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EMPLOYEE’S JOB RELATED ATTITUDES AND ORGANIZATIONAL PERFORMANCEIN NATIONAL WATER SUPPLY AND DRAINAGE BOARD IN JAFFNA

T.L.Vannarajah*T.Ramajeyam**

ABSTRACT

Now a day’s all organizations have recognized thatthe notion that the fact that an organization can gaincompetitive advantage in marketplace only if it hasemployees who possess positive work relatedattitudes. Literature of employees’ attitude highlightsthat employees’ attitude has the influence on all ofthe performance. Employees’ attitudes play a crucialrole in water board organization.

Therefore this study was made to identify theEmployees’ attitudes and performance in NationalWater Supply Drainage Board in Jaffna. Here,theoretical concept of job related attitudes andcomponents of attitudes were illustrated. The impactof employees’ attitudes has been identified and therelationship between employees, attitudes andperformance were clearly discussed. The summary ofthe research evidences regarding impact ofemployees’ job related attitudes on performance alsowas presented.

The study was carried out on 4 Section with 50respondents from National Water Supply DrainageBoard in Jaffna. Stratified random sampling methodwas used to select respondents from organizations.

The finding of the study is, there is positiverelationship between the employees’ attitudes andperformance. The relationship between works relatedattitude variables and performance were identified.

Based on the findings valuable suggestions wereprovided to the management of Water Board tocreate appropriate attitude to employees in theirorganizations to achieve sustainable competitiveadvantage through people.

Introduction

An organization needs to use more effectively all oftheir resources, including human resources. There arethree types of resources, which are physical,financial, and human resources in an organization.However, physical and financial resourcesthemselves do not result in productivity. It happensonly when the human element is introduced and it issaid that employees are the vehicle for accomplishingthe goal of a unit and an organization. Job relatedattitudes of employees have significant influence onemployee’s performance and participation. Theenvironment of the organization affects the jobrelated attitudes of the employees.

Attitudes are essential for understanding andpredicting social behavior. The demonstrates thatworkplace attitude manifest in various forms.Organizations can evaluate their performanceaccurately by averaging the performance of theiremployees. In most cases, the performance of anorganization is determined by the attitudes ofemployee’s. Employees could exhibit attitudestoward various aspects of their jobs. Such as thework itself, benefits received, supervision,impediments to their work or anything that mighttiger positive or negative reactions.

The performance is the end result of an activity. Andwhether that activity is hours of intense practicebefore a concert or race or whether it’s carrying-outjob responsibilities as efficiently and effectively aspossible, performance is what result from thatactivity.

The organizational performance is the accumulatedend results of all the organizations’ work processesand activities. It is a complex but important concept

Asst.LecturerATI,Jaffna**Senior Lecturer ATI ,Jaffna

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and managers need to understand the factors thatcontribute to high organizational performance.

Research problem.

In the ever-changing competitive world success ofthe organization depends on the performance of itsworkforce; attitude of employees. But in practicesome of the members of the organization expressmore satisfaction and show grater involvement intheir organization but in some organizations’employees express more dissatisfaction and showless involvement in their organizations. It is observedthat the environment that is the set of believes andvalue system of the organization affect the individualwork related attitudes.

Therefore the present study attempted to identify that“To what extent employees’ attitudes affect onorganizational performance”.

Research Questions.

Based on the research problem, findings of pastresearches and literature review the research questionis formulated. “Is there any relationship betweenemployees’ attitudes& organizational performance”?Through these questions the researcher will find outthe factors for improvement. And also point out thetrend of its performance and through this analysiswill tell employees’ attitudes in the people’s bank inJaffna region positive or negative.

Objective of the study

The main objective of this study is to identify therelationship between employees’ attitudes and desirefor organizational performance.

The research will attempt to:

Measure the employees’ job related attitudesamong selected organizations.

Establish the relationship betweenemployees’ job related attitudes andorganizational performance.

Identify the employees’ job related attitudesthat leads to the highest organizationalperformance.

Scope of the study

Human resources are the key to achieveorganizational goals in the ever changing competitivemarket place. The performance of the employees thatleads to achieve organizational goals is affected bytheir job related attitudes. Hence, management takesaction to enhance positive work related attitudes ofemployees. Employees' job related attitudes areinfluenced by several factors. Even though there areseveral factors in enhancing positive work relatedattitudes of employees, organizational environmentplays an important role.

The management is able to cultivate positive resultsthrough people when they create conduciveatmosphere in the organization. Therefore, it isnecessary to improve employees’ job related attitudesthrough creating appropriate organizational culture.Culture is the most powerful one in the organizationand it influences on employees’ attitudes andorganizational performance. In the present study ismade to examine impact of employees’ attitudes onorganizational performance.

The term scope refers that the choice of researcher.There are over 500 branches in Sri Lanka. This studyrefers to Jaffna region only. There are severalbranches in Jaffna region. But only 4branches areselected to analyze for the purpose of research. Dueto the reason of short term period is allocated tosubmit research report.

Conceptual Frame Work

The employees attitude is the independent variable inthis research comprise the three salient attitudesnamely job satisfaction, job involvement andorganizational commitment variable is organizationalperformance. So the conceptual model can beillustrated as follows;

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Employees’attitudes

OrganizationalPerformance

Employees’ attitudesJob satisfactionJob InvolvementOrganizationalCommitment

Hypothesis

Based on the objectives of the study, the followinghypotheses were developed for the purpose of thisstudy.

H 01: There is positive relationship between attitudesand organizational performance.

H 02: There is negative relationship betweenattitudes and organizational performance.

H 03: There is no relationship between attitudes andorganizational performance.

Research sample

Research sample will be selected National WaterSupply and Drainage Board in Jaffna RegionalOffice.

Research sample (National Water Supply andDrainage Board in Jaffna Regional Office)

Data Collection Method

The relevant data for the purpose of this study werecollected from primary and secondary sources.Primary data collected through questionnaire andsecondary data were collected from publisheddocuments.

In the data collection activity, much importance wasattached to the set of combined organizationalelements that influence job related attitude ofemployee’s. And importance has been given to

measure employees job related attitudes; jobsatisfaction, job involvement, and organizationalcommitment to identify the impact of employees,attitudes on organizational performance.

The researcher has chosen four water supply sectionsin Jaffna as a sample of collection data. For thispurpose has chosen the stratified random sampling.

Findings of the research

Water board also has to face competitive problemfrom the private and other government sector. In thisway every sector must know and measure theirperformance position through the employeesperiodically.

To know the solution for the problem identified bythe researcher, analysis was made by the researcherin the fourth chapter. According to that analysis,following findings were identified by the researcher.

The organizational performance 8.91% areexplained by the job satisfaction, 5.34% areexplained by the job involvement, 9.07% areexplained by the job commitment.

23.32% are explained by employees’attitudes on performance.

There is positive relationship between theemployees’ attitudes and performance.

References:

1. Griffen, “Human Resource Management”, 5th

Edition.

2. K.K.Ahuja, “Management & Organization”, 1st

Edition, 1993, CBS Publishers & Distributors.

3. Stephen P.Robbins, “Essential of OrganizationalBehaviour”, 4th Edition, Prentice-Hall of IndiaPvt Ltd, 1994.

4. John W.Newstrom and Keith Davis,“Organizational Behaviour”, 10th Edition.

5. John M.Ivancevich& Michel T.Matteson,“Organizational Behaviour and Mgt”, 2ndEdition, 1990, IRWIN Publishing.

Organizationalperformance

Performance

Independentvariable

Dependentvariable

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6. Fred Luthan, “Organizational Behaviour”, 5thEdition.

7. LioydL.Byars& Leslie W.Rue, “HumanResource Management”, 6th Edition, MC GrawHill/Irwin, 2000.

8. Gibson-Ivancevich-Donnelly, “OrganizationalBehaviour”, 10th Edition.

9. Gary Dessler, “Human Resource Management”,prentice hall Inc, 1997.

10. Mark C. Zerig, “Human Resource Management”,the complete guide book for design firms, 1991.

11. Milovich, Boundreau, “Human ResourceManagement”, 5th Edition, business publication,1998.

12. Rosemary Thomsan, “Managing people”, 1st

Edition, Association with the institute ofmanagement, 1993,

13. Randall B.Danhum& Lon L.Pierce, “HumanResource Management”, 1989.

14. Wayne F.Cascia, “Managing Human Resource”,5th Edition.

15. National Water Supply Drainage Board reports.

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THREE ASPECTS OF INDIVIDUAL INVESTOR TRADING, ASSET PRICES AND DISPOSITIONEFFECT ON STOCKS

Dr. M. Madana Mohan

Abstract

Individual investors trade stocks in a way verydifferent from what mainstream financial economictheory would predict: they generate too much tradingvolume - benchmark performance. Thisarticleoverview major ‘puzzles' of individual investortrading. The extant literature suggests that behavioralbiases and psychological explanations are largelyresponsible for many of the observed patterns inindividual trading. In this article discusses threeaspects of individual investor trading, namely thedisposition effect, the local bias, and the ability tolearn over trading and costs associated withindividual investor trading.

Key words:Disposition Effect, Individual InvestorTrading and Asset Prices, Trading losses andcosts,Individual Trading and Cost of Time

Introduction

The extraordinarily high degree of trading infinancial markets represents major challenges to thefield of finance. The National Stock Exchangewebsite indicates that the annual share turnover ratein the early 2000s on the NSE was close to 100percent, amounting to a total volume of about 350billion shares per year. Using reasonable estimates ofper-trade costs, this implies that the investing publicvoluntarily pays several billion dollars to financialintermediaries every year. International markets,especially many stock markets in Asia, witness evenhigher turnovers and trading costs. Such stylizedfacts are in stark contrast with many theoreticalmodels in finance, which argue that there should beno trading at all.

Scholars have devoted increasing research tounderstanding why investors, especially individual

investors, trade and the implications of individualinvestor trading to the financial markets. This chapterhas three major objectives. Firstly, summarize themajor motivations for individual investors’ tradesand provide empirical evidence testing respectivehypotheses regarding trading motivations. Evidenceshow that behavioral explanations are responsible formany of the interesting findings on individualinvestor trading.

Secondly, focuses on three important aspects ofindividual investor trading; (1) the disposition effect,(2) the tendency to trade geographically nearbystocks, and (3) individual investors’ ability to learnabout their investment skills over the course of theinvestment. Although rational predictions can explainpart of each phenomena, the extant literature largelyagree that behavioral explanations are responsible forthese three phenomena.

Lastly, reviews how investor trading activities affectthe financial markets. Evidence shows that individualinvestors trade in strikingly similar fashions. Suchcorrelated trading activities question the traditionalview that individual investors are ‘noise traders’ andtheir trading activities cancel each other, leaving noimpact on the market. As a matter of fact, severalrecent studies present convincing evidence thattrading activities by retail investors can influenceasset prices not only in the con-current period butalso in future periods. In addition to reviewingindividual investors’ impact on asset price formation,the last section also reviews the transaction costs andtime costs incurred in individual investor trading.

Review of Literature

Under the traditional financial economics literature,there are several major rational reasons for individualinvestors to trade. For example, argue that investors

Associate Professor & I/C Principal,VishwaVishwani Institute of Systems and Management, Hyderabad-78

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will trade when the marginal benefit of doing so isgreater than or at least equal to its costs. In particular,they suggest that information, or specifically privateinformation, should be a major motivation forinvestors to trade.

There are several other motivations to trade in a morerealistic and dynamic market. For example,individuals may need to trade in order to rebalancetheir portfolios after some stock prices substantiallychange in price, thus altering their portfolio weights.Trading in those stocks allow them to maintain theirpreferred asset allocation structure. Separately,individuals may need to liquidate part of their equityinvestment in order to raise needed cash forconsumption purposes.

Finally, propose social interaction may partly inducestock market participation and trading. Their modelpredicts that any given ‘social’ investor finds themarket more attractive when more of his peersparticipate. Using the Health and Retirement Studydata, they provide strong support for their predictionin that more social households, those households whohave more social interaction with the community, aresubstantially more likelyto participate in the stockmarket and hence stock trading.

Tax Motivations

Another apparent reason for individual investortrading is tax considerations. Given that tax lawstreat various components of investment returns suchas interests, dividends, and capital gains differently,rational investors who face tax obligations areexpected to trade so as to take advantage of the taxlaws. Use brokerage account data and analyze the taxawareness of individual investors in the UnitedStates. They find that investors prefer to locate bondsand mutual funds in retirement accounts and realizestock losses in their taxable accounts towards yearend, which supports the idea that individuals areconscious of taxes when they make investmentdecisions. However, find that investors trade activelyin their taxable accounts, realize gains morefrequently than losses, and locate a material portion

of their bonds in taxable accounts, thereby hurtingtheir after-tax returns.

Find a similar level of importance for taxconsideration in investment decisions from theFinnish stock market. They show that individualinvestors in Finland realize losses more than gainstowards the end of December. Moreover, Finnishinvestors repurchase the same stocks recently sold.The repurchase rate depends on the magnitude ofprevious losses. Such predictable trading patterngenerates net tax-loss buying pressure that isnegative before the turn of the year and positiveafterwards. They also conclude that such tax-motivated trading activities are responsible for theturn-of-the-year effect and thecross-section of stockreturns around year ends.

Behavioral Explanations

In contrast with the rational models, developtheoretical models of financial markets whereinvestors are susceptible to behavioral biases such asoverconfidence and self-attribution. Investors insuch models cannot accurately assess theirinvestment skills and may become (Wrongfully)over-confident about their investment abilities overtime. One attractive feature of such models is thatthey generate predictions that are consistent withempirical findings on excessive trading activities byindividual investors.

Studiesprovide further support for the over-confidence explanations. Specifically, revealevidence on investor profits and performancebetween men and women. By showing that womenoutperform men in their individual stock investmentsand by arguing that men are overall more confidentthan women about themselves, they conclude thatover-confidence induces more trading but hurtsinvestment performance. In a follow up study, findthat investors who choose to make investmentsonline are better performers than those who do not goonline before they switch to online trading. However,those who do switch find that their performanceworsens, especially in net returns, after they trade

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online. Again, the authors attribute such shift inperformance to overconfidence and the resultingimprudent trades.

To analyze overconfidence, sensation seeking andtrading with an interesting data source that combinesinvestors’ equity trading with data from an investor'stax filings, driving record, and psychological profile.Controlling for a host of variables including wealth,income, age, number of stocks owned, marital status,and occupation, the authors find that overconfidentinvestors and those investors most prone to sensationseeking trade more frequently. Thus, they alsosupport the hypothesis that over-confidence isresponsible for the heightened level of tradingactivities.

To provide one example of how investors focus onmore salient information and events available tothem by studying the trading activities around stocksplits. They find that a higher fraction of post-splittrades are made by less sophisticated investors.Individual investors increase their aggregate buyingactivities following stock splits while professionalinvestors reduce their buying activity. This behaviorsupports the common belief that stock splits helpattract new investors and improve stock liquidity.However, given that there is virtually no newinformation around the ex-dates of stock splits, theevents themselves and the otherwise unimportantnumeraire effect (i.e., the number of shares doublesand the prices halves accordingly) apparently induceindividuals to trade.

Another interesting example of the (misguided)attention is Rashes’ paper on the co- movement ofstocks with similar ticker symbols. For one such pairof firms, there is a significant correlation betweenreturns, volume, and volatility at short frequenciesdespite the low correlation in their fundamentalvalues. This anomaly provides an example of noisetraders fixating their attention at the most easilyaccessible, but flawed information. It reveals theeffect of noise traders on stock prices independent ofchanges in information and expectations. In sum, theabove studies suggest that factors other than

traditional rational explanations are responsible formany observed trading activities in financial markets.

Three Aspects Of Individual Investor Trading

Disposition Effect

The disposition effect, which is the tendency to holdon to losing stocks for too long while selling winningstocks too early, is arguably one of the most studiedpatterns of individual investing. Some twenty yearsago, uncovered an interesting pattern that individualinvestors hold different parts of their portfolios forvarying periods that depended on the previousperformance of those stocks. Another aspect of thedisposition effect is that there are an increasingnumber of studies that show that the dispositioneffect is widespread among markets outside theUnited States. The following provides a review ofonly a few of them. In a comprehensive study oftrading activity using and confirm a dispositioneffect. They also show that there are reference priceeffects, in that individuals are more likely to sell ifthe stock price attains a prior month high. Tofind thedisposition effect among their sample of individualinvestors from India to find the disposition effectamong a representative sample of investors at thenational stock exchange

Despite the fact that the disposition effect is widelydocumented at the market level, to find that there areconsiderable variations in the disposition effect at theindividual investor level. They analyze the tradingrecords of a major discount brokerage house toinvestigate the disposition effect and try to explainthe cross-sectional difference in the disposition effectexhibited by distinct investors. Building on thefindings in experimental economics and socialpsychology, the authors hypothesize that differencesin investor literacy about financial markets andtrading frequency are responsible in part for thevariation in individual disposition effect. Usingdemographic and socioeconomic variables as proxiesfor investor literacy, the paper finds empiricalevidence that wealthier individuals and individualsemployed in professional occupations exhibit a lower

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disposition effect. Consistent with experimentaleconomics, trading frequency also tends to reduce thedisposition effect.

Learning over Time

In contrast, behavioral finance theories argue thatinvestors, especially individual investors, learn in anasymmetrical way. That is, individuals tend to creditinvestment success to their owninformation orabilities and blame investment losses to luck. If suchtheories indeed depict how individuals learnthroughout their investment tenure, it implies thatmost investors are over- confident and believe thatthey are better investors than they truly are. If thisphenomenon were to pervade at the market level, onewould observe ‘puzzles’ such as excessive tradingand volatilities in the equity market.

Whether and how fast individual investors learnabout their abilities hence becomes an importanttopic in the behavioral finance literature. Empiricallytests whether individual investors learn about theirstock selection ability from their own tradingexperience, and consequently adjust their tradingbehavior accordingly. The authors find thatindividuals indeed learn from their tradingexperience and adjust their subsequent tradingactivities accordingly. Individuals with betterprevious performance are more likely to increasetheir future trades than individuals with disappointingperformance. To find that such evidence is strongerfor individuals with overall better performance thanthose with worse performance. In addition, they findthat although individuals respond to both previousgains and losses, they are much more responsive toprevious gains (by increasing their subsequenttrading intensity) than to previous losses (bydecreasing their subsequent trading intensity).Hence, the authors suggest that investor learningbehavior is probably more complex than any singletheoretical prediction, rational or biased. Instead,individual learning activities seem to be moreconsistent with bounded rationality.

In addition to use a large sample of individualinvestor records over a nine-year period from Finlandand analyze how the disposition effect and tradingperformance change over individual investors’ lifecycle. An extra year of experience decreases thedisposition effect of the median investor by about 4percent, which accounts for about 5 percent of theincrease in returns earned by these investors. Bycontrolling for survival and unobserved individualheterogeneity, the authors show that investors inaggregate learn partly by attrition, but that learning atthe individual level is also important. Anotherimportant finding is that unsophisticated investorsand investors who trade more learn faster about theirabilities and that individual investors change theirtrading styles over time, as they gain more tradingexperiences and understanding about their ownabilities.

Implications Of Individual Investor Trading

Individual Investor Trading and Asset Prices

Traditional economics and finance literature typicallyassumes that investors who trade without knowledgeof fundamental information (i.e., the noise traders) donot have a material impact on asset prices or marketstability as they trade in a rather atomic way and theinfluences that they generate cancel each other andleave no impact on the market.

To analyze the trading records for 66,465 householdsat a large discount broker and 665,533 investors at alarge retail broker and find that the trading ofindividuals is highly correlated and surprisinglypersistent. This systematic trading of individualinvestors is not primarily driven by passive reactionsto institutional herding, by systematic changes inrisk-aversion, or by taxes. Psychological biases likelycontribute to the correlated trading of individuals.They also find that biases lead investors tosystematically buy stocks with strong recentperformance, to refrain from selling stocks held for aloss, and to be net buyers of stocks with unusuallyhigh trading volume.

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The findings of are of particular interest to thebehavioral finance literature because it builds anecessary condition for individual investors to matterto financial markets. Observing that individualinvestors tend of commit the same kind of behavioralbiases at or around the same time, such investorsconceivably do not necessarily cancel each other’sactions. Instead, the actions of individual investorshave the potential of aggregating. If this is the case,individual investors cannot be treated merely as noisetraders but more like a giant institution in terms oftheir potential impact on the markets.

The papers show that the imbalance in individualinvestor trading, in total, can indeed predict thecross-section of future stock returns over an extendedperiod of time investigate the relationship betweenindividual investor trading activities using a largediscount brokerage firm and also use market leveldata from the Trade and Quotes and Institute for theStudy of Security Markets. The authors documentstriking similarity between the observed tradingimbalance from the brokerage firm data and that ofthe small-sized trades at the market level from theTrade and Quotes and Institute for the Study ofSecurity Markets data. Such findings confirmprevious conjecture that trade size is a reasonableproxy for the trading of individual investors

Welfare Evaluationof Individual InvestorTrading

Trading losses and costs

In addition to their influence on asset pricing,scholars and regulators are also interested in thewelfare implications of individual investortrading.Questions such as whether individualinvestors obtain (abnormal) returns and shouldengage in active trading have received increasingattention.Extant evidence so far suggests thatindividual trading seems to hurt their financialwealth. Most existing studies fail to find thatindividuals obtain excess returns than simplyfollowing buy-and-hold strategies of index funds.Consistent with several other papers relying on the

same data source, find that about 5 percent ofindividual investors manage to obtain abnormalreturns over a market index, when risk exposures areproperly controlled. Put in a different way, adominating majority of the individual investorscannot beat the market.

Using a complete trading history of all investors infind that individual investor trading activities are notwell founded and do not achieve particularlyimpressive returns. They show that the aggregateportfolio of individuals suffers an annualperformance penalty of 3.8 percentage points.Individual investor losses are equivalent to 2.2percent of Taiwan’s gross domestic product or 2.8percent of the total personal income. Interestingly,they find that the trades hurting individual investorsthe most are those about which individual investorsare most aggressive. In contrast, institutions enjoy anannual performance boost of 1.5 percentage pointsand both the aggressive and passive trades ofinstitutions are profitable. This study not only puts anumber to the considerable losses that individualinvestors face at the national level, but also providesa few specific directions (such as behavioral biasesand demand for liquidity) as to why individualsobtain such disappointing performance.

Individual Trading and Cost of Time

Researchers have not fully investigated one aspect ofcosts related to individual investor trading. Inaddition to the costs that individuals pay to executetheir trades, they have to spend time conductingresearch for their trading activities. Despite thefindings that individuals do not necessarily carefullyprocess relevant information before trading, theyprobably spend time attempting to glean usefulinformation ex ante. Individual households couldreasonably substitute the time that they spend onresearch and trading for some other valuableactivities in life.

This topic looking at the adoption of mutual fundinvestment by households with different levels of thecost of their time. The study draws similar

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conclusions from two distinct sources, the Survey ofConsumer Finance and data on portfolio choice andtrading from a large discount brokerage firm. Withthe Survey of Consumer Finance data, finds thathouseholds with higher cost of time are both morelikely to invest in mutual funds and invest a greaterfraction of their portfolios through mutual funds.Households with greater professional engagementinvest a higher fraction of their portfolios in mutualfunds. Ceteris paribus, a household with Rs. 10,000higher annual income or a household head workingin a professional occupation invests 7 and 9 percentmore in mutual funds. Because such investors havegreater professional responsibilities and a busierschedule, the findings support the hypothesis thathouseholds with greater cost of time are less likely toengage in direct stock trading.

Also consistent with this hypothesis, finds thathouseholds in which the household head is marriedor lives with a spouse/partner or owns their primaryresidences, invest 6 and 15 percent more,respectively, in mutual funds, among all equityinvestments. Such households are busier withdomestic activities and hence have less time fordirect investment. This finding lends support to thehypothesis that investors with higher cost of time aremore likely to invest in mutual funds. Finally, findsthat households that have more/less leisure time tendto invest less/more in mutual funds. Households inwhich household heads are retired invest 19 percentless while households in which both adults are full-time employed invest 12 percent more in mutualfunds, providing further evidence that the cost oftime influences household choice between direct andindirect investment in equities.

The analyses using data from a large discountbrokerage firm confirm the findings from the Surveyof Consumer Finance. In addition, such supplementalanalyses confirm that households with higher costs oftime are indeed less likely to trade common equitiesand turn over their portfolios less frequently.

SUMMARY AND CONCLUSIONS

This article summarizes extant research on individualinvestor trading activities. As the study suggests,rational theory cannot easily explain a large portionof individual investor trading activities. Individualbehavioral patterns, on the other hand, seem toprovide more probable explanations to many findingsof individual investor trading. Although many ofindividuals’ trading patterns seem to their financialwell-being, some studies suggest that the overallwelfare loss from individuals’ behavioral biases mayindeed be limited. Although whether individualssuffer considerably from their trading activitiesremain an open question, more studies seem toconfirm that their trading activities carry importantweight to asset price formation. Therefore, unlike thetraditional wisdom that assumes individual investorsto be insignificant noise traders, future studies infinance and economics have to take individualinvestors more seriously and devote more attention toindividual investors’ trading activities.

REFERENCES

Aumann, Robert. J. 2009. “Agreeing toDisagree.” The Annals of Statistics 4:6,1236-1239.

Barber, Brad M., Yi-Tsung Lee, Yu-JaneLiu, and Terrance Odean. 2012. “Who Losesfrom Trade? Evidence from Taiwan.” Reviewof Financial Studies 22:2, 609-632.

Barber, Brad M. and Terrance Odean. 2012.“Trading is Hazardous to Your Wealth: TheCommon Stock Investment Performance ofIndividual Investors.” Journal of Finance55:2, 773-806.

Barber, Brad M. and Terrance Odean. 2012.“Boys Will Be Boys: Gender,Overconfidence, and

Common Stock Investment.” QuarterlyJournal of Economics 116:1, 261-292.

Barber, Brad M. and Terrence Odean. 2012.“Online Investors: Do the Slow Die First?”Review California.

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Dhar, Ravi and Ning Zhu. 2011. “Up Closeand Personal: An Individual Level Analysisof the Disposition Effect.” ManagementScience 52:5, 726-740.

Feng, Lei and Mark Seasholes. 2012.“Correlated Trading and Location.”

Journal of Finance 59:5, 2117-2144.

Feng, Lei and Mark Seasholes. 2012. “DoInvestor Sophistication and TradingExperience Eliminate Behavioral Biases inFinance Markets?” Review of Finance 9:3,305-351.

Gervais, Simon and Terrance Odean. 2012.“Learning to be Overconfident.” Review ofFinancialStudies 14:1, 1-27.

Ivkovich, Zoran and Scott J. Weisbenner.2010. “Local Does as Local Is: InformationContent of the Geography of IndividualInvestors’ Common StockInvestments.”Journal of Finance 60:1, 267-306.

Kaniel, Ron, Gideon Saar, and SheridanTitman. 2012. “Individual Investor Tradingand Stock Returns.” Journal of Finance 63:1,273-310.

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THE OPTIMUM USE OF EDUCATION CESS FOR DEVELOPING THEINFRASTRUCTURE AS WELL AS THE STANDARD OF SCHOOLS IN INDIA

B.Ganeshkumar*, S.Saraswathi**

Introduction

A tax is a financial charge levy or imposed by a stateor to administration divisions on income input, salesetc., Taxes consist of direct or indirect taxes and it ispaid in money. Money provided by taxation has beenused by states some of these include expenditure onwar, the enforcement of law and public order,protection of property, economic infrastructure(roads, legal tender, enforcement of contracts, etc.,public works, social engineering, subsidies and theoperation of government itself. A portion of taxesalso go to pay off the state's debt and the interest thisdebt accumulates. Governments also use taxes tofund welfare and public services. These services caninclude education systems, health care systems, andpensions for the elderly, unemployment, and publictransportation. Energy, water and wastemanagement systems are also common publicutilities. Governments use different kinds of taxesand vary the tax rates. This is done to distribute thetax burden among individuals or classes of thepopulation involved in taxable activities, suchas business, or to redistribute resources betweenindividuals or classes in the population. A nation'stax system is often a reflection of its communalvalues and/or the values of those in power. To createa system of taxation, a nation must make choicesregarding the distribution of the tax burden—whowill pay taxes and how much they will pay—andhow the taxes collected will be spent. In taxation, theresource collected from the public through taxation isalways greater than the amount which can be used bythe government. The difference is called thecompliance cost. The collection of a tax in order tospend it on a specified purpose, for examplecollecting a tax on alcoholism rehabilitation centersis called hypothecation. This practice is often

disliked by finance ministers, since it reduces theirfreedom of action. Some economics theoristsconsider the concept to be intellectually dishonestsince, in reality, money is fungible. Furthermore, itoften happens that taxes or exercise initially levied tofund some specific government programs are thenlater diverted to the government general fund. Insome cases, such taxes are collected in fundamentallyinefficient ways, for example highway tolls.

Some economists, especially neo-classicaleconomists, argue that all taxation creates marketdistortion and results in economic inefficiency. Theyhave therefore sought to identify the kind of taxsystem that would minimize this distortion.

An Education cess was introduced by the UPAgovernment, former Finance minister P.Chidambaram on July 2004 proposed to levyEducation cess of two per cent on income tax,corporation tax, excercise and customs duties andservice tax in order to give a boost to primaryeducation in the country. An additional one per centSecondary and Higher Education cess was imposedin the year 2007 to help fund new seats in highereducation that are required to implement the 27%reservation of seats for other backward classes. “Ithas been introduced to fund secondary and highereducation as well as for the expansion of capacity by54% for reservation for socially and educationallybackward classes”. Education cess is a earmarked taxto full fill the needs and demands of secondary andhigher education. But the amount collected asEducation cess does not effectively utilized fordeveloping the standard of education, it is only fillingup the government’s coffer. The governmentexpected yield from Education cess was Rs. 4,000 to5,000 crores per annum but the average yield is Rs.16,000 crores per annum. Even the government

Research Scholar in Commerce, Sri Kaliswari College,(Autonomous),Sivakasi.**Assistant Professor, Department of PG Commerce, Sri Kaliswari College,(Autonomous),Sivakasi.

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receives more money comparing with their estimatedyield the governments strapped cash allocated for thedevelopment of secondary and higher educationevery year.

Statement of the Problem

In India most of the families are financially verypoor. Hence they are not ready to allow their childrento continue their school education because of the costof education is high compare with their familyincome. In order to reduce the cost of education andimprove the education growth Indian governmentrequires huge amount. So, the government desire tolevy education cess on both direct and indirect tax.Year after year the government collect huge amountcollected as education cess, whether it is correctlychannelized or used is the crux of the problem.

Objective of Study

To study the reasons for the leving educationcess.

To identify the sources for the collection ofeducation cess.

To know the applications of education cess.

To compare the sources and applications ofeducation cess.

To offer the suitable suggestion.

Methodology

The data needed for the study is collected fromsecondary source. The statistical data are taken fromindiabudget.nic.in and the description abouteducation cess collected from Direct and Indirect taxbooks. The present study is both descriptive andanalytical in nature.

Period of Study

The study covers the data of seven assessment yearsfrom 2007 - 08 to 2013 - 14.

Amount Collected as Education Cess

Tax is the most significant source of revenue of thegovernment to maintain law, promote the welfare of

the people, and safeguard the country. The fundmobilized as tax is from two source,

Direct taxes

Indirect taxes

Direct taxes consist - income tax and wealthtax.

Indirect taxes consist - customs duties,exercise duty.

Education cess is collected on tax amount.The cess collected during the last seven assessmentyear from direct and indirect taxes are as under.

Table – I

(Rs in crores)

S.No

Majorheads

2007 -08(Rs)

2008 –09(Rs)

2009 –10(Rs)

2010– 11(Rs)

2011- 12

2012 –13(Rs)

2013 –14(Rs)

1 CorporationTax

5,475

6,466

7,295

8,748 9,661.30

10,453

11,466

2 Income Tax

3,108

3,583

3,794

4,326 4,803.40

5,998

6,879

3 CustomsDuties

2,935

3,145

2,560

3,320 5,210.58

6,300

4,125

4 UnionExciseDuties

3,690

3,115

3,075

4,425 4,876.99

6,600

6,900

5 Service Tax

1,050

1,650

1,600

2,021.36

2,641.61

3,900

4,800

Total 16,258

17,959

18,324

22,840.36

27,193.88

33,251

34,170

Source: http://indiabudget.nic.in

From the above table it is clear that the amountcollected as education cess collected is doubledwithin six months. The contribution from the servicetax is increased in four times. The major contributionto total education cess is from corporate tax.

Distribution of Education Cess

The amount spends by the government for highereducation during the last seven assessment year fromEducation cess is as hereunder.

Indian government is wedded to socialistic pattern ofsociety it is the foremost duty of the government tobring out welfare and development programmeswhich will be bridge the gap between rich and the

14

poor. Tax amount collected may be used for generalpurposes where educational cess should be only usedfor secondary or higher education.

Table – II

(Rs in crores)S.No

Majorheads

2007 –08(Rs)

2008 –09(Rs)

2009 –10(Rs)

2010 –11(Rs)

2011 –12(Rs)

2012 13(Rs)

2013 –14(Rs)

1 GeneralEducation

1,958.97

3,475.63

3,779.09

4,994.07

6,472.18

6,750.50

7,642.43

2 TechnicalEducation

981.47

2,642.37

3,374.41

3,822.83

5,071.32

5,413.86

5,635.67

3 Secretarial-SocialServices

1,20 2.50 3.00 3.00 3.00 1.50 -

4 NorthEasternAreas

320.31

680 796 979.60

1,268.50

1.328.14

1,424.90

Total 3,261.95

6,800.50

7,952.50

9,799.50

12,815

13,494

14,703

Source: http://indiabudget.nic.in

Out of 34,170 crores collected as education cess inthe year 2013 – 14 only 14,703 crores were spent.Out of 14,703 crores 7,642.43 crores were spent forgeneral education, 5,635.67 crores for technicaleducation, 1,424.90crores for developing educationin north, eastern areas.

Amount spent for general education was Rs. 1,958.97crores during the year 2007 – 08 where it is increasedto Rs. 7,642.43 crores. Even though the amount wasincreased in three times it is not enough for thedevelopment of the education.

Collection and Distribution of Education Cess

Appropriate allocation and application of educationalcess is to fund a project for the up liftment of schoolsstandards. It is an integrated work among concernstates, educational ministry, direct and indirect taxdepartments etc.

Tax is actually a burden for the tax payer. Tax payersare levied at the maximum of 30% as tax on therelated sauces. In addition to that they are also

responsible for paying educational cess. Thecomparison between the education cess collected andspent for the last seven years are tabulated below.

Table – III

(Rs in crores)

S.No

Year Income Expenditure UtilizationPercentage

1 2007- 08

16,258 3,261.95 20.06

2 2008- 09

17,959 6,800.50 37.86

3 2009– 10

18,324 7,952.50 43.39

4 2010– 11

22,840.36 9,799.50 42.90

5 2011– 12

27,193.88 12,815 47.12

6 2012-13

33,251 13,494 40.58

7 2013- 14

34,170 14,703 43.02

Source: Computed data

The fact derived from the above table is that in theyear 2007-08, the amount collected as education cesswas 16258 crores, but the amount spent is only3261.95 crores. It is amount spent is only a 20.06 %on amount collected. Even though it is a less amount,in the very next year it was increased to 37.86% itreached

The above table reveals the percentage of amountspend by the government for the educational purposefrom the collected educational cess. From the resultof comparison of income and expenditure ofeducation cess we can understand that thegovernment does not spend the half of the collectedamount for educational purpose. During the studyperiod the government averagely spends only 39.27percentage amount per annum for the educationalgrowth from the total amount. The hike of 47.12 %on 2011 – 12, but in the next year it was decreased to40.58%. In 2013 – 14 the utilization ratio is increasedto 43.02%.

Suggestions

The government could pass a resolution insistingon the utilization of the realizing education

15

cessrealized only for education within astipulated time

The awareness should be created among theteachers towards the utilization of educationalcess

Government could spent educational cess tomake at least one government school in everydistrict as a model school of the district everyyear

Toilet facilities in government schools ispathetic n general. Initially government couldspend this amount for crating the basicinfrastructural facilities

A separate committee may be appointed formonitoring the collection and proper utilizationof educational cess

Tax payers are informed to pay their tax on or aparticular data through social media, like that theunutilized educational cess, procedure to availand use can also informed to teachers and publicthrough social advertisement in television

Conclusion

The above data shows that the fund realized aseducational cess has not been optimally utilized andso it results in slow development of the educationalsector. The infrastructure facilities in various schoolsand villages are very poor. If the governmentstimulates a step to utilize the cent per centeducational cess collected on education, it willstrengthen our nation in the forth coming years.

Reference

http://indiabudget.nic.in

16

SPURIOUS BRANDS IN INDIAN RURAL MARKETS

N. Maria Joseph*, Dr. S. LourduInitha**

Abstract

The word imitation has no limitation in the ruralmarkets of India. Though, it is a global issue and animmense challenge for several transcontinentalbrands world-wide, emerging economies like India isan easy prey for spurious brands to be persistentlysuccessful and sustain. Our legal framework is soscrawny, particularly in the field of consumerismwhich gives more space for such duplicate brands tobe aggressive to the extent of 22 percent increase inthe last two years. Multinational brands in India hasculpably failed to curb this rapid growth and theGovernment too, a big loser to the extent of 830crores as tax revenue. One of the primary causes forthis menace is undoubtedly, the lack of awarenessabout spurious brands among rural consumers inIndia. Hence the multinational brands cannot affordto waste the white-water from the flood-gates of ruralmarket anymore and they instantaneously requirededucating their consumers and promote awarenessfor their endurance. Hence, this study is pertinent andevocative in understanding the need for buildingawareness among rural mass about the tribulations ofspurious brands and its impact on rural consumerism.

Key Words: Imitation, consumerism, Multinationalbrands, Rural Market

Introduction

Rural market in India is no more a local market;rather it is emerging as contender for the urbancounter-part market in both goods and services. Thechanging development of rural market indicates itshyper-heterogeneity aspect amidst the homogeneousoutlook. The changeover of rural market base fromvillage to town and town to sub-urban is noticeable.Several multinational companies have unmistakablyunderstood the need for penetrating the less-tappedmarket for their very survival. However, the peculiar

features of rural consumers cannot be ruled-out;particularly in understanding the real needs of thecustomer and hence it is too difficult to customize thecustomer-centric rural market. The gap between theneed for branded and unbranded goods causes theflood-gates opened for spurious brands to gangrenousthe rural marketing environment. The word imitationhas no limitation in the rural markets of India.Though, it is a global issue and an immensechallenge for several transcontinental brands world-wide, emerging economies like India is an easy preyfor spurious brands to be persistently successful andsustain.

Objectives

The primary objective of the paper is to study thespurious brands in rural markets, particularly thePackaged Mass Consumption Goods (PMCG) inIndia. However, this paper also reckons to study thefollowing aspects:

To understand the fake brands in India and itsimpact on rural markets

To investigate the entry channels of spuriousbrands in rural markets and

To analyse the legal protection available to savethe consumer against fake brands.

Methodology

The paper titled “Spurious brands in Indian RuralMarkets” is exclusively based on secondary datacollected from various published sources. Further,the researchers have employed descriptive type ofstudy to find out the impact of spurious brands in therural markets principally with reference to thePackaged Mass Consumption Goods.

What is Fake Brands?

The fake brands in the Indian rural markets can be

Asst. Professor in Commerce, Loyola College, Chennai.** Associate Professor in Commerce, S.I.V.E.T. College, Chennai

17

classified into two types, viz. Counterfeit productsand Pass-off products with look-alikes and spell-alikes. The former is a kind of replication whereeven the original manufacturer would not be able todistinguish between a genuine and a spuriousproduct. These fake products bear the identical nameof the original one in every aspect such as itspackaging, graphics, colour pattern, design and evensame name and address as the genuinemanufacturer. A pass-off product, on the otherhand, is one that comes with a few inconsequentialchanges from the original product. The look-alikesare those products where the colour scheme on theoriginal packaging closely resembles that of apopular brand, while the pack carries a differentname. The spell-alikes are fakes of original brandspackaged in colours and designs in similar to thoseof the originals, but with names that are subtly andclearly misspelt. The changes are wittingly made tocircumvent being categorized legally as counterfeits.For example, ‘Bond’s Magic Talc’ is replicated for‘Pond’s Magic Talc’ and the manufacturer useanalogous type of packaging or colour or designs.They come out with the motive of misleading andcheating the ordinary consumers who areuneducated or in a hurry in purchasing products,particularly focusing upon packaged massconsumption goods (PMCG) in the rural markets.

Spurious Brands in Indian Rural Markets

A recent study on fake brands in Indian ruralmarkets reveals that there are nearly 128 `knownversions' of Parachute Hair Oil, 113 of Fair &Lovely cream, 44 of Vicks VapoRub, and 38 ofClinic Plus Shampoo. Further, it is very common toget the products like Polons, Run, Chaudharyséclairs, Nilima, Narima, Lifejoy, Liteboy, CollegeToothpaste, Friends and Lovely and so on. In anaverage rural market party-g or prima-g biscuits areedging out the original parle-g. And the fair & loveskin cream is selling like hot cake, right under fair &lovely's nose. Fakes of parle-g biscuits and fair &lovely fairness cream are extremely popular in ruralmarkets.

Further, a latest survey by city-based marketingconsultancy rural relations has not only revealed thatthe spurious brands are outselling the original ones,but that these brands have a surprising variety ofproducts, a strong marketing network and more thana few wicked tricks up their sleeves. Although giantslike Hindustan Unilever Limited (HUL), Marico,Procter and Gamble (P&G), Pepsi and many othersare doing their best to fight against spurious brandsin India. A large chunk of the turnover comes fromrural markets where consumers are largelyinfluenced by the retailers. However, the BrandProtection Committee (BPC) constituted bymarketing giants seem to be concentrating more onexposing fake items in urban markets through raids,even as spurious brands continue to thrive in ruralareas.

The distribution network of spurious brands wasbetter than that of the originals as the profit marginstoo are larger and ranging between 50 and 200 percent. Spurious brands of goods ranging from incensesticks to tea are available in rural markets. Thepackaging of spurious brands is extremelysophisticated and matched the original, except forthe ingredients and Maximum Retail Price (MRP)columns. It is surprised to note that in Rajasthan,Gujarat and Madhya Pradesh the market share ofTata Tea fell drastically due to the foul-play andrumours such as usage of meat in tea processing etc.The attitude of customer is to believe the retailerswho get more margins from spurious brands than thebrand awareness. Only through aggressive brandawareness programme, the marketers came to knowthis strategy of spurious brand and nearly more than50 percent of them agreed that the rumour kept themaway from such branded packaged goods.

Is spurious local or global?

Spurious is not only a local issue, but also a globalissue. It did not spare even the most developednations of the world and mercilessly posing apersistent threat to renowned global brands.According to a recent global study, the Web site ofDe La Rue reveals:

18

Ten per cent of perfumes and cosmetics and 11per cent of clothing and footwear bought byconsumers are fakes.

There are around 160 Web sites offering`genuine Channel products, despite the fact thatChannel doesn’t sell any of its products on theNet.

The US FDA recalled $7 million worth of intra-aortic pumps used during open-heart surgeryafter it discovered malfunctioning counterfeitparts in the devices.

Counterfeit baby formula resulted in somebabies developing rashes and seizures afterimbibing.

US investigators discovered that more than 600helicopters sold to US civilians and NATO wasequipped with counterfeit parts.

Fake perfumes have been found to contain urineas a stabilizer.

Legal Protection against Spurious Brands

The consumers are neither protected by the law norby any forum. The complexity prevailing in theexisting system paves way for the spurious brandto be more comfortable than the original ones. TheGovernment is not an exemption to the ill-effect ofspurious brands; at least the Government loses itstax revenues. The Indian consumers are protectedby several legislations against this social evil, butwhen it comes to reality, no doubts, they are atcross roads. Some of the legislations meant forcontrolling the spurious brand market in Indiainclude:

Indian Penal Code 1860

Drugs and Cosmetics Act, 1940

Prevention of Food Adulteration Act 1954

Consumer protection Act 1986

Bureau of Indian Standards Act 1986 and

Trade Mark Act, 1999

Suggestions and Recommendations

Educating rural consumers, particularly the youthand school children in villages and towns

The manufacturers of fake goods must bestringently curbed with iron-hands and theirbusiness must be completely closed by legalenforcement.

The retailers must be well-informed about thelegal implications on sale of fake goods

The manufacturers must periodically engagetheir marketing force to ensure the depletion ofspurious brands, apart from achieving their salestarget.

The Government must create adequate awarenessprogramme about the spurious brands and its ill-effects through panchayat, schools, taluk, self-help groups etc.

The market research team of renowned brandsmust make ample efforts to develop strong brandbuilding techniques and get the customerpatronage.

Conclusion

Spurious brand is a real challenge for original brands,consumers and regulatory bodies in all possibleaspects. The peculiar advantage enjoyed by thespurious brands and its customer patronage in ruralmarkets is a factual challenge. These brandsgaintheadvantageintermsof salesonthebaseofthereputationoftheoriginal brands and also givemore financial leverage to the retailers. Our legalframework is so scrawny, particularly in the field ofconsumerism which gives more space for suchduplicate brands to be aggressive to the extent of 22percent increase in the last two years. Multinationalbrands in India has culpably failed to curb this rapidgrowth and the Government too, a big loser to theextent of 830 crores as tax revenue. One of theprimary causes for this menace is undoubtedly, thelack of awareness about spurious brands amongrural consumers in India. Hence the multinationalbrands cannot afford to waste the white-water from

19

the flood-gates of rural market anymore and theyinstantaneously required educating their consumersand promote awareness for their endurance.

References

The Rural marketing, Second Edition,PradeepKashyap, Pearson, New Delhi, 2012

TheRuralMarketingBook,PradeepKashyapetal,Biztantra Publications,2008 Edition

MarketingManagementbyPhilipKotler11thedition,Pearson,PrenticeHall.

MarketingtoRuralConsumers:UnderstandingandTappingtheRuralMarketPotential,Vol.23Issue3,IndianManagementMay2007.

MarketingToRuralConsumers,Chandwani,andSanjay.Vision(09722629),Apr-Jun. 2009,Vol.13Issue2.

www.businessline.com

www.economictimes.com

20

A CONCEPTUAL RESEARCH STUDY ONBRAND SWITCHING WITH SPECIAL ILLUSTRATIONTO BANKING INDUSTRY

M. SAVIOUR*,Dr.S.P.MUTHU KUMAR**

Abstract.

Creating and maintaining a brand is the fundamentaltask of every business. This is an organized task thatstems from the very purpose of theorganisation.Periodically one must measure the valueof the brands and its relative strength andweaknesses. It will reflect the health of the brand infinancial terms. This is determined through thebrand’s current earnings and its potential futureearnings. The organisation must continuously try toimprove its brand value to avoid brand switching.Building strong brands will put an entry barrier forthe new business and also restrict the existingcompanies to capture the present customers of thebrand. This study attempts to explain the meaning ofthe term brand switching, reasons for brandswitching and how to prevent and overcome brandswitching by creating strong switching barriers.

INTRODUCTION:

Brand switching is asituation in which someonechanges from buying one brand of a producttobuyinga different brand. The fortunes of established brandsare driven by consumer’s fluctuating desires, not bychanged perceptions. When a consumer switchesaround within a set of brands, it is because his or herfluctuating desires temporarily alter how important itis that he or she receives the benefits of one brandvs.another. Once a product has been used, aconsumer’s perception of it rarely changes, butdesires for the perceived benefits of competing brandoften fluctuate and it is this that creates brandswitching.

BRAND SWITCHING:

Brand switching is sometimes known as brandjumping, and it is process of choosing to switch fromroutine use of one product or brand to steady usage

of a different but similar product. Much of theadvertising process is aimed at encouraging brandswitching among consumers, thus helping to growmarket share for a given brand or set of brands.

Convincing consumers to switch brands is sometimesa difficult task. It is not unusual for customers tobuild up a great deal of brand loyalty due to suchfactors as quality, price, and availability. Toencourage switching brands, advertisers will oftentarget these three areas as part of the strategy ofencouraging brand switching.

However, price is not always enough to encouragebrand switching. There are consumers who are lessconcerned with cost. For these users, the approach isto present the new brand as being of superior qualityto the established brand. Essentially, this meansdemonstrating that the new brand can do everythingthe older brand can do, plus a little more.

Switching behavior was induced by extrinsic (e.g.,price, coupon) or intrinsic(e.g., a desire to try a newbrand) incentives. Unlike intrinsically inducedswitching,extrinsic incentives motivateconsumers toswitch despite a high level of satisfactionwith the lastpurchased brand. However, this switchingbehaviorresultedin weaker intentions to repurchasethe new brand.

REASONS FOR BRAND SWITCHING:

Several reasons may be responsible for consumers ofswitching from one brand to another.

Low research and development which do notprovide improvisation in product quality andstandards.

Customers finding it uncomfortable if quality ofproducts starts falling.

Assistant professor, Department of Management Studies, Adhiparasakthi Engineering College, Melmaruvathur** Professor, Department of Management Studies, Adhiparasakthi Engineering College, Melmaruvathur.

21

Unavailability of product brand and variantwhich customers demand for.

Uniqueness and variety in other brands.

Price escalation or availability of other brands atcompetitive price.

Kleptomaniccustomers who are not advocates ofbrand loyalty, but after consumption and taste ofevery kind of products and utility possession.

Inconsistent brand positioning of the brand orproduct.

WHAT MAKES THE CONSUMER TOSWITCH OVER TO OTHER PRODUCT?

There are many factors which make the consumers toswitch over to other brands.It is explained here withthe help of banking industry.

What changes will prompt consumers to switch fromone bank to another bank are;

Free checking account-39%

Service quality-35%

Convenient branches-29%

Fair OD. NSF charges-20%

Surcharge fee ATMs-19%

Convenient branch hours-19%

Deposit rates-17%

Online banking technology-16%

Large ATM network-16%

OD coverage for cheks-14%

Loan rates-14%

OD coverage for ATM check-13%

Range of product services-11%

Mobile banking technology-6%

Other-5%

FACTORS INFLUENCING THE BRANDSWITCHING:

1. Better price (41%)

2. Better quality (26%)

3. Better service agreement (15%)

4. Better selection (10%)

5. Better features (8%)

BRAND SWITCHING BEHAVIOUR:

Consumer-switching behavior refers to customersabandoning a product or service in favor of acompetitor's. For example, a customer might movefunds from one bank to another if he is dissatisfiedwith the customer service at the first. Consumer-switching behavior is an ever-present danger for abusiness -- if the company does not keep itscustomers happy, its competitors might directlybenefit.

HOW TO PREVENT BRANDSWITCHING

Prevent consumer switching by soliciting feedbackand continually optimizing your customer service.You can’t please everybody, but making the effortcan go a long way. If your customers sense that youare out for their best interests, brand loyalty willdevelop, and your business will be less threatened byconsumer-switching behavior.

Companies often use promotional offers to induceconsumers to switch to their brands. A widely usedpromotion toward this end is price discounts. Thesediscounts may takethe form of sales, rebates, pricereductions, or coupons withthe objective of attractingboth switchers and consumers whoprefer analternative brand.

Conventional wisdom presents a very different view.Ever since the valid concept emerged that brands arepositioned perceptually, marketers have taken it forgranted that brand switching occurs becauseadvertising has changed perceptions – or because ofpromotion or lack of product availability. Theyassume for advertising to succeed it can and mustmove consumers’ perceptions closer to their ideal.

However, when consumer brand perceptions aretracked for an established brand, one finds they are

22

rarely any different during or after a campaign thatincreased market share than they were before.Because the share went up, these tracking results areusually dismissed as meaning only that perceptualchanges were too subtle to measure or that somecritical attribute was missed. Had this research beentaken at face value, marketers would now be lookingat their brands very differently, and establishedbrands would be managed more profitably.

Here is a general theory of consumer purchasebehavior that has important implications to themanagement of established brands.

1. The experience a consumer receives from using abrand solidifies his or her perceptions of it. Thesefixed perceptions can rarely be changed throughadvertising alone.

2. How a consumer perceives each of the differentbrands in a category determines which ones are usedand which ones are not. The consumer may perceivedifferent brands to be superior on different desirableattributes and these results in his or her switchingaround within a set of brands rather than using asingle brand.

3. When a consumer uses a set of brands, theconsumer’s fluctuating wants and desires are whatcauses switching from one brand to another.

4. In many categories, brand use itself is what causesa consumer’s desires to fluctuate. The consumer maytemporarily satisfy certain desires by using one brandbut simultaneously deprive themselves of othersatisfactions they could have received from acompeting brand.

5. As consumers’ desires fluctuate relative to theirfixed perceptions of brands, a consistent process ofbrand choice (brand switching) results over time.

6. Advertising and promotion intervene in theprocess of brand choice by temporarily changing theprobability of a user purchasing the brand the nexttime the category is shopped.

a. Advertising intervenes by temporarily intensifyingthe consumer’s desire for some benefit the brand isalready perceived to provide.

b. Price promotion intervenes by temporarilychanging the perception of price and value.

7. New brands, line extensions, productimprovements, disequilibrium price changes andrestages of existing brands change consumers’perceptions and permanently alter the process ofbrand choice (the probabilities of brands beingselected) for some category users.

8. It is the fate of most brands that their ownadvertising will never improve users’ perceptions,but instead that new competitors will diminish theseperceptions over time.

WAYS TO OVERCOME BRAND SWITCHING

Develop strong brands that signal a certain levelof quality so that satisfied buyers can easilychoose the product again.

The pricing strategy should be based onconsumer’s perception of value.

Create brand loyalty that provides predictabilityand security of demand for the product and itincreases strong switching barriers. Loyalty canalso translate into customer willingness to pay ahigher price – often 20% to 25% more thancompeting brands.

Create brand equity which must reflect inconsumers’ perceptions, preferences andbehaviour related to all aspects of the marketingof a brand.

Keep brand promise which is the marketers’vision of what the brand must be and do for theconsumer.

Conduct brand audit to assess the health of thebrand

Conduct brand tracking studies to collectquantitative data from consumers on a routinebasis over time to provide marketers with

23

consistent, baseline information about how theirbrands and marketing programs are performingon key dimensions.

Periodically estimate brand valuation to assessthe total financial value of the brand.

Rejuvenate the brand to add some value to anongoing brand by improving product attributesand enhance its overall appeal. This is intendedto recapture the attention of consumers.Consumer psychological desire for change is thekey factor behind brand rejuvenation.Quite often, we see ongoing brands appearing as ‘new’‘super’, ‘special’, ‘plus’, ‘premium’, ‘delux’,‘extra strong’, ‘fresh,. They appear in newshapes, new colour and flavours, new packsizes/design and new containers. Basically whathappen here is dressing up and a facelift of theongoing brands.

CONCLUSION

It is very difficult to create a brand and establish astrong brand position for the product in the minds ofthe customers. Once a brand is established it is themarketers’ duty to improve its brand to increase itsmarket share. For that the marketer must strengthenits brand by continuously improving its quality andthereby the marketer must create strong switchingbarriers to withstand the brand in the market for anunending period.

REFERENCES

1.Yow, Song and Carl F. Mela(2011), ‘ DynamicModel of Sponsored search advertising’ MarketingScience, 30(3), pp447-68)

2.Erdam, Tulin and Joffre Swait (2004), ‘Brandcredibility, Brand Consideration, and Choice’Joiurnal of Consumer Research, 31(1), pp191-98.

3. R. Satyanarayana, Dr.ByramAnand,PhanikumarVutukuin, ‘ Performance of GloballyMost Valued Brands’, Journal of ContemporaryResearch in Management, Jan-March, 2013, pp37-41

4. Mathias M. Birk and Sabine A. Einwiller(2010)How to save your Brand in the Face of Crisis”,MIT SloanManagement Review, 51(4), pp57-64

5. Muniz, Albert M., Jr. and Thomas C.OGuinn(2001), “ Brand Community”, Journal ofconsumer research, 27( March) pp412-32

6.Kotler Philip, Keller Kevin Lane , ‘ MarketingManagement’Prentice Hall of India Pvt. Ltd., NewDelhi, 2009, pp236-253

7.Ramasamy, Namakumari ‘MarketingManagement’2nd Edition, Vikas Publishing HousePvt. Ltd. pp242-245

24

ACCOUNTING AND VALUATION OF INTELLECTUAL ASSETS:

A STDUY ON THE PERCEPTION OF CHARTERED ACCOUNTANTS OF INDIA

N. Sivakoumar*, R. Kasilingam**

Abstract

Intellectual assets are the most valuable assets of theknowledge intensive industries. Since, technologicalchange is embedded with intellectual assets, theseassets rise in prominence in the asset portfolio ofknowledge intensive industries. Hence, intellectualassets demand their due recognition in the financialstatements of firms. Worldwide, the accountingstandards are inconsistent in the recognition ofintangible assets, especially when they are internallycreated. Since, accounting for intellectual assetsdepend on valuation of these assets, there is a need toconvince the accounting profession on the relevanceof intellectual assets in technology management.Thus far the studies on valuation of intangibles haveused ‘assumed’ amortization rates to accord assetstatus to internally created intangibles and convincethe accounting profession on the need for recognitionand valuation of these assets. The present study wasundertaken to gauge the perception of the accountingprofession on recognition and valuation of internallycreated intellectual assets and to arrive at appropriateamortization rates for treating the intangibles asassets. The results of the survey undertaken suggestthat the accounting profession is slowly reconcilingwith the growing importance of intellectual assets.

Introduction:

Intellectual assets are the most valuable assets of theknowledge intensive industries. Since, technologicalchange is embedded with intellectual assets, theseassets rise in prominence in the asset portfolio ofknowledge intensive industries. Hence, intellectualassets demand their due recognition in the financialstatements of firms. Since, accounting for intellectualassets depend on valuation of these assets, there is aneed to convince the accounting profession on the

relevance of intellectual assets in technologymanagement. The main purpose of financialreporting is to provide useful information to the usersof the financial statements for taking economicdecisions about the financial position of thecompany. In the industrial economy, the tangibleresources like production facilities, physical locationand efficient manufacturing process are the vitalresources to sustain and succeed in the market place.But, in the knowledge economy, capabilities likedifferentiation, innovation and intangible assets likeresearch and development, patents, trademarks,copyrights are essential to achieve competitiveadvantage. Even though it is generally accepted thatinvestments in intangibles are important sources offuture performance, the cost perspective accountingrules of assets, do not recognize the intangible assetsand include them in the balance sheets, especially ifthey are internally generated. More importantly, allcost incurred to develop the intangible assets aretreated as expenses. This means that the currentprofit is reduced and future profit is overstated. Thegrowing difference between the value of a firm in themarket and the value in its books of account stands asa testimony to this statement. Since, accounting isconsidered as the language of business, this languageshould be clear enough to communicate the realpicture about a company to its stakeholders. The shiftfrom industrial economy to knowledge economy hasdirect effect on the accounting profession, especiallywhen there is an imminent need to account forintellectual assets. This paper analyses the importantnational and international accounting standards onrecognition and treatment of internally createdintellectual assets and presents the perception of theChartered Accountants, on valuation of intellectualassets.

Professor, Central University, Pondicherry**Assistant Professor, Indira Gandhi College of Arts and Science, Pondicherry

25

Intellectual Assets and Accounting Standards:

The terms Intellectual Capital, Knowledge Capital,Intellectual Assets or Intangible Assets are usedinterchangeably as they all represent a non-physicalclaim to future benefits. Economists call them asKnowledge Capital, Management experts refer tothem as Intellectual Capital and Accountants callthem as Intangible Assets or Intellectual Assets.Intangible Assets is a generic term used to describethe invisible capital of a firm that generates value forit. Intangible Assets in its evolving forms iscommonly referred to as Intellectual Capital orKnowledge Capital or Intellectual Assets. Legallyprotected Intellectual Assets becomes IntellectualProperty. One of the most succinct definitions ofIntellectual Capital is given by Stewart (1997), as‘packaged useful knowledge’. He explains that thisincludes an organization’s processes, technologies,patents, employees’ skills, and information aboutcustomers, suppliers, and stakeholders. Acomprehensive definition of Intellectual Capital isoffered by Brooking (1996), ‘Intellectual Capital isthe term given to the combined intangible assetswhich enable the company to function’. Asmentioned earlier, these assets are either understatedor unstated in the financial statements. This isprimarily because worldwide, the accountingstandards are conservative in recognizing theseassets. Accounting standards define the structure andcontents of financial statements. They do not justaffect the company accounts, but the businessdecisions of the company also. The following aresome of the important accounting standards that laydown the prescription for recognition of intangibleassets.

International Financial Reporting Standards(IFRS):

Since, different countries follow different standardsin preparation of the financial statements, thecompanies operating in these countries face aproblem in consolidation of their accounts, especiallywhen they have multinational operations.International Financial Reporting Standards (IFRS)

were developed to harmonize the different nationalaccounting standards. The new InternationalAccounting Standards Board (IASB) adopted theInternational Accounts Standards Committee (IASC)and all its accounting standards. The IASC issuedInternational Accounting Standard (IAS) 38 whichprescribes the accounting treatment of intangibleassets. According to IAS 38 an asset to be qualifiedas intangibles, shall be identifiable, separable, becapable of generating future economic benefits andbe reliably measured. This standard explicitly statesthat expenditure on internally generated intangibleassets such as brands, mastheads, publishing titles,customer lists and similar items cannot becapitalized. Expenses on direct responseadvertisement are also treated as expenditure. Whileit does not permit capitalization of expenditure atresearch phase, it permits the expenditure on creationof an internally generated intangible asset at thedevelopment phase for capitalization and that toosubject to many conditions. Further IFRS-3describes the accounting treatment for intangibleassets acquired as a part of business combination.The introduction of IFRS-3 resulted in an increase inthe number of intangible assets recognized at thetime of acquisition. Goodwill and in-process researchand development are recognized only during mergersand acquisitions. Goodwill is measured as a residualvalue. Acquired goodwill is not permitted foramortization at the initial stage. It is put toimpairment test. Subsequently, it is amortized usingstraight line method less at historical cost lessimpairment value or at fair value less impairment.However internally generated goodwill is treated asexpenses only. Over 90 countries have fully adoptedIFRS and 120 countries require IFRS for theirdomestic listed companies.

US GAAP:

USA still follows their Generally AcceptedAccounting Principles (GAPP), but has committed toconverge with IFRS by 2015. The US GAPP isprescribed by Federal Accounting Standards Board(FASB). The Statement of Financial Accounting

26

Standards Board (SFASB) no.142 prescribes theaccounting treatment of acquired intangible assets,goodwill and internally generated intangible assets.According to SFASB 142, an asset to be recognizedas intangible it shall be identifiable, separable, becapable of generating future economic benefits andbe reliably measured. As regard to internallygenerated intellectual assets that are not separable,having indeterminate life or inherent to a continuingbusiness and that are related to the company as awhole are treated as expenses only. The Statement ofFinancial Accounting Standards Board (SFASB)no.142 prescribes the treatment of intangible assetsacquired during merger and acquisitions. TheUSGAAP accords similar treatment to internallygenerated intangible assets like IFRS, with the onlyexception on direct response advertisement, that toowith many conditions. There is no much ofdifference between IFRS and USGAAP in thetreatment of internally generated assets arising out ofresearch and development. However, the expenditurerelated to software development for internalmanagement and the website development cost ispermitted for capitalization, subject to someconditions. Under USGAAP revaluation of acquiredgoodwill is not allowed subsequently, it is onlypermitted for valuation at amortized cost lessimpairment. Like IFRS the US GAAP treatsinternally generated goodwill as expenses only.

UK GAAP: Under UK GAAP, Financial ReportingStandard-10 (FRS-10), issued by the AccountingStandards Board in December1997, sets out theprinciples of accounting for goodwill and intangibleassets. FRS 10 applies to all financial statements thatare intended to give a true and fair view of areporting entity’s financial position and profit or lossfor a period. The conditions as to recognition andmeasurement are similar to IFRS for acquiredintangibles. But in the case of internally generatedintangibles, all cost excluding development cost, maybe capitalized only if they have a readilyascertainable market value. Acquired goodwill ispermitted for amortization for 20 years. The UK

GAAP caps on the life of intangibles to 20 years.Similar to IFRS, the FRS 10 recognizes internallygenerated intangibles related to research anddevelopment only at the development phase and notat the initial phase. It is silent on acquired in-processresearch and development.

Indian GAAP: Though the Institute of CharteredAccountants of India (ICAI) announced that IFRS ismandatory from April, 2012, it still follows it ownGAAP. Accounting Standard (AS) 26 is theaccounting standard that deals with accounting ofintangible assets by the Indian companies.Accounting Standard (AS) 28 deal with impairmentof assets including intangible assets. The AS 26 issimilar to IAS 38 in all respects except the following:Revaluation of acquired and internally generatedintangible assets is not permitted; goodwill arisingout of amalgamation is amortized for five years; theuseful life of intangible assets shall not exceed 10years. As 26 is silent on treatment of acquired in-process research and development. Further it treatscost at the planning state of website development asexpenses, but the cost of website application iscapitalized.

On the analysis of the above accounting standards, itis clear that word wide accounting standards treatintangibles in two ways. If a firm ‘acquires’ anintangible asset, it is recognized and shown in thebalance sheets as an ‘asset’, of course with stringentconditions on revaluation. On the other hand if acompany ‘creates’ intangible assets, the cost of itscreation is treated as an ‘expense’. This dichotomydefies the very logic and basis of treating theinternally generated intangible assets as expense.Consider the following hypothetical case: Firm Aacquires an in-process research & developmentproject at ‘market value’. Subsequently it ‘spends’considerable amount for further improvement.According to the accounting standards the ‘spending’is to be treated as expense. Another firm offers tobuy the improved in-process research anddevelopment, what would be the value for the newimproved research and development project? Is it the

27

value at which it was initially acquired or at a highervalue? If at a higher value, how the ‘spending’ isincorporated in impairment? From a differentperspective, if a R&D project fails, the company mayembark on a second project. The second projectsucceeds, primarily on the accumulated knowledgeof the failed R&D project. In such a situation, if thecost incurred on failed research and development isto be treated as expenses, how the successful R&Dproject would be valued? Only the cost associatedwith the development phase of the succeeded projectwould be treated as asset? Is the actual value ofassets of a company, vanishing from the financialstatements due to the inconsistencies in theaccounting standards?

Review of Past Studies:

Canibano et al (2000) have extensively examined thestudies related to accounting of intangibles and havefound that accounting (standards) have failed toprovide an accurate view of intangible value driversand therefore traditional financial statements haveexperienced a significant loss of relevance. As aconsequence there is a significant gap between theaccounting estimate of a firm’s value and its marketvalue. The study opined that the standard settingbodies are facing the need to develop new guidelinesfor recognition, valuation and reporting ofintangibles.

Gill (2002) has scanned the international practices setforth by IAS No. 38 and APB Opinion No. 17 as wellas the lately issued FASB Summary of Statement No.142 and AS 26 prescribed by the Institute ofChartered Accountants of India (ICAI). The studyconcludes by recommending that, the difficulties invaluing intangibles should not discourage thecompanies from the disclosure of correct, factual andimportant information about the intangibles.

Bhartesh and Bandyopadhyay (2005) have analyzedthe inconsistencies in the accounting standards byanalyzing the accounting standards prescribed byIAS 38, SFASB 142, and AAS 13. They state that theaccounting standards do not to identify, recognize,

value and record the real value of internallygenerated intangible assets of an enterprise. This willresult in not disclosing the real value of theenterprise, leading to difference between marketvalue of an enterprise and its value shown in thefinancial statements. The study concludes by thislack of disclosure that shareholders will be at a lossand the management may collude with the otherparty for their personal benefits while finalizing thedeal of amalgamations and acquisitions ofbusinesses.

Lev (2000) analyses in this article the gap in theGenerally Accepted Accounting Practices (GAAP).He proves that the accounting standards in USA donot account for intangible assets properly, especiallythe internally generated intangibles. He suggests thatpolicymakers should play an important role in thedevelopment of New Accounting, focusing on theaccounting for intellectual assets. He concludes thatdevelopment of standardized measurement andreporting modes for key elements of the newinformation structure will be an importantcontribution to improved accounting and reporting.

Lev et al (2005) have analyzed the evolution ofaccounting for intellectual capital. The study hasanalyzed the IASB and FASB standards onaccounting for intangible assets and observes thatthere is controversy about the recognition ofinternally generated intangibles. They further observethat the traditional cost based accounting systemneeds to be complemented with information on theintangible value drivers. They have proposedalternatives to overcome the problem of accountingfor intangibles. They suggested capitalizationapproach and fair market value approach foraccounting for intangibles.

Ghafele (2010) observes that the traditionalaccounting practice does not recognize intellectualassets that are created by the companies. He furtherstates that the excess that is paid for a company thanits book Value during mergers and acquisitions waslumped as goodwill. This paper traces the recentdevelopments in the accounting standards and

28

proposes for a ‘Statement of Intellectual Property’ tobe appended with the financial statement, until theaccounting profession reconciles with the reality toaccount for internally generated intangible assets.

Mehra (2012) has analyzed the accounting standardsdealing with intangibles. The study compared theIFRS, USGAAP, UK GAAP, Indian GAAP and theChinese GAAP for identifying the inconsistencies inrecognition and measurement of acquired andinternally generated intangibles. The study adoptedthe content analysis methodology to prove theindispensability of intangibles on the performance ofcompanies in India and UK to strengthen the growingdemand of ‘proper accounting for intangible assets’by the accounting profession.

The studies presented above have analyzed theaccounting standards dealing with the recognitionand measurement of intangibles. These studies haveidentified that there are either inconsistencies withinthe standards (Lev, 2005), (Lev, -----) or they do nothelp the stakeholders to have a true picture about thefirms (Gill, 2002), (Bhartesh and Bandyopadhyay,2005). They therefore suggest for alternatives likeappending the financial statement with ‘Reports ofIntellectual Assets’, (Ghafele, 2010), (Lev, 2005),(Bhartesh and Bandyopadhyay, 2005). So far, theacademic researchers have only identified theinconsistencies in the accounting standards andsuggested alternatives for reporting intangible assetsin financial statements. This suggests that theaccounting profession and the academicians are atopposite ends on the issue of recognition andmeasurement of internally generated intangibleassets. This study is an attempt to bridge the gap inthe GAAP, by taking into confidence, the accountingprofession.

Research Methodology:

The study presented a questionnaire to 50 CharteredAccountants in Pondicherry and Chennai, India, togauge their perception on recognition andmeasurement of internally generated intellectualassets, as a pilot study. 34 filled up questionnaires

were received. Of these 3 respondents did notprovide complete information. So the pilot study wasrestricted to 31 responses.

Findings:

Of the 31 responses, 14 have mentioned that the costof creating internal intellectual assets should not betreated as investments, inferring, that they shall betreated as expenses only. On the other hand, 17respondents have mentioned that cost of creatinginternal intellectual assets can be treated asinvestments and thus qualify as assets. Interestingly,even those 15 respondents who were not inclined toaccord the status of assets to internally generatedintangibles were tempted to record their opinion onamortization of the expenses related to theseinternally generated assets, which can be inferred thatthey also are also in favor capitalization of theseexpenses.

Table I: Perception on assumption of expenses onintangibles as investments.

Question Perception(inpercentage)Yes No

Whether expenses related to R&D,Advertising, Marketing, Salaries,Training & development, General &administrative ‘expenses’ can beassumed as ‘investments’ for thepurpose of capitalization in order totreat them as ‘assets’?

55 45

Subsequently when the same question was askedwith reference to capitalization, interestingly, eventhose 15 respondents who concur with the currentaccounting standards were tempted to record theiropinion on amortization of the expenses. Table IIpresents the perception of the respondents who haverecorded ‘Yes’ on amortization of the expensesleading to creation of internally generated assets.

29

Table II: Perception on amortization rates forcapitalization of expenses on intangibles by thosewho recorded “Yes” (No. of responses 17/31)

Investments Perception on amortization rates (inpercentage)10%

20%

30%

40%

50%

Specific rates

Research &Development Nil 47 35 6 6 6Advertisement Nil 41 41 6 6 6Marketing 6 23 18 12 35 6Salaries &Wages 6 23 18 29 18 6Staff Welfare& Training 18 18 35 23 Nil 6General &Administration 12 53 6 Nil 17 12

Table III presents the perception of the respondentswho have recorded ‘No’ on amortization of theexpenses leading to creation of internally generatedassets.

Table III: Perception on amortization rates forcapitalization of expenses on intangibles by thosewho recorded “No” (No. of responses 14/31)

Investments Perception on amortization rates (inpercentage)10% 20% 30% 40

%50%

Specificrates

Research &Development

7 72 7 Nil

7 7

Advertisement Nil 57 14 Nil

29 Nil

Marketing Nil 57 29 Nil

14 Nil

Salaries & Wages 7 50 29 Nil

7 7

Staff Welfare &Training

7 64 22 Nil

Nil

7

General &Administration

7 57 15 Nil

7 14

The study made a comparison of the amortizationrates used by researchers worldwide forcapitalization of expenses related to internallygenerated intangibles in order to find, whether theperceptions of the Chartered Accountants of Indiamatch with these studies.

From the table VI it may be observed that theassumed amortization rates used in the variousstudies on valuation of intangibles, range between 10-25 percent for Research & Development expenses;15-50 percent for Advertisement expenses; 20-33percent for Marketing expenses (in many studiesonly Advertisement expenses are considered);Salaries at 20 percent; 15-20 percent for Training &Development and 20-25 percent for General &Administrative expenses. It may be noticed that theassumed amortization rates are in tandem with theperception of the Chartered Accountants of India.

Conclusion:

Intellectual assets are the most valuable assets of theknowledge intensive industries. The risingprominence of these assets in the asset portfolio ofknowledge intensive industries, demand their duerecognition in the financial statements of firms.Further, the growing difference between the marketto book value of firms, indicate some misalignmentin the pricing of these assets. However, worldwidethe accounting standards are inconsistent in therecognition of intangible assets, especially when theyare internally created. Therefore there is a need tosensitize the accounting profession on the need andrelevance of intellectual assets in technologymanagement. Thus far the studies on valuation ofintangibles have ‘assumed’ amortization rates toaccord assets status to internally created intangiblesand convince the accounting profession on the needfor recognition and valuation of these assets. Thepresent study, was undertaken to reconcile with theaccounting profession on recognition and valuationof internally created intellectual assets. The results ofthe survey undertaken suggest that the accountingprofession is slowly reconciling with the growingimportance of intellectual assets. Above all, since theamortization rates are suggested by the accountingprofession itself, it would lend more credence tovaluation efforts.

30

Table IV: A Literature Survey of the AssumedAmortization Rates used by the studies onvaluation of Intangibles

Sl.No

Studies

Assumed Amortization Rates (in percentage)R&DExpenses

AdvertisementExpenses

MarketingExpenses

Salaries

Training&DevelopmentExpenses

GeneralAdministrativeExpenses

1 Kanwar(2014)

15;30* 15 Nil Nil Nil Nil

2 Jaana(2014) 15 Nil 20**

20*

* Nil Nil3 Lidia,

Arturo& Jose(2014) Nil Nil Nil Nil

15;30* Nil

4 Hulten(2010) 25 33** 33** 25

5 Kavida&Sivakoumar(2009) 20 50 25 Nil Nil Nil

6 Srinivasan&Lilian(2009)

15;20*

40;45* Nil Nil Nil Nil

7 Hulten&Hao(2008) 10 20** 20**

20*

* 20** 20**

8 Czarnitzki, Hall&Oriani(2006) 15 Nil Nil Nil Nil Nil

9 Corrado,Hulten&Sichel(2005) 20 20 20 20 20 20

10

Hall&Oriani(2006) 15 Nil Nil Nil Nil Nil

11

Chan etal (2001) 20 Nil Nil Nil Nil Nil

12

Aboody& Lev(2001) 20 50 Nil Nil Nil Nil

13

Blundellet al(1999) 15 Nil Nil Nil Nil Nil

14

Hall&Vopel(1997) 15 Nil Nil Nil Nil Nil

15

Hall(1993)

15 ;67* Nil Nil Nil Nil Nil

16

Hall(1992)

15;20* Nil Nil Nil Nil Nil

17

Hall(1990) 15 Nil Nil Nil Nil Nil

18

Cockburn&Grilliches(1990) 15 Nil Nil Nil Nil Nil

19

Griliches, Hall 15 Nil Nil Nil Nil Nil

&Pakes(1988)

20

Jaffe(1986) 15 Nil Nil Nil Nil Nil

* Rates for robustness check

** Rates applied for combination of the Intangibles

References:

1. Aboody, D. and Lev, B. (2001). R&Dproductivity in the chemical industry”, WorkingPaper, New York University, Stern School ofBusiness. (Retrieved fromhttp://pages.stern.nyu.edu/~blev/).

2. Bhartesh KR, Bandyopadhyay (2005).Intellectual capital: concept and its measurement.Finance India. XIX (4):1365-74.

3. Blundell R, Griffith R, Van Reenen J. (1999).Market share, market value and innovation in apanel of British manufacturing firms. Review ofEconomic Studies 66, 529-554.

4. Cañibano, L., Covarsi, GM. & Sanchez, P.(2000). The Value Relevance and ManagerialImplications of Intangibles: A Literature Review.Journal of Accounting Literature, 19,102-130.

5. Chan, L.K.C, Lakonishok, J. &Sougiannis, T.(1998). The Stock Market Valuation of Researchand Development Expenditures. Working Paper,University of Illinois, Urbana, Champaign.

6. Cockburn, I. &Griliches, Z. (1988), Industryeffects and appropriability measures in the stockmarket’s valuaiton of R&D and patents.American Economic Review, 78, 419-423.

7. Corrado, Carol, Charles Hulten, and DanielSichel (2005). “Measuring Capital andTechnology: An Expanded Framework.” InMeasuring Capital in the New Economy, C.Corrado, J. Haltiwanger, and D. Sichel, eds.,Studies in Income and Wealth, Vol. 65. Chicago:The University of Chicago Press, 11-41.

8. Czarnitzki D., Hall B. H., Oriani R. (2006). TheMarket Valuation of Knowledge Assets in USand European Firms. In Bosworth D., Webster E.

31

(eds.), The Management of Intellectual Property,Edward Elgar, Cheltenham.

9. Gill, Suveera (2002). Accounting for Intangibles:a tangible new responsibility. The ManagementAccountant, (Retrieved fromwww.myicwai.com).

10. Griliches,Z. Pakes, A. & Hall, B.H. (1988). TheValue of Patesnts as Indicators of InventiveActivity. NBER Working Papers 2083,(Retrieved from www.nber.org/papers/w2083).

11. Hall, B. H. (1993). The Stock Market's Valuationof R&D Investment during the 1980s. AmericanEconomic Review, 83, 259-264.

12. Hall, B. H.&Jafee, A.&Trajtenberg, M (2000).Market value and patent citations: A first look.National Bureau of Economic Research, WorkingPaper No. W7741.

13. Hall, B. H., and R. Oriani (2006), “Does themarket value R&D investment by Europeanfirms? Evidence from a panel of manufacturingfirms in France, Germany.” InternationalJournal of Industrial Organization 24: 971-993.

14. Hall, B.H. (1990). The Manufacturing SectorMaster File: 1959-1987. NBER Working Papers3366, (Retrieved fromwww.nber.org/papers/w3366).

15. Hall, B.H. (1992). Investment and Research andDevelopment at the Firm Level: Does the Sourceof Financing Matter?NBER Working Papers4096, (Retrieved fromwww.nber.org/papers/w4096).

16. Hall, B.H., &Vopel,K. (1997). Market Value,Market Share and Innovation. (Retrieved fromhttp://eml.berkeley.edu/~bhhall/papers/HallVopel97.pdf).

17. Hulten, Charles R., &XiaohuiHao (2008). Whatis a Company Really Worth? Intangible Capitaland the “Market to Book value” Puzzle. NationalBureau of Economic Research. Working Paper,14548.

18. Hulten, Charles R., 2010. Decoding Microsoft:Intangible Capital as a Source of CompanyGrowth, NBER Working Paper 15799, NationalBureau of Economic Research. (Retrieved fromwww.nber.org/papers/w15799)

19. Kanwar, Sunil (2014). The Market Valuation ofInnovation. Working Paper No.237, Centre forDevelopment Economics, Department ofEconomics, Delhi School of Economics.(Retrieved fromwww.cdedse.org/pdf/work237.pdf)

20. Kavida, V.&Sivakoumar, N. (2009).The Valueof Intellectual Assets in Indian PharmaceuticalIndustry: An Empirical Study of the componentsof Market value, Working paper Series.(Retrieved fromhttp://ssrn.com/abstract=1357340.)

21. Lev, B. (2000). New Accounting for the NewEconomy (Retrieved fromwww.stern.ny.edu/~blev)

22. Lev, B., Canibano, L. and Marr, B. (2005). “Anaccounting perspective on intellectual capital” InMarr, B. (Ed.), Perspectives on IntellectualCapital: Multidisciplinary Insights intoManagement, Measurement, and Reporting,Elsevier, Boston, MA.

23. Mehra, V. (2010). Accounting and reporting ofintangible assets in India. (Retrieved fromhttp://hdl.handle.net/10603/5128)

24. Rahko, J. (2014) Market Value of Knowledgeand Organizational Capital: Finnish Evidence.Economics of Innovation and New Technology,23(4), 353-377.

25. Srinivasan, R., Lilien, G.L., (2009). R&D,advertising and firm performance in recessions.(Retrieved fromhttp://isbm.smeal.psu.edu/researcher/isbmresearch-database).

26. Jaffe, A.B. (1986). Technological Opportunityand Spillovers of R&D: Evidence from Firms’Patents, Profits and Market Value. NBER

32

Working Papers 1815, (Retrieved fromwww.nber.org/papers/w1815).

27. Lidia, G. Z, Arturo,R.C& Jose, G. M, (2014).Impact of investments in human capital onbusiness value. (Retrieved fromwww.researchgate.net/publication/234249642).

REASONS FOR ADOPTION OF MOBILE BANKING SERVICES IN INDIA

- AN EXPLORATIVE VIEW

T. Velmurugan*, Dr. M. Ramesh**

ABSTRACT

Mobile banking is an innovation that hasprogressively rendered itself in pervasive wayscutting across several financial institutions and othersectors of the economy. During the 21st centurymobile banking advanced from providing mere textmessaging services to that of pseudo internet bankingwhere customers could not only view their balancesand set up multiple types of alerts but also transactactivities such as fund transfers, redeem loyaltycoupons, deposit cheques via the mobile phone andinstruct payroll based transactions. A positive aspect

of mobile phones is that mobile networks areavailable in remote areas at a low cost. The pooroften have greater familiarity and trust in mobilephone companies than with normal financialinstitutions. This paper has dealt with reasons foradoption of mobile banking services with variouspoints of views.

Key words: Mobile Banking, Security, Simplicityand Speed.

INTRODUCTION

33

Mobile banking (m-banking) refers toprovision and a ailment of banking and financialservices through the help of mobiletelecommunication devices. The scope of offeredservices may include facilities to conduct bank andstock market transactions, administer accounts and toaccess customized information.

In the present day banking, total automation ofbanking operation and is an imperative for allbanks to attract more customers, provideefficient service and survive the competition,apart from achieving the profit , which is the

main goals of the business . Mobile banking isone of the alternatives channels available tocustomer for quick and efficient service atanytime and anywhere. Banks can also useunable banking for increasing the efficiency oftheir staff create a platform for better customerservice and improve relationship with theircustomers.

Mobile banking is an application of mobilecomputing which provides customers with thesupport needed to be able to bank anywhere,anytime using a mobile handheld device and amobile service such as Short Message Service(SMS). Mobile banking facility removes thespace and time limitations from bankingactivities such as checking account balances ortransferring money from one account to anotherand time saving when we go to bank and doingsome banking activities. Internet Banking helpsgive the customer's anytime access to theirbanks. Customer's could check out their accountdetails, get their bank statements, performtransactions like transferring money to otheraccounts and pay their bills sitting in the comfortof their homes and offices. But the biggest

limitation of Internet banking is the requirementof a Personal Computer with an Internetconnection, but definitely a big barrier if weconsider most of the developing countries ofAsia like India. Mobile banking addresses thisfundamental limitation of Internet Banking, as itreduces the customer requirement to just amobile phone. Mobile usage has seen anexplosive growth in most of the Asianeconomies like India. The main purpose ofMobile Banking scores over Internet Banking isthat it enables ‘Anywhere Anytime Banking is

Available'. Customers don't need access to acomputer terminal to access their bank accounts.

Mobile Banking services:

Account Details - define the information relatedto accounts and following are the main servicesof accounts.

a) Mini-statements and checking of accounthistory

b) Alerts on account activity

c) Monitoring of term deposits

d) Access to loan statements/card statements.

e) Mutual funds / equity statements

f) Insurance policy management

g) Pension plan management

Payments and Transfers - define the informationabout the payments and transfers activities likebill payment process.

a) Domestic and international fund transfers

b) Micro-payment handling

c) Mobile recharging

d) Commercial payment processing

Professor, Department of Management Studies, Annamalai University,** Research Scholar, Department of Management Studies, Annamalai University,

34

e) Bill payment processing

Investments Details: define the informationrelated to investments services.

a) Portfolio management services

b) Real-time stock quotes

c) Personalized alerts and notifications onsecurity prices Support

d) Status of requests for credit, includingmortgage approval, and insurance coverage

e) Check (cheque) book and card requests

f) Exchange of data messages and email,including complaint submission and tracking

Review of Literature

Recent literature has a narrow focus and ignoresinternet banking almost entirely; it equatesinternet money with the substitution of currencywith internet gadget. For instance Freedman(2000) suggests that internet banking andinternet money consists of three devices; accessdevices, stored value cards, and network money.Internet banking is simply the access to newdevices and is therefore ignored. Internet moneyis the sum of stored value (smart cards) andnetwork money (value stored on computer harddrives).

Bhattacharya and Thakor (1993) contemporarybanking theory suggests that banks, togetherwith other financial intermediaries are essentialin the allocation of capital in the economy. Thistheory is centered on information asymmetry, anassumption that “different economic agentspossess different pieces of information onrelevant economic variables, in that agents willuse this information for their own profit”(Freixas and Rochet 1988). Asymmetricinformation leads to adverse selection and moralhazard problems. Asymmetric information

problem that occurs before the transactionoccurs and is related to the lack of informationabout the lenders characteristics, is known asadverse selection. Moral hazard takes place afterthe transaction occurs and is related withincentives by the lenders to behaveopportunistically.

Rogers (1995) identified five critical attributesthat greatly influence the rate of adoption. Theseinclude relative advantage, compatibility,complexity, triability and observability.According to Rogers, the rate of adoption of newinnovations will depend on how an organizationperceives its relative advantage, compatibility,triability, observability and complexity.

Santomero and Seater (1996), Prinz (1999), Shy andTarkka (2002) present models that identifyconditions under which alternative paymentssubstitute for currency. Most of these models indicatethat there is at least a possibility for internetsubstitutes for currency to emerge and flourish on awide scale depending on the characteristics of thevarious technology and those of the potential users.

Friedman (1999), intimated that internet bankingpresents the possibility that an entire alternativepayment system not under the control of theCentral Bank may arise. Today computers makeit at least possible to bypass the payment systemaltogether, instead using direct bilateral clearingand settlement (Friedman, 1999).

Reason for adoption of Mobile Banking

34

e) Bill payment processing

Investments Details: define the informationrelated to investments services.

a) Portfolio management services

b) Real-time stock quotes

c) Personalized alerts and notifications onsecurity prices Support

d) Status of requests for credit, includingmortgage approval, and insurance coverage

e) Check (cheque) book and card requests

f) Exchange of data messages and email,including complaint submission and tracking

Review of Literature

Recent literature has a narrow focus and ignoresinternet banking almost entirely; it equatesinternet money with the substitution of currencywith internet gadget. For instance Freedman(2000) suggests that internet banking andinternet money consists of three devices; accessdevices, stored value cards, and network money.Internet banking is simply the access to newdevices and is therefore ignored. Internet moneyis the sum of stored value (smart cards) andnetwork money (value stored on computer harddrives).

Bhattacharya and Thakor (1993) contemporarybanking theory suggests that banks, togetherwith other financial intermediaries are essentialin the allocation of capital in the economy. Thistheory is centered on information asymmetry, anassumption that “different economic agentspossess different pieces of information onrelevant economic variables, in that agents willuse this information for their own profit”(Freixas and Rochet 1988). Asymmetricinformation leads to adverse selection and moralhazard problems. Asymmetric information

problem that occurs before the transactionoccurs and is related to the lack of informationabout the lenders characteristics, is known asadverse selection. Moral hazard takes place afterthe transaction occurs and is related withincentives by the lenders to behaveopportunistically.

Rogers (1995) identified five critical attributesthat greatly influence the rate of adoption. Theseinclude relative advantage, compatibility,complexity, triability and observability.According to Rogers, the rate of adoption of newinnovations will depend on how an organizationperceives its relative advantage, compatibility,triability, observability and complexity.

Santomero and Seater (1996), Prinz (1999), Shy andTarkka (2002) present models that identifyconditions under which alternative paymentssubstitute for currency. Most of these models indicatethat there is at least a possibility for internetsubstitutes for currency to emerge and flourish on awide scale depending on the characteristics of thevarious technology and those of the potential users.

Friedman (1999), intimated that internet bankingpresents the possibility that an entire alternativepayment system not under the control of theCentral Bank may arise. Today computers makeit at least possible to bypass the payment systemaltogether, instead using direct bilateral clearingand settlement (Friedman, 1999).

Reason for adoption of Mobile Banking

34

e) Bill payment processing

Investments Details: define the informationrelated to investments services.

a) Portfolio management services

b) Real-time stock quotes

c) Personalized alerts and notifications onsecurity prices Support

d) Status of requests for credit, includingmortgage approval, and insurance coverage

e) Check (cheque) book and card requests

f) Exchange of data messages and email,including complaint submission and tracking

Review of Literature

Recent literature has a narrow focus and ignoresinternet banking almost entirely; it equatesinternet money with the substitution of currencywith internet gadget. For instance Freedman(2000) suggests that internet banking andinternet money consists of three devices; accessdevices, stored value cards, and network money.Internet banking is simply the access to newdevices and is therefore ignored. Internet moneyis the sum of stored value (smart cards) andnetwork money (value stored on computer harddrives).

Bhattacharya and Thakor (1993) contemporarybanking theory suggests that banks, togetherwith other financial intermediaries are essentialin the allocation of capital in the economy. Thistheory is centered on information asymmetry, anassumption that “different economic agentspossess different pieces of information onrelevant economic variables, in that agents willuse this information for their own profit”(Freixas and Rochet 1988). Asymmetricinformation leads to adverse selection and moralhazard problems. Asymmetric information

problem that occurs before the transactionoccurs and is related to the lack of informationabout the lenders characteristics, is known asadverse selection. Moral hazard takes place afterthe transaction occurs and is related withincentives by the lenders to behaveopportunistically.

Rogers (1995) identified five critical attributesthat greatly influence the rate of adoption. Theseinclude relative advantage, compatibility,complexity, triability and observability.According to Rogers, the rate of adoption of newinnovations will depend on how an organizationperceives its relative advantage, compatibility,triability, observability and complexity.

Santomero and Seater (1996), Prinz (1999), Shy andTarkka (2002) present models that identifyconditions under which alternative paymentssubstitute for currency. Most of these models indicatethat there is at least a possibility for internetsubstitutes for currency to emerge and flourish on awide scale depending on the characteristics of thevarious technology and those of the potential users.

Friedman (1999), intimated that internet bankingpresents the possibility that an entire alternativepayment system not under the control of theCentral Bank may arise. Today computers makeit at least possible to bypass the payment systemaltogether, instead using direct bilateral clearingand settlement (Friedman, 1999).

Reason for adoption of Mobile Banking

35

A mobile payment service in order to becomeacceptable in the market as a mode of paymentthe following conditions have to be met:

a) Simplicity and Usability: The m-paymentapplication must be user friendly with little or nolearning curve to the customer. The customermust also be able to personalize the applicationto suit his or her convenience.

b) Universality: M-payments service mustprovide for transactions between one customerto another customer (C2C), or from a business toa customer (B2C) or between businesses (B2B).The coverage should include domestic, regionaland global environments. Payments must bepossible in terms of both low value micro-payments and high value macro-payments.

c) Interoperability: Development should bebased on standards and open technologies thatallow one implemented system to interact withother systems.

d) Security, Privacy and Trust: A customermust be able to trust a mobile paymentapplication provider that his or her credit ordebit card information may not be misused.Secondly, when these transactions becomerecorded customer privacy should not be lost inthe sense that the credit histories and spendingpatterns of the customer should not be openlyavailable for public scrutiny. Mobile paymentshave to be as anonymous as cash transactions.Third, the system should be foolproof, resistantto attacks from hackers and terrorists. This maybe provided using public key infrastructuresecurity, biometrics and passwords integratedinto the mobile payment solution architectures.

e) Cost: The m-payments should not be costlierthan existing payment mechanisms to the extentpossible. A m-payment solution should compete

with other modes of payment in terms of costand convenience.

f) Speed: The speed at which m-payments areexecuted must be acceptable to customers andmerchants.

g) Cross border payments: To become widelyaccepted the m-payment application must beavailable globally, word-wide.

Advantages of Mobile Banking

A very effective way of improving customerservice could be to inform customers better.Credit card fraud is one such area. A bank could,through the use of mobile technology, informowners each time purchases above a certainvalue have been made on their card. This waythe owner is always informed when their card isused, and how much money was taken for eachtransaction. Similarly, the bank could remindcustomers of outstanding loan repayment dates,dates for the payment of monthly installments orsimply tell them that a bill has been presentedand is up for payment. The customers can thencheck their balance on the phone and authorizethe required amounts for payment. Thecustomers can also request for additionalinformation. They can automatically viewdeposits and withdrawals as they occur and alsopre- schedule payments to be made or cheques tobe issued. Similarly, one could also request forservices like stop cheque or issue of a chequebook over one’s mobile phone.

There are number of reasons that shouldpersuade banks in favor of mobile phones. Theyare set to become a crucial part of the totalbanking services experience for the customers.Also, they have the potential to bring down costsfor the bank itself. Through mobile messagingand other such interfaces, banks provide value

36

added services to the customer at marginal costs.Such messages also bear the virtue of beingtargeted and personal making the servicesoffered more effective. They will also carrybetter results on account of better customerprofiling.

Conclusion

The world has also become increasingly addicted todoing business in the cyber space, across the internetand World Wide Web. Internet commerce in its ownrespect has expanded in various innovative forms ofmoney, and based on digital data issued by privatemarket actors, has in one way or another substitutedfor state sanctioned bank notes and checkingaccounts as customary means of payments.Technology has greatly advanced playing a majorrole in improving the standards of service delivery inthe financial institution sector. Days are long gonewhen customers would queue in the banking hallswaiting to pay their utility bills, school fees or anyother financial transactions. They can now do this attheir convenience by using their ATM cards or overthe internet from the comfort of their homes.Additionally due to the tremendous growth of themobile phone industry most financial institutionshave ventured into the untapped opportunity andhave partnered with mobile phone network providersto offer banking services to their clients.

References

Bryman and Bell (2003), is the resource-based‘view’ a useful perspective for strategicmanagement research?,The Academy ofManagement Review, 26(1), 22-40

Diamond, D. and P. Dybvig (1983) “ Bank runs,deposit insurance and liquidity,’’ Journal ofPolitical Economics 91,pp.401-419

European Central Bank (1999) “PaymentsSystems in the European Union’’: Addendumincorporating 1997 figures (Blue Book),January.

Freedman, C. (2000), Monetary PolicyImplementation: Past, Present and Future-‘’WillElectronic Money Lead to the Eventual Demiseof Central Banking?’’ International Finance,Vol.3, No.2, pp. 211-227

Friedman, B, (1999), the Future of MonetaryPolicy: The Central Bank as an Army with Onlya Signal Corps?InternationalFinance, Vol.2,No.3, pp.321-338.

Goodhart, E. (2000). Can Central BankingSurvive the IT Revolution?InternationalFinance, Vol. 3, No.2.pp.189-209.

Juniper Research (2009).Mobile BankingStrategies: Applications, Opportunities andMarkets 2010-2015.

Kariuki, N. (2005), Six Puzzles in ElectronicMoney and Banking IMF Working Paper, IMFInstitute. Vol. 19.February.

Mcmillan&Schumaker (2001). Non-enforceableimplementation of enterprise mobilization: andexploratory study of the critical success factors,Industrial Management & Data Systems, 105(6), 786-814.

Prinz, A. (1999), Money in, the Real and theVirtual World; E-Money, C-Money, and theDemand for CB-Money, Netnomics, Vol.1,pp.11-35.

Santomero, A.M, and Seater J.J,(1986).Alternative Monies and the demand forMedia of Exchange, Journal of Money, Creditand Banking, Vol.28, pp. 942-960.

Steven A. (2002), Information Systems: TheInformation of E-Business, New Jersey: NatalieAnderson, pp.11-36

Tarkka, J.(2002), The Market for ElectronicCash Cards, Journal of Money, Credit andBanking, Vol.34, pp.299-314.

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WilcokHpward. (2010). Mobile bankingstrategies: Application, opportunities andmarkets 2010-2015. Hampshire: JuniperResearch 1-4

A CONCEPT REVIEW ON STRESS

R.Priyadharsini.,*Dr.J.Shanthilakshmi*

ABSTRACT

Stress is today a deeply held modern metaphor, anunquestioned explanation of the darker sides ofhuman experience. Stress places a cost of burden onorganizations in all the locations and sectors, andthere is also a human price among those who work instressful situations or suffer from stress relatedinjuries and illness. It produces a state of knowledgebuilt around a research agenda that conveyed theissues of the day. The concept of stress has acomplex history. In the fast moving world people arestruggle with the stress because they are not having acapacity to cope with stress. In country like Indiapoverty is the main problem. It can exists asindigenous mass poverty in poor countries, pocketsof poverty amidst wealth in rich countries, suddenpoverty resulting from disasters and conflicts,

temporary poverty from loss of employment, or themarginal poverty of those performing humble butessential work for inadequate wages. Behind thesefaces of poverty lies the unpleasant reality of do ordie lives without choices and often, governments thatlack the capacity to cope. There are also serioushealth and social problems in countries witheconomies in transition and countries experiencingfundamental political, economic and socialtransformations (Cornia, 1994). Fortunately, moreand more health professionals and policy makers arebeginning to understand that biomedicine is not aloneto find out the solution to these problems. We alsotake into the consideration of the socio – economicand psychosocial conditions of life, the way peopleare cope with these conditions and the ensuing stressand health effects.

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INTRODUCTION

“Stress” is the organism’s response to stressfulconditions or stressors, consisting of a pattern of

physiological and psychological reactions, bothimmediate and delayed (Judith G, 1976)

Twenty four centuries ago, Hippocrates, the father ofmedicine, told his disciples in Greece that disease isnot only suffering, but also toil, that is, the fight ofthe body to restore itself toward normal (Selye, 1956,p.11). In order to explain its origins and meanings,authors have taken a number of different strategies.

“People are disturbed not by a thing, but by theirperception of a thing.” - Epictetus

But tracing the scientific origins of term “Stress” toits first appearance in Psychological Abstracts in1944 (Jones and Bright, 2001). Before 1940’s theterm “Stress” is very difficult to accept. Someauthors, considering the evolution of the term“Stress”, was described in the seventeenth century,it’s meaning is evolved through the eighteenth andnineteenth centuries to reflect some sort of force,pressure, or strain. The historical origins of the word“Stress” will allow us to consider whether “Stress isa disease of our times”. In the Modern society theindividual’s ability to cope with the pace of life withstress became an almost ritualistic belief in thenineteenth century and in the twentieth century thepace of life was viewed as the root cause of muchillness and disease (Abbott, 2001).

Stress is the feeling of pressure, strain or tension thatcomes from dealing with challenging situations.According to the founding fathers of WHO (1946),health could be characterized as ‘not only theabsence of disease or infirmity but also a state ofcomplete physical, mental and social well – being’.Stress means the experience of a perceived threat (real or imagined) to one’s mental, physical, orspiritual well – being, resulting from a series ofphysiological responses and adaptations.

2. PERCEPTION ON STRESS IN EARLYCENTURIES

Hinkle (1973) was the one who had brought out the

meaning of stress in 17th century which had come tomean “hardship” .By the mid of seventeenth centuryRobert Hooke analysed the stress in the field ofphysics as an engineering analogy of stress. Thebasic premise of Hooke’s law is that the amount ofdistortion is often called the strain on the object andthe stress is the outside force being applied. TheHooke’s Law is frequently paraphrased as “the strainis proportional to the stress” (Michael 2001).Hooke’s this work was concerned with how man –made structures (e.g. bridges) could be made towithstand heavy loads without collapsing (Engel,1985; Hinkle, 1973; Lazarus, 1999). Hookerepresents the idea that the stress is the impact on thebody of the wear and tear of life in his work(Doublet,2000; Selye, 1956).

However, Cox (1985) he pointed out an engineeringanalogy of stress is too simplistic. He said that wehave to accept some interfering psychologicalprocess which causes in – between the outcomes ofstress has to be perceived and recognized by man.Likewise “A machine still does not have to realizethe load or stress placed upon it.” In the 17th centuryand the writings of Descartes also left an indeliblemark, if not on the concept of “stress” itself, then atleast on the emerging field of psychology, thediscipline of many contemporary stress researchers.Descartes work confronted an age – old problem, therelationship between the mind and the body, bysuggesting, “that the non-physical mind couldinfluence the physical body” (Hergenhahn, 1992).

In Eighteenth century the problem of stress is re –relating, mind to body immediately arises. In order toavoid the mind and body problem entirely one mustrefuse any distinction between mind and body(JulienOffray de la Mettrie 1709-1751). Scientistsand social observer of 18th century also continued

Research Scholar, SardarVallabhbhai Patel International School of Textiles and Management, Coimbatore.** Associate Professor (HR) SardarVallabhbhai Patel International School of Textiles and Management, Coimbatore.

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their research on stress by rushing pace of life andtheir impact of health and well – being, to the extentthat by the time the 19th century arrived, there wasclearly a fear that “The human nervous system wasill – adapted to cope with the increased thecomplication of modern life” (Wozniak, 1992).Wozniak further exemplifies the work of GeorgeMiller Beard (1839 – 1883), a noted AmericanPhysician specializing in diseases of the nervoussystem. He is the first coined the term Neurastheniato described persons with unexplained chronicfatigue, lassitude, and weakness. Oftenaccompanying these symptoms were complaints suchas nervousness, irritability, anxiety, depression,headaches, insomnia, poor appetite, menstrual orsexual disorders and more.

Charles Darwin and Florence Nightingale may havesuffered with this syndrome. In his work, mid on 18th

century he suggest that the pressing demands ofnineteenth century life may lead to an overload ofnervous system this causes stress to human beings.Neurasthenia can be considered as “one of thegrowing pains of a new and better society”(Rosenberg, 1962). It was also during eighteenthcentury Claude Bernard (1859), a noted Frenchphysician, taught that one of the most characteristicfeatures of all living beings in their ability tomaintain the constancy of their internal milieu,despite changes in the surroundings, this led to theconcept of “Homeostasis” or stress (Selye, 1956).According to Bernard point of view about stress, theinternal environment was simply the blood. But thefixity of the internal environment supposes aperfection of the organism such that the externalenvironment varied at each moment compensatedand Constance. He also indicated that the stability ofthe internal environment is the condition for the freeand independent life (Charles, 1998).

Oskar Vogt (1870 – 1955) and his wife Cecile (1875– 1962) were neurologists and neuroanatomists witha strong interest in the cytoarchitectonics andmteloarchitectonics of the brain and in the functionalanatomy of the basal ganglia. He had an intense

interest and skill at hypnosis as a therapeuticprocedure, which was practised and adapted by manymedical luminaries of the time, including Charcot,Forel, and Freud. Oskar developed a technique ofhypnosis to retrieve suppressed traumatic memoriesin the treatment of neurosis. Oskar Vogt taughtmethods of self - hypnosis as early as 1900; one ofhis followers, Johannes Schultz, developed a methodcalled autogenic training, beginning in the 1920s.This method was somewhat ritualized from of self –hypnosis, has many contemporary advocates (ErnestR. Hilgard, 2013).

Autogenic training uses bodily sensations of warmthand heaviness to relax the body and then the mind bythe use of imaginary. It has been found to reduceanxiety, depression, and tiredness, and increaseresistance to stress. Relaxation consequently bringsbalance, emotional stability, ability to coordinate andability to fight against physical problems. Vogtfurther observed that these short term mentalexercises, when practised a few times during the day,reduced stressor effects such as fatigue and tension.On the basis of these observations, Vogt consideredsuch self – directed mental exercises, which he called‘prophylactic rest – auto hypnosis’ (Kanji, 1997).

In nineteenth century, the ground work for themodern meaning of “stress” was laid by Dr. WalterB. Cannon, a physiologist at Harvard almost 100years ago. Canon followed up Bernard’s work“Homeostasis” and he is the first person to give usthe concept of “Homeostasis”- the staying power ofthe body. His work about this psychosomaticapproach crossed three decades. Canon was theresearcher who first identified this stress reaction asthe “fight” or “flight” response (Jerrold, 2011). It is aseries of involuntary physiological and biochemicalchanges that prepare you to deal with threats ofdanger. This fight or flight notion would ultimatelycome to play an important role in stress discussion(Doublet, 2000). This response was critical to thesurvival of primitive humankind when requiringquick bursts of energy to fight or flee predators suchas the sabre – toothed tiger.

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Stress can be characterized as an experience arisingbetween a person and the environment, but there is amismatch between an individual’s resources and theperceived challenge or need. Some of his earlyresearch on stress established the flight – or fightresponse. His work showed that when an organismexperiences a shock or perceives a threat, it quicklyreleases hormones that help to survive. In thisresponse to a threat or “Stress”, the fight or flightresponse made it possible for a person to “moreeffectively meet the challenges, through mobilizingmental and physical abilities” (Aldwin, 2000, p, 27).

Canon’s work clearly reflects the social reformistideals of the psychosomatic movement. Doublet(2000) argues that the work of Canon as, without thehomeostasis, the concept of stress would not beessential. Cannon documented the physiologicaleffects of what he termed the “emergency reaction,”which he defined as an acute physiologic reactionthat prepares the organism for fighting or feeling.Cannon also hypothesized that stress not onlyinduces these physiologic changes, but also believedthat stress precipitates sudden death on his studies onvoodoo death (Gregg D, 2001).

Interest in stress can be seen in more prominentsocial circumstance. Dr. Hans Selye contribution tothe field of stress in early mid of nineteenth centuryand twentieth century was created a glory ofacademic excitement and argument. To this, Selyeadds that discovery of stress “it is not to seesomething first, but to establish solid connectionsbetween the previously known and the hithertounknown that constitutes the essence of scientificdiscovery” (1956, p.6). Selye defined “stress as thenon specific response of the body to any demand”(1956, p.55). That means good things (e.g., a jobpromotion) to which we must adapt (termed eustress)and bad things (e.g., the death of a loved one) towhich we must adapt (termed distress); both areexperienced the same physiologically (Jerrold.S,2011). As a medical student at the University ofPrague in1925, became interested in the developmentof stress he described as “the syndrome of just being

sick”. Later Dr. Selye, in spite of discouragement ofhis colleagues and teachers, continued studying ofthe syndrome of “Just being sick”. At first on July 4,1936 Selye published his first article in the Britishjournal, NATURE, under the title, “A SyndromeProduced by Diverse Nocuous Agents” (1956).

As a result of over forty years of scientific work byHans Selye is the introduction of a denotedexplanation of how the body responds to stressors.This explanation is for both general and localizedadaptation. Dr. Selye calls the physiological responseto stressors the “General Adaptation Syndrome”usually abbreviated as G.A.S. In addition he alsodescribed the local response to stressors under theconcept of “Local Adaptation Syndrome”. GeneralAdaptation Syndrome involves in three stages whichhe mentioned, namely: 1. the alarm reaction, 2. thestage of resistance, 3. the stage of exhaustion (1956,p.38).

By the end of nineteenth century, stress turns as anauthorized subject of academic study. By this timethe stress concept has also become established withinthe discipline of psychology. In this period Haward(1960, p.185), says that stress as a term, then, if notas a concept, is a comparative new comer topsychology, yet as an experimental variable it hasassumed far – reaching importance in boththeoretical and applied fields. Giving rise to thisearly speculation as to whether stress was an evenmore fundamental concern, and is still being playedout. Developments throughout this period meant thatattempts to provide any logical framework isrequired that different perspectives are identified,tried out, reviewed, incorporated, or even discarded.In the 1960s and 1970s psychosomatic theories tookas a goal, to explore those psychosocial variableswhich increase the exposure to illness as well asthose which support adaptive coping with it (Lipowski, 1977a). This provided the opportunity fora period of quiet reconstruction in stress research.

Looking back over the first fifty years of research instress there is unanimity among reviewers that thesubstance of the work developed by Cannon, Selye,

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Harold Wolff “appears to be correct, and it isgenerally accepted to be so” (Hinkle, 1987). The firstpsychological approaches of understanding the stressconcept were engendered independently by the workof Cannon and Selye. It is a fact that thepsychological approaches were afterwards used as apath for understanding the psychological reactions.They also had given popularity to the field ofresearch in stress in twentieth century.

In 1998, Dr. James L. Wilson coined the term‘adrenal fatigue’ to identify a specific kind of chronictiredness that many people experience. It can affectanyone who undergoes frequent, persistent or severemental, emotional or physical stress. Adrenalfunction can also be an important factor in healthissues from allergies to obesity. In his book AdrenalFatigue: The 21st Century Stress Syndrome, heprovides an additional support and access toresources to help to handle the stress in day-to-daylife.

Dr. Wilson supposed to state in his book AdrenalFatigue: The 21st Century Stress Syndrome, in factthe adrenals are known as “the glands of stress”because it helps our body to cope with stresses andsurvive (Wilson, 2001, p, 3). Adrenal fatigue affectsmillions of people in the U.S and around the world inmany ways and for many reasons. It is a collection ofsigns and symptoms, known as a “syndrome”. Peoplewith adrenal fatigue often look and act relativelynormal. They may not have any obvious signs ofphysical illness, yet they are not well and live with ageneral sense of unwellness or “gray” feelings and italso have an affects on mental states. People withadrenal fatigue show a tendency toward increasedfears, anxiety and depression, have intervals ofconfusion, increased difficulties in concentrating andless acute memory recall (Wilson, 2001).

Psychological stress is the negative emotional andcognitive states that occur when individuals believethe demands placed on them exceed their ability tocope (Lazarus &Folkman, 1984).

According to the national institute for occupationalsafety and health (NIOSH, 2002), job stress hasbecome a common and costly problem in theworkplace. NIOSH listed several occupations ashighly stressful, including labourers, secretaries, andindividuals in various health related professions.Individuals in these careers face new and uncertainchallenges each day, and much of the stress thatoccurs is the result of their lack of control over theseday to day situations (Fisher, 1985). Managerialwork is also considered to be a highly stressfuloccupation (NIOSH); however for managers, jobrelated stress is generally caused by being overloadedwith work as opposed to not being in control of thejob (Glowinkowski& Cooper, 1986). In the case ofthe restaurant industry, managers are often asked towork long or irregular hours, which may lead to workoverload and higher levels of job – related stress.

3. STRESS IN THE GLOBAL ENVIRONMENT

Globalisation is defined as “the increase in totalworld economic activity as a consequence of theliberalisation of trade and the elimination of thehindrances to the transfer of capital, goods, andservices across the national border” (Rantanen,2000). In other words, globalisation and deregulationhas resulted in increasing the gap between the richand the poor, and in excluding and interacting thegeneral worker, particularly in developing countries.However, the developing countries faced thechallenges and handling the changing nature of work,such as the increasing fragmentation of the labourmarket, the demand for flexible contracts, increasedjob insecurity, a high work pace, long and irregularworking hours, low control over job content andprocess, and low pay, together with new occupationalhazards accompanying the old and new industriesand technologies (Irene Houtman, Karin Jettinghoff,2007).

Occupational stress is a pattern of physiological,emotional, cognitive and behavioural reactions tosome extremely taxing aspects of work content, workorganization and work environment. When peopleexperience this work – related stress, they often feel

42

tense and distressed and feel they cannot cope. Dueto globalisation and changes in the nature of work,people in developing countries have to deal withincreasing occupational stress. In industrializedcountries, people are more comrades with whatwork-related stress is and how to manage it, althoughthe problem remains and even appears to beincreasing in the European Union (Iavicoli, S. et al,2004).

Although some research has been conducted indeveloping countries, but there are still not enough in– depth studies to fully analyse both culturaldifferences and behaviours which vary from onecountry to another. Along with being difficulties incontrolling other more well – known occupationalrisks, there is a lack of awareness of work – relatedstress, and shortage of resources to deal with it. Indeveloping countries the largest part of the workforceis self – employed, occupied in small countries andhome industries. These companies or individualsoften the resources and infrastructure to protect theirworkers or themselves from occupational stress andtheir groups of workers are difficult to reach both interms of information dissemination and assistance(Irene Houtman, Karin Jettinghoff , 2007).

International stress management association UK, it isan organization exists to advance the education of thepublic in the field of biological stress. The work ofISMA UK includes providing advice to the membersof the public and employer/ organisations, and addssupport to the Health & Safety Executive in thedelivery of their requirements for Stress RiskAssessment and the implementation of the HSEmanagement standards. And also The National StressAwareness Day (NSAD) is campaigned on the firstWednesday of November each tear involvesISMAUK members, the general public andparticipating organisations in developing anawareness of stress and how it can be managed.

The American institute of stress (AIS) is a non –profit organization which imparts information onstress reduction, stress in the workplace, effects ofstress and various other stress related topics. AI was

founded in 1978, at the request of Dr. Hans Selye toserve as a clearinghouse of all stress relatedinformation. Today, AIS provides a diverse andinclusive environment that fosters intellectualdiscovery creates and transmits innovativeknowledge, improves human health and providesleadership to the world on stress related topics.

Globalization is highlighted cross- culturaldifferences in working patterns: it is interesting inmentioned that the national variation in the copingstrategies applied in the workplace, such as Bulgarianmanagers more likely to employ both objective andplanning strategies for coping, as well as seekinghelp and using non – work resources, than managersfrom the UK, US and India ( Bernin et al., 2003).Whereas cultural differences in leadership style arealso highly relevant to change scenarios with MiddleEastern countries prioritizing aspects of managerialprocess, such as diplomacy, over the performanceoutcomes, which seem more highly prized in westernand southern Europe ( Abdalla and Al – Homoud,2001).

According to Adrienne Stauder (2009) chronic stressis one of the largest contributors to the strikinglyhigh morbidity and premature mortality rates inHungary as well as in other central and EasternEuropean Countries experiencing rapid social andpolitical changes because it interrupts the SovietUnion. In this research, they describe the workwhereby a standardized behavioural interventionprogram, formulated originally for the USpopulation, was adapted for use in different culturalcircumstances at Hungary. They also tested that theintervention is effective in reducing everyday stressand stress related symptoms in real world settings. Atthe end of the result the real – life field studyconfirmed the effectiveness of the intervention indistressed individuals depicted a significant reductionof the indicator of distress and an increase in well –being and life satisfaction. The stress managementprogram primarily reduces stress level, and there is areasonably weaker reduction of stress – related

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symptoms such as anxiety, depression, and somaticsymptom scores.

Women in workplaces generally experience andexpress stress-related problems more than men (forexample, Kauppinen et al, 2003, Giuffrida et al,2001). Causes for work-related stress that are ratherfrequent and specific for women in bothindustrialised as well as developing countries are:the double role they have to play both at home andwork, and the difficulty in balancing these roles, thegender roles of society and the need for anindependent role against the need to adjust socialexpectations, the sexual harassment at work, which ismainly directed at women at work, and gender baseddiscrimination reflected in lower wages and higherjob requirements.

4. CONCLUSION

Thus work-related stress in developing countries isoften made more terrible by a broad range of factorsoutside the work environment from genderinequalities, poor paths of participation and poorenvironmental management of industrial pollution toilliteracy, dependent to others and infectiousdiseases, poor hygiene and sanitation, poor nutrition,poor living conditions, inadequate transportationsystems and general poverty. These overwhelmingproblems linked to globalization are unemployment,under and self-employment, uncertainty of workingconditions due to new systems of work organizationand relaxation of the industrial relations.Globalization has led to growing inequality anddecreasing prioritizes of social aspects in many partsof the world.

Work-related stress is a matter of growing concern indeveloping countries as it will inevitably have futurenegative consequences for the health, safety andwell-being of workers and the productivity and cost-effectiveness of the companies they work for.Increasing globalization and transfer of unhealthywork practices and unsafe technology make thiseasily become a great challenge.

As organizations and workplaces constantly changeto keep up with the developments of globalization,the causes of work - related stress may change aswell. According to the WHO, “all workers have theright to healthy and safe work and to a workenvironment that enables them to live a socially andeconomically productive life” (WHO, 1994).National law may include the obligation foremployers to take measures to protect workers' healthand safety. However, making sure that sufficientmeasures are taken to protect the health and safety ofworkers will prove to be beneficial to the workers aswell as to the company.

Therefore, employers and worker representativesmust be aware and be able to prevent, or at leastrecognise signs of work-related stress in workers.Employers and workers are best prepared to managework-related stress by changing its structural causesin the company. The role of the workers and theirrepresentatives should be to warn the companymanagement when occupational stress creates aproblem. The following data was published byAmerican Psychological Association, AmericanInstitute Of Stress, NY to hint the causes for streeamong the people living in US

Top causes of stress in the U.S

CAUSES FACTORS

1. Job pressure Co-Worker Tension, Bosses,Work Overload

2. Money Loss Of Job, ReducedRetirement, Medical Expenses

3.Health

Health Crisis, Terminal orChronic Illness

4. Relationships Divorce, Death of Spouse,Arguments with Friends,Loneliness

5. PoorNutrition

Inadequate Nutrition, Caffeine,Processed Foods, Refined Sugars

6. MediaOverload

Television, Radio, Internet, E-Mail, Social Networking

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7. SleepDeprivation

Inability to release adrenalineand other stress hormones

( Source: American Psychological Association,American Institute Of Stress, NY)

U.S Stress Statistics

U.S Stress Statistics: Data

Percent of people who regularlyexperience physical symptoms caused bystress

77%

Regularly experience psychologicalsymptoms caused by stress

73%

Feel they are living with extreme stress 33%

Feel their stress has increased over thepast five years

48%

Cited money and work as the leadingcause of their stress

76%

Reported lying awake at night due tostress

48%

Stress Impact Statistics

Percent who say stress has a negativeimpact on their personal and professionallife

48%

Employed adults who say they havedifficulty managing work and familyresponsibilities.

31%

Percent who cited jobs interfering withtheir family or personal time as asignificant source of stress.

35%

Percent who said stress has caused themto fight with people close to them

54%

Reported being alienated from a friend orfamily member because of stress

26%

Annual costs to employers in stressrelated health care and missed work.

$ 300billion

Percent who say they are “always” or 30%

“often” under stress at work

People who cited physical symptomsexperienced the following

Fatigue 51 %

Headache 44 %

Upset stomach 34 %

Muscle tension 30 %

Change in appetite 23 %

Teeth grinding 17 %

Change in sex drive 15 %

Feeling dizzy 13 %

People who cited psychologicalsymptoms experienced the following

Irritability or anger 50 %

Feeling nervous 45 %

Lack of energy 45 %

Feeling as though you could cry 35 %

( Source: American Psychological Association,American Institute Of Stress, NY)

REFERENCES

1. Cox, T. 1978: Stress. London: The MacmillanPress.

2. Cox, T. 1985: Stress. London: The MacmillanPress.

3. Jones, F., and Bright, J.2001: Stress: Myth,Theory and Research. Harlow, England:Prentice hall.

4. Hinkle, L.E. 1973: The concept of stress in thebiological and social sciences. Science,medicine and man, 1, 31 - 48.

5. Judith G. Rabkin and Elmer L. Struening, Dec,1976: Life Events, Stress, and Illness, Science,New Series, Vol. 194, No. 4269 (Dec. 3, 1976),pp.1014.

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6. Engel, B.T. 1985: Stress is a noun! No, a verb!No an adjective! In T.M, Field, P.M. McCabeand N. Schneiderman. Stress and Coping.Hillshade, NJ: Lawrence Erlbaum, 3 – 12.

7. Lazarus, R.S 1999: Stress and Emotion: A NewSynthesis. London.

8. Doublet,S. 2000: The Stress Myth. FreemansReach, NSW, Australia: IPSILON Publishing.

9. Selye, H. 1956: The Stress of Life. New York:McGraw Hill Book Company.

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19. Cornia GA (1994) Crisis in Mortality, Healthand Nutrition. Economies in Transition Studies,Regional Monitoring Report No. 2. Florence:UNICEF.

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“Implicit Leadership Theory In The ArabianGulf States”, Applied Psychology: AnInternational Review, 50: 506 – 531.

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CSR PRACTICES – A CASE STUDY OF PHARMACEUTICAL INDUSTRY IN INDIA

Dr.C.VETHIRAJAN

ABSTRACT

In recent times there have been evidences ofan increasing awareness of corporate socialresponsibility in Indian business scenario. India a fastgrowing economy and is booming with national andmultinational firms. Therefore it is all the mareimperative for the Indian companies to be sensitizedto CSR in the right perspective.

In this paper on effort is made to examine theCSR initiatives of pharmaceutical sectors. Threecompanies from the Nifty Index with diverseindustrial background have been selected for thestudy because their contribution in the area of CSR

initiatives are substantial and worthy of emulation byother companies.

Introduction

The concept of Corporate SocialResponsibility (CSR) is not new to Indiancompanies. However, what is new is the way it hascaught on with Indian corporate and the directinvolvement of employees in implementation ofthese projects. Dedicated departments in mostorganizations are looking into much more than justfunding or getting involved in one-time projects.

In recent times, there have been evidences ofan increasing awareness of the responsibility of

47

corporate towards the society and the community atlarge. This is very essential as the society provides allthe necessary inputs required for the successful andeffective functioning of the business organizations.Hence it is the bounden duty of the corporate toutilize their talents and resources to the possibleextent for the benefit of the society. Corporate socialresponsibility is one such niche area of Corporate

Behavior and Governance that needs to getaggressively addressed and implemented tactfully inthe organizations. At the same time CSR is one sucheffective tool that synergies the efforts of corporateand the social sector agencies towards sustainablegrowth and development of societal objectives atlarge. India is a fast growing economy and isbooming with national and multinational firms. Atthe same time, the Indian land also faces socialchallenges like poverty, population, growth,corruption, and illiteracy just to name a few.Therefore it is all the more imperative for the Indiancompanies to be sensitized to CSR in the rightperspective in order to facilitate and create anenabling environment for the partnership between thecivil society and business.

Corporate Social Responsibility

Corporate Social Responsibility (CSR) isabout how companies manage the business processesto produce an overall positive impact on society. Forthis, companies need to answer two aspects of theiroperations:

The quality of their management in terms ofboth people and processes.

The nature and quantity of their impact onsociety in various areas.

Outside stakeholders are taking an increasing Interestin the activities of a company-what the company hasactually done, good or bad; in terms of its productsand services; its impact on the environment and onlocal communities or, how it treats and develops its

workforce. The World Business Council forSustainable Development, in its publication “MakingGood Business Sense” by Lord Home arid RichardWatts, defined:

“Corporate social responsibility is the continuingcommitment by business to behave ethically andcontribute to economic development whileimproving the quality of life of the workforce and

their families as well as of the local community andsociety at large”.

Corporate social responsibility is the capacity ofbuilding sustainable livelihoods. It respects culturaldifferences and finds business opportunities inbuilding skills of the employees, the community andthe government, more precisely, CSR is giving backto society what it gets from it. It is the concept thatan enterprise is accountable for its impact on thestakeholders.

According to Daniel Bell (1999):

When one uses the phrase ‘social responsibility’ ofthe corporations, one is not indulging in rhetoric(though many corporate officials are), or thinking ofnoblesse (which fewer corporate officials do) ofassuming that some doctrine is being smuggled intothe society (as some laissez-faire economists suggest)but simply accepting a cardinal socio-psychologicalfact about human attachments.

To Frielderi (1970), “Corporations, if they are tosurvive, will have to be responsive to the needs of thesociety.”

Scope of Study

There are many reports and studies undertaken by avariety of agencies about the social responsibility ofcorporate organization’s responsibility towards otherstakeholders such as the employees, the customers,the shareholders, the suppliers and the government.

The scope of this study is limited to the examinationof the Corporate Social Initiatives of 3pharmaceutical Industries. The scope also includes

Professor, Department of Corporate Secretaryship, School of Management,Alagappa University, Karaikudi - 630 003.

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the theoretical aspects of Corporate SocialResponsibility. The present study is predominantlybased on secondary data. It is aimed at examiningvarious aspects relating to Corporate SocialPerformance in a number of areas. The study hasadopted the case representing various industries.

Selection of the Companies

Three pharmaceutical companies from the NiftyIndex and from diverse industrial backgroundcompanies which constitute a judgmental samplinghave been selected for the study. These companieshave been selected because their contribution in thearea of Corporate Social Initiatives are substantialand worthy of emulation by other companies.

List of Companies Industry TypeDABUR INDIA PHARMACEUTICALSRANBAXY LABS PHARMACEUTICALSDR. REDDY’S LAB PHARMACEUTICALSGLAXO (SMITHLINE LAB)

REVIEW OF LITERATURE

Many scholars have conducted studies in the aspectof corporate social responsibility and sociallyresponsible stakeholder policies. These studies havebeen reviewed below.

Lockwood (2004) explained the critical role of theHR function in organizations play in leading andeducating their firms regarding the importance ofCSR, while at the same time, strategicallyimplementing sound HR management practices thatsupport the company’s business and CSR goals.According to him, firms must shift from first andsecond generation social responsibility practices ofnot risking a firm’s business success in the name ofCSR and move over to third generation CS practiceswhere a firm addresses significant societal issues,such as poverty and cleansing the environment; andthe HR function must lead this shift.

Corporate social responsibility has been studied fromthe value perspective. Hopkins (2004) studied the

economic value-added implications of CSR actionsand has found the following areas of impact: Brandequity and companies’ reputation, Access tofinancing, Employee motivation, Innovation,creativity, intellectual capital and learning, and Betterrisk management.

Bigg and Ward (2004) tried to link corporate socialresponsibility, good governance and corporateaccountability through an institutional framework.They found that it is necessary to integrate publicgovernance and CSR activities for better results.Further, they feel that corporate must create a moreinclusive agenda through a value framework ofsharing and caring. Ultimately, firms must have amulti-stakeholder outlook to frame their CSRpolicies.

Fombrun (2005) studied the evolving standardsregarding building corporate reputation throughCorporate Social Responsibility (CSR) initiatives.

CORPORATE SOCIAL RESPONSIBILITY OFRANBAXY LABS

Ranbaxy has a strong element of Corporate SocialResponsibility inscribed in its values and its concernfor the society extends well beyond its businessmotives.

Success and achievement are not viewed in terms ofcommercial gains only. They believe that corporatesocial responsibility is the key for providing a deepsymbiotic relationship that exist between thecompany and the environment in which it functions.

As a responsible corporate citizen Ranbaxy hasalways appreciated the importance of the socialdevelopment in its environment. It is a part ofRanbaxy’s ‘Values in Action’.

RCHS- Ranbaxy Community Healthcare Society

Ranbaxy created the Ranbaxy CommunityHealthcare Society (RCHS) in 1994 to improve theprimary health of the population in theunderprivileged section of the society. Starting with asmall group, today the society covers 95 villages anda population of almost 2 lakh people.

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The RCHS team of doctors and paramedics operatethrough mobile healthcare vans. On a weekly basisthey also hold clinics in different villages. Focusingon providing information rather than onlydistributing medicines, the team has been successfulin mobilizing, local support for their activities.

Addressing on areas of immunization, vitamindeficiency, malnourishment among children andmaternity health; RCHS undertakes preventive,promotive and curative checks. Under its care, infantmortality has reduced considerably. It alsoimplements several projects on reproductive childhealth and family welfare, specifically in the lowattention areas of Madhya Pradesh, HimachalPradesh, Punjab and Delhi.

RCHS is an active participant in all major nationalhealth campaigns like National Pulse PolioImmunization drive. It holds rallies and administerspolio does to the children in and around theCompany’s facilities. It also organizes awarenesscampaigns on safe motherhood, nutrition,breastfeeding and on population control educationprogram in conjunction with several NGO’s andlocal administration.

HIV/AIDS

HIV/AIDS is among the gravest issues cornering theworld today. With over forty million people infectedwith HIV and its expected escalation to over fiftymillion by the end of 2012, the situation has becomea cause for great concern. Currently, an estimate sixmillion People Living with HIV/AIDS (PLHAs) indeveloping countries requires Anti-RetroviralTherapy (ART). RCHS carried out a project called as“Targeted Intervention for Prevention of HIV/AIDSamong Truckers and Migrant Laborers in the UrbanSlum Areas of Dewas, Madhya Pradesh” along with.Madhya Pradesh AIDS Control Society.

The project led to an overall increase in the level ofawareness about AIDS to about 10% withsimultaneous decrease in unsafe sexual behavior toabout 7% amongst the target groups.

Managing Chemical Wastes

Ranbaxy is fully aware of the importance of ground -water protection in terms of both availability andquality. Continuous efforts are made to reduce thedetrimental environmental footprints by initiativeslike wastewater reduction and resourcesconservation. Utmost care is taken while designingthe manufacturing facilities to ensure totalcontainment of the chemical handled. To minimizethe chemical discharge to the environment Ranbaxyhas invested in effluent treatment plant using thelatest reverse osmosis membrane based technologyintegrating it with the multi-effect thermalevaporating system and state-of-the-art incinerator.Simultaneously, steps are taken to reduce waste atthe source.

Company carries out several other welfare initiativesaround its facilities in Mohali &Toansa in Punjab;Paonta Sahib in 1-limachal Pradesh. In these regionsdrinking water scarcity was a major issue. Ranbaxy,therefore, initiated special drinking water projects inthese villages to put an end to long-standing problem.

Towards eradicating Malaria

Ranbaxy has joined hands with Medicines forMalaria Venture (MMV) to develop a life savingSynthetic Peroxide Anti-malaria Drug. MMV is anonprofit Swiss Foundation dedicated to theeradication of this disease for the developingcountries.

Frost & Sullivan award

Ranbaxy received the prestigious Frost &SullivanAward 2004 for Customer Value in recognition forits sustained and consistent effort, to bring about aneasy access for Anti-retroviral to millions of peoplesuffering from HIV/ AIDS in the developingcountries at affordable price. The company’s offersof ‘less than a dollar a day’ HMRT (High ActiveAnti -Retroviral Regiment) therapy has been foundthe most economical in the world as per a pricesurvey done by Medicines Sans Frontieres.

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CORPORATE SOCIAL RESPONSIBILITY OFGLAXO SMITHKLINE

GAVs, a trust promoted for the development of ruralmasses GraminArogyaVikasSanstha (GAVs) is aregistered public trust promoted by Glaxo in April1997. The trust operates in three needy,predominantly tribal villages, 55kms away fromGSK’s factory at Nashik. The trust aims at fulfillingbasic healthcare, education and other developmentalneeds of the villagers.

GAVS organizes weekly medical check-ups andtreatment by qualified doctors, preventive healthawareness programs using audio-visual besidesrunning a small savings scheme for women andyouth. Training programs in health, midwifery is alsobeing conducted by the organization.

All programs are implemented through a full-timetrained social worker, under the guidance of fourtrustees (all GSK management staff) whoperiodically visit the project and provide their time,professional skills and expertise towards itsactivities.

SSSS, a trust working for disadvantaged slumchildren in MumbaiShishukalyanSnehiSwayamsevakSanstha (SSSS) -meaning “a voluntary organization for ChildWelfare”, is a charitable trust promoted by GlaxoIndia employees in 1979 for the development offinancially disadvantaged children-deprived ofopportunities such as basic education, healthcare andrecreation.

The SSSS operates in the slums of World Koliwada,a fisher folk community, located near the company’shead office in Mumbai. The SSSS runs a MedicalCare Center, which provides comprehensive healthcheck-up and treatment, Nutritional SupplementsScheme for children at a preprimary education,center and an Educational Sponsorship Scheme forneedy girl students of a local school.

Glaxo AIDs help line

As a unique and innovative initiative for counselingand dissemination of information on HIV/AIDS tothe lay public in Mumbai, the company launched a24 hours phone-in help line in October 2000. Highlytrained and experienced’ team of counselors answerthousands of callers from 10 a.m. to 9 p.m.Thereafter, the callers can obtain basic informationon issues related to HIV/AIDS through acomprehensive Interactive Voice Response that isoperational from 9 ‘p.m. to 10 a.m., available in twolocal languages besides English. The help linefocuses on various aspects related to generalawareness, prevention, treatment and ‘care,psychosocial support for HIV positive people andtheir families.

During 2006-07 GSK donated life-saving medicinesworth £27 million’ ($49 million), to support reliefefforts in almost 100 countries. Supplies ofantibiotics and basic medicines were sent inresponse. To the South East’ Asian tsunami,hurricanes in the US and the Caribbean and theearthquake in Pakistan.

In the immediate aftermath of the tsunami theydonated more than 3.6 million doses of antibiotics toprevent the spread of infectious diseases in affectedcountries. GSK has also committed £2 million ($3.8million) to support organizations working on reliefand reconstruction operations in the disaster area.

Following hurricane Katrina GSK donated medicinesvalued at $10 million to relief facilities in ten USstates. This included antibiotics, vaccines andconsumer healthcare products such as toothpaste,antacids and pain relievers. GSK also suppliedinterim shipments of medicines for diabetes, heartdisease, and asthma for patients who had lost theirsupplies in the disaster. Some of the medicines weredistributed to hospitals and shelters by our partnerorganizations such as Project HOPE and Americares.

CORPORATE SOCIAL RESPONSIBILITY BYDR. REDDY’S LAB

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While ‘Sustainability. The Triple Bottom l.ine’ as aterm may have a contemporary ring to it, the spiritunderlying it has been relevant through the ages.

At Dr Reddy’s, they believe that any highperformance sustainable organization rests on thethree pillars of economic, social and environmentalperformance. To be a truly sustainable organization,in the broadest definition of its terms, an organizationmust perform well across all three dimensions.

Naandi Foundation

Being a discovery-led company, Dr. Reddy’slaboratories Ltd. recognizes and upholds the need tosupport innovation-driven enterprises that createbreakthroughs, not only in laboratories, but in thesocial sector as well, to impact the quality of life.

Life Research, Hope-Driven by this spirit, thecompany, led by Chairman, Dr. K Anji Reddy, calledupon similar-minded corporates and created a newplatform, a not-for-profit development organizationthat could showcase not only to India but theinternational community as well, the depth ofcorporate will in shouldering the responsibility offinding solutions to long- pending socialdevelopment problems of the country.

For employees who want to do more, Naandi offersseveral windows of opportunities to give back to thesociety. These range from adopting governmentschools, and volunteering in them to improve qualityeducation, to participating in tribal developmentprojects. Dr. Reddy’s new recruits inevitablyget their first taste of rural India, every year, throughan Outbound Rural Sensitivity Training, which isorganized by Naandi.

Ability to gamer civil society support has propelledNaandi’s growth and reach. It is the only NGO in thecountry to run automated central Midday mealkitchens in urban centers-the ones at Hyderabad andVishakapatnam presently -cater to around 1200government schools. So far the kitchens havesupplied 45 million meals, without complaints, to the

underprivileged that come to these schools. This taskgets bigger as Naandi targets to implement thismodel for the children of 5 other cities in the country.

CORPORATE SOCIAL RESPONSIBILITIESOF DABUR

Promoting Hygiene and Health

In collaboration with the Chunnilal Medical Trust,they operate in 12 adopted villages providingmedicare services and conducting mass awarenessdrives.

Promoting formal and non-formal education

For children who have dropped out of school as wellas ones who have never been to school, sundeshprovides the assistance and opportunity to take upformal education. Sundesh also works for promotionof adult literacy and has opened many teachingcenters.

Promoting income generating activities

To help communities find means of livelihood thatsuit their skills, Sundesh has established vocationaltraining facilities for cutting and tailoring,beekeeping, mushroom farming and foodpreservation.

Promoting self-reliance

They encourage people to form cooperatives andself-help groups that can ultimately take care of thecommunity’s needs. There are already 25 Self-Helpgroups of economically weak families and groupsformed by members of lower and middle-incomefamilies.Sundesh

At Sundesh, The Team has initiated socialdevelopment programs that take a holistic approach.Integrating various aspects like health, literacy,employment and empowerment to let people takecontrol of their lives.

At Sundesh the aim is not to provide charity, but toenable deprived communities, so that they have theresources to lead a better life. And ultimately be adynamic and resourceful arm of mainstream society.

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Afforestation

Dabur has also set up the most modern tissue culturefacility for micro propagation of medicinal herbs.The company is involved in reforestation in theHimalayan Range, which would help in maintainingthe green cover there. The company has set up astate-of the green house for saplihgs of more than 40endangered plant species to help in averting theextinction of these plant species. This contractactivity provides additional source of income tofarmers.

Conclusion

The time has come where corporate have to realizethat CSR is no more an addition to the business; it isa key differentiator of it. CSR is not about how acompany gives away its money, it is about how itmakes money now it is a fact that business has littlechoice to take the path of CSR in the interest of profitand sustainability. The sooner corporate entitiesrealize this and aggressively pursue this process, thebetter off they will be.

We can conclude with the quote of J.R.D Tata aboutthe need of CSR in Indian business houses-“Everycompany has a specific and continuing responsibility

towards the people of the area in which it is locatedand in which its employees and their families live. Inevery city, town, or village, large or small, there isalways need for improvement for help, for relief, forleadership and for guidance.”

References

1. Garret J.E (1989) “Undistrjbutecj CorporateMoral Responsibility”, Journal of BusinessEthics, Vol. 8, pp. 535.545

2. Hopkins Michael (2004), “Corporate SocialResponsibility; An Issues Paper”, InternationalLabor Organization.

3. Lockwood Nancy R (2004), “Corporate SocialResponsibility; HR’s Leadership Role”, ResearchQuarterly, December Issue.

4. Robin D.PandReidenbach R.E (1987), “SocialResponsibility, Ethics and Marketing Strategy:Closing the Gap between concept andApplication”, Journal of Marketing, Vol. 51(January), pp.44-58.

5. Sharplin A (1989), “The Public Firm”, WorkingPaper, School of Business MministionMcneeseState University.

6. Wakutch R.E (1990), “Corporate SocialResponsibility; Japanese Style”, Academy ofVol.4, No. 2, pp. 56-74

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INSTITUTIONAL BRANDINGDIMENSIONS: HRPERSPECTIVES

*Dr.V. Samuel Rajkumar, ** Dr. P. Ganesan, ***R.Jeyachandran

Introduction

Oneoftheforemostprioritiesofbrandingistoenableattractive,credible,holisticandsustainableunderstandingofbrandsbyitstargetaudience.Brandingis oftenandincreasinglyseenasasalesenabler.Theincreasingneedtobrandisperhapsalsoaneffectoftheriseofcommunicationplatforms.Tomeettheendobjectiveofprofitabilityandgrowth,companiesoperatinginsimilarindustryverticals,competingformarkets,arevyingwitheachothertopromotetheirownbrandequity.Thecollateralimpactofthisexplosioninthecommunicationplatformshasmeantthatthespaceisquitecrowdedandthisposesaconstantchallengetoenhancethebrand’stopofthemindrecall.Whetherit is sellingofaproduct oran idea, awellthought throughand laid outbrandinghelps.

Anyhighereducationtechnicalinstitutehastobranditselfsothatitcanattractitsstakeholderslikeindustry,students,parents,government,societyetc.,Studentsandtheindustryareconsideredtobethe majorstakeholders foranyeducational institution. Thisstudyisbasedoninstitutionalbrandinginthespecificcontextofcampusrecruitments.Variousbrandingactivitiesaredonebythehighereducationalinstitutionstoattracttopglobalcompaniesfor campusrecruitmentsandindustry-instituteinteractions.Campusrecruitmentisamongthemostcritical factorsthatincreasinglyparentsofaspiringstudentsconsiderindecidingtheirward’sadmissionintoan educational institutionin this country.

Inthepresentglobalizedcontext,institutionsneedtobrandthemselvestosustaininthecompetitivemarket.Withthefresherhiring numbersgoingdownduetorecessionandotherexternalfactors,theemployershavebecomechoosy

withregardtotheeducationalinstitutionsinconductingcampusrecruitments.Thus,theeducationalinstitutionshavetobrandthemselvestoattracttheemployerstogettheirgraduatesemployed.Unlikeinothercountries,Indianengineeringeducationisdirectly linkedwiththeadmissionprocessandhencemuchimportanceisgivenby theeducationalinstitutionsinhavingthemajorcampusrecruitingcompaniesoncampus.Basedontheresearchproblemthefollowing objectives areproposed,

ResearchObjectives

1. To identifythe branding dimensionsinInstitutional brandingin campusrecruitment

2. To understand whethervariables suchassector and sizeof thefirm affects theinstitutional brandingdimensions.

Oneofthemajorobjectivesofthisstudyistoexploretheinstitutionalbranding paradigm.Thisdealswithvariousfeaturesofaninstitutionalbrandkeytoattractingemployerorganizationsfor conductingcampusrecruitmentintheUniversity(VITUniversity,Vellore).Anattemptwasmadetoidentifythe brandingdimensions thatwereconsideredbytheemployerswhilechoosing aninstitution forcampusrecruitment/engagement.Thereliabilityandthevalidityofthesedimensionsweretestedbyusing appropriatestatistical techniques.

Thestudyattemptstoanswerthefollowinghypothesesthatareframedbasedontheearlierreviewofliterature.Earlierstudiesshowedthattherequirementsinacampusrecruitmentprocessvariedwiththesector(Clarke,2008).Softwareservicescompaniesgavemoreimportancetothesoftskills(Gokuladas,2010)duringthecampusrecruitmentprocesscomparedtothecoreeng

* Director, Placement&Training VIT University ** Senior Professor VIT Business School***CEOArcelor Mittal

54

ineeringsectorwhichemphasizedmoreonthehardskills.Hardskillsarerelatedtothe academicsandsoftskillsdealwiththebehavioralaspects.

Byanalyzingtherequirementsofcoreengineeringandsoftwareservicescompanies,anattemptismadetofindoutifthereisanysignificantdifferenceintheinstitutional brandingdimensions perceived bythe HR managers ofboththesectors. Accordingly,

H1:Thereisnosignificantdifferencebetweencoreengineeringandsoftwarecompaniesinthelevelofimportance attributed tovarious dimensions thatdriveinstitutional branding.

Campusrecruitmentnumbersvarieswiththesize of thecompanies. Similarly,the companies’recruitmentstrategiesalsovarywiththesize(PiyaliGhoshandGeetika,2007).Thebelowhypothesis is framed to test ifthebrandingdimensions also varied with thesizeofthecompany.

H2: Company’s size(byemployeebase) castsnosignificant differencein the‘level’ of importanceattributed to various dimensions thatdriveinstitutional branding.

Methodology

Thepopulationofthestudyconsistedof172HRmanagersfromvariousindustrieswhohavevisited VITUniversityinthepastforcampusrecruitments.Apilotstudywasdonewith10HRmanagers,5fromcoreengineeringfirmsand5fromthesoftwarefirms.

Forfinalsurvey,randomsamplingmethod,namelystratifiedrandomsamplingmethodwasusedtostratifytheHRmanagersintotwogroupsnamely,coreengineeringandsoftwaresectors.Asamplesizeof86HRs(50percentofthepopulation)wasfixed.Thiswasbasedonthedeductive reasoningtechnique(SekaranandBougie,2010)insamplingandre

liability onlargersamplesize(Cooperand Schindler,2006).Therandomnumbergenerationprocess(throughMS-excel)ofrandomsamplingmethodwasappliedtoselect43HRmanagersfromeachsector. Afterduecareoneditingprocesswithquestionnairesformissingdata,65samplerespondentswerechosenforthefinalsurvey, of which, 39 ofthem werefrom softwarefirmsand 26 were from core engineeringfirms.Astructuredquestionnairewasdevelopedforinstitutionalbranding tocapturethebranding dimensions.

Constructs - Institutional branding dimensions

Variousbranding dimensionswereidentifiedthroughcriticalliteraturesurvey. Thetable(1)belowpresentstheconstructsmeasuringthebrandingdimensions..

Table1:Constructs’measuringbrandingdimensionsininstitutionalbranding

Institutional

branding

dimensions

Institutionalbranding

dimensionsNum

berofitems

InformationSources

Mediasources 9Directfeedback 9

Academics Academicsystems 9Academicfaculty 6

Students Studentskills 17Studentacademics 4

Infrastructure Academicinfrastructure

6Non-academicinfrastructure

8Events Events 7Reputation Reputation- product 5

Reputation -customertreatment

5Reputation–corporateleadership

3Reputation-contribution

2Reputation–employerrole

7Reputation–concernforindividual

9Credibility Credibility–

expertise4

Credibility–trustworthiness

5Companyengagement

Studentengagement 4Institutionalengagement

8Placementresponsiveness

Preplacementresponsiveness

9Postplacementresponsiveness

3IndustryDimension

Industry 5

55

ManagementDimension

Management 5Internationalrelations dimension

Internationalrelations

6

ANOVA wasusedtofind outthe significance ofdemographicandacademic variables in branding aninstitution. Allthescalesthatweredevelopedoradoptedwere vettedandtestedfortheirreliability.Cronbach’salphareliabilitytestwasusedtotesttheinstrumentbeforeitwasadministered.TheCronbachalphavalueswherethealphavaluesrangedbetween0.753and0.950andanaverage value of0.86 andabovewas found.

Demographicdetailsof the respondents

Withrespecttosectordetails,outof65respondents,39(60percent)werefrom thesoftwaresectorand26(40percent)werefromthecoreengineeringsector.Withregardstothecompanysize,23 (35.4percent)werefromtheorganizationsthathadanemployeestrengthoflessthan50000and42(64.6percent)werefromthoseorganizationswithanemployeestrengthofmorethan50000.44 (67.7percent)ofthemweremaleand21(32.3percent)ofthemwerefemale.

Results and Discussions

Analysis using ANOVA

ANOVAwasusedtoanalyzetheinstitutionalbrandingdimensionsbasedon theindustry sector andcompanysize.Theresultsarepresented below.

Dimension’simportancebasedonindustrysector(softwarevs.coreengineering)

The HRmanagerswere dividedinto2groups namelysoftware andcoreengineering.ANOVAwasusedtofindoutiftherewasanydifferenceintheimportancegiventothebrandingdimensions.Table(2)showstheANOVAresultsofbrandingdimensionimportancebasedonthe industrysector.

Table 2: Overallimportancegiventobrandingdimensions

BrandingdimensionsCoreengineering

Mean(SD)N=26

SoftwareMean(SD)

N=39F-Value

(sig)

Placement dimension-preplacement

1.329 (.369) 1.470(.530)

1.384 (.244)

Placement dimension-post placement

1.333 (.410) 1.444(.553)

.765 (.385)

Industrydimension 1.492 (.537) 1.600(.686)

.453 (.503)

Reputation-corporateleadership

1.551 (.573) 1.598(.552)

.110 (.742)

Infrastructure-academics

1.551 (.541) 1.581(.744)

.031 (.861)

Management dimension 1.576 (.549) 1.625(.645)

.100 (.753)

Reputation-contribution

1.634 (.656) 1.743(.560)

.514 (.476)

Academicdimension-systems

1.649 (.609) 1.757(.492)

.622 (.433)

Engagement-student 1.653 (.515) 1.711(.467)

.219 (.642)

Internationalrelations 1.692 (.631) 1.743(.616)

.106 (.746)

Studentdimensions-skills

1.719 (.515) 1.917(.424)

2.849 (.096)

Studentdimensions-academics

1.730 (.647) 1.852(.552)

.660 (.420)

Events 1.774 (.602) 1.952(.645)

1.245 (.269)

Reputation-concernforindividuals

1.777 (.591) 1.812(.6444)

.047 (.829)

Source-feedback 1.782 (.538) 1.940(.631)

1.098 (.299)

Reputation-product 1.807 (.561) 1.979(.520)

1.595 (.211)

Credibility-trustworthiness

1.815 (.616) 2.025(.558)

2.033 (.159)

Academicdimension-faculty

1.820 (.590) 1.897(.526)

.302 (.585)

Infrastructure–nonacademics

1.860 (.676) 1.814(.741)

.066 (.799)

Credibility- expertise 1.865 (.511) 1.974(.592)

.587 (.446)

Reputation-employerrole

1.890 (.610) 1.945(.565)

.138 (.711)

Engagement-institute 1.971 (.656) 1.875(.540)

.415 (.522)

Reputation-customertreatment

2.038 (.593) 2.066(.597)

.035 (.852)

Mediasources 2.324 (.751) 2.359(.682)

.036 (.850)

The Above table(2)highlightsthatthereisnosignificantdifferenceinthebranding dimensionsbasedontheindustrysector. Theaveragemeanvaluesoftwoalsosignifytheimportanceofallthebrandingdimensionsrelatingtotheindustrysector.Hence,thehypothesisH1isacceptedasthereisnosignificantdifferenceamongthetwogroupofHRmanagersbased onsectorwith respecttoinstitutional brandingdimensions.

Institutionalbrandingdimensionsimportanceb asedoncompanysize

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Thesamplesweredividedinto2groupsbasedonthesizeofthecompanies(sizedeterminedbasedonthenumberoftotalemployees),namelymorethan50000andlessthan50000employees.

Table 3:Overallimportancegiventobrandingdimensions(basedoncompany size)

Brandingdimension Lessthan50K Mean

(SD)

Morethan50KMean (SD)

F-Value(sig)

Placement dimension–postplacement

1.362(.448)

1.420(.531)

.199(.657)

Placement dimension–preplacement

1.410(.432)

1.415(.501)

.001(.970)

Infrastructureacademics 1.594(.543)

1.555 (.730) .049(.825)

Academicdimension-systems

1.753(.569)

1.693 (.530) .184(.670)

Engagement-student 1.750(.412)

1.654(.520)

.571(.453)

International relations 1.760(.598)

1.702(.634)

.131(.718)

Student dimensions-skills

1.798(.402)

1.859(.505)

.257(.614)

Student dimensions-academics

1.902(.651)

1.750(.554)

.987(.324)

Reputation-concernforindividuals

1.985(.605)

1.695(.609)

3.374(.071)

Source -feedback 1.975(.564)

1.822(.613)

.979(.326)

Reputation-product 1.904(.571)

1.9143(.528)

.005(.944)

Credibility-trustworthiness

1.930(.554)

1.947(.610)

.013(.911)

Academicdimension-faculty

1.905(.570)

1.845(.543)

.178(.675)

Infrastructure –nonacademics

1.929(.647)

1.779(.745)

.654(.422)

Credibility- expertise 1.978(.405)

1.904 (.631) .253(.617)

Events 2.012(.737)

1.809(.559)

1.554(.217)

Reputation– employerrole

2.049(.600)

1.853(.563)

1.717(.195)

Engagement-institute 2.087(.549)

1.818 (.590) 3.221(.078)

Reputation- customertreatment

2.130(.548)

2.014(.615)

.570(.453)

Media sources 2.550(.737)

2.2328(.669)

3.120(.082)

Oneway ANOVA (table3)revealedthattherewasnosignificantdifferenceintheimportanceofbranding dimensionsbasedonthesize ofthe

company.Hence,thehypothesis(H2)isacceptedasthereisno significantdifferenceinthemajorityofinstitutionalbrandingdimensionsbasedonthesizeofthe company.

Basedon theANOVA resultsitis observedthattherewas noperceiveddifference intheimportancegivenbasedontheindustrysector(softwareandcoreengineering).Thoughthestudents’skillsdimensionshowedamarginalvariance,itwasalsonotsignificantconsidering0.10level ofconfidence.Theresponsesinthestudents’skilldimensionsmighthavevariedwiththesectorbecauseofthedifferencein the student employabilityattributes that are required to get employed insoftware andacoreengineeringsector.ANOVAresultsalsoreportedthatthereisnosignificant differenceintheimportanceofbrandingdimensionsrelatingtosizeofthecompanies.Itindicatesthattheinstitutionsmayfocusontheimportantbrandingdimensionshighlightedbasedonthefrequenciesin improving thebrandequity.

Thetopinstitutionbrandingdimensionswerealmostsameifitisbasedonthesectorsorsizeofthe company.Amongthetopfive,theresponsiveness oftheplacementofficeintheplacementprocess(preandpost)emergedasthetopbrandingdimension. BrandingofaninstitutionincampusrecruitmentisbasedontherelationshipbetweentheHRandtheplacementpersonnelandthefacilitationsupportprovidedbytheplacementofficeinconductingtheprocess.Thisisamajordifferentiatorforanyinstitutioninbrandingitself.Involvementandcommitmentofthetopmanagementwasalsogivenprimeimportance.Unlesstheleadershipteamoftheinstitutioniscommittedandfocused,brandingefforts wouldnothappen.Thetop management oftheinstitutionsshouldsetthemissionandvisionclearlyandworktowardstheachievementofacademicexcellence.Thisrequires

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continuousassessment,involvementofthestakeholders,constant feedback etc., Clearvision and continuous support of the leadership(Chapleo,2010)wouldhelptheUniversitiestoenhancetheirbrandbuilding.

Conclusion

Thestudyhighlightedtheimportantbrandingdimensionsfortheinstitutionbrandingwhere,theperceptionsoftheHRmanagerswhobelongedtothesoftwareandcoreengineeringsectorweresame.Students’academicandsoftskillsdimensionweregivenequalimportanceby theHRmanagers ofboththesectors.Itwasalsoevidentthatthesizeofthecompany didnotaltertheperceptionsofthe HR. The mostsignificant findingofthe studywas that, regardlessofthe demographics, theHRmanagers’selectingtheplacementresponsivenessoftheinstitutionasthemostimportant brandingdimension.Leadershipdimensionswhichincludedthetop managementcommitmentandinvolvementwerealsogivendueimportance.Anotherinterestingfindingwasthatthelowimportancegiventothemediaresources. Theinstitutionsshouldlowertheir budgetsonmedia advertisementsasithasalowbearingontheinstitutionalbranding.Thestudyalsorevealedthattheimportancegiventoacademicinfrastructure,academicsystemsandstudentofferings which theinstitutions should focus on buildingthebrandamongthecorporate.

References:

Clarke,M.(2008),“Understandingandmanagingemployabilityinchangingcareercontexts”,Journal ofEuropeanIndustrial Training, Vol. 32, No4, pp.258-84

Chapleo,Chris(2010),“Whatdefines‘successful’Universitybrands?”InternationalJournalofPublic SectorManagement, Vol. 23, No2, pp.169-183.Churchill.G.A.(1979)

BrendanJ.Gray,KimShyanFam,VioletaA.Llanes(2003),“BrandingUniversitiesinAsian Market”, Journal ofProduct &Brand Management, Vol.12, No2, pp.108-120.

Gokuladas(2010),“Technicalandnon-technicaleducationandtheemployability ofengineering graduates:anIndiancasestudy”,InternationalJournalofTrainingandDevelopment,Vol.14, No2, pp.130-143.