JOB STRESS AND ITS IMPACT ON EFFECTIVE RESULTS · Employees at Big Bazaar in the Bangalore city to examine the relationship between time pressure, losing temper, sufficient number

1RVIM Journal of Management Research

JOB STRESS AND ITS IMPACT ON EFFECTIVE RESULTS

*Monica M, Assistant Professor, Department of MBA, Acharya Institute of Technology, Bangalore, Email:[email protected]

**Dr.Ramanaiah G, Department of MBA, Acharya Institute of Technology, Bangalore, Email:[email protected]

Monica M.*

Dr. Ramanaiah G.**

Abstract :

Most of the organisations are in the aim of attaining more productivity and ends up burdeningemployees with overload of work to meet goals and this might have psychological andphysical effects on the employees which may result in something contrary to what theseorganisations want to achieve. Especially in industry due to target pressure, loss of personallife, strange timings, downturnin the employment, competition, the employees suffer fromgreater workloads and work for longer hours which results in decrease in concentrationsof employees, increase in absenteeism, hypertension, conflicts arises etc. which eventuallyhas a severe impact on the productivity of the individual. Stress has become an inevitablepart of everyday life. This study was intended to assess the components of job stress andits impact oneffective results. The descriptive design was used with the sample size of 100Employees at Big Bazaar in the Bangalore city to examine the relationship between timepressure, losing temper, sufficient number of breaks, getting irritated and producing effectiveresult. The results shows that there is a significant relationship between time pressure andlosing temper, which shows that due to time pressure, employee tend to lose temper, ifthere are no sufficient number of breaks then employees tend to get irritated, this irritationleads to ineffective results. There is inverse relationship between unrealistic time pressureand effective results for challenging tasks.

Keywords: Job Stress, Employee performance, Effective Results, unrealistic time pressure.

Introduction

The Indian retail industry has emerged as oneof the most vibrant and fast-paced industriesdue to the entry of several new players. Itaccounts for over 10 per cent of the country’sGross Domestic Product (GDP) and around 8per cent of the employment. India is the world’sfifth-largest global destination in the retail space.The retail sector in India is emerging as one of

the largest sectors in the economy. Retailindustry is expected to grow to US$ 1.3 trillionby 2020, registering a CAGR of 9.7 per centbetween 2000-2020

Job stress happens when requirements ofthe job do not match the capabilities, resourcesor needs of the worker. This leads to harmfulphysical and emotional strain. Job stress caneven result in deprived health and also injuries.

Stress happens if we feel that we cannot dealwith burden and this burden comes in abundantshapes and forms, and triggers physiologicalresponses. Nowadays this is accountable foradded than fifty per cent of all illness.

The determination of this present abstraction isto actuate the capital confession for and after-effects of accent at work, and to acquisitionthe a lot of able means of avoiding it andarresting with it. The analysis as well analysesthe all-embracing accepted bearings of accentat plan and as well considers some actual factsaccompanying to the origins of stress. Stress isa body’s method of reacting to a given task.Main need of the study is to know the factorsaffecting stress. When the factors affectingstress is studied it will help us in knowing thecoping strategies in order to overcome stressat workplace which in return helps theemployees to perform better and achieveorganisation and individual goals as well.

Review of Literature

Johnson, David (1995) Studied “Stress andStress Management among owner –managersof small and medium sized enterprises. It wasobserved that stress can result from conflict,poor communication skills etc. It was alsoobserved that by implementing techniques likeeffective coping strategies, managing good dietand time, small firms were beneficial comparedto other firms”.

Berryman-Fink, Cynthia (1996), “Stressmanagement strategies. This paper is aboutstress coping strategies in order to manage andreduce stress of the employees. Tips formanaging one’s stress are presented. Theyinclude: 1. Practice relaxation techniques. 2.Develop an exercise program. 3. Practice good

nutrition. 4. Socialize with people other thanco-workers. 5. Develop a network of socialsupport. 6. Practice time management. It canbe concluded that by implementing andinculcating the above techniques employeesstress at workplace can be reduced”

Murphy, Lawrence R (1998), “Employeebehaviour before and after stress management.Aquasi experiment was conducted to comparethe behaviour of employees before and afterstress management training. Organizationalrecords on performance ratings, equipmentaccidents, employee absenteeism, and workinjuries were obtained. It was found that theresults provide limited support for relaxationtraining offered as a prevention activity in worksettings”

Broadbridge Adelina (2000), “Stress and thefemale retail manager,the authors compare thestress levels of female retail managers with thatof male retail managers. A research was doneto draw results. Sex discrimination betweenfemale n male retail managers was observedwhich could spoil the reputation of thecompany. The main finding was that female retailmanagers were under more job stress comparedto male retail managers”

Smith, Andrew (2001),”Perceptions of stressat work, the authors tell about the scale ofperceived stress at work. This study determinesthe scale of perceived stress at work, effectsof stress. The results revealed thatapproximately 20 per cent of the samplereported extremely high levels of stress at workmajorly due to stressful working condition andwhich may even affect physical and mentalhealth”

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Burke, Ronald.J (2002), “Work stress andwomen’s health: Occupational status effects.This research examines the relationship of workstress and women’s health. This study tells usthat work stressors had negative relationshipwith levels of job satisfaction. Findings said thatwomen in lower occupational status jobindicated less satisfaction at work and pooreremotional physical and mental health leading towork stress as they were more exposed tohazardous workplace compared to women inhigher occupational status”

Ornelas, Sandy, Kleiner, Brian.H(2003), “Newdevelopments in Managing job relatedstress,the authors have stated that job stress issomething which is found to be very commonin people at workplace. Job stress is somethingwhich cannot be eliminated but can be reduce.This article tells us that by practicing fewtherapies such as yoga, acupuncture, healthydiet, regular exercise and also by implementingstress management strategies at workplace jobstress can be reduced”.

Price, Kella B (2003), “his study on relationshipbetween stress and job satisfaction and itsimpact on employee turnover. Researchexplores the relationship between jobstress and job satisfaction as well as turnover,as it pertains to sales organizations.The researchconcluded that the stress factor could affect theemployee turnover can also reduce the level ofjob satisfaction”.

Wilson, Tony (2004),”Managing battle againststress. This paper talks as to how to manageand battle against stress. It includes copingstrategies in order to reduce stress. The tipswould be to monitor your own levels of stress,identify the triggers that cause it to rise andalways assess what may be the underlying

causes. Learn some relaxation techniques, getsufficient sleep, take regular exercise and eatwell and nutritiously. It was also said that onemust learn to take breaks and get away whenyou can-and don’t feel guilty about it”.

Delargy, Katrina, Chatten, Heather (2005),“HR and the parameters of knowledge stressand time.This article focuses on how the threeelements are inter linked and, when managedeffectively, can ensure personal andorganizational effectiveness and well-being. Itwas found that these three factors if balancedwell can be effective and yield good results tothe individual and organization as well”.

Salopek, Jennifer. J (2005), “Job stress.Thisarticle tells us about what Is job stress can whatcan be done to reduce job stress. Accordingto this research, in order to reduce job stressfirstly a general awareness must be built withinthe organization. A good support is requiredfor the program from top management. Effectivetraining programs for the staff about technicalknow-how. Next the stressors must be identifiedwhich includes working conditions, stress levels,health conditions and job satisfaction. Lastlythe progress must be evaluated regularly. Thisresults in bringing awareness about stress in theorganization and also helps in avoiding stresswhich leads to increased productivity withoutaffecting the performance of the employees”.

Park, Jungwee (2008), “made a study entitledWork stress and job performance, the articlefocuses on how work stress factors areassociated with productivity. This research wasdone on workers aged between 15 to 75 byselected characteristics. It included both menand women. Workers with high-strain jobs hadreduced work activities compared to workerswith low-strain job due to health problems. It

was also found that the reason for reduced workactivities for men was high workplace socialco-worker support and for women it was highemotional and informational support”.

John Boe (2010), “his research on twenty stressmanagement tips for peak performance. Thisarticle gives twenty tips as to how stress canbe managed and reduced. Tips like drinkinglots of water, avoiding alcohol, maintainingpositive mental attitude and many more wereincluded. Research also indicates that a personwill react to stressful situations based upon thehis/her temper that he/she was born into. It wasconcluded that by inculcating these stressmanagement tips, stress can be managed andreduced”.

Afsheen Khalid, Ghulam Murtaza, Aliya Zafar,Mucum Aizaz Zafar, Lutfullah Saquid, RizwanMushtaq (2012). “The role of supportiveleadership as a moderator between job stressand job performance. The results of the studyrevealed that supportive leadership had anegative impact on job stress but had a directimpact on job performance. It also revealedthat supportive leadership moderates therelationship between job stress and jobperformance”.

Sharma SD, Chauhan, Anjali, Khanna, Swati,(2012), “Stress management through yogapractices in the corporate sector. This resultstells us that practicing yoga helps reducingfactors like depression, anxiety etc which inreturn helps in reducing and managing stresslevel of the employees”.

Alqahtani, Abdulmuhsen (2012),” Organiza-tional stress: Causes and Management. Themain findings were that stress is an inevitablesegment of our life and cannot be completely

prevented since this kind of prevention isunrealistic but certain stress management stepscan help in reducing the stress level of theemployees and can have a positive impact onthe productivity”

Kar, Ajitkumar (2013), “Occupational stresson women employees: its impact on jobperformance and productivity.It was found thatwomen undergo more stress compared to menbecause of the responsibilities women have totake at home and at workplace as well. It wasalso found that poor mental health conditionslike anxiety, depression, and chronic fatigueamong women were more compared to men”.

Hassan Zarei Matin, Hamid Reza Razavi, SaiedEmamghalizadeh (2014), “in the research paperentitled is stress management related toworkforce productivity. The purpose of thestudy was to determine the relationshipbetween stress management and workforceproductivity. After analyzing the main hypothesis,the results confirmed that there was a positiveand significant correlation between stressmanagement and workforce productivity in thisresearch”.

Mirela-Mihaela, Dogaru, Irina, Donciu(2014),“Stress and job performance, the authors talkabout how to design effective selection system,training and development of the employees,good working environment with all requiredfacilities etc. It also tells that the attributes likejob description, job specification; job evaluationhas major significance on organizational stressmanagement. Major findings of the researchwere that improper working environment canhave an impact on employee’s stress which inreturn affects the performance and theproductivity of the organization”.



Boguslawska , Kate (2014), “what employersneed to know about stress at work, the authorstell as to what the employers must do in orderto reduce work stress of the employees.Employers must ensure that the employees havethe entire requisite in the place, properdistribution of work, proper training programs.Employers must also identify the factors whichlead to employee’s stress at work. Employersmust help the employees in such a way thatthey overcome job stress. Management shouldact with sensitivity and reasonableness tobalance the good of individual and therequirements of organization as well. Thisresults in happy employees with goodperformance and more productivity”.

Goswami, Tulsee Giri (2015),”studied Jobstress and its effect on employee performancein banking sector. This paper evaluates theimpact of occupational stress on employees. Itwas found that lack of proper and healthy workconditions leads to work stress. Lack of careerprospects at work place also causes lowsatisfaction and motivations and this can leadto poor performance of the employees andreduced productivity. Suggestions like providingproper and healthy working conditions, strongcareer planning and development, regularcounselling sessions etc can improve the stateof mind of employees and can overcome work

stress which helps in better performance of theemployees and increased productivity”.

Research Objective:

1. To analyse the various factors leading tostress at work place.

2. To examine the relationship between timepressure and losing temper.

3. To assess the association between takingbreaks and getting irritated.

4. To find the association between gettingirritated and giving effective results.

5. To suggest appropriate stress copingstrategies.

Research Methodology

A Quantitative research design was used toachieve the research objectives involvinggathering of information received from a sampleof 100 Employees selected by simple randomsampling method in Bangalore from January2016 to March 2016. The primary data wascollected from employees through questionnairewhich consist of set of questions with likert scale,the data gathered was analyzed using SPSS,and the data was interpreted based on thestatistical tools results.

Table 1: Age of employees

Analysis and Interpretation

Demographics:

Interpretation: It is denoted that 17% of thepersonnel are aged less than 20 and 62% ofthe employees come under the age groupbetween 21-30, 17% of the employees come

under the age group between 31-40, 3% ofthe employees lie under the age group between41-50 and only 1% of the employees are agedmore than 50.

Table 2: Gender of employees

Interpretation: From the above table it canbe seen that 52% respondents are femaleemployees and on the other hand 48% of therespondents are male employees.

Hypothesis testing:

Hypothesis 1

H0: The relationship between time pressure and

losing temper is not significant.

H1: The relationship between time pressure and

losing temper is significant.

Hypothesis 2

H0:The association between taking breaks and

getting irritated is not significant.

H2:The association between taking breaks and

getting irritated is significant.



Hypothesis 3

H0: There is no association between getting

irritated and giving effective results.

H3: There is association between getting irritated

and giving effective results.

Table 3: Results of Hypothesis Testing

Interpretation

H1: The result shows that there is a significant

relationship between time pressure and losingtemper at 0.01 levels. It can be clearly saidthat employees lose their temper due tounrealistic time pressures.


relationship between taking breaks and gettingirritated at 0.002 levels. From this it can besaid that when the employees are unable to takesufficient breaks during work hours they getirritated.


*-Correlation is Significant at the 0.05 Level (2-Tailed)**- Correlation is Significant at the 0.01 Level (2-Tailed)

relationship between getting irritated and givingeffective results at 0.05 levels. This tells thatwhen the employees get irritated when someoneunnecessarily intervenes in their work, they areunable to give effective results at work place.

Hypothesis 4

H0: The relationship between unrealistic time

pressures and giving effective results forchallenging tasks is not significant.

H1: The relationship between unrealistic time

pressures and giving effective results forchallenging tasks is significant.

RegressionTable 4: Model Summary

a. Predictors: (Constant), 8.I have time pressures

This table shows the R. and R2 .Values. The Rvalue denotes the simple correlation and is0.699, which has a correlation of high degree.The R2 value indicates the variance in thedependent variable (effective results forchallenging task) which can be explained bythe independent variable (Unrealistic timepressure) which is 0.477, higher the value, better

the model. Adjusted R Square is theadjustment of the R-squared that penalizes theaddition of extraneous predictors to the model,which is 0.462, if the gap between R and Rsquare is very less.Then the Root mean squareerror should be low, lower the error, and betteris the model

Table 5: anova calculation

a. Predictors: (Constant), 8.I have unrealistic time pressuresb. Dependent Variable: 26.I try to give effective results for challenging tasks at work place

This ANOVA table shows the regression modelwhich predicts that the dependent variable issignificantly well. We can make out by lookingat the “Regression” row and the “sig” column.This designates the regression model’s statistical

significance which was done. Here, p<0.0220and is less than 0.05, hence specifies that,generally, it is statistically significant andforecasts the conclusion variable and tells thatit is a good fit for the data.

a. Dependent Variable: 26.I try to give effective results for challenging tasks at work place


Table 6: Co-efficient


Y=a + b X

Y=3.83-1.48x

X (Independent variable) = Unrealistic timepressure.

Y (Dependent variable) = Effective result forchallenging tasks.

Interpretation

When stress increases due to unrealistic timepressures, performance with respect to effectiveresult for challenging tasks decreases. There isan inverse relationship between the dependentand Independent Variable.

Suggestions

Employees feel stressed due to long workinghours hence the organisation must ensure thereis an exact working hoursfor reducing the timepressure on the employees and suggesting toadopt Flexi-Time policy, which can have impacton effective results and also the organisationmust give enough breaks to the employees sothat they do not feel stressed.

� Reduce the long working hours

� Implement Flexi-time policy

� Provide sufficient number of breaks

� Unrealistic time pressure needs to bereduced.

Limitation

Although, all probable efforts to make theresearch analysis more comprehensive andsignificant, a study of present kind is bound tohave certain limitations

The research has been attempted to understandthe Job stress and its impact on effective results

of employees only at one branch of big bazaarwith the sample size of 100 only, research isconfined to one branch of Big Bazaar.Theresearch aims at analyzing the factors influencingthe Job stress and do not correlate with thedemographic factors such as age, gender etc.

Conclusion

The employees must be given enough time totake breaks which in return will be an advantagefor the company and employees as well. Theorganisation must practice proper timemanagement.The organisation must plan aneffective stress management strategy to reducethe harmful effects of stress in many ways. It isthe responsibility of the organisation to takecontrol measures regarding stress which theemployees undergo and must help theemployees to overcome the same.Employeesneed to be given training and developmentprograms which helps in changing their viewsabout stress.Job stress can be reduced whenthe employees are given few recreationalfacilities and involve them in such activities.

The organisation must train its employees in sucha way that the employees are able to cope upwith the job stress without letting it affect theirjob performance

Future Work

Advanced research could be conducted toanalyze the factors leading toJob Stress in theother Branches of Big Bazaar across Bangalore.Advanced research should be conducted inorder to give more insight on the concepts ofJob Stress with similar kind of outlets withincreased sample size. This study can be carriedout in order to assess the relationship betweendemographic variables and Dimensions of JobStress. Further research can be conducted by

analyzing the level of stress among the malesand females.

References

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• Broadbridge, Adelina (2000). Stress and thefemale retail manager, Journal of Womenin management review, 15(3), 145-159.

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• Delargy, Katrina, Chatten, Heather (2005).HR and the parameters of knowledge stressand time, Journal of Strategic humanresource review, 4(5), 32-35.

• Goswami, TulseeGiri (2015). Job stress andits effect on employee performance inbanking sector. Indian journal ofcommerce and management studies, 6(2),51-56.

• Hassan ZareiMatin, Hamid Reza Razavi,Saied Emamghalizadesh (2014). Is stress

management related to workforceproductivity? Iranian journal ofmanagement studies, 7(1), 1-19.

• James Campbell Quick, Jonathan D. Quick,Debra L. Nelson, and Joseph J. Hurrell, Jr(1998). Preventive Stress Management inOrganizations, Journal of Personnelpsychology, 51(2), 791-794.

• Javed Masooma, Rifat Balouch (2014).Determinants of Job Satisfaction and itsImpact on Employee Performance andTurnover Intentions, International Journal ofLearning & Development, 4(2), 120-140

• Jamal, M., (1984). Job stress and jobperformance controversy: An empiricalassessment. Organizational behavior andhuman performance, 33(1), 1-21.

• Jex, S. M. (1998). Stress and jobperformance: Theory, research, andimplications for managerial practice. SagePublications Ltd.

• Johnson, David (1995). Stress and stressmanagement among owner –managers ofsmall and medium sized enterprises, Journalof Employee counselling today, 7(5), 14-12.

• Khalid, Afsheen; Murtaza, Ghulam; Zafar,Aliya; Zafar, MueenAizaz; Saqib, Lutfullah;Mushtaq, Rizwan(2012). Role of supportiveleadership as a moderator between jobstress and job performance, Journal ofInformation management and businessreview, 4(9), 487-495.

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management perspectives, 2(3), 534-539.

• Mirela-Mihaela, Dogaru, Irina, Donciu(2014). Stress and job performance,Journal of knowledge horizons,economics, 6, 117-119.

• Park, Jungwee (2008). Work stress and jobperformance, Journal of Perspectives onlabour and income, 20, 7-19.

• Price,Kella B (2003). A Study of theRelationship between Stress and Job

Satisfaction in Sales Organizations: ItsImpact on Employee Turnover, Journal ofProquest dissertations and thesis,1-290.

• SharmaSD, Chauhan, Anjali, Khanna, Swati(2012). Stress management through yogapractices in the corporate sector, Africanjournal of business management, 6(37),10117-10124.

• Smith, Andrew (2001). Perceptions of stressat work, Human resource managementjournal, 11(4), 74-86.

PERFORMANCE ANALYSIS OF GREENFIELD AIRPORTS IN INDIA

Shreya Chakraborthy*P. Paramashivaiah**

Abstract:

This paper focuses on studying the performance of all the three Greenfield airports set upin India under Public-Private Partnership (PPP). The public private partnership model isone among the latest models for developing infrastructure in the country. Previously inIndia all infrastructure projects like roads, ports, airports etc. were built using the traditionalmodel whereby the Government took the responsibility of construction, operation andmaintenance. But, the capital available with the Government played a constraint leadingto shortage of world class infrastructure in India. Thus about, two decades ago theGovernment started allowing private parties to participate in developing infrastructureprojects thus paving way for PPP. Under PPP innumerable infrastructure projects havebegun operations in the past decade. Major highways, ports, airports were constructedunder this model. Thus this study focuses upon the 3 airports. The data related to the studyare drawn from the secondary sourcesincluding balance sheet profit and loss accounts andwebsites and the same have been analysed using ratios to arrive to the necessary results.

Key words: Airport Infrastructure, Public Private Partnership and Performance Analysis.

Introduction

Infrastructure development has always been onpriority for any developing country similarly ithas been the top agenda for India, consideringthe current global economic dynamics as wellas domestic growth necessities it has emergedas one of the single largest vital requisite whichcould seriously negotiate the economic growthroute.

The Indian civil aviation industry has witnessed,and continues to witness unprecedented growth.To meet this expanded as well as theanticipated demand; there would be a need for

*ShreyaChakraborthy, Research Scholar, Department of Studies and Research in Commerce, TumkurUniversity, Tumkur, Email: [email protected]

**P. Paramashivaiah, Dean and Chairman, Department of Studies and Research in Commerce, TumkurUniversity, Tumkur, Email: [email protected]

approximately 350-375 operational airportsacross the country. This implies that significantprivate investments will have to be attracted asthe Airports Authority of India (AAI) alone willnot be able to raise the required funds ofapproximately US $ 30 billion. The “ Five YearPlan estimates that almost $15 billion ofinvestments will be needed across airports inIndia and a significant portion of this investmentwill be driven by the private sector. TheGovernment of India has taken number ofinitiatives to open the airport sector to private



sector participation by modernizing existingbrownfield airports (Mumbai and Delhi) as wellas setting up of new Greenfield airports(Bengaluru, Hyderabad and Kochi) using thePublic Private Partnership model. These fiveairports have demonstrated that Public PrivatePartnerships are successful and preferredmodels for the development of airportinfrastructure in the country.

Greenfield airports refer to airports that havebeen constructed from the scratch. In India thereare at present only three such airports. Thesuccesses of these airports are very essentialfor Government to take a call on whetherinvestment in other such airports is called for ornot. Further, establishment of Greenfield airportensures high standards and stipulated timeforproject completion, they also ensure world classmanagement and latest technology into airportconstruction and maintenance. Thus, theseairports have become quintessential for thedevelopment of a country and looking at thebooming Indian aviation sector it is need ratherthan want.

Objectives of the Study:

The study basically aims

1. To study the performance of 3 Greenfieldairports in India

2. To compare the performance of 3 Greenfieldairports and draw inferences.

Methodology

The study uses, passenger traffic, cargo growthand other ratios as a tool to draw inference onthe performance of the three Greenfield airports.As there are only 3 Greenfield airportsoperational in India, all the three that isBengaluru, Hyderabad and Kochi are chosen

for the study. The data used for the study issecondary in nature and is drawn from varioussecondary sources like the annual reports thewebsites of the three airports to name a few.

Analysis of data

Brief profile of Bangalore InternationalAirport Limited (BIAL):

Bangalore International Airport is an airport setup in Devanahalli, Bengaluru Karnataka. Theairport has a capacity of 50mppa (millionpassenger per annum) and is currently operatingwith about 11.5 mppa. The airport is spreadaround 4300 acres and hosts all prime facilities.It came up under the PPP model using theBOOT (Build Own Operate Transfer) model.The contract period is of 30 years and the nameof the developer company is BIAL. The airportwas built with a whopping project cost of INR1930 crores.

Brief profile of Cochin International AirportLimited (CIAL)

Cochin International Airport is an airport setup in Nedumbassery, Cochin Kerela. Theairport has a 3400 meter long runway. Theairport is spread around 1200 acres and hostsall prime facilities. It came up under the PPPmodel using the BOO (Build Own Operate)model. The name of the developer company isCIAL. The airport was built with a meagreproject cost of INR 303 crores.

Brief profile of Hyderabad InternationalAirport Limited (HIAL)

Hyderabad International Airport is an airportset up in Shamshabad, Hyderabad Telengana.The airport has a capacity of 40 mppa (millionpassenger per annum) and is currently operatingwith about 5 mppa. The airport is spread

around 4000 acres and hosts all prime facilities.It came up under the PPP model using theBOOT (Build Own Operate Transfer) model.The contract period is of 30 years and the name

of the developer company is HIAL. The airportwas built with a whopping project cost of INR2480 crores.

Table: 1: Passenger Traffic at Bangalore International Airport Limited

The passenger traffic has seen an increase from10 million in 2007-08 to 19 million in 2015-16. This is an indication that the passengerspreferring to travel through BIAL has increased

over the years. Though majority of thepassengers travel within the country theinternational passengers have grown to almostdouble which is a great sign.

Table: 2:Passenger Traffic at Cochin International Airport Limited

The passenger traffic has seen an increase from3.3 million in 2007-08 to 7.7 million in 2015-16. This is an indication that CIAL has beenconsistent in increasing the passenger traffic overthe years. However, it is interesting to see that

CIAL boosts majority of internationalpassengers which is not the case for biggerairports like BIAL and HIAL. This can beattributed to a number of Keralites who travelfrom gulf countries.



Table: 3: Passenger Traffic at Hyderabad International Airport Limited

The passenger traffic has seen an increase from7 million in 2007-08 to 12.4 million in 2015-16. This is an indication that the passengerspreferring to travel through HIAL has increasedover the years but the rate of increase has been

slow. Though majority of the passengers travelwithin the country the international passengershave grown to almost double which is anindication towards awaited growth.

Chart: 1:Comparison of Growth of Passenger Traffics Across All the Three Airports

It could be seen that all the 3 airports havegrown in the past. All airports faced a steepdecline during the Recession of 2008. Thehighest hit was for BIAL. But, all of them have

eventually come out of it and are progressing inthe direction of growth in more or less the samepace which is commendable for the economyof the country.

Table: 4:Percentage of Passenger Traffic handled by BIAL in comparison with all Airports

Table: 5:Percentage of Passenger Traffic handled by CIAL in comparisonwith all Airports

Table: 6:Percentage of Passenger Traffic handled by HIAL in comparisonwith all Airports

The highest percentage of traffic is handled byBIAL followed by HIAL and then CIAL.Combined together they handle almost 18%

of total India’s passenger traffic. This showsthe important position of these green fieldairports in Indian aviation infrastructure.



Chart: 2: Comparison of Growth of Air Traffic Movement (ATM) AcrossAll the Three Airports

Air Traffic Movement (ATM) represents thenumber of arrival and departures that has takenplace in an airport in a particular year. Thecomparison shows that though all the 3 airportsare experiencing growth in the ATM at the

present, HIAL has been the most volatile withfluctuating ATM across the period ofcomparison whereas BIAL and CIAL havebeen relatively consistent.

Chart: 3:Comparison of Growth of CargoTraffic Across All the Three Airports

The comparison of the cargo traffic shows thatthere has been a decline in the cargo traffic from2014 onwards. HIAL though is steadily

increasing in cargo traffic but both BIAL andCIAL has seen a deep fall in the cargo traffic.

Table: 7: Financial Performance of BIAL (2009-2013)

BIAL has seen reduction in Profit after Tax (PAT)from 2012 to 2013, but it has eventuallyoutdone itself from 2009 where it made loss.The same is affected in the Earnings per Share(EPS) and others like Return on Assets (ROA),Return on Equity (ROE) and Return on CapitalEmployed (ROCE) which are all dependent

over profits. Sales here represent the totalearnings of BIAL by rendering the services.There has been a steep reduction in the growthof sales in 2013. The debt equity ratio is onthe higher verge but is still good as it is a hugeorganization.



Table: 8: Financial Performance of CIAL (2009-2013)

Though CIAL has seen reduction in Profit afterTax (PAT) from 2012 to 2013, but it is a verysmall dip and it could not be taken as a basefor saying that the company hasn’t performedwell. It has been on a consistent rise from 2009and has always managed to make profits. Thesame is affected in the Earnings per Share(EPS) and others like Return on Assets (ROA),Return on Equity (ROE) and Return on Capital

Employed (ROCE) which are all dependentover profits. Sales here represent the totalearnings of CIAL by rendering the services. Thecompany has been performing consistently overthe years and earning good value for theshareholders. Furthermore it has managed toremain a zero debt company which is a rarefeet for a company to achieve when all itscontemporaries are highly leveraged.

Table: 9: Financial Performance of HIAL (2009-2013)

HIAL has seen growth in Profit after Tax (PAT)from 2012 to 2013, it has eventually outdoneitself from 2009 and 2010 where it made loss.The same is affected in the Earnings per Share(EPS) and others like Return on Assets (ROA),Return on Equity (ROE) and Return on CapitalEmployed (ROCE) which are all dependentover profits. Sales here represent the totalearnings of BIAL by rendering the services.There has been steady increase in theperformance of the airport which is a sign ofrelief as the company was in loss for 2consecutive years. The debt equity ratio hasdeclined over the years and is attributable as agood sign.

Findings

1. The passenger traffic of BIAL has seen anincrease from 10 million in 2007-08 to 19million in 2015-16.

2. The passenger traffic of CIAL has seen anincrease from 7 million in 2007-08 to 12.4million in 2015-16.

3. The passenger traffic of HIAL has seen anincrease from 3.3 million in 2007-08 to 7.7million in 2015-16.

4. The highest percentage of traffic is handledby BIAL followed by HIAL and then CIAL.



5. The comparison shows that though all the 3airports are experiencing growth in the ATMat the present, HIAL has been the mostvolatile with fluctuating ATM across theperiod of comparison whereas BIAL andCIAL have been relatively consistent

6. The comparison of the cargo traffic showsthat there has been a decline in the cargotraffic from 2014 onwards

7. It could be seen that all the 3 airports havegrown in the past in passenger traffic. Allairports faced a steep decline during theRecession of 2008.

8. BIAL has seen reduction in Profit after Tax(PAT) from 2012 to 2013

9. The debt equity ratio of BIAL is on the higherverge

10. CIAL has seen reduction in Profit afterTax (PAT) from 2012 to 2013

11. CIAL has been on a consistent rise from2009 and has always managed to makeprofits

12. CIAL has remained a zero debt company

13. HIAL has seen growth in Profit after Tax(PAT) from 2012 to 2013

14. There has been steady increase in theperformance of HIAL which is a sign ofrelief as the company was in loss for 2consecutive years

15. The debt equity ratio of HIAL hasdeclined over the years

Conclusion

The comparison of performance of airportsshow that CIAL has been the consistentperformer but it hasn’t been able to reach thetop most position in passenger traffic cargotraffic or air traffic movement. Even though, ithas made profits every year. The airport is builtat the lowest cost and provides all necessaryamenities as per international standards. It isthe only airport with more internationalpassenger movement than domestic.

BIAL and HIAL have more or less been similarin majority of things like in terms of their financial

performance, both made losses in the initialyear but made up for it. They both have comeup under the BOOT approach of PPP withconcessional agreements lasting for 30 years.They have state of the art infrastructure and allnecessary amenities. Though BIAL has anupper hand in passenger traffic HIAL is notlagging very far.

Thus it can be concluded that ball the 3 greenfield airports are performing well and are settingnew examples for successful implementation ofPPP in Indian Airports.

References

1. Airports Authority of India Airports Authority of India . (2016).Aai.aero. Retrieved 1August 2016, from http://www.aai.aero/public_notices/aaisite_te

2. Airports EconomicRegulatory Authority of India(AERA), Government of India Home Page:: Airports Economic Regulatory Authority of India(AERA), Government of India.(2016).Aera.gov.in. Retrieved 6 August 2016, from http://aera.gov.in/content/

3. BIAL (2016). Bengaluruairport.com. Retrieved 12 August 2016, from http://www.bengaluruairport.com/home.jspx?_afrLoop = 2973793560351321 &_afrWindowMode=0&_adf.ctrl-state=766c6mhc6_4

4. Rajiv Gandhi Hyderabad International Airport | Rajiv Gandhi Hyderabad InternationalAirport | Home .(2016). Hyderabad.aero. Retrieved 3 August 2016, from http://www.hyderabad.aero/traveller.aspx

5. The Official Website of Cochin International Airport The Official Website of CochinInternational Airport .(2016). Cial.aero. Retrieved 11 August 2016, from http://cial.aero/



Abstract

Credit risk is unavoidable part of the banking business. Credit risk refers to the risk ofinability of borrower to repay the principal to meet contractual obligation. This is alsotermed as default risk. The credit risk is assed at the beginning of the loan origination. Thebest way to handle such risk is to identify, quantify, monitor and control upfront. Creditrisk should be monitored and reported to regulatory authorities, as a part of regulatorycompliance. It’s an important strategic planning for any financial institution to build asound Credit Risk Management System (CRMS).

There are multiple risk assessment and mitigation strategies in place to control such risk.It would vary from bank to bank. The primary parameters for any Credit Risk ManagementSystem are ‘ability to repay’ and ‘willingness to repay’. The current Credit Risk ManagementSystems use the static values for the risk parameters. In other words, the values of anyparameters are not validated for any change since the data was collected. This studyattempts to capture and use the dynamic values for the Credit Risk Management system.

Social Media could be a very good source for collecting the value of ‘ability to repay’ and‘willingness to repay’. Though the social media is not an authentic data source to base theCredit risk, we can derive a model which can help better quantify the risk, which can thenbe used for monitoring continually and gets us the most accurate risk index. The Source ofdata includes but not limited to Twitter, Facebook, News Portals, Weather portals, PublicEconomic surveys results published in various social portals.

Key words: Bank, Credit risk, Loan, Risk management, Borrower, Lender.

Introduction

Credit risk emanates from a bank’s dealingswith an individual, corporate, institution etc. Asper the Reserve Bank of India Guidelines (RBI),Each Banks which are under the purview ofRBI, need to have a Credit risk Management

USING SOCIAL MEDIA AS A TOOL FOR MONITORING

CREDIT RISK IN BANKING

Mr. Harish Kamath*Dr. Noor Firdoos Jahan**

*Mr. Harish Kamath, Research Scholar, ISBR Research Centre, Bangalore, Email:[email protected]

**Dr. Noor Firdoos Jahan, Professor, R V Institute of Management, Bangalore.

system in place. There are similar guidelines byvarious competent authorities. The primarypurpose of this is to reduce the Credit risk ofthe Banks and ensure reduced Non-Performingassets (NPA) [i]. In the present credit riskframework, Value of parameters is static in

nature. In other words the value of parametersused for assessing the credit risk at the beginningof a loan origination may have changed but therisk systems do not track them. Same risk datais used for risk monitoring also. The parametersinclude periodic Plant visit, Industry study,employment verification etc.

Social media is term used to paraphrase thegroup of internet based applications ortechnologies that enable people to create, shareor exchange ideas among its members. Socialmedia has its presencein the form of Facebook,blogging and Micro blogging, Twitter,Collaborative projects like Wikipedia, Contentcommunities like YouTube, Social newsnetworking like Digg and Leakernet, Virtualsocial worlds like SecondLife etc.

Social Media has opened avenues ofopportunities in the field of Analytics. There isa huge dataset available for the Analysis ofvarious dimensions of human behaviour. WithSocial media, the data cannot be verified for itstrueness. That’s the downside of the dataset.There have been several commercial usages ofthe Social media dataset. This is used tounderstand the taste of customer for the futureproducts, Feedback from customers on itscurrent range of products. What change peoplewant to see? How often they want changes toproducts etc. Fashion Designers, Consumerdurables, are the key innovators, leveraged thesocial media for its product design and featureaddition or removal.

Banking and Financial institutions have been thewatchers on Social media to leverage thedatasets. Due to the credibility of the data beingposted on the Social media, the Banking andFinancial institutions have been sceptic toleverage such huge treasure of dataset. Social

media contains the dataset which can potentiallybe used to identify any possible credit risk atindividual level or at the portfolio level. Socialmedia contains the dynamic and most currentdata points which can be used to analyse thelifestyle, current status of job, increasedexpenses etc.

Literature Review

Banks are often limited by static dataset andkeep them captured for their credit riskassessment. Credit risk monitoring cannot bedriven by static data points like Salary certificate,IT returns statement etc. These data pointswould vary from month on month. Dynamicnature of lifestyle and social influence wouldhave a positive or negative impact on the creditrisk. Credit risk can arise from either capacityto repay or from willingness to repay. Each ofthese data points is dynamic in nature.

The literatures have been studied in threeprimary areas.

1. Credit Risk – Basic understanding of Creditrisk and opportunity for improvement

2. Sentiment AnalysisBasic understanding andapplication

3. Social Media dataset Facts and figures

1.1 Credit risk

• Credit risk is most simply defined as thepotential that a bank borrower orcounterparty will fail to meet its obligationsin accordance with agreed terms. ii

• “Credit risk is the risk of loss due to adebtor’s non-payment of a loan or other lineof credit.”



The Risk management journal, by Bank forInternational Settlement (BIS) says,

• “Principle 3: Banks should identify andmanage credit risk inherent in all productsand activities. Banks should ensure that therisks of products and activities new to themare subject to adequate risk managementprocedures and controls before being

introduced or undertaken, and approved inadvance by the board of directors or itsappropriate committee”iii

• Credit risk monitoring refers to incessantmonitoring of individual credits inclusive ofOff-Balance sheet exposures to obligors aswell as overall credit portfolio of the bank.iv

Risk Monitoring contains three parts. RiskIdentification, Risk measurement and RiskMonitoring

Risk Identification

All types of risk must be identified and theirlikely effect in the short-run is understood. Abank that has international operations mayexperience different intensity of credit, marketand operational risks in various countries whencompared with a pure domestic bank. Also,even within a bank, risks will vary in its domesticoperations and its overseas arms.

Risk Measurement is also part of Risk

monitoring. Acceptable risk thresholds can beset to generate the alerts, while monitoring therisks.

Risk Measurement

Measurement means weighing the contents and/or value, intensity, magnitude of any objectagainst a yardstick. The objective should be tofind out and understand the exact degree ofrisk elements in each category in the operationalenvironment. While a very simple qualitativeassessment may be sufficient in some cases,sophisticated methodological/statistical modelsmay be necessary in others for a quantitativevalue. In bank lending activity, a simple one –

Source: Global association for Risk professionals. The GARP Risk Series

CREDIT RISK MANAGEMENT, Chapter 1 | Credit Risk Assessment deck Slide 6

page credit rating system along with simplefinancial analysis may be sufficient for a relativelylow credit limit. But for higher credit limits,detailed qualitative and quantitative analysis withsophisticated credit rating models may berequired because the size of the credit limitwould indicate the size of default risk and itsultimate effect on the institution

Risk Monitoring

Keeping close track of risk identificationmeasurement activities in the light of the risk,principles and policies is a core function in arisk management system. For the success ofthe system, it is essential that the operatingwings perform their activities within the broadcontours of the organizations risk perception.

Sentiment analysis

Sentiment analysis (also known as opinionmining) refers to the use of natural languageprocessing, text analysis and computationallinguistics to identify and extract subjectiveinformation in source materials. Sentimentanalysis is widely applied to reviews and socialmedia for a variety of applications, ranging frommarketing to customer service. (Source:Wikipedia)

Sentiment Analysis is now part of commercialapplications. Sentiment Analysis has grownbeyond the Research papers and now beingused in the real-world. It has severalapplications.

Approach to sentiment analysis, is to, find allpositive words in text and increment positivecount for each positive word. Similarly find allnegative words in text and increment negativecount for each word. At the end, which evercount is greater, you can say text is polarized

to that sentiment. There are 3 approachesavailable for performing Sentiment Analysis.

1. Lexicon based - considers lexicondictionary for identifying polarity of the text

2. Machine learning based approach -Needs to develop classification model, whichis trained using pre-labeled dataset ofpositive, negative, neutral content.

3. Combined approach - Which uses lexicondictionary along with pre-labelled data setfor developing classification model.

1.2 Social media Dataset for Credit RiskMonitoring.

Social media penetration

Social media has a large volume of data. Thedataset includes Facebook, Twitter, Instagram,Weather Portals, News feeds, Nationaleconomic Statistics for public consumption etc.Here are the statistics on few of the key Socialmedia components. Source: Pew Researchv

• There are just over 3 billion active Internetusers

• Nearly 2.1 billion people have social mediaaccounts

• 3.65 billion mobile users have access to theinternet via smartphones and tablets

• Close to 1.7 billion people have active socialmedia accounts

• There are nearly 1.4 billion Facebook users

• 47% of all Internet users are on Facebook

• 4.5 billion likes are generated daily

• Twitter has 284 million active users at lastcount



• Google+ chas 363 million users

• Instagram has 300 million users

• 70 million photos and videos are sent daily

• 53% of internet users aged 18-29 useInstagram

• LinkedIn has 347 million registeredmembers

• Viber has over 200 million users

• There are 639 million users on Qzone(China)

• 600 million users on Whatsapp

• Facebook messenger has 500 million users

The usage has gone up drastically over the lastdecade. 65% of adults now use socialnetworking sites – a nearly tenfold jump in thepast decadevi

. The following image shows the usage of socialmedia over the decade. This gives us a richdataset to explore and perform the sentimentAnalysis in the context of credit risk.

Objective of the study

Banks currently uses a risk model, giving variedweights to different parametersvii. Theseparameters will have different degree of

importance. All of these parameters are mostlystatic in nature, which means the data collectedonce are not validated at regular intervals forthese dynamic parameters. This raises the needfor development of dynamic Risk assessment

model, which can perform its risk assessmentbased on the dynamic values. Banks want toreduce its level of Non-Performing Assets(NPA) in Personal loan or mortgage loans bytightening its credit policy. The development ofsuch framework will standardize the judgmentand remove the element of bias and subjectivity.

Method

The Model will leveraging the SentimentAnalysis Methodology to mine the social mediaand segregate the sentiments into positive ornegative in the context of Credit risk

Identify the parameters impacting thecredit risk.

Identify the parameters that affect credit risk ofscoped loan. The first step in the developmentof the model is the identification of the variousrisks and the parameters to be taken intoconsideration. For this purpose, the variousmanuals and websites pertaining to the creditappraisal for corporate loans would be carefullystudied. Credit risk score done by internal riskmonitoring system will be taken intoconsideration. Both quantitative and qualitativeaspects will be taken into consideration whilecomputing the risk levels. Assessment will beundertaken to surface top 20 parameters thatneed to be taken into account while evaluatinga prospect. These parameters would beclassified under two heads namely Willingnessand capability risks. Weights developed inthis study were based on a conceptualunderstanding and the importance attached bypeople proficient in this area.

Obtain the Social media dataset

Social media dataset will be the source ofAnalysis. Data from Facebook, Twitter,

LinkedIn, Job Portals, and Weather Portals canbe obtained for more accuracy.

Perform Sentiment Analysis

Sentiment Analysis is an application of NaturalLanguage Processing which targets on theidentification of the sentiment (positive vs.negative vs. neutral), the subjectivity (objectivevs. subjective) and the emotional states of thedocument. We would label each sentimentwhich can impact eh credit risk negatively orpositively. We will not pay attention to neutralsentiment. There are multiple tools available forSentiment analysis. These are Python NLTK(Natural Language Toolkit), R, TM (textmining) module, RapidMiner.

Perform Discriminant Analysis

Discriminant Analysis can be used to developa function to discriminate between threecategories of risk (moderate risk clients, highrisk clients and very high risk clients). We needto find the factors which contribute themaximum in discrimination. To build thediscriminant model the value of the dependentand the independent variables for the set ofloans can be entered in the SPSS or any othercompetent software and the weights/coefficients for all the parameters can becomputed.

Assign Weightage based on recurrence ofrisk for that parameter

Identify the parameters which are more likelyto impact and assign the relative weightage toother parameters. The number of occurrenceand the Amount which is at stake, if the riskoccurs.



Compute the risk score

Compute the risk score based on the weightageassigned to each of the parameter, derived from

Feedback system

Feedback Mechanism is the critical part of thismodel. The Real-time systems will record theactual default and give the feedback to thesystem. There are cases where the default has

happened from totally un-captured parameter.The Feedback mechanism will help to add thatto the scoring system and make the weightedscoring mechanism more robust.

the Sentiment Analysis. This will help to generatethe alerts for Monitoring system.

Conclusion

The fundamentals of any Credit risk a.k.a.default risk, lies in multiple factors and omissionof the dynamic human factor cannot be ignored.There a huge dataset available in the Internetfor capturing the dynamic human factorsimpacting the Credit risk positively or negatively.

Using the sentiment Analysis, which has beenestablished its credentials over the time. Usingthe statistical models like Discriminant Modelto classify those into Positive or negative in thecontext of Credit risk.

Weightage can be assigned to each kind of eventor label and compute the credit risk score. Thiswill help capture the dynamic risk, and makethe model more robust, which otherwise is notfactored into risk model.

Literature References

iAs per latest RBI guidelines vide RBI/2013-14/62 dated July 1, 2013, an asset, including aleased asset, becomes non-performing when itceases to generate income for the bank.

iiBIS bis.org Basel Committee on BankingSupervision (BCBS):

https://www.bis.org/publ/bcbsc125.pdf

iii Principles for the Assessment of Banks’Management of Credit Risk, it cites this principleabout risk management. (https://www.bis.org/publ/bcbsc125.pdf)

ivCommercial Credit Risk Monitoring &Control Efforts.Linkedin Article on Credit riskmonitoring by Jim RiceManaging Director atSupporting Strategies - Orlando/Rohester

vPew Research CenterInternet, Science & Tech

vi Source: Pew Research CenterInternet,Science & Tech. http://www.pewinternet.org /2015/ 10/ 08/ social - networking - usage -2005 - 2015 / ?beta = true & utm_expid =53098246 -2.Lly4CFSVQG2lphsg-KopIg.1& utm_referrer = http %3A%2F%2Fw w w. p e w i n t e r n e t . o r g % 2 F f a c t -sheets%2Fsocial-networking-fact-sheet%2F

viiCredit risk Monitoring parameters

1. Credit files are neatly organized and cross-indexed;

2. Credit files should not be removed from theinstitution’s premises without the requisite

3. approval;



4. Insurance policies are properly assigned tothe institution and premiums are current;

5. Credit facilities are disbursed only after allcontractual terms and conditions have been

6. met and all required documents received;

7. Security documents are duly executed andproperly protected from fire, theft etc;

8. Collateral value is periodically ascertainedand monitored;

9. The borrower is making timely repaymentson interest, principal and any agreed to fees

10. and commissions;

11. Information on credit provided to thefinancial institution’s management isaccurate and

12. timely;

13. Credit administration responsibilitieswithin the financial institution areadequately

14. segregated;

15. Funds disbursed under the creditagreement are used for the purpose forwhich they were

16. granted;

17. Established policies and procedures, aswell as relevant laws and regulations, arebeing

18. complied with; and

19. Assessments of borrower’s business areconducted through regular inspections.

Source: http://www.eccb-centralbank.org/pdf/credit_risk.pdf

Terminology

For the purposes of this proposal, the followingdescriptions of terms will apply.

‘Origination’ will be used to refer the part ofthe loan processing where the borrower appliesfor new loan and a lender process theapplication. This process generally includes allorganization specific steps from applying to loanto disbursal of funds to the borrower. Theprimary step at this stage is to verify thecapability of the borrower to repay the loan.At present CIBIL score is used as one of thetool to verify the capability of an individual torepay along with one’s Salary certificate, tenureof one’s job or the stream of income asapplicable.

‘Capability’ will be used in the context ofrepayment of the mortgage. Assessment ofborrower’s stream of income at disposal toensure that borrower can repay the mortgagebeyond meeting his regular monthly expenses.

‘Willingness’ will be referred to depict thewillingness of the borrower to repay the loan.Willingness may vary due to various reasonsduring the life of the loan. Those could beconflicting priorities, Social obligations, slowappreciation of property value or moving to outof current location, causing lose interest in thecurrent property subjected to mortgage

‘Loan Servicing’ is the process by which acompany (mortgage bank, servicing firm, etc.)collects interest, principal and escrow paymentsfrom a borrower. In India mostly this is doneby the lender. The other option for loan servicingcould be delegating the loan servicing to thirdparty.

‘Credit risk’ is the Probability of loss from adebtor’s default. In banking, credit risk is amajor factor in determination of interest rateon a loan, Longer the term of loan, usually higherthe interest rate. Credit risk is also called creditexposure. It is the process of identification,measurement, monitoring and control of itsactivities which would have an adverse impacton the money lent

‘CIBIL score’ Credit Information Bureau(India) Limited (CIBIL). This is India’s firstCredit Information Company. CIBIL collectsand maintains records of an individual’spayments pertaining to loans and credit cards.These records are submitted to CIBIL bymember banks and credit institutions, on amonthly basis. This dataset is used with custombuilt analytics and formulas to arrive at credit

risk score for an individual. This score plays avital role to determine the sanction of loan. Thisplays as a credit risk tool during loan origination.

‘Loan origination’ is the process by which aborrower applies for a new loan, and a lenderprocesses that application. Origination generallyincludes all the steps from taking a loanapplication up to disbursal of funds (or decliningthe application).

‘Loan servicing’ covers everything afterdisbursing the funds until the loan is fully paidoff. Loan origination is a specialized version ofnew account opening for financial servicesorganizations. Certain people and organizationsspecialize in loan origination. Mortgage brokersand other mortgage originator companies serveas a prominent example.



Sample Labels determining the sentiments

Krupa V. D.*Sushmitha K. C.**

1. Introduction

Corporate Social responsibility (CSR) meansa doctrine that claims that an entity whether it isgovernment, private corporations or publicorganization has a responsibility to society. CSRis a concept that reduces costs and risks,increases the brand value and reputation,effectiveness and the efficiency of employees,improves transparency, and clarity in the

Abstract:

CSR is a business strategy that works in a world where brand value and reputation areincreasingly seen as an organization’s most valuable asset. It can build the loyalty andtrust that ensure a bright sustainable future. In our complex, global society, corporationsare becoming increasingly visible. These businesses are not judged on their results but ontheir behavior too. Thus CSR should have become an integral part of every aspect ofbusiness life and this brings improvement in financial performance, increases productivity,better risk and crisis management, increased worker commitment, good relations withgovernment and communities, enhanced brand value and reputation this brings to longterm survival and sustainable growth to the business. On the basis of these, this study isunder taken to know whether CSR practice of SHIMUL has impacted on the long termsurvival and sustainable development of the business, the study used structured questionnaireand interview method to collect the data from the respondents. The study has used chisquare method to check two hypotheses and both the alternative hypothesis are acceptedand study reveals that factors of CSR practice of the corporates impacts on long termsurvival and sustainable development of the business. So, there is a need for SHIMUL toimprove the CSR practice and reporting it regularly.

Key words: Survival, Sustainable development, Communities, Integral.

ROLE OF CSR IN CORPORATE LONG TERM SURVIVAL AND LONG TERM

SUSTAINABLE DEVELOPMENT – A STUDY OF SHIMUL, SHIMOGA

*Krupa V. D.., Faculty Member, Department of Post Graduate Studies and Research in Commerce, KuvempuUniversity, Jnana Sahyadri, Shankaraghatta, Shivamogga District, Email: [email protected]

**Sushmitha K. C., Department of Post Graduate Studies and Research in Commerce, Kuvempu University,Jnana Sahyadri, Shankaraghatta, Shivamogga District

working environment of the business house andenhances sustainable development ofcorporates.

According to research by the trade associationbusiness for social responsibility, corporationsreport publicly on their CSR activity to meetthe demands of stakeholders and otherinterested individuals-such as employees,consumers, clients, suppliers, shareholders, law

34 Vol.- 8, Issue - 1, PP 34 - 48, Jan - June, 2016


marks and regulators-who are askingcompanies to be accountable not only for theirown performance, but also for the effect of theirproducts, the performance of their supply chainand the well- being of their own performance,but also for the effect of their own performance,but also for the effect of their products and theperformance of their employees.

In India, the concept of CSR is governed byclause 135 of the Companies Act, 2013, whichwas passed by both Houses of the Parliament,and had received the assent of the President ofIndia on 29th August 2013. The CSR provisionswithin the Act is applicable to companies withan annual turnover of INR 1,000 crore andmore, or a net worth of INR 500 crore andmore, or a net profit of INR 5 crore and more.The new rules, which will be applicable fromthe fiscal year 2014-15 onwards, also requirecompanies to set-up a CSR committeeconsisting of their board members, including atleast one independent director. The Actencourages companies to spend at least 2% oftheir average net profit in the previous threeyears on CSR activities. The ministry’s draftrules, that have been put up for public comment,define net profit as the profit before tax as perthe books of accounts, excluding profits arisingfrom branches outside India.

1. Literature review

Prabjot Kaur made a study on, “CorporateSocial Responsibility: Present scenario inIndia”, He states that, India’s emerging CSRregime and its potential strength and weaknessalso he continued with the corporate reputationis an important strategic asset that contributesto firm-level persistent profitability and affirmsthat strong reputation is linked with superiorfinancial performance and sustainabledevelopment.

Ramendra Singh and Sharad Agarwal made astudy on, “Corporate Social Responsibility forsocial impact: approach to measure socialimpact using CSR impact index”. They statesthat, most companies in India engage with localcommunities near their areas of operations, andthe beneficiaries of CSR activities are generallythe local population, these companies shouldtry to develop scalable models of CSR that canbe extended across the nation using localNGO’s in each geographical area, a very helpfulresource yet at a low cost, scalable models willbe helpful in expanding the socio-economicimpact of CSR activities of the corporate.

Rajeev Prabhakar and Sonam Mishra made astudy on, “Corporate Social Responsibility inIndian organization: an-introspection”, now adays stakeholders are questioning more on CSRinitiatives of the companies today, they arechallenging the companies. It has becomeimperative to incorporate it for stakeholders.

Venugopal, R made a study on, “CorporateSocial Responsibility and the insurance sector”.He states that, it is not enough if a companymakes a profit, if should also play a critical rolein the life of the community. The board ofdirectors of the company has to observe theneeds of their immediate community and takesteps in ameliorating them in a suitable manner,thereby earning the epithet of a ‘good corporatecitizen’. Indian insurers have so far involved inboth direct as well as indirect CSR activities.Apart from being involved indirectly in themobilization of funds for the development ofnational economy, they are also directlyinvolved in many socially responsible causes.The US, insurance companies are the majorcontributors for CSR. They have donated$147mn, also other largest companies theyinvest in funding the building of road, schools

and other public projects. They also providecapital for research expansions throughinvestments in corporate equities and bonds.Any company that needs to call itself a goodcorporate citizen’ ought to spend at least 1%of its previous years pre-tax profit for CSRpurposes.

Nitin Kumar made a study on, “CorporateSocial Responsibility: An analysis of impact andchallenges in India”. He states, that, CSR hasevolved from being regarded as detrimental toa company’s profitability, to being consideredas somehow benefiting the company as a whole,at least in the long run. The challenges facingCSR initiatives in India are lack of communityparticipation in CSR activities, needs forcapacity building of the local non-governmentalorganizations. Issues transparency, non-availability of well-organized non-governmentalorganizations, ect. In the recent years corporatebusiness houses have substantially involvedtowards societal responsibilities. Companieshave started to realise the importance of CSRand initiating the steps towards it. This effortwill also motivate other corporate house to jointhe league and play an effective role inaddressing issues such as access to education,health care and livelihood opportunities for alarge number of people in India through theirinnovative CSR practices.

Ananda Das Gupta made a study on,“Implementing Corporate Social Responsibilityin India: issues and the beyond”. He states that,the government of India initiated corporateresponsibility for environmental protection(CREP) initiated by the Indian governmentrecently in 2003, set guide-lines of non-mandatory norms for 17 polluting industries.Corporate social responsibility is essentially a

new business strategy to reduce investment risksand maximize profits by taking all the key stake-holders into confidence. In the emergingperspective CSR enjoins upon corporations toanalyze profits in conjunctions with socialprosperity. Corporate gives stress on them asthe stake-holders, in a business are not just theshareholders, sustainable development andeconomic sustainability, corporate profits to beanalyzed in conjunction with social prosperity.Thus, ethical business is more a fundamentalneed, emerging trend on the international since.In an ethical business, the main trust is on socialvalues and business is conducted in consonancewith broader social values and the stakeholder’slong-term interest.

3. Objectives of the Study

� To analyze the CSR factors which influencedon the long term survival and sustainabledevelopment of the SHIMUL (ShivamoggaCo-operative Milk Union Limited).

� To give some suitable suggestions foraccelerating CSR initiatives in SHIMUL

4. Research Methodology

4.1 Type of research

This study is an empirical in nature, conductedto know how CSR practice can become toolfor survival and sustainable development of thecorporate sector.

4.2 Scope of the Study

The study conducted to know about theperception of employees about the CSRpractices in the corporates and to analyse howit become tool for survival and sustainabledevelopment of corporates. The study only



restricted to SHIMUL at Shivamogga (District,Karnataka state).

4.3 Sample Design:

� Sampling Method: Convenient samplingmethod is used to select the sample.

� Sample Size: The sample size of this studyis 60 respondents.

� Sample Frame: Employees of SHIMUL.

4.5 Hypothesis

H0: CSR is not a tool for Corporate Long termSurvival and Long Term SustainableDevelopment.

H1: CSR is a tool for Corporate Long termSurvival and Long Term SustainableDevelopment.

4.6 Hypothesis Test:

The outlined hypothesis of the study is testedwith the help of chi square.

4.7 Sources of Data

The study has used both primary and secondarydata.

The primary data of this study has collectedfrom respondents (employees of SHIMUL)through structured interview and questionnairemethod.

The secondary data for this study has collectedfrom published sources such as articles, variouscorporate CSR reports, books, journals andperiodicals.

5. Analysis and Interpretation

Discussion and Conclusion:

Table no - 5.1: Profile of respondents.

The above table shows that, there is an equalproportion of male and female respondents aretaken for this study and majority of them belongsto 18 to 35 age group. All the respondents are

educated and majority of them completed UGand PG and their annual income is more thanRs 2,00,000. Majority of the employeesworking experience is 0 to 20 years.

Table no 5.2: Respondents awareness about CSR activity

(Source: Primary data)

From the above table it clears that, allrespondents are aware about CSR activities ofthe SHMUL.




Table no 5.3: Means through which Respondents came to know about SHMUL’sCSR practice

From the above table it is clear that, majorityof the respondents are aware about CSR

practice through companies website.

Table no 5.4: SHIMUL community Development initiatives under CSR practice

The above table shows that, under CSR thecompany made more investments on

development of local heritage and they haveconcentrated less on other areas.



Figure – 5.1: SHMUL community development initiatives under CSR practice

Table no 5.5: Respondents opinion towards CSR as a tool for corporate long term survivaland sustainable growth

The above table shows that, majority of therespondents strongly agreed that CSR is a tool

for the corporate long term survival andsustainable growth.




Table no 5.6: Factors influenced on the long term survival of the organization throughCSR practice


(SA-Strongly agree, A-Agree, N-Neutral, D-Disagree, SD-Strongly disagree)

H0: CSR is not a tool for Corporate Long term Survival

H1: CSR is a tool for Corporate Long term Survival

The table value for 1% level of significance is32. The table value for 5% level of significanceis 26.30. The computed value is 41.938. Since,the computed value is more than both the table

values. So alternative hypothesis is acceptedand its result indicates that all the factors areinfluenced on the long term survival of theorganization through CSR practice.

Figure – 5.2: Factors influence on the survival of the organization through CSR

Table no– 5.7: Respondents opinion towards sustainable developmentthrough CSR practice

(SA-Strongly agree, A-Agree, N-Neutral, D-Disagree, SD-Strongly disagree)

H0: CSR is not a tool for Corporate Sustainable Growth

H2: CSR is a tool for Corporate Sustainable Growth



The table value for 1% level of significance is32. The table value for 5% level of significanceis 26.30. The computed value is 56.274. Since,the computed value is more than both the table

values. So alternative hypothesis is acceptedand its result indicates that all the factors areinfluenced on the sustainable development ofthe organization through CSR practice.

Figure – 5.3: Respondents opinion about sustainable development through CSR practice

Table no– 5.8: Environmental protection programmes under taken by theorganisation in CSR practice

Under CSR practice the company has undertaken some environmental protectionprogrammes. Among 127 total responses,majority of the respondents opined that, energy

saving programmes and waste recycling are themeasures which is majorly under taken by thecompany and for rest of the programmes theyconcentrated less.

Table no– 5.9: Problems faced by employees from impropermanagement of CSR practices


This shows that, by improper management ofCSR practice the organisation facing certainproblems internally. Among the above problems

less safety for employees and irregular load fromthe top management are the major problemsemployees are facing.




Table no – 5.10: Reasons for improper management of CSR practice.


This shows that, there are number of reasonswhich influenced on the improper managementof CSR practices in the organisations. Amongthose, lack of fund and time are the majorconstraints.

6. Findings

• All the employees in SHIMUL are awareabout the CSR practice conducted in theirorganizations and majority of them are awareabout it through the company website.

• SHIMUL regularly allocating and thebudgeting amount for CSR implementationand it is above Rs 150000 PA.

• SHIMUL regularly providing resources forCSR in the means of money and in kind.

• SHIMUL invested more in local heritage andyouth development as a part of itscommunity investment initiatives under CSRpractice and less concentrated on othercommunity development activities.

• SHIMUL adopted the purchasing policy/quality standards and they conduct theemployees satisfaction survey, regularly asa part of CSR practice.

• All the employees in the SHIMUL agreedthat “CSR is a tool for long term surival andsustained growth”.

• CSR report is not prepared by the SHIMULbut some information is disclosed in websites.

• Employee safety and irregular work is themajor problems recently faced by theorganization by improper management ofCSR practice.

• The potential benefits of the business andnature of the benefits of CSR for anorganization depending on the nature of theenterprise, as a result it is difficult to quantify.

• Majority of employees of the organizationagree that there is a relationships betweenprofitability and CSR activities of theorganization

• Organization adopts energy savings, wasterecycling measures to reduce environmentalimpact.

• The biggest obstacle faced by theorganization to practice CSR is lack ofhuman resources, lack of funds and time.

• Social responsibility of business have createda better image and goodwill to the company.Which will becomes an instrumental inattracting customers, employees and alsoinvestors. Which carries the organisation forlong term sustainable development.

� Results of first hypothesis: H1: CSR is atool for Corporate Long term Survival

• CSR meets clients requirements to improvethe relationship

• CSR improves stakeholders and createsgood relationship with the management

• It also improves economic performance ofthe company

• Motivates top management to performactivities effectively

• It improves companies marketing, publicrelationships and also creates goodcorporate image

• Through its possible for the company to gaincompetitive advantage

• It improves relationship with financialinstitutions

• It has also facilitated relevant accreditationssuch as environmental, quality, health andsecurity etc.

� Results of second hypothesis: H2: CSR isa tool for Corporate sustainabledevelopment

• CSR helps in sustainable development as itgives customer satisfaction and awareness

• CSR helps to customers to get qualityproducts at an affordable rate and it helpsto retain the customers

• It motivates employees to improve moraleand retain with the company

• It increases donarship and volunteerism andalso supports for social integration

• It attracts companies for green and ethicalinvestment. It helps the companies toproduce environmental friendly productsand services

• CSR also helps in protection of naturalresources.

7. Suggestions

• CSR is needed for parent corporates fortheir long term survival and sustainabledevelopment. So the corporates need topractice CSR regularly. Everyone in theorganization needs to recognize their ownrole in promoting CSR and companiesshould also need to provide widerprofessional development activities.

• Training, conferences and seminars shouldbe organized to disseminate and generatenew knowledge and information about CSRpractice.

• A strong budgetary support would definitelyhelp to grow CSR practice and researchrelated to respective organization wouldenhance the organizations contribution.

• Government regulations which aresupporting in this direction could attractmore response from organizations. All thiswould also lead to benchmark for CSRactivities.

• Organization should publish the CSR reportregularly.

• Organization need to involve their CSRactivities which build long term partnershipswith stakeholders which would lead tocreating a strong image and brand identity.

• Companies must set a network of activities



to be taken up in a consortium to tacklemajor environmental issues. It would alsoprovide an opportunity to learn from eachother.

• Accounting bodies need to create CSRaccounting standard which helps to maintainuniform method of CSR accounting.

• CSR activities enhance corporate socialobjective under areas of net incomecontribution. Human resource contribution,public contribution, environmentalcontribution, product or service contribution.

• With the transparency of social cost andbenefits in money terms. However, it isnecessary in order to improve the heads ofreporting in the context of dynamic socio-economic environment.

• The challenges are now the flexible modulesfor the CSR to be implemented, directiveto its arrangement with the corporate world.

• Organizations should conduct periodicreview of the CSR activities which will beconducted by a particular organization.

• Top management support, encouragementto CSR activity is necessary in the form ofproviding information about fund and otherresources.

• Organization need to take steps to reduceenvironmental impact they should followenergy savings, waste recycling, use ofrenewable resources, development ofenvironmental friendly product, mobilitymanagement etc.

• By adopting appropriate technology orinfrastructure, organization can control overthe irregular work, and can improve childrenwork, women rights, employee safety, andfair pay issues.

• In the production process organizationshould improve safety measures toemployees.

8. Conclusion

The CSR practice has definitely become a toolfor corporate long term survival and sustainedgrowth of the organization. The study revealsthat, improper management of CSR led to theSHIMUL to face problems such as employeesafety, women rights and irregular work loadfor employee. Those problems can be expungedby the proper management of CSR practicebecause every good work it really appreciatedby everyone so the CSR by the organization itattracts the people for effective workingprinciples like increasing businesscompetitiveness and market access, creatingshareholder value and increasingly access tocapital, enhancing brand reputation throughcredible assurance on ethical purchasingdecisions, improving employee recruitment,retention and performance by empoweringworkers, improving work-related skills andraising awareness on the enterprise’scommitment to job satisfaction and goodworking conditions, provide safety measuresto employees, provide equal rights to women,risk management and cost saving initiatives,improving product quality, improvingsupply chain management, enhancingoperational efficiency, strengthening stake-holder relationships, enhancing communitydevelopment and support, and showcasingresponsible leadership, practicing CorporateSocial Responsibility in different sectors ofbusiness this can help for the corporates longterm survival and sustainable development.

Reference:

� Ananda Das Gupta, 2014, ImplementingCorporate Social Responsibility in India:Issues and the Beyond.

� Georgina nunez, (July 2008), “PromotingCSR in small and medium enterprices in thecarebbean: survey results”, ECLAC officein Washington.

� Mahammad ghouse, S. and Zakker bhasha,S. “Role of Corporate Social Responsibilityin National Reinforcement” IOSR Journalof Humanities and Social science, Pp 15 –23.

� Nithin Kumar (May 2014), “CorporateSocial Responsibility: An analysis of impactand challenges in India”, AbhinavInternational monthly Refereed Journal ofresearch in management and technology, Vol.3, Issue 5 Pp. 97 – 104.

� Prabjot Kaur (June 2013) Corporate SocialResponsibility: Present Scenario In India,Journal of Commerce and ManagementThought, Vol. 6-3, Pp. 496-511.

� Policy on Corporate Social Responsibility,(June 2015), Board CSR Charter andpolicy.

� Rajeev Prabhakar and Sonam Mishra, (June2013), A Study of Corporate SocialResponsibility in Indian Organization: An –Introspection, Proceeding of 21st

International Business ResearchConference, Rhyrson University, Toronto,Canada, ISBN: 978-1-922069-25-2.

� Ramendra Singh and Sharad Agarwal, June2013, Corporate Social Responsibility forSocial impact: Approach to Measure socialImpact using CSR Impact Index, Indian

institute of management Calcutta, WPS No.729.

� Research Capsule: The Status of CorporateSocial Responsibility in India – A Note,(May 2005), Environmental ManagementCentre, Pp 1 – 12.

� Rich Gautam and Anju Singh, 2010,Corporate Social Responsibility Practicesin India: A study of TOP 500 Companies,Global Business and Management Research:An International Journal, Vol. 2, No. 1, Pp.41 – 56.

� Sanjay Pradhan, Akhilesh Ranjan, 2010,Corporate Social Responsibility in RuralDevelopment Sector: Evidences from India,School of Doctoral Studies European Unionjournal, Issue 2, Pp. 139 – 147.

� Soheli Ghose (December 2012), “A lookinto Corporate Social Responsibility inIndian and emerging economies”,International Journal of Business andManagement Invention, Vol. 1, Issue – 1,Pp. 22 – 29.

� Tejasweeta sunil Mundhe, (January 2013),“Indian ethos and Corporate SocialResponsibility by Indian companies”, OnlineInternational interdisciplinary ResearchJournal, Vol. 3, Issue 1, Pp 118 – 123.

� Uvais. M, and Hafeefa Cholassere (March2013), “Corporate Social Responsibility:Dimensions and challenges in India”,International Journal of Engineering ScienceInvention, Vol. 2, Issue 3, Pp. 27 – 32.

� Venugopal R, Corporate SocialResponsibility and the Insurance Sector,Journal of Business Strategy.



Abstract:

“Control your own destiny or someone else will” - Jack Welch

The aforesaid emphatic statement by Jack Welch speaks volumes about entrepreneurs’personality attributes to meet the challenges of Business Growth. Entrepreneurseffectively utilize their resources to achieve sound economic performance which is thefoundation for profitable results and the progress thereupon. Entrepreneurs face manychallenges from the day one of their venturing into the incubation of the Business enterprisetill they achieve their business objectives and grow constantly.

The dynamic and challenging multistructured activities of enterprise require appropriatecontrolling and decision making capabilities and effective performance. Eventually,entrepreneurs need a set of Personality attributes in order to be effective & successful.One such important Personality attributes is Machiavellianism. Synergizing it with theorganisational performance is a real challenge for the entrepreneurs. This research work isfocused on understanding the role of Machiavellianism in achieving entrepreneurial successand Business Growth.

The current study focuses on the Personality attributes of 100 Medium and Small ScaleEntrepreneurs, who manufacture Automotive Components/OEMs and in turn supply toAutomotive Component Giant BOSCH Ltd. An explorative research was conducted usingsurvey method by administering a structured questionnaire to the Entrepreneurs and theirresponses were collected and analyzed. The research has unearthed that entrepreneurswith higher Machiavellianism are found to be more successful. Hence, without anyexception, every entrepreneur should have higher Machiavellianism to achieve hisentrepreneurial success and Business Growth.

Key words: Business Growth, Entrepreneurial Success, Challenges, Personality Traits,

Machiavellianism.

SYNERGIZING PERSONALITY ATTRIBUTES AND PERFORMANCE FOR

ENTREPRENEURIAL SUCCESS AND BUSINESS GROWTH

*Mrs. MeeraUday, Professor in Management, Bangalore, Email: [email protected]

**Dr. R Krishna, Professor in Management and L & D Consultant, Bangalore,Email: [email protected]

***Mr. C. N. Udayashankar, Director- Techno CNC Pvt. Ltd., Bangalore and Lean Consultant,Email: [email protected]

Mrs. MeeraUday*Dr. R Krishna**

Mr. C. N. Udayashankar***

1. Introduction

Is Machiavellianism an attribute forentrepreneurial success? Why is it important?

Achieving excellence and improving on acontinuous basis is a basic crux of life. Inabsence of improvement, life becomes futile andfrustrating.

Individuals with higher ambition levels and higherachievement orientation, end up becomingentrepreneurs. Their achievement is just thesatisfaction derived out of doing something ontheir own’ itself. Enough reviews & successformula have been deciphered from a largenumber of entrepreneurs. While there are alarge number of entrepreneurs all around, onlya sizable number of them have been able toestablish themselves well in the sphere of theiractivities.

Personality attributes play very important rolein achieving the Entrepreneurs’ success, whichis synonymous with his business success.

The demand for success can be fulfilled onlywhen the entrepreneurs are closely involved insatisfying customer requirements - Rightproduct, Right Quantity, Right Quality, at theRight time, Right place, Right Cost, etc., forthe right set of customers.

Entrepreneurial success is a combination ofthree components-Investor needs, customerneeds & entrepreneurial capabilities. Whilesuccess is the end result of many ingredients, itis also dependent on the success characteristicsof an entrepreneur. Machiavellianism is onesuch important entrepreneurial attribute.

This research work is a sincere effort to identify

whether Machiavellianism contributes to theentrepreneurial success, sustainability andGrowth.

Machiavellianism

• Persons can beclassified into High Machsand Low Machs, according to theirMachiavellian levels.

• High Machs tend to take control, especiallyin loosely structured situations;

• High Machs tend to be more logical,rational and pragmatic than Low Machs

• High Machs are often skilled at influencingand coalition building.

It can be viewed in both positive and negativeconnotations, but, in this research work, it islooked from the positive connotation.

Objectives of the study

Based on the research questions, the researcherset the following objectives for this researchwork:

• To determine Machiavellian levels amongEntrepreneurs of automotive industrysuppliers.

• To ascertain the impact of these traits onentrepreneurial success.

Scope of the study

• Personality traits play very important role inachieving the Entrepreneurs’ success. Thisin turn helps to achieve business objectives.

• This demand for success can be fulfilled onlywhen the suppliers/entrepreneurs are closelyinvolved with the customer to supply: Rightproduct, Right Quantity, Right Quality, Right



customer, Right time, Right place, RightCost, etc.

• This calls for Excellent Entrepreneurshipattribute. The study helps to analyse animportant Entrepreneurship attribute –Machiavellianism that is known to help theentrepreneurs to achieve their businessobjectives.

• The respondents to this study areentrepreneurs - vendors of AutomotiveIndustry, supplying various components suchas raw materials, chemicals, packingmaterials, turned/machine components, etc.to BOSCH, Bangalore.

Operational Definitions of Concepts

(a)Machiavellianism:

• This is an important personality attribute ofentrepreneurs. It is the ability of an

entrepreneur to manipulate people, events,process, and situations for the attainment oforganizational objectives.

• Since Machiavellianism involvesmanipulation of people and resources, itis often viewed in negative connotations;however, it is looked at from a positiveconnotation in this research study. In orderto achieve their objectives, entrepreneursdefinitely need this trait, though they may nottake disadvantage of this trait on theirpeople. While using this trait, they mayensure that their people are safeguarded interms of their interests and may also protectthem from causing any personal damage tothem. Rather using this trait may be strategic.

• Scores of Machiavellian test can range from40 to 160. The higher the score, the higherthe Machiavellianism tendencies.

(a)Performance:

• This refers to the annual sales figures/turnover achieved by the entrepreneurs.

• For the purpose of determining performancelevel of entrepreneurs, data on their annualturnover target and the correspondingachievement for five consecutive years arecollected in order to arrive at their averageperformance, expressed as a percentage totheir target.

• The average performance thus derived is

corroborated with their personality trait-Machiavellianism, to draw out implications.

• Any performance above 90% to the target,on an average for five consecutive years, isconsidered as performance for the purposeof this research work.

Identification, definition and statement ofproblem

Research is always aimed at finding solutionsto problems for whom solutions are unknownyet. A problem is said to be almost half solved

when it is understood and defined better. Thisis of crucial importance in any research process.Hence understanding the problems faced andproviding appropriate solutions is the goal ofany research.

Personality attribute such as Machiavellianisminfluence decision making in business and hence,entrepreneurs need to realize the importanceof such an attribute without which, theirentrepreneurial success may be affected to agreat extent.Successful entrepreneurs possesspersonality attribute that stand them apart fromthe rest. Hence, identifying such a specificattribute that directly contributes to their success,becomes important, especially since a largenumber of factors contribute to success.

The present research enlists the informationabout Machiavellianism as Entrepreneurialsuccess attribute. Therefore, the problemchosen for this study is to determineMachiavellian level among entrepreneursand determine whether Machiavellianismcontributes to entrepreneurial success.

Machiavellianism is required for manipulatingpeople and things, to a certain extent in thepresent management scene. Machiavellianism,if used in the positive direction, results inorganisational effectiveness.

Hence, the main focus of this research workis: Identifying Machiavellianism Level and its’impact on entrepreneurial success, with specialreference to Automotive Industry Suppliers inBangalore.

Materials & Methods - ResearchMethodology

Research involves collection of vital informationfrom data sources. The totality of all the

members of the source is known as population.All the suppliers of automotive components toBOSCH constitute the population of this study.An explorative research design is adoptedfor this study.

Population size: In this study, the number ofautomotive component suppliers to BOSCHis 150.

Sampling technique: Random Samplingtechnique (using Lottery Method) is adoptedin this Research work.

Sample size:

100 suppliers, i.e., 70% of suppliers out ofapproximately 150 suppliers available, areconsidered to be ideal and selected for thisstudy.

After clearly defining the problem chosen forthe study, the researchers determined the datarequired for arriving at a solution for theproblem. A structured Questionnaire designedexclusively for this research work, keeping theobjectives of the study in mind, wasadministered to the identified respondentschosen by using random and convenientsampling techniques. Initial results suggested arelationship between Machiavellianism andentrepreneurial success, sustainability andGrowth.

Results

All the respondents seem to experientially opinethat shrewd planning and executing abilities/skills along with rational thinking processcontribute to entrepreneurial success,sustainability and Growth.Their opinion is alsocorroborated by their high Machiavellian levelsscored by them through the scientificallydesigned Questionnaire administered to them.



Incidentally, their average annual businessperformance over the last Five Years is also

Tables and Graphs

Few important questions and related tables, graphs and analysis are presented in thefollowing section.

Question: While planning your business activities, please specify your thinking process?

Table: Thinking Process

found to be 103% to their respective target.

It is interesting to observe that none hasopted to think emotionally while planning theirbusiness activities.Ubiquitously, all therespondents seem to be smart enough to thinkrationally while planning their business activities.

It is well known that a business activity is aserious issue and demands thinking logically sothat the actions can be justified. When achievingpre-determined business objectives are aconcern, business activities will have to be

Fig: Thinking Process

definitely rationalistic. Perhaps theserespondents may have been driven by thesethoughts. While the entrepreneurs have to bepassionate about their entrepreneurial

objectives, their business planning will have tobe positively rationalistic. That is how all therespondents may have responded so.

Machiavellianism Score of 100 Entrepreneurs

Fig: Machiavellianism Score of 100 Entrepreneurs

Majority of the entrepreneurs are found to beHigh Machs, which is an important observationas the Business leaders need to think and actpractically, take pragmatic decisions in orderto ensure that their business enterprise is running

smoothly and flourishing year on year. Businessenterprises in the current situation requireleaders who are pragmatic and articulate, whichdepicts the nature of Machiavellianism.



Machiavellianism attributes Mean and Std. Deviation Scores

Table: Attribute Mean and Std. Deviation Scores

Fig: Attribute Mean and Std. Deviation Scores

Entrepreneurs have given more prominence tohonesty and ethical practices, probablybecause, these entrepreneurs may believe that

honesty is the best policy. After all, honesty &ethical practices are integral characteristics ofan entrepreneur.

Table: Machiavellianism Score - Mean and Std. Deviation

Mean Machiavellianism score of all the 100Respondents is 67.40

Entrepreneurs might have often experienced theneed for converting the situations into favourableones to them and hence Machiavellian scoreseems to be 67.40.

Likert scale used in this research study,provides a score range from a minimum of 20to a maximum of 100 and from 40 to 120 whena correction factor of 20 is added to the same.The higher the score, the higher theMachiavellianism tendencies.

The average Machiavellianism score iscalculated by taking an average of all the scoresscored by the 100 respondents, in order todetermine the Machiavellianism level. Hence,

the Range of the Mach score varies from aminimum of 40X100= 4000 to a maximum of120X100=12000. When the scores of all the20 questions for the 100 responses are summedup, it adds up to 6740. When a correction factorof (100*20=2000) is added to this, it comesto 8740 (as shown).

Sum of Scores for 100 Respondents=6740;correction factor=100*20=2000

Sum Total score=6740+2000=8740,AverageMach score for 100 Entrepreneurs=8740/100=87.40

Thus, the average Machiavellianism scoreof the 100 respondents is 87.40, which fallsunder the bracket of High Mach.


Fig: Graph: Machiavellianism Score - Mean and Std. Deviation


Table: Correlation Scores – Machiavellian Attributes vs. Average Turnover

**Correlation is significant at the 0.01 level (1-tailed).*Correlation is significant at the 0.05 level (1-tailed).

Fig: Correlation Scores – Machiavellian Attributes vs. Average Turnover

Interpersonal skills, Farsightedness andpragmatism have a correlation of 0.359, 0.189,and 0.084 with Locus of control respectively.

Machiavellian attributes Interpersonal skills,

Pragmatism and Farsightedness have a positivecorrelation with Average Turnover probablyentrepreneurs with good interpersonal skillshave an ability to control the happenings in theirlives.

Source: Primary Data

Hence, the average performance of 100respondents over 5 year’s period is: 95%

Therefore, it can be concluded thatPersonality attribute when it is synergisedwith Performance results inEntrepreneurial success and BusinessGrowth.

Discussion and future scope of Research

Regulating one’s own thinking, planning andexecuting skills along with rational thinkingprocess as per the dynamics of the marketsituation and strategizing approaches with aconstant eye on the bottom lines of businessoperations demands an important Personalityattribute, viz. Machiavellianism. Self-reliance onone’s own ability to handle structured andunstructured situations has a direct relationshipwith entrepreneurial success.

Other investigators elsewhere have alreadyestablished the role of Machiavellianism inacademic accomplishments and scarcely in fewother industries. Its contribution to individualsuccess is substantiated in this research as well.

Since the results of this research work supportthe hypothesis of the researchers thatMachiavellianism impacts entrepreneurialsuccess, now another set of questions arise inthe minds of the researchers as to whetherMachiavellianism alone can make a successfulentrepreneur. Or are there any other contributingtraits for the entrepreneurial success? Researchreports abound claiming the influence of fewother personality traits Viz: Locus of Control,Achievement Orientation, Extroversion &Introversion, Authoritarianism, etc. This thirstfor further knowledge paves way for furtherresearch.

References

• Journal of Business and IndustrialMarketing, 2007, Volume 22 Issue 2,pp84-96.


• http://sustainablebusinessforum.com/greeneconomy/51927/ceos-see-sustainability-engine-growth-industry-sectors-split-priorities.

Table showing Annual Business Performance of the entrepreneurs


• Race effects on the employee assessingpolitical leadership: a review of Christieand Geis’ (1970) Mach IV measure ofMachiavelli By Jennifer Moss | Journalof Leadership &Organizational Studies- Winter, 2005 .The MachiavellianChallenge to Business Ethics GeorgeBraguesUniversity of Guelph-Humber,February 2008.

• “An Empirical Study on the Relationshipbetween Entrepreneur’s Traits andEntrepreneurial Success” Control,Automation and Systems Engineering,2009. CASE 2009. IITA InternationalConference onIssue Date: 11-12 July2009 ,On page(s): 261 – 265.

• Morris Boydston, Rich MountainCommunity College; Lisa Hopper, RichMountain Community College; and AlanWright, Henderson State University.

• http://www.designcouncil.org.uk/resources-and-events/designers/sustainability-and-growth/

• http://ec.europa.eu/enterprise/policies/s u s t a i n a b l e - b u s i n e s s / f i l e s /brochure_sustainable_industry_150711_en.pdf

• Harvard Classics, Vol. 36, Part 1-ThePrince-Niccolo Machiavelli: http://hbr.org/1963/05/managing-for-business-effectiveness/ar/1

• Randolph and Blackburn, ManagingOrganizational Behaviour :Tata McGrawHill, New Delhi,1975, pp-160-164

• Richard Christie and Florence L. Geis,studies in Machiavellianism (Orlando,Fla: Academic press ,1970).

Dr. T. V. Raju*Praveen Kumar R.**

Abstract

Corporate Governance (CG)refers to a process ofadheringrules and policies establishedto controlCorporateFunctions.Generally, Corporate Governance essentially involvesAccountability and an act of Balancing the Interests of the many stakeholders in a company- these include its shareholders, management, customers, suppliers, financiers, governmentand the community at large. Since Corporate Governance also provides the frameworkfor attaining a company’s objectives, it encompasses practically every sphere ofmanagement, from action plans and internal controls to Performance Measurement andCorporate Disclosure. Financial discipline and Corporate Governance plays an importantrole in the transformation process of Accountability and Responsibility towards thestakeholders of the Business Organization. Though, every business organization’s primeobjective is to make profits and this objective will sustain in the long run if the business isrun by being transparent.Banks have a greater Responsibility and Accountability towardsstakeholders in achieving the desired objectives. This paper deals with a survey on theParameters of Corporate Governance Practices from Customers Perspective.

Keywords: Corporate Governance (CG), Balancing the Interests, Accountability andResponsibility.

PARAMETERS OF CORPORATE GOVERNANCE PRACTICES IN INDIAN

BANKS FROM CUSTOMERS PERSPECTIVE

*Dr. T.V. Raju, Director, R V Institute of Management, Bangalore

**Praveen Kumar R, H.O.D. Business Management, Bishop Cotton Women’s Christian College, Bangalore,Email: [email protected]

Introduction

Definition/Meaning of ‘Governance’1

Is “The Establishment of policies, andcontinuous monitoring of their properimplementation, by the members of thegoverning body of an organization. It includesthe mechanismsrequired to balance the powers

of the members (with the associatedaccountability) and their primaryduty ofenhancing the prosperity and viability of theorganization.”

Governance2 is a synonym for government,or “the act or process of governing, specificallyauthoritative direction and control”.

1 http://www.businessdictionary.com/definition/governance.2Webster’s Third New International Dictionary (1986:982)



Governance3, in general terms, means theprocess of decision making and the process bywhich decisions are implemented (or notimplemented), involving multiple actors. Goodgovernance is one which is accountable,transparent, responsive, equitable and inclusive,effective and efficient, participatory and whichis consensus oriented and which follows the ruleof law.

Corporate Governance4

Corporate governance refers to “The set ofsystems, principles and processes by which acompany is governed. They provide theguidelines as to how the company can bedirected or controlled such that it can fulfil itsgoals and objectives in a manner that adds tothe value of the company and is also beneficialfor all stakeholders in the long term.Stakeholders in this case would includeeveryone ranging from the board of directors,management, shareholders to customers,employees and society. The management of thecompany hence assumes the role of a trusteefor all the others.”

Corporate Governance is based on principlessuch as conducting the business with all integrityand fairness, being transparent with regard toall transactions, making all the necessarydisclosures and decisions, complying with allthe laws of the land, accountability andresponsibility towards the stakeholders andcommitment to conducting business in an ethicalmanner.Fundamentally, there is a level ofconfidence that is associated with a companythat is known to have good corporate

governance. The presence of an active groupof independent directors on the boardcontributes a great deal towards ensuringconfidence in the market. It is also known tobe one of the criteria that foreign institutionalinvestors are increasingly depending on whendeciding on which companies to invest in. It isalso known to have a positive influence on theshare price of the company. Having a cleanimage on the corporate governance front couldalso make it easier for companies to sourcecapital at more reasonable costs.

According to Shri Kumar Mangalam Birla“fundamental objective of corporategovernance is the ‘enhancement of the long-term shareholder value while at the same timeprotecting the interests of other stakeholders.”

Global Genesis of concept of CorporateGovernance

The seeds of modern Corporate Governancewere probably sown by the Watergate scandalin the United States. As a result of subsequentinvestigations, US regulatory and legislativebodies were able to highlight control failuresthat had allowed several major corporations tomake illegal political contributions. This led tothe development of the Foreign and CorruptPractices Act of 1977 in USA that containedspecific provisions regarding the establishment,maintenance and review of systems of internalcontrol.

This was followed in 1979 by the Securitiesand Exchange Commission of USA’s proposalsfor mandatory reporting on internal financial

3What is corporate governance? Lisa Mary Thomson, ET Bureau Jan 18, 2009.

4What is corporate governance? Lisa Mary Thomson, ET Bureau Jan 18, 2009.

controls. In 1985, following a series of highprofile business failures in the USA, the mostnotable one of which being the Savings andLoan collapse, the Treadway Commission wasformed. Its primary role was to identify the maincauses of misrepresentation in financial reportsand to recommend ways of reducing incidencethereof. The Treadway report published in 1987highlighted the need for a proper controlenvironment, independent audit committees andan objective Internal Audit function. It calledfor published reports on the effectiveness ofinternal control. It also requested the sponsoringorganizations to develop an integrated set ofinternal control criteria to enable companies toimprove their systemic measures.

Accordingly COSO (Committee of SponsoringOrganizations) was born. The report producedby it in 1992 stipulated a control frameworkwhich has been endorsed and refined in the foursubsequent UK reports: Cadbury, Rutteman,Hampel and Turnbull. While developments inthe United States stimulated debate in the UK,a spate of scandals and collapses in that countryin the late 1980s and early 1990’s ledshareholders and banks to worry about theirinvestments. These also led the Government inUK to recognize that the then existing legislationand self-regulation were not working.

Companies such as Polly Peck, British &Commonwealth, BCCI, and Robert Maxwell’sMirror Group News International in UK wereall victims of the boom-to-bust decade of the1980s. Several companies, which sawexplosive growth in earnings, ended the decadein a memorably disastrous manner. Suchspectacular corporate failures arose primarilyout of poorly managed business practices.

It was in an attempt to prevent the recurrence

of such business failures that the CadburyCommittee, under the chairmanship of SirAdrian Cadbury, was set up by the LondonStock Exchange in May 1991. The committee,consisting of representatives drawn from thetop levels of British industry, was given the taskof drafting a code of practices to assistcorporations in U.K. in defining and applyinginternal controls to limit their exposure tofinancial loss, from whatever cause.

With this background of genesis of CorporateGovernance practices across the globe, it maybe pertinent to recall the earliest definition ofCorporate Governance by the Economist andNoble laureate Milton Friedman. According tohim, “Corporate Governance is to conduct thebusiness in accordance with owner orshareholders’ desires, which generally will beto make as much money as possible, whileconforming to the basic rules of the societyembodied in law and local customs.”

Corporate Governance Practices in Banks

Adoption of Corporate Governance practicesin banks has begun to reflect changes in thestyle of governance and their growth pattern.Before we embark on further study of its rolein banking system, a quick look at the pace ofgrowth of banking sector will help us crystallizeour views. The following sections will providea snap shot of how the banks have broadlydone in the recent years. These sections willalso attempt quantification of performance ofbanks in the capital market which has a bettercorrelation with the policy of corporategovernance measures.

More emphasis is laid globally on evolving bestpractices in corporate governance. Goodgovernance is the sine-quo-non of running



organisations to enhance their prospects ofgrowth. The standard of governance ofcompanies has also come to be known as thepulse of advancement of civilization. A set ofwell-run companies in a country can contributeto the enhancement of stake holder value thatgoes to enrich the society. Hence it is essentialthat the principles of corporate governance andits regulatory system needs to be reinforced tokeep up a productive corporate culture. Therehave been glaring instances of failure of keycompanies across the globe, more particularlyin the last few years exposing the vulnerabilityof corporate sector to failures in governance.Such failure of companies has multipleramifications. Beginning with the identity of thecompany, all the stake holders and even thesociety at large are forced to experienceirreparable loss.

Corporate Governance as a school of thoughtis globally practiced as an ethical, board drivenpolicy prescription that can put companies ona sustained growth trajectory having potentialityto contribute substantially to the society.Presence of a large number of such successfulcompanies builds up a productive environmentforging a constructive alliance with theeconomic development of the country. Henceestablishment of a high standard of corporategovernance is necessary for consistency ineconomic development. But many times certaincompanies are unable to effectively disseminatethe principles of corporate governance to thetop management stream leading to their failure.Such failed institutions are detrimental to thestakeholders and welfare of the society.

Globalised economies seeking to maximisestakeholder values many times build up atendency to fall prey to look for short term gainsleading to breakdown of systemic controls and

many times resulting in the closure of the units.The demise of the corporate begins with thebreak down in adhering to the ethical values,sacrificing good governance and succumbingof the management to the temptation to makelarge non existing profits for earning lump sumbonus and higher remunerations. In thesustainable interest of the organisation,effectiveness of checks and balances inprotecting the value system of the organisationassumes more importance.

Broad Principles of Corporate Governanceguidelines for Banks

Effective corporate governance practices areessential to achieving and maintaining publictrust and confidence in the banking system,which are critical to the proper functioning ofthe banking sector and economy as a whole.Poor corporate governance may contribute tobank failures, which can pose significant publiccosts and consequences due to their potentialimpact on any applicable deposit insurancesystems and the possibility of broadermacroeconomic implications, such as contagionrisk and impact on payment systems. In addition,poor corporate governance can lead marketsto lose confidence in the ability of a bank toproperly manage its assets and liabilities,including deposits, which could in turn trigger abank run or liquidity crisis. Indeed, in additionto their responsibilities to shareholders, banksalso have a responsibility to their depositors.

The OECD principles define corporategovernance as involving “a set of relationshipsbetween a company’s management, its board,its shareholders, and other stakeholders.Corporate governance also provides thestructure through which the objectives of thecompany are set, and the means of attaining

those objectives and monitoring performanceare determined. Good corporate governanceshould provide proper incentives for the boardand management to pursue objectives that arein the interests of the company and itsshareholders and should facilitate effectivemonitoring. The presence of an effectivecorporate governance system, within anindividual company and across an economy asa whole, helps to provide a degree ofconfidence that is necessary for the properfunctioning of a market economy.”

From a banking industry perspective, corporategovernance involves the manner in which thebusiness and affairs of banks are governed bytheir boards of directors and seniormanagement, which affects how they function:

Set corporate objectives:

• Operate the bank’s business on a day-to-day basis;

• Meet the obligation of accountability to theirshareholders and take into account theinterests of other recognized stakeholders;

• Align corporate activities and behavior withthe expectation that banks will operate in asafe and sound manner, and in compliancewith applicable laws and regulations; and

• Protect the interests of depositors.

Supervisors have a keen interest in soundcorporate governance as it is an essentialelement in the safe and sound functioning of abank and may affect the bank’s risk profile ifnot implemented effectively. As the functionsof the board of directors and seniormanagement with regard to setting policies,implementing policies and monitoring

compliance are key elements in the controlfunctions of a bank, effective oversight of thebusiness and affairs of a bank by its board andsenior management contributes to themaintenance of an efficient and cost-effectivesupervisory system. Sound corporategovernance also contributes to the protectionof depositors of the bank and permits thesupervisor to place more reliance on the bank’sinternal processes. In this regard, supervisoryexperience underscores the importance ofhaving the appropriate levels of accountabilityand checks and balances within each bank.Moreover, sound corporate governancepractices are especially important in situationswhere a bank is experiencing problems, orwhere significant corrective action is necessary,as the supervisor may require the board ofdirectors’ substantial involvement in seekingsolutions and overseeing the implementation ofcorrective actions.

Genesis of Corporate Governance inIndian Banks

As a prelude to institutionalize CorporateGovernance in banks, an Advisory Group onCorporate Governance was formed under thechairmanship of Dr. R.H. Patil. Following itsrecommendations in March 2001 anotherConsultative Group was constituted inNovember 2001 under the Chairmanship of Dr.A.S. Ganguly: basically, with a view tostrengthen the internal supervisory role of theBoards in banks in India. This move was furtherreinforced by certain observations of theAdvisory Group on Banking Supervision underthe chairmanship, Shri M.S. Verma whichsubmitted its report in January 2003. Keepingall these recommendations in view and thecross-country experience, the Reserve Bank



initiated several measures to strengthen thecorporate governance in the Indian bankingsector.

Indian banking system consists of Public/Privatesector banks having a basic difference betweenthem as far as the Reserve Bank’s role ingovernance matters relevant to banking isconcerned. The current regulatory frameworkensures, by and large, uniform treatment ofprivate and PSBs in so far as prudential aspectsare concerned. However, some of thegovernance aspects of PSBs, though they havea bearing on prudential aspects, are exemptfrom applicability of the relevant provisions ofthe Banking Regulation Act, as they aregoverned by the respective legislations underwhich various PSBs were set up. In brief,therefore, the approach of RBI has been toensure, to the extent possible, uniform treatmentof the PSBs and the private sector banks inregard to prudential regulations.

In regard to governance aspects of banking,the Reserve Bank prescribed its policyframework for the private sector banks. It alsosuggested to the Government the sameframework for adoption, as appropriate,consistent with the legal and policy imperativesin PSBs as well. Hence the endeavor is tomaintain uniformity in policy prescriptionsto the best possible extent for all types ofbanks.

Since role of Independent Directors form thebasis for effective implementation of corporategovernance in banks, it is necessary toreproduce the code of conduct prescribedunder SCHEDULE IV [section 149(7)] asprescribed in Companies Bill 2012 for theguidance to the companies. These arereproduced from the Companies’ bill 2012.

Literature review:

HemaliChokshi, (2015)Corporate governanceis an age old concept which provides for a setof transparent relationships between aninstitutions management, its board, shareholdersand other stakeholders. Corporate governanceis gaining centre stage in the recent times dueto failure of corporate and wide dissatisfactionamong the people with the way corporateworks and hence became a widely discussedtopic worldwide. Bank and Financial Institutionsare the backbone of the economic sector ofany country. The healthy economic conditionof a nation is depicted through the soundfunctioning of its banks. Banks form a cruciallink of a country’s economic sector hence theyare universally regulated industry and theirwellbeing is imperative for the economy.Working of banks is different from othercorporate in many important respects, and thatmakes corporate governance of bank not onlydifferent but also critical. Hence corporategovernance is conceptually different for banks.If a corporate fails, the fall outs can be restrictedto the stakeholders, but if a bank fails, theimpact can spread rapidly through otherbanks with potentially serious consequencesfor the entire financial system and themacro economy. Thus though variousguidelines are provided for working of a bank,corporate governance cannot be overlookedor discarded. Regulations, guidelines andcorporate governance are complementary toeach other in banking industry.

Lev Ratnovski, Luc Laeven, Hui Tong 2014Bank distress during the recent crisis causedsignificant damage to the real economy.Appropriately, the policy response focused onstronger bank supervision and regulation. Thiscolumn asks if there is a role for improvements

in bank corporate governance. Based on theliterature the authors suggest that better riskmanagement, regulation of pay, and enhancedmarket discipline can help make banks safer.However, corporate governance cannotsubstitute for strong supervision: it can at bestprovide a helping hand.

Michael Pomerleano, Robert E.Litan V.Sundararajan 2002 Policymakers and analystsare still sifting through the wreckage of the Asianfinancial crisis of 1997 and the subsequent crisesin Russia, Turkey, and Argentina to discern keylessons so that similar crises will not recur. Somelessons are by now well understood. Peggedexchange rates can encourage excessiveborrowing and expose countries to financialcollapse when foreign exchange reserves rundry. Inadequate disclosures by both privatecompanies and public bodies can lead to similardangers. Although many factors undoubtedlycontributed to these crises, it is now widelyrecognized that each suffered from a failure in“governance,” and in particular a failure ingovernance in their financial sectors.Accordingly, the World Bank Group, theInternational Monetary Fund (IMF), and theBrookings Institution devoted their fourth annualFinancial Markets and DevelopmentConference, held in New York from April 17-19, 2002, to the subject of financial sectorgovernance in emerging markets. Thisconference report summarizes some of thehighlights of the conference, whose fullproceedings will be published as a Brookingsbook in the fall of 2002.

Shashank Pant & Anish Ohlan 2015 Corporategovernance is gaining center stage in the recenttimes due to failure of corporate and widedissatisfaction among the people with the waycorporate works and hence became a widely

discussed topic worldwide. CorporateGovernance is now recognized as a paradigmfor improving competitiveness and enhancingefficiency and thus improving investors’confidence and accessing capital. If a corporatefails, the fall outs can be restricted to thestakeholders, but if a bank fails, the impact canspread rapidly through other banks withpotentially serious consequences for the entirefinancial system and the macro economy. Thusthough various guidelines are provided forworking of a bank, corporate governancecannot be overlooked or discarded.Regulations, guidelines and corporategovernance are complementary to each otherin banking industry.

A.P. Pati 2006 Banks being the most influentialinstitutions in the financial sector theirgovernance is of crucial importance. The postimplementation scenario of corporategovernance policies in Indian banking, whichwas undertaken after the recommendations ofAdvisory Group (2001) and others, has broughtmixed outcomes. Along with qualitative changesin disclosure practices most of the banks haveshown handsome profit and low NPAs.Statistically significant correlations ofgovernance with important financial variableson expected lines have been found for bankingin India. Strong impact of governance has alsobeen observed for all the variables in publicsector banks and in all scheduled commercialbanks. A greater degree of disintermediation inthe financial sector has put pressure on the bankdeposit mobilization and on the other side theopening of economy has brought more globalintegration with an adverse impact on loandisbursement. The growth of other channels ofsavings, growth of capital market and thepossibility of full capital account convertibility



in future will put bank governance for a litmustest. More dispersed ownership, withdrawal ofsafety nets, reduction of pre-emptive norms,more exposure to market discipline and spiritedimplementation of various measures arerequired for ensuring better governance inIndian banking.

Hamid MehranLindsayMollineaux 2012Weidentifies the tension created by the dualdemands of financial institutions to be value-maximizingentities that also serve the publicinterest. We highlight the importance ofinformation in addressing the public’s desire forbanks to be safe yet innovative. Regulators canchoose several approaches to increase marketdiscipline and information production. First, theycan mandate information production outside ofmarkets through increased regulatorydisclosure. Second, they can directly motivatepotential producers of information by changingtheir incentives. Traditional approaches to bankgovernance may interfere with the informationcontent of prices. Thus, the lackof transparencyin the banking industry may be a symptomrather than the primary cause ofbadgovernance. We provide the examples ofcompensation and resolution. Reforms thatpromote thequality of security prices throughinformation production can improve thegovernance of financial institutions. Futureresearch is needed to examine the interactionsbetween disclosure, information, andgovernance.

Dr RanaZehraMasood 2015 The fundamentalobjective of Corporate Governance is toenhance the long-term shareholder value whileprotecting the interests of other stakeholders,Maximizing long-term shareholder value in alegal and ethical manner, Ensuring fairness,

courtesy and dignity in all transactions withinand outside the Bank with customers,employees, investors, partners, competitors, thegovernment and the society, Open transparent,responsible and merit-based management.

Rajat Deb 2013 Corporate Governance hasfast emerged as a benchmark for judgingcorporate excellence in the context of nationaland international business practices. Fromguidelines and desirable code of conduct somedecade ago, corporate governance is nowrecognized as a paradigm for improvingcompetitiveness and enhancing efficiency andthus improving investors’ confidence andaccessing capital, both domestic as well asforeign. What is important is that corporategovernance has become a dynamic concept andnot static one.

Objectives of the Study

1. To analyse the scope of CorporateGovernance in Indian Banks.

2. To analyse the relevant Parameters ofCorporate Governance and its Effectiveness

3. To study which Parameters have receivedMajor importance

Research Question

To identify which criteria’s Parameter have beenconsidered important by the respondents?

Research Methodology

The Research was based on a Primary Surveyconducted on the Respondents by administeringa set of questionnaires prepared on the basisof Likert’s 5 point scale and Nominal Scale.

Respondents Category

Data Analysis

Respondents were administered 5Likert’s 5point Scale focussed on the following:Attributesof Good Corporate Governance in IndianBanks for InvestmentCriteria.Attributes ofGood Corporate Governance in Indian BankingSector, should Corporate GovernanceStandards be enforced through Regulations orshould they be Principle based and rate ofimportance of the factors in improvingCorporate Governance Standards.

Respondents were administered Nominal scaleclassified into Very Important, Moderateimportant and Not Important and focussed onthe following:Effectiveness of Audit Committeein Preventing Fraud, Achieving the Maximum

Effectiveness in terms of Good CorporateGovernance and Biggest Risk to CorporateGovernance in India.

Limitations of Research

1. The Research done based on survey methodis just an understanding on variouscategories of very important, ModerateImportant and Not Important Parametersof Corporate Governance.

2. The number of respondents for the surveyis very less.

3. Generalization of the findings cannot bedone. Since it is based on limitedrespondents.

5 Scales were adopted from “An Empirical Investigation of Corporate Governance Scenario in Public VsPrivate Banks In India” – Dr. DR. MAMTA BRAHMBHATT, International Journal of Marketing, FinancialServices & Management Research, Vol.1 Issue 10, October 2012,



Analysis and Findings

Part-A:

B. The analysis on the Parameters focussed on Attributes of Good Corporate Governance.(Taken on Likert’s 5 point scale.) shows the following:

1. Presence of a Strong and Independent Board of Directors and Means of CommunicationRanks 1st.

2. Appropriate Governance Structure Ranks 3rd.

3. Adequate committee Structure Ranks 4th.

4. High Level of Disclosure Ranks 5th.

5. Share Holding Pattern 6th.

A. The analysis on the Parameters focussed on Good Corporate Governance for InvestmentCriteria (taken on Likert’s 5 point scale.) shows the following:

1. Adhering to all Legal Compliance Ranks 1st.

2. Ensuring Share Holders Value and Transparency of Financial Statements Ranks 2nd.

3. Sound Risk Management Principles Ranks 4th.

4. Ensuring Ethical Practices Ranks 5thand

5. Protecting Minority Shareholding Interest Ranks



C. The analysis on the Parameters focussed on Corporate Governance enforcement throughregulations or Principle Based. (Taken on Likert’s 5 point scale.) Shows the following:

1. Strongly Regulatory Review Mechanisms Ranks 1st.

2. Completely enforced through regulations Ranks 2nd.

3. Principle based with Moderate Regulations Ranks 3rd.

4. Completely Principle Based Standards Ranks 4th.

D. The analysis on the Factors in Improving Corporate Governance Standards (taken on Likert’s5 point scale.) shows the following:

1. Improvement in risk Management Processes Ranks 1st.

2. Considerable Enhancement in Financial Disclosure Ranks 2nd.

3. Enhancing Rights of Minority Shareholders Ranks 3rd.

4. Enhancing the Power of Independent Directors Ranks 4th.

Part-B



A. The analysis on the Parameters focussed on the Opinions about the importance of Reportingto ensure a High Level of Transparency and Disclosure. (Taken on Nominal Scale) shows thefollowing:

1. 45 Respondents agree as Very Important.

2. 15 of them agree it is Moderate Important and

3. 3 of them agree as Not Important

B. The analysis on the Parameters focussed on the Opinion about the Effectiveness of AuditCommittee in Preventing Fraud? .(Taken on Nominal Scale) shows the following:

1. 33 Respondents Agree as Very Important

2. 27 of them agree it is Moderate Important and

3. 3 of them agree as Not Important.

C. The analysis on the Parameters focussed onBanks achieving the Maximum Effectivenessin terms of Good Corporate Governance.(Taken on Nominal Scale) shows thefollowing:

1. 26 Respondents Agree Yes

2. 15 of them agree No and

3. 22 of them say Don’t Know.



Conclusion

The Survey is a mere attempt to know theopinions of Customers of various categorieson the selected Parameters of CorporateGovernance. This study can also beconsidered to know the extent of theknowledge and general expectations ofcustomers regarding Corporate Governancepractices in Indian Banks.

This study establishes further scope oninvestigation and enhancement of Knowledgeon the above topic.

References

• Hemali Chokshi, 2015 CorporateGovernance in Banking Sector- IndicatingTransparency or Translucency by LawMantra Online Monthly Journal.

• Lev Ratnovski, Luc Laeven, Hui Tong2014 VOX CEPR’s Policy PortalResearch-based policy analysis andcommentary from leading economists.

• Michael Pomerleano, Robert E. Litan V.Sundararajan 2002 “StrengtheningFinancial Sector Governance in EmergingMarkets”.

• Shashank Pant & Anish Ohlan 2015journal.lawmantra.co.in p 136

• A.P. Pati 2006, Does CorporateGovernance Matter in Indian Banking?Policy Implication on the Performance.Indian Institute of Capital Markets 9thCapital Markets Conference Paper.Available at SSRN.

• Hamid Mehran Lindsay Mollineaux 2012Corporate Governance of FinancialInstitutions Federal Reserve Bank of NewYork Staff Reports, no. 539 January2012; revised February 2012 JELclassification: G01, G21, G32, G39.

• Rajat Deb 2013Journal of BusinessManagement & Social Sciences Research(JBM&SSR) Volume 2, No.5, P 36

Web sites:

• www.rbi.org.in

• www.sebi.gov.in

• www.sbi.co.in

• www.iibf.org.in

Abstract

Education is a platform that offers skills to cope with the challenges of the world. Differentlyabled individuals rather need more facilitation through Special Educators who work withcompassion & enthusiasm and equip them with the required life skills. The current Researchdescribes the factors that Motivate Special Educators in NGOs in Bangalore. Interview,observation and document review data, collected from 50 Special Educators from among150 of them, are used to describe and explain motivational factors of Special Educators.Findings indicate that, Empathy for the Special Children, Challenging & Interesting workand Salary are some of the factors that precisely motivate special educators in Bangalore.The Hypothesis that ‘more than 50% of Special Educators in Bangalore are highly motivated’is found to be true and hence it is accepted. Co-workers, family pressure and inflexibilityin work timings are the de-motivating factors that negatively influence the special educators.There is a need for special education teachers to receive the moral and material supportappropriate to their level of responsibilities. Research findings reveal a positive correlationfound between the job design factors and teachers’ motivation. It is observed that, there isno significant difference in the special education teachers’ choice of job motivation factorsdue to differences in their gender, age, level of special education training/education, yearsof experience and type of disability served. Findings and conclusions of the research workclose-in on suggestions that, the special education allowances should be reviewed regularlyto compensate for the challenges posed by the nature of the job of these teachers, providewith an adequate working environment with resources and materials necessary to facilitategood teaching and to boost their morale and make them part of curriculum developmentin special education.

Keywords: Education, Differently abled, Special Educators, Motivational factor, Teacher,Life Skills.

FACTORS THAT MOTIVATE SPECIAL EDUCATORS IN NGOS

IN BANGALORE

Dr. Ramesh T. A. *

Dr. R. Krishna **

1. Introduction

Education is the process of facilitating learning.Knowledge, skills, values, beliefs, and habitsof a group of people are transferred to other

*Dr. Ramesh T. A., Founder Director, Proquo Technologies (I) Pvt. Ltd., Email: [email protected]

** Dr. R. Krishna, Professor in Management and L&D Consultant, Bangalore,Email: rmservices2000@ gmail.com

people, through storytelling, discussion,teaching, training, or research.

The term “disability” broadly describesimpairment in a person’s ability to function,



caused by changes in various subsystems ofthe body, or to mental health. The degree ofdisability may range from mild to moderate,severe, or profound. A person may also havemultiple disabilities. Another term used for themis “Differently-abled”.

Special Schools serve children with Disabilities.They are different from Main stream schoolsas they don’t follow any specific curriculum butIndividual Development Programme will becreated in consultation with Parents by theSpecial Educators who play a vital role in theoverall progress of the disabled person. SpecialEducator is an individual with various specializedskills to teach and improve the overall progressof a disabled person. Special Educator workswith passion, love, affection and dedication.

Review of selected Literature

Why do we need motivated Special Educators?The answer is survival (Smith, 1994).Motivated Special Educators are needed in ourrapidly changing workplaces and EducationSystem. Motivated Special Educators helpNGOs survive.

Motivated Special Educators are moreproductive. To be effective, NGOs need tounderstand what motivates employees withinthe context of the roles they perform. Of all thefunctions a NGO performs, motivating SpecialEducators is arguably the most complex.

Educating learners with special needs involveslong teaching hours with little observablestudents’ progress and lack of perceivedsuccess on the job can affect the teachers’motivation to teach (Schmid and Nagata,1983). In support of this notion RoK (1999),asserts that special education teachers workwith children, some of whom have severe to

profound impairments. It further states thatsome children require the physical support ofthe teacher while their pace of learning too slowthus needs a lot of patience on the part of theteacher.

Need for the research

The researcher has decided to research thissubject in Bangalore due to following reasons:

1. Previous data was not available on thissubject

2. Researcher’s interest in a SpecialEducation

3. Hardly any studies were conducted onMotivational factors of a SpecialEducator

4. Outcome of the research might helpvarious NGO Managements to fill thegap by introducing schemes to improveMotivation of Special Educators.

Scope of the research

This research is vital. The researcher has triedto identify the Motivational factors that influenceperformance of Special Educators inBangalore.

The research covered an understanding of whatmotivates Special Educators and how werethey motivated. Motivation gives confidence,enthusiasm, increases commitment to work andhelps in constant positive energies to work withsocially less privileged persons.

The researcher had carried out this research inBangalore in Karnataka. He chose 50 SpecialEducators from among about 150 of them, whoare working with various small to medium sizeSpecial Schools run by NGOs in Bangalore.

Inputs of Special Educators were the sourcesof data related to this research.

Limitations of the research

Every research will have its own limitations. Thisresearch is carried out under the followinglimitations:

• There are many types of organizationscatering education to special children. Thisresearch is confined to special educationprovided by small and medium sized NGOsin Bangalore only.

• There are many educators all around. Thisresearch covered special educators whocater to mentally challenged, hearingimpaired, visually challenged, etc., only.

• While there are more than 150 organisedspecial educators in Bangalore, this researchcovered 50 of them only.

• There are about 60 small and medium sizedNGOs working in the field of specialeducation in Bangalore. The researcherrandomly selected about 20 of them, fromamong whose Special Educators, whonumber more than 100, 50 of them areselected.

Research design

This research employed an Explorative andDescriptive method, using surveyapproach.

Sampling Technique

There are about 150 special educators inBangalore which constitutes the population.Hence, 30% of the population, i.e. 50 of themare taken into consideration for the purpose ofprimary data collection. They are selected

based on convenience. In other words, NGOsare selected by Convenient Samplingtechnique, while the Special Educators in eachNGO are then selected at Random. Therefore,it is Random Sampling Technique.

Data Collection

Primary data is collected from the Specialeducators working in different NGOs inBangalore, by administering a structuredquestionnaire & interview method. Thequestionnaire, with closed & open endedquestions, was developed in consultation withthe research guide. It is also subjected toCronbach Alpha test to establish its validity &reliability, using item analysis. At a CronbachAlpha value of 0.810, it is found to be highlyvalid & reliable.

Secondary data is obtained from the literaturesurvey in journals, books, HRM text books andreports available through internet & othersources.

Field work

The researcher called on the said respondentspersonally to administer the questionnaire forcollecting the necessary data and conductedpersonal interview for a hands-on experience.Name, Age, Gender, Marital status, Years ofExperience, Highest Qualification, Training inSpecial Education & Service DisabilityCategory of the respondents and Name andArea of the School, etc. are captured as partof the Survey.

Findings of the Research work

In current survey, it is found that majority of therespondents are happy to moderate extent.Generally it is observed that the NGO’s wherethese special educators work, offer them a not



so good a pay scale compared to otherindustries.

This shows that these special educators do not

attach high priority to money, but they workbecause of other factors.

Serving category of disability by the respondents:

Majority of the respondents feel that their joboffers them a significantly a good workingcondition to the extent of moderate to good.Female respondents, constituting 54% of all therespondents, feel that their working conditionvaries from great or to moderate extent.

In special schools run by NGOs where amountof salary is less, but provided a good sense ofsecurity, make the special educators motivatedenough to continue to work for the organization.

In this case, 40% of the female respondentsfeel secured, either to moderate or great extentcompared 12% of male respondents. This maybe one of the reasons that female special

It is observed that majority of 62% of therespondents also feel that their organizationprovides them a good opportunity foradvancement to the extent of either moderateor good. This is one of the major factors forretaining the employees by the NGOs.

educators tend to feel secured by the way theNGO’s operate, which may offer them flexibilityor good work conditions. 22% of all therespondents feel ‘Not’ secure in their currentjob, may be due to various reasons, like industry

recession, social status, peers or stress at work.10% of all the respondents feel sense of securityto the extent of ‘Great’, which is a very positivesign to the organization.

In case of special education, the recognition bythe parents of special children boosts the moraleof special educators to a great extent, which isreflected during the survey.

A positive stroke from their senior, peer orparent makes the special educators to work tothe extent of feeling of oneness. In the currentsurvey, 44% of female respondents either feel

recognized either to the extent of ‘often’ or‘many times’ and this may be due the reasonthat females being more sensitive andunderstanding, compared to the males (26%).Recognition may be tangible or in-tangible, butany form of recognition is appreciated.Definitely, recognized special educators willsurge forward for their work.



It is observed that, 46% of the all therespondents feel their work to be ‘some of thetimes’ as challenging and another 38% of themfind it to be so ‘most of the times’. Overall, itreflects that special education is a challengingwork. This is one of the factors which is keepingtheir motivation level high. Higher the degreeof challenge (which can be coped with), higherthe motivation level. It is also observed that28% of the female respondents feel their workas challenging ‘most of the times’, probably duethe factors like interest, flexibility, progressionand pressure, to which most females arenormally quick to respond.

Teachers who have to work constantly withspecial needs learners have to deal daily withthe emotions aroused by them, which,sometimes, can be painful and stressful.Educating learners with special needs involveslong teaching hours with little observableprogress and lack of perceived success on thejob, can affect the teachers’ motivation to teach(Schmid and Nagata, 1983). In this currentsurvey also, we can observe this, as 54% of allthe respondents feel that they are performing

well ‘sometimes’ and out of whom, 36% ofthem are female respondents.

40% of all the respondents feel that they areperforming well either ‘most of the times’ or‘always’, which may be due to high morale orthe factors such as coping strategy, experience,good working conditions, etc..

Participation in decision making by asubordinate is assumed to result not only ingreater job satisfaction, but also in higherproductivity. The current survey reflects that58% of all respondents feel that they get anopportunity for independent thought and action,which may be evident from the information thatthe NGO’s where they are working, providethem every opportunity to learn and use theirspecific skills. However, results by Lewin etal., (1999) suggest that under some conditions,higher productivity may be achieved by usingmore autocratic methods. Probably because ofthis reason, 28% of them have given a negativeresponse by mentioning that they don’t getopportunity for independent thought and action,but this a minor data.

The current survey reveals that majority of therespondents feel their work to be interesting tothe extent of ‘small to great’, this may be dueto the fact that the special educators werelooking for varied, stimulating and creative jobobjectives and work activities, i.e., a job thatallows them to express and develop theircreative side.

Cole and Walker (1989) argue that manyresponsibilities of special education teachersmay be viewed as “dirty work”, at least by thesociety at large.

Having these above factors in mind, we canobserve in the current survey that 94% of allthe respondents feel that they yield positiveresults to the extent of ‘small to great’, which isreally a positive sign for the special educationsystem as a whole. 54% of female respondentsfeel that they yield positive results to the extentof ‘moderate to great’, probably this due tothe fact that, females have more patience,perseverance and are focused.

Teaching material is the main source of aids usedin special schools to teach special children. Theyplay a vital role in practicing, re-modelling, roleplay, etc., Generally, NGO’s who run thespecial schools will not be able to provide theappropriate teaching materials on time, due tofinancial issues and lack of technical knowledgein creating or maintaining the same.

In the current survey, it is observed that, therespondents provided positive response,mentioning that the availability of the teachingmaterial was to an extent of ‘some of the times’to ‘always’.

There is a big gap between the course thestudents undergo and the work they would beperforming during their career. This may be dueto curriculum structure or covering moresubjects in minimum time or evaluation methods,etc. 80% of the respondents feel that the trainingthey underwent is meeting the reality, whichshows that the special education trainingcurriculum follows practical oriented methodsto sticking to the theory.

Contrary to the above, 52% of all therespondents, did not feel interference in theirwork due to routine duties and paperwork,among whom, 38% of them were femalerespondents. Agreeing to the above studies,48% feel that there as an interference in theirwork due to routine duties and paperwork, tothe extent of ‘small’, ‘moderate’ and ‘great’.In general, the special schools, will have to havelot of paperwork like documentation of daily/weekly/monthly reports, individual developmentprograms, checklists, guidelines, etc., on acontinual basis, which is a time consumingactivity. Higher interference may bring downthe morale due to stress in managing time andactivity.



90% of all the respondents feel that theircolleagues are either cooperative to the extent

of ‘moderate’ or ‘great’, out of which 56% arefemale respondents.

More than half of the responds are highlymotivated and more than one third feel theirmotivation level to be average. Motivatededucators will give a positive result and theybecome more productive compared to the lessmotivated educators, as they influencenegatively. Overall, the personal, organizationaland social objectives of special educations aremet optimistically.

More than half of the responds are highlymotivated and more than one third feel that theirmotivation level is average, which is a positivesign. The lower side of the result may be due tovarious factors such as time, stress level, mood,not understanding the question, etc.

Personal loyalty is felt more because of variousfactors like charisma, ethics, values, moralresponsibility, possessiveness, attachment, etc.This is one of the major factors because ofwhich the labor turnover is less in countries likeIndia, where loyalty to the employer is viewedas ethical. There are several instances wherefor over three decades, continuous service isoffered with the same employer, i.e., entry toretirement, with the same employer. But the

trends are changing widely, but still, during thiscurrent survey, it is observed that therespondents feel stay with the organizationbecause of their personal loyalty to theemployer.

Special Educators work with passion, love,affection and dedication. They generally tendto build a special bondage and relationship withtheir students, so that the objectives are met.As these educators work with socially underprivileged children, lot of attachment will be builtduring the course of teaching.

They participate in empowering the parents,siblings and their families and society as a whole.High motivation is achieved only when theperson enjoys what he does and has belief inhis strength and focuses on the goals. It’s moreof emotional bonding because of which thespecial educators tend to give results than justteaching them autocratic way. 10% of therespondents feel that they don’t have specialbondage with their students, which may be atemporary phase, because special education issuch a field where lot of stress, patience,continuous learning, creativity and challenging

work is needed. Other factors such as peerpressure, cooperation from management,timelines, wages, etc., would have triggeredthem and might be reactive to the situation.

Maslow’s hierarchy of needs theory illustratesthat workers need a wage sufficient to feed,shelter & protect them and their familiessatisfactorily. This implies that pleasure comesfrom something the task leads to, such asmoney.

But in the current survey, Salary as a motivationfactor, is ranked fourth, which may be because,most of the respondents are females and theymay not be the primary bread winners of thefamily. Surprisingly, male respondents are alsoclaim to be happy to the extent of moderate(13) to great (2) out of 17 respondents. In thecurrent survey, opportunity to use personal skillsis ranked at fifth, above the good workingcondition and job security. This may be due tosatisfaction felt more when opportunity to usepersonal skills is provided.

Most employees also value locations that areclose to home, offer cleanliness, adequate tools& equipment and buildings that are in goodconditions, among others. Because of the samereason, in the current survey, good workingcondition is a motivation factor, ranked at sixth,above job security. Employees will look forpersonal growth in their work and will activelyseek out new responsibilities. Probably due tothis reason, Job security and personal growthin the organization are ranked at eight and ninthplace as motivation factors. Many times, thespecial educators look for policies to be moreflexible, but in reality, that mayn’t be possiblefor the management to offer, as these will bethe least priority for them to run the organization.Hence, in the current survey, it is observed that

the respondents ranked this as a lastmotivational factor for them as they may not begetting good support from the management. Itis mostly true in all other industries also.

36 of 37 respondents mentioned that thespecial children are the major motivatingfactor. This might be due to the reason thatthe special education is a field where empathy,love, passion, affection are prioritized. 18 ofthe respondents also mentioned that Salaryis their second motivation factor. Other thanthese two, job security, social recognition,cooperation from management, jobsatisfaction, working environment, etc. arelisted.

Most of the respondents feel that theirrelationship with their colleagues is not goodand a de-motivating factor. As mentionedearlier, generally, people enter into specialeducation as in-service, part time job. But later,they find it interesting & challenging andcontinue in the same field.

As they will not have proper qualification andskills, they tend to feel factors like qualification,handling pressure, etc. as de-motivating factors.Experienced and qualified professionals alsofeel the pressure, but they cope with themquickly.

Out of 24 respondents, 22 of them list ‘specialchildren’ as the factor to bring back theirmotivation level high. Other factors listedare Salary and Family support. Personalbonding and commitment/ empathy to helpspecial children are the factors that drive thespecial educators to work productively.Probably because of this reason, whenever theyare de-motivated, they tend to spend time withthem.



Hypothesis framed

• Null Hypothesis: Ho- More than 50% ofSpecial Educators in Bangalore are highlyMotivated.

• Alternate Hypothesis: H1- The number ofSpecial Educators with high motivation areless than 50% in Bangalore.

From the findings of the research, it is evidentthat, 57% of special educators in Bangaloreare highly motivated. Therefore null hypothesisis found to be true and hence it is accepted.Consequently the alternate hypothesis is untrueand therefore it is rejected.

Contribution of the Research work:

• Empathy for the Special Children,Challenging & Interesting work and Salaryare the factors that precisely motivate specialeducators in Bangalore.

• Co-workers, family pressure and inflexibilityin work timings are some of the de-motivating factors that negatively influencethe special educators.

• The research has come out with suitablesuggestions and recommendations and thesame are listed in the following paragraphs.

• The research has provided definite insightinto the current motivational level of specialeducators.

Conclusions of the research

The current research explains the complicatednature of the work of special education teachers.This research breaks down teachers’ work intospecific job factor categories. The findings ofthis research are hoped to lead to greater anddeeper exploration of this matter concerned

among special education teachers in futurestudies.

The main task for the stakeholders is not merelyto ensure that the key elements highlighted inthe present research are present, but also tostate what these elements are and how theyare vital in improving teacher motivation.

Based on the findings of the present research,there is a crucial need to address the factorsaffecting the motivation of special educationteachers. There is a need for special educationteachers to receive moral and material supportappropriate to their level of responsibilities.

The special education allowances should bereviewed constantly to compensate for thechallenges posed by the nature of the job ofthese teachers. This will make it possible forthem to live with dignity and not be forced toengage in additional income generating activitiesin order to make up for the low pay.

The special education teachers should beprovided with an adequate working environmentwith resources and materials necessary tofacilitate good teaching and to boost theirmorale.

They should be able to receive in-servicetraining and to attend workshops and seminarsregularly in order to share ideas and to keep intouch with new trends and developments in thefield of special education.

The special education teachers should obtaincontinuous support and feedback from theiradministrators through organised forums wherethey can openly exchange views and opinions.

They should be included in all activitiesconcerning special education. They should alsocontribute to national debates on special

education as they possess valuable experienceas practicing classroom teachers constantly intouch with students with special needs. This canconsequently enhance their motivation andconfidence in the system.

The teachers should also be represented incurriculum development in special educationsince they can recommend what is workable,based on their experience.

The curriculum should be adapted to thediversity of special learning needs. The specialeducation component should be incorporatedinto teacher education curriculum at all levelsof teacher training.

Frequent seminars, workshops and refreshercourses should be organised for teacherseducating special needs students which willenable them to update their skills, methods andstrategies for dealing with their students, helpingto enhance their confidence and job motivation.Similarly, teachers need to be provided withthe opportunity to interact with fellow colleaguesfrom other

special schools in conferences with the aim ofpresenting experiences, views and knowledgeand to simply encourage each other.

Administrative personnel in charge of the issuesof special education need to receive frequentin- service special education to enable them toacquire a working knowledge of specialeducation so that they can handle these mattersadequately. Preferably, qualified persons withdisabilities should be appointed toadministrative posts.

Suggestions and Recommendations:

This research analyzed the special educators’work by delineating it into various work

categories. In doing so, more detailedinformation has been obtained and thus moreprecise procedures and actions can be takento improve the motivating potential of teachers’work.

A positive correlation is found between the jobdesign factors and teachers’ motivation. Specialeducation teachers in the current research cite“workload”, “satisfaction with management”,“coworkers” as demoralizing factors. Sometrends in the results concur with the theory byHerzberg, which posits that extrinsic job factorsusually cause dissatisfaction to the employees.Herzberg’s also shows that hygiene factorsaffect the context in which work is conductedand when such factors are not gratified, negativeattitudes are created producing jobdissatisfaction.

Measures should be taken such as reducing theclass size, workshops on team work andteachers’ workload and establishing forumswhere the teachers can air their views as wellas their problems and experiences to the specialeducation administrators. Such forums shouldbe organized regularly to enhance positiverelations between the teachers and theadministrators, while at the same time improvethe working conditions of the teachers.

The current research found that some specialneeds children often require the physical supportof the teacher. Furthermore, their learning paceis slow, which can be often frustrating and hence,requires a lot of patience among the teachers.

Curriculum planners should be in a position toaddress issues concerning extra burdens thatexceptional students may present to theteachers to attend to and hence, introduce waysof reducing them. When teachers becomeoverwhelmed with unreasonable workloads,



they become frustrated in their efforts toprovide appropriate teaching for the students.The potential for laxity and negligence may behigh especially among teachers in crowdedclassrooms. This, therefore implies that forlearning to be effective, teachers in specialschools need to be allowed to handle smallerclasses, while regular classroom teachers, whointegrate special needs students need to beallowed to have fewer such students in the lightof the extra demands that are placed on them.

Many teachers report that their daily work withstudents constitutes only a part of theirresponsibilities and that the planning involvedin Individualized Education Programs (IEP)and counseling students, among others, involveafter school and weekend time. It is importantthat ways of compensating teachers for this extratime are explored.

Possibilities such as the provision of teacher-aides and team teaching may allow the specialeducation teachers adequate time to handlesome of these extra responsibilities duringregular school days. Rather than reducinginstructional effectiveness, these proposedstrategies should actually increase the qualityof instruction.

Scope for future research:

The present research can be extended to:

- To include the schools run by the Public/Large NGO organizations, viz., BHEL,Military Schools etc., and State and CentralGovernments.

- To other disability sectors like Autism,ADHD, Cerebral Palsy, Neurologicaldisorders, Psychiatric disability, etc.

- To include all the special educators inBangalore to ascertain the results of theresearch more accurately.

- To include all the special schools catering toall the disability sectors in Bangalore.

Bibliography and References:

Books

• The Laws of Motivation by Richard Denny

• Teacher morale, job satisfaction andmotivation by Linda Evans

• Directorate of Census OperationsKarnataka: Census of India 2001, ‘Dataon Disability’ India/state/district’Bangalore.

Articles

• Key Strategies to raise Teacher Morale andimprove School Climate by MagendriPerumal, South Africa (2011)

• Factors Affecting Teachers Motivation byDr. Muhammad Tayyab Alam, Head,Department of Research and DevelopmentFoundation

• Teacher career motivation in specialeducation in China by FENG Yan of Centerfor Special Education Needs Education andResearch, University of Northampton(2008)

• Training and Motivation of Special EducationTeachers in Greece by Ilias Athanasiadis,Assoc. Prof., University of Aegean,Department of Primary Education Rhodes,Greece,

• Loving Our Differences Motivation andSpecial Education by Hope M. Jordan,Ph.D., Professor of Education, RegentUniversity, USA

Websites

• http://www.joe.org/joe/1998june/rb3.html

• http://brj.asu.edu/vol30_no1/art9.pdf

• http://specialed.about.com/b/2003/09/20/lacking-motivation.htm

• http://www.naset.org/2404.0.html

• http://www.ibe.unesco.org/International/ICE47/English/Natreps/reports/kenya.pdf

• http://www.acsa.org

• http://www.ers.org

• http://www.hcs.harvard.edu/~jus/0303/bishay.pdf

• Teacher Career Motivation and ProfessionalDevelopment in Special and InclusiveEducation in China by Yan Feng, Universityof Northampton, UK (Pg 21-22), by SensePublishers, Netherlands

• http://upetd.up.ac.za/thesis/available/etd-09092004-092328/unrestricted/01thesis.pdf

• www.ccsenet.org/res

• http://www.ccsenet.org/journal/index.php/res/article/viewFile/4645/4993

• https://higherlogicdownload.s3. amazonaws.com/SPED/04bdc7a0-1ec9-4eaa-b61c-677439532d1a/UploadedImages/Journal_2010/Loving_Our_ Differences__Jordan.pdf

• http://www.osba.org/Resources/Article/Employee_Management/Motivating_Teachers_to_Improve_Instruction.aspx



A STUDY ON SOURCES OF SIZE EFFECT IN INDIAN STOCK MARKET

WITH SPECIFIC REFERENCE TO NSE

Jayavaram Suma Meghana *

Abstract

Including India, in many of the countries in world the extensively documented in capitalmarkets is the size effect. This project is all about examining the sources of size effect inIndian market with specific reference to NSE. The data for the studyis considered from2011 to 2015 to find whether size effects the operating, financial and liquidity characteristicsof the firms. The sample for the purpose of the study consists of 5 large capital companiesand 5 small capital companies based on the market capitalization. This study measuresStock Liquidity, Operating Profit, Asset Turnover, ROCE, Debt Equity, Interest Coverage,Current Ratio, Dividend Payout Ratio, Distress Level and Institutional Ownership. Thesecharacteristics were used to carry out ANOVA to find the effect of size in the stock market.Out of 13 measures it is found that 9 measures stated that the operating, financial andliquidity characteristics substantially differentiates small cap firms from that of large capfirms.

Key words: Size Effect, Stock Market, NSE, Operating and Financial Characteristics,Stock Liquidity.

*Jayavaram Suma Meghana, Associate, KPMG Global Delivery Center, BangaloreEmail: [email protected]

Introduction

For the organizations to raise money one of theimperative sources is the stock market.Organizations can trade publicly or can raiseextra monetary capital for the development inpublic market by offering the shares of theorganization and giving possession rights tothem. This gives the ability for the investors tosell the securities quickly and easily because ofliquidity afford by the stock market. For thisfeature of stocks, investors are attracted toinvest in stocks than in other less liquidinvestments. Companies can actively increasethe liquidity position by trading in their ownshares.

Share prices and some different assets are afundamental part of the elements of financialdevelopment as found ever. Rise in the stockmarket is an indicator of an upcoming economy.It is told that securities exchange is consideredas a vital marker for financial strength andadvancement of a nation. Increment in businessinvestment is connected with ascend in shareprices. Share prices likewise affect the utilizationof households as their wealth relies upon thespeculation. Therefore for the smoothoperation of monetary framework especially incontrol of the conduct of the stock market,Central banks tend to keep an eye. This smoothfunctioning encourages economic growth anddevelopment in low expenses and promotes

employment opportunities. In this way itcontributes to the increase in country’sprosperity.

Investment strategy based on size was foundto offer economically possible additional returnsand this “size effect” leads to investment strategyof arbitrage which could be explained as buysmall firm stocks and sell short large firm stocks.Usually small firms are less liquid and areneglected more by the institutional investors.Everyone perceives small firms are having lowoperating profitability along with financialleverage. Further, there is a belief that small firmshave more presence in certain sectors that areperforming very poor in the economy likechemicals, textiles, consumer durables etc.,whereas large firms are found in high profitablesectors like IT, banking and FMCG. But inreality size effect is not the only factor for anysector premium it depends on specific factorsrelated to firms. This study is exhaustive and itis a rich contribution on the security market.So the knowledge about this issue and theextent of impact of size effect on stock marketis very essential for an investor to assess therisk and effectively exploit them to get maximumreturn. This is an interesting topic foracademicians, researchers and policy makers.This study not only helps investors but alsouseful for mutual fund managers and financialanalysts for framing the investment strategiesthat are based on size of the firms to get extranormal returns in the stock market in Indiancontext.

Theoretical Background:

There are certain anomalies exist in the stockmarket that attracts the interest of the investors.Without any warning these anomalies willappear, disappear and reappear in the stock

market that affects the stock prices. They areSize effect, January effect, Low Book Value,Neglected Stocks, Reversals, Days of theWeek and Dogs of the Dow.

• Size effect is one of the major anomaly thattells about the small firms outperform.

• January Effect says that stocks which arenot performed well in the fourth quarter ofthe last year likes to perform well in themarkets in January. This effect leads to morepressure on selling before January and thereis excess buying pressure after January toavoid the tax loss selling.

• The third anomaly is the low book valueindicates that stocks with below averageprice to book ratios gives market beatingbetter performance in the market.

• The fourth anomaly is neglected stocksusually occurs on less liquidity stocks whichdo not have even minimum support fromanalysts. These stocks will do well as thesecompanies are identified by the investors.Neglected stocks have lower volatilitythough there is correlation between theperformance and size.

• The fifth anomaly is Reversals shows thatcompanies at the either corners of theperformance range will tend to show thereverse action over a period of time. In stockmarket, the company that performs wellyesterday can become the underperformerin today’s market and vice-versa. It iscommon that stocks that are over-pricedshows under performance whereas stocksthat are underpriced outperform well in stockmarket.

• The next anomaly is days of the week shows



that stocks tend to move more on Fridaysthan Mondays creating a bias towardspositive market performance on Fridays.Investors may have more interest towardstrading, and they can allot time for readingabout the market on weekends and feelsgloomy to trade on Monday are some ofthe psychological factors that support thisanomaly.

• The last anomaly is the Dogs of the Dowmeans that investors should select the stocksto invest in based on the Dow JonesIndustrial Average which have certain valueattributes. According to this theory, investorsselect 10 highest Dow yielding stocks andtake only 5 stocks from that list which arehaving low absolute stock price and holdthose for a year. The highest Dow yieldingstocks are underperformers relatively andthose are expected to outperform later.

Review of Literature:

Pandey and Sehgal (2015) analyzed BSE 500companies with the information from October2003 to January 2015. They found that profitsdiminish monotonically along with the size ofthe firm by controlling the penny stocks. Theygot vigorous findings for various options sizemeasures, for example, market capitalization,net fixed assets, net sales, total assets, networking capital, and enterprise value. Theyfound there was an opposite seasonality effectand non-synchronous exchanging inclination instock market. It was observed that size effectis clarified by the market, size, value andbusiness cycle elements whereas liquidity andmomentum elements have very little role.

Prasad and Verma (2013) clarified that aroundthe world in the securities exchange, one of the

prominent anomalies observed was the sizeeffect. This study finds out whether the portfolioof small stocks yields higher returns vice-versa.And also finds out whether there was a sizeeffect in Indian securities exchange. From April2001 to March 2010 of monthly returns of theS&P CNX 500 index was the sample theyconsidered. Two equal portfolios wereconstructed by taking 30 smallest and largeststocks by taking total assets and marketcapitalization as criteria. The result of thecorrelation analysis exhibits that the size effectwas not present in the Indian securities exchangeas the returns on portfolio of small stocks arenot totally different from the returns of portfolioof the large stocks.

Subramanian (2012) examined the presence ofasset pricing anomalies which includes size,liquidity, momentum, accruals, value,profitability and net stock issues in India. Theeffect of size is one of the most groundedirregularities that had 4.4% contrasts betweenenormous stock and small stock companies.Accruals, stock issues and returns were directlyrelated with each other whereas profitability andreturns were indirectly related with each other.CAPM does not clarify these oddities with therejection of new stock issues. The Fama French(FF) model can catch the values, profitabilityand accruals. Size and short term momentumwere consistent and hence continue to causechallenge to rational asset pricing in India. Thesteadiness of size and momentum anomaliesmay recommend that there is role for extra riskfactors in returns.

Welc (2011) perceived small firms carry higherinvestment risks than that of larger firms becauseof higher money related and working risks.Empirical research exhibited that small

companies would fluctuate with largecompanies by their long term ordinary returnsand variability in those benefits. As regards tostatistical implication, scope, stability anddirection of firm size and long term risks andreturns relationship the findings of the studywere a long way from being unmistakable. Theyconsidered polish securities exchange for thestudy and analyzed the size effect on it in themiddle of 1999-2011 years by utilizing electivemeasures for organization size. They affirmedthere was a solid negative relationship exists inthe middle of size of the organization and longterm return on stocks and it is significantstatistically.

Shijin et.al (2007) inspected the risk-returnattributes of regular stocks in Indian businesssector. To discover the way of relationshipbetween three elements to be specific marketrisk, size and value they projected autoregressive method, Granger-Causality tests andvariance decomposition analysis. Theydiscovered market risk proxy effectivelyaffected returns in securities exchange in India.There was causal relationship between marketrisk variable and non-market based measures.This study gave better comprehension withrespect to the size, value and market riskoutcome on stock prices to speculators in India.

Tripathi (2003) explained that including Indiafor most of the world capital markets, size effecthas been extensively documented. Theyexamined the causes of the size effect in Indianstock market. They tried the distinction of smallfirms with expansive firms considerably throughworking, budgetary and liquidity attributes.They also confirmed whether small firms areinnately more dangerous than large firms. Theobservational results highlight the covering ofsize and value effects i.e., BE & ME whereas

in US they were observed to be an autonomousrisk components. The findings may havesuggestions for mutual fund administrators andother investment strategies as a major part ofthe size premium which they saw as an arbitrageopportunity could actually be a compensationfor unaccounted risk.

Mohanty (2002) reported the consequencesof a research were intended to inspect the firmparticular characteristics by illuminating thecross sectional disparity in stock returns usingFama and Macbeth’s methodology. It was foundthat size, market leverage, price-to-book value,earnings-to-price ratio were highly correlatedwith stock returns. The outcome demonstratedthat these two proportions were extremelyassociated with stock returns. While size andprice-to-book value were negatively associatedwith stock returns, earnings-to-price andmarket influence were observed to be positivelycorrelated.

Jan Annaert et.al (2002) analyzed the premiumfor both size and value for European stocks.Previously there were number of studies thatfound returns from small stock exceeds fromthat of big stocks which was called as sizepremium. Similarly value stock returns exceedsthe growth stock returns which was called valuepremium. They found in whole Europeanmarket, there was large size premium but it existsonly in cross section. The technique will neveragain be productive if stocks were chosen inthe light of the market size of a nation. Annuallythere was impressive premium of 7% whenportfolios of value and growth were weightedequally.

Statement of the Problem:

The size effect is considered to be one of the



prominent factors that have been pragmatic inthe stock markets throughout the world. Thisstudy attempts to examine the causes of thesize effect in the Indian Stock Market whichhelps in finding out whether operating, financialand liquidity characteristics significantlydistinguish the small firms from that of largefirms which verifies whether small firms areinherently riskier than larger firms.

Objectives:

• To study the presence and sources of sizeeffect in Indian stock market for a recenttime period.

• To find whether operating characteristicssubstantially differentiate small firms fromlarge firms.

• To evaluate whether financial characteristicssubstantially differentiate small firms fromlarge firms.

• To examine whether liquidity characteristicssubstantially differentiate small firms fromlarge firms.

Hypothesis:

Null Hypothesis H0 = The operating, financial

and liquidity characteristics does notsubstantially differentiate smaller firms from thatof larger firms.

Alternative Hypothesis H1 = The operating,

financial and liquidity characteristics substantially

differentiate smaller firms from that of largerfirms.

Research Design:

Quantitative and Analytical method was usedto know the sources of size effect on the Indianstock market.

Sources of Data:

Secondary data includes –

• Data related to accounting and finance ofselected companies was taken from therespective company’s website.

• The daily traded share volume of the samplecompanies was considered and the data wascollected from NSE website.

• Other relevant information was collectedfrom website, journals, newspaper andbooks.

Sampling Design:

The Judgemental sampling was used as thesample companies are selected based on themarket capitalization.

Sample size:

The sample for the purpose of the study consistsof 10 companies listed in NSE. The sampleincludes 5 large capital companies and 5 smallcapital companies.

Data Analysis:

A detailed analysis was done using statisticaltool like Anova. The following steps are usedfor the analysis of data:

• The selected sample companies are rankedon the basis of market capitalization at theend of March 2016.

• Two similarly weighted portfolios are framedon the basis of ranking where one is aportfolio consists of 5 sample companieswith lowest market capitalization and onother hand a portfolio consists of 5companies with largest marketcapitalization.

• Then these two portfolios are measured bythe various operating, financial and liquiditycharacteristics of the firms at the end of theyear. The parameters incorporates numberof shares outstanding, trading volume, shareholding pattern, book value per share,market price per share, long term debt,equity capital, operating profits, net sales,fixed interest charges, capital employed, totalassets, current assets and current liabilities.These were taken at the end of March everyyear as proxies for size.

• To know the difference between twoportfolios ANOVA test was used at 5% levelof significance.



Limitations of the Study:

• Small number of companies isselected forthe study.

• In this study only one anomaly is used i.e.,sources of size effect on stock market.

Other asset pricing anomalies like value,momentum, liquidity, accruals, profitabilityand net stock issues in India are notconsidered.

Data Analysis and Discussion

Stock Liquidity:

Table showing Average Trading Volume of the Small Cap Firms:

Table showing Average Trading Volume of the Large Cap Firms:

The calculated F value is 0.0035 which is lessthan the tabulated value 0.956 at 5% level ofsignificance. The correlation r=0.034 indicatesthat there is a weak linear correlation exists inbetween the stock liquidity of both the smalland large cap firms. Coefficient ofDetermination (r2) indicates that 0.12% of thevariation in the average trading volume betweensmall cap firms and large cap firms has beenaccounted due to the size of the firm.

ANOVA for Average Trading Volume

As calculated F value is less than the significantF value at 5% level of significance it belongs tocritical region, therefore H

0 is accepted. That

means there is no significant difference inaverage daily traded volume of the stocks ofsmall capital and large capital firms. Thereforethere is no size effect on stock liquiditycharacteristics of the firms.

Operating and Financial characteristics:

Operating Profit Ratio:

Table showing ANOVA for operating profit ratio



The calculated F value 4.7783 which is greaterthan the table value 0.1167 at 5% level ofsignificance. The correlation r value 0.784indicates operating profits of both the small capfirms and large cap firms has strong positivecorrelation. Coefficient of Determination (r2)indicates that 61.43% of the variation in theoperating profit ratio between small cap firmsand large cap firms has been accounted due tothe size of the firm.

As calculated F value is greater than thesignificant F value at 5% level of significance itbelongs to critical region, therefore H

0 is

rejected. That means there is a significantdifference in operating profit ratios of smallcapital and large capital firms. Therefore thereis a size effect on operating profit ratios of thesmall and large capital firms.

Asset Turnover Ratio:

Table showing ANOVA for Asset Turnover Ratio:

The observed value of F is 4.32468 which isgreater than the tabulated value 0.1290 at 5%significance level. The correlation r value 0.768indicates asset turnover of both the small capfirms and large cap firms has strong positivecorrelation. Coefficient of Determination (r2)indicates that 59.04% of the variation in theasset turnover ratio between small cap firmsand large cap firms has been accounted due tothe size of the firm.


0 is

rejected. That means there is a significantdifference in asset turnover ratios of small capitaland large capital firms. Therefore there is a sizeeffect that differentiates small cap firms withlarge cap firms.

Return on Capital Employed:

Table showing ANOVA for Return on Capital Employed

The calculated F value is 0.000016 which isless than tabulated value 0.9970 at 5%significance level. The correlation r = 0.0023that shows there is a weak correlation betweenthe return on capital employed of both the smallcap and large cap firms. Coefficient ofDetermination (r2) indicates that 0.00124% ofthe variation in the return on capital employedbetween small cap firms and large cap firmshas been accounted due to the size of the firm.

Since calculated value is less than significantvalue at 5% level of significance it belongs tocritical region, therefore H

0 is accepted. That

means there is no significant difference betweensmall cap firms and large cap firms on returnon capital employed. Therefore there is no sizeeffect on the return on capital employed of thefirm.

Debt Equity Ratio:



The observed F value is 7.304 which is greaterthan the table value 0.07 at 5% significancelevel. The correlation r=0.842 shows that thereis a strong positive correlation between the debtequity ratios of small cap firms and large capfirms. Coefficient of Determination (r2) indicatesthat 70.89% of the variation in the debt equityratio between small cap firms and large capfirms has been accounted due to the size of thefirm.

Table showing ANOVA for Debt-Equity Ratio

Since calculated value is greater than significantvalue at 5% level of significance it belongs tocritical region, therefore H

0 is rejected. That

means there is a significant difference betweensmall cap firms and large cap firms on debtequity ratio. Therefore there is a size effect onthe debt equity ratio of the firms.

Interest Coverage Ratio:

Table Showing ANOVA for Interest Coverage Ratio:

The calculated F value is 0.652 which is greaterthan the table value 0.478 at 5% level ofsignificance. The correlation is 0.4 in interest

coverage ratio between small cap firms andlarge cap firms indicate a weak correlationbetween them. Coefficient of Determination (r2)

indicates that 17.68% of the variation in theinterest coverage ratio between small cap firmsand large cap firms has been accounted due tothe size of the firm.

As calculated F value is greater than thesignificant F value at 5% level of significance it

belongs to critical region, therefore H0 is

rejected. That means there is a significantdifference in interest coverage ratios of smallcapital and large capital firms. Therefore thereis a size effect that differentiates small cap firmswith large cap firms.

Current Ratio:

Table showing ANOVA for Current Ratio

The observed F value is 33.135 which is greaterthan the significance value 0.0104 at 5% levelof significance. The correlation r=0.957 showsthat there is a very strong correlation betweenthe current ratio of both the small cap and largecap firms. Coefficient of Determination (r2)indicates that 91.69% of the variation in thecurrent ratio between small cap firms and largecap firms has been accounted due to the sizeof the firm.

As calculated F value is greater than thesignificant F value at 5% level of significance it

belongs to critical region, therefore H0 is

rejected. That means there is a significantdifference in current ratios of small capital andlarge capital firms. Therefore there is a size effectthat differentiates small cap firms with large capfirms.



Dividend Payout Ratio:

Table showing ANOVA for Dividend Payout Ratio:

The calculated F value is 6.181which is greaterthan the tabulated value 0.0887 at 5% level ofsignificance. The correlation r=0.820 indicatesthere is a strong correlation between thedividend payout ratio of both large cap firmsand small cap firms. Coefficient ofDetermination (r2) indicates that 67.32% of thevariation in the dividend payout ratio betweensmall cap firms and large cap firms has beenaccounted due to the size of the firm.


0 is

rejected. That means there is a significantdifference in dividend payout ratios of smallcapital and large capital firms. Therefore thereis a size effect that differentiates small cap firmswith large cap firms.

Table Showing Summary of all the measures of the Operating andFinancial Characteristics

Out of 7 measures in operating and financialcharacteristics only one measure accepted nullhypothesis rest all measures rejected nullhypothesis indicating that there is a substantialdifferentiate between the large cap and smallcap firms.

Distress Level of the Firms:

It is the circumstances where a firm is

confronting trouble in meeting its monetarycommitments. If the firm has high fixedexpenses, illiquid resources and incomes thatare sensitive to monetary downturns then thereis more risk of expanding the money relateddistress levels of the company. This outcomesin less productive workers and it incrementsboth the money related and opportunity costs.

Book Equity to Market Equity Ratio:



The calculated F value is 0.257 which is lessthan the significant value 0.647 at 5% level ofsignificance. The correlation r=0.280 indicatesthat there is a weak linear correlation betweenthe book value to market value ratio of boththe small cap firms and the large capfirms.Coefficient of Determination (r2) indicatesthat 7.89% of the variation in the book equityto market equity ratio between small cap firmsand large cap firms has been accounted due tothe size of the firm.

Table showing Anova for Book Equity to Market Equity Ratio


0 is accepted. That

means there is no significant difference in bookvalue to market value ratios of small capital andlarge capital firms. Therefore there is no sizeeffect that differentiates small cap firms withlarge cap firms.

Earnings Yield Ratio:

Table showingANOVA for Earnings Yield

The calculated F value is 83.746 which isgreater than the tabulated value 0.0027 at 5%level of significance. The correlation r=0.982indicates that there is a positive linear correlationbetween the earnings yield ratio of both thesmall cap firms and large cap firms. Coefficientof Determination (r2) indicates that 96.54% ofthe variation in the earnings yield ratio betweensmall cap firms and large cap firms has beenaccounted due to the size of the firm.


0 is

rejected. That means there is a significantdifference in earnings yield ratios of small capitaland large capital firms. Therefore there is a sizeeffect that differentiates small cap firms withlarge cap firms.

Table showingANOVA for Dividend Yield:

Dividend Yield:

The calculated F value is 1.8897 which isgreater than the tabulated value 0.2629 at 5%level of significance. The correlation r=0.621indicates that there is a strong positivecorrelation between the dividend yield ratiosof both the small cap firms and large cap firms.Coefficient of Determination (r2) indicates that38.64% of the variation in the dividend yieldratio between small cap firms and large capfirms has been accounted due to the size of thefirm.


0 is

rejected. That means there is a significantdifference in dividend yield ratios of small capitaland large capital firms. Therefore there is a sizeeffect that differentiates small cap firms withlarge cap firms.



Cash Flow Yield:

Table showing ANOVA for Cash Flow Yield:

The calculated F value is 0.670 which is greaterthan the tabulated value 0.472 at 5% level ofsignificance. The correlation r=0.42 whichindicates there is a weak linear correlationbetween the cash flow yield ratio of both thesmall cap firms and the large cap firms.Coefficient of Determination (r2) indicates that18.26% of the variation in the cash flow yieldratio between small cap firms and large capfirms has been accounted due to the size of thefirm.


0 is

rejected. That means there is a significantdifference in cash flow yield ratios of small capitaland large capital firms. Therefore there is a sizeeffect that differentiates small cap firms withlarge cap firms.

Table showing summary of all the measures of distress level of the firms:

Out of 4 measures in budgetary distress levelattributes, 3 measures rejected null hypothesis.Only one measure that is book to market equityproportion acknowledged null hypothesis thatdemonstrates there is no significant contrastbetween the large cap companies and small capcompanies.

Institutional Ownership:

It refers to the measure of the stocks in anorganization that are claimed by mutual funds,insurance companies, financial institutions,investment firms, private foundations and otherlarge institutions that deals with the assets in

the interest of others. The organization that hasmore stocks held by institutional speculators isan ideal circumstance for the organization. Thisimpacts other potential individual financialspecialists to put resources into that organizationwhich has high institutional possession.Institutions also work to raise the price and tobuild the estimation of the shares of a specificorganization in light of the fact that even theyare the proprietors of the organization throughTV, publishing articles in prominent magazines,giving presentations at the speculator’sgatherings.

Table showing Institutional Ownership of Small Cap Firms:



Table showing Institutional Ownership of Large Cap Firms:

Table showing ANOVA for Institutional Ownership:

The calculated F value is 0.0122 which is lessthan the tabulated value 0.918 at 5% level ofsignificance. The correlation r=0.063 indicatesthat there is a weak linear correlation betweenthe institutional ownership of both the large capfirms and the small cap firms. Coefficient ofDetermination (r2) indicates that 0.406% of thevariation in the institutional ownership betweensmall cap firms and large cap firms has beenaccounted due to the size of the firm.


0 is accepted. That

means there is no significant difference ininstitutional ownership of small capital and largecapital firms. Therefore there is no size effectthat differentiates small cap firms with large capfirms.

Findings and Conclusion

Including India, in many of the countries in theworld the extensively documented in capitalmarkets is the size effect. Generally small firmsare considered to be more dangerous than largecap firms for speculators to contribute as resultof numerous components like low volume ofoperations, targeting only one market, no properaccess to capital market, low liquidity, lowstandards, depends totally on proprietor andso forth. It has been seen that small firms haveless liquidity position and they are ignored moreby the institutional financial specialists andanalysts. Normally it has been viewed that smallfirms are exposed to more risk and because oftheir poor performance small firms lost theirmarket value.

Small firms does not have proper customerdatabase with outdated technology, lesscategory of product lines and relatively loweraccess to financial markets. Small firm’s stockprices tend to be more sensitive for theeconomic changes as they cannot survive inadverse situations. But if they run the businessefficiently even small firms can perform well inthe economy by growing slowly and less efficientfirms may not survive with high growth rate.

A parametric test ANOVA has been used totest the difference among the means of variousmeasures. Out of 13 measures, it is found that9 measures acknowledge alternative hypothesisthat tells there is a significant difference betweenthe small cap firms and the large cap firms. It isclear from this research that there is thepresence of size effect in stock market thataffects operating, financial and liquiditycharacteristics. Remaining measures are returnon capital employed, book to market value inthe operating and financial characteristics and

also distress level that stated there is nosubstantial difference between the small cap andlarge cap firms. It is clear that even there is nosubstantial difference in the stock liquidity ofboth the large cap and small cap firms. There isno size effect on the average daily tradedvolume of the stocks.

The institutional ownership also stated that thereis no substantial difference between the neglectof large cap and small cap firms. The measuresthat state that there is a significance differencebetween the firms are operating profit ratio,asset turnover, debt equity, interest coverageratio, current ratio, dividend yield out, earningsyield out and cash flow yield.

The results of this research might haveimplications on the choices of investmentstrategists and the mutual fund directors whilepicking the stock. This size premium actuallywhat they perceive as arbitrage opportunitycould become a reward for unaccounted risk.

There is size effect on stock market in Indiamay be due to under reaction of investorsregarding the financial information of the smallcompanies. This happens because of inadequateinformation provided by the company, investorsnot having clarity on the information they haveor may be due to investors neglecting nature ofthe small companies. Along with this investorsare not considering the past data of the largecap companies as they are presently successesand over reacting to the information of smallcap companies as they are losers.

Suggestions:

• Small cap companies should ensure that thedata regarding the company should be madeavailable readily to the investors. Thiscreates more awareness about the company



and its transparency that makes the stockseasily picked by the investors.

• Usually Investors don’t want to take morerisk so they prefer to invest in less riskystocks. So there is a need on the part ofsmall cap firms to minimize the riskassociated with them by reducing theunnecessary costs.

• Small cap enterprises should improve theircorporate earnings from which they canoutperform better than large cap stocks.Because both the potential and currentinvestors can see the performance of acompany through this corporate earnings.

• By including small cap stocks in portfolioinvestor can diversify and manage the riskas small cap stocks do not move in locksteps with the overall market.

• Investors should choose the stocks byconsidering the factors that are associatedwith the company’s risk.

References

• Annaert, J. (2002, February). “Value andSize Effects: Now You See It, Now YouDon’t”. Social Science Research Network.

• Chan, K. (1982). “An ExploratoryInvestigation of the firm Size Effect”. (99),32.

• Mohanty, P. (n.d.). “Evidence of Size Effecton Stock Returns in India”. Research Gate.

• Pandey, A. (2016). “Explaining Size Effectfor Indian Stock Market”. Asia-PacificFinancial Markets, 23 (1), 45-68.

• Prasad, S. S. (2013). “Size and Returns: AStudy of the Indian Stock Market”. IndianJournal of Finance, 7 (5).

• Shijin S. (2007). “The Relationship betweenSize, Value and Market Risk: SomeEvidence”. Investment Management andFinancial Innovations, 4 (2).

• Sehgal, S. (2012). “A Search for RationalSources of Stock Return Anomalies:Evidence from India”. International Journalof Economics and Finance, 4 (4).

• Thirumalaisamy, R. (2014). “Firm Size andReturns on Retention”. International Journalof Development and Sustainability, 3 (8).

• Tripathi, D. V. (2003). “Size Effect in IndianStock Market: Some Empirical Evidence”.The Journal of Business Perspective .

• Welc, J. (2011). “Company Size effect onthe Polish Stock Market”. Journal of FinanceResearch .

• Wong, K. A. (1989). “The Firm Size Effecton Stock Returns in a Developing StockMarket”. Economies Letters, 30 (1).

Websites:

• http://www.nseindia.com/

• http://economictimes.com/

• http://morningstar.com/

• www.boschindia.com

• www.hdfcbank.com

• www.dhanbank.com

• www.angindustries.com

• www.airtel.in

• www.mtnl.net.in

• www.sunpharma.com

• www.alpalabs.com

• www.bajajfinserv.in

• www.reliancecapital.co.in

Annexure

Table Showing Summary of all the measures of the Operating and FinancialCharacteristics



Table Showing Summary of all the measures of the Distress Level Characteristics


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