An Empirical Study

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HR Development And Utilization In The Public Sector Mussie T. Tessema, Diane May, Mengsteab Tesfayohannes-Beraki, Sebhatleab Tewold, Kifleyesus Andemariam Effect of Trust on Customer Loyalty among Mobile Phone Service Subscribers: the Mediating Power of Brand Image Adewale. Adekiya, A. The influence of Conflict Resolution, Acculturation, Gender Role on Marital Satisfaction among Iranian Married Students Katayoon Ahangar, Rumaya Juhari, Siti Nor Yaacob, Mansor Abu Talib Awareness and Usage of Contemporary Performance Measures for Measuring Performance of Indian Banking Sector Prof. Sanjiv Mittal, Dr. Sanjeev, Dr. Sunil Kumar Integration of Indian Stock Markets With its trading partners from select Asian Markets: An Empirical Study Nupur Gupta-Bhattacharya, Rahul Gogawat, Ankit Chaturvedi, Dipal Modi Challenges of Day to Day Operations at Modern Retail Stores across the Pune City Metro Region Dr. Ranjeet H. Chitale An Empirical Study of E-Banking Adoption by Retail Customers in Selected Banks of Rajasthan Meera Mathur, Zakiya Khan Corporate Leverage and Shareholder Value Creation- A Study on Indian Manufacturing Sector D.Vijayalakshmi, Dr.Padmaja Manoharan Corporate Social Responsibility: An Inclusive Growth Model for Developed Indian Economy Shailja Dixit An Empirical Analysis on Subscription Pattern of Retail and Institutional Investors in Indian Capital Market Souvik Banerjee A study on effectiveness of FM radio advertising: An importance and performance mapping of Chennai FM radio stations Sivasundaram Anushan.S.C, Preethi.R Response of Bangladesh Stock Market to Global Financial Crisis: An Analysis Niti Goyal Family Level Problems of Single Parents and Role of Human and Material Resources Namita Bhatnagar Utilitarian and Hedonic Shopping Values: A Study on Impact of Rational and Emotional Behavior on Individual’s Perceived Benefits. Uma Gulati Sustainable Financial Planning: A Comparative Study on Odisha Young Employees with Financial and Non Financial Sectors Santanu Kumar Das, Suman Kalyan Chaudhary Motivation Level of Employees and its Effect on Overall Performance in Insurance Sector Ujjwal M. Mishra , Irfan Siddiqui Entrepreneurship in Health Care with Special Reference to Kerala State Shyni .MC A Study of HRD and its Impact on Organizational Performance with Special Reference to Indian IT Industry Kanchan Bhatia, Divya Tiwari The Impact of Mergers on Profitability: An Empirical Study on Indian Banking Sector Suresh Patidar, Gaurav Sunil Decision Making Determinants in Purchase of Clothing of Elderly Consumers Suman Pant, Nidhi Vashisth Indian Corporate Governance: Growth & Challenges Priyanka Vijay Impact of Advocacy Advertisement on Brand Image Sunita Dwivedi Water and Sanitation: A Gender Perspective Sangeeta Poswal, Thushara Roy Shakespeare’s Selected Plays: A Feminist Perspective Surbhi Vijay Capturing Synergies and Competitive Advantage to Take on Amazon though Acquisition of Myntra by Flipkart (CASE STUDY) Amit Kumar Sinha, Sayed Zainul Haque Evolution & Prevailing Condition of Primary Education in India Ritesh Dwivedi, Arunima Naithani Environment, Business and Accounting S.T. Gadade, Minaxi Rachchh Anti-Money Laundering Programme- An Insight Overview Mitali Palit

April-June, 2015

E- ISSN: 2320-8236 , P-ISSN: 2395-4833 VOLUME: 3, ISSUE:2 APRIL-JUNE 2015

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EDITORIAL BOARD Editor-In-Chief Dr. Pratyush Tripathi Professor Faculty of Management VNS Group of Institutions Bhopal (M.P.)

EDITORIAL ADVISORY BOARD Dr. Om Prakash Gupta Professor Prairie View University Texas (USA)

Dr. V.K. Gupta Professor IIM-Indore Indore (M.P.) Dr. Ashish Sadh Associate Professor IIM-Indore Indore (M.P.) Dr. Sudershan Kuntluru Associate Professor, Indian institute of management Kozhikode, Kerala

Dr. Kishore Kulkarni Professor College of Business, Metropolitan State University of Denver Denver, Colarado (USA)

Prof.Dr.Patthira Phon-ngam Chairman of Doctoral Degree Program Faculty of Humanities and Social Science Loei Rajabhat University Thailand Dr. S.C. Behari Dr. R.P. Das Professor (Finance) Professor & head, Faculty of Indian School of Business Management Studies Hyderabad (A.P.). Pt. Ravi Shankar University, Raipur (C.G.). India Dr. Shalini Talwar Dr. Karunesh Saxena Professor (Finance) Professor & Head, Faculty of KJ Somaya Institute of Management Studies Management Studies & Research M.L. Sukhadia University Mumbai (Mah.) Udaipur (Rajasthan) India Dr. R.P. Goutam Dr. M.P. Goutam Professor & Head, Department of Professor & Head, Deptt. Of Political Science & Public Forensic Science Administration, GGDU, Bilaspur Dr, Hari Singh Gour University, (C.G.) India Sagar, India

Prof. (Dr.). Abhilasha Singh American University in the Emirates (AUE) Dubai International Academic City, Dubai, UAE

Dr. L.P. Pateriya Professor & Head, Faculty of Management Studies GGDU, Bilaspur (C.G.) India. Dr. I.P. Tripathi Professor of Commerce, Principal, Govt. P.G. College Rewa (M.P.) Dr. Rajeev Dubey Professor (Business Economics) & Head, Deptt. Of Business Management A.P. S. University, Rewa

EDITORS Valentina Emilia Balas Assoc.Professor, Aurel Vlaicu University of Arad, Romania

Dr.B.Nimalathasan Senior Lecturer, Department of Accounting, Faculty of Management Studies & Commerce, University of Jaffna, Sri Lanka.

Dr. Parag Dubey Professor, National Institute of Technical Teachers Training & Research Bhopal (M.P) India

Dr. Mukesh Chansoria Professor & Director School of Management, LNCT Bhopal (M.P.) India.

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IRC’s International Journal of Multidisciplinary Research in Social & Management Sciences Vol 3 Issue 2 (April-June 2015)

Contents S.No. Title & Author 1 HR Development And Utilization In The Public Sector

Page No.

1-8

Mussie T. Tessema, Diane May, Mengsteab Tesfayohannes-Beraki, Sebhatleab Tewold, Kifleyesus Andemariam

2

Effect of Trust on Customer Loyalty among Mobile Phone Service Subscribers: the Mediating Power of Brand Image

9- 17

Adewale. Adekiya, A.

3

The influence of Conflict Resolution, Acculturation, Gender Role on Marital Satisfaction among Iranian Married Students

18- 24

Katayoon Ahangar, Rumaya Juhari, , Siti Nor Yaacob, Mansor Abu Talib

4

Awareness and Usage of Contemporary Performance Measures for Measuring Performance of Indian Banking Sector

25-32

Prof. Sanjiv Mittal, Dr. Sanjeev, Dr. Sunil Kumar

5

Integration of Indian Stock Markets With its trading partners from select Asian Markets: An Empirical Study

33-41

Nupur Gupta-Bhattacharya, Rahul Gogawat, Ankit Chaturvedi, Dipal Modi

6

Challenges of Day to Day Operations at Modern Retail Stores across the Pune City Metro Region

42-48

Dr. Ranjeet H. Chitale

7

An Empirical Study of E-Banking Adoption by Retail Customers in Selected Banks of Rajasthan

49-53

DR. Meera Mathur, Zakia Khan

8

Corporate Leverage and Shareholder Value Creation- A Study on Indian Manufacturing Sector

54- 62

Dr.D.Vijayalakshmi, Dr.Padmaja Manoharan

9

Corporate Social Responsibility: An Inclusive Growth Model for Developed Indian Economy

63-71

Dr Shailja Dixit

10

An Empirical Analysis on Subscription Pattern of Retail and Institutional Investors in Indian Capital Market

72-78

Souvik Banerjee

11

A study on Effectiveness of FM radio Advertising: An importance and Performance mapping of Chennai FM Radio Stations

79-85

Dr. Sivasundaram Anushan.S.C, Preethi.R

12

Response of Bangladesh Stock Market to Global Financial Crisis: An Analysis

86-89

Dr. Niti Goyal

13

Family Level Problems of Single Parents and Role of Human and Material Resources

90-95

Dr. Namita Bhatnagar

14

Utilitarian and Hedonic Shopping Values: A Study on Impact of Rational and Emotional Behavior on Individual’s Perceived Benefits

96-101

Dr.Uma Gulati

15

Sustainable Financial Planning: A Comparative Study on Odisha Young Employees with Financial and Non Financial Sectors

102-110

Mr. Santanu Kumar Das, Dr. Suman Kalyan Chaudhary

16

Motivation Level of Employees and its Effect on Overall Performance in Insurance Sector

111-114

Dr. Ujjwal M. Mishra, Dr. Irfan Siddiqui

17

Entrepreneurship in Health Care with Special Reference to Kerala State

115-120

SHYNI.MC

18

Predictors of Employee Wellbeing’s among Private & Public Sector: An Empirical Study in Odisha

121-130

Dr. Kalpana Sahoo

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A Study of HRD and its Impact on Organizational Performance with Special Reference to Indian IT Industry

131-135

Dr. Kanchan Bhatia, Divya Tiwari

20

Equity Investors Perception about Environment Related to M&A in India

136-140

P. Praveen Kumar, DR. R. Kasilingam

21

The Impact of Mergers on Profitability: An Empirical Study on Indian Banking Sector

141-154

Dr. Suresh Patidar, Gaurav Sunil

22

Decision Making Determinants in Purchase of Clothing among Elderly Consumers

155-163

Suman Pant, Nidhi Vashisth

23

Indian Corporate Governance: Growth and Challenges

164-166

Priyanka Vijay

24

Impact of Advocacy Advertisement on Brand Image

167-174

Dr. Sunita Dwivedi

25

Water and Sanitation: A Gender Perspective

175-179

Dr. Sangeeta Poswal, Thushara Roy

26

Shakespeare’s Selected Plays: A Feminist Perspective

180-182

Surbhi Vijayvargeeya

27

Capturing Synergies and Competitive Advantage to Take on Amazon though Acquisition of Myntra by Flipkart (CASE STUDY)

183-188

Dr. Amit Kumar Sinha, Sayed Zainul Haque

28

Evolution & Prevailing Condition of Primary Education in India

189-198

Dr. Ritesh Dwivedi, Arunima Naithani

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Environment, Business and Accounting

199-202

Dr. S.T. Gadade, Dr. (CA) Minaxi Rachchh

30

Anti-Money Laundering Programme- An Insight Overview

203-207

Dr. Mitali Palit

31

Text as Reflective Index of Human Behavior

208-211

Priti Sharma, Madhu Chauhan

32

Brain Tumor Segmentation Using Shannon and Non-Shannon Entropy Measures

212-217

Anushikha Jain, Ranu Lal Chouhan

33

Computational Model for Fuzzy Cryptography

218-221

Bhanu Sahu, Deepti Maheshwari, Neeraj Sahu

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Editor’s Message IRC’s International Journal of Multidisciplinary Research in Social and Management Sciences (IJRSMS) is a peer reviewed Quarterly journal, available in both online and print form. Its major objective is to disseminate concepts of professional management and contribute to a better understanding of the context, resources, structures, systems, processes and performance of organizations. It focuses on applied research and reflections that are relevant to practicing managers and social scientists. It has an emphasis on social and Management issues that are relevant to the society and business world. As IRC’s International Journal of Multidisciplinary Research in Social and Management Sciences (IJRSMS) its Tenth issue, we look forward to the momentous growth of our Journal, increasing in their appeal, readership and relevance to the fast-changing world of Business Management. During these two and half years journey our journal has been critically evaluated by various institutions with similar line of interest and faculty fraternity. We have been consistently seeking advice from experts to continuously improve the quality of the journal. Our journal has been got Impact Factor from Index Copernicus value 4.13. On behalf of the Management, Editorial Board and Editorial Team, I express my profound gratitude to all our authors, reviewers, readers and patrons for offering their overwhelming support and I anticipate a continued and lively partnership for years to come. All of us recognize the necessity for change, which results in progress. It gives way to new ideas and perspectives reflecting the current and emerging environment, which builds on the solid foundations of the past. Last but not least valuable would be your response and suggestions on this issue. Kindly send us your views so that we can keep on upgrading our journal.

Thanking you With Regards Dr. Pratyush Tripathi Editor

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HR Development And Utilization In The Public Sector Mussie T. Tessema1, Diane May2, Mengsteab Tesfayohannes-Beraki3, Sebhatleab Tewold4, Kifleyesus Andemariam5 12

(Department of Business Adm., College of Business, Winona State university, USA) 3 (Department of Management, Susquehanna University, USA) 4 (Department of Accounting, College of Business and Economics, university of Asmara, Eritrea) 5 (Department of Management, College of Business and Economics, university of Asmara, Eritrea) __________________________________________________________________________________________________________________

Abstract: This study discusses HRD and utilization practices and challenges in the public sector in general and that of the developing countries (DCs) in particular. This paper argues that HRD programs may be able to produce competent individuals but it may be difficult to produce committed, motivated, and productive individuals as the latter seems to be a challenge to organizations. These challenges, therefore, call for a strong linkage of HRD to other HR programs. This suggests that HR utilization is an important aspect of HR management (HRM). Implications of these findings and future research directions are discussed. Keywords: HRM, HRD, Training, utilization, public sector, Developing Countries. _________________________________________________________________________________________________

I.

Introduction

The quality of a nation’s workforce is a crucial determinant of its ability to compete and win in world market. Competent workforce is the most important asset of an organization or an institution or a nation (Den Hartog & Verburg, 2004; Mello, 2005; Pfeffer, 1994). Hence, the role of employees who have the knowledge base, skills, experience, and expertise, and who have the capabilities to use them for the betterment of their organizations and nations cannot be overemphasized (Acquaah & Tukamushaba, 2009: 359). Human Resource Management (HRM) underscores a belief that people really make the difference; only people among other resources have the capacity to generate value. Human resources can be sources of sustained competitive. According to Stone (1998: 4), “HRM is either part of the problem or part of the solution in gaining the productive contribution of people”. In the words of Pfeffer (1994: 33), “having good HRM is likely to generate much loyalty, commitment, or willingness to expend extra effort for the organization’s objectives”. Because personnel costs represent the lion’s share of government budgets, effective HRM could make a real difference (Pynes, 2009). Ingraham and Kneedler (2000: 245) further highlight that “government activities are typically highly personnel intensive and thus, HRM practices are central to improving the quality of services offered by the governments.” HRM is of central significance to every nation as they strive to govern well and deliver services effectively. Organizations thus need to effectively manage their human resources if they are to maximize individual and organizational performance (Hays, Kearney, & Coggburn, 2009) and important aspects of managing human resource are HRD and utilization (Tessema & Astani, 2012). Many studies reveal that effective HRD and utilization now more than ever before are a crucial ingredients in the provision of effective public service and the development process of a nation (Hilderbrand & Grindle, 1997). However, HRD and utilization have come under strong criticism in many DCs with their effectiveness thrown in doubt (e.g., Budhwar & Debrah, 2004; Grindle, 1997; Kiggundu, 1989; Tessema et al., 2014). This study will focus on the public sector, which comprises different types of organizations each with their own distinctive management regimes. These range from the core central government ministries, local government and a variety of parastatal public enterprises enjoying varying degrees of organizational autonomy from central government control. While this study tries to consider HRD and utilization in the public sector as a whole, the focus will be mainly at the civil service organizations (central government departments and/or ministries). This is because it is usually among these organizations that the administrative crisis is most serious, where privatisation measures are least likely in the future, and where, to date, most attention both by national governments and donor agencies has been devoted to improving service delivery (World Bank, 1997). This study therefore attempts to answer the following research questions: 1. How are employees developed (trained and developed) and utilized in the civil service organization of DCs? 2. What are the challenges facing civil service organizations of DCs in HRD and utilization?

II. Literature Review The increasing complexity in the role of the state in the context of rising aspirations of people and scarcity of resources pose tremendous challenges to the management capacity of the state. In a rapidly changing environment where the needs are great, resources are scarce and pressure to achieve objectives is high, effectiveness of a civil service is crucial. This in turn signals that countries have to make efforts in order to maximise the benefit derived from resources invested in HRD. HRD has become a widely used term and its conceptions vary widely (Werner & DeSimone, 2011). In this study, however, it refers to an organizational effort to upgrade and improve the skills, knowledge, ability, and behavior of the organizational workforce (Pynes,

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2009: 310). According to Werner & DeSimone (2011), training and development has been defined as a planned effort by an organization to facilitate the learning of job-related behavior on the part of its employees. According to Nalbandian and Nalbandian (2003), skills necessary for public servants include administrative skills, political and policy skills, skills related to public service values, and emotional and personal attributes. The aforementioned skills may lead to high performance of public servants and public sector organizations (Ferris et al., 2007; Hays, et al., 2009). HRD/training programs are necessary but not sufficient conditions for an effective HRM and thus, HR utilization is an important aspect of HRM. Thus, no discussion of HRD would be complete without considering the role of HR utilization (Hilderbrand & Grindle, 1997; Mello, 2015; Tessema, Soeters, & Abraham, 2005). HR utilization is the extent to which available human resources are deployed effectively for the maximum achievement of individual, collective, organizational or national goals and objectives. Effective HR utilization may involve human resource allocation, maintenance, and further development (Kiggundu, 1989: 151). Human resources need, like all other resources in organizations, constant replenishment both qualitatively and quantitatively (Berman et al., 2012: 234; Thomas & Theresa, 1995: 7). Effective HRD programs play an important role in making the workforce well equipped with the necessary skills, knowledge and behaviour that they need to successfully accomplish their duties and responsibilities (Werner & DeSimone, 2011). After reviewing the relevant literature, we developed a conceptual framework presented in Figure-1. To facilitate our understanding, different parts of the framework (Figure 1) are presented in such a way that environmental factors (A1) affect HRM sub-systems/practices (B1), which in turn affect HRM outcomes (C1), which subsequently affect employee performance (D). The conceptual framework was based on the following assumptions: * External or environmental factors (economic, political, and socio-cultural) affect both HRD and utilization practices, which in turn affect HR outcomes (e.g., HR competence, motivation, and retention), which subsequently affect employee and organizational performance. * The HRM system has several functions. In this study, however, they are grouped under three categories or sub-systems, namely HR procurement/staffing, training/development and, utilization. This study, however, focuses on HRD and utilization of public/civil servants. HRM-sub systems (HR staffing, HRD, and utilization) are affected by some factors, which we coined „critical factors‟. * The effectiveness of HRM in civil service organizations is influenced at three levels: macro (environmental factors), organizational (organizational factors) and individual (employee characteristics). However, this study puts much emphasis on the organizational factors. Of course, organizational issues cannot be seen ignoring different HRD and utilization issues at individual and macro levels.

Critical factors affecting the effectiveness of HRD/training (1) Presence of clearly written and operational HRD/training policies: Training policy is a policy that outlines the scope of all training activities, approaches to training needs, assessment of the priority and financing arrangements, the roles and functions of different categories of training institutions and mechanisms for co-ordinating their work, linkage of training to career planning and development and guidelines for the monitoring and evaluation of training (Paul, 1983). One of the pre-conditions for the success of civil service training is, therefore, the presence of effective and operational training policies (Kerrigan & Luke, 1987; Paul, 1983; Stephen, 2004; Tessema et al., 2007). Kiggundu (1989) and Paul (1983) underscore that when training programs are developed in isolation from comprehensive development planning or from general administrative policies and practices, many of the factors that are crucial to successful training may be overlooked. Civil service training policy must become an integral part of the national development planning and civil service HRM system. With the existence of such policy, training becomes part of the administrative process of civil service organizations. Without a need assessment, it is possible to design and implement a training program as the solution to a problem that is not related to a training deficiency (Pynes, 2009: 311). (2) Continuity of ‘Training Needs Assessment’ (TNA): Training needs assessment is the first step in the training cycle. It is critical as it provides the information on which training is based and the latter can be no better than the quality of the analysis permits. If HRD is to be responsive to real needs of organizations through improving the relevance of the training programs, conducting proper and continuous training needs assessment is a vital issue. According to Berman et al. (2012), the effectiveness and relevance of training are increased when it addresses specific and relevant work problems. The identification of training needs should start with an assessment of the organization or national goals, objectives and priorities (e.g., Alam, 1990; Kirkpatrick & Kirkpatrick, 2006; Stephen, 2004). Following national planning and goal setting, and after organizational and individual training needs assessments, the appropriate training programs can be chosen to support national programs, organizational improvement, and individual development.

2 HR Development And Utilization In The Public Sector Mussie T. Tessema1, Diane May, Mengsteab Tesfayohannes-Beraki, Sebhatleab Tewold, Kifleyesus Andemariam © INTERNATIONAL RESEARCH COMMUNION

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Figure 1: A framework for assessing the effectiveness of HRD and utilization practices

Linkage of HRD programs to organizational objectives and strategy: When there is a proper linkage of HRD programs to organizational objectives and strategy, HRD becomes relevant to the achievement of organizational objectives (Kerrigan & Luke, 1987; ILO, 1998). The quality of training in the public sector can be improved only if HRD efforts are integrated with manpower planning of the public sector, which, in turn, has to be integrated with the changing development objectives and strategies of a country (Kiggundu, 1989). (a) Presence of written and acceptable trainee-selection procedures: If HRD is to have an impact, organizations should select trainees who are suitably qualified and motivated/willing to undertake a particular training program (Guerrero & Sire, 2001; Tessema et al., 2005). There must be some criteria for the same or similar basis of which candidates should be selected such as age, educational level, position level, type of career and responsibilities, past experiences, performance records, etc. so that the entire group will consist of suitably qualified candidates to participate in the same training program (Paul, 1983; Tessema et al., 2005). Hence, careful selection of trainees contributes a lot to the success of training programs. It is also believed that the trainability of the individual participant may influence her/his learning, attitude as well as behavioural change and performance. (b) Linkages of HRD programs to other HR programs and policies: Linkage of HRD to other HR programs (placement, promotions, salary, other incentives, etc.) is one of the key ingredients for an effective HRD (e.g., Berman et al., 2012; ILO, 1998; Tessema, et al., 2014). This is because the above linkages significantly affect the motivation of trainees, which subsequently influences the impact of the HRD programs. Employees are more likely to pursue training opportunities when they believe that doing so is linked to future promotion opportunities or at least favourable consideration for merit increases and positive performance reviews (Naff et al. 2014). The ILO (1998: 9) also underscores that HR Development And Utilization In The Public Sector Mussie T. Tessema1, Diane May, Mengsteab Tesfayohannes-Beraki, Sebhatleab Tewold, Kifleyesus Andemariam © INTERNATIONAL RESEARCH COMMUNION

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before any investment in HRD can be made, there must be an assumption that career structures have been designed on the basis of reliable, objective and established criteria. This is mainly because career development linked to the training encourages the trainees to search for more skills, and it also raises the productivity of the organization. (c )Capacity of a government to finance HRD programs: The adequacy and reliability of financial resources is one of the key factors for the success of HRD (Pfeffer, 1994; Tessema et al., 2005). An important factor influencing HRD is its financing and funding. There are varying practices and the proportion of funds allocated by government for training purposes differs widely. Some DCs earmark a particular percentage of total budget for training while others create a special training fund. Most of the time, HRD funds in the case of DCs, come from two major sources: budgetary allocation by the government and funding by sponsoring organizations or countries (e.g., ILO, 1998; Paul, 1983). Allocating (specific) HRD budget reveals the commitment of a government to HRD. (d) Conduciveness of the working condition (transfer of training to work place): A conducive working condition where trainees are able to apply what they have learned is the sine-qua non for an effective HRD (e.g. Berman et al., 2012; Grindle, 1997; Werner & DeSimone, 2011). Senior managers have to encourage trainees to practise what they have learned by creating a conducive working environment. This is because if senior managers do not provide opportunities to the trainees to apply their new skills and knowledge, the benefits from HRD will be quickly lost. Sharma (1994: 125) argues that one of the important shortcomings in the training program is the lack of incorporation of the training results in actual work operation. This is an important deficiency. Training motivation is also correlated with post-training and with transfer of knowledge acquired to the work situation (Kirkpatrick & Kirkpatrick, 2006). (e) Commitment of policy makers and senior civil servants to HRD: There is no doubt that, like all national development programs and projects, the success of HRD initiatives is contingent on the active support of both policy makers and senior civil servants (e.g., ILO, 1998; Stephen, 2004). A commitment on the part of both political and bureaucratic leadership is an important requirement of successful implementation of HRD programs. Policy makers and senior civil servants should themselves be convinced of the utility of HRD. Top management bodies should believe that the time and money spent in HRD by them is not a loss but a gain and a fruitful investment (Grindle, 1997). (f) Continuity of monitoring and evaluation of HRD programs: It is believed that if there is no effort to monitor and evaluate the effectiveness of a training program, the function may in reality mean wastage of time and money. HRD may, then, do greater harm to an organization. The supposed panacea may turn out to be a scapegoat (Kirkpatrick & Kirkpatrick, 2006). It is, therefore, essential to see that HRD ensures its continuity by providing the returns that are greater than the costs incurred in its operation. Unless responsibility is allocated to monitoring and it is clear what is to be monitored, problems may go undetected and the effectiveness of the activities and programs will be diminished. If time and other resources are made available for implementation of HRD programs but not for follow-up and evaluation, this important stage of the HRD process will be neglected.

Critical factors affecting the effectiveness of HR Utilization (a) Availability of well-developed HR programs and policies A government has to formulate HR programs and policies and ensure that they are correctly interpreted and consistently applied throughout the civil service so that all employees are treated fairly and equitably. This suggests that a number of benefits could be obtained from the availability of well-developed HR programs and policies (e.g., Berman et al., 2012; Mello, 2015; Naff et al., 2014). HR programs that affect HR utilization include pay, employee benefits, placement, employee performance evaluation, promotion and transfer, and disciplinary program. (b) Ability of a civil service to effectively implement HR programs The capacity of civil service organizations to properly implement HR programs is a crucial factor for effectively utilizing the existing HRs (e.g., Grindle, 1997; Hays et al., 2009; Stephen, 2004). This suggests that developing attractive HR programs is necessary but not sufficient in effectively utilizing civil servants. Thus, the issue of ability to put the program into action comes into being. Berman et al. (2012) also underline that top officials must publicly commit to the HR programs by devoting sufficient resources to them. The ability of the government to implement HR programs should also be supplemented by government‟s willingness and commitment to take seriously the issues of merit. This is because the civil service especially in many DCs have been politicized, which in turn adversely affected the objectivity of HR decisions to be taken (e.g., Das, 1998; Heady, 1996). Thus, given the complexity of HRM, developing and implementing successfully different HRM programs is a critical factor for effective HR utilization. (c )Continuity of monitoring and evaluation of HR programs Developing and implementing attractive HR programs alone may be necessary, but not sufficient. This is because unless HR programs and policies are monitored and evaluated, they may not always be able to attract, motivate and retain qualified and experienced staff as the perceptions and demands of employees change with fast changing world (Hays, et al. 2009; ). Effective HRM, therefore, demands that HRM systems be monitored and evaluated comprehensively to assess whether the elements are all pointing in the same direction and to see whether the organization is implementing HRM programs and policies as they should be. Once the problems have been identified, preventive or corrective actions can be initiated as required by the situation HR Development And Utilization In The Public Sector Mussie T. Tessema1, Diane May, Mengsteab Tesfayohannes-Beraki, Sebhatleab Tewold, Kifleyesus Andemariam © INTERNATIONAL RESEARCH COMMUNION

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(Kirkpatrick & Kirkpatrick, 2006; Naff et al. 2014). Thus, monitoring and evaluation mechanisms could help organizations to take all necessary measures, which benefit the organization.

External factors affecting HRD and utilization The effectiveness of HRD and utilization in a civil service is not only influenced by internal factors but also by external factors (e.g., political, economic, socio-cultural) (Pynes, 2009; Hays et al., 2009). The environment in which public organizations conduct their operations critically influences the development of internal relationships. Pynes (2009: 1) further remarks that public organizations are finding themselves having to confront a variety of economic, social, and cultural changes with which they must cope effectively if they are to remain viable. Economic factors: They have significant effect upon the ability of a government to commit resources, which in turn influence the effectiveness of HRD and utilization practices (Hays et al., 2009). Many public organizations especially in DCs find themselves in the position of being unable to compete with the NGOs and the private sector for personnel (Tessema & Astani, 2012). As a result, the ability to pay becomes an unarticulated policy limitation on compensation. HRD in the public sector is complicated by a declining budget combined with heightened citizen complaints and pressures for higher productivity (Naff et al. 2014). Political factors: Unlike in the private sector, political factors have great impact on HRD and utilization in the public sector (Naff et al., 2014; Colling, 1997). In addition, the political climate of DCs is different from that of the industrial countries in that organizations in DCs often face a highly volatile and unstable political environment (Tessema et al., 2014; Beugre & Offodile, 2001). Socio-cultural factors: The organization‟s culture refers to norms of conduct, work attitudes, and the values and assumptions about relationships that govern behaviour at the organization (Hays et al., 2009). According to Pynes (2009: 106), organizational culture is defined as “the values, beliefs, assumptions, expectations, attitudes, and norms shared by a majority of the organization‟s members”. HRM in any country has not developed in a social and economic vacuum. As a managerial function, HRM is as much a product of complex cultural and historical forces. These cultural and historical contexts have helped shape HRM function within organizations (Pfeffer, 1994). An organization‟s HRD strategy has to be tailored around these underlying values, behavioural, norms, and social groupings (Mello, 2015). Civil service organizations, therefore, should make efforts to develop HRM policies and programs compatible with tradition and culture, if they are to get the required benefit from their employees.

III. Discussion One of the main objectives of this study is to assess HRD and utilization in the public (civil) sector of DCs. To that objective, first we developed a conceptual framework taking into account the context of both public sector and DCs. Training/HRD effort emerged as an absolute necessity for all countries in general and those countries owing to the shortage of qualified public/civil servants in particular (Kerrigan & Luke, 1987; McCourt & Sola, 1999). HRD has become, therefore, increasingly important for ensuring that DCs have an adequate and continuous supply of competent civil servants. As argued by the ILO (1998), effective HRD programs (training and education) are increasingly important in the development process of countries in general and DCs in particular. Hilderbrand and Grindle (1997: 53) indicate that “while training and recruitment are important aspects of developing capacity, effective utilization of human resources within organizations is the most important factor in determining whether public officials are productive or not.” Ineffective HRD and utilization practices are a major limiting factor in the development process of many DCs (Hilderbrand & Grindle, 1997; Kiggundu, 1989; Tessema & Astani, 2012). Thus, it could be argued that one of the main reasons for the failure of development programs and projects as well as of government routine operations is either a lack of competent public servants or an inability to effectively utilize the existing expertise of the human resource (Tessema et al., 2005). Over the past four decades, governments in DCs have been attempting to improve the skills and knowledge of their civil servants through HRD programs funded by themselves as well as donor countries and agencies. However, despite all the efforts made so far, HRD programs have had limited impact on the effectiveness of the civil service organizations in many DCs (Cohen & Wheeler, 1997; ILO, 1998; Hilderbrand & Grindle, 1997; Clemens & Pettersson, 2007). It is mainly due to ineffectiveness of the HRD program as well as their inability to effectively utilize the expertise of the well-trained civil servants. HRD and utilization practices in the public sector of DCs are significantly affected by external factors such as political, economic, and socio-cultural. The civil service organizations are increasingly being influenced by external factors that impact their internal operations, particularly, HRD. Colling (1997: 655) notes that the environment in which public organizations conduct their operations critically influences the development of internal relationships. Due to the above reasons, Berman et al. (2012) remark that managing people in government requires knowledge of the above-mentioned external factors within which HR policies and activities take place. Perry and Mesch (1997: 220) note that powerful economic, demographic, and technological forces have arisen that are radically reshaping longstanding assumptions about organizations and management. HR Development And Utilization In The Public Sector Mussie T. Tessema1, Diane May, Mengsteab Tesfayohannes-Beraki, Sebhatleab Tewold, Kifleyesus Andemariam © INTERNATIONAL RESEARCH COMMUNION

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Thus, this paper contends that knowing the environmental context plays an important role in improving our standing how HRD and utilization related decisions are made and implemented in civil organizations. The economy of most DCs have not been doing well over the past four decades, which in turn has affected their ability to allocate adequate resources for HRD and utilization programs and practices. “Adequate pay is a key component in improving and sustaining the motivation, performance and integrity of public servants” (UN, 2005: x). However, there has been a decline in civil service salaries in DCs. The ILO (1998: 45) states that “real wages in Africa declined by 2 percent annually during the period 1990-1996”. The salaries of senior civil servants in sub-Saharan Africa are compressed relative to the minimum pay in the salaries (Das, 1998: 17). For instance in Ghana, the compression ratio was 2.2, which means that the salary of the top-most civil servant was only 2.2 times that of the lowest-paid employee in the government (Numberg, 1994). For example, in Eritrea, civil service salaries have not been adjusted since 1996/7 (Tessema et al., 2014). Severe wage compression and low-level of remuneration for senior as well as highly educated civil servants made it difficult for the civil service in many DCs to retain and utilize the best and brightest. Besides, experiences of most DCs indicate that in spite of the importance of allocating adequate budget for HRD purposes, many DCs, in recent years, have been seen to decrease HRD investment (e.g., ILO, 1998; Tessema et al., 2014). In the words of Berman et al. (2012: 233), “training is often the forgotten budget item”. Under short-term budget pressure, HRD is often the first thing to be cut. The political conditions has also affected HRD and utilization practices in that there has been political instability in many DCs (Heady, 1996; Tessema et al., 2014) as well as political interference (Das, 1998). For example, Das (1998: 19) argues that “politicization has resulted in the total erosion of traditional civil service values such as political neutrality, probity, rectitude, and objectivity”. Furthermore, Heady (1996) notes that recruitment to the civil service in many countries is mostly based on considerations other than merit. As a consequence, some systems are „civil service‟ in name only and function as „spoils systems.‟ In other words, the government‟s personnel system may be nominally merit but practically political. Hence, civil servants who are well qualified, motivated and productive is a goal common to many countries; yet, this simply stated goal is usually not achieved. Despite the prominent doctrine of HRM or merit system in a public sector, a comparison between merit principles and the actual practice of public HRM in many DCs had been a disillusioning experience. This implies that public HRM would not be complete without mentioning the influences of political factors. As a result, it has been argued that managing a public organization is a more difficult task than managing a private sector (Pollitt & Bouckaert, 2000; Pynes, 2009). The objectives governing the management of public organizations and their workforces were subject to various forms of political control and scrutiny (Colling, 1997: 655). The socio-cultural factors also influence both HRD and utilization. The indigenous social arrangements, which lead to the patronizing attitude as well as the nepotism and favouritism seen in the management of civil service in many DCs have an adverse effect on both HRD and utilization (Beugre & Offodile, 2001). For example, in a study of managers‟ motivation in Africa, Beugre (1998, quoted in Beugre & Offodile, 2001: 537) states that African managers are required to satisfy the social needs of their relatives. Behind every African worker, there is a family requesting attention, time and, mostly, money. Obligation to relatives often leads to nepotism and/or favouritism. For example, helping one‟s relative for a job, placement, promotion, and HRD opportunity could be considered normal. The aforementioned external factors or the context within which civil servants are trained/developed and utilized adversely affected the effectiveness of HRD and utilization. Many civil servants trained at the expense of civil service organizations defect to private sector, NGOs, and abroad where salaries and other privileges are often higher (Marfouk, 2008; Tessema et al., 2014). For example, Marfouk‟s study (2008: 6) shows that “10 out of the 53 African countries have lost more than 35 per cent of the their tertiary educated labor force and countries such as Cape Verde (68 percent), Gambia (63 percent), Seychelles (56 percent), Mauritania (56 percent) and Sierra Leone (53 percent) suffered from a massive brain drain. In some DCs, the brain drain is acute. Haddow (quoted in Cohen & Wheeler, 1997: 125) indicated that “[the] government must train four officers to retain one for a long period of time… [this] serious retention problem… is reaching alarming proportions… [it] must be addressed squarely”. It must be noted that wide variations exist as to how countries manage HRD and utilization programs. That is, variations in contextual factors act as constraints on or enhancement in the HRD and utilization. Nevertheless, the presence (or absence) of the critical factors identified in the framework (Figure 1) greatly affects the effectiveness of HRD and utilization, which subsequently influences the performance of a civil service. Those critical factors for both HRD and utilization are greatly affected by external factors. Especially, factors such as economic and political are found to be instrumental in either facilitating or hindering the presence of the critical factors, which influence the effectiveness of HRD and utilization. Thus, an important question to ask is that „it is not how many employees are trained, but how they are trained/developed, utilized, and retained that matters‟. The answer to the above question is multifaceted involving economic, political, and managerial factors. Put it differently, many DCs have been experiencing serious HRD and HR utilization problems. As a result, continuous warnings have recently been sounded that if development goals are to be achieved, the significance of effectively training/developing and utilizing existing civil servants throughout the total administrative system cannot be overemphasized. HR Development And Utilization In The Public Sector Mussie T. Tessema1, Diane May, Mengsteab Tesfayohannes-Beraki, Sebhatleab Tewold, Kifleyesus Andemariam © INTERNATIONAL RESEARCH COMMUNION

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IV. Conclusions and direction for future research This study argues that, the critical factors identified in the conceptual framework significantly influence the effectiveness of both HRD and utilization. However, it concludes that many of the critical factors for an effective HRD and utilization practices in the civil service of DCs have either been inadequate or missing. Likewise, an analysis of the environmental factors, (mainly economic and political) reveals that these factors are not very conducive. On this basis, this study concludes that the unfavourable environmental factors (economic, political, and socio-cultural) obtaining in many DCs are the ones that have hindered effective HRD and utilization. The cumulative effects of the prevailing HRD and utilization challenges have adversely affected civil servants‟ competence (ability to do), motivation (willingness to work) and retention (willingness to stay). The existing situation in many DCs contributes to the under-utilization of the limited number of highly skilled workforce. These problems are compounded by the fact that DCs are increasingly unable to retain the trained personnel employed in the civil service. They also are unable to effectively utilize the expertise of those who do not leave the civil service. Thus, it is intuitively appealing to support the argument that civil service organizations in many DCs are not prestigious places which can attract, motivate, and retain qualified and experienced workers. Hence, this study argues that more than anything else, it is the personnel crisis in the civil service organizations in DCs that has to be addressed if meaningful improvements in service delivery are to be realized. This study further argues that, for better understanding of HRD and utilization in civil service organizations, there is a need to take into account the wider contexts within which HRD and utilization operate. This paper concludes that HRD programs may be able to produce competent individuals, but it may be difficult to produce committed and motivated. This study contends that instead of the HRD to have a positive impact on the morale and performance of the trained workforce, it could have a negative impact, if it is not supplemented with other motivational factors such as proper placement, supervision, pay and benefits, promotion, opportunities to practice skills and knowledge learned, etc. Finding new ways to motivate and retain competent and experienced employees is a major priority. Berman et al. (2012) state that keeping good people once a government finds them is equally important. Grindle also argues that “training and skill building investments tend to be more easily accomplished than utilizing professional and technical personnel appropriately” (1997:13). One way of effectively utilizing existing employees is, therefore, to have attractive and implementable HR programs. Therefore, the HR problem for organizations is often not so much the availability of well-trained/developed employees, but how they were utilized once they were recruited and trained into the organization. This study argues that HRD investments tend to be more easily accomplished than retaining and utilizing trained personnel appropriately. As suggested by Mello (2015), HRpractices either work together as a package or they fight each other. One may argue that training is necessary, but not sufficient in improving the performance of civil servants. This suggests that HR-utilization, which is greatly affected by motivation, is also very crucial. The present study extends previous research in HRD and utilization practices and challenges in the public sector organizations in general and civil service organizations in particular. It is an important step forward in understanding the HRD and utilization practices and challenges facing DCs and thus, it has a good contribution to the existing literature.

References 1.

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12. Grindle, M. S. (1997). The good governance imperative: Human resources, organisations, and institutions. In M. S. Grindle (Ed.), Getting good government: Capacity building in the public sector of developing countries (pp.3-28). Cambridge, MA: Harvard University Press. 13. Guerrero, S. & Sire, B. (2001). Motivation to train the workers‟ perspective: Example of French Companies. International Journal of Human Resource Management, 12(6): 988-1004. 14. Hays, S. W., Kearney, R. C. & Coggburn, J. D. (Eds.). (2009). Public Human Resource Management: Problems and Prospects (5th ed.). New York: Longman. 15. Heady, F. (1996). Configurations of civil service systems. In H. Bekke, J. Perry, and T. Toonen (Eds.), Civil service systems in comparative perspective (pp. 207-226). Bloomington: Indiana University Press. 16. Hilderbrand, M. & Grindle, M. (1997). Building sustainable capacity in the public sector: What Can Be Done? In M. 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Numberg (eds.), Rehabilitating Government: Pay and Employment Reform in Africa (pp. 119-159). Washington D.C: World Bank. 28. Paul, S. (1983). Training for Public Administration and Management in Developing Countries. World Bank staff Working Paper No. 584, Washington, D.C.: The World Bank. 29. Perry, J. & Mesch, D.J. (1997). Strategic Human Resource Management. In C. Ban and N.M. Riccucci (eds.), Public Personnel Management: Current Concerns and Future Challenges (pp. 21-34). New York: Longman. 30. Pfeffer, J. (1994). Competitive Advantage through People: Unleashing the Power of the Work Force. Boston: Harvard Business School Press. 31. Pollitt, C. & Bouckaert, G. (2000). Public Management Reform: A Comparative Analysis. Oxford: Oxford University Press. 32. Pynes, J. E. (2009). Human Resources Management for Public and Non-profit Organizations (3rd ed.). San Francisco, CA: Jossey-Bass. 33. Sharma, V. (1994). Aspects of Personnel Management in Public Enterprises. New Delhi: Nirmal Publication. 34. Stephen, K. (2004). Introduction: Civil service training. International Journal of Public Administration, 27(3): 147-150. 35. Stone, R. (1998). Human Resource Management. New York: John Wiley and Sons. 36. Tessema, et al. (2014). Effect of employee background on perceived organizational justice: managerial implications. International Review of Administrative Sciences,80(2): 443-463. 37. Tessema, M. & Astani, M. (2012). An Assessment of an HRD Project: Lessons Learned. Journal of Management Policy and Practice, 13 (2), 87-100. 38. Tessema, M., Soeters, J. & Abraham, K. (2005). Practices and challenges of training and labour utilisation in Sub-Saharan Africa: The case of Eritrea. International Journal of Training and Development, 9(4): 214-231. 39. Tessema, M., Soeters, J.L., De Groot, G.. & Tesfaselassie, M. F. (2007). Managing civil service training institutions: What lessons can countries learn from Singapore? International Journal of Human Resource Development and Management, 7(3): 300-318. 40. Thomas, K. & Theresa, M. (1995). Planning for Training and Development: A guide to analysing needs. London: Save the Children. 41. UN (2005). Unlocking the Human Potential for Public Sector Performance. World Public Sector Report 2005. Retrieved on September 19, 2008 from http://unpan1.un.org/intradoc/groups/public/documents/UN/UNPAN021617.pdf. 42. Werner, J. M., & DeSimone, R. L. (2009). Human Resource Development (6th ed.). Ohio: Thomson/South-Western Cengage Learning. 43. World Bank (1997). The State in a Changing World. World Development Report, 1997. New York: Oxford University Press.

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Effect of Trust on Customer Loyalty among Mobile Phone Service Subscribers: the Mediating Power of Brand Image Adewale. Adekiya, A. Department of Business Administration and Entrepreneurship, Bayero University, Kano, Nigeria. Email: [email protected] __________________________________________________________________________________________________________________

Abstract: With the intense competition in the Nigerian mobile telecom industry coupled with high switching rate among subscribers, companies have been directing their marketing expenditure towards the enhancement of those customer relationship tactics which is deemed as capable of providing the much needed customer loyalty base. There are empirical evidences indicating that the perception of trust by customers can act as a precursor to customer loyalty. However, little is known regarding the presence of any mediating variable in this relationship. This study investigates the mediating power of brand image in the trust - customer loyalty relationship among subscribers in the Nigerian Mobile Telecommunication industry. Making use of primary data elicited through close ended and structured questionnaire from three hundred and ninety (390) mobile phone services users who were selected through the multistage sampling technique: cluster sampling, proportionate sampling and convenience sampling, the results from the Pearson product moment correlation and the linear regression analysis indicates that both brand image and trust have a linear relationship with customer loyalty at the 0.001 significant level. However, brand image was found to exercise a stronger effect on customer loyalty in a separate linear regression that considered both trust and brand image as independent variables. In other words, brand image mediates the relationship between trust and customer loyalty. In the light of these findings, companies were advised on the need to equally focus on increasing brand image whenever the objective is increasing customer loyalty from the viewpoint of trust. Keywords: Customer Relationship Tactics, Customer Loyalty, Trust, Brand Image. _________________________________________________________________________________________________

I.

Introduction

The mobile communication industry of Nigeria is currently characterized by intense competition among rivals who are constantly rolling out attractive new products and services, to attract and retain subscribers and thus maintain a comfortable industry market share. With the realization that the traditional concept of four marketing Ps can no longer be considered as having absolute reliability in the formulation of market winning strategies for the enhancement of this competitive edge, these companies have started shifting their focus and resources to those customer relationship tactics which is viewed as antidote for long term customer sustainability. According to Nguyen, Leclerc, LeBlanc (2013) Relationship marketing tactics is the act of developing and maintaining lasting relationships with customers in order to strengthen a company’s competitive edge. They also agreed that this customer-firm relationship can rely on various constituents, such as the product/service quality, employee’s performance, brand name or the firm itself. In addition to these constituents, customer trust also remains an essential component whenever the objective is developing customer loyalty towards the firm (Nguyen et al, 2013). Hence the concept of trust in the context of organizational products and services has consistently generated the attention of researchers. While defining trust, Moorman, Zaltman & Deshpande (1992) deduced that it is the condition that exists when there is the willingness to rely on an exchange partner in whom one has confidence. Within the context of marketing, trust is usually linked to consumer expectations concerning the firm’s capacity to assume its obligations and keep its promises (Moorman Zaltman & Deshpande, 1992). According to Blomqvist (1997) these expectations are based on the firm’s competence, honesty, and benevolence. In his opinion, competence is expertise and reflects the firm’s capacity to carry out transactions and to live up to their expectations. Honesty is associated with fulfilling promises made by the firm, and benevolence represents the firm’s willingness to take into consideration consumer interests when making decisions and when planning for engagement in customer relationship activities (Blomqvist, 1997). Jahanzeb, Fatima & Khan (2011) maintained that trust serves as a key element to build customer loyalty in that it is found to increase customer’s commitment which weakens customers’ propensity to switch. To Nguyen, Leclerc, LeBlanc (2013) consumers who trust a firm expect promises to be respected as advertised and also expect the firm to act based upon their interests. Most studies on trust, in the context of customer loyalty have been focused on the direct relationship between these two variables. In other words, such studies were conducted in isolation of other factors that might play critical role in the relationship. Thus, no concrete attempt has been made to identify the presence of mediating or intervening variables in the trust, customer loyalty relationship. For instance the study by Adekiya (2014) uncovered a significant, strong and positive relationship between the combinations of customer satisfaction, brand image and trust on one side, and the tendency of mobile subscribers to maintain a continuous relationship with their service provider on the other side. A critical point of argument in this study is the mild, though significant relationship that was uncovered between trust and customer loyalty when compared with those obtained for brand image and

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customer satisfaction. On the basis of this, he recommended that further study must be carried out to determine the existence of a mediator in the trust customer loyalty relationship. Going by the argument of Dichter (1985) which maintained that corporate image is the overall impression created by a firm or corporate body, on the mind of the public, it is hence debatable that companies can build a positive brand image through gradual, consistent, sincere, trustworthy and honest relationship marketing efforts coupled with a provision of constant positive consuming experience. In other words, it can be theoretically argued that the brand image of a company will act as a mediator to the enhancement of customer loyalty from the viewpoint of customer trust. This assumption is however yet to substantially tested in an empirical atmosphere most specifically, in the context of Nigerian telecommunication industry. Against this backdrop this research will examine the mediating role of brand image in the trust, customer loyalty relationship among the subscribers of the mobile telecommunication services in this telecommunication industry.

II. Literature Review 2.1 Customer Loyalty Customer loyalty has been described by Nguyen, Leclerc, LeBlanc (2013) as the tendency to purchase repeatedly, the same brand, and the tendency to resist the temptation to switch to other brands. Other authors have distinguished the concept in form of three approaches. For instance Grahn (1969) defined loyalty in form of behavioral approach, which is a repeated purchase from a single firm and can be influenced by habits, by other people, or by a random choice. Similarly, Bennett & Rundle-Thiele (2002) defined the construct as an attitudinal approach which expresses a consumer’s desire to establish a long term relationship with a firm while Dick & Basu (1994) gave their own definition as the integration of both behavioral and attitudinal approach. Regardless of its perception as an attitude or behavioral concept, Nguyen, Leclerc, LeBlanc (2013) maintained that it is one of many factors that determine consumers’ decisions to buy for the assurance of organizational profitability, continuity and relevance. This brings us to the need for identifying its relevant antecedents as it represents a major research theme for those who wish to understand the driving factors behind organizational sustainability and survival. Among the notable factors that have been proposed according to the literature are customer satisfaction: for instance: (Khatibi, Ismail & Thyagarajan 2002; Dithan 2011; Almossawi 2012; & Khan 2012). Brand image: (Zhang & Feng 2009; Akrofi, Akrofi & wellbeck, 2012) trust: (Akbar & Parvez 2009; Jahanzeb, Fatima & Khan 2011; Sarwar, Abbasi & Pervaiz 2012). Service quality: (Yaacob, Ismail & Ismail 2009; Jahanzeb et al.2011; and Ishaq 2012). In most of these studies, the direct relationship between customer trust and customer loyalty has been a major point of focus. However, it can be assumed that if companies strive to develop a consistent and trustworthy relationship with their customers over time, such relationship might likely be transformed into a positive reputation and brand image for the company which will consequently lead to a repurchase commitment from the customers. In this regard, I investigate the direct and indirect relationship between the two constructs of trust and customer loyalty with brand image being considered as an intervening variable.

2.1.1 Trust and Customer Loyalty According to Morgan & Hunt (1994) trust is a condition that exists when one group has the confidence to engage in a relationship with another trustworthy and honest party. Mayer, Schoorman, & Davis (1995) in their own view provided one general definition on the concept of organizational trust and defined it as the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control the other party. Following this definition, I propose that subscribers to mobile phone services will likely develop a repurchase behavior for organizational products/services in the face of organization’s ability to consistently deliver on promises made in terms of product/services quality, pricing or promotional policies. Barney & Hansen (1994) describe trust as the basis of building a mutually beneficiary relationship with customers in order to enhance competitiveness while Taylor, Celuch, & Godwin (2004) stressed that trust acts as a basis of loyalty creation. In addition, Berry (2002) stressed that in telecom services, trust is the basis for loyalty, and that the biggest cause of failure to retain customers and make them loyal is the lack of trust. Empirical evidences from the research by Madjid (2013) among 150 Bank customers in Indonesia indicated that customer trust has a significant impact on customer loyalty and partially mediate the relationship between customer satisfaction and customer loyalty. Another study by Zhang & Feng (2009) among 101 randomly selected University Students uncovered that service quality, price perception, and value offers all have a positive and significant relationship with customer satisfaction and trust, which consequently lead to an increase in customer loyalty hence this implies that the perception of trust by these students have a critical role to play in the enhancement of long term commitment to their various mobile telecom providers. On this basis, I propose here that: H1 there is a relationship between trust and customer loyalty.

2.1.2 Brand Image and Customer Loyalty Pope, Voges & Brown (2009) insisted that corporate image is considered as a portrait that incorporates beliefs, ideas, and impressions. Keller (1993) defined brand image is a perception about a brand held in consumer memory while another definition by Nguyen and Leblanc (2001) posited that corporate image can be explained in terms of physical and behavioral attributes of the firm, such as business name, architecture, variety of products/services, and the impression of quality communicated by each person Effect of Trust on Customer Loyalty among Mobile Phone Service Subscribers: the Mediating Power of Brand Image Adewale. Adekiya, A © INTERNATIONAL RESEARCH COMMUNION

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interacting with the firm’s clients. As indicated by Porter & Claycomb (1997) a positive corporate brand image, aside from helping a company to become more competitive, can also encourages consumers to make repeat purchases of its products. In the view of Dithan (2011) a positive brand image will in addition to making it easier for a firm to convey its brand value to consumers, will generates favorable word of mouth among people, while a negative image will affect them in opposite direction. Also, Kandampully & Suhartanto (2003) concurred that there is a significant positive relationship between image and customer loyalty and that a desirable image of an organization can strengthen the relationship between customer satisfaction and customer loyalty. Hence the proposition of this hypothesis: H2: There is a significant relationship between brand image and customer loyalty

2.1.3 Trust and Brand Image As stressed by Nguyen, Leclerc & LeBlanc (2013) corporate image can influence trust in different contexts, notably in financial services and e-commerce. They further insisted that for companies to build or enhance customer trust, numerous researches have suggested that the firm’s strategy be based, among others, on nurturing a positive image and a solid reputation. According to Morgan & Hunt (1994) trust is a major factor in the relationship between the customer and the brand. This is to indicate that companies with favorable brand image are more likely to have a higher perception of trust from customers and such perception of trustworthiness will further strengthen their continuous relationship with the firm. For instance Hadiwidjojo, Aisjah & Solimun (2014) empirically uncovered that the perceived negative brand image towards Islamic private Universities by Students in Indonesia is associated with a consequent poor purchase behavior among the Students. Their conclusion was that brand image exerts a significant positive influence on students repurchase behavior through the mediating power of trust. This is to imply that a positive brand image will lead to a perception of trust by consumers and such trust will tend to translate into loyalty. In a similar vein, it will be reasonable to concur that a company can equally build a strong brand image through the element of trust. For instance the argument by Cannon, Perreault, & McCarthy (2009) posited that brand image is also regarded as opinion and consumer confidence in the quality of products produced by organizations, in addition to organizational honesty and sincerity in the products offered to consumers. According to Chaudhuri & Holbrook (2001) brand image may also reflect some of the strongest associations of a brand such as intangible attributes, abstract benefits, and customer attitude at every different and diverse product categories. This implies that organization with a unique history of sincerity and trustworthiness might likely have these intangible attributes associated with a strong brand image in the mind of consumers. To press home this earlier submission from the above authors, Hawkins, Best, & Coney (2004) posited that brand image is a perception of a good impression in the mind of the customers while Kotler & Keller (2009) insisted that the good impression could arise if the brand has a unique advantage, good reputation, popular, trustworthy and willing to provide the best service. In other words, the ability of any organizational or business vendor to consistently deliver on promises made in terms of product/service quality, financial transactions including other promotional promises might likely lead to a high perception of trustworthiness and the formation of a favorable brand image, which can translate into loyalty for the organization. Thus brand image might also tend to act as a mediator between trust and customer loyalty hence it is hypothesis that: H3: There is a significant relationship between trust and brand image. H4: Brand image will mediate the relationship between trust and customer loyalty

2.2 The Conceptual Model of the Research: FIG2.1: The conceptual framework outlining the proposed relationships between trust and customer loyalty, brand image and customer loyalty, trust and brand image and the mediating role of brand image in the trust customer loyalty relationship, presented in the Figure 1.

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III. Research Methods 3.1 Population of the Study The populations of this study are the subscribers of Mobile telecommunication companies in Kano. The study examined the six local governments within Kano metropolis, including its surrounding environ of Ungongo and Kumbotso. It focuses on the subscribers of mobile telecommunication companies that are working or resident in these local government areas. According to the National Bureau of Statistics (2013) over 90% of the population in major cities of Nigeria has access to mobile phone. Hence the total population of the subscribers in focus is calculated on the basis of 90% of the total population of the eight local governments aforementioned. The populations of these eight local governments from a report by National Population Commission (2006) are as follows: – Kano municipal – 365,525 x 90% = 328,972 Tarauni – 221,367 x 90% = 199230 Fagge –198,828 x 90%= 178945 Nassarawa – 596,669 x 90% = 537002 Gwale – 362,059 x 90%= 325853 Dala - 418,777 x 90% = 376899 Kumbotso – 295,979 x 90%= 266381 Ungongo- 369,657 x 90% =332692. They also agreed that the city is one of the most populated cities in Nigeria and as such have a cosmopolitan nature that represents all ethnic groups and tribes in the country. Thus, it can provide a representative sample for major cities, tribes, and ethnic groups in the country.

3.2 Sample Size and Sampling Technique The total sample size for the research is determined by drawing inference from the work of Krejcie & Morgan (1970) which has been adopted by the universal accreditation Board (2003) according to them, for a population that ranges from 100,000 to an upward of 10,000,000 a sample size of 384 is appropriate. Similarly in related studies, for instance Dithan (2011) in Uganda, a total of 385 samples size was used. In another by Khan (2012) and Achour & Boerhannueddin (2010) a sample size of 108 and 385 were respectively employed. However, in reference to the argument by Zigmund (2005) that as the sample size of a research increases the more reliability that can be derived from the result of such research, hence this research employed the use of a round figure of 400 subscribers that are resident or working in the 8 local governments as its sample size. Regarding the sampling procedure, first, the cluster sampling method was employed in clustering the geographical boundary of Kano metropolis and its surrounding environ into eight primary sampling units: Kano municipal, Tarauni, Gwale, Dala, Nassarawa, Fagge, Ungongo and Kumbotso. Cluster sampling is most appropriate when the objective is to investigate a large number of research elements that are scattered across a wide range of geographical location while operating in an atmosphere of financial constraint, and there is a need to retain the characteristic of probability sampling (Zigmund, 2005). Second, the determination of sample size from each cluster was carried out with the aid of proportional sampling technique. The proportional sampling is such that the items selected for the sample from clusters reflects the proportion of the cluster in the population (Zigmund, 2005). This is done to ensure that subscriber in each local government are proportionally represented according to the population strength of the local governments. Finally, the primary sampling units were picked by adopting the convenience sampling technique.

3.3 The Measures A self administered structured questionnaire was adopted in eliciting responses from the respondents in this study after a pilot study involving twenty (20) respondents from another local government area was conducted and efforts, made to carry out necessary rephrasing and restructuring of the items to be in accordance with their suggestions and recommendations. The item on trust consist of eight questions from the work of Sharma & Peterson (2000) it measures such attributes as customer’s level of risk perception, beliefs in the consistency of service providers, employee’s fairness, and in addition, company’s sincerity and honesty. It was revalidated to the Nigerian sample and a correlation coefficient Cronbach alpha of 0.820 was obtained. Brand image was made up of (seven) items from the original work of Ravald & Grönroos (1996) Aydin & Ozer (2005); and Souiden, Kasim & Hong (2006). These items jointly measures such attributes as company’s past ethical practices and records, its overall achievements, its level of popularity, its corporate social responsibility endeavors, and the overall perception of customers towards the company while customer loyalty consist of (eight) items from the original work of Lam, Shanker, Eramilli & Murphy (2004); Morgan and Hunt (1994); and Zethaml (1988) these items are designed to suit the need of the two major dimensions of loyalty namely attitudinal and behavioral loyalty. It measures the extent, to which respondents are willing to spread positive words of mouth about a brand both in the present and in the future, their tendency to stick with a brand even in the face of more competitive offers from rival brands, and their willingness to continue using the brand for a long period of time. both have a Cronbach alpha value of 0.798 and 0.858 respectively and well over the 0.70 threshold as recommended by Sekaran (2008) All item were measure on a Likert scale with a range of 1, 2,3,4,5 with (1) being the lowest score, while (5) is considered as the highest.

3.3 Procedure The administration of instruments in this study was carried out was carried out in a period of one month and two weeks (1 ½) months specifically between June 2014 and August 2014. In carrying out the administration, the researcher focused on the public/private offices, apartments and business centers that are scattered across the eight local governments under focus in order to pick the subscribers that constitute his sample elements. In conjunction with an assistant; his student at the Kano state school of management, questionnaires was hand distributed to respondents after which they were enlightened on the benefit of the research and the need for them to give objective answers as it represents their true perception on the subject matters. Each respondents was Effect of Trust on Customer Loyalty among Mobile Phone Service Subscribers: the Mediating Power of Brand Image Adewale. Adekiya, A © INTERNATIONAL RESEARCH COMMUNION

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given ample time of a range of 1 to 2 hours to ensure that all question are adequately answered so as to minimize incidence of missing data and omissions.

3.4 Design/Statistics The researcher employed a cross-sectional survey design in the study. In addition, the descriptive statistics: mean, mode. Median and standard deviation, the Pearson r moment correlation and linear regression were employed as tools of statistical analysis.

IV. Results/ Findings The result of the analysis shows the findings of the study which includes the demographic characteristics of respondents, the descriptive statistics of major variables, the inter-correlation between the independent variables and the dependent variable, the statistics on Tolerance, Variance Inflated Factor and Eigen-Value, the regression analysis of major variables and analysis of variance result obtained from the study. Table 4.1 shows the descriptive statistics while table 4.2 (a-d) shows the inter-correlation between the variables studied, and the regression analysis of the variables. Out of the total 400 questionnaire that was administered, only 393 were retrieved, 3 were discarded for improper completion and omission, while the remaining 390 were used in the final analysis indicating a response rate of 97.5%. The demographic characteristics of respondents were classified based on gender, age group, income level, educational level, occupation and marital status. Based on the analysis conducted, it was found that 204 or 52.3% of the respondents were male while 186 or 47.7% of the respondents were female. In addition, 177 or 45.4% of respondents are single, 210 or 53.8% are married, while 3 or 0.8% are divorced. Also, 94 or 24.1% of the respondents are between 15-25 years, 202 or 51.8% are between 26-36 years, 66 or 16.9% are between 37-47 years while 28 or 7.2% are 48 years and above. Furthermore, 173 or 44.4% of the respondents are civil servants, 13 or 3.3% of the respondents are self employed, 108 or 27.7% are students. Furthermore, 84 or 21.5% are employed by the private sector while 12 or 3.1% are unemployed. As regards educational qualification, 50 or 12.8% of the respondents have the senior school certificate SSCE qualification, 77 or 19.7% have the ordinary national diploma OND certificate, furthermore, 172 or 44.1% have the higher national diploma or bachelor degree, while 91 or 23.3% have post graduate qualifications. Finally, 99 or 25.4% earns less than N15,000, 89 or 22.8% earns between N16,000-N31,000, 55 or 14.1% earns between N32,000-N47,000, while 147 or 37.7% earns N48,000 and above Table 4.1: Descriptive Statistics for Major Variables. Constructs TRUST BRAND IMAGE CUSTOMER LOYALTY

Number of respondents 390 390 390

Minimum Score 1.00 1.00 1.00

Maximum Score 5.00 5.00 5.00

Mean 3.4852 3.8087 3.5419

Standard Deviation 0.72068 0.95076 0.80897

Skewness -.617 -.697 -.511

From table 4.1 above, the mean mark for trust across all 390 respondents was 3.4852 which indicate that the respondents are moderately high in perception of trust towards their service provider. Furthermore, both corporate image and customer loyalty recorded a mean mark of 3.8087 and 3.5419 respectively indicating that the 390 respondents in this study are high in these two constructs. In other words, they associate a high positive image with their respective service provider, and are also loyal to the providers. Furthermore, the Skewness statistics for the four constructs indicated that all the variables under consideration are negatively skewed. According to Jahanzeb, Fatima & Khan (2011) large values of Skewness indicate non-normality while downward slides of such values indicate movements towards normality. Hence it can be concluded that the entire construct employed in this study have to a great extent, satisfied the assumption of normality in distribution. Table 4.2(a): A Correlation Matrix of Trust, Corporate Image, and Customer Loyalty. (Correlation Coefficient) Trust TRUST Brand image

Customer loyalty

Person Correlation N Person Correlation N Person Correlation N

1 390 .556 ** .000 390 .520 ** 000 390

Brand image

Customer Loyalty

1 390 .551** .000 390

1 390

**. Correlation is significant at the 0.01 level (2-tailed). From the correlation matrix in table 4.2(a) above it is revealed that all the variables are significantly and positively related with each other at the 0.01 significant levels. In the table, trust is statistically and significantly related to brand image with a correlation coefficient of 0.556, p= 000 (p< 0.05). Brand image is equally related with customer loyalty correlation coefficient 0.551 p = 000 (p< 0.05) in a similar vein, trust is related with customer loyalty with a correlation coefficient 0.520 p = 000 (p< 0.05).

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According to Koop (2005) muticollinearity is a problem that arises in a regression model if some or all of the explanatory variables are highly correlated with one another. In their opinion, if it is present, the model has difficulty in explaining which explanatory variables are influencing the dependent variable. To test for the absence of any potential multicollinearity problem in this model, it was subjected to appropriate tests highlighted below in table 4.2(b). Table 4. 2(b): Statistics on Tolerance, Variance Inflated Factor and Eugen-Value Predictor Variables

Collinearity Statistics Tolerance VIF 0.556 1.799 0.533 1.875 0.639 1.566

Customer Satisfaction Trust Corporate Image

Eugen-Value 0.033 0.016 0.015

According to Cooper & Schindler (2003) the general rule of thumb for determining if correlation value is free of serious multicollinearity problem is that such value must not exceed 0.75. The highest correlation value in the matrix table above in table 4(2a) is 0.556 and between trust and brand image. Hence the absence of multicollinearity problem can be implied. In addition to the value of correlation coefficient, other means of investigating multicollinearity problems in a model are: tolerance statistics, variance inflated factor and the statistics on Eigen-value. In the opinion of Koop (2005) the tolerance is the percentage of the variance in a given predictor that cannot be explained by the other predictors. He also maintains that a tolerance value that is less than 10% is an indication of potential multicollinearity. As indicated by table 4.2(b) above, all tolerance statistics for the independent variables are well over 0.50 which indicates that over 50% of the variance in each given predictor can be explained by the predictor with the exception of others. A variance inflated factor greater than 2 is usually considered problematic (Hair, Black, Babin & Anderson, 2010). As shown by the table, all the values of variance inflated factor for the independent variables are well below the value of 2. Finally, it is in their opinion that Eugen values less than 0.010 indicate a serious multicollinearity problem. Here, the Eugen values for all predictor variables are over 0.010. Now that the assumption of multicollinearity has been satisfied, it is better to investigate the nature of the relationship among the variables in a more sophisticated manner in order to satisfy the objectives of the study. As such, the following regression models are presented. Table 4.2 (c) Mediator Variable Regressions (Brand Image) on Independent Variable (Trust): Model

a.

Model Summary R Square

R .556a

1 Predictors: (Constant), TRUST Model

Unstandardized coefficients

Adjusted R Square .307

.309

standardized Coefficients Beta

t

Std. Error of the Estimate 4.05584

Sig

B Std Error 1 constant 13.570 1.015 13.363 .000 Trust .470 .036 .556 13.363 .000 ------------------------------------------------------------------------------------------------------------------------------------------------------------

In the mediator regression in table 4(2c) above brand image was considered as a dependent variable while trust was adopted as the independent variable. The beta coefficient is .556 and significant at the 0.001 significant level. In addition, the R square value is .309 thus indicating that about 30.9% changes in the dependent variable is explained by the model. Also, the F statistics value of 173.302 which is significant at 0.001 significant level, and indicates there is a meaningful linear relation between the two variables. Table 4. 2 (d) Dependent Variable Regressions (Customer Loyalty) on Independent Variable (Trust):

a. Model

Unstandardized coefficients

1 constant

Trust

a.

Model R 1 .520a Predictors: (Constant), TRUST

B 12.072

.583

Std Error 1.386

.049

Model Summary R Square Adjusted R Square .270 .268

standardized Coefficients Beta

.520

t

Std. Error of the Estimate 5.53654

Sig

8.709

.000

11.980

.000

Dependent Variable: CUSTOMER LOYALTY

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In the dependent variable regression in table 4(2d) above customer loyalty was considered as the dependent variable while trust was the independent variable. The beta coefficient is .520 and significant at the 99% confidence level. In addition, the R square value is .270 which is an indication that about 27% of changes in the dependent variable are explained by the model. Also, the F statistics value is 143.526 and significant at 0.001 significant confidence interval. Hence this also implies that there is a meaningful linear relation between the two variables. Table 4.2(d) Dependent Variable Regressions (Customer Loyalty) on Independent Variable (Trust) and Mediating Variable (Brand Image).

a. Model

Model Summary Model R R Square Adjusted R Square 1 .608a .369 .366 Predictors: (Constant), BRAND IMAGE, TRUST Unstandardized coefficients

1 constant Trust Brand image

B 5.241 .347 .503

Std Error 1.559 .055 .503

Standardized Coefficients Beta .309 .379

t

Sig

5.790 6.365 7.804

.000 .000 .000

Std. Error of the Estimate 5.15300

a. Dependent Variable: CUSTOMER LOYALTY

In the second dependent variable regression in table 4(2d) above customer loyalty was considered as the dependent variable while brand image and trust were considered as independent variables. The beta coefficient for trust is .309 while that for brand image is .379 both significant at the 0.001 confidence level. In addition, the R square value is .369 which is an indication that about 36.9% of change in the dependent variable is explained by the model. Also, the F statistics value is 113.297 and significant at 0.001 significant levels indicating a linear relationship in the model. Further, a higher percentage of dependent variable change of 0.369 is identified by this model as compared to the first dependent variable regression. Hence, it can be assumed that brand image partially mediates the relationship between trust and customer loyalty.

4.2 Discussions This study examined the causal relationships among trust, brand image and customer loyalty. First, it was discovered that there is a significant relationship between trust and brand image, as displayed in the correlation matrix in table 4.2 (a) also, the mediation regression model in table 4.2 (b) indicates that trust has a positive and significant impact on brand image at the 0.001 confidence level, with beta coefficient 0.556. The R square value in the model is .309 which implies that about 30.9 % of the changes in brand image are explained by the model. In other words, an increase in trust across the subscribers will lead to a corresponding increase in brand image. This is in consistency with the argument of Morgan & Hunt (1994) who maintained that trust is a major factor in the relationship between the customer and the brand. It is also in line with the position of Kotler & Keller (2009) who are of the opinion that a good brand image of a firm can arise out of the perception of trustworthiness by customers. Furthermore, the dependent variable regression model in table 4.2 (c) indicates a beta coefficient of .520 and a R-square value of .270 which implies that about 27% of the changes in the dependent variable, customer loyalty is explained by the model. Thus brand image can act as a predictor to customer loyalty. This seems to be in coherence with the submission by Kandampully & Suhartanto (2003) where they concurred that there is a significant positive relationship between image and customer loyalty and that a desirable image of an organization can strengthen the relationship between customer satisfaction and customer loyalty. In the third regression model which is also an independent regression model and a multiple regression that examined the combined effect of trust and brand image on the dependent variable, customer loyalty, an R-square value of .369 was uncovered. This indicates that 36.9% of the changes in the dependent variable are explained by the model. The beta coefficient for trust in this model is 0.309 while that for brand image is 0.379. Though the two variables have a linear relationship with customer loyalty but the brand image relationship is stronger hence loyalty will tend to increase considerably as the perception of positive image is increased. Considering the predicting power of the second model, the third model is better, since the R square value in this model is a higher figure. For instance when brand image is introduced in the third model, the resulted R-square figure increased from .270 to .369. This figure means that about 36.9% percent of loyalty changes can be explained by trust and brand image, with brand image playing a more important role in this relation.

V.

Conclusion

Four major hypotheses were tested in this investigation. Hypothesis one which stated that there is a significant relationship between trust and customer loyalty was supported in that a positive and statistically significant relationship was uncovered Effect of Trust on Customer Loyalty among Mobile Phone Service Subscribers: the Mediating Power of Brand Image Adewale. Adekiya, A © INTERNATIONAL RESEARCH COMMUNION

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between the two variables. The second hypothesis which hypothesized a relationship between brand image and customer loyalty was also supported due to the positive and significant relationship that was found between the two. Thirdly, hypothesis three which says that a relationship exists between trust and brand image was equally accepted while the fourth hypothesis, which proposed that brand image will be a mediator in the relationship between trust and customer loyalty was equally accepted. Hence it can be reasonably deduced that organizations can improve customer loyalty through trust by focusing on the improvement of brand image.

VI. Recommendations Based on the above findings and conclusions arising there from, the following recommendations are put forward First as a result of the intense competition and high switching rate that currently characterizes subscribers in the Nigerian telecommunication industry, telecom companies must become aware of the importance of customer relationship tactics in providing for a desired level of loyalty among subscribers. Second, these companies must become aware that the perception of trust by subscribers is paramount in securing a desired level of customer loyalty. Most especially, in the present Nigerian legal and business environment that is being characterized by high level of uncertainty, customers are more likely to feel more vulnerable and thus, rely on trusted brands in transacting business. Hence efforts must be made to ensure that the business foundation in this sector is such that thrives on sincerity and the promotion of consistent services delivery to consumers as earlier promised. It is anticipated that such gesture will tend to enhance the perception of subscribers that the companies is trustworthy and dependable thus leading to an intention for long term relationship. Third, companies in this sector should be equally aware that the perception of trust by customers might not lead to an optimum level of customer loyalty. Hence the image of the company as perceived by the general populace is essential in the trust customer loyalty relationship. In other words, organizational marketing resources, channeled towards the enhancement of trust can be better complemented if it equally focuses attention on the enhancement of brand image. Therefore, it is recommended that in addition to fulfilling promises that relates to products and services, efforts should be made to ensure that other promises that can equally lead to the enhancement of brand image are considered. For instance promises on corporate social responsibilities, environmental preservation programs should be fulfilled on consistent basis.

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25. Keller, K.L. (1993). Conceptualizing, Measuring, and Managing Customer-Based Brand Equity. Journal of Marketing, 57(1), pp. 1-22. http://dx.doi.org/10.2307/1252054 26. Koi-Akrofi, G.Y., Koi-Akrofi, J., & Wellbeck, J.N. (2013). Relationship Marketing Tactics and Customer Loyalty. A Case of the Mobile Telecommunication Industry in Ghana. Asian Journal of Business Management 5(1): pp.77-92. 27. Koop, G. (2005). Analysis of Economic Data. (Second Edition) John Wiley & Son Southern Gate, Chichester. 28. Kotler, P., & Keller, K. (2009). Marketing Management: An Asian Perspective. Pearson Education International, Prentice Hall. 29. Krejcie, R.V. & Morgan, D.W. (1970). Determining Sample size for Research Activities. The Bobb Meril Co Inc p.608. Website: http://opa.uprrp.edu/InvinsDocs/KrejcieandMorgan.pdf. 30. Lam, S. Y., Shankar, V., Erramilli, M. K., & Murthy, B. (2004). Customer Value, Satisfaction, Loyalty, and Switching Costs: An illustration from a Business-toBusiness Service Context. Journal of the Academy of Marketing Science, 32:293–311. 31. Madji, R. (2013). Customer Trust as Relationship Mediation between Customer Satisfaction and Loyalty at Bank Rakyat Indonesia (BRI) Southeast Sulawesi. The International Journal of Engineering and Science (IJES), Volume.2. Issue 5, Pages. 48-60. 32. Mayer, R. C., Schoorman, F. D., & Davis, J. H. (1995). An Integrative Model of Organizational Trust: Past, Present, and Future, Academy of Management Review, Vol. 31, No. 3, pp. 540-558. 33. Morgan, R. M. & Hunt, S.D. (1994). The Commitment-Trust Theory of Relationship Marketing, Journal of Marketing, Vol. 58, No. 3, pp. 20-38. doi:10.2307/1252308. 34. Moorman, C., Deshpande, R., & Zaltman, G. (1992). Factors Affecting Trust in Market Research Relationships. Journal of Marketing, 57, 81-101. 35. Nguyen, N., Leclerc, A., & LeBlanc, G. (2013). The Mediating Role of Customer Trust on Customer Loyalty. Journal of Service Science and Management, 6, 96109. http://dx.doi.org/10.4236/jssm.2013.61010. 36. Nguyen, N., and Leblanc, G. (2001).Corporate Image and Corporate Reputation in Customers' Retention Decisions in Services, Journal of Retailing and Consumer Services, vol.8 No 4, pp. 227-236 37. Pope, N., Voges, K. E., & Brown, M. (2009). Winning ways: Immediate and Long-Term Effects of Sponsorship on Perceptions of Brand Quality and Corporate Image. Journal of Advertising, 38(2), 5-20. 38. Porter, S. S. & Claycomb, C. (1997). The Influence of Brand Recognition on Retail Store Image. The Journal of Product and Brand Management, 6, 373 – 384. 39. Ravald, A., & Gronroos, C. (1996). The Value Concept and Relationship Marketing, European Journal of Marketing, Vol. 30, No.2, PP.19-30. 40. Sharma, N., & Patterson, P. G. (2000). Switching Costs, Alternative Attractiveness and Experience as Moderators of Relationship Commitment in Professional Consumer Services. International Journal of Service Industry Management, 11(5): 470-90. 41. Sekaran, U. (2006). Research Methods for Business: A Skill Building Approach, (4ed, John Willey & Sons, York. 42. Souiden, N., Kassim,N. M., & Hong, H.J. (2006). The Effect of Corporate Branding Dimensions on Consumers’ Product Evaluation. European Journal of Marketing, 40:825–845. 43. Taylor, S.A., Celuch, K. & Godwin, S. (2004). The importance of brand equity to customer loyalty. Journal of Product & Brand Management, 13(4), pp. 217-227. http://dx.doi.org/10.1108/10610420410546934. 44. Yaacob, M.R., Nik Ismail,N.R., & Ismail, N.S.(2009). An Investigation of the Determinants of Customers’ loyalty of the Maxis Communications Berhad. Faculty of Entrepreneurship and Business, Universiti Malaysia Kelantan. 45. Zhang, X., & Feng, Y. (2009). The Impact of Customer Relationship Marketing Tactics on Customer Loyalty-within Swedish Mobile Telecommunication Industry. Master Thesis, Halmstad University. 46. Zeithaml, V. A. (1988). Consumer Perceptions of Price, Quality, and Value: A means-end model and synthesis of evidence. Journal of Marketing, 52, 2-22. http://dx.doi.org/10.2307/1251446 Zikmund W.G (2005). Sampling Designs and Sampling Procedures: Business Research Methods, Ohio, South -Western

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The influence of Conflict Resolution, Acculturation, Gender Role on Marital Satisfaction among Iranian Married Students 1,3&4

Katayoon Ahangar1, Rumaya Juhari2, Siti Nor Yaacob3, Mansor Abu Talib4 University Putra Malaysia (UPM), Department of Human Development and Family Studies, Faculty of Human Ecology 2 University Putra Malaysia (UPM), Family, adolescent & Child Excellent Center, Faculty of Human Ecology [email protected], [email protected], [email protected], [email protected]

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Abstract: The main purpose of the present study is to examine the association between conflict resolution, acculturation, gender role and marital satisfaction among married Iranian students in Malaysia. Data from 387 participants were examined using measures of conflict resolution, acculturation, gender role and marital satisfaction. The results indicated that conflict resolution is positively related to marital satisfaction and acculturation is negatively related to marital satisfaction. Although, based on gender role, there are some differences between conflict resolution and marital satisfaction; gender differences did not lead to the conclusion that gender has a moderating influence on the association between conflict resolution and marital satisfaction. Key words: Conflict Resolution, Acculturation, Marital Satisfaction, Moderator, Gender Role, Iranian, Married students. _________________________________________________________________________________________________

Introduction Marriage is one of the most special and intimate union acts and influential social structures in a society (Dwyer, 2005). Most people marry before the age of fifty years. However, a recent research carried out on marital dissatisfaction shows that approximately 55% of married persons end up in divorce or separation, while one third of all divorces happen in less than five years after the marriage in USA (Dwyer, 2005). Likewise, Bagheri (1992) reported 59% of Iranian marriages end up in divorce. Majd (2009) also states that marital satisfaction is very important among Iranian couples because more than 50% of the marriages in Iran will end in divorce after three years or more of marriage just because of poor marital satisfaction, specifically in terms of happiness and poor communication. According to Gottman (2000), unhappy couples are more likely to opt for divorce due to the poor interaction in their marriage life. This is because conflict resolution and daily interactions with their partner are more negative compared to that of the happy, stable couples. In today’s world of seemingly endless options, many couples suffer from marital dissatisfaction (Majd, 2009). Comparatively, one fourth of marriages end in divorces in Iran (Iranian Family Health Centre, 2010), while between one half and two thirds of marriages end in divorces in America; these figures showed the high rates of divorce (Ltzinger & Gordon, 2005). Similarly, Smart (2008) found that in America, around half of all marriages end up in divorces; in addition, he also stated that there is a correlation between marital dissatisfaction and divorce. Marital relationship can have effects on people’s quality of life uniquely, and because of this reason, the quality of marital relationship is a momentous topic for researchers (Whisman, Sheldon, & Goering, 2000). Moreover, marital dissatisfaction can cause problems to both family and society (Smart, 2008). Marriage undeniably plays an important role in Iranians’ life. According to Bozorgmehr (1998), after the Iran revolution in 1979, nearly 45% of the Iranians emigrated to the Western and Asian countries and this has led to many problems among the married couples, particularly in terms of the social, emotional factors such as financial problem, the lack of language knowledge, and the lack of communication with the people who have the same nationality. On the other hand, with the social environment and family changes that took place during marriage, Iranian married couples who have migrated face challenges with the new environment in their family. The major question here is “How will Iranian married couples be able to adapt to the new environment and the society and how will these couples find solutions for their marital conflicts during their migration?” An existing research has shown that there is a high prevalence of marital dissatisfaction among couples (Sadeghi, 1997). Moreover, after the 1979 revolution in Iran, a great influx of Iranian immigrants relocated to other areas such as America, Europe and Asia due to the social and political unrest. Adjusting and integrating to the new culture and environment is the main problem for these immigrants. This process of adjustment to new culture, different beliefs, values and attitudes is called acculturation (Banafsheian, 2003). Similarly, couples’ conflict interactional patterns can directly affect their relationship satisfaction (Faulkner, Davey, & Davey, 2005). With such high rates of divorces and marital dissatisfaction among Iranian couples research on marital satisfaction among immigrants is necessary (Saroukhani, 1991; Shahidian, 1999). Stein and Dilmaghani (2002) reported that divorce rate and separation among Iranian relocated families increased because of many reasons which include cultural shock and changing of cultural values, isolation from family, behaviour conflicts and loss of job position for men and in the end challenging with the new environment in host countries and this will create some emotional and mental problems in a family.

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According to Bradbury, Fincham and Beach (2000), marital satisfaction refers to the level of happiness, and pleasure within a couple’s relationships and this depends upon or is determined by their psychological well-being, as well as environmental factors. Moreover, another factor that may influence on marital satisfaction is gender roles and how individuals in a couple can carry these out in their marital relationship. According to Darvishpour (2002), gender is another important impact in a marriage and men seem to have more needs for romance relationship as compared to women. Moreover, there is a significant relationship between gender role and couple interaction and marital satisfaction (Williams & McBain, 2006). In addition, Faulkner, Davey, and Davey (2005) mentioned that gender roles affect the difference in the ways male and female manage conflicts. For example, men are more likely to withdraw from negative marital relationship, while women are more likely to pursue the negative conversation. Moreover, women are more likely to be attuned to the emotional quality of their marital interactions and are also more sensitive to events that occur in the relationship (Faulkner, Davey & Davey, 2005). According to Chang (2007) migration is a big challenge for exploration and personal growth. However, migration is a stressful and traumatic situation for immigrants adapting to a new culture, environment and a new sense of occupational and economic stresses. For example, immigrants leave their families and friends for a new sort of life and they feel isolated without them in their new society and the countries, whereby these immigrants will have to learn a new language, adjust to new custom, culture, and new occupations (Chang, 2007). Additionally, Ataca (1998) reported that during migration, marital conflicts can create problems in the new environment and culture, and thus, making adaptation even more difficult. Couples who have unhappy marital life are likely to be stressful in their marital situation. Hence, migration can be a stressful situation and it may increase conflicts between married couples (Ataca, 1998). The results of the current study will identify how relocating to new country affects on the marital satisfaction of Iranian couples and therefore, studies need to be widely conducted among Iranians who have moved to Malaysia. However, there is a theoretical gap in the literature to explain the relationships between acculturation, gender role, conflict resolution and marital satisfaction among Iranian married couples in Malaysian universities. Hence, more research on this topic is also needed. The research will undertake to addresses the following research question: What are the relationship between acculturation, gender role, conflict resolution and marital satisfaction among Iranian married students? Is variability in marital satisfaction influenced by acculturation, gender role and conflict resolution?

II. Significance of study Like all other studies, the present research primarily contributes to the promotion of human knowledge. Marital satisfaction plays a very significant role in married life among couples. Moreover, if the quality of marital relationship is high among Iranian married couples the society may not expose to family problems and family has important role for society (Saroukhani 1991). Secondly, the finding of present study will help Iranian Family Health Centre (IFHC) to find better solution for preventing marital dissatisfaction and decrease divorce rate among couples and help to formulate and guide marital therapy techniques. Furthermore, the current study aimed to further examine predictor of marital conflict resolution and marital satisfaction and dissatisfaction among couples. In addition, the significance of this research is considered effectively on its implication as a policy recommendation to Iranian Family Health centre programs, with the purpose of obtaining sufficient preparation of professionals’ program in the quest to improve the marital satisfaction relationship among Iranian married couples and provide some program in psychological clinic to improve knowledge of married couples about marital relationship. And also provides information regarding problems that may arise as a result of two conflicting cultures and body of knowledge of acculturation relation to relocated people from traditional culture. On the other hand current finding can be helpful to healing and recovering marital relationships problem among married couples. Most couples got married not because of mutual love, but because of practical necessity (Majd, 2009). However, these couples got married in order to complement each other in the areas of age and economic need. Therefore, these couples tend to suppress conflicts and troubles within their marriages. Moreover, it takes much time and effort for couples' affection and love to be expressed to each other (Majd, 2009).

III.

Theoretical Framework

This study is based on attachment theory and can help to provide a theoretical foundation for perceptions of quality of relationship, with an association between secure attachment and relationship satisfaction (Davila & Bradbury, 2001; Feeney, 2002). Attachment theory explains attachment as a characteristic of the relationship. This theory examines attachment security as an attribute that the marital partners provide for each other, creating a relationship environment. This theory also provides explanation of how the partners interpret each other's behaviour and then respond (Davila & Bradbury, 2001; Feeney, 2002). Additionally, Hollist & Miller (2005) mentioned securely attached married partners have high marital quality and lower divorce rate and securely attached couples described feeling comfortable with emotional intimacy and have satisfaction in marital relationships. In addition, Widger (2010) stated that the romantic relationship of adult becomes the primary adult attachment relationship and attachment functions are transferred to the romantic partner. The adult love relationship follows similar processes and serves similar functions as the childhood attachment relationship. Individuals with a secure attachment style experienced consistent and warm caregivers and tend to have romantic relationships characterized by trust, closeness, commitment and a relative absence of jealousy and fear of intimacy (Widger, 2010).

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IV. Method iv(a)Participants This study uses Krejcie and Morgan (1970) approach which provides a formula and table to determine the required sample size based on the population size 789 were listed on three public Malaysian universities (UM, UPM, UKM) which is the population of this research. However, using the Krejcie and Morgan (1970) table, the required sample size at the 0.05 degree of accuracy is 367 married students who are studying in public Malaysian universities. According to Iranian embassy in Kuala Lumpur in 2013, out of 12,715 Iranian students (male=7825, female= 4590) in Kuala Lumpur zone only 7,754 Iranian are studying in six public universities in Kuala Lumpur zone and out of six Malaysian Universities in Kuala Lumpur zone will be chose three Malaysian Universities (5,076) but the number of Iranian married students in those three universities (UM, UPM, UKM) are (789). The participants included in this study were married postgraduate Iranian students in public Malaysian university Kuala Lumpur zone. Out of six public universities in Kuala Lumpur zone, randomly three universities (UM, UPM, UKM) were chosen. Students were randomly recruited to participate in the study through their emails addresses. Data for this study were obtained by administering the survey instruments to the participants via an online survey. The total number of respondents reached 387. The raw data from the online survey instruments were downloaded from the website in which the survey was administered and imported into a computer spreadsheet for analysis. The sample consisted of 387 married students including 200 males and 187 females aged from 25 to 61.

iv (b) Instruments and Procedure The married students randomly selected to participate in the study through their emails addresses to complete a self-report questionnaire including Gender role will be measured by gender role attitude scale and developed by Baron (1996). This inventory measures policy items, belief items, and moral items, 75 policy items, 22 belief items and 9 moral items, making a total of 106, subjects rated the extent to which they agreed with each of the items on a scale of 1 to 5, where 1 was described as “strongly agree” 2 was “moderately agree” 3 was “neutral” 4 was “moderately disagree” and 5 was “strongly disagree” (Prasad & Baron, 1996). The scale has 27 items that measure equality, items held that males and females should be treated the same or should do the same things. Cronbach α of this scale is respectively: Equal, .964, Reversal, .774, Separate, .685, Belief, .907, Moral, .734. Naturally (Prasad & Baron, 1996). Acculturation will be measured East Asian Acculturation Measure (EAAM) developed by Barry (2001). The scale included 25 items and measured different acculturation dimensions, cultural identity, language, family-related attitude and family-related values and scale contains four subscales: Assimilation, Separation, Integration, and Marginalization. In scoring the scale, a total value is obtained by summing across the answers for all items. Acculturation score is calculated by dividing the total score by the total number of items, a score can range from 1 (low acculturation) to7 (high acculturation) (Barry, 2001). Conflict Resolution will be measured by using the PREPARE/ENRICH conflict resolution Scale (Olson, Larson & Olson, 2009). Conflict Resolution measures the ability of a couple to discuss and resolve differences. A very high score indicates very effectively discuss and resolve differences with partner, and a very low score reflects great difficulty discussing and resolving differences with your partner. Very high score is 85-100, high is 65-80, moderate 40-60, 25-35, very low 0-15 (Olson, Larson & Olson, 2009). Marital Satisfaction will be measured by using the ENRICH Marital Satisfaction Scale (Olson, Larson & Olson, 2009). The PREPARE/ENRICH is a multidimensional couples satisfaction inventory that includes 10 core scales and include: Idealistic Distortion, Communication, Conflict Resolution, Partner Style and Habits, Financial Management, Leisure Activities, Affection and Sexuality, Family and Friends, Relationship Roles, and Spiritual Beliefs (Olson, Larsan, Olson, 2009) and a participant must assess each item on a 5-point Likert scale. A very high score indicates adaptability and satisfaction with most aspects of the marital relationship, and a very low score reflects a lack of satisfaction and a concern over various aspects of the marriage. Very high score is 85-100, high is 65-80, moderate 40-60, low 25-35, very low 0-15. The internal reliability coefficient (alpha) of this subscale is .60-.89. (Olson, Larson & Olson, 2009). The instruction, presented by the researcher, provide the married students with a brief description of the purpose of the study, procedures for filling in the questionnaires and the assurance of the confidentiality of their responses, and the right to withdraw from the study at any time.

iv (c ) Data Analysis In order to test the research hypotheses, the data analysed using quantitative method analysis. This study used Partial Least Squares Structural Equation Modeling (PLS-SEM) method and Smart PLS 2.0 to test the developed structural model on the moderation effect of number of independent variables. Data analysis included the PLS approach which purpose is to predict and understand the role and formation of individual constructs and their relationships among each other. Partial Least Squares Structural Equation Modeling (PLSSEM) method and smart PLS software 2.0 to test the research hypotheses (Ringle, Wende, & Will, 2005). PLS-SEM can cope with formative constructs and it is appropriate for assessing relatively new measurement models. Using Gender Role and Conflict Resolution as formative constructs and constructing Acculturation as a second-order formative-formative construct justify adopting PLS-SEM for data analysis (J.F. Hair, Hult, Ringle, & Sarstedt, 2013; Ragavan, Subramonian, & Pahlevan Sharif, 2014; Rajaratnam, Munikrishnana, Pahlevan Sharif, & Nair, 2014). Among different methods for evaluating models with second-order constructs (Becker, Klein, & Wetzels, 2012), we use the two-stage method to achieve more reliable results. In this method, first we specify the model only by

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considering first-order constructs. Then, the latent variable scores of the first-order constructs are estimated and used as indicators for the second-order constructs in the structural model (Becker et al., 2012).

V. Measurement Model Assessment We evaluate marital satisfaction by assessing its construct reliability, convergent validity, and discriminant validity (Hair, Black, Babin, & Anderson, 2010). The results are reported in Table 1. As it is shown, construct reliability of marital satisfaction is 0.945 and its Cronbach alpha is 0.934 which are greater than 0.7 and indicate a high reliability. Then we assess convergent and discriminant validity by estimating average variance extracted (AVE), maximum shared squared variance (MSV), and average shared square variance (ASV) (Fornell & Larcker, 1981; Hair et al., 2010). For convergent validity, AVE should be greater than 0.50 and construct reliability should be greater than AVE (Fornell & Larcker, 1981). To establish discriminant validity, both MSV and ASV should be less than AVE. As shown in Table 1, AVE (0.659), MSV (0.589), and ASV (0.195) of marital satisfaction fulfill the criteria which indicate there is no convergent and discriminant validity issue for marital satisfaction.

TABLE 1: Reflective Construct Assessment Construct / Measure Marital Satisfaction (CR = 0.945, α = 0.934, AVE = 0.659, MSV = 0.589, ASV = 0.195) I am happy with how we resolve conflicts. We have difficulty deciding how to handle our finances. Our sexual relationship is satisfying and fulfilling to me. I am satisfied with how we share the responsibilities of raising our children. My partner and I feel closer because of our spiritual beliefs. I feel good about how we have divided household chores. How satisfied are you with your husband (or wife) as a spouse? How satisfied are you with your marriage? How satisfied are you with your relationship with your husband (or wife)?

Outer weight

0.138 0.115 0.143 0.117 0.147 0.129 0.150 0.146 0.143

t-value

Outer loading

23.759 14.619 21.258 15.274 20.581 17.511 29.747 29.021 29.879

0.826 0.706 0.841 0.724 0.754 0.772 0.888 0.892 0.876

t-value

40.834 19.761 39.717 20.506 26.742 29.475 67.010 66.691 66.364

CR: Construct Reliability, α: Cronbach Alpha, AVE: Average Variance Extracted, MSV: Maximum Shared Squared Variance, ASV: Average Shared Square Variance In order to assess formative constructs, we check collinearity among formative indicators and their absolute and relevance contribution to forming their respective constructs (Falk & Miller, 1992; Hair et al., 2013). Table 2 shows maximum VIF and correlation among indicators of each formative construct. As Maximum VIF of gender role (1.720), conflict resolution (1.296), assimilation (1.254), separation (1.536), and marginalization (1.665) are less than five and indicators of constructs do not have high inter-correlation, there is no collinearity issue (Hair, Ringle, & Sarstedt, 2011). Then, to evaluate the contribution of formative indicators and their relevance, factor weight and factor loadings of each indicator are assessed. Those indicators with significant outer weights and/or significant outer loadings as well as indicators with outer loading greater than 0.5 have significant contribution to forming their respective constructs and remain in the model (Hair et al., 2013). Thus, five items of assimilation, four items of separation, two items of integration, five items of marginalization, five items of gender role, and three items of conflict resolution remain in the model. Next, after running the first stage of two-stage method, latent variable scores of assimilation, separation, marginalization, and integration were estimated and they were used to evaluate the formative second level of acculturation. As the maximum VIF of these four constructs is 3.420 and they do not have high correlation, these is no collinearity issue among them. In addition, factor weight of integration, marginalization, and separation as well as factor loading of assimilation are significant at 95% confidence level and all remain in the model.

TABLE 2: Formative Constructs Assessment Construct / Measure Outer Weights Conflict Resolution (Range of inter-item correlations=0.294-0.444; Average inter-item correlation: 0.346; Max. VIF= 1.296) Sometimes we have serious disputes over unimportant issues. -0.001 At times I feel some of our differences never get Resolved. 0.016 Even during disagreements, I can share my feelings and ideas with my partner. 0.996 Gender Role (Range of inter-item correlations= 0.121-0.585; Average inter-item correlation: 0.289; Max. VIF= 1.720) High schools should spend as much money on girls sports as on boys sports. 0.166 Husbands and wives should have equal roles in decisions about investments 0.209 Husbands and wives should have equal roles in decisions about where to live. 0.127 In relationships between men and women, disloyalty should be equally censured for women and men. 0.486 Families should spend just as much money on the education of daughters as on the education of sons. 0.500 Assimilation (Range of inter-item correlations= 0.087-0.356; Average inter-item correlation: 0.200; Max. VIF= 1.254) I write better in English than in my native language (Farsi) 0.607 I get along better with Malaysians than Iranians. 0.268

t-value

Outer Loadings

t-value

0.027 0.290 57.957

0.299 0.314 1.000

4.009 4.064 451.851

0.824 1.017 0.639

0.528 0.624 0.557

3.457 4.413 3.665

2.751

0.731

5.926

2.668

0.714

5.699

3.426 1.226

0.770 0.483

5.848 2.522

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I feel that Malaysians understand me better than Iranians do. I feel more comfortable socializing with Malaysians than I do with Iranians. If I were asked to write poetry, I would prefer to write it in English

0.096 0.453 0.161

Separation (Range of inter-item correlations= 0.218-0.563; Average inter-item correlation: 0.322; Max. VIF= 1.536) I prefer going to social gatherings where most of the people are Iranian 0.522 I feel more relaxed when I am with an Iranian than when I am with a Malaysian. 0.589 Most of the music I listen to is Iranian 0.021 Mostly I identify with the Iranian ethnic group. 0.034 Integration (Inter-item correlations= 0.013) I feel very comfortable around both Malaysians and Iranians 0.870 I came to Malaysia to improve my education for future. 0.482 Marginalization (Range of inter-item correlations= 0.216-0.530; Average inter-item correlation: 0.348; Max. VIF= 1.665) There are times when I think no one understands me. 0.210 I sometimes find it hard to communicate with people. 0.546 Sometimes I feel that Iranians and Malaysians do not accept me. 0.336 I find that both Iranians and Malaysians often have difficulty understanding me. 0.193 I sometimes feel that neither Malaysians nor Iranians like me 0.026 Acculturation (Range of inter-item correlations= 0.311-0.751; Average inter-item correlation: 0.528; Max. VIF= 3.420) Assimilation 0.217 Separation 0.473 Integration 0.249 Marginalization 0.459

0.418 2.262 0.762

0.469 0.635 0.436

2.533 3.932 2.390

4.587 5.295 0.177 0.296

0.868 0.898 0.391 0.302

16.940 18.691 3.766 2.795

11.375 3.718

0.877 0.493

11.918 3.755

1.641 3.928 2.391 1.430 0.215

0.601 0.891 0.726 0.691 0.386

5.821 15.059 8.138 7.836 3.573

2.296 5.666 2.746 4.671

0.449 0.821 0.600 0.795

5.471 16.879 7.859 12.335

VIF: Variance Inflation Factor

Structural Model Assessment In order to test the research hypotheses, we estimate structural model parameters by using PLS algorithm and test their significance by employing bootstrapping resampling method with 2000 replications (Chin, 1998). Path coefficients, t-value and the percentile bootstrap 95% confidence interval for all paths are shown in Table 3. The R2 value suggests that 62.60% of the variance in marital satisfaction can be explained by the model.

Table 3: Coefficient of Determination, R2 R2 62.60%

Direct Effect Marital Satisfaction

Besides, result shown in Table 4, Stone-Geisser’s Q2 value of 0.6251 indicate appropriate predictive accuracy of marital satisfaction in the model (Hair et al., 2013; Henseler, Ringle, & Sinkovics, 2009).

Table 4: Predictive Relevance - Q2 Q2 0.6251

Direct Effect Marital Satisfaction

Research Question 1: What are the relationship between acculturation, gender role, conflict resolution and marital satisfaction among Iranian couple? H1. Relationship between acculturation, gender role, conflict resolution and marital satisfaction among Iranian couple are significant. The result of finding show that path coefficients, t-value and the percentile bootstrap 95% confidence interval of all paths are shown in Table 5 in below. Acculturation (standardized estimate = 0.199, t-value = 5.067), conflict resolution (standardized estimate = 0.652, tvalue = 17.245) have significant positive effect on marital satisfaction at 95% confidence level. Also gender role negatively moderate the positive effect of conflict resolution on marital satisfaction (standardized estimate = -0.102, t-value = 2.713).

Table 5. Direct Effects Path Marital Satisfaction  Acculturation  Conflict Resolution  Gender Role*

Path Coefficient

t-value

0.199*** 0.652*** -0.102**

5.067 17.245 2.713

Percentile 95% confidence intervals Lower Bound Upper Bound 0.122 0.578 -0.176

0.276 0.726 -0.028

*, **, and *** indicate statistical significance at the 0.05, 0.01, and 0.001 levels respectively. ns indicates not significant at 95% confidence level. t(0.05, 1999) = 1.960, t(0.01. 1999) = 2.576, t(0.001, 1999) = 3.291. Research Question 2: Is variability in marital satisfaction influenced by acculturation, gender role and conflict resolution? The influence of Conflict Resolution, Acculturation, Gender Role on Marital Satisfaction among Iranian Married Students Katayoon Ahangar1, Rumaya Juhari2, Siti Nor Yaacob3, Mansor Abu Talib4 © INTERNATIONAL RESEARCH COMMUNION

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HA2. The variance in marital satisfaction is influenced by acculturation, gender role, conflict resolution and marital satisfaction. HA2-1. The findings in Table 6 revealed that path coefficients, t-value and the percentile bootstrap 95% confidence interval of path. Acculturation (standardized estimate = 0.199, t-value = 5.067) have significant positive effect on marital satisfaction at 95% confidence level. According to Schwartz (2011) acculturation can make a huge marital dissatisfaction due to the differences in the values and culture. Moreover, Ghaffarian (2001) researched on acculturation among Iranian married couples and declared that Iranian men have accepted more values, attitude and more acculturated than Iranian female counterparts because men can adapt more to the new culture and much easier than the women and the more acculturated person is happier and has less depression. HA2-2. The findings showed that path coefficients, t-value and the percentile bootstrap 95% confidence interval of all paths are shown in Table 6 conflict resolution (standardized estimate = 0.652, t-value = 17.245) have significant positive effect on marital satisfaction at 95% confidence level. Similarly Schwartz (2011) stated that conflict resolution can affect on marital satisfaction and men state more conflicts about the relationship with relatives, have more aggressiveness and less conflict resolution. Min (2001) mentioned many immigrant couples have high level of marital conflicts in their marital relationship. Dilmaghani (2000) also declared that 46% of the respondents mentioned conflict resolution within the marital relationship as a serious problem. HA2-3.Path coefficients, t-value and the percentile bootstrap 95% confidence interval of all paths are shown in Table 6 gender role (standardized estimate = 0.080, t-value = 1.940) have significant positive effect on marital satisfaction at 95% confidence level. In similar, there is less marital conflict among traditional couples because they usually emphasize more on sympathy compared to modern couples, reduce emotional expressiveness and also traditional gender roles that result in perceived male dominance, apart from reporting more marital dissatisfaction compared to others (Schwartz, 2011). Stein & Dilmaghani (2002) stated changes of gender role are one of the important issues among most married Iranian. Moreover, Iranian women immigrated have more tendencies to become unhappy compared to Iranian men (Ghaffarian, 2001). Previous research has shown that changes gender role, attitudes is more difficult to happen to women than to men, and many Iranian men have shown few changes in their traditional value and gender roles but women are more challenged with the new changes in the new culture (Shirvani, 1998).

Table 6. Direct Effects Path

Path Coefficient

t-value

0.199*** 0.652*** 0.080

5.067 17.245 1.940

Percentile 95% confidence intervals Lower Bound Upper Bound

Marital Satisfaction  Acculturation  Conflict Resolution  Gender Role

0.122 0.578 -0.001

0.276 0.726 0.160

*, **, and *** indicate statistical significance at the 0.05, 0.01, and 0.001 levels respectively. ns indicates not significant at 95% confidence level. t(0.05, 1999) = 1.960, t(0.01. 1999) = 2.576, t(0.001, 1999) = 3.291.

VI Limitation The present study contributes to the literature in that no other studies have examined the moderating influence of the link between acculturation, conflict resolution, gender role and marital satisfaction. However, some limitations of the present study should be addressed. It is important to note that this sample represents a unique group in an emerging immigrant section of the country. Moreover, given participants’ educational levels, geographic location, and language use (i.e., that they were all predominantly Farsi speaking), the findings of this study are certainly not generalizable to all immigrated. Measurement of marital satisfaction, although claimed to be multidimensional, may not have covered all area of marital relationship, for example; affection, intimacy, sexual relationship. Moreover, all measurement used in this study in English version although Iranian language is Farsi and may not understandable for all respondents. According to the large number of variables and insufficient amount of information available on the topic, this research was exploratory rather than experimental. The sample size in this study, although sufficient for the proposed research, was not large enough to explore all variables. Future research with large samples would provide more information on marital satisfaction for this population. Additionally, the sample used in this study was very demographically specific and results of the investigation cannot be generalized to other immigrant population. This research found some cultural differences with Malaysian sample in the relationship between independent variables and marital satisfaction. These findings suggested cultural explanation that could be investigated future. Finally, there are other areas in the marital relationship that may explain better about marital satisfaction, for example; intimacy, commitment, sexual relationship and so on.

VI. Conclusion The proposed theoretical model was supported in this study. The finding showed that relationships between gender role, conflict resolution and acculturation were significantly positive correlated. Furthermore, the study demonstrates that acculturation can affect on marital satisfaction positively. The findings of the present study also showed that there is no significant difference between demographic variables and marital satisfaction. It is important to note that the differences in context culture, geographic may have affected on findings of this study. Theses finding only can generalize to the Iranian married students. Most of variables that are found related significantly to marital satisfaction. Looking at the students provides a better understanding of the marital satisfaction. Moreover gender role is evident to influence on marital satisfaction. The findings may be explained by the gender role that the males are more The influence of Conflict Resolution, Acculturation, Gender Role on Marital Satisfaction among Iranian Married Students Katayoon Ahangar1, Rumaya Juhari2, Siti Nor Yaacob3, Mansor Abu Talib4 © INTERNATIONAL RESEARCH COMMUNION

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acculturated than females. Therefore, the present study has added more empirical evidences to the body of knowledge that will inform practice and guide policy makers in relation to marital satisfaction among Iranian married students who are living in Malaysia.

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Journal of Marriage & Family, 62, 964-980. Bozorgmehr, M. (1998). From Iranian studies to studies of Iranians in the United States. Iranian Studies, 31(1), 4-30. Chang, Y. O. (2007). The Effect of the Relationship Enhancement Program among Korean Immigrant Couples. Syracuse University. Chin, W. W. (1998). Commentary: Issues and opinion on structural equation modeling. MIS Quarterly, vii-xvi. Darvishpour, M. (2002). Immigrant women challenge the role of men: How the changing power relationship within Iranian families in Sweden intensifies family conflicts after immigration. Journal of comparative family studies, 33(2). Dilmaghani, S. (2000). We are listening. Toronto: Family Service Association of Toronto. Dwyer, M., T. (2005). Emotional intelligence and conflict resolution style as predictors of marital satisfaction in the first year of marriage. University of Kentucky, Lexington, Kentucky. Falk, R. F., & Miller, N. B. (1992). A primer for soft modeling: Akron, OH: University of Akron. Faulkner, R. A., Davey, M., & Davey, A. (2005). Gender-Related Predictors of Change in Marital Satisfaction and Marital Conflict. The American Journal of Family Therapy, 33, 61-83. Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of marketing research, 18(1), 3950. Ghaffarian, S. (2001). The Acculturation of Iranian in the United State. Journal of social psychology, 127(6), 565-571. Gottman, J. M., Levenson, R. W., (2000). Dysfunctional marital conflict: Women are being unfairly blamed, Journal of Divorce and Remarriage, 31 (3/4), 117. Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivarite Data Analysis (7th ed.). NewJersey: Prentice Hall, Upper Saddle River. Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2013). A Primer on Partial Least Squares Structural Equation Modeling. Thousand Oaks: Sage. Hair, J. F., Ringle, C. M., & Sarstedt, M. (2011). PLS-SEM: Indeed a silver bullet. The Journal of Marketing Theory and Practice, 19(2), 139-152. Henseler, J., Ringle, C. M., & Sinkovics, R. R. (2009). The use of partial least squares path modeling in international marketing. New Challenges to International Marketing Advances in International Marketing, 20(1), 277-319. Majd, M. (2009). Marriage is not a manifestation of dreams. Gozaresh Journal, 198, 37-39. Min, P. G. (2001). Changes in Korean immigrants’ gender role and social status, and their marital conflicts. Sociological Forum, 16, 301-320. Litzinger, S., & Coop Gordon, K. (2005). Exploring Relationships Among Communication, Sexual Satisfaction, and Marital Satisfaction. Journal of Sex & Marital Therapy, 31, 409-424. Olson, D. H., Larson, P.J., Olson, A.K. (2009). PREPARE/ENRICH Program: Customized Version, Minneapolis, Minnesota, Life Innovations, Inc. Rahmani, A., Merghati Khoei, E., & Gholi , L. A. (2009). Sexual Satisfaction and its Relation to Marital Happiness in Iranians. Iranian J Publ Health, 38(4), 77-82. Ragavan, N. A., Subramonian, H., & Pahlevan Sharif, S. (2014). Tourists’ Perceptions of Destination Travel Attributes: An Application to International Tourists to Kuala Lumpur. Paper presented at the 5th Asia Euro Conference 2014, Taylor’s University, Malaysia. Rajaratnam, S. D., Munikrishnana, U. T., Pahlevan Sharif, S., & Nair, V. (2014). Service Quality and Previous Experience as a Moderator in Determining Tourists’ Satisfaction with Rural Tourism Destinations in Malaysia: A Partial Least Squares Approach. Paper presented at the 5th Asia Euro Conference 2014, Taylor’s University, Malaysia. Sadeghi, F. (1997). Exploring socio-psychological causes of divorce in Iran. Tehran University, Iran, Tehran. Saroukhani, B. (1991). An introduction to the sociology of the family. Soroush, No: 243, Tehran.Iran. Schwartz, A. L. (2011). Marital Quality, Acculturation, and Communication in Mexican American Couples. Utah State University, Lagon, Utah. Shirvani, M. (1998). adjusment of divorced Iranian immigrant women in America. California State University, Long beach. Stein, L., & Dilmaghani, S. (2002). Transitions: Meeting the Needs of Iranian Families Facing Separation and Divorce. Toronto: Family Service Association of Torontoo. Document Number) Whisman, M. A., Sheldon, C. T., & Goering, P. (2000). Psychiatric disorders and dissatisfaction with social relationships: Does type of relationship matter? Journal of Abnormal Psychology, 109, 803-808. Williams, Lee and Heidi McBain (2006). Integrating gender on multiple levels: A Conceptual Model for Teaching Gender Issues in Family Therapy. Journal of Marital and Family Therapy. 32 (3): 385-397.

The influence of Conflict Resolution, Acculturation, Gender Role on Marital Satisfaction among Iranian Married Students Katayoon Ahangar1, Rumaya Juhari2, Siti Nor Yaacob3, Mansor Abu Talib4 © INTERNATIONAL RESEARCH COMMUNION

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Awareness and Usage of Contemporary Performance Measures for Measuring Performance of Indian Banking Sector Prof. Sanjiv Mittal1, Dr. Sanjeev2, Dr. Sunil Kumar3 1Dean, USMS, GGSIP University, New Delhi,

2 Associate Prof., Deptt. Of Commerce, A S College, Khanna (Haryana) 3 Associate Prof, SOMS, IGNOU, New Delhi-110068

, e-mail: [email protected] __________________________________________________________________________________________________________________

Abstract: Information about performance measurement and management is critical to the effective functioning of any organisation. However, what constitutes good performance and what constitutes good measures of performance are continuously being debated. In addition, why there is a need for organisations’ to focus on both traditional financial and non-financial indicators of performance in order to meet organisational objectives, irrespective of competitive environment. The paper deals with the various performance measures used by the banks for measuring and managing performance, awareness level about various performance measurement systems, alignment of individual objectives with the organizational objectives, contribution of various intangible assets for value creation for the banks, feedback taken from different stakeholders and various channels of getting such feedback. For this purpose, a sample of six banks consisting of top three public sector banks on the basis of size (assets) of each bank i.e. SBI and its associates SBOP, PNB and Canara bank and top three private sector banks on the basis of size (assets) of each bank i.e. ICICI bank, HDFC bank and AXIS bank has been taken. The survey result concludes that both the financial and non-financial measures were considered important by public sector and private sector banks for measuring and managing their performance, but there is a need to strike a balance between financial and non- financial measures. Key Words: Banks, Performance Measures, Financial, Non-Financial Measures, Banks financial and non financial measures _________________________________________________________________________________________________

1. Introduction In an increasingly dynamic and information-driven environment, the quest by business leaders and management researchers for performance measures which reflect competitive productive strategies, quality improvement and speed of service is at the forefront of managing organization performance. The selection of the most appropriate performance measures is, however, an area with no defining boundaries as there are a number of purposes to which performance measurement can be put, although not all performance measurements can be used for all purposes (Tapanya, 2004). If the performance measurement is right, the data generated will tell the user where the business is, how it is doing, and where it is going. In short, it is a report card for a business that provides users with information on what is working well and wh at is not. With this in mind, we overview the various performance measurement systems (PMS) used today by enterprises to drive improvements in overall organizational performance with reference to banking sector in India. A performance measurement system (PMS) enables an organization to plan, measure, and control its performance according to a p re-defined strategy (Johnson, 2007). Information about performance measurement and management is critical to the effective functioning of any organisation. However, what constitutes good performance and what constitutes good measures of performance are continuously being debated. For instance, do financial performance indicators provide the necessary information for operating within environments that are classified as global, turbulent and competitive, given that they are backward looking and histori cal in nature. Is it important to utilize non-financial information for organisations that are facing changes with the changing economic environment? In addition, why there is a need for organisations’ to focus on both traditional financial and non financial indicators of performance in order to meet organisational objectives, irrespective of competitive environment. Specific frameworks, which can be utilized by organisations to measure performance in this way, are also considered wit h a particular focus on the Balanced Scorecard (BSC) as a measurement tool which meets the demands of contemporary organisation (Kaplan, 1992). The goal of Performance Measurement System (PMS) is to implement strategy. In setting up such a system upper level management selects measures that best represent the company's strategy. These measures can be seen as a current and future critical success factors (CSF); if they are improved, the company has implemented its strategy. The strategy's success depend s on its soundness. A performance measurement system is simply a mechanism that improved the likelihood the organisation will implement its strategy successfully (Anthony and Govindarajan, 2007). The paper deals with the various performance measures used by the banks for measuring and managing performance, awareness level about various performance measurement systems, alignment of individual objectives with the organizational

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objectives, contribution of various intangible assets for value creation for the banks, feedback taken from different stakeho lders and various channels of getting such feedback.

2 Review of Literature Measuring organizational performance has been an important area and it has undergone continuous development and modification. Since the inception of the concept, management experts as well as academicians have been trying to develop advanced methods of measuring it. On account of its growing importance, the subject has intrigued many scholars, economic theorists, financial analysts and many others to probe into the various facets of performance measures as well as performance measurement systems. A number of studies have been conducted in India and abroad to study various performance measures for measuring performance of the banking sector. Kaplan and Norton (1992), in their paper, “The Balanced Scorecard: Measures that Drive Performance” revealed that what you measure is what you get. They realized that no single measure can provide a clear performance target and focused attention on critical areas of the business. Norreklit (2000), in his research article titled, “The Balance on the Balanced Scorecard: A Critical Analysis of Some of its Assumptions”, first examined the extent to which there is cause and effect relationship among the fou r areas of measurement suggested (the financial, customer, internal-business processes and learning & growth perspectives). Anand (2004), in his paper titled, “Achieving Breakthrough Performance Using the Balanced Scorecard”, revealed that the balanced scorecard will benefit the organization in more than one way. Gupta et al. (2004), in their article titled, “Balanced Scorecard – An Emerging International Performance Measure”, revealed that measuring organizational performance has been an important area and it has undergone continuous development Kochhar and Anand (2004), while participating in the seminar on “Balanced Scorecard in Indian banks”, organized by IBA – cedar consulting, Ms Chanda Kochhar, Executive Director, ICICI Bank gave her key-note presentation. Tapanya (2004), in his research study titled, “Examining the factors which influence Performance Measurement and Management in the Thai Banking Industry: An Application of Balanced Scorecard framework”, examines various performance measurement systems based on financial and non-financial measures. Chakraborty (2007), in his article titled, “Balanced Scorecard – “A Comprehensive Guide to Performance Evaluation” described the Balanced Scorecard as a management system. It is a mirror, which shows how an organization’s mission and vision can be decomposed into strategic components that are actionable, specific and measurable. Johnson (2007) highlighted various performance measurement systems in his paper. The author said that from the beginning, it is important to understand why measuring an organisation's performa nce is both necessary and vital.

3 Research Objective, Scope and Methodology The study has been conceived to understand the awareness and usages of contemporary performance measures to measure the performance in this competitive environment. To examine the awareness and usages of existing and new performanc e measures in place in the Indian banking sector, mainly primary data has been used and has been gathered through a structured questionnaire. The questionnaire has been administered in such a manner that covers the entire hierarchy of the banks i.e. t op level management of the banks which are responsible for formulating the bank’s mission, vision and strategies (i.e. CMD, MD, Board Members, vice president, GM etc.), middle level management which are responsible for communicating bank’s strategy down to operating people (i.e. Regional / Zonal/ Circle / Divisional managers, principal of training college etc. ) and covering branch level management which are responsible for implementing the bank’s strategy to achieve the bank’s mission and vision ( i.e. Chief Manager / Branch Manager including officer’s rank people etc.). For this purpose, a sample of six banks consisting of top three public sector banks on the basis of size (assets) of each ban k i.e. SBI and its associates SBOP, PNB and Canara bank and top three private sector banks on the basis of size (assets) of each bank i.e. ICICI bank, HDFC bank and AXIS bank has been taken. For the collection of data, it was planned to give representation to entire state of Punjab covering all the major districts and Chandigarh (UT) being capital and regional, zonal, training and circle offices of all the selected banks. For collection of data , a sample of 200 bankers selecting equal number (100 each) from both public sector and private sector banks has been drawn. The analysis of collected data has been done by using simple frequencies, percentages, averages, Weighted Average Scores (WAS), Mann-Whitney test (U-test), etc.

4 Hypotheses of the Study Ho,1: There is no significant difference in the awareness levels about performance measurement systems amongst public and private sector bankers in India. Ho, 2: There is no significant difference in the perception of public and private sector bankers with regard to alignment of individual objectives with the organizational objectives. Ho, 3: There is no significant difference in the perception of public and private sector bankers in terms of contribution of various intangibles assets to the value creation for the banks. Ho, 4: There is no significant difference in the perception of public and private sector bankers with regard to feedback taken from different stakeholders about contribution of various intangible assets to the value creation. Awareness and Usage of Contemprorary Performance Measures for Measuring Performance of Indian Banking Sestor Prof. Sanjiv Mittal, Dr. Sanjeev, Dr. Sunil Kumar © INTERNATIONAL RESEARCH COMMUNION

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5 Results and Discussion 5(a) Bankers’ Opinion Regarding Various Performance Measures Used by the Banks for Measuring and Managing Overall Performance of the Banks An endeavour has been made to examine the opinion of bankers regarding various financial and non-financial performance measures used by the banks to measure their overall performance. They were asked to give their response about different measures of performance for measuring and managing overall performance of the banks like financial measures, non -financial measures and both financial and non-financial measures. Table 1 presents that almost all the bankers (98.00%) reported that their banks were using both financial and non -financial measures for managing the overall performance. In the case of public sector banks vast majority of bankers (97.00%) revealed that their banks used both financial as well as non-financial measures, while the remaining only 3 per cent bankers stated that their banks measured and managed the overall performance on the basis of financial measures only. Table 1: Opinion of Bankers Regarding Performance Measures used by the Bank for Measuring and Managing Overall Performance of the Bank N= 200 Measures Financial Measures Non-financial Measures Both Financial and Non- financial Measures Total

Public sector Banks 3 (3.00) 0 (0) 97 (97.00)

Private Sector Banks 1 (1.00) 0 (0) 99 (99.00)

Total 4 (2.00) 0 (0) 196 (98.00)

100 (100.00)

100 (100.0)

200 (100.0)

Note: The figures given in parentheses denote the percentage of response. In the case of private sector banks, majority of the bankers (99.00%) revealed that their banks used both financial and non financial measures of performance for measuring and managing their overall performance. None of the bankers from both the public and private sector banks stated that their banks measured and managed their overall performance based on non -financial measures only. It brings out that as far as the emphasis on financial and non-financial measures is concerned, both public as well as private sector banks need to realize the importance of striking a balance between financial as well as non-financial performance measures. 5 (b) Opinion of Bankers Regarding Awareness Level about Various Performance Measurement Systems (PMS) The awareness level of bankers about various performance measurement systems (PMS) used by their banks was judged from the response given by them on a five-point likert scale ranging from to large extent, to some extent, to little extent, very little extent and not aware. Bankers were asked to give their views regarding various performance measurement systems (PMS) based on financial and non-financial measures. Under financial measures, they were asked about awareness of various performance measurement systems like Return on Investment (ROI), CAMEL framework (CAMEL stands for Capital Adequacy, Asset Quality, Management Efficiency, Earning and Liquidity), and Productivity measures, while under non financial measures, they were asked about awareness of different perspectives like customer perspective, internal business process perspective and learning and growth perspective. The response of bankers pertaining to different performance measurement systems is shown in Table 2. Table 2: Bankers’ Awareness Level about Various Performance Measurement Systems (PMS) (N=200) Performance Measurement Systems ROI CAMEL Framework Productivity Customer Perspective Internal Business Process Perspective Learning and Growth Perspective

To Large Extent 135 (67.50) 76 (38.00) 136 (68.00) 162 (81.00) 129 (64.50) 120 (60.00)

To Some To Little Extent Extent Financial Measures 48 (24.00) 11 (5.50) 66 (33.00) 22 (11.00) 42 (21.00) 15 (7.50) Non-financial Measures 32 (16.00) 2 (1.00) 55 (27.50) 13 (6.50) 67 (33.50) 9 (4.50)

Very Little Extent

Not Aware

WAS

04 (2.00) 18 (9.0) 5 (2.50)

02 (1.00) 18 (9.00) 2 (1.00)

4.55 3.82 4.53

3 (1.50) 2 (1.00) 3 (1.50)

1 (0.50) 1 (0.50) 1 (0.50)

4.76 4.55 4.51

Note: The figures given in parentheses show the percentages. The opinion of bankers regarding awareness of various performance measurement systems is shown in the above table. Under financial measures, majority of the bankers expressed awareness with regard to Return on Investment (91.50%), Productivity measures (89.00%) and CAMEL framework (71.00%), while under non-financial measures the response with regard to various performance measurement systems was customer perspective (97.00%) followed by learning and growth perspective (93.50%) and internal business process perspective (92.00%). However, only few bankers were unaware about Return on Investment (3.00%), Productivity measures (3.50%), customer perspective, and learning and growth perspective (2.00% each) and internal business process perspective (1.50%). It is interesting to note that 18 per cent bankers were not aware about CAMEL framework as a performance measurement system. Awareness and Usage of Contemprorary Performance Measures for Measuring Performance of Indian Banking Sestor Prof. Sanjiv Mittal, Dr. Sanjeev, Dr. Sunil Kumar © INTERNATIONAL RESEARCH COMMUNION

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Further, weighted average scores (WAS) have been calculated for all the bankers by assigning weights as 5, 4, 3, 2 and 1 to large extent, to some extent, to little extent, very little extent and not aware respectively. The weighted average scores make it clear that bankers were much aware about financial as well as non-financial measures based performance measurement systems. Among financial measures, bankers were more aware about Return on Investment (4.55) as compared to productivity measures (4.53) and CAMEL framework (3.82). Similarly among non-financial measures, bankers were more aware about customer perspective (4.76) followed by internal business process perspective (4.55), and learning and growth perspective (4.51). The weighted average scores highlight that the awareness regarding customer perspective is the highest (WAS 4.76) followed by Return on investment and internal business process perspective (4.55 each), and Learning and growth perspective (4.51). It is observed that competitive environment forced the banks to sensitize their managers with regard to non -financial performance measures, such as Customer perspective, Internal business process perspective and Learning and innovation perspective. Further, the bankers were found to be relatively lesser aware about CAMEL framework. Table 3: Weighted Average Scores Corresponding to Awareness Level about Performance Measurement Systems (PMS) (Bank-wise Distribution) Performance Measurement Systems SBI ROI Camel Framework Productivity

4.86 4.54 4.83

Customer Perspective Internal Business process Perspective Learning and Growth Perspective

4.74 4.57 4.51

Public Sector Banks PNB CB Total ICICI Financial Measures 4.66 4.87 4.79 4.46 4.26 4.27 4.36 3.69 4.83 4.77 4.81 4.69 Non-financial Measures 4.80 5.00 4.84 4.74 4.51 4.73 4.60 4.60 4.43 4.70 4.54 4.71

Private Sector Banks AXIS HDFC Total

WAS

4.37 2.93 4.07

4.11 3.17 3.94

4.31 3.28 4.24

4.55 3.82 4.53

0.000* 0.000* 0.000*

4.77 4.53 4.40

4.51 4.34 4.31

4.67 4.49 4.48

4.76 4.55 4.51

0.061 0.167 0.856

p-values

* Significant at 5 per cent level of significance. Weighted average scores corresponding to awareness level of performance measurement systems (PMS) of selected banks are shown in Table 3. The table reveals that bankers from public sector banks were more aware with respect to all the listed performance measurement systems as compared to private sector banks as shown by their respective weighted average score. Among selected public sector banks, bankers from SBI were more aware about CAMEL framework (4.54) and Productivity measures (4.83), whereas bankers from Canara Bank were more aware about Customer perspective (5.00), Return on Investment (4.87), Internal business process perspective (4.73), and Learning and growth perspective (4.70). However, bankers from PNB were more aware about Productivity measures(4.83).On the other hand, in the case of selected private sector banks, bankers from ICICI Bank were more aware about all the performance measurement systems as compared to the Axis Bank and HDFC Bank. It is worth mentioning that public sector banks were more aware about various performance measurement systems under financial measures as compared to private sector banks as shown by their weighted average scores corresponding to private sector banks. Under non-financial measures both the banks were equally aware about various performance measurement systems used by their banks for measuring and managing their performance. The estimated p-values using Mann-Whitney U-test with regard to all the performance measurement systems reveal that there is significant difference between public and private sector banks as far as awareness about various performance measurement systems under financial measures is concerned (p-values < 0.05). Under non-financial measures, there was no significant difference between public and private sector banks regarding awareness about various performance measurement systems. It is interesting to note that all the public sector banks (PSBs) accorded greater importance to CAMEL framework as the performance measurement system as compared to private sector banks as shown by their weighted average scores. The null hypothesis is that there is no significant difference in the awareness level about various performance measurement systems under financial and non-financial measures amongst public and private sector banks in India. The null hypothesis stands accepted as far as awareness level of various performance measurement systems under non-financial measures is concerned. But the null hypothesis stands rejected regarding various performance measurement systems under financial measures. 5 (c) Bankers' Opinion Regarding Aligning of Individual Objectives with Organisational Objectives Every top management tries to align individual objectives with the organisational objectives so that it can successfully implement its strategy to achieve organisational objectives. Bankers were asked to give their opinion about how successfully top management was able to align individual objectives with organisational objectives. Table 4: Bankers’ Opinion Showing Successfulness of Top Management to Align Individual Objectives with the Organisational Objectives N=200 Factors Alignment of Individual Objectives with the Organizational Objectives

To Large Extent

To Some Extent

To Little Extent

92 (46.00)

82 (41.00)

18 (9.00)

Very Little Extent 8 (4.00)

Not at All 0 (0.00)

Note: The figures given in parentheses denote the percentages. Awareness and Usage of Contemprorary Performance Measures for Measuring Performance of Indian Banking Sestor Prof. Sanjiv Mittal, Dr. Sanjeev, Dr. Sunil Kumar © INTERNATIONAL RESEARCH COMMUNION

WAS 4.29

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Table 4 explains that all the bankers were aware about alignment of individual objectives with organisational objectives. As many as 87.00 per cent bankers opined that the top management was successful to align individual objectives with organisational objectives to a reasonable extent, while the remaining 13.00 per cent bankers believed that management was abl e to align individual objectives with organisational objectives to a little extent. There was none to respond that the top management failed to align individual objectives with organisational objectives. The overall weighted average score indicates that bank management had successfully aligned individual objectives with organizational objectives. Table 5: Weighted Average Scores Corresponding to Alignment of Individual Objectives with Organisational Objectives (Bank-wise Distribution) Factors Alignment of Individual Objectives with Organization Objectives

SBI

Public Sector Banks PNB CB Total

ICICI

Private Sector Banks AXIS HDFC Total

WAS

4.31

4.29

4.20

4.27

4.29

4.43

4.34

4.26

4.24

p-value 0.503

Note: The p-value in the above table is not significant at 5 per cent level of significance. The weighted average scores of the selected banks were calculated to ascertain which select bank's management was able to align individual objectives with the organisational objectives so that it could successfully implement its strategy. Table 5 shows that both the banks’ management was able to align individual objectives with organisational objectives. Among the selected public sector banks, Canara Bank (4.43) was more successful as compared to other banks. In the case of private sector banks, the managements of Axis Bank (4.27) and HDFC Bank (4.26) were more successful in aligning individual objectives with orgnisational objectives. The extent of agreement among managers of Canara Bank, SBI, Axis Bank and HDFC Bank for meaningful alignment of individual objectives with organisational objectives is the greatest. The estimated p-values using Mann-Whitney U-test also support the claim that no significant difference was reported among public and private sector banks as far as alignment of individual objectives with organisational objectives is concerned. The managements of banks from both the sectors were able to execute their business strategy for achieving the overall objectives of their banks. The null hypothesis is that there is no significant difference in the perception of bankers from both the public and private sector banks with regard to alignment of individual objectives with the organizational objectives. The null hypothesis is, thus, acc epted as far as alignment of individual objectives with organisational objectives is concerned. 5 (d) Bankers' Opinion Regarding Contribution of Various Intangible Assets To examine the importance of contribution of various intangible assets to the value creation for the banks, the bankers were asked to indicate their opinion on a five point-likert scale (ranging from Most important, Important, Neither important nor unimportant, Unimportant, and Most Unimportant) regarding importance of various intangible assets, such as customer service, customer relationship, customer loyalty, production innovation, technology, committed and trained staff, strong work culture and brand image in the value creation for the bank. In this respect, the responses of bankers have been presented in Table 6. Table 6: Opinion of Bankers Regarding Contribution of Various Intangible Assets for the Value Creation of the Bank (N=200) Intangible Assets Customer Service Customer Relationship Customer Loyalty Product Innovation Technology Committed and Trained Staff Strong Work Culture Brand Image

Most Important 180 (90.0) 163 (81.5) 129 (64.5) 102 (51.0) 121 (60.5) 143 (71.5) 139 (69.5) 125 (62.5)

Important Neither Important Nor Unimportant 18 (9.0) 1 (0.5) 33 (16.5) 3 (1.5) 66 (33.0) 3 (1.5) 95 (47.5) 1 (0.5) 74 (37.0) 3 (1.5) 49 (24.5) 6 (3.0) 59 (29.5) 1 (0.5) 65 (32.5) 8 (4.0)

Unimportant Most Unimportant 0 (0) 1 (0.5) 2 (1.0) 2 (1.0) 2 (1.0) 2 (1.0) 1 (0.5) 2 (1.0)

1 (0.5) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0) 0 (0)

WAS 4.88 4.79 4.61 4.49 4.57 4.67 4.68 4.53

Note: The figures given in parentheses represent the percentages. The table reveals that vast majority of bankers considered the contribution of customer service and strong work culture (99.0 0% each), customer relationship and product innovation (98.00% each), customer loyalty (97.50%), committed and trained staff (96.00%) and brand image (95.00%) important for value creation of the bank. On the basis of weighted average scores, bankers considered all the intangible assets as important for value creation of the bank. Among the various intangibles, the weighted average score of customer service (4.88) is the highest followed by customer relationship (4.79), strong work culture (4.68), committed and trained staff (4.67), customer loyalty (4.61), technology (4.57), brand image (4.53) and product innovation (4.49).

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Table 7: Weighted Average Scores Corresponding to Contribution of Various Intangible Assets to the Value Creation for the Banks (Bank-wise Distribution) Intangible Assets Customer Service Customer Relationship Customer Loyalty Product Innovation

SBI 4.94 4.86 4.69 4.51

Public Sector Banks PNB CB 4.91 4.93 4.86 4.87 4.60 4.70 4.54 4.57

Total 4.93 4.86 4.66 4.54

ICICI 4.97 4.83 4.63 4.43

Private Sector Banks AXIS HDFC 4.87 4.66 4.73 4.60 4.50 4.54 4.33 4.51

Total 4.83 4.72 4.56 4.43

4.88 4.79 4.61 4.49

0.149 0.083 0.383 0.301

Technology

4.71

4.60

4.67

4.66

4.43

4.57

4.46

4.48

4.57

0.069

Committed and Trained Staff Strong Work Culture Brand Image

4.77 4.77 4.51

4.57 4.77 4.57

4.67 4.73 4.57

4.67 4.76 4.55

4.66 4.43 4.43

4.67 4.67 4.70

4.66 4.71 4.63

4.66 4.60 4.58

4.67 4.68 4.57

0.939 0.023* 0.740

WAS

p-values

* Significant at 5 per cent level of significance. Bank-wise analysis is shown in Table 7. The table reveals that bankers from public sector banks gave more importance to the intangibles, such as customer service (4.93), customer relationship (4.86), strong work culture (4.76), committed and trained staff (4.67), technology and customer loyalty (4.66 each) and product innovation (4.54) as compared to private sector banks except brand image (4.58). Among the selected public sector banks, SBI accorded importance to intangible assets like custome r service (4.94), committed and trained staff and strong work culture (4.77 each) and technology (4.71) whereas Canara Bank considered customer relationship (4.87), customer loyalty (4.70), and product innovation and brand image (4.57 each) as most important intangible assets to value creation for the bank . None of the intangibles is considered important by the bankers from PNB as compared to SBI and Canara Bank. Similarly, among the selected private sector banks, ICICI Bank accorded importance to intangible assets like customer service (4.97), customer relationship (4.83) and customer loyalty (4.63) followed by Axis Bank which considered brand image (4.70), committed and trained staff (4.67) and technology (4.57) as most important intangible assets. However, the bankers from HDFC Bank accorded importance to intangible like strong work culture (4.71) and product innovation (4.51). The estimated p-values using Mann-Whitney U-test show that all the intangible assets are equally important for the banks from both the public and private sectors as far as value creation for the banks is concerned except strong-work culture (p-value o if F(Yt+hSt) = F(yt+hSt − Xt) (4) Where, F => conditional distribution St− Xt => all the information in the universe except series Xt. In plain words, Xt is said to not Granger-cause Yt if X cannot help predict future Y.

5. Empirical Findings This section deals with the various statistical analysis and tests conducted on the data collected and their significance. i) Descriptive Statistics ii) Graphical Analysis iii) Correlation & Regression Analysis iv) Augmented Dickey-Fuller Test Analysis v) Granger Causality Test Analysis vi) Vector Error correction

5.1.

Descriptive Statistics

The descriptive analysis is needed to initially find out the performance of each stock index. The below given tables viz. Table II, III, IV show the mean, standard deviation, Variance, kurtosis of the individual stock exchanges.

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TABLE 6: Overall period statistics Total Period Time Period 19972014

Countries Singapore Hong Kong Taiwan Mauritius India

Mean 0.030 0.024 -0.003 0.102 0.106

Standard Deviation 0.248 0.260 0.249 0.150 0.252

Variance 0.061 0.067 0.0620 0.022 0.064

Kurtosis 3.085 2.846 0.716 3.225 0.966

Skewness -0.386 -0.514 -0.153 -0.150 -0.443

CAGR 0.031 0.024 -0.003 0.108 0.114

Over the entire period of seventeen years, India has the highest compound annual growth rate of 11.4% followed by Mauritius which ha s10.82% of CAGR TABLE 7: 1997-1999 Asian Financial Crisis Time Period

1997-1999

Countries Singapore Hong Kong Taiwan Mauritius India

Mean 0.095 0.014 -0.072 0.067 0.062

Standard Deviation 0.445 0.438 0.294 0.135 0.287

Variance 0.198 0.192 0.086 0.018 0.082

Kurtosis -0.401 1.002 -0.663 1.971 -0.965

Skewness 0.029 -0.295 0.254 -0.291 -0.085

CAGR 0.122 0.018 -0.083 0.084 0.122

Source: As per Author’s calculations TABLE 8: 2000-2002 Dot Com Bubble Time Period

2000-2002

Countries Singapore Hong Kong Taiwan Mauritius India

Mean -0.204 -0.199 -0.213 -0.029 -0.131

Standard Deviation 0.257 0.238 0.345 0.090 0.239

Variance 0.066 0.056 0.119 0.008 0.057

Kurtosis 0.619 -0.975 0.505 3.768 -0.778

Skewness -0.509 0.115 0.634 1.261 0.057

CAGR -0.155 -0.156 -0.229 -0.028 -0.134

Source: As per Author’s calculations TABLE 9: 2003-2007 INDIA'S HIGHEST GROWTH PERIOD Time Period

2003-2007

Countries Singapore Hong Kong Taiwan Mauritius India

Mean 0.190 0.218 0.129 0.305 0.358

Standard Deviation 0.116 0.157 0.179 0.130 0.221

Variance 0.013 0.024 0.032 0.017 0.049

Kurtosis 1.498 0.912 -0.004 1.507 1.243

Skewness -0.806 -0.127 -0.328 0.847 -0.845

CAGR 0.219 0.246 0.111 0.326 0.442

Source: As per Author’s calculations TABLE 10: 2008-2009 GREAT RECESSION Time Period

2008-2009

Countries Singapore Hong Kong Taiwan Mauritius India

Mean -0.091 -0.120 -0.019 -0.052 -0.006

Standard Deviation 0.340 0.347 0.347 0.295 0.116

Variance 0.116 0.120 0.120 0.087 0.013

Source: As per Author’s calculations TABLE 11: 2010-2014 Time Period

2010-2014

Countries Singapore Hong Kong Taiwan Mauritius India

Mean 0.028 0.026 0.031 0.053 0.091

Kurtosis 1.574 0.310 -0.816 -0.395 0.432

Skewness -0.609 -0.532 -0.303 -0.162 -0.194

CAGR -0.014 -0.034 0.043 -0.079 -0.005

(Source: As per Author’s calculations) POST RECESSION Standard Deviation Variance 0.134 0.018 0.182 0.033 0.146 0.021 0.094 0.009 0.168 0.028

Kurtosis 0.335 0.988 0.373 1.304 -0.035

Skewness -0.548 -0.643 -0.630 0.398 -0.069

CAGR 0.038 0.042 0.044 0.040 0.105

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Fig I: Returns of Stock Markets of all the countries in consideration

5.2.

Graphical Analysis

The above chart displays the log normal returns given by various stock markets over the span of 17 years. It basically gives is the absolute return on a monthly basis.

STOCK MARKET COMPARISON Singapore

Semdex

Hang Seng

Sensex

Taiwan

JUL-97 DEC-97 MAY-98 OCT-98 MAR-99 AUG-99 JAN-00 JUN-00 NOV-00 APR-01 SEP-01 FEB-02 JUL-02 DEC-02 MAY-03 OCT-03 MAR-04 AUG-04 JAN-05 JUN-05 NOV-05 APR-06 SEP-06 FEB-07 JUL-07 DEC-07 MAY-08 OCT-08 MAR-09 AUG-09 JAN-10 JUN-10 NOV-10 APR-11 SEP-11 FEB-12 JUL-12 DEC-12 MAY-13 OCT-13 MAR-14

40000 30000 20000 10000 0

Fig. II: Stock market performance The above chart displays the overall positioning of the individual stock exchange. We can conclude from the above chart that Indian stock markets are performing way beyond the performance of the other economies included in the study. A detailed analysis is mentioned in the later part of the report.

5.3.

Correlation analysis

This part deals with analysis of all the data tested for the considered countries and their correlation with India. 5.3.1. Analysis of Singapore Stock Market Singapore is considered to be one of India’s old partners in terms of trade and commerce. The geographical positioning of Singapore in South East Asia makes it a very lucrative investment destination. India and Singapore have commenced business on various lines in the past which enabled them to contribute to each other’s GDP growth. Overall correlation between the two economies is 0.38 from 1992-2014, a look in the past will give a clear idea about the inter-linkages of both the economies. 5.3.2. Analysis of Hong Kong stock market It can be inferred that in most of the time periods, the correlation between Indian stock market and Hang Seng is positive. A rise in Hang Seng is replicated in the form of a rise in the SENSEX, and the significant impact is low. Over a large range of period, the behaviour of positive high correlation is observed continuously. The correlation of the entire data period also turns out to be positive implying an interlinked behavioural impact of Hang Seng on SENSEX. 5.3.3. Analysis of Mauritius stock market The overall correlation between the two indices has been weak since past 17 years. The major reason behind this is trade relations began quite late between the countries in the year 2007 and then recession had hit immediately after that period which majorly affected the Mauritian Economy which has struggled to recover out of it. 5.3.4. Analysis of TAIEX (Taiwan index) Integration of Indian Stock Markets With its trading partners from select Asian Markets: An Empirical Study Nupur Gupta-Bhattacharya, Rahul Gogawat, Ankit Chaturvedi, Dipal Modi © INTERNATIONAL RESEARCH COMMUNION

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The correlation between SENSEX and TAIEX for the period 1997-2014 is 0.481. It is slightly in the lower half of positive correlation mainly because the trade relations started picking up pace only after 2006.

5.4.

Augmented Dickey-Fuller Test Analysis It is quite evitable form the above graphs that there is a trend and hence it is appropriate to evaluate the ADF results which hold true only if such trends and intercepts are included in a series. The results of ADF test for the stock returns of the six countries are indicated in table 12: TABLE 12: Unit root test of Stock Indices at First difference Series India Mauritius Hong Kong Taiwan Singapore

ADF test static -13.400 -10.469 -13.444 -8.297 -12.889

Probability* 0.000 0.000 0.000 0.000 0.000

*MacKinnon (1996) one-sided p-values. Source: As per Author’s calculations From the above results, we see that at first difference the value of t-static is negative for all the countries. The p-values are indicative of co integration among the series based on a single co integration equation. Since all the p-values are less than 0.05, all the series under consideration are stationary. The series is a good case to be tested for short and long run causal relationships

5.5.

Vector Error Correction method There might be some short run relationship between India and the other south Asian economies. In order to examine them, VECM is adopted. The empirical findings of this model are depicted in table 13. TABLE 13: Vector Error correction Model Results Error Correction: CointEq1 D(HONG_KONG(1)) D(HONG_KONG(2)) D(SINGAPORE (-1)) D(SINGAPORE (-2))

D(TAIWAN(-1))

D(TAIWAN(-2))

D(SENSEX(-1))

D(SENSEX(-2)) D(MAURITIUS (-1)) D(MAURITIUS (-2))

C R-squared Adj. R-squared Sum sq. resids S.E. equation F-statistic

D(HONG_KON G) -0.351 (0.160) [-2.193] -0.233 (0.147) [-1.583] -0.006 (0.113) [-0.053] -0.239 (0.114) [-2.080] -0.265 (0.117) [-2.263] 0.147659 (0.09934) [ 1.48645] 0.038 (0.092) [ 0.416] -0.257 (0.138) [-1.857] -0.117 (0.093) [-1.253] -0.106 (0.128) [-0.833] 0.003 (0.126) [ 0.023] 0.001 (0.005) [ 0.312] 0.347 0.309 1.255 0.081 9.199

D(SINGAPORE) 0.149 (0.154) [ 0.967] 0.278 (0.142) [ 1.962] 0.305 (0.109) [ 2.791] -0.878 (0.110) [-7.937] -0.479 (0.112) [-4.252] -0.045 (0.095) [-0.473] -0.124 (0.088) [-1.396] 0.051 (0.133) [ 0.384] 0.029 (0.090) [ 0.328] -0.013 (0.123) [-0.108] 0.069 (0.122) [ 0.570] 0.001 (0.005) [ 0.135] 0.347 0.309 1.163 0.078 9.186

D(TAIWAN) -0.587 (0.153) [-3.823] 0.542 (0.141) [ 3.833] 0.279 (0.109) [ 2.562] -0.153 (0.110) [-1.387] -0.085 (0.112) [-0.758] -0.583 (0.095) [-6.120] -0.179 (0.088) [-2.024] -0.345 (0.132) [-2.604] -0.164 (0.089) [-1.830] -0.161 (0.123) [-1.310] 0.009 (0.121) [ 0.079] 0.001 (0.005) [ 0.224] 0.397 0.363 1.156 0.078 11.414

D(SENSEX) 0.855 (0.151) [ 5.647] -0.346 (0.139) [-2.485] -0.188 (0.107) [-1.757] -0.054 (0.108) [-0.502] 0.037 (0.110) [ 0.334] -0.213 (0.094) [-2.269] -0.103 (0.087) [-1.185] -0.083 (0.130) [-0.640] -0.107 (0.088) [-1.040] 0.209 (0.121) [ 1.725] 0.201 (0.120) [ 1.676] 0.001 (0.005) [ 0.106] 0.443 0.410 1.123 0.076 13.746

D(MAURITI US) 0.202 (0.084) [ 2.395] -0.194 (0.077) [-2.504] -0.161 (0.059) [-2.698] 0.083 (0.060) [ 1.372] 0.066 (0.061) [ 1.083] -0.022 (0.052) [-0.426] 0.034 (0.048) [ 0.711] 0.192 (0.073) [ 2.638] 0.185 (0.049) [ 3.753] -0.430 (0.067) [-6.361] -0.345 (0.066) [-5.159] -0.001 (0.003) [-0.102] 0.343 0.305 0.349 0.042 9.053

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ISSN(E): 2320-8236 , ISSN (P): 2395-4833 VOLUME: 3, ISSUE:2 APRIL-JUNE 2015 Log likelihood 226.548 234.192 Akaike AIC -2.124 -2.199 Schwarz SC -1.927 -2.003 Mean dependent 0.001 0.001 S.D. dependent 0.097 0.094 Determinant resid covariance (dof adj.) Determinant resid covariance Log likelihood Akaike information criterion Schwarz criterion

www.ircjournals.org 234.813 -2.206 -2.009 0.001 0.097

237.705 -2.234 -2.038 0.001 0.100 2.91E-13 2.14E-13 1513.379 -14.340 -13.275

355.727 -3.403 -3.206 -0.001 0.051

Source: As per Author’s calculations From table 13, it can be concluded that there is co integration only between the Indian and the Mauritius markets as the p-value is less than 0.05. Rest of the countries do not have a short run relationship with Indian stock market due to high values of p-value. The investors can use these markets to diversify their portfolios in the short run due to their independence.

5.6.

Granger Causality Test Analysis

The results of Granger causality test of the various stock markets are presented in table 14. A lag of 2 days is used to perform this test. The lag is selected by taking into account the time difference between the countries and assuming that 2 days would be adequate to transfer the effects of one market to another.

TABLE 14: Granger Causality Tests on the Stock Indices Null Hypothesis: TAIWAN does not Granger Cause SENSEX SENSEX does not Granger Cause TAIWAN SINGAPORE does not Granger Cause SENSEX SENSEX does not Granger Cause SINGAPORE HONG_KONG does not Granger Cause SENSEX SENSEX does not Granger Cause HONG_KONG MAURITIUS does not Granger Cause SENSEX SENSEX does not Granger Cause MAURITIUS SINGAPORE does not Granger Cause TAIWAN TAIWAN does not Granger Cause SINGAPORE HONG_KONG does not Granger Cause TAIWAN TAIWAN does not Granger Cause HONG_KONG MAURITIUS does not Granger Cause TAIWAN TAIWAN does not Granger Cause MAURITIUS HONG_KONG does not Granger Cause SINGAPORE SINGAPORE does not Granger Cause HONG_KONG MAURITIUS does not Granger Cause SINGAPORE SINGAPORE does not Granger Cause MAURITIUS MAURITIUS does not Granger Cause HONG_KONG HONG_KONG does not Granger Cause MAURITIUS

No. of Obs 203 203 203 203 203 203 203 203 203 203

F-Statistic 3.100 1.484 5.954 0.125 7.026 0.724 0.508 13.279 0.285 2.440 0.247 2.308 1.069 12.595 5.311 0.753 0.276 9.009 0.893 9.205

Probability 0.047 0.229 0.003 0.881 0.001 0.485 0.602 3.9E-06 0.751 0.089 0.781 0.102 0.345 7.1E-06 0.005 0.471 0.759 0.001 0.410 0.015

Source: As per Author’s calculations From the empirical results, we found out that there is a unidirectional causal relationship between the countries and there is no bidirectional relationship between any countries. Taiwan Granger causes SENSEX but SENSEX not Granger causing Taiwan. Similarly, from the Table 14 we can see that there are no bidirectional causal relationships as one of the null hypotheses is rejected in all the observations such as SENSEX not granger causing Singapore but Singapore Granger causing SENSEX, Hong Kong granger causes SENSEX but SESNEX not granger causing Hong Kong, Mauritius not granger causing SENSEX but SENSEX granger causing Mauritius and so on. Thus it can be said that the Indian market is affected and caused by the other Asian economies barring Mauritius which is affected and caused by India.

6. Conclusion From the above findings and analysis it is clear that the Indian markets are not completely untouched from the activities of ASEAN markets and other smaller markets of Asia. The research objectives mentioned in Section III were satisfactorily achieved from the tests conducted and inferences drawn. There was a moderate-to-weak relationship between the stock markets of countries under study and the Indian Stock market. As the analysis of different time period clearly states that the inter dependence of all the stock markets with India has gradually increased, it is mainly due to the fact that there have been increased trade agreements sanctioned between the countries. So trade forms an imperative part of stock market correlation. Indian markets have clearly outperformed all the other markets studied in this research report. The other nations have also performed well, Singapore being the leader, but due to their small size their impact is not considered to be too strong. In the initial period, the correlation of India with all the countries was very less in magnitude; this signifies that Indian markets were independent of other stock markets. As the technology improved and higher information transmission and absorption into Integration of Indian Stock Markets With its trading partners from select Asian Markets: An Empirical Study Nupur Gupta-Bhattacharya, Rahul Gogawat, Ankit Chaturvedi, Dipal Modi © INTERNATIONAL RESEARCH COMMUNION

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the Indian markets took place a higher correlation was observed. Indian markets are vulnerable to the emerging markets but smaller nations have a limited impact on the Indian Stock markets.

References 1 2 3 4 5 6 7 8 9 10

Bose, S. and Mukherjee, P. (2006). “A Study of Interlink ages between the Indian Stock Market and Some Other Emerging and Developed Markets” in ICRA bulletin in 2006. Accessed from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=876397. Chittedi, K. (2009). “Indian Stock market integration and cross country analysis”, In 11th Annual Conference on Money and Finance in the Indian Economy, IGIDR, January 2009. Accessed from http://www.igidr.ac.in/money/mfc-11/Chittedi_Krishna.pdf Gupta-Bhattacharya, N., Talwar, S. and Sachdeva, J.K. (2014). “Co Integration among Equity Markets: A Study of Select South Asian Markets”, Journal of Global Economy, Vol.10.No 4, December 2014, pp. 265-275. Kanakarajammal, Paulraj and Arunlalan (2014). “A Study on Co Movement Relationship between India, China and US Stock Markets in the Post Reform Era”, Journal of Business Management Studies, Volume 10 No 2, July December 2014, pp .64-76. Mandaviya, J. (2014). “Indian stock market influenced by global stock market – A study of select world major stock markets “, Samzodhana – “Journal of Management Research”, Volume 2, Issue 1,pp. 12-24. Nath and Verma (2003). “Study of common stochastic trend and cointegration in the emerging markets: A case study of India Singapore and Taiwan”, NSE news, July 6 to July 12. Accessed from http://nse-india.com/content/research/Paper72.pdf. Ranpura, D., Patel, B. and Patel, N. (2011). “Study of Co Movement and interdependence of Indian stock market with selected foreign markets”, Asian Journal of Research in banking and Finance, Volume 1, Issue 3, pp. 74-92. Rao, K.M. (2014). “Interrelationship among Indian Stock Market and Selected Stock Price Indices of the Asia-Pacific Region”, The Indian Journal of Commerce, Vol.67, no 3, July-Sept, 2014, pp.13-20. Tripathi and Seth (2012). “Inter linkages of Indian Stock Market with Advanced Emerging Markets, The Asian Economic Review, Volume 54 No 3, pp. 507-528. Wong, W. Agarwal, A. And Du, J. (2005). “Financial Integration for India Stock market, a financial co Integration approach”, Finance India: the quarterly journal of Indian Institute of Finance. Vol. 18.No. 4, pp. 1581-1604.

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Challenges of Day to Day Operations at Modern Retail Stores across the Pune City Metro Region Dr. Ranjeet H. Chitale Associate Professor, Department of Management Sciences (PUMBA), Savitribai Phule Pune Univeity (Formerly University of Pune), India

Abstract: Modern retailing is a relatively new phenomenon in India. The performance of modern retail chains over the last decade is mixed and some of them have even closed down their stores in recent past. The reasons for this include high rentals cost, strategy failures and operational inefficiencies. This empirical research describes the operational challenges of the brick and mortar retailing in India. In this descriptive study 51 big retail stores (floor area wise) were surveyed across the Pune City Metro Region which is the seventh largest metropolis in India having a significant number of retailing formats. The respondent store managers were asked to describe the level of challenges associated with 26 types of day to day operational problems faced by them. These were classified into five basic areas of retail operations viz. Space, Stock, Staff, Systems and Standards. The study found that ‘Merchandise Shrinkage’, ‘Inadequacy of Staff’ and ‘Achieving Performance Standards & Targets’ were the most challenging problems whereas ‘Stock Location Problems’ and ‘Ordering Problems’ were the least ones. However the problems were found to be equally challenging across the five basic areas of store operations. The findings however differed slightly for the three formats viz. Departmental Stores, Hypermarkets and Supermarkets. Keywords : Key Operational Areas, Level of Challenge, Retailing, Store Level Problems, Store Operations _________________________________________________________________________________________________

I.

Introduction Retailing is one of the most happening sectors in the Indian economy today. The Indian retail market is estimated to cross INR 25,000 billion by 2015 [1]. At present the share of the organized sector is only 6.3 % of the total retailing market. But its size is Rs. 1,18,500 crore today and is projected to grow at a phenomenal rate of 21 % p.a. It is estimated to cross the Rs. 2400 billion mark by the year 2015, also raising its contribution to 9 % [1]. Also, with the constantly growing economy, the consumer preferences are changing very fast and they are demanding high quality products at competitive prices and are expecting a convenient shopping experience with an improved service quality i.e. ‘retail offering’ or ‘shopping experience’. Indian retailing is becoming more and more competitive. The modern brick and mortar retailers are competing not only with the unorganised retailers and E-retailers but they will also be facing threats in future from the aspiring multinational players because of their size, scale and excellence in the operational practices. In fact many of them have recorded losses in last few years and a few of them have closed down some of their stores. The reasons for this include high rentals cost, strategy failures and operational inefficiencies. ‘Retail marketing’ is researched extensively, being the present thrust area in India. However, store operations management is to affect the long term survival, profitability and growth of the retailers in the growing competitive environment. The research problem studied was to know and assess the nature of store level problems and the level of challenge associated with them. The work is significant in the sense that it focuses on the day to day functioning of the retail stores, describing the state of affairs as they are. It has implications for the retailers as a better understanding of these challenges will help them prepare for the ensuing competition through improved store delivery processes.

II.

Literature Review a. b. c. d. e.

f.

As described by Levy et al [2] , at the level of a retail store, operations management comprises the activities like: Stores location, Layout and Facilities management Merchandise buying / sourcing, Supply chain and Logistics management Inventory management, In-store handling of merchandise Stores information management systems , Automation and Use of technology Human resources management, Performance measurements In-store customer services, Visual merchandising etc. They have underlined the limitations of merchandising management in developing a strategic advantage in the changed retail environment and have highlighted the increased importance of store management. Excellence in store management for improved store experience of the consumers (including the service received and the quality of shopping environment) can provide a leading edge to the retailers and can go a long way in differentiating them from the competition. Raman et al [3] have also recognized ‘execution’ as the missing link in the retail operations.

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Though not all, some retail problems do emerge from poor operational practices at retail store levels. As described by Harris and Walters [4], the success of retailing companies is critically dependent on effective management of operations. In order to improve the retail store operations, store managers are required to identify and solve the store problems. Retail Operations Improvement Tool (ROIT), developed by John W. Pal and John W. Byrom [5] identifies five key elements / areas of retail store level problems (five Ss) . These are : Stock (inventory, offerings etc), Space (layout, display, facilities etc), Staff (sales, support, training, motivating etc.), Systems (practices) and Standards (guidelines). Herbert Kotzab and Christoph Teller [6] identified the typical problem areas within store operations which were - lack of knowledge on cost and service of day to day work; presence of a few standardized optimization guidelines for the stores; shortage of qualified personnel and deficits in the store design. Gary Davies and Tony Rands [7] describe the three important practical issues of store operations viz. bottle-necks, process sequencing and capacity planning. There are numerous problems and issues which are required to be addressed for efficient and smooth functioning of a retail store and these can be related to one or more of the five key areas of Space, Stock, Staff, Systems and Standards. For example, a study by Kotler [8] determined that the ease with which one could find items in a retail store was particularly significant when it comes to choice of a store for shopping. A study by Peterson and Kerin [9] showed further that among the factors studied, the factor “easy to find items” was accorded the highest correlation with customer satisfaction. As the floor shape becomes more complex this will have an adverse effect on the ease of shopping as internal visibility will diminish and negotiation of the space will become more difficult. Lusch [10]; Larson and Lusch [11] argue that after cost of goods sold, the major costs incurred by retailers involve the resource trinity of space, labour and stock. Inventory (a.k.a. stock) provides product availability which is a key dimension of customer service (LaLonde and Zinszer [12]; Copacino [13]). Daniel Corsten and Thomas Gruen [14] in their study identified the root causes for the stock-outs as : Poor ordering practices (including forecasting errors, late or insufficient ordering and supply etc.), Poor replenishment practices (resulting out of inadequate shelf space, lack of right processes, improper inventory management at the back-room etc.) and Poor planning practices (lack of communication, improper management actions, manufacturer‟s problems etc.). Another study by Nicole DeHoratius and Ananth Raman [15] found that the Inventory Record Inaccuracies (IRI) are caused by various factors such as selling and restocking errors, replenishment errors, database errors and poor synchronization, counting errors and customer and employee thefts. In their study on Out of Stock (OOS) rates, Jesper Aastrup and Herbert Kotzab [16] highlighted the main discriminating issues between stores with a low and a high OOS rate as : store management emphasis and commitment to OOS issues; the resulting priority and managerial guidance in store ordering and store replenishment tasks; the stability of staff and the proper planning for replenishment peaks; the store size and resulting space conditions; and the use of appropriate decision heuristics and use of inventory in store ordering. Carlos Pestana Barros and Carlos Alberto Alves [17] found that inefficiency in retail outlets was consequence of the factors such as : improper pattern of rotation of outlet managers; structural rigidities associated with labour markets; unequal access to information across the outlets; delays in acquisition of new technologies and skills up-gradation among the staff and lack of incentives for improving the efficiency. These factors lead to underutilization of the resources thereby affecting the store performance. Sami Kajalo and Arto Lindblom [18] showed that, of different types of security problems, grocery store retailers view shoplifting as the most severe. Among the formal surveillance, CCTV was looked upon as the most effective against shoplifting. The retailers considered the uniformed security guard and activity of the personnel as the most effective rather than high-tech measures. This study also highlighted the importance of the store environment (layout, cleanliness etc.) in controlling shrinkage and providing security. Report of Global Retail Theft Barometer [19] states India as the country with highest shrinkage rate of 3.2 % of sales which is followed by Mexico and South Africa while lowest rates were found in Australia. In India, it reported that retail shrinkage increased by +3.2 % to US $ 2.6 billion. Shoplifting (45.2%) was the major source of retail shrinkage which was followed by employee theft (23.3%), while internal errors and process failures contributed (22.6%).

III. 1. 2. 3.

Objectives and Hypothesis

Based on the observations and insights gathered through the literature reviews and the exploratory studies this research study was carried out with the following objectives: To identify the nature of operational problems commonly faced by the retail store managers To assess the level of challenge associated with these problems To identify most challenging area for retail store operations The store level problems can be broadly classified as related with one or more of the five key areas / elements of Retail Store Operations which are : Space, Stock, Staff, Systems and Standards. „Space‟ is concerned with the issues such as (layout, display, facilities etc). „Stock‟ stands for issues related with (merchandise inventory management, supply management, product offerings etc). „Staff‟ concerns with the issues like (HR issues, sales staff, support staff etc.). „Systems‟ represent the (hard IT issues, the practices and procedures to be followed etc.) and „Standards‟ represents adherence to guidelines and norms for the store operations. The problems related with Systems and Standards can be studied over a period of time and are addressed by taking specific corrective actions. Among the „Space‟, „Stock‟ and „Staff‟ the issues related with the „Stock‟ are very dynamic as retailing is all about selling the goods. As retailers handle dynamic inventories of hundreds and thousands of varieties of goods (SKUs) at a time, managing the stock happens to be the core function of a retail store. Hence, „Stock‟ related problems are very likely to be the most challenging ones. Hence the research hypothesis was set as „Stock related problems are more challenging than other store level problems‟.

Challenges of Day to Day Operations at Modern Retail Stores across the Pune City Metro Region Dr. RANJEET H. CHITALE © INTERNATIONAL RESEARCH COMMUNION

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IV.

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Research Methodology

Research Design Used : Descriptive (Cross sectional study) Universe for the Study : Big retail stores (floor area wise) in Pune Metro Region (consisting of geographical areas coming under the jurisdiction of Pune and Pimpri-Chinchwad Municipal Corporations) Sampling Units : Store managers of big retail stores (non owner –manager type) The stores included a. Supermarkets (selling food, grocery, FMCG items i.e. daily needs) with store size more than 2000 sq.ft. b. Hypermarkets (selling large variety of consumer goods) with store size more than 15000 sq.ft. c. Departmental / Specialty Stores (selling apparels and accessories) with store size more than 6000 sq. ft. These stores were included as Food & beverages, FMCG and apparels form dominant section of retail sector in India. Sampling Design : Non-probability judgmental / convenience (proportionate quota) sampling Sample Size : 51 (Sampling Ratio = 30% approximately) [Sample included 16 Supermarkets (out of approximate population of 45 to 50 stores) + 10 Hypermarkets (out of approximate population of 25 to 30 stores) + 25 Departmental/Apparel Stores (out of approximate population of 70 to 80 stores)] Data Collection : Data pertaining to the study was collected through primary and secondary sources. a. Secondary Data Collection : This was done through extensive discussions with retail practitioners, store managers and experts. Study of research papers / articles, books on retailing, reports, magazine articles and newspaper cuttings also were referred. Important inputs were also gathered through exploratory studies and Standard Operating Procedure (SOP) Manuals of few Retailers. b. Primary Data Collection : Primary data was predominantly collected through the Opinion Survey of Retail Store Managers. Observations and informal interviews were also occasionally used. Survey Instrument used : Structured Questionnaire (predominantly close ended) was used, which was revised after the pilot study. Scaling Technique Used : (6 point) Likert type Rating Scale (based on interval level of measurement having multiple items) Respondents were asked to provide following details : 1. Profile of the Store 2. Some operational details of specific store operations 3. Ratings on a scale of 1 to 6 where : [1 - None, 2 - Somewhat, 3 - Moderate, 4 - High, 5 - Very High and 6 - Extreme] to describe the Level of Challenge associated with a list of 26 store level operational problems. These were short listed after going through the literature reviews and extensive discussions with the experts and retail practitioners and were related with one or more of the areas of - Space, Stock, Staff, Systems and Standards.

V. Results and Discussions The 26 shortlisted representative store level problems were defined as : (Variable : C-21.01, Area : Space) - Parking Problems ; (Variable : C-21.02, Area : Space) - Space Inadequacy/ Crunch (Variable : C-21.03, Area : Space) - Proper Utilization of Space (Variable : C-21.04, Area : Stock) - Merchandise Shrinkage (Variable : C-21.05, Area : Stock) - Stock-outs/ Non-availability of Stock (Variable : C-21.06, Area : Stock) - Stock Location Problems (Variable : C-21.07, Area : Stock) - Damage/ Pilferage & Expiry /Spoilage of Merchandise (Variable : C-21.08, Area : Staff) - Inadequacy of Staff (Variable : C-21.09, Area : Staff) - Proper Utilization of Labour / Staff (Variable : C-21.10, Area : Systems) - Cash Management & Billing /Scanning Errors (Variable : C-21.11, Area : Systems) - Reverse Logistics Issues (Variable : C-21.12, Area : Systems) - IT Infrastructure/ System related Errors (Variable : C-21.13, Area : Systems) - Security related Issues (Variable : C-21.14, Area : Systems) - Updating Changes (Variable : C-21.15, Area : Standards) - Achieving Performance Standards & Targets (Variable : C-21.16, Area : Space, Systems, Standards) - Queuing/ Waiting Line Problems (Variable : C-21.17, Area : Space, Standards) - Efficient Use & Maintenance of Store Facilities (Variable : C-21.18, Area : Stock, Systems) - Stock-taking & Stock-verification (Variable : C-21.19, Area : Stock, Systems) - Irregular/ Inadequate Supply/ Delivery of Merchandise (Variable : C-21.20, Area : Stock, Systems) - Processing and Replenishment of Merchandise (Variable : C-21.21, Area : Staff, Systems) - Under-trained Staff (Variable : C-21.22, Area : Systems, Standards) - Handling Customer Complaints (Variable : C-21.23, Area : Systems, Standards) - Decision-making Processes (Variable : C-21.24, Area : Systems, Standards) - Standard Operating Procedures (SOPs) (Variable : C-21.25, Area : Stock, Systems) - Ordering Problems Challenges of Day to Day Operations at Modern Retail Stores across the Pune City Metro Region Dr. RANJEET H. CHITALE © INTERNATIONAL RESEARCH COMMUNION

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(Variable : C-21.26, Area : Space, Standards) - Visual Merchandising / Displays /Atmospherics related Problems These were rated on the scale of 1 to 6 for the level of challenge associated with them. The mean Challenge Ratings for all these problems across all the 51 stores and the three formats are as follows : TABLE 1 : Mean Challenge Ratings of Problems CCCCCCCCCCCCCCCCCCCCCCCCCC-

Format Problem 21.01 21.02 21.03 21.04 21.05 21.06 21.07 21.08 21.09 21.10 21.11 21.12 21.13 21.14 21.15 21.16 21.17 21.18 21.19 21.20 21.21 21.22 21.23 21.24 21.25 21.26

All Mean 2.75 2.41 2.47 3.2 2.75 1.88 2.43 2.92 2.63 2.12 2.16 2.67 2.25 2.29 2.75 2.63 2.59 2.78 2.54 2.43 2.63 2.49 2.2 2.31 1.94 2.16

Dept. Stores Mean S.D. 2.72 1.54 2.16 1.11 2.72 1.57 2.84 1.21 2.84 1.07 1.92 1.04 2.04 0.98 2.84 1.4 2.52 1.26 2.08 0.72 2.2 0.96 2.56 1.23 2.24 0.97 2.04 0.93 2.84 1.37 2.44 0.87 2.56 1.36 2.52 1.56 2.29 1.2 2.56 1.58 2.36 1.41 2.28 1.49 2.08 1.35 2.44 1.56 1.83 1.05 2.2 1.35

S.D. 1.49 1.19 1.3 1.22 1.04 0.97 1.01 1.41 1.3 0.77 1.03 1.18 1.07 1.08 1.44 1.04 1.28 1.5 1.28 1.43 1.39 1.46 1.18 1.39 1.1 1.27

Hypermarkets Mean S.D. 2.3 1.25 2.3 1.16 2.4 1.35 3.6 1.26 2.4 0.84 2 0.94 2.9 0.88 2.7 1.06 2.6 1.26 2.4 1.07 2.1 1.1 2.5 0.71 1.9 0.88 2.9 1.1 2.9 1.52 2.7 1.49 2.3 1.34 2.8 1.4 2.6 0.84 2.3 0.95 2.8 0.92 2.4 1.26 2.3 1.25 1.9 0.88 1.8 0.92 2.3 1.34

Supermarkets Mean S.D. 3.06 1.57 2.88 1.26 2.13 0.62 3.5 1.1 2.81 1.11 1.75 0.93 2.75 0.93 3.19 1.64 2.81 1.42 2 0.63 2.13 1.15 2.94 1.34 2.5 1.32 2.31 1.2 2.5 1.55 2.88 0.96 2.81 1.17 3.19 1.47 2.88 1.59 2.31 1.49 2.94 1.57 2.88 1.54 2.31 0.87 2.38 1.41 2.19 1.28 2 1.15

Based on the TABLE 1 above, the major findings of the study were : Challenges of Problems related with - Space (All Stores) 6.00

Mean Ratings

5.00 4.00 3.00

2.75

2.41

2.47

2.63

C-21.02

C-21.03

C-21.16

2.59 2.16

2.00 1.00 0.00 C-21.01

C-21.17

C-21.26

Proble ms

Figure 1 : Challenges of ‘Space’ related Problems (All Stores) Across all the stores : The challenge ratings for all the „Space‟ related problems (Fig.1) were fairly low and consistent. The most challenging problem was found to be „Parking Problems‟ (M = 2.75, SD = 1.49) which was followed by „Queuing/ Waiting Line Problems‟ (M = 2.63, SD = 1.04). The least challenging problem was „Visual Merchandising / Displays / Atmospherics related Problems‟ (M = 2.16, SD = 1.27). Formatwise The most challenging problems were found to be „Parking Problems‟ and „Improper Utilization of Space‟ (for Departmental Stores); „Queuing/ Waiting Line Problems‟ (for Hypermarkets) and „Parking Problems‟ (for Supermarkets). Challenges of Problems related with - Stock (All Stores) 6.00

Mean Ratings

5.00 4.00 3.20 2.75

3.00

2.43

2.78

2.54

2.43 1.94

1.88

2.00 1.00 0.00 C21.04

C21.05

C21.06

C21.07

C21.18

C21.19

C21.20

C21.25

Proble ms

Figure 2 : Challenges of ‘Stock’ related Problems (All Stores) Challenges of Day to Day Operations at Modern Retail Stores across the Pune City Metro Region Dr. RANJEET H. CHITALE © INTERNATIONAL RESEARCH COMMUNION

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Across all the stores : The challenge ratings for all the „Stock‟ related problems (Fig.2) were fairly low but were not consistent. The most challenging problem was found to be „Merchandise Shrinkage‟ (M = 3.20, SD = 1.22) which was followed by „Stock-taking & Stock-verification‟ (M = 2.78, SD = 1.50). The least challenging problem was „Stock Location Problems‟ (M = 1.88, SD = 0.97). Formatwise : The most challenging problems were found to be „Stock-outs/ Non-availability of Stock‟ and „Merchandise Shrinkage‟ (for Departmental Stores); „Merchandise Shrinkage‟ (for Hypermarkets) and „Merchandise Shrinkage‟ (for Supermarkets). Challenges of Problems related with - Staff (All Stores) 6.00

Mean Ratings

5.00 4.00 2.92

3.00

2.63

2.63

C-21.09

C-21.21

2.00 1.00 0.00 C-21.08

Proble ms

Figure 3 : Challenges of ‘Staff’ related Problems (All Stores) Across all the stores : The challenge ratings for all the „Staff‟ related problems (Fig.3) were fairly low and consistent. The most challenging problem was found to be „Inadequacy of Staff‟ (M = 2.92, SD = 1.41). The least challenging problems were „Proper Utilization of Labour / Staff ‟ (M = 2.63, SD = 1.30) and „Under-trained Staff‟ (M = 2.63, SD = 1.39). Formatwise : The most challenging problems were found to be „Inadequacy of Staff‟ (for Departmental Stores); „Under-trained Staff‟ (for Hypermarkets) and „Inadequacy of Staff‟ (for Supermarkets). Challenges of Problems related with - Systems (All Stores) 6.00

Mean Ratings

5.00 4.00 2.67

3.00 2.12 2.16

2.25 2.29

2.63 2.78 2.54 2.63 2.49 2.43

2.20 2.31

2.00

1.94

1.00

C

-2 1

.1 C 0 -2 1 .1 C 1 -2 1 .1 C 2 -2 1 .1 C 3 -2 1 .1 C 4 -2 1 .1 C 6 -2 1 .1 C 8 -2 1 .1 C 9 -2 1 .2 C 0 -2 1 .2 C 1 -2 1 .2 C 2 -2 1 .2 C 3 -2 1 .2 C 4 -2 1 .2 5

0.00

Proble ms

Figure 4 : Challenges of ‘Systems’ related Problems (All Stores) Across all the stores : The challenge ratings for all the „Systems‟ related problems (Fig.4) were fairly low and consistent. The most challenging problem was found to be „Stock-taking & Stock-verification‟ (M = 2.78, SD = 1.50) which was followed by „IT Infrastructure/ System related Errors‟ (M = 2.67, SD = 1.18). The least challenging problem was „Ordering Problems‟ (M = 1.94, SD = 1.10). Formatwise : The most challenging problems were found to be „IT Infrastructure/ System related Errors‟ and „Processing and Replenishment of Merchandise‟ (for Departmental Stores); „Updating Changes‟ (for Hypermarkets) and „Stock-taking & Stockverification‟ (for Supermarkets). Challenges of Problems related with - Standards (All Stores) 6.00

Mean Ratings

5.00 4.00 3.00

2.75

2.63

2.59

2.49

2.20

2.31

2.16

C-21.23

C-21.24

C-21.26

2.00 1.00 0.00 C-21.15

C-21.16

C-21.17

C-21.22 Proble ms

Figure 5 : Challenges of ‘Standards’ related Problems (All Stores) Across all the stores : The challenge ratings for all the „Standards‟ related problems (Fig.5) were fairly low and consistent. The most challenging problem was found to be „Achieving Performance Standards & Targets‟ (M = 2.75, SD = 1.44) which was followed by „Queuing/ Waiting Line Problems‟ (M = 2.63, SD = 1.04). The least challenging problem was „Visual Merchandising / Displays / Atmospherics related Problems‟ (M = 2.16, SD = 1.27). Challenges of Day to Day Operations at Modern Retail Stores across the Pune City Metro Region Dr. RANJEET H. CHITALE © INTERNATIONAL RESEARCH COMMUNION

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Formatwise : The most challenging problems were found to be „Achieving Performance Standards & Targets‟ (for Departmental Stores); „Achieving Performance Standards & Targets‟ (for Hypermarkets) and „Queuing/ Waiting Line Problems‟ and „Handling Customer Complaints‟ (for Supermarkets). Comparing the challenges of all the store level problems : After the analysis of the data about the Mean challenge Ratings of all the 26 store level problems studied across the formats (TABLE 1), it was found that : Across all the stores, the most challenging problem was „Merchandise Shrinkage‟ which was followed by „Inadequacy of Staff‟ and „Stock-taking & Stock-verification‟ in that order. The least challenging problem was found to be „Stock Location Problems‟ which was preceded by „Ordering Problems‟. Formatwise, the most challenging problems were found to be „Stock-outs/ Non-availability of Stock‟, „Merchandise Shrinkage‟, „Achieving Performance Standards & Targets‟ and „Inadequacy of Staff‟ (for Departmental Stores); „Merchandise Shrinkage‟ followed by „Damage/ Pilferage & Expiry /Spoilage of Merchandise‟, „Updating Changes‟ and „Achieving Performance Standards & Targets‟ (for Hypermarkets) and „Merchandise Shrinkage‟ followed by „Stock-taking & Stock-verification‟ and „Inadequacy of Staff‟ (for Supermarkets).

VI.

Hypothesis Testing

The research hypothesis was stated as „Stock related problems are more challenging than other store level problems‟. In order to test the hypothesis, it was initially tested if the challenges of the problems related with the five areas / elements of retail store operations (viz. Space, Stock, Staff, Systems and Standards) were different on not. If they were found different, the post-hoc analysis was to be used. Thus, the null and alternative hypotheses were set as: H0 : There are no differences in the challenges associated with the problems across the five key areas/elements of retail store operations (viz. Space, Stock, Staff, Systems and Standards) H1 : There is a difference in the challenges associated with the problems between at least two of these areas/elements Internal Consistency : (Composite) mean challenge ratings for problems related with Space (based on 5 problems), Stock (based on 8 problems), Staff (based on 3 problems), Systems (based on 14 problems) and Standards (based on 7 problems) were calculated. T he consistencies of the scales were tested using Cronbach‟s alpha as follows 1. For the scale measuring challenges for „Space‟- (Improved Cronbach’s alpha = 0.731) > 0.7) 2. For the scale measuring challenges for „Stock‟- (Cronbach’s alpha = 0.832) > 0.7 3. For the scale measuring challenges for „Staff‟ - (Cronbach’s alpha = 0.864) > 0.7 4. For the scale measuring challenges for „Systems‟- (Cronbach’s alpha = 0.901) > 0.7 5. For the scale measuring challenges for „Standards‟- (Cronbach’s alpha = 0.864) > 0.7 Thus all scales were found consistent. Statistical Test Used : As (composite) mean challenge ratings for five conditions were to be compared within the stores, One-way Repeated Measures ANOVA test was used. Testing Assumptions : Normality was fairly evident from the Histograms. Also group sizes are equal (n = 51). Data (being composite scores) are interval scaled. Sphericity was tested and correction was applied. Test Result : Using Greenhouse-Geisser Correction - {[F(df = 2.45,122.40) = 4.22] > [Fcritical(df = 3,100) = 2.70]}, (p = 0.011) < ( = 0.05). Hence, Ho is rejected (at 5% level of significance). Thus the challenges of problems across the 5 areas are not the same. Hence the alternative hypothesis (H1) is accepted. Thus, the challenges of at least two of the areas have a statistically significant difference. Post-Hoc Analysis : As the challenge ratings were different, Post-hoc analysis was carried out (Bonferroni correction procedure)[20], for pair-wise comparisons of the challenges (ratings) associated with the problems across all areas/elements of retail store operations, with the following results : Table 2 : Challenge Rating Estimates for ‘Store Problem Areas’ Estimates Measure:Challenge Elements 1-Space 2-Stock 3-Staff 4-Systems 5-Standards

Mean 2.451 2.498 2.725 2.397 2.445

Std. Error .119 .114 .170 .120 .135

95% Confidence Interval Lower Bound Upper Bound 2.213 2.689 2.269 2.726 2.385 3.066 2.155 2.639 2.173 2.717

Table 3 : Pair-wise Comparisons among ‘Store Problem Areas’ Pair-wise Comparisons Measure:Challenge 95% Confidence Interval for Differencea (I) Elements

(J) Elements

Mean Difference (IJ)

Std. Error

Sig.a

Lower Bound

Upper Bound

Challenges of Day to Day Operations at Modern Retail Stores across the Pune City Metro Region Dr. RANJEET H. CHITALE © INTERNATIONAL RESEARCH COMMUNION

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1-Space .047 3-Stafff -.228 4-Systems .101 5-Standards .052 Based on estimated marginal means a. Adjustment for multiple comparisons: Bonferroni.

www.ircjournals.org .085 .110 .050 .086

1.000 .435 .511 1.000

-.204 -.551 -.047 -.199

.297 .095 .248 .304

*. The mean difference is significant at the .05 level

For all the four pairs of comparisons between the problem areas of „Stock‟ and the rest (viz. Space, Staff, Systems and Standards), the p-value of the test statistic is (p > 0.05). Thus, none of these differences in challenges are statistically significant. The challenge ratings of the „Stock‟ related problems are thus not significantly different from any other areas. Hence, the research hypothesis is rejected (at 5% level of significance). Thus, the research hypothesis is validated and tested Negative. The results further showed that for all such ten pairs (except for the pair „Staff with Systems‟), the differences in challenge ratings were not statistically significant. (For all these pair-wise comparisons, [p-value > ( = 0.05)]. However, for the pair „Staff with Systems‟ the difference in the challenge ratings was found to be statistically significant [(p = 0.024) < ( = 0.05)]. Thus, „Staff‟ related problems are more challenging than the Systems related ones.

VII.

Conclusion

This study describes the characteristics and problems of store operations of the Indian retailers. Retail is in detail and hence at a store level the store manager is faced with numerous day to day issues with varied complexities. However this study shows that among these problems, „Merchandise Shrinkage‟, „Inadequacy of Staff‟ and „Achieving Performance Standards & Targets‟ are the most challenging ones. The challenges of the problems of „Parking Problems‟, „Merchandise Shrinkage‟, „Damage/ Pilferage & Expiry /Spoilage of Merchandise‟, „Updating Changes‟ and „Stock-taking & Stock-verification‟ vary across the retail formats. However the problems related with all the five broad key areas/elements of retail store operations (viz. Space, Stock, Staff, Systems and Standards) are almost equally challenging. In particular, challenges of Stock related problems are not significantly different from those related with others. This is true across all the formats. Thus retailers must always pay equal attention to all these areas and should not overlook any of them. This research is however is based upon the stores located in the Pune metro region only and it dealt with three retail formats only. It did not cover other retail stores selling products such as electronic goods, furniture, footwear, jewellery etc. Again the data collected was mainly based on the subjective opinions / judgments of the store managers only. Similar study can be conducted on a wider scale for the stores in other geographical areas covering other retail formats as well. This will provide better insights about retail store functioning

REFERENCES 1. 2. 3. 4. 5. 6. 7.

India retail report (Images F & R Research, 2011) Michael Levy, Barton A. Weitz, and Ajay Pandit, Retail management (Tata McGraw Hill Publication, New Delhi, Edition 6, 2008). A. Raman, N. DeHoratius, and Z. Ton, Execution: the missing link in retail operations, California Management Review, 43(3), 2001, 136-52. D. Harris, and D. Walters, Retail operations management: a strategic approach (Prentice-Hall, Hemel Hempsted, 1992). John W. Pal, and John W. Byrom, The five Ss of retail operations: a model and tool for improvement, International Journal of Retail and Distribution Management, 31(10), 2003,518-528. Herbert Kotzab, and Christoph Teller, Development and empirical test of a grocery retail in-store logistics model, British Food Journal, 107(8), 2005, 504-505. Gary Davies, and Tony Rands, The strategic use of space by retailers : a perspective from operations management, International Journal of Logistics Management, 3(2), 1992, 63-76.

8. 9.

P. Kotler, Competitive strategies for new product marketing over the life cycle, Management Science, 1965, 104-19. R.A. Peterson, and R.A. Kerin, Store image measurement in patronage research: fact and artefact, in W.R. Darden, and R.F. Lusch (Eds), Patronage behavior and retail management (North- Holland, New York, NY, 1983), 293-306.

10. 11.

R.F. Lusch, The new algebra of high performance retail management, Retail Control, September,1986, 15-35. P.D. Larson, and R.F. Lusch, Quick response retail technology: integration and performance measurement, The International Review of Retail, Distribution and Consumer Research, 1(1), 1990, 17-35. B.J. LaLonde, and P.H. Zinszer, Customer service meaning and measurement (National Council of Physical Distribution Management, Chicago, IL., 1976). W.C. Copacino, Supply chain management: the basics and beyond (St Lucie Press, Boca Raton, FL., 1997). Daniel Corsten, and Thomas Gruen, Desperately seeking shelf availability: an examination of the extent, the causes and the efforts to address retail out-of-stocks, International Journal of Retail and Distribution Management, 31(12), 2003, 605-617.

12. 13. 14. 15. 16.

Nicole DeHoratius, and Ananth Raman, Inventory record inaccuracy: an empirical analysis, Management Science, 54(4), April 2008, 627–641. Jesper Aastrup, and Herbert Kotzab, Analyzing out-of-stock in independent grocery stores: an empirical study, International Journal of Retail & Distribution Management, 37(9), 2009, 765-789.

17.

Carlos Pestana Barros, and Carlos Alberto Alves, Hypermarket retail store efficiency in Portugal, International Journal of Retail & Distribution Management, 31(11), 2003, 549-560. Sami Kajalo, and Arto Lindblom, Effectiveness of formal and informal surveillance in reducing crime at grocery stores, Journal of Small Business and Enterprise Development, 18(1), 2011, 157 – 169.

18. 19. 20.

Report of Global Retail Theft Barometer, 2009, in Storai (Retailers Association of India, Nov- Dec 2009), 80-82. Andy Field, Discovering statistics using SPSS ( SAGE Publications, Edition 3, 2012, 472).

Challenges of Day to Day Operations at Modern Retail Stores across the Pune City Metro Region Dr. RANJEET H. CHITALE © INTERNATIONAL RESEARCH COMMUNION

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An Empirical Study of E-Banking Adoption by Retail Customers in Selected Banks of Rajasthan 1

DR. MEERA MATHUR1, ZAKIYA KHAN2 Professor, FMS,M L Sukhadia University, Udaipur. Email: [email protected] 2 Visiting Faculty E.mail: [email protected]

__________________________________________________________________________________________________________________

Abstract: Competition, securitization, automation and regulation are the major forces that are driving and shaping consumer lending. Net banking, phone banking, mobile banking, ATMs and bill payments are the new facilities that banks are using not only to lure customers but also to help them reduce their total operating costs. The enormous competition has led to innovative retail banking products that are extremely customer-friendly and plug the loopholes in the existing similar products. Retail banking includes a comprehensive range of financial products which provide an opportunity for banks to diversify the asset portfolio with high profitability and relatively low NPAs. This paper deals with the analysis of the usage of services based on technology by the retail customers in different categories of banks. The study is focused on most prominently used three ebanking services- ATMs, Internet banking and Mobile Banking. Key Words: E-Banking, Retail Banking, Internet Banking, Mobile Banking, ATM, public sector banks, private banks, foreign banks. _________________________________________________________________________________________________

I.

Introduction

For several years, banks viewed consumer loans with skepticism. Commercial loans dominated the banks portfolio as they generated high net yields with low credit risk. Consumer loans in contrast involved smaller amounts, large staff to handle accounts and high default rates. They were considered substandard by the banks. Today, competition, securitization, automation and regulation are the major forces that are driving and shaping consumer lending. With deregulation and increase in consumer loan rates, the risk-adjusted returns in retail sector have exceeded the returns on commercial loans. The growth in retail banking has been facilitated by the growth in banking technology and automation of banking processes that enable extension of reach and rationalization of costs. ATMs, Internet and Mobile Banking have emerged as alternative banking channels, which facilitate low-cost transactions in comparison with traditional branches. They also have the advantage of reducing the branch traffic and enable banks with small networks to offset the traditional disadvantages by increasing their reach and spread.

II.

Objectives of the Study

a) To study the current technology implementation in banks of Rajasthan. b) To study the usage of banking technology by retail banking customers. c) To analyze the difference in usage of e-banking by retail customers in different categories of banks, Private sector banks and Foreign banks.

III.

banks viz. - Public Sector

E-Banking Components

An array of banking services offered to retail and wholesale customers through an electronic distribution channel is collectively referred to as e-banking. (Rajshekar, 2004).It is a mix of services which include Internet banking, Mobile banking, ATM kiosks, Fund Transfer System, Real Time Gross Settlement (payment & settlement system), Credit/Debit/Smart/Kisan Cards, Cash management services, and Data warehousing, Operational data for MIS and Customer Relationship Management.

IV.

Retail Banking in India

Retail banking includes wide-ranging financial products viz. deposit products, residential mortgage loans, credit cards, auto finance, personal loans, consumer durable loans, loans against equity shares, loans for subscribing to Initial Public Offers (IPOs), debit cards, bill payment services, mutual funds, investment advisory services. These products provide an opportunity for banks to diversify the asset portfolio with high profitability and relatively low NPAs. As Chatterji(2004) says, “Customization of services is fast becoming the norm than a competitive advantage. With the Retail banking sector expected to grow at a rate of 30% [Chanda Kochhar, ICICI Bank] players are focusing more and more on the Retail and are waking up to the potential of this sector of banking.” At the same time, India compares pretty poorly with the other economies of the world that are now becoming comparable in terms of spending patterns with the opening up of our economy. For instance, while the total outstanding Retail loans in Taiwan is around 41% of GDP, the figure in India stands at less than 5%. The comparison with the West is even more staggering. Another comparison that is natural when comparing Retail sectors is the use of credit cards. Here also, the potential lies in the fact that of all the consumer expenditure in India in 2001, less than 1% was through plastic, the corresponding US figure standing at 18%.

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V.

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Technology enabled retail banking segment

Today, the most proactive banks have entered the retail banking segment and have identified it as a principal growth driver. They are slowly gaining market share in the retail space. The categorization of retail banking services is shown in Figure 1 Core Services Payment services

Current account and savings account

Loan products: Consumer loans, Personal loans, Housing loans, Educational loans

Insurance products: Life insurance, Pension schemes

Figure 1. Categorization of Retail Bank Services Facilitating Services Supporting Services Cash Making payments at door step Foreign currency requirements Internet banking Traveler cheques Telephone banking DD/Bankers cheque TT EFT ATM card Credit cards/ Debit cards Standing instructions from customers for making Services to senior citizens payments Telephone banking Inter branch/ interbank Internet banking transfer of funds Conversion of excess balance to Time deposit Safety vault Current account Delivery of loan at promised time period Savings account Interest rate option: Fixed/ floating Time deposit account Flexibility in pre-payment of loan Counseling on Real-estate markets Legal services for documentation ECS for payment of loan installments Current account Additional insurance facility for family members Savings account Counseling on post retirement savings. Time deposit Safety vaults

Source: ICFAI Journal of Professional Banker, January 2003.

The figure clearly identifies the inclusion of e-banking in the retail segment. In fact services like ATMs and credit/debit cards are prominently being utilized by retail customers.

VI.

Literature Review

Given the fact that online banking transactions cost substantially less than physical branch transactions, banks throughout the world are rushing to develop their internet strategies (Wright and Ralston, 2002). Historically, the distribution channels have been the corner stones of most banks success, but the delivery capabilities of new electronic channels are outstripping the branch – cantered models that most banks use to manage them (FengLi, 2001). In particular, a cohort of value-focused new entrants in the financial market are experimenting with very different strategies and business models to capture the most lucrative businesses and the most profitable customers by leveraging their unique resources and core competence and by exploiting the new capabilities of internet. New electronic channels also make customers more knowledgeable and shift bargaining power from banks to customers. Although millions of dollars have been spent on building internet banking systems, reports have shown that potential users may not use the systems in spite of their availability. According to Technology Acceptance Model (TAM), perceived ease of use and perceived usefulness constructs are believed to be fundamental in determining the acceptance and the use of various information technologies. Lang (2003) investigated the impact of IT in relationship marketing context through a survey on customers‟ usage on telephone banking and interactive voice response in New Zealand. The result of the study showed that the customers who would prefer to use more or less Information Technology to interact with their bank, ie exhibiting a positive or negative IT gap, perceived their relationship to be weaker than those who were satisfied with the way they currently interact with their bank. An IT gap, either positive or negative, may be caused by three firm related factors, first a service provider may not have the full complement of channels to allow in customers to interact in ways that they would like to (e.g. no internet based banking possible or branches have been closed), second the infrastructure may not provide all the functionality customer is seeking, (e.g. internet based banking does not allow customers to transfer funds between accounts). Third, functionality of the infrastructure may be cumbersome to use (e.g. customer may have to move thro many web pages before being able to transfer funds from one account to another). The research of Ulengin (1998) in Turkey and Almossawi (2001) in Bahrain concluded that ATM network in convenient locations was a dominant factor in bank selection decision-making of consumers in those countries. The substantive conclusions of this study were that, on an average, respondents of the survey preferred the extended customer loyalty programs, the continuous information flow from the bank, the offsite ATMs, the minimum waiting time in the branches and a simplified applications form for all accounts a bank offers. Shaw (2004) suggested that the internet was essentially affecting the competitive landscape of the banking industry by many ways. First, it changed the industry structure and in doing so, altered the rules of competitions. Secondly, it created competitive advantages for banks giving them new ways to outperform their rivals and finally the internet had spawned the creation of new businesses that were beyond the traditional banking domains. An Empirical Study of E-Banking Adoption by Retail Customers in Selected Banks of Rajasthan DR. MEERA MATHUR1, ZAKIYA KHAN2 © INTERNATIONAL RESEARCH COMMUNION

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Chau and Lai (2003) conducted a study and concluded that „perceived ease of use‟ might be the single most significant determinant of users‟ acceptance of internet banking perceived usefulness and accessibility followed perceived ease of use. De & Padmanabhan, (2002) explain that Internet banking increases operational efficiencies and reduces costs, besides giving a platform for offering value added services to the customer Kamakodi and. Khan , (2008) obtained a survey result from 292 respondents about their views on electronic banking channels. The results indicate that the majority of the customers are very comfortable and willing to use e-banking channels. At the same time, over 80% feel that „human contact is necessary‟. Kolodinsky and Hogarth (2001) studied the adoption of new innovations and services like electronic transfer of funds, electronic bill payment, phone banking, and PC banking They concluded that with the exception of income, they could not consistently infer that any set of variables is associated with the adoption of all e-banking products. It was clear, however, that individuals who had higher incomes had higher probabilities of currently using or intending to use these products. If relative income matters in adoption, then lower income households will continue to be left out. For India, which has substantial rural, poor and illiterate population, this is a significant observation to be taken note of. Migdadi (2008) studied the quality of internet banking service encounter of the retail banks in Jordan, and identified the quality dimensions that should be improved or sustained.To achieve these purposes the banks' web sites were evaluated by using the web site quantitative evaluation method (QEM), the evaluation of the banks' web sites was conducted in March 2008 for sixteen retail banks in Jordan. The results indicated that; the banks in Jordan have significant positive quality of the internet banking service encounter, further the banks' web sites are rich in their content, and significant in the navigation, but the speed of home page down load and web site accessibility should be developed in the future. Moutinho and Smith (2000) studied the bank customer satisfaction through mediation of attitudes towards human and automated banking. Their findings suggest that the drive towards „ease of banking‟ and convenience is favoured by customers and therefore banks should find alternative strategic routes designed to improve service delivery, either human-based or technology-based. Oliveira P. & Eric V. H. (2011) have found that 55% of today‟s computerized commercial banking services were first developed and implemented by non-bank firms for their own use, and 44% of today‟s computerized retail banking services were first developed and implemented by individual service users rather than by commercial financial service providers. According to Agarwal R., Restage S.&Mehrotra A. (2009) customers are influenced in their usage of e-banking services by the kind of account they hold, their age and profession, attach highest degree of usefulness to balance enquiry service among e-banking services, consider security & trust most important in affecting their satisfaction level The IBEF (Indian Board of Equity Foundation) (2015), states that with the advancement in technology, mobile and internet banking, services have come to the fore. Banks are focusing to provide better services by upgrading their technology infrastructure. HDFC, ICICI and AXIS are currently exploring the option to launch contactless credit and debit cards in the market. Online Banking Report,(2014), states that Digital banking is more than getting customers to use online or mobile banking or adding on to existing products. New models of digital banking touches on product level distribution, front and back office operations, marketing communication, customer service and much more. Jim Marous,(2015) predicts that banks and credit unions will leverage richer analytics- driven insights to enable a more personalized approach to targeting and engaging with consumers. Kenneth B. Y., David H. W., Claire L., Randall B, (2010) the study shows that Traditional service quality builds customer trust in the e-banking service. The size and reputation of the bank were found to provide structural assurance to the customer but not in the absence of traditional service quality. Such many more researches have been conducted to study the factors affecting the usage of electronic banking services. Moreover the studies mostly are focused on a single service. No such study has been conducted within Rajasthan comparing the three bank categories i.e. public, private and foreign banks with special reference to retail banking customers.

VII. Research Methodology The research included the analysis of usage of three main e-banking services in three categories of banks – 1) Public sector 2) Private sector 3) Foreign banks The e-banking services included: a. Internet banking b. ATMs c. Phone banking. The research design was exploratory in nature and non-probability judgment sampling was used.30 bank branches were studied from the selected cities within Rajasthan namely- Udaipur, Ajmer, Kota, Jaipur and Jodhpur for the purpose. The study included 20 branches of Public sector banks,7 Private sector and 3 Foreign bank branches.

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The data was collected with the help of structured questionnaires. The survey has used multiple types of variables and scales like Nominal and Likert, depending on the nature of the question. 30 statements were identified to study the adoption and usage of ebanking in the different banks.

VIII. Data Analysis The data collected from the bank branches was tabulated and analysed using ANOVA technique which is explained as follows:8.1 Distribution of banks by categories The responses of banks are categorised into public sector, private sector and foreign banks which is given in table 1.

Table 1. Categorization of different Bank branches: Bank Category Public Sector Banks Private Sector Banks Foreign Banks Total

Number 20 7 3 30

Percentage Representation 66.7 23.3 10 100

Responses of total 30 bank branches were taken which included 20 public sector, 7 Private and 3 Foreign bank branches. Table 2 gives the different types of services provided by banks in different categories. All the private and foreign sector banks under study provide all e-banking services while the public sector banks lag behind.The table shows that 90% banks provide Internet banking, 80% provide phone banking and 80% provide ATM facilities to the customers while all the banks under study provide facilities of RTGS, ECS and Credit/Debit cards.

Table 2: E-banking services provided by banks in different categories Type of technology based service

Internet Banking Phone Banking ATM Credit/Debit Cards Electronic Clearing Services RTGS Core Banking

Bank Category Public Sector Number % 17 85 14 70 14 70 20 100 20 100 20 100 20 100

Private Sector Number % 7 100 7 100 7 100 7 100 7 100 7 100 7 100

TOTAL Foreign Number % 3 100 3 100 3 100 3 100 3 100 3 100 3 100

Number 27 24 24 30 30 30 30

% 90 80 80 100 100 100 100

8.2 Analysis of Retail a/c holders using various e-banking services in different banks The table gives the descriptive of the Retail customers using various e-banking services. Analysis is carried out to find if there is any difference in usage pattern of retail customers against the type of bank category for which ANOVA is used to test the hypothesis. The following hypothesis was framed: Hypothesis: There is no statistically significant relationship between type of bank and usage of different e- banking services by retail customers. Table-3 Oneway Descriptives 95% Confidence Interval for Mean Retail Customers Internet Banking

Retail Customers ATM

Retail Customers Mobile Banking

Bank Type

N

Mean

Std. Deviation

Std. Error

Lower Bound

Upper Bound

Minimum

Maximum

1

20

9.45

4.236

.947

7.47

11.43

0

13

2

7

20.29

1.380

.522

19.01

21.56

18

22

3

3

80.00

5.000

2.887

67.58

92.42

75

85

Total

30

19.03

21.497

3.925

11.01

27.06

0

85

1

20

42.50

32.302

7.223

27.38

57.62

0

75

2

7

95.71

4.499

1.700

91.55

99.87

90

100

3

3

100.00

.000

.000

100.00

100.00

100

100

Total

30

60.67

37.040

6.763

46.84

74.50

0

100

1

20

5.20

4.008

.896

3.32

7.08

0

10

2

7

12.71

1.380

.522

11.44

13.99

11

15

3

3

60.00

5.000

2.887

47.58

72.42

55

65

Total

30

12.43

16.817

3.070

6.15

18.71

0

65

An Empirical Study of E-Banking Adoption by Retail Customers in Selected Banks of Rajasthan DR. MEERA MATHUR1, ZAKIYA KHAN2 © INTERNATIONAL RESEARCH COMMUNION

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The above hypothesis is tested with the help of ANOVA technique as follows: Table-4 ANOVA Sum of Squares Internet Banking

ATM

Mobile Banking

df

Mean Square

F

Sig.

436.109

.000

13.428

.000

288.491

.000

Between Groups

12998.588

2

6499.294

Within Groups

402.379

27

14.903

29

Total

13400.967

Between Groups

19840.238

2

9920.119

Within Groups

19946.429

27

738.757

Total

39786.667

29

Between Groups

7834.738

2

3917.369

Within Groups

366.629

27

13.579

Total

8201.367

29

The F –ratio with freq(2,27)calculated shows high significance at 5% level of significance for all the groups. Hence null hypotheses is rejected and It is concluded that there is significant difference between the percentage of retail customers using ATM, Internet banking and Mobile banking in three bank categories. Maximum usage is shown in foreign banks followed by private and then public sector banks. It must be cleared that out of 30 bank branches contacted, 3 did not offer internet banking and these branches belonged to public sector banks.

IX.

Findings and Conclusion

Few of Public Sector Banks were in the initial stage of e-banking implementation. Most of them employ very less technical staff. Technical operations are centralized and there is less requirement at branch level. Majority had their ATMs but among the banks Internet banking was not equally available. Few banks who did not have ATMs at particular place ,have started issuing ATM cum debit cards only after April 2009 as the facility has been centralized by National Financial switch. Study shows that 90% banks provide Internet banking, 80% provide phone banking and 80% provide ATM facilities to the customers. As far as Internet banking is concerned, foreign and private banks are far ahead of public sector banks in provision of these services. Public sector banks have been facing the problem of the poor infrastructure available in many locations. So banks need to develop the infrastructure to let internet banking be in every customer‟s reach. Areas where there is cause for concern are the security of Internet transactions, Infrastructure and computer literacy. In light of the fact that many online retailers' web sites have been attacked by hackers, security and confidentiality must remain a paramount concern of banks and customers alike. To improve phone banking, banks need to extend Phone banking facility for the access to services as checking card bills, reporting lost cards etc. Public sector Banks tend to forget an important aspect about Customer Relationship Management; the CRM is more than just a technology implementation, it has to be a clearly defined process with appropriate customer service levels in order to make e- banking successful.

References: 1) Agarwal R., Rastogi S., Mehrotra A., (2009), “Customers‟ perspectives regarding e-banking in an emerging economy”, Journal of Retailing and Consumer Services, Vol. 16 (5), pp. 340 - 351. 2) Berry,LL., Parasuraman,A. and Zeithmal.V.A.(1988), “The service quality puzzle.” Business Horizons, Sep-Oct, pp 34-35. 3) Chatterji S.(2004), “Banking on retail”,Banknetindia.com accessed on 10 Sep.2008 4) Chau P.Y.K and Lai V.S.K. (2003)“An empirical investigation of the determinants of user acceptance of Internet Banking.” Journal of organizational computing and electronic commerce; 13, 2003, pp.123–145. 5) De,R, Padmanabhan (2006),“Internet opens new vistas for Indian banks”, www.networkmagazineindia.com ,Accessed on March 5. ……..(2003). ICFAI Journal of Professional Banker, January 2003 6) Jim Marous,(2015), 2015 Digital Banking Trends and Predictions. 7) Kamakodi, N. and Khan, B.A. (2008) „Looking beyond technology: a study of e-banking channel acceptance by Indian customers‟, International Journal of Electronic Banking, Vol. 1, No. 1,pp.73–94 8) Kolodinsky, J. Hogarth, J.M., and Gabor, T. (2008) „Consumer payment choices: paper, plastic, or electrons?‟, International Journal of Electronic Banking, Vol. 1, No. 1, pp.16–35. 9) Migdadi K.A.Y., (2008), The Quality of Internet Banking Service Encounter in Jordan http://www . arraydev. com /commerce/JIBC/.,Accessed 20th May.2009. 10) Moutinho L and Smith A.(2000) “Modelling bank customer satisfaction through mediation of attitudes towards human and automated banking.” International Journal of Bank marketing, 18, 2000, pp.124-134. 11) Rajshekar N(2004). “E-banking ,the new age banking”, Banking in the New Millenium , Icfai Books, pp 1-36. WEBSITES: 1. www.online sbi.com 2. www.rbi.org.in 3. www.wikipedia.com 4. www.banknetindia.com 5. www.ibef.org/industry.banking-india.aspx

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Corporate Leverage and Shareholder Value Creation- A Study on Indian Manufacturing Sector Dr.D.Vijayalakshmi1, Dr.Padmaja Manoharan2

1(Assistant Professor, Department of B.Com (AM), PSGR Krishnammal College for Women, Coimbatore.) 2(HOD (Retd), Department of Commerce, PSGR Krishnammal College for Women, Coimbatore.)

__________________________________________________________________________________________________________________

Abstract: Shareholder Value Creation has become the global standard for measuring corporate performance. The LPG era has made a radical change in the financing policies of the corporate firms warranting a redesign in their capital structure. A firm has to frame a capital structure with the objective of shareholders’ wealth maximization because they are the ultimate owner of the enterprise. Leverage plays an essential role in designing the capital structure. The focal gain of the insertion of fixed cost funds in the capital structure has a domino effect on higher profits. In this backdrop, the study makes an attempt to examine the impact of leverage on shareholder value creation of Indian Manufacturing sector for the period 1995-96 to 2009-10. A panel data approach has been applied to analyse the data. The study reveals that the leverage has a significant influence on shareholder value creation. Keywords: Capital structure, Leverage, Shareholder Value Creation, Market Value added, Liberalization, Privatization, globalization _________________________________________________________________________________________________

I.

Introduction India has made considerable economic growth after independence. The constituent sectors of the Indian economy are agriculture sector, industrial sector and service sector. Even though the service sector among these three, lead in the percentage share in GDP (57.2 % according to Economic survey 2009 -2010), the contribution of industrial sector (28%) plays a momentous role in the progress of the economy, because of the continuous production of goods, which satisfies the needs of the society. The industrial sector comprises of manufacturing, mining and quarrying and electricity sub sectors. Out of these, the share of manufacturing sector is sky- scraping (16 %), and thereby it is considered as one of the hub sectors of Indian economy. It has played a key role in the economic development, growth and as a source of employment of a nation. After independence, the Government of India has announced Industrial policy in 1948 and planned for industrial development by setting up of new industries and expansion of existing industries. The industrial policies imposed several limitations on the manufacturing sector with regard to the scale of operation, procurement and use of raw materials, restrictions for private sector entry etc… The policies also favoured labour intensive and small sized firms. The New Economic Policy 1991 has removed those restrictions and opened a new path for manufacturing sector. Liberalization, privatization and globalization have caused a transition in the Indian manufacturing sector. These reforms have made Indian industries to develop core competencies in terms of technologies, productivity etc…which have enabled Indian industry to accomplish rapid growth. (Manpreet Kaur & Ravi kiran, 2008). The change in economic environment has forced the Indian manufacturing firms to invest huge amount for improving technology, research and development and innovative action to compete for a new market share. A high level of investment necessitates the firms to change the financial policies. The choice of financial policy of a firm plays a significant role, which influences the debt – equity mix (leverage) and ultimately affects shareholders’ wealth, return and risk. Construction of capital structure is an inevitable task of a firm, since the firm value depends on is capital structure. The firm has to select a right combination of debt and equity for betterment of its shareholder satisfaction. The study has been undertaken with an intention to know if the Indian manufacturing firms have added value to the shareholders by taking the benefit of leverage. Hence, the study focuses on the analysis of leverage and its impact on shareholder value creation of Indian manufacturing firms.

II.

Objectives of the study  

III.

To analyse the shareholder value creation in terms of Market Value Added of the Indian manufacturing sector. To examine the impact of leverage on shareholder value creation in terms of Market Value Added of the Indian manufacturing sector.

Hypothesis

The following null hypothesis has been framed for the purpose of the study. Leverage does not influence the shareholder value creation in terms of Market Value Added (MVA) – as it is an independent function.

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IV Framework of the Study To ascertain the impact of leverage from its different dimensions on Market Value Added, the variables, namely, Long Term Debt ratio, Short Term Debt Ratio, Total Debt to Asset Ratio, Debt to Equity ratio, Capital Gearing ratio, Interest Coverage ratio, Fixed Assets to Funded Debt ratio, Current liabilities to Proprietor Fund ratio, Ratio of Reserves to Equity Capital, Total Investment to Long term liabilities ratio, Financial leverage, Operating leverage, Combined leverage, and Working capital leverage have been considered. To avoid inter-dependence of variables (multi-collinearity), correlational analysis has been employed with 0.75 as the cut off point. Those variables with R values less than the cut off point have been selected for the purpose of the analysis. The variables that are finally chosen as leverage dimensions to ascertain the impact on Market Value Added are Long Term Debt (LTD) ratio, Short Term Debt (STD)ratio, Interest Coverage (IC) ratio, Financial Leverage(FL), Operating Leverage(OL), Combined Leverage(CL) and Working Capital Leverage(WCL), which are considered as independent variables. Independent Variables

Formulae

Long Term Debt ratio (LTD) Short Term Debt ratio (STD) Interest Coverage ratio (IC) Financial Leverage(FL) Operating Leverage(OL) Combined Leverage(CL) Working Capital Leverage(WCL)

Long term debt / Total assets Short term debt / Total assets PBIT net of P&E / Interest Paid PBIT net of P&E / PBT net of P&E Contribution / PBIT net of P&E Contribution / PBT net of P&E Percentage change in Return on Investment / Percentage change in current assets Where, Return on investment = PBIT net of P&E/ total assets

The dependent variable is Market Value Added (MVA) Dependent Variable Shareholder Value Creation Metric

Formulae

Market Value Added (MVA)

MVA = Market capitalization – Net worth Market capitalization = closing share price X number of shares outstanding as on the date of balance sheet. Net worth =equity capital + reserves and surplus net of revaluation reserve accumulated losses and miscellaneous expenditure.

V. Research Methodology 5.1 Source of data The study is primarily based on secondary data. The data has been collected from PROWESS 3.1 version maintained by CMIE (Centre for Monitoring Indian Economy Pvt Ltd) which is the most empowered reliable database. 5.2 Period of study The study has covered a period of 15 financial years from post-liberalisation era, namely, 1995 -1996 to 2009- 2010. This period has shown a transition in the Indian corporate sector due to Liberalization, Privatisation and Globalization. 5.3 Sample and sampling design The CMIE (Centre for Monitoring Indian Economy Pvt Ltd) has classified the manufacturing firms of India under seven sectors. All the seven major manufacturing sectors, have been taken for the study, namely, Food and beverage, textile, chemical, non-metallic mineral products, metal and metal products, machinery and transport equipment. The seven major manufacturing sectors have in total 9548 firms, of which 909 firms have been listed at National Stock Exchange and 2668 firms have been listed at Bombay Stock Exchange. Out of 1143 firms which have been listed both at BSE and NSE, those firms which have satisfied the following conditions have been selected for the study .viz., i) Firms having a continuous data for 15 years from 1 st April 1995 to 31st March, 2010. ii) Firms which have a positive net worth throughout the study period. iii) Firms which have total assets of more than 100 crores as on 31 st March, 2010. There are 338 manufacturing firms (excluding multinational corporations and government companies) which have satisfied all the above parameters. Accordingly, 338 (29.6 per cent) firms constitute the sample for the study, based on the purposive sampling technique applied. Firms, thus selected from each sector have been presented in the table 1

Table 1-Selection of firms Manufacturing sector

Total

Total Number of Firms Listed at NSE

Total Number of Firms Listed at BSE

Food and Beverage Textile

1756 1486

103 127

358 456

Total Number of Firms Listed at both NSE& BSE (A) 130 175

Final sample selection (B)

28 50

% of final sample out of both NSE&BSE listed firms ( B/A*100) 21.5 28.5

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2342 627 1313 1468 556 9548

253 84 115 147 80 909

www.ircjournals.org 787 203 328 391 145 2668

319 97 144 186 92 1143

98 33 36 58 35 338

30.7 34 25 31.18 38.04 29.6 %

5.4 Tools for Analysis 



Summary statistics, such as, mean, median, standard deviation, co-efficient of variation, skewness and kurtosis have been applied to study the characteristics of the variable namely, Market Value Added. The growth measures namely, Annual Growth Rate (AGR), Linear Annual Growth Rate (LAGR) and the Compound Annual Growth Rate (CAGR) have been computed to study the growth of the variable namely, Market Value Added. Pooled OLS regression and panel data regression have been applied to analyse the data. 5.4.1 Pooled OLS Regression Pooled Ordinary Least Square is an ordinary regression equation type Yi = a + b1X1i+b2X2i+b3X3…. bnXni +ui where X1, X2,… Xn are independent variables and Yi the dependent variable ui, error term with i= 1… ..n observations. In the pooled regression approach, the effect of period (years) is ignored and regression analysis is carried out with normal estimation procedure. 5.4.2 Panel Data Regression Panel data is a dataset in which the behaviors of individuals are observed cross time. These individuals could be states, companies, persons, countries, etc., It facilitates analysis of cross-sectional and time series data. So it is also known as longitudinal or cross sectional time-series data. (Oscar Torres – Reyna. Panel data analysis: Fixed & Random effect (using stata 10. X). Two basic models of panel data regression have been used in this study.

Model 1: Panel Data Regression with Fixed Effect. Fixed-Effect (FE) model may be used in analyzing the impact of variables that vary over time. Fixed Effect explores the relationship between predictor and outcome variables within an Individual. Each individual has its own unique characteristics that may or may not influence the predictor variables. The equation for the fixed effects model is:

Yit = 1Xit + i + uit where – i (i=1….n) is the unknown intercept for each individual (n individual -specific intercepts). – Yit is the dependent variable where i = individual and t = time. – Xit represents one independent variable – β1 is the coefficient for that independent variable, – uit is the error term

Model 2: Panel Data Regression with Random Effects The assumption behind Random Effects (RE) model is that, unlike in the fixed effects model, the variations across individuals is assumed to be random and is uncorrelated with the predictor or independent variables included in the model; if the differences across individuals have some influence on the dependent variable then Random effects models may be used. The equation for the Random effects model is:

Yit = βXit +  + uit + it where uit – error variation between the individuals εit - error variation within the individuals This study has used all the three models (pooled OLS, FE and RE) and further, two tests have been carried out to decide the appropriateness of these three models. Initially, the Lagrange multiplier test has been applied to find the existence of panel effect in the values. The classical model (Pooled OLS) and the Random Effect model are compared and when there is no panel effect, the pooled OLS has been chosen for further analysis; otherwise, the Random Effect model has been chosen for the next step of application. As a second step, the Random Effect model is compared with Fixed Effect model using Hausman Specification test and the appropriate model has chosen for further analysis based on the significance of the chi-square value.

VI. Limitations of the Study 

The study is subject to the following limitations: The financial data that have been used are historical and quantitative in nature without considering the inflationary effects. Corporate Leverage and Shareholder Value Creation- A Study on Indian Manufacturing Sector Dr.D.Vijayalakshmi, Dr.Padmaja Manoharan © INTERNATIONAL RESEARCH COMMUNION

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The limitations inherent in statistical tools apply to this study also. The study has been conducted on the basis of mean value of the sector, due to the presence of enormous companies with a lengthy period. The results are applicable to the sector and not to the individual firms.

VII. Results and Discussion 7.1 Market Value added (MVA) MVA is the difference between the market capitalization and net worth of the company. A positive MVA reveals that the firm has created shareholders’ wealth. A negative MVA indicates that the firm has destroyed shareholders’ wealth. The table 2 reveals the year wise analysis and summary statistics of Market Value Added of the seven sectors for a period of 15 years from 1st April 1995 to 31st March 2010.

Table 2. Year wise analysis and Summary Statistics- Market value Added Years F&B

Textile

Chemical

Non - Metallic

Metal

Machinery

Transport

1996

24.850

23.237

90.106

132.854

174.986

42.442

383.588

1997

-3.858

-47.632

62.583

-.508

113.274

2.544

255.953

1998

23.413

-74.323

72.436

-45.654

22.023

-13.567

203.062

1999

47.012

-89.224

47.614

-58.379

-111.875

3.240

133.679

2000

6.569

-92.136

398.796

-24.448

-50.550

-2.839

149.496

2001

-46.429

-107.643

360.685

-73.749

-82.889

-41.246

-29.396

2002

-60.621

-98.673

180.289

-59.619

-91.908

-36.885

198.413

2003

-78.489

-91.058

166.771

-68.009

-43.937

-45.576

174.821

2004

-2.781

-40.417

698.391

-9.416

367.787

19.375

974.501

2005

109.804

27.722

752.881

157.310

640.279

128.124

1028.166

2006

355.816

163.496

1580.976

524.532

1117.334

491.294

2324.245

2007

203.054

34.289

2179.935

489.338

723.270

584.457

1814.998

2008

339.286

-15.663

3493.249

562.136

1149.690

690.175

1459.129

2009

24.898

-141.355

1619.752

15.504

-1074.187

102.342

507.223

2010

494.738

-12.681

3689.981

526.318

951.030

816.481

2765.448

Mean

95.817

-37.471

1026.296

137.881

253.622

182.691

822.888

Median

24.850

-47.632

398.796

-0.508

113.274

19.375

383.588

S.D

172.815

77.475

1233.991

251.405

586.046

299.966

884.181

C.V

695.433

-162.653

309.429

-49489.139

517.370

1548.214

230.503

Skewness

1.291

1.207

1.336

0.957

-0.276

1.259

1.151

Kurtosis

0.643

1.937

0.694

-0.950

0.593

-0.020

0.194

-

-

96.988

-

-

-

-

28.796

6.702

254.959

44.843

53.215

55.763

163.987

39.307 CAGR Source : computed - negative values could not be computed

-

-

-

-

AGR LAGR

It is apparent from the above table that the chemical sector has marked the highest MVA (3689.98) in the year 2010 and the lowest MVA of -1074.19 in the metal sector. The MVA has shown an increasing trend in all the sectors in the year 2010. The period 1997-2004 has shown a negative value in the sectors, such as, textile and non-metallic. The chemical sector has marked the highest mean MVA of 1026.296 indicating that the sector has added a huge amount of wealth to its shareholders. The minimum MVA (-37.471) has been found in the textile sector. The coefficient of variation has been the maximum (1548.214) in the machinery sector. The minimum variation (-49489.139) has been noticed in the non-metallic sector. All the sectors, except the metal sector have shown a positive skewness. Majority of the sectors, such as, food and beverage, textile, chemical, metal and transport have shown a positive kurtosis. A negative kurtosis has been noticed in the non-metallic and machinery sector. The chemical sector has shown a positive AGR and CAGR and the other sectors have negative values and hence, AGR and CAGR have not been computed. All the sectors have marked a positive trend. 7.2 Pooled OLS regression and Panel data analysis The panel data analysis reveals the following results: 7.2.1 Food and Beverage Sector The dependent variable (MVA) has been regressed with the independent variables, namely, LTD ratio, STD ratio, IC ratio, FL, OL, CL and WCL with the following null hypothesis. Corporate Leverage and Shareholder Value Creation- A Study on Indian Manufacturing Sector Dr.D.Vijayalakshmi, Dr.Padmaja Manoharan © INTERNATIONAL RESEARCH COMMUNION

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H01: “The independent variables, namely, LTD ratio, STD ratio, IC ratio FL, OL, CL and WCL do not have a significant impact on MVA for food and beverage sector”

Table 3. Pooled OLS and Panel Data Regression Results (Constant) Long term debt ratio Short term debt ratio Interest coverage ratio Financial Leverage Operating leverage Combined leverage Working Capital Leverage R2 F-statistic Wald ()

Pooled OLS Fixed Effect Random Effect B t-value Sig. B t-value Sig. B z-value Sig. 179.140 1.862 NS -10.76855 -0.08 NS 30.39248 0.22 NS -176.601 -.880 NS 115.0761 0.39 NS 45.05968 0.17 NS -156.783 -.907 NS 209.5289 0.90 NS 134.1452 0.63 NS 4.449 2.169 * 2.755778 1.44 NS 2.915496 1.56 NS .693 .367 NS .1047929 0.07 NS .1247379 0.08 NS -1.275 -1.189 NS -.4105763 -0.49 NS -.4580729 -0.55 NS -.333 -.352 NS -.0496922 -0.07 NS -.0551887 -0.07 NS 0.088 .422 NS -.0092125 -0.06 NS -.0017282 -0.01 NS .023 0.0084 0.0080 1.272 NS 0.43 NS

Hausman () LM ()

3.39

3.22

NS

436.12

**

NS

Source : Computed * significant at 5 per cent level ** significant at 1 per cent level

The table 3 has discerned that the signs of the regression co-efficient have been the same in both the FE and RE models, but they differ in the pooled OLS model. The R2 values have shown a very low correlation between the selected independent variables and the MVA in all the three models. The F-test and Wald-chi-square test have revealed an insignificant value showing that there is no significant correlation between the selected independent variables and the MVA. The Lagrange Multiplier test result has shown that the chi-square value (436.12) is significant at one per cent level revealing the existence of panel effect. Hence, RE model is preferred to pooled OLS model. The Hausman test has revealed that the chi-square value (3.39) is not significant showing that the RE model is more effective than the FE model .In all the three models applied, the RE model has been found to be appropriate for further analysis. The RE model has inferred that all the seven independent variables have not had a significant impact on MVA. Hence, the null hypothesis (H01) has been accepted for all the variables. It is concluded that the leverage does not have an effective influence on MVA. 7.2.2 Textile Sector The dependent variable (MVA) has been regressed with the independent variables, namely, LTD ratio, STD ratio, IC ratio, FL, OL, CL and WCL with the following null hypothesis. H02: “The independent variables, namely, LTD ratio, STD ratio, IC ratio FL, OL, CL and WCL do not have a significant impact on MVA for textile sector”

Table 4. Pooled OLS and Panel Data Regression Results (Constant) Long term debt ratio Short term debt ratio Interest coverage ratio Financial Leverage Operating leverage Combined leverage Working Capital Leverage R2 F-statistic Wald () Hausman () LM ()

Pooled OLS B t-value Sig. -179.691 -5.181 157.924 2.529 324.587 3.951 .182 1.806 -2.145 -1.015 0.0053 .008 .263 .891 -.103 -1.381 .032 3.212

** * ** NS NS NS NS NS **

Fixed Effect Random Effect B t-value Sig. B z-value Sig. -69.6152 -1.28 NS -120.158 -2.58 * 39.48895 0.37 NS 101.5382 1.21 NS 60.82631 0.52 NS 174.924 1.75 NS .0665099 0.57 NS .1000038 0.93 NS -1.789242 -0.89 NS -1.919386 -0.97 NS .2241218 0.38 NS .1542647 0.26 NS .1644792 0.57 NS .1973007 0.70 NS -.0543338 -0.78 NS -.0675332 -0.97 NS 0.0041 0.0034 0.37 NS 6.29

6.34

NS

133.44

**

NS

Source : Computed * significant at 5 per cent level ** significant at 1 per cent level

The table 4 has shown that the signs of the regression co-efficient have been the same in all the three models. The R2 values have revealed a very low correlation between the selected independent variables and the MVA. The F-values of pooled OLS model has a significant correlation between the selected independent variables and the MVA, whereas, the F-value of FE model and Wald-chi-square value of RE model have not had a significant correlation between the selected independent variables and the MVA. The result of LM test reveals that the chi-square value (133.44) is significant at one per cent level revealing the existence of panel effect, thereby, the RE model has been preferred to pooled OLS model. Corporate Leverage and Shareholder Value Creation- A Study on Indian Manufacturing Sector Dr.D.Vijayalakshmi, Dr.Padmaja Manoharan © INTERNATIONAL RESEARCH COMMUNION

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The Hausman test result reveals that the chi-square value (6.29) is not significant, thereby, the RE model is more effective for further analysis. The RE model has shown that all the independent variables have not had a significant impact on MVA. Hence, the null hypothesis (H 02) has been accepted for these variables. It is inferred that the leverage does not have an effective influence on MVA. 7.2.3 Chemical Sector The dependent variable (MVA) has been regressed with the independent variables, namely, LTD ratio, STD ratio, IC ratio, FL, OL, CL and WCL with the following null hypothesis. H03: “The independent variables, namely, LTD ratio, STD ratio, IC ratio FL, OL, CL and WCL do not have a significant impact on MVA for chemical sector”

Table 5. Pooled OLS and Panel Data Regression Results (Constant) Long term debt ratio Short term debt ratio Interest coverage ratio Financial Leverage Operating leverage Combined leverage Working Capital Leverage R2 F-statistic Wald () Hausman () LM ()

Pooled OLS Fixed Effect Random Effect B t-value Sig. B t-value Sig. B z-value Sig. 2312.985 2.370 * 1470.399 1.21 NS 1671.52 1.30 NS -1218.562 -.577 NS -4123.896 -1.55 NS -3437.451 -1.40 Ns -3684.552 -1.639 NS 1107.07 0.37 NS -86.80372 -0.03 NS 14.493 3.624 ** 10.59867 3.03 ** 11.10365 3.21 ** 14.953 .308 NS .2138468 0.01 NS 2.698099 0.07 NS -6.508 -.418 NS -1.118651 -0.09 NS -1.89957 -0.15 NS -3.208 -.349 NS .0141112 0.00 NS -.535697 -0.07 NS -.161 -.207 NS .0057531 0.01 NS -.0266608 -0.04 NS .014 0.0109 0.0106 2.707 ** 1.96 NS 3.14

14.12

*

1097.42

**

NS

Source : Computed * significant at 5 per cent level ** significant at 1 per cent level

It is observed from the table 5 that the regression co-efficient signs have been different in all the three models. The R2 values have shown a very low correlation between the selected independent variables and the MVA. The F-value of pooled OLS and the wald chisquare value of RE model have shown a significant correlation between the independent variables and the MVA at one per cent level of significance, whereas, F-value of FE model has not had a significant correlation between the independent variables and the dependent variable. The LM test has revealed that the chi-square value (1097.42) is significant at one per cent level implying the existence of panel effect. Hence, the RE model is preferred. The Hausman test has depicted that the chi-square value (3.14) is not significant indicating that the RE model is preferred to FE model. Among all the three models applied, the RE model serves as an appropriate model for further analysis. The RE model has shown that the IC ratio has a significant positive effect on MVA. Hence, the null hypothesis (H 03) has been rejected for this variable. Majority of the independent variables, namely, LTD ratio, STD ratio, FL, OL, CL and WCL have not been statistically significant. Hence, the null hypothesis (H03) has been accepted in respect of these variables. Finally, it is concluded that the IC ratio which has favoured the MVA, would enhance the shareholder value of the chemical sector. 7.2.4 Non-metallic Sector The dependent variable (MVA) has been regressed with the independent variables, namely, LTD ratio, STD ratio, IC ratio, FL, OL, CL and WCL with the following null hypothesis. H04: “The independent variables, namely, LTD ratio, STD ratio, IC ratio FL, OL, CL and WCL do not have a significant impact on MVA for non-metallic sector”

Table 6. Pooled OLS and Panel Data Regression Results (Constant) Long term debt ratio Short term debt ratio Interest coverage ratio Financial Leverage Operating leverage Combined leverage Working Capital Leverage R2 F-statistic

Pooled OLS Fixed Effect Random Effect B t-value Sig. B t-value Sig. B z-value Sig. -129.840 -1.009 NS 34.66991 0.18 NS 18.61436 0.11 167.431 .625 NS -1590.955 -4.35 ** -855.1587 -2.69 744.383 2.989 ** 1524.364 3.57 ** 1024.357 3.10 .452 .615 NS .2484009 0.39 NS .2852974 0.44 -6.954 -.633 NS -8.807178 -0.91 NS -9.640013 -0.98 -0.042 -.029 NS -.2323076 -0.19 NS -.1581503 -0.12 .978 .580 NS 1.655442 1.10 NS 1.656547 1.09 0.032 .318 NS -.021026 -0.24 NS -.0072604 -0.08 .024 0.1251 0.1230 1.458 NS 7.70 **

NS ** ** NS NS NS NS NS

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Wald () Hausman () LM ()

27.03

29.55

**

138.84

**

**

Source : Computed * significant at 5 per cent level ** significant at 1 per cent level

It is evident from the table 6 that the signs of the regression co-efficient have been the same in the FE and RE models and they differ in the pooled OLS model. The R2 values have shown a low correlation between the selected independent variables and the MVA. The Fvalue of pooled OLS model has not been statistically significant, whereas, the F- value of FE model and Wald-chi-square value have been significant at one per cent level revealing that there is a significant correlation between the selected independent variables and MVA. The LM test shows that the chi-square value (138.84) is significant at one per cent level indicating that the RE is preferred to pooled OLS model. The Hausman test result reveals that the chi-square value (27.03) is significant at one per cent level showing that the FE model is more effective than RE model. Among all the three models applied, the FE model serves as an appropriate model to analyse the effect of leverage measures on MVA. The FE model has shown that the STD ratio has a significant positive impact on MVA and the long term debt ratio has a significant negative impact on MVA. Hence, the null hypothesis (H04) has been rejected in respect of these variables. Majority of the variables, namely, IC ratio, FL, OL, CL and WCL have not had a significant influence on MVA. Hence, the null hypothesis (H04) has been accepted with reference to these variables. Finally, it is concluded that the LTD ratio and STD ratio are the significant influencing factors of MVA. The STD ratio has favored the MVA, strengthening the shareholder value creation. The reduction of negative effect of LTD ratio would enhance the financial position and the shareholder value creation. 7.2.5 Metal Sector The dependent variable (MVA) has been regressed with the independent variables, namely, LTD ratio, STD ratio, IC ratio, FL, OL, CL and WCL with the following null hypothesis. H05: “The independent variables, namely, LTD ratio, STD ratio, IC ratio FL, OL, CL and WCL do not have a significant impact on MVA for metal sector”

Table 7. Pooled OLS and Panel Data Regression Results (Constant) Long term debt ratio Short term debt ratio Interest coverage ratio Financial Leverage Operating leverage Combined leverage Working Capital Leverage R2 F-statistic Wald () Hausman () LM ()

Pooled OLS Fixed Effect Random Effect B t-value Sig. B t-value Sig. B z-value Sig. 1163.817 2.853 ** 877.6449 1.25 NS 1024.439 1.85 NS -1198.002 -1.422 NS -1520.736 -1.27 NS -1418.938 -1.40 NS -1740.236 -2.296 * -723.4365 -0.50 NS -1219.59 -1.16 NS -.720 -.415 NS .3965057 0.21 Ns .0240729 0.01 NS 1.445 .095 NS 5.206119 0.35 Ns 4.550076 0.31 NS -.506 -.093 NS -1.214964 -0.23 NS -1.087285 -0.21 NS -.462 -.109 NS -1.587733 -0.38 NS -1.396107 -0.34 NS 0.0035 .050 NS -.0056299 -0.08 NS -.0039128 -0.06 NS .012 0.0045 0.0039 .858 NS 0.30 NS 1.97

2.76

NS

68.19

**

NS

Source : Computed * significant at 5 per cent level ** significant at 1 per cent level

It is vivid from the table 7 that the signs of the regression co-efficient have been the similar in the FE and RE models. The R 2 values have revealed a very low correlation between the selected independent variables and the MVA. The F-value and the Wald-chi-square value have shown that there is no significant correlation between the selected independent variables and the MVA. The result of LM test has shown a significant value of 68.19 at one per cent level. Hence, the RE model is preferred to pooled OLS model. The Hausman test has revealed that the chi-square value (1.97) is not significant, thereby, the RE model is preferred toFE model and consider appropriate for further analysis. The RE model has shown that all the seven independent variables taken for the study have not had a significant influence on MVA. Hence, the null hypothesis (H05) has been accepted for all the variables. In a nutshell, it is found that in the metal sector, the leverage has not had a significant impact on MVA. 7.2.6 Machinery Sector The dependent variable (MVA) has been regressed with the independent variables, namely, LTD ratio, STD ratio, IC ratio, FL, OL, CL and WCL with the following null hypothesis.

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H06: “The independent variables, namely, LTD ratio, STD ratio, IC ratio FL, OL, CL and WCL do not have a significant impact on MVA for machinery sector” Table 8. Pooled OLS and Panel Data Regression Results (Constant) Long term debt ratio Short term debt ratio Interest coverage ratio Financial Leverage Operating leverage Combined leverage Working Capital Leverage R2 F-statistic Wald ()

Pooled OLS Fixed Effect B t-value Sig. B t-value Sig. -.715 -.006 NS 123.8232 0.73 NS -749.212 -2.462 * -1167.589 -3.26 ** 739.337 3.544 ** 576.7525 1.57 NS .483 3.218 ** .4299194 3.02 ** -2.334 -.155 NS -5.886584 -0.42 Ns -0.019 -.013 NS .2741462 0.20 NS -.596 -.413 NS -.0353652 -0.03 NS -0.031 -.165 NS -.0218568 -0.12 NS .049 0.0374 5.822 ** 4.08 **

Hausman () LM ()

3.01

Random Effect B z-value Sig. 74.13915 0.49 Ns -1030.897 -3.11 ** 647.5815 2.24 * .4423289 3.15 ** -4.998658 -0.36 NS .2172893 0.16 NS -.1646989 -0.13 NS -.0219292 -0.13 NS 0.0372 32.89

**

197.88

**

NS

Source : Computed * significant at 5 per cent level ** significant at 1 per cent level

It is disclosed from the table 8 that the signs of the regression co-efficient have been the same in all the three models, except for the variable, OL in the pooled OLS. The R2 values have shown a very low correlation between the selected independent variables and the MVA. The F-value and Wald-chi-square value have a significant correlation between the selected independent variables and MVA. The LM test result has indicated that the chi-square value (197.88) is significant at one per cent level revealing that the RE model is preferred to pooled OLS model. The result of Hausman specification test has revealed that the chi-square value 3.01 is not significant. Hence, the RE model is more effective than FE model. The RE model has inferred that the variables, namely, STD ratio and the IC ratio have a significant positive effect on MVA. The LTD ratio has a significant negative effect on MVA. Hence, the null hypothesis (H06) has been rejected for these variables. The variables, namely, FL, OL, CL and WCL have not been statistically significant. Hence, the null hypothesis (H 06) has been accepted for these variables. The LTD ratio, STD ratio and the IC ratio are the significant influencing factors of MVA. The STD ratio and the IC ratio have supported the MVA, strengthening the shareholder value creation of the sector. The LTD ratio has not favoured the MVA. 7.2.7 Transport sector The dependent variable (MVA) has been regressed with the independent variables, namely, LTD ratio, STD ratio, IC ratio, FL, OL, CL and WCL with the following null hypothesis. H07: “The independent variables, namely, LTD ratio, STD ratio, IC ratio FL, OL, CL and WCL do not have a significant impact on MVA for transport sector” Table 9. Pooled OLS and Panel Data Regression Results (Constant) Long term debt ratio Short term debt ratio Interest coverage ratio Financial Leverage Operating leverage Combined leverage Working Capital Leverage R2 F-statistic Wald ()

Pooled OLS B t-value Sig. -652.382 -.829 349.237 .229 2853.208 1.889 12.219 10.055 15.266 .256 .114 .040 -5.614 -.652 -0.016 -.031 .197 16.675

NS NS NS ** NS NS NS NS **

Fixed Effect B t-value Sig. 112.3904 0.12 -2105.4 -1.24 2136.64 1.22 11.57877 8.51 .1869519 0.00 -1.690522 -0.70 1.714879 0.23 -.4675877 -1.10 0.1612 12.10

Hausman () LM ()

4.84

Ns NS NS ** NS NS NS Ns

Random Effect B z-value Sig. -107.4887 -0.12 -1543.832 -0.96 2340.311 1.42 11.60656 9.00 2.977834 0.06 -1.445079 -0.60 .6693565 0.09 -.4090102 -0.96 0.1609

Ns NS NS ** NS NS NS NS

** 94.01

**

343.12

**

NS

Source : Computed * significant at 5 per cent level ** significant at 1 per cent level

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It is clear from the table 9 that the signs of the regression co-efficient have been the same in the FE and RE models and they differ in the pooled OLS model. The R2 values have shown a very low correlation between the selected independent variables and the MVA. The Fvalue and Wald-chi-square value reveal the existence of significant correlation between the selected independent variables and MVA. The result of LM test shows that the chi-square value (343.12) is significant at one per cent level implying the existence of panel effect; thereby, the RE model is preferred. The Hausman specification test reveals that the chi-square value (4.84) is not significant indicating that the RE model is preferred. In all the three models applied, the RE model has been found appropriate to analyse the impact of leverage on MVA. The RE model has resulted that the IC ratio has a significant positive impact on MVA. Hence, the null hypothesis (H 07) has been rejected for this variable. The other variables, namely, LTD ratio, STD ratio, FL, OL, CL and WCL have not been statistically significant. Hence, the null hypothesis (H07) has been accepted with respect to these variables. It is concluded that in the transport sector, the IC ratio is the significant factor of MVA.

VIII. Findings The impact of leverage on MVA of seven sectors has been presented below:

   

Sectors Food & Beverage Textile Chemical Non-metallic

Models Random Effect Random Effect Random Effect Fixed Effect

Metal Machinery

Random Effect Random Effect

Transport

Random Effect

Impact of leverage on EVA NIL NIL Interest Coverage Ratio Short Term Debt ratio, Long term debt ratio NIL Short term debt ratio Interest Coverage Ratio Long term debt ratio Interest Coverage Ratio

Effect NIL NIL + + NIL + +

The IC ratio has shown a significant positive impact on MVA in the sectors, namely, chemical, machinery and transport. The two sectors, namely, non-metallic and the machinery have revealed that the STD ratio has a significant positive influence on MVA. The long term debt ratio has revealed a significant negative effect on MVA in the sectors, namely, non-metallic and the machinery In general, only three ratios, namely, LTD ratio, STD ratio and IC ratio have influenced the MVA of a manufacturing sector. The leverage has an effective influence on shareholder value creation of the sectors, such as, Chemical, Non-metallic, Machinery and Transport.

IX. Conclusion The leverage ratios have influenced the shareholder value creation. The Interest Coverage Ratio has played a pertinent role in shareholder value creation. The general assumption that the leverage is an independent function, not influencing the shareholder value creation has thus been disproved. Firms with a good MVA would magnify the shareholder value and their respective market share. The basic objective underlying the LPG policy along with its potential outcome, can be accomplished by the Indian manufacturing sector, by framing a comprehensive, effective and applicable leverage policy and thereby, increasing the profit margin and value addition to the shareholders’ wealth. This will pave the way for occupying a pivotal position in the global map.

References 1. 2. 3. 4. 5.

Anil.K.Sharma.,(2006) “Financial leverage and firms’ value- A study of capital structure of selected manufacturing sector firms in India”, The Business Review, Cambridge, Vol.6, No.2, pp. 70-76. Economic Survey (2009-2010). Retrieved from http://indiabudget.nic.in/es2009-10/estat1.pdf Kuben Rayan.,(2008) “Financial leverage and firm value”, Research project, Gordon Institute of Business Science : University of Pretoria. Manpreet Kaur, Ravi kiran (2008). Indian manufacturing sector: Growth and productivity under the new policy regime. International review of business research papers, 4(2),136-150. Torres Reyna, O (2007, December). Panel data analysis: Fixed & Random effect (using stata 10. X). Retrieved from http://www. Princeton.edu/~ otorres/ panel101.pdf

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Corporate Social Responsibility: An Inclusive Growth Model for Developed Indian Economy Dr Shailja Dixit

Associate Professor, Amity Business School, Amity University Uttar Pradesh, Email: [email protected], [email protected]

Abstract: Corporations around the world are struggling with a new role, which is to meet the needs of the new Global world without compromising the basic purpose of existence of their own. The theme of corporate social responsibility assumes pivotal significance in the changed business environment. Corporate social responsibility is the commitment of business to contribute to sustainable economic development. In the era of Inclusive Growth and Responsible Business paradigm is no longer acceptable for a corporation to experience economic prosperity in isolation from those agents impacted by its actions. Over the past two decades, India's economy has undergone rapid growth and has become globally acknowledged as being one of the world’s strongest emerging markets. India's organizations have played a crucial part in the development of the modern. But no economy can attain sustainable economy until there is a model for inclusive growth. Continued economic growth will be futile if we cannot exterminate the widespread hunger, poverty, and environmental damage. The potential and advantages of CSR are often overlooked and in order to achieve inclusive growth businesses must participate in addressing socio-economic concerns while still maintaining their business strategies and the necessity to nurture and include all the relevant stakeholders in their growth stories. Keeping this view government made regulations so that companies can more efficiently and effectively pursue their CSR activities, while remaining aligned with the requirements of the Companies Act, 2013. The next phase of CSR in India is promising and provides great motivation and incentive to reduce inequalities in our country and include inclusive growth an integrated part of organizations business models Keywords: CSR, Corporate Social Responsibility, Sustainability, Inclusive Growth, Shared Value, Government Policy, Business Responsibility _________________________________________________________________________________________________

I. Introduction Organizations are being called upon to take responsibility for the ways their operations impact societies and the natural environment. They are also being asked to apply sustainability principles to the ways in which they conduct their business. A firm must now focus its attention on both increasing its bottom line and being a good corporate citizen who helps its fellow citizen to grow at equitable pace. Keeping abreast of global trends and remaining committed to financial obligations to deliver both private and public benefits have forced organizations to reshape their frameworks, rules, and business models focusing on inclusive growth business model. To understand and enhance current efforts, the most socially responsible organizations continue to revise their short- and long-term agendas, to stay ahead of rapidly changing challenges. G205 leaders recently recognised that: “Too many of our citizens have yet to participate in the economic global recovery that is underway. The G20 must strive not only for strong, sustainable and balanced growth, but also for a more inclusive pattern of growth that will better mobilize the talent of our populations. In a report on inclusive growth, the Organisation for Economic Cooperation and Development (OECD) (2012) identifies three problems that even the record levels of growth of the 1990s and decade of 2000s failed to tackle: poverty, unemployment and inequality. These highlighted the need to address the quality of growth, in particular to improve its inclusiveness. The doctrine of “shared value” propounded by eminent Harvard economists Michael Porter and Mark Kramer, seeks financial gains for companies from the activities they undertake in discharging their corporate social responsibility. According to Porter and Kramer, “The essential test that should guide CSR is not whether a cause is worthy but whether it presents an opportunity to create shared value – that is, a meaningful benefit for society that is also valuable to the business”. The proposition of shared value has deep rooted sense of inclusive growth model. Creating “Shared Value” involves creating new business opportunities and developing new products that are profitable for companies while simultaneously contributing to social development. Organizations have developed a variety of strategies for dealing with this intersection of societal needs, the natural environment, and corresponding business imperatives. On the continuum it can be seen that at one end of the continuum are organizations that do not acknowledge any responsibility to society and the environment and on the other end of the continuum are those organizations that view their operations as having a significant impact as well as reliance on society at the economic, social, and ecological levels, thus resulting in a sense of responsibility beyond the traditional boundaries of the organization. Most

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organizations can be placed somewhere in between. Analysing the impact organizations have on society the government also globally have framed policy and designed initiative to promote CSR and enhance inclusive growth. (a) Despite strong growth, India is expected to fall short on several Millennium Development Goals. The Government of India projects that by 2015: (b) More than one-fifth of Indians (250 million people) will remain below the poverty line. (c) Forty percent of children younger than three years old will suffer from malnutrition. (d) India will fail to meet its target for decreasing the infant mortality rate and lose 46 lives per 1000 live births (the target is 26.7)

2. LITERATURE REVIEW Shorrocks and van der Hoeven (2004) pointed; increased economic welfare in a country on average makes everyone better-off. Sachs (2005) also observed that the main pro-poor growth strategy is to ensure that countries “climb the ladder” of economic development. Investment in human capital is important, not only for economic growth but also, more directly, for poverty reduction (Hughes and Irfan, 2007). In particular, the literature shows that education increases the stock of human capital, which in turn increases skills, labor productivity and wages. The literature clearly postulates that reduction in poverty directly leads to economic growth of the country. Prahalad‟s (2005) Bottom of the Pyramid (BOP) idea provided a strong argument for corporates that poverty alleviation and profitmaking can be aligned. Thus, stating that if we include the bottom of Pyramid people in the mainstream growth, economy development can be accelerated. The concepts of „inclusive growth‟ and of „inclusive businesses have recently been (re)introduced by multilateral organizations and could facilitate the spread of (active) business involvement in pro-poor growth strategies. The traditional concept of Business has come a long way since the famous economist and Nobel laureate, Milton Friedman famously proclaimed in 1970, “The business of business is to maximise profits, to earn a good return on capital invested and to be a good corporate citizen obeying the law – no more and no less”. In 1984, Edward Freeman introduced the stakeholder theory and argued that socially responsible activities helped business in building strong relationships with stakeholders, and that management must pursue actions that are optimal for a broad class of stakeholders rather than those that serve only to maximise shareholder interests. In 1989 another prominent economist, Kenneth Andrews exhorted corporates “to focus corporate power on objectives that are possible but sometimes less economically attractive than socially desirable”. In 1998, John Elkington first introduced the concept of “Triple Bottom line” to emphasise that a company‟s performance is best measured by the economic, social and environmental impact of its activities. According to Dr. Chakrabarty, Deputy Governor, Reserve Bank of India, "Economic growth in India has not been inclusive; unemployment and poverty remain high and a vast majority of the population remains excluded from health and education facilities." UNDERSTANDING CONCEPTS BUSINESS RESPONSIBILITY– defined as the commitment of an enterprise to operating in an economically, socially and environmentally sustainable manner while balancing the interests of diverse stakeholders.

CORPORATE SOCIAL RESPONSIBILITY Corporate Social Responsibility is the responsibility which the corporate enterprises accept for the social, economic and environmental impact their activities have on the stakeholders. The stakeholders include employees, consumers, investors, shareholders, civil society groups, Government, non-government organisations, communities and the society at large. It is now universally accepted that corporate social responsibility is not a stand-alone, one time, ad hoc philanthropic activity. Rather, it is closely integrated and aligned with the business goals, strategies and operations of the companies. There is a close integration of social and business goals of companies. The WBCSD (World Business Council for Sustainable Development) defines CSR as “the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large.” According to the UNIDO (United Nations Industrial Development Organisation), “Corporate social responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders”. CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives (Triple-Bottom-Line Approach), while at the same time addressing the expectations of shareholders and stakeholders. In this sense it is important to draw a distinction between CSR, which can be a strategic business management concept, and charity, sponsorships or philanthropy.

APPROACHES TO IMPLEMENTING CSR The two poles of the existing approaches are self-regulation and legal regulation (Chahoud, 2005). Between those two extremes, the multi stakeholder initiatives stand for the alternative approach of co-regulation. The dimensions of the CSR triangular concept can be characterized as follows: I. The self-regulation approach is characteristic of most company-related initiatives. In this case, companies decide for themselves how far to engage in CSR and which CSR measures to implement. As the role of the state is limited, liability is limited, too.

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II.

In legal regulation, the government is the most important player. This is reflected in multinational initiatives which are based on binding legal commitments. Individual codes of conduct for companies form one side of the spectrum, the legal instruments the other. III. Multi-stakeholder initiatives, such as the Global Compact or the OECD Guidelines for Multinational Companies, are located between the two extremes and can be defined conceptually as co-regulation approaches in which stakeholders are involved in a company‟s CSR policy-making process. In this “third way” (Utting,2005) NGOs, business associations, governmental organizations and multilateral institutions, among others, work together in a constructive manner to achieve complementary goals in the CSR process. It is important to bear in mind the difference between internal CSR, where workers, shareholders and investors are the beneficiaries, and external CSR, where communities, civil society groups, other companies or institutions are the main beneficiaries. Internal and external CSR should be seen as complementary if the sustainable development of CSR policies is to be achieved.

CSR Triangle Concept Multi-stakeholder initiatives/co-regulation

CSR Legal-regulation

Self-regulation Source: GDI, 2007.

Enterprises operate around seven areas: (1) shareholders and potential investors; (2) managers; (3) employees; (4) customers; (5) business partners and contractors or suppliers; (6) the natural environment; (7) the communities, within which they operate, including national governments. The emergence of corporate social responsibility and sustainable development as important concerns of business activity is the result of realization that any business conducted with the sole motive of profit maximisation for the shareholders, in disregard of societal and environmental concerns is bound to fail in the long run. Creating shared value (CSV) is an approach to corporate social responsibility (CSR) that involves creating large-scale and sustainable social impact while strengthening the fundamental drivers of business competitiveness. It is a powerful approach for corporations to contribute meaningfully to inclusive development, while reducing barriers to continued economic growth and long-term business success. Porter and Kramer argue that companies create shared value in three ways: • Reconceiving products and markets: Better serving existing markets, accessing new ones, or developing innovative products that meet social needs. • Redefining productivity in the value chain: Improving the quality, quantity, cost, and reliability of inputs, production, and distribution in a sustainable manner. • Enabling local cluster development: Developing a strong competitive context, including reliable local suppliers, a functioning infrastructure, access to talent, and an effective legal system.

INCLUSIVE GROWTH Despite the agreed urgency to achieve inclusive growth, there is surprising little clarity as to what it actually is, with important differences in approach among key institutions and governments: the World Bank, Asia Development Bank (ADB) and International Policy Centre for Inclusive Growth (IPC-IG) all have different definitions and understandings. Drawing on the literature, a working definition for inclusive growth is possibly: 1. Have broader objectives than increasing income and GDP and require governments to proactively work to achieve those objectives, rather than assuming that positive outcomes will automatically come through growth. 2. Translate into gains in human development and increased well-being 3. Benefit all groups, including the most marginalised 4. Reduce poverty and inequality Corporate Social Responsibility: An Inclusive Growth Model for Developed Indian Economy

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5. Consider participation, not just distribution outcomes and therefore focus on increasing active participation in the economy and a say in how the economy is run. 6. Promote the sustainable use of natural resources and climate protection. Some of the key ingredients for inclusive growth that are generally agreed upon include: Investment in human capital Job creation Structural transformation and broad-based growth Progressive tax policies Social protection Non-discrimination, social inclusion and participation Strong institutions

THE GLOBAL CSR GUIDING PRINCIPLES AND ITS JOURNEY The UN Global Compact was the first major initiative by the International organisation to lay down a charter of ten principles for all companies globally to respect and follow in their business operations. By asking companies to embrace, support and enact a set of core values in the areas of human rights, labour standards, environment and anti-corruption, it sets the agenda for corporate social responsibility for all corporate enterprises and provides a framework for initiation and practice of sustainability policies. A number of international private initiatives in this regard corporate social responsibility and sustainability issues have led to the development of standards and benchmarks for voluntary disclosure, reporting and audit of corporate social responsibility and sustainability programmes. Most notable of these initiatives are the Global Reporting Initiative‟s (GRI) Sustainability Reporting Guidelines; Account Ability‟s AA1000 standard based on John Elkington‟s triple bottom line (3BL) reporting; Social Accountability International‟s SA8000 standard; and, the ISO 14001 environmental management standard.

FOUR PHASES OF CSR DEVELOPMENT IN INDIA

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The New Landscape While it is private sector investments that drive the majority of economic activity that will ultimately determine outcomes, policy has a crucial role to play in creating the right incentives and an enabling environment to facilitate an appropriate business response. Indian Government came out with a ruling on CSR, which has been detailed below. As per the Companies Act, 2013, section 135, every company having a net worth of rupees five hundred crore or more, or a turnover of rupees one thousand crore or more or a net profit of rupees five crore or more, during any financial year, shall ensure that the company spends, in every financial year, at least two per cent of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility policy. The application is to every company, including its holding or subsidiary, and a foreign company having its branch or project office in India. The Ministry of Corporate Affairs (MCA) has vide its notification dated 27 February 2014, and in exercise of powers conferred by section 1(3) of the Companies Act, 2013 („the Act‟), notified 1 April 2014 as the date on which the provisions of section 135 and Schedule VII of the Act shall come into force. The MCA has also notified the Companies (Corporate Social Responsibility Policy) Rules, 2014 („the Rules‟) to be effective from 1 April 2014.

STATEMENT OF THE PROBLEM: RESEARCH OBJECTIVES: The objective of this study is to analyse the following: 1) To review the CSR initiatives by major corporate houses and business entities in the state of Uttar Pradesh; 2) To study the methods and patterns of social responsibility of business in Uttar Pradesh; 3) To suggest policy measures for effective and efficient administration of social development projects by corporate houses for inclusive growth;

RESEARCH METHODOLOGY The data was collected through both Primary and secondary source. In order to draw sample from the universe, lottery method was used for selecting companies in the state. However it was ensured that both Private and Public sector companies are chosen. For Primary data a structured questionnaire was constructed to analyse the forms and modes of CSR activities being performed by various organizations of the state. The method employed was personal interviews conducted for the respondents which also had open ended questions to develop a better understanding about the activities being performed. For survey 139 companies were contacted but only 85 of them responded. It was ensured that the companies chosen are involved in some CSR activity. Thus 85 corporates (Public and Private) were selected for the research and our analysis is based on it. For Secondary Sources information has been gathered from various journals, periodicals, reports, magazines, database, etc. The survey was conducted in central region, eastern region and western region of Uttar Pradesh.

ANALYSIS In this part of the study, an attempt has been made to examine the CSR initiatives and policy issues of corporate houses both private and public sector enterprises in the state of Uttar Pradesh.

Nature and Type of Organizations It was found more corporates were pronouncing in Western Region as compared to other regions of Uttar Pradesh and 65 out of 85 companies were in western region. It was found more corporates were pronouncing in Western Region as compared to other regions of Uttar Pradesh and most of them are in manufacturing and production. Nature of Organization 40 30 Central Region

20

Eastern Region

10

Western Region

0 Private Sector

Public Sector

Source: Field Survey, 2014.

Types of Organizations Type of Organizations Manufacturing & Production Trading & Marketing Servicing & Consultancy Others Total

Central Region 6 4 2 12

Eastern Region 9 5 7 2 23

Western Region 23 12 10 5 50

Total 38 21 19 7 85

Source: Field Survey, 2014. Corporate Social Responsibility: An Inclusive Growth Model for Developed Indian Economy

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Involvement in CSR Activities: The respondents were asked that whether the company has CSR initiatives. Almost all the respondents reported that their organizations have initiated CSR activities. It is because of the fact that only those organizations were selected for the field surveys who have taken CSR initiatives in the recent past.

Whether Organization Has Taken CSR Initiatives Central Region 12 12

Yes No Total

Eastern Region 23 23

Western Region 50 50

Total 85 85

Source: Field Survey, 2014. Issues Covered Under CSR by Organizations Action in CSR in India largely spans a diverse set of thematic areas such as health, education, livelihood, poverty alleviation, environment, water, housing, energy and macro finance. However, some other areas like women empowerment, child development and infrastructure also appeared in the CSR initiatives. It also proves from the present survey. The survey highlighted that health, HIV AIDS, education, rehabilitation and resettlement, livelihood development, women empowerment, disaster management, child development, sanitation and environment are the major thrust areas currently covered under CSR initiatives of corporate houses and companies in the state of Uttar Pradesh. However, areas/issues covered under CSR initiatives varies depending upon the geographical reasons. In the Western Region, most of the organizations were found engaged in health, HIV/AIDS, education and livelihood development. Similarly, in Central Region, majority of the organizations were found engaged in health, environment, sanitation, HIV/AIDS, child care and education. In Eastern Region, a large segment of the organizations was found engaged in water resources, HIV/AIDS, child care, education, health, disaster management and women empowerment. The rationale for the selection of development issues covered under CSR initiatives by corporate houses and companies depends on host of factors including orgnaizational mandate, current relevance of the issues and demand from community. However, it varies depending upon the geographical area and nature of the corporate organizations.

Issues Covered Under CSR by Organizations Issues of CSR Health Environment Agriculture Micro Finance Water Sanitation HIV/AIDS Child Care/Development Education Rehabilitation & Resettlement Slum Improvement Disaster Management/Rehabilitation Livelihood Promotion Women Empowerment Charitable Events Others (Specify) Total

Central Region 12 9 6 1 7 10 12 9 12 3 2 4 7 5 2 3 12

Eastern Region 20 8 13 3 21 17 19 21 23 15 4 20 13 20 14 3 23

Western Region 50 23 12 6 13 21 46 20 37 34 16 21 43 23 12 9 50

Total 82 40 31 10 41 48 77 50 72 52 22 45 63 48 28 15 85

Source: Field Survey, 2014. CSR Policy of Organization The respondents were asked that whether their organizations have CSR policy. Most of the organizations revealed that they have CSR policy (69.41 per cent). It was found more pronouncing in Central Region as compared to other regions.

Whether Organization Has CSR Policy Yes No In the process

Central Region 10 2 12

Eastern Region 15 7 1 23

Western Region 34 14 2 50

Total 59 23 3 85

Source: Field Survey, 2014. Most of the organizations reported that CSR policy has been formulated by their organizations during 1990s. On an average, the period of formulation of CSR policy by the organizations was reported 6.88 years.

Reasons for Not Having CSR Policy Most of the respondents reported that their organizations will bring out CSR policy in near future (34.78 per cent) while about 30 per cent respondents reported that there is no need to have a CSR policy. Corporate Social Responsibility: An Inclusive Growth Model for Developed Indian Economy

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Reasons for Not Having CSR Policy Central Region Organization does not feel the need This will come in the near future There is no need to have a CSR policy It is not on our agenda at all Other Total

1 1

2

Eastern Region 2 1 2 1 1 7

Western Region 1 6 4 1 2 14

Total 3 8 7 2 3 23

Source: Field Survey, 2014. Separate Allocation of Funds/CSR Corpus Majority of the respondents reported that they have separate allocation of funds for CSR activities. It has been revealed by the organizations that on an average 0.2 per cent to 1 per cent of their annual turnover are being allocated for social development activities under CSR initiatives.

Whether You Have Separate Allocation of Funds/CSR Corpus Central Region 8 4 12

Yes No Total

Eastern Region 14 9 23

Western Region 36 14 50

Total 58 27 85

Source: Field Survey, 2014. Whether You Have Separate Allocation of Funds/CSR Corpus O 8 4 14 9 36 14

(O-E)2/E 0.00 0.01 0.16 0.40 0.11 0.21  (O-E)2/E=0.88

E 8.1 3.8 15.6 7.3 34.1 15.8

Calculated value of X20.05 = 0.88 d.f= 2. Table value of X20.05 = 5.99 d.f = 2 Since calculated value of X20.05 at 2 d.f. is less than the table value hence, difference between theory and observation is not significant.

Proportion of Annual Budget on CSR Initiatives The proportion of annual budget on CSR initiatives is shown in Table 6.13. Most of the organizations reported that they have less than 5 per cent of their annual budget on CSR initiatives. However, a large number of respondents reported that the proportion of CSR fund depends upon the Board‟s decision and it does not have relation with annual budget.

Proportion of Annual Budget on CSR Initiatives Less than 5% 5-10% 10-20% 20-30% More than this Depends upon board‟s decision (not fixed) Does not have any relation with the annual budget No specific budget Total

Central Region 4 1

Eastern Region 7 1

Western Region 20

2 3 2 12

11 3 1 23

12 14 4 50

Total 31 2 0 0 0 25 20 7 85

Source: Field Survey, 2014. WHAT COMPANIES ARE DOING AS PART OF CSR IN INDIA

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CHALLENGES/ PROBLEMS OF ORGANIZATIONS FACED DURING IMPLEMENTATION OF CSR During the research it was found that the corporates face major challenges / problems during implementation of these CSR activities. Few of them are mentioned below.  Lack of Community Participation in CSR Activities for Inclusive growth of the economy.  Need to Build Local Capacities: there is serious dearth of trained and efficient organizations that can effectively contribute to the ongoing CSR activities initiated by companies.  Issues of Transparency: local implementing agencies do not make adequate efforts to disclose information on their programmes, audit issues, impact assessment, and utilization of funds.  Non-availability of Well Organized Non-governmental Organizations  Visibility Factor: role of media in highlighting good cases of successful CSR initiatives is welcomed as it spreads good stories and sensitizes the local population about various ongoing CSR initiatives of companies.  Narrow Perception towards CSR Initiatives  Non-availability of Clear CSR Guidelines  Lack of Consensus on Implementing CSR Issues

SUGGESTIONS & RECOMMENDATIONS:         

Business should introduce CSR at the highest level as part of the overall strategic planning. Also awareness and sensitization at middle level and junior level managers should be included for better understanding and implementation of CSR activities. Spreading CSR along the supply chain is highly relevant in a country like India, where SMEs account for the major part of the economy. Also as majority of population live in rural India uplifting SME will directly result in inclusive growth and economy growth. The government should recognize and reward corporate houses and their partners implementing social development projects efficiently for the empowerment of poor and under-privileged under CSR initiatives so enhance motivation for inclusive growth. Companies should be more open to stakeholder engagement and broaden their definition of stakeholders to include NGOs other than agencies implementing community development projects. Development cooperation may finance the interaction process with capacity-building relating to CSR issues and by bringing together different networks and players from both companies and stakeholders. More holistic certification, monitoring and reporting mechanisms should be used as selection criteria so that comparisons of companies‟ overall CSR performance can be more easily made. Corporate social responsibility must be seen as an effective instrument in promoting public private partnership in infrastructure development, delivery of services and improving governance. Ensure that the objectives for inclusive growth are explicitly defined. These should focus on broader sustainable human development objectives than increasing incomes or nGDP, such as gains in human development, poverty and inequality reduction, increased economic participation and promotion of the sustainable use of natural resources and climate protection. Develop proactive strategies to ensure growth that are inclusive – this does not happen automatically. This paper has proposed some key factors to consider for achieving inclusive growth which are supported by evidence. In addition, economic policy-makers should proactively aim to maximize social and environmental co-benefits. Corporate Social Responsibility: An Inclusive Growth Model for Developed Indian Economy

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Develop clear guidelines, objectives and indicators on how inclusive growth will be Achieved and measured. This includes clearly articulating the methodology for implementation and theory of change behind a proposed approach. Aim to incentivise business action under the 12th Five Year Plan, there is a knowledge gap in understanding the impacts of these policies on business actors. In-depth policy analysis and dialogue is needed to understand the drivers and constraints that determine the incentives facing business, and how to create an enabling environment that best encourages the desired investment. -

Conclusion: Will CSR be a game changer for India? It was analysed that companies in their own ways are contributing to the foundation of CSR in India. Currently, they are headed in a positive direction as there already exist a multitude of enabling organizations and regulatory bodies such as the DPE, MCA, and IICA that have already set the wheels in motion and are playing an important role in making CSR a widespread practice and ensuring success in reducing inequalities without risking business growth. They have, with their desired methods of intervention, been addressing national concerns such as livelihood promotion, community development, environment, making health services more accessible, creating inclusive markets and so on. However, the efforts are not coordinated and a strategic national level policy framework with the involvement of all stakeholders may ensure that the efforts made by companies, individuals, organizations, and the government are synergistic and create a snowball effect. The mandatory reporting standards being introduced in the Companies Bill will aid in creating uniformity and accountability of actions and also become a measure of the impact these activities will have and the ability measure the impact will be a step in a positive direction. Even the tools that have been developed for measuring social return on investment can be employed more effectively. India And Inclusive Growth through CSR will lead to a Win – Win situation for all.

REFERENCES & BIBLIOGRAPHY 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34.

Albareda, L., Lozano, J. M., & Ysa, T. (2007). Public policies on corporate social responsibility: The role of governments in Europe. Journal of Business Ethics, 74, 391– 407.http://ec.europa.eu/enterprise/policies/sustainable-business/corporate-social-responsibility/index_ en.htm Alvord, S. H., Brown, L. D., & Letts, C. W. (2004). Social entrepreneurship and societal transformation. Journal of Applied Behavioral Science, 40, 260–282. Ancrum, R. (2006, December/2007, January). The principal‟s principles. Financial Management, pp. 57–58. Barton, D., Coombes, P., & Wong, S. C. (2004). Asia‟s governance challenge. McKinsey Quarterly, 2, 54–61. Bendell, J. (2005). In whose name? The accountability of corporate social responsibility. Development in Practice, 15(3-4), 362–374. Bendixen, M., & Abratt, R. (2007). Corporate identity, ethics and reputation in supplier-buyer relationships. Journal of Business Ethics, 76, 69–82. Campbell, J. L. (2007). Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. Academy of Management Review, 32, 946–967. Deckop, J. R., Merriman, K. K., & Gupta, S. (2006). The effects of CEO pay structure on corporate social performance. Journal of Management, 32, 329–342. Frame, B. (2005). Corporate social responsibility: A challenge for the donor community. Development in Practice, 15, 422–432 Garvy, N., & Newell, P. (2005). Corporate accountability to the poor? Assessing the effectiveness of community-based strategies. Development in Practice, 15, 389–404. Hartman, L. P., Rubin, R. S., & Dhanda, K. K. (2007). The communication of corporate social responsibility: United States and European Union multinational corporations. Journal of Business Ethics, 74, 373–389. Hatcher, M. (2002). New corporate agendas. Journal of Public Affairs, 3(1), 32–38. Jackson, I. A., & Nelson, J. (2004). Profits with principles: Seven strategies for delivering value with values. New York: Doubleday Kotler, P., & Lee, N. (2005). Corporate social responsibility: Doing the most good for your company and your cause. Hoboken, NJ: John Wiley & Sons. Malini, M. (2006). Corporate social responsibility in emerging economies. Journal of Corporate Citizenship, 24, 20–22. Prahalad, C. K., & Hammond, A. (2003). Serving the world‟s poor, profitably. In Harvard Business Review on corporate social responsibility (pp. 1–26). Boston: Harvard Business School Press. Richards, E. P. (2003). Developing socially responsible business leaders: The Lubrizol experience. Mid-American Journal of Business, 18(1), 11–14. Guidelines on Corporate Social Responsibility and Sustainability for Central Public Sector Enterprises -http://www.recindia.nic.in/download/DPE_Guidelines_CSR_Sust.pdf accessed on 9th Sept 2014. http://www.wbcsd.org/work-program/business-role/previous-work/corporate-social-responsibility. aspx http://www.unido.org/what-we-do/trade/csr/what-is-csr.html#pp1[g1]/0/ www.unglobalcompact.org/ http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf http://www.ilo.org/empent/Publications/WCMS_094386/lang--en/index.htm http://oecdwatch.org/about-oecd/guidelines http://www.accountability.org/standards/ http://www.sa-intl.org/index.cfm?fuseaction=Page.ViewPage&PageID=937 http://ec.europa.eu/enterprise/policies/sustainable-business/corporate-social-responsibility/index_ en.htm http://www.wbcsd.org/work-program/business-role/previous-work/corporate-social-responsibility. aspx http://articles.economictimes.indiatimes.com/2013-06-09/news/39834857_1_smes-workforce-small-and-medium-enterprises http://www.businessstandard.com/article/sme/smes-to-get-professional-help-on-corporate-social-responsibility-108060501090_1.html http://www.unido.org/what-we-do/trade/csr/what-is-csr.html#pp1[g1]/0/ http://www.iso.org/iso/home/standards/iso26000.htm http://www.oecdguidelines.nl/get-started/creating-a-csr-policy/ http://www.globalcompactselfassessment.org/aboutthistool http://www.thesroinetwork.org/117-home/all-regions/167-why-should-i-use-sroi10

Corporate Social Responsibility: An Inclusive Growth Model for Developed Indian Economy

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An Empirical Analysis on Subscription Pattern of Retail and Institutional Investors in Indian Capital Market Souvik Banerjee Assistant Professor, Sri Sri Institute of Management Studies, Margao, Goa

Abstract: Indian capital market saw a whole host of new initiatives in the last two decades. In this research paper, it is explored, whether IPO(Initial Public Offer) Grading, has any impact on the way institutional and retail investors subscribe to IPOs. As the data was not normally distributed, non parametric statistical analysis in the form of wilcoxon signed ranks test is used. The analysis shows, that institutional investors have more affinity for better graded IPOs, than the lower graded IPOs. So institutional investor‟s used IPO Grading, as a signal in a better way than the retail investors. Keywords: IPO Grading, Non Parametric Statistical Analysis, Institutional Investors _________________________________________________________________________________________________

1. Introduction Among the emerging market economies, equity market in India has an unique place, as the performance of the equity market is often taken as the barometer for the performance of the overall economy. Initial Public Offering (IPO) by companies and their performance post listing takes considerable media space in India. Indian equity market has seen complete transformation from the days of Controller of Capital Issues(CCI) to setting up of the SEBI(Securities Exchange Board of India) in 1988 , to abolition of CCI in the post reform years of early 1990s. Opening up of the Indian economy, in the year 1991, is a watershed event, which changed the direction of the economy towards more market orientation. This event also hastened the reforms in the Indian capital market. In the reforms initiated under SEBI, centralised power to determine pricing of equity issues gave way to information dissemination in the public domain. These led to stricter information disclosure norms, Book Building(BB) of Issues ,IPO Grading, Applications Supported by Blocked Amount (ASBA), SME platform in stock exchanges etc. Financial performance of the company preceding the issue plays an important role, to signal investors regarding the quality of the issue. The track record and expertise of the promoters and the management team are also important signals from the prospective investors point of view. There are other formal and informal certification processes available to investors, to enable them to take an informed decision. Some of these are reputation of the underwriter of the issue, venture capital firm affiliation, shareholding pattern of decision makers (board of directors), reputation and track record of the lead manager of the issue, promoter group affiliation, analyst recommendation etc. Number of investors in the equity market, compared to the total population is minuscule in India(about 1%). There is a significant mistrust among the risk averse investors as far as the equity market is concerned. The reasons for this trust deficit are manifold. Securities Exchange Board of India (SEBI), the statutory body that governs the stock exchanges in India, has taken several initiatives to bridge this deficit. Initial Public offer (IPO) Grading is one such initiative. SEBI introduced IPO Grading on voluntary basis in April,2006. SEBI introduced IPO Grading on the basis of sections 11 and 11A of the SEBI Act,1992, which entrust, the capital market regulator to safeguard investors interest. It was optional till 30th.April,2007.However, the experiment was not successful as borne out by the relevant data; although around 40 companies tapped the primary market in that time frame, only 4 companies approached the Credit Rating Agencies(CRAs) for grading. These 4 companies also did not accept the grade assigned to them. This situation aroused because there were no incentives for the companies to opt for the rating/grading. On the one hand a fundamentally good company had an apprehension, that if they do not get a good rating, their plan to raise money may jeopardize, on the other hand fundamentally not so good companies had the fear that, their careful cover ups may get exposed(Poudyal,2008). SEBI had made Initial Public Offer Grading mandatory with effect from May 1, 2007.Explaining the rationale behind making the IPO grading mandatory, the then SEBI chairman M. Damodaran explained, “ When the market started going up suddenly a lot of people(companies) started coming to the market. It is not that only the best and the brightest continue to come to the market, there are a lot of other people(companies) who started entering the market. One of our concerns is whether we are going to have another round of „vanishing companies‟ which will raise money and never spend it for the intended purpose. I firmly believe that (IPO) grading , if made mandatory, will prevent vanishing companies in future.” As India opened its economy in 1991, a new bull market started in India, based on the assumption that the Indian economy will now grow faster, leaving behind the history of „Hindu Rate of Growth‟. In particular, the initial years of liberalization,

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after 1990-91, witnessed a boom in the Indian IPO market. With fewer regulations during this period, many entrepreneurs used the (Khanna and Palepu, 1997 and 2000) primary market as the main vehicle to raise capital. As equity market return zoomed , host of companies accessed the primary market to tap high investor appetite for the IPOs. However what followed from the mid 1990s onwards is a black spot till date, in the history of the equity market in India. Taking the advantage of the regulatory lacuna, hundreds of companies simply vanished. Indian authorities lacked the regulatory and the information gathering mechanism to trace these companies. At the last count as on 2009, Department of Company Affairs(DCA) identified 121 such companies(Source: Financial Times, London, Dated July 14,2009), who duped investors to the tune of thousand of crores of Indian rupees(INR). According to some of the observers, in such instances, there is still some regulatory lacunae exists. For example liability of merchant bankers, auditors etc. is still not clear. So entities, which are supposed to do, due diligence professionally, there is no mechanism to hold them accountable, for their acts of omission and commission. However in December,2013, SEBI again made IPO Grading voluntary. The Primary Market Advisory Committee(PMAC) of the SEBI and also other capital market stake holders like Association of Investment Bankers of India strongly recommended this move. This was done, to end the dry spell in the IPO market. Whether this initiative will bear fruit is yet to be seen. Credit rating agencies like CRISIL, CARE, ICRA, FITCH(now renamed India Ratings & Research) and Brickwork Rating are entrusted with the job of IPO grading. The rating scale used is 1 to 5, with 1 being the worst, and 5 being the best. There were many weak as well as fraudulent issues hitting the market. The number of such issues hit the roof, whenever the stock market performance is extra ordinary. Some dubious companies also want to bask in the glory of the well performing stock market. The grading is done of the company and not of the issue. The basic difference between grading of a company and an issue is, a company may be good, but due to mispricing the IPO may not be attractive enough, for the investors. In this research endeavour, the correlation between the grading obtained by a company and the institutional investors appetite for that issue will be analyzed threadbare. The primary motivation of the regulator, regarding introduction of IPO Grading was quality information dissemination in the public domain, so that Indian equity market avoids, crisis of confidence as seen in various scams, especially the ‗vanishing companies scam‘.

II. Objective and Motivation of the Research Indian Equity market is unique with respect to information dissemination regarding various types of investors. Information is readily available regarding appetite of retail investors, institutional investors(QIB-Qualified Institutional Bidders), and Non Institutional Investors(NII), also known as High Net worth Individuals(HNIs). In India, according to SEBI ICDR(Issue of Capital and Disclosure Requirements),2009, in Book Built(BB) issues QIBs should have at least 50% of issue allocated to them, retail investors should get 35% of the allocation. As of now any investor, who is putting up to Rs.2,00,000(rupees two lakh), in an IPO, is considered a retail investor. FIIs(Foreign Institutional Investors) participate in the IPOs as part of QIBs. FIIs were allowed in India, post liberalization(of 1991) opening up of the economy. Earlier the FIIs had to register with SEBI but now, It has delegated the registration process to the designated depositary participants. In this research endeavour, it is explored whether institutional and retail investors, behave differently, as far as graded IPOs are concerned.

III. Literature Review: Formal certification may be a new thing introduced by the Indian capital market regulator(SEBI), but informal certifications in the form of past performance by the company, group affiliation of the company, reputation of the underwriter, in case of venture capital (VC)backed firms, the reputation of the VC, the reputation of the merchant banker, which is acting as the lead banker, analysts recommendation etc. are available. Informal certification plays an important role as a signal, to investors. There is a plethora of literature available regarding informal certification‘s effect on a company‘s IPO. Barry, Muscarella and Vetsuypens (1990) and Megginson and Weiss (1991) found that under pricing is lower for the IPOs of firms with a strong venture capital participation than for those without such investors. That means post listing return of these firms are lesser. Contrary to this, a recent study by Lee and Wahal (2004), based on a much larger sample size concluded that, VC backed firms have a higher under pricing. Regarding underwriter reputation, there is a vast body of research in the western world, among the prominent studies Logue (1973), Beatty and Ritter (1986), Titman and Trueman (1986), Masksimovic and Unal (1993) and Carter, Dark and Singh (1998) found that the under-pricing of IPOs brought to the market by reputable underwriters is lower than those brought by non-reputable underwriters. Equity analysts give recommendations regarding Initial Public Offer (IPO) of firms. The extent of research, on analyst recommendations available before the IPO is very limited. Most of the recommendations are seen post listing. Objectivity of these recommendations is in serious doubt as past studies have shown biased behaviour on the part of the analysts. Analysts can put buy or avoid call on the IPO, but past data shows analysts in majority instances had given buy call. For example, Bradley et al. (2003)

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find that analyst coverage is initiated immediately for 76 percent of IPOs during 1996 to 2000, almost always with a favourable rating. There are various possible reasons for this: 1. Conflict of Interest: The equity analysts of the investment bank are likely to give positive recommendation on issues, where same investment bank had acted as the lead manager or the co-manager for the issue. 2. Over optimism: According to studies done by Rajan and Servaes (1997) analysts are over optimistic about the earnings growth rate of the companies, which recently floated IPO. 3. Bias: According to the studies by Michaely and Womack (1999), there is a significant proportion of bias in the analyst‘s recommendation. Moreover, there is evidence that investors often fail to objectively assess IPOs as they suffer from behavioural biases (Ljungqvist et al. 2006). So the grade should make the job easier for them, as grade reduces fundamental quality of a company into `easy-to-use' symbol (Jacob and Agarwalla,2012).On the impact of IPO Grading on investor demand, Deb and Marisetty (2010) is of the view that retail investors show greater affinity to higher graded issues, they arrived at this conclusion with a sample of 159 companies, they also argued that while retail investors look for the quality of companies, institutional investors look for the leverage and the return on networth of the company. Khurshed et al.(2011) argued that the grading positively influences the subscription pattern of the institutional investors, which in turn, positively impacts the retail subscription. Banerjee et al.(2013) concluded on the basis of a sample size of 162 companies, that differences in retail investor‘s subscription level of IPOs of different grades is not statistically significant.

4. IPO Grading Framework: Grade / scale 5/5 4/5 3/5 2/5 1/5

Grading Definition Strong Fundamentals Above Average Fundamentals Average Fundamentals Below Average Fundamentals Poor Fundamentals

Table 1:IPO Grading Scale According to SEBI guidelines, Credit Rating Agencies (CRAs)are supposed to analyse companies, for the purpose of grading on the following parameters: a. Business Prospects and Competitive Position i. Industry Prospects ii. Company Prospects b. Financial Position c. Management Quality d. Corporate Governance Practices e. Compliance and Litigation History f. New Projects—Risks and Prospects The costs of the Grading are to be borne by the IPO bound firm. Therefore there is likely to be conflict of interest between the rating agency(which is supposed to grade the IPO) and the equity issuing firm, which is bearing the costs of this grading process. However there is a reputational stake for the rating agencies in the longer term.

IV.

Hypothesis of the Research:

Null Hypotheses H01- There are no grade 1. H02- There are no grade 2. H03- There are no grade 3. H04- There are no grade 4. H05- There are no grade 5.

V.

differences in the appetite of the institutional investors and retail investors across the IPOs of companies with differences in the appetite of the institutional investors and retail investors across the IPOs of companies with differences in the appetite of the institutional investors and retail investors across the IPOs of companies with differences in the appetite of the institutional investors and retail investors across the IPOs of companies with differences in the appetite of the institutional investors and retail investors across the IPOs of companies with

Research Methodology:

For this specific paper, we have explored, whether institutional investors and retail investors, act in similar fashion in IPO subscription. The number of times subscription of the portion earmarked for the institutional investors in the IPO, is taken as the proxy for the institutional investor‘s appetite; the retail investor‘s appetite is taken in the same fashion. In this paper 171 companies which issued IPO between 2007 and 2013 are analyzed. All the Graded IPOs between May,2007 and December,2013(The An Empirical Analysis on Subscription Pattern of Retail and Institutional Investors in Indian Capital Market Souvik Banerjee © INTERNATIONAL RESEARCH COMMUNION

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timeframe, when IPO Grading was mandatory) are considered. The source of the data is Capital Market Data Base. We have used SPSS version 16.0 for the purpose of analysis. There are 21 companies with grade 1,52 companies with grade 2;The similar number for companies with grade 3,4 and 5 are 64,29 and 5 respectively. 5 29

1

21

2

52

3

64

4 5

Figure 1: Grade Wise Distribution of Companies The grade wise subscription data is not normally distributed, as borne out by Q-Q plot of the data. As the data is not normally distributed, non-parametric statistical analysis, in the form of Wilcoxon Signed Ranks Test is used, for the purpose of analysis. For each IPO Grade, company wise retail and institutional portion subscriptions data are analyzed, to check, whether there is statistically significant difference exist or not.

VI.

Empirical Results and Analysis: Q-Q Plot of Reatil Subscription:

Figure 2:

Figure 3: Q-Q Plot of Institutional(QIB) Subscription:

Figure 4:

Wilcoxon Signed Ranks for IPOs with Grade 1 Ranks N Retail Subscription - QIB Subscription

Mean Rank

Sum of Ranks

Negative Ranks

3a

2.33

7.00

Positive Ranks

18b

12.44

224.00

Ties

0c

Total

21

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a. Retail Subscription < QIB Subscription b. Retail Subscription > QIB Subscription c. Retail Subscription = QIB Subscription Test Statisticsb Retail Subscription - QIB Subscription -3.771a

Z Asymp. Sig. (2-tailed)

.000

a. Based on negative ranks. b. Wilcoxon Signed Ranks Test

In this case, as the p-value is 0.000, null hypothesis is rejected at 1% level of significance. Wilcoxon Signed Ranks for IPOs with Grade 2 Ranks N Retail Subscription - QIB Subscription

Mean Rank

Sum of Ranks

Negative Ranks

19a

21.74

413.00

Positive Ranks

33b

29.24

965.00

Ties

0c

Total

52

a. Retail Subscription < QIB Subscription b. Retail Subscription > QIB Subscription c. Retail Subscription = QIB Subscription Test Statisticsb Retail Subscription - QIB Subscription -2.514a

Z Asymp. Sig. (2-tailed)

.012

a. Based on negative ranks. b. Wilcoxon Signed Ranks Test

Here the p-value is 0.012, so null hypothesis is rejected at 1% level of significance, for companies with IPO Grade 2. Wilcoxon Signed Ranks for IPOs with Grade 3 Ranks N Retail Subscription - QIB Subscription

Mean Rank

Sum of Ranks

Negative Ranks

38a

40.00

1520.00

Positive Ranks

26b

21.54

560.00

Ties

0c

Total

64

a. Retail Subscription < QIB Subscription b. Retail Subscription > QIB Subscription c. Retail Subscription = QIB Subscription Test Statisticsb Retail Subscription QIB Subscription Z Asymp. Sig. (2-tailed)

-3.210a .001

a. Based on positive ranks. b. Wilcoxon Signed Ranks Test

For companies with IPO Grade 3, the p-value is 0.001, so null hypothesis is rejected at 1% level of significance,.

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Wilcoxon Signed Ranks for IPOs with Grade 4 Ranks N Retail Subscription - QIB Subscription

Mean Rank

Sum of Ranks

a

29

15.00

435.00

Positive Ranks

0b

.00

.00

Ties

0c

Total

29

Negative Ranks

a. Retail Subscription < QIB Subscription b. Retail Subscription > QIB Subscription c. Retail Subscription = QIB Subscription Test Statisticsb Retail Subscription QIB Subscription -4.703a

Z Asymp. Sig. (2-tailed)

.000

a. Based on positive ranks. b. Wilcoxon Signed Ranks Test

In this case, as the p-value is 0.000, null hypothesis is rejected at 1% level of significance, for companies with IPO Grade 4. Wilcoxon Signed Ranks for IPOs with Grade 5 Ranks N Retail Subscription - QIB Subscription

Mean Rank

Sum of Ranks

Negative Ranks

4

a

3.50

14.00

Positive Ranks

1b

1.00

1.00

Ties

0c

Total

5

a. Retail Subscription < QIB Subscription b. Retail Subscription > QIB Subscription c. Retail Subscription = QIB Subscription Test Statisticsb Retail Subscription QIB Subscription Z Asymp. Sig. (2-tailed)

-1.753a .080

a. Based on positive ranks. b. Wilcoxon Signed Ranks Test

In this instance, as the p-value is 0.080, null hypothesis is rejected at 10% level of significance, for companies with IPO Grade 5. As the results show, all the null hypotheses are rejected, first four at 1% level of significance, and the fifth one at 10% level of significance. This means there is significant difference, in the way, retail and institutional investors behave. For companies, with grade 1 & 2, the retail portion subscription is more than the institutional portion subscription, in the majority of the companies. For companies, with grade 3,4 & 5, the institutional portion subscription is more than the retail portion subscription, in the majority of the companies.

VII.

Conclusion:

The results, clearly shows that more informed investors, use the additional information in the form of IPO Grade more efficiently. The companies with higher grade, clearly have more institutional investor‘s appetite in their IPOs. So, IPO Grade is an additional information for the already informed investors. So SEBI‘s contention of safeguarding retail investor‘s interest may not have been met. So making IPO Grading voluntary may be a hasty decision, as more time should have been given to let this information percolate down to retail investor level.

Reference: 1. 2.

Akerlof, G. (1970).‖The Market for Lemons: Quality Uncertainty and the Market Mechanism‖. Quarterly Journal of Economics,84, pp.488-500. Banerjee Souvik, Rangamani K.T. and Banerjee Merina(2013).‖IPO Grading And Its Effect On Appetite Of Retail Investors‖. Anvesha-The Journal of Management,6(3),pp.1-6.

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Barry, C.B., Muscarella, C. J., Peavey, J., and Vetsuypens, M. (1990). ―The role of venture capital in the creation of public companies‖. Journal of Financial Economics, 27, pp.447-471. Beatty R. and J. Ritter( 1986). ―Investment Banking, Reputation, and the Under pricing of Initial Public Offerings,‖ Journal of Financial Economics ,15, pp. 213-232. Carter, R., Dark, R., and Singh, A.(1998).‖Underwriter reputation, initial returns, and the long-run performance of initial public offering stocks‖, Journal of Finance, 53, pp.289-311. Deb, S. S. and Marisetty, V. B. (2010). ―Information content of IPO grading‖, Journal of Banking & Finance, 34(9),pp.2294-2305. Joshy Jacob, Sobhesh Kumar Agarwalla.‖ Mandatory IPO Grading: Does It Help Pricing Efficiency?‖, W.P. No. 2012-12-07,IIM, Ahmedabad. Khanna T and Palepu K (1997). ―Why Focused Strategies May be Wrong For Emerging Markets‖, Harvard Business Review, 75(4), pp. 41-51. Khanna Tarun and Krishna Palepu. (2000). ―Is Group Affiliation Profitable in Emerging Markets? An Analysis of Diversified Indian Business Groups‖, The Journal of Finance,55(2),pp.867-891 Khurshed, A., Paleari, S., Pande, A., and Vismara, S. (2011). Grading, transparent books and initial public Offerings. Online paper. http://www.unibg.it/dati/persone/1823/4211-Grading%20paper.pdf. Krishnamurti, Chandrasekhar and Thong, Tiong Yang and Vishwanath, S. R ‖ Does certification work in emerging markets? evidence from the Indian IPO market.‖, Published in Conference Proceedings of JCF Conference on Emerging Market Corporate Finance, 24-25 Aug 2009, Beijing, China Lee, P. M., and Wahal, S. (2004). ―Grandstanding, certification and the under pricing of venture capital backed IPOs‖, Journal of Financial Economics, 73, pp.375407. Ljungqvist, A.‖ IPO Under pricing‖ Handbook of corporate finance: Empirical corporate finance, 1.pp.375-422. Ljungqvist, A., Nanda, V., and Singh, R. (2006).‖Hot markets, investor sentiment, and IPO pricing‖,The Journal of Business, 79(4), pp.1667-1702. Maksimovic, V., and Unal, H. (1993).‖ Issue size choice and under pricing in thrift mutual-to-stock conversions‖, Journal of Finance, 48, pp.1659-1692. Megginson, W., Weiss, K. (1991) .―Venture capitalist certification in initial public offerings‖. Journal of Finance, 46, pp.879–903. Michaely, Roni and Kent L. Womack, (1999).―Conflict of Interest and the Credibility of Underwriter Analyst Recommendations,‖ Review of Financial Studies, 12, pp.653-686. Pham, P.K., Kalev., P. S., and Stein, A. (2003). ―Under pricing , stock allocation, ownership structure and post-liquidity of newly listed firms‖, Journal of Banking and Finance, 27, pp.919-947. Poudyal Sanjay(2008).‖Grading Initial Public Offerings (IPOs) in India‘s Capital Markets A Globally Unique Concept‖, Working Paper No.2008-12-08,IIM, Ahmedabad Rajan, R., Servaes, H.(1997).‖ Analyst following of initial public offerings‖, Journal of Finance,52,pp. 507–530. Shah. A., and Thomas.S. (2001). ―Policy issues in the Indian securities market‖. Working Paper No. 106, Stanford University.

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A study on effectiveness of FM radio advertising: An importance and performance mapping of Chennai FM radio stations Dr. Sivasundaram Anushan.S.C1, Preethi.R2 1

(School of Management, SASTRA University, INDIA) (School of Management, SASTRA University, INDIA)

2

Abstract: Advertising is providing information, calling attention to and making known something that you want to sell or promote. It is a message designed to promote or sell a product, a service, or an idea. Radio is one of the premiere engagement platforms available in commercial media, where the listeners believe the medium and advertising to be very relevant and more reliable. The study tries to examine the performance of FM Radio Stations in Chennai, towards the various important and effective elements of advertising chosen for the study. For carrying out this study 160 respondents from Chennai city were contacted and the data was analyzed. The major findings were, Radio City performed well in FM radio advertising with high rating by the listeners in five of the effective elements of advertising followed by Suriyan FM and Chennai Live in two of the factors. The significant success elements were identified as immediacy, frequentness and cost efficiency. Keywords: Advertising, Radio, Effectiveness, Brand Recall, Reliability, Overall success. _________________________________________________________________________________________________

I. Introduction Introduction to FM Radio Advertising Radio is the most accessible medium in our daily lives. It is one of the premiere engagement platforms available in commercial media. Radio listeners are very reactive and receptive especially to the advertising they hear. A successful radio campaign must include Reach, Frequency and Creative. Radio advertising with its own degree of advantage still prevails to be a preferred medium for the advertisers though as a secondary medium. Being a personalized source of reach, it penetrates and works well when pitched to the right people, at the right time.

FM Radio industry an overview The FM radio industry is projected to grow at a CAGR of 20 percent and is expected to be INR 25 billion in terms of revenue. The major players in FM radio industry include Radio City, Suriyan FM, Radio Mirchi, Big FM, Aaha FM, Radio Mango etc. The Fm radio stations taken for the study include Radio Mirchi, Suriyan Fm, Big FM, Chennai Live, Radio City and Radio One in chennai.

II. Review of Literature To understand the research problem clearly a review of the past literature was carried out and is presented below Bates, Kenneth1 and Somasundaram’s study states that, advertisers often employ spokespeople who speak with an accent to promote products and services that are stereotypical of a speaker's background and the impact of using an accented spokesperson on listener evaluations of credibility increases the purchase likelihood of an advertised product or service( December 2014). Jeff Small, founder and chief executive officer (CEO) of Portland, Maine-based Strategic Media Inc., states that, the advantage radio holds over TV or print advertising is its ability to specifically target demographics. Also, radio is very cost efficient for direct response marketers when compared with other media (December 2011) Rajagopal analysed the impact of radio advertisements on urban commuters towards buying behaviour in retail stores and revealed that the buying behaviour of urban consumer at retail stores in response to radio advertisements is highly influenced by the physical, cognitive and economic variables of the ad (2011). Hansen, Flemming1, Lundsteen, Steen1, Grønholdt, Lars1, Lange and Karsten studied the effects of radio advertising and found that brand recall and recognition were more sensitive to spending of the listener, when it comes to changes in purchase intention (2009) Wheatley and John in 1994, examined the effects of music tempo in a radio ad which included feelings, attitudes, unaided recall, and purchase likelihood and found it had effects on listener’s buying behaviour. According to Abernethy, Avery M, Gray, James I, Rotfeld and Herbert J, the creative strategies employed in an advertising campaign can have a significant impact on its effectiveness and reach to the listeners (1993). Sullivan, Gary stated that, radio advertising music format can moderate the persuasive effect of ads for low involvement type products and found that, a highly involving music format produced the most consistently favourable effects for the products tested (1990). Exxdell, Julie A.1, Keller and Kevin Lane, determined the outcomes from reinforcing radio ad and this recall of ads were positive for radio replay as they are for the television recurrence condition.

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The study by Betsy D. Gelb and George M. Zink Han in the year 1987, concerned the effect of radio commercials creates brand attitude, advertising recall, purchase probability and choice behaviour of the product or service advertised (1989). Duncan and Calvin’s findings showed that, significant humor effects grabs on attention to the ad, liking the ad and mediates humour’s impact on product preference with the intention to buy (1985). The study of Riebe, Erica1, Dawes, and John investigated the relationship between radio advertising clutter and advertising recall and concluded that, the low-clutter participants were twice as likely to recall a particular advertisement among those ads they were exposed and showed almost three times greater prompted advertising recognition than the high-clutter participants (1979). Collins Jacobson’s study measured the success of radio commercial which intrudes to capture the listener's attention from his other interests at that time by measuring brand recall for determining commercial intrusiveness (February 1978). Vigderhous and Gideon felt that, the advertising message in radio is considered the stimulus and the response to it is considered the awareness of the product or the actual purchasing behaviour of the product with individuals' receptiveness to various stimuli (April 1977). Cassidy Jr., Ralph, Williams and Robert M. reports the positive aspects of radio advertising which include its effectiveness in appealing to consumers on an emotional level; announcing promotions for scarce merchandise; and building goodwill for a well-known brand as radio advertising medium is used for persuasion rather than information (1949).

1. III. Need for the Study The factors that aid FM radio advertising vary over time. Certain factors are predominant and significant than others. The FM radio stations should constantly on a periodic phase access the opinion of their listeners. When they do this, they can track their advertising reach and take decisions concerning to the effective performance of the important elements.

3.1 Objectives of the Study To position the FM Radio stations in Chennai based on the performance of FM Radio Stations in Chennai, towards the various important and effective elements of advertising.

3.2 Methodology The study using descriptive research design, adopting a sampling survey, using a structured undisguised questionnaire to collect among 160 respondents of Chennai on convenience basis has developed a data base in SPSS v16. The data was subjected to multiple linear regressions and Importance performance mapping. For presenting the data uni-variate and bi-variate tables were used.

3.3 Demographic Characteristics of the Respondents The majority of respondents belonged to the age between 26-36 years, more than 50% of the respondents were male, more than 35% of the respondents were undergraduates, the family size was 3-4 members on an average, for more than 50% of the respondents with an income level of Rs.20001– Rs.25000 for more than 35% of the respondents, more than 60% of the respondents were employed in private sector and the nature of residence for 90% of the total respondents was urban region.

3.4 Listening Characteristics of the Respondents The people listening to FM radio regularly constitute to 80% of the total respondents and morning time was mostly preferred to listen to radio conveniently at home daily, with a time span of 31minutes-90 minutes to get updated with the general news broadcasted. Radio Mirchi was liked by majority of the listeners for the songs played in it and the ads were paid attention only when it targeted the listener’s profile. The advertisements frolicked lasted in the minds of listener for a weeks’ time as it acted as a reminder for purchase of a product or service.

3.5 Elements leading to effective FM radio advertising The various elements leading to effective FM radio advertising identified from the FM radio industry and review of literature were as follows: a) Station reliability- The content and views delivered by the FM radio station conforms the fact and is worthy to trust b) Cost efficiency- Cost incurred to advertise in FM radio station is minimal and is effectual to the money spent c) Frequency- The frequentness of ads played in the FM radio station d) Reach- Ability of the FM radio station to stretch out to its listeners e) Personal Medium- Capability of the FM radio station to connect with the listeners emotionally and create values based relationship with the ads played f) Quality of radio ads- The ads played by the FM radio station is eminent in nature g) Brand re-call- Potentiality of the FM radio station to make the listener reminiscent the brand in memory h) Complementary Medium- FM Radio station acts as a theatre of mind intermedial to other sources of mass communication i) Radio Fabric- The matter of issue conversed for the day in the FM radio station j) Immediacy- The propensity of a FM radio station to give a sense of direct and instant involvement to the listeners

III.

Importance given to effective elements of FM radio advertising Table 1: Descriptive statistics for Importance given to effective elements of FM radio advertising Effectiveness Elements Station Reliability

Count

Not Important 2 (1.3% )

Somewhat Important 50 (31.3%)

More Important 108 (67.5%)

Mean 2.6625

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Count Count Count Count Count Count Count Count Count

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4 (2.5%) 0 (0%) 12 (7.5%) 4 (2.5%) 6 (3.8%) 20 (12.5%) 24 (15.0%) 14 (8.8%) 0 (0%)

42 (26.3%) 36 (22.5%) 60 (37.5%) 50 (31.3%) 62 (38.8%) 70 (43.8%) 78 (48.8%) 60 (37.5%) 18 (11.3%)

114 (71.3%) 124 (77.5%) 88 (55%) 106 (66.3%) 92 (57.5%) 70 (43.8%) 58 (36.3%) 86 (53.8%) 142 (88.8%)

2.6875 2.7750 2.4750 2.6375 2.5375 2.3125 2.2125 2.4500 2.8875

It can be clearly seen that the most important element for effectiveness of FM advertisement was Frequency with a frequency score of 2.7750 and the least important element for effectiveness of FM advertisement was Complementary Media with a frequency score of 2.2125. Table 2: Mean importance score and Mean performance rating of various FM radio advertising effectiveness elements for Chennai FM stations FM Station Radio Mirchi Suriyan FM Big FM Radio City Radio One Chennai Live FM Station Radio Mirchi Suriyan FM Big FM Radio City Radio One Chennai Live

Station Reliability Importance Rating 2.6190 4.4286 2.5455 4.1818 2.7692 4.4615 4.6250 2.8750 2.6667 4.6666 2.6667 4.6667 Quality of Radio Ads Importance 2.6429 2.3636 2.5385 2.6250 2.0901 2.0054

Rating 4.1667 3.6364 4.2308 4.3750 3.3333 4.0235

Cost Efficiency Importance Rating 2.6667 4.3571 4.3636 2.8182 2.5385 4.3077 2.7523 4.6250 2.6667 4.3333 2.8982 4.6467 Brand Re-Call Importance 2.3810 2.4545 2.3077 2.3750 1.3333 1.6667

Rating 3.8333 3.7273 3.8462 4.0541 2.6667 3.0432

Frequency Importance Rating 2.7857 4.5952 2.6364 4.3636 2.6923 4.2308 2.9230 4.7522 2.6667 4.3333 2.9110 4.6667 Complementary Media Importance Rating 2.3571 3.9524 2.0310 3.2727 2.0769 3.8462 3.7500 2.3750 1.3333 2.3333 2.0231 3.0123

Reach Importance Rating 2.5238 4.2857 2.6364 4.4545 2.3077 4.001 2.6250 4.375 2.0203 4.0421 2.0123 3.6667 Radio Fabric Importance 2.5238 2.9104 2.0769 2.7500 1.3333 2.0432

Rating 4.0123 3.1818 3.4615 4.1250 2.3333 3.6667

Personal Medium Importance Rating 2.6429 2.7273 2.5385 2.8750 2.0067 2.6667

4.3095 4.0909 4.0032 4.625 4.0103 4.0607

Immediacy Importance 2.3095 2.0456 2.0769 2.1250 1.6667 2.3012

Rating 4.0476 4.0501 4.1538 4.2500 4.6670 4.5052

The highest mean importance for station reliability is observed for Radio city with a mean score of 2.875 and the highest mean of rating is observed for Chennai Live with a score of 4.6667. The highest mean importance for Cost Efficiency is observed for Suriyan FM with a mean score of 2.8182 and the highest mean of rating is observed for Chennai Live with a score of 4.4667 .

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The highest mean of importance for frequency is observed for Radio city with a score of 2.9230 and the highest mean of rating is observed for Radio city with a score of 4.75.The highest mean of importance for reach is observed for Suriyan FM with a score of 2.6364 and the highest mean of rating is observed for Suriyan FM with a score of 4.4545.

The highest mean of importance for personal medium is observed for Radio city with a score of 2.875 and the highest mean of rating is observed for Radio City with a score of 4.625.The highest mean of importance for quality of radio ads is observed for Radio Mirchi with a score of 2.6429 and the highest mean of rating is observed for Radio City with a score of 4.375. A Study on Spouse Sobriety Influence on Alcoholic Anonymous Group Members Dr. P. JENIS MARY © INTERNATIONAL RESEARCH COMMUNION

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The highest mean of importance for brand re-call is observed for Suryan FM with a score of 2.4545 and the highest mean of rating is observed for Radio city with a score of 4.The highest mean of importance for Complementary medium is observed for Radio City with a score of 2.375 and the highest mean of rating is observed for Radio Mirchi with a score of 3.9524.

The highest mean of importance for radio fabric is observed for Suryan FM with a score of 2.9104 and the highest mean of rating is observed for Radio City with a score of 4.125.The highest mean of importance for immediacy is observed for RadioMirchi with a score of 2.3095 and the highest mean of rating is observed for Radio One with a score of 4.667. A Study on Spouse Sobriety Influence on Alcoholic Anonymous Group Members Dr. P. JENIS MARY © INTERNATIONAL RESEARCH COMMUNION

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2. IV. Effectiveness of FM radio advertising Table: 3: Effectiveness of FM radio advertising Level of effectiveness

Frequency Percentage

Highly Effective

52

32.5

Effective

102

63.8

Neither Effective nor ineffective

4

2.5

Ineffective

2 Total

160

1.2 100.0

The Table above shows the level of effectiveness of FM radio advertising. Out of 160 respondents, 102 respondents contributing to 63.8% feel, FM radio advertising is Effective in its reach to the listeners.

3. V. Model of Overall effectiveness of FM Radio advertising from agreement towards individual statements describing criterions for FM radio advertising A model of Overall effectiveness of FM Radio Advertising from agreement towards individual statements describing the effectiveness criterions of FM radio advertising was constructed . Table: 4: Summary of the Model R .970

R Square

Sum of Squares 23.145

.941

df

Mean Square

F

19

1.218

28.755

140

.205

51.9

159

Sig.

5.931

.000

Estimation of effectiveness of FM Radio Advertising: a + b1X1+ b2X2+………..+ b20X20 (1) The power of the regression model is represented by the R2 is a highly healthy .941 and the F test of the model shows that the significance of the model is high as the significance of F is .000 which is less than .05. To decide which variables are good explanatory variables t-test for each variable is analyzed and presented in Table 5 below. Table: 5: t-test showing regression coefficients accepted by the Model of Overall effectiveness of FM Radio Advertising from agreement towards individual statements describing the effectiveness criterions of FM radio advertising Predictors (Constant) Level of Persuasion in advertising Scheduling of ads in radio Passive ad avoidance Selective Segmentation of audience Content of ad Creativity in advertising Economy of words Cognitive delivery of message Articulations in ad Use of sound elements to enhance the message Effective use of the interplay between emotion and logic Distinctiveness in promotion of product or service Effective Seasonality to advertise the product or service Personalization in advertising Authenticity of Ads Extension of Ad Life Relevance to audience with respect to ad and brand Proximity of Purchase Ingestion by the audience with minimal effort

Un standardized Coefficients B Std. Error .748 .220 .396 .067 -.136 .055 .001 .062 .034 .081 .162 .093 -.078 .067 .087 .079 -.119 .078 .140 .060 .238 .072 -.164 .066 -.034 .074 -.121 .074 .035 .068 .184 .069 .136 .065 .028 .062 -.086 .067 -.196 .068

Standardized Coefficients Beta .474 -.195 .001 .042 .179 -.107 .110 -.150 .200 .301 -.199 -.037 -.164 .046 .244 .167 .036 -.108 -.266

t

Sig.

3.403 5.910 -2.467 .010 .423 1.751 -1.161 1.107 -1.532 2.326 3.292 -2.469 -.458 -1.634 .523 2.655 2.108 .450 -1.286 -2.896

.001 .000* .015* .992 .673 .082 .248 .270 .128 .021* .001* .015* .648 .104 .602 .009* .037* .653 .201 .004*

* = significant at 5% (If the sig. of t is less than 0.05 it indicates that the concerned variable is significant in the model) The model’s t-test shows that the predictors namely, level of persuasion in advertising, scheduling of ads in radio, articulations in ad, use of sound elements to enhance the message, effective use of the interplay between emotion and logic, authenticity of ads, extension of ad life, and ingestion by the audience with minimal effort are significant in the estimation of Overall effectiveness of FM Radio Advertising at 5%.

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4. VI. Findings 1. Immediacy, frequentness and cost efficiency factors were found to be the most effective elements of FM radio advertising. 2. Level of persuasion in advertising, scheduling of ads in radio, articulations in ad, use of sound elements to enhance the message, effective use of the interplay between emotion and logic, authenticity of ads, extension of ad life, and ingestion by the audience with minimal effort were determined to be significant in FM Radio Advertising. 3. Every FM radio station possesses its own level of importance for each of the effective elements of advertising, but the rating of listeners varies with their level of persuasion and ingestion. According to the listeners opinion Radio City tops the position in its frequentness, quality of radio ads, brand re-call, radio fabric and as a personal medium of communication.

5. VII. Conclusions Radio City tops amidst all the other FM radio stations in Chennai with its significant performance towards the various important and effective elements of advertising. The station can continue its functioning to sustain the position in market and take further measures to enhance it. The other stations taken for the study have to do a lot more to substantiate their position and take corrective steps to captivate their advertisement to listeners.

References Journal Papers [1] [2] [3] [4] [5] [6] [7] [8] [9]

Ivanic, Aarti s, Bates,Kenneth1, Somasundaram, The Role of the Accent in Radio Advertisements to Ethnic Audiences, Journal of Advertising Research., 2014, Vol. 54 Issue 4, p407-419. Impact of radio advertisements on buying behaviour of urban commuters. Rajagopal International Journal of Retail & Distribution Management, 2011, Vol. 39 Issue 7, p480-503. 24p. Combinations of Creative Elements in Radio Advertising. Abernethy, Avery M, Gray, James I, Rotfeld, Herbert J. Journal of Current Issues & Research in Advertising (CTC Press). 1993, Vol. 15 Issue 1, p87. 13p. Sullivan, Gary L, Music Format Effects in Radio Advertising, Psychology & Marketing, 1990, Vol. 7 Issue 2, p97-108. Exdell, Julie A, Keller, Kevin Lane, the Information Processing of Coordinated Media Campaigns, Journal of Marketing Research (JMR). 1989, Vol. 26 Issue 2, p149163. Nelson, James E,, Humor and Advertising effectiveness after repeated exposures to a radio commercial", Journal of Advertising. 1987 Vol. 16 Issue 1, p63-65. Duncan, Calvin P. nelson, James E, Effects of humor in Radio Advertising experiment, Journal of Advertising, 1985, vol. 14 issue 2, p33-64. Collins, Sy, Jacobson, Sol, A Pretest of Intrusiveness of Radio Commercials, Journal of Advertising Research, 1978, Vol. 18 Issue 1, p37 Profit Analysis of Radio Ad Awareness. Vigderhous, Gideon1, Journal of Advertising Research, Apr 1977, Vol. 17 Issue 2, p21.

Books [10] Cauley, Pat, Radio renaissance, Response. 2011, Vol. 22 Issue 5, p40-46. 5p. [11] Cassidy Jr., Ralph, Williams, Robert M, Radio as an Advertising medium, “Harvard Business Review, 1949, Vol. 27 Issue p62-78.

Proceedings Papers [12] Hansen, Flemming, Lund Steen, Grønholdt, Lars, Lange, Karsten,The Relative role of impact and resonance in determining the effectiveness of radio advertising, American Academy of Advertising Conference Proceedings. 2009, P148-159. [13] Booker, Geprge, Wheatley, John J, Music and Radio Advertising: Effects of Tempo and Placement, Advances in Consumer Research. 1994, Vol. 21 Issue 1, p286-290.

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Response of Bangladesh Stock Market to Global Financial Crisis: An Analysis Dr. Niti Goyal

Assistant Professor, IGN College, Ladwa

Email: [email protected]

Abstract: The prime aim of this article is to analyse the response of Bangladesh stock market to the global financial crisis. The financial crisis which originated in US in 2008 is known as the biggest financial crisis after the recession of 1930s and affected the economies of all the countries. The study employs GARCH model using daily returns of CSE 30 index from 1st January 2004 to 31st December 2014. The whole time span has been divided into 3 periods: Pre recession, recession and post recession period. This study empirically reveals that there had been no significant impact of recession on the Bangladesh stock market returns & volatility. The study also found that there is no significant difference in volatility of returns during the pre & post recession period but the structure of volatility has changed in the post recession period. The stock market became informationally inefficient and the persistence in volatility has also showed an increase. KEYWORDS: GARCH; EGARCH; Leverage; Recession; Volatility; _________________________________________________________________________________________________

I.

Introduction

Stock markets are one of the most important part of the financial system. The stock market play a pivotal role in the growth of industry and commerce of a country. Happenings in the stock market are of great concern to the industry as well as to the investors which could be the government, institutional investors or the general public. Stock markets are sensitive to national and international events and react immediately after their occurrence. These swings in stock prices as a reaction to these occurrences is known as volatility. Volatility in stock markets is an important input in taking financial decisions like portfolio diversification and risk management. Volatility in the stock return is an integral part of stock market with the alternating bull and bear phases. Without volatility superior returns cannot be earned. However, too much volatility is considered as a symptom of an inefficient stock market. Volatility of returns in financial markets can be a major stumbling block for attracting investment in small developing economies. It has an impact on business investment spending and economic growth through a number of channels. Moderate returns, high liquidity & low level of volatility is taken to be a symptom of a developed market. Low volatility is preferred as it reduces unnecessary risk borne by investors thus enables market traders to liquidate their assets without large price movements. The volatility in stock markets is linked to a number of reasons such as political climate, economic cycle, economic growth, international trends, budget, general business conditions, company profits, product demand etc. Investment decisions are governed significantly by this volatility apart from other interdependent factors like price, volume traded, stock liquidity, among many others. Recent global financial crisis is known as the biggest financial crisis & is more contagious and deeper than Asian crisis. Probably, it is the largest crisis after great recession of 1930s & has affected both real and financial sectors It started from US in 2008 and affected all countries. This article attempts to study the response of the returns & volatility of the Bangladesh stock markets to the recession of 2008. To model volatility, various linear and nonlinear methods have been developed in the literature and extensively applied in practice. One of the most prominent tools for capturing such changing variance has been the GARCH family models. GARCH was developed by Bollerslev in 1986. This study uses ARMA(3,3)- GARCH(1,1) model keeping in view the characteristics of the financial time series such as: Leptokurtosis, Volatility clustering & Heteroskedasticity

II.

Review of Literature

Vast literature has emerged addressing different aspects of the stock market. A brief review of few studies addressing the issue of volatility of stock markets as well as the issue of financial crises impact on the stock markets as under: Adamu (2010) also studied impact of recession of 2008 on return and volatility of Nigerian stock market using standard deviation and variance analysis and divided the data into pre and post crisis period. This study empirically revealed that during the financial crisis period, volatility in Nigerian stock market increased.

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Ravichandran and Maloain (2010) found that during recent financial crisis, stock markets of six Gulf countries also declined but strengthened during post crisis period. Ali R. and Afzal M. (2012) studied the impact of the global financial crisis on the stock markets of India and Pakistan . EGARCH model has been used to find volatility by using daily data from 1st January 2003 to 31st August 2010 of KSE-100 and BSE-100 indices, They found that volatility clusters and negative shocks have more pronounced impact on the volatility than positive shocks. They also found that the financial crisis made mild negative impact on stock returns and enhanced volatility in Pakistani and Indian stock exchanges but this impact is stronger on Indian stock market. Ramanathan K. & Gopalakrisnan M. (2013) , attempted to examine the volatility of Indian stock market using daily opening price, closing price, high and low prices of 31 selected companies. The sample period for the study has been 2005-2008 and 2009-2012. The sample period chosen helps to identify volatility relationship during Pre Recession and Post Recession period. The data have been analyzed using Yang-Zhang Estimator and the calculation carried in excel .The study shows that the volatility estimates compared between Pre and Post Recession period, Pre Recession seems to be more volatile where in Post Recession the volatility of stocks were gradually decreasing in most of the companies selected. Pre recession period had a higher upward or downward movement in stock prices compared to Post recession. Roy Sankharaj (2013), measured the volatility of Indian stock market during the period of 2005 to 2012 on both NSE & BSE indices. Volatility has been estimated using models like Parkinson Model, Garman & Klass Model, and Intra & Inter day volatility. It has been observed that returns were mostly negative in both the market indexes during the recession period with the higher volatility when the market was falling and vice versa.

III.

Research Methodology

Traditionally volatility modeling techniques were based on the assumption of homoskedasticity and were not able to capture the changing variance i.e. heteroskedasticity found in the returns. So more sophisticated models like ARCH/GARCH were developed to capture such effects and leave the errors white noise. This study uses GARCH (1,1) model to estimate the volatility and to capture the asymmetric effects in the Bangladesh stock market. GARCH model was Proposed by Bollerslev (1986). For modelling conditional variance two equations need to be formulated, mean equation & variance equation The specification of mean & variance equation i.e., ARMA(2,2)-GARCH(1,1) model is as follows: 𝑅𝑡 = 𝛼 + 𝛽0 𝑅𝑡−1 + 𝛽1 𝑅𝑡−2 + 𝛽3 𝑒𝑡−1 + 𝛽4 𝑒𝑡−2 + 𝜀𝑡 ………(1)

2 2 𝜎𝑡2 = 𝛼0 + 𝛼1 𝜀𝑡−1 + 𝛽1 𝜎𝑡−1

………..(2) The GARCH specification formulates the serial dependence of volatility and incorporates the past observations into the future volatility. GARCH model was first used to model the autoregressive and time varying nature of Inflation.

Data & Preliminary Statistics To model the volatility of the Bangladesh stock Market, we have used daily logarithmic returns of the most popular stock index i.e. CSE 30 as proxy to the Bangladesh stock market. CSE30 index is used as a benchmark of performance. It consists of stocks representing the whole market & have high percentage coverage of the market in terms of market value The data ranges for from 1st jan 2004 to 31st December, 2014. National bureau of economic research dates the beginning of recession as Dec. 2007. In this study 1st Jan 2008 has been taken as the beginning of recession as recession got severity in 2008. The data has been analysed using Eviews 7 software. The entire time period has been divided into three parts: Pre recession period- 1st Jan 2004- 31st Dec 2007 Recession period- 1st Jan 2008- 31st Dec 2009 Post recession period- 1st Jan 2009- 31st Dec 2014 To study the impact of recession on the return & volatility of the Bangladesh stock market, dummy variable denoted by crisis in eq.3 has been incorporated in both the mean and the variance equations. The dummy variable takes the value of „1‟ during the recession period & „0‟otherwise. The recession period has been taken to be 1st jan 2008 to 31st Dec 2009. The coefficient of dummy variable depicts the effect of crisis on return & conditional variance of stock markets. The extended , GARCH model with the dummy variable is as follows:

2 2 𝜎𝑡2 = 𝛼0 + 𝛼1 𝜀𝑡−1 + 𝛽1 𝜎𝑡−1 +  𝐶𝑟𝑖𝑠𝑖𝑠

………(3) To further analyse volatility after recession, dummy variable has been incorporated which takes value of „1‟ in the post recession period and „0‟ in the pre recession period in equation 3. The significant coefficient of dummy variable will show if markets have become more volatile after recession. A comparison of the structure of volatility has also been made by formulating separate GARCH(1,1) model for both pre & post recession period and by comparing the resulting volatility coefficients. Empirical studies such as Bologona and Cavallo (2002) and Antoniou and Holmes (1995) state that the variance equation has two effects: the effect of recent news to the market (ARCH effect) depicted by α1 and the effect of the old news to the market (GARCH effect) depicted by β1 in eq 3. The same description has been followed. Response of Bangladesh Stock Market to Global Financial Crisis: An Analysis

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Analysis of Data: First, logarithmic returns have been calculated from the closing price series as follows:

𝑟𝑡 = log⁡ (𝑝𝑡 − 𝑝𝑡−1 ) Where rt = continuously compounded logarithmic return pt =daily closing value of index at day t and pt-1 =closing value of index at day t-1 The descriptive statistics of the Bangladesh stock market returns has been given in fig 1 in appendix. The descriptive statistics shows that the distribution of returns is not normal as Jarque Bera test rejects normality. The distribution is leptokurtic as the kurtosis is greater than 3 and the skeweness is positive which means there is more probability of earning positive returns on the Bangladesh stock market. The graph of the return series is shown in fig 2 in appendix which shows a constant mean which shows stationarity of the data. The series has a non constant variance i.e. heteroskedasticity, which is the typical feature of the time series data. Also volatility clustering in the returns can also be easily seen. Thus the return series follow the characteristics of the time series data i.e. heteroskedasticity, leptokurtosis & volatility clustering. Table 1 given below shows the result of ARMA(3,3)-GARCH( 1,1) with dummy variable with taking value as „1‟ during the recession period. The result in table 1 shows that there had been no significant effect on returns & volatility during the recession Thus markets did not become riskier during recession. Table 1. ARMA(3,3)-GARCH( 1,1) with dummy variable Variable

Coefficient

Std. Error

z-Statistic

Prob.

C DUMMY AR(1) AR(2) AR(3) MA(1) MA(2) MA(3)

0.000854 4.54E-06 1.211600 -1.212875 0.728894 -1.131079 1.133193 -0.622996

0.000303 0.000733 0.063973 0.059604 0.061994 0.074235 0.069537 0.071899

2.823090 0.006187 18.93918 -20.34876 11.75742 -15.23640 16.29626 -8.664872

0.0048 0.9951 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Variance Equation 5.52E-06 1.30E-06 0.147602 0.017504 0.831214 0.017762 1.06E-06 1.74E-06

4.229510 8.432469 46.79836 0.611516

0.0000 0.0000 0.0000 0.5409

1.395204

29.17384

0.0000

C RESID(-1)^2 GARCH(-1) DUMMY GED PARAMETER

0.047824

Table 2 below shows the post recession impact on the Bangladesh stock market . It shows the result of ARMA(3,3)-GARCH( 1,1) with dummy variable taken as „1‟ in the post recession period. Volatility of the Bangladesh stock market has not increased after recession. The coefficient of Dummy variable is neither negative nor significant. But the structure of volatility seems to have changed. A comparison of the alpha & beta coefficients in the pre & post recession period shows that the impact of new news on volatility has deceased after recession but the impact of old news has increased meaning that the informational efficiency of the Bangladesh stock market has declined after recession. The results have been given in table 3. Table 2. Result of ARMA(3,3)-GARCH( 1,1) with dummy variable as „1‟ in the post recession period Coefficient Variable C AR(2) AR(3) MA(1) MA(2) MA(3) C RESID(-1)^2 GARCH(-1)

Std. Error

0.000858 0.000275 -1.213300 0.059343 0.727562 0.062325 -1.130345 0.074491 1.133725 0.069267 -0.621639 0.072184 Variance Equation 5.46E-06 1.30E-06 0.147841 0.017484 0.829817 0.018029

z-Statistic 3.124941 -20.44544 11.67360 -15.17416 16.36754 -8.611815

Prob. 0.0018 0.0000 0.0000 0.0000 0.0000 0.0000

4.210867 8.456006 46.02773

0.0000 0.0000 0.0000

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DUMMY1

1.06E-06

1.44E-06

0.738987

0.4599

GED PARAMETER

1.392465

0.047823

29.11722

0.0000

Table 3. Result of Comparison of Volatility Coefficients Pre & Post Recession

𝛼1 𝛽1

Pre -Recession

Post-Recession

0.211115 (0.0000)

0.139924 (0.0002)

0.707026 (0.0000)

0.839741 (0.0000)

CONCLUSION This article aimed to find the response of Bangladesh stock market to the recession of 2008 using returns of CSE 30 index from 1st Jan. 2004 to 31st Dec 2014. The study found that the recession had no impact on the returns & volatility of the Bangladesh stock market. The volatility of the stock market was also unaffected even in the post recession period but the stock markets became informationally inefficient after the recession and the persistence of volatility increased meaning that a shock to the volatility takes more time to die out. Stock market of Bangladesh was unaffected by the global recession.

REFERENCES 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19.

Abhilash S. Nair (2008), “Impact of Derivative Trading on Volatility of the Underlying: Evidence from Indian Stock Market” IIMK, Working Paper Series no. 31, Jan 2008. Abdul Rashid & Shabbir Ahmad( 2008) , “Predicting Stock Returns Volatility: An Evaluation of Linear vs. Nonlinear Methods”, International Research Journal of Finance and Economics, Volume 0(20),141-150. Abhilash S. Nair (2011), “Existence and Extent of Impact of Individual Stock Derivatives on Spot Market Volatility in India”, Applied Financial Economics, 1, 1-38. Adamu A (2010). Global financial crisis and Nigerian stock market volatility. Proceedings of the National Conference on “Managing the challenges of Global Financial Crisis in Developing Economies”, 1, 102-113. Akgiray, V., (1989) “Conditional heteroscedasticity in time series of stock returns”, Journal of Business, 62, 55-80. Alberg, D., Shalit, H., and Yosef, R. (2006) “Estimating stock market volatility using asymmetric GARCH models”, Discussion Paper No. 06-10, Monaster Center for Economic Research, Ben-Gurion University of the Negev, Israel Ali R. and Afzal M. (2012) Impact of global financial crisis on stock markets: Evidence from Pakistan and India. E3 Journal of Business Management and Economics, 3(7) , 275-282. Antoniou A., & Holmes P. (1995), “Futures trading, information and spot price volatility: Evidence for the FTSE – 100 stock index futures contract using GARCH”, Journal of Banking and Finance, 19, 117–129 Badhani K.N.(2009) “Response Asymmetry in Return and Volatility Spillover from the US to Indian Stock Market”, The IUP Journal of Applied Finance, 15( 9), 22-45 Banerjee Ashok & Sahadeb Sarkar (2006), “Modeling Daily Volatility of the Indian Stock Market using Intra-Day Data”, IIMK, WPS No. 588/ March 2006. Bhaskkar Sinha (2006), “Modeling Stock Market Volatility in Emerging Markets: Evidence from India” The Icfai Institute for Management Teachers (IIMT), WPS (2006). Bologna, P and L. Cavallo (2002): “Does the Introduction of Stock Index Futures Effectively Reduce Stock Market Volatility? Is the „Futures Effect‟ Immediate? Evidence from the Italian stock exchange using GARCH”, Applied Financial Economics, Volume 12, 183-192 Engle RF (1982). Autoregressive conditional Heteroskedasticity with estimates of the variance of U. K. inflation. Econometrica, 50, 987- 1008. Hameed A, Ashraf H (2006). Stock market volatility and weak-form efficiency: Evidence from an emerging market. The Pakistan Develop. Rev., 45(4 II), 1029-1040. Nelson DB (1991). Conditional Heteroskedasticity in asset returns: A new approach. Econometrica, 59, 347-370. Olowe RA (2009). Stock return, volatility and the global financial crisis in an emerging market: The Nigerian case. Intl. Rev. Bus. Res. Papers 5(4), 426-447. Ramanathan K. & Gopalakrisnan M. (2013) , Volatility in Indian Stock Market – A Study of Post & Pre Recession Period, Namex International Journal of Management Research, 3(1), 133-143. Ravichandran K, Maloain AM (2010). The global financial crisis and stock market linkages: Further evidence on GCC Market. J. Money,Invest. Banking, 16, 46-56. Roy Sankharaj (2013),Economic Recession and Volatility in Stock Markets: Evidence from Indian Stock Exchanges, IJMBS,3(2), 132-136.

APPENDIX Fig 1 : Descriptive statistics of the CSE 30 series.

Fig 2: Graph of CSE 30 returns RET

900 Series: RET Sample 1/01/2004 2/17/2015 Observations 2711

800 700

.15

.10

600

Mean Median Maximum Minimum Std. Dev. Skewness Kurtosis

500 400 300 200

Jarque-Bera Probability

100 0 -0.1

0.0

0.1

0.000762 0.000442 0.179379 -0.155302 0.015734 0.385297 18.31420 26558.59 0.000000

.05

.00

-.05

-.10 04

06

08

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Family Level Problems of Single Parents and Role of Human and Material Resources Dr. Namita Bhatnagar Assistant Professor, Banasthali University, Rajasthan, India Email – [email protected]

Abstract: The exponential rise in single parent households has become one of the most important issues of concerns to social welfare workers in developing countries too. Psychologists remain firm on the fact that single parenting is a challenging task as they have to bear with added responsibilities, tensions and pressures. The present study was an attempt to identify what problems single parents face at family level, what resources (Human and Material) are available to them and what role these resources play in shaping the life of single parents. Key Words: Single parents, Problems, Human Resources, Material Resources _________________________________________________________________________________________________

I.

Introduction

Demographics show that there is exponential rise in the number of single parents in the last few decades. Psychologists remain firm on the fact that being a single parent can be hard and growing up in a single parent family puts children at risk. Although traditional norms are changing but Indian society still looks harshly upon divorced / separated mothers and for widows problems are different. Whatever is the reason for single parenting (divorce, separation, extra marital pregnancy, adoption, abandonment or enforceable tragedy i.e. death of one parent) there is mountain of scientific evidences that show single mothers face hostility, find it difficult to meet the basic needs of their children, their emotional life is also affected and they suffer from loneliness, trauma and depression (Kotwal and Prabhakar, 2009),and they also find it hard to discipline their children. Difficult task of earning a living makes disproportional demand on single parents and financial stress has been observed to decrease their emotional exchange with the children (Burden 1986). Even the relatively privileged mothers who got little support and a fair earning found it difficult to manage their traditional female roles of cooking, cleaning, caring for children etc. (Nelson, 2004). Single mothers may be exposed to a high level of stress due to the financial demands of family combined with caring for home and children. The problems are many and are related to many aspects of their life like family, society, their own personality but this research paper focuses only the potential familial problems perceived by single parents related to relationships, roles and responsibilities and resources available to them.

II.

Literature Review

Apart from his/ her own loneliness, rejection, emotional stress and depression a single parent is forced to adjust in entirely new social milieu and adopt the role of both the father and the mother which is always a big challenge. As proved by scientific research that there is a bundle of problems which they face. Cote (2003) found that ‘poverty’ is one of the key explanations of the negative consequences in single parent families. ‘Time Poverty’ is the flip side of sole mother’s employment (Craig, 2005). Rani (2006) concluded that single mothers face significant difficulty in providing quality child care because of combination of parenting single handedly, financial tension and strain of over load. Singh and Gill (1986) found that 90% of the widows indicated problems in the area of child rearing. They experienced difficulties in fulfilling daily needs of the children, taking care of them when they were sick and disciplining them. Problems of helping children in their school assignments, choosing subjects for their higher studies, taking them for outings and making arrangements for their wedding were also expressed by widows. N.S.Krishnakumari (1987) conducted a study in Bangalore city and concluded that though certain problems are common to all single women but the young and nil or little educated mothers face greater problems than educated, employed and economically independent mothers but 87% of both (working and nonworking single mothers) possessed low status and felt the financial stress in maintaining the family alone. Bringing up small children and difficulty in disciplining sons seemed to be the next major problem. According to Asha Mohan Sethi (1994) widows undergo a shock or trauma when they lose their husbands. In the case of young working widows parenting of children and working may jeopardize their chances of higher placement or promotion in the job. They may not be left with either time or energy to improve her occupational skills. But there are some protective factors that can reduce the level of problems. Family and social support plays a key role here. Dornbusch, et al, (1985) reported that beneficial effects of a supportive adult who assisted single parent with child care. Several studies also revealed that mother adolescent relationship is less affected in single parent families. Girls have a more positive relationship with their mother and are more responsible than boys (Hetherington, 1989).

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The loss of father has less impact on the relationship that adolescents have with their mothers (Aquilino, 1994). Managhan and Parcel (1995) found that single mothers who are in well paid occupations provide their children with home environment equivalent to that available in similar two parent homes. Lussier et al (2002) reported that closeness to maternal grandparents typically was associated with better child adjustment. Amato and Fowler’s study (2002) revealed that ‘positive parenting practices’ such as support, monitoring and avoidance of harsh punishment were important predictors of child’s outcomes in all types of family structures. Parental involvement not only improves academic performance but also relationships and health. Sharing of thoughts with someone else who is in a similar situation can also prove to be extremely helpful. A rotation schedule with other neighborhood mothers frees up time for everyone (Calizaire, 2005). The above mentioned descriptions of research reveals contradictory findings and suggest that on one side single parents have higher possibilities of difficulties in their adjustment whereas on the other side support factors and their own adaptive and coping process play an important role and can minimize the risk. Purpose of the study The purpose of this study was to identify problems perceived by single parents at familial level in India. To answer few questions (like – Do all single parents have problems?, What are the problems they face?, What human and material resources are available to them at family level? and what role human and material resources play in minimizing the problems) following objectives and assumptions were formed – III. Research Objectives 1. To identify the problems and available resources (Human and Material) as perceived by single parents at family level. 2. To identify association between family level problems of single parents and resources available to them. III (a) Assumptions 1. Single parents may have problems at family level. 2. Availability of human and material resources may play a significant role in the lives of single parents. III (b)Delimitation 1. Only single parent families of school going children were selected for the study. 2. The schools from urban areas only were included in the study.

III (c )Research Method Quantitative research method (Survey) was used for study. The quantitative aspect of research method was concerned with collection and analysis of data in numeric form to test hypotheses and achieve objectives .A semi structured questionnaire including closed ended and open ended questions was developed by the researcher.

III (d) Locale of the study The study was carried out in a larger area covering seven zones (Jaipur, Udaipur, Ajmer, Bikaner, Jodhpur, Kota and Bharatpur) of Rajasthan state and Delhi region as being a metropolitan city it could provide diverse population of single parents.

III (e) Sample Total 200 single parents of the children (studying in 6th to 12th standard) constituted the sample.

III (f) Instrumentation The survey instrument (5 point rating scale) used in the study was designed to measure following variables – Demographic characteristics of the sample, problems faced by single parents, resources (human and material) available to them at family level. The statements included in the instrument measured following areasa. Demographic characteristics of the sample included - Family type, Living arrangement, Cause of single parenting, Duration of single parenting, Occupation status of single parents, Monthly income, Number of children etc.

b.

Problems related constructs

1. 2. 3. 4. 5.

Bonding with Children (BwC) Moral and Behavioral Problems of Children (MBoC) Need Fulfillment and Financial Problem (NFF) Problem of Bonding with Family Members and Home Environment (BwFMHE) Burdon of Responsibilities (BoR) Human and Material Resources related constructs Support of Children (SoC) Support of Family Members (SoFM) Support of Relatives (SoR) Living Conditions and Facilities Provided (LCFP)

c. 1. 2. 3. 4.

IV. Data Processing and Analysis To obtain numeric data following scoring procedure was used in the research Table 1 - Scoring Procedure used in the Research Family Level Problems of Single Parents and Role of Human and Material Resources

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Options Scoring Statements related to Problems Statements related to available Human and Material Resources

Always 0 4 4 0

Positive Negative Positive Negative

Most Often 1 3 3 1

Usually 2 2 2 2

Rarely 3 1 1 3

Never 4 0 0 4

Note – A. On problem statements high scores show high level of problem and low scores show low level of problem. B. On human and material resources related statements high scores show good availability of resources and low scores show poor availability of resources. Categorization Criterion For the present study the 5 point rating scale was converted into interval scale to locate the level of problem as the average rating (mean) could be derived in decimal values.

Table 2 - Categorization Criterion Range of scores

0.0 – 0.8

0.8 – 1.6

1.6 – 2.4

2.4 – 3.2

3.2 -4.0

Level of Problems

Very low

Low

Average

High

Very high

Level of Available Human and Material Resources

Very Poor

Poor

Average

Good

Very Good

V. Results A. B. C. D. A.

The results of the study are covered under following four heads – Demographic Characteristics Problems perceived by single parents at family level Resources (human and material) available to them at family level Association between problems and resources available (human and material) Demographic Characteristics Table 3 - Demographic Characteristics of the Sample S.No .

Fre que ncy 99 101 55 38 107 150 25 25 137 63 166 34 124 76 34 166

Variables

1

Family type

2

Living arrangement

3

Cause of single parenting

4

Education of single parents

5

Occupation status of single parents

6

Monthly income

7

Gender of single parents

Joint Nuclear Parents Parent in-laws Separately with children Death Separation Divorce School educated College educated Working Non-Working Up to 20,000 Rs/PM Above 20,000 Rs/PM Father Mother

Percentage 49.5 50.5 27.5 19 53.5 75 12.5 12.5 68.5 31.5 83 17 62 38 17 83

B. Problems perceived by Single Parents Table 4 - Statistics for scores obtained on various problem areas – Level of problem

Very low

Low

Average

High

Very high Mean

Problem Area (% frequency) Bonding with Children (BwC) Moral and Behavioral Problems of Children (MBoC) Need Fulfillment and Financial Problem (NFF) Bonding with Family Members and Home Environment (BwFMHE) Burden of Responsibilities (BoR)

S .D.

0.0 – 0.8

0.8 – 1.6

1.6 – 2.4

2.4 – 3.2

3.2 -4.0

41.5

37

17

4.5

0

1.08

0.71

59.5

23.5

14

3

0

0.84

0.7

5

17

17

35

26

2.48

0.93

4.5

53

38.5

4

0

1.58

0.45

0

5

42

23

30

2.73

0.78

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It is evident from the table- 4 that there were three problem areas on which single parents rated the problem at low level – BwC, MBoC, BwFMHE. Majority of single parents rated the problem related to ‘Bonding with children (BwC)’ at low level (mean 1.08) and feel that they have a good bonding with their children. This problem area included 10 statements and majority of parents responded that their children help in decision making, show faith and trust, feel bad for disrespect shown to their parents by others etc. Although only on one aspect they (31.5%) stated that their children rarely share and discuss about their friends and school with them. Results regarding ‘Moral and behavioral problems of children (MBoC)’ were also indicative of low occurrence of problem. Majority of parents i.e. 59.5% and 23.5% rated the problem at very low level and low level respectively. The responses of majority of parents indicated that their children obey them, do not show behaviors like lying, stealing, answering back, loiter about, wasting time, blackmailing their parents by threatening to leave the house, insulting them etc. 53% and 38.5% single parents rated the problem ‘Bonding with family members and Home Environment (BwFMHE)’ at low and average level respectively. This problem area included 9 statements and the general result shows that most of the single parents have good bonding with family members and find their home environment peaceful and conducive. Although on two aspects 43% parents rated the problem at high level and responded that they hesitate in sharing their problems with family members as well as they also don’t feel secure in family interpersonal relationships. The reasons could be varied such as they may be guilty for exerting extra pressure on family members and have feeling of dependency as most of the (62%) parents’ earnings are not sufficient to fulfill their own and their children’s requirements. The other two problem dimensions ‘Need Fulfillment and Financial Problem (NFF)’ and ‘Burden of responsibilities (BoR)’ were rated at high level. The results on NFF shows that most of the single parents have financial problems and face difficulties in fulfilling their own and children’s need. This problem area included 13 statements and on one aspect a significant number of single parents (51%) reported that they need not borrow money and they can manage their requirements without any outside support. Regarding BoR almost all (95%) single parents rated the problem at average (42%), high (23%) and very high (30%) levels respectively and felt heavy burden of responsibilities. The reasons could be varied – a. 83% single parents are working and perform dual roles (as per demographic characteristics of the group), b. Single parents who live separately with children are the sole bearer of responsibilities c. Single parents who live in joint family may not get required help from family members in daily household chores and taking care of children. C. Resources available to single parents Table- 5 - Statistics for Scores Obtained on Various Available Resources Level of available resources Resource Area (% frequency) Human Resources Support of Children (SoC) Support of Family Members (SoFM) Support of Relatives (SoR) Material Resources Living Conditions and Facilities Provided (LCFP)

Very poor

Poor

Average

Good

Very good Mean

S.D.

0.0 – 0.8

0.8 – 1.6

1.6 – 2.4

2.4 – 3.2

3.2 -4.0

0 3 2.5

0 21 26

6 33 50

84 25.5 21.5

10 17.5 0

2.92 2.66 1.92

0.317 0.85 0.59

50.5

27.5

14.5

6

1.5

0.93

0.317

Available human resources a. Support of Children (SoC) - Majority of single parents (84%) rated the support at good level and responded that their children b.

c.

provide them physical and mental support by sharing their problems and work load and try to reduce their tension and stress level. Support of family members (SoFM) – Regarding support of family members also majority of single parents i.e.33% and 25.5% rated the support at average and good level respectively. This HR area included total 11 statements and on one dimensions i.e. the support from their parent-in-laws, 43% single parents reported that they never receive support but at the same time 29.5% single parents accepted that they receive very good support from their parent-in-laws. The responses also indicated that single parents (36%) also experience decrease in love and affection of their parent-in-laws and they can’t share their problems with them (39.5%) but regarding support from their own parents majority of single parents (25.5% reported good support and 53.5% reported very good support) accepted that they almost always receive support from their own parents. Support of Relatives (SoR) – Half of the single parents (50%) rated the support of relatives at average level. This HR area included 6 statements out of which 40% single parents agreed to one statement i.e. there is lack of support of relatives due to poor economic status of single parents.

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Available material resources a.

Monthly Income – The demographic characteristic shown in table- 3 indicate that a vast majority of single parents (62%) have low monthly income (Upto 20,000 Rs/PM only) and 38% single parents have average or good income i.e. above 20,000 Rs/PM.

b. Living Conditions and Facilities Provided (LCFP) – It is evident from the table- 5 that the average rating of sample on LCFP falls in the poor level category and is indicative of poor living conditions and facilities available to single parents. The reason could be their low income which creates a stumbling block in hiring houses in good colonies and getting sufficient facilities . D. Association between problems and resources available (human and material) In order to achieve objective- 2 (to study the association between available resources and problem faced by single parents) Karl Pearson Correlation Coefficients were calculated. Which are depicted in the following table Table- 6 Correlation (r) between Problem of Single Parents and Available Resources at Family Level Problem Areas

Bondin g with Childre n ‘BwC’

Moral and Behavioura l Problems of children ‘MBoC’

Need Fulfillment and Financial Problems ‘NFF’

Problem of Bonding with Family Members and Home Environment ‘BwFMHE’

Burden of Responsibil ities ‘BoR’

Overall Family Problem

-0.043

-0.022

-0.01

-0.251

0.132

-0.035

0.55 -0.133 0.06 -0.07 0.327 -0.031 0.667 -0.093 0.192

0.761 0.134 0.058 -0.343 0.000 (**) -0.207 0.003 (**) -0.291 0.000 (**)

0.886 0.311 0.000 (**) 0.024 0.733 -0.071 0.318 0.06 0.399

0.000 (**) 0.137 0.053 0.001 0.992 0.107 0.131 0.086 0.227

0.062 0.033 0.64 -0.222 0.002 (**) -0.129 0.068 -0.201 0.004 (**)

0.618 -0.205 0.004 (**) -0.239 0.001 (**) -0.154 0.029 (*) -0.18 0.011 (*)

MR and HR Living Conditions and Facilities Provided ‘LCFP’ (MR) Support of Children ‘SoC’ (HR) Support of Family Members ‘SoFM’ (HR) Support of Relatives ‘SoR’ (HR) Over all Family HR

r – Value P – Value r – Value P – Value r – Value P – Value r – Value P – Value r – Value P – Value

The results based on table- 6 are as follows -

i.

Family Problems and Living Conditions and Facilities Provided (MR)

Out of four family problem areas viz. BwC, NFF, BwFMHE and MBoC as well as overall family problem only BwFMHE was found significantly correlated (r = -0.25) at 0.01 level which shows these two variables are significantly different from each other and as living conditions improve and more resources are available, there is decrease in problem related to bonding with family member and home environment. In other words there are more chances of conflicts among family members when limited resources are available.

ii. 1.

2.

iii. 1. 2. 3.

2.

Family Problems and Support of Family Members (HR)

The two problem areas viz. MBoC, BoR and Overall Family Problems were found to be negatively correlated with support of family members at 0.01 level of significance which shows as the support of family members increases less moral and behavioral problems are perceived by single parents among children. the burden of responsibilities on single parents decreases. the level of overall family problem also reduces.

iv. 1.

Family Problems and Support of Children (HR)

As far as significance of correlation is concerned only two following association were found significant – Positive correlation was found between NFF and SoC (r = 0.311) which was significant at 0.01 level of significance that shows as ‘Support of Children’ increases the problem related to ‘Need Fulfillment’ also increases. The reason for this result could be a good bonding between single parents and their children (which revealed in this study) due to which parents may have more desire to fulfill the needs of their children and try to satisfy them which may exert the financial pressure on them. Negative correlation was found between overall family problem and SoC (r = -0.205) which was significant at 0.01 level of significance. Which means as support of children increases the level of overall family problem decreases.

Family Problems and Support of Relatives (HR)

Only one problem area MBoC and Overall Family Problem were found significantly correlated with SoR. Between MBoC and SoR negative correlation (r = -0.207) was found significant at 0.01 level which means as the support of relatives increases there is decrease in moral and behavioral problems among children perceived by single parents. Between Overall Family Problem and SoR negative correlation (r = -0.154) was found significant at 0.05 level of significance which indicates as support of relatives increases the overall family problem decreases.

v.

Family Problems and Overall Support (HR) available

Out of associations between Overall Support available at family level and various problems only following three associations were Family Level Problems of Single Parents and Role of Human and Material Resources

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2.

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found significant – Negative correlation was found between MBoC and overall HR (r = -0.291) and BoR and overall family HR (r = -0.201) at 0.01 level of significance which indicated as overall family support increases the level of moral and behavioral problems among children and burden of responsibilities on single parents decreases. Negative correlation was found between Overall Family Problem and Overall Family HR (r = -0.18) which was significant at 0.05 level of significance. The result shows that overall family support helps in reducing overall family problems.

VI. Conclusion The study revealed mixed results in accordance with Objectives and Assumptions of the study. There were some areas in which problems were found significantly severe such as problems of need fulfillment and burden of responsibilities. The result justifies many previous studies such as Craig (2005), Rani (2006), Kotwal and Prabhakar (2009). On the other hand in some areas problem existed only at low or very low levels and contrary to Burden’s study(1986) it was found that there was a good bonding between single parents and their children and in spite of financial stress and time poverty they receive good and average support of their family members and relatives respectively. The results also showed that most of the single parents receive support from their own parents and family members in comparison to their parent - in – laws. Regarding availability of material resources majority of single parents perceived their living conditions and facilities to be very poor. In accordance with the 2 nd assumption the study revealed close and significant association between various problems and available resources. It was found that where the support of family members and relatives was strong, the severity of problems was low. It could be concluded that strong support system and good living conditions and facilities play a significant role in reducing the level of problems.

BIBLIOGRAPHY 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Amato P.R., and Fowler F. (2002). Parenting practices, child adjustment, and family diversity. Journal of Marriage and Family, 64, 703-716. Aquilino W.S. (1994). Later life parental divorce and widowhood: Impact on young adults assessment of parent-child relations. Journal of Marriage and Family, 56(4): 908-922. Burden D.S. (1986), Single parents and the work setting: The impact of multiple job and home life responsibilities, Family Relations, 35, 37-43. Calizaire C. (2005, October). How she does it. Working mother, 28(8), 25-29. Cote S., Tremblay R.E., and Vitaro F. (2003). Le development de l’agression physique au cours de l’enfance: differences entre les sexes et facteurs de risqué familiaux. Sociologie et societies, 35, 203-219. Craig L. (2005, Summer). The money or the care: A comparison of couple and sole parent household’ time allocation to work and children. Australian Journal of Social Issues, 40(4), 521-540. Dornbusch S.M., et al. (1985). Single parents, extended households, and the control of adolescents. Child development, 56, 326-341. Hetherington, E.M. (1989). Coping with family transitions: Winners, losers and Survivors, Child Development, 60(1-4): 1-14. Kotwal N., Prabhakar B., Kamla-Raj 2009 journal of social science, 21(3): 197-204 (2009). Krishnakumari N.S., Status of Single Women in India (A study of spinsters, widows and divorcees), Uppal Publishing House, New Delhi- 110002, 1987. Lussier G., Deater-Deckard K., Dunn J., and Davies.L (2002). Support across two generations: Children’s closeness to grandparents following parental divorce and remarriage. Journal of Family Psychology, 16, 363-376. Menaghan E.G., and Parcel T.L. (1995). Social sources of change in children’s home environments: The effect of parental occupational experiences and family conditions: American Sociological Review, 57, 69-84. Rani N.I. (2006, winter). Child care by poor single mothers: Study of mother-headed families in India. Journal of Comparative Family Studies, 37(1), 75-95. Sethi A.M. (1994). Single women: Problem and perspectives. In Neshla (Eds), Single women in Indian Perspective, Nirmal Book Agency, Kurukshetra, 15-23. Singh A.M. and Gill S., Problems of Widowhood, Indian Journal of Social Work, 47(1): 67-71, 1986. Net reference Nelson (2004) www.kon.org/vrc/v7/bronnimann.html

Family Level Problems of Single Parents and Role of Human and Material Resources

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Utilitarian and Hedonic Shopping Values: A Study on Impact of Rational and Emotional Behavior on Individual’s Perceived Benefits Dr.Uma Gulati Associate Professor, Gitarattan International Business School, Madhuban Chowk, Pitampura, New Delhi-85 E-mail: [email protected]

Abstract: Purpose: Online shopping or e-shopping is a form of electronic commerce which allows consumers to directly buy goods or services from a seller over the internet using a web browser. Today, more and more shoppers are purchasing online in order to save time and maximize their convenience instead of physically visiting a store. This study investigates how the individual buyer’s perceived benefits in online shopping are influenced by his or her perceived utilitarian or hedonic shopping values. The purpose of this study is to investigate the Internet shopping experiences from both utilitarian and hedonic perspectives. Utilitarian values and experiences are influenced by convenience, cost saving, information availability, and selection whereas hedonic values and experiences are influenced by adventure, and authority and status Approach: This paper explores the relationship of Utilitarian and Hedonic Shopping Values with perceived benefits. In which ways and to what extents can utilitarian and hedonic shopping values impacts perceived benefits in online shopping. The study has been confined to the customers who do online shopping in Delhi and includes the customers of age group between 18-40 years which were selected using convenience sampling. Findings: The study reveals that Utilitarian Shopping Values have significant positive impact on individual’s Perceived Benefits and Hedonic Shopping Values have negative impact on individual’s perceived benefits in Online Shopping. Practical implication: E-shopping tendency is increasing rapidly among buyers across the world. It has great potential among the youth segment. Therefore the marketers must consider as to how they should investigate the individual buyer’s perceived benefits in e-shopping and how it is influenced by his or her perceived utilitarian or hedonic shopping values. Keywords: Emotional Behavior, Hedonic Shopping Values, Online shopping, Rational Behavior, Utilitarian Shopping Values. _________________________________________________________________________________________________

I. Introduction Online shopping is a rapidly growing e-commerce area. Today, one can find two basic formats of shopping: store format and non-store format. Nowadays, more and more shoppers are purchasing online in order to save time and maximize their convenience instead of physically visiting a store. The internet has become a significant means for carrying out commercial transactions. Alternative names are: e-web-store, e-shop, e-store, Internet shop, web-shop, web-store, online store, online storefront and virtual store. Rapid growth of cybercafés across India access to Information the increase in number of computer users reach to net services through broadband middle-class population with spending power is growing. People have very little time to spend for shopping. Many of them have started depending on internet to satisfy their shopping desires. The individual buyer’s perceived benefits in online shopping are influenced by his or her perceived utilitarian or hedonic shopping values. The purpose of this study is to investigate the Internet shopping experiences from both utilitarian and hedonic perspectives.

II. Literature Review Shopping values: Utilitarian and Hedonic values Value is one of the most powerful forces in the marketplace to understand consumer behavior (Zeithaml, 1988; Dodds et al., 1991; Holbrook, 1996). Value originates from the confrontation between what the customer receives (e.g. quality, benefits, worth, utilities) and what he or she gives up to acquire the benefits (for example, price, sacrifices) (Zeithaml, 1988) and thus is defined as a consumer’s overall judgment of benefits and sacrifices (Overby and Lee, 2006). Value plays an important role in predicting customers’ choice and future repurchase intentions (Zeithaml, 1988; Dodds et al., 1991; Holbrook, 1996). Thus, value judgment creates consumer preference and this consumer preference increases behavioral intention to participate in various shopping processes (Cronin et al., 2000; Overby and Lee, 2006).

Utilitarian Value Hirschman (1984) asserted that all shopping experiences involve the stimulation of thoughts and/or senses and that they accordingly may be viewed as a process that provides the individual with cognitive (utilitarian) and affective (hedonic) benefits. More specifically, tangible attributes of goods and services provide input to cognitive process and is closely related to assessments of utilitarian value. Thus, a consumer receives utilitarian shopping value when he or she obtains the needed product, and this value increases as the consumer obtains the product more effortlessly (Babin et al., 1994). Early studies on shopping value mostly focus on the utilitarian aspect of shopping (Bloch and Bruce, 1984). Utilitarian consumer behavior is explained

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task related and rational behavior (Batra and Ahtola, 1990; Kempf, 1999). Perceived utilitarian shopping value is determined by how much of the consumption need that prompts the shopping experience, is met (Seo and Lee, 2008). This means that the consumer purchases goods in a deliberant and efficient manner (Hirschman and Holbrook, 1982; Engel et al., 1993). Therefore, utilitarian purchasing behavior is more logical, rational, related to transactions (Sherry, 1990; Batra and Ahtola, 1990), and associated with more information gathering compared to hedonic purchasing behavior (Bloch and Richins, 1983). Although this utilitarian approach to consumer shopping values is helpful for analyzing consumer purchases, it offers no framework for measuring product selection and analyzing consumption behavior based on emotional needs (Hirschman and Holbrook, 1982).

Hedonic Value Compared to utilitarian value, hedonic shopping value is more subjective and individualistic. Its value is perceived through fun and pleasure as opposed to goal achievement (hirschman and holbrook, 1982). Also, hedonic shopping value reflects the pleasure and emotional worth of shopping (bellenger et al., 1976). Recently, as the needs of consumers have become more diverse, many studies have begun to focus on hedonic shopping value. In the past, however, there was a considerable lack of studies examining hedonic shopping value compared to utilitarian shopping value (sherry, 1990). Previous studies have identified and included fun, pleasure, recreation, freedom, fantasy, increased arousal, heightened involvement, new information, escape from reality, and others as hedonic shopping value (darden and reynolds, 1971; tauber, 1972; hirschman and holbrook, 1982; babin et al., 1994). Therefore, hedonic shopping value refers to the level of perception where shopping is considered emotionally useful through various positive feelings and worthwhile. Thus, hedonic shopping value can be understood as the emotional benefits the consumer perceives through the shopping experience other than the achievement of the original purchase intent (macinnis and price, 1987). Abstract characteristics of goods and services can contribute to affective elements in shopping and are closely related to hedonic value (cottet et al., 2006). In a similar context, babin et al. (1994) defined hedonic shopping value as perceived entertainment and emotional worth provided through shopping activities. As bloch and bruce (1984) stated, consumers obtain hedonic value as well as task-related or product acquisition value during the shopping experience.

Hedonic and Utilitarian Consumption in Online Shopping Consumer goals, products, and activities are often classified as hedonic or utilitarian, a categorization that summarizes a host of related concepts (for a review, see Khan, Dhar, and Wertenbroch [2005]). For example, hedonic consumption experiences are fun, sensorial, and spontaneous (Holbrook and Hirschman 1982). Because of their inherent pleasurable, playful, and immediately gratifying nature, hedonic experiences often elicit guilt and are likened to vices and luxuries. Utilitarian consumption experiences, on the other hand, are functional, sensible, and useful. As a result, utilitarian experiences are easy to justify because they are associated with virtues and necessities (Dhar and Wertenbroch 2000; Kivetz and Simonson 2002; Okada 2005; Sela, Berger, and Liu 2009; Strahilevitz and Myers 1998). Accordingly, hedonic consumption is more affectively rich than utilitarian consumption, such that attitudes and behaviors toward products and activities are more likely to be determined by affective considerations (Pham 1998). Preferences for hedonic tasks and goods are emotionally driven, whereas those for utilitarian tasks and goods are cognitively driven (Havlena and Holbrook 1986; Holbrook and Hirschman 1982; Mano and Oliver 1993; Shiv and Fedorikhin 1999). The affect-rich nature of hedonic outcomes causes their value to be established mostly on internal, subjective, and discretionary standards, whereas the value of utilitarian outcomes depends on external, objective, and mandatory standards (Babin, Darden, and Griffin 1994; Batra and Ahtola 1990). More important for our theorizing, however, are the motivational drivers, which are essential in determining whether an experience is perceived as primarily hedonic or utilitarian (Khan et al. 2005; Pham 1998). According to Batra and Ahtola (1990), consumers purchase and consume for two motives: consummatory (hedonic) gratification, mostly derived from innate affective and sensory attributes, and instrumental (utilitarian) reasons concerned with expectations of consequences. Thus, a hedonic experience is intrinsically motivated and inherently rewarding and for this reason is sought as an end in itself, a terminal goal. By contrast, a utilitarian experience is extrinsically motivated because it is not rewarding in itself but is instrumental to the achievement of a higher-level goal (Dhar and Wertenbroch 2000; Holbrook and Hirschman 1982; Mano and Oliver 1993; Pham 1998). It is important to note that the distinction between intrinsic and extrinsic motivations to engage in an activity depends not on who compels that activity, whether the self or a third party, but on the reason for pursuing it, whether for its inherent satisfaction or as a means to a separable consequence that might or might not be compelled by the self (Moller et al. 2006). In this respect, tasks that are undertaken not for their own sake but as links to self-selected, longer term purposes, including the improvement of self-image, are by definition extrinsically motivated (Kasser and Ryan 1996). Central to our theory development, we refer to intrinsic motivations as terminal and define consumption experiences as hedonic when they are sought as goals in themselves and not as intermediate steps to achieve higher-end goals, including self-signals. Thus, eating for the sheer pleasure of tasting the food is a hedonic experience, whereas eating to cultivate a gourmet self-image is not. We instead refer to extrinsic motivations as instrumental and to consumption experiences as utilitarian when they serve a goal beyond that inherent in the experience itself, for example, eating in order to learn about a foreign culture or to signal a gourmet image to oneself or others.

III.

Objectives of the study

The objectives of the present study are: Utilitarian and Hedonic Shopping Values: A Study on Impact of Rational and Emotional Behavior on Individual’s Perceived Benefits.

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IV.

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To study the impact of utilitarian shopping values on individual perceived benefits in online shopping. To study the impact of hedonic shopping values on individual perceived benefits in online shopping

Hypotheses of the study

To study the impact of Utilitarian and Hedonic Shopping Values on Individuals Perceived Benefits in Online Shopping the following hypothesis were figured out: H1: Consumers’ Utilitarian Shopping Value has significant positive impact on their Perceived Benefits in Online Shopping. H2: Consumers’ Hedonic Shopping Value has significant negative impact on their Perceived Benefits in Online Shopping.

V.

Research methodology Research framework According to objectives and purpose of the research, the study proposes the research framework as Utilitarian and Hedonic Shopping values being independent variable and perceived benefit as dependent variable.

Methodology for data collection

a. b.

c.

Both Primary and Secondary sources have been used for data collection. A Standardized questionnaire developed by Abhigyan Sarkar (2011) has been used as the major tool for collecting the data while Journals, Magazines, Internet and other relevant manuals and publications have been used as secondary sources of data collection. Measurement Items- Perceived benefits in online shopping have been measured using a Standardized questionnaire developed by Abhigyan Sarkar (2011). Eleven items to measure hedonic and four items to measure utilitarian shopping values have been adopted. Sampling Technique- Convenience sampling was done on the ease of access. The reason for convenience and judgment sampling were done among the adult customers of online shopping. Sample Size - For valid and reliable results, a random selection method has been undertaken including customers of various segments in a sample size of 120 out of which 7 were rejected. A total 113 completed questionnaires were considered for final analysis. The age range of the respondents was 18 to 40 years. Only those respondents who had made at least one online purchase of any good or service during the last month were eligible for participating in the study.

Methodology used for Data Analysis Data collected has been analyzed using descriptive statistics and Multiple Regression analysis. In order to test the hypothesized relationships, the multiple regression technique has been used. It has been done to investigate the linear relationships hypothesized between the constructs It is used to test whether an overall relationship exists between the dependent variable and a set of independent variables. It is also used to measure the relative importance of various independent variables in explaining the dependent variables. As far as statistical tool is concerned, SPSS is applied to analyze data.

VI.

Findings

Sample Analysis Out of 113 respondents 59 are male and 54 are female respondents, the number of respondents between 18 to 22 years is 49, age group between 23 to 27 years is 40 respondents, between 28-32 years are 9 respondents and between 33-40 years are 15 respondents. Therefore the major respondent lies between the age group 18-22 years. Hypothesis 1 H1: Consumers’ Perceived Utilitarian Shopping Value has significant positive impact on their Perceived Benefits in online shopping. perbenefit USV

Table no. 1Descriptive Statistics Mean Std. Deviation 59.6549 7.06825 12.4425 2.22381

N 113 113

Table no. 2: Correlations

USV

perbenefit

Pearson Correlation Sig. (1-tailed) N

USV 1 113

.324** Pearson Correlation Sig. (1-tailed) .000 N 113 **. Correlation is significant at the 0.01 level (1-tailed).

perbenefit .324** .000 113 1 113

Analysis: Since the results are displayed in a matrix, each result is repeated. In the above table (table no. 2) where ever we see perfect correlations (“1”), these cells reflect the correlation of a variable with itself. We are interested in cells which reflect the relationship Utilitarian and Hedonic Shopping Values: A Study on Impact of Rational and Emotional Behavior on Individual’s Perceived Benefits.

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between perceived benefits and Utilitarian shopping value. We can seen from the table that Pearson correlation coefficient for perceived benefit and Utilitarian shopping values is .324, which is significant at 0.05 and also at 0.01 level based on sample of 113 cases. Interpretation: Based on the results, we can state that Perceived benefit and Utilitarian shopping values have a statistically significant linear relationship. The direction of the relationship is positive which means both these variables tend to increase together. The magnitude or strength of the relationship is moderate (.3 < | r | < .5). Table no. 3: Model Summaryb Model R R Square 1 .324a .105 a. Predictors: (Constant), USV b. Dependent Variable: perbenefit

Adjusted R Square .097

Std. Error of the Estimate 6.71721

Analysis: This table gives the r-square & adjusted r-square values. R-sq value indicates the proportion of variance of dependent variable that is collectively explained by all independent variables. Adj R-sq gets no sense when there's only one independent variable. But in case of multiple regressions we do check the value of Adj R-sq. The above table tells us that 10% of variability in the dependent variable is accounted for by Independent variables. The footnote of this table tells us which variable was included in this question. Interpretation: Only 10% variance of dependent variable that is perceived benefit is explained by utilitarian shopping values. There are still some other variables which we have not included in our study on which the dependent variable depends. Model 1

Regression Residual Total a. Predictors: (Constant), USV b. Dependent Variable: perbenefit

Table no. 4: ANOVAb Sum of Squares df Mean Square 587.122 1 587.122 5008.418 111 45.121 5595.540 112

F 13.012

Sig. .000a

Analysis: This table (table no.6) gives us an F-test to determine whether the model is a good fit for the data. Here we assume that there's no significant difference between the explained variance (given by regression equation) and the unexplained variance. In other words we are saying Regression equation given by analysis is useless and there's no difference in explained & unexplained variance Alternative hypothesis: Regression equation is robust & Explained variance is quite high than unexplained variance. Interpretation: P value is less than 0.05 and Sig < 0.05 indicates that model is good fit for data. Alternative hypothesis is accepted that is Consumers’ perceived utilitarian shopping value has significant positive impact on their perceived benefits in online shopping.

Table no. 5: Coefficients Model 1

Unstandardized Coefficients B Std. Error 46.844 3.607 1.030 .285

(Constant) USV

Standardized Coefficients Beta .324

T 12.987 3.607

Sig. .000 .000

Dependent variable: perbenefit Analysis: Finally, here are the beta coefficients—one to go with each predictor. We use “unstandardized coefficients,” because the constant [beta zero] is included. Based on this table, the equation for the regression line is: y = 46.844 + 1.030 (USV) There's another column giving sig value of every coefficient. Its meaning is the same as that of ANOVA. The coefficients are checked against the hypothesis that these coefficients are produced by chance. Alternate hypothesis will be coefficients are quite robust. So wherever sig value is < 0.05, coefficients are quite robust to be used for prediction. When sig value of coefficients >0.05 then it means we should go for another sample of data and analyze again. The standardized coefficient is useful if we want to know which of the different independent variables is more important. The unstandardised coefficient, on the other hand, is the one we use to find out what effect 1 unit change in x will have on y. Interpretation: The unstandardised coefficient tells us that one unit change in USV will bring 1.030 changes in perceived benefit. Hypothesis 2 H2: Consumers’ perceived hedonic shopping value has significant negative impact on their Perceived benefits in online shopping. Table no. 6: Descriptive Statistics perbenefit HSV

Pearson Correlation

Mean Std. Deviation 59.6549 7.06825 35.0708 6.02631 Table no. 7: Correlations perbenefit perbenefit 1.000

N 113 113 HSV .368

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HSV perbenefit HSV N perbenefit HSV **. Correlation is significant at the 0.01 level (1-tailed). Sig. (1-tailed)

.368 . .000 113 113

1.000 .000 . 113 113

Analysis: Table no. 7 reflects the relationship between perceived benefits and Hedonic shopping value. We can seen from the table that Pearson correlation coefficient for perceived benefit and Hedonic shopping values is .368, which is significant at 0.05 and also at 0.01 level based on sample of 113 cases. Interpretation: Based on the results, we can state that Perceived benefit and Hedonic shopping values have a statistically significant linear relationship. The direction of the relationship is positive which means both these variables tend to increase together. The magnitude or strength of the relationship is moderate (.3 < | r | < .5). Table no. 8: Model Summaryb Model R R Square 1 .368a .135 a. Predictors: (Constant), HSV b. Dependent Variable: perbenefit

Adjusted R Square .128

Std. Error of the Estimate 6.60169

Analysis: The above table notifies that 13% of variability in the dependent variable is accounted for by Independent variable. The footnote of this table tells us which variable was included in this question. It indicates that 13% variability in perceived benefit is accounted by hedonic shopping values. Interpretation: Only 13% variance of dependent variable that is perceived benefit is explained by Hedonic shopping values. There are still some other variables which we have not included in our study on which the dependent variable depends. Model 1

Regression Residual Total a. Predictors: (Constant), HSV b. Dependent Variable: perbenefit

Table no. 9: ANOVAb Sum of Squares df Mean Square 757.897 1 757.897 4837.643 111 43.582 5595.540 112

F 17.390

Sig. .000a

Analysis: This table gives us an F-test to determine whether the model is a good fit for the data. Here we assume that there's no significant difference between the explained variance (given by regression equation) and the unexplained variance. In other words we are saying Regression equation given by analysis is useless and there's no difference in explained & unexplained variance Alternative hypothesis: Regression equation is robust & Explained variance is quite high than unexplained variance. Interpretation: P value is less than 0.05 and Sig < 0.05 indicates that model is good fit for data. Alternative hypothesis is accepted that is Consumers’ Perceived Hedonic Shopping Value has significant Negative Impact on their Perceived Benefits in Online Shopping. Table no. 10: Coefficients Model 1

Unstandardized Coefficients B Std. Error 44.516 3.683 .432 .104

(Constant) HSV

Standardized Coefficients Beta .368

t 12.087 4.170

Sig. .000 .000

Dependent variable: perbenefit Analysis: Finally, here are the beta coefficients—one to go with each predictor. We use “unstandardized coefficients,” because the constant [beta zero] is included. Based on this table, the equation for the regression line is: y = 44.516 + .432 (HSV) There's another column giving sig value of every coefficient. Its meaning is the same as that of ANOVA. The coefficients are checked against the hypothesis that these coefficients are produced by chance. Alternate hypothesis will be coefficients are quite robust. So wherever sig value is < 0.05, coefficients are quite robust to be used for prediction. When sig value of coefficients >0.05 then it means we should go for another sample of data and analyze again. The standardized coefficient is useful if we want to know which of the different independent variables is more important. The unstandardised coefficient, on the other hand, is the one we use to find out what effect 1 unit change in x will have on y. Interpretation: The unstandardised coefficient tells us that one unit change in HSV will bring .432 changes in perceived benefit.

VII. Limitations of the study Sample size was restricted which acted as a constraint as out of 120 only 113 valid responses were considered. The responses given by respondents are not always accurate because the respondents give the response according to their interpretation. Survey is a time consuming process but the time to collect the data for research was very less. This study is limited to age factor which is 18-40. There Utilitarian and Hedonic Shopping Values: A Study on Impact of Rational and Emotional Behavior on Individual’s Perceived Benefits.

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are only two variables that are utilitarian and hedonic shopping value used to represent the impact on individual perceived benefits in online shopping. The study was carried out with limited consumers that are online shoppers so this can act as a limitation to the study. Geographical area acted as a constraint as Delhi was the only region taken to conduct the study.

VIII. Managerial Implication Today, many customers across the globe are purchasing online. The war is increasing rapidly in this sector. In order to be victorious in online marketing, the marketers must do two things: add to the hedonic or entertainment value of the sites and increase the level of perceived security in online shopping. By increasing the hedonic value, the marketers will be able to draw those customers whose hedonic shopping value is high and who normally purchase from brick stores. The finding has a very significant proposition in the context of e-marketing management. In order to be successful, an e-marketer must try to increase the hedonic or entertainment value of its website. The website design should be such that it provides fun to the customers. This fun element is necessary to attract and retain online customers. The results of this study also reinforce the fact that the customers with high utilitarian shopping values perceive greater benefits in online shopping. Most of the online stores provide the utilitarian benefits to their customers by saving their time and costs. Customers primarily make online purchase in order to get greater convenience. As a whole, fun, and security are two key benefits that are desired by online consumers.

REFERENCES 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.

Alba, J., Lynch, J., Weitz, B., Janiszewski, C., Lutz, R., Sawyer, A., & Wood, S. (1997). Interactive home shopping: Consumer, retailer and manufacturer incentives to participate in electronic marketplaces. Journal of Marketing, 61(July), 38-53. Babin, B. J., Darden, W. R., & Griffin, M. (1994). Work and/or fun: Measuring hedonic and utilitarian shopping value. Journal of Consumer Research, 20(4), 644-656. Batra, R., & Ahtola, O. (1990). Measuring the Hedonic and Utilitarian sources of consumer attitude. Marketing Letters, 2(2), 159-170. Bhatnagar, A., & Ghosh, S. (2004). A latent class segmentation analysis of E-Shoppers. Journal of Business Research, 57(7), 758-767. Childers, T. L., Carr, C. L., Peck, J., & Carson, S. (2001). Hedonic and Utilitarian motivations for online retail shopping behavior. Journal of Retailing, 77, 417-424. Dholakia, R. R., & Uusitalo, O. (2002). Switching to electronic stores: Consumer characteristics and the perception of shopping benefits. International Journal of Retail & Distribution Management. 30(10), 459-470. Dichter, E. (1947). Psychology in market research. Harvard Business Review, 25(summer), 432-443. Forsythe, S., Liu, C. L., Shannon, D., & Gardner, L. C. (2006). Development of a scale to measure the perceived benefits and risks of online shopping. Journal of Interactive Marketing, 20(2), 55-75. Freud, S. (1953). The standard edition of the complete psychological works of Sigmund Freud. J. Strachey, ed. (24 volumes), London: Hogarth Press. Holbrook, M. B., & Hirschman, E. C. (1982a). The experiential aspects of consumption: Consumer fantasies, feelings, and fun. Journal of Marketing, 9(2), 132-140. Holbrook, M. B., & Hirschman, E. C. (1982 b). Hedonic consumption: Emerging concepts, methods and propositions. Journal of Marketing, 46(summer), 92101. Hopkinson, C. G., & Davashish, P. (1999). A factor analytic study of the sources of meaning of Hedonic consumption. European Journal of Marketing, 33(3/4), 273-290. Holbrook, M. B., & Hirschman, E. C. (1982a). Experiential aspects of consumption: Consumer fantasies, feelings and fun. Journal of Consumer Research, 9, 132-140. Holbrook, M. B., & Hirschman, E. C. (1982b). Hedonic consumptions: Emerging concepts, methods & propositions. Journal of Marketing, 46(Summer), pp 92-101. Maignan, I., Lukas, B. A. (1997). The nature and social uses of the Internet: A qualitative investigation. Journal of Consumer Affairs, 31(2), 346-371. Parsons, A.G. (2002). Non-functional motives for online shoppers: Why we click. Journal of Consumer Marketing, 19(5), 380-392. Sheth, J. N., Gardner, D. M., & Garrett, D. E. (1988). Marketing theory: Evolution and evaluation. USA: John Wiley & Sons, Inc. Sarkar, A (2011). Impact of Utilitarian and Hedonic Shopping Values on Individual’s Perceived Benefits and Risks in Online Shopping, vol.7 no.1 2011.

Utilitarian and Hedonic Shopping Values: A Study on Impact of Rational and Emotional Behavior on Individual’s Perceived Benefits.

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Sustainable Financial Planning: A Comparative Study on Odisha Young Employees with Financial and Non Financial Sectors Mr. Santanu Kumar Das1,

1

Dr. Suman Kalyan Chaudhary2

Assistant Professor, P.G. Department of Business Administration, Kalam Institute of Technology, Berhampur, Odisha; PIN: 761003, E-Mail:[email protected] 2 Faculty Member, P.G. Department of Business Administration, Berhampur University, Berhampur, Odisha; PIN: 760007. EMail: [email protected]

Abstract: Planning is an inevitable process of everyone’s life. It would be a financial blasphemy if the role and importance of financial planning is overlooked as it is essential right from managing a house individually till managing a giant corporate globally. A long term financial plan represents a blueprint of what an individual proposes to do in the future. He or she must plan for the overall financial success of the firm as well as his or her own individual life. Financial planning has emerged as an important part of financial manager’s responsibility. The study tries to find out the financial behavioural pattern of among earning youths in different cities of Odisha who are employees of financial sector and non-financial sector in order to throw light upon whether there is any significant difference in financial planning behavior between employees of these two strata. The data was collected through questionnaires and presented in the form of tables and charts with percentile analysis. The risk return trade off was also analysed for financial planning. Testing of Hypothesis was done by using Chi square test at 5% level of significance. Though the degree of awareness was found to be relatively superior incase of employees of financial sector because of the nature of association by virtue of employment, financial planning behavior of the employees of both sectors does not necessarily depend on their respective sector of employment.

Key words: Financial planning, Financial behavior, Investments, Savings, Earnings, Young employees _________________________________________________________________________________________________

1. Introduction Being “rich” means different things to different people. Some define wealth as owning many expensive possessions and a high income. People may associate being rich with not having to worry about finances or being able to pay bills. For others, being rich means they are able to contribute to organizations that matter to them. How people get rich also varies. Starting a successful business or pursuing a high-paying career is common path to wealth. However, frugal living and wise investing can also result in long-term financial security. In recent years, many have discovered that the quality of their lives should be measured in terms of something other than money and material items. Consequently, a renewed emphasis on family, friends, and serving others has surfaced. It has been interesting and surprising found that over 70 percent of major lottery winners end up with financial difficulties. These winners often squander the funds awarded them, while others overspend. Many end up declaring bankruptcy. Having more money does not automatically mean you will make better financial choices. Therefore, it is imperative that, as an individual one must handle their finances so that they get full satisfaction from each available rupee. To achieve this and other financial goals, people first need to identify and set priorities. Both financial and personal satisfaction is the result of an organized process that is commonly referred to as personal money management or personal financial planning. Personal financial planning is the process of managing one’s money to achieve personal economic satisfaction. This planning process allows controlling our financial situation. Every person, family, or household has a unique financial position, and any financial activity therefore must also be carefully planned to meet specific needs and goals. A comprehensive financial plan can enhance the quality of one’s life and increase self satisfaction by reducing uncertainty about future needs and resources.

2. Review of Literature Crankshaw & Hugh (2006): The research entitled "Personal financial planning: strategies for successful practice management" identified principles of practice management as applied to the personal financial planning process. The purpose of this research was to establish principles that Financial Planners could use to improve service delivery to the individual. In broad terms this is known as practice management and this research attempted to develop a greater understanding of practice management and provide a basis for further research on the subject. To do this in a meaningful way the research had two structured phases. The first phase was a theoretical study that provided the basis for the design of a research instrument. The second phase was an empirical study that was done on the responses received on the research instrument to establish principles of practice management. The research successfully identified four components and twenty principles of practice management, as well as three demographic drivers of income and succeeded in meeting the research objectives. David S Murphy (2010): The research paper title is "Personal financial planning attitudes: a preliminary study of graduate students". The purpose of this paper is to report on a survey about the personal financial planning attitudes of MBA students in the USA. The study surveyed 206 MBA students about their attitudes to personal financial planning.

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Participants were asked about their level of knowledge, whether they had prepared components of a financial plan, where they might seek assistance in such a process and the criteria for selecting a financial planner. In addition, participants were asked to indicate their level of confidence in a financial plan's capacity to help them to meet their long-term needs and the likelihood that they would implement such a plan. The findings indicate that, while most respondents feel both financial planning is important and that they are interested in developing a financial plan, very few feel that they have the necessary skills and knowledge to prepare their own plan. In addition, the participants indicated a strong preference for professional personal financial planning advice. The study also indicates that less than 13 percent have prepared a comprehensive personal financial plan. When asked to identify the one professional from whom they would seek advice, certified financial planners were the preferred resource. While the results are not generalize to the wider population, the views of this group are important because one might expect that educated individuals would be both more interested in personal financial planning and more capable of preparing their own plans compared with average Americans. The study presents some implications for practice and financial literacy education from a US perspective. A perceived need of respondents is to feel that their financial planner will put their needs first. While some professionals believe this to be the hallmark of "independence," the respondents placed less importance on planner independence. In order to foster client confidence, planners must act in ways that convey clearly the primacy of their clients' needs. Ming-Ming Lal & Wei-Khong Tan (2009): This paper examines the attitudes of the Malaysians towards personal financial planning which encompasses money management, insurance planning, investment planning, retirement planning and estate planning. A survey data was obtained from 400 Malaysians by using a set of structured questionnaire. They associated personal financial planning with three measures: attitudes towards personal financial planning, factors influencing various aspects of personal financial planning and frequency of managing for various aspects of personal financial planning. The results show that the job status of a respondent is the primary factor in influencing attitudes towards personal financial planning and the frequency in managing for various aspects of personal financial planning. Demographic characters such as age, race, marital status, gender, and education level are the secondary factors which were concerned. Manuel Tarazo (2008): This study proposes a state preference-enhanced, Linear Expenditure (LE) system as a framework for household financial planning. Individual (small) investors first identify necessary and discretionary consumption; then, they dedicate fixed income funds to cover expected necessary consumption. The remaining funds are then available for variable income investing. Tahir, Izah Mohd, Abu Bakar, Nor Mazlina (April 2010): Managerial Competency is considered a key factor in contributing to the survival and performance of earning youths in both financial and non financial organizations. It has been proven that firm performance and managerial competencies are interrelated with financial planning behavior. This study presents the findings of managerial competencies in the Malaysian financial services sector, 48 items under 16 managerial competency dimensions i.e., Leadership, Communication, Customer Concern, Team Building, Team Membership, Results, Personal Drive, Planning, Efficiency, Decision Making, Coaching and Counseling, Managing Change, Stress Management, Crisis Management, Creativity and Innovation, as well as Integrity are used. The results of this study indicate that the core competencies for managers of financial institutions in Malaysia are Leadership, Team Building, Communication, Results, Efficiency and Coaching and Counseling. The results also indicate that the managers are reckoned to have performed at a level between fair and good with their competencies earning a score between 4 and 5 on the performance scale. Further, the results also show that no competencies are found with substantial score disparity reflecting that bank managers had little pressing need for training in any particular competency.

III. Statement of the Problem Financial planning is an important factor for individuals from the point of view of growth in life. How a young earner is utilizing his income, his risk tolerance capacity and attitude towards expenditure and savings will decide his behavior towards financial planning. Financial planning behavior among the employees of financial sector and non-financial sector may differ significantly due to the level of the knowledge of individuals on the financial matters. Thus, a comparative study on financial planning among employees of financial sector and non-financial sector is an attempt to know the financial profile of the individuals and also to know whether the sector to which they belong will have a significant impact on the financial planning

IV. Objectives of the study Following are the objectives of the study: 1. To study the financial planning behavior of employees of financial sector and non financial sector ; 2. To find is there any significant differences in financial planning behavior between employees of financial sector and non- financial sector; 3. To identify the financial risk taking ability among the respondents; 4. To identify the investment and expenditure patterns of the respondents.

V. Hypothesis: These are the hypothesis of the study: H0- Financial planning behavior is independent of the sector. Sustainable Financial Planning: A Comparative Study on Odisha Young Employees with Financial and Non Financial Sectors Mr. Santanu Kumar Das, Dr. Suman Kalyan Chaudhary © INTERNATIONAL RESEARCH COMMUNION

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H1- Financial planning behavior is dependent of the sector.

VI. Research Methodology: This is an empirical study which attempts to find the financial planning behavior of employees from financial sector and non-financial sector. The study is conducted in different cities of Odisha.

Sampling method Stratified sampling technique is used for selection of respondents for the study. The whole population is divided into two strata i.e. financial sector and non-financial sector to check the gap in their financial planning behavior. The data is collected from each strata independently.

Sample unit Young individuals employed in financial and non-financial sector between the age group of 18-35 years old who are working in different cities of Odisha is the unit of sample. The young employees who work in credit unions, banks, insurance companies, consumer finance companies, stock brokerages and investment companies are considered under the category of financial sector employees. In non financial sector the employees who are working in business organization other than financial sector and professionals like doctors, lawyers, consultants etc are considered.

Sample size The total sample size is 150 which include 75 employees from financial sector and 75 employees from non financial sector.

Data collection Primary Data: Primary data is collected through survey method with the help of structured questionnaire from the respondents. Survey is conducted by meeting each respondent individually at their convenient place and time.

Data collection tool Structured questionnaire is used for the collection of primary data. The questionnaire contains questions about employee's personal information. Savings, emergency sources of funds, expenditure, retirement plan, tax planning, insurance policy, risk appetite, investment decision, tax benefits and financial planning behavior.

Tools and techniques of data analysis The primary data is processed, categorized and tabulated according to the requirement of the analysis. The data collected through questionnaires were presented in the form of tables and charts with percentile analysis. Based on the objectives of the study suitable hypothesis are framed. Hypothesis is tested by using Chi square test at 5% level of significance.

Limitations of the study  Generalization of the topic cannot be made from the samples drawn since the sample size is small.  The respondents who have responded might not have given correct information. There is chance of biased information from respondents.  Lack of time is one of the main constraints.

VII. Data Analysis & Interpretation: 1. Monthly savings Table 1 - Classification of respondents on the basis of their monthly savings Savings No saving 1%-10% 11%-20% 21%-30% Above30% Total

Financial sector Frequency 0 7 29 6 3 75

Percentage 0% 9% 39% 48% 4% 100%

Non-financial sector Frequency 0 9 28 29 9 75

Percentage 0% 12% 37% 39% 12% 100%

Source: Primary data Note: Savings are given in percentage of monthly income of the respondents. Chart 1 - Showing Classification of respondents on the basis of their monthly savings

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40 30 20 10 0

Financial sector Non-financial sector

Analysis: The above table shows that, out of total respondents of employees of financial sector, zero percent of them do not save, 9 % them save 1%-10%, 39% of them save 11%-20%, 48% them save 21%-30% and 4% them save above 30% of their monthly salary. Whereas in non-financial sector zero percent of them do not save, 12 % of them save 1%-10%, 39% of them save 11%-20%, 37% them save 21 %30% and 13% them save above 30% of their monthly salary.

Inference: From the above analysis, it can be inferred that, majority of young financial sector employees save between 21-30% of their monthly salary and non-financial sector employees save between 11%-20% of their monthly salary. Respondents' do not save category is nil, which shows that 100% of financial sector and non-financial sector employees save some amount of their monthly salary.

2. Pattern of regular monthly expenses Table 2: Classification of respondents on the basis of pattern of regular monthly expenses Spending pattern Definite spending plan No definite spending plan Total

Financial sector Frequency Percentage 31 42% 44 58% 75 100%

Non-financial sector Frequency Percentage 40 53% 35 47% 75 100%

Chart 2: Classification of respondents on the basis of pattern of regular monthly expenses

Analysis: The above table shows that, out of total respondents of employees of financial sector 41% of them have a definite spending pattern and 58% of them don't spend in a planned manner. Whereas compared to employees of non-financial sector 53% of them have a definite spending pattern and 47% of them do not spend in a planned manner.

Inference: From the above analysis, it can be inferred that the majority of young financial sector employees do not spend in planned manner. In terms of percentage the majority of non-financial sector employees have a definite spending pattern, but there is no much difference between spending and non-spending pattern between two sectors.

3. Major source of emergency fund Table 3: Classification of respondents on the basis of major source of emergency fund Emergency funds Spouse Parents Relatives and friends Created an emergency fund Borrowings Total

Financial sector Frequency Percentage 7 9% 27 36% 14 19% 14 19% 13 17% 75 100%

Non-financial sector Frequency Percentage 2 3% 36 48% 10 13% 8 11% 19 25% 75 100%

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Chart 3: Classification of respondents on the basis of major source of emergency fund.

Analysis: The above table shows that, out of total respondents of employees of financial sector, 9% of them will depend on spouse, 36% of them depend on parents, 19% of them depend on relatives and parents, 19% of them have created an emergency fund and 17% on borrowings. Whereas in case of employees of non-financial sector, 3% of them will depend on spouse, 48% of them depend on parents, 13 % of them depend on relatives and parents, 11 % of them have created an emergency fund and 25% on borrowings.

Inference: From the above analysis, it can be inferred that the majority of young financial sector and non-financial sector employees have considered their parents as a major source emergency funds. Most of them have not created any emergency fund or they don't have a plan to face emergency requirement of money.

4. Investment pattern Table 4: Classification of respondents on the basis of their investment pattern Financial sector Frequency Percentage 13 17% 24 32% 8 11% 15 20% 8 11% 7 9% 75 100%

Investment pattern Fixed deposits Insurance schemes Equities Mutual fund schemes Real estates Commodities/Derivatives Total

Non-financial sector Frequency Percentage 31 41% 27 37% 4 5% 10 13% 1 1% 2 3% 75 100%

Chart – 4: Classification of respondents on the basis of investment their pattern. 35 30 25 20 15 10 5 0 Fixed deposits

Insurance schemes

Equities

Financial sector

Mutual fund schemes

Real estates

Commodities/ Derivatives

Non-financial sector

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Analysis: The above table shows that, out of total respondents of employees of financial sector, 17% of them invested in fixed deposits, 32% of them invested in insurance schemes, 11% of them invested in equities, 20% of them invested in mutual fund schemes, 11 % of them invested in real estates and 9% of them invested in commodities/Derivatives. Whereas in case of non-financial sector, 41% of them invested in fixed deposits, 37% of them invested in insurance schemes, 5% of them invested in equities, 13% of them invested in mutual fund schemes, 1% of them invested in real estates and 3% of them invested in commodities/Derivatives.

Inference: From the above chart it can be inferred that the majority of young financial sector employees have invested in insurance schemes and non-financial sector employees have invested in fixed deposit schemes.

5. Level of risk appetite Table 5: Classification of respondents on the basis of level of risk appetite Financial sector Frequency 5 33 34 3 75

Risk appetite High Medium Low No Risk Total

Percentage 7% 44% 45% 4% 100%

Non-financial sector Frequency 4 41 24 6 75

Percentage 5% 55% 32% 8% 100%

Chart 5: Classification of respondents on the basis of level of risk appetite

Analysis: The above table shows that, out of total respondents of employees of financial sector, 7% of them have high risk appetite, 44% of them have medium risk appetite, 45% of them have low risk appetite and 4% of them have no risk. Whereas in case of employees of non-financial sector, 5% of them have high risk appetite, 55% of them have medium risk appetite, 32% of them have low risk appetite and 8% of them have no risk.

Inference: From the above analysis, it can be inferred that the majority of young financial sector employees prefer low risk investment instruments and non-financial sector employees prefer medium risk investment instruments. It clearly indicates that the young employees of both the sector are not high risk takers and going for safe investment options.

6. Objective of financial planning Table 6: Classification of respondents on the basis of their objectives of financial planning Financial sector

Non-financial sector

Objectives of financial planning

Frequency

Percentage

Frequency

Percentage

To get value for money in family financial planning To have sufficient savings and income for future To maximize return on investment at reasonable rate of risk To accumulate necessary funds to cover contingency

21 20 11 18

28% 27% 15% 24%

27 25 11 4

36% 33% 15% 5%

To minimize and defer taxes Total

5 75

6% 100%

8 75

11% 100%

Source: Primary data

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Chart 6: Classification of respondents on the basis of their objective of financial planning

Analysis: The above table shows that, out of total respondents of the employees of financial sector, the objective of financial planning, 28% of them is to get value for money in family financial planning, for 27% of them is to have sufficient savings and income for future, for 15% of them to maximize return on investment at reasonable rate of risk, for 24% of them is to accumulate necessary funds to cover contingency and 6% of them to minimize and defer taxes. In case of employees of non-financial sector, 36% of them is to get value for money in family financial planning, for 33% of them is to have sufficient savings and income for future, for 15% of them to maximize return on investment at reasonable rate of risk, for 5% of them is to accumulate necessary funds to cover contingency and 11 % of them to minimize arid defer taxes.

Inference: From the above analysis, it can be inferred that the objective of financial planning for the majority of young financial sector and nonfinancial sector employees is to get value for money in family financial planning and next is to have sufficient savings and income for future.

7. Financial planning Table 7: Classification of respondents on the basis of who will do the financial planning Financial sector Frequency Percentage 25 33% 46 62%

Financial planning Myself Myself but with help of an expert By expert on behalf of me Total

4 75

Non-financial sector Frequency Percentage 20 27% 41 55%

5% 100%

14 75

18% 100%

Source: Primary data

Chart 7: Classification of respondents on the basis of who will do the financial planning for respondents 60 40 20 0 Myself

Myself but with help of an expert Financial sector

By expert on behalf of me

Non-financial sector

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The above table shows that, out of total respondents of employees of financial sector, 33% of them make their financial planning by themselves, 62% of them make their financial planning by themselves but with help of an expert and 5% of them said that financial planning are made on behalf of them. Whereas in case non-financial sector, 27% of them make their financial planning by themselves, 55% of them make their financial planning by themselves but with help of an expert and 18% of them said that financial planning are made on behalf of them.

Inference: From the above analysis, it can be inferred that the majority of young financial sector and non-financial sector employees make their financial planning by themselves but with the help of an expert.

8. Testing of Hypothesis Hypothesis: H0- Financial planning behavior is independent of the sector H1- Financial planning behavior is dependent of the sector

Contingency table Financial sector 47 28 75

Planned Unplanned Column total

Non-financial sector 40 35 75

SI No

o

E

o-E

1 2 3 4

47 28 40 35

43 32 43 32

4 -4 -3 3

(0-E)2



16 16 9 9 (O  E ) 2 E

Row total 87 63 150

(0 - E)2 E 0.37209302 0.5 0.20930233 0.28125 1.36264535

Degree of freedom = (r-1) (c-1) = (2-l) (2-l) = 1 The calculated X2 = 1.36264535. The table value of X2 at 5% level of significance and the degrees of freedom 1 = 3.841. Thus, X2cal < X2tab, i.e. 136 < 3.841. Since, the calculated X2 value is less than the Table value; therefore H0 is accepted and H1 is rejected Inference: The Testing of the hypothesis has reflected that the financial planning behavior of the employees is independent of the sector they belong. This implies that the employees have a general tendency to plan and their planning behavior is not dependent on the sector in which they work. This is mostly because of their income levels and also due to their personal spending habits.

VIII. Summary of Findings: The major findings of the study are as follows:  Majority of the young employees of financial sector and non-financial sector are saving in the range of 21%-30% of their income. 54% of the young employees of financial sector and 45% of non-financial sector are saving some amount of their monthly salary but most of them are not following any time frame for saving. They are saving something every month.  Most of the young employees of financial and non-financial sector have definite spending pattern. Their percentage of spending on different categories like food, rent, clothes, transportation and entertainment is reasonable. Majority of them are making their purchases by using both cash and credit card in financial and non-financial sector employees. Majority of them have an expense which is well within their income.  Majority of them have bank fixed deposit for meeting contingencies like loss of job etc. Most of them are taking insurance policies just to save their income tax. Majority of the respondents in both the sectors have term plan insurance policy.  Majority of the young employees of financial and non-financial sector require a pension amount which is equal to their salary at the time of retirement. Majority of the employees have a pension fund in financial sector and majority of the employees in non-financial sector has not though off for retirement corpus.  Majority of the young employees of financial sector are doing tax planning beginning the year and majority of them took the help of an expert in non-financial sector are doing their tax planning. Majority of them are able to fully utilize the income tax benefits.  The objective of investment for the majority of the young financial and non-financial sector employees is to conserve capital and generate income. Majority of the employees are investing in fixed deposits in both the sectors. Most of them are investing for medium term. They are taking their investment decision on yearly basis. Majority of them are going for safe investment proposition.  The main objective of financial planning for most of the young financial and non-financial sector employees is to have sufficient savings and income for future but most of them are not getting enough time for managing their financial planning affairs. Majority of the employees of both the sector are agreed on the fact that they are satisfied along with the help of an expert for their financial planning decision. Sustainable Financial Planning: A Comparative Study on Odisha Young Employees with Financial and Non Financial Sectors Mr. Santanu Kumar Das, Dr. Suman Kalyan Chaudhary © INTERNATIONAL RESEARCH COMMUNION

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 Most of the young employees of financial and non-financial sectors are not taking the financial planning very seriously. But somehow they are able to manage their financial planning effectively to some extent.  Testing of the hypothesis has reflected that the financial planning behavior of the employees is independent of the sector they belong. This implies that the employees have a general tendency to save and their planning behavior is not dependent on the sector in which they work.

IX. Suggestions: The following suggestions are required for young employees of financial sector and non-financial sectors:  Young employees of financial sector and non-financial sectors can save more and invest more; it's only possible during this stage of life, where responsibilities are less. For this they need to plan their financials systematically.  Equity and equity related instruments can occupy a greater portion of the investment portfolio.  Need for liquidity is less but still keeping in mind the era of pink slip, young financial sector and non-financial sectors employees should keep more money for contingencies.  It can be suggested that young financial sector and non-financial sectors employees can follow a time frame for saving.  Understanding the importance of savings and benefits of compound growth is important for them.  Young financial sector and non-financial sectors employees can go for expert's advice for financial planning.

X. Conclusion: The study about the financial planning behavior of the employees of the financial and non-financial sector reveals that the saving patterns are independent of the sector. However, the behavior does vary within the employees to some extent due to various other external factors, not necessarily due to their sector of employment. The study observed that the young employees of financial sector have slightly higher rates of savings than the non-financial sector. This could be due to their living habits as they are in their young age and do not have considerable liabilities. The study also suggests that the differences in the financial planning behavior are not considerable among the employees of the two sectors as they both face the same set of external and macro-economic variables. In terms of the risk taking ability of the employees of both financial and non-financial sector, the study has found out that the risk appetite among the employees of the non-financial sector is medium and that of the financial sector ranges between medium and low. Meeting and interviewing a sizable number of young employees belonging to financial and non-financial sectors having different set of incomes, experience in the industry and so on, it's observed that most of them do not have a systematic savings from their income and majority of them save as fixed deposit. But one good thing is that majority of respondents save some portion of their income every month and most of their expenses are well within the income. Also majority of them have created emergency fund and they have a contingency plan also. Thus, the study concludes that the sustainable financial planning behavior of the employees of financial and non-financial sector is not dependent on the sector of their employment but is affected by various external factors which result in a slight difference in their saving and investment patterns.

References 1. David S. Murphy, Scott Yetmar, (2010) "Personal financial planning attitudes: a preliminary study of graduate students", Management Research Review, Vol. 33 Iss: 8, pp.811-817 2. European journal of Economics, Finance and Administrative sciences, 2009, Vol. 3 Iss:1, pp.45-56. 3. International journal of applied sciences, 2008, Volume l & volume 2. 4. Brown, Carol E. Nielson, Norma I. Phillips, Mary Ellen, (lull990) "Journal of Financial Planning", Vol. 3 Issue 3. 5. Kasper, T., Grable, J. E. (2005), "Journal of Personal Finance" volumes 1, 2, & 3. 6. Shannak Rifat (2009) "Measuring Knowledge Management Performance European Journal of Scientific Research", Vol.35, Iss.2. 7. Swapna Mirashi(2010), I can do financial planning, New Delhi, Academic foundation. 8. Madhu sinha(2008), Financial planning (A Ready Reckoner), New Delhi, McGraw Hill.

Websites: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

http://www.investopedia.eom/terms/f/financial_sector. asp#ixzz2NQhFoozo http://www.fpsb.co.in/Upload/FinancialConsumerArticle/Magazine%20March%20 08-c.pdf http://www.fpsb.co.in/Upload/FinancialConsumerArticle/January-March%2008-%20Co-%201.pdf http://www.upperlinefinancial.com/in-the-news http://www.fpsb.co.in/scripts/FinancialArt icles.aspx http://profit.ndtv.com/news/your-money/article-5-steps-to-the-perfect-financial-plan-324184 http://www.mywealthguide.com http://www.moneycontrol.com/pehlakada m/financial_planning.php www.eurojournals.com www.indiamoney.com www.emeraldinsight.com

Sustainable Financial Planning: A Comparative Study on Odisha Young Employees with Financial and Non Financial Sectors Mr. Santanu Kumar Das, Dr. Suman Kalyan Chaudhary © INTERNATIONAL RESEARCH COMMUNION

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Motivation Level of Employees and its Effect on Overall Performance in Insurance Sector Dr. Ujjwal M. Mishra1, Dr. Irfan Siddiqui2 1

Associate Professor Sinhgad College of Engineering, Department of Management Studies, Pune [email protected] 2 Associate Professor Sinhgad College of Engineering, Department of Management Studies, Pune [email protected]

Abstract: In organizations, it is important to determine both current and future organizational requirements for both core employees and the contingent workforce in terms of their skills/technical abilities, competencies, flexibility etc. The analysis requires consideration of the internal and external factors that can have an effect on the resourcing, development, motivation and retention of employees and other workers. External factors are those largely out-with the control of the organization. These include issues such as economic climate and current and future labor market trends (e.g., skills, education level, government investment into industries etc.). On the other hand, internal influences are broadly controlled by the organization to predict, determine, and monitor—for example—the organizational culture, underpinned by management style, environmental climate, and the approach to ethical and corporate social responsibilities. Key Words: Motivation, Employees, Performance, Insurance, Measures _________________________________________________________________________________________________

I. Introduction Motivating employees can be a challenging task when learning how to supervise people. In order to drive your employees to be perform at their best it helps to understand what motivates people. The key factors that motivate people. Understanding these factors can help in finding the right solutions in motivating employees. One of the keys to being a successful manager is the ability to motivate employees to perform at their best. When employees aren’t interested in their work or they’re bored, employee morale is low and productivity drops. Generally, employees are willing and able to work if they feel their job is important and they are appreciated. When motivating employees there are two main types of rewards, intrinsic reward and extrinsic reward. People are motivated in different ways, one of which is by intrinsic reward. Intrinsic rewards or intrinsic motivation primarily deals with the feelings an employee has when they have done a good job. They do it because they enjoy it. This can be seen more in hobbies or in the feeling of obligation to do well at ones job. The second type of reward is extrinsic. Extrinsic rewards or extrinsic motivation refers to a tangible or intangible reward given to you by someone else. Praise, pay increases, bonuses, and promotions are a few examples of extrinsic rewards. The traditional method of motivating employees has been used extrinsic motivation. In order to better understand how to motivate employees you must first understand how motivation works. According to Abraham Maslow, people are motivated by unmet needs. Maslow’s hierarchy of needs:

II. Literature Review The Michigan model is based on the paradigms developed by Chandler (1962) and Galbraith and Nathanson (1978). It is argued that an organization's structure is an outcome of its strategy (Chandler, 1962). This argument was extended by linking different personnel functions such as career paths, rewards, and leadership styles to the organization's mission (Galbraith and Nathanson, 1978). The matching model has been criticized as being too prescriptive by nature mainly due to the fact that its assumptions are too unitarist (Boxall, 1992). It emphasizes a 'tight fit' between organizational strategy and HR strategies and, while doing so, completely ignores the interest of employees and hence considers HR as a totally passive, reactive, and implementation function. The model's emphasis on tight fit makes the organization inflexible and incapable of adapting to the required changes and hence is a 'misfit' in today's dynamic business environment. The very idea of the model to consider and use human resources like any other resources in an organization seems unpragmatic as it misses the human aspect. Despite many criticisms, the matching model provides a good framework to theory development in the field of HRM. It also provides a promising schema to look at the HR practices in universal and generic term. It, however, ignores the cultural processes. The matching model and the Harvard analytical framework represent two very different emphases. The former is closer to strategic management literature while the latter to human relations tradition. Some aspects of the basic philosophy of 'soft HRM' can be traced back to the writings of McGregor (1960) who, as mentioned by Truss (1999), even used the terminology 'hard' and 'soft' to characterize the forms of management control. McGregor's Theory X describes the 'control' model of management (Walton, 1985) while Theory Y emphasizes the importance of integrating the needs of the organization and those of the individual.

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The principle of mutual trust again being expressed by Walton (1985) The soft model of HRM traces its roots to the Human Relations School. It involves "treating employees as valued assets, a source of competitive advantage through their commitment, adaptability, and high quality of skills, performance etc." (Storey, 1992) HRM as a concept emerged in the mid-1980s with the efforts of the writers of management of that decade including Pascale and Athos (1981) and Peters and Waterman (1982) who listed the attributes which they claimed as characterizing successful companies. The 'school of excellence' writers may have exerted some influence on management thinking about the need for strong culture and commitment (two features of HRM) but, they were 'right enough to be dangerously wrong' (Guest, 1993). It has, however, been observed that "even if the rhetoric of HRM is soft, the reality is often hard with the interests of the organization prevailing over those of the individual" (Truss, 1999). Gratton et al. (1999) identified a combination of soft and hard HRM approaches in the eight organizations studied. The Western countries, especially the US, have done a lot of empirical studies in the area of HR practices. In India, on the other hand, no attempt has been made to systematically evaluate the extent of HRD function or its components or practices, its expected impact on the organization, and its internal working and support provided to it by the management (Pareek, 1997)    

III Objectives of the research paper: To study how difficult the motivation has become most difficult task in organization To find the causes of low level of motivation among employees To know the positive measures that can improve the workers participation at work level. To find the negative measures that can enhance the motivation of your employees

IV Research Methodology: Sr. no. 1. 2. 3. 4. 5. 6.

Universe Research Method Sampling Technique Research Tool Sample Unit Sample Size Research design

Pimpri –Chinchwad and Pune city Survey Method Simple Random Sampling Questionnaire Branch managers and Level III employees 50 Descriptive research design

V Data Analysis and Interpretation: The data was analyzed using chi square test on SPSS. The null hypothesis and alternative hypothesis were framed. Which methods of motivation do you feel is appropriate at branch level? Null Hypothesis H0: All methods of motivation are same Alternative Hypothesis H1: All methods are different Methods of Motivation Expected N 8 6 15 12 9 50

Observed N 1.00 2.00 3.00 4.00 5.00 Total

Residual 10.0 10.0 10.0 10.0 10.0

-2.0 -4.0 5.0 2.0 -1.0

Test Statistics Methods of Motivation Chi-Square df Asymp. Sig. a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 10.0.

5.000a 4 .287

From the above Chi-Square table it can be observed that the value of Chi Square is 5.0 and its significant value is 0.287 which is much more than .05 therefore the null hypothesis is accepted and we conclude that all methods of motivation are same.

Do you feel that motivation has become most difficult task in your organization/ Null Hypothesis H0: Motivation is not difficult task Alternative Hypothesis H1: Motivation is difficult task Observed N 1.00 2.00 Total

Motivation Difficult Task Expected N 35 15

Residual 25.0 25.0

50

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Interpretation: From the Chi Square table above the significant value is .005 which is less than the significant value 0.05, therefore the null hypothesis is rejected and we conclude that motivation has become difficult task. Test Statistics Motivation Difficult Task 8.000a 1 .005

Chi-Square df Asymp. Sig.

What in your opinion are the causes of low level of motivation of your employees Null Hypothesis H0: No particular cause is significant for low level of motivation or all causes are same Alternative Hypothesis H1: Causes are different for low level of motivation. Opinion Observed N 1 2 3 4 5 6 7 8 Total

Expected N

Residual

7 8 6 7 8 4 4 6 50

6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3

.8 1.8 -.3 .8 1.8 -2.3 -2.3 -.3

Do you think that certain positive measures can improve the workers participation at work level. Test Statistics Opinion 2.800a 7 .903

Chi-Square df Asymp. Sig. a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 6.3.

Interpretation : From the table above we see that the significant value is 0.903 which is much higher than the significant value. Therefore we accept the null hypothesis and conclude that no particular cause can be attributed for low level of motivation. Null Hypothesis H0: No particular measure can improve the workers participation Alternative Hypothesis H1: Particular measures can improve the workers participation 1 2 3 4 5 6 7 8 Total

Observed N 10 6 5 4 5 5 6 8 49

Positive measures Expected N 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1

Residual 3.9 -.1 -1.1 -2.1 -1.1 -1.1 -.1 1.9

Test Statistics Positive measures Chi-Square df Asymp. Sig. a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 6.1.

4.388a 7 .734

Interpretation: From the above table the significant value is 0.734 which is higher than 0.05, therefore we accept the null hypothesis and conclude that no partcular measure can improve the workers participation.

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Do you think certain Negative measures can enhance the motivation of your employees? Table No. 1.4 Negative measures to improve workers participation Transfer, Change of Work Punishment for poor performance Minimum bench mark standard Minimum chances of advancements Restrictive participative activities Reduction in power to take Independent decisions

No. of employees 7 6 9 3 11 9

VI Conclusion: As to various HR practices adopted by the corporation to enhance the growth of manpower planning. The true asset of any organization is its dynamic strength. The dynamism is reflected by the question of manpower planning nurtures and therefore the question of manpower planning is what the organization is. As rightly said by an expert there is no asset like human resource and therefore the development of human resource is what really worth. Human asset are the true asset as they are enriched by experience, the ability to improve with knowledge, skill development and improve performance which are truly to great extend depend on how it frames its human resource policy. In a present study the researcher makes an attempt to analyze how the human resource practices are developed and how practices are adopted, modified and altered by course of time. Considering the nature of study the researcher has set of selected questions collected from employees and branch managers of life Insurance corporation.

VII Suggestion:

 Need and assistance of professional trainee should be taken while formulation of various Motivation development programmes.  The motivation evaluation mechanism is established to make an assessment of effectivity and utility of various employee within the organization.  A suitable incentive policy should be brought to increase motivation of employees.  Efficient and committed employees given merit based incentives to their contribution to organization development.

References: 1.

2.

3. 4.

Chalofsky, N. and Lincoln, C. (1983), "Up the HRD Ladder", Reading, MA: Addison Wesley. Chandler, A (1962), "Strategy and Structure", Cambridge, MA: MIT Press, Conner, K.R A (1991), "Historical Comparison of Resource Based Theory and Five Schools of Thoughts which Industrial Organization Economic: Do we have a new theory of Firm", Journal of Management, 17-21. Fombrun, C J, Tichy, N M and Devanna, M A (1984), Strategic Human Resource Management, New York : Wiley. Galbraith, C J and Nathanson, D (1978), "Strategy Implementation: The Role of Structure and Process", St. Paul: West Publishing. Ghosal, S. and Bartlett, A.C. (1997), "The Individualized Comparison", HarperCollins, New York, NY Giannantonio, C.M. & Hurley A.E. (2002), "Executive insights into HR practices and education", Human Resource Management Review. 12,491-511. Peters, T (1988), Thriving for Chaos, London: Macmillan. Peters, T J and Waterman. "The Applicability of McGregor's Theories in South East Asia," The Journal of Management Development, 6(3), 9-18.

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Entrepreneurship in Health Care with Special Reference to Kerala State SHYNI.MC Full Time Research Scholar, Department of Management Studies, Kannur University, Thalassery campus, Palayad, Kannur, Kerala-670661, INDIA, [email protected]

Abstract: Like in any other public financed economy health competes for resources with other sectors of the economy although health can be treated as a ‘commodity ‘or not is widely debated several movements through have made deep inroads into several sectors of the Indian economy, their presence in social sectors like health is notably low. An exception is Kerala where hospitals have come to play a significant role. The hospitals in the private sectors and co-operative sectors are also playing a crucial role in the state’s achievement in the field of health .Do the hospital in these sectors such as co-operative ,public and private witness any significant change in the organizational framework while making a comparison? To find the answer the researcher proposes to make a detailed study of the selected co-operative, public and private hospitals in Kerala.

Keywords: Entrepreneurship, Healthcare, Hospitals _________________________________________________________________________________________________

1. Introduction Entrepreneurship is often described as the ability to create ventures from new or existing concepts, ideas and visions. There has been significant entrepreneurial response to the changes in the scientific and social underpinnings of health care services delivery. This study is about entrepreneurship in healthcare in Kerala .Kerala has to its credit a fairly developed healthcare infrastructure and Kerala has a long history of organized health care. When the State was founded in 1956, the foundation for a sound health care system had already been laid. Thereafter, there was remarkable growth and expansion of government health services. The number of beds in government hospitals rose from 13,000 in 1960 to 38,000 in 1996. The annual compound rate of government expenditure on health during that period was higher than the compound rate of total government expenditure and higher than the annual compound rate of growth of the state domestic product .The easy accessibility and coverage of medical care facilities has played a dominant role in shaping the health status of Kerala. Some of the hospitals in Kerala are more than 50 years old. Health had been a major area of spending in the budget from early years in Kerala.(Gangadaharan,2005). The growth of health facilities in Kerala offers many lessons in development. The active role of the state government has seen a key factor in the expansion of health care facilities. The initial period of rapid growth in health facilities was dominated by the public sector up to the 1980s. By the mid 1980s because of fiscal and other problems, there was a slow down n the growth of government health institutions. This affected not only the growth in absolute number of beds, but probably the maintenance of quality as well. However, by this time, the private sector was paired for growth and it took the lead in the growth of health care facilities in Kerala. The growth of the private sector in Kerala should not be seen as independent phenomena. The public sector paved the way for its development by sensitizing the population to the need for sophisticated care and creating demand. The government continues to play leadership role in the training of all strata of health professionals, who are then largely absorbed by the private sector. Factors outside the health field, such a growing income, improvement of literacy and population ageing all contributed to this trend. Kerala knows for its model of ‘Good Health at Low cost’ achieved through universal availability, accessibility and performance of government healthcare delivery system to even poorer sections of the society. Competition from govt. facilities often serves as an important factor in determining treatment cost in private hospitals (Aravindan, 2000) The annual growth rate of government health care expenditure has been showing a steady increase. India’s first ever Human Development Report published in 2002, placed the southern State of Kerala on top of all other states in India, because of easy accessibility and coverage of medical care facilities. Kerala is one state where private health sector, both indigenous and western systems of medicine, has played a crucial role. The Ayurvedic system of treatment practiced in Kerala dates back to centuries. In the field of modern medicine system, missionary hospitals have contributed profusely by even going into the interiors of the state. High level of education especially among Women and greater health consciousness has played a key role in the attainment of good health standards in Kerala. Today with the mushrooming of private hospitals that offer quality services, matching international standards and with the tie up of the health care industry with the tourism sector, health care in Kerala is growing by leaps and bounds(Soman,2007).As such the present study aims to investigate the organizational framework of the selected private ,co-operative and government hospitals in Kerala in order to understand the healthcare entrepreneurship in Kerala in detail.

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II. LITERATURE REVIEW Ramankutty (2000) in his article seeks to describe the growth of heath care facilities in Kerala.with respect to the increase in the number of public institutions and beds and the trends in Govt expenditure on health; the current pattern of distribution of health care facilities in the public and private sectors; and the implication arising from there for the state’s future health development. The study is divided in to four sections .First section gives a summary of the historical milestones in the growth of modern medical care in Kerala. Second gives the growth of health sector in Kerala after the state’s formation in 1956;the third part depicts the current patterns of distribution of health care facilities in the public and private sectors. Nabae (1997) in his article has analyzed the past accomplishment and new challenges faced by the health care system in Kerala. He also suggests some measures to overcome the challenges faced by the public sector over the private sector. . He suggests that, Kerala must invest in the public sector to revitalize the system. To achieve this, tax revenue must be increased. Second, Kerala must streamline the system through decentralization. Third, Kerala must take a step to revamp the health care system in a way that the public and private sectors effectively co-operate and complement each other to meet the needs of the people Narayana & Hari Kurup(2000) in their study seeks to analyze decentralization of the health care sector in Kerala and the associated problems as perceived by the elected members .The study argues that three basic problems of decentralizing the health care sector ,namely spillover effect ,role and relevance of a pre –existing body ( Hospital Development committee or HDC) and the level of minimum health care services to be provided by the health care institutions have not been adequately addressed . Kunchikannan and Aravindan (1999 ) aims to link the socio –economic and health status of the Kerala state. The study followed up a sample of households surveyed in 1987and conducted a repeat survey of their health and socio economic status in 1996. Panikar(2004) in his special article had examined the achievements of Kerala in the health field .His primary focus is on the rural population ,who generally constitute the predominant majority. The conclusion to which this case study leads is that given proper policies and priorities, lack of resources need not be an impediment to improve health status even in low income countries. Gangadharan(2007) have examined the success indicators of health in Kerala with that of the national health and the issues connected with the health care investments and morbidity prevalence in Kerala. The study has great relevance in the present socio economic and environmental contest. The state Kerala which has been considered as a state with advanced human development index and better health status is now ailing from acute morbidities of different communicable and chronic illness. Since high morbidity prevalence in the basic issue of the Kerala’s health sector, greater attention is needed to reduce the intensity morbidity prevalence private health care can only be a complementary to public institution and not as a substitute to achieve health for all at least in the near future. To attain the status of health for all, aged population has to be properly rehabilitated and efforts should be made to augment the utilization of health services among the marginal deprived and venerable sections of the society. Moreover there should be better of safe drinking water sanitation and utmost care should be provided for better environmental cleaners both in the urban and rural areas.

III. SIGNIFICANCE OF THE STUDY Kerala has a long history of organized health care. When the State was founded in 1956, the foundation for a sound health care system had already been laid. Kerala has a vast health care infrastructure under Allopathy, Ayurveda and Homoeopathy system of medicine. In the health sector the role of Allopathy stream is very important and the major participation is focused in the Allopathic sector which has hospitals both in the private and public sector .Therefore the paper proposed to conduct a detailed study of the major role played by this sectors in the health care scenario of Kerala.

IV. RESEARCH METHODOLOGY

1.

The research is designed as both explorative and descriptive. So the major data source is primary in character. However secondary data from print media (books, reports, monographs) and the official record of the government are also made used. The sample units for the study is selected by multi stage stratified random sampling. First of all the total population is divided into three strata based on region, based on ownership and based on bed strength of each selected hospitals. After the stratification the datas are collected from the hospitals according to their bed strength of each private ,co-operative and government hospitals.. The bed strength ranging below50, between 51-150, and above 150 forms the group. For the purpose of analyzing the data suitable scaling techniques, mathematical tool like percentage and statistical tool like chi-square test etc are used. The Hypotheses of the entire study was designed as follows. There exists significant difference in the organizational framework of the selected group of hospitals in Kerala .

V. RESULTS AND DISCUSSIONS This section seeks to study the organizational framework of the selected group of hospitals in Kerala. For this variables such as locality of hospital, type of hospital organization , extent of involvement of the group in the promotion and conduct of the hospital, previous experience in running hospital , nature of relation of hospital management with employees, satisfactory level of entrepreneurs in the hospital sector ,advantages and difficulties enjoyed and faced by the hospital , motivating factor for starting the hospital, reason for selecting the present location of the hospital, problems faced by the hospital now etc are analyzed in detail.

Locality of the hospital The geographical dispersion of hospitals in Kerala is examined at this part to understand the extend of penetration of hospitals in rural and urban area.

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Table 1: Locality of the hospital Area Panchayath Municipality Corporation Total

Private 13 (31.71) 17 (41.46) 11 (26.83) 41 (100.00)

Co-operative 4 (44.44) 4 (44.44) 1 (11.11) 9 (100.00)

Government 16 (55.17) 10 (34.48) 3 (10.34) 29 (100.00)

Total 33 (41.77) 31 (39.24) 15 (18.99) 79 (100.00)

Values in parentheses are percentages Source: Field survey Regarding the location of the hospital, it is found that majority of the private hospitals concentrated in municipal area, rest of them concentrating in panchayat and corporation area but co-operative hospitals are equally concentrating on panchayat and muncipality. While in the case of government hospitals majority of the hospitals are concentrating in panchayat area.

Type of organization of hospitals in Kerala Table 2: Type of organization of hospitals Type Single ownership Partnership Co-op society Government Charitable trust Total

Private Co-operative Government 24 (58.54) 0 (0.00) 0 (0.00) 14 (34.15) 0 (0.00) 0 (0.00) 0 (0.00) 9 (100.00) 0 (0.00) 0 (0.00) 0 (0.00) 29 (100.00) 2 (4.88) 0 (0.00) 0 (0.00) 41 (100.00) 9 (100.00) 29 (100.00) Pearson Chi-square: 153.504, df=8, p=.000000

Total 24 (30.38) 14 (17.72) 9 (11.39) 29 (37.97) 2 (2.53) 79 (100.00)

Values in parentheses are percentages Source: Field survey The above table depicts the type of organization of the hospital in Kerala as on date. An analysis of the table shows that sole proprietorship or single ownership seems to be more popular among private hospitals. In Kerala, most of the hospital entrepreneurs opted for sole proprietorship for unified control. But in addition to this34.15percentage private hospitals are registered as partnership and 4.88percentage are registered as charitable trust. The table further shows the form of organization of co-operative hospitals and government hospitals. Co-operative hospitals are registered as co-operative society and government hospitals come under government sector. The resultant p value given in the table shows that there exist significant differences at 1 percentage.

Involvement in the promotion and day to day conduct of the hospital Table 3: Involvement in the promotion and day to day conduct of the hospital Acted as Secretary Administrator Medical superindandat Total

Private 0 (0.00) 41 (100.00) 0 (0.00) 41 (100.00)

Co-operative Government Total 9 (100.00) 0 (0.00) 9 (11.39) 0 (0.00) 0 (0.00) 41 (51.90) 0 (0.00) 29 (100.00) 29 (36.71) 9 (100.00) 29 (100.00) 79 (100.00) Pearson Chi-square: 158.000, df=4, p=0.00000

Values in parentheses are percentage Source: Field survey Table 4 gives the involvement of entrepreneurs in the promotion and conduct of the hospital. It can be noticed from the table that while promoting the sample private hospital, all entrepreneurs acted as administrator, acted as secretary in all the sample co-operative hospital. In the case of government hospital the government itself is promoting the hospital and the medical superintendent is appointed to promote the hospital as a government entity. The p value 0.0000 which is significant and it indicates that there exists significant difference at 1percentage. Previous Experience in running hospital Table 4: Previous Experience in running Hospital Private No experience in hospital running 13 (31.71) Field Experience 28 (68.29) Total 41 (100.00) Pearson Chi-square: 158.000,df=4,P=0.00000

Co-operative 9 (100.00) 0 (0.00) 9 (100.00)

Total 22 (27.85) 28 (35.44) 79 (100.00)

Values in parentheses are percentage Source: Field survey No doubt, experience is the best teacher. In business experience is considered as a vital input for success. As revealed by the table 4, among private out of the 41 units in the sample, 28 entrepreneurs (68.29) had previous employment or experience in their field and 13 entrepreneurs (31.71percentage) had started their unit without any previous experience in the line. Out of 9 units in the sample of co-

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operative hospitals all units have started their function without any previous experience .The chi square test reveals a significant difference at 1percentage.

Relation of hospital management with the employee Relation of hospital management with the employee are measured on a 5 point scale at two stages such as cordial and motivating (0-5) and satisfactory (5.1-10) Table 5: Relation of Hospital Management with the employees (measured on a 10 point scale) Relation Private Cordial &Motivating 20 (48.78) Satisfactory 21 (51.22) Total 41 (100.00) Pearson Chi-square: 27.4311, df=2, p=.000001

Co-operative 2 (22.22) 7 (77.78) 9 (100.00)

Total 51 (64.56) 28 (35.44) 79 (100.00)

Values in parentheses are percentage Source: Field survey The above table depicts the relation of hospital management with the employees. Among private the table describes that 48.78percentage hospital management have very cordial and motivating relationship with their employees and 51.22percentage shows the satisfactory relationship. Majority of the co-operative hospitals reveal satisfactory relationship with the employees than the cordial and motivating relationship.. Further enquiry reveals that though salary conditions of supporting staff in hospital are generally low, the private hospitals do not make strict restrictions the collecting tips from patient customers while co-operative hospitals do not permit such practices. The p value given in the table indicates that there exists significant variation between relations of hospital management with the employees in private, co-operative hospitals.

Satisfactory level of entrepreneurs in the hospital Level of satisfaction of entrepreneur is measured in terms of rank at three stages .The ranks are 0-4 ( satisfied), 4.1- 7( moderately satisfied), and 7.1-10 ( satisfied) Table 6: Satisfactory level of entrepreneurs in the Hospital Level Highly Satisfied Moderately Satisfied Satisfied Total

Private 23 (56.10) 11 (26.83) 7 (17.07) 41 (100.00)

Co-operative 9 (100.00) 0 (0.00) 0 (0.00) 9 (100.00)

Total 32 (40.51) 35 (44.30) 12 (15.19) 79 (100.00)

Pearson Chi-square: 40.1077, df=4, p=.000000

Values in parentheses are percentage Source: Field survey Self satisfactions boost hard work and prop up aspiration. Entrepreneurs in general have to surmount several stumbling blocks in their courses of growth. Table 6 reveals the level of satisfaction of entrepreneurs in the present functioning of hospitals .Out of 41 units of sample private hospitals 56.10percentage are highly satisfied, 26.83percentage are moderately satisfied and 17.07percentage are satisfied to the present functioning of the hospitals. The table further reveals that all co-operative hospitals are highly satisfied with their present functioning. The chi square test found out that there exists significant difference in the satisfactory level of entrepreneurs in the private and cooperative hospitals.

Privileges enjoyed by the hospitals at their initial stage Table 7 : Privileges enjoyed by the hospitals at their initial stage Privileges Govt /political support Support from qualified doctors

Private 0 (0.00) 25 (60.38)

Co-operative 5 (55.56) 0 (0.00)

Govt 29 (100.00) 0 (0.00)

Total 34 (43.04) 25 (31.65)

Support from team of local authority people Ownership of land and building Financial support from family members Govt/political support&Support by team of qualified doctors

3 (7.32) 5 (12.20) 8 (19.51)

0 (0.00) 0 (0.00) 0 (0.00)

0 (0.00) 0 (0.00) 0 (0.00)

3 (3.80) 5 (6.33) 8 (10.13)

0 (0.00)

4 (44.44)

Total

41 (100.00)

9 (100.00)

0 (0.00) 29 (100.00)

4 (5.06) 79 (100.00)

Source: Field survey The above table reveals the privileges enjoyed by the hospitals while starting. The analysis of the above table shows that 55.56 percentage co-operative hospitals and all government hospitals enjoyed the benefit of government and political support while starting the hospital and remaining 44.44 percentage co-operative hospitals enjoyed the benefit of both political support and support by team of qualified doctors but no private hospitals had received any support from political leaders or from the government. Among the total Entrepreneurship in Health Care with Special Reference to Kerala State

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sample private hospitals 60.38 percentage hospitals enjoying the support by team of qualified doctors ,7.32 percentage hospital has a support from team of local authority people, benefit of own land and building is another advantage enjoyed by 12.20 percentage hospitals and another 19.51 percentage hospitals have financial support from their family members

Difficulties faced by the hospital while starting Table 8: Difficulties faced by the hospital while starting Difficulties

Private

Delay in obtaining loan Delay in compliance of formalities Shortage of capital Distance from local people No difficulties Total

Co-operative

Total

3 (7.32)

1 (11.11)

4 (8.00)

6 (14.63)

0 (0.000)

6 (12.00)

10 (24.39)

4 (44.44)

14 (28.00)

2 (4.88) 20 (48.78) 41 (100.00)

0 (0.00) 4 (44.44) 9 (100.00)

2 (4.00) 24 (48.00) 50 (100.00)

Source: Field survey Every entrepreneur has to face several problems in starting and running their units .many of them are general problem being applicable to all entrepreneurs as well as some of the problems have uniqueness in nature or dimension. Hospital entrepreneurs in the sample had to face several difficulties in starting the unit .Many of them was prejudice towards the difficulties and selected their line of activity on the basis of easiness to start. In the case of private hospitals 7.32 percentage hospitals faced the problem of delay in getting loan and 14.63 percentage hospitals faced difficulties in compliance of formalities. Further 24.39 percentage and 4.88 percentage hospitals have the problem of shortage of capital and lack of co-operation from local bodies such as panchayath and municipal authorities. In the case of co-operative hospitals11.11percentage and 44.44 percentage hospitals have the problem of delay in sanction of loan and compliance of formalities. However 48.78percentage private hospitals and 44.44 percentage co-operative hospitals faced no difficulties while starting their unit.

Motivating Factor for Starting the hospital Table 9: Motivating Factor for Starting the hospital Reason

Private

Co-operative

Govt

Total

Ensuring hospital service to the poor people Generating employment opportunity

27 (65.85) 2 (4.88)

0 (0.00) 0 (0.00)

29 (100.00) 0 (0.00)

56 (70.89) 2 (2.53)

Provide specialty services at affordable fee Earning profit Ensuring hospital service to the poor people& Provide specialty services at affordable fee Total

4 (9.76) 3 (7.32)

0 (0.00) 0 (0.00)

0 (0.00) 0 (0.00)

4 (5.06) 3 (3.80)

5 (12.19) 41 (100.00)

9 (100.00) 9 (100.00)

0 (0.00) 29 (100.00)

14 (17.72) 79 (100.00)

Source: Field survey In order to undertake any activity there will be some motivation. Motivation initiates and stimulates one’s action. Various factors motivated hospital entrepreneurs to start own business are tabulated in the table The above table made clear that 65.85 percentage private hospitals and all government hospitals started with the objective of providing hospital service to the people. Besides 4.88 percentage and 9.76 percentage private hospitals aims to generate employment opportunity and provide specialty services at affordable fee respectively. In addition to this 7.32 percentage private hospitals started their hospitals for making financial profit and 12.19 percentage hospitals started with the objective of both ensuring hospital service to the poor people and provide specialty services at affordable fee. However 100 percentage co-operative started their hospitals with the objective of ensuring hospital services to the people in the locality and provide specialty services at affordable fee.

Reasons for selecting the present location of the hospital Table 10: Reason for selecting the present location of the hospital Reason

Private

Co-operative

Govt

Total

Easy availability of land/ own land Shortage of well equipped hospitals within 5 kilometers

6 (14.63) 13 (31.71)

0 (0.00) 6 (66.67)

0 (0.00) 0 (0.00)

6 (7.60) 19 (24.05)

Non availability of moderate and less expensive hospital facility at the location Nearness and accessibility to people from different locations Total Source: Field survey

12 (29.26)

3 (33.33)

0 (0.00)

15 (18.99)

10 (24.40) 41 (100.00)

0 (0.00) 9 (100.00)

29 (10.00) 29 (100.00)

39 (49.36) 79 (100.00)

The above table reveals the reason for selecting the present location of the hospital. Among private hospitals14.63 percentage and 31.71percentage hospitals selected the location because of cheap availability of land or own land and shortage of well equipped hospitals within 5 kilometers. Majority of the ( 66.67%)co-operative hospitals chose the location since there is shortage of hospitals facility in to Entrepreneurship in Health Care with Special Reference to Kerala State

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area . Further 29.26 percentage private hospitals and 33.33 percentage co-operative hospitals chose the location because of non availability of moderate and less expensive facility at the location. Lastly nearness and accessibility to people from different location is the other reason for 24.4percentage private hospitals, 100 percentage government hospitals. The analysis general framework of the private, co-operative hospital and government hospital reveal that there exist significant differences in the general framework of the selected private,co-opertive and government hospitals in Kerala. On this basis hypothesis, stating that there exists significant difference in the organisational framework of the selected group of hospitals in Kerala stands accepted

VI. CONCLUSIONS AND LIMITATIONS Thus the study concluded the organizational framework of the selected hospitals is varying but their role in the health care sector in Kerala is very significant. The major limitation for this study is that it has not covered the other types of institutions in the health sector such as Ayurvedic, Homeopathic, and Unani etc and it has become difficult for the researcher to collect data from different hospitals. Perceptions of the respondents are measured through observation, personal interview, questionnaire and schedules. The power structure in India may cause respondents to answer with partially frank acknowledgement of feelings. It became very difficult to meet and elicit opinion of administrators due to their busy schedules. Majority of administrators are under the impression that research on management means probing in to their internal affairs especially in health care sector .With this opinion they hesitated in providing required data. Another limitation is that the above analyzed data is not sufficient to study about the entrepreneurship in healthcare in Kerala.

REFERENCES 1. 2. 3. 4. 5. 6. 7. 8.

Nabae, K. (1997). The Health care system in Kerala-Its past accomplishments and new challenges. Journal of the National nstitute of Public Health, 18, 24-28. Aravindan, K. T. (1999). Changes in the Health Status of Kerala 1987-1995. Kerala Sasthra Sahithya Parishad . Aravindan, T. P. (2000). Changes in the Health Status of Kerala 1987-1997. Thiruvananthapuram: Centre For Development Studies. D Narayana, K. K. (2000). Decentralisatrion of the Healthcare sector in Kerala : Some issues. Thiruvananthapuram: Centre for Development Studies. Gangadharan, K. (2005). Utilisation of Health Services in Kerala. New Delhi: Serial Publications. Panikar, P. G. (2004). Resources not the constraint on health improvement- A case study of Kerala. Economic And Political Weekly, 14, 85-92. Ramankutty, V. (2000). Historical Analysis of the Development of Health care facilities in KeralaState,India. Health Policy and Planning, 15 , 103-109. Soman, C. R. (2007). Kerala's Crisis in Public Health. New Delhi: Ministry of Health and Family Welfare.

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Predictors of Employee Wellbeing’s among Private & Public Sector: An Empirical Study in Odisha Dr. Kalpana Sahoo Faculty in OB &HRM, Xavier University, Bhubaneswar, India [email protected]/[email protected] ______________________________________________________________________________________________________________________

Abstract: It is meaningful and important to pursue quality of work life and it is also crucial to find out how this can be accomplished in different contexts of employees. The primary purpose of the present study was to examine the role of setting and culture in employee’s well-being. Four hundred employees (200 males and 200 females) participated in this study. The study involved 2 (sex) x 2 (setting: private vs. public) factorial design where private and public sector of participants were crossed with sex. The dependent measures included overall life satisfaction, satisfaction with general as well as specific areas of life functioning, positive affect experience, negative affect experience, perception of resourcefulness and goal accomplishment. Independent variables are all the dimensions taken in the study. All these variables were measured with the help of a standardized questionnaire: Life Orientation Scale (LOS).The analysis of group differences done through ANOVA indicated that private people revealed greater well-beings not only in the area of overall life satisfaction but also in specific areas of happiness such as education, self, leisure, job and finance. However, public sector employees reported a greater wellbeing in the domain of social support and family. Private sector employees also reported a greater degree of resourcefulness and goal accomplishment than did public sector participants. The findings were explained in terms of the current conceptualization of psychological well-being which indicates the quality of work life of employees. Major implications of the study were outlined in view of the deficits in quality of work life , it would be useful to offer appropriate challenging task and continuous feedback for public sector employees. They must be trained to develop right kind of coping mechanism as well as a well structure succession planning. They need to be trained with respect to developing a sense of self efficacy and goal settings. Whereas in private sector employees lacking the social support and have less time family .Proper counseling and flexibility should be given to them. Key Words: Theoretical Frameworks of Employee’s Well-being, Predictors of wellbeing’s, Quality of Work life _________________________________________________________________________________________________

I. Introduction Work is an integral part of our everyday life, as it is our livelihood or career or business. On an average employees spend around twelve hours daily in the work place, that is one third of our entire life; it does not influence the overall quality of our life. It should yield job satisfaction, give a peace of mind, a fulfillment of having done a task, as it is expected, without any flaw and having spent the time fruitfully, constructively and purposefully. If their employees are in a good state of health and well-being, this must surely contribute to successful performance. Work life is an important as personal life and satisfaction of an individual in both aspects of life is very important.

Employee’s Wellbeing: Individual wellbeing, employee engagement, and a culture of wellbeing link to important organizational outcomes, such as productivity, health, and employee retention. These factors complement and affect one another in ways that leaders, managers, and organizations can influence. In the past, well-being was something that was provided for employees by beneficent employers. Today employers and employees share that responsibility in partnership. Organization can create and support an environment where employees can be healthier through providing information and access to schemes to improve well-being. However, well-being is ultimately an employee’s responsibility requiring education and a degree of self-awareness. Perhaps the most important factor in employee well-being is the relationships employees have with their immediate manager. Where there are strong relationships between managers and staff, levels of well-being are enhanced. A good manager will recognize the strengths, likes and dislikes of their team members and will be able to recognize when the volume or complexity of the work is too much for a particular team member. The more capable that line managers are in identifying the personal interests and concerns of the individual, the more likely they will be able to create a team where employee well-being becomes an integral part of getting the job done. Sometimes the concept of employee’s wellbeing varies from private sector to public sector. Variations in employee wellbeing: Though engagement is essential to creating a culture of workplace well-being, it's not enough on its own to create high well-being in all five elements. When employees are engaged, they're twice as likely as average employees to have thriving well-being. When employees are thriving in multiple elements, it becomes easier for them to accomplish things that are in their own best interest, such as maintaining good physical health. It is clear that the organization has a responsibility to lead employee wellbeing, and there are several key areas the organization can address to encourage wellbeing among its employees.

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Open, two-way communication, pay and benefits, fair and equal treatment, employing the „right‟ workforce, career development and training, working hours, and health and safety are all aspects of the work environment that organizations can control and influence and have been found to impact upon well beings on engagement levels. However, there is no „one size fits all‟ model of wellbeing, and different employees will have different needs which they value each of these elements in return for quality of work life. The findings of this literature review suggest that there is no discernable difference between the dynamics of wellbeing within the public sector as opposed to the private sector. Rather differences in engagement levels result from organizational characteristics; in whichever sector that organization sits. However, findings suggest that the public sector performs weaker in areas relating to strategic vision and change management, both of which are important to employee engagement. The CIPD (2010) reported that those who were absorbed in their work were almost three times as likely to have six key positive emotions at work (enthusiasm, cheerfulness, optimism, contentment, to feel calm and relaxed) as negative ones (feeling miserable, worried, depressed, gloomy, tense or uneasy).Robertson Cooper (u.d.) argued that high psychological wellbeing leads to positive individual outcomes, such as commitment, morale and health, which in turn lead to improvements in organizational performance . Research evidence also shows that many wellbeing programme has been conducted for employee engagement and less research has been found on what are the critical dimensions of employee wellbeings. This present study tries to highlight the micro dimensions of wellbeing in private and public challenges.

Predictors of Wellbeings: The issue of employee wellbeing is an important area of scientific concern. Although a brief description of the construct of wellbeing and its operationalization process has been outlined, but it is important to familiarize oneself with developments in this area of empirical research. The works relating to employee wellbeing stem from two broad areas. Some researchers have devoted their attention to the study of predictors of people wellbeing. Other scholars have concerned themselves with the why of the wellbeing. In this process, they have advanced knowledge in the area.

Psychological Factors The psychological predictors of employee wellbeing include factors such as personality and self-esteem. Personality. In recent years, a number of studies have appeared that examine the role of personality in employee wellbeing. Personality is suggested as a relevant factor in happiness . Studies on well-being had focused on the affective experiences of subjects based on subjective evaluation towards individual everyday life (Ilies, Dimotakis, De Pater, 2010).Personality traits account for a larger portion of variance in individual differences in happiness and appear critical to well-being(Diener et al., 1999). Marchand, Demers and Durand (2005) reported many people had physical consequences that were attributable to long-term exposure to stressful situations in the workplace. Frederickson (2002) argues that people should cultivate positive emotions in themselves and in those around them, towards fostering and achieving psychological growth and physical health. Research by Cartwright and Holmes (2006) supports the fact that when emotions and personality are properly managed, they will drive trust, loyalty, team spirit and improved organizational accomplishments. Self-esteem. There‟s a strong correlation between how we feel about ourselves (our self-esteem) and our feelings of well-being. When we have a high sense of self-worth and our lives are in harmony, we will actually create positive events in our lives. But when we have a low sense of self-worth and our lives are in disharmony, we create negative events.Self-esteem has been defined as a global feeling of self-worth or adequacy as a person, or generalized feeling of self –acceptance and self-respect. Wellbeing and self-esteem appear to be linked. Schutte, Malouff, Simunek, McKenley and Hollander (2002) mention the importance of cultivating positive emotion and higher self-esteem as characteristic of well-being among leaders.

Socio-Demographic Predictors In addition to psychological factors, a number of Socio-demographic Predictors need to be discussed. Genetic Factors. The idea of a genetically determined set point for wellbeing is a seminal point Lykken and Tellegen (1996) have provided evidence, based on twin studies and adoption studies, that the heritability of wellbeing may be as high as 80% (although a more widely accepted figure is 50%.). Gender. It is worth noting that men and women handle their emotions in different ways. For example, women report using social support more frequently than do men to combat the negative moods . However, the emotional benefits that women gain through affiliation may be undercut by their greater tendency (relative to men) to ruminate about the causes and consequences of their unhappiness .Another study views that although women report more negative affect, they also enjoy greater happiness (Braun, 1977). Social Support. Social support is one of the most effective means by which people can cope with stressful events, thereby buffering themselves from the adverse mental and physical health effects of stress (Cohen & Wills, 1985). Thomas (2010) specifically examined whether it is more beneficial to give or receive support in a sample of older adults. She found that total provided support was the strongest predictor of well-being in a model that included several predictors, whereas total received (i.e., enacted) support was positively associated with well-being, but only when examined in a model without provided support. Thomas (2010) concludes that „„it is often better for the well-being of older adults to give than to receive‟‟. Predictors of Employee Wellbeing’s among Private & Public Sector: An Empirical Study in Odisha

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Goals. Goal refers to strive to accomplish things or attempt to reach full potential. According to Ruch (1970), a goal refers to some substance, objects or environmental condition capable of reducing or temporarily eliminating the complex of internal conditions which initiated action‟. Diener and Fujita (1995) found that having resources(e.g., money, physical attractiveness ,or social skills) in these area is related to one‟s goals. Basic psychological needs mediate the relations between extrinsic or intrinsic goals and wellbeing. Placing value on intrinsic goals, attainment of these goals, and expectation for future attainment contribute to satisfaction of psychological needs and well-being (Brdar, 2006; Rijavec et al., 2006). Income. A study of 24,000 German residents revealed a correlation between income and life satisfaction (Lucas, Clark, Georgellis, & Diener, 2003) A study of Russian participants revealed correlations between household income and wellbeing of .48 in 1999 and .39 in 2000.In a meta-analysis of 286 empirical investigations of older adults, income was significantly correlated with happiness and life satisfaction, and more so than with education. Spirituality. It indicates that an involvement for searching a meaning and purpose in life, unfolding mysteries of the universe, harmony peace, wholeness, and transcendence is a stable predictor of happiness. It is consistent with conceptual models presented by Boland (2000) and by Hill and Pragment (2003). Boland (2000) asserted that spirituality allows an individual to draw inner resources that facilitate adaptive coping and positive health outcomes. Cultural Factors. Subjective well-being, as the term indicates, is primarily concerned with the person‟s subjective judgment of his or her well-being (Diener, Suh, Lucas & Smith, 1999). Because the standards of self-evaluation are deferred to the individual, evaluating whether one‟s life as a whole is satisfying or not can be a challenging cognitive task to the respondent. By emphasizing different elements of experience and by giving priority to different types of information, culture play a key role in determining what types of information are chronically salient among their cultural members (Triandis, 1989) . This leads to the idea that the judgment of life satisfaction could be based on different sources of information across cultures. Three important socio-cultural variables that influence SWB are (a) Equality, (b) Independence-Interdependence, and (c) Cultural homogeneity. A broad cultural variable that may potentially influence SWB is individualism-collectivism (I-C; Triandis, 1989), which is also labeled Independence-Interdependence (Hofstede, 1980, 1991; Markus & Kityama, 1991). In individualistic societies, people are oriented toward their personal goal and desire, and they perceive the individual as the basic unit. In contrast collectivists view the group as of primary importance and focus their attention on achieving group goals. Evidence suggests that internal phenomenological states, such as emotions, are less control to the psychological behaviours of collectivist cultural members (Levenson, Ekman, Heider, & Friesen, 1992).Study by Diene and Diener (1995) reveal that cultural homogeneity did not relate to higher SWB. Inglehart (1990) viewed that as basic material needs are met, individuals moved for self-fulfillment.

Quality of Work life: Quality of work life is specifically related to the level of wellbeing a person derives for his career. Each person has different needs when it comes to their careers; the quality level of their work life is determined by whether those needs are being met. While some people might be content with a simple minimum wage job as long as it helps pay the bills, others would find such a job to be too tedious or involve too much physical labor and would find such a position to be highly unsatisfactory. Thus, requirements for having a high "quality of work life" vary from person to person. Regardless of their standards, those with a high quality of work life generally make enough to live comfortably, find their work to be interesting or engaging and achieve a level of personal satisfaction or fulfillment from the jobs that they do. In other words, employees who are generally happy with their work are said to have a high quality of work life, and those who are unhappy or unfulfilled by their work are said to have a low quality of work life. The understanding, measurement, and improvement of human experience have been major goals of individuals, researchers, communities and governments. The overall assessment of employee experience has been commonly expressed by the term quality of work life (QWL). Recent research on QWL has focused on two basic methodologies of measurement. One method utilizes quantifiable social or economic indicators to reflect the extent to which employee needs are met. The other looks to self reported levels of happiness, pleasure, fulfillment, and the like, and has been termed “subjective well-being”(SWB) (Diener and Lucas, 1999).

Rationale and Objectives The analysis and integration of the pertinent literature provides some conceptual frameworks. The goal has been made in certain areas, while there are research gaps in other areas. To examine organizational type with respect to Workplace well beings. The operationalization of the construct of wellbeing is a matter of fundamental concern. Although overall life satisfaction and frequency of positive and negative effects have been greatly implicated in the definition of wellbeings, the exact nature of relationship has to be identified. In other words, nomological network of the concept of wellbeing can be delineated only when the linkage between wellbeing and other parameters is clearly identified. Consequently a major objective of the concern is the proper intervention of the employees based on this result. In view of these studies, it seems important to probe into the nature of setting. Prior to pinpointing the role of mediating mechanisms, it is useful to examine employee wellbeing in public and private corporate context. The present study is directed to examine employee wellbeing in private-public context. It is expected that the examination of such difference would identify Predictors of Employee Wellbeing’s among Private & Public Sector: An Empirical Study in Odisha

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specific mediating mechanism. The study is also directed to investigate the sex difference. In addition the objective was to revalidate a comprehensive measure of employee wellbeing

Hypotheses 1. 2.

The following hypotheses are formulated for empirical investigation Male employees experience greater wellbeing than do females Private organizations employees experience greater wellbeing than do public sector employees.

METHOD OF STUDY The objective of the investigation was to compare public and private employees with respect to several dimensions of wellbeing. The other purpose was also to examine sex difference with respect to wellbeing.

An Over-View of the Design The study involves 2 (sex) X 2 (setting: Private vs Public) factorial design where male employees and female employees from private and public areas were randomly sampled. There were 400 adult employees with 100 employees in each of the four cells. The dependent measures involved overall life satisfaction as well as wellbeing in several areas such as education, social support, leisure, job, flexibility, finance and family. The groups were also compared with respect to resource factors and goal accomplishment.

Sample: The participants were randomly selected from two different settings; Public and Private Settings. Each of the setting comprised 100 male employees and 100 female employees. All participants were married. The samples were collected from NTPC as the public sectors and INFOSYS as the private sectors. Almost all participants were of middle level management.

Measure The wellbeing measure labeled the Life Orientation Scale (LOS) is designed specifically to measure employees‟ wellbeing. Part-I presents ten life satisfaction statements borrowed from relevant cross-culturally used scale. The statements include items such as “ I am pleased with the way I have fulfilled my duties” and “ I feel good about my Life”. Respondents are asked to indicate their agreement/disagreement with each of the statements on a 7-point scale where „1‟ denotes “strongly disagree” and „7‟ indicates “strongly agree”. The scoring is reversed for negative items. The overall score is computed by summing scores across ten items. Part-2 measures domain-specific happiness. Seven such domains are represented; these include education (for self and children), social relation, self in general, work, recreation, finance and family. Under each domain, a number of sub-domains (such as coaching, examination performance, teacher, and school/college environment) are indicated. Respondents are required to indicate their level of satisfaction on a 7-point scale with respect to each domain as well as each sub-domain.The scale indicates „1‟ for “terrible” and „7‟ for “delightful”. While computing the score, seven sub-scores for seven domains are computed. In addition to measuring people‟s satisfaction with respect to general domains such as education and social relation, participants are also asked to indicate the satisfaction with specific aspects of a general domain. For instance, the general domain of social relation included specific aspect such as neighbours, friends, colleagues and visitors. Similarly, self- general included specific aspects in such as physical health, achievement, assignment and ethics. The general domain of recreation included games and sports, social gettogether, hobbies and T.V/movies. While computing satisfaction score for each of the specific aspects, an averaged (mean) satisfaction score for specific aspect is also computed for each domain. For instance, in the domain of education, there are subdomain scores for education (in general): coaching, examination performance, teachers, school/college and school environment. Part-3 measures the intensity of feeling. Twenty four affect-denoting (12 positive and 12 negative) adjectives are presented. The positive items include cheerful and joyful whereas negative items include sad and lonely. Subjects are asked to indicate the frequency with which they have been experiencing each of these during last two months. The rating scale ranges from 1 to 5 where „1‟ denotes “never” and „5‟ indicates “almost always”. Positive affects score is computed by summing ratings across positive items and negative affects score is similarly computed. The balance score is indicative of person‟s happiness/unhappiness feeling state. Part-4 measures employee‟s satisfaction with existing resources. Twenty-one assets (resources) are indicated. The list includes assets such as intelligence, social skill, position of authority, and physical attractiveness. Respondents are asked to assign „1‟ against a resource if they possess it much below the average in their community. They are asked to assign „7‟ against a resource if they possess it much above the average. Accordingly, they may assign intermediate numbers. It is to be noted that the sum of ratings across all items is indicative of resource satisfaction. Part-5 is intended to measure participants‟ satisfaction with goal accomplishment. Respondents are asked to indicate ten activities/goals they consider most important in their life. They are also asked to indicate the level of satisfaction with each of these activities/goals on a six-point scale where „1‟ denotes „extremely dissatisfied‟ and „6‟ indicates „extremely satisfied‟. Intermediate numbers are used for other response categories such as moderately dissatisfied, mildly dissatisfied, mildly satisfied, and moderately satisfied. The goal accomplishment score is the sum of ratings across ten activities. The final part seeks open-ended answers. First, the person is asked to think of happiest person in his or her immediate environment and give a brief description of him/her. Second the subject is also asked to think of the unhappy person and give a brief description. Predictors of Employee Wellbeing’s among Private & Public Sector: An Empirical Study in Odisha

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Furthermore, personal information such as sex, age, education, income, and place of residence is also sought in this part. The psychometric efficacy of the measure requires specification. It may be indicated that contemporary research on happiness/SWB has stressed to use composite indicators of measuring happiness. According to Diener et al. (1999), three separate indicators need to be included for comprehensive assessment of happiness: overall life satisfaction, domain-specific satisfaction and positive affect-negative affect experience differential. Accordingly the present measure has included all these three components and a few more elements. The overall life satisfaction scale has employed all the items used in the global measure of satisfaction designed by Diener. This global measure has been extensively used in cross-cultural research and its psychometric efficacy has been reported in a large number of studies (Diener, 2000). Sahoo (2005) has also reported its satisfactory internal consistency of Cronbach‟s alpha (.79) in Indian context. Drawing on the suggestion of Diener, domain-specific measurement of happiness has been developed by Sahoo (2005). It has been used in previous studies (e.g., Sahoo & Mohapatra, 2009) and internal consistency has reported. The Cronbach‟s alpha for each segment of the study (e.g., education, social relation, and so on) range from .73 to .81. Similarly part three of the measure is intended to determine positive affect experience, negative affect experience and differential affect. This part has also been validated prior to the present study. Cronbach‟s alpha range from .76 to .81 and indicate significant level of internal consistency (Sahoo & Mohapatra, 2009).

Procedure Participants were contacted in their natural habitat. The investigator approached each respondent individually and imparted a clear description of what to do. The instructions for each part of questionnaire were adequately explained and care was taken to ensure that they understood the instructions. The questionnaire was in English and each participant received face-to-face instructions from the investigator. Moreover, detailed written instructions were also provided on the entire questionnaire for their reference and guidance. Participants are asked to indicate their agreement and disagreement on a 7-point scale for Part-1. In the Part -2, participants were asked to indicate the degree of satisfaction with each of the seven domains on a seven point scale. Appropriate statistical analysis was carried out to examine group differences on each of the variables. Furthermore, the network of the relationship amongst variables was also examined. All the participants were individually administered the Life Orientation Scale (LOS).

RESULTS &ANALYSIS: The purpose of the present empirical investigation is to examine the relevance of critical predictors of psychological wellbeing. The objective is also to investigate the pattern of relationship amongst various variables. In order to achieve those objectives, appropriate statistical analyses are carried out. The Analysis of Variance performed on overall life satisfaction shows significant sex effect, F (1, 396) = 40.27, p < 0.01 (see Table – 1). As indicated by Table–2, males exhibit greater life satisfaction than do female employees, (M = 45.03 and 33.35, respectively). Furthermore, the results reveal significant effect for organizational setting, F (1, 396) = 28.81, p < 0.01. As shown in Table-2, Private sector employees show greater life satisfaction than do public sector participants, ( M = 44.13 and 34.25, respectively). The result also shows significant sex X setting Effect, F (1, 396) = 15.79, p < 0.01. As depicted by Figure–1, the gap between male employees and female employees with respect to overall life when it moves for privatization. Table – 1: Analysis of Variance Performed on Overall Life Satisfaction Scores of Participants Sources Sex Setting Sex X Setting Error

df

MS 4095.01 2930.41 1606.01 101.7

1 1 1 396

F 40.27 * 28.81 * 15.79 *

* p < 0.01 Table – 2 Mean Overall Life Satisfaction Scores of Participants Groups Public Sector Private Sector All

Male M 36.43 53.63 45.03

SD 15.33 7.90 14.88

Female M 32.07 34.63 33.35

SD 8.30 6.36 7.44

Combined M 34.25 44.13

SD 12.42 11.93

Figure 1: The Sex X Setting Effect for Overall Life Satisfaction Scores

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The Analysis of variance is performed on satisfaction with resource conditions. The result indicates the significant effect of sex, F (1,396) = 9.39, p < 0.01 (see Table - 3). As shown by Table-4, the male employees indicate greater satisfaction with resources than do female employees (M = 49.73, 42.90 respectively). The result also reveals the significant effect of setting, F (1,396) = 9.03, p < 0.01. The mean scores indicate that the private sector participants exhibit higher satisfaction than do public sector participants (M = 49.67 & 42.97 respectively). Furthermore, the result reveals the significant effect for sex X setting, F (1,396) = 6.23, p < 0.05.

Table-3: Analysis of Variance Performed on Satisfaction with Resource Availability Sources Sex Setting Sex X Setting Error

df

MS

F

1 1 1

1400.83 1346.70 929.63 149.20

9.39 ** 9.03 ** 6.23 *

396

*p < 0.05 **p < 0.01

Table – 4: Mean Scores of Satisfaction with Resource Availability Groups Rural Urban All

Male M 43.60 55.87 49.73

Female SD 10.91 12.01 12.95

M 42.33 43.47 42.90

Combined SD 13.84 11.91 12.82

M 42.97 49.67

SD 12.37 13.41

As depicted by Figure-2, female employees‟satisfaction with resource conditions remains unchanged whereas the males‟ satisfaction with resource condition rises steeply with the increasing level of privatization. Figure :2: Sex X Setting Effect for Satisfaction with Resource Conditions

The Analysis of variance is performed on satisfaction with goal setting. The result indicates the non-significant effect of sex, F (1,396) = 1.82 n.s. (see Table- 5). As shown by Table – 6, males exhibit similar satisfaction with goal setting compared to females (M = 26.28 & 24.12 respectively). The result also indicates significant effect of setting, F (1,396) = 39.35, p < 0.05. The mean scores reveal that the private sector participants exhibit greater satisfaction compared to public sector participants (M = 30.23 & 20.17 respectively). The result also reveals the significant effect of sex X setting, F (1,396) = 4.06, p < 0.05. As depicted by Predictors of Employee Wellbeing’s among Private & Public Sector: An Empirical Study in Odisha

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Figure-3, the gap between males and females with respect to their satisfaction with goal setting increases as the participants become more and more privatized. Table – 5: Analysis of Variance Performed on Satisfaction with One’s Goal Setting Sources Sex Setting Sex X Setting Error

df

MS

1 1 1

140.83 3040.13 313.63 77.26

396

F 1.82 39.35 ** 4.06 *

*p < 0.05 **p < 0.01 Table – 6: Mean Scores of Satisfaction with One’s Goal Setting Groups Rural Urban All

Male M 19.63 32.93 26.28

Female SD 6.39 10.37 10.86

M 20.70 27.53 24.12

Combined SD 6.34 10.97 9.53

M 20.17 30.23

SD 6.34 10.93

Figure :3: Sex X Setting Effect for Satisfaction with One’s Goal Setting

Analysis of Relationship In addition to examining group differences, the analysis of relationships amongst variables is carried out in the form of corelational computations. The correlation coefficients are computed with respect to measures obtained from private sector participants. As shown by Table-7, life satisfaction insignificantly correlated with many of domains specific satisfaction. For example, life satisfaction is significantly related to satisfaction with self, r(198) = .59, PF 0.2154 0.2154 0.2154 0.2154

e e e e

e = exact, a = approximate, u = upper bound on F

Table 10 shows canonical correlation value of 13 percent which is not significant at five percent. Hence, there is no significant relationship between the two sets. It can further be inferred from the table that the significance value in respect of the profile variable of age is less than 0.05, suggesting that age is the profile variable which casts the maximum influence on investors’ perception about the environment prevalent in India about M&A. Furthermore, personal profile influences investors’ perception about environment prevalent in India regarding M&A, while investment profile is not influencing the same.

V.

CONCLUSION

Perception about environment related to M&A in India will differ among investors. This study finds that the investors have the perception that Indian companies are acquiring more number of foreign companies. Cluster analysis has segmented investors into three categories of normal environment, volume and conductive environment. Existence of relationship between investors perception about environment related to M&A in India and their profile characteristics of age, number of family members, number of dependents, number of income earning members, savings and equity investment avenues has been established. Age of investors is exerting the maximum influence on investors perception about environment related to M&A in India. REFERENCES Dhinaiya, G.M., (2012) “Impact of mergers & acquisitions on the performance of companies”, International Journal of Research in Commerce & Management, Vol. 3, No. 9, pp. 102-106. 2. Jain, A., (2012) “Extra-territorial jurisdiction of Competition Commission of India”, Journal of Financial Crime, Vol. 19, No. 1, pp. 112–119. 3. Kirchhoff M, Schiereck D, Mentz M (2006). Market valuation of real estate finance mergers: a note. Journal of Property Investment & Finance 24(1):79–87. 4. Kyriazis D, Diacogiannis G (2008). The Determinants of Wealth Gains in Greek Takeover Bids. International Research Journal of Finance and Economics 22:162177. 5. Lahovnik M, Malenković V (2011). Corporate acquisition strategies and economic performance – A case of Slovenia. 29(1):33-50. 6. Lau B, Proimos A (2010). The underperformance of equity-financed bidders. International Journal of Managerial Finance 6(1):4–23. 7. Morris, D., (2011) “The employment law implications of charity mergers”, Employee Relations, Vol. 23, No. 3, pp. 271-289. 8. Moskowitz H, Rabino S, Gofman A, Moskowitz D (2007). Effective and confident communications in the midst of a major crisis: An experiment in the pharmaceutical context. International Journal of Pharmaceutical and Healthcare Marketing 1(4):318–348. 9. Mullin, R., (1996) “Honeywell at halftime”, Journal of Business Strategy, Vol. 17, No. 5, pp. 22–28. 10. Nguyen H, Kleiner BH (2003). The effective management of mergers. Leadership & Organization Development Journal 24(8):447–454. 11. Rani N, Yadav SS, Jain PK (2013). Post-M&A Operating Performance of Indian Acquiring Firms: A Du Pont Analysis. International Journal of Economics and Finance 5(8):65–73. 1.

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The Impact of Mergers on Profitability: An Empirical Study on Indian Banking Sector Dr. Suresh Patidar1, Gaurav Sunil2

1Reader, International Institute of Professional Studies, Devi Ahilya University, Indore

[email protected], [email protected] 2Assistant Manager, Canara Bank, Circle Office, Bhopal,

Abstract: Globally mergers and acquisitions have become a major way of corporate restructuring and the financial services industry has also experienced merger waves leading to the emergence of very large banks and financial institutions. The key driving force for merger activity is severe competition among firms of the same industry which puts focus on economies of scale, cost efficiency, and profitability. The other factor behind bank mergers is the “too big to fail” principle followed by the authorities, Where as various researches showed that mergers has detrimental impact on profitability of banking industry. This study attempts to study the impact of mergers on profitability of banks. This study uses different financial ratios and tools like OLS regression and fixed effect model to analyse and interpret the effect of merger on profitability. Keywords: Mergers, Profitability, Financial Ratios, OLS regression, Fixed effect Model. _________________________________________________________________________________________________

1. Introduction The term „merger‟ is not defined under the Companies Act, 1956 (the „Companies Act‟), the Income Tax Act, 1961 (the „ITA‟) or any other Indian law. Simply put, a merger is a combination of two or more distinct entities into one; the desired effect being not just the accumulation of assets and liabilities of the distinct entities, but to achieve several other benefits such as, economies of scale, acquisition of cutting edge technologies, obtaining access into sectors / markets with established players etc. Generally, in a merger, the merging entities would cease to be in existence and would merge into a single surviving entity. Merger generally refers to a circumstance in which the assets and liabilities of a company (merging company) are vested in another company (the merged company). The merging entity loses its identity and its shareholders become shareholders of the merged company. The main motive behind the Merger is to create synergy, that is one plus one is more than two and this rationale beguiles the companies for merger at the tough times. Mergers help the companies in getting the benefits of greater market share and cost efficiency. Companies are confronted with the facts that the only big players can survive as there is a cut throat competition in the market and the success of the merger depends on how well the two companies integrate themselves in carrying out day to day operations

1.1 MERGERS IN INDIAN BANKING INDUSTRY1 Globally mergers have become a major way of corporate restructuring and the financial services industry has also experienced merger waves leading to the emergence of very large banks and financial institutions. The key driving force for merger activity is severe competition among firms of the same industry which puts focus on economies of scale, cost efficiency, and profitability. Banks merge for a variety of reasons, among them to realize increases in efficiency through exploitation of economies of scale or scope, to spread best-practice techniques and expertise to less profitable participants, and to reap the benefits of market share and decreases in competition. The other factor behind bank mergers is the “too big to fail” principle followed by the authorities. In some countries like Germany, weak banks were forcefully merged to avoid the problem of financial distress arising out of bad loans and erosion of capital funds. A merger is expected to generate improved performance if the change in accounting-based performance is superior to the changes in the performance of comparable banks that were not involved in merger activity. The history of Indian Banking shows that seeds of banking in India were sown back in the 18th century when efforts were made to establish the General Bank of India and Bank of Hindustan in 1786 and 1790 respectively. Later some more banks like Bank of Bengal, Bank of Bombay and the Bank of Madras were established under the charter of British East India Company. These three banks were merged in 1921 and it formed the Imperial Bank of India, which later became the State Bank of India. The period between 1906 and 1911 witnessed the establishment of banks such as Bank of India, Bank of Baroda, Canara Bank, Corporation Bank, Indian Bank and Central Bank of India; these banks have Survived to the present. Several M&A activities among banking institutions were later reported during this pre independence period. In 1949, the Banking Regulation Act which empowered the Reserve Bank of India (RBI), India‟s central bank, to regulate and control banking institutions in India was enacted. This enactment has provided a sigh of relief to investors and improved depositors‟ confidence in Indian banking system. In 1960s, several private banks were found to be operating on a very low capital. As a 1

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result, several banks have failed and this has led to loss of confidence of the public towards the banking system as a whole. To restore confidence in the banking system and thus to avoid losses to depositors, 45 banks were pushed into mergers. Most of these mergers were between failed private banks and public sector banks. The banking sector in India can be divided into two era i.e. pre-liberalization era and postliberalization era since 1991. In the preliberalization era, the Government of India nationalized the 14 largest commercial banks in 1969. A second dose of nationalization of six more commercial banks followed in 1980. The stated reason for the nationalization was to give the government more control of credit delivery. Later, in the year 1993, the government merged New Bank of India with Punjab National Bank. It was only the merger between nationalized banks and resulted in the reduction of the number of nationalized banks from 20 to 19. Since 1980 the consolidation fever started in both commercial and rural banks. There were about 196 rural banks in 1989 that were consolidated into 103 by merging themselves into commercial banks. In 2000, about 17 urban co-operative banks were merged with the state owned commercial banks. Since about 75% of the Indian banking system consists of public sector banks, more consolidations began to take place in the late 2000. Indian banking institutions began facing competition when the regulators started to allow foreign banks to enter the local banking market. At the same time, private banks began to increase in number. With strong support from their parents, foreign banks in India have set the trend of services and performance in Indian banking institutions. Feeling this pressure, many private banks began to merge with foreign banks for reasons such as building up their financial strength, capturing larger portion of the growing retail business and securing better regional presence 1. Recently, on 13th August 2010, the process of M&As in the Indian banking sector passes through the Bank of Rajasthan and the ICICI Bank. Moreover, the HDFC Bank acquired the Centurion Bank of Punjab on 23 May 2008. The Reserve Bank of India sanctions the scheme of mergers of the ICICI Bank and the Bank of Rajasthan. After the merger the ICICI Bank replaced many banks to occupy the second position after the State Bank of India (SBI) in terms of assets in the Indian. Banking Sector. In the last ten years, the ICICI Bank, the HDFC bank in the private sector, the Bank of Baroda (BOB) and the Oriental Bank of Commerce (OBC) in the public sector involved themselves as a bidder Banks in the Merger and Acquisitions (M&As) in the Indian Banking Sector. Table 1 gives a detailed account of all Merger and Acquisitions took place in the Indian banking sector. 2

Source: Report on trend and progress of banking in India , RBI

2. LITERATURE REVIEW Government policy can be the one of the major forces in banking consolidation. In 1997, as a result of the Asian financial crisis, the governments of the region have promoted consolidation of the banking system on the ground that this would contribute to the stabilization on the banking system of the region (Berger et al (1999)). Besides this guided merger, consolidation due to market driven has also increased. According to Amel (2002), between 1990 and 2001, more than 8000 bank consolidations has occurred globally. It has been argued that the rationale for consolidation of banking institutions through mergers and acquisitions is to improve cost and revenue efficiency that will in turn improve profitability, safety and soundness of these institutions (Berger, Hunter and Timme (1993)). Morris Knapp, Alan Gart & Mukesh Chaudhry (2006) research study examines the tendency for serial correlation in bank holding company profitability, finding significant evidence of reversion to the industry mean in profitability. The paper then considers the impact of mean reversion on the evaluation of post-merger performance of bank holding companies. The research concludes that when an adjustment is made for the mean reversion, post-merger results significantly exceed those of the industry in the first 5 years after the merger. Suchismita Mishra, Arun, Gordon and Manfred Peterson (2005) study examined the contribution of the acquired banks in only the non conglomerate types of mergers (i.e., banks with banks), and finds overwhelmingly statistically significant evidence that non conglomerate types of mergers definitely reduce the total as well as the unsystematic risk while having no statistically significant effect on systematic risk. Ya-Hui Peng & Kehluh Wang (2004) study addresses on the cost efficiency, economies of scale and scope of the Taiwanese banking industry, specifically focusing on how bank mergers affect cost efficiency. Study reveals that bank merger activity is positively related to cost efficiency. Mergers can enhance cost efficiency, even though the number of bank employees does not decline. The banks involved in mergers are generally small were established after the banking sector was deregulated.

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Sinha Pankaj & Gupta Sushant (2003) studied a pre and post analysis of firms and concluded that it had positive effect as their profitability, in most of the cases deteriorated liquidity. After the period of few years of Merger and Acquisitions(M&As) it came to the point that companies may have been able to leverage the synergies arising out of the merger and Acquisition that have not been able to manage their liquidity. Study showed the comparison of pre and post analysis of the firms. It also indicated the positive effects on the basis of some financial parameter like Earnings before Interest and Tax (EBIT), Return on share holder funds, Profit margin, Interest Coverage, Current Ratio and Cost Efficiency etc. Kuriakose Sony & Gireesh Kumar G. S (2006) in their paper, they assessed the strategic and financial similarities of merged Banks, and relevant financial variables of respective Banks were considered to assess their relatedness. The result of the study found that only private sector banks are in favor of the voluntary merger wave in the Indian Banking Sector and public sector Bank are reluctant toward their type of restructuring. Anand Manoj & Singh Jagandeep (2008) studied the impact of merger announcements of fivebanks in the Indian Banking Sector on the share holder bank. These mergers were the Times Bank merged with the HDFC Bank, the Bank of Madurai with the ICICI Bank, the ICICI Ltd with the ICICI Bank, the Global Trust Bank merged with the Oriental Bank of commerce and the Bank of Punjab merged with the centurion Bank. The announcement of merger of Bank had positive and significant impact on share holder’s wealth. Mantravadi Pramod & Reddy A Vidyadhar (2007) evaluated that the impact of merger on the operating performance of acquiring firms in different industries by using pre and post financial ratio to examine the effect of merger on firms. They selected all mergers involved in public limited and traded companies in India between 1991 and 2003, result suggested that there were little variation in terms of impact as operating performance after mergers. Mehta Jay & Kakani Ram Kumar (2006) stated that there were multiple reasons for Merger and Acquisitions in the Indian Banking Sector and still contains to capture the interest of a research and it simply because of after the strict control regulations had led to a wave of merger and Acquisitions in the Banking industry and states many reason for merger in the Indian Banking sector. While a fragmented Indian banking structure may be very well beneficial to the customer because of competition in banks, but at the same time not to the level of global Banking Industry, and concluded that merger and Acquisition is an imperative for the state to create few large Banks. R. Srivassan et al., (2006) gave the views on financial implications and problem occurring in Merger and Acquisitions (M&As) highlighted the cases for consolidation and discussed the synergy based merger which emphasized that merger is for making large size of the firm but no guarantee to maximize profitability on a sustained business and there is always the risk of improving performance after merger. Berger and Humphrey (1994) reported that most studies that examined pre-merger and post-merger financial ratios found no impact on operating cost and profit ratios. The reasons for the mixed evidence are: the lag between completion of merger process and realization of benefits of mergers, selection of sample and the methods adopted in financing the mergers. It is clear from the above review of literature that, most of the works have been done on trends, policies & their framework, human aspect which is needed to be investigated, whereas profitability and financial analysis of the mergers have not given due importance. The present study would go to investigate the detail of Merger with greater focus on the mergers held in Indian banking sector after 2005. The study will also discuss the pre and the post merger performance of banks. An attempt is made to determine the factors that have significant impact on financial performance (profitability)

3.1 RATIONALE In India economic reforms initiated in the year 1991. One of the economic reforms was opening of banking sector for private players. Many private players entered banking sector and started their business. In India contribution of service sector to GDP accounts more than 60% and within service sector share of banking services is significant any change in the banking sector may have impact on the GDP. In recent past banking sector witnessed consolidation. In this sector various force mergers also taken place because of the directives of the RBI. By this study researcher trying to find out the effect of mergers and acquisitions on profitability of banks.

3.2 OBJECTIVE 1. 2.

This study attempts to analyse: The Impact of Mergers on Profitability in Indian banking industry. To determine the pre-mergers and Post-Mergers variables which has significant impact on profitability

3.3 METHODOLOGY 3.3 (A) DATA & SAMPLING For the purpose of the study mergers held after 2005 were considered. The rationale behind choosing this period is that the similar researches have been already performed on mergers held in period 2001-2005. But those researches include few variables and does not suggests the premerger and post-merger variables that has significant impact on profitability. As per literature review the true impact of merger comes out in long run ie 3 to 4 years thus at least 5 years premerger study and 5 years post merger study is required to study the true impact. For this purpose mergers held in 2006 and 2007 are considered for study. Based on this criterian 5 mergers has been identified and out of which 4 mergers (4 banks ) are included in the study. These banks are: Transferor Bank Ganesh bank of kurundwad ltd

Transferee Bank Federal Bank ltd

Date 2 –Sept -2006

Type Voluntary merger

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IDBI bank IOB ICICI ltd

Forced merger Forced Merger Voluntary merger

There was one more merger in 2007 between Lord Krishna Bank and Centurian Bank of Punjab, but it is not considered for study because , the transferee bank of this merger ie Centurian Bank of Punjab was merged in HDFC bank in 2008.

3.3 (B) PERIOD OF STUDY For the sake of simplicity merger completed between 1-04-2006 and 31-03-2007 is assumed as merger completed in 2006 And merger completed between 1-04-2007 and 31-03-2007 is assumed as merger completed in 2008. Premerger period is 2002-2006 and postmerger period is 2007-2011 comprising five year premerger data and five year post merger data.

3.3 (C ) DESCRIPTION OF VARIABLES In this study different financial ratios are taken as variables. Profitability is measured in terms of return on shareholders’ (ROSF) funds and return on assets (ROA). These are dependent variables. Other variables in the study are taken as independent variables. These variables are shown in table below: variable Size Capital Adequacy ratio Debt to Equity Ratio Turnover Growth Interest spread Net Profit margin Net interest income to total Asset Return on Advances Credit to Deposit ratio Investment to deposit ratio Cash to deposit ratio Earnings Per Share Current ratio Advances to loan Funds Cost of funds Return on shareholders funds Return on Assets

acronym BSIZE CAR DE TURNOVER GROWTH INTSPR NPM NIITOTA ROADV CDR IDR CashDR EPS CR ATLF CE ROSF ROA

How to calculate LN( assets) Total capital/RWA Debt /equity (shareholders funds) LN(total income) Sn- So/So Interest income- interest expenditure Net profit/ total profit Net interest income/total asset Net income /total advances Total credit/total deposit Investment/total deposit Cash/total deposit Net profit after tax/no of equity shares Current assets/current liablity Total advances/deposits+ borrowings Total interest exp / deposits+ borrowings Net income/ shareholders funds Net income / total assets

What it measures Control variable solvency solvency Control variables Control variables Mgmt efficiency Mgmt efficiency Asset quality Earnings liquidity liquidity liquidity Earnings liquidity risk Asset quality Profitability Profitability

Type Independent Independent Independent Independent Independent Independent Independent Independent Independent Independent Independent Independent Independent Independent Independent Independent Dependent Dependent

3.3 (D) SOURCE OF DATA COLLECTION Data is collected from annual reports of the respective bank. Some ratios which are already calculated is taken directly whereas some ratios are calculate on basis of relevant information given in financial statement and schedules given in annual reports. Test for multicollinearity: Correlation analysis is done to check multicollinearity among the 16 dependent variables taken for the study. From the correlation analysis , significant correlation is detected among variables like :- (refer ANNEXURE 1) size Capital Adequacy (CAR Debt/equity Turnover Net Profit Margin(NPM) Net Interest Income To Total Asset Credit to deposit ratio

Debt/equity , Turnover , Intrest spread , Net Intrestincome to total asset , credit /deposit ratio Debt equity ratio Size , CAR , Turnover , Interest spread , Net Intrestincome to total asset , credit /deposit ratio , investment to deposit ratio. Interest Spread , size , debt equity Net Interest income to total asset , Interest Spread. Cost Efficiency , Debt equity , Return on total advances , Credit to deposit ratio , investment to deposit ratio , EPS Size , debt to equity , Net Interest income to total asset

Thus to minimise the effect of multicollinearity those variables which are correlated to many variable has been dropped. Rational analysis is done to remove those variable and finally 11 variables have been selected. These variables are: Bank Size (BSIZE) Total Income / Total (ROADV) Current Ratio (CR)

Advances

Capital Adequacy (CAR) Investment to deposit Ratio (IDR)

Growth (GROWTH) Cash to Deposit ratio (CashDR)

Advances to loan Funds (ATLF)

Cost of Funds (CE)

Net Profit Margin (NPM) Earnings Per Share (EPS)

3.3 (E) MODELLING AND HYPOTHESIS TESTING OLS REGRESSION : it is applied to check the over all profitability ie whether mergers has significant impact on profitability or not. If dummy variable introduced is found significant then it can be stated that mergers has significant impact on profitability. Y= A1 + B1X1 + B2X2 + ………..+ B16X16 + CD0 +ET D = Dummy Variable Introduced (Value = 0 for premerger period and value = 1 for post merger period) X = Independent Variables The Impact of Mergers on Profitability: An Empirical Study on Indian Banking Sector Dr. SURESH PATIDAR, GAURAV SUNIL © INTERNATIONAL RESEARCH COMMUNION

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Y = Dependent Variable ( ROSF or ROA) OLS regression analysis is also applied individually on Pre-merger and Post-merger data to find out those variables which has significant impact on profitability in both cases Y= A1 + B1X1 + B2X2 + ………..+ B16X16 +ET X = Independent Variables Y = Dependent Variable ( ROSF or ROA) Before applying regression correlation analysis will be done to check multi collinearity in independent variables. Autocorrelation will be detected using Durbin Watson Statistic.

3.3 (F) HYPOTHESIS Null Hypothesis: H0: Merger has no significant impact on profitability H0 = C = 0 H0: BSIZE , CAR, GROWTH, NPM, ROADV, IDR , CashDR , EPS , CR, ATLF , CE has no significant impact on Pre-Merger profitablity H0:B1 = B2 = B3 = B4 = B5 = B6 = B7 = B8 = B9 = B10 = B11 = 0 H0: BSIZE , CAR, GROWTH, NPM, ROADV, IDR , CashDR , EPS , CR, ATLF has no significant impact on Post-Merger profitability H0:B1 = B2 = B3 = B4 = B5 = B6 = B7 = B8 = B9 = B10 = B11 = 0

Alternate Hypothesis H1: Merger has significant impact on profitablity H1≠ C ≠ 0 H1: BSIZE , CAR, GROWTH, NPM, ROADV, IDR , CashDR , EPS , CR, ATLF has significant impact on Pre-Merger profitablity H1:B1 ≠ B2 ≠ B3 ≠ B4 ≠ B5 ≠ B6 ≠ B7 ≠ B8 ≠ B9 ≠ B10 ≠ B11 ≠ 0 H1: BSIZE , CAR, GROWTH, NPM, ROADV, IDR , CashDR , EPS , CR, ATLF has significant impact on Post-Merger profitability H1:B1 ≠ B2 ≠ B3 ≠ B4 ≠ B5 ≠ B6 ≠ B7 ≠ B8 ≠ B9 ≠ B10 ≠ B11 ≠ 0

4.

HYPOTHESIS TESTING

OLS REGRESSION : it is applied to check the over all profitability ie whether mergers has significant impact on profitability or not. If dummy variable introduced is found significant then it can be stated that mergers has significant impact on profitability. OLS regression analysis is also applied individually on Pre-merger and Post-merger data to find out those variables which has significant impact on profitability in both cases. Pre-Merger and Post-Merger analysis to find out variables which has significant impact on profitability in each case is further supported by using fixed effect model (a type of Panel Data regression). Both OLS regression and Fix effect model is applied using SPSS 17.0 The panel data regression used has some benefits relative to period average cross-sectional data like increasing in the degrees of freedom, more precise estimates due to the efficiency gain brought by the availability of large number of observations, and reducing the problem of co- linearity among explanatory variables. These advantages lead to extra efficient estimation. Pooled Regression is part of the Panel family of Regression models- below is not an exhaustive taxonomy of these models

Panel data may have group effects, time effects, or the both, which are analyzed by fixed effect and random effect models.

5. FIXED EFFECTS MODEL The fixed-effects model controls for all time-invariant differences between the individuals, so the estimated coefficients of the fixedeffects models cannot be biased because of omitted time-invariant characteristics…[like culture, religion, gender, race, etc]. A class of regression methods, called fixed effects models, makes it possible to control for variables that have not or cannot be measured. The basic idea is very simple: use each individual as his or her own control. One side effect of the features of fixed-effects models is that they cannot be used to investigate time-invariant causes of the dependent variables. Technically, time-invariant characteristics of the individuals are perfectly collinear with the person [or entity] dummies. Substantively, fixed-effects models are designed to study the causes of changes within a person [or entity]. A time-invariant characteristic cannot cause such a change, because it is constant for each person.” (Kohler, Ulrich, Frauke Kreuter).

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A fixed group effect model examines group differences in intercepts, assuming the same slopes and constant variance across entities or subjects. Since a group (individual specific) effect is time invariant and considered a part of the intercept, u I is allowed to be correlated to other regressors. Fixed effect models use least squares dummy variable (LSDV) and within effect estimation methods. Ordinary least squares (OLS) regressions with dummies, in fact, are fixed effect models. Fixed effects are tested by the (incremental) F test, while random effects are examined by the Lagrange Multiplier (LM) test (Breusch and Pagan 1980). If the null hypothesis is not rejected, the pooled OLS regression is favored. The Hausman specification test (Hausman 1978) compares fixed effect and random effect models. If the null hypothesis that the individual effects are uncorrelated with the other regressors in the model is not rejected, a random effect model is better than its fixed counterpart. If one cross-sectional or time-series variable is considered (e.g., country, firm, and race), this is called a one-way fixed or random effect model. Two-way effect models have two sets of dummy variables for group and/or time variables (e.g., state and year). There are several strategies for estimating fixed effect models. The least squares dummy variable model (LSDV) uses dummy variables, whereas the within effect model does not. These strategies, of course, produce the identical parameter estimates of non-dummy independent variables. The between effect model fits the model using group and/or time means of dependent and independent variables without dummies.

TABLE 5.3 Comparison of Fixed Effects and Rndom Effects Regression Model:

1. 2. 3.

There are 3 versions of Fixed Effects Model, viz. Least Square Dummy Variable Fixed Effects First Difference Fixed Effects Within-Group Fixed Effects In our study we will be using the LSDV Fixed Effects Model for the analysis. Least squares dummy variable fixed effects In this version of the fixed effects approach, known as the least squares dummy variable (LSDV) regression model, the unobserved effect is brought explicitly into the model. If we define a set of dummy variables A i, where Ai is equal to 1 in the case of an observation relating to individual i and 0 otherwise, the model can be written as,

Where, Yit = dependent vriable Xijt = explanatory variables(independent vaiables) ᵋit = error term Formally, the unobserved effect is now being treated as the coefficient of the individual specific dummy variable, the α iAi term representing a fixed effect on the dependent variable Yi for individual i (this accounts for the name given to the fixed effects approach). Having re-specified the model in this way, it can be fitted using OLS. Note that if we include a dummy variable for every individual in the sample as well as an intercept, we will fall into the dummy variable trap. To avoid this, we could define one individual to be the reference category, so that β1 is its intercept, and then treat the αi as the shifts in the intercept for the other individuals. However, the choice of reference category is often arbitrary and accordingly the interpretation of the αi in such a specification not particularly illuminating. Alternatively, we can drop the β1 intercept and define dummy variables for all of the individuals. The αi now become the intercepts for each of the individuals. Note that, in common with the first two versions of the fixed effects approach, the LSDV method requires panel data. With crosssectional data, one would be defining a dummy variable for every observation, exhausting the degrees of freedom. The dummy variables on their own would give a perfect but meaningless fit.

6. FINDING AND INTERPRETATION 6.1 REGRESSION ANALYSIS: For impact of mergers on Profitability OLS regression is applied on smaple using a dummy variable. Table 3 : Model Summaryb

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Model

R

1

.940

Adjusted R Square

R Square a

.883

Change Statistics

Std. Error of the Estimate

.831

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R Square Change

2.78873

F Change

.883

df1

17.017

df2 12

Sig. F Change 27

Durbin-Watson

.000

2.036

a. Predictors: (Constant), DUMMY, CashDR, GROWTH, ROADV, NPM, EPS, BSIZE, CAR, CR, CE, ATLF, IDR b. Dependent Variable: ROSF

From Table 3. Impact of independent variables are checked on ROSF (return on shareholders funds , a well accepted measure of profitability). From Durbin- Watson score which is around 2 shows that autocorrelation is not present. R square shows that 88 % variation in ROSF ( dependent variables) is explained by explanatory variables. Adjusted r square shows that 83% variation in ROSF ( dependent variables) is explained by explanatory variables. b

Table 4.Model Summary

Change Statistics Model

R

R Square Adjusted R Square Std. Error of the Estimate R Square Change F Change df1 df2 Sig. F Change Durbin-Watson a

1

.941

.885

.834

3.12469

.885

17.380 12 27

.000

1.957

a. Predictors: (Constant), DUMMY, CashDR, GROWTH, ROADV, NPM, EPS, BSIZE, CAR, CR, CE, ATLF, IDR b. Dependent Variable: ROA

From Table 4. Impact of independent variables are checked on ROA (return on Assets, another well accepted measure of profitability). From Durbin- Watson score which is around 2 shows that autocorrelation is not present. R square shows that 88 % variation in ROA ( dependent variables) is explained by explanatory variables. Adjusted r square shows that 83% variation in ROSF ( dependent variables) is explained by explanatory variables. Table 5: ANOVAb Model

Sum of Squares

1

Regression

Mean Square 12

169.696

263.619

27

9.764

2299.967

39

Residual Total

df

2036.348

F

Sig. .000a

17.380

a. Predictors: (Constant), DUMMY, CashDR, GROWTH, ROADV, NPM, EPS, BSIZE, CAR, CR, CE, ATLF, IDR b. Dependent Variable: ROA

Table 6: ANOVAb Model 1

Sum of Squares Regression Residual Total

df

Mean Square

1588.142

12

132.345

209.980

27

7.777

1798.122

39

F

Sig. .000a

17.017

a. Predictors: (Constant), DUMMY, CashDR, GROWTH, ROADV, NPM, EPS, BSIZE, CAR, CR, CE, ATLF, IDR b. Dependent Variable: ROSF

From Table 5 & Table 6 the F statistic has found to be significant at .000 level which implies that the model used to assess the impact of merger on profitability of banking sector is a valid model. Table 7: Coefficientsa Unstandardized Coefficients Model 1

B (Constant)

Standardized Coefficients

Std. Error

Beta

.000

4.410

.000

.225

-.666

-6.594

.000

.492

.988

.044

3.498

.022

NPM

1.051

.220

.511

4.773

.000

ROADV

1.574

.635

.488

2.480

.020

.002

.055

.014

.034

.973

-.062

.243

-.093

-2.257

.049

EPS

.077

.046

.151

1.695

.102

CR

.015

.102

.014

.151

.881

ATLF

.143

.053

.434

2.678

.012

-1.824

.634

-.527

-2.876

.008

2.948

1.984

.220

2.186

.049

GROWTH

IDR CashDR

CE DUMMY

2.258

.512

-1.484

Sig.

.372

CAR

13.925

t 5.458

BSIZE

75.995

a. Dependent Variable: ROSF

From table 7. It is clear that there is significant increase in profitability after merger as dummy variable is significant. ROSF = A + .372 BSIZE -.666 CAR +.044 GROWTH +.511 NPM + .488 ROADV - .093CR +.434 ATLF - .527 CE + .220 DUMMY

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Since dummy is significant, it states that after merger ROSF is increased. Thus it can be inferred that merger has positive impact on merger .thus Null hypothesis is rejected From Table 8 (shown below) also shows that there is increase in profitability (ROA) as dummy is also significant in this case: ROA= CONST + .315BSIZE - .648 CAR +.544 NPM +.226 EPS + .434 ATLF -.412 CE +.074 DUMMY

Thus null hypothesis is rejected. a

Table 8: Coefficients Unstandardized Coefficients Model 1

B (Constant)

Standardized Coefficients

Std. Error

Beta

84.515

15.602

2.160

.574

-1.632

GROWTH NPM

t

Sig. 5.417

.000

.315

3.766

.001

.252

-.648

-6.473

.000

1.092

1.106

.085

.986

.333

1.264

.247

.544

5.124

.000

.955

.711

.262

1.342

.191

IDR

-.075

.062

-.482

-1.208

.238

CashDR

-.238

.272

-.877

.388

EPS

.131

.051

.226

2.562

.016

CR

.016

.115

.014

.143

.887

ATLF

.162

.060

.434

2.699

.012

-1.614

.711

-.412

-2.271

.031

1.129

2.223

.074

2.908

.036

BSIZE CAR

ROADV

CE DUMMY

-.315

a. Dependent Variable: ROA

From above findings it is clear that there is significant impact of merger on profitability of banks. To determine the pre merger and post merger variables which has significant impact on profitability individual regression analysis is done on premerger data and post merger data.

6.2 OLS REGRESSION ANALYSIS ON PREMERGER DATA Table 9: Model Summaryb Change Statistics Model

R

R Square Adjusted R Square Std. Error of the Estimate R Square Change F Change df1 df2 Sig. F Change Durbin-Watson

.963a

1

.928

.840

2.94887

.928

10.552 11

9

.001

2.100

a. Predictors: (Constant), CE, BSIZE, CashDR, GROWTH, EPS, NPM, CAR, CR, ROADV, ATLF, IDR b. Dependent Variable: ROSF

Table 10: Model Summaryb Change Statistics Model

R

R Square Adjusted R Square Std. Error of the Estimate R Square Change F Change df1 df2 Sig. F Change Durbin-Watson

.975a

1

.951

.891

2.80289

.951

15.867 11

9

.000

2.067

a. Predictors: (Constant), CE, BSIZE, CashDR, GROWTH, EPS, NPM, CAR, CR, ROADV, ATLF, IDR b. Dependent Variable: ROA

From Table 9 & Table 10. Impact of independent variables are checked on ROSF & ROA respectively . From Durbin- Watson score which is around 2 shows that autocorrelation is not present. R square shows that 92 % variation in ROSF ( dependent variables) is explained by explanatory variables. Adjusted r square shows that 84% variation in ROSF ( dependent variables) is explained by explanatory variables, and R square shows that 95 % variation in ROA ( dependent variables) is explained by explanatory variables. Adjusted r square shows that 89% variation in ROA ( dependent variables) is explained by explanatory variables. Table 11: Coefficientsa Unstandardized Coefficients Model 1

B (Constant)

Standardized Coefficients

Std. Error

Beta

113.710

23.908

BSIZE

5.301

1.382

CAR

-.237

GROWTH

t

Sig.

4.756

.001

.763

1.836

.084

.672

-.078

-.353

.732

-.020

1.103

-.002

-.018

.986

.830

.373

.389

2.223

.053

ROADV

2.313

.797

.870

2.902

.018

IDR

-.045

.080

-.400

-.563

.587

.227

.367

.433

.619

.551

NPM

CashDR

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EPS

-.057

.062

-.117

-.923

.380

CR

-1.003

.446

-.448

-2.248

.050

.028

.105

.099

.267

.796

-1.754

.822

-.619

-2.134

.050

ATLF CE a. Dependent Variable: ROSF

Table 11 shows variables which has significant impact on premerger profitability(on ROSF). Netprofit margin, return on advances ratio , current ratio , cost of funds has significant impact on profitability. (bank size c”BSIZE” can be considered as significant at 90% confidence.) ROSF = CONST +.389 NPM + .870 ROADV - .448 CR - .619 CE

Table 12 shows variables which has significant impact on premerger profitability(on ROA). Netprofit margin, return on advances ratio , current ratio , cost of funds has significant impact on profitability. ROA = CONST + .530NPM -.005 CAR +.523 ROADV-.474 CR -.425 CE

BSIZE and EPS could be considered as significant at 90 % confidence Table 12: Coefficientsa Standardized Coefficients

Unstandardized Coefficients Model

B

1

(Constant)

Std. Error

Beta

140.085

22.725

BSIZE

6.446

1.314

CAR

-.017

t

Sig. 6.164

.000

.806

1.065

.095

.639

-.005

-2.227

.479

.900

1.048

.086

.859

.413

NPM

1.304

.355

.530

3.674

.005

ROADV

1.602

.758

.523

2.114

.049

IDR

-.123

.076

-.946

-1.615

.141

CashDR

.543

.349

.899

1.557

.154

EPS

.070

.058

.125

1.196

.080

-1.221

.424

-.474

-2.881

.018

.013

.100

.040

.130

.899

-1.386

.781

-.425

-2.775

.041

GROWTH

CR ATLF CE a. Dependent Variable: ROA

6.3 OLS REGRESSION ANALYSIS ON POST – MERGER DATA Table 13: Model Summaryb Change Statistics Model 1

R .947a

R Square Adjusted R Square Std. Error of the Estimate R Square Change F Change df1 df2 Sig. F Change Durbin-Watson .905

.864

1.25355

.905

31.926 11

9

.000

1.969

a. Predictors: (Constant), CE, CR, ROADV, ATLF, BSIZE, GROWTH, CashDR, CAR, EPS, IDR, NPM b. Dependent Variable: ROSF

Table 14: Model Summaryb Change Statistics Model 1

R .938a

R Square Adjusted R Square Std. Error of the Estimate R Square Change F Change df1 df2 Sig. F Change Durbin-Watson .896

.847

1.33547

.897

33.494 11

9

.000

2.074

a. Predictors: (Constant), CE, CR, ROADV, ATLF, BSIZE, GROWTH, CashDR, CAR, EPS, IDR, NPM b. Dependent Variable: ROA

From Table 9 & Table 10. Impact of independent variables are checked on ROSF & ROA respectively . From Durbin- Watson score which is around 2 shows that autocorrelation is not present. R square shows that 90 % variation in ROSF ( dependent variables) is explained by explanatory variables. Adjusted r square shows that 86% variation in ROSF ( dependent variables) is explained by explanatory variables, and R square shows that 89 % variation in ROA ( dependent variables) is explained by explanatory variables. Adjusted r square shows that 84% variation in ROA ( dependent variables) is explained by explanatory variables. Table 15: Coefficientsa Unstandardized Coefficients Model 1

B (Constant)

Standardized Coefficients

Std. Error

Beta

77.760

20.556

1.447

.516

-1.066

GROWTH NPM

BSIZE CAR

t

Sig. 3.783

.004

.268

2.802

.021

.229

-.651

-4.650

.001

8.495

5.137

.323

1.654

.133

1.172

.374

.684

3.134

.012

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ROADV

1.537

.970

.249

1.584

.148

IDR

-.150

.075

-.289

-1.993

.077

CashDR

.859

.434

.296

1.978

.079

EPS

.289

.068

.563

4.276

.002

CR

.038

.072

.050

.526

.612

ATLF

.370

.097

.404

3.809

.004

-2.732

1.435

-.359

-1.903

.089

CE a. Dependent Variable: ROSF

Table 15 shows variables which has significant impact on postmerger profitability(on ROSF). Banksize , Capital adequacy Ratio Netprofit margin, EPS, advances to loan Funds, cost of funds has significant impact on profitability. Bank size is one of the significant variable which confirms the impact of mergers on profitability. ROSF = CONST + .268 BSIZE - .651 CAR +.684 NPM +.563 EPS + .404ATLF

IDR and cost of funds(CE) can be considered as significant at 90 % confidence level. Table 16 shows variables which has significant impact on postmerger profitability(on ROA). Banksize , Capital adequacy Ratio Netprofit margin, Return on Advances (ROADV) advances to loan Funds(ATLF), Earning per share (EPS), cost of funds has significant impact on profitability. Bank size is one of the significant variable which confirms the impact of mergers on profitability. ROA = CONST +.057 BSIZE -.675 CAR +.879 NPM+ .275 ROADV + .799 EPS +.355 ATLF Table 16: Coefficientsa Unstandardized Coefficients Model 1

B (Constant)

Standardized Coefficients

Std. Error

Beta

50.602

21.899

.336

.550

-1.204

GROWTH

t

Sig. 2.311

.046

.057

2.611

.050

.244

-.675

-4.933

.001

7.213

5.473

.251

1.318

.220

NPM

1.642

.398

.879

4.121

.003

ROADV

1.853

1.034

.275

2.293

.048

IDR

-.106

.080

-.187

-1.320

.220

CashDR

.476

.463

.150

1.029

.330

EPS

.447

.072

.799

6.213

.000

CR

.062

.077

.075

.799

.445

ATLF

.355

.104

.355

3.429

.008

-2.175

1.529

-.262

-1.422

.189

BSIZE CAR

CE a. Dependent Variable: ROA

6.4 FIXED EFFECT MODEL ( PANEL DATA REGRESSION ANALYSIS) To further support the evidences and findings of OLS regression fixed effect model is applied . Results and interpretation of FEM regression analysis are given below:

PRE-MERGER Table 17: Estimates of Fixed Effectsb 95% Confidence Interval Parameter

Estimate

Intercept

Std. Error

df

t

Sig.

Lower Bound

Upper Bound

12.131992

2.911029

20.000

4.328

.000

64.824643

185.439342

[dummyt=1.00]

3.751952

3.639851

20

2.031

.047

-3.840643

11.344548

[dummyt=2.00]

1.218346

3.005513

20.000

2.405

.041

-5.051044

7.487736

[dummyt=3.00]

.451227

2.808012

20

3.161

.004

-5.406183

6.308637

[dummyt=4.00]

1.281535

1.647076

20.000

2.778

.045

-4.717276

2.154206

[dummyt=5.00]

0a

0

.

.

.

.

.

BSIZE

5.966464

1.406103

20.000

1.243

.983

-8.899544

-3.033384

CAR

-.287415

.487701

20

-.589

.562

-1.304741

.729912

GROWTH

-.218938

.652014

20

-.336

.741

-1.579015

1.141140

NPM

1.537827

.307959

20

4.994

.000

.895436

2.180219

ROADV

2.517949

.463467

20

5.433

.000

1.551173

3.484725

.098630

.065653

20.000

1.502

.149

-.038319

.235579

-.480676

.332211

20.000

-1.447

.163

-1.173655

.212304

EPS

.051790

.044633

20.000

1.160

.260

-.144893

.041313

CR

-.734937

.372033

20

-1.975

.062

-1.510984

.041110

ATLF

-.098056

.100940

20.000

-.971

.343

-.308613

.112500

IDR CashDR

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.885902

20

-3.019

.007

-4.522880

-.826960

a. This parameter is set to zero because it is redundant. b. Dependent Variable: ROSF.

From table 17 NPM , ROADV , CR and CE are found significant. It also explains the time effect. Generalised: ROSF= 12.131 + 1.537*NPM + 2.517ROADV - .734CR -2.674CE +et Time 1: ROSF= 3.75 + 1.537*NPM + 2.517ROADV - .734CR -2.674CE +et Time 2: ROSF= 1.21 + 1.537*NPM + 2.517ROADV - .734CR -2.674CE +et Time 3: ROSF= 0.45 + 1.537*NPM + 2.517ROADV - .734CR -2.674CE +et Time 4: ROSF= 1.28 + 1.537*NPM + 2.517ROADV - .734CR -2.674CE +et Time 5: N/A Table 18: Estimates of Fixed Effects

b

95% Confidence Interval Parameter

Estimate

Std. Error

df

t

Sig.

Lower Bound

Upper Bound

Intercept

9.549439

3.935428

20.000

5.621

.000

84.621012

184.477866

[dummyt=1.00]

2.310175

3.013431

20.000

2.967

.023

-3.975732

8.596081

[dummyt=2.00]

4.209376

2.488263

20.000

2.692

.042

-.981049

9.399800

[dummyt=3.00]

3.968975

2.324752

20.000

2.707

.033

-.880372

8.818322

[dummyt=4.00]

.973562

1.363614

20.000

3.714

.004

-3.818010

1.870887

[dummyt=5.00]

0a

0

.

.

.

.

.

6.713972

1.164112

20.000

1.767

.106

-9.142268

-4.285676

CAR

.257783

.403767

20

.638

.530

-.584461

1.100027

GROWTH

.625321

.539802

20

1.158

.260

-.500687

1.751328

NPM

1.606889

.254959

20

6.303

.000

1.075054

2.138725

ROADV

1.594182

.383704

20

4.155

.000

.793789

2.394575

IDR

-.069550

.054354

20

-1.280

.215

-.182930

.043830

CashDR

.318942

.275037

20

1.160

.260

-.254776

.892659

EPS

.120479

.036952

20.000

1.260

.916

-.197558

-.043399

CR

-.862657

.308006

20.000

-2.801

.011

-1.505145

-.220168

.030451

.083568

20

.364

.719

-.143869

.204770

-1.725640

.733438

20.000

-2.353

.029

-3.255565

-.195715

BSIZE

ATLF CE

a. This parameter is set to zero because it is redundant. b. Dependent Variable: ROA.

From table 18 it states that NPM , ROADV , CR , CE has significant impact on Premerger profitablity Generalised: ROA= 9.549 + 1.606*NPM + 1.594ROADV - .862CR -1.725CE +et Time 1: ROA= 2.31 + 1.606*NPM + 1.594ROADV - .862CR -1.725CE +et Time 2: ROA= 4.20 + 1.606*NPM + 1.594ROADV - .862CR -1.725CE +et Time 3: ROA= 3.96 + 1.606*NPM + 1.594ROADV - .862CR -1.725CE +et Time 4: ROA= 0.97 + 1.606*NPM + 1.594ROADV - .862CR -1.725CE +et Time 5: N/A

The Fixed effects Model produces 5 different intercepts(constants) by fixing the effect of each year differently and 1 cumulative intercept without fixed effect. But it generates same slopes for each independent variable as has been suggested in the literature review. As seen from the equations above, the various time frames considered for the study have a significant impact on constant value of profitability of respondent banks It can be concluded that time periods considered for the study , have a considerable impact in defining the constant value of profitability of banks in India measured in terms of ROSF and ROA.

6.5 POSTMERGER ANALYSIS Table 19: Estimates of Fixed Effectsb 95% Confidence Interval Parameter

Estimate

Intercept

Std. Error

df

t

Sig.

Lower Bound

Upper Bound

14.569006

5.730334

20.000

2.971

.032

-17.877201

127.015213

[dummyt=1.00]

.958837

3.381854

20.000

2.284

.048

-6.095588

8.013261

[dummyt=2.00]

.205918

2.391008

20.000

3.086

.012

-5.193474

4.781638

[dummyt=3.00]

.571558

2.233799

20.000

2.656

.041

-4.088065

5.231181

[dummyt=4.00]

.656537

2.022662

20.000

2.325

.047

-3.562662

4.875735

[dummyt=5.00]

0a

0

.

.

.

.

.

.867489

.751217

20.000

2.155

.050

-2.434500

.699521

-1.003080

.198747

20

-5.047

.000

-1.417658

-.588501

BSIZE CAR

The Impact of Mergers on Profitability: An Empirical Study on Indian Banking Sector Dr. SURESH PATIDAR, GAURAV SUNIL © INTERNATIONAL RESEARCH COMMUNION

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GROWTH

5.581350

4.509986

20.000

1.238

.230

-3.826315

14.989015

NPM

1.417274

.358936

20.000

3.949

.001

.668547

2.166000

ROADV

1.016546

.855606

20.000

2.288

.049

-.768217

2.801309

IDR

-.202704

.121935

20.000

-1.662

.112

-.457056

.051648

CashDR

.826229

.634965

20

1.301

.208

-.498286

2.150743

EPS

.268281

.061629

20.000

4.353

.000

-.396837

-.139726

CR

.051824

.155357

20.000

.334

.742

-.272244

.375892

-.235354

.173301

20.000

-1.358

.190

-.596854

.126146

-1.930788

1.492283

20.000

-1.294

.210

-5.043635

1.182058

ATLF CE

a. This parameter is set to zero because it is redundant. b. Dependent Variable: ROSF.

From Table 19 states those variables which has significant impact on postmerger ROSF. These variables are BSIZE, CAR, NPM , ROADV , EPS , Generalised: ROSF= 14.56 + .867 BSIZE + 1.41*NPM – 1.003 CAR + 1.016 ROADV + .268 EPS +et Time 1: ROSF= .958 + .867 BSIZE + 1.41*NPM – 1.003 CAR + 1.016 ROADV + .268 EPS +et Time 2: ROSF= .205 + .867 BSIZE + 1.41*NPM – 1.003 CAR + 1.016 ROADV + .268 EPS +et Time 3: ROSF= .571 + .867 BSIZE + 1.41*NPM – 1.003 CAR + 1.016 ROADV + .268 EPS +et Time 4: ROSF= .656 + .867 BSIZE + 1.41*NPM – 1.003 CAR + 1.016 ROADV + .268 EPS +et Time 5: N/A Table 20 Estimates of Fixed Effectsb 95% Confidence Interval Parameter

Estimate

Intercept

Std. Error

df

t

Sig.

Lower Bound

Upper Bound

15.455386

7.488607

20.000

2.654

.038

-11.884843

102.795616

[dummyt=1.00]

.898135

2.676694

20.000

2.336

.041

-6.481620

4.685350

[dummyt=2.00]

3.527769

1.892452

20

2.864

.039

-7.475354

.419817

[dummyt=3.00]

.739033

1.768023

20

2.918

.035

-4.427064

2.948998

[dummyt=4.00]

.491065

1.600910

20.000

3.307

.006

-2.848376

3.830505

[dummyt=5.00]

0a

0

.

.

.

.

.

.321916

.594578

20.000

2.541

.044

-1.562184

.918352

BSIZE CAR

-.996608

.157305

20.000

-6.335

.000

-1.324742

-.668475

GROWTH

6.826495

3.569595

20.000

2.112

.050

-.619549

14.272540

NPM

1.709122

.284093

20.000

6.016

.000

1.116514

2.301729

.660347

.677201

20.000

.975

.341

-.752269

2.072964

-.258719

.096510

20.000

-2.681

.014

-.460035

-.057403

.954275

.502567

20.000

1.899

.072

-.094061

2.002612

EPS

.403028

.048778

20.000

8.262

.000

-.504778

-.301278

CR

-.086591

.122963

20.000

-.704

.489

-.343087

.169905

ATLF

-.202365

.137166

20.000

-1.475

.156

-.488487

.083758

-1.221903

1.181122

20

-1.035

.313

-3.685680

1.241875

ROADV IDR CashDR

CE

a. This parameter is set to zero because it is redundant. b. Dependent Variable: ROA.

From Table 20 states those variables which has significant impact on postmerger ROA. These variables are BSIZE, CAR, GROWTH, NPM , EPS , IDR Generalised: ROA= 15.45 +.321BSIZE - .996 CAR + 6.826GROWTH + 1.709NPM + .403EPS - .258IDR +et Time 1: ROA= .898 +.321BSIZE - .996 CAR + 6.826GROWTH + 1.709NPM + .403EPS - .258IDR +et Time 2: ROA= 3.52 +.321BSIZE - .996 CAR + 6.826GROWTH + 1.709NPM + .403EPS - .258IDR +et Time 3: ROA= .739 +.321BSIZE - .996 CAR + 6.826GROWTH + 1.709NPM + .403EPS - .258IDR +et Time 4: ROA= .491 +.321BSIZE - .996 CAR + 6.826GROWTH + 1.709NPM + .403EPS - .258IDR +et Time 5: N/A

Findings of this study shows that variables which have significant impact on profitability in pre-merger period are Net profit Margin , Return on Advances , Capital adequacy ratio, current ratio and cost of funds. It is clear from the study that capital adequacy current ratio and cost of funds have negative impact on profitability which is very obvious. Net Profit Margin , Return on Advances and Capital adequacy is significant in both cases, which suggests that bank should focus on its main function i.e. lending which is the main source of income for the banks and a proper capital adequacy should be maintained. If capital adequacy maintained by bank is higher then it can be inferred that banks is loosing investment opportunities and compromising with its profitability. The Impact of Mergers on Profitability: An Empirical Study on Indian Banking Sector Dr. SURESH PATIDAR, GAURAV SUNIL © INTERNATIONAL RESEARCH COMMUNION

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Results of this study indicate that overall profitability is increased after merger and shows that merger has significant impact on profitability. Bank size, EPS are found significant in post-merger case and has positive impact on profitability. Significance of bank Size also confirms the impact of merger on profitability of banks. Advances to Loan funds were also found significant in OLS regression analysis. Results of OLS regression is compared with Fixed effect regression whose results were similar to pre-merger and post merger analysis of OLS regression except ATLF which was found insignificant. From the fixed effect model it can be concluded that time periods considered for the study, have a considerable impact in defining the constant value of profitability of banks in India measured in terms of ROSF and ROA.

7 CONCLUSION From this study it can be concluded that Mergers have significant impact on profitability. This can be attributed to creation of synergy, which is one of the prime motive behind mergers. The results of this study are different from earlier researches. In earlier researches it were found that mergers in banking industry fails to create synergy and mergers has no significant impact on banks profitability. Even it was also found that in some cases profitability in post merger case declined. But in this study results showed the favourable effect of merger in banking industry. This favourable effect resulted due to two main reasons. First is that the transferee banks were very large and financially sound which might have absorbed the ill effect of mergers. Second, is that the two mergers out of four were voluntary mergers. Earlier researches were done on the sample where most of the mergers were forced mergers, initiated by RBI for restructuring of weak banks. Thus it can also be concluded that voluntary mergers can result in generation of synergy and can enhance profitability where as forced mergers does not result any positive effect until the transferee bank is very large bank and highly financially sound as compared to transferor bank.

7.1 RECOMMENDATIONS AND POLICY IMPLICATIONS 1. 2. 3.

This research can be utilised by policy makers before making any merger decision in banking industry. Those variables which are found having significant impact on profitability should be considered while taking merger decisions. Voluntary merger should be preferred for expansion of banks. Now these days banks are planning to penetrate in rural areas. Voluntary mergers with small rural banks would be considered.

7.2 LIMITATIONS OF THIS STUDY 1. 2. 3.

This study is conducted only on those mergers , which were taken place in 2006 and 2007 which may not provide appreciable results (sample size is very small). This study involves pre and post-merger analysis of transferre banks where as detailed study of transferor bank is not performed which may challenge the accuracy of output. Group effect is missing in this research. This research could be more accurate if study has been performed by creating groups i.e. PSU Banks and Private Banks ,or Forced Merger and voluntary Mergers.

BIBLIOGRAPHY 1. Abel Istvan and Siklos Pierre L.(2004) Secrets to the Successful Hungarian Bank Privatization:The Benefits of Foreign Ownership through Strategic Partnerships, Economic Systems, 28(2): 111 – 123. 2. Bank for International Settlements. (2001) The Banking Industry in the Emerging Market Economies: Competition, Consolidation, and Systematic Stability, BIS Papers No. 4. 2. Baradwaj B, Fraser D, and Furtado E. (1990) Hostile Bank Takeover Offers: Analysis and Implications, Journal of Banking and Finance, 14(6): 1229-1242. 3. Berger AN and Humphrey D(1994) Bank Scale Economics, Mergers, Concentration, and Efficiency: The U. S. Experience, Center for Financial institutions Working Papers 94 – 25, Wharton School Center for Financial Institutions, University of Pennsylvania. 4. Berger AN, Demetz RS, Strahan PE (1999) The Consolidation of the Financial Services Industry: Causes, Consequences and Implications for the Future, Journal of Banking and Finance, 23: 135-194. 5. Berger, AN and Humphrey D. (1992) Mega Mergers in Banking and the Use of Cost Efficiency as an Anti Trust Defense” The Anti Trust Bulletin, 37: 541-600. 6. Berger, AN. (1997) The Efficiency Effects of Bank Mergers and Acquisitions: A Preliminary Look at the 1990‟s data. In Arnihud Y, Miller G (Eds), Mergers of Financial Institutions. Business One-Irwin, Homewood, IL. 7. Bernanke, B. and Gertler, M. (1995) Inside the Black Box: The Credit Channel of Monetary Policy Transmission, Journal of Economic Perspectives, 9(4): 27– 48. 8. Boot, Arnoud W. A. (1999) European Lessons on Consolidation in Banking Journal of Banking and Finance, 23: 609 – 663. 9. 10.Brealey, R.A and Myers SC. (2000) Principles of Corporate Finance, 6th Edition, New Delhi: Tata McGraw-Hill. 10. Brook, Y. Hendershott, Robert J. and Lee, Darrell. (2000) Corporate Governance and Recent Consolidation in the Banking Industry, Journal of Corporate Finance, 6: 141– 164. 11. Chong, Beng-Soon, Ming-Hua Liu and Kok-Huai Tan. (2006) The Wealth Effect of Forced Bank Mergers and Cronyism, Journal of Banking and Finance, 30: 3215-3233. 12. Cornett MM Teharnian H. (1992) Changes in Corporate Performance Associated with Bank Acquisitions, Journal of Financial Economics, 31: 211-234 13. Damodaran A. (1994) Damodaran on Valuation: Security Analysis for Investment and Corporate Finance, New York: John Wiley and Sons 14. Degryse Hans, Nancy Masschelein and Janet Mitchell. (2004) SMEs and Bank Lending Relationships: The Impact of Mergers, National Bank of Belgium, Working Papers No. 46. 15. Devine, Marion (2003) Successful Mergers: Getting the People Issues Right, London: The Economist. 16. Dymski, G. A. (1999) The Bank Merger Wave: The Economic Causes and Social Consequences of Financial Consolidation .Armonk, NY: M.E. Sharpe. 17. Dymski, G. A. (2005) Financial Globalization, Social Exclusion and Financial Crisis, International Review of Applied Economics, 19(4): 439-457. 18. European Savings Banks Group (2004) European Banking Consolidation: A Condensed Analysis of the Retail Banking Market and the position of the European Savings Banks Group, December. 19. Gelos R. G. and Roldos J. (2004) Consolidation and Market Structure in Emerging Market Banking Systems, Emerging Markets Review, 5(1), 39 – 59. 20. Gual J. (1999) Deregulation, Integration and Market Structure in European Banking, CEPR, Discussion Paper No. 2288, (CEPR, London). 21. Hannan, T and Wolken, J (1989) Returns to Bidders and Targets in Acquisition Process: Evidence from the Banking Industry, Journal of Financial Services Research, 8: 145-156. 22. Havrylchyk, O. (2004) Consolidation of the Polish Banking Sector: Consequences for the Banking Institutions and the Public, Economic Systems 28(2): 125 – 140. 23. Hawawani G, Swary I. (1990) Merger and Acquisitions in the US Banking Industry, Evidence from the Capital Markets, Amsterdam: North-Holland.

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ANNEXURE 1 Correlations SIZE

SIZE

Pearson Correlation

CAR

1

Sig. (2-tailed) N CAR

40

Pearson Correlation

.100

Sig. (2-tailed)

.538

N DebtEQ

Pearson Correlation Sig. (2-tailed) N

BTURNOVE R

.100 -.494

.971

-.525

.077

-.340

-.309

.362

.052

.087

-.016

.039

.233 -.062

.076

.538

.001

.000

.001

.637

.032

.053

.022

.751

.594

.920

.812

.148

.702

.640

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

1 -.580

.148

-.003

.140

-.096

.131

-.136

.104

.158

.042

.252

-.248

.124 -.267

.000

.363

.985

.390

.554

.420

.403

.521

.329

.796

.117

.122

.444

.096

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

-.494

-.580

1

-.466

.524

-.131

.439

.163

-.342

-.418

-.306

-.040

.219

.027 -.132 -.021

.001

.000

40

40

.002

.001

.419

.005

.314

.031

.007

.055

.808

.175

.867

.418

40

40

40

40

40

40

40

40

40

40

40

40

40

.899 40

1

-.432

.043

-.261

-.125

.293

.050

.121

.035

.072

.114

.027

.105

.005

.793

.103

.441

.067

.762

.456

.831

.657

.485

.869

.519

40

40

40

40

40

40

40

40

40

40

40

40

-.525

-.003

.524

-.432

1

.265

.820

.272

-.284

-.422

-.254

.525

.306

.121 -.370 -.154

.001

.985

.001

.005

.099

.000

.090

.076

.007

.114

.001

.055

.459

.019

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

1

.464

-.239

.044

-.237

-.159

.336

-.171

.399 -.583

.018 .911

Pearson Correlation

.341

Pearson Correlation

.077

.140 -.131

.043

.265

Sig. (2-tailed)

.637

.390

.419

.793

.099

.003

.138

.789

.141

.326

.341

.292

.108

.800

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

-.340

-.096

.439

-.261

.820

.464

1

.344

-.315

-.443

-.294

.600

.043

.135 -.330

.023

.032

.554

.005

.103

.000

.003

.030

.047

.004

.066

.000

.791

.407

.038

.887

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

-.309

.131

.163

-.125

.272

-.239

.344

1

-.501

-.082

-.013

.178

.008

-.660

.719

.073

.053

.420

.314

.441

.090

.138

.030

.001

.614

.938

.272

.961

.614

.683

.656

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

-.136 -.342

.293

-.284

.044

-.315

-.501

1

.128

.002

-.058

-.121

.577 -.302

.346 .029

Pearson Correlation

Pearson Correlation

Pearson Correlation

.362

Sig. (2-tailed)

.022

.403

.031

.067

.076

.789

.047

.001

.431

.992

.721

.458

.000

.058

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

1

.929

-.275

-.243

-.412

.228

.041

Pearson Correlation

.052

.104 -.418

.050

-.422

-.237

-.443

-.082

.128

Sig. (2-tailed)

.751

.521

.007

.762

.007

.141

.004

.614

.431

.811

.086

.131

.082

.157

.802

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

1

-.182

-.064

-.398

Pearson Correlation

.087

.158 -.306

.121

-.254

-.159

-.294

-.013

.002

.929

Sig. (2-tailed)

.594

.329

.055

.456

.114

.326

.066

.938

.992

.811

.260

.696

.110

.329

.644

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

.042 -.040

.035

.525

.336

.600

.178

-.058

-.275

-.182

1

.106

.244 -.236 -.048

.920

.796

.808

.831

.001

.341

.000

.272

.721

.086

.260

.517

.129

.143

.771

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

Pearson Correlation

.039

.252

.219

.072

.306

-.171

.043

.008

-.121

-.243

-.064

.106

1

Sig. (2-tailed)

.812

.117

.175

.657

.055

.292

.791

.961

.458

.131

.696

.517

40

40

40

40

40

40

40

40

40

40

40

40

40

Pearson Correlation

.233

-.248

.027

.114

.121

.399

.135

-.660

.577

-.412

-.398

.244

.129

Sig. (2-tailed)

.148

.122

.867

.485

.459

.108

.407

.000

.000

.008

.011

.129

.428

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

.124 -.132

.027

-.370

-.583

-.330

.719

-.302

.228

.158

-.236

-.110

-.735

1

.093

.702

.444

.418

.869

.019

.000

.038

.683

.580

.157

.329

.143

.500

.504

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

-.267 -.021

.105

-.154

.018

.023

.073

.346

.041

-.075

-.048

-.221

.155

.093

1

Pearson Correlation Sig. (2-tailed) N

N

N Pearson Correlation Sig. (2-tailed) N TRGROW

TRGRO W

CE

40

N

CE

ATLF

40

N

ATF

CR

.002

N

CR

EPS

40

N

EPS

CASHDEPR

.363

Sig. (2-tailed)

CASHDEPR

INVDR

40

N

INVDR

CREDR

.000

Sig. (2-tailed)

CREDR

ROADV

Sig. (2-tailed)

N

ROADV

NIITOTA

.148 -.466

N

NIITOTA

NPM

.971

Sig. (2-tailed)

NPM

INTSPR

Pearson Correlation

N INTSPR

DebtEQ BTURNOVER

-.016

-.062

.158 -.075

.129 -.110 -.221 .428

.500

40

40

40

1 -.735

.155

.000

.339

.568

Pearson Correlation

.076

Sig. (2-tailed)

.640

.096

.899

.519

.341

.911

.887

.656

.029

.802

.644

.771

.171

.339

.568

40

40

40

40

40

40

40

40

40

40

40

40

40

40

40

N

The Impact of Mergers on Profitability: An Empirical Study on Indian Banking Sector Dr. SURESH PATIDAR, GAURAV SUNIL © INTERNATIONAL RESEARCH COMMUNION

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40

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Decision Making Determinants in Purchase of Clothing of Elderly Consumers Suman Pant, Nidhi Vashisth 1&2

Department of Clothing & Textiles, Faculty of Home Science, Bansthali University, Rajasthan

Abstract: Clothing buying practices of old age people have been presented. Field survey has been conducted on 100 male and 100 female elderly. A questionnaire was designed to collect the information. It was found that conformity is less important for elderly people. Fashion innovation is not on priority list of old people. Branded clothes were less preferred by elderly. These findings are contradictory to result of studies conducted in western countries. KEYWORDS: Price, quality, brand, store image, fashion consciousness, impulsive buyer vs planned purchaser. _________________________________________________________________________________________________

1. Introduction Older adults constitute a rapidly growing demographic segment, but stereotype persist about their consumer behaviour. It is said that age associated changes in cognition; affect and goals interact to make older consumers’ decision making processes different from those of younger adults. According to Hurlock (1981), there is as wide a variation in the clothing preferences of the elderly as for any age group. However, it is generally accepted that fashion changes are less readily accepted by older citizens, partly because of their limited income and lack of energy to shop. On the other hand, the older person tends to retain attitudes developed in earlier years regarding the proper type of clothing to be worn for given occasions. For example, the research shows that older men and women tend to wear hats to a much greater extent and lean more to conservation in dress, irrespective of the locality or climate, than younger people. The fact that older men and women do less socializing than in their earlier year’s decreases their need of clothing for social functions. The one area in which social participation tends to increase with age is in religious activities, which promote conservatism in dress. Since keeping busy is considered important to good adjustment in old age, active participation in selected activities should be encouraged. Being well dressed is essential for group participation at any age. The low income of many aged people precludes their spending much in clothing, since the money needed for food, shelter and increasing medical costs. There is evidence that older people do not feel the need to replace their clothing as often as younger people. For one thing, they are less active than younger people, and so there is less wear and tear on their garments. Moreover, they tend to buy more conservative and durable clothing, which does not easily wear out. Their idea of when a garment is wore out or out of style is less dependent on the dictates of current fashion than is true of younger people. Most of the researches have been conducted on clothing behaviour of adolescents/teenagers. There is lack of data on old age adults’ clothing purchasing behaviour. Research on older female consumers indicates that their interest in fashion does not necessarily decline with age (Banner, 1983). Two thirds of women in one study of older women exhibited a positive degree of fashion consciousness and indicted a desire to keep up with fashion. They are not specially price consciousness nor do they tend to shop around; however they do tend to gather information from many sources (Martin, 1973 and; Lumpkin and Greenberg, 1982). This woman is also less prone to social pressure and more willing to create a distinctive look that feels right to her and willing to pay more for better quality apparel. This generation is much more active and physically fit than its predecessors (Solomon and Rabolt, 2004). Recent research has revealed that older consumers are wealthy, innovative and have a desire to actively participate in mainstream consumption (Szmigin and Carrigam, 2001). According to Solomon and Rabolt (2004), today’s elderly are active, interested in appearance and what life has to offer, and enthusiastic consumers with the means and willingness to buy more goods and services. Lumpkin (1985) found that a high proportion of active mature consumers were relatively high spender on clothing. Inattention to this consumer segment has resulted in lost revenues for business as well as lost consumption and service opportunities for the elderly. Present study attempts to study clothing purchase behaviour of old age adults to find out answer to the questions such as how fashion conscious and brand aware are elderly Indian consumers? Is price the most important factor in the selection of clothes for adults? Are fit and comfort more important than style for Indian consumers? Is there a change in the purchase behaviour of clothing of older generation due to mass media exposure?

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JUSTIFICATION Also, almost all studies related to clothing buying behaviour of mature adults have been conducted in the developed countries, and comparatively very limited attention has been paid on this segment of consumers in developing countries. An increasing amount of evidence suggests that the attitudes, beliefs and perceptions of consumers in developed countries are significantly different from those in developing countries (Rathnayake, 2011). Consumer research has historically examined consumers in Western countries. Clearly, consumers in non-Western and developing countries are also of substantial theoretical and managerial importance. Given that the preponderance of theories and accepted truths about shopping behaviors are based on studies and observations of mostly Western populations, an interesting question is whether these theories and descriptions hold for non-Western shoppers as well? What is now needed is more research into actual and desired consumption by old age Indian consumers. Study will be useful for marketers and manufacturers of apparel in planning strategies for old age segment.

II.

METHODOLOGY

As present study is descriptive in nature, field survey method is the most appropriate to collect the data. 3.1 Locale of the study Present study was conducted in Moradabad city of Uttar Pradesh. This area has been purposely selected because Moradabad is neither a metropolitan city nor a town. It is a developing city which is slowly adapting metro culture. As the city is in transitional phase, there are people with traditional values as well as modern outlook. Malls, boutiques are mushrooming in Moradabad. Moreover, it was easy for the investigator to approach the respondents. 3.2 Sample and its selection Data was collected from 200 respondents. 100 male and 100 female adults were selected by convenient sampling technique. It is non probability sampling method that takes less time and cost. It is assembled from a population that is readily available or easily and immediately accessible to researcher. 3.3 Variables of the study Dependent- Evaluation criteria of clothing viz. price, brand name, store image, fashion, quality. Impulsive buying vs planned purchase, Individuality vs conformity

Independent – Sex 3.4 Tools for data collection A questionnaire was designed to collect the data. The questionnaire was prepared using academic and trade literature as a guide. Questionnaire consisted of 36 close ended questions related to evaluative criteria used for clothing and their purchase behaviour. Likert type scale was used in most of the questions. Prior to conducting the main study, a pilot study was conducted to find out feasibility of the study. The questionnaire was pilot tested on 10 % respondents randomly selected and was finalized after refining it on the basis of responses obtained during pilot study as well as suggestion of the clothing and textile experts. 3.5 Collection of data The tool was distributed to the old age respondents personally and collected thereafter. The objective of the study was explained to the respondents. Only those respondents have been included in the samples that were willing to give information. 3.6 Analysis and interpretation The data collected was edited, coded and prepared for analysis. Data was analyzed and interpreted using percentages. Chi square test was used to study the association between selected variables of the study.

III.

RESULT AND DISCUSSION

In the present study decision making determinants in purchase of clothing of elderly people has been studied. An attempt has been made to find out the difference in behaviour of male and female respondents. Gender has been identified as a significant factor in understanding consumer behaviour in most of the studies. It is used as a fundamental marketing segment index by firms to meet their customers’ needs and wants. Marketers try to understand the gender difference in decision making style. Major hypothesis of the study was set asHo : Clothing buying practices is independent of sex of elderly.

Table no 1: Frequency of purchasing of clothing Male (N=100) Female (N=100)

Less than 5 times 79% 5%

Frequency per year 5 -10 times 19% 36%

More than 10 times 2% 59%

Table 1 shows frequency of buying of clothes by elderly respondents. It is evident that majority of the male respondents (almost 79%) buy the clothes at least 5 time in one year. Hardly 19% of the respondents buy the clothes at least 5-10 times in one year. And very few male respondents buy the clothes more than 10 times in one year. On the other hand most of the female buy more than ten times.

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Table no.2: When do you purchase clothes? Male(N=100) Female(N=100)

On special occasions

When needed

During sale

Strong desire

11 18

75 55

4 17

11 10

12.86

The table 2 shows that most of the respondents buy the clothes when there is need. Similar result was reported by other researchers (Nam et al., 2006). Number of the people buying the clothes on special occasions such as festivals, marriage etc. is 11% male and 18% female. More female buy the clothes during sale period compared to male.

Table no.3: Accompanying person while buying clothes Alone Male (N=100) Female (N=100)

Family members 55 42

Friends 7 20

28 19

Husband/wife 10 19

12.52

Table 3 shows that most of the old men and women go for shopping of clothes in company of the family members. This may be because of the fact that they are old so family members want to accompany them for shopping.10-19% old persons go with husband/ wife. More female than male go with friends and more old men than women go alone for purchasing the clothes. Quality consciousness among elderly Quality is an important factor when purchasing apparel products. Perceived quality is defined as the consumers’ judgement about an entity’s excellence or superiority. Elderly consumers’ quality consciousness was measured and result presented in tables 4-5.

Table no.4: Importance of very good quality clothes Male(N=100) Female (N=100)

Yes

No

66 78

34 22

3NS

NS= Not significant Attitude of elderly towards importance of very good quality clothes was determined. Table 4 shows that no significant difference between male and female was found. For most of the older men and women quality of clothes is very important.

Table no. 5: Make special effort to get best quality clothes Male (N= 100) Female (N=100)

Yes

No

90 93

10 7

0.26 NS

NS – not significant Table 5 shows that majority of elderly male and female make special efforts to purchase good quality clothes. Thus they show similar behaviour. No significant difference between male and female was found with regard to making special efforts to get best quality clothes.

Store image How consumer view store image has long been considered an important aspect of consumer decision making. This is because of the consumers’ view and feeling toward the store might create a habit to purchase at that shop repetitively or make them loyal to the store. Table no.6: Prefer to buy the clothes from selective shops Male (N = 100) Female (N =100)

Always

Sometime

Never

74 41

18 45

8 14

22.68 **

*significant at .05 level, ** significant at .01 level, ns – not significant Data given in table 6 shows preference for buying clothes from selected shops which they trust more. 74%men always buy the clothes from selected shops compared to 41% women. 45% female respondents sometimes buy the clothes from selected shops. And few of them have no fixed shops for buying the clothes. Preference to buy the clothes from selective shops is associated with sex of respondents as chi square calculated is highly significant.

Table no. 7: Selection criteria of clothing shop S. No. 1 2 3 4 5

Criteria Good Service Availability of quality garment Availability of branded garment Availability of good design Availability of garment of right price

Male (N= 100) 5 59 19 11

Female (N= 100) 5 23 6 16 48

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Easy to reach

6

2

Table 7 shows criteria of selection of shop for buying clothes. Availability of quality garment is main criteria for most of the old men compared to women. Availability of the branded clothes is the criteria for some men because they are less conscious for fashion. On the other hand availability of garment of right price is main criteria for most of the female respondents because during old age the people has less income. Next in order is availability of quality garment for some women followed by availability of good design. It is interesting that easy to reach is considered by very few old people. The reason may be now a days old people are fit and healthy and good transport facilities are available so they can easily reach the shop.

Table no. 8: Type of shop preferred for purchasing of clothes Boutique Male (N= 100) Female (N= 100)

Shopping mall 7 10

1 2

Branded shop 29 7

Traditional shop 63 81

16.56**

*significant at .05 level Data given in table 8 shows that most of the respondents (63 % male and 81% female) prefer to purchase clothes from the traditional shop. 29 % male buy clothes from the branded shop as compared to the female and few of them buy the clothes from shopping mall whereas very few buy from boutique. It is clear from chi square value that type of shop preferred for purchase of clothes is dependent on sex of respondents as significant difference in the type of shop for clothing purchase is found.

Brand consciousness among elderly Brand is a powerful tool to attract consumers to buy a product. Branding more or less for centuries has been a means to differentiate goods of one company from that of another. Eight questions of the tool assessed attitude of old people towards branded clothes and their preference for them. Table 9 to 15 presents the result.

Table no. 9: Selection of branded clothes Male (N= 100) Female (N=100)

Always

Frequently

Sometime

Never

57

16

17

10

9

23

40

28

53.97**

*significant at .05 level, ** significant at .01 level, ns – not significant Table 9 shows that more (57%) old men always prefer branded clothes as compared to old women. 40 % women sometime buy branded clothes. 16% old men and 23% old women frequently buy branded clothes. Percentage of elderly females who never prefer branded clothes is more than male. The reason may be that few brands are available for females. Calculated value of is higher than critical value therefore it can be said that selection of branded clothes is dependent on sex of respondents.

Table no.10: Preference for best selling brands Male (N= 100) Female (N= 100)

Yes

No

49 37

51 63

2.47 NS

NS– not significant Findings presented in table 10 shows that 49% female and 37 % male give preference to best selling brands while selecting clothes but most of the respondents do not give preference to best known branded clothes. There is no association between sex and preference for best selling branded clothes as calculated ≤ 3.841. Table no. 11: Branded clothes are fashionable Agree Male (N= 100) Female (N= 100)

33 44

Somewhat agree

Disagree

61 39

6 17

11.67**

** Significant at .01 level Table 11 shows that 44% old women agree that branded clothes are fashionable as compared to old men. It was found that more male than female somewhat agree that branded clothes are fashionable. And few of them disagree that branded clothes are fashionable. There is significant difference in opinion of male and female elderly for fashionable aspect of branded clothes. Table no. 12: Branded clothes are costly compared to unbranded clothes Agree Male (N= 100) Female (N= 100)

73 68

Somewhat agree 25 24

Disagree 2 8

3.8 NS

NS – not significant Decision Making Determinants in Purchase of Clothing of Elderly Consumers

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Data given in Table 12 shows views of elderly about the statement that branded clothes are costly compared to unbranded clothes. It was found that that most of the male and female respondents agree that branded clothes are more costly as compared to simple clothes. 25-24% male and female respondents somewhat agree whereas few of them completely disagree. Null hypothesis was accepted as calculated ≤ 7.815 thus opinion of male and female are same in this regard. Table no.13: Branded clothes are of good quality Male (N= 100) Female (N= 100)

Agree

Somewhat agree

Disagree

62 43

26 54

12 3

18.64**

** Significant at .01 level It is apparent from Table 13 that more male agree with the statement that branded clothes are of good quality as compared to female. Whereas more female somewhat agree with the fact that branded clothes are of good quality. And some respondents completely disagree. Opinion of male and female elderly show significant difference as chi square value is significant at .01 significant level. Table no. 14: Branded clothes increase the status of person Agree Male (N= 100) Female (N= 100)

Somewhat agree 47 28

43 53

Disagree 10 19

8.65*

*significant at .05 level It is clear from table 14 that 43% old male and 53% female agree with the view that wearing branded clothes increase the status of the person. On the other hand 47% male and 28% female somewhat agree that branded clothes increase the status of the person and few of them disagree. Opinion of male and female elderly differs significantly as chi square value calculated is higher than critical value at 0.05 level of significance. Table no. 15: Branded clothes create good impression Agree Male (N= 100) Female (N= 100)

Somewhat agree 30 32

62 48

Disagree 8 20

7.14*

*significant at .05 level Table 15 shows that most of the male respondents (62%) and about 48% female respondents agree that branded clothes create good effect. Number of male is higher as compared to female. About 30-32% respondents agree to some extent that branded clothes create good impression on others. 8% male and 20% female do not agree with this statement. Significant difference in attitude of male and female elderly was found at 0.05 level of significance.

Price consciousness among elderly Price consciousness or value for money is first factor for many consumers in taking buying decision. Considering the fact that old people have comparatively less disposable income than adults, an attempt was made to find out how price conscious they are. Table no.16: High price of clothes indicates high quality Male (N= 100) Female(N= 100)

Agree

Somewhat agree

Disagree

22 28

66 42

12 30

13.77**

** significant at .01 level Elderly’s opinions were taken about the statement that high price of clothes indicates high quality. Table 16 shows that 28% female totally agree that high price indicate good quality clothes. Most of the male (66%) and 42% female somewhat agree with this statement. And 30% female totally disagree compared to 12 % men. They do not think that high price means quality of clothes is good. Opinion of elderly about ‘high price of clothes indicates high quality’ is dependent on sex.

Table no. 17: Search for less priced clothes Male Female

Always

Frequently

Sometime

Never

17 57

16 8

38 21

29 14

34.42**

** Significant at .01 level Data presented in table 17 shows that 57% female always search clothes of less price in comparison to men. 8-16% old men Decision Making Determinants in Purchase of Clothing of Elderly Consumers

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and women frequently search such clothes. 38% male and 21% female sometimes search cheaper clothes. obtained ≥ 11.345 ,therefore, null hypothesis is rejected. It can be said that search for less priced clothes is dependent on sex of elderly people.

Table no.18: I go to market during rebate period only Male Female

Always

Frequently

Sometime

Never

44 15

12 23

16 24

28 38

22.83**

Table 18 shows the percentage of old people who buy the clothes during rebate period. 44% male buy the clothes during the sale season because they have less disposable income for clothing. 23% female and 12% male frequently buy clothes during rebate period. 24%women sometime buy the clothes during sale time as compared to men and 38%women and 28% never buy the clothes during sale session. I go to market during rebate period only is dependent on sex of respondents.

Table no. 19: Expenditure on clothes per year Below Rs.5000 21 55

Male (N=100) Female (N=100)

Rs. 5000-10,000 70 40

Above Rs.10,000 9 5

Table 19 shows yearly expenditure on clothing by elderly people. More female spend below Rs.5000/- on clothes as compared to men. It is clear that majority of the men and 40 % women spend Rs. 5000-10000 per year and very few male and female spend above Rs. 10000.

Impulsive buyer vs planned purchaser According to Park (2005), impulsive buying behaviour is a sudden, compelling, hedonically complex buying behaviour in which the rapidity of an impulsive decision precludes thoughtful and deliberate consideration of alternative information and choices. An endeavour was made to find out whether old age consumers are impulsive buyer or they plan carefully before taking decision considering their experience and lack of sufficient income.

Table no. 20: Prepare budget Male (N= 100) Female (N= 100)

Always

Frequently

Sometime

Never

18 21

12 15

52 35

18 29

6.46 NS

NS – not significant Table shows that 21% female always prepare budget as compared to 18% men. 15% women and 12% men frequently prepare the budget. More men sometime prepare budget as compared to the women (35%). It is interesting to note that more women than men never prepare budget before purchasing the clothes. It is clear from calculated value of chi square that budget preparation for clothing is independent of sex of elderly.

Table no.21: Plan carefully before purchasing the clothes Male(N= 100) Female(N= 100)

Always

Frequently

Sometime

Never

32 23

26 18

15 31

27 28

8.51*

*significant at .05 level It is apparent from data given in table 21 that 32% male always plan carefully before purchasing clothes in comparison to the women. 26% male18% female frequently make plan before buying. Hardly 31% female and 15 % male sometime do planning. Some of them, about 27-28%, never plan their purchase. There is significant difference between male and female in their behaviour towards planning carefully before purchasing the clothes.

Table no. 22: Take time in making brand and product decision Male(N= 100) Female(N= 100)

Always

Frequently

Sometime

Never

39 15

29 18

12 27

20 40

25.68**

** Significant at .01 level Table 22 shows that 39% male always take decision about brand and product after proper consideration and 29% take frequently take time for brand and product decision and then purchase it. 27% female sometime show this behaviour compare to 12% male. On the contrary 40% female never take time for brand and product decision. hypothesis is rejected. There is significant difference in behaviour of male and female

obtained ≥ 11.345 therefore, null

Table no. 23: Impulsive buying of clothes Male (N= 100) Female (N= 100)

Yes

No

74 70

26 30

0.22 NS

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NS – not significant Table 23 shows that 74% male purchase the clothes impulsively that is even if there is no plan for purchase of garment, they will buy it if they like the design and colour combination. But 30% female and 26%male never purchase the clothes if they have not planned.

Table no. 24: Compare the price of clothes before purchasing Male(N= 100) Female(N= 100)

Always

Frequently

Sometime

Never

53 40

19 25

17 21

11 14

3.42 NS

NS – not significant Table 24 shows that 53% men compare the price before taking buying decision for the clothes as compared to women, 25% women frequently compare the price as compare to men, 21% women and 17% men sometime compare the price before purchasing clothes. And few of them never compare the price. The behaviour related to comparison of the price of clothes before purchasing is independent of sex of elderly.

Table no. 25: Check all aspects of garment before purchasing Always Male(N= 100) Female(N= 100)

Frequently

41 65

22 22

Sometime

Never

20 9

17 4

17.65**

** significant at .01 level It is clear from table 25 that 65 % female check all the aspects before purchasing the clothes such as quality of stitching, fabric etc. Equal numbers of respondents (22 %) frequently check all the aspects during purchasing of clothes. Only 20% male check all the aspects of clothing some time as compared to 9% female. Few of them (17% male and 4% female) never check the clothes properly. Behaviour of male and female is significantly different.

Table no.26: Read label before purchasing the clothes Male (N= 100) Female (N= 100)

Alwa ys 63 33

Frequently

Sometime

Never

20 20

13 30

4 17

24.14**

** Significant at .01 level It is clear from table that most of the respondents read the label before purchasing the clothes. Only 20% male and female both are regular read the label before purchasing the clothes. 30 % female read the label before purchasing as compared to male. Few never read label both male and female.

Table no. 27: Collect information before purchasing the clothes Male(N= 100) Female(N= 100)

Always

Frequently

Sometime

Never

20 7

19 25

54 53

7 15

10**

*significant at .05 level, ** significant at .01 level, NS – not significant Table show that 20 % male take a information before purchasing the clothes as compared to 7% female. 25% female and 19% frequently take the information before purchasing the clothes. Most of the respondents sometime take the information before purchasing the clothes .and 15% female and 7% male never take the information before purchasing the clothes.

Table no. 27: Sources of information of clothes before purchasing the clothes Male (N= 100) Female (N= 100)

Window shopping 1 -

Friends and colleagues 15 30

Internet

Television.

Shopkeeper

6

8 25

70 45

-

Consumers acquire information to reduce uncertainty and risk in purchasing decision. The influence on an individual to select a product or store depends upon the communication of information from sources to individual. Table 27 shows that 30% female take information from her friends and colleagues before purchasing as compared to the men. Most of the male and female (70%male and 45% female) take the information from shopkeeper before purchasing the clothes. More (25%) female than male get the information from television . Only 6% male take information from internet and 1% male take a information do window shopping. Female never do window shopping and do not use net as source of information. They might not know how to use internet or they may not be having this facility.

Fashion consciousness of elderly respondents Fashion consciousness refers to a person’s degree of involvement with the styles or fashion of clothing. An individual does not have to be either a fashion opinion leader or a fashion innovator to be considered fashion conscious. Rather, fashion consciousness is characterized by an interest in clothing and fashion, and in one’s appearance.Studies conducted in western Decision Making Determinants in Purchase of Clothing of Elderly Consumers

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countries indicate that elderly are fashion conscious. An attempt was made to find out fashion consciousness of Indian elderly. Five questions in the tool analysed fashion behaviour of old people. Result is presented in tables 28.

Table no. 28: Preference for fashionable trendy clothes Male(N= 100) Female(N= 100)

Always

Frequently

Sometime

Never

10 12

12 16

48 50

30 22

2.02 NS

NS – not significant Table 28 shows that 12% female and 10% male always prefer to purchase fashionable clothes whereas 16% female and 12% male purchase fashionable clothes frequently. Most of the male and female (50%female and 48% male) prefer to purchase fashionable clothes some time. 30 % male and 22 % female never purchase the trendy fashionable clothes. Preference for fashionable clothes is independent of sex of elderly as chi square calculated is not significant.

Table no. 29: Knowledge of fashion trend Male (N= 100) Female (N= 100)

Always

Frequently

Sometime

Never

10 21

11 23

47 42

32 14

16.15**

*significant at .05 level, ** significant at .01 level Table shows that few (10 %) male and (21% ) female always know about the fashion trend. 23 % female and 11% male know about the fashion trend frequently. Most of the male and female (47% male and 42%) some time know about the fashion trend. And 32% male and 14% female are never aware about the fashion trend. Awareness about fashion trend is dependent on sex of respondents.

Table no. 30: Sources of fashion information T.V. 15 6

Male (N= 100) Female (N= 100)

Newspaper and magazine 6 12

Friends and colleagues 16 41

Family members 63 41

Table shows that most of the respondents sources of fashion trend is family members (63 %male and 41 % female ) followed by friend and colleges (41 % female and 12 % male ) .Hardly 12 % female and 6% male sources of fashion newspaper and magazines. And 15% male and 6% females; sources is television.

Table no.31: Do not wear clothes which are not in fashion Male (N= 100) Female (N= 100)

Yes

No

59 57

41 43

.02 NS

NS – not significant It is interesting to find from data given in table 33 that 59% male and 57% female do not wear the clothes if these are out of fashion. And 41% male and 43% female do wear the clothes if these are not in fashion. They are not concerned about fashion aspect of clothes. Chi square value shows that both the sexes have almost similar attitude in this regard.

Table no. 32: Preference to purchase high priced fashion clothes Male (N= 100) Female (N= 100)

Yes

No

24% 42%

76% 58%

6.54*

*significant at .05 level Findings given in table 32 show that majority of elderly male and female do not buy fashion clothes if they are high in price whereas 42% female and 24% male buy the fashionable clothes even if these are high in price. Calculated chi square shows significant difference at 5% level which indicates that preference to purchase high priced fashion clothes is dependent on sex of respondents.

Conformity vs Individuality It is said that phenomena of conformity is present in most form of clothing behaviour which is very strong in teen age. Whether elderly follow conformity in dress was studied by investigator.

Table no. 33: Importance of Social approval Male (N= 100) Female (N= 100)

Yes

No

94 88

6 12

1.53 NS

NS = not significant

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It is clear from table 33 that majority of elderly male and female agree that social approval is important. 12%female and 6% male said that social approval is not important for them. No significant difference in their attitude toward social approval was found.

Table no. 34: Preference of clothes similar to friends and colleagues Always Male (N= 100)

1 4 7

Female (N= 100)

Frequently

Sometime

Never

12

60

14

31

41

21

15.7**

** significant at .01 level Findings presented in table 34 shows that among elderly respondents, 14% male and 7% female always prefer to wear the clothes similar to his / her friends and colleges. 12% male and 31 % female frequently prefer to wear the clothes same as his / her friends and colleges. However, most of the male and female respondents some time prefer to wear the clothes which are same as his / her friends and colleagues. And few of them never purchase the clothes which are same as their friends. Chi square calculated shows significant difference in attitude of both the sexes towards preference to wear clothes similar to friends.

Table no.35: Approval of husband and family in purchase of clothes Male (N= 100) Female (N= 100)

Yes

No

40 65

60 35

11.55**

** Significant at .01 level It is clear from table 35 that 40% male and 65% female respondents do not wear the clothes if their family members do not like. And 60% male and 35% female do not require approval of family members to wear clothes of their liking. Calculated value of chi square indicates that approval of husband and family in purchase of clothes is dependent on sex as significant difference is found in the views of males and females.

Table no.36: Search for new and different clothes Male (N= 100) Female (N= 100)

Always

Frequently

Sometime

Never

3 7

10 10

16 43

71 40

22.61**

** Significant at .01 level Data given in table shows that very few, only 3% elderly male and 7% elderly female always search new and different clothes when they go for shopping. 10% male and female frequently search different clothes. Some respondents (16 %male and 53% female) search different clothes some time. Most of the male respondents (71%) and 40% female respondents never try to search new and different clothes. Thus fashion innovation/leadership is not on priority list of elderly. Nam et al. also found that conformity is less important for elderly female. Chi square value reveals that there is association between search for new and different clothes, and sex of respondents.

IV.

CONCLUSION

It can be concluded that some of clothing buying criteria / practices of elderly male and female respondents are same whereas there is difference in other clothing buying practices. Most of the male always buy clothes from selected shops compared to female. Availability of quality garment is main criteria for selection of shop for male. On the other hand availability of garment of right price is main criteria for female. It was interesting to find that more male plan carefully before purchasing than female. Result of the study cannot be generalized because of small sample size.

REFERENCE 1. 2. 3. 4. 5.

6. 7. 8.

L. W. Banner, ,American Beauty (Chicago: University of Chicago Press, 1983): 225. E. B.Hurlock, (1981). Developmental psychology: a life- span approaches (5th ed.). Tata McGraw Hill Publishing Ltd., New Delhi. J. R. Lumpkin and C. W. Greenberg, (1982). Apparel shopping patterns of the elderly consumer, Journal of Retailing, 5, 68-89. J.R. Lumpkin, (1985) Shopping segmentation of the elderly consumer.Journal of Academy of Marketing Science, 13, 68–69. Martin, C. D., (1976). A transgenerational comparison: The elderly fashion consumer. Advances in Consumer Research, 3, 453-456. M. Solomon and N. Rabolt, (2004) Consumer Behavior in Fashion. Prentice Hall, Englewood Cliffs, NJ. Szmigin, and M. Carrigan, (2001) Learning to love the older consumer. Journal of Consumer Behavior, 1, 22–34. Jinhee Nam, Reagan Hamlin, Hae Jin Gam, Ji Hye Kang, Jiyoung Kim, Pimpawan Kumphai, Cathy Starr and Lynne Richards (2007) The fashion-conscious behaviours of mature female consumers International Journal of Consumer Studies, 31,102-198

Decision Making Determinants in Purchase of Clothing of Elderly Consumers

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Indian Corporate Governance: Growth and Challenges Priyanka Vijay Assistant Professor, FMS WISDOM Banasthali University, Rajasthan

Abstract: Corporate governance conceptually is highly associated with ethical business. Corporate managements are required to adopt a broad vision of their duties with good governance practices. Corporate governance is a system to direct a company in the moral frame work such that it can become accountable for share holders, employees, management. It is based on complete transparency of all transactions towards all stakeholders. The presence of an active group of independent direction of the board adds a great deal towards ensuring confidence in the market. It is an important concept to achieve corporate superiority. Good governance is not just about fulfillment of formal rules and regulations but also creating internal process and position that make a positive image of business and ensure its success. Management should follow the path of dynamic success to achieve corporate competence in the corporate world. An ethical approach is becoming necessary for corporate competence. Especially now a day’s ethics in business are obligated because many businessmen are only interested in making money despite the ethical cost or the harm they would probably cause to people or even to nature (Environment pollution). Business ethics is the use of general ethical ideas which arises in business environment and applied in every aspect of business behavior. Ethical business behavior is expected by public, prevents damage to stakeholders, inappropriate profitability, making new business relations and employee productivity, reduces criminal penalties, protects business against unscrupulous employees and competitors, protects employees from harmful actions by their employer, and allows people in business to act consistently with their personal ethical beliefs. Ethical problems occur in business for many reasons, including the selfishness of a few people, competitive pressures on profits, the clash of personal values and business goals, and cross cultural contradictions in global business operations. Similar ethical issues such as bribery and corruption are evident throughout the world and many national governments and international agencies are actively attempting to minimize such actions through economy sanctions and international codes. This paper complies the concept of corporate governance and its other aspects like organizational and legal framework. Lastly the paper suggest the need for robust research in the field of corporate governance research that would support policy formulation in order to make next generation governance reforms more effective for the Indian condition. Key Words: Corporate governance, Business ethics, Compliance ________________________________________________________________________________________________

1. Introduction Corporate governance is a system of regulations, best management practices, and sprit and adherence to ethical standards or to meet certain well defined objectives. It includes fair, efficient and transparent policy to satisfy share holders, creditors, employees, customers and suppliers. Ethics in corporate governance means a conception of right and wrong behavior which a company sets for itself. There should be a transparency in operations leading to accountability, which should ensure safety and trust in the market place. When issues like Enron, Worldcom, UTI, Ketan parekh and trust etc hit the headlines, it is difficult to ignore businesses ethics. As consumers are getting increasingly aware of ethical issues, corporations have to respond to their concern whether it is related to issues of environment, health or any other concern. WHAT IS CORPORATE GOVERNANCE? Corporate governance is a procedure by which companies are supervised and controlled under legal and non legal principles and practices. It affects overall firm’s value and performance directly or indirectly. It also includes the set of relationships between management and stake holders which determine corporate direction and performance. It ensures:  Transparency in business transaction  Statutory and legal compliances  Adequate disclosure and effective decision making to attempt government goals  Commitment to ethical values of business  Protection of interest of share holders In other words, corporate governance specifies the distribution of duties and powers with in a corporation among different stake holders. Such defined roles ensure the attainment of corporate objectives. Corporate governance is therefore about what the board of a company does and how it sets the value of company and it is to be separated from the routine operational management of the company by full time executives. In the UK, Listed companies are required to report about the conduct of code. The FRC also publishes guidance to boards to assist them in considering how to apply the code to their special circumstances but good governance can affect to the non listed companies also because it is fundamental that a corporation should be committed to be a good corporate citizen not only in

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compliance with all relevant laws and regulations but also by actively assisting in the improvement of the quality of life of the people in the communities in which it operates with the objective of making the self reliant and enjoy a better quality of life. Such social commitment consist of initiating and supporting community initiates in the field of public health and family welfare, water management, vocational training , education and literacy and encourages application of modern scientific and managerial techniques and expertise. The fundamental objective of corporate governance is to protect the long term interest of stakeholders and to increase the shareholder’s value as much as possible but it can be implemented only if all the interests and rights of share holders complied with. Further its objective is to create the environment of the confidence among the parties conflicting interests. A CONCEPTUAL FRAMEWORK: The Corporate governance is an expressed and implied contracts between the director and others participants typically shareholders and management, and other participates like supplies, creditors, costumers, employees etc. The corporate governance framework is also about the legal, regulatory and environment of the community. Corporate Governance Framework Legal Framewor k

Orgazinational Framework

MCA

SEBI

Kumar Mangalam Birla Committee Report 2000-07

CII Recommendations 1997-98 MR NarayanMurthy Committee Report 2003

Compan y Law

Companies Act 1956

SEBI Law Companie s Bill 2004

A) Organizational Framework: The organizational framework for corporate governance initiatives in India consist of the ministry of corporate affairs (MCA), the confederation of Indian industry (CII) and the securities and exchange board of India (SEBI). In 1998, the Confederation on Indian Industry (CII) “India’s Premier Business association”, unveiled India’s first code of corporate governance. Soon after SEBI appointed in 2000, the Kumar Managalam Birla committee. In 2003, SEBI instituted the M.R. Narayan Murthy committee to scrutinized India’s corporate governance framework. B) Legal Framework: An Effective legal framework is essential for the proper and continuous growth of the company. In rapidly changing national and international business environment, it has become necessary to regulate corporate entities with the emerging economic trends, encourage good corporate governance and enable them to protect the interest of all shareholders. The legal framework for corporate governance consists of the company laws and the SEBI laws. KEY ISSUES IN CORPORATE GOVERNANCE: Indian Industry has come a long way since 1991. Corporate sector is growing very fast in both terms quantitative and qualitative. To developing successfully, India needs to ensure this growth is sustainable and inclusive. Currently, corporate governance in India is at cross roads. Though putting in practice the corporate governance in the Indian circumstances is not so much easy. Although corporate governance codes have been drafted with a deep understanding of the governance standards around the world but prior experience on governance issues in the country has shown that none of the corporate governance principles can be cast in the stone and laid to rest 1. The gap between the interest of management and isolated share holders: The constitutions of many companies stress and underline the business is to be managed “by or under the direction of” the board. In such a practice, the responsibility for managing the business is delegated by the board to the CEO, who in turn delegates the responsibility to other senior executives. Thus the board occupies a key position between the shareholder and the company’s management. They represent shareholder’s interest by monitoring managers, approving strategies and policies and disciplining poorly performing managers. A family-owned controlled and managed business with intergenerational time horizons and material, direct share holding may present far lower governance risks to long term investors than a listed company controlled by a foreign multinational where management have little incentive to grow the value of the local subsidiary. 2. Protection of minority shareholders: The protection of minority share holders affected more by national legislation rather than the behavior of individual companies much of global corporate governance focus on boards and their committees, independent Indian Corporate Governance: Growth and Challenges Priyanka Vijay © INTERNATIONAL RESEARCH COMMUNION

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directors and managing CEO succession. In the Indian corporate, boards are not as empowered as in several western economies and since the board is subordinate to the shareholders, the will of majority shareholders prevails. Therefore there is a conflict in India between the majority and minority shareholders. The minority shareholders themselves have today a distribution that varies significantly from the past. Only the supervision boards and the institutes of ethics will be main safeguard of interest of minority shareholders. But even the members of the supervision board can be corrupted and behave like men of straw. 3. Independent Directors: Independent directors are expected to be independent from the management and act as the trustees of shareholders. This implies that they are obligated to be fully aware about the conduct of organization on relevant issues. The corporate governance structure hinges on the independent directors who are supposed to bring objectivity and improves its effectiveness. However, the problem is that an independent director cannot play an effective role in isolation despite their commitment to ethical practices. They are not able to prevent the decision which is harmful to the members individually, but if they act collectively then they can prevent any such decision. Independent directors may not be in a position to stop fraud at the maximum level but they may identify the signals that indicates about the things is not as it should be. 4. Director’s and Executive’s Remuneration: This is one of the mixed and vexed issues of corporate governance that occupied the centre stage during the massive corporate failures in the USA between 2000 and 2002. Executive compensation has also in recent times become the most visible and politically sensitive issue relating to corporate governance. The Cadbury report stressed that shareholders should be informed of all details pertaining to board remuneration, especially director’s entitlements, both present and future, and how these have been determined. Other commodities on corporate governance have also laid emphasis on other related issues such as “ pay-for performance”, heavy severances payments, pension for non-executive directors, appointment of remuneration committee and so on. “However, while controversy often surrounds the size of quantum of remuneration, this is not necessarily an issue of corporate governance- a payment that may be excessive in one context may be reasonable in another.” 5. Disclosure and Audit: The OECD lays down a number of provisions for the disclosure and communication of “key facts” about the company to its shareholders. The Cadbury Report termed the annual audit as one of the corner stones of corporate governance. Audit also provides a basis for reassurance for everyone who has a financial stake in the company. Both the Cadbury Report and the Bosch Report stressed that the board of directors has a bounden responsibility to present to shareholders a clear and balanced assessment of the company’s financial position through audited financial statement. There are several issues and questions relating to auditing which have an impact on corporate governance. There are, for instance, question such as: (i) Should boards establish an audit committee; (ii) If yes, hoe should it be composed of; (iii) How to ensure the independence of the auditor; (iv) What precaution are to be taken or what are the position of the state and regulators with regard to provision of non-audit services rendered by auditors; (v) Should individual directors have access to independent resources and; (vi) Should boards formalize performance standards. These questions are being answered with different perceptions and with different degrees of emphasis by various committees and organizations that have gone into and analyzed these issues in depth.

Suggestions First of all my suggestion for good corporate governance is that there is a requirement of independent directors. At least two third directors should be independent not only for fulfilling the law requirement but also to bringing the objectivity in board process and for the benefit of minority and small shareholders. There should be equal distribution of power between board and management so that no single entity has dominance over another. Senior executives play a very important role in corporate governance. They should be honest in every matter especially in disclosure of financial reporting. Remuneration of senior executives should be based on the principles of justice, transparency, and accountability. The ICAI or the Government should persuade the growth of a whistle blowing committee so that anybody can report to that about any fraud in the company.

Conclusion Corporate governance determines the selection criteria of directors, functions of board of directors, how executive actions are supervised and how a company is accountable to regulations imposed on it by law or other commitments to shareholders. Corporate governance is about ethics and values which drive companies in the conduct of their business. A business with good corporate governance can survive for a long term and can generate good revenue with good reputation. If companies do not have corporate governance they have to bear more cost to retain their stakeholders.

References: 1. Fernando A.C. (2011), “Business Environment”, Pearson Education India. 2. Panchasara, Bhavik M. (2012), “An empirical Study on corporate Governance in Indian Banking Sector”, Thesis Ph.D., Saurshtra University. 3. JACQUES CORY (2005), “Activist Business Ethics”, Springer Science & Business Media. 4. Black, Bernard, Hasung Jang & Woochan Kim (2006), ―Does Corporate Governance Affect Firm’s Market Values? Evidence from Korea‖ Journal of Law, Economics and Organization, Vol. 22, pp. 366-413. 5. University of Technology Sydney. Corporate Governance: The Significance of Corporate Governance. Available at www.ccg.uts.edu.au 6. http://en.wikipedia.org/wiki/corporate_governance 7. http://business.gov.in/corporate_governance

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Impact of Advocacy Advertisement on Brand Image Dr. Sunita Dwivedi Associate Professor, Symbiosis International University, Noida

(U.P.), [email protected]

Abstract: “In a country like ours, we only have to look at our past to realize that our future is one of diversity. If we do not have t he initiative to use this to our advantage, then we will fail to provide the client with advertising that works”. —Justin Atkins, creative director, ADdictive Advertising & Marketing Advertisement is an encapsulated communication about a product (good/services), a clearly designed, concise, aesthetically appealing and content-wise accurate communiqué intended to effectively persuade the target audience(viewers/listeners/readers) to arrive at a decision as desired by the advertiser often concerning the product (goods/service). Advocacy advertising can be directed at specific targets, or general targets, such as political activists, the media, consumer groups, government agencies, or competitors. For Marketers salling is all about creating a demand for an offer by enticing and persuading customers. Whole marketing concept and starategies requires an exercise to motivate customeres to take final buying decisions. Key to effective marketing is creating a rapport with the people at an emotional level. Creating emotional ties with the customer is crucial at the time of marketing. A customer who is emotionally bonded with the brand, grabs its message immediately, and gives the desired response. For customers being emotional in buying may not be desired act disposed in-front of shopkeepers, but for marketers it is an opportunity to bound them as a lifetime customers. Research have proved that Emotional Marketing builds customers selfesteem making him/her to believe that by using the product offered by marketers make him/her look better, smarter, and more sophisticated. All this makes the customer feel better about their own self, the brand transcends from being a mere product status to become a trusted friend. This can happen if well planned advertisement and brand is build, keeping its image aliened with the personality of its targeted audience. Well managed and crafted ad/ brand image can develop positive feeling or emotions among customers for the product. Hence it can be concluded that Advertisement/Brand Image anyhow helps the companies to build a long term attachment with its customers. Your brand’s image will precede, follow and present itself among existing and potential customer in the market. Even as products or services come and go, this image remains in the minds of consumers. It is important that this image must reflect that what your company is all about. This image somewhere helps in building customer loyalty by providing a short of satisfaction looked forward by the customer and promised to be delivered by the Brand. Any Marketer can well do this by designing a well crafted advertisement which can probably be advocating a brand image and helps in developing a long term loyalty. Hence this research has taken three dimensions of advocacy advertisement and three dimensions of Brand Image to see the relationship among them and with the Brand loyalty. The main aim of this research is to determine such relationship and its impact on brand loyalty, also to design a model supporting this contention. Key Words: Advocacy-Advertisement, Emotional Marketing, Brand Image, Customer Loyalty, Brand Personality, Social Messages. ________________________________________________________________________________________________

1. Introduction 1.1 Advertising??? Advertisement is an encapsulated communication about a product (good/services), a clearly designed, concise, aesthetically appealing and content-wise accurate communiqué intended to effectively persuade the target audience(viewers/listeners/readers) to arrive at a decision as desired by the advertiser often concerning the product (goods/service). Advocacy advertising can be directed at specific targets, or general targets, such as political activists, the media, consumer groups, government agencies, or competitors.

1.2 Advocacy Advertising??? Advocacy advertisement can be said as an advertisement which covers a strong social message not only influencing consumer positively but also to sensitize consumers about a companies being socially concerned. Such ad basically carries a strong intention of transferring a social message touching heart of consumers and building favorable company image. Advocacy advertising can be directed at specific targets, or general targets, such as political activists, the media, consumer groups, government agencies, or competitors. It can be sponsored by any type of advertiser (businesses, consumer groups, special interest groups, political parties, or even individuals). An extreme example occurred in the 1960s, when a private citizen bought a two-page advertisement in the New York Times at a cost of $12,000 to offer his peace plan for ending the war in Vietnam. In 1974, Mobil Oil Company began advocacy advertising concerning the need for offshore oil drilling to alleviate the energy crisis that existed at the time. NBC accepted the television commercial, but ABC and CBS did not, because of the controversial nature of the topic. As a result, Mobil Oil Company took out full-page newspaper ads, which reproduced in print the visuals and text for the commercial. Advertisements placed by companies presenting their own opinion on one or more public issues. The

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advertisements reflect the opinion of the company and are meant to influence public opinion. Issues include consumer rights, education, the environment, health, and taxation. Advocacy advertising is normally thought of as any advertisement, message, or public communication regarding economic, political, or social issues. The advertising campaign is designed to persuade public opinion regarding a specific issue important in the public arena. The ultimate goal of advocacy advertising usually relates to the passage of pending state or federal legislation. Almost all nonprofit groups use some form of advocacy advertising to influence the public's attitude toward a particular issue. One of the largest and most powerful nonprofit advocacy groups is the American Association of Retired Persons (AARP). The AARP fights to protect social programs such as Medicare and Social Security for senior citizens by encouraging its members to write their legislators, using television advertisements to appeal to emotions, and publishing a monthly newsletter describing recent state and federal legislative action. Other major nonprofit advocacy groups include the environmental organization Green-peace, Mothers Against Drunk Driving (MADD), and the National Rifle Association (NRA). Advocacy ads are a particularly controversial form of corporate advertising, because they aim to influence audiences on topics beyond the conventional consumer realm of products and services (Culter and Muehling 1989; Nelson 1994). In addition, advocacy ads are commonly used by organizations that sell risk-related products such as oil and gas, alcohol, tobacco, and pharmaceutical still one can say that not only these companies are confine to such act, advocacy advertisement is wide spreading into other sectors/companies also like TATA Tea, Idea Cellular etc are also indulging them into such act. Advocacy campaigns such as Shell Oil's ads on driver safety or Budweiser's effort to promote "responsible drinking and driving" differ from public service campaigns in that they not only promote a common good, but also focus on protecting the company's market. Marketplace advocacy ads, the focus of this study, can be defined as messages that emphasize building acceptance for a particular product or service by addressing consumer concerns. Changes in laws governing commercial speech and development of more sophisticated marketing techniques have resulted in an increasingly blurred line between PSAs (public service announcements), paid advocacy ads, and editorial content (Cutler and Meuhling 1989; Sandler and Secunda 1993). A variety of companies, as well as government and nonprofit political and social organizations, now use advocacy advertising in attempts to influence public opinion and deflect criticism (Haley 1996; Rice and Atkin 2000). Despite the growing importance of advocacy advertising, relatively little research has examined these strategies and how audiences respond to them (Burgoon, Pfau, and Birk 1995; Haley 1996).

2.1 Some Examples of Companies making Advocacy Ads more Effective. What Makes an Advocacy Advertisement Effective? A quality research determining the contention of social issues, advocacy advertisement can be well-expressed, phrased in human terms, and articulates the debate on your terms, rather than the opposition‟s point of view. It can also be substantiating companies claims make the advertisement more powerful. Companies use that kind of communication to develop their public image and promote their values (Benetton, De Beers, Kellogg's, Philip Morris) Philip Morris: 1996 launch of an advertising campaign to publicize its position that kids should not smoke Broad effort to repair the company‟s battered public image. Message provided through athletes and celebrities Benetton: From 80‟S to the end of 2000: pointed out society issue but without giving any opinion (AIDS, war, sex, culture…) “Unwanted” ad of Benetton highlighted the union of two opposite communities into one. (2000 onwards) DeBeers: Creates the Diamond Trading Company and implements the « supplier of choice » strategy Publishes the « Best practice principles » which encourages proper working conditions, as well of the respect of the environment. Idea Cellular: Focused on social issue on the grounds on Castizim, literacy and Plantation. Tata Tea: Race against corruption, non-voting, and changes in Political Faces.

In which form Companies Use Advocacy Advertisement. At the different stages of life cycle companies use different-different mode to create awareness about it. At the initial stage companies use product advertisements to create awareness about it(s) offer/product(s), than advertise for brand recognition and finally advertisement to create corporate branding allowing awareness about company along with intention to enhance Image or Goodwill. Companies adopt different methods of advertising Corporate Brands, among them Advocacy Advertisement is one of them. There are several types of corporate advertising, including identity, cause-related, and advocacy advertising (Belch and Belch 2004; O'Guinn, Allen, and Semenik 2003). Corporate identity ads focus on awareness, often by emphasizing logos and names, and they may seek to establish or change the organization's image. Cause-related ads build a pro-social image for an organization. Ads that connect an organization with a charity or nonprofit group, identifying the advertiser as a sponsor of the charity, are one example of cause-related advertising (Belch and Belch 2004). Finally, advocacy ads are designed to present a certain point of view (Arens 2004; Belch and Belch 2004; O'Guinn, Allen, and Semenik 2003; Schuman, Hathcote, and West 1991; Wells, Burnett, and Moriarty 2003). While also addressing the general corporate advertising goal of enhancing organizational image, advocacy ads primarily deflect criticism of the organization, its policies, products, or services (Bostdorff and Vibbert 1994).

TYPES OF ADVOCACY ADs:Advocacy Ads can be dynamically used depending upon the need of offer, status of organization in existing environment, and the level of acceptance by consumers. Based on this advocacy ads can be broadly classified into marketplace, political, and value advocacy ads (Arens 2004). Marketplace advocacy ads seek to establish acceptance for a product or service, and they address potential or existing consumer concerns about the product itself or the business practices or manufacturing processes used to create it. In general the most Impact of Advocacy Advertisement on Brand Image

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frequent aired ads on different Media promoting and provoking an acceptance about a product can be termed as Marketplace advocacy advertisements. Similarly, political advocacy ads seek support for a particular public policy or candidate by presenting favorable arguments to counter public concerns. The third category, value advocacy ads, represents a less overt strategy. Instead of supporting the organization's political or marketplace agenda, these ads deflect criticism by associating the organization with accepted societal values. Value advocacy ads may directly praise certain values, such as honesty or hard work, or they may feature individuals who represent those values (Bostdorff and Vibbert 1994). It is important to note that the three categories of advocacy ads are not mutually exclusive, and in practice, they may appear in combination more often than in pure form. For example, an ad could combine marketplace and values advocacy by associating the organization's products, services, or way of doing business with important values in society. Many political ads invoke values, and some are almost exclusively value advocacy messages, such as the "Morning in America" campaign for Ronald Reagan or "A Man from Hope" for Bill Clinton, both of which associated values with the candidates instead of discussing public policy (Bostdorff and Vibbert 1994). A corporation might also advocate a product or service and related legislation in a single ad. In fact, all three strategies can be combined: The National Rifle Association's advertising campaign has sought acceptance for guns, lobbied against gun control legislation, and associated the NRA with values such as "safety, freedom, conservation, tradition, discipline, and family togetherness" (Bostdorff and Vibbert 1994, p. 148).

Advocacy Advertising by various companies (1) Weber Shandwick carries HLL’s social initiative to the Government Weber Shandwick, one of the largest PR Agencies in the world has carried Lifebuoy, world‟s largest selling soap‟s, social initiative to the Government, making Lifebuoy the first brand to be lauded by the Indian Postal Department. Department of Post under the Ministry of Communications issued a Special Postal Cover to encourage the invaluable contribution of Lifebuoy for its pioneering social initiative, „Lifebuoy Swasthya Chetna‟ (LSC). Minister of State for Communications and IT, Government of India released the Special Postal Cover on the occasion of World Health Day. Also present at the occasion was Ms. K Noorjehan, Chief Post Master General, and Maharashtra Circle. The postal cover was released to recognise Lifebuoy‟s pioneering rural health and hygiene education initiative, Lifebuoy Swasthya Chetna (LSC). Launched in 2002, this ground-breaking programme has covered more than 17000 villages across the country, with no signs of slowing down. It is all set to initiate and extend these efforts to 10000 villages starting April 27th, 2006. This program has been developed around the insight that people believe “Visible clean is safe clean”. LSC has established itself as India‟s single largest health and hygiene education programme Weber Shandwick (WS) encouraged this non-media initiative and suggested to them that they should have it endorsed through some Government body to achieve a better media outreach. WS was a part of it right from planning till execution. WS understood Lifebuoy‟s target audience, which is the masses involving people of all sections is the most significant feature of Lifebuoy, which includes school children, mothers, village elders and influencers. WS started looking for the strategic avenues to run the campaign effectively by getting it lauded by a prominent Government body. Arijit Sengupta, VP, Weber Shandwick, says, “We have always set higher standards in the industry by developing innovative and effective tools to bring value addition to our clients. We, as an agency, initiate a lot of non-media activities for our clients and expect it to bring in even more value to them. And looking at the dedication and enthusiasm of Lifebuoy for this prestigious social campaign, it was very important for us to implement the same make it effective. As the vision of the brand is to make one billion Indians feel safe and secure, LSC is instrumental to translate that vision into reality and we helped them achieve that.”. The Lifebuoy Swasthya Chetna campaign was divided into various phases. In the initial phase, the Lifebuoy‟s Health Development Facilitator (HDF) and his assistant interacted with students and the influencers of the community like the Sarpanch, medical practitioners, Panchayat members, etc. A number of tools like a pictorial story in a flip chart format, the Glo-germ demonstration and a quiz with attractive prizes to reinforce the message used to make the module interactive and successfully gained involvement and participants from the school children. Speaking at the occasion Mr. Nitin Paranjape – Executive Director, Hindustan Lever Limited said “We are delighted to be India‟s first personal wash brand to receive the honour of the special Postal Cover and have Dr Shakeel Ahmed himself to unveil the same for Lifebuoy. Lifebuoy Swasthya Chetna movement has successfully educated 70 million rural people across 7 states and created awareness about the threat of unseen germs and basic hygiene practices. So far we have covered 17,000 villages and are happy to extend our efforts to another 12,000 villages as part of the phased program.”

(2) Indian polio plus program Rotary one of the largest Non-Government International Organization focused mainly towards the up-liftment of the downtrodden worldwide, got involved in the Polio Eradication Program way back in 1979 with a five-year pledge to immunize about six million Philippine children from the crippling disease of Poliomyelitis. By 1982, Rotary committed itself to implement the most ambitious program ever, “to immunize all the world‟s children against polio by 2005-Rotary‟s first birth centenary year. Encouraged by Rotary‟s commitment towards this objective, the World Health Organization (WHO) adopted a resolution of eradicating polio, as part of the Expanded Programme on Immunization (EPI). The World Health Assembly in 1988, in which Governments of over 100 countries including the Government of India resolved to eradicate polio, recognized Rotary International as the key non-government, private partner on the global team. Ever since Rotary has been providing financial assistance to national governments for the purchase of Oral Impact of Advocacy Advertisement on Brand Image

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Polio Vaccine and conducting the highest level of advocacy efforts to see that soon polio is eradicated globally. Rotary called its Polio Eradication Initiative “Polio Plus Program” and focused primarily on social mobilization and voluntarism. Hence one can say that the usage of advocacy advertisements adopted by companies to build a favorable image and increase the goodwill of companies by reflecting their involvement in redressing social issues.

Can Advocacy Advertisement be build as Companies Core Competency? A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990): 1. It provides customer benefits, 2. It is hard for competitors to imitate and 3. It can be leveraged widely to many products and markets. A core competency can take various forms, including technical/subject matter know how, a reliable process, and/or close relationships with customers and suppliers (Mascarenhas et al. 1998). The benefit of having core competency as a long term advantage, it can enable companies to derive sustainable competitive advantage building long term profitable model for companies. For example; Honda develops its expertise in making all types of engines facilitating its services from lawn/snow blowers to automobiles. Similarly Rolls Royce claims its outmost comfort to its customers, Dominoz‟s 30 minutes delivery is perhaps the end result of their competency in terms of customer benefit. Their core competency might be more about their ability to source and design high protection components, or to research and respond to market demands concerning expectations of expertise services claimed by them.

What is Competitive advantage? When a firm sustains profits that exceed the average for its industry, the firm is said to possess a competitive advantage over its rivals. The goal of much of business strategy is to achieve a sustainable competitive advantage.

A Model of Competitive Advantage

Some of the examples Companies using Advocacy Advertisement as Core Competencies. In a award function at New York, Eight leading businesses will receive awards recognizing their outstanding contributions in the fight against AIDS, TB and malaria at the 6th Annual GBC Awards for Business Excellence Gala at the American Museum of Natural History. GBC also will present an award to former U.S. President Bill Clinton for his outstanding leadership on HIV/AIDS and global health at the 2007 event, which will be attended by more than 700 high-ranking guests from business, politics and international development. GBC honors six companies that conceived and executed effective HIV/AIDS workplace, community, core competency, national action, testing and counseling, and advocacy and leadership programs, as well as two companies with superlative TB and malaria programs. The HIV/AIDS winners include Chevron (workplace); Coca-Cola China Beverages Ltd., (community); Standard Chartered PLC (core competency); Abbott and Abbott Fund (national action); Eskom Holdings Ltd. (testing and counseling); HBO (advocacy & leadership). Eli Lilly and Company receives the tuberculosis award and Marathon Oil Corporation receives the malaria award. The awardees were selected from a pool of more than 50 nominees by an independent panel of expert judges. In addition to President Clinton, honored guests include: Sir Richard Branson, Founder and Chairman, Virgin Group; Academy Awardwinning actor Jamie Foxx; Zambian author and noted AIDS activist Ophelia Haanyama Orum; Gala Chair Amy Robbins; NBA star Samuel Dalembert; The Global Fund to Fight AIDS, TB and Malaria Chairman Rajat Gupta; and Malaria No More Co-Chair Ray Chambers. "The companies we honor have broken new ground in the corporate fight against HIV/AIDS, tuberculosis and malaria, and they will serve as pre- eminent examples for other businesses around the world to follow," said GBC President Ambassador Richard Holbrooke. Impact of Advocacy Advertisement on Brand Image

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"The business community plays a vital role in fighting these epidemics, which decimate economies, destroy families and permanently alter societies. The companies honored tonight prove that the private sector can make a significant difference and pave the path for additional action."

2007 Awards for Business Excellence Winners: Core Competency Winner: Standard Chartered PLC Standard Chartered PLC has applied its business skills to fight against HIV/AIDS by helping to improve the performance of the Gambia's grant from the Global Fund to Fight AIDS, TB and Malaria. As a result, more people who are infected are receiving life-saving drugs and counseling. Standard Chartered also piloted a program in Thailand, which used messages on Automatic Teller Machines to encourage HIV testing. In addition, they have launched a pilot with guidance from the World Economic Forum's Global Health Initiative in Tanzania which aims to equip their small/medium-sized customers roll out their own HIV/AIDS workplace programs .

Advocacy and Leadership Winner: HBO Even as "AIDS fatigue" discouraged some companies from covering the epidemic, HBO continued to educate its viewers about the disease, in an effort to raise awareness, undo stigma, and encourage people to protect themselves and get tested. Some of the early films include, Common Threads: Stories from the Quilt (1989), And the Band Played On (1993), In the Gloaming (1997), and Gia (1998). HBO produced Rory Kennedy's documentary Pandemic: Facing AIDS, and the critically-acclaimed Angels in America. In 2007, HBO produced the documentary The Blood of Yingzhou District and the film Life Support. HBO also partnered with GBC, the NBA and the Kaiser Family Foundation to promote HIV testing through a series of PSAs

Workplace Winner: Chevron Driven by a rigorous analytical assessment that matches resources to real community needs, Chevron has significantly raised the bar on best practices for workplace HIV/AIDS programs. Chevron's Global HIV/AIDS Policy -- Policy 260 -- affirms that infected and affected employees are protected by the company's existing policies on discrimination and harassment and guarantees employee HIV/AIDS status confidentiality. Chevron conducted situational analyses to identify gaps between the HIV/AIDS threat and current company/community training, counseling, testing and treatment resources, and has engaged regional HIV/AIDS coordinators to bridge the gaps identified in the situation analysis, prioritizing countries with the greatest risk.

Community Winner: Coca-Cola China Beverages Limited A leader in HIV/AIDS awareness and prevention, Coca-Cola China executed national campaigns in 2005/2006, which reached 71 million people in more than 200 cities across the country. In addition, Coca-Cola China built upon a trip to South Africa by China's Ministry of Health by partnering with the Yunnan Provincial Women and Children Development Center in initiating an AIDS Orphan Care program, which provides support and care to AIDS-impacted orphans from 75 villages across the region.

National Action Winner: Abbott and Abbott Fund Abbott and Abbott Fund have been working in partnership with the Government of Tanzania since 2000, creating a $50 million initiative to modernize the country's public health care infrastructure and meet the life- long treatment needs of people living with HIV/AIDS. The results have generated support for 90 rural hospitals and health clinics; trained 7,400 health care workers in HIV patient care; and expanded and accelerated voluntary testing and counseling for more than 150,000 people.

Testing and Counseling Winner: Eskom Holdings (South Africa) As the main producer of electricity in South Africa, Eskom is dependent on an economically viable supply chain, customer base and productive workforce. Having identified HIV/AIDS as a great risk to its sustainability, it has invested its financial and human resources to manage the disease. Its voluntary testing and counseling program is 100% confidential. Eskom provides outstanding counseling services through an independent service provider, ensuring that qualified psychologists are available to provide emotional support around the clock. The company, which distributes free condoms, partners with other businesses as a member of the South African Business Coalition on HIV/AIDS (SABCOHA).

Tuberculosis Winner: Eli Lilly and Company In response to the growing MDR-TB pandemic, Eli Lilly and Company worked closely with Medicines Sans Frontiers and the World Health Organization to create the Lilly MDR-TB Partnership, a global effort with operations in 40 countries and a $120 million commitment. The effort is the only philanthropic MDR-TB program that combines early detection and treatment, health care worker training, surveillance, community and patient support and transfer of drug- manufacturing technology to companies in developing countries. International companies developing Lilly off-patent drugs have strengthened their manufacturing skills, generated exports and created hundreds of jobs.

Malaria Winner: Marathon Oil Corporation When Marathon acquired production interests in Equatorial Guinea (EG) in 2002, the Company quickly identified malaria as the key health issue facing local communities. Marathon realized that elimination or a drastic reduction of malaria would reduce the health care and economic burden on the local population and also help protect the workforce. To address this critical community issue, Marathon led the formation of a unique $12.8 million public- private partnership which includes Noble Energy, the Government of Equatorial Guinea, Medical Care Development International and leading health specialists. During the first three years of The Bioko Island Malaria Control Project this groundbreaking effort has resulted in a 95 percent reduction in malaria transmitting mosquitoes caught indoors, and a 44 percent reduction in the presence of malaria parasites in children. An estimated 150,000 cases were averted in the program's first year, Impact of Advocacy Advertisement on Brand Image

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saving hard-earned income for impoverished workers that otherwise would be spent on treatment. For every dollar invested by the project, the community earned four dollars through improved productivity. So well planned and executed advocacy advertisement can build a positive and favorable repo of companies making their social concern as a core competency of their respective organization.

How Companies Socially Responsible images conveyed through Advocacy Advertisements. Corporate social responsibility is a term defines company's responsibility to be accountable to all of its stakeholders in all its operations and activities. Socially responsible companies consider the full scope of their impact on communities and the environment when making decisions, balancing the needs of stakeholders with their need to make a profit‟s company‟s stakeholders are all those who are influenced by and can influence a company‟s decisions and actions, both locally and globally. Business stakeholders include (but are not limited to) employees, customers, suppliers, community organizations, subsidiaries and affiliates, joint venture partners, local neighborhoods, investors, shareholders (or a sole owner), and the environment.

Prominence of CRM or Why Companies Resort to CRM …….. One of the far most reasons for companies doing marketing based on cause-related effect to come very close to their customers mind or heart. Cause-related marketing can become a cornerstone of any marketing plan. Cause-related marketing activities highlight company's reputation within target market. Cause-related marketing can positively differentiate a company from its competitors and provide an edge that delivers other tangible benefits, and hence cause-related marketing is a way to merge your profit center with your "passion center" and build a business that mirrors your personal values, beliefs and integrity.

Indian Examples of CRM campaigns With today‟s global firms defying the Internet as the world‟s greatest invention since the microchip, the company‟s looks closely at the advent of CRM (Cause Related Marketing) – as the future of corporate philanthropy. It is fervently hoped that in the coming years, CRM or e-CRM will play a small part in achieving both of its inherent objectives promoting the corporate image as well as contributing towards Indian society.

CITIBANK in Project Shiksha Citibank provides option to its account holders to contribute Rs. 100 every month for education of underprivileged children. Citibank‟s most consistent program with CRY has been the Citibank CRY Affinity Credit Card . Every time a person subscribes to the card or spends on it, Citibank, automatically donates a percentage of the transaction to CRY. This partnership has been supporting project.Kislay which works with children in a slum in Delhi. The credit card provides customers the opportunity and satisfaction of being able to make a difference to the lives of underprivileged children by simply using their cards.

CADBURY’S into CRM Launched in Australia in 1997 to great acclaim, Cadbury's Yowie is the first chocolate brand to combine an entertaining educational programme about the environment with a new concept in children's confectionery and new folklore for the children of Australia. In their first year, 31 million Yowie were sold in Australia. The Yowie is a product which serves to educate children about the environment and its value which combines fun and enjoyment with a strong educationalmessage about the environment and the natural heritage of Australia.

HLL’s SHAKTI SHAKTI means „Strength‟. Project SHAKTI is HLL‟s initiative to upliftment of standard of living in rural India by creating incomegenerating capabilities for underprivileged rural women by providing a small-scale enterprise opportunity, and to improving rural lives through health and hygiene awareness. Project SHAKTI is taken up in rural areas only whereby women are the distributors for HLL products and are called “Shakti Ammas”. This identity is ushering prosperity in their lives and most importantly self respect.

ITC’s E-Choupal The Choupal is a Hindi word for village square where elders meet to discuss matters of importance. The letter "e" has brought in a computer with an Internet connection for farmers togather around and interact not just among themselves but with people anywhere in the country and even beyond. ITC installs a computer with solar-charged batteries for power and a VSAT Internet connection in selected villages. The computer's functioning is free from the usual troubles of power and telecom facilities in rural area. A local farmer called sanchalak (conductor) operates the computer on behalf of ITC, but exclusively for farmers. ITC's Agri-Business is India's second largest exporter of agricultural products. Through the e-Choupal initiative, ITC aims to confer the power of expert knowledge on even the smallest individual farmer. Thus enhancing his competitiveness in the global market. ITC‟s e-choupal is the single-largest information technology-based intervention by a corporate entity in rural India. Transforming the Indian farmer into a progressive knowledge-seeking netizen. Enriching the farmer with knowledge; elevating him to a new order of empowerment. E-Choupal delivers real-time information and customized knowledge to improve the farmer's decision-making ability, thereby better aligning farm output to market demands; securing better quality, productivity and improved price discovery. The model helps aggregate demand in the nature of a virtual producers' co-operative, in the process facilitating access to higher quality farm inputs at lower costs for the farmer. The e-Choupal initiative also creates a direct marketing channel, eliminating wasteful intermediation and multiple handling, thus reducing transaction costs and making logistics efficient. The e-Choupal project is already benefiting nearly 4 million farmers. The e-choupal offers farmers and the village community five distinct services: • Information: Daily weather forecast, price of various crops, e-mails to farmers and ITC Impact of Advocacy Advertisement on Brand Image

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officials, news-all this in the local language and free of cost. • Knowledge: Farming methods specific to each crop and region, soil testing, expert advicemostly sourced from agriculture universities-all for free. • Purchase: Farmers can buy seeds, fertilizers, pesticides and a host of other products and services ranging from cycles and tractors to insurance policies. Over 35 companies have become partners in the e-choupal to sell their products through the network. • Sales: Farmers can sell their crops to the ITC centers or the local market, after checking the prices on the Net. • Development work: NGOs working for cattle breed improvement and water harvesting, and women self-help groups are also reaching villages through e-choupal. In some states farmers can even access their land records online, sitting in their village. Access to health and education services through e-choupal begins next month.ITC eChoupal creatively leverages information technology to set up a metamarket in favor of India's small and poor farmers, who would otherwise continue to operate and transact in 'unevolved' markets. Free access to Internet is also opening windows of rural India to the world at large. ITC eChoupal is now being regarded as a reliable delivery mechanism for resource development initiatives.

Proctor & Gamble The entry of P&G into the field of corporate social responsibility with project PEACE – an environmental education programme followed by FUTURE FOCUS – first ever career guidance service. P&G experimented Cause Related Marketing with different projects like Project DRISHTI where Whisper helped to restore eyesight to 250 blind girls through corneal transplant operations in which P&G contributed Re 1 for every pack of whisper sold Project OPEN MINDS to support and educate children across the Australia, ASEAN and the India (AAI) region. For every large size pack of Vicks VapoRub, Whisper, Ariel Power Compact, Head & Shoulders and Pantene purchased by consumers during November 1999 to January 2000, P&G on behalf of consumers contributed the cost of one day‟s education of a working child to the „OPEN MINDS‟ fund. In India P&G raised Rs. 1.25 crore for „OPEN MINDS‟ which was donated to UNICEF in February 2000 Project POSHAN to combat malnutrition in India. P&G raised Rs. 50 lakhs by contributing Resale. 1/- from sales of large size packs of Ariel, Whisper, Head & Shoulders and Pantene sold in the months of May, June and July 2000 and Project SHIKSHA – a unique CRM initiative in association with Sony Entertainment Television. By purchasing packs of Vicks, Whisper, Ariel, Tide, Head & Shoulders and Pantene between 21st April – 12th June 2003, this unique education promotion allowed a mother to win Rs. 2 lakhs towards Graduate Education Fee of one child (24 such Prizes), or Rs. 5,000 towards Next Year‟s Tuition fee for one child (96 such Prizes), and a number of Consolation Prizes, all courtesy P&G.

TATA Salt’s Desh Ko Arpan Programme This programme was launched by the pioneers and undisputed leaders in the packaged and iodized salt category - Tata Salt in association with CRY in 2002 and raised around Rs. 33 lakhs in a period of one month. Through the Desh Ko Arpan programme, Tata Chemicals Limited contributes 10 paise for every kilo of Tata Salt, sold during specific periods, to the education of underprivileged children and enable underprivileged children have an opportunity to develop their sports ability and pursue higher education.

Breast Cancer Awareness Campaign Breast Cancer Awareness Campaign is the most popular cause related and corporate social responsibility programme. Several big and small companies joined hands to make it a success. This campaign was associated with PINK color. The following are a few companies involved in this campaign:

Companies Involved • Avon Avon Cosmetics‟ commitment to women runs deeper than the boundaries of business. Women are the heart of Avon's success and Avon continues to support and understand their needs through Avon's Breast Cancer Crusade. The goal of the Avon Foundation Breast Cancer Crusade is to improve access to quality breast health care for underserved, uninsured and low income populations, and to support biomedical research focused on prevention and improved methods of diagnosis and treatment to Cure and prevent breast cancer.Avon related many of its products with this campaign and named them as Avon Breast Cancer Crusade fundraising products. These products includes ribbon pins, pens, notebooks, key rings, lip colors, etc. On the purchase of these products some amount was donated towards this campaign

• Kodak Kodak has supported Breakthrough since 2000, and 2005 will see the total amount of funds raised by Kodak top the £500,000 mark. Kodak's impressive involvement includes a highly successful sponsorship of Fashion Targets Breast Cancer 2005 Contest. Teaming up with Woman‟s Weekly, they launched a national search for a more mature face to represent and inspire an age group who need to be increasingly breast aware. The contest highlighted Kodak's work in the area of health imaging and the importance of breast screening.

• Marks & Spencer Marks & Spencer developed a range of lingerie that is suitable for women that have had breast cancer. The post-surgery lingerie range has been created to meet the practical needs of women affected by surgery while being pretty, feminine and sexy in design. M&S will be donating 10% of the sale of all the items in this range . Impact of Advocacy Advertisement on Brand Image

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• Warner Music Warner Music raised a fantastic £50,000 for Breast Cancer Awareness Campaign by donating £1on every 'Breakthrough Breast Cancer presents All Woman - The Platinum Collection' album sold. Warner Music also launched a special edition album entitled „Ladies‟ Night‟ with a £1donation going to Breast Cancer Awareness Campaign for each album sold.

CONCLUSION Advocacy advertisements placed by companies presenting their own opinion on one or more public issues. The advertisements reflect the opinion of the company and are meant to influence public opinion. Issues include consumer rights, education, the environment, health, and taxation. \Advertising used to espouse a point of view about controversial public issues. Advocacy advertising can be directed at specific targets, or general targets, such as political activists, the media, consumer groups, government agencies, or competitors. It can be sponsored by any type of advertiser (businesses, consumer groups, special interest groups, political parties, or even individuals. Companies are endorsing advocacy advertisements and committing towards CSR. REFERENCES Books 1. Integrated Marketing Communication- Pearson Education, India. 2. Advertising- Principals and Practices –Seventh Edition by Wells, Moriarty, Burnett-Pearson Education. 3. Contemporary Advertising Irwin/McGraw-Hill 4. Integrated Marketing Communications – Duncon – TMH Internet 1. http://www.afaqs.com 2. http://www.knowthis.com/tutorials/principles-of-marketing/advertising/6.htm 3. http://www.answers.com/topic/advertising?cat=biz-fin 4. http://en.mimi.hu/marketingweb/advocacy_advertising.html 5. http://www.accessmylibrary.com/coms2/summary_0286-11125056_ITM 6. http://www.tobacco.org/Misc/aaaalert.html 7. http://fmcg-marketing.blogspot.com/2007/10/core-competency-and-competitive.html News Paper and Magazines 8. Times of India ,Economics times, Hindustan times 9. India Today, Business today, outlook and other magazines.

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Water and Sanitation: A Gender Perspective Dr. Sangeeta Poswal1, Thushara Roy2 1Director, Amity School of Liberal Arts, Amity University Rajasthan, Jaipur ,

[email protected] [email protected]

2Assistant Professor, Amity Business School, Amity University Rajasthan, Jaipur ,

Abstract: According to The Committee of Social, Economic and Cultural Rights, access to water and adequate sanitation are underlying determinants of health, which in turn, is an inclusive right. In our portfolio of economic development and social progress, provision of proper sanitation and drinking water are quintessential requirements, especially when it pertains to women’s health. Proper water availability and better sanitation are indeed reflections of a woman’s dignity and equity. Absence of proper hygiene and sanitation is the chief cause of reproductive tract infections (RTI) in females where the former is primarily associated with the availability of water. Her personal sanitation and hygiene is neglected with huge gender inequalities in the utilization of the services. The paper has relied primarily on secondary data to analyse the problem in consideration. For qualitative analysis, a few case studies are incorporated in understanding the gravity of the situation and for deriving inference about the problem. The paper examines the functionality of various government programs in Rajasthan related to water availability and sanitation. It tries to find the gap that pertains in this sphere, where there is divergence between approved, released and actual funds. Thus the government is realising the necessary condition of toilet construction and meeting the sufficient condition of proper water availability remains a crucial issue. The paper tries to focus on the problem of water availability which adversely affects sanitation practices that result in various health hazards especially with reference to rural women of Rajasthan. Effort is made to evolve a sanitation model that adapts well to Rajasthan’s social and geographic conditions. Appropriate design and location of sanitation facilities reduces the risk of violence and gender specific health problems. It is essential to understand the needs of women and girls while designing sanitation programs.(Marcelina Albuquerque). Realizing the goal of adequate sanitation and water availability is a consistent social process that requires time and investment. Key words- Sanitation, Health infrastructure, Total Sanitation Campaign, gender mainstreaming, water availability _________________________________________________________________________________________________

I. Introduction The often unspoken part of water crisis and sanitation is its impact on the Gender, a woman’s struggle involved in getting the basic needs met as she is the sole promoter of the family’s health and hygiene practices. According to The Committee of Social, Economic and Cultural Rights, access to water and adequate sanitation are underlying determinants of health, which in turn, is an inclusive right. In our portfolio of economic development and social progress, provision of proper sanitation and drinking water are quintessential requirements, especially when it pertains to women’s health. Proper water availability and better sanitation are indeed reflections of a woman’s dignity and equity. With reference to the state of Rajasthan which is located on the northern side of the country, which comprises mostly the wide and inhospitable Thar Desert1 with a significant rural mass, the problem of water and sanitation is quite crucial2. Rajasthan with a geographical area of 10.4% which supports 5.5% of the population and 18.70% of the livestock has only 1.16% of the total surface water available in the country. 85 out of 142 desert blocks are in the state of Rajasthan covering almost 60%. Average annual rainfall is 531mm (ranging 100-800) and has witnessed frequent droughts and famine. The per capita water availability in Rajasthan is about 780 cubic metres against the minimum requirement of 1000 cubic metre. It is feared that the availability of water would fall below 450 cubic metre by year 2050 which is considered as absolute water scarcity as per international accepted norms 3.

II. GOVERNMENT PROGRAMMES Health infrastructure is the fundamental prerequisite for achieving the desired results in the pace of development and growth. It is a merit good which should strictly adhere to the principles of non- excludability and non-rivalry. It has a role to play in the generation of positive externalities and to minimise market failure. Sanitation thus, is a right for all, where the benefit has to be transmitted to every sphere and segment of the society irrespective of caste, class and gender. It is a sad fact that dualism exists in this arena too, which has crippled the functionality of proper water supply and adequate sanitation. This persists not only in India, but is a grave issue all over the world, where the gender is callously sidelined. Many international organizations have come up for the redressal of the issue where United Nation Development Programme’s (UNDP) Millennium Development Goal (MDG) is one such. 1

Government of Rajasthan, Official Web Portal http://www.investrajasthan.com/drinking-water.cms 3 Hemant Joshi & Suneet Sethi,(2011), “Decentralized Governance in Rural Water Sector: The Rajasthan Scenario”, Communication and Capacity Development Unit, Water and Sanitation Support Organization, Public Health Engineering Department, Government of Rajasthan 2

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Sanitation as a national objective shaped out of its genesis in the form of government sponsored programmes since 1986 with Central Rural Sanitation Programme as the pioneer. It was launched to improve the quality of life of rural people and also to provide privacy and dignity to women. In Rajasthan, various programmes are launched under Rajeev Gandhi Water Resources and Conservation Mission like Apex Committee of State Water and Sanitation Mission (SWSM), Executive Committee of Sanitation, Programme Monitoring Unit & Sanitation Support Organisation (PMUSSO), Capacity and Communication Development Unit (CCDU). Panchayati Raj Institutions are entrusted with justifiable or rather „need-of-the-hour‟ objectives under District Water and Sanitation Mission (DWSM), Block Water and Sanitation Mission, Village Health and Sanitation Committee etc. In 1999, there is Total Sanitation Campaign (TSC) including large IEC (Information, Education and Communication) component which is hailed as a major paradigm shift from a supply driven approach to demand driven approach 1. Demand-side approaches focus on health education, social marketing, community action, supporting household behaviour change and enabling small scale entrepreneurial initiatives with state as facilitator.2 In 2003, Nirmal Gram Puraskar was initiated where there is reward for 100% sanitation. In 2012, Nirmal Bharat Abhiyan, community led and people cantered approach. In Rajasthan, the sanitation programmes triggered off with Rural Sanitation Programme in 1994-97, that provide training to NGOs in Rajasthan. Many other projects were also initiated. Adequate sanitation and construction of toilets is receiving attention these days. The focus on creating demand for toilets and sanitation has led to important findings that individual and households‫ ׳‬motivations to build and use toilets has more to do with comfort, convenience, status, privacy, and dignity than with perceived public health benefits (Evans, 2005, Jenkins and Scott, 2007 and Jenkins and Curtis, 2005; Jenkins and Sugden, 2006; Peal et al., 2010). Thus the positive externality of public health is hardly considered by the households or individual units. According to United Nations, Millennium Development Goals Report 2014, Sanitation remained a grave concern for India. The danger of water scarcity encircling the State, the problem of Sanitation is critical. Health and Sanitation is regarded as an inclusive right by World Health Organisation (WHO)3. Sanitation is regarded as public health emergency, where availability of water is crucial. Without water, there is no hygiene. Research shows that less water availability results in less good hygiene in the households.4 Having said that, the State of Rajasthan and its sanitation has to be given serious attention.

I. TREND OF TSC BUDGETING Funding is allocated to rural sanitation and hygiene in line with Total Sanitation Campaign and Government of India guidelines, which clearly shows a lack of convergence between the approved, released and actual expenditure of funds. The Total Sanitation Campaign transferred the administrative control to Panchayati Raj Department in 2010. It is a sad reality that the agencies entrusted with the responsibility of effective sanitation like Panchayati Raj Institutions (PRI) are not given the financial freedom via fund allotment. Financial autonomy is very much desirable for a better productive performance and a fruitful outcome. The table shows the trend in Total Sanitation Campaign budgeting in Rajasthan.

Table-1: Trend of TSC Budgeting: Approved, Released and Actual Expenditure

source: ddws.nic.in (Y axis-funds in rupees crore) 1

Plan International (India),(2009),”Evaluation of Existing capacities in WATSAN Sector”, Plan International and WASH Institute. Kathleen O Reilly, Elizabth Louis, (2014), “The Toilet Tripod: Understanding Successful Sanitation in Rural India” Science Direct, Health and Place, Volume 29, Sep., 2014, pp 43-51. 3 http://www.wma.net/en/20activities/20humanrights/10health/UN_s_Special_Rapporteurs_briefing-EN.pdf. 4 http://www.who.int/water_sanitation_health/takingcharge.html. 2

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The table shows the divergence between the approved, released and actual expenditure of funds. The percentage of cumulative expenditure to approved funds is abysmally low. For a considerable period of time, cumulative expenditure remained stagnant. ie, from 1999-2000 to 2005-06. Growth of cumulative expenditure is marginal and was around 32% of approved funds in 2011-12.The percentage of cumulative expenditure to release funds is also no less depressing. Between 1999-2000 and 2002-03, the percentage of cumulative expenditure to released funds was zero percent. It showed a steady improvement and reached 72% of approved funds in 2011-12. Though the figure shows an upward trend, it has to be noted that it constitutes only 32 percent of the approved funds. Though the Government is showing a greater conscience getting more and more funds approved, the release of the funds is minimal which throws light on an inefficient bureaucracy and many loopholes in the administration. Even the use of released funds is questionable. Total Sanitation Campaign has played a major role in the construction of more toilets in the rural areas. All districts of Rajasthan have been covered under TSC and the rural sanitation coverage of the State has increased from 14.61 % (2001) to 45.45% (2010).5 The rural sanitation coverage of the country is 62.41% as per the progress reported by all the states which clearly indicated that the state of Rajasthan is lagging behind as the figure is less than the national average. NSSO data shows that TSC has led to large leakages without improving much in rural sanitation of Rajasthan. The expenditure of funds should manifest itself in the proper functioning and maintenance of toilets which is not happening. There is much emphasis on the construction of toilets. But there is hardly any follow up so as to make these toilets functional for the public use. Women are the major sufferers here as they are subjected to grave gender inequities. The situation of toilets in the public schools of Rajasthan shows the true picture of sanitation efforts by the government which is grossly underperforming in respect of necessary and sufficient conditions. The norms of the Water Sanitation Hygiene programme for school (WASH) for toilets are 1 toilet for 80 boys and 1 toilet for 40 girls. The findings show that for boys, 68 per cent schools have a ratio of one toilet per 80 boys, while for girls only 28 per cent schools have one toilet for 40 girls which shows gender discrimination. Water in toilets was available only in 48.55 per cent schools, while the rest had no water in the toilets. Water in urinals was available only in 52.15 per cent schools.6 Although significant progress has been made in coverage of school latrines increasing from 20.24% (2005) to 89.89% (2011)7. Now 97% of schools have common toilets, but only 85% of the schools have separate toilets for boys and girls 8.But putting mere concrete would not help. Sanitation Crisis would not have happened if the Government had seen not only the necessary condition of creating the “infrastructure”, but also the sufficient condition of making it functional focussing much on the areas like water supply, proper pipelines, proper drainage, appropriate toiletries, men and resources required to maintain the toilets. The majority of public toilets situated in public offices, bus stops, railway stations etc are locked and many are extremely unhygienic which poses a great hindrance to women sanitation and health. Use of unhygienic toilets has resulted in severe health problems including Reproductive Tract Infections (RTI) and poses hazard to women‟s menstrual hygiene. Water inadequacy adds gravity to the situation and is one major catalyst for the extreme unhygienic state of the public toilets. Many defecate in the open and women „hold back‟ due to lack of privacy and results in severe health repercussions. It is indeed a pity that much social and cultural stigma is attached to discussing openly the sensitive, serious issues of these kinds. According to UNICEF Report, as in 2013, only 48 per cent of rural Indian population has access to good toilet and sanitation facilities. In Rajasthan, 60% of population defecates in the open.9 Lack of toilet facilities in the rural areas for females has always been a matter of concern, especially during the late hours. In every household, women shoulder the responsibility of maintaining the hygiene, sanitation and fetching water for the family. Many of the rural households lack proper awareness on adequate sanitation. Moreover, culture and beliefs, along with female illiteracy, make them unaware of the health hazards that they have to deal with on a daily basis. Women suffer from inflammation, itching, soreness and odorous discharge. Lack of hygiene plays a big part in transmission-sharing bathrooms or toilets of poor hygienic condition. A case study on Dausa district of Rajasthan (2012) supports this as it was found out that around 70-80 percent of rural females suffer from the above illnesses. An interview with health service providers and other health agencies threw light on the grave sanitation issues that has crippled the female health. Rural girls suffer from poor menstrual hygiene. According to Craig Mokhiber, Chief of the Human Rights Office Development and Economic and Social Issues Branch, stigma around menstrual hygiene is the violation of human rights and it demands attention, not just of the human rights community, but of health professionals, governments, activists, economists and broader society at large.10

II.

CASE STUDIES

The following cases throw light on the severity of water unavailability on sanitation and general hygiene with greater impact on the women. The cases are from Lakshmangarh village which is in Sikar district of Rajasthan 5

Government of Rajasthan, Rural Development and Panchayati Raj Department (2011) Aarti Dhar, (2015), Rajasthan HC: No recognition for schools without toilets, The Hindu, Feb., 23, 2015, Jaipur. 7 www.ddws.nic.in. 8 Rajasthan Rural Education Council, August 2011 9 Diane Coffey, Aashish Gupta, Payal Hathi, Nidhi Khurana, Nikhil Srivastav, Sangita Vyas, Dean Spears (2014),”Open DefecationEvidence from a new Survey in Rural North india”,20 Sep.2014,Economic and Political Weekly, Vol XLIX No.38 10 http://www.ohchr.org/EN/NewsEvents/Pages/Everywomansrighttowatersanitationandhygiene.aspx 6

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Santosh, aged 35, literate, holding a BA degree, encourages her children to defecate outside, squatting on the drainage lines, though they have a toilet inside the house. She tells that it saves much of her water which she fetches with difficulty from the outside pipe where water comes at irregular intervals. She saves water for cooking and for “emergencies”. Jyoti, aged 39, again a graduate, rich who belongs to the joint family, owning and living in a Haveli which has a toilet attached to the house outside. On 2-3 visits there, it was found that the toilet was extremely dirty ignoring hygiene to its core, again attributing it to the shortage of water. There the males prefer open defecation. Durga, aged 9, belongs to a poor and illiterate household does not have a toilet in her house. The family defecates in the open, takes bath in the only room of their house and when asked as to what they would do if more money was coming their way, toilet was never in their list. The two of the three cases above are true paradoxes as literacy even could not save hygiene and sanitation in the face of severe water scarcity. They ignore the consequences or rather they choose to ignore. Indeed, literacy and awareness foster better sanitation and hygiene practices. But when adequate water is not there to make it functional, the rest all factors are grossly ineffective. In the Ralawata village of Rajasthan, hardly ten out of one hundred households have toilets. Upon interviewing a few, it was found that mostly the financial assistance received from the government for the construction of toilets, comes under the female‟s name. Unfortunately, she does not have a say in the family and comply to her husband‟s decision of constructing toilets and using it as store rooms so that they meet the inspection requirement by government authority. It is thus necessary to evolve the toilet model that complements the economic dictum, ”the maximum utilisation of scarce resources”-our main issue here being that of water shortage and that justifies the geographical and social conditions of the rural mass in Rajasthan. This would enhance the dignity and self-esteem of the women folk at large. Ecological Sanitation (ECO-SAN) Model toilets should come forth and to a great extent can curb the problems of sanitation where water scarcity is also acute. 11 This toilet design might be costly but prevents contamination of water and soil. Human waste can be composted and used as a natural fertilizer. This is best in water scarce areas. With greater funds approved for sanitation, right utilisation in the right direction is not a major hindrance If we tally the costs and benefits of sanitation, the costs are very minor compared to the benefits as it has a direct impact on health, gender, social security, economic stability and advancement of the state and the nation at large. Eco-sanitation or compost toilets have helped achieve nearly 100% sanitation in Rupauliya, a small village in Bihar. 12 From the gender perspective, it is clear that the severity of the problem of scarce water supply and sanitation is quite huge. It carries shocking dimensions with it. Her right to health, right to freedom, freedom of speech and expression, her security and safety are put to question. With ample funds approved, it has to be put to the best utilisation adopting the best sanitary measures, water and maintenance of sanitation and its effective monitoring by the government bodies.

III.

CONCLUSION AND RECOMMENDATIONS

We need to realise the strong interconnection between water management, sanitation systems, waste management and health education. As pointed out by Avinash Kumar, Director of Programs and Policy for Water Aid India, Census 2011 found that almost 80% of the toilets estimated to be built under TSC between 2001 and 2011 were missing. It has been realised that the money dumping on just toilet construction will not help. Corporate Social Responsibility can bring in technology for sustainable sanitation, they can use their expertise on consumer behaviour to develop designs for mindset changes around sanitation and lastly it has to recognize that this is also a social process requiring time and investment. Greater priority on Information, Education and Communication (IEC) is the need. It is necessary to have greater social mobilisation for generating demand for sanitary facilities at manageable cost, adequate NGO involvement, a greater focus on long term planning, impact maximisation through inter-sectoral co-ordination, greater community participation in decision making and planning at the grass root level, especially women so as to incorporate their needs. Long term planning should be resorted to. Further, a proportion of fund should be assigned to the regular maintenance and monitoring over sanitary facilities guaranteed to rural poor in Rajasthan. The trend of valuing private good over public good should be ripped off. As Christian Holmes, the USAID Global Water Coordinator rightly puts it, "It is time to support and enhance the capacity of woman to develop and lead the implementation of water and sanitation solutions. Women have the right to participate equally in decision making within the communities to help address these needs." Thus, working on development goals like water and sanitation should be the outcome of joint effort, of evolving mindset more adaptive to welcome changes, closely correlated with gender mainstreaming and a consistent perseverance towards a better quality of life for human sustenance.

REFERENCES 1. 2. 3. 4. 5.

11 12

Adams J S (2003). Village committees manage water supply scheme in Rajasthan. Info change News and Features, November 2003. Batchelor Charles, Batchelor James, M. Snehalatha, (2013). “How can water security be improved in water scarce areas of Rural India?”, Earth scan Studies in Water Resource Management Data World Bank.org/indicator/SH.STA.ACSN” Improved Sanitation Facilities: % of Population with Access” Dhar Aarti (2015). Rajasthan HC: No recognition for schools without toilets. The Hindu, 23 February, Jaipur. Evans B, (2005), Securing Sanitation: The Compelling Case to Address the Crisis, Stockholm International Water Institute with World Health Organisation and Norwegian Agency for Development Cooperation.

http://water.worldbank.org/shw-resource-guide/infrastructure/menu-technical-options/ecological-toilets Chicu Lokgariwar,(2014),”The profitable Toilet”, India Waterportal Water and Sanitation: A Gender Perspective

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G. Hutton, L. Haller, J. Bartram, (2007), “Global Cost Benefit Analysis of Water Supply and Sanitation Interventions” J Water Health, http://www.ncbi.nlm.nih.gov/pubmed/17878562. Government of India (2007), Total Sanitation campaign sanitation for all: 2012 International Journal of Research and Social Sciences (http://www.ijmra.us). Government of India (2013), Programme Evaluation Organisation, Evaluation Study on Total Sanitation campaign, Planning Commission. http://www.ircwash.org/sites/default/files/SuSaNa-2009-Cost.pdf (Sun San A- Factsheet, Sustainable Sanitation Alliance- Cost and Economics). Modi Nerendra (2014). Lack of basic school amenities: Rajasthan among worst., The Times of India, 7 September, Jaipur. Reilly Kathleen O, Louis Elizabth, (2014), “The Toilet Tripod: Understanding Successful Sanitation in Rural India” Science Direct, Health Place, Volume 29, Sep., pp 43-51. Saini, Sakshi, (2012), “Necessity of Community Participation in the process of Resettlement to improve Watsan Facilities: A study of Indian Urban Poor Women of Madanpur Khadar.

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Shakespeare’s Selected Plays: A Feminist Perspective Surbhi Vijayvargeeya Research Scholar(PhD, English) , Department of English, Rajasthan University, Jaipur, Rajasthan

Abstract: Shakespeare, the master playwright, in the history of English Literature has long been targeted by the feminist critics as his plays provide ample scope for the application of feminist theories. His plays not only represent the contemporary image of women but also her place in a male dominated sixteenth century Elizabethan society. This paper scrutinizes the scope of Shakespeare’s plays in the light of feminism and post-feminism. The paper has attempted to answer the burning question regarding the feminist element in Shakespeare’s plays. Keeping in mind, the limitations of time and space the present study takes few plays of Shakespeare as representative and further analyses them under the light of both feminism and post-feminism. The plays that have been selected for the study are The Tempest, King Lear, and Macbeth which have been dealt thematically as well as linguistically. Shakespeare certainly manifolds women’s personality through his considerable range of iconic plays. The female characters in his various plays carry different personalities, so all of them have not been given the same kind of portrayal. They are submissive kind such as Miranda (The Tempest), Cordelia (King Lear), and Desdemona (Othello): who have been presented as totally guided and influenced by their fathers or lovers. On the contrary there is no scarcity of the females who are clever, self-motivated and able to manipulate men for example: Goneril and Regan (King Lear), Lady Macbeth (Macbeth) etc. There are women who dress like men for example: Rosalind (As You Like It). Such characters sufficiently highlight that woman, while acquiring a male guise can enjoy social liberty and freedom. Thus the paper brings forward some of such issues and presents a feministic reading of Shakespeare’s selected plays. Keywords- Feminism, King Lear, Macbeth, Tempest, Shakespeare. ________________________________________________________________________________________________

1. Introduction Feminism emancipated the women all around and enabled them to look beyond the dark corners of their households in order to understand their fundamental rights. The movement focused upon gender as a subject of analysis, while reading cultural practices. Feminists believed that gender roles are predefined and woman is trained to fit in those roles. They attacked on the stereotypical presentation of women as weak, vulnerable, seductress, obstacle, sexual object and a procreating device. The movement led to the political freedom of women but it could not set women free from those socially imposed gender roles. Feminists anticipated equality, rights and justice for women in spite of that the ill outcome of feministic ideals has been that the world had become a battlefield for the sexes. The battle still continues and we still suffer. Post feminism, an outcome of third wave feminism, intends to pose a contrast with the prevailing idea of feminism. The whole movement can be said a reaction against feminism (first and second wave). Post feminists are not anti-man and sexists but they are against all concepts which talk of man and woman being different entities. Post feminists talk about ‘people’, neither for ‘men’ nor for ‘women’. So, the term post feminism advocates a broader notion by denying morally, politically and socially defined gender roles. Shakespeare’s plays have long been targeted by feminists. The research paper presents a feminist as well as post feminist scrutiny of three of Shakespeare’s plays which are King Lear, The Tempest and Macbeth. The Female characters have been scrutinized are Cordelia, Goneril, Regan, Miranda and Lady Macbeth. The literature of any age serves as a chronicle of the contemporary society. Shakespeare’s works undoubtedly mirror the contemporary Elizabethan society. In order to comment upon the heroines of Shakespeare, first we have to look into the condition of women in England during Elizabethan age. The women of Elizabethan age were highly burdened with morals. The standards for ‘a good woman’ and ‘a bad woman’ used to be judged upon some predefined moral conduct. The morally loaded woman was said to be ‘a good woman’ on the other hand if a woman was found to be deviated from moral grounds then she was accused of being ‘a bad woman’, better known as a ‘whore’. Shakespeare has also been influenced by this spirit of his age while representing women in his plays. The world created by him is essentially a patriarchal one. We can commonly find the dominance of male characters in his plays. In King Lear, The Tempest, or Macbeth there is one common feature that in all of them fathers or husbands not only lead the action but also hold the destiny of female characters. King Lear decides the fate of her three daughters. Prospero also shapes Miranda’s life by searching a suitor for her as per his own will. In Macbeth also Lady Macbeth acts according to her husband’s plans. Macbeth has already decided to kill the king when he listens the prophesy made by the witches. On listening to Macbeth’s plans, Lady Macbeth at once supports her husband without taking a second thought of morality or immorality. Some critics have found Lady Macbeth manipulating Macbeth’s mind but in fact she acts as the subconscious of his husband. The thought of killing the king and usurping the kingdom has already taken place in Macbeth’s mind so the murder of the king is entirely Macbeth’s own wish. Lady Macbeth works

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merely as a supporter to the conscious mind of Macbeth. So, we can not consider Lady Macbeth a strong female character who can manipulate a male‟s mind. Apart from this unquestionable dominance of father figures, there is a complete absence of mothers in all three plays. This is certainly astonishing to find no mother in these plays. We don‟t know what would Shakespeare have intended by not creating mother figures but being critics we can only point out that Shakespeare has neglected mother figures because they could not play any part in the course of the action as all the decisions have been made by male characters. Stephen Orgel in his article “Prospero‟s Wife” has commented upon the absence of mother figure in The Tempest: Prospero's wife is alluded to only once in the play, in Prospero's reply to Miranda's question, "Sir, are you not my father? " Thy mother was a piece of virtue, and She said thou wast my daughter; and thy father Was Duke of Milan; and his only heir And princess: no worse issued. (I.ii.55 -59)' Prospero's wife is identified as Miranda's mother, in a context implying that though she was virtuous, women as a class are not, and that were it not for her word, Miranda's legitimacy would be in doubt. The legitimacy of Prospero's heir, that is, derives from her mother's word. But that word is all that is required of her in the play…Once he is assured of it, Prospero turns his attention to himself and his succession…Except for this moment, Prospero's wife is absent from his memory. She is wholly absent from her daughter's memory: Miranda can recall several women who attended her in childhood, but no mother. (Orgel 1) Cordelia, Goneril, Regan, Miranda and Lady Macbeth all have been feminine characters in this sense as they accepted the dominance of male charaters in the plays. Cordelia has turned out to be a mere object in the hand of her father and later King of France takes the command of helpless Cordelia, dejected by his father. Goneril and Regan though deny patriarchy by afflicting misery upon their father but later they submit themselves to Edmund ( Gloucester‟s illegitimate son), thus they again submit themselves to patriarchy. Miranda, just like Cordelia , appears as an object to be handed over from the father authority to the husband authority. Lady Macbeth is not able to think anything else beyond her husband‟s will and supports him in the wrong deed. Shakespeare‟s language had been the most authentic record which helps us judging the real perception of woman in his age. Women in Elizabethan age were judged upon their physical purity. The standard for this purity was their virginity. A woman was not allowed to step out of her wedlock and mix with other men except her husband. Shakespeare had labeled women with the disrespected term „whore‟. Frequently, Shakespeare had questioned upon women‟s moral character in his plays through his speakers. He defined woman in his play Hamlet as: “Frailty thy name is woman.” (I.ii. 99) Shakespeare‟s Characters seem to be misogynist in their attitude as far as woman is concerned. He has indignantly highlighted woman as a lustful creature. Below are some examples from King Lear where the language mirrors the image of women created by Shakespeare through the voice he has given to his male characters: Fool: For there was never yet fair woman but she made mouths in a glass. (III.ii.58) Fool : This is a brave night to cool a courtesan… And bawds and whores do churches build— Then shall the realm of Albion Come to great confusion. (III.ii.59) Edgar: A servingman, proud in heart and mind, that curled my hair, wore gloves in my cap, served the lust of my mistress' heart and did the act of darkness with her… (III.iv.63) Fool: He‟s mad that trusts in the tameness of a wolf, a horse‟s health, a boy‟s love, or a whore‟s oath. (III.vi.68) Edgar: O indistinguished space of woman‟s will! A plot upon her virtuous husband‟s life, And the exchange my brother. (IV.vi.96-97) Such scattered examples of biased treatment towards women can be found in many of the Shakespearean works. Shakespeare seems to be influenced by the contemporary notion for women predefined by the then male dominated society while creating such humiliating image of women. There is another dimension of thought that I would like to add before I reach to any biased conclusion through this paper. Every coin has two sides similarly a text could have various interpretations which might be different from the presentation. Here, I will try to imply post feminism on these female characters that have previously been declared as feminine. For that purpose we have to raise above all petty notions of gender roles and consider both men and women as „people‟. We consider the woman being suppressed by the patriarchy but if we closely look at the things we will be able to find that these female characters have been diplomat enough in accepting this dominance of patriarchy. I mean to say that this patriarchal system, to much extent, is self-imposed by woman herself. I will call all three women characters diplomat that I have dealt with, as they are all behind power, money and security. Women have been accepting the male dominance as they wish to be socially, economically and materially secured. We talk about Cordelia and Miranda who have been seen as the stereotypes of a good woman. Cordelia has divided her love for her father and husband into equal shares as she anticipates power and security in the return of that love. Miranda also enjoys power and security with her father and again becomes dependent upon Ferdinand becoming his wife. Shakespeare’s Selected Plays: A Feminist Perspective Surbhi Vijayvargeeya © INTERNATIONAL RESEARCH COMMUNION

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Goneril and Regan, after usurping the property of their father, compete to be Edmund‟s mistress or wife when suddenly he emerges as a powerful man. Goneril is even ready to leave her own husband for money and power. Regan, starts thinking of marrying Edmund instead of mourning at the recent death of her husband. Lady Macbeth is again an example of a diplomat female. She incites her husband to attain monarchy as she solves out her own purpose to be a queen through her husband. In this way all the females discussed above are highly individualistic. They do not exactly follow men‟s ordain but they willingly do what they want to do. Desire for money, power and security is common to all human beings and woman is also not untouched by this. We can universally state that every human being wants to attain money and power at any cost and gender is not an issue for them. Whether man or woman everyone is solving one‟s own purpose and that is the way we survive. I would like to conclude that Shakespeare‟s treatment to his female characters is essentially feminine which may be influenced by the prevailed notion of gender in his time. Yet, there is ample scope for a post feminist scrutiny in his plays. The only hindrance which stops us transcending from petty feministic notions to a broader and positive concept of post feminism is our prejudices for the opposite sex.

Works-Cited Primary sources: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

Shakespeare, William. King Lear. Ed. A. W. Verity. London: Cambridge University Press, 1959. Print. Shakespeare, William. Macbeth. Ed. Kenneth Muir. London: Methuen & Co. Ltd, 1962. Print. Shakespeare, William. The Tempest. New Delhi: Peacock Books, 2000. Print. Secondary sources: Dowden, Edward. Shakespeare: A Critical Study of His Mind and Art. New Delhi: Atlantic Publishers & Distributors, 2003. Print. Gupta, S. C. Sen. A Shakespeare Manual. Calcutta: Oxford University Press, 1997. Print. Hulme, Hilda M. Exploratios in Shakespeare’s Language. New York: Longman, 1962. Print. Kahn, Coppelia. “The Absent Mother in King Lear”. King Lear: New Casebooks. Ed. Kiernan Ryan. London: Macmillan, 1993. Print. Kurup, Ravindra. Crisis of Value in Shakespearean Tragedy. New Delhi: Anmol Publications Pvt. Ltd., 1997. Print. McLuskie, Kathleen. “The Patriarchal Bard: Feminist Criticism and King Lear.” King Lear: New Casebooks. Ed. Kiernan Ryan. London: Macmillan, 1993. Print. Nayar, Pramod K. Contemporary Literary and Cultural Theory. New Delhi: Longman, 2010. Print. Shakespeare, William. Hamlet. Lucknow: Prakashan Kendra, 1960. Print. Internet Sources: McRobbie, Angela. “Post- Feminism And Popular Culture”. Routledge. Feminist Media Studies, Vol. 4, No. 3 (2004) pp. 255-264. WEBLEARN. Web. 20 Aug. 2012. Orgel, Stephen. “Prospero‟s Wife”. University of California Press. Representations, No. 8, autumn (1984) pp. 1-13. JSTOR. Web. 23 Aug 2012.

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Capturing Synergies and Competitive Advantage to Take on Amazon though Acquisition of Myntra by Flipkart (CASE STUDY) Dr. Amit Kumar Sinha1, Sayed Zainul Haque2 1

Associate Professor, Amity Business School, Amity University, Mallhaur, Gomti Nagar Extn. Lucknow

[email protected], [email protected] 2

MBA, B.Tech. Student, Amity Business School, [email protected]

Abstract: An invention of WWW has revolutionized every domain of the world and taught us to do business in a unique way. Today with 3.19 billion Internet Users across the world of which 2.5 million in India (ranked 3 rd among number of users) itself it has become a hotspot for investors. As we see the developed countries like USA,UK are seeing a industrial life cycle to be in saturation stage whereas in developing countries like China and India they are still in infant stage. Today India has become a prime market for giants like Amazon ,eBay. India’s household name Flipkart is in with a mission. Its recent moves like “Billion Day Sale” and acquisition of Myntra has been subjects to ponder upon. The acquisition of Myntra (India’s largest fashion e-tailer) by Flipkart (India’s biggest e-tail company) brought together two of the biggest e-tailers in India. This acquisition made possible by common investors, the acquisition would enable Myntra to leverage on Flipkart’s infrastructure, while allowing Flipkart to strengthen its portfolio of product offering and outbound distribution logistic. The acquisition is being looked upon as a step towards, forward as well as horizontal integration and exploiting the operational synergy generated thereby. This consolidation is seen as a response to taking on Amazon which has made big plans for Indian market, to get a competitive advantage. In this case authors have made an attempt to analyze this philosophy and analyze its effects on the Indian e commerce market and economy on a whole. Keywords: Acquisition, Amazon, Competitive Advantage, Forward integration, Flipkart, , Myntra, Operational Synergy _________________________________________________________________________________________________

1. Introduction 22nd May 2014 would be remembered as one of historic days in the e-commerce industry of India. In the Myntra Headquarters at Bangalore the company’s co founders and chief executive Mukesh Bansal revealed the buy out of his firm by Flipkart. He briefed the media for the announcement with the introduction of his two new colleagues – Sachin and Binny Bansal, the founders of Flipkart. The three briefed about Myntra becoming a part of Flipkart but would continue to maintain its identity. They added that the deal was finalized in Singapore in Flipkarts quarterly board meeting held from 15 th May 2014 to 20th May 2014. Sachin Bansal (Flipkart’s Founder Member) said ” "Myntra is the leader in fashion today and we would love to work with and learn from Mukesh and Myntra." Apprehensions started coming forward when reports came out of Mukesh Bansal joining the Flipkart and heading the fashion segment of both the entities. In several reports which come forward Economic Times quoted “A holding company has been formed in which the founders of the two companies and their investors will hold stakes, according to multiple people who have direct knowledge of the deal. The employees who have stock options will also get a stake in the holding company. Myntra's policy of universal employee stock options will continue.” Arvind Singhal, Chairman of Technopak Advisors Pvt. Ltd., said, “The Flipkart and Myntra merger will create the first Indian e-tailing powerhouse, and provide a big fillip to India's still nascent but very promising e-commerce industry.” However, not all experts were of the same view. Mahesh Murthy, co-founder of Seedfund , said, “While this (deal between Flipkart and Myntra) may be good for investors, it might not be so good for the entrepreneurs and staff of these companies.” Swati Bhargava, cofounder of Cashkaro.com , said “…Consolidation of top two out of five players is probably not great from a customer perspective. It reduces competition and perhaps incentive for continual improvement.

2. Indian Online Retail(E-Tail)Industry In 2009, e-business in India had the value of $2.5 billion with 75% included in travel related business (airline tickets, railway tickets, hotel bookings, online mobile recharge etc.). India e-business is expected to touch $9 Billion by 2016 and $70 billion by 2020 with assessed CAGR (compound annual growth rate) of 61%. Online shopping ritual in India has had a slow journey and the reason is internet penetration is very slow and not considered to be very dependable. The things off late have been encouraging due to the changes made by the service providers and the well approached customer satisfaction at the click of a button and in the place, time he wants. Although there grass root problems exist, yet Online Shopping in India is evolving rapidly and has the potential to grow substantially in the times to come, as the internet penetration is reaching far and wide across the rural areas as well. Further, the Indian purchaser attitude is changing at a quick rate. The cash on delivery has helped a great deal for conventional purchasers to shop on the web. Today consumers are looking for value for money and online portals are able to cater their desires in terms of quality, on time delivery, quality post sale service and above all reasonable deals. These were the opportunity seen by founders of Flipkart. Thus the growth’s evident. We expect the revenue generated by e-commerce to be $15 million by 2017( refer to exhibit-3). Thus a lot of room for growth is left

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Thus we see that Indian market is growing with a rapid speed in the e-commerce field. To have a better understanding if we look at that the commodity wise distribution of the products we see that apparels and accessories accounts for 30% (refer to exhibit-04) which makes Myntra acquistion for Flipkart to continue to be the overall leader in the growing competition of e-commerce market in India.Indian e-tail industry players mostly followed an inventory-based model or a non-inventory-based model also known as the marketplace model. In August 2014, the players which followed the inventory-based model were Jabong.com , Myntra.com, Firstcry.com , zovi.com (all were online retailers) and players that followed the non-inventory-based model were Flipkart.com, Snapdeal.com , ebay.in , and Amazon.in (all were marketplaces). Industry experts felt the Flipkart and Myntra deal could start a phase of consolidation in the Indian online retail space which was worth about Rs. 139 billion (about US$2.32 billion) in 2012-13.

III. Emergence of Flipkart Flipkart is an electronic business organization established in 2007, by Sachin Bansal and Binny Bansal. It works solely in India, where it is headquartered in Bangalore, Karnataka. It is enrolled in Singapore, and possessed by a Singapore-based holding organization. As per Alexa Internet, Flipkart's site is one of the 10 most visited to sites in India. Flipkart is not an Indian organization since it is enrolled in Singapore and dominant part of its shareholders are outsiders. Since remote organizations are not permitted to do multi-brand e-retailing in India, Flipkart offers merchandise in India through an organization called WS Retail later developing into a market place. Flipkarts founders are, engineering graduates of 2005 from Indian Institute of Technology Delhi, who worked for Amazon. From a startup with a venture of simply $8,000 Flipkart has developed into a $100 Million income online retail monster in only five years. They came in the E-commerce Industry with an idea to sell books including novels online however they started as a price comparison platform since there weren't enough e-commerce sites to compare So, both the Bansals, who were colleagues at IIT Delhi, and then at Amazon.com, thought, “why not start an e-commerce site?”. When they thought for a name which did not just speak of books alone, but one that could suit any category of Products that they may add in future , a name which was easy to remember and catchy so they came up wth Flipkart which means ‘Flipping things into your Kart’. On 5th September 2007 Bansals launched the company’s URL i.e. Flipkart.com for the first time in just an apartment room. Experts feel the cash-on-delivery model adopted by Flipkart has proven to be of great significance since credit card and net banking penetration is very low in India. The founders had used $8,000 just for making site to set up the business. However they have had various rounds of funding being the highest in India of about $1.8 Billion in various rounds till July 2014 (refer to Exhibits 01-02). However in the December it declared to complete the 11th rounding and taking the investments to $ 2.5 billion. When we look at there sales figures it was follows Financial Year 20082009 20092010 20102011 20112012

    

Sales Figures(in INR) 40 million 200 million 750 million 5 billion

Experts have projects its sales to reach 10 billion by year 2014 and 50 billion by 2015.On an average, Flipkart sells nearly 10 products per minute. On 6 October 2014, they created history in e-commerce history by selling products worth INR 650Crore in 10 hours in a special one-day event - "The Big Billion Day".On the other hand their hard-won reputation for good customer service got a hit because of technical problems, and angry reactions on social media from buyers disappointed with the pricing and availability of products. Their founders wrote an apology email which was a rare feet in Indian culture. Flipkarts has always being a firm who could have been its competitor or can contribute to its growth. Thus ,they have worked on acquiring the start ups and the list can be drawn as: 2010: WeRead, a social book discovery tool 2011: Mime360, a digital content platform company 2011: Chakpak.com,a Bollywood news site thatupdates news, photos and videos. 2012: Letsbuy.com,Indian e-retailer in electronics estimated US$25 million deal. 2014: Myntra.com in an estimated INR 2,000 crore deal. Thus we see that Myntra is a recent adding to this series so we lets see what has been the road for Myntra as of now.

IV. Myntra- The fashion leader Myntra was established by three IIT graduates Mukesh Bansal, Vineet Saxena and Asutosh Lawania in February 2007 . The vision while establishing was to make India's biggest on- request personalization portal. . It started as a website catering to B2B (business to business) segment with personalization of gifts like T-shirts, mugs and caps, calendars, chains and many more. When enquired about the Capturing Synergies and Competitive Advantage to Take on Amazon though Acquisition of Myntra by Flipkart (CASE STUDY)

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idea of the name “Myntra” its Co founder Ashutosh Lawania says. "We shortlisted 10 names, some more inclined to Hindi and the others to English. We finally picked this one as it played on the word Mantra and still had a modern feel to it," However, in 2010, the company shifted its strategy by becoming a B2C (business to customer) oriented firm. In initial three years it became India’s largest on demand personalization platform with over a 50% market share . The turn around came in December 2013, when it ventured into fashion and today has become the market leader of online space. They have received funding from initial days and till today has generated capital worth $158. Myntra also adapted the expansion strategy through acquisition and have acquired the following firms. 2012-Sher Singh a private label fashion wear 2013 – Fitiquette , a virtual fitting room technology company

V. A Glimpse of Flipkart and Myntra Deal It is a 100% acquisition of Myntra by Flipkart Myntra has been valued at INR 2,000 crore Myntra will continue to operate its website Identities of both portals will continue to exist as it was before the deal. Myntra CEO, Mr.Mukesh Bansal will join the Flipkart board and oversee Flipkarts fashion business. Myntra inventory maintenance procedure will be followed by Flipkart The deal details were given by CEO’s in a press conference. “It is a 100% acquisition and going forward, we have big plans in this segment. Flipkart and Myntra are getting together to create one of the largest e-commerce stories and together we will dominate the market”. Flipkart co-founder and CEO Sachin Bansal . Mukesh Bansal , CEO , Myntra “ I am satisfied with the evaluation of Myntra at INR2,000 crore . I feel it is fairly evaluated.”

VI. Why this great Bansal Wedding? 1. 2.

In order to understand, the motive behind this acquisition, we look into two aspects Strategic- to take on Amazon Synergy- Operational & Financial Synergy To begin with, if we look into the strategic relevance of this acquisition. We feel that the entry of the Amazon into Indian market was a threat call for Indian players and on the domestic front increase in the numbers of competitors like Snapdeal was having an adverse effect on Flipkart. Soon the management realized that in such competition from domestic as well as international players sustaining the competitive advantage is big challenge. Then Flipkart management started looking for strategic move for sustainability. After making competitor analysis, they thought about expansion strategy. And they went forward with acquisition of Myntra which gave them the desired competitive advantage with both vertical and horizontal integration. Vertical Integration as we know is an expansion plan in which company focuses on the point on the same path business. Through this acquisition it will help Flipkart in improving its logistics network as it can utilize and learn from Myntra’s self owned logistic network. As Flipkart has faced issues with its logistics network “E-Kart” so it can utilize the Myntra’s logistic network to enhance its delivery. On the other hand if we see the horizontal integration which focuses on the acquisition or merger of similar nature of firms, here Myntra’s addition to Flipakrt’s army would help it compete in the area of fashion in which it was lacking behind. Myntra which is the country biggest fashion store will help catering to the customers which Flipkart lost due to lack of collection or varieties which is a major requirement in this sector. Here Myntra too can benefit as it can utilize the database of Flipkart and therby generate better traffic along with focusing on increasing the profit margins by bargaining with the vendors as it has two warehouses to manage now thus greater quantity to procure. Well lets look onto the Synergy accept as well. In simple words synergy is the creation of a whole that is greater than the simple sum of its parts. When we look at this acquisition at this point we look into corporate synergy when corporations interact congruently. A corporate synergy refers to a financial benefit that a corporation expects to realize when it merges with or acquires another corporation. Thus synergy is of various forms:

Financial: By combining it would help negotiate their debt capacity as Flipkart was estimated with loss of 400 crores INR for 2013-14 (estimated by techcircle.in).This would help them over come this mutually benefitting each other.

Marketing: Both the firms can will mutually benefit in utilizing the huge database of customers for campaigns and promotion. They both can now addresses a huge section of people at one go.

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Source :Industry Estimates

Operational: In the field of e-commerce the foremost challenge faced by the service provider is enhanced delivery service. With the expected launch of drone services by its competitors they can maintain the competitive advantage with the help of self owned logistics network. Myntra has launched its own logistics firm named “Myntra style delivery “which has been as successful as delivering the product in 58 minutes in Delhi and Bangalore. Flipkart too has its own logistics named “e-Kart “which has faced various hurdles recently which has disappointed lot of customers recently. After this acquisition they want to stand out in logistics as they want to have their own providing the best customer experience. Myntra’s operation head Ganesh Subramaniam said “One of the biggest advantages is obviously customer experience. For instance, is a customer wants the order to delivered at the office instead of his or her home, a third party wouldn’t do it. When you have your own logistics, this becomes possible. The other thing is that when you’ve hit a certain scale, delivering via your own logistics is cheaper” Management: Myntra CEO, Mr.Mukesh Bansal who joined Flipkart board after the deal and was expected to oversee Flipkarts fashion business. Recently he has been set to play a bigger role as he now is the Marketing Chief of Flipkart along with looking after the computer and electronics segment too. Cost: As they both the parties to continue to hold their individual existence and as part of the deal that both start maintaining inventory. Now they will be in a better position to negotiate with the vendors and thereby reducing the cost. Revenue: By joining hands they are expected to get 50% of the organized lifestyle market as a combination of Flipakart and Myntras present share of the market. In future they want it to increase to 70% of the share and increasing their revenue..

Market Share Other's 35% Flipkart+Myntra 65% Source :Industry Estimates

VI. CONCLUSION Today the world has become a global village and no sector remains untouched. With the entry of a global player like Amazon in the Indian e tail market becomes competitive and Indian players like Flipkart , Myntra , Snapdeal are supposed to face stiff competition. In such scenario Indian players like Myntra and Flipkart have taken the right step towards by consolidation. As this deal is in native phase so lot consequences are yet to occur but in the current work an effort has been made to work out the expected synergy which may arise over the long period of time in future. On the basis of available information it may be concluded that the acquisition of Myntra with generation of synergy especially operational synergy which is quite observable in terms of enhanced supply chain logistics and extended market shares. Right now we are not in the condition to make any comments in terms of financial synergy as these two companies are not public limited companies. Hence the financial information is not available in public domain. However Flipkart who has raised $700 million (Rs 4,300 crore), less than six months. This Bengaluru-based company saw participation from new investors, including Greenoaks Capital, Steadview Capital and Qatar Investment Authority, along with existing investors such as DST Global, ICONIQ Capital and Tiger Global. For the year, 2014 Flipkart has raised a total of $1.9 billion and close to $2.7 billion since its inception. With this it is now valued at about $11 billion (Rs 69,000 crore), more than some of the country's largest consumer companies.

VII. Teaching Notes Capturing Synergies and Competitive Advantage to Take on Amazon though Acquisition of Myntra by Flipkart (CASE STUDY)

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Synopsis In the current era of information technology, e-retail industry across the globe has become one of the most emerging industries. Indian market where brand awareness is quite high but availability of brand is relatively low, the opportunity for e-retail industry is huge. In last few years Indian e-retail industry has witnessed a lot of domestic players like Flipkart, Myntra, and Snapdeal etc. But with the entry of a global player like Amazon in the Indian e-retail industry becomes competitive and Indian players like Flipkart, Myntra, Snapdeal are supposed to face stiff competition. In such scenario two Indian biggies, Myntra and Flipkart have taken the strategic move of consolidation to take on Amazon. This acquisition is very significant from strategic point as well as synergy generation point. If we look into the strategic perspective of acquisition, definitely it has given Flipkart an upper hand over Amazon. In terms of competitive advantage, the market share and penetration of Flipkart has been increased. With this acquisition Flipkart now gets an edge over its competitors in the fashion apparel segment. We analyzed the synergies generated from this acquisition, and saw that there is both financial & operation synergies been generated for Flipkart.

Teaching Objectives a) b) c) d) e)

Evaluate the Acquisition of Myntra and its potential synergies Study the benefits of the deal to Flipkart and Myntra To analyse the competitive advantage through consolidation Analyze the future challenges which Indian ecommerce players could face with the global majors focusing on India. This case is meant for MBA students as a part of the Merger and Acquisition/ Business Strategy curriculum .

Learning Outcomes a) b) c) d)

Understanding about the competition in Indian e-retail industry Expansion strategy to gain competitive advantage Forward and horizontal integration for market penetration Synergies through consolidation

Discussion Question Q.1 Q.2 Q.3 Q.4 Q.5 Q.6

What are the major motives you analyzed behind acquisition of Myntra by Flipkart? What kind of synergies you see in this acquisition? Do you think after acquisition Flipkart will get competitive advantage? What do you think, after acquisition of Myntra, Flipkart would be able to take on Amazon? What kind of future challenges you see in Indian e-retail industry? Will Flipkart get benefited by Myntra’s distribution network?

EXHIBITS EXHIBITS 01-

Source: yourstory.com

EXHIBITS 02

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Source: yourstory.com

EXHIBITS 03 $20.00

E-commerce in Billion USD

$10.00

$2009

2010

2011

2012

2013

2014

2017

Source: Crsil, IAMAI, PwC analysis and Industry experts

EXHIBITS 04-

REFRENCES WEB REFERNCES: 1. 2. 3. 4. 5. 6. 7.

TaslimaKhan ,Flipkart buys Myntra: A deal which is win-win for both , Business Today ,May 2014 http://businesstoday.intoday.in/story/flipkart-buys-myntra-impact-on-fashion-e-retail-sector/1/206484.html (accessed on 5th September 2014 at 7 :00 pm) AlokSoni, Everything you wanted to know about the Flipkart-Myntradeal ,Youstory.com May 2014 http://yourstory.com/2014/05/flipkart-myntra-acquisition/ (accessed on 6th September 2014 at 8:00 PM) AlokSoni, Quick fact file of Myntra-Flipkart dealYoustory.com May 2014 http://yourstory.com/2014/05/myntra-fipkart-merger/ (accessed on 6th September 2014 at 8:10PM) Why Flipkart and Myntra Should Explore Synergies. Next Big What http://www.nextbigwhat.com/flipkart-myntra-explore-synergies-297/ (accessed on 11th September 2014 at 8:10PM) ShradhaSharma,Did you read between the lines of Flipkart and Myntra deal? Entrepreneurs don’t miss this, May 2014 http://yourstory.com/2014/05/flipkart-myntra-deal/ (accessed on 6th September 2014 at 8:20PM) Flipkart&Myntra Merger Is a Done Deal; FlipkartTo Raise Another Round of Funding, nextbigwhat.com http://www.nextbigwhat.com/flipkart-acquires-myntra-funding297/ (accessed on 10th September 2014 at 8:30PM) Amazon's Perfect Timing for India , Forbes India Jul 2, 2013 http://forbesindia.com/article/big-bet/amazons-perfect-timing-for-india/35517/1 (accessed on 10th February 2014 at 8:30PM)

Research Paper 1.

Flipkart-Myntra; From a Merger to an Acquisition (http://www.ripublication.com/ijmibs-spl/ijbmisv4n1spl_10.pdf) International Journal of Management and International Business Studies. ISSN 2277-3177 Volume 4, Number 1 (2014), pp. 71-84 © Research India Publications http://www.ripublication.com

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Evolution & Prevailing Condition of Primary Education in India Dr. Ritesh Dwivedi1, Arunima Naithani2 1

Assistant Professor, Amity School of Rural Management, Amity University, Noida UP 2 Amity School of Rural Management, Amity University NOIDA UP.

Abstract: Education is the pillar for the society to achieve its socio-economic development. It transforms human beings from ignorance to enlightenment, from shades of social backwardness to light of social amelioration and a nation from underdevelopment to faster social and economic development. The true meaning of education is somewhere lost in the midst of dark cloud of money making. Swami Ramakrishna Paramhansa once said ‘When you swim on the surface, you get cheap shells. To get real pearls you have to dive deep.’ Our educational system, at present is swimming on the surface it has to dive deep into our education ocean to get quality gems. In present scenario, our education system is not strong enough as our leaders and mentors wanted it. Primary education is still facing tougher challenges and universal elementary enrollment is also far away from target. The number of children, particularly children from disadvantaged groups and weaker sections, who drop out of school before completing upper primary education, remains high. The quality of learning achievement is not always entirely satisfactory even in the case of children who complete elementary education. It is very ironic to observe the breach between the two new classes in Indian education society: the elite and the masses. Bags jam-packed with books, long routes to cross, no sign of joyride only fear of burden and beating. Children’s' may have been given the right to study but have no right to understand what they are studying, how it will brighten their future. Keywords: Education research, _________________________________________________________________________________________________

I. Introduction There are different meanings of Education by different philosophers and scholars from India and Abroad. But the one which comes closest to its core is that education is what remains with you after you have forgotten all what you learnt at school, college or university. Jean Piaget rightly defined, „the principle goal of education in the schools should be creating men and women, who are capable of doing new things, not simply repeating what other generations have done, men and women who are creative, inventive and discoverers, who can be critical and verify and not accept , everything they are offered.‟ In technical sense, the definition of education is the process which society deliberately transmits its accumulated knowledge, skills and values form one generation to another. A student only successfully learns when the information processed can be interpreted in a unique fashion by the student. It is not enough to simply repeat the definitions back to the person testing them. The question, therefore, arises as to where have the things gone wrong? How the creators of history have become its creatures. Education has literally come to mean just a paper degree, the teaching has been reduced to transfer of notes, from the professor‟s note- book to the student‟s exercise book, through his/her pen, without entering into the mind of either. The process of learning does not take place in our class rooms and even in the coaching classes. The true meaning of studentteacher relationship has become a passé. 1 As it is proven that human beings are social animals and are the wisest of all animals by virtue of one and only thing that is the extraordinary power of thinking and emoting. And this quality adds on to become our basic necessities which are: food, shelter, clothing and education. As the modern 21st century is completely propelled by knowledge acquired by all means, education to all has become the focus of attention all over the world. Education- both formal and informal- accounts for all our endeavors. Despite the mandatory Acts and commitment to provide “free and compulsory education for all children until they complete the age of 14” and with the target of Millennium Development Goal 2 (MDG) to achieve Universalization of Elementary Education (UEE) it has only shown substantial improvement in the quality but the major concern of drop-outs and the average years of schooling still remains unanswered. Regardless of recent unprecedented economic growth, India still faces a big challenge in fighting poverty. With the growing population of 1.2 billion, educational opportunities are becoming more uneven, marked by wide regional and social disparities, especially for children studying in schools in rural areas. Our social system which is graded into diverse layers is based on class, caste, gender, and religion and with the unequal social, economic and political situations, which exists and deeply influences the access to quality education for children and their participation in the learning process is badly affected.

II. Literature Review This study has been reviewed from a book written by S.K. Kochhar, on “Pivotal Issues in Indian Education”, Education in Ancient India. 1

Khullar, K K, Edition : May 2011, Article: “The meaning of Education”, Magazine: Kurukshetra,

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“There is no country where the love of learning had so early an origin or has exercised so lasting and powerful an influence as in India.”

III. Evolution of Education System: Ancient to Pre-Independence Period

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Historical overview, the glorious past: Indian civilization goes back to about 5000 years, learning and education is deep-rooted in our nation. Indians had a great reverence and love for education since their first appearance in authentic history; they have enjoyed the reputation of being a learned people. Vedic education was introduced by Aryan civilization, because for every Aryan it was more or less compulsory. For every boy- the Brahmans, the Kshatriyas and the Vaishyas it began at the age of 8th and lasted till the age of 24th. Then the Buddhism and Jainism learning came, which was centered round monasteries. Some of the monasteries, especially those at Nalanda and Taxila, had acquired an international reputation. 1 There was a large network of elementary schools called Maths, and Tols there were also Viharas- centers of higher education-which were residential universities well known among them are Nalanda, Vikramsila, Taxila, Odantapuri and Jagaddala. And the only comparable university in the ancient world was the one in Alexandria in Egypt. The early decades of British rule, during the period of East India Company (1765-1813), there was no interest in the education of the people, because the languages they neither understood nor appreciated. The period of 1813-1834 was the years of increasing popularity of English as medium of higher education in preference to Arabic and Sanskrit. Persons like Raja Rammohan Roy, Radhakant Dev and others were feeling the need for a new type of education. In this period first HINDU COLLEGE was established for the education of children of the upper and middle classes of the Indian society in European Sciences and English Literature. In 1854, Sir Charles Wood, then President of the Board of Control to Government of India, gave his official report, popularly known as Wood's Despatch. The chief provisions of the Despatch were: The Sovereign power declared its responsibility of educating the masses; a separate Department of Public Instruction was created in each of the five provinces- Bengal, Madras, Bombay, North West Province and Punjab. D.P.I was to be assisted by an adequate number of inspecting officers; Universities on the model of London University should be established to hold examinations and confer degrees; Teacher training institutions should be opened; A network of graded schools should be set up; and A system of grants-in-aid be set up Wood's Despatch is still known as the foundation of Indian education, for it is said to have laid the fundamentals of our present system of education. In 1882, the GoI appointed Education Commission- the Hunter Commission, to enquire into the principles of Wood's Despatch and to make recommendations to the Government for necessary changes. In 1882-1902, during this period there was considerable expansion in the field of secondary education, partly to the enthusiasm of private enterprise or due partly to the system of grants-in-aid. At this period, education was taken as a major issue by Indian leaders. The new scheme favored by the Indian leaders included technical and vocational education. In the era of 1929, there was rapid expansion of education which resulted in the dilution of quality and education became largely ineffective and wasteful. The committee proposed the introduction of diversified curricula at the secondary level, placed more emphasis on industrial and commercial subjects. The committee drew the attention of the authorities to the problems in education system of stagnation and wastage, the disparity in literacy between men and women, high percentage of failures at the matriculation level, lack of industrial and vocational training and the massive rush of admission at the university level. 2

1. Developments in Education Sector After Independence When the Britishers left our country in 1947, they left behind a very well-articulated system of education for about a century (1854-1947) and their solicitude for the rapid promotion of education in India. But our opening balance, one the eve of freedom, in every sector of education was extremely meager and disappointing. Little attention was paid to pre-primary education and it was not even regarded as a state responsibility. Pre-school education was a non-entity. For the first time, its importance was emphasized in the Sargent Report of 1944 which recommended an adequate provision of pre-primary education as an essential adjunct of national system of education. It, however, remained only an idea when India became free. The total enrolment in the age-group 6-11 was 41 lakh, which meant hardly 35% in this age group in the primary schools. There were 5,000 secondary schools with enrolment of 8, 70,000 or 4% of the children of the 14-17 age groups. The 19 universities and 400 colleges had an enrolment of 2, 50,000. The total expenditure on education was Rs.57 crores or 0.5% of the total revenue of the government. There was no national system of education in the country and English language dominated at the secondary and the college stages.3 Thus free India had not only to tackle the problem of expanding educational facilities and bringing schools to school less villages and towns, but also to reorganize the entire educational system. This was the biggest task before the nation. As foreign rules wanted to make the optimum profit out their mindless exploitation of the masses, they wanted the majority of Indians to remain illiterate and impoverished. The poverty of people was used for their advantage in the form of cheap labor and the poor people of our country were

Kochhar,S K, ―Pivotal Issues in Indian Education‖, Education in Ancient India, available at http://books.google.co.in/books Kochhar,S K, ―Pivotal Issues in Indian Education‖, Education in Ancient India, available at http://books.google.co.in/books 3 Service sector in Indian Economy by Talluru Sreenivas, available at http://www.google.co.in/search?tbm=bks&hl=en&q=Service+sector+in+Indian+economy&btnG= 1 2

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employed both at home and abroad to produce a number of goods which won the rulers both name and prosperity. Therefore after our country started thinking of its priorities, the first of all that came to the force was recognized as education. However, soon after India achieved its Independence on 15th August, 1947, a fully fledged Department of Education (under the MHRD) was established on 29th August 1947. The nomenclature and responsibilities of the Education Department has undergone many changes from time to time since Independence. India's first Minister of Education, Maulana Abul Kalam Azad, envisaged strong central government control over education throughout the country, with a uniform educational system. 4 But the problems of access, quantity, quality, relevance and financial outlay, as a result, accumulated over the years. Thus, the new National Policy on Education (NPE) was adopted in May, 1986 after a comprehensive appraisal of the existing educational scenario. The Policy laid great emphasis on developing a national system of education, elimination of disparities in the educational system and provision of more facilities through qualitative interventions. One of the significant aspects of the NPE, 1986 was the greater concern for the: - Empowerment of women, access to education to disadvantaged sections of the society, educationally backward minorities and Disabled people. 5 The Policy gave added impetus to the launching of a large scale programme of non-formal education, boldly acknowledging that the school system cannot reach all children. In order to nurture rural talent, the establishment of Navodaya Vidyalayas (model schools) with residential facilities, was also made part of the NPE. It also called for greater rigour and discipline in academic pursuits, autonomy and accountability, experimentation and innovation, nurture of excellence and modernization of processes at different levels of education.

2. Key Programmes: Post NPE

1. 2. 3. 4. 5. 6. 7. 8.

This study is reviewed through an article on, ‗The Challenges for India's Education System‘ by Marie Lall, Chatham House. 6 The new policy was intended to raise education standards and increase access to education. At the same time, it would safeguard the values of secularism, socialism and equality which had been promoted since Independence. The central government committed itself to financing a portion of development expenditure, and around 10 per cent of primary education is now funded under a centrally sponsored scheme. The key legacies of the 1986 policy were the promotion of privatization and the continued emphasis on secularism and science. Another consequence of the NPE was that the quality of education in India was increasingly seen as a problem, and several initiatives have been developed since in an attempt to counter this: Operation Blackboard (1987–88) aimed to improve the human and physical resources available in primary schools. Non Formal Education Scheme (1988) an alternative delivery system of education for children who are not able to participate in the formal elementary school Restructuring and Reorganization of Teacher Education (1987) created a resource for the continuous upgrading of teachers‘ knowledge and competence. Mahila Samakya (1989) to translate the goals enshrined in the NPE into a concrete programme for the education and empowerment of women in rural areas particularly those from socially and economically marginalized groups. Minimum Levels of learning (1991) laid down levels of achievement at various stages and revised textbooks. Lok Jumbish (1992) was ‗to develop, demonstrate, catalyze and transform the mainstream education system with the objective of ensuring that every child has access to basic education (Grades I to VIII).‘ DPEP (1993) emphasized decentralized planning and management, improved teaching and learning materials, and school effectiveness. National Programme for Nutritional Support to Primary Education (1995) provided a cooked meal every day for children in Classes 1–5 of all government, government-aided and local body schools. In some cases grain was distributed on a monthly basis, subject to a minimum attendance. The development of non-formal education despite Nehru‘s visions of universal education, and the intentions of the Kothari Commission to provide all young children with free and compulsory schooling, a significant proportion of India‘s young population remained uneducated by the 1970s. To address this problem, the Centrally Sponsored Scheme of Non Formal Education was set up to educate school dropouts, working children and children from areas without schools. It started on a pilot basis in 1979 and expanded over the next few years to cover ten educationally backward states. Other schemes specifically targeted at marginalized groups, such as disabled children, and special incentives targeting the parents within SC and ST was also introduced. 7 The census provided a positive indication that growth in female literacy rates (11.8%) was substantially faster than in male literacy rates (6.9%) in the 2001-2011 decadal periods, which means the gender gap appears to be narrowing. Kerala retained its position by being on top with a 90.86% literacy rate, closely followed by Mizoram (88.80%) and Lakshadweep (86.66 %). Bihar with a literacy rate of 47.00% ranks last in the country preceded by Jharkhand (53.56 %) and Jammu and Kashmir (55.52 %).

4

May 2010 ,“Education Now A Fundamental Right”, Competition Success Review, Kochhar,S K, ―Pivotal Issues in Indian Education‖, Education in Ancient India, available at ‗http://books.google.co.in/books‘ 6 Lall, Marie, "The Challenges for India‘s Education System" ASIA PROGRAMME ASP BP 05/03, APRIL 2005available at 5

http://cfsc.trunky.net/_uploads/Publications/3_challenges_for_indias_education.pdf 7 Lall, Marie, "The Challenges for India’s Education System" ASIA PROGRAMME ASP BP 05/03, APRIL 2005available at http://cfsc.trunky.net/_uploads/Publications/3_challenges_for_indias_education.pdf Evolution & Prevailing Condition of Primary Education in India

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Kerala also occupies the top spot in the country both in male literacy with 94.24 per cent and female literacy with 87.72 per cent. On the contrary, Bihar has recorded the lowest literacy rates both in case of males (59.68 %) and females (33.12%).

3. Inclusive Education From an analysis study of Sarva Shikhs Abhiyan on ‗Overview of Inclusive Education‘ Not only illiteracy, but also regional, social, gender and caste based inequality in literacy are some of the features of literacy in India The government of India launched several programs after Independence to uplift literacy in the country. In order to achieve inclusive education it has provided incentives to the children belonging to Scheduled Castes and Scheduled Tribes and also to the girls. 8 Amartaya Sen also emphasized that the solution of all problems, be they related to economy, development or population lies in education. After 6 decades of investments in education, India the largest system of education after China, has realized that the benefits of knowledge are growing and fruitful. The census of India, 2001, listed the Literacy rate by Caste Group and Sex. Table given below shows a darker picture of literacy in India, where female literacy is hardly touching 50% and male literacy rate in different section is also between 59-75%. This is not an encouraging sign for a country which raring to achieve its place among top five world economies. Table 1: Literacy Rate by Caste Group and Sex Categories General Literacy

Scheduled Castes

Scheduled Tribes

Types Person Male Female Person Male Female Person Male Female

Literacy (%) 64.8 75.3 53.7 54.7 66.6 41.9 47.1 59.2 34.8

Source: Literacy rate by Caste Group and Sex, Census of India, 2001 Schools in India: It is clear from the table below that number of upper-primary schools is increasing rapidly. There has also been an upsurge in the enrolment of girls in both primary and upper-primary schools. The ratio of primary to upper-primary enrolment has come down from 3:2:1 during 1999-2000 to 2:8:1 during 2004-2005. This relatively poor enrolment in upper primary is because of a lingering tendency among many poor families to consider that schooling up to class V is enough for children. Table 2: Upper Primary and Primary Schools Particulars Number of primary schools Number of upper-primary schools Teachers in primary schools Teachers in upper-primary schools Student enrolment in primary schools Student enrolment in upper-primary schools Annual growth of primary schools since 1997-98 Annual growth of upper-primary schools since 1997-98 Annual growth rate of boys in primary schools since 1999-2000 Annual growth rate of girls in primary schools since 1999-2000 Annual growth rate of boys in upper-primary schools since 1999-2000 Annual growth rate of girls in upper- primary schools since 1999-2000

No. 7,67,520 2,74,731 23,10,800 14,39,146 131.69 million 51.67 million 2.7 % 6.9% 1.7% 5.2% 2.2% 6.5%

Source: Planning Commission working groups, Date: 30 September 2004 This table also shows an interesting trend where despite all obstacles girls are showing far better growth rate in both primary and upperprimary schools. If obstacles of girl education can be removed, our literacy program will touch new heights in very short span of time.

4. Student Attendance in Primary Schools9 The average primary school NAR in India is 83 % according to data from a DHS conducted in 2005 and 2006. However, the national average hides considerable regional variation in primary school attendance. India is divided into 28 states and 7 union territories. With the DHS data it was possible to calculate the primary school NAR in 29 states and territories. 10The states with the highest primary school NAR, between 98 and 99%, are Himachal Pradesh, Kerala, and Tamil Nadu. In these states, virtually all children of primary school age are in school. Six other states also have primary NAR values above 90 percent: Assam, Goa, Gujarat, Maharashtra, Mizoram, and Uttarakhand. In 15 states and territories the primary NAR is between 80 and 90%. In 6 states, fewer than four out of five children of primary school age are in school: Arunachal Pradesh, Bihar, Jharkhand, Meghalaya, Nagaland, and Sikkim. By far the lowest primary

8

SSA, 'Overview Of Inclusive Education, available at http://ssa.nic.in/inclusiveeducation/overview-on-inclusiveeducation/OVERVIEW%20OF%20INCLUSIVE%20EDUCATION.pdf/view 9 Lall, Marie, "The Challenges for India‘s Education System" ASIA PROGRAMME ASP BP 05/03, APRIL 2005 10 Primary NAR In India By State And Territory,2006 , Source : India DHS 2005-06

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school attendance rates are observed in Bihar (59 %) and Meghalaya (60 %), two of the poorest and economically least developed states of India.11

IV.

Research Methodology

This study is based on secondary data and various studies, research papers and reference material which have been reviewed and evaluated for the methodology, also using the reports of archive studies on primary education in rural areas. The policies framed for the elementary education system in India, which will help in exploring the relevant framework and understanding of complex issues in elementary education in rural areas. The focus of this article is to discover the role of different policies designed to achieve Universal Elementary Education and also which can be an effective medium in delivering quality education in primary schools in rural areas. This will help in analyzing in the reducing drop-out rates, improvement in enrolment, retention rates of students and providing an alternative mechanism. Through different reports and studies on the conditions of elementary education, this study is based on assessing the role of stakeholders and present functional models used for providing elementary education in primary schools, reviewing the National Policies for School Education.

V. Analysis and Discussion Milestones of Primary Education12: Since 1950, impressive progress has been made in every sphere of primary and upper primary   



  

education. Some key achievements have been listed below:-In 1950-51, there were about 210 thousand primary and 14 thousand upper primary schools. In 1998-99, there were about 627 thousand primary and 190 thousand upper-primary, thus showing an average annual growth of 2.30 and 5.58 per cent per annum. As many as 83% of the total 1,061 thousand habitations have access to primary schooling facilities within 1km and 76% habitations to upper-primary schooling facilities within a distance of 3km. About 94% and 85% of the total rural population is accessed to primary and upper primary schools/sections. The ratio of primary to upper primary schools over time has improved which is at present 3.3. More than 84% of the total 570 thousand primary schools in 1993-94 had school buildings. The number of teachers both at the primary and upper primary levels of education over time has increased many folds. From a low of 538 thousand in 1950-51, the number of primary school teachers in 1998-99 increased to 1,904 thousand. Upper primary teachers during the same period increased from 86 thousand to 1,278 thousand. The pupil-teacher ratio is at present 42:1 at the primary and 37:1 at the upper primary level of education. Despite the significant improvement in number of teachers, the percentage of female teachers is still low at 35% and 36% respectively at the primary and upper primary level of education. However, the majority of teachers, both at the primary (87%) and upper primary (88%) levels are trained. Enrolment, both at the primary and upper primary levels of education, has increased significantly. From a low of 19 million in 1950-51, it has increased to about 111 million in 1998-99 at the primary and from 3 to 40 million at the upper primary level. At present, the GER is 92% and 58% respectively at the primary and upper primary level of education. The percentage of Girl‘s enrolment to the total enrolment at the primary and upper primary level of education in 1989-99 was about 44 and 41%. Despite improvement in retention rates, the dropout rate is still high at 40% and 57% respectively at the primary and elementary level of education. The transition from primary to upper primary and upper primary to secondary level is as high as 94% and 83%.

Universal Literacy: Yet To Be Achieved

    

Literacy in India13 is a key for socio-economic progress, and the Indian literacy rate grew to 74.04% in 2011 from 12% at the end of British rule in 1947.Although this was a greater than six- fold improvement, the level is well below the world average literacy rate of 84%. There is a wide gender disparity in the literacy rate in India: effective literacy rates (age 7 and above) in 2011 were 82.14% for men and 65.46% for women. Here some key facts and figures have been presented which are showing some alarming condition. Despite marked achievements in recent years, only 55% of female respondents in NFHS-3 and 78 % of male respondents are literate. Literacy is increasing dramatically among women. While only 38 % of women age 45-49 are literate, 74 % of women age 15-19 are literate. In rural areas only 46% of women are literate, compared with 75 % of women in urban areas. Only 19 % of women from the poorest households are literate, compared with 90 percent of women from the wealthiest households. Women‘s educational gains are slower after primary school; girls are now almost as likely to attend primary school as boys. Nationwide, 85 % of boys and 81 % of girls age 6-10 are attending school. After primary school, however, girls in rural areas fall behind by ages 15-17, 49 % of boys but only 34% of girls in India are still attending school. At every age, children from rural areas are less likely to be attending school than urban children.

Graph 1: School Attendance By Age, Sex And Residence 11

Huebler, Friedrich, December 09, 2007,'Primary school attendance by state in India', available at 'http://huebler.blogspot.com/2007/12/primary-school-attendance-bystate-in.html' 12 Pratham, January 14, 2011,'Annual Status of Education Report (Rural)','http://www.asercentre.org/' 13 UNESCO: Literacy, UNESCO

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AGE 6-10, URBAN 79

AGE 6-10, RURAL

84 81 83

AGE 11-14, URBAN 66

AGE 11-14, RURAL 28

AGE 15-17, RURAL 0

20 FEMALE

79

51 52

AGE 15-17, URBAN

88 88

47 40

60

80

100

MALE

Source: Nfhs-3 India 2005-06 Disparities in education between boys and girls are particularly evident in Rajasthan, Bihar, Jharkhand, Andhra Pradesh, Orissa, Uttar Pradesh, and Chhattisgarh. On the other hand, girls are slightly more likely to be attending school than boys in Mizoram, Delhi, Nagaland, Sikkim, and Kerala. At every age, children from rural areas are less likely to be attending school than urban children, but the urban-rural differences are much smaller for boys than for girls.

Out-Of-School Children Rural children account for a proportionately larger share of the children ‗Not Attending‘ school in India compared to their share in total population as well in comparison with their shares in urban children. The share of rural children in total population was 78% while share of rural in all children ‗Not Attending‘ school was 86% in 2004/05. 14

Graph 2 SHARE OF CHILDREN (6-13 YEARS) NOT ATTENDIND SCHOOL: PROGRESS IN AND DIFFERECES ACROSS RURAL AND URBAN INDIA

60% RURAL

40% 20%

URBAN

0% 1986/87

1995/96

1999/2000

2004/05

Source: World Bank Report, 2008 However, this does not mean that there has been no progress in rural areas. As a share of population, children ‗not attending‘ school in rural areas has reduced from 47% in mid-1980s to 14% in 2004/05. In urban areas, the corresponding decline was from 23 % to 8 %. Thus, though urban area has lesser number (and proportionately lesser population) out-of-school, the gains in terms of more children to attend school regularly during 1999/2000 to 2004/05 was more prominent in rural areas.

New Initiatives in Primary Education “Our people are no different from Americans or Europeans of today; it is all a matter of education or the lack of education.”- Kido Takayoshi, one of the leaders of Japanese reforms after the Meiji Restoration in 1868 The general conference of UNESCO in 1964 recognized that ―Illiteracy is a grave obstacle to social and economic development and hence the extension of literacy is a pre-requisite for the successful implementation of national plans for economic and social development.‖ Those countries, which cannot provide it equitably to all citizens, are considered backward, however affluent and resourceful they may be materially. Illiteracy is identified as the root cause of most number of social evils. No human effort can address many of the problems, if education plays no role. After the 2001 Census, the GoI decided to launch a new programme to promote UEE, a flagship programme in partnership with the state government to cover the entire country and address the needs of 192 million children in 1.1 million habitations that is the ‗Sarva Shiksha Abhiyan‘ (SSA).

Sarva Shiksha Abhiyan SSA is a comprehensive and integrated flagship programme of the GoI implemented in partnership with the States, aimed at providing relevant and meaningful education to all children in the age group of 6-14 years age in the country in a Mission mode. Launched in 14

Sanka, Deepa, October 2008,' What is the progress in elementary education participation in India during the last two decades? An Analysis using NSS Education rounds', available at, 'http://ddp-ext.worldbank.org/EdStats/INDwp08a.pdf'

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partnership with the State Governments, SSA aims to provide quality education to all children in the age group of 6-14 years. The four SSA Goals are as follows: All children in school, Bridging gender and social gaps, All children retained in Elementary Education, and Education of satisfactory quality. The programme seeks to open new schools in those habitations which do not have schooling facilities and strengthen existing school infrastructure through provision of additional class rooms, toilets, drinking water, maintenance grant and school improvement grants. Existing schools with inadequate teacher strength are provided with additional teachers, while the capacity of existing teachers is being strengthened by extensive training, grants for developing teaching-learning materials and strengthening of the academic support structure at a cluster, block and district level. SSA seeks to provide quality elementary education including life skills. It has a special focus on girl's education and children with special needs and also seeks to provide computer education to bridge the digital divide. 15

National Programme of Nutritional Support to Primary Education (Mid-day Meal Scheme) The National Programme of Nutritional Support to Primary Education (NP-NSPE) was launched as a centrally sponsored scheme on 15th August, 1995, initally in 2408 blocks of the country. Today NP-NSPE is the largest feeding programme reaching on to about 12 crore children in over 9.50 Lakh schools across the country. Barring few, all states were providing 3 kg of wheat/rice per child per month. This scheme aims at enhancing enrolment and retention of children in schools by providing nutritional food so that the children could gain health and take keen interest in education. Indirectly it also envisages the promotion of social values and equality through the common sharing of food by children.

The Better Picture..     

With schematic interventions from the erstwhile Operation Blackboard, Bihar Education Project, Lok Jumbish, DPEP, and the Government‘s current flagship programme of SSA. 16 18 crore children are taught by almost 57 lakh teachers in more than 12 lakh primary and upper primary schools across the length and breadth of the country. Over 98% of our children are estimated to have access to primary schooling within one kilometer of their habitation, and almost 92% to an upper primary school within three kilometers of their habitation. GER have increased significantly across all social categories, drop- out rates at primary level have declined, and transition from primary to upper primary stage has improved. Decentralised academic support structures have been established in the form of DIETs in 571 districts, and Resource Centres in 6746 blocks and 70388 clusters in the country. Over 12 crore children participate in the Mid Day Meal programme, the world‘s largest school feeding programme, which impacts not only enrolment of children, but also their regular attendance in school and participation in the learning process.

Universalization Of Elementary Education17 Over the years there has been significant spatial and numerical expansion of elementary schools in the country. Access and enrolment at the primary stage of education have reached near universal levels. The number of out-of-school children has reduced significantly. The gender gap in elementary education has narrowed and the percentage of children belonging to scheduled castes and scheduled tribes enrolled is proportionate to their population. Yet, the goal of universal elementary education continues to elude us. There remains an unfinished agenda of universal education at the upper primary stage. The Constitution (86th Amendment) Act, 2002 inserted Article 21-A in the Constitution of India to provide free and compulsory education to all children in the age group of 6 to 14 years as a fundamental right in such a manner as the State may, by law, determine. The RCFCE Act, 2009, which represents the consequential legislation envisaged under Article 21-A, means that every child has a right to full time elementary education of satisfactory and equitable quality in a formal school which satisfies certain essential norms and standards.

Right To Education

 

The need to address inadequacies in retention, residual access, particularly of un-reached children, and the questions of quality are the most compelling reasons for the insertion of Article 21-A in the Constitution of India and the passage of the RTE Act, 2009 in the Parliament. Article 21-A and the RTE Act came into effect on 1 April 2010. The title of the RTE Act incorporates the words ‗free and compulsory‘. ‗Free education‘ means that no child, other than a child who has been admitted by his or her parents to a school which is not supported by the appropriate Government, shall be liable to pay any kind of fee or charges or expenses which may prevent him or her from pursuing and completing elementary education. ‗Compulsory education‘ casts an obligation on the appropriate Government and local authorities to provide and ensure admission, attendance and completion of elementary education by all children in the 6-14 age groups.

Basic Features.. Pattanaik, B.K, May 2011, ―SSA and Inclusive Education‖, Kurukshetra, 'RTE SSA Final Report' ,'The Situation of Elementary Education in Indi','http://www.indg.in/primary-education/policiesandschemes/rte_ssa_final_report.pdf' 17 Memoire, Aide, 17th to 31st January 2011,'sarva shiksha abhiyan','Thirteenth Joint Review Mission' ,'http://ssa.nic.in/page_portletlinks?foldername=ssa-framework' 15

16

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 Every child should be enrolled. No child should be left behind.  Free and compulsory elementary education to all children in India  Age group – 6years to 14years  Elementary education : Class 1st – Class 8th  No child shall be held back, expelled, or required to pass a board examination until completion of elementary education  If a child above 6 years of age has never been to school will be provided with a special training and will be given a direct admission in a class appropriate to his or her age.  If a child has crossed 14 years of age he/she can avail free education till completion of elementary education.  At the time of admission Birth Certificate should be provided for the age proof.  For the purposes of admission to elementary education, Proof of age for admission should be on the basis of the birth certificate.  No child shall be denied admission in a school for lack of age proof.  A child who completes elementary education shall be awarded a certificate.  Calls for a fixed student-teacher ratio.  Provides for 25% reservation for economically disadvantaged communities in admission to Class One in all private schools.  Mandates improvement in quality of education.  School teachers will need adequate professional degree within five years or else will lose job.  School infrastructure (where there is problem) to be improved in three years, else recognition cancelled.  Financial burden will be shared between State and Central Government.  No child shall be subjected to physical punishment of mental harassment  No teacher shall be deployed for any non-educational purpose.  No teacher shall engage himself or herself in private tuitions  Constitution of a SMC consisting of the elected representatives of the local authority, parents or guardians of children.

Leading Organizations Working For Rural Education Apart from government initiatives to improve the quality education in rural India, there are many NGO‘s who have initiated this cause as a social concern and are working towards education sector to implement changes in the quality of education and provide a better environment for rural children. Pratham: Pratham is the largest nongovernmental organization working to provide quality education to the underprivileged children of India. Azim Premji Foundation: Azim Premji Foundation is a not-for-profit organization with a vision to contribute to systemic changes in Indian education that facilitates a just, equitable, humane and sustainable society. Save The Children: It work towards developing inclusive and equitable education policies and practices, thereby ensuring a quality education for all children, regardless of their gender, class, caste, ethnicity and religion. Smile Foundation: Mission Education is a national level programme from Smile Foundation which focuses on basic education for underprivileged children and youth. IRRAD: IRRAD with KMG InfoTech Foundation is running a project to aware the SMC members, giving them training on the importance of schooling, to bring in drop-out children ,improving the role and responsibility of teachers, headmaster and training the parents and committee members to be a part of decision making in the overall development of the school.

Campaigns Support My School, NDTV: This initiative has been taken to reach out to government school going children by providing the following five components in government schools to provide Improved Access to Water, Water Conservation by providing Rain Water Harvesting Structures, Hygiene and Sanitation by providing toilet facilities for girls and boys, Environment by providing Plantation and landscaping. Teach For India, is a nationwide movement of outstanding college graduates and young professionals who commit two-years to teach full-time in under resourced schools and bring equity in education.

VI.

Conclusion

India has the second largest education system in the world after China. The scale of operation involved to ensure quality of education for all in the country is unique and challenging. At the same time, the nature of problems affecting the education system is so diverse and often deep rooted that the solution cannot lie in the alteration of any one single factor. India is more illiterate than it was fifty or hundred years ago. The socio-economic conditions in rural India have decayed, declined and deprived the primary education system. Equally the social inequalities of caste, class and gender have been identified as the major causes of education deprivation among the children majorly in rural India. The spread of education has been uneven not only in terms on interstate variations, but also between rural and urban areas, with urban areas being at an advantage compared to the rural areas. Social inequalities of caste, class and gender have manifested themselves in primary school participation and completion, as a result of which, certain segments of society, such as the SC's, ST's, and girls in rural areas, have continued to lag behind the general population. Evolution & Prevailing Condition of Primary Education in India

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The overall scenario of rural education system in India is in dismal lack of finance, increasing child labourers, and the need of qualified teachers is becoming a challenge. These issues are not only pressurizing the government but also raising questions on the lack of concern shown in our education sector (especially for those 82 lakh out of school children between 6 to 14 years). MHRD Annual Report 2010-2011, states that government has recruited only 11.13 lakh teachers in 2010. In 2011 almost 39.48 lakh teachers were approved for in-service training under the SSA, to address the needs of 192 million children in 1.1 million habitations. Recruitment of teachers at a very larger level is the immediate need of the hour. In this hard core competitive world, where urban children are getting smarter and are in the race to excel for success from a very tender age, the rural children on the parallel side are depicting a very gloomy picture. As per the ASER report almost 50% of the children from class V cannot read and write, Class I children show a poor ability to do simple mathematics and cannot recognize numbers from 1-9. If in the same pattern we continue to raise our rural children it will become difficult for them to attain a quality life for their own future. They will undergo the same challenges and issues which their parents and ancestors went through. The latest change in our education system has washed off the concept of EXAMINATION till class VIII. Now there will be no more pressure, no more tensions and no more suicides. Children till the age of 14 have been freed from standard examination pattern and there is an alternative evaluation process which will focus to strengthen the competencies of students so that they can face the competitive environment. Making them not go through exam is not only affecting in their competitive spirit but also obstructing their growth and progress. If they don‗t write papers how they will get ready for the 10th and 12th board, and how will they analyze the areas of interest and subjects to pursue ahead for higher education. Therefore to bridge this gap and increase the quality of education, new improvised initiatives and alternative educational models should be designed to cater the needs at the grass-root level. Parents should realize the importance they carry for their child‗s future. They should be concerned about the evaluation of their child‗s school report card. The quality and standard of education system should become more focus-centric and need based. Teachers should make learning and teaching through activities, discovery and exploration in a child friendly and child-centered manner. The image of Government schools in India is not at all appealing any parent who can afford the fees of private school doesn‗t look back at the government schools. The expansion and promotion of private schools with lucrative offers and quality education is attracting more and more parents. Government schools image have declined only because of weak monitoring system. Lack in this sector has resulted in high level of corruption and inefficiency in providing quality education. Under RTE Act, these issues have been highlighted without providing any ground level preparation to overcome it. For Government to solely taking up this task of mobilizing parents to exercise their rights under RTE, Act is a very tough job. Government should take aid from other social organization working under this sector to make this function effectively. One of the major problems of our education system is lack of infrastructure. The physical infrastructure of rural schools is far behind the satisfactory-level, with 82% of the schools is in need of renovation (PROBE). Proper classroom, table & chair, blackboard, toilets, drinking water and ventilation are few basic elements which should be taken care of in any government school. Under SSA, budget is provided to cater such needs but the lack of concern and corruption is preventing the progress in development of such schools. It is not easy to create schools for our large and ever growing population. Today ‗good‘ schools mean expensive schools, mostly private which most lower middle class people cannot afford. That is the fact—every year education gets more and more expensive. Education was viewed as the best way of bringing social change but government has failed miserably in providing quality primary education to rural children. The only source and resource through which rural children could relive their lives is so badly inadequate that it has become one of the biggest challenges for the government.

VII. Limitations of the Study The study is primarily based on secondary research and studies conducted by different researchers and their studies in primary education in India. The risk comes when the data are not managed and organized systematically. Dependency on a few review studies and their exploration makes it difficult to reach a generalized conclusion. The study has been structured and focused on the present, relevant and updated data on primary education sector especially in rural areas but, but as this field is rapidly developing have tried to be more specific.

VIII. Scope for Further Research The Elementary education has been a challenging sector for India and a good progress has been made in last 10-15 years. In the latest report of on progress towards MDGs in India, only elementary education is promising one. So, This study paves way for further research to enrich the sector with its detailed description of various interventions and programmes in initial part of paper. This study has presented different stakeholders role in elementary education sector which can be further elaborated.

Reference 1. 2. 3. 4. 5.

Khullar, K K, (2011), ―The meaning of Education‖, Kurukshetra, May Issue. Goonatilaka Susantha, 1999,―Towards a Global Science: Mining Civilizational Knowledge ‖ Vistaar Publication, New Delhi. Kochhar, S K, (2005) ―Pivotal Issues in Indian Education‖, Education in Ancient India, Sterling Publishers Pvt. Ltd., New Delhi May 2010 ,―Education Now A Fundamental Right‖, Competition Success Review, Lall, Marie, (APRIL 2005) "The Challenges for India‘s Education System" London Royal Institute of International Affairs, ASIA PROGRAMME, ASP BP 05/03, Unpublished Paper

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6.

Huebler, Friedrich, (December 2007) ,'Primary school attendance by state in India', available at 'http://huebler.blogspot.com/2007/12/primary-school-attendance-bystate-in.html' accessed on 31st May 2012. 7. Pratham, (January 14, 2011),'Annual Status of Education Report (Rural)', New Delhi: ASER Centre, available at www.pratham.org/aser08/ASER_2010_Report.pdf accessed on 31st May 2012 8. Sanka, Deepa, (October 2008),' What is the progress in elementary education participation in India during the last two decades? An Analysis using NSS Education rounds', available at 'http://ddp-ext.worldbank.org/EdStats/INDwp08a.pdf' accessed on 31 st May 2012. 9. Pattanaik, B.K, (2011), ―SSA and Inclusive Education‖, Kurukshetra, May Issue 10. 'RTE SSA Final Report' (2010),'The Situation of Elementary Education in Indi','http://www.indg.in/primary-education/policiesandschemes/rte_ssa_final_report.pdf' accessed on 31st May 2012 11. Aide Memoire, (17th to 31st January 2011),'Sarva Shiksha Abhiyan','Thirteenth Joint Review Mission','http://ssa.nic.in/page_portletlinks?foldername=ssaframework' accessed on 31st May 2012.

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Environment, Business and Accounting Dr. S.T. Gadade, Dr. (CA) Minaxi Rachchh 1Principal CKT ASC College, Panvel, India, Charmain BOS - Accountancy, University of Mumbai, India 2ICLES’ College of Arts, Science and Commerce, Vashi, Navi Mumbai, India, Member BOS – Banking and Finance, University of Mumbai, India

Abstract: Every business is responsible for the environment as its impact on the environment is adverse in nature. Accounting, a major part of the business, measures and reports all the economic activities of the firm. Thus, business and accounting are interrelated. As business has to respond the environmental issues, the accounting must move with the business in the same direction. Business has to account environmental issues of its operations. Hence, accounting, business and environment are inter-related. The role of accounting in environmental issues is very important. The purpose of this paper is to gain a general understanding of accounting for the environment. To achieve this goal, a brief outline of the relationship among accounting and the environment is given. The objective of the study is to explain the role of accounting in detail with respect to business environmental impacts. Business has to account environmental issues of its operations. However, the traditional accounting policies and procedures are not enough to manage the environmental performance. Therefore, various accounting and reporting system has emerged. Keywords: Accounting, environmental issues, accounting for environment. _________________________________________________________________________________________________

I. Introduction Environment makes important contributions to the economy. It provides natural resources that are used for human activities. It also restores the waste and pollutants generated from human activities. All the contributions of the environment are limited and non renewable. Since the 1970s, the degeneration of the environment has been at a high rate. Major current environmental issues are climate change, pollution, environmental degradation and resource depletion. There are number of factors that are responsible for causing the environmental crises. Major cause for environmental degradation is the unsustainable use and overexploitation of various natural resources. The rapid industrial development has increased the chances of adversely affecting the environment. Rise of technological advancements led to increasing environmental challenges. Various movements have recognized that the deterioration of the environment is mainly due to corporate activities. The Founex Report of June 1971 and a symposium of experts organized by The United Nations Environment Programme (UNEP) and the United Nations Commission on Trade and Development (UNCTAD) the economic and social factors that lead to environmental deterioration. The Brundtland Report of 1987 recognized the role of corporate entities in respect of the environment. The pressure on corporate sector realized due to various industrial accidents of the 1980s (UNEP GEO 3, 2002). It is duly realized that the corporate activities are the most important reason to cause pollution.

II. Business Responsibility towards Environment The companies use the environmental resources in operating activity. These resources are belong to entire society therefore it is obligatory on the part of the companies to contribute towards maintenance of environmental resources. It is the need of the century to develop and use the technologies, which reduce the adverse effects of business activities on environment by the companies. It is the responsibility of the business to produce the products for sale, which are not harmful to environment. It is ethical to disclose the environmental impacts by the business as it has the social contract with society. In the modern society, the business must constantly meet the requirements of the society. It is also the need to have society‟s approval for the services provided by the business to the society. Because of the principles of morality and justice, the companies‟ disclosures should include the cost of externalities and other costs adversely effecting environment due to the business processes. As per socio political view, the business is responsible for the efficient allocation of economic resources. The business should ensure the public interest. Business is accountable to society and accountability is the duty to provide an account of the actions for which one is held responsible. A company‟s act upon environmental issues on a global or regional level determines the sustainability of the society and the company (Gray et al., 1997). In 1983, The “World Commission on Environment and Development (WCED)”, known as „Brundtland Commission‟ was established by UN. It published its first report in 1987 known as Brundtland Report. The main attention of the report was on sustainable development. The role of corporate entities in respect of environment has been recognized in the report. The pressure on corporate sector realized due to various industrial accidents of 1980s. UNEP co- organized the World Industry Conference on Environmental management. In 1984, Responsible Care was established by the chemical industry in Canada, one of the first attempts to provide a code of conduct to sound environmental management in the business sector. The concept of eco efficiency was introduced into industry as a means reducing the environmental impact. Ideas such as multi stakeholder participation and increased accountability on environmental and social matters had taken shape during the late 1980s. The UN Conference on Environment

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and Development (UNCED or the Earth Summit) was held in June 1992 in Rio de Janeiro, Brazil. It made the declaration on Environment and Development and a blue print for environment and development in 21 st century (UNEP GEO-3, 2002).). The various studies have recognised the increasing awareness of the importance of the environment and its relationship with business (Bebbington et al., 1994). Thus, there is an increasing recognition that companies have an impact on the physical, social, cultural and political environments. The negative impacts of the corporate activities are also growing. It indicates a lack of corporate ethical responsibility and a call for a more proactive role by companies in ethical (and environmental) matters.

III.

Accounting for Environment

The primary objective of accounting and reporting is to measure the level of operations and financial position of every organization. Accounting is socially desirable as it provides stakeholders with information to make decision that not only benefit them but society as a whole. Accountancy ensures the efficient allocation of economic resources. In socio-economic terms, the accountancy provides valuable information to all interested parties in public interest. From a narrow point of view the main objective of accounting is to provide information to investors and creditor. So, the environmental issues in accountancy are not greatly considered as important. Environmental issues indicate initiatives taken to reduce and prevent the environmental damages caused to the environmental due to organizational activities, consequences of environmental damages and the consequences of violating environmental regulations and norms. These environmental issues can have various implications on accounting. The implications of environmental issues into accounting are being reflected by the environmental accounting. The four basic postulates of accounting are going concern, time period, accounting entity and monetary unit. The going concern postulate states that the organization will continue to operate and all financial transactions are recorded and reported based on this concept. On this basis it is assumed by the user of the accounts that all the assets and liabilities are reported and also that important information about the company's future is disclosed. In this sense, environmental issues and possible liabilities should be the part of the base for future prediction of the company. The time period postulate suggests that all the events including environmental events reported refer to a specific time and can be easily compared. Accounting entity concept indicates that all the items including environmental items recorded for the entity can be easily comparable with other entities. The money measurement concept states that all the items as well environmental related costs, liabilities, assets and expenses are to be measured in monetary terms. Thus, the four postulates indicate similar view and treatment of environmental items with the ordinary financial items. The various accounting principles, the historical cost, realization, matching, objectivity, materiality, full disclosure, consistency, and conservatism also form the bases for application of accounting for environment. All assets are valued at cost and depreciation is provided on historical cost as per historical cost principle. This principle states that no changes are to be made in the accounts even if a property has decreased or increased in value due to environmental changes. Thus, the cost principle is not conflict with financial environmental accounting. As per realization principle, revenue shall be recognized in the accounting when it is realized. The revenue recognition principle states that the revenues from environmentally friendly products are to be accounted when realized. The matching principle indicates that the costs must match the revenues generated. As per earlier principle, revenue recognized from the environmental concern are to be accounted on realization and any cost that have created revues are to be accounted as per matching principle is also applicable to environmental costs. As per objective principle, a financial report must picture the company's financial situation, free from personal attitudes. It is difficult to comply with the objectivity principle if environmental items are to be reported separately in a financial report. The materiality principle states that all material information of importance for users should be accounted for. The aim of accounting is the provision of information to the stakeholders. The role of accounting to provide information leads to the need to ensure „flows of information in which those controlling the resources provide accounts to society for their use of those resources‟ (Gray et al, 1996). Accountability is defined by Gray, Owen & Adams as „the duty to provide an account (by no means necessarily a financial account) or reckoning of those actions for which one is held responsible‟ (Gray et al.,1996). Gauthier et al., 1997 defined accountability within the context of environmental accounting as, “the obligation imposed on a manager (leader, administrator, etc) by the law or a regulation or contract to demonstrate that he or she has managed or controlled, in accordance with certain explicit or implicit conditions, the resources with which he or she has been entrusted.” Thus, accountability needs disclosure of information necessary to account for the organizational environmental performance also. Hence, companies must account for their environmental performance also. Thus, the accounting can be applicable to the organizational environmental issues. It can be applicable for financial and non financial disclosure to the stakeholders. (Gray et al., 1996) Accounting concept of cost and profit cannot be implemented without accounting environmental issues. Thus, accounting is applicable for organizational environmental issues and financial/non-financial disclosures to all the stakeholders. Accounting is now facing the challenge to account for the environment through its traditional role of recording and reporting financial information and through its potential role to manage environmental performance. To manage the environmental issues, pressures, associated costs and potential cost savings, various types of expertise from the accounting discipline are required. There are various problems with conventional accounting in addressing these issues. Environment, Business and Accounting

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Conventional accounting does not separate recognition to organisation-related environmental impacts and fails to provide a full account of the use of many resources. Also, many costs, which organisations impose on the environment, are not accounted for in conventional accounting. Therefore, there is a need to apply some form of environmental accounting to take into account environment-related issues. The consumption and use of environmental resources are to be accounted for.

IV.

Role of Accounting in Environmental Issues

The role that accounting appears to play in the process of environmental degradation is duly recognised (Gray, 1990). It is noted that while accounting can play an important role in external reporting, it has the potential to make contributions to the internal management of environmental performance (Gauthier et al. 1997). Environmental issues indicate initiatives taken to prevent, reduce and remedy the damages caused to the environment or to preserve the resources, penalty of infringing environmental regulations and norms and consequences of damages caused to the environment or natural resources. These environmental issues can have impacts in bookkeeping and the financial statements in various ways. The environmental regulations and norms can lead to depreciation of assets. The environmental regulations and norms bring out various costs such as cost of environmental restoration, costs for compensation of damages to the environment or other costs requested by the law in relation to the environment. The environmental regulations and norms bring out various benefits and revenues. A series of companies belonging to different industrial sectors, such as the extractive industry, chemical industry and recycling industry have environmental costs and debts that arise as a direct consequence of the activities they perform. The implications of environmental aspects or issues into accounting are being reflected by the environmental accounting. Accounting plays an important role of the valuation of environmental impact, environmental performance evaluation, flow of financial information and the monitoring of the success of implementation of environmentally related actions together with the traditional functions. This in turn enhances the quality of decision making. Accounting also assists in cost allocation, cost recognition, cost saving, revenue resulting from environmental actions. Further, accounting can be extended to monitoring, waste management, audits, pollution control, public relations, training, remediation, research and development, site decommissioning, insurance, recycling and habitat protection (Wilmshurt & Frost, 2001). There is a wide range of environmental issues associated with business. These issues represent both a threat and an opportunity. The accounting can develop policies to manage the business risks of environment. Accounting can play an important role in environmental accounting practices and cost benefit analysis as also in management control and environmental management system. Thus, accounting has a potential role in organizational environmental issues. The relationship between accounting and environment is increasing as the importance of environment is being increasingly realised.

V. Effects of Environment on Accounting The role of business on the growing environmental degradation has made it imperative that information on environment due to business activities is broadcasted to all concerned parties. Various accounting and reporting system has emerged due to the information need and changing attitude both at national and international level. Following types of accounting and reporting policies have emerged due to the effects of environment on accounting: I. Environmental financial accounting: It deals with accounting and reporting environmental costs and liabilities, and disclosure of environmental risk management and strategic issues. The objective is to provide environmental related disclosures in the financial statements. II. Environmental management accounting: It relates to identification and allocation of environmental costs within the organizational accounts. It deals with the management of environmental information and economic performance. It can be possible only through the development and implementation of appropriate environmental related accounting systems and practices. EMA involves life-cycle costing, benefits assessment, strategic planning, reporting and auditing. III. Environmental financial management: It indicates emission trading and economic environmental instruments such as environmental taxes. IV. Environmental accounting: At the micro level it includes the entire domain of accounting for the environment right from financial accounting, reporting and auditing, to environmental management accounting. V. Environmental reporting: It means reporting the environmental impacts of organisational activities. VI. Accounting for bio diversity: Accounting for stocks of flora and fauna is termed as accounting for bio diversity. VII. Social accounting and reporting (SAR): Social accounting and reporting refers to identifying, accounting and reporting the social impacts of the organization. VIII. Sustainability Reporting: It indicates organizational reporting on the economic, environmental and social impacts of the business activities. IX. Full cost or sustainability accounting: It refers to measuring and costing physical emissions and social impacts to calculate sustainable level of profit. Environment, Business and Accounting

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Many companies incorporate environmental issues into companies‟ goals and policies. Companies increasingly include environmental issues in management decisions, in daily production and in communication with stakeholders.

VI.

Conclusion

Business has adverse effects on environment. Environmental impacts on business have realized. The business and accounting cannot be separated. The adverse effects of environment have great impact on accounting. Hence, environment, business and accounting are inter related. The inter relation has created the need for various accounting and reporting system for environmental impacts of business. References: 1. 2. 3. 4. 5.

Bebbington, J., Gray, R., Thomson, I., & Walters, D. (1994). Accountants' Attitudes and Environmentally-Sensitive Accounting. Accounting and Business Research, 24 (94), 109-120. Gray, R. D. (1997). Struggling with Thepraxis of Social Accounting: Stakeholders, Accountability, Audits and Procedures. Accounting, Auditing and Accountability Journal, 10 (3), 325-64. Gray, R., Owen, D., & Adams, C. (1996). Accounting and Accountability: Changes and Challenges in Corporate Social and Environmental Reporting. London: Prentice Hall. UNEP. (2002). Global Environmental Outlook 3. London, UK: Earthscan Publications Ltd. Retrieved April 10, 2010, from http://www.unep.org/geo/GEO3/english/pdfs/prelims.pdf: www.unep.org Wilmshurst, T. D., & Frost, G. R. (2001). The Role of Accounting and the Accountant in the Environmental Management System. Business Strategy and the Environment, 10, 135-147.

Environment, Business and Accounting

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Anti-Money Laundering Programme- An Insight Overview Dr. Mitali Palit Assistant Professor, Srushti Degree College, Bangalore, Karnataka.

Abstract: Money laundering -- the process of disguising or concealing illicit funds to make them appear legitimate -- is a serious issue, with an estimated $500 billion laundered annually, according to the U.N. Office of Drug Control and Crime Prevention. The terrorist attacks of Sept. 11, 2001, heightened concerns about money laundering and terrorist financing. Money laundering is a problem of some magnitude internationally and has long term negative economic impacts. Money laundering is largely linked to fraud and that it is not only small islands and tax heavens that launder, but increasingly industrialized countries like the US, Australia the Netherlands and the UK. In January 2002, International Federation of Accountants (IFAC) published its first paper on anti-money laundering aimed at promoting awareness of important money laundering issues and of the related professional obligations imposed on accountants. This study provides an introduction of money laundering with respect to global scenario, stages of money laundering and the Indian perspective, incorporation of Anti-Money Laundering programme and challenges for the financial services industry in India. Keywords: Money Laundering, Anti-Money Laundering, Financial Action Task Force (FATF) _________________________________________________________________________________________________

I. Introduction In today’s global economy, organized crime groups generate huge sums of money through drug trafficking, arms smuggling and financial crime. The “dirty money”, however, is of little use to organized crime because it raises the suspicions of law enforcement and leaves a trail of evidence. Criminals that wish to benefit from the proceeds of large scale crime have to disguise their illegal gains without compromising themselves. There have been a number of developments in the international financial system during recent decades that have made the three F’- finding, freezing and forfeiting of criminally derived income and assets-all the more difficult. Estimated money laundering flows are reported to be in excess of US $1 trillion every year by drug dealers, arms traffickers and other criminals. The International Monetary Fund (IMF), for example, has stated in 1996 that the aggregate size of money laundering in the world could be somewhere between two and five per cent of the world’s gross domestic product. It is estimated that illicit funds would grow at an estimated rate of 2.5% - 3% annually. With such massive amount of funds being laundered, the international response to the underground economy has been coordinated by the Financial Action Task Force on Money Laundering (FATF). Its original 40 principles form the basis of most international responses to money laundering activities, a further nine principles, designed to counteract funding to terrorist organizations, were added in response to the September 11, 1001, to form the “40+9” principles of anti money laundering and combating the financing of terrorism (AML/CFT). Further, several bodies have been formed to combat money laundering and finance of terrorism. The Wolfsberg Group is an association of twelve global banks, which aims to develop financial services industry standards, and related products, for Know Your Customer, Anti-Money Laundering and Counter Terrorist Financing policies. The Egmont Group is an association of several FIU’s across the world whose aim is information exchange about money laundering activities. Currently, there are over 107 Financial Intelligence Units (FIUs) across the world. This means that over 107 countries have legislations aimed at controlling money laundering activities and combating terrorist financing. The role of FIUs is mainly centred around collection of data on money laundering and terrorist financing activities through prescribed reporting formats, analyzing the data and disseminating the information to various law enforcement agencies. The prominent FIUs are FINCEN (USA), FINTRAC (Canada), AUSTRAC (Australia) and SOCA (UK). These FIUs have played a leading role in supporting law enforcement agencies and defining and uncovering several money laundering typologies.  

II. Objectives of the Study To make a brief study of money laundering with respect to global scenario and the Indian perspective. To describe the incorporation of Anti-Money Laundering programme and challenges for the financial services industry in India.

III.

Literature Review

Jonathan E. Turner (2011), in his book, “Money Laundering Prevention: Deterring, Detecting, and Resolving Financial Fraud”, provides an understanding of the mechanisms, tools to detect issues, and action lists to recover hidden funds. It provides action-oriented material that will show how to deter, detect, and resolve financial fraud cases. It offers an understanding of the mechanisms, tools to detect issues, and action list to recover hidden funds, covers mechanisms for moving money, identifying risk exposures, and investigating money movement. Arming auditors, investigators, and compliance personnel with the guidance that, up until now, has been restricted to criminal investigators, Money Laundering Prevention provides nuts-and-bolts information needed to fully understand the money laundering process.

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Brigitte Unger and Elena Madalina Busuioc (2007), in their book, “The Scale and Impacts of Money Laundering”, states that wellestablished financial markets and growing economies with sound political and social structures attract launderers in the same way as they attract honest capital. The book gives an interdisciplinary overview of the state-of-the-art of money laundering as well as describing the legal problems of defining and fighting money laundering. It then goes on to present a number of economic models designed to measure money laundering and applies these to measuring the size of laundering in the Netherlands and Australia. The book also gives an overview of techniques and potential effects of money laundering identified and measured so far in the literature. It adds to this debate by calculating the effects of laundering on crime and economic growth. Davi M. D'Agostino (2002), in his book, ―Money Laundering: Extent of Money Laundering through Credit Cards Is Unknown‖, describes vulnerabilities to money laundering that may exist in the credit card industry; efforts by the industry to address potential vulnerabilities to money laundering using credit cards; and existing regulatory mechanisms to oversee the credit card industry and help ensure the adequacy of required anti-money laundering (AML) programs.

IV.

What is Money Laundering

Money Laundering in simple words is moving illegally acquired money through financial systems so that it appears to be legally acquired. It is a process by which criminals attempt to hide the true origin and ownership of the proceeds of crime. It is the funneling of cash or other funds generated from illegal activities through legitimate financial institutions and businesses to conceal the source of the funds. Money laundering is a global activity that, like the illegal activities underlying it, seldom respects local, national or international borders.

Stages of Money Laundering While the activities and methods of money laundering have become increasingly complex and ingenious, its ―operations‖ tend to consist of three basic stages or processes — placement, layering and integration.

1. Placement (Hide) Placement is the process of transferring the proceeds from illegal activities into the financial system in a way that financial institutions and government authorities are not able to detect. Money launderers pay careful attention to national laws, regulations, governance structures, trends and law enforcement strategies and techniques to keep their proceeds concealed, their methods secret and their identities and professional resources anonymous. Common placement techniques include the structuring of cash payments through legitimate bank and other financial institutions, which may involve deposits or money transfers, or the purchase of money orders, cashiers or travelers‘ checks or other monetary instruments.

2. Layering (Move) Layering is the process of generating a series or layers of transactions to distance the proceeds from their illegal source and to obscure the audit trail. Common layering techniques include outbound electronic funds transfers, usually directly or subsequently into a ―bank secrecy haven‖ or a jurisdiction with lax record-keeping and reporting requirements, and withdrawals of already-placed deposits in the form of highly liquid monetary instruments, such as money orders or travelers checks.

3. Integration (Invest) Integration, the final money-laundering stage, is the unnoticed reinsertion of successfully laundered, untraceable funds into an economy. This is accomplished by spending, investing and lending, along with cross-border, legitimate-appearing transactions. The world's largest and wealthiest economies tend to serve as the primary hosts for money launderers and their operations. These economies generally harbor the greatest demand for illegal drugs, which is still the primary money-laundering activity. Also, to successfully place, layer and integrate their illegal proceeds, the more sophisticated money launderers look for a similarly sophisticated financial services sector.

V. Money Laundering: The Indian Perspective As a part of global efforts to fight money laundering and terrorist financing, India has enacted the Prevention of Anti Money Laundering Act, 2002 (PMLA). This act has come into force from 1 st July 2005. The Financial Intelligence Unit-India (FIU-IND) was set up in the same year. The aim of FIU-IND is on one hand to receive cash and suspicious transaction reports from the reporting entities, analyse them and disseminating the results to various law enforcement agencies and on the other hand interact with other FIUs across the globe, incorporate and implement some international best practices and share money laundering typologies. The PMLA placed obligation on Banks, Financial Institutions, Intermediaries and Insurance Companies to put in place a robust AML program and report cash and suspicious transactions to the FIU-IND. To facilitate compliance with the required provisions of PMLA 2002, Indian regulators- Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) and Insurance Regulatory Authority of India, have issued Anti Money Laundering Guidelines for the respective reporting entities.

VI.

AML PROGRAMME

Entities sometimes retain an auditor to provide an independent review of AML and suspicious activity (transaction) reporting programs. This auditor may be the same individual or firm as performs the financial statement audit. Before accepting such an Anti-Money Laundering Programme- An Insight Overview

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engagement, the financial statement auditor would consider the exact nature of the AML engagement and whether there are independence conflicts that prevent acceptance. A robust AML programme should incorporate the following:

1. Auditor’s objectives, role and responsibilities The auditor‘s objectives, role and responsibilities should include:  Assisting financial institutions and other organizations with addressing their statutory or regulatory requirements (depending on the various requirements of jurisdictions) for independent testing of their AML and SAR/STR programs, processes and controls.  Similarly, assisting business organizations in meeting parallel requirements imposed through contracts, or as conditions for, establishing and maintaining business relationships and for conducting transactions.  Identifying material program weaknesses, control deficiencies and opportunities for program, process and control enhancement, and reporting them to senior managers and audit committees/principals.  Assisting senior managers with identifying money laundering and other financial crime vulnerability.  Performing work that may be useful to regulators in conducting their supervisory examinations.

2. Internal Policies, Procedures and Controls Before drilling down into relevant business processes and controls, auditors should consider the ―big picture‖ – the organization‘s overall internal control environment as it pertains to AML and SAR/STR. This means getting a sense of the ―tone-at-the-top‖ of the organization – principals‘ and executives‘ attitude, posture and message about integrity, ethical values and competence. Are the right messages sent internally and externally about the importance of complying with the letter and spirit of the law and about protecting the enterprise, its people, assets, operations and reputation from money launderers, money laundering and related financial crime? Does the Board-approved policy framework (a ―should-be‖) contain a clear policy for, and commitment to, assisting global efforts to combat money laundering and related financial crime? To ―Know Your Customer?‖ To monitor for and report suspicious activity/transactions? Does one get a sense from meeting with employees that these values are effectively communicated and shared? Do employees across the enterprise have a positive attitude, understand what unusual and suspicious activity is and the importance of identifying and reporting it to management? Do they know what to do and whom to contact? How frequently does the subject matter show up on internal communications?

3. Written Compliance Program Auditors should look for evidence of AML and SAR/STR compliance program documentation about unusual and suspicious activity identification and reporting at three levels: a. Level I: Board-approved policy framework- Auditors must gain an understanding of the specific AML statutory and regulatory requirements that apply to the enterprise. Auditors should also review the agendas and minutes of senior management and board meetings to determine whether the right discussions and actions are taking place to support a well-considered policy framework and to get a sense of future plans or intentions to review or modify the policies. b. Level II: Enterprise-wide standards and guidance- Auditors should determine what enterprise-wide standards and guidance are articulated and promulgated by senior managers and principals that underlie and glue together an enterprise-wide AML and SAR/STR program. Does management communicate to employees the conduct and response that is expected of them? c. Level III: Implementing, operating policies and procedures- Many business organizations confuse policies with procedures, as is frequently evident from reviewing compliance program documentation. Accounting professionals, therefore, frequently assist their clients with revising their written compliance programs accordingly. Here‘s the distinction in a nutshell: policies are the ―what‖ and procedures are the ―how.‖

4. Robust risk assessment process In the realm of money laundering and anti-money laundering, one size does not fit all. AML programs need to be tailored. Business processes and controls need to be business- and risk-based. Business units need to assess what types of unusual and suspicious activity are more likely to occur and what employees are more likely to encounter in their respective areas. To get a good sense of whether an enterprise has a sound risk assessment process in place, auditors should look to see whether there is a hands-on, sustainable AML committee, usually chaired or coordinated by the AML compliance officer and made up of individuals who properly represent the business units and support areas of consequence. Among their committee obligations and assignments, members should be actively engaged in periodic risk assessment and reporting results to the committee. The output of risk assessment should be a blueprint for the types of unusual and suspicious activity that the employees of respective areas are more likely to encounter. Management should prepare a risk assessment survey for the committee to administer.

5. Training and awareness Training and awareness programs are perhaps the most consistent and universal AML program requirement. Ideally, auditors should evaluate the quality and relevance of the AML program. They should assess the effectiveness of training by talking to employees and reviewing test results where applicable. Training materials should show signs of freshness and meaningfulness.

6. Sound Judgment and Quality Reporting Process It is important to distinguish the internal detection and escalation process from the external reporting process. Employees should be sufficiently trained and engaged, and written policies and procedures should be sufficiently clear and robust, to ensure effective Anti-Money Laundering Programme- An Insight Overview

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internal detection, reporting and escalation. Typically, employees prepare an internal report of unusual or suspicious activity in consultation with a supervisor and the designated compliance liaison. The internal report is then escalated for analysis and investigation (i.e., the internal report becomes a case) that is tracked and then quickly routed or further escalated to a committee to review the case and to make the ―suspicious‖ determination. The committee members (the decision makers) should have sufficient authority and judgment to make the determination, and ought to be people who best know the customer.

7. Compliance Monitoring and Assessment Regulators frequently require or favor AML programs that have a strong compliance monitoring function as well as a transactions monitoring function. This should not be confused with independently testing the effectiveness of the AML program, which is what this section is about. Auditors should review the compliance review, assessment or monitoring program (different terms are used among jurisdictions and businesses) to make sure that this requirement is being adequately addressed. Compliance assessment is the primary mechanism through which the compliance function can assess the quality and effectiveness of the AML and SAR/STR program in place. Auditors should determine whether this component is in place and operating effectively, whether periodic assessment is being performed by sufficient and qualified professional staff and the results are being reported and acted upon.

8. Information and communication Auditors should examine and assess the quality of strategic, compliance and operational information surrounding and driving the AML and SAR/STR processes and the adequacy of the channels of communication. Enabling and strengthening the program elements and practices described above require quality information, information processing and well-defined and working channels of communication. Management information about program performance, risk assessment and response has to be accurate, meaningful and timely to enable senior management to make well-informed decisions. Assessing the quality of information and information processing connected with the AML and SAR/STR processes itself may require some in-depth analysis. This will likely include assessing the timeliness, accuracy, efficiency, effectiveness, quality and usefulness of the mechanisms, reports and reporting tools used by designated employees to support the monitoring, escalation, investigation, analysis and reporting of unusual and suspicious activity. Here, it may be prudent to assign an IT auditor to look at the automated processes. Similarly, auditors must identify the channels of communication surrounding the AML program and SAR/STR processes and evaluates their effectiveness. Conventional channels include: internal conveyances of written compliance programs (usually email, web-site postings and employee manuals), compliance and business unit meetings, and training and awareness sessions.

VII. Challenges for The Financial Services Industry in India The application of AML rules and guidelines is at its nascent stage in India. With the PMLA introduced in July 2005 and the regulatory guidelines issued thereafter, the industry is still a long way to go in this area. It is set to meet several challenges along the way. Following are the challenges financial services organization should consider:

1. Development of an AML Programme Financial services organizations need to develop an AML program that incorporates all the components described above. The program should be well documented, demonstrable and defendable.

2. Development of an Integrated Approach The organizations AML program is only as strong as its weakest link. In its efforts to combat money laundering and terrorist financing, organizations need to work towards ensuring that all its functions work as a cohesive force. Hence, processes need to be put in place to integrate the efforts of the front end staff, business unit heads, compliance team, internal audit team and AML team. For this to take place, the right ‗tone at the top‘ needs to be established together with control processes, adequate education at all levels and the involvement all functional groups including human resources, executive management, board of directors and business units.

3. Risk Based Approach Every organization has limited resources; hence it is imperative for organizations to develop a risk-based approach to tackle money laundering and terrorist financing. The AML resources must be applied towards geographies, functions, products, services, customers and distribution channels that pose the most risks.

4. Staffing Adequate staffing by the organization at the right ‗trouble spots‘ helps in mitigating money-laundering risk.

5. Training Programme Organizations need to invest time and money in training their resources in the area of AML. The training program should be available to all employees, refreshed on a continuous basis, incorporate live examples and instances when things have gone wrong due to laxity of the personnel or ineffective controls and the risk the organization was exposed.

6. Client Identification Process (KYC process) The regulators have provided a list of identification and address proofs that the organizations need to obtain to establish the identity of the client. Further, the regulators have suggested that adequate due diligence and risk profiling should be carried out during the Anti-Money Laundering Programme- An Insight Overview

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account opening process. The organization needs to ensure that appropriate documentation is collected and the due diligence process is adequately designed to manage the customer risk to the organization.

7. Transaction Monitoring The organization need to have a system in place to monitor the transactions conducted by the client. There should be appropriate and adequate rules and conditions defined in order to detect suspicious transactions. These rules need to be modified and applied across all functions/products of the organization.

8. Automation/ Systems support The organization should work towards automation the AML process. Use of technology in the area of transaction monitoring could help generate more accurate and frequent alerts. Further, the technology could also be used in areas of watch-list screening, automatic generation of CTR and STR in the requisite formats and generation of an audit trail that could be used to demonstrate compliance to the regulators. Moreover, appropriate due diligence should be conducted on the potential solutions available in the market and its ability to be customized to meet the needs of the organization.

REFERENCES 1. Asia/Pacific Group on Money Laundering - http://www.apgml.org -Annual Report 1 July 2001 – 30 June 2002 (December 2002). 2. Council of Europe - http://www.coe.int-1990 Convention on Laundering, Search, Seizure and Confiscation of The Proceeds from Crime (1998). 3. CTIF-CIF (Belgian Financial Intelligence Processing Unit)- http://www.ctif-cfi.be -Money Laundering Indicators (February 2003) -9th Annual Report 200102 (October 2002). 4. Davi M. D'Agostino (2002), ―Money Laundering: Extent of Money Laundering Through Credit Cards Is Unknown‖, DIANE Publishing, 2002. 5. Egmont Group- http://www.egmontgroup.org -Information Paper on Financial Intelligence Units and the Egmont Group (September 2003). 6. Financial Action Task Force - http://www.fatf-gafi.org-The 40 Recommendations (June 2003) -Annual Report and Annexes 2002-03 (June 2003) -Annual Review of Non-Cooperative Countries or Territories (June 2003) -Report on Money Laundering Typologies 2002-03 (June 2003). 7. Financial Services Authority, UK-http://www.fsa.gov.uk -Reducing Money Laundering Risk – Know Your Customer and Anti-Money Laundering Monitoring (August 2003). 8. IMF - http://www.imf.org -AML and Combating the Financing of Terrorism – Status Report of the Work of the IMF and the World Bank on the TwelveMonth Pilot Program of AML/CFT Assessments and Delivery of AML/CFT Technical Assistance (September 2003). 9. Turner, Jonathan E. (2011), ―Money Laundering Prevention: Deterring, Detecting, and Resolving Financial Fraud‖, John Wiley & Sons, 2011. 10. Unger, Brigitte and Madalina Busuioc, Elena (2007), ―The Scale and Impacts of Money Laundering‖, Edward Elgar Publishing, 2007. 11. Wolfsberg - http://www.wolfsberg-principles.com -Global Anti-Money Laundering Guidelines for Private Banking – Wolfsberg AML Principles (May 2002).

Anti-Money Laundering Programme- An Insight Overview

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Text as Reflective Index of Human Behavior Priti Sharma1, Madhu Chauhan2 1&2Assistant Professor (IT), IINTM, Janakpuri, New Delhi, India

Abstract: In the world of computers and networks, being social means posting comments on social websites, participating in discussion forums and writing blogs. In the situation where there is no physical or face to face communication, it is very difficult to understand emotions, behavior and perception of a person. In such cases, the only method of judging a person’s emotions is analyzing the written text, based on which his/her behavior can be predicted which in turn reflects overall personality of a person. In this paper we take a look at the various tools, applications, and challenges for Sentiment analysis. We will also discuss various approaches to perform analysis of sentiments and opinions. Key Words— Natural Language Processing, Polarity, Machine learning.

_________________________________________________________________________________________________

I. Introduction In today’s world of information technology, most of us prefer to communicate on social media. Due to which a huge amount of structured and unstructured data is available on the web. From such a repository, it becomes difficult to analyze emotions, feelings and perception of people on a particular topic. Had it been the case where there was face to face or direct communication this would have been easier. What we think is important, but more than that what matters to us is what others think. As compared to the trend earlier, where we were in communication with limited number of people, it was easier to analyze and conclude others’ thinking. But now as unlimited number of people can post their positive or negative opinion on a particular topic, it is easier to get views but at the same time difficult to analyze them. Here the concept of Sentiment Analysis comes into picture. Sentiment Analysis or Opinion Mining has emerged from Natural Language Processing which determines the attitude of speaker or writer with respect to some issue. Formally we can define Sentiment Analysis or opinion mining as “The computational study of people’s opinions, appraisals and emotions towards entities, events and their attributes”. Different kinds of feelings and sentiments which constitute human behavior can be categorized into three major parts, namely, Positive, Negative and Neutral. Positive sentiments denotes happiness, joy, love, progress, satisfaction. Contrary to this, Negative sentiments denotes sadness, depression, sorrow, disappointment. Neutral symbolizes impartiality, being void of sentiments. Sentiment analysis is done on three levels:  Document Level  Entity or Aspect Level  Sentence Level. Document Level Sentiment analysis is done on the whole document to decide whether the document express positive or negative sentiment. Entity or Aspect Level sentiment analysis is performed for finer - grained analysis. The goal of entity or aspect level sentiment analysis is to find sentiment on entities and/or aspect of those entities. For example consider a statement “My Samsung phone has good picture quality but it has low phone memory storage.” so sentiment on Samsung’s camera and display quality is positive but the sentiment on its phone memory storage is negative. Sentence level sentiment analysis is performed to find the sentiments from sentences whether each sentence expressed a positive, negative or neutral sentiment. Sentence level sentiment analysis is closely related to subjectivity classification. Most of the statements about entities are factual in nature and yet they still carry sentiment. Current sentiment analysis approaches express the sentiment of subjective statements and neglect such objective statements that carry sentiment.

II. Classification of Sentiment Analysis Methods In order to analyze the sentiments from any written text, we require some methods/techniques. Being latest concept in the field of data mining, a few techniques have been introduced. Some of which are discussed as follows:

a.

The Machine Learning Approach

Machine learning approaches are based on the famous Machine Learning algorithms to solve the Sentiment Analysis as a regular text classification problem by using syntactic and/or linguistic features. Text Classification Problem Definition: We have a set of training records D = {X1, X2, . . ., Xn} where each record is labeled to a class.

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The classification model is related to the features in the underlying record to one of the class labels. Then for a given instance of unknown class, the model is used to predict a class label for it. The hard classification problem occurs when only one label is assigned to an instance. The soft classification problem occurs when a probabilistic value of labels is assigned to an instance. The machine learning method uses several learning algorithms to determine sentiment by training on a known dataset.

2.1.1. Supervised Learning The supervised learning methods depend on the labeled training documents. There are many types of supervised classifiers. The purpose of text classification is to classify documents into a certain number of predefined categories. In order to accomplish this task, large numbers of labeled training documents are used for supervised learning. It is sometimes difficult to create labeled training documents in text classification but it is easy to collect the unlabeled documents.

2.1.2. UnSupervised Learning The unsupervised learning method overcomes the difficulties which we faced during supervised learning. In unsupervised learning method we divide the documents into sentences, and categorize each sentence using keyword lists of each category and sentence similarity measure.

2.2 Lexicon-Based Approach Positive opinion words express desired states, whereas negative opinion words are used to express some undesired states. There are also opinion phrases and idioms which together are called opinion lexicon. There are three approaches to compile or collect the opinion word list. Manual approach is time consuming and it is not used alone. Manual approach is combined with the other two automated approaches to avoid the mistakes that resulted from automated methods. The two automated approaches are presented in the following subsections.

2.2.1. Dictionary-based Approach In a Dictionary Based approach a small set of opinion words are collected manually with known orientations. Then, this set is grown by searching in the well known thesaurus for their synonyms and antonyms. The newly found words are added to the seed list then the next iteration starts. The iterative process stops when no new words are found. After the process is completed, we perform manual inspection to remove or correct errors. The major disadvantage of dictionary based approach is the inability to find opinion words with domain and context specific orientations.

2.2.2. Corpus-based Approach The Corpus-based approach is used to solve the problem of finding opinion words with context specific orientations. Its methods depend on patterns that occur together along with a seed list of opinion words to find other opinion words in a large corpus. The constraints are for connectives like AND, OR, BUT, EITHER-OR. . .. . .; the conjunction AND for example says that conjoined adjectives usually have the same orientation. This idea is called sentiment consistency, which is not always consistent practically.

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III. TOOLS 3.1 LIWC LIWC is an abbreviated term for Linguistic Inquiry and Word Count. This tool makes use of customized dictionary. Words are divided into certain major categories like positive, negative, social, happiness, sadness, cognitive and articles, self references etc. This tool allow users to change the dictionary as per their requirement and field of study i.e. they can include their customized dictionaries instead of standard ones. The user can enter certain text (which could either be any comment posted on social site, any speech or any written document). The tool then analyze the text and compare the words with customized dictionary and then display the result in the form of some numeric values which denote positive or negative aspect of human behavior. For example, If we enter “enjoy”, this word fall under the category of positive emotion. The software is available at: http://www.liwc.net/.

3.2 SENTINET This tool explores the concept of Artificial Intelligence. It works at semantic level to calculate the polarity of given text by using natural Language Processing. For example, If we say “This day is special”. It will calculate polarity of day and special. Based on the average calculated from these values, we reach to a conclusion. This software is available at: http://sentic.net/.

IV. Challenges for Sentiment Analysis As discussed above, sentiment analysis deals with judging behavior of any human being from the written text by classifying the text in three categories namely positive, negative and neutral. The process seems to be simple but it is not the case. There are various challenges which are faced in this area. Some of the problems faced are as follows:

4.1 Entity Identification At the time of analyzing sentiments, it is very important to find/judge main entity when more than one entity is mentioned in the text. It can be the case that the sentence which is positive for one entity is negative for another one or vice versa. If one chooses a wrong entity, whole conclusion will get wrong. This can be understood by following example: “LED is better than LCD” “Sunil defeated Ajay in Badminton”. The above examples are positive for LED and Sunil but negative for LCD and Ajay.

4.2 Subjectivity Detection This challenge deals with detection of subjectivity to find out actual facts. One sentence can be an opinion oriented while other is nonopinion oriented sentence. That is one argument can be used as basis or opinion for another sentence. For example: “I hate world wars” “I do not like the movie –World war 2” The first example presents an objective fact whereas the second example depicts the opinion about a particular movie. Implicit Sentiment and Sarcasm It is not necessary that a sentence that is to be analyzed have positive or negative words in it. Sometimes the sentence may overall be negative or positive despite the presence of any sentiment bearing words. For example “One should doubt the intelligence of a person who asked about xyz issue in society” “How can anyone watch this movie”. In the above mentioned examples there is no sentiment bearing word but still the sentences are negative.

4.3 Negation Out of above mentioned challenges negation is most difficult one as negation can be expressed in number of ways even without use of any negative word. For example, “I do not like theory but I like practical subjects”. In the above example we have both like and do not like as positive and negative words which do not convey any sentiment on the basis of these words as polarity is reversed within the sentence. In such cases one should take into consideration the words like only as it may change the polarity of complete sentence if used after the word Not. For example, “Not only I like theory but practical subjects” Text as Reflective Index of Human Behavior

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V. Applications of Sentiment Analysis We can apply Sentiment Analysis in Consumer Market for product reviews, Social media like facebook or twitter for finding general public opinion about a recent hot topic, marketing for knowing consumer attitudes and trends, Movie to find whether a recently released movie is a hit or flop. Pang-Lee et al. (2002) broadly classifies the applications into the following categories: a. Applications to Review Websites Product Reviews, Movie Reviews etc. b. Applications as a Sub-Component Technology. Detecting heated language in mails, spam detection, context sensitive information detection etc. c. Applications across different domains Knowing opinions for political leaders. d. Applications in Business and Government Intelligence

VI. EVALUATION We have evaluated the speech of Swami Vivekananda on a tool http://www.liwc.net/ to find the different sentiment words. The speech was taken from the source http://hinduism.about.com/od/vivekananda/a/vivekananda_speeches.htm . After applying the speech to LIWC tool we got the following result:

In the above results we can easily find that the value of negative emotions is coming out 0 and the value of positive emotions is 5.35 and the value of social words is 10.37. Thus we can conclude that Swami Vivekananda was a very positive and Social person.

VII. Conclusion As we came to know that there are various sentiments associated with written text i.e. positive, negative and neutral. Human behavior and sentiments can be analyzed based on various tools that are discussed above. As discussed, there are various approaches and tools for sentiment analysis, yet a lot of work is to be done upon the challenges that are faced while evaluation of text. Some of the challenges have already been discussed in the paper. Accuracy of results is also one of the major aspect that has to be taken into consideration, for which study can be extended. Only a few of the methods are able to reach a somewhat high level of accuracy. Thus, the solutions for sentiment analysis still have a long way to go before reaching the confidence level demanded by practical applications.

References 1. 2. 3. 4. 5. 6. 7.

B. Pang and L .Lee ”Opinion Mining and Sentiment Analysis, ”Foundations and trends in Information Retrieval, vol.2, nos. 1-2, 2008. B. Liu, Sentiment Analysis and Opinion Mining, Morgan and Claypool, 2012. M. Subhabrata, “Sentiment Analysis”-A Literature Survey. Alekh and B. Pushpak, Sentiment Analysis: A New Approach for effective use of Linguistic Knowledge and Exploiting Similarities in a set of documents to be classified, International Conference on Natural Language Processing (ICON 01), IIT Kanpur, India , December, 2005. K. Alistair and Diana Inkpen, Sentiment Classification of movie and product reviews using contextual valence shifter, Computational Intelligence, 22(2):110-125, 2006. R Balamurali, J. Aditya, B. Pushpak, Harnessing WordNet Senses for Supervised Sentiment Classification, In Proceedings of EMNLP, Edinburgh, 2011. J. Aditya, A. R. Balamurali, B. Pushpak, 2010, A Fall-Back Strategy for Sentiment Analysis in a New Langyage: A Case Study for Hindi, ICON 2010, Kharagpur, India.

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Brain Tumor Segmentation Using Shannon and Non-Shannon Entropy Measures Anushikha Jain1, Ranu Lal Chouhan2 1&2

Department of Computer Science Engineering, Government Engineering College Bikaner, Rajasthan.

[email protected], [email protected]

Abstract: Image Segmentation plays an important role in medical field that enable professionals to detect their patient’s problems and help them to get proper diagnosed. In this article, an entropy based approach for image segmentation is discussed to highlight tumour in MRI images. Magnetic Resonance Imaging (MRI) is a process, in which pixel values are based on radiation absorption. In the proposed approach we have selected threshold values on the basis of different entropy measures such as Shannon, Renyi, Harvard Charvart , Kapur and Vajda entropy measures to segmentize an MRI image indicating tumour. The gray level cooccurrence and probability matrix are utilized as basis functions for proposed methodology. Simulation results for different entropy measures depicts that Non Shannon Entropy measures give more promising results as compared to classical Shannon based approach, thus can be used to detect human body tumours using MRI images. Key Words—Image Segmentation, Co-occurrence and Probability matrix, Shannon Entropy, Renyi Entropy, Harvard Charvart Entropy, Kapur Entropy, and Vajda Entropy. _________________________________________________________________________________________________

I. Introduction Segmentation is the process to dicotise an image into distinct images with homogenous properties such as gray level, colour, texture, brightness, and contrast. The role of segmentation is to subdivide the objects into an image; in case of medical image segmentation the aim is to: 1) Study anatomical structure. 2) Identify regions of Interest i.e. locate tumour, lesion and other abnormalities. 3) Measure tissue volume to measure growth of tumour( also decrease in size of tumour with treatment) 4) Help to plan how to treat prior to radiation therapy. In this paper we have focused on one of the problems in image segmentation in medical fields when dealing with the MRI images indicating tumour. MRI stands for Magnetic Resonance Imaging which is a safe and a painless test that uses a magnetic field and radio waves to produce detailed pictures of the body’s organs and structures. Through MRI Images we are able to locate the problem with the body tissues or tumours if any in the body. MRI creates two dimensional image of thin slice of a body. In [1] the fully automatic approach for segmenting the brain from head magnetic resonance MR images has been discussed which works even in the presence of radio frequency. The method uses an integrated approach which use anisotropic filters and snake contouring techniques. In [2] the automatic segmentation of structures from Basal Ganglia and a new methodology based on Stacked Sparse Auto Encoders (SSAE) is proposed. Moreover two approaches including 2D and 3D features of images are included and then the results are compared based on that they saw that SSAE improves the result. It is the purpose of this paper to investigate and present a comparative study of different entropy measures for threshold selection purpose in MRI image segmentation problems using co-occurrence matrix. Here we compute the threshold for each gray plane using the minima of each entropy measures (Shannon, Renyi, Havrda-Charvat, Kapur and Vajda), which in turn is computed via the co-occurrence matrix and use it for segmentation. The simulation results are also presented using different entropy measures. It is seen that the threshold values obtained from these plots is dependent on the particular definition of the entropy chosen, which in turn affects the segmentation results. It is seen that Non Shannon Entropy measures gives better results as compared to the Shannon entropy measures.The rest of the paper is organized as follows. Section II describes the definitions of several entropy measures which are evaluated for threshold selection in image segmentation problems. Simulation results are presented in section III. Section IV of this paper presents us the conclusion.

II. Proposed Method The methodology to segmentise the image using the Gray Level Co-occurrence matrix (GLCM) and probability matrix is discussed. In this paper we have extent this image in non Shannon entropy measures such as (Renyi, Harvard Charvart, Vajda, and Kapur) on MRI images. We have calculated the gray co-occurrence matrix Cm1,m2 for each channel in Gray Images. The probability function pm1,m2 = Cm1,m2/MN is then calculated from gray co-occurrence matrix. Entropy functions for each entropy are defined below in the interval t ∈ [0,1,2,3L − 2]. The minima points are obtained from the graph plotted against from the entropy versus gray level plot(t). Gray Co-occurrence matrix: It is a matrix or a distribution that is defined over an image to the distribution of co-occurring values at a given offset. Mathematically a GLCM ‘C’ matrix is defined over an image n∗ m image I, parameterized by an offset (∆x,∆y), as:

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Where i and j are the Image intensity values of the images, p and q are the spatial positions in the image I and offset (∆x,∆y) depends on the direction used θ and the distance over which the matrix is computed Offset parameterization makes GLCM more sensitive to rotation. Syntax of the GLCM can be give by any of the of three: • Glcm= graycomatrix [I] • Glcm= graycomatrix [I, param1, val1, param2, val2...] • [Glcm,SI]=graycomatrix(....) .

Figure 1. GLCM Representation

Probability Matrix: It is a normalized GLCM over all offsets or directions under the consideration. Entropy: Entropy is the measure of degree of randomness that can be used to characterize the texture of the input image. Entropy is defines as, −Xpi ∗ logpi There are different types of entropies as: 1) Shannon Entropy: Shannon entropy provides an absolute limit on the best possible lossless compression of a signal under constraint. Shannon Entropy is defined as Hsp(m1,m2) = XXpm1m2logpm1m2 m1 m2 , where pm1 and pm2 are probability density functions in 2-D random variable [3]. In this paper we have computed the values of pm1m2 from the entries of the GLCM. 2) Renyi Entropy generalizes the Shannon Entropy, this entropy is also important in quantum information where it can be used as a measure of entanglement. It is defined as the entropy of the order of ∝, where ∝≥0 and ∝6=1, is defined as

3) Harvrda-Charvat : This entropy is used for statistical physics and modified by Dracozy. This entropy is defined as the function of ∝ and mathematically as.

4)

Kapur-Entropy:This entropy is defined by H k(pm1m2) of order of α and type β and is defined as,

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Table I: ENTROPY FUNCTIONS

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Above we have discussed the Entropies and their mathematical representation. The main approach of this paper is to select threshold from entropy function of the above entropies which will calculate the minimum value of threshold. The entropy function of given Entropies are as follows. The above entropies are calculatedfor each t ∈ [0,1,2,3....L − 2] on the basis of the Gray Co-occurrence Matrix Cm1m2 which in turn is used to calculate the probAlgorithm 1 Steps for Entropy Based Threshlod Selection. 1) Let I(x,y) be a given image. 2) Cm1m2 represents the co-occurrence matrix for a specified neighbourhood. 3) Then evaluate probability matrix as, P Cm1m2 Pm1m2 = P All 8 neighbourhoods 4) Apply, Entropy functions given by Table 1 on this Pm1m2 where t varies from 0 to L − 2 for t = 0 to L − 2 V (t) = Entropyfun(Pm1m2,t); end. 5) Find out all localised minimas. 6) Find the minimal localised minima, find its generating t values which represents the optimal threshold values. ability density function pm1m2. This Pm1m2 plays a vital role which represents an image.

III. SIMULATION RESULTS The experiment is conducted on 12 to 15 MRI Images on 2.60 GHz Intel core i5 processor running on windows 8.The average computation time comes out to be 0.5 seconds. The entropy versus gray value plots for the different entropy functions is represented by below figures for a few select MRI Images. The segemenation results for different entropies is depicted by Table 3.

IV. CONCLUSION In this paper, we have investigated different Entropy functions for tumor segmentation from different MRI images. They are dependent on the different entropy function and their shanon and non shannon behaviour at different instance of parametric selections. The best result are obtained from Havrda Charvat Entropy are better than other Entropy functions used in sense of detecting tumours.

REFERENCES 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

M.Stella Attkins,Blair T Mackiewich „Fully Automatic Segmentation of the Brain in MRI‟ IEEE Transactions on Medical Imaging Vol 17 No 1 February 1998 Alberto Martino Gonzalez, Laura Igual Munoz, „Segmentation Of Brain MRI Structures with Deep Machining Learning‟ Master In Artificial Intelligence. KK Sharma, Neeraj Sharma, Shobha Sharma „Comparison Of Shannon And Non Shannon Entropy Measures For Threshold Selection in Image Segmentation Problems‟ 2012 International Conference On Electronics Computer Technology. Chun Yuan, Shagli Liang, “Segmentation of Color Image Based on partial Differential Equations,” Fourth International Symposium on Computational Intelligence and Design, 2011. Baljit Singh Khehra, Amar Pratap singh Pharwaha, “Digital Mammogram Segmentation using Non-Shannon Measures of Entropy ,”Proceeding of the world congress on Engineering 2011 Vol II WCE 2011,july 6-8, 2011, London, U.K. Hossein Mobahi, Shankar Rao, Allen Yang, Shankar Sastry and Yi Ma, “Segmentation of Natural Images by Texture and Boundary Compression,” International Journal of Computer Vision (IJCV), 95 (1), pg. 8698, Oct. 2011. Anil K. Jain, Fundamentals of digital image processing, Prentice- Hall of India, New Delhi, 2010 Kapur, J.N.: Generalized entropy of order α and type β. Math. Seminar, Delhi. G.C. Patni and K.C. Jain, “Axiomatic Characterization of Some nonadditive measures of Information,” Metrika, Band 24, 1977, Seite 2334, Physica-Verlag, Wien. P.K. Sahoo, P.K., Wilkins, C., et al., “Threshold selection using Renyi‟s entropy,” Pattern Recognition, vol. 30, pp. 71–84, 1997. B. Chanda and D. Dutta Majumder, “A note on the use of the gray level co-occurrence matrix in threshold selection,” Signal processing 15, pp. 149-167, NorthHolland, 1988. Jayanta Mukherjee, Sanjit Kr. Mitra, “Enhancement of Color Image by Scaling the DCT Coefficients,” IEEE Transactions on image processing, vol. 17, no. 10, October 2008.

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Table II: ENTROPY PLOTS

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Table III BRAIN TUMOR SEGMENTATION RESULTS

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Computational Model for Fuzzy Cryptography Bhanu Sahu1, Deepti Maheshwari2, Neeraj Sahu3 1&2Commerce, AISECT, Bhopal, INDIA 3Computer, MCU, Bhopal, INDIA

Abstract: This paper presents a fuzzy cryptography based model for network security. In this research work a fuzzy cryptography model is proposed to fuzzy encryption and fuzzy decryption algorithms in network security. The proposed model is used fuzzy secrete key for decryption and encryption algorithms. Fuzzy public key encryption algorithms have fuzzy public key and fuzzy private key. The performance evaluation of experimental results has done by MATLAB 7.14 Software. The experimental results show that the proposed approach out performs. The proposed models give best security compare to exiting algorithms. Keywords - Fuzzy cryptography, fuzzy decryption, fuzzy encryption, fuzzy private key, fuzzy public key, fuzzy secrete key. _________________________________________________________________________________________________

I. Introduction Fuzzy cryptography is an art of secrete writing with combination of fuzzy encryption and fuzzy decryption methods. There are fuzzy secrete keys. Fuzzy public key encryption algorithms are proposed fuzzy public key and fuzzy private key.

II. Related work Sahai A, Waters B. gave Fuzzy identity-based encryption[5], Fabian Monrose, Michael K. Reiter, Q. (Peter) Li, and Susanne Wetzel gave Cryptographic key generation from voice[2],Adi Shamir gave Identity-based cryptosystems and signature schemes[3], Xavier Boyen gave Reusable cryptographic fuzzy extractors[1],Brent Waters gave efficient identity based encryption without random oracles [4] Boneh D,Di Crescenzo G, Ostrovsky R, Persiano G. gave Public key encryption with keyword search[6].

III.

Preliminaries and Basic Definitions

Fuzzy Encryption: A method converting plaintext to cipher text using fuzzy secrete key is defined fuzzy encryption. Fig 1.2 block diagram for fuzzy encryption. Fuzzy secrete key K = { k1,k2,k3,k4,k5,k6,k7}

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Fuzzy Decryption: A method converting cipher text to plaintext using fuzzy secrete key is defined fuzzy encryption algorithms. Fig 1.3 block diagram for fuzzy Decryption Fuzzy secrete key K = { k1,k2,k3,k4,k5,k6,k7}

C. Fuzzy Public key encryption In the Fuzzy public key encryption different the steps are used. The steps are as follows by figure 1.4

a) Fuzzy Public key algorithms are based on mathematical function rather than on simple operations on bit patterns b) Fuzzy Public key cryptography is asymmetric, involving the use of two separate keys c) The key ingredients are similar to that of conventional fuzzy secret key algorithms, except that there are two keys – a fuzzy public key and a fuzzy private key used as input to the fuzzy encryption and the fuzzy decryption algorithm.

IV.

Calculation of Security Accuracy percentages for various methods and keys

In these calculation security accuracy percentages for methods is described as tabulations representation in Table 1 and security accuracy percentages is described for keys in Table 2. Table 1 shows methods encryption, decryption, public key encryption, fuzzy decryption, fuzzy decryption, and fuzzy public key encryption security accuracy percentages. Computational Model for Fuzzy Cryptography

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Table 2 shows keys public key, private key, secrete key, fuzzy public key, fuzzy private key and fuzzy secrete key security accuracy percentages. TABLE I: Security Accuracy percentages for methods Methods Security Accuracy percentages Encryption 92% Decryption 91% Public key encryption 93% Fuzzy decryption 94% Fuzzy encryption 93% Fuzzy public key encryption 95% TABLE II: Security Accuracy percentages for keys Methods

Security Accuracy percentages

Public key

94%

Private key

96%

Secrete key

95%

Fuzzy public key

95%

Fuzzy private key

97%

Fuzzy secrete key

96%

V. Methodology In the fuzzy cryptography different the steps are used. The steps are as follows: a) Fuzzy Encryption: A method converting plaintext to cipher text using fuzzy secrete key. b)

Fuzzy Decryption: A method converting cipher text to plaintext using fuzzy secrete key.

c) Fuzzy Public key encryption: A Method of converting cipher text to plaintext using fuzzy public key and cipher text to plaintext using fuzzy private key.

VI.

Algorithm

The algorithm 1 describe fuzzy encryption algorithm. Algorithm 1: Basic algorithm obtains for fuzzy encryption. Step1: Input: Plain Text. Step 2: Output: Cipher Text. Step3: Find fuzzy encryption using fuzzy secrete key. Step 4: Find the fuzzy encryption. The algorithm 2 describe fuzzy decryption algorithm. Algorithm 2: Basic algorithm obtains for fuzzy decryption. Step1: Input: Cipher Text. Step 2: Output: Plain Text. Step3: Find fuzzy decryption using fuzzy secrete key. Step 4: Find the fuzzy decryption.

Computational Model for Fuzzy Cryptography

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ISSN(E): 2320-8236, ISSN(P): 2395-4833 VOLUME: 3, ISSUE:2 APRIL – JUNE 2015

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The algorithm 3 describes Fuzzy Public key encryption. Algorithm 3: Basic algorithm obtains for Fuzzy Public key encryption. Step1: Input: Plain Text. Step 2: Output: Plain Text. Step3: Find fuzzy encryption using fuzzy public key. Step4: Find fuzzy decryption using fuzzy private key. Step 5: Find the Plain Text.

VII. Experiment and Results In this experiment security accuracy percentage for methods is described as graphical representation in Figure 1.5 and security accuracy percentages for keys is give graphical representation in Figure 1.6. Figure 1.5: Security Accuracy percentages for methods

Figure 1.6: Security Accuracy percentages for keys

KEYS

96% 95% 94% 93% 92% 91% 90% 89% Data

Security Accuracy s %

Security Accuracy s %

METHODS 98% 97% 97% 96% 96% 95% 95% 94% 94% 93% 93%

Data

VIII. Conclusion In this paper we proposed a new approach for network security based fuzzy cryptography. Fuzzy cryptography based network security aims to improving the network security and developed efficient and accurate new fuzzy encryption algorithm and fuzzy decryption algorithm for network security the experimental results show that our proposed new approach for network security is best performs. The accuracy of security is efficient and accurate.

References 1. 2. 3. 4. 5. 6.

Xavier Boyen. Reusable cryptographic fuzzy extractors. In ACM Conference on Computer and Communications Security—CCS 2004, 2004 Fabian Monrose, Michael K. Reiter, Q. (Peter) Li, and Susanne Wetzel. Cryptographic key generation from voice. In Proceedings of the IEEE Conference on Security and Privacy, 2001. Adi Shamir. Identity-based cryptosystems and signature schemes. In Proceedings of CRYPTO 84 on Advances in cryptology, pages 47–53. Springer-Verlag New York, Inc., 1985. Brent Waters. Efficient identity based encryption without random oracles. In To Appear in Proceedings Eurocrypt 2005, 2005. Sahai A, Waters B. Fuzzy identity-based encryption. Advances in Cryptology–EUROCRYPT 2005, p. 557. Boneh D,Di Crescenzo G, Ostrovsky R, Persiano G. Public key encryption with keyword search. Advances in Cryptology-Eurocrypt 2004, Springer; 2004, p.506-522.

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