exchanges. The gold and silver futures market contribute more towards price innovation in MCX and NYMEX. For crude oil, futures market contributes more towards price innovation in NYMEX while it is not so in MCX. This shows that, NYMEX, the developed market and MCX, an emerging market, are efficient in price transmission as well as information sharing with respect to futures trading. This reveals that, commodity futures trading, increasingly used in developed markets, are now spreading to emerging markets. However, TOCOM spot market is efficient in information transmission than futures market for all the commodities. Their potential contribution to efficiency and economic performance is enormous. Commodity futures trading are used to expand risk management capabilities, improve credit allocation and risk sharing among economic agents, reduce the transaction costs of achieving desired risk profiles, increase the pricing efficiency of commodity markets, and provide new instruments for dealing with contractual and informational problems. Hence, the difference between developed and emerging markets is vanishing due to the efficiency of futures trading in these markets. Overall, there exists long run relationship between futures and spot market and futures market serves as a price discovery

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Journal of Business and Behavioral Sciences Vol 23, No 1; Spring 2011

Clark Atlanta University

Grounded by Contingency Theory, the study focuses on the impact of Environmental Protection Agency (EPA) regulatory action on market innovation. Based upon detailed interview from eighty one marketing executives representing both the industry and non-industry, the study identifies fourteen different uncertainty categories relating to EPA regulations. The results indicate a very high level of perception within the government regulatory action posing a significant risk to ecologically related innovation among industrial firms.

The 2000s have become the "Decade of the Environment," and both business and government are coming to the same conclusion: environmental protection is not an option, it is an essential part of the complex process of doing business. Global concern about protecting the environment fostered regulatory reforms and a growing variety of specific legislation favoring environmentally friendly marketing. More recently, the Obama Administration has favored the replacement of government regulatory programs with an innovative marketing-based policy known as the "Bubble" voluntary program. Such a change in the EPA orientation, which is already somewhat in evidence, has gone on to make a transition from a "command-and-control" orientation to a "marketing" orientation. The Bubble is an approach that attempts to elicit voluntary action based on a realistic understanding of industry's needs, attitudes and behavior. The voluntary policy of regulatory alternatives for industry is compatible with the concept of ecological marketing, a term used to identify marketing that takes into consideration the environmental consequences of its actions. Unfortunately, U.S. environmental policy has been dominated by the "market failure" paradigm - the belief among businesses that environment problems are caused by the failure of the market to provide the right signals. Surprisingly, many businesses are not aware of the Bubble policy, and, thus, only a relatively small proportion of industrial firms are engaged in the policy. Despite the increasing importance of voluntary reaction to green policies, scholarly inquiry on the topic has been hampered in two ways. First, the literature suggests that only a relatively small proportion of industrial firms react to the green voluntary policies (Apaiwongse 2009). Second, very little academic

Journal of Business and Behavioral Sciences

research has attempted to practically explain the interactive role played between government and business in an ecological as well as political setting (Apaiwongse 2008). Another question is of major concern for regulatory agencies and industrial firms alike: whether or not this marketing-based policy may produce some barriers to the acceptance among businesses. Yet, the issue remains one about which marketers know relatively little. The scant attention that has been given to studying this issue is in no way commensurate with its importance. To investigate this issue, a survey was conducted to identify how industries make adaptations toward the regulatory policy. After describing the concept of [1] contingency theory in marketing, and [2] the concept of uncertainty, the paper identifies different types of regulatory uncertainty and discusses how industries adapt their marketing units' structure to cope with an uncertainty toward the regulatory policy.

Also, future research suggestions focus on the interactive relationship and role of industries and government.

CONCEPTUAL FRAMEWORKS

Prior Research on Contingency Theory: Early contingency theorists studied the relation between the environment and structure at a macro level. Segmenting the environment into a simple dichotomy of stable/unstable, primarily on the basis of an organization's familiarity with the elements and tasks typically encountered in its overall environment. There are two divergent systems of management practice -- mechanistic and organic. The mechanistic system relies on vertical control and a precise definition of rules and procedures (high formalization), making it most appropriate for firms operating under stable conditions. However, as the environment becomes less stable, environmental constraints limit the structural options available to the successful firm. Lawrence and Lorsch (1967) study determined that the demands of the external environment lead to differences in decision-making structures, not only across firms but also between functional units within the same organization. Managers facing dynamic, complex environments sensed the need to implement organic structures whereas units operating in stable environments were more likely to develop short-term, formalized outlooks and implement mechanistic structures.

Galbraith (1973) provided significant theoretical support for the contingency perspective by demonstrating the important link between uncertainty and information. The greater the task uncertainty is, the greater the amount of information that must be processed among decision makers. For the mechanistic organization, tasks are usually routine and predictable and behavior can be coordinated among units by rules. As the level of uncertainty increases, a few situations arise for which no rules are available and these exceptions are referred to a level in the hierarchy where information is adequate to address them. In contrast to stable environments in which bureaucratic structures are the preferred design strategy, uncertainty environments involve so many exceptions that

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information must be processed during task execution and organizational designs develop in which more people have a reasonable degree of decision-making latitude and flexibility. Though rooted in the contingency tradition, Duncan (1972) studied the smaller decision units and measured five dimensions of structure: hierarchy of authority, degree of impersonality, participating in decision making, rules and procedures, and division of labor. The measures of environmental uncertainty incorporated three basic dimensions: lack of information about environmental factors, inability to predict the impact of a specific decision on the organization if it were incorrect, and inability to assign probabilities on how environmental factors will affect the success or failure of the decision unit. Duncan found the traditional contingency relationship: bureaucratic structures (high hierarchy of authority and rules and procedures, low impersonality, participation, and division of labor) predominated under conditions of low perceived uncertainty whereas more organic structures were implemented as the degree of uncertainty increased.

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organization. Perceptual measures typically rely on interview and questionnaire data from organizational members. The rationale for using perceptual measures holds that, in order for an environmental factor to influence the organization adoption, the members of the firm must perceive this environmental factor as important. Perceptual-measure approach is widely applied among many behavioral researchers. Some evidence reflects the application of the perceptual-measure approach to the industrial marketing area (Apaiwongse, 2008).

The other school of thought followed in the work of Duncan (1972). Duncan sought to facilitate contingency research through clarifying uncertainty concepts by relating two dimensions of organization environments, complexity, and dynamism to a manager's perception of uncertainty. Duncan's measure of perceived uncertainty was developed from a semantic analysis of individual verbalizations of the concept of uncertainty. The validity of this instrument is based primarily on the ability of individuals to verbalize their views concerning the relevant dimension of uncertainty. The three dimensions of uncertainty include: [1] lack of information regarding environmental factors associated with a given decision-making situation; [2] lack of knowledge about the outcome of a specific decision in terms of how much the organization would lose if the decision were incorrect; and [3] ability or inability to assign probabilities as to the effect of a given factor on the success or failure of a decision unit in performing its function. Both uncertainty and environmental dimensions were defined in terms of organizational member' perceptions. Uncertainty was tapping a psychological construct or perceptual measure.

RESEARCH OPERATIONALIZATION

Measuring Instrument for Uncertainty: In an effort to be consistent with the logical and methodological contributions made by Lawrence and Lorsch (1967) and Duncan (1972), measure of uncertainty are modified and applied to the present study. To operationalize the concept of regulatory uncertainty for this research, the specific dimensions of the EPA regulation are specifically required. These components are commensurate with the research work of the Apaiwongse‘s 2008 study. Viewpoints expressed by marketing executives and in some leading environmental journal are presented.

STUDY 1

To determine whether regulatory uncertainty, as perceived by marketing executives, has an impact on new product innovations, two focus group interviews in one group of four and another group of five were conducted. Interviews were used to determine the uncertainty perceived by marketing executives. The findings from the interview were used as a part of the final questionnaire construction.

Apaiwongse