Running Head: JOURNAL ARTICLE CRITIQUE

Journal Article Critique

Peter Bakke
Walden University
Professor Thomas Spencer, Ph.D.
RSCH-8250Z-1 Advanced Quantitative Reasoning & Analysis

July 16, 2013

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Introduction
Hsu, Chen, and Cheng (2013) used a cross-sectional study to analyze 187 small
and medium enterprises (SMEs) in Taiwan to determine if CEO attributes contributed to
internationalization success as defined by firm performance. Based upon upper echelon
and information processing theories, the researchers hypothesized that five CEO
characteristics (age, tenure, education, international experience, and duality - that is,
CEO also as board chairman) were significant moderating effects upon international firm
performance. Using regression analyses, the researchers concluded that four of the
predictors, excluding CEO tenure, had a significant moderating effect upon firm
performance.
The rationale for the study was described by the researchers as a need to analyze
CEO characteristic attributes because such CEO predictors had not been addressed in
previous studies of internationalization and firm performance. Therefore, this study
appeared to fill a gap in the literature. The three authors seemed to be a well-balanced
team to tackle this particular academic issue. They individually had well-suited
combinations of experience in finance, risk management, and international business.
Literature Review
The literature review was extensive and was broken down logically into two main
sections: Internationalization/Firm Performance and Upper Echelon/Information
Processing theories. Upper Echelon theory and Information Processing theory appeared
to adequately address the studys main thrust of analyzing CEO personal attributes in a
complex business setting at the individual level (versus organizational structure). In
addition, the hypotheses section, which contained discussions of the studys six
hypotheses, also included copious literature references. However, out of the studys 88

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referenced materials, only 8 references were written within 5 years of the articles
publication date. The 88 references for this relatively small study seemed to be excessive,
so there is a concern that the authors may have been making up for a lack of recent
relevant articles by citing an abundance of older articles and studies. This could have
been driven by the perceived gap in the literature, which is frequently seen in this kind of
situation. Breaking new ground in a well-documented topic sometimes has to be
performed without the support of recent academic journal articles.
One area of general concern was the studys focus upon SMEs and the off-shore
internationalization of small and medium business dealings. It seemed more appropriate
that the focus upon internationalization would be better applied to larger enterprises
which would be better suited for this CEO study because larger organizations would
logically have more abundant resources of all kinds and more experienced CEOs who
could better internationalize their businesses versus the small and medium enterprises
analyzed by this study. However, one must realize that Taiwan is a small island nation
which must perforce rely upon many international partners for resources, commerce, and
labor. Given the rather unique context of Taiwan, it seems plausible that even small and
medium Taiwanese businesses would indeed be vitally concerned with international
business success and their CEOs part in that success.
The six hypotheses stated in the study appeared to be logically driven by the
identified gap in the academic literature. The only possible bias in the approach of the
topic seemed to be frequent references to the age of CEOs and the fact, revealed below,
that an increase in CEO age appears to significantly relate negatively to international firm
performance. Given that this is an Asian nation where age typically equates with
increased knowledge, the studys finding that CEO age does not actually equate to

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increased firm performance may have been a preconceived bias by the researchers and
they may have been keen to use the study results to help move aging CEOs out of their
hierarchical positions or may have a bias towards changing CEO selection criteria. At a
minimum, the results of this study, if truly applicable to the larger population represented
by the sample, have the potential to make many aging Asian CEOs, and their boards,
uncomfortable.
Another bias in the study sample is that the companies are all publicly-held
companies, therefore private companies were excluded from the sample presumably
because it was a convenience sample. Comparable data for private companies is difficult
to obtain.
Methods/Research Design
For the purposes of obtaining company data for this study, SMEs were defined by
the researchers as Taiwanese public companies that had fewer than 200 employees. These
companies were selected from the Taiwan Stock Exchange and GreTai Securities Market.
Financial data for the companies was obtained from the Taiwan Economic Journal
Databank and CEO demographic data was manually gathered from company reports. Any
companies that lacked any of the required data were removed from the study sample. As
stated earlier, n=187. Field (2013) suggested that for a regression study, the minimum
sample size should be 104 cases plus the number of predictors, or in this case, 104 + 5 =
109. Therefore the minimum sample size for the regression was met.
Because the data was gathered from public sources, no IRB intervention was
necessary in the data gathering process. There are no apparent ethical concerns about the
study, particularly since the data was randomly selected and anonymous in nature. There
is no individually identifiable CEO information in the dataset.

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The authors addressed several concerns of a regression study. They used a
generalized least squares (GLS) regression method to address the problem of crosssectional heteroskedasticity and within-unit serial correlation. The GLS method was used
to test the studys hypotheses. The Hausman test was used to determine that there were no
significant correlations between independent variables. However, elsewhere in the study,
the researchers related that two variables did indeed have significant correlation and they
stated that they simply added the two variables together. This seemed rather a
simplified method to avoid too much variable correlation in an already complex model,
but the researchers claimed it was a valid method to avoid multicollinearity and included
a citation to affirm their addition action. The authors did mention that all variance
inflation factors (VIF) values were well under the benchmark of 10.0, indicating that
multicollinearity was not a serious factor in the regression model.
Also, it was not clear that all variables were continuous. For example, the
education variable was encoded using a Likert scale between 1 (elementary) and 7 (PhD).
These values can be seen as continuous when averaged across all cases, but are not a
continuous variable, per se. There was also concern on the part of this reviewer that there
were too many variables in the regression analysis, making it too complicated. The
authors had to use seven regression models to determine the effects of their predictors.
This seemed like a cumbersome and overly complex regression model, particularly when
control and dummy variables were added into the regression equation, such as Firm
Size, R&D Intensity, Debt Ratio, Product Diversity, and Regulative Distance. It
wasnt clear exactly how these variables were used to control the cross-sectional design
in this complex regression model.
Results section

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Descriptive statistics (mean, standard deviation), correlations, and significance (p)
values were provided for all variables. The main results were reported as regression
coefficients and significance values. Two very large tables of results with very small type
were provided. All of the reporting of hypothesis confirmations were done by referencing
only the first table of results. It was not clear why the second table was never referenced.
If it was not referenced, why was it included in the study? The final size of the study
sample was never compared to the population sample. That is, n=186 was never related to
the proportion of the total population. Interaction plots for the four significant CEO
attributes (age, experience, education, duality) were listed, but the X-axis of each plot
was not described. This made the importance of the plots less impactful.
Discussion section
Each hypothesis was analyzed based on the regression results and confirmed or
denied. Four of the predictors were significant. However, CEO tenure was not
statistically significant, yet the authors chose to discuss its importance. If a variable, such
as CEO tenure is not statistically significant, the researchers should not opine about its
potential meaning for the study or how it may have affected a particular hypothesis.
Limitations of the study were discussed. Generizability for other non-Taiwanese
businesses was discussed as a limitation. Asian cultural aspects inherent in the study,
particularly around the attitudes of age and knowledge, were discussed as well. The
authors also recognized that there may be other factors that affect successful
internationalization, such as organizational structure, that were not addressed in the study.
Three-stage theory was mentioned as a potential limitation, but what this meant was
not clear as it was not clearly defined. It was suggested that further research could be
done using a longitudinal study involving SME CEO attributes. Practical implications of

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the study revolved around CEO selection and grooming based on the significant
predictors listed above.
Overall Evaluation
This CEO attributes study appears to support several hypotheses about the
significance of CEO characteristics that positively and negatively impact the successful
internationalization of SMEs in Taiwan. The three authors discussions about the
significance of CEO age, CEO international experience, CEO level of education, and
CEO duality (that is, a company has a better chance of being successful if the CEO is not
also the chairman of the board) all could be justifiably and reliably cited in other studies
about CEO characteristics and their affect upon firm performance.

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References
Hsu, W., Chen, H., & Cheng, C. (2013). Internationalization and firm performance of SMEs:
The moderating effects of CEO attributes. Journal of World Business, 48, 112.
Field, A. (2013). Discovering statistics using SPSS (4th ed.). London: Sage.