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CONTENTSCONTENTSCONTENTSCONTENTS Sr.

No. TITLE & NAME OF THE AUTHOR (S) Page No.

1. MALL CHOICE CRITERIA: A QUALITATIVE STUDY WITH REFERENCE TO NEW MUMBAI SHOPPERS

DR. SUDHEER DHUME & DR. ANKUSH SHARMA

1

2. PERFORMANCE ANALYSIS OF THE LIGHT RAIL TRANSIT’S (LRT’s) TICKET-BASED SYSTEM IN STATION X USING

SIMULATION SOFTWARE

MA. TEODORA E. GUTIERREZ

6

3. DIVERSIFYING A PAKISTANI STOCK PORTFOLIO WITH REAL ESTATE CAN REDUCE RISK

AMMAR ASGHAR & KASHIF SAEED

10

4. THE EFFECT OF FDI INFLOWS ON NIGERIA’S BALANCE OF PAYMENT FOR THE PERIOD 1980-2009

OMANKHANLEN ALEX EHIMARE

17

5. FINDING THE DETERMINANTS OF CAPITAL STRUCTURE: A CASE STUDY OF UK COMPANIES

MUKHIDDIN JUMAEV, JALAL HANAYSHA & EMAD EDDIN ABAJI

21

6. AN ASSESSMENT OF THE CONTRIBUTION OF PAY-AS-YOU-EARN TO THE INTERNALLY GENERATED REVENUE OF

KANO STATE BETWEEN THE PERIODS 1999 TO 2008

ISHAQ ALHAJI SAMAILA

26

7. A FRAMEWORK FOR MINING BUSINESS INTELLIGENCE – A BOON TO NON MINING EXPERTS

B. KALPANA, DR. V. SARAVANAN & DR. K. VIVEKANANDHAN

30

8. UTILIZING THE POWER OF CLOUD COMPUTING TO PROMOTE GREEN LEARNING

DR. V.B. AGGARWAL & DEEPSHIKHA AGGARWAL

35

9. WORK EXPERIENCE AND LENGTH OF WORKING HOURS ARE AFFECTING ON THE STRESS

DHANANJAY MANDLIK & DR. PARAG KALKAR

39

10. AN EMPIRICAL INVESTIGATION INTO MANAGEMENT PRACTICES OF ACADEMIC LEADERS IN MANAGEMENT

COLLEGES

SWAPNIL PRAMOD MACKASARE & DR. UMESH VINAYAK ARVINDEKAR

43

11. USING NCDH SEARCH ALGORITHMS BLOCK MOTION ESTIMATION

R. KARTHIKEYAN & DR. S. R. SURESH

50

12. SERVQUAL IN FINANCIAL SERVICES: CASE STUDY OF LIFE INSURANCE CORPORATION OF INDIA

DR. KESHAV SHARMA & BEENISH SHAMEEM

56

13. INFORMATION ORIENTATION AND ETHICAL PRACTICES IN GOVERNMENT ORGANISATIONS: A CASE OF HEALTH

SECTOR

ANJU THAPA & DR. VERSHA MEHTA

60

14. DO THE TEENAGERS EVALUATE THE PRODUCT WHILE INFLUENCING THEIR PARENTS TO PURCHASE?

DR. A. S. MOHANRAM

65

15. RIGHT TO EDUCATION: EFFECTIVE USE OF ICT FOR REACHING OUT TO SOCIALLY AND ECONOMICALLY WEAKER

SECTIONS IN INDIA

PRABIR PANDA, DR. G P SAHU & THAHIYA AFZAL

69

16. WEB RESOURCES FOR GREEN REVOLUTION

M. PADMINI, M. SURULINATHI, T. R. SAJINI NAIR & T. SUHIRTHARANI

76

17. IPOs GRADE AND POST ISSUE PERFORMANCE: AN EMPIRICAL STUDY

DR. ISHWARA. P & DR. CIRAPPA. I. B

79

18. INVENTORY LEANNESS IMPACT ON COMPANY PERFORMANCE

RENU BALA

83

19. A STUDY OF BUSINESS OPERATION OF RRBs OF GUJARAT

JAIMIN H. TRIVEDI

85

20. SKILLS & COMPETENCIES FOR THE AGE OF SUSTAINABILITY: AN UNPRECEDENTED TIME OF OPPORTUNITY

DR. B. REVATHY

87

21. CORPORATE SOCIAL RESPONSIBILITY @ ICICI BANK

MANISHA SAXENA

94

22. INVESTMENT DECISIONS OF RETAIL INVESTORS IN MUTUAL FUND INDUSTRY: AN EMPIRICAL STUDY USING

DEMOGRAPHIC FACTORS

SHAFQAT AJAZ & DR. SAMEER GUPTA

101

23. AN EVALUATION OF SERVICE QUALITY IN COMMERCIAL BANKS

DR. V. N. JOTHI

109

24. APPRAISAL OF QUALITY OF SERVICES TO EXPRTERS IN PUBLIC SECTOR BANKS

SAHILA CHAUDHRY

113

25. MANAGEMENT OF HOSPITAL DISASTERS: A STUDY OF HOSPITAL DISASTER PLAN

RAMAIAH ITUMALLA

118

REQUEST FOR FEEDBACK 122



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Chancellor, Lingaya’s University, Delhi

Founder Vice-Chancellor, Guru Gobind Singh Indraprastha University, Delhi

Ex. Pro Vice-Chancellor, Guru Jambheshwar University, Hisar

PATRONPATRONPATRONPATRON

SH. RAM BHAJAN AGGARWAL Ex. State Minister for Home & Tourism, Government of Haryana

Vice-President, Dadri Education Society, Charkhi Dadri

President, Chinar Syntex Ltd. (Textile Mills), Bhiwani

COCOCOCO----ORDINATORORDINATORORDINATORORDINATOR

MOHITA

Faculty, Yamuna Institute of Engineering & Technology, Village Gadholi, P. O. Gadhola, Yamunanagar

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Chancellor, The Global Open University, Nagaland

PROF. M. S. SENAM RAJU

Director A. C. D., School of Management Studies, I.G.N.O.U., New Delhi

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Principal (Retd.), Maharaja Agrasen College, Jagadhri

EDITOREDITOREDITOREDITOR

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Professor, Bharti Vidyapeeth University Institute of Management & Research, New Delhi

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MOHITA


EDITORIAL ADVISORY BOARDEDITORIAL ADVISORY BOARDEDITORIAL ADVISORY BOARDEDITORIAL ADVISORY BOARD

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Faculty, Yanbu Industrial College, Kingdom of Saudi Arabia

PROF. PARVEEN KUMAR

Director, M.C.A., Meerut Institute of Engineering & Technology, Meerut, U. P.

PROF. H. R. SHARMA

Director, Chhatarpati Shivaji Institute of Technology, Durg, C.G.

PROF. MANOHAR LAL

Director & Chairman, School of Information & Computer Sciences, I.G.N.O.U., New Delhi

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DR. ASHWANI KUSH

Head, Computer Science, University College, Kurukshetra University, Kurukshetra

DR. BHARAT BHUSHAN



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Head, Department of Computer Science & Applications, Guru Nanak Khalsa College, Yamunanagar

DR. VIJAYPAL SINGH DHAKA

Head, Department of Computer Applications, Institute of Management Studies, Noida, U.P.

DR. SAMBHAVNA

Faculty, I.I.T.M., Delhi

DR. MOHINDER CHAND Associate Professor, Kurukshetra University, Kurukshetra

DR. MOHENDER KUMAR GUPTA

Associate Professor, P. J. L. N. Government College, Faridabad

DR. SAMBHAV GARG Faculty, M. M. Institute of Management, Maharishi Markandeshwar University, Mullana

DR. SHIVAKUMAR DEENE

Asst. Professor, Government F. G. College Chitguppa, Bidar, Karnataka

DR. BHAVET Faculty, M. M. Institute of Management, Maharishi Markandeshwar University, Mullana

ASSOCIATE EDITORSASSOCIATE EDITORSASSOCIATE EDITORSASSOCIATE EDITORS

PROF. ABHAY BANSAL

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PROF. NAWAB ALI KHAN

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DR. ASHOK KUMAR

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ASHISH CHOPRA

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TECHNICAL ADVISORSTECHNICAL ADVISORSTECHNICAL ADVISORSTECHNICAL ADVISORS

AMITA

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MOHITA


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NEENA

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JITENDER S. CHAHAL

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SUPERINTENDENTSUPERINTENDENTSUPERINTENDENTSUPERINTENDENT

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• Garg, Bhavet (2011): Towards a New Natural Gas Policy, Political Weekly, Viewed on January 01, 2012 http://epw.in/user/viewabstract.jsp



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1

MALL CHOICE CRITERIA: A QUALITATIVE STUDY WITH REFERENCE TO NEW MUMBAI SHOPPERS

DR. SUDHEER DHUME

ASSOCIATE PROFESSOR

NATIONAL INSTITUTE OF INDUSTRIAL ENGINEERING

MUMBAI

DR. ANKUSH SHARMA

ASSOCIATE PROFESSOR

ITM BUSINESS SCHOOL

NEW MUMBAI

ABSTRACT Organized Retail and Mall Culture has very much arrived in India. It is expected to grow at an accelerated pace in the times to come. Along with the growth the

intensity of competition is going to be significantly high. Increasing the number of ‘Foot-Falls’ and converting them in to shoppers will be a challenge for the

management of Malls. In this backdrop, the knowledge of shopper behavior becomes pre-requisite for enhancing the probability of success. Precise knowledge of

the parameters considered by the shoppers while choosing a mall out of alternatives can go a long way in guiding the marketing decisions. The present research

paper aims at identifying those factors which influence shoppers’ mall choice at New Mumbai. Using FGD technique prominent factors have been identified.

Based on this understanding certain broad recommendations are also made.

KEYWORDS Retail, Malls, Shoppers Choice Criteria, FGD, Qualitative Research.

INTRODUCTION rganized retailing in India witnessed a gross turnover of USD 320 billion1 in 2006. Although this figure is low compared with other developed economies,

industry experts expect the growth rate of this sector at 35% until 2010. At present, about 100 malls are operational at a Pan-India level with a total area

of 19 million sq ft. As per the current estimates, about 300 additional malls are expected to be constructed across the country by 2010. As organized

retail grows, we expect the market to be more competitive by providing more choices to consumers and retailers. At this point, developers will have to work

harder to create a differentiation for their product. We believe consumers and retailers will be attracted to malls that are professionally managed, making

effective mall management a critical factor behind the success of a mall.

The partial foreign direct investment (FDI) relaxation in 2006 allowed 51% ownership in joint ventures by single-brand companies in the retail market. This

triggered high international single-brand retailer interest in the Indian retail market. Additionally, large Indian conglomerates such as Reliance Industries and

Aditya Birla Group are commencing their foray into retailing across the country. This prompts the Indian retail industry to undoubtedly move on a high growth

curve. However, at this juncture, retailing is still faced with one major challenge: systematic mall management. Currently, there are very few designated mall

management companies in India. However, big retail chains such as Future Group and some large developers have set up their own mall management divisions

that operate as their subsidiary companies. Some developers such as DLF have also recently entered into contractual arrangements with international property

consultancy firms to manage their malls. Historically, developers were managing their malls in-house, which are expected to change going forward. (Debarpita

Roy, Nitika Masih, 2007)

The retail format that has shown maximum growth among all is the multipurpose shopping complexes or shopping malls. Spencer Plaza in Chennai and

Crossroads in Mumbai are considered to have pioneered the shopping mall in its modern format. The pace of development has been fast since then. Mall

development is expected to grow at a frantic pace in metros and mini metros driven by the organized retail sector and spread to 60 cities by the end of this

decade. For the Indian mass affluent, the call of the mall is proving irresistible. The packed parking lots, busy food courts and restaurants, crowded anchor stores

and noisy gaming arcades at the malls bear testimony to this alluring call. The secret of the lure of the mall lies in its mass appeal—it has something on offer for

everyone in the family. The fact that a mall offers experience and not just goods is a major attraction. There is a wide range of shopping experiences—bargains

and discounts or high-end brands for couples, gaming and other amusement facilities for kids, a large choice of cuisines for family meals, and, of course, the

multiplex theatres.

Since organized retail is in its nascent stage, mall management is mostly learning through trial and error. “Build them and they will come”, is the attitude

towards consumers currently. Much to their dismay, malls are finding that shoppers are spending lot of time and not money at the malls. People visit cafes,

spend the whole day here and pass their time. The malls are always crowded but most of the people come for window shopping and not actual shopping. When

the promised footfall and conversions do not materialize, then the relationship between the retailer and the mall management sours. With more and more malls

dotting the urban landscape, it is now becoming essential to study consumer behavior and differentiate the offerings. (Shelja Jose Kuruvilla and Nishank Joshi,

2010)

MALLS IN NAVI MUMBAI Navi Mumbai is the world's largest planned city. It was initially planned with a specific purpose: to decongest Mumbai and become an alternative haven for the

multitudes that throng to Mumbai from all over India. As of the 2001 India census, Navi Mumbai had a population of 703,947 which is projected in 2011 census

data as 1,268,784 Males constitute 56% of the population and females 44%. Navi Mumbai has an average literacy rate of 74%, higher than the national average

of 59.5%: male literacy is 79%, and female literacy is 67%. In Navi Mumbai, 14% of the population is under 6 years of age, with 28% in the age group of up to 15

years, 55% in the age group of 15-44 year bracket and 13% aged 45–59. Average family size is 4.05 persons, compared to Mumbai's average of 4.85.67% of

families living in Navi Mumbai own their homes and of the working population, 63.5% are employed within the city.

With so many malls, mega-marts and retail stores in our city, and more to open up soon, the scene definitely looks good for the die-hard shoppers and window

shoppers. Malls in the city are seeing a rise in footfalls during the last few months, global recession notwithstanding. There are so many high-end shops in the

malls in Navi Mumbai that there is no need to go to Mumbai now, as almost all premium brands are available right here. Malls in the city are quite big and are a

hangout for the youth of the city. Big Bazaar, gift shops like Archies and Karigar, music and book stores like Planet M and Crossword, various apparel stores are

just too good for the consumer who has become king,” says Snehal Bangad, a collegian from Belapur. Center One, Vashi, opened up first followed by others like

Palm Beach Galleria, Raghuleela, City Center and now Inorbit. With five malls, Vashi has become a shoppers’ paradise One can also head to one of the

multiplexes in the city, within the malls.

Not just the customers, even the managements running these malls are positive about the long term impact of malls on the city and its consumerist culture.This

satellite township has been witnessing a rapidly changing retail landscape and is on the brink of a retail revolution. With the launch of world-renowned stores

O



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across malls in Navi Mumbai, there has not only been a rise in footfalls here but also a boost in shopping of popular labels, amongst the shoppers. This

eventually is helping malls like Inorbit to bring home to their shoppers famous sought-after brands.

It is the shopping experience that people love here. Not everybody is necessarily looking for discounts and do not mind spending a few extra bucks. Besides, the

growing population of expats in the city is adding to the changing profile of this city’s consumer. Right now, due to the ripple effect of the global meltdown, a

major chunk of customers are the loyal ones. However, recession is a temporary phase. The mall owners are sure that they will again start getting customers in

huge numbers. The future of malls and the mall culture in this city seems fantastic.

Some people attach special feelings with these concrete and glass structures, too. Customers and young couples, who spend a lot of time at the mall, consider it

just like their home. They are very comfortable here and often hang out with their loved ones. It seems mall culture has already become a big factor in this city.

Celebs are also adding to the glam quotient of these hip “Masti, Bunty Aur Babli, Saas, Bahu Aur Sensex, Mumbai Meri Jaan were the other movies with certain

scenes shot at Center One mall. Shatrughan Sinha aka Shotgun, Rekha and Satish Shah recently shot a few scenes of their new movie here. The ambience is what

they like at our mall. (Sharma, 2008)

CHALLENGES Earlier in the decade, mall developers were more inclined towards exiting the project early by selling retail mall units to investors at the pre-completion and

post-completion stages and booked profits. As the ownership of individual retail spaces were with different entities, there was no central authority managing

the malls. There was no control over the various facets of mall management mentioned earlier in the paper. Even though there have been some examples of

professionally managed malls in recent years, organised retail in Indian malls have a long way to go to achieve optimum mall management. The current Indian

scenario is plagued by various issues, some of which are discussed below.

• Lack of Feasibility/Market Research Prior to the Development of a Mall – In the past, some malls were constructed without carrying out a rigorous due

diligence exercise on their feasibility. The market scene is gradually changing wherein more and more developers are approaching property consultancy

firms to conduct feasibility and positioning studies for their projects.

• Zoning – Landlords/developers tend to lease out retail space on a first-come-first-served basis. This creates a sub-optimal tenant mix like a food and

beverage outlet next to a designer apparel shop instead of an accessories or a footwear shop.

• Design Issues – At present, most of the popular malls have long queues and congestion outside their main entry points during weekends and festive

seasons. Having only one entry and exit points also leads to overcrowding. Similarly, the visibility of retail units from all vantage points is poor in many

malls.

• Few Promotional Activities – There are very few promotional activities organised in the majority of malls at present. Developers perceive that these events

only help increase foot traffic and not revenues.

• Facility Management – Good infrastructure/facility management of common areas becomes a problem in malls where retail outlets are sold as strata title.

• Parking – Many malls in India do not have adequate parking. Since most malls are being built in the city, developers typically provide basement parking

facilities. However, these parking spaces are inefficient due to low ceiling heights, bad lighting and single entry and exit points. (Banga, 2010)

The coming year will have a lot of consolidation. The existing smaller or vacant malls will either be converted into commercials or will be acquired by the larger

players. The commercialization strategy will improve as the developers have seen enough and have learned to reject the worst and select the best. The tagline

"everybody is welcome" will no longer be entertained and the landlords will be more selective in case of tenant mix and assigning locations.

To assimilate the above, complete and professional asset management services are required to assist the developers and to create a good balance between the

customers, retailers and the owners. It is possible by correct succession of steps beginning from thorough market research till the designing of the property.

Considering the fact that Indian real estate market has high potential and long way to go; the current phase demands improvisation through professional

consultancy and other allied services. It is the time to see how owners employ the best use of these services in future. And if all this is incorporated, one can

hope that Indian Malls can once again be on a path of glory.

PROBLEM DISCUSSION Retail in India is passing through an interesting phase. On one hand there are promising projections of future growth, and on the other hand the landscape is

becoming more and more competitive. Some malls do have large number of foot falls, but those foot falls are not getting converted to shoppers. What is true at

the national level is true of Navi Mumbai market as well.

The million dollar question on the top of the mind of mall management is ‘How to make the shoppers to get attracted?’ Related question is ‘What factors

influence the customers while choosing the mall for shopping?’

RESEARCH OBJECTIVE The foremost objective of the research is to ascertain the Antecedents of consumers’ mall choice in the conglomerate locality.

LITERATURE REVIEW Early researchers on mall patronage developed gravitational models to predict patronage for shopping areas using a combination of objective measures, such as

distance, population density and mass (square footage of retail space)(Brunner and Mason, 1968; Huff, 1963; Bucklin, 1967).

Huff (1964) and Huff and Rust (1984) retail gravity model, provides a formula for predicting mall patronage based on the principle of cost (accessibility) verses

utility (size).

Later studies focused on subjective factors such as image attributes and consumers’ shopping motives (Bellenger et al., 1977; Gentry and Burns, 1977–8; Nevin

and Houston, 1980; Finn and Louviere, 1996; Stoltman, 1991).

Wakefield and Baker(1998) examined the relationship between three factors—tenant variety, mall environment and shopping involvement, on shoppers

excitement and desire to stay at the mall in the effort to understand antecedents and consequences of excitement at the mall.

Shopping mall attributes determine the shoppers’ attitude to malls. Shim and Eastlick (1998) defined mall shopping attitude as the shoppers attitude towards a

variety of dimensions including location, variety of stores, parking, mall employee behavior, price, quality, customer service, promotional activities, ambiance,

mall amenities, food and refreshments and safety.

Malls are viewed as cultural and entertainment centers (Robertson, 1995; Rintama€ki etal., 2006). They help retailers satisfy the utilitarian and emotional needs

of the consumers (Holbrook and Hirschman, 1982; Bloch et al., 1994; Buss, 1997; Wakefield and Baker, 1998; Arnold and Reynolds, 2003)

Over the past few years researchers have examined mall ambience, store factors, and facilities that contribute to mall patronage and attractions (Howell and

Rogers, 1980; Finn and Louviere, 1990; Finn and Louviere, 1996; Swait and Sweeney, 2000; Darian et al., 2001; Yavas, 2003; De Juan, 2004).

Paper looks at the mall attributes that influence consumer behavior which were identified by Bloch et al. (1994). They are categorized as follows:

1. Aesthetics: Belk (1975) concludes that physical and social surroundings of shopping centers are important attributes affecting shopping behavior. The

variables such as locations, de´ cor, noise, aromas, lighting intensity, physical layout, and presence of other shoppers in a shopping environment influence

consumer’s shopping behavior.

2. Escape: Shoppers seek respite from their daily routines in the malls. The mall environment provides positive cues which have an impact on the consumers’

moods (Bittner, 1992; Michon et al., 2008; Ghee and Ahmad, 2010).

3. Flow: Mall patronage motives are also influenced by variety, entertainment, social, leisure, fashion, convenience, and relaxation (Haynes andTalpade, 1996).

4. Exploration: Wakefield and Baker (1998) suggest that variety of shops in malls generate positive effect and excitement.



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5. Role enactment: Tauber (1972) states, ‘‘Many activities are learned behaviors, traditionally expected or accepted as part of ascertain position or role in society

like—mother, housewife, husband, or student. A person internalizes the behaviors as ‘‘required’’ and is motivated to participate in the expected activities’’.

6. Social: Malls facilitate social interaction (Kelly, 1983).

7. Convenience: Research also suggests that convenience has the largest impact on the shopping center choices (Bearden, 1977)

METHODOLOGY This Qualitative study was carried out to explore the antecedents of Shoppers’ Mall choice. The methodology included Secondary Research and Series of

Focused Group Discussion (FGD).

FOCUSSED GROUP DISCUSSION (FGD)

Focused Group Discussions were conducted amongst the potential shoppers belonging to upper middle class .The respondents were chosen keeping in mind

that they fall under the category of our target audience, i.e., having residence in Navi Mumbai and are from either SEC A or B. The main objective of conducting

these group discussions was to understand the consumer behavior towards the malls in Navi Mumbai and also their expectations from the malls as a product or

service mix.

PARAMETER DEFINITION

The parameters/attributes of interest in FGDs were as follows:

1. Location: EXTERNAL FACTOR

Refers to the area in which the mall is placed. It takes into consideration the distance from the station [train/ bus], basically the accessibility of the mall. Also it

takes into consideration the locale.

2. Ambience: EXTERNAL FACTOR

Refers to the environment of a mall. It includes the layout, the flooring, the décor, the overall furnishing and other small factors such as cleanliness etc which

build up the atmosphere inside a mall. It is basically the overall feel of the mall.

3. Shopping area: EXTERNAL FACTOR

It refers to the size of the mall. Sometimes also called as floor space, this parameter directly associates with the capacity of the mall.

4. Parking space: EXTERNAL FACTOR

It refers to the availability of parking facilities for vehicles in and around the mall.

5. Events: FUNCTIONAL FACTOR

This refers to the various programs and entertainment events which are organized inside the malls.

6. Food courts/restaurants: FUNCTIONAL FACTOR

This refers to the sum of all the food retail shops, chains, cafés, ice cream parlors etc which are present inside the mall.

7. Brands: FUNCTIONAL FACTOR

This refers to all the product outlets as well as services which are present in the mall.

8. Kids zone: FUNCTIONAL FACTOR

This refers to the gaming parlors as well as special counters were young people can have some fun.

9. Multiplexes: FUNCTIONAL FACTOR

Refers to the movie hubs present in the mall.

10. Shopping: FUNCTIONAL FACTOR

Excludes purchase of daily need products i.e. FMCG products and includes apparel, electronic items etc.

11. Hanging out: FUNCTIONAL FACTOR

When consumers go to a mall with the sole purpose of spending time with their friends, family, spouse or even alone, then it is called “hanging out”.

12. Window shopping: FUNCTIONAL FACTOR

When consumers go to a mall with the intention of not buying anything but just to acquire information or to evaluate alternatives then it is called window

shopping.

13. One stop shop: FUNCTIONAL FACTOR

Refers to the characteristic of the mall i.e. the consumer can avail most of his needs in a single shop.

14. Discount offers: FUNCTIONAL FACTOR

Refers to the discounts and offers which are given to a consumer when they go to a particular mall.

15. Daily need products: FUNCTIONAL FACTOR

It refers to the need of purchase of FMCG product from a mall.

FINDINGS, DISCUSSIONS AND IMPLICATIONS The following are the inputs we got from our respondents which were divided into clusters according to their profile and responses

CLUSTER -1

Age: 40-45 yrs

Residence: Kharghar

For them the most important parameter of going to the mall was location followed by ambience, brands and food courts. They prefers going to the malls with

her family on weekends. Since their children are grown-up, events and gaming zone aren’t much important to and they goes to the malls for buying groceries,

footwear, clothes and to hang out at the food court.

CLUSTER-2

Age: 35-40yrs

Residence: Seawoods, Nerul

The most important aspect for them to go to the mall is the fun part. She loves going to the mall with their family every weekends and they does shopping of

groceries, footwear, gift items, clothing and also takes her children to the gaming zone and multiplex. For them brands and parking space are the two important

criteria before choosing any mall and they prefers taking their relatives to the malls who visit her place.

CLUSTER-3

Age: 25-30 yrs

Residence: Dombivili

For them, the first thing she expects from a mall is the ambience and they prefers going to the mall with their family where they can get bigger shopping area

and a good food court and they visits the malls for watching movies and shopping for clothes and groceries.

CLUSTER-4

Age: 30-35 yrs

Reseidence: Kharghar

No. of children: Nil

they loves to go to the mall for hanging out with their friends and For them food court is the first priority followed by multiplex and shopping of clothes and

footwear and they also likes doing window shopping with his friends.



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CLUSTER-5

Age: 25-30 yrs

Residence: Kharghar

No. of children: nil

For them the mall should be a One Stop Shop, they prefer everything should be available under one umbrella. They prefers going to the mall with their family

and spend time at the food court. Does there complete shopping for the mall and also visits the multiplex.

CLUSTER-6

Age: 25-30 yrs

Residence: Kalamboli

No. of children: nil

The first think they looks in while visiting any mall is the brands available there and They visits the malls during weekends along with his family and they spent

their day shopping for clothes, footwear ,watching movies and also eating at the food court.

CLUSTER-7

Age: 40-45 yrs

Residence: Vashi

They loves going to the mall with there family every weekend. Since, there children are grown-up, for them gaming zone and events aren’t much important. The

foremost criteria for them while choosing any mall is the ambience. They are also particular about the brands available in the mall and also the food court.

From this discussion, we could conclude that according to all the respondents a mall should be a One Stop Shop where they can spend their entire day with their

family. It should have the proper ambience, food court, brands and a multiplex. Events are not something for which somebody visits malls but they definitely are

crowd-pullers. According to all the respondents, Inorbit is the best mall in Navi Mumbai catering to all their needs.

CONCLUSION Predicting the consumer behavior for a particular service or a product is very important in any industry. This gives us the trend and the perception that

consumer has about a particular service or a product.

The conclusions we were able to ascertain from the research were as follows:

1. There exists a marked difference in the behavior of various classes, their purchasing pattern and their attitude towards various functional as well as non

functional parameters.

2. Location and restaurants are by far the most important parameters on which a consumer chooses which mall to go in.

3. Events and Gaming zones have no importance whatsoever but are definitely the future prospects for the mall industry.

4. Ambience, parking space, shopping area and brands play equal importance for the general mass, although they are important for all of them.

5. The time spending pattern for most of the people is not much which means that malls are still not in the mature stage.

6. The visiting patterns are confined to weekends except for the student segment and hence there is a need to position malls in the minds of the consumer as

a place for relaxation not only shopping.

7. People usually go to malls with their family of friends and hence this is the way to promote them i.e. as a place of fun, excitement etc.

8. Recreational factors are of major importance along with shopping for the consumers.

9. The purchasing pattern of the consumers inside the malls is limited to apparel.

Based on the inputs from the FGD Participants and detailed review of literature, following model is proposed:

FIGURE 1: ANTECEDENTS OF SHOPPERS’ MALL CHOICE



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SUGGESTIONS • A good ambience is a must for any mall anywhere because this can be used as the biggest differentiating factor.

• When setting up a mall it is preferable for us to have a large and comfortable shopping area.

• If we have to place a mall specifically for Class A and Class B then we have to make sure that we provide the service of parking.

• Events are one area in which we have a potential to grow and differentiate. This can be a new way to promote a mall by associating malls through this

variable.

• Gaming and Kids zone is very potential in future prospects.

• We can start a setup where we can provide services as to take care of children [little] when the parents are shopping with trained professional. This has

worked very wel in foreign and may work out in India as well.

SCOPE FOR FUTURE RESEARCH As Research was primarily focus on Satellite area of Navi Mumbai and researcher have tried to understand and ascertain the importance of factors with respect

to the local market. Similar sort of research can be highlighted in different parts of country and mostly in the upcoming area. Mall Management requires lots of

consumer decision making interfaces. Research can be conducted to explore those intangible variables and to present that in a more empirical manner.

Quantitative Research can be carried out to ascertain the strength of each of the dimensions identified.

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2. Bloch, P., Ridgway, N., Dawson, S., 1994. The shopping mall as consumer habitat. Journal of Retailing 70 (1), 23–42.

3. Bloch, P.H., Richins, Marsha L., 1983. A theoretical model for the study of product importance perceptions. Journal of Marketing 47 (Summer), 69–81.

4. Belk, Russell W., 1975. Situational variables and consumer behaviour. Journal of Consumer Research 2, 157–164.

5. Bittner, Mary Jo, 1992. Servicescapes: the impact of physical surroundings on customers and employees. Journal of Marketing 58 (April), 57–71.

6. Brunner, J.A., Mason, J., 1968. The influence of driving time upon shopping centre preference. Journal of Marketing 32 (2), 57–61.

7. Bucklin, L.P., 1967. The concept of mass in intra-urban shopping. Journal of Marketing 31 (4), 37–42.

8. Bearden, W.O., 1977. Determinant attributes of store patronage: downtown versus outlying shopping centers. Journal of Retailing 53 (2), 15.

9. Banga, A. S. (2010, March 1). The Fading Picture of Indian Malls. Retrieved August 16, 2010, from http://ezinearticles.com/?The-Fading-Picture-of-Indian-

Malls&id=3846188

10. Bellenger, D.N., Robertson, D.H., Greenberg, B.A., 1977. Shopping centre patronage motives. Journal of Retailing 53 (2), 29–38.

11. Bloch, P., Ridgway, N., Dawson, S., 1994. The shopping mall as consumer habitat. Journal of Retailing 70 (1), 23–42.

12. Darian, J.C., Tucci, L.A., Wiman, A.R., 2001. Perceived salesperson service attributes and retail patronage intentions. International Journal of Retail and

Distribution Management 29 (5), 205–213.

13. De Juan, M.D., 2004. Why do people choose the shopping malls? The attraction theory REVISITED. Journal of International Consumer Marketing 17 (1),

71–96.

14. Debarpita Roy, Nitika Masih. (2007). Mall Management – A Growing Phenomenon in Indian Retail Industry. Mumbai.

15. Finn, A., Louviere, J.J., 1996. Shopping center image, consideration, and choice: anchor store contribution. Journal of Business Research 35 (3), 241–251.

16. Finn, A., Louviere, J., 1990. Shopping center patronage models: fashioning a consideration set segmentation solution. Journal of Business Research 21, 259–

275. Finn, A., Louviere, J., 1996. Shopping center image, consideration and choice: anchor store contribution. Journal of Business Research 35 (3), 241–252.

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18. Gentry, J.W., Burns, A.C., 1977–8. How ‘important’ are evaluative criteria in shopping center patronage? Journal of Retailing 53 (4), 73–86

19. Huff, David L., 1963. A probabilistic analysis of shopping center trade analysis. Land Economics 39 (Feb), 81–90.

20. Huff, David L., 1964. Defining and estimating a trade area. Journal of Marketing 32 (4), 34–38.

21. Huff, David L., Rust, Rowland T., 1984. Measuring the congruence of a trading area. Journal of Marketing 48 (4), 68–74.

22. Holbrook, M.B., Hirschman, E.C., 1982. The experiential aspects of consumption: consumer fantasies, feelings and fun. Journal of Consumer Research 9 (2),

132–140.

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25. Michon, R., Yu, H., Smith, D., Chebat, J-C., 2008. The influence of mall environment on female fashion shoppers’ value and behavior. Journal of Fashion

Marketing and Management 12 (4), 446–456.

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30. Rintamaki, T., Kanto, A., Kuusela, H., Spence, M.T., (2006) Decomposingthevalue of departmentstoreshoppingintoutilitarian,hedonicandsocialdimensions—

evidence from Finland.InternationalJournalofRetailandDistributionManage- ment 34(1),6–24.

31. Robertson, K.A., 1995. Downtown redevelopment strategies in the United States. Journal of the American Planning Association 61 (4), 428.

32. Stoltman, J.J., 1991. Shopping choices: the case of mall choice. Advances in Consumer Research 18, 434–440.

33. Shim, S., Eastlick, M.A., 1998. The hierarchical influence of personal values on mall shopping attitude and behavior. Journal of Retailing

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35. Shelja Jose Kuruvilla and Nishank Joshi. (2010). Mall Management. Profiling the Heavy Consumers at Malls in India, 3-7.

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37. Wakefield, K.L., Baker, J., 1998. Excitement at the mall: determinants and effects on shopping response. Journal of Retailing 74 (4), 515–539.

38. Wakefield, Kirk L., Baker, J., 1998. Excitement at the mall: determinants and effects on shopping response. Journal of Retailing 74 (4), 515–539.

39. Yavas, U., 2003. A multi-attribute approach to understanding shopper segments? Journal of Retail and Distribution Management 31 (11), 541–548.



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PERFORMANCE ANALYSIS OF THE LIGHT RAIL TRANSIT’S (LRT’s) TICKET-BASED SYSTEM IN STATION X

USING SIMULATION SOFTWARE

MA. TEODORA E. GUTIERREZ

ASST. PROFESSOR

INDUSTRIAL ENGINEERING DEPARTMENT

TECHNOLOGICAL INSTITUTE OF THE PHILIPPINES – MANILA

PHILIPPINES

ABSTRACT The study evaluated the present performance of the light rail transit’s (LRT’s) fare collection ticket-based system at Station X. The goal is to measure the

performance of the current system in terms of the average time that passengers spent in operation that is, procuring the ticket from vending machines and time

spent in waiting lines. Total number of passengers in waiting lines was also identified as well as the number of passengers already exited from the system given

the thirty (30) minutes observed time. Application of Queue theory in the field of transportation was used as model framework and Promodel simulation software

was applied to calculate the present and proposed system.

KEYWORDS Rail transit, Simulation, Queue Theory.

INTRODUCTION he presence of rail transit in the developing countries is imperative because it reduces the travel time from one destination to another that helps both

individual commuters and businesses alike. The Light Rail Transit Authority (LRTA) is a wholly owned government corporation which is recognized to

provide reliable, efficient, and environment-friendly mass rail services to all residents in Metro Manila. In that case, evaluating their systems

performance is critical.

The objective of the study is to conduct performance analysis of the fare collection ticket-based systems of LRTA in station X. Moreover, the intention of the

study is to improve the systems performance in terms of identifying the optimum number of ticketing machines.

LITERATURE REVIEW Queuing theory is used to mathematically measure the waiting time of an entity. An entity could be a products, customers, materials and machines. Also, this

theory permits to calculate other performance indicators of a system like average time spent, average number of customers in a system, etc. On the other hand,

simulation is one of a tool to understand queuing models because of its capability to measure a system performance.

Researches in the field of Queuing theory were applied mostly in transportation industry. For instance, Soh, et al (2009), uses simulation to propose a new traffic

model for multilane multiple intersection based on queuing theory. Moreover, Toledo, et al (2010) presented a transit simulation model in order to support

evaluation of operations, planning and control where travel time is the basis of performance.

METHODOLOGY The Light Rail Transit Authority’s fare collection system is a ticket based system, which uses two types of tickets: a single journey (one way ticket) whose cost is

dependent on the destination and a stored value (multiple –use) which cost one hundred pesos (P100). The study focused on a single journey ticket which can

be procured from vending machines.

The evaluation of the current performance was observed between 1:00pm to 1:30 pm at station X. Since that the station is considered as the central place and

connecting place to the other rail transit, the period of time that the observation takes place is considered as peak hour. The data collected was stated in table 1.

ProModel simulation software was used to measure its performance.

TABLE 1 – ARRIVAL FREQUENCY AND SERVICE TIME OF ALL PASSENGERS

PEAK HOUR 1:OO PM – 1:30 PM

Machine 1 Machine 2 Machine 3 TOTAL Average per Machine

A. Number of passengers arrive 111 79 139 329 109.67

B. Number of Minutes observed 30 minutes 30 minutes 30 minutes

C. Total service time of all passengers arrive in 30 minutes 63.70 47.33 58.90 169.93 56.64

A.1 Arrival Rate

A.1.1 Passengers per Minute ( )

A.1.2 Minute per passenger ( )

3.70

0.27

2.63

0.38

4.63

0.22

10.97

.091

3.66

0.29

B.1 Service rate

B.1.1. Passenger per minute ( )

B.1.2 Minute per passenger( )

1.74

0..57

1.67

0.60

.87

1.14

4.29

2.32

1.43

0.77

In the above table, three machines are working during actual observation, although there are seven machines available, the other four machines are under

repair. The frequency of passengers’ arrival per ticketing machine within the 30 minutes observation ranges from 79 passengers to 139 passengers, which forms

an average of approximately 110 passengers. On the other hand, the service time for all passengers which arrived in one ticketing machine within the 30

minutes observation ranges from 47.30 minutes to 63.70 minutes, which constitute an average service time of 56.64 minutes.

The actual observation of passenger’s arrival rate was done from 1:00 pm to 1:30 pm, but the total time consumed in directly observing the system of LRTA

station X is 4.5 hours, because all passengers arrived from 1:00 pm to 1:30pm were monitored up to the time they exit the system. The system defined here is

where passengers procured their ticket through vending machines.

Given the observed data, in order to measure the performance of the Light Rail Transit’s (LRT) ticketing machine, the study will use Promodel Simulation

software. First step in promodel simulation is to build Location, where it involves identifying the fixed locations of the waiting lines and the ticketing machines in

which passengers are routed for processing their transactions. The structure of the system is that each machine has its own waiting line (See figure 1).

T



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Second step in Promodel simulation is to identify Entity, it refers to the items being processed in the system (Benson, 1997). In this case, the entity is the

passenger.

Third step is to build Arrival rate. The total number of passengers arrived within the thirty (30) minutes observation is 329 passengers. Hence, arrival rate is

10.97 passengers per minute or 0.091 minute per passenger. The arrival rate is assumed to have exponential distribution in which it characterizes the

independencies of arrival. Therefore, the arrival rate encoded in the Promodel has a syntax of E (0.91) MIN.

The last step is to build Processing. The highlight of this step is to identify the service rate. In this study, the service rate is assumed to have uniform distribution

with an average of 1.4 passengers per minute per machine or equivalent to 0.77 minute per passenger per machine. It is interesting to note that the service rate

becomes longer when the arrival rate increases as implied in the above table where machine 3 has the longest service rate. The service rate ranges from 0.57

minute per passenger to 1.14 minute per passenger. Therefore the service rate encoded in the Promodel has syntax of U (0.77, 0.37) MIN, which means that the

service rate has an average of 0.77 minute per passenger per machine and variance of 0.37 minute per passenger per machine.

RESULTS Below are the results of the simulation after the abovementioned procedures.

FIG. 1 – PROMODEL SIMULATION ON THE TICKETING SYSTEM OF LRTA STATION X

FIG. 2 – PROMODEL OUTPUT REPORTS ON LOCATIONS WITH THREE MACHINES

To validate the built model in relation to the actual data collected, the simulation run hours is set to thirty (30) minutes. Actual observation reflected that a total

of 329 passengers arrived in the system within the time period of thirty (30 minutes), and in the simulation output report total entries is 334.80 passengers.

Moreover, in figure 3 , simulation output revealed that the average time the passengers is in operation or procuring the ticket is 0.77 minutes. Hence, there’s a

little discrepancy if not none in terms of the data collected and the simulation output report, thus, the simulation model validates the actual fare collection’s

ticket based system of LRTA station X.

The current performance of the ticketing system of LRTA’s station X after thirty (30) minutes of observation time during peak hours an average number of

110.87 passengers that are still waiting in lines .Each machine had already served an average of 40 passengers.



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FIG. 3 – PROMODEL OUTPUT REPORTS ON ENTITY ACTIVITY

Each passenger spent 10.35 minutes in procuring a ticket. Comprises of 0.77 minutes spent in procuring the ticket, and 9.58 minutes were spent in the waiting

lines. Moreover, 115 passengers have already been served or exited in the system and 219.80 passengers are still waiting in line.

FIG. 4 - ENTITY STATE

The passenger’s state in the present system with only three (3) available vending machines revealed that each passenger spent 92.54% of the total time waiting

in line and only 7.46% of the time spent in procuring a ticket.

The present performance of the system revealed poor customer service because it depicts the purpose of the passengers to arrive at their destination with

lesser time for reason of them spending almost ten (10) minutes in queue or waiting lines.

Hence, another scenario could be evaluated by having more available ticketing machines. During the actual observation, four ticketing machines are under

repair. Measuring the systems performance when all ticket vending machines were used, reveals the following output:

FIG. 5 – PROMODEL OUTPUT REPORTS ON LOCATIONS WITH SEVEN MACHINE



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If seven (7) vending machines were used, the average number of passengers waiting in line is 28.57, which resulted to a possible reduction of approximately 200

passengers as compared to the previously observed scenario. Moreover, there is a huge reduction in terms of number of passengers in queue evident by only

one passenger left waiting in line in each machine.

FIG. 6 – PROMODEL OUTPUT REPORTS ON ENTITY ACTIVITY WITH SEVEN MACHINES

If there are seven machines working, the passenger will spend 3.24 minutes in the system which comprises of both operation time and waiting time. The waiting

time is 2.47 minutes as compared to the previous scenario of 9.58 Minutes. Moreover, the total passengers exited in the system after thirty (30) minutes is

already 265.60 as compared to the previous scenario which is 115 passengers.

CONCLUSION The performance of the actual observed system which was also termed as present system with three (3) vending machines reflects poor customer service since

the time spent by each passenger is 10.3 minutes, which contradicts the purpose of Light Rail Transit (LRT), known to provide efficient and fast service.

On the other hand, the proposed scenario, that is the usage of all seven (7) ticket vending machines, resulted to 3.24 minutes passenger’s time spent in the

system. This is much lower when compared to the present scenario or the observed system which resulted to a reduction of 69% of the total time spent in the

system. Also, the total number of remaining passengers after thirty (30) minutes is 65.90 passengers, a difference of 153.90 passengers or a 70% reduction of

passengers. Nonetheless, further study in the analysis of increasing the number of vending machines and its effect to the system performance measure is

recommended.

REFERENCES BOOKS

Banks, J., Carson, J, S. II, Nelson, B., Nicol, D.(2010) “ Discrete event system simulation ” 5th

Edition .Pearson

Hillier, F., Lieberman, G. (2010). “Introduction to Operations Research” Mc Graw Hill

JOURNALS

Soh, A., Khalid,M., Marhaban.M., Yusof ,R. ( 2009 ) “Modeling of a multilane-multiple intersection based on queue theory and standard approach techniques”

Simulation Modeling Practice and Theory 17 (2009) 1081–1105

Toledo, T., Cats, O., Burghout, W, Koutsopoulos,H. ( 2010 ). “Mesoscopic simulation for transit operations”. Transportation Research pp. 896–908

Benson, D. (1997) “Simulation Modeling and Optimization using Promodel”. Proceedings of the 1997 Winter Simulation Conference

WEBSITE

Bose, S. (2011) “An Introduction to Queuing Systems “viewed on December 18, 2011 http://home.iitk.ac.in/~skb/ee679/ee679.html



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10

DIVERSIFYING A PAKISTANI STOCK PORTFOLIO WITH REAL ESTATE CAN REDUCE RISK

AMMAR ASGHAR

LECTURER

UNIVERSITY INSTITUTE OF MANAGEMENT SCIENCES

PIR MEHR ALI SHAH ARID AGRICULTURE UNIVERSITY

PAKISTAN

KASHIF SAEED

ASST. PROFESSOR

UNIVERSITY INSTITUTE OF MANAGEMENT SCIENCES

PIR MEHR ALI SHAH ARID AGRICULTURE UNIVERSITY

PAKISTAN

ABSTRACT A stock only portfolio due to its high liquidity can easily lose its Net Asset Value in response of any stimulus like Open Market Operation, political instability or due

to law in order situation in the country. If another asset is added to the portfolio that acts in reverse manner to these stimuli (i-e negatively correlated) then the

Net Asset Value of the portfolio can be hedged. This study attempts to find that an illiquid asset like real estate if added to a stock portfolio can curtail its

volatility (in other words hedge the Net Asset Value) or not? The researchers use Markowitz Portfolio Theory to answer this question. A few studies have been

carried out in U.K and U.S.A to answer the same question but in Pakistan such a study is an unprecedented effort. The researchers found a high correlation of 0.58

between Karachi stock exchange and real estate market and a well desired negative correlation of -0.018 between Islamabad stock exchange and real estate

market. Based on these correlation values optimal portfolio weightages of these assets were found. The results showed that an investor (considering the least

coefficient of variation) should invest only 100% in real estate and 0% in Karachi stock exchange or he/she should invest 97% in real estate or 3% in Islamabad

stock exchange.

KEYWORDS Index, Markowitz portfolio theory, Pakistan, Portfolio, Return, Real Estate, Risk.

INTRODUCTION inancial system is the collection of markets, institutions, laws, regulations and techniques through which bonds, stocks and other securities are traded,

interest rates are determined and financial services are produced and delivered throughout the world. The primary function of a financial system is to

mobilize surplus funds from savers to borrowers so that the borrower can buy goods and services and make investments in new equipment and facilities

so that economy can grow and increase the standards of living enjoyed by its citizens1.

The institutions in the system that mobilize the funds are of two types. One of them is known as “Financial Broker” like stock exchange broker. These brokers in

the form of brokerage firms direct the funds from savers to borrowers and for that purpose charge a brokerage fee. The other type is “Financial Intermediary”.

These financial intermediaries in the form of companies or firms take funds from the savers and give them their own security document, like share or deposit

certificate, entitling the savers a right to their earnings. These funds are then placed in different assets to get earnings (investment). These assets might be

shares of other public limited companies, bonds of other companies, real estate etc. the examples of financial intermediaries include predominantly, banks and

mutual funds.

Amongst all the financial institutions discussed above only Mutual Funds go for diversifying their investment portfolios (basket of assets in which funds are being

invested) with different assets like shares of other companies, interest earning assets (t-bills, TFCs, CFS), spread transactions2, real estate etc. The other

counterparts specialize in one sort of assets. Banks specialize in interest earning assets like t-bills, bonds, TFCs, CFS3, etc. Financial brokers on the other hand

tend to specialize in brokerage business and earn a brokerage fee.

In Pakistan there are 67 Mutual Funds. Depending upon their kind they invest in different sort of assets. Income funds invest in interest based assets like CFS,

TDRs, TFCs, money market placements etc. examples of such funds in Pakistan include Atlas Income Fund, KASB Liquid Fund, IGI Income Fund, Pakistan Income

Fund etc. Stock Market Mutual Funds invest in assets related to stock market like Shares and CFS. Examples are Atlas Stock Market Fund, Pakistan Stock Market

Fund etc. some Mutual Funds are hybrid funds. They invest in both stock market and interest earning assets. Example of such a fund is Arif Habib Asset

Management Company’s “Pakistan Capital Market Fund”. Some mutual funds invest only in Shariah compliant securities like Modarba certificate, Musharka

certificates. Their examples include Atlas Islamic Fund and Pakistan international element Islamic fund. Still there is another type of Mutual Funds that invest

exclusively in Real Estate. These are known as Real Estate Investment Trust (REIT). At the moment in Pakistan there is no REIT.

If we note the compositions of the portfolios above we find that these portfolios are vulnerable to interest rate risk (change in the Net Asset Value of a Portfolio

due to change in the interest rate). If the interest rate in the economy go up then the prices of Bonds, TFCs, TDRs, T-bills, and Shares go down. The reason is that

the bank deposits now give more interest than these interest based assets and shares and holders of these assets are ready to sell these assets so that the

proceeds can be deposited in banks resulting an increased supply of these assets in the market which causes a downward pressure on the price of the assets.

Efficient markets providing liquidity, like stock exchange, facilitates this process and there is nothing stopping this price decline. So an Income Fund or a Stock

Market Fund or a Hybrid Fund is bound to book a capital loss i-e a decrease in the NAV (Net Asset Value). One question arises over here that why do we want to

hedge the NAV of a portfolio. The answer is that a mutual fund’s NAV determines the unit price of the fund4. Decrease in the NAV decreases the unit price as

well. This means decrease in the shareholder’s wealth which is against the primary purpose of financial management i-e “to increase the share holder’s wealth”.

If we add such an asset to these portfolios which cannot behave as quickly as the other assets to such stimuli as interest or other then we will be able to put a

drag on the NAV of the portfolio. Putting it in another way, we are interested in adding an asset to the portfolio whose price change has a negative or very little

correlation with the price changes of the other assets in the portfolio.

1 Money and Capital Markets by Peter Rose, 8

th Edition.

2 Spread Transaction is earning a spread in the price of shares resulting from the timing difference between ready and future settlement, buying in the ready

settlement market and selling in the future settlement market. 3 CFS stands for continuous financing system. This financing system is modernized version of Badla financing system with provisions to curtail stock price

manipulations. By the virtue of this system speculators finance their speculations in stock market to earn capital gain and the financier (bank or Stock Broker)

earns the interest on the loaned amount. 4 Unit/share price of Mutual Fund = NAV/ total number of shares or units of the fund outstanding.

F



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11

This is what Markowitz said in 1950 in his Nobel Prize winning “Portfolio Theory”. According to Markowitz Portfolio Theory the risk (here, deviation of NAV of

portfolio from expected average NAV) of a portfolio depends upon the covariance of the returns (here, capital gain/increase in the NAV of portfolio) of the

assets in the portfolio. If correlation between he capital returns of the assets in the portfolio is positive then there is high degree of risk because at any time the

capital returns from both of the asset can be positive or negative resulting in high deviations of NAV from the expected average NAV. If correlation between he

capital returns of the assets in the portfolio is negative then capital gain by one asset is offset by capital loss by the other asset and the there will be less

deviation from the expected average NAV of portfolio which means less risk. So if the covariance terms are likely to be negative then it may be possible to get rid

of the risk almost wholly by resorting to diversification.

This paper attempts to see the benefits of diversification (risk reduction phenomenon) due to correlation effect if private real estate is added to a portfolio of

stock. The reason for adding a private real estate5 to a portfolio of stock is that at the moment there are no efficient markets for private real estate making

private real estate an illiquid asset. So private real estate cannot react as quickly to interest rate changes or other stimuli as the other assets like Shares can. So

adding a real estate to the portfolio of shares would put a drag on the NAV of the portfolio. Public real estate on the other hand acts like stock because being

traded at the stock exchange gives it a lot of liquidity.

Different studies have been carried out in other countries (other than Pakistan) to find the correlation of real estate market with stock market and to find out

the optimal allocation of real estate in a portfolio. Paladino, Michael, Mayo, Herbert (1995)1 found the correlation between the returns of stock and the returns

of private real estate market, and the returns of stock market and public real estate market. For this purpose the benchmark of stock market, private real estate

market and public real estate market performance was consider to be S&P-500 index, NCREIF index, NAREIT (National Association of Real Estate Investment

Trust) index respectively. They found a very low correlation between Private real estate and stock market returns i-e 0.052 and very high correlation between

public real estate and stock market return i-e 0.72. Based on theses results and in the light of Markowitz Portfolio theory they concluded that because of low

correlation with stock market Private real estate gives more benefits of diversification than Public real estate. Later on a study by Sander’s (1998)ii aimed at

finding the allocation of private real estate in a mixed asset portfolio in the absence of public real estate revealed that private real estate enters the mixed asset

portfolio of stock and bonds at all risk levels with the allocation between 10% and 40%. An extensive study by Muller, Andrew, Muller and Glenn (2003)2

attempted to analyze the inclusion of both Public and Private Real Estate in a mixed asset portfolio using Mean/Variance Markowitz Efficient Frontier

Methodology. Their findings indicate that Public and Private Real Estate returns have low correlation between each other and the inclusion of both in a mixed

asset portfolio of stock and bond produces more efficient frontier than inclusion of just one or the other or neither. After adjusting for the appraisal-bias in the

NCREIF index they suggested 100% allocation to Private Real Estate at the lowest risk level and a portfolio composition of 96% Public Real estate and 4% stock

(1.5% S&P-500 and 2.5% Russell-2000) at the mid point in the mean/variance curve. In another study Georgiev, Gupta, Kunkel (2003)3 explored the benefits of

Private and Public real estate investments in a mixed asset portfolio of stock and bonds and other asset classes such as hedge funds and commodities. Their

analysis included the correlation analysis of assets. The correlation of Private Real Estate (represented by NCREIF) with stock (represented by S&P-500) was

found to be -0.02. Adair, McGreal, Webb (2006)4 used data from 1975 through 2003 to construct a mean/variance optimal portfolio for U.K. the portfolio so

constructed was a mixed asset portfolio consisting mainly of three assets i-e Real Estate (including both Private and Public), Common Stock, and Gilt

(Government Bonds). Different alternative portfolios were suggested based on both current and capital gains separately. Their findings in context of capital gains

were that the allocation of funds to the real estate should be 65.5%, 47% and 0% to portfolios of low, medium and high risk profile respectively.

As far as Pakistan is concerned, till now there have been no attempts by the researchers to find out the correlation between real estate returns and stock market

returns.

OBJECTIVES OF THE RESEARCH

1. The first objective of the research is to find out the correlation between the returns (here, only capital returns considered) of stock market and real estate

market. Lesser the correlation more the benefits of diversification with such assets.

2. The optimum weightage of real estate and stock in a portfolio that would result in minimum variance.

3. Compare the performance of the best optimal portfolio with the contemporary stock portfolios using different performance measures like Standard

Deviation, Beta, and Sharp ratio.

The study is planned as follows. The second section presents the model, data and estimation technique. The third section analyses results. The fourth section

provides the conclusion.

FRAME WORK OF ANALYSIS, DATA AND ESTIMATION THE MODEL (MARKOWITZ PORTFOLIO THEORY)

The research is based on Markowitz Portfolio theory. This Portfolio theory, originally proposed by Harry Markowitz in 1950s, was also the first former attempt to

quantify the risk of a portfolio and develop a methodology for determining the optimal portfolio. Prior to the development of portfolio theory, investors dealt

with the concepts of return and risk somewhat usually, intuitively smart investors knew the benefits of diversification which is reflected in the traditional adage

“do not put all your eggs in one basket”. Harry Markowitz was the first person to show quantitatively why and how diversification reduces risk. In recognition of

his seminal contributions in this field he was awarded the Nobel Prize in Economics in 1952. He proposed the following formulas for finding the return and risk of

portfolio.

PORTFOLIO EXPECTED RETURN

The expected return on a portfolio is simply the weighted average of the expected returns on the individual securities in the portfolio.

[1]

Where = expected returns on the portfolio

= weight of the security i in the portfolio

= expected return on security i

n = number of securities in the portfolio

PORTFOLIO RISK

Markowitz gave the following equation to measure the risk of portfolio;

[2]

5 Private real estate is the property like residential and commercial areas that are not traded on stock exchange as compared to publicly traded real estate which

is traded on the stock exchange in the form of shares of REIT.



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12

Where = variance of portfolio return

= square of weight of the two securities in the portfolio

= variance of returns of the two securities

= covariance of returns of the two securities

= coefficient of correlation between the returns of two securities

Harry Markowitz was the person to quantify the risk of a portfolio and develop a methodology for determining the optimal portfolio. The Efficient Frontier

represents all the dominant portfolios in risk/return space. The efficient frontier was first defined by Harry Markowitz in his groundbreaking (1952) paper that

launched portfolio theory. That theory considers a universe of risky investments and explores what might be an optimal portfolio based upon those possible

investments.

Consider an interval of time. It starts today. It can be any length, but a one-year interval is typically assumed. Today's values for all the risky investments in the

universe are known. Their accumulated values (reflecting price changes, coupon payments, dividends, stock splits, etc.) at the end of the horizon are random. As

random quantities, we may assign those expected returns and volatilities. We may also assign a correlation to each pair of returns. We can use these inputs to

calculate the expected return and volatility of any portfolio that can be constructed using the instruments that comprise the universe.

The notion of "optimal" portfolio can be defined in one of two ways:

1. For any level of volatility, consider all the portfolios which have that volatility. From among them all, select the one which has the highest expected return.

2. For any expected return, consider all the portfolios which have that expected return. From among them all, select the one which has the lowest volatility.

Each definition produces a set of optimal portfolios. Definition (1) produces an optimal portfolio for each possible level of risk. Definition (2) produces an optimal

portfolio for each expected return. Actually, the two definitions are equivalent. The set of optimal portfolios obtained using one definition is exactly the same set

which is obtained from the other. That set of optimal portfolios is called the efficient frontier.

Efficient Frontier

The green region corresponds to the achievable risk-return space. For every point in that region, there will be at least one portfolio that can be constructed and

has the risk and return corresponding to that point. The efficient frontier is the gold curve that runs along the top of the achievable region. Portfolios on the

efficient frontier are optimal in both the sense that they offer maximal expected return for some given level of risk and minimal risk for some given level of

expected return.

STATISTICAL TEST FOR CORRELATION

A statistical test to conclude, if the correlation between the returns of real estate and stock market is significant or not, is two tailed t-test. Where “t” is a normal

random variable and is given by

[3]

Where

N = size of sample and in our case, 14 for KSE and 11 for ISE

r = coefficient of correlation

N-2 = degree of freedom and in our case 12 for KSE and 9 for ISE

Here for this statistical test the level of significance is assumed to be 0.10 i-e 10%. The critical values of “t” at 13 and 10 degree of freedom and 0.10 level of

significance are 1.782 and 1.833 respectively.

DATA

The basis of our calculation is an “index” showing change in the prices of assets. KSE-100 index and ISE-10 index has been taken as a benchmark to calculate the

stock market returns. The historical index values of KSE-100 index and ISE-10 index are being taken from the respective exchanges. At the moment in Pakistan

there is no real estate index as there are in USA like NPI (NCREIF Property Index that represents a value-weighted aggregate of private U.S real estate properties)

and NAREIT index (the index for publicly traded real estate investment trusts in USA). So we had to calculate the index ourselves.

Data about the property prices in order to compute real estate index has been gathered from different property dealers who have been working since 1990 in

their respective areas. The property dealers were asked to fill a questionnaire with price of a certain area, with in a certain region, for different years. Based on

theses prices for different years (since 1992-2007) for different areas that lie in different regions, a price weighted index of real estate has been developed. Nine

real estate properties are used to calculate the index therefore we name it RE-9 index. All of these nine real estate properties are in Rawalpindi and in

Islamabad.

ESTIMATION TECHNIQUE

The first objective of the study is to calculate the coefficient of correlation (r) between real estate and stock market returns so calculation of returns of real

estate and stock is a prerequisite to the accomplishment of the objective. To calculate the returns, the index of real estate is to be calculated first. So a price



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13

weighted real estate index is made which is an unprecedented effort in Pakistan. Based on the index, percentage returns (percentage capital gain) of real estate

are calculated. These percentage returns are then correlated with stock market returns to find “r”. Stock market returns are also percentage capital gains based

on KSE-100 index and ISE-10 index. To find “r” between real estate and KSE returns the tenure is 14 years from 1993 to 2006 and for “r” between real estate and

ISE return the tenure is 11 years from 1997 to 2007.

In pursuit of the second objective the risk and return, as per the formulae proposed by the Markowitz, of the Real Estate-Stock portfolio are calculated for

different percentages of the two assets in portfolio. A portfolio weightage that gives maximum return for minimum risk is considered to be optimal portfolio

weightage.

RESULTS AND FINDINGS As discussed in the introduction the research study has three objectives therefore the results and discussion section also has three parts.

First one deals with the finding pertaining to the correlation between the stock market and the real estate market. The second one describes the optimal

portfolio allocation between real estate and stock that would maximize return for a given level of risk. The third one compares the performance of this optimal

portfolio with the contemporary stock portfolios using different measures.

CORRELATION ANALYSIS

The exhibit-1 shows the Real Estate index calculated as per the procedure explained in the Methodology section. Exhibit-2 shows the three indices that is KSE-

100 index, ISE-10 index and real estate index plotted on the same graph.

Based on theses indices and the procedure explained in methodology the correlation between returns of Karachi Stock Exchange and Real Estate market works

out to be 0.58 (t=2.498, statistically significant) and between the returns of Islamabad Stock Exchange and Real Estate market works out to be -0.018 (t= - 0.054,

statistically insignificant). The correlation between ISE returns and Real Estate market return is quite in line with the findings of Paladino, Michael, Mayo,

Herbert (1995) and Georgiev, Gupta, Kunkel (2003) but the correlation between the returns of KSE and Real Estate market is too high as compared to the

previous researches carried out in other parts of world. Such high correlation between a liquid Stock market and an illiquid Real Estate market seems illogical

and unlikely. What could be the reason?

The answer to this question can be sought in light of 9/11 incident. Exhibit-3 shows the returns from KSE and Real Estate market. If we see the era before 2001,

we observe little fluctuation of Real Estate capitalization and quite a volatile capitalization of stock market. Also, if we see numerically, the correlation (r)

between the returns in this period (1992-2000) is only -0.053 which is in line with findings of Paladino, Michael, Mayo, Herbert (1995) i-e r = 0.052 (not adjusted

for appraisal bias) and Georgiev, Gupta, Kunkel (2003) i-e r = - 0.04 (after adjusting for appraisal bias) and r = - 0.02 (before adjusting for appraisal bias). After 9-

11 many wealthy investors and businessmen of Pakistani origin living in the west perceived subsequent events and policies as a possible threat to their financial

futures and feared the daunting prospect of having their assets frozen. Therefore, there was a large influx of capital back to Pakistan6. Pakistan witnessed an

upsurge in home remittances from $983 million in 2000 to historic $4.2 billion in fiscal year 2003-20037. Also president Musharraf declared his support against

terrorism after 9/11 resulting in $2 billion grant during 2001-2003 and FDI of $82 million during July, 2004 and February, 2005. The post 9/11 analysis of exhibit-

2 and exhibit-3 shows that all these funds found their way into Stock market (and KSE being the largest one8) and Real Estate market as both gained in

capitalization after year 2001. So a low correlation of returns (-0.053) in before 9/11 and high correlation of returns in after 9/11 period resulted in overall good

correlation of 0.58.

OPTIMAL PORTFOLIO ANALYSIS

To find the optimal portfolio we must draw the Markowitz Efficient Frontier. It is drawn by taking Risk (Variance of return) of portfolio at x-axis and return of

portfolio at y-axis. Each point on the graph represents a different percentage allocation to the real estate and stock. Exhibit-5 shows the possible portfolio

options for ISE stock and real estate. The head of the arrow points at the Minimum Variance Portfolio or more accurately the minimum standard deviation

portfolio because the x-axis represents the standard deviation. At any point below MVP the investor would be assuming more risk for less return but at any point

above MVP the investor would be assuming more risk for more return therefore the points above MVP represent the optimal portfolio options or Markowitz

Portfolio Frontier. So no investor would like to invest in any portfolio below MVP. Exhibit-6 shows the Markowitz Efficient Frontier for ISE stock and real estate.

The following tables summarize the portfolio allocation between stock and real estate for different risk levels. The results are not comparable with the previous

researches carried out in other countries because in them private real estate was considered in a mixed asset portfolio consisting of assets other than stock as

well. Therefore the allocation of real estate in their portfolios was dependent upon the correlation of real estate with assets in portfolio other than stock as well.

TABLE - 1: PORTFOLIO ALLOCATION BETWEEN KSE AND REAL ESTATE FOR DIFFERENT RISK LEVELS

RISK PROFILE %AGE OF REAL

ESTAE

%AGE OF KSE LISTED

STOCK

RETURN OF

PORTFOLIO

RISK OF

PORTFOLIO

COEFFICIENT OF

VARIATION

(i-e RISK/RETURN)

HIGH 0% 100% 24.9495% 42.4180% 1.7002

MEDIUM (AVERAGE OF HIGH AND LOW RISK) 41% 59% 22.8634% 29.3929% 1.2856

LOW (MVP) 100% 0% 16.1432 19.8614% 0.8128

BEST PORTFOLIO ALLOCATION (Least

coefficient of variation)

100% 0% 16.1432 19.8614% 0.8128

TABLE - 2: PORTFOLIO ALLOCATION BETWEEN ISE AND REAL ESTATE FOR DIFFERENT RISK LEVELS

RISK PROFILE %AGE OF REAL

ESTAE

%AGE OF ISE LISTED

STOCK

RETURN OF

PORTFOLIO

RISK OF

PORTFOLIO

COEFFICIENT OF

VARIATION

(i-e RISK/RETURN)

HIGH 100% 0% 20.0035% 18.9111% 0.9454

MEDIUM (AVERAGE OF HIGH AND LOW RISK) 95% 5% 19.0948% 18.0387% 0.9447

LOW (MVP) 81% 19% 16.5504% 16.9418% 1.0236

BEST PORTFOLIO ALLOCATION (Least

coefficient of variation)

97% 3% 19.4583% 18.3608% 0.9436

COMPARISON OF THE PORTFOLIO WITH CONTEMPORARY STOCK PORTFOLIOS

This part of the section compares the performance of stock-real estate portfolio with contemporary stock portfolios that have not been diversified by using real

estate. For this purpose we have selected three parameters:

• Standard deviation of the best (minimum coefficient of variation) portfolio

• Beta of the best (minimum coefficient of variation) portfolio

6 Clark, Masood, Tunaru, “Political Events Affecting the Pakistan Stock Exchange: An Analysis of the Past and Forecasting the Future” Cass Business School, City

University, London 7 www.strategicforesight.com/sfgnews_133.htm

8 As on march 2007, 655 companies were listed on KSE as compared to 240 on ISE (Source: Economic Survey 2006-2007)



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14

• Sharp ratio of the best (minimum coefficient of variation) portfolio

Beta of a portfolio is actually the correlation of the portfolio with the stock market and it is a measure of systematic risk. Systematic risk is the variation of

expected returns due to factors that affect each sector of the stock and not one or two. The stock market beta is “1” because correlation of stock market with

itself is “1”. If the portfolio beta is greater than “1” then it means that the factors bring more changes in the expected return of portfolio as compared to that of

stock market and vice versa. In Pakistan Karachi Stock Exchange is considered as a benchmark of performance of stock or equity market. Mathematically it can

be written as:

Beta = (STD of portfolio/STD of stock market) * (r) (between portfolio and stock market return)

Sharp ratio of a portfolio is excess return (over risk free return) to standard deviation of the portfolio. Mathematically it can be written as:

Sharp ratio = (AVG return on portfolio – AVG return on a risk free investment)/STD of portfolio

To calculate the sharp ratio, PACRA9 and all mutual funds use 3-month Treasury Bills rate as risk free investment and the ratio is calculated by using the average

value for the last three years. For the purpose of comparison we follow the same convention and find the sharp ratio of our portfolios based the average values

of last three years.

The table-3 on the other page compares the performance measures of different stock market funds with our least coefficient of variation stock-real estate

portfolio.

So from the table on the next page we see that our portfolio outperforms all other mutual funds. Its very low beta value i-e 0.22 makes it less volatile than the

benchmark market, Karachi stock Exchange. It is evident that the rest of the mutual funds have high degree of correlation with KSE as the minimum Beta value

among them is 0.62. Also the sharp ratio suggests that KSE-Real estate portfolio gives more excess return (over risk free return) than any other fund in the

comparison. ISE-Real Estate fund gives a low sharp ratio because this calculation involves the return of year 2007 which is a year of slump for the property

market. So due to more deviation of returns the sharp ratio is low for this portfolio.

TABLE - 3: COMPARISON OF MINIMUM COEFFICIENT OF COVARIANCE PORTFOLIOS WITH CONTEMPORARY STOCK INVESTMENT FUNDS PARAMETERS BENCH MARK

KSE-100

KSE-REAL

ESTATE

PORTFOLIO

(0%KSE-

100%RE)

ISE-REAL

ESTATE

PORTFOLIO

(3%ISE-97%RE)

PAKISTAN STOCK

MARKET FUND (July

2007 fund manager

report)

PAKISTAN INTERNATIONAL

ELEMENT ISLAMIC FUND

(July 2007 fund manager

report)

PAKISTAN

CAPITAL MARKET

FUND

(July 2007 fund

manager report)

KASB STOCK

MARKET FUND

(August 2007

fund manager

report)

STANDARD

DEVIATION (%)

42.42 16.14 18.36 18.72 17.24 17.87 1.0

BETA (correlation

with KSE)

1 0.22 DATA

CONSTRAINT

0.69 0.62 0.63 0.87

SHARP RATIO 0.60

(Yr 2005-2007)

3.32

(Yr 2004-2006)

0.34

(Yr 2005-2007)

1.11

(Yr 2005-2007)

0.35

(Yr 2005-2007)

1.16

(Yr 2005-2007)

0.015

(Yr 2005-2007)

EXHIBIT-1

REAL EATATE INDEX (RE-9 INDEX)

1000 1164 1372 1550 1691 1983 2401 2759 3215 3483

61416870

8266

10048

1140811214

0

2000

4000

6000

8000

10000

12000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007YEARS

IND

EX

PO

INT

S

The graph above shows the change in the index of real estate (RE-9 index). From 1992-2001 there is a persistent and almost constant rise in the prices of the real

estate properties. In 2002 the index went up like a rocket due to 9/11 incident as a lot of Pakistanis in America repatriated their money from America to Pakistan

and invested them in real estate. Resultantly the prices of the real estate went up.

EXHIBIT-2

COMPARISON OF THREE MARKET INDICES

0

2000

4000

6000

8000

10000

12000

14000

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

YEARS

INDEX POINTS

RE- 9 INDEX

KSE-100 INDEX

ISE-10 INDEX

The above graph shows KSE-100 index, ISE-10 index and RE-9 index (made by the writers of this paper).

9 PACRA stands for (Pakistan Credit Rating Agency Limited). PACRA is to evaluate the capacity and willingness of a corporate entity to honor its debt obligations.

PACRA ratings reflect an independent, professional and impartial assessment of the credit risk associated with a particular debt instrument or a corporate entity

(such as a Bank, Mutual Fund). By providing a measurement of risk, PACRA's ratings facilitate investors in making prudent investment decisions after

determining the acceptable rate of return at the given risk level.



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15

EXHIBIT-3

COMPARISON OF RETURNS OF KSE AND REAL ESTATE

-60

-40

-20

0

20

40

60

80

100

120

140

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

YEARS

RETU

RN

S(%

)

REAL ESTATE RETURNS

KSE RETURNS

The above graph shows the up and down movement of returns of real estate market and Karachi Stock Exchange.

EXHIBIT-4

COMPARISON OF RETURNS OF ISE AND REAL ESTATE

-100

-80

-60

-40

-20

0

20

40

60

80

100

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

YEARS

RETURNS(%

)

REAL ESTATE RETURNS

ISE RETURNS

The above graph shows the up and down movement of returns of real estate market and Islamabad Stock.

EXHIBIT-5

POSSIBLE PORTFOLIO OPTIONS AT DIFFERENT LEVELS OF R ISK AND RETURN

0

5

10

15

20

25

0 5 10 15 20 25 30 35 40 45

RISK (%)

RETURN(%

)

Possible portfolio options for different levels of risk and return.

EXHIBIT-6

EFFICIENT PORTFOLIOS

15

16

17

18

19

20

21

16.5 17.0 17.5 18.0 18.5 19.0 19.5

RISK OF THE PORTFOLIO(%)

RETURN OF THE PORTFOLIO(%)

Markowitz Efficient Frontier for ISE and real estate.

I-----Correlation – (-0.053)-------I

Minimum Variance Portfolio

(MVP)



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EXHIBIT-7

POSSIBLE PORTFOLIO OPTIONS AT DIFFERENT LEVELS OF R ISK AND RETURN

15

17

19

21

23

25

27

15 20 25 30 35 40 45

RISK(%)

RE

TUR

N(%

)

Markowitz Efficient Frontier for KSE and real estate as the correlation between the two is high i-e 0.58 therefore the Markowitz Efficient Frontier and graph of

possible portfolio option is the same.

CONCLUSION The research very convincingly meets its objectives. It shows that there exists no correlation between stock market and real estate market. The high positive

correlation between KSE and real estate (r=0.58) is due to high influx of home remittances after 9/11. If we exclude the period after 9/11, the correlation works

out to be almost zero (r= -0.053). In the light of these finding we are safe to say that adding real estate to a stock portfolio reduces the volatility of the overall

portfolio. In other words Real estate in the portfolio puts a drag on the Net Asset Value of the whole portfolio due to its low correlation with the other asset in

the portfolio. Coefficient of variation analysis of the Markowitz Efficient Frontier suggests that 100% real estate and 0%KSE portfolio or 97% real estate and

3%ISE portfolio provides the best return against the risk assumed. The former also outshines many Stock Mutual Funds (not being diversified by real estate) as

indicated by its low beta value i-e 0.22 and high sharp ratio i-e 3.32.

REFERENCES 1. Paladino, Michael, Mayo, Herbert, “Investments in REITS do not Help Diversify Stock Portfolio”, Real Estate Review, 1995, Vol 25, issue 2.

2. Muller, Andrew, Muller and Glenn, “Public and Private Real Estate in a Mixed Asset Portfolio”, The Journal of Real Estate Portfolio Management, (2003).

3. Georgiev, Gupta, Kunkel, “Benefits of Real Estate Investment”, the Journal of Portfolio Management, 2003, Special Issue, 28-33.

4. Adair, McGreal, Webb, “Diversification Effect of Direct versus Indirect Real Estate Investments in the U.K.”, The Journal of Real Estate Portfolio Management,

2006, vol-12, 85-90.

Minimum Variance Portfolio

(MVP)



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17

THE EFFECT OF FDI INFLOWS ON NIGERIA’S BALANCE OF PAYMENT FOR THE PERIOD 1980-2009

OMANKHANLEN ALEX EHIMARE

LECTURER

DEPARTMENT OF BANKING & FINANCE

COVENANT UNIVERSITY

OGUN STATE, NIGERIA

ABSTRACT This research study deals with the effect of Foreign Direct Investment inflows have any effect on Nigerian’s Balance of payment (BOP) over the period 1980-

2009.It helped examined empirically if Foreign Direct Investment inflows have any effect on the nation’s BOP. Econometric model was developed to investigate

the relationships between the BOP and foreign direct investment. Based on the data analysis it was discovered that foreign direct investments have positive and

significant impact on current account balance in the Balance of payment. While Gross fixed capital formation is inelastic to Balance on current account. Therefore

it is recommended that for Nigeria to attract the desired level of FDI, and have improved Balance of payment position, it must introduce sound economic policies

and make the country investor friendly. Also its economy must be open to foreign trade, there must be political stability, sound economic management and well

developed infrastructure.

KEYWORDS Foreign direct investment, gross fixed capital formation, government expenditure, Nigeria, BOP.

INTRODUCTION DI is an investment made to acquire a lasting management interest (normally 10% of voting stock) in a business enterprise operating in a country other

than that of the investor defined according to residency not nationality (World Bank, 1996) as cited by Adebgite and Ayadi (2010). Given the Nigerian

economy resource base, the country’s foreign investment policy should move towards attracting and encouraging more inflow of foreign capital. The

need for foreign direct investment (FDI) is born out of the under developed nature of the country’s economy that essentially hindered the pace of her economic

development. Generally, policy strategies of the Nigerian government towards foreign investments are shaped by two principal objectives of the desire for

economic independence and the demand for economic development.

An analysis of foreign flow into the country so far have revealed that only a limited number of multinationals or their subsidiaries have made Foreign Direct

Investment in the country. Added to this problem of insufficient inflow of FDI is the inability to retain the Foreign Direct Investment which has already come into

the country. Also what effect have foreign direct investment have on such variables as- Gross Domestic Product (GDP) and Balance of Payment(BOP).Moreover,

Carkovic and Levine (2002) in their study concluded that exogenous component of FDI does not exert a robust positive influence on economic growth.

The hypothesis to be tested in this study is stated below:

HO. FDI does not contribute to Nigeria’s Balance of Payment (BOP).

H1 . FDI contribute to Nigeria’s Balance of Payment (BOP).

This paper is divided into five parts. Part one above is the introduction. Part two reviews the relevant literature, part three discusses the methodology employed

in this study, and part four is data presentation and analysis while part five discusses the findings and recommendation.

This study will evaluate the effect of FDI inflows on Nigeria’s Balance of payment. The period 1980-2009 will be investigated in the study. Only FDI, Government

Expenditure and Gross Capital formation will be used as the explanatory variables. While the balance on Balance of payment current account will be used as the

dependent variable.

LITERATURE REVIEW The balance of payments is obviously affected by FDI in a variety of ways. Letto-Gillies (1992) assert that there are the direct effects of capital outflows and

inflows destined to finance the outward and inward FDI. However, outward FDI does not necessarily involve outflow of funds from the home country, since

there are other ways of funding direct investment, such as borrowing on international markets and using profits from such subsidiaries. Other direct effects are

connected with the outflow and inflow of profits and dividend related respectively to past inward and outward FDI. For countries with long traditions of FDI

these income one extreme of the spectrum net inflows of income from capital invested abroad has in many years, outstrips the inflows of new inward FDI.

Magdoff (1992) illustrates this with reference to United States investment during the period 1950-65. The outward investment in Latin America was US $3.8b

while the related income flowing from Latin America to the USA in the same period was $11.3billion. This net inflow of funds was achieved in spite of the

growing amount of foreign asset being acquired.

However, the balance of payments effects can have profound effects on the real sector of the economy that is not always beneficial. Rowthorn and Wells (1987)

as cited by Alderson (1997) refer to such effects in relation to net income from foreign investment as the wealth trap. The manipulation of transfer prices also

has effects on the balance of payment accounts. Indeed, very often the manipulation of transfer prices is motivated by the desire to take advantage of actual or

expected changes in exchange rates or by the wish to transfer profits where legal impediments exist to such transfers (Letto-Gillies, 1992).

Foreign direct investment improves the balance of payments and current account substantially if it is directed towards the production for exports or import

replacement (Hess and Ross, 1991). The government budget balance can also improve through high tax revenue from corporate profits, salaries of employees,

and daily tax on finished goods and services. According to Adegbite and Ayadi (2010) FDI helps fill the domestic revenue-generation gap in a developing

economy, given that most developing countries’ governments do not seem to be able to generate sufficient revenue to meet their expenditure needs. Other

benefits are in the form of externalities and the adoption of foreign technology. Externalities here can be in the form of licencing, imitation, employee training

and the introduction of new processes by the foreign firms (Alfaro, Chanda, Kalemli- Ozean and Sayek 2006).

Foreign direct investment consists of external resources including technology, managerial and marketing expertise and capital. All these generate a considerable

impact on host nation’s productive capabilities. The success of government policies of stimulating the productive base of the economy depend largely on her

ability to control adequate amount of FDI comprising of managerial, capital and technological resources to boast the existing production capacity. Although the

Nigerian government has being trying to provide conducive investment climate for foreign investment, the inflow of foreign investments into the country have

not been encouraging. The economic impact of FDI on the level of economic activity has been widely investigated in recent years across different countries. See

(Jenkins and Thomas 2002; Adelegan 2000, Akinlo 2006, Johnson 2006 e.t.c.).Although FDI has a positive impact on economic growth but the magnitude of the

effect depends on the availability of complementary resources, especially on the domestic stock of human capital.

The inflow of FDI plays an important role in determining the surplus/deficit in the capital and current account of the BOP statement. The initial impact of an

inflow of FDI on any nation’s BOP is positive but the medium term effect could become either positive or negative as the investors increase their imports of

intermediate goods and services, and begin to repatriate their profit.

According to Hossain (2008) Empirical research in several countries suggests that the initial inflow of FDI tends to increase the host country's imports. One

reason for this is that primarily FDI companies have high propensities to import capital and intermediate goods and services that are not readily available in the

F



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host country. However, if FDI is concentrated in import substituting industries, then it is expected to affect imports negatively because the goods that were

imported earlier would now be produced in the host country by foreign investors.

In addition Hossain (2008) show that FDI contributes positively to increasing imports and exports and can either improve or deteriorate the country’s trade

balance depending on the relative magnitude of the two forces. However, with a. positive effect of FDI inflows on the financial account, it is more likely that the

first round effect of FDI is positive on the Balance of payment (BOP) of Bangladesh which he studied.

METHODOLOGY MODEL SPECIFICATION

This study is based on the assumption that the inflow of FDI affects Nigeria’s Balance of Payment (BOP). In other-words, BOP is dependent on FDI, hence the

model:

BCA = f (FDI) (1)

Where:

BCA = Current Account Balance

FDI = inflow of Foreign Direct Investment

Considering the fact that the BOP of an economy is not determined by FDI alone, the inclusion of two more growth determining variables is made so as to get a

more realistic model: Hence, equation (1) is extended thus:

BCA = f (FDI, GOV, GCF) (2)

Where:

GOV = Government expenditure

GCF = Gross fixed capital formation.

Equation (2) show that BCA is dependent on FDI, GOV and GCF.

The statistical form of the model is thus:

BCA = αo + αI FDI - α2 GOV + α3 GCF + e (3)

Where:

α0 = the intercept for equations (1)

αI = the parameter estimate of FDI.

α2 = the parameter estimate of GOV.

α3 = the parameter estimate of GCF.

e = the random variable or error term.

TECHNIQUES TO ADOPT IN THE ANALYSIS OF DATA Scientific or empirical research can be carried out by four possible alternative methods, namely, the comparative method, the econometric method, the

experimental method, and the case history method. The nature of the problem under investigation and the objectives of the research will determine which of

these alternatives will be adopted. They may be adopted singly or in combination.

The econometric method is the approach employed for the research. There is no doubt that the method will facilitate the model specification, parameter

estimation and appropriate econometric tests.

SOURCES OF DATA FOR THE STUDY Annual time-series data on the variables under study covering thirty year period 1980-2009 are used in this study for estimation of functions. Foreign Direct

Investment inflow (FDI), Government Expenditure (GE) and Gross fixed Capital Formation (GCF) are the relevant explanatory variables. Equally, the Balance on

Current Account is the dependent variable. The Balance on Current Account was used to measure Balance of payment (BOP).

Data were collected from various editions of the various issues of Central Bank of Nigeria Economic and Financial Review.

DATA ANALYSIS AND RESULT PRESENTATION PRESENTATION OF RESULTS

This part focuses on the analysis of, and interpretation of the results generated from the regression analyses. It helped in providing the set of data used a

practical meaning, the result, serving as a yard-stick/benchmark for the measurements of the various impacts which the different variables have on BOP of the

country. The regression analysis and test of hypothesis are conducted at 5% significance level. After running the relevant regressions, the following results were

obtained and are presented below:

ESTIMATED RESULTS

MODEL

BCA = αo + αI FDI - α2 GOV + α3 GCF + e

BCA = -1.3500 + 7.0662FDI + -0.49248GOV. + 0.42403GFC

S.E. = (1.1447) (21.5046) (0.35404) (0.29101)

t = -1.179 4.696 -1.391 1.457

R2 = 0.919443 F-Statistic = 98.917 D.W. = 1.72

N.B: The regression result is presented in Appendix 1. Note: Numbers in parenthesis are t-values.

“SE” is the Standard Error of the Estimates. “FS” is the ratio used in the statistical test of significance. “DW” is the Durbin-Watson statistic used in the test of auto

correlation.

INTERPRETATION OF THE MODEL From the regressions result of model, the R-squared (R²) value of 0.919443 shows that at 91.94% the explanatory variables explain changes in the dependent

variable. This means that at 91.94% the independent variables explain changes on Current Account Balance (BCA). This simply means that the explanatory

variables explain the behaviour of the dependent variable at 91.94%. The calculated F-statistics of 98.917 which is greater than the value in the F-table (2.9751)

implies that all the variables’ coefficients in the regression result are all statistically significant.

The Durbin-Watson (DW) as shown in the regression analysis is 1.72 which shows that there is the presence of autocorrelation.

The above model tested the effect of three different variables namely – Foreign Direct Investment (FDI), Government Expenditure (GOV) and Gross fixed Capital

Formation (GCF) on Current account Balance (BCA). In order to obtain the regression result, the OLS technique with the help of the PC Give software was used.

The result obtained from the regression shows that there is positive and significant impact of Foreign Direct Investment (FDI) on Current Account Balance (BCA)

with a coefficient of 7.0662. This coefficient is statistically significant as revealed by its corresponding standard error and t-values. Hence, FDI is elastic to BCA.

This positivity in the coefficient of Foreign Direct Investment is in conformity to the economic a priori expectation of a positive impact of Foreign Direct

Investment on Current Account Balance of the nation.



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Also, the regression result shows that the Government Expenditure has a negative impact on BCA with a coefficient of -0.49248. The standard error and t-values

showed that this parameter is not statistically significant. Thus, the Government Expenditure is inelastic to Current Account Balance. This negativity of the

coefficient of GOV conforms to the economic a priori expectation of a negative impact of Government Expenditure on BCA.

Furthermore, the result obtained from the regression shows that Gross Fixed Capital Formation has a positive impact on BCA. This is indicated in its positive

coefficient of 0.42403. However, this coefficient is revealed not to be statistically significant by the standard error and t-values. Thus, from this it implies that

Gross fixed Capital Formation is inelastic to Balance on Current Account (BCA). The coefficient of Gross fixed Capital Formation being positive conforms to the

economic a priori expectation of a positive impact of GCF on Balance of Payment vis-à-vis Balance on Current Account (BCA).

TEST OF HYPOTHESES This section of study implies testing the significance of the numerical values of the parameter estimates of the OLS regression. It is needed to examine the

relationship between the data collected and the stated hypothesis. Here, the t-statistics and values are required.

HYPOTHESIS

Recall: Ho: α1 = 0: There is no significant relationship between BCA and FDI

H1: α 1 ≠ 0: There is significant relationship between BCA and FDI

Decision: Accept H0 if t0.05 > tStatistics and

Reject Ho and accept H1 if t0.05 < tStatistics

Where t0.05 = 1.703, and

tStatistics = 4.696

1.703 < 4.696

Therefore, we reject H0 implying that the inflow of Foreign Direct Investment into the Nigerian economy within the period of 1980 - 2009 was significant to

Balance of Payment through Current Account Balance of the country.

DISCUSSION OF FINDINGS The OLS regression analysis is carried out to determine the impact of FDI, Government expenditure and Gross fixed Capital Formation on Balance of Payment

through Balance on Current Account (BCA), . Hence, BCA is regressed on FDI, GOV and GCF. Though the impact of FDI is of primary concern here, the other two

economic variables were included to serve as “control variables” to check the overstating of the estimated coefficient of FDI.

The results of the findings show that FDI has positive and significant impact on BOP through current account balance during the period of analysis (1980-2009).

In addition Gross fixed capital formation is inelastic to Balance on current account.

CONCLUSION In conclusion after the OLS regression analysis had been carried out and with the study about the effect of FDI on BOP, it is seen that the Governments direct

involvement in the provision of goods and services by establishing and controlling corporations, for example, has contributed little to economic growth in

Nigeria. This justifies the privatization policy of the various administrations in our government to allow for the possible takeover by investors (both foreign and

domestic) of the government corporations.

Foreign direct investment (FDI) has contributed significantly to Balance of Payment (BOP) through the nation’s current account balance. Thus it is clear that FDI

can be used as an effective measure of correcting balance of payment disequilibrium in our economy.

RECOMMENDATIONS The most significant factors that make Nigeria a good host for FDI are her abundance in natural resources and large population, indicating a large market.

The outcome of this study shows that though FDI was not found to have significantly contributed to the nation’s economic growth, if well harnessed it can

contribute to economic growth in Nigeria. To increase the inflow of FDI and its performance, the following recommendations from this study are enunciated:

Policy measures should be put in place to encourage improved inflow of foreign direct investment to Nigeria. This is expected to result in Nigeria’s exports

competitiveness, thereby leading to increased exports and investment, which will further increase the foreign exchange earnings, the Balance of payment

position and improve the Gross domestic product (GDP) of the nation.

The country should be more open to foreign trade. Balasubramanyam et al (1996) showed that most economies benefit best from FDI when they are open to

foreign trade. Hence, the Nigerian government should reduce the bureaucratic bottlenecks in foreign trade especially the one constituted by the customs and

port authorities.

Every effort should be used to improve the level of education in the nation. Broensztein et al (1998) proved that there is a high positive relationship between FDI

and the level of educational standard in the host economy. Based on this, the country’s education should be in favour of management, science and technology

which would provide the economy with the required skills that FDI require.

Competitiveness should be encouraged, and as a result, the existing and ‘yet-to-exist’ export processing and free trade zones should be equipped with state-of-

the-art infrastructures and technologies.

The infrastructures in the country need to be improved to reduce the cost of doing business in Nigeria. For example, electricity should be provided at an

uninterrupted level to reduce the extra cost that investors incur in the procurement of power generating sets coupled with the health hazards associated with its

use, especially the fumes it generates to the environment.

REFERENCES Adegbite E.O and F.S. Ayadi (2010) “The Role of FDI in Economic Development:A Study of Nigeria.” World Journal of Entrepreneurship, Management and

Sustainable Development.Vol.6 No 1/2 [Internet] Available from www.worldsustainable.org. P. 133-147

Adelegan, J.O. (2000). “Foreign direct investment and economic growth in Nigeria: A seemingly unrelated model”. African Review of Money, Finance and

Banking,Pp 5-25

Alderson, Arthur S. (1997). "Globalization and Deindustrialization: Direct Investment and the Decline of Manufacturing Employment in 17 OECD Nations." Journal

of World-Systems Research 3: 1 - 34.

Alfaro, L., Chanda, A., Kalemli-Ozcan, S. & Sayek, S. (2006). “How Does Foreign Direct Investment Promote Economic Growth? Exploring the Effects of Financial

Markets on Linkages”. NBER Working Paper no. 12522, National Bureau of Economic Research, Cambridge, MA.07-013

Akinlo, A.E. (2004). “Foreign direct investment and growth in Nigeria: An empirical investigation”.Journal of Policy Modeling, 26: 627–39.

Balasubramanyan, V., N. M.A. Salisu and D. Sapsford. (1996). “Foreign Direct Investment and Growth in EP and IS Countries”, Economic Journal, 106: 92–105

Borensztein, E., J. De Gregoria and J. Lee. (1998). “How does foreign investment affect economic growth?” Journal of International Economics, 45(1): 115–35

Carkovic, M. and R. Levine. (2002). “Does foreign direct investment accelerate economic growth?” University of Minnesota Working Paper. Minneapolis.

Available at: www.worldbank.org/research/conferences/financial_globalization/fdi.pdf

Hossain, M.A. (2008) Impact of Foreign Direct Investment on Bangladesh’s Balance of Payments: Some Policy Implications. Available from

thaibizbangladesh.net.Pp 1-9

Jenkins, C. and Thomas, L. (2002) “Foreign direct investment in Southern Africa: determinants, characteristics and implications for economic growth and poverty

alleviation”, University of Oxford [internet.] Available from http://www.csae.ox.ac.uk/reports/pdf.



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Johnson, A. (2006), "The Effects of FDI Inflows on Host Country Economic Growth", CESIS Working Paper Series, Paper No. 58, Royal Institute of Technology,

Sweden

Letto-Gillies, G. (1992). International Production: Trends, Theories, Effects. Cambridge: Polity Press.P. 171-188

Magdoff, H. (1992). "Globalization - To What End?" Monthly Review 43: 1-18.

APPENDIX REGRESSION RESULT

---- PcGive 8.00, copy for meuller ----

---- session started at 13:39:56 on 24th

December 2010 ----

Data loaded from: alexpr~1.wks

EQ( 1) Modelling BCA by OLS

The present sample is: 1 to 30

Variable Coefficient Std.Error t-value t-prob PartR2

Constant -1.3500e+005 1.1447e+005 -1.179 0.2489 0.0508

FDI 7.0662 1.5046 4.696 0.0001 0.4590

GOV._EXP. -0.49248 0.35404 -1.391 0.1760 0.0693

GFC 0.42403 0.29101 1.457 0.1571 0.0755

R2 = 0.919443 F(3, 26) = 98.917 [0.0000] s = 472972 DW = 1.72

RSS = 5.816258697e+012 for 4 variables and 30 observations



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FINDING THE DETERMINANTS OF CAPITAL STRUCTURE: A CASE STUDY OF UK COMPANIES

MUKHIDDIN JUMAEV

M B.A. STUDENT

OTHMAN YEOP ABDULLAH GRADUATE SCHOOL OF BUSINESS

UNIVERSITY UTARA MALAYSIA

MALAYSIA

JALAL HANAYSHA

RESEARCH SCHOLAR



MALAYSIA

EMAD EDDIN ABAJI

M.B.A. STUDENT



MALAYSIA

ABSTRACT This paper analyzes the significant of variables that determine capital structure. In addition, it emphasizes how independent variables influences leverage

particularly long-term debt. A sample from 905 UK companies was chosen to examine an effect of book value of debt on book value of asset and 750 companies

were used to determine the influence of book value of debt on market value of asset. It was found that Profitability, Growth opportunity, and Costs of financial

distress have negative relationship with leverage. While firm size, tangibility, business risk, and market to book of asset ratio have positive correlations with

capital structure. It was also found that companies which have high profitability and growth opportunity prefer to operate with internal financing activities, high

cost of financial distress is constrain to finance from external. By the way, big size companies are able to use more external long-term financing. High tangibility

and market to book ratio of asset are helpful to operate external financing activity.

KEYWORDS Firm size, book value, growth opportunity, business risk, tangibility.

INTRODUCTION ince the 1950s from the 20th century, Western economists launched a wide range of capital structure research. The MM theorem proposed as a starting

point the traditional capital structure theory, such as the Modigliani Miller (MM) theory, balance theory, agency theory, asymmetric information theory,

control theory. These theories suggested that the optimal capital structure of companies have chosen to have some guidance. There is a gap between

theory and reality, and always some unexpected factors influence the choice of capital structure, one after another of these factors were caused the concern of

financial and economic scholars and, through case summary or empirical studies to prove these factors on capital structure.

Capital structure theory is the Western contemporary financial theory of the main research results. Capital structure is due to adopt a different method of

financing business formation, showing long-term capital for enterprises and the ratio between the composition of the corporate balance sheet on the right long-

term debt, preferred stock, common equity structure. Different combinations of various types of financing decisions on capital structure of enterprises and

changes. Do capital structures change with corporate value in the kind of relationship? When firms make capital structure of what state the maximum business

value? This relationship constitutes the focus of capital structure theory.

This study extends empirical work on capital structure theory. First, it extends the range of theoretical determinants of capital structure by examining some

recently developed theories. Second, since some of these theories have different empirical implications with regard to different factors affect capital structure, it

is analyzed variables to determine debt to total asset especially on long-term debt. In this study, it is emphasized on the determinant as several ratios that able

to get figure from financial statements in companies. Furthermore, it will be used Ordinary Least Square (OLS) to examine relationship between the

determinants and capital structure. Lastly, we close with conclusion and suggestions for future research.

LITERATURE REVIEW There have been many scientific works regarding to capital structure by the researchers until now. Gurcharan (2010) studied the capital structure role in

developing countries’ companies which was taken from Asian Stock exchange index-linked listed. It was resulted that Debt Exempt tax shield of Malaysian

companies were negative significance on leverage, and nevertheless, observed positive relationship with firm sizes especially in Indonesian and Philippine

companies. As described that theoretical perspectives of capital structure has showed the variables, which are stock market, Gross Domestic Product (GDP) rate

are significant relationship with leverage but, the Influence of bank size and inflation rate are also insignificant.

In addition, Korajczy and Levy (2003) investigated relationship the effect of macro economical variables to the capital structure change. By using as a measure of

financial constraints, the result defined hypothesis, which unconstrained firms make moment their matters to match with macroeconomic condition periods but

constrained firms are opposite.

Brav (2009) revealed that Evaluation between public and reliance of private types subsidies on debt financing in Great Britain were higher leverage ratios which

was defined on reluctance of external capital markets, high willingness to regulate to variation on their capital structures. It was pretended that these distinct

are because of more cost of private equity than public since information irregularity and aspiration are for keeping the power.

Regarding to capital structure, Margaritis and Psillaki (2007) analyzed the correlation of both firm efficiency and leverage. The sampled data from 12 240 New

Zealand firms were revealed that Firm efficiency was defined as a measure of production facility in industrial organizations and also positive relationship.

Moreover, Efficiency influence was positive on leverage beyond the overturn at low Mid Leverage levels, and nevertheless it is negative at high leverage ratios. It

was found that firm size effect on leverage as follow: Both Negative and Positive are respectively at low debt ratios and at mid high debt ratios. Influence of both

tangibles and profitability is positive on leverage whilst there is negative influence of intangibles and assets on leverage.

Ovtchinnikov (2010) approached five type-deregulated industries which entertainment, petroleum, natural gas, utilities, telecommunications, and

transportations in capital structure decisions. Results were that deregulation influenced significantly to the working environment of the firm as well as financing

S



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decisions also. But it was observed that there was considerable impact decreasing in firm profitability, tangible asset and therefore, it was significant raise in

growth opportunity by the following deregulation. Firms have achieved it by having decreased leverage ratio. And also, it was observed that there had been

considerable impact on cross-sectional correlations betwixt casual factors and leverage. Also, negligible negative Leverage was interrelated with lucrativeness

as well as market value to book value. Nevertheless, firm sizes were related positively and matched with capital structure’s dynamic tradeoff theory.

Frank and Goyal (2009) surveyed that which factors can have strong relationships in public organizations based on American for the periods between 1950 and

2003 years. From found results that factors are positively related in respectively median industry leverage, tangibility, log of assets and expected inflations and

however, negative approach was market to book asset ratio and profit. Moreover, Lowe leverage is as a result of tending firms which are based on dividend

paying. By approaching book leverage, it has an influence on firm size, market to book ratio but are not consistent with inflation rate. They found that book

leverage is related with a several theories of capital structure’s trade-off-theory.

Additionally, Brounen et al (2006) made investigation internationally amid 313 Chief Financial Officers on arranging capital structure of the company. They

approached to learn the way of applying conceptual theories which was applied by UK, Netherland Germany and France professionals. Having result, they

contrasted with other result which was done previously in US and the findings are in the pecking order of behavior. Asymmetric Information system doesn’t

regulate behavior by that time. They considered that generally, the target debt and also, tax cut and bankruptcy cost approves static trade-off theory. In the end,

they concluded with that there are negligible differences over the countries in spite of considerable existences of distinction in organizations. They revealed that

there were opposing characteristics in private companies to the public companies. As well as, they pointed which was not found any clear details about agency

problems in structuring of the company capital.

Hackbarth et al (2006) analyzed the correlation influence of credit risk in terms of macro economical changes and in changing of the capital structure. The

research investigation was begun by the scientists while turnover of cash flows were regulated by the economic climate change. This economic position can

advantage for firms which can adjust both their financial and default policies in terms of the business procurement process. The study showed that variables

which were chosen were considerable impact on company destiny. Remarkably, the created model by the scientists was revealed that it repeated debt levels

which were selected and leverage ratio cyclicality. In addition, the model also replicated short terms credit structure and lead short term maturity credit spreads

for which was considered as a debt contract.

Margaritis and Psillaki (2009) studied about that whether there is any relationship or not between capital structures, ownership structure and firm performance

by approaching French based companies. By utilizing non parametric data envelopment analysis, since they tended to check that high performing efficient

companies whether they choose more or less debt to form their capital structure. They accepted two opposing hypothesis ideas which were risk efficiency and

franchise value measurements. They found that firm efficiency on leverage is correlated positively as well as company ownership equity was originated from the

high debt in capital structure.

Booth et al (2001) conducted a research to evaluate the irrelativeness of capital structure theory over the countries with institutions which are diverse type

form. The study of capital structure which was taken from 10 developing countries revealed that the influence of identical variables resulted as like as developed

states. Their decision conclusion was that capital structure formation greatly remains which having done effect of diverse aspect organizations in spite of

approaching to the modern finance theories.

King and Santor (2008) on the other hand, made survey analysis correlation of that whether family ownership impact firm efficiency and capital structure as an

example of 613 Canadian firms which period was taken since 1998 until 2005 year. The finding was revealed that there has been a like market performance in

these firms which are not family owned. But the firms, which are owned by the family, are not related negatively for the Canadian institution’s performance.

However, this type of ownership may cause to destabilize firm on value sides.

Furthermore, Desai et al (2004) studied characteristics of capital structure foreign subsidiary and domestic markets of conglomerates. The study showed that

higher taxes rates are due to 2.8% higher ratios in debt and assets as well as domestic lend is responsive to the taxes. It was also defined which these institutions

are rarely funded externally in countries where was low progressed capital markets and fragile credit privileges. Moreover, it was caused to cost highly getting

from the domestic borrowing. Higher borrowing, which was taken from company substitutes in three quarter periods caused to decrease to get fund from

outside sources under the capital market environment. Additionally, size has positive correlation with long-term debt to book value of asset ratio and market to

book value of asset is able to increase external long term financing capacity (Titman & Waessels, 1988).

Lang et al (1996) demonstrated that growth opportunity has negative effect to leverage because if companies have high growth rate so they will use internal

financing rather than debt financing.

Bradley et al (1984) illustrated that cost of financial distress has negative effect on leverage ratio, they argued if companies associate with more financial distress

that companies would have high probably default in payment. In addition, Walsh and Ryan (1997) indicated that volatility decrease probability to issue debt.

METHODOLOGY

This study used secondary data from academic database in Sultanah Bahiyah library, University Utara Malaysia, which is DATASTREAM from Thomson Reuters

that has information similar balance sheet of companies. We got 1588 companies as list on London Stock Market Exchange in every industry in time series period

1998 to 2010. After that, it is used Eviews program to analyze and excluded some incomplete raw data. Therefore, there are around 905 companies were tested

by model 1 and model 2 and 750 companies were by model 3.

This study is applied Ordinary Least Square regression method to test correlation between independent variables and capital structure. For dependent variables,

it is tested for overall leverage in model 1, long-term leverage in model 2, and leverage

in model 3. For details of independent variables as illustrated in TABLE 1.

TABLE 1: DEFINITION OF INDEPENDENT VARIABLES

Independent Variables Measurable Expectation

1. Profitability (PROFIT)

+/-

2. Firm Size (SIZE) Log of Total Asset +/-

3. Growth Opportunities (GROWTH)

+/-

4. Tangibility (TANG)

+

5. Cost of Financial Distress (EVOL) Earning volatility = Absolute value of the first difference of percentage change of Operating Income -

6. Tax Shield Effects (NDTS)

+

7. Business Risk (RISK)

-

8. Liquidity (LIQUID)

-

9. Effective Tax rate (TAX)

+

10. Market to Book value (GROWTHA)

-



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REGRESSION MODEL

This study uses sample data across companies’ overtime, which means to apply panel data method. Therefore, it is adopted 3 regressions to examine

relationship between leverage and independent variables are;

Model 1

Model 2

Model 3

From models, i and t denote individual company and time dimension respectively. Model 1 highlights on relationship between independent variables and all

leverage. Then model 2 testes how independent variables affect to book value of long-term debt as book value of asset is denominator. The purpose of model 3

is to examine correlation between independent variables and book value of long-term debt when market value of asset is denominator. The next section

considers the finding and discussions of the study.

FINDING AND DISSCUSSIONS TABLE 2: DESCRIPTIVE ANALYSIS

Variables LEV1 LEV2 LEV3 PROFIT SIZE GROWTH TANG EVOL NDTS RISK LIQUID TAX GROWTHA

Mean 0.1849 0.1196 139911.6 -0.0541 11.0224 -0.8076 0.2342 0.0763 0.0356 0.2496 1.2034 0.2134 0.0034

Median 0.1185 0.0369 320.9646 0.0881 10.8241 0.5170 0.1367 0.0681 0.0224 0.071 0.6969 0.2066 0

Maximum 19.5091 6.5606 27281192 8.0498 19.5112 2593.0730 14.2290 359.4101 18.8569 379.8404 485.6667 173.3333 8.2857

Minimum 0 0 -85082.46 -219.1429 2.6391 -11731.46 0 -534.000 0 0.0006 0.0000 -60.3333 -0.6350

Std. Dev. 0.3765 0.2295 877010.5 2.5974 2.3791 159.5198 0.3406 12.9376 0.2653 4.3521 8.3729 2.6178 0.1134

Observations 8113 8113 8113 8113 8113 8113 8113 8113 8113 8113 8113 8113 8113

Table 2 presents descriptive statistics of all variables in every model. There are 8113 observations by period between 1998 -2010 from DATASTREAM. LEV1,

LEV2, and LEV3 are dependent variables as ratio of leverage in difference detail ratio as it was mentioned in previous part. While other variables are,

independent variables in these estimations determine capital structure in each model. As it was explained details of these variables in earlier part also. It is

illustrated mean, median, maximum, minimum, and standard deviation in this table.

For Table 3 presents correlative coefficients for variables in these estimations. It also indicated significant correlation between variables as mentioned in this

table. For instance, SIZE has correlation with every leverage significant at 1% level, while it has correlation with other independent variables as PROFIT,

GROWTH, RISK, LIQUID, TAX, and GROWTHA as different significant. In addition, there are other correlations as we show in this table.

TABLE 3: CORRELATION ANALYSIS LEV1 LEV2 LEV3 PROFIT SIZE GROWTH TANG EVOL NDTS RISK LIQUID TAX GROWTHA

LEV1 0.141735

LEV2 0.043818 0.052672

(52.992)***

LEV3 24948.48 25923.57 7.69E+11

(6.825)*** (11.697)***

PROFIT -0.16962 -0.00102 21881.03 6.745484

(-15.863)*** (-0.154) (0.865)

SIZE 0.03727 0.099367 781785.8 0.731251 5.659414

(3.750)*** (16.669)*** (36.401)*** (10.734)***

GROWTH -0.43172 0.286613 832247.1 24.516 10.30076 25443.42

(-0.647) (0.705) (0.535) (5.338)*** (2.445)**

TANG 0.009551 0.032039 20915.57 0.013845 0.143563 0.358003 0.115983

(6.727)*** (40.473)*** (6.322)*** (1.409) (16.215)*** (0.593)

EVOL -0.04795 -0.022819 -2797.251 0.174411 -0.036056 -2.072326 0.003353 167.3603

(-0.886) (-0.692) (-0.022) (0.467) (-0.105) (-0.090) (0.068)

NDTS 0.002205 0.001577 -871.8236 -0.001619 -0.006677 -0.108912 0.004751 -0.012566 0.070363

(1.989)** (2.334)** (-0.337) (-0.211) (-0.953) (-0.231) (4.743)*** (-0.329)

RISK 0.102072 -0.001612 -29974.02 -0.942356 -0.885208 -1.250575 0.028174 0.082664 0.002274 18.93833

(5.621)*** (-0.145) (-0.707) (-7.535)*** (-7.728)*** (-0.162) (1.712)* (0.132) (0.177)

LIQUID 0.25172 0.006825 -13387.62 -1.01755 -0.50153 -2.364618 0.046382 -0.222756 -0.00214 1.095161 70.0971

(7.215)*** (0.319) (-0.164) (-4.219)*** (-2.268)** (-0.159) (1.465) (-0.185) (-0.086) (2.708)**

TAX 0.014616 0.010273 25067.21 0.025634 0.171396 -12.88133 0.005451 0.493751 -0.00094 -0.035292 -0.013435 6.852226

(1.335) (1.540) (0.983) (0.339) (2.479)** (-2.779)** (0.550) (1.313) (-0.121) (-0.279) (-0.055)

GROWTHA 0.000693 -0.00021 -481.7613 -0.229067 -0.0199 -0.031024 -0.000542 -0.001282 -5.02E-05 0.053456 0.0267 -0.0007 0.012859

(1.461) (-0.727) (-0.436) (-111.441)*** (-6.661)*** (-0.154) (-1.263) (-0.078) (-0.150) (9.813)*** (2.533)** (-0.211)

* Significant at 10% level, **significant at 5% level, *** significant at 1% level

TABLE 4: REGRESSION ANALYSIS

Independent Variables Model 1 Model 2 Model3

1. PROFIT -0.040772*** -0.000761 -925.4687***

2. SIZE -0.001664 0.000463 10342.06***

3. GROWTH -2.56E-06 -4.24E-06**

4. TANG 0.112139*** 0.415222*** 795.3153

5. EVOL -5.61E-05 -1.89E-05**

6. NDTS 0.017470 -0.000516

7. RISK 153.1409***

8. LIQUID -1.051771

9. TAX 6.429752

10. GROWTHA 1535.198***

Observations 9049 9044 7498

R-squared 0.821833 0.921604 0.842847

Adjust R-squared 0.821695 0.921543 0.842679

F-statistics 0.000000 0.000000 0.000000

Durbin-Watson Stat 1.903743 1.783020 1.911036

*Significant at 10% level, **Significant at 5% level, ***Significant at 1%level

The empirical result from all three model has revealed that there are 7 variables significantly correlated with leverage as profitability, firm size, growth

opportunitties (GROWTH), growth opportunities (GROWTHA), tangibility, cost of financial distress, and business risk. It was observed three models gave results

for different variables. Some variables as profitability was examined by model 1 and 3 and showed the same result, whlie tangibilty was also tested by model



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24

1and 2 and also showed the same result. Profitbality, growth opportunities, and cost of financail distress are negative relationship with leverage, while firm size,

tangibility, business risk, and growth opprtunities (GROWTHA) are positive relationship with leverage.

In this comparison of model, all models have high R2, estimated at 82-92% that means thease models have explanatory power on leverage. Further, Durbin-

Watson statistics of all model that lies near 2 showed that there are not auto- correlations in these models.

DISCUSSION PROFITABILITY

Profitability has negative correlation with leverage as be tested by model 1 and 3 as significant level 0.01. This result support pririor researches that indicate

negative relationship between profitability and leverage by Pecking order model as Kester (1986), Friend and Lang (1988), Baskin (1989), Griner and Gordon

(1995), Shyam-Sunder and Myers (1999). That means, as the Pecking order theory hypothyse that the companies prefer to issue internal financing by issuing

securities rather than external financing. In addition, issuing common stock is prcess of financing that become free source of finance. From this result, It implies

that the companies in UK use eqity finance as much as possible because of retaining profit is easy and fast financing.

SIZE

Firm size has positive relationship with leverage significant level 0.01 examined by model 3. Similarly, The previous reseaches have found the same result of

Marsh (1982), Rajan and Zingales (1995), and Chittenden et al. (1996). These result demonstrated as follow trade-off theory. The expectation of this correlation

is, if size is large so it has higher debt capacity especially on long term debt, that mean firm size has positve correlation with long term debt. In addition, large

size with long term debt able to reduce transaction cost of debt financing. From this result, the coefficient of firm size is 10342.26 that are able to imply that firm

size has highly relationship with long term debt in UK companies; large firms have much proportion of long term debt. Furthermore, there is also probability

default in large companies because of proportion of long term debt. While Pecking order theory suggests that firm size should be lower relation with leverage

and should issue equity securities rather than debt (Kester, 1986). In addition, Titman and Wassels (1988) indicated there is negative relationship between firm

size and leverage.

GROWTH OPPORTUNITIES (GROWTH)

In this research, there are 2 variables concern about growth opportunites, GROWTH from proportion of sale growth and total asset growth. This variable has

negative correlation with significant level at 0.05 by model 2. This result support trade-off theory as Long and Malitz (1985) examined the same result before.

The trade-off theory demonstrate that firms holding growth opportunities for create intangible assets and tend to borrow less than firm holding more tangible

assets. Myers (1977) and Jensen (1986) demonstrated on agency theory that firms have a tendency to move wealth from debtholder to shareholder because

subsitution effects and flexibility on investment.

GROWTH OPPORTUNITIES (GROWTHA)

Growth opportunities (GROWTHA) from proportion of market value of total asset and total asset, has positve correlation at significant level 0.01 by model 3,

which support result of prior researchers as Titman and Waessels (1988), Lang et al (1996) on Pecking order theory and signalling model. Wald (1999) confirmed

that this relationship was occured in developed coutries except United State. The signalling model demonstrate that companies with the best earning and gross

prospects will use the most leverage. Furthermore, Lang et al (1996) argued that the negative correlation between growth and leverage will happen in unknow

companies by the capital market only. The implication of UK companies, growth opportunities associate with lised companies are recognise by capital market.

TANGIBILITY

Tangibility was tested by model 1 and 2 and found the simmilar that there is positive relationship with leverage at significant level 0.01. This result as follow

trade-off theory and Pecking order theory, which has been examined by Long and Malitz (1985), Chung (1993), and Walsh and Ryan (1997). From the result,

tangibility has positive correlation with debt especially on model 2, which able to imply that tangible assets are important for bank’s credit policy especailly on

long term debt. In addition, the more proportion of tangibility able to reduce cost of financial distress that occur when there are more intangible asset

(Markaritis & Psillaki, 2007).

COST OF FINANCIAL DISTRESS

Cost of financial distress has negative correlation with capital structure at sinificant level 0.05 by model 2. This result supports the findings of pririor researches

by Bradley et al (1984), Friend and Lang (1988), and Walsh and Ryan (1997) with trade-off theory. The theory indicates that if there is high volatility of earning

that increase probability of financial distress. So, the companies may not be able to fulfil their debt servicing commitments. The implication from this result, cost

of financial distress affect to ability of long term debt finacing. That mean if companies have much cost of financial distress, so there are constraints to debt

financing such as bank’s consideration fund as less than companies’ expect, or afffect on companies’ credit rating as decrease.

BUSINESS RISK

Business risk was tested by model 3 and find that has positive relationship with capital structure at significant level 0.01. This result is opposite to the

expectation of risk according to trade-off theory that demonstrates negative relationship with leverage. Argument from theory, when there is greater risk of

bankruptcy cost; the firm will take offseting action by reducing leverage. In addition, the companies issue long-term debt as bond that attempt to restrict the

extent to which equityholder able to pursue risky project that reduce the value of the debt (Jensen & Meckling, 1976). Capital structure theory suggest that firms

with large fragtion of tangible asset should serve as collateral and reduce risk of the lender suffering the agency cost of debt, that means correlation between

tangibility and leverage insisit negative relationship between risk and capital structure.

CONCLUSION

This paper investigated the determinants of leverage ratio of UK companies. The purpose of this study is a looking for which factors affect capital structure.

Therefore, it was used 3 ratios of leverage to be dependent variables, which focus on book value of total debt to book value of total asset in model 1, and

especially proper of book value of long term debt by compare with book value of total asset in model 2 and market value of total asset in model 3. It was used

905 UK companies to test in model 1 and 2, and 750 companies to test model 3. The determinants whcuh was applied as independent variables such as

profitability, size, growth opportunity, tangibility, cost of financial distress, tax shield effect, business risk, liquidity, effective tax rate, and market to book of

asset ratio.

The result, there are 7 independent variables which was affected to capital structure ratio. Profitability, growth opportunity, and cost of financial distress are

negative relationship with leverage. While firm size, tangibility, business risk, and market to book of asset ratio have positive correlations with capital structure.

From results, it can be implied that the companies, which have more profitability and growth opportunity, focus more on internal financing as prefer to use

common stock and retain earning to invest in companies that means they would use less long-term liability to financing in companies. Cost of financial distress is

threat of long-term debt because there are volatilities to fulfil debt obligations. In contrast, firm size and tangibility are positive relationship with long-term debt

because of there is more debt in big companies, is common sense that able to understand. While there are more tangible assets, is good collateral to finance

with long-term debt in companies. For market to book of asset ratio, which results opposed with prior research that this implication is the UK companies, which

high market price can make reliable for long-term financing in UK companies. Moreover, for risk, it cannot make implication in this study.

FUTURE RESEARCH we considere for the future research to focus more on model 2 and model 3 because variables which have significant correlation in model 1, model 2, and 3.

This means that it should interprete relationship between the determinants of capital structure with long-term debt. In addition, we leave for future research to

include other variables to determine capital structure in terms of other countries.



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Brav, O. (2009). Access to capital, capital structure, and the funding of the firm. The Journal of Finance, 64(1), 263-308.

Brounen, D., de Jong, A., & Koedijk, K. (2006). Capital structure policies in Europe: Survey evidence. Journal of Banking & Finance, 30(5), 1409-1442.

Desai, M.A., Foley, C.F., & Hines, J.R. (2004). A multinational perspective on capital structure choice and internal capital markets. The Journal of Finance, 59(6),

2451-2487.

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Graduate School of Management, 2-20.

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2423-2432.

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Margaritis, D., & Psillaki.M. (2010). Capital structure, equity ownership and firm performance. Journal of Banking & Finance, 34(3),621-632.

Shleifer, A. and R., W. Vishny (1992). Liquidation values and debt capacity: A market equilibrium approach. The Journal of Finance, 47 (4), 1343-1366.

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Smith, C. W. (1979). On financial contracting: An analysis of bond covenants. Journal of financial economics, 7 (2), 117-161.

Stonehill, A., Beekhuizen T., Wright. R., Toy L. R, N., Shapiro A. (1975). Financial goals and debt ratio determinants: A survey of practice in five countries.

Financial Management 4(3), 27-41.

Strebulaev, I. A. (2007). Do tests of capital structure theory mean what they say? The Journal of Finance 62(4), 47-87.

Titman, S., & Wessels.R. (1988). The determinants of capital structure choice. Journal of finance, 63(2), 1-19.

Toy,N.A., Stonehill.L.R., & Beekhuisen.T. (1974). A comparative international study of growth, profitability, and risk as determinants of corporate debt ratios in

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AN ASSESSMENT OF THE CONTRIBUTION OF PAY-AS-YOU-EARN TO THE INTERNALLY GENERATED

REVENUE OF KANO STATE BETWEEN THE PERIODS 1999 TO 2008

ISHAQ ALHAJI SAMAILA

LECTURER

DEPARTMENT OF ACCOUNTING

BAYERO UNIVERSITY

KANO-NIGERIA

ABSTRACT The paper assessed the contribution of pay-as-you-earn to the internally generated revenue of Kano state between the periods 1999 to 2008. Data was collected

from the annual reports and account of the Accountant General of Kano State and the internally generated revenue statement of Kano State Board of internal

revenue which were analyzed using Descriptive statistics and Pearson correlation coefficient. The results show that pay-as-you-earn contribute significantly to the

internally generated revenue of Kano state. It constitutes significant percentage of the personal income tax and also to the board of internal revenue collection.

The contribution should have been much more than this due reluctance of revenue generation efforts This is partly as a result of the certainty of earnings from

the federation account, poor remittance and collection machinery, lack of motivation of revenue staff, inadequate demographic information on tax payers,

corrupt practices by some tax officials and tax payers among others. Finally it is recommended that effort should be made by the government to identify

taxpayers that are yet to be captured in the tax payers net, through the issuance of a unique tax identification number and the development of data base of tax

payers’ profile in order to improve pay-as-you-earn collection, personal income tax and internally generated revenue of Kano state.

KEYWORDS Internally generated revenue, Pay-as-you-earn, Personal income tax.

INTRODUCTION eneration of revenue by every entity is an issue of paramount importance. This cuts across households, firms, states and nations. Every country of the

world today is striving to achieve rapid socio-economic growth and development through optimum tax assessment, collection and utilization.

Government at every level (Federal, State or Local) is expected to discharge certain functions to its populace which includes the provision of basic

infrastructure and social amenities (Abdulkadir 1998). The generation of adequate revenue is, therefore, very important for the effective discharge of the

functions of government, as no meaningful development can be achieved in the absence of revenue.

Revenue as explained by Oni (2005) means the receipt of a government, state or firm. In accounting terms, revenue means gross income received before any

deduction for expenses incurred in generating the income. The 1999 Constitution of the Federal Republic of Nigeria, section 162(10) (1) defined revenue as any

income or return accruing to or derived by the government from any source (internal or external). On the other hand, internally generated revenues are those

revenues that are derived from various sources within a state or local government. The sources include pay – as – you- earned, direct assessment, capital gains

tax, withholding tax on rent, motor vehicle license, stamp duties, earning and sales of governmeent properties etc (Buhari, 2001).

Revenue is necessary for the effective functioning of the government machinery, as no government can survive without adequate revenue. However, studies

have shown that state being the second tier of government in Nigeria has over the years shown sheer laxity toward enhancing internally generated revenue

(Hamid, 2008). Most state governments have over the years over- relied on their share of revenue from the federation account, neglecting other internal

sources of revenue generation available to them. Although pay-as-you-earn has the potential of generating sufficient internal revenue to state governments, it

has not been given the desired attention. This has resulted to decrease in the share of the contribution of pay-as-you-earn to the overall revenue being

generated at state level. Thus, current dwindling in the price of crude oil at the international market coupled with the world economic meltdown creates a

shortfall to all the three tiers of governments, including the government of Kano State. With the price of crude oil in the international market crashing from $140

per barrel in early 2008 to the current average price of about $80 in December, 2009, coupled with the reduction of Nigeria’s OPEC quota to 1.88 million bpd

compared to the budgeted 2.292 million bpd for 2009, all the three tiers of government have to explore other sources of revenue. Presently, the grim picture

that confronts states in Nigeria is that of drastic reduction in allocation from the Federation Account. In January 2009, the funds allocated to the three tiers of

government dropped to N285 billion as against N435 billion allocated in December 2008, a difference of N150 billion. The allocation reduces further in March to

251.5 billion (Federal Republic of Nigeria, 2009; Mukwuzi, 2009; Omose; 2009 and Subair, 2009). Such reduction together with the crisis in the Niger-Delta is

affecting all the states in Nigeria leading to cutting down of expenditure. If this trend is to continue, states governments may not be able to provide the desired

basic amenities to the masses, which will in turn affect the standard of living of the majority of the populace.

The internally generated revenue (IGR) level in Kano state for most of the years under review (1999-2008) has been below the desired target (Annual Report and

Account1999-2008). The unfavorable situation has been as a result of weaknesses in judicial and tax administrative machinery and laxity in the exploitation of all

the sources of revenue available to the state, among others. Though in the recent past, considerable efforts have been made by the government in improving

the internally generated revenue level of the state. For instance in 2005 and 2006, an increase of 10% and 24.27% were recorded respectively over the budgeted

amount (Annual Reports and Accounts Kano State, 1999-2008).

Although Kano State government has been making concerted efforts to shore up its internal revenue base, through setting up of machineries to tackle tax

evasion, restructure management of the State’s Board of Internal Revenue, as well as engaging a number of experts and consultants, the level of achievement

recorded is yet to be ascertained.

The paper is aimed at assessing the contribution of Pay-As-You-Earn (PAYE) to the internally generated revenue in Kano state between the periods 1999 to 2008

and also to see the extent to which Pay-As-You-Earn (PAYE) contributes to the personal income tax and the Kano state board of internal revenue collection. To

accomplish this, the paper is divided into five sections. Introduction, conceptual framework and literature review, methodology, results and discussions,

conclusion and recommendations.

LITERATURE REVIEW THE CONCEPT OF REVENUE

The term revenue has been defined by various authors in different ways. Adam (2006) defined revenue as the fund required by the government to finance its

activities. These funds are generated from different sources such as taxes, borrowing, fine, fees etc. It is also defined as the total amount of income that accrues

to an organisation (public or private) within a specified period of time (Hamid, 2008). States revenue comprises of receipt from taxation as well as those which

are not the proceeds of taxation, but of either the realization from the sale of government properties or other interests and returns from loans and investment

earning. Bhatia (2001) contends that revenue reciept include “routine” and “earned” income. For these reasons, according to him, revenue do not include

borrowing and recovery of loans from other parties, but it includes tax reciept, donations, grants, fees and fines and so on.

Similarly, Pearce (1986) defined government revenue as all the money received other than from issue of and debt, liquidation of investments. Government

revenue includes tax collections, charges and miscellaneous revenues, utility and insurance trust revenue for all funds and agencies of a government. Public

G



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revenue according to Stephen and Osagie (1985) is concerned with various ways in which the government raises revenue. From the above definitions, it can be

said that revenue is the total amount of income accruing to a state from various sources within a specified period of time.

States’ government, like the other two tiers of government, has sources and uses of revenue. Oshisami (1994) states that there are basically two types of

revenue that accrues to state governments. These are internally generally generated revenue and revenue allocated from the Federation Account. Internally

generated revenue are those revenues that are derived within the state from various sources such as taxes (pay as you earn, direct assessment, capital gain

taxes, etc), and motor vehicle license, among others. While the statutory allocation from Federation Account, Value Added Tax etc constitute the external

source.

Most states of the federation get the bulk of their revenue in form of statutory allocation from the federation account to finance their expenditure programmes

(Mukhtar, 1996; Isyaku, 1997; abdulkadir, 1998; Ibrahim, 2002; Ishaq, 2002 and Hamid, 2008). State governments as the second tier of government in Nigeria

derive its revenue from various sources. However, it should be noted that sources of revenue are by no means uniform among the states. States derive their

revenue depending on the resources available to them; (Anyafo, 1996; Daniel, 1999; and Adam, 2006). The share of federation account to states constitutes

57.97% in 2002 of the total revenue plus grant and this rose to 65.82% in 2006; while the internally generated revenue decline from13.38% in 2002 to 8.11% in

2006 (CBN,2006). The average percentages of internally generated revenue in relation to the federal allocation were between 5-9 percent for most non-oil

producing states in the recent past. Kano was able to slightly exceed 10% in 2004 to date due to aggressive revenue generation efforts, with Lagos state as the

only exception. The Internally Generated Tax Revenue of Lagos State has gone up sharply over the period 2000-2004 and to date, in both nominal and real

terms. This favourable development is due to the general dynamism, enthusiasm and professionalism of private sector agents (tax consultants) whose

remuneration is performance based (Zeeuw and Abdulrazaq 2005 and Sagagi 2007).

The common sources of revenue among the state governments in Nigeria as highlighted in Anyafo (1996), Jimoh (2007) and Hamid (2008) include taxes, fines

and fees, licences, earning and sales, rent from government properties, interest and repayments of loans, re-imbursements, statutory grant and miscellaneous.

Revenue generated by state governments is used to finance various expenditure programmes. Expenditure is an actual payment or the creation of an obligation

to make a future payment for some benefit, item or service received. Government expenditure is broadly divided into two (2) main categories, viz, recurrent

expenditure and capital expenditure (Sosanya, 1996; and Jimoh, 2007).

Recurrent expenditure according to Jimoh (2007) is the type of expenditure that happens repeatedly on daily, weekly or even monthly basis. The amount

involved is charged to some operating account (e.g. profit and loss account or income and expenditure account).This includes for example payment of pensions

and salaries, administrative overhead, maintenance of official vehicles, payment of electricity and telephone bills, water rate and insurance premium, etc.

Capital expenditure on the other hand refers to expenditure on capital projects. It is expenditure for the purpose of acquiring or improving a relatively

permanent asset. This includes construction of houses, roads, schools and hospitals, human capital development (expenditure on education and health),

purchase of official vehicles, construction of boreholes, electrification projects, etc. The above expenditures both recurrent and capital, are therefore incurred

with the aim of improving the standard of living of the populace(Sosanya, 1996; and Jimoh, 2007).

Anyafo (1996) explains that government expenditure produces different degrees of impact on the economy. The effects vary greatly, depending on exactly how

the government disburses public funds. If not undermined by poor management and fiscal indiscipline, government expenditure is expected to have positive

impact on resource allocation, that is, on the pattern of goods and services produced by the economy. It is also expected to produce some implications on the

distribution of real income and welfare. Since many government expenditures benefit some groups at the expense of others, the impact is usually in the form of

income redistribution.

PERSONAL INCOME TAX

Personal Income Tax (PIT) is the oldest form of tax in the country. It was first introduced as a community tax in the Northern Nigeria in 1904 (before the

unification of the country in 1914). It is implemented through the native revenue ordinances to the western and eastern regions in 1917 and 1928 respectively.

It was later incorporated into direct taxation ordinance number 4 of 1940 (Ola, 2001). The need to tax personal income prompted the Income Tax Management

Act (ITMA) of 1961. Several amendments have been made to the 1961 ITMA Act in 1985, 1989, 1990, and 1992.

The application of ITMA varied across regions/states causing the burden of multiple taxes on individuals. As stated by Odusola (2006) two study groups were set

up in 1991 to review the situation and improve tax collection. The 1961 ITMA was replaced with an amended act which was superseded in 1993 by Personal

Income Tax Act (PITA) number 4. It was applicable with nationwide coverage. Its administration however, was assigned to the states, which were empowered to

tax individuals, or bodies of individuals residing in its territory in a particular year. The PITA empowered the Joint Tax Board to administer the tax throughout the

country and to coordinate its administration while the State Board of Internal revenue (SBIR) became responsible for the administration of the revenue.

Dandago and Alabede (2000) defined Personal Income Tax as taxes imposed on the income of individuals, communities and families, etc. arising from

employment, business, trade, profession, vocation etc. Bimpe (2002) consider Personal Income Tax as employment income taxes (payroll taxes) operated on the

basis of Pay–As –You Earn (PAYE). He further explained that the tax applies to all employees of a Nigerian Company including expatriates as well as self

employed individuals, partners and trustees. In these regards, the definition implies two forms of personal income Taxes. That is the PAYE and the Direct

Assessment form of personal income tax.

Two forms of personal income tax exist; the Pay-As-You-Earn system (PAYE) and Direct assessment. Mballos (2005), Taiwo (2002) and Ola (2001) described PAYE

as the system whereby the employee pays tax on whatever income he earned from his employment in any particular month at the end of that month. It is a

progressive tax arrangement whereby an employee pays income tax on his/her current earnings when it becomes payable. PAYE applies only to employees

resident in Nigeria and employees of Nigerian government oversee. It applies to income from all sources, salaries, bonuses, commission, directors’ fees and any

other income from employment etc. The employer deducts the tax from the employee’s monthly earnings including any allowances or benefits paid in cash or

given to or on behalf of the employee. The total amount deducted by the employer from the employee’s earning at the end of every month is then remitted to

the relevant tax authority (the relevant State Board of Internal Revenue).

Evasion (partial or total) is described by Jimoh (2007) and Olaofe (2008) as outright or deliberate breaking of law to minimize or not to pay taxes at all or efforts

outside the law to minimize taxes. The PAYE system seems to be the most effective way of enforcing payment of tax (from employment). Since tax is deducted

at source, Hence, PAYE system reduces the level of evasion.

In an attempt to solve the problem of Personal Income Tax and Companies Income Tax, especially in the areas of evasion, self assessment system was

introduced by the federal government of Nigeria through the 1991 budget pronouncement. The system is to run concurrently with the existing Government

assessment (or non-self assessment) for both individual and corporate tax payers. The system is based on the assumption that every tax payer is patriotic. It is

expected to be reinforced by some compliance measures like regular and selective tax audit in order to sustain credibility of the system. Those who exploit the

system to evade legitimate tax liability are to be severely punished (Buhari, 2001 and Jimoh, 2007).

The growing concern of tax administration throughout the world is on how to simplify the tax assessment system to encourage voluntary compliance and many

countries have adopted the self-assessment as a solution (Sarker, 2003). This recent trend in developing countries sees a shift from the official assessment

system to self assessment. Compliance costs are all costs incurred by taxpayers, non- filers and third parties to comply with tax obligations Das-Gupta (2003).

The success or failure of the self assessment system from the view point of the tax administration is ascertained from the amount of taxes collected by the

system and is found to be successful in countries like Japan as a result of their half century experience (Sarker, 2003).

The self assessment tax system is an assessment by the tax payer in which he carries out the computations of the tax liability, usually on a prescribed form and

accompanies this with payment of the tax due to the tax authority. The non-self assessment tax on the other hand, is the assessment made by the tax

authorities and conveyed on an assessment notice to the tax payer. In most cases, the tax payer provides the relevant information on a tax return form to assist

the tax authority to carry the necessary assessment’



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RESEARCH METHODOLOGY Ex-post facto research design was used for this study. Data was also obtained from the revenue statement of the Board of Internal Revenue and report of the

Accountant General Kano State for the period of ten (10) years, (1999-2008) in order to determine the extent of pay-as-you-earn (PAYE) contribution to the

internally generated revenue in Kano State, total personal income tax and the board of internal revenue collection. Descriptive statistics and Pearson

correlation coefficient were used in analyzing the data collected. This is with a view to enable the researcher to find out whether or not pay-as-you-earn (PAYE)

contributes significantly to the internally generated revenue in Kano State.

RESULTS AND DISCUSSION This section presents analyses and interprets the data generated for the study. The data generated from the revenue statement of Kano state board of internal

revenue and report of the Accountant General Kano State for the period of ten (10) years, (1999-2008).

RELATIONSHIP BETWEEN PAY-AS-YOU-EARN AND INTERNALLY GENERATED REVENUE

Table 1 (appendix) shows the Pearson correlation coefficients on the relationship between pay-as-you-earn (PAYE) and total internally generated revenue. The

values of the correlation coefficient range from -1 to 1. The sign of the correlation coefficient indicates the direction of the relationship (positive or negative),

the absolute values value of the correlation coefficient indicates the strength, with larger values indicating stronger relationships. The correlation coefficients on

the main diagonal are 1.0, because each variable has a perfect positive linear relationship with itself.

The results (appendix) show the correlation coefficient for Pay-As-You-Earn (PAYE) and Internally Generated Revenue (IGR) is 0.786 which is relatively close to 1;

this indicates that PAYE and IGR are strongly positively correlated. The significance level or p-value is 0.007, also indicates that PAYE contributes significantly to

IGR in Kano state because it is close to zero. The average contribution of PAYE to IGR is 28%. The implication of this is that PAYE is one of the major sources of

revenue in Kano state. However, in view of the status of Kano state been the centre of commerce of the Northern Nigeria and the most populous state of the

country; the contribution of PAYE to IGR which is a little above one quarter of the total IGR suggest that other sources of IGR are not contributing enough

particularly direct assessment. Some of the problems facing the state in the area of revenue generation include tax evasion, lack of trained, effective and

motivated personnel, non-challant attitude of some tax officials, problem of assessment, problem of legal proceedings, lack of commitment to collect capital

gains tax on all capital gains accruing to individuals, lack of commitment to pursue all internal revenue sources available to the state. For example withholding

tax on rent and investment income), high tax rate, accessibility lack of mobility, networks, neglect of tax administration, and lack of up- to- date statistics on tax

payers. These problems have hindered the state from generating enough revenue to the state and consequently affected the level of essential services the state

government provides.

RELATIONSHIP BETWEEN PAYE, TOTAL PIT AND KSBIR COLLECTION

The correlation coefficient for Pay-As-You-Earn (PAYE) and total personal income tax is 0.991 (appendix II) which is close to 1; this indicates that Pay-As-You-Earn

(PAYE) and total personal income tax are strongly positively correlated. The significance level or p-value is 0.000, which indicates that Pay-As-You-Earn (PAYE)

contributes significantly to the total personal income tax on average PAYE contribute 88% of the total personal income tax with direct assessment contributing

the balance of 12% .

When Pay-As-You-Earn (PAYE) and total Kano State board of internal revenue collection are related, the results (appendix II) shows that the correlation

coefficient is 0.995 which is very close to 1. This indicates that Pay-As-You-Earn (PAYE) and board of internal revenue collection are strongly correlated. The

significance level of 0.000 is very low indicating that the correlation is significant. Thus, Pay-As-You-Earn (PAYE) contributes significantly to the total Kano State

board of internal revenue collection. The average contribution is 82% of the Kano State board of internal revenue collection. This means that the state board of

internal revenue effort toward generating revenue from other sources is not encouraging; Pay-As-You-Earn (PAYE) is deducted from the source and requires not

much effort from the tax officials for assessment and the contribution of just 18% from the other sources is insignificant looking at the diverse revenue

potentials of the state. Thus, the need for effective assessment and collection of revenue from all sources

CONCLUSIONS AND RECOMMENDATIONS The paper posits that Pay-As-You-Earn (PAYE) contributes significantly to the Internally Generated Revenue (IGR) of Kano state, it also constitute significant

percentage of the personal income tax and the board of internal revenue collections. The significant contribution of Pay-As-You-Earn (PAYE) indicates that Kano

state as a commercial state is not making enough effort in generating revenue from other sources of revenue. This is partly as a result of the certainty of

earnings from the federation account, poor remittance and collection machinery, lack of motivation of revenue staff, inadequate demographic information on

tax payers, Inadequate and unreliable information furnished by tax taxpayers, Politics and partisanship, Corrupt practices by some tax officials and tax payers

among others.

The neglect of Pay-As-You-Earn (PAYE) a component of personal income tax which is an important source of revenue has contributed immensely to the over

reliance of revenue from the federation account. Such over reliance has affected Kano state and other states of the federation negatively in the area of providing

basic amenities that the citizens need.

It is recommended that effort should be made to identify taxpayers that are yet to be captured in the tax payers net, through the issuance of a unique tax

identification number and the development of data base of tax payers’ profile. Government should have the political will and should also ensure effective

assessment, collection and utilization of tax revenue; this would improve Pay-As-You-Earn (PAYE) collection, PIT and the IGR of Kano State

REFERENCES Abdulkadir, A.S. (1998). Revenue and Expenditure in Nigerian Local Government. A Case Study of Kano Municipal LGA, Unpublished B. Sc. Economics project,

Department of Economics, Bayero University, Kano.

Adam, R. A. (2006). Public Sector Accounting and Finance: Lagos, Corporate Publishers Ventures, 2nd

Edition.

Anyafo, A.M.O. (1996) Public Finance in a Developing Economy, the Nigerian Case, Enugu University of Nigeria press.

Bhatia, H.L (2001). Public Finance. New Delhi: Vikas Publishing PVT ltd. 22nd

Edition

Bimpe, B. (2002) Taxation as a Source of Government Revenue; A Paper presented at National workshop on Revenue Mobilization for National Development

Issues and Challenges. Jos Nigeria (Unpublished).

Buhari, A. L (2001) Straight to the Point, ICAN/Polytechnic Public Finance, Ilorin: Ilorin Press

Central Bank of Nigeria (2006), Annual Reports and Statement of Accounts

Dandago, K. I. and Alabede, J.O. (2000), Taxation and Tax Administration in Nigeria, Kano: Triumph Publishing Company Ltd.

Daniel, G. I. (1999). Public Sector Accounting, Zaria: Ahmadu Bello University Press

Federal Republic of Nigeria, (1999). Constitution of the Federal Republic of Nigeria, Lagos: Government press.

Federal Republic of Nigeria, (1993). Personal Income Tax Act.

Hamid, K. T (2005). “Towards Enhancing Revenue Generation at State Level ; A Study of Bauchi, Kaduna and Kano States”. The Treasury Manager.. The official

Journal of the Institute of Treasury Management and Financial Accountants of Nigeria, Vol. 1, No. 2 pp 64 – 72

………………. (2008), SWOT Analysis on Sources of Revenue at State Government Level. A Paper Presented at the Bi – Annual Conference of the Federal and State

Auditors – General held at Tahir Guest Palace, Kano

Isyaku, G.A. (1997), Management of Revenue Accruing from Taxation in Nigerian Economy with reference to Katsina State, Unpublished MBF, Department of

Economics, Bayero University, Kano.



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Ishaq, I. (2002). The Role of Taxation in the Economic Development of Kano State. Unpublished B.Sc Economics Project, Department of Economics, Bayero

University, Kano.

Jimoh, B.(2007) Public Sector Accounting and Finance. Lagos: Magic Plus Publishers.

Kano State Government: Report of the Accountant General 1999-2008

Kano State Government: Board of Internal Revenue Statement 1999-2008

Mballos, O. O (2005). PIT Returns processing’,A paper presented at a workshop organised by FIRS, Abuja(unpublished)

Mukwuzi, M. (2009). The IGR Race. The News @ the newng.com/news/the-igr/2009/02

Mukhtar, A. M. (1996), Problems and Prospects of Tax Administration (A Case of Kano State Board of Internal Revenue, Unpublished PGDBF Project, Department

of Economics, Bayero University, Kano.

Odusola, A. (2006) Tax policy reforms in Nigeria. UNU-WIDER.

Ola, C. S. (2001) Income Tax Law and Practice in Nigeria; Ibadan: Heinemann University Press Ltd.

Olaofe, E. O. (2008). “Overview of Tax Administration and the Three Tiers of Government In Nigeria”; ICAN Students Journal Vol. 12, No. 2 Pp 7-15

Oni, A. O. (2002). Exploiting Administrative Revenue and Public Debt source of Government Revenue; A Paper presented at National Workshop on Revenue

Mobilization for National Development; Organized by Revenue Mobilization, Allocation and Fiscal Commission and ICAN. Jos Nigeria (Unpublished)

Omose, K. (2009). The Lagos way Time for Bolder Action Part 3 @www.nigeranvillagesquare.com/articles/kinsley-omose/the-lagos-way-timeforbolder-action

Ososami, L. (2003). A closer Look at Taxation as a Tool for Revenue Generation and promotion of Investment in Nigeria

Oshisami, K. (1994), Government Accounting and Financial Control, Ibadan: Spectrum Books Ltd.

Pearce, D.W (1986). Macmillan Dictionary of Modern Economics, London, Macmillian Press Ltd.

Sagagi, M.S. (2007), Nigeria: Non oil Prducing States and Growing Socio- economic Crisis. Daily Trust @ all Africa .com

Sarker, T.K. (2003). Improving Tax compliance in Developing countries Via Self Assessment. What Could Bangladesh Learn from Japan? AISA-Pacific Tax bulletin

Vol. 9, No. 6.

Sosanya, S.O. (1996). “Economics of Taxation as a Source of revenue Generation”, The National accountant, Vol. 6 No. 1 pp 75-80

Stephen, N.M. and Osagie, E. (1985), A Textbook of Economics for West African Students, Ibadan, University Press Limited

Subair, G. (2009). Federation Account Records N36b Deficit. Nigerian Tribune @ www.nigerian tribune. 16/03/09

Taiwo, H. O. A. (2002). Personal Income Tax, CITN Nigerian Tax Guide Statutes. The Chartered Institute of Nigeria, Lagos.

Zeeuw, M. A. and Abdulrazaq, T. (2005), Tax Policy Assessment for Lagos State Government. Consultants’ Report Number 202 CNTR 000512A @

APPENDICES APPENDIX I

TABLE 1:PEARSON CORRELATIONS RESULT ON THE RELATIONSHIP BETWEEN PAYE AND IGR

Internally Generated Revenue Pay-As-You-Earn

Internally Generated Revenue Pearson Correlation 1 .786**

Sig. (2-tailed) .007

N 10 10

Pay-As-You-Earn Pearson Correlation .786**

1

Sig. (2-tailed) .007

N 10 10

**. Correlation is significant at the 0.01 level (2-tailed).

Source: Computed by the Author from the Data on Appendix III (SPSS Version 16.00)

APPENDIX II

TABLE 2: PEARSON CORRELATIONS RESULT ON THE RELATIONSHIP BETWEEN PAYE, TOTAL PIT AND KSBIR COLLECTION

Pay-As-You-Earn Total Personal Income Tax Total KSBIR Collection

Pay-As-You-Earn 1 .991**

.999**

.000 .000

10 10 10

Total Personal Income Tax .991**

1 .995**

.000 .000

10 10 10

Total KSBIR Collection .999**

.995**

1

.000 .000

10 10 10

Source: Computed by the Author from the Data on Appendix III (SPSS Version 16.00)

APPENDIX III TABLE SHOWING INTERNALLY GENERATED REVENUE, PAY-AS-YOU-EARN, TOTAL PERSONAL INCOME TAX AND TOTAL REVENUE OF KANO STATE BOARD OF INTERNAL REVENUE

YEAR 1GR(N) PAYE(N) TOTAL PIT TOTAL REV OF KSBIR

1999 1,453,309,124 286,993,832.00 376,420,283.08 476,354,698.31

2000 1,847,049,387 387,987,643.40 512,323,199.30 628,386,925.20

2001 2,337,313,746 713,959,883.30 902,832,307.79 1,041,822,740.77

2002 2,191,297,904 1,148,234,962.00 1,323,854,290.91 1,551,835,316.21

2003 4,517,503,134 1,012,868,694.00 1,150,963,603.92 1,416,905,484.40

2004 6,651,982,871 1,324,476,265.00 1,662,645,194.95 1,951,775,373.23

2005 6,754,740,822 1,497,918,511.00 1,828,423,879.68 2,101,990,302.66

2006 7,777,523,683 1,712,910,339.00 2,066,723,801.68 2,407,291,855.64

2007 8,293,966,984 2,150,287,268.00 2,188,129,688.52 2,864,855,587.33

2008 6,979,069,779 3,224,729,462.00 3,284,610,045.62 4,270,678,165.40

Source: Kano State Accountant General Report and KSBIR Revenue Statement 1999-2008



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A FRAMEWORK FOR MINING BUSINESS INTELLIGENCE – A BOON TO NON MINING EXPERTS

B. KALPANA

RESEARCH SCHOLAR, BHARATHIAR UNIVERSITY, COIMBATORE

ASST. PROFESSOR

DEPARTMENT OF COMPUTER SCIENCE & APPLICATIONS

PSG COLLEGE OF ARTS AND SCIENCE

COIMBATORE

DR. V. SARAVANAN

PROFESSOR & DIRECTOR

DEPARTMENT OF MCA

DR. NGP INSTITUTE OF TECHNOLOGY

COIMBATORE

DR. K. VIVEKANANDHAN

PROFESSOR

SCHOOL OF MANAGEMENT

BHARATHIAR UNIVERSITY

COIMBATORE

ABSTRACT Any business today requires additional intelligence for its own decision making process. The data available should act as leverage to business intelligence that

could be used for decision making purpose. This paper outlines a framework for an automated data mining tool for business operators. The required knowledge

to use a data mining tool by the business user is far out of his/her domain knowledge. Activities like selecting required attributes for the query, selecting

appropriate mining technique for business intelligence can be done by software agents. The proposed framework for automated data mining proposes to solve

the problem of business operators by use of intelligent agents. This paper shows the preliminary work done on an online ticket booking website database.

KEYWORDS Automated data mining, agents, business intelligence.

INTRODUCTION ny software bought today requires a certain degree of customization. Either we have to setup a wizard or we have a company representative to install it

in our system or office. After some basic configuration is done, the system runs as required. Consider a business operator, who requires some business

intelligence for marketing, for enhancing customer relationship or for cross selling purposes. The business operator has a repository of data like who

bought what, customer type, customer searches, click patterns, queries, product sold dates etc. The business operator uses a business tool for analysing the

required trends or patterns. The settings for the tool can be semi automated by a wizard. The business operator has no knowledge of how the settings can be

changed or whether the settings are set properly initially. The proposed framework helps to solve these problems by making the tool more user friendly and

with the aid of agents, make the mining process more automated. The following are major advantages a building an business intelligence tool. [1]

• follow profitability of their products sold;

• analyse expenditures;

• monitor corporate environments; and

• discover business anomalies and frauds

• discover new trends and novel information based on historic data

BUSINESS OPERATOR AND THE MINING TOOL Consider the scenario where an online business uses mining tool for business analysis. The data to be mined is collected and made ready for mining. After pre-

processing the data is made ready for mining. The business operator will not have a clue of what to do with the accumulated data or how to process it so as to

get a optimized result for his query. The job of the tool is to present different results based on the configuration given by him initially.

FIG. a. BUSINESS OPERATORS IN THE WEB AND A DM TOOL

A



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FIG b: THE FRAMEWORK OF AN AUTOMATED TOOL

The DM tool keeps collecting the business operators preferences based on their clicks. In fact the framework suggests that, agents can show the structure of

the query to be processed in a more general term than calling it association, classification or clustering. The tool starts storing the preferences of the business

operators of what type of analysis he/she is interested in, for future use. The proposed framework is shown in Fig b.The theoretical model is explained in

following sections.

BUILDING A WAREHOUSE A ware house is built based on the transaction database. A copy of transactions can be periodically updated in a data warehouse. Loading a data ware house

with information for mining is an iterative step. According to W. Inmon [2] , the father of data warehouse, first the data from different sources are extracted and

loaded into a data ware house. How the subset of data should be loaded for meaningful mining?. Should the data be transformed based on unit of time, or

location or product type or customer class or activity type?

FIG c. DATAWARE HOUSE

There are practically speaking, an infinite number of ways to subset data. What is a meaningful subset depends entirely on who the first user of the first iteration

of the data warehouse will be. The data architect needs to ask the question - who will be the first user of the first iteration of data and knowing whom the first

user is, what data would be meaningful to them? A data model is also selected so as to make mining less cumbersome.

PREPROCESSING OF DATA Data cleaning and transformation of instances to suit the mining technique is done in the pre-processing stage.

Data cleaning deals with missing values, noise and redundant data. Missing values could be due to data not available or accessible due to privacy issues. If

attribute value is missing we can infer the value of attribute based on other attributes or other instances or just ignore the instance .If class label is missing we

can omit that instance or use a semi supervised learning and use estimation maximization technique to find if the classifier classifies accurately. Noise in data

could be due to unknown encoding, inconsistent formats, out of range values etc. Noise can be removed using consistency checks, canonicalization, prior

domain knowledge or statistical measures. We can handle noisy data by binning, regression, clustering to find outliers.

THE ROLE OF AGENTS IN AUTOMATED DATA MINING FRAMEWORK Agents are defined as software or hardware entities that perform some set of tasks on behalf of users with some degree of autonomy [4]. In order to work for

somebody as an assistant, an agent has to include a certain amount of intelligence, which is the ability to choose among various courses of action, plan,

communicate, adapt to changes in the environment, and learn from experience. Other attributes that are important for agent paradigm include mobility and

learning. An agent is mobile if it can navigate through a network and perform tasks on remote machines. A learning agent adapts to the requirements of its user

and automatically changes its behaviour in the face of environmental changes [5].

For learning or intelligent agents, an event-condition-action paradigm can be defined [6].In the context of intelligent agents, an event is defined as anything that

happens to change the environment or anything of which the agent should be aware. For example, an event could be the arrival of a new mail, or it could be a

change to a Web page. When an event occurs, the agent has to recognize and evaluate what the event means and then respond to it. This second step,

determining what the condition or state of the world is, could be simple or extremely complex depending on the situation. If mail has arrived, then the event is

self-describing, the agent may then have to query the mail system to find out who sent the mail, and what the subject is, or even scan the mail text to find

keywords. All of this is part of the recognition component of the cycle. The initial event may wake. Here the software agent plays a role of decision maker. Based

on the query string given the agents starts preparing the data and use a technique most suitable for the data and return the result. For example in classification

many algorithms are available. The most suitable ones in the domain of application can be selected and stored in a repository. The agent can classify the

instance and the results can be returned.

The results of the agent can be stored and if there is spike upward or downward than the previously stored results then it can be reported with the variation

information.



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SELECTION AGENT

The agent can be doing a selection of appropriate attributes for data mining process. The agents can also select a particular mining technique. Thus we can have

two type of selection agents.

1. Attribute selection agent

2. Algorithm selection agent

The job of the agent is to choose the required attributes that will help the mining technique to predict the class into which an instance of data will belong.

Given N number of attributes, the job of the agent is to choose a set of N’ attributes, called the “qualifying attributes” that will contribute mostly in classifying

the given data into a particular class in minimum amount of time and efficient utilization of resources. For example the customers can be classified according to

their spending habits as “high spender” or “moderate spender”. Given a set of n transactions it will be useful to find, the spending pattern of customers on their

each transaction. The proliferation of feature selection algorithms, however, has not brought about a general methodology that allows for intelligent selection

from existing algorithms. In order to make a “right” choice, a user not only needs to know the domain well (this is usually not a problem for the user), but also is

expected understand technical details of available algorithms. Therefore, the more algorithms available, the more challenging it is to choose a suitable one for

an application. Consequently, a big number of algorithms are not even attempted in practice and only a couple of algorithms are always used. Therefore, there is

a pressing need for intelligent feature selection that can automatically recommend the most suitable algorithm among many for a given application [3].

Feature selection is a process that selects a subset of original features. The optimality of a feature subset is measured by an evaluation criterion. As the

dimensionality of a domain expands, the number of features N increases. Finding an optimal feature subset is usually intractable [ 8] and many problems related

to feature selection have been shown to be NP-hard [9]. A typical feature selection process consists of four basic steps namely, subset generation, subset

evaluation, stopping criterion, and result. Knowledge and data about feature selection are two key determining factors. Currently, the knowledge factor covers

purpose of feature selection, Time concern, expected Output Type, and M=N Ratio—the ratio between the expected number of selected features M and the

total number of original features N. The data factor covers Class Information, Feature Type, Quality of data, and N=I Ratio—the ratio between the number of

features N and the number of instances I.

The algorithm selection agent can choose between algorithms if association between objects required or a classification based on some attributes is required.

Clustering techniques can be used for grouping items into different categories. A prediction model can be computed based on previous training test or by cross

validation.

RECOMMENDATION AGENT

The user navigation pattern can be identified and be supplied to indecisive users. For example if the state space consists of all possible combination of

navigation, then the job of the agent is to group all similar interest users and give them directions for recommendation. To develop mining tasks for navigation

pattern, we need to estimate how similar two mining patterns are. We introduce a metric that estimates the similarity based on the total number of common

categories that coexist to the total number of distinct categories.According to [11] the sequential subsequence can be obtained from decisive users and help the

indecisive users.

For example, if association between an item-X with that of n number of other item. We can use this metric to identify users who share common navigation

behaviour and search interests. These are people who search for new information in a similar way. They form the “decisive group”. We can use k-means

algorithm to group similar interest users and the agent help the indecisive users with the clusters obtained to recommend popular predictions.

EXPERIMENTS AND RESULTS We conducted mining on the data base of an online ticket booking operator, ticketgoose [7]. An SQL dump was made available whose information from 2007 to

2010. The database had 128 tables each with a minimum of 2 attributes to a maximum of 5 attributes. A set of questions were prepared to find what the

operator was interested in. Equipped with this information the database was pre-processed and the selected attributes were stored in separate files. Some pre-

processing task had to be performed. For example the locations were all given ids which were integer attributes. So they were converted to nominal attributes

initially. Some of the tables contained null attribute values for example the comment attribute of the user feedback table. The value was not going to affect

the classification criterion. So it was left as such. Summary statistics of attributes helped in evolving the results.

A subset of questions and the results are submitted herewith. Clustering was done based on travel date to find the number of persons who travelled through

ticket goose between 2007 to 2010 (in fig d). The number of bus operators, buses, trading partners, agents registered with ticketgoose in fig. e . Summary

statistics helped to achieve the number of hits per year to the website (in fig f).To predict the most sought after destination during peak holiday period such as

pongal holidays from Chennai ( in fig g). How did you know about ticket goose?( In fig h). Relation between booking and browsing (in fig. i).Browsing can be

made not only for booking but also for cancellation and browsing the ticket status or casual browsing. This statistics may help website designers for

advertisement and other deals.

FIG d. THE NO. OF PERSONS TRAVELLED

FIG e. THE STAKE HOLDERS OF THE COMPANY



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FIG f. NO. OF HITS PER YEAR

FIG g. NUMBER OF PERSONS BOARDING CHENNAI

FIG h. HOW DID YOU NOW ABOUT TICKET GOOSE?

FIG i. NO. OF HITS VS PASSENGERS BOOKED

FUTURE DIRECTIONS We had presented an automated mining framework which has been attempted by very few. The possibility of creating such a tool when non mining experts

find it difficult to distinguish between of algorithms, resource utilization and optimized results for their business leverage. We plan to study further how an

agent can recommend results based on user navigation of the tool.

ACKNOWLEGEMENTS We would like to acknowledge Mr. Arunkumar Athiappan of ticketgoose, for provding us the dataset and accepting the results provided herewith.



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REFERENCES [1] Olszak, C & Ziemba, E. “Approach to Building and Implementing Business Intelligence Systems,” Interdisciplinary Journal of Information, Knowledge, and

Management, 2, 2007, 135-148.

[2] W. H. Inmon,”Buiildiing the Data Warehouse::Gettiing Started”,2000 ,wiley & sons.

[3] H.Liu, L.Yu,”Toward Integrating Feature Selection Algorithms for Classification and Clustering”, IEEE Transactions on knowledge and data engineering, vol. 17,

no. 4, April 2005.

[4] S.Russell, P.Norvig, (1995.),”Artificial Intelligence: A Modern Approac”, Prentice-Hal.

[5] Seydim A. Y. (1999)” Intelligent Agents: A Data Mining Perspective”, Department of Computer Science and Engineering, Southern Methodist University,

Dallas. http://engr.smu.edu/ yasemin/agentsdm.pdf,

[6] J.P.Bigus, J. Bigus(1998),” Constructing Intelligent Agents with Java - A Programmer’s Guide to Smarter Application”s, John Wiley & Sons Inc.,

[7] Online ticket booking service, viewed on October 2011,http://www.ticketgoose.com/

[8] R. Kohavi and G.H. John, (1997) “Wrappers for Feature Subset Selection,” Artificial Intelligence, vol. 97, nos. 1-2, pp. 273-324.

[9] A.L. Blum and R.L. Rivest, (1992),“Training a 3-Node Neural Networks is NP-Complete,” Neural Networks, vol. 5, pp. 117-127,.

[10] Han, J. and M. Kamber, 2001. Data Mining: Concepts and Techniques, Morgan Kaufmann,USA.

[11] P-miner: Using user navigation patterns for personalizing topic directories, viewed on September 10, 2011, http://www.dblab.ntua.gr/~pbour/p-miner/



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UTILIZING THE POWER OF CLOUD COMPUTING TO PROMOTE GREEN LEARNING

DR. V.B. AGGARWAL

DIRECTOR (IT)

JAGAN INSTITUTE OF MANAGEMENT STUDIES

ROHINI, DELHI

DEEPSHIKHA AGGARWAL

ASSOCIATE PROFESSOR

JAGAN INSTITUTE OF MANAGEMENT STUDIES

ROHINI, DELHI

ABSTRACT Time, distance and languages are common hurdles for the formal education system. The emergence of IT and the technological solutions like developments in

information, communication and computing technologies have made available several powerful tools that support learning to a large sector of the population.

Utilizing the information and communication technology in education is referred as e-learning. Emergence of e – learning has led to the availability of higher

education to masses. The importance of e-learning like reduced paperwork and manual tasks, saving on the transportation costs, streamlining of processes

making it more efficient, automation leading to easy accessibility and ready availability, a collaborative learning mechanism, ease in modification and updation

are well-known. The purpose of this research is to explore how cloud computing can be used as a tool for e - learning and hence for the promotion of Green

Education. When we use the term green we refer to the methods that help in protecting the environment. Computing technology has put intense pressure on the

environment and natural resources and by switching over to green computing we try to reduce, reuse and recycle the resources. E-learning contributes to a

greener environment by saving on the fuel to travel for learning purposes and also the resources required to build infrastructure for traditional learning. The

reason for suggesting the utilization of cloud computing in this paper is that cloud computing is ultimately the green computing because when we use the cloud,

we reduce the hardware usage by individuals and organizations as the data and applications are stored on the cloud and we therefore promote a greener

environment.

KEYWORDS Cloud computing, E-learning, Green Learning, IT Innovations, Web 2.0.

INTRODUCTION ideo Conferencing, Satellite Applications, internet and www has changed the life styles of people around the world. In the education system also, an

environment in which, learning is facilitated by Information and Communication Technology (ICT) applications for teaching and learning, has emerged.

These tools especially the ones created by web 2.0, which enable the elimination of barriers of the traditional education system leads to setting-up of

digital/virtual/e-campuses or e-varsities for E-learning. Global connectivity must mean more than technology and commerce; it must lead to global learning, and

the inculcation of values that set apart a civilized human being.

Green: The term “green” is used when we use the minimum resources to carry out a process. The idea is to have sustainable use of resources so that the

resources that are used can be recharged by nature on a regular, sustainable and long-term basis. Resources could be energy or material. The activities or tasks

carried on should generate the least amount of pollution, and any waste if generated should be recyclable.

Cloud computing: Cloud computing is an emerging technology through which an increasing number of IT services are delivered over the Internet. From personal

messages and pictures on Gmail or Facebook, to more professional offerings from Amazon Web Services or Microsoft Online Services, cloud computing makes it

possible to run applications without having dedicated hardware, software, and services. Cloud computing, for a great part, is enabled by virtualization, which

allows, the decoupling of server hardware from applications and operating system (OS) storage. Cloud computing and virtualization make it possible to sell (or

purchase) IT resources, such as CPU time, storage, and network bandwidth, as on-demand and/or metered resources, similar to how public utilities are used.

The result is that organizations can reduce costs and be more flexible, more mobile, and scalable while improving their quality of service.

E-Learning: The term e-learning refers to computer based training which incorporates technologies that support interactivity beyond what is normally provided

by a single computer. Further, it can refer to an approach that facilitates and enhances learning through the use of computer and communication technology,

such as personal computers, Digital Televisions, Mobile Phones, Internet, email, and collaborative software. E-learning continues to be popular because of its

ability to provide greater convenience, time flexibility and self-paced learning to students while avoiding travel time and cost. It can also accommodate learning

styles not suited to traditional classroom instruction.

REVIEW OF LITERATURE E-learning has evolved from its predecessor, the distance learning. Distance learning attracted many learners from all over the globe, mainly because of its

flexibility. Schank (2002), Roffe (2002), Sambrook (2003) and Tsai & Machado (2002) refer to e-learning as “communication and learning activities through

computers and networks (or via electronic means)”.The popularity of e-learning is not only limited to working adults who are seeking higher qualifications

without leaving their jobs and losing their earning power (Lau, 2003). This trend seems ever increasing as the Internet and computer technology become

widespread as a daily necessity of the younger generation. Evan & Hasse (2001) found out that learners are moderately lacking in computer proficiency and,

since e-learning is centered around computer technologies, it is a barrier to those learners without good computer skills. In addition, studies of Evan & Hasse

(2001), O’Regan (2003) and Rovai & Jordan (2004) found out that learners face limited physical interactions among themselves in e-learning. The main purpose

of this paper that is to explore some limitations in this learning method. Students need necessary hardware for e-learning such as desktop or notebook

computers and printers (Kathawala, Abdou, Elmulti, 2002; Hiltz, 1997). Therefore, one of the major technological limitations of e-learning is the necessity of

computer hardware and relevant resources. Hardware and other ICT resources are necessary for e-learning implementation in institutions. Most of these

problems are being addressed by the cloud computing technology. In recent years e-learning has grown into a widely accepted learning model. Innovative

changes in e-learning applications have also been witnessed. Also Cloud computing has become one of the hottest buzzwords in the IT area. Many companies

and institutions are rushing to define clouds and provide cloud solutions in various ways. Cloud computing allows an e-learning system with the infrastructure

which is reliable, flexible, cost efficient, self-regulated, and QoS-guaranteed. In this paper we would establish the link between these two major developments in

the IT sector. We would also study the relationship between green computing and education as green computing is considered to be the ultimate outcome of

the cloud.

According to Wikipedia, Sustainable development (SD) is a pattern of resource use that aims to meet human needs while preserving the environment so that

these needs can be met not only in the present, but also for generations to come. E-learning promotes sustainable learning practices by providing ways to save

resources. Another technology that makes e-learning simple, widespread and sustainable is the development of tablet computers and laptops. The smart phones

V



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also are a part of this set of portable devices which serve the purpose of e-learning very well without the need for an elaborate infrastructure. These devices are

wireless and that is the major advantage. Being wireless, they do not need a wired network infrastructure and hence save a lot of resources. Another benefit is

that they are portable devices so people do not have to buy multiple devices to work at multiple places. This saves a huge amount of computing resources and

ultimately contributes to saving the environment to some extent from the problem of electronic waste disposal because the more devices we use, the more we

dispose.

NEED FOR E- LEARNING Teaching students in classrooms is the traditional way of teaching around the world. Shifting to the modern approach of E-learning is a challenge but it remains

an interesting and promising area of research. In some regions there are barriers to accessing traditional forms of higher education, particularly in areas with a

large rural hinterland, or where mobility is restricted such as in developing countries like India. Even in urban areas e-learning plays an important role as the

students are becoming more technically savvy, and want to access their course materials from the Web. E-learning systems usually require many hardware and

software resources. There are many educational institutions that cannot afford such investments, and cloud computing is the best solution. Learning is not

limited to university students but we see the emergence of lifelong learning.

The gap between globalization and sustainable growth continues to widen. One strategy to fill this gap is the delivery of higher education globally by using the

power of ICT. The inefficient use of fossil fuel energy in commuting to and from campus, coupled with the high-energy content associated with production and

delivery of printed books, suggests an expanded role for e- learning. More specifically, rising fuel prices throughout the world has generated increased interest in

using the Internet to support higher education. Going green is an integral part of sustainable development. Achieving sustainable development is a challenge

necessary to ensure the well being of our world and its people. Therefore switching to e-learning not only enables spreading of knowledge around the world but

it also contributes to sustainable development.

HOW IS E LEARNING THE “GREEN LEARNING” Green Learning can be described as the type of learning that supports the environment. Whenever we refer to the phrase Green, it implies the protection of

environment from the harmful impacts of technology and development and ultimately the concept of reduce, reuse and recycle. A move to eLearning will not

only reduce overall costs of learning but also contribute to environmental sustainability through energy conservation. By switching to online learning, we

instantly reduce the largest contributor to our carbon footprint, travel. Online learning options using learning management systems and web/videoconferencing

can cut back on the need for traditional physical classrooms (and other infrastructure) while also reducing travel costs and associated energy use.

In a traditional teaching set up, the students and the teachers and all other supporting staff has to travel to the campus which significantly increase the carbon

footprint of everyone involved. Then there is a huge infrastructure set up for the academic institute which again leads to usage of more resources and energy.

Another aspect of classroom training that is particularly harmful to the environment is the printing out of classroom materials. This leads to consumption of

huge amounts of paper. With technologies like Adobe PDF and other collaborative services for document sharing, there is no reason to continue with this model.

Making these resources available online has many benefits. First of all, learners can access them on demand from any PC, so if they are at home or away on

travel, they can still have access to the information. Secondly, the resources become searchable, so if you are looking for a specific content that you vaguely

remember from the training, you don’t have to flip through pages to try to find it, but you can just type in a keyword and the PDF returns the page number

instantly to you. Finally, if a learner does want a print out of a set of steps to achieve a specific workflow for example, they can print out that single page and

save on the other pages that they would have otherwise. The reductions in printing costs as well as the positive impact to the environment are obvious here.

Based on this criterion, e-learning can be described as green learning because it saves tremendous resources, mainly petroleum and energy used in

transportation of people from their place of dwelling to the place of learning. E-learning enables learning to be delivered on your desktop or even your mobile

thus avoiding a whole lot of logistics exercise associated with classroom learning. E-learning is an approach to facilitate and enhance learning based on computer

and communication technologies.

BARRIERS TO E-LEARNING E-Learning emerged in late 1990’s and has grown significantly since then. However the success of E-learning has been mostly limited to the developed countries.

In rest of the world E-learning is yet to succeed. The barriers to success of e-learning are as follows:

Language barriers: Most of E-learning content is developed for a particular audience, hence the language & accent is usually in English. E-learning content has to

be localized to account for local languages. Mindset barriers: For many people, learning has to be face-to-face – i.e., person to person contact is essential. E-

learning is seen as too synthetic and impersonal. The general perception is that e-learning is not true learning. Lack of awareness of available online courses also

hampers success of e learning.

Cultural barriers: They arise due to the differences in Learning style or preferences. Cultural problems concerning credibility of e-learning. Different people have

different attitude towards e-learning and some fear lack of credit or certification after completion

Time barrier: Time management problems occur due to different time zones across the globe.

Interactivity barriers: They arise because there is lack of communication between the participants of an e-learning group. Interpersonal barriers also arise as the

e-learning content not always audience-specific

Other technical problems include Limited online course availability, Registration system problems, Connectivity problems, Navigation problems, Limitations of

technical support.

Bandwidth problems: They arise due to limited bandwidth availability in certain areas. It may also lead to loss of data and inability to save or transfer data

RESOLUTION OF BARRIERS TO E- LEARNING Advances in hardware technologies, open source software and ease of communication have made it possible for a wide range of people to own a computer

system at reasonable price. Most of the computer users have a high speed Internet access that keeps them connected to the world. The availability of both

computer and communication technology has enabled the shift to e-learning for both formal and informal education across the world as a way to provide higher

education for a wide range of people at an affordable cost.

E-learning offers a mechanism to overcome these barriers of access and mobility by providing convenient and safe access to education. The real impact that E-

Learning on education and training has been achieved through use of online technologies especially the ones promoted by Web 2.0 over the cloud platforms to

support both asynchronous (self-paced) and synchronous (collaborative) learning.

Asynchronous learning is the self-paced learning occurring at different times as per the convenience of the learner. Self-managing learning environments are

preferred by adult learners as they offer the facility of making curriculum available 24/7. The learning content is in the form of recorded live events and online

documents.

Though this mode of learning does not provide direct interaction between the teacher and the student, the technologies like person-to-person contact through

email, threaded discussion, phone and video make the scenario better and more interactive.

Synchronous learning is the real-time learning that brings the instructor and student together at the same time in a live event. Synchronous learning involves

social learning principles and dynamics, whether the interaction is one-one, one-to-many, or many-to-many. The synchronous learning uses the tools provided

by Web 2.0 such as the virtual classrooms, teleconferencing, chat rooms and instant messaging.



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The concept of the "classroom" has been expanded and transformed by new modes of e learning. Today a classroom can be physical, virtual or both. E-Learning

makes possible new modes of learning that overcome distance barriers and logistical costs — providing dramatic economic savings. Because the internet is

global, our classrooms can now be global.

ROLE OF CLOUD COMPUTING By creatively pushing the limits of cloud computing, we can create highly engaging e-learning environments that enhance the learning experience of the users.

The potential and efficiency of using Cloud Computing in higher education has been recognized by many universities throughout the world. Cloud Computing

offers to universities the possibility of concentrating more on teaching and research activities rather than on complex IT configuration and software systems. In

addition, cloud solutions can be used to support cooperative learning and socially oriented theories of learning, using computer technologies to support

collaborative methods of instruction. Cloud computing offers many benefits to e-learning solutions by providing the infrastructure, platform and educational

services directly through cloud providers and by using virtualization, centralized data storage and facilities for data access monitoring.

Cloud computing provides much more than the services and infrastructure. It makes the hard disk of client machines almost redundant as all the data storage

occurs on the servers. The client machine only needs the processor, RAM and Internet connection. Reducing the hard disk usage provides multiple advantages. It

reduces the cost of production of the client system and increases the lifespan of the computer as the processor and RAM can be used for a much longer time. It’s

only the hard disk that needs constant replacement, thus adding to the wastes produced. Since the number of clients is much larger than the number of servers,

reducing the hard disks in clients helps in reducing the impact of computer hardware wastes on the environment. Also the systems without hard disks that use

the services of cloud computing consume much less power and emit much lesser heat, and this directly helps in greener environments and sustainable

development.

The role that cloud computing can play in making e-learning successful can be seen by various tools for learning supported by cloud computing in the next

section. One specific strategy called blended learning combines the best features of the traditional classroom with the power of the Internet and e-learning.

Providing enhanced blended learning opportunities throughout higher education can contribute to the goal of achieving sustainable growth in a globalized

economy.

WEB 2.0 TOOLS THAT SUPPORT GREEN LEARNING Cloud computing has given birth to Web 2.0. ‘Web 2.0’ is an umbrella term for a host of recent internet applications such as social networking, wikis,

folksonomies, virtual societies, blogging, multiplayer online gaming and ‘mash-ups’. Whilst differing in form and function, all these applications share a common

characteristic of supporting internet-based interaction between and within groups, which is why the term ‘social software’ is often used to describe web 2.0

tools and services.

The following tools of the Web 2.0 could be used in an educational context.

Wikis: “A wiki is a website constructed in such a way as to allow users to change content on the site”. They enable every user to actively manipulate the content

of a web page. When using sites like Wikipedia to convey learning content, the interaction of the user with the material can foster the learners’ motivation. In an

ideal situation the community behind the wiki tries to make it as top-quality as possible. Wikis are used in Education to support collaborative work, to produce a

course or study material in cooperation with all academic stakeholders such as lecturers and students and to distribute information to students.

Blogs: The wiki is a way of constructing knowledge; a blog is a way of distributing news. There are one or several authors that produce entries about a topic and

visitors can add comments. It is possible to subscribe in order to receive news via email or through RSS readers. A more recent development uses the blog as a

way to deliver learning materials to a community. What make them interesting for learning purposes are the simple and approachable design as well as the

possibility for the users to comment on every blog post. Some professors already maintain their own educational blogs and post new content as well as respond

to the users' comments. Teachers have used blogs as an easy way to produce dynamic learning environments without previous knowledge of html. Students

have used blogs as an alternative digital portfolio or as a learning log. Ultimately, blogs have been used as support for collaborative work.

Video repositories: To share video clips at YouTube or some of the several sites that offer this service has become a welcome way to introduce audiovisual

material in eLearning courses. Some specific web sites focus on instructional or educational videos, such as Teachertube, Our media, Sclipo, Expert village, Ubu

films and EngageMedia. This has helped to solve technical or size-related problems in the distribution of audiovisual products for eLearning courses. While some

eLearning institutions have included online video as a resource on their websites, some professors prefer to access public open resources via Stickam or UStream

to distribute videos to their students in their distance lectures or coaching sessions.

Shared documents and podcasts: Video clips are not the only kind of documents to share. Professors and students are used to accessing multimedia

presentation, written documents and images, for example. As for the audiovisual perspective, podcasting is a different way of sharing audiovisual material. As

opposed to YouTube or similar sites, in podcasting documents are downloaded on the client computer for a free use. There are also quality differences. Podcasts

are audio files which are distributed to an audio enabled RSS reader like Apple's iTunes. Similar to blogs they started as personal diaries and are now being used

for different purposes: from conveying news, to promotional uses and most recently education. There are foreign language tutorials and workshops for many

different topics available. Apple started in 2007 to aggregate educational podcasts of American Universities under the name iTunes U. These include course

lectures, language lessons and lab demonstrations. Podcasts share some characteristics with audio books as they make it possible to learn even while driving a

car or cooking a meal. They have however the additional benefit of being free and often more up-to-date.

For educational purposes, digital reusable learning objects repositories as well as the Open Courseware consortium or the Open Educational Resources initiative

have become available. The methods of E-Learning 2.0 are promising but have not realized their full potential yet.

Social networks: A social network is a collection of Web 2.0 technologies combined in such a way to help focus on the building of communities of people who

share interests and activities, or who are interested in exploring the interests and activities of others. Participants in a social network usually engage in a variety

of forms of communication and information sharing, which can include personal Web pages, blogs, and discussion groups. The current interest and popularity in

Web 2.0 applications has led to the phenomenal popularity of social networking sites, such as MySpace and Facebook. Research shows that students these days

spend at least some time on social networking sites in a week. Social networking places its focus on the learner and the interactions and provides a relatively

informal space that allows learners to exercise their own thoughts, reflections, make their own connections.

CONCLUSION If we go the green way for learning, we can make a huge contribution to sustainable development. Universities and Corporations benefit from learning through

cloud by reduced infrastructure costs, lower software installation and training costs and increased speeds of analyzing and presenting data. Apart from

being green through energy savings, it minimizes overhead costs (as courses are delivered ‘on-demand’), increases scalability across global branches (as courses

are replicated on secure servers closest to the learner), and eliminates downtime during heavy usage (as learners are transferred seamlessly to a free server

closest to them). Green Cloud Data Centers can be promoted to reduce data center energy consumption by locating them in cold regions, utilizing wind and solar

power, employing low-loss direct current, and using tunnels and other underground sites with strong earthquake resistance and stable temperatures.

Development is a process fueled by resources and it is imperative that much more be done to make certain that these can equitably meet present needs and

also remain available for the development needs of generations to come. There are no easy solutions. There is, however, a considerable amount of consensus

that the most successful approach will involve two key elements. The first of these is education. More people at all levels must be empowered to develop the

values, attitudes and skills necessary to change behavior in regard to natural resource management. The second component is greater collaboration among key

entities working to make a difference. Technology plays a vital role in achieving both these goals. Change cannot be brought about by any single organization -

no matter how large or well resourced. Every person has to understand and contribute their bit towards making a greener planet. In this research we found that

we can utilize the services of the cloud computing for promoting green IT specifically the green learning.



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REFERENCES [1] Creating & Connecting: Research and Guidelines on Online Social - and Educational –Networking. NSBA (National School Boards Association), USA,

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generations-social-creative-and-interconnectedlifestyles-NSBA-20071109.htm

[2] Dillenbourg, Pierre (2000). Learning in the new millennium: Building new education strategies for schools. Workshop on Virtual Learning Environments

presented at the Eclipsys User Network (EUN) conference. http://tecfa.unige.ch/tecfa/publicat/dil-papers-2/Dil.7.5.18.pdf

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presented at the Eclipsys User Network (EUN) conference. http://tecfa.unige.ch/tecfa/publicat/dil-papers-2/Dil.7.5.18.pdf

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[6] John C. Butler, “Is the Internet helping to create learning environments?” Campus-Wide Information Systems, 17 (2), 2000, ISSN 1065-0741 John C. Butler,

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[7] M G K Menon, “Transformative Synthesis of Education and Information Technology” (Address at the 12th

convocation of IGNOU held at New Delhi on 3rd

March 2001), University News, 39(27), 2-8 July, 2001, pp 13-17

[8] MacEntee, V.M. and Wells, S.J. The use of technology to facilitate authentic Learning. Proceedings from 2005 Informing Science and IT Education

conference. Flagstaff, Arizona, June 16-19, 2005.

[9] Mungania, P & Reio, T.G. Jr. If E-Learners get there, will they stay? The role of e-learning self-efficacy. Online Submission (2005). ERIC. 8 May 2007.

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WORK EXPERIENCE AND LENGTH OF WORKING HOURS ARE AFFECTING ON THE STRESS

DHANANJAY MANDLIK

ASSOCIATE PROFESSOR

SINHGAD BUSINESS SCHOOL

PUNE

DR. PARAG KALKAR

DIRECTOR

SINHGAD INSTITUTE OF BUSINESS ADMINISTRATION & COMPUTER APPLICATION

KUSGAON

ABSTRACT Any situation that puts us under pressure is technically "stressful". Stress is not necessarily unpleasant or harmful. When we are able to cope satisfactorily with

the stress and find it to be positive in its effect, we tend to use other words - such as "stimulation" or "challenge". For the purpose of this introduction, we will use

the term "stress" to mean the reaction we have to those pressures, which are harmful, unpleasant or disabling. Stress occurs when the pressures upon us exceed

our resources to cope with those pressures. It follows, therefore, that we can attempt to tackle stress either by reducing the pressures or by increasing our coping

resources, indeed, a combination of both strategies. Stress is the everyday impact on your body as you respond to the people, places and things in your life. Stress

can be a negative thing that undermines health and capacity to function. But it can also be a positive, life energy force necessary to maintain vitality, creativity

and a zest for life. Stress does not affect each of us in the same way. Everything you encounter in your daily living has an impact on you, positively or negatively,

based on how you perceive and deal with each potentially challenging or stressful situation. The body undergoes a progressive series of responses that are first

triggered by an external stimulus termed the stressor. The more prolonged and accelerating reactions produce an intense and severe disruption called strain. All

of this moves the body away from homeostasis, the maintenance of equilibrium of the internal body functions in response to external changes. The study is based

on 46 respondents of Pimpri Chinchwad Industrial Area.

KEYWORDS Stimulation, Challenge, Stress, strain.

INTRODUCATION EFFECTS ON HUMAN BODY

basic concept in any study of stress is the acknowledgment of the link between what the brain says and the way the body behaves. This is known as the

body-mind connection. The two are often inseparable and most studies on stress-related behavior emphasize the role of the brain and the biology of

stress in great detail. The following are some essential terms needed to understand the basic concepts of stress behavior and how we can use the body to

tackle stress.

• Pupils of the Eye: Enlarge to facilitate greater acuity to see danger and escape routes

• Brain: Increased blood flow, increased metabolism of glucose, focusing more intense, fatiguing thoughts

• Heart: Increased heart rate and vasospasm for risk of stroke and heart attack

• Lungs: Increased respiratory rate, dilation of bronchi, increased oxygen supply to enable rigorous physical response to attack

• Liver: Increased glucose production via gluconeogenesis which depletes energy reserve

• Muscles: Increased breakdown of glycogen to glucose for immediate energy, increased residual tension causing neurons behavior, irritability and

discomfort

• Fat tissue: Increased breakdown of stored fat, more fatty acids in the bloodstream increasing heart disease risk

• Digestion: Increased acidity and decreased motility causing discomfort, possible constipation (at first) followed by diarrhea (if reaction is severe)

• Excretory: Neuron stimulation of the bladder producing the urge to urinate in spite of the fact that urine flow is reduced

• Lymph tissue: Increased release of T cells and natural killer cells depleting the reserves thus decreasing immune function

• Skin: Decreased blood flow causing cold hands/feet

• Sweat Glands: Increased sympathetic nervous response causes sweating and hyperhidrosis

• Salivary Glands: Decreased flow of saliva causing thicker, sticky, dry mouth "cotton mouth"

PSYCHOLOGICAL AND SOCIAL EFFECTS The psychological effects of stress may be expressed in a variety of different ways, and involve changes in cognitive-perceptual function, emotion and behavior.

Some of these changes may represent attempts to cope, including changes in health-related behaviors. There is evidence that some health-promoting behaviors,

such as exercise and relaxation, sleep and good dietary habits, are impaired by the experience of stress, while other health-risk behaviors, such as smoking and

drinking, are enhanced. Other behaviors, such as sexual behavior, which may be health-neutral, can also be impaired and that impairment becomes a secondary

cause of stress. Similarly, increases in health-risk behaviors can also become secondary causes of stress if sustained. Particular reference may be made to

psychological dependency on alcohol or smoking. Social behavior, and interpersonal relations, may be impaired by the experience of stress, possibly reflecting

more fundamental psychological changes in, for example, irritability, attention span and memory. Stress-related impairments of social relations may both create

secondary problems and reduce the availability of social support. Figure 1 shows the model for Psychological strain, job satisfaction, Organizational commitment

and its impact.

A



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FIGURE 1: MODEL FOR PSYCHOLOGICAL STRAIN, JOB SATISFACTION, ORGANIZATIONAL COMMITMENT AND ITS IMPACT.

LITERATURE REVIEW The aim of this paper is to review the focus of work stress. We also focus on literature which is related to the causes and impact of stress on working community

and outcome of stress on the physical and mental health of people working in the business organizations and the copings strategies used by them. We looked

into the literature that found through books, journals or research papers, reports and websites. The views and findings of various researchers and the

organizations that have done extensive research on stress are compiled in this paper. Figure 2 shows the Generic psychosocial stress model. From Sauter and

Swanson.

FIGURE 2: GENERIC PSYCHOSOCIAL STRESS MODEL. FROM SAUTER AND SWANSON

RESEARCH DESIGN AND METHODOLOGY AREA OF RESEARCH

Pimpri Chinchwad Industrial Area is the research area which has changed the economy of Pune city & it’s surrounding. Pimpri Chinchwad having like Telco, Bajaj,

Thermax, Alfa laval started operating there were good job opportunities. People shifted from their native places to this area for job, good pay package and good

educational and environmental facilities to their family naturally it effect on stress.

SAMPLING DESIGN:

Universe : Industrial Area of Pimpri Chinchwad Munsipal Carporation

Sampling Frame : 16 companies from above universe

Sample Size : 46 Respondents

TOOLS APPLIED

The data collected from primary & secondary source will be analyzed by using statistical tools viz. percentage, average, deviations etc. The hypothesis will be

tested with the help of statistical techniques. The following statistical tools were applied:

1. Percentage Analysis

2. Frequency Analysis

SOFTWARE USED FOR ANALYSIS

Microsoft Excel 2007 and SPSS were used for data analysis.

PRIMARY DATA COLLECTION

Primary data was collected through questionnaire method by distributing and collecting data from executives and managers of various large scale companies in

Pimpri- Chinchwad Industrial Area. The questionnaires were distributed in the large scale organizations and then collected back after being filled up by

managers.

OBJECTIVE OF THE STUDY The study is based on following objectives

• Top management should formulate measurable and achievable objectives; communication level with managerial staff should be increased during the

period of change within organization.

• The top management should revisit the schedules of work and try to increase the flexibility in timing after due discussion with Managers

• The managers who are sincere but need additional training to upgrade their performance be supported with required training.

• The stress is directly proportional to age factor

• To understand the role played by the organization in reducing managerial stress

• To discuss and suggest the ways to handle stress by organization.

HYPOTHESIS OF THE STUDY Our interest is to understand the stress, especially in the context of the specific leading industrial belt of Asia. We wanted to explore whether there was any

relationship between the personal attributes and the stress this hypothesis support the following sub hypothesis.



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1. Managers feel stressed irrespective of their Experience.

ANALYSIS OF DATA For this research paper data is collected from 46 respondents from the Pimpri Chinchwad Industrial area. The detailed statistics is as follows.

TABLE 1: FREQUENCY OF THE DATA COLLECTION

Designation Frequency Percent Valid Percent

Valid AM 16 34.78 34.78

M 14 30.43 30.43

SM 13 28.26 28.26

AGM 3 6.52 6.52

Total 46 100.00 100.00

PARAMETERS FOR FINDING STRESS

Following are parameters are selected for finding the stress for this research paper.

Que1. Educational Qualification and Length of hours worked increase the stress

Que2. Designation and a lack of supportive interaction increase the stress.

Que3. Designation and Insufficient resources to do your job properly increase the stress.

Que4. Education Qualification and many recent changes in working practices increase the stress.

Que5. Education Qualification and Lack of communication within your organization increase the stress.

Que6. Designation and Too much work to handle increase the stress.

From the table 2 it is observe that almost all respondents has given sincere answers.

TABLE 2: FREQUENCY AND STATISTICS OF THE DATA COLLECTION

Que1 Que2 Que3 Que4 Que5 Que6

N Valid 46 44 46 45 46 46

Missing 0 2 0 1 0 0

Mean 2.4130 1.9091 2.3043 2.9778 2.2826 2.4783

Median 2.5000 2.0000 2.0000 3.0000 2.0000 2.0000

Mode 3.00 1.00 2.00 3.00 3.00 2.00

Minimum 1.00 1.00 1.00 1.00 1.00 1.00

Statistics of Educational Qualification and Length of hours worked increase the stress: 50% of respondents are in fever of the question where 50% are against

the agreement Educational Qualification and Length of hours worked increase the stress.

Frequency Percent Valid Percent Cumulative Percent

Valid Never 13 28.3 28.3 28.3

Occasionally 10 21.7 21.7 50.0

Very often 14 30.4 30.4 80.4

Always 9 19.6 19.6 100.0

Total 46 100.0 100.0

Statistics of Designation and a lack of supportive interaction increase the stress: 67.4% of respondents are in fever of the question where 32.4% are against the

agreement Educational Qualification and Length of hours worked increase the stress.


Valid Never 21 45.7 47.7 47.7


Very often 9 19.6 20.5 90.9

Always 4 8.7 9.1 100.0

Total 44 95.7 100.0

Missing System 2 4.3

Total 46 100.0



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42

Statistics of Designation and Insufficient resources to do your job properly increase the stress: 65.3% of respondents are in fever of the question where 36.7%

are against the agreement Educational Qualification and Length of hours worked increase the stress.


Valid Never 9 19.6 19.6 19.6


Very often 9 19.6 19.6 84.8

Always 7 15.2 15.2 100.0

Total 46 100.0 100.0

Statistics of Education Qualification and many recent changes in working practices increase the stress: 26.1% of respondents are in fever of the question

where 73.9% are against the agreement Education Qualification and many recent changes in working practices increase the stress.


Valid Never 4 8.7 8.9 8.9


Very often 18 39.1 40.0 66.7

Always 15 32.6 33.3 100.0

Total 45 97.8 100.0

Missing System 1 2.2

Total 46 100.0

Statistics of Education Qualification and Lack of communication within your organization increase the stress: 56.5% of respondents are in fever of the question

where 43.5% are against the agreement Education Qualification and Lack of communication within your organization increase the stress.


Valid Never 8 17.4 17.4 17.4


Very often 19 41.3 41.3 97.8

Always 1 2.2 2.2 100.0

Total 46 100.0 100.0

Statistics of Designation and Too much work to handle increase the stress: 52.2% of respondents are in fever of the question where 47.8% are against the

agreement Designation and Too much work to handle increase the stress.


Valid Never 7 15.2 15.2 15.2


Very often 15 32.6 32.6 84.8

Always 7 15.2 15.2 100.0

Total 46 100.0 100.0

FINDINGS AND OBSERVATIONS The investigators found four conditions which were consistently cited as substantial workplace stressors:

� Poor communication with and by management

� Increased workload

� Job insecurity and lack of career opportunities

� Organizational change / restructuring

• Perceived stress at work was associated with reports of exposure to potentially stressful work characteristics including long hours, lack of support, and high

noise levels.

• Stress levels outside work were lower although 10% reported high stress levels outside of work.

• Overall those surveyed reported quite good health however, high levels of physical symptoms and mental ill health were reported by those with high stress

levels at work.

• 23% of the sample reported that they had experienced an illness caused or made worse by work in the last 12 months.

• Job satisfaction in academic staff was low, relative to other occupational groups, but average in general staff.

• Most academic staff was dissatisfied with five aspects of their job: university management, hours of work, industrial relations, chance of promotion, rate of

pay. In contrast, most general staff reported dissatisfaction with only one aspect of their job, chance of promotion.

• Psychological strain was highest and job satisfaction lowest among Level B and C academics (Lecturers and Senior Lecturers), particularly those working in

the Humanities and Social Studies.

• More than 30% of academics reported working more than 55 hours per week.

• Trust in senior management and perceptions of procedural fairness, (both predictors of job satisfaction) were both low.

SCOPE FOR FARTHER RESEARCH Following are the some of the scopes for father research:

1. There is need to examine relevant cases on workplace stress and its implications for the organization; and the necessary steps to be taken and reviewed

periodically and scientifically on stress problems faced by Managers.

2. The acceptability of work stress by Indian organizations as a problem and coping strategies followed by the industries.

3. Calculation of work stress component and its impact on profitability and growth of organization.

BIBLIOGRAPHY 2. Cooper, Cary L., and Smith, Michael J. Job Stress and Blue Collar Work. John Wiley and Sons Publishing. New York, New York, 1985

3. Cox T. Stress Research and Stress Management: Putting Theory to Work, CRR61. London: Health and Safety Executive, 1993.

4. COX, T. & COX, S. (1993). Psychosocial and Organisational Hazards: Control and Monitoring in the Workplace. European Occupational Health Series No. 5.

Copenhagen: World Health Organisation.

5. Encyclopaedia of Occupational Health and Safety Sauter S, Hurrell J, Murphy L, Levi L [1997]. Psychosocial and organizational factors. In: Stellman J, ed.

Encyclopaedia of Occupational Health and Safety. Vol. 1. Geneva, Switzerland: International Labour Office, pp. 34.1-34.77.

6. Health and Safety Executive, 5 Steps to Risk Assessment, INDG163 (rev). Sudbury: HSE, 1998.



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AN EMPIRICAL INVESTIGATION INTO MANAGEMENT PRACTICES OF ACADEMIC LEADERS IN

MANAGEMENT COLLEGES

SWAPNIL PRAMOD MACKASARE

ASST. PROFESSOR

DKTE SOCIETY’S TEXTILE & ENGINEERING INSTITUTE

RAJWADA

DR. UMESH VINAYAK ARVINDEKAR

DIRECTOR

INSTITUTE OF MANAGEMENT

DKTE INSTITUTE OF MANAGEMENT

KALAWANT MALA

ABSTRACT With an increasing number of mushrooming post graduate management institutions, there has been a growing concern on retaining the quality of higher

education in India. There have been quite few institutions that have strived hard to attain academic excellence, though most of them still have been struggling to

attain it. Among a few successful institutions, Icfai National Colleges were found to establish such kind of an academic excellence with regard to major academic

activities, with a sturdy blend of an indispensable academic culture and practices that have actually contributed to the institution’s success. This paper highlights

some of the exuberant leadership styles practiced and their relationship with regard to overall institutional effectiveness. These leadership styles were studied

with regard to eight different academic factors, with the leadership effectiveness being determined for each academic factor. The findings of the present study

are an eye-opener for improving conventional academic practices led by other management institutions.

KEYWORDS Leadership in Higher Education, INC, Transformational leadership.

INTRODUCTION he National Knowledge Commission (2006) in its report on higher education has clearly stated the future challenges for higher education in India. The

report admits the declining academic standards in the Indian higher education. Some of the problems of the Indian higher education include an ungainly

affiliating system, inflexible academic structure, eroding autonomy of academic institutions, poor accreditation systems with low coverage and no

consequences. Moreover, with the increasing number of private management institutions, higher education in India could only maintain a very small base of

quality institutions. In order to determine the effectiveness of the leadership styles at such institutions the present research was undertaken at different private

post graduate management institutions.

There has been a significant contribution to leadership in higher education. The relationship between leadership styles and performance in higher education

was carried out to find possible correlations; this study explored any relationship between chief enrolment managers (CEMs) with transactional,

transformational or laissez faire leadership styles with effective and non-effective annual institutional enrolment performance. The results of this research study

did not indicate a statistically significant, positive or negative relation between CEM transactional, transformational, or laissez faire leadership styles and

institutional enrolment performance. The implications of this research study were null (Dutschke, 2005). An empirical research evaluated the leadership style of

enrolment managers employed at postsecondary institutions in the southern United States. Enrolment management seeks to influence enrolment by analyzing

and monitoring the size and characteristics of the student body. Enrolment managers coordinate numerous functions associated with recruiting, retaining,

funding, and tracking students. Individuals who supervised both the undergraduate admissions office and student financial aid office were included in the study.

Participants completed the Multifactor Leadership Questionnaire (MLQ) Form 5X – Short (Revised), developed by Antonakis et al., (2003), and were categorized

as having either transactional leadership style or transformational leadership style (Hughes, 2005).

An examination of leadership styles of head teachers was carried out at public secondary schools with its impact on academic achievement. The study delimited

the scope to three leadership styles; autocratic, democratic and laissez faire at secondary level of education. The study used a total of 288 secondary schools and

higher secondary schools, and a maximum of 10 secondary teachers and 20 secondary students randomly selected from each school as a sample. Pearson’s

correlation coefficient was used to analyze and find out the value of relationship between leadership style and academic achievement and stepwise regression

analysis was used to analyze the differential impact of leadership style and academic achievement. Results of the study concluded that the leadership styles

influenced the education process in producing an academic environment. The democratic style showed positive response, followed by autocratic style but the

laissez faire style was found to be ineffective (Muhammad et al., 2010).

Foundational descriptive quantitative studies examined leadership styles and traits of higher distance education leaders at the post secondary level. Participants

were subjected to the Multifactor Leadership Questionnaire (MLQ), the questionnaire further assessed leadership outcomes scaled as extra effort, effectiveness

and satisfaction. Additional statistical significance established positive correlates between age and effectiveness and a negative correlate was observed between

age and active management by exception. Also the level of position in the organization and reporting line of the distance education leader made a difference in

the leadership style (Schrenk, 2011).

Another empirical study was conducted on assessment of leadership styles of managers in a selection of state owned enterprises (SOEs) and private enterprises

(PEs) which solicited responses from selected managers at different levels. Statistical tools like ‘T’ test, coefficient of correlation and other descriptive statistics

scores have been used to quantify qualitative variables of the leadership styles, performance and satisfaction. Results stated that the level of performance of

followers and satisfaction levels of followers and leaders of higher order in PEs than SOEs (Subba Rao et al., 2008).

Research studies have been carried out to investigate preferred leadership style of academics in Malaysian public higher education institutions. Results of the

study revealed that respondents indicated high preference for both transactional and transformational leadership styles while laissez faire leadership was the

least preferred style (Voon Mung Ling et al., 2009). With regard to ethics and institutionalization a correlational study determining the relationship between

leadership styles in higher education and the institutionalization of ethics was conducted. The study included a stratified random sample of 400 from over 11000

employed faculty at institutions of higher education within the University System of Georgia (USG). The results of the study indicated that a relationship existed

between leadership styles and ethics institutionalization (Floyd, 2010).

Muhammad et al., (2009) research focused on factors influencing decision making quality of higher education leaders, with the leadership styles, decision styles,

managerial processes and competitive intensity relationships. The methodology opted for the study made effective use of the concurrent triangulation strategy

with qualitative and quantitative analysis, with two different methods for confirmation, cross validation and corroboration of the findings. The analysis depicted

T



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that the leaders/decision makers who use a hierarchic decision style, transformational leadership style or transactional leadership style will lead to quality

decision making.

Distributed Leadership (Gronn, 2002) - is a strongly emergent theme in the educational leadership literature, as well as in the ‘official’ discourse of the sector, as

represented by the National College for School Leadership (Southworth, 2002). It is underpinned by a widespread sense of shared ownership of decisions, based

on the exercise of leadership at all levels within the organization, and is reflected in an increasing number of co-ordinator, lead practitioner and education

improvement group roles within the teaching staff. Though normative, this model is largely based on school effectiveness and discuses school leadership. The

instructional model (Sawbridge, 2000) casts the leader with the primary focus of leadership work being the development of behaviours in teachers that directly

influence their relationships with students through planning and delivery of teaching and learning. Although, there were several conceptualizations of the

model, the most frequently discussed features include the direct involvement of the principal in developing, co-ordinating and controlling the curriculum.

The conceptualization of instructional leadership – perhaps the most widely found – proposes three elements to the construct namely, defining the school’s

mission, managing the instructional program, and promoting a positive learning climate within the school. Implicit in all of these conceptualizations of the

model, which is largely schools-based, is the presumption that most head teachers are also ex-teachers themselves and so their own teaching experience and

expertise is drawn upon in supporting staff in improving their own practices, and in monitoring the quality and effectiveness of the learning delivery.

Instructional leadership reinforces a hierarchical structure, and is often categorized as a kind of transactional leadership (Hallinger, 2000).

Increasing organizational competitiveness and the need for the most effective use of human resources have led writers and researchers to study

Transformational Leadership. These writers and researchers argued that transformational leadership is both desirable and necessary in competitive

environments, and requires organizations to be capable of fast, radical change and those aspiring to be the best must be able to lead change rather than just

follow it (Mullins, 1999).

Though most researchers have made a significant contribution to leadership styles in higher education, there is little evidence of research on leadership styles in

post graduate management institutions in India. Moreover, with the nature of problems encountered at professional management institutions in the Indian

context, the present study used a method to determine the leadership styles and the leaders’ effectiveness with regard to the institutional performance at these

professional management institutions in higher education.

HIGHER EDUCATION IN INDIA There are different types of universities and colleges in the Indian higher education. The universities are of unitary type with single or multiple campuses or of

affiliating type. The concept of an affiliating university is unique to South Asia where colleges affiliate to university. These colleges award the degree of the

university to which they are affiliated with. The higher education in India covers all post secondary education beyond class twelve in different disciplines

including professional streams that includes engineering and technology, medicine, pharmacy, etc. It comprises of three levels Bachelor’s or undergraduate

degree programs, Master’s or Post graduate degree programs, and Doctoral programs (ICRIER, 2006).

The research on leadership in the Indian higher education has been at its lowest ebb. Therefore, the need to study leadership styles in higher education was

considered in the present study. The principles derived from the Transformational leadership (Bass et al., 2005) theory are fundamental to effective leadership

and are widely applicable to many segments of life, ranging from work to family to sport, classroom and importantly to issues of social change. Further, with the

transformational leadership perspective, this study was specifically undertaken for determining leadership styles at post graduate management colleges with

two different clusters (Mackasare, 2010). Another significant reason to conduct the research at such institutions was a sudden growth of professional colleges

and institutions after 2000 according to the gross enrolment ratio (GER) as stated in ICRIER (2006). One of the clusters was the Institute of Chartered and

Financial Analysts of India, ICFAI National Colleges (INCs), a part of the ICFAI University Dehradun, which was established in the year 2003. A significant reason to

carry out the intended study at INCs was their exceptional growth and academic consistency in achieving academic excellence in the past few years. The present

paper explored existing leadership styles at 48 INCs in order to understand the leadership effectiveness at these Indian Management institutions and the

relationship of the leadership styles with overall institutional effectiveness. Various parameters related to academic leadership in the context of professional

management institutions were identified and are based on the lines of qualitative factors with reference to the National Knowledge Commission report (2006)

with regard to higher education in India. The effectiveness of leadership styles with relation to some of the important academic factors was studied. It was

expected that the conclusion of this study would help in determining the actual leadership effectiveness and its contribution to the institutional performance.

METHODOLOGY The primary data required for the study were obtained by using the multifactor leadership questionnaire (MLQ) (Antonakis et al., 2003). The inventory is based

on declarative questions with 5 choice Likert scale with responses ranging from “Not at all” - 1, “Sometimes” - 2, “Once in a while” - 3, “fairly often” - 4,

“frequently if not always” - 5 (Likert, 1939). This inventory consists of 21 items with 3 questions on a single factor. The respondent is supposed to respond with

any one option which suits his/her leadership style.

ACADEMIC FACTORS PERFORMANCE INDICATORS (AFPI)

Another schedule was designed on the basis of the issues discussed in the report of the National Knowledge Commission (2006). These data were obtained from

secondary sources like institutional websites, University websites, mails, telephonic conversations, and personal interviews, with the concerned administrative

personnel and student feedbacks. This inventory used for collecting the secondary data, contained eight items related to academic efficiency. The inventory was

used to collect information from individual institutions along with the leader’s feedback. For the present study, eight important academic variables viz., number

of admissions, number of placements, academic results, student attendance, timely salary payments to faculty and staff, infrastructure, computerization, and

faculty to student ratio, were used for calculating the overall organizational performance and the leadership styles associated with each factor. The scores of

AFPI for each academic factor considered in the present study have been correlated with the scores of the multifactor leadership questionnaire thus reflecting

the leadership style effectiveness with regard to each academic factor.

To find To find out the coefficient of correlation between the projected leadership styles (scores of MLQ) and academic factors (scores obtained from the AFPI),

Karl Pearson’s coefficient of correlation (r) was used, and for the testing of hypotheses related to the coefficient of correlation the‘t’ test is used.

CODING BETWEEN MLQ AND BLAKE AND MOUTON’S LEADERSHIP GRID

TABLE 1: AFPI RANGES AND THE CORRESPONDING LEADERSHIP STYLES

The first three elements of the transformational leadership show a high resemblance with team leadership (9, 9) on the leadership grid (Blake & Mouton, 1964).

Since idealized influence, intellectual stimulation, and inspirational motivation reflect the charismatic attributes of the leaders, the total scores of these

elements together was used as the first variable, i.e., (9, 9) leadership style = II + IM +IS. The next best leadership style on the grid was (9, 1) leadership style or

the authority-compliance leadership style, with such leaders giving more importance to task and less to people. This was similar to the leadership element of

management by exception (A) with contingent reward, since management by exception particularly considers setting priority tasks and accomplishment of the

tasks, and rewards for individuals only on the accomplishment of the assigned tasks. Thus, (9, 1) leadership style = scores of MBE (A) + scores of CR. The (5, 5) or

Sr.no Transformational Leadership elements (MLQ) Leadership grid styles AFPI Ranges

1 II+IM+IS Team leadership (9, 9) 80-100 %

2 MBE (A) + CR Authority-compliance (9, 1) 60-80%

3 IC Middle of the road (5, 5) 40-60%

4 MBE (P) + LZ Country Club (1, 9) 20-40%

5 LZ Impoverished (1, 1) 10-20%



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middle of the road leadership shows a 50% concern for tasks and 50% for people. The leadership element individualized consideration was combined with this

style of leadership, since it gives priority or pays attention to a few people and the tasks associated with certain individuals and not all of them. Thus, the third

variable was formed as (5, 5) leadership style = scores of Individualized consideration.

The (1, 9) leadership also called as country club leadership is known for having a high concern for people and low concern for tasks (Blake & Mouton, 1964). For

the same reason it has been associated with MBE (P) management by exception (passive) and the laissez faire element. The MBE (P) reveals about setting

important tasks or finding solutions to problems only after encountering with problems without a pre-plan of setting important plans and tasks. The laissez faire

element also corresponds to the non-participation of a leader in taking important decisions (Lewin et al., 1939). Hence, the (1, 9) leadership style = scores of

MBE (P) + scores of Laissez Faire (Lzf)

The (1, 1) leadership or impoverished leadership shows a low concern for people as well as the tasks. The laissez faire was the only element that could be

associated with the impoverished leadership. Thus, the (1, 1) leadership style= scores of Lzf.

SAMPLE SELECTION

The Institute of Chartered and Financial Analysts of India (ICFAI) was established in the year 1984 with only the CFA course in the inception. ICFAI University is a

private university recognized by the University Grants Commission under sec 2(f) of the UGC Act 1956. The MBA course was started in the year 1995 in ICFAI

Business School (IBS). In the year 2003 ICFAI established 7 ICFAI National Colleges in Andhra Pradesh, India. In a very short span of 3 years ICFAI National

Colleges (INCs) were spread across the country with 155 institutions established at different locations in India. As compared to other private management

institutions, INCs were found to be more consistent with academic practices, relevance of the syllabi, and the development of industry-academia linkages. These

salient features of INCs made it a professional brand and a favourable destination for pursuing professional management education. Since the investigator

himself had served as a faculty member in ICFAI Academy, it was quite convenient to collect the data and moreover the academic culture of ICFAI being

completely different than other private management institutions, INC was thought to be an ideal sample in the present study. An attempt was made to cover all

155 colleges of Institute of Chartered Financial Analysts Academy. The leadership questionnaire and the AFPI were mailed to the designated Campus Heads,

after due permission from the concerned authorities. It was not possible to meet all INC academic leaders personally due to geographical spread, the non-

availability of the respondents and paucity of time; therefore the leaders were contacted telephonically as well as through mail.

DATA COLLECTION

All the leaders were provided with the full description of the study under consideration, its scope and purpose. After a constant follow up through telephones

and mails, a total of 48 out of 155 respondents provided their feedback. List of different INCs along with the contact persons, emails, phone numbers, and cell

phone numbers was obtained from the ICFAI HRIS database. These data were verified with appropriate administrative authorities at the respective INCs. The

data were cross checked and verified after an interaction with the administrative authorities and feedback obtained from students at the institutions with regard

to number of faculty, percentage of attendance for the third and fourth semesters and results of final semesters thus ensuring the reliability of the data

collected.

RESULTS Out of 48 INCs, only 3 leadership styles with (9, 9), (9, 1) and (5, 5) were observed with regard to different academic activities quoted in the AFPI and the MLQ

for each factor, in contrast to another research study of post graduate management institutions where five different leadership styles were practiced.

(Mackasare, 2010). It was also noticed that the leadership styles derived from the administration MLQ were independent of leadership practiced with respect to

eight different tasks performed at these colleges. Based on the findings of the present study it was observed that all the leadership styles showed a positive

relationship with eight academic factors considered in the present study. As per the values obtained from the MLQ and the scores of AFPI, the (9, 9) and (9, 1)

leadership styles were found to show a dominance.

The (9, 9) leadership style depicted the leaders’ charismatic role in influencing, motivating and intellectually stimulating the team members and staff where all

the team members including the faculty, the non-teaching staff and administrative staff had a high level of motivation to perform tasks associated with

academic and administrative activities. Another exuberant attribute of the (9, 9) leaders was a perfect delegation of responsibilities to team members who

possessed the requisite competencies to perform such tasks. Moreover, it was also evident that the (9, 9) leaders would develop the team members by assigning

exigent tasks, thus providing the members with a scope to be more creative in analysing problems and providing effective solutions. The (9, 9) leadership style

was effective in developing a proactive attitude within the team members and staff thus, ensuring the successful completion of all academic activities. In the

present context the (9, 9) leadership style was found effective with academic factors: admissions, job placements, and student attendance.

TABLE 2: LEADERSHIP STYLES AND EFFECTIVENESS WITH REGARD TO EIGHT ACADEMIC FACTORS

SrNo Academic factors Coefficent of Correlation (r) d. f. (n-2) Calculated t (t) Table Value Significance

1 Admissions (9, 9) 0.907 27 11.191 2.052 Significant

2 Placements (9, 9) 0.877 26 9.307 2.056 Significant

3 Results (9, 1) 0.814 22 6.573 2.074 Significant

4 Attendance (9, 9) 0.757 17 4.777 2.110 Significant

5 Payments NA NA NA NA NA

6 Infrastructure (9, 1) 0.670 26 4.602 2.056 Significant

7 Computerization (9, 1) 0.836 27 7.916 2.052 Significant

8 Faculty: Student (9, 1) 0.808 26 6.993 2.056 Significant

(Significance at t > t0 0.05) showing significant relationship between the leadership styles and the academic factors.

1. ADMISSIONS

The term admission refers to the total number of intake of students in an institution. Most private management institutions struggle hard to complete the intake

of the allotted management seats, which according the AICTE norms is 60 seats. There have been instances where the seats have been vacant at some

management institutions according to another research conducted on private post graduate management institutions (Mackasare, 2010). In case of other

private management institutions, the entire admissions process is governed by apex bodies like the AICTE and DTE, where the leaders at institutional level have a

negligible role to play. However at INCs the entire admissions process was handled in a different manner. INCs were found to excel in the completion of 100

percent admissions at these institutes. After having explored the reasons for such an accomplishment it was found that these team leaders were extremely

motivating with good interpersonal communication and dexterity among the team members and faculty. Another peculiar feature was observed in these

institutes, all these institutes had a separate marketing team for actualizing 100 percent admissions. INC was found to have marketing and brand building

executives who were responsible in generating admissions by counselling graduates.

Several faculty members were found to conduct brand development activities with topics like ‘Career Planning’, ‘Personality Development’, ‘Stress

Management’, ‘Presentation skills’, ‘Interview skills’ at different UG colleges in the vicinity which even included some engineering colleges. One of the

respondents also conducted a faculty development workshop on for UG faculty. More importantly, at all INC’s, a merit rating system has been implemented

where the individual colleges take special efforts right from admissions to recruitment of faculty. The most striking feature in INC admission procedures was

selecting students with a meritorious record, with this regard INC has developed merit scholarships with fee concessions as follows: ≥60% to 70% for male

students 35% of fees, ≥60% to 70% for female students, >70% male students with 50% of fees, > 70% female students with 60% of the fees.

INC has also designed a lucrative incentive system for the first 100 admissions; this incentive system has been a good motivator for the INC team members to

contribute to 100% admissions at individual institutions. This clearly shows the effort of the academic leaders with regard to admissions and proves that there is

a significant relationship between leadership at the institutional level and the admission process at the respective colleges. The (9, 9) leadership style shows



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high concern for people and high concern for task as well, the leadership elements associated with this leadership style i.e., idealized influence, inspirational

motivation, intellectual stimulation clearly elucidated the charismatic traits of the (9, 9) leaders at INC management colleges with regard to the admissions.

Moreover, it was also observed that all the (9, 9) leaders were able to create an environment where, there has been more positive reinforcement to the team

members for successful accomplishments of all tasks related to the admission process. Though, there have been adequate admissions at other private

management institutions yet, the procedure for handling all admissions related activities was quite unique in INC. To a great extent INC had developed a unique

academic culture which was found favourable with the leadership at these institutions which clearly shows the difference between other private management

institutions and INC with regard to admissions.

2. JOB PLACEMENTS

A major challenge for most private management institutions in the Indian context is the employability of students in the best industry with good pay packages

before completion of the MBA program. The placement program at INC has been uniquely designed for all INCs across different states. The placements have

been categorized at three different levels

a. NATIONAL LEVEL: At INC head quarters Hyderabad, some of the best students who have surpassed the highest benchmarks from different INC institutes,

qualify at the national level. All the students from this group have had the best lucrative pay packages. It is quite obvious that only those students with a

high aptitude, sound conceptual knowledge and a consistent academic record had qualified for national level placements. INC proudly announced their

names with the details of the company and the package they obtain on their all India web site, as well as the individual institutional placement brochure.

Generally, 10% from all India INCs qualify for this level since it has been regarded to have the toughest standards.

b. Regional Level: Regional placements are targeted at metros/cosmos and district places. INC has its regional offices in different states; which have a

systematized data of students comprising of academic consistency, Summer Internship Program (SIP) with details of the on-the-job training and

achievements, Management Thesis, as well as the GD/PI scores during campus interviews. Thus, the performance of students is observed from time to

time and depending on the progress that the student exhibits he/she gets selected at this particular level. The regional level placements were found to

contribute 60% of the total students from various INC institutes in different states.

c. Local Level: Local level placements are aimed at students who are average and above average level and also for few girl/lady students who were not

allowed by their parents to go to metro cities are accommodated at this level. When enquired about the success of local placements, it was revealed by

one of the regional heads, that individual INCs have been establishing industry-institute interfaces with diversified industries at district level. The local level

placement attributes for 10-30% of the remaining students from different INCs.

The (9, 9) leadership style was found to be inspirational, influential and motivating for all the team members associated with the tasks of placements. There has

been an inbuilt lucrative reward/incentive system for faculty, marketing executives, and even the administrative personnel for accomplishments of all the tasks

associated with placements. It has been observed that many educational institutions at higher education stand in isolation from the society and service sectors.

As a matter of fact they are actually supposed to strive hard for significant connections with the user-agencies in their locality or elsewhere. INCs have been

successful in establishing local industry contacts and linkages through summer internship programs and student placements in such industries. It would be even

a better option to involve the industries in designing the course curriculum and structure. In order to help the learners gain practical corporate exposure, all INCs

have identified opportunities with short term and long term assignments or live projects and on-the-job training. These efforts have not only developed practical

insights within students but also developed a rapport and helped substantially in placements.

Thus, with an excellent merit based system, INC has taken care of placing all the students either at the national, regional or local level, which actually happens to

be the reason for 100% placements at all these institutions. All the (9, 9) leaders of INC were found to play a significant role by developing contacts with such

employers or professional organizations giving the learners a significant opportunity to learn and develop.

3. ATTENDANCE

There has been a growing concern for student attendance in the Indian higher education, especially at private management institutes showing a declining

attendance trend at the IIIrd and IVth semesters of the MBA course. Though, the minimum statutory eligibility for attending the examination is 75%, yet it has

been observed that neither the students nor the private management colleges take cognizance of this fact. In most of the colleges majority of the students do

not attend lectures but are declared eligible for appearing examinations. This further deteriorates not only the students standards but the colleges’ as well.

In order to understand what best practices do academic leaders resort to in order to maintain 100% attendance, this particular factor of student attendance was

also considered with regard to the leadership at institutional level. It was interesting to observe what (9, 9) leaders did at their institutions in order to maintain

the attendance standards at their institutions. The (9, 9) leaders were often found to upgrade their existing academic system and were also found to make

consistent improvements in the qualitative aspect of education by giving appropriate training to the faculty in different domains. There was a collaborative

teaching-learning process developed at these centres where the faculty was found to correlate the concepts and cases with his subjects. The delivery of the

academic content and the subject matter was more refined and fine-tuned where one could call this as achieving academic excellence. This method of the (9, 9)

leaders can be considered to be an innovative approach towards achieving academic excellence, where there has been constant benchmarking and upgrading of

the academic system. Students at the institutions are found to learn maximum with greater practical insights and were found quite enthused in attending the

lectures with significant less absenteeism. It was also observed that one such respondent did not allow 41 students out of a total of 104 students to attend

examinations for subjects with low attendance at one of the INCs, owing to poor attendance in the first semester. Such kind of a practice was usually undertaken

in the first semester, which was like a warning for students showing negligence with regard to the attendance standards. The (9, 9) leaders clearly

communicated the disadvantages of non-compliance of the minimum attendance criteria, that would have an instant impact on the placements of such

students. This clearly shows the uncompromised academic standards with regard to student attendance at INCs.

The (9, 1) leadership style reflects two important leadership elements, management by exception (active) MBE (A) and contingent reward (CR). A major

difference between (9, 9) and (9, 1) leadership style is the degree and magnitude of monitoring and controlling people and tasks. The (9, 1) leadership style

considers setting priority tasks and evaluation of the accomplishments of these tasks. Further, (9, 1) leaders would only reward the team members on successful

completion of the allotted tasks. An element of stringency is reflected from the (9, 1) leadership style with a primary focus on strict compliance of delegated

responsibilities which is not observed with the (9, 9) leadership style. Though, even the (9, 1) leadership style showed a significant positive relation with

academic factors: computerization, attendance, infrastructure and faculty: student ratio in the present study.

4. COMPUTERIZATION

The term computerization refers to the technological advancements with introduction of digital libraries, e-learning methodologies with a well built commercial

or internal/inbuilt reforming and governance system catering to the higher educational needs of the institutions. The track record of such use of sophisticated

MIS packages for improving the governance at the private higher education institutions has been poor (ICRIER, 2006) pp115. However, it was observed that at

INC has an excellent online centralized computerized packages for accounts, infrastructural facilities and asset management, weekly academic monitoring

system and a human resource information system, examination (internal and external assessment) and results information system for with regard to the

institutional governance. For improving the institutional governance, INC had a bouquet of such inbuilt online reporting systems like

a. Weekly Academic Monitoring Systems (WAMS): An online reporting system giving the requisite details of weekly session plans for all the subjects, syllabus

covered subject-wise student attendance, guest lectures, internal and external evaluation, faculty development workshops, industry-institution interaction

and other important academic activities.

b. Summer Internship Program (SIP): The most inimitable and distinguishing program devised by INC, which has tenure of 4 months for the summer interns

in contrast to 50 days summer training in all Indian universities affiliated colleges. The program was deliberately undertaken only at metropolitan cities, to

give a good exposure to students from district and rural places. Another feature of this program is that, it is a perfect blend of on-the-job training (OJT) as

well as research (management thesis). Students have a definite marketing target with stipulations which were closely monitored by the company guides

and faculty guides on weekly basis. There has been a good interaction between the faculty guides and company guides with regard to the progress of every



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student. The SIP portal is an online reporting system ensuring regular attendance of students and the details of on-the-job accomplishments of students.

This system helped the students to be placed after completion of the second year. During internship students are found to be more confident, with an

overall developed personality, eventually increasing their chances of employability. Most of them were found to have a pre-placement offer (PPOs) which

is the greatest takeaway for INCs.

c. Examination portal: Another online reporting system, through which details of the students internals and externals are compiled by the academic co-

ordinators of all the INCs and all the necessary compliances were found to be done on semester basis. The examination at INCs was found to be a multiple

choice question (MCQs) format, where the qualitative aspect is considered, unlike other conventional Indian university theory pattern which focuses more

on the descriptive aspect. Such kind of an objective exam was found to be more reliable and applied than the conventional theory examinations. A proper

record of maintenance of student academics and result analysis was possible with such a reporting system.

d. Accounts and Asset Management System: It has been a practice in most of the private management institutions to manipulate and show different records

of asset management when additional courses/seats are requested to regulatory authorities and scrutiny committees from the AICTE, University or NAAC.

By doing this, such institutions increase the number of intake and get sanction however; the infrastructure and facilities remain unaltered. In contrast to

this, at INCs there has been an online asset management system portal which contains a record of all the assets, and there is a periodic review of the assets

distributed across various INCs. Along with the administrative authorities even the faculty is one of the asset management team members for audit and

maintenance of assets.

e. HRIS: A centralised Human Resource Information System gives details of employees starting from recruitment to exit interview, payslips, benefits, medi-

claim, performance appraisal and Income Tax investment information.

5. ACADEMIC RESULTS

The term results refer to the passing or failure percentage of students in the final semesters. The assessment of students is considered to be another important

academic factor with different internal and external evaluation components as per the methodology which has been the same in most of the private

management institutions. There have been many questions with regard to the reliability of these methods for courses in different disciplines.

The (9, 1) leadership style was found to be significant with regard to the results factor at INCs, with the leadership elements of management by exception (A)

and contingent reward as far as monitoring and controlling the academic results was concerned. The directors of these colleges were found to be very prompt

on displaying the academic performance of every student regularly and influencing the students sentient about their deficiency in the concerned subjects. The (9

,1) leaders also designed mentoring programs for students at their institutions, where each faculty member had the responsibility of 10-12 students, which

shows the involvement of the faculty in the overall development of the students thus, making everyone employable. An interesting thing to be noted was that,

the academic leaders addressed all the students on a weekly or a fortnightly basis on the agenda of improvement on academic grounds; proper counselling was

done for students requiring a special attention with regard to some subjects. Wherever required the academic leaders called for experts from the industry by

giving the best of their efforts for improving the subject knowledge of the students. At all INCs, it was mandatory to conduct guest lectures from industry every

week for bestowing them with requisite practical insights at corporate world. The students at INC were made to realize that their academic consistency was a

matter of concern when it comes to placing them into organizations. As a result of which, the examinations and internal assessments were undertaken seriously

by all the students. The academic performance of the students already placed was found to be displayed on the notice boards with the overall and aggregate

CGPA, and the companies they have been placed along with the salary package details.

Examination assessment units have been established to have regular brainstorming for formulation of schemes, question banks, with a consistent and a

standard percentage of internal and external evaluation and declaration of results. At INC, examinations are very innovatively formulated consisting of computer

assisted assignments based on objective type questions, applied theory questions, numerical problems, case-lets and case studies. With such reliable standards

of evaluation, students have been found to be competent to grab the best of opportunities with good pay packages which clearly shows a linkage with

performance of the students.

Moreover, the assessment systems and evaluation patterns in majority of the private institutions have been theoretical in nature, usually in the form of

descriptive tests. However, at INC there exists special examination assessment unit which ensures appropriate assessment of students with multiple choice

questions. The internal evaluation components of students were in terms of live projects, seminars on the latest topics, group activity and presentations. This

scheme also envisages faculty members in colleges to decide the curriculum and conduct the evaluation of the students with more internal evaluation.

This also proves the initiatives undertaken by the (9, 1) leaders showing significance with the results parameter as one of the key academic factors in the present

study.

6. INFRASTRUCTURE

The (9, 1) leadership style is associated with the leadership elements of management by exception and contingent rewards, which proves that these leaders

have had a very high concern for tasks and the compliance of important academic tasks. The monitoring of utility of different resources and equipments like

computers and e-labs and all the essential physical assets was recorded and maintained by the administrative personnel at individual institutional level. At some

institutions along with the administrative staff even the faculty members were given a responsibility of monthly maintenance and audit of infrastructural

facilities. As compared to (9, 9) leaders (9, 1) leaders were found to be better in terms of maintenance of important assets at the institutions, all (9, 1) leaders

strictly followed the monthly internal audit processes and keep a track of the utility of important resources and equipments, which shows that (9, 1) leaders

were good at maintaining the assets. The (9, 1) leaders were found to be good at availing and setting of new infrastructure mainly in the form of the standards

that they were found to maintain with regard to adequate classrooms, libraries, seminar rooms, auditoriums.

7. FACULTY: STUDENT RATIO

There has been a very serious concern for retaining talented faculty members at private management institutions. Faculty shortages have been one of the

prominent problems either because of non-availability of suitable qualified persons or arising out of other financial reasons. Hence, faculty to student ratio of

1:15 is not observed in many private management institutions. At many private management institutions this parameter is not given due importance and is not

treated as a very serious issue. On the other hand, at all INCs the recruitment of the faculty had been on a merit as well based on the industrial experience, the

development of faculty also takes place from time to time with FDP’s and workshops at appropriate time intervals. The appraisal of faculty was done on an

annual basis based on the number of academic responsibilities handled, progress in research work and intellectual capital, where the incentives and pay

packages the faculty members receive are commensurate with experience and on-the-job performance.

The (9, 1) leadership style showed a positive response in maintaining and controlling the standard faculty: student ratio which is 1:15 as per the AICTE norms.

The practice of collaborative learning methodologies developed at most of the INC’s encouraged the faculty members to study and understand the subject

domains apart from the ones they were specialized in, the (9, 1) leaders recruited faculty members on a merit basis where the faculty members did find an

incentive to learn and grow at the institutional level. All the (9, 1) leaders were successful in creating good loyal employees at the institutions.

8. SALARY /MONTHLY PAYMENTS

There have been 155 INCs across different states in India. All these institutes have been very prompt with regard to the payments of the faculty across different

regions. The recruitment of the entire faculty staff has been done on a merit basis, initially during the first year it was difficult to get qualified faculty however,

subsequently due to more payments and the brand itself, qualified faculty members were attracted and retained within INCs. At INC the salary of the entire

faculty, non-teaching staff would be deposited on 30th/31st of every month very promptly with online payslips generated on the web based applications that

INC had designed for each employee with a unique ID and password. In case, if there happens to be a holiday or a Sunday on any of the 30th, the salary would

be deposited one day in advance. This promptness was seen at all INCs. Therefore leadership style with regard to this particular factor of payments did not

matter, since every leader was a part of this system and there was no relation of payments and the INC leaders at individual institutes.



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DISCUSSION Based on the findings of the present study it was observed from the leadership questionnaire values and the AFPI scores that there were two dominant

leadership styles the (9, 9) and (9, 1). The (9, 9) leadership style was found to be favourable with academic factors admissions, job placements and attendance.

The (9, 1) leadership style showed a positive response with academic factors like computerization, infrastructure, academic results and the faculty: student ratio.

With the salary/payments factor at INCs, it was observed that the salary of the entire faculty, non-teaching staff would be deposited on 30th/31st of every

month very promptly with online payslips generated on the web based applications. There was never any delay with regard to the monthly payments at all INCs.

All academic activities from student admissions to recruitment of faculty were done on a merit basis. The placement program was categorized at 3 different

levels with National Regional and Local level which was effective in placing not only the intelligent students but also the average and above average students

with 100% placements at all INCs. The internal evaluation pattern was based on the case-studies, seminars, presentations, on-the-job training assignments with

no scope for the students to show absenteeism, ensuring more than 90% of attendance with good results. All INCs had adequate infrastructure with modern

teaching aids and equipments at all the institutes. As regards computerization for improving the institutional governance, INC had a bouquet of such inbuilt

online reporting systems with weekly academic monitoring systems (WAMS), summer internship program (SIP), examination portal, accounts as well as asset

management system and an HRIS which gave details of employees starting from recruitment to exit interviews, payslips, benefits, mediclaim, and Income Tax

investment information. INCs have motivated and dedicated faculty members who undergo one month rigorous induction program on teaching methodology,

and are apprised periodically on the basis of productive work with intellectual capital and publications in journals of repute.

In India, the prevailing bureaucratic structure in the higher education system has been a primary impediment in the delivery of quality higher education. This

bureaucratic system has restricted the growth and expansion of private institutions which are more promising and intended to deliver professional higher

education. On the contrary, it has been observed that there are many institutions that are actually not complying with regulatory standards, with inadequate

infrastructure, poor faculty-student ratios, yet are running smoothly. Moreover with political interventions in the system, this has led to the further

deterioration of the quality of education. Many such institutions have the sheer intention of making profits rather than focusing on the enrichment of quality

higher education. In short there has been a serious concern with regard to standardization in higher education. Many of the private institutions affiliated to

universities have a conventional system, with a little or no change in the syllabus with lot of obsolete concepts; these institutions are also found to be isolated

from the industry and society by and large.

In case of politically led institutions, the recruitment of administrative staff and faculty is done on an influential basis (from their own constituencies) and not on

merit. Even the percentage of qualified directors at such management institutions has been low. There are many directors who are not qualified but still

functioning with the said designation. Same is the case with faculty; most of the faculty do not possess doctoral qualification yet they are continued on the same

pay scales. Despite explicit AICTE norms such institutions are functioning and flourishing whereas institutions like INCs with a merit based system, right from

recruitment of faculty to compliances related to other important administrative and academic activities like admissions, placements, monitoring of attendance,

close tie-up and linkages with industry, adequate infrastructure, huge number of consultancy projects, and a relevant syllabus (with regard to the job market)

with a keen intention of nurturing professionalism amongst students and major contributors in increasing the student employability, have to suffer on

bureaucratic grounds of the higher education system in India. INCs became a victim of this bureaucratic system prevailing in higher education, where the Madras

High court restricted INCs to conduct further admissions.

Mackasare and Arvindekar (unpublished) study is an eye-opener for conventional private management institutions in the Indian higher education. With the

present picture of private management institutions there is a need to simplify academic and administrative practices like the regularity of conducting internal

audits, degree of computerization and procedures for timely and speedy curricula revision and introduction of new courses. There is a need to review and revisit

the statutory provisions in this regard. Greater autonomy should be given to colleges to initiate curricula changes with checks and balances through supervision

by expert and professional bodies.

The performance criteria for appraising faculty members’ needs to be customized on the basis of scholarly articles and research work, within National/

International journal publications, which at present is rarely seen among private management institutions. Faculty can be motivated by lucrative rewards for

pursuing research and consultancy along with the teaching, academic and administrative responsibilities.

There is a need to develop a merit based system with regard to the faculty recruitment process, where only qualified and competent faculty should be given an

opportunity with a constant periodic review of the progress. Even the placement program at management colleges needs to be designed on a merit basis which

caters the employment need of not just the intelligent students but also average students. The incorporation of a soft-skills laboratory should be mandatory

where proper grooming of students with a constant review of the student progress from semester –I to semester IV must be constantly monitored.

The existing dilapidated examination system with gullible learning needs to be revamped with the inclusion of incessant examination reforms focusing more on

problem solving and analysis rather than the conventional descriptive tests. Like wise even the internal evaluation pattern should be revived with a greater focus

given to presentations on live projects in the industry, seminars, paper presentations, general awareness quiz sessions, thematic tests. The external evaluation

should be developed with grade systems with objective based questions on an analytical nature than the theoretical pattern.

The basic infrastructural facilities were found to be fulfilled with majority of the management institutions, however after taking into consideration the number of

actual programs/additional intake, the infrastructure appeared to be inadequate with the actual number of programs being run by institutions. Hereby a

computerized asset management system needs to be developed, which can further be linked to statutory authorities for effective monitoring and controlling.

Based on the findings of the present study it is suggested that a full-fledged computerized management support system should be monitored at the university

level where all the affiliated colleges would be connected centrally with proper reporting and accountability, with a consistency in performing different academic

activities, like the factors considered in the present study. Proper systems catering to the compliance of different academic activities should be brought into

action which includes the details of weekly session plans, syllabus covered, weekly attendance, value addition including guest lectures and events organized

during the week. An online portal can be developed to fulfil the requirements of the summer internship projects that actually monitor the student progress with

a special regard to research as well as other on-the-job activities. An HRIS database can also be developed to include the information of all employees, job

descriptions, and records from employee recruitment to the exit interviews, leave benefits, performance appraisal, gratuity, medi-claim, income tax and

investment information. With an effective use of management support systems (MSS) management institutions can ensure timely academic task compliances

with transparency and accountability.

The study could have been extended to the primary and secondary institutions however it was not relevant in the higher education context, considering

important academic factors included in the present study. In comparison to the sample size in the present study, findings could have been verified on a larger

database. The present study has helped the researcher to study leadership styles at professional higher management educational system, and hence the design

of the research instruments will suit only in the higher education environment. However with the inclusion of other factors, these inventories can be used in

other industries and institutions with a proper alteration of the present factors. The emotional intelligence factor can also be studied with regard to leadership in

higher education on similar lines. The present study can also be expanded globally with the inclusion of foreign universities with a comparative analysis of the

Indian and foreign universities which would help in designing a gap-fit analysis mechanism, eliminating the existing flaws in the current higher educational

system.

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Blake, R. and J. Mouton (1964). “The managerial grid”. Houston, Gulf Publishing.



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JOURNAL AND OTHER ARTICLES

Antonakis, J., Avolio, B. & Sivasubramaniam, N. (2003) “Context and Leadership: an examination of the nine-factor full-range leadership theory using the

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UNPUBLISHED DISSERTATION AND THESES

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Effectiveness”, A Ph. D. Dissertation, Shivaji University, Kolhapur (Maharashtra, India).



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USING NCDH SEARCH ALGORITHMS BLOCK MOTION ESTIMATION

R. KARTHIKEYAN

LECTURER

DEPARTMENT OF CSE

BHARATH INSTITUTE OF SCIENCE & TECHNOLOGY

CHENNAI

DR. S. R. SURESH

DEAN

COMPUTER APPLICATIONS

BHARATH UNIVERSITY

CHENNAI

ABSTRACT One of the key elements of many video compression schemes is motion estimation. A video sequence consists of a series of frames. To achieve compression, the

temporal redundancy between adjacent frames can be exploited. That is, a frame is selected as a reference, and subsequent frames are predicted from the

reference using a technique known as motion estimation. In this paper, we propose two cross-diamond-hexagonal search (CDHS) algorithms, which differ from

each other by their sizes of hexagonal search patterns. These algorithms employ two cross-shaped search patterns consecutively in the very beginning steps and

switch using diamond-shaped patterns. To further reduce the checking points, two pairs of hexagonal search patterns are proposed in conjunction with

candidates found located at diamond corners.

KEYWORDS BMA-Block Matching Algorithm, CDHS -Cross Diamond Hexagonal Search, CDS-Cross Diamond Search, LCSP-Large Cross Shaped Pattern, LHSP-Large Hexagonal

Shaped Pattern, SCSP-Small Cross Shaped Pattern, SHSP-Small Hexagonal Shaped Pattern .

INTRODUCTION LOCK-MATCHING motion estimation [1] is inextricably part of today’s video coding techniques and standards, such as ISO/IEC MPEG-1, 2, 4, ITU-T H.261,

H.263, and the emerging H.264 Video frames are first divided into macroblocks. The displacement of these macroblocks from reference frame are

reckoned and coded together with the residual frames using the generic hybrid predictive/transform coding framework.

In the last 20 years, many fast algorithms were proposed to pursue low computational complexity consumed by the full search algorithm. To reduce the

exhaustive checking of candidate motion vectors, fast block-matching algorithms [2] with different block-matching strategies and their corresponding search

patterns with various sizes and shapes have enormous impact on both search speed and accuracy.

The typical example is the three-step search, which employs rectangular search patterns with different sizes. Others like 2D-logarithmic search and orthogonal

search algorithms performed searching in either orthogonal or linear direction. These fast algorithms result in speed improvement, however, with quality varied

amongst the nature of video sequences, especially for that possessing high motion content. Afterwards, the exploitation of center-biased property by new three-

step search four-step search , and block based gradient descent search algorithms increased the searching speed significantly by taking the nature of most real-

world sequences into account. Meanwhile, they still maintained the prediction quality comparable with the FS’s. Until the unprecedented suggestion of

unrestricted search steps and nonrectangular search patterns, such as the diamond search and hexagon-based search algorithms, they required much fewer

checking points, in contrast to algorithms with limited steps.

Although these fast BMAs may result in sub-optimal solution because of traps by local minima, they were usually employed in practical implementations due to

their simplicity and regularity of data access.Besides the shape that candidate blocks taken for matching, the size of search patterns employed in these fast

algorithms gave us an insight to the search strategies. . Moreover, they give consistently better motion estimates and directions due to larger size. Another relief

of reducing checking points is to have successive search patterns overlapped as much as possible. For example, 4SS and DS requires three or five extra checking

points while HEXBS requires consistently three extra points in advancing step.

Recently, cross-diamond search algorithm [5] exploits a more dominant cross-center-biased property in most real-world sequences. A more advanced idea using

similar starting pattern, but with dynamic size and adaptive feature, can be found. Experimental result in compares most fast BMAs without prediction feature.

It shows that CDS generally requires about two to five fewer points than DS. The speedup gain using CDS over DS is reported up to 40% with similar or even

better quality than DS’s. In this paper, we proposed two novel-cross-diamond-hexagonal search algorithms by employing a smaller cross-shaped pattern before

the first step of CDS and replacing the diamond-shaped pattern with hexagonal search patterns in subsequent steps.

PRODUCT DESCRIPTION In this paper, we proposed two novel-cross-diamond-hexagonal search algorithms [3] by employing a smaller cross-shaped pattern before the first step of CDS

and replacing the diamond-shaped pattern with hexagonal search patterns in subsequent steps.

SEARCH PATTERNS Two types of search patterns are used in CDHS

• Cross-Center-Biased Motion Vector Distribution

• Hexagonal Search Patterns.

EXISTING SYSTEM In the last 20 years, many fast algorithms were proposed to pursue low computational complexity consumed by the full search algorithm. To reduce the

exhaustive checking of candidate motion vectors, fast block-matching algorithms [2] with different block-matching strategies and their corresponding search

patterns with various sizes and shapes have enormous impact on both search speed and accuracy.

B



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FIGURE 1: SHOWS THE SEARCH AREA IN BLOCK MATCHING METHODS

These fast algorithms result in speed improvement, hoIver, with quality varied amongst the nature of video sequences, especially for that possessing high

motion content. Afterwards, the exploitation of center-biased property by new three-step search four-step search, and block-based gradient descent search

algorithms increased the searching speed significantly by taking the nature of most real-world sequences into account. Meanwhile, they still maintained the

prediction quality comparable with the FS’s. Until the unprecedented suggestion of unrestricted search steps and nonrectangular search patterns, such as the

diamond search and hexagon-based search algorithms, they required much feIr checking points, in contrast to algorithms with limited steps. Although these fast,

BMAs may result in sub-optimal solution because of traps by local minima, they Ire usually employed in practical implementations due to their simplicity and

regularity of data access.

PROPOSED SYSTEM The maximum theoretical speedup of the proposed CDHSs is about 20.5–45.0 times with window size of 7, as only five and 11 points are checked, After utilizing

cross-center-biased characteristics, CDHSs can further reduce the computations by checking three more points consistently in advancing steps. Table 1 shows

the performance comparisopns of CDHSs on sequence “SALES” (CIF).

TABLE - 1

Therefore, the average gain using CDHS-F over DS with window size of 7 is 3.56 search points per block. All the theoretical gains of CDHSs over 4SS, DS and CDS.

It shows that the gain over 4SS is larger than that of DS, and is larger than CDS’s. It also shows that CDHS-F generally checks feIr points than CDHS-T, i.e., number

of candidate points checked: CDHS-F<CDHS-T <DS .

SYSTEM DESIGN DESCRIPTION CROSS-CENTER-BIASED MOTION VECTOR DISTRIBUTION

In addition, the average motion vector probability distributions taken from 31 sequences, in CIF/SIF/CCIR601 formats are analyzed. These sequences consist of

different motion contents, from gentle to vigorous motion activities. The MVPs are resulted from simulations using FS with mean absolute difference as the

block distortion measure inside a search area, typically is set to 7 for QCIF/CIF/SIF and to 15 for CCIR601 sequences. the probabilities in which motion vectors are

found within the cross ( ), diamond ( )and square ( ) region, over 93% of motion vectors are found within the central area when using QCIF sequences. This is

shown in figure 2.

FIGURE 2



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This is a square-center-biased distribution indicating most of real-world sequences move gently, smoothly and slowly, and can be regarded as quasistationary.

Within this square region, about 90% and 92% motion vectors are found located in the cross-center-biased and diamond-center-biased portions. Amongst these

three shaped-distributions, CCB distribution is the most dominant.

Moreover, such cross-biased behavior maintains over 93% at boundaries of search area. Similar center-biased properties distributed as a cross, diamond and

square shape are found in CIF/SIF and CCIR601 formats. This shows the CCB occupies the most proportion at different displacement p,p € w, especially when

1≤p≤2. Thus, a small cross-shaped pattern is employed in the very beginning of the proposed algorithms, prior to the large cross-shaped pattern used in CDS

shown in figure 3.

FIGURE 3

These two cross-shaped patterns can work more efficiently on finding small motion vectors than diamond-shaped ones within the central 5 ×5 area in the first

two steps. Afterwards, the proposed search algorithms will use the large Diamond-shaped pattern for better performance on large motion vectors and possibly

stop the search using a small diamond-shaped pattern if the previous minimum BDM found in the diamond center.

HEXAGONAL SEARCH PATTERNS

Translation, zooming, pan and tilt motions are usually found in video. This block movement will easily fall on the diamond corners if DS is employed for coding.

There is still a room to reduce two fewer points between successive steps of DS by switching the LDSP into HSPs. This is shown in figure 4.

FIGURE 4

However, it is not always true as motion direction may be “diversified” into other directions as the frame dimension increases, i.e., falling onto the diamond

faces. This can be indicated by the decrease from about 43% to 40% when changing the sequence “tennis” from CIF to CCIR601 format. This is shown in figure 5.

FIGURE 5

The diamond-corner hits will be dropped if the smaller SCSP is used to allow earlier halfway stop. The use of SCSP is applied in prior to the CDS algorithm (fig 6).

The probabilities of the search path hitting a diamond corner are generally dropped due to the earlier halfway-stop condition. With exploiting the cross-center-

biased property, the drop may be tremendous.

FIGURE 6

Nevertheless, there is still a big room to consider a switch into another search pattern, such as hexagonal patterns, in order to reduce the extra checking points

in advancing from a diamond corner, especially for some rich motion clips with motions oriented orthogonally. It is shown in figure 7.



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FIGURE 7

Two pairs of LHSPs. Each pair consists of two orientations: vertical and horizontal. These two pairs are different in their sizes. Checking points spanned in the

SHSP are physically the same as SCSP and SDSP and proposed for the sake of completeness after pattern switched. Fig. 8.

FIGURE 8

Based on the search strategy of DS. The thick ones advance the search with bigger steps and result in faster search speed than the flat ones, but make sacrifice

for quality. Conversely, the flat ones give better quality, as they require more steps and thus more points.

In short, it is a prior problem that I cannot know the nature of a sequence in advance. Therefore, a diamond-shaped pattern, i.e., LDSP, plays an important role in

our proposed CDHSs. Three possible directions that the minimum BDM found located in the previous LDSP. Either a pair of LHSPs will be consistently used

throughout the search. Figure 9 shows the Search patterns switched for different directions

FIGURE 9: SEARCH PATTERNS SWITCHED FOR DIFFERENT DIRECTIONS

DEVELOPMENT SPECIFICATION

CROSS-DIAMOND-HEXAGONAL SEARCH

FLOW OF THE CDHSs

The proposed CDHS algorithms [3], [4] differ from DS, HEXBS, and CDS by performing a highly cross-center-biased search with SCSP in the first step. In addition,

the search may involve up to two different patterns: diamond-shaped LDSP and hexagonal pair LHSP. The common strategy amongst them is employing a

halfway-stop technique. The following summarizes the CDHS algorithms.

Step (i) Starting: A minimum BDM point is found from the five checking points of SCSP at the center of search area. If the minimum BDM occurs at SCSP center,

the search stops.

Step (ii) Large Cross Searching: The four outermost points of the central LCSP are evaluated. (fig 10).

FIGURE 10



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Step (iii) Half-diamond Searching: Two additional points of the central LDSP closest to the current minimum BDM of the central LCSP are checked, i.e., two of

the four candidate points located at. If the minimum BDM found in previous steps is at any endpoint of SCSP (fig 11).

FIGURE 11

STEP (IV) SEARCHING

Case (1): If LDSP is used in previous step and the minimum BDM is found located at any point on diamond edge, a new LDSP is formed by repositioning the

previous minimum BDM point as the center of LDSP.

Case (2): If LDSP is used in previous step and the minimum BDM is found located at either of the horizontal (vertical) diamond corners, a new horizontal (vertical)

LHSP is formed by repositioning the previous minimum BDM as the center of LHSP.

Case (3): Otherwise, a new LHSP of the same shape is formed by repositioning the previous minimum BDM as the center of LHSP.For any case above (LDSP LDSP,

LDSP LHSP, orLHSP LHSP), three new checking points1 are evaluated. (fig. 12).

FIGURE 12

Step (v) Ending: With the minimum BDM point in the previous step as the center, a new SDSP is formed if LDSP is used in previous step; otherwise, a SHSP is

employed instead. Identify the new minimum BDM point, which is the final motion vector, from the four new candidate points2 in SDSP or SHSP. Figure 13.

Shows the Gain in search points using CDHS-F over DS.

FIGURE 13: GAIN IN SEARCH POINTS USING CDHS-F OVER DS.

IMPLEMENTATION In this paper, we proposed two novel-cross-diamond-hexagonal search algorithms by employing a smaller cross-shaped pattern before the first step of CDS and

replacing the diamond-shaped pattern with hexagonal search patterns in subsequent steps. We had used four frames for searching which was taken from

already stored frames. And will try to implement this paper (project) with mpeg compression. CDHS algorithms are simulated using the luminance of the testing

sequences .Block size of 16 and sum of absolute difference as the BDM are used. It shows that the speedup gain using CDHS-F over DS is up to about 144% and

gain over CDS is about 73%. In addition, CDHS-F can also provide even better prediction quality, indicated by negative values. e.g., 2.7% lesser MAD error than

DS’s. In particular, they improve searching speed by about 144% faster than diamond search algorithm and about 73% faster than the cross-diamond search.

CONCLUSION

We proposed two fast cross-diamond-hexagonal search algorithms, namely CDHS-F and CDHS-T. They differ from each other in their hexagonal search pattern

sizes. Both are suggested to firstly employ a small cross-shaped pattern to explore the cross-center-biased property of most real-world sequences. They then

typically perform block matching as in DS, but switch using hexagonal search pattern in advancing steps. Experimental results show that our proposed CDHSs

typically outperform other fast BMAs. In this paper we had used four frames for searching which was taken from already stored frames. In future, we will try to

implement this paper (project) with mpeg compression. It shows that the speedup gain using CDHS-F over DS is up to about 144% and gain over CDS is about



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55

73%. In addition, CDHS-F can also provide even better prediction quality, indicated by negative values. e.g., 2.7% lesser MAD error than DS’s. In particular, they

improve searching speed by about 144% faster than diamond search algorithm and about 73% faster than the cross-diamond search. It shows that the speedup

gain using CDHS-F over DS is up to about 144% and gain over CDS is about 73%. It is shown in the Table 2. Figure 14 and 15 shows the results of the block-

matching algorithm for full search and cross diamond hexagonal search.

TABLE 2: EXPERIMENTAL RESULTS SHOW THAT PROPOSED CDHSs

FIGURE 14: THE RESULTS OF THE BLOCK-MATCHING ALGORITHM FOR FULL SEARCH

FIGURE 15 SHOWS THE RESULTS OF THE CROSS DIAMOND HEXAGONAL SEARCH

REFERENCES [1]. Liang Yaling Liu Jing Du Minghui , “A cross octagonal search algorithm for fast block motion estimation” Coll. of Electron. & Inf. Eng., South China Univ. of

Technol., Guangzhou, China.

[2]. Haihua Liu Changsheng Xie Yi Lei , “An unsymmetrical dual cross search algorithm for fast block-matching motion estimation”, Coll. of Comput. Sci.,

Huazhong Univ. of Sci. & Technol., Wuhan.

[3]. Moradi, A. Dianat, R. Kasaei, S. Shalmani, “Enhanced cross-diamond-hexagonal search algorithms for fast block motion estimatio” M.T.M. Dept. of Comput.

Eng., Sharif Univ. of Technol., Tehran, Iran.

[4]. Xuqing Xiao Ruimin Hu Ruolin Ruan Wei Huang, “Adaptive Dual-Cross-Diamond-Hexagon Search Algorithm for Fast Block Motion Estimation”, Nat. Eng.

Res. Center for Multimedia Software, Wuhan Univ., Wuhan.

[5]. HaiHua Liu Yi Lei ChangSheng Xie , “Fast block-matching motion estimation based on an improved cross-diamond search algorithm “Coll. of Comput. Sci. &

Technol., Huazhong Univ. of Sci. & Technol., Wuhan.

[6]. Small-diamond-based search algorithm for fast block motion estimation , Source Shen-Chuan Tai, Ying-Ru Chen, Yu-Hung Chen.



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SERVQUAL IN FINANCIAL SERVICES: CASE STUDY OF LIFE INSURANCE CORPORATION OF INDIA

DR. KESHAV SHARMA

PROFESSOR, THE BUSINESS SCHOOL, UNIVERSITY OF JAMMU, JAMMU (ON LIEN)

CAMPUS DIRECTOR

RAYAT & BAHRA BIO-TECHNOLOGY CENTRE OF EXCELLENCE

MOHALI

BEENISH SHAMEEM

RESEARCH SCHOLAR

THE BUSINESS SCHOOL

UNIVERSITY OF JAMMU

JAMMU

ABSTRACT Service sector has produced approximately two-thirds of worldwide GNP from twenty first century (Kara et al.,2005).In the huge service sector, insurance sector is

one of the most important entities which has been growing relatively fast in India. In a period of half century or less, the insurance sector in the country has

undergone roundabout movement, from being an open competitive market to full nationalization, and then back again to a liberalized market, in which private

players and public sector companies are operating on a level playing field. At present there are twenty three players in the Indian life insurance industry out of

which Life Insurance Corporation (LIC) is one of the leading public companies, holds largest number of policies in the world to suit different financial requirement

of an individual.This study reports an application in the financial services industry of the SERVQUAL model developed by Parasuraman, Zeithaml and Berry.The

model is designed to measure those components of service that generate satisfaction within five dimensions. This study identified the existence of gaps between

clients' and management perceptions of attributes of the life insurance company, and between client expectation and perception of the services offered. It is

argued that the existence of these gaps is a source of dissatisfaction with services provided.

KEYWORDS Customer satisfaction, Expectations, financial services, Life Insurance, Perceptions, Servqual.

INTRODUCTION TO FINANCIAL SERVICE SECTOR ndia’s strong financial fundamentals and so-called conventional financial approach helped the country come strong through the world-wide crisis. Financial

services, being the back bone of any economy, entail various segments of the industry in its purview. It includes banking, insurance, broking, mutual funds

and stock markets to be named as major sub-segments. Indian insurance sector is in top-gear growth wherein the number of life policies in force has

increased nearly 12-fold over 2000-2010 and those pertaining to health insurance have increased nearly 25-fold.Data released by the Insurance Regulatory and

Development Authority (IRDA) indicates that 23 life insurers mopped US$ 4.1 billion by writing new policies during April-June 2011. For non-life insurers, the

gross premium underwritten during April-August 2011 increased by 24 per cent at Rs 23,712 crore (US$ 4.82 billion) as against Rs 19,114 crore (US$ 3.89 billion)

in the year-ago period.The total industry premium collection (of both life and non-life companies) for August 2011 grew 34 per cent at Rs 5,065 crore (US$ 1.03

billion) compared with Rs 3,752 crore (US$ 762.73 million) in August 2011, the IRDA said. RDA has recently hinted at mandatory listing of insurance companies.

Though the insurance Act doesn’t stipulate companies to go public, the regulator might make amendments to it to facilitate capital raising by the players. Initial

Public Offer (IPO) guidelines for the insurance sector are also being worked upon. According to the draft guidelines released, only those players that have 10

years of operational experience and strong financial performance would be allowed access to the capital markets.Meanwhile, the Indian government is

contemplating on enabling public sector banks to raise lots of additional capital without the central authority losing control over them. For the purpose, the

government is considering to form a single holding company to unite 21 state-run banks a it would provide room for innovation in capital infusion.The

government is also considering allowing foreign individuals or Qualified Foreign Investors (QFIs), to buy equities directly in stock markets, a senior Finance

Ministry official has revealed. In an initiative to highlight India as a major investment hub and attract higher foreign equity, the government has already allowed

QFIs to invest up to US$ 13 billion in equity and debt schemes of mutual funds in the infrastructure sector.Indian Financial Services industry is a promising one

and holds potential for massive growth in future. Be it in banking, insurance or foreign investments, the country is making its mark in every sub-segment,

nationally as well as internationally. For instance, a report by Boston Consulting Group (BCG), an industrial body and Indian Banks Associations (IBA), anticipates

that Indian banking industry would stand as the third largest in the world by 2025 wherein its assets size is poised to mark US$ 28,500 billion by 2025 from the

asset size of US$ 1,350 billion in 2010.India’s life insurance market has grown rapidly over the past six years, with new business premiums growing at over 40%

per year. The premium income of India’s life insurancemarket is set to double by 2012 on better penetration and higher incomes. Insurance penetration in India

is currently about 4% of its GDP, much lower than the developed market level of 6-9%. In several segments of the population, the penetration is lower than

potential. For example,in urban areas, the penetration of life insurance in the mass market is about 65%, and it’s considerably less in the low-income unbanked

segment. In rural areas, life insurance penetrationmin the banked segment is estimated to be about 40%, while it is marginal at best in them unbanked segment.

The total premium could go up to $80-100 billion by 2012 from the present $40 billion as higher per capita income increases per capita insurance intensity. The

average household premium will rise to Rs 3,000-4,100 from the current Rs 1,300 as will penetration by the existing and new players. India’s ratio of life

insurance premium to its GDP is around 4 per cent against 6-9 per cent in the developed world. It could rise to 5.1-6.2 by 2012 in tandem with the country’s

demographic profile. India has 17 life insurers and the state owned Life Insurance Corp. of India dominates the industry with over 70 percent market share,

though private players have been growing aggressively.Considering the world’s largest population and an annual growth rate of nearly 7 per cent, India offers

great opportunities for insurers. Plans to enter the Indian market following deregulation of its insurance sector Foreign holding in Indian insurance companies is

limited to 26 per cent. The government wants to increase the cap to 49 percent, but its communist allies oppose such a move. The market is moving beyond

single-premium policies and unit linked insurance products which are easier to sell. The agency model is the dominant sales channel accounting for more than 85

per cent of fresh premiums but overall inactivity and attrition is much higher at 50-55 per cent than the global average of 25 per cent.Opportunities include

health insurance and pensions, the report said, adding only 1.5-2 percent of total healthcare expenditure in India was currently covered by insurance.A life

insurance policy covers one’s personal self. Unlike with general insurance, it is not like insuring a vehicle. Having said that, if we consider that India’s population

is over one billion and growing, we get a picture of the true potential of the life insurance sector in India. That is the kind of potential one is talkingabout in life

insurance in India

I



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REVIEW OF LITERATURE Service quality is the result of the comparison that customers make between their expectations about a service and their perception of the way the service has

been performed (Gronroos, 1984; Parasuraman et al., 1985, 1988). A number of experts define service quality differently. Parasuraman et al. (1985) define it as

the differences between customers, expectation of services and their perceived service. If the expectation is greater than the service performance, perceived

quality is less than satisfactory and hence, customer dissatisfaction occurs. Lewis and Mitchell (1990), Dotchin and Oakland (1994), and Asubonteng et al. (1996)

define service quality as the extent to which a service meets customers, need and expectation. The SERVQUAL approach has been applied in service and retailing

organizations (Parasuraman et al., 1988; Parasuraman et al., 1991). Service quality is a function of prepurchase customers, expectation, perceived process

quality, and perceived output quality. Parasuraman et al. (1988) define service quality as the gap between customers, expectation of service and their

perception of the service experience. Based on Parasuraman et al. (1988) conceptualization of service quality, the original SERVQUAL instrument included 22

items. The data on the 22 attributes were grouped into five dimensions: tangibles, reliability, responsiveness, assurance, and empathy. Numerous studies have

attempted to apply the SERVQUAL. This is because it has a generic service application and is a practical approach to the area. This instrument has been made to

measure service quality in a variety of services such as hospitals (Babakus & Glynn 1992), hotels (Saleh & Rylan 1991), travel and tourism (Fick & Ritchie 1991), a

telephone company, two insurance companies and two banks (Parasuraman et al. 1991). In this study, the researcher uses SERVQUAL approach as an instrument

to explore customer’s expectations and perceptions levels of service quality towards the front office staff at the hotel. SERVQUAL dimensions.Previously,

Parasuraman et al. (1985) identify ten determinants for measuring service quality which are tangibility, reliability, responsiveness, communication, access,

competence, courtesy, credibility, security, and understanding/knowledge of customers. Later these ten dimensions were further purified and developed into

five dimensions i.e. 12 tangibility, reliability, responsiveness, assurance and empathy to measure service quality, SERVQUAL (Parasuraman et al., 1988). These

five dimensions identified as follows:

Tangibility: The physical evidence of front office staff is including a personality and appearance of personnel, tools, and equipment used to provide the service.

Reliability: The ability involves performing the promised service dependably and accurately. It includes doing it right the first time1, which is one of the most

important service components for customers. Reliability also extends to provide services when promised and maintain error-free records.

Responsiveness: The front office staff are willing to help customers and provide prompt service to customers such as quick service, professionalism in handling

and recovering from mistakes.

Assurance: Assurance refers to the knowledge and courtesy of employees and their ability to convey trust and confidence including competence, courtesy,

credibility and security.

Empathy: Empathy refers to the provision of caring and individualized attention to customers including access, communication and understanding the

customers.

SERVQUAL instrument is an invaluable tool for organizations to better understand what customer’s value and how well their current organizations are meeting

the needs and expectations of customers. SERVQUAL provides a benchmark based on customer opinions of an excellent company, on your company, on the

importance ranking of key attributes, and on a comparison to what your employees believe customers feel. Quality is one of the competitive priorities which

have migrated from the literature of manufacturing strategy to the service arena (Pariseau and McDaniel, 1997). In the service sector, the quality of service, one

of the most dominant themes of research in services, has become a strategic instrument for firms since 1990s (Fisk et al., 1993; Donnelly etal., 1995). Customer

perceives services in terms of its quality and how satisfied they are overall with their experiences (Zeithaml, 2000). According to Timmers and Van Der Wiele

(1990), satisfying the customer is not enough: there is a compelling need to delight the customer if a competitive advantage is to be achieved. The key to

sustainable competitive advantage in today’s competitive environment lies in delivering high-quality service that result in satisfied customers (Shemwell et al.,

1998). In fact, service quality has become a great differentiator, the most powerful competitive weapon which many leading service organizations possess (Berry

et al., 1985).Parasuraman et al. (1985) revealed ten dimensions viz., tangibles, reliability, responsiveness, competence, courtesy,credibility, security,

communication, understanding, and access in the original model of service quality. But in the subsequent study of Parasuraman et al. (1988), these ten

dimensions were condensed into five viz., tangibles, reliability, responsiveness, assurance, and empathy. This led to the development of a 22-item SERVQUAL

scale for measuring service quality. It is the most frequently used model to measure service quality (Mattson, 1994) and made to be used by services

organizations or industries to improve service quality (Parasuraman et al., 1988). Obviously, the SERVQUAL instrument has been used to measure service quality

in various service industries which included health sector (Babakus and Boller, 1992; Carman, 1990; Bowers et al., 1994; Headley and Miller, 1993; Lam,

1997;Kilbourne et al., 2004); retailing (Teas, 1993; Finn and Lamb, 1991; Tsai and Huang, 2002; Naik et al., 2010);banking (Lam, 2002; Zhou et al., 2002);

hospitality (Mey et al., 2006; Spreng and Singh, 1993); sports (Kouthouris and Alexandris, 2005); telecommunications (Van Der Wal et al., 2002); and information

system (Jiang et al., 2002; Carr, 2002). In addition, there have been several contextual studies (Stafford et al., 1998; Leste and Vittorio, 1997;Westbrook and

Peterson, 1998; Mehta et al., 2002; Evangelos et al., 2004; Goswami, 2007; Gayathri et al., 2005;Siddiqui et al., 2010) regarding the insurance

industry.Additionally, a review of the relevant literature also reveals that the principal focus of service quality research has been twofold: First, the identification

of service quality dimensions being of primary interest to researchers(Parasuraman et al., 1985,1988, 1991b); and second, the development of measurement

instruments of service quality being the focus of subsequent research efforts (Parasuraman et al., 1988, 1991a, 1993; Cronin and Taylor, 1992, 1994;Asubonteng

et al., 1996, Buttle, 1996). Numerous researchers have confirmed the applicability of five dimension model in different sectors in different countries (e.g. Gabbie

and Neill, 1996; Bojanić and Rosen, 1994; Mehta and Durvasula, 1998; Lam and Zhang, 1999); however in some studies the five dimension model was not

confirmed (e.g.Carman, 1990; Babakus and Boller, 1992; Brown et al., 1993; Ryan and Cliff, 1996; Zhao et al., 2002; Wang et al.,2004; Jain and Gupta, 2004;

Evangelos et al., 2004). In the various other significant studies, the SERVQUAL scalehas been presented in different dimensions – single-dimensional (Babakus et

al., 1993; Lam, 1997), two-dimensional(Babakus and Boller, 1992; Nadiri and Hussain, 2005; Karatepe and Avci, 2002; Ekinci et al., 2003; Evangelos et al.,2004),

three-dimensional (Mei et al., 1999), four-dimensional (Gagliano and Hathcote, 1994; Kilbourne et al., 2004),six-dimensional (Headley and Miller, 1993), seven-

dimensional (Freeman and Dart, 1993), nine-dimensional(Carman, 1990), and nineteen-dimensional (Robinson and Pidd, 1998) construct. Besides, a number of

researchers in different contexts have reported different dimensions for expectations, perceptions, and gap scores (Arasli et al., 2005; Zhao et al., 2002; Parikh,

2006). In summing up, Babakus and Boller (1992) commented that “the domain of servicequality may be factorially complex in some industries and very simple

and uni-dimensional in others”. In effect, authors claim that the number of service quality dimensions is dependent on the particular service being offered.

Dotchin and Oakland (1994) states that dimensionality of SERVQUAL depends on the context in which it is applied and cannot be generalized in all and any

service industry. Similarly, Brown et al. (1993) suggested that SERVQUAL has to be modified and adapt-based on the industry, the business and the location.

Ozer (1999) recommends the development of industry-specific quality measurements for a better fit to the nature of the industry. As a result,numerous studies

in different service sectors have sought to develop industry-specific service-quality scales. Forexample, several scales have been replicated, adapted and

developed to measure services by taking SERVQUAL as abase, viz., SERVPERF (Cronin and Taylor, 1992, 1994) for hotels, clubs and travel agencies; DINESERV

(Stevens etal., 1995) for food and beverage establishments; LODGSERV (Knutson et al., 1990) for hotels; SERVPERVAL(Petrick, 2002) for airlines; SITEQUAL (Yoo

and Donthu, 2001) for Internet shopping; E-S-QUAL (Parasuraman etal., 2005) for electronic services; SELEB (Toncar et al., 2006) for educational services;

HISTOQUAL (Frochot andHughes, 2000) for historic houses; LibQUAL (Cook et al., 2002) for library ; and ECOSERV (Khan, 2003) for ecotourism.

RESEARCH METHODOLOGY The study was conducted on LIC customers in Srinagar, for choosing the sample, non-probabilistic convenience sampling technique was used. A sample of 450

customers was taken up who were approached personally at their work places. Out of the total, 337 responses (75 percent) were found to be valid and used for

the purpose of analysis. SERVQUAL – 22 item scales as proposed by Parasuraman et al. (1988) has been employed for collecting data regarding the customers’

perceptions and expectations of various service attributes. The discrepancy between perception and expectation (termed the P-E or gap) is a measure of service

quality. Respondents were asked to indicate their perceptions and expectations level for each of the 22 items in the questionnaire using a seven-point Likert

scale (ranging from 1 indicating ‘very strongly disagree’ to 7 indicating ‘very strongly agree’.



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RELIABILITY TEST Overall reliability of the perception (0.9110), expectations (0.7842), and gap(P-E) (0.8701) scales were also quite high and hence deemed acceptable (Nunnally

and Bernstein, 1994; Hair et al., 2010).

GAP ANALYSISOF THE STUDY (EXPECTATION PERCEPTION GAP) In the present study the gap scores for individual items were analyzed using the Weighted Average Scores (WAS) for all the 16 items to identify areas where

quality improvement by LIC is needed the most.As expected (Parasuraman et al., 1985, 1988), the results (shown in Table 6) revealed that in all the attributes of

service quality of LIC, the gap scores are negative. Levy and Weitz (2005) posit that customers are satisfied when the perceived service meets or exceeds their

expectations. They are dissatisfied when they feel the service falls below their expectations. From Table 1, it is clear that negative gaps were found in all 16 items

indicating that customers’expectations were in excess of their perceptions. In other words, service quality of LIC at an overall level falls far below the customer

expectations. This can be interpreted as a gap between what was expected and perceived, thus,representing a failure in service delivery and service quality at all

the levels. By analyzing the ‘gaps’, insurer has the opportunity to take the appropriate actions to improve the quality of their services, giving priority to items

with the largest gap scores.Table 1 indicate that the maximum gap (-2.15) among all the items was found to be in item 15 in the area of being neat and

professional. The next high gap (-2.02) existed in item 14 in the area of visually appealing materials and facilities.The third substantial gap (-1.97) existed in item

16 in the area of modern equipment, fixtures & facilities. The higher negative scores indicate that those attributes may not be available or at the most be

inadequate to users even if available. Besides, biggest gaps call for the need for immediate attention by service provider to make improvements in these

areas.The lowest gap (-1.51) was found to be in item 3 which shows that agents fail to make customers feel safe and secure in their transactions. The attributes

with lowest negative value can, however, in no way be ignored by service provider.Therefore, in order to reduce the gap, LIC must have to provide excellent

training, education & awareness to its staff to provide excellent services to the customers by building a relationship of trust. Eventually the lack of proper factor

structure as revealed by the analysis of data, the weighted average scores of the items of gap scale points out to the need for considerable improvements in the

LIC service quality in all aspects.

SUGGESTIONS The results show that most of the items proposed under five dimensions by Parasuraman et al. (1988) are relevant in measuring life insurance service quality in

the Indian context and there are not major reliability problems .In the critical moments of truth, only those organizations which will be in position to enhance

quality in their end products will sustain and maintain their position (Brown et al., 2005). Therefore, LIC must have to focus on quality improvement strategy to

remove the quality flaws by giving the first priority to the items with biggest gaps and subsequently to the items with lowest gaps. However, SERVQUAL

instrument is moving around the human element of service delivery (which consists of assurance, reliability, responsiveness & empathy) and tangibles attributes

(Sureshchandar et al., 2001), so, LIC should ensure that agents & employees are well trained and understand the needs of customers and provide services

accordingly that the organization is supposed to provide for its customers. Besides, in a competitive environment, by performing on differential strategies aimed

at improving the service quality, LIC will be able to add value to their relationship with the current and prospective customers.

LIMITATIONS AND FURTHER RESEARCH The conclusion drawn from the results of this study should be viewed under the following limitations. Firstly, this study was carried out mainly in SRINAGAR;

therefore, the results obtained may not be pertinent to the country as a whole.Second,the present study has been conducted by taking a sample of 337

customers of LIC (a public company), ignoring the private life insurance companies. This cannot lead to the generalizability of the findings and the results may

not be implied conclusively to the whole life insurance industry. Additional studies are recommended to fill this gap. These limitations may decrease the ability

of generalizing the results of this study to other life insurance companies’ settings. Therefore, the conceptual and methodology limitations of this study need to

be considered when designing future research.

CONCLUSION The findings of the present study indicate that SERVQUAL instrument is not applicable to the Indian life insurance sector; therefore, further research is

imperative to understand and improve life insurance service quality in India. Few statements which showed reliability problems should be restated or

substituted by more relevant statements and a separate instrument may also be developed to measure service quality for the life insurance industry. Although,

SERVQUAL dimensions cover only human element of service delivery and tangibles facet of the service, the concept of service quality does not confine to the

realms of these factors, but also encompasses other critical factors namely, service product or the core service, systematization of the service delivery, and social

responsibility (Sureshchandar et al., 2001). Therefore, in future these critical factors might also be considered to measure service quality in the life insurance

industry.Results of averages computed on gap scores indicate negative gaps in all items of service quality which revealed that expectations of customers were

more than their perceptions. The negative gaps indicate that the service quality level was unsatisfactory. Accordingly, maximum gap was found in respect of

tangibles items followed by responsiveness, assurance, empathy, and reliability items. The greatest negative scores have made it necessary for LIC to take

corrective measures and focus on quality improvement to increase its effectiveness and to compete successfully in the life insurance industry. For that reason,

quality improvement strategy should be opted in the order of the highest to the lowest gaps. Conversely, failing to make improvement will widen the gaps and

which will result in customer dissatisfaction towards service quality of LIC. Overall, this study also found that the gap (P-E) model as proposed by Parasuraman et

al. (1988) did not perform as well as the perception based performance (P) model of Cronin and Taylor (1992) in terms of reliability, explained variance and its

factor structure. In addition, suggested improvements in the service quality are required to be focused by LIC to retain potential customers, gain a competitive

advantage, increase its market share & profitability, and to ensure its sustainability especially in the developing countries like India. Moreover, the continuous

examination of customers’ perceptions and expectations is needed in order to know about what actually the customers want, in that way, up-to-date measures

are needed to be employed, basing them on the customers’ stated needs and demands to improve the service quality.

TABLES TABLE 1

DIMENSION TOTAL NO.ITEMS PERCEPTION (P) EXPECTATIONS (E) GAP(P-E)

ASSURANCE 04 0.7148 0.4548 0.6452

RELIABILITY 03 0.7390 0.2928 0.6655

EMPATHY 03 0.7084 0.5033 0.4905

RESPONSIVNESS 03 0.8134 0.5252 0.7384

TANGIBLE 03 0.8218 0.4208 0.6872

OVERALL (16 ITEMS) 0.9110 0.7842 0.8701



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TABLE 2

BIBLIOGRAPHY • Ahmad, A., and Sungip, Z., (2008), “An Assessment on Service Quality in Malaysia Insurance Industry”, 13, Communications of the IBIMA, Volume 1, 2008.

• Babakus, E. and Mangold, W.G. (1992), “Adapting the SERVQUAL scale to hospital services: An empirical investigation”, Health Service Research, Vol. 26

No. 6, pp. 767-86.

• Butterworth Heinemann. Bebko CP. (2000) Service intangibility and its impact on consumers’ expectations of service quality. The journal of services

marketing, 14(1):9-26.

• Berry L.L. & Parasuraman A. (1992) Services Marketing starts from within. Marketing management, 1(1):25 (11p).

• Bhaumik, Suman Kumar. (1999) Liberalization of the insurance industry: Some lessons from the US experience. ICRA Bulletin, Money and Finance.

• Bhave, A., (2002), “Customer Satisfaction Measurement”, Quality and productivity Journal: February 2002 Issue, http: //WWW.Symphonytech.com.

• Bloemer, J., Ko de Ruyter, et al (1999), “Linking perceived service quality and service loyalty: a multi-dimensional perspective”, European Journal of

Marketing, 33, 1082.

• Cassel , C ., (2006), “ Measuring customer satisfaction , a methodological guidance”, State-of the Art Project

• Chandra Shil, N., and Rashed Osman, A., (2007), “Quality Function Deployment for Customer Satisfaction in Banking Services”, Daffodil International

University Journal of Business and Economics, 2, 106-118.

• Chong “Joanna” S.K. Lee (2006), “customers’ definition of bank service quality: an exploratory analysis of top-of-definition”, Proceedings of Fordham

University conference of the marketing of financial services, November 3rd

and 4th

, 2006, New York.

• Forell, C., Mithas, S., et al (2005), “Customer satisfaction and stock prices: high returns, low risk”, Journal of Marketing, 70, 3-14.

• Gruca, T., and Rego, L., (2005),” Customer satisfaction, cash flow and shareholder value”, Journal of Marketing, 69, 115-130.

• Gustafsson, A., Johnson, M., et al (2005), “The effects of customer satisfaction, relationships commitment dimensions, and triggers on customers

retention”, Journal of Marketing, 69, 210-218.

• Parasuraman, A., Zeithaml, et al (1988), “Servqual: A multiple –Item scale for measuring consumer perceptions of service quality”, Journal of retailing,

64, 12-40.

WEBSITES

• http://www.investorsguide.com -12-11-2011

• http://www.finance.yahoo.com -12-11-2011

• http://www.fineweb.com- 08-08-2011

• http://www.fisher.osu.edu/fin -07-08-2011.

• http://www.smartmoney.com- 07-08-2011

• http://www.economictimes.com- 02-08-2011

• http://www.financialengines.com -05-08-2011

• http://www.nfsn.com- 05-08-2011

• http://www.financemarkets.co.uk- 05-11-2011

• http://www.scribd.com -05-11-2011

• http://www.indiastat.com

• http://www.iber.com.

• http://www.marketresearch.com

• http://www.financial-shopper-network.com

SR.NO. ITEMS/STATEMENTS GAP SCALE(WAS)

1 Agents and employees who have the proper knowledge and competence to answer customers ‘ specific queries and requests -1.84

2 Agents and employees who instills confidence in customers by proper behavior -1.58

3 Making customers feel safe and secure in their transactions -1.51

4 Appropriate behavior of the concerned staff -1.87

5 Providing promised services as per the set schedule -1.67

6 Providing services right the first time -1.70

7 Showing sincere interest in solving customers problems -1.72

8 Giving caring and individual attention to customers by having customers best interest’s at heart -1.83

9 Agents and employees who understand the specific needs of their customers -1.64

10 Having convenient operating hours and days of the branches for the customers -1.72

11 Apprising the customers of the nature and schedule of services available in the organization -1.66

12 Willingness to help customers and the readiness to respond to customers requests -1.92

13 Providing prompt service to customers -1.62

14 Visually appealing materials and facilities associated with the service -2.02

15 Staff appeared neat and professional -2.15

16 Modern looking updated equipment, fixtures , and facilities -1.97



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INFORMATION ORIENTATION AND ETHICAL PRACTICES IN GOVERNMENT ORGANISATIONS: A CASE OF

HEALTH SECTOR

ANJU THAPA

RESEARCH SCHOLAR

THE BUSINESS SCHOOL

UNIVERSITY OF JAMMU

JAMMU

DR. VERSHA MEHTA

PROFESSOR

THE BUSINESS SCHOOL

UNIVERSITY OF JAMMU

JAMMU

ABSTRACT Information is widely recognized as the most important asset of organization in the current transition of developed countries towards knowledge-based

economies. With the advent of new technologies and innovations, the entire work system in corporate as well as government has become more oriented towards

efficiency, cost-effectiveness and transparency. The present paper is an attempt to study the level of Information Orientation (Information technology practices,

Information management practices and Information behavior and values) among the employees in the health and medical sector organizations. The study also

investigates the impact of Information Orientation on ethical practices in both the select public as well as private sector health organizations. The results revealed

that Information orientation does have a positive impact on enhancing ethical practices in an organization. Also it has been found out that the Information

orientation in public organisation is significantly different than in the private sector organization.

KEYWORDS Ethical practices, Information orientation, Knowledge based economy.

INTRODUCTION nformation is widely recognized as the most important asset of an organization especially as a result of transition of economies to being knowledge-based.

It has been seen, since the last decade, that there has been an increasing interest in managing knowledge in the organizations. This has been due to the

rapid development of information systems and technologies which have enabled organizations to manage their knowledge assets more effectively. With

the advent of new technologies and innovations the entire work system in corporate as well as government organizations has become more efficient, cost-

effective and transparent. The organizations of late, have realized that the intellectual capital and the corporate knowledge is a valuable asset which needs to be

shared as well as managed effectively to improve ethical practices in organization. Besides, it also enables organizations to communicate and share information

instantaneously across the globe. This is in the backdrop of Information he backdrop of Information becoming a critical success factor for gaining competitive

advantage.

Contemporary organizations are becoming knowledge driven and it has become imperative to keep abreast of the latest trends to achieve success of an

organization. It is needless to say that Information and the knowledge is critical not only for competitive existence but also for the sustainability of an

organization. In this context, it is essential that every individual associated with the organization be it management, employer, employee, worker, stakeholder or

a competitor must be Information Oriented and transparent at work. Thus, for the sustainability of an organization, in a highly competitive environment, there

should be a focus on Information i.e. its collection, management and dissemination. Also effective Information use in organizations depends not only on how

people senses, represent, and communicate but also on the attitude of seeking, learning, and sharing of information (Information behavior and values).

Various studies have shown that Information Orientation among the employees increases the level of business performance in one way or another (C.S.Lee ,

I.S.Ko, C.Jung, 2008). Also, it has been found that the Information Orientation significantly reduces information asymmetry. This influence may be mediated by

(i) Information sharing and (ii) Information collection. It is also indicated that the organizations having stronger orientation towards information may have less

information asymmetry problems and thus in turn would be more capable to take appropriate decisions based on information (Hsieh, Lai and Shi, 2006). Also,

one has to be ethical while sharing information in order to be more transparent and efficient at the work place. Ethics is not as simple as deciding what is ‘good’

or ‘bad’ – although that is certainly a part of it. Instead, it is about ‘doing what is right’. The ‘right thing’ is often ‘the fair thing’ i.e. the action that considers

others’ needs. It therefore, concerns the values that shape our behaviour towards fellow employees, customers, suppliers, competitors and all our organization’s

stakeholders (Lagan, 2000). Also, it needs to be found out that whether Information Orientation improves ethical practices of an organisation. Also, what impact

Information technology practices, Information management practices and information behaviour and values have on ethical practices (Donald A. Marchand,

William J. Kettinger, and John D. Rollins, 2001). In addition Information Orientation mediates the link between Information seeking behaviour of employees in

the organizations and their performance. Thus, from the above studies it can be assumed that there exists a relation between level of Information Orientation of

employees in an organisation and their information behaviour and values, the result of which improves the ethical practices which in turn can enhance overall

performance of an organisation. The purpose of this research is to study the relationship between Information Orientation (IO) and Ethical practices (EP), and

also to establish a linkage amongst IT practices, Management practices and Information behaviour and values with the Information Orientation and also with the

Ethical practices. A comparative study has been done comparing public as well as private sector health organizations. Thus, the Information Orientation

improves Ethical practices and Information orientation depends on (i).Information management (IT practices and Management practices) and (ii).Information

behavior and values in an organisation.

SCOPE

The finding of the study shall fill the gap in the existing literature and establish a link between Information orientation and ethical practices in the health and

medical related organizations. The focus of the study is to determine the Information orientation and ethical practices among the employees of government and

private hospitals. The study has been conducted in the select hospitals of Jammu region. The respondents of the research study comprise of the employees in

hospitals associated with Government medical college (GMC), Jammu and Acharya Shri Chander College of Medical Sciences (ASCOMS), Jammu.

OBJECTIVES The objectives of the study are as follows:

1. To study the level of Information Orientation of the select organizations.

I



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2. To study the impact of Information Orientation on ethical practices in the health organizations.

REVIEW OF LITERATURE The current literature demonstrated that Information sensing, collection, organisation, communication and its use with a high information orientation are

critical to the knowledge-based organisations (Marchand et al 2001). A study conducted on the subject of information orientation by Marchand et al (2001)

claimed to be one of the first studies to identify a link between information systems and performance. The study broadens the scope of practices examined and

including elements such as information management practices and organisational culture. Also, it has been seen that information based organizations require

specialists of many kinds to carry out their mission and translate their objectives into specific actions. For this, knowledge workers or managers play an essential

role in managing information and implementing information and communication technology in organisation. (Hargrove, 2001; Kluytmans, 2005; Boonstra, 2005).

In a recent study conducted by Marchand (2010), it has been revealed that the information and information related systems represent a competitive advantage

as it helps in improving the ability of the managers and employees. Thus, technology has penetrated significantly into business processes and directly controls

the key processes and their introduction has resulted in a radical change in the business processes. It is also highlighted that IT alone cannot generate values;

rather it is how IT is used that contributes to organizational performance (Prasad and Heales, 2008). Hence, the success of an organization is based on

Information advantage. The information is dispersed throughout the market in the form of competition and Information gaps are thus closed (Picot, Reichwald,

and Wigand, 2008). Since, the business environment is constantly changing and evolving. Business themselves change over time and as they grow and develop,

the information needs of the business will also change.

The Information Orientation model (Aytes and Beachboard, 2007), pointed that the organisation that demonstrates effective uses of Information (Information

behavior and values IBV), Information management (Information management practices IMP) and management of its information Technology (Information

technology practices ITP) in combination affects organizational performance. It has been seen that if an organisation is “mature” i.e. effective in these three

areas, the organisation will experience superior business performance. Gaither and Frazier (2007), revealed in the study that advances in Information and

communication technology have allowed organizations to manage operations easily and to work on projects which are globally dispersed among the teams. The

wide spread use of e-mail today allows employees to communicate quickly and cheaply with vendors and customers as well as with co-workers. This also results

in faster decision and improved performance at the work place. Also, it has been studied that Information Orientation could significantly reduce information

asymmetry. This influence may be mediated by information sharing and information collection. In, addition to this, IO could significantly influence e-business

adoption also. It is found that the company with stronger IO may have less information asymmetry problems, and thus would be more capable to make

appropriate decisions based on information (Hsieh, Lai and Shi 2006). Information Technology add different and non-existence capabilities to individuals and

groups that may cascade with other impacts. It also shows that IT use will lead to changes in work practices and thereby to organizational transformation (Baxter

and Lyytinen 2005).

In addition to it, the ethical practices allow the organisation to identify the gaps between desired to be good practices and what is happening in reality and in

turn provide with suggested development actions. It also monitors employees understanding and perception about company’s values and culture. Improving

Information management practices is a key focus for many organisations, across both the public as well as private sector. Thus as a result of it, there is an impact

of information on ethical practices (Malhotra, 2005). The results from existing literature show that practices in the organisation do matter. The organisations

having better practices have better out comes. The researchers divide the given organisations into two groups based on particular interests. These are (a)

Leaders and Laggers (b) What sets off leaders from laggers. It has shown that leaders perform well in all of the best practices. Leaders are not merely using best

practices but they also use them effectively. Laggers, on the other hand, don’t have well applied practices and may have problems in performing effectively at

the work place. They need to improve their practices in order to catch up with the leaders (Sanner and Wijkman, 2005). Further, Marchand (2004) differentiate

between low IO organizations from the organizations possessing high IO. People do not know enough about their customers to adequately serve and anticipate

their needs in the former, while Information is easily accessed across organizational boundaries and hierarchies in the later. Efforts to serve customers have

failed due to a lack of information and sharing across channels while managing information. Collecting, organizing and maintaining are viewed as everyone’s

responsibility. Thus, the study confirms previous research findings, related to the “critical role” of information in organizations and specifically small companies.

Information has emerged as a critical supporting theme either explicitly having a clear reference to corporate information competence, or implicitly not

immediately identifiable as corporate information competence (Sen and Taylor, 2007). Also, the results of the study by Guthrie (2001) indicate a positive

association between use of high involvement ethical practices and employee retention which may ultimately result in higher productivity.

Also, it bas been seen that ethical attitudes and ethical behavior in organizations may have substantial ramifications on a firm’s operation. The study investigates

whether or not managers are perceived by employees to exhibit ethical attitudes and ethical behavior and thereby being their role models. Effective strategic

ethical practices can help firms to enhance their performance while competing in turbulent and unpredictable environments. When the activities called for by

these components are completed successfully, the firm’s strategic ethical practices can become a source of competitive advantage. Thus, Ethical practices can be

applied to all business activities, both locally and offshore, and are best achieved through transparent and accountable processes. An ethical practice in an

organization is about going beyond legal considerations, ensuring compliance with not only the letter of the law, but the spirit too. The organisational practices

are also dependent upon the surrounding context and its specific ethical values and principles. Furthermore, it is dependent upon the gap between different

perceptions of ethical values and principles and if the outcome of the corporation's ethical values and principles are proactive or reactive in relation to the

reigning ethical values and principles in the marketplace and society. Finally, it is also dependent upon the potential and eventual consequences of ethical values

and principles (Goran Svensson and Greg Wood, 2007). When the ethical climate is not clear and positive, ethical dilemmas will often result in unethical

behavior. In such instances, an organization's culture also can predispose its members to behave unethically.

Thus, from the existing literature it needs to be found out whether there exists any relation between Information Orientation and ethical practices in the

organizations. The purpose of this research paper is to study the relationship between Information Orientation (IO) and Ethical practice (EP) and to establish a

link among IT practices, Management practices and Information behavior and values on Information Orientation and further in turn its impact on ethical

practices. A comparative study of all these factors can be done in both public as well as private sector health organizations in the Jammu region.

RESEARCH METHODOLOGY The present study has been conducted among the employees of one of the crucial organization related to common mass i.e. Health and Medical Department in

Jammu region of the state Jammu and Kashmir. This sector has been chosen for the study, as it is one of the biggest service organizations which deal with the

serving people. Also, this study will be helpful in evaluating the Orientation of the employees of the select hospitals towards information and establish a link with

ethical practices. For the purpose of the given study primary as well as secondary data has been used. The Secondary data has been collected from various

books, journals, published research papers and websites etc. The primary data has been collected by means of a standard questionnaire (Source: Aytes and

Beachboard. Using the information orientation maturity model to increase the effectiveness of the core MBA IS course; Journal of Information Technology

Education, 2007 and Addy. D. et al.). Copies of the questionnaire were given personally to respondents in the two select hospitals i.e. Government medical

college (GMC), Jammu and Acharya Shri Chander College of Medical Sciences (ASCOMS), Jammu. The questionnaire contained a total of 34 (32+2) items with 5-

point Likert scale ranging from 1-strongly disagreed to 5-strongly agreed. The sample was randomly selected and 70 respondents were personally collected to

give their responses.

DATA ANALYSIS AND INTERPRETATIONS The study deals with the analysis of the level of information orientation among the employees in the health department and makes comparison between public

and private sector hospitals in terms of their ethical practices. The data collected from the respondents has been first subjected to simple percentage method,



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mean score and finally the regression method has been used in order to know the impact of Information orientation on ethical practices in the select health

organizations.

DEMOGRAPHIC PROFILE For studying about the demographic profile of the employees, simple percentage method has been used. The results shows that more than half of the

respondents are females (54.3%) and rest are males (45.7%). In terms of age majority of respondents (88.57%) are below 35 years and having their tenure less

than 2 years (54.3%), 38.6% respondents have their tenure ranging between 2-5 years. About 44.3% employees have income below Rs 15000 and 45.7% have

income ranging Rs. 15,000 to Rs. 30,000. More than half (57.1%) of the employees are graduate, 25.7% are under graduate and 11.4% are post-graduate.

TABLE 1: INFORMATION TECHNOLOGY PRACTICES (ITP)

Information Technology Practices Public Private

1. Sharing knowledge 4.02

4.45

2. Market trends 2.65 3.62

3. Taking risk 3.85

3.25

4. Exploring and sharing new ideas 4.11 4.22

5. New products and services 3.71 4.00

6. Relations with suppliers and customers 3.65

3.74

7. Controlling different operations 4.14

4.20

8. Employees performance 3.74 4.02

9. Efficiency of work 4.20 4.11

Grand Mean Score 3.78 3.95

Table 1 given above depicts the Information technology practices (ITP) in the public as well as private sector hospitals. The table shows the nine statements

whose mean scores are calculated for comparing public and private sector health organizations. As revealed by the table, in case of public-sector hospitals,

efficiency of work has the highest mean score (4.20), followed by controlling different operations (4.14), exploring and sharing new ideas (4.11), sharing

knowledge (4.02), taking risk (3.85), employees performance (3.74), new products and services (3.71), relations with suppliers and customers (3.65), and market

trends (2.65). Similarly, in the case of private sector hospitals, sharing knowledge among employees has the highest mean score (4.45), followed by exploring

and sharing new ideas (4.22), controlling different operations (4.20), efficiency of work (4.11), employees performance (4.02), new products and services(4),

relations with suppliers and customers (3.74), market trends (3.62), and taking risk (3.25). Since, the mean scores of almost all the statements are above 3,

except role of Information technology in knowing market trends (2.65) in case of public sector hospitals. It indicates that the Information technology practice has

positive impact on Information orientation of the employees of the public and private sector health departments. Also, the grand mean scores are calculated

which comes out to be 3.87 and 3.95 of public and private hospitals respectively, which shows at there are high Information technology practices in both the

organizations.

TABLE 2: INFORMATION MANAGEMENT PRACTICES (IMP)

Information Management Practices Public Private

1 Hiring skilled people 3.68

3.97

2 Providing training skills 4.05 4.42

3 Evaluating people 3.74 4.11

4 Rewarding people 3.60 3.60

5 Information overload 3.42 3.80

6 Reuses of information 3.51 3.97

7 Data updating 3.82 4.14

8 Assessing customer demands 3.88 4.22

9 Anticipating problems 3.82 4.28


Table 2 given above depicts the Information Management Practices (IMP) in the public as well as private hospitals of Jammu region. The table shows the mean

scores of the statements and thus, comparison of the public and private sector health organizations can be done. As indicated from the table, in case of public-

sector hospitals, providing training skills has the highest mean score (4.05), followed by assessing customer needs (3.88). It has been seen that data updating and

anticipating problems has equal mean score (3.82), followed by evaluating people (3.74), hiring skilled people(3.68), rewarding people (3.6), reuse of information

(3.51) and information overload (3.42). Similarly, in case of private hospitals, providing training skills also has the highest mean score (4.42), followed by

anticipating problems (4.28), assessing customer demands (4.22), data updating (4.14), evaluating people (4.11). In this case, hiring skilled people and reuse of

information both has equal mean score of 3.97, followed by information overload (3.8) and rewarding people (3.6). Since, the mean scores of all the statements

are above 3, it indicates that the Information technology practices has positive impact on Information orientation of the employees in the health department.

Also, the grand mean score are calculated which comes out to be 3.72 in case of public sector and 4.05 in case of private sector hospitals, which clearly shows

that Information Management Practices (IMP) are high in both sectors but more in case of private sector than public sector health organizations .

TABLE 3: INFORMATION BEHAVIOR AND VALUES (IBV)

Information Behavior and Values Public Private

1. Information exchange 4.05

3.97

2. Keeping information 2.20 2.28

3. Informal sources of information 2.40 2.02

4. Inaccurate Information 3.37 2.30

5. Manipulating information 2.82 2.02

6. Relevant information 4.00 4.11

7. Discloses information to its members 3.54 3.42

8. Evaluating people 3.97 3.74

9. Changes in the government 3.71 4.05


Table 3 given above depicts the Information Behavior and Values (IBV) in both public and private sector health organizations. The table shows the mean scores

of the nine statements which are categorized under Information Behaviour and Values. In the public sector hospitals the information exchange has the highest



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mean score (4.05), followed by relevant information (4), evaluating people (3.97), changes in the government (3.71), discloses information to its members (3.54),

inaccurate information (3.37), manipulating information (2.82) and informal sources of information and keeping information has equal mean score of 2.20. Like

wise the mean scores of the private sector hospitals are calculated. The highest mean score are (4.11) of relevant information, followed by changes in the

government (4.05). The mean scores of information exchange and informal sources of information was equal to 3.97, followed by evaluating people (3.74),

discloses information to its members (3.42), inaccurate information (2.30), keeping information (2.28) and manipulating information (2.02). Also, the grand

mean score are calculated which comes out to be 3.34 and 3.10 respectively of public and private sector hospitals, which shows that Information Behavior and

Values (IBV) are high in both the sectors.

Thus, from the above analysis it has been concluded that all the three variables of Information orientation i.e. Information technology practices (ITP),

Information management practices (IMP) and Information behavior and values (IBV) are high which indicates that the employees of the health sector

organisation are highly oriented towards information.

TABLE 4: ETHICAL PRACTICES (EP)

Ethical Practices Public Private

1. Discussion about errors and mistakes 4.28

4.22

2. Loss of privacy 3.45 3.68

3. Members trust each other 4.12 4.20

4. Transparency 3.87 4.22

5. Sharing of gifts 3.81 4.34


Table 4 given above depicts the ethical practices in the public and private sector health organizations. In case of public sector health organizations, the

discussion about errors and mistakes has the highest mean score which comes out to be 4.28, followed by members trust each other (4.12), transparency (3.87),

sharing of gifts (3.81) and loss of privacy (3.45). Similarly, in case of private sector health organizations, sharing of gifts has the highest mean score (4.34),

followed by discussion about errors and mistakes and transparency (4.22), members trust each other (4.20) and loss of privacy (3.68). Grand mean scores of the

items of ethical practices were also calculated which comes out to be 3.90 and 4.13 in case of public and private sector health organizations respectively. Thus,

from the above table it has been revealed that both public as well as private sector health organizations has high score of ethical practices but private sector has

comparatively more inclination towards ethical practices.

TABLE 5: REGRESSION ANALYSIS

Table 5 given above depicts the overall analysis of the results of the Information Orientation (IO) and Ethical Practices (EP) among the employees of the public

and private sector health organizations. The mean scores of the responses were subjected to the regression method in order to know the impact of Information

Orientation (IO) on Ethical Practices (EP). In case of Public sector health organizations the correlation between Information Orientation and Ethical Practices

comes out to be 0.875, which implies that the correlation between the two variables is positive and high. Also, it has been observed that the value of R square

comes out to be .766 in case of public sector health organizations which indicates that 1% change in the independent variable i.e. Information Orientation (IO)

may lead to cause 76% change in the dependent variable i.e. Ethical Practices (EP). Thus, it can be concluded that Information Orientation (IO) has high impact

on Ethical Practices (EP) in the public sector health organizations. While in case of Private sector health organizations the correlation between Information

Orientation and Ethical Practices comes out to be 0.911, which implies that the correlation between the two variables is positive and very high. Also, it has been

observed that the value of R square in case of private sector health organizations is .911 in case of public sector health organizations which indicates that 1%

change in the independent variable i.e. Information Orientation (IO) may lead to cause 91% change in the dependent variable i.e Ethical Practices (EP). Thus, it

can be concluded that Information Orientation (IO) significantly affects the Ethical Practices (EP) in the private sector health organizations also.

Thus, it can be revealed, that the Information Orientations does have a significant impact on the ethical practices of the employees of both public as well as

private sector health organizations. Also it has been seen that the components of the Information Orientation i.e. Information management practices (IMP),

Information technology practices (ITP) and Information behavior and values (IBV) individually affects the Information orientation of the employees but the

impact of Information management practices and Information technology practices alone cannot lead to the significant results. It is more of Information

behavior and values (IBV) which need to be improved in the organizations in order to enhance the overall Information orientation in the organizations. Thus, the

overall results demonstrated that for improving the Information orientation of the employees of any organization, Information management practices (IMP),

Information technology practices (ITP), along with Information behavior and values (IBV) need to be improved which may enhance the overall ethical practices in

the organizations.

CONCLUSION In summary, it can be concluded that information and information related technology become ever more important organization tools. Its use has become

increasingly important for anticipating and reacting to the changing market conditions in both corporate as well as government sector. The attempt to study the

Information Orientation and ethical practices among the employees of the health department was quite successful. It helped the employees to understand the

relationships among information management practices, Information Technology practices, and the “culture” of information sharing and use i.e. Information

behavior and values in an organization. The findings of the study provided an excellent opportunity for the employees of the health sector organizations to be

more oriented towards information to order to become more efficient, cost-effective and transparent. In addition, it can be concluded that it is more of

Information behavior and values (IBV) which need to be improved in the organizations in order to enhance the overall Information orientation in the

organizations. Thus, the study can be concluded by saying that for improving the Information orientation of the employees of any organization, Information

management practices (IMP), Information technology practices (ITP), along with Information behavior and values (IBV) need to be improved which may enhance

the overall Ethical Practices (EP) in the organizations.

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Model R R Square Adjusted R Square Std. Error of the Estimate

Public .875 .766 .062 .30780

Private .911 .830 .319 .21344



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7. Gabberty, J. W and Vambery, R. G.(2007), “Information And Communications Technology: A Comparative View Of Technological Determinism.” The Journal

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Lausanne, Switzerland.

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23. Prasad, A. and Heales, J. (2008), “Understanding the use of technology in organizations: A structural approach.” Proceedings of Association for Information

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No.3, pp. 281-293.



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DO THE TEENAGERS EVALUATE THE PRODUCT WHILE INFLUENCING THEIR PARENTS TO PURCHASE?

DR. A. S. MOHANRAM

PROFESSOR

DEPARTMENT OF MANAGEMENT STUDIES

ST. JOSEPH’S COLLEGE OF ENGINEERING

CHENNAI

ABSTRACT In general, it is believed that teenagers tended to have more influence in the purchase of products that were less expensive and for their own use. Parents of

adolescents perceived their role similarly. The study reveals hoe teens influence on their parents not only on less expensive products but also consumer durable

products purchased for the family use like walkman. The study also reveals that while purchasing walkman teenagers are influenced by updated information of

the product and hence they go for information search, collect information from different dealers on various aspects like price, technology and so on. Further

teenagers predominantly apply emotional approach and less logical approach to convince their parents to get the product. In respect of product characteristics it

is found that product value is more popular among the teenagers than product image. Teenagers give more importance to product value and apply either

emotional or logical approach to influence their parents. However while evaluating the product it is found that product convenience has more influence on the

purchase decision than perceived value addition. This implies that teenagers are inclined to get the product for the best value for money more than the social

image, perceived prestige etc.

KEYWORDS Emotional approach, Logical approach, Product evaluation, Product value.

INTRODUCTION hough much research has been done into the husband-wife interaction in the purchase-decision process, relatively a few studies only have dealt with the

role of teenagers in the family buying process. Early studies suggested that teenagers did not have much influence in household purchases. But

contemporary research indicates that teenagers constitute a major consumer market, with direct purchasing power on items such as snacks and sweets;

electronic items and indirect purchase influence while shopping for big-ticket items, such as automobiles, vacations, grocery and fast food etc. Teenagers tend to

attribute more influence to parents than the better half. No doubt fathers and mothers clearly dominate the decision process. But teenagers attribute more

influence to father or mother than the better half. (Belch, G, M A Belch, and G Ceresino, 1985). In general, it is believed that adolescents tended to have more

influence in the purchase of products that were less expensive and for their own use. Mothers and adolescents perceived their role similarly, but fathers felt that

the adolescents had less influence than the adolescents thought they had (Beatty, Sharon E, and Salil Talpade, 1994).

Adolescents have greater influence in a concept-oriented environment where they are encouraged to develop their own ideas and express their views more

openly (Foxman, Ellen, Patriya S Tansuhaj and Karin M Ekstrom, 1989b). Adolescent, children are also primed to assume a more active role in purchase

discussions after years of listening to their parents’ description why certain requests can/cannot be honored. Influence attempts by adolescents are likely to be

effective when they match them to their parents' decision-making style (Palan, Kay M, and R E Wilkes, 1997).

Teenagers are exposed to technologies and so they are found to have the greatest relative influence across two areas: suggesting price and learning the best

way to buy. The responses for these are of two measures, which harmonized for parents as well as Teenagers. Sometimes, growing children gathered more

favourable information for favourable product profiles and less information when cost versus benefit of acquiring information is high. (Paxton, Jennifer Gregan,

and Deborah Roedder John, 1995). Not only that younger children use few dimensions to compare and evaluate brands, relying on dominant perceptual

features, rather than functional features, in gathering information and making choices (Capon, N, and D Kuhn, 1980).

Presently, parents are encouraging children to participate in decision-making process. It may be that the age of the parents, fewer children, and working mother

are the situations reporting greater influence.

Teenagers are also effectively fitting into the consumer role owing to time pressures and income effects in dual career families. Moreover, exposure to mass

media and discussions with parents ensure that teenagers are not only aware of the new brands available, but also know how to evaluate them on various

parameters. While younger children clearly affect parental behaviour and purchases, adolescents have full cognitive development and an understanding of the

economic concepts required for processing information and selection (John, D R, 1999). This aspect is developed through family life cycle stages.

OBJECTIVES OF THE STUDY The primary objectives of the study are:

To investigate the strategies adopted by teenagers to influence their parents towards purchase of a Walkman used by teenagers.

The design and nature of the study is focused on the techniques of problem solving as it analyses within the purview of the main objectives. The research

design also provides a scope for drawing logical conclusions. The study relies mainly on the primary data collected through questionnaires supplemented by

personal interview. As such, teenagers’ influences are a bundle of characteristics comprising product attributes; and the influencing strategies.

OPERATIONAL DEFINITION Teenager: A teenager is a person in the age group between 13 and 19 at the School level, or in the first year degree level of Arts, Science and Professional

courses in the colleges in the Metropolitan City of Chennai who possess walkman, two-wheeler and computer. For the purpose of this study, “Teenager” and

“Adolescent” are the terms used interchangeably.

REVIEW OF LITERATURE ROLE OF TEENAGERS

A cursory review of research on family consumption and decision making behaviour would lead one to wonder whether the field should be called spousal

decision making or whether one should continue to use the misleading term “family”. Much of this research had been focused on the husband and the wife, and

the role of teenagers, which had been ignored often (Lackman and Lanasa 1993). Considering the complexity of relative influence between two decision makers,

it was easy to understand why the three-factor interaction (father-mother-teenager interactive influence in decision making) was very challenging.

Ward and Wackman (1972) found that attempts by children at influencing purchase were negatively related to the age of the child; however, the tendency of

mothers to yield to such influence rose with the age of the child but varied across product categories. They also examined children’s purchase influence

attempts and parental yielding in terms of these variables, demographics, parent and child interaction and mother’s mass communication behaviour. The study

was conducted among various age groups. The result showed that child’s purchase influence attempts on the type of product were increasing when mothers

yielded to requests. Mother’s time spent on watching TV was positively related to influence attempts and yielding. The mothers with more positive attitude

towards advertising were more likely than the mothers with negative attitude to yield to influence attempts.

T



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Mehrotra and Torges (1977) suggested that the extent to which mothers yielded to the influence of the teenager also depended on the extent to which mothers

and teenagers were exposed to advertising together.

Atkin (1978) found that while teenagers tended to make forceful demands at the point of purchase, their success depended on whether they "ask" or "tell".

Atkin reported a greater success rate in the case of teenagers who "tell" rather than "ask".

Belch and Ceresino (1985) later studied the diversity in the influence of teenagers. They reported that the extent of such influence varied with product and stage

in the decision making process, thus supporting the assertions of Szybillo and Sosanie (1977). It was found that while the role of the teenage child was most

prominent at the initiation stage, it was limited thereafter.

Michael A. George E Belch and Donald Sciglimpaglia (1979) reported the discrepancy in reports of influence. They detected that while teenagers attributed

greater influence in decision making to them, they consistently attributed more influence to the father than to the mother.

Foxman, et al (1989b) also found that personal resources of the teenager (such as grades in school) and perceived product knowledge determined the extent of

the influence. Supporting Foxman et al.’s (1989a) evidence, Beatty and Talpade (1994) reported similar effects on the usage of the teenagers’ influence. They

supported the findings of Belch et al. 1985) about discrepancy in reports when they found that discrepancy was greater between father and teenager, rather

than between mother and teenager.

Betty, Sharon and Sabit Talpade (1994) found several elements of Foxman, P Tanushaj, and K. Ekstrom (1989a&b) in the study of adolescents influence and a

new scale of perceived relative influence. Further, the study examined the effect of parental employment status on teenager’s influence, as well as gender-

based differences in perceptions. Motivational aspects including product importance and usage provided the strongest and the most consistent explanations of

teenager’s perceived relative influence across stages and purchase situations. In addition, parental employment status positively influenced teenager’s

perceived influence of durable family purchases. Mothers and daughters generally did not differ in their ratings of the daughter’s perceived influence in the

durable purchase decision-making process, while fathers and daughters differed much.

Ahuja and Stinson (1993) examined the role of children in woman-led households and found that the influence of the child varied across several parameters

such as product, the age of the child and the sex-role orientation of the mother. No conclusive patterns could be detected.

The studies of Simpson and Linda Diane (1994) revealed that adolescents generally decided alone in catalogue purchase decisions; however, when influenced,

friends were considered the most influential people in this regard. Adolescents’ parents had more influence on higher risk purchases, such as coats, than on

lower risk purchases, such as socks. The adolescents’ parents generally paid for the purchaser. Information generally sought by adolescents is on size and price;

brand and product specific attributes most often considered were style, colour and fit. Adolescents tended to compare shops by looking at each page of the

catalog used before purchase.

Palan Kay Marie (1995) studied family decision making and parent adolescent interactions in the main process of purchase decision. The study examined the

effect of family communications, consumer socialization, and gender role identification and power resources on adolescents’ decision. Here the two types of

purchase decisions were used, namely, adolescent clothing decision and family restaurant decision. Simultaneous measurement of each family member’s

relative influence was made using a constant sum scale. The second process examined parent-adolescent interactions and influences through content analysis of

personal interviews conducted with the mother, the father, and the adolescent from each family.

Several factors were found to influence perception of adolescent significantly. However, the impact varied with respondents and purchase decisions. The types

of influence strategies, which were used, by adolescents and parents in purchase decisions identified the usage of patterns and strategy that were developed. In

addition, linking strategy used for other study variables developed typologies of adolescent and parent strategy groups. The study revealed that adolescents and

parents were engaged in much specified patterns of interaction in family decision process. Adolescent’s choice of strategy and pattern interaction were

dependent on purchase type. Adolescents used more influence strategies for purchases they were personally involved Parents responded to adolescent

influence attempts with one of the two patterns: (1) Engaging in strategies that allowed interaction with adolescents and (2) usually controlling strategies

intended to preempt the use of adolescent influence strategies.

Palan and Wilkes (1997) presented a classification of influence strategies and reported that adolescents were most successful in their influence attempts when

they mirrored their parents' strategies.

INFLUENCE STRATEGIES

Woodside and Moles (1979) identified three unique dimensions in the marital decision making roles for 6 products studied. They were problem recognition,

product related and shopping related problems. These dimensions were generalized to some extent across products. Higher level of internal family role

agreement was evident with a majority of couples assured agreeing on the spouse’s role of the decision making in the aggregate as well as in disaggregate

analysis.

Park (1982) examined more closely the actual process of family decision making. The decision heuristics developed through methodology for examining such

decision making, particularly, with respect to similarities and dissimilarities of strategies. He conceptualized a joint decision as characters by a muddling through

process rather than by a systematic strategy with limited knowledge and awareness of each spouse’s decision strategies.

Spiro (1983) examined the influence strategies used by husband and wife in resolving disagreements concerning purchase decision. The study also identified

those characteristics of the individual and situation, which affected the spouse’s use of influence. Six different influence strategies were considered such as

expert influence, legitimate influence, bargaining, reward influence, emotional influence and impression management. Individuals were grouped first on the

basis of combination of influence strategies that they used most often. Six groups were formed in this manner and were labeled non-influencers, light-

influencers, subtle influencers, emotional influencers, combination influencers and heavy influencers. These groups were then examined in terms of several

socio economic and life- cycle variables that significantly discriminated them. The result also indicated that most partners’ perceptions of each others’

influencers were not agreeable.

Palan and Wilkes (1997) also found that parents used five different influence strategies like Bargaining, Persuasion, Emotional, Request, Legitimate and Directive

based on their different roles as authorities, and that teenagers generally accepted and respected this authority. Further, the study dealt with various

characteristics, affecting teenagers’ influence, which were classified as teenager, parental or household decisions.

Beatty, Sharon and Salil Talpade (1994) found a clear connection between product importance and adolescent influence in family decision making. The

researchers found that teenagers’ knowledge did affect their perceived influence for the search and deciding process for a family Stereo, which suggested that

for some products expertise mattered. Teenagers’ financial clout seemed to allow them greater say in initiating self-purchases, but not in the decision making

for a family purchase except for stereo. The study also dealt with parents’ dual income status, which allowed teens greater influence for some durable family

purchase but not for self-purchases where the influence was already substantial.

SAMPLING PROCEDURE

According to the Government of India census 2001 Chennai had a population of 6.4 million, in which teenagers’ population was 5,92,784. Since the population

size is very large, it is decided to use non-probability quota sampling technique with a sample size of 600. This figure was arrived at as follows. During the

consumer satisfaction survey done by Business World in the middle of June 2003, published on the 25th October 2003, it was found that 80,653 walkman

computers were sold in Chennai. An average of 63,864 individuals possessed the products. Hence, it was decided to take a convenient quota sampling of 600.

Area blocks were used for the selection of sample and it was decided to target the teenagers studying in schools and colleges. The reason for conducting the

study at Chennai is that Chennai is one of the four largest cities in India. It is a city of contrast and diversities, a melodious blending of old and new, traditional

and modern outlook where opposite poles meet, agile and maintain a balance of acrobatic agility in a unique ambience. To conduct the study the whole Chennai

was divided into four areas as North, East, South and West Chennai. Teenagers who were at different educational stages, viz., school, polytechnic, arts and

science colleges and engineering colleges were identified. Further, under quota sampling method two higher secondary schools, two polytechnics, two Arts and

Science colleges and two professional colleges in each area were identified and data was collected accordingly. Hence, the survey covered, teenagers in the age



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67

group of 13-19, studying in school, first year students of arts and science colleges and professional colleges in Chennai, Metropolitan city students are

volunteered to participate in this exercise were chosen for the study.

After explaining purpose and content of the tool 150 questionnaire was distributed in each area. But, the completed response distribution was as below.

AREA BLOCK NUMBER OF TEENAGERS RESPONDED

North 147

East 86

South 101

West 133

Total 477

Out of 600 copies Questionnaires distributed, only 569 were returned. Out of 569 received responses only 477 were found fit for the purpose of this study.

ANALYSIS OF THE DATA PRODUCT EVALUATION- WALKMAN

The Varimax factor analysis was carried out over nine statements of product evaluation process aimed at the reduction of the variables into profound

explanatory factors. In this factor analysis, two factors are identified. They are product convenience and value addition.

FACTOR 1: PRODUCT CONVENIENCE

The related statements are:

• Convenience of the product

• Dealers’ display

• Discount offered by the dealer

• Financial options available with the dealer

• Easy and free availability of the product

• Maintenance cost of the product

FACTOR 2: VALUE ADDITION

The related statements are:

• Perceived prestige in possessing them

• Social Image for the product

• Resale value of the product

TABLE 1: PERCENTAGE OF VARIANCE PRODUCT EVALUATION

Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings

Eigen value % of Variance Cumulative % Eigen value % of Variance Cumulative %

3.106 34.514 34.514 2.503 27.810 27.810

1.430 15.892 50.406 2.034 22.596 50.406

Source: Primary data

TABLE 2: FACTOR LOADING OF PRODUCT EVALUATION

Product evaluation process statements

Factors

Product Convenience Value Addition

Discount offered by the dealer 0.788

Financial options available with a dealer 0.743

Easy and free availability of product 0.595

Maintenance cost of the product 0.582

Approach by the dealer for purchasers convenience 0.564

Dealer display 0.535 .

Perceived prestige in possessing the product 0.845

Social Image of the product . 0.854

Resale value of the product 0.456


The total variation explained by the two factors of the product evaluation process is 50.406 percent (Table 2).

The first factor is named as “Product convenience” which is supported by discount offer has the highest factor loading of 0.788, followed by financial options

available with the dealers with a factor loading of 0.743. Then easy and free availability of product has a factor loading of 0.595, maintenance cost of the product

with 0.582, convenience of the product 0.564 and finally dealer display with a factor loading 0.535 also supported the factor.

The second factor “Value Addition” is contributed by perceived prestige in possessing the product with a high factor loading of 0.845, followed by social Image

for the product with a factor loading of 0.854 and resale value of the product with a factor loading of 0.456 (Table 1)

From the above analysis, it is inferred that product convenience has more influence on the purchase decision than value addition. This implies that teenagers are

inclined to get the product for the best value for money more than the social image perceived prestige. This behaviour of the teenagers is manifested in their

responsibility and realization, the glue that binds Indian teenagers to their parents.

PRODUCT EVALUATION AND INFLUENCING STRATEGY

Product evaluation consists of two factors, namely, ‘Product convenience’ and ‘Value addition’. Teenagers influencing strategy is divided into two factors,

namely, emotional approach and logical approach.

In order to find out the relationship between the influencing strategy and the two factors, namely, Convenience and Value addition, Karl Pearson’s co-efficient of

correlation is applied and the details are given in the table 3



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TABLE 3: RELATIONSHIP BETWEEN PRODUCTS EVALUATION AND INFLUENCING STRATEGY

Influencing strategy Tools used Product Convenience Value Addition

Emotional

Approach

Pearson Correlation 0.039 0.168(**)

Sig. (2-tailed) 0.395 0.000

N 477 477

Logical

Approach

Pearson Correlation 0.097(*) 0.093(*)

Sig. (2-tailed) 0.034 0.043

N 477 477

Sig. (2-tailed) 0.000 0.000

N 477 477


** Correlation is significant at the 0.01 level (2-tailed).

* Correlation is significant at the 0.05 level (2-tailed).

From the above table, it is found that emotional approach has a significant positive correlation with value addition (r = 0.168) at 1% level. Similarly, in respect of

logical approach, it has a significant positive correlation with both convenience and value addition factors r = 0.097 and r = 0.093 at 5% level.

It could be inferred that the emotionally approaching teenagers try to put forth their points emotionally, in respect of various value addition factors like social

image, perceived prestige in possessing the product, resale value of the product and try to influence their parents to get the product.

Similarly, logical teenagers try to interact and convince their parents with both conveniences of the product and value addition factors. Convenience cues like

convenience of the product, dealer’s display, discount offered by the dealer, easy and free availability of the product and maintenance cost of the product are

given more priority.

CONCLUSION Teenagers are inclined to get the product for the best value for money more than the social image perceived prestige. This behavior of the teenagers is

manifested in their responsibility and realization, the glue that binds Indian teenagers to their parents. Emotionally approaching teenagers try to put forth their

points emotionally, in respect of various value addition factors like social image, perceived prestige in possessing the product, resale value of the product and try

to influence their parents to get the product.

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21 (September), 332-341.



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RIGHT TO EDUCATION: EFFECTIVE USE OF ICT FOR REACHING OUT TO SOCIALLY AND ECONOMICALLY

WEAKER SECTIONS IN INDIA

PRABIR PANDA

RESEARCH SCHOLAR

MN NATIONAL INSTITUTE OF TECHNOLOGY

ALLAHABAD

DR. G P SAHU

ASSOCIATE PROFESSOR

MN NATIONAL INSTITUTE OF TECHNOLOGY

ALLAHABAD

THAHIYA AFZAL

ASST. PROFESSOR

VIT UNIVERSITY

VELLORE

ABSTRACT Most of the enrolment growth in the coming several decades will be in developing countries and India will contribute a significant proportion of that expansion.

India by enacting “Right to Education Act, 2009” has set out on an ambitious path to provide free and compulsory education to all children in the 6 to 14 age

group. As a result the number of students enrolled in elementary schools in far flung villages would definitely see a quantum jump. Challenges of funding,

availability of qualified teachers, and building a sustainable academic culture and school infrastructure are significant and real. Providing access to the free

education for the children of downtrodden peoples like tribals, lower castes, and dalits is a complex issue in India wherein the fragmentation in the society along

religious, ethnic and linguistic lines is deep rooted. In addition, rampant poverty which is the root cause of child labour leaves no time for the affected children to

undertake formal schooling. In this paper we review various facets of and challenges in providing access to universal elementary education for the children from

socially weaker sections in India. The paper delves into various aspects of this ambitious aim and suggest measures for mitigating the risks and pitfall in India’s

march towards achievement of 100% literacy of over 1 billion people. We also explore the ways in which the strengths of ICT can be leveraged in achievement of

the goal.

KEYWORDS Right to Education, Use of ICT in Education, Compulsory Education, State Policy.

INTRODUCTION . Khan (2001) reported that learning plays central role in sustainable development and it contributes immensely to poverty reduction and income

generation, empowerment and consolidation of democracy, disease prevention and sustainable health and to the protection of the environment is by now

well known. The close relationship of education, social status and choice of occupation has been underlined by Balasubramanyam & Balasubramanyam

(2010). The critical link of education to poverty reduction and human development is depicted in the following figure:

FIG 1: PATHWAYS OF EDUCATION TO POVERTY REDUCTION AND HUMAN DEVELOPMENT

Source: Khan, 2001

2. The importance of education on affirmative action and upliftment of masses is not lost on Indian policy makers. In fact Altbach (2009) reported that

China and India, which together make up one-third of the world’s population and are two of the most rapidly growing economies, are awakening to the

significance of education for technological development and for the global knowledge economy. The economic realities of China and India’s rapid growth are

affecting the world, from increased demand for natural resources to their roles as exporters of products of all kinds, a pattern that will continue regardless of the

current economic slowdown. A growing impact of these countries is in higher education; their higher education systems are already among the world’s largest,

and they are major exporters of students to other countries.

CHALLENGES FOR UNIVERSAL ELEMENTARY EDUCATION IN INDIA 3. The challenges for India in educating its large population have been reported by Datta & Mitra (2010) in their study. They report that about 35% of

world's illiterate population is Indian. Despite seemingly optimistic Gross Enrollment Ratios (GER) being recorded and proactive literacy schemes (Sarva Shiksha

Abhyan, National Literacy Mission and Mid-day Meal Scheme) being introduced, there is a disparity between these positive indicators and actuality. A high

dropout rate of 41.2% is seen at the elementary level. The national literacy rate of girls over seven years is 54% against 75% for boys. In the Northern Hindi-

1



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speaking states of India, girls’ literacy rates are particularly low, ranging between 33 – 50%. Quality of instruction and learning is poor. Students’ understanding

and application of written and verbal expression, logic and reasoning, numeric and quantitative knowledge is inadequate. Geographical remoteness and access

challenges, regional/ gender/ socio-economic inequity, poor infrastructure, amenities and non-conducive learning environments, academically inclined (often in

contrast to practical applicability), corporal punishment, apathetic and untrained teachers and theoretical pedagogy, are key causative factors for poor

accomplishments in the education sector.

4. The Sarva Shiksha Abhiyan was launched in 2001 -02 to attain universal elementary education in India for children in the age group of 6 to 14 years.

To ensure that all children attend school, several measures were taken under Sarva Shiksha Abhiyan such as mobilization of the community, providing schools

within easy reach, and organizing bridge courses for out-of-school children. In order to assess how far these measures have succeeded, a nation-wide

independent sample survey of households was conducted in all the States and Union Territories of India in 2009 to provide estimates of the number and

percentage of out-of-school children in the age group 6-13 years (http://ssa.nic.in/).

5. The survey was conducted by Social & Rural Research Institute -IMRB International (SRI-IMRB). The findings of the survey indicated that the country

had about 19.1 crores children in the age group 6-13 (i.e. below 14 years), of whom 4.3% children were out of school, in 2005 this figure was 6.9% . Amongst the

out of school children, 3.2% children had never attended school and 1.1% were dropouts. Among boys 3.9% children were out of school and among girls 4.6 %

children were out of school. The key statistics for the out of school children (as reported by the study) are appended in Table 1:

TABLE 1: COMPARISON OF OUT OF SCHOOL CHILDREN 2005 VS 2009

Source: http://ssa.nic.in/

DIAGRAM 1: PERCENTAGE OF OUT OF SCHOOL CHILDREN IN DIFFERENT SOCIAL GROUPS BY LOCATION

Source: http://ssa.nic.in/

6. The survey brought out that the children belonging to underprivileged and socially backward groups are more likely to drop out of elementary

schooling due to one or more of the following reasons acting as a trigger:

(a) Poverty / Economic reasons.

(b) Child too young to attend school.

(c) Child suffers from some disability or poor health.

(d) Child is not interested in studies.

(e) Child to supplement household income.

(f) Needed to help in domestic work.

(g) Education not considered necessary by parents or head of the household.

(h) School location not suitable.

(j) Needed to take care of siblings.

7. The analysis of the results of the study brought out that flagship educational programmes launched by Govt of India have not been able to make

significant inroads in the underprivileged sections of the society. These programmes have not achieved the desired results for the children from weaker sections

of the society and children living in remote areas. Under the circumstances it would not be out of place to have a look at the efficacy of affirmative action in

India.

EFFICACY OF AFFIRMATIVE ACTIONS IN INDIA 8. While positive discrimination has been a policy of the Indian government for decades, a considerable debate is still under way about both the

justification for and the effectiveness of the policy. Positive discrimination has been claimed as largely ineffective in raising the status of the downtrodden

groups it is intended to help and a mistaken social policy in a meritocratic society (Mahajan, 2007). The studies on affirmative action in India primarily focus on

the reservation policy for the scheduled castes/scheduled tribes (SCs/STs), mandated by the Constitution from its inception. Since OBC reservation is



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comparatively a new issue, few studies have concentrated solely on OBCs. Partly because reservation policy had primarily focused on SC/ST candidates till 1990,

separate estimates for these categories were available from government sources. All other castes were put in the “others” category. But inclusion of OBCs for

affirmative action since 1999 has resulted in the availability of some data separately for this category as well. Hence, the category of others now includes all

upper castes as well as some lower castes close to SCs, and also other lower castes which are not recognised as SCs, STs or OBCs. Gill (2006) reported that the

same situation prevails in respect of tribals in India and their relative situation (viz-a-viz general population) has not changed much over the years. Sujatha

(1999) in her study brought out that the level of educational development among tribes differs vastly across the provinces. The national average literacy rate

among them is 29 per cent. Among the eight provinces, the highest literacy rate among the tribes is 36 per cent, in Gujarat, against 17 per cent in Andhra

Pradesh, which is the lowest in the country. Compared to all the provinces, the tribals in Andhra Pradesh stand at the lowest level.

9. Basant & Sen (2010) reported the educational achievements of upper caste Hindus and other upper castes with that of dalits, adivasis and Muslims

during 1983 and 2000. Although the primary school enrolment at all income levels are higher for Hindus and other upper castes over this period, the study

shows that there is a narrowing trend in the gap between Hindus and other marginalised groups at the higher income levels. It implies that affirmative action in

employment may have contributed to higher primary school enrolment over the years (i.e., more people participating in school education in anticipation of

getting jobs through reservation). At the same time, improvement in economic condition has increased the effectiveness of the programme. Households with

better economic conditions benefited more from the job reservation as it resulted in higher school enrolment.

RIGHT TO EDUCATION AND ACT THEREOF 10. In order to achieve universalisation of education in India, the parliament passed Constitution (Eighty-sixth Amendment) Act 2002 to incorporate right

to education as fundamental rights affecting Article 21A, 45 and 51A of the constitution. Further, the Right of Children to Free and Compulsory Education Act

(RTE), 2009 (35 of 2009) received the assent of the President on the 26 August 2009 and was published in the Gazette of India Extraordinary No. 39 on 27 August

2009. On 16 February 2010, Central Government in exercise of the powers conferred by section 1(3) of the Act, stipulated 01 April 2010 as the date on which the

provisions of the said Act shall come into force (Gazette notification S.O. 428(E)). In addition, Central Govt in exercise of the powers conferred by section 38 of

the Act, notified Right of Children to Free and Compulsory Education Rules 2010 (vide G.S.R. 301(E) dated 08 April 2010).

11. The salient provisions of the Act and the rules made there under are (http://education.nic.in/):

(a) The Act makes it mandatory for every child between the ages of 6-14 to be provided free education by the State. This means that such child does not

have to pay a single penny as regards books, uniforms etc.

(b) Any time of the academic year, a child can go to a school and demand that this right be respected.

(c) Section 12(1)(c) of the Act provides that private education institutions and specified category schools shall admit (starting 2011) at least 25% of the

strength of class I, children belonging to weaker section and children belonging to disadvantaged group from the neighbourhood and provide them free and

compulsory education till completion of elementary education.

(d) Strict criteria for the qualification of teachers. There is a requirement of a teacher student ratio of 1:30 at each of these schools that ought to be met

within a given time frame.

(e) The schools need to have certain minimum facilities like adequate teachers, playground and infrastructure. The government will evolve specific

mechanisms to help marginalised schools comply with the provisions of the Act.

(f) There is a new concept of ‘neighbourhood schools’ that has been devised. This is similar to the model in the United States. This would imply that the

state government and local authorities will establish primary schools within walking distance of one km of the neighbourhood. In case of children for Class VI to

VIII, the school should be within a walking distance of three km of the neighbourhood.

(g) Unaided and private schools shall ensure that children from weaker sections and disadvantaged groups shall not be segregated from the other

children in the classrooms nor shall their classes be held at places and timings different from the classes held for the other children. Right of Children to Free

and Compulsory Education Rules, 2010

12. The important government orders / gazette notifications with regards to implementation of the Act / Rules are appended in Table 2 below:

TABLE 2: IMPORTANT GOVT ORDERS PERTAINING TO RTE ACT

Notification/G.O. No. Details

(a) S.O. 749(E) dated

31 Mar 2010

National Council of Educational Research and Training (NCERT) was authorised to lay down the curriculum & evaluation,

procedure for elementary education and to develop a framework of national curriculum under clause (a) of sub-section (6) of

Section 7 of the Act

(b) S.O. 750(E) dated

31 Mar 2010

National Council for Teacher Education (NCTE) was authorized to lay down the minimum qualifications for a person to be

eligible for appointment as a teacher.

(c) F.No.1-13/2009-EE-4

dated 31 May 2010

National Curriculum Framework 2005 was notified to be the framework for education under the Act till such time as the

Central Government decides to develop a new framework.

(d) F.No.1-4/2010 -EE4

dated 22 Jun 2010

In consideration of the representations received from State Governments (regarding inability to complete recruitment process

to achieve Pupil Teacher Ratio (PTR) specified in the Schedule to the Act), the following directions were issued:-

(i) Rationalise the deployment of existing teachers to address the problems of urban-rural and other spatial imbalances In

teacher placements; and

(ii) Initiate the process of recruitment of new teachers to fill vacant posts" as per the PTR stipulated in the Schedule.

(e) S.O 1631(E)

dated 08 July 2010

National Advisory Council was constituted (with HRD Minister as chairperson, five Ex-officio Members and nine nominated

members) to advice the Central Government on implementation of the provisions of the RTE Act in an effective manner.

(f) F.No.61-03/20/2010/

NCTE (N&S)

dated 23 Aug 2010

NCTE (in pursuance of gazette notification No. S.O. 750 (E) dated 31 Mar 2010) laid down the minimum qualifications for a

person to be eligible for appointment as a teacher in class I to VIII in a school referred to Section 2(n) of the RTE Act.

(g) F.No.1-15/2010-EE-4

dated 23 Nov 2010

Schools were directed to follow a system of random selection out of the applications received from children belonging to

disadvantaged groups and weaker sections for filling the pre-determined number of seats in that class, which should be not less

than 25% of the strength of the class.

For admission to the remaining 75% of the seats, the schools were directed to formulate a policy under which admissions are to

take place. This policy should include criteria for categorization of applicants in terms of the objectives of the school on a

rational, reasonable and just basis. Profiling of students, testing and interviews for any child/parent falling within or outside the

categories was prohibited. Selection would be on a random basis.

(h) F.No.1-1S/2010-EE-4

dated 23 Nov 2010

Directions were issued to state governments for ensuring that the rights of Minority Institutions, guaranteed under Articles 29

and 30 of the Constitution, are protected while implementing the provisions of the RTE Act.

(j) No.76-4/2010/NCTE/

Acad

dated 11 Feb 2011

Guidelines for conducting Teacher Eligibility Test (TET) under RTE Act 2009 notified.

(k) S.O. 623(E)

dated 23 Mar 2011

Relaxation was granted to the State of Orissa in respect-of the minimum teacher qualification norms notified by the National

Council for Teacher Education (NCTE) for a period of one year.



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PROBLEMS AREAS OF RTE ACT 13. Jha and Parvati (2010) in their study reported following problem areas concerning the Right to Education Act:

(a) Though the act expresses interest in taking necessary steps in providing free pre-school education for children above three years of age, leaving out

this critical segment of the child population from the definition is worrisome. Not only does the act fail to cover all children, it does not provide definite timelines

for many provisions.

(b) The Act fails to tackle the problem of quality of teachers and infrastructure required for undertaking the task involved.

(c) Quality monitoring is attainable only in a culture of accountability. The act does not effectively address issues with regard to quality and disciplinary

proceedings against the erring schools. In addition, the unaided schools have been left out of the purview of accountability with regard to the provisions

contained in Section 21.1 of the act.

(d) There is no clarity on who will take lead in financing the Act. Ideally, the central government ought to should do this due to poor fiscal situation in

most states. Acknowledging this reality, the Act notes that the states may seek a predetermined percentage of expenditure as grants-in-aid from the central

government, based on the recommendations of the finance commission on assessment of additional resource requirements for any state.

USE OF ICT IN EDUCATION 14. Cecchini & Scott (2003) underline that the use of ICT applications can enhance poor people’s opportunities by improving their access to markets,

health, and education. Furthermore, ICT can empower the poor by expanding the use of government services, and reduce risks by widening access to

microfinance. Realizing the poverty-reducing potential of ICT is not guaranteed. It requires attentive public policy formulation and careful project design.

Insufficient information and communication infrastructure, high access costs, and illiteracy have bestowed the benefits of ICT on the better off, urban segments

of the population to the detriment of the poor and rural areas.

15. The specific impact of technology on learning has been reported by Sharples, Taylor & Vavoula (2005) in their study. They brought out that learning

is mediated by knowledge and technology as instruments for productive enquiry, in a mutually supportive and dynamically changing relationship. The mediation

can be analysed from a technological perspective of human-computer interaction, physical context and digital communication, and from a human perspective of

social conventions, community, conversation and division of labour. These two perspectives interact to promote a co-evolution of learning and technology. It

describes a cybernetic process of learning through continual exploration of the world and negotiation of meaning, mediated by technology. This can be seen as a

challenge to formal schooling, to the autonomy of the classroom and to the curriculum as the means to impart the knowledge and skills needed for adulthood.

But it can also be an opportunity to bridge the gulf between formal and experiential learning, opening new possibilities for personal fulfillment and lifelong

learning.

16. The effectiveness of ICT for reaching out to rural masses and delivery of relevant content including education has been recognized by India long back.

In fact, India was amongst the first few countries to explore the use of Satcom for carrying education and development- oriented information and services to the

rural masses. The applications started with satellite TV broadcasting to schools and rural communities in the mid-seventies. Under the Edusat utilization

programme two types of satellite-based VSAT networks i.e., interactive networks consisting of Satellite Interactive Terminals (SITs) and receive-only networks

using Receive-Only-Terminals – are being set up in various states across the country for promoting universal education. Generally, interactive networks are set

up for imparting teacher’s training and curriculum-based teaching to students of the arts and science colleges, polytechnics, and management and professional

institutes. Similarly, the receive-only networks are being used for imparting curriculum-based education to primary and secondary schools students. To provide

these space-based services directly to the rural areas, ISRO has initiated a programme to set up Village Resource Centres (VRCs) in association with NGOs and

trusts and state and central agencies concerned. VRCs are envisaged as single window delivery mechanism for a variety of space based products and services,

such as tele-education; telemedicine; information on natural resources for planning and development at local level; interactive advisories on agriculture,

fisheries, land and water resources management, livestock management, etc.; interactive vocational training towards alternative livelihood; e-governance;

weather information, etc. VRCs also address a variety of social aspects locally, and can act as help lines (Bhaskaranarayana, Bhatia, Bandyopadhyay & Jain,

2007).

17. In addition, the Common Services Centers (CSC) is a strategic cornerstone of the National e-Governance Plan (NeGP), as part of its commitment in the

National Common Minimum Programme to introduce e-governance on a massive scale. The CSCs would provide high quality and cost-effective video, voice and

data content and services, in the areas of e-governance, education, health, telemedicine, entertainment as well as other private services. A highlight of the CSCs

is that it will offer web-enabled e-governance services in rural areas, including application forms, certificates, and utility payments such as electricity, telephone

and water bills. The Scheme creates a conducive environment for the private sector and NGOs to play an active role in implementation of the CSC Scheme,

thereby becoming a partner of the government in the development of rural India. The PPP model of the CSC scheme envisages a 3-tier structure consisting of the

CSC operator (called Village Level Entrepreneur or VLE) the Service Centre Agency (SCA), that will be responsible for a division of 500-1000 CSCs and a State

Designated Agency (SDA) identified by the State Government responsible for managing the implementation over the entire State. The CSC Scheme has been

approved by Government in September 2006 with an outlay of Rs. 5742 Crores over a period of 4 years. It is expected that 100% CSCs would be rolled by March

2011 (http://mit.gov.in/). Though there have been delays in rolling out of CSC in some states.

18. The formal inclusion of ICT in education commenced in centrally sponsored Scheme “Information and Communication Technology in School” which

was launched in December 2004. The Scheme was meant to be a major catalyst to bridge the digital divide amongst students of various socio economic and

other geographical barriers. The financial assistance (under the scheme), is given to States and other institutions on the basis of the approvals accorded by

Project Monitoring and Evaluation Group (PM&EG) headed by Secretary of the Department of School Education and Literacy. The broad objectives of the

scheme are (http://www.indg.in/):

(a) To ensure the availability of quality content on-line and through access devices.

(b) Enrichment of existing curriculum and pedagogy by employing ICT tools for teaching and learning.

(c) To enable students to acquire skills needed for the Digital world for higher studies and gainful employment.

(d) To provide an effective learning environment for children with special needs through ICT tools.

(e) Promote critical thinking and analytical skills by developing self-learning. This shall transform the classroom environment from teacher-centric to

student-centric learning.

(f) To promote the use of ICT tools in distance education including the employment of audio-visual medium and satellite-based devices.

19. Datta & Mitra (2010) studied the utilization of technology in education. They reported that national education, especially at the primary and

secondary levels, has also failed to adapt the benefits of diverse technologies that are available today for the cause of education.

DISCUSSION AND FINDINGS 20. Analysis of sources of secondary data from OECD, World Bank, UN and various government portals underline following facts (with a bearing on use of

ICT in successful implementation of RTE):

(a) The government of India charges Access Deficit charge from the various telecom operators to ensure roll out of telecom services in rural and remote

areas which are not profitable. This provides funding for the state owned telecom companies to provide services in rural areas which otherwise is financially not

viable.

(b) The call charges (both local and STD) are one of the lowest in the world which makes mobile calls affordable for the rural populace.

(c) The telecommunication sector in India has been witnessing highest growth rates in the world and the trend continues (refer diagram 2 below). The

growth in the subscriber base is being caused particularly by the unprecedented growth in mobile telephony. The penetration of mobile phones has been aided



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by the sharp decline in the cost of mobile instrument with many handset available in the market with longer battery life costing below Rs.1000/-. In fact many

mobile handsets have facility for solar charging which augers well for remote areas where electricity supply is erratic.

DIAGRAM 2: GROWTH OF SUBSCRIBER BASE (IN MILLION) FROM 2000 TO 2010

Source: Annual Report 09-10, TRAI

(d) The Government of India has launched many toll free numbers for providing on demand information to the masses through help centres.

(e) The National e-Government Plan encompasses installation of Citizen Service Centres connecting government to the citizens spread across the length

and breadth of the country.

(f) The literacy rate has been increasing over a period of time with corresponding reduction in the poverty levels. The year on year comparison of

literacy rates since independence is depicted in Diagram 3 below:

DIAGRAM 3: COMPARISON OF LITERACY RATES IN INDIA SINCE INDEPENDENCE

Source: http://www.censusindia.gov.in/

(g) For a country to achieve rapid socioeconomic advancement, a 20 to 25 percent participation rate of the relevant age group in higher education is a

prerequisite. Therefore, India must expand its system of higher education further so as to accommodate at least 20 percent of eligible 18- to 24-year-olds.

Future policies must capitalize on the ODL system and develop a network of open universities. The ODL system should account for at least 50 percent of total

enrollment in higher education and provide a good quality education (Chauhan, 2008).

21. However, a lot remains to be accomplished in order to achieve the mission of 100% literacy envisaged under RTE Act. We need to increase enrollment

of children in the schools, motivate them to complete the schooling, creating an enabling environment for the children from the socially / economically weaker

sections to study and at the same time contribute in securing bread and butter for their home. We need to implement a system whereby education is available

on demand and at the convenience of the leaner and not as per the fixed timings o the schooling. This scheme of “education on demand” and “learn while you

earn” would enable these children to reap in the benefit accruable through RTE Act and the ICT. Towards this, we could take cue from the bi-modal transmission

framework proposed by Basu & Modak (2010). Diagram 4 depicts their conceptual framework to establish a communication channel between the remote rural

areas with inadequate education and health care facility and an expert advisory group consisting of a panel of teachers and doctors respectively, interlinked by a

group of operators in order to provide service to rural unprivileged through the servers located in the headquarter. The new mobile technology establishes a

new-fangled mobile connectivity layer that allows transportation of all relevant data and information from the service information layer represented by the

instructors or group of experts towards the application layer as rural remote schools and health care centers. The communication device being mobile phones,

successful information exchange demands a mobile based information processing system as an Education Information System (EIS) and a Healthcare Information

System (HIS) to deliver and receive relevant information back and forth.

DIAGRAM 4: BI-MODAL TRANSMISSION MODEL

Source: Basu & Modak, 2010



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RECOMMENDATIONS 22. In the backdrop of the discussions in preceding paragraphs, we recommend the following measures for ensuring achievement of universal elementary

education by effective use of ICT:

(a) Integration of “formal education” and “education on demand”. The importance Open and Distance Learning environments for developing countries

have been underlined by Dele & Osiki (2008) in their study. We need to integrate the formal and informal education systems so that a student can switch

between them seamlessly at any time, if necessitated due to his/her social/economic compulsions. For this both the systems would need to share the EIS which

would also be economically prudent. The bi-modal transmission model may be used for the purpose (refer Para 21 above). The teachers appointed under the

RTE Act could form the pool of resources at remote locations for providing education on demand using ICT tools. The framework suggested by Venkatagiri

(2007) for self-paced learning in networked environments could be used in conjunction with bi-modal telecommunication system for flexibility and content

richness in education-on-demand system.

(b) Open Schooling for Higher Education. Bloom & Rosovsky (2001) underlined that higher education is one of the most powerful mechanisms societies

have for upward mobility. It has enormous potential to promote prosperity among people with talent and motivation, irrespective of their social origins.

Therefore, once a student completes his elementary education, he should be encouraged to study further. This could be achieved by providing him with the

opportunity through open/distance learning environments. The institute similar to National Institute of Open Schooling should be opened in each state/UT. The

education could be imparted through EIS utilizing VSC/CSC. For higher education, IGNOU already has infrastructure (in the form of Gyandarshan TV channel) and

is also actively involved in imparting distance education. In addition, some of the states have opened up state open universities. We need to strengthen these

institutions of open/distance learning and improve the quality of education imparted through them.

(c) Adult Literacy Campaign. The need for education of the parents needs no emphasis. Imparting lessons on basic education and financial management

to the people of weaker sections (through adult literacy centres in the form of evening classes/EIS) would go a long way in their upliftment. Cohen & Sebstad

(2003) brought out that financial education can play an important role in contributing to poverty reduction in developing countries by building people’s

knowledge and skills to optimize the use of resources and take advantage of opportunities. Financial literacy can enhance the ability of people in not so well off

households to interface more effectively with the financial system – not only microfinance institutions, but other formal and informal institutions as well. The

attendant awareness from the adult literacy would definitely aid GER.

(d) Involvement of Gram Panchayats and NGOs. Comings & Smith (1995) advocated involvement of NGOs in various literacy programmes due to their

direct connection to the communities they serve. In fact, Gram Panchayats and NGOs can be used for influencing people in enhancing GER and in reducing drop-

out rates. In addition, we could enlist support of industry. Recently Ministry of Corporate Affairs, GoI has made it mandatory for the companies to report (to

their shareholders) about the expenditure incurred by them on Corporate Social Responsibility (CSR). We could encourage the corporate houses to adopt

divisions/villages for overall upliftment including achievement of 100% literacy. The expenditure incurred towards the welfare could be reported towards CSR.

Similarly, leading and reputed private schools could be encouraged to patronize the EIS of a district/village.

(e) PPP in Education. The development of infrastructure of EIS could be undertaken as Public-private partnership project. The investment in this sector

could be promoted by giving exemptions on such investments or by allowing tax rebates. In this context, Prakash (2008) underlined that with the expected

diversification of higher education in the coming years, planners would be more concerned about quality assurance and appropriate institutional planning

models for ensuring enough autonomy and an effective accountability framework.

(f) Dealing with Shortage of teachers in Rural/Remote Areas. The shortage of qualified teachers is a major constraint in remote areas. The problem

could be solved by two pronged approach. Firstly, services of retired teachers can be taken to ride over the immediate crisis. Secondly, rural stint may be made

mandatory for government teachers. The teachers could be encouraged to take up postings in rural / remote areas by improving their working conditions and

suitably compensating them.

(g) Emphasize Empiricism. Boswell, Rozelle, Zhang, & Liu (2011) from their study in China emphasize that quantitative, experimental design is the best

means to reliably measure success and effectively channel ideas and investments that target the world’s most pressing problems. It should be made mandatory

for the District Education Officer to carry out survey of population in his / her jurisdiction about the effectiveness of various educational programmes and report

the results to state education department and National Literacy Mission. The help of Gram Panchayats should be enlisted for the smooth conduct of survey.

These surveys could form the basis for fine-tuning of the education delivery system.

(h) Reduce the Digital Divide. The reduction of digital divide and diffusion of ICT technology to the downtrodden and remote masses is precursor to

universalisation of the education. Mistry (2005), underlined the both indirect as well as direct role of the government in bridging the digital divide.

DIAGRAM 5: ROLE OF GOVERNMENT IN BRIDGING THE DIGITAL DIVIDE

Source: Mistry, 2005

The government needs to take proactive measures and subsidize technology products to bring them within the reach of poor. A right step in this direction is the

development of Sakshat (Sanskrit: "Embodiment") tablet PC for bridging the digital divide between the rich and the poor. The Rs.1,500/- ($30) Tablet PC is

currently not available for sale in the market as government has decided to launch it for students in 2011. The device has been developed as part of the National

Mission on Education through Information and Communication Technology that aims to link 25,000 colleges and 504 universities on the subcontinent in an e-

learning program via an existing Sakshat portal (http://sakshattablet.org/).

CONCLUSION We conclude by underlining the fact that India is a large developing country. It has many issues to address along its journey to all inclusive growth. We need

ensure that the benefit of RTE reaches the poorest of the poor living in remote areas by breaking the boundaries of cast, religion and access. We need to address



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75

the issue of poverty and stark digital divide before the benefits of ICT could be reaped for dissemination of knowledge. We should direct our efforts towards

bringing education and schools at the doorstep of the needy children rather pushing them to schools. Ensuring of 100% literacy of over one billion population is

though difficult but not impossible to achieve. All we need is sincerity, commitment and right policy measures.

REFERENCES Altbach, P. G. (2009), “One-third of the globe: The future of higher education in China and India”, Springer, 39(1), 11-31. doi: 10.1007/s11125-009-9106-1.

Balasubramanyam, V. N., & Balasubramanyam, A. (2010), “Human Capital and Development A Tale of Two Cities; Software Sector in Bangalore and Hyderabad”

paper presented at the International Conference on Science, Technology and Economy: Human Capital and Development, Mumbai, India, 11-12 Nov 2010.

Retrieved from www.hss.iitb.ac.in/FGKS_IITB_2010/papers/Balasubramanyam.pdf.

Basant, R., & Sen, G. (2010), “Who Participates in Higher Education in India? Rethinking the Role of Affirmative Action”, Economic & Political Weekly, XLV (39),

62-70.

Basu, R., & Modak, M. (2010), “Modeling a bi-modal telecommunication system for education and health care in rural sector” paper presented at Academic

Meet 2010, FOSET, Kolkata. Retrieved from http://fosetonline.org/Academicmeet/IEM/42-RANA.pdf.

Bhaskaranarayana, A., Bhatia, B. S., Bandyopadhyay, K., & Jain, P. K. (2007), “Applications of Space Communication”, Current Science, 93(12).

Bloom, D. E., & Rosovsky, H. (2001), “Higher Education and International Development”, Current Science, 81(3), 252-256.

Boswell, M., Rozelle, S., Zhang, L., Liu, C., Luo, R., & Shi, Y. (2011), “Conducting Influential Impact Evaluations in China: The experience of the Rural Education

Action Project”, International Initiative for Impact Evaluation, New Delhi. Retrieved from www.3ieimpact.org on 10 Mar 2011.

Cecchini, S., & Scott, C. (2003), ”Can Information and Communications Technology Applications Contribute to Poverty Reduction? Lessons from Rural India”,

Information Technology for Development, 10(2), 73-84. IOS Press. doi: 10.1002/itdj.1590100203.

Chauhan, C.P.S. (2008), “Higher Education: Current Status and Future Possibilities in Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri

Lanka”, Analytical Reports in International Education, 2(1), 29-48. doi: 10.3890/arie.2.1.29.

Cohen, M., & Sebstad, J. (2003), ”Financial Education for the Poor”, Working Paper #1, Washington, US, Retrieved from

www.globalfinancialed.org/documents/WP1_FinEd4Poor.pdf on 12 Mar 2011.

Comings, J. P., & Smith, C. (1995), “Adult Literacy Programs: Design, Implementation and Evaluation”, Center for Human Capacity Development, U.S. Agency for

International Development. Retrieved from http://pdf.usaid.gov/pdf_docs/PNABX789.pdf on 12 Mar 2011.

Datta, D., & Mitra, S. (2010), “M-Learning: Mobile - Enabled Educational Technology”, Retrieved from http://www.cks.in/html/cks_pdfs/M-LearningMobile-

enabled Educational Technology.pdf.

Dele, B., & Osiki, J. O. (2008), “The Impact of Technology on Accessibility and Pedagogy: the Right to Education in Sub-Saharan Africa”, Asian Journal of Distance

Education, 6(1), 53 - 62. Retrieved from http://www.asianjde.org.

Gazette notification S.O. 428(E). Retrieved from http://education.nic.in/.

Gill, M. S. (2006), “Situation of Tribal Population in India”, Demography, III (540), 91-104.

Govt Order: F.No.1-13/2009-EE-4 dated 31 May 2010. Retrieved from http://education.nic.in/.

Govt Order: F.No.1-15/2010-EE-4 dated 23 Nov 2010. Retrieved from http://education.nic.in/.

Govt Order: F.No.1-1S/2010-EE-4 dated 23 Nov 2010. Retrieved from http://education.nic.in/.

Govt Order: F.No.1-4/2010 -EE4 dated 22 Jun 2010. Retrieved from http://education.nic.in/.

Govt Order:F.No.61-03/20/2010/NCTE(N&S) dated 23 Aug 2010. Retrieved from http://education.nic.in/.

Govt Order: No.76-4/2010/NCTE/Acad dated 11 Feb 2011. Retrieved from http://education.nic.in/.

Govt Order: S.O 1631(E) dated 08 July 2010. Retrieved from http://education.nic.in/.

Govt Order: S.O. 623(E) dated 23 Mar 2011. Retrieved from http://education.nic.in/.



Govt Order: S.R. 301(E) dated 08 April 2010. Retrieved from http://education.nic.in/.

Jha, P. and Parvati, P. (2010), “Right to Education Act 2009: Critical Gaps and Challenges”, Economic and Political Review, Vol XLV No. 13. Retrieved from

http://images2.asercentre.org/Contents/RTE_critical.pdf

Khan, A. W. (2001), “Learning for a Better Future: Overcoming Disadvantages” paper presented at the 20th ICDE World Conference on Open Learning and

Distance Education (pp. 01 - 05). Düsseldorf, Germany.

Mahajan, N. (2007), “The Cream of India’s Colleges Turns Sour”, Far Eastern Economic Review, 170(1), pp. 62–65.

Mistry, J. J. (2005), “The Role of E-Governance: A Case Study of India” paper presented at the IADIS International Conference e-Commerce 2005, pp 158-166.

Prakash, V. (2008), “Directions in Educational Planning: Changing Landscape of Educational Planning in India: Planning and Administration”, NUEPA, New Delhi,

India.

Right of Children to Free and Compulsory Education Act (RTE), 2009 (35 of 2009). Retrieved from http://education.nic.in/.

Sharples, M., Taylor, J., & Vavoula, G. (2005), “Towards a Theory of Mobile Learning Mind”, Retrieved from http://www.mlearn.org.za/CD/papers/Sharples-

Theory of Mobile.pdf on 10 Mar 2011.

Sujatha, K. (1999), “Education of India Scheduled Tribes: A Study of Community Schools in the district of Vishakhapatnam, Andhra Pradesh”, UNESCO. Retrieved

from http://www.unesco.org/iiep on 10 Mar 2011.

Telecom Regulatory Authority of India, Annual Report 09-10. Retrieved from http://www.trai.gov.in/.

The Department of Information Technology portal is a single point of availability of all resources pertaining to Information Technology. (http://mit.gov.in/)

The India Development Gateway (InDG) portal is dedicated to empowerment of rural India. InDG initiative is supported by Dept of Info Tech, MCIT, GoI and

executed by Centre for Development of Advanced Computing, Hyderabad. (http://www.indg.in/)

The Indian Census portal is the most credible source of information on population characterstics, Economic Activity, Literacy and Education, Housing &

Household Amenities, Urbanisation, Fertility and Mortality (http://www.censusindia.gov.in/)

The portal of Ministry of HRD contains information on various educational programmes and policies of central government (http://education.nic.in/)

The portal provides complete information regarding Sakshat tablet PC. (http://sakshattablet.org/).

The Sarva Shiksha Abhiyan portal of Ministry of HRD, GoI is a single point source of information pertaining to this flagship programme. (http://ssa.nic.in/).

Venkatagiri, S. (2007), “Promoting collaborative learning in higher education” paper presented at IADIS International Conference Applied Computing 2007, pp.

421-430, Morristown, NJ, USA: Association for Computational Linguistics. doi: 10.3115/1599600.1599679.



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76

WEB RESOURCES FOR GREEN REVOLUTION

M. PADMINI

LECTURER


V.S.B ENGINEERING COLLEGE

KARUR

M. SURULINATHI

ASST. LIBRARIAN

DEPARTMENT OF LIBRARY & INFORMATION SCIENCE

BHARATHIDASAN UNIVERSITY

TIRUCHIRAPPALLI

T. R. SAJINI NAIR

LIBRARIAN

DEPARTMENT OF LIBRARY & INFORMATION SCIENCE

V.S. B. ENGINEERING COLLEGE

KARUR

T. SUHIRTHARANI

STUDENT


INDIRA GANDHI COLLEGE

TRICHY

ABSTRACT This article describes the many web resources made available to users in the form of open access and subscribed in the form of E-journals, E-Books, e-theses and

video sharing web sites. It proves that open access and subscribed resources may be prepared even for highly resource-demanding lessons on text, image, video

and audio processing and compression. This paper helps to online learners of Green revolution professionals to aware of web-based resources available on

Internet. The creation and application of web resources will support learning and teaching process.

KEYWORDS Web Resources; Green Revolution; open acess; Video sharing Website.

INTRODUCTION he popularity of the World Wide Web and the incredible rapid growth of the web technology could not be imagined a decade ago. Web is a globally

hyper linked electronic environment on which a lot of latest information is available in almost all subject areas. Keeping this in mind, an exhaustive

information search was conducted on Internet to compile a list-of various web sites providing information on the use of multimedia systems for library

applications. Rapid increase number of Internet access points all over the world leads to many research on new technologies for education and working. The

creation and application of web resources will support learning and teaching process.

WEB RESOURCES FOR GREEN REVOLUTION • Video Sharing Websites

• E-Journals

• E-Books

• Electronic Theses and Dissertations and so on.

MULTIMEDIA@TEACHER TUBE Teachertube is to provide anytime, anywhere professional development with teachers teaching teachers. As well, it is a site where any one can post videos

designed for students to view in order to learn a particular game.

With TeacherTube, community members can:

• Upload, tag and share videos worldwide.

• Upload Support Files to attach your Green based Speeches, formats to your video.

• Browse hundreds of videos uploaded by community members.

• Customize the experience by subscribing to member videos, saving favorites, and creating play lists.

T



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TABLE 1: SHOWS DISTRIBUTION OF VIDEOS IN TEACHERTUBE

S. No. Key word/Terminology No of Videos

1 Green Buildings & Smart homes 7

2 Green Computing 19

3 Green ICT 10

4 Green Engineering 56

5 Green Educational Technologies 23

6 Green Manufacturing & Energy efficiency 1

7 Sustainable development 29

8 Green Management and Marketing 6

MULTIMEDIA@YOUTUBE

The below table shows that videos made available to user in the form of open access in youtube. YouTube is a video sharing website where users can upload,

view and share video clips. In November 2006, YouTube, LLC was bought by Google Inc. and is now operated as a subsidiary of Google. The company is based in

San Bruno, California, and uses Adobe Flash Video technology to display a wide variety of user-generated video content, including movie clips, TV clips, and

music videos, as well as amateur content such as video blogging and short original videos. Most of the content on YouTube has been uploaded by individuals.

TABLE 2: SHOWS DISTRIBUTION OF VIDEO COLLECTION IN YOUTUBE


1 Green Buildings & Smart homes 891

2 Green Computing 2080

3 Green ICT 958






MULTIMEDIA@GOOGLE VIDEO (http://video.google.com/)

Google Video is a free video sharing website and also a video search engine from Google that allows anyone to upload video clips to Google's web servers as well

as make their own media available free of charge; some videos are also offered for sale through the Google Video Store. The below table shows number of

collection available on green engineering, green building, green marketing and so on.

TABLE 3: SHOWS DISTRIBUTION COLLECTION IN GOOGLE VIDEO


1 Green Buildings & Smart homes 1,280

2 Green Computing 3,040

3 Green ICT 1,690

4 Green Engineering 10,300

5 Green Educational Technologies 1,960


7 Sustainable development 14,400

8 Green Management and Marketing 1,810

DOAJ (http://www.doaj.org/)

The aim of the Directory of Open Access Journals is to increase the visibility and ease of use of open access scientific and scholarly journals thereby promoting

their increased usage and impact. The Directory aims to be comprehensive and cover all open access scientific and scholarly journals that use a quality control

system to guarantee the content. The below table shows number of videos available in DOAJ.

TABLE 4: SHOWS DISTRIBUTION JOURNAL ARTICLES IN DOAJ

S. No. Key word/Terminology Publications

1 Green Buildings & Smart homes -

2 Green Computing 9

3 Green ICT -



6 Green Manufacturing & Energy efficiency -



NDLTD (NETWORKED DIGITAL LIBRARY OF THESES AND DISSERTATIONS)

NDLTD is an international organization dedicated to promoting the adoption, creation, use, dissemination, and preservation of electronic theses and

dissertations (ETDs). The below table shows number of journal article available on green revolution in NDLTD.

TABLE 5: SHOWS DISTRIBUTION OF ETD IN NDLTD

S. No. Key word/Terminology E-Theses

1 Green Buildings & Smart homes 3,534

2 Green Computing 21,936

3 Green ICT 2,846

4 Green Engineering 54,326

5 Green Educational Technologies 13,398

6 Green Manufacturing & Energy efficiency 10,661

7 Sustainable development 39,249

8 Green Management and Marketing 17,123



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78

BIBLIOGRAPHIC DATABASES

Biographic databases are used to store collections of bibliographic records. Scopus and Web of Science databases contained fields to store information about a

limited range of printed works, books reviews, articles, Letters, meeting abstract, Conference publications manuscripts etc. It also helps to know the Citations, H-

index, and Impact Factor for particular Journal and so on.

TABLE 6: SHOWS DISTRIBUTION PUBLICATIONS IN DATABASES

S. No. Key word/Terminology Scopus Web of Science 1999-2011

1 Green Buildings & Smart homes 594 3

2 Green Computing 1806 2462

3 Green ICT 172 52

4 Green Engineering 11258 3259

5 Green Educational Technologies 105 18

6 Green Manufacturing & Energy efficiency 133 35

7 Sustainable development 68572 18206

8 Green Management and Marketing 1599 6966

E-JOURNAL DATABASES

Access > 7,00,000 E-journals articles covering Subjects like Green Buildings & Smart homes, Green Computing, Green ICT, Green Engineering, Green Educational

Technologies, Green Manufacturing & Energy efficiency, Sustainable development, Green Management, Green Marketing by Springerlink and Elsevier Science.

TABLE 7: SHOWS DISTRIBUTION PUBLICATIONS IN DATABASES

S. No. Key word/Terminology Springer Elsevier

1 Green Buildings & Smart homes 1,805 2808

2 Green Computing 36,791 63012

3 Green ICT 14,391 4563

4 Green Engineering 1,06,824 219200

5 Green Educational Technologies 12,513 17080

6 Green Manufacturing & Energy efficiency 3,752 14281

7 Sustainable development 70,377 121999

8 Green Management and Marketing 1,08,563 26925

CONCLUSION Digital Libraries and Multimedia brings together in one place important contributions and up-to-date research results in this fast moving area. Libraries need to

balance provisions for greater access to text based information systems as opposed to limited-scale, multimedia products. However, as Libraries move into the

twenty-first century, multimedia integrated library systems will become a necessity rather than a luxury.

REFERENCES 1. Qiu Junping et al. “The application of Multimedia in Academic Library”, International Conference on Multimedia and Information Technology, pp.703-706,

2008.

2. R. Balasubramani, N. Amsaveni, M. Surulinathi, and C. Ranganathan,Web Resouces for Physical Education and Sports Sciences, National Conference

on emerging trends in Physical Education and Sports Sciences, March 12, PP. 157-161, 2011.

WEBSITES

3. http://videolectures.net/

4. http://freevideolectures.com/mav.html

5. http://www.uwtv.org/index.aspx

6. http://web.sls.csail.mit.edu/lectures/

7. http://videolectures.net/

8. http://www.youtube.com

9. http://www.teachertube.com



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79

IPOs GRADE AND POST ISSUE PERFORMANCE: AN EMPIRICAL STUDY

DR. ISHWARA. P

ASSOCIATE PROFESSOR

DEPARTMENT OF COMMERCE

MANGALORE UNIVERSITY

MANGALAGANGOTHRI

DR. CIRAPPA. I. B

ASST. PROFESSOR

DEPARTMENT OF COMMERCE,

DAVANAGERE UNIVERSITY

SHIVAGANGOTHRI, THOLUHUNSE

ABSTRACT The Indian Stock Market which is performing well and has doubled its low in March 2009. The BSE SENSEX was 8325, now it is hovering around 16500-18500 is

more than doubled in last two years. Indian economy is growing at robust pace and performance of the economy is very good in last two years. If we look at the

performance of IPOs, 74 per cent of total 222 listed from 1-4 2007 to 31-3-2010 are trading below their issue price. In this direction an attempt has been made to

evaluate the post issue performance of Initial Public Offers (IPOs) listed during the year 2010 and also to identify is there any benefits of IPOs grading to the retail

investor. The study result reveals that 93 per cent and above issues in 2010 are trading below their issue price and some of them performed really badly. The

government entities are no exception to them. As far as IPOs grading is concerned equities are graded on a scale of one to five. The higher the rating, the better

is the issue. The study result shows that Issues with Grade 4 yielded high losses compared to other low grades. On the listing day, only issues with Grade 1 and

Grade 3 proved to be beneficial to the investors marginally. Grade 2 and Grade 4 issues resulted in losses.

KEYWORDS IPO, Stock Market.

INTRODUCTION he primary market for equity in India gained momentum after the liberalization initiative taken by the government in the early 1990s. During the last

twenty years, the Indian IPO market has undergone many changes that are widely seen to have improved its transparency and efficiency. In particular,

the initial years of liberalization, after 1990-91, witnessed a boom in the Indian IPO market. With fewer regulations during this period, many

entrepreneurs used the primary market as the main vehicle to raise capital as well as reduce their own holdings. The favorable developments lead to rapid

growth in the quantum of financial investment. Thus, the primary capital market in India has been witnessing tremendous growth in the number of new issues

hitting the market, surpassing the normal growth that is expected as a result of growth economy.

In the 21st Century, the revival of the primary market, which started in 2003-04, gathered momentum in 2004-05 and further invigorated in 2005-06, 2006-2007.

Strong macro-economic fundamentals, sustained growth of the manufacturing sector, active institutional support led by FIIs and mutual funds, positive

investment climate, sound business outlook, encouraging corporate results and buoyant secondary market induced large number of companies to raise resource

from the primary market. Apart from several mega issues, large number of small and medium sized companies’ mobilized resources through public and rights

issues. The private sector continued to dominate the primary market activities during these years. There was overwhelming response to most of the public

issues reflecting risk appetite of the investors in general and sustained investment activities in particular. Regulatory reforms such as introduction of

proportionate allotment and margin requirement for the Qualified Institutional Buyers (QIBs) and special allocation to mutual funds within the QIBs category

also contributed to brisk activities in the primary market. During this period the SEBI introduced various regulatory measures, in order to protect the interest of

stakeholders. Some of the regulatory reforms introduced in the Indian capital market in the recent past are listed out below.

REGULATORY REFORMS IN THE INDIAN IPOs MARKET Booking Building: This process helps discover the price of an IPO. The company sets a floor price (the lowest price in the band) and a ceiling price (or cap). “The

actual price is determined depending on how many bids came at what price”.

Allotment of Shares: In cases of book-built issues, the basis of allotment is finalized by lead managers or investment bankers within two weeks from the date of

closure. In a situation where a company is divesting more than 25 per cent under a proportionate allotment system, three classes of investors can bid for the

shares. At least 50 per cent shares are reserved for Qualified Institutional buyers (QIBs). These include mutual funds and foreign institutional investors. The

bidding limit for retail category was raised to Rs 2 lakh (in the Securities and Exchange Board of India’s latest order). At least 35 per cent is reserved for this

category. The balance bids are offered to HNIs (High Net-worth Individuals) or non-institutional investors (NIIs) and corporate. At least 15 per cent is reserved

for this category. If the promoters are diluting less than 25 per cent stake in an IPO, QIBs get 60 per cent reservation, retail 30 percent and NIIs 10 per cent.

Subscription: Retail investors and HNIs are allotted shares on a proportional basis. For example, the Coal India IPO was subscribed two times in the retail

category (If Mr X has applied for 200 shares, he will qualify for 100 shares, 200/2). Similarly, an HNI will get eight shares as the category was subscribed 24 times.

Sometimes, if the subscription is huge or the price is too high, the allotments are made by lottery. Say, you apply for five shares and the category is subscribed

10 times. In this case, you are entitled to half a share. Since it’s not possible, the company may allot shares to one out of every two investors.

IPOs Grading: Grading of equity instruments in its initial public offerings (IPOs) is unique to Indian capital markets. The capital market regulator, SEBI introduced

grading of IPOs initially on a voluntary basis on December 30, 2005, and subsequently made it compulsory with effect from May1, 2007. Equities are graded on a

scale of one to five. The higher the rating, the better is the issue.

ASBA: In Applications Supported by Blocked Amount (ASBA), the bid amount is blacked in bank account of the applicant till the allotment. For instance, if Mr X

applied for shares worth Rs 2 lakh, this amount gets blocked in his account. On allotment, shares worth Rs 50,000 will be credited to his demat account and the

remaining amount Rs 1, 50,000, unblocked by bank account.

IPO Discount at Application Stage: Retail investors to a public issue and employees of company concerned can benefit from the discount clause at application

stage itself and not while allotment is being done. This is to enable investors to apply for a higher quantity of shares with the same outlay of funds net of

discount. This comes into effect on companies filing their red herring prospectus or prospectus with the Registrar of Companies on or after June 15, 2011.

REVIEW OF PAST STUDIES ON IPOs PRICING AND PERFORMANCE Performance of IPOs in the long run and short run is a well researched area in the capital markets literature. Reilly and Hatfield (1969) reported under-pricing to

the extent of 11% from their study of the IPOs in US during the period 1963-65. Subsequently Ibbotson (1975), Reilly (1977), Aggarwal and Rivoli (1989), Ritter

(1991), Loughran and Ritter (1995), Ritter and Welch (2002), Ljungqvist andWilhelm (2003) all document under-pricing in the U.S. market. Jog and Riding (1987)

report the same for the Canadian market; Ljungqvist (1997) for the German market; Gong and Sekhar (2001) for the Australian market also report under pricing.

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Wong and Chiang (1986) for the Singapore market; Chen et al (2004) for the Chinese market and Yong and Isa (2003) provide evidence on under-pricing of IPOs

in the Asian markets. It is clear that most studies agree that IPOs leave some money on the table where the money left on the table is the difference between

the listing day's close price and the offer price multiplied by the number of shares outstanding. Under-pricing of IPOs is explained by various researchers in

different ways and the same may be classified as under:

Information Asymmetry Hypothesis: According to Rock (1986) investment community is characterized with two kinds of investors informed and uninformed

investors. When a new issue comes to the market by virtue of their knowledge informed investors keep away from poor quality issues or will be investing only if

the aftermarket returns are positive. While uninformed investors subscribe to all issues both good as well as poor quality issues and in all likelihood they will get

higher allocation in the later type of issues. This may lead the uninformed investors to keep away from the new issues market. Therefore by under- pricing these

investors will be lured to participate in the new offerings. Koh and Walter (1989) working on the Singapore market directly tested this hypothesis and their

results corroborate this hypothesis.

Signaling hypothesis: Allen and Faulhaber (1989) propose that a good quality issuer by under-pricing the IPO will subsequently return to the market with a

seasoned offering and raise money at better terms. Welch (1992) finds evidence that almost a third of the new issuers returned to the market with a seasoned

offering.

Other explanations include Tinic (1989) who suggested that under-pricing discourages investors to file law suits against the issuer and Benveniste and Spindt

(1989) propose that investors with more information ill be enticed to reveal more information by under-pricing the IPOs.

In the Indian context Shah (1995) documents a phenomenal 105.6% excess return over the offer price in a study of 2056 new listings over the period

January1991 to May 1995. However, this study provides evidence on the short run performance only while Madhusoodanan and Thiripalraju (1997) from a study

on IPOs offered on BSE during the period 1992 to 1995shows that under-pricing was higher than the international experiences in the short run and in the long

run too they yield higher returns compared to the negative returns recorded from the international markets. Krishnamurti and Kumar (2002) working on a

sample of IPOs that hit the market between 1992 and1994 demonstrate that the under-pricing is to the extent of 72.34% (market adjusted returns). Kakati

(1999)analyzed the performance of a sample of 500 IPOs that came to the market during January 1993 to March 1996and documents that the short run under-

pricing is to the tune of 36.6% and in the long-run the overpricing is 40.8%.

The short-run performance of IPOs has been extensively researched and clearly indicates that on average investors outperform which leads to some loss of value

to the issuer of stock. In very few studies on average investors under-perform i.e. stocks were over-priced. IPO short-run performance (under-pricing) has been

one of the persistent empirical phenomena for many decades. Kenourgios et. al. (2007) analyzed 169 IPOs listed on the Athens Stock Exchange over the period

1997-2002. The average raw return of the first day was 52.7%, while the average adjusted return was 54.28%. The average raw return of the 5th and the 21st

day were 44.78% and 41.84% respectively, while the average excess return was 45.32% and 43.83%. The results suggest that the new issues were on average

under-priced since it had significant returns for those who had participated in the offering and sold the new shares at the closing of the 1st, 5th and 21st day,

respectively. Another study on the listed securities at Shanghai and Shenzhen stock exchange by Liu & Lie (2000) investigated 781 securities using 09-years data

and found that on average market adjusted short run performance (return) was 139.4%. Their analyses revealed that the first day initial return was much higher

in 1991, 1992 & 1993. Market adjusted short run performance (return) for 1st, 5th, 10th and 20th

trading days of Shenzhen stock exchange were higher than

those of Shanghai stock exchange. Under-pricing of initial public offerings in Bangladesh was analyzed by Hasan and Quayes (2008) using a sample of 90 IPOs

issued in mid nineties during stock market bloom. They identified that increased ownership stake and foreign participation were the factors which negatively

affect the magnitude of under pricing. They analyzed the comparison of mean percentage under-pricing on first day between ‘premium’ and ‘par’ issues.

Findings showed that premium issues are less under-priced than IPOs issued at par. U.S. IPO market has been researched extensively over the last decades. The

last updated by Loughran et al (2006) in 15,333 IPOs that were listed in the period 1960-2005 revealed 1st day returns of 18.1%. Similar to this finding Ritter and

Welch (2002) reported initial returns of 18.8% in the U.S. from 1980-2001. Choi and Nam (1998) reported that Australian Public IPOs are more under-priced than

private sector IPOs. They found that, in general, over their sample of 30 countries, PIPOs were more under-priced than private-sector IPOs. Peter (2007) in his

research paper investigated initial return on IPOs of a developing country Sri Lanka and found that in emerging market under-pricing exist in high level as

compared to developed countries. Results showed that privatized IPOs had higher average return as compared to non-privatized, privatized IPOs' excess return

is 98%. The holding period return was found positive for the first two years while the out-performance finished after three years of initial listing. Initial excess

return was almost similar to that of middle income countries like Malaysia, Mexico, Poland and Thailand -priced by 63.92% with 30 IPOs (13.3%) to be

overpriced. The initial under-pricing was 67.14% for industrial firms, 54.55% for finance firms and 56.19% for other firms. In terms of sub-sectors the highest

return was obtained in Information Technology group while the lowest return was observed in Telecommunication Group. Results suggest that the IPO market

on Greece was 'good' only for large offerings. Investigation of factors influencing the initial performance show that market condition, demand multiple, cold-hot

issue periods, and offer price independence are significant determinants of under-pricing. Banerjee et al (2009) in their article empirically analyzed the cross-

country differences in IPO under-pricing among 18 countries between 2000 and 2006. They had studied the impact of cross country differences in information

asymmetry, home bias, enforcement mechanism, and litigation risk on IPO under-pricing. They found that on average investors out-perform in short-run by

considering the impact of cross-country differences in information asymmetry, home bias, enforcement mechanism, and litigation risk on IPO under-pricing

variables.

STATEMENT OF THE RESEARCH PROBLEM The Indian Stock Market which is performing well and has doubled its low in March 2009. The BSE SENSEX was 8325, now it is hovering around 16500-18500 is

more than doubled in last two years. Indian economy is growing at robust pace and performance of the economy is very good in last two years. If we look at the

performance of IPOs, 74 per cent of total 222 listed from 1-4 2007 to 31-3-2010 are trading below their issue price. Almost 27 per cent of total issues lost more

than 70 per cent of their issue price and 16 per cent lost their value 80 per cent and above. In this direction an attempt has been made to analyze the

performance of the IPOs listed during the year 2010 with the following objectives.

OBJECTIVES OF THE STUDY The primary objective of this paper is to measure the performance of IPOs listed during the year 2010. In addition to there are the following specific objectives:

1. To know the recent regulatory changes in the Indian capital market.

2. To evaluate the post issue performance of IPOs.

3. To evaluate IPOs grading and its benefits to investors.

4. To make some suggestions to the potential investors.

RESULTS AND DISCUSSIONS TABLE 1: IPOs ACTIVITY IN INDIA DURING 2000-01 TO 2010-11

Year No. of Issues Amount ( Rs. Crore)

2000-01 119 6,518

2001-02 19 6,423

2002-03 14 5,732

2003-04 34 22,131

2004-05 34 25,526

2005-06 102 23,676

2006-07 85 24,993

2007-08 91 53,219

2008-09 22 3,534

2009-10 47 49,411

Source: Handbook of Statistics on the Indian Securities Market 2010



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Table -1 presents a snapshot of the IPO activity from the beginning of the new millennium. It can be noted there are a total of 567 issues till March 2010 and the

number represents IPOs issued following the Book building route as well as Fixed Price Offer route though a majority of them might had been through the book

building method.

TABLE-II: IPOs PERFORMANCE DURING THE YEAR 2010

Source: Data complied

S. No Company List Date List Price Current Price Issue Price Change Rating Agency Grade

1 Aqua Logistics Ltd 23-Feb -10 219.4 15.05 220 -93.16 Brick Work 3

2 Bajaj Corp Ltd 18-Aug-10 730 115.4 660 -82.52 CRISIL 4

3 DB Realty Ltd 24-Feb-10 430 85 468 -81.84 CRISIL 2

4 Gyscoal Alloys Ltd 27-Oct-10 76.6 14.82 71 -79.13 CARE 2

5 Aster Silicates Ltd 28-Jul-10 127.7 25 118 -78.81 Brick 2

6 Tirupati Inks Ltd. 1-Oct-10 53.95 9.3 43 -77 N.A 2

7 Sea TV Network Ltd. 14-Oct-10 120 23 100 72.22 ICRS Ltd 1

8 Cantabil Retail India Ltd 12-Oct-10 133.8 37.5 135 -72.22 ICRA Ltd 2

9 Commercial Engineers & Body Builders Co Ltd 18-Oct-10 122.8 35.55 127 -72.01 CRISIL 2

10 Emmbi Polyams Ltd 24-Feb-10 45.5 12.88 45 -71.38 CARE 2

11 Tarapur Transformers Ltd 18-May-10 75 22.5 75 -70 CRISIL 1

12 SKS Microfinance Ltd 16-Aug-10 1036 297.85 985 -69.76 CARE 4

13 Birla Sholka Edutech Ltd. 29-Jan-10 49 16.25 50 -67.5 N.A N.A

14 Midfield Industries Ltd. 4-Aug-10 159.4 46.3 133 -65.19 Brick Work India Ltd. 2

15 Syncom Healthcare Ltd 15-Feb-10 88 28.85 75 -61.53 Credit Analysis 2

16 Microsec Financial Services Ltd. 5-Oct-10 135.1 47.5 118 -59.75 CRISIL 2

17 Texmo Pipes and Products Ltd. 10-Mar-10 101.5 39.4 90 -56.22 CARE 2

18 Goenka Diamond & Jewels Ltd. 16-Apr-10 130 60 135 -55.56 ICRA 2

19 BS Transcomm Ltd 27-Oct-10 251 113.5 248 -54.23 ICRA 2

20 Intrasoft Technologies Ltd. 12-Apr-10 140 68.2 145 -52.97 NA NA

21 Ravi Kumar Distilleries Ltd. 27-Dec-10 64 30.35 64 -52.58 NA NA

22 Nitesh Estates Ltd. 13-May-10 50 26.25 54 -51.39 CRISIL 2

23 Orient Green Power Company Ltd 8-Oct-10 45.7 23.3 47 -50.43 CRISIL 4

24 Hathway Cable & Datacom Ltd 25-Feb-10 246 119.75 240 -50.1 CRISIL 3

25 Vascon Engineers Ltd 15-Feb-10 170 86.15 165 -47.79 CRISIL 3

26 Man Infraconstruction Ltd 11-Mar-10 335 132.5 252 -47.42 CRISIL 3

27 Jaypee Infratech Ltd 21-May-10 93 57.9 102 -43.24 ICRA 3

28 A2Z Maintenance & Engineering Services Ltd. 23-Dec-10 390 238.2 400 -40.45 NA NA

29 Ramky Infrastructure Ltd. 8-Oct-10 450 268.85 450 -40.26 CRISIL 3

30 Indosolar Ltd 29-Sep-10 29.75 17.6 29 -39.31 CRISIL 3

31 Technofab Engineering Ltd. 16-Jul-10 265 154.6 240 -35.58 FITCH 3

32 DQ Entertainment (International ) Ltd. 29-Mar-10 135 55.9 80 -30.13 FITCH 3

33 JSW Energy ltd. 4-Jan-10 102 70.85 100 -29.15 NA NA

34 Shipping Corporation of India Ltd. 15-Dec-10 136..9 105.35 140 -24.75 N.A N.A

35 Pradip Overseas Ltd. 5-Apr-10 120 85 110 -22.73 ICRA 2

36 IL & FS Transportation Networks Ltd. 30-Mar-10 287 199.5 258 -22.67 CARE & FITCH 4

37 Prestige Estates Projects Ltd 27-Oct-10 190 142.5 183 -22.13 ICRA 3

38 Claris Lifesciences Ltd. 20-Dec-10 224.4 179.2 228 -21.4 FITCH 3

39 Electrosteel Steels Ltd 8-Oct-10 12.35 8.96 11 -18.55 CARE 3

40 SJVN Ltd. 20-May-10 28 21.35 26 -17.88 CARE 4

41 Eros International Media Ltd. 6-Oct-10 213.35 145.6 175 -16.8 CARE 4

42 Punjab & Sind Bank 30-Dec-10 146.1 100.65 120 -16.13

43 Ashoka Buildcon Ltd 14-Oct-10 333.55 272.95 324 -15.76 CRISIL 4

44 Tecpro Systems Ltd. 12-Oct-10 399.4 301.25 355 -15.14 CRISIL 4

45 NMDC Ltd. 29-Mar-10 295.7 265.95 300 -11.35 N.A N.A

46 NTPC Ltd. 19-Feb-10 204 180.25 201 -10.32 N.A N.A

47 Shree Ganesh Jewellery House Ltd. 9-Apr-10 258.85 236.65 260 -8.98 CARE 3

48 Oberoi Realty Ltd. 20-Oct-10 280 240.3 260 -7.58 CRISIL 4

49 MBL Infrastructures Ltd. 11-Jan-10 190 170 180 -5.56 NA NA

50 VA tech Wabag Ltd 13-Oct-10 1655 1250 1310 -4.58 ICRA Ltd 4

51 Hindustan Media Ventures Ltd 21-Jul-10 170 158.9 166 -4.28 CRISIL 4

52 Engineers India Ltd. 12-Aug-10 315 281.55 290 -2.91 N.A N.A

53 R P Infra Projects Ltd. 6-Dec-10 75 74.45 75 -0.73 FITCH 2

54 Infinite Computer Solutions (India) Ltd 3-Feb-10 178.35 164.2 165 -0.48 CRISIL 2

55 MOIL Ltd. 15-Dec-10 551 373.85 375 -0.31 CARE 5

56 Career Point Infosystems Ltd. 6-Oct-10 461 322.95 310 4.18 CARE 3

57 Standard Chartered PLC 11-Jun-10 105 111.95 104 7.64 N.A N.A

58 Arss Infrastructure Projects Ltd. 3-Mar-10 640 488.8 450 8.62 CARE 2

59 Bedmutha Industries Ltd. 14-Oct-10 114.4 110.8 102 8.63 ICRA 2

60 D B Corp Ltd. 6-Jan-10 250 238 212 12.26 NA NA

61 Persistent Systems Ltd 6-Apr-10 400 389.7 310 25.71 CRISIL 4

62 Gujarat Pipavav Port Ltd. 9-Sep-10 56.25 60 46 30.43 CRISIL 4

63 Prakash Steelage Ltd 25-Aug-10 118.55 145 110 31.82 CARE 2

64 Godrej Properties Ltd. 5-Jan-10 510 704.25 490 43.72

65 United Bank of India 18-Mar-10 77 101.85 66 54.32 CARE & ICRA 4

66 Coal India Ltd. 4-Nov-10 287.75 386.3 245 57.67 CRISIL 5

67 Talwalkars Better Value Fitness Ltd. 10-May-10 138 220.95 128 72.62 CARE 3

68 Mandhana Industries Ltd. 19-May-10 132.7 229.3 130 76.38 CRISIL 3

69 Gallantt Ispat Ltd. 11-Oct-10 48.9 91.05 50 82.1 NA NA

70 Rural Electrification Corporation Ltd. 8-Mar-10 230 223.95 105 113.29 CARE NA

71 Thangamayil Jewellery Ltd. 19-Feb-10 70 179.4 75 139.2 Brick Work 3

72 Gravita India Ltd. 16-Nov-10 218.75 356.45 125 185.16 Brick Work 3

73 Jubilant Foodworks Ltd. 8-Feb-10 161.6 740.05 145 410.38 FITCH 3



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82

From the above table it is clear that, 93 per cent and above issues in 2010 is trading below their issue price and some of them performed really badly. The

government entities are no exception to them. If we look at why the performance of IPOs is so bad, there are few notable points which comes to the forefront.

1. The offer prices of these IPOs are very aggressive and there is very little or no room is left for the short term appreciation of the share price. Some of the

big companies have not done well on the stock market like MPSEZ, NTPC, NMDC and NHPC.

2. The second most important point is the lead manager and under writer. If a company hired good lead manager, under writer, analyst and paid media, the

issue will be oversubscribed.

3. Institution and conventional wisdom expect that high grade issues either provide high profits or low losses. The study results prove the other way round.

Issues with Grade 4 yielded high losses compared to other low grades. On the listing day, only issues with Grade 1 and Grade 3 proved to be beneficial to

the investors marginally. Grade 2 and Grade 4 issues resulted in losses. Shocking result is that Grade 4 issues lost maximum offsetting gains from other

grades. On day five, Grade 2, 3 and 4 issues recorded profits, while Grade 1 issues recorded small losses. What is once again surprising and shocking is that

Grade 4 issues on many subsequent days also continue to lose money. Grade 3 issues are relatively better placed. Grade 4 issues appear to be a big drag on

remaining grades.

4. Large issues, generally, get higher grades and small issues have high probability of getting low grades. Further, companies with better grades were able to

save on cost of raising funds. It also observed that low grade companies spend more money to raise resources and high grade companies spend less. This

could be due to size factor also.

5. There is no consistency of returns within inter-grades and inter-grading agencies. No grading agency comes out clearly as a winner. Rather, it appears there

is a competition to lose out.

6. In recent times, in the aftermath of sub-prime crisis, rating agencies globally came under heavy flack from all governments, regulators, international

regulatory associations, central banks, investors and others. One that has received much attention lately is the impact of the dynamics of competition on

ratings and rating quality. The theoretical argument is that competition among providers of rating can lead to a general deterioration of the quality of

ratings known as “rating inflation”.

SUGGESTIONS Some of the IPOs are from established corporate but many are from new entities. The small investors, however, should subject all offerings to some simple

checks before picking their choice. As compare to rights issues or subsequent public issues or secondary market purchases, a share offered in an IPO is the most

opaque investment instrument. This is natural as the company undertaking the IPO is a private one and, as such has had no requirement to share with the public

all information about itself. Further, as an unlisted company, there is no price discovery for its shares as yet. Yet IPOs have always been viewed by small

investors as a quick way to make a profit. But the risk-reward ratio inherent in an IPO is, today, higher and the small investor must do all his homework well

before investing. The credit rating agencies rate IPOs on a scale of 1 to 5 (5 being the best) based on many financial and operational parameters. However, in

addition to the IPOs grading, the retail investor suggested to verify the following:

Track the history: Companies sometimes change names to reflect the change in the nature of their business. But frequent name changes reflecting totally

different business activities may indicate that the company has not, over the years, developed any core competence in any particular field.

Review prompter’s record: Check the performance of the promoter’s other ventures, his experience in the business, and so on.

Look at the composition of the shares on offer: Sometimes an IPO includes sale of shares held by promoters. This is quite common when the Government

divests its holding in the PSUs. In the case of private sector IPOs the reason why the promoter is partly exiting should by examined if the quantum is

disproportionately high.

Check the end use of the IPO proceeds: The end use of the funds raised in the IPO will determine how visible and time bound the flow of benefits will be. The

value accretion from IPO funds deployed in specific ongoing projects or to repay high cost debt is likely to be more ascertainable. A positive feature would be if

the projects included in the fund use list have been appraised by a bank. Whereas when the listed end users are very general in nature with no clear timeframe,

the visibility of the earnings from the IPO will be somewhat lower.

Ascertain the reputation and experience of other participants involve in the IPO such as Book Running Lead Manager, Anchor Investor, if any, and so on.

Fortunately, for the small investors, the above study is not very difficult and the information can be called from the prospectus and documents related to the

IPO. This additional due diligence would help reach a more informed decision when confronted with a wide choice of IPOs.

REFERENCES 1. Fama, E. F. (1970). Efficient Capital Markets: A Review of Theory and Empirical Work. The Journal of Finance, Vol.25, 383-417.

2. Gupta, L. C. (1992). Stock Exchange Trading in India: Agenda for Reforms. Society for Capital Market Research and Development, New Delhi, 123.

3. Gupta, R. (1992). Development of the Capital Market in India: A Regulatory Perspective. Working Paper No.997, IIM, Ahmadabad, Jan-March.

4. Gupta, R. (1992). Foreign Stock Listing: Benefits and Costs. Chartered secretary, Vol.22, No.5, 410-411.

5. Gupta, R. (1987). Is Indian Capital Market Inefficient of Excessively Speculative? Vikalpa, Vol.12, No.2, 21-28.

6. Gupta, R. (1991). Regulation of Securities Market in India: Some Issues. Chartered secretary, Vol.21, No.6, June.

7. Gupta, R. (1991). Revamping Stock Exchange Operations - Some Suggestions. Working PaperNo.922, IIM, Ahmadabad, Jan - March.

8. Lal, T. (1990). Primary Capital Market: Some Reflections. Yojana, Vol.34, June 16-30, 9-12.

9. Levine, R., & Zervos, S. (1998). Stock Markets, Banks and Economic Growth. American Economic Review, Vol.88, 537-558.

10. Mishra, P. K. (2009). Indian Capital Market - Revisiting Market Efficiency. Indian Journal of Capital Markets, Vol. II, Issue IV, 30-34.

11. Mishra, P. K., & pradhan, B. B. (2009). Capital Market efficiency and Financial Innovation – A Perspective Analysis. The Research Network, Vol.4, No.1, 1 -5.

12. Mishra, P. K., K. B. Das, and B. B. Pradhan, (2009): Empirical Evidence on Indian Stock Market Efficiency in Context of the Global Financial Crisis, Global

Journal of Finance and Management, Vol.1, No.2, pp.149-157.

13. Mishra, P. K., K. B. Das, and B. B. Pradhan, (2009): “Capital Market Volatility – An Econometric Analysis”, The Empirical Economics Letters, Vol.8, No. 5, 469 -

477.

14. Mishra, P. K., K. B. Das and B. B. Pradhan (2010): “Global Financial Crisis and Stock Return Volatility in India”, Indian Journal of Finance.

15. Mookerjee, R. (1988). The Stock Market and the Economy: The Indian Experience. Indian Economic Journal, Vol.36, No.2, 30-43.

16. Raghunathan, V. (1991). Stock Exchanges and Investments: Straight Answers to 100 Nagging Questions. New Delhi: TMH, pp.176.

17. Raju, M. T., & Ghosh, A. (2004). Stock Market Volatility - An International Comparison. WPSNo.8, SEBI.

18. Sahni, S. K. (1985). Stock Exchange in India: Practices, Problems, Prospects. New Delhi: North Publishing Corporation, pp.344.

19. Sinha, S. (1993). The Badla Market and Futures and Options. Pending Presentation in CBOT5th Annual Asia-Pacific Futures Research Symposium, March 14-

15. Taipei: Unpublished



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83

INVENTORY LEANNESS IMPACT ON COMPANY PERFORMANCE

RENU BALA

CHARTERED ACCOUNTANT

FLAT NO. 18, KARTHIK APARTMENT, SECTOR – 21 C

FARIDABAD

ABSTRACT The analysis of manufacturing company’s data reveals that inventory leanness and company performance relationship is varied substantially. Inventory

performance relationship is significant in the most of industries. Lean inventory strategies are economically viable in some industries. This strategy is not

amenable due to their particular product, production technology, supply or demand characteristics. In most of these instances, the relationship is concave,

suggesting that there is an optimum level of inventory leanness beyond which firm performance deteriorates. This paper deals with inventory leanness impact on

company performance

KEYWORDS Inventory, lean, Manufacturing, Firm, Performance.

INTRODUCTION nventories are represented as short-term assets in the balance sheet. Inventory can be defined as assets that are held for the purpose of sale. It refers to

an asset held for conversion to a form which can be sold. It also refers to assets held for assisting in the production of goods which will be sold. Inventory

refers to the stock held by an organization at any point of time, which possess economic value. These resources can be manpower, machines, capital goods

or materials at various stages. An inventory valuation allows a company to provide a monetary value for items that make up their inventory. The valuation needs

to be objective, confirmed and accurate. Accurate inventory valuation requires accurate inventory record keeping. If companies use an accurate costing method

for valuation of inventory, it will be a waste of time if the record accuracy level is poor. Maintaining accurate record is also important, because companies are

striving for leaner production and processes. Inventory leanness effect firms performance.

In this paper section A consists related work section B deals with critical analysis and Section C consist development of the leanness indicator and conclusion.

RELATED WORK Matthias Holweg et al. have reviewed that the lean concept is the outcome of a dynamic learning process. It is based on the practices adopted by automotive

and textile sectors in Japan [12]. Fullerton et al. have maintained that lean production is typically conceptualized as a multi-dimensional construct composed of

multiple lean practices such as total quality control, total productive maintenance, and just-in-time. Implementation of lean production results in improved

operational performance in terms inventory management, process control, information flows, human factors, delivery, flexibility and quality. Financial

performance is positively affected by the implementation of lean production practices [10]. Bradly R. Staats et al. have discovered that lean principles can apply

to others sectors also [5].Womack et al. mentioned that to improve firms performance lean production relies on a set of practices including Kanban, total quality

management, to minimize waste like excess inventories, scrap, rework [17]. Tyson R. Browning et al. have said that implementation of lean practices will reduce

waste and thereby decrease costs. Novelty, complexity, instability, and buffering affect the relationship between lean implementation and production costs [15].

Rachna Shah et Al. propose a conceptual definition of lean production and identified ten factors of lean system [13]. Balakrishnan et al. have compared the

financial performance of a group of firms that had adopted lean production and an equal number of similar firms that had not. He observe a significant increase

in inventory turnover in the treatment group as compared to the control group, He find no significant differences in ROA between these two groups. His studies

note that small firms do not benefit from lean production adoption as much as large firms [1]. Kinney et al. have observed that there is improvement in

profitability for firms that adopt lean production relative to those that do not [11]. Swamidass et al. have investigates the effects of lean production adoption on

inventory-performance of U.S. manufacturing firms. After grouping firms by performance, he finds that better performing firms have improved their inventory

management performance, as measured by total inventory-to-sales ratio [14]. Cannon et al. have uses a hierarchical linear model to explore the effects of

changes in inventory turnover on firm performance measured by ROA, ROI, market value added, and Tobin’s Q. He concludes that improvements in inventory

management do not lead to improved firm performance [6]. Capkun et al. have analyzed firm-level data on U.S. manufacturing firms from 1980 to 2005 to

estimate the effect of inventory management on firm performance. Their results indicate that total inventory levels, as well as raw materials, work in- process

inventory, and finished goods, have a positive effect on firm performance [7]. Womack et al. have said that inventory is a type of waste which should be

minimized [16]. Chan et al. have discovered that by adopting lean production inventory holding is decreased [8]. Zipkin, P.H et al. have mentioned that lean

inventory management can be compared to good inventory management. A lean strategy may not be appropriate for all firms [18]. David L. Cooke et al. analysis

supports a view that management should not arbitrarily push inventories lower simply to improve the balance sheet [9].

CRITICAL ANALYSIS OF EXISTING INVENTORY LEANNESS MEASURES Econometric studies rely on various measures as proxy for inventory leanness. These measures can be classified into three groups A, B and C: [A]absolute

measures, including average inventory levels and maximum inventory levels are absolute in nature. It is important to measure inventory leanness with respect to

size adjusted industry average as absolute measures of inventory management effectiveness can be misleading. The economic benefit of increased inventory

leanness depends on a firm’s status quo and industry-specific inventory management characteristics. [B] Standardized measures, such as inventory turnover and

its variant. These are the most widely used measures of a firm’s inventory leanness. However, such measures ignore economies of scale in inventory

management. Ignoring these economies of scale results in biased estimates of a firm’s inventory leanness, which, in turn, yields biased estimates of the marginal

effect of inventory leanness on firm performance. To illustrate this point, consider firm X in Diagram. Line S1 represents the mean of inventory turnovers across

firms in the same industry and line S2 represents the industry average of inventory turns adjusted for sales. In other words, firms with lower sales are expected

to have lower inventory turnover while firms with higher sales should have higher inventory turnover, all other things being equal. At first glance, inventory

turnovers for firm X appears to be above the unadjusted industry average, but they are actually below the industry average when economies of scale are

considered.

I



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84

FIGURE 1: RELATIONSHIP BETWEEN SALES AND INVENTORY VALUATION

Inventory S2

Turnover

• Firm X

•

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ S1

•

•

•

Sales

[C]Complex measures based on fuzzy set theory data envelopment analysis and require expertise in solving such models and interpreting the results. These

measures are not well suited for widespread use by managers.

DEVELOPMENT OF LEANNESS INDICATOR Ballou has described the specific nature of the relationship between sales and inventories in multiple stocking locations of a firm, thereby identifying economies

of scale in inventory holding. In this work, I = is used to estimate a turnover curve. An estimate of shape parameter α< 1 indicates economies of scale

(increasing inventory turnover), α > 1 diseconomies of scale (decreasing inventory turnover), and α = 1 a constant inventory turnover. Ballou’s has explained that

the coefficient estimates of α is typically around 0.6. The (LI) lean indicator is then calculated as the residual estimated during the fitting of the turnover curve

for a given industry. The LI is a measure of inventory leanness that is rooted in inventory theory and, unlike inventory turnover, accounts for economies of scale

in inventory management. Moreover, the LI inherently controls for industry-specific inventory management characteristics which make it particularly suitable for

use in cross sectional studies.

FIGURE 2: RELATIONSHIP BETWEEN SALES AND INVENTORY LEVEL

CONCLUSION This paper investigates the effect of inventory leanness on company performance. The analysis of a large sample of manufacturing firms over time period

indicates that the significance and shape of this relationship varies greatly from one industry to another. Some of the industries exhibit no significant effect of

inventory leanness on firm performance.

The impact of inventory leanness on firm performance is mostly positive and generally nonlinear. In most instances, the effect of inventory leanness is concave

implying in line with inventory control theory that there is an optimal degree of inventory leanness beyond which the marginal effect of leanness on financial

performance becomes negative.

REFERENCES [1] Balakrishnan, R., Linsmeier, T.J., Venkatachalam M., “Financial benefits from JIT adoption: effects of customer concentration and cost structure”, The

Accounting Review, volume 71, pp. 183-205, 1996.

[2] Ballou, R.H., “Estimating and auditing aggregate inventory levels at multiple stocking points”, Journal of Operations Management, volume 1, pp. 143-153,

1981.

[3] Ballou, R.H., “Evaluating inventory management performance using a turnover curve”, International Journal of Physical Distribution & Logistics

Management, volume 30, pp. 72-85, 2000.

[4] Ballou, R.H., “Expressing inventory control policy in the turnover curve”, Journal of Business Logistics, volume 26, pp.143-164, 2005.

[5] Bradley R. Staats, David M. Upton, “Lean Knowledge Work”, Harvard Business Review, volume 89, pp.1-11, 2011.

[6] Cannon, A.R., “Inventory improvement and financial performance”, International Journal of Production Economics, volume 115, pp. 581-593, 2008.

[7] Capkun, V., Hameri, A., Weiss, L.A., “On the relationship between inventory and financial performance in manufacturing companies”, International Journal

of Operations & Production Management, volume 29, pp. 789-806, 2009.

[8] Chen, H., Frank M.Z., WuO.Q., “What actually happened to the inventories of American companies between 1981 and 2000?”, Management Science,

volume 51, pp. 1015–1031, 2005.

[9] David L. Cooke, Thomas R. Rohleder, “Inventory evaluation and product slate management in large-scale continuous process industries”, Journal of

operation management, volume 24, pp. 235-249, 2006.

[10] Fullerton, R.R., McWatters, C.S., “The production performance benefits from JIT implementation”, Journal of Operations Management, volume 19, pp.81-

96, 2001.

[11] Kinney, M.R.,Wempe, W.F., “Further evidence on the extent and origins of JIT’s profitability effects” The Accounting Review, volume 77, pp. 203-225, 2002.

[12] Matthias Holweg, “The genealogy of lean production”, Journal of Operations Management, volume 25, pp. 420-437, 2007.

[13] Rachna Shah, Peter T. Ward, “Defining and developing measures of lean production”, Journal of operations management, volume 25, pp. 785-805, 2007.

[14] Swamidass, P.M., “The effect of TPS on US manufacturing during 1981-1998: inventory increased or decreased as a function of plant performance”,

International Journal of Production Research, volume 45, pp. 3763-3778, 2007.

[15] Tyson R. Browning, Ralph D. Heath, “Reconceptualizing the effects of lean on production costs with evidence from the F-22 program”, Journal of

Operations Management, volume 27, pp. 23-44, 2009.

[16] Womack, J.P., Jones, D.T, “From lean production to the lean enterprise.” Harvard Business Review, volume 72, pp. 93-103, 1994.

[17] Womack, J.P., Jones, D.T., Roos, D., “The Machine that Changed the World” Rawson Associates, HarperCollins, NY, 1990.

[18] Zipkin, P.H, “Does manufacturing need a JIT revolution?” Harvard Business Review, volume 69, pp. 40-50, 1991.



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85

A STUDY OF BUSINESS OPERATION OF RRBs OF GUJARAT

JAIMIN H. TRIVEDI

ASST. PROFESSOR

TAKSHASHILA COLLEGE OF MANAGEMENT & TECHNOLOGY

SARDAR PATEL UNIVERSITY

BAKROL

ABSTRACT This paper attempts to understand the business operations like lending and recovery performance of regional rural banks of Gujarat state. For the study

researcher has selected three banks i.e. Baroda Gujarat gramin bank, Dena Gujarat gramin bank, and saurastra gramin bank. This study is totally based on

secondary data only. The study is carried on with the help of ratio analysis which provides the clear cut idea about the efficiency in the Business operation among

this three banks.

KEYWORDS Business, RRBs, Gujrat, Banking.

INTRODUCTION s per the Act, the RRBs transact the business of banking as defined under the banking regulation Act, 1949 (I.e. accepting for the purpose of lending or

investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise). RRBs can

carry on any business which a commercial bank is allowed to carry on, however, the Act enjoins upon the RRBs the responsibility of lending to small and

marginal farmers and agricultural labourers, and to co-operatives societies, including agricultural marketing and processing societies, primary agricultural credit

societies, farmers service societies etc. as also to artisans, small entrepreneurs and persons of small means engaged in trade, commerce or industry, or other

productive activities, within, within the notified area in relation to the bank. With the passage of time, the concept of lending to this 'target group' has been

withdrawn and the RRBs have been allowed to lend to any person in their notified area of operation, with the condition that advances to 'priority sector' should

not be less than 60 percent of their total advances Bank extends credit to different categories of borrowers for a wide variety of purposes. For many borrowers bank credit is the easiest to access at reasonable

interest rates. Bank credit is provided to households, retail traders small and medium enterprises (SMEs), corporate, the government undertaking etc. in the

economy.

RESEARCH METHODOLOGY This study is carried on for the understanding of business operation (lending and borrowing) of regional rural banks of Gujarat. Three banks have been selected

for the study i.e. BGGB, SGB, & DGGB. Ratio analysis has been used to identify the efficiency of business operation. The period of study is for five years i.e.2005-

06 to 2009-10.

RATIO ANALYSIS

Ratio Analysis is a widely used tool of financial analysis. It is defined as the systematic use of ratio to interpret the financial statement. So that the strength and

weaknesses of a firm as well as its historical performance and current financial condition can be determined. The term ratio refers to the numerical or

quantitative relationship between two items or variables. This relationship can be expressed as percentage portion of number of fractions. This alternative

method of expressing items which are related to each other for the purpose of financial analysis is referred as Ratio Analysis.

The ratio analysis provides useful data to the management, which would hold them in taking important policy decision. Diverse group of people make use of

ratio to determine a particular aspect of the financial position of the company in which they are interested.

BARODA GUJARAT GRAMIN BANK The central governments vide its notification No. F. 1(2) 2001/RRB dated 12th September, 2005 in exercise of the powers conferred by sub section (1) of section

23A of the RRBs act. 1976(21 of 1976) and also in consultation with National Bank for Agriculture and Rural Development (NABARD), Government of Gujarat,

and Bank, Surat Bharuch Gramin Bank and Valsad Dang Gramin Bank in the public interest and in the interest of the development of the area served by the

aforesaid RRBs and also in the interest of said RRBs themselves it had been decided that the said RRBs should be amalgamated into a single Regional Rural Bank

and named as Baroda Gujarat Gramin Bank and named as Baroda Gujarat Gramin Bank with its head office at Bharuch w.e.f 12th September,2005.

DENA GUJARAT GRAMIN BANK

The DGGB came in to existence on 26th December, 1978. Providing there in for amalgamation of the three RRBs sponsored by Dena Bank, named Kutch Gramin

Bank, Banaskatha, Mehsana Gramin Bank and Sabarkatha, Gandhinagar Gramin Bank and Patna Gramin Bank established under the RRBs Act, 1979.

SAURASHTRA GRAMIN BANK SGB, sponsored by State Bank of India, came into existence vide GOI notification NO.1/26/2005-RRBs Dtd.02.01.2006 by amalgamation of three erstwhile RRBs

viz.

1. Jamnagar-Rajkot Gramin Bank

2. Surendranagar-Bhavnagar Gramin Bank

3. Junaghdh- Amreli Gramin Bank

As on 2nd January, 2006 under provision of Sec. 3(I) of RRBs Act 976.

CREDIT - DEPOSIT (C. D. RATIO) RATIO Ratio between credit and deposit reveals the possibilities of utilization of available deposits in the form of credit higher percentage or ratio of credit deposit

shows more benefits to the society through the credit mechanization in the contest of rural area or it reveals how much the rural have helped the rural

development through credit. The lesser percentage of ratio of credit deposit shows its lesser benefits to the social through its credit mechanization and deposit

mobilization in the context of rural area. In the RRBs credit deposit ratio is higher than in the commercial banks. This difference is there because the RRBs are

based not only on deposits, but also on borrowing from their main object is to provide financial assistance in rural areas.

A



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TABLE- 1: C.D. RATIO OF RRBs DURING THE PERIOD FROM 2005-06 TO 2009-10 (Rs. In Lacs)

Name of RRBs Year Deposits Advance C. D. Ratio In %

BGGB 2005-06 64989.45 28419.84 43.73

2006-07 76299.36 35612.33 46.74

2007-08 85563.17 43018.20 50.28

2008-09 106321.71 44960.02 42.29

2009-10 115800.43 46615.43 40.25

DGGB 2005-06 73979.43 29030.99 39.24

2006-07 88385.27 43527.30 49.25

2007-08 106686.03 53925.18 50.54

2008-09 157121.34 46358.00 29.50

2009-10 188222.38 52378.95 27.83

SGB 2005-06 55009.15 36449.38 66.99

2006-07 68132.00 44208.00 65.93

2007-08 84154.88 53692.38 63.80

2008-09 107331.12 65058.29 60.51

2009-10 122013.02 71953.91 58.97

(Source: Annual reports of various RRBs)

The above table shows the credit and deposit performance of RRBs of Gujarat from 2005-06 to 2009-10. The overall performance of all three banks are good but

which one is best, that we can conclude on the base of average ratio during the period from 2005-06 to 2009-10.

RECOVERY OF LOAN AND ADVANCES OF RRBs Recovery is an important ingredient of fund recycling and it accelerates the disbursement of loan. RRBs made all possible efforts for recovering their dues. The

poor recoveries of loans make the recycling of limited funds of the banks almost impossible and consequently, the profitability of the bank is eroded.

TABLE - 2: RECOVERY PERFORMANCE OF RRBs DURING THE PERIOD FROM 2005-06 TO 2009-10

Name of RRBs Year Demand Collection Overdue Recovery In %

BGGB 2005-06 17271.28 11482 5789.36 66.48

2006-07 15303.2 10509.24 4793.96 68.67

2007-08 17141.05 12366.96 4774.09 72.15

2008-09 21569.16 16594.17 4974.99 76.93

2009-10 24214.46 18499.29 5715.17 76.40

DGGB 2005-06 15865.25 13402.55 2462.95 84.48

2006-07 20015 17656 2359 88.21

2007-08 31618.55 27327.39 4291.16 90.02

2008-09 42217.32 38842.27 3375.05 92.00

2009-10 55751.24 51857.77 3893.47 93.01

SGB 2005-06 42202.67 39192.35 3010.32 92.81

2006-07 36777.44 33189.98 2987.46 91.74

2007-08 48329.97 41011 7318.97 84.86

2008-09 53829.77 38572.62 15257.15 71.66

2009-10 65014.37 53534.08 11480.29 82.34

(Source: Annual reports of various RRBs)

The recovery performance of RRBs showing in above table is that The highest recovery was 92.81% by SGB in the year 2005-06 and the lowest recovery

performance of 66.48% by BGGB in the year of 66.48% in the year of 2005-06, the overall recovery performance was good during the period from 2005-06 to

2009-10.

AVERAGE OF C.D. RATIO & RECOVERY RATIO The average ratio of all the three regional rural banks regarding the credit deposit and recovery operation during the period of study are as follows.

TABLE - 3: AVERAGE OF C. D. RATIO & RECOVERY RATIO

Name of Banks Average ratio during the period from 2005-06 to 2009-10

C.D. Ratio Recovery ratio

BGGB 44.66 % 72.13%

DGGB 39.27% 89.54%

SGB 63.24% 84.68%

INFERENCE

The average credit deposit ratio of SGB is the highest during the period from 2005-06 to 2009-10 which reveals the best performance of credit deposit

operations of SGB among all three banks but the recovery performance is poor in compare to DGGB.

From the above analysis we can conclude that the overall performance of all three banks regarding lending and borrowing operation is good.

FINDINGS AND CONCLUSION � The advances of BGGB, DGGB, SGB were showing the increasing trend during the period from 2005-06 to 2009-10.

� Deposits of BGGB, DGGB, SGB were showing an increasing trend during the period from 2005-06 to 2009-10.

Variation was seen in the credit deposit ratio of the selected bank. It ranged from minimum of 27.83% of DGGB and maximum percentage of SGB i.e.66.99%.

High C.D ratio of RRBs may be a favorable feature for rural development because the banks are in a better position to provide a large amount of finance to a

large number of borrowers. But from the high to poor recovery performance, high C. D. ratio entails high incidents, bad-debts, and losses.

REFERENCES � Sonara, C. K., Regional Rural Banks In India, Anmol Publication Pvt.Ltd.-New Delhi.

� Gordan & Natrajan " Banking theory law and practice" H.P.H. Mumbai 20th edition 2006

� Kothari C.R."Research Methodology" Annual Report of BGGB.

� Annual Report of DGGB.

� Annual Report of SGB.



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SKILLS & COMPETENCIES FOR THE AGE OF SUSTAINABILITY: AN UNPRECEDENTED TIME OF

OPPORTUNITY

DR. B. REVATHY

ASSOCIATE PROFESSOR


SCHOOL OF BUSINESS STUDIES

MANONMANIAM SUNDARANAR UNIVERSITY

TIRUNELVELI

ABSTRACT Skills and knowledge are the driving forces of economic growth and social development for any country. Countries with higher and better levels of skills adjust

more effectively to the challenges and opportunities of world of work. India has set a target of skilling 500 million people by 2022. As the proportion of working

age group of 15-59 years will be increasing steadily, India has the advantage of “demographic dividend’. Harnessing the demographic dividend through

appropriate skill development efforts would provide an opportunity to achieve inclusion and productivity within the country and also a reduction in the global skill

shortages. Large scale skill development is thus an imminent imperative. The article highlights the skills required for sustainability as the country moves to a

sustainable, low carbon, resource efficient economy; a range of skills for sustainability will be required in existing, emerging and new industries. In any one

context, one is likely to draw on more than one competency. In fact, any given situation or goal may demand a constellation of competencies, configured

differently for each particular case. Thus the technique of combining key competencies is elaborated in the article. The article brings to light the challenges for

skill development and the barriers to effective skill development. The article concludes that quality and relevance of skill development are key to India’s global

competitiveness as well as to improve an individual’s access to decent employment.

KEYWORDS Ability, commitment, competence, skills, sustainability.

INTRODUCTION ndia is increasingly becoming a top global innovator for high-tech products and services. Still, the country is underperforming relative to its

innovation potential - with direct implications for long-term industrial competitiveness and economic growth. About 90 percent of Indian workers are

employed in the informal sector, and this sector is often characterized by underemployment, as well as low-productivity and low-skill activities. Although

India has the benefit of a dynamic young population with more than half of the country's population under 25 years old— only 17 percent of people in their

mid-20s and older have a secondary education. To sustain rapid growth and help alleviate poverty, India needs to aggressively harness its innovation potential,

relying on innovation-led, rapid, and inclusive growth to achieve economic and social transformation.

The need is to up-skill the Indian workforce so that our businesses and industry is efficient, sustainable, and internationally competitive. Our key competitive

advantage has been the intellectual capital of our employees. Now over 60% of the jobs demand skills and competencies of well trained employees. Therefore, it

is an undisputed fact that human capital is critical to organisation’s financial performance. The financial impact resulting from strategic investment in learning

and development is also well documented in several reputed research studies. It is critical for all successful organisations to build a competitive advantage

through training & skilling human resources and to link enhanced employee productivity directly to business gains. In today's dynamic business environment,

‘people skills’ and competence are critical for both personal and organisational success. Skills for sustainability (also known as green skills), are the technical

skills, knowledge, values and attitudes needed in the workforce to develop and support sustainable social, economic and environmental outcomes in business,

industry and the community. An organisation's performance hinges on its ability to hire, retain and groom the best talent in a highly complex business

environment.

GLOBALISATION DRIVEN BY TECHNOLOGY AND THE EMERGING KNOWLEDGE ECONOMY Globalisation and modernisation are creating an increasingly diverse and interconnected world. To make sense of and function well in this world, individuals

need to master changing technologies and make sense of large amounts of available information. They also face collective challenges as societies – such as

balancing economic growth with environmental sustainability, and prosperity with social equity. In these contexts, the competencies that individuals need to

meet their goals have become more complex, requiring more than the mastery of certain narrowly defined skills. “Sustainable development and social cohesion

depend critically on the competencies of all of our population – with competencies understood to cover knowledge, skills, attitudes and values.”

Occupational patterns are changing; new jobs and job titles, job enlargement, job enrichment, and new flexible work arrangements are emerging. Employment

demands are shifting towards higher skill categories. It is imperative, therefore, for India to move up the skill-ladder and produce a larger number of people with

higher education and generic training for new types of knowledge work, both in high skill services and high technology industrial production. Knowledge

professionals will need support from middle-skilled workers in new knowledge and technology areas. The skill development system will need to meet this

challenge. The response time is limited as the rate of change is high and accelerating.

INDIVIDUAL AND GLOBAL CHALLENGES Individuals need to draw on key competencies that allow them to adapt to a world characterized by change, complexity and interdependence. Not only are

individuals expected to be adaptive, but also innovative, creative, self-directed and self-motivated. These competencies need to be appropriate for a world

where:

● Technology is changing rapidly and connnuously, and learning to deal with it requires not just one-off mastery of processes but also adaptability.

● Socienes are becoming more diverse and compartmentalized, with interpersonal relanonships therefore requiring more contact with those who are different

from oneself.

● Globalisanon is creanng new forms of interdependence, and actions are subject both to influences (such as economic competition) and consequences (such as

pollution) that stretch well beyond an individual’s local or national community.

Achieving sustainability will require a new set of skills and abilities. Decisions and activities of individuals are to be revamped so that they are supported by an

understanding of science and business with the goals of:

a) Integrating actions of conservation and human development.

b) Satisfying basic human needs.

c) Achieving equality and social justice for all.

d) Facilitating social self-determination and cultural diversity.

e) Managing our legacy for future generations.

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f) Maintaining ecological integrity.

g) Developing new technologies and product manufacturing processes.

In order to attain this model of practice, existing and aspiring practitioners in different areas of sustainable development should be exposed to a consistent set

of criteria and competencies defining their educational achievements in the overall field of sustainability.

SKILLS FOR SUSTAINABILITY Our transformation from unsustainability to sustainability comprises of four sets of critical skills required to realize the great opportunity for creating a better

world:

� the skills of thinking and seeing systemically or holistically

� the skills of creating a positive vision of the future

� the skills of finding like-minded people for cooperative efforts

� the skills of using available resources in new ways

This set of skills is absolutely essential to make strategic decisions about how to contribute to sustainability with our life, or even how to generate positive

visions of humanity's future. Sustainability is not just an "environmental" matter; it is a matter of changing the whole way we understand ourselves, the way we

think about and behave towards ourselves and each other. It demands a holistic approach.

As the country moves to a sustainable, low carbon, resource efficient economy, a range of skills for sustainability will be required in existing, emerging and new

industries. And workers across the economy will need new skills to increase resource efficiency, reduce waste, conserve water and develop and implement new

technologies and practices for a more sustainable world. Skills for sustainability will be important to all industries and sectors, not just to the trades. For

example: lawyers, accountants and economists will need to respond to the demand for environmental reporting and accounting practices. Planners, architects

and engineers will need to respond to demand for sustainable design and new green materials. Business owners and operators will need to respond to rapidly

escalating energy, water and waste costs. Retailers, service providers and procurement managers will need to respond to increasing consumer and client

demand for green products and services. Primary producers will need to respond to rising input costs and land degradation.

A competency is an observable, behavioral act that demonstrates a professional’s knowledge, skill and ability.

Competence includes the knowledge, understanding and skills that underpin performance. It is attained through a mixture of education, training and

professional development. Competence (or competency) is the ability of an individual to perform a job properly. A competency is a set of defined behaviors that

provide a structured guide enabling the identification, evaluation and development of the behaviors in individual employees. As defined, the term "competence"

first appeared in an article authored by Craig C. Lundberg in 1970 titled "Planning the Executive Development Program". “Competence" is a combination of

knowledge, skills and behavior used to improve performance or the state or quality of being adequately or well qualified, having the ability to perform a specific

role. For instance, management competency might include systems thinking and emotional intelligence, and skills in influence and negotiation. Competency is

also used as a more general description of the requirements of human beings in organizations and communities. Competency is sometimes thought of as being

shown in action in a situation and context that might be different the next time a person has to act. In emergencies, competent people may react to a situation

following behaviors they have previously found to succeed. To be competent a person would need to be able to interpret the situation in the context and to

have a repertoire of possible actions to take and have trained in the possible actions in the repertoire, if this is relevant. Regardless of training, competency

would grow through experience and the extent of an individual to learn and adapt. Competency has different meanings, and continues to remain one of the

most diffuse terms in the management development sector, and the organizational and occupational literature.

The OECD’s Definition and Selection of Competencies (DeSeCo) Project’s conceptual framework for key competencies classifies competencies in three broad

categories.

First, individuals need to be able to use a wide range of tools for interacting effectively with the environment: both physical ones such as information technology

and socio-cultural ones such as the use of language. They need to understand such tools well enough to adapt them for their own purposes – to use tools

interactively.

Second, in an increasingly interdependent world, individuals need to be able to engage with others, and as they will encounter people from a range of

backgrounds, it is important that they are able to interact in heterogeneous groups.

Third, individuals need to be able to take responsibility for managing their own lives, situate their lives in the broader social context and act autonomously.

These categories, each with a specific focus, are interrelated, and collectively form a basis for identifying and mapping key competencies. The need for

individuals to think and act reflectively is central to this framework of competencies. Reflectiveness involves not just the ability to apply routinely a formula or

method for confronting a situation, but also the ability to deal with change, learn from experience and think and act with a critical stance.



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CORE COMPETENCE IN SUSTAINABILITY Competence is a functionally linked complex of knowledge, skills, and attitudes that enable successful task performance and problem solving. Competencies in

sustainability, these are complexes of knowledge, skills, and attitudes that enable successful task performance and problem solving with respect to real-world

sustainability problems, challenges, and opportunities.

SUSTAINABILITY REQUIRES

• Collaboration across/beyond disciplines

• Involvement of stakeholders

• Commitment to justice and equity

Competencies as abstractions of work-relevant human behaviour have emerged as a promising concept for making human skills, knowledge and abilities

manageable and addressable in a wide range of application areas. From a management point of view, they provide a more adequate approximation of human

performance factors than the notion of ”knowledge” in traditional knowledge management approaches as they can represent a set of skills, knowledge, and

abilities that belongs together and as competencies go beyond mere “knowing” towards work-relevant action. For the traditional training (and human resource

development) community, competencies allow for operationalizing learning goals and outcomes and thus can serve as a control instrument. And competence

management approach aim at connecting the individual and the organizational perspective via the competency abstraction.

COMPETENCY-DRIVEN APPROACHES ARE FACING FUNDAMENTAL CHALLENGES a) A well-defined common understanding of each competency needs to be developed and enforced across various departments or even organizations.

b) On the technical level, various systems and services involved in HR, training, and knowledge management need to be semantically coherent so that

competency-driven approaches can live up to their holistic expectations.

c) The crucial trade-off in competency modelling needs to be solved: the more accurate, realistic and fine-grained considered competencies are, the more

complex management and controlling tasks become. Today’s societies place challenging demands on individuals, who are confronted with complexity in

many parts of their lives.

Defining such competencies can improve assessments of how well prepared young people and adults are for life’s challenges, as well as identify overarching

goals for education systems and lifelong learning. A competency is more than just knowledge and skills. It involves the ability to meet complex demands, by

drawing on and mobilizing psychosocial resources (including skills and attitudes) in a particular context. For example, the ability to communicate effectively is a

competency that may draw on an individual’s knowledge of language, practical IT skills and attitudes towards those with whom he or she is communicating.

Individuals need a wide range of competencies in order to face the complex challenges of today’s world, but it would be of limited practical value to produce

very long lists of everything that they may need to be able to do in various contexts at some point in their lives. Some of these competencies may be general and

some peculiar to the chosen career.

A BASIS FOR KEY COMPETENCIES COMPETENCE AND THE DEMANDS OF MODERN LIFE

Key competencies are not determined by arbitrary decisions about what personal qualities and cognitive skills are desirable, but by careful consideration of the

psychosocial prerequisites for a successful life and for a well-functioning society. Competence is also an important factor in the ways that individuals help to

shape the world, not just to cope with it. Thus, as well as relating to key features and demands of modern life, competencies are also determined by the nature

of our goals, both as individuals and as a society. Coping with today’s challenges calls for better development of individuals’ abilities to tackle complex mental

tasks, going well beyond the basic reproduction of accumulated knowledge. Key competencies involve a mobilisation of cognitive and practical skills, creative

abilities and other psychosocial resources such as attitudes, motivation and values. Competencies comprise more than just taught knowledge. The framework

described here relates to individual competencies, rather than to the collective capacities of organisations or groups. However, as illustrated in the diagram

below, the sum of individual competencies also affects the ability to achieve shared goals.

INDIVIDUAL AND COLLECTIVE GOALS AND COMPETENCIES

In so far as competencies are needed to help accomplish collective goals, the selection of key competencies needs to some extent to be informed by an

understanding of shared values. The competency framework is thus anchored in such values at a general level. These values imply both that individuals should

be able to achieve their potential and that they should respect others and contribute to producing an equitable society. The complementarity of individual and

collective goals needs to be reflected in a framework of competencies that acknowledges both individuals’ autonomous development and their interaction with

others.

SELECTING KEY COMPETENCIES

The above demands place varied requirements on individuals in different places and different situations. However, key competencies are those of particular

value, that have multiple areas of usefulness and that are needed by everyone. The first of these conditions, that competencies should be valued, applied in

relation to measurable benefits for both economic and social purposes. Recent research reinforces the view that human capital not only plays a critical role in

economic performance, but also brings key individual and social benefits such as better health, improved well being, better parenting, and increased social and

political engagement. The second condition, that competencies should bring benefits in a wide spectrum of contexts, means that they apply to multiple areas of

life. Thus, certain areas of competence are needed not only in the labour market but also in private relationships, in political engagement and so on, and it is



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these transversal competencies that are defined as key. The third condition, that key competencies should be important for all individuals. Emphasis is given to

transversal competencies that everyone should aspire to develop and maintain.

COMBINING KEY COMPETENCIES

A further link between the specific competencies described below is that in any one context, one is likely to draw on more than one such competency. In fact,

any given situation or goal may demand a constellation of competencies, configured differently for each particular case. People living in different situations will

draw to varying degrees on various competencies according, for example to cultural norms, technological access, social and power relations. The ability to deal

with differences and contradictions is found on many lists of key competencies within the economic and educational sector. Today’s diverse and complex world

demands that we do not necessarily rush to a single answer, to an either-or solution, but rather handle tensions –between, for instance, autonomy and

solidarity, diversity and universality, and innovation and continuity – by integrating seemingly contradictory or incompatible goals as aspects of the same reality.

Thus, individuals have to learn to think and act in a more integrated way, taking into account the manifold interconnections and interrelations between positions

or ideas that may appear contradictory, but that may sometimes only superficially be so.

COMPETENCY CATEGORY 1: USING TOOLS INTERACTIVELY

The social and professional demands of the global economy and the information society require mastery of socio-cultural tools for interacting with knowledge,

such as language, information, and knowledge, as well as physical tools such as computers. Using tools interactively requires more than having access to the tool

and the technical skills required to handle it (e.g. read a text, use software). Individuals also need to create and adapt knowledge and skills. This requires a

familiarity with the tool itself as well as an understanding of how it changes the way one can interact with the world and how it can be used to accomplish

broader goals. In this sense, tools not just a passive mediator, but an instrument in an active dialogue between the individual and his or her environment.

Individuals encounter the world through cognitive, socio-cultural and physical tools. These encounters, in turn, shape how they make sense of and become

competent in the world, deal with transformation and change, and respond to long-term challenges. Using tools interactively opens up new possibilities in the

way individuals perceive and relate to the world.

COMPETENCY 1-A: THE ABILITY TO USE LANGUAGE, SYMBOLS AND TEXT INTERACTIVELY

This key competency concerns the effective use of spoken and written language skills, computation and other mathematical skills, in multiple situations. It is an

essential tool for functioning well in society and the workplace and participating in an effective dialogue with others. Terms such as “communication

competence” or “literacies” are associated with this key competency.

COMPETENCY 1-B: THE ABILITY TO USE KNOWLEDGE AND INFORMATION INTERACTIVELY

Both the increasingly important role of the service and information sectors and the central role of knowledge management throughout today’s societies make it

essential for people to be able to use information and knowledge interactively. This key competency requires critical reflection on the nature of information

itself – its technical infrastructure and its social, cultural, and even ideological context and impact. Information competence is necessary as a basis for

understanding options, forming opinions, making decisions, and carrying out informed and responsible actions. Using knowledge and information interactively

requires individuals to:

● Recognise and determine what is not known;

● Idennfy, locate and access appropriate informanon sources (including assembling knowledge and informanon in cyberspace);

● Evaluate the quality, appropriateness and value of that informanon, as well as its sources; and

● Organise knowledge and informanon

COMPETENCY 1-C: THE ABILITY TO USE TECHNOLOGY INTERACTIVELY

Technological innovation has placed new demands on individuals inside and outside the workplace. At the same time, technological advances present individuals

with new opportunities to meet demands more effectively in new and different ways. Interactive use of technology requires an awareness of new ways in which

individuals can use technologies in their daily lives. Information and communication technology has the potential to transform the way people work together (by

reducing the importance of location), access information (by making vast amounts of information sources instantly available) and interact with others (by

facilitating relationships and networks of people from around the world on a regular basis). To harness such potential, individuals will need to go beyond the

basic technical skills needed to simply use the Internet, send e-mails and so on. As with other tools, technology can be used interactively if users understand its

nature and reflect on its potential. Most importantly, individuals need to relate the possibilities embedded in technological tools to their own circumstances and

goals. A first step is for individuals to incorporate technologies into their common practices, which produces a familiarity with the technology that then allows

them to extend its uses.

COMPETENCY CATEGORY 2: INTERACTING IN HETEROGENEOUS GROUPS

Throughout their lives human beings are dependent on ties to others, for material and psychological survival, as well as in relation to social identity. As societies

become in some ways more fragmented and also more diverse, it becomes important to manage interpersonal relationships well both for the benefit of

individuals and to build new forms of co-operation. The building of social capital is important, as existing social bonds weaken and new ones are created by

those with the ability to form strong networks. One of the potential sources of inequity in the future could be differences in the competence of various groups to

build and benefit from social capital. The key competencies in this category required for individuals are to learn, live and work with others. They address many of

the features associated with terms such as “social competencies”, “social skills”, “intercultural competencies” or “soft skills”.

COMPETENCY 2-A: THE ABILITY TO RELATE WELL TO OTHERS

This first key competency allows individuals to initiate, maintain and manage personal relationships with, for example, personal acquaintances, colleagues and

customers. Relating well is not only a requirement for social cohesion but, increasingly, for economic success as changing firms and economies are placing

increased emphasis on emotional intelligence. This competency assumes that individuals are able to respect and appreciate the values, beliefs, cultures and

histories of others in order to create an environment where they feel welcome, are included and thrive. Co-operating well with others requires:



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● Empathy - taking the role of the other person and imagining the situation from his or her perspective. This leads to self-reflection, when, upon considering a

wide range of opinions and beliefs, individuals recognize that what they take for granted in a situation is not necessarily shared by others.

● Effecnve management of emonons – being self-aware and able to interpret effectively one’s own underlying emotional and motivational states and those of

others.

COMPETENCY 2-B: THE ABILITY TO COOPERATE

Many demands and goals cannot be met by one individual alone but instead require those who share the same interests to join forces in groups such as work

teams, civic movements, management groups, political parties or trade unions. Co-operation requires each individual to have certain qualities. Each needs to be

able to balance commitment to the group and its goals with his or her own priorities and must be able to share leadership and to support others. Specific

components of this competency include:

● The ability to present ideas and listen to those of others;

● An understanding of the dynamics of debate and following an agenda;

● The ability to construct tacncal or sustainable alliances;

● The ability to negonate; and

● The capacity to make decisions that allow for different shades of opinion.

COMPETENCY 2-C: THE ABILITY TO MANAGE AND RESOLVE CONFLICTS

Conflict occurs in all aspects of life, whether in the home, workplace or the larger community and society. Conflict is part of social reality, an inherent part of

human relationships. It arises when two or more individuals or groups oppose one another because of divergent needs, interests, goals or values. The key to

approaching conflict in a constructive manner is to recognise that it is a process to be managed rather than seeking to negate it. This requires consideration of

the interests and needs of others and solutions in which both sides gain. For individuals to take an active part in conflict management and resolution, they need

to be able to:

● Analyse the issues and interests at stake (e.g. power, recognition of merit, division of work, equity), the origins of the conflict and the reasoning of all sides,

recognising that there are different possible positions;

● Idennfy areas of agreement and disagreement;

● Reframe the problem; and

● Priorinse needs and goals, deciding what they are willing to give up, and under what circumstances

COMPETENCY CATEGORY 3: ACTING AUTONOMOUSLY

Acting autonomously does not mean functioning in social isolation. On the contrary, it requires an awareness of one’s environment, of social dynamics and of

the roles one plays and wants to play. It requires individuals to be empowered to manage their lives in meaningful and responsible ways by exercising control

over their living and working conditions. Individuals must act autonomously in order to participate effectively in the development of society and to function well

in different spheres of life including the workplace, family life and social life. This is because they need to develop independently an identity and to make

choices, rather than just follow the crowd. In doing so, they need to reflect on their values and on their actions. Acting autonomously is particularly important in

the modern world where each person’s position is not as well-defined as was the case traditionally. Individuals need to create a personal identity in order to give

their lives meaning, to define how they fit in. In general, autonomy requires an orientation towards the future and an awareness of one’s environment, of social

dynamics and of the roles one plays and wants to play. It assumes the possession of a sound self-concept and the ability to translate needs and wants into acts

of will, decision, choice and action.

COMPETENCY 3-A: THE ABILITY TO ACT WITHIN THE BIG PICTURE

This key competency requires individuals to understand and consider the wider context of their actions and decisions. That is, it requires one to take account of

how they relate, for example, to society’s norms, to social and economic institutions and to what has happened in the past. One needs to recognise how one’s

own actions and decisions fit into this wider picture. This competency requires individuals, for instance, to:

● Understand paqerns;

● Have an idea of the system in which they exist (i.e. understand its structures, culture, practices, and formal and informal rules and expectations and the roles

they play within it, including understanding laws and regulations, but also unwritten social norms, moral codes, manners and protocol). It complements an

understanding of rights with knowledge of the constraints on actions;

● Identify the direct and indirect consequences of their actions; and

● Choose between different courses of action by reflecting on their potential consequences in relation to individual and shared norms and goals

COMPETENCY 3-B: THE ABILITY TO FORM AND CONDUCT LIFE PLANS AND PERSONAL PROJECTS

This competency applies the concept of project management to individuals. It requires individuals to interpret life as an organised narrative and to give it

meaning and purpose in a changing environment, where life is often fragmented. This competency assumes an orientation towards the future, implying both

optimism and potential, but also a firm grounding within the realm of the feasible. Individuals must be able, for instance, to:

● Define a project and set a goal;

● Idennfy and evaluate both the resources to which they have access and the resources they need (e.g. nme and money);

● Priorinse and refine goals;

● Balance the resources needed to meet mulnple goals;

● Learn from past actions, projecting future outcomes; and

● Monitor progress, making necessary adjustments as a project unfolds.

COMPETENCY 3-C: THE ABILITY TO ASSERT RIGHTS, INTERESTS, LIMITS AND NEEDS

This competency is important for contexts ranging from highly structured legal affairs to everyday instances of assertiveness of individuals’ own interests.

Although many such rights and needs are established and protected in laws or contracts, it is ultimately up to individuals to identify and evaluate their rights,

needs and interests (as well as those of others) and to assert and defend them actively.

On the one hand, this competency relates to self-oriented rights and needs; on the other hand, it also relates to the rights and needs of the individual as a

member of the collective (e.g. actively participating in democratic institutions and in local and national political processes). The competency implies the ability,

for instance, to:

● Understand one’s own interests (e.g. in an elecnon);

● Know wriqen rules and principles on which to base a case;

● Construct arguments in order to have needs and rights recognised; and

● Suggest arrangements or alternanve solunons

CHALLENGES FOR SKILL DEVELOPMENT The country is poised at a moment in history when a much brighter future for its entire people is within its reach. Skill development will help actualize this

potential. Development and articulation of a national policy on skill development is a matter of priority.

A task of skill development has many challenges which include:-

a) Increasing capacity and capability of existing system to ensure equitable access to all.

b) Promoting life long learning, maintaining quality and relevance, according to changing requirement particularly of emerging knowledge economy.

c) Creating effective convergence between school education, various skill development efforts of government and between government and Private Sector

initiative.



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d) Capacity building of institutions for planning, quality assurance and involvement of stake holders.

e) Creating institutional mechanism for research, development, quality assurance, examinations and certification, affiliations and accreditation.

f) Increasing participation of stakeholders, mobilizing adequate investment for financing skill development, attaining sustainability by strengthening physical

and intellectual resources.

BARRIERS TO EFFECTIVE SKILL DEVELOPMENT LACK OF EXPERTISE

As a new and emerging area of skill development, accessing the necessary expertise to develop and deliver skills for sustainability is another challenge. To be

considered credible, teachers and trainers need to have expertise and experience in sustainable practices, as well as to be skilled facilitators of learning. The

difficulty lies in finding people who have expertise in both sustainability and in education. Drivers and support Consultations have overwhelmingly confirmed

that action taking place in the area of skills for sustainability is being driven by individual passion. The impetus for developing and offering skill development was

the result of a passionate individual pushing for action - even in the large-scale state-wide programs. Amongst participants, individual passion is also a key driver

for participating in skills for sustainability. The lack of support from managers, institutions and state policy directives were by far the most common challenges in

undertaking skill development for sustainability and in trying to implement or pass on their learning back in their workplaces. This lack of systemic support

means that responsibility and time for addressing skills for sustainability issues is not being built into role descriptions, workloads or organisational practices.

FUNDING AND LONG-TERM APPROACHES

An issue raised in almost every consultation is the lack of funding for skills for sustainability. In our country those with responsibility for sustainability and

professional development scrounge for funding opportunities. In situations where funds are available, it is generally for one-off projects, rather than for the

implementation of long-term initiatives or funding of ongoing sustainability-focused positions of responsibility. As education for sustainability is about changing

values, attitudes and behaviours, skill development will require long-term approaches, including support for encouraging and embedding change over the long

term. It also requires mechanisms for measuring change and for long-term approaches to evaluation.

INDUSTRY ENGAGEMENT

Most of the expertise in sustainability currently lies within industry, and the challenge lies in the VET sector connecting with it.

COST

The most common barrier is cost. This includes costs of providing replacement staff to cover those attending skill development programmes, as well as the cost

of the skill development activity itself. Budgets can be a problem, particularly for part-time and seasonal staff, who often have to fund their own skill

development. Distance, time and cost barriers are exacerbated for those in regional and remote areas, as most professional development activities tend to be

offered in capital cities.

TECHNOLOGY

With technology now being a central part of learning, either to access the learning itself, or to do the necessary research for undertaking learning tasks or finding

resources, lack of access to appropriate technology can be a major barrier.

Planned development of skills must be underpinned by a policy, which is both comprehensive as well as national in character. A national policy response is,

therefore, needed to guide the skill development strategies and coordinated action by all stake holders linked to policies in the economic, employment and

social development arenas.

VISION FOR THE NATIONAL SKILL DEVELOPMENT INITIATIVE IN INDIA � Scale of ambition: At present the capacity of skill development in India is around 3.1 million persons per year. The 11

th Five Year Plan envisions an increase

in that capacity to 15 million annually. India has target of creating 500 million skilled workers by 2022. Thus, there is a need for increasing capacity and

capability of skill development programs.

� High inclusivity: The skill development initiatives will harness inclusivity and reduce divisions such as male/female, rural/urban, organized/unorganized

employment and traditional/contemporary workplace.

� Dynamic and demand-based system planning: The skill development initiatives support the supply of trained workers who are adjustable dynamically to

the changing demands of employment and technologies. This policy will promote excellence and will meet the requirements of knowledge economy.

� Choice, competition and accountability: The skill development initiative does not discriminate between private or public delivery and users’ choice and

competition among training providers and their accountability.

� Policy coordination and coherence: The skill development initiatives support employment generation, economic growth and social development processes.

Skill development policy will be an integral part of comprehensive economic, labour and social policies and programmes. A framework for better

coordination among various Ministries, States, industry and other stakeholders will be established.

OPERATIONAL STRATEGIES The following operational strategies shall be adopted:

� Folding the future in: If we start from our current position, we are likely to extrapolate. Folding the future in allows us to innovate. Innovation is, therefore,

an important element of the strategy.

� Skills framework must move to a system of equivalence to diplomas and degrees: National Vocational Qualification Framework (NVQF) shall be created

with an open/flexible system which will permit individuals to accumulate their knowledge and skills, and convert them through testing and certification

into higher diplomas and degrees. NVQF shall provide quality assured various learning pathways having standards, comparable with any international

qualification framework. NVQF shall support lifelong learning, continuous up gradation of skills and knowledge.

� Skills must be bankable: The process of skill acquisition especially for the poor and needy persons shall be made bankable. The effort would be to

complement public investment with institutional/ bank finance.

� Co-created solutions and forging partnerships: We have to accept a very asymmetric India as a starting point. Partnerships shall be consciously promoted

between Government, industry, local governments, civil society institutions and all potential skill providers. Institutional mechanism and standing

platforms shall be created to ensure sustainability.

� Game-changing delivery/innovation: Availability of public institutions above the high school level, after class hours for skill development by the Private

Sector, without disturbing the normal working, shall be explored. Necessary regulations would be brought in by the local management authority of the

particular educational institution.

CORE OPERATING PRINCIPLES � Government financial support must complement private investment: The Central Ministries must focus on areas where private investment in skilled

development is unlikely to be available or forthcoming. The Government would aim at useful public-private partnerships.

� States as key actors: The States being the key actors in Skill Development would set up overarching integrated framework for action for Skill Development

through State level Skill Development Missions.

� Deployment of funds: The funds would be deployed more for activities than for buildings and other hard assets. However, up gradation of machinery and

equipment, teaching and learning aids will be a continuous process. Creation of infrastructure in latest technology, need-based new initiatives, creation of

infrastructure in rural, remote and difficult areas should continue.



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� Focus of modular courses, open architecture and short term courses: With fast changing skills in the labour market, focus should be on short, relevant and

effective courses that would get candidates into the workplace. They shall be welded through NVQF to maintain dynamism and open to feedback.

� Separate financing from delivery: Today Government funds are only available for government delivery. National Skill Development Corporation shall

support private skill development initiatives. Following financing options shall be explored:

o Link financing to outcomes: Today public and private training is financed largely on inputs viz. number of courses, number of students, faculty, etc.

Efforts would be made to move towards Government financing linked to placement ratios and outcomes.

o Focus funding on candidates: The focus would be on funding the candidates rather than institutions to create choice. This could be structured as a

scholarship, skill voucher, outcome based reimbursement, etc.

� Create infrastructure for on-the-job-training and encourage apprenticeships: The enabling infrastructure for large number of formal apprentices needs to

be built that includes modification to the Apprentices Act, 1961.

� Publicize rating and outcome information on training institutions: A framework of accreditation and infrastructure for information dissemination around

measurable criteria on institutions shall be created. Ratings of public and private institutions would be put on public domain.

� Effective assessment and credible certification: Quality assured learning, credible assessment and certification shall be developed. This will allow

employers to use the certificate as a proxy to fast track job applicants.

� Restructure employment exchanges as career guidance centres: Employment Exchanges shall be restructured as career guidance centres to channelize

candidates into jobs, apprenticeships and training.

� Expand formal employment: Formal employment is not only fiscally attractive but more amenable to financing innovations. This shall require a review of

existing State and Central legislations which shall encourage informal and unorganized employment.

� Promoting Excellence: To promote excellence, a significant number of well performing institutions shall be assisted to develop into institutions of

excellence. These institutions shall be generously resourced, equipped with internationally comparable facilities and high quality faculty and able to offer

high quality programmes in current and emerging technology areas. These institutions shall be networked with a number of training institutions in their

vicinity and shall serve as lead institutions in supporting their development.

APPROACH TO DELIVERABLES � Diversity of skills: There is a need to identify, catalog and project the range and depth of skills e.g. traditional, industrial-era and post-industrial era skills to

understand and present the vast array of skills that individuals can choose from.

� Talent pool: Skill inventory along with its various levels and grades shall be created.

� Employment outcomes: Skill training must ensure a job for those who seek it. The placement ratio shall be monitored and placed in the public domain by

agencies involved in skill training.

CONCLUSION Quality and relevance of skill development are key to India’s global competitiveness as well as to improve an individual’s access to decent employment. For

enterprises to compete in the global economy, the quality of labour force must reach world standards and be relevant to the needs of national and international

markets. To increase the relevance with future employment market including promotion of self employment, soft skills and entrepreneurship skills shall be

made integral part of skill development. The demographic advantage that the country enjoys, coupled with prospects of global shortages in skills as the world

population ages, means that the country could be supplying skills to the world.

REFERENCES 1. Agarwal, P. (2006) “Higher Education in India: The Need for a Change” Working Paper No. 179, ICRIER, New Delhi.

2. Dar, A. (2006) “Skill Development in India: The Vocational Education and Training System,” World Bank, Washington, DC.

3. Farrell, Diana, Noshir Kaka, and Sascha Sturze (2005) “Ensuring India’s Offshoring Future” Earthscan Publications, Mumbai.

4. Palmer, R. (2007) ‘Technical and vocational skills development and impressive economic growth: policy and research challenges” Indian Institute of

Management, Ahmedabad.

5. Robinson, M. A., Sparrow, P. R., Clegg, C., & Birdi, K. (2007) “Forecasting future competency requirements: A three-phase methodology” Personnel Review,

36(1), 65–90.

6. Rychen D.S. and Salganik L.H. (2003) “Key competencies for a successful life and a well-functioning society” DeSeCo Publications, New Delhi.

7. Rychen D.S. and Salganik L.H. and McLaughlin. M.E. (2003) “Defining and selecting key competencies” DeSeCo Publications, New Delhi

8. Salganik, L.H., Rychen, D.S., Moser. U., and Konstant .J. (2003) “Key competencies for a successful life and for a well-functioning society”, East West Books

Pvt. Ltd, New Delhi.



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CORPORATE SOCIAL RESPONSIBILITY @ ICICI BANK

MANISHA SAXENA

ASST. PROFESSOR

INSTITUTE OF MARKETING & MANAGEMENT

NEW DELHI

ABSTRACT A conscious society today has increasing appetite for the socially responsible investments made by organizations. Business groups have now realized that in the

global and highly competitive market place, success rests on the firm’s ability to sustain its growth through inclusion of multiple stakeholders (Robbins &

DeCenzo, 2006). This demands organizations to be more responsible to the environment they operate in. CSR – Corporate Social Responsibility is an innovative

approach undertaken by the corporate in the process of sustainable development. CSR approach is still new for the corporate managers as they are unable to

comprehend the tangible and intangible benefits of this approach to enhance their growth and ultimately gain the long-term profits. This paper makes an effort

to understand various CSR initiatives prevalent in the Indian banking sector with special reference to ICICI bank. It mainly analyses the CSR objectives of ICICI Bank

and its capacity to identify and address various social issues. According to a survey conducted by Karmayog in 2008 ICICI invests Rs. 20 crores yearly through its

dedicated not-for-profit group, the Social Initiatives Group (SIG). The three layers of CSR activities for ICICI Bank, are primary or elementary education, health at

birth and microfinance. While primary education connects the poor and the uneducated to the larger economy, activities in health and micro-finance have a

direct link with the bank’s business. Thus the Bank's CSR activities have taken three broad strategic directions: CSR through commercial activities, CSR in

partnership with civil society and CSR through ICICI Foundation for Inclusive Growth.

KEYWORDS

Corporate Social Responsibility, ICICI Foundation, Social Initiatives Group Multiple Stakeholders.

INTRODUCTION one are the days when organizations felt free to treat the society in whatever manner they felt most appropriate as it was a sellers’ market. Today a

conscious society has an increasing appetite for the socially responsible investments made by organizations. Business groups have now realized that in

the global and highly competitive market place, success rests on the firm’s ability to sustain its growth through inclusion of multiple stakeholders

(Robbins & DeCenzo, 2006). This demands organizations to be more responsible to the environment they operate in. CSR – Corporate Social Responsibility is an

innovative approach undertaken by the corporate in the process of sustainable development. CSR approach is still new for the corporate managers as they are

unable to comprehend the tangible and intangible benefits of this approach to enhance their growth and ultimately gain the long-term profits.

The objectives of the paper can be stated as follows:

• To find out the various CSR initiatives of the banking industry in India in general.

• To study the CSR activities of ICICI Bank Ltd. in particular.

• To understand the impact of CSR on sustainable development of ICICI Bank.

The above objectives were achieved by doing a systemic review of the available authentic documents in the concerned area along with information given on the

websites of Ministry of Corporate Affairs, Government of India; various banks; their annual and CSR and sustainability reports. Various reports based on the

survey conducted by Karmayog in the past years (2007, 2008 and 2009) were studied. To understand in depth the CSR initiatives of ICICI Bank a telephonic

interview with the help of a semi structured schedule (Annexure 1) was conducted with one of the team members of ICICI foundation, Mumbai.

DEFINING SUSTAINABILITY Brundtland Commission, formally the World Commission on Environment and Development (WCED), of the United Nations on March 20, 1987 defined

sustainability and sustainable development as: “sustainable development is development that meets the needs of the present without compromising the ability

of future generations to meet their own needs.” This required the reconciliation of environmental, social and economic demands - the "three pillars" of

sustainability as noted at the 2005 World Summit. To be sustainable any organization needs to look into all the three areas which are rather mutually reinforcing

than mutually exclusive. The economic pillar undoubtedly is the first and foremost but is not the only point of concern. It has to go hand in hand with the

organization’s social and environmental impact and performance.

Corporate Sustainability (CS) is a business approach that creates long-term consumer and employee value by not only creating a “green” strategy aimed towards

the natural environment, but taking into consideration every dimension of how a business operates in the social, cultural, and economic environment and one

that fosters longevity through transparency and proper employee development.

CORPORATE SOCIAL RESPONSIBILITY (CSR) - WHAT DOES IT MEAN? The World Business Council for Sustainable Development defines it as "CSR is the continuing commitment by business to behave ethically and contribute to

economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large" (Holme &

Watts, 2000).

The European model is more focused on operating the core business in a socially responsible way, complemented by investment in communities and seems to

be more sustainable because:

1. Social responsibility becomes an integral part of the wealth creation process - which if managed properly will solve a twin purpose of enhancing

competitiveness of business and maximizing the value of wealth creation to society.

2. In hard times CSR practices will always be the first thing to go if it is a philanthropic exercise, peripheral to the main business.

As there is no "one size fits all", different organizations have different priorities and values that shape how business act. Due to the varied inconsistencies in the

finalization of the CSR definitions it would be appropriate to stick to one definition of the concept. CSR can be defined as the "economic, legal, ethical, and

discretionary expectations that society has of organizations at a given point in time" (Carroll & Buchholtz, 2003). Essentially, CSR is the deliberate inclusion of

public interest into corporate decision-making, and the honoring of a triple bottom line: People (social bottom line)/planet (ecological bottom line)/profit

(economic bottom line). Figure 1 clearly brings out the connectivity between all the concepts.

G



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FIGURE 1: RELATIONSHIP 3P, CS & CSR

Source: Erasmus University, Wempe & Kaptein in Marrewijk (2003)

CSR A SNAPSHOT VIEW The Green Paper (2001) by the Commission of the European Communities identifies two main dimensions of CSR, an internal dimension (Human Resource

Management, Work safety and health measures, Adaptation to change, management of environmental impacts) relating to practices internal to the company

and an external dimension (Local Communities, Business Partners and Human Rights) involving the external stakeholders.

Companies should realize their CSR practices will be judged taking into account the practices of their economic partners and suppliers throughout the supply

chain. Also as part of their social responsibility companies are expected to provide high quality products and services, which meet customer expectations in a

manner reflecting the company’s concern for the environment and the local conditions. The Caux Round Table (CRT) Principles (1994) state that companies

have a responsibility to respect human rights and democratic institutions; and promote them wherever practical.

EVOLUTION OF CSR AND CSR MODELS There is an interesting history associated with the evolution

of the concept and definition of CSR. The evolution of the

CSR beginning in the 1950s marks the

modern era. Definitions expanded during the 1960s and proliferated

during the 1970s. In the 1980s, fewer new definitions,

more empirical research, and

alternative themes began to mature which included Corporate Social Performance (CSP), stakeholder theory, and business ethics theory. In the

1990s, CSR

continued to serve as a core construct but was transformed into alternative thematic frameworks.

Carroll (1991) talked about a multilayered concept of CSR that can be differentiated into four interrelated aspects-economic, legal, ethical and philanthropic

responsibilities. Carroll presents these different responsibilities as consecutive layers within a pyramid with economic level being at the bottom and

philanthropic level at the top, such that true social responsibility requires the meeting of all four levels consecutively. The model probably is the most accepted

and established. The evolution of CSR in India has followed a chronological evolution of 4 thinking approaches (table 1):

TABLE 1: CSR MODELS

S.no Model Time

period

Area of Focus Pioneer

1 Ethical 1930s-

1950

Businesses to volunteer to manage their business entity as a trust held in the interest of the

community i.e. the promotion of “trusteeship”

Gandhiji

2 Statist 1950s-

1970

State ownership and legal requirements to decide the corporate responsibilities Jawahar Lal Nehru

3 Liberal 1970s-

1990

Corporate responsibility is confined to its economic bottom line i.e. limited to private owners.

This implies that it is sufficient for business to obey the law and generate wealth, which through

taxation and private charitable choices can be directed to social ends.

Milton Friedman and

Theodore Levitt

4 Stakeholder 1990s-

present

Expects companies to perform according to “triple bottom line” approach which essentially

measures an enterprise’s performance against economic, social and environmental indicators

Edward Freeman, Robert

Ackerman and Archie B

Carroll

Source: “Altered Images: The 2001 State of Corporate Social Responsibility in India Poll”, a survey conducted by Tata Energy Research Institute (TERI)

RATIONALE OF CSR Businesses should assume social responsibilities because they are among the few private entities that have the resources to do so. The corporate world has

some of the brightest minds in the world, and it possesses tremendous financial resources (Wal-Mart, for example, has annual revenues that exceed the annual

GNP of some countries). Thus, businesses should utilize some of their human and financial capital in order to make the world a better place.

Corporations deal with a wide variety of social issues and problems, some directly related to their operations, some not. Social and environmental impact of the

organization’s working is of major concern today apart from its economic growth. Corporations have long been criticized for their negative effect on the natural

environment in terms of wasting natural resources and contributing to environmental problems such as pollution, global warming, waste disposal, deforestation,

acid rain, land degradation etc. It is likely that corporate responsibilities in this area will increase in the coming years as all of these issues have far-reaching

societal and ethical implications.

CSR IN THE INDIAN BANKING SECTOR The concept of “Community Service Banking” (earlier known as Innovative Banking) was Australia's first and specialist banking service, exclusively for not-for-

profit organizations, but today this is being widely used by Indian banks also. A study of some of the newspapers during this period revealed that banks had risen

social spending to boost client base (empower the target group sufficiently so that they can become clients in the future) and encourage corporate brand image

(Ray & Basu, 2006). HSBC, Standard Chartered Bank (StanChart), ICICI Bank, HDFC Bank and State Bank of India (SBI) were some of the banks to take the lead in

the same.

CSR as practiced by the banks has two separate dimensions: First and the direct philanthropic one is the outright grant provided by them. The second supports

mainstream commercial activities like providing micro-credit to the rural poor. By and large, banks focus on a whole range of causes, including disability, gender,

women’s empowerment, rehabilitation of the poor and aged, health and environment, education and livelihood promotion/poverty alleviation-related work. In

particular, banks that have strong microfinance services tend to focus on rural livelihoods a lot more as it synergizes well with their need to meet priority sector

lending targets. The findings of Narwal (2007) suggest that banks have an objective view-point about CSR activities concentrating mainly on education, balanced

growth (different strata of society), health, environmental marketing and customer satisfaction. He concludes that irrespective of location, the nature of CSR

activities undertaken by banks is found to be similar.

Corporate Social Responsibility

Corporate Sustainability

P

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A

P

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A survey conducted by Karmayog in the years 2007, 2008 and 2009 studied numerous organizations across various industries pan India to understand all details

regarding their initiatives and contributions towards CSR. The Karmayog CSR Ratings are based on various parameters and are from Level 0 to Level 5 with Level

0 being the lowest (No CSR). Table 2 below brings out (looking into the percentages) that banks are on a rise as far as CSR is concerned.

TABLE 2: COMPARATIVE DEPICTION OF KARMAYOG SURVEY CONDUCTED ACROSS ALL OVER INDIA ACROSS VARIOUS INDUSTRIES

2007 2008 2009

Total number of companies surveyed 500 1000 500

Number of banks included 42 40 36

Number of banks doing CSR 13(30.95%) 23(57.5%) 33(91.67%)

Number of banks with atleast 2 or above rating 11(26.19%) 15(37.5%) 27(75%)

Source: Data taken from the survey conducted by karmayog for CSR rating and ranking, 2007, 2008 and 2009 (karmayog’s website)

According to the results of the Karmayog CSR Ratings (2009) 26% of the companies were not doing any CSR activity, and just 3% of the largest Indian companies

(based on sales) studied got a rating of Level 4 with none of them at 5 (this was true for all the 3 years).The Banking sector was one of the best performing

sectors, largely due to the mandatory regulations on social sector expenditure for PSUs.

TABLE 3: COMPARATIVE OVERVIEW OF KARMAYOG CSR RATINGS FOR INDUSTRY SECTOR 'BANKING' (DOES NOT INCLUDE FINANCIAL INSTITUTIONS)

Karmayog CSR Rating No. of Banks in 2007 % No. of Banks in 2008 % No. of Banks in 2009 %

5/5 0 0% 0 0% 0 0%

4/5 0 0% 0 0% 1 3%

3/5 7 17% 6 15% 11 31%

2/5 4 10% 9 23% 15 42%

1/5 2 5% 8 20% 6 17%

0/5 29 69% 17 43% 3 8%

Total 42 100% 40 100% 36 100%

Source: Data taken from the survey conducted by karmayog for CSR rating and ranking, 2007, 2008 and 2009 (karmayog’s website)

The data in table 3 clearly depicts that no bank has been able to reach a rating of 5 till now. There were only six- Level 3 banks (Andhra Bank, Canara Bank, ICICI

Bank, PNB, Union Bank of India, Yes Bank) in 2008. Yes bank was the only bank with level 4 rating in 2009.Though the number of banks rated 0, for not doing

anything on the CSR front, has reduced over the years more work is required to be done.

TABLE 4: A COMPARISON OF THE CSR ACTIVITIES TAKEN BY THE BANKING INDUSTRY IN GENERAL IN THE THREE YEARS

Broad Areas of CSR related to 2007 2008 2009

Local Community/ Society

• Banking Awareness

• Blood donation

• Child Labor

• Disaster

• Education

• Employment

• Farmers Training

• Healthcare / At

Birth

• Medical

• Micro Finance

• Rural Development

• Seed Bank

• Women

Empowerment

• Blood Donation

• Children

• Donations

• Education

• Girl child

• Health care

• Heritage

• Livelihood

• Rural

development

• Sports

• Sustainability

• Training

• Women

Empowerment

• Adoption of Girl Child

• Agriculture, farming and Farmer's welfare

• Children

• Credit counseling

• Disaster Relief

• Education

• Employment

• Energy

• Finance to under-served areas and people

• Livelihoods training

• Micro-credit / Self help groups

• Poverty eradication

• Rural Development

• Senior Citizens

• Sponsoring healthcare related initiatives

• Vocational Training/ Training for self-employment

• Women's empowerment

Environment • Environment

• Green Banking

Employee Non Non Non

Any other • Priority sector lending

• Responsible Banking

• Sports

Source: data taken from the survey conducted by karmayog for CSR rating and ranking, 2007, 2008 and 2009 (karmayog’s website).

The author has tried to segregate the various CSR initiatives into broad heads (i.e. related to either the local community or society; environment; employee or

any other). Looking at the above table 4 we can conclude that CSR is mainly guided or focused towards the development of the society in general or local

community in particular. In 2008, 60% of the banks were working in the area of rural development.

Saksena (2009) reiterates that as an important player in the Indian economy, the banks realize that their role should extend beyond the commercial sector to

include the social sector as well. It, therefore, aims to participate in the all round development of the country by focusing on some of its fundamental needs.

A LOOK AT SOME OF THE CASES The rise in focus on CSR activities by banks can perhaps be well exemplified by the Standard Chartered Bank’s sponsored “Mumbai Marathon”, which is an event

that draws in several other banks as active participants like ICICI Group, Citibank, HDFC and HSBC. The money raised collectively by these banks and their

employees is channelized to more than 50 NGOs all over India by GiveIndia, a donation platform that has assisted many private and foreign banks in their

philanthropic activities.

Centurion Bank of Punjab initially adopted the traditional model where most companies do business as usual and use CSR as an alternate channel for image

building or going a bit beyond by providing local area growth, employment and development. Later CSR was driven separately by CEO having little or no impact

on the image of the corporate (Example Microsoft as different from the Bill & Melinda Gates foundation). The new approach to CSR interlinked it with business

strategy thus the customer doing business with the organization drives and sustains CSR in the long term. It has created a sustainable platform to educate India’s

underprivileged children (gift a future~ spread a smile) with an initial nominal contribution from both consumer and bank and helps build a future for more than

1500 children. It has not only led to further growing a profitable product (credit card) for the bank but also a satisfied and actualized customer base. Thus co-



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opting the customer in a CSR initiative ensures that the CSR initiative blossoms and grows along with the growth of the business to create a longer-term

sustainable CSR platform.

The same can be tracked for HSBC. The HSBC staff survey in Hong Kong, 2005 brings out some interesting facts like the staff feels that the social and

environmental responsibilities of HSBC are very important and a company’s ability to fulfill its social responsibilities, including supporting community services, is

one of the top five criteria for assessing the success of any large business. Visualizing the rising sentiment towards CSR, HSBC has developed a Corporate

Sustainability framework that starts from the bottom of the pyramid with investment in community through education, scholarships, financial literacy etc,

aligning it with the business thus creating sustainability by building prosperous communities and impacting the environment positively. The initiatives are in line

with the international codes that HSBC has adopted for the same: Global Compact and Global Sullivan principles. It has been awarded a place in the Dow Jones

Sustainability World Index (DJSI World) and is the first bank to go carbon neutral in 2005. In 2005-06 alone, the bank’s microfinance activities provided Rs 33

crore of micro-finances to some 80,000 families in India one of the innumerable social linkage projects. Other actions include disaster and relief rehabilitation,

HIV/AIDS, water harvesting, wildlife preservation etc.

ICICI: A CASE STUDY OVERVIEW

ICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00 billion (US$ 81 billion) as on March 31, 2010 and profit after tax Rs. 40.25 billion (US$

896 million) for the year ended March 31, 2010. The Bank with a customer base of more than 20 million operates through a network of 2,529 branches and

6,000 ATMs in India, and has a presence in 19 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail

customers through a variety of delivery channels and through its specialized subsidiaries in the areas of investment banking, life and non-life insurance, venture

capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain,

Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh,

Thailand, Malaysia and Indonesia. Hence it is an international MNC now with a strong hold in its industry. The testimonials to its consistently strong position are

some of the awards it has been conferred upon by national and international bodies. ICICI Bank has won the "Banking Technology Awards 2010" at The Indian

Banks Association in the following categories:

• Best Financial Inclusion Initiative (first prize)

• Best Online Bank (runner up)

• Best use of Business Intelligence ( runner up)

• Technology Bank of the year ( runner up)

Further:

• ICICI Bank was ranked 70th

(2009 and 2010) and 69th

in 2011 in the Brand directory league tables of the world’s most valuable brands by The BrandFinance®

Banking 500.

• ICICI Bank ranked 2nd

in the financial services sector in Business World's "Most Respected Company Awards 2011".

• ICICI Bank was ranked 1st in the Banking and Finance category and 9

th in the "2010 Best Companies To Work For" by Business Today.

• Ms. Chanda Kochhar, Managing Director & CEO, ICICI Bank has been conferred with "Padma Bhushan".

HISTORY

ICICI Bank was originally set up and promoted in 1994 as a wholly-owned subsidiary to enter the area of commercial banking by ICICI (Industrial Credit &

Investment Corporation of India) Limited an Indian financial institution. ICICI Ltd. was formed in 1955 at the initiative of the World Bank, the Government of

India and representatives of Indian industry as a development financial institution for providing medium-term and long-term project financing to Indian

businesses. In the 1990s, ICICI transformed its business from a development financial institution to a diversified financial services group offering a wide variety of

products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI became the first Indian company and the

first bank or financial institution from non-Japan Asia to be listed on the New York Stock Exchange (NYSE).

THE HUMAN FACE OF ICICI BANK: ICICI FOUNDATION

The report In Search of Sustainability in Development (2007) beautifully comes out with the journey that ICICI Bank has traversed in its pursuit to be a good

corporate citizen. Moreover a short telephonic interview with some of the employees of ICICI bank, Mumbai, gave a clear picture of the strong position taken by

ICICI bank towards its understanding of CSR more than a decade ago.

Version 1 of CSR

A Social Initiative Group (SIG), a non-profit resource group was set up in ICICI Bank in 2000 based on the reasoning that the intent of development should be to

create the ability and opportunity to achieve a state of well-being by all (In Search of Sustainability in Development, 2007). Thus this group decided to focus on

capacity building of marginalized communities (especially the poorest of the poor) to help them participate and influence the socio-economic-political processes

determining their lives. For this purpose they rationalized a few objectives under three key finalized areas: early child health, elementary education and access

to financial services. The idea was to catalyze change through innovation, research, knowledge generation, influencing policy, advocacy and reforming

mainstream practice. The basic purpose was to build the bank as a responsible corporate citizen.

Version 2

The SIG was quick to realize that all this would be achievable only with strategic partnerships with Civil Society Organizations (CSO), academics, central and state

governments and where necessary and appropriate for-profit, private sector companies also. It built partnerships to strengthen the capacity of marginalized

communities w.r.t. participation in and influence on social, economic and political processes that determine their lives (Kamath, 2008-9, pg.4). Thus SIG’s work in

the three areas was carried out through specialized groups: ICICI Center for Child Health and Nutrition (ICCHN, Pune); Elementary Education Practice of the SIG

(EESIG, Mumbai) and Microfinance Practice of the SIG (MFSIG, Chennai). Apart from this the SIG does take help from the already existing systems like National

Rural Health Mission (NRHM), Eklavya, GiveIndia, Mitra Foundation etc (In Search of Sustainability in Development, 2007).

The year 2008 saw the establishment of a separate ‘foundation’ to focus on the CSRs of the whole ICICI group.

Version 3

Drawing from the experiences of other big players and organizations from different industries, ICICI Foundation was established to undertake the whole and sole

responsibility of CSR to be implemented by ICICI as a group. Bill & Melinda Gates foundation, Warren Buffet foundation for HIV, WIPRO’s Pratham, Ford

foundation etc are existing examples where exclusive concentration is on certain predefined themes.

According to Kamath (2008-9, pg.4) the lopsided economic growth within the country which lead to 600 million Indians to remain bereft of the economic

opportunities presented by the high rate of growth forced the ICICI group (ICICI Bank and its subsidiaries: ICICI Prudential Life Insurance, ICICI Securities Limited,

ICICI Lombard General Insurance Company, ICICI Prudential Asset Management Company, ICICI Venture) to get together to promote (with the help of grants,

donations and corpus funds) inclusive growth of all sectors across the nation’s economy by establishing the ICICI Foundation for Inclusive Growth (IFIG) on

January 04, 2008 as a public charitable trust registered at Chennai vide registration of the Trust Deed with the Sub-Registrar’s office at Chennai. The Foundation

works with ICICI Group of Companies to support their various CSR initiatives which are designed to be consistent with their respective business foci. But as the

IFIG annual report (2008-9, pg.48) puts it, economic growth alone gives an incomplete picture of a country’s development as it ignores the effects of

development on ecological and natural systems. From a sustainable point of view it is essential to examine environmental sustainability in relation to economic

and social development.

Mor (2010) states that no single institution working alone can fully address the complexities of economic, social and environmental situations and thus, only by

drawing on and harnessing the already existing high levels of expertise with different institutions in several different areas can an organization address each

issue and in-depth. So rather than building departments within a large organization the most innovative step of the group was to invite strategic partnership to



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collaborate with and foster independent, responsive organizations with deep expertise in selected areas for CSR (primary health, elementary education, financial

inclusion, protection of the rights of the poor and environmental responsibility). He reasons out the choice of the CSR initiatives of the foundation. According to

the foundation while healthy and educated individuals do gain the capacity to transform their lives enabling them to participate fully in the socio-economic

processes of the country, their ability to do so depends a lot on the access to quality financial services but these three areas only fulfill the minimum necessary

criteria for the Indian growth process to be truly inclusive but are not sufficient for the same. Hence the foundation goes a step further in supporting social

change without exploitation with the help of strong CSO partners. For a sustainable growth and development the group emphasizes environmentally sustainable

finance. The strategic partners (or beneficiaries of grants by the ICICI group) for achieving these goals are ICCHN, ICICI Center for Elementary Education (ICEE),

IFMR (Institute for Financial Management and Research) Finance Foundation (IFF), CSO partners and Environmentally Sustainable Finance (ESF) Group.

The bank and its subsidiaries propose to give some percent their profits every year to the foundation, subject to approvals from their respective boards.

According to the annual report 2008-9 of IFIG while the IFIG was founded by the ICICI group in early 2008 the foundation’s of ICICI group’s approach towards

human and social development were established with the SIG. According to Kochhar (2010) ICICI bank in its effort to integrate good corporate citizenship with

good business promoted financial inclusion as a priority both from a social and business perspective. But, she elaborates, with the massive size of India’s rural

population along with its wide geographical spread innovative models of financial service delivery and customized financial products are the need of the hour to

bridge the gap.

ICICI Group's financial inclusion initiatives include microfinance initiatives, introduction of biometric cards, models like Business Correspondents, micro insurance

and micro systematic investment plans, capacity building for MFIs, Financial education, credit counseling and debt management etc. The rural Indian economy is

exposed to fundamental risks and has limited access to risk mitigating solutions. In order to achieve significant impact, it is critical to operate on a large scale

with operational costs that are one tenth of those in urban areas. Technology Finance Group’s (TFG) programs are designed to assist industry and institutions to

undertake collaborative R&D and technology development projects.

On October 30, 2009 the Board of Directors of ICICI bank constituted the CSR Committee which is empowered to review the CSR initiatives undertaken by the

ICICI Group and the ICICI Foundation for Inclusive Growth, make recommendations to the Board, review and implement initiatives, policies and practices of the

ICICI Group if required (Annual Report, 2009-2010).

TOWARDS SUSTAINABLE DEVELOPMENT The biggest innovation in their effort to build sustainable models for socio-economic development has been partnerships with a wide range of players and

infusion of technology. Further to make CSR itself sustainable it has to bring in some tangible results towards corporate sustainability. The below table 5 tries to

bring out the relation between the financial growth of the bank vis a vis its spending on and rating in CSR.

TABLE 5: ICICI BANK FINANCIAL GROWTH (ALL FINANCIAL YEARS FROM 1ST

APRIL OF THE PREVIOUS YEAR - 31ST

MARCH OF THE NEXT YEAR) VIS-A-VIS GROWTH IN CSR

2006-2007 2007-2008 2008-2009 2009-2010

CSR Rating 3 3 3 NA

Areas of work • Elementary

Education

• Health

• Micro finance

• Community welfare

• Health care

• Sustainability

• Children

• Education

• Rural

Development

• Elementary Education

• Philanthropy counseling

and referral programme

• Apart from contributing for

other group activities

Income (in Rs

crores)

12565

16115 15970 15592

Consolidated Profit

after tax (in Rs

crores)

2761 3398 3577 4670

CSR Budget (in Rs

crores)

NA ICICI Bank and its subsidiaries will contribute

0.75%-1.0% of their annual profits to the

Foundation

50 (from 4th

Jan 2008-31st

march 2009)

15.370

NA-Not Available Source: Annual Reports 2006-7, 2007-8, 2008-9 & 2009-10 of ICICI Bank; Annual Reports 2008-9 & 2009-10 of IFIG and Karmayog study for the years 2007, 2008, 2009

Though no direct study has been done to understand the impact of CSR on the Corporate Sustainability (CS) of the bank, the above table 5 tries to bring out

some similarity in the direction in which the bank’s financial growth in terms of profit and its commitment to social issues proceed. The karmayog study

recommends an expenditure of 0.2% of sales on CSR. Does a strong financial position lead to CSR initiatives or a commitment to CSR lead to corporate

sustainability? The issue still needs to be addressed.

ICICI Bank, is a responsible corporate citizen and believes that every small 'green' step today would go a long way in building a greener future and that each one

of us can work towards a better earth. Thus it recognizes and contributes to the need to conserve national resources and explore clean technology to mitigate

climate change by collaborating with employees and customers alike to reduce the carbon footprint from banking. It helps other organizations in their effort to

"Go Green" by funding and managing green technology projects. It assists projects in the energy and environment space that reduce green house gas emissions

and pollution at source (by using cleaner technologies). Hence it promotes sustainable development by integrating all this with social and environment

considerations.

Read to Lead campaign is ICICI bank’s flagship programme under its CSR as it is a staunch believer of the fact that education today means a better tomorrow. It

was launched in 2008 to facilitate elementary education for underprivileged children in the age group of 6-14 years. It focused on strengthening the existing

education system, rather than creating a parallel one in the country and aimed at making underprivileged children of our country self-reliant and self-dependent

by getting them into the mainstream of our education system and in turn to strengthen the future of our nation. Through this campaign ICICI Bank has pledged

to educate over 1,00,000 children (aim to enroll 50% girls), currently not enrolled in school with the help of around 30 partners (NGOs/CSOs), chosen on the

basis of their years of experience in the field of education, their ideologies, the sustainability of their models and their outreach. Some of the grant beneficiaries

like Centre for learning Resources (ClR); Educational Support Organisation (ESo), Eklavya Foundation, Pratham, Vidya Bhawan Society etc. develop material,

curriculum, pedagogy and training approaches, conduct research, provide technical services to implement capacity building programmes, develop organizational

design and management systems that can address some of the issues of access and quality of education. CSO Partners work with specialized entities such as

GIVE India and MITRA to facilitate linkages between corporate and retail contributors and deserving NGOs.

ICEE believes that education up to the elementary level is a minimal and necessary condition for individuals to participate meaningfully in socio-economic

processes, and collectively contribute to the development of society. This pan India (around 14 states) initiative is funded (allocation of 10 crores) by ICICI

foundation. The initiative is a complete package that involves parents and community; organizes teacher trainings; provides educational kits with uniforms,

books, stationery and woolen clothes; offers health and nutritional support for children etc.

Some of the other innovative interventions by ICICI bank (In Search of Sustainability in Development, 2007):

• The Center for Development Finance (CDF) at IFMR, Chennai worked and is working with Decentralized Energy Systems India (DESI) Power, a CSO to

provide energy using Biomass.

• Realizing that a large proportion of the Indian population does not have access to basic facilities as health care, education and financial services which cuts

them from the mainstream markets, the bank has tried to experiment in institutional build up through partnerships to provide opportunities to the poor in

the areas of microfinance, insurance and development finance etc. After the group lending and Joint Liability Group the microfinance model has graduated

to a new methodology of individual lending. Moreover Financial Information Network and Operations (FINO), a technology solutions company promoted



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by ICICI bank provided the first innovative technology solutions like biometric multi-function card to reach the millions of underserved end users.

Microfinance is considered as a business with social dimensions as it is seen as a pathway out of poverty.

• Skill building, quality control and improving productivity was the next phase after the provision of financial services for the poor long considered to be a

missing market. Capacity building not being a core to ICICI bank it partnered and supported partnerships for the same. Thus creating an enabling

environment through institutional support.

• The bank part funded National Center for Advanced Economic Research (NCAER) and National Institute of Public Finance and Policy (NIPFP) and Institute of

Financial Management and Research (IFMR) for knowledge creation through specialized policy research and surveys.

• Realizing that in a rapidly growing globalised world the competition is no longer among independent firms but among their respective supply chain

networks, ICICI bank has set up an end-to-end supply cold chain project. Thus it seeks to unlock the immense potential of the Indian horticulture sector by

providing pre and post-harvest interventions in the value chain, innovative cattle finance products to be distributed by MFIs in dairy farming, exploring and

building forward and backward linkages within the aquaculture.

• It finances organizations that work towards developing a sustainable model for providing clean (according to WHO standards) and low cost drinking water

facilities to the rural poor.

• The bank promoted National Commodity Development Exchange (NCDX) to help farmers command a better price through a free and fair pricing

mechanism

Efforts are in progress to replicate the above successful models implemented in a city, district or state in other parts of the country. A direct approach to CSR is

taken where ICICI Group of Companies’ core competencies and resources can be put to work as their CSR efforts have been and remain integral to its core

mission of delivering value to its stakeholders and to the sustainable growth and development of India’s economy. The foundation’s vision is to create a world

free of poverty in which every individual has the freedom and power to create and sustain a just society. It is guided by its mission to empower the poor to

participate in and benefit from the Indian growth process through integrated action in the fields of child health and nutrition, elementary education, financial

inclusion and sustainable livelihood.

CONCLUSION, LIMITATION AND FUTURE SCOPE OF THE STUDY The lack of concern for the local community, the consumers and the environment by corporate in today’s world will undoubtedly create large scale public

debate and action. Thus it is important in this context to understand that the sustainable business growth is associated with care for the community and the

markets/environment the corporate operate in. The negative publicity caused by actions/inactions of corporate will lead to suspicion about their operations in

the eyes of the general public (Krishnan & Balachandran, December 21-22, 2004). CSR in itself might have some inherent limitations for its successful

implementation as listed below:

• Huge investments in terms of time, money and people

• Time duration of return unclear

• Difficult to define tangible Returns

• Difficult to quantify intangible returns

• Lack of expertise of the corporate in this area

• Selection of CSR initiative is also debatable

But still there is no doubt that the legal, ethical, and discretionary expectations placed on businesses are greater than ever before. Hence companies purport to

pursue not only the goal of increased revenues and profits, but also the goal of community and societal betterment. Research suggests that those corporations

that develop a reputation as being socially responsive and ethical enjoy higher levels of performance. However, the ultimate motivation for corporations to

practice social responsibility should not be a financial motivation, but a moral and ethical one. Hence CSR has an important role to play especially in building up

trust in the minds of the consumers.

The case for ICICI bank proves that there is lot more to discover in the field of CSR themes as there is immense gap between what banks are doing in terms of

CSR and what they are capable of and should be doing. The gap reaffirms the scope that lies in taking CSR initiatives for the benefit of the multiple stakeholders.

It is not possible for an organization to address all the issues that it effects and so it is always better for it to prioritize according to its limited resources,

expertise etc.

Banks can zero down to any theme that suits not only their financial capacity but also their human resource capabilities. Micro finance and financial inclusion are

being seen as a potential source or tools for CSR in the Indian banking sector. Thus can be further explored by the organizations to not only exhibit their social

concern but also to gain more loyal customers that run from one generation to the other. If subsidies and grants would have really worked for the betterment of

the poor and alleviation of poverty, we would not have yet been a nation where 456 million Indians (41.6 % of the total Indian population) live under the global

poverty line of $1.25 per day (According to a 2005 World Bank estimate). Thus in place of charity if we concentrate on Social Business (the term used by

Muhammad Yunus) we might be in a position to incorporate CSR in a sustainable manner for sustainable development.

Small banks may find it difficult to go for CSR as a separate activity because of the above reasons and financial constraint but if they integrate it in their strategic

business model itself from day one, they will not feel it as an extra effort or burden in future. As fact of the matter remains that every small organization today

has to or will most probably become huge and large tomorrow. So instead of restructuring tomorrow to absorb the crucial requirements of sustainable

existence, working towards it from day one will strengthen the organizations position forever.

Besides giving back something to the local community and improving the quality of people’s lives, CSR initiatives also reflect commitment to building a

sustainable and successful business in the future as they complement and link each other. By contributing in a sustainable and scalable manner to India’s socio-

economic growth, value is added as a bank and it in turn, benefits the shareholders, customers and employees. Though the study restricts itself to the analysis of

a single bank ICICI but ICICI bank being the largest private sector bank in India definitely is a source of guidance for the others in the industry. Taking a cue from

the works of ICICI foundation other banks as well as other industries can conceive their own innovative models of CSR for sustainable development. One of the

future scopes of the paper can be to understand the actual relationship between CSR and CS.

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APPENDIX Annexure 1: Semi structured interview schedule

Q1. What are the various CSR initiatives of ICICI Bank exclusively (not the complete ICICI group)

Q2. What according to you has been the most innovative thing about it, as in the initiative, its operation, implementation or the process etc.?

Q3. How do you thing CSR supports sustainability of ICICI bank?

Q4. Any other information that you would like to furnish.



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INVESTMENT DECISIONS OF RETAIL INVESTORS IN MUTUAL FUND INDUSTRY: AN EMPIRICAL STUDY

USING DEMOGRAPHIC FACTORS

SHAFQAT AJAZ

RESEARCH SCHOLAR

THE BUSINESS SCHOOL

UNIVERSITY OF JAMMU

JAMMU

DR. SAMEER GUPTA

ASSOCIATE PROFESSOR

THE BUSINESS SCHOOL

UNIVERSITY OF JAMMU

JAMMU

ABSTRACT This paper is based on the framework of the investment decisions of retail investors in mutual fund schemes. The paper aims to investigate effects of

demographic variables (gender, age, education level, marital status, occupation, household monthly income and cities) on investment decisions of retail investors

in mutual fund schemes. In the backdrop of methodology, the data of 841 retail investors who actively invested in mutual fund schemes were analyzed. Primary

data was collected from four cities of Northern India namely Jammu, Srinagar, Chandigarh and Ludhiana by using a structured questionnaire. The findings of the

study revealed that gender has least impact on retail investor’s decisions, while other demographic variables taken for the study have major impact on retail

investor’s decisions. The findings further revealed that in-between selected Cities, investment decisions were not influenced by demographic variables.

KEYWORDS Demographic Factors, Investment Decisions, Mutual Fund Schemes, Retail Investors.

INTRODUCTION N OVERVIEW OF INVESTMENT

Individuals save their surplus funds in the form of financial as well as physical savings; physical savings still command dominant share vis-à-vis a financial

savings in India. The financial savings are kept in the form of currency, bank deposits, life insurance fund, provident and pension fund, shares, debentures

and mutual funds. Saving money in the form of bank deposits, life insurance schemes, provident and pension fund offers safe but low return. Investments in

corporate securities provide an opportunity of investing small amount of funds directly into the business and reap the benefit of corporate profits. But it is also

accompanied by capital, liquidity, and profitability risk. That is why the contribution of corporate securities though have consistently increased during the past

two decades, but their share in the total financial savings has remained low (5% approximately) and majority of financial savings are still parked in the form of

risk- free deposits and funds. After financial sector reforms, there has been a shift in trend towards investment in corporate securities in general and mutual

funds in particular Mutual funds have emerged an option for investing financial savings as they offer diversified investment in various corporate securities with

comparatively much lesser risk than direct investment in corporate securities along with the benefit of consistent returns which are better than returns offered

by risk free deposits. There has been consistent increase in the funds mobilize by the mutual fund and the assets under the management of mutual funds have

increased from rupees 107946crores in 2000 to rupees 613979crores in 2010 which has been an impressive six times increased during last decade. There is

enough research evidence that investment is the primary instrument of economic growth. Further, the rate of investment is proportionately increasing with the

rate of savings. Therefore, saving is the key factor in achieving a high rate of investment. According to Athukorala & Sen (2004), the investors are the backbone

of the any economy especially in India. The research also revealed that there has been a consistent increase in the national saving rate in India through the post

independence period, though with considerable fluctuations from year to year.

RETAIL INVESTORS: AN INVESTMENT DECISIONS Retail investors are the polar opposite of institutional investors. Retail individual investor is defined by Securities and Exchange Board of India and Investor

Education and Protection Fund, Ministry of Corporate Affairs, Govt. of India “Retail Individual Investor means an investor who applies or bids for securities of or

for a value of not more than Rs 100,000”. According to Investopedia, “Retail investor refers to an individual who buys and sells securities for his or her own

account through a traditional or online brokerage firm”. While some retail investors hold portfolios worth millions of dollars and others own just a few securities,

they are different from institutional investors, such as pension funds, money managers, or financial services companies, who have discretionary control over at

least $100 million in securities. A retail investor invests small amounts of money for himself/herself rather than on behalf of anyone else.

RETAIL INVESTORS IN MUTUAL FUNDS As per Association of Mutual Fund in India database retail investors own 46,394,282 folios out of the total 47,598,163 folios having a share of 97.47 per cent of

the total folios. Retail investors have made investment under different types of mutual fund schemes including Equity oriented, Debt oriented, Balanced funds,

Gold ETF, Fund of Funds investing Overseas and the total investment of retail investors under these schemes has been 47,140,177crores as on march 30,sep.

2010 (AMFI). Net Investments – in 2011(September) in equity and debit is 17,664.7 crores (SEBI). All investment has some risk element, this risk factor should be

borne in mind by the investors and they should take all precautions to protect their interest. Michael K.H Law, 2010 revealed that it is more about the risks and

subsequently make an informed decision as to whether to take on the risk according to their risk appetite. Even though they take a decision by using the

marketing information but every investor invest money with three objectives i.e., return on investment, looks for the safety and liquidity of fund (K. Balanga

Gurunathan, 2007). As most of the retail investors are not financial experts, there may simply be no way available to them for obtaining the necessary

information. Firms should therefore, be made to disclose the financial risks and alert investors. This would help to increase the participation of small investors’

higher rate of investment and channelizing of the same into capital markets. The informed trading would encourage small investors’ channelize their saving into

capital market and this informed trading ensure market efficiency through the atmosphere of transparency, faith, and confidence of investors’ to the market

(Nicholas. L. Georgakopoulous, 1996). According to Somaiya, in 2005 asymmetry in the investors’ market should be reduced through the periodically update

about the firm information, more efficient regulatory network, clarity, scientific system and scientific management process. Hence an informed investor is a safe

investor and in the absence of relevant information, individual investors’ cannot make informed decisions and would be exploited unfairly by sellers, who would

know better about the true-risk and return of the products than the buyer.

A



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INVESTMENT DECISION MAKING Market information help the investor to take decision and in the absence of market information the investor are in dilemma to take decision, so investment

decision cause an issue of behavioral finance. According to Mathews in 2005, Olsen in 1998, and also Linter in 1998 decision making related with behavioral

finance is a process of choosing a particular investment alternative from a number of alternatives that is an activity that follows after proper evaluation of all the

alternatives available in the market and not try to show the rational behavior or label decision making which is biased or faulty. The basic purpose of the

behavior finance is to understand and predict systematic financial market implications or psychological decision processes.

Many investors have, for long considered that psychology plays a key role in determining the behavior of markets. Evidence in the literature of psychology also

suggested that individuals have limited information processing capabilities, they are prone to making mistakes and also they exhibit systematical errors. The

sources of these irrationalities are demographic factors and emotional responses to price fluctuations and the changes in an investor’s wealth. Individuals’

decisions have significant consequences ( Andrew W. Lo, Dmitry V. Repin, and Brett N. Steenbarger) Individual investors who trades in capital markets are

searching for new strategies to maximize their returns those individuals make periodic contributions and withdrawals from their investment portfolios in a way

trying to minimize their losses and maximize their gains. They use more subjective and less ideal paths of reasoning in consistent with their basic judgment and

preferences. Demographic characteristics and trading strategies do play a role in the magnitude of trading returns of individual investors. Research reveals that

an investor’s background and past experiences plays a significant role in decisions made during their investment.

EVIDENCES FROM THE EXISTING LITERATURE The importance of small investors has been recognized in the development of the country through various studies. Such investors have already attracted the

attention of global practitioners and academicians but most of the existing research available is on either accelerating the return on funds or comparing it with

benchmark fund schemes. A scholarly investigation is being carried out to study the phenomenon of retail investment. A research survey conducted with the

objective of providing data on the investor preferences on MFs and other financial assets. The findings of the study were more appropriate, at that time, to the

policy makers of mutual funds to design the financial products for the future (Gupta, 1994). A considerable amount of research focuses on the demographic

differences in terms of individual investors trading strategies, risk preferences and trading performance. From a general framework, researchers commonly

agree that women are more risk averse than men, similarly men are more risk tolerant than women (Bajtelsmit and Bernasek, 1996; Sung and Hanna, 1996);

unmarried individuals are more risk tolerant compared to married couples (Lee and Hanna, 1991) and the tendency to held more risky and volatile assets

decrease as age increases (Barber and Odean, 2001; Sung and Hanna, 1996). Lewellen, Lease and Schlarbaum (1977)’s study, using a data set of 972 individual

investors from 1964 through 1970, report that men spend more time and money on security analysis and rely less on their brokers, make more transactions,

believe returns are more highly predictable, and anticipate higher possible returns than do women. Barber and Odean (2001)’s investigation of 35.000

households common stock investments also offer interesting findings about age. Concerning age of households, the findings revealed that young investors hold

more volatile portfolios and their average monthly turnover declines as age increases. Barber and Odean (2001) also reported that these differences are more

pronounced between single men and single women.

Loayza and Shankar (2000) show the evolution of private saving rate in India during 1960-95. They find that India’s demographic transition in the past 30 years

must have contributed to an increase in the aggregate private saving rate. The research reveals that in the long run, the level of income promotes savings rather

than the other way round. In the short run, economic liberalization appears to depress savings, but in the long run it promotes savings through its impact on

growth (Mahambare and Balasubramanyam, 2000). A recent nationwide survey of over 60,000 households (Shukla, 2007) by National Council of Applied

Economic Research (NCAER), New Delhi and Max New York Life has revealed that India saves but does not invest. India saves for long-term goals such as

emergencies, education and old age, but does not invest in long-term instruments. Financial vulnerability is not limited to poor households; even prosperous

households are financially vulnerable as majority of them neither plan their future, nor save long-term. A researcher conducted a survey of about the investment

behavior of 200 respondents belonging to Coimbatore district in Tamil Nadu, and found that irrespective of the developments in the capital market /economic

conditions, investors like to invest regularly and this investment behavior is highly related to educational background, their occupation, reading habit of

investment news and the time taken for investment decision making process (Krishnamoorthi, 2009). Shankar (1996) points out that the Indian investors do view

Mutual Funds as commodity products and AMCs, to capture the market should follow the consumer product distribution model. Jambodeka (1996) conducted a

study to assess the awareness of MFs among investors, to identify the information sources influencing the buying decision and the factors influencing the choice

of a particular fund. The study reveals among other things that Income Schemes and Open Ended Schemes are more preferred than Growth Schemes and Close

Ended Schemes during the then prevalent market conditions.

Sikidar and Singh (1996) carried out a survey with an objective to understand the behavioral aspects of the investors of the North Eastern region towards mutual

funds investment portfolio. The survey Vol. 3, No. 10 International Journal of Business and Management 92 revealed that the salaried and self-employed formed

the major investors in mutual fund primarily due to tax concessions. Goetzman and Peles (1997) established that there is evidence of investor psychology

affecting fund/scheme selection and switching. Sundar (1998) conducted a survey to get an insight into the mutual fund operations of private institutions with

special reference to Kothari Pioneer. The survey revealed that agents play a vital role in spreading the Mutual Fund culture; open-end schemes were much

preferred then age and income are the two important determinants in the selection of the fund/scheme; brand image and return are the prime considerations

while investing in any Mutual Fund. Khorana and Servaes (1999) had experimented that the decision to introduce a new type of fund is affected by a number of

variables, including investor demand for the fund’s attributes.

Shanmugham (2000) conducted a survey of 201 individual investors to study the information sourcing by investors, their perceptions of various investment

strategy dimensions and the factors motivating share investment decisions, and reports that among the various factors, psychological and sociological factors

dominate the economic factors in investment decisions. In his study “Are Retail Investors Better off Today. Keli (2005) is of opinion that Past performance and

Fund’s Investment Strategy continued to be the top two drivers in the selection of a new fund manager. Kavitha Ranganathan (2006) conducted a study on

Consumer behavior from the marketing world and financial economics has brought together to the surface an exciting area for study and research: Behavioral

finance. The realization that this is a serious subject is, however, barely dawning. Analysts seem to treat financial markets as an aggregate of statistical

observations, technical and fundamental analysis. A rich view of research waits this sophisticated understanding of how financial markets are also affected by

the financial behavior of investors. With the reforms of industrial policy, public sector, financial sector and the many developments in the Indian money market

and capital market, mutual fund, which has become an important portal for the small investors, is also influenced by their financial behavior. Hence, this study is

an attempt to examine the related aspects of the fund selection behavior of individual investor toward mutual fund, in the city of Mumbai. From the researchers

and academicians point of view, such a study will help in developing and expanding knowledge in this field. Lakshmi, Malabika, Murugesan;(2008) conducted the

study of the performance of Indian mutual funds with special reference to growth schemes over a period of eight years from April 1998 to March 2006. As per

the study performance of the mutual funds schemes were in line with that of market. Though the mutual funds schemes did not provide adequate returns in

terms of systematic and unsystematic risk, yet they ensured positive returns due to stock selection skills of fund manager. The market performance had a

significant positive influence on all schemes performance. The present Net Present Value of all the schemes is positively and significantly correlated with its past

Net Asset Value for all the time lags signifying consistency in successive period returns.

HYPOTHESES H1: Demographic profile has a significant impact on investment decision of retail investors.

H2: Demographic profiles do not have significant impact on investment decisions of retail investors.



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METHODLOGY The study is empirical in nature. The scope of the study extends to four cities of Northern India namely Jammu, Srinagar, Chandigarh and Ludhiana. The data was

collected both from primary as well as secondary sources. The primary data was collected by using a structured questionnaire. The questionnaire was framed on

the basis of investment decisions and demographic factors. An analysis was done and changes were made to overcome the errors. The final data was collected

by a modified questionnaire with 37 questions. The secondary data was collected from journals, magazines, periodicals, books, published and unpublished

research materials etc. A sample size of 1000 was taken out of which 841 filled questionnaire were received. The statistical tools implemented are: Econometric

analysis—Multiple nominal Logistic regressions.

ANALYSIS AND INTERPRETATION The demographic profile of the respondent selected for the study is described in Table 1. The questionnaire were randomly distributed among male and female

respondents and the researcher received 841 (out of 1000 sample size) responses out of which 571(67.9 %) were male respondents and 270 (32.10%) were

female respondents. Growth schemes of the mutual funds have been favored by investors in their investment decisions with 45.3% of respondents investing in

growth schemes. When it comes to educational level, investors with post graduate and above qualification have made maximum investment (61.5%). In terms of

marital status, married individuals have maximum investment (57.3%) and as per the age group category, 25-34 years have got the highest share in investment

(70.6%). Employees in the private sector have got 54.7% share among the mutual fund investors, and among the households, households with monthly income

in the category of (20,001-40,000) have made the maximum investment (37.6%) in the mutual funds.

OVERALL TEST OF RELATIONSHIP

The overall test of relationship is shown in Table 2. The table shows the relationship between the demographic profile and investment decision of retail

investors. The presence of a relationship between the dependent and combination of independent variables is based on the statistical significance of the final

model chi-square in the below table i.e., (termed model fitting information). In this analysis, the distribution reveals that the probability of the model chi-square

(154.180) was 0.000, less than the level of significance of 0.05 (i.e. p<0.05). This explained that demographic profile has a significant impact on investment

decision of retail investors. After finding the significant relationship between the dependent and independent variable the researcher used the case processing

summary for dependent variable to know the by chance accuracy rate. This rate is useful for validating the model for research in multinomial logistic regression.

STRENGTH OF MULTINOMIAL LOGISTIC REGRESSION RELATIONSHIP

Once the relationship is established, the next vital thing is to establish the strength of multinomial logistic regression relationship which is shown in Table 3.

While, MLR does compute correlation measures to estimate the strength of the relationship (pseudo R square measures, such as Nagelkerke's R²), these

correlation measures do not really tells an analyst much about the accuracy or errors associated with the model. A more useful measure to assess the utility of a

multinomial logistic regression model was the classification accuracy, which compares predicted group membership based on the logistic model to the actual,

known group membership, which is the value for the dependent variable. To assess the strength of multinomial logistic regression relationship, however, the

evaluation of the usefulness for logistic models was considered. In this case, using Cox & Snell R Square, the Nagelkerke R square value and McFadden R square

vale, they provide an indication of the amount of variation in the dependent variable. These are described as pseudo R square. The distribution in the below

table reveals that the values are 0.168, 0.183 and .074 respectively, suggesting that between 16.8 percent, 18.3 percent and 7.4 percent of the variability is

explained by this set of variables used in the model.

EVALUATING USEFULNESS FOR LOGISTIC MODELS

The value of by chance accuracy was computed by calculating the proportion of cases for each group based on the number of cases in 'Case Processing

Summary', and then squaring and summing the proportion of cases in each group (0.453² + 0.132² + 0.293² + 0.1222 = 0.322) which is shown in Table 4.1. To

characterize the model as useful, the study compared the overall percentage accuracy rate produced as 25% more than the proportional by chance accuracy.

The proportional by chance accuracy criteria is 40.25% (1.25 x 32.2% = 40.25%). The classification accuracy rate was 48.8% (table classification) shown in Table

4.2, which was greater than the proportional by chance accuracy criteria of 40.25%, suggesting that the model was useful in the study.

RELATIONSHIP OF INDEPENDENT AND DEPENDENT VARIABLES

Once the above sections are clarified, a further scrutiny of the relationship of independent and dependent variables needs to be addressed. There are two types

of tests for individual independent variables. The likelihood ratio test evaluates the overall relationship between an independent variable and dependent

variables and the Wald test which evaluates whether or not the independent variable is statistically significant in differentiating between two groups in each of

embedded binary logistic comparisons. There should a need to be cautions though that if the independent variable has an overall relationship to the dependent

variable, it does not necessarily suggest statistical significance. In fact, it might or might not be statistically significant in differentiating between pairs of groups

defined by the dependent variable. Following the argument above and referring to table 5, there is a statistically significant and non significant relationship

between the independent variables (demographic factors) and the dependent variables (investment decisions).The relationship between gender and

investments decisions has the probability of the chi-square statistic (1.817) is 0.611, greater than the value of significance, this shows that gender have least

impact on preferences of retail investor in mutual fund schemes. For the relationship between Age, Educational Qualification, Marital Status, Occupation,

Household Monthly Income and investment decisions, the probability of the chi-square statics are (12.609), (32.289), (13.345), (61.246), and (10.049)

respectively having less than or equal to the level of significance of 0.05, this shows that there is significant relationship between demographic variables and

investment decisions of investors. Relationship between cities and investment decisions of investors have the probability of chi-square static (6.169) is 0.723,

higher than significance value which means investment decisions are not impacted across the different cities.

PARAMETER ESTIMATES

The three equations in the table of Parameter Estimates are labeled by the group they contrast to the reference group i.e., income schemes. The first equation

is labeled "growth schemes", the second equation is labeled "balanced schemes” and the third equation is labeled “tax saving schemes”. The coefficients for

each logistic regression equation are found in the column labeled B. (The hypothesis that the coefficient is not zero, i.e. changes the odds of the dependent

variable event, and is tested with the Wald statistic, instead of the t-test as was done for the individual B coefficients in the multiple regression equation.) The

variables that have a statistically significant relationship to distinguishing predictors for growth schemes from predictor for income schemes (reference) in the

first logistic regression equation were D3=2(graduate), Second table: In second table The variables that have a statistically significant relationship to

distinguishing predictors for balanced schemes from predictor for income schemes (reference) in the second logistic regression equation were D3=2(graduate),

D3= 3(PG & Above), D6 (Household Monthly Income), Third table: In third table the variables that have a statistically significant relationship to distinguishing

predictors for Tax saving schemes from predictor for income schemes (reference) in the third logistic regression equation were

D2(Age),D3=2(graduate),D4=1(Married),D5=1(BusinessPerson),D5=2(Private Sector Employee),D5=3(Govt. Employee),D6(Household Monthly Income).

GROWTH SCHEMES PARAMETER ESTIMATES

Table 6 shows the Interpretation of the independent variables is aided by the "Exp (B)" column which contains the odds ratio for each independent variable. The

relationships can be stated as - having a graduate degree rather than a postgraduate and undergraduate degree decreased the likelihood of growth scheme by

about 80% over income scheme and they would choose income scheme rather the growth scheme. In other words, it has been observed that graduates give

more preference to income schemes over the growth schemes which imply that graduates are ready to invest in debt schemes. Income schemes are primarily

concerned with current income; hence the portfolio is made up of income - producing securities, which could be both debt as well as equity. Since most of the

debt schemes pay periodic interest, the portfolio leans towards the fixed income schemes. Historically these schemes produce lower returns than equity

schemes. The principal source of their return is the interest earned on the fixed income schemes held in the portfolio. Debt schemes are generally considered to

be safer than the equity schemes. This perception is partially true due to the fact that issuers of the bonds must pay interest and principal amount when it is

due. It is also partially due to the lower variability in the prices of debts compared to prices of equity.



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The logistic regression equation is developed by the independent variables is aided by the “(E)” column with table 6 which contains the positive and negative

values, the positive values increase the likelihood ratio between the dependent and independent variables and negative values reduces the likelihood ratio

between dependent and independent variables. The dependent variable “Y” (growth schemes) equal to intercept value plus the demographic variables if the

value of variables are positive and subtract the value if the value of variables is negative result in logistic regression equation.

LOGISTIC REGRESSION EQUATION IN GROWTH SCHEMES

{Y=.638+0.07(age) +0.177(household monthly income) +0.091(male) -0.396(undergraduate) -1.608 (graduate) - 0.867(pg &above) + 0.226(Married)

+0.885(businessperson) +1.233(private sector employee) +1.387(govt. employee) -0.884 (Retired person) +0.114(Jammu) + 0.098 (Srinagar) -0.307(Chandigarh)}

BALANCED SCHEMES PARAMETER ESTIMATES

The investment in balanced schemes is mainly a mix of equity and debt. Balanced schemes have the objectives of payment of current income; moderate capital

appreciation and preservation of capital. Investors who want to hold a portfolio of combination of securities seek some current income and moderate growth

with low level of risk, may invest in balanced schemes. Generally the net asset value (NAV) of balanced schemes moves in narrower range and is not volatile as

that of equity schemes. Thus balanced schemes tend to outperform the equity schemes in bearish phase but do less in a bullish market. Interpretation of the

independent variables is aided by the "Exp (B)" column which contains the odds ratio for each independent variable. We can state the relationships as follows:

Having a graduate degree rather than a postgraduate and undergraduate degree decreased the likelihood of balanced scheme by about 89.7% over income

scheme and they would choose income scheme rather the balanced scheme and having post graduation & above degree rather than graduate and

undergraduate degree decreased the likelihood of balanced scheme by about 81.4% over income scheme and they would choose income scheme rather the

balanced scheme. Post graduate, undergraduate and graduate choose income schemes rather than balanced schemes. The education level group needs regular

income for their current requirements and they had least interest to invest in balanced schemes. The aim of income schemes is to provide regular and steady

income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market

instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However,

opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the

interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these

fluctuations. As the household monthly income increases across the four categories the likelihood ratio increases by 46.7% which means that across the income

group balanced schemes are more preferred than income schemes. Across the different income group categories balanced schemes were more preferred.

The logistic regression equation is developed by the independent variables is aided by the “(E)” column which contains the positive and negative values, the

positive values increase the likelihood ratio between the dependent and independent variables and negative values reduces the likelihood ratio between

dependent and independent variables. The dependent variable “Y”(balanced schemes) equal to intercept value plus the demographic variables if the value of

variables are positive and subtract the value if the value of variables is negative result in logistic regression equation. This is shown in Table 7.

Logistic regression equation balanced schemes:

Y=(-.676-.215)age+(.384household monthly income)+ .374male(gender)+.687(under-graduate)-2.274( graduate)-1.683(Pg& above) + .662(married) +

.952(businessperson) +1.518(private sector employee)+1.838(Govt. employee) -.710(Retired person)+0.074(Jammu)-.218(Srinagar)-.184(Chandigarh).

TAX SAVING SCHEMES PARAMETER ESTIMATES

Interpretation of the independent variables is aided by the "Exp (B)" column which contains the odds ratio for each independent variable, shown in Table 8. The

relationships can be stated as:

Across the different age group the value of likelihood of Tax saving scheme is decreased by about 36% over income scheme and they would choose income

scheme rather the Tax saving scheme. Household Monthly Income also decreases the likelihood ratio by 43.9% which means that across the income group tax

saving schemes are less preferred than income schemes. In marital status married people increase the likelihood ratio by 27% that means married people prefer

tax saving schemes rather income schemes. The married people are more concerned with tax saving schemes in order to reduce the tax liability. In Occupation

category Businessperson, Private sector employee and Govt. employee increase the likelihood ratio by 62%, 46.7% and 63.75 respectively. They people prefer

tax saving schemes rather income schemes. These schemes offer tax incentives for investment in specified avenues, e.g. Equity Linked Savings Schemes (ELSS).

Pension schemes launched by the mutual funds also offer tax benefits. These schemes are growth oriented and invest pre-dominantly in equities. Their growth

opportunities and risks associated are like any equity-oriented scheme. In tax saving schemes investment is made in equity and equity related instruments with

an objective to produce long term capital appreciation. The difference between equity and equity linked saving schemes (ELSS) is that the latter has a 3-year

lock-in and tax benefit like other tax saving products viz. public provident fund (PPF), national saving certificate (NSC), infrastructure bonds and insurance. This 3-

year lock-in is imposed by the Central Board of Direct Taxes (CBDT). These schemes are suitable for equity oriented investors seeking to generate capital

appreciation from an equity portfolio as well as tax benefits under the section 88 of the Income Tax Act, 1961. The logistic regression equation is developed by

the independent variables is aided by the “(E)” column which contains the positive and negative values, the positive values increase the likelihood ratio between

the dependent and independent variables and negative values reduces the likelihood ratio between dependent and independent variables. The dependent

variable “Y”(tax saving schemes) equal to intercept value plus the demographic variables if the value of variables are positive and subtract the value if the value

of variables is negative result in logistic regression equation.

Logistic regression equation:

Y=18.527-0.447(age) +0.364(household monthly income) +0.047(male) 1.091(undergraduate) -1.104 (graduate)-0.705(pg &above) + 0.821(Married)

+19.144(businessperson) +20.157(private sector employee) +20.409(govt. employee) +16.853(Retired person) +0.074(Jammu) -0.236 (Srinagar) -

0.502(Chandigarh)

DISCUSSION AND CONCLUSION Retail investors has emerged as a backbone for the economic development of a nation especially India. In the current scenario, Indian retail investors share is

growing at the tremendous speed. Though highly populated the investors in India are sparsely populated located depending upon the prosperity and investment

climate of the region across the country. In this backdrop, the present study was undertaken to analyse which demographic factors leave their impact on the

retail investment decisions of an investors. Research analysis revealed that Growth schemes of the mutual funds have been favored by investors in their

investment decisions, followed by tax saving schemes, balanced schemes and income schemes respectively. When it comes to educational level, investors with

graduate, post graduate and above qualification have made maximum investment with respect to professional qualification and undergraduate. In terms of

marital status, married individuals have maximum investment and as per the age group category, 25-34 years have got the highest share in investment.

Employees in the private sector have got maximum share among the mutual fund investors and among the households, households with monthly income in the

category of (20,001-40,000) have made the maximum investment in the mutual funds schemes. Male respondents have made higher investment than female

respondents in mutual funds. As per the likelihood ratio test discussed above that investment skill depends on the occupation of the family and it has very large

impact on the scheme offered by the mutual fund industry. Household monthly income which is very important aspect for the investment show least

importance by the likelihood test and this test valued it on lower number than the other demographic factors. Education, occupation, age and marital status

have significant relationship with investment decisions of retail investors in mutual funds schemes. Lastly it is stated that these evidences should be taken into

consideration when evaluating the merits of schemes provided by the mutual fund industry. Moreover the mutual fund companies should focus more on

investment strategies which will help them to attract and retain more and more valuable retail investors. The companies should come up with schemes which

are within the reach of average retail investors.

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TABLES TABLE 1: MULTINOMIAL LOGISTIC REGRESSION

Case Processing Summary

N

Marginal Percentage

Schemes Growth Schemes 381 45.3%

Balanced Schemes 111 13.2%

Tax Saving Schemes 246 29.3%

Income Schemes 103 12.2%

Demographic Variables

Gender

Male 571 67.9%

Female 270 32.1%

Age 18-24 years 90 10.7%

25-34 years 594 70.6%

35-45 years 103 12.2%

Above 45 years 54 6.4%

Educational level Under Graduate 12 1.4%

Graduate 208 24.7%

PG & above 517 61.5%

Professional Qualification 104 12.4%

Marital Status Married 482 57.3%

Unmarried 359 42.7%

Occupation Businessperson 31 3.7%

Private Sector employee 460 54.7%

Govt. employee 293 34.8%

Retired Person 51 6.1%

Student 6 .7%

Household Monthly Income Up to 20,000 105 12.5%

20,001-40,000 316 37.6%

40,001-60,000 189 22.5%

Above 60,000 231 27.5%

City Jammu 207 24.6%

Srinagar 197 23.4%

Chandigarh 224 26.6%

Ludhiana 213 25.3%

Valid 841 100.0%

Missing 0

Total 841

Subpopulation 375

TABLE 2: OVERALL TEST OF RELATIONSHIP

Model Fitting Information

Model Model Fitting Criteria Likelihood Ratio Tests

-2 Log Likelihood Chi-Square df Sig.

Intercept Only 1556.921

Final 1402.741 154.180 42 .000

TABLE 3: STRENGTH OF MULTINOMIAL LOGISTIC REGRESSION RELATIONSHIP

Pseudo R-Square

Cox and Snell .168

Nagelkerke .183

McFadden .074

TABLE 4.1: EVALUATING USEFULNESS FOR LOGISTIC MODELS

Case Processing Summary

Scheme N Marginal Percentage

Growth Schemes 381 45.3%

Balanced Schemes 111 13.2%

Tax Saving Schemes 246 29.3%

Income Schemes 103 12.2%

Valid 841 100.0%

Missing 0

Total 841

Subpopulation 1



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TABLE 4.2: EVALUATING USEFULNESS FOR LOGISTIC MODELS

Classification

Observed Predicted

Growth Schemes Balanced Schemes Tax Saving Schemes Income Schemes Percent Correct

Growth Schemes 322 4 42 13 84.5%

Balanced Schemes 84 3 20 4 2.7%

Tax Saving Schemes 186 3 56 1 22.8%

Income Schemes 62 1 11 29 28.2%

Overall Percentage 77.8% 1.3% 15.3% 5.6% 48.8%

TABLE 5: RELATIONSHIP OF INDEPENDENT AND DEPENDENT VARIABLES

TABLE 6: GROWTH SCHEMES PARAMETER ESTIMATES

Parameter Estimates

Growth Schemes B Std. Error Wald df Sig. Exp(B) 95% Confidence Interval for Exp(B)

Lower Bound Upper Bound

Intercept .638 1.233 .268 1 .605

Age .070 .205 .117 1 .732 1.073 .718 1.603

Household Monthly Income .177 .133 1.788 1 .181 1.194 .921 1.549

Gender- Male .091 .275 .111 1 .740 1.096 .639 1.879

Female 0b . . 0 . . . .

Educational Level-

under Graduate

-.396

1.377

.083

1

.774

.673

.045

10.009

Graduate -1.608 .553 8.474 1 .004 .200 .068 .591

PG & Above -.867 .525 2.725 1 .099 .420 .150 1.176

Professional Qualification 0b . . 0 . . . .

Marital Status- Married .226 .291 .603 1 .438 1.253 .709 2.217

Unmarried 0b . . 0 . . . .

Occupation-

Businessperson

.885

1.154

.589

1

.443

2.423

.252

23.260

Private Sector employee 1.233 1.037 1.412 1 .235 3.430 .449 26.183

Govt. Employee 1.387 1.059 1.716 1 .190 4.004 .502 31.914

Retired Person -.884 1.084 .664 1 .415 .413 .049 3.462

Student 0b . . 0 . . . .

Cities- Jammu .114 .376 .093 1 .761 1.121 .537 2.341

Srinagar .098 .369 .070 1 .791 1.103 .535 2.271

Chandigarh -.307 .351 .766 1 .382 .736 .370 1.464

Ludhiana 0b . . 0 . . . .

Likelihood Ratio Tests

Effect Model Fitting Criteria Likelihood Ratio Tests

-2 Log Likelihood of Reduced Model Chi-Square df Sig.

Intercept 1402.741a .000 0 .

Age 1415.349 12.609 3 .006

Household Monthly Income 1412.790 10.049 3 .018

Gender 1404.558 1.817 3 .611

Education Level 1435.030 32.289 9 .000

Marital Status 1416.086 13.345 3 .004

Occupation 1463.987 61.246 12 .000

Cities 1408.910 6.169 9 .723

The chi-square statistic is the difference in -2 log-likelihoods between the final model and a reduced model. The reduced model is formed by omitting an effect

from the final model. The null hypothesis is that all parameters of that effect are 0.

a. This reduced model is equivalent to the final model because omitting the effect does not increase the degrees of freedom.



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TABLE 7: BALANCED SCHEMES PARAMETER ESTIMATES

Parameter Estimates

Balanced Schemes B Std. Error Wald df Sig. Exp(B) 95% Confidence Interval for Exp(B)


Intercept -.676 1.702 .158 1 .691

Age -.215 .255 .713 1 .398 .806 .489 1.329

Household Monthly Income .384 .161 5.679 1 .017 1.467 1.070 2.012

Gender – Male .374 .340 1.214 1 .271 1.454 .747 2.831

Female 0b . . 0 . . . .

Educational Level-

under Graduate

.687

1.430

.231

1

.631

1.988

.121

32.790

Graduate -2.274 .609 13.936 1 .000 .103 .031 .340

PG & Above -1.683 .559 9.080 1 .003 .186 .062 .555


Marital Status- Married .662 .350 3.586 1 .058 1.939 .977 3.847

Unmarried 0b . . 0 . . . .

Occupation-

Businessperson

.952

1.674

.324

1

.569

2.592

.097

68.999

Private Sector employee 1.518 1.550 .958 1 .328 4.562 .219 95.261

Govt. Employee 1.838 1.569 1.373 1 .241 6.286 .290 136.019

Retired Person -.710 1.634 .189 1 .664 .492 .020 12.095

Student 0b . . 0 . . . .

Cities- Jammu .074 .451 .027 1 .870 1.077 .445 2.609

Srinagar -.218 .453 .231 1 .631 .805 .331 1.953

Chandigarh -.184 .417 .195 1 .659 .832 .367 1.884

Ludhiana 0b . . 0 . . . .

TABLE 8: TAX SAVING SCHEMES PARAMETER ESTIMATES Parameter Estimates

Tax Saving Schemes B Std. Error Wald df Sig. Exp(B) 95% Confidence Interval for Exp(B)


Intercept 18.527 .984 354.859 1 .000

Age -.447 .222 4.047 1 .044 .640 .414 .989

Household Monthly Income .364 .141 6.674 1 .010 1.439 1.092 1.896

Gender Male .047 .290 .027 1 .870 1.049 .594 1.851

Female 0b . . 0 . . . .

Educational Level-

under Graduate

1.091

1.454

.563

1

.453

2.977

.172

51.428

Graduate -1.104 .583 3.590 1 .058 .332 .106 1.039

PG & Above -.705 .553 1.624 1 .203 .494 .167 1.461


Marital Status- Married

.821

.307

7.131

1

.008

2.272

1.244

4.151

Unmarried 0b . . 0 . . . .

Occupation-

Businessperson

19.144

.888

464.703

1

.000

2.062E8

36172314.54

1.176E9

Private Sector employee 20.157 .657 940.852 1 .000 5.676E8 1.566E8 2.058E9

Govt. Employee 20.409 .688 880.913 1 .000 7.307E8 1.898E8 2.812E9

Retired Person 16.853 .000 . 1 . 20844976.594 20844976.594 20844976.594

Student 0b . . 0 . . . .

Cities- Jammu .074 .393 .036 1 .850 1.077 .498 2.328

Srinagar -.236 .391 .364 1 .546 .790 .367 1.700

Chandigarh -.502 .368 1.864 1 .172 .605 .294 1.245

Ludhiana 0b . . 0 . . . .

a. The reference category is: 4.

b. This parameter is set to zero because it is redundant.



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109

AN EVALUATION OF SERVICE QUALITY IN COMMERCIAL BANKS

DR. V. N. JOTHI

LECTURER


KANCHI SHRI KRISHNA COLLEGE OF ARTS AND SCIENCE

KILAMBI

ABSTRACT Financial sector an economy is a multi-faceted term. It refers to the whole gamut of legal and institutional arrangements, financial intermediaries, markets and

instruments with both domestic and external dimensions. Finance is the life blood of a modern economy. Banking system, as an integral part of the financial

sector, is the linchpin of any development strategy. It promotes savings by providing a wide variety of financial assets to the general public and reforms are aimed

at induction of best international practices and technological changes for competing globally. The objective of this study is to know the factors which lead to

higher level satisfaction with regard to banking service facility. This study is based on data collected from sample of 100 customers having a deposit. It is

observed from this study that a majority of the customers feel that the service quality of commercial bank is only at the average level. It is concluded that there is

no significant difference noticed with respect to some of the demographic variables, thus it is assumed that the expectation of the consumers are uniform for all

the categories of the consumers.

KEYWORDS Service quality, Banking, Commercial Banks.

AN EVALUATION OF SERVICE QUALITY IN COMMERCIAL BANKS he Indian financial sector has undergone a significant structural transformation since the initiation of the financial liberalization in 1990’s. It brought

significant changes in financial sector. The business of a commercial bank is primary to hold deposits and make loans and investments with the object of

securing profits. Commercial banks have come to play a significant role in the development of countries

In a developing country like India, Banking facilities are highly inadequate. The vast number of people living in villages and towns do not have any banking

facilities and consequently all their savings are wasted. The opening of banks in these areas or extension of bank facilities will help mobilize savings in these

areas.

TOTAL CREDIT AND DEPOSITS Table shows the analytical results of credit and deposits by Scheduled Commercial Banks (SCB’s). Demand deposits of SCBs have increased from 1,17,423 crore

in 1999 to Rs. 5,23,085 crore in 2009. However, time deposits of banks have increased from Rs. 6,04,780 crore to Rs. 33,11,025 crore in same period. The

growth of time deposits in absolute term has been more than demand deposit. Total credit of SCB’s has increased from Rs. 3,68,837 core in 1999 to Rs.

24,17,006 crore in 2008. Deposit per capital has increased from Rs. 7,264 crore in 1999 to Rs. 33,225 crore, while credit deposits ratio has increased from 51.1

to 72.39 during the same period. The growth of credit and deposits has significant over the study period.

TABLE – 1: TRADE CREDIT AND TIME DEPOSITS OF SCB’s

Indicators March 1999 March 2006 March 2007 March 2008 March 2009

Total deposits 7,22,203 21,09,049 26,11,933 31,96,936 38,34,110

a) Demand deposits 1,17,423 3,64,640 4,29,731 5,24,310 5,23,085

b) Time deposits 6,04,780 17,44,409 21,82,203 26,72,630 33,11,025

Total credit 3,68,837 15,07,077 19,47,100 24,17,006 -

Credit / deposit ratio 51.1 70.1 73.94 73.88 72.39

Deposit per capita 7264 19,069 23,279 28,093 33,225

Source: Money and Banking Centre for Monitoring Indian Economy.

The move from old to new business environment has created the demands on Indian bank like enhanced work flow, full customer access to banking transactions

through electronic mode etc. In the emerging scenario of fierce competition backed twin force of deregulation and technology, the degree of competition in the

Indian financial sector has increased to unprecedented level. Hence, the operational efficiency of banks has achieved immense significance for their survival.

Now-a-days the banks are working hard to attract customer and retain their market share by providing them with various innovative service. Today’s customers

are more dynamics in their thinking their taste, needs and preferences keeping peace with changing trends and technology changes. Providing additional service

as per the expectations of the consumers is the main ingredient, which in turn lead to higher level of customer satisfaction. Customer satisfaction is an

important factor for capturing the additional market and also for retaining the existing customers. With this backdrop the present study analyse the level of

satisfaction of the service facility offered by banks on which factor influence the customer satisfaction.

The objective of the study is to examine the service quality and to identify the determinants contributing to service quality of commercial bank in Kanchipuram.

METHODOLOGY The sample for this research consists of heterogeneous category of commercial bank users living in Kanchipuram. Initially, the survey instrument was distributed

among 160 peoples at different locations. Overall 112 respondents responded the request and 12 instruments were discarded due to missing information.

Finally the research was settled with 100 completed responses.

The survey questionnaire was developed to explore the attitudes and motivation of commercial bank users. It was developed to explore the relationship

between demographic variable, social, psychological variables and usage behaviours.

This paper analyzes the responses collected from the respondents. It is based on the objectives and hypotheses that are set earlier to examine the consumer

attitudes in using the commercial banks facility offered. To find out how is the penetration of new technology among Indian consumers and also, do the

demographic factors influence the adoption new technology. The data collected were initially coded and transcribed in the data format. The data analysis was

carried out by using SPSS (Statistical Package for Social Sciences), Version 16. The respondents’ perception towards the service user is going to be analyzed by

using frequency analysis, chi-square test, t-test and ANOVA. Cross tabulation was mainly used to analyse the role of personal information to make inferences

and draw conclusion to prove or disapprove the hypothesis and to analyse the result. The analysis is given in two sections, first section deals about the

demographic profile of the respondents. The second section is devoted to capture the consumer attitudes towards the service quality and usage of bank.

T



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TABLE – 2: PROFILE OF THE RESPONDENTS

Gender Male 63 % Female 37 %

Age Group % Income % Qualification % Occupation %

> 21

21 - 30

31 - 40

41 - 50

60

22

8

10

> 100,000

1,00001 - 200,000

2,00,001 - 3,00,000

< 3,00,000

62

23

11

4

Higher Secondary

Bachelor Degree

Master Degree

Others

29

21

37

13

Service employed

Business

Professional

Self employed

Others

40

13

19

10

18


From the above table 2 it is clearly understood that service users consists of 63% (63) male users and 37% (37) female users. It gives some indication that the

male users are more than female users with respect to bank service usage.

With reference to age it is identified that 60% (60) user are below 21 age group followed by 22% (22) of users comes in the age group of 21-30. Only 8% (8)

users are in the age category of 41-50. In the present scenario, the younger people are techno savvy and they easily adapt to the new technology, the

distribution of respondents with reference to age confirms about this phenomenon.

When the data is compare on the basis of income level it reveals that 62% (62) user are getting income below 1,00,000 p.a 23% (23) of users are getting income

from Rs.1,00,000 to 2,00,000 p.a 11% (11) of users are getting income between Rs. 2,00,000 – 3,00,000 p.a. only a few users are getting income above Rs.

3,00,000 p.a. The above statement clearly explain most of the users getting income in below Rs. 1,00,000.

With reference to educational qualification it is identified that out of the total service users 29% (29) of the service users are with higher secondary qualification,

21% (21) of the users are Bachelor Degree 37% (37) of the service users are Master degree 13% (13) of the service user are other qualification; hence it is clear

that most of service users are educated up to master degree.

In the next level the respondents are distribution based on their occupational category it is identified that out of the total respondents; 40% (40) of them are

service personnel working either in government or private organizations. 13% (13) at the respondents are carrying out their business 19% (19) are professionals

and 10% (10) are self employed professional. Only 18% (18) are working some other jobs. So it is clearly shown that majority of the respondents are service

personnel.

OVERALL USAGE OF BANK SERVICE Now a day the commercial banks provide many services facility. But in the present scenario it is considered as full pledged bank with almost all service facilities.

The following table provides the usage pattern of the respondents for various services.

TABLE – 3: CROSS TABULATION OF USAGE PURPOSE ON THE BASIS OF GENDER

Total Male (No. of usage) Female (No. of usage)

Cash withdrawal 99 62 37

Overdraft 83 50 33

Deposits 38 20 18

Transfer of funds 19 7 12

Bills payment 26 14 12

Other usage 27 16 11

Chi-square:5.178 Significance:0.3946

It is concluded that most of user use bank only for withdrawal purpose followed by overdraft and only minority customer are using for deposits and transfer of

funds.

USAGE OF BANK BASED ON GENDER In addition to identifying the reason for using bank, the data was cross tabulated to identify there is any significant difference exists between the male and

female consumers with respect to usage of bank and its purpose. For that purpose the following null hypothesis has been proposed.

HYPOTHESIS There is no significant difference exist between the purpose of bank usage and Gender.

To validate the null hypothesis, by using the cross tabulated results chi-square analysis was carried out. It produced the following results. Chi-square value of

5.178 with a significance value of 0.3946. It is clearly indicated the acceptance of null hypothesis, and it is concluded that there is no significant difference

between Male and Female users with regard to usage pattern of bank.

SERVICE QUALITY OF BANK SERVICE Service Quality of any service provision can be assessed with many qualities. In the present study the service quality of bank was assessed by twelve attributes,

namely, investment suitability, trust credibility & future security, reliable and promptness, best customer service, consultancy service, best interest rates, well

furnished infrastructure, insurance linked bank deposits, quick sanction of loans, Automated Teller Machine (ATM), mobile banking, and E - banking. These

service qualities were measure by using five point Likert scale. The weighted mean score on these attributes are given in Table 4. From this table, the

consumer’s needs may be properly assessed so that the service provision can be made in appropriate manner according to the requirements of the customers.

The consumer preference and priorities can easily be assessed with the following table.

TABLE – 4: MEAN SCORE OF SERVICE QUALITY ATTRIBUTES OF BANK

S. No Service Quality Attribute Weighted Average Score

1. Investment suitability 4.53

2. Trust credibility & future security 4.47

3. Reliable and promptness 4.30

4. Best customer service 4.09

5. Consultancy service 4.34

6. Best interest rates 3.74

7. Well furnished infrastructure 4.14

8. Insurance linked bank deposits 4.31

9. Quick sanction of loans 3.78

10. Automated Teller Machine (ATM) 3.74

11. Mobile banking 3.66

12. E – banking 4.31



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111

From the above table it is clearly understood that the consumer perception of service quality of bank facility and equipment should be more suitable for

investment and it should be ergonomically designed it is evidenced with the highest weighted average score is 4.53 while comparing to other service quality

attributes. The respondents said the additional interest rate should be provided for deposits with a moderate level with a weighted average score of 3.74. The

respondents expressed their displeasure with regard to mobile banking is expressed with the least mean score of 3.66.

SERVICE QUALITY COMPARISON WITH GENDER In addition to identifying importance of service quality attributes in using bank, the data was cross tabulated to identify is there any significant difference exists

between the male and female consumers with respect to individual service quality item. For that purpose the following null hypothesis has been proposed.

HYPOTHESIS There is no significant difference exists between the service quality attributes (individually) and gender.

To validate that null hypothesis, t-test was carried and the results are given in Table 5.

The table 5 show’s that the service quality of bank based on gender most of the male respondents’ preference goes to consultancy service with the highest

weighted average score of 4.51 followed by quick sanction of loan facilities with moderate weighted average score of 3.83. The male respondents demand best

interest rate for deposits which is not at satisfactory level with a minimum weighted average score of 3.60.

Most of the female respondents felt investment suitability of bank are very good the highest weighted average score is 4.68 while comparing to other service

quality. The female users felt that statement and document should be reliable and promptness with a moderate level with the weighted average score of 4.19.

The female respondents said quick sanction of loans, ATM and mobile banking with the least weighted average score of 3.70.

t-test results confirms that all the service qualities does not differ significantly between male and female consumers. Only consultancy service attribute differs

significantly between male and female consumers.

SERVICE QUALITY COMPARE WITH AGE GROUP In the next level age was identified as the next important demographic variable which influence the service quality attribute. Hence, the data were grouped on

the basis of different age category the Mean value of different age groups is given in Table 5.

The table 5 provides service quality comparison for the different attributes with reference to different age categories. Majority of the below 21 age group

respondents said bank is suitable for investment and it is very important attribute with a weighted average score of 4.52. In same category ensuring the well

furnished infrastructure is considered to be the next important attribute with a moderate level weighted average score of 4.12. The ATM needs and mobile

banking are shown as a minimum weighted average score of 3.72.

The 21-30 age group said investment suitability is enough level weighted average score is 4.59. The 21-30 respondents’ showed their preference at moderate

level to best customer service and insurance linked bank deposit facility with the weighted average score of 4.14. In this category of age fulfilling the consumers

needs in ATM, some attention from the banks because it shows minimum weighted average score of 3.73.

The 31-40 age group of respondents said insurance linked bank deposit facility is provided at sufficient level weighted average score is 4.88. 31-40 age groups

said best customer service at moderate level weighted average score is 3.75. The 31-40 of age group said mobile banking is not sufficient level weighted average

score is 3.13.

The 41-50 age group of the respondents is said trust for credibility & future security are very good weighted average score is 4.50. The 41-50 of age group

respondent said well furnished infrastructure service is moderate level weighted score is 3.90 above age group of the respondents said mobile banking is not

sufficient level weighted average score is 3.30.

SERVICE QUALITY COMPARE WITH OCCUPATION In the ordinary human life various categories of people use the bank. So, in this study is concentrate customers on the basic of occupations.

The table 5 shows that service quality of bank comparison with different occupational level. In the service personnel category employee said Investment

suitability and trust for credibility & future security is an essential element with a very good weighted average score is 4.48. At the moderate level they said well

furnished and infrastructure attribute with the weighted average score of 3.93 some employee said mobile banking is not sufficient which is evidenced by low

weighted average score of 3.43.

Majority of the business personnel said ensuring well furnished infrastructure facility is good with a weighted average score of 4.31. Facility and equipment

should be more Investment suitability with the moderate level of weighted average score 3.92. Some business employed said best interest is not provided for

deposits with the weighted score of 3.31.

Most of the professional employees said banks are suitable for investment, very good weighted average score is 4.84. They are expecting best interest rate for

deposits is an essential element in enhancing the service facility with a moderate level weighted average score of 4.26. Bank is not satisfying the customer’s

ATM need weighted average score is 3.74.

Most of the self employees said suitable centre for investment is fine weighted average score is 4.70. Self employed user said bank provided consultancy service

at moderate level. Self employed person said our ATM needs and requirement are not fulfill weighted average score is 3.40.

Majority of other working people said banks are well equipped to attract suitable investment and its weighted average score is 4.67. Banks are provide best

customer service and its weighted average score is 4.11 and other working people said mobile banking service is not sufficient weighted average score is 3.74.

ANOVA results in the form F-value and significant values it is concluded that none of service quality attributes differ significantly with respect to different

occupational levels.

CONCLUSION It is evident from above discussion that a majority of the customers feel that the service quality of bank is only the average level. The customers are not fully

aware of the service facilities offer by banks. Hence, the banks should take necessary steps to create awareness of the usage by means of proper education. On

the basis of the observation from the responses of the respondents it is concluded that the future of bank service quality may improve in the coming years. This

will definitely help in the transformation of banking sector in a positive manner. On the basis of finding, the paper suggests that there is no significant difference

noticed with respect to some of the demographic variables, thus it is assumed that the expectation of the customers are uniform for all the categories of the

consumers, hence, while formulating the common banking strategy to different categories of consumers may be fruitful.

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• Parasurama A., Zeithamal, V.A. & Berry L.L. (1988). A service quality – A multiple item scale for measuring consumer perception of Service Quality. Journal

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• Brown, S.W. Swartz., T.A. (1989) – A gap analysis of Professional Service Quality, Journal of Marketing 53 (1) 92 – 98.

• Reserve Bank of India published in Feb 2008 article of Banking Finance vol.5 No.2 Issn 0972.736.



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• Koeva. Petya, 2003, The Performance of India Banks during Financial Liberalization. IMF Working Paper No.03/150.

• Miniappan G.P: 2002, “The NPA Overhang Magnitude solutions, legal reforms”, Address at CII Banking Summit 2002, Mumbai, April 2002.

• Ministry of Finance (993b), Public Sector Commercial Banks and Financial Sector Reforms: Rebuilding for a Better future, New Delhi, Government of India.

• Ministry of Finance (1991). Economics’ Reforms two years after and the task Ahead, New Delhi, Government of India.

• Rakesh Mohan, “Financial Sector Reforms in India”, Chartered Accountant, Feb 2005.

• Reddy Y.V., (2002a): “Monetary and Financial Sector Reforms in India”, A Parishioner’s Perspective, In RBI Bulletin, May, Pp 337-356.

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Research Paper, No. 32, pp 1- 73.

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June, 2007.

• Sudhir Sharmaand Akhash, “Foreign and Domestic Banks in India: An Analysis”, Southern Economists, Vol. – 46, No. – 5, July 1, 2007.

TABLE – 5: MEAN SCORE OF SERVICE QUALITY ATTRIBUTES BASED ON GENDER, AGE, AND OCCUPATION

1. Investment suitability, 2. Trust credibility & future security, 3. Reliable and promptness, 4. Best customer service, 5. Consultancy service, 6. Best interest rates,

7. Well furnished infrastructure, 8. Insurance linked bank deposits, 9. Quick sanction of loans, 10. Automated Teller Machine (ATM), 11. Mobile banking, and 12

E - banking.

1 2 3 4 5 6 7 8 9 10 11 12

Male 4.44 4.46 4.37 4.10 4.51 3.60 4.14 4.32 3.83 3.76 3.63 4.16

Female 4.68 4.49 4.19 4.08 4.05 3.97 4.14 4.30 3.70 3.70 3.70 4.57

T (1.081) (0.196) 1.101 0.081 2.401 (1.803) 0.038 0.111 0.513 0.296 (0.282) (2.378)

Sig. 0.075 0.845 0.274 0.936 0.018 0.074 0.969 0.912 0.609 0.768 0.779 0.019

>21 4.52 4.40 4.33 4.13 4.28 3.77 4.12 4.33 3.75 3.72 3.72 4.33

21-30 4.59 4.55 4.11 4.14 4.36 3.86 4.23 4.14 3.91 3.73 3.86 4.36

31-40 4.75 4.75 3.63 3.75 4.50 3.63 4.38 4.88 3.63 3.38 3.13 4.40

41-50 4.30 4.50 4.40 4.00 4.50 3.40 3.90 4.10 3.80 4.20 3.30 4.31

F 0.851 0.847 2.373 0.540 0.248 0.538 0.429 1.647 0.151 1.170 1.175 0.776

Sig. 0.469 0.471 0.075 0.656 0.862 0.657 0.733 0.184 0.929 0.325 0.323 0.510

Service Personal 4.48 4.48 4.28 4.18 4.20 3.55 3.93 4.28 3.55 3.73 3.43 4.35

Business 3.92 4.23 4.23 3.77 4.00 3.31 4.31 3.69 4.23 3.38 3.77 4.15

Professional 4.84 4.68 4.16 4.37 4.84 4.26 4.16 4.74 3.84 3.74 3.79 4.37

Self- employment 4.70 4.20 4.30 3.50 4.00 3.90 4.30 4.510 3.80 3.40 3.70 4.10

Others 4.67 4.56 4.56 4.11 4.56 3.83 4.39 4.28 3.89 4.22 3.74 4.39

F 5.564 1.531 0.682 2.501 2.784 2.510 0.964 3.150 0.951 1.971 0.769 0.337

Sig 0.000 0.199 0.606 0.048 0.310 0.470 0.430 0.017 0.438 0.105 0.548 0.852



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APPRAISAL OF QUALITY OF SERVICES TO EXPRTERS IN PUBLIC SECTOR BANKS

SAHILA CHAUDHRY

STUDENT

SCHOOL OF MANAGEMENT

ITM UNIVERSITY

GURGAON

ABSTRACT In banking, the quality of customer service holds primal significance, particularly in the context of sustained business growth. Unlike other industries engaged in

the production of tangible goods, banks are unique in the sense that they are producing and delivering the service at the delivery points, i.e. at branches. Despite

what has been done in the past in this regard, hiatus between customer expectations and customer service continues to persist. Service, like any product, is

subject to further improvements and quality of service should evolve contemporaneously with the rising expectations of the customers. In the present paper, an

attempt is made to appraise the quality of services to exporters in public sector banks. To achieve the objective of the study, a sample of 100 customers

(exporters) is selected to obtain the responses from them about the quality of the services provided by their banks to them. The respondents are selected

purposively from Panipat and Faridabad in Haryana and Ludhiana in Punjab. It is found that majority of the respondents deal with the private and foreign banks

and compared their services far better/better than those of public sector banks. According to them, professionalism, disciplined management and technology

used are the main factors contributing to the better services in PSIBs/FBs. Simplification of rules and procedures, personalized service/doorstep service, making

working days/hours more flexible are the main suggestions, in order of importance, to improve the customer services to the exporters. No doubt, automation and

technology are contributing to speed, accuracy and convenience, it may not be possible or desirable to do away with human contact all together. The human

element cannot be lost sight of, therefore, pertinent for the banks to tone up the interpersonal skills in their staff, more particularly, the front-line staff, who could

meaningfully contribute to the basic satisfaction of the customer.

KEYWORDS Delivery points, Expectations, Professionalism, Technology, Personalized/doorstep service, Interpersonal skills.

APPRAISAL OF QUALITY OF SERVICES TO EXPRTERS IN PUBLIC SECTOR BANKS n banking, the quality of customer service holds primal significance, particularly in the context of sustained business growth. Unlike other industries

engaged in the production of tangible goods, banks are unique in the sense that they are producing and delivering the service at the delivery points, i.e. at

branches. This has an overwhelming impact on the customer psyche and makes them super-sensitive towards the quality of service. The relationship

between a bank and its customer is not a one-time, but a relatively permanent and enduring one, which required to be nurtured with good quality of service. In

such a situation, any bank not having a mind towards bettering the quality of customer service is almost certain to loose its business. As the post-reform era is

becoming competitive day by day, the banks have started realizing that business goes to those who seek clients, service them satisfactorily and strive hard to

retain them.

TRENDS: WORLD OVER Banking has been at the core of the country's economy for more than one and half centuries. With globalization, banking sector has become more competitive.

As a result, there is no more a seller's market. The prevailing trends of buyer's market require the players to come for the customers rather than taking them for

granted. When the competition has resulted in thinning of margins, enhancement of profits can be possible only through multiplying the volume. The volumes

may be increased only if the banks are able to attract, service and retain the customers. The quantum of customer assets in banks' balance sheets is declining.

The large number of customers is shying away from banks; therefore, there is an urgent need to bring the customers back to the banking fold. Advancement of

IT has provided for major supports to financial systems. Communication technologies have facilitating gathering and transferring of information across the globe.

The awareness of the customers about the market place is also increasing. These trends compel to believe that the banks will have to concentrate on customer

service not only for expansion and maximization of profits but even for survival.

THE INDIAN CONTEXT With delayed entry in globalization process compared to peers, the Indian banking is at the crossroads. It has to service the age-old traditional customer and also

to develop products to meet emerging demands of present, prospects and new customers. During post-nationalization period, class banking was converted into

mass banking. With the new thrust on profit-maximization, the shift is in favour of class banking. Addressing the needs from sophisticated export finance

clientele to IRDP customer, banks undertake a wide range of activities.

Environment in which banks operate are again divergent. In metro-centers, every activity is technology driven. On the other side, there are remote branches

situated in hilly areas, where day long electric supply is also not assured. Customer service requirements at these centers are also totally different. The

awareness level of customers at different centers is also varied. One set of customers in rural areas feels that the bank is obliging them by giving service, while

the other group in metros considers such service at the lowest possible cost as, more or less, a fundamental right.

Customers in rural areas are more interested in getting the service they want and are unaware about the profits the bank makes. Alternatively, urban customers

not only insist on best service at the lowest cost, but also, as prospective shareholders, like the banks to show excellent profit performance. On the advent of

disinvestment programs of PSBs, the shareholder's pressure on banks is to excel in terms of profit as well as in customer service.

It must be recognized that the banks in India are certainly realizing the significance of customer service not only for business expansion but also for their survival.

The entry of FBs with their advanced technology, leaner organizational set ups and absence of legacies like NPAs have increased the importance of customer

service. Similarly, the recent development of credit card market and banking through ATMs, internet, mobile, etc. will have a telling effect on customer service

issues.

In the past, bankers in India hardly gave any thought on the aspect that the customer is the boss or there is only one champion and that's the customer. Rather

their main concerns were profitability and safety of assets. However, the scenario changed gradually and the banks realized that the expectations of the

customers are growing with the increase in competition. Banks can no longer ignore the needs and demands of their customers. After all, a customer is the

lifeblood of a banker's business. While defining the purpose, for which business exists, Peter Drucker, the best-known management thinker, said, "With respect

to the definition of the business purpose and business mission, there is only one such focus, one starting point, and it is the customer. The customer defines the

business. The company’s name, statutes or articles of incorporation do not define a business. It is defined by the wants, which the customer satisfies when he

buys a product or service. To satisfy customer is the mission and purpose of business". The main objective of the banker, therefore, is to create, cultivate and

retain the customer. If the bank were able to fulfill this objective, the residual results like profitability and productivity would automatically follow. It is widely

recognized that if the customer is dissatisfied, the organization has no business to exist. Further, studies have revealed that it is cheaper to retain the existing

customer than seeking a new one. It is also true that it is very challenging to retain the existing customer than to secure a new one. In the U.S., it was noticed

I



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that for every dollar of lost business, it took 10 dollars of new business to compensate the loss. One study of U.S. organizations conducted by "The Service Edge"

revealed that for 5 percent improvement in customer retention, the profit increased by 32 percent in automotive service, 85 percent in advertising agency and

138 percent in auto/home insurance. The data may give an indicative trend for the Indian banking industry as well. In an environment where the customer has

come to the center-stage, listening to the customer for redressal of his grievance is an organizational necessity and imperative. This is why American corporate

has come to the conclusion that a good way to improve an organization is to hire an Ombudsman to listen the complaints of the customers. It is in this

background that the initiative taken by the RBI to introduce the Banking Ombudsman Scheme in 1995.

REVIEW OF LITERATURE The subject of customer service in PSBs, being sensitive in its nature, has been considerable focus and debate, especially in the post-nationalization era. The

aftermath of bank nationalization saw tremendous quantitative explosion and thoroughly altered the input-output relationship and a result of which the

customer service in banks reached probable its lowest level by mid-1970s and early 1980s. The organized effort to tackle the issue and initiate corrective

measures took the form of Talwar Committee, which submitted its report in 1977. The Committee went into various aspects of customer service in banks and

came up with 176 recommendations, majority of which were accepted and implemented in right earnest under the close monitoring of the Finance Ministry and

RBI. Given the dynamic context and rising customer expectations, however the level of public satisfaction with bank services again suffered a downturn, leading

to the constitution of yet another Committee in 1990. This Committee, more popularly known as Goiporia Committee, carried out extensive studies and

interviews and came up with 97 recommendations. These recommendations too found ready acceptance and the banks have committed themselves to their

implementation. There can be no denying the fact that both these committees have contributed significantly to the focusing of attention on various aspects of

customer service, but failed to bring about perceptible improvement in service quality mainly due to the facts that (i) the recommendations were framed

without considering the inadequacies of infrastructure (both internal and external) and system support, and (ii) no punitive measures were suggested for not

implementing these recommendations.

Narasimham (1991), which went into the whole gamut of the Indian banking sector, had also emphasized the need to improve service to the customers.

Simultaneously, pressures are building up on the banks in the matter of prudential norms, transparency etc. besides having to work efficiently. Other important

developments in respect of customer care include the Customer Protection Act, which, inter-alia, covers the bank services and the establishment of Banking

Ombudsman Scheme 1995.

Madhukar (1997) examined the various initiatives and developments that have had an impact on customer service in banks and concluded that staff skills and

attitudes are yet to attain levels, which the public in general perceives to be satisfactory. One of the challenges before the PSBs is one of transforming their work

culture so as to make banking service a delightful experience. What needs to be achieved depends largely on the desire and conviction on the part of the bank

staff at all levels. If the staff employed by the FBs and new PSIBs can set high standards of service and customer orientation, there is no reason why those in the

PSBs cannot do it, especially when the infrastructural facilities are adequately provided and work environment made congenial.

Chakrabarty (1997) stated that the liberalization of banking sector from the shackles of regulations has no doubt exposed its inherent weaknesses, but opened

up new vistas of growth and opportunities also. At the same time, the Indian banks never before faced the threats and challenges of competition so acutely. To

what extent, the Indian banks will survive the ordeal of deregulation and remain on the track of growth will critically depend upon how soon they relearn the

forgotten basics of customer orientation and bring about an improvement in the service standards, which can be matched by only the global standards.

Gadkari (1997) examined the critical success factors and stressed that excellence in customer service and high level of customer satisfaction will remain elusive

goals even with the induction of the state-of-the-art technology and competitive pricing of products if the employees at the grass roots level are not committed

to these goals. The challenges lie in mobilizing the commitment by branch and divisional managers, in developing a vision and consensus for customer oriented

culture and in providing the necessary tools and support as branch and divisional managers implement and lead the changes.

Gauri Shankar (2004) studied the various aspects of customer service in banks and concluded that customer focusing is not to be viewed as just a business

strategy but should become corporate mission. Building value for customers should be seen as equal to building shareholder value. The challenge for banks will

be in the area of people (changing beliefs and attitudes), technology and competition.

Santi Swarup (2004) analyzed the customer orientation in banks for building long-term relationships and concluded that for delivering quality service, it is

imperative to have customer orientation as a culture in the bank. Customer orientation builds long-term relationships resulting in customer satisfaction and

cash flows to the banks.

Hasanbanu (2004) highlighted that the rural customers don’t have any idea as to how much time is required for any type of banking services. The rural

customers are not aware for what purpose the loans are available and how they can be availed. Customers’ do not know the complete rules, regulations, and

procedures of the banks and bankers preserve them for themselves and don’t take interest in educating the customers.

Ramesha, Hundekar and Kumber (2004) appraised how the marketing strategies brightens the future customer friendly banking services and said that the

banks, in the days to come, have to provide their broad-based service package in the midst of stiff competition. To ensure their competitive edge in future, they

have to fight with rivals in terms of quality to their customer services.

Sharad Kumar (September 2005) focused on the kind of services provided in developed countries and level of innovative services provided by the Indian banks.

Many innovative services are currently available in Indian banks like e-banking, ATMs, anywhere banking etc. But there is a vast scope for further improvement.

Parthasarathi (2005) examined the importance of customer service in banks and concluded that customer service is a vital function in any walk of life and

especially in business and service organizations like banks. Customers form their backbone and taking care of their requirements is of paramount importance.

Therefore, the banks have to adopt innovative strategies to meet customers’ requirements in terms of services, products, etc.

Ratnam and Suguna (2005) studied the customer service in commercial banks in the new era and said that the banks are facing many hurdles in the new era of

deregulation and ever increasing competition. To fight these problems efficiently, banks should focus on customer satisfaction, which can be achieved through

providing customized products, innovative ways of delivery, etc. Apart from this, banks should prepare customers relationship strategies that include bifurcation

of business operations, effective management of complaints, service as a brand, etc.

Bontis et. al. (2007) claimed that customer satisfaction enhances reputation in the service environment, which further mediates partially the relationship

between satisfaction and loyalty, and partially between satisfaction and recommendation.

Walsh and Beatty (2007) supported that service quality is strongly associated with important outcome variables such as customer satisfaction, loyalty, trust and

word of mouth when employing a multi-dimensional model across three service business types including banking.

Radomir, Wilson and Scridon (2009) examined the relationship between service quality dimensions and customer satisfaction with bank territorial units in

Romania. The results reveal that human resources have the greatest impact on customers’ satisfaction with bank territorial units and that both “Convenience

and Efficiency” and “Bank personnel” are the dimensions that bank management should consider in their efforts to improve and maintain the service quality

level.

Jayaraman, Shankar and Mun (2010) examined the relationship between service quality dimensions and customer satisfaction and concluded that assurance

has positive relationship but it has no significant effect on customer satisfaction. Reliability has negative relationship but it has no significant effect on customer

satisfaction. Tangibles have positive relationship and have significant impact on customer satisfaction. Empathy has positive relationship but it has no significant

effect on customer satisfaction. Responsiveness has positive relationship but no significant impact on customer satisfaction. The study also highlighted the

implications for marketers in banking industry for improvement in delivery of service quality.

Mishra, Das, Patnaik and Mohanty (2010) proposed two structural equation models (SEMs), one for public and another for private sector banks in India, to

show the relationship between customer satisfaction on bank services and the attributes of the perceived service quality and to explore the impact of the

relationship between customer satisfaction and service quality attributes.



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Despite what has been done in the past in this regard, hiatus between customer expectations and customer service continues to persist. Service, like any

product, is subject to further improvements and quality of service should evolve contemporaneously with the rising expectations of the customers. Having this

background in mind, the present study is an attempt to fill this gap.

OBJECTIVE OF THE STUDY The present study is conducted to assess the quality of services being provided to the exporters by the public sector banks.

RESEARCH METHODOLOGY To achieve the objective of the study, a sample of 100 customers (exporters) is selected to obtain the responses from them about the quality of the services

provided by their public sector banks to them. The respondents are selected purposively from Panipat and Faridabad in Haryana and Ludhiana in Punjab. The

data is collected with the help of the questionnaire and analyzed with the help of various statistical techniques like percentage, ranking method and presented

in tables in the later part of the study.

RESULTS AND DISCUSSIONS Responses about the rating of services provided by the banks to the exporters are given in Table - 1. It is evident from the table that the majority of the

respondents rated the courtesy at the counter, promptness in transactions and speedy sanction in facility as good and other services are rated as fair. Prompt

redressal of grievances is rated as average by majority of the respondents. On the other hand, bank charges are rated as normal by majority of them. As a whole,

the services of the banks have been rated as good, fair and average by 44 percent, 37 percent and 24 percent respectively.

Responses about the various factors affecting services are given in Table - 2, which indicate that all the factors except communication are affecting the services

of banks to a large extent or to some extent. As a whole, it can be said that as many as 47 percent of the respondents are of the view that these factors affect

the services to a large extent.

Table - 3 is prepared to compare the responses about the services of PSBs with those of PSIBs/FBs. It is clear from the table that 40 percent of the respondents

deal with these banks and compared their services far better/better than those of PSBs. According to them, professionalism, disciplined management and

technology used are the main factors contributing to the better services in PSIBs/FBs.

Table - 4 highlights that as high as 80 percent of the respondents interact with their banks regularly and banks respond positively only in 75 percent cases. The

banks provide necessary information and guidance to 92 percent of the respondents. As many as 84 percent of the respondents claim that the banks usually

informed to them about the latest changes in RBI/GOI guidelines/exchange control rules relating to the exports. As many as 76 percent of the respondents

affirm that there is a machinery for the redressal of grievances and 55 percent of them make use of it. As many as 62 percent of the respondents are of the view

that the problems do not get sorted out promptly. As high as 76 percent of the respondents claimed that they do not have specialized branches in their areas

and majority is of the view that their dealing with specialized branches provide more satisfaction to them.

Table - 5 is constructed to analyze the responses regarding the processing of application forms and sanctioning of loans. As many as 88 percent of the

respondents claimed that banks helped in filling up of application forms and their general attitude is found very co-operative/cooperative. Majority of the

respondents claimed that the application forms for loans are exhaustive enough to seek all the information at the first instance. Usually, the facilities sanctioned

are need-based. As many as 60 percent of the respondents claimed that loan sanctioned is usually more than 25 percent less than the requirement. Only 28

percent of the respondents complained that the banks usually delay in the sanction of various facilities and that is due to unhelpful attitude of the staff and

procedural rigidities.

The responses about the collection procedure are analyzed in Table - 6, which shows that 88 percent of the respondents are of the view that banks intimate

about the receipt of sales proceeds from the FBs and usually don't delay in the negotiation of the documents. Majority of the respondents claimed that banks

take up the matter with FBs in case of delay in reimbursement of proceeds to their satisfaction and are of the view that by decentralization, bank procedures can

be simplified without exposing them to any risk.

Responses about the suggestions for improving customer service are given in Table - 7, which reveal that simplification of rules, procedures etc., personalized

service/doorstep service, making working days/hours more flexible are the main suggestions, in order of importance, to improve the customer services to

exporters.

RECOMMENDATIONS With a view to combating competition and becoming more effective and for bringing about perceptible changes in the economy through expected customer

changes, the bankers should draw up a strategic framework addressing the key issues concerning the quality aspects thereof. While complaints cannot be totally

removed, their intensity could be greatly reduced, if a proper arrangement is made for their redressal. Resolution of grievances raised by customers would

greatly enhance the image and reputation of banks as well as generate goodwill and bring in more business to them. The fundamental philosophy behind

customer grievance redressal is to treat customer’s complaints as opportunities to do better.

In the normal course, the customer feels distanced from the banks and this could prove to be the potential risk in loosing him over time. It would, therefore, be

necessary for the banks to undertake customer meet on a continuous basis without, of course, tuning them ritualistic. As customer-meets are very significant,

the bankers should regularly convene them and they should be separate for various categories of customers as also according to the users of the products.

The customers belong to various socio-economic groups especially in rural areas (large-sized land holders, marginal farmers, dry land farmers, irrigated land

farmers, agricultural labours, artisans, women, SC/STs and the like) pursuing different kinds of economic activities (crop-farming, live-stock farming, fisheries,

forestry, processing tiny and cottage scale industries, business and services etc.). These, along with other characteristics, definitely call upon the bankers to

stratify the different customer groups and devise products and delivery systems to suit their specific requirements.

Often, gaps arise and get widened due to mismatched levels of perception between the bankers and customers. It is to be appreciated that customer service is

not about dealing with the people of logic but with people of emotions. It would, therefore, be worthwhile for banks to educate the customers about the various

banking schemes, systems and procedures of the banks, rights and duties of the customers, which can play a vital role in evolving healthy bank-customers

relationship.

With the growing awareness gained by the customer, he expects convenience in dealing with the bank. Therefore, technology can be gainfully employed. On-

line, Real Time Banking, Anytime/Anywhere Banking, Single Window Banking, Electronic Fund Transfer, Automated Teller Machines, Tele-banking etc. are some

such innovations aimed at providing the customers with convenience and flexibility.

No single customer is an isolated individual. He has his own network of relationship, be their friends, relatives, colleagues, business associates etc. Higher the

status that an individual enjoys in the society, greater and powerful will be the size and influence of the network. The prudence of relationship banking strategy

lies in the fact that the banks do not cater to the needs of just the customer but endeavor to influence his entire network through him. Relationship banking is a

step-by-step process to be built brick-by-brick through value enrichment at every interface with the customer.

No doubt, automation and technology are contributing to speed, accuracy and convenience, it may not be possible or desirable to do away with human contact

all together. The human element cannot be lost sight of, as the customer would still like to interact with human beings. It is, therefore, pertinent for the banks to

tone up the interpersonal skills in their staff, more particularly, the front-line staff, who could meaningfully contribute to the basic satisfaction of the customer.

REFERENCES • Talwar, R. K. (1977), "Customer Service in Banks", IBA Publication, Mumbai.



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• Goiporia (1991), "Customer Service in Banks”, IBA Publication, Mumbai.

• Narsimham, M. (1991), "The Committee on Financial System", Nabhi Publication, New Delhi.

• IBA (1997), ”IBA Bulletin: Special Issue on Customer Service, Vol. XIX, No.3, March, pp. 62, 65,75, 76, 91.

• Narsimaham, M. (1998), "The Banking Sector Reforms", Nabhi Publication, New Delhi.

• IBA (2004), “IBA Bulletin: Special Issue on Customer Service in Banks, Vol. XXVI, No.8, August.

• Mohanty, Ajay Kumar (2005), “Customer Service in Banks: An Overview”, Professional Banker, January.

• Kumar, Sharad (2005), “Innovation in Customer Service in Banks”, Professional Banker, September.

• Shajahan, S. (2005), “A Study on the Level of Customers’ Satisfaction on Various Modes of Banking Services in India”, ICFAI Journal of Bank Management,

February.

• Parthasarathi, B. R (2005), “Customer Service in Banks and its Importance”, Professional Banker, November.

• Ratnam, N. Vijya and Kumari v. Suguna (2005), “Customer Service in Commercial Banks in the New Era”, Professional Banker, December.

• Bontis, N., Booker L.D., and Serenko, A., (2007) “The Mediating Effect of Organizational Reputation on Customer Loyalty and Service Recommendation in

the Banking Industry”, Management Decision, Vol. 45 No.9, pp. 1426-1445.

• Walsh G., and Beatty, S. E., (2007) “Customer-Based Corporate Reputation of a Service Firm: Scale Development and Validation”, Journal of the Academy of

Marketing Science, Vol.35 No.1, pp. 127-143.

• Radomir Lăcrămioara, Wilson Alan and Scridon, Andrei Mircea (2009) “Improving Bank Quality Dimensions to Increase Customer Satisfaction”, accessed

from www.mnmk.ro/documents/2011/11 Radomir%20Cluj%20FFF.pdf

• Munusamy Jayaraman, Chelliah Shankar and Mun Hor Wai (2010) “Service Quality Delivery and its Impact on Customer Satisfaction in the Banking Sector in

Malaysia”, International Journal of Innovation, Management and Technology, Vol. 1, No. 4, October 2010, ISSN: 2010-0248

• Mishra Uma Sankar, Dass Jyoti Ranjan, Patnaik Sanjib and Mohanty, Ayasa Kanta (2010) “Service Quality Attributes Affecting Customer Satisfaction in

Banking Sector of India” European Journal of Economics, Finance and Administrative Sciences, Issue 24 (2010), ISSN 1450-2275,

http://www.eurojournals.com

TABLES TABLE 1: RATING OF SERVICES TO EXPORTERS

No. of responses (percentage)

Please rate the following services in terms of their relative importance :

Good Fair Average

(a) Courtesy at the Counter 18(60) 8(27) 4(13)

(b) Promptness in Transactions 17(57) 10(33) 3(10)

( c) Speedy sanction in facilities 19(63) 7(23) 4(14)

(d) Job knowledge 16(53) 8(27) 6(20)

(e) Prompt redressal of grievances 8(27) 9(30) 13(43)

(f) Simplified Procedures 9(30) 12(40) 9(30)

(g) Providing guidance to customers 17(57) 10(33) 3(10)

(h) Technology Upgradation 22(73) 6(20) 2(24)

(I) Bank charges Fairly High 2 (37) High 4 (13) Normal 24 (72)

Total 128(47) 74(28) 68(25)

Source: Survey

TABLE 2: FACTORS AFFECTING SERVICES TO EXPORTERS


To what extent according to you, the following factors influence the services of the banks :

To Large Extent To Some Extent Not At All

(a) Training and Placement of Staff 21(70) 6(20) 3(10)

(b) Procedures 20(67) 5(17) 5(16)

(c) Location of the bank 14(47) 13(43) 3(10)

(d) Communication 3(10) 7(23) 20(67)

(e) Supervision 6(20) 12(40) 12(40)

(f) Modernization 12(40) 11(37) 7(23)

Total 76(42) 54(30) 50(28)

Source: Survey

TABLE 3: COMPARISON OF SERVICES OF PSBs WITH THOSE OF PSIBs/FBs


(a) Do you deal with PSIBs/FBs Yes - 26 (87) No - 4 (13)

(b) If Yes, how do you compare the services of Far better Better Same Poor

these banks with those of PSIBs/FBs 20(77) 6(23) Nil Nil

( c) What are the factors, you think, contribute to the better service in PSIBs/FBs :

Particulars Rank - I Rank - II Rank -III Rank - IV Rank - V Total Overall

(Score) (Score) (Score) (Score) (Score) Score Rank

(I) Disciplined Management 5(25) 6(24) 7(21) 8(16) 2(2) 88 2

(ii) Professionalism 8(40) 9(36) 4(12) 3(6) 2(2) 96 1

(iii) Technology 7(35) 6(24) 5(15) 4(8) 4(4) 86 3

(iv) Higher Return on Deposits 7(35) 4(16) 5(15) 7(14) 8(8) 88 5

(v) More Cooperative 6(30) 5(20) 4(12) 4(8) 7(7) 77 4

Source: Survey



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TABLE 4: CUSTOMER GUIDANCE, REDRESSAL OF GRIEVANCES AND SPECIALIZED BRANCHES


Particulars Yes No

1 (a) Do you interact with your bank regularly 24(80) 6(20)

(b) If Yes, do the bank respond positively 20(83) 4(17)

2 Do you get necessary information and guidance from the banks 26(87) 4(13)

3 Does your organisation keep itself informed of the latest changes in

RBI/GOI guidelines/exchange control rules relating to exports

25(83) 5(17)

4 (a) Is there any effective machinery for redressal of grievances in banks 23(77) 7(23)

(b) If Yes, do you make use of them 20(87) 3(13)

(c) If Yes, do the problems get sorted out promptly 15(75) 5(25)

5 (a) Do the banks in your area have specialized branches to deal in

foreign trade

30(100)

(b) If No, do you think that such specialized branches would provide

better services

28(93) 2(7)

Source: Survey

TABLE 5: PROCESSING OF APPLICATION FORMS AND SANCTIONING OF LOANS


(1) Do the banks help in filing up application forms Yes - 21 (70) No - 9 (30)

(2) What is the general attitude of bankers when an application for loan is made Very cooperative Cooperative Discouraging

18(60) 8(27) 4(13)

(3) ( a) Are the application forms for loans exhaustive enough to seek all the Yes No

information from the applicant at the first instance 18(60) 12(40)

( b) Are the facilities sanctioned need based 25(83) 5(17)

( c) If the loan sanctioned is less than requirements, (0-10%) (10-20%) (above 20%)

what is the approximate credit gap (in percentage) 16(53) 9(30) 5(17)

(4) Are the clarifications with respect to loan taken in one go or in piecemeal (in one go) 27(90) (in piecemeal) 3(10)

(5) (a) Do you think that the banks delay in the sanction of various facilities Yes Sometimes No

14(47) 10 (33) 6(20)

( b) If Yes, are these do to (Please tick)

(I) Unhelpful attitude of the staff 4(28)

(ii) Delay in supplying data by customers 3(21)

(iii) Complicated proposal 2(14)

(iv) Procedural rigidities 5(36)

Source: Survey

TABLE 6: COLLECTION PROCEDURE OF PSBs

No. of responses (Percentage)

Yes No

(1) Does your bank intimate you about the receipt of sales proceeds from FBs 20(67) 10(33)

(2) Do the banks delay in negotiation of documents 6(20) 24(80)

(3) Do the banks take up with the FBs the matter regarding delay in reimbursement

of proceeds to your satisfaction 27(90) 3(10)

(4) (a) Do you think that the bank's procedures can be simplified without exposing them

to any risk 12(40) 18(60)

(b) If Yes, in which of the following ways

(I) Decentralization 8(67) -

(ii) Bid bond and guarantees be sent directly 4(33) -

Source: Survey

TABLE 7: SUGGESTIONS FOR IMPROVING SERVICE TO EXPORTERS

Ranks (Score)

Rank -I Rank - II Rank -III Rank - IV Rank - V Rank - VI Rank -VII Rank - VIII Total

Score

Overall

Rank

Please rate the following suggestions for improving service to exporters :

(a) Customers education and counselling 6(42) 4(24) 4(20) 5(20) 4(12) 3(6) 2(2) 6 (6) 126 4

( b) Personalized service/door step service 8(56) 10(60) 2(10) 5(20) 2(4) 2(4) 1(1) 4 (4) 155 2

( c) Gearing up grievances settling machinery 6(42) 4(24) 2(10) 4(16) 3(9) 4(8) 7(7) 2 (2) 110 7

( d) Mechanization and automation 7(49) 4(24) 3(15) 2(8) 2(6) 6(12) 6(6) 6 (6) 120 6

( e) Simplification of Rules, Formats, etc. 10(70) 12(72) 20(10) 2(8) 1(3) 1(2) 2(2) 2 (2) 167 1

( f) Staff training 2(14) 6(36) 5(25) 5(20) 5(15) 5(10) 3(3) 4 (4) 123 5

( g) Making working days/hours more flexible 9(63) 4(24) 5(25) 6(24) 1(3) 2(4) 3(3) 3 (3) 146 3

Source: Survey



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MANAGEMENT OF HOSPITAL DISASTERS: A STUDY OF HOSPITAL DISASTER PLAN

RAMAIAH ITUMALLA

RESEARCH SCHOLAR

SCHOOL OF MANAGEMENT STUDIES

UNIVERSITY OF HYDERABAD

HYDERABAD

ABSTRACT In the last few years, some of the worst disasters have been in India resulting in significant loss of life and destruction of property and infrastructure. The disaster

sometimes occurred inside health institution which affected hospital staff, patients, visitors and the community and also outside of the hospitals. Healthcare

facilities are expected to respond to these emergencies in a coherent fashion since hospitals definitely play an important role in disaster management. The study

adopted the descriptive research design to understand the Inclusive growth in healthcare. The study was based on the secondary data. The aim of the present

paper is to discuss the Hospital Disaster Plan and explain the challenge of establishing hospital disaster plan.

KEYWORDS Hospital, Disaster, Disaster Plan, Hospital disaster manual.

INTRODUCTION he word Disaster is derived French word “Desastre” meaning bad or evil star. This is a very narrow conception of disaster and in broader context; disaster

means any situation in which there is a sudden disruption of normalcy within society causing widespread damage to life and property. Disasters are the

events which usually characterized by negative human impact and exceptional demands for interventions are inevitable. Impact can be substantially

reduced by adequate preparation, early warning, and swift, decisive responses. Disaster Management encompasses all aspects of planning for and responding to

disasters. It applies to management of both risks and consequences of disasters.

Typology of disaster- A disaster can be either natural such as rain, flood, cyclone, storm, landslides, earthquake, volcanoes; or manmade such as war including

biological, arson, sabotage, riots, accident (train, air, ship), industrial accidents, fires (forest fires), bomb explosions, nuclear explosions and ecological disasters.

Future disasters are inevitable. The impact can be significantly reduced by development policies and strategies that target the most vulnerable, provided that

interventions are co-ordinated, and sustained beyond the immediate emergency phase.

THEORY OF DISASTER A disaster is “a natural or human-caused event, occurring with or without warning, causing or threatening death, injury or disease, damage to property,

infrastructure or the environment, which exceeds the ability of the affected society to cope using only its own resources”. Disasters can be natural (arising in the

environment and outside our control) or human caused (from identifiable human actions, directly or indirectly, deliberate or not). Often disasters such as famine

or drought have interacting human and natural causes. Sudden disasters can lead to emergency: an unforeseen event that calls for immediate measures to

minimise its adverse consequences. Slow onset disasters result when the ability of people to support themselves, and sustain their livelihoods, slowly diminishes

over time. Such disasters may also be aggravated by ecological, social, economic and political conditions. Which events qualify as ‘disasters’ is a social issue? Is

HIV or TB a disaster? Poverty, taxi violence and global warming? Oil spills and threatened penguins? While all these problems are serious, we should remember

that a disaster is an exceptional event. It should have some negative human impact and reach a scale where abnormal interventions are required.

Disasters need to be declared in a legal sense to release government resources. In general, smaller, insidious, and environmental events, affecting poor and

remote communities, are less likely to be officially recognized as disasters. It is not true that disasters are entirely unpredictable. Floods occur in valleys and

flood plains; fires occur after the accumulation of dry material; wars after the accumulation of weapons. Earthquakes and cyclones occur mostly in places with a

known history of such events. Mudslides may occur in uninhabited areas; but when there are homes in their path they can become disasters. Hazards are

threats to life, well-being, property and/or the environment. Hazards result from extreme natural processes, technological developments, and various forms of

social exclusion. They are risks that can be described in advance.

Vulnerability results from the interaction of a community, its environment and those hazards. Storms of equal magnitude might cause minimal disruption in the

USA, but kill thousands in Bangladesh - people in Bangladesh are more vulnerable to storms. Disaster management encompasses all aspects of planning for and

responding to disasters, including hazard analysis, vulnerability reduction (preparedness), prevention, mitigation, response, recovery and rehabilitation. It may

refer to the management of both the risks and consequences of disasters. Contingency planning relates to events, which may or may not occur, in which

objectives and scenarios are agreed, managerial and technical actions defined, and potential responses put in place to prevent, or respond to an emergency

situation.

Mitigation is action to reduce the consequences of a disaster. While it may not be possible to prevent all disasters, the effects can be modified or reduced if

appropriate steps are taken. Responses can be divided into early and late phases. Early responses are rescue and relief; later responses are rehabilitation and

reconstruction. The first people to respond to any disaster are communities themselves, not governments. Their resourcefulness and resilience is the key to

disaster mitigation. Local people are also the main drivers of reconstruction and continued development. In developing countries, longer-term effects of a

disaster on local economies, social conflict, nutrition and disease patterns can cause far more deaths than the event itself.

Many international disasters have been described in terms of the ideal management, and what actually happened. Characteristically, even quite predictable and

regular events have not been planned for; communities have been far more vulnerable than they could have been; and authorities have been slow to recognize

and declare disasters. Responses have ranged from superb to downright incompetent or absent; relief has often been too little, too late, misdirected, or

inappropriate. Often disaster responses are clouded in apathy and confusion; there are often severe deficiencies in communication and information systems.

The usual distortions from a rational response are caused by political and media factors, corruption, inadequate resources, and various local and foreign

agencies working at cross purposes. Disaster responses often focus on short-term, high profile rescue operations and neglect the bigger, long-term issues.

Finally, several authors have described the interconnections between disaster management and sustainable development. While good disaster planning

minimizes interruptions to development, poor responses can divert scarce resources, increase dependency, and actually increase vulnerability to further

disasters. Post-mortems, enquiries and evaluations are an essential part of the cycle. While it is easy to criticize after the event, they are also opportunities to do

better the next time.

NEED FOR HOSPITAL DISASTER PLANNING In the last few years, some of the worst disasters have been in India resulting in significant loss of life and destruction of property and infrastructure. The

disaster sometimes occurred inside health institution which affected hospital staff, patients, visitors and the community. Healthcare facilities are expected to

respond to these emergencies in a coherent fashion since hospitals definitely play an important role in disaster response due to the hospitals treatment role and

are an integral part of the nation's disaster response efforts. As well hospitals are charged with preventing and reducing disease and injury [E. A. Heide, 2006]. In

T



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the event of a disaster, hospitals themselves have two-pronged missions: provide patient care and protect their own staff and facilities [American Hospital

Association, 2001].

To increase a hospital’s resilience to deal with disaster, some literatures mention about the importance of having hospital disaster planning by establishing a

predetermined level of operational sustainability that will carry it through a disaster [C. C. Barrett, 2007]. Thus a hospital can minimize the results of injuries,

suffering, and death that accompany a disaster and provide continued quality care to those patients in the hospital. Other literature states that hospital

preparedness is an essential requirement in the current atmosphere of man-made and natural disasters [Babar and R. Rinker, 2006]. The major accidents and

disasters can only be mastered and controlled by intelligent planning [B. Hersche and O.C. Wenker, 2000].

OBJECTIVE OF THE STUDY The present study has twofold objectives. They are: To Study the Hospital Disaster Plan, To find out the challenge of establishing disaster plan in hospital, from

process of planning, implementation, monitoring and evaluation and To find recommendation from literature to help planners to avoid common disaster

management pitfalls thereby can improve performance during a disaster.

METHODS The study adopted the descriptive research design to understand the Hospital Disaster Plan and Challenges of Establishing Hospital Disaster in Hospital. The

study was based on the secondary data such as articles in various journals and the internet materials.

HOSPITAL DISASTER PLAN Here are the details of Hospital Disaster Planning according to Dr. Shakti Kumar Gupta.

AIM OF HOSPITAL DISASTER PLAN To provide prompt and effective medical care to the largest number of people needing that care in order to bring about early recovery and reduce the death and

disability associated with the disaster incident

OBJECTIVES OF HOSPITAL DISASTER PLAN * Prepare the staff and institutional resources for optimal performance

*Make the community aware of the importance of the disaster plan, how it is executed and the benefits it provides

*Train staff

*Carry out periodic drills & its evaluation to update plans Guidelines

GUIDELINES � Establishment of Communication intramural and extramural

� Mobilization Immediate & sustainable

• Manpower

• Materials and supplies

• Provisioning of the space

• Transportation

• Public relations

• Documentation

PRINCIPLES OF DISASTER PLANNING Pre-disaster preparedness & properly drawn up disaster plan can minimize effect of disaster. The plan should be:

� Simple- Easily understood by everybody so that it can be put into action immediately

� Flexible - To fit different types of disaster

� Clear & concise - Can be acted upon during noise & confusion

� Adaptable- Applicable for any time of the day including off time/day

� Extension of normal hospital working- working- So that staff can act upon it in routine manner

� Practiced regularly

� Permanent and periodically updated

� A part of a Regional Disaster Plan

WHO SHOULD MAKE THE HOSPITAL DISASTER PLAN? Hospital Disaster Management Committee would make the hospital disaster plan. The suggested membership of hospital disaster plan is Director/executive

head of the hospital, Departmental heads, Nursing Superindent/CNO/SNO, Hospital Administrator, I/c Casualty Services, Maintenance and Engineering Staff,

Staff representative and Representatives from other supportive & utility services as required

FUNCTIONS OF HDMC The functions of the Hospital Disaster Management Committee are: to develop the Hospital Disaster Plan, to develop Department Plan in support of the hospital

plan, to plan allocation of resources, to allocate duties to hospital staff, to establish standards for emergency care, to conduct and supervise training

programme, to supervise drills to test the hospital plan and to review and revise the Disaster Plan at regular intervals.

COMPONENTS OF HOSPITAL DISASTER PLAN The components of Hospital Disaster Plan are:

1. Efficient system of alert

2. Staff assignments

3. Unified Medical Command

4. Mobilization of resources

a. Medical, nursing, administrator staff

b. Medical stores supply and equipment

c. Conversion of use use-able space and clearly defined areas for reception, triage, observation and immediate care

5. Procedure for prompt intra intra-hospital transfer of patients

6. Procedure for discharge/referral/transfer of patients including transportation

7. Prior establishment of public information centre



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8. Security arrangements

9. OT utilization planning

10. Planning for X-ray Lab & Blood Bank services

HOSPITAL DISASTER MANUAL Every hospital should have the hospital disaster manual which has to be including the written statement of Disaster Plan and to be activated during disasters.

The Hospital disaster manual is advised to be divided into five sections such as: Section I - Introduction, Section II - Responsibilities, Section III - Action Plan,

Section IV - Check Lists and Section V - Rehearsals.

CHALLENGES OF ESTABLISHING HOSPITAL DISASTER PLAN PLANNING

The Hospital Disaster plans are generally developed through discussions, meetings, articles from the internet, seminars, training, staff suggestions, and disaster

plan from another hospital, accreditation guidelines and past experience. The Hospital also can undertake a disaster risk analysis before developing the plan.

When designing the plans, the hospitals are encountered several challenges.

a) LIMITED STAFF: The main challenge was a human resources matter such as limited staffing. Due to the limited number, staff had many jobs and made it

difficult them together to discuss or establish the plans. Besides, since the disaster plan was a new issue, few staff had little skills and expertise in the field.

Moreover, as the plans closely related to an emergency response, the idea and initiative for establishing the plan usually come from the Emergency

Department.

b) LIMITED BUDGET: Another challenge was the limited budget. The preparation of disaster plan needs many tools and infrastructures for example

communication equipment and decontamination area with hot and cold water supply. Due to budget limitation, the hospitals could not comply with

literature guidelines. Then the disaster committee modified the plan such as using intercom rather than radio communication for alternative

communication.

c) CREATING AWARENESS: All hospitals have to make an effort to make the hospital personnel aware of the hospital disaster plan. Usually the hospitals

disseminate the plan through training such as fire, evacuation and Basic Life Support; and simulation.

Furthermore, staff could identify problems and apply lesson learned from past experienced. Usually before training and simulation, to introduce disaster plan

matter, it is important since disaster plans are still a new issue in India.

IMPLEMENTATION After the planning the next important aspect of disaster planning is Implementation. Each hospital had different risks to anticipate as well as disaster plan

implementation. The hospital may experience a disaster and/or mass casualty situation. Though the disasters plan exists in the hospitals, they may encounter

the following challenges when using their own disaster plans.

• The first challenge was a limited budget.

• Second was the limited competency of hospital personnel about disaster planning topics.

• The third challenge is an ineffective command control system. Hospital have to concerned on the command control system and revised the system before

to prevent the system cannot work on disaster situation

• Limited medical equipment and thus the hospital cannot handle the patients which were in need of sophisticated equipment and in these cases the

patients would need referral to another hospital which has better facilities.

• Low human resources capacity issues and thus the hospitals needed to engage in a process of staff capacity building.

• Another challenge is the risk of ineffective coordination with the government field coordination unit and also within hospital.

MONITORING The major problem in this stage of the Hospital Disaster Plan is that the hospital doesn’t implement a comprehensive hospital disaster preparedness

measurement system. The reasons for not doing so were that there was no indicator or measurement tool and there was no department/division that had

responsibility to do the monitoring. The measuring the plan is important to test the hospital system as a whole.

CONCLUSION There should be a clear understanding at the planning level that almost any part of the plan may fall through, and contingency plans should also exist:

� When establishing hospital disaster plans the involvement of a multidisciplinary team is required. Thus disaster planning committees should have

multidisciplinary members including administrative staff.

� The disaster plan has to be decided locally on the basis of hazard analysis and proper disaster planning. In the case of these, it may be effective if Health

Department can facilitate hospitals to meet and discuss about disaster plans so that there is congruence and sharing of resources.

� Regarding the Human recourse challenges, the hospitals have to deal with them by increasing human resources capacity in disaster and emergency

response, regular training of staff in Basic Life Support and evacuation so that the staff will be ready to cope with disasters.

� The hospital has to disseminate the plan through training such as fire, evacuation and Basic Life Support; and simulation. Furthermore, staff could identify

problems and apply lesson learned from past experienced. Usually before training and simulation, to introduce disaster plan matter, It is important since

disaster plans are still a new issue in India.

� The plans must be simple and flexible since disasters never go according to the plan and it is crucial that the plan should be made by the people who are

going to execute them

� When dealing with limited resources need to be cost-effective and focus on priority issues consequently, rather than doing everything possible to save an

individual patient, it will be necessary to allocate limited resources in a modified manner to save as many lives as possible.

� Hospital should assign disaster team roles and responsibilities in terms of position rather than individuals.

� Hospital should establish tools and method for monitoring and evaluating disaster plan.

� The primary goal of disaster planning is increasing a hospital's resilience by establishing a predetermined level of operational sustainability that will carry it

through a disaster. To create resilience, a hospital should integrate preparedness in its daily operations, fund it in its budget, implement it with standard

operating procedures, and measure it through drills and performance evaluations.

� To be effective, plans must be practical, acceptable by all users, inter organizational, and based on valid resource information.

� Management should not focus on production of a written document since what need to be created are not only documents.

Hospital need to review their plan to improve it over time. To establish hospital preparedness towards disaster, hospital should establish operational

sustainability that will carry it through disaster. Therefore hospital can reduce number of injuries, suffering and death during disaster and provide continued

quality of care. Disaster plan can improve the hospital’s capacity to deal with disasters. Using disaster plans, help hospital staff know what to do, when and how

to do it, who they should help first and make coordination; and where is they should go. Moreover, the plans also give guidance to hospital what to do before

and after disasters happen thus emergency response become more prepare, more organized and faster. Even though there were challenges in designing and

implementing the plans, the hospital has to be prepared. This is lacking in many hospitals because they thought disaster was rarely happen thus the

implementation of the plan was not necessary. Major accidents and disasters can only be mastered and controlled by intelligent planning However, even



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disaster plan is nonprofit issue even need money; managers, administrators and clinician from all hospital have commitment to apply hospital disaster plan due

to patient and staff safety.

“Well plan is half work done”

“The best managed disaster is the disaster which is prevented!”

ACKNOWLEDGMENT I would like to thank my teachers, Prof. B. Raja Shekhar & Dr. G.V.R.K Acharyulu, School Of Management Studies, University of Hyderabad, Hyderabad for their

encouragement, support and inspiration.

REFERENCES 1. E. A. Heide. (2006). The Importance of Evidence-Based Disaster Planning. Annals of Emergency Medicine, 47, Issue 1, pp. 34-49.

2. C. C. Barrett. (2007). Disaster Planning after Katrina. Health Progress, November-December, 88 – 6.

3. American Hospital Association. (2001). Disaster Readiness Advisory #1: Disaster Readiness.

4. Dr. Shakti Kumar Gupta. (2006). Overview of Health Services Disaster Plan, Work shop on Integrating Hospitals safe from disasters.

5. Babar and R. Rinker, Direct patient care during an acute disaster: chasing the will-o'-the-wisp. Critical Care, 10-206.

6. B. Hersche and O.C. Wenker. (2000). Principles of Hospital Disaster Planning. The Internet Journal of Disaster Medicine, 1-2.

7. WHO. (2008). Hospitals Safe from Disasters Reduce Risk, Protect Health Facilities, Save Lives. 2008-2009 World Disaster Reduction Campaign.

8. APIC Bioterrorism Working Group (2002). Mass Casualty Disaster Plan Checklist: A Template for Healthcare Facilities. Saint Louis University, School of

Public.

9. Pan American Health Organization (2008). PAHO, 2000 Series: Hospitals Safe from Disasters No 2, Hospital Safety Index, Evaluation Forms for Safe

Hospitals.

10. A.H. Kaji and R.J. Lewis (2006). Hospital Disaster Preparedness in Los Angeles County. Academic emergency medicine, 13, issue 11, pp. 1198-1203.

11. Harvard Medical International (2005). Hospital disaster management: Preparing for the unexpected.

12. S. Mehta (2006). Disaster and mass casualty management in a hospital: How well are we prepared?. Journal of Postgraduate Medicine, 52, issue: 2, pp. 89-

90.

13. K.O. Sundnes (1999). Health disaster management: guidelines for evaluation and research in the Utstein style: executive summary, Task Force on Quality

Control of Disaster Management. Prehospital and Disaster Medicine, 14 (2), pp.43-52.

14. http://www.tn.gov.in

15. http://www.hst.org.za



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REQUEST FOR FEEDBACK

Dear Readers

At the very outset, International Journal of Research in Computer Application and Management (IJRCM)

acknowledges & appreciates your efforts in showing interest in our present issue under your kind perusal.

I would like to request you to supply your critical comments and suggestions about the material published

in this issue as well as on the journal as a whole, on our E-mails i.e. [email protected] or

[email protected] for further improvements in the interest of research.

If you have any queries please feel free to contact us on our E-mail [email protected].

I am sure that your feedback and deliberations would make future issues better – a result of our joint

effort.

Looking forward an appropriate consideration.

With sincere regards

Thanking you profoundly

Academically yours

Sd/-

Co-ordinator



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