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VOLUME NO. 3 (2013), ISSUE N O. 07 (J ULY)
ISSN 2231-1009
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ISSN 2231-1009
CONTENTS
Sr.
No.
TITLE & NAME OF THE AUTHOR (S)
1. THE EFFECT OF LEADERSHIP STYLES ON THE FUNCTIONAL PERFORMANCE OF EMPLOYEES IN PUBLIC INSTITUTIONS (AFIELD STUDY/ IRBID
2.
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30.
GOVERNORATE)
AHMAD SALEH AL-HAZAYMEH
EFFICIENCY OF INDIAN STOCK MARKET: EVIDENCES BASED ON STOCK SPLITS
SULTAN SINGH & KUMARI SAPNA
DEALING WITH PROBLEMS AND CHALLENGES OF E-GOVERNANCE IN BANGLADESH
KHANDAKER DAHIRUL ISLAM & MOHAMMAD NAZIMUL HOQUE
A STUDY OF THE IMPACT OF URBANIZATION ON AGRICULTURE CROPPING PATTERN
DR. UMA. H. R & MADHU. G. R
LANDSCAPING DISABILITY EDUCATION IN INDIA: A STUDY OF NORTH INDIAN CITY
DR. PRATAP THAKUR, DR. SHAVETA MENON & DR. J. S. SAINI
ORGANIZATIONAL ROLE STRESS AND JOB SATISFACTION IN BANK OFFICERS: A STUDY
DR. D. V. RAMANA MURTHY & MAZHARUNNISA
FINANCIAL PERFORMANCE ANALYSIS OF BHARAT PETROLEUM CORPORATION LIMITED
DR. V. K. GUPTA, DR. ANIL KUMAR GOYAL & PAWAN KUMAR
ACTIVE LEARNING THROUGH THE INTEGRATION OF 3D VIRTUAL ENVIRONMENT
I.MUTHUCHAMY & K.THIYAGU
A THEORETICAL REVIEW OF LITERATURE ON JOB SATISFACTION
DR. KALPANA KONERU & HYMAVATHI CHUNDURI
A STUDY ON FACTORS THAT INFLUENCE CUSTOMERS TO ADOPT INTERNET BANKING SERVICES
A. MEHARAJ BANU & DR. N. SHAIK MOHAMED
NEED OF FINANCIAL INCLUSION FOR INCLUSIVE GROWTH
AJAY SIDANA & NEERU SIDANA
CEMENT INDUSTRY: SCOPE FOR DIFFERENTIATION
ANIL KUMAR PILLAI & DR. SHANTHI VENKATESH
WHAT THE INDIAN MUSLIMS THINK ABOUT ISLAMIC FINANCE: AN EMPIRICAL STUDY
NISSAR AHMAD YATOO & DR. S.SUDALAIMUTHU
STRUCTURAL CHANGE IN EASTERN STATES OF INDIA
TINA SINGH
INNOVATION AND ENTREPRENEURSHIP IN KNOWLEDGE BASED ECONOMY
DR. VIDHU GAUR
A STUDY ON SAVING AND INVESTMENT METHODS OF SCHOOL TEACHERS IN BIDAR TALUKA, KARNATAKA
SANGASHETTY SHETKAR
USE OF INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) PRODUCTS AND SERVICES IN UNIVERSITY LIBRARIES OF TIRUPATI (A.P.): AN
ANALYTICAL STUDY
Dr. D. KONAPPA
EMOTIONAL INTELLIGENCE AND THINKING STYLE IN ORGANIZATIONS: A COMPARATIVE ANALYSIS
DR. SOUMYA MISHRA
ENTERING INTO INDIAN RETAIL SECTOR
PARAMJEET KAUR
MEASURING FINANCIAL STRENGTH OF A TEXTILE COMPANY BY ‘Z’ SCORE MODEL: A CASE STUDY
A.S.MANJULAKSHMI
ANALYSIS OF RECRUITMENT AND SELECTION PROCESS AT SBI LIFE INSURANCE COMPANY LIMITED
P SWETHA
STRUCTURAL CHANGE IN WESTERN STATES OF INDIA
TINA SINGH
PSYCHOLOGICAL WELL-BEING OF NIGERIAN NON-ACADEMIC STAFF AS A CONSEQUENCE OF ATTITUDES TOWARD SAVINGS, MONETARY
INVESTMENT AND COOPERATIVE LOANS
ARAMIDE, OLUFEMI KUNLE, OMISORE, OLUFUNMILAYO OLASUNBO & ADERIBIGBE, JOHN KOLAWOLE
AN OVERVIEW ON THE EXPORTS-IMPORTS TREND IN CROSS-BORDER TRADE THROUGH NATHULA PASS, SIKKIM
SANJAYA KUMAR SUBBA & PRAVEEN RIZAL
BENEFITS ASSOCIATED WITH BRAND LOYALTY IN THE PURCHASE OF SILK SAREES AMONG WOMEN CUSTOMERS IN THE CITY OF BANGALORE
SHEETHAL JOSE & LAKSHMI SHANKAR IYER
EFFECT OF PSYCHOSOCIAL FACTORS ON CAREER AND JOB SATISFACTIONS AMONG ADMINISTRATIVE STAFF OF NIGERIAN HIGHER
INSTITUTIONS’ HOSPITALS
ARAMIDE, OLUFEMI KUNLE, ALIMI, TALAYO JAMIU & ADERIBIGBE, JOHN KOLAWOLE
STATUS, PROBLEMS AND PROSPECTS OF REMITTANCE INFLOW IN BANGLADESH
MOHAMMAD OMAR FARUK & ROKSHANA ALAM
AN EMPIRICAL STUDY ON ATTITUDE AND KNOWLEDGE OF UNIVERSITY STUDENTS TOWARDS ENTREPRENEURS AND ENTREPRENEURSHIP:
PERSPECTIVE OF BANGLADESH
RAKIB AHMED & TANUZA NATH
ANALYSIS OF THE EFFECTS OF MICRO CREDIT ON RURAL HOUSEHOLD INCOME: EVIDENCE FROM RURAL MICROFINANCE PARTICIPANTS IN
EASTERN TIGRAY, ETHIOPIA
HAFTOM BAYRAY, KAHSAY
SICKNESS IN MICRO, SMALL AND MEDIUM ENTERPRISES IN INDIA: AN OVERVIEW
JAINENDRA KUMAR VERMA
REQUEST FOR FEEDBACK
INTERNATIONAL JOURNAL OF RESEARCH IN COMPUTER APPLICATION & MANAGEMENT
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ISSN 2231-1009
CHIEF PATRON
PROF. K. K. AGGARWAL
Chairman, Malaviya National Institute of Technology, Jaipur
(An institute of National Importance & fully funded by Ministry of Human Resource Development, Government of India)
Chancellor, K. R. Mangalam University, Gurgaon
Chancellor, Lingaya’s University, Faridabad
Founder Vice-Chancellor (1998-2008), Guru Gobind Singh Indraprastha University, Delhi
Ex. Pro Vice-Chancellor, Guru Jambheshwar University, Hisar
FOUNDER PATRON
LATE SH. RAM BHAJAN AGGARWAL
Former State Minister for Home & Tourism, Government of Haryana
Former Vice-President, Dadri Education Society, Charkhi Dadri
Former President, Chinar Syntex Ltd. (Textile Mills), Bhiwani
COCO-ORDINATOR
DR. SAMBHAV GARG
Faculty, Shree Ram Institute of Business & Management, Urjani
ADVISORS
DR. PRIYA RANJAN TRIVEDI
Chancellor, The Global Open University, Nagaland
PROF. M. S. SENAM RAJU
Director A. C. D., School of Management Studies, I.G.N.O.U., New Delhi
PROF. S. L. MAHANDRU
Principal (Retd.), MaharajaAgrasenCollege, Jagadhri
EDITOR
PROF. R. K. SHARMA
Professor, Bharti Vidyapeeth University Institute of Management & Research, New Delhi
EDITORIAL ADVISORY BOARD
DR. RAJESH MODI
Faculty, YanbuIndustrialCollege, Kingdom of Saudi Arabia
PROF. PARVEEN KUMAR
Director, M.C.A., Meerut Institute of Engineering & Technology, Meerut, U. P.
PROF. H. R. SHARMA
Director, Chhatarpati Shivaji Institute of Technology, Durg, C.G.
PROF. MANOHAR LAL
Director & Chairman, School of Information & Computer Sciences, I.G.N.O.U., New Delhi
PROF. ANIL K. SAINI
Chairperson (CRC), GuruGobindSinghI. P. University, Delhi
PROF. R. K. CHOUDHARY
Director, Asia Pacific Institute of Information Technology, Panipat
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ISSN 2231-1009
DR. ASHWANI KUSH
Head, Computer Science, UniversityCollege, KurukshetraUniversity, Kurukshetra
DR. BHARAT BHUSHAN
Head, Department of Computer Science & Applications, GuruNanakKhalsaCollege, Yamunanagar
DR. VIJAYPAL SINGH DHAKA
Dean (Academics), Rajasthan Institute of Engineering & Technology, Jaipur
DR. SAMBHAVNA
Faculty, I.I.T.M., Delhi
DR. MOHINDER CHAND
Associate Professor, KurukshetraUniversity, Kurukshetra
DR. MOHENDER KUMAR GUPTA
Associate Professor, P.J.L.N.GovernmentCollege, Faridabad
DR. SAMBHAV GARG
DR. SHIVAKUMAR DEENE
Asst. Professor, Dept. of Commerce, School of Business Studies, Central University of Karnataka, Gulbarga
DR. BHAVET
ASSOCIATE EDITORS
PROF. ABHAY BANSAL
Head, Department of Information Technology, Amity School of Engineering & Technology, Amity University, Noida
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Department of Commerce, AligarhMuslimUniversity, Aligarh, U.P.
ASHISH CHOPRA
Sr. Lecturer, Doon Valley Institute of Engineering & Technology, Karnal
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AMITA
Faculty, Government M. S., Mohali
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NEENA
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Bowersox, Donald J., Closs, David J., (1996), "Logistical Management." Tata McGraw, Hill, New Delhi.
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Sharma T., Kwatra, G. (2008) Effectiveness of Social Advertising: A Study of Selected Campaigns, Corporate Social Responsibility, Edited by David Crowther &
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Schemenner, R.W., Huber, J.C. and Cook, R.L. (1987), "Geographic Differences and the Location of New Manufacturing Facilities," Journal of Urban Economics,
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Garg, Bhavet (2011): Towards a New Natural Gas Policy, Political Weekly, Viewed on January 01, 2012 http://epw.in/user/viewabstract.jsp
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THE EFFECT OF LEADERSHIP STYLES ON THE FUNCTIONAL PERFORMANCE OF EMPLOYEES IN PUBLIC
INSTITUTIONS (AFIELD STUDY/ IRBID GOVERNORATE)
DR. AHMAD SALEH AL-HAZAYMEH
DEAN
STUDENT AFFAIRS
DEPARTMENT OF ADMINISTRATIVE SCIENCES
FACULTY OF ECONOMICS & ADMINISTRATIVE SCIENCES
JERASH UNIVERSITY
JORDAN
ABSTRACT
This study aims at recognizing and understanding the role that the manager plays through out the difference between leadership styles (Autocratic, Democratic,
Participatory, Balanced, And Dictatorial) concerning a sample of public institutions employees. The study sample consists of (100) employees, was taken
randomly, work in public institutions in Irbid governorate. Many results have been concluded after applying the statistical analysis; the most important of which
are: There is an average level of practicing the five leadership styles (Autocratic, Democratic, Participatory, Balanced, Dictatorial) in the public institutions in Irbid
governorate. Also there is a positive correlation statistically indicative at the function level of (α = 0.05) between work functionality and (Autocratic, Democratic,
Participatory, Balanced, Dictatorial) leadership styles in public institutions. The study recommends taking into account the principle of efficiency and equality of
opportunities during the distribution of leadership positions for employees in public institutions and supporting the unity of human work in Jordan public
institutions.
KEYWORDS
Leadership Styles, Autocratic, Democratic, Participatory, Balanced, Dictatorial, Work Functionality, Irbid Governorate.
INTRODUCTION
T
he modern time is representing an open world without any borders for economical and technical powers, which is invisible, but it has the ability to
change the life course at any moment. It is being considered that the modern environment of labor institution requires switching in the leadership roles
and a clear awareness of the human revolution importance in knowledge acquisition or inventions.
You can’t lead people in the same way as you did in the recent past if you want to leverage their talents and obtain optimal performance. Today, most successful
organizations call upon knowledge workers, i.e. highly-qualified people who want to make the best use of their capabilities in an environment that affords them
the freedom to demonstrate their sense of initiative and responsibility. If such people are restrained from functioning at what they consider their peak level of
competence, there is a good chance that they will lose momentum, as well as their motivation, and even walk away. So in that respect, leaders (‘knowledge
leaders’?) must understand the need for using different leadership styles effectively and appropriately. (www.trainingjournal.com , 2011)
Many writers and scholars in the administration field used to not differentiate between leadership and administration and between leader and administrator;
rather they consider it as a two different names for the same concept.
The success of any organization is highly rested upon the head, boss or the manager of such an enterprise like business, school or any organization. The
leadership impact is desirable in organization to aid easy and maximum success. Leadership is an instrument used in an organization for behavior modification.
It determines the goals of an organization and means of accomplishing them. Therefore, leadership in an organization has been seeing as a motivator whereby
one person who is the head motivates others towards the achievement of specific goals of the organizations. However, follower ship is the essence of
leadership. In other words, it is the willingness of people to follow that makes a person a leader. Moreover, people follow those perceived to be providing means
of achieving their own desires, wants and needs. (Sunday, 2013)
Supposing that the leadership is a relation between two people, a relation between a leader and a subordinate, and by the fact that every leader has a number
of subordinates, this relationship will be very obvious through the leader effect on his/her subordinates in his/her group. Specifically the effect on the
employee's behavior to activate and motivate them toward working in order to achieve the decided and common objectives .
But after deep thinking; it will be obvious that the administration is a broad and comprehensive, while the leadership is just an important part of the
administration and an essential task of the administrative leader tasks where the administrator can create an atmosphere of cooperation and practical activity
among a group of individuals that he/she manages to achieve a common objective.
On the other hand, organizational performance refers to ability of an enterprise to achieve such objectives as On high profit, quality product, large market share,
good financial results, and survival at pre- time using relevant strategy for action (Koontz and Donnell, 1993).Organizational performance can also be used to
view how an enterprise is doing in terms of level of profit, market share and product quality in relation to other enterprises in the same industry.
Consequently, it is a reflecsurvivalat predetermined productivity of members of an enterprise measured in terms of revenue, profit, growth, development and
expansion of the organization .
2- REVIEW OF LITERATURE AND THE PREVIOUS STUDIES
FIRST: THE REVIEW OF LITERATURE
All the organizations, at variation of its magnitude and its nature, need leaders capable of carrying the main responsibility in achieving these organizations
objectives and fulfilling their tasks competently and functionality. Without these aware and responsible leaderships it will be impossible for these organizations
to carry on their factual activity, but rather they will aim at achieving their objectives and ambitions.
The complexity of the administrative processes and their course led to organizations magnitude, also the multitude of the internal and external relations,
economic, political, social and technical conditions effect on these organizations led to research continuity, modernization, innovation and improvement. These
issues can only achieve under a guidance of understanding and aware administrative leadership. (Alshareef, 2004).
Three criteria for choosing the appropriate the challenge for leaders is to decide which style they will adopt to maximize performance and create a healthy
environment.
Three indicators can be used to direct them in their choice:
- The business situation leadership style
There is no question that, in a very fast-changing world, one cannot lose sight of the situation that the team or organization is confronted with. By business
situation, we mean how competitive are we? What is our market share? Are we clear on our business model? Do we have what it takes in terms of financing,
talents, equipment, know how? It is clear that a high-risk situation (crisis) will require very strong and active involvement by the leader to turn it around and
keep it under control. The more serious the challenge, the more leaders must use the ‘leading by doing’ style. But if the situation is low-risk, it is perhaps time for
the leader to give his people a chance to use their brains and implement their ideas. In other words to empower them.
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- the people or team members Even if the business situation would allow for empowerment according to the criteria mentioned above, the leader, before going
ahead and just letting team members take charge, has to ask himself: are my people prepared for it? Can I take the risk of letting them run on their own? The
answer to that depends on whether the people involved are competent (do they understand the business, do they know our market well enough, are they well
acquainted with our products, can they properly deal with our customers?) and committed (trust is critical. Can they be relied upon to abide by the business
views of the leader, implement the agreed vision and apply the ethical rules in place?) And finally, of course, the leader will have to make sure that team
members want to be empowered and take the corresponding risks.
According to how much competence the team member demonstrates and how much the leader can trust him, different degrees of empowerment will be
devolved, as shown in the graph on p50.
- The corporate culture
There is no question that the pervading culture in the organization will influence the degree to which leaders will be inclined to extend autonomy to their team
50 members. The Feature more conservative the organization culture, the e of the model (leading by doing and leading by tem ore leaders will feel pressed to
stay on the right sedum working).
A contraries, the more entrepreneurial the company environment, the more room for charismatic leadership and empowerment . (www.trainingjournal.com
January, 2011)
THE ADMINISTRATIVE LEADERSHIP CONCEPT
There are many leadership concepts. We can not say that there is a typical definition has been agreed upon by the writers or scholars; as the definitions differ by
the writers' and scholars' points of view. Next, we will present the most important definitions in order to reach a comprehensive concept of leadership
(Alshqhaa’, 2003)
Sallah Addin Alfeke defines it as follow, “working with others and affecting their behaviors in order to achieve specific objectives”. Also he defines the leadership
as, “ the capability and extraordinary abilities that the individual has, who occupy a leadership position, through which he/she can unify his/her subordinates
efforts and effect in them to achieve certain objectives, (Alfeke, 2004).
ADMINISTRATIVE LEADERSHIP VALUE
Many of administrative field researchers adopted the idea which says that the leadership is the core of administrative process, its vivid heart, and it’s the
administration master key Also its important role comes as it plays a very basic role related to all administrative process, that makes the administration more
dynamic and effective and works as a motivating tool to achieve its objectives.
Leadership became the criteria which upon success of any administrative system can be measured. Hence, the management scientists made the leadership an
essential subject in their studies and it occupies a remarkable aspect in the most books of general administration and business management. Administration
means implementation the general polices of the state and making it a reality. As the leadership is related with administration; success or failure of
administrative leadership affects the state as a whole. (Alsh’laan, 2002).
ADMINISTRATIVE LEADERSHIP THEORIES
Administrative leadership is considered one of the subjects that have earned a massive interest by the scholars in the administration science and psychology, as
a result many point of views have emerged and became the base of a number of theories. (Alsh’laan, 2002).
Characteristics Theory.
Attitude Theory.
Interaction Theory.
LEADING BEHAVIOR
Many of scholars have studied the leader leading behavior, since it’s related directly with administrative leadership. The studies has concluded that there are
two directions for the leading behavior in organizations have been agreed upon by many researchers (Alkelabe, 2000) and they are:
LEADERSHIP STYLES
Many have interested in leadership and its styles in past and present for its importance in the administrative process, where some have classified the leadership
as positive and negative leaderships, this classification based on the point of view of motivations. While the classification based on authority commission: the
administrative leadership can be categorized as centralized and decentralization leaderships (Shareef, 2004).
FIRST: AUTOCRATIC LEADERSHIP
The autocratic leader characterized by his/her attempting to concentrates all authorities on his/her side, keeps to himself/herself executing every detail
individually, issues his/her orders and instructions that deal with all the details and insists on obedience of his subordinates, so he/she does not delegate his/her
powers, but tries his/her best always to expand his/her powers and authorities and extend them to make everything under his/her control. He/she does all that;
believing he/she should give only a small fraction of freedom for the subordinates to act without his/her own approval (Alsabeel, 2003).
Moreover, the autocratic leader depends on finding the motivation toward work in his/her subordinates through the so-called authority of penalty, so he/she
adopts the negative stimulant policy based on intimidation, threats and penality , and the imposition of authority by impose directives to his/her subordinates.
Through this method the leader has the complete freedom in policy and decision-making and changing every small detail individually, according to his/her
wishes and this is accomplished by issuing orders and instructions that deal with all the details and his/her insistence on his subordinates to obey it (Alsabeel,
2003).
SECOND, THE DEMOCRATIC LEADERSHIP
The capacity of achievement, encourage the initiative and the ability of creation and innovation.
The democratic leadership style is the leadership that depends on human relations, participation and delegation of authority. Democratic leadership is based
primarily on sound human relations between the leader and his/her subordinates which are based on fulfilling their needs and to create cooperation among
themselves and solve their problems (Alsabeel, 2003).
It also depends on the involvement of subordinates in some of the tasks of leadership such as solving of some problems and making decisions. Therefore it
depends on the delegation of authority to the democratic leader subordinates. Time and effort to identify important leadership tasks .
In general it was found that the democratic leadership leads to a higher morale, increased cooperation, double
THE DEMOCRATIC LEADERSHIP MODELS VERIFY AS FOLLOWING (ALSHQHA’, 2003)
Democratic leader model, who allows a degree of freedom for subordinates for their participation in decision-making process, he/she puts the problem in front
of his/her subordinates, asking them to participate in making the right decision.
Democratic leader model who sets certain limits and ask his/her subordinates to make the decision within these limits. He/she identifies the problem, draw
dimensions and authorize his/her subordinates to take the right decision to solve it, and democratic leader gives his/her subordinates a great extent of freedom
in decision-making.
Democratic leader model who makes the decision by him/herself, but is keen to generate debate and discussion to see the extent that his/her subordinates
accept this decision. This happens often when the leader sees that the conditions are inappropriate for the participation of subordinates in decision-making.
Democratic leader model that makes the decision and gives the opportunity for subordinates to participate in finding a way to implement this decision .
Democratic leader model, who gives his/her, subordinates a great freedom in decision-making. He/she allows them to make the decision which they see as the
most appropriate and his/her role is limited in the approval. This model represents the maximum freedom of action for the subordinate.
PARTICIPATORY STYLE
This style allows the sharing of information, power and influence between the leader and his subordinates, and deal with subordinates equally and allows them
to influence his/her decisions by participating in his/her final decision, which is related with their specializations . Studies have shown that participation has a
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strong and positive effect on productivity and morale, and so it is when subordinate has high IQ and an amount of information and a natural tendency toward
this type of leadership behavior and the function should be compound and non-routine. (http://ejabat.google.com).
BALANCED STYLE
This type of leadership deals with individuals and work in a balanced and a fair level by working to maintain the morale of the individuals and achieving
satisfactory level of performance.
This type of leadership deals with the individuals and work in a balanced way to both of them and this means work is done by a team members, collaborators
and committed to the highest degree of enthusiasm in order to achieve organization goals and achieve their desires and satisfy their needs in a work
environment dominated by respect, trust and high efficiency. (http://www.hrdiscussion.com/hr31231.html).
DOCTORIAL STYLE
Known by other names such as authoritarian or arbitrariness, whatever the label, this leadership is characterized by that the leader orders and his/her orders
supported by the ability to reward and penality . The philosophy of this leadership basis on the of concentration of all powers and authorities on his/her side, so
he/she executes all the small details and does not share it with anyone. He/she adopt absolute centralization.
FEATURES OF THIS STYLE
1 - A sense of ownership and monopolizing power to decide on things and make decisions concerning work affairs without consulting. Implementation of
instructions to the letter. Control and lack of attention to the value of the individual and respecting his/her opinion, "refer to the theory of scientific
management of Frederick Taylor, bureaucratic theory of Max Weber,".
2 - Illusion and arrogance.
3 – Observance the appearance on account of the fact, the form on account of the content during work process.
4 - Making meetings as a room to talk about the self, issuing orders and decisions and not to provide discussion opportunity for the employees.
The opinion of contemporary management thought in the doctorial style: 1 - This style leads to improve the performance of work and self-growth of the working body but very slowly.
2 - The spirit of cooperation is almost missing.
3 - Lack of human relations between workers.
4 - No complacency and lack of adequate opportunities for progress and prosperity.
5 - Leads to eliminate the spirit of research, thinking and innovation among employees.
This authoritarian style is unacceptable, except in necessary and emergence cases, because it destroys the character of employees and hinder its improvement.
Provided that employees charged with the implementation of the instructions without participating in, and this leads to lack of human work unity and in the
school and this does not fit with the education (http://aboshehabahmed.maktoobblog.com).
Lee and Chuang (2009), explain that the excellent leader not only inspires subordinate‟s potential to enhance efficiency but also meets their requirements in the
process of achieving organizational goals. Stogdill (1957), defined leadership as the individual behaviour to guide a group to achieve the common target . Fry
(2003), explains
Leadership as use of leading strategy to offer inspiring motive and to enhance the staff‟s potential for growth and development . Several reasons indicate that
there should be a relationship between leadership style and organizational performance. The first is that today‟s intensive and dynamic markets feature
innovation-based
Competition, price/performance rivalry, decreasing returns, and the creative destruction of existing competencies
(Santora et al, 1999; Venkataraman, 1997) . Studies have suggested that effective leadership behaviors can facilitate the improvement of performance when
organizations face these new challenges (McGrath and
MacMillan, 2000; Teece, Pisano and Shuen, 1997
- Robertson (2006) argues Mehra, Smith, Dixon and that when some organizations seek efficient ways to enable them outperform others, a longstanding
approach is to focus on the effects of leadership. Team leaders are believed to play a pivotal role in shaping collective norms, helping teams cope with their
environments, and coordinating collective action. This leader-centered perspective has provided valuable insights into the relationship between leadership and
team performance (Guzzo and Dickson, 1996). Some studies have explored the strategic role of leadership to investigate how to employ leadership paradigms
and use leadership behavior to improve organizational performance (Judge, Bono, Ilies, and Gerhardt, 2002; Judge and Piccolo, 2004; Dickson, 2004; Yukl, 2002).
This is because intangible assets such as leadership styles, culture, skill and competence, and motivation are seen increasingly as key sources of strength in those
firms that can combine people and processes and organizational performance (Purcell et al., 2004).
WORK FUNCTIONALITY
Work functionality is described as the results that achieved by the employee in the field. Glossary of administrative sciences defines performance as fulfilling the
tasks of the work such as the responsibilities and duties in accordance with the required supposed rate of the competent and trained employee. Taylor's
definition of performance is to achieve maximum productivity of the individual and the machine.
It is illustrated by definition many of the contributing or affecting factors on the performance. Some of these factors are within the control of the employee
while others beyond the control and this highlights the importance of three factors in particular which are.
1 - Employee: What he/she possesses of the knowledge, skills and values, attitudes and motives related with the work.
2 - Position: What it is characterized by of the requirements and challenges and the enjoyable opportunities that work offers.
SECOND: IMPORTANCE OF WORK FUNCTIONALITY
Work functionality occupies a special place within any organization that is considered the final outcome of all activities on the levels of the individual, the
organization and the state, so that the organization would be more stable and keep on its rank for longer time when the performance of employees is
distinctive. There we can say in general that the organization's administration and leadership observation of the performance level usually exceeds its
employees observance. Therefore it can be said that the performance of any organizational level within the organization and in any part of it is not a mere
reflection of the capabilities and motivations of subordinates, but is a reflection of the capabilities and motives of administrators and leaders as well.
SECOND: PREVIOUS STUDIES
1 – Sabri’s Study, (2010), entitled: Styles of Administrators in Jordan Business Institutions in Light of Cultural Values, this study aimed to analyze the prevailing
leadership styles in a sample of administrators in a number of Jordanian business organizations in the light of the different cultural values. The study adopted
authority level and uncertainty avoidance as an independent variables and human structural leadership styles as dependent variables. The study hypostasized
that Jordanian administrators, for cultural reasons, tend to pay attention to the work and performance more than attention to the relations and employees. The
results of this hypothesis shown; it was found that administrators adopt a structural leadership style, because of their tendency to paying attention to
performance in a greater phase than the employees (human Leadership). Also found that administrators who do not have an academic degree, male
administrators and young administrators of the sample tend to adopt structural leadership style more than the human leadership. The study recommended that
the required transformation in the styles of leadership according to the requirements of modern business can be done through a cultural and values change of
Jordanian administrators and take advantage of the prevailing administrative methods in the other cultures, in order to face the competition in the business
complex and changeable environment.
2 - Almenkash’s Study, (2010), entitled: Leadership Over the Group with the Group, Comparative Study Between Typical Male and Female Leadership Styles in
King Saud University in Riyadh, The aim of this study was to investigate the effect of employees gender on the leadership style of males and females. To
achieve this objective, Fidler measure was used to measure the two genders practicing of the two leadership styles over the group and leadership with the
group. the study have been applied on a sample of academic departments heads and secretaries in King Saud University in Riyadh, The most significant results of
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the study were the presence of statistically significant differences between males and females in their exercise of two leaderships styles over the group and the
leader with the group, which means that gender has a significant effect on the leadership style.
3 - Najjy, (2009), entitled: A Study of the Relationship between the Styles Adopted by the Leader in Administration, Culture of the Organization and the Level
of Career Satisfaction among Yemeni Nurses, The aim of this study was to investigate the relationship between styles and methods that the leader adopts and
their relationship to the culture of the institution (hospital), as well as their relationship to the level of career satisfaction for the Yemeni nurses. The study was
conducted with the participation of 291 nurses from three hospitals, transforming, teaching and public and three private hospitals and one of them is a teaching
hospital. Study was conducted in northern Yemen in the capital Sana'a, information was collected from nurses and in each hospital through the distribution of
questionnaires containing questions regarding the personal data of the nurses, questions related to the measurement of the level of career satisfaction and
others related to the measurement of practiced leadership styles by the leader from the perspective of nurses.
4- Fenwick and Gayle (2008), in their study of the missing links in understanding the relationship between leadership and organizational performance conclude
that despite a hypothesized leadership performance relationship suggested by some researchers, current findings are inconclusive and difficult to interpret.
5 - Alnofel’s & others Study, (2011), entitled: The Availability of Leading Properties in the Leaders and Administrators (A Prospective Study of a Sample Views
of Heads of Departments (Scientific Departments at Al-Mosul University), The aim of this study was to determine the effect of the administrative leadership
surrounding changes to seek the most successful formulas in order to keep pace with those changes and work on contain it. The leading formula expresses it in
both form and content . The study has adopted the analytical descriptive approach in order to benefit from the emerged answers from the respondents on the
designed questionnaire of the studied phenomenon and on the way which contributed in Answering the following question: “ do the administrative leaders in
the sample organizations have a visualization of what leadership is, and the nature of its related characteristics .
The study found a number of conclusions, the most important are; the availability of some leading properties in the administrative leaderships in the sample
organizations with a degree of variation in its relative value. There is an actual contribution to some paragraphs that express the leadership characteristics in the
formation of the cluster series contrariwise other paragraphs; results in a certain amount of loss when you pursue any action at work; was the most
instrumental. which means that the state of failure in some cases may exist, and this is what we can observe when Mr. (Henry Ford) was bankrupt up to seven
times before his success in the development of his company. As for the proposals presented by researchers, emerged the need to activate the leading
properties, the study subject, which leads to the development of other properties and the emergence of others that are prevailing which are practiced by
administrative leaderships, in order to ensure the ability to confront difficulties and keep pace with developments.
6 - Obiwuru Timothy, Okwu, Andy, Akpa, (2011), entitled: EFFECTS OF LEADERSHIP STYLE ON ORGANIZATIONAL PERFORMANCE:
A SURVEY OF SELECTED SMALL SCALE ENTERPRISES IN IKOSI-KETU COUNCIL DEVELOPMENT AREA OF LAGOS STATE, NIGERIA
This study has investigated the effects of leadership style on organizational performance in small scale enterprises. The major objective was to determine effect
of leadership styles on performance in small scale enterprises. Transformational and transactional leadership styles were considered in this study.
Transformational leadership behaviours and performance/outcome considered relevant in the study were charisma, inspirational motivation and intellectual
stimulation/individual consideration; and effectiveness, extra effort and satisfaction, respectively. Transactional leadership bahaviours and
performance/outcome variables were constructive/contingent reward and corrective/management by exception; and effort, productivity and
loyalty/commitment, respectively. The study followed a survey design, and employed evaluative quantitative analysis method. Analysis was based on primary
data generated through a structured Multifactor Leadership Questionnaire (MLQ) administered on respondents. Responses to research statements were scaled
and converted to quantitative data via code manual developed for the study to enable segmentation of the data responses into dependent and independent
variables based on leadership behaviours and associated performance variables. OLS multiple regression models were specified, estimated and evaluated. The
result showed that while transactional leadership style had significant positive effect on performance, transformational leadership style had positive but
insignificant effect on performance. The study concluded that transactional leadership style was more appropriate in inducing performance in small scale
enterprises than transformational leadership style and, therefore, recommended transactional leadership style for the small enterprises with inbuilt strategies
for transition to transformational leadership style as the enterprises developed, grew and matured.
7 - Hakan Erkutlu, (2008) entitled: "The impact of transformational leadership on organizational and leadership effectiveness: The Turkish case",
The purpose of this paper is to examine the influence of leadership behaviors on both organizational and leader effectiveness at boutique hotels.
Design/methodology/approach – A total of 722 subjects (60 managers and 662 non-managerial employees) participated in this study from 60 boutique hotels.
Participants were told that the study was designed to collect information on the leadership styles used by managers and on the satisfaction and commitment of
employees in the hospitality workforce. Multifactor Leadership Questionnaire, Organizational Commitment Questionnaire and Job Descriptive Index were used
to assess leadership behaviors of the boutique hotels' first-line managers and commitment and satisfaction levels of employees, respectively.
8 - Aruna B. Bhat(2013), entitled: Impact of Transformational Leadership Style On Organizational Learning.
The aim of this study is to determine the relationsip between transformational leadership and organizational learning among different nature of Indian
organizations. The paper explores certain characteristics / factors of transformational as well as transactional leadership which significantly affect organizational
learning. Using Bass and Avolio’s MLQ framework of leadership and Pareek’s old of organizational learning on a sample of 125, the results reveal that:
(1) Transformational leaders affect significantly negative to organizational learning
(2) Contingent reward of transactional leadership significantly affects organizational learning
(3) Innovation and experimentation of organizational learning has more effect on transactional leadership as compared to transformational.
Shebin El-Kom,Nile &Belal ,(2012), entitled: Leadership Styles and Organizational Learning An Empirical Study on Saudi Banks in Al-Taif Governorate Kingdom of
Saudi Arabia.
This paper investigates how two important research streams, namely Leadership Styles (LS) and Organizational Learning (OL), might be related. In other words,
LS and OL represent two rich lines of research: one is about how people lead and the other is about how people learn. Specifically, this contribution addresses
two issues (1) the evaluative attitudes of the employees towards LS and OL and (2) the relationship between LS and OL. This study was conducted at Saudi banks
in Al-Taif Governorate, Kingdom of Saudi Arabia. This research is practical, according to its purpose, and descriptive according to its data collection method.
Three groups of employees at Saudi banks were reviewed. Of the 335 questionnaires that were distributed, 285 usable questionnaires were returned, response
rate of 85%. The finding reveals that there are differences among the three groups of employees regarding their evaluative attitudes towards LS and OL. Also,
this study reveals that the aspects of LS have a significantly direct effect on OL.
Accordingly, the study provides a set of recommendations that included the need for Transactional Leadership Styles (TALS) in general, and Transformational
Leadership Style (TFLS) in particular, in order to achieve the best response to the needs and wishes of the workers at Saudi banks to increase their contribution
to the achievement of OL on the one hand, and raise the level of their performance and enhance competitive advantage of these organizations on the other
hand.
SECOND: PREVIOUS STUDIES DISCUSSION
The purpose of the previous studies was to recognize the analysis of the prevailing leadership styles among a sample of administrators in a number of different
Jordan business organizations in the light of their cultural values. Also to the identification of gender factor effect on the males and females leadership styles .
This study aimed to investigate the relationship between styles and methods that the leader adopts and their relationship to the culture of the institution
(hospital), as well as their relationship to the level of the Yemeni nurse's career satisfaction. Also aimed to determine the surrounding changes affect on
administrative leadership to seek the most successful formulas in order to keep pace with those changes and work to contain it.
In the other hand, the current study was aimed to understand the played role by the different leadership styles (autocratic, democratic, participatory, balanced,
and doctorial) in a sample of institutions. revealing work functionality among the employees in the institutions.
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NEED / IMPORTANCE OF THE STUDY
The study value is recognition the leadership methods and styles in the public institution (Autocratic, Democratic, Participatory, Balanced, Dictatorial) and how
they effect ,concerning a sample of public institutions, on the employees work functionality in these institutions and recognizing the employees characteristics,
which lead to a better understanding of basics and guidance. Brought a suitable atmosphere for the employees in these institutions. Highlight the relationship of
leadership styles with work functionality aspects of the employees in these institutions, then identifying the factors that can increase or improve their work
skills.
The study discussion is in attempting to discover the effect of leadership methods and styles diversity in the institutions and on the work functionality of its
employees. The leadership is considered one of the important fields which helps in interpreting and understanding many of the related problems concerning the
work functionality in public institutions. Study problem can be identified in the following aspects:
1- Revealing if there are distinctions in the work functionality in the institutions, this comes as a result of leadership styles variation: (Autocratic, Democratic,
Participatory, Balanced, Dictatorial) concerning a sample of institutions.
2- Recognition the effect of experience interaction and the educational major on the work functionality in the institutions.
OBJECTIVES OF THE STUDY
1- Understanding the roles at the variance of leadership styles (Autocratic, Democratic, Participatory, Balanced, Dictatorial) on work functionality concerning a
sample of public institutions in Irbid Governorate.
2- Reveling the work functionality of the public institutions employees in Irbid Governorate.
HYPOTHESES OF THE STUDY
123456-
There is a practicing for the five styles of leadership (Autocratic, Democratic, Participatory, Balanced, Dictatorial) on the performance concerning a sample
of public institutions.
There is a positive correlation statistically indicative between the democratic Leadership style and work functionality in the public institutions.
There is a positive correlation statistically indicative between the autocratic leadership style and work functionality in the public institutions.
There is a positive correlation statistically indicative between the participatory leadership style and work functionality in public institutions.
There is a positive correlation statistically indicative between the balanced leadership style and work functionality in the public institutions.
There is a negative correlation statistically indicative between doctorial leadership style and levels of work functionality in the public institutions.
RESERCH METHODOLOGY OF THE STUDY
The study depends on the methodology of descriptive research, besides field research. Concerning the descriptive research; the study based on giving an
accurate image of administrative leadership styles, while the field research based on collecting the data via a questionnaire was designed by the researcher
himself and will be discussed under the title of Study Method .
THE STUDY POPULATION
The study community is consist of a group of employees working in (the Municipality, Water Authority, Power Company) in Irbid Governorate .
Study Sample: The study sample consists of (100) employees, chosen randomly, work in the public institutions in Irbid governorate.
Water Authority
Power Company
The Municipality
Total
Community
53
55
160
218
Sample
30
30
40
100
STUDY METHOD
The study method is a questionnaire was giving to the employees for filling it, in order to understand the extent of the independent variables effect (Autocratic,
Democratic, Participatory, Balanced, Dictatorial) on the dependant variable (work functionality) and it consists of two parts:
First Part: contains the Personal Data of the employees in the studied public institutions, which are gender, education, experience, age and position.
Second Part: Consists of (41) paragraph that measure the study variables, both dependant and independent .
STUDY RELIABILITY
The Study Reliability is (0.90), which is a high percentage that can be reliable in generalization the results. The Reliability means that if this study would be
repeated after a certain period of time within the same conditions we would get the same results.
THE ADOPTED STATIC METHOD
Extracting the correlation coefficient (Pearson ) to study the administrative leadership styles effect on the performance in the public institutions (Irbid
Governorate ).
Implementing the one-way regression formula to study the administrative leadership styles effect on the performance in the public institutions (Irbid
Governorate ).
PROCEDURAL DEFINITIONS
Leadership: It’s a source of authority and effect, where its role is considered one of the most important roles related to the group structure center. (Algahtani,
2001).
Style: The leader frequent behavior during the fulfillment of his/her daily administrative tasks and so on. The leader can adopt a certain method or style for
his/her leadership as a result of his/her experience, then this style, which characterizes him/her, can be considered as his/her behavior by whom he/she works
with. (Alzageer, 1404 H).
Autocratic Style: This type of leadership is defined with many definations such as the militarism leadership or despotic leadership (doctorial). This type of leaders
is distinctive with his/her arbitrary behavior which he/she obtains from his/her commissioned authority.
Democratic Style: One of the leadership styles, this style is adopted as a result of leader believe and conviction that the officials participation and consultation
with them in the matters that are related to the system activities is the way that leads to the best results. The leader here adopts the participation of his/her
subordinates in leadership responsibility, as he/she distributes the responsibilities among them and involves them in his/her tasks rather than restriction of the
authorities on his/her side, also he/she enhances the relationships between the group individuals.
Balanced Style: This style cares about both the work and the individuals on a balanced and moderate base through observance the individuals morals and
achieving a satisfactory level of performance.
Dictatorial Style: This type of leadership is defined with many definitions such as despotism and arbitrariness. Whatever is the definition, in this type of
leadership the leader is distinguished by his/her orders and these orders are based on authority of dominating the rewards and penalties. Also the philosophy of
this type of leadership based on restriction all the authorities and references on his/her side, as he/she supervises all details and does not participate with
anyone; he/she adopts the absolute power.
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MODEL STUDY
INDEPENDENT VARIABLES
DEPENDANT VARIABLE
Democratic leadership Style
Autocratic leadership Style
Functionality Performance
Participatory leadership Style
Balanced leadership Style
Doctorial leadership Style
Source: designed by the researcher (Dr. Al-hazaymeh, Ahmad, 2013)
RESULTS DISCUSSION, AND HYPOTHESIS TESTING
This part will present the results of the study aimed to identify the "Impact of Leadership Styles on performance in public institutions (Irbid)", also includes a
description of the study sample according to the personal variables.
Following is the results display:
TABLE (1): SHOWS THE DISTRIBUTION OF THE SAMPLE INDIVIDUALS DEPENDING ON THE PERSONAL VARIABLES
Variable
Level
Repetition Percentage
Male
72
72.0
Gender
Female
28
28.0
Total
100
100.0
Under 25 years
12
12.0
26-35 years
35
35.0
Age
36-45 years
22
22.0
46 years and above
31
31.0
Total
100
100.0
Employee
73
73.0
Department Head
15
15.0
Position
Expert/Member
5
5.0
Bureau Director/ Deputy Director 7
7.0
Total
100
100.0
Under 5 years
21
21.0
5-10 years
17
17.0
Experience 11-15 years
17
17.0
15 years and more
45
45.0
Total
100
100.0
Ph.D.
11
11.0
Master
24
24.0
Education
High Diploma
39
39.0
B.A
26
26.0
Diploma
Total
100
100.0
It's noticed from the above table as follows:
1 - The percentage of males in the sample is (72.0%), while the percentage of females is (28.0%).
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2 - The highest percentage for the distribution of sample by age is (35.0%) for the age group (26-35 years), while the lowest percentage is (12.0%) for the age
group (25 years old or less).
3 - The highest percentage for the distribution of the sample according to the position is (73.0%) for the position is (employee), while the lowest percentage is
(5.0%) for the position (expert / member).
4 - The highest percentage for the distribution of the sample depending on experience is (45.0%) of the level of experience (more than 15 years), while the
lowest percentage is (17.0%) to levels of experience (5-10 years, 11-15 years).
The highest percentage for the distribution of the sample according to the academic degree is (39.0%) for the degree (Higher Diploma), while the lowest
percentage is (11.0%) for the degree (PhD).
HYPOTHESES TESTING
The first hypothesis: There is a moderate level of exercise for the five leadership styles (autocratic, democratic, participatory, balanced, doctorial) in public
institutions in Irbid governorate.
In order to validate this hypothesis the arithmetic averages and standard deviations was extracted for the study sample answers on all the paragraphs of the
leadership styles area. Also (One Sample T-test) have been applied shows that..
TABLE (2): ARITHMETIC AVERAGES AND STANDARD DEVIATIONS FOR THE ANSWERS OF STUDY SAMPLE FOR ALL THE ITEMS OF LEADERSHIP STYLES AREAS
No. Paragraph
Arithmetic
Standard
Average
Deviations
Democratic leadership
1.
Administrator praises the excellent works that improve the performance of employees in the institution.
4.22
0.99
2.
Administrator works with the members and the personal in the spirit of the one team
4.00
1.17
3.
Management seeks to facilitate the atmosphere to stimulate employees to exert maximum efforts to achieve the
3.79
1.13
desired objectives
4.
Administrator distributes leadership positions to employees in accordance with the principle of efficiency and
3.31
1.18
equality of opportunity
5.
Administrator fulfills personal needs of the institution employees
1.24
3.37
Autocratic leadership
6.
Administration acts without consulting any one of the institution members.
3.70
1.30
7.
Administration is keen to exploit the maximum potential of employees.
3.75
0.98
8.
Administrator works with open mind in case of employees differences
2.62
1.39
9.
Administrator follows the method of strict control to follow the employees in the institution
3.26
1.19
10.
Administrator follows threat and pressure to do the work in the institution
2.94
1.38
Participatory leadership
11.
Administrator shares the information and influence among his/her subordinates and the subordinates are equally
3.90
1.20
treated in the institution
12.
Administrator allows the employees to influence his/her decisions by participating in the final decision, which are
3.77
0.98
linked to their specializations in the institution
13.
Administrator has a strong and positive impact on productivity and morale in the institution
3.88
1.05
14.
Administrator distinguished with intelligence and common sense and good treatment in the institution
3.99
1.09
15.
Administrator fulfills personal needs of employees in the institution
3.40
1.29
Balanced leadership
16.
Administrator observes both individuals and work in a balanced way in the institution
3.88
1.11
17.
Administrator keeps the morale of the employees and achieving satisfactory performance level in the institution
3.76
1.05
18.
Administrator prefers to work with a cooperative and committed team has the highest degree of enthusiasm in order
3.87
0.99
to achieve the objectives of the institution
19.
Administrator fulfills the desires and needs of the employees in the institution
3.47
0.99
20.
Administrator works to create a working environment dominated by high respect, confidence and effectiveness in the 3.58
1.25
institution
Doctorial leadership
21.
Administrator is distinguished with that he/she orders and his/her orders are supported by the ability to reward and
3.76
1.24
penalty
22
Administrator concentrate all authorities and powers in his/her hand as he/she executes all the details and does not
3.25
1.36
allow anyone to involve with him
23
Administrator works on improving the performance of work and self-growth of the working body but very slowly
3.30
1.12
24.
Administrator considers the employee as unacceptable except in cases of necessary and emergency because he/she
2.94
1.19
destroys personal and hampers its improvement in the institution
25.
Administrator is the reason of the lack of unity and human work in the institution
2.69
1.30
The above table shows the following:
1 - The highest arithmetic average of the sample answers for the paragraph of democracy style is (4.22) for the paragraph (1) " Administrator praises the
excellent works that improve the performance of employees in the institution ", while the lowest arithmetic average is (3.31) for paragraph (4) " Administrator
distributes leadership positions to employees in accordance with the principle of efficiency and equality of opportunity.”
2 - the highest arithmetic average of the sample answers for the autocracy style paragraph is (3.75) for paragraph (7) " Administration is keen to exploit the
maximum potential of employees ", while the lowest arithmetic average is (2.62) for paragraph (8) " Administrator works with open mind in case of employees
differences " .
3 - The highest arithmetic average of the sample answers for the paragraph of participatory style is (3.99) for paragraph (14) " Administrator distinguished with
intelligence and common sense and good treatment in the institution.", While the lowest arithmetic average is (3.40) for paragraph (15) " Administrator fulfills
personal needs of employees in the institution. "
4 - The highest arithmetic average of the sample answers for the paragraph of balanced style is (3.88) for paragraph (16) "Administrator observes both
individuals and work in a balanced way in the institution ", while the lowest arithmetic average is (3.47) for paragraph (19) " Administrator fulfills the desires and
needs of the employees in the institution. "
5 - highest arithmetic average of the sample answers for the paragraph of dictatorial style is (3.76) for paragraph (21) " Administrator is distinguished with that
he/she orders and his/her orders are supported by the ability to reward and penalty ", while the lowest arithmetic average is (2.69) for paragraph (25) "
Administrator is the reason of the lack of unity and human work in the institution".
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TABLE (3): TEST RESULTS OF THE APPLICATION (ONE SAMPLE T-TEST) ON THE LEADERSHIP STYLES FIELDS
Field
arithmetic average Standard Devotion Average Score T
Unrestraint Degrees Statistically function
Democratic Style
3.74
0.90
High
8.17 99
0.00
Autocratic Style
3.25
0.82
Average
3.10 99
0.00
Participatory Style 3.79
0.84
High
9.43 99
0.00
Balanced Style
3.71
0.87
High
8.14 99
0.00
Doctorial Style
3.19
0.98
Average
1.92 99
0.00
The above table shows the following:
1 – there is a high level and statistically indicative at the function level of (α = 0.05) from the exercise of autocratic style, as the value of (T) is (8.17), which a
statistically indicative value as the arithmetic average is (3.74) with a high assessment degree.
2 – There is an average level and statistically indicative at the function level of (α = 0.05) from the exercise of autocratic style, as the value of (T) is (3.10), which
is a statistically indicative value as the arithmetic average is (3.25) with an average assessment degree.
3 – there is an average level and statistically indicative at the function level of (α = 0.05) from the exercise of the autocratic style, as the value of (T) is (3.10),
which is a statistically indicative value as the arithmetic average is (3.25) with an average assessment degree.
4 – There is a high level and statistically indicative at the function level of (α = 0.05) of exercise of a balanced style, as the value of (T) is (8.14), which is a
statistically indicative value as the arithmetic average is (3.71) with a high assessment degree
5 - there is an average level and not statistically indicative at the function level of (α = 0.05) of exercise of the dictatorial style, as the value of (T) is (1.92) a value
that is not statistically indicative as the arithmetic average is (3.19) with an average assessment degree.
As the above it is clear there is an average level of exercise for the five leadership styles (autocratic, democratic, participatory, balanced, dictatorial) in public
institutions in Irbid governorate , and thus the first hypothesis of the study is accepted.
The second hypothesis: There is a positive statistically indicative relation at the function level of (α = 0.05) between work functionality and democratic
leadership style in the institutions.
In order to validate this hypothesis; Pearson correlation coefficient(Pearson Correlation) has been extracted between the areas of work functionality and the
democratic leadership style, and the application of one way regression analysis (Simple Regression) to study the effect of the democratic leadership style every
area of work functionality separately and work functionality as a whole, tables (4-5) show that
TABLE (4): PEARSON CORRELATION COEFFICIENT BETWEEN THE AREAS OF WORK FUNCTIONALITY AND WORK FUNCTIONALITY AS A WHOLE AND THE AREA
OF DEMOCRATIC LEADERSHIP STYLE
Work Functionality
Democratic Leadership Style
Work Functionality Pace
Correlation Coefficient 0.23
Statistically Function
0.02
Work Functionality Size
0.03
Work Functionality Quality
0.00
Work Functionality as A Whole Correlation Coefficient 0.34
0.00
The above table shows that all the correlation coefficients between the areas of work functionality and work functionality as a whole and the area of democratic
leadership style, were positive and statistically indicative at the function level of (α = 0.05).
TABLE (5): RESULTS OF APPLYING THE ONE WAY REGRESSION ANALYSIS (SIMPLE REGRESSION) TO STUDY THE EFFECT OF DEMOCRATIC LEADERSHIP STYLE ON
EVERY AREA OF WORK FUNCTIONALITY SEPARATELY AND WORK FUNCTIONALITY AS A WHOLE
Work Functionality
β
T
R
R Square F
statistically Function
Correlation Coefficient
0.23 0.29 2.30 0.23 0.05
5.05 0.02
0.22 0.28 2.20 0.22 0.04
0.04 0.03
0.35 0.40 3.70 0.35 0.12
0.12 0.00
Work Functionality as A Whole Correlation Coefficient
0.34 0.49 3.60 0.34 0.11
0.11 0.00
The above table shows that there is a positive effect statistically indicative at the function level of (α = 0.05) for the democratic leadership style on every area of
work functionality separately and work functionality as a whole, where all the values of (β, T) is positive and statistically indicative, as shown by the existence of
a relationship statistically indicative between the democratic leadership style on every area of work functionality separately and work functionality as a whole,
where all the values of (F, R, R Square) statistically indicative, as already shown there is a positive correlation statistically indicative at the function level of (α =
0.05) between work functionality and democratic leadership style in the institutions, therefore, the second hypothesis of the study is accepted.
The third hypothesis: There is a positive correlation statistically indicative at the function level of (α = 0.05) between work functionality and autocratic
In order to validate this hypothesis, the correlation coefficient Pearson (Pearson Correlation)has been extracted between the areas of work functionality and the
style of autocratic leadership, and the application of mono regression analysis (Simple Regression) to study the impact of autocratic leadership style on each
area of functionality separately and functionality as a whole, tables (6-7) are show this.
TABLE (6): PEARSON CORRELATION COEFFICIENT BETWEEN THE AREAS OF WORK FUNCTIONALITY AND WORK FUNCTIONALITY AS A WHOLE AND THE
AUTOCRATIC LEADERSHIP STYLE
Work Functionality
Autocratic Leadership Style
0.48
0.71
0.19
0.26
The above table shows that all the correlation coefficients between the areas of work functionality and work functionality as a whole and the autocratic
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TABLE (6): RESULTS OF APPLYING THE ONE-WAY REGRESSION ANALYSIS (SIMPLE REGRESSION) TO STUDY THE EFFECT OF AUTOCRATIC LEADERSHIP STYLE ON
Work Functionality
β
T
R
R Square F
0.08 0.71 0.07 0.005
0.51 0.47
0.04 0.37 0.04 0.001
0.14 0.71
0.14 1.32 0.13 0.010
0.76 0.18
Work Functionality as A Whole 0.14 1.13 0.11 0.013
1.28 0.26
The above table shows that there is a positive effect and not statistically indicative at the function level of (α = 0.05) for the autocratic leadership style on each
area of work functionality separately and work functionality as a whole, where all the values of (β, T) is positive and statistically indicative, as shown there is no
indicative relationship between autocratic leadership style on each area of work functionality separately and work functionality as a whole, where all the values
of (F, R, R Square) statistically indicative, as the above shows there is a lack of a positive correlation statistically indicative at the level function of (α = 0.05)
between work functionality and autocratic leadership style in the institutions, therefore, the third hypothesis of the study rejected.
The fourth hypothesis: There is a positive correlation statistically indicative at the function level of (α = 0.05) between work functionality and participatory
In order to validate this hypothesis, the correlation coefficient Pearson (Pearson Correlation) has been extracted between the areas of work functionality and
the participatory leadership style and The application of one way regression analysis (Simple Regression) to study the effect of participatory leadership style on
each area of work functionality separately and work functionality as a whole, tables (6-7) show that
TABLE (7): PEARSON CORRELATION COEFFICIENT BETWEEN THE AREAS OF WORK FUNCTIONALITY AND WORK FUNCTIONALITY AS A WHOLE AND
PARTICIPATORY LEADERSHIP STYLE
Work Work Functionality
participatory Leadership Style
0.00
0.00
0.00
0.00
The above table shows that all the correlation coefficients between the areas of work functionality and work functionality as a whole and the participatory
leadership style, were positive and statistically significant at the significance level (α = 0.05).
TABLE (8): RESULTS OF APPLYING THE ONE-WAY REGRESSION ANALYSIS (SIMPLE REGRESSION) TO STUDY THE EFFECT OF PARTICIPATORY LEADERSHIP STYLE
ON EVERY AREA OF WORK FUNCTIONALITY SEPARATELY AND WORK FUNCTIONALITY AS A WHOLE
Work Functionality
β
T
R
R Square F
0.51 4.72 0.43 0.18
22.31 0.00
0.35 2.96 0.29 0.08
8.79
0.00
0.54 5.86 0.51 0.26
34.41 0.00
35.99 0.00
The above table shows that there is a positive effect statistically indicative at the function level of (α = 0.05) of the participatory leadership style on each area of
workfunctionality separately and work functionality as a whole, where all the values of (β, T) is positive and statistically indicative, as shown there is a
relationship statistically indicative between the participatory leadership style on each area of work functionality separately and work functionality as a whole,
where all the values of (F, R, R Square) statistically indicative, which already shown a positive correlation statistically indicative at the function level of (α = 0.05)
between work functionality and participatory leadership style in the institutions, therefore, the fourth hypothesis of the study is accepted.
The fifth hypothesis: There is a positive correlation statistically indicative at the function level of (α = 0.05) between work functionality and the balanced
the balanced leadership style, and the application of one-way regression analysis (Simple Regression) to study the effect of balanced leadership style on each
area of work functionality separately and work functionality as a whole, tables (8-9) illustrate this:
TABLE (9): PEARSON CORRELATION COEFFICIENT BETWEEN THE AREAS OF WORK FUNCTIONALITY AND WORK FUNCTIONALITY AS A WHOLE AND BALANCED
LEADERSHIP STYLE
Work Functionality
balanced Leadership Style
0.00
0.00
0.00
0.00
The above table shows that all the correlation coefficients between the areas of work functionality and work functionality as a whole and the balanced
TABLE (10): RESULTS OF APPLYING THE ONE-WAY REGRESSION ANALYSIS (SIMPLE REGRESSION) TO STUDY THE EFFECT OF BALANCED LEADERSHIP STYLE ON
Work Functionality
β
T
R
R Square F
0.43 3.67 0.35 0.12
13.51 0.00
0.35 2.88 0.28 0.08
8.33
0.00
0.47 4.65 0.43 0.18
21.70 0.00
23.60 0.00
The above table shows that there is a positive effect statistically indicative at the function level of (α = 0.05) for the balanced leadership style on each area of
work functionality separately and work functionality as a whole, where all the values of (β, T) is positive and statistically indicative, as shown there is a
relationship statistically indicative between the balanced style of leadership on each area of work functionality separately and work functionality as a whole,
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where all the values of (F, R, R Square) statistically indicative, which already shown a positive correlation statistically indicative at the function level of (α =
0.05) between work functionality and balanced style of leadership in the institutions, therefore, the fifth hypothesis of the study is accepted.
Sixth hypothesis: There is a negative correlation statistically indicative at the function level of (α = 0.05) between work functionality and doctorial leadership
style in the institutions.
the doctorial leadership style, and the application of one-way regression analysis (Simple Regression) to study the effect of doctorial leadership style on each
area of work functionality separately and work functionality as a whole, tables (10-11) illustrate this:
TABLE (11): PEARSON CORRELATION COEFFICIENT BETWEEN THE AREAS OF WORK FUNCTIONALITY AND WORK FUNCTIONALITY AS A WHOLE AND
DOCTORIAL LEADERSHIP STYLE
Work Functionality
Doctorial Leadership Style
Correlation Coefficient -0.02
0.82
0.34
0.79
Work Functionality as A Whole Correlation Coefficient -0.05
0.62
The above table shows that all the correlation coefficients between the areas of work functionality and work functionality as a whole and the doctorial
leadership style, was negative and statistically indicative at the function level of (α = 0.05).
TABLE (12): RESULTS OF APPLYING THE ONE-WAY REGRESSION ANALYSIS (SIMPLE REGRESSION) TO STUDY THE EFFECT OF DOCTORIAL LEADERSHIP STYLE ON
Work Functionality
β
T
R
R Square F
statistically function
-0.03 -0.22 0.02 0.001
0.05 0.82
-0.13 -0.96 0.10 0.009
0.93 0.33
-0.03 -0.26 0.03 0.001
0.07 0.79
Work Functionality as A Whole -0.07 -0.49 0.05 0.002
0.24 0.62
The above table shows that there is a negative effect and statistically indicative at the function level of (α = 0.05) of the doctorial leadership style on each area
of work functionality separately and work functionality as a whole, where all the values of (β, T) is negative and statistically indicative, as shown the lack of
indicative relationship between doctorial leadership style for every area of work functionality separately and work functionality as a whole, where all the values
of (F, R, R Square) statistically indicative, the above shows the absence of a negative correlation statistically indicative at the function level of (α = 0.05) between
work functionality and doctorial leadership style in the institutions, thus the sixth study hypothesis is rejected.
FINDINGS AND CONCLUSIONS
This study has evaluated the THE EFFECT OF LEADERSHIP STYLES ON THE FUNCTIONAL PERFORMANCE OF EMPLOYEES IN PUBLIC INSTITUTIONS the Analysis and
hypothesis testing has shown the following:
1 - There is an average level of exercise for the five leadership styles (autocratic, democratic, participatory, balanced, and doctorial) in the public institutions in
Irbid governorate.
2 - There is a positive correlation statistically indicative at the function level of (α = 0.05) between work functionality and democratic leadership style the
institutions.
3 - There is a positive correlation statistically indicative at the function level of (α = 0.05) between work functionality and the autocratic leadership style in the
institutions.
4 - There is a positive correlation statistically indicative at the function level of (α = 0.05) between work functionality and participatory leadership style in the
institutions.
5 - There is a positive correlation statistically indicative at the function level of (α = 0.05) between work functionality and balanced leadership style in the
institutions.
6 - There is a negative correlation statistically indicative at the function level of (α = 0.05) between work functionality and doctorial leadership style in the
institutions.
RECOMMENDATIONS
Based on the above the study recommends the following:
1 - Taking into account the principle of efficiency and equality of opportunities in the allocation of leadership positions for the employees in public institutions.
2 - Spread the spirit of affection and cooperation between employees of public institutions in Jordan.
3 - Taking into account the personal needs of employees by administration in the public institutions.
4 - Attempt to fulfill the wishes and needs of employees working in the public institutions.
5 – Supporting the human work unit in the public institutions in Jordan.
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EFFICIENCY OF INDIAN STOCK MARKET: EVIDENCES BASED ON STOCK SPLITS
SULTAN SINGH
DEAN
DEPARTMENT OF BUSINESS ADMINISTRATION
CHAUDHARY DEVI LAL UNIVERSITY
SIRSA
KUMARI SAPNA
ASST. PROFESSOR
DEPARTMENT OF FOOD BUSINESS MANAGEMENT AND ENTREPRENEURSHIP DEVELOPMENT
NATIONAL INSTITUTE OF FOOD TECHNOLOGY ENTREPRENEURSHIP AND MANAGEMENT
KUNDLI
ABSTRACT
Stock split remains one of the puzzling anomalies in the behaviour of stock prices and stock liquidity since they are only numeraire changes in stock price
denominations that have no impact on investors’ fraction of equity ownership. Stock splitting is a device for managers to signal their highest earnings potential to
financial markets. Due to this cosmetic feature, it persuade to checkout whether stock market reacts positively or not. Since the publication of the paper of Fama,
Fisher, Jensen and Roll (1969) that investigate the share price performance of splitting firms, many hypotheses have emerged and empirical studies have been
conducted to explain the puzzling market reaction to stock splits. The present study aims to examine the efficiency of Indian stock market around stock splits
announcement in India during the period 2006-07 to 2009-10. A database of 309 observations by complete enumeration method has been constructed, which
reduced to 219 observations after implementing the criteria. The event study methodology has been used for calculating the abnormal returns by using Sharpe
Single Index Model and CAPM and further, two methods i.e. percentile method and the paired t-test for means has been used to examine the impact of
announcement on liquidity. The results indicate that CAARs has been found significant around announcement date. The study found mixed results regarding
liquidity aspect. In percentile method, turnover, traded quantity, number of transactions has increased only in few companies during periods under study but the
results of the paired t-test for are contradictory to above results.
KEYWORDS
Event Study, CAPM, Single Index Model, Stock Splits.
INTRODUCTION
S
tock splits remain one of the puzzling anomalies in the behaviour of stock prices and stock liquidity since they are only numeraire changes in stock price
denominations that have no impact on investors’ fraction of equity ownership. The balance sheet items remain same except that the total number of
outstanding shares of the company increases proportionately to the ratio of split. The reason for the interest is therefore to understand why managers
would undertake such (potentially costly) cosmetic decisions. In order to make their more tradable, affordable and also to increase the P/E ratio is one of the
reasons behind stock split. But in reality there is no change in P/E ratio. Also, stock splitting is a device for managers to signal their highest earnings potential to
financial markets. Due to this cosmetic feature, it persuade to checkout whether stock market reacts positively or not. However, previous research has
documented positive price performance subsequent to splits. (Grinblatt et al. (1984) and Lamoureux and Poon (1987) support the signaling hypothesis that firms
use stock splits to signal future positive earnings. Since the publication of the classic paper of Fama, Fisher, Jensen and Roll (1969) that investigated the share
price performance of splitting firms, many hypotheses have emerged and empirical studies have been conducted to explain the puzzling market reaction to stock
splits. The more prominent hypotheses are the signaling hypothesis, the optimal trading range hypothesis, the liquidity hypothesis, the tax option hypothesis,
and the managerial entrenchment hypothesis.
In the process of continuous evaluation of efficiency of Indian stock market with regard to stock split, the various academicians, scholars and administrators have
made several studies but in different periods and in different perspectives. Mishra (2007) examined the market effect of stock splits on stock price, return,
volatility and trading volume around the split ex-dates for a sample of stock splits undertaken in the Indian stock market over the period 1999–2005. The
empirical evidence confirms a negative effect on price and return of stock splits. The overall cumulative abnormal returns after the split are negative. These
results suggest that stock splits have induced the market to revise its optimistic valuation about future firm performance, rejecting signaling hypothesis to which
splits convey positive information to the markets. Hence, stock splits have reduced the wealth of the shareholders. The results also showed that presence of a
positive effect on volatility and trading volume following the split events, thus suggesting that split events enhance liquidity. Joshipura (2009) analyzed returns
price effects surrounding announcement date of stock split. A sample of 94 companies has been taken for the study which announced stock split June 2002 to
June 2007. The study concluded that price effect associated with stock split is significant on and around announcement and effective day of stock split with
significant positive abnormal return of 1.08 per cent 1.66 per cent found on announcement and effective day respectively. There is a clear evidence of significant
improvement in traded volume (turnover) associated with stock split surrounding both announcement and effective day and it sustains in post event days.
Choudhary and Choudhary (2009) examined the stock return behavior vis-à-vis stock splits in Indian context during the period from December 1999 to
December 2007. It also makes an effort to disentangle the liquidity, trading range and neglected firm hypothesis. Consistent to earlier evidence, the study also
documents the stock split announcement and execution effect in Indian context. The results regarding trading volume and daily turnover led to negation of
improvement in liquidity after stock splits in India. The study could not support the trading range hypothesis as possible explanation of stocks splits in India as
majority of shares which split were trading at low market prices. While the neglected firm hypothesis could firmly be associated with the stock splits in India.
Raja and Sudhahar and Selvam (2009) examined the informational efficiency of Indian stock market with regards to stock split announcement released by the
information technology companies. The result of the study showed that the security prices reacted to the announcement of stock splits. The reaction took place
for a very few days surrounding day 0 and it was extended up to +15 for the remaining days. Thus, one can conclude that the Indian stock markets in respect of
IT companies in general are efficient, but not perfectly efficient to the announcement of stock split. This can be used by investors for making abnormal returns at
any point of the announcement period. Martin and Nishikawa and Qi (2009) examined the intra-industry effects of stock split announcements within the
insurance industry. Stock split announcements are interesting to study because stock splits are cosmetic accounting changes where no cash flows are directly
affected. Therefore, as suggested by Tawatnuntachai and D’Mello (2002), the analysis of stock price reactions of non-splitting firms could provide an ideal setting
to test the intra-industry informational content of stock splits. When managers of the firm decide to issue a stock split, analysts need to decipher the underlying
signal of this decision and determine the valuation implications for the splitting firm as well as for the other firms in the industry. Suresha B and Naidu (2011)
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tested whether the investor can make an above normal return by relying on public information impounded in a stock split announcement. Stock split sample
observations for the announcement and the corresponding S&P CNX IT SECTOR INDEX were analyzed using standard risk adjusted event study methodology.
Abnormal returns were calculated by use of the market model and t-tests are conducted to test the significance. The study found out that the Indian market
reacts positively to stock splits, as shown by a general increase in volumes of shares traded around the stock split. There is also an increase in trading activity
after the stock split as compared to that before the stock split. Consistent with the signaling hypothesis, the study also equally found out that on the split date
and on days around the stock split, there was a positive average abnormal return that was significant at 5 per cent level of significance. The results of the
cumulative abnormal return indicated that there is a positive cumulative abnormal return across the different event windows.
Above review of literature shows that various researchers studied on different hypothesis associated with stock splits likewise trading range, signaling, liquidity,
optimal tick size, etc. In most of the Indian research studies, standard event study methodology has been used. However, some researchers (Joshipura, 2009;
Chaudhary & Chaudhary, 2009) stated that stock splits are cosmetics event and found in their study that abnormal returns occurred around the announcement
date while some other researcher (Mishra, 2007) found a negative effect on prices and returns on stock splits and overall cumulative abnormal returns after the
split are negative. But there is not even a comprehensive study regarding stock split announcement using Sharpe Single Index and CAPM and liquidity aspects for
investigating the stock market reactions. The present study focus on the stock market reactions to stock split, which measures the reactions by using Sharpe
Single Index Model as well as CAPM for a period of four years and also examined the impact of the corporate event on liquidity (turnover, traded quantity,
number of transactions).
OBJECTIVES, HYPOTHESES AND METHODOLOGY
The primary objective of the present study is to examine the semi-strong efficiency in Indian stock market. To achieve this objective, the following are the
specific objectives of the study:
1. To analyze the differences in abnormal returns calculated by using Sharpe Single Index Model and CAPM.
2. To examine the impact of selected corporate event on liquidity for the selected companies.
RESEARCH HYPOTHESES
The following hypotheses are formulated and tested to achieve the objectives of the study:
H01: Semi strong form of efficiency does not exist in the Indian stock market.
H02: There are no significant differences in the CAARs calculated by using Sharpe Single Index Model and Capital Asset Pricing Model for stock split
announcement.
H03: There are no significant differences in turnover after stock split announcement.
H04: There are no significant differences in traded quantity after stock split announcement.
H05: There are no significant differences in number of transactions after stock split announcement.
SAMPLE PROFILE AND DATA COLLECTION
To conduct the present study, a database based on complete enumeration method for a period of four years i.e. 2006-2010 has been constructed but splits only
in equity are considered in the present study. Number of the companies included in the sample has been selected on the basis of criteria i.e. the companies are
having data on event day/announcement day, the companies are having data for 5 days continuously before and after the event day, the companies are having
data for event estimation period and the companies are having data without interruptions. The required data regarding announcement date (day 0), historical
financial data, i.e. the stock price and BSE-SENSEX, turnover, traded quantity and number of transactions has been collected from the database CMIE-Prowess.
TABLE-1: NUMBER OF COMPANIES
Years
Before After Total
2006-07 90
52
142
2007-08 78
74
152
2008-09 84
38
122
2009-10 57
55
112
Total
309
219
528
DATA ANALYSIS
The Sharpe Single Index and CAPM have been used for calculating CAAR after that t-test has been applied to measure statistical significance. Under both the
models, same event window i.e. 30 days has been used. The following steps are used in the present study:
First of all, holding period returns of the companies and the corresponding BSE-SENSEX (Rm) for each day in the study period were calculated using the following
formula:
Rit = (Pit – Pit – 1) / Pit – 1
(1)
Where,
Pit = daily price for the share of a company i at time t.
Pit-1 = daily price for the share of a company I at time t-1.
Rmt = (It – It – 1) / It – 1
(2)
Where,
It = daily value for the market Index at time t.
It-1 = daily value for the market Index at time t-1.
A regression analysis was performed using the actual daily return of each company (dependent variable) and the corresponding BSE-SENSEX daily return
(independent variable) over prior to event period to obtain the intercept alpha and the standardized coefficient beta by using MS-Excel-2007. BSE-SENSEX has
been used as the benchmark index in the study because of widely accepted index for measuring the market return.
Assuming a constant beta value for a given stock j, the estimated return of stock j is calculated in the event window by using Sharpe Single Index Model, which is
defined as follows:
E (Rj) = α + β*Rmt + ℮
(3)
Where E is the expected return of company j at time t, while α and β are parameters of the regression equation. β is the stock beta value and Rmt is the daily
return on a stock market index m (BSE - SENSEX) at time t. The abnormal return is defined as the difference between the actual return on a stock j and its
expected return E. Therefore, the abnormal return of a stock j at time t is given as:
ARjt = Rjt - E(R) jt
(4)
The average abnormal return at time t (AAR) is the arithmetic mean of n stocks. The ARs of each company are averaged for each day surrounding the event day
(-30 to + 30 day) by using the following equation:
N
∑
ARjt
/ N
(AARt) = i = 1
The cumulative average abnormal return (CAAR) for security j is the sum of average abnormal returns in a given time period (t0, t1)
(5)
N
(CAARt) =
∑
AAR
(6)
t=1
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ISSN 2231-1009
CAPM
Daily risk free rate of return (rf) has been calculated by dividing 6.6964 (on 29 September 2010,364 day’s treasury bills rate) with 247 working days of SENSEX
(247 days = 52*5 days - holidays defined in BSE website). In the next step, daily risk free rate of return has been deducted from daily return of company as well
as SENSEX calculated in first step for pre-estimation period. After that, a regression analysis has been performed on these returns of pre-estimation period in
MS-Excel 2007 to get the value of intercept and slope. Assuming constant intercept and slope, expected return of the company has been calculated by using
Equation-3. Daily risk free rate of return has been subtracted from expected return to find the actual realized return of the company using Equation-8.
(7)
Actual Realized Return = E(R) jt - Rf
The abnormal return is defined as the difference between the actual return calculated in equation 8 on a stock j and its expected return E. Therefore, the
abnormal return of a stock j at time t is:
ARjt = Actual Realized Return - E(R) jt
(8)
Further, average abnormal return (AAR) and cumulative average abnormal return (CAAR) has been calculated by using equation 5 and 6.
Statistical Significance of CAARs
For testing the statistical significance, both parametric and non-parametric tests were used. The t-test applied for testing the significance levels of results arrived
at by analyzing the data. The t-statistics for AARs for each day during the event window is calculated as:
t=
AAR
σ ( AAR )
(9)
Where,
AARs= Average Abnormal Returns
σ = Standard error of average abnormal returns
The t statistic for CAARs for each day during the event window is calculated as follows:
t=
CAAR
σ (CAAR )
(10)
Where,
CAAR = Cumulative Average Abnormal Return
The standard error is calculated by using following formula:
S .E . = σ / n
(11)
TOOLS FOR ANALYSIS OF LIQUIDITY
For measuring impact of announcement of stock split for the present study, three aspect of liquidity (i) turnover (ii) trading quantity (iii) number of transactions
has been considered. To examine the impact of stock split on liquidity, two methods i.e. percentile change between before and after announcement during
event window and the paired t-test for means has been used. 30 days average turnover, trading quantity and number of transactions has been calculated for
before and after announcement day. After that, percentile method and the paired t-test for means has been used to see the change after announcement. The
Paired t-test for means has been performed with the help of Data Analysis Pak in MS-Excel 2007.
RESULTS AND DISCUSSIONS
COMPARISONS OF RESULTS OF CAARs
Table-2 depicts the results of Cumulative Average Abnormal Returns calculated by both the models for stock splits during 2006-2010. During 2006-07, it is found
significant from event window to t+5 day at 1 per cent level under both the models. Further, it occurred significant on t-18, t-16, t-11, t-10 and t+8 days at 10 per
cent level under Single Index Model, however the same is not true for CAPM. There are no occurrences of significant CAARs for any day before announcement
and also didn’t occur significant continuously for eight days even after announcement under both the models during the period of 2007-08. However, it is found
significant from t+18 to t+30 day at 1 per cent level under both the models. Same pattern is observed during the period of 2008-09. Again, it is not found
significant on event day under both the models. It is found significant hardly on any day before announcement except t-30 day. Though it occurred significant
from t+14 to t+30 day at 1 per cent level, on t-30 day at 10 per cent level, and on t+13 day at 5 per cent level under both the models. During 2009-10, CAAR is
found significant from t-10 to t+10 day at 1 per cent level under both the models and from t+11 day onwards to last day of event window at 1 per cent level
under CAPM, and from t+11 to t+21 day at 5 per cent level under Single Index Model. Therefore, the null hypothesis i.e. there are no significant differences in
CAARs before and after announcement, can’t be accepted except the period of 2005-06.
ANALYSIS OF LIQUIDITY
The results of average turnover, average trading quantity and average number of transactions are exhibited in Table-3. During 2006-07, the results regarding
average turnover revealed that it increased only in case of 18 out of 52 companies after announcement, whereas average traded quantity has been increased in
case of 48 companies during the period of 2006-07. As a matter of effect, the results of the paired t-test for means concerning turnover showed that there are
no significant differences between before and after ex-split date. On the other hand, significant differences are found in average traded quantity between
before and after ex-split date. The biggest change in traded quantity has been found for the Unitech Ltd (3264. 39 per cent) and in case of average turnover, it
has been found out in case of the Jyoti Structures Ltd (732.91 per cent). The rising trend regarding average number of transactions has been noticed in case of
the 35 out of 52 sample companies and change is found out more than one hundred per cent in case of 18 companies out of 35 companies. Again, results of the
paired t-test for means (t = 2.52 significant at 5 per cent level) doesn’t support the null hypothesis i.e. there are no significant differences in average number of
transactions between before and after ex-split date.
The results of the average turnover showed that the announcement of stock split didn’t make any positive change in case of 47 companies out of 74 sample
companies during the period of 2007-08. With a matter of effect, the results of the paired t-test for means revealed that there are no significant differences in
average turnover between before and after announcement of stock splits. On the other hand, average traded quantity has shown an increasing trend in case of
65 companies and declined only in 9 companies. Further, the paired t-test results (t statistics=4.50) showed that there are significant changes in average traded
quantity between before and after announcement of stock splits. Average number of transactions has registered an increase of more than one hundred per cent
in case of the 20 out of 51 companies. Again, results of the paired t-test (t = 4.50) showed that there are significant changes in average traded quantity between
before and after announcement of stock splits. During 2008-09, average turnover and number of transactions has increased with more than one hundred per
cent in case of 5 companies and 10 companies out of 38 companies respectively. But in case of average traded quantity, it reduced for 3 companies out of
sample companies after stock split announcement while t-statics (t-statics=2.45) shows that there are significant differences in average traded quantity between
before and after announcement of stock splits. The paired t-test means results (t = 4.29) shows that there are significant changes in before and after average
traded quantity during the period 2009-10. It is observed that average turnover has reduced after stock split announcement for more than 50 per cent of the 55
sample companies but average traded quantity and average number of transactions has increased for more the 100 per cent in case of 39 and 16 companies
respectively.
14
ISSN 2231-1009
CONCLUSION
To sum up, positive CAARs have been found significant around announcement date. The results regarding abnormal returns have been found consistent with the
earlier studies like Grinblatt and Masulis and Titman (1984), Farinha and Basilio (2006), Gueyié and Sedrine and Atindehou (2007), Pavabutr and Sirodom (2008).
The study found mixed results regarding liquidity aspect. In percentile method, turnover, traded quantity, number of transactions has increased only in few
companies during periods under study but the results of the paired t-test for means gave contradiction to above mentioned results. The results regarding impact
on liquidity are also found consistent with the findings of the Pavabutr and Sirodom (2008), Farinha and Basilio (2006), Menendez and Gomez-Anson (2003).
Therefore, the present study provides evidence for supporting the signaling hypothesis and the liquidity hypothesis of stock split and also an addition to the
existing literature on stock split.
REFERENCES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Aduda, Josiah Omollo and Caroline S.C, Chemarum (2010), “Market Reaction to Stock Splits: Empirical Evidence from the Nairobi Stock Exchange”, African
Journal of Business & Management, April, Vol.1, pp 165-184.
Akintoye, Ishola Rufus (2008), “Efficient Market Hypothesis and Behaviourial Finance: A Review of Literature”, European Journal of Social Sciences, Vol. 7,
No. 2, pp 7-17.
B, Suresha and Naidu, Gajendra (2011), “Shareholders Market Wealth Effect around Stock Split Announcements–An Empirical Sectoral Evidence from
Indian Stock Market”, International Journal of Research in Commerce and Management, May, Vol. 2, Issue 5, pp 53-60.
Choudhary, Kapil and Choudhary, Sakshi (2009), “Stock Return Behaviour around Stock Splits: Indian Evidences”, Asia Pacific Business Review, JanuaryMarch, Vol. 5, No. 1, pp 55-65.
Garcia De andoain, Carlos and Bacon, Frank W. (2009), “The Impact of Stock Split Announcements on Stock Price: A Test of Market Efficiency”, ASSBS
Annual Conference Proceedings, February, Vol. 16, No. 1, pp 1-14.
Gueyie, Jean-Pierre and Sedrine, Ramzi Ben and Atiendehou, Rozer B. (2007), “Canadian Stock Splits and Financial Forecasts: Testing Signaling and
Attention Effects”, The International Journal of Business and Finance Research, Vol. 1, No. 1, pp11-20.
Huang, Gow-Cheng and Liano, Kartono and Pan, Ming-Shiun (2009), “The Information Content of Stock Splits”, Journal of Empirical Finance, September,
Vol. 16, Issue 4, pp 557-567.
Joshipura, Mayank (2009), “Price and Liquidity Effects of Stock Split: Empirical Evidence from the Indian Stock Market”, Indian Journal of Finance, October,
Vol.3, No.10, pp 22-31.
Lyroudi, Katerina and Dasilas, Apostolos and Varnas, Antonios (2006), “The Valuation Effects of Stock Splits In Nasdaq”; Managerial Finance, Vol. 32, Issue
5, pp 401-414.
Martin, Anna D. and Nishikawa, Takeshi and Qi, Rong (2009), “Intra-Industry Effects of Stock Splits: Focus On Insurance Companies”, American Journal of
Business, Spring, Vol. 24, No. 1, pp 67-73.
Mishra, A K (2007), “The Market Reaction to Stock Splits - Evidence from India”, International Journal of Theoretical and Applied Finance, Vol. 10, No. 2, pp
251-271.
Pilotte, Eugene (1997), “Earnings and Stock Splits in the Eighties”, Journal of Financial and Strategic Decisions, Summer, Vol. 10, No 2, pp 37-47.
Raja, M. and Sudhahar, J. Clement and Selvam, M. (2009) ,“Testing The Semi-Strong form Efficiency of Indian Stock Market with Respect to Information
Content of Stock Split Announcement–A Study In IT Industry”, International Research Journal of Finance and Economics, Issue 25, pp 7-20.
Wulff, C. (2002), “The Market Reaction to Stock Splits: Evidence from Germany”, Schmalenbach Business Review, Vol. 54, No.3, pp 280-290.
15
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TABLE
TABLE-2 (A) CAARS BEFORE AND AFTER STOCK SPLITS ANNOUNCEMENT UNDER CAPM AND SINGLE INDEX MODEL
2006-07
2007-08
CAPM
Single Index
CAPM
Single Index
Days AAR
t-stat
AAR
t-stat
AAR
t-stat
AAR
t-stat
-30
-0.56782
-1.43716
-0.54060
-1.36829
0.21644
0.64858
0.23771
0.71088
-29
0.03445
0.06121
0.08894
0.15801
0.09307
0.19098
0.16698
0.34252
-28
0.07668
0.11205
0.15845
0.23153
-0.22359
-0.38751
-0.11732
-0.20324
-27
0.01450
0.01846
0.12349
0.15717
-0.14789
-0.20189
-0.04148
-0.05660
-26
-0.01272
-0.01498
0.12350
0.14549
-0.03512
-0.04363
0.15228
0.18901
-25
-0.32428
-0.34363
-0.16084
-0.17043
0.14368
0.16132
0.32113
0.36051
-24
0.14840
0.14669
0.33910
0.33520
0.09501
0.09964
0.29120
0.30533
-23
0.35058
0.32038
0.56850
0.51953
-0.39528
-0.38644
-0.19907
-0.19449
-22
0.86469
0.74983
1.10987
0.96244
-0.57743
-0.53368
-0.35293
-0.32600
-21
0.55732
0.46436
0.82977
0.69137
-0.51089
-0.43856
-0.24993
-0.21447
-20
0.97337
0.76061
1.27314
0.99487
-0.91013
-0.72172
-0.63165
-0.50065
-19
1.47876
1.11502
1.80580
1.36162
-0.88538
-0.65318
-0.53132
-0.39192
-18
1.92462
1.39225
2.27894
1.648*
-1.34176
-0.95536
-1.02133
-0.72678
-17
1.66106
1.16610
2.04256
1.43392
-1.28971
-0.87782
-0.94982
-0.64600
-16
2.20398
1.47145
2.61272
1.744*
-0.97462
-0.63846
-0.53706
-0.35188
-15
2.00531
1.29078
2.44134
1.57143
-1.10608
-0.70773
-0.64210
-0.41092
-14
1.91050
1.18166
2.37380
1.46821
-0.91848
-0.56985
-0.39451
-0.24473
-13
1.72583
1.03161
2.21641
1.32486
-1.19816
-0.72159
-0.64192
-0.38649
-12
2.14685
1.24353
2.66476
1.54353
-1.20573
-0.71240
-0.64256
-0.37968
-11
2.66719
1.50503
3.21236
1.812*
-1.01154
-0.58965
-0.39149
-0.22810
-10
2.79897
1.53925
3.37142
1.854*
-1.01743
-0.58038
-0.42609
-0.24309
-9
3.13726
1.6770*
3.73707
1.997**
-1.44685
-0.80863
-0.87665
-0.48990
-8
3.43512
1.7849*
4.06214
2.110**
-1.67468
-0.91065
-1.05969
-0.57627
-7
3.79691
1.923*
4.45124
2.254**
-1.34624
-0.71308
-0.60475
-0.32020
-6
3.36931
1.6677*
4.05099
2.005**
-1.37371
-0.71091
-0.60683
-0.31393
-5
3.33484
1.62101
4.04372
1.965**
-1.79666
-0.90391
-0.98555
-0.49551
-4
3.39859
1.61565
4.13475
1.965**
-1.22054
-0.59720
-0.43790
-0.21425
-3
3.65800
1.710*
4.42131
2.066**
-0.93986
-0.45201
-0.22662
-0.10894
-2
4.13007
1.8989*
4.92067
2.262**
-1.28519
-0.60581
-0.43394
-0.20448
-1
4.46968
2.0164**
5.28752
2.385**
-0.79223
-0.36365
0.08161
0.03745
0
11.12304 4.1645*** 11.96812 4.480*** 1.53179
0.67552
2.46773
1.08786
1
11.43486 4.2013*** 12.30729 4.521*** 1.94121
0.83813
2.85430
1.23238
2
11.61390 4.2129*** 12.51358 4.539*** 2.09873
0.88384
3.01266
1.26878
3
11.13807 3.9815*** 12.06503 4.312*** 1.71729
0.71111
2.61844
1.08419
4
10.70521 3.7860*** 11.65938 4.123*** 1.42347
0.57807
2.38027
0.96667
5
8.64524
2.9211*** 9.62664
3.252*** 2.49113
0.99023
3.48924
1.38709
6
6.63542
2.2183**
7.64403
2.555**
0.91160
0.35701
1.88006
0.73633
7
5.27833
1.750*
6.31411
2.094**
-1.96588
-0.75855
-0.91107
-0.35151
8
4.19856
1.37767
5.26161
1.726*
-3.16123
-1.20292
-2.05200
-0.78066
9
3.30251
1.06999
4.39284
1.42326
-4.50405
-1.686*
-3.37348
-1.26303
10
2.62574
0.83609
3.74337
1.19197
-4.40713
-1.62732
-3.27726
-1.20997
11
1.71261
0.53903
2.85747
0.89937
-4.90915
-1.786*
-3.68945
-1.34229
12
1.97406
0.61636
3.14616
0.98232
-5.43549
-1.9550*
-4.16946
-1.498
13
1.27956
0.39603
2.47904
0.76728
-6.42743
-2.283**
-5.14526
-1.827*
14
1.10537
0.33564
2.33207
0.70813
-7.53198
-2.655***
-6.30756
-2.224**
15
1.46350
0.43990
2.71741
0.81681
-7.87018
-2.7298*** -6.62811
-2.299**
16
1.55401
0.46363
2.83516
0.84586
-8.66763
-2.9824*** -7.34840
-2.528**
17
1.04698
0.30868
2.35532
0.69442
-8.53194
-2.907***
-7.27408
-2.477**
18
0.41937
0.12182
1.75496
0.50979
-8.97730
-3.0239*** -7.65059
-2.576***
19
0.66021
0.18895
2.02306
0.57900
-9.53332
-3.1880*** -8.10972
-2.7114***
20
0.83554
0.23731
2.22566
0.63213
-9.79659
-3.2399*** -8.32646
-2.752***
21
0.95404
0.26900
2.37135
0.66863
-10.33961 -3.3971*** -8.83954
-2.9033***
22
0.39031
0.10917
1.83482
0.51320
-10.79729 -3.5172*** -9.27278
-3.019***
23
-0.65915
-0.18295
0.81263
0.22555
-10.89496 -3.4962*** -9.33462
-2.994***
24
-1.63698
-0.45170
-0.13796
-0.03807
-12.02503 -3.8158*** -10.44590 -3.3141***
25
-1.54995
-0.42411
-0.02366
-0.00648
-11.95406 -3.766***
-10.39633 -3.275***
26
-2.14301
-0.58345
-0.58953
-0.16051
-12.16113 -3.799***
-10.61246 -3.315***
27
-3.10292
-0.83972
-1.52219
-0.41194
-12.09009 -3.7399*** -10.50115 -3.248***
28
-3.41484
-0.91646
-1.80690
-0.48493
-11.82898 -3.625***
-10.27191 -3.147***
29
-3.21326
-0.85497
-1.57808
-0.41989
-12.34208 -3.764***
-10.61937 -3.2380***
30
-2.89059
-0.76193
-1.22816
-0.32373
-13.14509 -3.982***
-11.46212 -3.4725***
Source: Compiled from data obtained from CMIE-Prowess
*Significant at 10 per cent level, **Significant at 5 per cent level, ***Significant at 1 per cent level.
16
ISSN 2231-1009
TABLE-2 (B) CAARS BEFORE AND AFTER STOCK SPLITS ANNOUNCEMENT UNDER CAPM AND SINGLE INDEX MODEL
2008-09
2009-10
CAPM
Single Index
CAPM
Single Index
Days AAR
t-stat
AAR
t-stat
AAR
t-stat
AAR
t-stat
-30
-1.09567
-1.984**
-0.93296
-1.658*
-0.37206
-1.20363
-0.57781
-2.05951
-29
-0.96318
-1.35662
-0.99825
-1.37506
-0.02946
-0.05966
-0.11874
-0.20784
-28
-0.33302
-0.34493
-0.16569
-0.17101
-0.11552
-0.18335
-0.22953
-0.32404
-27
0.28413
0.25268
0.30209
0.26641
0.50292
0.66073
0.41991
0.51284
-26
0.47170
0.36884
0.61230
0.47760
1.32960
1.52000
1.03860
1.14650
-25
0.48066
0.34748
0.61409
0.44294
1.86413
1.9043*
1.43897
1.43314
-24
0.13779
0.09123
0.27960
0.18473
2.16136
2.016**
1.38587
1.30445
-23
0.88117
0.55010
0.93123
0.57736
3.16940
2.6315*** 2.06933
1.752*
-22
-0.24732
-0.14216
0.01233
0.00705
3.52353
2.7549*** 2.16024
1.776*
-21
-1.40570
-0.75516
-1.33158
-0.71159
3.32146
2.4352**
1.80654
1.41834
-20
-1.15859
-0.58602
-0.89828
-0.45369
3.94620
2.7620*** 1.66029
1.27753
-19
-0.96186
-0.46915
-0.73517
-0.35802
4.21235
2.7944*** 1.70526
1.27004
-18
-0.76830
-0.36463
-0.56157
-0.26597
5.07705
3.2121*** 1.89641
1.36803
-17
-0.80736
-0.36397
-0.48120
-0.21663
5.77365
3.5292*** 2.47382
1.749*
-16
-1.56243
-0.67309
-1.21460
-0.52255
6.94482
4.0471*** 2.60687
1.814*
-15
-1.42465
-0.60221
-0.99498
-0.41971
7.48654
4.2088*** 2.56172
1.752*
-14
-1.10387
-0.45550
-0.65363
-0.26917
8.44440
4.5904*** 2.71604
1.813*
-13
-0.74346
-0.30036
-0.27541
-0.11105
10.36110 5.3752*** 3.02268
1.990*
-12
-1.14190
-0.44742
-0.67193
-0.26286
12.07337 6.0156*** 3.63246
2.338**
-11
-2.19678
-0.84966
-1.95885
-0.75615
12.49924 6.0451*** 3.93208
2.4812**
-10
-2.09282
-0.78040
-1.72319
-0.64233
12.98259 6.1153*** 4.24084
2.608***
-9
-2.79347
-1.02057
-2.44435
-0.89246
14.07914 6.4579*** 4.39039
2.653***
-8
-3.52898
-1.24263
-2.98173
-1.04895
15.43957 6.9500*** 5.16042
3.0681***
-7
-2.86830
-0.97010
-2.30000
-0.77719
16.08872 7.0952*** 5.06300
2.9620***
-6
-1.97529
-0.64527
-1.44587
-0.47201
17.18817 7.3444*** 5.20386
2.9886***
-5
-1.83847
-0.58309
-1.49612
-0.47373
18.21847 7.6351*** 5.69464
3.205***
-4
-1.71660
-0.52899
-1.35639
-0.41732
18.58729 7.661***
5.85664
3.2318***
-3
-2.52418
-0.76195
-1.89708
-0.57201
18.70171 7.524***
5.60065
3.0102***
-2
-2.62119
-0.77040
-1.97254
-0.57912
19.72867 7.7915*** 5.87940
3.1042***
-1
-1.00846
-0.28906
-0.36868
-0.10557
20.71309 7.9615*** 6.19439
3.1935***
0
2.76157
0.76913
3.44929
0.95978
22.30097 8.3367*** 6.99865
3.500***
1
3.91628
1.05264
4.42371
1.18768
30.02075 7.7658*** 14.88474 4.633***
2
3.97295
1.03972
4.56398
1.19338
29.29294 7.5174*** 14.17760 4.388***
3
3.35462
0.86799
3.94498
1.01986
29.15264 7.3976*** 13.58332 4.1637***
4
3.68182
0.94223
4.41939
1.12999
29.18029 7.3399*** 13.28011 4.041***
5
3.67888
0.92488
4.22694
1.06151
29.35421 7.2755*** 13.10653 3.9303***
6
0.41379
0.10297
0.94340
0.23448
28.21696 6.9036*** 11.90609 3.5275***
7
-2.08159
-0.50870
-1.52631
-0.37257
28.38211 6.9089*** 11.67958 3.455***
8
-3.22445
-0.77405
-2.66098
-0.63804
27.16908 6.3092*** 10.15730 2.8446***
9
-6.01028
-1.42289
-5.21633
-1.23331
26.77599 6.1672*** 9.90889
2.7604***
10
-6.93329
-1.61460
-6.24363
-1.45227
27.14076 6.1979*** 9.34108
2.5951***
11
-7.89681
-1.8159*
-7.19744
-1.653*
27.64735 6.2676*** 9.07109
2.511**
12
-9.16121
-2.0865**
-8.30976
-1.890*
26.94488 6.0704*** 8.09379
2.231**
13
-10.84937 -2.446**
-10.02405 -2.258**
26.52545 5.9500*** 7.82503
2.152**
14
-12.99872 -2.9115*** -12.26051 -2.743***
27.38637 6.1170*** 8.50965
2.334**
15
-14.70618 -3.269***
-14.01228 -3.111***
27.82080 6.1846*** 8.93255
2.442**
16
-16.40293 -3.610***
-15.69384 -3.450***
28.14380 6.2390*** 8.76185
2.3907**
17
-16.70272 -3.642***
-15.98305 -3.481***
29.01335 6.3791*** 8.80108
2.3965**
18
-17.24864 -3.7295*** -16.40033 -3.543***
29.57430 6.4641*** 8.53858
2.324**
19
-18.19124 -3.9185*** -17.39357 -3.7431*** 29.58899 6.4377*** 8.42236
2.287**
20
-18.59819 -3.963***
-17.78786 -3.787***
29.20548 6.3121*** 7.57067
2.0489**
21
-19.38512 -4.0972*** -18.46530 -3.900***
29.78997 6.3972*** 7.45082
2.0063**
22
-19.61060 -4.113***
-18.80291 -3.938***
29.67441 6.3477*** 6.94150
1.8622*
23
-19.84368 -4.1206*** -19.01534 -3.944***
29.64491 6.3076*** 6.70021
1.793*
24
-20.77894 -4.2681*** -19.76311 -4.056***
30.06093 6.3702*** 6.48061
1.7318*
25
-21.21477 -4.3160*** -20.34766 -4.134***
30.28160 6.3915*** 6.04890
1.61200
26
-21.25852 -4.2826*** -20.18493 -4.063***
30.70804 6.448***
6.06072
1.60610
27
-21.69148 -4.3194*** -20.66046 -4.111***
31.21112 6.5361*** 6.01495
1.58971
28
-22.61540 -4.4620*** -21.57416 -4.2537*** 31.39428 6.5347*** 5.44518
1.42625
29
-22.68492 -4.4143*** -21.62082 -4.2046*** 31.48793 6.5077*** 5.24114
1.36206
30
-23.77605 -4.5778*** -22.67613 -4.3632*** 31.50421 6.3869*** 5.20072
1.31659
Source: Compiled from data obtained from CMIE-Prowess
*Significant at 10 per cent level, **Significant at 5 per cent level, ***Significant at 1 per cent level.
17
ISSN 2231-1009
TABLE-3 (A) AVERAGE DAILY TURNOVER, TRADED QUANTITY AND AVG. NUMBER OF TRANSACTIONS BEFORE AND AFTER EX-SPLIT DATE DURING THE PERIOD 2006-2007
Sr.
No
Company Name
Before
Turnover
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
ALEMBIC LTD.
ANSAL PROPERTIES & INFRASTRUCTURE LTD.
ANUH PHARMA LTD.
ASTRAZENECA PHARMA INDIA LTD.
BAJAJ HINDUSTHAN SUGAR & INDS. LTD.
BLUE STAR LTD.
CROMPTON GREAVES LTD.
E I H LTD.
ESSEL PROPACK LTD.
EXIDE INDUSTRIES LTD.
GEMINI COMMUNICATION LTD.
GODREJ INDUSTRIES LTD.
GRINDWELL NORTON LTD.
H T MEDIA LTD.
HINDUSTAN DORR-OLIVER LTD.
HOTEL LEELAVENTURE LTD.
INDIAN HOTELS CO. LTD.
INFOTECH ENTERPRISES LTD.
JAYBHARAT TEXTILES & REAL ESTATE LTD.
JYOTI STRUCTURES LTD.
K P I T CUMMINS INFOSYSTEMS LTD.
KEI INDUSTRIES LTD.
LAKSHMI ENERGY & FOODS LTD.
LAKSHMI MACHINE WORKS LTD.
MARICO LTD.
MINAXI TEXTILES LTD.
MONOZYME INDIA LTD.
MUNJAL SHOWA LTD.
N R B BEARINGS LTD.
NATIONAL PEROXIDE LTD.
NAVNEET PUBLICATIONS (INDIA) LTD.
NIRMA LTD.
PANTALOON RETAIL (INDIA) LTD.
PARAMOUNT COMMUNICATIONS LTD.
PUNJ LLOYD LTD.
PRIME URBAN DEVELOPMENT
SANWARIA AGRO OILS LTD.
SIEMENS LTD.
SIMPLEX INFRASTRUCTURES LTD.
STERLITE INDUSTRIES (INDIA) LTD.
SUPER SPINNING MILLS LTD.
SUPREME TEX MART LTD.
SUVEN LIFE SCIENCES LTD.
SWAN ENERGY LTD.
TELEVISION EIGHTEEN INDIA LTD.
TRANSPORT CORPORATION OF INDIA LTD.
TUBE INVESTMENTS OF INDIA LTD.
UNITECH LTD.
UNITED BREWERIES LTD.
VOLTAS LTD.
BIRLA CAPITAL & FINANCIAL SERVICES LTD.
DECCAN CHRONCLE
t stat
1.62
4.36
0.08
0.38
0.17
0.53
2.69
0.76
1.18
3.75
0.08
0.43
0.31
0.72
0.54
2.67
5.76
0.49
0.05
0.24
1.68
4.54
0.43
2.82
1.06
0.17
0.00
0.13
0.15
0.46
0.28
0.13
2.89
7.70
11.88
0.09
0.02
21.72
0.69
38.92
0.30
0.14
0.22
2.84
0.86
0.87
17.78
0.98
9.76
0.09
0.05
1.77
0.17
Trading
Quantity
No. of
Transactions
44147.30
43934.93
441.63
891.27
4743.20
7541.23
29208.27
10364.13
28717.53
107154.57
1764.63
8540.30
10443.90
9245.23
6137.13
92552.53
41837.73
9572.63
2300.80
6503.70
26083.30
106727.87
5092.60
797.90
18328.33
58643.10
2103.87
3377.27
2943.33
468.07
8566.20
3609.53
13576.03
335553.30
143381.47
5243.57
2662.63
43341.97
4211.43
179073.60
8704.27
32153.10
15035.10
7572.33
12952.77
15025.37
17239.77
5911.17
98406.80
2389.60
26987.90
20829.23
4.30***
610.03
869.80
91.57
139.63
41.23
195.23
411.80
415.63
223.17
1778.57
28.00
254.17
98.77
236.17
155.93
1301.53
1088.80
237.77
37.57
124.37
890.77
1934.00
145.03
448.47
390.67
141.67
6.57
104.77
21.67
240.93
213.23
101.77
561.10
2824.03
4408.03
48.73
37.10
4406.87
240.43
4045.93
76.00
37.73
172.07
583.23
276.53
196.70
1954.93
209.97
3245.20
62.17
51.10
140.57
2.52
After
Turnover
0.53
5.73
0.06
0.06
0.53
0.51
2.58
1.34
0.40
3.05
0.04
0.46
0.24
0.86
0.14
7.61
8.71
1.28
0.02
1.96
8.07
5.06
1.03
2.62
2.23
0.04
0.00
0.08
0.07
0.08
0.17
0.18
3.05
2.48
6.12
0.01
0.05
20.56
0.98
48.76
0.21
0.09
0.10
2.64
0.68
0.53
11.58
0.31
6.10
0.08
0.00
1.15
Trading
Quantity
No. of
Transactions
78242.33
87369.90
1051.23
919.87
124043.27
34204.30
118514.40
124556.93
61156.77
705030.50
1990.23
46353.30
7743.97
47780.97
13655.83
1050657.87
578422.83
62919.20
2242.93
205894.40
511099.43
453536.27
60639.77
6987.47
393418.30
126756.00
3138.03
10836.00
7791.50
2199.73
26733.00
11437.40
66039.87
529688.80
345747.83
4073.80
9385.23
233141.37
27708.90
1239776.73
57342.50
35639.40
25776.07
245072.30
13482.07
68627.47
580014.03
29912.90
584139.63
8713.10
13967.00
71736.23
460.93
975.47
82.57
49.47
148.20
441.53
946.40
1214.73
225.20
3335.80
23.60
470.33
104.53
547.50
93.73
6020.93
2938.50
986.83
24.63
1246.60
5450.37
2826.73
223.57
817.57
576.17
61.87
5.13
81.20
76.23
99.70
181.80
141.87
1154.47
2154.73
4123.57
16.97
68.60
5895.57
645.27
16916.53
216.17
48.17
165.27
1315.37
243.17
402.77
3228.20
238.90
4501.43
88.83
18.77
284.30
Percentile Change
%
% Change
Change
in Traded
in
Qty.
Turnover
-67.15
77.23
31.53
98.86
-30.92
138.03
-84.12
3.21
212.52
2515.18
-4.20
353.56
-4.13
305.76
74.63
1101.81
-66.14
112.96
-18.63
557.96
-46.29
12.78
7.66
442.76
-24.02
-25.85
19.46
416.82
-74.63
122.51
185.31
1035.20
51.30
1282.54
161.58
557.28
-54.48
-2.52
732.91
3065.80
381.34
1859.49
11.54
324.95
142.68
1090.74
-6.92
775.73
111.05
2046.50
-77.25
116.15
-16.67
49.16
-38.50
220.85
-51.70
164.72
-83.07
369.96
-41.23
212.08
42.97
216.87
5.50
386.44
-67.74
57.86
-48.45
141.14
-86.88
-22.31
131.75
252.48
-5.33
437.91
42.75
557.94
25.28
592.33
-30.88
558.79
-38.85
10.84
-53.16
71.44
-6.96
3136.42
-21.14
4.09
-38.64
356.74
-34.91
3264.40
-68.01
406.04
-37.49
493.60
-16.30
264.63
-94.89
-48.25
-35.11
244.40
% Change in No. of
Transactions
-24.44
12.15
-9.83
-64.57
259.42
126.16
129.82
192.26
0.91
87.56
-15.71
85.05
5.84
131.83
-39.89
362.60
169.88
315.04
-34.43
902.36
511.87
46.16
54.15
82.30
47.48
-56.33
-21.83
-22.49
251.85
-58.62
-14.74
39.40
105.75
-23.70
-6.45
-65.18
84.91
33.78
168.38
318.11
184.43
27.65
-3.95
125.53
-12.07
104.76
65.13
13.78
38.71
42.90
-63.27
102.25
Source: Compiled from data obtained from CMIE-Prowess.
*Significant at 10 per cent level, **Significant at 5 per cent level, ***Significant at 1 per cent level
18
ISSN 2231-1009
TABLE-3(B) AVERAGE DAILY TURNOVER, TRADED QUANTITY AND AVERAGE NUMBER OF TRANSACTIONS BEFORE AND AFTER EX-SPLIT DATE DURING THE PERIOD 2007-2008
Sr.
No
Company Name
Before
Turnover
Trading
Quantity
No. of Transactions
After
Turnover
1
2
3
4
5
6
7
8
9
10
A B B LTD.
ACTION CONSTRUCTION EQUIPMENT LTD.
ADVANI HOTELS & RESORTS (INDIA) LTD.
AMARA RAJA BATTERIES LTD.
ANANT RAJ INDS. LTD.
APOLLO TYRES LTD.
ASIAN ELECTRONICS LTD.
ASIAN FILMS PRODUCTION & DISTRIBUTION LTD.
B L KASHYAP & SONS LTD.
BANCO PRODUCTS (INDIA) LTD.
11
12
13
14
15
16
17
18
19
20
21
22
23
5207.67
355.97
35.30
698.70
262.70
844.67
1412.97
148.03
307.50
933.40
Percentile Change
% Change
% Change
in
in Traded
Turnover
Qty.
50.67
519.70
-38.59
213.27
-24.22
212.55
57.37
552.44
38.51
499.82
33.42
1195.45
-27.99
56.01
-54.34
269.09
25.08
80.63
255.87
1182.41
% Change in
No. of
Transactions
201.24
60.97
-49.67
151.90
31.70
25.78
18.70
12.17
46.82
302.15
9.83
0.39
0.85
0.74
0.73
1.45
3.67
0.07
0.92
0.20
21467.43
9046.70
25893.67
11501.57
5166.43
38031.90
40426.40
147811.33
4076.37
13014.07
1728.77
221.13
70.13
277.37
199.47
671.57
1190.40
131.97
209.43
232.10
BATLIBOI LTD.
BHARAT SEATS LTD.
BIRLA PRECISION TECHNOLOGIES LTD.
BLISS G V S PHARMA LTD.
CINEVISTAAS LTD.
CITY UNION BANK LTD.
CLASSIC DIAMONDS (INDIA) LTD.
COMPUCOM SOFTWARE LTD.
CORE PROJECTS & TECHNOLOGIES LTD.
CRAZY INFOTECH LTD.
DIVI'S LABORATORIES LTD.
EASUN REYROLLE LTD.
ELECTROSTEEL CASTINGS LTD.
0.44
0.13
2.95
0.27
0.51
2.07
1.69
0.18
2.86
0.24
51.47
3.63
0.70
26574.50
7553.10
60655.47
5877.77
55993.57
49947.27
33605.43
19290.53
47881.17
73943.90
78805.63
32177.73
15062.87
20806.47
26486.83
50282.00
51721.57
45290.80
77146.63
35027.07
17450.07
697303.87
504860.87
73605.93
68094.00
666455.97
184.47
100.43
130.53
163.07
137.50
357.57
285.00
72.70
3128.90
365.17
2981.53
1103.23
1907.40
-54.09
-62.57
-83.69
-13.34
-86.74
-85.22
-80.84
-85.00
248.37
-7.04
-83.16
-54.55
451.86
-21.71
250.67
-17.10
779.95
-19.11
54.46
4.23
-9.54
1356.32
582.76
-6.60
111.62
4324.50
-60.67
-35.37
-59.79
0.89
-57.90
-57.36
16.76
-70.20
1002.89
57.35
-68.33
-12.68
444.30
24
25
26
27
28
29
30
EMCO LTD.
EVEREST KANTO CYLINDER LTD.
G E E LTD.
G M R INFRASTRUCTURE LTD.
G V K POWER & INFRASTRUCTURE LTD.
GANDHI SPECIAL TUBES LTD.
GLENMARK PHARMACEUTICALS LTD.
1.02
3.19
0.17
84.60
4.98
0.03
6.86
0.29
5.11
0.11
55.33
4.63
0.03
10.71
14331.13
226432.77
13239.47
3078459.60
1103295.67
2736.23
254810.00
145.27
2893.83
63.93
19438.60
3079.97
34.83
3360.93
-71.83
60.37
-34.61
-34.59
-7.00
-11.96
56.11
67.46
650.86
216.01
190.61
1638.65
79.26
148.47
82.80
75.53
-16.64
12.11
257.42
-4.65
166.16
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
GUJARAT FLUOROCHEMICALS LTD.
GUJARAT GAS CO. LTD.
GUJARAT MINERAL DEVP. CORPN. LTD
GULF OIL CORPN. LTD.
HIND RECTIFIERS LTD.
IBN18 BROADCAST LTD.
JAGRAN PRAKASHAN LTD.
JAI CORP LTD.
JAIPRAKASH ASSOCIATES LTD.
K S OILS LTD.
KANORIA CHEMICALS & INDS. LTD.
KULKARNI POWER TOOLS LTD.
LANCOR HOLDINGS LTD.
LLOYDS METALS & ENGINEERS LTD.
MAN INDUSTRIES (INDIA) LTD.
MARKSANS PHARMA LTD.
MODERN INDIA LTD.
MODISON METALS LTD.
N I I T LTD.
ORIENT PAPER & INDS. LTD.
P T L ENTERPRISES LTD.
PAPER PRODUCTS LTD.
PENINSULA LAND LTD.
PHOENIX MILLS LTD.
PUDUMJEE INDUSTRIES LTD.
RAJESH EXPORTS LTD.
RUCHI SOYA INDS. LTD.
SANGHVI MOVERS LTD.
SANWARIA AGRO OILS LTD.
SATRA PROPERTIES (INDIA) LTD.
SHILPA MEDICARE LTD.
SUBROS LTD.
SUN T V NETWORK LTD.
SUPER TANNERY LTD.
SUZLON ENERGY LTD.
THOMAS COOK (INDIA) LTD.
TRITON CORP LTD.
USHA MARTIN LTD.
WALCHANDNAGAR INDUSTRIES LTD.
WEST COAST PAPER MILLS LTD.
I C S A (INDIA) LTD.
ARSHIYA INTERNATIONAL LTD.
DELTA CORP LTD.
MATRA REALTY LTD.
t statistics
1.47
0.28
20.46
12.55
0.23
0.88
0.98
10.40
55.08
14.33
0.49
0.20
0.18
0.56
0.85
3.05
0.61
0.43
4.62
1.06
0.10
0.15
5.98
1.45
0.03
15.62
1.59
0.62
0.26
1.58
0.08
0.15
5.15
0.02
29.73
0.39
0.54
1.04
10.00
0.19
3.63
0.53
3.43
1.62
0.37
1.22
0.86
8.79
5.20
0.16
0.32
0.43
94.14
92.25
8.57
0.18
0.11
0.44
0.54
0.95
3.33
0.21
0.13
9.81
1.95
0.37
0.13
5.10
1.05
0.02
6.81
6.54
0.35
0.06
1.49
0.05
0.33
3.59
0.02
41.20
0.39
0.16
2.14
6.16
0.39
4.79
0.23
1.02
1.27
51002.20
29366.13
159112.37
167661.87
8870.83
20876.97
33470.73
894951.37
2209813.60
1541514.67
33312.33
11041.77
36090.20
70079.30
74122.47
1634376.33
11035.63
26334.90
648427.07
48119.23
132193.10
19854.30
385950.70
25804.67
6914.27
501792.47
597531.87
17239.53
7897.70
78525.97
1374.53
64971.03
99298.47
16326.60
1310382.30
59893.37
151253.77
333096.50
113520.97
41922.80
138660.40
8918.07
133374.83
253196.60
299.27
284.77
3554.77
1813.83
173.90
486.20
314.33
5011.40
14740.37
3317.20
171.93
161.70
149.37
196.20
619.33
1287.20
40.30
48.77
3866.30
637.60
64.10
72.47
1413.60
233.07
31.97
4174.03
3108.07
268.90
71.40
265.00
16.37
347.23
1935.67
49.67
16050.10
460.77
149.53
1174.80
3420.43
230.47
2207.30
46.33
328.83
531.10
-16.91
203.78
-57.05
-58.56
-30.03
-64.21
-56.04
805.36
67.47
-40.21
-64.07
-46.52
140.25
-3.92
11.53
9.10
-65.68
-69.87
112.36
84.69
277.97
-11.88
-14.74
-27.42
-17.50
-56.40
310.60
-43.98
-75.00
-6.04
-44.40
129.29
-30.32
10.42
38.62
0.43
-71.32
105.90
-38.47
105.32
32.08
-57.39
-70.33
-21.84
125.94
1365.01
71.71
101.74
240.66
137.70
157.05
7107.24
604.02
379.60
-0.50
31.66
708.93
186.43
143.49
1172.56
116.85
210.52
1350.79
216.57
1803.82
367.58
269.49
278.47
314.24
158.64
1352.21
152.09
-55.71
332.53
-28.91
851.46
208.74
401.27
799.05
799.07
-22.01
771.18
702.69
881.00
542.84
73.57
151.84
865.69
0.83
149.72
-22.01
-37.11
10.18
99.92
56.15
228.65
158.76
4.20
-32.17
-15.85
187.61
68.65
8.85
131.80
-55.04
11.59
100.77
147.52
150.72
-23.23
-56.74
14.25
28.04
61.82
563.88
12.60
-44.69
19.87
-56.97
213.10
24.85
76.75
317.20
61.24
-64.96
276.14
10.22
96.70
123.86
-3.41
-47.77
75.18
Trading
Quantity
No. of
Transactions
14.81
0.24
0.64
1.17
1.00
1.94
2.64
0.03
1.15
0.72
133034.23
28340.17
80929.93
75041.20
30989.40
492686.00
63071.10
545557.57
7363.13
166893.57
469.07
155.40
324.67
161.63
326.57
838.57
244.10
244.00
283.70
232.07
9414.47
1263.37
350.43
0.20
0.05
0.48
0.23
0.07
0.31
0.32
0.03
9.97
0.22
8.67
1.65
3.86
8557.73
30156.50
4189.53
1059297.07
63457.17
1526.43
102552.40
79.47
1648.60
76.70
17339.33
861.73
36.53
1262.77
22573.37
2004.50
92663.77
83108.53
2604.03
8782.93
13021.33
12417.40
313886.57
321415.67
33479.27
8386.77
4461.47
24466.80
30441.20
128432.30
5088.97
8480.90
44694.77
15200.23
6943.57
4246.20
104455.77
6818.10
1669.13
194014.13
41146.33
6838.63
17831.33
18154.87
1933.53
6828.57
32162.87
3257.03
145751.10
6661.67
193936.47
38235.07
14142.63
4273.47
21570.03
5138.10
52960.33
26219.33
4.50
296.80
114.03
4558.10
2884.10
157.83
243.20
201.30
1524.87
5696.43
3183.40
253.47
192.17
51.93
116.33
568.97
555.30
89.63
43.70
1925.73
257.60
25.57
94.40
3267.40
204.00
24.97
2579.43
468.17
238.80
129.10
221.07
38.03
110.90
1550.33
28.10
3847.07
285.77
426.73
312.33
3103.27
117.17
986.00
47.97
629.63
303.17
2.29
19
ISSN 2231-1009
TABLE-3(D) AVERAGE DAILY TURNOVER, TRADED QUANTITY AND AVERAGE NUMBER OF TRANSACTIONS BEFORE AND AFTER EX-SPLIT DATE DURING THE
PERIOD 2008-2009
Sr.
No
Company Name
Before
Turnover
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
ADITYA BIRLA MONEY LTD.
A I A ENGINEERING LTD.
ALLIED COMPUTERS
AREVA T & D INDIA LTD.
CALS REFINERIES LTD.
CAMLIN LTD.
COUNTRY CLUB (INDIA) LTD.
DOLLEX INDUSTRIES LTD.
EASTERN SILK INDS. LTD.
ERA INFRA ENGG. LTD.
GEMINI COMMUNICATION LTD.
HATSUN AGRO PRODUCTS LTD.
HERCULES HOISTS LTD.
INDIA INFOLINE LTD.
J M FINANCIAL LTD.
JINDAL DRILLING & INDS. LTD.
JYOTHY LABORATORIES LTD.
KOFFEE BREAK PICTURES LTD.
M I C ELECTRONICS LTD.
MADRAS ALUMINIUM CO. LTD.
MADRAS CEMENTS LTD.
MOBILE TELECOMMUNICATIONS LTD.
MOTILAL OSWAL FINANCIAL SERVICES LTD.
NECTAR LIFESCIENCES LTD.
PROVOGUE (INDIA) LTD.
RATNAMANI METALS & TUBES LTD.
SYBLY INDUSTRIES LTD.
SESA GOA LTD.
SHRI DINESH MILLS LTD.
SKYLINE MILLARS LTD.
SONA KOYO STEERING SYSTEMS LTD.
TAKE SOLUTIONS LTD.
TEXMACO LTD.
TIME TECHNOPLAST LTD.
TRIBHUVAN HOUSING LTD.
TRICOM INDIA LTD.
A I CHAMPDANY INDS. LTD.
SANRAA MEDIA LTD.
t statstics
0.08
0.24
0.27
0.09
1.75
0.45
0.41
0.03
0.14
0.57
8.78
72.14
0.08
0.07
0.74
2.49
0.82
0.42
0.32
2.14
0.15
0.29
0.77
4.13
0.01
0.03
0.04
0.14
0.08
0.94
0.03
0.00
0.06
0.08
0.07
0.16
0.02
0.15
-1.29
Trading
Quantity
No. of
Transactions
18817.13
43730.13
41898.57
8325.30
22662.50
8926.47
32944.70
777.57
1952.37
10426.17
140915.57
228382.90
4477.17
24230.70
5503.20
52171.03
47092.20
1505.53
5313.37
8801.57
2165.57
2208.27
27962.97
29890.07
1120.10
589.40
20181.87
1582.07
1932.10
39863.07
325.87
14953.07
21525.67
3374.73
146052.00
2428.33
2972.57
132413.17
2.45*
118.17
109.47
100.77
154.40
1016.87
126.70
13.20
86.07
569.17
4755.13
21014.67
75.63
68.27
409.53
1653.87
457.10
353.37
148.20
244.53
75.13
82.73
150.87
2579.80
10.00
44.63
30.90
97.70
60.13
615.03
67.20
21.40
47.57
47.63
114.97
72.53
18.13
112.37
0.95
After
Turnover
0.10
0.56
0.11
0.23
1.52
0.16
0.50
0.01
0.13
1.00
3.77
39.41
0.04
0.39
1.35
1.59
0.30
0.28
0.24
1.90
0.29
0.17
0.03
0.88
0.00
0.09
0.01
0.20
0.08
0.11
0.01
0.00
0.11
0.04
0.13
0.52
0.00
0.03
Trading
Quantity
No. of
Transactions
35302.50
1116845.33
25630.70
132681.80
131494.13
31888.13
181739.47
1592.10
8800.37
90992.73
293522.47
2959449.83
20187.57
222216.13
235532.50
185897.10
120913.33
13811.60
53454.57
286537.07
35092.87
10033.40
10971.40
53765.73
2307.37
31473.67
37811.77
7581.17
14114.13
57492.40
2279.17
30290.10
389776.67
5154.83
2477115.97
85437.27
363.40
585588.47
175.17
202.87
75.30
380.97
1109.63
358.17
21.30
109.67
1033.27
3085.17
23933.60
106.63
625.50
1871.80
1371.33
237.97
397.37
229.77
496.47
193.80
193.40
95.90
1143.60
11.53
77.93
16.83
72.90
76.13
179.50
44.97
15.97
120.07
72.50
605.50
834.47
5.60
123.73
Percentile Change
% Change
%
in
Change
Turnover
in Traded
Qty.
29.31
87.61
133.70
2453.95
-60.27
-38.83
150.18
1493.72
-13.43
480.23
-63.81
257.23
22.43
451.65
-58.16
104.75
-6.88
350.75
74.87
772.73
-57.11
108.30
-45.38
1195.83
-55.74
350.90
461.43
817.09
81.45
4179.92
-36.08
256.32
-63.03
156.76
-33.04
817.39
-25.11
906.04
-11.41
3155.52
89.35
1520.49
-41.70
354.36
-95.99
-60.76
-78.68
79.88
-97.30
106.00
247.56
5239.95
-86.36
87.36
39.86
379.19
-2.09
630.51
-88.03
44.22
-45.45
599.42
-90.00
102.57
95.95
1710.75
-54.51
52.75
72.73
1596.05
233.48
3418.35
-100.00
-87.77
-81.61
342.24
% Change in
No. of
Transactions
48.24
85.32
-25.27
146.74
9.12
182.69
61.36
27.42
81.54
-35.12
13.89
40.99
816.26
357.06
-17.08
-47.94
12.45
55.04
103.03
157.94
133.76
-36.43
-55.67
15.33
74.61
-45.52
-25.38
26.61
-70.81
-33.09
-25.39
152.42
52.20
426.67
1050.46
-69.12
10.12
20
ISSN 2231-1009
TABLE-5.11 (J) AVERAGE DAILY TURNOVER, TRADED QUANTITY AND AVERAGE NUMBER OF TRANSACTIONS BEFORE AND AFTER EX-SPLIT DATE DURING THE PERIOD 2009-2010
Sr.
No.
1
2
Company Name
Before
Turnover
AISHWARYA TELECOM LTD.
ALKA SECURITIES LTD.
0.25
1.60
3
ALLCARGO GLOBAL LOGISTICS LTD.
0.40
4
ALLIED DIGITAL SERVICES LTD.
3.25
5
ANJANI SYNTHETICS LTD.
0.39
6
ANU'S LABORATORIES LTD.
4.24
7
ASHCO NIULAB INDS. LTD.
8
9
Trading
Quantity
48274.23
505283.93
After
Turnover
0.21
0.57
Trading
Quantity
92191.57
340448.33
No. of
Transactions
227.00
102.47
Percentile Change
% Change in
% Change in
Turnover
Traded Qty.
-16.62
90.97
-64.38
-32.62
102.07
1.05
53243.33
326.47
160.76
1026.16
219.86
2217.27
1.79
80998.83
1688.77
-45.02
16.31
-23.84
176.33
0.08
275151.03
164.30
-78.75
144.99
-6.82
883.87
17.44
4688498.57
13724.30
311.44
3583.06
1452.76
79.63
0.09
619586.27
290.87
68.87
1380.45
265.26
0.02
5537.67
41.00
-89.86
-76.47
-83.53
0.57
2346479.87
480.10
103.55
3529.47
258.91
0.64
519567.47
1481.33
25.26
336.09
65.85
291.00
3.55
190132.97
1066.93
474.92
2526.79
266.64
248.97
0.10
196311.70
184.33
-46.80
489.76
-25.96
No. of
Transactions
218.37
185.90
% Change in No.
of Transactions
3.95
-44.88
4727.87
69642.20
112310.73
127298.90
0.05
41851.30
ASSOCIATED STONE INDS. (KOTAH) LTD.
0.21
23535.70
248.87
AVANCE TECHNOLOGIES LTD.
0.28
64650.73
133.77
10
BABA ARTS LTD.
0.51
119142.50
893.17
11
BAJAJ ELECTRICALS LTD.
0.62
7238.23
12
BASANT AGRO TECH (INDIA) LTD.
0.18
33286.70
13
BIRLA COTSYN INDIA LTD.
0.16
188362.93
312.70
0.11
1219130.50
490.93
-28.66
547.22
57.00
14
COMFORT INTECH LTD.
0.67
54786.10
291.73
1.70
666008.13
626.47
152.53
1115.65
114.74
15
CONSOLIDATED CONSTRUCTION CONSORTIUM LTD.
0.28
6475.97
210.33
0.39
49684.23
420.60
40.43
667.21
99.97
16
EDUCOMP SOLUTIONS LTD.
96.38
209670.60
20253.30
78.79
1018354.10
29893.27
-18.25
385.69
47.60
17
F C S SOFTWARE SOLUTIONS LTD.
5.74
544619.23
3527.67
1.92
1442006.20
1854.67
-66.59
164.77
-47.43
18
FALCON TYRES LTD.
12.09
868719.13
7966.43
7.48
1076226.20
5827.03
-38.13
23.89
-26.86
19
GAMMON INFRASTRUCTURE
0.87
81162.90
475.57
0.67
337376.20
835.73
-23.61
315.68
75.73
20
GENNEX LABORATORIES LTD.
0.12
56799.60
129.43
0.07
290617.83
177.00
-47.72
411.65
36.75
21
GOOD LUCK STEEL TUBES LTD.
5.96
170360.43
2492.53
4.26
909770.23
2586.03
-28.51
434.03
3.75
22
GOKUL REFOILS & SOLVENT LTD.
1.20
41101.73
637.17
0.45
76247.17
330.10
-62.82
85.51
-48.19
23
H B L POWER SYSTEMS LTD.
0.47
12043.80
184.53
0.28
71994.80
301.53
-40.71
497.77
63.40
24
HALDYN GLASS GUJARAT LTD.
0.47
41907.20
402.03
1.04
637576.87
1418.33
119.04
1421.40
252.79
25
HINDUSTHAN NATIONAL GLASS & INDS. LTD.
0.33
4587.90
216.10
0.20
14141.93
196.77
-38.04
208.24
-8.95
26
I L & F S INVESTMENT MANAGERS LTD.
5.27
224784.70
2215.07
1.49
294090.40
1115.43
-71.69
30.83
-49.64
27
INDIACO VENTURES LTD.
0.01
191.90
12.10
0.01
3076.07
34.63
123.53
1502.95
186.23
28
IPCA LABORATORIES LTD.
0.36
2985.43
195.87
0.86
31321.47
505.37
140.85
949.14
158.02
29
J K LAKSHMI CEMENT LTD.
0.98
75190.80
630.83
1.43
188994.93
1243.80
46.14
151.35
97.17
30
J M D E PACKAGING & REALTIES LTD.
0.02
28041.17
53.67
0.01
78166.20
34.07
-76.81
178.76
-36.52
31
JINDAL SAW LTD.
23.77
274389.67
5940.87
9.26
475296.83
3464.63
-61.04
73.22
-41.68
32
K M SUGAR MILLS LTD.
0.08
22713.07
152.37
0.43
483674.20
505.87
417.27
2029.50
232.01
33
K R B L LTD.
4.59
195368.37
2862.27
3.59
1324252.00
3174.20
-21.85
577.82
10.90
34
KWALITY DAIRY (INDIA) LTD.
9.26
79488.90
2062.70
10.27
740120.73
3385.00
10.93
831.10
64.11
35
LANCO INFRATECH LTD.
19.59
346928.63
7620.40
10.90
2211136.77
7401.23
-44.34
537.35
-2.88
36
M V L LTD.
1.79
99513.40
394.00
5.07
899841.03
820.97
182.96
804.24
108.37
37
MADHUCON PROJECTS LTD.
1.66
66148.47
1276.33
1.73
107939.70
1637.53
3.91
63.18
28.30
38
MAHINDRA & MAHINDRA LTD.
16.15
152683.97
4218.17
16.17
307284.83
6257.30
0.13
101.26
48.34
39
MURLI INDUSTRIES LTD.
0.71
21262.77
457.30
4.18
469053.97
2418.07
485.87
2105.99
428.77
40
NAKODA LTD.
2.43
379607.23
1710.43
0.23
173782.57
511.97
-90.69
-54.22
-70.07
41
NU TEK INDIA LTD.
0.42
46057.40
374.33
0.42
96235.13
324.80
0.16
108.95
-13.23
42
RADHE DEVELOPERS (INDIA) LTD.
0.36
48041.63
171.47
0.64
841510.57
585.87
80.13
1651.63
241.68
43
RAJOO ENGINEERS LTD.
0.07
7682.03
56.10
0.11
74191.17
139.80
61.11
865.78
149.20
44
RAMCO INDUSTRIES LTD.
0.26
2090.37
134.37
0.15
24242.17
168.43
-41.22
1059.71
25.35
45
SHREE ASHTAVINAYAK CINE VISION LTD.
5.97
93848.17
1033.10
10.66
1491221.70
3811.47
78.52
1488.97
268.93
46
SIGRUN HOLDINGS LTD.
1.84
45129.60
171.17
2.59
352327.37
660.33
40.84
680.70
285.78
47
SIMMONDS MARSHALL LTD.
0.03
2670.13
36.30
0.01
4914.50
21.97
-59.80
84.05
-39.49
48
STERLITE TECHNOLOGIES LTD.
5.61
132345.63
2522.43
5.66
592252.37
3661.20
1.00
347.50
45.15
49
SUPRAJIT ENGINEERING LTD.
0.22
13662.40
190.73
0.10
57047.07
150.50
-55.87
317.55
-21.09
50
VINATI ORGANICS LTD.
0.83
32265.67
657.70
0.27
46249.10
327.17
-67.62
43.34
-50.26
51
VISAGAR POLYTEX
0.50
3718.27
124.37
0.23
18537.43
175.83
-55.14
398.55
41.38
52
WELL PACK PAPER
15.50
597936.17
826.37
9.87
3661586.17
1408.23
-36.30
512.37
70.41
53
WINSOME TEX
0.14
23072.83
91.53
0.05
107855.70
99.33
-64.56
367.46
8.52
54
WINSOME YRANS
0.13
74968.20
99.77
0.06
333472.67
60.80
-53.05
344.82
-39.06
55
ZYDEN GENTEK
0.06
21953.87
72.00
0.05
145436.60
115.07
-21.86
562.46
59.81
t statistics
-1.16
4.29
1.76
21
ISSN 2231-1009
DEALING WITH PROBLEMS AND CHALLENGES OF E-GOVERNANCE IN BANGLADESH
KHANDAKER DAHIRUL ISLAM
HEAD
DEPARTMENT OF ELECTRONICS AND COMMUNICATION ENGINEERING
SYLHET INTERNATIONAL UNIVERSITY
SYLHET
MOHAMMAD NAZIMUL HOQUE
INSTRUMENT AND CONTROL ENGINEER
LAFARGE SURMA CEMENT LTD.
SYLHET
ABSTRACT
In the recent era, the application of Information & Communication Technology (ICT) in the Government of Bangladesh has got a remarkable development, though
it still is in its vestigial stage. Reforming public administration organizations and delivering an efficient and cost effective service are one of the staple concerns of
Government, since Government has been observing the utmost development in ICT sector around the world for years. E-governance is the effective use of
Information & Communication Technology (ICT) that tends to improve the system of governance. It is a network of organizations to include government,
nonprofit and private sector entities that hopes to provide better services to the citizens. Lately Bangladesh has given high priority in applying e-Governance, as
the country realizes it to be the only mean of scattering Information Technology to the common people. Developments in e-Governance will provide better
opportunities to exploit the power of Information and Communication Technology (ICT) in order to get the way of governance reactive, inexpensive, and allembracing. To date, various technologies have been applied to support the unique characteristics of e-government, including electronic data interchange,
interactive voice response, voice mail, email, web service delivery, virtual reality, and key public infrastructure. This paper will discuss about the basic problems
and visual percepts of e-Governance in Bangladesh.
KEYWORDS
Information and Communication Technology, e-Governance, network, problems, development.
1. INTRODUCTION
T
he word governance derives from the Greek verb kubernáo which means to steer and was used for the first time in a metaphorical sense by Plato. It then
passed on to Latin and then on to many languages. In current usage, to govern means to steer, to control, and to influence from a position of authority.
Good governance is perhaps the single most important factor in eradicating poverty and promoting development. Governance is the act of steering social
systems. It is a process by which organizations are directed, controlled, and held to account to their society. It relates to decisions that define expectations, grant
power, or verify performance. It consists of either a separate process or part of management or leadership processes. These processes and systems are typically
administered by a government. It is a collection of systems and processes which are concerned with ensuring the overall direction, effectiveness, supervision and
accountability of an organization. It involves a new fashion of leadership, new mean of debating and deciding policy and investment, new mode of accessing
education, new room of listening to citizens and new manner of organizing and delivering information and services. It is the application of information and
communication technologies (ICT) to transform the efficiency, effectiveness, transparency and accountability of informational and transactional exchanges with
in government, between govt. and govt. agencies of National, State, Municipal and Local levels, citizen and businesses, and to empower citizens through access
and use of information. In other words e-Governance is the implementation and delivery of government services through the information communication
technology to provide Transparent, Effective, Efficient, Responsive and Accountable governance to the society [1].
FIGURE 1: MODEL OF e-Governance
Good governance has eight major characteristics for the effective and efficient governance. They are Participation, Transparency, Effectiveness and efficiency,
Responsiveness, Accountability, Equity and inclusiveness [2]. If all these properties revolve around the ICT will explains innovative definition of e-governance as
in figure1. This means e-Governance has all the above properties as well as innovative Information and communication Technology for the effective and efficient
governance in any sector which assures that corruption is to be minimized, the views of minorities are taken into account and that the voices of the most
vulnerable in society are heard in decision-making. It is also responsible to the present and future needs of society. A conceptual model for e-Governance is
shown in figure-1 which explains about the interrelation between citizens, government and the services accessed by the citizen’s through information and
communication technology followed by the major characteristics of good governance.
2. OBJECTIVES
Specific objectives of this research are:
a.
Identification of problems of current system
b. Challenges to be faced in terms of E-governance
c.
Possible solutions.
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3. METHODOLOGY
Step-by-step methodologies of the research are:
a.
Extensive study on respective field
Through deeper study of the current field has favored a lot in doing research. It is knowledge that helps understanding different situations.
b. Field survey
This survey helped analyzing various information regarding e-Governance.
c.
Statistical analysis
d. Regional comparison of the implementation of e-Governance.
4. MISCONCEPTIONS OF E-GOVERNANCE
a.
b.
c.
d.
E-Governance is not a process that intends to change the system of government and interpersonal relationships.
E-Governance is not a way that limits to computerize the governmental system only.
E-Governance is not about to convert all the paper based documents to e-document.
E-Governance is not to put the security and confidentiality of the government into danger.
5. COMPONENTS OF E-GOVERNANCE
It needs to have the clear concept of e-Governance first. For the betterment of understanding, it needs to go through the various components of e-governance.
There are three major components of e-Governance, introduction of which are stated below:
5.1.
Government to Citizen (G2C)
G2C is the communication link between a government and private individuals or residents that is it involves interaction of individual with the
government. Such G2C communication most often refers to that which takes place through Information and Communication Technologies (ICTs), but
can also include direct mail and media campaigns. G2C can take place at the federal, state, and local levels. G2C stands in contrast to G2B, or
Government-to-Business networks. As an example, a candidate is willing to download an application form for a government job from a relative site.
5.2.
Government-to-Government (G2G)
G2G stands for Government to Government, describing internal or external Government to Government data communications. G2G is the online
non-commercial interaction between Government organizations, departments, and authorities and other Government organizations, departments,
and authorities. Its use is common in the UK, along with G2C, the online non-commercial interaction of local and central Government and private
individuals, and G2B the online non-commercial interaction of local and central Government and the commercial business sector.
5.3.
Government-to-Business (G2B)
Government-to-Business is the online non-commercial interaction between local and central government and the commercial business sector, rather
than private individuals (G2C), with the purpose of providing businesses information and advice on e-business 'best practices'.
6. SUCCESS FACTORS OF E-GOVERNANCE
A lot of retardants exist against the success of e-governance in developing countries. It is difficult to identify main one, because a number of aspects appear as
basic predicament of Good Governance. Those work as a collection, for which it is really tough to identify the main inhibitor. The risk of implementing egovernance is thus a fact and is unavoidable. Only the solution is in a certain phase and in the context of possible success (and fail) factors.
FIGURE.2: ASSESSING RISKS e-governance
The following aspects have to be taken into account when examining the risk of implementing e-governance solutions:
•
Political stability (elections, democracy)
•
Level of trust in Government (perception of service levels)
•
The importance of Government identity (fragmentation or integration)
•
Economic structure (education, agriculture, industry or service)
•
Government structure (centralised or decentralised)
•
Different levels of maturity
•
Constituent demand (push or pull)
7. E-GOVERNANCE IN BANGLADESH
High level of internet penetration is a must for the development of ICT. The latest statistics (ITU 2007) revealed that internet penetration is only 0.3% in
Bangladesh, whereas the rate is 7.3 and 5.3% respectively in India and Pakistan [3]. According to ITU 5,570,535 Internet users as of Dec, 2011;
3.5% of the population. Following is the table showing Internet Usage and Population Statistics:
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TABLE 1: INTERNET USAGE AND POPULATION STATISTICS
Year Users
Population
% User GDP ($) Source
2000 100,000
134,824,000 0.1 %
N/A
ITU
2007 450,000
137,493,990 0.3 %
466
2009 556,000
156,050,883 0.4 %
574
2010 617,300
158,065,841 0.4 %
624
2011 5,501,609 158,570,535 3.5 %
700
Note: Per Capita GDP in US dollars, source: International Monetary Fund.
Honorable Prime Minister herself has put great emphasis on identifying challenges in the implementation of nation-wide E-Governance and on initiating pilot
projects in various sectors of the government through a project called the Support to ITC Task Force (SICT). Ministry of Finance has customized software for
budget planning, sensitivity analysis, impact analysis, financial projections and various reports. Besides this, National Board of Revenue is computerizing the
revenue budget procedure. The following area are also noted:
a.
Both Dhaka and Chittagong Stock Exchange are highly computerized and networked, allowing citizens to trade with much more ease than before.
b. Ministry of Science and ICT creating web-sites containing information about various ministries.
c.
Ministry of Communication provides online searchable database of contractor’s tenders and created a Project Monitoring System for tracking progress of
the projects.
The Southern Asian region remains far below the world average and is the lowest ranking region in Asia. The Maldives (0.4491) continues to lead this region,
followed by Sri Lanka (0.4244) and Iran (0.4067). Bangladesh has improved on its web measurement in the enhanced and interactive stages [4].
The following table draws out the facts:
TABLE.2: E-GOVERNANCE READINESS FOR SOUTH ASIA
Country
2008 Index 2005 Index 2008 Ranking 2005 ranking
Maldives
0.4491
0.4321
95
77
Sri Lanka
0.4244
0.3950
101
94
Iran (Islamic Rep. of) 0.4067
0.3813
108
98
India
0.3814
0.4001
113
87
Pakistan
0.3160
0.2836
131
136
Bhutan
0.3074
0.2941
134
130
Bangladesh
0.2936
0.1762
142
162
Nepal
0.2725
0.3021
150
126
Afghanistan
0.2048
0.1490
167
168
Region
0.3395
0.3126
World
0.4514
0.4267
e-Governance is a way to solve the social as well as economical problems exist in the developing countries like Bangladesh. If a small fraction is spent on
technology, namely to streamline the processes, it will really boost the domestic tech industry [5]. The above table represents the growth of acceptability of eGovernance in Bangladesh is quite improving.
8. CHALLENGES OF E-GOVERNANCE IN BANGLADESH
Corruption in the public sector has significantly fallen in Bangladesh once it tempts to adopt electronic system in its many working areas. A survey in India shows
that the states, where e-governance has been established even partially, the corruption rate has dramatically come down. The survey found that in Kolkata and
Mumbai, due to adoption of e-Governance, the corruption rate declined, in some of the public sector organizations, to 19 per cent and 18 per cent compared to
51 per cent and 38 per cent respectively in 2000. In Bangladesh, computerization of Railway Reservation System, black-marketing of tickets has significantly gone
down [6].
Limited time to plan
Lengthy process for Legal Framework to support E-Governance
Insufficient telecom infrastructure to support E-Governance
Unaffordable Internet services for private sector & citizens
Limited ICT human capacity to support E-Governance
For a least developed country (LDC) like Bangladesh, funding is the main challenge. E-Governance is very capital intensive and no donor or consortium of donors
can fully fund for the establishment of e-Governance. Private sector is a major beneficiary of e-Governance through increased access procurements and eservices. So they can play a major role in funding for yielding facilities in subsidizing e-Governance products.
9. E-GOVERNANCE: MAJOR CHALLENGES WITH PROBLEMS IN BANGLADESH
Most of the people are poor in the countries like Bangladesh. The overall infrastructures here are not up to the mark. Under this critical condition, it is very
difficult to render government services to the people. In the following sections a number of reasons for this are stated:
a. Poverty: Internet access is too expensive for the poor in developing countries like Bangladesh. The setup cost becomes too high in suburb areas in
Bangladesh. Installing the necessary telephone lines needed for internet or email access is equally unaffordable in most poor countries. Here, each
telephone connection likely cost as much as BDT30,000 in urban areas and BDT70,000–80,000 in villages, which is unaffordable by most of the low income
families. It is also very expensive to gain internet access in Bangladesh. It is seen that it costs about BDT25 per hour in cities and BDT150 per hour in rural
areas.
TABLE 3: ICT USAGE IN VARIOUS COUNTRIES
Countries
PC/100 Telephone/100 Internet/100
Bangladesh
0.4
0.625
0.3
India
2.76
3.37
6.93
Canada
94.58
55.48
76.77
UK
81.21
55.43
66.15
USA
79.89
55.35
71.94
Australia
75.70
47.05
54.19
Singapore
72.61
41.91
69.99
New Zealand 54.15
40.83
80.41
Source: International Telecommunication Union, World Telecommunication/ICT Indicators 2008 and http://www.btcl.gov.bd/profile/profile.htm
b. Technical Illiteracy: There is general lack of technical literacy as well as literacy in countries like Bangladesh, the correlation between education level and
use of electronic means or Internet and other ICT means are quite significant, for instance about usage of ICT is given above in the table (Table.1) [7].
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Dominance of English Language: The potency of English on the internet tightens the access of non-English-speaking population. It is found that of all the
web pages in the world, about 84 percent are in English followed by 4.5 percent in German, 3.1 percent in Japanese, 1.8 percent in French, 1.2 percent in
Spanish, 1.1 percent in Swedish, 1 percent in Italian and less than 1 percent in all other languages [8]. Due to such overwhelming dominance of English over
these communication channels, computers and the internet are quite useless in villages, and the use of local languages does little to alleviate the problem
due to the poor literacy level mentioned earlier.
d. Unawareness: There is general lack of awareness regarding benefits of e-governance as well as the process involved in implementing successful G-C, G-G
and G-B projects. The administrative structure is not geared for maintaining, storing and retrieving the governance information electronically.
e. Inequality: Inequality in gaining access to public sector services between various sections of citizens, especially between urban and rural communities,
between the educated and illiterate, and between the rich and poor.
f.
Impediments for the Re-Engineering Process: Implementation of e-governance projects requires lots of restructuring in administrative processes,
redefining of administrative procedures and formats which finds the resistance in almost all the departments at all the levels.
Besides the above, the following issues are also too significant in consideration to the challenges of establishing e-governance:
Inadequate ICT infrastructure within the government
Govt. officials are very less in accessing ICT
Mare application of IT system
Lack of incentive structure of government officials
Absence of the participations of society, public and private sectors
Deficiency of adequate training program
Less competent IT maintenance
Insufficiency of sustainability of IT system
Frequent and atypical transfer of government functionaries
Few ownership if IT system
The psychology of government servants is quite different from that of private sectors. Traditionally the government servants have derived their sustenance from
the fact that they are important repositories of government data. Thus any effort to implement Documents Management and workflow technologies or bringing
out the change in the system is met with resistance from the government servants.
c.
10. PROSPECTIVE FACILITIES
a.
b.
c.
d.
e.
f.
e-Governance will able to provide the government services to the common man in a very cost effective manner.
The citizens of Bangladesh could access number of facilities and information from one stop shop at a very nominal cost by using e-Governance.
Online availability of complete vehicle information will help selling and purchasing of vehicle, transfer of vehicle, address modification etc. this process
would become very fast and easy.
Collection of fee and taxes of registration, license, and permit would be fast and efficient also. Thus e-Governance would minimize the corruption.
Farmers will be benefited through providing the appropriate price for their crop. This would minimize the role of mediators and yield very fast and easy
access of various types of forms, land records etc.
Villagers could participate in the decision making of various functioning bodies for their welfare through e-governance.
11. SUGGESTIONS
It is a must to build a superb consensus with all interested people to get champions in all sectors. The private sector can play an important role in this respect.
They have sufficient funds and are able to influence different stakeholders along with the government itself to support E-Governance. It needs to pay close
attention to the various office of the government like the office of the President, Ministries of Telecom, and Education etc. for emphasizing the organic or
functional relation among the parts as a whole. Today, public servants must have to be encouraged and trained well in order to be familiar with the tools and
languages of ICT. Such initiatives of the Bangladesh government must have to take, so that the commitment of political leadership and the enthusiasm of private
entrepreneurs too are met with the public demands. Infrastructure development and met the transfer of technology must have to be done throughout the
country in order to disseminate technological along with general knowledge. And remote areas of the country should be given highest priority.
12. CONCLUSION
Since its independence in 1971, Bangladesh has not been able to develop its poor infrastructure. Moreover it has to fight against poverty, illiteracy problems,
corruption and many other problems. Though Bangladesh has taken a number of e-governance projects. Effective promotion schemes by the government will
also a boosting factor to provide quality services to their citizens, which means there is huge potential for the development of e-governance in various sectors. It
can be said that e-Governance is the key to the “Good Governance” for the developing countries like Bangladesh to minimize corruption, provides efficient and
effective or quality services to their citizens. This paper concludes that e-government preparation in Bangladesh is still in its primary stages. It has not yet fulfilled
what actually the time demands due to technical, infrastructural, and political obstacles. A well-coordinated effort of political leadership, bureaucrats, and
private entrepreneurs could surely facilitate the desired development in the ICT sector. This will help accelerate the implementation and presence of egovernment in Bangladesh.
13. REFERENCES
1.
2.
3.
4.
5.
6.
7.
8.
Deepak Ghaisas, 2007, [http://egovindia.wordpress.com/2007/04/22Nation al-Policy-on-egovernance-required]
Dr. Sanjay Kumar Dwivedi, Ajay Kumar Bharti, Journal of Theoretical and Applied Information Technology, 2010, www.jatit.org.
Global Information and Technology Report 2008-09 World Economic Forum: International Telecommunication Union, World Telecommunication/ICT
Indicators 2008 (September 2008 update)
Norris, Pippa 2001, Digital Divide? Civic Engagement, Information Poverty and the Internet in Democratic Societies. Cambridge: Cambridge University
Press.
OECD e-book Citizens as Partners - Information, Consultation and Public Participation in Policy-Making [http://www. oecd.org/publications/ebook/
4201131E.Pdf]
The Daily Star, Wednesday, May 30, 2012, Bangladesh. http://www.thedailystar.net/newDesign/news-details.php?nid=121567
The Financial Express, Dhaka, Sunday April 26 2009, http://www.thefinancialexpress-bd.com/2009/04/26/64847.html
UN E-Government Survey 2008, from E-Government to connected governance, Department of Economic and Social Affairs Division for Public
Administration and Development Management.
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A STUDY OF THE IMPACT OF URBANIZATION ON AGRICULTURE CROPPING PATTERN
DR. UMA. H. R
PROFESSOR
UNIVERSITY OF MYSORE
MYSORE
MADHU. G. R
RESEARCH SCHOLAR
DOS IN ECONOMICS AND CO-OPERATION
UNIVERSITY OF MYSORE
MYSORE
ABSTRACT
Urbanization is the common trend in these days, urban area expansion directly affect rural and agriculture cropping pattern. In this study, which is based on
primary data, the data is collected from a village in Hassan district, Karnataka where majority of the formers were growing paddy as the main crop. This work
observe that expansion of urban area attracts the agriculture laborers and small farmers and these people instead of migrating completely to cities shift to
changing cropping pattern which is suitable to work in urban area. These job seekers work and earn in urban area comfortably without discontinuing their
farming activity with family members. This type of changing crop pattern helps to improve the socio economic condition of the job seekers.
KEYWORDS
Agriculture, cropping pattern, labour, Urbanization.
INTRODUCTION
A
griculture is the one of the core sectors in the Indian economy, agriculture provide food fodder and employment to large population of the country. More
than 65% of the population involve in the agriculture sector directly or indirectly.
Agriculture labourers move towards urban area is one of the common trends in these days. This movement of labour directly linked to the urbanization of
the small towns and semi urban areas of the country. This expansion of the dimension of the cities has affected agriculture and also agriculture labourers,
urban area attract rural agricultural labourers with higher wage for less effort. In the same time agriculture labourers are facing adverse weather condition in
agriculture sector. This condition in agriculture sector pushes the labourers out of the agriculture sector.
Urbanization and infrastructure development are necessary for achieving the desired growth rate of the economy. But this type of development is negatively
affecting agriculture sector as there is a big shift of agriculture labourers and farmers to urban and semi urban areas. This is directly affecting whole of
agriculture. The labour class which does not have their own land tends to go out in search of better wage to urban areas. This has created labour problem to
those who owns land and are in need of some help both financial and manual to continue their farming.
Changing cropping pattern has been considered by such farmers as a boon in some places where they can stay back in their own native and also work in a
nearby town so that they can improve their standard of living. These labourers search the jobs in cities and semi urban areas which are near to their farm or
village, but they are not ready to sacrifice the agriculture all together. They change the crop, preferring the one which needs less attention and work there for
few hours in a day and they deploy their family members to continue the agriculture work in his land or give his land to other farmers for rent. This type of
farming has actually increased the agriculture and agricultural labour productivity.
DEFINITION
Urbanization: Urbanization is the physical growth of urban areas as a result of rural migration and even suburban concentration into cities, particularly the very
largest ones.
Agriculture labour : Agricultural Labour Enquiry Committee defined agricultural labour as a person who, for more than half of the total number of days, worked
as an agricultural labour. An agricultural labour may be the small or marginal farmer or an artisan, but when a person derives his main earning by doing some
agricultural work on others farm is called an agricultural labour.
Cropping pattern: Cropping pattern is defined as the spatial representation of crops rotations, or as the list of crops that are being produced in an area and their
sequence in time.
Job seeker: The act of searching for employment. A job search is performed when an individual is either unemployed or dissatisfied with their current position.
Review literature
Biplab Dasgupta (1987) examine particular pattern of urbanization in West Bengal-the overwhelming role of the primate city, the wide gap between the former
and the other major cities in the region in terms of population size, economic activities and cultural influence, and the predominantly rural character of the other
areas in the region-is distinct from the alternative pattern of decentralized urbanization one sees in Punjab, Haryana, Kerala and some other states.
Bryan R. Roberts' (1989), this author looks at the effect of the new international division of labor on urbanization in developing countries. Previous histories,
particularly of in-sertion into the world economy, affect responses to the new order. Also, previous phases in the organization of the world economy, particularly
those associated with import-substitution industrialization, have shaped the urban systems and urban social organization of developing countries in particular
ways.
Julia j. Henderson (1957) analyze rate of urban growth is now higher in some of the economically underdeveloped countries than it is in the United States. The
apparent imbalance between rates of urban growth and of industrialization is pointed out. Levels of employment, health, education, nutrition, and housing
among the masses of rural migrants to the cities in most countries are posing problems which strain overburdened resources of the underdeveloped countries
to the breaking point. There is some reason to hope that planned economic development as well as the techniques of regional and city planning may be applied
more generally in the solution of these problems in Asia, Latin America, and the Middle East than they have been in North America.
Liu Shaoquan et al(2004)This study focuses on the impacts of urbanization and resettlement on employment of rural inhabitants, based on a tracking
investigation of migrants and host inhabitants in Lishu Village, and local inhabitants in other villages of Changing Town in the Three Gorges Reservoir (TGR) area.
Urbanization in its initial stage, driven by non-conventional forces and resettlement, has triggered a shift of rural labor from agriculture to industry. This has
worsened the labor surplus situation for both migrants and host inhabitants, especially women.
M S A Rao (1996), attempts to understand the process of modern urbanization, with special reference to a village near Delhi. Urbanization as a process of interaction between town and country may be studied in terms of rural-urban relations, that is, in terms of participation of villagers in the social and cultural life of
the town and vice versa, and in terms of inter-personal relations between villagers and town dwellers.
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NataDuvvury(1989),India in the recent past has witnessed an upsurge in research on various aspects of women's existence, with the early focus on the social
facets of their status giving way of analyses of women's location within the sphere of economic production, a shift that was prompted by the alarming decline in
female participation. This paper reviews literature women in agriculture, highlight lacunae and pointing to possible areas of fruitful future research
PabitraGiri (1998), in this paper discusses the urbanization process in West Bengal during 1951-91 with reference to the changes in workforce structure and
urban-rural productivity gap. In general the relative industrial stagnation and the population pressures determined the urbanization process in West Bengal in
the post-independence period. Moreover, the agricultural growth and the changed political scenario since the late 1970s had influenced the process.
Stanley et al. (1969) this research, based on data collected in a north Indian village, is an analysis of the relationship of family types to a number of variables:
caste, type of house, ownership of land, and the urbanization, type of employment, age, and education of the family head. There is no statistically significant
difference in family types between families headed by urban-oriented men and those headed by village-oriented men. Type of house, education, and type of
employment also prove to be non-significant. Family type is correlated with high- and low-caste status, landownership, and the age of the family head. Highcaste landowning families are more likely to be joint than low- caste landless ones. Also, older men are more likely to head joint families than younger ones.
Agriculture sector is one the core sector in Indian economy. Agriculture played a vital role in economic growth, but after speedy spread of urbanization and
industrialization and adverse environment of agriculture, farmers and agriculture labourer slowly depend on other areas for stable income and livelihood , after
reviewing the literature so many studies done on urbanization and migration, urbanization and development ,migration and development ,this paper try to find
out the effect of urbanization on changes in agriculture pattern and changes in cropping pattern.
OBJECTIVES OF THIS PAPER
This paper has three objectives
1) To analyze the recent trends in agriculture sector in rural areas.
2) To study the effect of changed cropping pattern on farmers income level
3) To examine the effect of urbanization on agricultural cropping pattern.
HYPOTHESES OF THE STUDY
1) There is no significant difference between income level of the farmers before and after changing the cropping pattern.
2) There is no significant difference between income level of the farmers before and after their migration to urban areas
METHODOLOGY
This paper is based on both secondary and primary data. Primary data is collected from 100 households with scheduled questionaire in a village closely located
near Hassan district. SPSS package is used for data analysis. Paired T test method was used to analyze wage differences before and after migration. Excel is used
for tabulation and construction of Chart. Garret’s ranking technique is use to rank the reasons for urbanization effect on farmers and changing cropping pattern.
TABLE - 1: AGE
AGE
Frequency Percentage
21-30
58
58.0
31-40
29
29.0
41-50
13
13.0
TOTAL 100
100
Collected data has been classified based on age group of the farmers who are seeking jobs in other sectors of the urban area. Here we find that 58%of the them
are belonging to 21-30 age group and 29%of the labourers belong to 31-40 age group. It is clearly shows that younger age people are more mobile compared to
older age groups. 41-50 ages consists only 13 %of the labourers and more than 50 age group people do not want to move to urban area.
TABLE - 2: EDUCATION LEVELS OF THE VILLAGERS
Class
Frequency percentage
Illiterate
15
15.0
Higher primary
9
9.0
High school
42
42.0
P.U.C
9
9.0
Graduation
10
10.0
Job oriented training 13
13.0
Master degree
2
2.0
Total
100
100
Above table refers the education status of the farmers. It shows 42% of them are having high school level of education. This is the highest percentage of
education attained by the farmers. Illiterates are second highest constituting 15 percentages. There are very few post graduates and graduates. This statistics
shows that high school level is sufficient enough to fetch a job for them in urban or semi urban areas. With this education normally they prefer urban life to
rural.
TABLE - 3: GENDER
Gender Frequency percentage
Male
88
88.0
Female 12
12.0
Total
100
100
This table shows the gender based classification of the surveyed population. according to the above table, men constitute highest share of 88 %in total job
seekers and female are lowest ie 12 %job seekers .Here one of the interesting thing is when the males are seeking jobs in other sectors of the economy for
earning more for livelihood, women are shouldering the responsibility of the family and agriculture activities in male members absence.
TABLE – 4: MARITAL STATUS
Marital status
Married
Unmarried
Total
Frequency
57
43
100
Percent
57.0
43.0
100
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Table 4 refers the marital status of job seekers in surveyed area, 57%of laborers are unmarried and 43%of the labourers are married job seeking to earn more in
urban area where they got more income.
TABLE- 5: CASTE
caste
Frequency Percent
3A
85
85.0
SC
13
13.0
CAT1
2
2.0
TOTAL 100
100
Table 5 shows the caste status of the job seekers. 85 %of the labourers are from 3A, in this surveyed 3A is the major caste group living in the village and same
trend followed in migration also.SC and CAT1 have 13% and 2% respectively.
Paired
Before and after crop
TABLE – 6: INCOME DIFFERENCE AFTER CHANGING CROPPING PATTERN
Mean
std deviation std error mean 95%confidance interval
Lower
Upper
-1364.000 875.540
87.554
-1537.726 -1190.274
T
df
Sig
-15.579
99
.000
CHART-1
20000
15000
corp before
10000
corp after
5000
0
Above Table 6 refers to the income difference of the before and after changing the cropping pattern of the farmers moving to the other sectors of the urban
area with changing the cropping pattern. The table value is greater than calculated value (1.660>-15.579).Therefore the null hypothesis is rejected. Rejecting
null hypothesis shows that the test is statically significant. There is a significant difference between income level of the job seekers before and after changing the
cropping pattern. The income has actually increased. This type of changing the cropping pattern not only helped to improve the standard living of the job
seekers, this type of movement and cropping pattern positive impact on agriculture growth and productivity.
Chart -1 also clearly shows the difference between income of the before and after changing cropping pattern.
Paired
before and after migration
Mean
-5128.00
Table – 7: INCOME DIFFERENCE OF AFTER MIGRATION
Std deviation Std error mean 95%confidance interval
2630.8611
263.8611
upper
lower
-5650.0199 -4605.9801
T
-19.492
df
99
Sig
.000
10000
8000
6000
4000
2000
0
1
5
9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 97
before
after
Above Table with paired T test refers to the income earning status of the job seekers before and after their migration from agriculture to urban area. As shown
above, the table value is greater than calculated value (1.660>-19.492).therefore the null hypothesis is rejected. Rejecting null hypothesis shows that the test is
statically significant. There is a significant difference between income level of the job seekers before and after their migration. The income has actually
increased. This type of migration not only helped to improve the standard of living of the job seekers, but also made them economically strong and this type of
economic improvement positively impact agriculture activities also .this type of part-time job seekers earn more and apply advanced technology, seeds,
fertilizers to land and get higher productivity and contribute to the agriculture .
Chart -2 clearly shows the difference between income of the before and after changing cropping pattern.
TABLE – 8: REASONS FOR NOT PREFERING AGRICULTURE
Indicators
Scores Rank
Loss in agriculture
5393
II
Unstable income
6487
I
Environmental reasons 5230
III
Over dependency
3115
V
Higher input cost
4367
IV
Labour problem
3021
VI
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Garrett’s ranking technique is used for ranking the reasons for leaving agriculture and working in urban area; first and foremost reason for leaving the
agriculture is unstable income in agriculture .second most influencing reason is loss in agriculture, environmental reasons like drought, heavy rain fall,
insecticides problems are the third reasons to influence to leave the agriculture. Higher input cost got fourth rank in the Garrett’s ranking table like hybrid
seeds, fertilizer, and technology. Many of the job seekers are marginal and small farmers hence one or two members of the family to other sectors for
employment and higher wages, over dependency is the fifth reason for moving to urban area.
TABLE – 9: REASONS FOR JOB SEEKING IN URBAN AREA
Indicators
Scores Rank
Good demand for labour /irregular work in village 4694
III
Stable income
6206
I
Improvement of infrastructure
5734
II
Weekly/monthly income
4200
VI
Higher income
3845
V
Above Garrett’s ranking table is also used to rank the reason for moving to urban area in search of jobs. Unstable or seasonal income in agriculture sector is
most influencing reason for job seeking in urban area, improvement in infrastructure like more bus facility, good roads, telephone and mobile facilities are the
second in the ranking table , speedy urbanization has creating demand for huge amount of labourers and observe more labourers from rural areas , most of the
workers are working in informal sector they get weekly or monthly income, this type of income helps in repayment of loan and to make saving through chits
,SHG’s and fixed deposit with bank and post office fixed bank account , it is the fourth reason in ranking table, lastly higher wages attract the labourers to
migrate and work in other area where they are get more wages and continuous employment.
FINDINGS AND CONCLUSION
In this paper we find that most of the agricultural labourers migrate to other sector for regular employment and higher wages. All marginal farmers they slowly
depending on other sector for higher wages without fully neglecting the agriculture. Instead of that they have shifted to changing the cropping pattern and
continued their agriculture activity with other family members and relative’s. They are changing cropping pattern with modern technology which reduce their
time and risk on farming and support their move to higher income jobs in urban areas. After they move to urban areas, farmers spend 2 or 3 hours in their land
and use technology to save their time and money. Now farmers use tractors for cultivating the land instead of bullock, use high yield seeds instead of traditional
seeds. Most of the farmers discontinue feeding the bullocks and cows. Cropping pattern is having positive impact on agriculture sector by increasing their
income. After the migration they earn more from land and also at working place, and spend some amount of income of agriculture input cost, cultivation labour
cost etc.
This increased income of the labourers increase the overall standard of living. They have purchased bikes/cars, send their children to town school, construct new
houses, involve in financial activities, access a good health care facility, celebrate festivals with grand parties, etc. Migration and crapping pattern, both are
having positive impact on agricultural labourers who have earned more not by completely stopping agricultural activities and migrating to urban areas but by
changing the cropping pattern and by doing so they get more time to work in urban area and also to take care of the farming with family members support. This
has really improved their standard of living.
REFERENCES
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2.
3.
4.
5.
6.
7.
8.
9.
10.
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12.
13.
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AbantiKundu (1983) “Urbanization in India: A Contrast with Western Experience” Social Scientist, Vol. 11, No. 4, pp. 37-49.
Amitabh Kundu(2009)” Exclusionary Urbanization in Asia: A Macro Overview” Economic and Political Weekly, Vol. 44, No. 48, pp.48-58,
Amitabh Kundu(2011) “Trends And Processes Of Urbanization In India”,Urbanization And Emerging Population Issues- 6 ,Human Settlement Group, IIED.
Population And Development Branch, UNFPA.
Biplab Dasgupta (1987)” Urbanization and Rural Change in West Bengal”, Economic and Political Weekly, Vol. 22, No. 7 , pp. 276-287
Bryan R. Roberts (1989) “Urbanization, Migration, and Development” Sociological Forum, Vol. 4, No. 4, Special Issue: Comparative National Development:
Theory and Facts for the 1990s , pp. 665-691.
Deshinkar,Priya (2006) international migration .poverty and development in Asia, downloaded from website www.asia 2015.conferenceorg/
PhDs/deshingkar.pdf.
Kalpana Bardhan(1973)Factors Affecting Wage Rates for Agricultural Labour” Economic and Political Weekly, Vol. 8, No. 26, pp. A56-A64
M. S. A. Rao (1966) “Urbanization in a Delhi Village: Some Social Aspects” Economic and Political Weekly, Vol. 1, No. 9, pp. 365-370.
M. S. Gore (1975)”Development and a Strategy for Urbanization: Absence of a Positive 115+117-119.
Nata Duvvury,(1989”)Women in Agriculture: A Review of the Indian Literature” Economic and Political Weekly, Vol. 24, No. 43 (Oct. 28, 1989), pp. WS96WS112
Nigel Harris (2005)”Migration and Development” Economic and Political Weekly, Vol. 40, No. 43, pp. 4591-4595.
Nirmala Banerjee (1969)”What Course for Urbanization in India?” Economic and Political Weekly, Vol. 4, No. 28/30, pp. 1173-1176.
P. Parthasarathy Rao, P. S. Birthal and P. K. Joshi (2006)”Diversification towards High Value Agriculture: Role of Urbanization and Infrastructure”, Economic
and Political Weekly, Vol. 41, No. 26, pp. 2747-2753.
Pabitra Giri (1998)Urbanization in West Bengal, 1951-1991, Economic and Political Weekly, Vol. 33, No. 47/48, pp. 3033-3035+3037-3038.
Robyn Eversole (2008) “Development in Motion: What to Think about Migration? “, Development in Practice”, Vol. 18, No. 1, pp. 94-99.
Rogaly, b. et al (2001) “seasonal migration, social change and migration’ rights (lesson from westBengal)”, December 8,pp.4547-57.
Tapan Piplai,Niloy Majumdar Source,Sankhya (2002)”Internal Migration in India: Some Socio-Economic Implications”, The Indian Journal of Statistics, Series
B Vol. 31, No. 3/4, pp. 509-522
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LANDSCAPING DISABILITY EDUCATION IN INDIA: A STUDY OF NORTH INDIAN CITY
DR. PRATAP THAKUR
STUDENT
CENTRE FOR PUBLIC HEALTH
PANJAB UNIVERSITY
CHANDIGARH
DR. SHAVETA MENON
STUDENT
CENTRE FOR PUBLIC HEALTH
PANJAB UNIVERSITY
CHANDIGARH
DR. J. S. SAINI
PROFESSOR & HEAD
DEPARTMENT OF RURAL DEVELOPMENT
NATIONAL INSTITUTE OF TECHNICAL TEACHERS TRAINING & RESEARCH
CHANDIGARH
ABSTRACT
In India despite a large number of initiatives by central and state governments and variety of activities & programmes undertaken by the Non-Governmental
Organisations (NGO), Persons with disability (PWD) continue to live an undignified life. The objective of our study was to bring in light the problems faced by
institutes working in the area of disability in Chandigarh and Panchkula. We conducted survey in months of June and July 2013 with the help of self-prepared
questionnaire. List of all the institutes was prepared. A brief tour of the institutes and an assessment of their pedagogy and vocational training was undertaken. A
questionnaire consisting of 22 questions was prepared and the head of the institutes interviewed. Report was prepared on Microsoft Word and for quantitative
analysis and chart preparation, Microsoft Excel used. Most of the institutes are working for more than 15 years and catered to the needs of mentally challenged
children, with few dealing with various other categories of disabled children. Financial constraints, lack of awareness and counselling, social and religious
prejudices, working parents, frequent transfers, inability to accept child’s condition, make parents unable to co-operate with school authorities detrimental to the
growth and upbringing of such child. The institutes working in the area of disability were giving their best, but lack of cooperation from parents and government
hampered their programme activities .We the general public should come forward for the cause of this vulnerable section of the society .Given a chance PWD’s
are no less than the normal strata of any society. This would be possible if they receive timely interventions, vocational training proper education and guidance,
which in turns is the prime responsibility of the institutes.
KEYWORDS
Disability, PWD, Education, Chandigarh, Panchkula, Problems.
INTRODUCTION
W
e need inclusion not exclusion, empathy not sympathy, liberation not protection, opportunity not charity”
Principal, Institute for Blind, Chandigarh.
According to the World Health Organisation, a disability is “Any restriction or lack (resulting from any impairment) of ability to perform an activity in
the manner or within the range considered normal for a human being”. The International Classification of Functioning, Disability and Health (ICF) defines
disability as an umbrella term for impairments, activity limitations and participation restrictions. Rates of disability are increasing due to aging of population and
increase in chronic health conditions. People with disabilities have less access to health care services and therefore experience unmet health care needs.
Disability is the interaction between individuals with a health condition (e.g. cerebral palsy, Down syndrome and depression) and personal and environmental
factors (e.g. negative attitudes, inaccessible transportation and public buildings, and limited social supports). Over a billion people are estimated to live with
some form of disability. This corresponds to about 15% of the world's population. Between 110 million (2.2%) and 190 million (3.8%) people 15 years and older
have significant difficulties in functioning.
Spectrum of Disability is extremely diverse. Some health conditions associated with disability result in poor health and extensive health care needs, while others
do not. However all people with disabilities have the same general health care needs as everyone else, and therefore need access to mainstream health care
services. Article 25 of the UN Convention on the Rights of Persons with Disabilities (CRPD) reinforces the right of persons with disabilities to attain the highest
standard of health care, without discrimination. People with disabilities report seeking more health care than people without disabilities and have greater unmet
needs. For example, a recent survey of people with serious mental disorders, showed that between 35% and 50% of people in developed countries, and
between 76% and 85% in developing countries, received no treatment. Health promotion and prevention activities seldom target people with disabilities. For
example, women with disabilities receive less screening for breast and cervical cancer than women without disabilities. People with intellectual impairments and
diabetes are less likely to have their weight checked. Adolescents and adults with disabilities are more likely to be excluded from sex education programmes.
People with disabilities are particularly vulnerable to deficiencies in health care services. Depending on the group and setting, persons with disabilities may
experience greater vulnerability to secondary conditions, co-morbid conditions, age-related conditions, engaging in health risk behaviours and higher rates of
premature death. Secondary conditions occur in addition to (and are related to) a primary health condition, and are both predictable and therefore preventable.
Examples include pressure ulcers, urinary tract infections, osteoporosis and pain. Co-morbid conditions occur in addition to (and are unrelated to) a primary
health condition associated with disability. For example, the prevalence of diabetes in people with schizophrenia is around 15% compared to a rate of 2-3% for
the general population. The ageing process for some groups of people with disabilities begins earlier than usual. For example, some people with developmental
disabilities show signs of premature ageing in their 40s and 50s.
The objective of our study was to bring to light the problems faced by institutes working in the area of disability in Chandigarh and Panchkula
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ISSN 2231-1009
METHODOLOGY
List of all the institutes working in disability around Chandigarh and Panchkula was prepared. We conducted survey with help of a self-prepared questionnaire
consisting of 22 items at institute’s premises. Report was prepared on Microsoft word and Microsoft Excel was used for quantitative analysis and chart
preparation. Study excluded the Institutes not giving permission for interview and found closed on three visits. Study was conducted in months of June and July
2012.
FIGURE 1: MAP REPRESENTING STUDY AREA OF CHANDIGARH AND PANCHKULA
LIMITATIONS OF THE STUDY
The period of the internship was during the summer vacation of most of the institutes. It was a difficult interviewing heads of the institutions, organisations, and
NGOs during the break. Even after to three visits some institutes could not be contacted. Limited time made us confine ourselves to this region of Chandigarh
and Panchkula. So only 12 out of 15 institutes were covered. Some of the respondent institutions, organisations, NGOs were suspicious of the purpose and
usefulness of this study. Head of one institute (Jai Durga) did not talked to us.
RESULTS
TABLE 1: TYPE OF INSTITUTE BY FUNDING
Sr. No. Name
Address
Funding
1.
Ashadeep (regional institute for mentally challenged )
Sec 31 ,Chandigarh
Govt
2.
Ashakiran
Sec 46 ,Chandiagrh
Govt
3.
Indian national patronage association
Karuna sadan 1st floor ,sec 11 ,Chandigarh Semi Govt
4.
Prayas
Opp Dainik Bhaskar, Sec 38 ,Chandigarh
Semi Govt
5.
Institute for blind
Sec 26,Chandigarh
Govt
6.
Vatika school of deaf and dumb
Sec 19 ,Chandigarh
NGO
7.
Sadhana vocational institute for mentally handicapped
Raen basera building ,Manimajara
NGO
8.
Haryana welfare society for hearing and speech handicapped Sec 16,Panchkula
Govt
9.
Orkids
Sec 15,Panchkula
Private
10.
Asha school
Western command ,Chandimandir
Army
11.
Lions club school for deaf and dumb
Sec 18 ,Chandigarh
NGO
12.
SOREM
Sec 36,Chandigarh
NGO
Maximum number of institutes are in govt sector followed by private initiative with considerable chunk of institutes working in semi govt. mode. Army was also
operating one institute in Chandimandir. By years of establishment, six institutes are working for more than 15 years. Most of them had good infrastructure
provided by central government. However, pay and facilities for the teachers were the sore points. One institute have leased its Premises for generating
revenue, which could be utilised by opening up more classes or increasing the intake of students. Some of the institutes also complained about the lack of cooperation from the parents. New institutes were also grappling with their own problems; some were deficient in infrastructure while others lacked teaching
expertise.
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FIGURE 2: LIST OF INSTITUTES BY YEARS OF ESTABLISHMENT
45
40
35
30
25
20
15
10
5
0
Institutes were extending help to the students from the lowest to the highest strata of society. Govt institutes attracted a large no of students due to affordable
services. They got most of the children referred from PGIMER, GMCH, and other medical institutions. They also got children referred
re
from welfare department.
Army Institute was providing services for children of army personnel with considerable representation
representation to civilian population. It got children referred from
Military Hospital. NGOs attracted their audience largely due to of mouth and public awareness campaigns carried out by them. They consisted of children of
mixed socio-economic status. Some institutes even arranged funds by collective responsibility system in which children belonging to well to do families paid for
fo
their poor peers
Most of the institutes catered to the needs of mentally challenged children, Except one, none of the institute was dealing with orthopedically handicapped
children. It required a great amount of effort on the part of both teachers and parents to deal with mentally challenged children.
chil
A point worth noting here is
that mentally impaired children were at a loss, as Disability
isability Act provides no reservation to them in govt. sector. Avenues where they can cope up need to be
created and nurtured. Promotion of Safe and harmless activities like arts and crafts is need of hour. Late realisation on the part of parents about the condition of
their ward led to dismal performance and adaptation problems of these children.
Private institutes were providing specialised services with personalised care in the area of learning disabilities. Such students
stud
also attended inclusive systems of
education and had the benefit of early interventions. The students so admitted were both from urban and rural background. Those
Tho who could not afford were
given free services, some of the institutes even went out of their way and arranged bus passes for students who could travel locally. Some institutes even tried
to provide financial help to poor students by way of mobilizing support from well to do friends.
Ideal Teacher student ratio is 1:4 but none of the institute maintained it. Pressure and the lack
lack of expertise among teacher leads to suffering on part of students.
Low salaries was the cause of frustration among teachers
Regular medical check-up
up is also a part of duty for these institutes. Although the institutes had full time and part time therapists
therapis working with them, yet they
lacked the in-house
house facility of a specialist doctor. Most of the institutes either referred their children to PGIMER or Govt. Hospital, sector
sec
16 or conducted
monthly check up in their institutes as of ENT, Dental etc. Those serving in cantonment area gave their children special card for free check-up
check
in Command
Hospital
MAJOR PROBLEMS REPORTED
TED BY INSTITUTES
Institutes complained about students leaving courses mid-way
mid
as biggest problem. Financial constraints, inability to accept child’s condition, lack of awareness
and counselling, frequent transfers, social and religious prejudices, make parents unable to co-operate
co operate with school authorities. This is detrimental to all-round
all
growth and upbringing of children. Institutes conducted
ucted family sensitisation programmes, yet they found it difficult to counsel.
counsel
FIGURE 3: BREAKUP OF PROBLEMS FACED BY INSTITUTE
Finance
Infrastructure
transport
Expertise
Co-operation
operation of parents
25%
20%
0%
20%
20%
15%
LACK OF COOPERATION FROM PARENTS
Parents totally depend on the institute for their child with no effort at personal level. Poor education status of the parents is a great hindrance especially of
mothers. An educated and well aware mother is best guide child can get.
FINANCE
No less were the problems of finance, transport and lack of expertise. The government schemes
schemes as, told by the institute heads, were mostly confined to papers
and they still have to run for their share of money. Available funds need to be distributed adequately and regularly
INTERNATIONAL JOURNAL OF RESEARCH IN COMPUTER
COMPUTER APPLICATION & MANAGEMENT
A Monthly Double-Blind Peer Reviewed (Refereed
Refereed/Juried) Open Access International e-Journal - Included in the International Serial Directories
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ISSN 2231-1009
TRANSPORT
The children were coming from far off places daily in absence of proper transport facility parents had to face a tough time .The lack of proper transport was one
of the reasons of drop out of children.
EXPERTISE
With low salaries, it was difficult for the institutes to hold on to teachers who preferred to leave the institutes for better opportunities and pay scales.
INFRASTRUCTURE
Infrastructure in the form of space and accessibility was seen lacking in most of the institutes. Vicious cycle of low funding and non-cooperative government was
being experienced by most of the institutes.
DISCUSSION AND CONCLUSION
TABLE 2: REASONS AND CAUSES OF CHILDREN DROPPING OUT OF INSTITUTES
Family problems
Lack of proper transport facility
Poverty
Unavailability of school buses
Poor Education
Lack of co-ordination with transport dept.
Late realisation of Child’s condition
Issuance of bus passes time repeatedly
Inadequate knowledge about condition Restriction on travel in some state depot buses, pass not
recognised by private and other state depots
Syllabi
Accessibility to institutes
No long travel facility
Lack of further studies
Lack of earning hand
No separate counter for disabled at bus stands
Lack of counselling
Rural and slum Dwellers
inconsiderate behaviour of fellow passengers in buses
Institutes/organisations/NGOs working in the area of disability require immediate attention. There is need for constant monitoring of institutes by the
government for ensuring availability of proper funds. The government should strictly implement its schemes and ensure institutions/organisations/NGOs,
dedicating themselves for the cause of disability have adequate funds. Up gradation of institutes is next herculean task for the government. There is also need to
provide incentives to the teachers working in the area of disability. Access to vocational training for such children, after they complete their studies, will provide
them a dignified life. This would lead to a bright future for children with disabilities.
Holistic approach in the area of disability by government and changing the attitude of mainstream society is the need of hour. Lack of awareness on the part of
society should be dealt through education and campaigning by media. More and more philanthropists should come forward to help PWDs and
institutions/organisations/NGOs working in the area of disability. The improvement of these institutions would definitely lead to the better rehabilitation and
vocational training in these institutes. Given a chance, they are no less than the normal people are, so we should create avenues for them to lead a normal and
self- reliant life.
Lack of interest in studies
Unfamiliar environment
Homesickness
Teasing
Poor student teacher ratio
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Bank.
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ISSN 2231-1009
ORGANIZATIONAL ROLE STRESS AND JOB SATISFACTION IN BANK OFFICERS: A STUDY
DR. D. V. RAMANA MURTHY
PREOFESSOR & HEAD
DEPARTMENT OF MBA
KBN COLLEGE (PG) CENTRE
VIJAYAWADA
MAZHARUNNISA
ASSOCIATE PROFESSOR
DEPARTMENT OF MBA
KBN COLLEGE PG CENTRE
VIJAYAWADA
ABSTRACT
Modern complex organizations involve task specializations and human beings are placed in different organizational roles. Sometimes people who are placed in
different jobs and roles may have a feeling of meaninglessness, powerlessness, and dissatisfaction. Consequently people may experience stress. Stress in general
terms refers to the pressures people feel in life. It is a condition of strain on one’s emotions, thought processes and physical conditions. Stress experienced at the
work place may have an origin from role related factors. Stress is not necessarily bad in itself up to a moderate level as it enhances the motivation and
performance of the individual; however, if stress is excessive, and prolongs over a long period of time it leads to dissatisfaction. It has been observed high stress
reduces job satisfaction of the employees and hampers their growth in development. The present study examines the relationship between organizational role
stress and job satisfaction amongst officers.
KEYWORDS
Complex organizations, Stress, Organizational Roles, Job satisfaction, Motivation, Performance.
INTRODUCTION
S
tress is anything that changes our physical, emotional or mental state while encountering various stimuli in our environment (Uma sekharan, 1989).
Stress is a dynamic condition in which an individual is confronted with an opportunity, demand or resource related to what the individual desires and for
which the outcome is perceived to be both uncertain and important(Cooper et.al.2002). In the organizational context, stress has been found to be
experienced by employees during job insecurity, performance expectations, and technology changes, personal and family problems. A more generalized
description is provided by Caplan et.al (1975) who suggests that stress is any characteristic of the job environment. Stress is a neutral word. The term “Distress”
has a negative connotations and the term”Eustress” has a positive meaning.
The term Job satisfaction was first described by Hoppock(1935), who observed that job satisfaction is a combination of psychological, physiological and
environmental circumstances that cause a person to say “I am satisfied with my job”.
Job satisfaction is a person’s attitude towards the job. Positive attitudes towards the job are equivalent to job satisfaction where as negative attitudes towards
the job are equivalent to job dissatisfaction. However a more direct description is provided by Saiyadain (2007) who defines Job satisfaction as end state of
feeling, the feeling that is experienced after a task is accomplished. This feeling could be positive or negative depending on the outcome of the task undertaken.
Earliest studies on job satisfaction attempts to determine the general properties of satisfied and dissatisfied workers. Then there were attempts to correlate
certain characteristics such as age, education, length of employment, performance, salary, abilities, marital status and sex with job satisfaction (D.M.Pastonjee,
1991).
STRESS & JOB SATISFACTION: LITERATURE REVIEW
The relationship between stress and job satisfaction has been studied in a variety of professions. A study by Chung and Fong (1990) on general medical
practitioners in Hongkong found that though the medical practitioners’ job is considered as hard work, majority of them were generally satisfied with their work.
Pestonjee(1973), in a review of job satisfaction studies, identified on- the –job as well as off- the-job factors. They consist of many intertwined job aspects like
job and management areas and personal and social relations areas.
Finemann(1979), views stress as psychological response or state of negative effect characterized by a persistent and a high level of experienced anxiety or
tension.
Srivastava(1991), in a sample of 300supervisory cadres at LIC, found significant positive correlation of various dimensions of role stress with the symptoms of
mental ill health.
Raja Gopalan&Khandelwal(1999),in a sample of 120 engineering Executives total role stress had a positive correlation (0.28) with avoidance and negative
correlation (-0.29) with approach coping style; both significant at (0.001) level.
Khan et.al,(1964) examined a sample of managers on series of personality variables such as extroversion vs introversion, flexibility vs. rigidity, inner vs outer
directedness, open vs close mindedness with job stress. They also found in their study, those men who suffered from role ambiguity, experience lower job
satisfaction, high-job related tension, greater futility and lower self confidence.
Harel (1964,) in his study has listed personal factors like age as the determinant of job satisfaction. Hence age of a person may be related to satisfaction and
stress.
Chandraiah et.al. (2003) studied the effect of occupational stress on job satisfaction among 105 managers of different age groups and found a positive
relationship between role stress and job satisfaction amongst old managers.
Morgolis,Krores&Quinn(1974) also found a number of significant relationships between indicators of physical and mental ill health with role ambiguity in their
representative national sample(n=1496).The stress indicators related to the role ambiguity were, depressed mood, lowered self esteem, life dissatisfaction, low
motivation to work and intention to leave the job
Udai Pareek has classified as many as 10 different Organizational Role Stresses which are described below.
1. Self Role Distance (SRD): This arises out of conflict between self concept and expectations from role as perceived by the role occupant.
2. Role Stagnation (RS): This is a feeling of stagnation and lack of growth in job because of few opportunities for learning and growth.
3. Inter Role Distance (RD): I t is a conflict between ones organizational role and other roles.
4. Role Isolation (RI): A feeling of being isolated from channels of information and not being part of what is happening..
5. Role Ambiguity (RA): The individual is not clear about various expectations that people have from his role.
34
6.
7.
8.
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ISSN 2231-1009
Role Expectation Conflict (REC): There may be conflicting demand by different role senders.
Role Erosion (RE): A decrease in one’s level of responsibility or feeling of being fully not utilized.
Resource Inadequacy (RIn): This experienced when the resources required by role occupant for performing a role effectively are not available.
Personal Inadequacy (PIn): The role occupant may feel that he does not have enough knowledge, skills, or training, or he has not had time to prepare for
the assigned role.
CONSEQUENCES OF ORGANIZATIONAL ROLE STRESSES
These role stresses set a devastating environment for the individual and resulting physiological effects like high blood pressure and behavioral consequences like
depression and withdrawal behavior. The manifest health effects could be stomach disorders and psychosomatic disorders. It has been observed that high stress
reduces job satisfaction of the employees and hampers their growth in development. For instance (French&Caplan(1973) in a study of 205 Engineers and
Scientists at NASA base, it was found that role ambiguity was significantly related to the low job satisfaction and to feelings of job related threat to one physical
and mental well being.
OBJECTIVES
The following are the objectives of the present study.
1. To measure the Organizational Role Stress and Job Satisfaction among officers in State Bank of India.
2. To examine the relationship between Organizational Role Stress and Job Satisfaction.
3. To draw the implications of the results of the study.
4. To understand the influence of organizational role stresses on employee job satisfaction.
METHODOLOGY
The following is the hypotheses and sample of the study.
HYPOTHESES
The following hypotheses are set up.
1. Organizational Role Stress and Job Satisfaction are negatively related.
2. Organizational Role Stress and Job Satisfaction vary with age.
SAMPLE
The study is carried out on one hundred Officers of a leading Public sector bank. The Officers having a minimum of 5 years of experience are included for the
sample. The Officers are divided in to two age groups namely Officers below 35 years of age and Officers above 35 years of age.
RESEARCH INSTRUMENTS
The study is survey based .Two research instruments are used to collect the primary data from the respondents namely
1. Organizational Role Stress (ORS) Scale by Udai Pareek(1993).
2. Satisfaction-Dissatisfaction Employee Inventory (SD Employee Inventory) developed by D.M. Pastonjee(1973).
OSR SCALE: This scale contains fifty items. Each of the ten dimensions of role stress contains five items. It uses five pint scale (from 0 – 4). Thus for each
dimension the minimum and maximum scores that respondent can get are 0 & 20.
SD EMPLOYEE INVENTORY: This inventory evaluates Job satisfaction in four dimensions. This scale contains a five point scale (from 0 – 4). Thus for each
dimension the minimum and maximum scores that respondent can get are 0 & 20.
RESULT & DISCUSSION
The present Study shows mean scores on role stress and Job satisfaction and does indicate the prominent stress and satisfaction dimensions of higher (above 35
years of age) and lower age group (below 35 years of age) of respondents.
TABLE - 1: AVERAGE SCORES OBTAINED BY BOTH AGE GROUPS ON VARIOUS ROLE STRESS DIMENSIONS
Role Stress Dimensions
Mean Stress Scores (Age below 35 Years) Rank
Mean Stress Scores (Age above 35 Years) Rank
Inter Role Distance
6.78
4.00
6.88
5.00
Role Stagnation
4.26
9.00
5.34
9.00
Role Expectation Conflict 4.86
8.00
6.64
6.00
Role Erosion
9.62
1.00
8.34
1.00
Role Overload
5.28
6.00
6.48
7.00
Role Isolation
6.98
3.00
7.34
3.00
Personal Inadequacy
7.76
2.00
7.58
2.00
Self Role Distance
5.34
5.00
5.88
8.00
Role Ambiguity
3.22
10.00 4.48
10.00
Resource Inadequacy
5.24
7.00
7.02
4.00
Total Role Stress
58.48
65.40
The responses of all the respondents are added and divided by their number. The obtained value is the mean stress score for each of the ten dimensions of the
ORS. The total sample of hundred was divided into categories age-wise namely above 35 years of age and below 35 years of age. For each dimension of ORS, the
mean scores of the two groups are arrived at. These are ranked separately for two groups. Comparison is made for these two groups basing on the rank
obtained by each of the dimensions.
Table-1 indicates that Role Erosion causes maximum stress (9.62 for the age group of below 35 years and 8.34 for the age group of above 35 years). Personal
Inadequacy causes second (7.76 and 7.58 mean scores for age group of below 35 years respectively). Role Ambiguity causes minimum stress (3.22 & 4.48 mean
scores for age group of below 35 years and above 35 years respectively). Role Ambiguity which is due to lack of information and understanding of the role causes
least stress in Bank Officers because they have clearly defined roles and there is no conflict regarding expectations.
TABLE - 2: AVERAGE SCORES OBTAINED BY BOTH AGE GROUPS ON VARIOUS DIMENSIONS OF JOB SATISFACTION
Job Satisfaction Dimension Mean Stress Scores (Age below 35 Years) Rank Mean Stress Scores (Age above 35 Years)
Job
15.30
3.00
14.36
Management / Supervision 15.52
1.00
13.82
Personal Adjustment
15.22
4.00
14.30
Social Relations
14.24
6.00
13.88
On the Job factors
15.41
2.00
14.09
Off the Job factors
14.78
5.00
14.09
Total
60.24
56.90
Rank
1.00
6.00
2.00
5.00
3.00
3.00
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ISSN 2231-1009
In the Job satisfaction scale the response of all respondents are added and divided by their number. The obtained value is the mean satisfaction scores. The total
sample of hundred is divided into age groups namely below 35 years of age and above 35 years. For each dimension of the satisfaction, the mean scores of the
two groups are arrived at. These are ranked separately for the two groups. Comparison is made for the two groups basing on the rank obtained by each of the
dimensions.
The mean scores shown in table-2 indicates that Officers of higher age group are more satisfied with Job (14.36), Personal Adjustment (14.30) as compared to
management (13.32), social relations (13.88); whereas the prominent areas of Satisfaction in lower age group are management (15.52) and Job (15.30) as
compared to Personal Adjustment (15.22), and Social Relations (14.24). Thus Bank Officers who are young are most satisfied with management. The total
satisfaction scores show that the Officers of both age groups vary in total satisfaction. Officers of lower age group are more satisfied (60.24) than higher age
group (56.90).
If we carefully observe Tables 1 & 2 we find that the Officers of higher age group have higher role stress (65.40) and lower job satisfaction (56.90); whereas
Officers of age group of below 35 years have lower Role stress (58.48) and higher job satisfaction (60.24). This proves the hypotheses: a) Higher the Role Stress,
lower the Job Satisfaction and b) Role Stress vary with age.
TABLE - 3: AVERAGE SATISFACTION SCORES AND STANDARD DEVIATION OF DIFFERENT GROUPS SCORING HIGH, MODERATE AND LOW ON ROLE STRESS
Job Satisfaction
H S G (Mean) (N = 0) SD M S G (Mean) (N = 0) SD L S G (Mean) (N = 0) SD t
Job
----13.50
3.20
15.83
2.31
4.09
Management
----12.93
3.29
16.09
2.29
5.45
Personal Adjustment ----13.28
3.24
16.05
3.17
4.30
Social Relations
----13.40
2.89
15.70
2.46
4.26
On the Job
----26.46
5.70
31.92
3.65
5.57
Off the Job
----26.20
6.05
31.85
4.06
5.09
Total
----52.48
10.05
63.85
6.74
3.69
For each dimension of ORS, Mean and Standard Deviation are computed separately. The values ‘M + ISD’ and ‘M – ISD’ are computed, Persons who crossed less
than the value of ‘M-ISD’ are regarded as ‘Low Scoring Group’ (LSG) and persons who crossed above the value ‘M+ISD’ are regarded as ‘High Scoring Group’
(HSG). The group whose scores are between ‘M-ISD’ and ‘M+ISD’ are regarded as ‘Medium Scoring Group’ (MSG). Mean and Standard Deviation for MSG and
LSG on each of the dimensions of Satisfaction – Dissatisfaction Inventory are calculated. T-test is calculated for all these dimensions and it is found that‘t’s are
significant.
Table-3 indicates that there are no Officers experiencing high Role Stress, 45% experience moderate, whereas 55% experience low stress. The results show that
Officers with low stress score better on Job Satisfaction as compared to those experiencing moderate stress.
TABLE – 4: CHI-SQUARE TEST FOR COMPARISON OF JOB SATISFACTION AND ROLE STRESS IN A ‘2 X 2’ CONTINGENCY TABLE
Job Satisfaction
Role Stress
X2
P
High Low
Job
High 2
89
8.55
0.01
Low
2
7
Management
High 2
84
4.48
0.05
Low
2
12
Personal Adjustment High 2
91
11.83 0.01
Low
2
5
Social Relations
High 4
89
3.13
NS
Low
0
7
On the Job
High 1
90
22.16 0.01
Low
3
6
Off the Job
High 3
91
2.66
NS
Low
1
5
Total
High 2
91
11.83 0.01
Low
2
5
‘2 X 2’ contingency table – Chi – Square test:
Persons who scored higher than the mean of each dimension of SD Employee Inventory, constituted the high group and their counter parts as low group. Similar
is the case with ORS Scale. Number of persons who scored high on ORS and SD Employee Inventory are identified. Similarly the number of persons who scored
low on both the scales is identified. The number of persons who scored high on ORS; but low on SD Employee Inventory and vice versa is identified.
These figures are calculated as shown below:
Role Stress
High Low
High
2
89
91
Low
2
7
9
4
96
100
Job
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ISSN 2231-1009
The numbers in the cells constitute the ‘observed frequency’ (f0), the expected frequency (fe) for each cell is computed in the following manner.
(fe) for first cell.
(fe) for 1st cell
(fe) for 2nd cell
(fe) for 3rd cell
(fe) for 4th cell
fo - fe
(fo – fe)2 / fe
Job – ORS
(H,
(L,
(H,
(L,
H)
H)
L)
L)
(4 x 91) / 100
(4 x 9) / 100
(96 x 91) / 100
(96 x 9) / 100
=
=
=
=
3.64
0.36
87.36
8.64
1st cell
2nd cell
3rd cell
4th cell
2.00 2.00 89.00 –
7.00 -
=
=
=
=
-1.64
1.64
1.64
-1.64
1st cell
2nd cell
3rd cell
4th cell
(-1.64)2 / 3.64
(1.64)2 / 0.36
(1.64)2 / 7.36
(-1.64)2 / 8.64
=
=
=
=
0.7389
7.4711
0.0308
0.3113
3.64
0.36
87.36
8.64
df = (r-1) (c-1) = (2-1) (2-1)
(Rows -1) (Column - 1)
X2 value = 0.7389 +7.4711 + 0.3113 = 8.5521.
Referring table E, it is found that for 1 df , the table value is 6.635 at 0.01 level of significance. Since the obtained value is higher than the table value, the X2 is
significant.
Table-4 reveals statistically significant X2 on all the dimensions of Job satisfaction except social relations and off the job. This signifies that degree of stress (high
or Low) has detrimental influence on almost all aspects of job satisfaction and total satisfaction. Pestonjee (1982) also found X2 to be significant on all aspects of
job satisfaction except social relations.
Referring Table E it is found that for 1df, the table value is 6.635 at 0.01 level of significance. Since the obtained value is higher than the table value, the X2 is
significant.
Table-4 reveals statistically significant X2 on all the dimensions of Job satisfaction except social relations and off the job activities. This signifies that degree of
stress (high or Low) has detrimental influence on almost all aspects of job satisfaction and total satisfaction. Pestonjee (1982) also found X2 to be significant on
all aspects of job satisfaction except social relations.
TABLE-5: CORRELATION BETWEEN JOB SATISFACTION AND ROLE STRESS OF HIGHER AGE GROUP (ABOVE 35 YEARS)
HAG
Correlation (r) P
Role Stress and Job Satisfaction -0.66
-0.01
Coefficient of Correlation (r) is computed, for the overall scores on Job Satisfaction and Role Stress. Since N = 100, the ‘df’ is ‘N – 2 = 100 – 2 = 98’. Referring
‘Table E’ for 98df, the value to be significant at 0.01 levels is 0.254. Since the obtained value ‘r’ is higher than the table value, the ‘r’ is significant. Similarly
calculations are done for Table-6 and Table-7.
TABLE-6: CORRELATION BETWEEN JOB SATISFACTION AND ROLE STRESS OF LOWER AGE GROUP (BELOW 35 YEARS)
LAG
Correlation (r) P
Role Stress and Job Satisfaction -0.50
-0.01
Both Table 5 and 6 indicate that inverse relationship between Role Stress and Job Satisfaction stands true for Officers of higher as well as lower age groups. This
shows that low Role Stress results in high Job Satisfaction for Officers of all age groups.
TABLE-7: CORRELATION BETWEEN JOB SATISFACTION AND ROLE STRESS
Correlation (r)
P
Role Stress and Job Satisfaction
-0.44
-0.01
This negative correlation between Role Stress and Job Satisfaction shows that Role Stress and Job Satisfaction are negatively related.
CONCLUSION
The findings of the present study substance the results of the earlier studies quoted on Role Stress and Job Satisfaction. This Study clearly indicates that low Role
Stress leads to higher Job Satisfaction in Bank Officers, irrespective of age. This low stress is because of nature of task in banking organization. As the work is
peaceful and does not involve much conflict, Bank Officers are satisfied with their jobs. The little stress experienced is healthy and functional for psychological
growth, achievement and development of new skills in the Officers.
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Saiyadain, M (2007) Human Resouce Management,New Delhi,Tata McGraw Hill
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FINANCIAL PERFORMANCE ANALYSIS OF BHARAT PETROLEUM CORPORATION LIMITED
DR. V. K. GUPTA
READER
DEPARTMENT OF ACCOUNT, LAW & COMMERCE
K. R. (PG) COLLEGE
MATHURA
DR. ANIL KUMAR GOYAL
ASSOCIATE PROFESSOR
RUKMINI DEVI INSTITUTE OF ADVANCED STUDIES
ROHINI
PAWAN KUMAR
RESEARCH SCHOLAR
MEAWAR UNIVERSITY
CHITTORGARH
ABSTRACT
Oil & Gas is one of the most important sectors contributing to the economic development of a country. The production and consumption of oil & gas in a country
has become a barometer of its growth and prosperity. As per the record of Ministry of Petroleum, over the years Indian petroleum industry has played an
influential part in triggering the speedy expansion of the country's economy by contributing 15% in the total GDP. Bharat Petroleum Corporation Limited is
second largest state-owned oil and gas company, with Fortune Global 500 rank of 272 (2011). As the name suggests, its interests are in downstream petroleum
sector. It is involved in the refining and retailing of petroleum products. Financial performance analysis is essential for every firm/company to evaluate its
performance in all financial aspects. It is the process of identifying the financial strength and weakness of the firm/company and a tool to compare with industry’s
financial health. The analysis of financial performance of the firm/company can be carried out with the help of ratio analysis. The ratio analysis is a powerful tool
for the analysis of the financial performance of the firm/company. It indicates the effectiveness of long term as well as short-term financial policies of the
firm/company. Financial Performance of Bharat Petroleum Corporation Limited and its financial position can be well judged by profitability ratios (Gross profit
ratio and Net profit ratio), liquidity ratio (Current ratio and Quick ratio) and Solvency ratio (Debt-Equity ratio, Debt to Total Assets Ratio and proprietary ratio).
The study is based on secondary data collected from the Annual Reports of the company (BPCL), Annual Reports of the Ministry of Petroleum and other secondary
sources.
KEYWORDS
BPCL, financial performance.
INTRODUCTION
F
inancial performance refers to the act of performing financial activity. It indicates to the degree to which financial objectives being or have been
accomplished. The process of measuring the results of a firm's financial policies and operations in monetary terms is known as financial performance. It is
used to measure firm's overall financial health over a given period of time usually one year. Evaluation of its performance in all aspects like production,
operations, sales and finance is essential for every firm in this competitive environment. Financial performance identifies the strength and weakness of the firm
with regard to the various financial aspects. In order to analysis financial performance of a firm, the financial analyst needs certain tools to be applied on various
financial aspects. One of the widely used and powerful tools is ratio. Ratios express the numerical relationship between two or more related variables/values.
This relationship can be expressed as percentages, times or proportion of numbers. Accounting ratios are used to describe significant relationships, which exist
between figures shown in a balance sheet, profit and loss account, budgetary control system or any other part of the accounting organization. Ratio analysis
plays an important role in determining the financial strengths and weaknesses of a company relative to that of other companies in the same industry. The
analysis also reveals whether the company's financial position has been improving or deteriorating over a period of time.
Bharat Petroleum Corporation Limited has refineries at Mumbai and Kochi with a capacity of 12 MMTPA and 9.5 MMTPA respectively for refining crude oil
Bharat Petroleum Corporation Limited’s subsidiary at Numaligarh has a capacity of 3 MMTPA. Bina refinery is situated in the state of Madhya Padesh with a
capacity of 6 TMT was commissioned at the hand of Mr. Manmohan Singh, prime minister of India on 25th may 2011.
METHODOLOGY OF THE STUDY
The study is based on secondary data collected for a period of last seven years from the Annual Reports (2005-06 to 2011-12) of Bharat petroleum Corporation
Limited and Annual Reports of the Ministry of Petroleum for (2005-06 to 2011-12). The data collected has been classified and analysed to achieve the objectives
of the study using key financial ratios like profitability ratios (Gross profit ratio and Net profit ratio), liquidity ratio (Current ratio and Quick ratio) and Solvency
ratio (Debt-Equity ratio, Debt to Total Assets Ratio and proprietary ratio).
ANALYSIS OF DATA
TABLE- 1: GROSS PROFIT RATIO OF BHARAT PETROLEUM CORPORATIO LIMITED
YEAR
GROSS PROFIT (Rs. in Crore) NET SALES (Rs. in crore) GROSS PROFIT RATIO (%)
2005-06 1423
85150
1.67
2006-07 4204
107452
3.91
2007-08 4368
121684
3.59
2008-09 4246
145392
2.92
2009-10 4619
131500
3.51
2010-11 5169
163218
3.17
2011-12 5569
222394
2.50
Source- Annual report of Bharat Petroleum Corporation Limited
39
ISSN 2231-1009
GROSS PROFIT RATIO (%)
5
1.67
3.91
3.59
2.92
3.51
3.17
2.5
0
2005-06
06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
12
GROSS PROFIT RATIO (%)
Interpretation
Gross Profit is the key indicator of profitability of any organization. From the above table - 1, Gross Profit ratio of Bharat Petroleum Corporation Limited, it seems
that there is no stability in profitability of the company.
In 2005-06
06 the Gross profit ratio was 1.67% which can not be said even satisfactory from any point of view. No doubt company improved it in 2006-07 to 3.91%
which is appreciable but could not maintain it and in the next two years it decreased by 1% and reached to the level of 2.92%.
2.92% In the year 2008-09 it is very
surprising that sales increased by almost 20% but Gross Profit ratio decreased in comparison to 2007-08.
2
08. It shows the inefficiency of company in maintaining the
operating expenses. Again in 2009-10
10 company tried to improve in the adverse condition when sales decreased but gross profit increased. The situation could
not continue for long time and in the next year 2010-11
11 the ratio decreased and again in 2011-12
2011 12 company fails to maintain its operating expenses. So it can be
concluded that company improves its gross profit ratio in any year and it decreases for next two years. This trend continues and can be seen two times in the
study period of seven years. Company is unable to control or even maintain its direct operating expenses, which is not good for
f company’s financial health.
YEAR
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
TABLE- 2: NET PROFIT RATIO OF BHARAT PETROLEUM CORPORATIO LIMITED
NET PROFIT (Before Tax) (Rs. in Crore) NET SALES (Rs. in crore) NET PROFIT RATIO (%)
407
85150
0.48
2768
107452
2.58
2597
121684
2.13
1004
145392
0.69
2366
131500
1.80
2414
163218
1.48
1884
222394
0.85
Source Annual report of Bharat Petroleum Corporation Limited
Source-
NET PROFIT RATIO (%)
2.58
4
2
0.48
2.13
1.8
0.69
1.48
0.85
0
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
2011
NET PROFIT RATIO (%)
Interpretation
The trend of Gross Profit ratio is repeated in Net Profit ratio. In 2005-06
2005 06 the Net Profit ratio is the lowest i.e. below 0.50%. A company where public is
stakeholder at large and state-owned;
owned; the situation can not be said satisfactory. No doubt in the next year i.e. 2006-07
2006 07 company improved its profitability by
increasing Net Profit ratio to more than 5 times to the previous one. In 2007-08
2007
it decreased to 2.13% in the same way as Gross Profit ratio. But due to
inefficiency on the part of operations it decreased to 0.69% in 2008-09
2008 09 which is less then 1/3 of the previous year even after 20% increase in sales. Again
company tried and improve it more than doublee to 1.80% in 2009-10
2009
but could not maintain it in the year 2010-11
11 and 2011-12
2011
and continuously decreasing and
reached to the level of less then 1%, which is a matter of worry to the company. It is because of direct expenses only. Because
Becau after deducting indirect expenses,
the net profit follows the trend of Gross Profit. This trend can not be said satisfactory from the point of view of investors,
investors, creditors, lenders etc.
YEAR
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
TABLE- 3: RETURN ON INVESTMENT
INVESTM
OF BHARAT PETROLEUM CORPORATIO LIMITED
ED
EBIT
CAPITAL EMPLOYED
RETURN ON INVESTMENT(%)
(Rs. in Crore)
(Rs. in crore)
654
17513
3.73
3301
21103
15.64
3270
26699
12.25
3170
33300
9.52
3377
35282
9.57
3514
33030
10.64
3684
37913
9.72
Source-
40
ISSN 2231-1009
Return On Investment (%)
15.64
12.25
20
10
9.52
9.57
10.64
9.72
2008-09
2009-10
2010-11
2011-12
3.73
0
2005-06
2006-07
2007-08
Return On Investment (%)
Interpretation
Return on Investment is a parameter to measure the capability of firm to earn on the amount invested by various stakeholders in terms of ownership and
borrowed capital. From the above analysis it is clear that the average ROI of the company is 10% approximately during the period of study.
st
Year 2006-07 shows
the highest ROI of 15.64% which was not achieved again. In the year 2008-09
2008
it came down to 9.52% and company
any tried to improve it in next year i.e. 2009-10
2009
but no major improvement can be seen, but the results may be seen in the year 2010-11
2010 11 when the ration increased to 10.64%. The company can not sustain the
improvement and it came down to 9.72% in the next and
and last year of the study. The capital employed is increasing every year except the year 2010-11,
2010
the
fluctuation in ROI is because of the EBIT. So the company is unable to maintain EBIT with respect to capital employed.
TABLE- 4: CURRENT RATIO OF BHARAT PETROLEUM CORPORATIO LIMITED
YEAR
CURRENT ASSETS CURRENT LIABILITIES
(Rs. in Crore)
(Rs. in crore)
CURRENT RATIO
2005-06 13313
9407
1.42:1
2006-07 13634
11277
1.21:1
2007-08 19707
14580
1.35:1
2008-09 15288
12831
1.19:1
2009-10 23584
17131
1.38:1
2010-11 27606
21958
1.26:1
2011-12 33498
27580
1.21:1
Source-
CURRENT RATIO
1.42
1.5
1.21
1.35
1.19
1.38
1.26
1.21
1
2005-06 2006-07
2006
2007-08 2008-09 2009-10 2010-11 2011-12
CURRENT RATIO
Interpretation
Current Ratio is basically a measure of short term liquidity which expresses the ability of a firm to pay its short term liabilities within in due time period. The ideal
ratio should be 2:1 but the standard can not be applied to each and every industry. If we compare the current ratio of the company
co
with the ideal ratio during
the period of study, ideal ratio could never be achieved. The average Current ratio lies between 1.2 to 1.3 times. It means the company did not maintain proper
level of current assets to meet the current liabilities. The correlation of current assets and current liabilities is positive
positive but the difference
differen i.e. working capital is
not even constant, which created the fluctuation in the current ratio. In the last 3 years of the study current ratio is continuously
cont
decreasing which can not be
said satisfactory the point of view of creditors & short term lenders.
lenders. They may increase the cost of credit because of increasing risk of non payment within time.
YEAR
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
TABLE- 5: QUICK RATIO OF BHARAT
BH
PETROLEUM CORPORATIO LIMITED
QUICK ASSETS (Rs. in Crore) CURRENT LIABILITIES (Rs. in crore) QUICK RATIO
4268
9407
.45:1
4973
11277
.44:1
9103
14580
.62:1
8465
12831
.66:1
11555
17131
.67:1
12231
21958
.56:1
17550
27580
.64:1
Source-
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QUICK RATIO
1
0.45
0.44
0.62
0.66
0.67
0.56
0.64
0.5
0
2005-06
06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
2011
QUICK RATIO
Interpretation
Quick ratio is the ratio between quick assets and current liabilities. When quick assets are divided by current liabilities, the result is known as Quick/ Acid test/
liquid ratio. Quick assets are the assets which are either cash or easily convertible in to cash without any major loss in the value. The ratio is a parameter to
measure the ability of firm to meet its current liabilities, as and when they occur, without disturbing the operation of the company. The ideal quick ratio is 1:1; it
means the quick assets should be equal to the current liabilities.
If we see the above table the average quick ratio of the company is 0.6:1 approx which is much lesser than the ideal ratio. As
A in the case of current ratio, the
correlation between quick assets and current liabilities is positive. Quick ratio is almost moving with the current ratio. It means the non liquid but current assets
of the company are not fluctuating very much but fluctuation in liquid assets is responsible for the fluctuation in both the current ratio and liquid ratio.
TABLE- 6: DEBTDEBT EQUITY RATIO OF BHARAT PETROLEUM CORPORATIO LIMITED
YEAR
TOTAL DEBTS (Rs. in Crore) EQUITY (Rs. in crore) DEBT- EQUITY RATIO
2005-06 8374
9139
0.92
2006-07 10829
10274
1.05
2007-08 15022
11677
1.29
2008-09 21172
12128
1.75
2009-10 22195
13087
1.70
2010-11 18972
14058
1.35
2011-12 22994
14914
1.54
Source-
DEBT- EQUITY RATIO
2
0.92
1.05
1.29
1.75
1.7
1.35
1.54
1
0
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
2011
DEBT- EQUITY RATIO
Interpretation
Debt – Equity ratio is related with the use of leverage in the capital structure. Ideally debt assumed to be less costly in comparison
comparis to equity capital. Debt is used
to get the maximum benefit of leverage to maximize the return to shareholders and ultimately
ultimately the wealth maximization. The Bharat Petroleum Corporation
Limited has increased the debt-equity
equity ratio for the first four years of the study but in the fifth year it decreased and continued to decrease in the sixth year and
again it increased but could not reach to the level of year 2008-09
2008 09 which is the highest during the study period. Company should concentrate to increase the use
of debt fund in the capital structure and magnify the effect of the less costly fund to maximize the wealth of shareholders. The equity capital is increasing
continuously but debt fund does not follow the trend, it increased till 2009-10
2009
and decreased in 2010-11
11 and increased in the last year of the study.
TABLE- 7: DEBT- TOTAL ASSETS RATIO OF
O BHARAT PETROLEUM CORPORATIO LIMITED
TED
YEAR
TOTAL DEBT (Rs. in Crore) TOTAL ASSETS (Rs. in crore) DEBT- TOTAL ASSETS RATIO
2005-06 8374
18869
0.44
2006-07 10829
22485
0.48
2007-08 15022
28181
0.53
2008-09 21172
34539
0.61
2009-10 22195
36141
0.61
2010-11 18972
34037
0.56
2011-12 22994
39774
0.58
Source-
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DEBT TOTAL ASSETS RATIO
DEBT1
0.44
0.48
0.53
0.61
0.61
0.56
0.58
0
2005-06
06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
2011
DEBT- TOTAL ASSETS RATIO
Interpretation
Total debt to total assets ratio measure the extent to which assets are financed with the borrowed capital (debt capital). If more assets are financed with debt
capital, the difference between return on assets and cost of debt capital directly goes to equity shareholders which in turn increase the wealth of the
shareholders. In the case of Bharat Petroleum Corporation Limited the ratio continuously increased
increased in the first four years the study then remains constant for
one year. In the year 2010-11
11 both total debts and total assets decreased and the ratio also decreased. In the last year of study, both total debt and total
t
assets
increased and the ratio marginally
ginally improved, which has no major impact on the capital structure. Company should use more borrowed capital to finance its long
term assets.
TABLE- 8: PROPRIETARY RATIO OF BHARAT PETROLEUM CORPORATIO LIMITED
YEAR
PROPRIETARY
ETARY VALUE (Rs. in Crore) TOTAL ASSETS (Rs. in crore) PROPRITARY RATIO
2005-06 9139
18869
0.48
2006-07 10274
22485
0.46
2007-08 11677
28181
0.41
2008-09 12128
34539
0.35
2009-10 13087
36141
0.36
2010-11 14058
34037
0.41
2011-12 14914
39774
0.37
Source-
PROPRITARY RATIO
0.6
0.4
0.48
0.46
0.41
0.35
0.36
0.41
0.37
0.2
0
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
PROPRITARY RATIO
Interpretation
Proprietary ratio is a variant of the debt-to-equity
equity ratio. It is also known as equity ratio or net worth to total assets ratio. It is the relationship of the
shareholder's funds to total assets. Proprietary / Equity ratio indicates the long-term
long
or future solvency position of the business. Shareholder's funds include
paid-up
up equity share capital and all reserves and surplus. Total assets include all assets, excluding fictitious assets. In that case
c
the total shareholder's funds are
to be divided by total tangible
angible assets. The ratio throws light on the general financial strength of the company. It is also regarded as a test of the soundness of the
capital structure. Higher the ratio or the share of shareholders’ fund in the total capital of the company, better
better is the long-term
long
solvency position of the
company. A low proprietary ratio will result in greater risk to the creditors.
In case of Bharat Petroleum Corporation Limited, the ratio continuously decreased for the first four years of the study from 0.48 to 0.35 and in the next and fifth
year it increased slightly and reached to 0.36 which can not be counted as increase. The company tried to improve it in the sixth
s
year of the study but could not
even maintain it in year 2011-12
12 which is the last year of the study. The proprietors’ fund continuously increasing during the period of study but the fluctuations
in the ratio are mainly due to increase and decrease in the total assets. The increase in the both values is not proportionately,
proportionat
so the ratio fluctuates. The
situation seems that the company is taking advantage of leverage and financing its assets with borrowed capital.
CONCLUSION
After the study of financial performance analysis of Bharat Petroleum Corporation Limited from various financial aspects like profitability, liquidity and solvency,
it can be concluded that the profitability position of the company can not be said satisfactory because the Gross Profit Ratio
Rati varies from 1.67% to 3.91 % with
the average of 3.04%. The gross profit ratio of 3% needs to be improved. The second ratio of profitability is net profit ratio which varies from 0.48% to 2.58%
with the average of 1.43%. The net profit ratio of 1.43% is not satisfactory from any point of view so company should concentrate
concent
on minimization of the
expenses. The third and last measure of profitability taken in the study is return on investment which varies from 3.73% to 15.64%
1
with an average of 10.15%.
The return of 10% on investment to the investors is not so good or so bad; it seems to be an average
average return on any investment.
The short term solvency is measured by the current ratio and quick ratio. Undoubtedly the ideal ratios can not be applied in each and every industry, though the
ideal current ratio is 2:1. The company never even touched the ideal
ideal current ratio. It varies from 1.19:1 to 1.42:1 with an average of 1.29:1 which is much less
than the ideal ratio. The second ratio of liquidity is quick ratio; ideally it should be 1:1. In the case of the BPCL it varies
varies from 0.44:1 to 0.69:1 with an average
ave
of
0.58:1. As in the case of current ratio the company was unable to even touch the ideal quick ratio during the period of the study
s
which may create problem to
the short term liquidity.
43
ISSN 2231-1009
The long term solvency is measured by Debt-Equity ratio, Debt to Total Assets ratio and Proprietary ratio. Debt –Equity ratio of the company varies from 0.92 to
1.75 with an average of 1.37 which shows that the company is not taking benefit of leverage. As the debt capital is presumed to be cheaper to the equity,
company should get benefit by restructuring its capital structure. The second measure of long term solvency is taken Debt to Total Assets ratio, which varies
from 0.44 to 0.61 with an average of 0.54; the solvency position of the firm is good. The firm can finance more assets with borrowed capital to take the
advantage of so-called cheaper capital. The third measure of long term solvency taken is Proprietary ratio which varies from 0.35 to 0.48 with an average of 0.41,
which express the less risk of insolvency of the firm.
The financial performance of the company is good on the part of long term solvency but it need to improve its short term solvency and profitability position.
REFERENCES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Annual Report, Ministry of Petroleum, Various issues.
Annual Reports, BPCLvarious issues.
Bhalla. V.K., Financial Management, Amol Publication House Pvt. Ltd. New Delhi, 7th Edition.
Chandra. Prasanna, Financial Management- Theory & Practice, Tata McGraw Hill,5th Edition2003.
Gupta. Shashi.K., R.K. Sharma, Management Accounting, Klyani Pub. 11th Edition, 2008.
Jain. S.P., Narang. K.L., Cost and Management Accounting, Kalyani Pub. 4th Edition,2008
Kapil. Sheeba, Financial management,- Pearson publication New Delhi.
Khan & Jain, Financial Management- Tata Mc Graw Hill Publication, New Delhi
Khan. M.Y., Jain. R.K., Management Accounting, Tata McGraw Hill, New delhi, Fifth Edition, 2008
Kishore. Ravi. M, Cost & Management Acoounting, Taxman Pub., Fourth Edition, 2006
Kishore. Ravi. M., Financial Management, Taxman Publication, 6th Edition 2008
Maheshwari. DN, Maheshwari. SK, Accounting for Management, Vikas Publication House Pvt. Ltd, New Delhi, First Edition 2006
Muthusamy.A, Gowari.M, Performance Appraisal of Hindustan Petroleum Corporation Limited, IJRFM (ISSN 2231-5985), volume-2, issue 6, June 2012.
Pandey. I.M., Financial Management- Vikash Publication House, New Delhi, 9th Edition, 2005 reprint-2009.
Rajasekaran.V, Lalitha.R, Financial Accounting, Pearson.
Rehman. Ramiz Ur. Saleem. Qasim, Impacts of Liquidity ratios on profitability (Case of oil and gas companies of Pakistan, Interdiciplinary Journal of
Research in Business, volume-1, issue-7, July 2011(pp95-98)
17. Rustagi R.P. Financial Management, Galgotia Publication, 3rd Edition reprint 2008.
18. Sharma. Asha, Financial Analysis of Oil and Petroleum Industry,IJRCM, Volume No.-2, Issue No.-6,(June-2012), ISSN-2231-5756
19. Sharma. Vivek, Profitability Analysis of Oil Companies of India: A comparative study of IOCL, BPCL, HPCL, BSSS Journal of Management, issue-2, vol-2, 2011.
20. Van. James. C. Horne- Financial Management, Pearson Publication, New Delhi, 11th Edition,2003
WEBSITES
21. www.bharatpetroleum.com
22. www.bpcl.com
23. www.moneycontrol.com/financials/indianoilcorporation/ratios/IOC
24. www.petroleum.nic.in
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ISSN 2231-1009
ACTIVE LEARNING THROUGH THE INTEGRATION OF 3D VIRTUAL ENVIRONMENT
I.MUTHUCHAMY
ASSOCIATE PROFESSOR
DEPARTMENT OF EDUCATIONAL TECHNOLOGY
BHARATHIDASAN UNIVERSITY
TIRUCHIRAPPALLI
K.THIYAGU
ASST. PROFESSOR
DR. SIVANTHI ADITANAR COLLEGE OF EDUCATION
TIRUCHENDUR
ABSTRACT
Information and Communication Technologies can be important in the process of adapting to the new demands, as they have the potential to make learning
resources more accessible, to allow a greater degree of individualisation and to make the learning process a more active one. This article focuses on how to
design and develop the active learning environment. Active learning is the learning strategy that encourages students to interact and think by working on a
problem-solving activity in order to develop their knowledge and experiences. By using 3D virtual learning environment corresponding to an instructional design
methodology called ADDIE, the active learning environment is created. The proposed active learning environment consists of Simulation, Problem Solving, Game,
Self-Assessment, and Animation. We believe that when students study in the active learning environment, they can fully understand the content through the
learning components.
KEYWORDS
Active learning environment, Integration, 3D virtual environment.
INTRODUCTION
A
ctive learning, as one of the learning strategies attempting to improve student learning outcomes, focuses on how to make students active in learning
environment and to engage students in thinking and problem solving activities. Because students generally remember only 10 percent in traditional
passive learning environment, encouraging students to interact and be active in learning environment may increase their learning outcomes. Active
learning focuses on the learning experiences and promotes students learning by doing (Hamada, 2007). In addition, active learning encourages students to learn
through problem solving, game, and learning activity. Moreover, activities always take place under a certain circumstance with a specific environment. Student’s
who work or learn a specific subject in the active learning environment can improve their learning outcomes (Uden, 2007).
Therefore, this study aims to create the active learning environment. Since using multimedia benefits students to learn complex or new ideas (Su, 2007), 3D
graphic and animation is used in the development of the learning environment. In addition, 3D animation is appealing and students enjoy in using it (Elliott,
2002) and it encourages students to interact with the content which makes students active in the learning environment. In this paper, the design and
development of the active learning environment with the integration of 3D virtual reality is described.
3D VIRTUAL LEARNING ENVIRONMENT
Virtual Reality and Virtual Learning Environment have become increasingly ambiguous terms in recent years. For example, Moore (1995) states that “Virtual
reality falls into three major categories: text-based, desktop and sensory-immersive virtual reality”. The term Virtual Learning Environment has begun to be used
to encompass any Internet or Web based learning resource with associated discussion tools. The term 3D environment has been chosen to focus on a particular
type of virtual environment that makes use of a 3D model.
Specifically, the main characteristics of a 3D environment are as follows:
The environment is modelled using 3D vector geometry, meaning that objects are represented using x, y and z coordinates describing their shape and
position in 3D space.
The user’s view of the environment is rendered dynamically according to their current position in 3D space.
The user has the ability to move freely through the environment and their view is updated as they move.
At least some of the objects within the environment respond to user action, for example doors might open when approached and information may be
displayed when an object is clicked on.
3D ANIMATION SOFTWARE
The main software tool that is used to create 3D animations is a package that can model, render, and animate 3D scenes. Several different packages are
available to do this for all the major operating systems. Below is a short list of the most popular and capable 3D modeling, rendering, and animation packages:
Maya: Used extensively to create both movies and games, Maya is especially good at modeling and animating organic-based objects.
3ds max: Perhaps the most-popular modeling, rendering, and animation package for games, 3ds max includes a host of features for animating characters.
SoftImage XSI: As part of the Avid line-up, SoftImage XSI includes an amazing collection of additional tools in its base package.
Lightwave: Used in many television series, Light wave consists of two separate interfaces for modeling and animating.
INSTRUCTION DESIGN OF ACTIVE LEARNING ENVIRONMENT (ALE)
To design the active learning environment, a systematic approach that is goal-oriented, well-planned, and procedurally executed, should be applied. The
instructional design methodology, called ADDIE, is used in develop the active learning environment. ADDIE is a commonly used methodology that is effective in
almost every situation (Huang et al., 2005). ADDIE is an acronym derived from the 5 phases of the process which are Analysis, Design, Development,
Implementation, and Evaluation. The descriptions of 5 phases are given below:
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ISSN 2231-1009
ADDIE
ANALYSIS
DESIGN
DEVELOP
IMPLEMENT
EVALUATION
Analysis Phase: The analysis phase emphasizes the goal of the design. Since the active learning focuses on making students active by encouraging them to
interact with the media, the designed environment should make them enjoy while they learn. Since 3D animation can make students enjoy, it is used as a tool in
the active environment.
Design Phase: In the design phase, the active learning environment is designed to be the integrated learning environment. By using 3D animation, the active
learning environment consisted of 5 components which are Simulation, Game, Assessment, Animation, and Problem Solving.
Development Phase: In the development phase, the content of Computer Network course is produced by using 3D technology corresponding to the
components designed in the active learning environment.
Implementation Phase: In the implementation phase, the active learning environment is implemented as a web-based learning environment and used in the
classroom. Students may take the advantage of using web-based technology which they can access the content from anywhere, at anytime.
Evaluation Phase: In the evaluation phase, students are asked to answer the questionnaire to evaluate if they satisfy with the learning environment.
COMPONENTS OF ACTIVITY LEARNING ENVIRONMENT THROUGH 3D ANIMATIONS
Integration 3D animation, the active learning environment consisted of 5 components which are Simulation, Game, Assessment, Animation, and Problem
Solving.
SIMULATION
PROBLEM
SOLVING
GAME
COMPONENTS
of ALE
ANIMATION
[[[
ASSESSMENT
Simulation: The first component integrated in the active learning environment is the Simulation. Here the pupil faces scaled down approximation of real life
situations. Hence, realistic practice takes place without involving any risk. By experiencing simulation, students have an opportunity to increase their thinking
flexibility. Moreover, Simulation helps students easily understand something that is difficult to explain in text and reach beyond the imagination when they only
read a book.
Problem Solving: The second component is the Problem Solving. Problem solving is always important in the learning process because it efficiently helps students
develop critical thinking skill. In problem solving activity, students experience a real-life task which is important to improve their learning outcomes. 3D
animation plays an important role because it makes the problem look real. As found in Hadjerrouit (1998), when students think that they are solving the real
problem, they are actively involved and motivated to solve the problem.
Game: The third component that is integrated in the active learning environment is the Game. This Game mode may or may not be instructional, but it is
recreational. Sometimes learning takes place through games. This mode is especially meant for young children. Games are good to supplement students to
practical training (Mili, et al., 2008). Moreover, game can draw the student attention and may be used to encourage student interactivity. Therefore, we may use
game to develop student skill.
Animation: The next component is the Animation. The advantage of animation is that it can better demonstrate and explain the complex concept than text
(Syrjakow & Szczerbicka, 2000). In computer network course, animation may be used to demonstrate many computer network events that are difficult to
explain.
Self-Assessment: The final component in the active learning environment is the Self-assessment. Self-assessment keeps students interactive and helps them
focus on the learning content. Besides, students may evaluate their learning performance by using the self-assessment component. If they receive low score in
the assessment, they do not understand the content deep enough and they need to go back and learn more.
BENEFITS OF 3D VIRTUAL ENVIRONMENT IN AN EDUCATIONAL SETTING
Using virtual reality in schools and colleges greatly eases the burden for teachers. Teachers become learning facilitators as students explore and learn in virtual
reality. As opposed to merely supplying answers, teachers guide students' self-discovery and assist in building ideas. Virtual reality is a giant step towards
"perfect learning" - a learning environment that focuses on the student rather than placing burdens on teachers. It creates a learning environment where
students explore, discover and make decisions, while teachers assist and guide. From a teacher's perspective, virtual reality creates a structured environment
that focuses students on specific learning objectives, similar to good teaching. Because the students are immersed in the virtual reality learning environment
with a headset, there are no distractions to learning. Students are totally focused with no unruly behavior.
Tied to the curriculum, virtual reality is an educational aid without peer. It can be integrated into schools/colleges in a number of ways. Modularly designed
programs work as a standalone educational tool, as a classroom supplement or as a study aid. In an initial stage of integration, as with the science subjects,
virtual reality is best used as a supplement to existing coursework, allowing instructors to integrate the programs into learning objectives. For example in the
biology class where students are learning cell structure is supplemented by a trip to the virtual reality lab where students enter and explore a human cell.
The relevance of 3DVLEs (also known as 3 Dimensional Virtual Learning Environments) can thus be summarized in three broad areas:
Accessibility: If taking an Asynchronous curriculum, student has the availability to access the course after office hours. For Synchronous and Asynchronous
instruction, the student has the flexibility of being in the safety of their own home.
Interactivity: There is much evidence to show that students benefit from actively engaging with their course. More specifically, the advantages relate to
feedback, practice and customization.
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Communication: This element is must be increased in a VLE. It helps the student to feel part of a learning community. Tools used are bulletin boards, being
able to “play-back” a session, chatting, email, and instruction & announcements are current due to the live instructor.
Traditionally, the primary source for obtaining information would be the encyclopaedia generally available in the library. But now, we access to interactive 3D
animation multimedia, the student would collect various textual materials about the particular topic from sources on a CD-ROM. With a multimedia approach,
the student could also access Web sites on the Internet to get more information. The student could then add film clips on the particular topic in their natural
habitat (all may be from the same CD-ROM) and blend them into a report. Then by adding titles and credits, the student now has a new and original way of
communicating his/her own individual perspective.
Besides student use, teachers should find 3D animation multimedia of great use in delivering their lessons. For example, a history teacher could use a
multimedia CD to create a lecture on the non-violence movement by using film clippings and audio tapes on Mahatma Gandhi or Martin Luther King, also by
incorporating other audio visual information with text to make the subject come alive. All this material would be available on a videodisc. Similarly, a university
professor might use a 3D animation multimedia CD to prepare or to update information or to teach so as to enliven and also add insight to his/her teaching,
thereby improving the quality of the course. The uses of 3D animation multimedia need not be seen as a tool for classrooms only.
DISADVANTAGES OF 3D VIRTUAL ENVIRONMENT
3D virtual animation multimedia requires high-end computer systems. Sound, images, animation, and especially video, constitute large amounts of data, which
slow down, or may not even fit in a low-end computer. Unlike simple text files created in word processing, 3D animation multimedia packages require good
quality computers. A major disadvantage of writing multimedia courseware is that it may not be accessible to a large section of its intended users if they do not
have access to multimedia-capable machines. For this reason, courseware developers should think very carefully about the type of multimedia elements that
need to be incorporated into applications and include only those that have significant value.
3D animation multimedia has other weaknesses too. While proponents of this new technology are very enthusiastic about its potential, they often leave the
financial and technical issues unattended. Developments in 3D animation multimedia are very high and the process of developing effective multimedia takes
time. Time spent on developing the 3D animation multimedia package requires money so that the true cost of an interactive programme mounts with each
delay. Further, if the prerequisites for using multimedia include to computers with related software, the user must possess a minimum level of computer literacy
in order to exploit the capabilities of this medium for learning. And finally, of the educator who is unfamiliar with the production and design of multimedia
courseware or packages can be equally complicating.
CONCLUSION
The future development of this active learning environment is to create the collaboration component which students can not only interact with the media but
also interact with their friends. Therefore, the collaboration component will also help students improve their learning outcomes. The objective of the study is to
advocate the use of 3D-VLEs and virtual objects in schools and colleges using distributed computing infrastructures in science subjects with the goal of bringing
computer modeling and simulation in those subjects to new frontiers in complexity and to a new regime of time-to-solution. This will stimulate innovation and
cost-effective but at the same time offer quality education. Such areas of application as in computational chemistry using VLEs cover traditional chemistry,
materials science, molecular biology and environmental chemistry. Enabling and accelerating the transition of teaching and learning to Virtual learning
environment will make students be more competitive, innovative and cost-effective to schools and colleges. This paper has discussed the potential educational
applications of 3D environments. Although the potential of 3D environments as learning resources is clear, there is still a great deal of work to be carried out
before designers can be sure about where 3D environments should appropriately be used and about how best to design them.
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Jonassen, D.H. (1991) Objectivism versus Constructivism: Do We Need a New Philosophical Paradigm? Educational Technology Research and Development
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Moore, P. (1995). Learning and teaching in virtual worlds: Implications of virtual reality for education. Australian Journal of Educational Technology, 11(2).
Osberg, K. (1994). Spatial cognition in the virtual environment. HITL Technical Publication: R-97-18.
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Thurman, R.A. and Mattoon, J.S. (1994) Virtual Reality: Towards fundamental improvements in simulation-based training. Educational Technology 1994,
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A THEORETICAL REVIEW OF LITERATURE ON JOB SATISFACTION
DR. KALPANA KONERU
ASSOCIATE PROFESSOR
SCHOOL OF MANAGEMENT STUDIES
VIGNAN UNIVERSITY
VADLAMUDI
HYMAVATHI CHUNDURI
ASST. PROFESSOR
SCHOOL OF MANAGEMENT STUDIES
VIGNAN UNIVERSITY
VADLAMUDI
ABSTRACT
In an organization ,the first and foremost requirement is employee's satisfaction in all the spheres and areas of the concern. Job satisfaction results when the
quality needed for a particular job and the qualities of an individual are fitting in. This paper is a review of selected literature on Job satisfaction and its relation
with Motivational theories. The satisfaction or dissatisfaction from the job leads to the psychological problem of morale. The review includes qualitative as well
as quantitative studies that have been conducted in order to identify job satisfaction of the employees.
KEYWORDS
Job Performance, Job Security, Motivation, Rewards, Satisfaction.
INTRODUCTION
J
ob satisfaction is a widely accepted psychological aspect of functioning in any profession. The credit of bringing the term in to prevalence goes to Hoppack
on publication of his classic work’ job satisfaction’. He reviewed 32 studies on job satisfaction conducted prior to 1933. He conducted the earliest
community wide study of job satisfaction in the town New Hope, Pennsylvania. Since then the topic has been a matter of public concern and research
interest. Job satisfaction refers to a person's feeling of satisfaction on the job, which acts as an elevation to work. It is not a self satisfaction, happiness or selfcontentment but the satisfaction on the job.
DEFINITIONS OF JOB SATISFACTION
Hoppack defines job satisfaction as any combination of Psychological, Psychological and environment circumstances that cause a person to truthfully say ; I am
satisfied with my job.’ Job satisfaction is the verbal expression of an employee’s evaluation of his work life.
There are a plethora of definitions of job satisfaction, some of which are contradictory in nature. Spector (1997) refers to job satisfaction in terms of how people
feel about their jobs and different aspects of their jobs. Ellickson and Logsdon (2002) support this view by defining job satisfaction as the extent to which
employees like their work.
Schermerhorn (1993) defines job satisfaction as an effective or emotional response towards various aspects of an employee’s work. The author emphasizes that
likely causes of job satisfaction include status, supervision, co-worker relationships, job content, remuneration and extrinsic rewards, promotion and physical
conditions of the work environment, as well as organizational structure.
Similarly, Mc Namara (2004) points out that job satisfaction refers to an individual’s feeling or state of mind giving heed to the nature of the individual’s work.
The author further explains that job satisfaction can be influenced by a diversity of job dimensions, inter alia, the quality of the employee’s relationship with
their supervisor, the status of the physical environment in which the individual works, degree of fulfillment in work.
In direct contrast, Rue and Byars (1992) refer to job satisfaction as an individual’s mental state about the job. Robbins et al. (2003) add that an individual with
high job satisfaction will display a positive attitude towards his job, and the individual who is dissatisfied will have a negative attitude about the job. This
definition is expanded by Greenberg and Baron (1995) who define job satisfaction as an individual’s cognitive, affective and evaluative reactions toward their
jobs.
Katzel defined Job satisfaction as “The verbal expression of an incumbent’s evaluation of his job”.
DETERMINANTS OF JOBSATISFACTION
The various factors influencing job satisfaction may be classified into two categories:
1. Environmental factors
2. Personal factors
2.1 ENVIRONMENTAL FACTORS
These factors relate to the work environment, main among which as follows:
2.1.1 JOB CONTENT
Herzberg suggested that job content in terms of achievement, recognition, advancement, responsibility and work itself tend to provide satisfaction but their
absence does not cause dissatisfaction. Where the job is less repetitive and there is variation in job content and job satisfaction tends to be higher.
Specialization increases repetitiveness leading to boredom and monotony. But greater variety of tasks may not increase satisfaction unless the tasks form a
unified, integrated and meaningful whole.
2.1.2. OCCUPATIONAL LEVEL
The higher level of the job in organizational hierarchy the greater the satisfaction of the individual. This is because, positions at higher level are generally better
paid, more challenging and provide greater freedom of operation. Such jobs carry greater prestige, self-control and need satisfaction. One study revealed that
professional people were the most satisfied, followed by salaried workers and factory workers were the least satisfied with their jobs.
2.1.3. PAY AND PROMOTION
The other things being equal, higher pay and better opportunities for promotion lead to higher job satisfaction.
2.1.4. WORK GROUP
Man is social animal and likes to be associated with others. Interactions in the work group help to satisfy social and psychological needs and, therefore, isolated
workers tend to be dissatisfied. Job satisfaction is generally high when an individual is accepted by his peers and he has a high need for affiliation.
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2.1.5. SUPERVISION
Considerate supervision lends to improve job satisfaction of workers. A considerate supervisor takes personal interest in his subordinates and allows them to
participate in the decision making process. However, authoritarian people may be more satisfied under the supervision of high status and strongly directive
leaders. Employee satisfaction from supervisor behavior depends upon the influence, which the supervisor exercises, on his own superior.
2.2 PERSONAL CHARACTERISTICS
Personal life exercises a significant influence on the job satisfaction. The main elements of personal life are given below.
2.2.L. AGE
Some research studies reveal a positive correlation between age and job satisfaction. Workers in the advanced age group tend to be more satisfied probably
because they have adjusted with their job conditions. However, there is a sharp decline after a point perhaps because an individual aspires for better and more
prestigious jobs in the later years of his life.
2.2.2 GENDER
One study revealed that women are less satisfied than men due to fewer job opportunities for females. But female workers may be more satisfied due to their
lower occupational aspirations.
2.2.3. EDUCATIONAL LEVEL
Generally more educated employees tend to be less satisfied with their jobs probably due to their higher job aspirations. However, research does not yield
conclusive relationship between these two variables.
2.2.4. MARITAL STATUS
The general impression is that the married employees and the employees having more dependents tend to be more dissatisfied due to their greater
responsibilities. But such employees may be more satisfied because they value their jobs more than unmarried workers.
2.2.5. EXPERIENCE
Job satisfaction tends to increase with increasing years of experience. But it may decrease after twenty years of experience particularly among people who have
not realized their job expectations.
FACTORS INHERENT IN THE JOB
TYPE OF WORK
The most important factor inherent in the job is type of work. Several studies have shown that varied work brings about more job satisfaction than the routine
work .It is difficult to separate the importance of type of work, skill, pay and status, since they usually go together Skill required to job satisfaction has a bearing
on several other factors like kind of work, occupational status and responsibility.
FACTORS CONTROLLED BY MANAGEMENT
4. 1. SECURITY
A summary of all the studies that can be compared shows that industrial employees say that what they want most is steady work. Security for old age was one of
the five factors significantly related to the workers satisfaction. The other four were "interest in the job", "not being over worked1', "ability to advise", and belief
"that individual merit is rewarded". These five factors are even more important for satisfaction with the company than the satisfaction with the job.
4.2. TRAINING AND DEVELOPMENT
Job training and employees career development are becoming generally accepted activities in industry. The fact that training also reduces absenteeism and
turns over suggests that training has a favorable effect on morale and satisfaction.
There are different types of training methods such as
1. Lecture method
2. Circulars method
3. Sound motion pictures on job training
4.3. PARTICIPATION
Participation means active in pursuit of a goal, which involves the ego. The incentive of participation of workers is becoming more and more prominent for
causing greater job satisfaction. Participation appears to incorporate two strongest incentives, the social motives of self-respect and self-approval.
4.4. MOTIVATION
Motivation refers to the behavior itself or the end results of all inputs. This motivation is a six-phased process beginning from the inner state or need deficiency
to need fulfillment.
GENERAL DETERMINANTS
More important factors conductive to job satisfaction are mentally challenging work, equitable rewards, supportive working conditions, and supportive
colleagues.
5.1. MENTALLY CHALLENGING WORK
Employees tend to do perfect jobs that give them opportunities to use their skills and abilities and offer a variety of tasks, freedom, and feedback on how well
they are doing. These characteristics make work done well, but too much challenging creates frustration and feelings of failure. Under conditions of moderate
challenge, most employees will experience pleasure and satisfaction.
5.2. EQUITABLE REWARDS
Individuals who perceive that promotion decisions arc made in a fair and just manner are likely to experience satisfaction from their jobs.
5.3. SUPPORTIVE WORKING CONDITIONS
Employees are concerned with their work environment for both personal comfort and facilities for doing a good job.
5.4. SUPPORTIVE COLLEAGUES
People get more out of work than merely money or tangible achievements. For most employees, work also fills the need for social interaction. Having friendly
and supportive co-workers lead to increased job satisfaction. The behavior of one’s bosses also a major determinant of job satisfaction. Studies generally find
that employee satisfaction is increased when the immediate supervisor understands and friendly offers praise for good performance, listen to employees’
opinions, and shows a personal interest in them.
DETERMINANTS FOR YOUNGER GROUP
1. Type of work
2. Working conditions
3. Pay
4. Co-workers
5. Ease of commuting to work
6. Advancement opportunities
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DETERMINANTS FOR OLDER GROUP
1. Security
2. Supervision
3. Company prestige
4. Working hours
IMPORTANCE OF JOB SATISFACTION
8.1. REDUCES ABSENTEEISM AND TURNOVER
High job satisfaction tends to have greater incomes and more education and enjoy more benefits, which promote longevity. On the other hand chronic
dissatisfaction with work represents stress which in turn takes its ill on the organization.
8.2. JOB SATISFACTION HAS SOME RELATION WITH MENTAL HEALTH OF PEOPLE
Many unresolved personal problems and make adjustments arise out of a person’s inability to find satisfaction in his work. Job satisfaction is important for
psychological adjustments and happy living of an individual.
8.3. SPREADS GOOD-WILL ABOUT THE ORGANIZATION
People who feel positively about their work life are more apt to voice favorable sentiments about organization to the community at large. Organizations will be
in a position to enjoy talents of people as job satisfaction faster a pervasive residue of public good –will towards the organization.
8.4. JOB SATISFACTION HAS SOME DEGREE OF POSITIVE CORRECTION WITH PHYSICAL HEALTH OF INDIVIDUAL
People with greater satisfaction tend to have greater incomes and more education and enjoy greater benefits, which promote positivity on the other hand
chronic dissatisfaction with work represents stress, which in turn takes its ill on the organization.
8.5. IDENTIFICATION OF EMPLOYEE’S ATTITUDE
A survey reveals how employees feel about jobs, what parts of their jobs these feelings are focused on, which departments are particularly affected and whose
feelings are involved. Survey also indicates specific areas of satisfaction or dissatisfaction. The survey is a powerful diagnostic instrument for assessing employee
problem.
8.6 SATISFACTION SURVEYS IMPROVING ATTITUDE
For some employees, the survey is a safety value on emotional realize, a chance to get things off their chest. For other the survey is a tangible expression of
management's interest in employee welfare, which gives employees reasons to feed better towards management.
8.7 IMPROVES COMMUNICATION
Communication flows horizontally, vertically, upward and downward. As people want the survey, they talk and discuss its results particularly beneficial to the
company. It is the upward communication when employees are encouraged to comment about what they really have in their minds.
8.8 JOB SATISFACTION IS THAT THEY HELP MANAGEMENT TO ASSESS TRAINING NEEDS
Employees are given an opportunity to report how they feel. The supervisor performs certain parts of jobs such as delegating work and giving adequate job
instructions.
8.9 Job satisfaction survey can help discover the causes of indirect productivity problems such as absenteeism, turnover which are highly correlated with job
satisfaction. It was also noted that these in term effect productivity.
8.10. A job satisfaction survey is an indicator of the effectiveness of organizational reward systems as was discussed earlier. There is a positive relationship
between performance and satisfaction.
MOTIVATIONAL THEORIES
Mullins (1996, p. 520) states “motivation is a process which may lead to job satisfaction.” Although the relationship between motivation and job satisfaction is
not clear, it can be illustrated by means of the motivational theories (Mullins, 1996). According to Calder(2000), motivational theories can be classified into two
categories, namely, content theories and process theories. Mullins (1996) concludes that the content theories of motivation are specifically related to job
satisfaction and assume a direct relationship between job satisfaction and improved performance, while the process theories contemplate in more detail the
relationship between motivation, satisfaction and performance.
Cronje, Du Toit, Marais and Motlatta (2003) further posit that content theories highlight the factors within people that guide behaviour, whereas process
theories focus largely on why individuals opt for certain behavioural choices to satisfy their desires and how they assess their satisfaction after they have
attained their objectives. Nel et al. (2004) make reference to content theories as the ‘what’ of motivation and to process theories as the ‘how’ of motivation. Nel
et al. (2004) state that content theories concentrate on the needs and factors that motivate behaviour, while process theories are focused on the source of
behaviour and the factors that affect the strength and direction of the behaviour.
The following content theories will be addressed:
Maslow’s needs hierarchy theory,
Herzberg’s two-factor theory
and Mc Clelland’s achievement motivation theory.
Process theories include:
The Valence Instrumental Expectancy theory,
Equity theory and Goal Setting theory.
These theories endeavor to provide a supporting context for job satisfaction.
9.1 CONTENT THEORIES
9.1 .1 MASLOW’S NEEDS HIERARCHY THEORY
Extensive research has been conducted in the area of work motivation and satisfaction and many psychologists have attempted to explain it in terms of certain
needs, interests and values. One theory that has explored these factors is Maslow’s hierarchy of needs. According to Maslow, the individual personality is
dynamic and continuously strives to satisfy hierarchy of needs with an inherent tendency towards self actualization.(Joubert, 2000).
Amongst others, Abdulla (2002) postulates that Maslow’s hierarchy of needs is divided into five levels Edwards (1993 cited in Arnolds & Boshoff,2001) states that
level one of the hierarchy refers to the satisfaction of the psychological needs which include the basic needs such as housing, material and financial benefits
impacting positively on employee job performance.
At level two, the safety needs for security and protection from physical and emotional harm is prominent. At this level, the employer must provide a safe
working environment, while the onus rests with individuals to ensure their own personal safety outside of the work sphere (Abdullah, 2002). According to Smith
and Tisak (1993cited in Arnolds & Boshoff, 2001) at this level, safety and security in the form of job security and fringe benefits, have been found to enhance
employee job performance.
According to Abdullah (2002), level three refers to the social needs that entail the need for affiliation focusing on the relationship with co-workers or
subordinates. Evine (1994) concludes that at this level, social support of employees is necessary to enhance performance.
The esteem needs exist at level four of the hierarchy and is divided into two parts, namely, (i) the need for recognition and respect from others and (ii) a need
for appositive self-image and self-respect (Abdullah, 2002). According to Korman (1971) and Tharenou (1979) cited in Arnolds and Boshoff (2001), individuals
with high self perceived ability and self-image are more likely to be higher achievers on task performance than those who have a low self-perceived ability, low
success expectancy and low self-image
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The self-actualization needs are at the last level of Maslow’s hierarchy and are arrived at when all previous levels have been satisfied to a large extent (Heller
&Hindle, 1998). Creating opportunities for promotion, allowing autonomy, providing challenging assignments and the optimal utilization of individual’s ability,
enhances the satisfaction of self-actualization in the workplace. This is specifically prevalent in the case of top management where the factors mentioned above
impact positively on employee job performance (Alpander (1990), Cranny, Smith & Stone (1992), and Mc Campbell (1996) cited in Arnolds & Boshoff, 2001). As
each need in terms of the hierarchy becomes substantially satisfied, the following need becomes dominant (Robbins et al., 2003).
Although Maslow’s needs theory is used extensively, wide criticism has been lodged against the theory as a lack of empirical evidence exists in substantiation
for the theory (De Cenzo & Robbins, 1988 cited in Arnolds & Boshoff, 2001). Steers and Porter (1991) add that there is no evidence of the five categories of
needs being reflected in order of satisfaction in any special hierarchy. Similarly, Robbins et al.(2003) posit that little support has been found for the prediction
that need structures are organized along the scope suggested by Maslow.
9.1.2 HERZBERG’S TWO FACTOR THEORY
According to Heller and Hindle (1998), Herzberg’s two factors is a set of motivators that drives people to achieve. Nagy (n.d.)asserts that Herzberg’s theory
consists of two dimensions known as “hygiene” factors and “motivator” factors. According to Herzberg (1959) cited in Ruthankoon and Ogunlana (2003), the
hygiene factors, also known as extrinsic factors are the parts of the jobs which create dissatisfaction but, if not present, only return the worker to a neutral point
of job satisfaction. These job factors include supervision, interpersonal relations, benefits, job security, salary and working conditions. Herzberg states that
hygiene issues cannot motivate employees but can minimize dissatisfaction and serve as a point of departure for motivation. On the other hand, satisfying
motivator needs which are related to job tasks, job content and intrinsic aspects of the job can lead to job satisfaction, but the absence there of cannot lead to
job dissatisfaction (Robbins, 1993). According to Robbins et al. (2003), investigations conducted by Herzberg in terms of the intrinsic (motivators) factors and
extrinsic factors (hygiene) suggest that the opposite of satisfaction is not dissatisfaction as was traditionally believed. The results of the studies reflected that the
opposite of satisfaction is no satisfaction (motivators) and the opposite of dissatisfaction is no dissatisfaction (hygiene factors).
FIGURE 2.1: FACTORS THAT AFFECT JOB SATISFACTION IN TERMS OF HERZBERG’S THEORY
Hygiene needs:
Reflect job context and lower –
level needs
Negative job environment
creates demands for
Hygiene factors:
More money
Better supervision
Good working conditions
Job security
Consistent management
policies and rules
Which influence
Level of dissatisfaction
Level of job performance
Level of satisfaction
Which influence
Motivator needs:
Reflect job content and
higher – level needs
Positive job opportunities
Allow worker to achieve
Motivators:
Achievement
Responsibility Growth
Work itself
Recognition
Source: Grobler et al. (2002, p. 107).
A criticism of Herzberg’s theory is that it oversimplifies work motivation. There are job factors that lead to both satisfaction and dissatisfaction. Despite this
criticism, Herzberg extended Maslow’s needs hierarchy concept and made it more applicable to work motivation (Abdullah, 2002).
Nagy (n.d.) points out that empirical evidence for Herzberg’s theory is scarce and most support around this theory has been obtained using Herzberg’s own
unique methods consisting of critical interviews.
However, according to Schermerhorn (1993), Herzberg’s two-factor theory is an important frame of reference for managers who want to gain an understanding
of job satisfaction and related job performance issues. Schemerhorn asserts that Herzberg’s two-factor theory is a useful reminder that there are two important
aspects of all jobs: what people do in terms of job tasks (job content), and the work setting in which they do it (job context). Schermerhorn suggests that
managers should attempt to always eliminate poor hygiene sources of job dissatisfaction in the workplace and ensure building satisfier factors into job content
to maximize opportunities for job satisfaction.
9.1.3 MCCLELLAND’S NEED FOR ACHIEVEMENT THEORY
McClelland’s need theory was one of the popular motivation theories in the 1950’s and his theory relates to management by objectives (Di Rodio, 2002).
Robbins et al.(2003) report that McClelland’s theory focuses on the needs for achievement, power and affiliation.
The need for achievement, according to Greenberg (1999), is where individuals strive for goals that are challenging, but attainable, with the hope of feedback on
achievement. Greenberg (1999) further states that this need is concerned with an individual’s longing to strive for personal achievement rather than the rewards
of success.
The need for power refers to individuals’ desire to control their surroundings, including people and material resources. In this regard some people have a high
need for personalized power while others have a high need for socialized power (McShane& Von Glinow, n.d.).
In terms of McClelland’s need for affiliation, Stuart-Kotze (n.d.) states that the need for affiliation is similar to Maslow’s need to belong. Stuart-Kotze contends
that the need for affiliation manifests itself in the desire to be liked by other individuals, to be accepted in a group and to enter warm personal relationships.
Cronje et al. (2003) posit that research indicates that people with a high need for power and low need for affiliation make good managers, whilst individuals with
a high need for achievement, in most instances, make successful entrepreneurs.
9.2 PROCESS THEORIES
9.2.1 VROOM’S EXPECTANCY THEORY
Vroom regarded Maslow’s hierarchy of needs and Herzberg’s two factor theory as too simplistic and as a result put forwarded a model that constituted the
concepts of valence (V), instrumentality (I) and expectancy (E). Vroom’s theory is referred to as VIE theory. Vroom explained the scope of motivation as a
process governing choices between alternative forms of voluntary activity. According to the VIE theory, misbehaviors are under the voluntary control of a person
(Abdullah, 2002).
According to Vroom’s expectancy theory, the success of motivation is dependent onto factors, namely, that the value of the outcome should be high and that
the individual should be of the opinion that the task undertaken is attainable and will lead to the expected outcome (Dessler, 1988). In this regard, Vroom’s
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theory links expectation and task accomplishment to the probability of recognition (Luthans, 2002). In support Nel et al. (2004) state that expectancy refers to an
individual’s belief that a certain level of effort will lead to a certain level of performance and reward.
Figure 9.2.1 illustrates the key concepts of Vroom’s expectancy theory.
FIGURE 9.2.1: VROOM’S EXPECTANCY THEORY
Expectancy – perceived probability
that effort will lead to performance
and first level outcomes
Effort exerted
(Motivation force)
Valence-anticipated
satisfaction of attaining a goal
Performance
First–level
outcomes
Units produced
Sales generated
Number of queries solved
Number of invoices
processed
Second-level
outcomes
Recognition
Bonus
Acceptance
Promotion
Source: Nel et al. (2004, p. 318).
A criticism of Vroom’s theory however, is that he did not succeed to convert motivation to perform an act into the actual performance of that act (Bottomley,
1987). Although the theory has its criticism, most of the research evidence is supportive of the theory (Dessler, 1988).
9.2.2 EQUITY THEORY
The Equity theory of motivation suggests that individuals have a strong want to maintain a balance between what they perceive their inputs or contributions to
be in relation to expected rewards (Dessler, 1988). In terms of the Equity theory, Robbins(1993) states that satisfaction is determined by an individual’s inputoutcome balance. The author further mentions that satisfaction occurs when perceived equity exists, and dissatisfaction results when perceived inequity exists.
To illustrate the Equity theory, reference is made to table 1 below.
TABLE 1: EQUITY THEORY
Ratio Comparisons
Perception
______________________________________________________________
O / lA < O / lB
Inequity due to being under – rewarded
O / lA = O / lB
Equity
O / lA > O / lB
Inequity due to being over – rewarded
________________________________________________________________
*Where: O / lA represents the employees; and O / lB represents relevant others.
Source: Robbins (1993, p. 224).
In terms of the theory, individuals regard a state of equity to exist when their job inputs in relation to their job outputs are equivalent to that of relevant others.
In this regard a situation of fairness is said to exist (Robbins, 1993). Employees might assess their relation to friends, neighbors, co-workers, colleagues in other
organizations or previous jobs they themselves have occupied (Robbins, 1993). Similarly, Robbins et al. (2003) concur that employees compare their job inputs
(such as their contribution, experience, education and competence) to their job outputs (salary levels, salary increases and recognition) in relation to that of
others.
Similarly, inequity exists when there is a perception amongst employees that they are under-rewarded relevant to others or whether they are over–rewarded in
relation to their job outputs. The resultant effect is that individuals might contribute less in the workplace if they are of the opinion that they are being
underpaid. On the other hand, employees might offer more in terms of their expected job outputs as they may be more motivated to contribute if a job pays
well in comparison to their job outputs (Dessler, 1988).
9.2.4 GOAL SETTING THEORY
Locke (1995 cited in Robbins et al., 2003) proposed that aiming towards attaining a goal is a significant source of work motivation. According to Heery and Noon
(2001), the goal setting theory stems from the notion that influencing their goals and targets can change the behaviour of employees. Nel et al. (2004) add that
employees are motivated if they are aware of what needs to be done in achieving a specific goal, irrespective of the difficulties they might encounter in doing so.
They refer to the Management By Objectives (MBO) technique that harbors employee involvement in goal setting, decision-making and feedback.
Robbins (1998) states that employees will perform better if they get continuous feedback in terms of how well they are progressing toward their goals.
Furthermore, Robbins (1998) adds that continuous feedback will also identify possible discrepancies that might hamper the achievement of attaining goals.
Employees granted the opportunity to be involved in the preparation of their own goals would be more committed in achieving such goals.
Heery and Noon (2001, p. 142) note four general principles to elicit high performance and increase motivation in terms of the goal setting theory:
“Goals should be challenging but attainable;
Goals should be specific rather than vague;
Employees should be involved in the process, setting their own goals; and
Goals should be measurable in terms clearly understood by employees.”
CONCLUSION
This brief review of selected literature indicates that extensive research has been conducted to study the relationship between job satisfaction and Motivational
theories. The centrality of work in modern economies has made an understanding of the psychology of motivation and job satisfaction a key component of
business and management.
REFERENCES
1.
2.
3.
4.
5.
Abdullah, W. (2002). Human resources management: A comprehensive guide. Cape Town: Heinemann Publishers, (Pty) Limited.
Calder, G. (2000). Motivating pharmacist [Electronic version]. The Pharmaceutical Journal, 7096(264), 729-731.
Cronje, G.J., Du Toit, G.S., Marais, A.K., & Motlatta, M.D.C. (2003). Introduction to business management (6th ed). Cape Town: Oxford University Press, Inc.
Dessler,G.(1988). Personnel Management (4th ed) . New York: Prentice- Hall, Inc.
Edwards Arnolds, C.A., & Boshoff, C. (2001). The challenge of motivating top management: A need satisfaction perspective [Electronic version]. Journal of
Industrial Psychology, 27(1), 39-42.
52
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7.
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9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
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ISSN 2231-1009
Ellickson. M.C., & Logsdon, K. (2002). Determinants of job satisfaction of municipal government employees [Electronic version]. Public Personnel
Management, 31(3), 343-358.
Greenberg, J.(1999). Managing behaviour in Organizations (2nd ed). Trenton: Prentice- Hall International, Inc.
Greenberg, J., & Baron, R.A. (1995). Behavior in organizations: Understanding and managing the human side of work (5th ed.). Trenton: Prentice-Hall
International, Inc.
Heery, E., & Noon, M., (2001). A dictionary of human resource management. . New York: Oxford University Press.
Heller, R., & Hindle, T. (1998). Essential manager’s manual. London: Dorling Kindersley Ltd.
Hoppack R., Job satisfaction. Newyork 1935.
Joubert, L. (2000). Work motivation and job satisfaction. Retrieved April 29, 2005, from: http://www.iol.co.za/index.php?set_id=3&click_id= 428 &
art_id=io 1962377903498M214
Katzel, R.A. Personal values, Job satisfaction and Job behaviour (in) Borow, H., ed., Man in a world of work, Boston: Houghton-Miffillin Co. pp. 341-361
(1965).
Locke, E.A.(1995). Commentary: The Micro- Analysis of Jobsatisfaction: Comments on Taber and Alliger (Electronic Version). Journal of Organizational
Behaviour, 16(2), 123-126.
Luthans, F.(2002). Organizational behaviuor(9thed.) New York: McGraw-Hill.
Mc Namara C. (n.d.). Retrieved October 24, 2004, from: http://www.mapnp.org/library/prsn_wll/job_stfy.htm.
McShane, S.L, & Von Glinow,M.A. (n.d.). Foundations of Employee Motivation. Retrieved June 10, 2005,from: http:/ /highered.mcgrawhill.com/sites/0072470089/student_view0/chapter5/chapter_o.
Mullins, L.J. (1996). Management and organizational behavior (4th ed.). Great Britain: Pitman Publishing.
Nagy, M.S. (n.d.). What to do when you are dissatisfied with job satisfaction scales: A better way to measure job satisfaction. Retrieved May 2, 2005, from:
http://www.ipmaac.org/can/apr96/techaff.htmliness management (6th ed.). Cape Town: Oxford University Press, Inc.
Nel, P.S., Van Dyk, P.S., Haasbroek, H.D., Schultz, H.B., Sono, T., & Werner, A. (2004). Human resources management (6th ed.). Cape Town: Oxford
University Press, Inc
Robbins,S.P. (1993). Organizational behaviour (6th ed.). New Jersey: Prentice –Hall International.
Robbins,S.P.(1998) Organizational behaviour (8th ed.). New Jersey: Prentice –Hall International.
Robbins,S.P.(2003) Organizational behaviour (9h ed.).Cape Town: Prentice –Hall International.
Rue, L.W., & Byars, L.L. (1992). Management skills and application (6th ed.). New Jersey: Prentice-Hall International.
Ruthan Koon,R.& Ogunlana S.O. (2003). Testing Herzberg’s Two- Factor theory in Thai Construction Industry (Electronic Version). Engineering Construction
and Architectural, 10(5), 333-341.
Schermerhorn, J.R. (1993). Management for productivity (4th ed.). Canada: John Wiley & Sons, Inc
Spector, P.E. (1997). Job Satisfaction: Application, Assessment, causes and consequences. New York: Harper & Row.
Stuart – Kotze, R.(n.d) Motivation Theory. Retrieved June 10, 2005,from: http://www.goal-setting-guide.com/motivation theory.html
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A STUDY ON FACTORS THAT INFLUENCE CUSTOMERS TO ADOPT INTERNET BANKING SERVICES
A. MEHARAJ BANU
ASST. PROFESSOR
CENTRE FOR RESEARCH DEPARTMENT OF COMMERCE
SRIMAD ANDAVAN ARTS & SCIENCE COLLEGE
TIRUVANAIKOVIL
DR. N. SHAIK MOHAMED
ASSOCIATE PROFESSOR
PG & RESEARCH DEPARTMENT OF COMMERCE
JAMAL MOHAMMED COLLEGE
TRICHY
ABSTRACT
Internet banking refers to the use of technology, which allows customers to perform banking transactions electronically without visiting a brick and mortar
institution. Up gradation of technology, innovation and modernization are the key factors of having excellence over others in banking sector. The purpose of the
research is to determine the factors influencing adoption level of Internet banking by the bank customers in Tiruchirappalli District. There are ten factors
compiled into a structural model to explain the customer’s adoption level of internet banking i.e. awareness of service, security, cost, computer self efficacy,
keenness to change, perceived usefulness, perceived ease of use, trust, attitude and adoption intention. The data were collected using convenience-sampling
method by randomly taking all the bank customers that have using Internet banking in Tiruchirappalli District. The data collected was analysed by use of
frequency, percentage, means and correlation.
KEYWORDS
Internet Banking Services, Innovative Methods, Factors, Fund Transfer.
INTRODUCTION
I
ndian Banking Sector has undergone a tremendous change during the last decade in terms of transformations of technology advancements. It has become
completely dependent on technology as the service/product channel. The bank that used the right technology to supply timely information has seen
productivity increase and got a competitive edge over others. Banks need greatly enhanced use of technology of the customer friendly, efficient and
competitive existing services and business. They also need technology for providing newer products and newer form of services in an increasingly dynamic and
globalise environment.
Electronic services allow a bank’s customers and other stakeholders to interact and transact with the bank seamlessly through a variety of channels such as the
Internet, wireless devices, ATM’s, On-line banking, phone banking and Tele banking. The services offered under e banking include electronic fund transfer,
electronic clearing service and electronic payment media, viewing account details, chequebook request, transaction enquiry etc. On-line banking helps
consumers to overcome the limitations of place and time as they can bank anywhere, anytime as these services are available 24 hours, 365 days a year without
any physical limitations of space like a specific bank branch, city or region.
SIGNIFICANCE OF INTERNET TECHNOLOGY IN BANKING
1)
2)
3)
4)
5)
6)
7)
8)
More convenience in transacting business
Better knowledge of state of accounts
Possible lower cost of accessing banking services
Possibility of attracting new customers
More scope to offer differential services
Opportunity for banks to deliver a dynamic range of virtual financial services at less cost through the network
Opportunity for expanding banks operational base by participation in shared networks.
Greater opportunity to cross-sell.
THEORIES SUPPORTING INTERNET BEHAVIOUR OF CUSTOMER
Several competing models have been widely used by information system researches to predict the intention to adopt IT. These models are:
INNOVATION DIFFUSION THEORY (ROGERS, 1983)
According to this theory, innovation adoption is a process of uncertainty reduction. To reduce uncertainty about the new technology, individuals will gather and
synthesize information about the technology. Diffusion researchers have identified five product characteristics that seem to influence consumer acceptance of
new products (i) relative advantage (ii) compatibility (iii) complexity (iv) trialability and (v) Observability.
RELATIVE ADVANTAGE
The new products most likely to succeed are those that appeal to strongly felt needs. In banking, ATMs have diffused through the social system quickly because
they offer high-perceived relative advantage to consumers who want 24 hours availability.
COMPATIBILITY
The degree to which potential consumers feel a new product is consistent with their present needs, values and practice is a measure of its compatibility.
Compatibility of a new product is an important determinant of its acceptance.
COMPLEXITY
Complexity is the degree to which an innovation or a new product is perceived as difficult to understand and use affects product acceptance. The more complex
the new product, the more likely it will be difficult to gain acceptance.
TRIABILITY
New products are more apt to succeed when consumer can try or experiment with the idea on a limited basis. Sampling is an effective method of inducing trial
of new products. Enhancing the triability of new products can be accomplished through sampling – packaged goods.
OBSERVABILITY
Observability and communicability is the degree to which results from using a new product are visible to friends and neighbours. Marketers can sometimes
employ strategies to enhance the visibility of products by inducing celebrities to use them.
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TECHNOLOGY ACCEPTANCE MODEL (DAVIS 1989)
The Technology Acceptance Model (TAM), developed by Davis (1989), has been one of the most influential theories in the IT literature. TAM explains the causal
links between individuals’ perceptions, inclinations, intentions and behaviours in the acceptance of information technologies based on four main elements.
These elements are the following:
1. Perceived Usefulness, 2. Perceived Ease of Use 3. Attitude 4. Behavioural Intention
TECHNOLOGY ACCEPTANCE MODEL
Perceived
Usefulness
External
Variables
Intention
Attitudes towards
Use-to-use
Actual Usage
Perceived
Ease of use
Perceived usefulness: Perceived usefulness is one of the components of Technology Acceptance Model (TAM), is the primary prerequisite for mass-market
technology acceptance, which depends on consumers’ expectations about how technology can improve and simplify their lives.
Perceived ease of use: According to perceived ease of use is the extent to which a person believes that using a particular system will be free of effort. It is a
critical factor in the development and delivery of Internet banking services.
THEORY OF PLANNED BEHAVIOUR (TPB) (Ajzen 1985): An expansion of the TRA is the Theory of Planned Behaviour (TPB) (Ajzen, 1985). TPB includes the
construct, perceived behavioural control to measure and account for the extent to which users has complete control over their behaviour.
FRAMEWORK FOR THE ADOPTION OF INTERNET BANKING
Attitude
Relative Advantage, Compatibility,
Values, Internet experience,
Banking needs, Complexity,
Trialability, Risk
Subjective Norms
Intention to use
Internet Banking
Services
Usage of Internet
Banking Services
Perceived Behavioural Control
Self-efficacy
Facilitating Conditions
- Availability of Government
Support
- Availability of Technology
Support
ATTITUDE
Attitude toward the behaviour is defined as the individual's positive or negative feelings about performing behaviour. It is determined through an assessment of
one's beliefs regarding the consequences arising from a behaviour.
SUBJECTIVE NORM
Subjective norm is defined as an individual's perception of whether people important to the individual think the behaviour should be performed. The
contribution of the opinion of any given referent is weighted by the motivation that an individual has to comply with the wishes of that referent.
PERCEIVED BEHAVIOURAL CONTROL
Behavioural control is defined as one's perception of the difficulty of performing a behaviour. It is determined by control beliefs about the power of both
situational and internal factors to inhibit or facilitate the performing of the behaviour
THEORY OF REASONED ACTION (TRA) (FISHBEIN & AJZEN, 1975)
The intention to accept or reject a particular technology is based on a series of tradeoffs between the perceived benefits of the system to the user and the
complexity of learning or using the system. This phenomenon can be reasonably explained by using the Theory of Reasoned Action. TRA essentially argues that
social behaviour is motivated by an individual’s attitude towards executing that behaviour. Therefore, the change of behaviour is a function of one’s beliefs
about the outcomes of the behaviour and an evaluation of the value of each of those outcomes.
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THEORY OF REASONED ACTION
Beliefs and
Evaluation
Normative
Beliefs
User Attitude
Behavioural
Intention
Subjective
Norms
Actual
Behaviour
ATTITUDE TOWARD THE BEHAVIOUR
Attitude toward the behaviour refers to the person’s judgment that performing the behaviour is good or bad. According to the theory, attitudes are a function of
beliefs. In general, a person who believes that performing a given behaviour will lead to positive outcomes will hold a favourable attitude toward performing the
behaviour.
Subjective norms are a function of normative beliefs. The general subjective norm is determined by the perceived expectation of specific referent individuals or
groups, and by the person’s motivation to comply with those expectations.
DECOMPOSED THEORY OF PLANNED BEHAVIOR (TAYLOR & TODD,1995)
The decomposed theory of planned behaviour originated from theory of planned behaviour (TPB) that posits that actions are determined by a combination of
people's behavioural intentions and perceived behavioural control (Ajzen, 1991). In the decomposed theory of planned behaviour attitude, subjective norms,
and perceived behavioural controls are all decomposed into lower level belief constructs (Taylor & Todd, 1995).
DECOMPOSED THEORY OF PLANNED BEHAVIOUR
Perceived usefulness
Ease of use
Attitude Towards the
Behaviour
Compatibility
Peer influence
Subjective Norm
Behavioural
Intention
Behaviour
Superior influence
Self-efficacy
Technology
Perceived
Behavioural Control
Resources
ATTITUDE
Attitude is defined as the degree to which the individual favours the behaviour being examined. It focuses on three attitudinal components: perceived
usefulness, perceived ease of use, and compatibility.
Subjective norms: Subjective norms refer to the social pressures that make an individual perform a particular behaviour. Different social groups might have
different opinions regarding the adoption of a particular technology.
PERCEIVED BEHAVIOURAL CONTROL
Perceived behavioural control accounts for situations where individuals do not have complete control over their behaviour and are made of two components.
The first is self-efficacy reflecting the personal comfort with using technology. The other component includes facilitating conditions and other resources needed
to use the technology.
OBJECTIVES OF RESEARCH
1)
2)
To study the personal profile of consumers selected from the study units.
To analyze the factors that influence customers to adopt Internet banking services and consumer satisfaction in the study area.
POPULATION, SAMPLE AND SAMPLING
The population used is the bank customers who use Internet banking service. The sample is not restricted from how long they have used internet banking,
because there are equal respondents between long-user internet banking and customers who have just used few months using internet banking and thus data
variability can be obtained in order to describe customer’s decision to still continue using internet banking in the future or not. The data were collected from 50
respondents by convenience sampling method randomly taking all the bank customers that have using Internet banking in Tiruchirappalli District. To study the
personal profile and to analyse the factors that influence customers to adopt Internet banking services, a structured questionnaire was prepared. Questionnaire
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contains two parts. Part I relates to demographic profile of the customers and Part II contains the factors which influence customers to adopt Internet banking
services. The data collected was analysed by use of frequency, percentage, means and correlation analysis.
DATA ANALYSIS
Demographic profile of the respondents is presented in Table 1.
From Table 1, the sample customers were mostly in the age group of 31-40. Out of 50 respondents 32 of them are male and 18 of them are female.
Furthermore, a majority of the respondents were married (60%). The respondents were predominantly post-graduates (50%) and graduates (26%). This implies
that the respondents had high literacy levels. With regard to employment status, the respondents were a mix of government employee (16%), private employee
(44%), self employed (10%) and professional (30%). And regarding the account status 84% of the respondents has savings bank account and 16% of the
respondents are current account holders.
TABLE 1: DEMOGRAPHIC PROFILE OF THE CUSTOMERS
S.No. Demographic profile
Frequency Percentage
1.
Gender: Male
32
64
Female
18
36
2.
Age (years): Below 30
19
38
31-40
20
40
41-50
08
16
Above 50
03
6
3.
Marital status: Married
30
60
Unmarried
20
40
4.
Educational qualification: Up to HS
04
8
Graduate
13
26
Post graduate 25
50
Professional
08
16
5.
Occupation: Government employee
08
16
Private employee
22
44
Self- employed
05
10
Professional
15
30
6.
Type of account: Savings Bank a/c
42
84
Current a/c
08
16
RESULTS OF FACTORS THAT INFLUENCE CUSTOMERS TO ADOPT INTERNET BANKING SERVICES
Awareness of service, security, cost, computer self efficacy, keenness to change, perceived usefulness, perceived ease of use, trust, attitude and adoption
intention are the factors are considered for the adoption of internet banking services by the respondents. Each variable was measured using Likert scale with a
weight from 1 to 5 i.e. highly satisfied, satisfied, neutral, dissatisfied and highly dissatisfied.
TABLE 2: RESEARCH INSTRUMENT
Questions
Awareness of service:
Knowing that bank had IB service
Knowing benefits and risks from using IB
Knowing application procedure of IB service
Knowing how to use IB
Security:
Banks gives security guarantee to do transactions over IB
IB services keeps accurate record of transactions
Using IB for money transactions is secure
IB system contains comprehensive FAQs sections for common problems
Cost:
IB is a cheaper way to conduct banking activities
Banks offers additional benefits for internet banking users
Banks encourages me to use internet banking
Computer self efficacy
I could complete my bank transactions using the IB system if I had only online help for reference
I could complete my banking transactions using the IB system if I had only the system manual for reference
Keenness to change:
Willingness to adopt new technological advancement for doing banking transactions
Level of awareness of the new services being introduced in the banking sector.
Perceived usefulness:
Using IB in my job increase my performance
Using IB in my job increase my effectiveness
Using IB in my job increase my productivity
I would find the IB system useful in conducting my banking transactions
Perceived ease of use:
Interacting with IB does not require a lot of my mental time
Interaction with IB is clear and understandable
It is easy for me to become skillful at using IB
Learning how to use IB systems is easy for me
Trust:
I trust my banks internet banking site
The IB site keep customers best interest in mind
The IB site keeps its promises and commitments
I trust in the benefits of the decision of the IB site
Attitude:
In my opinion it is desirable for every customers to use IB
My attitude towards IB usage is positive
Using IB is a wise idea
Adoption Intention:
I will use IB on regular basis in the future
I will strongly recommend others to use IB
Whenever I have an access to internet, I intend to use IB
Feels satisfied with the benefits I can get from IB
Mean
Std. deviation
17.24
2.759
15.12
3.578
11.26
2.414
7.52
1.972
8.5
1.460
17.46
2.557
16.56
2.689
15.94
2.951
11.82
2.585
16.12
3.141
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From the mean values that there is a significant relationship between awareness of service and perceived usefulness i.e. more awareness about the internet
banking service useful to the customers for doing banking transactions effectively. And another factor such as perceived ease of use has significant relationship
with adoption intention of Internet services in the future. Because customers feel easy for doing transactions over Internet so they want to continue this service
in the near future also.
RESULTS OF CORRELATION COEFFICIENT MATRIX
Pearson's correlation coefficient, normally denoted as r, is a statistical value that measures the linear relationship between two variables. Correlation Matrix
1.Awareness
of Service
2.Security 3.Cost 5.Computer
Self Efficacy
6.Keenness
to change
7.Perceived
Usefulness
8.Perceived
Ease of Use
10.Trust 11.Attitude
Towards
Using
12.Adoption
Intention
1.000
.235
-.049 .310
.010
.779
.628
.222
.307
.536
2.Security
.235
1.000
.544
.494
.270
.348
.457
.797
.265
.424
3.Cost
-.049
.544
1.000 .203
.483
.198
.093
.426
.289
.351
5.Computer
Self Efficacy
.310
.494
.203
1.000
.064
.445
.506
.539
.267
.227
6.Keenness to .010
change
.270
.483
.064
1.000
.036
.146
.130
.035
.076
7.Perceived
Usefulness
.779
.348
.198
.445
.036
1.000
.609
.385
.430
.666
8.Perceived
Ease of Use
.628
.457
.093
.506
.146
.609
1.000
.393
.485
.371
10.Trust
Correlation 1.Awareness
of Service
.222
.797
.426
.539
.130
.385
.393
1.000
.320
.608
11.Attitude
.307
Towards Using
.265
.289
.267
.035
.430
.485
.320
1.000
.558
12.Adoption
Intention
.424
.351
.227
.076
.666
.371
.608
.558
1.000
.536
These numbers measure the strength and direction of the linear relationship between the two variables. The correlation coefficient can range from -1 to +1, with
-1 indicating a perfect negative correlation, +1 indicating a perfect positive correlation, and 0 indicating no correlation at all. From the above table it indicates
some of the factors are positively correlated and the factors such as cost v/s awareness of service has negatively correlated.
CONCLUSION
The purpose of this research is to determine the factors influencing adoption level of Internet banking by the bank customers in Tiruchirappalli district. There
are ten constructs compiled into a structural model to explain customer adoption level of internet banking such as Awareness of service, security, cost,
computer self efficacy, keenness to change, perceived usefulness, perceived ease of use, trust, attitude and adoption intention. The results show that that there
is a significant relationship between awareness of service v/s perceived usefulness and perceived ease of use v/s adoption intention. In order to increase the
number of Internet users the banker should provide consumer education regarding the usage of Internet banking service to the customers. In addition banks
should also improve the customer confidence to use Internet banking service for overall customer satisfaction.
REFERENCES
1.
Jasveen Kaur & Baljit Kaur “ Determining Internet Bnaking service quality & customer satisfaction in India” – AIMS international conference on
management Jan 2013
2. Mahardika Adiya Widjana Basuki Rachmat “ Factors determining acceptance level of internet banking implementation” – journal of economics, Business
and Accountancy ventura vol 14, No.2, Aug-2011
3. Shah Ankit “Factors influencing online banking customer satisfaction and their importance in improving overall retention levels” – Information and
knowledge management Vol 1. No. 1, 2011
WEBSITES
4. http://delnet.nic.in Accessed on 26/05/13
5. http://ieeexplore.ieee.org Accessed on21/05/13
6. www.wikipedia.com Accessed on 25/05/13
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NEED OF FINANCIAL INCLUSION FOR INCLUSIVE GROWTH
AJAY SIDANA
ASSOCIATE PROFESSOR
SHREESIDDHIVINAYEK GROUP OF INSTITUTIONS
JAGADHRI
NEERU SIDANA
LECTURER
SHREESIDDHIVINAYEK GROUP OF INSTITUTIONS
JAGADHRI
ABSTRACT
The arrival of the country in the global stage after post reform period witnessed transformation of the economy in to a high growth plane. A lack of inclusive
growth can result in real or perceived inequalities, which has its own social ramifications. For economics growth of a nation it requires inclusiveness of all sections
of the society. Inclusiveness – a concept that encompasses equity, equality of opportunity, and protection in market and employment transitions –is an essential
intergradient of any successful growth strategy. Financial inclusion is integral to the inclusive growth process and sustainable development of the country.
Financial inclusion facilitates economic transaction, improvement of life; provide banking and financial services to all people in a fair and equitable manner at
affordable cost. Financial inclusion is one of the most important remedial and proactive measures that can be used to ensure inclusive growth. The present paper
presents the importance of inclusive growth, the significance of financial inclusion, the opportunities and challenges that lie in the path of financial inclusion.
KEYWORDS
inclusive growth, financial inclusion, economic transaction.
INTRODUCTION
I
nclusive growth is not a new or novel idea defined in the eleventh plan a “growth process which yields broad based benefits and ensure equity of
opportunity for all”. It stands for “equitable development” or “growth with social justice” which has always been the watch words of development
planning in India. Inclusive growth seeks to broaden the flow of benefits of globalization towards the currently excluded sections for achieving inclusive
growth. It is essential that the diffusion of opportunities be supported with good governance and accountability. A society can be considered financially inclusive
when all segments and strata of society have access to financial services and timely and adequate services of formal credit. Today, the Indian’s population lacks
access to financial products and services, such as savings accounts, loans, insurance; pension schemes etc .most of the population belonging to the lower income
groups does not have access to formal banking and credit.
Financial inclusion will lead to the surplus rural income being converted into a pool of liquid funds for the economy. Three pillars of inclusive growth are (1)
maximize economic opportunities (2) ensure economic well being and (3) ensure equal opportunities to economic opportunities.
WHY INCLUSIVE GROWTH
Easy access to finance and markets, health care and quality education across all low income households comes under the scope of inclusive growth. Why
inclusive growth now considered essential even to sustain the growth momentum. The rationale behind the inclusive growth is that the poor chunk of India’s
population is based in rural areas as well as growth in agriculture is necessary in order to keep manufacturing prices under check provide food security and keep
inflation under control. Rapid and sustained poverty reduction requires inclusive growth that allows people to contribute to and benefit from economic growth.
Growth has to inclusive. All the efforts of government in agricultural and rural development, in industry and urban development, in infrastructure and services,
in education and healthcare-sought to promote inclusive growth.
Inclusive growth is the focal point of growth strategy and major concern for the policy
makers in India.
WHAT IS THE NEED OF FINANCIAL INCLUSION?
Inclusive growth and, as a part of it,greater,financial inclusion, is desired both from the equity as well as the efficiency angles. Inclusive growth without financial
inclusion will not succeed in achieving objectives as financial inclusion can fortify the economic standards of the poor and the disadvantaged. Financial inclusion
is based on the principal of equity. It denotes access to affordable banking services for the entire population. In India, this requires a high level of penetration by
the formal financial system dominated by the banking sector. Even in areas covered by banks, there are large sections of society excluded from the banking
system. As India is on the path of growth, so one can not imagine that a third of the population is under poverty level. Financial inclusion will help in maintain a
balance by channelizing the surplus to deficit units and bring them under the growth metaphor. Financial inclusion and inclusive growth are now considered
essential for the long term political and social stability of the country.
EFFORTS MADE FOR FINANCIAL INCLUSION
Government of India and RBI were proactive in order to augment the banking penetration .some of efforts made in this direction were facilities the cooperation moment, setting up of SBI, nationalization of banks in two phases, initiation of lead bank scheme, establishment of RRBs. Introducing self help group
bank linkage programmed.
59
S. No.
1
Years
1969
2
1969
3
1975
4
1980
5
1991
6
1992
7
1998
8
199899
200910
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TABLE -1 : RBI’S CONTRIBUTION (RESERVE BANK OF INDIA AND FINANCIAL INCLUSION)
Particular Phase
Objectives of Particular Stage
Nationalization of 14
The major objective behind the motive of nationalization was to create the equally banking infrastructure in
private banks.
rural areas and to will make low cost credit availability for Indian farmers.
Lead Bank Scheme
The scheme envisaged allotment of districts to banks to enable them to assume leadership in bringing about
banking developments in the respective districts.
Establishments of 5
To meet the need of credit of farmers particularly small & marginal farmers and rural artisans.
Regional Rural Banks
Nationalization of 6
The stated reason for the nationalization was to give the government more control of credit delivery.
other Private Sector
Banks.
Banking Sector Reform
Major objective of banking sector reform was to enhance the efficiency and productivity of Indian banking
First Phase.
industry particularly public sector banks.
Self-Help-Group
The SHG's bank linkage programmed was launched in 1992 as a flagship programmed by NABARD. The
Programme
programmed envisages organization of the rural poor into self help groups for building their capacities to
manage their own finance and the negotiate bank credit on commercial term.
Banking Sector Reform
This second phase reform was mainly focused on structural measures and improvement in disclosure standards
Second Phase.
and level of transparency so as to align Indian best practices.
Kishan Credit Card
The main objective of this scheme is to provide timely and adequate credit sport of farmers for their production
Scheme
needs in a flexible and cost effective manner. It is providing the short term credit facility to farmers.
Swarna Jayanti Gram
To enhance the role of women in Self-Help-Group programmed
Swarozgar Yojna (SGSY)
WHAT HAS BEEN ACHIEVED
The objective of financial inclusion is to extend financial services to the large hitherto unserved population o the country to unlock its growth potential. In
addition, it strives towards a more inclusive growth by making financial available to the poor in particular.
TABLE -2 : NUMBER OF BRANCHES OF SCHEDULED COMMERCIAL BANKS AS ON 30TH JUNE 2012
Bank group
Rural
urban Semi-urban metropolitan Total
Public sector bank
22146 17803 14223
13231
67403
Private sector banks 1555
4660
3580
3621
13416
Foreign banks
7
9
61
247
324
Regional rural banks 12258 3094
830
148
16330
total
35966 25566 18694
17247
97473
TABLE -3 : NUMBER OF FUNCTIONING BRANCHES OF SCHEDULED COMMERCIAL BANKS DURING LAST THREE YEARS
As on
rural
Semi-urban urban metropolitan total
March 31,2010 32525 20776
16678 15342
85321
March 31,2011 33800 22961
17563 16293
90617
June 30,2012
35966 25566
18694 17247
97473
TABLE -4 : NUMBER OF BRANCHES OF SCHEDULED COMMERCIAL BANKS OPENED DURING THREE YEARS
Population group 2009-10 2010-11 2011-12
Rural
974
1280
2051
Semi-urban
1704
2186
2479
Urban
1398
890
1065
Metropolitan
1116
958
908
Grand total
5192
5314
6503
TABLE -5 : NO. OF VILLAGES AND AVERAGE POPULATION PER BRANCH
Number of villages in India as per the 200 1 census
60,00000
Average population per bank branch as on 31.3.2012 12921
(1) Swabhimann Campaign: Under “swabhimann”- the financial inclusion campaign launched in February 2011, banks had provided banking facilities by March,
2012 to over 74000 habitations having population in excess of 2000 using various models and technologies including branchless banking through business
correspondent’s agents. Over 3.16 crore accounts were opened and than 62000 bca were engaged during the campaign.
(2) Banking Facilities In Unbanked Blocks: All the 129 unbanked blocks (91 in north east states and 38 in other states) identified in the country in July 2009, had
been provided with banking facilities by March 2012, either through brick and mortar branch or business correspondents or mobile van.
(3) Business Correspondent And Business Facilitators (Bc/Bf) Models: The number of villages covered through Business Correspondents (BC) as on 31st March
2011 is 76,801. The number of villages covered through mobile vans and ATMs as on 31st 1March 2011 is 355. Business Facilitators (BFs) play vital role in
achieving the objectives of Financial Inclusion and RRBs have been advised to consider appointing Farmers' Clubs as BF. Based on the keen interest shown by
RRBs and Farmers Clubs acting as Business Facilitators of RRBs, the financial support has been extended for up scaling the pilot for FCs as BFs for all villages
having population more than 2000 in the command areas of RRBs. As on 31 December 2011, 2.08 cores sanctioned to 22 RRBs in 12 states from FIF.
(4) General Credit Cards (GCCS) : General Purpose Credit Cards (GCCs) offered by banks at their rural and semi-urban braches are in the nature of revolving
credit, entitling the holder to withdraw up to the limit sanctioned (` 25,000). By March 2011, banks had provided credit aggregating ` 1,308 crore in 1.0 million
GCC accounts.
(4) Kisan Credit Cards (KCCS): Kisan Credit Cards (KCCs) Scheme introduced in 1998-99 as a credit product to allow hassle free revolving credit to farmers by
banks in rural and semi-urban areas. At end-March 2011, the total number of KCCs issued by Cooperative banks, Regional Rural Banks (RRBs) and Commercial
banks all over the country stood at 103.84 million.
(5) Financial Inclusion Plans (FIP): All domestic Scheduled Commercial Banks (SCBs) were advised in January 2010 to draw up specific Board-approved Financial
Inclusion Plans (FIP) by March 2010 incorporating certain basic minimum qualitative features and quantitative indicators with a view to rolling them out over the
next three years. As on 31st March 2011, out of 99,840 villages identified for extension of banking services, 53,397 villages with population over 2000 have been
covered under Financial Inclusion Plans. Similarly, as on 31st March 2011, number of villages with population less than 2000 covered under FIPs are 46,443. The
number of villages covered through bank branches as on 31st March 2011 is 22,684 for providing basic banking services. As on 31st March 2011, the total number
of customer service points deployed is 58,361
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SHORTCOMINGS
(1) Lack of Financial Literacy: Low literacy rate has also become big problem for financial inclusion as ignorance causes low level of awareness .it also creates
difficulty in communicate the terms. With little knowledge it becomes tough to make them understand the product features.
(2) Trained Manpower: For effective implementation of financial inclusion there is need of versatile manpower with a human touch who can feel the pulse of
consumer and shifting gears according to circumstances.
(3) Lack Of Customized Products: The banking industry has to understand the basic philosophy and mind set of customers and develop innovative products.
(4) Lack Of Network Co-Operation: Delivery channels like mobile banking and correspondent banking need a critical level of participation (by agents, telecoms,
clients,etc.) Or interoperability to generate value.
(5) Lack of Interest by Providers and Policymakers: Providers may not try to reach low-income clients because they do not believe that the poor can be viable
clients. Policymakers may not promote inclusion if they do not value it.
(6) Insufficient Infrastructure: Underdeveloped transportation, communication, and power grid structures limit delivery of financial services in rural and remote
areas.
(7) Inadequate Client Protection: Client protection ensuring that services are transparent, air and appropriate for their customers are not well developed among
providers or regulators
(8) Cost of Building /Branches: High fixed and running costs make branches an expensive delivery channel for poor neighborhoods and sparsely populated areas.
RECOMMENDATIONS AND POLICY CHOICES
(1) Exclusive Focus On The Socially/Excluded And The Poor: It is essential to focus on socially excluded section and the poor like, tenant farmers, marginal
farmers with small uneconomical land holdings, agricultural laborers and majority of weavers in handloom sectors.
(2) Procedural/Documentation Charges: The present guidelines for opening of bank account are more tedious and result in huge cost for the poor in accessing
the banks for any kind of services. it should be simplified.
(3) Effective Use of It Solutions: The use of IT solutions for providing banking facilities at doorstep holds the potential for scalability of financial inclusion
initiatives.
(4) Active Role of Government: State government should play an active role in facilitating financial inclusion. Issuing official identity documents for opening
account, creating awareness and involving district and block level persons in the entire process are the ways in which state and district can involve themselves.
(5) Financial Inclusion as a Part Of Course Curriculum in High Schools: Financial inclusion should imbibe in to the course curriculum in high schools so that the
students would understand the importance of financial inclusion for inclusive growth in the economy.
(6) Coordination with Uidai: Government of India’s UIDAI can help in achieving financial inclusion. There needs to be proper systematic coordination with UIDAI
In order to make the best use of it for the purpose for financial inclusion.
CONCLUSION
For standing out on a global platform India has to look upon the inclusive growth and financial inclusion. Financial inclusion is the key for inclusive growth.
Financial inclusion has not yielded the desired result and there is long road ahead but no doubt it is playing a significant role and is working on the positive side.
Financial inclusion along with the government development programmers will lead to an overall financial and economic development in our country. As well as
extending the banking services to every one in the country will be the key drive towards an inclusive growth.
REFERENCES
1.
2.
3.
4.
5.
6.
7.
8.
Bihari s.c.(2011), “financial inclusion-the key to challenges:AIJSH
Dev,Mehendra S(2006), “financial Inclusion: Issue And Challenges”, economic and political weekly, October 14,2006.
Government of India economic survey
Inclusive growth: the role of financial education by shyamala gopinath, Dy. Governor of RBI
Report from world bank on financial inclusion
Reserve Bank of India “report on financial inclusion”
Vighneswara swamy & Vijayalakshmi, “role of financial inclusion for inclusive growth in India-issue & challenges
Vijay kelkar, “financial inclusion for inclusive growth”ASCI journal of management, 39(1),pp 55-68
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CEMENT INDUSTRY: SCOPE FOR DIFFERENTIATION
ANIL KUMAR PILLAI
RESEARCH SCHOLAR
DEPARTMENT OF MANAGEMENT
SRM UNIVERSITY
CHENNAI
DR. SHANTHI VENKATESH
ASSOCIATE PROFESSOR
LOYOLA INSTITUTE OF BUSINESS ADMINISTRATION
CHENNAI
ABSTRACT
Indian Cement Industry is the second largest in the world after China. The industry transformed from a seller’s market to buyers market in view of the
liberalisation in the industry . Cement is generally considered to be a commodity but the number of brands in the Indian Cement industry have increased after
total decontrol in 1989 . There has been an attempt by various firms to differentiate the brands on various factors.. This article through literature review in
Marketing and industry reports from the Cement Industry illustrate the various factors for differentiating cement..
KEYWORDS
Indian Cement industry , sellers market , buyers market , differentiate , brands.
INTRODUCTION
T
he Indian Cement Industry is considered to be the second largest in the world after China. The total capacity of the industry is 360 million tonnes per
annum with 81 companies and 200 plants. The Cement industry occupies an important place in the economy and all other sectors like construction ,
transportation, power, coal and financial markets are linked to the cement industry. The transformation in the Indian Cement industry from an era of
price controls to total decontrol has led to an entry of number of companies and numerous brands in the Indian Cement industry . Brand development in the
Indian cement industry is gaining prominence and manufacturers are trying to get a pricing premium on account of branding or enhanced value proposition .
ICRA (formerly Investment Information and Credit Rating Agency of India Limited) views favourably sustained efforts by manufacturers towards brand
development, as it expects brand strength to allow market acceptance in the long term.To change from a commodity to brand there is need to differentiate
cement on various factors.
OBJECTIVES
Cement is a perishable commodity and cannot be stored for long time as there is a risk that it may absorb moisture and hence may be unfit for construction .
Hence more importance is given on sales leading to a price war in the market . However in the recent times many companies in the Indian Cement industry are
attempting to brand cement for getting a price premium . To brand cement and to maintain a premium price , differentiation plays a vital role . This study
therefore identifies various factors in cement that could be used as differentiators to gain customer loyalty .
METHODOLOGY ADOPTED
The data & information for the article is through Literature review of Marketing and reports and articles from the cement industry .
Literature in the area of Marketing and Cement Industry will explore the possibility of differentiation in cement and identify the areas in which differentiation is
possible for cement companies in the industry.
LIMITATION
The present study is based on secondary sources through an exhaustive literature survey . No primary data sources have been used for the study.
INDIAN CEMENT INDUSTRY
Cement Industry in India has evolved over the years from being an importer during 1920 to being the second largest producer in the world. The origin of Indian
Cement Industry can be traced to over 100 years. Industry was in the hands of the government who controlled production and pricing. Capacity addition was at
a slow pace and fewer entrepreneurs were coming forward to set up cement plants. It was only after the end of price controls that production slowly started
stepping up. After the total decontrol there was a quantum jump in capacity addition . Number of companies entered the cement industry and there were
number of brands available in the market. The buying behaviour also changed from a seller’s market to a buyer’s market. There was a time when there was
scarcity of cement and buyers did not have a choice . But with number of brands and companies increasing in the Indian Cement Industry, customers had
number of options to choose from amongst the available brands.
Cement which used to be considered as a commodity began to be branded. Supply demand in a particular region is one of the major factor in determining price.
With supply exceeding demand capacity utilisation of cement plants started coming down . It was at this juncture that many companies in the Indian cement
industry started giving more importance to marketing rather than just selling
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1951-1982
TABLE 1: EVOLUTION OF INDIAN CEMENT INDUSTRY
REMARKS ABOUT CAPACITY , GROWTH , CONSUMPTION
Cement consumption was around 2 million tones during this period of 10 years ; 50 % was through imports . Production in
the year 1914 was 10, 000 tonnes and in 1924 production was around 0.26 million tones a year against capacity of half a
million tonne.
Indigenous production went from 3.66 lakh tones in 1925 to 18.30 lakh tonne in 1941. Imports contributed to less than 7%
of total cement consumption during 1924-1942
Production stepped up from 1.8 million tones in 1942 to 3.2 million tones in 1951 . Imports dwindled to less than 2 -1/2 % of
total consumption
Growth in cement capacity but not at requisite pace. Capacity was 29 Mn t in 1981-82
1982-88
Quantum jump in capacity and production during 1982-88 . Cement became surplus from 1987 onwards.
March 1989
onwards
During the end of FY 2009 capacity rose to 219 Mn tonnes
ERA
Era of Dominant
Imports
YEAR
1914- 1924
Era of Struggle
and Survival
Era
of
Price
Controls
Era of Planning
and Controls
Era of Partial
Decontrol
Era
of
Total
Decontrol
1924- 1941
1942-1951
Source: Website of Cement Manufacturers Association www.cmaindia.org
As shown in Table 1, the industry structure changed over the years .During the year 1914- 24 most of the requirement was met through imports before
indigenous production started .Subsequently Government played a major role in Planning & Control. After the industry was decontrolled the capacity grew
manifold. The selling strategy of firms and the buying behavior of customers also saw a major change. Cement from being a pure commodity dependent on
price alone is being recognized as a product whose pricing and demand could be varied through various Marketing promotions. Brands started emerging after
total decontrol in the year 1989 and certain brands started commanding premium due to quality perceptions. Therefore positioning of cement brands in the
customers minds play a vital role .
The one type of cement that was available before 1990’s was the OPC (Ordinary Portland Cement) – 33 grade. Subsequently other grades of OPC like OPC 43,
OPC 53 were introduced. The number 33, 43 or 53 indicated the compressive strength of cement mortar after 28 days tested as per BIS procedures.
Subsequently other types of cement like Portland Pozzolana Cement & Portland Slag cement were introduced. Other special types of cement for specific
applications were launched as per the requirements of the construction Industry.
TABLE 2: TYPES OF CEMENT : PRODUCTION PERCENTAGE WISE
Type of Cement
Percentage to total production
Ordinary Portland Cement ( OPC)
32.26%
Portland Pozzolona Cement ( PPC)
60.79%
Portland Blast Furnace Slag Cement ( PBFS) 6.60%
Sulphate Resistant Cement ( SRC)
0.07%
IRS T40
0.24%
Source: CMA Executive Summary Cement Industry April 2011, (Page 50)
The type of cement that is manufactured in huge quantity as on April 2011 is the PPC ( Portland Pozzolona Cement) which accounts for about 61% of the total
cement manufactured
LITERATURE REVIEW
Literature in Marketing highlights the importance of differentiation. A commodity is sold purely based on price and it is considered that all brands in a category
like cement are similar and there is no distinction. However according to Levitt (1980) there is no such thing as a commodity. The normal perception that
branding can only be done in certain product categories was not accepted by Levitt( 1980) and his firm view was that any product or service can be
differentiated, even the commodity that seems to differ from competitors' offerings only in price. As per Levitt ( 1980) Even produce and deal in primary metals,
grains, chemicals, plastics, and money can be differentiated according to the author .
Levitt ( 1983) in his book Marketing Imagination has highlighted the importance of understanding the customers , their problems and the means to capture their
attention . By emphasising that people don’t buy things but buy solutions to problems , the author has indicated the importance of good data about customers.
This according to him has the power to improve strategic decisions in the right directions. Cement is not used in isolation but it is usually mixed with other
ingredients like aggregates and water to get a mixture called concrete . Therefore the construction professionals at site face number of problems in making
concrete. Hence a construction professional is not just buying cement but also looking for solutions to make a good concrete that is durable.
Verdoorn ( 1956) mentions the role of five groups of instruments which a firm can use it to formulate its marketing policy . The instruments are the price , the
quality of the product , promotional effort , distribution channels and the firms product line. Verdoorn ( 1956) has highlighted the feature of substitution
amongst these instruments and the term “ marketing mix” is given for a given combination of these instruments. Even in case of cement it is not only the
product quality but the capability of the firm to make the availability of cement at site plays a vital role.
Borden ( 1984) tells of the evolution of the marketing mix concept and mentions that the elements of the Marketing Mix of Manufacturers relates to Product
Planning , Pricing , Branding, Channels of Distribution , Personal Selling , Advertising , Promotions, Packaging , Display , Servicing , Physical Handling , Fact Finding
and analysis .
Borden ( 1984) has outlined the market forces bearing on the marketing mix as that of Consumers Buying behaviour , traders behaviour Competitors position
and behaviour and the Government behaviour . Cement is subject to influence by the behaviour of consumers especially the construction professionals ,
behaviour of traders or dealers , the behaviour of competitors and government policy in setting of cement plants and introduction of taxes .
Donohue Brian C , Miles Marshall F ( 1995) gives importance to the voice of the customer and emphasizes on the responsibility of Marketing & sales which is to
collect and analyze the customer needs. Cements traditionally was being used as a commodity , sales maximization being the topmost priority . However firms
have began to listen to the voice of customer Basso Joe ( 2007 ) stresses the need for creating dialogue with customers in a competitive marketplace which
allows organization to customise the marketing approach
Aaker A David identifies three major sustainable competitive advantage for long term performance which relates to quality reputation , customer orientation
and the ability to recognize name which indirectly refers to the awareness of the brand.
According to Basso Joe , Randy Hines ( 2007) the challenge, therefore, is for companies to be responsive to consumer demands by being proactive in their
business approaches rather than reactive. Satisfying consumer needs and clearly communicating organizational policies will go a long way in forging long-lasting
relationships with consumers( Basso Joe , Randy Hines)
The demand-supply condition frequently exists for manufactured products in developing countries, those countries with relatively low levels of per capita
income that are taking steps to move from a lower to a higher stage of economic development with some degree of success (e.g. Bolivia, India, Malaysia,
Pakistan, Thailand) (cf. Baker and Al-Haddad, 1985; Douglas, 1971; Negandhi, 1972).Cement is also affected more by such demand supply conditions. Whenever
demand goes up price takes an upward trajectory and whenever supply exceeds price goes down.
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While purchasing a product the first encounter is with the visual design of the product and thus plays a frontline role in the success of a product ( Kotler and Rath
1984). Cement is packed in 50 kg bags and stored in the dealers shops where retail or trade sales takes place . There are end customers who look at the
attractiveness of the bag to decide on the brand to be purchased.
The study by Pires, Ricardo ( 2008) concluded that consumers are faced with quality and product performance uncertainty and hence rely on extrinsic
attributes like brand , price , package and warranty as signals of perceived quality . This is equally applicable in case of cement and hence there for investment
on brand development in the cement industry is on the rise as is evident from the advertising or wall painting of cement brands that is seen in many Indian
cities.
Perceived quality was evaluated and decided by consumers. Perceived quality is another valuation of brand to push the customer to buy products (
Wonglorsaichon & Sathainrapabayut , 2008) . In case of cement construction professionals do not get an opportunity to purchase cement after testing by them .
However manufacturers give a test certificate for every batch of cement manufactured by them . Hence selection of brand is more on the basis of perceived
quality than objective quality .The power of brand lies in the minds of existing or potential customers and what they have experienced directly and indirectly
about the brand( Wonglorsaichon & Sathainrapabayut , 2008) .The marketing program has effect to improve the perceive quality of brand for different
customers ( Wonglorsaichon & Sathainrapabayut , 2008) The premise of customer-based brand equity models is that the power of brand lies in what customers
have responded, seen, read, heard, learned, thought and felt about the brand over time( Wonglorsaichon & Sathainrapabayut , 2008) .
Brands which have been there for more than 50 years in the Indian cement industry has an advantage over the new entrants . This is because older brands have
been engaged in activities which connect them to the customers.
Keller ( 2000) is of the view that building and properly managing brand equity has become a priority for companies of all sizes in all types of industries , in all
types of markets. This is more pertinent , as according to the author , customer loyalty and profits flows from strong brand equity . Due to increasing
competition in the Indian cement industry there is a need to develop customer loyalty .
Perceived quality can be defined as the consumer's judgment about a product's overall excellence or superiority (Zeithaml, 1988). As used in the literature,
objective quality refers to measurable and verifiable superiority on some predetermined ideal standard or standards.
Customers perceived quality in cement will depend on various factors like price , attractiveness of the bags , quality of advertisements and customer service .
According to Richard and Deborah consumers perception of product characteristics help them in discriminating between products and attributes that signal
quality have been dichotomized into intrinsic and extrinsic cues. Intrinsic cues involve the physical composition of the product whereas Extrinsic cues are
product-related but not part of the physical product itself and are by definition, outside the product ( Richard and Deborah) . Price, brand name, and level of
advertising are examples of extrinsic cues to quality.
Chang & Dibb ( 2012) points that Customer-perceived value is of concern for consumers , practitioners and researchers . Consumers wishes to make sound
purchase choices, practitioners are keen to improve their customers' perceptions of value, and researchers seek to clarify the conceptual underpinnings of
customer-perceived value and its relationship with other marketing variables ( Chang & Dibb, 2012) . The paper by Chang & Dibb ( 2012) synthesises the
literature from marketing, economics, axiology and psychology to provide a holistic review of the customer-perceived value concept.
According to Garvin ( 1984) Product Quality is rapidly becoming an important competitive issue and each discipline has wrestled with the question of whether
quality is objective or subjective. The objective quality of cement can be gauged in a cement testing laboratory whereas teh subjective quality is indirectly
evaluated based on the quality of concrete produced at site.
Market Research helps in identifying characteristics that connote quality, these characteristics are then translated into identifiable product attributes,
manufacturing process should be organized to ensure that the products are manufactured as per specification ( Garvin – 1984).
Garvin ( 1987) remarks that Quality means pleasing consumers , not just protecting them from annoyances and he proposes eight dimensions of quality that can
serve as a framework for strategic analysis : performance, features, reliability , conformance , durability , serviceability , aesthetics, perceived quality.
A product or service can rank high on one dimension of quality and low on another – indeed an improvement in one may be achieved only at the expense of
another ( Garvin – 1987) .Cement with higher early compressive strength may rank low on durability aspects.
According to Norman .L.Barnett people differentiate among the various brands in a market according to their perception of the brands' real or imagined
characteristics; they choose brands whose characteristics they prefer. This is reported to be more effective than segregating consumers based on their
characteristics ( Norman .L.Barnett) .Customers need to be segmented based on the application whether cement is used for concreting or plastering and the
type of work whether its a bridge work or residential work .
Inferences drawn by Mark Vandenbosch , Niraj Dawar ( 2002) were as follows : a) Offering great products , technologies or services is an entry stake into the
competitive arena. b) Most spoke on the need to maintain an edge on ways Companies interact with customers .c) Cost-oriented factors like convenience, ease
of doing business and product support, as well as risk-oriented factors like trust, confidence and the strength of relationships were given importance . d)
Suppliers become the link between customers and sellers of complimentary products and services thereby reducing buyers search and acquisition costs. The
supplier increases the number of customer “touch points” and thus its claims on customer loyalty.
Customer value models are based on assessments of the costs and benefits of a given market offering in a particular customer application ( Anderson , Narus –
1998).
Zeitmal ( 1988) has distinguished perceived Quality from objective or actual quality , a higher level of abstraction rather than a specific attribute of a product , a
judgement usually made within a consumers evoked set. ; perceived quality may not exist because all quality is perceived by some one be it consumers or
managers or researchers at Consumer reports.
Jacoby and Olson ( 1977) distinguished between objective price ( the actual price of the product ) and perceived price ( the price as encoded by the consumer)
Wagner suggests that Customer service should be given more importance to firms that are seeking greater sales for current products in current markets
through market penetration and also mentions that servicing customers is vital for market development and product development .
Growing competition and more demanding customers is making it difficult to achieve and maintain a commanding position in a wide variety of industries
according to Parasuraman ( 2000) NA
Manufacturing Companies in searching for new approaches to retain customers are increasingly using service as a differentiator and as a means of integrating
themselves into the customers supply chain systems ( Liz Lee Kelley et. al, 2002).
A study of the UK Steel industry has revealed that higher the level of perceived quality of service , the higher the expressed intended loyalty and for steel
managers this research has highlighted the importance of establishing a relationship strategy through service enhancement to foster customer loyalty (Liz Lee
Kelley et.al , 2002).
Gronroos (1990) advises that in the service society, manufacturing needs to adapt to the new order of demands to achieve and maintain competitive advantage.
Hallowell ( 1996) defines customer loyalty as the relationship a customer maintains with the seller after the first interaction.
Bachelor ( 1998) in arguing that customer loyalty is not appropriate for commodity products where selling price seems to be a major role in the purchase
decision asks the question “
Is there such thing, any more , as customer loyalty ”. Service Management literature shows increasing interests in relationship strategies where the focus is on
building customer satisfaction and loyalty.
Whiteley ( 1991) differentiates products and services quality by defining the former as “ what you get “and the latter as “ How you get it” This is in agreement
with Gronroos ( 1990) two dimensional aspects of service quality:
Technical quality : the quality of what is delivered
Functional quality : The quality of how the service is delivered
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One study conducted by the US office of Consumers affairs indicated that one dissatisfied customer could be expected to tell nine other people about the
experiences that resulted in dissatisfaction. ( Knauer , 1992) This raise the question of whether dissatisfied customers do actually voice their complaints or they
simply do not buy from the same supplier again.
Consistent with the overall desire to manage relationships, CRM is generally defined as the “management of mutually beneficial relationship(s) from the seller's
perspective” (LaPlaca, 2004, p. 463)
Richards Keith , Eli Jones ( 2008) describes Customer equity (CE) as
a. Identifying the value of a customer to the selling firm.
b. The margins beyond product costs and selling costs of these products can be evaluated by measuring Customer equity .
c. Focus of customer equity , according to the authors are customer relationships and financial accountability .
Following the earlier work by Rust, Zeithaml, and Lemon (2000), three types of equity have been described as antecedents to customer equity: value equity,
brand equity, and relationship equity. Value equity is the customer's appraisal of the brand based on its utility. Brand equity is a more subjective appraisal of the
brand and is more concerned with image and meaning than the rational evaluation of price, quality and convenience (Lemon, Rust, & Zeithaml, 2001; Rust et al.,
2000).
Customer-centric marketing, a term used by Sheth, Sisodia, and Sharma (2000), describes this shift toward customizing marketing efforts for each individual
customer.
Kohli & Leuthesser ( 1993) defines Product positioning in relation to competitors and stresses that it’s the act of designing the image of firms offering in such a
way that target customers understand and appreciate what the product stands for.
According to Kevin , positioning is the message a company wants to imprint in the minds of customers and prospects about its product or service or its brand
and how it differs from and offers something better than competitors.
Onkvisit and Shaw ( 1988) is of the view that branding when properly executed can be a viable solution to the problem of cut throat competition since brand
names can enhance the customer perception of the value of the product.
DISCUSSIONS
Literature review suggests differentiation can be done and for cement it could be any of the activities in the chain leading to delivery of cement. According to
Levitt ( 1980) the fundamental rudimentary thing needed to play the game of market participation is termed as generic product ; the offered product makes the
difference in getting customers , the expected product representing the customers minimal purchase conditions like Delivery , Terms of purchase , support
efforts and giving new ideas. The observations by Levitt ( 1980 ) can be applied in case of cement as follows:
1. Delivery of cement : Location of cement Plants and the time of delivery of cement so that it minimizes inventory costs for the buyer . The nearer the
cement plant is to the customers site the lesser would be the inventory cost for him . Customers could be given preferential treatment whenever there is a
general shortage in the industry . Customers expect flexibility and proper quantity to be delivered to him .
2. Terms: In major projects builder sor contractors prefer to have a rate contract preferably till the completion of the project .Other terms like discounts for
prompt payment may be expected by the customer.
3. Support efforts: Cement being one of the ingredients in concrete is dependent on many factors like quality control at site , skill of the mason and the
awareness of the construction professionals. The client or the customer therefore expect special advice and support for projects or residential project.
4. New ideas: Customers use cement in concrete . Any new idea which optimises or economises the quantity of cement without compromising on the quality
of concrete would be appreciated by the customer.
Bonoma ( 1982) has identified six buying roles like Initiator , Gatekeeper , Influencer and Decider and briefly outlines the roles they play as follows:
Initiator : recognizes that some company problem can be solved or avoided by acquiring a product or service
Gatekeepers : are involved in the purchase process . They usually act as problem or product experts.
Influencers : are those who have a say in whether a purchase is made and about what is bought .
Deciders are those who say yes or no to the contemplated purchases
Cement buying in projects also involve similar dynamics and it is very difficult in some cases to categorise the roles . Therefore understanding consumer
behaviour during cement purchase is critical as decision to buy may not be taken by a single department or personnel .
Eight dimensions of quality are distinguished by Garvin ( 1987) as follows:
Performance : Products primary operating characteristics . Brands can usually be ranked objectively on individual aspects of performance but sometimes
performance standards are based on subjective preference.
Features: Characteristics that supplement basic functioning involves objective and measurable attributes .
Reliability: This dimension reflects the probability of a product failing within a specified time period.
Conformance: The degree to which a products design and operating characteristics meet established standards.
Durability : The amount of use one gets from a product before it deteriorates.
Serviceability : The speed, courtesy , competence and ease of repair is serviceability .
Aesthetics: The subjective dimension of quality that involves personal judgment and reflection of individual preference that has more to do with as to how a
product looks, feels , sounds, tastes or smells.
Perceived Quality : Complete information about attributes of a product or service is not available to the consumers ; indirect measure may be the only basis for
comparing brands. Images , advertisements , brand names gives inferences about quality . Reputation affects perceived quality .
In case of cement performance is evaluated on the basis of testing thereby defining features of cement . Reliability an durability are critical as cement is used
for durable concrete structures which customers expect to last a life time . Cement fulfils the minimum requirement as laid down in the relevant BIS codes.
After sales service for making good quality concrete after cement is supplied to customers have become important . Cement cannot be evaluated through a
quick test and also since there is a scarcity of cement testing laboratories Perceived quality plays a vital role in determining the brand of cement used.
Das Narayan Das ( 2005) suggests that its useful for executives to think about a products value by grouping its benefits into four categories
Tangible financial benefits : Values that sellers can communicate and buyers can verify.
Non tangible financial benefits : Those values that sellers can convey bit buyers cannot easily validate.
Tangible non financial benefits : Values that cannot be easily quantified by teh sellers but buyers perceive it such as corporate reputations, global scale and
innovation capabilities take time and money to create but in commodity market they influence firms choices.
Non tangible non financial benefits : value that both sellers and buyers are unable to quantify especially in monetary terms .
Jamali , Atafar , Sanayei ( 2011) have analysed , ranked , positioned top four cement brands of Isfahan by perceptual mapping . The questions that were used to
draw the perceptual map were related to quality of product , package quality ,product accessibility , product variety , product price and data sheet accuracy .
Respondents ranged from cement distributors/wholesalers , university professors and civil Engineers
Rensburg , Niekerk ( 2010) conducted a study that proposes approaches followed that could be used to differentiate value propositions offered by cement
producers based on customers perceptions.The results of the research suggest that customers indeed attach different levels of importance to different value
attributes which indicate that value differentiation could be used as a viable marketing strategy in the cement industry . It is also indicated in the study that
customer value perceptions could be enhanced by the introduction of new or enhanced value attributes.The key drivers of the current value proposition as
indicated by regression weight are in order of importance : Product offering ( 18.3%) Ordering ( 15.7%) Administration ( 13.6%) ,Image( 13.6%) Distribution (
11.5%).The research findings also suggest that different groups of customers attach different levels of importance to different value attributes associated with
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ISSN 2231-1009
producers core offerings , sourcing process and customer operations inspite of the contradictory view that cement is a generic product utilising similar pricing
strategies
Heaoron Henry , Mazur Glenn ( 2002) stresses on the importance of Technical Services Department to assist customer with field problems.The study
emphasises on listening to the Voice of Customer which could influence buying decisions in more profitable ways .
Varghese Toms and Massey conducted this study to find the perception of cement buyers in two cities namely Varanasi and Ghaziabad in Uttar Pradesh . The
study focussed on the knowledge level of consumer about various parameters of cement like setting time , colour , price , curing required and compressive
strength. The major findings of the study were that customers prefers grey coloured OPC cement whereas in Varanasi they prefer dark or Portland Pozzolona
Cement.
Shahida P , Nargundkar Rajendra & Hiremath Gaurav ( 2008) On finding out the relative importance of various attributes of cement considered while purchasing
branded cement strength of cement was considered the most important attribute , price the second most important attribute and then availability was
considered the third important parameter.
Jacques.M. Francois( 2007) notes that relationship plays a key role in cement and in his own words “ salesmen whose pitches were aimed at making friends
rather than demonstrating that their products were better than the competitions. The critical aspect in cement business was the challenge to deliver tangible
results and the way prices were negotiated as according to the author In a commodity business like cement a 1% gain in price has twice the impact on NPV of a
1% increase in volume or a 1% reduction in cost and four times the impact of a 1% savings in investment.
Onkvisit and Shaw ( 1988) broadly lists the prerequisites before a commodity is transformed into a product a. quality and quantity consistency b.Possibility of a
product differentiation c.degree of importance consumers place on the product attributes to be differentiated.
FINDINGS
Based on the above Literature review and Cement industry reports it is evident that price premium and brand equity in case of cement are important and
relevant. The following areas could be used for differentiation of cement:
•
Product quality and types: Certain parameters of cement can be enhanced to increase value proposition for a specific customer segment. Manufacturing
different types of cement suitable for a particular application.
•
Solutions to problems, New ideas and support to construction professional : Construction professionals use concrete or plaster at site and hence
rendering advice to construction professionals can help . Technical Services in Cement Marketing can be a differentiator if customers are offered solution
to concreting problems.
•
Flexibility in delivery of cement to various projects : Delivery flexibility in terms of bagged or bulk cement based on the site requirement
•
Understanding Perceived quality for effective communication : Customer surveys at periodic intervals can help in understanding customers perception on
various quality dimensions. The results obtained during these surveys could be useful in designing Integrated Marketing Communication to various
customer segments
•
Ordering & Distribution of cement : Availability of cement at site on time is considered to be important for certain project sites
•
Commercial terms & Conditions: Customised commercial terms and conditions to each customer segment
•
Niche Segment: Enhancing value proposition for a niche segment leading to price premium.
Thus it is inferred that a generic product like cement can be differentiated on various factors and the offered product could be used to enhance value
proposition to the customer.
CONCLUSIONS
Number of works on branding and differentiation is already done in other product categories. Findings from such product categories could be used in marketing
cement which will enable the firms to increase market share or maintain premium pricing. Results of studies done in other cement industries across the globe
can be applied in Indian Cement industry. Few of the differentiators are extracted from the literature and summarised in the article
Empirical studies can be done in major Indian Cities to evaluate the behaviour of customer segments on the above differentiators that could be effectively used
in the cement industry. Primary sources through surveys on target segments like Engineers, Contractors, Dealers and Masons will further help cement marketers
to implement them in the Indian Cement markets
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6.
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10.
11.
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13.
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Bonoma V. ( 1982) Thomas Major Sales : Who Really Does the Buying , Harvard Business Review , May- June 1982
Borden H Neil (1984) , The Concept of the Marketing Mix', Journal of Advertising Research , Classics Volume II , September 1984
Chang Connie ( 2012 ) , Sally Dibb Reviewing and conceptualising customer-perceived value The Marketing review, 2012 , Vol 12,No 3
CMA : Executive Summary Cement Industry April 2011 ( Page 50)
Das Narayan Das ( 2005) Building Loyalty in Business Markets Harvard Business Review September 2005
Donohue Brian C ( 1995) , Miles Marshall F Total Quality Management in the Marketing Organization, 1995, IEEE
Douglas, S. (1971), "Patterns and Parallels of Marketing Structures in Several Countries", MSU Business Topics, Vol. 19, Spring, pp. 38-48.
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Garvin A. David ( 1984) What Does Product Quality Really Mean ? ( 984) Sloan Management Review – Fall 1984
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Heaoron Henry , Mazur Glenn ( 2002) Using QFD to Improve Technical Support to Make Commodity Products More Competitive The 14th Symposium on
QFD
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21. Jacoby , J. & Jerry C. Olson ( 1977) , “ Consumer Response to Price : An Attitudinal Information Processing Perspective , ” in Moving Ahead with Atitude
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WEBSITES
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Investment Information and Credit Rating Agency of India Limited)
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WHAT THE INDIAN MUSLIMS THINK ABOUT ISLAMIC FINANCE: AN EMPIRICAL STUDY
NISSAR AHMAD YATOO
RESEARCH SCHOLAR
DEPARTMENT OF BANKING TECHNOLOGY
PONDICHERRY UNIVERSITY
PONDICHERRY
DR. S.SUDALAIMUTHU
ASSOCIATE PROFESSOR
DEPARTMENT OF BANKING TECHNOLOGY
PONDICHERRY UNIVERSITY
PONDICHERRY
ABSTRACT
This research investigates the opinion of Indian Muslims about Islamic finance. the study is based on the empirical data collected from 609 respondents among
the Muslims in India. The results suggest that Muslims in India emphasise the role of religious and ethical values in Islamic finance over the commercial values.
KEYWORDS
Islamic Finance, Religious values, Commercial values.
INTRODUCTION
O
ver the last three decades Islamic banking and finance has developed into a full-fledged system and is practiced in about 75 countries around the world
with about 500 financial institutions. Islamic finance in terms of charitable funds like Zakah, Sadakah and other alms exists in India since the inception of
Islam, which is managed by the non profitable institutions like the Baitulmals, Wakaf trusts and other Muslim trusts. Islamic Finance Institutions (IFI) as
economic entities were first established in late 30’s and early 40’s of the 20th century. The Patni Co-operative Credit Society Ltd was established in 1938 and the
first Muslim fund was started in 1941. However proliferation and growth of IFI took place in India only after the independence and their commercialization took
place along with the global development of Islamic finance in the 80’s. During the 90’s, almost 400 IFI were operating throughout India in major states like
Andhra Pradesh, Delhi, Maharashtra, Karnataka, Kerala, UP and Gujarat. These financial institutions are broadly divided into four categories viz; Financial
association of persons, Islamic financial societies, Islamic co-operative credit societies and Islamic investment and financial companies. Most of these IFI’s
stopped their operations due to the hurdles created by the financial sector reforms in the 90’s. Many of the co-operative societies were forced to shut down
there operations due the unsupportive legal requirements.
During the last decade, efforts are being made by certain religious and social organizations from different states especially, Kerala for formally introducing
Islamic Banking and Finance in India. In 2005, Government of India asked Reserve Bank of India to examine Islamic banking instruments and constituted a
Working Group headed by Mr. Anand Sinha, Chief Manager, Department of Banking and Operation and Development along with senior bankers from SBI, ICICI
and Oman International Bank reported in 2006 that within the current statutory and regulatory framework it would not be possible for banks in India to
introduce Islamic Banking and concluded that for banks to introduce Islamic banking, appropriate amendments are required in the Banking Regulations Act,
1949. This announcement led to interactive sessions by Indian center for Islamic finance-ICIF. In August 2007, Govt. of India under the Planning Commission
constituted a high level Committee on Financial Sector reforms (CFSR) under the chairmanship of Dr. Raghuram Rajan, former chief economist, IMF along with
other eleven members who are the finest financial and legal minds in the country to examine the Islamic finance products and practices.
LITERATURE REVIEW
Islamic Finance was born out of the aim of implementing the teachings of the Holy Quran, which states explicitly that interest on money is prohibited in Islam
while earning profit is a very permissible act. Available literature have highlighted the concepts of Islamic Finance (Nicolas 1994; Siddiqi, 1998), Islamic finance
products and services( Ali Khan, 2005), attitude towards Islamic Banking ,bank selection criteria (Erol and El-Bdour (1989); Sudin et al. (1994),customer
satisfaction and preference ( Naser et al , 1999) and is limited to various regions where it is practiced like Malaysia, Jordan , Singapore , Saudi Arabia (Haron,
1994; Gerrad and Cunningham, 1997; Ahramul Haq, 2010).
Studies in India have so far focused on the overview of Islamic Banking, its principles and potential in India. India has about 300 Islamic financial institutions but
very little is known about their functioning, socioeconomic performance and potential (Bagsiraj, 2003). There exists a great potential for investment in the Indian
economy because of the strong macroeconomic fundamentals and the growing industrial and services sector (Nisar ,2006). The RBI Working Group Report
examined financial instruments used in Islamic Banking gave an overview of the philosophy, basic principles and different instruments used in Islamic banking (
Sinha, 2006). There exists a great potential for Islamic banking in India (Vohra 2008). Haque et al (2010) by means of SWOT analysis explained how Islamic
finance is a viable and better option for India.
Islamic Banking and Finance has been variously understood as ethical, participatory and interest free banking (Khan, 2012).The aim of this paper is to highlight
the opinions of financially literate Muslims in India about Islamic Finance.
RESEARCH OBJECTIVE
This study was designed with the aim of investigating what Muslim financial literates in India opine about the nature and purpose of Islamic Finance.
METHODOLOGY
This is an empirical study based on primary data, collected through a structured questionnaire. Mosques served as a point for data collection. Data was collected
during the last quarter of 2012 and first quarter of 2013 from 609 Muslims from different states in India, in the presence of the researcher. The states chosen for
the purpose of study were Tamil Nadu, Kerala, Karnataka, Andhra Pradesh, Delhi, Utter Pradesh, Bihar and Jammu & Kashmir. These states were selected on the
basis of Muslim population
The questionnaire was designed to understand what Indian Muslims opine about Islamic Finance. Questions pertaining to demographics were also included in
the questionnaire .The items for the study were drawn from previous literature. The items were Ethical Finance, Shariah Finance, Participatory Finance, Interest
free Finance, Alternative Finance and Finance for specific Purpose. Unidentified names were treated as ‘other’. Respondents were asked to assign rank from1 to
7 based on their opinion about Islamic Finance.
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DATA ANALYSIS
The Statistical Package for Social Sciences (SPSS) was used for descriptive and inferential analyses to provide respondents’ profiles. Windows Excel (version 8)
was used for Garret ranking, which was used to determine the widest opinion about the nature and purpose of Islamic finance. The ranking were converted into
score values using the formula:
Percent position = 100 (Rij – 0.5)
-------------------Nj
Where
Rij = Rank given for the ith variable by jth respondents
Nj = Number of variable ranked by jth respondents
With the help of Garrett’s Table, the percent position estimated was converted into scores. Then for each factor, the scores of each respondent were added and
then total value of scores and mean values of score was calculated. The factors having highest mean value was considered to be the most important factor
(Mehta, 2012)
FINDINGS AND SUGGESTION
Out of the total of 609 respondents, the number of male respondents was five times more than the number of female respondents. The majority of the
respondents were falling in the age group of 20 years to 40 years. Based on their Occupation, respondents were grouped as Government Employees, Private
Employees, Business Men and Students. Following is the table showing the demographic details of all the 609 respondents.
TABLE 1: DEMOGRAPHIC PROFILE OF THE RESPONDENTS
AGE
Below 20
20- 30
30- 40
40- 50
Above 50
SEX
32
207
234
109
27
Total
609
Male
Female
503
106
MARITAL STATUS
Married
316
Unmarried
293
609
609
DEMOGRAPHICS
EDUCATION
OCCUPATION
Ph.D
18
Govt. Employee
PG
219
Pvt. Employee
Graduate
277
Business Men
12th
74
Students
Below 12th
21
Others
609
181
174
119
126
9
STATE
Tamil Nadu
Kerala
AP
Karnataka
Delhi, Up and Bihar
J&K
609
98
95
41
96
180
99
609
HOUSE HOLD INCOME IN (INR)
Below 10,000
39
10,000 to 20,000
242
20,000 to 50000
259
Above 50,000
69
609
TABLE 2: GARRETT'S RAKING RESULTS FOR OPINION ABOUT ISLAMIC FINANCE
Perception\Rank
Ethical Finance
Shariah Finance
Participatory Finance
Finance for specific purpose
Alternative Finance
Interest free finance
Other
1
129
263
43
33
36
39
51
2
195
107
35
99
94
64
0
3
42
92
234
72
83
71
0
4
51
91
114
173
150
15
0
5
121
17
67
84
100
135
70
6
11
16
94
85
56
216
101
7
45
0
0
41
75
54
364
Total
594
586
587
587
594
594
586
G R Score
7482
8358
6714
6768
6307
6287
3925
Average
56.25
64.29
52.05
52.46
50.86
47.27
30.19
Rank
II
I
IV
III
V
VI
VII
The garret ranking table (table 2) shows that the Shariah Finance name has come with the highest average score of 64.29 and was ranked first. Similarly Ethical
Finance, specific purpose Finance, Parcipatory Finance, Alternative finance and interest free finance got second, third, fourth, fifth and sixth rank respectively.
The terms Shariah finance and ethical finance depicts the religious value of Islamic finance and the terms specific purpose Finance, Parcipatory Finance,
Alternative finance and interest free finance depict the commercial values of Islamic finance. As observed from the above analysis, the terms Shariah finance and
ethical finance received highest ratings, which implies that Muslims in India connote religious value to Islamic finance rather than commercial value. The
researcher suggest that marketers when developing Islamic finance products for India should focus on the religious and ethical values as the same has been
shown to be important to the Indian Muslim.
REFERENCES
1.
2.
3.
4.
5.
6.
Bhagsiraj M I, (2003). Islamic Financial Institutions Of India: Progress, Problems And Prospectus. King Abdula Aziz University.
Khan, A. M (2005)“Understanding Islamic Finance” -by -Asia Policy Number 6.
Khan.K (2012), International Jornal of Business and Tomorrow Vol.2 No.6
Nisar S, (2006). Islamic Investment opportunities in India. Retrieved October 10 2012 from http://www.icif.in/publication.php
Siddiqi .N (1998) journal of King Abdul-Aziz University; Islamic Economics, Vol.10, Jeddah
Sinha, A( 2006) “Report of the Working Group to Examine Financial Instruments used in Islamic Banking”. Reserve Bank of India.
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STRUCTURAL CHANGE IN EASTERN STATES OF INDIA
TINA SINGH
ASST. PROFESSOR
MATA GUJRI COLLEGE
FATEHGARH SAHIB
ABSTRACT
Structural change refers to a long-term shift in the basic structure of an economy which is often associated to growth and economic development. The present
paper attempts to study structural change in addition to certain socio-economic indicators in the eastern states of India. Time period of the study is from 1980-81
to 2010-11. A unique feature of structural transformation in these states has been a decrease in the share of primary sector in the NSDP and an increase in the
share of tertiary sector. The process of urbanisation was found in all regional economies with West Bengal showing the highest figures. Next was Jharkhand
followed by Orissa and Bihar both showing the lowest figures. Some extent of inequality was also found in the eastern states with urban inequality being greater
than rural during all points of time. Bihar showed the lowest value of Ginni Co-efficient both in the rural as well as the urban sector. West Bengal performed well
in the socio-economic indicator of population below poverty line by having the least level of poverty among the Eastern states. In case of demographic indicators
of sex ratio, Orissa and in literacy rate, West Bengal has shown the highest figure while Bihar faired the poorest in both the indicators.
JEL CODES
OO, O1
KEYWORDS
Primary sector, secondary sector, structural change, structural transformation, tertiary sector.
1. INTRODUCTION
A
s an economy grows there is change in its structure also. A well-documented characteristic of modern growth is structural change or structural
transformation. Over the past years structural transformation has been witnessed in India just like many developed and developing economies across the
world. This phenomenon has prevailed at the state level too. In continuation of my earlier work on structural change in northern and southern states of
India, the present study is of structural change and certain socio-economic indicators of the eastern states of India. An attempt is made to study the
transformation of the eastern states of India. The time period of the study is from 1980-81 to 2010-11. Major sources of data have been CSO, RBI publications,
Planning Commission and Socio-economic Review of States.
The process of economic growth is seldom consistent. Economic growth leads to change in structure of an economy referred to as structural change or structural
transformation. Structural transformation comprise the following characteristics; a falling share of agriculture in output and employment, rising share of urban
economic activity in industry and modern services, migration of workers from rural to urban areas, demographic transition etc. Structural transformation has
been studied extensively. A vast literature already exists on the topic which includes the noteworthy contributions of Fisher (1939), Clark (1940), Chenery (1979),
Kuznets (1961), and Syrquin (1975). They all conclude that the growth in an economy is characterised by a shift from the primary to the secondary and lastly to
the tertiary sector.
2. REVIEW OF LITERATURE
Research work has been carried out across the world to study the process of structural change. Caselli and Coleman II (2001) have presented a joint study of the
U.S. structural transformation and regional convergence where they ﬁnd empirically that most of the regional convergence is attributable to the structural
transformation. Alessandrini and Buccellato (2008) have studied the different patterns of growth of China, India and Russia. By exploring and focusing on the
sector transformations involved in the three economies, they have shown that the growth strategies implemented present specific characteristics in terms of
gradualism and policy choices. These studies suggest the prevalence of structural transformation in these economies. Moving closer, the existence of structural
transformation has also been observed in the Indian economy. Mazumdar (2011) has studied the growth and structural changes in output since India's
independence. The study presents an analytical description of the twin processes of growth of output and changes in its composition in the Indian economy
since independence. Papola (2012) in his study highlights the major structural aspects of India's economic growth over the past three decades from the
viewpoint of its long-term sustainability. Similarly, studies show the existence of structural transformation at the regional level in the Indian economy. Studies
conducted by Bagchi, Das and Chattopadhyay (2005) have examined the structural changes in the economy of Gujarat. They have observed that the pattern of
growth of Gujarat has not been uniform across different sectors. Khanna (2011) examines the structural changes that have taken place in the Punjab economy,
since the Green revolution. These studies highlight the existence of structural change/transformation in various national and sub-national economies thereby
building a strong ground to the present study of structural change and certain socio-economic indicators of East India.
3. STATEMENT OF THE PROBLEM
The present paper attempts to study structural change/transformation in addition to certain socio-economic indicators in the eastern states of India. It evaluates
the relative performance of the eastern states viz-a- via each other in various indicators of structural change in the last few decades.
4. OBJECTIVES
1. To determine whether the state economies of East India are undergoing any structural change.
2. To evaluate the relative performance of the state economies of East India on various socio-economic indicators.
5. DATA ANALYSIS, RESULTS AND DISCUSSION
5.1 COMPOSITION OF NSDP OF EASTERN STATES
The share of various sub-sectors i.e. primary, secondary and tertiary in NSDP from 1980-81 to 2010-11 are presented in Table 1. It was seen that structural
transformation has occurred in all four eastern states of India with notable interstate differences. In 1980-81, Orissa and Bihar showed the highest shares of
primary sector in the NSDP each having a share of 55.43% and 55.22%. For Orissa, the share declined over the years and reached 32.76% in 2010-11. Bihar also
saw a fall in its share of primary sector which reached to 26.50% in 2010-11. They were followed by Jharkhand whose share was 36.46% in 2000-01 which
declined to 26.75% in 2010-11. (Data for Jharkhand is available since 2000-01). The least share was shown by West Bengal being 32.60% in 1980-81 which
declined to 23.94% in 2010-11.
Although the economies saw a shift out of the primary sector, it was not so well absorbed by the secondary sector. West Bengal showed the highest share of
secondary sector in the NSDP but it witnessed a decline over time. It was 29.28% in 1980-81 and reached 15.51% in 2010-11. Jharkhand showed an increase
from 26.75% in 2000-01 to 27.55% in 2010-11. Orissa and Bihar showed varying shares of secondary sector over time. In Orissa it increased from 15.44% in 1980-
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81 to 21.53% in 1990-91. Thereafter it declined to 17.54% in 2000-01 and further to 16.64% in 2010-11. Bihar showed a share of 17.33% in 1980-81, increased to
21.66% in 1990-91. It saw a major fall in its secondary sector share to 08.66% in 2000-01 with a mild recovery to 17.40% in 2010-11.
A decline in the share of primary sector in NSDP has been absorbed by a rise in tertiary sector. The economies that used to be dominated by the primary sector
have turned around to be predominantly tertiary sector oriented. West Bengal showed a maximum share of tertiary sector in NSDP at all points of time. It was
38.11% in 1980-81 and rose to 60.54% in 2010-11 which was the highest among the eastern states. It was followed by Orissa and Bihar, both of which showed a
gradual increase in the share of tertiary sector. Jharkhand trailed behind having the lowest share of tertiary sector.
TABLE 1: COMPOSITION OF NSDP OF EASTERN STATES (IN PERCENT)
1980-81 1990-91 2000-01 2010-11
WEST BENGAL Primary Sector
32.60
33.47
32.29
23.94
Secondary Sector 29.28
26.02
18.43
15.51
Tertiary Sector
38.11
40.49
49.26
60.54
ORISSA
Primary Sector
Secondary Sector
Tertiary Sector
55.43
15.44
29.22
43.92
21.53
34.54
39.71
17.54
42.74
32.76
16.64
50.59
BIHAR
Primary Sector
Secondary Sector
Tertiary Sector
55.22
17.33
27.43
49.44
21.66
28.89
41.77
08.66
49.56
26.50
17.40
56.09
JHARKHAND
Primary Sector
N.A.
Secondary Sector N.A.
Tertiary Sector
N.A.
Source: CSO
N.A.
N.A.
N.A.
36.46
26.75
36.77
26.75
27.55
45.69
5.2 URBANISATION
Urbanisation exists in the eastern states of India but at a low level. Table 2 presents the urbanisation percentages of various eastern states. West Bengal has
performed the best in East India by showing rates almost double than the rest of the Eastern states. It has shown a consistent rise in the level of urbanisation
being 26.47% in 1981, 27.48% in 1991, 27.48% in 2001 and 31.89% in 2011. It was the only state to have been at par with the national level in case of
urbanisation. It was followed by Jharkhand which is a comparatively newly formed state. The states of Orissa and Bihar have shown a dismal picture with the
urbanisation rates being least for Bihar being 12.47% in 1981, falling to 10.40%in 1991 and 11.30% in 2011.
TABLE 2: URBANISATION (In Percent)
States
1981
1991
2001
2011
WEST BENGAL 26.47 27.48 27.48 31.89
ORISSA
11.79 13.38 14.99 16.68
BIHAR
12.47 10.40 10.46 11.30
JHARKHAND
N.A.
21.25 22.24 24.05
ALL INDIA
23.34 25.71 27.81 31.16
Source: Socio Economic Review of Gujarat
5.3 GINNI CO-EFFICIENT
The Ginni Co-efficient is a measure of inequality in a population. A lower Ginni Co-efficient indicates a more equal distribution, with 0 corresponding to complete
equality while a higher Ginni Co-efficient indicates more unequal distribution with 1 corresponding to complete inequality.
Table 3 presents the Ginni Co-efficient for East India. It was seen that the urban areas showed a greater level of inequality as compared to the rural. Comparing
with the other eastern states Bihar showed the lowest value of Ginni Co-efficient both in the rural as well as the urban sector during the time period of the study
showing greater level of equality amongst the eastern states. On the other hand, West Bengal showed the highest Ginni Co-efficients in the urban sector
throughout the time period, whereas highest Ginni Co-efficients in the rural sector was shown by West Bengal in 1983-84 and 1993-94 and by Orissa in 1999-00,
2004-05 and 2009-10 showing a greater level of inequality in these areas.
The Ginni Co-efficient of the Eastern States was less or equal than the All India level at all points of time thereby representing a greater level of equality in East
India than seen at the national level.
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TABLE 3: GINNI COEFFICIENT
Rural Urban
1983-84
WEST BENGAL 0.28
0.32
ORISSA
0.26
0.29
BIHAR
0.25
0.29
JHARKHAND
N.A.
N.A.
ALL INDIA
0.29
0.32
1993-94
WEST BENGAL 0.25
0.33
ORISSA
0.24
0.30
BIHAR
0.22
0.30
JHARKHAND
N.A.
N.A.
ALL INDIA
0.28
0.34
1999-2000
WEST BENGAL 0.22
0.34
ORISSA
0.24
0.29
BIHAR
0.20
0.31
JHARKHAND
N.A.
N.A.
ALL INDIA
0.26
0.34
2004-05
WEST BENGAL 0.27
0.37
ORISSA
0.28
0.35
BIHAR
0.20
0.33
JHARKHAND
0.22
0.35
ALL INDIA
0.30
0.37
2009-10
WEST BENGAL 0.23
0.38
ORISSA
0.26
0.38
BIHAR
0.22
0.33
JHARKHAND
0.24
0.35
ALL INDIA
0.29
0.38
Source: Planning Commission
5.4 POPULATION BELOW POVERTY LINE
As depicted in Table 4 population below poverty line was the highest for Orissa and Bihar and was much above the All India level. For Orissa it was highest in
1983-84 (65.29%), 1999-00 (47.15%) and 2004-05 (46.4%) and for Bihar in 1993-94 (54.96%). West Bengal performed well on this indicator by having the least
level of poverty among the Eastern states. Its rates were declining overtime from 54.85% in 1983-84 to 24.7% in 2004-05. Jharkhand being a newly formed state
had data for 2004-05 only which shows poverty rate of 40.3% which is way above the national level but less than Orissa and Bihar for the year 2004-05. On the
whole, the Eastern states have not faired well on this indicator by having rates much higher the national level.
TABLE 4: POPULATION BELOW POVERTY LINE (In Percent)
States
1983-84 1993-94 1999-2000 2004-05
WEST BENGAL 54.85
35.66
27.02
24.70
ORISSA
65.29
48.56
47.15
46.40
BIHAR
62.22
54.96
42.60
41.40
JHARKHAND
N.A.
N.A.
N.A.
40.3
ALL INDIA
44.48
35.97
26.10
27.50
5.5 SEX RATIOS
The demographic indicator of sex ratio for East India is presented in Table 5. Orissa has performed markedly well among the eastern states in this indicator by
having sex ratios of 981, 971, 972 and 978 in the years 1983-84, 1993-94, 1999-2000 and 2004-05 respectively which were much above the national level at all
points of time. It was followed by Jharkhand with the rates 940, 922, 941 and 947 for the respective years. West Bengal is on the third position and has not
faired too well. Bihar showed a good figure of 948 in 1981 occupying the second position after Orissa but failed to maintain the same and fell to the fourth
position in 1991, 2001 and 2011 being below the national level too.
TABLE 5: SEX RATIOS
States
1981 1991 2001
WEST BENGAL 911
917
934
ORISSA
981
971
972
BIHAR
948
907
921
JHARKHAND
940
922
941
ALL INDIA
934
927
933
2011
947
978
916
947
940
5.6 LITERACY RATES
Literacy rates depicted in Table 6 have shown a gradual rise in all the eastern states. The highest rates were shown by West Bengal being 48.65%, 57.70%,
68.64% and 77.08% in 1981, 1991, 2001 and 2011 respectively which was higher than the All India level at all points of time. It was followed by Orissa and
Jharkhand. The least rates were shown by Bihar being 32.32% in 1981, 37.49% in 1990, 47.00% in 2001 and 63.82% in 2011 where the figures although showed
an increase but were less than the All India level.
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TABLE 6: LITERACY RATES (Percent)
States
1981
1991
2001
WEST BENGAL 48.65 57.70 68.64
ORISSA
33.62 49.09 63.08
BIHAR
32.32 37.49 47.00
JHARKHAND
35.03 41.39 53.56
ALL INDIA
43.57 52.21 64.84
2011
77.08
73.45
63.82
67.63
74.04
6. CONCLUSION
The present study highlights certain interrelated factors which determine the ongoing process of structural change in the states of East India. A unique feature of
structural transformation in these states has been seen in the declining share of primary sector in the NSDP and the increasing share of tertiary sector in NSDP
during the time period of the study. West Bengal has shown the largest increase in the services sector. Orissa and Bihar, although being an agriculturally
dominated state has also witnessed a rise in the services sector. Jharkhand although a comparatively newly formed state, has also witnessed an increase in the
share of tertiary sector.
Structural change is characterised with urbanisation which was found in miniscule level in Eastern states with West Bengal performing best by showing the
highest figures throughout. It was followed by Jharkhand. The states of Orissa and Bihar have shown a dismal picture with the urbanisation rates being least for
Bihar.
In terms of inequality, the eastern states showed greater urban inequality than rural at all points of time. Bihar showed the lowest value of Ginni Co-efficient
both in the rural as well as the urban sector during the time period of the study showing greater level of equality amongst the eastern states whereas highest
Ginni Co-efficients in the rural sector were shown by West Bengal in the early time period and Orissa in the later showing a greater level of inequality in these
areas.
The socio-economic indicator of population below poverty line has witnessed West Bengal performing well on this indicator by having the least level of poverty
among the Eastern states. It showed the least rate in population below poverty line for the entire time period. Population below poverty line was the highest for
Orissa and Bihar and was much above the All India level. On the whole, the Eastern states have not faired well on this indicator by having rates much higher the
national level.
In case of demographic indicator of sex ratio Orissa has shown the highest figures followed by Jharkhand while Bihar faired the poorest in the later years and
was much below the national level too. In case of literacy rates, West Bengal performed the best throughout while Bihar showed a poor show in this indicator
too.
Thus, structural change is taking place which is an indicator of development with West Bengal topping the charts on various indicators. Suitable measures need
to be administered so that these states may progress to achieve balanced growth and be at par with each other in the process of development.
7. SCOPE OF THE FUTURE RESEARCH
The present study was conducted taking into consideration only the eastern states of India. It can be extended to study structural change by including various
other states of India, India as a whole and a comparison of various economies of the world may also be made. As far as the limitations are concerned, since data
were collected mainly from secondary sources certain variations in the time periods were found in few indicators due to the non-availability of data for specific
years from the same source. Also, data for Jharkhand was not available for all the years as it is a comparatively newly formed state which made it difficult to
compare it with the other eastern states for the years for which the data was missing.
8. REFERENCES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
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Alessandrini, M. and Buccellato, T. (2008) : “China, India and Russia: Economic Reforms, Structural Change and Regional Disparities” Economics Working
Paper No.97, UCL SSEES, Centre for the Study of Economic and Social Change in Europe Viewed on June 25, 2013 http://discovery.ucl.
ac.uk/17441/1/17441.pdf
Bagchi, A.K, Das, P. and Chattopadhyay, S.K. (2005): “Growth and Structural Change in the Economy of Gujarat, 1970-2000”, Economic and Political Weekly,
Vol 40, pp 3039-47.
Caselli, F and Coleman II W. J. (2001) : “The U.S. Structural Transformation and Regional Convergence: A Reinterpretation”, Journal of Political Economy,
Vol. 109, No. 3, pp. 584-616
Central Statistical Organisation
Chenery, H.B. (1979): “Structural Change and Development Policy,” New York: Oxford University Press
Chenery, H.B. and Syrquin, M. (1975): “Patterns of Development, 1950-1970,” London: Oxford University Press.
Clark, C. (1940): “The Conditions of Economic Progress,” London: Macmillan.
Fisher, A.G.B. (1939): “Production, Primary, Secondary and Tertiary,” Economic Record, Vol 15, pp 24-38.
Khanna, K. (2011): “Growth and Structural Changes in Punjab Economy: A Study of Post Green Revolution Period”, Political Economy Journal of India, Vol.
20, No.1.
Kuznets, S. (1961): “Quantitative Aspects of the Economic Growth of Nations: IV. Long Term Trends in Capital Formation Proportions,” Economic
Development and Cultural Change, Vol 9, pp 1-124.
Mazumdar, S. (2011) : “Growth and Structural Changes in Output in India since Independence: A Study Report” Viewed on June 25, 2013
http://isidev.nic.in/pdf/ICSSR_SM.pdf
Papola, T.S. (2012): “Structural Changes in the Indian Economy :Emerging Patterns and Implications”, ISID Working paper No. 2012/02.
Planning Commission Website: : Databook on DCH, April, 2013. Viewed on 30 June, 2013 www.planningcommission.org.in
RBI’s Handbook of Statistics of Indian Economy 2010-2011.
Socio Economic Review of Gujarat, 2010-2011.
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INNOVATION AND ENTREPRENEURSHIP IN KNOWLEDGE BASED ECONOMY
DR. VIDHU GAUR
ASST. PROFESSOR
ALLIANCE UNIVERSITY
BANGALORE
ABSTRACT
In the modern era of new knowledge economy, innovation and entrepreneurship activities are considered to be some of the most important factors influencing
economic development, both in national and international level. The paper attempts to define the main factors which determine the innovation and
entrepreneurial capability of a country and to investigate the implications on economic growth, namely, to which extent economic development depends on the
presence of an environment favorable to innovation, based on the endogenous development capabilities? This paper attempts to examine the role of
entrepreneurship and those of innovation activities (technical change, research and development and diffusion of technology) and the effects of economic growth
process. The quality of human capital is a key contributor to innovation and economic development and is becoming all the more important in the contest of the
knowledge society. As trade in services and information grows, the economy of today will increasingly call for employees with new skills and competencies
beyond those in the traditional economy. Therefore, an efficient education system, adapted to the needs of the labor market, and the improvement of skills and
employability are crucial to continued economic growth and increased employment.
KEYWORDS
Firm Specific Factors, Entrepreneurial Environment, Knowledge Economy, Productivity.
INTRODUCTION
I
nnovation has a variety of roles. As a driving force, it points firms towards ambitious long-term objectives. It leads to the renewal of industrial structures
and is behind the emergence of new sectors of economic activity. In brief, innovation is:
•
The renewal and enlargement of the range of products and services and the associated markets;
•
The establishment of new methods of production, supply and distribution;
•
The introduction of changes in management, work organization, and the working conditions and skills of the workforce.
Innovation in processes increases the productivity of the factors of production by increasing production and/or lowering costs. It provides room for flexible
pricing and increased product quality and reliability. Competition makes this quest for productivity an ongoing activity, and successive improvements are a
guarantee of not falling behind. Innovation in terms of products (or services) makes for differentiation vis-à-vis competing products, thus reducing sensitivity to
competition on costs or price. Improved quality and performance, better service, shorter response times, more suitable functionality and ergonomics, safety,
reliability, etc., are all elements which can be strengthened by innovation and which make all the difference for demanding customers.
International investment and market access are primary vehicles for the cross-border transmission of innovation which assures growth and wealth creation in
participating countries. This participation is based on long term economic processes such as new market development, job creation, enterprise as well as
structural changes and adjustment costs. International investment liberalization in the context of open market frameworks is essential to the diffusion of
benefits created by globalization.
TECHNOLOGICAL CREATIVITY
Technological creativity and advancement are key components of not only innovation and growth, but also their sustainability in the long term. Most of the
economy consists of users of a given technology and is concerned chiefly by the breadth of the application of technology outside the sector that invented it.
Therefore, R&D is an incomplete indicator for innovative capacity. The emergence of the knowledge economy means there is greater focus upon and recognition
of the notion that people and their skills is the key to international competitiveness and sustainable growth. At the same time, it implies an increasing pace of
change, for which new competencies must be acquired. To better adapt school programs to the needs of the employment market, a careful analysis of the skills
required for specific sectors/ jobs and their broad commonalities is an essential step, which can be facilitated by close co-operation with the business
community.
HUMAN RESOURCES
Research, development and the use of new technologies – in a word, the technological factor – are key elements in innovation, but they are not the only ones. It
must incorporate those means that the firm must make an organizational effort by adapting its methods of production, management and distribution. Human
resources are thus the essential factor. In this respect, initial and ongoing training play a fundamental role in providing the basic skills required and in constantly
adapting them. The ability to involve the workforce to an increased extent, and from the outset, in the technological changes and their implications for the
organization of production and work must be considered a deciding factor. Innovation in work organization and the exploitation of human resources, together
with the capacity to anticipate techniques and trends in demand and the market, are frequently necessary preconditions for the success of the other forms of
innovation. Since the life-cycle of products and services is becoming ever shorter, and generations of technologies are succeeding each other at an ever faster
rate, firms are often under pressure to innovate as fast as possible. The time of entry into the market and the moment of introducing a new product onto it are
becoming crucial factors in competition. Finally, it is the dissemination of new techniques; products and services to the whole of the economic fabric which
allows full benefit to be gained in terms of competitiveness.
In knowledge-based economies, the efficient systems are those which combine the ability to produce knowledge, the mechanisms for disseminating it as widely
as possible and the aptitude of the individuals, companies and organizations concerned to absorb and use it. The crucial factor for innovation is thus the link
between research (the production of knowledge), training, mobility, interaction (the dissemination of knowledge) and the ability of firms to absorb new
technologies and know-how. There are two important types of knowledge industries: First, there are those industries whose major product is knowledge itself;
then there are industries that manage or convey information. The first group includes industries such as software, biotechnology, and information technology
hardware; and occupations such as engineers, scientists, programmers, and designers, whose major output is research that translates into new products and
services. These industries are driven not by machinery, skilled shop floor workers, or even capital – although these all play a role – but rather by individuals
engaged in research, design, and development. While these industries make up less than seven percent of the economy’s output, they are in many ways key
drivers of the New Economy. Just as capital – and machinery – intensive industries (e.g., autos, and chemicals, steel) drove growth in the 1950s and 1960s,
knowledge production firms are the growth engines of the New Economy.
On the other hand, a large share of the economy is now involved in managing, processing, and distributing information. These industries include
telecommunications, banking, insurance, advertising, law, medicine, and much of government and education; and occupations such as managers, lawyers,
bankers, sales reps, accountants, and teachers. In these industries, effective handling and managing of information, rather than breakthrough knowledge
generation, are the keys to success. New technologies hold the promise for higher economic growth. However, to fully realize these gains, skills must be
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upgraded to match the changing labor market requirements, individuals must be mobilized to seize business opportunities and firms must adapt their
organizational structures. The quality of human capital is a key contributor to innovation and economic development and is becoming all the more important in
the context of the knowledge society. As trade in services and information grows, the economy of today will increasingly call for employees with new skills and
competencies beyond those in the traditional economy.
ENTREPRENEURSHIP
Managers describe entrepreneurship with such terms as innovative, flexible, dynamic, risk taking, creative, and growth orientated. The popular press, on the
other hand, often defines the term as starting and operating new ventures, leading to the conclusion that, “the entrepreneur is not a fixed state of existence;
rather entrepreneurship is a role that individuals undertake to create organizations.” The Schumpeterian entrepreneur recognizes and initiates (possible)
changes in the society, and in doing so he/she creates a multi-linked dynamic process. To act with confidence beyond the range of familiar beacons and to
overcome that resistance requires aptitudes that are present in only a small fraction of the population and that define the entrepreneurial type as well as the
entrepreneurial function. This function does not essentially consist in either inventing anything or otherwise creating the conditions, which the enterprise
exploits. It consists in getting things done. Entrepreneurial behavior thus described that change the established pattern. Changing established patterns of
behavior through entrepreneurial activity rather than as continuous occurrence is mediated through ‘swarms’ or momentary events. Enterprise or
‘entrepreneurship’ as it is sometimes called is a slippery concept. Not easy to work into formal economic analysis, because it is so closely associated with the
temperament or personal qualities of individuals.
KNOWLEDGE-BASED ECONOMY
The increasing recognition by policy makers and academics of the importance of the emerging “knowledge-based economy” for future output and employment
growth has yet to be reflected in any policy action. Thus, the simple comparison, popular in many policy circles in the 1980s, of the United States’ impressive and
Europe’s poor, experience in employment creation in the 1970s and 1980s, is now being complemented by trends in employment growth by educational
category and accompanying earnings. The evidence suggests that during the 1980s all the advanced countries appear to be confronted with a reduction, and in
some cases even a collapse in the demand for unskilled labor, partly as a result of technical change, partly as a result of their opening up to international trade.
On the one hand, the move towards an information society is likely to lead to substantial changes in the demand for various sorts of educational and skill
requirements. On the other hand, it is highly likely that large parts of the unskilled labor force will become excluded.
Information infrastructures provide the foundations for the exchange of goods and services in the markets of the future and generate “electronic commercial”
opportunities that will affect all business practices. The development, design and availability of these new instruments will shape social and economic life.
Furthermore, as a result of increased globalization, information and communication technologies stimulate world-wide competition among firms. The rate of
innovation accelerates in specific areas while the emergence of new families of technology and products may be slow due to weak aggregate demand raising
macro – as well as microeconomic challenges closely associated with the need for de- and re-regulation of new product markets, particularly in the service
sectors. Intra – firm relationships are affected by the intensified competition and the need for accelerating innovation and rapid adjustment to new market
trends.
The overall long-term tendency towards a more strongly knowledge-based economy, in terms of both input proportions and the nature of the output, is
accelerating. At the firm level, this is reflected in the fact that the shift in the demand for skills is strongest in firms introducing information technology. The
dramatic decrease in the cost of obtaining data and information produces a shock effect, while the decline in the price or information is at the core of a new
wave of productivity growth. This is especially true for organizations and institutions strongly involved in the production, use and distribution of knowledge
(education, research, development) but also firms as learning organizations. The term ‘knowledge-based economy’ founded on two aspects:
1. Knowledge and technology are the main drives of the economic growth, and
2. The high-technology sectors are the leading contributors to national output and employment.
TECHNOLOGY AND INNOVATION
Technological innovation is vital for firm’s competitive advantage. One of the features of the New Economy is that in the transformation process, the major input
is intellectual property: knowledge, research, information and design. These inputs have supplanted (in value) the material inputs required to build physical
units. Therefore, there is no doubt that in ‘knowledge-based economy’ essential role plays the systematic application of the scientific knowledge to new product,
process or service. The intellectual property and technology are the foundations of the economic development.
Five principles for managing technology and innovation: First, there must be a need, or demand, for the technology. Without this need driving the process, there
is no reason for technological innovation to occur. Second, meeting the need must be theoretically possible, and the knowledge to do so must be available from
basic science. Third, we must be able to convert the scientific knowledge into practice in both engineering and economic terms. Fourth, the funding, skilled
labor, time, space, and other resources needed to develop the technology must be available. Finally, entrepreneurial initiative is needed to identify and pull all
the necessary elements together.
Five approaches for the evolution of innovation management in a chronological order of development:
1. Technology push theory of engineering: According to this theory, innovation is derived from science. New or improved products and processes are brought
into the light of existence as a result of an invention or research development, for which an application has to be found.
2. Market pull theory of innovation: In this theory, innovation is derived from market needs. New or improved products and processes arise as a result of the
company’s marketing effort which involves understanding their customers’ problems and identifiable unsatisfied needs.
3. Chain-link theories: This approach tackles innovation derived from linkages between actors in markets. It gives attention to linkages between research and
the market via engineering, production, technology development, marketing and sales.
4. Systems of innovation: At the end of the 1980s and during the 1990s, a technological networks theory of innovation management was developed by a new
group of experts under the label of “systems of innovation”. This view stressed the importance of sources of information that are external to the firm:
clients, suppliers, consultants, government laboratories, government agencies, universities, etc.
5. Social network theory of innovation: This theory points out the growing importance of knowledge as a production factor. According to this theory,
innovation is derived from social networks. Knowledge-based innovation requires not one but many kinds of knowledge. Also, it requires the convergence
of many different kings of knowledge retained by a variety of actors.
KNOWLEDGE – BASED ECONOMY: A CHANGING ENVIRONMENT
In the modern world economy, significant changes have taken place: economies all over the world are seeking for the most appropriate and effective ways that
could provide them with the strengths and opportunities necessary to obtain and sustain a competitive advantage over their rivals. In this competitiveness race,
improvement of the processes used and commodities produced is of great importance for economic growth, in the face of uncertainties generated by domestic
and international competition. Changes in the pattern of economic growth and productivity have been interpreted as a movement towards knowledge-based
economy. Currently, output and employment are expanding fast in high-technology industries, as well as in knowledge-based services. More resources are spent
on the production and development of new technologies, in particular on information and communication technology. At the same time, major shifts are taking
place in the labor market in particular the increased demand for skilled labor. Globalization and worldwide competition has shifted the comparative advantage
of economies towards the factor of knowledge and innovation, where productivity based on the endogenous development capabilities plays a rather important
role, as far as growth and competitiveness enhancement are concerned. These changing conditions have imposed a great number of challenges in every sector
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of economic activity. Corporations seek to find new resources and opportunities to develop their capabilities and become more competitive than their rivals.
Firms in every industry, and especially those related with high technology, have found themselves struggling to acquire and accumulate new knowledge, apply it
to their business, and then profitably commercialize the newly produced technology.
In the modern knowledge economy, growth depends extensively on the presence or the formation of a network and environment favorable to innovation, which
is based on the endogenous development capabilities. Even though the firm-specific factors are important determinants of innovation activity, technological
opportunities and favorable entrepreneurial environment have a positive effect on innovation activity, as well. Technological change, innovation and technology
creation and diffusion are an important factor to economic progress. Developments in the theory of economic growth have renewed the interest for the role of
innovation in the development process, underlining the interaction between the investment in innovative activities, technological change and economic growth.
Technology and innovation play an important role in economic growth and technology has become one of the most important factors in the models of growth.
The role on innovation is multiple: as motive force it directs the enterprises to ambitious and long-term objectives, it leads to the renewal of methods of
production, as well as industrial structures and the appearance of new sectors of economic activity.
ECONOMIC DEVELOPMENT AND INNOVATION: A MULTI – FOLD RELATIONSHIP
Innovation refers to the creation and successful market implementation of a new or improved product or production process and it involves two kinds of action,
a) Research, namely the production of information and b) Development, namely the embodiment of the acquired information into new commodities and
processes. The Research & Development (R&D) process as a whole is the non-commercial generation of scientific knowledge and its transformation into
commercial technology engaged in the business procedures of the organization, in order to meet the market needs and lead to financial success. In business
terms, innovation includes ‘the search for, discovery, development, improvement, adoption, commercialization of new processes, new products, and new
organizational structures and procedures and it is a process that involves uncertainty, risk taking, probing, experimenting, and testing. Above all, innovation is a
cumulative activity that involves building on what went before, whether it is inside the organization or outside the organization. Innovative actions are
considered to be rather important to economic growth, development and welfare. Firstly, they stimulate investments which introduce new commodities and
processes, which improve the living standards of the society. Moreover, they lead to new developments, which increase the comparative advantage of an
economy and affect positively the trade performance and competitiveness of a country worldwide. These effects result in a greater level of economic growth.
ENTREPRENEURSHIP AND INNOVATION: ANOTHER MULTI-FOLD RELATIONSHIP
Innovation is important to an individual firm for two main elements: Firstly, a corporation, which undertakes R&D programs, acquires new information and
knowledge to embody in the new commodities, as well as new production and marketing processes, ready to be employed in product and process innovation. As
a result, through innovation, a company is able to develop directly new products and processes and bring them to the market acquiring an advantage over its
competitors. Secondly, it can enhance the ability of the firm to develop and maintain capabilities to absorb and expand technology information available by
external sources, and identify, assimilate and exploit new knowledge and technology produced elsewhere. There are two reasons, which pursue companies to
engage in investments that augment their R&D activities:
The first objective, which companies try to achieve, is the reduction of the production cost of their current product set and the development of new products,
which can contribute to the firm’s profitability. This incentive would be applied even if the firm was not in an innovation race against its rivals, and even if it was
to take R&D investment decisions in isolation. This incentive is called ‘the stand-alone’ or ‘profit’ incentive to R&D investments. The second objective is the
provision of the firm with a strategic advantage over its competitors by either increasing its market share relative to its rivals, or introducing a competitive threat
to them, through the development of a better process or product, so the firm may have the opportunity to foreclose the market and reap the highest amount of
benefits. This incentive is called ‘competitive’ or ‘replacement threat’ incentive as the desire of the firm to be the first innovator in an industry and not to be
replaced by its rivals in its current market position, and emphasized to the difference between the firm’s profits if it innovates before its competitors, and its
profits if one of its competitors innovated first.
In the modern knowledge economy, growth depends extensively on the presence or the formation of an environment favorable to innovation, which is based on
the endogenous development capabilities. Even though the firm-specific factors are important determinants of innovation activity, technological opportunities
and favorable entrepreneurial environment have a positive effect on innovation activity, as well and entrepreneurship is generally considered to be of great
importance for economic development as a source of economic growth by a great number of researchers. Entrepreneurship is a process of exploiting
opportunities that exist in the environment or that are created through innovation in order to create value. Entrepreneurship refers to activities undertaken in
order to convert ideas into economic opportunities. These activities include factors such as opportunity seeking, risk and uncertainty bearing, innovativeness,
coordination, capital supply, decision making, ownership and resource allocation. Then, entrepreneurship focuses on creating the adequate economic
opportunities in order to introduce new ideas in the market. In accordance to these characteristics, entrepreneurship could be mainly considered to be the
exploitation of technological opportunities by profit seeking agents, process which actually leads to economic growth and development.
Innovation is characterized by two features: uncertainty (risks) and accumulation. As far as the innovation process is concerned, the necessary information is
asymmetrically available, which makes it rather difficult and costly to collect and exploit it. Moreover, the necessary inputs, as well as their attributes are
difficult to be defined and, as a consequence, it becomes, also difficult to evaluate their potential effects and results. Furthermore, innovation process requires
cooperation and collaboration of a great number of different actors, which, to a large extent, incorporates high transaction cost and high uncertainty level.
Because of these qualities of knowledge, namely uncertainty, asymmetries and high transactions cost – entrepreneurship becomes more important in a
knowledge-based economy, since entrepreneurship activities are closely related with uncertainty, risk, investment, return and profits and of course with
innovative actions. Success in R&D does not lead automatically in financial business success. New commodities and processes do no yield any benefits, unless
they are commercialized. Profitable commercialization requires that the innovative firm had a blend of all the appropriate complementary assets, services, and
technologies, which can transform the generated knowledge into commodities produced and sold on competitive terms.
The relationship between entrepreneurial culture and economic Growth is considered to be rather strong and entrepreneurial economies are more innovative
and subsequently grow faster and since early, differences in economic success have been related to the presence or lack of entrepreneurial activities. More
specifically, entrepreneurs are important for the growth of firms since they provide the vision and imagination necessary to carry out opportunistic expansion. It
is claimed that entrepreneurship generates innovations. On the other hand, as mentioned before, due to information asymmetries, uncertainty and high cost
features of innovation, entrepreneurship becomes more important in a modern economy since it may provide one of the mechanisms by which new economic
knowledge is disseminated into different networks. Entrepreneurship generates growth because it serves as a link between innovation and change. Thus, by
serving as a vehicle for knowledge transmission and spillover, entrepreneurship plays a key role in the link between knowledge and growth. On the other hand,
entrepreneurship is the factor which energizes and combines the production functions in order to create and disseminate innovations, which leads to
improvements in productivity and economic development.
CONCLUSION
The importance of entrepreneurship and innovation activities has been emphasized by economic literature. Much of the recent work on economic growth can
be viewed as refining the basic economic insights of classical economists. The recent debate on the determinants of output growth has concentrated mainly on
the role of knowledge, typically produced by a specific sector of the economy, and furthermore in the role of entrepreneurship and the implications on
economic growth. The main themes of this paper are: Knowledge Economy, Innovation Activities, and the Role of Entrepreneurship and the main questions is:
How can we estimate the effects of entrepreneurship and innovation activities in the knowledge-based economy? The Role of Entrepreneurship and Innovation
in the Context of Knowledge Economy are highlighted in the paper.
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REFERENCES
1.
2.
3.
4.
5.
6.
7.
8.
Beugelsdijk, S. (2004), Entrepreneurial Culture, Regional Innovativeness and Economic Growth, Proceedings of ERSA 2004 Conference, Porto.
Bienayme, A. (1986), The Dynamics of Innovation, International Journal of Technology Management Volume I, pp. 133-159.
Dunning, J. (Ed.) (2000), Regions, Globalization & the Knowledge Based Economy. Oxford: Oxford University Press.
Kitsos, C. P., Korres, G., Hadjidema, S. (2005), Inside the Knowledge Based Economy: Looking for the effects of innovation and entrepreneurship activities
on regional growth, International Journal of Knowledge, Culture and Change Management.
Korres, G. (2010), Women Participation and Innovative Activities, Delhi: The Women Press, pp. 117-162.
OECD (1996), The Knowledge Based Economy, OECD, Paris. STI Outlook.
Wennekers, S. and Thurik, R. (1999), Linking Entrepreneurship and Economic Growth, Small Business Economics 13: 27-55.
World Bank (1998), Knowledge for Development, World Development Report, New York: Oxford University Press.
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A STUDY ON SAVING AND INVESTMENT METHODS OF SCHOOL TEACHERS IN BIDAR TALUKA,
KARNATAKA
SANGASHETTY SHETKAR
ASST. PROFESSOR
DEPARTMENT OF COMMERCE & MANAGEMENT
GOVERNMENT FIRST GRADE COLLEGE
MANAHALLI
ABSTRACT
The present paper enlightens the saving and investment methods adopted by school teacher. The study carried in the month February 2013 covering Bidar Taluka
of Karnataka state. Mainly five objectives were structured and with the help of questionnaire method information were collected from the Teachers of the
Government, Aided, and Private primary and high schools. The collected information tabulated by using simple calculations and presented result by using graphs
and tables.
KEYWORDS
Saving and Investment Methods, Teachers, Bidar.
INTRODUCTION
S
aving is most important to all human being because somewhere I read the person Who is Earning He is not Rich but who is saving money he is called as
rich, basically our study is concern with saving and Investment Methods adopted by school Teachers. the teachers are calculative minded and future is
always Uncertain so for meeting Future know our unknown obligations teachers should save money in certain form i.e. cash in hand ,bank, post office
saving Account ,Insurance ,Gold and land and buildings. Our study focus on school teachers. We considered primary School (Govt, Aided and Private) and High
School (Govt, Aided and Private).
NO OF SCHOOL IN BIDAR DISTRICT
S.no
1
2
3
4
Type of school
Lower Primary
Higher Primary
High School
Total
Schools in Bidar District
706
1178
432
2316
*source www.bidar.nic.in
Schools in Bidar Taluka
169
352
126
647
NO OF TEACHERS IN BIDAR DISTRICT
S.n
1
2
3
Type of School
Teachers in Bidar District Teachers in Bidar Taluka
Primary
10630
3167
Higher primary and high school 3250
823
Total
13880
3990
*source www.Bidar.nic.in
Thus, after studying the no of schools and No of teachers in Bidar district as well as Bidar Taluka. The researcher felt of doing the saving and investment Method
adopted by school teacher in Bidar taluka and here with presented the same data in simple tabular and graphical form.
The main objectives of the paper are to know about the Teachers saving and Investment Methods in Bidar Taluka of Bidar Disrtict of Karnataka State. It hoped
that this study not only helps to the Teachers or Researchers but also to the small investors which have scattered all over the country:
1. To study about the various factors which determine the Savings and Investment Method of School Teacher
2. To analyze the Saving Pattern of School Teacher in Bidar Taluka
3. To evaluate the opinion of the Teacher about the Saving and investment.
4. To study about satisfaction of Teachers with regard to after investment
5. To give suggestions from findings of this study
SCOPE OF THE STUDY
Present study was limited to Bidar Taluka of Bidar district of Karnataka state with specific number of respondents. The study or information was limited to
researcher questionnaire. The research was conducted in one month (February 2013) so in depth study and analyze was limited to time bond.
DATA ANALYSES AND INTERPRETATION
Analysis of all the received data have been presented in simple tabular and graphical form.
S.No
1
2
3
TABLE 1: CATEGORY OF SCHOOL
Catagory of school No of respondents
Govt
10
Aided
10
Private
10
Total
30
%
33
33
34
100
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Source: Field work
Table No. 1 Represents the type of School 34%, 33% and 33% respectively Private, Govt and Aided schools
TABLE NO 2: TYPE OF SCHOOL WHERE TEACHER WORKING
Sl No Description
No of Resp %
1
Primary school 15
50
2
Middle school
05
17
3
High school
10
33
Total
30
100
60
50
40
30
20
10
0
Primary school
Middle school
High school
Source: Field work
Table No 2. Cleared that 50% of the respondents are Primary Teacher, 33% of the respondents are high school Teachers and lastly 17% of the
th respondents are
middle school teachers.
TABLE NO 3:
3 TOTAL ANNUAL INCOME OF THE RESPONDENTS
Sl No Description
No of Resp Percentage
1
Below Rs1,00,000
10
33
2
1,00,001-2,00,000 10
33
3
2,00,001-3,00,000 08
27
4
Above 3,00,000
02
07
Total
30
100
Total Annual Income of the respondent
Above 3,00,000
7%
2,00,001-3,00,000
27%
Below Rs1,00,000
33%
Below Rs1,00,000
1,00,001-2,00,000
2,00,001-3,00,000
Above 3,00,000
1,00,001-2,00,000
33%
Source: Field work
Out of 100% of respondents, 93% of respondents Annual income is less than Rs 3,00,000 and only 7% of respondents Annual income
inco
is more than Rs 3,00,000
(Table No.3)
TABLE NO 4:
4 TOTAL ANNUAL SAVINGS OF THE RESPONDENTS
Sl No Description
1
Below 50,000 25
83
2
Above 50,001 05
17
Total
30
100
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Total Annual Sav ings of the Re sponde nt
Above 50,001
17%
Below 50,000
Above 50,001
Below 50,000
83%
Source: Field work
It is cleared from Table No 4 that 83% of school Teachers saving less than Rs 50,000 per annuam and only 17% teachers saving more than Rs.50,001
TABLE NO 5: INVESTMENT OF RESPONDENTS
Sl No Description
1
Cash in hand 08
27
2
Post office
06
20
3
Bank
08
27
4
Chit fund
06
20
5
Mutual fund
02
06
Total
30
100
Investment of Respondent
Chit f und
20%
Mutual f und
6%
Cash in hand
27%
Cash in hand
Post of f ice
Bank
Chit f und
Post of f ice
20%
Bank
27%
Mutual f und
Source: Field work
It is cleared from Table No 5 that 27% of respondents selected Bank and Cash in hand is best investment option. Where as 20% of respondents choose chit fund
and Post office investment is good and lastly only 6% of respondent choose mutual fund and share for investment.
TABLE NO 6: REASONS FOR SELECTING INVESTMENT
S.no
Description
1
High interest
03
10
2
More safety
15
50
3
Good customer service 03
10
4
Simple procedure
08
27
5
Tax saving
01
03
Total
30
100
Reasons For Selecting Investment
Simple procedure
27%
Tax saving High interest
3%
10%
High interest
More safety
Good customer service
Good customer
service
10%
More safety
50%
Simple procedure
Tax saving
Source: Field work
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Table No 6. Shows that 50% of the respondents are selected particular investment for the sake of safty,37% of respondents invested on the base of simple
procedure of investment and good timely customer service after investment and 13% respondent invested to earn high interest as well to save tax.
TABLE NO 7: PURPOSE OF INVESTMENT
Description
Children Education
20
67
Marriage
04
13
Tax savings
02
07
Security after retirement 02
06
Re sale purpose
02
07
30
100
Sl No
1
2
3
4
5
Total
Purpose of investment
6%
7%
ChildrenEducation
7%
Marriage
Tax savings
13%
Security after retirement
67%
Re sale purpose
Source: Field work
Figures in Table No 7. Shows that 67% of respondents invested for the sake of their children education purpose only 13% respondents are invested for their
children Marriage purpose and 21% respondents invested for to save tax, re sale purpose and security after retirement.
TABLE NO 8: WHO INFLUENCE FOR INVESTMENT
#
1
2
3
Description
Self
Husband/Wife
Father/Mother
Total
No of Resp
25
03
02
30
Percentage
83
10
07
100
Influence of Investment
10%
7%
Self
Husband/Wife
Father/Mother
83%
Source: Field work
From the Table No 8. It is clear that 83% of the respondents take self decision to where to invest,10% respondents take help from spouse and only 7% of
respondents take guidence from their parents .
TABLE NO 9: DURATION PERIOD OF INVESTMENT
Sl No Description
1
Less than 1 year 08
27
2
1-2 years
06
20
3
2-3 years
02
07
4
3-6 years
04
13
5
Above 6years
10
33
Total
30
100
Period of Investment
Less than 1 year
27%
Above 6years
33%
Less than 1 year
1-2 years
2-3 years
3-6 years
13%
2-3 years
7%
1-2 years
20%
3-6 years
Above 6years
Source: Field work
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From the above table and graph, we conclude that 33% of respondents invest in long period i.e more than 6 years where as 77% responds are more interested in
short term investment that is less than 6 years.
TABLE 10: RETURN ON INVESTMENT
Sl No
1
2
3
4
Description
Below 5 %
6-10 %
11-15 %
Above 15%
Total
No of Resp
08
10
07
05
30
Percentage
27
33
23
17
100
Return On Investment
Above 15%
17%
Below 5 %
27%
Below 5 %
6-10 %
11-15 %
11-15 %
23%
Above 15%
6-10 %
33%
Source: Field work
Table No 10 33% respondents satisfy with only 10% of rate of return ,23% respondents expect rate of return on investment is less than 15% ,and 17%
respondents want 15% rate of return on investment lastly only 27% respondents are expect less then 5% rate of return on investment.
FINDINGS AND SUGGESTIONS OF THE STUDY
1.
2.
3.
4.
5.
6.
7.
8.
Cleared that 50% of the respondents are Primary Teacher ,33% of the respondents are high school Teachers and lastly 17% of the respondents are
middle school teachers .
93% of respondent’s Annual income is less than Rs 3,00,000 and only 7% of respondents annual income is more than Rs 3,00,0001
83% of school Teachers saving less than Rs 50,000 per Annuam and only 17% teachers saving more than Rs.50,001.
It is observed that 56% of respondents selected Bank and Cash in hand is best investment option. Where as 40% of respondents choose chit fund and Post
office investment is good and lastly only 6% of respondent choose mutual fund and share for investment.
It is clear from the study 67% of respondents invested for the sake of their children Education purpose only 13% respondents are invested for their
children marriage purpose.
83% of the respondents take self decision to where to invest, 17% of respondents take other help for investment decision
33% of respondents invest in long period i.e more than 6 years where as 77% responds are interested in short term investment that is less than 6 years
56% respondents satisfy with less than15% of rate of return and 44% of respondents want Less than 15% rate of return on investment.
SUGGESTIONS
The above study has given clear picture regarding the savings and investment method adopted by school teachers in Bidar taluka of Bidar district of Karnataka
providing sufficient statistical figures and graphs. After studying above all as a researcher can I suggest the following points:
1. Teachers are less aware of mutual funds and shares training should be given
2. Teachers should increase their saving in chit fund ,mutual fund and shares because they give more return than bank and post office
3. Teachers should take export advise for investment for batter return.
4. Teacher should invest more in long term to gain
CONCLUSION
The above study conducted to identify the saving and Investment method adopted by School teachers in Bidar taluka of Bidar District of Karnataka State. The
study revealed the various aspects of teachers savings and investment It is clearly understood from the study that, there is direct relation between the teacher
income and saving The study also focuses on the factors influencing saving of the teacher and they give first priority to safety, and easy availability money when
they needed lastly return on investment
REFERENCES
1. C R Kothari. 2010.Research Methodology, Vishwa Publication, New Delhi
2. Investment Management By Dr. V A Avadani
WEBSITE
3. www.Bidar.nic.in.com
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USE OF INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) PRODUCTS AND SERVICES IN
UNIVERSITY LIBRARIES OF TIRUPATI (A.P.): AN ANALYTICAL STUDY
Dr. D. KONAPPA
LIBRARIAN
P.V.K.K INSTITUTE OF TECHNOLOGY
ANANTAPUR
ABSTRACT
The present study has been undertaken with an attempt to evaluate the use of Information and Communication Technology (ICT) products and services made
available in the Tirupati (A.P) University Libraries amongst the P.G students of Science and Technology with special reference to Sri Venkateswara University, Sri
Padmavathi Mahila Viswa Vidyalayam, Acharya N.G. Ranga Agricultural University and Rastriya Sanskrit Vidyapeeth which represent truly population. For that
purpose, survey method has been adopted by the investigators, which comprises of administration of questionnaire, observation of the participants, and
interview of some of the participants for knowing the opinion of the respondents in respect of use of ICT) products and services for their academic and research
activities.
KEYWORDS
ICT, information technology, Internet, P.G students of Science and Technology.
INTRODUCTION
I
n this information explosion era, libraries play a pivotal role in preserving and serving the information requirements of the users. In the present scenario,
libraries are the main facilitators in the scholarly communication system. The communicated information has been selected, acquired, processed, stored
and retrieved by the library for current use and for prosperity. Therefore, the library is a place where books and other sources of information kept for
teaching, learning, research and extension activities.
Owing to ICT enabled products & services, and the availability of online information resources have changed the way the services academic institutions and
libraries now provide to their users. ICT is the integration of computer and communication technology used to process, store and disseminate information. It has
changed the traditional practices of library and information centers in delivery of services to the end users. In the present scenario, users can have access to a
variety of information and digital archives of libraries from any corner. It also helps to users to access, manage, integrate, evaluate, create, and communicate
with other users more easily than ever. The significant developments in ICT have forever changed the way of information gathering, processing and
disseminating. While the ICT products and services processing, storage and retrieval facilities are provided by computers, telecommunication provides the
facilities for the transfer or communication of information.
MEANING OF ICT
The term ‘Information and Communication Technology’ (ICT) first appeared in the mid 1980s and was defined as "All kinds of electronic systems used for
broadcasting telecommunications and mediated communications", with examples including personal computers, video games, cell phones, internet and
electronic payment systems and computer S/W etc.
The ICT is made of computer and communication technology. The computer technology is the tool for storing and processing information in digital form while
communication technology helps us to transfer and disseminate digital information. Additionally ICT means a variety of technological applications in the process
and communication of information. The word ICT is a combination of two words information, communication & technology. Information means knowledge and
technology means use of computer & communication. The term ICT can be defined as “the integration of computing, networking and information processing
technologies and their applications”.
Thus, ICT means a combination of computer applications’ and communication technology for gathering, processing, storing and disseminating of Information.
BENEFITS OF ICT BASED PRODUCTS & SERVICES
The ICT products & services are beneficial for the libraries in the following ways:
1. It provides efficient and accurate services;
2. It saves the time, space, energy and resources;
3. It helps for controlling the tremendous escalation of information;
4. It assist to provide high quality of services and increases the range of services;
5. It has invented the ways of resource sharing by co-operation and co-ordination;
6. It helps for the betterment of library image by providing better services in modern ways.
OBJECTIVES
The primary objective of the present study is to examine the use of ICT products and services in university libraries of Tirupati.
The specific objectives are:
•
To find out the level of use and purpose of using various ICT products and services.
•
To know the frequency of use of ICTs and time spent.
•
To find out the level of expertise of users regarding the use of ICTs.
•
To study the Methods of learning to use ICTs in university libraries.
•
To find out the problems encounter by the users while using ICTs.
SCOPE AND LIMITATIONS OF THE STUDY
The scope of the present study is limited to four Universities, viz. Sri Venkateswara University (SVU), Rastriya Sanskrit Vidyapeeth (RSVP), Sri Padmavathi Mahila
Viswa Vidyalayam (SPMVV) and Acharya N.G. Ranga Agricultural University (ANGRAU). The population of this study consists of P.G. Students of Science and
Technology.
METHODOLOGY
The survey method was adopted for the present study and a questionnaire was used as a data collection tool. The majority of the questions were objective type
designed keeping the objective of the study in view. The questionnaire was distributed to all the P.G. Students of Science and Technology. In total 837
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questionnaires were distributed among the P.G. Students of Science and Technology and responded with the response rate is 636 (75.99%), and asked of fill-up
the same by allowing sufficient time.
DATA ANALYSIS
A total 636 out of 837 regular Postgraduate students are selected four universities they were taken for the study of Tirupati, and responded with the response
rate is 75.99%, which is presented in Table 1.
TABLE 1: DISTRIBUTION OF QUESTIONNAIRES AND RESPONSES
S.No Universities PG students Distributed Received Percentage
1
SVU
1856
372
256
68.82
2
RSVP
524
104
87
83.65
3
SPMVV
981
196
171
87.24
4
ANGRAU
827
165
122
73.94
Total
4188
837
636
75.99
As already noted, the total sample of users covered in the study is 636, comprising 75.99% postgraduate students. University wise 87.24% of the Sri Padmavathi
Mahila Viswa Vidyalayam, 83.65% of the Rastriya Sanskrit Vidyapeeth 73.94% of the Acharya N.G. Ranga Agricultural University and remaining 68.82% Sri
Venkateswara University postgraduate members.
TABLE 2: CLASSIFICATION OF RESPONDENTS BY SEX
S.No Universities Male
Female
Total
No. %
No. %
No. %
1
SVU
164 64.06 92
35.94 256 40.25
2
RSVP
56
64.37 31
35.63 87
13.68
3
SPMVV
0
0.00
171 100.0 171 26.89
4
ANGRAU
83
68.03 39
31.97 122 19.18
Total
303 47.64 333 52.36 636 100
Hence this result shows the sex wise distribution of respondents. Of the total 636 respondents surveyed, 303 (47.64%) are male and about 333 (52.36%)
respondents are female. It can be inferred from table 2 that female respondents dominate over male respondents.
S.No
TABLE 3: LIBRARY COLLECTION DEVELOPMENT OF UNIVERSITY LIBRARIES
S.No Library Collection
SVU
RSVP
SPMVV ANGRAU Total
1
Books
355000 88871 124896 90125
658892
2
Journals
325
175
256
276
1032
3
Thesis/Dissertations
3086
2000
1782
9064
15932
4
Reports/Patents/Standards
251
0
126
30
407
5
CD-ROM Databases
630
11536
12166
6
Microfilm/Microfiches
1500
100
276
1876
7
Audio/Video Sources
675
12
237
924
8
On-line Databases/E-Journals 9000
6000
2965
17965
Total
369837 91158 134203 113996
709194
It is obvious, that the total Book collection of Sri Venkateswara University Library being the highest while University clearly sweeps its strength in Journal
collection by subscribing 325 scientific journals and also 9,000 of online databases (e-Journal) are subscribed.
Sri Venkateswara University Library has collecting the 3086 of theses and dissertations and 675 various Audio/Video Sources. It is pathetic find from the table
that, the CD-ROM products, a major information storage and retrieval sources in the Internet era. Acharya N.G Rang Agricultural University (11,536) and Sri
Padmavathi Mahila Viswa Vidyalam (630) are the only libraries having CD-ROM Information Technology products. Microfilm/Microfiche readers have in Sri
Venkateswara University (1500), Sri Padmavathi Mahila Viswa Vidyalam Library (276) and also Reports/Patents/Standards are collecting of Sri Venkateswara
University (251), Sri Padmavathi Mahila Viswa Vidyalam Library (126) and Rasthriya Sanskrit Vidya Peetha Library (30).
Respondents were asked to express their level of use of various ICT products for their research work. Table 4 shows that 85.55 percent of Sri Venkateswara
University postgraduate science and technology students used computer for their study. On the other hand 78.14% respondents are used computer for their
study. A majority of (75.15 per cent) used their personal Laptops. Followed by 64.1% of the respondents are used Internet. As far as various application software
are concerned, it was found that while 58.33% of the respondents are used MS Word, 50.63% MS PowerPoint, and 47.80% MS Excel. Only 35.85% of the
respondents are use printers. It is interesting to note that 30.35% and 25.16 of the respondents are used DVD/CD/Pen Drive and Scanner.
ICT Products
1
2
3
4
5
6
7
8
9
Computer
Laptop
Internet
MS-Word
MS-Power Point
MS-Excel
Printer
Scanner
DVD/CD/Pen Drive
No.
219
209
164
178
115
112
79
56
67
TABLE 4: USE OF ICT PRODUCTS
SVU
RSVP
SPMVV
% No.
% No.
%
85.55
65 74.71 126 73.68
81.64
69 79.31 132 77.19
64.06
56 64.37 121 70.76
69.53
43 49.43
89 52.05
44.92
47 54.02
91 53.22
43.75
49 56.32
91 53.22
30.86
37 42.53
68 39.77
21.88
22 25.29
44 25.73
26.17
36 41.38
59 34.50
ANGRAU
No.
%
87 71.31
68 55.74
68 55.74
61 50.00
69 56.56
52 42.62
44 36.07
38 31.15
31 25.41
No.
497
478
409
371
322
304
228
160
193
Total
%
78.14
75.16
64.31
58.33
50.63
47.80
35.85
25.16
30.35
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S.No
S.No
TABLE 5: PURPOSE OF USING ICT PRODUCTS AND SERVICES
Purposes
SVU
RSVP
SPMVV
ANGRAU
Total
No.
% No.
% No.
% No.
% No.
%
1
Electronic books 157 61.33
52 59.77
96 56.14
66 54.10 371 58.33
2
Electronic journals 205 80.08
71 81.61 132 77.19
93 76.23 501 78.77
3
E-mail 215 83.98
72 82.76 136 79.53
99 81.15 522 82.08
4
Ongoing study work 162 63.28
56 64.37 121 70.76
68 55.74 407 63.99
5
Preparation of notes 243 94.92
79 90.80 162 94.74 109 89.34 593 93.24
6
Project/Dissertation 126 49.22
42 48.28
89 52.05
57 46.72 314 49.37
7 Writing a article for publication
46 17.97
17 19.54
45 26.32
59 48.36 167 26.26
8
For seminars
62 24.22
19 21.84
39 22.81
64 52.46 184 28.93
9
Search Web OPAC/OPAC
56 21.88
22 25.29
44 25.73
38 31.15 160 25.16
10
Curriculum design
58 22.66
16 18.39
19 11.11
21 17.21 114 17.92
Table 5 describes that Majority of the respondents (93.24%) reported that they use ICT product and services for the purpose of Preparation of notes. 82.08% of
respondents are used e-mail; 78.77 per cent for electronic journals; 63.99 per cent to ongoing study work; 58.33 per cent for electronic books. Also 49.37% of
the respondent’s use of ICT products and services for their “Project/Dissertation work” and 28.93% of the respondents are using for the purpose of “Attending
seminars”. About 26.26% of the respondents use ICT products and services for the purpose of “Writing a article for publication” and only 25.16% of the
respondents use the same for “Web OPAC/OPAC”.
The less used services among PG students of science and technology were Curriculum design. The investigator feels that the PG students of science and
technology might not have got proper training/guidance and assistance from the staffs/librarians which is very necessary for the effective use of ICT products
and services.
TABLE 6: FREQUENCY OF USE OF COMPUTER AND INTERNET
Frequency
SVU
RSVP
SPMVV
ANGRAU
Total
No.
% No.
% No.
% No.
% No.
%
1
Everyday
88 34.38
39 44.83
59 34.50
34 27.87 220 34.59
2
Twice a week
57 22.27
21 24.14
41 23.98
37 30.33 156 24.53
3
Once in a week
46 17.97
12 13.79
33 19.30
26 21.31 117 18.40
4
Twice a month
37 14.45
8
9.20
24 14.04
14 11.48
83 13.05
5 Once in a month
23
8.98
5
5.75
11
6.43
7
5.74
46
7.23
6
Occasionally
5
1.95
2
2.30
3
1.75
4
3.28
14
2.20
Total 256
100
87
100 171
100 122
100 636
100
Table 6 shows that the majority of 220 (34.59%) respondents are use of ICTs of an everyday. Also 156 (24.53%) of the respondents use ICTs on twice a week and
117 (18.40%) of the respondents are using the ICTs once in a week, 83 (13.05%) of respondents are use ICTs on twice a month and 46 (7.23%) of use it once in a
month. Only 14 (2.20%) of the respondents respectively use it occasionally.
S.No
S.No
TABLE 7: LOCATION OF INTERNET USE FOR ICTs
Location
SVU
RSVP
SPMVV
ANGRAU
Total
No.
% No.
% No.
% No.
% No.
%
1
Library 219 85.55
73 83.91 137 80.12 111 90.98 540 84.91
2 Computer centre in campus 176 68.75
43 49.43
89 52.05
61 50.00 369 58.02
3
Department
79 30.86
37 42.53
68 39.77
44 36.07 228 35.85
4
Other places
95 37.11
49 56.32
91 53.22
39 31.97 274 43.08
Table 7 indicates that, Majority (84.91%) of the respondents indicated that they have access to the internet and use it for ICTs also access it from library. While
58.02% access the ICTs through the facility at campus computer centre. The respondents who choose ‘other places’ mainly referred to it as their home and
private cyber cafe accessed internets from this location were 43.08%. Only 35.85% of the respondents indicated that they use it from their respective
departments.
TABLE 8: EXPERTISE IN USING ICTs
S.No Level of Expertise SVU
RSVP
SPMVV
ANGRAU
Total
No. %
No. %
No. %
No. %
No. %
1
Very expert
51
19.92 14
16.09 36
21.05 30
24.59 131 20.60
2
Expert
57
22.27 21
24.14 41
23.98 37
30.33 156 24.53
3
Average user
88
34.38 39
44.83 59
34.50 34
27.87 220 34.59
4
Poor
37
14.45 8
9.20
24
14.04 14
11.48 83
13.05
5
Very Poor
23
8.98
5
5.75
11
6.43
7
5.74
46
7.23
Total
256 100
87
100
171 100
122 100
636 100
Table 8 shows that only 20.60% of respondents indicated that they are very expert in using ICTs, while 24.53% of respondents indicated that they are expert
users of ICT. 34.59% respondents indicated that they are average users of ICTs.
The reasons for less expertise in using ICTs are that a majority of the PG students of science and technology do not have a formal knowledge or a computer
training programme.
TABLE 9: METHODS OF LEARNING TO USE ICTs
Methods
SVU
RSVP
SPMVV
ANGRAU
Total
No.
% No.
% No.
% No.
% No.
%
1
Self study 209 81.64
69 79.31 132 77.19
68 55.74 478 75.16
2 With the assistance of colleagues/friends 221 86.33
65 74.71 126 73.68
87 71.31 499 78.46
3
Courses offered by institution/college 112 43.75
49 56.32
91 53.22
52 42.62 304 47.80
4
By attending formal courses
98 38.28
41 47.13
72 42.11
63 51.64 274 43.08
5
Guidance from library staff
26 10.16
12 13.79
19 11.11
21 17.21
78 12.26
According to their responses, it was found that learning with the assistance of colleagues/friends (78.46%) and Self study (75.16%) is the most popular methods
of electronic information sources learning among the respondents. It was followed by 47.80% of the respondents who learnt to use electronic information
sources through courses offered by their institutions. Another 43.08% respondents learnt by attending formal course, either paid or through official training.
Guidance or skills offered by the library (12.26%) play a minor role. That does not mean that support from the library is regarded as unimportant.
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S.No
TABLE 10: PREFERRED SEARCH ENGINES
S.No Search Engine SVU
RSVP
SPMVV
ANGRAU
Total
No. %
No. %
No. %
No. %
No. %
1
Google
237 92.58 81
93.10 162 94.74 109 89.34 589 92.61
2
Firefox
168 65.63 56
64.37 121 70.76 68
55.74 413 64.94
3
Yahoo!
116 45.31 42
48.28 89
52.05 57
46.72 304 47.80
4
AltaVista
37
14.45 8
9.20
24
14.04 14
11.48 83
13.05
5
MSN
23
8.98
5
5.75
11
6.43
7
5.74
46
7.23
Regarding the use of search engines respondents were asked to indicate multiple answers according to their use. Table 4 shows that 92.61% of respondents are
use Google. Followed by 64.94% of respondents also use Firefox. It is found that 47.80%of respondents use Yahoo!, while 13.05% AltaVista, and only 7.23%
MSN.
TABLE 11: PROBLEMS ENCOUNTER WHILE USING ICTs
Items
SVU
RSVP
SPMVV
ANGRAU
Total
No.
%
No.
%
No.
%
No.
%
No.
%
1
Too few computers with internet facilities 219 85.55 65
74.71 126 73.68 87
71.31 497 78.14
2
Incessant power outage
209 81.64 69
79.31 132 77.19 68
55.74 478 75.16
3
Slow internet connectivity
164 64.06 56
64.37 121 70.76 68
55.74 409 64.31
4
Non-connectivity
56
21.88 22
25.29 44
25.73 38
31.15 160 25.16
5
Inability to use computer
115 44.92 47
54.02 91
53.22 69
56.56 322 50.63
6
Selecting search terms
112 43.75 49
56.32 91
53.22 52
42.62 304 47.80
7
Finding relevant information
79
30.86 37
42.53 68
39.77 44
36.07 228 35.85
8
Lack of ICT skills
178 69.53 43
49.43 89
52.05 61
50.00 371 58.33
The above table showed that few computers with internet facilities were got 78.14% and also incessant power outage (75.16%) highest among the problems
encountered by the respondents. More than half of the respondents (64.31% and 58.33%) are indicated to have slow internet connectivity and Lack of IT skills.
This was followed by incessant power outage which was ranked at 910 (41.61%) while lack of ICT skills was ranked lowest at 77 (3.52%). Similarly, 50.63% of the
respondents are encounter the problem of Inability to use computer, while 47.80% of the respondents are encounter the problem of selecting search terms.
35.85% and 25.16% of the respondents are encountering the problem of “Finding relevant information” and “Non-connectivity of internet” respectively.
TABLE 12: SATISFACTION LEVEL TO USE OF ICTs
Satisfaction level to use of ICTs SVU
RSVP
SPMVV
ANGRAU
Total
No. %
No. %
No. %
No. %
No. %
1
Highly satisfied
42
16.41 9
10.34 21
12.28 12
9.84
84
13.21
2
Satisfied
57
22.27 16
18.39 37
21.64 32
26.23 142 22.33
3
Neutral
113 44.14 45
51.72 87
50.88 64
52.46 309 48.58
4
Dissatisfied
26
10.16 14
16.09 17
9.94
9
7.38
66
10.38
5
Highly dissatisfied
18
7.03
3
3.45
9
5.26
5
4.10
35
5.50
Total
256 100
87
100
171 100
122 100
636 100
The respondents were asked to rate their overall satisfaction with the level of access to ICTs use on a five-point scale from 1 (Highly satisfied) to 5 (Highly
dissatisfied).
The respondents are overwhelmingly positive about the level of access for the use of electronic information sources. A majority of the (84.12%) indicated they
are moderately to highly satisfied, whereas only 15.88% indicated dissatisfaction. It can be seen from Table 5.13 that 13.21% of the respondents indicated that
highly satisfied with the access they have to use ICTs. Followed by 22.33% of respondents were satisfied with the use of ICT products and services. Further,
nearly half of the respondents (48.58%) were moderately satisfied whereas only 10.38% were dissatisfied and 5.50% of respondents were highly dissatisfied with
the access they are having in using ICT products and services in their universities.
S.No
FINDINGS
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
The total Book collection of Sri Venkateswara University Library being the highest while University clearly sweeps its strength in Journal collection by
subscribing 325 scientific journals and also 9,000 of online databases (e-Journal) are subscribed.
More than seventy percent of the respondents are used computer and their personal Laptops of ICT Products.
Majority of the respondents (93.24%) reported that they use ICT product and services for the purpose of Preparation of notes and 82.08% of respondents
are used e-mail.
It is found that the majority (220) of respondents is use of ICT products and services an everyday.
Majority (84.91%) of the respondents indicated that they have access to the internet and use it for ICTs also access it from library.
The study found that, 34.59% respondents indicated that they are average users of ICTs. The reasons for less expertise in using ICTs are that a majority of
the PG students of science and technology do not have a formal knowledge or a computer training programme.
The survey found that learning with the assistance of colleagues/friends (78.46%) and Self study (75.16%) of the users, most popular methods of electronic
information resources learning among the respondents.
The study found that 92.61% of respondents are use “Google” search engine for browsing the ICT products and services.
It can be inferred from the data that the majority of users do face problems of few computers with internet facilities and incessant power outage.
The respondents are overwhelmingly positive about the level of access for the use of Information and Communication Technology products and services. A
majority of the (84.12%) indicated they are moderately to highly satisfied.
CONCLUSION
The use of information and communication technology (ICT) products and services respondents varied according to their program of study, the need to carry out
postgraduate students to excel in their academic endeavour and versatility in the use of information and communication technologies to search for information.
The current trends in electronic environment, suggest a complete revolution in the status of collection development. As Information and Communication
Technology (ICT) advances, the emphasis of academic libraries has focused upon the intrinsic excellence of collection development suitable to information and
communication technology (ICT) products and services.
Academic libraries are changing very fast by ICT based products and services. The change enforced by ICT, to adoption of products and services of ICT in libraries
are robust indicator of this response. It provides a means for overcoming historically intractable problems of isolation and lack of access to information and
knowledge, crucial impediments to libraries development. The ICT products and services have reshaped the educational landscape by transforming the content
and modes of release of information. Apart from facilitating the global networked ICT, also enhances knowledge creation and innovation.
The present study reveals that information and communication technology (ICT) products and services have a positive impact on library users. The future of the
library and information services at academic libraries depends upon major factors, like, availability of manpower in adequate proportion, which continuously
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keeps updating its ICT skills and determination of higher authorities in allocating appropriate recurring grants to procure, update and maintain ICT infrastructure
and products and services.
REFERENCES
1.
2.
3.
4.
5.
6.
7.
8.
9.
Ahmad Naved and Fatima Nishat, J. (2009). Usage of ICT Products and Services for Research in Social Sciences at Aligarh Muslim University. DESIDOC
Journal of Library &Information Technology, 29(2), p. 25-29.
Ahmad Parvez. (2011). Development in library services with the advent of ICT based products & services: a continuous process. International Journal of
Digital Library Services, 1(2), p. 1-9.
Kamble Ajay. (2011). Usage of ICT Products and Services for Research [Internet]. Version 1. LIS Compendium. 2011 Nov 24. Available from:
http://liscompendium.wordpress.com/article/usage-of-ict-products-and-services-for-20eckkj3x4w7q-1/. (Accessed on 13-06-2013).
Kaur, A. (2000). Internet facility at GNDU: A survey. /In /national Seminar on Academic Libraries in the Modern Era. IASLIC, 4-6 December 2000, Bhopal, p.
119-124.
Koganurmath, M.M., and Jange, S. (1999). Use of Internet by social science research scholars: A study in academic libraries in the Internet era. In National
Convention on Academic Libraries in the Internet Era, INFLIBNET, p.478-483. Ahmedabad.
Konappa, D., Chandran, D and Sreenivasulu, R. (2013). Use of Electronic Information Resources in University Libraries of Tirupati (A.P): An Analytical Study.
58th ILA International Conference on: Next Generation Libraries: New Insights and Universal Access to Knowledge, Karnatak University, Dharwad, February
24-27, 2013, p. 311-319.
Kumbhar, Rajendra. (2009). Use of e-learning in library and information science education. DESIDOC Journal of Library & Information Technology, 29(1), p.
37-41.
Mishra, O.P., Yadava, N. and Bisht, K. 2005. Internet utilization pattern of undergraduate students, /University News/, 43(13), p. 8-12.
Riyasat, Azmi and Fatima, Nishat. (2008). Impact of Information and Communication Technology LIS: major shifts and practices. 6th International CALIBER
University of Allahabad, Allahabad 2008.
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EMOTIONAL INTELLIGENCE AND THINKING STYLE IN ORGANIZATIONS: A COMPARATIVE ANALYSIS
DR. SOUMYA MISHRA
ASST. PROFESSOR
IBCS
S ‘O’ A UNIVERSITY
BHUBANESWAR
ABSTRACT
The study followed a 2x2 factorial design of research taking junior and senior employees from two sectors: industry and service. The sample consisted of 120
employees from L & T and IIPM, Kansbahal. In each subgroup, there were 30 respondents (N=120). The objectives were to assess communication styles,
emotional intelligence level and thinking styles of employees across sectors and levels. Standardized measures were administered. The findings revealed that
employees from industry showed higher degrees of EI than employees of service sector. Age and work experience influenced communication styles, thinking styles
and EI. The senior employees used more of analysis and collaboration as their preferred thinking styles as compared to junior employees. Appraisal of positive
emotions, emotional facilitation and goal-orientedness, and, interpersonal skills and flexibility as EI facets were valued more than the other two EI factors by all
the four subgroups. Junior employees did not use much of imagination as a preferred thinking style in both types of organizations. Correlations indicated a
significant relationship among thinking style, EI and Communication Styles. Employees using more of assertive Communication Style seem to have higher
emotional intelligence and seem to use more of implementation and collaborative thinking style than employees using more of non-assertive and aggressive
communication style. The study implicates that further research could be undertaken using multivariate factorial designs of research to explain and unravel the
dynamics of organizational health and organizational effectiveness.
KEYWORDS
EQ, Thinking Style, Corporate Excellence, Emotion, Emotional Competence.
CONCEPT OF EMOTIONAL INTELLIGENCE
I
n the most literal dictionary sense, emotion is defined as ‘any agitation or disturbance of mind, passion; any vehement or excited mental state’. Emotion
refers to a feeling with its distinctive thoughts, psychological and biological states, and ranges of propensities to act. There are hundreds of emotions,
along with their blends, variations, mutations and nuances. Indeed, there are more subtleties in emotions than there are words to express them. For
example, some of the main emotions with their blends are as follows:
♦ Anger Fury, outrage, resentment, wrath, exasperation, indignation, vexation, acrimony, animosity, annoyance, irritability, hostility and, at the extreme,
pathological hatred and violence.
♦ Sadness Grief, sorrow, cheerlessness, gloom, melancholy, self-pity, loneliness, dejection, despair and pathological severe depression.
♦ Fear Anxiety, apprehension, nervousness, concern, misgiving, wariness, qualm, dread, fright, terror, as a psychopathology, phobia and panic.
♦ Enjoyment Happiness, joy, relief, contentment, bliss, delight, amusement, pride, sensual pleasure, thrill, rapture, gratification, satisfaction, euphoria,
ecstasy and, at the extreme, mania.
♦ Love Acceptance, friendliness, trust, kindness, affinity, devotion, adoration and infatuation.
♦ Surprise Shock, astonishment, amazement and wonder.
♦ Disgust Contempt, disdain, scorn, abhorrence, aversion, distaste and revulsion.
♦ Shame Guilt, embarrassment, chagrin, remorse, humiliation, regret and mortification (Singh, 2001).
‘Emotional Quotient’ (or EQ) is used interchangeably with ‘Emotional Intelligence’. In simple terms, this can be defined as knowing what feels good, what feels
bad, and how to get from bad to good., A more formal academic definition refers to emotional awareness and emotional management skills which provide the
ability to balance emotion and reason so as to maximize long term happiness.
Emotional intelligence includes components like self-awareness, ability to manage moods, motivation, empathy and social skills such as cooperation and
leadership. It is believed that learning difficulties as well as various problems of maladjustment at the workplace have their origin in poorly developed emotional
awareness in early childhood. Emotions enable human beings to respond appropriately to a variety of environmental situations.
The proponents of EQ argue that it is never too late to make changes in your life, or help others do the same or create a culture which is more caring, giving,
supportive and enriching.
Research and experience clearly demonstrate that while some aspects of your personality are fixed, you may choose the way you want to act these out. In other
words, you do not choose your characteristics or many of the events in your life, but you do choose how to react to them. This conclusion may be unpalatable to
some, but inescapable nonetheless; you are responsible for your thoughts, feelings and actions. Your temperament, as is generally believed, is not your destiny.
Just as those attributes which are now labeled as ‘intelligence’ are really an aggregate of the different functions of the brain (or different kinds of cognition),
‘emotional intelligence’ is a combination of patterns, behaviours and kinds of thought.
The good news about emotional intelligence is that, unlike IQ, it can be improved throughout life. In a serendipitous fashion, life offers innumerable chances to
tone your emotional competence. In the normal course of a lifetime, emotional intelligence tends to increase as you learn to be more aware of your moods, to
effectively handle distressing emotions, to listen and empathies. In short, as you become more mature. To a large extent, maturity itself describes this process of
becoming more intelligent about your emotions and your relationships.
Men and women are equal in their ability to increase emotional intelligence. While women tend to be stronger in competencies based on empathy and social
skills, men do better in those based on self regulation. The same study of MBA students revealed that men and women could improve to the same extent,
regardless of where hey started on a given competence.
Have you ever analyzed what makes you think, act and feel the way you do? Which parts of your reaction are habitual (done without conscious thought) and
which parts are intentional? What are you afraid of? The answer could be self awareness, i.e., the recognition of the causes and effects of your feelings and
reaction; self honesty, i.e., the acceptance of your own qualities and faults, experience and emotions, and power; independence, i.e., there cognition of your
rights and responsibilities s a free person. Also, how do you know what is right for you? Can you increase your awareness of your own actions so that you can
see their effects? If you were not afraid, what would you do? Can you live with doing less than what is right? The answer could be delayed gratification, ‘doing
right’ actions even though there may not be any immediate rewards; prioritizing, bringing to the forefront of your mind a ‘check list’ of what is most important
so that you can weigh decisions and actions; managing feelings, using simple techniques like pausing for reflection, whether to act or react; optimism,
recognizing that you have a choice, that you can make a difference, that you are an important part of a living whole; and finally accountability, holding yourself
to high standards and doing what is right, even when it seems hopeless.
EMOTIONAL INTELLIGENCE AT WORK PLACE
What determines professional success? Is it largely intelligence or the skills you possess or is it something else? Perhaps, it is a combination of the two. The
exponents of emotional intelligence are of the view that your emotional make up largely determines your professional success. For example, EQ is at least as
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much a determinant of how far you will succeed, personally and professionally. It is fascinating to see how people with high IQ fail and those with lower
intellectual endowment are a runaway success in their professional lives. There are innumerable such examples in Indian business, politics, academics and
administration. What are the ramifications of EQ for professionals? Clearly in any discussion of emotional intelligence, it is important to identify one of the key
determinants of success in the workplace. Even more significant is the basis on which you must form your own moral compass, both at the workplace and
elsewhere. It is increasingly being recognized that EQ can be applied to an organization’s unique needs. Employees can learn the principles of EQ to become
better team players, be more creative in their work and increase overall productivity. This can be achieved by learning powerful techniques to integrate and
utilize the principles of applied emotional intelligence in the workplace. For instance, learning how to successfully remove obstacles, surmount blocks, resolve
conflicts and deal with any issue that may have prevented you from accomplishing your managerial objectives.
Interestingly, the Indian business community sincerely believes that there is no room for emotions in business. How often you have heard people saying
‘business is done with the brain and not with the heart’. In a meeting of Industries Association, a senior vice president of a successful company was heard saying,
‘emotional approaches to business often result in poor management, low productivity, and sometimes even lockouts. ‘He further explained that the ‘use of the
brain’ is the key to success and professional effectiveness. In India the professional approach can be defined as a non-emotional approach devoid of personal
relations. The time has come to adopt a different perspective of the whole issue so as to keep pace with recent management revolutions. To be successful, you
need to know how you feel about yourself and how others feel about you. This is not as simple as it sounds. Often you do not understand either yourself or
others working in the same organization. To be a professional, you have to learn to do so.
EQ AND LEADERSHIP EFFECTIVENESS
A leader’s singular job is to get results. Despite the abundance of leadership training programmes and ‘expert’ advice available, effective leadership still eludes
many people and organizations. One reason, according to Goleman (1998), is that these experts offer advice based on inference, experience and instinct, and
not on scientific data. On the basis of research covering more than 3,000 executives, Goleman pinpointed leadership behaviours which yield positive results. He
identified six distinct leadership styles; each one arising from different components of emotional intelligence. Each style has a distinct effect on the working
environment of a company, a division, or a team, and in turn on its financial performance. These styles, by name and brief description alone, will resonate with
any one who leads, is led, or does both. For instance, coercive leaders demand immediate compliance. Authoritative leaders mobilize people towards a vision.
Affiliative leaders create emotional bonds and harmony. Democratic leaders build consensus through participation. Pace-setting leaders expect excellence and
self-direction. Coaching leaders develop people for the future.
Goleman observed that leaders who achieved the best results did not necessarily rely on only one leadership style; they used a variety of styles. He further
explained that each styles.
THE IMPORTANCE OF THINKING STYLES
The old proverbial wisdom says – Managers think; workers work. Today, learning organizations focus on knowledge management. While leadership is always
important to corporate performance, current leadership models are more about the responsibility of changing the way in which people ‘think’ and ‘act’ in the
background of an increasingly changing business landscape. A leader has to don the role of a cognitive tuner, a people catalyser, a systems architect, and an
efficacy builder, in order to be a successful navigator through the rocky process of altering mindsets. It is also important to note that success has gone to those
leaders who have created ‘value out of values’. Such leaders have built successful, sustainable and socially responsible organizations by allowing their values to
guide their actions. Ramnarayan (2007) observes that a cognitive tuner has to use thinking as a tool for achieving his/her goal. Thinking makes leaders skilled in
initiating dialogue to both understand prevailing mindsets and make people aware of their mindsets. Thinking styles facilitate the attitudes of the leader to
behave like a systems architect and crate cross-functional linkages in the organization and create new agenda for improvement. In early 90’s, the Tata Steel
made the entire workforce of forty thousand people to change their thinking style to cope with the changing business environment and work culture. A major
change initiative called ASPIRE (Aspirational Initiatives to retain Excellence) was launched to use teams as an instrument and source of innovation in the
company. Not surprisingly, Tata Steel is ranked as the best steel company in the world in 2005. Though the company changed all the components of capability –
skills, systems, structure, strategy, and culture, the heart of the leadership lies in building self-efficacy. Self-efficacy refers to the confidence an individual has in
his or her ability to achieve changing goals, and this ability generates from different thinking styles.
THINKING STYLE AND LEADERSHIP PROCESS IN ORGANIZATION
In contemporary organizations, employees in all levels need to be motivated and need to perform with optimum levels of motivation. In order to do so, they also
need to think about the organizational processes, systems, policies and strategies. This calls for a link between how you think or thinking style and the
organizational processes such as motivation, communication, group dynamics, team building, problem solving, conflict management, decision making and
leadership styles. It is observed that a particular thinking style sometimes influences different dimensions of leadership behaviors in work organization. For
example, - a person using ‘imagination’ as a thinking style will always appreciate a leader who has a vision of the future whereas, a person using
‘implementation’ as a thinking style would have to follow a performing leader. This indicates that executives at different levels having different responsibilities
need to develop different kinds of thinking styles in order to facilitate organizational effectiveness.
An organization having a very healthy environment and operating in a competitive business environment needs people who are very sound in implementation
and collaboration. On the other hand, in an organization which is making expansion and diversification, it requires the senior executives to use imagination and
innovation as the focused thinking style. In other words different types of organization having different types of work cultures and organization climates call for
developing appropriate thinking styles for different categories of employees in organizations.
Gangopadhyay (1991) observed that there are four major thinking styles which managers use in Indian organizations: Analysis, Implementation, collaboration,
and Imagination. The analyzers are those who use perceptual vigilance, scan, discuss, use feeling and emotion and then take the decision. They are basically
cognitive tuners. They usually do not belong to the type-A personality type. The implementer is one who thinks in terms of practical utility and feasibility of any
system or proposal for the organization. Such managers are incepted and do have a positive mindset and job attitude and give priority to action over affection.
They do have a cognitive map and they follow it in the appropriate or right direction and achieve their goals. The collaborator is the new age thinker. He or she
believes in a 50-50 share. They believe in team work, partnership, joint ventures, mergers and acquisitions, total quality management, BPR, outsourcing and
bench marking. They think progressively and are usually proactive. They believe in synergy building and discourage soft work cultures. The imaginator thinks in
terms of a long-term perspective. They do dream, but, at the same time, they have a vision of the future. Sahoo (1987) refers to the concepts of cognitive styles
and cognitive types in this context. Wertheimer (1945) noted individual differences in the approach to the structuring of a situation which results in differences
among people in the productivity of their thinking. Luchin’s (1942) work on the effect of set on people’s thinking gave rise to the notions of rigidity and
functional fixedness that came to be accepted as differentiating the modes of thinking of individuals. The New Look Management in the fields of learning and
perception generated new approaches to the study of cognitive styles. It refers to the characteristics ways in which individuals conceptualize the environment.
In other words, it refers to the ways in which thought is structured. Conceptual styles, on the other hand, refer to analytic, relational, and inferential styles. The
constructs do influence the four thinking styles.
RATIONALE AND OBJECTIVES
The conceptual analysis of both emotional intelligence and thinking styles in organizations along with the review of literature definitely draw attention of
behavioural scientists to analyze and explain the dynamics involved in this process. For sustainable advantage and organizational effectiveness, employees need
to integrate their emotional intelligence with their thinking styles. Executives with different levels of work experience in different types of organizations might
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acquire different facets of EQ and might use different thinking styles. While taking about ‘prepare for change’ during the India Today Conclave (2007),
N.R.Narayan Murthy, Chief Mentor, Infosys, observed that “the problem is how we use information overload to come to better conclusions, to take better
decisions. Ships are safest in the harbour, but they are not meant to be there. They have to go into the high seas, face the storm and reach the comfort of a safe
and desirable destination. The smartness is to foresee the risks and take appropriate measures. For building global competency, the only thing we can do is to
advance our preparedness to handle change. India must realize that the only insurance we have to handle future risks coming out of technological advances,
coming out of globalization, coming out of comparative advantage, is by focusing on education, innovation, and human resource development”.
These observations led to the design of this research. The major objectives are to make an assessment of the different facets of emotional intelligence in a
multinational company having reputational capital for a long period and compare it with an educational institution focusing on training, consultancy, research
and development which is quite younger to the production unit. It also attempts to find out if there are differences among the junior (less experienced) and
senior (more experienced) employees in both the organizations with regard to both emotional intelligence and thinking styles. It also aims at explaining the
interrelationships of EQ factors with thinking styles across the four subgroups. Finally, the study also attempts to suggest possible human resource management
strategies and organizational development interventions for achieving organizational effectiveness as well as corporate excellence. It also attempts to link
different communication styles with EQ and thinking styles.
METHODOLOGY OF STUDY
DESIGN
The study follows a 2x2 factorial design of research. Factor 1 refers to type of organization (Production and Service). Factor 2 refers to level and experience of
employees (Junior and Senior).
SAMPLE
The study sample consists of 120 employees working in two organizations : Larsen & Toubro Limited, a reputed MNC at Kansbahal, Orissa, and Indian Institute
for Production Management at Kansbahal. L & T deals with manufacturing heavy engineering tools and IIPM provides training and consultancy to technical
institutions in India and also to foreign countries. Both junior and senior executives/faculties were randomly selected as respondents. In each of the four
subgroups, there were thirty participants (N=120). Al the respondents had the minimum educational qualification of graduation. Those who had ten or less than
ten years of work experience were treated as junior employees and those who had put in more than ten years of work experience were treated as senior
employees.
MEASURES
Two standardized measures were used to collect data.
(i)
Emotional Intelligence Scale
Developed by Mandal et al. (2004), this scale consists of 40 statements with some reverse scored items. It is scored on a 5-point scale (1-2-3-4-5). It
yields five factors of EI: appraisal of negative emotions, appraisal of positive emotions, interpersonal conflicts and difficulties, interpersonal skills and
flexibility, and, emotional facilitation and goal-orientedness. The scale indicates the relevance for self as well as interpersonal contexts.
(ii)
Thinking Style Inventory
Developed by Ganguly (1991), TISS, Mumbai, this instrument has 24 items. Each item refers to a context/situation and gives four alternative
responses (A, B, C, D). The respondent has to rank all the four for each of the 24 items. The TSI yields four thinking styles: analyzer, implementer,
collaborator and imaginator. The dominant thinking style is reflected by the highest score. It is ranked as 1, 2, 3, 4. Rank 4 goes to the most preferred
alternative, 3 to the next, 2 to the next, and 1 to the least preferred item.
Both the instrument enjoys highly reliable and valid psychometric properties.
PROCEDURE/ADMINISTRATION
The Chief Executives of both the organizations were contacted and administrative approval was obtained to conduct the research work. The HR Department of L
& T was the nodal agency to execute the programme. On the basis of age and experience at work, the junior and senior employees were randomly selected.
Following the random sampling technique, each respondent was contacted personally and the investigator discussed in detail the objective of the study and the
relevance of such an endeavour. Both the instruments were given to them simultaneously and collected on the same day or the day after. The departmental
heads also took part in small group discussions and almost all the units of both the organizations were covered in this study. The data obtained was treated with
appropriate statistical techniques.
RESULTS AND DISCUSSION
The research project aimed at examining and explaining he role of the type of the organization and he level of employees along with their work experience on
their emotional intelligence and thinking styles. In order to achieve this objective, a 2x2 factorial design of was adopted and 120 employees from two
organizations participated as respondents. Analysis of variance was performed on each one of the components of emotional intelligence to examine the group
differences. The following abbreviations are used in the result tables :
Gr.I : Junior Industrial Employees (JIE)
Gr.II : Senior Industrial Employees (SIE)
Gr.III: Junior Service Employees (JSE)
Gr.IV: Senior Service Employees (SSE)
Emotional Intelligence : EI
Factor 1 : Appraisal of Negative Emotions (ANE)
Factor 2 : Appraisal of Positive Emotions (APE)
Factor 3 : Interpersonal Conflict and Difficulties (ICD)
Factor 4 : Interpersonal Skills and Flexibility (ISF)
Factor t : Emotional Facilitation and Goal-orientedness (EFGO)
Overall Emotional Intelligence : OEI
Thinking Styles : TS
Type of Organization : TO
Level of Employees : LE
Source
TO
LE
TOXLE
Error
*p <0.5
TABLE 1: SHOWING ANOVA PERFORMED ON APPRAISAL OF NEGATIVE EMOTIONS SCORES OF EMOTIONAL INTELLIGENCE
DF
MS
F
1
321.41
4.12*
1
94.77
0.82
1
108.73
1.13
116
258.93
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TABLE 2: SHOWING MEAN AND SD SCORES ON APPRAISAL OF NEGATIVE EMOTIONS SCORES OF EMOTIONAL INTELLIGENCE
Groups
Industry
Service
All
Mean SD
Mean SD
Mean SD
Junior
3.55
1.21 2.12
0.93 2.85
1.07
Senior
3.60
1.15 2.05
0.87 2.83
1.1
Combined 3.57
1.18 208
0.80
The ANOVA indicates significant difference between the two types of organizations with regard to their appraisal of negative emotions as a facet of emotional
intelligence. The employees of service organization show less ANE compared to industry employees. On the other hand, there is no significant difference
between junior and seminar employees in both the organizations. The interaction effect is also not significant. Years of work experience does not influence the
appraisal of negative emotions significantly. In other words, one important factor of emotional intelligence seems to be independent of age and work experience
in organizations.
TABLE 3: SHOWING ANOVA PERFORMED ON APPRAISAL OF POSITIVE EMOTIONS SCORES OF EMOTIONAL INTELLIGENCE
Source DF
MS
F
TO
1
102.67 1.02
LE
1
97.63
.93
TOXLE
1
78.04
.84
Error
116 76.06
TABLE 4: SHOWING MEAN AND SD SCORES ON APPRAISAL OF POSITIVE EMOTIONS SCORES OF EMOTIONAL INTELLIGENCE
Groups
Industry
Service
All
Mean SD
Mean SD
Mean SD
Junior
4.05
2.23 4.03
2.12 4.4
2.18
Senior
4.15
2.27 4.07
2.08 4.11
2.17
Combined 4.10
2.25 4.5
2.10
Both main effect and interaction effects are found to be not significant. It indicates that neither type nor level influences appraisal of positive emotions of
employees in organizations. Mean scores are quite high for both the groups from industry and service organizations. While appraising positive emotions, they
apply greater level of emotional intelligence compared to the appraisal of negative emotions. Age and experience at work place do not bring in any significant
difference in their appraisal of positive emotions.
TABLE 5: SHOWING ANOVA PERFORMED ON INTERPERSONAL CONFLICTS AND DIFFICULTIES SCORES OF EMOTIONAL INTELLIGENCE
Source DF
MS
F
TO
1
349.78 5.23*
LE
1
102.73 1.14
TOXLE
1
178.40 1.23
Error
116 194.26
*p <0.5
TABLE 6: SHOWING MEAN AND SD SCORES ON INTERPERSONAL CONFLICTS AND DIFFICULTIES SCORES OF EMOTIONAL INTELLIGENCE
Groups
Industry
Service
All
Mean SD
Mean SD
Mean SD
Junior
3.47
1.26 2.02
1.17 2.58
1.22
Senior
3.53
1.24 2.14
1.21 2.84
1.27
Combined 3.50
1.25 2.8
1.19
Results show significant type effect on interpersonal conflicts and difficulties as a facet of emotional intelligence. Employees of industrial organizations have
higher levels of EI relating to ICD compared to their counterparts in service organizations. But, the level effect is insignificant. Age and work experience do not
influence EI in terms of interpersonal conflicts and difficulties. The mean values seem to be less than the mean values obtained for appraisal of negative
emotions and appraisal of positive emotions for all employees in both types of organizations.
TABLE 7: SHOWING ANOVA PERFORMED ON INTERPERSONAL SKILLS AND FLEXIBILITY SCORES OF EMOTIONAL INTELLIGENCE
Source DF
MS
F
TO
1
123.27 1.12
LE
1
287.14 4.17*
TOXLE
1
282.17 3.14*
Error
116 263.44
*p <0.5
TABLE 8: SHOWING MEAN AND SD SCORES ON INTERPERSONAL SKILLS AND FLEXIBILITY SCORES OF EMOTIONAL INTELLIGENCE
Groups
Industry
Service
All
Mean SD
Mean SD
Mean SD
Junior
3.97
1.27 3.63
1.23 4.20
1.25
Senior
4.63
1.53 4.58
1.47 4.61
1.50
Combined 4.30
1.40 4.10
1.35
The findings show no significant type effect on ISF scores. But the level effect and interaction effects are found to be significant. It implicates that in both the
organizations the employees use interpersonal skills and flexibility almost at a similar degree. But, the senior employees we more of it compared to junior
employees. Age and work experience seem to influence emotional intelligence in terms of interpersonal skills and flexibility. Both type and level jointly influence
emotional intelligence. The combined mean scores are quite high, even, they seem to be higher than other facets of emotional intelligence. This particular factor
of EI calls for greater attention in the light of the changing competitive business environment and globalization of the market, economy and policies of corporate
governance. Flexibility is being focused by both behavioural scientists as well as management researchers (Dhananjayan, 2007).
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TABLE 9: SHOWING ANOVA PERFORMED ON EMOTIONAL FACILITATION AND GOAL-ORIENTEDNESS SCORES OF EMOTIONAL INTELLIGENCE
Source DF
MS
F
TO
1
377.43 5.23*
LE
1
381.78 5.37*
TOXLE
1
397.23 5.42*
Error
116 367.14
*p <0.5
TABLE 10: SHOWING MEAN AND SD SCORES ON EMOTIONAL FACILITATION AND GOAL-ORIENTEDNESS SCORES OF EMOTIONAL INTELLIGENCE
Groups
Industry
Service
All
Mean SD
Mean SD
Mean SD
Junior
4.62
1.23 3.92
1.24 4.27
1.23
Senior
3.62
1.32 3.12
1.34 3.37
1.33
Combined 4.12
1.27 3.52
1.29
Both main effect and interaction effects are found to be significant. Type of organization and level of employees along with their age and work experience
influence emotional intelligence in terms of emotional facilitation and goal orientedness. Junior employees from industry have the highest level of this kind of
emotional intelligence. Compared to employees of industry, the employees of service organizations have lower levels of emotional facilitation and goal –
orientedness. This aspect of EI also has drawn specific attention from researchers in the recent past (Raju and Seema, 2007). For achieving greater sustainable
competitive advantage, organizational strategy focuses on the development of this factor as a component of emotional intelligence of its employees. EI has a
number of correlates relating to facets of motivation, commitment, leadership and decision making abilities in organizations. It is also related to studies on self
efficacy, competence building, eco-business, e-marketing and organizational citizenship behaviour.
TABLE 11: SHOWING ANOVA PERFORMED ON THE TOTAL EMOTIONAL INTELLIGENCE SCORES
Source DF
MS
F
TO
1
389.91 4.26*
LE
1
121.23 1.23
TOXLE
1
128.56 1.25
Error
116 258.26
*p <0.5
The results indicate only type effect to be significant. The level effect and interaction effects are not statistically significant. It implicates that emotional
intelligence of employees in industrial organizations are different from employees working in service/research/consultancy/ training-providing institutions. Age
and work experience do not contribute much towards this difference. The junior and senior employees in both types of organizations enjoy quite similar level of
emotional intelligence though there are differences relating to specific factors of EI. This suggests that the work environment, work culture, organizational
climate, goals/ policies and organizational synergy play a more important role than personal experience, feelings, perceptions and cognitions of employees at
work places. In old organizations, there are established and well-accepted patterns and norms of work culture. It might have influenced the findings of the
present research, and, therefore, there is a ‘type effect’. Since L & T is an old MNC and has tremendous amount of reputational capital compared to IIPM, it
might have contributed towards a higher level of emotional intelligence of its employees than IIPM employees.
FINDINGS ON THINKING STYLES
Analysis of variances were performed on all the four different thinking styles : Analyzer, Implementer, collaborator, and Imaginator. Thinking styles of employees
do influence their interaction, work perception, human resource management practices, role behaviour and personal effectiveness.
TABLE 12: SHOWING ANOVA PERFORMED ON ANALYZER SCORES OF THINKING STYLE
Source DF
MS
F
TO
1
983.23 5.41*
LE
1
897.78 4.73*
TOXLE
1
902.33 4.82*
Error
116 877.23
*p <0.5
TABLE 13: SHOWING MEAN AND SD OF ANALYZER SCORES OF THINKING STYLE
Groups
Industry
Service
All
Mean SD
Mean SD
Mean SD
Junior
60.3
8.3 56.4
11.2 58.4
9.7
Senior
65.3
7.3 67.2
10.4 66.4
8.8
Combined 62.8
7.8 61.8
10.8
Both main effect and interaction effects are found to be significant. It implicates that analysis as a thinking style is different for senior and junior employees in
industrial and service organizations. Junior employees in industry use more of analysis as a thinking style compared to their counterparts in service sector; on
the other hand, senior employees of service sector use greater level of analysis compared to senior employees in industrial organizations. On the whole, the
senior employees seem be stronger analyzers than junior employees. It implicates that age, work experience and continued participation in the work culture and
organizational processes facilitate their orientation towards using analysis as a thinking style at their work places.
TABLE 14: SHOWING ANOVA PERFORMED ON IMPLEMENTER SCORES OF THINKING STYLE
Source DF
MS
F
TO
1
385.66 16.46*
LE
1
634.80 27.10*
TOXLE
1
136.53 5.83*
Error
116 259.28
*p <0.5
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TABLE 15: SHOWING MEAN AND SD SCORES ON IMPLEMENTER OF THINKING STYLE
Groups
Industry
Service
All
Mean SD
Mean SD
Mean SD
Junior
59.07 6.25 55.48 5.03 57.28 5.6
Senior
62.66 5.23 58.16 5.56 58.9
5.40
Combined 60.85 5.76 55.32 5.30
The findings show that both the main and interaction effects are found to be significant. The industry employees use higher degree of implementation as a
thinking style than service sector employees. The senior employees use more of implementation compared to junior employees in both types of organizations.
Usually, in industrial organizations, the time frame is target oriented and the company has to achieve that production level. This might put emphasis on
implementation to be given greater emphasis by the employees of such organizations compared to employees of service organizations where there is room for
delay or stretching out.
TABLE 16: SHOWING ANOVA PERFORMED ON COLLABORATOR SCORES OF THINKING STYLE
Source
TO
LE
TOXLE
Error
DF
1
1
1
116
MS
787.54
1548.08
526.31
638.26
F
29.65*
58.29*
19.81*
*p <0.5
TABLE 17: SHOWING MEAN AND SD SCORES OF COLLABORATOR STYLE OF THINKING STYLE
Groups
Industry
Service
All
Mean SD
Mean SD
Mean SD
Junior
58.05 6.74 55.30 6.29 52.61 6.51
Senior
61.63 5.40 59.70 5.31 60.52 5.36
Combined 59.8
6.02 58.00 5.80
The results implicate significant differences between employees of the two types and two levels on collaborative style of thinking. Both junior and senior
employees working in industry do use collaboration thinking style more than employees working in service organizations. The corporate mission, policies,
strategies along with the work environment, age, experience and perceptual processes seem to influence thinking styles of employees in organizations.
TABLE 18: SHOWING ANOVA PERFORMED ON IMAGINATOR SCORES ON THINKING STYLE
Source DF
MS
F
TO
1
688.73 12.64*
LE
1
589.46 8.93*
TOXLE
1
433.78 5.92*
Error
116 393.87
*p <0.5
TABLE 19: SHOWING MEAN AND SD SCORES OF IMAGINATOR SCORES OF THINKING STYLE
Groups
Industry
Service
All
Mean SD
Mean SD
Mean SD
Junior
59.84 3.61 64.33 4.62 62.14 4.22
Senior
54.18 5.39 60.37 4.51 57.28 4.95
Combined 57.10 4.5
62.35 4.56
The findings reveal that both main and interaction effects are significant. But, in contrast to the other three styles, here, the employees of service organizations
tend to use more of imagination as a thinking style in comparison to employees of the industrial organizations. The junior employees also seem to use higher
level of imaginator thinking style than senior employees in both types of organizations. This suggests that younger people think of future with a vision and goal
orientedness for a better career plan and organizational growth. In recent times, service organizations have entered into a competitive environment focusing on
customer satisfaction, quality improvement and timely delivery of goods and services. Even manufacturing industries are focusing on research and development
(R & D), for example, Ranbaxy & Proctor & Gamble. Planning for the future and preparing a vision document requires greater level of imagination in R &D
Focused institutions imparting training and consultancy.
Inter-correlations were calculated in order to find out the relationship among the different variables of emotional intelligence and thinking styles among
employees across organizations.
Non-Assertive
Assertive
Aggressive
TABLE 20: SHOWING MEAN SCORES OF COMMUNICATION STYLES FOR DIFFERENT GROUPS
Groups
Non-Assertive Assertive Aggressive
Junior Industry 3.7
5.8
6.3
Senior Industry 2.4
6.4
5.3
Junior Service
4.2
5.8
5.7
Senior Service
3.9
6.4
6.2
: Mild in nature. If you want to get things done, you need to put your point across more forcefully.
: You have the knack to communicate clearly and directly, without impinging upon others’ rights.
: You need to soften your aggressive approach for being an effective communicator.
TABLE – 21: SHOWING CORRELATIONS OF COMMUNICATION STYLES WITH THINKING STYLES
Communication Styles Analyser Implementor Collaborator Imaginator
Non-Assertive
.18
.12
.42
.58
Assertive
.53
.62
.68
.33
Aggressive
.17
.32
.13
.14
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TABLE – 22: SHOWING CORRELATIONS OF COMMUNICATION STYLES WITH EMOTIONAL INTELLIGENCE
Communication Styles Emotional Intelligence
ANE APE ICD ISF EFGO
Non-Assertive
.17
.28
.14 .27 .22
Assertive
.23
.44
.12 .54 .57
Aggressive
.37
.22
.47 .16 .14
The findings indicate that assertive communication style is significantly and positively correlated with emotional intelligence facets. Emotional intelligence of all
levels of employees facilitates assertive communication. Analyzing, implementing and collaborative thinking styles are also positively correlated to assertive
communication style. An aggressive communication style seems to be poorly correlated with collaboration, imagination and implementation. It has also poor
correlation with emotional intelligence.
GENERAL DISCUSSION
The nature of correlations reveals that there are significant positive relationships among a good number of variables within EI and TSI for both the groups. V3,
V4, V5, V6, V7, V8, V9, V10 and V11 have highly significant correlations. Imagination as a thinking style does not have a significant relationship with the
emotional intelligence factors. In industrial sector, the relationship between emotional intelligence and thinking style is more positive than in service sector.
Studies on leadership, organizational effectiveness, communication, decision making, team building, job satisfaction, quality of work life, organizational culture
and other OB facets lend support to such findings (Gibs, 1995; Cooper & Swaf, 1997; Mayer et al., 1999; Raju & Seema, 2007). EI can be regarded as a construct
integrating social intelligence, practical intelligence, personal intelligence and emotional creativity. Ravi and Rao (2007) observed that emotional intelligence
plays an important role in leadership effectiveness. Managing others begins with the leader managing inner life so that right emotional behavioural chain
reaction occurs. Since Goleman (1995), over the years, the construct has gone under revisions and the current thinking contends that EI is the capacity for
recognizing our own feelings and those of others, for motivating ourselves, and for managing emotions well in ourselves and in our relationships. EI describes
abilities distinct from, but complimentary to, academic intelligence or the purely cognitive capacities measured by IQ. Emotional competence is a learned
capability based on emotional intelligence that results in outstanding performance at work. EI is a bigger and stronger predictor of work place success than IQ.
Even relationship management is facilitated by emotional intelligence at work place (Chemis, 2000; Jennifer, 2000; Ravi, 2001). The findings of the study derive
support and strength from such research findings and observations.
SUMMARY OF RESULTS
The results show significant differences between employees of industry and service organizations across their levels with regard to emotional intelligence and
thinking styles. Junior employees have higher levels of appraisal of positive emotions and emotional facilitation and goal orientedness in both types of
organizations than senior employees. Imagination is the least preferred thinking style for all four groups of employees. Emotional intelligence is related to
thinking styles of employees in industry as well as service sector. It is also observed that assertive style of communication is positively correlated with thinking
styles and emotional intelligence.
SUMMARY AND CONCLUSION
The quest for managing and enhancing effectiveness of people in organizations has driven the research on identifying contributors to performance. Emotional
intelligence has been identified as one of the important behavioural constructs considered to be a major contributor to performance (Goleman, 1995; Goleman,
1998; Hay Group, 2003; Singh, 2004). Mayer and Solvery (1993) defined EI as “a type of social intelligence that involves ability to monitor one’s own and other’s
emotions, to discriminate among them, and to use the information to guide one’s thinking and actions”. They also suggested a four-dimensional model. The first
dimension consisted of emotional perception and identification involving recognition and in putting information from the emotion system. The second and third
dimensions were emotional facilitation of thought and emotional understanding that involved further processing of emotional information with a view of
problem –solving. The emotional facilitation of thought dimension involved use of emotions for improving cognitive processes, where as emotional
understanding incorporated cognitive processing of emotions. The fourth dimension emotional management consisted of emotional self-management and the
management of emotions in others. But the most popular and widely accepted construct of EI refers to Goleman’s notion that holds five dimensions of
emotional intelligence consisting of twenty-five competencies within them. They are : self awareness (emotional self awareness, accurate self assessment, self
confidence), self regulation (self control, trustworthiness, conscientiousness, adaptability, innovation), self motivation (achievement drive, commitment,
initiative, optimism), Empathy (understanding of others, developing others, service orientation, leveraging diversity, political awareness), and, social skills
(influence, communication, conflict management, leadership, change catalyst, building bond, collaboration and cooperation, team capabilities). A thorough
analysis of the construct and its relationship with a host of other social and psychological variables in the organizational context implicate that our thinking
process and thinking style is not independent of our emotional intelligence.
The present research was designed to address these important phenomena from an organizational psychological perspective. The sample was drawn randomly
from two different organizations, namely, Larsen & Toubro Limited and Indian Institute for Production Management, both situated at Kansbahal in the State of
Orissa. It adopted a 2x2 factorial design of research. The four subgroups were : Junior employees from L & T, Senior employees from L & T, Junior employees
from IIPM, and Senior employees from IIPM. In each subgroup, there were 30 respondents. Two standardized tools were used to measure emotional intelligence
and thinking styles. Analysis of variance was used to analyze the data along with correlations. The findings revealed a number of significant differences among all
the four subgroups with regard to both the dependent measures. Type of organization and level of the employees significantly influenced different facets of EI as
well as thinking styles. Emotional intelligence was found to be greater for the industrial organization employees compared to the R & D Service Institution called
IIPM. Analysis and implementation came out to be dominant thinking styles in both sectors, industry and service. Collaboration as a thinking style was shared
almost at the same degree by both junior and senior employees in both types of organizations. The five factors of emotional intelligence were significantly and
positively correlated with three thinking styles, namely, analyzer, implementer, and collaborator. Imagination was not a preferred style neither by employees
from industry nor by employees from the service organization. EI factors such as positive emotions appraisal, inter personal skills and flexibility and emotional
facilitation and goal orientedness seem to be highly valued by employees in both types of organizations The linkage between emotional intelligence and thinking
styles create opportunities for management experts, policy makers, HRM strategists and industrial organizational psychologists to blend technology/
organizational practices/ organizational goals with innovations of values in terms of thinking styles. One could enrich both emotional intelligence and
appropriate and effective thinking styles by creating value innovations in a learning organization.
IMPLICATIONS OF THE RESEARCH
The major implications of the research refers to the opportunities and possibilities of establishing an integrated linkage between emotional intelligence and
thinking styles of people working in organizations with their value innovations and perception of organizational strategies. It also implicates that executives in
established industry like Larsen & Toubro need to develop long-term visions and core missions. R & D focused units like IIPM do need people to enrich their
emotional intelligence and strengthen their thinking styles in terms of higher degree of collaboration and implementation. Age and experience at work place
influence emotional intelligence and thinking style at a moderate level. There are many other factors which contribute substantially towards the development of
emotional intelligence and thinking styles. They may be extra organizational variables including personality traits, cognitive styles and cognitive abilities. Further
research could only throw light on this unknown side of the phenomenon.
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FUTURE DIRECTIONS
Though the present study ahs come out with some meaningful and useful observations, it has its own limitations because of the size of the sample, the
organizational setting, restrictive work environment. In a larger sampling frame with a wider coverage of different types of organizations varying in
organizational designs and matrices, one could expect a different trend in the findings. It would be possible to draw more accurate and definitive conclusion with
the use of larger samples and multivariate designs of research. If one takes other professional groups and different types of employees with varied degrees of
competence and resource strength, it would help in identifying and explaining the exact influence of occupational or organizational socializations in the
development of emotional intelligence as well as different thinking styles.
Future research is directed towards linking emotional intelligence and thinking styles with spiritual management (Agrawal, 2007). Employees are putting greater
efforts to inculcate spirituality as a way towards better work life balance. Towards the beginning of the 21st century, the concept of SQ-Spiritual Quetient –
stretching beyond IQ and EQ was advocated as the ultimate and unique human intelligence. The road to spirituality comes from the desire to confront major
crises and surmount them successfully. A shift in philosophy guiding the functioning of business enterprises is required to integrate spirituality into our
processes. Business or any organization for that matter is a part of life and the decisions in the board room can no longer be separated from life views. Unreality
is the true source of powerlessness. We can not control things which we do not understand. Directions for future research probably call for an eclectic holistic
approach which integrates IQ, EQ and SQ. Communication styles of employees could be improved for facilitating healthy and effective thinking styles.
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TABLES
V1
V2
V3
V4
V5
V6
V7
V8
V9
V10
V11
V12
TABLE – 23: SHOWING CORRELATIONS FOR ALL THE RESPONDENTS (N=120)
Variables V1
V2
V3
V4
V5
V6
V7
V8
V9
V10
V11
V1
1.00 .00
–.23 –.42 –.26 –.42 –.48 –.52 –.57 –.34 –.47
V2
.00
1.00 –.02 .19
.02
.01
.31
.13
.07
.01
–.03
V3
–.23 –.02 1.00 .14
.35
.25
.27
.67
.54
.40
.42
V4
–.42 .19
.14
1.00 .21
.40
.57
.66
.57
.39
.47
V5
–.26 .02
.35
.21
1.00 .61
.43
.68
.62
.51
.58
V6
–.42 .01
.25
.40
.61
1.00 .55
.70
.61
.43
.53
V7
–.48 .31
.27
.57
.43
.55
1.00 .73
.63
.43
.53
V8
–.52 .13
.67
.66
.68
.70
.73
1.00 .86
.63
.74
V9
–.57 .07
.54
.57
.62
.61
.63
.86
1.00 .79
.83
V10
–.34 .03
.40
.39
.51
.43
.43
.63
.79
1.00 .77
V11
–.47 –.03 .42
.47
.58
.53
.53
.74
.83
.77
1.00
V12
–.26 –.03 –.16 .15
.19
.19
.15
.12
.28
.36
.52
– Type of Organization
– Level of Employees
– Appraisal of Negative Emotions
– Appraisal of Positive Emotions
– Interpersonal conflicts and difficulties
–Interpersonal Skills and Flexibilities
– Emotional facilitation and goal-orientedness
– Total emotional intelligence
– Analyser
– Implementer
– Collaborator
– Imaginator
V12
–.26
–.03
–.16
.15
.19
.19
.15
.12
.28
.36
.52
1.00
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ENTERING INTO INDIAN RETAIL SECTOR
PARAMJEET KAUR
ASST. PROFESSOR
KHALSA COLLEGE FOR WOMEN CIVIL LINES
LUDHIANA
ABSTRACT
Indian retail sector is going through a transformation and this emerging market is witnessing a significant change in its investment pattern. Retailing in India is
receiving global recognition and attention. It is not just the global players like Wal Mart, Tesco and Metro group are eying to capture the pie of this market, but
also domestic corporate giants like Reliance K Modi, Aditya Birla Group and Bharti Group too are at some stage of retail development. Reliance announced that it
will invest $3.4billion to become country’s largest modern retailer. The retail aim of Aditya Birla Group aims to be an USD 2.5 billion entity by 2017-18.
Historically, retailing was carried out in traditional store format, with minor non-store variations like catalogue selling, direct selling and tele-marketing till last
decade of twentieth century. But the last decade witnessed a wide metamorphosis in the retailing market. Propelled by growth in technological innovations,
mainly World Wide Web the retail industry is evolving to serve the more convenience and value seeking shoppers. As a result, retailers are venturing into multiformat structure to deliver higher value proposition to the shoppers. But an issue of current interest is whether Indian retail sector is contributing a good share in
GDP of the country or not? Also the issue is whether the retail sector is growing in organized format or not? Considering all the facts this paper brings forth a few
conceptual issues that may help in building a new road for this sector.
KEYWORDS
Global, Growth, Retail sector, Transformation.
INTRODUCTION
A
s consumer behaviour and life styles changed, people no longer buy the way they used to. Simply increasing ‘width’ and ‘depth’ of coverage no longer
seems to produce the magical results it once used to”.
-Marketing that works, Business Line, April 2007.
Retailing in India is one of the pillars of its economy and accounts for 14 to 15 percent of its GDP. The Indian retail market is estimated to be US$ 450 billion and
one of the top five retail markets in the world by economic value. India is one of the fastest growing retail markets in the world, with 1.2 billion people. For long,
the analysts have been betting on strong retail and financial services sector performances to help and power India – Asia’s third-largest economy. Such
expectations further get a boost as more and more Indians move towards western-style consumer spending patterns. And, while Fitch, the global ratings agency,
has recently opined that Indian consumer spending is at its weakest in seven years. Further it is projected that, modern retail, which currently stands at 5
percent, will grow about six times from the current USD 27 billion to USD 220 Billion in the next 8 years. Consumer dynamics in India is changing and retailers
need to take note of this and formulate their strategies and tactics to deliver value to consumer. This paper covers modern retail formats and challenges
available to retailers to succeed in this country. The last couple of years have been rosy for real estate developers and the retailers are finding suitable retail
space in prominent locations. The industry is buoyant about growth and the early starters are in expansion mood. There is increased sophistication in the
shopping pattern of consumers, which has resulted in big retail chains coming up in most metros; mini metros and towns being the next target. Consumer taste
and preferences are changing leading to radical alteration in lifestyles and spending patterns which in turn is giving rise to new business opportunities.
Companies need to be dynamic and proactive while responding to the ever changing trends in consumer lifestyle and behavior.
RETAIL IN INDIA
Indian retail sector is going through a transformation and this emerging market is witnessing a significant change in its investment pattern. Retailing in India is
receiving global recognition and attention, as the market is wearing new clothes with a three year compounded annual growth rate of 52.64 percent, which has
made the retail as the fastest growing sector of economy. Global players like Wal Mart, Tesco and Metro group are eying to capture the pie of this market along
with domestic corporate behemoths like Reliance K Modi, Aditya Birla Group and Bharti Group too are also making their way to capture the share of this market
by developing new formats such as departmental stores, hyper markets, super markets and specialty stores.. Historically, retailing was carried out in traditional
store format, with minor non-store variations like catalogue selling, direct selling and tele-marketing till last decade of twentieth century. But the last decade
witnessed a wide metamorphosis in the retailing market. Propelled by growth in technological innovations, mainly World Wide Web the retail industry is
evolving to serve the more convenience and value seeking shoppers. As a result, retailers are venturing into multi-format structure to deliver higher value
proposition to the shoppers. Both existing and new players are experimenting with new retail formats. Presently two popular formats –hypermarkets and super
markets are growing very fast. The growth factors in Indian organized sector are various but it is mainly due to the fact that India's economy is booming.
Retailing in India is currently estimated to be a USD 220 billion industry, of which organized retailing makes up 6 percent or USD 7.4 billion. By 2015, organized
retail is projected to reach USD 25 billion and in terms of market share it is expected to rise by 20 to 25 per cent. Indian economy has shown an impressive
growth of over 6 per cent for last five years and continues to surge ahead. GDP growth rate in 2003-04 recorded a fifteen year high of 8.5% and subsequently
maintained a steady growth for the next two years. Real GDP growth accelerated from 7.5 per cent during 2004-05 to 8.4 per cent during 2005-06 on the back of
buoyant manufacturing and services activity supported by a recovery in the agricultural sector. With strong economic growth consumerism is increasing in the
country and India is the fourth largest economy as far as purchasing power parity is concerned, just behind USA, Japan and China. The generic growth is likely to
be driven by changing lifestyles and by strong surge in income, which in turn will be supported by favorable demographic patterns. Rapid growth in international
quality retail space brings joy to shoppers and shopping malls are becoming increasingly common in large cities, and announced development plans project at
least 150 new shopping malls by 2013. The number of department stores is growing at a much faster pace than overall retail, at 24 per cent annually.
Supermarkets have been taking an increasing share of general food and grocery trade over the last two decades. Food Forum India (FFI) has awarded Big Bazaar
as ‘Most admired F&G retailer’ of the year 2010, as its total stores are 132 today as against 110 in 2008-09. Development of mega malls in India is adding new
dimensions to the booming retail sector. Shopping experience in the nation of shopkeepers is changing and changing very fast. There is significant development
in retail landscape not only in the metros but also in the smaller cities. Even the rural sector is not untouched. Even ITC went one step ahead to revolutionize
rural retail by developing ‘Choupal Sagar’ a rural mall. On one hand there are groups of visionary corporate working constantly to improve upon urban shopping
experience and on the other hand some companies are trying to infuse innovative retail experience into the rural set up.
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GIANTS IN RETAIL SECTOR
The best example to be quoted here is the mega story of Reliance Retail. Reliance has targeted sale turnover of Rs. 100000 crore
cr
(US$ 25 billion) by 2013 with a
planned investment of Rs. 40000 crore bovverr next 5 years, which is termed as retail vision of Mukesh Ambani and his RIL Retail team. Various other retail giants
are not left behind. The Mahindra Group is the fourth largest
large Indian business group to enter the business of retail after Reliance Industries Ltd., the Aditya Birla
Group, and Bharti Ent. Ltd. To be brief, expansion of retail industry
industry in India is highlighted here with some future projections of investment by leading retail
giants.
RETAIL GIANT
Pantaloon Retail India (PRIL)
Timex India
Reliance Foot Print
Big Bazaar
Wills Life Style
Life Style
PROJECTED INVESTMENT BY 2011
US $77.88 million
US $ 1.3 million
US $ 86.62
million
EXISTING OUTLETS
68
120
16
US $ 1.5 billion
PROJECTED NEW OUTLETS BY 2014
155
52 stores
100 outlets
155
100
50 stores (35 for retailing apparel, cosmetics and
footwear, 15 home centers)
1000-1200
1200 every month
200 stores
Suvidhaa Info serve
18000
Koutons Retail India
1400
Reliance Retail
US $ 20 billion
Aditya Birla Group
US $ 2.5 billion
12 hyper markets, 100 super markets
Reliance announced that it will invest $3.4billion to become country’s largest modern retailer by establishing a chain of 1,690
1,6 stores by March 2013. The retail
aim of Aditya Birla Group aims to be an USD 2.5 billion entity by 2017-18.
2017
The growth will be driven
riven by opening new stores, launching private labels and closing
unviable stores. This group has proposed to open 12 hypermarket stores (at an investment of 18 crore per store, spread over 55000-75000
5
sq. ft.), 70-100 super
market stores every year (at an investment of 50-60
60 lakhs per store spread over 2500-2800
2500
sq. ft.).
Viability of quality retail space, wider brand choice and better marketing communication are some of the factors driving Indian
Indi retail. On the other side a lot
depends on the preparedness
ss of Indian retailers in terms of having suitable formats, scalable business model, appropriate technology and relevant organization
orga
capability for the success. Currently the country has a population of over one billion, 60% of which is under 30 years of age. This means majority of the
population is young and working class with higher purchasing power. The low median age of population means a higher current consumption
c
rate which augurs
well for the retail sector. Consumer spending in India has grown at over
ov 12 percent since mid-1990s
1990s and 64 per cent of Indian GDP is accounted for by private
consumption.7 Over the last decade, the average Indian spending has gone up from INR 5,745 in 1992-93
1992 93 to INR 16,457 in 2003-04
2003
and is expected to grow
around its trend rate of 12 per cent.
GROWTH OF RETAIL IN RELATION TO GDP IN INDIA
India is forth largest economy as regards GDP (in PPP terms) and is expected to rank third by 2011, just behind US and China. Indian market being fifth largest
retail destination globally, has been ranked as the most attractive emerging market for investment in retail sector. As per a study conducted by Indian Council
Co
for Research on International Economic Relations (ICRIER), retail sector is expected to contribute 28% of Indian GDP by 2013. With rising consumer demands and
greater disposable income, (Us $ 400 billion) Indian retail sector is clocking an annual growth of 30%, which is even more than
th the growth of GDP. Retail sector is
projected to grow to US $ 880 billion by 2013 according to a report submitted by Global Consultancy Northbridge Capital. According to Mc Kinsey report ‘The
Rise of Indian consumer Market’, Indian consumer market is likely to grow four times by 2025. India’s overall retail sector is
i expected to rise US $ 833 billion by
2013 to US $ 1.3 trillion by 2018, at a compounded annual growth rate (CAGR) of 10%.
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ISSN 2231-1009
CHART 1: INDIAN RETAIL GROWTH ACROSS (ALL FIGs in US $)
4000
Retail
2000
GDP
0
2003
2008
2013
2018
(Source: Techno Park estimates, GOI)
The above chart shows projected India’s retail growth by comparing retail and GDP. No doubt growth in US dollars is high in case
c
of GDP, but growth percentage
of retail sector is far high than growth rate in GDP.
CHART 2: GROWTH OF RETAIL SECTOR AND GDP IN % (ALL FIGURES in %)
100%
Retail
50%
GDP
0%
2003-08
2008-13
2013-18
The above chart shows the projected growth rate of retail sector in comparison to GDP, which clearly shows that growth rate of
o retail sector is far high than
growth rate of GDP.
RETAIL FORMATS
Indian retail industry is divided in organized and unorganized sector. Organized retailing refers to trading activities by licensed
li
retailers, who are registered
under sales tax, income tax etc. These include corporatecorporate backed hyper markets and retail
tail chains. Unorganized retailing refers to traditional formats of low cost
retailing e.g. local Karana shops, owner manned general stores, paan/beedi shops, pavement vendors etc. according to KPMG report,
rep
India has a huge potential
of growth both in organized
nized and unorganized sector. According to Rakesh Kacker (additional Secretary, Dept. of Consumer affairs, Ministry of Consumer
Consum affairs,
Food and Public Distribution), both retail sectors will go from strength to strength together, but organized sector is projected to grow at a much faster pace of
40% p.a. to touch US $ 54 billion by 2011, while organized sector is projected to grow US$ 78 billion in next 3 years. Indian retail sector is highly fragmented with
91% of its business being run by unorganized retailers
tailers like traditional family run stores and corner stores. The organized retail however is at a very nascent stage,
though attempts are being made to increase its proportion to 15-25
15 25 percent by 2012 bringing in a huge opportunity for prospective new players.
pla
CHART 3: COMPARATIVE PENETRATION
PEN
OF ORGANIZED RETAIL (in %)
100%
50%
unorganized sector
0%
Organized sector
Source: Ernst & young the great retail story, 2009.
Indian retail market is estimated to at US $ 300 billion. But organized retail sector is estimated at only US $ 20 billion. However this sector is expected to grow at
7% by 2011 and touch a retail business of $ 42 billion. Organized sector has the potential to add over Rs. 2000 billion( US $ 45 billion)by the year 2011 generating
employment for some 2.5 million people in variouss retail operations and over 10 million additional workforce in retail support activities. Chart no.4 shows the
retail distributed over various categories in India.
CHART 4: ORGANIZED RETAIL
R
PENETRATION ACROSS CATEGORIES
25
20
15
10
5
0
99
ISSN 2231-1009
CHART 5: INDIA’S ORGANISED RETAIL BY DIFFERENT SECTORS
INDIA'S Organized Retail By Sector
Others
Books, Music, Toys
Footwear
Jewellery & Watches
Home improvement
Food service
Durables & Mobiles
Clothing
Food, Grocery & merchendise
10% 0% 5% 3%
9%
7%
9%
38%
7%
12%
Source: TSMG analysis
DRIVERS OF GROWTH OF ORGANIZED SECTOR IN INDIA-THE NEW WAVE
Growing consumerism is a key driver for organized retail in India. Several demographic trends are favorable for the growth of organized trade in India, such as:Rapid Income Growth
- Consumers have greater ability to spend.
Increasing Urbanization
- Larger Urban population which values convenience coupled with higher propensity of the urban consumer to spend.
Growing youth population - Growth of post liberalization maturing population with the willingness to spend(attitude).
Tendencies to spend
- Consumers are willing to borrow for current which was to save earlier consumption.
While organized retail is possible in many categories, and in India the retailer are currently operating in following types of formats:Malls
Department stores
Hypermarkets
Supermarkets
Convenience stores
Discounters
Branded stores
Category killer
Dollar stores etc.
ROAD AHEAD
According to new market research report by RNCOS titled, ‘Booming retail sector in India’ organized retail market in India is expected to reach US $ 60 billion by
2013.
Number of shopping malls is expected to increase at a CAGR of more than 18.9% from 2007 to 2015.
Next phase of growth is expected to come from rural market.
Rural market is projected to dominate the retail industry landscape in India by 2013 with total market share of 55%.
Organized retailing of mobile handset and accessories is expected to reach close to US $ 999 million by 2013.
Driven by the expanding retail market, the third logistics market is forecasted to reach US $ 30 billion by 2013.
Internet retailing is expected to touch INR 32 billion in 2012 from INR 10 billion in 2008. The contribution of internet retailing to non-store retailing is likely
to be 51% by 2012.
Even though there is huge investment coming especially in the area of retail space development in the form of mall development, the challenges remain
same from a retailer’s view point as the cost to acquire retail space in mall is increasing.
Technology is going to play a major role in retail development in India. Retailers are going to experience the impact of technology in retail. Almost 97
percent of retailing is in the hand of unorganized retailers it is predictable that the retailers are going have operational inefficiency. They face several
challenges like maintaining inventory, ordering and above all keeping track of customer by maintaining consumer data base.
Talent is in short supply and employee churn has been high for all players. It is very difficult to get experienced store managers to run stores.
CONCLUSION
India’s retail sector has the potential to achieve a USD 1.3 trillion opportunity by 2020. Sales through digital channels, notably websites and mobile applications,
which at present are miniscule, will increase to 6-8 % of the total modern retail, by amounting to about USD 13.3-17.6 Billion by 2020. Most of the organized
retailers in India are harping on quality, service, convenience, satisfaction and assured benefits to lure shoppers into the store. Retailers should create value for
the consumer and must decide suitable vehicle to deliver desired consumer value. No doubt that retail format is one of the vehicles to deliver value proposition
and also it helps to position the store in the mind of target shoppers. Probably in a growing market no one finds difficulty in pulling customer into store but that
may not be sufficient to operate profitably. Retailers need to find out what matches consumer requirement and offer better than competition. Retailers
certainly need to be innovative in designing the value proposition and deciding the format to deliver that to the consumer. It is not all about deciding the format
but all about serving the consumer better, faster and at less cost. Retailers can use their store as an indicator of what they stand for and what value they offer.
Retailers have to out think consumer in providing service and value. Conclusion is that consumer is the focus of retail business and the retailers should serve the
consumer better, faster and at less cost.
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REFERENCES
1.
2.
3.
Ashraf Riziv M and Ramneek Kapoor, Communication for Retail Professional. Tata Mc Graw Hill. New Delhi.
Nitin Malhotra. Indian Retail Sector-a Primal. Icfai University Press, India.
Pandurand Patil, Pravin and Vidyadhar Vedak .Private Label: Retailer’s value Proposition and strategic tool of differentiation. Indian journal of marketing.
Feb 2011.
4. Radhika Neeela. Changing trends in Retailing and FMCG industry in India. Casefolio. Icfai University Press India.
WEBSITES
5. http://business.mapsofindia.com/india-retail-industry/
6. http://economictimes.indiatimes.com/news/news-by-industry/cons products/articlelist/13358759.cms
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ISSN 2231-1009
MEASURING FINANCIAL STRENGTH OF A TEXTILE COMPANY BY ‘Z’ SCORE MODEL: A CASE STUDY
A.S.MANJULAKSHMI
ASST. PROFESSOR
DEPARTMENT OF COMMERCE
J D BIRLA INSTITUTE
KOLKATA
ABSTRACT
Finance is the significant facet of every business. Financial analysis is an aspect of the overall business finance function that involves examining historical data to
gain information about the current and future financial health of a company. Financial analysis can be applied in a wide variety of situations to give business
managers the information they need to make critical decisions. Therefore it is important to monitor the financial position and strength of a company through its
financial statement, which throws light on the operational efficiency and financial position of the company. The prediction and prevention of financial distress is
one of the major factors, which will help to avoid bankruptcy. Ratio analysis is widely used tool in assessing the performance of a firm in respect of liquidity,
profitability and growth. This study was undertaken with a view to assess the financial strength of Siyaram Silk Mills Ltd for five financial years 2007-08 to 201112 through the method of ratio analysis. The Z score model has been adopted for analysing the financial strength of the company. The study reveals that
financial strength of Siyaram Silk Mills Ltd is healthy and future in this situation is uncertain to predict as per Altman guidelines of Z score.
KEYWORDS
Liquidity, Profitability, Sustainability, t-test and Z–Score.
INTRODUCTION
F
inance is the significant facet of every business. Both excessive as well as inadequate finance positions are dangerous from the business point of view.
Therefore finance is the back bone of any business. The financial analyst is responsible to monitor the financial position of the business regularly. As there
is an increasing competition from other global players, the management has to initiate appropriate steps to assess the financial strength of the company.
Financial strength will provide valuable insights into its financial performance. Financial soundness of a firm is reflected through various financial parameters. By
establishing a close relationship between variables, a firm can analyse its financial performance in terms of liquidity, profitability, viability and sustainability.
Distress prediction model will assist a manger to keep track of a company’s performance and help in identifying important trends. An attempt has been made in
the present study to have an insight into the examination of financial strength of the selected company.
The need for reliable financial statement data and the importance of financial ratios for analysis and prediction is well established in the literature. Beginning
with Beaver's (1966) contention that standard financial ratios can predict the financial performance of firms, many subsequent studies have attempted to
demonstrate the predictive value of various techniques for estimating actual business performance.
Altman, (1968), “Financial ratio discriminate analysis and prediction of corporate Bankruptcy” analyzed the bankruptcy with five financial ratios for predicting
the risk of failure and developed a model as ‘Z' score.
Altman used multiple discriminate analyses (MDS) in his effort to find out a bankruptcy prediction model. He selected 33 publicly traded manufacturing bankrupt
companies between 1946 and 1965 and matched them to 33 firms on a random basis. The result of MDS exercise yielded equations called ‘Z’ score that correctly
classified 94% of the bankrupt companies and 97% of the non bankrupt companies a year prior to bankruptcy. This percentage dropped when trying to predict
bankruptcy two or more years before it occurred. The ratios used in Altman model are working capital over total assets, retained earnings over total assets,
earnings before interest and taxes over total assets market value of the equity over book value of total liabilities and sales over total assets.
Fieldsend, Longford and McLeay, (1987)explained how financial ratios can also give mixed signals about a company's financial health, and can vary significantly
among companies or industries over a time. Other factors should also be considered such as a company's products, management, competitors, and vision for the
future.
Gupta attempted a refinement of Beavers method with the objective of building a forewarning system of corporate sickness. A sample non parametric test for
measuring the relative differentiating power of various financial ratios was used. The study, among 728 textile and non textile group of industries, revealed that
earnings before depreciation, interest and taxes to sales and operating cash flows to sales had higher degree of sickness. The analysis is based on logistic
regression, where the bankrupt event is explained by accounting and market based variables. In accordance with the literature, the liquidity and profitability
ratios turned out to be the most important variable in forecasting default followed by the company size and its activity.
J.R.Raiyani and Dr. R.B. Bhatasna (2011) “A study on Financial Health of Textile Industry In India; A Z – Score Approach”. Concluded that predictive viability of a
company’s financial health by using financial ratios ultimately predicts a score and determine the financial performance of an industry.
Perttunen and Martikainen, (1990) explained some listing of ratios to be aware of in analyzing a Company’s balance sheet and income statement. They
expressed that these ratios fall into four categories — liquidity, profitability, asset management (efficiency), and debt management (leverage).
Zavgren (1985), using a sample of 45 bankrupt and 45 non bankrupt firms, identified seven variables that were used to predict the future financial performance
of businesses.
Deakin (1972) advanced the research of Beaver and Altman by including the fourteen important ratios identified by Beaver with the multivariate methodology
of Altman. Using a sample of 32 failed and 32 non failed firms, Deakin found that cash flow coverage to total debt was important for predicting bankruptcy.
Kannadhasan(2007) in his study analysed the financial health of a public limited company using ‘Z’ score model and found that the company’s financial position
is healthy , management of working capital was satisfactory, and correlation coefficient of the financial ratios are positive.
Suriyamurthi and velavan .M (2010) tested the sample units through Z score and finally concluded that predictive viability of company’s financial health using a
combination of financial ratio ultimately predicts a score which can be used to determine the financial health of company.
IMPORTANCE OF THE STUDY
It is important to measure the financial sustainability and growth in this competitive world for existence and to grow further. If the company monitors the
financial strength at regular interval, it can identify the sign of financial distress and thereby avoid bankruptcy. It is also helps to monitor the entry of new players
in this field. All the above reviews show the significance of measurement of financial strength. The present study made an attempt to measure the financial
strength along with liquidity, solvency with the help of Z score model of selected textile company in India.
STATEMENT OF PROBLEM
The textile industry holds significant status in the Indian Economy. Textile industry provides one of the most fundamental necessities of the people. It generates
massive potential for employment in the sectors from agricultural to industrial. The textile industry is the second largest employer, after agriculture. Sickness
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and inter-sector contradictions that are regular features of the industry have to be solved through a wise approach and well-calibrated steps, to ensure healthy
growth. Therefore the sectors should be analysed to identify the weakness and find solution for the same.
ABOUT THE COMPANY
The company Siyaram Silk Mill Ltd was incorporated in the year 1978 and went on public in the year 1980. For over three decades Siyaram Silk Mills Ltd has been
delivering blended high fashion shirting and suiting fabrics. It is today the largest Indian manufacturer of blended fabrics and the products are available through
an unparallel network of over 0.1 million outlets spread across India.
1.
2.
3.
To assess the overall financial performance of Siyaram Silk Mills Lltd.
To measure the efficiency in financial operations of Siyaram Silk Mills Ltd.
To predict the financial health and viability of Siyaram Silk Mills Ltd.
HYPOTHESIS
Ho (1) No significant relationship between working capital (WC) and total assets (TA)
Ho (2) No significant relationship between Retained earnings (RE) and total assets (TA)
Ho (3) No significant relationship between Earnings before Interest and Tax (EBIT) and total assets (TA)
Ho (4) No significant relationship between Market value of equity (MV) and total liabilities (TL)
Ho (5) No significant relationship between sales and total assets (TA)
Ho (6) No significant difference between the 5 years average of ‘Z’ – Score ratio of the standard.
The study is concerned with Siyaram Silk Mills Ltd from textile industry listed in stock exchange. This study was based on the data obtained from the Annual
reports of Siyaram Silk Mills Ltd for five financial years (2007-08 to 2011-12). The collected data was analyzed with the help of ratio analysis and the Z score
model. Financial distress is the event of special interest. Beaver was first to use statistical techniques to predict corporate failure. He found that financial ratios
for failed companies deteriorated markedly as failure approached. In similar type of study Edward I Altman, an economist developed the Z score model for
predicting the financial health of a company. This model uses five financial ratios that combine to form a number. This number called the Z score is a general
measure of the corporate financial health. Altman’s Z score Model is based on Multiple Discriminate Analyses (MDA); the model predicts a company’s financial
health based on a discriminate function of the firm. The specific variable used is explained below and the interpretation of ‘Z’ score value is presented in Table 1.
In addition the study used statistical tools like mean, standard deviation, correlation and t- test.
Z= 0.012X1+0.014X2+0.033X3+0.006X4+0.999X5
X1= Working capital/total assets.
X2=Retained earnings/total assets.
X3= Earnings before interest and taxes/total assets.
X4= Market value of equity/book value of total liabilities.
X5= Sales/total assets.
TABLE 1: ALTMAN GUIDELINE
Z score
Zones
Remarks
Situation I
Below 1.80
Bankruptcy
Failure is certain & extremely likely & would occur probably within a period of two years.
Situation II
Between 1.80 and 2.99 Healthy
Financial viability is considered to be healthy. The failure in this situation is uncertain to predict.
Situation III 3.00 And above
Too Healthy Its Financial health is viable and not to fall.
LIMITATIONS OF THE STUDY
The study is limited to five years only.
The study is limited to one company.
The data for this study is taken from the published Annual reports only.
Research was based on secondary data and historical in nature.
Ingredients
X1
X2
X3
X4
X5
Financial Ratios
WC/TA
RE/TA
EBIT/TA
MV/BVTL
SALES/TA
Z Score
Relationship
Correlation between WC/TA
Correlation between RE/TA
Correlation between EBIT/TA
Correlation between MV/BVTL
Correlation between Sales/TA
TABLE 2: ‘Z’ SCORE INGREDIENTS AND ITS VALUE
2007-08 2008-09 2009-10 2010-11 2011-12
45.12
40.97
31.06
11.63
17.22
1.01
1.28
2.47
7.76
12.28
4.76
6.93
12.70
14.64
14.50
23.49
11.76
47.13
49.21
36.81
1.01
1.17
1.37
1.29
1.26
1.86
1.97
2.48
2.31
2.34
Source: Computed Data
Mean
29.20
4.96
10.71
33.68
1.22
2.19
Correlation
-0.774
0.975
0.927
0.756
0.944
TABLE 3: ‘t’ DISTRIBUTION INFERENCES
Calculated Value Degree of freedom Table Value of @5% Confidence
-2.1158
3
2.353
7.6461
3
2.353
4.2694
3
2.353
1.9974
3
2.353
4.9534
3
2.353
Source: Computed Data
Remarks
Not Significant
Significant
Significant
Not significant
significant
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TABLE 4: ‘t' TEST FOR ‘Z’ SCORE (5 YEARS AVERAGE OF Z SCORE VALUES TO THE STANDARD)
Year X(z Score) x =(X – Ẋ ) X2
1
1.86
0.1454
0.0211
2
1.97
0.1182
0.0140
3
2.48
0.2886
0.0833
4
2.31
-0.2189
0.0479
5
2.34
-0.3340
0.1111
Ẋ
2.19
0.2775
σs =
0.2634
t= [Ẋ-µHo]/ [{σs}/⥌ (n)] = - 2.48
As the observed value of ‘t’ (i.e., -2.48) is in the acceptance region (less than the table value of 2.132 at 5% with degree of freedom of 4), we accept Ho at 5 %
level and conclude that there is no significant difference between the 5 years average of ‘Z’ – Score ratio of the standard as per table 4.
WORKING CAPITAL (WC) TO TOTAL ASSETS (TA)
Working capital is the difference between current assets and current liabilities. This ratio considers liquidity of the company. A company with consistent
operating losses will have shrinking current assets in relation to total assets.
GRAPH 1: WC TO TA OF SIYARAM SILK MILLS LTD
WC
TA
80000
Rs Lakhs
60000
40000
20000
Avg
11-12
Year
10-11
09-10
08-09
07-08
0
Sources: Annual Reports of Siyaram Silk Mills Ltd 2007-08 to 2011-12.
It may be seen from the above graph 1 that the working capital of the company is fluctuating during the study period; whereas the total assets increased year
by year without any proportion to working capital. The correlation coefficient between WC and TA is tested through the hypothesis and the result are indicated
in the table 3.
Retained Earnings (RE) to Total Assets (TA)
This ratio measures the cumulative profitability over the life of the company. Significant retained earnings means a history of profitable operation and ability to
withstand periods of losses.
GRAPH 2: RE TO TA OF SIYARAM SILK MILLS LTD
RE
80000
TA
Rs Lakhs
60000
40000
20000
Avg
11-12
10-11
09-10
08-09
07-08
0
Year
Sources: Annual Reports of Siyaram Silk Mills Ltd 2007-08 to 2011-12
The graph 2 shows that the Retained earnings to Total asset are very less compared to the conventional ratio of 1:1. The correlation between RE and TA was
positive which was tested through the hypothesis and the result is shown in the table 3.
EARNINGS BEFORE INTEREST AND TAX (EBIT) TO TOTAL ASSETS (TA)
This ratio measures the productivity of capital or the earning power of the company. The survival of a company depends on its earnings power. EBIT to TA shows
the operational performance and earning power of the company.
GRAPH 3: EBIT TO TA OF SIYARAM SILK MILLS LTD
EBIT
TA
80000
40000
20000
Avg
11-12
10-11
09-10
08-09
0
07-08
Rs Lakhs
60000
Year
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Graph 3 depicts that the EBIT and TA increased year by year during the study period but not at the same proportion. The correlation between EBIT to TA tested
through the hypothesis and the result was indicated in the table 3.
MARKET VALUE OF EQUITY (MV) TO TOTAL LIABILITY (TL)
A significant market value of equity signifies investors’ belief on the earning power of the company and its solid financial position. Moreover, a company that has
significant market capitalisation can issue new shares to mobilize funds to circumvent temporary financial difficulties.
GRAPH 4: MV TO TL OF SIYARAM SILK MILLS LTD
MV
80000
TL
Rs lakh
60000
40000
20000
Avg
11-12
10-11
09-10
08-09
07-08
0
Year
According to graph 4 the market value of equity and total assets were fluctuating over the period. The correlation between MV to TA tested through the
hypothesis and the result was indicated in the table 3.
NET SALES (NS) TO TOTAL ASSETS (TA)
This ratio measures how efficiently the company uses its assets to generate sales. It measures the capability of the company in dealing with competitive
conditions.
GRAPH 5: NS TO TA OF SIYARAM SILK MILLS LTD
NS
TA
100000
80000
Rs Lakhs
60000
40000
20000
Avg
11-12
10-11
09-10
08-09
07-08
0
Year
Sources: Annual Reports of Siyaram Silk Mills Ltd 2007-08 to 2011-12.
It is clear from the graph 5 that sales to total asset were increased in the same trend during the study period. The correlation between Sales to TA tested
through the hypothesis and the result was indicated in the table 3.
GRAPH 6: Z SCORE OF SIYARAM SILK MILLS LTD
Z Score
3.00
2.48
Z Score
2.50
2.00
1.86
2.31
2.34
1.97
1.50
1.00
0.50
6
5
4
3
2
1
0
0.00
Year
Sources: Calculated as per Annual Reports of Siyaram Silk Mills Ltd 2007-08 to 2011-12
The graph 6 shows the Z score value of the Company. As per Altman’s guideline, the Company’s financial viability is considered to be healthy. The failure in this
situation is uncertain to predict. The correlation of Z score for 5 years average was tested through the hypothesis and the result is indicated in the table 4.
FINDINGS
•
•
•
As mentioned above, the study had made an attempt to analyse the financial strength of Siyaram Silk Mills Ltd by Z score model. It is clear that the financial
strength is healthy. In the initial years of the study period, the financial strength showed improvement and in later years it shows stagnation. Therefore, it
is difficult to predict the future in such situations.
The efficiency in the matter of working capital management helps the company to maintain the good financial health. The working capital management of
the selected company was only average till 2010-11, but it shows improvement in the year 2011-12.
If the EBIT and TA are moving in the same direction, it will adversely affect the financial health of the company.
105
•
•
•
ISSN 2231-1009
Working capital to total assets ratio has been fluctuating during the study period. One of the reasons may that the company is not capable of collecting
materials on credit and has less credit worthiness in the market.
Investment in fixed assets has increased year by year. These are positive signs. The cause maybe, that the company has taken expansion programme.
In spite of high sales, its net profit position is not very high. This may be due to higher fixed operating expenses and low rate of gross margin.
RECOMMENDATION/SUGGESTIONS
Since increasing sales of the company had been yielding sufficient earnings to meet the obligation, additional debt will not remain unpaid. The management
should depend on low cost debt capital to finance its investment programme. As operating leverage depends on techniques of production it is difficult to change
the production system. If market is available cost should be reduced and gross margin is to be improved. The company should try to minimize its cost of goods
sold, enhance working capital and convert debt capital into equity capital.
CONCLUSION
Financial strength of the company is a matter of concern for every stakeholder. In this arena Altman’s Z score plays an important role in judging the financial
soundness of the company. The present study was conducted to analyse the financial strength of the company selected .The study reveals that financial strength
of Siyaram Silk Mills Ltd is healthy and future in this situation is uncertain to predict as per Altman’s guidelines. If the healthy condition is to be sustained in the
years ahead it has to strive for improved productivity and optimal utilisation of all the resources by following the growth path that it has set for itself.
ACKNOWLEDGEMENTS
I take this opportunity to extend my gratitude to my family members for their support and sincere thanks to my colleague Ms. Soheli Ghosh Banerjee for her
advice.
REFERENCES
BOOKS
1. Asish K Battacharyya., (2009) “Introduction to financial statement analysis”. Reed Elsevier India pvt Ltd.
2. Gokul Sinha., (2009) “Financial Statement Analysis” PHI Learning Private Limited New Delhi.
3. Gupta R.L. and Radhaswamy.M, (1995) “Financial Management Analysis” 5th edition, Sultanchand and sons New Delhi.
4. James C. Van Horne., (2002) “Financial Management & Policy.”Pearson Education, Inc and Dorling Kindersley Publishing Inc. New Delhi.
5. Kothari C.R.., (2004), “Research Methodology Methods and Techniques.” New Age International Publisher, New Delhi.
6. Pandey I.M., (2004), “Financial Management.” Vikas Publishing House Pvt Ltd. New Delhi.
JOURNALS AND OTHER ARTICLES
7. Altman, (1968). “Financial ratios discriminate analysis and prediction of corporate bankruptcy”, Journal of finance, sep. pp. 598-609.
8. Altman, I.E.R.G., Narayana,P(1977). “Zeta analysis:a New Model to identify Bankruptcy Risk of corporation”, Journal of Banking and Finance, June,pp.29-54.
9. ANNUAL REPORTS OF SIYARAM SILK MILLS LTD 2007-08 TO 2011-12.
10. Beaver, W. H. (1966), "Financial Ratios as Predictors of Failure empirical research in according selected studies," Journal of Accounting Research,
supplement, pp. 71-127.
11. Bhargav H. Pandya (2012) “Financial analysis of Tata Steel Ltd –A Case Study” International Journal of research in Commerce & management, January, PP.
93-97.
12. Deakin, E. (1972), "A Discriminant Analysis of Predictors of Business Failure," Journal of Accounting Research, spring, 1972, pp. 167-179.
13. Fieldsend, Longford and McLeay, 1987, “Sector and size effects in ratio analysis: indirect tests of ratio proportionality.” Accounting and Business Research.
pp. 17/66, 133-140.
14. J.R.Raiyani and Dr. R.B. Bhatasna (2011) “A study on Financial Health of Textile Industry In India; A Z – Score Approach”. Indian journal of Finance, Jan .pp.
09- 16.
15. Kannadhasan.M (2007) “ Measuring Financial Health of A public Limited Company using ‘Z’ Score Model – A Case Study” Management
Accountant,June,2007,pp 469-479.
16. Perttunen and Martikainen, 1990, “The functional form of earnings and stock prices: international evidence and implications for the E/P anomaly.” Journal
of Business Finance and Accounting. Pg.21/3, 395-408.
17. Suriyamurthy. S and Velavan.M (2010) “Measuring Financial Health of E.I.D Parry sugar Limited Using ‘Z’ Score Model – A case Study” Indian Journal
Finance, November, pp.30-43.
18. Zavgren, C. V. (1985), "Assessing the Vulnerability of American Industrial Firms: A Logistic Analysis," Journal of Business Finance and Accounting, spring, pp.
19-45.
APPENDIX
APPENDIX 1
MEASURING FINANCIAL STRENGTH OF A TEXTILE COMPANY BY Z SCORE MODEL-A CASE STUDY
Source of Data: Siyaram Silk Mills Ltd. Annual Reports
PARTICULARS
Units
2011-12
2010-11
2009-10
2008-09
2007-08
Fixed Assets
Rs.Lakhs
26499.72 25304.18 22874.53 20681.26 20653.73
Current Assets
Rs.Lakhs 46062.19 41543.04 25140.21 24757.7
27606.78
Total Assets
Rs.Lakhs 72561.91 66847.22 48014.74 45438.96 48263.51
Retained Earnings
Rs.Lakhs 8910.19
5186
1184.4
582.42
486.87
Profit Before Tax
Rs.Lakhs 8121
8284
4899.85
1464.22
1225.03
Interest
Rs.Lakhs 2401.86
1505.73
1196.77
1682.78
1072.17
Earnings Before Interest and tax
Rs.Lakhs 10522.86 9789.73
6096.62
3147
2297.2
Shareholders fund
Rs.Lakhs 26712.26 21988.29 20661.05 37503.88 40684.12
Non Current Liabilities
Rs.Lakhs 12283.45 11089.89 1829.14
1795.14
1745.14
Current Liabilities
Rs.Lakhs 33566.2
33769.89 10224.55 6139.94
5831.25
Total Liabilities
Rs.Lakhs 72561.91 66848.07 32714.74 45438.96 48260.51
Sales
Rs.Lakhs 91554.06 85954.52 65972.72 53011.57 48609.62
Working Capital
Rs.Lakhs 12495.99 7773.15
14915.66 18617.76 21775.53
Market Price per Share
Rs.
285
351
164.5
57
120.95
Number of Equity Shares
Numbers 9372048
9372048
9372048
9372048
9372048
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ISSN 2231-1009
APPENDIX 2
't' TEST OF RATIOS FOR ASCERTAINING THE LEVEL OF CONFIDENCE
Sl.
Particulars
(a)
(b)
(c)
(d)
(e) = (c)-(d)
Working Capital/
Total Assets
Retained
Earnings/ Total
Assets
X2
EBIT/ Total
Assets
Market Value of EQ /
Book Value of Total
Liabilities
X4
X1
X3
t = r x ⥌[(n-2)/ (1-r2)]
Where, n= 5
(n-2) / (1-r2)
7.4768
61.4625
21.2279
6.9894
Square root (a)
2.7344
7.8398
4.6074
2.6438
Calculated Value 't'=
-2.1158
7.6461
4.2694
1.9974
Degree of Freedom=
(n-2)=3
(n-2)=3
(n-2)=3
(n-2)=3
Assuming Confidence Level = 5%
2.353
2.353
2.353
2.353
Table Value at 5% Confidence Level
=
Difference=
-4.4688
5.2931
1.9164
-0.3556
Remarks
Not Significant
Significant
Significant
Not Significant
(If the calculated value of 't' is more than the table value, then there is significant difference)
Sales/ Total
Assets
X5
27.5362
5.2475
4.9534
(n-2)=3
2.353
2.6004
Significant
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ISSN 2231-1009
ANALYSIS OF RECRUITMENT AND SELECTION PROCESS AT SBI LIFE INSURANCE COMPANY LIMITED
P SWETHA
ASST. PROFESSOR
DEPARTMENT OF BUSINESS MANAGEMENT
BADRUKA COLLEGE PG CENTRE
KACHIGUDA
ABSTRACT
Successful employment planning is designed to identify an organization’s human resource needs. Once these needs are known, an organization will want to meet
them. Organizations have to recruit people with requisite skills, qualifications and experience, if they have to survive and flourish in a highly competitive
environment. To be effective, they need to tap all available sources of supply, both internal and external. Recruitment provides a pool of applicants for selection.
Selection is much more than just choosing the best candidate. It is an attempt to strike a balance between what the applicant can and wants to do and what the
organization requires. Successful selection activities entail a lot of careful planning and careful thought. The Selection process is composed of steps, each of which
provides decision makers with information that will help them predict whether an applicant will be a successful job performer. One way to conceptualize this is to
think of each step as a higher hurdle in the race. The applicant able to clear all the hurdles wins the race and the job offer. The purpose of the study is to
understand the recruitment and selection process of SBI Life Insurance Company and its efficiency. The data gave knowledge about loyalty & their opinion about
SBI Life Insurance. Information was collected using questionnaire from 30 respondents. The information about various attributes & factors was collected. All the
data collected was filtered & analyzed, represented in the form of graphs & charts .It is found that most of the recruited people are aware of the insurance sector
and the people who are not aware of the insurance sector are made aware through the training before sitting for the test.
KEYWORDS
Recruitment and Selection, Selection process, headhunting, Personnel planning, selection testing, recruitment process.
INTRODUCTION
H
uman Resource is a basic need of any work to be done. According to Arthur Lewis: “There are great differences in development between countries which
seem to have roughly equal resources, so it is necessary to enquire into the difference in human behaviors”. This study is all about recruitment and
selection process which is an important part of any organization. Recruitment highlights each applicant’s skills, talents and experience. Their selection
involves developing a list of qualified candidates, defining a selection strategy, identifying qualified candidates, thoroughly evaluating qualified candidates and
selecting the most qualified candidate. It is said if right person is appointed at right place the half work has been done. This study covers all the important points
that should be kept in mind while recruitment and selection process and have conducted a research study through a questionnaire that got filled with all the
sales managers of the SBI Life Insurance , Hyderabad, Andhra Pradesh and tried to find out which methods and various other information related to recruitment
and selection and tried to come to a conclusion at what time mostly the manpower planning is done , what are the various methods used for recruiting the
candidates and on what basis the selections is done. SBI LIFE has a well-articulated equal opportunity policy, which lays strong emphasis on hiring of individuals
irrespective of age, race, caste or gender as a best practice in recruitment.
According to Costello (2006) recruitment is described as the set of activities and processes used to legally obtain a sufficient number of qualified people at the
right place and time so that the people and the organization can select each other in their own best short and long term interests. In other words, the
recruitment process provides the organization with a pool of potentially qualified job candidates from which judicious selection can be made to fill vacancies.
Successful recruitment begins with proper employment planning and forecasting. In the staffing process, an organization formulates plans to fill or eliminate
future job openings based on an analysis of future needs, the talent available within and outside of the organization, and the current and anticipated resources
that can be expanded to attract and retain such talent. Also related to the success of a recruitment process are the strategies an organization is prepared to
employ in order to identify and select the best candidates for its developing pool of human resources. Organizations seeking recruits for base-level entry
positions often require minimum qualifications and experiences.
The focus of recruitment and selection according to Montgomery (1996) is on matching the capabilities and inclinations of prospective candidates against the
demands and rewards inherent in a given job. Jovanovic (2004) said recruitment is a process of attracting a pool of high quality applicants so as to select the best
among them. For this reason, top performing companies devoted considerable resources and energy to creating high quality selection systems.
Recruitment and selection process are important practices for human resource management, and are crucial in affecting organizational success Jovanovic
(2004). Due to the fact that organizations are always fortified by information technology to be more competitive, it is natural to also consider utilizing this
technology to re-organize the traditional recruitment and selection process through proper decision techniques, with that both the effectiveness and the
efficiency of the processes can be increased and the quality of the recruitment and selection decision improved. A human resource information system is a
system exploited to acquire, store, manipulate, analyze, retrieve, and distribute relevant information regarding an organization's human resources (Huselid,
1995). The purpose of the system is to support human resource services from the strategic level down to the tactical and operational levels.
A critical role for human resource management is how to elicit positive reactions from candidates when discussing administrative roles. When opportunities are
presented to employees to move towards careers in administration (i.e., tapping shoulders of potential candidates), often a negative reaction occurs. People
without administrative experiences have negative perceptions and views of the role of the administrator. In attempts to attract and support individuals to the
administrator’s position it is necessary to identify what barriers prevent potential candidates from applying to the pool. Job complexity and workload are
perceived by employees as the two considerations having had the greatest impact on the number of applicants for administrative positions. Other factors
include poor remuneration as it relates to demands and expectations of the job and lack of resources and support structures in. Many highly qualified,
competent, and talented employees dismiss careers in administration because they do not want to sit in an office all day. Until some alternative image is
understood, or at least some support and resources put in place, a problem of pre-screening and identification will not likely improve (Mullins, 1999).
NEED FOR THE STUDY
The success of organizations in this modern business environment depends on the calibre of the manpower that steers the day to day affairs of the
organizations. The process of recruiting and selecting all categories of employees into both private and public companies has been a matter of concern to many
and needs attention.
The study is to:
•
Understand the Recruitment and Selection process of SBI Life Insurance.
•
Awareness of Recruited people on Insurance sector.
•
Various sources of recruitment process.
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OBJECTIVE OF THE STUDY
The objectives of the study are:
•
To search or headhunt people whose skill fits into the company’s values.
•
To learn what is the process of recruitment and selection that should be followed.
•
To build an effective Recruitment and Selection process in the organization.
•
To understand the gap between employee expectations of the job before and after joining.
SCOPE OF THE STUDY
The benefits of the study for the Researcher are that it helped to gain knowledge and experience and also provided the opportunity to study and understand the
prevalent recruitment and selection procedures.
The key points of the study are:
•
To study the facts about SBI LIFE INSURANCE.
•
To understand and analyze various HR factors including Recruitment and Selection procedures at SBI LIFE.
•
To suggest any measures/ recommendations for the improvement of recruitment procedures.
Generally two types are data are used for any research, which are very important for the research; these can be discussed as –
1. Primary Data
2. Secondary Data
Primary Data –
Primary data are the data which are original in character, obtained for the first time, being collected from the respondents, either through questionnaire or
through personal interviews. This can be collected by various methods like
•
Surveys
•
Observation
•
Experimentation
•
Measurements
•
Personal interview
•
Telephonic interview
•
Questionnaires
But my chosen way of collecting data was through Personal Interview and Questionnaires.
Secondary data –
Secondary data is the data, which has been collected by someone else for some other purpose and is used by the researcher in his research for study.Various
sources of secondary data are Catalogues, Brochures, Magazines and Websites, Television etc. In this project I made use secondary data for gaining more and
more about the company, its products and various benefits the sales managers will be getting. For acquiring this knowledge I have studied secondary sources
like company websites, brochures, paper presentations etc.
DATA ANALYSIS AND INTERPRETATION
After the data is collected the researcher has to analyze the collected data, the researcher has to classify the data into purposeful and usable category. The
analysis can be done by means of various statistical measures. For representation of the data use of bar charts, Pie Chart is made.
Once the data analysis is done, the obtained information is interpreted and various inferences are made and also conclusions are drawn related to the
objectives, which have been listed, in the beginning of project. Sample size- 30 (newly recruited employees of front line sales team in SBI life insurance)
Q1. How did you apply for SBI LIFE?
FIGURE NO. 1: APPLIED FOR SBI LIFE
internal ref
job portals
consultants
others
7% 3%
50%
40%
INTERPRETATION
The above observation shows that The main source of recruitment is through internal reference. The other sources of recruitment are through Job portals,
Consultants and advertisements.
Q2. What is your educational qualification?
FIGURE NO. 2: EDUCATIONAL QUALIFICATION
diploma
graduate
postgraduate
others
0% 0%
33%
67%
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INTERPRETATION
From the above chart, it is observed that 67 % of the people recruited to SBI LIFE INSURANCE are graduates and 33% are post graduates.
Q3.How many years of experience do you have?
FIGURE NO. 3: EXPERIENCE (IN YEARS)
0-2yrs
2yrs-4yrs
4yrs-6rs
others
7%
36%
30%
27%
INTERPRETATION
It is observed that, 36% of the recruited people are freshers, 27% of the sales team are of 2-4 yrs of experience, 30% of them have 4-6 yrs of experience and 7%
of them are of 7plus years of experience.
Q4. How were the arrangements during the day of your interview?
FIGURE NO. 4: ARRANGEMENTS MADE DURING THE INTERVIEW
good
very good
excellent
13% 0%
dissatisfied
23%
64%
INTERPRETATION
It is observed that arrangements were made very good during the interview.
Q5. How many rounds of interview were conducted?
FIGURE NO. 5: ROUNDS OF INTERVIEW
one
two
three
four
0%
33% 23%
44%
INTERPRETATION
44% of the respondents had undergone two rounds of interview, 33% had three rounds of interview and 23% had a single round of interview.
Q6. Was proper support given to you after the release of the offer letter?
FIGURE NO. 6: SUPPORT PROVIDED BY THE COMPANY
strongly agree
agree
strongly disagree
disagree
0%
7%
43%
50%
INTERPRETATION
It is observed that 50% of the respondents agree that they were given proper support after the release of the offer letter.
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Q7. How much time did it take for you to join the company from your date of application?
FIGURE NO. 7: TIME TO JOIN THE COMPANY FROM THE DATE OF APPLICATION
10 days
20 days
30 days
more than 30 days
20% 13%
10%
57%
INTERPRETATION
57% of the respondents state that it took 30 days for joining the company from the date of application, it took 10 days for 13% of the respondents ,20 days for
10% of the respondents and it took more than 30 days for 20% of the respondents.
Q8. Is your job relevant to your educational background?
FIGURE NO. 8: JOB RELEVANCY TO EDUCATIONAL QUALIFICATIONS
strongly agree
agree
strongly disagree
disagree
3% 10%
14%
73%
INTERPRETATION
It is observed that 73% of the respondents feel that there is no job relevancy to their educational qualifications.
Q9. Has someone explained to you about your role in the company?
FIGURE NO. 9: CLARITY ABOUT JOB ROLE
yes
no
27%
73%
INTERPRETATION
73% of the respondents agree to the statement that they have a job role clarity.
Q10. How different is the recruitment process at SBI LIFE from other companies?
FIGURE NO. 10: RECRUITMENT AT SBI LIFE IS
completely different
quite different
similar
not applicable
17%
33%
7%
43%
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INTERPRETATION
It is observed that 43% of the respondents feel that the recruitment process at SBI LIFE is quite different whereas 33% of them say that it is not applicable, 17%
of respondents say that it is completely different. Only 7% of respondents say that it is similar to other companies recruitment process.
Q11. Are you satisfied with the recruitment and selection process at SBI LIFE?
FIGURE NO. 11: LEVEL OF SATISFACTION WITH THE RECRUITMENT AND SELECTION PROCESS AT SBI LIFE
dissatisfied
moderate
satisfied
highly satisfied
0% 4%
23%
73%
INTERPRETATION
23% of the respondents are highly satisfied with the recruitment and selection process at SBI LIFE, 73% are satisfied respondents.
SUGGESTIONS
Based on the findings in the Research, following suggestions are made –
•
Company should go for regular Market Survey for finding out the smart worker who can stay under the Managers Sales Team, and will generate long term
business.
•
HR Manager should take the feedback from the existing sales managers so that he/ she can easily understand the sales manager’s problems as well as they
can recommend new changes.
•
The company should concentrate on providing various training programs for the freshers before they join the company.
•
The company should try to conduct prior induction programs to the senior level managers and provide them with some information about the HR and
travel policies.
CONCLUSIONS
•
•
•
•
•
•
•
•
•
It is found that in the last five years the Indian economy has progressed, which has increased the average purchasing power & the insurance sector has
contributed significantly in this.
Since last five to six years many Private Companies have entered in insurance sectors & because of which the Indians are having number of options in front
of them investing their money & to safeguard the life.
While doing this project it is found that recruiting of the sales managers is done by the HR manager
The study of the profile of the sales manager is depending on their industry background i.e. their work experience and the age wise distribution.
The level of awareness of the prospects about the private insurance company has increased because of the heavy advertising ad marketing by the
companies over the period of time.
It is important to appoint only those prospects as sales manager, who can give & generate long term business for the company, so to analyze the prospects
& study their status is very important thing.
Most of the prospects wanted to join to improve their Association with the No. 1 Private Life Insurance Company.
Maximum percentage of employee’s job is not relevant to their educational background.
Maximum number of employees who got recruited recently were completely satisfied with the recruitment and selection process at SBI LIFE INSURANCE.
REFERENCES
1. Aswathappa .K, (2010) ,“Human Resource and Personnel management”, McGraw-Hill Education
2. De Cenzo, David. A and Robbins, Stephen. P, (2007), “Human Resource Management”, Wiley-India Publishers.
3. Rao ,VSP ,(2007), “Human Resource Management”, Excel books
4. Robbins, Stephen. P, (1996 ), “Organizational behavior”, Prentice Hall of India
JOURNALS & ARTICLES
5. IRDA JOURNAL
6. BROCHURES & REPORTS OF THE COMPANY
WEBSITES
7. http://dspace.knust.edu.gh:8080/jspui/bitstream/123456789/4294/1/FINAL%20THESIS%20%20EDWARD%20DJABATEY.pdf
8. www.citehr.com
9. www.economictimes.com
10. www.insuranceguide.com
11. www.sbilife.co.in
12. www.skope.ox.ac.uk/sites/default/files/SKOPEWP88.pdf
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STRUCTURAL CHANGE IN WESTERN STATES OF INDIA
TINA SINGH
ASST. PROFESSOR
MATA GUJRI COLLEGE
FATEHGARH SAHIB
ABSTRACT
Structural transformation is a gradual change in the basic structure of an economy. It is linked with the development process and prevails in mostly all economies
of the world. The present paper attempts to study structural change in addition to certain socio-economic indicators in the western states of India. Time period of
the study is from 1980-81 to 2010-11. A distinguishing characteristic of structural change in these states has been a decline in the share of primary sector in the
NSDP and an increase in the share of secondary and tertiary sectors in the NSDP. Urbanisation, an important indicator of structural transformation was found in
all western states but in varying levels. It was highest for Maharashtra initially and was taken over by Goa in the succeeding years, whereas Rajasthan showed
the least rate of urbanization throughout so much so that it showed figures below the All India level at all points of time. Some degree of inequality was also
found in the western states with urban inequality being greater than rural during all points of time. Highest level of inequality was found in Maharashtra majority
of time. Gujarat, Rajasthan and Goa interchangeably showed the least levels throughout the time period. The socio-economic indicator of population below
poverty line has witnessed Goa performing well by showing the least rates amongst the rest of western states. In the demographic indicators of sex ratio and
literacy, Goa has performed much better than rest of states in the West in both the indicators.
JEL CODES
OO, O1
KEYWORDS
Primary sector, secondary sector, structural change, structural transformation, tertiary sector.
1. INTRODUCTION
S
tructural transformation is a unique feature prevailing in mostly all economies of the world. The economies may be national or regional in nature. India
too has observed a gradual structural change in the past decades. The present study is of structural change and certain socio-economic indicators of the
western states of India. An attempt is made to study the manner in which the adjoining states located in the West are transforming with time. The time
period of the study is from 1980-81 to 2010-11. Major sources of data have been CSO, RBI publications, Planning Commission and Socio-economic Review of
States.
The western states have performed well in the last few years with some degree of disparity among them. Rajasthan attributes its growth to the primary sector
with a fairly strong tertiary sector. Performance of Goa and Maharashtra was dependent on their secondary and tertiary sectors while that of Gujarat was spread
reasonably over the three sub-sectors i.e. primary, secondary and tertiary.
Structural transformation in an economy is defined as the reallocation of economic activity across three broad sectors (agriculture, manufacturing, and services)
that accompany the process of modern economic growth. Major structural shifts in output and employment accompany a sustained and rapid growth of per
capita output of a country has been a well-known fact since the original studies of economic growth by Fisher, Clark and Kuznets. Such structural shifts have
been seen as mechanisms influencing the pace of growth as well as being the result of growth. Either of two tripartite divisions of the economy closely
resembling each other—the primary-secondary-tertiary or agriculture-industry-services divisions—have been used to describe the typical pattern of structural
change associated with what Kuznets called modern economic growth.
Research has been conducted since long across the world to study the process of structural change/transformation in various economies. Choliz and Duarte
(2004) analysed the structural and technological changes in the Spanish economy between 1980 and 1994; Giesecke (2005) investigated the sources of growth
and change in the Australian economy over the period 1996/97 – 2001/02 relying on the results from historical and decomposition simulations with the
MONASH model. Memedovic and Iapadre (2009) in their paper presented a quantitative analysis of sectoral trends in the global economy and the historical
evolution of agriculture, industry and services in terms of their share of world value added. The analysis referred to six continental regions and covers a period of
40 years. All studies found the occurrence of structural transformation in these economies. Moving closer, the prevalence of structural transformation has also
been witnessed in the Indian sub-continent. Venkatramaiah, Kulkarni and Argade (1984) in their study have examined the structural changes that have taken
place in the Indian economy covering the time period 1951 to 1963 i.e. the initial decade of the plan period using the input-output tables. Sastry, Singh,
Bhattacharya and Unnikrishnan (2003) examined the growth of linkage among the agriculture, industry and services sectors in the economy, using both an
input-output framework and a simultaneous equation framework during the period 1970-71 to 2000-01. Looking at the sub-national level too, Singh and Joshi
(1989) have examined the structural changes in the economy of Uttar Pradesh for the period 1970-71 to 1977-78 by using the input-output analysis. Kannan
(2005) has attempted to place the debate on Kerala’s lopsided development in a balanced perspective by analysing the turnaround in growth.The above studies
highlight the prevalence of structural transformation in all economies; at national or state level thus suggesting a firm base to the present study of structural
change and certain socio-economic indicators of West India.
3. STATEMENT OF THE PROBLEM
The present paper attempts to study structural change/transformation in addition to certain socio-economic indicators in the western states of India. It
determines the relative performance of the western states viz-a- via each other in various indicators of structural change in the last few decades.
4. OBJECTIVES
1. To find whether the state economies of West India are undergoing any structural change/transformation.
2. To determine the relative performance of the states of West India on various socio-economic indicators.
5. DATA ANALYSIS, RESULTS AND DISCUSSION
5.1 COMPOSITION OF NSDP OF WESTERN STATES
Table 1 presents the estimates of the shares of primary, secondary and tertiary sectors in NSDP for the years 1980-81, 1990-91, 2000-01 and 2010-11. It is
observed that structural transformation has taken place in all the four states of West India with prominent interstate differences.
During 1980-81, Rajasthan held the first and Gujarat held the second position in the primary sector each having a share of 52.26% and 40.80% in the NSDP. They
were followed by Goa whose share was 28.54% which was followed by Maharashtra with a share of 28.10% in the NSDP. All four states witnessed a decline in
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the share of primary sector in NSDP with Rajasthan showing a steep fall of around 20% where its primary sector's share decreased from 49.18% in 1990-91 to
28.51% in 2000-01.The decline was witnessed by all four states at all points of time with the exception of the last decade where Rajasthan, Gujarat and Goa saw
a marginal increase in the share of their primary sectors in the NSDP. It was only Maharashtra which saw a continuous and gradual decline in the primary
sector's share in NSDP.
The declined share of primary sector in NSDP in the Western States has been absorbed by a rise in the secondary and tertiary sectors. The share of secondary
sector did not show a significant increase in these states rather tended to decline at some points of time. The highest share of secondary sector in NSDP in 198081 was shown by Maharashtra (35.09%) followed by Goa (29.66%) and Gujarat (27.24%). Rajasthan showed the least share of 18.02% for the same year and rose
to 23.22% in 2010-11. The years following 1980-81 saw Maharashtra and Goa show varying shares of secondary sector in NSDP. It was only Gujarat to have
shown a gradual increase of secondary sector from 27.24% in 1980-81 to 30.91% in 1990-91 to 32.63 % in 2000-01 and finally to 33.60% in 2011.
A unique feature of these economies has been the increasing importance of the tertiary sector. The economies dominated by the primary sector initially have
transformed to be predominantly service sector based. Maharashtra and Goa have shown highest share of tertiary sector in NSDP through all points of time. For
Maharashtra it was 36.80% in 1980-81, rose to 43.01% in 1990-91, 57.92% in 2000-01 and finally to 58.52% in 2010-11. Similarly, for Goa it was 41.78% in 198081, increased to 47.84% in 1990-91, rose to 53.17% in 2000-01 and declined marginally to 46.24% in 2010-11. Next in line was Gujarat followed by Rajasthan.
The share of tertiary sector in NSDP has shown an increase for Maharashtra and Rajasthan throughout whereas it tended to fall slightly in the last decade for
Goa and Gujarat.
TABLE 1: COMPOSITION OF NSDP OF WESTERN STATES (In Percent)
1980-81 1990-91 2000-01 2010-11
RAJASTHAN
Primary Sector
52.26
49.18
28.51
31.71
17.79
26.57
23.22
Tertiary Sector
29.70
33.02
44.90
45.06
GUJARAT
Primary Sector
Secondary Sector
Tertiary Sector
40.80
27.24
31.95
33.31
30.91
35.76
19.01
32.63
48.34
23.51
33.60
42.88
MAHARASHTRA
Primary Sector
Secondary Sector
Tertiary Sector
28.10
35.09
36.80
23.47
33.52
43.01
17.28
24.79
57.92
13.42
28.05
58.52
GOA
Primary Sector
28.54
Tertiary Sector
41.78
Source: CSO
21.71
30.44
47.84
14.85
31.97
53.17
23.66
30.09
46.24
5.2 URBANISATION
The period under study saw a rise in the process of urbanisation in all the western states of India. As depicted in Table 2 it was seen that the rate of urbanization
was highest for Maharashtra in 1981 being 35.03% which was taken over by Goa in the succeeding years. Goa showed an urbanization rate of 41.01% in 1991
which rose to 49.76% in 2001 and finally with a major increase of 12% became 62.17% in 2011. It was followed by Maharashtra and Gujarat in the respective
years with Rajasthan on the fourth place throughout bearing the least figures of 21.05% in 1981, 22.88% in 1991, 23.39% in 2001 and 24.89% in 2011. Rajasthan
was the only western state to have shown urbanization rates below the All India level at all points of time of the study.
TABLE 2: URBANISATION (In Percent)
States
1981
1991
2001
RAJASTHAN
21.05 22.88 23.39
GUJARAT
31.10 34.49 37.36
MAHARASHTRA 35.03 38.69 42.43
GOA
32.03 41.01 49.76
ALL INDIA
23.34 25.71 27.81
2011
24.89
42.58
45.23
62.17
31.16
Source: Socio Economic Review of Gujarat
5.3 GINNI CO-EFFICIENT
Table 3 shows the Ginni Co-efficient values for West India. Ginni Co-efficient measures the level of inequality in population. Lower the Ginni Co-efficient greater
is the level of equal distribution with 0 corresponding to complete equality. Higher the Ginni Co-efficient higher is the level of unequal distribution with 1
corresponding to complete inequality.
All states of West India showed a greater level of inequality in the urban areas as compared to the rural for all points of time. Gujarat showed the minimum in
the rural sector in the years 1983-84 (0.25) and 1993-94 (0.23) while Rajasthan showed the least values in 1999-00 (0.20) and 2004-05 (0.24). However, the
lowest level of inequality was taken over by Goa in 2009-10 by showing the least Ginni Co-efficient of (0.21) as compared to the rest of western states. In case of
urban sector, Gujarat showed the least values for the majority of the years being 0.26 in 1983-84, 0.28 in 1993-94, 0.28 in 1999-00, 0.30 in 2004-05 and finally
0.32 in 2009-10. Maharashtra shows the highest level of inequality for the major time period in both rural and urban sectors with the exception in 1983-84
where Rajasthan showed the maximum in the rural sector (0.34) and in 2004-05 where Goa showed the maximum in the urban sector (0.40).
The Ginni Co-efficient of the Western States was less than the All India level at various points of time (with the exception of Maharashtra, Goa and Rajasthan in
certain years) thereby representing a greater level of equality in West India than seen at the national level.
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TABLE 3: GINNI COEFFICIENT
Rural Urban
1983-84
RAJASTHAN
0.34
0.30
GUJARAT
0.25
0.26
MAHARASHTRA 0.28
0.32
GOA
N.A.
N.A.
ALL INDIA
0.29
0.32
1993-94
RAJASTHAN
0.26
0.29
GUJARAT
0.23
0.28
MAHARASHTRA 0.30
0.35
GOA
N.A.
N.A.
ALL INDIA
0.28
0.34
1999-2000
RAJASTHAN
0.20
0.28
GUJARAT
0.23
0.28
MAHARASHTRA 0.25
0.34
GOA
N.A.
N.A.
ALL INDIA
0.26
0.34
2004-05
RAJASTHAN
0.24
0.36
GUJARAT
0.26
0.30
MAHARASHTRA 0.30
0.37
GOA
0.29
0.40
ALL INDIA
0.30
0.37
2009-10
RAJASTHAN
0.22
0.37
GUJARAT
0.25
0.32
MAHARASHTRA 0.26
0.41
GOA
0.21
0.40
ALL INDIA
0.29
0.38
5.4 POPULATION BELOW POVERTY LINE
Population below poverty line is depicted in Table 4 for western states of India and it shows that Maharashtra had the highest level of poverty in 1983-84
(43.44%). It fell to 36.86% in 1993-94 and further to 25.02% in 1999-2000. However it showed a slight increase of around 5% in 2004-05 and became 30.7%.
Maharashtra was followed by Rajasthan which showed poverty rate of 34.46% in 1983-84 and fell to 22.1% in 2004-05. Similarly, Gujarat also witnessed a fall in
its poverty level from 32.79% in 1983-84 to nearly its half (16.8%) in 2004-05. Goa performed the best by showing least poverty levels of 18.9% in 1983-84. It fell
further to 14.92% in 1993-94 and to 4.40% in 1999-00. However like all other western states, Goa also witnessed an increase in poverty levels in 2004-05.
Besides Maharashtra all western states showed poverty levels below the national level at all points of time.
TABLE 4: POPULATION BELOW POVERTY LINE (In Percent)
States
1983-84 1993-94 1999-2000 2004-05
RAJASTHAN
34.46
27.41
15.28
22.10
GUJARAT
32.79
24.21
14.07
16.8
MAHARASHTRA 43.44
36.86
25.02
30.70
GOA
18.90
14.92
04.40
13.80
ALL INDIA
44.48
35.97
26.10
27.50
5.5 SEX RATIOS
In the present indicator of sex ratio (Table 5), Goa has performed well viz- a via the rest of the western states at all points of time having values of 975, 967, 960
and 968 in 1981, 1991, 2001 and 2011 respectively which are much higher than the national level during the same time period. Goa has been the only saving
grace to have pulled off well as compared to the other western states but has shown a downward trend in its values from 1981 to 2001. It was only in 2011 that
it showed a rise in the sex ratio to 968. It was followed by Gujarat where the sex ratio was 942 in 1981 and slipped to 918 in 2011 not showing a very impressive
picture. Similarly, Maharashtra showed a figure of 937 in 1981 and dropped to 925 in 2011. Rajasthan was the only state which managed to show a little
increase in the sex ratio overtime. It rose from 919 in 1981 to 926 in 2011.
TABLE 5: SEX RATIOS
States
1981 1991
RAJASTHAN
919
910
GUJARAT
942
934
MAHARASHTRA 937
934
GOA
975
967
ALL INDIA
934
927
2001
922
921
922
960
933
2011
926
918
925
968
940
5.6 LITERACY RATES
The state of Goa showed the highest figures in the literacy rates too which gradually increased through the entire time period. It showed literacy rates of
65.71%, 75.51%, 82.01% and 87.40% in 1981, 1991, 2001 and 2011 respectively which were much higher than the national figures of 43.57%, 52.21%, 64.84%
and 74.04% for the same time period. It was followed by Maharashtra and Gujarat whose rates increased over time. Rajasthan showed a dismal state here too
by showing the least rates at all points of time. The rates rose from 30.11% in 1981 to 38.55% in 1991, with a huge leap of 22% in 2001 it reached to a figure of
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60.41% and finally to 67.06% in 2011. Rajasthan was the only state to have figures well below the national level. Gujarat and Maharashtra, even though having
figures lower than Goa managed to remain above the All India level.
TABLE 6: LITERACY RATES (Percent)
States
1981
1991
2001
RAJASTHAN
30.11 38.55 60.41
GUJARAT
44.92 61.29 69.14
MAHARASHTRA 57.24 64.87 76.88
GOA
65.71 75.51 82.01
ALL INDIA
43.57 52.21 64.84
2011
67.06
79.31
82.91
87.40
74.04
6. CONCLUSION
The present study throws light on various interconnected factors which determine the process of structural transformation in the states of West India. A
distinctive characteristic of structural change in these states has been seen in the declining share of primary sector in the NSDP and the increasing share of
secondary and tertiary sectors in NSDP during the time period of the study. Maharashtra followed by Goa have shown the highest shares of services sector in the
NSDP followed by Gujarat. Rajasthan, although being an agriculturally dominated state has also witnessed a rise in the services sector.
One of the important indicators of structural transformation is urbanization which was found in all western states but in varying levels. It was seen that the rate
of urbanization was highest for Maharashtra in 1981 initially and was taken over by Goa in the succeeding years. Whereas Rajasthan had the least rate of
urbanization throughout the period under study so much so that it was the only western state to have shown figures below the All India level at all points of
time.
Inequality was also witnessed in the western states with urban inequality being greater than rural during all points of time. Gujarat, Rajasthan and Goa
interchangeably showed the least levels throughout the time period. Highest level of inequality was found in Maharashtra at majority of time. The Ginni Coefficient of the Western States was less than the All India level at various points of time (with the exception of Maharashtra, Goa and Rajasthan in certain years)
thereby representing a greater level of equality in West India than seen at the national level.
The socio-economic indicator of population below poverty line has witnessed Goa outperforming the other western states by showing the least rates in
population below poverty line throughout the time period. Maharashtra on the other hand, witnessed the maximum poverty levels and the only western state
to show poverty rates above the national level at all points of time.
In case of demographic indicator of sex ratio, Goa has shown the highest figures with Rajasthan showing the least. Goa showed the highest rates of literacy too
followed by Maharashtra. It was Rajasthan to have faired the worst amongst the rest.
Thus, structural transformation is taking place which is an important feature of development with Goa leading in majority of indicators followed by Maharashtra
in the other few than rest of West India on various indicators. Appropriate steps need to be taken so that these states may develop in a progressive manner so
as to achieve balanced growth and development and be in harmony with each other.
7. SCOPE OF THE FUTURE RESEARCH
The present study was conducted taking into consideration only the western states of India. It can be further extended to study structural change by including
various other states of India and India as a whole. Apart from this structural change in nations other than India can be studied individually or in comparative
terms. Taking into consideration the limitations of the study, as the data were mainly collected from secondary sources, certain gaps in data were found in few
indicators due to the non-availability of data for specific years from the same source.
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South Australia. Viewed on 15 May, 2013 www.unisa.edu.au/commerce/events/docs/2005/giesecke
Kannan, K.P. (2005): “Kerala’s Turnaround in Growth: Role of Social Development, Remittances and Reform”, Economic and Political Weekly, Vol 40, pp
548-54.
Kuznets, S. (1961): “Quantitative Aspects of the Economic Growth of Nations: IV. Long Term Trends in Capital Formation Proportions”, Economic
Development and Cultural Change, Vol 9, pp 1-124.
Memedovic, O. and Lelio, A. (2009) : “Structural Change in the World Economy: Main Features and Trends”,Working Paper 24/2009,Research and
Statistics Branch, United Nations Industrial Development Organisation.Viewed on 25 May, 2013 http://www.unido.org/fileadmin/user_media/Publications
/Research_and_statistics/Branch_publications/Research_and_Policy/Files/Working_Papers/2009/WP%2024%20Structural%20Change%20in%20the%20W
orld%20Economy%20-%20Main%20Features%20and%20Trends.pdf
Planning Commission Website: Databook on DCH, April, 2013. Viewed on 25 June, 2013 www.planningcommission.org.in
RBI’s Handbook of Statistics of Indian Economy 2010-2011.
Sastry, D.V.S., Singh, B., Bhattacharya, K. and Unnikrishnan, N.K. (2003): “Sectoral Linkages and Growth Prospects: Reflections on the Indian Economy,”
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Singh, S. and Joshi, Y. (1989): “Structural Changes in the Economy of Uttar Pradesh during Seventies: An Input-Output Study”, The Indian Economic Journal,
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Socio Economic Review of Gujarat, 2010-2011.
Venkatramaiah, P., Kulkarni, A.R. and Argade, L. (1984): “Structural Changes in Indian Economy: An Analysis with Input-Output Tables, 1951-1963”, Artha
Vijnana, Vol 26, pp 1-187.
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PSYCHOLOGICAL WELL-BEING OF NIGERIAN NON-ACADEMIC STAFF AS A CONSEQUENCE OF ATTITUDES
TOWARD SAVINGS, MONETARY INVESTMENT AND COOPERATIVE LOANS
ARAMIDE, OLUFEMI KUNLE
CHIEF LECTURER
DEPARTMENT OF GENERAL STUDIES
THE POLYTECHNIC
IBADAN
OMISORE, OLUFUNMILAYO OLASUNBO
PRINCIPAL INTERNAL AUDITOR
DEPARTMENT OF INTERNAL AUDIT
UNIVERSITY OF IBADAN
IBADAN
ADERIBIGBE, JOHN KOLAWOLE
LECTURER
DEPARTMENT OF LEARNING AND DEVELOPMENT
CHARTERED INSTITUTE OF PERSONNEL MANAGEMENT OF NIGERIA
OYO STATE
ABSTRACT
This study investigated psychological well-being of Nigerian Non-Academic Staff as a consequence of attitudes toward savings, monetary-investment and
Cooperative-loans. Survey Research Design, Purposive and Convenience Sampling Techniques were adopted with a sample of 230 male and female participants.
Participants were administered a structured questionnaire. Five hypotheses were tested. Results showed that attitude towards savings, co-operative loans and
monetary-investments jointly influenced psychological well being (R2 =.226; F(3,225)=23.17; P<.01). Attitude towards savings and co-operative loans
independently influenced psychological well-being at t=3.24; β=.210; P <.05 and t= 6.04; β=.358; P <.05 respectively. However, attitude towards monetary
investment did not independently influence psychological well-being at t=1.55; β=.101; P >.05. Similarly, there was no significant difference between the mean
scores of male and female respondents in terms of their psychological well-being, at t (207) =1.38; p >.05. Also, there was no significant difference between the
mean scores of senior staff and junior staff in terms of their psychological well-being at t (147) =-.089; p >.05. Moreover, income and educational-qualification did
not jointly influence psychological well-being (R2 =-.008; F(2,227)=.107; P>.05). Also, there was no significant independent influence of income and educationalqualification on psychological well-being at t= -442; β=1.667; P >.05 and t=.195; β=1.714; P >.05 respectively. Similarly, age and marital-status did not jointly
influence psychological well-being (R2 =-.001; F(2,227)=1.065; P>.05). Finally, age and marital status did not independently influence psychological well-being at
t= -.778; β=-.067; P >.05 and t=-.446; β=-.038; P >.05 respectively. Hence, it was recommended that, managers in all sectors should incorporate in their
organizational budgets, adequate training fund to sponsor employees on finance and well-being management training programmes.
KEYWORDS
Attitude, cooperative loans, monetary investment, phychological well-being, savings.
INTRODUCTION
I
ssue of psychological well-being of individuals has a long history. For centuries, people developed ideas about the nature of human well-being, its sources
and its relevance for individual behavior. Well-being or happiness and ill being or psychological distress are empirical distinct dimensions with different
causes; they are not opposite ends of the same dimension. Well-being comprises of life satisfaction and positive feelings (e .g joy, vitality, sound mind) or
what psychologists call positive effects. Ill being on the other hand comprises of anxiety, depression and other negative effects. There is much evidence that
people can experience both high level of well-being and also quite high levels of anxiety at the same time (Heady, Kelley and Wearing, 1993).There are two main
domains of research traditions on well-being (Keyes, Shmotkin, and Ryff, 2002). One tradition referred to as subjective well-being, deals with happiness and
investigates factors related to self-assessed life satisfaction in general or applied to specific areas of one’s life. The other tradition, referred to as psychological
well-being, focuses on human potential, which reflects personal growth, sense of control over one’s actions and purpose in life. Conceptualisations of
psychological well-being draw on formulations of human development in the context of external life challenges. On the basis of these formulations, Ryff (1989)
suggested seven dimensions of psychological well-being, differentiated by the different challenges that individuals encounter as they strive to function
positively. The dimensions were: self-acceptance, ability to shape the environment, personal autonomy, self-determination, purpose in life, personal growth,
and positive relations with others.
In view of the above, this study investigated psychological and situational determinants of psychological well-being among non-academic staff in the academic
setting. In a bid to achieving this, the study identified attitude toward savings, monetary investments and cooperative loans as possible psychological variables. It
further identified age, sex, marital status, job position, income and education as situational factors that could contribute to or explain psychological well-being of
aforementioned individuals.
Attitudes are crucial predictors of behavioral intention and eventual behavior. As in Kidwell, Brinberg, and Turrisi’s model (2003), money-related attitudes were
hypothesized to be determined by personality, situational factors and cognition. However, normative influences on attitudes are moderated by affect, while the
money-related attitudes include both attitudes to loan and money attitude. Some universities in Nigeria have a strong co-operative financial service unit that
occupies a unique economic and social niche in the institutions’ financial sector. This has allowed co-operative unions of the Universities to play an important
historical role in the welfare of staff most especially, the Non-Academic.
PSYCHOLOGICAL WELLBEING, ATTITUDES TO SAVINGS, INVESTMENT AND LOANS
A significant advancement in the attitude-behavior relationship centers on the concept of correspondence between the attitude and the ultimate behavior
target. According to Holland, Verplanken, & Knippenberg, (2003) attitude has a significant influence on the behavior relationship. They argued that “the
confidence with which an attitude is held may be inferred from the ease with which the attitude comes to mind”. Trafimow and Finlay (1996) found that
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individually defined differences play a significant role in determining behaviours. Results from their study indicated 79% of the respondents indicated behaviours
as a result of attitudes rather than subjective norms.
The study by Hayhoe, Leach, & Turner. (1999), suggests that the unfavorable cognitive attitude found in their study by individuals with four or more credit cards
may be the result of having taken a class in personal finance. Hayhoe, Leach, Turner, Bruin, & Lawrence (2000) found that participating in fewer financial
management practices was a significant factor in the number of credit cards carried by students, and argue that perhaps individuals need to feel the stressful
consequences of credit abuse before they seek help and implement good financial practices.
Research by Pinto, Mansfield, and Parente (2004) may support this, as their findings suggest that perceived financial well-being is related to personality. Pinto,
Parente & Palmer (2001) found a significant relationship between credit card attitudes and a materialism measure, finding that those with higher scores (more
materialistic) held a more favorable attitude toward credit card use. However, the study found no significance in the relationship between the materialism score
and either the number of credit cards used or the balances carried on the cards. Davies and Lea (1995) found that many of the participants in their study
exhibiting financial stress as a result of high debt loads felt the stress would be temporary and controllable. Norvilitis, Szablicki, and Wilson (2003) found that
participants in their study did not see debt as a long-term stressor event, suggesting, “it is possible that most participants in financial trouble view money as just
one circumscribed area of life”.
Other studies of financial stress (Bojuwoye, 2002; Kim & Garman, 2003; Kim & Garman, 2004) all support a significant inverse relationship between financial
stress and varying measures of well being, although neither of the Kim and Garman studies included college students as participants or respondents. Bojuwoye
(2002) sampled students randomly in eight universities in South Africa. Financial difficulties and/or lack of financial support were rated highest of the stress
induced factors in four of the five schools. Although not specific to college students, researchers of consumer credit counseling clients (Garman et al., 1999)
revealed that financial stress was responsible for poor sleep patterns in almost 80% of the sample. Sixty-five stressor have been shown to have a detrimental
impact on overall well being (Bojuwoye, 2002).
In the study of Fox and Chancey (1998), the authors argue that increased financial stress significantly contributes to poor physical health, conflict within families,
marital dissolution, psychological distress, and decreased self-satisfaction. Whether or not the assertion of Henry, Weber, and Yarbrough (2001) that
“administrative workers are vulnerable to financial crisis” may be applied to all workers, certainly employees face increasing financial pressures and difficulties
resulting in varying levels of financial stress.
Psychologists have found a surprisingly small relationship between money and happiness (Diener & Biswas-Diener, 2002; Frey & Stutzer), and economists have
found Americans’ happiness levels to have remained largely constant despite increases in the country's financial wealth over the same time period. Studies of
financial issues revealed that attitude to money play an important role in determining a person’s financial management and level of financial well-being (Joo and
Grable, 2004; Porter and Garman, 1993). A number of research findings emphasized that, generally, persons with stronger perceptions and positive financial
attitudes tend to be more satisfied with their financial appraisals (Joo and Grable, 2004) and have more effective money management. In respect of financial
matters, previous research generally proposed that past experiences formed attitudes toward money.
The studies of financial well-being indicate that the single most powerful direct determinant of financial satisfaction is an individual’s financial behaviour (Joo
and Grable 2004). In other words, personal financial behaviour has been identified as a major factor contributing to the satisfaction or dissatisfaction with one's
financial status.
DEMOGRAPHIC VARIABLES AND PSYCHOLOGICAL WELL-BEING
Chen and Volpe (2002) found that males scored significantly higher on a measure of financial literacy, and further that males placed a higher value on the
financial literacy than did female participants. Gender was also found significant in the Hayhoe, Leach & Turner (1999) study. Easterlin (1995) found that income
is a poor predictor of many measures of individual well-being. Some studies have found a small positive relationship between income and happiness (Clark,
Georgellis, and Sanfrey, 2001 and Frey and Stutzer, 2000). Kraft (2000) found an inverse U-shape relationship with life satisfaction reaching a maximum at
roughly 45,000DM per month. In contrast, Clark and Oswald (1994) were unable to find any robust effect, whilst Clark (1999) noted evidence of a significant
negative relationship between income and happiness using data from the BHPS. Clark and Oswald (1994), Clark, Oswald, and Warr (1996) and Theodossiou
(1998) have found that men are more likely than women to be observed at the higher end of the happiness index. In contrast, Frey and Stutzer (2000) identified
no gender difference using Swiss data. Similarly, whilst some studies have found that well-being is positively related to education (Clark, Georgellis, and Sanfrey
2001; Frey and Stutzer 2000), other studies have found the converse (Clark and Oswald, 1994). The latter authors argue that the more highly educated have
greater life expectations, which if not satisfied, lead to unhappiness.
It has also been found that marriage leads to a welfare gain over being single, and that the experience of divorce or separation significantly reduces happiness
levels (Clark and Oswald, 1994; Clark, Georgellis, and Sanfrey 2001; Theodossiou, 1998; Winkelmann and Winkelmann, 1998). In this respect, Kraft (2000) claims
that a rise of 6000DM per month would be needed to produce an equivalent rise in happiness to exactly offset the loss associated with separation. In addition,
the findings of Lim and Teo (1997) showed some gender differences, with males often using money as a means of evaluation compared to females.
Later Lim et al., (2003) conducted a study among the Singaporean Chinese, which supported that men were more concerned about the power and anxiety
dimensions, while women were more concerned about the budget, retention and evaluation dimensions of money attitudes. Lim et al., (2003) concluded that
gender differences in money attitude might relate to the variation of socialization and traditional gender role expectations, especially in the Asian context. Men
expect to be the breadwinners and the head of the family; therefore, men have a power/prestige money attitude. However, since women are expected to hold
family roles they are attached to budget and retention money dominants.
Furthermore, Lim, Teo, & Loo, (2003), following a review of the literature indicated that women are more likely to view money as a means for attaining
gratification, by allowing them, among other things, to acquire treasured possessions. He mentioned that, relative to men, as women are prone to
underestimate their knowledge in financial matters, they may be more anxious about their finances and other finance-related matters (Lim, Teo, & Loo, 2003).
In comparison to men, recent studies have also found that women are less knowledgeable financially (Goldsmith and Goldsmith 2006) late age financially
socialized (Shim, Barber, B.L., Card, N.A., Xiao, J.J., and Serido 2010) and have negative attitudes towards money (Dowling, 2009), which will likely result in
significant differences in their behaviour and financial well-being.
Studies have also found that marriage raises happiness, across countries. Married people have a higher subjective wellbeing than singles, divorced, separated or
widowed. Why is this so? Some explanations are that marriage provides additional sources of self esteem, support and companionship (Frey and Stutzer 2002).
Blanchflower and Oswald (2000) examine wellbeing data on 100,000 randomly sampled Americans and Britons from the early 1970s to the late 1990s and find
that a lasting marriage is worth $100,000 per annum when compared to being widowed or separated.
Research of this kind will provide theoretical bases for University Administrators to design programmes that help old and new staff in preparing for new
challenges of work-life. The study would be significant to Nigerian Universities workers and all other sectors of organizations in Nigeria, because it will serve as
an eye opener into some factors that could affect their psychological well being and how psychological well being can be enhanced.
It would also reveal how psychological well being can be enhanced through savings and investments and how demographic factors such as gender, age, marital
status, job position, education, and income affects psychological well being. Findings from this study will set a good platform for subsequent related studies and
will generally add to the body of knowledge of employee well-being in the journals of managerial psychological.
University staff’s spending habits and management of personal finances have been the focus of many studies in the West, because high level of debts and
frequent bad budgeting practices have been shown to relate to serious consequences, such as damaged credit history, stress-related health problems, and work
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performance (Kidwell, Brinberg, & Turrisi, 2003). Therefore, the University Staff have the challenge and responsibility to acquire competences in managing
personal finances and making the best of their spending power (Munro & Hirt, 1998). It thus becomes crucial to better understand the processes underlying
workers’ spending and money management.
A research into savings behavior carried out in the United Kingdom shows that the level of personal loan and debt have been of increasing concern especially in
the context of the recession where individuals are over stretched and unable to meet their commitments not to talk of saving and investing (Kempson et al.,
2004). In an analysis carried out, it was found out that under half (45%) of individuals interviewed in 2004 and again in 2009 owed nothing in both years, while
25% owed money in both years. The proportion who owed money did not change between 2004 and 2009 but the amount owed had doubled over the period.
The study of individual happiness and well being are based on subjective view of utility recognizing that everyone has his or her idea about happiness, good life
and psychological well being and that observed behavior is an incomplete indicator of individual and psychological well being. This therefore, brought about
limitations to the generalization of the past reports on psychological well-being.
Therefore, investigating the phenomenon of psychological well-being of University of Ibadan Staff is important. Thus, there is a need to study the role of
workers’ attitudes toward savings, investments, loan and their age, gender, marital status, job position, education and income in psychological well-being.
OBJECTIVES
Generally in this paper, the level of psychological well-being of individuals was examined and reported in relation to their attitudes towards saving money
investing their money and co-operative loan. The specific objectives on the other hand are: to investigate the influence of attitudes of employees toward savings
on their psychological well-being, to explore the influence of attitudes of employee towards investments on their psychological well-being, to examine the
influence of attitudes of employees toward co-operative loan on their psychological well-being, to investigate the influence of gender, age, income, job position,
education and marital status on psychological well-being.
HYPOTHESES
1.
2.
3.
4.
5.
There would be a significant joint and independent influence of attitude towards savings, co-operative loan and investments on psychological well being of
University of Ibadan’s administrative staff.
Male respondents would report significantly higher on psychological well being than female respondents.
Senior staff would score significantly higher on psychological well being than junior staff.
Income and educational qualification would jointly and independently predict psychological well being of University of Ibadan’s administrative staff.
Age and marital status would jointly and independently predict psychological well being of University of Ibadan’s administrative staff.
RESEARCH DESIGN
The study was designed as a survey to investigate the influence of attitudes toward savings, monetary investment and co-operative loan on university
employees’ psychological well-being. The independent variables were attitude toward savings, monetary investment, co-operative loan and socio demographic
variables of age, marital status, income level, gender and education while the dependent variable was psychological well being.
RESEARCH SETTING
The study was conducted in University of Ibadan, Ibadan. It was restricted to the aforementioned place because of availability of heterogeneous population.
RESEARCH PARTICIPANTS
Participants of the research were two hundred and thirty (230) administrative staff of the University of Ibadan. In the sample, one hundred and twenty-two
(122) respondents (53%) were males while one hundred and eight (108) (47%) were females. The mean age was 38% years (SD=10.39). Their levels of education
ranged from OND to M.Sc/MBA and above. 42% had OND/HND; 26% had B.Sc/B.tech; 18% had M.Sc/MBA; 31% had higher post graduate education. Also, 28%
were single; 63% were married; 6% were divorced; 1% was widow/widower. Additionaly, 71% were Christians; 23% were Islam; 2% were Traditional while 3%
were of other religions. In all, 58% of the respondents were senior staff while 41% junior staff. 43% earned below #500,000 per annum as salary; 24% earned
between #500,000 and #1,000,000; 16% earned above #1,000000 while 15% earned above #2,000,000.
SAMPLING PROCEDURE
Purposive and Convenience sampling techniques were used to sample the participants. These sampling techniques were adopted because of its simplicity and
expediency in the eventuality that the sample tested is a true representative of the population of study.
INSTRUMENT FOR DATA COLLECTION
Questionnaires were used for data collection from the respondents in this study. Each questionnaire was divided into different sections of A, B, C, D and E. Each
section tapped different information according to the intended measure. Section A tapped information on relevant demographic characteristics about each
respondent. It covered age, sex, religion, job title, educational qualification, income level and marital status. Section B had the attitude towards co-operative
loan scale developed by Davis and Lea (1995). It was scored on a 5-point likert response format. The scale is made up of 12 items. The scoring format ranged
from 1-5. Participants who indicated strongly agree to a positive statement scored 5 while those who indicated strongly agreed to negative statement scored 1.
The scale had a cronbach alpha of 0.79 as reported by the authors. In the present study, a cronbach alpha of 0.51 was recorded. Section C had the attitude
towards savings scale developed by Yamauchi and Templer (1982). It was scored on a 5-point likert response format. The scale is made up of 7 items. The scoring
format ranged from 1-5. Participants who indicated strongly agreed to a positive statement scored 5 while those who indicated strongly agreed to negative
statements scored 1. The scale had a cronbach alpha of 0.78 as reported by the authors. In the current study, a cronbach alpha of 0.80 was recorded. Section D
had the attitude towards investments scale developed by Karson, and Fisher ( 2005). It was scored on a 5-point likert response format. The scale is made up of 6
items. The scoring format ranged from 1-5. Participants who indicated strongly agreed to a positive statement scored 5 while those who indicated strongly
agreed to negative statements scored 1. The scale had a cronbach alpha of 0.97 as reported by the authors. In the present study, a cronbach alpha of 0.64 was
recorded. Section E had the psychological well-being scale developed by Ryff, C. D., (1989). It was scored on a 5-point likert response format. The scale is made
up of 63 items. The scoring format ranged from 1-5. Participants who indicated strongly agreed to a positive statement scored 5 while those who indicated
strongly agreed to negative statements scored 1. The scale had a cronbach alpha of 0.92 as reported by the author. In the present study, a cronbach alpha of
0.83 was recorded.
PROCEDURE FOR DATA COLLECTION
Data collection for this study started with an official process of seeking the consent and approval of the authority of University of Ibadan, Ibadan and it was
granted respectively. Researchers embarked on the field of data collection with two hundred and fifty (250) questionnaire forms. To participate in the study,
participants were approached individually in their various offices. They were briefed about the importance of the study and various benefits accrued to
individuals in terms of knowledge and management orientations. They were also assured of the confidentiality of all information supplied and that sincere
responses were needed. A questionnaire form was given to them each participant to fill. Efforts were taken by researcher, to ensure that participants read the
instructions on the questionnaire form and ask questions if not clear. They were therefore, told not to write any identity information as emphasis was on
diligence in filling of the form. So the process of administration and retrieval of questionnaire lasted for two weeks. At the end of the process, a total of two
hundred and forty-seven (247) questionnaires were administered however, two hundred and thirty (230) were appropriately filled and retrieved respectively.
Others were either not returned at all or invalidated as a result of incomplete filling.
STATISTICAL ANALYSIS
Data collected were subjected to statistical analysis using both descriptive and inferential statistics. Descriptive statistics were employed in describing the
characteristics of the participants, while the formulated hypotheses were tested using inferential statistics. Specifically, multiple regression analysis and t-test
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were employed in testing the stated hypotheses. Hypotheses one, four and five were tested using multiple regression analysis while hypotheses two and three
were tested using t-test.
The first hypothesis stated that there would be a significant joint and independent influence of attitude towards savings, co-operative loan and investments on
psychological well being of University of Ibadan administrative staff. Results revealed that there was a significant joint influence of attitude towards savings, cooperative loan and investments on psychological well being. However, it was further revealed that independent influence of attitude towards investment on
psychological well-being is was not significant. As a way of discussing these results Psychologists have found a surprisingly small relationship between money
attitude of individuals and their well-being (Diener & Biswas-Diener, 2002; Frey & Stutzer, 2002), and Economists have found Americans’ well-being levels to
have remained largely constant despite increases in the country's financial wealth over the same time period (Easterlin, 1995). Studies of financial issues
revealed that attitude to money play an important role in determining a person’s level of psychological well-being (Joo and Grable, 2004; Porter and Garman,
1993). A number of research findings emphasized that, generally, persons with positive financial attitudes tend to be more satisfied with their lives’ appraisals
(Joo and Grable, 2004) and have more effective money management. In respect of financial matters, previous research generally proposed that past experiences
formed attitudes toward money. Evidence suggests that attitudes precede the development of well-being (Roberts and Jones, 2001), in other words, money
attitude contributes to predict healthy behavioural practices (Dowling et al., 2009; Shim, et al., 2009). Davies and Lea (1995) found that many of the participants
in the study exhibiting financial stress as a result of high debt loads felt the stress would be temporary and controllable, for the most part being eliminated when
post-education employment opportunities were realized.
Second hypothesis stated that male respondents would report significantly higher on psychological well being than female respondents. However, result
revealed that there was no significant difference between the mean scores of male and female respondents in terms of their psychological well-being. It implies
that male respondents did not significantly score higher on psychological well-being than females. The present finding contradicts the findings of Clark and
Oswald (1994), and Clark et al. (1996), which found that men are more likely than women to be observed at the higher end of the psychological well-being.
However, Theodossiou (1998) argues that his finding is consistent with the belief held by psychologists that women are typically more critical of themselves and
devalue themselves much more than men. Gerdtham and Johannesson (1997) in their study using Swedish data found that women are higher in psychological
well-being than men. In contrast, Frey and Stutzer (2000) identified no gender difference on psychological well-being using Swiss data.
Third hypothesis stated that senior staff would significantly score higher on psychological well being than junior staff. Result of the study however, revealed that
there was no significant difference between the mean scores of senior and junior staff in terms of their psychological well-being. Thus, implies that senior staff
was not significantly disposed to psychological well-being more than junior staff. Wright, Bonett, and Sweeney, (1993); Wright and Cropanzano, (2000) in their
various studies reported that psychological well-being is related to both work and personal life outcomes. For example, there is considerable research on the
relationship between psychological well-being and performance at work. Also, superior mental (Koivumaa- Honkanen et al., 2004) and physical (Roysamb, Tawls,
Reichborn-Kjenneruc, Neale, & Harris, 2003) health and longevity (Danner, Snowdon, & Friesen, 2001) have been found to co-vary with happiness and positivity
levels.
Hypothesis four stated that income and educational qualification would jointly and independently predict psychological well being. However, result of this study
revealed that there was no significant joint influence of income and educational qualification on psychological well being. This implies that the hypothesized
joint prediction of psychological well-being by income and education was not significant. Result further revealed that the expected independent influence
showed that both income and educational qualification did not significantly influence psychological well-being. Thus, implies that income and educational
qualification were neither joint nor independent predictors of psychological well being. In support of these findings Easterlin (1995) found that income is a poor
predictor of many measures of individual well-being. Oswald (1997) noted only a small happiness gain from economic growth in Europe and the USA in the postwar period. This result was supported by the empirical analysis of Blanchflower and Oswald (2000). However, some studies have found a small positive
relationship between income and happiness (Clark et al., 2001; Frey and Stutzer, 2000; Gerdtham and Johannesson, 1997; Gerlach and Stephan, 1996;
Winkelmann and Winkelmann, 1998). Kraft (2000) found an inverse U-shape relationship with life satisfaction reaching a maximum at roughly 45,000DM per
month. In contrast, Clark and Oswald (1994) were unable to find any robust effect, whilst Clark (1999) noted evidence of a significant negative relationship
between income and happiness using data from the BHPS. Similarly, whilst some studies have found that well-being is positively related to education (Clark et
al., 2001; Frey and Stutzer, 2000; Gerdtham and Johannesson, 1997), other studies have found the converse (Clark and Oswald, 1994). The latter authors argue
that the more highly educated have greater life expectations, which if not satisfied, lead to unhappiness.
The fifth hypothesis stated that age and marital status would jointly and independently predict psychological well being. However, result showed that there was
no significant joint influence of age and marital status on psychological well being. This result implies that the hypothesized joint prediction of psychological wellbeing by age and marital status was not significant. Similarly, results revealed that both age and marital status did not significantly influence psychological wellbeing. This implies that age and marital status were neither joint nor independent predictors of psychological well being. Though, some studies in the past have
found that marriage leads to a welfare gain over being single, and that the experience of divorce or separation significantly reduces happiness levels (Clark and
Oswald, 1994; Clark et al., 2001; Gerlach and Stephan, 1998; Theodossiou, 1998).
This study investigated attitude toward savings, monetary investment and loans on psychological well-being of non-academic employees. Based on the empirical
evidence, the study recommended the following:
•
This study found that employee attitude towards savings and cooperative loans were significant predictors of psychological well-being. Implication of this
finding to government executives, directors and private managers in every sector is that, they should encourage employees to develop positive savings
attitude by being disciplined and commitment to keeping money either in the bank or corporative union such that ensure financial security, healthy living
and good welfare during and after service.
•
The study found that gender, age, educational qualification, job category and marital status were neither joint nor independent significant predictors of
psychological well-being. Implication of this finding to government executives, directors and private managers in all sectors is that, they should concentrate
more on psychological variables of employees since demographic factors seems not to be important. They have to look for ways of enhancing the
significant psychological variables that contribute to employees’ well-being.
•
Another implication of this finding to government executives, directors and private managers in all sectors is that, they should encourage researchers to
investigate further and discover other psychological variables apart from attitude that could also be considered in the strategic plans of their organizations.
•
It was therefore recommended that government executives, directors and private managers in all sectors should incorporate in their organizational budget
adequate training fund to sponsor employees on manpower development and training programmes where they can learn more about necessary
managerial behaviours important for their psychological well-being.
•
It is important for future studies to cover a larger population in terms of number of participants and categories of employee.
CONCLUSIONS
A major conclusion that could be drawn from the findings of this study is that employee attitude towards savings and cooperative loans are significant predictors
of psychological well-being. Gender, age, educational qualification, job category and marital status are neither joint nor independent significant predictors of
psychological well-being. Perhaps, there could be some other demographic variables that have potentials to predict the phenomenon of psychological well-being
other than aforementioned.
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ISSN 2231-1009
LIMITATIONS
This study has limitations that also give opportunities for future research. The study was limited to the non-academic staff and the results might not be enough
to make valid conclusions in terms of generalization to an entirely different setting or organization. Thus, creates an opportunity for researchers to further
investigate both academic and non-academic staff. Furthermore, people have a negative attitude towards questionnaire which resulted into poor or
inappropriate filling and at most rejected.
Researchers should further investigate both academic and non-academic staff in respect of their psychological well-being and identify other variables that could
contribute to it or explain it better.
REFERENCES
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Blanchflower, D. and Oswald, A. (2000), Well-being over time in Britain and the US. University of Warwick, mimeo.
Clark, A. and Oswald, A. (1994), Unhappiness and unemployment, Economic Journal, Vol. 104, 648 59.
Clark, A., Georgellis, Y. and Sanfrey, P. (2001), Scarring: the psychological impact of past unemployment, Economica, Vol. 68, pp. 221-241.
Clark, A., Oswald, A. and Warr, P. (1996), Is job satisfaction U-shaped in age? Journal of Occupational and Organizational Psychology, Vol. 69, pp. 57-81.
Danner, D. D., Snowdon, D. A., and Friesen, W. V. (2001), Positive emotions in early life and longevity: Findings from the nun study. Journal of Personality
and Social Psychology, Vol. 80, pp. 804–813.
Easterlin, R. A. (1995), Will raising the incomes of all increase the happiness of all? Journal of Economic Behavior and Organization, Vol. 27, pp. 35−48.
Frey, B. and Stutzer, A. (2000), Happiness, economy and institutions, Economic Journal, Vol. 110, pp. 918-938.
Gerdtham, U. and Johannesson, M. (1997), The relationship between happiness, health and socio-economic factors: results based on Swedish micro data,
Working Paper in Economics and Finance, No. 207, Stockholm School of Economics.
Goldsmith R. E and Goldsmith E. B (2006), The Effects of Investment Education on Gender Differences in Financial Knowledge, Journal of Personal Finance,
Vol. 5, No. 2, pp. 55-69.
Karson, E. J. and Fisher, R. J. (2005), "Predicting intentions to return to web site: extending the dual mediation hypothesis," Journal of Interactive
Marketing, Vol. 19, No. 3, pp. 2-14.
Koivumaa-Honkanen, H., Koskenvuo, M., Honkanen, R. J., Viinamaki, H., Heikkilae, K., and Kaprio, J. (2004), Life dissatisfaction and subsequent work
disability in an 11-year follow-up study, Psychological Medicine, Vol. 34, pp. 221–228.
Kraft, K. (2000), The short and long-run effects of shocks on life satisfaction: unemployment, health problems and separation from the spouse in
comparison, University of Essen, Mimeo.
Lim, V. K. G., Teo, T. S. H., and Loo, G. L. (2003), Sex, financial hardship and locus of control: An empirical study of attitudes towards money among
Singaporean Chinese, Personality and Individual Differences, Vol. 34, pp. 411-429.
Munro, J., and Hirt, J. B. (1998), credit cards and college students: Who pays, who benefits? Journal of College Student Development, 39(1), 51-57.
Roysamb, E., Tawls, K., Reichborn-Kjenneruc, T., Neale, M. C., and Harris, J. R. (2003), Happiness and health, Journal of Personality and Social Psychology,
Vol. 85, pp. 1136–1146.
Ryff, C. D. (1989a), "Beyond Ponce De Leon and Life Satisfaction: New Directions in the Quest of Successful Aging," International Journal of Development,
Vol. 12, pp. 35-55.
Ryff, C. D. (1989b), "Happiness Is Everything, or Is It? Explorations on the Meaning of Psychological Well-Being," Journal of Personality and Social
Psychology, Vol. 57, No. 6, pp. 1069-81.
Shim, S., Barber, B. L., Card, N. A., Xiao, J. J., and Serido, J., (2010), Financial Socialization of First-year College Students: The Roles of Parents, Work, and
Education, Journal of Youth Adolescence Vol. 39, No. 12, 1457-1470.
Theodossiou, I. (1998), The effects of low-pay and unemployment on psychological wellbeing: a logistic regression approach, Journal of Health Economics,
Vol.17, pp. 85-104.
Winkelmann, L. and Winkelmann, R., (1998), Why are the unemployed so unhappy? Evidence from panel data, Economica, Vol. 65, pp. 1-17.
Wright, T. A., and Cropanzano, R. (2000), Psychological well-being and job satisfaction as predictors of job performance, Journal of Occupational Health
Psychology, Vol. 5, pp. 84–94.
Wright, T. A., Bonett, D. G., and Sweeney, D. A. (1993), Mental health and work performance: Results of a longitudinal field study. Journal of Occupational
and Organizational Psychology, Vol. 66, pp. 277–284.
APPENDIX/ANNEXURE
QUESTIONNAIRE
Dear Respondent
Kindly provide information as requested in the questionnaire items below. All responses would be used strictly for research. Your sincere responses would
therefore be highly appreciated.
Thank you
SECTION A
Please tick [√]/indicate in the appropriate box
1. Sex: Male [ ] Female [ ]
2. Age: _______
3. Marital status: Single [ ] Married [ ] Divorced [ ] Widow/Widower [ ]
4. Religion: Christian [ ] Islam [ ] Traditional [ ] Others [ ]
5. Job Title:___________________________
6. Income Level Per Annum in Naira:______________________
7. Highest Educational Qualification: ______________________
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SECTION B
Strongly
Agree
Agree
There is no excuse for taking loan.
Cooperative should not give interest-free loan to Staff.
Staff have to take loan.
It is OK to take loan in order to buy foodstuff.
I have to always save up first before buying something.
Loan is an integral part of today's lifestyle.
Staff should be discouraged from taking loan.
Cooperative should not be surprised when Staff takes large loan.
It is OK to take loan if you know you can pay it off.
Once you are on loan it is very difficult to get off it.
It is better to have something now and pay for it later.
Taking a loan is a good thing because it allows you to enjoy life as a Staff.
Disagree
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Strongly
Disagree
STATEMENTS
Rarely Agree
ATTITUDE TOWARDS COOPERATIVE LOAN
S/N
SECTION C
Strongly
Agree
Agree
I do financial Planning for the future.
I put money aside on a regular basis for the future.
I save now to prepare for my old age.
I keep track of my money.
I follow a careful financial Budget.
I am very prudent with money.
I have money available in the event of another economic depression.
Rarely Agree
13.
14
15.
16.
17.
18.
19.
Strongly
Disagree
STATEMENTS
Disagree
ATTITUDE TOWARDS SAVINGS
S/N
SECTION D
Strongly
Agree
Agree
If I actually have the money to invest, I am not likely to do.
If I actually have the money to invest, I am not sure that I will buy stock or shares.
If I actually have the money to invest, I am not willing to invest on any business.
If I actually think of investing, shares or stock is one of my choices.
If I actually think of investing, I will refer shares or stock to people.
If I actually think of investing, I will talk positively about financial investments.
Rarely Agree
20.
21.
22.
23.
24.
25.
Strongly
Disagree
STATEMENTS
Disagree
ATTITUDE TOWARDS INVESTMENTS
S/N
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SECTION E
Strongly
Agree
Agree
My decisions are not usually influenced by what everyone else is doing.
I have confidence in my opinions even if they are contrary to the general consensus.
I have confidence in my own opinions, even if they are different from the way most other people think.
I tend to worry about what other people think of me.
I often change my mind about decisions if my friends or family disagree.
I am not afraid to voice my opinions, even when they are in opposition to the opinions of most people.
Being happy with myself is more important to me than having others approve of me.
It's difficult for me to voice my opinions on controversial matters.
I tend to be influenced by people with strong opinions.
I judge myself by what I think is important, not by what others think is important.
I judge myself by what I think is important, not by the values of what others think is important.
I am good at juggling my time so that I can fit everything in that needs to get done.
I often feel overwhelmed by my responsibilities.
I am quite good at managing the many responsibilities of my daily life.
I am good at managing the responsibilities of daily life.
I do not fit very well with the people and community around me.
I have difficulty arranging my life in a way that is satisfying to me.
I have been able to create a lifestyle for myself that is much to my liking.
I generally do a good job of taking care of my personal finances and affairs.
In general, I feel I am in charge of the situation in which I live.
The demands of everyday life often get me down.
I am not interested in activities that will expand my horizons.
I have the sense that I have developed a lot as a person over time.
When I think about it, I haven't really improved much as a person over the years.
I think it is important to have new experiences that challenge how I think about myself and the world.
I think it is important to have new experiences that challenge how you think about yourself and the world.
I don't want to try new ways of doing things -- my life is fine the way it is.
I do not enjoy being in new situations that require me to change my old familiar ways of doing things.
There is truth to the saying you can't teach an old dog new tricks.
For me, life has been a continuous process of learning, changing, and growing.
For me, life has been a continuous process of learning, changing, and growth.
I gave up trying to make big improvements or changes in my life a long time ago.
I don't have many people who want to listen when I need to talk.
I enjoy personal and mutual conversations with family members and friends.
I often feel lonely because I have few close friends with whom to share my concerns.
It seems to me that most other people have more friends than I do.
People would describe me as a giving person, willing to share my time with others.
Most people see me as loving and affectionate.
I know I can trust my friends and they know they can trust me.
Maintaining close relationships has been difficult and frustrating for me.
I have not experienced many warm and trusting relationships with others.
I enjoy making plans for the future and working to make them a reality.
My daily activities often seem trivial and unimportant to me.
I am an active person in carrying out the plans I set for myself.
I tend to focus on the present, because the future nearly always brings me problems.
I don't have a good sense of what it is I'm trying to accomplish in life.
I sometimes feel as if I have done all there is to do in life.
I sometimes feel as if I've done all there is to do in life.
I used to set goals for myself, but that now seems like a waste of time.
Some people wander aimlessly through life but I am not one of them.
I live life one day at a time and don’t really think about the future.
I feel like many of the people I know have gotten more out of life than I have.
In general, I feel confident and positive about myself.
When I compare myself to friends and acquaintances, it makes me feel good about who I am.
My attitude about myself is probably not as positive as most people feel about themselves.
I made some mistakes in the past, but I feel that all in all everything has worked out for the best.
The past had its ups and downs, but in general, I wouldn't want to change it.
In many ways, I feel disappointed about my achievements in life.
When I look at the story of my life, I am pleased with how things have turned out.
When I look at the story of my life, I am pleased about how things have turned out.
When I look at the story of my life, I am pleased with how things have turned out so far.
I like most parts of my personality.
I like most aspects of my personality.
Rarely Agree
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
Strongly
Disagree
STATEMENTS
Disagree
PSYCHOLOGICAL WELL-BEING
S/N
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FIGURES & TABLES
TABLE 1: A SUMMARY OF MULTIPLE REGRESSION RESULT SHOWING THE PREDICTION OF PSYCHOLOGICAL WELL-BEING BY ATTITUDE TOWARDS SAVINGS,
CO-OPERATIVE LOAN AND INVESTMENTS
Dependent variable
Independent Variable R
R2
F
P
Β
t
p
Investment Attitude
.486 .226 23.17 <.01 .101 1.55 >.05
Loan Attitude
.358 6.04 <.05
Psychological Well-Being Savings Attitude
.210 3.24 <.05
TABLE 2: A SUMMARY TABLE OF T-TEST COMPARING MALE AND FEMALE RESPONDENTS ON PSYCHOLOGICAL WELL-BEING
Dependent Variable
Gender
N
(X)
SD
df
T
P
Male
122 201.07 18.41 207 1.38 >.05
Psychological Well-Being Female
108 197.28 22.49
TABLE 3: A SUMMARY TABLE OF T-TEST COMPARING SENIOR STAFF AND JUNIOR STAFF ON PSYCHOLOGICAL WELL-BEING
Dependent Variable
Job Category N
(X)
SD
df
T
P
Psychological Well-Being Senior Staff
134 199.18 16.00 147 -.089 >.05
Junior Staff
96 199.44 25.52
TABLE 4: A SUMMARY OF MULTIPLE REGRESSION RESULT SHOWING THE PREDICTION OF PSYCHOLOGICAL WELL-BEING BY INCOME LEVEL AND EDUCATIONAL QUALIFICATION
Dependent variable
Psychological Well-Being
Independent Variable
Income
Educational Qualification
R
.031
R2
-.008
F
.107
P
>.05
β
1.667
1.714
T
-.442
.195
P
>.05
>.05
TABLE 5: A SUMMARY OF MULTIPLE REGRESSION RESULT SHOWING THE PREDICTION OF PSYCHOLOGICAL WELL-BEING BY AGE AND MARITAL STATUS
Dependent variable
Independent Variable R
R2
F
P
β
t
P
Psychological Well-Being Age
.096 .001 1.065 >.05 -.067 -.778 >.05
Marital Status
-.038 -.446 >.05
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AN OVERVIEW ON THE EXPORTS-IMPORTS TREND IN CROSS-BORDER TRADE THROUGH NATHULA PASS,
SIKKIM
SANJAYA KUMAR SUBBA
ASST. PROFESSOR
DEPARTMENT OF COMMERCE
NAMCHI GOVERNMENT COLLEGE
SOUTH SIKKIM
PRAVEEN RIZAL
RESEARCH SCHOLAR
DEPARTMENT OF ECONOMICS
ANNAMALAI UNIVERSITY
ANNAMALAI NAGAR
ABSTRACT
The prime objective of present paper is to analyse the Cross-border trade through Nathula Pass in Sikkim State. Nathula pass route in Sikkim is one of the three
open trading border posts of India in the Himalayan Mountain. It is the oldest Pass from Sikkim to Tibet. The reopening of Nathula Pass for trade between India
and China on 6th July, 2006 gave the way to more benefits to India through trade. The Agreement between two Governments has declared 36 items for exports
and 20 items for imports. The data obtained through secondary sources represents that the exports of Indian goods to China is more than imports. It has
increased from 8.87 Lakhs in 2006 to 4.02 Crores in 2010. The import has decreased from 10.83 lakhs in 2006 to 2.96 lakhs in 2009 and Nil in the year 2010
against 4.02 crores of export. With the increasing trend in the volume of export of goods from India to China, we can state that the cross-border trade through
Nathula Pass is in the favour of India. Further, for more growth in trade through Nathula and thereby more benefit, facilities like better transportation system,
warehouses, inspection posts, proper weights and measures, surfaced roadway, accommodation facilities to the people i.e., both trades and tourists, and good
opportunities for traders should be provided.
KEYWORDS
Cross-border trade, exports-imports, Nathula Pass, Sikkim.
INTRODUCTION AND BACKGROUND
T
rade is the exchange of goods between two individuals or Nations. Trade is the basic component of economic activities and is undertaken for mutual
advantage” (Dictionary of Economics, Oxford University Press). As per the definition given by the Ministry of Commerce and Industry regarding Border
Trade, “Border trade is overland trade and exchange of commodities by the residents along the border”. Trade through Nathula pass is one of the three
open trading border posts of india. The other two are Shipkila in Himachal Pradesh and Lipulekh in Uttarakhand. There is a total of 54 kms of road to Nathula
from Gangtok, the capital of Sikkim and 430 km from Lhasa. Nathula, a 14,140-feet-high Himalayan border was sealed since the war between two countries from
1962 to 2006. Only in 2006, the pass reopened for trading purpose following numerous bilateral trade agreements. Sikkim, after all, is having very long history of
trading with its neighboring state Tibet, Nathula being part of the old Silk Route. It is the oldest Pass from Sikkim to Tibet, now Tibet Autonomous Region- China
(Praveen and Asokan, 2013). The word ‘Nathula’ means the whistling pass, is one of the highest motor able roads of the world, at a height of 14200 ft. (4330 m).
It is about 56 kilometers by road from Gangtok (Dorji, 2008).
The border trade via the Old Silk Route at Nathula reopened on the 6th of July, 2006 amidst huge expectations of improving the relation between the two
upcoming superpowers of the world, India and China. It was also expected to help in achieving economic prosperity in the areas surrounding the Nathula Pass in
both the countries. The Border Trade remains officially open for about six months every year (Government of Sikkim, 2010). The trade between the two
countries is of serious gain to livelihood for the people of Sikkim and other adjoining states. The Government of India has declared 29 items for export and 15
items for import within a specific trading period per year which has further increased to 20 import and 36 export items in 2012. The rising trend of exports
shows the positive impact of Nathula trade to India. The opening of the pass is expected to strengthen the economy of both the countries and the growth of
cross-border trade. Also the cross-border trade is strengthening and shortening the travelling distance to the pilgrimage sages of the both land.
Inspite of enthusiastic trade agreement between two countries, there is a wide gap in export and import. Further, what is the present position and status after
the reopening of the Nathula pass? What is the trend in export and import within these six years of cross-border trade? It is in this light, the paper examines the
present scenario in Sino-India trade through Nathula pass.
METHODOLOGY
DATA AND SOURCES
The present paper is based on the secondary data. Secondary data and information on the exports and imports of goods between India and China have been
collected from the Department of Statistics, evaluation and monitoring of Government of Sikkim.
PERIOD OF THE STUDY
The period for the study covers Seven years from 2006-07 to 2012-13. The rationale behind selecting year from 2006-07 to 2011-12 is that the Nathula Cross
border trade between India and China restarted in the year 2006 only.
STATISTICAL METHOD USED
Statistics like mean, S.D, Variance, Range, Maximum, Minimum have been used to study the trade scenario after the reopening of Nathula Pass. Further, the
differences in exports and import, trade trend and benefits from the trade have been estimated with the help of simple equation of Cross-Border Trade Surplus
(CBTS).
DELIMITATIONS OF THE STUDY
The paper is confined to the study of cross-border trade between India and China through Nathula Pass in Sikkim.
The Cross-border trade between two countries is taking place in a Mart at Sherathang, which is four kms before reaching Nathula. The trade at present is open
to the local people of Sikkim State and is proved as a means to livelihood to the people of this region. Trading period was different in the first year of border
trading and later on changed to some possible extent. The trade mart at Sherathang was opened from 1st of June to 30th of September in the early year (2006)
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ISSN 2231-1009
and after 2007, it was revised from 1st May to 30th November. This mart opens from Monday to Thursday every week. Four days in a week and from morning
7.30 am to afternoon 3.30 pm Indian Standard
dard Time (IST) and 10 am to 6pm as per the Chinese time (Praveen and Asokan, 2013).
TABLE 1: TRADING PERIOD (2006-07 TO 2011-12)
Sl. No. Year
From
To
1
2006-2007 6th July 2006
3rd September 2006
2
2007-2008 1st May 2007
30th November 2007
th
3
2008-2009 19 May 2008 27th November 2008
4
2009-2010 1st May 2009
30th November 2009
5
2010-2011 1st May 2010
30th November 2010
nd
6
2011-2012 2 May 2011
30th November 2011
Sources: Government of Sikkim
For the trade through Nathula pass Imported –Exported
Exported Code is not required because persons importing or exporting to TAR-China
TAR
(Tibet Autonomous RegionChina) are authorized to trade in Indian Currency value of Rs.25000/Rs.25000/ per day per trader (2006-2007) only.
ly. Later, it has increased from Rs.25000/Rs.25000/ to Rs.
100000/- per day per trader after 2007-08.
08. Further, a permit fee of Rs. 50 for each vehicle is levied while entering the Sikkim state. Similarly, a sum of 5 Yuan
(Rs.5 equal to one Yuan) is levied for everyy vehicle crossing over to the Chinese to the trade mart point.
TABLE 2: LIST OF EXPORTS-IMPORTS
EXP
ITEMS THROUGH NATHULA TRADE
EXPORT
IMPORT
1. Agriculture Implements
16. Snuff
1. Goat Skin
2. Blankets
17. Spices
2. Sheep Skin
3. Copper products
18. Shoes
3. Wool
4. Clothes
19. Kerosene oil
4. Raw Silk
5. Cycles
20. Stationary
5. Yak tail
6. Coffee
21. Utensils
6. Yak hair
7. Tea
22. Wheat
7. China clay
8. Barley
23. Liquor
8. Borax
9. Rice
24. Milk Processed Product 9. Seabelyipe
10. Flour
25. Canned Food
10. Butter
11. Dry Fruits
26. Cigarettes
11. Goat Kashmiri
12. Dry and Fresh Vegetables 27. Local Herb
12. Common salt
13. Vegetable oil
28. Palm oil
13. Horse
14. Gur and Misri
29. Hardware
14. Goat
15. Tobacco
15. Sheep
The table 2 shows the total number of export and import items for the trade between India and China through Nathula Pass. The list of exportable and
importable items shows that the total number of export items is more than that
that of items to be imported from China. Initially till 2011-12,
2011
Governments of both
the Countries had declared 29 items for export and 15 items for import. Later, in the year 2012 the items have been revised and
a the total number has been
increased to 36 items
ems for export and 20 items for import.
TABLE 3: DETAIL OF TRADE
T
FOR THE LAST SEVEN YEARS
Sl. No Year
Exports Imports
1
2006-07 8.87
10.83
2
2007-08 27.87
6.88
3
2008-09 95.00
1.35
4
2009-10 135.00
2.96
5
2010-11 402.00
00
6
2011-12 334.4
00
7
2012-13 598.81
101.46
FIGURE 1. VOLUME OF EXPORT-IMPORT BETWEEN INDIA AND CHINA (Rs)
450
400
350
300
250
2006-07
07
2007-08
08
200
150
2008-09
09
100
50
2010-11
11
2009-10
10
0
Exports
Imports
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The recommencement of Indo-China cross-border trade through the Nathula trade route has proved highly beneficial to India, especially to the Himalayan
region of Sikkim and its local people. The table 3 shows the rising trend of exports of Indian commodities to China. This rising trend of exports shows the positive
impact of Nathula trade for India. The data, obtained through secondary sources depict that the exports of Indian goods to China is more than imports. The
export of Indian goods to China has increased from 8.87 lakhs in 2006-07 to 598.8 lakhs in 2012-13. It was 8.87 lakhs in 2006-07, 27.87 lakhs in 2007-08, 95.00
lakhs in 2008-09. During the year 2009-10, export from India to Tibet Autonomous Region was recorded at Rs. 135.00 lakhs whereas import from Tibet
Autonomous Region to India was recorded at Rs. 2.96 lakhs (Government of Sikkim). In the year 2010-11 it was 402 lakhs and 334.4 lakhs in 2011. As per the
government official record, canned foods, utensils, textiles, copper items, vegetable oil, tea, cigarette, coffee, mire, and blankets have been the most popular
export items for the year 2010-11. In the year 2012-13 it has further increased to 598.81 lakhs.
The import has decreased from 10.83 lakhs in 2006-07 to 00 in 2011-12. The table 3 shows the negative trend of imports. It is 10.83 lakhs in 2006-07, 6.88 lakhs
in 2007-08, 1.35 lakhs in 2008-09 and 2.96 lakhs in 2009-10 respectively. The import for the year 2010-11 and 2011-12 was nil against 402 and 334 lakhs of
exports in 2010-11 and in 2011-12. In the year 2012-13, the import of the goods from China to India has been increased to 101.46 lakhs. It is because of the
additional five items in the import side.
TABLE 4: STATISTIC OF EXPORTS-IMPORTS FROM 2006-07 TO 2010-11 (in Lakhs)
Statistics
Exportable Importable
Mean
132.4567
3.6700
Std. Deviation 141.64519 4.34497
Variance
20063.361 18.879
Range
393.13
10.83
Minimum
8.87
.00
Maximum
402.00
10.83
Sources: Computed using SPSS
Statistics of the exports and imports in the table 4 shows a wide gap between the export and import of the commodities in the trade. The mean for the exports
is 132.45 against 3.67 of mean for the imports. If we see all the statistics, there is a significant gap in exports and imports of goods. Through this, we can
conclude that there is a wide gap in trade between two countries.
With the rising trend in the volume of export, it is clear that the cross-border trade through Nathula Pass is favorable to India. The positive and favorable impact
of cross-border trade through Nathula pass can be observed and explained in terms of Cross-Border Trade Surplus. The following table shows the positive impact
of Indo-China cross-border trade through Nathula with the help of Trade Surplus.
TABLE 5: CROSS-BORDER TRADE SURPLUS (CBTS) THROUGH NATHULA PASS TRADE (in Lakhs)
Sl. No Year
Exports Imports Cross-Border Trade Surplus (E-I)
1
2006-07 8.87
10.83
- 1.96
2
2007-08 27.87
6.88
20.99
3
2008-09 95.00
1.35
93.65
4
2009-10 135.00
2.96
132.04
5
2010-11 402.00
00
402.00
6
2011-12 334.4
00
334.4
7
2012-13 598.81
101.46
497.35
Sources: Computed
The Cross-Border Trade Surplus, on the other hand, is an estimation of Balance of Trade of a particular point, like Nathula trade. Balance of Trade is the excess of
the visible exports over the visible imports (Dictionary of Economics, Oxford). The table 5 states that there is a positive and increasing Cross-Border Trade
Surplus through Nathula cross-border trade. In the first year of cross-border trade (2006-07), the Trade Surplus is deficit i.e., -1.96 (in Lakhs). The Trade Surplus
has increased tremendously every year after 2007-08. It has increased from 20.99 the year 200-08 to 497.35 in the year 2012-13. As compared, the same of
2010 is 19.15 times more than that of 2007. This increasing Trade Surplus is the result of rising trend in exports from India to China and at the same time, it is the
result of decreasing of imports from China.
CONCLUSION AND SUGGESTIONS
The cross-border trade is proved to be very highly profitable to India. It is found that there is a rising trend of export of Indian commodities as compared to
Imports from China. Further, the increasing trend in Trade Surplus through Nathula trade shows the cross-border trade between India and China is favorable to
India and it is expected to increase further in the future. It is serving as a means of livelihood to the citizen of Sikkim, those who have employed themselves as
traders. Inspite of its positive side, cross-border trade from the Nathula is yet to improve for the further growth in trade and benefit thereby. The items for the
trade should be increased so that it will strengthen the trading relation. The State Government also requested for change/ revision in the list of export/ import
items for Nathula Border Trade as most of the items in the list are not tradable. But no changes were made during the year. This is one of the reasons for the
Nathula Border Trade not doing well as expected of it (Government of Sikkim, 2010).
Further, for more growth in trade through Nathula and thereby more benefit, facilities like better transportation system, warehouses, inspection posts, proper
weights and measures, surfaced roadway, accommodation facilities to the people i.e., both trades and tourists, and good opportunities for traders should be
provided. Also the Border Roads Organization and the Department of Roads, Transport and Highways, Government of India, have taken up road widening works
for improvement of National Highway 31A from Sevoke to Nathula Border (Government of Sikkim, 2010) but it is still under construction process. Need for quick
and better steps for the improvement of trade in Nathula Pass is felt extensively. Further, the increasing crowd because of growth of trade and tourism in and
around the Nathula Pass also has equal impact on the environment and the sustainability. It is a major research gap of the study and which needs to be filled in
future studies.
REFERENCES
1.
2.
3.
4.
5.
6.
7.
Bhaumik, A, India-China border trade through Nathula delayed, Deccan Herald, New Delhi, http://www.deccanherald.com/content/160905/india-chinaborder-trade-through.html (Accessed on 15/06/2013)
Black, J., Hashimzade, N., and Myles, G. (2009), A Dictionary of Economics, Oxford University Press. Third edition.
Dorji, N.G. (2008), Sikkim A to Z, a fact & information book on Sikkim. Gushing torrent international Pvt. Ltd.
Government of Sikkim, (2010), Annual Report - 2009-10, Department of Commerce & Industries, Gangtok, Sikkim.
Indo-China Border Trade through Nathula Pass, Government of Sikkim.
Lama, M.P (2005), Sikkim-Tibet Trade via Nathu La; A Policy Study on Prospects, Opportunities and Requisite Preparedness. Prepapred by Nathu La Trade
Study Group for Government of Sikkim.
Lama, M.P (2008), Sikkim Development Report-2008, Planning Commission, Government of India, Acedemic Foundation, New Delhi, India.
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9.
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11.
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13.
14.
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Mahanta, A. 2006-08, Regional Cooperation and Cross-Border Trade- A study on the reopening of Nathula for Cross-Border Trade between India and China.
Tata Institute of Social Sciences, Mumbai.
Mohanty, S. (2008), Nathu La, Bridging the Himalayas, IPSC ISSUE BRIEF, Vol. No. 73, JUNE.
Nathula Border Trade, 02, May 2011 – 30, Nov 2011, Place: Sino-India border, http://www.travel-sikkim.com/event/Nathula_Border_Trade (Accessed on
15/06/2013).
Outdated Tradable Item list Hindering Nathula Trade, Sikkim Mail, Gangtok: September 13, Posted on September 14, 2011 by iSikkim,
http://isikkim.com/2011-09-outdated-tradable-item-list-hindering-nathula-trade-141/ (Accessed on 15/06/2013).
Praveen Rizal and R. Asokan (2013), Promotion of Tourism after the Reopening of Nathula Cross-Border Trade in Sikkim State: An Economic Analysis,
INTERNATIONAL JOURNAL OF MANAGEMENT AND DEVELOPMENT STUDIES. Vol. No. 2, ISSUE No. 6, June.
Rajan, D.S, 21 September 2005, China: Vision for Tibet-Indian Ocean Trade Route, http://www.orfonline.org/cms/sites/orfonline/modules/
analysis/AnalysisDetail.html?cmaid=2157&mmacmaid=102 (Accessed on 15/06/2013).
Rusko, C.J. and Sasikumar, K. (2007), INDIA AND CHINA: FROM TRADE TO PEACE? ASIAN PERSPECTIVE, Vol. 31, No. 4, pp. 99-123.
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BENEFITS ASSOCIATED WITH BRAND LOYALTY IN THE PURCHASE OF SILK SAREES AMONG WOMEN
CUSTOMERS IN THE CITY OF BANGALORE
SHEETHAL JOSE
STUDENT
CHRIST UNIVERSITY INSTITUTE OF MANAGEMENT
BANGALORE
LAKSHMI SHANKAR IYER
ASST. PROFESSOR
CHRIST UNIVERSITY INSTITUTE OF MANAGEMENT
BANGALORE
ABSTRACT
Indian women are known for the way they dress and silk sarees add to their elegance. With changing social and economic conditions, dressing styles of Indian
women have changed. When looking forward to a grand occasion women tend to wear silk sarees. The traditional golden ‘Zari’ silk sarees have given way to
other varieties. Brand loyalty, celebrity endorsement also fascinate the customer while making the purchase decisions. From literature review tangible variables
(design, colour combination, price, texture, family tradition, heaviness of the saree and original zari) and intangible variables (peer influence, celebrity, quality,
place of make, brand name, status. trust and uniqueness) were identified for store loyalty. The objectives of the study are: To identify the tangible and intangible
benefits associated with the brand during the purchase of silk sarees and to learn the purchase pattern and the factors influencing the purchase of silk sarees.
Survey technique was used where by questionnaire was administered to 141 women in Bangalore city. Most of the respondents filled their questionnaires after
the purchase of silk sarees from the shops. Inputs from whole salers, branded shop owners and owner of home based boutiques are also added to the study. In a
city like Bangalore, women spend on clothing and hence main driving point to any store is quality and variety and that is what this study has proved. Traditional
form of advertising like TV commercials and word of mouth is still bringing business and internet advertising for silk sarees is in nascent stage.
KEYWORDS
brand loyalty, intangible benefits, purchase decision, silk sarees, tangible benefits.
INTRODUCTION
S
ilk is highly knitted with our history, tradition and culture. It signifies richness and beauty. Exquisite qualities of silk like elegance, natural sheen,
softness, vibrant colours and excellent drape have made it a perfect choice of connoisseurs. Indian women are known for the way they drape their saree
with elegance. With changing tastes and preferences traditional silk sarees are being replaced by embroidery, stone work and designer varieties. Brand
loyalty, celebrity endorsement, promotional activities by the retail store fascinates the customer while making the purchase decision. Knowing the customer
needs, stocking the current designs and educating them on different varieties and styles in silk sarees leads to the success of any retail shop. It is a well known
fact that brand loyalty plays a major role in repeat purchase of silk sarees. Brand loyalty goes to the extent of association with a specific brand since generations.
Since saree is an occasional wear customers are ready to spend. There are also categories of sarees been made to order by the customers according to their
preferences. Silk sarees are bought on the basis of trust and associated brand. Hence identification of the benefits of brand, purchase patterns and its impact on
the purchase decision of customers is necessary. This study was done to identify the tangible and intangible variables that act as a catalyst among customers
while purchasing a silk saree. The study will stress on the fact that brand loyalty will benefit the shop owners with repeat purchase and loyal customers act as
brand ambassadors for the retail shop.
Consumers have different buyer strategies which fit into four groups, i.e. long loyals, rotators, price drivens and light users. Demographics can create a mass
buying difference. Long loyals buy the same product year after year, they will never substitute and hence ready to wait or make an extra effort, they are not
price sensitive. Rotators shift among a limited set of brand in a particular category, they take turns for each brand. Price driven are emotionally driven for price
saving strategies, they look for coupons or deal. There are two types - price driven and product driven. And light user category means limited category
interaction, makes few purchases in a category and hence cannot draw a purchase pattern. Retailers will have a tough time, light users and for price driven
retailers have to keep their eyes open knowing about what is the deal competitors are making. (Consumer buying patterns: beyond demographics, 1995)
The study ‘An exploration of how mature women buy clothing: empirical insights and a mode’ offers useful suggestions to clothing designers, manufacturers,
retailers, and marketers on how to target mature women more effectively. The main components of the models are environment, peer groups, individual
characteristics preference (shopping style, retailer preference, clothing fit), individual fissionability (wearing and combining apparel, building need and
awareness, searching and fitting, evaluating and actual purchase and wearing and combining apparel). The present idealisation of slimness and youth has an
influence also on mature women’s clothing choices. They want to buy long-lasting designs and good quality. Therefore, it is essential to stress the notion of value
when marketing to mature women. Longevity, value for money, and hard-wearing are considered to be anathema to fashion, which depends on transience.
(Maria Holmlund, 2011)
The article ‘Resurgence of the Indian Textile Industry’ gives a glimpse of Indian textile industry. This is an independent industry from raw material procurement
to final production with value-addition at every step. Forming 14% of the total industrial output, the textile sector stands big in the Indian industrial scenario and
is fast-growing. Indian fabric is in great demand in foreign shores due to its ethnicity, handwork, rich textures and earthly colours. “India is the second largest
producer of silk and accounts for about 18% of the total world raw silk production. India produces all four varieties of silk, namely, Mulberry, Eri, Tasar and
Muga. The remarkable Indian silk is varied in form, colours, design, weaves and is high in quality. “Kancheepuram silk sarees is known by golden jari buttas,
woven into the saree in unique patterns. Gujarat and Rajasthan are known for Bandhni silk produced through an ancient method called “bandhej”. Ikkat silk,
known as patola in Orissa, also involves the same technique but is applied to the yarn before weaving. Andhra Pradesh, Gujarat and Orissa produce this silk.
Varanasi or Benaras in Uttar Pradesh are famous for the Benaras silk fabric woven to create a raised effect (brocade) depicting floral motifs. The global textiles
and clothing industry is earmarked to grow to USD 700 billion by 2012. (Janakiraman, 2011)
The study “Consumers susceptibility to reference group influence: A Segmentation Analysis” discussed the opinions, attitudes and behavior of others as
elements that can considerably affect the decision-making process and consumer choice decisions. Marketers and advertisers have addressed the influence of
reference groups on consumers' decision. “Reference groups are persons, groups and institutions whom one looks to for guidance for one's own behavior and
values, and whose opinion about oneself is valued (Widing et al. 2003)”. The study has also noted that reference group influence is affected by the type of
product or situation studied. The main focus of this study was to see whether the individuals' susceptibility to group influence (informational, utilitarian and
value expressive) could serve as the basis for market segmentation. The main variables which were used are demographic variables included in the analysis are
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sex, age, education, household income and marital status. Personality variables include individualistic orientation and global self esteem. Mature consumers are
more susceptible to the influence of reference groups. (Mihic)
Every woman is fascinated to dress well and look beautiful. The traditional silk saree with its unique colour combinations, designs and varieties gives elegance to
Indian women. Women like to spend a lot when it comes to occasional wear like silk saree which they wear for wedding, family function and religious gatherings.
They like to flaunt their sarees as a matter of status in society. Indian women prefer to purchase a new saree for every occasion and worn sarees are not
repeated frequently. They remain in the closets as assets. The major factors that influence the purchase of silk sarees are status, peer influence, quality, variety,
brand name and trust. Hence identifying the benefits of the brand, purchase pattern of customers is necessary.
Silk saree stores are in the expansion mode fighting to be market leaders in new territories. These stores were once based on a particular location creating its
own unique identity and position in the mind of the consumers. Even though brand loyalty as such cannot be linked to silk saree market, there are certain
tangible and intangible variables associated with a silk saree purchase. As preferences vary across different age groups there is a scope for identifying these
specific groups and the benefits that motivate them when they make that final purchase decision.
OBJECTIVES
1. To identify the tangible benefits associated with the brand during the purchase of silk sarees.
2. To identify the intangible benefits associated with the brand during purchase of silk sarees.
3. To learn the purchase pattern and the factors influencing the purchase of silk sarees.
HYPOTHESES
TANGIBLE VARIABLES
H01: Design is not an important benefit associated with the purchase of silk sarees
Ha1: Design is an important benefit associated with the purchase of silk sarees
H02: Price is not an important benefit associated with the purchase of silk sarees
Ha2: Price is an important benefit associated with the purchase of silk sarees
H03: Texture is not an important benefit associated with the purchase of silk sarees
Ha3: Texture is an important benefit associated with the purchase of silk sarees
H04: Family tradition is not an important benefit associated with the purchase of silk sarees
Ha4: Family tradition is an important benefit associated with the purchase of silk sarees
INTANGIBLE VARIABLES
H05: Peer influence is not an important factor that influences the purchase of silk sarees
Ha5: Peer influence is an important factor that influences the purchase of silk sarees
H06: Brand name is not an important factor that influences the purchase of silk sarees
Ha6: Brand name is an important factor that influences the purchase of silk sarees
H07: Status is not an important factor that influences the purchase of silk sarees
Ha7: Status is an important factor that influences the purchase of silk sarees
H08: Trust is not an important factor that influences the purchase of silk sarees
Ha8: Trust is an important factor that influences the purchase of silk sarees
The study is to identify the benefits associated with the purchase of silk saree and the purchasing pattern of women among different groups through primary
research. Responses were recorded through questionnaire when women came out of the silk saree shops after purchase. To understand the silk saree business
and to know major variables influencing the brand loyalty, inputs from whole salers, branded shop owners and owner of home based boutiques were
considered. In this study girls and women were the target audience and a total one hundred and forty one respondents took part. Simple random sampling
methodology was used for the study which took six months to complete.
Age Group
Age Group
16 - 23
24 - 31
32 - 39
16%
12%
9%
40 - 47
48 and above
40%
23%
Source: Primary data
In the study women who belonged to the age group of 16-23 consisted of 40% and women with age group of 24-31 consisted of 23%, age group of 32-39 with
9% and finally the age group from 48 and above took 16%.
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Marital Status
Marital Status
Married
Single
48%
52%
The pie chart indicates that 52% were single women and married were 48%.
Education
Education
10th
PUC
Graduation
Post graduation
1% 8%
44%
47%
The education statistics portrays that 47% of women are graduates and 44% were post graduates.
Occupation
Occupation
Student
Home Maker
Working Professional
Business woman
Retired
2% 3%
27% 49%
19%
The study says that 49% of the women were students followed by 27% working professional and 19% home makers.
Annual household income
Annual Household Income
1 lakh - 3 lakh
3 lakh - 5 lakh
5 lakh - 7 lakh
9 lakh and above
19%
18%
23%
40%
The study shows that the annual income of 40% women was 3-5 lakhs, 23% with 5-7 lakhs, 19% women with 9 lakhs and above.
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Purchase frequency
Purchase Frequency
Every Month
Once in two months
Once in six months
Once a year
Occasionally
1% 10%
22%
57%
10%
57% if women purchased silk sarees occasionally whereas 22 % of them purchased once in six months.
Annual Budgetary Allocation For the purchase
Annual Budgetary Allocation for the Purchase
(INR)
1000 - 6000
7000 - 13000
14000 - 21000
21000 and above
13% 3%
37%
47%
Annual budgetary allocation for the purchase is 47% with 7000-13000, 37% with 1000-6000, 13% for 14000-21000 and the rest spend 21000 and above.
•
Reasons for choosing a particular location was analyzed on the basis of convenience, price, habit, variety, brand, quality and trust. It was found that quality
and variety plays a major role in the choice of a retail shop. Price is also one of the high influencers.
Convenience
Price
Habit
Variety
Brand
Quality
Trust
quality + variety
quality + variety + Price
41
61
12
80
4
102
48
1st highest
2nd highest
AGE GROUP AND PURCHASE DURATION CROSS TABULATION
Purchase Duration
Total
.00 1.00 2.00 3.00 4.00
Age Group
1.00 0 4
10
6
36
56
2.00 1 4
9
1
17
32
3.00 0 1
2
0
10
13
4.00 0 1
5
6
5
17
5.00 0 5
5
1
12
23
Total
1 15
31
14
80
141
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In X-axis
•
1=16 to 23 years
•
2=24 to 31years
•
3=32 to 39 years
•
4=40 to 47 years
•
5=48 and above
In Y-axis
•
.0=Every month
•
1=Once in two months
•
2=Once in six months
•
3=Once a year
•
4=Occasionally
Interpretation
In the age group of 16 to 23 ten people prefer to buy once in six months and in the age group of 24 to 31, 17 people prefer to buy occasionally and in the age
group of 32 to 39, 10 people prefer to buy occasionally and in the age group of 48 and above 12 people prefer to buy occasionally.
AGE GROUP AND PREFERENCE TO WEAR SILK SAREE ON DIFFERENT OCCASIONS CROSS TABULATION
Wear Silk Saree
Total
1.00
2.00
3.00
4.00
Age Grp
1.00
37
18
0
1
56
2.00
11
15
1
5
32
3.00
8
5
0
0
13
4.00
3
13
0
1
17
5.00
2
15
1
5
23
Total
61
66
2
12
141
In the above graph x-axis denotes the age group
•
1=16 to 23 years
•
2=24 to 31years
•
3=32 to 39 years
•
4=40 to 47 years
•
5=48 and above
Y-axis denotes Preferences to wear silk sarees on different occasions
•
1=weddings
•
2=temple/church visit
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•
3=Office
•
4=Family function
•
5=everyday Occasion
Interpretation
In the age group of 16 to 23, 37 prefer to wear silk saree during weddings, 18 prefer it during religious visits, none prefers for office, and one prefers for family
function. In the age group of 24 to 31, 11 prefer to wear silk saree during weddings, 15 prefer during temple/church visit, one prefers for office, and 5 prefer for
family function. In the age group of 48 and above, 2 prefer to wear Silk saree during weddings, 15 prefer it during temple/church visit, one prefers for office, and
5 prefer for family function.
EDUCATION AND INFORMATION ABOUT NEW STORE CROSS TABULATION
Information about new store Total
1
2
3 4
5
Education
1 0
1
0 0
1
2
2 1
7
1 0
2
11
3 18
21
4 4
19
66
4 7
22
4 6
23
62
Total
26
51
9 10
45
141
In X-axis
•
1=10th
•
2=PUC
•
3=Graduation
•
4=Post Graduation
In Y-axis
•
1=print ad
•
2=TV commercials
•
3=Hoardings
•
4=Internet
•
5=Word of mouth
Interpretation
Among graduates, 18 came to know about a new store from print ad, 21 from TV commercials, 4 from hoardings, 6 from internet and 23 by word of mouth.
Among post graduates, 7 came to know about a new store from print ad, 22 from TV commercials, 4 from hoardings, 6 from internet and 23 by word of mouth.
MARITAL STATUS AND INFORMATION ABOUT NEW STORE CROSS TABULATION
Information About New Store Total
1
2
3 4
5
Marital status
1.00
15
21
3 4
24
67
2.00
11
30
6 6
21
74
Total
26
51
9 10
45
141
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In X-axis
•
1=Married
•
2=Single
In Y-axis
•
1=print ad
•
2=TV commercials
•
3=Hoardings
•
4=Internet
•
5=Word of mouth
440
144
584
DESIGN
24
Neutral
>432(Mean)
6
4
10
Interpretation
Among single women, 15 get to know about a new store through print ad, 21 through TV commercials, 3 through hoardings, 4 through internet and 24 by word
of mouth. Among married women, 11 get to know about a new store through print ad, 30 through TV commercials, 6 through Hoardings, 6 through internet and
21 by Word of mouth.
HYPOTHESIS TESTING FOR TANGIBLE VARIABLES
H01: Design is not an important benefit associated with the purchase of silk sarees
Ha1: Design is an important benefit associated with the purchase of silk sarees
Mean = 432
Null hypothesis can be rejected if the sum of value of scales ‘4’ and ‘5’ is greater than the mean value.
Here, 584 > 432, that is null hypothesis can be rejected by which design becomes a significant factor for the purchase of silk sarees
Z Test
One-Sample Statistics
N MeanStd. Deviation Std. Error Mean
Design 1414.45 .914
.077
One-Sample Test
Test Value = 5
t
df Sig. (2-tailed)Mean Difference 95% Confidence Interval of the Difference
Lower
Upper
Design-7.190 140 .000
-.553
-.71
-.40
p value for the test conducted is .000. As per the condition, null hypothesis can be rejected if p value is less than .05 that is here null hypothesis is rejected by
which design becomes a significant factor for the purchase of silk sarees.
H02: Price is not an important benefit associated with the purchase of silk sarees
Ha2: price is an important benefit associated with the purchase of silk sarees
PRICE
84
20 5
neutral
444 >432
25
444 > 432, that is null hypothesis can be rejected by which price becomes a significant factor for the purchase of silk sarees
Z Test
N MeanStd. DeviationStd. Error Mean
Price 141 3.79 1.092
.092
260
184
One-Sample Test
Test Value = 3
t
Df Sig. (2-tailed)Mean Difference 95% Confidence Interval of the Difference
Lower
Upper
Price 8.635140 .000
.794
.61
.98
P value for the test conducted is .000. Null hypothesis can be rejected as p value is less than .05. Price becomes a significant factor for the purchase of silk
sarees.
H03: texture is not an important benefit associated with the purchase of silk sarees
Ha3: texture is an important benefit associated with the purchase of silk sarees
245
TEXTURE
78
neutral
469 >432
224
14
3
17
Here
469 > 432, that is null hypothesis can be rejected by which texture becomes a significant factor for the purchase of silk sarees
Z Test
N MeanStd. Deviation Std. Error Mean
Texture 1414.28 3.504
.295
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One-Sample Test
Test Value = 3
t
df Sig. (2-tailed)Mean Difference95% Confidence Interval of the Difference
Lower
Upper
Texture 4.350140 .000
1.284
.70
1.87
p value for the test conducted is .000. Null hypothesis can be rejected as p value is less than .05 by which texture becomes a significant factor for the purchase of
silk sarees.
H04: Family tradition is not an important benefit associated with the purchase of silk sarees
Ha4: Family tradition is an important benefit associated with the purchase of silk sarees
255
FAMILY TRADITION
184 51
38
neutral
439 >432
46
8
Here
439 > 432, that is null hypothesis can be rejected by which family tradition becomes a significant factor for the purchase of silk sarees.
Z Test
N Mean Std. DeviationStd. Error Mean
Family Tradition141 3.09 1.330
.112
One-Sample Test
Test Value = 2
t
Df Sig. (2-tailed) Mean Difference95% Confidence Interval of the Difference
Lower
Upper
Family Tradition9.748140.000
1.092
.87
1.31
p value for the test conducted is .000. Null hypothesis can be rejected as p value is less than .05 by which family tradition becomes a significant factor for the
purchase of silk sarees.
HYPOTHESIS TESTING FOR INTANGIBLE VARIABLES
H05: Peer influence is not an important factor that influences the purchase of silk sarees
Ha5: Peer influence is an important factor that influences the purchase of silk sarees
130
PEER INFLUENCE
160 90
44
Neutral
290 <432
67
23
Here
290 < 432, that is null hypothesis is accepted by which peer influence becomes a weak influencer for the purchase of silk sarees.
Z Test
N MeanStd.
Std.
Deviation Error
Mean
141 3.15 1.341
.113
One-Sample Test
Test Value = 3
Peer Influence
t
df
Sig. (2-tailed)
Mean Difference
95% Confidence Interval of the
Difference
Lower
Upper
1.319
140
.189
.149
-.07
.37
Peer Influence
p value for the test conducted is .189. Null hypothesis can be rejected if p value is less than .05 but here peer influence becomes a weak influencer for the
H06: Brand name is not an important factor that influences the purchase of silk sarees
Ha6: Brand name is an important factor that influences the purchase of silk sarees
240
BRAND NAME
200 69
22
Neutral
440 >432
31
9
Here
440 > 432, that is null hypothesis is rejected by which brand name becomes a strong influencer for the purchase of silk sarees.
Z Test
N Mean Std. Deviation Std. Error Mean
Brand name141 3.67 1.137
.096
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One-Sample Test
Test Value = 3
t
Lower
Upper
Brand name7.036140.000
.674
.48
.86
p value for the test conducted is .000. Null hypothesis can be rejected if p value is less than .05 by which brand name becomes a significant influencer for the
H07: Status is not an important factor that influences the purchase of silk sarees
Ha7: Status is an important factor that influences the purchase of silk sarees
250
STATUS
54
Neutral
446 >432
196
26
11
37
Here
446 > 432, that is null hypothesis is rejected by which status becomes a strong influencer for the purchase of silk sarees.
Z Test
N Mean Std. Deviation Std. Error Mean
Status1413.61 1.188
.100
One-Sample Test
Test Value = 4
t
Lower
Upper
Status -3.899140 .000
-.390
-.59
-.19
p value for the test conducted is .000. Null hypothesis can be rejected if p value is less than .05 by which status becomes a significant influencer for the purchase
of silk sarees.
H08: Trust is not an important factor that influences the purchase of silk sarees
Ha8: Trust is an important factor that influences the purchase of silk sarees
315
TRUST
63
Neutral
495 >432
180
12
6
18
Here,
495 > 432, that is null hypothesis is rejected by which trust becomes a strong influencer for the purchase of silk sarees.
Z Test
N MeanStd. DeviationStd. Error Mean
Trust141 4.09 1.072
.090
One-Sample Test
Test Value = 3
t
Lower
Upper
Trust12.016140.000
1.085
.91
1.26
p value for the test conducted is .000. Null hypothesis can be rejected if p value is less than .05 by which trust becomes a significant influencer for the purchase
of silk sarees.
FINDINGS
•
•
•
•
•
•
•
•
Most of the respondents have household income between INR 3-5 lakh followed by 5-7 lakh. Also most of them prefer buying silk sarees occasionally and
chose branded shop for their purchase.
Most of the respondents are in the early stages of earning they usually spend between INR 7000 – 13000 and INR 1000 – 6000 rupees annually for the
Most of the respondents pick quality and variety as the main reason for choosing a store to buy their sarees. The successful factors for a good store hence
will be quality, variety and good price.
We can also infer that most of the respondents buy silk saree occasionally, since they consider silk saree as auspicious unique and elegant. Also silk sarees
are worn during weddings which are supported by all women across age groups and the matured women also prefer it for religious visits. This finding
stresses on the inference that silk saree is auspicious not considered as an everyday wear.
TV commercials inform and create curiosity where as word of mouth transforms that curiosity into action.
Education qualification does not hamper the effect of traditional media. New media like internet is yet to be effective in silk saree genre. Married women
are influenced by word of mouth and then TV commercials. Print ads also play a major role of informing and creating awareness about a new store.
We can infer that all the tangible variables cited in the study that is design, colour combination, price, texture, family tradition and original zari are proved
to be the major benefits looked by a customer during the purchase of silk saree.
Among intangible variables, peer influence and place of make do not influence the customer in purchasing silk sarees where as celebrity endorsements,
quality, brand name, status, trust and uniqueness are the main important factors.
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SUGGESTIONS
Store loyalty is very much associated with silk saree purchase; it is the trust that a particular store is providing quality, variety in good price that makes
customers prefer one store over the other. Store loyalty is something that cannot be created in one day; it is a gradual process needs full commitment from the
store owners’ side. Silk mark is one such quality trademark that can be used by stores which will signify that quality is assured in the clothes they sell.
Silk can be produced in different forms other than silk saree and hence silk is here to stay and so do sarees, new players in the market are also playing a guerilla
strategy by which new customers who are looking for designer silk sarees see a lot of variety in boutiques. So it is time for traditional shops move from product
oriented approach to customer oriented approach and make sarees, designs as per the new trend. Traditional shops can also add value to the customers with
the involvement of loyalty programs. Customization offer on sarees will also attract new customers since it would mean customers can select their own, design
and colour combination.
CONCLUSIONS
Silk saree is woven in new forms, designs and colour combinations. It is very much unorganized sector and new entrants are making their way inside. Old stores
hold their brand equity in the name of tradition while new entrants bring in the mantra of designer sarees. In a city like Bangalore, women spend more on
clothing and the main driving point to any store is quality and variety which the study has proved. Consumers nowadays are not able to differentiate between
pure and suspicious sarees, hence the trademarks like ‘silk mark’ have come to play. It is very important for stores now to look for relationship based
transactions since new customers look for quality and trust than just a price discount. And this will bring in more customers and create store loyalty.
Research on silk saree and brand loyalty is first of its kind and hence there is always scope for improvement and filling the gap. The study can be further carried
on same topic in larger sample size and a different age group. Also a frame work for a model can be created for silk saree and brand loyalty by which
measurement of loyalty for each store can be calculated.
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Targeting, Measurement and Analysis for Marketing, 19(3), 243-260
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EFFECT OF PSYCHOSOCIAL FACTORS ON CAREER AND JOB SATISFACTIONS AMONG ADMINISTRATIVE
STAFF OF NIGERIAN HIGHER INSTITUTIONS’ HOSPITALS
ARAMIDE, OLUFEMI KUNLE
CHIEF LECTURER
DEPARTMENT OF GENERAL STUDIES
THE POLYTECHNIC
IBADAN
ALIMI, TALAYO JAMIU
SENIOR PHYSIOTHERAPIST
DEPARTMENT OF PHYSIOTHERAPY
FEDERAL MEDICAL CENTRE
ABEOKUTA
ADERIBIGBE, JOHN KOLAWOLE
LECTURER
DEPARTMENT OF LEARNING AND DEVELOPMENT
CHARTERED INSTITUTE OF PERSONNEL MANAGEMENT OF NIGERIA
OYO STATE BRANCH
ABSTRACT
This study explored the effect of organizational-based self-esteem and coworker’s relationship on job and career satisfactions among administrative staff of
Nigerian higher institutions’ hospitals. Quasi-Experimental Research Design, Purposive and Convenience Sampling Techniques were adopted with a sample of 234
male and female participants. The participants were administered a structured questionnaire. Four hypotheses were tested using univariate analysis of variance
and multiple regression analysis. Results showed that, organisational-based self-esteem did not affect career satisfaction (F (1,230) = 19.98, p < .05), and job
satisfaction (F (1,230) = 154.28, p < .05). Coworker’s relationship did not affect career satisfaction (F (1,230) = 255.40, p < .05), and job satisfaction (F (1,230) =
20.72, p < .05). Organisational-based self-esteem and coworker’s relationship interactively affected career satisfaction (F (1,230) =144.28, p < .05), and job
satisfaction (F (1,230) =270.96, p < .05). Pay, job-position, education, working-experience, marital-status, gender and age jointly contributed to career
satisfaction (R2= .809; F (7,222) = 9.53, p < .05), while Pay (β = .239; t=10.17; p < .05), job- position (β = .251; t=9.72; p < .05), and working-experience (β = .168;
t=8.27; p < .05) independently predicted career satisfaction. Similarly, job-position, education, working experience, marital-status, gender and age jointly
contributed to job satisfaction (R2= .844; F (7,222) = 26.99, p < .05), while Pay (β = .506; t=7.02; p < .05), job-position (β = .343; t=8.39; p < .05), education (β =
.165; t=9.22; p < .05) and working-experience (β = .262; t=10.08; p < .05)independently predicted job satisfaction. It was therefore recommended that, health
institutions’ management should adequately address the issues of employee job and career satisfactions in respect of the effect of psychosocial factors involved.
KEYWORDS
career satisfaction, coworker’s relationship, job satisfaction, organizational based self-esteem.
INTRODUCTION
J
ob and career satisfactions are intimately related psychological constructs, which often stimulate attentions of researchers, managers and human resource
or organizational planners in the contemporary world of work, because of its impact on the performance of an organization. However, as closely related the
phenomena of job and career satisfactions are, scholars have recently sensitized individual stakeholders on the difference in the nature of the two almost
similar salient employee issues.
In view of the above, job satisfaction is described as a multifaceted psychological construct, covering a multitude of contextual factors encountered in the
workplace (Spector, 1997). For instance, a worker may be satisfied with his or her pay, promotion opportunities, and fringe benefits, and also be dissatisfied with
environmental conditions, coworker behavior, and the supervisor. Career satisfaction on the other hand is however described mainly, as an employee’s positive
attitude towards only inherent characteristics of a profession such as pay, promotion opportunity, professional skills development and career related knowledge
acquisition. Following Judge and Higgins (1999) clarification, career satisfaction is a different construct from job satisfaction, as the latter focuses more
specifically on a person‘s occupation in a shorter time interval. Career satisfaction, on the other hand, is developmental in nature, changing throughout one‘s
lifespan; it is the sum of one‘s feelings about a lifetime of work (Lounsbury, Steel, Gibson, & Drost 2008).
Nevertheless, it is believed that, as interesting the organizational issues of job and career satisfactions are to employees, researchers, managers and human
resource or organizational planners, the two construct do not just exist without some antecedent factors, which could also be personal, organizational or
situational in nature. In order to examine both variables, this study therefore, investigated the effect of organizational based self-esteem, coworker’s
relationships, pay (salary), education, work experience, job position, gender, age and marital-status on career and job satisfaction among administrative staff of
Nigerian higher institutions’ hospitals.
The concept of coworker’s relationship explains how an employee interacts with his or her coworkers in the course of performing official assignments. It could
also be explained from a teamwork and team spirit perspective, also from team competition from the other hand. Hence, some employees prefer more social
interactions with their co-workers, such as shared lunch hours or company sponsored gatherings. Others do not seek a social aspect of their work, preferring to
use their downtime to run errands or for personal activities. Organizational-based self-esteem (OBSE) on the other hand is a specific form of self-esteem (Pierce,
Gardner, Cummings & Dunham 1989), which focuses on self-perceived value that individuals have about themselves within a specific organizational context. It
reflects people's sense of their own value within a particular setting and shows the extent to which their need for self-esteem is met by performing their role in
the organization. Organizational members with high OBSE believe that they are significant, capable, and important to the organization. They feel they are
valuable and important part of organisation, they count, and they make a difference. The organization is important to them because it is a key component to
their self-worth and identity. Hence, pay, educational qualification, working experience, job position, age, gender and marital status are critical sociodemographic factors of employees.
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JOB SATISFACTION, SELF-ESTEEM AND COWORKER’S RELATIONSHIP
Kravitz, Leigh, Samuels, Schembri, and Gilbert (2003) studied obstetrics and gynecology practitioners, a specialty considered to have among the lowest
satisfaction rates among all physicians (Leigh, Kravitz, Schembri, Samuels, and Mobley, 2002), and found that feelings of dissatisfaction among obstetricians and
gynecologists resulted in lower patient satisfaction. According to Pierce, Gardner, Cummings, and Dunham (1989) in their study, it was reported that, there is a
significant relationship between one’s experiences in an organization and organisational-based self-esteem.
From the work of Strydom and Meyer (2002), it was deduced that many employees experienced job satisfaction because their need for interaction with others
at work is being satisfied to some extent. Social relations with clients and subordinates were also found to elevate the job satisfaction of a small group of
managers from a variety of industries (Strydom & Meyer, 2002). Jessen and Jorum (2004) also found a strong positive correlation between public approval,
support from colleagues, and job satisfaction among Norwegian public social workers.
Nakakis and Quzouni, (2008) explored factors influencing job satisfaction of nurses working in psychiatry units. Quality of interpersonal collaboration between
doctors and nurses was found to be among very important factors influencing job satisfaction among nurses working in psychiatry unit.
Liu, Wang, and Xlu (2010) in another study using self completed questionnaire with cronbach alpha of 0.861 and administered on 172 participants including
medical doctors, medico- technical workers, and public health workers. The result of their study indicated that participants were more satisfied with their co
workers and the importance of their job. However, they were dissatisfied with their work reward (i.e. welfare, pay, and promotion opportunities), working
conditions, and sense of work achievements. Some complained that salary was too low considering their experience and skill levels which substantially hurt their
work enthusiasm. Inability to realize personal values was a major concern among the categories of health workers studied.
Herzberg (1966) believed that relationship with colleagues is one of the essential factors that dictate job satisfaction. Failure to meet this employee demand will
lead to complaints. Bodur (2002) lends his own contribution to the cause of investigating job satisfaction among health workers. Using the short form of the
Minnesota Satisfaction Questionnaire as an instrument of data collection from153 health workers employed at health centre in Turkey comprising 50 general
practitioners, 39 midwives, 30 public health nurses, and 34 health technicians. 60% of the investigated participants were reported to be satisfied with their job.
Midwives had the least score. Work environment and income were reported to be the most contributory factors to dissatisfaction. Overall, the result of the
study showed that health care workers at public health centre had low satisfaction score. According to Levent , Brown, & Hackett (2004), the most important
predictor of job satisfaction was found to be leadership followed by interpersonal relationship with colleagues, and advancement.
Marina, Axlsson, and Lepnum, (2007) study reveals that administrative and support staff scored lowest in overall job satisfaction and knowledge about their
hospital. Furthermore, they submitted that job satisfaction among non- health personnel was influenced by their physical and mental exhaustion caused by high
workloads. In addition, they reported that being disagreeably treated by their fellow worker, is also factor causing dissatisfaction among the non medical staff
investigated in their study.
According to Wie, Lai lai, and Mustaffa (2011), health workers are moderately satisfied and committed to their current jobs.
CAREER SATISFACTION, SELF-ESTEEM AND COWORKER’S RELATIONSHIP
A number of studies have focused on the importance of career satisfaction to work-related outcomes. For example, significant correlations have been found
relating quality of care and patient outcomes to career satisfaction in samples of physicians in a variety of specialties (Leigh, Kravitz, Schembri, Samuels, &
Mobley, 2002). Herzberg, Mausner, Peterson, and Capwell (1957) identified several characteristics of satisfied/dissatisfied workers. They indicated that morale is
high when people first start their jobs. Morale decreases during the next few years and remains at a relatively low level until workers are in their late twenties or
early thirties. At this time, job satisfaction levels begin to rise and continue to rise through the remainder of the workers’ careers.Kravitz, Leigh, Samuels,
Schembri, and Gilbert (2003) studied obstetrics and gynecology practitioners, a specialty considered to have among the lowest satisfaction rates among all
physicians (Leigh, Kravitz, Schembri, Samuels, & Mobley, 2002), and found that feelings of dissatisfaction among obstetricians and gynecologists resulted in
lower patient satisfaction.
Lee, Carswell, and Allen (2000) found that people who were more satisfied with their careers were more likely to display higher levels of organizational
commitment and stay with their jobs longer, thus lowering their turnover rate in the organization. Using the NEO-FFI Big Five scale Costa & McCrae, (1992),
found that career satisfaction was positively related to extraversion and negatively related to neuroticism in both samples, and negatively related to
conscientiousness among the American participants. In a sample of employees from various occupational backgrounds, Seibert and Kraimer (2001) found
significant, positive associations between career satisfaction and extraversion, and negative relationships between both emotional stability and agreeableness,
and career satisfaction. Tharenou (1979) reported that, high self esteem individuals (as compared to those with low self-esteem) tend to rely less on their job
environments and more on their own self-perceptions to guide their work behavior. According to Holland, (1996) people flourish in their work environment
when there is a good fit between their personality type and the characteristics of the environment. Lack of congruence between personality and environment
leads to dissatisfaction, unstable career paths, and lowered performance
DEMOGRAPHIC VARIABLES, JOB AND CAREER SATISFACTIONS
Gender differences in job satisfaction have been extensively researched and no conclusive evidence has been found with regard to the levels of satisfaction
among men and women. However, results from studies have indicated that there is a relationship between gender and job satisfaction (Oshagbemi 2000).
Souza-Poza (2000) found that women’s satisfaction has declined substantially in the past decade, whereas men’s job satisfaction has remained fairly constant.
There are even some studies that indicate that there is no relationship between gender and job satisfaction levels (Nestor & Leary, 2000), whereas Nestor and
Leary (2000) found no relationship between gender and job satisfaction. Mroczek and Spiro (2005) in their studies, directly or indirectly stated that individuals
who are married would be more likely to be satisfied with their job than those who are not married. They therefore, found and reported that married men have
higher life satisfaction than the never married ones. Since life satisfaction is often positively attached to career satisfaction, thus it seemed fit to state that
married men have higher career satisfaction than non-married ones.
Tang (2007) discovered and reported in his study that male and married people had with higher income, which has been associated with career satisfaction. He
further reported that married people also have higher quality of life, which is often related to career satisfaction. Thus, it can be concluded that married men are
more satisfied with their job because they have higher income and better quality of life than females or non-married individuals. Therefore, from the above
support, it seems that married individuals will be more likely to be satisfied with their job, because they have higher income and better quality of life.
In a study of agricultural education teachers in Ohio, Cano and Miller (1992b) found that the teacher’s age, years in current position, total years teaching, and
degree status were not significantly related to overall job satisfaction. In general, both males and females were equally satisfied with their jobs. When the same
demographic variables were examined in another study that explored six different classifications of agriculture teachers (Cano & Miller, 1992a), it was found that
overall job satisfaction was not significantly related to any of the demographic variables. Research has been conducted on whether Extension faculty’s level of
job satisfaction was related to age, years of experience, educational level, and marital status (Nestor & Leary, 2000). Concerning the educational level of
Extension faculty, Andrews (1990) discovered a relationship between educational level and job satisfaction. However, Bowen, Radhakrishna, and Keyser (1994).
Marital status was related to the job satisfaction levels of 4-H agents as indicated by Bowen et al. (1994) who found in a study that married 4-H agents were
more satisfied with their jobs than those who were single. Fetsch and Kennington (1997) also found a relationship between marital status and job satisfaction
levels. They found both divorced and married agents to be more satisfied with their jobs than agents who were never married, remarried, or widowed.
It is not surprising, that “employee problems” of job and career dissatisfactions appear on the agenda of politicians, governments and social partners – more
often, and more intensely. A special European Council, held in Lisbon during March 2000, agreed on a strategy emphasizing the importance of job and career
satisfactions. Relating this to Nigerian employee management situation, the ultimate goal is, within the new dispensation of democracy, to motivate Nigerian
employees to perform maximally. The idea behind this goal is that employee satisfaction driven economy, which results in high-dedicated labour and growth in
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productivity, should be our focus.Nigeria government policy strategy is only focusing on the establishment of a dynamic knowledge economy as we are having
currently, but neglecting the importance of modernization of labour relations, labour-management relation and the issue of employees’ job and career
satisfactions, in which the key phrases are “investment in people” and “social inclusion”. Thus, employees see themselves as important to the organization and
capable of contributing to the organization's well-being. This however, necessitates the need for scientific investigations and interventions in form of
professional suggestions as remedies for the perceived health sector’s administrative personnel’s problems of job and career satisfactions.
In view of the above, findings from this study will contribute immensely to the understanding of factors responsible for employees’ job and career satisfactions.
It will also facilitate the knowledge of psychological and social factors of organizational based self-esteem and coworker’s relationship as it affect the
phenomena of job and career satisfactions. Furthermore, findings from this study will enable stake holders-including government, management of health
institutions, Scholars, employees and other interested individuals-to better understand the potent of education, age difference, gender difference, marital
status, job position, pay and years of work experience to job satisfaction and career satisfaction. Hence, the knowledge of this study will provide the groundwork
necessary for managers, trainers, lecturers, scholars and other stakeholders in human resource management to better address the salient issues involved and
designed effective mechanisms of helping affected employees to better adjust, cope and be delightful with their jobs and careers respectively. No doubt about
the significant implications of findings from this study to existing related journals of diverse fields of discipline as it increases the body of intellectual reports on
human resource issues.
Given the high rate of unemployment and poor managerial styles in Nigeria, it is understandable that most dissatisfied workers suffer in silence. Again, the fact
that employers have always responded to industrial unrest for wage increase and adopting new leadership styles and management strategies; after which the
workers fall back into their old work attitude is an indication that a more comprehensive solution is yet to be found (Ojokuku & Salami, 2011) The health industry
has been a focus of attention as related to series of industrial actions that have occurred in the past one or two decades in Nigeria. Most of the industrial actions
recurring in the health sector have been directed mostly towards dissatisfaction with pay discrimination among the different categories of professionals in the
health sector, nonpayment of remuneration arrears, and dilapidated state of the health sectors (Ezeja, Azodo, Ehizele, Ehigiator & Oboro, 2010). The Senior Staff
Association of Universities, Teaching Hospitals, Research Institutes, and Associated Institutions (SSAUTHRIAI) and the Medical and Health Workers Union of
Nigeria (MHWUN) to which most of the Administrative Staffs of Tertiary Health Institutions belong have been at the fore front of the struggle.
In addition, prior to embarking on this study, having thoroughly reviewed existing literature and engaged in systematic interactions with some the administrative
staff in question, reseacher identified organizational based self-esteem, coworker interactions and pay issues among others as factors, which have not been
accorded proper respect by the management of most Nigeria Tertiary Health Institutions therefore, causing lots of frustrations working in the hospital
environment (Okediji, 2011). In line with the above stated observations and the fact that, most of the past studies conducted among health workers have paid
little attention to non clinical staff. Particularly, administrative staff that play very critical role in policy formulation and implementation. Also previous studies
did not thoroughly investigate issues of job and career satisfactions of Administrative Staff of Nigeria Tertiary Health Institutions.
OBJECTIVES
The broad objective of the study was to investigate and report findings regarding the effect of organizational based self-esteem, coworker’s relationship, pay,
education, work experience, job position, age, gender and marital status on job and career satisfactions of Administrative Staff of Nigerian Higher Institutions’
Hospitals.
The study specially examined the effect of organizational based self-esteem on job and career satisfactions of Administrative Staff of Nigeria Tertiary Health
Institutions. It investigated the effect of coworker’s relationship on job and career satisfactions of Administrative Staff of Nigeria Tertiary Health Institutions.
Moreover, the effect of pay, work experience, job position, age, gender and marital status were tested on job and career satisfactions of Administrative Staff of
Nigeria Tertiary Health Institutions.
HYPOTHESES
1.
2.
3.
4.
There would be significant main and interaction effects of coworkers’ relationships and organizational based self-esteem on career satisfaction.
There would be significant main and interaction effects of coworkers’ relationships and organizational based self-esteem on job satisfaction.
There would be significant joint and independent predictions of career satisfaction by pay, job position, education, working experience, marital status,
gender, and age.
There would be significant joint and independent predictions of job satisfaction by pay, job position, education, working experience, marital status, gender,
and age.
RESEARCH DESIGN
The research design used for the study is quasi-experimental research design. This research design was used because no active manipulation was done on any of
the independent variables. Moreover, measures were taken on the variables of consideration through the use of questionnaire. The independent variables of
this study are organizational-based self-esteem, coworkers’ relationships, pay, job position, age, gender, marital status, educational qualification and work
experience while the dependent variables are job and career satisfactions.
RESEARCH SETTING
The study was conducted in Federal Medical Centre, Abeokuta, Lagos University Teaching Hospital, Lagos, and University of Ibadan Teaching Hospital, Ibadan. It
was restricted to the aforementioned places because of availability of heterogeneous population.
RESEARCH PARTICIPANTS
Two hundred and thirty-four (Males=168, Females=66) participants participated in the study. The respondents age ranged from 20 to 58 years old with a total
mean age of 39.64 years (SD=9.61). The marital status of the respondents show that 54(23.1%) were single, 146(62.4%) were married, 21(9.0%) were divorced
while 13(5.6%) were widowed. Respondents varied in their educational qualifications: Ordinary National Diploma Certificate 11(4.7%), Higher National Diploma
Certificate 108(46.2%), B.Sc/B.A Certificate 86(36.8%), Master Degree 26(11.1%), and PhD 3(1.3%). The average years of employment of the participants was
13.66years (SD=6.17). The study adopted purposive sampling techniques to sample the participants from the general population. 8(3.4%) of the participants
were Assistance Executive Officers, 19(8.1%) were Executive Officers, 42(17%) were Higher Executive Officers, 27(11%) were Senior Executive Officers, 33(14.1%)
were Principal Executive Officers, 15(6.4%) were Assistance Chief Executive Officers, 14(6%) were Chief Executive Officers, 30(12.8%) were Administrative
Officers II, 22(9.4%) were Administrative Officers I, 12(5.1%) were Senior Administrative Officers, 6(2.6%) were Principal Administrative Officers, 4(1.7%) were
Assistance Chiefs, 2(0.9%) were Chiefs,
SAMPLING PROCEDURE
Purposive and Convenience sampling techniques were used to sample the participants. These sampling techniques were adopted because of its simplicity and
expediency in the eventuality that the sample tested is a true representative of the population of study.
INSTRUMENT FOR DATA COLLECTION
The study used a carefully designed questionnaire to collect data on the various variables of study. The Questionnaire was divided into four sections named A to
E. Section A consisted the demographic variables. Section B, consisted career satisfaction scale developed by Lepnurm, Danielson, Dobson & Keegan, (2006). This
scale consists of 17 items of which the responses were scaled from 1(Very Dissatisfied) to 6(Very Satisfied). High scores on each of the items imply a high career
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satisfaction feeling of respondents, while low scores imply a low career satisfaction feeling of respondents. For the purpose of this study, a Cronbach Alpha of
0.78 for the scale was reported. Section C consisted of the job satisfaction scale developed by Smith, Kendall, and Hulin (1969). This scale consists of 6 items of
which the responses were scaled from 1(Strongly Disagree) to 5(Strongly Agree). High scores on each of the items imply a high job satisfaction feeling of
respondents, while low scores imply a low job satisfaction feeling of respondents. For the purpose of this study, a Cronbach Alpha of 0.87 was reported for the
scale. Section D consisted of organizational-based self-esteem scale developed by Pierce, Gardner, Dunham, & Cummings (1989). This scale consists of 10 items
of which the responses were scaled from 1(Strongly Disagree) to 7(Strongly Agree). High scores on each of the items imply a high Organizational-Based SelfEsteem of respondents, while low scores imply a low Organizational-Based Self-Esteem of respondents. For the purpose of this study, a Cronbach Alpha of 0.72
was reported for the scale. In Section E consisted of coworker’s relationship of participants was assessed with a coworker’s relationship scale developed by Liden
and Maslyn, (1998). This scale consists of 13 items of which the responses were scaled from 1(Strongly Disagree) to 5(Strongly Agree). High scores on each of the
items imply a good coworker’s relationship of respondents, while low scores imply a bad coworkers’ relationship of respondents. For the purpose of this study, a
Cronbach Alpha of 0.65 was reported for the scale.
PROCEDURE FOR DATA COLLECTION
We administered the instrument to the Administrative Staff of University College Hospital, Ibadan, Lagos University Teaching Hospital, Lagos, and Federal
Medical Centre, Abeokuta. In administering the instrument, permission was sought from Authorities of the three Hospitals as a way of getting their consent for
the study. Purposive and convenience sampling procedures was used to select participants because the main objective of the study was to obtain Participants’
perceptions of their career satisfaction, job satisfaction, organizational-based self-esteem, and coworkers’ relationships. Individual participants were
approached personally and the purpose of the study was briefly explained to them as a way of seeking their consent and cooperation for the study. Each of the
participants was given a questionnaire and told to assess him or herself. The instrument was administered to the Participants in their work places and they were
required to respond to all items at their convenient time. Participants were made to know that participation was voluntary and they were assured of
confidentiality of their information supplied. Though, not all the workers could be reached immediately for various reasons, we then delegated the distribution
of instrument to some supervisors to give to their subordinates whenever it was convenient for them to fill. It took about three weeks to collect data from 234
sincere respondents out of 260 originally administered, while some of the remaining questionnaires were not properly filled, some were returned unfilled and
others could not be accounted for. The screened data was therefore analyzed.
STATISTICAL ANALYSIS
The data collected was analyzed using univariate analysis of variance and multiple regression analysis. Hypotheses 1 and 2 were analyzed using univariate
analysis of variance while hypotheses 3 and 4 were analyzed using multiple regression analysis. The reason for this choice of statistics was to test for the main
and interaction effects of organizational-based self-esteem and coworkers’ relationships on career and job satisfactions of Participants and to test for
predictions of job and career satisfactions by age, gender, work experience, marital status and job position.
This study found that hypothesis one which stated that, there would be significant main and interaction effects of coworker’s relationship and organizationalbased self-esteem on career satisfaction was confirmed. According to the result, organizational-based self-esteem which explains individual employees’ selfworth based on their membership of the particular work setting is one of the divers significant psychological factors that causes employee satisfaction with his
or her career. This further proves that being employed makes one to be socially or professionally belong therefore, contribute to employees’ feelings of
contentment with their chosen career unlike when an able person, well educated, skillful and ready to work is battling with unemployment situation, which
negatively affect the perception of his or herself. Furthermore, this study has proved beyond a reasonable doubt that, coworker’s relationship is another
significant work related psychological phenomenon that plays a salient role in an issue of satisfaction or dissatisfaction with an employee’s career, as the case
may be. It stresses that power of social influence, relation and interaction on individual employees’ psychological state with their chosen careers. Thus, if an
employee is unfortunate to be found in a work setting that does not give considerations to effective social relations among staff, such person may found that
career boring and not satisfying. Above findings were supported by numerous findings of related studies. Costa & McCrae, (1992), found that career satisfaction
was positively related to extraversion and negatively related to neuroticism in both samples, and negatively related to conscientiousness among the American
participants. In a sample of employees from various occupational backgrounds, Seibert and Kraimer (2001) found significant, positive associations between
career satisfaction and extraversion, and negative relationships between both emotional stability and agreeableness, and career satisfaction.
This study also found that hypothesis two which stated that, there would be significant main and interaction effects of coworkers’ relationships and
organizational-based self-esteem on job satisfaction was confirmed. According to the result, organizational-based self-esteem is also applicable to job
satisfaction. Since employment is an important thing that an average person desire, it speaks an employee’s worth and sense of responsibility. It proves that
being employed makes one to be socially or professionally belonged therefore, contribute to employees’ feelings of comfort on their job and with their work
setting. Furthermore, the finding has also proved beyond a reasonable doubt that, coworkers’ relationship is another significant psychological variable that plays
a role in employee’s job satisfaction. It stresses the power of social influence, relation and interaction on individual employees’ psychological state of
satisfaction with their organizations. Thus, if an employee is unfortunate to be found in a work setting that does not give considerations to effective social
relations among staff; such a person may found the job to be boring. Above findings were supported by numerous findings of related studies. According to
Poling (1990), the best predictor of job satisfaction is when the employees’ personal values match those of the organization. Costa & McCrae, (1992), found that
career satisfaction was positively related to extraversion and negatively related to neuroticism in both samples, and negatively related to conscientiousness
among the American participants.
Similarly, hypothesis three which stated that, there would be significant joint and independent predictions of career satisfaction by pay, job position, education,
working experience, marital status, gender and age was partially confirmed. This implies that, there was a significant joint influence of the seven aforementioned
demographic variables on career satisfaction of Participants; also that only pay, job position, and working experience significantly and independently predicted
career satisfaction of the Administrative Staff. However, age, gender, marital status and education are not significant and independent predictors of
Administrative Staff career satisfaction. The reason is that career satisfaction is a psychological variable that explains an individual’s state of joy, happiness and
comfort with his or her prospect on a particular career. Result has shown that this psychological variable is not dependent on age, gender, marital status or
education of a participant, meaning that, career satisfaction is applicable or general to men and women. Thus, neither male nor female employee could alone
experience some level of joy, happiness and comfort with his or her prospect on a particular career. This further explains that gender is a symbolic or identical
variable to the phenomenon of career satisfaction, which does not really matter or count. Marital status only differentiates or categories individuals based on
responsibility of one to his or her partner. In the real sense of it, whether an employee is married or not or even divorced, widowed or widower in any case, one
is socially or otherwise responsible to people around therefore, makes marital status of employees not significantly relevant in issues of individuals’ dispositions
concerning career satisfaction. Therefore, makes marital status not solely accountable for Administrative Staff expression of career satisfaction. Education in this
study has proved to be irrelevant when it comes to the psychological matter of satisfaction or dissatisfaction with career. For instance, the recent protests of
various labour unions in Nigeria Tertiary Institutions over dissatisfaction with the treatments they have received from their employers, which is not limited to
the Professors but also the technicians and Clarks. This simply explains that whether an employee is highly educated or not does not guarantee satisfaction or
otherwise as the case may be. Similarly, age does not matter when it comes to the issue of career satisfaction, because both young and old employees have the
potentials to express displeasure with anything that does not conform to their standards or expectations. The fact that one is a female or male worker does not
necessarily mean that you will or not be satisfied with your career. Pay in this study was viewed as salary or income of participants, which has been confirmed
relevant to employee career satisfaction, is one of the observed significant demographic factors that influenced career satisfaction. In the context of Nigeria
world of work, money is cogent to employee motivation, which is synonymous to satisfaction. Today in Nigeria, employees are protesting basically for pay
increase. The contemporary crisis in Nigeria involving Labour Unions against governments and other private employers over minimum wage issue is a good
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instance to buttress the significance of pay in employees’ satisfaction. Nigerian Employees want more attractive pays or pay increase regardless of job position
or cadre as they strongly attribute it to satisfaction with career. Job position as also proved to be another important factor to have significantly contributed to
Participants expression of satisfaction. Job position is categorized in this study as a demographic variable, though to an extent it is psychological when we
consider its ability to cause employees’ satisfaction or otherwise depending on the level at which an employee is operating on a particular career. Rationally, an
employee would express satisfaction with a career that gives prospect for promotion to the peak of the profession. Working experience is a factor that is worth
given adequate attention as the result of this study proves. Little wonder when employers, human resource managers and investors do not compromise the
standard when it comes to careers of professions that highly required related experience to be able to function well as a career holder. In fact, this is general to
virtually all areas of human endeavor. These findings were supported with the result of the following past studies of Cano and Miller (1992) found that the
teacher’s age, pay, years in current position, total years teaching, and degree status were not significantly related to overall job satisfaction. Grund and Sliwka
(2001) found positive effects of both wages and wage increase on job satisfaction in the UK and Germany respectively.
Finally, this study found that hypothesis four which stated that, there would be significant joint and independent predictions of job satisfaction by pay, job
position, education, working experience, marital status, gender and age was partially supported by the result. This implies that there was a significant joint
influence of the seven aforementioned demographic variables on job satisfaction of Participants; also that only pay, job position, education and working
experience significantly and independently predicted career satisfaction of the Administrative Staff. However, age, gender, and marital status are not significant
and independent predictors of Administrative Staff job satisfaction. The reason is that, just as career satisfaction is, job satisfaction is a psychological variable
that explains an individual’s state of joy, happiness and comfort his or her prospect on a particular job. Result shows that the psychological variable of job
satisfaction is not dependent on age, gender and marital status of a participant, meaning that, job satisfaction is applicable or general to men and women. Thus,
neither male nor female employee could alone experience some level of joy, happiness and comfort with his or her prospect on a particular job. This further
explains that gender is a symbolic or identical variable to the phenomenon of job satisfaction, which does not really matter or count. Just as its applied to career
satisfaction, so it is to job satisfaction in the case of marital status of Administrative Staff. Marital status only differentiates or categories individuals based on
responsibility of one to his or her partner. In the real sense of it, whether an employee is married or not or even divorced, widowed or widower in any case, one
is socially or otherwise responsible to people around therefore, makes marital status of employees not significantly relevant in issues of individuals’ dispositions
concerning job satisfaction. Therefore, marital status solely did not account for Administrative Staff expression of job satisfaction. Similarly, age does not matter
when it comes to the issue of job satisfaction, because both young and old employees have the potentials to express displeasure with anything that does not
conform to their standards or expectations. The fact that one is a female or male worker does not necessarily mean that you will or not be satisfied with your
job. However, contrary to what was reported in the first result, education in this study has proved to be a significant predictor of job satisfaction. For instance,
education takes an employee beyond his or her immediate geographical, professional and cultural belief or orientations therefore, empower him or her to cope
adequately with challenges and duties of various forms from different fields. We can see today in the cotemporary conglomerates and government sectors,
where Engineers, Doctors, Scientists, Lawyers, Military and Security Personnel are being forcefully or willingly as the case may be enrolled for professional
trainings in areas far different from their fundamental discipline such as Human resource management, finance management, strategic management etc.
Education therefore, offers employees ability to contribute meaningfully, appreciate other department or areas of job and give all to his or her employer. So, it is
highly relevant to employee’s job satisfaction. Above findings were supported with the result of the following past studies:
Nestor and Leary (2000) did find that as one’s years of experience increased as an Extension faculty member, his or her intrinsic and overall job satisfaction
increased as well. Nestor and Leary (2000) also reported that there is relationship between gender and job satisfaction. According to Pierce, Gardner, Cummings,
& Dunham (1989) in their study, it was reported that, there is a significant relationship between one’s experiences in an organization and organisational-based
self-esteem.
Based on the above findings and discussion, it was recommended that, government executives, directors and private managers should effectively manage areas
of differences across individual employees such that will bring about efficient pool of highly motivated employees. It was similarly suggested that government
executives, directors and private managers should give adequate managerial interventions such as training, seminar, lecture and workshop for employees to
expose them to importance of human relation skills to help manage issues such as appreciation of efforts and potentials of fellow employees, respect for one
and others, industrial conflict, interpersonal conflict, interdependence etc. All government and private operators should increase salary and implement the new
minimum wage policy so that employees can be more satisfied with their jobs and careers. Government executives, directors and private managers should
sensitize employees on the importance of self-esteem to their job and career satisfactions. So also, they should stimulate or facilitate their social relation levels
as it plays an important role in their career and job satisfaction. It was also recommended that consultants’ involvement be restricted to the technical aspect of
the aforementioned managerial intervention programmes to achieve the desired results.
CONCLUSIONS
It was concluded in this study that Organizational based self-esteem and coworker’s relationship mainly and interactively affected career and job satisfaction of
administrative staff of Nigerian higher institutions’ hospitals. Pay, gender, work experience, job position, marital status, education and age were significant joint
predictors of job and career and satisfactions. Only pay, work experience and job position were significant independent predictors of job and career
satisfactions.
LIMITATIONS
The study was limited to the Federal Medical Centre, Abeokuta and University College Hospital, Ibadan. Field work was conducted within three weeks, which
could have been extended beyond to get more participants, but time factor was inevitable. Also, some participants did not fill or return the given questionnaire
hence, limited the number of questionnaire collected.
This study should be repeated in three to five years time to determine if the level of job and career satisfactions of Administrative Staff in Tertiary Health
Institutions in Nigeria is related to the same psychosocial factors and discover other variables that affect the phenomena of concern. Finally, other service
oriented organizations should replicate this study.
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APPENDIX/ANNEXURE
QUESTIONNAIRE
Dear Respondent
This questionnaire is designed for research purpose only therefore, whatever information you give shall be treated in absolute confidence. Your honest and
correct responses are essential for this study to be successful.
Thank you for your cooperation.
SECTION A
Please tick [√ ]/indicate in the appropriate box
1. Sex: Male [ ] Female [ ]
2. Age:_______
3. Marital status: Single [ ] Married [ ] Divorced [ ] Widowed [ ]
4. Religion: Christian [ ] Islam [ ] Traditional [ ] Others [ ]
5. Job Title:___________________________
6. Highest Educational Qualification:________________________
7. Income Status Per Month:__________________________
8. How Long Have You Worked in this Hospital? ________________________
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SECTION B
Response Format: Very Dissatisfied (VD), Dissatisfied (D), Somewhat Dissatisfied (SD), Somewhat Satisfied (SS), Satisfied (S), Very Satisfied (VS).
S/N
HOW SATISFIED ARE YOU WITH THE FOLLOWING:
VD D SD SS S VS
1.
Your interactions and relationships with your colleagues?
2.
The coworker’s interactions derived from providing administrative service?
3.
Your success in meeting the administrative needs of the hospital?
4.
Your capacity to keep up with advances in your profession?
5.
Your interactions and relationships with other hospital staff?
6.
Your interactions and relationships with finance administrators in the hospital?
7.
Your authority to get your administrative decisions carried out?
8.
Your ability to control your work schedule?
9.
Your ability to keep responsibilities at work from intruding on your life
10.
Your earning as an administrative personnel?
11.
Your career advancement in the health sector?
12.
Your ability to maintain satisfying activities in the community (service, culture, church etc)?
13.
Your career, considering your various roles and responsibilities at work?
SECTION C
Response Format: Strongly Disagree (SD) Disagree (D) Undecided (U) Agree (A) Strongly Agree (SA).
S/N
STATEMENTS
SD D U A SA
14.
I am satisfied with the supervision I receive on my job
15.
I like the people I work with
16.
I enjoy the work that I do
17.
I am satisfied that I can be promoted to the next level
18.
I feel that I am being paid a fair amount for the work I do
19.
This hospital is a good place to work, because it offers flexibility in work schedule
SECTION D
Response Format: Strongly Disagree (SD) Moderately Disagree (MD) Slightly Disagree (SD) Neutral (N) Slightly Agree (SA) Moderately Agree (MA) Strongly Agree
(SA).
S/N STATEMENTS
SD MD SD N SA MA SA
20.
I count around here
21.
I am taken seriously around here
22.
I am an important part of this hospital
23.
I am trusted around here
24.
There is faith in me around here
25.
I can make a difference around here
26.
I am a valuable part of this place
27.
I am helpful around here
28.
I am efficient around here
29.
I am cooperative around here
SECTION E
Response Format: Strongly Disagree (SD) Disagree (D) Undecided (U) Agree (A) Strongly Agree (SA).
S/N
STATEMENTS
SD D U A SA
30.
I like my colleague very much as a person.
31.
My colleague is a lot of fun to work with.
32.
My colleague is the kind of person one would like to have as a friend.
33.
I respect my colleague’s knowledge of and competence on the job.
34.
I am impressed with my colleague’s knowledge of his or her job.
35.
I admire my colleague’s professional skills.
36.
My colleague defends my work actions to a superior, even without complete knowledge for the issue in question.
37.
My colleague would defend me to others in the organization if I made an honest mistake.
38.
My colleague would come to my defense if I were ‘attacked’ by others.
39.
My colleague can depend on me when we are overloaded with work.
40.
I am willing to apply extra efforts, beyond those normally required, to meet my partner’s work goals.
41.
I do not mind working hardest for my colleague.
42.
I do work for my colleague that goes beyond what is specified in my job description.
FIGURES & TABLES
TABLE 1: SUMMARY OF UNIVARIATE ANALYSIS OF VARIANCE SHOWING THE MAIN AND INTERACTION EFFECTS COWORKERS’ RELATIONSHIPS AND
ORGANIZATIONAL-BASED SELF-ESTEEM ON CAREER SATISFACTION
Source
SS
Df
MS
F
Sig.
Org.-Based Self-Esteem
86.758
1
86.758
19.989
.000
Coworkers’ Relationships
1108.518 1
1108.518 255.404
.000
Org.Self-Esteem* Coworkers 626.226
1
626.226
144.283
.004
Error
998.259
230
4.340
Total
73350.00 234
145
ISSN 2231-1009
TABLE 2: SUMMARY OF UNIVARIATE ANALYSIS OF VARIANCE SHOWING THE MAIN AND INTERACTION EFFECTS COWORKERS’ RELATIONSHIPS AND
ORGANIZATIONAL-BASED SELF-ESTEEM ON JOB SATISFACTION
Source
SS
df
MS
F
Sig.
Org.-Based Self-Esteem
5295.642
1
5295.642 154.287
.000
Coworkers’ Relationships
711.324
1
711.324
20.720
.013
Org.Self-Esteem*Coworkers
Error
Total
9300.227
7894.353
318978.00
1
230
234
9300.227
34.323
270.960
.009
TABLE 3: SUMMARY TABLE OF MULTIPLE REGRESSION ANALYSIS SHOWING THE JOINT AND INDEPENDENT PREDICTIONS OF CAREER SATISFACTION BY PAY,
JOB POSITION, EDUCATION, WORKING EXPERIENCE, MARITAL STATUS, GENDER AND AGE
Variables
Β
T
Sig.
R
R2
F
Pay
.239
10.177 .029
Job Position
.251
9.721 .002
Education
.005
0.075 .940
Working Experience
.168
8.276 .018 .822
.809
9.539
Marital Status
-.055
-.763
.446
Gender
-.021
-.305
.760
Age
-.147
-1.163
.246
TABLE 4: SUMMARY TABLE OF MULTIPLE REGRESSION ANALYSIS SHOWING THE JOINT AND INDEPENDENT PREDICTIONS OF JOB SATISFACTION BY PAY, JOB
POSITION, EDUCATION, WORKING EXPERIENCE, MARITAL STATUS, GENDER AND AGE
Variables
Β
T
Sig.
R
R2
F
Pay
.506
7.023
.030
Job Position
.343
8.395
.023
Education
.165
9.226
.021
Working Experience
.262 10.088 .030 .919
.844 26.997
Marital Status
-.032
-.438 .662
Gender
-.029
-.429 .669
Age
-.088
-.693 .489
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ISSN 2231-1009
STATUS, PROBLEMS AND PROSPECTS OF REMITTANCE INFLOW IN BANGLADESH
MOHAMMAD OMAR FARUK
LECTURER
EASTERN UNIVERSITY
DHAKA
ROKSHANA ALAM
EXECUTIVE
PRESIDENCY UNIVERSITY
DHAKA
ABSTRACT
The remittance is the largest external sources of fund for the developing countries to get access to the foreign currency. The main purpose of this report is to
show the trend of foreign remittance growth and to identify the problems & the prospect of remittance inflow in Bangladesh. The report shows the size and
growth of remittance inflow to Bangladesh for the last few years, which also shows the country wise trend of the remittance inflow to Bangladesh. The analysis
found that the flow of the unskilled migration is higher migration of skilled and professionals from Bangladesh, among the unskilled workers most of them goes
to Middle East. According to the data most of the remittance of Bangladesh comes form Saudi Arabia, UAE, UK, Kiewit, USA and Malaysia. The report shows
some of the problems of the remittance inflow like strict rules and regulations, hundi, illegal way of sending remittance, lack of exchange house in abroad,
migrations more unskilled workers, depending on outside financial environment, and also proposes some solutions for those problems.
KEYWORDS
Remittance in Bangladesh, Problems and Prospects of Remittance, Remittance Growth.
JEL CODE
F24
INTRODUCTION
T
he remittance is one of the common ways that a country gets access to the currency of other countries. The migrant workers help their local country by
sending remittance in many ways like to get foreign currency, to improve the foreign currency reserve, to strengthening the local currency and to
improve the balance of payment (Bruyn et al., 2005). The remittance has a large contribution on the GDP of a country such as the remittance inflow of
Bangladesh is 10.54% of the GDP of 2010. According to the official statistics between 1976 and 2009 the total number of Bangladeshis working abroad stands at
about 6.7 million (Khawaja, 2010).
Remittance is important to stabilize the macro and microeconomic factors of a country. The remittance flow of a country helps to improve the economic growth,
to upper standard of living, to increase expense on education and health, to generate the employment, to reduce the foreign currency rate, to improve the GDP
and to improve the major economic condition (Bahar et al., 2006). Remittance inflow in Bangladesh is gradually increasing day by day so that Bangladesh is able
to take high amount of foreign remittance reserve because of increasing rate of remittance inflow. The reasons behind the enrichment of the remittance inflow
in Bangladesh are strong monitoring system of Bangladesh bank, quicker and reliable delivery system of banks due to having competitiveness among them, a
lucrative foreign exchange rate and increasing in migration day by day. It takes maximum 24-72 hours for a bank to reach the remittance anywhere of the
country, nowadays it takes few hours to receive the remittance by the recipient throw latest technology like internet and mobile.
The main objective of this report is to find out the prospects of remittance inflow to Bangladesh. Besides this, the report also shows the status of the remittance
inflow for the last ten years (from 2001to 2010) in Bangladesh and the flow of the manpower recruitment from Bangladesh based on level of skills and
experiences is shown. Hence the decision is shown to recruit more skilled and professional in the foreign country, though it has negative impact on the exporting
the knowledge to the foreign country but to increase the remittance earning it can be a feasible way.
LITERATURE REVIEW
Remittances are a more constant source of income to developing countries than other private flows and foreign direct investment, and decisions by migrants to
submit a share of their income to their country of origin are affected less by international financial and market crises than by the decisions of private investors
and speculators (Gammeltoft 2002).
Looking solely at developing countries, Kapur (2004) plots net and gross remittances against other private and public capital flows. His study shows that while
other capital flows (such as FDI) exhibit notable fluctuations over time, remittances were the most stable capital flow during the period 1990-2001.
Ratha (2003) has rightly insisted that migrant remittances are “an important and stable source of external development finance,” and whose potential for
stimulating economic growth has been largely neglected by those who explore such issues from the top down. By contrast, millions of migrant workers working
from the bottom up, who have for many years been sending billions of dollars of investment funds back to their home villages have not been so negligent.
Apart from increasing disposable incomes and thus creating a spillover effect by raising the effective demand for local goods and services, invested remittances
play a central role in developing local capital markets and productive infrastructure (Ballard 2002; Keely and Tran 1989).
Law and practice in Bangladesh strictly prohibit sending remittances through informal channels, such as hundi. Despite this prohibition, remittances received
through banking channels, the only ones recorded in Bangladesh, are estimated to be no more than 46 percent of total remittances (Siddiqui and Abrar 2003).
The World Bank’s report (GEP 2006) identifies remittance cost, attitude of host countries towards migrants’ financial matters, employment opportunities in the
host countries, cost of living in the host and home countries, government policies in host and home countries as crucial factors affecting remittances. In the
home countries, such policy variables include tax exemption for remittance income, easing recipients’ access to financial services, incentives to attract
investments by the diasporas, easing access to foreign exchange, lowering import duties and support for the projects of migrant.
Chamon, Semblat and Morant (2005) find results partly similar to that of the IMF study (2005) in case of Samoa. Their results indicate that depreciation of
domestic currency and growths in the host country have positive impact on remittance, while growth in the home country has negative impact. The negative
association between home country growth and remittances implies the counter cyclicality of remittances.
METHODOLOGY
The secondary data from 2001 to 2010, on remittance from the citizens of Bangladesh living or employed abroad, is collected from the Bangladesh Bank web
site, schedule bank statistics, journal, article and different publication of the Bangladesh Bank. Tabular and graphical analysis was performed using Microsoft
147
ISSN 2231-1009
Excel. The trend analysis shows the time series pattern of the last few years of Bangladesh and few Asian countries. The decision is made based on the
assumptions and the graphical data presented.
ANALYSIS AND INTERPRETATION OF THE DATA
REMITTANCE INFLOW SCENARIO IN WORLD
Remittances to developing countries in 2010 totaled $325 billion which was $308 billion in 2009. The largest recipients of remittances among the developing
countries in 2010 were India, $53 billion; China, $51 billion; Mexico, $22 billion; Philippines, $21 billion; and Bangladesh, 11.5 billion.
A majority of the remittances from the US have been directed to Asian countries like India (approx. 26 billion USD), Philippines (approx. 20 billion USD) and China
(approx. 23 billion USD). Most of the remittances send by the conventional channel of agents, like Western Union, MoneyGram or Xpress Money Services.
However, with the increasing relevance and reach of the Internet, online and mobile phone money transfers from companies such as Remit2India and
Xoom.com have significantly grown.
TOP REMITTANCE RECIPIENT COUNTRIES
FIGURE 1: TOP REMITTANCES RECIPIENT COUNTRIES (Billions USD)
Top Remittances Recipient Countries
60
India
Billions USD
50
China
40
Mexico
30
Israel
20
Philippines
10
Pakistan
0
Bangladesh
2006-07
2007-08
2008-09
2009-10
2010-11
Source: http://en.wikipedia.org/wiki/Remittance#cite_note-21
The remittance inflow in Bangladesh in 2010-11 was US$11.7 billion which was US$ 5.5 billion in 2006, so the remittance inflow in Bangladesh was doubled
within only four years. The remittance inflow in India and China was very high for the last few years, Philippine, Israel and Mexico was good remittance earners.
Bangladesh is able to keep positive growth rate of the remittance inflow for the last few years. The remittance inflow in Bangladesh is increasing slowly
comparing the growth rate of India and China after 2007-08, though the remittance inflow in Bangladesh reached more then 10 billion for the last two years. The
performance of the Pakistan is not changing in over the night but it was increasing with a positive growth for the last five years.
REMITTANCE INFLOW SCENARIO IN BANGLADESH
Remittances inflow in Bangladesh is continuously increasing trend over the last 30 years. While total remittance inflow in Bangladesh was only USD 24 million in
1976, the amount stood at USD 6,584 million in 2007. Bangladesh was the 10th largest recipient of remittances among the developing countries considering the
average for the period 1990 to 2005 (IFS, October 2007). It ranked 14th among all of the remittance-recipient countries in terms of the amount of remittances
received in 2005 (Global Economic Prospects, GEP 2006, WB). Bangladesh stands at 5th among the top remittance recipient countries of the world (According to
an article published by D-8 secretariat Bangladesh: Global Financial Crunch set to Cut Remittance, on December 3, 2008). The remittance inflow in Bangladesh is
having good pace for the last few years, the remittance inflow in Bangladesh stood USD 11.7 billion in 2010-11 which was USD1.88 billion in ten years back, so
remittance inflow was increased six times within 10 years.
A positive remittance growth of Bangladesh has been seen in each year. On an average 22.24% growth has been found in each year of the last ten years. During
the 2008-09 and 2007-08 the amount of total remittance inflow was USD 9.7 billion and USD 7.9 billion respectively and the growth rate was 32.39% in 2007-08.
FIGURE 2: TOTAL REMITTANCE INFLOW IN BANGLADESH
Source: Statistics Department, Bangladesh Bank
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FIGURE 3: NUMBER OF MIGRANTS CLASSIFIED BY SKILL
500000
400000
300000
Number of Migrants Classified by Skill
Professional
Skilled
Semi
Semi-skilled
Less
Less-skilled
Total
1000000
800000
600000
400000
200000
200000
100000
0
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Total Number of Migrants
No. of Migrants Based on
Skill
600000
Source: Bangladesh Economic Review 2011, Published by Ministry of Finance
According to the data the flow of the migration from Bangladesh was highly increased in 2007 and 2008, the reason was high growth of less-skilled
less
and semiskilled (who has some technical knowledge). But the professional migration, high remittance earners, was dramatically declining
declini from 2007 to very recent years.
There are two major patterns in international migration from Bangladesh: first the industrialized countries like UK and USA, and second Middle East and
Southeast Asia. The Bureau of Manpower, Employment and Training (BMET) maintains a database on the labor migrants who officially go overseas for
employment. According to the official statistics, between 1976 and 2009, the total number of Bangladeshis workers abroad stands
stan at about 6.7 million. The
major destination countries for these workers include Saudi Arabia
Arabia (KSA), the United Arab Emirates (UAE), Malaysia, Kuwait, Oman, Singapore, Bahrain, Qatar,
and Libya. Saudi Arabia alone hosts about 40% of the total migrant workers from Bangladesh.
The most of the migration from Bangladesh originates from the districts
districts of Sylhet, Chittagong, Noakhali, Comilla, and Dhaka (Murshid et al 2002). While it has its
origin in history, it has some important implications for the current immigration. For instance, there are some interesting links
l
between destinations and origins.
For example, the Bangladeshi migrants in the Tower Hamlets in the U.K. mostly came from Sylhet. Similarly, migration to Rome mostly originates in Faridpur
district.
Five government ministries are involved in international labor migration (Siddiqui, 2005): (i) the Ministry of Expatriates’ Welfare and Overseas Employment that
was created in 2001; (ii) the Ministry of Home Affairs; (iii) the Ministry of Foreign Affairs; (iv) The Ministry of Finance; and (v) the Ministry of Civil Aviation and
Tourism.
FIGUREE 4: COUNTRY-WISE
COUNTRY
WORKERS' REMITTANCES IN 2010-11
Country-wise Workers'
Remittances
in 2010-11Saudi
10%
6%
3%
3%
28%
Arabia
U.A.E.
U.K.
16%
17%
9%
Kuwait
8%
Saudi Arabia is the highest sources of remittance inflow for Bangladesh which made almost 28% of the total earning in 2010-11.
2010
U.A.E. has 17% and USA has 16%
contribution in the total remittance earning of Bangladesh. Kuwait, UK, and Malaysia are also a big market for remittance inflow
inf
in Bangladesh.
More then 50% remittance inflow in Bangladesh comes only from three countries (Saudi Arabia, UAE, UK), but Bangladesh should emphasize on the others
region or country of the world to reduce the dependency on the Middle East and to diversify the sources of remittance earning.
earning Some of the countries like Italy,
Quarter, Libya, and Lebanon. Oman, Kuwait and
d European countries like Ireland, Holland, Finland, and Spain can be good sources of the remittance inflow.
COUNTRY-WISE
WISE REMITTANCE INFLOW IN BANGLADESH
Bangladesh expatriates send their hard-earned
earned remittance from different parts of the world. But due to having more unskilled and semi-skilled
semi
workers working
in different foreign countries, they can afford fewer amounts in comparison to their man power potentiality. Despite, the less
les skilled expatriates a huge amount
of remittance is received each
h year from these expatriates. In accordance with the last ten year data, the highest amount of remittance is received from the
t
Middle-East like Saudi Arabia, UAE and USA.
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ISSN 2231-1009
FIGURE 5: REMITTANCE INFLOW FROM DIFFERENT COUNTRIES FOR THE LAST 10
0 YEARS
Taka in crore
Country wise remittance inflow in Bangladesh
25000
Saudi Arabia
20000
U.A.E.
15000
U.K.
10000
Kuwait
U.S.A.
5000
Malaysia
Average
2010-11
2009-10
2008-09
2007-08
2006-07
2005-06
2004-05
2003-04
2002-03
2001-02
2000-01
0
Only few countries are the major contributors of the remittance inflow in Bangladesh, most of the remittance inflow in Bangladesh
Bangla
comes from six countries, like
Saudi Arabia, UAE, UK, Kuwait, USA and Malaysia. Malaysia had continuous decrease growth rate from
f
(2000-07),
07), but 2007 to last year it had positive growth of
remittance inflow in our country. However the remittance inflow growth rate of UK and Kuwait of 2009 were very much disappointed
disappoin
comparing with the
growth rate of 2005 to 2007 of those countriess and it is needed further research for commercial banks as well as the government about this fact. The common
cause may be that worldwide economic recession in last few years has created influence over this figure.
FIGURE 6: COUNTRY WISE
WI REMITTANCE INFLOW IN BANGLADESH
in crore taka
300%
2009-10
2010-11
10 Years Average
Change Between 2009-10 and 2010-11
11
20000
15000
200%
100%
10000
0%
Other…
Hong Kong
South Korea
Italy
Australia
Malaysia
Japan
Iran
Bahrain
Germany
Singapore
Oman
Qatar
Libya
U.S.A.
Kuwait
U.K.
U.A.E.
0
Saudi…
5000
-100%
Changes of remittance inflow
Country
Country-wise
Workers' Remittance
25000
The significant contributors of the remittance inflow in Bangladesh are Saudi Arabia, UAE, UK, Kuwait, USA and Malaysia. Now if we consider the years 2009-10
and 2010-11
11 then the data the remittance inflow from USA, Kuwait, Malaysia, U.K. Singapore and UAE has been increased at a slow rate. The remittance inflow
from Libya, Germany, Hong Kong and Australia has significantly increased between 2009-10
2009
and 2010-11.
11. But at the same time the remittance inflow from Saudi
Arabia was decreased by -1.10%. Significantt decreased market was Qatar (-8.93%),
(
Iran (-47.02%) and Oman (-1.50%).
1.50%). It is obvious that the remittance inflow
from most of the major sources was increased in 2010-11
2010 11 then the average of ten years remittance inflow. It is important to note that remittance
remitta
inflow from
Malaysia has significantly increased during the last year, though the figure was decreasing continuously for the three consecutive
consec
years after 2005.
Malaysia is very much important remittance market for India, China and Pakistan which indicates
indicates that there is a huge potentiality for Bangladesh to increase
remittance inflow from Malaysia therefore Bangladesh should emphasize on this market. Despite the huge potentiality the remittance
remit
inflow is traditionally slow
from some of the countries like
ke Libya, Iran, Japan, Australia, South Korea and Hong Kong.
PROBLEMS OF REMITTANCE INFLOW IN BANGLADESH AND SOME FINDINGS
•
•
•
A huge amount of remittance flows through an illegal network known as Hundi, covers around 40% of inward remittance in Bangladesh,
Bangla
which is a big
problem for our economy because these foreign currency does not go to the bank. Those foreign currency may not properly be using
us for the development
of the country. Some of the real estate companies are influencing the wage earners to invest their money at a higher rate of profit or to purchase
plots/flats and avoid banking channels. The real estate companies are offering flats/plots at low cost to the people living in
i foreign country by arranging
real estate fair.
Due to some strict rules and regulations the competition in the remittance industry is being hindered. The high fees or charges of remittance are a
discouragement for the migrants to send the remittance through proper channel. The government has some specification to be followed
fo
by banks for the
opening remittance booth or exchange center in the foreign country.
Depending on the remittance for the external fund the country’s economy will be dependent on the outside financial environment.
environmen Sometimes the sudden
economic shock of the host country can affect the economy of the remittance sending country. So depending on the health of the economy of another
country may not be suitable economic decision for a developing country like Bangladesh.
150
•
•
•
•
•
ISSN 2231-1009
Remittance inflow can have negative impact by global recession like, if workers employed abroad lose their job and stop sending remittance; the local
currency rate will be depreciated, which can shrink the importing business of the local country. Even, if those workers move back home from the foreign
country then the unemployment problem may be increased and the local economic recession will increase.
There are more unskilled or semi-skilled workers are working in the abroad from Bangladesh who earn a less compare to the skilled and trained
professionals. The earning of an unskilled person is very less than a skilled person, while professionals earn even higher. Though the migration rate from
Bangladesh is increasing day by day but the growth rate of skilled and trained professionals is not increasing for the last ten years. So the number of
outgoing manpower is not always important, where fewer skilled people can earn much more than a large number of unskilled persons. So it is very
important to develop skills in the relevant sectors to create the demand of Bangladeshi workers.
Lack of exchange houses or representative of bank in overseas is a reason for the slow growth of remittance inflow. Most of the Bangladeshi workers in
abroad are unskilled and less educated, who do not understand the language of that foreign country and also feel hesitant to enter into foreign banks or
exchange houses to remit money. Some of the workers are working in the rural area of the foreign country; usually send remittance through illegal channel
because they do not have time, flexibility and availability for banking.
The amount of remittance inflow in Bangladesh is not properly investing or utilizing in the prospective sectors due to some the reasons like relatively small
amount of remittances, lack of investment knowledge of the remittance clients, irregularity in remittance transactions, poor investment climates in
developing countries, lack of a perceived need to invest and rising of the price level or the inflationary impact of remittances can cause high consumption.
More then 50% remittance comes from Saudi Arabia, UAE and UK, it may not be suitable for the long term sources of remittance inflow because any kind
of problems like deterioration of the diplomatic relation, adverse economic situations or any others decision taken by the host country. So depending on
the few countries or a region for the sources of remittance inflow may not be deplorable decisions for Bangladesh.
PROSPECTS OF REMITTANCE INFLOW IN BANGLADESH AND SOME SUGGESTION
•
•
•
•
•
•
•
•
Recent remittance growth rate from KSA was slightly slower then the average of the last five years so the government should take fruitful decision to build
diplomatic relation with this country and try to send more workers. As the political situation of Middle-East is not suitable for the last few years so the
government of the Bangladesh should think about the alternative labor market. The government should search for the new labor market like Australia,
Iraq, New Zealand, Russia, Canada, Sweden, Sudan and South Africa. The more potential market can be Europe and Africa region because of their rapid
economic development.
More exchange houses should be opened in different employer countries around the world to prevent Hundi. Exchange houses will help the workers or
migrants to send the remittance through proper banking channel. The Bangladesh Bank should make flexible rules and regulations for the establishment of
the exchange houses. Most of the migrants do not have bank account so improving access to banking can provide the flexible way for sending remittance
and discouraging about Hundi.
The bank should recruit some skilled bankers who will be able to solve all the problems relating to sending remittance of the migrant workers. The
exchange house should be in the rural area and have flexible time for the workers to send the remittance in the home country.
The process of sending remittance should be made easy for both literate and illiterate wage earners. Bankers can provide latest technology such as SMS
banking, mobile banking, remittance card, spot cash facility for speedy service. Only 4 private banks got the approval to distribute remittance through the
outlets of mobile phone operators but this range should be increased. Bangladesh Banks have been allowed 16 local banks to establish 44 exchange
houses/branch offices/representative offices in abroad for collecting remittances and onward transmission to the country (Bangladesh Economic Review
2011).
The government and private organizations should develop training programs based on specific foreign markets or industry to ensure the sending more
skilled workers in the foreign country rather then unskilled workers. The government can take initiatives to export professionals such as doctors, engineers,
teachers and nurses, and skilled manpower like drivers, computer operators, electricians, who can earn more than semi-skilled or unskilled manpower. The
Probashi Kalyan Bank, started operation in 20 April, 2011, should play an important role by assisting the workers who intend to go abroad and to
rehabilitating the workers who return to the country.
The foreign remittance can be used to establish high-tech industries, establish large conglomerates, issue bonds and encourage public private partnership
for developing the infrastructure, establishing power plants, bridges, airports and other development activities. The government can show different
attractive investment opportunities, like Wage Earners’ Development Bond, Premium Bond and Dollar Bond, so that the remittance senders will be
interested to send more remittance and to use those in the productive sectors.
The legal status of migration is usually very important to increase the remittance inflow. Legal immigration usually implies better pay and conditions of
employment in the host country for the workers or migrants. It also encourages to send the remittance at low cost and also to send high volume of
remittances through banking channel.
The new financial product should be promoted targeting to the migrants and the marketing strategies should encourage the migrants to send the
remittance legally. Some marketing strategies can be media advertisements (TV, radio, newspaper, magazines), the sponsoring of public events, direct
mailing, referral services and promotional activity. Marketing strategy should be encouraging the workers/migrants to send remittance and highlighting the
benefits of sending remittance through banking channel.
CONCLUSION
As the remittance have different contributions like raising household incomes, broadening the opportunities to increase incomes, creating the employment,
providing the opportunities to invest, generating positive effects in the local economy, achieving new economic & social infrastructure and empowering financial
strength of the home country so the government should give keen interest on this issue.
Though there is a slightly negative growth rate of remittance inflow from few countries but the overall remittance inflow is positive in Bangladesh. The
government should emphasize on the sending more skilled workers, ensuring them better working environment, providing easiest way of sending remittance,
promoting more local investment, making strategic financial marketing plan and enhancing diplomatic relationships with the foreign countries and planning
proper utilization of foreign remittance by which Bangladesh can be turned into a middle-income country very soon.
The government plans to earn USD 31.40 billion within the FY 2014-15 with a growth rate of 22 per cent every year. According to media reports, five teams are
going to visit 17 countries to explore manpower markets (Economic Policy Unit of the Unnayan Onneshan, September 2011). To strengthen our economy, the
government, central bank, private commercial banks, foreign commercial banks and state owned commercial banks should work together to increase the
remittance inflow for a sustainable development of our country.
REFERENCES
1.
2.
3.
4.
Bahar, Habibullah, Abdul Awwal Sarker and Ballal Hossain (2006), The Flow of Workers’ Remittances in Bangladesh: Performance, Challenges and Policy
Options, Draft Working Paper, Bangladesh Bank, Dhaka.
Bangladesh Bank Web site (www.bangladeshbank.org)
Bangladesh Economic Review 2011, Published by Ministry of Finance, Government of the Peoples Republic of Bangladesh. (http://www.mof.gov.bd/en/
index.php?option=com_content&view=article&id=211&Itemid=1)
Bruyn, Tom de, and Umbareen Kuddus (2005), Dynamics of Remittance Utilization in Bangladesh, IOM Migration Research Series, Regional Office for South
Asia, International Organization for Migration, Geneva.
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Chamon, Marcos, Romuald Semblat and Anne Morant (2005), SAMOA: Selected Issues and Statistical Appendix, Asia and Pacific Department, IMF,
Washington D.C..
Economic Policy Unit of the Unnayan Onneshan, Bangladesh Economic Update, Volume 2, No. 8, September 2011
Gammeltoft, Peter. 2002. “Remittances and Other Financial Flows to Developing Countries.” Centre for Development Research Working Paper 02.11.
Global Economic Prospects (2006), World Bank, Washington D. C..
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the world bank.
Keely, Charles B., and Bao Nga Tran. 1989. “Remittances From Labor Migration: Evaluations, Performance, and Implications.” International Migration
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Khawaja A. Mamun and Hiranya K Nath, 2010, “Workers’ Migration and Remittances in Bangladesh”, http://ssrn.com/abstract=1592764
Murshid, K.A.S., K Iqbal, and M. Ahmed. 2002. A Study on Remittance Inflows and Utilization. International Organization for Migration (IOM), Regional
Office for South Asia, Dhaka
Ratha, Dilip. 2003. “Workers’ Remittances: An Important and Stable Source of External Development Finance.” In Global Development Finance 2003.
Washington, DC: World Bank.
Siddiqui, Tasneem and Chowdhury R. Abrar. 2001. “Migrant Worker Remittances and Micro- Finance in Bangladesh.” Social Finance Programme Working
Paper No. 38, International Labour Office.
Siddiqui, Tasneem, and Chowdhury R. Abrar. 2003. “Migrant Worker Remittances and Micro-Finance in Bangladesh.” Working Paper 38, Social Finance
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Taylor, E. 1999. “The New Economics of Labour Migration and the Role of Remittances in the Migration Process.” International Migration 37(1): 64–88.
APPENDIX
REMITTANCE INFLOW FROM DIFFERENT COUNTRIES FOR THE LAST 10 YEARS (Taka in crore)
Period
Saudi Arabia U.A.E.
U.K.
Kuwait
U.S.A.
Malaysia Other Countries
2000-01 4972.70
779.39
300.98
1336.39 1218.15
164.69
1397.71
2001-02 6598.68
1311.63
595.02
1642.34 2048.24
269.44
1898.63
2002-03 7262.45
1895.65
1275.08 1960.44 2652.10
239.75
2443.33
2003-04 8169.26
2201.17
1753.70 2129.15 2757.27
218.43
2645.4
2004-05 9291.27
2721.92
2311.60 2499.32 3430.30
156.49
3213.75
2005-06 11385.21
3776.30
3752.95 3326.33 5105.86
140.26
4778.67
2006-07 11978.88
5560.56
6132.91 4701.48 6423.17
81.80
6419.74
2007-08 15943.64
7786.82
6148.16 5925.33 9467.07
633.86
8390.27
2008-09 19673.17
12080.40 5433.31 6678.44 10837.68 1943.98
10029.54
2009-10 23447.61
14274.54 6329.35 7668.55 13162.81 4061.92
12347.04
2010-11 23447.61
14274.54 6329.35 7668.55 13162.81 5011.17
1397.71
Average 12924.59
6060.27
3669.31 4139.67 6387.77
1174.71
4996.53
Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
NUMBER OF EXPATRIATES CLASSIFIED BY SKILL
Professional
Skilled
Semi-skilled
Less-skilled
6940
42742
30702
109581
14450
56265
36025
118516
15862
74530
29236
136562
19107
81887
24566
147398
1945
116393 24546
112556
925
115468 33965
231158
676
165338 183673
482922
1864
281450 132825
458916
1426
134265 74604
255070
387
90621
12469
287225
1192
229149 28729
308992
Total
188965
225256
254190
272958
255440
381516
832609
875055
475278
390702
568062
152
ISSN 2231-1009
COUNTRY-WISE WORKERS' REMITTANCE (Taka in crore)
Period
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
Period
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
Saudi Arabia
4972.70
6598.68
7262.45
8169.26
9291.27
11385.21
11978.88
15943.64
19673.17
23709.40
23447.61
Bahrain
237.97
310.93
368.93
360.18
412.59
451.35
552.12
948.03
1082.69
1177.05
1326.45
Iran
0.00
0.00
1.28
2.24
3.21
11.94
16.30
22.22
22.58
31.07
16.46
U.A.E.
779.39
1311.63
1895.65
2201.17
2721.92
3776.30
5560.56
7786.82
12080.40
13077.51
14274.54
Japan
58.69
81.20
105.60
110.39
97.43
63.43
70.27
111.74
97.11
101.96
108.62
U.K.
300.98
595.02
1275.08
1753.70
2311.60
3752.95
6132.91
6148.16
5433.31
5723.90
6329.35
Kuwait
1336.39
1642.34
1960.44
2129.15
2499.32
3326.33
4701.48
5925.33
6678.44
7050.75
7668.55
U.S.A.
1218.15
2048.24
2652.10
2757.27
3430.30
5105.86
6423.17
9467.07
10837.68
10044.26
13162.81
Malaysia
164.69
269.44
239.75
218.43
156.49
140.26
81.80
633.86
1943.98
4061.92
5011.17
Australia
…
13.09
19.57
28.23
43.89
64.60
78.38
89.93
46.65
58.46
93.97
Italy
…
2.01
111.86
160.08
254.03
556.63
1034.41
1471.20
1285.87
1259.93
1538.18
Libya
0.53
0.00
0.96
0.77
1.66
1.22
18.00
2.48
8.61
10.45
42.01
Qatar
342.41
520.63
657.46
669.79
837.54
1179.24
1610.46
1988.05
2362.51
2496.55
2273.66
South Korea
…
4.54
22.75
30.59
113.02
116.99
118.12
135.07
126.11
143.63
170.37
Oman
451.66
593.49
660.42
698.62
806.69
1109.99
1357.48
1513.80
1996.01
2414.78
2378.50
Hong Kong
…
22.91
27.62
34.89
34.56
38.91
42.44
55.57
62.54
57.54
79.38
Singapore
42.20
82.05
179.84
190.79
294.81
436.30
554.64
892.49
1136.71
1338.39
1443.45
Other Countries
243.45
232.68
231.63
287.39
252.11
668.12
864.11
975.38
1669.23
3143.12
3459.76
Germany
20.80
35.10
55.41
71.44
62.20
79.97
103.01
184.32
132.92
114.12
184.06
Total
10170.01
14363.98
17728.81
19874.39
23624.65
32265.59
41298.54
54295.16
66676.51
76014.78
83008.89
Source: Bangladesh Bank
153
ISSN 2231-1009
AN EMPIRICAL STUDY ON ATTITUDE AND KNOWLEDGE OF UNIVERSITY STUDENTS TOWARDS
ENTREPRENEURS AND ENTREPRENEURSHIP: PERSPECTIVE OF BANGLADESH
RAKIB AHMED
LECTURER
EASTERN UNIVERSITY
DHAKA
TANUZA NATH
LECTURER
UNIVERSITY OF DHAKA
DHAKA
ABSTRACT
This article explores entrepreneurial attitudes and knowledge among potential entrepreneurs in Bangladesh. The main objective of this study was to investigate
the attitudes and knowledge of final year university students’ towards entrepreneurs and entrepreneurship. The study surveyed final year students across the
various schools on the attitudes and knowledge of entrepreneurship. It also investigated the attitudes and knowledge of entrepreneurship from a gender
perspective. For data collection the descriptive survey was employed from a purposive sample of five schools and/or departments. The sample size was 500
students from all the five schools and/or departments at various public and private universities located in Dhaka, Bangladesh. The majority of students showed
generally positive attitudes towards entrepreneurship at all the universities. They indicated that entrepreneurship education is crucial. All students showed a
sense of social responsibility by suggesting that business owners should give back something to the community beyond providing employment. They believe
entrepreneurship might be the quest for success. It was argued that attitudes towards entrepreneurs and entrepreneurship are important determinants for future
entrepreneurial activity. Therefore, they showed interest in starting up their businesses soon after graduation, although males were more inclined than female
students to start up a business after graduation.
KEYWORDS
Entrepreneurship, Attitudes, Knowledge, Bangladesh.
JEL CLASSIFICATION CODE
L26
1. INTRODUCTION
E
ntrepreneurship has emerged as the most potent economic force the world has ever experienced (Kuratko, 2005). The entrepreneurial interest has
acquired its intensive level almost everywhere in the world. At most of the developing countries, it is seen as an engine of economic progress, job
creation and social adjustment (Mohar, Singh and Kamal, 2007). Therefore, the entrepreneurship development education has been a significant subjectmatter for research among academics in Bangladesh. The subject-matter of entrepreneurship has become a motivating factor for a number of reasons:
Entrepreneurship education is considered as a means of stimulating stagnated economies; revitalizing developing economies and solving the unemployment
problem by providing new job opportunities (Bishop, 1985).
Cachon and Cotton, (2008) explored some strong relationship between entrepreneurial orientation and the personal attitudes of potential entrepreneurs.
Educational programmes also have significant impact on the entrepreneurial attitudes of potential entrepreneurs. After participation in such programmes,
German potential entrepreneurs shifted their interest towards a higher entrepreneurial level (Schroder and Rodermund, 2006). Similar results have been
reported from the US, UK and France (Soutaris, Zerbinati & Al-Laham 2007; Zhao, Seibert, & Hills, 2005). Empirical evidence confirms that entrepreneurial
programs have successfully imparted relatively higher confidence among the potential entrepreneurs to pursue their own line of entrepreneurial activities.
Moreover, academic experience of entrepreneurs significantly predicts their entrepreneurial attributes and motivation (Lope Pihie 2008).
Universities enhance entrepreneurial potential of the prospective entrepreneurs (Van Burg, Romme, Gilsing and Reymen, 2008). Now entrepreneurship has
become a prime university function (Fitzkowitz, 2004). Entrepreneurship is an important element in the dynamics of national economies and it is seen as the
driving engine in economic growth and job creation (Sunter, 2000). Therefore, the need for entrepreneurship education cannot be undervalued (Bishop, 1985,
Todaro, 1998 and Tichagwa, 1998) in any country like Bangladesh. Universities have a role to play in developing an entrepreneurship thriving society. They can
change the attitudes of their students by instilling in them an understanding of the risks and research of business creation and the resultant causes of failures.
University students form a powerful force that will supply future entrepreneurs. It is also quite clear that the lack of graduate employment in Bangladesh makes
it necessary for government to come up with a deliberate policy to equip students with entrepreneurial skills, knowledge and abilities (Collins et al, 2004). The
supply of entrepreneurs needs an environment that encourages positive and self-enabling perceptions of potential entrepreneurs (Kourilsky, 1985). The study
focuses on the final year students in universities as they expect to be job seekers soon after graduation, and not all will be successful. The study surveyed final
year students across the various schools on the perception and knowledge of entrepreneurship. It further investigated the perceptions and knowledge of
entrepreneurship from a gender perspective.
From several studies it has shown that thirty percent (30%) of university students may not find jobs after they graduate (Cape, 2006). Traditionally, Bangladeshis
have been socialized and educated to enter the labour market as employees, but not as entrepreneurs (Bishop, 1985). The Global Entrepreneurship Monitor
(GEM, 2001) reported that there is an overall lack of entrepreneurship elements in the education systems of most of the countries in Asia. Education about
entrepreneurship and for entrepreneurship has the capacity of increasing students’ interest in becoming entrepreneurs at some stage after completing their
university degrees (Friendrich and Visser, 2005). Less research has focused on the factors which deter students from engaging in entrepreneurial interests. High
level entrepreneurial interest exists among university students in Singapore, but the deterrents here seem to be inadequate business knowledge and perceived
risk (Wang and Wong, 2004). Additionally, lack of finance has appeared as a major entrepreneurship barrier in many cases (Wilson, Brown, Anderson &
Galloway, 2003).
Attitudes, perceptions and knowledge of the youth towards entrepreneurship do vary among countries, and/or even regions (Green & Pryde, 1990). A 1998
opinion survey revealed that 48% of young people in UK, between the ages of 16 and 21, aspired owning their own business (Green and Pryde, 1990). About 70%
of American youth would like to have their own business someday but have weak perceptions about their ability to actually do it. (Green and Pryde, 1990). In
Canada, almost all the youth would like to start their own business some day but only half think they will, and the biggest barriers being fear of financial failures,
154
ISSN 2231-1009
lack of strong identity with the entrepreneurial role and lack of knowledge about the first step to take (Green and Pryde, 1990). As much as 90% of Dutch people
have favourable attitudes towards entrepreneurship. However, only 7% of Dutch university students have the ambition to start their own business within three
years of completing their studies (Green & Pryde, 1990).
About 70% of Finns university students would prefer to be “employed” than self employed and only 27% would prefer to be self-employed (Gallop Europe). Thus
the lack of motivation is the biggest challenge in Finland at the present. Government policy has been focused in the opportunity area that is, reducing
administrative barriers and improving access to financing, information, and counseling support. With regard to youth entrepreneurship, Finland has been
progressive in its efforts to include a provision for entrepreneurship education in the national curriculum guidelines and to introduce compulsory
entrepreneurship courses in secondary and vocational education. Mass media coverage is without doubt, the most effective tool for creating widespread,
awareness of entrepreneurship in society and increasing its legitimacy (Fallows and Stephen, 2000). Even in the United States of America, which is the most
entrepreneurial nation in the world, media coverage is an important component of building the culture of entrepreneurship. Taiwan and Canada also use a
variety of promotional tools, television, programmes, newspapers print and profiles of entrepreneurs and well-publicized public entrepreneurship events
(Fallows and Stephen, 2000). Most countries celebrate Entrepreneurship Week, the events being built around a variety of award programmes.
Dyer (1994) discusses the different dimensions of a theory of careers and applies those ideas to entrepreneurship. Dyer (ibid) noted that a vital dimension of
socialization that contributes to entrepreneurial careers is the education and training that the individual receives. In their final year of studies, the students
should be introduced to entrepreneurship as a career option and should be offered alternative perspectives to their pre-conceived career orientation towards
more traditional occupations (Kourilsky, 1995 cited in Brijlal, 2008). Veciana (1998), cited in Veciana et al (2005), argued that students should look for “seed
beds” rather than “job beds” and that in the knowledge of society, the most promising sources of entrepreneurs are the university students. Among the growing
body of literature which analyses the relationship between gender and perceptions towards starting a business, several studies have found that males have a
higher preference for entrepreneurship behaviour than females (Delmar and Davidson, 2000). Studies by Kolvereid (1996) have found that males have a
significant higher preference for self-employment than females.
The attitudes and perceptions about entrepreneurship are enormously important and establish the foundation for becoming an entrepreneur long before an
individual actually makes the decision to become one (Kruegar and Brazeal, 1994). The supply of entrepreneurs can be strongly affected by creating a favourable
entrepreneurial environment at an early stage that encourages positive and self-enabling perceptions of potential entrepreneurs. It is indeed from this pool that
the supply of entrepreneurs will eventually be drawn. Therefore tertiary institutions can be seen as an environment that can prepare students by providing the
necessary knowledge and skills to become entrepreneurs (Brijlal, 2008). University students naturally prepare for employment in the corporate sector after
graduation.
This paper lay down to investigate the attitudes and knowledge of students in various universities in Bangladesh. It would be interesting to explore the attitudes
and knowledge of university students regarding entrepreneurship across the different departments from a gender perspective. If attitudes and knowledge differ
across departments then it may motivate some sort of entrepreneurship module for university students across all departments. This would enable them to
become employment creators, instead of being employed after graduation (Brijilal, 2008). This study has implications for policy markers, educators and
practitioners in the field as it provides new insights for curriculum development for the fourth year university students.
In view of the findings of the different literature, none have considered the attitudes, perceptions and knowledge on entrepreneurship of university students
across different departments. Bangladesh has a highly respected system of education in Asia and it would be beneficial to carry out a survey to measure the
extent to which the system of education is changing the attitudes of university graduates towards accepting entrepreneurship as the new order of life today.
3. PURPOSE OF THE STUDY
The specific objective of this paper is to examine the university student’s attitudes and knowledge regarding entrepreneurship development.
4. THE STATEMENT OF THE PROBLEM
Typical educational system prepares the youth to fill city jobs in the modern sector. The concept of entrepreneurship is not sufficiently rooted in national
culture. Educational systems and their output, especially in developing countries, have in recent years been growing two or three times as fast as the economy,
hence faster than the number of new jobs available (Bishop, 1985). This has given rise to the problem of graduate unemployment. Thus, the values, subject
matter and examination criteria at all levels of the education system assume that university graduates want to become civil servants, lecturers, and managers in
relatively modern and industrial and commercial establishments.
Historically, most young people have been socialized and educated to enter the labour market as employees, but not as entrepreneurs. The image of
entrepreneurship in Bangladesh is unfavourable. Therefore, the government, universities and educational planners have a duty to stimulate entrepreneurial
discussions, to demystify and to raise awareness of the entrepreneurial process and thereby bringing communities to the required level of readiness to accepting
entrepreneurship.
4.1 HYPOTHESES
Thus the following four hypotheses were developed in this research concerning entrepreneurship.
Hypothesis-1 (H1): Attitudes of university students regarding entrepreneurs and entrepreneurship are the same across gender.
Hypothesis-2 (H2): Attitudes of university students regarding entrepreneurs and entrepreneurship are the same across all departments.
Hypothesis-3 (H3): Knowledge of university students on entrepreneurship is the same across gender.
Hypothesis-4 (H4): Knowledge of university students on entrepreneurship is the same across all departments.
5. RESEARCH METHODOLOGY
A descriptive survey research was designed for this study. This kind of design is helpful as it uses different methods of data collection techniques such as
questionnaires, documentary analysis; and interview schedules. Questionnaires were used to collect data from a sample of university students across various
departments/ schools at various both private and public universities located in Dhaka. The departments/ schools are Business Administration, Computer Science
and Engineering, Department of LAW, Hospitality and Tourism, Electronics and Electronic Engineering. Attitudes toward entrepreneurship were measured using
a Likert scale (ordinal) while knowledge was measured using a nominal scale. In the analysis, equal numbers of males and females across all the five schools
were considered. Questions were made up of both closed and open-ended questions. Interviews were used to confirm the reliability of the data provided
through questionnaires and to provide in-depth understanding of the attitudes and knowledge of fourth year university students towards entrepreneurship.
The target group for this study was final year students at various private and public universities located in Dhaka, Bangladesh. Final year students normally
prepare for employment in the corporate sector soon after graduation. Therefore a total of 500 respondents participated in the study. Purposive sampling was
used to come up with 500 students from the five departments. This was done in order to make comparisons between the different schools easier. Stratified
sampling was done for the school and the random sampling procedure was employed within the departments in the school. A small percentage of graduates
actually become entrepreneurs within a few years after graduation. It was felt that final year students would provide reliable and relevant information
pertaining to their attitudes and knowledge towards entrepreneurship.
6. DISCUSSING THE RESEARCH OUTCOMES
6.1 MAJOR FINDINGS
From the survey we have found some important issues. The following outcomes and discussion present the different schools, gender, attitudes towards
entrepreneurship and knowledge of entrepreneurship among final year university students.
155
Departments
Gender
%
Male
Female
Total
Business
Administration
ISSN 2231-1009
TABLE 1: RESPONDENTS BY GENDER AND DEPARTMENTS
Computer Science and
Department of
Hospitality and
Engineering
Law
Tourism
Electronics and Electronic
Engineering
%
40
60
100
%
%
%
42
56
60
58
44
40
100
100
100
Source: Structured Questionnaire Survey
From the total final year students surveyed, 50% were males whereas 50% were females. This has implications for female graduates on entrepreneurship, as
they constitute a large pool that can be tapped for business start-ups.
52
48
100
TABLE 2: ENTREPRENEURIAL ATTITUDES ACROSS GENDER
Attitude Factors
Females (%) Males (%)
Entrepreneurship education is necessary 78
80
Prefer to start one’s own business
37
65
Perform social responsibility
79
76
Idol or role models
35
51
Table-2 shows that there were no significant differences in the attitudes of males and females with respect to the need for entrepreneurship education. About
80% of male students and 78% of female students felt the need for entrepreneurship education.
There was a significant difference between male and female students wanting to start a business after graduation (p< 0.05). Female students were less likely
than males to give themselves a higher rating on starting a business soon after graduation, supporting the findings, of other researchers like Kolvereid (1996),
and Delmar and Davidson (2000). This apparent difference in attitude is a cause for concern as it may directly diminish the size of the potential pool of female
entrepreneurs.
There was no apparent difference in the need for social responsibility. Seventy-six percent of the male students compared with 79% of the female students
considered social responsibility as important.
Further analysis reveals that 51% of male students knew of a friend who owned a business, compared to 35% of the female students. This may imply that female
students may not be motivated enough to start a business due to lack of contacts.
Departments
Attitude Factors
Entrepreneurship education
is necessary
Prefer to start one’s own
business
Perform social responsibility
Idol or role models
TABLE 3: ENTREPRENEURSHIP ATTITUDES ACROSS DEPARTMENTS
Business
Department of
Hospitality and
Administration
Engineering
Law
Tourism
Engineering
78
65
60
70
68
45
40
46
46
47
80
65
78
74
80
76
35
40
45
67
Table-3 shows that students in the school of Business Administration and Hospitality & Tourism Management showed the highest need for entrepreneurship
education compared to the students in the school/ Department of LAW who showed the least need for entrepreneurship education.
There was no significant difference in attitudes among the various schools in wanting to start a business. However, it was interesting to note that more
engineering students (47%) than business students (45%) seemed to be interested in wanting to start a business. On the question of social responsibility all
schools indicated that entrepreneurs should be involved in social responsibility. The highest percentage (80%) came from the school of Business Administration
while the lowest percentage (74%) came from the School/ Department of Law. Sixty-five (65%) percent of the students from the School of Business
Administration indicated that they knew of someone who owned a business. Thus the highest percentage (67%) came from the School of Electronics and
Electronic Engineering while the least percentage (35%) came from School of Computer Science and Engineering. There was an association between students
who wanted to start a business and knowing someone who is an entrepreneur (P< 0.05). The final year students were tested on basic knowledge on
entrepreneurship. Eight multiple choice questions were adopted to assess basic knowledge about entrepreneurship and business in general.
Table 4 and 5 describe the topics covered by the questions and gives the percentage of correct responses for each item across the various schools and gender.
TABLE 4: ENTREPRENEURSHIP KNOWLEDGE ACROSS GENDER
Entrepreneurship Knowledge
Male (%)
Female (%)
Meaning of entrepreneurship
70
60
Employment creation
60
60
Establish a business venture
60
60
Bearing risks (moderate & calculated)
40
40
Pricing system
50
50
Creativity and innovation
40
50
Inflation, GDP
50
50
Market demand, supply; and Gap analysis
40
50
Mean (%)
52
54
Table-4 shows that there were notable differences between males and females in terms of knowledge on entrepreneurship. The results of Table 4, suggest an
entrepreneurship knowledge gap between males and females, with males scoring 52% and females scoring 54% on average. There were no differences in scores
between males and females on the issues of employment creation, starting up a business, bearing risks, and mergers.
50% of females, compared to 40% of males had the correct answer on demand, supply and price. There were no differences in terms of scores between males
and females on the issue of inflation. On the issue of price discrimination females students scored 50% compared to male students who scored 40%.
156
Departments
Entrepreneurship Knowledge
Meaning of entrepreneurship
Employment creation
Establish a business venture
Bearing risks (moderate &
calculated)
Pricing system
Creativity and innovation
Inflation, GDP
Market demand, supply; and
Gap analysis
Mean (%)
ISSN 2231-1009
TABLE 5: ENTREPRENEURSHIP KNOWLEDGE ACROSS DEPARTMENTS
Business
Department of
Hospitality and
Administration
Engineering
Law
Tourism
Engineering
70
60
60
30
60
50
30
30
60
60
40
30
70
50
50
60
60
50
50
40
60
60
60
40
30
30
40
40
40
30
50
40
30
40
50
40
50
50
50
40
39
44
49
49
Table-5 shows that both the Schools of Business Administration and Hospitality & Tourism Management showed the best results of 70% each in case of meaning
of entrepreneurship. The School of Business Administration normally includes business related modules, hence the best performance in the survey. On the
question of raising money to start up a business, the most common response was borrowing from the bank as a solution. Using personal money, or borrowing
from family or friends are other sources of money. Raising finance is seen as one of the main obstacles to starting a business (Galloway and Brown, 2005).
6.2. HYPOTHESES TESTING RESULTS
This research paper explored attitudes, knowledge, gender, and department-wise differences of university students towards entrepreneurship. A summary of
the hypotheses and the outcomes are discussed below.
55
H1: Attitudes of university students towards entrepreneurship are the same across gender.
Not supported
H2: Attitudes of university students towards entrepreneurship are the same across all departments. Supported
H3: Knowledge of university students on entrepreneurship is the same across gender.
Not supported
H4: Knowledge of university students on entrepreneurship is the same across all departments.
Not supported
H1: Males seemed to be more inclined to start a business after graduation in compared to female students. The hypothesis is not supported.
H2: This hypothesis was supported, as there were no significant differences across the departments.
H3: There were marked differences between male and female students on the knowledge of entrepreneurship. This hypothesis was not supported.
H4: Differences among the departments on the total results were noteworthy. The department of Business Administration and Hospitality and Tourism
management showed the best performance. This hypothesis is not supported.
7. RECOMMENDATIONS/ SUGGESTIONS
This is an empirical study from the perspective of Bangladesh. Although entrepreneurship development course is assigned in the business studies field, but in the
other field of studies this is not assigned as a course. Therefore, the researcher recommends that in all the fields of studies or education in Bangladesh there
should be included a provision for entrepreneurship education in the national curriculum guidelines and to introduce compulsory entrepreneurship courses in
primary, secondary, universities and vocational schools & colleges. The curriculum should be designed in such a way that it changes the attitudes and behavior of
students to the extent that they perceive employment creation as the correct ideology of life. The curriculum should allow students to prepare for taking risks
and starting business ownership.
8. CONCLUSIONS
The study showed that entrepreneurship education is important. According to the survey, although sixty percent (60%) of the students showed their eagerness
to begin a business soon after graduation, but the real number becoming entrepreneurs might be practically lower. Attitudes of students toward
entrepreneurship did not differ significantly across departments. However, more male students rather than female students showed a curiosity in starting a
business. There was also a noticeable difference between male and female students on the knowledge of entrepreneurship. Basically, the department of
Business Administration, Hospitality & Tourism Management and Electronics and Electronic Engineering showed the best outcome on the knowledge of
entrepreneurship.
9. LIMITATIONS OF THE STUDY
The following limitations are faced in the time of preparation of this research.
• The scope of study is limited to a few schools and/or departments of university only.
• The survey area is only Dhaka (Capital City of Bangladesh) based.
• Difficult to collect the necessary information (sometimes difficult to realize the actual required information).
• Reluctant to provide enough time for filling survey form by the target group students.
• Lack of previous literatures regarding the related issue in the context of Bangladesh.
10. FUTURE RESEARCH DIRECTION
Each & every research creates an opportunity of further research. It is also true for this present research. Future researchers can work on the comparative
analysis of students’ attitudes and knowledge of different schools / departments on entrepreneurship, analysis of male and female students’ interests and
eagerness towards entrepreneurship, impacts of potential entrepreneurs’ on the economic development of a country, emerging young entrepreneurs as a quest
for success etc. based on this study.
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3.
4.
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Brijlal, P. (2008). The state of entrepreneurship education at tertiary institutions in the Western Cape. J College Teach. Learn…5/2): 25-36.
Cook, S. W., & Selltiz, C. (1967). A multiple-indicator approach to attitude measurement. In M. Fishbein (Ed.), Readings in attitude theory and
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ANALYSIS OF THE EFFECTS OF MICRO CREDIT ON RURAL HOUSEHOLD INCOME: EVIDENCE FROM RURAL
MICROFINANCE PARTICIPANTS IN EASTERN TIGRAY, ETHIOPIA
HAFTOM BAYRAY, KAHSAY
LECTURER
DEPARTMENT OF ECONOMICS
MEKELLE UNIVERSITY
MEK'ELE
ABSTRACT
This paper evaluates the impact of micro credit program participation on household income. It also addresses whether gender specific participation matters or
not. The study uses panel data collected by MU-IUC in two years difference. The study employs quasi experimental techniques. Specifically, Difference in
Difference (DD) approach for impact analysis was used. This approach handles the time invariant bias. Accordingly, the study finds that micro credit participation
significantly improves the income of poor people living in the rural areas of Eastern Tigray, Ethiopia. The result portrays that, on average total consumption
expenditure increases by 35% for the participants when compared to non participants at 5 percent significance level. It seems this result is by far greater from the
studies taken in Bangladesh and some other studies in Ethiopia. The following possible reasons are worth mentioning: First, majority of the respondents are living
below poverty line and providing micro credit largely improves farm output and therefore their income. Secondly, we could not capture the effect of other
programs such as productive safety net program. A detail of our justification is presented in the empirical part. On the other hand, the study found out women
specific participation does not have significant effect on household income. Rather micro credit program has a large effect on household income when men are
the program participants. However, in areas where men have control over resources and make vital decisions, comparing the heads of the families may not give a
clear image regarding gender specific performances. This has good policy implications for the policy makers and donor agencies. Policy makers have to focus on
enriching the poor rural community in terms of micro credit. There is also a need to bring women to micro credit and this can happen by synchronizing
microfinance and other stakeholders.
KEYWORDS
Consumption expenditure, difference in difference, micro credit program impact, women specific participation.
1.
INTRODUCTION AND BACKGROUND INFORMATION
E
thiopia is one of the least developed countries in Africa with a total population of 84 million (World Bank 2012 report). It is one of the poorest countries
where there are a number of people living under extreme poverty. The extent of poverty in Ethiopia is severe. According to World Bank estimate, 29.6%
of the population live under 1.25 dollar a day. Furthermore, the same report shows that, 17% of the total labor forces are unemployed. Agriculture is the
main source of income and more than 80 % of the total population lives in rural areas. Since most of the agricultural activities are highly dependent on whether
condition it is highly vulnerable. As a result poverty and food insecurity are the main challenges and fundamental issues of economic development in Ethiopia.
Accordingly, the government of Ethiopia has been adopting a number of policies and strategies to alleviate poverty under the umbrella of Agricultural
Development Led Industrialization (ADLI). Furthermore, the government also has been working with international donor agencies in areas that bring sustainable
development and poverty reduction programs. The government has been giving special attention to MFIs as a means to reduce poverty. In response several
micro finance institutions (MFIs) have established and have been operating to resolve credit access problem of the poor. Lending to the poor involves high
transaction costs and risks associated with moral hazard and adverse selection problems. Moreover, the poor do not have any collateral and this makes the
formal banks reluctant to provide loans. Nevertheless, several MFIs have been introduced to allow the poor access to credit. Dedebit Credit and Saving
Institution (DECSI) is one of the MFIs working with the poor in the northern part of Ethiopia. DECSI is among the large microfinance institutions in Ethiopia that
provides small scale credit facilities and other banking services to the poor people in the Northern part of Ethiopia. This institution was founded in 1994 to
provide production earmarked micro credit to the disfavored rural and urban poor people of Tigray. It has been working exclusively with the rural poor
community of North Ethiopia. As an objective, the institution focuses on poor rural and urban households in Tigray with a special focus on women. Women in
rural areas face credit constraint. They are also marginalized from having access to sell their labor in off-farming activities in the rural areas. In many part of
Ethiopia there is inequality in household decision making because of cultural and religious factors that favor men. Men have control over resources and
therefore make major household decisions. Hence, the DESCI is striving to bridge this gap by extending credit facilities to them so that they can improve their
livelihood. This paper will address the above idea and can be used as a mechanism to evaluate whether micro credit provided by DESCI improves the income of
the poor. Also the paper will establish whether gender specific participation matters or not. The existing literature regarding the impact of microfinance in
improving household income and reducing poverty asserts that in some cases micro finances significantly improves the income of the poor and it has a large
effect when women are the program participants. Another argument is that microfinance benefits the poorest people and plays a powerful role in reducing
poverty and enhancing their welfare. However, there is also evidence that microfinance does not support the poorest rural and urban people. Moreover,
whether gender specific participation matters or not is questionable. Given these differences in literature this study will assess the impact of micro credit
provided by DECSI in improving rural income in Eastern Zone of Tigray, Ethiopia. This paper is structured in five components; the first part provides a brief
introduction about the study. The second part discusses literature review. The writer reviews literature that explains the effect of micro credit on poverty
reduction amongst the poor. Based on the literature the gaps were identified and are addressed by the study. The third part deals with methodological
framework. It explains the major methodological challenges in impact analysis, and how different quasi experiment techniques alleviate this problem. Finally, an
appropriate and justifiable method was chosen for this research i.e. DD method. The fourth part focuses on data analysis and interpretation and it has two parts:
Descriptive analysis and empirical analysis. The descriptive analysis part tests whether the counterfactual of the treated group was appropriately approximated
or not. Then, the impact analysis discusses the empirical part. The fifth and last part of this research presents conclusions, policy recommendations and future
research.
2.
REVIEW OF LITRATURE
Different scholars have been evaluating the role of microfinance in poverty reduction. The empirical study of Khandker and Pitt (1998) depicts that micro credit
significantly improves the income of poor people in Bangladesh. Furthermore, they found an interesting result explaining that micro credit has a large effect
when women are the program participants. For example, according to them household annual consumption expenditure increases by 18 percent for the women
participants and 11 percent for men. The poverty impact of microfinance in an economy is an argumentative issue. Some scholars argue that poverty impact of
microfinance with low economic growth is modest or nonexistent. Kahandker (2003) using panel data from Bangladesh found out that microfinance benefits the
poorest and plays a crucial role in reducing poverty. According to him it has a strong effect in reducing extreme poverty than moderate poverty. Similarly,
Mahjabeen (2007) using computable general equilibrium (CGE) analysis found that micro credit institutions improve income, consumption, reduce income
inequality and maximize welfare of the poor. He further established that microfinance create job opportunities particularly for the poor society. According to
him micro finances are a strong means for alleviating poverty and enhancing welfare of the poor society. Swain et al (2008) empirically examined the effect of
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microfinance in poverty reduction in the Mekong Delta community in Vietnam. Their main findings suggests that micro credit helps the poor in accumulating
their livelihood asset when compared to the non participants but it could not help them escape from poverty. Furthermore, they also noted that the treated
groups have improved their human capital through training and experience sharing among group members. The works of Bakhtiari (2006) shows more optimist
results. Accordingly, the provision of micro credit enables the poor to manage risks, smooth consumption, improve income earning capacity and maximize
welfare. On the other hand, Montgomery and Weiss (2010) found that when compared to better off borrowers, the poorest people were not significantly
affected in any major ways in terms monetary measurement. But access to micro credit helps them in improving their health and educational status. This study
result challenges many of the earlier scholars that advocate microfinance institutions are pro poor and the research findings that assumed it is the poorest that
gains most from micro credit. There are also arguments that microfinance does not support the poorest rural and urban people. Conversely, there is a debate
among scholars regarding whether micro credit lifts the poorest people above the poverty line. The size of the loan, the petty nature of the business and low
skills and knowledge of the micro finance clients is challenging the poverty reduction effect of micro finances. Given these different arguments, this study
assesses the effect of micro credit provided by DESCI in improving the rural income in Eastern Tigray, Ethiopia. The study further analyses whether gender
differences in participation matters or not.
3.
METHODOLOGICAL FRAMEWORK
The major challenge in impact analysis is finding the counterfactuals of the treated. If the counterfactual is inappropriately approximated the outcome of the
method applied shows biased result. Furthermore, a method has to be designed to handle the bias created from unobserved individual and village level
heterogeneity. Hence, there are a number of quasi experimental techniques to handle the problem of counterfactual and biased created by unobserved
variables. There are a number of approaches to assess the impact of micro credit on household income and poverty reduction. The choice of approach basically
depends on the required data and handling of selection bias. This part focuses on the different quasi experimental techniques which are commonly used in
microfinance literature on impact assessment. Quasi experiments make a comparison the outcomes of an intervention with what could have happened had
there not been an intervention (Hulme, 2000). Propensity Score Matching (PSM) technique is one of the quasi experiment techniques which is widely used in
impact assessment of micro credit. This method ensures matching the treated and control groups through an estimated probability of participation (Hulme,
2000). The idea behind PSM is a comparison of before and after the intervention can be easily done when an identical non participants can be created by their
propensity score. Once the treated and control groups are matched by their propensity score, the average treatment effect can be determined easily. PSM
minimizes the problem of self selection bias which is common in micro credit by creating an identical counterfactual through propensity score matching. PSM
works efficiently if the assumptions of conditionality, common support and unconfoundness are satisfied. One basic problem with PSM is the assumption that
there are no unobserved variables left over. However, in reality there are unobserved variables such as motivation and entrepreneurial skill differences among
farmers. Such bias cannot be cleaned by PSM.
DECSI microfinance provides individual microcredit to group of 3 to 6 members. Groups are self selected and members act as collateral. If there is any defaulter
among them the whole group will be responsible and also the group will be ineligible for renewal or extension of any loan. Loan history is a crucial variable in
participation but the number of loans that individuals took from the firm will not affect the outcome.
If participation is self selective it will be very difficult to measure the net impact of the program using PSM and any other type of matching. Furthermore, PSM
needs large representative participants and non participants from the population. However, the number of non-participants in the survey they are too few to
represent the population under consideration. Furthermore, the number of non participants as compared to the treated group has to be large enough for a good
matching but the reverse has happened in this survey. Therefore, in this case using PSM will provide biased estimate. Difference in difference (DD) helps us to
capture the time invariant non randomness problems in program participation that might happen because of self selection and program placement bias created
in the initial stage of the program. However, this method assumes the unobserved variables are time invariant. According to Khandker (2003) endogeneity
problems related to program placement and program participation is a serious issue that a researcher has to account in impact evaluation. Furthermore,
empirical evidences have shown that unobserved covariates such as entrepreneur skills a household gained are a crucial element in influencing participation in
micro credit over time. DD method which controls time invariant unobserved variables may not yield a consistent estimate with panel data when unmeasured
determinants vary over time. In such a case an adoption of Instrumental variable method can overcome the problem. According to Pit et al (1999) the powerful
method for impact assessment when regressors are endogenous is to apply the instrumental variable approach. The instrumental variable method is also one of
the standard methods in non experimental studies. Unfortunately, finding a good instrumental variable which is a crucial element in this type of method is
equally a difficult task. For example, Khandker and Pitt (1998) have used an IV method assuming land as an exogenous variable that determines eligibility to
participate in the micro credit but they assumed that this variable is not correlated with the outcome variable which is more subjective. One can argue that the
more income you have the more probability of shifting from agricultural activities then the less land you will be acquired for farm output and more likely to
satisfy the land limit that micro finances set. Hence, you will be eligible for participation. Finally, to choose a method for this study it is better to look at the
nature of the data and characteristics. In this survey the number of participants and non participants are 145 and 34 respectively. PSM will show a good result if
larger number of eligible nonparticipants are compared to participants in the survey. Furthermore, the differences in motivation and entrepreneur skill among
farmers can create biased results if adopted PSM in this study. Hence, considering panel data and if we believe there are time invariant unobservable variables,
it is appropriate to use difference in difference approach. Another importance of longitudinal data analysis is that it reduces the potential for specification errors
relative to cross sectional data. This study assumes there are differences in unobservable variables among farmers but as our panel data is only 2 years
difference we could not expect these unobservable variables to change in this short span. We can explain the above argument from the following major
justifiable reasons: Firstly, the economy in the rural areas is largely dominated by agriculture. The outcome of agriculture when it is compared with service
activities is harvested in a longer period. Entrepreneur dynamism from experience takes longer time in Agriculture. In addition, the group based collateral type
of micro credit accompanied by poor extension service adversely affects the behavior of farmers. Motivation to take risk and diversify farm and off farm
activities is also influenced by group members. In a group based collateral any default coming from the members will be shared among them. They will be risk
averse and less motivated to diversify their farm and off farm activities. To change this behavior it will take longer time. Secondly, one of the crucial elements
that improve entrepreneur skill is education. However, on average the respondents in this survey are illiterate. We cannot assume an illiterate farmer can create
a significant jump in education within 2 years. Thus, our study applies the DD method to assess the impact of micro credit in improving household income.
4.
DATA ANALYSIS, INTERPRETATIONS AND PRESENTATION
4.1 DESCRIPTIVE ANALYSIS
Micro credit is one of the effective ways in reducing poverty. However, Poverty is a broad concept and determining the causality between micro credit and
poverty is not straight forward. One way of assessing the impact of micro credit is looking at whether expenditure improves because of participation.
The data used for this study was collected by “rural finance” sub project of the socio economic research project under the Mekelle University and the Inter
University Cooperation of Belgium (MU-IUC Belgium) program. The project collected data from a sample of 377 households from four representative Tabias
located in three zones in Giba catchment. Giba catchment is one of the largest catchments in Tekeze basin with the highest land degradation levels, extreme
poverty and high population and livestock density. The sample of households was selected randomly from the population in the study area. To avoid the
problem of selection bias and assure external validity, DECSI clients were selected randomly from Tabia and Kushet. Members of the control group were selected
to reflect similar socio-economic characteristics of DECSI clients. Again, these were selected from Tabia and Kushet because they have the same social, economic
and infrastructural facilities.
This study uses the information from two Tabias, i.e., Rubafeleg and Tsenkanit. The two Tabias are found in Eastern Zone of Tigray. Again, the two Tabias share
the same geographical location, annual rainfall, distance to market, etc. A sample of 179 households (145 participants and 34 non participants) was selected.
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Data was collected in two different years of the same survey. The first data set was collected in 2007 and with the same survey questioner was used in the
second data set of 2009. This data set satisfies the use of panel data in this study.
Before looking at the empirical analysis of this study, it is desirable to assess the household characteristics of the treated and control groups. First, let us see
whether the counterfactual of the treated group was appropriately approximated. To do this, we will look at the household characteristics of participants and
non participants of the micro credit program depicted in the table below:
TABLE 4.1: SOCIO-ECONOMIC CHARACTERISTICS OF TREATED AND CONTROL GROUPS (Year 2007)
Household Characteristics
Treated
Controlled
P-value
Xt
δt
Xc
δt
(Xc- Xt)
Average age of household head
48.8
1.2
52
3.26
3.2
0.28
Average household size
6.19
0.18
3.97
0.38
-2.22
0.00***
Household head illiteracy level
1.8
0.09
1.5
0.13
-0.31
0.13
Average fertile land holdings (hectar)
0.58
0.08
0.62
0.17
0.038
0.83
Average value of livestock(000 Birr)
3.864
0.26
4.185 0.53
0.322
0.59
Average household asset( in 000 Birr)
9.15
0.96
9.59
1.95
0.445
0.84
Average hh consumption per year (in 000 birr) 14.267 0.525 9.52
0.932 -4.75
0.00***
Source: Own calculation based on base line survey
Where: X, δ are mean and standard error for the treated and controlled groups.
The above table reports that except for household size and household consumption per year, participants and non participants of the sample households on
average share similar characteristics in the starting year (2007). The p-value for average age of household head, household head illiteracy level, average land
holdings and average household asset are 0.28, 0.13, 0.83 and 0.84 respectively. This shows that the mean difference for those variables is insignificant even at
10% significance level. However, as it can be seen from the above table the mean differences for average household size and average household consumption
per year are significantly different from zero at 1% significance level. The overall result of the above summary table shows us there was a problem in the sample
survey especially in the approximation of the counterfactual. Therefore, in such circumstances unless we have justifiable reason these difference will not create
bias on our impact analysis, the study will end up with biased result. Therefore, it is useful to check and justify whether these difference will create bias or not.
When we look at the consumption expenditure per year, the two groups have different initial amounts and this difference can influence the outcome through
rate of growth. Therefore, we have to look at the relationship between the rate of growth and total consumption expenditure in the year 2007. The trend can
show increasing, decreasing or constant effect. If it is increasing, the initial statuses of treated groups will exaggerate our outcome of the impact analysis. On the
other hand, if it is declining it shows the outcome could have been more than the result we got. The following figure can easily elaborate the above assumption.
-2
0
2
4
6
When the graph of relationship is above the 45 degree as it is depicted by curve-A, such trend is an increasing trend and it will create bias on our impact analysis.
Whereas, if the trend follows functional relationship depicted by curve-B, we do not have to be worried as it will not provide us an exaggerated result. But trend
B doesn’t mean it is free of bias but the bias effect is in the opposite direction showing that the result cannot be overstated because of the initial position of
household expenditure. Rather it will understate our program impact. Based on the above argument, let us see the growth rate and household expenditure of
the data in this study.
FIGURE 4.2: TWO WAY SCATTER GROWTH RATE VERSUS CONSUMPTION EXPENDITURE
0
10000
20000
consumption exp in 2007
growth
30000
40000
Fitted values
As it can be seen from the above graph, the fitted line shows a declining trend moving towards the lower part of the 45 degree line. This indicates that the
growth rate will not over state our final result from impact analysis. Thus, with this assumption it is possible to proceed to the empirical analysis of the effect of
micro credit on improving households’ income. Moreover, an application of DD method minimizes such problem.
One of the objectives of this study is to assess whether gender difference matters or not. In this survey all the participants in the micro credit are the head of the
family. Before heading towards empirical analysis let us observe whether the male headed households are significantly different or not from those of female
headed families.
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TABLE 4.2: SOCIO-ECONOMIC COMPARISON AMONG MALE AND FEMALE HEAD HOUSEHOLD (Year 2007)
Household Characteristics
Male Head
Female Head
Xm
δm
Xf
δf
(Xf-Xm) P-value
Average age of household head
50.33
1.38
47.56
2.05
-2.77
0.26
Average household size
6.55
0.19
4.23
0.26
-2.31
0.00**
Household head illiteracy level
1.85
0.11
1.57
0.12
-0.28
0.102
Average fertile land holdings (hectar)
0.114
0.02
0.11
0.03
-0.003 0.93
Average value of livestock(000 Birr)
4.142
0.291 3.494
0.388 -0.648 0.19
Average household asset( in 000 Birr)
8.617
1.058 10.45
1.485 1.837
0.32
Average household consumption per year (in 000 birr) 14.562 0.575 10.991 0.786 -3.569 0.000**
Source: Own calculation based on base line survey
Based on the mentioned household characteristics presented in table-2 above, it illustrates that except for average household size, male headed households and
female headed households are not significantly different. Male and female headed households are significantly different in family size. I argue that because of
the excess labor force in the rural areas of Ethiopia this difference will not adversely affect our result. Therefore, differences in household size will not
significantly create income disparity among households. Thus, the overall result of the above table shows us the survey was fairly approximate the
counterfactual.
4.2 EMPIRICAL ANALYSIS
4.2.1
IMPACT OF MICRO CREDIT ON HOUSEHOLD INCOME
To assess the impact of micro credit on households income the DD approach was used and specified as follows:
Difference-in-Difference Estimator
Underlying assumption: this estimator assumes time invariant selection effects that can be eliminated by differencing the difference between the treated and
control groups (Caliendo M and Hujer, 2005). In this study the duration of time between the initial and final survey (2 years) is short to vary the unobserved
variables. Thus, these variables are assumed time invariant. Based on the above assumption the DD estimator can be presented as follows:
(1)
DD = E (YTt – YTt’ /D=1) - (YCt – YCt’ /D=0)
In equation (1), YTt & YTt’ denote average household expenditure after and before intervention for the participants of micro credit and conditional to participation
(D=1). On the other hand, YCt & YCt’ indicate average household expenditure after and before intervention for the non participants of micro credit and conditional
to non participation (D=0). Table 4.3 summarizes the outcome of double difference (DD) when it applies to our case study. The DD estimate can also be
calculated using fixed effect regression analysis. The estimation equation is specified as follows:
(2)
Yit = α + βTi1t + ρTi1 + εit
In the above equation, the coefficient β gives the average treatment effect which is equivalent with DD of equation (1). This coefficient is an interaction between
the post program treatment variable (Ti1) and time (t=1…T). Time in this case is two years. Table 4.4 summarizes the outcome of the fixed effect regression
analysis.
TABLE 4.3: EFFECT OF MICRO FINANCE PARTICIPATION ON HOUSEHOLD EXPENDITURE
Group
Observations Mean
Std.err p-value
o
37
-0.326 0.266
1
133
0.031
0.047
Combined 170
-0047
0.069
Difference
-0.35
0.166
0.03**
Source: Own calculation
The above table reports a very optimist result that micro credit programs significantly improves total household expenditure. In this program micro credit
participation improves household expenditure by 35%. And this result is significant at 5 percent level. It seems this result is by far greater from the studies under
taken in Bangladesh and some other countries. The following possible reasons are worth mentioning: Firstly, 92% of the respondents in this survey are living
below one dollar a day. Providing micro credit for their basic input for farming largely improves farm output and therefore income. Secondly, eastern part of
Tigray-Ethiopia is one of the areas where productive safety net program has been applied. If the participants and non participants are not equally beneficiaries of
safety net program, the micro credit program effect will be exaggerated especially, when there are more safety net program participants from the treated
group. The Agricultural Office of Tigray is also providing rural farm agricultural packages. Beneficiaries of this program will not be deregistered because of
membership in micro credit. Unless the benefit from this program is clearly identified, the micro credit impact result might show an exaggerated figure.
Therefore, this study needs further data regarding the mentioned elements so that it will come with justifiable outcomes.
TABLE 4.4: FIXED EFFECT REGRESSION
No. of obs.
358
F(2,168) 2.54 Prob>F 0.082
lcexpyr
Coeff.
Std. error Prob> t
Year
-0.3264 0.1472
0.028
crmktpYr 0.3572
0.166
0.033
Cons
9.36
0.047
0.000
The above table shows that controlling for the fixed effects of time invariant unobserved variables micro credit participation significantly impacts household
income. It improves for 35.7% at 5 percent significance level in the given panel year. There is no significant difference the results from DD method and the fixed
effect regression analysis, indicating good strength of our results.
4.2.2 IMPACT OF GENDER SPECIFIC CREDIT ON HOUSEHOLD EXPENDITURE
In this part we establish whether gender specific participation matters or not. The basic question in this part is whether gender specific participation affects
household income. Similarly, we can apply the above concept of DD method to address this question.
TABLE 4.5: EFFECT OF WOMEN PARTICIPATION IN MICRO CREDIT ON HOUSEHOLD INCOME
Group
Observations Mean
Std.err p-value
O
113
-0.057 0.095
1
57
-0.027 0.084
Combined 170
-0.047 0.69
Difference
-0.03
0.147
0.83
As it can be seen from the above table, women-focused micro credit does not significantly improve their household income. Robustness of the method was also
checked using the fixed effect regression. As it can be seen this result is against many of the studies in the literature which advocate that women-specific
microfinance improves significantly household income. But we have to raise a question why this happens in rural Tigray area? There are two explanations for
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this; one conventional answer may be the power over resources. In rural Ethiopia, men have the power and control over resources. Normally, profit gained from
micro credit may be snatched by the husband and extravagantly spent in ventures which are not related to household consumption. Secondly, women equally
contribute in the farm and off farm activities. Men access credit and pass it on to their wives. As long as the credit and outcome is reported by the head (male),
the contribution of women in the household is understated. This is in practice a women-women comparison. Therefore, comparing the heads of households may
not give a clear image regarding gender specific performance.
5.
CONCLUSION, POLICY RECOMMENDATIONS AND FUTURE RESEARCH
This study examined the impact of micro credit on household income in Northern Ethiopia. It used panel data and DD method for its analysis. The result shows
that micro credit participation significantly improves total consumption expenditure. On average, consumption expenditure increased by 35% for the
participants at 5 percent significant level. On the other hand, the study found out that women-specific participation does not matter in improving household
income. However, in areas where men have control over resources and make vital decisions, comparing the heads of the families may not give a clear image
regarding gender specific performances.
This has good implication for the policy makers and donor agencies in Ethiopia. Micro credit significantly improves household income. Microfinance is the most
appropriate way to provide micro loans to the rural poor. Policy makers have to focus on enriching the poor community by extending micro credit facilities to
the rural poor. There is also a need to bring women on the microcredit stream and this can happen by integrating microfinance and other stakeholders. Further
to this, instead of providing direct aid, donor agencies have to support MFIs for better outcome. This creates access to financial services for the poor and the
fund will also revolve among the poor for better results. Finally, this study raises the following research questions for further study: Micro credit participation
significantly improves household income but how far can this go to lift the poor above poverty line? What is the impact of microfinance on vulnerability to
poverty?
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SICKNESS IN MICRO, SMALL AND MEDIUM ENTERPRISES IN INDIA: AN OVERVIEW
JAINENDRA KUMAR VERMA
RAJIV GANDHI NATIONAL FELLOW
DEPARTMENT OF APPLIED ECONOMICS
UNIVERSITY OF LUCKNOW
LUCKNOW
ABSTRACT
Industrial Sickness is the key event of modern industrial age. Incidence of Industrial Sickness is a continuous process some units in a particular industry will be
running sick even if the industrial climate is favorable from all points of views process and at some point of time. As in a society, some are healthy, some are of
medium health and some are sick and others are recovering from sickness. And the same is the case with the industries also. Continuous sickness in an industry
leads to closure. Hence advance actions should be taken to avoid closure. As soon as the sickness of the industry is visible prompt actions should be taken. The
paper is an attempt to explore the amount of Sickness in Small Scale Industries in India.
KEYWORDS
Industrial sickness, Small scale industries, Micro, small and medium enterprises.
INTRODUCTION
S
mall Scale Industries plays an important role in the economic development of a developing country like India. These industries by and large represent a
stage in economic transition from traditional to modern technology. These industries encourage self-sufficiency, self-reliance and co-ordination. An
industry faces a number of problems during its implementation and operation stage because of various internal and external environmental factors. The
sick industries are unable to utilise the production capacity or produced goods and services. The sickness has been acute and adversely affecting production and
employment in the country besides other socio-economic repercussions, so there is need to identify sickness in the initial stages and to initiate the process of
corrective measure and revive/rehabilitation before the sickness assumes a serious proportion.
A company is considered to be sick when the accumulated losses at the end of any financial year results in erosion of 50% or more of its peak net worth during
the immediately preceding 5 years. The increasing trend of Industrial Sickness is touching all types of units including Small, Medium and Large scale Industries
but Small Scale Industries are more prone to Industrial Sickness. Industrial Sickness is not a sudden process A healthy unit shows profit and has positive values of
net working capital and net worth. But when it tends towards sickness one of these may become negative.
As per RBI, “A unit which has incurred cash losses for one year and in the judgment of the bank, it is likely to continue to incur cash lose for current year as well
as following year and which has an imbalance in its financial structure such as current ratio is less than 1:1 and worsening debt-equity ratio”.
•
•
•
To analyze extent of sickness in small enterprises.
To evaluate remedies for reducing industrial sickness.
To examine the factors of sickness in small industries and finding out solutions to it
This research design adopted for the paper is descriptive in nature. The study is based on the sickness in small scale industries in India. The earlier researches
have been considered while preparing of the paper.
WARNING SIGNALS OF INDUSTRIAL SICKNESS
•
•
•
•
•
Shortage of liquid funds
Growing of excessive inventories
Under-utilisation of capacity
Return on investment
Maintenance of certain financial ratios
CAUSES OF INDUSTRIAL SICKNESS
In India most of the Small Scale Industries are either born sick or stay sick. Earlier detection of sickness leads to early redemption of sickness. The main reasons
of sickness are different in different industries. The main reasons of sickness are management failure, non-availability of raw materials, power cuts, labour
unrest, marketing problem etc.
CAUSES OF SICKNESS OF SMALL SCALE INDUSTRIES IN INDIA
Indian authors have classified causes of sickness in small industries under two categories.
INTERNAL FACTORS
•
Lack of finance
•
Bad production policies
•
Marketing and sickness
•
Inappropriate personnel management
•
Ineffective corporate management
EXTERNAL FACTORS
•
Personnel constraints
•
Marketing constraints
•
Production constraints
•
Finance constraints
QUANTUM OF INDUSTRIAL SICKNESS IN INDIA
Though, there is being a constant growth in the small industries over the years. There has been a gradual increase in the industrial sickness in Micro, Small and
Medium Enterprises.
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ISSN 2231-1009
TABLE-1: SICKNESS IN MSMEs IN INDIA
Year Total MSMEs (in Lakhs) Sick Units (in Lakhs) Percentage
1998 89.71
2.21
2.46
1999 93.96
3.06
3.26
2000 97.15
3.04
3.13
2001 101.1
2.49
2.46
2002 105.21
1.77
1.68
2003 109.49
1.67
1.53
2004 113.95
1.43
1.25
2005 118.59
1.38
1.616
2006 123.42
1.26
1.02
2007 261.01
1.14
0.43
2008 272.79
0.85
0.31
2009 285.16
1.04
0.36
2010 298.08
0.78
0.26
2011 311.52
0.90
0.29
Source: Govt. of India, Ministry of Micro, Small & Medium Enterprise Annual report 2011-12 Reserve Bank of India Hand Book of Statistics on Indian Economy2010-11.
In the Table-1, it can be clearly seen that there were 89.71 lakhs total MSMEs in the year 1998 which increased to 311.52 in the year 2011. And the percentage
of sick units in 1998 was 2.46 which increased to 3.13 in 2000 and then declined to 0.29 in 2011.
INVESTMENT IN MSMEs
From the Table-2, it can be observed that the percentage of investment in sick units is revolving between 3.52 to 2.89.The highest percentage of investment in
sick units was noticed to be 3.52 in the year 2003.The percentage of investment in sick units has been increasing because of increased investment in MSMEs.
TABLE-2: INVESTMENT IN MSMEs IN INDIA
Year Total Investment (in Rs. Crore) Investment in sick units (in Rs Crore) Percentage
1998 1333242
3857.00
2.89
1999 135482
4313.48
3.18
2000 139982
4608.43
3.29
2001 1468454
4505.54
3.07
2002 154349
4818.95
3.12
2003 162317
5706.35
3.52
2004 170219
5772.64
3.39
2005 178699
5380.13
3.01
2006 188113
4981.13
3.64
2007 500758
5266.65
1.05
2008 558190
13849.00
2.48
Source: 1. Govt. of India, Ministry of Micro, Small & Medium Enterprise Annual report 2009-10 & 2. Reserve Bank of India Hand Book of Statistics on Indian
Economy- 2008-09
NUMBER OF SICK UNITS AND NUMBER OF SICK UNITS UNDER NURSING
The number of MSMEs is compiled by the RBI from the scheduled commercial banks. At the end of March, 2010, there were 77,723 sick units in the country.
There has been on increase in the number of sick SMEs to 90,141 in the March, 2011. The number of sick MSMEs and the enterprises under nursing with the
amount outstanding against them from March, 2005 are given in Table-3.
As at the end of March
2005
2006
2007
2008
2009
2010
2011
TABLE-3: NUMBER OF MSMEs UNDER NURSING
Total Sick MSMEs
Units under nursing
Number (units) Amount outstanding (Rs. in Crore) Number (units) Amount outstanding (Rs. in Crore)
138041
5380.13
2080
259.93
126824
4981.13
915
233.77
114132
5266.65
588
268.93
85187
3082.72
1262
126.92
103996
3619.90
2330
424.26
77723
5233.15
2360
478.84
90141
5211.25
4698 5
518.30
Source: RBI Bulletin 2012
PREVENTIVE MEASURES
The prevention of sickness cannot be the sole responsibility of any one agency. It is to be checked at various stages by developing close and continuous dialogue
with each other through effective communication. The preventive measures can be taken individually or jointly by having discussions and consultations. In
preventing the sickness, therefore, the role of the following agencies has been identified with respective distinction:
•
Term lending institutions
•
Commercial banks
•
Entrepreneurs
•
Government
These agencies can effectively stem the sickness if they make use of signals and symptoms that are generated by the industrial unit in its working and by using
information and reporting system of important key parameters of the industrial enterprise.
CONCLUSION
In spite of the incentives and facilities offered under Industrial policy and intensive efforts to promote large number of MSME over the years large numbers of
units have been confronted with a number of problems which turn them into sick or closure. As we examined the investment in sick units have been increasing
because of increase in investment in MSMEs. There was increase in the total investment among MSME has wider implications including locking of funds of the
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ISSN 2231-1009
lending institutions, loss of scarce material sources and loss of employment. When the problems arise, the diagnosis and treatment would be easier. However,
when sickness reaches an advanced stage, it becomes difficult and takes longer time to diagnose the reason and makes it more costly and expensive to bring the
units back to normal, so there is a need to identify sickness in initial stages and initiate remedial measures before the sickness takes place.
REFERENCES
1.
2.
Dr. K. A. Goyal, Dr. Nitin Gupta, Neeta Gupta: An Overview of Sickness in Micro, Small & Medium Enterprises in India
Dr. Navneeta Singh: Industrial Sickness: Causes & Remedies
166
ISSN 2231-1009
REQUEST FOR FEEDBACK
Dear Readers
At the very outset, International Journal of Research in Computer Application and Management (IJRCM)
acknowledges & appreciates your efforts in showing interest in our present issue under your kind perusal.
I would like to request you tosupply your critical comments and suggestions about the material published
in this issue as well as on the journal as a whole, on our [email protected] for further
improvements in the interest of research.
If youhave any queries please feel free to contact us on our E-mail [email protected].
I am sure that your feedback and deliberations would make future issues better – a result of our joint
effort.
Looking forward an appropriate consideration.
With sincere regards
Thanking you profoundly
Academically yours
Sd/Co-ordinator
167
ISSN 2231-1009
II

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