Nepalese Journal of Management - Uniglobe College

Nepalese Journal of Management

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JANUARY 2015 VOLUME 2 NUMBER 1 ISSN: 2392- 4152

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Chief Editor Dr. Radhe S. Pradhan Academic Director, Uniglobe CollegeExecutive Editor Dr. Nar Bahadur Bista Principal, Uniglobe CollegeAdvisory Board Prof. Alojzy Z. Nowak Faculty of Management, University of Warsaw Prof. Muhammad Z. Mamun Unversity of Dhaka, Bangladesh Prof. Jayanta K. Parida Utkal University, Bhubaneshwor, India Prof. Voradej Chandarasorn President, Shinawatra University, Thailand Prof. Jawahar Lal Srivastav University of Delhi, India Dr. Khagendra P. Ojha Chairman, Uniglobe College Dr. Manish Thapa IR Director, Uniglobe College Mr. Gangadhar Dahal Executive Director, Uniglobe CollegeEditor Mr. Dipkar Thapa Program Director, Uniglobe College Design and Layout Mohan Himamshu Dahal

Production Team Min Bahadur Bista Khima Dahal Madhav Subedi Bishnu ThapaPrinted in Nepal

Nepalese Journal of ManagementNMJ JANUARY 2015 VOLUME 2 NUMBER 1 ISSN: 2392- 4152

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Nepalese Journal of Management (NJM) is the official publication of the Uniglobe College (Pokhara University affiliate). It is published on half-yearly basis. Annual subscription rates are Rs. 500 for libraries and organizations, and Rs. 300 for individuals. For availability of back issues, contact Executive Editor, NJM. Claims for missing copies must be made within three months of publication to Executive Editor, NJM, Uniglobe College 977-1-411 56 90/ 411 55 69, Fax: 447 31 29, E-mail: [email protected]. The subscribers are requested to add postage charges on subscription rates. Send address changes and correspondence related to dues and subscriptions to the Executive Editor NJM, Uniglobe College.

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ContentsPredominant factors of non-adoption of information and communication technology (ICT) by the small and medium enterprises (SME) of Bangladesh ......................................... 1-21 Prof. Muhammad Z Mamun and Mujahid Mohiuddin Babu

Problems & prospects of management education in India... 22-27Dr. Krishn Awatar Goyal

Human resource management and organizational performance in Nepalese commercial banks ................................................. 28-39 Bandana Panta

Impact of human resources practices on job satisfaction of women employees from manufacturing industries: strategic initiatives of Tiruvannamalai district.............................................................. 40-53E.Hemavathi

An empirical study on punter’s acuity towards internet banking services ......................................................................... 54-64Prof. Jaladi Ravi and Dr. K. Hari Hara Raju

Determinants of capital structure: a case of selected Nepalese commercial banks ..................................................... 65-75Krishna Chalise

Women entrepreneurship in India in globalized economy .. 76-85Prof. K.S. Rao and K.P. Kumar

Investors’ awareness, perceived risk attitudes, and investors’ behavior: a case of Nepalese capital market ................. 86-93Pawan Kawan

Impact of market entry strategy on export performance ... 94-102Dr. Suman Kumar Regmi

Customer switching behavior in the retail banking industry of Nepal ...................................................................................... 103-112Shazia Thapa

Nepalese Journal of ManagementNMJ JANUARY 2015 VOLUME 2 NUMBER 1 ISSN: 2392- 4152

Predominant factors of non-adoption of information and communication technology (ICT) by the small and medium

enterprises (SME) of Bangladesh

- Prof. Muhammad Z. Mamun* and Mujahid Mohiuddin Babu

AbstractInformation and Communication Technology (ICT) is a strategic tool which positively impacts the performance of the business firm both in short and long terms. SMEs, presently, are deemed as the strategic economic tool to achieve economic emancipation. In Bangladesh, the SMEs are expanding due to some positive initiatives of the government. But the SMEs are yet to incorporate the ICT comprehen-sively not only to survive but also to flourish in this competitive world. This study endeavors, particu-larly, to explore impact of ICT on the business firms’ performance and to identify the impediments for the adoption of ICT by the SMEs. The SMEs, while adopting ICT, face a few but colossal impediments namely poor infrastructure, cost, knowledge deficiency, attitude toward ICT, and non-customized soft-ware. Government should play the pioneer role in making the SMEs good practitioner of ICT.

Keywords: : Return on investment, labor productivity, market access, productivity, nformation and communication technology

*Dr. Muhammad Z. Mamun was Professor, Institute of Business Administration University of Dhaka, Bangladesh. Email: [email protected]

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1. IntroductionThe effects of ICT on a firm’s performance in the context of industrialized countries are beyond mentioning. Adoption and frequent up gradation of technology is a prominent feature of developed countries’ business organizations. Every initiative of the organization has both long run and short run outcome. SMEs in the manufacturing sector of Bangladesh have reported a positive link between ICT-capital stock and productivity, and between ICT adoptions and export performance as evidenced in various studies. But the other sectors of economy are yet to conceptualize the essence of this fact and reap up benefit with its proper utilization. Most of the firms do not have any idea about the potential benefit that it can generate for them. Still now investment in ICT is an irrecoverable item with no return. Even though if the SMEs invest, the firms undertake short-term strategies and can seldom afford the time and effort necessary to thoroughly integrate ICT in their operations, which increases the odds against successful technology acceptance. Due to these limitations, SMEs tend to use ICT as a simple operational and technical tool, and fail to draw significant performance benefits from it.

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In Bangladesh outsourcing of ICT is not available and the firms are accustomed to it. More recently, however, SMEs in manufacturing and service sectors have been more actively investing in informatization, demonstrating a heightened awareness of the importance of ICT. Studies also report that SMEs that make extensive use of ICT perform better. A study of Canadian manufacturing establishments (plants) with ten or more employees (excluding food processing establishments) drawn from Statistics Canada’s Business Register, shows that those with high productivity growth are more likely to be using greater numbers of advanced ICT (Baldwin, 2002). Even with small investments, SMEs, provided they make active use of ICT, are able to improve their market shares or profitability or make progress in other performance areas. The report, generally, figures out some binding constraints to the development of ICT and offers recommendations in this regard and tried to determine whether the use of ICT can improve the performance of SMEs and enabling them to gain competitive advantage and improve their performance indicators.

ObjectivesThe main objective of the study is to identify predominant factors of non adoption of ICT by the SMEs of Bangladesh. The specific objectives of this study are:

• To explore the influence of the ICT on SMEs’ performance.• To analyze whether the growth rate of the enterprises is facilitated by the ICT

or not.• To identify whether ICT infrastructure offers economies of scale that stimulate

network building and consequent spillover benefits.• To know whether strategic use of ICT is essential for the SMEs to overcome

limitations in resources and competitive capabilities to enhance their performance.

• To identify the factors for which the SMEs are reluctant to adopt ICT and suggest a few recommendations to overcome the issues.

2. MethodologyThe study has initially focused on qualitative research to conceptualize the issues of SMEs in Bangladesh, ICT and its impact on business. On the basis of the qualitative study few hypotheses were developed which were tested later through quantitative research. For that purpose data were collected through questionnaire survey. To conduct the study, primary data were collected through structured questionnaires. The questionnaire was designed to collect information about the SMEs’ reluctance of using ICT, issues that impede the SMEs ICT exposure, impact of ICT on the key performance indicators. Prior to that quantitative approach, basic primary qualitative technique, i.e., depth interview was conducted over the experts in ICT and SME sectors to shed light onto this issue. The level of scale was interval and the technique was five point Likert scale anchored at the numeral 1 with the verbal statement ‘strongly disagree’ and at the numeral 5 with the verbal statement ‘strongly agree’. Multiple items were used to establish appropriate measurement properties (reliability and validity) of the selected constructs. The scale was reliable

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as the Cronbach’s alpha1 was evidenced as 0.723. The questionnaire was pretested to ensure that the wording, format, length, and sequencing of questions were appropriate.

Non Probabilistic Sampling technique was used to determine the elements of the sample. Two categories of samples were chosen: (i) one group which has not established and utilized the ICT issues and (ii) another which has done that for at least more than a year. First group comprised of 100 samples from Dhaka and Rajshahi and another group comprising 70 sample elements from the same areas in the early periods of 2009. The types of businesses that were surveyed are grocery and general stores, light engineering, agro-industry (incl. rice mills), cloth stores, cosmetic retailers, shoe stores, wood, timber and lumber industry, car mechanic workshops, restaurants and hotel. The sampling distribution is shown in table 1.

Table 1: Distribution of Sample

Types of BusinessNo. of SMEs that have

not adopted ICTNo. of SMEs that adopted

ICTFrequency % Frequency %

1. Grocery and general stores 15 15% 10 14.28%2. Light engineering 12 12% 7 10%3. Agro-industry (incl. rice mills) 13 13% 8 11.4254. Cloth and shoe stores 20 20% 9 12.85%5. Packaging factories 5 5% 5 7.14%6. Confectioneries 10 10% 11 15.71%7. Timber and lumber industry 5 5% 8 11.43%8. Car mechanic workshops 8 8% 6 8.57%9. Restaurants and hotel 12 12% 6 8.57%

Total 100 100% 70 100%

For data analysis, initially factor analysis2 has been used for identifying predominant factors3 and then each factor was tested by parametric procedures to reach decisions. One sample t-test and correlation have been applied to measure the different dimensions of ICT in SMEs in Bangladesh. Simultaneously, to make this paper more informative different published text books, related journals, reports, seminar papers, web pages, web blogs, magazines and research works have been consulted. Literatures were generally collected from said sources and the Internet. As a result, a thorough review of literatures enabled us to make a consistent presentation of the theme of study.

Review of literatureAny country’s economy runs primarily on the business organizations of its own. For the economic development of a developing country SMEs are very potent economic tool to be utilized efficiently. A nationwide survey claims that Micro, Small and Medium Enterprises (MSMEs) value addition accounts for 20 to 25 percent of


Bangladesh’s GDP (Rabbani and Sulaiman, 2004). SMEs are defined in various ways by different experts and organizations. Stanworth’s (1991) definition of small business shows the degree of relevance of context specificity. “One with a relatively small share of the market, one that is managed by its owners in a personalized way, and independent in the sense that it is free from outside control in decision making” However, as rule of thumb, the size of employees and/or the value of assets of the enterprises are considered to define SME. Enterprises with less than 250 employees are considered as SME in most cases (Ayyagari, 2003). Government of Bangladesh uses the definition of 10 to 99 workers as SMEs according to the Industrial Policy 1999. However, this definition is hardly applicable to non-manufacturing enterprises. On the other hand Enterprises with up to 9 employees are treated as “micro”; with between 10 and 49, as small; with between 50 and 99, as medium, and all the rest, as large (BBS, 2006).

The liberalization of the economy along with rapid globalization has posed severe challenges to SMEs not only in international markets but also in the domestic economy. Since SMEs are based on relatively small investment, their survival depends on timely & adequate financing and readily available markets with an easy access (Razzaque, 2003). The actual performance of SMEs, however, varies depending on the relative economic efficiency, the macro-economic policy environment and the specific promotion policies pursued for their benefit. SMEs in manufacturing and services combined have 19 percent share of GDP. Contribution of SMEs to the economy is shown in the table - 1.

Table 2: Contribution of Large Medium and Small Industries to the GDP (%)Type of industry 2000-01 2001-02 2002-03 2003-04 2004-05Large Industry 11.13 11.16 11.29 11.47 12.03Medium Industry 4.46 4.6 4.68 4.78 4.89Small Industry 15.59 15.76 15.97 16.25 16.51

(Source: Economic Review, Ministry of Finance, GOB, 2005)

The Internet has introduced a new way of doing business especially in the field of commercial operations – selling and buying, advertisement, servicing and training. The number of enterprises using Internet to market their products and services is rapidly increasing and more and more SMEs are becoming aware of the potential of this new technique. Poon and Jevons (1997) appositely view that Internet has created unpredictable and unprecedented opportunities for SMEs and they can access to certain markets similar way as large enterprises and are able to engage in international marketing which otherwise could have been unaffordable due to huge amount of resources requirement.

ICT is used as input both in the production process, and in the transaction process. ICT can enhance enterprise performance through indirect cost savings such as labor costs and increased labor productivity, and direct cost reduction of firm’s input such as information costs. The use of ICT in the post production and transaction process can foster input and output market expansion. Short-run impacts of ICT adoption in the production process is also enjoyed by the adopters. Computers and access to

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the Internet have become common in most OECD (Organization for Economic Co-operation and Development) countries, but sales and purchases over the Internet are yet to take off.

E-commerce is increasing but still accounts for a relatively small share of total commerce. On-line transactions are mainly B2B and domestic, rather than B2C or cross-border. The situation is similar for small and medium-sized enterprises (SMEs), although they lag behind larger firms in Internet transactions. 24-hour availability of the contact is especially attractive and required for those countries remaining in different time zones. Eurostat’s E-commerce Pilot Survey shows that SMEs’ motives for Internet commerce include reaching new/more customers, geographic expansion of market and improvement of service quality (OECD, 2004).

Taking a wide definition of electronic commerce to cover transactions over computer-mediated networks (including traditional EDI) and inter-firm transactions, e-commerce sales were 13.3% of total business sector sales in Sweden and 7.9% in Finland. Excluding the financial sector they were 10% in Norway and 6% in the United Kingdom and Denmark. For retail sales (B2C) shares were much lower, around 1.4% in the United Kingdom, 1.2% in the United States. Shares for SMEs are probably lower than these shares for the whole economy (OECD 2002b and 2002c). Purchasing over the Internet is more common than selling. Of the EU countries for which both Internet purchasing and Internet sales are easy, only one in eight on averages reported making Internet sales. Twice as many businesses on average use the Internet for purchases as for sales, with between 63% and 93% of businesses reported using the Internet, except in Greece and Luxembourg (OECD, 2002c). The situation is similar for SMEs, but they lag behind larger firms.

The gap between SMEs and larger firms is greater for Internet purchases than for Internet sales. At inter-firm level, the Internet and e-commerce have great potential for reducing transaction costs and increasing the speed and reliability of transactions. They can also reduce inefficiencies resulting from lack of co-ordination between firms in the value chain. Internet-based B2B interaction and real-time communication can reduce information asymmetries between buyers and suppliers and build closer relationships among trading partners (Moodley, 2002). In fact, adopters of e-commerce tend reduce transaction costs, increase transaction speed and reliability, and extract maximum value from transactions in their value chains (OECD, 2002a). In the long run, ICT always will have an even bigger impact as it can entirely restructure the operations and transaction methods, arrange more flexibility and improve outputs. The organizations have so far limited themselves only to ICT effects on enterprise return, labor productivity and market expansion though ICT can influence the performance of an enterprise in multifaceted ways. However, though ICT have high return potentials, they may erode a firm’s profitability, in the long run, by integrating markets and exposing SMEs to competition. Despite these advantages, rapid growth of e-business over the Internet is yet to be materialized.

Some SMEs have exploited ICT effectively to improve internal communications and have improved their reputation through swift responses to customers’ complaints


and an ability to capture clients’ (hidden) needs (METI, 2001). Through their Web site, SMEs can attract potential investors and persons seeking employment from abroad by providing information on their technologies and financial positions (e.g. balance sheets). Some small firms with leading-edge technologies and/or unique products and an on-line presence have received substantial capital from larger firms (Sakai, 2002). ICT represents a case of unrealized potential in Bangladesh. The relevance of ICT to the goal of accelerated poverty reduction is threefold: firstly, ICT as an employment frontier, secondly, ICT as a facilitator for strengthening the role of the poor in the market, and lastly, ICT as a bridge reducing the distance between the citizenry including the poor and the state (NSAPR, 2005).

SMEs, like any firm, will adopt ICT when the benefits will outweigh the establishment and maintenance costs. Data available from surveys in some of the EU countries indicate that SMEs use the Internet (and e-mail) for better external communications and as a means of obtaining business information. In Japan, the most common use of the Internet is general information searches. Other uses include communication via e-mail, providing information about a company’s products, services and technologies via the corporate Web site, order exchanges with regular customers, recruitment and receiving customer feedback. Some SMEs purchase some standard materials, office equipment and software over the Internet, but only a small share conduct B2C and B2B Internet e-commerce for non-standard products. A study of 484 SMEs with fewer than 250 employees in Lanarkshire (Scotland) shows a similar pattern of Internet use. Around 60% of the firms with the Internet use it to learn about competitors, customers or suppliers. Other major uses include providing product information (56%), setting up a Web page (54%), purchasing goods/services (53%) and building customer connections (48%) (Scally et al., 2001).

A few OECD analyses reflect a positive impact of ICT and e-business strategies on firm performance, but that ICT is not a panacea in them. The OECD’s Electronic Commerce Business Impacts Project (EBIP) studied a set of 220 early successful adopters of e-business strategies in a range of established sectors in eleven different countries. This study showed the positive impacts of e-commerce on their turnover and profitability and to a lesser extent on employment, most notably when e-commerce is part of larger business strategies of firms (OECD, 2002a). Further work by researchers in 13 OECD countries based on large scale statistical surveys provides evidence that the use of ICT can contribute to improved firm performance, in terms of increased market share, expanded product range, customized products and better response to client demand (OECD, 2004). Moreover, it indicates that ICT may help reduce inefficiency in the use of capital and labour, e.g. by reducing inventories, and that the more customers or firms are connected to the network, the greater the benefits (spillover effects). However, the analysis shows that complementary investments in skills, organizational change and innovation are key to making ICT work, and that the use of ICT affects firm performance primarily when accompanied by other changes and investments and that without these, the economic impact of ICT may be limited (OECD, 2004).There is a wide range of reasons why SMEs are reluctant to use the Internet and e-business. Reasons vary widely among sectors and countries and are most

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commonly related to lack of applicability to the business, preferences for established business models, and the kinds of electronic transactions SMEs are involved in or wish to introduce (B2B or B2C). According to the report of OECD, published in 2004, the most common barriers include: unsuitability for the type of business; enabling factors (availability of ICT skills, qualified personnel, network infrastructure); cost factors (costs of ICT equipment and networks, software and re-organization, and ongoing costs); and security and trust factors (security and reliability of e-commerce systems, uncertainty of payment methods, legal frameworks).

The situation of Bangladesh in participating in the increasingly networked world is not satisfactory, though government and non-government institutions’ participation and initiatives are countable. Bangladesh has started achieving its ICT growths in 1990s though she has the experience since 1960. Bangladesh govt. has taken a number of big steps, like reducing almost 100% import duties from the computer hardware and peripherals in 1998, to motivate the growth of ICT industries. This encourages the people of many corners of the country to enjoy the usage of computer with lower cost in their personal and work lives. Bangladesh govt. took several initiatives to be in the process of being connected with the world’s information super highway through submarine optic fiber cable during past few years and achieved success in May 21, 2006. This creates enormous opportunity for Bangladesh to get access in Internet and to use it in various functions ranging from simple e-mail operation to online transactions. Such developments thrust Bangladesh to be ranked 136 among 178 countries of the globe in ICT development. Besides this, Bangladesh’s ICT position is 6th among the seven SAARC countries. The use of Internet at the private enterprise level is still very low in Bangladesh and there is a serious lack of infrastructure in this regard. It is often the case that since the private enterprises does not have the appropriate and adequate information government agencies monitoring the business practices take undue advantages (Haque, 2003). Availability of Information & Communication Technology (ICT) would facilitate faster development and self sustenance of SMEs (Mahmud, 2006). Development of ICT can be facilitated if assistance is available from both private and public sectors especially the contribution from govt. is more desirable. There is not enough budgetary allocation for the development of e-governance and ICT, although these are highlighted in the PRSP (Moazzem, 2006).

In Bangladesh 0.15 million people have access to the Internet and 1person per 10000 citizens has the access to the Internet, though actual number of users is 0.5 million and user per 10000 is 32 persons. People of Bangladesh have more access to the mobile technology as more than 34.37 million people have access in it (http://www.itu.int). The business people’s access to the communication technology has much more been facilitated for the introduction of PSTN land phone lines. Presently (up to April, 2008) a little over 3.54 lac people have been subscribing this technology (www.thedailystar.net, May 23, 2008) and it is burgeoning at a commendable pace. The development initiatives in Bangladesh are passing through many constraints. The main source of connectivity, telephone is not available in this country.


Bangladesh is the country of lowest teledensity in the world. It ranked 39th among the 40 countries of Asia pacific in 1999 with 0.46 combined density. Like many other developing countries, Bangladesh suffers from inadequate infrastructure, outdated telephone systems, limited access to telephone and computer, poor service quality with high price, lack of qualified personnel, low level of literacy and IT skill, as well as cultural and language barriers (WTO, 1998). These hinder the adoption of Internet, though Bangladesh has the potentials to use Internet technology in developing her education, business, and service sectors. Main obstacle of using the Internet in Bangladesh is its distribution (Azam, 2007). The Internet facility is still an urban privilege in Bangladesh as the telephone connections are more concentrated in urban areas, especially Dhaka based. The populations living outside urban areas are mostly deprived of gaining the Internet benefit though they have the potentials. Part of this particular problem is being solved with the introduction of the internet connectivity in the mobile phones.

A study conducted by Azam (2007) in Rajshahi implies that respondents perceived Internet using with insecurity and lack of confidentiality. Many weapons of the country’s legal system and its cultural heritage hinder the adoption of Internet. People in Bangladesh are still not familiar with the computer operation. As Internet is a computer dependent communication media, they normally face two-dimensional complex, simultaneously in operating the computer as well as in handling Internet technology. Despite suffering from multi-dimensional problems in Internet access, Bangladesh has the potentials of gaining success in using Internet in her education, development, business and other service sectors (Azam, 2007). In Bangladesh the rise of mobile telecom is commendable. But so far this technology is confined to communication and entertainment. Mobile technology can be a good source for bringing thrust into business operations. Owing to the mainstream and value-added services of the mobile phone operators the micro, small and medium level entrepreneurs get the opportunity to adopt the ICT in their regular marketing activities.

ICT policy for SMEs: Policies that will affect the adoption and use of e-business strategies include those designed to expand and improve the quality of network infrastructure and legal and regulatory environment, foster technological diffusion and create a favorable business environment. Beyond these general framework policies, specific policies for SMEs have focused on ICT and e-business awareness programs, business consultation services and employee and management training to enhance ICT and managerial skills. Policies have shifted over time as firms and economies have moved from concentrating on readiness and connectivity, to diffusion and use, and are moving towards mature e-business strategies which blend broad policies for the business environment. Policy has moved beyond a narrow concept of e-commerce (on-line transactions) to a wider view of e-business integration of internal and external processes, based on technology neutrality.

Govt. is interested to identify and establish an appropriate physical and ICT network of infrastructure and institutional delivery mechanism that facilitate the promotion of SMEs. One of the foremost objectives of the Industrial Policy 2005 (IP

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2005) is to help attain competitive efficiency by developing technology, reducing consumers’ costs by using cost-effective technology, and assist in the development of an environment friendly industrial production system. Converted efforts will be made in order for entrepreneurs to boost their profit with the help of improved management and production technology. ICT based knowledge management and customer supremacy in the markets are also included in the IP 2005 to enhance the usage of ICT in the local business levels. Moreover assistance will be provided in the use of new technology in order to substitute for imports or expand exports in prioritized sectors.

Development of hypothesisAt the end of the literature review the following hypotheses were developed to analyze the issue more comprehensively. Altogether seven core hypotheses, some having sub-hypotheses, were developed.

H1: The Owners of SMEs are not interested to utilize due to some internal and external factors.

H1.1: There is a lack of appropriate infrastructure for ICT development.

H1.2: The Owners do not have adequate knowledge about available technology

H1.3: The SME owners are accustomed to operating businesses with obsolete technology and production processes

H1.4: Lack of clear cut legal frame work

H1.5: There is a prominence of ICT-related skill deficiency

H1.6: Unavailable source of credit for ICT development

H1.7: Start up and Maintenance Costs of ICT equipment are unaffordable.

H1.8: The SME owners do not view ICT as a strategy to achieve competitive advantage.

H1.9: Lack of trust regarding security of the transactions

H1.10: The owners hardly have clear idea about ecommerce

H1.11: ICT and the Internet is inapplicable to the nature of operations

H1.12: There is a lack of dynamism between ICT firms and SMEs

H1.13: The ICT equipments are too complex for SME users to operate.

H1.14: The users have poor Operational knowledge of the process, equipments and software.

H1.15: From the installation of ICT the SMEs cannot reap of any immediate benefit.

H1.16: ICT products are generally designed for larger firms and not for SMEs.

H1.17: Frequent power cut discourages the establishment and usage of ICT.

H1.18: The SME owners’ lack inadequate knowledge about the importance of ICT in improving the efficiency of the organization.

H1.19: The SMEs are reluctant to allocate required budget for the development of e-governance and ICT from the firm’s capital

H2: Establishment and Proper Usage of ICT can aid the SMEs to enhance the key performance indicators.

H2.1: Usage of ICT helps the SMEs to improve the sales turnover of the SMEs.

H2.2: ICT support can help the SMEs to improve the profitability of the SMEs.

H2.3: ICT support contributes to the long term growth rate of the SMEs.

H2.4: The use of ICT can help the firm to improve production efficiency.

H2.5: The use of ICT has a positive impact on the distribution efficiency.

H2.6: Usage of ICT can help the firm to improve administrative efficiency.H2.7: The use of ICT can help the firm to improve decision making efficiencyH3: There exists a positive relationship between the usage of ICT & modern

technology and return on investment (ROI).H4: The productivity of the workforce is also influenced by ICT.H5: The use of ICT and modern technology has a positive relationship with market

expansion H6: Strategic use of ICT is essential for the SMEs to overcome limitations in resources

and competitive capabilities to enhance their performance.H7: ICT infrastructure offers economies of scale that stimulate network building

and consequent spillover benefits.

3. Primary data analysis Predominant impediments of the ICT adoption by the SMEsThe factor analysis shows that to have a better understanding of the predominant impediments of the ICT adoption by the SMEs, the organizers need to stress on the 8 factors (table 3). These eight factors are identified out of 23 variables with eigen value4 greater than 1 explaining 70.398% variability of the data. The factor analysis of 23 variables with 170 sample is found adequate (KMO test result = 0.574 ≥ 0.5) and valid (Bartlett’s test of sphericity indicates a significance level of 0.000). The communalities5 of the variables that constituted the factors are found very strong which indicates robust relationships among the variables (Appendix 1).


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Table 3: Factors, their Eigen Value and Total Variance Explained

ComponentsInitial Eigen value

Total Variance (%) Cumulative Variance %

1. Lack of appropriate Network infrastructure 4.792 20.833 20.8332. Costs of ICT equipment 2.684 11.669 32.5023. Not viewing ICT as an competitive strategy 2.041 8.872 41.3744. Inapplicable to the nature of operations 1.706 7.416 48.7905. Poor Operational knowledge of the users 1.447 6.292 55.0826. ICT products are designed for larger firms and not SMEs 1.321 5.745 60.827

7. Owners’ lack inadequate knowledge about the importance of ICT in improving the efficiency 1.121 4.875 65.702

8. Inadequate budgetary allocation for the development of e-governance and ICT from the firm’s capital

1.080 4.696 70.398

Extraction Method: Principal Component Analysis.The detailed of the variables included in the factors are listed below.Factor 1: Lack of appropriate Network infrastructure

Variables Factor Loading6

1. Lack of appropriate Network infrastructure 0.7922. Lack of knowledge about available technology 0.7853. Accustomed to operating businesses with obsolete technology and

production processes 0.756

4. Lack of clear cut legal frame work 0.6775. Prominence of ICT-related skill deficiency 0.6026. Unavailable source of credit for ICT development 0.601

Factor 2: Costs of ICT equipmentVariables Factor Loading1. Costs of ICT equipment 0.8622. Maintenance and Operational cost 0.8553. Too expensive software -0.477

Factor 3: Not viewing ICT as an competitive strategyVariables Factor Loading

1. Not viewing ICT as an competitive strategy 0.8112. Lack of trust regarding security of the transactions 0.7983. Unclear idea about ecommerce 0.5014. Lack of knowledge of best practices in ICT usage 0.368


Factor 4: Inapplicable to the nature of operations

Variables Factor Loading1. Inapplicable to the nature of operations 0.7432. lack of dynamism between ICT firms and SMEs - 0.695Too complex for SME users to operate 0.687

Factor 5: Poor Operational knowledge of the users

Variables Factor Loading1. Poor Operational knowledge of the users 0.7742. Number of users is very poor 0.7113. No immediate benefit of ICT 0.532

Factor 6: ICT products are designed for larger firms and not SMEs

Variables Factor Loading1. ICT products are designed for larger firms and not SMEs 0.7612. Power constraint 0.749

Factor 7: Owners’ lack inadequate knowledge about the importance of ICT in improving the efficiency

Variables Factor LoadingOwners’ lack inadequate knowledge about the importance of ICT in improving the efficiency 0.870

Factor 8: Inadequate budgetary allocation for the development of e-governance and ICT from the firm’s capital

Variables Factor LoadingInadequate budgetary allocation for the development of e-governance and ICT from the firm’s capital 0.829

Hypotheses testingFrom the above analysis, 8 factors have been extracted as cumulative frequency is greater than 70% that indicates the adequacy of the analysis through the derived factors. These 8 factors have been extracted from the component matrix on the basis of factor loadings to encounter our first hypothesis (H1) that is, the non adoption of ICT is caused by simultaneous activation of internal and external forces. The extracted factors/barriers are1. Lack of appropriate Network infrastructure2. Costs of ICT equipment3. Not viewing ICT as an competitive strategy4. Inapplicable to the nature of operations5. Poor Operational knowledge of the users6. ICT products are designed for larger firms and not SMEs7. Owners’ lack inadequate knowledge about the importance of ICT in improving

the efficiency8. Inadequate budgetary allocation for the development of e-governance and ICT

from the firm’s capitalThe derived factors were later tested through One Sample T-test to know whether the SME owners and employees consider these as their primary barriers.

Mamun and Babu 13

H1: Lack of appropriate Network infrastructureThe Table 4 proves H1 with the level of significance at 5%. Here all the sub hypotheses (factors) under H1 have actual values less than 0.05 which leads to the rejection of null hypotheses and acceptance of the alternate hypothesis H1.

So we can infer that the SME owners perceive the aforementioned eight factors as the most predominant impediments.

Table 4: Test of Factors under H1 through T-TestOne-Sample Test

Test Value = 3

t dfSig.

(2-tailed)

Mean Difference

95% Confidence Interval of the

Difference

Lower Upper

Lack of appropriate Network infrastructure 5.338 99 .000 .62000 .3895 .8505

Costs of ICT equipment 2.634 99 .010 .37000 .0913 .6487

Not viewing ICT as an competitive strategy 3.444 99 .001 .43519 .1847 .6857

Inapplicable to the nature of operations 8.840 99 .000 .91667 .7111 1.1222

Poor Operational knowledge of the users 5.603 99 .000 .51852 .3351 .7020

ICT products are designed for larger firms and not SMEs 10.939 99 .000 1.07407 .8794 1.2687

Owners’ lack inadequate knowledge about the importance of ICT in improving the efficiency

3.340 99 .001 .44444 .1806 .7083

Inadequate budgetary allocation for the development of e-governance and ICT from the firm’s capital.

4.875 99 .000 .56000 .3321 .7879

H2: Establishment and Proper Usage of ICT can aid the SMEs to enhance the key performance indicators.

H2.1: Usage of ICT helps the SMEs to improve the sales turnover of the SMEs.H2.2: ICT support can help the SMEs to improve the profitability of the SMEs.H2.3: The use of ICT can help the firm to improve decision making capability.H2.4: The use of ICT can help the firm to improve production efficiency.H2.5: The use of ICT has a positive impact on the distribution efficiency.H2.6: Usage of ICT can help the firm to improve administrative efficiency.H2.7: ICT support contributes to the long term growth rate of the SMEs.According to the analysis presented in table 5, it is evident that the core hypothesis H2 is acceptable as all the sub hypotheses under it have produced a less than


0.05 probability except the last one. In the last sub hypothesis (H2.7: ICT support contributes to the long term growth rate of the SMEs) the actual value is 0.176 which is absolutely higher than the critical value 0.05 which leads to the acceptance of null hypothesis which states that the growth of SMEs cannot be significantly influenced by ICT. All the respondents have established and adopted ICT not before 1/2 years back. So we can infer that establishment and proper usage of ICT has a good impact over the key performance indicators of SMEs other than the growth factor. The user SMEs’ decision making process, production capability, distribution efficiency, sales turnover, profitability and administrative efficiency have been improved due to the proper utilization of ICT.

Table 5: Test of core Hypothesis 2 and its sub hypotheses

One Sample Test

Test Value = 3

t

df

Sig.

(2-tailed)*

Mean Difference


Difference

Lower UpperSales Revenue 4.931 69 .000 .65714 .3913 .9230Profitability 13.924 69 .000 1.25714 1.0770 1.4373Productivity 14.541 69 .000 1.35714 1.1710 1.5433Distribution efficiency 7.247 69 .000 .87143 .6315 1.1113Administrative 4.300 69 .000 .61429 .3293 .8993Decision making capability 6.200 69 .000 .84286 .5716 1.1141Growth rate 1.368 69 .176 .20000 -.0916 .4916

* Level of significance 0.05

H3: There exists a positive relationship between the usage of ICT & modern technology with return on investment (ROI).

H4: The productivity of the workforce is also influenced by ICT.H5: The use of ICT and modern technology has a positive relationship with market expansion H6: Strategic use of ICT is essential for the SMEs to overcome limitations in resources

and competitive capabilities to enhance their performance.H7: ICT infrastructure offers economies of scale that offset network building

expenditure and reaps up consequent spillover benefits.Table 6 significantly delineates the level of correlation between the Establishment and usage of ICT factor with ROI, Productivity of Labor and Market expansion capability of the SMEs. Here at 5% significance level, the correlation prevails strongly as the calculated values are less than 0.05 (exactly 0.014, 0.006 and 0.02 for H3, H4 and H5 respectively) and in three of the cases correlation is medium to strong (value of r is equal to 47% for ROI, 54% for Labor productivity and 49% for Market access). Here Labor productivity is showing strong and the rest of the two have produced more than medium level of correlation. So we can infer that there exists a strong correlation between ICT and Return on Investment (ROI), ICT and Labor productivity and ICT and Access to market.

Mamun and Babu 15

Table 6: Correlations is run to test the Hypotheses H3, H4 and H5 Parameters Statistical Tests ICT establishment

and usage

ICT establishment and usagePearson Correlation 1

Sig. (2-tailed) --N 70

Return on Investment (ROI)Pearson Correlation 0.47

Sig. (2-tailed) 0.014*N 70

Labor productivityPearson Correlation 0.54

Sig. (2-tailed) 0.006*N 70

Market accessPearson Correlation 0.492

Sig. (2-tailed) 0.02*N 70

* Correlation is significant at the 0.05 level (2-tailed).

In the following table (table 7) last two core hypotheses (H 6 and H7) were analyzed and the test result shows that the actual values (0.002 and 0.00) are much less than critical value of 0.05 for both the hypotheses. This leads to the conclusion of rejecting of null hypotheses and acceptance of these alternate hypotheses. So we can infer that resource limitation can be well offset by the proper utilization of ICT and ICT infrastructure offers better economies of scale to optimize the cost incurred for the establishment of ICT.

Table 7: Analyses to test the core Hypothesis 6 and 7One-Sample Test

Test Value = 3

t df Sig.(2-tailed)

Mean Difference


Difference

Lower UpperICT helps to overcome limitations in resources and increase competitive capabilities.

3.160 99 .002 1.33000 .4948 2.1652

ICT infrastructure offers economies of scale that offset network building expenditure and reaps up consequent spillover benefits

12.042 99 .000 1.04000 .8686 1.2114


4. Conclusions and recommendationsThere is no substitute of adopting and adapting with the latest technology in each and every level of business organization. Not only to grow but also to survive in the current competitive market the SMEs have to resort to the adoption of ICT. To cope up with the world or to neutralize the pressure of globalization the SMEs must have to incorporate Information and Communication Technology in the appropriate areas of the organizations. This study has identified a few impediments which are required to be addressed for the establishment of ICT. Apart from addressing those, following issues have to be addressed for facilitating ICT among the SMEs.• In order to spread out the usage of ICT it is earnestly required to develop

infrastructure. It is understandable that the infrastructure development cannot be done in a flash. But, at least, initiatives can be taken to start from the Thana or district levels. In this case a Private Public Agreement can be a result oriented initiative. It has to be ensured that people especially business people can get access to computer and computer related technology very comfortably as this is the inevitable precondition to access the ICT.

•Cost of ICT establishment and operation is an intimidating factor. Government should take measure (e.g. tariff/duty restructuring, credit arrangement) to reduce the establishment cost of ICT. The commercial banks can play a pivotal role by arranging easy source of financing for the SMEs.

• Establishment of ICT will bring change in the business firms’ mode of operations. The SMEs have to learn how to deal with the management of organizational changes.

• The SME owners, managers and employees should be made aware and convinced about the benefit of adopting ICT in their business operations. For building up awareness of ICT, different measures like road shows, case studies, first-hand impacts sharing can be utilized. The SME people have to understand that investment in ICT is a way to gain strategic advantage.

• The benefit of upgraded ICT is perpetual. But the investment in and usage of ICT requires complementary investments in skill development. The SME owners and employees possess very poor knowledge regarding the proper utilization of ICT. Training the employees and owners about the usage of ICT is the compulsory prerequisite for reaping up the benefits of ICT by the SMEs.

• Private Public Partnership (PPP) will play a vital role for the upbringing of the ICT for the business houses especially for the SMEs. The combined effort of govt. and private firms may develop the appropriate infrastructure of the ICT for the SMEs, provide required training and create adequate awareness.

The SMEs of Bangladesh have adopted the ICT but in limited version. Undoubtedly this practice has to be increased. The outcome of this study has implication not only to the academicians but also to the business community and to the policy makers. The outcome of this study has the representation of limited geographic regions, mainly divisional areas of the country. Future study could be done to assess the prevalence of ICT in much root level for SMEs and for any other spheres of the economy.

Mamun and Babu 17

NOTES1 Usually a Cronbach’s alpha α value of over 0.8 is considered satisfactory, though

a cut-off level of 0.7 is considered adequate (Kline 1999). Thus, scales scoring alpha values above 0.7 are considered reliable.

2 Factor Analysis is a type of analysis used to discern the underlying dimensions or regularity in phenomenon. It general purpose is to summarize the information contained in a large number of variables into a smaller number of factors. It is an interdependence technique in which all variables are simultaneously considered.

3 Factor is a linear combination of the original variables. Factors also represent the underlying dimensions (constructs) that summarize or account for the original set of observed variables.

4 Eigenvalue is the amount of variation in the data accounted by a factor. 5 Communality, a measure of uniqueness, is the proportion of a variable’s total

variation that is involved in the factors. 6 ‘Factor loading’ is a measure of the importance of the variable in measuring each

factor. It is used for interpreting and labeling a factor. It is the correlation between a variable and a factor, and key to understanding the nature of a particular factor.

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Appendix 1: List of Variables and their Commonalities

Original Variables Commonalities

1. Lack of appropriate Network infrastructure 0.7152. Lack of knowledge about available technology 0.6283. Accustomed to operating businesses with obsolete technology and

production processes0.590

4. Lack of clear cut legal frame work 0.5975. Prominence of ICT-related skill deficiency 0.5986. Unavailable source of credit for ICT development 0.618

7. Costs of ICT equipment 0.5008. Maintenance and Operational cost 0.5649. Too expensive software 0.61610. Not viewing ICT as an competitive strategy 0.65211. Lack of trust regarding security of the transactions 0.63812. Unclear idea about ecommerce 0.67213. Lack of knowledge of best practices in ICT usage 0.69114. Inapplicable to the nature of operations 0.77015. lack of dynamism between ICT firms and SMEs 0.72616. Too complex for SME users to operate 0.72317. Poor Operational knowledge of the users 0.53218. Number of users is very poor 0.56319. No immediate benefit of ICT 0.60120. ICT products are designed for larger firms and not SMEs 0.66221. Power constraint 0.76022. Owners’ lack inadequate knowledge about the importance of ICT in

improving the efficiency0.676

23. Inadequate budgetary allocation for the development of e-governance and ICT from the firm’s capital

0.657

Mamun and Babu 21

22

Problems & prospects of management education in India

- Dr. Krishn Awatar Goyal



NMJ

AbstractAt present India is in a stage of transition involving social cultural and economic changes. It is gradually moving from tradition to modernity, from an industrial to an information society from welfare state to liberal market economy. Phenomenal change are being witnessed the world over. Today we have reached a stage where there is cut throat competition all over the world. Everybody wants to be the best and have ‘best’ but resources in terms of man, money, machine and material are limited. This arouses the need of management that would result in efficient and effective utilisation of resources to fulfil the objectives. Pt. Jawahar lal Nehru recognised the importance of management education long back in 1961 and had said, “Business education is very important in our country” the growing importance of management education and the exponential growth taking place in the field is a welcome step. It is the source of developing Youth, diverting them to proper employment and developing leadership skills. But at the same it poses a number of questions and challenges like unemployment among B’ graduates, zero session in management colleges, unqualified faculty, poor infrastructure etc. under such scenario management institutions should focuses on developing entrepreneurs with skills to run business in spite of developing employees. This can help in creating employment opportunities. The success of management institute and management education would depend on how quickly and effectively they are able to adopt and address themselves to the need of the society and changing business environment. Against this background the present paper attempts to identify such issues and drawing the attention of all concerned to the management Education and its role in developing youth in India. The whole idea is to initiate a thought process on the relevant issues.Keywords: Business education, challenges, entrepreneurship

*Dr. Krishn Awatar Goyal was Associate Professor, Department of Business Finance & Economics, J.N. Vyas University, Jodhpur, [email protected]

Introduction:

The field of management is dynamic in nature. New tools and techniques are continuously being introduced to improve efficiency, productivity and profitability to any organisation. At present India is in a stage of transition involving social cultural and economic changes. It is gradually moving from tradition to modernity, from an industrial to an information society from welfare state to liberal market economy. Global competition is changing the relationship between management education and Business management in practice. This arouses the need of management that would result in efficient and effective utilisation of resources to fulfil the objectives.

Goyal 23

Today we have reached a stage where there is cut throat competition all over the world. Everybody wants to be the best and have ‘best’ but resources in terms of man, money, machine and material are limited. This arise the demand of quality business education,

But at the same time Business education pose a number of questions and challenges, such as mushrooming of management education Institutions, quality education in the business school, Demand of corporate world, Information technology, Changing business environment, role of administration & commitment. Against this background the present paper attempts to identify such issues and drawing the attention of all concerned to the managerial implications of this trend. The whole idea is to initiate a thought process on the relevant issues.

Historical background of management education:The first graduate school of business in USA was the Tuck School of Business; founded in 1900, part of Dartmouth College, providing Master of Science in commerce degree. In 1908; the graduate school of business Administration (GSBA) at Harvard University was established, it offered the world’s first MBA Program. INSEAD was the first European University offering MBA degree, followed in 1964 by IESE, UCD Smurfit Business School in 1964, Manchester Business School and London Business School in 1965 and so on.

Business education in India has a long history in India, dating back to 19th century, early business schools were focussed on commercial sides of business. (G Shaha 2012) ,India’s first B school was setup in 1886 in the southern city of Chennai i.e. Commercial school of Pacchippa Charties. Further in 1903, British government initiated secondary school level commerce classes at Presidency College in Calcutta with a focus on Secretarial practice, business communication, short hand typing, correspondence & accounting. The first college level business school was founded in 1913 in Mumbai in Sydenham College. Another college of Business was started in new Delhi in 1920 as commerce college, later it was renamed as Shri Ram College of commerce. The Indian Institute of Social Science was founded in the year 1948 as India’s first Management Programme with an intention to train manpower to create & spread the knowledge required for managing Industrial enterprise in India. Catholic community founded Xavier Labour Relations Institute (XLRI) at Jamshedpur in 1949. Indian Institute of Social welfare & Business Management (IISWBM) was set up in 1953 at Calcutta which is considered India’s first Official Management Institute. The first IIM appeared in 1961 in Calcutta followed by IIM Ahmedabad in 1962. These two schools promoted by federal Govt. The third IIM started in Bangalore in 1973 and the fourth IIM was opened in Lucknow in the Year 1984. From 1991 business education got momentum and increased at faster speed. The growth of Business school can be seen in the following table


Table -1Number business schools in India

Year No. of B School

In1988 100

By1993 200

By1998 400

By2003 800

By2008 1700

By2012 2400

By 2014 4500Source: Compiled from various Reports, News papers

The above table shows that, the number of business schools have doubled in every five years from 1988 to 2008. But in last five years it has tripled to 4500 B’ schools amounting to as many as 3,60,000 MBA seats. This mushrooming growth in business school has created many problems. More than 185 B’ schools have been closed down in the year 2012 and many other schools are struggling for survival.

Emerging issues in b’ educations (problem areas)• What should be the role and mission of B’ Schools. Especially is it the function of

the business school to prepare employees or to prepare leaders. • The mushrooming of B’ Schools provide more opportunities for the students

but at the same time it raises some doubts. How does a student evaluate a management institute and its programme? This question is particularly relevant as management education in India is of very uneven quality. On the one hand some of the leading institutions are comparable to the best in the developed countries whereas some institute don’t even have proper infrastructure and faculty.

• In India multi technologies co exist. On one hand we have traditional institutes untouched by waves of technological revolution whereas on the other hand there are institute with art of the facilities of education technology. For example, there are still many institutes where the teaching is limited to ckalk and black board based lectures whereas there are institutes having LANs, WANs, VANs, CANs World Wide Web and Multimedia system. This wide disparity in delivering of education is also a question.

• Another issue is the faculty in business schools. As we know visiting faculty teaches and leaves. The core faculty teaches and stays to interact. As much of the development of management students take place outside the classroom, a critical mass of core faculty is a must and appointment of visiting faculty is a question.

• The curriculum of management studies programme needs to be revised in the changed socio-cultural economic scenario. University business school have very poor reputation in this regard. There are a number of university business school where revision and updating of courses were done a decade back. Who is responsible for that? In the years to come, a number of inputs are to be included for strengthening the B Education programme.

Goyal 25

• Teacher occupies key position and any amelioration in management education must start with the teacher, in fact there is no substitute for a good teacher. Who owns the responsibility of preparing /producing management teachers? Who would be a very powerful resource of communication of knowledge and development of skills?

• The question is whether knowledge is power or information is power in management education?

• In the entire placement scenario the industry is the customer, the institute is the supplier and the MBA graduate student is the product supplied by the institute. Of late the customer (Industry) has started complaining about the product (MBAs). Some examples of the complaints are; they fly high; they change job very frequently; their attitude and behaviour is not as expected; they are less sincere and interested more in window dressing; they are not really very strong in their chosen area of specialisation. Of course their complaints are not valid for every MBA and the exceptions are always there. If the customer is not happy, there must be some reason. Who is responsible for the situation?

• There is misconception among the companies that managers from the elitist and topmost management institutes only are bright. This in-built superiority complex can be a deterrent to the progress of the company as well as to the students. Some times managers from these institutes do not come up to the desired level of competence. When asked to find solution to practical problems they become helpless.

• We will have to think through how to use the international opportunities and need of our country for the development of management education.

Recommendations to Improve Business Education:1. Selection of Business School by the students: (student’s perspective) The students should take all precautionary measure before joining business

schools as selection of the right business school is the first step towards achieving right management education. They should look for accredited business schools. What is needed is to provide relevant course content, case study discussion, industry interaction and proper placements. The business school focuses on these issues should be preferred. Margaret Mac Namara and et al.(1990) stressed on action learning in management education as management institutes are often criticized for focusing more on theory and on quantitative analysis while neglecting interpersonal relationship and quantitative finding. It is often stated that management education should be experience-based, active, problem oriented and modified by feedback and action learning serves the purpose

2. Selection of Students in Business schools: (Institute’s Perspective) Most college owners complain of not being able to have enough admission in spite

of investing on college infrastructure and startup costs. And those that are able to fill capacity they admit anyone who applies for admission thus resulting in poor input, leading to poor placements. Students admitted for the business education should be judged on the basis of attitude, ethics and managerial aptitude.


3. Selection of Faculty in Business Schools: The faculty should preferably be selected who have combination of the four areas

of expertise such as consultancy, teaching, research and industry. It is desirable to have research experience in management along with consultancy and teaching experience. Above all, the faculties should be strong scholars with an exposure to multiple audiences

4. Selection of Course Curriculum in Business School: The course curriculum should be designed to suit new perspectives for building

managerial and leadership skills. There is a strong need to focus management education Glocally (think globally; act locally). Management education has to give emphasis on making it relevant to the Indian context, the themes to be covered, and the way the topics have to be dealt with. Detailed coverage has to be developed for each subject. Since management is a practice oriented domain, management education has to incorporate an element of on-the job training. This will need a mix of concepts, cases, exercises as well as simulations for themes such as business strategy, market planning, business negotiations, leadership, business ethics and team work. The main lesson that one can garner from an analysis of US Business education is that they give considerable attention to context design and theme delivery modes. It is true that when the course content will be customized then students will not face unemployment problem.

Past studies and their suggestions on improvement of b’ Education(Hasan 1993, Raelin 1993), i n U S A reported that business schools chose increasingly to teach what they wish to, rather than what business organizations need. A UK study reported that when universities depend on tax payers, their independence and standards suffer. As per this, American Universities with their mighty reserves of talent and money, look comfortably placed to compete with the new academic powerhouses emerging in India and China (Stevens 2004).

Conclusion:• The management education system is like an automobile car with four wheels;

the institute, the industry, the faculty, and the students. All these four wheels have to be properly balanced and aligned with each other to realise the fruits of B Education in India. B education is required in each and every field of life. To becoming internationally competitive we will have to focuses on the quality education. Good Quality business education aim at the development of balanced personalities who are culturally refined, emotionally stable, ethically sound, intellectually alert, socially efficient, spiritually upright and physically strong. Good education also aims at developing men who can play as well as work, men who can consume as well as create.

In light of above, a total revamping of the existing system is urgently required. In the perspective of challenges and opportunities in the entire socio-techno-eco-cultural set up, we have to build up such a dynamic and open system which can become a source of preparing young management professionals with harmonious development. Hence there is a need for excellence in management education. The success of management institute and management education would depend on how quickly and effectively they are able to adapt and address themselves to the needs of the society and changing business environment.

Goyal 27

References:Angehrn, A. &Nabeth, T., (1997)”Leveraging Emerging Technologies in Management

Education: Research and Experiences”, European Management Journal, Vol.15, No.3, pp.275-285. at:http://www.financialexpress.com/printer/news/527793 (accessed 24 October 2010)

Bandyopadhyay,R.,(1991))”Indian Management Education: Need for a Constructive Behrman, J. N. and Levin, R. (1984). Are business schools doing their job? Harvard

Business Review, January/February, 140-147.Business Standard, Mumbai, May 22, 2013, Debate”, Economic and Political Weekly,

Vol.26, No.48, pp.M118-M122.D’Mello,B.,(1999)”Management Education: A Critical Appraisal”, Economic and

Political Weekly, Vol. 15, No. 22 (May 31, 1980), pp. Published,Vol.34,No.48,pp.M169-M176.

Dr. Priya,A.,(2007)”Global World & Quality of Management Education in India”, available at : ttp://www.indianmba.com/faculty_column/fc631/fc631.html(accessed 25 October 2010)

Matthai,R. J.,(1980)”The Organisation and the Institution: Management Education in India”, Economic and Political Weekly, Vol.15,No.22,pp.M69-M72

Ravichandran,N.,(2009)”A perspective on management education in India”, available

Saxena,N.,(2009)”How to improve management education in India?”, available at WWW.timesascent.in/article/83/2009091020090910145228171479914ef/Howimprovemanagement-education-in-India.html,(accessed 20 October 2010),

Saha Goutam, Management Education in India: Issues & Concerns, JIKRBMA, volume 2 isue-1

Thorat,S.,(2005)”Higher Education in India Emerging Issues Related to Access, Inclusiveness and Quality”,paper presented at the Nehru Memorial Lecture,26 November,University of Mumbai,Mumbai, available at: http//www.ugc.ac.in/ chairman _nehru_lecture.pdf(Accessed 29 October2010).

28

Human resource management and organizational performance in Nepalese commercial banks

- Bandana Panta



NMJ

AbstractThis paper examines the impact of human resource management on organizational performance in Nepalese commercial banks. The employee satisfaction, organizational commitment, ROA, ROE and EPS are selected as Organizational performance variables for this study and these five are the Dependent Variables. Recruitment and Selection, Training and Development, Compensation Practices and Performance Appraisal are the independent human resource practices variables. The study involves both primary and the secondary data. The primary data are collected from the questionnaire survey of 17 commercial banks. The secondary data are downloaded from the annual report of the sample banks. The Kendall’s Tau correlation and step wise regression models are applied to test the significance and importance of human resource management practices in organizational performance in Nepalese commercial banks.The result shows that there is positive and significant relationship between human resource management practices and employee satisfaction and organizational commitment. Recruit-ment and selection and compensation practices has major role for influencing ROA and EPS. Likewise all the independent variable play major role for influencing ROE in Nepalese commercial banks..Keywords: Recruitment and selection, training and development, compensation practices, performance appraisal, employee satisfaction, organizational commitment, ROA, ROE and EPS.

1. IntroductionHuman resource management for an organization is an essential asset. Today the time has changed when managing HR practices was the responsibility of HR departments. Nowadays, performance enhancement is the responsibility of every manager in an organization. Therefore, while making strategic decisions on HR practices, it is imperative to involve line managers. In fact, the line managers are the real HR managers who are the most responsible for performance enhancement. HR departments heads and experts working in the departments have to understand this message to cooperate with the line management in the management of this valued resource to raise organizational performance (Adhikari, 2009).Human resource management (HRM) is the new version of personnel management in the age of neo-liberalism and market economy. It is concerned with the “people” dimension in management. (Decenzo and Robbins, 1993). It is the strategic and

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operational management of activities focusing on the human resources in an organization. (Mathis and Jackson, 1991). The emerging global competition, customer focus and the speed and flexibility have created challenges in all types of organization in modern market economy. Whether an organization is service-oriented or manufacturing, it is important to respect and use its human resource in order to achieve this advantage in these times of increasing challenges and opportunities in external environment, HRM is the most important assets in an organization.The study of human resource management practices has been an important and critical area in management and organizational performance from last several years especially in the banking industry. Influence of human resource management practices on organizational performance has been an important area of research in past 25 years indicating positive relationship between HR practices and organizational performance (Quershi et al., 2007).A firm’s human resource management practices have an economically and statistically significant impact on the performance of the organization. It has significant impact on the employee satisfaction, organizational commitment, ROA, ROE, EPS etc. Though there are growing evidence showing an association between human resource management practices and firm performance (Becker and Gehart, 1996), with very few exceptions, the prior industry studies focus only on the manufacturing sector. Despite the fact that, most employees work in service producing industries (Bartel, 2004), the HRM environment can be even more important determinant of productivity in service sector than the manufacturing sector in today’s scenario. In regard to this, the study finds the impact of HRM practices on the organizational performance in the Nepalese commercial bank.There are not sufficient study carried out to analyze the relationship between HRM practices and the organizational performance in context of Nepal using the recent data. There are numerous studies showing relationship between HRM practices and organizational performance. Numerous studies for e.g. (Singh, 2004), Wan et al. (2002), (Mudashiru et al., 2013) etc have shown the positive relationship between the HRM practices and the organizational performance. However some studies (Guest, 1997) showed that it is important to examine HRM practices on organizational performance in a developing country. Previous studies in Nepal are quite limited in investigating HRM issues in banks. Furthermore, despite the abundance of the studies in the west which revealed the positive relationship between HRM practices and organizational performance (Drogr and Vickery, 1999) so far there is no consistent agreement on what to measure in regards to organizational performance (Becker and Gehart, 1996). This study seeks to find the issues of HRM practices that affect the organizational performance in Nepalese banking industry.The study examined the relationship between HRM practices and the firm performance. HRM practices were creating positive effect on organizational performance. Results calculated through regression suggested that effective implementation of key HRM practices increases organizational performance Wan et al. (2002).Human resource management practice is directly linked with the organizational performance. Singh (2004) found that there is a positive relationship between


several HRM practices like selection, performance appraisal, training, compensation system, employee participation with firm performance. Out of these practices only training and compensation system had positive impact on firm performance and market performance of the firm. The study carried out by Quershi et al. (2007) concluded that there is positive effect of selection, training and development, performance appraisal, compensation and employee participation with the organizational performance. Out of these practices, only selection, training and employee participation have positive impact on organizational performance and market performance of the organization. The study analyzed the relationship between human resource management practices and employees’ outcomes. The results of correlation showed a significant relationship of compensation practice, promotion practice and performance evaluation practice with job satisfaction, organizational commitment, organizational citizenship behavior, turnover intention and employees’ perceived performance. Performance evaluation practice was proved to be the strongest predictor of job satisfaction. Compensation practice was proved to be the strongest predictor of organizational citizenship behavior and organizational commitment and employees’ perceived performance followed by promotion practice. Only Compensation practice was proved to be the strongest predictor of turnover intention Ali et al. (2014).The purpose of this study is to investigate the relationship and impact of human resource management practices on organizational performance in Nepalese commercial banks. Specifically, it examines the impact of recruitment and selection, training and development, compensation practices and performance appraisal on organizational performance as employee satisfaction, organizational commitment, ROA, ROE and EPS in Nepalese commercial banks.The remainder of this paper is organized as follows. Section two describes the sample, data and methodology. Section three presents the empirical results and the final section draws conclusions and discusses the implications of the study findings. 2. Methodological aspectsThe study is based on both the primary and the secondary data. The primary data were collected through questionnaire survey on 17 different commercial banks. The total numbers of the respondent are 150. The secondary data were collected through the annual reports. Only one year (2013/14) data were used as secondary data. The data were collected on the HRM practices through questionnaire on recruitment and selection, training and development, compensation practices, performance appraisal, employee satisfaction and organizational commitment and on return on assets, return on equity and earning per share.The descriptive analysis has been undertaken in this study. This study has also employed casual comparative research design to determine the cause effect relationship between various dependent of the HR variables on the organizational performance in context of Nepalese commercial banks. More specifically, this study examines the impact of recruitment and selection, training and development, compensation practices and performance appraisal on employee satisfaction, organizational commitment, ROA, ROE and EPS. Table 1 shows the number of commercial banks selected for the study. There are total 17 commercial banks taken as sample banks for primary data for the study.

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Likewise one year secondary data were taken from these commercial banks on ROA, ROE and EPS.

Table 1Sample banks for primary data

S.N. Name of Bank Office/Branch location No. of Respondents

1 Nepal Bank Limited New Road 14

2 Agriculture Development Bank Ramshah Path 12

3 RastriyaBanijya Bank Ramshah Path 13

4 Everest Bank Limited Lazimpat 11

5 Himalayan Bank Limited New Baneswor 5

6 Nabil Bank Limited Kanthipath 10

7 Bank of Kathmandu Durbar marg 10

8 Prime Commercial Bank Limited New Road 9

9 Nepal SBI Bank Limited Hattisar 7

10 NIC Asia Bank Limited Trade Tower 7

11 NMB Bank Limited Babarmahal 11

12 Global IME Bank Limited Lazimpat 8

13 Nepal Investment Bank Limited Putalisadak 7

14 Janata Bank Limited Shankhamul 8

15 Siddhartha Bank Limited Hattisar 8

16 Citizen Bank International Limited Durbar marg 5

17 Sunrise Bank Limited GairiDhara 5

Total 150

The ModelAs a first approximation, the model estimated in this study assumes that the organizational performance depends on several human resource management practices. The human resource management practices variables considered are recruitment and selection, training and development, compensation practices and performance appraisal as independent variables. The organizational performance variables are employee satisfaction, organizational commitment, ROA, ROE and EPS as dependent variables. There are five models for this study.Model 1: The dependent variable is Employee Satisfaction (ES) and HRM practices variable as independent variable.ES= α+ ß1RSi+ß2TDi+ß3CPi+ß4PAi+eiModel 2: The dependent variable is Organizational Commitment (OC) and HRM practices variable as independent variable.OC= α+ ß1RSi+ß2TDi+ß3CPi+ß4PAi+eiModel 3: The dependent variable is Return on Assets (ROA) and HRM practices as independent variable. ROA= α+ ß1RSi+ß2TDi+ß3CPi+ß4PAi+eiModel 4: The dependent variable is Return on Equity (ROE) and HRM practices as independent variable.ROE= α+ ß1RSi+ß2TDi+ß3CPi+ß4PAi+ei


Model 5: The dependent variable is Earning Per Share (EPS) and HRM practices as independent variable.EPS= α+ ß1RSi+ß2TDi+ß3CPi+ß4PAi+eiWhereas, ES= Employee Satisfaction, OC= Organizational Commitment, ROA= Return on Assets, ROE= Return on Assets, EPS= Earnings Per Share as dependent variable, RS= Recruitment and Selection, TD= Training and Development, CP= Compensation Practices, PA= Performance Appraisal as independent variables in the model.Likewise the following hypotheses are tested in this study:H1: There is a positive relationship between HRM practices and employee satisfaction.H2: There is a positive relationship between HRM practices and organizational commitment.H3: There is a positive relationship between HRM practices and ROA.H4: There is a positive relationship between HRM practices and ROE.H5: There is a positive relationship between HRM practices and EPS.

3. Presentation and analysis of dataDescriptive StatisticsTable 2 shows the descriptive statistics. The table shows the weighted mean value of different HRM practices.

Table 2HRM Practices N Weighted Mean

Recruitment and Selection 150 4.178Training and Development 150 3.418Compensation Practices 150 3.576Performance Appraisal 150 3.535Employee Satisfaction 150 3.776Organizational Commitment 150 4.086

The recruitment and selection practices has the highest value weighted value which reveals that recruitment and selection practice is effectively followed in Nepalese commercial banks. Likewise training and development has lowest weighted mean value which reveals that training and development practice is not effectively followed in Nepalese commercial banks. Employees are not satisfied with training and development programs provided to them. Nepalese commercial banks should improve the training and development practices followed in their organization.

Correlation AnalysisTable 2 presents the Kendall’s tau correlation coefficient of the variables used in our model. According to our data, the highest correlation is observed to be 0.639 between ROA and EPS. Employee satisfaction and organizational commitment is positively related to all the independent variables. They are also observed to be significant at 1% level of significance with all the independent variables. ROA is positively correlated to recruitment and selection and compensation practices. This indicates that better

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the recruitment and selection and compensation practices higher will be the ROA. But it doesn’t seem to be significant at 1% and 5% level of significance. ROA has negative relation with training and development and performance appraisal. ROE is positively correlated to all the independent variables. This indicates better the human resource management practices higher will be the ROE. The data shows only recruitment and selection and compensation practices have significant relationship with ROE. Likewise EPS has positive relation with recruitment and selection and compensation practices and negative relation with training and development and performance appraisal. But the data shows recruitment and selection, compensation practices and performance appraisal have significant correlation. This indicates better the recruitment and selection and compensation practices higher will be the EPS.

Table 3Correlations matrix for all dependent and independent variables

ES OC ROA ROE EPS RS TD CP PA

ES 1

OC .550** 1

ROA -0.068 -0.058 1

ROE .136* .166** .605** 1

EPS -0.029 0.061 .639** .394** 1

RS .359** .540** 0.077 .288** .212** 1

TD .568** .286** -0.073 0.071 -0.07 .133* 1

CP .542** .496** 0.002 .109* .118* .476** .320** 1

PA .596** .314** -.121* 0.043 -.115* .167** .574** .337** 1**. Correlation is significant at the 0.01 level (1-tailed).*. Correlation is significant at the 0.05 level (2-tailed).Regression AnalysisThe regression of human resource management practice on organizational performance has been analyzed by defining organizational performance in terms of employee satisfaction, organizational commitment, ROA, ROE and EPS. The regression of human resource management variables on employee satisfaction produced the results as indicated in Table 4. The table indicates that beta coefficients are positive for all the independent variables recruitment and selection, training and development, compensation practices and performance appraisal. Also the beta coefficients are significant at 1% level of significance. The result indicates that better the human resource management practices higher will be the employee satisfaction. Human resource management practices play major role in influencing employee satisfaction in Nepalese commercial banks.


Table 4: Regression of human resource management variables on employee satisfactionThe table shows the stepwise regression analysis results based on the weighted mean value of perceived five point likert value of 17 commercial banks of 2014 survey. The model is ES= α+ ß1RSi+ß2TDi+ß3CPi+ß4PAi+ei where ES, RS, TD, CP, PA are Employee Satisfaction, Recruitment and Selection Practices, Training and Development Practices, Compensation Practices and Performance Appraisal.

Model InterceptRegression Coefficients of

Adj R2 SEE FRS TD CP PA

1 1.789(6.727)*

0.476(7.525)* 0.272 0.37314 56.627*

2 1.940(11.333)*

0.537(10.863)* 0.440 0.32727 118.009*

3 1.694(8.571)*

0.582(10.638)* 0.429 0.33029 113.158*

4 1.471(7.563)*

0.652(11.958)* 0.488 0.3129 142.997*

5 0.499(2.250)**

0.390(8.431)*

0.482(11.684)* 0.620 0.2696 122.491*

6 0.908(5.071)*

0.396(9.267)*

0.424(9.035)* 0.637 0.26331 131.959*

7 0.726(3.849)*

0.384(7.907)*

0.475(9.299)* 0.638 0.26298 132.484*

8 0.404(1.970)***

0.229(4.320)*

0.411(10.130)*

0.283(5.159)* 0.676 0.24879 104.762*

9 0.649(3.616)*

0.235(4.264)*

0.370(8.024)*

0.284(4.313)* 0.676 0.24883 104.710*

10 0.161(0.804)

0.224(4.501)*

0.252(4.859)*

0.233(4.414)*

0.278(4.495)* 0.714 0.23388 93.960*

Notes: 1. Figures in parentheses are t-values. 2. The asterisk (*) sign indicates that the results are significant at 1% level of significance. 3. Dependent variable is employee satisfaction.The regression of human resource management practices on organizational commitment shows that all the beta coefficient are positive in all the equations as indicated in Table 5. The beta coefficient is also observed to be significant at 1% level of significance in all the equations. Thus we can conclude that better the human resource management practices better will be the organizational commitment. This indicates that human resource management variables plays major role in influencing organizational commitment in Nepalese commercial banks.

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Table 5: Regression of human resource management variables on organizational commitment

The table shows the stepwise regression analysis results based on the weighted mean value of perceived five point likert value of 17 commercial banks of 2014 survey. The model is OC= α+ ß1RSi+ß2TDi+ß3CPi+ß4PAi+ei where OC, RS, TD, CP, PA are Organizational Commitment, Recruitment and Selection Practices, Training and Development Practices, Compensation Practices and Performance Appraisal.



1 0.131(0.359)

0.947(10.916)* 0.442 0.51168 119.162*

2 2.374(7.190)*

0.501(5.248)* 0.151 0.63124 27.541*

3 1.068(3.272)*

0.844(9.331)* 0.366 0.54549 87.073*

4 1.682(4.450)*

0.680(6.413)* 0.212 0.60814 41.130*

5 -0.876(-2.259)**

0.880(10.866)*

0.376(5.212)* 0.526 0.47168 83.697*

6 0.563(1.563)

0.253(2.934)*

0.742(7.834)* 0.397 0.53199 50.077*

7 0.336(0.891)

0.694(7.148)*

0.359(3.518)* 0.411 0.52565 50.073*

8 -0.980(-2.588)**

0.702(7.195)*

0.298(3.983)*

0.312(3.077)* 0.552 0.45866 62.167*

9 0.306(0.806)

0.092(0.787)

0.688(7.062)*

0.284(2.043)** 0.410 0.52634 35.498*

10 -1.213(-3.126)*

0.698(7.244)*

0.146(1.452)

0.263(2.577)**

0.267(2.226)** 0.564 0.45257 49.127*

Notes: 1 Figures in parentheses are t-value 2. The asterisk (*) sign indicates that the results are significant at 1% level of significance. 3. Dependent variable is organizational commitment.The regression of human resource management variables on ROA has been shown in Table 6. The table indicates that beta coefficient is negative for performance appraisal and positive for recruitment and selection, training and development and compensation practice. This indicates that better the recruitment and selection, training and development and compensation practice higher will be the ROA. The recruitment and selection variable is significant in all the models. Hence this shows that recruitment and selection may be more important variable for higher ROA in Nepalese commercial banks.


Table 6: Regression of human resource management variables on ROAThe table shows the stepwise regression analysis results based on the weighted mean value of perceived five point likert value of 17 commercial banks of 2014 survey. The model is ROA=α+ ß1RSi+ß2TDi+ß3CPi+ß4PAi+ei where ROA, RS, TD, CP, PA are Return On Assets, Recruitment and Selection Practices, Training and Development Practices, Compensation Practices and Performance Appraisal.

Models InterceptRegression Coefficients of


1 0.660(1.630)

0.228(2.370)** 0.030 0.56825 5.619**

2 1.595(5.267)*

0.006(0.063) 0.007 0.57893 0.004

3 1.155(3.353)*

0.128(1.346) 0.005 0.57543 1.812

4 2.000(2.580)*

-0.109(-1.087) 0.001 0.57664 1.182

5 0.734(1.566)

0.233(2.383)**

0.027(0.315) 0.024 0.56999 2.842***

6 1.240(3.162)*

0.043(0.459)

0.146(1.418) 0.000 0.57697 1.007

7 1.581(3.863)*

0.216(2.050)**

-0.209(-1.889)*** 0.022 0.5705 2.706***

8 0.732(1.551)

0.231(1.897)***

0.028(0.306)

0.004(0.032) 0.017 0.57194 1.882***

9 1.535(3.734)*

0.141(1.117)

0.207(1.965)***

-0.324(-2.146)** 0.024 0.57002 2.223

10 1.020(2.109)**

0.236(1.967)***

0.159(1.271)

0.064(0.498)

-0.330(-2.207)** 0.043 0.5645 2.667**

Notes: 1 Figures in parentheses are t-value 2. The asterisk (*), (**) and (***) sign indicates that the results are significant at 1% , 5% and 10% level of significance. 3. Dependent variable is ROA.Table 7 shows the regression results for the dependent variable of ROE. The table shows that the beta coefficient is positive for all the variables. This indicates that better the human resource management practices higher will be the ROE. The recruitment and selection and training and development practices are significant in all the models. Hence we can conclude that recruitment and selection and training and development may be more important variable for influencing ROE in Nepalese commercial banks.

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Table 7: Regression of human resource management variables on ROEThe table shows the stepwise regression analysis results based on the weighted mean value of perceived five point likert value of 17 commercial banks of 2014 survey. The model is ROE=α+ ß1RSi+ß2TDi+ß3CPi+ß4PAi+ei where ROE, RS, TD, CP, PA are Return On Equity, Recruitment and Selection Practices, Training and Development Practices, Compensation Practices and Performance Appraisal.

Model Intercept Regression Coefficients of Adj R2 SEE F

RS TD CP PA

1 -23.872(-2.954)*

10.905(5.672)* 0.173 11.33957 32.176*

2 4.847(0.758)

4.920(2.664)* 0.039 12.22212 7.095*

3 2.973(0.406)

5.227(2.576)** 0.036 12.24016 6.638**

4 5.025(0.657)

4.707(2.193)** 0.025 12.31313 4.810**

5 -33.147(-3.593)*

10.288(5.339)*

3.466(2.018)** 0.190 11.22374 18.457*

6 -4.309(-0.522)

3.668(1.861)***

3.757(1.738)*** 0.052 12.13953 5.106*

7 -2.815(-0.321)

4.040(1.791)***

2.838(1.196) 0.039 12.22235 4.044**

8 -31.844(-3.456)*

12.522(5.268)*

4.456(2.450)**

3.920(1.590) 0.198 11.16584 13.275*

Notes: 1 Figures in parentheses are t-value 2. The asterisk (*), (**) and (***) sign indicates that the results are significant at 1% , 5% and 10% level of significance. 3. Dependent variable is ROE.Table 8 shows the regression of human resource management variables on earning per share. The table shows that the beta coefficient is negative for training and development and performance appraisal. However the beta coefficient is positive for recruitment and selection and compensation practices. This indicates that better the recruitment and selection and compensation practices higher will be the EPS. The table shows that recruitment and selection variable is significant in all the equations. Hence we can conclude that recruitment and selection practices has major role in influencing EPS in Nepalese commercial banks.

Table 8: Regression of human resource management variables on EPS

The table shows the stepwise regression analysis results based on the weighted mean value of perceived five point likert value of 17 commercial banks of 2014 survey. The model is EPS= α+ ß1RSi+ß2TDi+ß3CPi+ß4PAi+ei where EPS, RS, TD, CP, PA are Earning Per Share, Recruitment and Selection Practices, Training and Development Practices, Compensation Practices and Performance Appraisal.



1 -21.009(-1.343)

13.579(3.648)* 0.076 21.95897 13.304*

2 37.795(3.152)*

-0.614(-0.177) 0.007 22.92229 0.031

3 3.496(0.260)

9.004(2.416)** 0.031 22.48568 5.836**

4 47.544(3.344)*

-3.351(-0.841) 0.002 22.87017 0.707

5 -14.057(-0.778)

14.041(3.719)*

-2.598(-0.772) 0.074 21.989 6.932*

6 11.776(0.771)

-4.171(-1.144)

10.676(2.669)* 0.033 22.46231 3.578**

7 22.502(1.412)

12.904(3.147)*

-9.320(-2.162)** 0.055 22.21163 5.328*

8 -15.113(-0.831)

12.229(2.607)*

-3.401(-0.948)

3.179(0.654) 0.070 22.03198 4.746*

Notes: 1 Figures in parentheses are t-value 2. The asterisk (*), (**) and (***) sign indicates that the results are significant at 1% , 5% and 10% level of significance. 3. Dependent variable is EPS.4.Summary and conclusionThe concept of Human Resource Management is the improved version of the term Personnel Management. Its emerging concept emphasizes the integration of both the strategic and operational activities to achieve the desired goals. It is the organizational function that deals with the issues related to the people such as hiring, training, motivating and communicating the employees. HRM practices as recruitment and selection, training and development, compensation practices and performance appraisal are essential to achieve these results. Human resources are the valuable assets of an organization. If they are managed and treated properly, they help to increase the organizational productivity through their full commitment and capability and enable the firm to compete worldwide.This study aims at examining the impact of human resource management practices in organizational performance in Nepalese commercial banks. It determines the impact of recruitment and selection, training and development, compensation practices and performance appraisal on employee satisfaction, organizational commitment, ROA, ROE and EPS. This study is based on the descriptive and casual comparative study of primary and secondary data of 17 commercial banks with 150 respondents.


Recruitment and selection has the highest weighted mean value which reveals that it is followed effectively in Nepalese commercial banks. Likewise training and development has lowest weighted mean value which indicates that training and development practice is not effectively followed in Nepalese commercial banks. The correlation result shows all the independent variables have a major influence on employee satisfaction and organizational commitment. ROA is positively correlated to recruitment and selection and compensation practices. ROE is positively correlated to all the independent variables and EPS has positive relation with recruitment and selection and compensation practices and negative relation with training and development and performance appraisal.The regression result shows that all the independent variables have major influencing role for employee satisfaction and organizational commitment. Likewise recruitment and selection may be more important variable for higher ROA. Similarly that recruitment and selection and training and development may be more important variable for influencing ROE and recruitment and selection practices has major role in influencing EPS in Nepalese commercial banks.This study concluded that recruitment and selection practices and organizational commitment are effective in Nepalese commercial banks. But training and development practice, compensation practice and performance appraisal practice is not so effectively followed in Nepalese commercial banks. Employees think that if the Nepalese commercial banks have good HRM practices then it will increase employee’s commitment towards their organization and job as well as employee satisfaction towards their job. Most of the employees are satisfied with the recruitment and selection practices in Nepalese commercial banks. But they are not well satisfied with the training and development, compensation and performance appraisal practice. Hence Human Resource Management practices are still needed to be improved in Nepalese commercial banks. ReferencesAdhikari,D.R. (2009). Human Resource Management. Kathmandu: Buddha Academic Enterprises

PVT. LTD.Ali, N., kakakhel, S. J., Rahman, W., & Asham, A. (2014). mpact of Human Resource Management

Practices on Employees’ outcomes (Empirical Evidence fromPublic Sector Universities of Malakand Division, KPK, Pakistan). Life Science Journal , 11 (4), 68-77.

Becker, B., and Gerhart, B. (1996). The impact of human resource management on organizational performance: Progress and prospects. Academy of management journal, 39(4), 779-801.

Bartel, A. P., (2004). Human resource management and organizational performance: Evidence from retail banking. Industrial and Labour relations Review, 57(2), 181-203.

Decenzo, D.A. and Robbins, S.P. (1993), Personnel/Human Resource Management. New Delhi: Prentice-Hall of India.

Guest, D. (1997). Human resource management and performance: a review and research agenda. International Journal of Human Resource Management, 8,263-276.

Mudashiru, M. A., Ilesanmi, A. O., & Aremu, M. (2013). The Impacts of well planned Recruitment and Selection Process on Coporate performance in Nigerian Banking Industries. International Journal of Academic Research in Business and Social Sciences , 3 (9), 633-648.

Mathis, R.L. and Jackson, J.H. (2004), Human Resource Management, New York: West Publishing Company.

Singh K (2004). Impact of HR practices on perceived firm performance in India. State Bank of Pakistan, Number of Reporting Scheduled Banks and Their Branches 1976 to 2008 SBP, Karachi, Pakistan Available

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Impact of human resources practices on job satisfaction of women employees from manufacturing industries: strategic initiatives of

Tiruvannamalai district

- E. Hemavathi



NMJ

AbstractThis study aims at exploring the impact of HR practices on job satisfaction of women employee in the context of Tiruvannamalai district. A total of 60 responses from various manufacturing firms were collected and analyzed objectively. It was found that HR practices have significant association with job satisfaction of women employee. In addition, human resource planning and training and development were found to have positive impact on job satisfaction of women employee. Academicians, researchers, policy-makers, practitioners, students, local and foreign entrepreneurs of Tiruvannamalai district and other similar district could benefit from this paper by exploring the association between HR practices and job satisfaction of women Employees.

Keywords: Job satisfaction , women employee, HR practices, manufacturing firms

*E. Hemavathi, Ph.D Research Scholar, Anna Centre for Public Affairs, University of Madras, Chennai

IntroductionThe importance of job satisfaction is fairly evident from description of the importance of maintaining morale in the industry. If a worker is not satisfied with his work, then both the quantity and quality of his output will suffer. If her job satisfaction increases then there is an improvement in both the quality and quantity of production. Organizations in which the workers are satisfied with their work are also characterized by a high morale. The following things are generally important of creating job satisfaction. It is desirable that complaints of the workers are heard patiently and the problems be solved as far as possible organizations, in which the worker’s demands are not heeded suffer because the workers lose confidence in the management and become frustrated. This study has been conducted to fill the existing research gap and to explore the relationship between HR practices and job satisfaction in the context of Tiruvannamalai district. This study would augment the contemporary research and practice of human resource practice. Furthermore, it would also be useful for the developed countries as they find developing countries as attractive places for investment due to their large markets, and cheap and skilled workforces (Budhwar and Debrah 2001).

Hemavathi

Elucidation of Job SatisfactionGreenberg and Baron (1999:170) defined job satisfaction as “an individual’s reaction to their job”. This reaction they categorized as cognitive, affective and evaluative. Smith, Kendall and Hulin (1969) defined job satisfaction as the feelings a worker has about his job, with different feelings attached to different aspects of the job. They saw it as a function of the perceived characteristics of the job relative to an individual’s frame of reference (internal standard(s) used in making an evaluation).Smith et al (1969) offered that these internal standard(s) are related to: An individual’s prior experience An individual’s set / predilection for making a given response Expectations Threshold for change in a given stimulus dimensionKreitner, et al (1999:197) described job satisfaction as “an affective / emotional response towards various facets of one’s job”. It is an individual’s degree of positive attitudes towards their current job, as an individual could be satisfied with one aspect but dissatisfied with another. Job satisfaction is, therefore, not a unitary concept that can be explained by a single factor, but rather a multi-faceted concept that is defined by a number of factors. Additionally, alternatives available to an individual influence his / her total evaluation of the job and must increase / decrease the extent to which various aspects of the situation contribute to total satisfaction (Smith, et al, 1969).

Importance of Job SatisfactionJob Dissatisfaction is revealed by a number of factors. Bargraim, Potgieter, Schultz, Viede and Werner (2003) offered that when employees are dissatisfied, they display the following responses, amongst others:

Exit: Terminating the contract of employment with the current employer or actively seeking alternative employment by applying for a job.

Voice: Employees unhappy about their jobs may put forward alternative suggestions or demand attention to their work problems. To this end, employees have been known to toyi-toyi in South Africa.

Loyalty: A state of inactivity may be shown by dissatisfied employees. They would, however, remain positive to resolution of problems encountered.

Neglect: Intentionally letting the work conditions deteriorate without taking the necessary steps to rectify, absenteeism, less effort and making more mistakes.

Nel, et al (2003) mention that current research has not found a direct relationship between job satisfaction and performance, but a general agreement exists that job satisfaction influences absenteeism, turnover, commitment and loyalty.

Ross and Zander’s (1957) study of need satisfactions and turnover found that a degree to which an employee’s needs are supplied by their company has a significant direct relationship to their continued employment in that company. Those needs

41

were as follows, in order importance: Need for recognition. Need for autonomy. Need for doing important work. Need for evaluation by fair standards.They concluded that workers whose needs were satisfied on the job were more likely to maintain their employ with their company.

Alavi and Askaripur (2003) offered the following reasons highlighting the importance of job

Satisfaction: Dissatisfied employees leave the organization, Satisfied employees enjoy better health and increased life expectancy, Job satisfaction effects on the employee cross over into the individual’s private

life.Lawler (1994) suggests that organizational effectiveness can be influenced by job satisfaction since it is related to absenteeism and turnover. It therefore makes good business sense for organizations to be concerned with job satisfaction.

Theories of Job SatisfactionLawler (1994) identified four approaches in the theoretical work on satisfaction; viz. 1. Fulfillment Theory: this theory proposes that employees will be satisfied in a direct proportion to the extent to which their needs are satisfied (Schafer, 1953). That people’s satisfaction is a function of how much they receive and of how much they feel they should and / or want to receive (Locke, 1969).

Discrepancy theory: states that dissatisfaction is determined by the difference between the actual outcome and either the felt or the expected outcome. The bigger the discrepancy the bigger the dissatisfaction (Porter, 1961).

Equity theory: Adams (1965) argued that satisfaction is determined by a person’s perceived equity, which is determined by his / her input / outcome balance compared to some other’s perceived input / output balance. Two-factor theory: Herzberg, et al’s (1959) study revealed that satisfaction and dissatisfaction do not exist in a continuum running from satisfaction to neutral to dissatisfaction, but rather in two independent continua; satisfied to neutral and dissatisfied to neutral.

Elements of Job SatisfactionNel et al (2001) propose 2 main groups of factors that contribute to job satisfaction, viz. Personal and Organizational Factors. Organizational factors are the following:

Work: employees prefer interesting and challenging tasks that provide opportunities for self-actualization and recognition. For employees to execute their tasks efficiently, they need training and development, which serve to enable the employer to reach its HR targets, not forgetting that these two are of mutual interest to the employer and the employee.


Pay: the remuneration employees receive is perceived as an indication of their worth to the organization after evaluating their input and peer’s input against their pay. Luthans (2002a) concurred and offered that money is more persuasive than fringe benefits seeing that it encourages employees to perform better than is expected of them.

Promotion: opportunities for promotion are seen to be key in determining job satisfaction. Employees’ perception of the existence of the ability to self-actualize in the organization through getting a better job and the perception of that being applied fairly contribute towards job satisfaction. It therefore stands to reason that an objective performance measurement system needs to be in place and applied fairly because, according to Luthans (2002a), promotions usually occur when employees are appraised and remunerated for the efforts they have contributed to the organization.

Supervision: the amount of technical and social support extended by the supervisor to the employee influences job satisfaction. Supervisors direct the activities of employees by planning, leading, organizing and controlling the organization’s resources (Davis & Newstrom 2002). By being open to employees’ suggestions relative to their jobs and letting their inputs form partof the decisions that affect their jobs, they play an important role in employees’ job satisfaction (Nel, et al, 2001).

Role of Human Resource Practices to Improve Job SatisfactionVarious practices to improve job satisfaction are as follows:

Set new challenges for your employees: If you reveal that an employee stuck in a job because of lack of education or a downturn in the economy, it doesn’t mean his or her work has become drudgery. With a little imagination, he can create new challenges and make the best of the job he have. Here are some ideas for helping him/her in this situation:

I. Improve job skills: Let employee imagining himself/herself in dream job, employee might envision himself as an excellent project manager a confident communicator and a highly organized person.

ii. Let employee to develop his/her own project: Employee can take on a project that can motivate him and give him a sense of control. Start small, such as organizing a work-related celebration, before moving on to larger goals.

Iii. Let employee to mentor a co-worker: Once an employee mastered a job, he may find it becoming routine. Helping a new co-worker or an intern advance his or her skills can restore the challenge and the satisfaction he or she desire.

Match employee abilities with responsibilities:

If employ his responsibilities, job becomes boring. Following are some suggestions:

Break up the monotony: Take advantage of the work breaks. Read, listen to music and go for a walk. Even write a mail.

Hemavathi 43

Cross-training: If the work consist of repetitive tasks, such as entering data or working on an assembly line talk with the boss about training for a different task to fight boredom.

Volunteer for something different: If an employee hears that his company is launching a new project, he can volunteer for the work team.

Growth opportunities: Providing employees better growth opportunities is very important as far as understanding their abilities is concerned. Keep your employees always positive: Inculcate positive thinking in your employees to reframe their thought process about their job. Changing your attitude about work won’t necessarily happen overnight or increase the job satisfaction overnight. Following are some techniques: Stop negative thoughts: Pay attention to the messages an employee give himself. When he catches himself thinking his job is terrible, stop the thought in its tracks. Put things in perspective: Remember everyone encounters good days and bad days on the job. Look for the silver lining: “Reframing” can help an employee find the good in a bad situation. For example, employee receives a less than perfect performance appraisal and his boss warns him to improve or move to another job. Instead of taking it personally or looking for another job right away, look for the silver lining. Depending on where he work, the silver lining may be attending continuing education classes or working closely with a performance coach and having the satisfaction of showing the boss that you’re capable of change.

Learn from your mistakes: Failure is one of the greatest learning tools, but many people let failure defeat them. When an employee makes a mistake at work, let him learning tools, but many people let failure defeat them. When an employee makes a mistake at work, let him learn from it and ensure that he or she might not try that again.

Energize employees: the power of recognition There is more than enough research to show people are more motivated by recognition than money. Especially the young blood (generation) with lower experience as they are already very energetic and dynamic. Cultivating and motivating them through “Recognition” enhance their job satisfaction reducing attrition rate. Recognition can be provided by the following means: Ø Increasing their roles and participation.

Providing appropriate Designations. Involving them in decision making process. Empathize with employees. Providing Succession and career planning opportunities. Inspire employees: reward systems

The greatest management principle is that the things that get rewarded get done fast.


i. Empowering the people around us: The three general rules for a boss empowering the people around are appreciation, approval, and attention. Boss has to voice his thanks and gratitude to others on every occasion. He must praise them for every accomplishment & pay close attention to them when they talk and want to interact with their boss. These three behaviors alone will make a boss a master of human interaction and will greatly empower the people around him.

ii. To know how satisfied the employees are: How satisfied are our employees with their jobs and the company? One should be asking this question quite often. For the reason, that a worker who is not satisfied with his job would not only be looking for a new job, he or she will also be uninterested in performing at their full potential and they will transfer this negativity into their fellow workers and one will be left with a workforce where majority of the workers is discontent with their jobs. Job satisfaction is a product of many elements, some of the important ones are remuneration package, workforce environment, management style and the nature of the duties assigned.

Proper management style: The relationship between the manager and subordinates is a very critical one, if the managers or supervisors are disrespectful or unconcerned about their subordinate’s emotions the job satisfaction level is always going to be low, no matter what the other instrumental factors are. Nobody likes discriminatory treatment, insulting remarks or overly authoritative behavior. Employees should feel at ease in the workplace, therefore the supervision should not unnecessarily break the comfort level.

Conducive Workforce environment and health issues Bad working conditions include bad lighting, insufficient ventilation, hot temperatures or any other kind of health priority basis without waiting for someone coming up with complains. In addition to the physical safety, working environment should also be able to provide mental peace. Issues like overly aggressive supervisors, passionate co-workers or impractical work targets can spoil the peace of mind.

A good salary package can cancel out various minor issues Probably the most influential factor in job satisfaction is the remuneration one gets for his job, a reasonable pay will compensate for many hitches, for example work overload, overtime or even a stressful job. Job satisfaction is directly related to remuneration packages and dissatisfaction mostly come up when a worker feels that he is not being appropriately compensated for the work he is doing for the company.

Exploring economic condition of employees: HR person should explore the economic conditions and priorities of every employee through proper communication channel so that the increments and other financial rewards should meet the employees expectations. Though tackling this issue is quite subjective in nature but even then employees having severe financial needs will be served on priority basis as compared to other employees, keeping other employees in confidence. This boosts the employee overall job satisfaction and became more productive for an organization.

Hemavathi 45

Job satisfaction through job enrichment One of the key factors in good job design is job enrichment, most notably promoted by psychologist Frederick Hertzberg .He focused on the practice of enhancing individual jobs to make the responsibilities more rewarding and inspiring for the people who do them. Job enrichment expands the task set that someone performs. More stimulating and interesting work is provided that adds variety and challenge to an employee’s daily routine. This increases the depth of the job and allows people to have more control over their work. Job enrichment addresses these factors by enhancing the job’s core dimensions and increasing people’s sense of fulfillment.

Designing jobs that motivate There are five factors of job design that typically contribute to people’s enjoyment of a job which leads to job satisfaction:

Skill variety: Increasing the number of skills that individuals use while performing work. Task identity: Enabling people to perform a job from start to finish. Task significance: Providing work that has a direct impact on the organization or its stakeholders. Autonomy: Increasing the degree of decision making, and the freedom to choose how and when work is done. Feedback: Increasing the amount of recognition for doing a job well, and communicate the results of people’s work.

Work life balance: This is an emerging issue all across organizations as it is very essential aspect for every employee, especially females to balance their personal and professional lives. Research indicated that one of the important factors is tight, hectic and rigorous work schedules which adversely affect the employees satisfaction level, lead to high attrition rate in organizations. Facilities like Flexible working hours and work from home may results in better work life balance thus enhancing the overall job satisfaction.

Review of Literature

HR PracticesHR Practices are linked with the management of human resources, activities necessary for staffing the organization and sustaining high employee performance (Mahmood, 2004). The most common HR Practices are recruitment, selection, training and development, compensation, rewards and recognition (Yeganeh & Su, 2008). Six HR practices selective hiring, compensation policy, rewards, recognition, training and development and information sharing have been studied with relation to employee job satisfaction (Dessler, 2007). The present study examines the relationship between the HR Practices i.e training and development, rewards, recognition and women employee job satisfaction.


Job SatisfactionJob satisfaction means what are the feelings of different employees about the different dimensions of their jobs (Robbins, 2003). The level of satisfaction and dissatisfaction is another aspect which is related to employee job satisfaction (Spector, 1997). Job satisfaction may be the general behavior emerged due to different happenings at the work place; it may be supervisor’s behavior, relationship with peers or the work environment (Janet, 1987) .Various factors such as an employee needs and desires, social relationships, job design, compensation, developmental opportunities and aspects of work-life balance are ijcrb.webs.com considered to be some of the key factors of job satisfaction (Byars & Rue, 1997; Moorhead & Griffin, 1999). According to (Robbins 1999), a satisfied workforce can increase organizational productivity through less distraction caused by absenteeism or turnover, few incidences of destructive behavior, and low medical costs.

ObjectivesThe main purpose of the study was to identity the impact of HR practices on job satisfaction of women employee. In order to materialize this objective, the following specific objectives were considered: To address the association between HR practices and job satisfaction; To identify the impact of HR practices on job satisfaction; To examine the level of job satisfaction of women employee of women To suggest some measures in order to enhance the HR practices of the selected

industrial enterprises.

Research methodologyThe study is confined to Tiruvannamalai district. The data has been collected using Random Sampling Method, wherein the researcher collected the questionnaire from women of various Manufacturing Industries in and around Tiruvannamalai district.

Research designFundamental to the success of any formal research project is sound research design. The function of a research design is to ensure that the required data are collected and they are collected accurately and economically. A research design is purely and simply the frame work or plan for a study that guides the collection and analysis of data.

Types of research designThe Design used for this study is exploratory in nature. The various factors that contributed towards Training and Development were explored by this researcher.

Designing of questionnaireQuestionnaire is a standardized from for collecting information to elicit desired data from the respondents. A questionnaire consists of a set of questions presented to a responded for her answers.The questionnaire prepared in this study was mainly aimed at personal interview and was contained closed-ended, multi-choice questions, dichotomous questions and also checklists.

Hemavathi 47

Pretesting the questionnaireBefore the questionnaire was ready, it was pre tested under the field conditions. Pre-tests are made by personnel interview. The number of interview in the pre-test was with 30 respondents. During pre-testing wording of some questions was improved to make it more understandable to the respondents. Some questions were eliminated from the questionnaire and new questions we added on the basis of the response of the respondents.

Limitations of the studyEven though the survey was conducted among the women employees of Manufacturing Industries in Tiruvannamalai district it may not reflect the real opinion of the all the women employees.

Because of time constraints, the sample size is restricted to 60, which may not reflect the opinion of the entire women employee group.

The samples may behave or give opinions differently at different times because of their psychological temperament. This will affect the survey.

Data Sources and Instrumentation The study was compiled with the help of primary data and secondary data. Primary data was collected through direct personal interview by means of the questionnaire. A total of 60 women employees (i,e., three employees were selected from every manufacturing firm) responded through the questionnaire. Moreover, the desk study covered various published and unpublished materials on the subject. The questionnaire was administered to women employees of various manufacturing firms in Tiruvannamalai district. A five points rating scales of questionnaire from strongly disagree (1) to strongly agree (5) were adopted to measure the variables of HR Practices. Job satisfaction of women employee among women employee was measured by a one-item questionnaire on five-point Likert scale [where disagree (1) to strongly agree (5)], this is the single global rating approach (Davidson,1979) as it is believed to be an easier approach to collect data (Haque and Taher,2008; Yu and Egri,2005).

Reliability and Validity Before applying statistical tools, testing of the reliability of the scale is very much important as it shows the extent to which a scale produces consistent result if measurements were made repeatedly. This is done by determining the association in between scores obtained from different administrations of the scales. If the association is high, the scale yields consistent results, thus it is reliable. ronbach’s alpha is the most widely used method. It may be mentioned that its value varies from 0 to 1 but the satisfactory value is required to be more than 0.6 for the scale to be reliable (Malhotra, 2000; ronbach, 1951). In the present study, we, therefore, used Cronbach’s alpha scale as a measure of reliability.


Table 1. Reliability value of the Scale

Scale No. of Items Cronbach’s Alpha (α)1. HR Planning 5 .7962. Recruitment & Selection 8 .7603. Training & Development 5 .7864. Performance Appraisal 3 .6205. Compensation 5 .9546. Industrial Relations 5 .8337. Job Satisfaction 1 -

Source: Survey data

From the Table-1, it is seen that the reliability value was estimated to be α=0.620-0.954 between the scale. If we compare our reliability value with the standard value alpha of 0.6 advocated by Cronbach (1951), Nunnally & Bernstein (1994); and Bagozzi & Yi’s (1988) we find that the scales used by us are highly reliable for data analysis. Validation procedures involved initial consultation of the questionnaires. The experts also judged the face and content validity of the questionnaires as adequate. Hence, researchers satisfied the content and construct validity.

Data Analysis and Findings In the present study, we analysed our data by enter wise method in a multiple regression analysis. In this context, a multiple regression was performed, by making use of all the discrete variables (i.e., dependent and independent variables) available in the dataset. The estimation process was based on Ordinary Least Squares (OLS) [i.e.,Y= a + bx]. For this purpose, we consider the following model specifications, by taking as dependent variable i.e., job satisfaction of women employee (JSWE) by making HR practices as independent variables:

JSWE = ßO+ß1(HRP) +ß2(RNS) +ß3(TND) +ß4(PA) +ß5(COM) +ß6(IR)+e ...... Model (1)where: ß0 , ß1, ß2, ß3, ß4, ß5 and ß6 are the regression co-efficient;JSWE: Job Satisfaction of women Employee;HRP: Human Resource Planning;RNS: Recruitment and Selection;TND: Training and Development;PA: Performance Appraisal;COM: Compensation;IR: Industrial Relations;e: error term.

Hemavathi 49

To test how well the mode-1 fit the data and findings, correlation (r), R, R2 (Coefficient of determination), variance, analysis of variance (ANOVA) and the t statistic were used. Correlation analysis was performed to find out the pair wise relationship between variables: HRP, RNS, TND, PA, COM, IR and JSWE. Hence, the results are summarised in Table-2.

Table 2. Correlations Matrix for HR Practices and JSWE

Variables HRP RNS TND PA COM IR JSWE

Human Resource Planning 1

Recruitment and Selection 0.585**(0.000) 1

Training and Development 0.627**(0.000)

0.422**(0.000) 1

Performance Appraisal 0.772**(0.000)

0.811**(0.000)

0.637**(0.000) 1

Compensation 0.728**(0.000)

0.542**(0.000)

0.699**(0.000)

0.715**(0.000) 1

Industrial Relations 0.356**(0.000)

0.598**(0.000)

0.331**(0.000)

0.644**(0.000)

0.533**(0.000) 1

Job Satisfaction of women Employee

0.626**(0.000)

0.493**(0.000)

0.623**(0.000)

0.615**(0.000)

0.594**(0.000)

0.439**(0.000) 1

Source: Survey data; **Correlation is significant at the 0.01 level (2-tailed)

Table-2 shows that the factors HRP, RNS, TND, PA, COM, and OIR are independently positively correlated with JSWE and also highly significant at 1% levels. Therefore, Hypothesis 1 of the present study was accepted. Here it is obvious that the maximum correlation (r =0.626) is existed between HRP and JSWE, followed by the association (r =0.623) between TND and JSWE; PA and JSWE (r= 0.615); and COM and JSWE (r =0.594). It should be necessary to give the highest emphasis on HRP for superb job satisfaction of women employee. Training and development is also crucial for wonderful job satisfaction of women employee. Although there has no so influential link (r =0.493) between RNS and JSWE; and IR and JSWE (r=0.439). These were also essential for job satisfaction. HR practices are pair-wise positively correlated with one to another and also statistically significant at P-value 0.000. Among the six HR practices, the relationship (r =0.811) between RNS and PA is the highest, followed by the link (r =0.772) between HRP and PA.

Further, a multiple regression analysis was performed to identify the predictors of JSWE as conceptualized in the model. An enter-wise variable selection was used in the regression analysis and table-3 and table-4 show the summary measure and ANOVA of the model.

Table 3. Predictors of JSWE - model summary

Model R R2 Adjusted R2

1 0.720(a) 0.518 0.464

Predictors: (Constant), HRP; RNS; TND; PA; COM, and IR


Table 4. ANOVA

Model Sum of Squares df Mean Square F Sig.

1 Regression 36.958 6 6.160 9.497 .000(a)

Residual 34.375 53 .649

Total 71.333 59Predictors: (Constant), HRP; RNS; TND; PA; COM, and IR

Dependent Variable: JSWEThe HR practices (HRP; RNS; TND; PA; COM and IR) in the above model revealed the ability to predict JSWE (R2 = 0.518). In this model value of R2 denotes that 51.8 percent of the observed variability in JSWE can be explained by the HR practices namely HRP; RNS; TND; PA; COM and IR. The remaining 48.2 percent is not explained which means that the rest 48.2 percent of the variation of JSWE is related to other variables which are not depicted in the model. This variance is highly significant as indicated by the F value (F=9.497 and P = 0.000) [For details please see table-4]. An examination of the model summary presented by the table-3 in conjunction with ANOVA, presented by the table-3, indicates that the model explains the most possible combination of predictor variables that could contribute to the relationship with the dependent variable.

Table 5. Coefficients for Predictors of JSWE

Models

Unstandardized

Coefficients

Standardized Coefficients t Sig

ß Std.Effor Beta

1. Constant -.698 1.086 -.643 .523

HRP .323 .170 .334 1.892 .064RNS .160 .342 .079 .469 .641TND .404 .164 .354 2.460 .017PA -.071 .314 -.056 -.226 .822COM -.033 .129 -.004 -.023 .982IR .250 .180 .194 1.386 -.172

Source: Survey dataThe table-5 shows that HRP and TND are positively influencing on JSWE. For HRP, the value of t is 1.892(p=0.064, df=53), for TND, the value of t is 2.460 (p= 0.017, df=53). Thus, we accept Hypothesis 3 and 5. But for RNS, PA, COM and IR which fall in the area of rejection. Thus, we do not accept the Hypothesis 4, 6, 7 and 8. Hence, it can be concluded that HRP and TND have significant impact on JSWE. Therefore, hypothesis-2 is also partially accepted.

Hemavathi 51

ConclusionsThe highest positive value of correlation between Human Recourse Planning and Job Satisfaction of Women Employee clarifies that the authorities of selected industrial enterprises are required to focus on HRP for getting fabulous job satisfaction of women employee followed by Training and Development; Performance Appraisal; and Compensation. The evidence from research studies indicates that the more important elements that contribute to job satisfaction of women employee to the nature of work, equitable reward system, promotion, quality supervision, supportive colleagues and conducive conditions. Most of the women employees are crave intellectual challenges on their jobs. Therefore, they prefer to jobs that offer them challenges and an opportunity to use their skills and abilities. However, while too much challenge in job creates frustration and feelings of failure, too little challenges cause boredom. In fact, it is the conditions of moderate challenge of women employees, experience pleasure and satisfaction. Accordingly, if they see pay as fair, based on job demands and employees skill and as per community pay standards, it results in job satisfaction. It is also found that Human Recourse Planning and Training and Development have significant impact on fabulous job satisfaction of women employee. The present study only collected perceptual data. The study did not collect data regarding size of the firms, the volume of the production, and the turnovers.

Policy Implications Although the present study was confined to identify the impact of HR practises on job satisfaction, it may be appropriate to state briefly the policy implications for the study. In this context, the following policy actions may be considered worthwhile.Organizations should offer extensive training and development programs for the

employeesOrganizations should go for thorough HR planning.Organizations should carefully conduct recruitment and selection process.Organizations should introduce proper performance appraisal systems.Organizations should offer at least reasonable compensation to the employees.Organizations should maintain healthy industrial relations based on mutual trust

and confidence of the employers and employees.Organizations should develop good working condition. This facilitates employees

to do their work effectively.Organizations should induce employees to perform well. This can be achieved by

providing reward, motivations, and other benefits etc.Employees should be trained to adopt new technology and or develop their career.Organizations should provide unbiased promotion. That is promotion should be

provided based on the qualification of employees and /or experience. Organizations should implement equal employment opportunities. That is

employees should not discriminate against female, and minority or old worker. Organization should design working procedure including hours work, over time

payment and hour’s payment.


Proper working environment should be designed. In that the organization should provide adequate facilities employees to do their works such as appropriate equipment, work breaks, and work sharing.

Organization should design good grievance procedure, disciplinary procedure and separation procedure etc.

References:Ahmad , I., Khalil , M. I., (2007). Human resource planning in the banking sector of Bangladesh:

A comparative study between public & private bank. Journal of Business Administration, 33, (3).23-42.

Blum, M.L, and Naylor, J.C (1968), Industrial Psychology: Its Theoretical and Social Foundation, Harper & Row, New Yark NK.

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Gerhart, B. & Milkovich, G.T. (1992), ‘Employee Compensation: Research and practice’, Harel, G.H. & Tzafrir, S.S. (1999), ‘The Effect of Human Resource Management Practices on the Perceptions of Organizational and Market Performance of the Firm’, Human Resource Management, Vol.38, pp.185–200

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Kalleberg, A.L & Moody, J.W. (1994), ‘Human Resource Management and Organizational Performance’, American Behavioural Scientist, Vol.37, pp.948-962. Lado, A. & Wilson, M. (1994), ‘Human Resource Systems and Sustained Competitive Advantage: Competency-based Perspective’, Academy of Management Review, Vol.19, pp.699-727.

Nikandroua, I., Aposporia, E., Panayotopouloua, L., Eleni T., Stavroub & Papalexandrisa, N. (2008), ‘Training and firm performance in Europe: The impact of national and organizational characteristics’, The International Journal of Human Resource Management, Vol. 19, No. 11, pp.2057-2078.

Paauwe, J. (2004), HRM and Performance: Achieving Long Term Viability, New York: Oxford University Press.

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Terpstra, D.E. & Rozell, E.J. (1993), ‘The relationship of staffing practices to organizational level measures of performance’, Personnel Psychology, Vol.46, pp.27-48. Ulrich, D., (1997), ‘Measuring Human Resources: An Overview of Practice and Prescription for Results’, Human Resource Management, Vol.3, pp.303-320.

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Hemavathi 53

54

An empirical study on punter’s acuity towards internet banking services

- Prof. Jaladi Ravi and Dr. K. Hari Hara Raju



NMJ

AbstractInformation Technology has introduced new business pattern. It is increasingly playing a vital role in improving the services in the banking industry. This paper provides an outline to the concept of internet banking. In addition, it highlights the aids it provides from the point of view of bank’s customers as well the banking industry. Further, an attempt has been made to bring to light various customer level concerns in Visakhapatnam towards availing the internet banking facility by the means of a structured questionnaire based survey. The primary data used in the research consists of survey conducted on a sample of 350 customers in Visakhapatnam city, analyzing the survey responses percentages and mean score was used. Research findings are expected to be of value to commercial banks towards enhancing the accessibility of internet banking facility to their customers.

Keywords: Internet banking, customer, banking industry, information technology.

*Prof. Jaladi ravi, Department of Commerce & Management Studies, Andhra University, Visakhapatnam, E-mail: [email protected] **Dr. K. Hari Hara Raju, Post-Doctoral Fellow (UGC), Department of Commerce & Management Studies, Andhra University, Visakhapatnam, E-mail: [email protected]

Introduction Competition and the constant changes in technology and lifestyles have changed the face of banking. Nowadays, banks are seeking alternative ways to provide and differentiate amongst their varied services. Customers, both corporate as well as retail, are no longer willing to queue in banks, or wait on the phone, for the basic banking services. They demand and expect a facility to undertake their banking activities where and when they wish to do (Uppal, 2011).

Internet Banking refers to a system allowing individual customers to perform banking activities at off-bank sites such as home, office and other locations via internet based secured networks. Internet or online banking through traditional banks enable customers to perform all routine transactions, such as account transfers, balance inquiries, bill payments and stop-payment requests, and some even offer online loan and credit card applications.

To access a commercial bank’s online banking facility a customer having personal internet access must register with the institution for the service, and set up a confidential ‘password’ for customer verification. Commercial Banks in the present

Ravi and Raju 55

times allocate ‘Customer Numbers’, whether or not customers intend to access their online banking facility. Customer numbers are not the same as account numbers, because a number of accounts can be linked to one customer number. The customer will link to the customer number any of those accounts which the customer controls, which may be in the nature of checking, savings, provident fund, loan, credit card and other accounts. Towards accessing internet banking, the customer would go to the commercial bank’s website and login to the internet banking facility using the unique customer number and password issued to him. Some financial institutions have set up additional security steps for access, but there is no consistency to the approach adopted. The growing popularity of personal computers coupled with accessibility to internet has marked an increase in use of internet by banks as a channel for receiving instructions and also delivering the products and services to the customers.

Review of literature Internet revolution is a global phenomenon and going by the current growth statistics, India expects a spurt in the internet penetration in coming years particularly in the electronic commerce. It is an obvious notion that internet banking and payments are likely to progress in tandem with the e-commerce. Existing researches indicate that the business frameworks of banks, securities trading firms, brokerage houses, insurance companies etc. are significantly impacted by internet banking. Internet banking has also attracted the attention of regulators and lawmakers in the developing nations since the late 1990’s. Commercial banks are aware that internet opens up new horizons for them and enables them to expand from local to global frontiers within a short span of time. Online banking enables bank customers to get access to their accounts and general information on bank products and services through the medium of bank’s website, without the intervention of sending letters, faxes, original signatures and telephonic confirmation (Thulani et al., 2005). Internet banking provides universal connection from any location worldwide and is universally accessible from any internet enabled computer. Internet offers the cheapest delivery channel for banking products as it allows the entity to reduce their branch networks and minimize the service staff requirement. Banks consider the ‘minimizes inconvenience’, ‘minimization of transactions cost’ and ‘time saving’ to be major benefits of e- banking. On the other hand, ‘probability of government of accesses, ‘chances of fraud’ and ‘lack of information security’ to be vital risks attached with e-banking (Kaleem & Ahmad, 2008). Internet banking is a cause of concern to majority of the offline banks who should be ready for an unprecedented competition from the modern banking institutions offering banking and financial services over the internet (Rajagopalan, 2001). Although some of the traditional banks have started offering their services online, it is only an extension of their offline services (Devi, 2011). Advent of internet banking service has influenced the banking customers to park their funds with the online banks, a trend which has led to a substantial impact on the deposit base of the traditional offline banks. It is an empirically established fact that introduction of technology in banking has a direct positive relationship with profitability. Ceteris paribus, investment in

e-banking increase the profit margin of banks by reducing costs and increase in non-interest income, which in turn will lead to rise in ROA and ROE (Sinkney, 1998). The integration of the banking services with e-commerce and emergence of e-cash would positively affect the efficiency scores of the banks (Scott, 1999). However, online banking is a mixed blessing in the form of increased risk, the level of confidence reposed by the customers and the problem of blending it with the physical system (Hawke, 2001). Internet banking has brought about a new orientation to risks like settlement risk, international technology transfer risk, risk of fraudulence, regulatory avoidance risk, taxation avoidance risk and the competition risk (Saunders, 1997). Basel-II recommendation on operational risk also supports this hypothesis.Internet banking in India As per the findings of Internet and Mobile Association of India (IAMAI), about 23% of the online users prefer internet banking as banking channel in India, second only to ATM which is preferred by 53%. Further the study reveals that the people are not using internet based bank websites for executing financial transactions in India. The major reasons identified for the same were security concerns (43%), preference for face-to-face transactions (39%), lack of knowledge about transferring online (22%), lack of user friendliness (10%), and lack of the facility in the current bank (2%). E-banking has gained wide acceptance internationally. In India also the things are changing fast. With the advent of Net-banking, Indian economy is on the threshold of a major banking revolution. In 2002, only about a dozen banks were providing e-banking services. The Indian banks lag far behind the international banks in pro-viding online banking. In fact, this is not possible without creating sufficient infra-structure or presence of sufficient number of users. The experience of two of the leading private sector banks i.e. ICICI Bank and HDFC Bank shows that the number of transactions carried out on the internet is still very limited compared to banking customer base.

C. Benefits of internet banking The benefits of online banking can be analyzed from the viewpoint of customers, banking organizations and economy in general.

I. Benefits to Customers General banking customers have been significantly affected by the advent of internet banking revolution. a) A banking customer’s account is extremely accessible with an online account. b) Through internet banking customer can operate his account remotely from his office or

home. The need for going to bank in person for every single banking activity is dispensed with.

c) Internet banking lends an added advantage towards payment of utility bills. It eliminates the need to stand in long queues for the purpose of bill payment.

d) All services that are usually available from the local bank can be found on a single website. e) Sharp growth in credit card/debit card usage can be majorly attributed to e-banking. A customer

can shop globally without any need for carrying paper currency with him. f) By the medium of e-banking (including internet banking), banks are available 24x7 and are

just a mouse click away.


II. Benefits to Banking Sector In addition to banking customers, growth of e-banking infrastructure in general and online banking in particular has proved to be extremely beneficial to banks and over-all bank organizations on account of following: a) The concept of online banking has immensely helped the banks in putting a tab over their

specific overheads and operating cost. b) The rise of internet banking has made the banks more competitive. It resulted in opening

of better prospects and avenues for banking operations. c) The online banking has ensured transparency of transactions and facilitated towards

removing the documentation requirements to a major extent, since majority of records under an e-banking set up are maintained electronically.

d) The reach and delivery capabilities of internet-enabled banks, proves to be significantly better than the network of physical bank branches.

D. Factors delimiting internet banking usage India being a developing nation is significantly behind its developed counterparts in respect of adoption of technology towards availing common banking services by the public. One of key reasons which can be cited towards such a trend is the fact that major portion of the Indian population resides in rural areas of the country, having negligible access to technology for online banking given the low penetration of internet. Though, Reserve Bank of India, country’s banking regulator, have been emphasizing upon financial inclusion, but the inclusiveness in real terms can only be realized when the technology is embraced upon by the people at the grass root level for fulfilling their banking needs. Further, towards ensuring data security and genuineness of transactions undertaken online banks have introduced multiple layers of authentication for logging into the internet banking zone within the bank’s website. As a part of the current trend, banks make use of ‘Password and Image based login systems’, along with stressing upon the usage of a ‘virtual keyboard’ for entering secret login details. At the time of granting the online banking access, the banks issue a one-time default password valid for the initial login. On logging in for the first time the password automatically lapses and the user is instructed to create a new password to be used for future logins. Such measures, though enhances user security, may put off an existing internet banking user.Need for the studyIn the very recent past series of innovative practices have been introduced in banking industry with the purpose of making as many services available as possible to the customers by minimizing the cost factor. The services in the banking industry gained lot of prominence by introducing many modes. All these services mentioned aimed at facilitating the customer to make quick transaction with ease. As whole gamat of banking industry is purveyed with these services, it is the opportune time for the researchers, research institutions to enquire into the efficiency to the services. Against this back up, an attempt made in this study whether substantial benefits are accruing to the customer due to Internet Banking Services.Objectives of the study1. To analyze the socio-economic profile of the sample respondents.2. To examine the customer’s perception towards internet banking services in the selected

banks in Visakhapatnam city.3. To recommend appropriate suggestions and strategies to enhance and improve the

services on the basis of the findings of the study.

Ravi and Raju 57

Research methodologyFor this study both primary and secondary data was used. The primary data was collected from using one questionnaire. Secondary data was collected from banking journals, magazines etc., a simple random sampling technique was used for the selection of bank branches in the city. As far as selection of customer is concerned convenience sampling is used. A sample of 350 respondents was selected for the purpose of the study. Data was interpreted with percentage and mean.

Analysis and discussionTable No: 1 Respondent’s Demographic Profile

Particulars Demographic profileNo. of respondents

(Total-350)Percentage

Age (In Years)

Less than 25 75 21.425-35 128 36.635-45 104 29.7Above 45 43 12.3

Gender Male 205 58.6Female 145 41.4

Marital StatusMarried 284 81.1Un Married 41 11.8Others 25 7.1

Educational Qualification

Under Graduate 105 30.0Post Graduate 125 35.7Professional/Technical 79 22.6Others 41 11.7

Occupation

Govt. Employee 85 24.3Private Employee 137 39.1Business/Professional 62 17.7Students 66 18.9

Monthly Income

(In INR)

less than 10,000 71 20.310,000 - 20,000 132 37.720,000 - 30,000 79 22.6above 30,000 68 19.4

Using IBS

Less than 1 year 183 52.31-2 years 66 18.92-3 Years 48 13.7More than 3 years 53 15.1

Frequency of using IBS (In a week)

Less than 3 times 174 49.74-6 times 90 25.77-10 times 54 15.5More than 10 times 32 9.1

Source: Primary Data


Respondent’s demographic profile is depicted in table no.1. Out of the total sample 350 respondents 30.6 per cent of the respondents are in the age of 25-35 years of age. Regarding gender 58.6 per cent of the respondents are males and the remaining 41.4 per cent of the respondents are females. Regarding marital status of the respondents a whopping percentage of 81.1 per cent of the respondents are married, and the remaining 18.9 per cent of the respondents are unmarried and others (widows and divorced), coming to educational background of the respondents most of the respondent’s educational qualification is P.G & U.G (i.e., 35.7 per cent & 30 per cent) respectively. In the case occupation of the respondents majority 39.1 per cent of the respondents are private employees and followed by 18.9 per cent of the respondents are students and the remaining 17.7 per cent of the respondent’s occupation is business/professionals. Regarding monthly income of the respondents majority of the respondent’s (i.e., 37.7 per cent) income group is Rs.10, 000 to Rs.20, 000. Regarding Using Internet Banking Services majority of the respondents (i.e., 52.3%) are using IBS since less than a year, followed by 18.9 per cent of the respondents are using from 1- 2 years and the remaining 13.7 per cent and 15.1 per cent of them are using from 2-3 years and more than 3 years respectively, and for frequency of using IBS (In a week) nearly half of the respondents are using less than 3 times in a week.

Table No: 2 Respondents opinion regarding Internet Banking Activities

S.No Activity Never Sometimes Often Frequently Always Total

1 Account Summary 11(3.1)

28(8.0)

143(40.9)

119(34.0)

49(14.0)

350(100.0)

2 Funds Transfer 21(6.0)

27(7.7)

120(34.3)

137(39.1)

45(12.9)

350(100.0)

3 Mobile/ DTH Recharge 22(6.4)

43(12.3)

81(23.1)

151(43.1)

53(15.1)

(350)(100.0)

4 Railway/flight ticket booking

16(4.6)

21(6.0)

81(23.1)

157(44.9)

75(21.4)

350(100.0)

5 Online purchase/ e-shopping

29(8.3)

50(14.3)

124(35.4)

91(26.0)

56(16.0)

350(100.0)

6 Paying Bills 29(8.3)

49(14.0)

39(11.1)

142(40.6)

91(26.0)

350(100.0)


Table no.2 shows the customer’s internet banking activities like account summary, fund transfer, mobile/DTH recharge, railway/flight booking, and online purchase\e-shopping and paying bills. Regarding account summary majority of the respondents (40.9%) are using this activity, followed by 34.0 per cent of them using frequently, 14.0 per cent of them using always and the remaining 8.0 Per cent and 3.1 per cent of them using sometimes and never used respectively. Coming to fund transfer out of the total 350 sample respondents 39.1 per cent of the respondents are using frequently and the remaining 34.3 per cent, 12.9 per cent 7.7 per cent and 6.0 per cent are using often, always, sometimes and never respectively. Regarding mobile/DTH recharge most of the respondents (i.e.,43.1 per cent of them using frequently, and the remaining 23.1 per cent, 15.1 per cent, 12.3 per cent and 6.4 per cent of the respondents are using Often, always, sometimes and never respectively.

Ravi and Raju 59

Railway/flight booking nearly 45 per cent of the respondents are using frequently and the remaining 23.1 per cent, 21.4 per cent, 6.0 per cent and 4.6 per cent of the respondents are using oftenly, always, sometimes and never respectively. Further online purchase/e-shopping majority of the respondents are using oftenly and remaining respondents are using frequently (26.0%), always (16.0%), sometimes (14.3%) and never (8.3%) finally pay bills 40.6 per cent of them using frequently, 26.0 per cent of them are using always, 14.0 per cent of them are using sometimes, 11.3 per cent of them are oftenly and only 8.3 per cent of the respondents are never using the internet banking activities.

Table No: 3 Respondent’s opinion towards Internet Banking services

S.No Opinion Strongly Disagree Disagree Neutral Agree Strongly

Agree Mean

1Using internet banking improves functioning of my banking activities

22(6.3)

28(8.0)

42(12.0)

172(49.1)

86(24.6) 2.50

2Internet banking allows me to manage my banking activities more conveniently and quickly

15(4.3)

24(6.9)

62(17.7)

163(46.5)

86(24.6) 2.52

3The time taken to process a transaction or query is fast and quick in internet banking

25

(7.1)

50

(14.3)

110

(31.4)

95

(27.2)

70

(20.0)2.24

4The instructions provided on my internet banking website are clear and understandable

34

(9.8)

56

(16.0)

46

(13.1)

112

(32.0)

102

(29.1)2.35

5The screen design of my internet banking website (i.e. colours, boxes, menus, navigation tools etc.) is good and well presented.

49

(14.0)

76

(21.8)

52

(14.8)

158

(45.1)

15

(4.3)2.01

6I think my bank informs the customers about the advantages of internet banking

15

(4.3)

32

(9.1)

100

(28.6)

170

(48.6)

33

(9.4)2.32

7I think my bank encourages the customers to use internet banking

20

(5.8)

39

(11.1)

146

(41.7)

119

(34.0)

26

(7.4)2.16

8I think I do not get enough information about how to open an internet banking account and operate it

38

(10.8)

59

(16.9)

115

(32.9)

95

(27.1)

43

(12.3)2.07

9 While using internet banking, I fear losing control of my account

24

(6.9)

41

(11.7)

89

(25.4)

126

(36.0)

70

(20.0)2.32

10While using internet banking, I fear the process may not work properly or correctly

23

(6.6)

32

(9.1)

106

(30.3)

139

(39.7)

50

(14.3)2.29

11

While using internet banking, I feel internet banking systems can never be accessed by unauthorized people

19

(5.4)

56

(16.0)

99

(28.3)

142

(40.6)

34

(9.7)2.21


12While using internet banking, I fear increased possibility of unwanted emails

23

(6.6)

21

(6.0)

108

(30.8)

126

(36.0)

72

(20.6)2.37

13

While using internet banking, I feel unsecure about sending and receiving my financial information on internet banking system

16

(4.6)

33

(9.4)

141

(40.3)

122

(34.9)

38

(10.8)2.24

14My bank will never make my personal information accessible to others

22

(6.3)

31

(8.9)

125

(35.7)

132

(37.7)

40

(11.4)2.25

15

Issue of ‘Amount deducted from account but transaction not complete’ is addressed quickly by my bank (maximum 3 days)

19

(5.4)

39

(11.1)

146

(41.7)

108

(30.9)

38

(10.9)2.19

16

While using internet banking, I fear not having enough information about internet banking in general

13

(3.7)

33

(9.5)

119

(34.0)

125

(35.7)

60

(17.1)2.34

17I will use the internet banking services more regularly and add it to my favourite links

14

(4.0)

39

(11.1)

124

(35.5)

132

(37.7)

41

(11.7)2.27

18My bank promptly informs me about the completion of any transaction made by me.

14

(4.0)

39

(11.1)

124

(35.5)

132

(37.7)

41

(11.7)2.27

19

Provision of One Time Password (OTP) ensures safety of every transaction I do through Internet banking

19

(5.4)

26

(7.4)

114

(32.6)

143

(40.9)

48

(13.7)2.32

20

I am confident that my transactions through internet banking will always be transparent because of RBI regulations

15

(4.3)

20

(5.7)

90

(25.7)

147

(42.0)

78

(22.3)2.47

21 I have confidence in the internet banking services of my bank

16

(4.6)

21

(6.0)

81

(23.1)

157

(44.9)

75

(21.4)2.47

22 My bank is consistent in providing quality online service

12

(3.4)

16

(4.6)

117

(33.4)

145

(41.4)

60

(17.2)2.41

23Overall, I am satisfied with the internet banking services of my bank

23

(6.6)

45

(12.9)

79

(22.6)

128

(36.5)

75

(21.4)2.34


Respondent’s opinion towards Internet Banking services is depicted in table no.3. Respondent’s opinion towards Internet Banking services is depicted in table no.3. Using internet banking improves functioning of my banking activities the mean score is 2.50, for Internet banking allows me to manage my banking activities more conveniently and quickly the mean score is 2.52, for the time taken to process a transaction or query is fast and quick in internet banking the mean score

Ravi and Raju 61

is 2.24, for the instructions provided on my internet banking website are clear and understandable the mean score is 2.35, for the screen design of my internet banking website (i.e. colours, boxes, menus, navigation tools etc.) is good and well presented the mean score is 2.01, for I think my bank informs the customers about the advantages of internet banking the mean value is 2.32, for I think my bank encourages the customers to use internet banking the mean score is 2.16, for I think I do not get enough information about how to open an internet banking account and operate it the mean score is 2.07, while using internet banking, I fear losing control of my account the mean score is 2.32, While using internet banking, I fear the process may not work properly or correctly the mean score is 2.29, While using internet banking, I feel internet banking systems can never be accessed by unauthorized people the mean score is 2.21, While using internet banking, I fear increased possibility of unwanted emails the mean score is 2.37, While using internet banking, I feel unsecure about sending and receiving my financial information on internet banking system the mean score is 2.24, regarding my bank will never make my personal information accessible to others the mean score is 2.25, for Issue of ‘Amount deducted from account but transaction not complete’ is addressed quickly by my bank (maximum 3 days) the mean score is 2.19, While using internet banking, I fear not having enough information about internet banking in general the mean score is 2.34, I will use the internet banking services more regularly and add it to my favourite links the mean score is 2.27, for my bank promptly informs me about the completion of any transaction made by me the mean score is 2.27, for provision of One Time Password (OTP) ensures safety of every transaction I do through Internet banking the mean score is 2.32, I am confident that my transactions through internet banking will always be transparent because of RBI regulations the mean score is 2.47, I have confidence in the internet banking services of my bank the mean score is 2.47, My bank is consistent in providing quality online service the mean score is 2.41, Overall, I am satisfied with the internet banking services of my bank the mean score is 2.34.

Findings 1. Nearly half of the percentage of the respondents is agreed that by using internet

banking improves functioning of my banking activity. 14 per cent of the respondents are not agreed.

2. 71.1 per cent of the respondents are agreed and strongly agreed that Internet banking allows me to manage my banking activities more conveniently and quickly.

3. 47.2 per cent of the respondents are agreed that the time taken to process a transaction or query is fast and quick in internet banking.

4. Majority of the respondents (i.e., 66.6 per cent) of the respondents are agreed that the instructions provided on my internet banking website are clear and understandable.

5. Nearly 50 per cent of the respondents are agreed that the screen design of my internet banking website (i.e. colors, boxes, menus, navigation tools etc.) is good and well-presented and 35.6 per cent of the respondents are not agreed with this statement.


6. 58 per cent of the respondents are agreed that their bank informs the customers about the advantages of internet banking and 13.4 per cent of the respondents are disagreed.

7. It is interesting to note that majority of the respondents (i.e., 41.7 per cent) are in neutral position regarding their bank encourages the customers to use internet banking.

8. 39.4 per cent of the respondents are agreed that they do not get enough information about how to open an internet banking account and operate it.

9. Most of the respondents (i.e., 56 per cent) are agreed that when they are using internet banking they fear losing control of my account. And less number of respondents is disagreed with this statement.

10. 54 per cent of the respondents are fear the process may not work properly or correctly.

11. Little more than 50 per cent of the respondents are felt that internet banking systems can never be accessed by unauthorized people.

12. 56.6 per cent of the respondents are fear about increased possibility of unwanted emails.

13. 45.7 per cent of the respondents are felt that unsecure about sending and receiving my financial information on internet banking system.

14. Nearly an equal percentage of the respondents are agreed and neutral regarding Issue of ‘Amount deducted from account but transaction not complete’ is addressed quickly by my bank (maximum 3 days).

15. Nearly half of the percentage of the respondents are using the internet banking services more regularly and add it to my favourite links.

16. Only 50 per cent of the respondents are agreed that their bank promptly informs about the completion of any transaction made by the customer.

17. 54.6 per cent of the respondents are agreed that Provision of One Time Password (OTP) ensures safety of every transaction I do through Internet banking.

18. Majority of the respondents (i.e., 64.3 per cent) are confident that their transactions through internet banking will always be transparent because of RBI regulations.

19. 66.3 per cent of the respondents are confident about their bank internet banking services.

20. 58.6 per cent of the respondents are felt that their bank is consistent in providing quality online service.

21. Overall 57 per cent of the respondents are satisfied with the internet banking services of their respective bank.

Ravi and Raju 63

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Pallab Sikdar1, Munish Makkad, “Internet Banking in India – A Perspective on Benefits and Challenges Involved” International Journal of Engineering, Business and Enterprise Applications (IJEBEA), 2013.

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Marketing & Management Review, Vol.1 (4), December (2012).Thulani D., Tofara C. & Langton R., ‘Adoption and Use of Internet Banking in

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Determinants of capital structure: a case of selected Nepalese commercial banks

- Krishna Chalise

AbstractIn this paper, an attempt has been made to examine the determinants of capitalstructure –bank size, growth rate, dividend payout, assets structure, collateral value of assets, profitability and volatility of earning of the selected Nepalese commercial banks. The purpose of this paper is to analyze the determi-nants of capital structure of selected Nepalese commercial banks, in the light of the MM theory, Trade-Off theory, Pecking Order theory and Agency cost theory. Leverage, short term; long term;overall leverage are selected as dependent variable, where assets size, profitability, assets structure, dividend payout, collateral and volatility of earning are independent variables. Data are collected from the bank-ing and financial statistics published by Nepal Rastra Bank, NRB directives. Apart from this, different published articles, reports, books and magazines are also used for data analyzed. The multiple regres-sion models are applied to test the significant and important factors to determine the capital structure in the Nepalese commercial banks.

The results show thatall the variables, except growth and dividend payout ratio, seem to be positive and significant variables in determining the capital structure in the Nepalese banking sector.

Keywords: Capital structure, leverage, assets size, profitability, assets growth rate, assets structure, dividend payout ratio and volatility on earning



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1. IntroductionThe subject matter of leverage decisions and the factors influencing these decisions has been attracting attention since the pioneering work of Modigliani and Miller in 1950’s. Modigliani and Miller (1958) stated that the valuation of a company will be independent from its financial structure under certain key assumptions. In their frictionless world there is no optimal capital structure since debt-equity decisions made by the company can be imitated by the investors. The concept of optimal capital structure is expressed by Myers (1984) and Myers & Majluf (1984), based on the notion of asymmetric information. The existence of information asymmetries between the firm and likely finance providers causes the relative costs of finance to vary between the different sources of finance.

Capital structure of firm is determined by firm specific variables as well as external macroeconomic variables. Homaifar et al. (1994) and Titman & Wessels (1988) report explained that the firm specific variables are important determinants of capital structure. The findings of Kester (1986), Titman & Wessels (1988) and Rajan

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& Zingales (1995) also support the above statement. Since most of the studies are based on firm specific variables. Based on the capital structure theories tax shield, assets structure, profitability, firm size, growth, risk, liquidity, industry class and product uniqueness are the firm specific key attributes which determine the capital structure.

With consistent with Marcus (2009) the study has defined capital structure, as the mix of long-term debt and equity financing. However, the term capital structure and financial structure have been used interchangeably in finance literature. A line of technical difference is there, that is, the financial structure comprised of the total combination of equity capital, preferred capital, long-term debt and short-term debt/liabilities, whereas, the capital structure excludes the short-term debt/liabilities.

The optimal capital structure is that combination of debt and equity,which maximizes the value of the firm. In this respect, the capital structure can be interpreted in terms of target capital structure to strike a balance between risks and returns for maximizing the value of the firm. Using more debt raises the riskiness of the firm’s earnings stream. However, a higher debt ratio generally leads to a higher expected rate of return. The higher risk tends to lower a stock price, but a higher expected return raises it and drives toward equilibrium.

In boarder perspective, the sources of the firm’s capital can be classified into two basic categories, that is, equity and debt. Both of these capitals hold inherent properties. In one hand, the equity capital provides investors to control over the firm as owners. However the firm may not able to use only equity financing because the rational objective is to maximize the value of the firm. The cost of new equity would come across higher than existing one and since the risk patternon equity is higher, the higher expected rate drives to sell equity in lower price in the market. On the other hand, the debt capital provides investors a certain fixed return and right to first claim over the liquidation. Raising debt capital is also advantageous to the firm in numerous ways. Firstly, interest is tax deductible,which lowers the effective cost of debt. Secondly, debtholders are limited to a fixed return (the coupon amount), so stockholders do not have to share profits ifthe business does have excess profit. Thirdly, debt holders do not have voting rights, so the stockholders can control a business however they are investing less money than would otherwise be required.

Welch (2011), challenges the use of only including financial debt and equity into the capital structure measure and advances instead a measure including total liabilities to total assets. Using this leverage measure indicates that capital structure consists of all liabilities, both financial and non-financial, and equity. For the purpose of the literature review and the capital structure theories treated it is sufficient to use a definition of capital structure between the two above mentioned. As such capital structure is defined as the mix of financial debt, including long- and short-term debt and convertible debt, and equity. This definition is able to capture the implications of the capital structure theories examined in the following sections.


2. Methodological aspectThis study is based on the secondary and primary data. Secondary data were gathered from 17 commercial banks out of 30 commercial banks. The main source of data are banking and financial statistics published by Nepal Rastra Bank. The data were collected on leverage, assets size, profitability, collateral value of assets, dividend payout ratio and volatility of earning. The research design adopted in this study consists of descriptive and causal comparative research designs to deal with the various issues raised in this study. The descriptive research design has been adopted to undertake fact- finding operation searching for adequate information in Nepalese context. The secondary source primarily includes annual reports of bankfrom fiscal year 2006/07 through 2011/12. The information collected from annual report of the selected banks is the sources of secondary data. The main source of data is Banking and Financial Statistics published by Nepal Rastra Bank, NRB Directives and concerned by-laws regarding banking performance. Table 1 presents the total no of commercial banks, sample size and number of observation taken for this study.

Table 1: Selection of Commercial Banks

S.No Bank Name Period (in Year)

Number of Observation

1 Nepal Bank Limited NBL 2007-2012 6

2 RastraBanijya Bank Limited RBB 2007-2012 6

3 Nabil Bank Limited NABIL 2007-2012 6

4 Himalayan Bank Limited HBL 2007-2012 6

5 Kumari Bank Limited KBL 2007-2012 6

6 Nepal Investment Bank Limited NIBL 2007-2012 6

7 Everest Bank Limited EBL 2007-2012 6

8 Nepal SBI Bank Limited SBI 2007-2012 6

9 Standard Chartered Bank Limited SCBL 2007-2012 6

10 Bank Of Kathmandu BOK 2007-2012 6

11 Mega Bank Limited MEGA 2007-2012 3

12 NIC Asia Bank Limited NIC Asia 2007-2012 6

13 NMB Bank Limited NMB 2007-2012 6

14 Sunrise Bank Limited SUNRISE 2007-2012 6

15 Nepal Credit and Commercial Bank NCC 2007-2012 6

16 Kist Bank Limited KIST 2007-2012 6

17 Lumbini Bank Limited LBL 2007-2012 6

Total Number of Observations 102

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The ModelThe theoretical statement of this model is that the debt-equity ratio of firms is influenced by firm size, profitability, assets growth, collateral value of assets, dividend payout and earning volatility. Bayless (1990) concluded that firm characteristics including size, market-to-book ratio of assets, stock returns, asset tangibility, profitability and the marginal tax rate play a significant role in determining corporate financing choices, especially profitability and market-to-book ratio. These are so-called standard determinants of capital structure. The model takes the following form:Leverage = f (size, assets growth, profitability, collateral, dividend, risk,).

More specifically,Leverage = a0+ a1SIZEit+ a2PROFit+ a3GROWTHit + a4DIVit+ a5COLLit + a6VOLit.............................. (1)

Where,The leverage is used as a dependent variable and is measured in terms of the following:LEV= Overall Financial LeverageLLEV= Long term Financial LeverageSLEV= Short term Financial LeverageThe independent variables are as underSIZE=Log of Total AssetsPROF=ProfitabilityGROWTH =Growth RateDIV = Dividend PayoutCOLL=Collateral Value of Assets of BankVOL= Volatility of Earning

Table 2 Description of Control and Explanatory VariablesSize SIZE Logarithm of total assetsProfitability (PROF) ROA Net profit/total assets

Assets Growth Rate GROWTH Growth of total assets

Dividend payout DIV

Ratio of dividend to total income available to shareholders. Dividend includes only cash dividend not stock dividend and other forms of dividend

Collateral Value of Total Assets

COLLRatio of fixed assets plus inventory to total assets is considered as proxy to collateral assets.

Volatility-Risk VOL Standard deviation of EBIT to total assets


3. Presentation and analysis of data

Descriptive analysis

Table 3 shows the descriptive statistics. Clearly, bank size ranges from zero to 7.82 while the sales growth ranges from -94 to 316 in percentage.

Table 3: Descriptive Statistics

N Minimum Maximum Mean Std. DeviationBank Size 102 .00 7.82 6.87 1.76Sales Growth 102 -.94 3.16 .209 .415Return on Assets 102 -14.6 18.04 1.78 2.72Collateral Value of Assets 102 .000 .212 .024 .0380Dividend Payout 102 .000 .377 .086 .105Risk 102 .00 5.48 4.70 1.24Overall Leverage 102 .00 24.73 1.72 4.03Long Term Leverage 102 .00 1.12 .064 .1978Short Term Leverage 102 .00 23.80 1.65 3.844Valid N (listwise) 102Source: Bank Supervision Report 2012

The ratio of net profit to total assets (ROA) varies from -14.6 to 18.04 in percent. Collateral ranges from zero to 21.2 percent, while the dividend payout ratio varies from zero to 37.7 percent. The average bank size has been observed Rs.6.87 million while of sale growth is 20.9%. Similarly, the average value of overall leverage is 1.72 percent. The average of short term leverage and long term leverage are 1.65 percent and 0.064 percent respectively.

Correlation analysis

Having indicated the descriptive statistics, the Pearson Correlation Coefficients have been computed and the results are presented in Table 4. All of the correlation can be considered as positive and statistically significant correlation between overall leverage and long term leverage. Bank size is positively related with long term and short term leverage, but it negatively related with long term leverage. There is negative relation of leverage with assets growth and dividend payout ratio. However leverage is positively related to return on assets, collateral value of assets and volatility of assets.All three Leverage ratios are positively related to return on assets and volatility of assets (risk).

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Table 4: Pearson’s Coefficient Correlation

Variables Size Growth ROA Collateral Dividend Risk OL LTL STL

Bank size 1

Sales growth .118 1

Return on assets .153 .077 1

Collateral value of assets .060 -.076 -.009 1

Dividend payout .27 -.132 -.008 -.144 1

Volatility .97 -.118 .134 .078 .32 1

Overall leverage .017 -.169 .042 .904 -.142 .057 1

Long term leverage -.011 -.130 .036 .888 -.120 .020 .96 1

Short term leverage .018 -.171 .042 .903 -.143 .059 1.0 .96 1

Regression AnalysisThe regression on leverage and independent variables produced the result as indicated in Table 5. The table indicates that beta coefficients are positive for assets size, ROA, collateral and risk. Thus larger the total assets size larger would be the overall leverage. However the beta coefficient is significant only for ROA and risk at 5 percent and 1 percent level of significant respectively. The beta coefficients are negative for assets growth and dividend payout ratio. The result shows that higher the assets growth lower would be the overall leverage where beta coefficients are not significant at any level of significance.

Table 5: Regression Coefficient of Over LeverageThe results are based on panel data of 17 commercial banks with 102 observations for the period of 2006/07 -2011/12 by using linear regression model. The model is LEVit= a0+ a1SIZEit+ a2PROFit+ a3GROWTHit + a4DIVit+ a5COLLit + a6VOLit

Models InterceptRegression Coefficient of Overall Leverage

R2 SEE FSize Growth ROA Collateral Dividend Volatility

1 1.452(0.893)

.039(.171) .000 4.058 .029

2 2.066(4.6)**

-1.646(-1.7) .029 4.000 2.95*

3 1.611(3.352)

.062(.417) .002 4.055 .173

4 -.577(-2.80)

.130(.56)**

.361(2.3)*

95.9(21.1) .837 1.735 447.4**

5 2.195(4.25)*

-1.68(-1.75)*

.082(.55)**

-5.466(-1.44) .020 4.018 2.072**

6 .850(.538)

96.72(19.6)**

.185(.57)** .003 4.053 .326

7 .964(1.373)

-.070(-.662)

-.956(-2.3)**

.119(1.66)

96.82(19.7)**

-.572(-.329)

-.081(-.54) .834 1.697 84.53**

Source: Bank Supervision Report 2012


Notes: 1. Figures in parentheses are t-value.2. The asterisk (**), (*) sign indicates that the results are significant at the 0.01

level (2-tailed) and at the 0.05 level (2-tailed) respectively.3. Dependent variable is overall leverage.

The regression of long term leverage and independent variables shows that the beta coefficients are negative for assets growth and dividend payout ratio in all the equations as indicated in Table 6.The result shows that higher the assets growth lower would be the long term leverage where beta coefficients are not significant at any level of significance. Whereas the beta coefficient of assets size, profitability, collateral value of assets and volatility are positive. The result indicates that higher the level of profitability higher would be the long term leverage. There is positive and significant relationship between long term leverage and assets size. In the model one and model six the value of R square is zero, it means that long term leverage is not explained by assets size.

Table 6: Regression Coefficient of Long Term LeverageThe results are based on panel data of 17 commercial banks with 102 observations for the period of 2006/07-2011/12 by using linear regression model. The model is LLEVit= a0+ a1SIZEit+ a2PROFit+ a3GROWTHit + a4DIVit+ a5COLLit + a6VOLit

S.No InterceptRegression Coefficient of longterm Leverage R2 SEE F

Size Growth Collateral Divi-dend Volatility R2 SEE F

1 072(.909)

.909(-.105) .000 .198 .011

2 077(3.531)*

-.062(-1.31) .017 .197 .1.75*

3 .060(2.534)

003(.36) .001 .198 .130

4 -.046(-4.318)

4.618*(19.3) .789 .092 372.8**

5 .084*(3.311)

-.227(-1.25) .015 .197 1.475

6 .049(.637)*

4.604(17.8)*

-.018(.12)**

.003(.201) .000 .198 .040

7 .004(.115)**

0.06(0.542)

-.036(-1.6)** .006 4.555

(17.16).048

(.517)*-.011

(-1.33) .801 .091 63.6*


Notes: 1. Figures in parentheses are t-value.

2. The asterisk (**), (*) sign indicates that the results are significant at the 0.01 level (2-tailed) and at the 0.05 level (2-tailed) respectively.

3. Dependent variable is long term leverage.

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The next aspect of the study is concerned with the regression of short term leverage and control variables. The regression results are presented in Table 7. The Table represents the status of the model and the relation of the long term leverage to dependent variables.The beta coefficient of assets size is positive. It means higher the assets size higher would be the short term leverage. However the beta coefficient is not statistically significant. Likewise the profitability, collateral value of assets and risk are positively related with short term leverage. Collateral value of assets is inversely related with short term leverage. In the model 1 the value of R square is zero, it means that short term leverage is not explain by assets size.

Table 7: Regression Coefficient of Short Term LeverageThe results are based on panel data of 17 commercial banks with 102 observations for the period of 2006/07 -2011/12 by using linear regression model. The model is SLEVit= a0+ a1SIZEit+ a2PROFit+ a3GROWTHit + a4DIVit+ a5COLLit + a6VOLit

S.No InterceptRegression Coefficient of longterm Leverage R2 SEE F

Size Growth ROA Collateral Divi-dend

Vola-tility R2 SEE F

1 1.379(.890)

.040(.185) .000 3.86 .034

2 1.989(4.7)*

-1.584(-1.736) .029 3.81 3.01*

31.551

(3.38)*

.059

(.42)*.002 3.86 .177

4 -.531(-2.7)**

91.363(21.01)* .815 1.66 441.

5 2.110(4.29)*

-5.240(-1.44) .021 3.82 2.09

6 .800(.532)

-.957(-2.5)**

90.572(21.28)*

.182(.59) .003 3.86 .347*

7 .017(.026)

-1.077(-2.701)

.112(1.61)

89.150(18.7)**

-.622(-.373)

-.070(-.49) .832 1.62 78.2*


Notes: 1. Figures in parentheses are t-value2. The asterisk (**), (*) sign indicates that the results are significant at the 0.01 level

(2-tailed) and at the 0.05 level (2-tailed) respectively3. Dependent variable is short term leverage

With respect to primary analysis, the optimal capital structure is used to minimize the weighted average cost of capital. Commercial Banks measure the degree of financial leverage by long term debt to total assets. New funding source is the mix of debt and equity capital for Nepalese commercial banks. Firm size, profitability and assets growth rate are the most


determinants of capital structure of Nepalese commercial banks. Whereas, dividend payout and earning volatility is not considered as important determinant of capital structure. In order to reduce the agency cost and to reduce the tax liability of firm debt capital is used.

4. Summary and conclusionThis study attempts to explain the capital structure determinants and its management in the context of Nepalese commercial banks. A majority of earlier studies mostly indicated some common factors affecting the capital structure management decisions in the corporate sectors of developed countries. So, this study has investigated these implications in the context of Nepalese commercial banks. Among the several determinants of capital structure, six different variables namely, firm size, profitability, collateral value of assets, volatility, growth and dividend payout ratio are considered in this study.

The study concluded that bigger the size of the company greater the capacity to take the risk and higher would be the financial leverage. It was found that average assets size is highest for Nepal Bank Limited and lowest for Mega Bank. The average values of size have increased slowly over a period of time from 2006/07 to 2011/12. With respect to primary analysis, the optimal capital structure is used to minimize the weighted average cost of capital. In order to reduce the agency cost and to reduce the tax liability of firm debt capital is used. Commercial Banks measure the degree of financial leverage by long term debt to total assets. New funding source is the mix of debt and equity capital for Nepalese commercial banks. Firm size, profitability and assets growth rate are the most determinants of capital structure of Nepalese commercial banks. Whereas, dividend payout and earning volatility is not considered as important determinant of capital structure. Capital structure of a firm affects its value. It also conveys future prospects.

The major conclusion of this study is that among the various variables as determinants of capital structure firm size and profitability has been found most significant for whole sample. Assets growth rate is also considered as another determinant of capital structure of Nepalese commercial banks. Whereas, dividend payout and earning volatility is not considered as important determinant of capital structure.

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Women entrepreneurship in India in globalized economy

- *Prof. K. S. Rao and **K. P. Kumar



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AbstractIndian women have to go a long way to achieve equal rights and position because traditions are deep rooted in Indian society where the sociological set up has been a male dominated one. Despite all the social hurdles, Indian women stand tall from the rest of the crowd ands are applauded for their achievements in their respective field. The transformation of social fabric of the Indian society, in terms of increased educational status of women and varied aspirations for better living, necessitated a change in the life style of Indian women. She has competed with man and successfully stood up with him in every walk of life and business is no exception for this. These women leaders are assertive, persuasive and willing to take risks, they managed to survive and succeed in this cut throat competition with their hard work, diligence and perseverance. Increasing numbers of women are becoming leaders of their own businesses, and many are struggling to achieve success. The present paper endeavors to study the concept of women entrepreneurs –reasons women become entrepreneurs –Reasons for slow progress of women entrepreneurs in India-suggestions for the growth of women entrepreneurs-schemes for promotion &development of women entrepreneurship in India.

Keywords: Entrepreneurship, women, business, Government, problems, India.

* Prof. K.S.Rao, Professor, Dept. of Commerce & Management Studies, Andhra University, Visakhapatnam – 530 003, Andhra Pradesh, India.E.Mail:[email protected]** Mr. K. Phani Kumar, Asst. Professor, School of Management Studies, Vignan University, Vadlamudi, Guntur(Dist) – 522 213, Andhra pradesh, India.E-mail: [email protected]

IntroductionEntrepreneurs are essential drivers of innovation and progress. In today’s competitive world many individuals start small business with an intension to earn profits and to achieve the goals in their business activity. Women entrepreneurs act similarly, tapping inspiration and creativity, courage and fortitude, to seize opportunities that challenge and forever change established. The Indian culture made them only subordinates and executors of the decisions made by other male members, in the basic family structure. While at least half the brainpower on earth belongs to women, women remain perhaps the world’s most underutilized resource. The educated women do not want to limit their lives in the four walls of the house. They demand equal respect from their partners. However, Indian women have to go a long way to achieve equal rights and position because traditions are deep rooted in Indian society where the sociological set up has been a male dominated one. Women are considered as weaker sex and always made to depend on men folk in their family and outside, throughout their life. These women are assertive

persuasive and willing to take risks. They managed to survive and succeed in this cut throat competition with their hard work , diligence and perseverance, ability to learn quickly her persuasiveness, open style of problem solving, willingness to take risks and chances , ability to motivate people, knowing how to win and lose gracefully are the strengths of the Indian women entrepreneurs. Despite all the social hurdles, India is brimming with the success stories of women.

Objectives of the study1. To evaluate the factors responsible for encouraging women to become

entrepreneurs2. To study the impact of assistance by government on women’s entrepreneurship.3. To study the policies, programmer’s institutional networks and the involvement

of support agencies in promoting women’s entrepreneurship.4. To critically examine the problems faced by women entrepreneurs.

Need for the study• Women in business is considered in recent trends in India• Employed to self- employment has been a noticeable phenomenon in the emergence of new women entrepreneurs.

Review of Literature Women’s leadership in contexts of small business ownership can be argued to present different models of leadership style, values, and challenges than those developed by women in organizational leadership roles. Recent studies of women in business ownership (i.e. Business Development Bank of Canada, 1999; Industry Canada, 1999) suggest that these women business owner-leaders exercise a large degree of control over the vision and purpose of the enterprise, and often deliberately craft working environments and cultures that support their personal values and preferences. They can cultivate their own working relationships with greater freedom. They can seek as much challenge and take as much risk as they can personally manage. For some women, these freedoms come at a high cost of fears and insecurities, unpredictable workload and isolation (Canadian Advisory Council, 1991). In sum, small business ownership creates leadership issues for women that are different in kind than those shared by their sisters in senior management positions located in corporate or government settings.

In the 1990’s across North America, women increasingly have been entering ventures in self-employment. In the USA, by 1992 women already owned 27 percent of small businesses (National Women Business Owners (NFWBO), 1992). In Canada, this figure in 1996 was 40 percent (Industry Canada, 1999). Statistics collected in 1997-98 found that women were starting businesses in North America at two to five times the rate of men (National Foundation, 1999; Industry Canada, 1999) and that increasing numbers of these were home-based. There is also evidence of a trend of women in senior management leaving or wanting to leave their corporate positions to try business ownership (Catalyst, 1998; Sharp and Sharp, 1999). In the U.S. from 1987-99, women’s businesses increased 103%, their sales grew 436% and their employee ranks swelled 320% (NFWBO, 1999a). Various estimates claim that by the year 2000, almost 50 percent of all new businesses in North America will have been started

Rao and Kumar 77

by women (Business Development Bank, 1999; Industry Canada, 1999; NFWBO, 1999a). World-wide, similar patterns are becoming evident. Women-owned businesses are increasing to comprise one-quarter to one-third of businesses in the formal economies of Brazil, Equador, Mexico, Australia, Ireland, Italy, England, Germany, France, and certain African countries, and women business owners of these countries share similar concerns, according to surveys conducted 1997-98 at international conferences by the National Foundation of Women Business Owners (1998).

A growing body of literature is emerging to study the phenomenon of women’s leadership as small business owners along a wide variety of dimensions, drawing from perspectives ranging from market models of business economic development to women’s psychological development and feminist studies of women’s leadership. Qualitative studies in the past five years have indicated contested issues related to values, identity and the meaning of leadership emerging in this trend of women business ownership (Gay, 1997; Robertson, 1997; Thrasher and Smid, 1998). For example, women don’t always accept the dominant formula that success equals money and power. Women who start their own business sometimes do so to craft a new way of working, and many continue to fight barriers related to traditional constructs of economic power and expectations. Many women business owners claim that the whole experience changes them profoundly.

Women’s motives for starting and leading a business have been documented in many studies (Lee and Rogoff, 1997; NFWBO, 1999b) to help illuminate the desires and needs of women leaders who choose business ownership over organizational management positions. Women’s reasons for business start-up reasons encompass a wide range: desiring greater work-life flexibility, seeking challenge, fulfilling a long-felt desire, or escaping an organizational glass ceiling.

Management strategies often tend to be reported from statistical studies grounded in market models which examine women’s business growth rates, business planning ability, and possession of management training against traditional expectations of small business management (i.e., Carlsrud and Olm, 1986; Fagenson and Marcus, 1991). While a few have drawn attention to the possibility that women’s leadership approaches in small business are unique (Chell, Haworth, and Brearley, 1991), there is still little substantial research exploring this area. Value choices in leadership of women entrepreneurs, including women entrepreneurs’ meanings of success and values respecting work, money, and family, is a theme emerging in some recent writings on women entrepreneurs that embraces many tensions and dilemmas.

Barriers and conflicts encountered by women business owners are sometimes studied from a feminist perspective which critiques the structural and ideological discrimination built in to the existing economy and tacitly-agreed western models of business growth. Reports include isolation and gender-based discrimination of various kinds (Canadian Advisory Council, 1997), exclusion from male networks (Shragg, Yacuk, and Glass, 1992), and limited access to capital (Buttner, 1993). Work-family conflict experienced by women business owners has been a focus of recent studies.


Factors motivating women to become entrepreneursThe glass ceilings are shattered and women are found indulged in every line of business. “Women entrepreneur” is a person who accepts challenging role to meet her personal needs and become economically independent. A strong desire to do something positive is an inbuilt quality of entrepreneurial women, who is capable of contributing values in both family and social life. The obstacles and opportunities provided to the women of digital era are growing rapidly that the job seekers are turning into job creators. But new talent pool of women entrepreneurs is forming today, as more women opt to leave corporate world to chart their own destinies. In order to find out the factors influencing the women to become entrepreneurs 18 attributes that can influence their decision were identified such as economic independence, dissatisfaction with existing job, unemployment, seeking challenge, self interest, self prestige, traditional/hereditary, employment opportunities, financial assistance, technical knowledge, encouragement from family members, use of idle funds, infrastructural facilities, entrepreneurial experience, market potentials, family members interest, social status and family background

Women Entrepreneurship in IndiaEven as women are receiving education, they face the prospect of unemployment. In this background, self employment is regarded as a cure to generate income .The Planning commission as well as the Indian government recognizes the need for women to be part of the mainstream of economic development. Women entrepreneurship is seen as an effective strategy to solve the problems of rural and urban poverty. Traditionally, women in India have been generally found in low productive sectors such as agriculture and household activities. Human Development Report 2004 ranks India 103 in Gender related Development Index (GDI). As per 2001 census; women constitute nearly half of India’s population. Out of this total, 72% were engaged in agriculture, 21.7% in other non agricultural pursuits with only 6.3% in household industries.

Women entrepreneurs in India are handicapped in the matter of organizing and running businesses on account of their generally low levels of skills and for want of support system. The transition from homemaker to sophisticated business woman is not that easy. But the trend is changing. Women across India are showing an interest to be economically independent. Women are coming forth to the business arena with ideas to start small and medium enterprises. They are willing to be inspired by role models- the experience of other women in the business arena. The role of women entrepreneurs is especially relevant in the situation of large scale unemployment that the country faces. The modern large scale industry cannot absorb much of labour as it is capital intensive. The small scale industry plays an important role absorbing around 80% of the employment.

The myth that women cannot engage in productive employment needs to be dispelled. They can be encouraged to set up small and medium scale industries on their own initiative. Entrepreneurship development for women is an important factor in economic development of India. Rural women can be encouraged to start cottage industries. Rural based micro enterprises have been encouraged by the government by various schemes-such as Integrated Rural Development Program

79Rao and Kumar

(IRDP), Training of Rural Youth for Self Employment (TRYSEM), and Development of Women and Children in Rural Areas (DWCRA). The aim is to remove poverty through entrepreneurial programs.

Women Entrepreneurs in the Global EconomyAs technology speeds up lives and the new millennium is now upon us, it is useful to take time to reflect on what will surely be one of the driving forces of the global economy of the 21st century. Women are an emerging economic force that policymakers cannot afford to ignore. However, governments and institutions promoting democratic values make a real difference in women’s business organizations in newly emerging market democracies.

In the global economy of the 21st century, international trade will be a key source of economic growth and development. A recent survey conducted in several countries by the National Foundation of Women Business Owners (NFWBO) indicates that women-owned firms involved in the global marketplace.

Women Entrepreneurs in the Global Economy have greater revenues, are more optimistic about their business prospects and are more focused on business expansion .Obviously, expanding into international trade can pay off for women-owned firms. However, it is not clear that smaller enterprises are benefiting from these potential as much as larger firms. Women’s business associations can and should ensure that their members are equipped to reap the rewards of expanding into the international arena. Women must learn how to play the international trade game, and a global network of women’s business associations can help them do that. Information technology can help identify markets, provide industry information and spotlight trends about what the role of women in national economies can be.

Today, women in advanced market economies own more than30% of all businesses and women-owned businesses in Africa, Asia, Eastern Europe, and Latin America are growing rapidly. In some regions of the world, transformation to a market economy threatens to sharpen gender inequality. Some of these changes are simply the legacy of a gender imbalance that existed prior to political and economic reforms. Other changes reflect a return to traditional norms and values that relegated women to a secondary status.

Reasons for slow progress of women entrepreneurs in IndiaThe problems and constraints experienced by women entrepreneurs have resulted in restricting the expansion of women entrepreneurship. The major barriers encountered by women entrepreneurs are• The greatest deterrent to women entrepreneurs is that they are women.• Male chauvinism is still prevalent in many part of the country yet. Women are

looked upon as “ abla” weak in all respects.• Women entrepreneurs have to face a stiff competition.• Lack of self –confidence, will power, strong mental out look amongst women

creates fear in their growth.• Women in India lead a protected life.• The old and outdated social outlook to stop women from entering in the field of

entrepreneurship is one of the reasons for their failure.


• Women‘s family obligations also bar them from becoming successful entrepreneurs in developing nations

• Indian women give more emphasis to family ties and relationships.• Women’s family and personal obligations are sometimes a great barrier for

succeeding in business career.• The educational level and family background influences women participation.• Many women take the training by attending the entrepreneurial development

programme.• High production cost of some business operations adversely affects the

development of women entrepreneurs.• Women controlled business are often small and not easy for women to access the

information they need regarding technology, training, innovative schemes etc.• Lack of awareness about the financial assistance.

Apart from the above discussed obstacles there may occur series of serious obstacles faced by women entrepreneurs as improper infrastructure facilities, high cost of production attitude of people of society towards the women modern business outlook, low needs, traditional socialization has all been cited as reasons for delayed entry into entrepreneurial careers.

Problems faced by women entrepreneursThe individual woman entrepreneur single-handedly faces a plethora of seemingly endless problems. 1. Bank and other Financial Institutions do not consider Women Entrepreneurs as

“Serious” applicants for setting up their projects and they are hesitant to provide financial assistance to unmarried women or girls taking into consideration that who will return the loan either parents or in-laws.

2. Attitude of Officers of Support System is not motivating and encouraging as they have the belief that setting up of business/ industry is not the Women’s cup of tea.

3. Financial Support System suffers from aphorism/ unpredictable delays.4. Moving in and around the Market, is again a tough job for Middle Class Women

Entrepreneurs in India Social system.5. Women cannot get Sales Tax number (Regd.) without a male partner. This again

humiliates prospective Women Entrepreneurs. 6. The Security/ Surety and collateral requirements of Banks and Financial

Institutions specially frustrate unmarried women/ girls. It is extremely difficult for girls and sometime other women also particularly those, coming from a lower Socio-Economic level to set up a modest sized unit as their own financial and other resources are barely inadequate to meet the promoter’s contribution.

7. Personal (family) reasons like: Women’s more inclination towards family activity For married middle class women in India: “Family is the priority”. For unmarried women: “Marriage is the priority because of Indian social system.

Suggestions for the growth of women entrepreneursThe development of women entrepreneurs and their greater participation in the entrepreneurial activities. Women entrepreneurs need to be given confidence,

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independence and mobility to come out of their paradoxes. The following measures are suggested to empower the women to seize various opportunities and face challenges in business.• There should be a continuous attempt to inspire, encourage women entrepreneurs.• A awareness programme should be conducted.• Enhance the standard of education of women, organize training programmes.• Self-help groups of women entrepreneurs to mobilize the resources• To establish all India forums to discuss the problems issues against constraints towards economic progress.

Economic Impact of Women EntrepreneurshipIt is obvious that the 21” century provides high hopes for the progress in women role. They do have the opportunity to get strategic positions that dominated by men in the past. In Asia, women are the economy driving force. Their contribution in providing job openings in business sectors continues to rise. They are involved in enterprises at all levels as managers, entrepreneurs, owners and investors. Combination of influence of more education, technology and fast economic growth make Asian women more assertive concerning their right, more aggressive in reaching their ambition while we already acknowledged that the number of Asian women in the work force from country to country are almost as high as those of men. Surprisingly in most countries in Asia, women are dominating the service sector.

The service sector in Asia also experienced surprising growth, and resulting a large working opportunity for women. In the business world, women entrepreneurs play a big role in business development in the Pacific region. In Japan, 5 out of 6 new businesses are created by women, and they have at least five employees. The number of women-owned larger companies is not significant, but they start and manage the smaller companies.

Steps taken by the governmentDevelopment of women had been a policy objective of the government sine independence. Women are given priorities in all the sectors including SSI sector. Government and non-government bodies have paid increasing attention to women’s economic contribution through self-employment and industrial ventures.• The first five-year plan (1951-56)-women establishment of social welfare measures

for women.• The second five-year plan (1956-61) –women empowerment in agricultural

development programmes• The third & fourth five plan (19 61-66 & 1969-74)-Support for women education

as a major welfare.• The fifth five year plan (1974-79)-emphasized in training for women welfare&

development.• The sixth five year plan (1980-85) a definite shift from welfare to development.• The seventh five plan (1985-90) emphasized the need of gender equality and

empowerment.• The eight five year plan (1992-97) focused on empowering women through

panchayati raj institutions


• The tenth five year plan (2002-07)-National policy for empowerment of women (2011)-protection and development of women.

At present, the government of India has over 27 schemes for women operated by different departments & ministries some of these are

• TRYSEM-Training of rural youth for self-employment• IRDP-Integrated rural development programme• KVIC-Khadi and village Industries commission• PMRY-Prime Minister’s Rojar Yojana• RGMVP-Rajiv Gandhi Mahila Vikas Pariyojana• EDPs-Enterpreneurial Development Programme• WDCs –Women’s Development Corporation

ConclusionGrowing evidence asserts that women’s entrepreneurial leadership, while differentiated, is fundamentally different than men’s. It is apparent that some entrepreneurial women are crafting new visions and models of leadership, and many are experiencing unique processes entwining the developing self, values of work, life, and family, and the personal dynamics of change with the processes of developing and leading a business. These phenomena deserve careful and critical exploration if we are to understand radical changes now occurring in women business owners’ work-lives and leadership development, and develop new conceptual frames and vocabulary for naming these changes as they emerge. Today in India women’s are in better position in the field of entrepreneurship through effective participation in various sectors. Efforts are taken at the economy as brought promise of equality of opportunity in all spheres to Indian women and laws guaranteed equal rights of participation in political process and equal opportunities and rights in education and employment were enacted. Women sector occupies nearly 45% of Indian population .at the effective steps are needed to provide entrepreneurial awareness, orientation and skill development programs to women. The role of women entrepreneur in economic development is also being recognized and steps are being taken to promote women entrepreneurship. Women in the society and understand their vital role in modern business field too. Then very soon we can pre-estimate our chances of out beating our own conservative and rigid through process which is the biggest barrier in our country’s development process.. the unexplored talents of young women can be identified , trained and used for various types of industries to increase the productivity in the industrial sector.

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Brush, C((1997).Taoi, Dr.Kamal- Entrepreneurship in the Decentralized, sector women owned Business: Obstacles and Opportunities, Journal of development entrepreneurship.

Carmen Niethammer, creating opportunities for women entrepreneurs in conflict affected countries, International Finance Corporation.

Economic participation of women in Mizoram: Lalhriatpuii, concept pub, 2010, xii, 188 p, tables, ISBN: 81-8069-665-0.

Aboriginal Business Canada. (1998).The road less traveled. Spirit of Aboriginal Enterprise [On-line government report]. Available: http://sae.ca/research/nita/5_1.htm.

Adamski, P. (1995). A place of her own. Atlantic Progress, 7 (3), 13-20.Albert, S.W. (1992). Work of her own: How women create success and fulfillment off the

career track. New York: Tarcher/Putnam.Aldrich, H., Reece, P.R., & Dubini, P. (1989). Women on the verge of a breakthrough?

Networking among business owners in the U.S. and Italy. Entrepreneurship and Regional Development, 1 (4), 339-356.

Allen, S. & Truman, C. (Eds.) (1993). Women in business: perspectives on women entrepreneurs: London and New York: Routledge.

Alsos, G.A., & Ljunggren, E. (1998). Does the business start-up process differ by gender? A longitudinal study of nascent entrepreneurs. Frontiers of business ownership research. Wellesley. MA: Center for Entrepreneurial Studies, Babson College. Available online: <http://www.babson.edu/entrep/fer/papers98/V/V_/V_A.html>

Astin, H. S., & Leland, C. (1991). Women of influence, women of vision: A cross generational study of leaders and social change. San Francisco: Jossey-Bass.

Bank of Montreal. (1996). Myths and realities: The economic power of women-led firms in Canada. Toronto, ON: Bank of Montreal.

Baridon. A.P., and Eyler, D.R. (1994). Working together: The new rules and realities for managing men and women at work. New York: McGraw-Hill.

Barrett, M. (1995). Feminist perspectives on learning for entrepreneurship: The view from small business. Frontiers of business ownership research. Wellesley. MA: Center for Entrepreneurial Studies, Babson College. Available online: <http://www.babson.edu/entrep/fer/papers95/barrett.htm>

Birley, S. (1989). Female entrepreneurs: Are they really any different? Journal of Small Business Management, 27 (1), 32-37.

Bowen, D.D. & Hisrich, R.D. (1986). The female entrepreneur: A career development perspective. Academy of Management Review, 11 (2) 393-407.

Brook, P. (1997). Work less, live more. Toronto: HarperCollins.Brush, C.G. (1992). Research on women business owners: Past trends, a new

perspective, and future directions. Entrepreneurship Theory and Practice, 16 (4), 5-30.


Business Development Bank of Canada. (1999). Women business owners in Canada: Geared towards success. Business Development Bank of Canada [On-line government report]. Available: http://strategis.ic.gc.ca/SSG/mi04735e.html.

Buttner, E.H. (1993).Female business owners: How far have they come? Business Horizons, 18 (2), 59-62.

Buttner, E.H., & Rosen, B. (1992). Entrepreneur’s reactions to loan rejections. Journal of Small Business Management, 30 (1), 59-66.

Brush, C. (1999). Review of “Women entrepreneurs: Moving beyond the glass ceiling”. Academy of Management Review, 24 (3), 586-600.

Caffarella, R.S., & Olson, S.K. (1993). Psycho-social development of women: A critical review of the literature. Adult Education Quarterly, 43 (3), 125-151.

Canadian Advisory Council on the Status of Women. (1991). The glass box: Women business owners in Canada. Ottawa, ON: Canadian Advisory Council for the Status of Women, No. 91-E-173.

Canadian Federation of Independent Business. (1995). Small business and equal employment opportunities: A review of women business owners in Canada. Toronto, ON: Canadian Federation of Independent Business.

Catalyst (with the National Foundation for Women Business Owners). (1998). Women business owners: Why companies lose female talent and what they can do about it. New York: Catalyst Foundation.

Catalyst. (1999). Women board directors of Canada. New York: Catalyst Foundation.Caputo, R.K., & Dolinsky, A. (1998). Women’s choice to pursue self-employment:

The role of financial and human capital of household members. Journal of Small Businessm Management, 26 (3), 8-17.

Carlsrud, A., & Olm, K. (1986). The success of male and female business owners: A comparative analysis of the effects of multidimensional achievement motivation and personality traits. In R. Smilor & R. Kuhm (Eds.), Managing takeoff in fast growth companies (pp. 147-162). New York: Praeger.

Carter, S. & Cannon, T. (1992). Women as entrepreneurs: A study of female business owners, their motivations, experiences and strategies for success. London: Academic Press.

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86

Investors’ awareness, perceived risk attitudes, and investors’ be-havior: a case of Nepalese capital market

- Pawan Kawan



NMJ

AbstractIndian women have to go a long way to achieve equal rights and position because traditions are deep This paper examines the level to which investors’ awareness, perceived risk attitudes affect investors’ behavior in case of Nepalese capital market. The investors’ behavior is the dependent variable whereas investors’ awareness and perceived risk attitudes are the independent variables used in the study. The primary sources of data have been used to assess the opinion of respondents with respect to investor awareness, perceived risk attitudes and investor behavior in case of Nepalese capital market. The stock investors are selected from different brokers’ floors in Kathmandu and personally known investor friends and relatives. The selection of the brokers’ floor is based on the random sampling procedure. Similarly, for comparative study of primary data, the study also stratified the total samples into three strata: small investors, medium investors, and large investors according to level of investment in Nepalese capital market. The multiple regression models are applied to test the significance and importance of investors’ behavior in the Nepalese capital market.

The result shows that there is a significant and positive impact of investors’ awareness and perceived risk attitudes on investors’ behavior. Similarly the impacts of social learning, financial awareness, affective and cognitive aspects are positively significant with investors’ behavior in Nepalese capital market.

Keywords: Investors’ awareness, perceived risk attitudes, investors’ behavior, social learning, financial awareness, affective, cognitive.

1. IntroductionStock markets play a major role in the development of national economies (Bohnstedt, 2000). The stock market is one of the most important sources for companies to raise money. This allows business to be publicly traded, or raise additional capital for expansion by selling shares of ownership of the company in a public market. The liquidity that an exchange provides affords investors the ability to sell securities quickly and easily. Stock market plays a crucial role in the financial system. Thus stock market is considered as one of the best ways to increase funds. Capital markets provide an effective way of procuring long-term funds by issuing shares and debentures or bonds for corporate enterprises and government and at the same time provide an investment opportunity for individuals and institutions. Investors participate in the capital market by purchasing and selling different stocks and it is quite important to identify various economic and behavioral motivations that affect their purchasing decisions (Gurung, 2004).

The decision to participate in the stock exchange also requires the knowledge and awareness of the available financial instruments, an assessment of the risk-return tradeoff and an act of trust, and that the overall system is fairness of the system (Guiso and Jappelli, 2005). Many prospective investors shy away from the stock market because they have limited knowledge of stocks, the working of the stock market, and asset pricing (Rooij, Lusardi and Alessie, 2007). Awareness means having prior knowledge of the stock, and is regarded as the knowledge about stock market activity that is improved through regular and intensive stock market education. Elke and Richard (1997) assert that the decision to accept a particular asset and the willingness to pay for the asset depends on the investor’s risk perception. At different levels of perception towards risk, the individual investor thinks differently about their investment and makes decisions differently (Chira and Thornton, 2008). The decision-making behavior of an investor is affected by the attitude towards the risk as well as the way in which the investment risk is perceived by the investor.

The behavioral finance mainly focuses on how investors interpret and act on micro and macro information to make investment decisions. The aim of behavioral finance is to analyses the phenomena of market keeping in view the psychological factors involved in the behavior of investors. Information has been one of the most important components in determining the behavior of investors. In case of their investor behavior in stock market, it becomes even more critical to access and incorporate into their decision making updated information included in financial reports, periodical press releases, and media coverage and so on (Easley, Hvidkjaer and O’Hara, 2010). Individual investments behavior is concerned with choices about purchases of small amounts of securities for his or her own account (Nofsinger and Richard, 2002). Investors do not act rationally in taking decisions relating to investment. They have certain weaknesses like cognitive and emotional which take a predominating role in taking investment decision of individuals.

A better understanding of behavioral processes and outcomes are important for financial planners because an understanding of how investors generally respond to market movements would help them in making appropriate asset allocation strategies for clients (Al-Tamimi, 2006). The investor behavior is also governed by the financial literacy. Financial literacy is defined as “the ability to obtain information, analyze, manage and communicate about one’s personal financial situation as it affects one’s material well-being” (Vitt et. al, 2000). Having financial literacy skills enable individuals to make informed decisions about their money and minimizes the chances of being misled on financial matters (Delpachitra and Beal, 2003). Investors do not act rationally in taking decisions relating to investment. They have certain weaknesses like cognitive and emotional which take a predominating role in taking investment decision of individuals. They have behavioral biases in the event of taking investment decision. The most crucial challenge faced by the investors is perhaps in the area of taking investment decisions. Every investor differs from the others in all aspects due to various factors like demographic factors, socio-economic background, marital status, educational attainment level, age, gender information (Kabra, Mishra, and Dash, 2010).

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In case of developing countries like Nepal, investors have less information about the share market so they imitate decisions and recommendations from friends, relatives, advocates, and brokers. Chandra and Kumar (2011) argue that the recommendations of brokerage houses, family members and co-workers go largely unheeded. Brijlal (2007 ) showed that investors presently seemed to be making more use of advice from stockbrokers compared to the investors in the 1980s. The study by Pradhan, 1993 shows that there is positive relation between stock returns and size where as inverse relation between stock returns and market-to-book value.

The purpose of this study is to analyze the individual investors’ perception in Nepalese capital market. Specifically, it examines the level to which investors’ awareness, perceived risk attitudes affect investors’ behavior in case of Nepalese capital market. Furthermore other specific objectives are to find out the major sources of basic knowledge about how to invest in stock, to analyze the most influential factors that affect the investment decision, to examine the major sources of information and financing used by the investors, and to determine the risk taking behavior of Nepalese investors.

The remainder of this paper is organized as follows. Section two describes the sample, data, and methodology. Section three presents the empirical results and the final section draws conclusion and discusses the implications of the study findings.

2. Methodological aspectsThe primary sources of data have been used to assess the opinion of respondents with respect to investor awareness, perceived risk attitudes and investor behavior in case of Nepalese capital market. The questionnaire survey has been conducted to record the opinions, perceptions, and characteristics of investors in Nepalese capital market. The stock investors are selected from different brokers’ floors in Kathmandu and personally known investor friends and relatives. The selection of the brokers’ floor is based on the random sampling procedure. The structured questionnaires in English medium with 35 questions were distributed among the investors. The study was conducted in Kathmandu valley by distributing 300 questionnaires through field survey and email survey method. Out of which 120 questionnaires were distributed in field survey where 77 responses received. Likewise 180 questionnaires were distributed in email survey where 138 responses received. Thus there are altogether 215 respondents on which the entire study depends. Similarly, for comparative study of primary data, the study also stratified the total samples into three strata: small investors, medium investors, and large investors according to level of investment in Nepalese capital market.

The research design undertaken in the study consists of descriptive and causal comparative types to deal with the fundamental issues associated with investors’ awareness, perceived risk attitudes and investors’ behavior in case of Nepalese capital market. Descriptive research design attempts to obtain a complete and accurate description of a situation. Causal-comparative research is an attempt to identify a causative relationship between an independent variable and a dependent variable.


Research hypothesisBased on the objectives of the study, the following null hypothesis have been formulated and tested:

Null Hypothesis 1: There is no relationship between investor awareness and investor behavior.Null Hypothesis 2: There is no relationship between perceived risk attitudes and investor behavior.Null Hypothesis 3: There is no relationship between financial awareness and investor behavior.Null Hypothesis 4: There is no relationship between social learning and investor behavior.Null Hypothesis 5: There is no relationship between affective and investor behavior.Null Hypothesis 6: There is no relationship between cognitive and investor behavior.

The ModelThe empirical model employed in this study intends to analyze the relationship between the investors’ awareness, perceived risk attitudes and investors’ behavior. The analysis of investor behavior with respect to the investors’ awareness and perceived risk attitudes variables have been conducted with the help of OLS regression estimates. In order to explain the effect of investors’ awareness and perceived risk attitudes in the investors’ behavior the empirical model has been determined as equation (i). The regression model is as follows:

IB = β0 + β1 IA + β2 PR + e……………………………………….…………………………………….. (i)

In equation (i), IB refers to the investors’ behavior determined from the survey, IA is the investors’ awareness and PR denotes perceived risk attitudes. Similarly, e refers to normally identical and independently distributed error terms. The entire explanatory variables are used as index determined from the questionnaire survey. Likewise β0 is the intercept term, and β1, and β2 are the respective parameters of the explanatory variables to be estimated.

Similarly, in order to understand the effect of financial awareness, social learning, affect and cognition on investor behavior the empirical model of the form specified in equation (ii) has been used. The empirical model is as follows:

IB = β0 + β1 SL + β2 FA + β3 AFF + β4 COG + e……….……………………………… (ii)

In equation (ii), IB refers to the investors’ behavior determined from the survey, SL indicates social learning, FA represents financial awareness, AFF denotes affective and COG refers to cognition. Likewise, e refers to the normally identical and independently distributed error terms. Similarly β0 is the intercept term, and β1, β2, β3 and β4 are the respective parameters of the explanatory variables to be estimated.

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3. Presentation and Analysis of dataThis section reports the results of questionnaire survey conducted among individual investors in Nepalese capital market. Questionnaire survey was designed to understand the view of the respondents in relation to their buying and selling preferences, degree of trading, perception towards risk and return and experience relationship along with factors affecting investors’ behavior in Nepal.

Table 1 shows the number of respondents from types of investors according to investment size in the market. Out of total 300 questionnaires distributed to the investors in Nepalese capital market, only 215 of them responded, which consisted of 80 Small Investors, 65 medium investors, and 70 large investors. The response from the small investor is high which is 37.2% compared to medium (30.23%) and large (32.56%) investors. Though the size of medium and large investors seems to be smaller, they are good representative because investors do not want to reveal their investment.

Table 1: Number of respondents

S.N. Category of investors Number Percentage

1 Small investors 80 37.21

2 Medium investors 65 30.23

3 Large investors 70 32.56

Total 215 100

Correlation analysis Table 2 presents the Kendall’s tau correlation coefficient between each pair of investors’ behavior and its determinants. The tau coefficient for the investors’ behavior and investor awareness is positively related which indicates that as investor’s awareness increases, the activities of investors’ in the market also increases. Likewise the Tau-b between the investors’ behavior and perceived risk attitudes also shows that there is positive association between perceived risk attitudes and investors’ behavior. Similarly investors’ behavior is positively related with social learning and financial awareness. In the same way there is direct association of investors’ behavior with affective and cognitive aspect.

Table 2: Correlation matrix for the dependent and independent variables

IB IB IA PR SL FA AFF COG

IB 1

IA .513* 1

PR .408* .474* 1

SL .474* .777* .428* 1

FA .454* .759* .425* .487* 1

AFF .345* .326* .668* .303* .272* 1

COG .374* .491* .735* .437* .467* .341* 1

*. Correlation is significant at the 0.01 level (2 tailed).**. Correlation is significant at the 0.05 level (2 tailed).


Regression AnalysisThe regression of investors’ awareness and perceived risk attitudes on investors’ behavior in table 3 reveals that investors’ behavior is positively related with investors’ awareness which reveals that as awareness about capital market increases then the level of investment made by investors also increases and vice versa. Similarly investors’ behavior is positively related with perceived risk attitudes. The regression analysis of the dependent variable with all explanatory variables revealed that investors’ behavior is positively and significantly related with investors’ awareness and perceived risk attitudes.

Table 3: Regression of investors’ awareness and perceived risk attitudes on investors’ behavior

Models InterceptRegression Coefficients of

Adj. R-bar2 SEE FIA PR

(1) 1.009(4.937**)

.401

(6.461**)

.331(5.002**) .465 .397 93.936

(2) 1.420(7.661**)

0.604

(12.865**).435 .408 165.513

(3) 1.487(7.116**)

.614(11.073**) .362 .433 122.607

Notes:1. The signs ** and * denote that the results are significant at 1 percent and 5

percent level of significance respectively.2. Dependent variable is investors’ behavior.

The regression of investors’ behavior and its determinants in the Nepalese capital market has been analyzed by defining social learning, financial awareness, affective and cognitive. The results are presented in table 4. The table indicates that investors’ behavior is positively related with social learning which reveals that as social learning increases then the level of investment made by investors also increases and vice versa. Similarly the dependent variable is positively related with financial awareness. Likewise the result shows that investors’ behavior is positively related with affective and cognitive variables as well. The regression analysis of the dependent variable with all explanatory variables revealed that investors’ behavior is positively related with social learning, financial awareness, affective and cognitive.

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Table 4: Regression of social learning, financial awareness, affective and cognitive on investors’ behavior

Models InterceptRegression Coefficient of Adj.

R-bar2 SEE FSL FA AFF COG

(1) .920(4.431**)

.214 (4.074**)

.204(3.649**)

.265(4.667**)

.076(1.434**) .471 .394 48.710

(2) 1.891(11.270**)

.487(11.409**) .376 .428 130.176

(3) 1.894(9.945**)

.479(10.019**) .317 .448 100.390

(4) 1.871(8.990**)

.516(9.263**) .284 .459 85.803

(5) 2.239(12.358**)

.407(8.619**) .255 .468 74.279

(6) 1.436(7.706**)

.341(6.706**)

.259(4.761**) .434 .408 83.045

(7) 1.443(6.788**)

.365(6.088**)

.261(5.240**) .363 .433 61.962

(8) 1.206(6.070**)

.370(8.228**)

.308(5.615**) .455 .401 90.183

(9) 1.583(7.986**)

.346(6.177**)

.221(4.161**) .366 .432 62.698

Notes:1. The signs ** and * denote that the results are significant at 1 percent and 5 percent level

of significance respectively.2. Dependent variable is investors’ behavior.

4. Summary and Conclusion Stock market is considered as one of the best ways to increase funds. The stock market is one of the most important sources for companies to raise money. This allows business to be publicly traded, or raise additional capital for expansion by selling shares of ownership of the company in a public market. Capital market helps to mobilize the surplus unit to deficit unit for productive investments. The major finding of this study is that male investors are more active in capital market and portion of married investors are large. Capital gain is the major objective of the investors. Likewise as experience of the investors increases the level of investment will also increases. Most of investors have moderate knowledge about capital market and uses fundamental analysis. The multiple regression analysis with entire explanatory variables in model revealed that investors’ behavior is positively related with investors’ awareness and perceived risk attitudes. Similarly investors’ behavior is positively related with social learning, financial awareness, affective and cognitive aspects.


References

Al-Tamimi, H., 2006. Factors influencing individual investor behavior: An empirical study of the UAE financial markets, IBRS Athens.

Bohnstedt, A., 2000. Recent development in Uganda’s finance sector: Crises of transition? Kampala: Bank of Uganda, FSD series 3.

Brijlal, P., 2007. Key changes in profile and characteristics of individual investors on the Johannesburg Securities Exchange (JSE), over the past two decades, African Journal of Business Management, 1, 136-141.

Chandra, A. and R. Kumar, 2011. Determinants of individual investor behaviour: An orthogonal linear transformation approach, Munich Personal RePEc Archive .

Chira, I. and B. Thornton, 2008. Behavioral bias within the decision making process, Journal of Business and Economics Research, 6, 8-11.

Delpachitra, D. J. and S. B. Beal, 2003. Financial literacy among Australian Universi-ty Students, Economic Papers, 22, 65-78.

Easley, D., S. Hvidkjaer, and M. O’Hara, 2010. Factoring information into returns, Journal of Financial and Quantitative Analysis, 45, 293-309.

Elke, U. and A. Richard, 1997. Perceived risk attitudes: Relating risk perception to risky choice, Management Science, 43, 123-144.

Guiso, Luigi and Jappellio Tullio, 2005. Awareness and stock market participation, The Review of Finance, 9, 1-31.

Gurung, J. B., 2004. Growth and performance of securities market in Nepal, The Journal of Nepalese Business Studies, 1, 85-92.

Kabra, G., P. K. Mishra, and M. Dash, 2010. Factors influencing investment decision of generations in India: An econometric study, Asian Journal of Management Research, 4, 305-326.

Nofsinger, and Richard, 2002. Individual investments behaviour, New York, McGraw-Hill, 4, 144-162.

Pradhan, R. S., 1993. Stock market behavior in a small capital market: A case of Nepal, The Nepalese Management Review, 1, 23-49.

Rooij, V., A. Lusardi, and R. Alessie, 2007. Finanical literacy and stock market participation, NBER Working Paper, 1, 35-65.

Vitt, L. A., C. Anderson, J. Kent, D. Lyter, J. Siegenthaler, and J. Ward, 2000. Personal finance and the rush to competence: financial literacy education in the U.S., Institute for Socio-Financial Studies, FunnieMae Foundation.

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Impact of market entry strategy on export performance

- Dr. Suman Kumar Regmi*



NMJ

AbstractWith increasing levels of globalization and international competition, managers are facing ever more complex strategic decisions. Often, foremost among these are decisions relating to the choice of entry strategy in export markets. Selection of an appropriate entry strategy is a critical and indispensable component of the strategic decision a firm has to make when investing overseas. The study has been implemented with the aim of examining the impact of entry strategy on export performance of Nepalese export companies. In goals and nature of research, it is based on a descriptive Study, and in collecting data, it is on the basis of a survey research. Based on the method of judgmental, non-probable sampling (experts’ choice), we chose some companies which cover exports of the country as case study.

We collected the essential data through questionnaires. The results represent that the entry strategy affects the export performance of the export companies.

Keywords: Entry strategy, export performance, Nepalese export companies

Introduction: Companies enter international competitions because of different motives such as gaining global reputation, assurance of long term growth, increase of profitability, reaping the economy of scale and for other reasons such as saturation of internal market, intensity of competition in internal market and pressure of governmental rules and regulations. In international competition, a proper and creative entry strategy guaranties a long term presence in the market and leads to the success of the company in international markets. Those companies, which tend to enter international markets, must decide about the type of entry strategy and its effect on foreign operation of the company. Further, firms operate in increasingly dynamic and unstable environments characterized by intense competition, uncertain market conditions, faster technological changes and shorter product life cycles. Under these circumstances, the successful introduction of new products into the market becomes a critical factor for the survival and growth of companies. Effective new product development and commercialization

*Dr. Regmi has been teaching starting from Pashupati Campus since 1981. The writer has taught International Business in National open college after 2004. Presently, he is Visiting Faculty in Global Business, The Writer can be contacted at [email protected]

is therefore a challenging task, and several studies have verified that the entry or launch strategy is a key determinant of the success or failure of product innovations (Pinto, Escudero and Cillán,2007).

Some researchers believe that apart from the motive of companies for entering foreign markets, improvement of export performance is their main concern (Cavusgil, Zou and Naidu ,1993). Entry strategy is one of the most fundamental and main factors in appointing export performance (Zou and Stan, 1998).

Although in earlier researches an emphasis was put on the effect of entry strategy on export performance of companies, little study has been done on it.

International entry mode research is important because the chosen entry mode has significant implications for performance. It determines whether a company has full control over the foreign unit or has to share control with a partner. In addition, once established, the mode of entry is difficult to change, because it has long-term consequences for the company. Given its high relevance, numerous empirical studies have addressed the entry mode decision.

Modes of entry into international markets are the most researched field in international management (Werner, 2002).

On the other hand, research on a number of Nepalese’s export items illustrates that foreign trade balance of our country has always been negative and the amount of our export has been less than that of the import (www.tepc.gov.np).

Despite the role and importance of export items in export leap strategy and economic, social and cultural development plans in the country, little study has been conducted in this domain. Majority of studies are done in macro level that focuses on the government role in export. Few researches in country have been on micro level that focuses on company’s level. Therefore, this study focuses on export companies in Nepal to answer this fundamental question that how the market entry strategies can affect export performance of export companies.

Literature Review: Internationalization is the process of increasing the addition of knowledge in markets and institutions abroad. It has been observed that firms start the internationalization process by exporting products as demanded by different countries. However, other researchers argue that the longer a firm waits to initiate international activities, the more difficult it will be to grow internationally (Sharma and Blomstermo, 2003).

Internationalization can be professed as a part of the ongoing strategy process of most business firms. The main differences between internationalization and other types of strategy processes are as follows: first, when products, services or resources are to be transferred across national boundaries, the firm has to select the country where or with whom the transactions should be performed. Secondly, the firm has to select the international exchange transaction modality, i.e. a foreign market entry strategy (Andersen and Buvik, 2002).

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This article concentrates on market entry strategy, because one of the critical decisions in that internationalization process is the choice of an entry strategy (Quer, Claver and Andreu, 2007).

Entry strategy is the method used by a company to start doing business in a foreign country (sharma, 2000). Entry strategy is an institutional arrangement that makes possible the entry of firm’s products, technology, human skills, management, or other resources into a foreign country (Karkkainen, 2005).

Many forms of market entry strategy are available to firms to enter international markets. One classification first distinguishes between equity and non-equity modes. Equity modes involve firms taking some degree of ownership of the market organizations involved, including wholly owned subsidiaries and joint ventures. Non equity modes do not involve ownership and include exporting or some form contractual agreements such as licensing or franchising (Wilkinson and Nguyen, 2003).

Also, Caves (1982) identified four basic ways to expand internationally, from the lowest to the highest risk: (1) exporting; (2) licensing and franchising; (3) strategic alliances; and (4) wholly owned foreign subsidiaries.

Cateora and Graham (2002) stated there are six basic strategies for entering a new market: export/import, licensing and franchising, joint venturing, consortia, partially-owned subsidiaries, and wholly-owned subsidiaries. Generally, these represent a continuum from lowest to highest investment and concomitant risk-return potential. In choosing a particular strategy, a company constructs a fit between its internal corporate risk “comfort level” and the externally-perceived risk level of the target entry market.

Some companies may perceive different risks as they evaluate the same market and therefore choose different entry modes. Two companies also may perceive the same risks in a country but still choose different strategies because of their firm’s differing tolerances of risk. More specifically, the different market-entry strategies can be encapsulated as follows (Cateora & Graham 2002).

The initial classification of different international entry modes is founded on two separate characteristics: (1) the location of manufacturing facilities, and (2) the percentage of ownership the firm desire in foreign investment.

Entry in the foreign markets can occur in two ways based on the location of the manufacturing facilities. The firm can either export its products to the target country from production facilities outside that country (exporting strategies), or the firm can transfer its resources in technology, capital, human skills, and enterprise to the foreign country, where they may be sold directly to users or combined with local resources to manufacture products for sale in local market (non exporting strategies). The second characteristic (percentage of ownership) offers three different options: none, partly or wholly owned investment (Karkkainen, 2005).


1) Export Strategies: Numerous firms choose exporting for an international entry mode as a strategic alternative that maintains effort and resources while still taking advantage of foreign opportunities (Czinkota et al, 1992). The exporting can become an international learning experience (Root, 1994). Many firms choose export for their first international entry mode. This is the easiest and most low risk way to enter foreign markets. It needs the least facility allocation and has the lowest changes in the country marketing programs (Kotabe and Helsen, 2000; Onkvisit and Shaw, 1993).

A firm using exporting strategies usually achieves certain benefits like, the rapidity of international market entry, and not required investment in establishing operations in the host country. Especially direct exporting offers for a firm a low risk and simple way to begin its international process and meet the demand and challenges. In addition, in exporting alternative the company and management commitment is usually small (Hitt et al, 2003: Luostarinen and Welch, 1990). Export strategies are divided into two categories: direct export strategy and indirect export strategy.

Direct Export Strategy: In direct importing firms are in interrelationships with foreign customers and markets. The end result of exporting is the same whether the activities are direct, own or indirect (Karkkainen, 2005). Companies, which are urged to export by foreign customers, usually use this strategy. In this strategy, the company is connected to one or more sales agents in the country. Companies, which accept all necessary liabilities to sell their products in the target country, can attempt direct export strategy.

Therefore, it requires a high level of expertise in international marketing. The advantages of this strategy are more sales, control, market information, experience and specialty of the company in export, while the drawback is more cost. Different methods of direct export are: export agents, mobile sales agents, sales branches, internal export department, and mail order (Albaum et al, 2002).

Indirect Export Strategy: In indirect involvement firms participate in international businesses through an intermediary and do not deal with foreign customers or firms (Karkkainen, 2005). In this strategy the company sends its products to foreign customers through intermediaries in its country (Kotabe and Helsen, 2000). In other words, a company employs indirect export strategy when its products are sold in foreign markets without any special activities inside the company. In fact, in this strategy the company does not involve in international marketing in real sense. This strategy is more common among companies which have decided to export. The methods of indirect export are: using commercial companies, using export management companies, cooperation in export and distribution.

2) Non Export or Investment Strategies: It means the company produces its export products in other countries and exports them to international markets (Dehghan, 2008). Types of non-export or investment strategies consist of:

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Strategic Alliances: In a strategic alliance, organizations pool or share their resources and expertise with other firms and the parties share the rewards or risks of starting a new venture (ling et al, 2005). In this strategy, the company uses methods such as licensing, franchising, contractual production, and joint investment for entering international markets. In licensing and franchising, the company enters the foreign market without investment.

The joint investment happens when a company requests to share in the stock of a foreign company (Dehghan, 2008). A joint venture involves constantly sharing equity and risks and also participation in management between partners forming a long lasting, profit seeking relationship (Karkkainen, 2005). The advantages of joint venture are saved capital and less restricted resources for foreign country operations. Also the risks involved in international market entry are smaller and through join venture the firm acquires highly important resources, like local knowledge and experiences (Luostarinen and Welch, 1990; Root, 1994).

Joint ventures permit closer relationships with local government and other organizations such as labor unions. Joint ventures make also possible to minimize risk of exposing long term investment capital, while at the same time maximizing the leverage on the capital that is invested (Czinkota et al, 1992).

Foreign Direct Investment: In this strategy, an international company handles all production activities in a foreign country and owns 100% of the company. This can happen in two ways: firstly, it can buy an active company; secondly, it can establish a new company (Dehghan, 2008). When firms choose to set up wholly owned foreign subsidiaries as the entry mode, they are establishing operations in a foreign country without direct involvement of firms from that country (ling et al, 2005).

The core advantage of the foreign direct investment for the firm is the maintained control over the technology, marketing, and distribution of its products (Hitt et al, 2003). The disadvantages of the Greenfield investment are usually often complex establishing process and potential high costs. Establishing new wholly owned subsidiary takes a lot of time, and thus is not appropriate for rapid entering in foreign markets. Establishing the Greenfield investment needs also the greatest contribution of knowhow of all the international market entry alternatives (Karkkainen, 2005).

Entry strategy selection: The theories of international production are commonly employed as the basis to analyze entry strategy selection of international firms. Many mono disciplinary theoretical frameworks, for example, Hymer’s market imperfections theory (Hymer, 1960), the transaction costs theory (Williamson, 1975; Anderson and Gatignon, 1986), the internalization theory (Buckley and Casson, 1976), the strategic behavior approach (Kogut, 1988), and the resource-based approach (Wernerfelt, 1984), have tried to explain the choice of an optimal entry mode into a foreign market by international firms from one specific perspective only.


Nevertheless, Andersen (1997) argues that a firm’s entry strategy choice involves many factors and that one single theoretical perspective is not adequate to provide a comprehensive explanation. To tackle this complex decision-making process of entry strategy selection, an eclectic approach that compares various factors simultaneously is obviously more appropriate. An attempt to integrate different theoretical approaches into an eclectic framework is made by Dunning (1980; 1988; and 1995).

According to Dunning’s eclectic model, the firm’s decision to enter a foreign market and the choice of a market entry mode (direct investment, contractual resources transfers or exports) depends upon the possession of (1) ownership-specific, (2) location-specific, and (3) internalization advantages. His diverse example helps analyze why firms choose foreign production rather than exports or transferring technology overseas. However, Dunning’s model is not to distinguish the choice between a wholly owned subsidiary and a joint venture once the firm has decided to invest directly in a foreign country (Moon, 1997).

Usually, selection of entry strategy involves two steps: (1) determining the location of production facilities, and (2) deciding the firm’s level of involvement in, or control of, the operations of the foreign subsidiary.

In Step 1, a manufacturing business or a hard service business chooses between exporting and production in the target foreign market. In Step 2, manufacturing business or a hard service business chooses between full-control or high-involvement modes and shared-control or low-involvement modes (Ekeledo and Sivakumar, 1998).

Many researchers have suggested that entry strategies may be differentiated according to the level of resource commitments and control. Also, many often conflicting forces are influencing a company’s choice of entry strategy. Factors influencing in entry mode decisions can be divided for external and internal factors. External factors include target country market factors, target country environmental factors, target country production factors and home country factors. Internal factors affecting in the entry mode decision are company product factors and company resource factors (Root 1994; Koch, 2001)

Research Methodology Based on nature and goals, this research is descriptive. This is categorized in descriptive format because descriptive Research studies present condition and explains the results; moreover, the researcher cannot change any independent variables, but he can use the results to suggest, design a model, or design a system (Khaki, 2000). The research is a survey one in the method of data collection. The statistical population of the research is the questionnaire validity and reliability.

In this research, to evaluate the validity of the designed questionnaire, a copy was given to some management professionals and academicians who were familiar with international marketing and export issues to express their ideas about the accuracy and clearness of the questions.

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Performance: A fundamental debate in strategic management and international marketing research is questioning about the performance, especially when the companies involve in international performance (Florin and Agboei, 2004). An accurate understanding of the crucial link between international strategy and performance is especially important in the face of world markets that are increasingly global. Consequently, international marketing research has moved from being descriptive – studying the differences between exporters and non-exporters – to providing performance explanations (shoham and kropp, 1998). In today’s complex business world, performance is an indispensable guide for any company analyzing its level of success, in both the domestic and international arenas. Assessing export performance is quite a complex task, as export performance can be conceptualized and operationalzed in many ways. Broadly speaking, the literature considers three aspects of export performance: financial, strategic, and that of performance satisfaction (Lages and Montgomery 2004). Although considerable progress has since been made, research remains underdeveloped. Defining and understanding performance is problematic, especially in terms of identifying uniform, reliable, and valid performance measures (Katsikeas, Leonidou and Morgan, 2000). Export performance is the dependent variable in the simplified model and is defined as the outcome of a firm’s activities in export markets.

There are two principal ways of measuring export performance: economic (financial measures such as sales, profits, and market share) and noneconomic (nonfinancial measures relating to product, market, experience elements, etc.) . Most background and intervening variables were associated with economic measures of performance, particularly export sales intensity (export-to-total sales ratio), export sales growth, and export profitability (Katsikeas, Leonidou and Morgan, 2000). Also, Export performance, a widely studied construct, refers to the outcomes of a firm’s export activities, although conceptual and operational definitions vary in the literature (Calantone, 2005)

Entry Strategy and export performance: The choice of entry mode has become a crucial strategy decision for firms wishing to enter international markets, as it will have an important influence on their future business success (Peinado and Barber, 2006). Market entry strategies affect business performance in the context of manufacturing industries (Kirca, 2005). Choosing the right entry strategies is one of the key points in international marketing. These strategies have an effect on performance and duration of it through determining the method and allocating essential and sufficient resources (Ekeledo & Sivakumar, 1998). Entry mode performance is defined in terms of efficiency or profitability. Non profit motives, such as resource and knowledge development or strategic moves against competitors, are assumed to be reflected in long term profit. Profitability depends on costs and revenues (Wilkinson and Nguyen, 2003). Furthermore, some of the researches indicate that entry strategies affect export performance by determining the control level, risk level and company share in foreign markets and end up with the success or failure of the company.

Previous studies have generally neglected the link between exporting and performance and survival.


Conceptual Model Based on the foregoing literature review it is possible to propose a model of entry strategy and export performance. The idea concentrates on the relationship between entry strategies and export performance. Further, in most researches in international business, international experience and the firm size are considered as control variables. Therefore, in this study also these two variables are considered as control variables. The relationship between firm size and export performance has been studied frequently in the international marketing literature. There is general consensus in the literature that firm size is positively related to the firm’s propensity to export (Verwaal, and Donkers, 2002).

Also, firm size affects entry strategy. Horst (1972) argued that, considering the inherent risks and fixed costs, the proneness to invest abroad must increase with the dimension of the firm. Besides, greater size implies greater availability of financial and managerial resources, which makes it easier to set up full-ownership subsidiaries (Tallman & Fladmoe-Lindquist, 2002).

In keeping with this, a large part of the empirical research has observed that firm size correlates positively with the degree of commitment assumed with the entry mode (Quer, Claver and Andreu, 2007).

In relation to the firm’s international experience, the more internationally competent a firm is the more likely it is that standardization alone will not lead to optimal results. A competent firm, because of its international experience knows the differences in environmental conditions and is more likely to select the most attractive market for the venture and adapt the marketing strategy to accommodate the specific needs of the market (Cavusgil and Zou, 1994).

Experience in international business complements abundant resources. Relative corporate experience, often reflected in the ratio of foreign sales to total sales, number of foreign markets currently served, and knowledge of the host country, influences entry mode choice. Empirical evidence shows that the preference for sole ownership increases with cumulative international experience (Ekeledo and Sivakuma, 1998).

A firm with limited international experience that enters foreign markets is likely to use a low- involvement mode of operation, such as exporting, to gain experience before getting involved in equity investment.

References: Gerald, Albaum et al, (2002). International Marketing and Export Management. Prentice

Hall, 248-249

Andersen, O. (1997). Internationalization and Market Entry Mode: A Review of Theories and Conceptual Frameworks, Management International Business Studies, 17, 1–26.

Aswathappa, K. (2005).International Business. New Delhi: Tata McGraw Hill Publishing Company Limited

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Ball, DA. Mchulloch, W.H. Frantz, P. L. Geringer ,M(Jr.) and MC. Minor, (2006). International Business: The challenges of Global Competition. New York: McGraw Hill, International Publication

Buckley, P. and M. Casson, (1976). The Future of the Multinational Enterprise. London: Macmillan.

Cateora and Graham (2002). International Marketing. McGraw-Hill Caves, R.E. (1982). Multinational Enterprises and Technology Transfer: New Theories

of the Multinational Enterprise. New York: St Martin’s Press. Czinkota, M. R., P.Rivoli, and I. A.Ronkainen (1992). International Business, The Dryden

Press, 268-289 Czinkota, Michael R. , I.K .RonKainon, and MH. L.Moffett. International Business.

Thompson South-Western. Daniels J.D., L. H. Radegauh, and D. P. Sulivan, (2005). International business:

Environments and Operations. India : Pearson Education AsiaKoontz , Harold (2000). Essential of management. New DelhiHill, Rechard. International Business: Concepts and Issues. Tata McGraw Hill, 5th

Edition Hitt, M. A., R. D. Ireland, and R. E. Hoskisson , (2003). Strategic Management:

Competitiveness and Globalization, South Western, 258 – 287 Hymer. S. (1960 and 1976), The International Operations of National Firms: A Study

of Direct Investment. Cambridge, MA: MIT Press. Daniels, John and W. H. Radebough. International Business: Environments and

Operations. Pearson Education Daniels, John D. and Lee H. Radebaugh (1994). International Business (Environments

and operations )6th Edition. USA The web site of Trade and Export Promotion Centre (www.tepc.gov.np)


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Customer switching behavior in the retail banking industry of Nepal

- Shazia Thapa



NMJ

AbstractThis paper examines the influencing factors on customer switching behavior in the retail banking industry of Nepal. The reputation, switching cost, service quality, product variety, customer satisfaction, geographic location and involuntary switching behavior are the independent variables where as customer switching behavior as dependent variable. The data are collected by surveying banks customer through mails, online survey as well as distributing questionnaires in their respective bank premises. The information regarding customer switching behavior is collected from different published articles, reports, journals and books. The regression models are applied to test the significance and importance of customer behavior in Nepalese banking industry.

The result shows that the significant numbers of customers are of youthful age. The independent variables like geographic location, service quality and product variety have strong relation with customer switching behavior. The result also showed that many respondents did not switched to other banks because they were happy with the current provider. Thus, the study concluded that the positive relationship exist between switching behavior and other variables like customer satisfaction, service quality, geographical location and product variety. Similarly there is no relationship of customer switching behavior with pricing strategies and reputation.

Keywords: Customer switching behavior, price, customer satisfaction, service quality, reputation, geographic location, product variety, involuntary switching behavior, and switching cost.

1. IntroductionBank is the place where customers are served with various financial services. It is an industry which cultivates financial relationships with customers of all sizes to supply financial products and services. It is a service sector and for every service sector customers are an indispensable part. Without customer no service sector can run and show its existence. It is same for banking sector as well. Banking industry all around the world is adopting unique strategies to overcome various challenges and move forward to deliver financial objectives to people and organizations. Banks around the world now not only focus on gains but it also focuses in improving the customer experience. Creating a connection with customer has always been an objective for any service sectors. However, their efforts are not paying off in terms of inducing customer retention and loyalty.

The retail banking industry is subject to a number of strong external forces which have the potential to increase future switching behavior. It is a service industry and delivers its services to the consumer. There are various financial reforms which is lowering entry barriers and growing product lines of banks and non-banks. Banks are therefore functioning increasingly under competitive pressures. In this era of mature and intense competitive pressures, it is imperative for all the banks to maintain a loyal customer base. It is because the customers are the key success factor for almost every kind of organizations. Levesque and McDougall (1996) states that for every business to be able to survive will immensely depend on its potential customers. As a result, it will be flop for say business which does not identify and retain its customers. According to Keiningham et al., (2007) banks that would not be able to provide complete customer service could lose the customer. Banks that are unable to acquire their most valuable customers may face declining market share, revenue and shareholder value. Thus, bank management must develop customer- oriented strategies in order to compete successfully in the competitive retail banking environment. The longer a bank can retain its customer, the greater revenue and cost savings from that customer. So this study helps to identify the major factors responsible for switching behavior of customer.

According to Kanojia and Yadav ( 2012), in a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy. Customer satisfaction is an ambiguous and abstract concept and the actual manifestation of the state of satisfaction will vary from person to person and service to service. The state of satisfaction depends on a number of both psychological and physical variables. In recent year’s bank switching behavior has been a major challenge for marketers. Hence consumer service switching remains an important research area in the relationship marketing literature Chiu et al., (2005).

Furthermore, world retail banking report of 2013 also revealed that less than half of the banking customers are only likely to stay with their banks. Globally, nearly 10% of customers say they are likely to switch banks in the six months. While more than 40% are not sure if they will stay with their bank in the next six months. The quality of overall services is the primary factor that drives cus-tomers to leave their banks was major finding during the report. Similarly, the positive customer experiences are strongly correlated with the trust that custom-ers place in their banks and with the customers’ belief that banks have a good understanding of their needs. This report also revealed that customer satisfaction levels often overestimate customers’ likelihood to stay with their bank and posi-tive experiences are more closely correlated with retention.

The study conducted by Chakravarty and Scott (1999) revealed that banks survival is only possible when there is a strong relationship between customers and banks as well. Customers account can only be maintained by the banks when banks have direct relationship with their customers otherwise customers will try to switch from


this bank. There is also evidence that banks are well aware of the importance of building relationships with their customers for long-term profitability and survival of the banks. Sustainment of any bank necessitates it to retain the existing customers and inspire them not to switch.

During the past two decade or so, regulatory and structural and technological fac-tors have significantly changed the banking environment throughout the world Angus et al., (1999). In addition, deregulation and the emergence of new forms of technology have created highly competitive market conditions which have had a critical impact upon consumer behavior. Customer switching behavior damag-es market share and profitability of service firms. In terms of having customers, research shows that service quality, relationship quality and overall service satis-faction can improve customer’s intentions to stay with the firm. But, the question is what about losing customers? What action in financial service industry causes customers to switch from one bank to another is needed to be studied. Usually, the need as well as effect of such study has not been identified in Nepal so far. Manage-ment also is reluctant to see the importance of this kind of study on their business. As far as banking industry is concerned, there is no such kind of study which gives emphasis on switching behavior. Therefore, there seems a dire need for such types of studies which could benefit banking industries in the long run.

The purpose of this study is to investigate the relationship between customer switch-ing behavior and its influencing variables in Nepal’s banking sector. Specifically, it examines the impact of reputation, service quality, geographic location, product variety, pricing strategies, customer satisfaction and switching cost on customer switching behavior. It help managers and marketers understand service switching from the customer’s perspective so that they can plan how to avoid the revenue-re-ducing and cost-incurring impact of customer switching.

The remainder of this paper is organized as follows. Section two describes the sam-ple, data, and methodology. Section three presents the empirical results and the final section draws conclusions and discusses the implications of the study findings.

2. Methodological aspects

The study is based on the primary data which were gathered for 26 banks in Ne-pal. The main source of primary data is the structured questionnaire that contains questions related to switching behavior in retail banking in Nepal. The primary data were collected by fulfilling the questionnaire which contains the respondent related information like yes or no questions, tick mark questions, multiple choice questions, rank questions and 5- scale liker scale questions.

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Table 1: Number of commercial banks selected for the studyThe table given below shows the name of the bank along with the number of respondents. This table shows the percentage of respondents.

S.N Name of Banks Observations Study period1 Nepal Bank Ltd. 3 2013/20142 RastriyaBanijya Bank Ltd 8 2013/20143 Agriculture Development Bank Ltd. 8 2013/20144 Standard Chartered Bank Nepal Ltd. 22 2013/20145 Himalayan Bank Ltd. 6 2013/20146 Nepal SBI Bank Ltd. 8 2013/20147 Nepal Bangladesh Bank Ltd. 2 2013/20148 NMB Bank Ltd. 2 2013/20149 Everest Bank Ltd. 9 2013/201410 Nabil Bank Ltd. 14 2013/201411 Nepal Investment Bank Ltd. 33 2013/201412 Bank of Kathmandu Ltd. 20 2013/201413 Lumbini Bank Ltd. 2 2013/201414 Machhapuchchhre Bank Ltd. 11 2013/201415 Kumari Bank Ltd. 4 2013/201416 Laxmi Bank Ltd. 2 2013/201417 Global IME Bank Ltd. 7 2013/201418 Citizens Bank International Ltd 4 2013/201419 Prime Commercial Bank Ltd. 8 2013/201420 Sunrise Bank Ltd. 4 2013/201421 NIC Asia Bank Ltd. 6 2013/201422 Grand Bank Nepal Ltd. 3 2013/201423 Kist Bank Ltd. 6 2013/201424 Mega Bank Nepal Ltd. 1 2013/201425 Civil Bank Ltd. 5 2013/201426 Sanima Bank Ltd. 2 2013/2014 Total 200

Source: Field Report, 2014The research design adopted in this study is descriptive, causal and comparative type. It deals with relationship between customer switching behavior and its influencing variables. The data’s were collected for the period of 2013-2014.The descriptive research design has been adopted to undertake fact-finding operation for adequate information in the context of Nepalese banking sector and to assess the opinions of customers regarding their switching behavior of the listed banks of Nepal.

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Table 1 shows the number of commercial banks selected for the study along with the study period and number of observations. This study aims to analyze the interrelationship between customer switching behavior and its variables. Here, customer switching behavior is dependent variable where as variables like price, customer satisfaction, service quality, reputation, geographic location, product variety, involuntary switching behavior are independent variables.

The ModelMultiple regression models are used in this study to analyze the interrelationship between dependent and independent variables.

Research Model: customer switching behavior = f (price, customer satisfaction, service quality, reputation, geographic location, product variety, involuntary switching behavior)

The multiple regression model used in this study is:

CSBi = α+ β1PSTRi+ β2CSi+ β3SQi+ β4REPi+ β5GLOCi+ β6PVRTi+ β7SCOSTi+ β8 ISBi+ Ui

Where,

i= number of respondents

Ui= Random variable

CSBi= Customer switching behavior

PSTRi = Pricing strategies

CSi= Customer satisfaction

SQi= Service quality

REPi= Reputation

GLOCi = Geographic location

PVRTi= Product variety

ISBi= Involuntary switching behavior

SCOSTi= Switching cost

α = Intercept of dependent variable and β1, β2, β3, β4, β5, β6, β7 and β8 are the beta coefficients of the explanatory variables that need to be estimated.

There are various variables that influence customer switching behavior. According to studies conducted by Almossawi, 2001; Kiser, 2002; Clemes, et al.; and Gerrard and Cunningham, 2004 measured that price, reputation, service quality, advertising, involuntary action, distance, cost and other variables influences the customer switching behavior in banking industry of Nepal.

3. Presentation and analysis of dataTable 2 shows the descriptive statistics. Clearly, reputation ranges from one to 4 percent, leading the average reputation to 2.83 percent while the service quality ranges from one to 4 percent, leading to the average service quality of 14.1 percent.

Table 2: Descriptive statistics

Ratios N Minimum Maximum Mean Std. DeviationCSB 200 1 5 2.83 0.90842REP 200 1 4 2.22 0.75794SQ 200 1 4 2.18 0.75978

GLOC 200 1 5 2.1 0.92208PVRT 200 1 4 2.13 0.69411PSTR 200 0 4 2.56 0.88367ISB 200 1 5 3.23 0.82935CS 200 1 5 2.44 0.95444

SCOST 200 1 4 2.54 0.68639

Similarly geographic location ranges from one to 5 percent, leading to the average of 2.1 percent. Likewise, the product variety ranges from 1 to 4 percent, pricing strategies ranges from zero to 4 percent, the involuntary switching behavior ranges from one to 5 percent , the customer satisfaction ranges from one to 5, and the switching cost ranges from 1 to 4.

Correlation analysisHaving indicated the descriptive statisitics, the Pearson Correlation Coefficients have been computed and the results are presented in Table 3. All the correlations can be considered as low since the highest correlation has been observed to be 0.711 between reputation and service quality. The customer switching behavior is negatively correlated with geographic location. The correlation value between these variable is negative. To decrease customer switching behavior bank must focus on geographic location as major factor. Furthermore, the correlation between service quality and customer switching behavior is negative. This shows that the good service quality is second important for customer switching behavior. To decrease customer switching behavior bank must focus on service quality factors like politeness, friendly nature, and prompt service with greater accuracy, tangibility, reliability, responsiveness, assurance, and empathy. However, the correlation value between customer switching behavior and product variety is also negative, which shows that customer switching behavior and product variety is negatively correlated. It results also indicate that higher the product variety lower will be the customer switching behavior. Here, product variety refers to various products like saving account, current account, saving accounts with lockers, fixed deposit etc offered by banking industry. Thus, bank must also focus on product varieties to decrease the customer switching behavior.


Hence, it could be concluded that the highest correlation has been observed to be 0.711 between reputation and service quality. Also, variables like geographic location, service quality and product variety have strong relation with customer switching behavior then other variable like reputation, pricing strategies, involuntary switching behavior, customer satisfaction and switching cost.

Table 3: Spearman’s Rho CorrelationThe table presents Spearman’s rho correlation coefficient between dependent variable customer switching behavior (SBHV) and independent variable reputation (REP), service quality (SQ), geographic location (GLOC), product variety (PVRT), pricing strategies (PSTR), involuntary switching behavior (ISB), customer satisfaction (CS) and switching cost(SCOST).

CorrelationsSpearman

Rho SBHV REP SQ GLOC PVRT PSTR ISB CS SCOST

SBHV 1 -0.067 -0.279 ** -0.221** -0.295 ** -0.07 -0.017 -0.104 -0.064

REP 1 0.711** 0.304 ** 0.452 ** 0.243 0.254 0.569 ** 0.363 **

SQ 1 0.309 ** 0.54 ** 0.283 0.286 ** 0.580 ** 0.553

GLOC 1 0.358 ** 0.272 0.035 0.570 ** 0.067

PVRT 1 0.181 0.220 ** 0.464 ** 0.444 **

PSTR 1 0.054 0.261 ** 0.125

ISB 1 0.121 0.340 **

CS 1 0.249 **

SCOST 1

Source: Field Report, 2014

* Correlation is significant at the 0.05 level (2-tailed)** Correlation is significant at the 0.01 level (2-tailed)

Regression analysisThe regression of control variables on customer switching behavior has been analysed by defining customer switching behavior in terms of reputation, service quality, geographic location, product variety, pricing strategies, customer satisfaction and switching cost. The regression of customer switching behavior and control variables produced the results as indicated in Table 4.The result provides significant relationship between customer switching behavior and its determinants as reputation and service quality. It shows insignificant relationship with geographic location and pricing strategies. The regression of customer switching behavior and influencing variables shows beta coefficient of reputation, pricing strategies, customer satisfaction and switching cost is positive in all equations as indicated in table 4. However coefficient is not significant for pricing strategies but beta coefficient for reputation, customer satisfaction and switching cost are significant. The negative beta coefficients have been observed for service quality, geographic location and product variety. The beta coefficient is significant for service quality, geographic location and product variety. The results indicates

109Thapa

that higher the reputation, more pricing strategies, higher customer satisfaction and high switching cost reveals high customer switching behavior. However, higher change in geographic location, higher service quality and high product variety will lower the customer switching behavior.

Table 4: Regression Analysis of Customer Switching Behavior The regression results are based on weighted mean value presented in 5-scale Likert value of 30 commercial banks of 2014 survey by using linear regression model. The model is CSB = α+β1 REP+β2SQ +β3 +β4PVRT+β5PSTR+β6ISB+β7CS+β8SCOST. Here, CSB is customer switching behavior, REP is reputation, SQ is service quality, PVRT is product variety, PSTR price strategies, ISB is involuntary switching behavior, CS is customer satisfaction and SCOST as switching cost.

Regression Analysis

Model Intercept REP SQ GLOC PVRT PSTR CS SCOST Adjr2 SEE F-value

1 3.1819.806

0.365(2.713) **

-0.464(4.014) *

-0.171-2.28

0.131.2 0.46 0.54 6.52

2 3.604(19.34) **

-0.296(3.57) ** 0.44 0.56 12.79

3 3.178(14.48) **

-0.398(-4.63) **

0.264(3.447) ** 0.4 0.6 12.69

4 3.356(15.35) **

-0.329(3.844) **

-0.277(3.621) **

0.379(4.693) ** 0.59 0.42 13.35

5 2.816(8.574) **

-4.51(4.444) **

-0.272(3.595)**

0.434(5.175) **

0.264(2.187)** 0.6 0.39 11.4

6 2.8590.842 **

-0.382(3.718) **

-0.236(-3.118) **

-0.266(2.78) **

0.466(5.593) **

0.366(2.944) ** 0.65 0.34 10.98

Note: i) Figures in parentheses are t- valuesii) **&* denotes that results are significant at 1% and 5% level respectively

Results of the current study expose that geographic location of the bank branches, quality of services, profit or interest rate, product variety offered by banks to their customers directly impact on the attitude and it drive intention to behave in a particular way of customers. If the profit or interest rate will not be higher than any other bank then this factor will create intention to switch. Same behavior will be established by customers in the case of low service quality and single bank branch or distant branch from center of city. Study also indicates that banks should concentrate on improving their service quality according to the market demand and for the betterment of customers’ perception, satisfaction and loyalty.

4. Summary and ConclusionStrong banking sector of any country plays very important role to the development, stabilization of the economy of that country when there is competitive globalized corporate environment. Business organizations in today’s dynamic marketplace are increasingly being customer-oriented, realizing the importance of keeping custom-ers in a long-term relationship. Though customer retention is crucial, it is equally important to explore and examine the factors that can cause customers to switch service firms. This is simply because to keep current customers, it is important for firms to understand why customer switches. Conceptually, consumer retention


and consumer switching behavior are two different marketing constructs that have unique theoretical and managerial implications. The subject of Consumer Switching Behavior (CSB) has gained considerable attention, since the past decade, among scholars and practitioners in the marketing literature, probably, because of its likely impact on the survival, profitability and growth of the business enterprise. Thus, in several researches were conducted each year just to study the behavior of customer, their choices, preferences, and the reasons associated.

This study on customer switching behavior and its influencing variables has been undertaken for Nepalese banks because Nepalese banking sector has gone sweeping changes and is emerging as a major sector of the economy. There is a need to broaden the knowledge about the switching process in Nepalese banking sector like other sectors.

The study revealed that average customer switching behavior is 2.83 percent. The average ratio of reputation is ovbserved to be 2.22 percent. The average ratio of service quality is observed to be 2.18 percent. Likewise, average geographic location is has been observed to be 2.1percent while the average product variety is observed to be 2.13 percent. The average pricing strategies observed to be 2.56. Likewise,the average involuntary switching behavior is 3.23 percent. And the average customer satisfaction and switching cost is 2.44 percent and 2.54 percent respectively.

The correlation analysis reveals that the independent variables like geographic location, service quality, and product variety have strong relation with customer switching behavior than other variables like reputation, pricing strategies, involuntary switching behavior, customer satisfaction and switching cost.

The regression analysis reveals the relationship between customer switching behavior and different variables. The result provides significant relationship between customer switching behavior and its determinants as reputation and service quality. It shows insignificant relationship with geographic location and pricing strategies. The regression of customer switching behavior and influencing variables shows beta coefficient of reputation, pricing strategies, customer satisfaction and switching cost is positive. However coefficient is not significant for pricing strategies but coefficient for reputation, customer satisfaction and switching cost are significant. The negative coefficients have been observed for service quality, geographic location and product variety. The coefficient is significant for service quality, geographic location and product variety. The results indicates that higher the reputation, more pricing strategies, higher customer satisfaction and high switching cost reveals high customer switching behavior. However, higher change in geographic location, higher service quality and high product variety will lower the customer switching behavior.

References

Almossawi, M., 2001. Bank selection criteria employed by college students in Bah-rain: an empirical analysis. Journal of Bank Marketing , 22, 15-16.

Angus, H., R. Jones, and H. Perkins, 2013. Inclusion of Switching Behaviour into

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Relationship Marketing Model: A Theoretical Model. Journal of Marketing, 18, 314-333.

Chakravarty, S., and J. Scott, 1999. Relationships and rationing in consumer loans. Journal of Business, 72, 523–544.

Chiu, C., C. Hsieh, and M. Lee, 2005. Relationship Marketing and Consumer Switching Behavior. Journal of Business Research, 2, 1681-1689.

Clemes, C. and D. Zhang, 2010. Customer switching behavior in the Chinese retail banking industry. Internal Journal of Bank Marketing , 28 (7), 519-546.

Gerrard,P. and B.Cunningham, 2004. Consumer switching behavior in the Asian banking market. Journal of Services Marketing , 18, 215-223.

Kanojia,D., and R.Yadav, 2012. Customer Satisfaction in Commercial Banks:A Case Study of Punjab National Bank. International Journal of Trade and Com-merce-IIARTC , 1, 90-99.

Keiningham,L., B. Cooil, L. Aksoy, W. Andreassen, and J. Weiner, 2007.The value of differentcustomer satisfactionand Loyalty metrics in predicting customer retention, recommendation, and share-of-wallet. Managing Service Quality, 17(4), 361-384.

Kiser, K., 2002. Household switching behavior at depository institutions: Evidence from survey data. Federal Reserve Board.

Levesque,T. and McDougall, G. 1996. Determinants of customer satisfaction in retail banking, International Journal of Bank Marketing, 14, 12-20.

World Retail Banking Report, 2013.



MBA (FINANCE)MASTER OF BUSINESS ADMINISTRATION (FINANCE)

MBA (Finance)

MBA (Finance) like any other MBA program is more finance focused and contains more finance courses. MBA (Finance) is the only program offered by Pokhara University in Nepal through this college. This academic program is termed as competent both at national and international levels. This two-year program is for those who want to take up the challenging task of becoming managers, entrepreneurs, researchers and academicians. Its uniqueness, among others, in relation to building human capital, is categorically crafted that ensures much needed highly competent human resources in local as well as and global job markets.

Highly competent faculties

Faculties of Uniglobe College are trained in Florida State University, USA; Virginia Polytechnic State University, USA; University of Alabama, USA; Rikkyo University, Japan; University of Tokyo, Japan; University of Warsaw, Poland; Asian Institute of Technology, Thailand; University of Southampton, UK; Cambridge University, UK; Technical University, Germany; Tashkent State University, Uzbekistan; University of Hong Kong, Hong Kong; Indian Institute of Management, Ahmedabad, India; University of Delhi, India; Indian Institute of Mass Communication, India; University of Rajasthan, India; Pune University, India; Banaras Hindu University, India; Tribhuvan University, Nepal; Kathmandu University, Nepal and Pokhara University, Nepal.At Uniglobe College, some of the courses are also taught by foreign faculties who are internationally renowned in their subject areas.

Duration of the CourseMBA (Finance) program is a two-year program stretched over six terms of full-time study, with every academic year having three terms (trimesters).Total credit hours: 69 (more than other MBA program).Eligibility for application: Anyone with minimum 3 years Bachelor’s degree in any discipline with at least 45% in aggregate or CGPA 2.0.Scholarship is available as per the rule of Pokhara University

New Baneshwor, Kathmandu | Tel: 01-4115690, 4115569 | www.uniglobe.edu.np

BBABACHELOR OF BUSINESS ADMINISTRATION

BBA

Uniglobe College runs BBA Program of Pokhara University. It is the most modern and advanced program now offered in Nepal which goes much more beyond the traditional BBA. This four– year rigorous and intensive program is for those who wants to take up the challenging task of becoming middle level managers and entrepreneurs. It also prepares the students for higher level of education.

Pokhara University’s BBA at Uniglobe College realizes the greater needs of business community and prepares the students accordingly. This academic program is, therefore, termed as highly competent and popular at the national level. Its uniqueness, among others, in relation to building human capital, is categorically crafted that ensures much needed highly competent middle level human resources in Nepalese and global job markets.


Faculties at Uniglobe College are trained in Florida State University, USA; Rikkyo University, Japan; Warsaw University, Poland; Asian Institute of Technology, Bangkok; Cambridge College, New Land University, USA; University of Southampton, UK; University of Hong Kong, Hong Kong; Indian Institute of Management, Ahmedabad; University of Delhi, India; Indian Institute of Mass Communication, India; University of Rajasthan, India; Tribhuvan University; Kathmandu University; and Pokhara University, Nepal.

Duration of the Course

BBA program is a four-year program stretched over eight semesters of full-time study, with every academic year having two semesters.Total credit hours 120.

Eligibility for application: Anyone with minimum 3 years Bachelor’s degree in any discipline with at least 45% in aggregate or CGPA 2.0.Scholarship is available as per the rule of Pokhara University

New Baneshwor, KathmanduTel: 01-4115690, 4115569

www.uniglobe.edu.np


BBA-BIBACHELOR OF BUSINESS ADMINISTRATION- BANKING & INSURANCE

BBA-BI

Uniglobe College runs BBA-BI Program of Pokhara University. It is the most modern and advanced focused program now offered in Nepal which goes much more beyond the traditional BBA. This four– year rigorous and intensive program is for those who wants to take up the challenging task of becoming finance focused middle level managers and entrepreneurs. It also prepares the students for higher level of education.

Pokhara University’s BBA-BI at Uniglobe College realizes the greater needs of financial community and prepares the students accordingly. This academic program is, therefore, termed as highly competent and popular at the national level. Its uniqueness, among others, in relation to building finance focused human capital, is categorically crafted that ensures much needed highly competent finance focused middle level human resources in Nepalese and global job markets.


Faculties at Uniglobe College are trained in Florida State University, USA; Rikkyo University, Japan; Warsaw University, Poland; Asian Institute of Technology, Bangkok; Cambridge College, New Land University, USA; University of Southampton, UK; University of Hong Kong, Hong Kong; Indian Institute of Management, Ahmedabad; University of Delhi, India; Indian Institute of Mass Communication, India; University of Rajasthan, India; Tribhuvan University; Kathmandu University; and Pokhara University, Nepal.

Duration of the Course

BBA-BI program is a four-year program stretched over eight semesters of full-time study, with every academic year having two semesters.Total credit hours 120.Eligibility for application: Anyone with minimum 3 years Bachelor’s degree in any discipline with at least 45% in aggregate or CGPA 2.0.Scholarship is available as per the rule of Pokhara University

New Baneshwor, KathmanduTel: 01-4115690, 4115569

www.uniglobe.edu.np


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Antique format in a 12 point font.2. Papers for publication should be sent in quadruplicate to: Dr. Nar Bahadur Bista, Executive Editor, Uniglobe College, P. O. Box 7953, Kathmandu, Nepal. Submission

of a paper will imply that it contains original unpublished work. The Editor does not accept responsibility for damage or loss of papers submitted. Acceptance of an article, means that the author has transferred copyright of the accepted article to the publisher. This transfer will ensure the widest possible dissemination of information. The submission fee is Rs.3000 for members of the Uniglobe College and Rs. 5000 for non- members. Cheques should be made payable to “Nepalese Journal of Management”.

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