Management & Change by IILM Institute for Higher Education

IMI[1IID[1~@ mID@IIDlt ~ Surendra

S. Yadav P.K. Jain

Shiri Vivek Ravi Shankar D. K. Banwet K. Momaya

Rajesh K. Pillania

ceIhl[1IID~@ Financial Management Practices in Public Enterprises: Development of an Index of Professionalism Delivering Partnership:

Value through Strategic A case of services outsourcing

Enhancing Learning Performance Knowledge Management State of Art of Knowledge India

through

Management

Hawa Singh Sudesh

An Empirical Investigation of the Causal Relationship between Openness and Economic Growth in India

Richa Awasthy Rajen K. Gupta

Cross-Cultural Management in a MultiNational: A Case Study of an AngloAmerican MNC in India

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Professor, Indian Institute of Management. Lucknow Ex-Pro-Vice Chancellor. University of Deihl, Delhi Distinguished Prol'cssor, .I K Kellogg Graduate School 01' Management. Northwestern University, Evanston. 111"lOIS. Dean, Research, Management Development Institute, Gurguon Director, I1LM-Graduate School of Management, Ncw llelhl & Former Dean, Indian Institute of Foreign Trade, Nn\ Delhi Professor, Management Centre. University 01' 13rucll'lrd. UK Dean Emeritus. IILM. New Delhi Professor, Robert Moms College, Pittsburgh. USA Professor, Stern School 01' BUSiness. New York Univcrsil\. USA. Professor, Indian Institute 01' Technology. New Delhi Professor, Shri Ram Centre 1(1I Industrtal Relation". New DelhI. Professor. Dept. of FinanCial Studies. University of Delhi Professor, Faculty of Management Studies, University 01' Delhi DistingUished Prol'cssor, IIIM,New Delhi & Ex-Directol'.Delhl School of Economics. Delhi Direetor-Research, National Producti\'lty Council, New Delhi. Director, RIS for Non-Aligned and Developing Countries. Nn\ Deihl Professor, Indian Institute of Management. Ahmedabad. Professor. Delhi School of Economics, University of Deihl. Delhi. Ex-Director, Indian Institute of Management, Ahmedabml Professor, International Management Institute, New Delhi Professor, University of Osnubruck Germany Director, Indian Institute of Technology, Roorkee

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Management & Change VOLUME

NUMBER

2005

ARTICLES Financial Management Practices in Public Enterprises: Development of an Index of Professional Delivering Value through Strategic A Case of Services Outsourcing

l l,

Enhancing Learning Performance Knowledge Management State of Art of Knowledge

Surendra S. Yadav P. K. Jain ism

Partnership:

through

Management

in India

Shiri Vivek Ravi Shankar D.K.Banwet

KMomaya

Rajesh

K. Pillania

An Empirical Investigation of the Causal Relationship between Openness and Economic Growth in India

HawaSingh Sudesh

Cross-Cultural Management in a Multinational: A Case Study of an Anglo-American MNC in India.

Richa Awasthy Rajen K. Gupta

BOOK REVIEWS

119

Jagmohan, Soul and Structure of Governance in India, reviewed by B. Bhattacharyya. Seema Sanghi, The Handbook of Competency Mapping: Understanding, Designing and Implementing Competency Models in Organizations, reviewed by K. M. Mita!. Ram Naresh Roy, Operations Management: A Modern Approach, reviewed by Y. R. Murali Mohan. Arya Bhushan and Madan Mohan Agarwal, Indian Railway Safety: Ultimate Goal to Prevent Railway Accidents, reviewed by K. M. Mila!. Nicholas Walliman, Your Resea~ch Project, reviewed by Sachchidanand Kama. Avtar Singh, Negotiable Instruments, reviewed by V. R. Murali Mohan.

l- ---------

~~_

~--------------------,-----------

Contributors

Surendra S. Yadav

Professor & Head, Department of Management Studies, Indian Institute of Technology, New Delhi.

P. K.Jain

Professor, Department of Management Studies, Indian Institute of Technology, New Delhi.

Shiri Vivek

Associate Professor, Institute for Integrated Learning in Management, Lodhi Institutional Area, New Delhi.

Ravi Shankar

Associate Professor, Department of Management Studies, Indian Institute of Technology, New Delhi.

D.K. Banwet

Professor, Department of Management Studies, Indian Institute of Technology, New Delhi.

KMomaya

Associate Professor and Chairman, Strategic Management Group, Department of Management Studies, Indian Institute of Technology, New Delhi.

Rajesh Pillania

A:;sistant Professor, Institute for Integrated Learning in Management, Lodhi Institutional Area, New Delhi.

HawaSingh

Associate Professor, Department of Commerce, Kurukshetra University, Kurukshetra.

Sudesh

Associate Professor, Department of Commerce, Kurukshetra Univeristy, Kurukshetra.

Richa Awasthy

Research Scholar, lamia University, New Delhi.

Rajen K. Gupta

Professor,

Management

Hamdard,

Hamdard

Development

Institute,

Gurgaon.

From the Editor's Desk LEADERSHIP EMPOWERMENT TALENT RETENTION

AND

In corporate world leaders have a major role in inspiring work teams. Vision, positive outlook, and optimism should be the qualities of any leader. As Peter Drucker once said, 'management is doing things right; leadership is doing the right things'. In many cases employees leave organizations when leaders do not inspire. It is generally a myth that money is the main motivator for job .switch but quite often it is lack of work challenge and inspiring leadership, which is the main cause. Leadership which is inspiring can play significant role in making organizational work culture more dynamic and challenging which may also facilitate employee retention. A leader by definition calmot be pessimist. Mahatma Gandhi while in his Sevagram Ashram at Wardha on February 2, 1946 observed, 'only he can be leader who never loses hope'. A dynamic organization culture provides competitive advantage as companies can differentiate themselves by inspiring and retaining their talented employees on sustainable basis. Talent retention is no doubt important but no less important is initial right selection. The right employee selected should essentially have the right bandwidth with the right skills and right attitude. Skills can be acquired but if the right person is not hired then the desired output can't be achieved. Following initial right choice and subsequent training and development, it may be possible to harness their full potential enshrined in their knowledge, skills and abilities (KSAs). A few ideals can be derived from the spiritual leadership of Mahatma Gandhi which was not driven by any official power but unparalleled people's love and support. It will not be incongruous to recall some lessons from Gandhiji's extraordinary leadership. When Gandhiji died in 1948, Albert Einstein, whom people of the world vide the Times magazine survey (2000) rated him as the 'man of the 20 th century', had paid following tributes about the man, who was also neck-to-neck race with Einstein in the worldwide opinion survey for this unique honour. 'Leader of his people unsupported by any outward authority, a politician whose success rests not upon craft nor the mastery of technical devices; a v

victorious fighter who has always scorned the use of force; a man of wisdom and humility, armed with resolve and inflexible consistency, who has developed all his strength to the upliftment of his people and betterment of their lot; a man who has confronted the brutality of Europe with the dignity of simple human being, and thus all times rising superior. Generations to come, it may be, will scarce believe that such a man as this ever in flesh and blood walked upon this earth.' Leadership theory and research can provide some practical tips about specific (micro) behaviours which leaders normally display. A leader who believes in employee motivation and empowerment can play important role in improving organizational performance. Accordingly, leadership effectiveness may depend on specific leadership style advocated by researchers, which a leader may Iike to follow. However, at the same time it should be real ized that compliance of set rules is no panacea that it would necessari Iy create a leader of desired traits. In real life a leader may follow a particular style one in natural course endowed with, though leadership analysts may attribute particular leadet:ship style to him. For instance, if one studies Gandhiji 's leadership style as a specific case-in-point, one can easily conclude that he was spiritual and ethical leader par excellence who often exhibited a combination of 'firmness' and 'flexibility' often discerned in his 'outer softness' and 'inner toughness'. According to Gandhij i, achievement of goals is no doubt very important for any leader, but means to be deployed are no less important. Hence, goals need to be attained with a flexible approach avoiding all unfair means. In fact, Gandhiji could be viewed as an epitome of ethics (morality) in public and social life. An ethical leader could be compared with sufi, an Arabic word, which has roots in 'safi' which means pure. Sufism is a mystic tradition in which followers seek inner knowledge directly from God through meditation, rituals and dancing. They seek a life of ascetic piety, shunning worldly pleasures, and seeking inward purity ofa.re.lationship with God through love, patience, forgiveness, and other higher human values, which characterize ethical outlook. Gandhiji's leadership was also characterized by abundance of sainthood (rishihood) and purity (sufism) in his leadership style. Another equally shining example of leadership from India is that ofNetaji Subhas Chandra Bose, whose mere name creates sensation in people's mind and body. Netaji symbolized patriotism, hope and determination. He advocated a philosophy that nothing comes. free in life i.e. if one wants to 'get' one vi

should first 'give', a philosophy which can also be linked with present day corporate social responsibility (CSR).,Netaji once said (from a poster in the Cellular Jail at Port Blair): 'Do not be disheartened by the temporary defeat. Be cheerful and optimistic. Above all never lose your faith in the destiny oflndia. There is no power on earth which can keep in bondage. India will be free and that too soon. Remember the eternal law. You must give life if you want to get it, and the highest virtue is to battle against inequity, no matter what the cost may be.' The leadership traits of such men and women as Napolean Bona Part, Abraham Lincoln, Mahatma Gandhi, Subhas Chandra Bose, Winston Churchill, Mao Tse-tung, Eisonhower, Charles de Gaule, Jawaharlal Nehru, Abdul Gamel Nasser, John F. Kennedy, Khruschev, Gorbachov and Ronald Reagon, made real differences in philosophy and history of nations. Similarly, industry stalwarts such as automobile manufacturer Henry Ford, the aircraft stalwart Boeing, electronics industry giant Matsushita, steel wizard Jamshetji Nasarvanji Tata, IT supremo Bill Gates, and more recently, textile and petroleum doyen Dhirubhai Ambani, and steel czar L.N.Mittal, to name a few from the long list of big achievers, have made indelible impact on their respective enterprises. Empowerment works only in a climate of trust. As a case-in-point trust and empowerment were Dhirubhai Ambani's hallmark. Dhirubhai would often say, 'between my past, the present and the future, there is one common factor-relationship and trust. This is the foundation of our growth.' Dhirubhai Ambani's setting up petroleum refinery at Jamnagar in 24 months was nothing short ofa miracle. In this context he said: 'If the impossible has to be converted to possible, then it is this team that can do it.' Mr. Lakshmi Niwas Mittal, Founder Chairman ofispat International, which has emerged as the world's largest steel. group, in an interview to The Economic Times (March 17, 2005) observed: 'My vision is dynamic. It evolves every day as situations change and new opportunities come up. To be successful globally you have to think globally. Don't let cultural boundaries hold you back, always think outside the box and embrace opportunities that appear, whatever they might be. Be flexible to different cultures and ways of thin king and be open to learnihg new skills and techniques from any different market.' Empowerment of employees follows when organizations have flexible

,••••• -••..•••...••• 7••• '.---

vii

and less bureaucratic structure, and employees can act independently based on their individual knowledge and experience. Enhancing flexiibility may be difficult initially but employees tend to become flexible when company leadership asserts and genuinely tries to make them pick up this virtue. It should be remembered that success in flexibility may more often result from individual initiative rather than any structural change. The greater the degree of employees' involvement with the workplace administration and flexibility to act, the more empowered they may feel. Employee involvement which makes perfect business sense may result from partnership initiatives such as teamwork, target setting, quality circles, suggestion schemes, TQM, etc. Empowerment is easier in flatter organizations, which have less grades or levels, and where day-to-day working is governed by participative style. Leadership and communication processes can play important role in achieving empowerment by developing partnership witp employees which may be conducive for changing workplace practices. As a downward form of communication, the house journal or newsletter can ac1t as important medium. 'Team briefings' is another effective communication appro~ch to cascade top management thinking and plans among divisions and departments and different groups of employees. In its contemporary form, team briefing involves line managers disseminating information from top down below. Empowerment also makes information flow upwards. In their empowered role when employees take charge of their workplace management, employees put up their ideas before management as upwards communication. Empowerment thus leads to replacing autocratic style of management with participative style. Empowered employees are more committed to their jobs as they do not work' under' the management but' for and with' the management, which may also bring some attitudinal change in employees for organizational benefit. Flexibility and autonomy provided by a leader can thus lead to empowerment of employees, which may eventually result as competitive advantage for the firm as a whole, as under a dynamic leadership empowered employees may achieve everything that improves organizational competitiveness. K. M. Mital

VIII

FINANCIAL MANAGEMENT PRACTICES IN PUBLIC ENTERPRISES: DEVELOPMENT OF AN INDEX OF PROFESSIONALISM

Surendra S. Yadav

P. K. Jain

Generally, a professional approach in managing the affairs of an organization is considered superior to an arbitrary or non-professional approach. Application of knowledge and skills, and supplemented with training intervention can have a visible impact on performance. In this paper it is attempted to analyze financial management practices in public enterprises in India by developing a suitable index. Eight financial areas identified for this exercise include: capital budgeting, capital structure, dividend payment, working capital management, financial control, political/country risk, exchange rate risk and management information system.

INTRODUCTION According to Eric Hoyle (1980) professionalization which is described by terms like 'professionalism' and 'professionality' typically involves: a relatively long period of training relating to that activity; a qualified membership with a strong boundary between those who are legitimately entitled to practice it and those who are not; a control over the activities of the profession so as to enhance it; and continuous improvement of knowledge and the skills of practitioners. Professionalism refers to commitment among the members of an occupation towards increased professional status and strategies pursued to achieve that status. Professionality on the other hand refers to the attitude towards professional practice among lTl.embers of llhe occupation and degree of knowledge and skills they bring to it. By applying knowledge and skill in systematic and professional manner, it is always possible to improve organizational performance. In this paper it is attempted to analyze financial performance in public enterprises by developing a professionalism index. A corporate would be viewed professional if its management practices are carried out in accordance with a well-documented and sound management theory and Management & Change, Volume 9. Number I (2005) ~ 2005 Institute for Integrated Learning in Management.

All Rights

Reserved.

2 Financial Management

Practices in Public Enterprises

not acting based on arbitrary, ad-hoc or rule-of-thumb approach in decision-making. This exercise due to time constraint was however limited to eight financial areas, namely, capital budgeting (CB), capital structure (CS), dividend payment (D), working capital management (WC), financial control (FC), political risk (PR), exchange risk (ER), and information system

(IS).

METHODOLOGY A questionnaire

(see Annexure)

was prepared

with items pertaining

eight fields of financial management, namely, capital budgeting (CB), capital structure (CS), dividend payment (D), working capital management (WC), financial control (FC), political risk (PR), exchange risk (ER), and information system (IS), which was sent to 230 leading public enterprises. A total of 41 public enterprises responded, which included 25 in manufacturing and 16 in service sector. A set of items of each of the eight areas covered were identified for purposes of analyzing degree of professionalism. The items in the questionnaire elicited responses concerning various financial management practices. For each financial decision, a set of alternative practices is possible but with varying degrees in terms of theoretical soundness. For example, in working out the cost of capital, weighted average cost of long-term finance is considered superior to other practices/methods. Hence, maximum score is assigned to the item relating to the cost of capital if the response given by a particular enterprise shows that it uses the weighted average cost of capital. On the other hand, minimum score is assigned if according to the enterprise cost of capital is decided by the top management in an arbitrary manner. In this way, for each item a maximum and minimum score are assigned. Total score for a particular financial area is divided by the maximum score obtainable with best practices. The ratio thus obtained is multiplied by 100 for obtaining an IPF (index value) for that enterprises in that category of financial management practice. For illustration, we may look at the questionnaire (see Annexure). There are seven items in capital structure (CS) category. Suppose the score of a manufacturing enterprise on item i (i varying from 1 to 7) is MSi while maximum obtainable score on this item is MSim. Thus, lPFM (CS) for this enterprise Management

& Change.

Volume

is: 9. Number

I (2005)

Yadav and Jain 3

IPFM(CS)

IMSi " xIOO LJMSirn

(Eq. 1)

Thus, a set of eight indices need to be constructed for each enterprise individually in manufacturing and service sector, respectively. Their respective nomenclature would be: IPFM(CB) for capital budgeting in manufacturing sector, IPFS(CB) for capital budgeting in service sector, IPFM(CS) for capital structure in manufacturing sector, IPFS(CS) for capital structure in service sector, etc. Computations for indices are included in Table A I to A8 (see Appendix A). This is followed by averaging of IPFM(CB), IPFM(CS), IPFM(D), IPFM(WC), IPFM(FC), IPFM(PR), IPFM(ER) and IPFM(IS) individually for each responding organization taken together. Under each financial management practice an average as worked out is given in the lowest row of Tables 1 and 2. The average is based on the number of responding enterprises. For example, comp.utation of AvIPFM(CB) is based on 23 enterprises and not 25. Similarly, the computation of AvIPFM(D) is based on the average of 21 enterprises, etc. (for nomenclature of indices used, see Appendix D). Combined value of index relating to a particular financial management practice is a weighted average of respective averages under manufacturing and service sector individually. For example, the combined index for capital budgeting practices, IPFC(CS) would be: Av IPFC( C S )=[N

mV IP FM

(C S)+ N sAv IP FM( C S)]I (N + N,) III

(Eq. 2)

where Nm is the nUltlber of manufacturing enterprises forming the AvIPFM(CS), and Ns is the number of service providing enterprises forming the AvIPFS(CS). Average values of index for the public sector as a whole for each category of financial management practices covered are given in Table 3. Finally, an overall aggregate single average index can be computed as follows: Av IPFC( A G )=[ Av IPFC(CB)+ Av IPFC( CS)+ Av IPFC(D)+ Av IPFC(WC) + AvIPFC( FC)+ AvIPFC(PR)+ Av IPFC( ER)+ Av IPFC(I S) ]/8 (Eq. 3)

Management & Change. Volume 9. Number I (200S)

4 Financial Management

Practices in Public Enterprises

STUDY OBSERVATIONS As already pointed out, detailed computations for the value of IPFs relating to different categories of financial management practices are given in Tables A I to A8 of Appendix A for manufacturing enterprises and in Tables B I to B8 of Appendix B for service providing enterprises, which are summarized in Tables I and 2, respectively. It is to be seen that for the manufacturing enterprises the value of IPFM(CB) varies between as low as 50 and the maximum of 100. An average of 82.17 is quite high, signifying that in general sound capital budgeting practices are in place. Likewise, the IPFS(CB) values for service sector enterprises vary between 40 and 100, with an average of 70.71. The overall index for the capital budgeting

practices,

IPFC(CB),

is 77.83. Proceeding

in this man-

ner, computations of all financial groups were completed. It is to be noted that the average index values for most final1cial groups are generally above 70 except political risk management and exchange risk management practices. While AvIPFM(PR) is 56.06, AvIPFS(PR) is 66.51. Similarly, the corresponding average values for exchange risk management index are 47.42 and 66.54, respectively. These low values are understandable as public enterprises, by their vary nature, are not significantly involved in the global operations and accordingly face limited geopolitical risk. Public enterprises also face relatively less exchange risk as compared to private enterprises. Most of the public enterprises covered either had effective management information system in place and were using it extensively or inclined to use. This observation is borne out by the generally very high values of IPFM(lS) and IPFS(lS). These values are above 80 for each one of the enterprises in the list. Index values are generally high above 80 for 'working capital management' as well as 'financial control' practices. This shows public enterprises pay close attention to aspects like liquidity, inventory and receivables, etc. However, results may not be very satisfactory for some public enterprises due to the fact computations are based on a small number of enterprises, that is, 25 or less in manufacturing sector and 16 or less in service sector. However, there is no clear trend i.e., which of the two sectors, manufacturing and service, is superior in terms of professionalism relat-

Management

& Change,

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Yadav and Jain 5

ing to financial management. Whereas for some items manufacturing sector is better but for some it may be otherwise. An overall aggregate professional index value of 76.80 shows that responding public enterprises by and large follow sound financial management practices with a high degree of professionalism.

CONCLUDING REMARKS Based on responses received from PSUs though not very high (41 out of 230), it can still be viewed as a fairly good representation of the pub Iic sector as a whole. Accordingly, based on study findings it can be inferred that public enterprises follow sound financial management practices by and large. However, for certain financial activities there is considerable scope for improving professionalism for which the reasons why these indices are low may not be far to seek.

REFERENCES Hoyle, E. (1988) Professionalization and Deprofessionalization in Education, World Year Book of Education. London: Kogan Page Ltd., p. 42.

Management & Change, Volume 9, Number I (2005)

Table I Professional Index Values for Manufacturing

PSE

::l

OJ fIO

'":3 '"~ p,o

n ::r OJ

::l

.'" ~ ::l n: C

-0

Z c

:3 a-

~ N o o 'J.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

AvIP FM

IPFM (CB) 90.00 90.00 90.00 80.00 80.00 90.00 85.00 80.00 60.00 50.00 80.00 90.00 90.00 70.00 80.00 50.00 80.00 70.00 -

100.00 -

100,00 90.00 100.00 95.00 82.17

Enterprises

..,5'

IPFM (CS)

IPFM (D)

IPFM (WC)

IPFM (FC)

IPFM (PR)

IPFM (ER)

IPFM (IS)

65.71 77.14 56.66 70.00 88.00 82.86 77.14 85.50 63.33 80.00 88.57 90.00 90.00 90.00 82.86 60.00 88.57 70.00 43.33 60.00 20.00 83.33 80.00 71.42 68.00 73.30

100.00 100.00

71.43 100.00 80.00 96.00 90.00 75.71 86.66 100.00 84.00 100.00 88.33 77.14 96.66 96.61 100.00 98.33 88.57 76.66 92.00 100.00 70.00

84.00 80.00 82.00 92.00 96.00 96.00 94.00 92.50 92.00 75.00 90.00 85.00 80.00 86.00 94.00 94.00 84.00 96.00 72.00 72.00 92.00 83.33 72.50 76.00 98.00 86.33

50.00 26.66 60.00

95.00 90.00 100.00 100.00 80.00 95.00 100.00 100.00 100.00 92.00 92.00 100.00 100.00 100.00

100.00 100.00 100.00 100.00 100.00 0.00 0.00 0.00 100.00 100.00 100.00 100.00 100.00 0.00 100.00 100.00 -

0.00 0.00 100.00 71.43

84.00 93.33 80.00 88.56

66.66 93.33

66.66 66.66

60.00 60.00

0.00 93.33 66.66 33.33 60.00 0.00 26.66 60.00 0.00 26.66 60.00 56.06

36.66 35.00 76.00 75.00 33.33 52.00

50.00 26.66 25.00

40.00 75.00 80.00 0.00 20.00 -

40.00 65.00 52.00 72.00 47.42

=r'> [

3: lQ

lQ I1Q

~ 3 ~

..•

"tl

r'>

;:;.

5' "tl

~ ;:;.

92.00 100.00 92.00 93.33 100.00 100.00 100.00 100.00 88.00 100.00 96.21

-= M

~ ..•

..•

(;;'

~.~.

-~:-~~::;;,""iiiii

.---..------

.• --

•••••••

r_:'. -:",-

Tab I 2 Professional Index Values for Service Enterprises fSE

IfFS (('B)

I 2

.,.,

3:: ::>

"3 "~ 11:0

n ::T !!:

~ ~

=" 3

z c:

':T

~ IV

4 5 6 7 8 9 10 II 12 13 14 15 16 AvJ PFS

80.00 100.00 90.00

80.00 60.00 80.00 50.00 50.00 60.00 40.00

80.00 90.00 70.00 60.00 70.71

IfFS (eS) 70.00 80.00 80.00 70.00 70.00 64.00 73.33 72.86 71.43 85.00 82.86 100.00 80.00 65.71 64.00 64.00 74.57

IfFS

(D)

(WC)

(FC)

100.00 100.00 100.00

100.00 70.00 90.00 86.66

100.00

98.00 78.00 80.00 84.00 72.00 92.00 76.00 68.00 50.00 70.00 98.00 80.00 90.00 80.00 92.00 88.00 81.03

100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 92.85

92.85 83.33 100.00 90.00 83.33 80.00 70.00 97.14 87.14 94.28 100.00 88.32

IfFS (fR)

IfFS (ER)

60.00 60.00 66.66

50.00 88.57

50.00 95.00 60.00

50.00 100.00 33.33 96.61 60.00

75.00

75.00 90.00 45.00 52.00 50.00 53.35 88.00 65.00

66.51

66.54

IfFS (IS) 90.00 100.00 100.00 88.00 93.33 95.00 80.00 100.00 100.00 100.00 100.00 95.00 85.00 100.00 100.00 95.00 95.06

~ ~ ~ ~

5. ;5" ....:J

8 Financial

Management

Practices

in Public Enterprises

Table 3 Professional Index Values for public Enterprises (Manufacturing

S. No. I

I/em Capital Budgeting

Capital structure

Dividend Payout

Working Capital Management

Financial Control

Political Risk

Exchange Rate

Information System

Aggregate Index

Note:

and Service Combined)

Indices

Value

AvlPFM (CB) AvlPFS (CB) AvlPFC (CB) AvlPFM (CS) AvlPFS (CS) AvIPFC (S) AvIPFM (D) AvIPFS (D) AvIPF (D) AvIPFM (WC) AvIPFS (WC) AvlPFC (WC) AvIPFM (FC) AvlPFS (FC) AvlPFC (FC) AvlPFM (PR) AvIPFS (PR) AvIPFC (PR) AvIPFM (ER) AvlPFS (ER) AvIPFC (ER) AvIPFM (IS) AvIPFS (IS) AvIPFC (IS) AvIPFC (AG)

82.17 (23) 70.71 (14) 77.83 (37) 73.30 (25) 74.57 (]6) 73.79 (41) 71.73 (2]) 92.85 (14) 79.99 (35) 88.56 (24) 88.32 (15) 33.46 (39) 86.33 (25) 81.03(16) 84.25 (41) 56.06 (19) 66.51 (II) 59.89 (30) 47.42(19) 66.54 (II) 54.43 (30) 96.2] (24) 95.06 (]6) 95.75 (40) 76.80

Figures within brackets indicate number of enterprises whose responses were used in computing the index value.

Management

& Change,

Volume 9. Number

I (2005)

______ ~ __ .. _~____ -~J

Yadav and Jain 9 Appendix A Computations for Professional Index Values for Manufacturing Enterprises Table A 1 Computations of Professional Index Values ofIndividual Manufacturing Enterprises Pertaining to Capital Budgeting (CB) Practices

Enterprise 1 2 3 4 5 6 7 8 9 10 11 12 13 14 IS 16 17 18 19 20 21 22 23 24 25 Av1PFM(CB)

Item I

Item 2

IMBi

IPFM

IMBim

(eB) 90.00 90.00 90.00 8000 80.00 90.00 85.00 80.00 6000 50.00 80.00 90.00 90.00 70.00 80.00 50.00 80.00 70.00

5/5 5/5 5/5 4/5 4/5 5/5 5/5 4/5 3/5 1/5 4/5 5/5 5/5 3/5 5/5 1/5 4/5 3/5 5/5

4/5 4/5 4/5 4/5 4/5 4/5 3.5/5 4/5 3/5 4/5 4/5 4/5 4/5 4/5 3/5 4/5 4/5 4/5 -

9/10 9/10 9/10 8/10 8/10 9/10 8.5/1 0 8/10 6/1 0 5/10 8/10 9/10 9/10 7/10 8/10 5/10 8/1 0 7/10

5/10

10000

5/5 5/5 5/5 5/5

5/10 9/10 10/10 9.5/10

100.00 90.00 100.00 95.00/ 82.17

4/5 5/5 4.5/5

Management

& Change,

Volume 9, Number

I (2005)

c::>

Table A2 Computation of Professional Index Values oflndividual Manufacturing Enterprises Pertaining to Capital Structure (CS) Practices

~ ~

III

";:: F'l> ()

Enterprise

Item I

Item 2

Item 3

Item 4

Item 5

Item 6

Item 7

5/5 5/5 2/5 2/5 2/5 5/5 2/5 2/5 1/5 5/5 2/5 2/5 2/5 5/5 2/5 2/5 l/5 1/5 2/5

5/5 5/5 5/5 5/5

5/5 1/5

3/5 1/5 5/5

3/5 5/5 3/5

5/5 5/5

5/5 5/5 3/5

5/5 3/5 5/5 -

1/5 2/5 2/5 1/5 1/5

5/5 5/5 5/5 5/5

1/5 515 1/5 5/5 5/5 1/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 1/5 5/5 5/5 1/5 5/5 1/5 5/5 5/5 5/5 5/5

1/5 5/5 1/5 2/5 5/5 5/5 2/5 5/5 2/5 2/5 5/5 5/5 5/5 2/5 2/5 2/5 5/5 2/5 1/5 5/5 1/5 5/5 5/5 5/5 5/5

;:T

~ ~ ~ C 3

':0

<:T

~ N

8 v.

1 2 3 4 5 6 7 8 9 10

II 12 13 14 15 16

17 18 19

20 2\ 2J 23 24

25 AvIPFM(CS)

5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 -

1/5 1/5 5/5

5/5 5/5 4/5 5/5 5/5 5/5 5/5 5/5 5/5 3/5 5/5 1/5

5/5 1/5 5/5 5/5 1/5 1/5

5/5 1/5

5/5 1/5 3/5 1/5

5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5

3/5

3/5 5/5 5/5

IMSi

,=.,

[ ~ III

lPFM

IMSim

res)

23/35 27/35 17/30 14/20 22/25 29/35 27/35 17/20 19/30 28/35 31/35 27/30 27/30 27/30 29/35 21/35 31/35 21/30 13/30 12/20 3/15 25/30 28/35 25/35 17/25

65.71 7714 56.66 70.00 8800 82.86 7714 85.50 63.33 80.00 8857 90.00 90.00 90.00 82.86 60.00 88.57 70.00 43.33 60.00 20.00 83J3 80.00 71.42 68.00 71.94

III

1 ~

-a' rJ,.,

i;~

! i'

:;~3

'1""

7-P-

-I

f I I

Yadav and Jain II

Table A3 Computation of Professional Index Values oflndividual Manufacturing Enterprises Pertaining to Dividend (D) Practices

Enterprise

---

fPFM(D)

MDm 1

5/5

100.00

5/5

10000

5/5

100.00

5/5

100.00

5/5

100.00

5/5

100.00

5/5

100.00

0/5

0.00

0/5

000

0/5

000

5/5

10000

5/5

100.00

5/5

10000

5/5

100.00

5/5

10000

0/5

000

5/5

10000

5/5

10000

20 21 22 23

0/5

000

5/5

100.00

0.00

AvIPFM(D)

7143

fI r

Management

& Change.

Volume 9. Number

1 (2005)

Table A4 Computation of Professional Index Values oflndividual Manufacturing Enterprises Pertaining to Working Capital Management (WC) Practices

":a

Enterprise

?l> () :r

~ ~ ~

1 2 3 4 5 6 7 8 q

C 3

;"0 z

'3"

~ 8 ~

Item 2

Item 3

Item 4

Item 5

Item 6

Item 7

1/5 5/5 5/5 5/5

5/5

5/5 5/5 3/5 5/5 4/5 4/5 4/5

5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5

4.5/5 5/5 4/5

4.5/5 5/5 4/5 4/5 4/5 5/5 4/5 5/5 5/5 5/5

5/5 3/5 5/5 4/5 3.5/5 3/5

5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 3/5 3/5 5/5 3/5

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Item I

115 5/5 5/5 1/5 5/5 5/5 115

5/5 3/5

5/5

5/5 3/5 5/5

5/5 5/5 1/5

5/5

3/5 1/5 5/5

4/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5

-5/5 . -

5/5 5/5 5/5 115 1/5 5/5 5/5 1/5

. -

5/5 5/5

1/5 5/5 5/5

5/5 5/5 5/5

4.5/5 5/5 5/5 4/5 5/5 4.5/5 5/5/5 4/5/5 5/5

5/5

. .

5/5

5/5 5/5 5/5

5/5

5/5 4/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5

LMWi LMWim

~ S" ~

,=..

(WCJ

14/20

5/5 5/5

21/25 28/30 16/20

..A....-..-..-..-

__)

•••••••

•

•••••

l'll

"'tl

iJ B-. ,.. 11

S" "'tl

=g: iii"

t"'l

;..,;-

..,

"Cl ~"

84.00 93.33 80.00 88.56

AvIPFM(WC)

71.43 100.00 80.00 96.00 90.00 75.71 8666 100.00 8400 100.00 88.33 77.14 96.66 96.61 100.00 98.33 88.57 7666 92.00 100.00 70.00

25/35 30/30 24/30 24/25 27/30 26.5/35 26/30 25/25 21/25 20/20 26.5/30 27/35 29/30 29/30 25/25 29.5/30 31/35 23/30 23/25 15/1.5

[ ~ ~ ~

IPFM

..•.

Yadav and Jain 13

Table AS Computation of Professional Index Values ofIndividual Manufacturing Enterprises Pertaining to Financial Control (FC) Practices Enterprise I

2 3 4 5 6 7 8 9 10 II

12 13 14 15 16 17 18 19 20 21 22 23 24 25 AvIPF M(FC)

Item 1

Item 2

Item 3

Item 4

Item 5

LMCi LMCim

5/':! 5/5 4.5/5 4.5/5 4.5/5 4.5/5 4/5 4/5 4/5 4/5 4.5/5 4/5 4/5 4.5/5 4.5/5 4/5 4.5/5 4/5 4/5 4/5 4/5 4.5/5 4.5/5 4/5 4.5/5

5/5 -

5/5 4.5/5 .4.5/5 4.5/5 4.5/5 4.5/5 4/5

5/5

4.5/5 4.5/5 4/5 4.5/5 5/5 5/5 5/5 4/5

5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5

5/5 4.5/5 5/5 4.5/5 5/5 5/5 4/5 5/5

5/5 3/5 5/5

4/5 5/5

1/5 3/5 1/5 4/5 5/5 5/5 5/5

5/5 1/5 3/5 3/5 5/5 3/5 5/5 5/5 3/5' 5/5 1/5 5/5 5/5 3/5 1/5 3/5 5/5

Management

5/5 3/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 3/5 4.5/5 5/5 5/5 4.5/5 5/5 3/5

5/5 5/5 4/5 5/5 5/5

& Change.

21/25 16/20 20.5/25 23/25 24/25 24/25 23.5/25 18.5/20 23/25 15/20 22.5/25 17120

12/15 21.5/25 23.5/25 23/25 21/25 24/25 18/25 18/25 23/25 12.5/15 14.5/20 19/25 24.5/25

Volume

9. Number

IPFJ'vl (Fe)

84.00 80.00 82.00 92.00 96.00 96.00 94.00 92.00 92.00 75.00 90.00 85.00 80.00 86.00 94.00 94.00 84.00 96.00 72.00 72.00 92.00 83.33 7250 76.00 98.00 86.33

I (2005)

--~~--~~~~----------

'U'IIl,mU~!!IIII!"W'I!IlI" __

"_111

111•••

11111

14 Financial Management Practices in Public Enterprises Table A6 Computation of Professional Index Values ofIndividual Manufacturing Enterprises Pertaining to Political Risk (PR) Practices

IMPi Item 2

Item 3

5/5

0/5

5/1 a

50.00

0/5

4/5

0/5

4/15

26.66

5/5

4/5

0/5

9/15

60.00

5/5

0/5

10/15

6666

5/5

4/5

14/15

9333

Item 1

Enterprise I

IMPim

(PRJ

5/5

0/5

10/15

66.66

5/5

0/5

10/15

66.66

5/5

4/5

0/5

9/15

60.00

4/5

0/5

9/15

60.00

0/5

0/10

0.00

14/15

9333

5/5

0/5

10115

66.66

0/5

5/5

0/5

5/15

3333

5/5

4/5

0/5

9/15

60.00

50.00 60.00

5/5

0/5

5/5

4/5

5/5

17 18 19

20 21

5/5

0/5

5/10

5/5

4/5

0/5

9/15

0/5

0/1 0

000

0/5

4/5

0/5

4/15

26.66

5/5

4/5

0/5

9/15

60.00

56.06

Av1PFM(PR)

Management

& Change,

IPFM

Volume 9, Number

I (2005)

Table A 7 Computation of Professional Index Values oflndividual Manufacturing Enterprises Pertaining to Exchange Risk (ER) Practices Enterprise

Item 1

Item 2

Item 3

Item 4

Item 5

Item 6

Item 7

IMEi IMEim

::::

i ~

p,.

n :r

~ ~ &-

;: 3

â&#x20AC;¢'0

z: r::

i., N

8 'J>

I 2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25

AvIPFM lER)

0/5 0/5 0/5 5/5

5/5

5/5 0/5 0/5

5/5 5/5 5/5 0/5 0/5

. -

0/5 5/5 5/5

5/5 5/5 5/5 5/5 5/5

5/5

5/5 5/5

. -

5/5 -

3/5 4/5

0/5 5/5 5/5 0/5 0/5 0/5

3/5 4/5

3/5

4/5

3/5 3/5 3/5 3/5

5/5 0/5 0/5

0/5 0/5

. 0/5 0/5 0/5 0/5

2/5

0/5 0/5 5/5 5/5 0/5 0/5

3/5

. .

0/5 0/5 0/5

. 5/5 . -

0/5 -

0/5 0/5 0/5

5/5 5/5 0/5 5/5

. . -

5/5 . -

5/5

11/30 7/20 19/25 15/20 5/15 13/25

IPFM (ER)

3666 35.00 76.00 75.00 3333 52.00

5/10 4/i5 5/20

50.00 26.66 2500

8/20 15/20 20/25 0/15 4/20

40.00 75.00 8000 000 20.00

8/20 13/20 13/25 18/25

40.00 65.00 52.00 7200 47.42

~ ~

1 fr a'

... Ul

16 Financial Management

Practices in Public Enterprises

Table A8 Computation of Professional Index Values oflndividual Manufacturing Enterprises Pertaining to Information System (IS) Practices

Enterprise

item I

I 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 AvlPF M(IS)

5/5 5/5 5/5 5/5 5/5 5/5

Management

Item 2

Item 4

Item 3

Item 5

LMli. LMlim

5/5 5/5 5/5 5/5 5/5 5/5 5/5

5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5

5/5 5/5 5/5 5/5 5/5 5/5

& Change,

4/5 3/5 5/5 5/5 5/5 4/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5

0/5

3/5 3/5

5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5

Volume 9, Number

19/20 18/20 20/20 20/20 20/25 19/20 15/1 5 20/20 20/20 23/25 23/25 20/20 20/20 20/20

9500 90.00 100.00 10000 80.00 95.00 100.00 10000 100.00 92.00 9200 10000 100.00 100.00

5/5 5/5 5/5

5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5

IPFM (IS)

5/5 5/5 5/5 4/5 5/5 5/5 5/5 5/5 4/5 5/5

3/5 3/5 -

3/5 3/5

23/25 20/20 23/25 14/15 20/20 20/20 20/20 20/20 22/25 25/25

92.00 100.00 92.00 93.00 100.00 10060 100.00 10000 8800 10000 96.21

1 (2005)

Yadav and Jain 17 Appendix B Computation for Professional Index Values of Service Enterprises Table B 1 Computation ()fProfes~ional Index Values oflndividaual Service Enterprises Pertaining to Capital Budgeting (CB) Practices

ISBi

IPFS(CB)

Item I

Item 2

4/5

8/10

80.00

SIS

10/10

10000

SIS

4/5

9/1 0

90.00

Enterprise

ISBim

4/5

80.00

2/5

4/5

6/1 0

60.00 80.00

3/5

SIS

8/1 0

liS

4/5

5/1 0

50.00

2/5

3/5

5110

50.00

3/5

6/10

60.00

3/5

4/10

40.00

10 II

liS

SIS

3/5

8/1 0

80.00

SIS

4/5

9/1 0

90.00

3/5

4/5

7/1 0

7000

3/5

6/10

60.00 70.71

AvIPFS(CB)

Management

& Change,

Volume 9, Number

I (2005)

ClC

~ ~

"'fl

3 (1)

TableB2 Computation of Professional Index Values oflndividual Service Enterprises Pertaining to Capital Structure (CS) Practices

~ ?l>

= t')

[

a: =

(")

[ ~

Enterprise

Item i

I 2 3 4 5 6 7 8

2/5 5/5 1/5 1/5 2/5 2/5 5/5 2/5 515 2/5 5/5

item 2

Item 3

Item 4

itP.f116

item 5

item 7

ISSi

~ ~ ~

iPFS (eS)

ISSim

t')

.~ Z c 3

8" N o o

::!)

9 10 II 12 13 14 15 16

6 •...•. _--

AvIPFS (CS)

5/5 5/5

5/5

. .

5/5 5/5 5/5 515 5/5 515 5/5

2/5 2/5 2/5 2/5

5/5 5/5 5/5 515

3/5 515 115 5/5 1/5

1/5 515

1/5 5/5

5/5 3/5 3/5

5/5 5/5 5/5 5/5 1/5 5/5 1/5 1/5

3/5 1/5 1/5 5/5

515 5/5 515 515

1/5

3/5 3/5 3/5

5/5

5/5 2/5 5/5 5/5 2/5 5/5 5/5 5/5 5/5 5/5

5/5 1/5 1/5 1/5

5/5 2/5 5/5 5/5

3/5 5/5 5/5 3/5 3/5

7110 28/35 24/30 14/20 14/20 16/25 22/30 22/35 25/35 17/20 29/35 10/10 28/35 23/35 16/25 16/25

c:*

70.00 80.00 80.00 70.00 70.00 64.00 73.33 62.86 71.43 85.00 82.86 100.00 80.00 65.71 64.00 64.00 77.86

= ""C

::;

~. 5' ""C

;:SO

t'"' ;=-

.a.,

•..

••.

f Yadav and Jain 19

Table 83 Computation of Professional Index Values oflndividual Service Enterprises Pertaining to Dividend (D) Practices

Enterprises

IPFS(D)

SDm

5/5

100.00

5/5

10000

5/5

10000

5/5

100.00

0/5

0.00

5/5

100.00

5/5

100.00

5/5

10000

5/5

100.00

5/5

100.00

5/5

100.00

5/5

100.00

5/5

100.00

5/5

10000 92.85

AvIPFS(D)

l I

I ~

~ I

Management

& Change,

Volume 9. Number

I (2005)

~--~----------------------------~~~====------~~~~~~"~"~-~---... N

~ '"::l ,fJ '"'3

<:>

= =

Table B4 Computation of Professional Index Values oflndividual Service Enterprises Pertaining to Working Capital Management (WC) Practices

":::.

I»

Roo

n ::l"

IjQ

£nterprise

Item 3

Item I

Item 2

5/5 3/5

1/5 3/5 3/5

3/5 5/5 5/5

Item 4

Item 6

Item 5

Item 7

ISwi

: =

IPFS (WO

ISwim

I»

;: 3

":0 z c: :3

~ tv o o 'J,

\ 2 3 4 5 6 7 8 9 10 II

12 13 14 15 16

4/5 3/5 5/5 4/5 ,,/5

5/5 -

5/5 5/5 5/5 5/5

1/5 3/5

3/5 5/" 5/5 3/5

3/" 5/5 3/5

5/5 5/5 5/5

5/5

5/5 4/5

4/5 3/5

4/5 5/5

4/5

5/5 4.5/5 5/5 5/5

5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 ,,/5

5/5 5/5 5/5 5/5 5/5 3/5 5/5

5/5 4/5 5/5

5/5 5/5

5/5

451<,

51<,

20/20 21/30 27/30 26/30

5/5 4.5/5 4/5 4/5 4.5/5 4/5 5/5 4/5 4/" 5/5 4/5 4/5 4/5 5i5 5/5

5/5 5/5

100.00 70,00 liO.OO 86.66

~ ;:::;~

325/35 25/30 25/25 27/30 25/30 16/20 14/20 34/3" 5/35 33/35

92.85 83.33 100.00 9000 83.33 80.00 70.00 97.14 8714 94.28 10.00 8832

15/1 "

AvIPFS

'J 5!: ;::l'

r"l t;"

-a:!. ~

(wei

•

,~.~ __ .---A

_"_~__

",.

•

_"..

Yadav and Jain 21 Table 85 Computation of Professional Index Values of Individual Service Enterprises Pertaining to Financial Control (FC) Practices

Enterprise

Item I

1 2 3 4 5 6 7 8 9 10 II 12 13 14 15 16

Item 2

Item 3

Item 5

Item 4

ISCi ISCim

4.5/5 4/5 4/5 4/5 4/5 4.5/5 4/5 4/5 4/5 4.5/5 4.5/5 4/5 5/5 4.5/5 4/5 5/5

5/5 4.5/5 5/5 4/5 45/5 4/5 4/5 4/5

5/5 5/5 5/5 5/5

4/5 5/5

5/5 515

4/5 4/5

5/5 4/5 5/5 515

5/5 5/5 5/5 5/5 515 4.5/5 5/5 3/5

5/5 1/5 1/5 3/5 1/5 5/5 1/5 1/5 1/5 1/5 5/5 5/5 3/5 3/5 5/5 3/5

515 5/5 5/5

3/5 5/5 3/5 5/5 4.5/5 515 515

24.5/25 19.5/25 20/25 21/25 145/20 23/25 191?5 17/25 511 0 17.5/25 24.5/25 12/1 5 18/20 16/20 23/25 22/25

AvlPFS (Fe)

IPFS (Fe) 98.00 78.00 8000 84.00 72.00 92.00 76.00 68.00 50.00 70.00 98.00 80.00 9000 8000 92.00 88.00 8103 --

Table 86 Computation of Professional Index Values oflndividual Service Enterprises Pertaining to Political Risk (PR) Practices

Enterprise 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 AvIPFS(PR)

Item I

Item 2

Item 3

5/5 5/5 5/5

4/5 4/5 5/5

0/5 0/5 0/5

0/5 5/5 5/5

4.5/~ 4/5

5/5

5/5 5/5 0 5/5 5/5

5/5 4.5/5 4/5

0/5

0/5 5/5 0/5 5/5

ISPi ISPim 9115 9115 10.15 5110 9.511 0 9115

5110 10110 5115 145/15 9/15

IPFS (PRJ

60.00 60.00 66.66

50.00 95.00 60.00

50.00 10000 33.33 9661 60.00

66.51

Management

&. Change,

Volume 9, Number

1 (2005)

N N

""l

OJ tl'l <ll

3 <ll

== [

Table 87 Computation of Professional Index Values of Individual Service Enterprises Pertaining to Exchange Risk (ER) Practices

;; Ro

r':l

() OJ

"" :>

2: c

3 <ll

;D Z 3 0c

~ ,-..> o o 'J>

Enterprise

Item I

Item 2

Item 3

Item 4

Item 5

Item 6

item 7

I 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 AvlPFS

0/5 5/5

5/5

5/5 4/5

5/5 5/5

5/5

5/5 -

5/5 0/5 5/5

5/5 5/5 5/5

5;5

5/5

LSEim

IPFS (FC) 50.00 88.57

2/5

5/5

0/5

15120

75.00

3/5 4/5 3/5

5/5 5/5

5/5

15/20 18/20 9/20 13/25 5/1 0 8/15 22/15 13/20

75.00 90.00 45.00 52.00 50.00 53.35 88.00 6500

4/5 3/5

0/5 0/5 0/5 5/) 0/5

3/5 -

0/5 0/5 0/5 5/5 5/5 5/5

5/5

3/5 5/5

6654

(ER)

-~-~.

~_-----.""i

~ 53 ~

=-~

0/5 5/5

10/20 31/35

===

LSEi

: ,

~ ~

~. '"S' ~

s::: ;:;-

t'rl

-a::3. '"~

•

-~-

Table 88 Computation of Professional Index Values oflndividual Service Enterprises Pertaining to Information System (IS) Practices

Elllapr!

111;'/71 1

111;'//1

111;'111 3

1fl;'n1

../

110/1

ISlim

se 1

e: 0>

(JC

"~ ?:o G

0> r~

~ ~

3 C>

-0

'3 ~ 0;

is 'Jo

2 3 -I 5 6 7

8 9 10 11 12 13 14 15 16 A \'lPFS (IS)

5/5 ':"/5 515 5/5 5/5 5i5

5/5 5.'5 56 5/5 515 515 515 5/5

515 5/5 515 51) 5/5 5/5 5/5 515 5/5 515 515 515 515 5/5 5/5

515 56 5/5 5/5 515 515 5/5 515 515 5/5 5/5 515 515 515

ISIi

4/5

515 4i5 4/5 4i5 }/5 5/5 5i5 SiS 5/5 4/5 4/5 SiS 5/5 4/5

3/5

315

3/5

9110 IS/IS 20/20 22/25 14115 19/20 16/20 20/20 20/20 20/20 20/20 Ic)/20 17/20 20/20 20/20 19/20

/PFS (1R!

9000 10000 10000 8800 c)'..J . ..J..J "

95.00 80.00 10000 10000 100.00 10000 95.00 85.00 WOOD 100.00 95.00 9506

~ c.

;5'

"r'

-"'FT'

'IT.'

"v,,"'"""V"'!!"N"\I':rr

nrr,'m'.'''W'''EP'['R''RIII'Ir''l'I':1

!!'!!I;"!':'!~'~'r~r:lrtlltl\!~t:m!l~n""nW1!!'!!Itf!1~t1Un,mFlI!l'

24 Financial Management Practices in Public Enterprises Appendix C Computations for Prof~sional Index Values of Public Enterprises in Manufacturing and Service Sectors Combined AvIPFC(CB)

[Nm. AvIPFM(CB) + Ns. IPFS(CB)]/(Nm (23 x 82.17 + 14 x 70.71)/37 7.83

AvIPFC(CS)

[Nm. AvIPFM(CS) + AvNs IPFS(CS)]I/(Nm (25 x 73.30 + 16 x 74.57)/41 73.79

AVIPFC(D)

[Nm. AvIPFM(D) + Ns. AvIPFS(D)]/( (21 x 71.43 + 14 x 92.85)/35 79.99

AvIPFC(W.C)

[Nm.AvIPFM(WC) + Ns. AvIPFS(WC)]/( (24 x 88.56 + 15 x 88.32)/39 88.46

AvIPFC(FC)

[Nm.AvIPFM(FC) + Ns.AvIPFS(FC)]/( (25 x 86.33 + 16 x 81.03)/41 84.25

Nm + Ns)

AvIPFC(PR)

[Nm.AvIPFM(PR) + Ns.AvIPFS(PR)]/( (19x56.06+ II x66.51)/30 59.89

Nm + Ns)

AvIPFC(ER)

[Nm.AvIPFM(ER) + Ns.AvIPFS(ER)]/( (18 x 47.42 + 11 x 66.54)/30 54.67

Nm + Ns)

AvIPFC(IS)

[Nm.AvIPFM(IS) + Ns.AvIPFS(IS)]/( (24 x 96.21 + 16 x 95.06)/40 95.75

AvIPFC(AG)

[AvIPFC(CB) + AvIPFC(CS) AvIPFC(WC) + AvIPFC(FC) AvIPFC(ER) + AvIPFC(IS)]I8

+ Ns)

Nm + Ns)

+ Avl PFC(O) + AvIPFC(PR)

+ -f-

(77.83 + 73.79 + 79.99 + 88.46 + 84.25 + 59.89 + 54.67 + 95.75)]/8 76.80

Management

& Change.

Volume

9. Number

1 (2005)

Yadav and Jain 25

Appendix D Nomenclature

IPFM(CB)

AvIPFM(CB)

IPFS(CB)

of Indices Used

Index of professionalism with regard to Capital Budgeting (CB) practices in a manufacturing enterprise; Average index of professionalism with regard to Capital Budgeting (CB) practices in the manufacturing sector as a whole; Index of professionalism with regard to Capital Budgeting (CB) practices in a service enterprise;

AvIPFS(CB)

Average index of professionalism with regard to Capital Budgeting (CB) practices in the service secwr

AvIPFC(CB)

as a whole; Average index of professionalism with regard to Capital Budgeting (CB) practices in the public sector as a whole (manufacturing and service enterprises

IPFM(CS)

combined); Index of Professionalism with regard to Capital Structure (CS) practices in a manufacturing enterprise;

AvIPFM(CS)

IPFS(CS) AvIPFS(CS)

AvIPFC(CS)

IPFM(D) AvIPFM(D)

Average Index of professional ism with regard to Capital Structure (CS) practices in the manufacturing sector as a whole; Index of professionalism with regard to Capital Structure (CS) practices in a service enterprise; Average index of professionalism with regard to Capital Structure (CS) practices in the service sector as a whole; Average index of professionalism with regard to Capital Structure (CS) practices in the public sector as a whole (manufacturing and service enterprises combined); Index of professionalism with regard to Dividend (D) practices in a manufacturing enterprise; Average index of professionalism with regard to Dividend (D) practices in the manufacturing sector as Management

& Change,

Volume 9, Numher

I (200';)

26 Financial Management

Practices in Public Enterprises

a whole; IPFS(D)

Index of professionalism with regard to Dividend (D) practices in a service enterprise;

AvIPFS(D)

Average index of professionalism with regard to Dividend (D) practices in the service sector as a whole;

AvIPFC(D)

Average index of professionalism with regard to Dividend (D) practices in the public sector as a whole (manufacturing and service enterprises combined);

IPFM(WC)

Index of professionalism with regard to Working Capital (WC) practices in a manufacturing enterprise;

AvIPFM(WC)

Average index of professionalism with regard to Working Capital (WC) practices in the manufacturing sector as a whole;

IPFS(WC)

Index of professionalism with regard to Working Capital (WC) practices in a service enterprise;

AvIPFS(WC)

Average index of professionalism with regard to Working Capital (WC) practices in the service sector as a whole;

AvIPFC(WC)

Average index of professionalism with regard to Working Capital (WC) practices in the public sector as a whole (manufacturing and service enterprises combined);

IPFM(PR)

Index of professionalism with regard to Political Risk (PR) management practices in a manufacturing enterprise;

AvIPFM(PR)

Average index of professionalism with regard to Political Risk (PR) management practices in the manufacturing sector as a whole;

IPFS(PR)

Index of professionalism with regard to Political Risk (PR) management practices in a service enterprise;

AvIPFS(PR)

Average index of professionalism with regard to Political Risk (PR) management practices in the service sector as a whole;

AvIPFC(PR)

Average index of professionalism

Management

& Change,

Volume 9, Number

J (2005)

with regard to

Yadav and Jain 27 Political Risk (PR) management practices in the public sector as a whole (manufacturing and service enterprises combined); IPFM(ER)

Index of professionalism with regard to Exchange Risk (ER) management practices in a manufacturing enterprise;

AvIPFM(ER)

Average index of professionalism Exchange Risk (ER) management manufacturing sector as a whole;

IPFS(ER)

Index of professionalism with regard to Exchange Risk (ER) management practices in a service enterprise;

AvIPFS(ER)

Average index of professionalism Exchange Risk (ER) management service sector as a whole;

AvIPFC(ER)

Average index of professionalism with regard to Exchange Risk (ER) management practices in the public sector as a whole (manufacturing and service enterprises combined);

IPFM(FC)

Index of professionalism with regard to Financial Control (FC) practices in a manufacturing enterprise;

AvIPFM(FC)

Average index of professionalism with regard to Financial Control (FC) practices in the manufacturing sector as a whole;

IPFS(FC)

Index of professionalism with regard to Financial Control (FC) practices in a service enterprise;

AvIPFS(FC)

Average index of professionalism with regard to Financial Control (FC) practices in the service sector as a whole;

AvIPFC(FC)

Average index of professionalism with regard to Financial Control (FC) practices in the publ ic sector as a whole (manufacturing and service enterprises combined);

IPFM(IS)

Index of professionalism with regard to Information System (IS) practices in a manufacturing enterprise;

AvIPFM(IS)

Average index of professionalism Management

& Change,

Volume

with regard to practices in the

with regard to practices. in the

with regard to 9, Number

I (2005)

28 Financial Management Practices in Public Enterprises Infonnation System (IS) practices in the manufacturing sector as a whole; IPFS(lS)

Index of professionalism with regard to Information System (IS) practices in a service enterprise;

AvIPFS(IS)

Average index of professionalism with regard to Information System (IS) practices in the service sector as a whole;

AvIPFC(lS)

Average index of professionalism with regard to Information System (IS) practices in the public sector as a whole (manufacturing and service enterprises combined);

IPFC(AG),

Aggregate value of the index of professional ism for all enterprises and all financial management practices combined.

Management

& Change,

Volume 9. Number

1 (2005)

Yadav and Jain 29 Annexure: Questionnaire I. Items Reillting to Capital Budgeting (CB) Practices I.

Please identify capital expenditure evaluation technique(s) used in your company a. - Accounting rate of return on investment b. - Payback period c. Discounted cash flow techniques i-Net present value II - Internal rate of return III - Profitability index/Present value index d. - Any other (please specity)

Do you use following approaches to incorporate investment decision process? a.. Shorter payback period for risky projects b. - Higher cut-off rate for risky projects c. - Sensitivity analysis d. - Any other (please specity) II. Items relating to Capital Structure

project risk into your

(CS) Practices

The ratio of debt to equity should be maintained around less than I / 1: 1 /2: 1 /3: 1/ greater than 3.

In general, the debt is preferred to equity as a. Debt is cheaper than equity b. It is easier to raise debt as investors are risk averse and equity is risk capital c. Debt is more flexible than equity in terms of callability clause, repayment schedules, etc. d. The perceived advantage offlexibility in payment of dividend is more illusory than real e. Any other (please specity)

If your firm prefers to have predominantly more equity, the reason(s) could be a. Firm is not bound to pay dividends b. Flexibility in paying dividends c. Equity is easy to raise d. Any other (please specity)

Management

& Change,

Volume

9. Number

I (2005)

--~------~--------------_".lIIg'lIIglll! •• 'I!III."_-.-

30 Financial

Management

Practices

in Public Enterprises

What method do you use to determine cost of capital') a. Weighted average cost of long term sources of finance b. Marginal cost of additional funds raised to finance new asset c. Decided by the top management d. Any other (please specifY) .

Weights used for average cost of capital are equivalent to a - Market value weights b -Book value weight c - Target weights

In general, your organization

Long-term Short-term 7.

has preference for

debt

Is your organization using short-term sources of finance to meet its long-term requirements.(I Always, 2 Often, 3 Sometimes, 4 Never)? I 2 3 4

III. Items Relating to Dividend (D) Practices

.1•

Do you follow stable dividend policy?

Yes

IV. Items Relating to Working Capital (WC) Management

/No Practices

Which of the following forms the basis for determination your organization? a. Percentage of budgeted production b. Percentage of budgeted sales c. Length of operating cycle d. Any other (please specifY)

Please state your organization's policy regarding financing of working capital a. Mainly from long-term sources b. Mainly from short-term sources c. Variable needs from short-term sources and only for period needed. d. Permanent needs from long-term sources and variable needs from short -term sources e. Any other (please specifY) 3. Excess working capital was a. Temporarily invested

Management & Change. Volume 9. Number I (2005)

of working capital in

Yadav and Jain 31 b. c. d. e. 4.

Please rank the objectives of your credit policy a. Growth in sales b. Match credit terms with that ot competitors c. Better credit terms than those of competitors d. Any other (please specify)

a. Is risk analysis of customers made before granting credit? Yes /No b. Is ageing-schedule of debtors prepared? Yes /No

Excess cash (i.e., cash not currently needed in operations) is utilized to a. Deposit with bank for short period b. Retire short-term debt c. Make short-term investments d. Not to invest as a matter of policy e. Keep it as cushion for emergency

How do you manage emergency requirements of cash? (Arising due to unexpected events or to exploit an opportunity) Always maintain minimum cash balance over and above the required amount b. Bank overdraft / Cash credit c. Discount bill receivables d. Have special arrangements with some lending agency for such purposes, e. Sell marketable securities f. Raise loan against warehouse receipt g. Any other (please specify)

a. -

, )

Invested in long-term securities Invested in fixed assets Utilised for repayment of debt Any other (please specify)

V. Items Relating to Financial Control (FC) Practices 1.

Which of the following technique(s) are employed by your organization for financial control? a. Ratio Analysis b. Budgeting and profit planning c. Responsibility Accounting in terms of (i) - Cost Centres Management

~ ~-

& Change.

Volume

9. Number

I (200:')

32 Financial Management Practices in Public Enterprises

------=----------'--

Revenue Centres Profit Centres Investment Centres

(ii) (i ii) (iv) -

2. If you are using ratio analysis, which standards are being used by your organization for comparison ofratios? Please identify. a. Budgeted performance level b. Historical (previous) figures of the organization c. Other organization or industry standards d. Any other (please specify) 3. Why variance analysis is useful in your organization. Please indicate. a. It acts as an instrument of control barometer of business activity b It traces out the causes for variance and thus responsibility is assigned to a particular department. c. It helps in assessing the accuracy of standards. d. It creates and .maintains cost consciousness among' personnel. 4. Which type of budgeting is being followed by your organization? a. Zero base budget b. Performance budget. c. Programme budget. d. Traditional budget. e. Functional budget. f. If any other (please specify) 5. What measures of financial performance are being adopted for profit or investment activity in your organization? a. Return on investment. b. Return on shareholders funds c. Returns to the Government (including income tax, excise duty, sales tax, etc). d. Economic value added VI. Items Relating to Political Risk (PR) Management Practices I. Do you think incorporating in international investment activity a risk premium in the cost of capital is a good technique of political risk management? Yes / No 2. Indicate the order of preference as to which of the following precautions could help in minimizing the political risk in international operations. (1 for Management

& Change,

Volume 9, Number

1 (2005)

Yadav and Jain 33 most important, 2 for next preference and so on) a. - Integrating products of the host country in your organization. b. - Taking loans from the financial institutions of the host country. c. - Increasing the number of the host country employees. d. - Creating joint ventures with an enterprise of the host country. e. - Any other(please specify) 3.

Is your organization taking recourse to insurance for political risk management in international operations.? Yes / No

VII. Items Relating to Exchange Risk (ER) Management 1.

For a. b. c.

managing exchange rate risk, do you use the following leads and lags. Yes Netting Yes Back to back swap. Yes

RliliiVOidiifi,

Any other(please specify)

throllgh

celllfllliz~J

~y~t\i;m,Yi;15__

Yes

Practices technique(s)? /No /No /No

mo__ /No

In case of anticipated depreciation oflocal currency, which of the basic hedging strategies is used by your organization? (please tick mark) a. Sell local currency forward. b. Reduce levels of local currency cash and marketable securities. c. Reduce local-currency receivables. d. Delay collection of hard currency(appreciating currency)receivables. e. Borrow locally. f Delay payments of acc6unts-payable g. Speed up dividend and other remittances to parent. h. Invoice exports in foreign currency and imports in local currency.

Please a. b. c. d. -

Does your organization cover foreign currency exposures with forward contract? Yes / No

rank your most preferred sources of foreign currency loans/resources GDRs/ADRs/Euro issues, etc. Foreign banks Foreign collaborations/joint ventures Any other (please specify

5. What percentage of foreign exchange exposures do your organization cover?

Management

& Change,

Volume 9, Number

I (2005)

34 Financial Management 5.

What percentage of foreign exchange exposures a. 100010 b. 90% c. 80% d. 70% e. 60% f 50% g. any other percentage(please specify)

6. Do you project (forecast) 7.

Practices in Public Enterprises do your organization

exchange rates for future dates?

Yes

cover?

/ No

Which of the following techniques/analysis are used for exchange forecast. a. Fundamental analysis b. Technical analysis c. Any other technique/model (please specify)

rate

VIII. Items relating to Information System (IS) Practkes I.

Does your organization

The a. b. c. d. e. f g.

reasons for using MIS (Select one or more) Increase in efficiency. Fast access of data. Accuracy of data. Fast decision making. Easy to solve financial problems. Helpful in cash planning, credit planning etc. Helpful in preparing barance sheet, income statement etc.

For a. b. c. U. e. f

which finance operations/statements Preparation of balance sheet. Preparation of income statement. Inventory management. F~ifij!H4B~ iii~iHi~~iii~!ii FunJ flow statement Receivables management.

Does your organization use a. The packages available in the market. b. The packages developed in house. c. Combination of both.

If, for some reason, MIS has not yet been used, do you intend using it in near fu~re? ~s mo

Management

& Change.

Volume

make use of Management

9. Number

Information Yes

System (MIS)? I No

do you use MIS in your organization?

I (2005)

------------------~-

------

DELIVERING VALUE THROUGH STRATEGIC PARTNERSHIPS: A CASE OF SERVICES OUTSOURCING

Shiri Vivek

Ravi Shankar

D. K. Banwet

Turnover of the global business process outsourcing (BPO) industry is estimated to vary between $150-700 billion depending upon the source and particular outsourcing definition chosen. The BPO industry is phenomenally growing between 60-70 per cent annually. In 2005 it was generating annually $ I6 billion per annum as against US$ 5 billion per annum 5-6 years ago. In this case study it is attempted to gain an insight into the organizational context and process migration and transition practices in the IT - enabled service (ITES) providing organizations.

INTRODUCTION The demand for Indian IT - enabled services originally started in wake of lower manpower costs and larger availability of English speaking workforce. In the first phase of evolution of this industry, the customers were looking at achieving cost and labour arbitrage by relocating digitised business processes to India. In this stage the service providers were assigned work with specified instructions. With satisfying performance of the service providers, the clients started transferring not only the work but the ownership of work. The client would simply indicate overall expectations and transfer work, with considerable flexibility and autonomy to perform, putting the onus of methods and procedures on the service provider. As the industry evolved further, the outsourcer started taking a harder look at the relationship with which their expectations moved from tactical or operational objectives to more strategic levels, for example, thus the ultimate satisfaction of through responsiveness and quality. At present, armed with increasing experience and knowledge, the industry is rapidly gaining maturity and consolidation, following entry of traditional IT services players, who have added the lTES portfolio to their existing offerings in order to provide customers with a complete umbrelfa

Management & Change, Volume 9, Number I (2005) (Q 2005 Institute for Integrated Learning in Management.

All Rights Reserved_

36 Delivering Value Through Strategic Partnerships of end-to-end services (The Economic verage on the existing knowledge and lTES-BPO vendors are moving up the Ahuja, el 01. 2004b) to offer high-end

Times, 2004). The idea is to leexperience, A number of Indian value chain (Ahuja., el (fl" 2004a, services such as equity research

and analytics, insurance and technology support and development. The following case helps to study how the service providers

in In-.

dia create strategic partnerships with outsourcers to leverage their organizational set-up and process migration and stabilization strategies to manage existing knowledge in order to deliver value to clients beyond expectations

(Gandhi,

el 01.,2004). --~------_ ... _--- ._Supply-side response

[----::]

-=:;::---~

Advent of delocaJization

Gco-ecollomi(,:

Slage II

Ability Lo deslgn/ standard Ize processes

Low~resourcc involvement in nOll-core processes

Stage III Gailllng customer acceptability of outsourcin. relationship

Value-driven sourcing relationships

>errol"mlng gUided

Sblge I Cost and l<lbour arbitrage

tnillsfcrrt'd

Ability to deliver customer satIsfaction

Experience and ( knowle~ge III a matured mdustJ),

Stage IV Performance beyond expectations

raklll

High

work

O\\'llCfShIP

of\\'Ork

I'CSPOIlSI\'CIlt:SS

and quality

Delivering value b.eyond contract fulfillment Leverag1l1g the Knowledge Advantage I

Fig.!.3

Identifying scope of the research

RESEARCH METHODOLOGY The study which was directed at the top management, senior and middle managers in the IT-enabled services was carried out through investigation of tele-mediated work i.e. work carriedout with extensive use of computer systems and supported by telecommunication links. Top and middle level executives are generally involved in project migrations and Management

& Change,

Volume 9, Number

I (2005)

\ Vivek, Shankar and Banwet 37

stabilization at different levels and in different capacities. An important criterion for selecting the case study was that the project under study should have been sourced since at least 2002. In this case, it was the sourced process, and not organ izations, that was the criterion and focus of the study. The service provider was studied only to the extent the influence of organizational set up factors and transition management on the sourced process could be understood. The case was followed up on a longitudinal basis for more than a year. The case has been analyzed using the 'flexible systems' methodology through application of SAP analysis and LAP synthesis as a chosen technique. In SAP analysis, the dynamic parameters of a case are highlighted through three dynamic interfaces of any business system. In SAP analysis, these interfaces include 'situation,' 'actor' and 'proc6ss' (Sushil, 2000). The macroeconomic environment constitutes the situation over which business entities have no direct control. They are constrained to assess present and future situations against their position. Decision-makers comprise 'actors', who use their specialized knowledge to assess the situation as well as deliver services that offer value to the client. The 'process' involves procedural steps needed to engage people, technology and systems such that they deliver value to the cl ient. Analysis of the situation, actor and process has to be continuous and should synthesize into learning, action and performance (LAP). Thus, 'actors' consistently evaluate a situation, follow processes, take actions, learn from their performance and modify or repeat processes based on the performance of the processes. CASE STUDY:

COPYTECH-TOPCLUSTER-SPACEWORK

This case study relates to the Customer Information Centre (CIC) of CopyTech being run previously by Topcluster and later by Spacework, third party contact centres and Business Process Outsourcing (BPO) organizations. General Information. CopyTech is synonymous with hardcopy computer products and printer supplies business. The company restructured its distribution channels with a view to adopt strategies practiced for distributing FMCGs. To achieve centralization of distribution network, the CopyTech centralised its pre-sales department by routing inquiries to dealers and partners via the CIC located within and managed by Management & Change. Volume 9, Number I (2005)

_._ ..._-

'i "

38 Delivering Value Through Strategic Partnerships Topcluster, which developed a closed loop system for handling inquires for the CopyTech products. The system includes a set of resellers across the country and ensures follow-up on an inquiry till it reaches a definite conclusion. The contact centre was initially run by an external agency Query, though out of CopyTech premises. In the year 2000, this centre was contracted to Topcluster, which operated it for three years until 2003. Though Topcluster continually added new technologies to meet the demands made by the service agreement, but in view of dissatisfaction with progress in performance, the expectation of end-customer and the cost-benefit analysis carried out, Copy tech relocated the CIC to Spacework in 2003. The contact centre's management and operations are presently with Spacework. CopyTech however, keeps continuous involvement in activities like decision-making, recruitment, training, etc. for the contact center, which takes calls from across the country through a toll free number hubbed in Gurgaon. CopyTech has reached a level to restructure its supplies distribution on the lines of FMCGs and geared to achieve its distribution targets in collaboration with the research and reporting done by Spacework on a regular basis.

Tlte Client Perspective This section reviews the case from the perspective of CopyTech. It includes a short profile of the company followed by deliberation of reason for outsourcing tIle CIC. The later sections discuss the process of migration, enabling technologies and skill requirements for the same.

Motives for sourcing. CopyTech

India Pvt. Ltd. is a wholly owned subsidiary of CopyTech Company with a sales turnover of RS.1334 crores during 200 I -02. Copy tech has customers spread in most cities of the country. The cities are divided into zones with one re-seller in-charge of each zone. Marketing activities are divided into cities, which in turn are divided into zones. The zonal sales are taken care of by more than 250 resellers in over 45 cities across India. Additionally, the support coverage is run by 280 service centres and warehouses at nine locations. To link all the reseIIer partners, the company centralised its pre-sales inquiries via its CIC at Topcluster.

Management

& Change.

Volume 9. Number

,••••. ut:.amm •.iw.,Z,

I (2005)

iL,tjill11iiZ&.."i",,,'J'

,; ""J

,.;["jJ.]."&Z::m,,,,;aJim.=,nj,zlJ&=lii~JDim

liBl.IllJiS

'} i

Vivek, Shankar and Banwet 39 CopyTech was interested to enhance customer satisfaction at every customer contact point, which is in consonance with the company's strategy to make the availability of genuine supplies as pervasive and easy as dialling for a pizza. CopyTech's business need is primarily to offer support to the customer in terms of discounted standard ised pric ing, ensuring product availability, honouring one-year warranty, etc. While the company pursues its avowed goals, the partners still act as the primary interface with the customer. CopyTech's mission is to enable all CopyTech Hardware customers buy 'original' supplies conveniently at a reasonable and stable price in India. The large spread of customers and re-sellers, and also of distributors enabled their linkage with the company, while at the same time providing a way to customers to inquire and buy products on telephone. The developments in call centre technology made CopyTech decide on advanced contact centres that could handle calls across many cities.

CopyTech was also facing a big challenge from the grey market. About 10 per cent of the company's profits were getting hit by counterfeit products from the grey market. To fight the grey market it was important that the company made suppl ies conven ient and qu ick for its customers. Due to all these factors, a strategic decision was taken to operate like a Fast Moving Consumer Goods (FMCG) company. The company's core strengths lie in hardware and IT peripherals. At the same time, a single point of contact for customers, partners and the company was an imperative for supplies, a business initiative, which is highly customer centric in nature. Thus, the decision to relocate the contact centre from one agency (which lacked very advanced technologies for call handling, etc.) to another technologically advanced agency with strong infrastructure was taken. When compared with the option of sourcing it back to the company, the decision to outsource was strengthened by the fact that the company could save on infrastructure, office space and technology, if it used the services of a third party contact centre. Topcl uster was also one of the few contact centres with presence in a large number of cities and a number which was very easy to get through. Even while the call centre was located in company premises a few years back, its operations had been outsourced to a specialised agency. CopyTech had experienced an increase in its sales and better consolidation of its sales network with support from outsourced call

l_.,,, ..".'i.,"._ommr_.",nn._~~

Management

& Change.

Volume

9. Number

I (2005)

__ .

I-

{

40 Delivering Value Through Strategic Partnerships centre. Hence, the company not only utilised third party services for management of its CIC, but outsourced the complete CIC to the service provider's

premises.

The Process of Migration. Until 2000, CopyTech

contact being run by another agency Query. Being a small company, operatinK the call centre with not-so-modern technologies. centre technologies advanced, CopyTech wanted to perform tions through its call centre. It thus considered relocating centre to an agency with more advanced systems and also

centre was Query was As contact more functhe contact planned to

increase the functions it performed. With one representative from the sales department, a technical manager, the call centre manager and an external consultant from a reputed management institute in India, the team evaluated the feasibility of relocating the call centre. A number of visits were made to the service provider location, each followed by meetings with the management and operations heads of both the companies where a lot of information was exchanged. Finally, the company zeroed in on Topcluster. Thereafter, the technical representatives of both sides together developed the software for the CIC. The coverage, infrastructure, financial set up, subscriber base and the strength of the company were the main criteria for selecting the Topcluster. The agency had its presence in ten cities at the time of relocation. These cities were broadly covering the sales area of the CopyTech. Consequently, CopyTech first started contact centres in five cities. Gradually, the operations were spread to all the ten cities. In 2002, after upgrading to a toll free number, number of centres was gradually reduced, along with a reduction in manpower at all the centres. While outbound calls were being handled by the nearest contact centres, inbound contact centres were centralised to three locations: Mumbai, Delhi and

Bangalore. Relocation to Topcluster initially increased the revenue of the company several times and also helped in better planning of media campaigns by way of being able to assess the impact of previous campaigns. Through appropriate routing of enquiries received at the cal! centre, the company, along with its partners was able to better manage the inventories with its partners. The working association between the two companies had mostly been highly cordial. However, Cop"yTech experienced

Management

& Change.

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Vivek, Shankar and Banwet 41

certain problems due to a high rate of attrition, resulting in increased training time and costs. Lack of experience of new agents on Copy Tech desks at Topcluster added to the error rate and call drop rate several times. The biggest problem according to CopyTech sources has been the inability of Topcluster to recruit and retain manpower with high skills. For long CopyTech advised and adopted several strategies to attract and retain talent, but the situation did not change much. In the early months of 2003, Topcluster was given the last opportunity to improve its manpower situation at CopyTech desks and reduce errors, which the Topcluster could not curb. Until 2003, Topcluster handled all customer inquiries for CopyTech products in a closed loop manner. Whenever the company ran a campaign, the contact centre number assigned by Topcluster was publ.ished in the advertisements. Customer called up on this number to receive product information or to place orders. Through the Enquiry Data Matrix- based on a fixed set of criteria- an appropriate partner (distributor) was chosen to whom the details of the customer were forwarded. The contact centre then ensured that the partner contacted the customer within four hours. If the allocated partner failed to contact the customer in four hours, a new allocation was made; else, the contact centre followed up the progress made by a partner on each allocated inquiry until the customer enquiry reached a logical conclusion, either making sales or losing it. Enabling Technologies. CopyTech received reports via e-mails. Certain technologies however have been installed at the partners' end. While in the initial stages they were supposed to install a small paging device through which they were receiving inquiries on pager. However, the device had problems of frequency and could not be used very successfully. With the spread of mobiles, this device was replaced by 'short messaging service' and e-mails with updates to the partners. The information and communication technologies (lCT) have helped the company to reduce the cycle time for closing calls drastically. By upgrading technology continuously, the lead time between receiving an enquiry and attending to it has been reduced from 48 hours in the initial stages to four hours at present. Thus, ICTs primarily served the function of communication at high speed. These technologies also help in monitoring activities of different parties involved and in reporting to the client company. Management

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42 Delivering Value Through Strategic Partnerships

Skills Requirements.

Till the company was using the C[C only for exchanging information with prospective and existing customers, the skills requirement was also simple. With increasing role of the C[C in pushing sales, channelling products, balancing partner inventories, supporting new partners, ensuring performance from existing partners and measuring media effectiveness, skills requirements for agents have increased manifold. While the company expects to recruit technically qualified graduates with selling and communication skills, a qualification in hardware as well as direct marketing along with some experience, may prove beneficial. A combination of technical and selling skills is somewhat difficult and may not be easily available. [n an attempt to attract the right talent, CopyTech improved the compensation and incentives for its C[C agents, who were employees of Topcluster.

First Service Provider Perspective This section describes provider for CopyTech.

the case from the end of the previous service The partnership with this service provider failed

after some time.

Profile and Corporate Culture. By 2003, Topcluster

had achieved substantial success in the domestic contact centre market by acquiring major multi-national clients in the automobile, white goods, FMCG, [T, telecom, entertainment, finance and insurance sectors. The company has an experience of handling over 60 million calls per annum for its 60 odd client corporations. The company operated its call centres in top 10 business cities of India which includes Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Bangalore, Ahmedabad, Pune, Kanpur and Guwahati - one of the most geographically diverse call centre operations in the country. With over six years of experience in call handling, Topcluster had well established processes, that duly conforming to ISO 900 I standards. The congeniality of work culture is evident from the long years that most senior employees of the company have put in. However, the current financial problems of the company have impacted the 'openness' in the culture. When employees wanted to discuss the salary ai'ld emolument issues with top management, they did not find them 'as open' and felt that 'appeasement' had replaced earlier culture of 'resolution' of issues. However, all interviewees were appreciative of objective assessment of performance appraisals. The teams worked in a close knit culManagement

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ture. A senior agent who was leaving the company on the day of the interview, clearly stated that she was sticking until now due to the motivation and mentoring of her manager, who had also left the company (for the second time) lately. She also stated in confidence that three of the female employees from the CopyTech account might also leave due to their unhappiness regarding the financial dealings of the company, who had all along stayed mainly due to excellent relationship with the departmental manager. Most senior employees at Topcluster had been working with the company for a very long time. Six to eight years of interface with the team leaders and top and middle management of the company led to their enhanced influence in management. At the same time they also acted as link between new agents and the senior management. However, they found themselves unable to continue maintaining the congeniality and discipline at work.

Process of Migration. When CopyTech

was in the process of looking for a contact centre, Topcluster sent its profile soliciting the contract. Once the profile of the company satisfied the CopyTech representatives in the initial stages, they sent a technical team to visit the location, which reviewed the state of infrastructure and facilities. Along with the team was a professor from a reputed management institute who was assigned to review the quality of work at Topcluster. The preliminary clearance of the infrastructure and facilities led to the visit of a specialised technical team to review the technology and its adaptation to the specific requirements of CopyTech. Proceeding in this manner, the client reviewed each and every resource from the financial status, infrastructure, technology, etc. to the quality, experience, facilities, manpower, to the quality before it handed over the letter of intent. After Topcluster received a letter of intent from CopyTech, a technical team was created to study the existing system on which their earlier contact centre was operating. This led to the development of a customised closed loop solution for CopyTech requirements, the prototype of which was sent back to CopyTech technical representatives for approval. After a series of changes in the system, a final design was reached, Topcluster then received a phasewise description of activities, which included details like the cities to start from and the activities to launch in the first phase. The company started off with a sales activity, where the sales information was being provided to the customer and the Management

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44 Delivering Value Through Strategic Partnerships caller's data was captured and transferred to CopyTech who was then forwarding this data to the respective resellers. After about a month of the launch, the value addition in activities started taking place. As Topcluster added more cities, the data was going to all dealers/ resellers in those territories and a consolidation of the same went to the CopyTech office. As the system stabilised,' the network continued to increase including information and its consolidation. Earlier the time period for a dealer to respond was eight hours as sometimes the data took time in reaching him. However, with upgradation of technology, the response time came down by 50 per cent (i.e. four hours). At this time through short messaging service and e-mails, the information was reaching the sales executive wherever he was, in office or in the field. This way value-addition to the complete system has been a constant feature by managing knowledge of actions of all the parties involved continuously.

Relational

Issues. While the CIC was being set up, the source company worked in complete cooperation with the destination company. The software was developed by Topcluster with specific inputs from CopyTech. Right from the planning stages, the two companies have been working in synchrony. However, lately difficulties arose mainly due to the financial constraints of the destination company. These financial difficulties were'a cumulative effect of inability to fight competition through improved quality, which was resulting into lost contracts. While CopyTech continually pushed for increasing salaries and better resources for their desks, Topcluster tried to make some balance between Copy Tech and its other clients' desks. As CopyTech Topcluster has failed to minimize attrition followihng low compensation paid, which leads to increase errors and call drop rate. The increasing attrition is evident from the fact that 40 per cent of the team of CopyTech had left the organisation in the midst of this case being written. For some time, CopyTech started closely monitoring and changing selection and remuneration policies to curb attrition and improve quality, but could not make any headway. CopyTech also played an active role in providing product training to agents when they join the desk. An agent spent about two weeks acquiring soft skills and product training, modules for which had been prepared jointly by the source and destination company. However, attrition and product changes constrained the source company to give frequent product training, which turned out to be expensive for CopyTech. Management

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fI I

Threat to Contract. All the interviewees indicated indirectly or directly towards the impending threat to employment following relocation of the CIC. Although the top management did not mention the possible termination of contract, the agents and team leaders were aware of the possible relocation. The interviewees felt that although revenues to the client had increased from this call centre, the very high rate of attrition posed considerable economic burden to the source company by way of increased ,training costs and resources combined with lowering quality. Increasing employee separatiOlls added to the training costs. As a result, the project failed to move up on the value-chain and add value to the overall objective for which CopyTech outsourced. In the absence of systems to record observations and experiences of previous employees on the desks, the project lagged behind in meeting the larger objective. One existing team leader looked visibly stressful while spelling out reasons for the threat. First, in spite of repeated recommendations from the source company to increase salaries, the emoluments to even senior employees were very low. Secondly, the business and number of calls had increased manifold. However, Topcluster had not worked towards increasing the number of seats. In fact, even the existing eight seats had only six agents to handle the calls. With these numbers, the call drop rate has increased from 3-4 per cent to 12-14 per cent. The call waiting period has also increased steeply to even two-three minutes during peak hours. The source company is dissatisfied with the quality of personnel, on account of low salaries and stressful conditions at work, coupled with long working hours. The agents had observed that Topcluster's 9628 number is being replaced with toll-free number in the advertisements. The 9628 number lands on Topcluster's exchanges while the toll-free number ends at CopyTech exchange from where it re-routes it to the CIC. The agents feel that though it is difficult to change the number as many old customers are in the habit of calling up on 9628 number, the fact that company is advertising the toll free 1600 number was an indication that the CIC could be relocated in near future.

Second Service Provider Perspective From Topcluster, the CIC was migrated once again to Spacework in October 2003. This section describes the partnership from the perspective of Spacework. Management

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Corporate Profile. Spacecom and represented

Telesystems is headquartered in Mumbai across seven offices in India and two in USA. In 1999-

2000, 'Spacecom

entered the ITES industry. Spacework

is a domestic

center brand of Spacecom having a national presence through its five Call Centers with 3245 strong team workforce. committed

call

across India, of committed

Spacework claims to be a group of dedicated people who are to outlive customer expectations. The interviewer observed

that motivated

professionals

who aim to achieve

excellence

through

dedicated teamwork attend to every contact with zeal. The interviewees took pride in describing their ability to deliver efficient services at affordable prices. Spacework is committed to providing high quality and cost effective services to exceed customer expectation and achieve customer delight.

The Process of Migration.

After having migrated the process from Topcluster with the technologies operational there, Spacework embarked on process stabilization, process improvement and process maturity. The stabilization of the process was marked with technological upgradation and customized training to the agents. This was necessary as the CopyTech CIC needed a combination of skills not readily available. Connectivity with partners and client was made highly interactive on real time basis. The second stage of process improvement was stal1ed with defining quality parameters. These parameters ensured that quality checks went beyond ensuring service levels as mentioned in the contract. An interviewee gave an example of the same. While the service level agreement required the delivery of supplies within four hours with an error of 0.01 per cent, the company set a target of 3 hours 20 minutes for itself, maintaining the same error rate. In the next stage the error rate was brought down, though the client was happy with the existing rate also. Another example of improvement related with the soft aspect of service. Although the client does not require the service provider to make followup calls with the customer before the deadline time, the agents at Spacework make follow up calls after three hours of order has elapsed. They also ensure that a customer is given very close approximations of delivery time. The quality monitoring team keeps a close eye on every agent. Dealing with the quality process, Spacework views all the possible parameters in detail. All the aspects that are set up in the beginning of the process are re-evaluated and their end result is compared with the expected outcome. All the discrepancies are noted and are duly acManagement

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counted for. Spacework has created capabilities to deal with every piece of information such as the call type, its date and time, etc. to generate' frequent work reports. The third stage of process maturity is a continuing process for Spacework. Accordingly, a dedi~ated quality asssurance team has been formed for CopyTech processes. The team enhances and extends current quality practices, and educates operations by sharing its learnings and perceptions. It plays a key role in the operations through a large number of functions to train, monitor and improve the performance of agents. The quality assurance teams ensure that the agents understand that they are managing more than a phone call. They're managing the relationship between the client and the customers. Spacework lays highest emphasis on the quality of customer interaction services and have a sound procedure to monitor calls between the crc and valued customers.

Performance The company has been benefited in several ways by running a value adding crc for all these years. While the interviewees reported a three fold increase in revenues of a particular product category in the last three years, a large number of benefits came through robust monitoring of channels as well as of advertising and promotions: The 'suppl ies on call' programme has successfu lIy countered the menace of grey market and counterfeit products. Delivering products at home in the shortest possible time ensures that an order is not lost to the competition. The company has a 'birds eye view' of all its campaigns across the country and the qual ity of response to such campaigns. U nderstanding the response to any media helps the company in increasing future media effectiveness for all its campaigns. Category managers for specific products now get complete information on the performance of their product line during any given period. The sales team is better able to manage partners by pushing leads to active partners and withdrawing from the non-responsive ones. Performance of each partner is monitored continuously by logging their response to the leads passed on to them. This helps in manipulating the Enquiry Date Matrix on a daily basis. Management

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ANALYSIS

OF THE CASE WITHIN

SAP-LAP

FRAMEWORK'

The SAP-LAP paradigm considers three basic ment context, viz. situation, actor, and process. ties, the freedom of choice exists with the actor. ses the case based on this framework (Sushi I,

entities in any manageOut of these three entiThe next section analy1997).

Situation With PCs and associated peripherals increasingly reaching the homes and small offices, PC pen.etration is on the increase. Printers are also becoming a necessary and an affordable computer peripheral. After CopyTech merged with another leading hardware manufacturer, it was. looking at consolidating its leadership position by strengthening its market share, as well as by entering and establishing itself in markets which were relatively untouched by the competitors. CopyTech's main competition was with local assemblers in the PC segment and grey market as well as counterfeits in case of supplies. About 10 per cent of CopyTech's profits were being hit by counterfeit printer related supplies from the grey market. To fight the grey market it was important that the company made supplies convenient and quick for its customers. CopyTech sought to brand itself on the same Iines as that of a consumer goods company. CopyTech's strategy was 'to make the availability of genuine supplies as pervasive and easy as dialling for a pizza.' The company sought to enable all CopyTech Hardware 'customers buy 'original' supplies 'conveniently' at a 'reasonable' and 'stable' price in India. This needed distribution strategies oriented on the same patterns as FMCG. The contact centre initiative of the company is to cater to the increasing demand of genuine printer supplies. CopyTech was keen to improve the total customer experience by examining and providing value at every customer contact point. The primary business need was to offer support to the customer in terms of discounted standardised pricing, ensuring product availability, honouring one-year warranty, etc. The biggest problem according to CopyTech sources has been the inability of Topcluster to recruit and retain manpower with high skills.

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Actor In supplies business, the reseller-partners act as the primary interface with the customer. CopyTech has customers spread in most cities of the country. The cities are divided into zones with one re-seller in-charge of each zone. The large spread of customers and re-sellers, and also of distributors brought about the requirement for linking them up to the company, while at the same time providing a way to customers to inquire and buy products on telephone. The developments in call centre technology presented a possible solution towards integrating distribution channels widely spread across the country. CopyTech was earlier handling customer calls in-house. Advanced contact-centre technology also provided an option to outsource this function, while concentrating on core aspects of marketing and distribution. Single point of contact for customers, partners and the company was an imperative for supplies business initiative, which is highly customer centric in nature. Thus, decision was taken to relocate the contact centre from Query (which lacked very advanced technologies for call handling, etc.) to Topcluster, a technologically advanced agency with strong infrastructure. With one representative from the sales department, a technical manager, the call centre manager and an external consultant from a reputed management institute in India, the team evaluated the feasibility of relocating the call centre. Process Before making the decision about outsourcing to Topcluster, two alternatives were studied for their feasibility by a CopyTech team, of which Topcluster was selected for its technological advancement, geopresence and experience in the industry. A number of visits were made to the destination location, each followed by meetings with the management and operations heads of both the companies where a lot of information was exchanged.

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50 Delivering Value Through Strategic Partnerships The software for the CIC was also jointly cal representatives from both sides.

developed

by the techni-

The decision to outsource was strengthened by the fact that the company could save on infrastructure, office space and technology if it used the services of a third party contact centre. Topcluste'r was also one of the few contact centres not only with presence in a large number of cities, but also a number which was 'very easy to get through.' This was the number which erstwhile paging customers of the company were using which though since then had become obsolete but the number remained active in customers memory. Soon after outsourcing to Topcluster, CopyTech had experienced an increase in its sales and better consolidation of its sales network. Initially the client was satisfied with the performance of the service provider. Topcluster primarily handled customer queries and sales calls, forwarded them to the reseller-partners and then did a closed-loop. That is, they kept following up the progress at the partner and the customer end, till the time the case came to a conclusive end.

Learning CopyTech found that with the handling of calls by dedicated team, the 'supplies on call' programme has successfully countered the menace of grey market and counterfeit products. With technologically supported and advanced communication processes in place, the distribution channels could be integrated well, with the CIC acting as a hub. This move drastically reduced the number of orders that were lost to competition. CopyTech also learned strong and experienced, HR polic.ies in place. schedules delivered to new recruits.

that although Topcluster was technologically the service provider did not have professional This was evident in the unplanned training agents and, adhocism followed in training of

Salary disbursement to Topcluster employees was adversely affected by the financial problems arising in the company. Consequently, the attrition rate of trained manpower was on the rise. CopyTech had to pitch in its resources to train new recruits. This increased the costs incurred and time spent by CopyTech on training Topclllster employees. Management

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With increasing employee attrition, lack of adequate availability of manpower with requisite technical and selling skills, there was shortage of agents to CopyTech desks. The supervisors and team leaders who had the knowledge of reporting and analyses, were also leaving at an increasitlg rate. With advanced contact centre technologies, CopyTech was keen to perform more functions through its call centre. However, with increasing attrition, the performance curve at CopyTech desks was coming down. 'Lack of experience of new agents on CopyTech desks at Topcluster added to the error rate and call drop rate several times. Action To contain the situation, CopyTech advised and also implemented different strategies to attract and retain talent at Topcluster. The salaries of CopyTech agents were improved by providing several incentives. Though not a part of the initiat contract, these incentives were being contributed by CopyTech. CopyTech started providing training and free certification to new agents at its own expense. A large number of reward and incentive schemes were also started to motivate the agents, team leaders and supervisors. The objective was to retain them and motivate the1llior consistent performance. CopyTech realized that although Topcluster had implemented latest technologies to provide good results in the beginning, the technologies could only push the performance graph up in the initial stages. The performance of the CIC had virtually stabilized and there were no more processes with the service provider to make further value additions in the performance of the centre. The matter was discussed with Topcluster management and a notice period given in the mid of 2003 in order to improve performance. CopyTech considered relocating the contact centre to an agency with more advanced systems and also planned to increase the functions it performed. In October 2003, the Customer Information Centre was shifted from Topcluster to Spacework. Spacework was a relatively new entrant in the industry, with primary experience of public sector clients. The company had an expanding set-up and experienced teams to handle customer related processes. Management

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52 D,elivering Value Through Strategic Partnerships Besides having updated technological support, Spacework had research teams constituted individually for each client. The teams were responsible for data and information analysis at the end of each day. The relationship structure between the client and service provider was also dynamic. While all operational aspects were being handled efficiently by the Spacework management, they kept CopyTech teams informed and involved with continuous reporting of performance and trends in the CTC. Performance Relocation to Spacework initially increased the revenue of the company severalfold and also helped in better planning of media campaigns through evaluation of earlier campaigns. Through appropriate routing of enquiries received at the call centre, the company, along with its partners is presently in better position manage the inventories with its partners. The inventory costs have since then been drastically reduced to benefit the reseller-partners, The information and communication technologies (ICT) have helped the company to reduce the cycle time for closing calls drastically. By upgrading technology continuously, the lead time between receiving an enquiry and attending to it has been reduced from 48 hours in the initial stages to a maximum of four hours at present. These technologies at the same time help in monitoring the actions of different parties involved, CopyTech presently manages the performance of its reseller partners through the CTC. The dynamic performance management system for partners has been created by Spacework, where a team regularly monitors the performance of each partner listed on the EDM, With the help of frequent performance reports from the research team at Spacework, CopyTech at present identifies effective and ineffective partners across the country. A large number of partners have been permanently removed from the dynamic list. Based on their performances whereas some are given preference to serve an order wh iIe others are used with discretion, CopyTech has also introduced rewards to its partners as well as frequent customers.

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There is a continuous value-addition done by the Spacework teams for CopyTech, as a result of the company now has more effective media time spent, high performing reseller-partners and low customer defection ratio. The client teams are also effectively spending their time and resources on core distribution and marketing processes.

REFERENCES Ahuja, S., Shankar, R. and Banwet, D.K. (2004a) "Managing Knowledge through Delocalization of Work: Creating Value through Strategic Outsourcing ", paper presented at the Eighth World MultiMedia Conference on Systemics, Cybernatics and Informatics, Orlando, Florida, USA, July 27-30. Ahuja, S., Shankar, R. and Banwet, D.K. (2004b) "Knowledge Management and Organisational Flexibility: Linkages and Implications", Paradigm, 8(1), 37-45. Gandhi, S., Banwet, D. K. & Shankar, R. (2004c) "From Offshoring to Offsourcing: Shifting focus from Ownership to Strategic Partnerships", Productivity. 45(2) ..

Management

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ENHANCING LEARNING PERFORMANCE THROUGH KNOWLEDGE MANAGEMENT

K. Momaya Importance of leaming is increasing as individuals, teams and organizations face unprecedented challenges of acquiring new skills in face of turbulent times. At the same time many organizations have felt the need for leveraging their knowledge-based assets through formal programmes of knowledge management (KM). Technology can playa very important enabling role in both the above important inter-linked issues: leaming and KM. This paper aims to evolve debate and achieve greater understanding of the subjects matter and potential synergies. The learning presented herein is based on factual experiments undertaken by the author and supporting team on a number of pilot projects, real life situations and research/consuiting projects during the past four years. The focus is on the role of technology to enable design better systems as one moves towards E-learning paradigm in a digital era. Different experiments conducted are portrayed in 'caselets' forms to offer better feel for realities and relate leaming with context. Leaming and action opportunities are given so that aspiring managers and scientists can develop their own experiments.

INTRODUCTION Learning is being increasingly viewed as a major source of success across various organizational levels. In fact, the rate at whichindividuals, teams, divisions and organizations learn may become the only sustainable competitive advantage. Recognizing this need, many professionals are opting for continuous learning, often referred to as continuing education. Whereas technological learning can be completed in short duration programmes, managenlent learning often needs long term programmes such as executive MBA spread over 1-3 years. Initiatives of this nature can provide proper blend of breadth and depth of learning objectives. More importantly, it provides them time to assimilate learning and apply it for decision- making in their own real life context, actions and results.

Management & Change, Volume 9. Number 1 (2005) ÂŤ;) 2005 Institute for Integrated Learning in Management.

56 Enhancing Learning Performance Through Knowledge Management Learning is laced with many concepts and making it part of way people work is a real challenge. Learning is a funqamental ito improving competitiveness, the basis of survival and success of organizations, Competitiveness has been receiving increasing attention as organizations learn to cope with unprecedented challenges in the knowledge era (Momaya, 2001). Competitiveness has become crucial as the urge for creating an 'organizational memory' and ability to acknowledge and learn from failures as well as successes are very essential for today's knowledge economy (Bukowitz, 1999). Learning is considered as an Important process of knowledge management (KM). At the same time KMc~)l also play crucial role in enhancing learning experiences and hence effc'ctiveness of learning. Today's global manager is under tremendous pressure, scarcity of time is one such factor. Hence, it is natural that one demands best of learning experience in a flexible mode. With multiple projects, location and time zones of work, managers are ideally demanding 'anytime, anywhere' learning syndrome. Proceeding toward such E-Iearning paradigm has been high on agenda of several management programmes. Experimenting has been one of the best ways to learn worthwh iIe concepts, hence, on-the-job experiments have all along been a fundamental tool to enhance learning experiences of working professionals, more specifically knowledge workers. This paper highlights the results of such experiments carried over last several years. Many of the experiments involved participants of [he part-time MBA programme at the Indian Institute of Technology (IIT), Delhi. This included participants at the level of doctors, senior managers or middle managers, referred to as a 'strategic knot' and 'horizontal link.' Participants provided a bridge between the visionary leadership ideas of the top and the chaotic realities of business confronted by front-line workers who are the true 'knowledge engineers' of the knO\yledge creating company (Nonaka, 1995). Such knowledge workers, operating in very demanding environs of today, wish to have flexible learning opportunities, Evolving E-dimension (e.g. E-commerce and E-business) is touching learning also in the form of evolving E-Iearning that also fosters flexibility. Migration to E-Iearning paradigm enables such flexibility which forms the core area of this research. Other approach is weekend format with ongoing dialogue during breaks and meals. Students devellop skills, capabilities such as teamwork and developing business network through interactions. However, such an approach requires enormous transformaManagement

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tion, resources and consensus across large audiences. This for obvious reasons, involves high risk. In a developing country context with slow systems for approvals and experimentation, such large interventions were considered not very appropriate. Hence, a more evolutionary approach that builds' on continuous improvement was evolved. KEY UNDERLYING

RESEARCH

CONCEPTS

AND ISSUES

Underlying key concepts of the research are general and it may be appropriate to define them of first nature so that they are uniformly understood. Learning though as a concept has existed from time memorial but it has acquired new focus in recent years. Senge (1990) expanded the concept in his bestseller, 'The Fifth Discipline'. Senge struct:Jred learning around 'personal mastery,' 'mental models,' 'shared vision,' and 'team learning.' Based on relevant ideas from abroad, spectrum of science to spirituality, Senge explains why the learning organization matters, provides summary of management basics, that offers operating tools, and enumerates implementation aspects. The book's concepts remain stimulating and relevant as ever. Learning issues, modes, paradigm and process including linkages among learning and other new management approaches such as Total Quality Management (TQM), Business Process Rengineering (BPR) and World Class organization have been studied by Sushil (2000) through connecting link of flexible systems management. Learning is made an important component of emerging powerful Situation-Actor-Process/Learning-Action-Performance(SAP-LAP) paradigm that unleashes many useful concepts, frameworks and approaches. Human side of 'learning theory' and the technical side of 'capability development and deployment' has been reviewed by Rosenberg (2000) in context of the emerging E-Iearning as a vehicle to deliver knowledge in digital age. Learning can be defined as a process of acquiring useful skills, knowledge, attitudes; and shaping, leveraging and successfully using them for customer related issues and resulting opportunities.Knowledge originates in the mind of those who processes it. Knowledge on the other hand is a fluid mix of experience, values, contextual information, expert insight and grounded intuition that provides an environment and framework for evaluating and incorporating new experiences and information. In organizations, knowledge is embedded not only in documents and repositories, Management

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58 Enhancing Learning Performance Through Knowledge Management.

but also in organizational routines, processes, practices and norms (Davenport and Prusak as quoted in Tiwana, 1999). Knowledge management, in' simple words can be described as management of knowledge. KM can be defined as 'process that enhances organizations ability to take effective action.' KM as it has several perspectives can be defined in different ways. Two important stakeholders in KM related experiments were 'learners' and 'facilitators.' With perspective of facilitors and long term KM potential for learning, KM is sought to be defined as 'that process and phenomenon which enhances organ ization's abi Iity to faci Iitate learn ing and learn relevant concepts effectrvely through better management of information in right contexts.' Thus, direct and immediate utility of KM for facilitators was envisaged. At the same time, long term potential of KM for learners was also envisaged. While individual's drive for personal growth through learning has seemingly intensified manifold in last decade, its harnessing for organizational goals poses numerous challenges. Knowledge management can be a vehicle to integrate learning, action and performance. A knowledge society is characterized by rapidly growing obsolescence rate (Khandwalla, 2004). The strategy lies for individuals in teams and organizations to quickly adapt new knowledge bases and innovating niches within them. Some practical strategies for instrumentation based on action research have been recently evolved (Momaya, Sushil and Chatterjee, 200 I). Interactions with some key stakeholders resulted in identifying some key result areas wherein actions can make greatest impact. The prevailing popular model in a developing country where majority of learning happens through textbooks and classroom interactions is referred to as 'traditional approach' in this paper. A mix of classroom and modern delivery channels including e-mail, web, forums are refereed to as hybrid approach. Attempts have been made to understand the problems with traditional techniques such as 'problem structuring' which systematically help to examine different facets of problems. It has been attempted to study some major organizational problems with some relevant part of the 'problem structuring', approach, which were identified through 'formal' and 'informal' evaluations. Classroom approach may not be adequate for meeting the learning objectives as individual needs and capabilities always differ. It requires everyone to assemble at the place and time which is both resource and Management

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time constrained and suffer from present days facility of anytime anywhere access of digital content. If large number of participants have to be covered class room methods may pose problems. This apart, only limited contents can be covered in a class. Teachers depend on text book contents, which may not be regularly updated or for some new topics, text books may not be available at all. Due to their specific background faculty may not always be comfortable with case study method. Thus, alternative delivery mechanisms such as web-based broadcast and computer-aided learning (CAL) provide more flexible learning options. Nonaka and Takeuchi, 1995; Nonaka, Toyama and Konno, 2000 have proposed KM as a tool for learning. However, paradigm shifts in learning methods have posed unparalleled challenges for facilitators. E-Iearning is one of the more significant inflection point (Andrew Grove's definition: 'only the paranoid survive') of recent times. It means unprecedented change and considerable learning on all aspects of learn ing experience from theory, content, del ivery to efficiency and effectiveness. The problem structure provides a gl impse of the overall challenge and can help to define scope and objectives of research. The research reported herein forms small part of this overall challenge. OBJECTIVES

AND METHODOLOGY

It has been attempted to develop better understanding of learning and knowledge processes and role of technology in facilitating them. A set of on-the-job learning methods have been evolved over long times with varying learning objectives. The present research has been carried out with a view to understand dynamics and interplay of two important concepts: Learning and Knowledge Management; dynamics and vis-a-vis learning practices being followed at premier ac<1demicinstitutions such as the Indian Institute of Technology (lIT); to have understanding of real issues and ground real ities of learning, and design learn ing experiments. Accordingly, it aims developing alternative methods of learning; to synthesize learning and implications for more comprehensive experimentation, and to improve competitiveness of the institution (lIT), with whose reference the research was carried out. A flexible approach was adopted at different project stages and it was attempted to replace adhoc approach by the systematic approach. The experiments began from comManagement

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-''

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60 Enhancing Learning Performance Through Knowledge Management

monly available simple tools such as e-mail and are evolving to leverage more sophisticated tools such as repositories, Underlying principles in designing experiments are as follows: Learning by doing. Experience is a great teacher. Daily experience is the crucible in which individuals learn and formulate what they know (Bukowitz,1999). These experiments, facilitated though a teacher harnessed such experiences that were planned; pilot tested and then implemented in phased manner. Result-driven approach. Results are virtually engine for any initiative and accordingly a result-driven approach to KM (Fig. I) was adopted. Based on end results, decisions, knowledge, information and data collection were accordingly planned. The approach is illustrated in case let 2 relating to design of 'discussion forum'. Diagnostic questions. Diagnostic questions can provide very relevant insights into a probl~m and its potential solutions. Hence, diagnostic questions were generated taking clues from a research in KM (McKinsey, 1998) comprising: Are there exciting ideas emerging in the unit, but failing to be successfully deployed? If ideas are not reaching the market, what incentives, structures, or management processes seem to be blocking them? How can we improve customer satisfaction and responsiveness? How can we leverage knowledge assets to enhance learning experiences? These representative questions were discussed with customers and other stakeholders. The consensus emerged that answers were more close to yes in above questions one, but fuzzy indicating good opportunity improvement.

lJ CJ Data

~~~. ---.)

{

(

)

'( '-..,..

7..-/

Knowl~dge

Info

Decision

FigJ

Result-driven

approach

(Source: Adapted from Murray, 1999)

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Experimentation. Experiments provide an excellent mechanism for costeffective learning, yet very few organizations leverage them. Indeed, a failure to recognize the potential experimental-value of ongoing activities was evident in most organizations, wherever discussions were held with group of professionals and surveyed. These experiments were designed and implemented in an on-the-job context of ongoing activities for obtaining real insights. Experiments helped to explore and innovate to overcome limitations and problems as encountered in the problem structure. EXPERIMENTS

DESIGNED

AND IMPLEMENTED

Experiments are naturally occurring phenomenon, which enable to make one's way of life. Over last few years, a number of experiments have evolved. Some broad details of these experiments are included herein so that practitioners can get feel for key elements. Three separate groups of students (20-25 in each) were selected to participate in the experiments during the last two years period. Beginning with very few interactions in 1999 the features and tools being tested have grown significantly. Following caselets provide details of these experiments. Leveraging E-mail to Improve Explicit Info Flows. One of the first application of networking and still one of the most frequently used application, proviJ~s starting point for the E-Iearning. Its usefulness can be gauged by the fact that all faculty at lIT use e-mail. However, using e. mail as a learning aid requires considerable planning and efforts. Experiments were started with e-mail in small groups since 1997. Mostly it involved simple tasks such as responding to student inquiries. With classes becoming increasingly large, e-mail usage posed some problems. Initially, e-mail applications were confined to s!mple applications, which generated very satisfactory and not very satisfactory outcomes: e-mail to address student queries; group e-mail to announce events, dates, schedule changes; subgroups for feedback; and submission of abstracts, assignments, projects, and their confirmations. Satisfactory experiences can be gauged by the fact that most of students participated in the experiment and provided their. e-mails; slowly people learned to use e-mail effectively; development of improved architectures about processes, storage and retrieval system; and minimizing use of paper in learning process. It has led to reduce use of paper, but still very long way to go for paperless learning. DissatisfYing experiences were Management

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--~~

..-----"~.".••..••.•. "••.• ,.,,.•... '•'••• .••• " •••• """_.~ ••.•••• _ ••• -----_II-_.II.WI-.II!l"llE'!rJJ:it!llIIll!llIl!lllllllmlll.I

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62 Enhancing Learning Performance Through Knowledge Management

discernible in the form of some learners refusing to participate in the experiments; downloaded material not worth the time and effort; and technological failures, such as speeds, efficiency issues in free e-mail accounts. Discussion Forum. Discussion forum is a powerful mechanism for sharing ideas and learning in virtual mode. Being a asynchronous mode, participants can contribute anytime. Due to web enabling, the participation is open to all people on the network: intranet, extranet or internet. Result-driven approach was followed in design of the discussion forums. Resulting benefits covered; improved customer satisfaction; anytime, anywhere self-learning; and prompt information; access and prompt response, including better knowledge creation broader participation. This was followed by action, identification and knowledge generation for corrective actions. The actions were planned using staged approach. It began with simple applications such as e-mail and web pages. There are more sophisticated tools such as communities and repositories on the roadmap. rJ1.anydifferent types of knowledge are essential to ensure better learni~g experience. For instance, to understand what kind of customer knowledge is needed, some basic questions are: What are customer needs? How to provide better services to customers? What approach/alternatives are available? Which approach/alternatives are more relevant and in what contexts? and how to leverage enablers such as technology/infrastructure? Finally steps were initiated for generating information or data. For instance, to access to basic info, were identified, which were appropriately li~ked to course outlines, info about projects and assignments on the web. Similarly, info about guidelines, dates, templates and evaluations is updated on the web from time to time. The topics, technology for participation, an'd mechanislT1,Sfor effective functioning were designed after much thought. As a case-in-point comprehensive communication program consisting of mix of electronic and face-to-face communication was designed. Participants were given clear guideline for submissions. Most of the details about participation including datelines were put on a web page. Results. Experiments provided some excellent insights and learning about real issues and strategies that work. The process itself has been a great learning mechanism, which generated encouraging results. First, it provided some interesting ideas about potential technological innovations MaJ\agement

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Momaya 63 as an aid for those learning experiences. Those interested further can go deeper by leveraging online resources provided to them. These werei well appreciated by customers and who have been seeking more inputs. The 'discussion forum' ever since it was launched has became one of the most popular forums on that business portal. Three of the portals have maintained top ranks since 2000 .. Supportive feedback has been received from knowledgeable industry professionals, including some from abroad, who were not in the class, thus learning from TIT extended beyond its boundary. One of the distinguishing features of experiments has been cost-effective engagement of resources. The experiments have been supported by voluntary efforts and no significant additional budget was spent. The whole lot of these experiments have been designed, implemented and sustained with minimum investments in hardware and software. They also developed frameworks of knowledge management that proved handy in teaching, research and consulting roles. The web page became very popular and customers started visiting it frequently for obtaining relevant information about courses.

Learning. The experiments

provided several useful learning aids that will provide inputs to next stage of experimentation. It should however act as preliminary aid only as the experiments were exploratory and quantitative analysis was needed to be done. Learning was centered around three pillars: people, process and technology. Customers are often clear about their problems, but not about new developments that can alleviate their problems. Thus, they were needed to be made aware, apprised of potential benefits through live demonstrations and given right kind of infrastructure to motivate them. Customers welcomed the new facilities, but slowly. The students with insatiable desire for learning were active users and big supporters of new technology. Sometimes, incentives need to be provided that bring creative change. Continuous communication, although costly at times, need to be maintained to sustain the interest. Process often emerged as one of the weakest areas in KM maturity. For instance, those at the helm were not mature to evolve the whole series of projects and experiments in a full proof manner. One critical area in KM is about right kind of processes to facilitate smooth flow of explicit as well as tacit knowledge. Other important area concerns right kind of content architectures. It has been attempted to provide a good mechanism to share information. It was also attempted to delineate funcManagement

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64 Enhancing Learning Performance Through Knowledge Ma~agement

tional web pages that are updated at right times and bookmark to organize contents such as useful links to be quite effective. The KM maturity model (Kochikar, 2000) pioneered and succe.ssfully implemented by a world-class leading IT company, Infosys, that provides very useful hints to focus organizational efforts in this area. Technology can be an important enabler, provided one knows how to manage technology effectively. A number of common technologies were experimented with during project; the dominant one being e-mail, web, forum and networking. New technologies, while providing requisite flexibility, also pose new challenges such as the costs often outweigh benefits. For instance, e-mail 'course submissions' provide some flexibility to learners. They can submit assignments / projects even when far away from physical learning place at low costs. However, due to lack of discipline and technological failures, there have been instances of loss of data due to destructive virus that came with files. Cle~r thinking on technology management is important, if technology is to be leveraged for scale-up in learning systems. While managing technology, organizations should never abandon values and ethics as without them some benefits of technology management may never be harnessed (Mital, 200 I). ROAD AHEAD The pursuit of knowledge is very arduous hence it is worthwhile to plan ahead, for which some key areas are as under: Improve efficiency of the systems. Attempt was made to cope with rapid increase in volume of data in the form of e-mails, search results, newsletters and hard data contained in books, journals and articles. For instance, once the system of submissions bye-mails was opened up the e-mail accounts started becoming full in no time. Accordingly, the e-mail account for each account had to be increased from single to four for each course. Naturally, managing info started taking more and more time. Accordingly, alternative upcoming technologies were introduced to filter only relevant mails from junk that pours in with some free e-mail. Enhance utility. Current systems are able to address only basic dimensions of E-Iearning. One needs to harness innovations to address other real problems being faced by students. For instance, they need to have anytime access of quality class proceedings, access to richer Management

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content and supplementary learning material on the web, interactions with world-class experts, mentoring by professionals and real life multi-level case studies. Ensure sanctity. Digital media is vulnerable for misuse for duplication and accordingly requisite safeguards to be introduced to ensure genuine learning and sanctity of evaluation process. Unethical practice of 'cut and paste' to be guarded against. Assignments have to be careful1y redesigned to minimize such occurrences and, penalty imposed for ethical violations. Evolve IPR violations: Better systems have to be devised for protecting Intellectual Property Rights (IPRs). IPR violations need to be more strictly dealt with. Implications. The hands on experiments provided several worthwhile opportunities for learning based on which implications can be drawn. Planners, designers and implementers of such innovations may benefit by giving considerations to the following a'spects: Technology can be an important enabler, but should be managed strategically to deliver results. One needs to have strategic perspectives while selecting technologies. One needs to utilize effective technologies such as e-mail and web to improve efficiency and sustainability. Basic technologies such as e-mail can be utilized innovatively. One needs to plan and design the complete process with proper standards, guidelines and support. Systems need to be people centric, which should solve their problems. Excessive technology focus may often take attention away from real needs of customers resulting into failures. It is desirable to opt for open systems and indigenous solutions to have better sustainability. For instance, open standards such as HTML enabled to reduce load on the systems and enhance systemic efficiency. Similarly, development of solutions based on locally available resources led to enhancing customer satisfaction. For instance, local e-mail had much less irrelevant / junk mail and better speed, which enable to sustain the experiments over years. Experiments are underway to use open systems such as Linux to reduce software costs as well total cost of ownership of IT. It is desirable to provide flexibility in terms of anytime, anywhere access and submissions. Web and e-mail made such flexibility possible. At the same time students who had anytime access but had other

Management

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._--..., 66 Enhancing Learning Perform~nce Through Knowledge Management problems copy.

were provided

with the flexibility

of 'submission'

in hard

It is important to plan, design and implement with options. Options of alternative e-mails, hosting sites for 'discussion forums' saved the experiments when unexpected and unforeseen problems threatened the viability of the experiments. It s necessary to develop content and technology.

standards,

templates,

arch itectures

such as

It is important to maintain good communication. With right selection and use of technologies, one could maintain healthy communication with customers. Apart from meeting during regular classes, faculty communicated with students about twelve times during a semester, which were highly appreciated by students. Particularly, part time students, who were frequently on tour and assignments while out-ofstation found such communication very useful. However, lack of available flexibility provided by the system needed manual as well as e-Iearning experiments to run in parallel often doubling the workload. Developmental tasks without proper supporting technology platforms and encouraging environments may adversely affect the sustainability and scale-up of such experiments. Flexible environment and top management support are crucial for the success. Indigenous inputs from idea stage to scale-up are key to success in implementation. Values and ethics can provide anchors in transfonnations needed to navigate today's turbulent world with learning. Several Indian values are universal in nature and transcend national boundaries (Mital, 2001). Efforts should be made to maximize indigenous inputs and values for leveraging real benefits from such innovations.

CONCLUDING

REMARKS

Customers, particularly business professionals need more flexible mechanisms for learning and proactive academic institutions should more favourably respond. Technology-aided KM and learning have very synergistic role in developing flexible work culture. Good practices in KM provide excellent opportunities for experimentation. Success demands careful planning for critical people and process fronts. Technology can help, but need to be managed strategically. Technology parameters, such Managemcnt

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,---------------------------

Momaya 67

I ~

as identification, selection, transfer, absorption and up-gradation need to be carefully chosen and used. Despite big claims by technology developers effectiveness and efficiency continues to be elusive. There is cost of using new technology and the stakeholders should be willing to pay for it. Free services such as e-mail and space are only notionally free and thus should be taken for intermediate solution. Deficiencies in planning and implementation can result into excessive investments in inappropriate technologies, poor returns and often complete failu~es. Contexts in developing countries provide very different challenges and need to be addressed innovatively. While the whole process of experimentation may be considered slow, but it can be sustainable with resource effectiveness. Acknowledgments The author would like to acknowledge enormous support extended by participating students and other professionals in the experiments. Sincere gratitude is conveyed to Prof. Sushi I for his all round guidance and support. Gratitude is also conveyed to Prof. V. Gautam, Prof. S. S. Yadav and Dr. M. P. Gupta, all of the Dept. of Mgmt. Studies, lIT Delhi, for their varied guidance. The experiments such as e-mails, web page and forums would not have been possible and sustained without availability of basic infrastructure (Domain-B) and business vortels of liT Delhi such as Rediff, Sify and 123India.

REFERENCES Bukowitz, W. and R. Williams (1999) The Knowledge Management Fieldbook. New Delhi: Pearson Education. Khandwalla, P. N. (2004) Lifelong Creativity: An Unending Quest. New Delhi: Tata McGraw-HilI. Kochikar, V. (200 I) The Knowledge Management Maturity Model: A Staged Framework for Leveraging Knowledge, A Whitepaper, www.infy.com. McKinsey (1998) Best Practice and Beyond: Knowledge Strategies, The McKinsey Quarterly, Quarter 1: 19-25. Mital K. M. (2001) Indian Ethos and Technology Management: Insight and Contemporary Relevance. In "Sushil and Momaya K. (eds), GloManagelllent

& Change.

Volullle

9. NUlllher

I (2005)

.~~~~~~-"-='

••. " =' •.•• ''' .•••• ".UII'"_.m •••'lIIIm~!.IIIIl'B.IIII __ ID_•••

:JI •••

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!Ill"'J.J.!!.lll'tIIl'!lIJ!!rtll!l1:lli!~.IIIl!!I!!I!l1W!IIIl!, ,'111.11111111'1111111.1,

68 Enhancing Learning Performance Through Knowledge Management

balization, Flexibility and Competitiveness,' A Technology Management Perspective ", Global Institute of Flexible Systems Management. New Delhi: Vikas Publishing, 159-182. Momaya K. (2001) International Competitiveness: Evaluation and Enhancement. New Delhi: Hindustan Publishers. Momaya K., Sushi I and J. Chatterjee (200 I) "Implementation Issues in Knowledge Man~gement", Udyog Pragati: The Journal for Practising Managers, 25 (3): 36-44. Murray, P. (1999) How Smarter Companies Get Results from KM. In "Information Systems Management", London: Financial Times. Nonaka, I. and Takeuchi, H. (1995) The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation. New York: Oxford University Press. Nonaka I., R. Toyama and N. Konno (2000) Sa and Leadership: a Unified Model.of Dynamic Knowledge Creation, Long Range Planning, 33: 5-34. Rosenberg, M. (2000) E-Learning: Strategies for Delivering Knowledge in the Digital Age. New York: McGraw-Hili Professional Publishing. Senge, P. (1990) The Fifth Discipline: The Art and Practice of the Learning Organization. New York: Double Day Currency. Sushil (2000) Flexibility in Managemen, Flexible Systems Management Series; Global Institute of Flexible Systems Management (www.giftsociety.org). New Delhi: Vikas Publishing House Pvt. Ltd, Tiwana, A. (1999) The Knowledge Management Toolbox. New York: Prentice Hall.

Management

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~IIE!IJ' ~lII!!IllJ!l!! I!n

II.

STATE OF ART OF KNOWLEDGE INDIA

MANAGEMENT

Rajesh K. Pillania

The current era is a knowledge era, where knowledge has emerged as a critical resource and thus nee(ls to be given all out support and fillip. In this era Indian industry faces hyper competition from all quarters for which harnessing of sound knowledge management (KM) practices assumes critical significance. Given this context, it i~'thus appropriate to review stateof-art of.knowledge management practices in India. Accordingly, iUs attempted to review state-of-art of KM both from macro and micro perceptives. This study reviews three important sectors of the economy in this regard, namely, pharmaceuticals, information technology and petroleum. The paper apart from presenting sectorwise empirical results broadly concludes that KM though highly important for the Indian industry is in nascent stage ojapplication and not receiving adequate focus and attention it deserves.

INTRODUCTION Evolution anGi growth of human civilization is based on the evolution of knowledge, its applications and its subsequent transfer from one generation to another (Pillania, 2003). Concept of knowledge is as old as human civilization but what is new is its added realisation and significance in hyper competitive era of liberalisation, privatisation and globalisation. In recent years the focus has shifted from physical production to knowledge creation as engine of growth (Prusak, 200 I). Knowledge management is being increasingly viewed as a discipline that provides competitive advantage to business organizations and in coming periods its role is expected to grow phenomenally. Knowledge is assessed as a critical resource for an organization (Bartlett and Ghosal, 1993, Davenport and Prusak, 1997, Drucker, 1993, Nonaka, 1991 and 94, PiJlan ia, 200Sa, Stewart, 1997 and 2001, Toffler, 1997). KM has emerged as a new lexicon, giving rise to healthy debate whether it is management discipline or simply a fad.

Management & Change, Volume 9, Number 1 (2005) I1J 2005 Institute for Integrated Learning in Management.

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70 State of Art of Knowledge Management in India Knowledge conjures up different picture among minds of different people. For example, for business people it may mean knowledge about customers, products, processes, competition and so on wh ich can be stored in people's mind, documented in hard copies or stored in electronic form (KPMG, ]998). Knowledge is a whole set of intuition, reasoning, insights, experiences related to customers, products, processes, markets, competition and so on that enables effective action (Pillania, 2005b). Knowledge is a processed information embedded in routines and processes based on which it can be retrieved and utilised as per the organisational needs. Knowledge embedded in organisation's systems, processes, products, rules and culture should be easily retrievable and this is what KM essentially aims at (Myers, 1996) . . Knowledge is a fluid mix of framed experience, values contextual information and expert insight that provides a framework for evaluating and incorporating new experiences and information. It originates and is applied in the minds of knower. In organizations, it often becomes embedded not only in documents or repositories but also in organizational routines, processes, practices and norms (Davenport and Prusak, 1998). KM is a commitment to create new knowledge, disseminate it throughout the organization and embody it in products, services and system (Nonaka and Takeuchi, 1995). KM refers to any process or practice of creating, acquilring, capturing, sharing and using knowledge, wherever it resides, to enhance learning and performance in the organisation (Scarbrough, el al. 1999). KM can be defined as systematic and organized attempt to use knowledge within an organisation to transform its ability to store and use it to improve organizational performance (KPMG Consultancy, 1998). KM is thus formalization of an access to experience, knowledge, and expertise that creates new capabilities, enable superior performance, encourage innovation, and enhance customer value (Beckman, 1997). It is a systematic approach to help information and knowledge emerge and flow to the right people at the right time to create value (O'Dell, 2000). In this study (Pillania, 2005c), KM was appropriately defined as 'a systematic, organised, expl icit and deliberate ongoing process of creating, disseminating, applying, renewIng and updating the knowledge for achieving organisational objectives'.

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RESEARCH

METHODOLOGY

~ I

This study was carried out on the basis of primary data collected from leading firms in pharmaceutical, IT and petroleum sectors. It aimed to review state-of-art of KM in India by eliciting views of eminent experts from academia, practioners and policy makers in government agencies and also undertaking a detailed micro survey in leading IT and pharmaceutical firms and marketing divisions of petroleum PSUs. This study was limited to five leading Indian firms in pharrnaceutical sector, namely, Ranbaxy, Cipla, Glaxo, Dr. Reddy's Lab and Dabur; five well-known firms in IT sector, namely, Wipro, HCL Technologies, Inf9syS, Tata Consultancy Services and CMC; and marketing divisions of four leading PSUs in petroleum sector, namely, Indian Oil Corpora.tion Ltd., Bharat Petroleum Corporation Ltd., Hindustan Petroleum Corporation Ltd. and IBP Ltd., aJl of which were either listed in BT 500 firms or major IT and petroleum companies. In each firm, ten executives were taken on random basis for eliciting their views on state of art of KM. The micro survey was conducted by obtaining feedback from 50 executives in IT sector and pharmaceutical sector each and forty executives from marketing executives in select petroleum PSUs. The macro survey on the other end was conducted by obtaining feedback from 30 experts in academia, practioners and policy makers in government agencies. Appropriate statistical measures like mean ~nd standard deviation were computed in each case for different categories.

ANALYSIS

AND RESULTS

Responses received were analysed according to different parameters and sectors. Experts who were contacted expressed varied perceptions about knowledge as an asset base. . A perception of 30 experts contacted was analyzed, which is pictorially represented in Fig. I. Over 63 per cent recognized knowledge as an asset base, little over 23 per cent did not recognize so and little over 13 per cent had no specific views in this regard. Majority of the experts conveyed that KM applications existed in very nascent form in their respective organizations (Fig. 1).

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72 State of Art of Knowledge Management in India

Analysis and results with regard to micro surveys are presented separately for the three sectors, namely) IT, pharmaceutical and petroleum. Fig.1 The current stage of I<IVIin Indian Industry.

13.33% 5l N3soen! stage .~ Introduction stage

$66%

:Hi GCMlth stage : [j]

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IT Sector A very high majority (96 per cent) of the respondents conveyed that their products /services had tangible and knowledge/intangible component (Fig. 2). Companywise responses did not show any significant variation in their perception: Infosys (100 per cent), Wipro (100 per cent), TCS (100 per cent), HCL (lOa per cent) and CMC (80 per cent).

Fig. 2 Presence

of both tangible and tangible/knowledge

components

in products/services.

I:'J I!!I !!l

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Pillania

Responses with regard to percentage of knowledge/intangible component in products/services are summarised in Table I. Responses varied from 65 to 75 per cent with regard to knowledge component in products/services. Company wise mean values of responses received are: Wipro (73 per cent), Infosys (71 per cent), TCS (70.5 per cent), HCL Tech (70 per cent) and CMC (65 per cent). Overall companywise standard deviation of responses is quite high (27.62). Companywise SO is highest for TCS (14.91 per cent) followed by CMC (12.04 per cent), HCL Tech. (11.40 per cent), Wipro (11.00 per cent) and Infosys (10.44 per cent). Table I Percentage

of Knowledge/Intangible Services

Component

in Products/

â&#x20AC;˘ Statistical

Measure

Value

Minimum value of Range Maximum value of Range Mean Standard Deviation

60 per cent 95 per cent 69.9 per cent 27.62

A high proportion of the respon<jents (92 per cent) conveyed that their products/services created higher value on account of the knowledge component (Fig. 3). Individual IT firms conveyed similar responses except CMC, which was earlier a PSU and privatised in 2002, in which case as high as 30 per cent conveyed that they were ,unaware about such benefit. Fig.3 The products/services deliver much higher value as a result of knowledge component they contain.

4 4

EIYes ill No

m Don't

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74 State of Art of Knowledge Management in India

Sixty six per cent of the respondents conveyed that KM programme existed in their organisation, 6 per cent conveyed it was planned to introduce, and 28 per cent affirmatively conveyed that no such programme was in place. Whereas, Infosys, Wipro and TCS have KM programme in place and HCL Technologies was planning to introduce, and the CMC had no such programme in place nor planning to introduce any. Pharmaceutical

Sector

A high proportion (82 per cent) of the respondents conveyed that their products/ services had tangible and knowledge/intangible component (Fig. 4). Individual industry wise responses did not exhibit any significant variations: Dr. Reddy's Lab (90 per cent), Ranbaxy (90 per cent), Glaxo (80 per cent), Cipla (80 per cent) ~nd Dabur (50 per cent). Response for knowledge component in products/services in per cent showed a wide variation (Table 2). Responses varied from 10 to 21 per cent with overall SO for the sector as a whole 17.06. Companywise mean values of the responses received are: Dr. Reddy's Lab (62 per cent), Ranbaxy (61 per cent), Glaxo (58 per cent), Dabur (56 per cent) and Cipla (54 per cent). The SD is highest for Dabur (21.79) followed by Cipla (18), Ranbaxy (15.52), Glaxo (14.73) and Reddy's Labs (10.77). The mean value is highest for Reddy's Labs (62 per cent) followed by Ranbaxy. Table 2 Percentage

of Knowledge/Intangible Services

Statistical

Measure

Component

Value

Minimum value of Range Maximum value of Range Mean Standard Deviation

in Products/

30 per cen1n'~ 90 per cent 58.2 per cent 17.06

A high proportion of respondents (78 per cent) conveyed that their products/services delivered higher value on account of knowledge component (Fig. 5) but with no significant companywise variation.

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Fifty eight per cent of the respondents conveyed that no such KM related programme existed in their organisation, 40 per cent conveyed they were planning to introduce and 2 per cent of the respondents conveyed that they had KM related programme in place. Dr. Reddy's Labs was in process of introducing such a programme, Ranbaxy was planning to introduce one; but in case of Glaxo, Cipla and Oabur, neither any programme existed nor there was any such planning. Petroleum

Marketing

Sector

A large number of respondents (75 per cent) conveyed that their products/services had tangible and knowledge/intangible component (Fig. 6). There was however no significant companywise variation in this regard: IOC (80 per cent), BP (90 per cent), HP (80 per cent), and IBP (50 per cent).

reIher nuch highenruue a<;a result cfkncMl~e cmp:Jlent they cootain

Fig.5 Probcts/sernces

12%

Responses with regard to per cent of knowledge/intangible component in products/services are summarised in Table 3, which varied from 10 to 35 per cent. As for overall SO for the petroleum marketing as a whole, it was high at 26.26. The SO is highest for IOC (12.49) followed by IBP (11.83), HP (10.62), and BP (10.24). The mean value is highest for BP (35 per cent) followed by IOC (28 per cent), HP (28 per cent) and IBP (20 per cent). Management

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76 State of Art of Knowledge Management in India Table 3 Percentage

of Knowledge/Intangible Services

Statistical

Component

Measure

Minimum value of Range Maximum value of Range Mean Standard Deviation

in Products/

Value

per cent 50 per cent 27.5 per cent 26.26

A large proportion of respondents (62.5 per cent) conveyed that their products/services delivered higher value on account of knowledge component (Fig.7). There was however, no significant company to company variation. A significant number of the respondents at IEP (50 per cent), HP (40 per cent) and IOC (40 per cent) conveyed that they were unaware about any such beneficial outcome. A large proportion (72.5 per cent) conveyed that no such KM programme existed in their organisation, 12.5 per cent conveyed that they were in the process of introducing KM programme, 5 per cent conveyed they are looking at the need, whereas 10 per cent conveyed that they are already having such programme in place. Bharat Petroleum is planning to introduce, JOCL is thinking of it but no such programme is contemplated at the Hindustan Petroleum and the IEP.

;

Fig.6 Presence of roth tangilie and intangilie/knowe~e COlllfXlUentsin good;/services.

17.5

GlYes 'I!l f\b ,Ill1[bn't ImN

1__

Management & Change, Volume 9, Number I (2005)

Pillania Fifty eight per cent of the respondents

conveyed

that no such KM re-

lated programme existed in their organisation, 40 per cent conveyed they were planning to introduce and 2 per cent of the respondents conveyed that they had KM related programme in place. Dr. Reddy's Labs was in process of introducing such a programme, Ranbaxy was planning to introduce one; but in case of Glaxo, Cipla and Dabur, neither any programme existed nor there was any such planning. Petroleum

Marketing

Sector

A large number of respondents (75 per cent) conveyed that their products/services had tangible and knowledge/intangible component (Fig. 6). There was however no significant companywise variation in this regard: lOC (80 per cent), SP (90 per cent), HP (80 per cent), and IBP (50 per cent).

Fig.5 Probcts/seruces

relher DllChhighenalue as a result

cikIx:Mlecge cmpnent they cootain 12'10

Responses with regard to per cent of knowledge/intangible component in products/services are summarised in Table 3, which varied from 10 to 35 per cent. As for overall SO for the petroleum marketing as a whole, it was high at 26.26. The SO is highest for IOC (12.49) followed by IBP (11.83), HP (10.62), and SP (10.24). The mean value is highest for SP (35 per cent) followed by IOC (28 per cent), HP (28 per cent) and IBP (20 per cent). Management

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76 State of Art of Knowledge Management in India Table 3 Percentage of Knowledge/Intangible Services Statistical

Component in Products/

Measure

Value

per cent 50 per cent 27.5 per cent 26.26

Minimum value of Range Maximum value of Range Mean Standard Deviation

A large proportion of respondents (62.5 per cent) conveyed that their products/services delivered higher value on account of knowledge component (Fig.7). There was however, no significant company to company variation. A significant number of the respondents at IBP (50 per cent), HP (40 per cent) and JOC (40 per cent) conveyed that they were unaware about any such beneficial outcome. A large proportion (72.5 per cent) conveyed that no such KM programme existed in their organisation, 12.5 per cent conveyed that they were in the process of introducing KM programme, 5 per cent conveyed they are looking at the need, whereas 10 per cent conveyed that they are already having such programme in place. Bharat Petroleum is planning to introduce, JOCL is thinking of it but no such programme is contemplated at the Hindustan Petroleum and the IBP.

Fig.6 Presence of roth tangilie and intangilie/knowe~ col11(Xlllentsin good;/services. 17.5

I1JYes 'I!lNJ i I'i!I[bn'j !<roN I L__ .... --1

Management

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I (2005)

r ,

PiIIania 77

~ Inter Sectoral Comparisons

f i

I ,

, â&#x20AC;˘â&#x20AC;˘â&#x20AC;˘

A very high prop0l1ion (96 per cent) of the respondents in the IT sector, a high proportion (82 per cent) in the pharmaceutical sector and large number (75 per cent) in the petroleum marketing sector conveyed that their products /services had tangible and knowledge/intangible components. The response for the percentage of knowledge component in products/services shows a sectorwise variation. The mean value of the percentage of knowledge component in products/services is highest for IT sector (69.9%) followed by pharmaceutical sector (58.2%) and petroleum marketing sector (27.5%). This percentage of knowledge component in products/services showed a variation within all the three sectors and the standard deviation is highest for IT sector (27.62) followed by petroleum marketing sector (26.26) and pharmaceutical sector (17.06). A high proportion of the respondents (92 per cent) in the IT sector and a large number of respondents (78 per cent) in the pharmaceutical sector believed that their products/services delivered higher value on account of the knmvledge component whereas only 62.5 per cent of the respondents in the petroleum marketing sector had such perception. According to sixty six per cent of the respondents in the IT sector conveyed that knowledge management programme had existed in their organizations, whereas fifty eight per cent of the respondents in pharmaceutical sector and seventy five per cent in the petroleum marketing sector conveyed absence of any such programme in their organization.

Fig.7. P,'oducts/services delivermu~h higher value as a result of know ledge component they contain. 17.5 I;]Yes !:lINo

III Don't know 20

Management

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78 State of Art of Knowledge 1\ •.•• ;agement in Indi:1

------_._-----

CONCLUDING

••

REMARKS

World over, knowledge management is looked upon as a source of sustainable competitive advantage. It has become an accepted philosophy of CEO's lexicon. Ironically, people do recognize the importance of knowledge, but paradoxically KM has not received due attention and focus in the Indian industry barring IT sector. Knowledge management has not received its due importance and recognition in Indian Industry. This can be attributed to lack of awareness of KM benefits and knowledge hoarding mind-set of employees (Pillania, 2005d). Furthermore, in many cases organization culture is not conducive for introducing KM and it is recognized as a job of few specialized people only (Pillania, 2006). Building a knowledge-sharing cultune in firms can begin with linking knowledge sharing to personal rewards for employees and partners and encouraging risk taking. PSUs in particular need to take a serious look at the way it is ignoring KM if it wants to survive and grow in this era of liberalization, privatization and globalisation. Such mindsets can have far reaching implications for the future of firms, the industries and the country as a whole. Today, knowledge is recognised as the most crucial resource. The recent announcement of establishing a Knowledge Commission by the Prime Minister, Dr Manmohan Singh is a positive indication of growing significance of KM. Firms need to continuously create, disseminate and utilize knowledge for surviving in this hyper-competitive global-mall.

REFERENCES

I Bartlett, C.A. and S. Ghosal (1993) "Beyond the M-form: Toward a Managerial Theory of the Firm", Strategic Management Journal, 14: 23-46. Beckman, T. (1997) A Methodology for Knowledge Management, Al and Soft Computing Conference. Banftt Canada: International Association of Science and TechnolDgy for Development (lASTED). Davenport, T. H. and L. Prusak (1995) Working Knowledge: How Organisations Manage What They Know. Boston: Harvard Business School Press. Drucker, P. F. (1993) Post-Capitalist Society. London: ButterworthHeinemann. p.166. Management

L----

& Change,

Volume 9, Number

I (2005)

•• m ••••••••••• ,

Pillania

KPMG Consultancy (1998) Knowledge Management Research Report 1998. UK: KPMG Consultancy, www.kpmg.co.uk, p.6. Myers, P.S. (1996) 'Knowledge Management and Organisational Design: An Introduction'. In "Myers, P.S. (ed.) Knowledge Management and Organisational Design, Boston: Butterworth-Heinemann", p.2. Nonaka, I. (1991) "The Knowledge-creating Company", Harvard Business Review, Nov.-Dec.: 96-104. Nonaka, I. (1994) "A Dynamic Theory of Organizational Knowledge Creation", Organisation Science, 5(1): 14-37. O'Dell, C. (2000) 'Knowledge Management: a Game of Skill and Not of Chance' In "American Productivity and Quality Council Conference Dec. 7-8" .Houstan Texas: www.apgc.org/presfiles/fallo%dell-files/ frame.htm. Prusak, L. (ed.) (200 I) Knowledge in Organisations, Boston: Butterworth-Heinemann, p.VIII. Pillania, R. (2003), "Knowledge Management: A Study of Selected Sectors of Indian Economy". Ph.D Thesis, Panjab University, Chandigarh, p.l. Pillania, R.K. (2005a), "Leveraging Knowledge in Indian Industry: Expectations and Shortcomings", Global Business Review, 6(2), forthcomll1g. Pillania, R.K. (2005b) "IT Strategy for Knowledge Management in Indian Industry", Journal of Information and Knowledge Management (JIKM), 4(3), forthcoming. Pillania, R. K. (2006), "State of Organizational Culture for Knowledge Management in Indian Industry", Global Business Review, 7( 1), forthcomlllg. Scarbrough, H., J. Swan and J. Preston (1999) Knowledge Management - A Literature Review. London: Institute of Personnel and Development, p.2. 'Stewart, T. A. (1997) Intellectual Capital: The New Wealth of Organisations. New York: Doubleday, p.6. Stewart, T. A. (2001) The Wealth of Knowledge: New York: Currency, . p.5. Toffl er, A. (1997) Powershift: Knowledge, Wealth and Violence at the Edge of the .21 Century. New York: Bantam Books. sf

Management

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â&#x20AC;¢

AN EMPIRICAL INVESTIGATION OF THE CAUSAL RELATIONSHIP BETWEEN OPENNESS AND ECONOMIC GROWTH IN INDIA

Hawa Singh

Sudesh

The present study attempts to investigate causal relationship between openness and economic growth within the backdrop of the India's economic policy of liberalization, privatization and globalization with special reference to causality between exports and economic growth, aspects which have been very scantily researched and modelled earlier. In this study it has been attempted to investigate causal relationship between exports and economic growth as applied to India on,the basis of published GOI figures. Openness in this regard is expressed as ratio betweenforeign trade and GDP. The study concludes that India's economic growth and openness are linked in positive feedback loop each reinforcing the other.

INTRODUCTION

he source of economic growth has been a central issue in the field of economic security since 1950s. The neoclassical model of Solow (1956) suggests a growth accounting method for explaining the source of growth. By using this method, economic growth can be explained in terms of three different parts: physical capital accumulation, labourforce growth and total factor productivity growth. Recently, it is held that along with basic factors included in the neoclassical model, the environment especially the degree of openness of the economy is also one of the most important determinants of economic growth. In recent years the relationship between external sector and economic growth in developing countries has been of continuing interest both in theoretical and empirical literature. A large number of empirical studies have been conducted during the last two decades to investigate the role of exports and openness on economic growth. Methodologically, there are two approaches: one is the prqduction based regression model approach (Tyler 1981, Kavoussi 1984, Feder 1985, Balassa 1985, Mbaku 1989, Moschos 1989, Salvatore & Hatch, 1991, Yaghmaian 1994, Nidulgala 1996). These Management & Change, Volume 9, Number I (2005) 2005 Institute for Integrated Learning in Management

ÂŤ;)

J-----

82 An Empirical Investigation of the Causal Relationship models identify the relationship between economic growth and exports in alternative growth equations which include various factor of production. These models pay little attention to the issues related to the causality between exports and economic growth. Second approach is to test directly the causal relationship between exports and economic growth in either a bilateral or multivariate framework (lung & Marshall, 1985, Chow 1987, Kunst and Mavin 1989, Sheegy 1990, Dadoro 1991, Gartley 1993, Arnade & Vasadvda, 1985). A number of studies pertaining tween

external

sector

to India regarding

and economic

growth

have

the relationship been

carried

beout

(Nidugala, 1997; Chandra, 2002; Tripathy, 1985, Mukharji, 1987; Tondon & Neelamber, 1987; Nayyar, 1976; Paharia 1988 and Rao, 1991). However, none of these studies investigate causal relationship between openness and economic growth. The present study is an attempt to investigate this causal relationship in respect of India. Openness in this study is defined us the ratio of external trade (exports, imports, export plus imports) to GDP. The importance of trade is well-defined by Charles Wheelan: 'Imagine a spectacular invention - a machine that can convert corn into stereo equipment. When running at full capacity, this machine can turn fifty bushels of a corn into a CD player. Or with one switch of dial, it will convert fifteen hundred bushels of soybeans into a four-door sedan. However, this machine is even more versatile, which on being properly programmed can turn window software into finest French wines. Or a Boeing 747 into enough fresh fruits and vegetables to feed a city for months. Indeed, the most amazing thing about this invention is that it can be set up anywhere in the world and programmed to turn whatever is grown or produced there into things that are usually much harder to come

by.' This basic role and the characteristic of trade is shared by almost all the economists from classical to modern. As for the theoretical aspects of causal relationship between the external sector and economic growth, there are different approaches. First is the neo-classical export led growth hypothesis. It held that direction of causation is from exports to economic growth: as the expansion of exports lead to increase in productivity due to economics of scale, higher quality products in view of the exporter's exposure to global consumption pattern, increase in capital formation and technology, relaxation of foreign exchange constraints and also the deManagement

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velopment of the sector in which a country has more advantage. The _second view is that causality runs from economic growth to exports. Higher productivity leads to lower unit cost, which facilitates exports (Kaldor, 1967). The excessive production in relation to domestic consumption leads to exploring foreign markets. According to Pack (1988,1992) and Yaghmaizn (l9~4) no causal relationship exists between exports and economic growth. Exports and economic growth are both the result of the process of development and structural change. While there are few studies which investigate relationship between economic growth and exports plus imports i.e. openness, the reason may be in macroeconomics where imports represents a leakage from the circular flow of income and will lead to domestic unemployment rather than economic growth. It can be argued, however, that imports are a very important determinant of economic growth if they are used as a means to ensure supply of key raw materials and acquire embodied technology through import of capital goods. Thus, there can be a bidirectional causality between imports and economic growth. Till mid 1980s, India obdurately continued to pursue the attainment of the goal of self-reliance by adopting protective and inward looking pol icies based on import substitutions, restriction on foreign transactions involving foreign exchange, high grade tariff, etc. Coming close to on the heels of the wave of economic reforms sweeping particularly the developing world during 1980s, India too embarked upon experimenting with structural economic reforms to jolt the economy out of its inertia. The reforms which was initiated in India during 1980s, culminated in Structural Adjustment Programme (SAP) known as New Economic Policy (NEP). If one looks at the experience of India it is a small player in international trade, accounting for only about 0.6 per cent of the world trade. During 1950s, 1960s, 1970s and 1980s, India had sustained the average growth rates of exports 3.57 per cent, 3.51 per cent, 15.84 per cent and 8.04 per cent, respectively in dollar terms. At present the economy of the country is globalizing fast. The ratio of international trade to GOP of the country has increased from 15.6 per cent in 1990-91 to 20.8 per cent in 1999-2000. Tariff in the country has also reduced from 79.1 per cent in 1990-91 to 30 per cent (2001). The corporate sector of the country is under heavy pressure and price in the country is being aligned with other countries. Exchange rate adjusts to Management

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84 An Empirical Investigation ofthe Causal Relationship

the pressures from international market Financial market of the country is much more integrated with global finance today then a decade ago. The behavior of producers and consumers is changing fast The strong winds of openness in the economy are blO\ying everywhere in the economy. Thus, India's trade policy is steadily moving towards export promotion. While encouraging an outward oriented strategy, India uses import as a way of importing key raw materials and technology. Thus, a bi-directional causation between openness in the broader sense and economic growth is likely to occur. RESEARCH

METHODOLOGY

AND DATA SOURCE

Cointegra~ion technique is employed to examine and analyze the causal relationship between different variables. Empirically, it has been shown that most of the macro variables are non-stationary in nature. Hence, analyses of non-stationary series with conventional technique gives rise to a fair possibility.of spurious co-movement between variables. Differencing of data has been suggested to alleviate the problem of time trends, though others have objected the same on the ground that such a process involves loss of potential long run information on the data. In this context, cointegration and error cor~ection modeling which retains such long run information has been suggested. Cointegration analysis confronts spurious regression, and error correction provides short run dynamics and tries to direct causal relationships (Engle & Granger, 1987). A pre-requisite for testing the sets of variables for cointegrationis to establish the properties of the individual series and the order of integration of each variable needs to be determined. In general, a series, which is stationary after being differenced 'd' times, is said to be integrated to order 'd' denoted as I (d). Dickey-Fuller (OF) and the Augmented Dickey-Fuller (ADF) tests also known as unit root test are used for testing the stationarity of the series. The ADF test entails estimating the following regression equation. (Eq.l)

where Y1 is relevant time series, ~ is first difference operator, T is a linear trend and VI is the error term. The null hypothesis of the existence of a unit root is ).1=0. Management

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.•••

_._

•• 111111111111&'''.'

••

Singh and Sudesh 85

If any variable is found to be non-stationary, it wi II be tested for stationarity in its first difference form. If each variable is stationary or achieves stationarity after first differencing, then bivariate co integration test will be used to know the relationship between the variables.

, !~

If two series Xl and Yt are both I (d), Engle and Granger (1987) have shown that a linear combination Zt = \ -ex.Ytwill also, in general, be I (d). However, if the constant ex.provides an outcome where z is integrated of order (d-b), I (d-b) and b>O, then Xt and YI are said to cointegrated. To be co integrated, both Xl and Yt must have the some order of integration (Engle & Granger, 1987). In this study, Johnsen (1988) testing procedure for cointegration is used for determining the number of cointegration vectors. Once it is established that both the variables are co integrated the next issue is to determine, which variable causes the other, Engle and Granger (1987) have shown that if the variables Xt and Yt are integrated of degree I( I) and are co integrated then either unidirectional or bidirectional Granger causality must exist in at least the 1(0) variables. If the variables are cointegrated there must exist an error correction representation that may take the following form: C

Y I-I

(Eq. 2)

(Eq. 3)

where the error correction terms et-I and et-I' are the stationary residuals from the co integration equation. The inclusion of error correction terms in equation I and 2 introduces additional channel through which Granger causality could be detected. For instance, in the first difference equation Y is said to Granger cause X not only if'doi' are jointly significant (through F-lest) but also if go is significant then the error allow for the fact that Y Granger causes X as long as the co-efficient of the error correction term is significant even if 'doi"s are not jointly significant. Johnes & Joulfain interpret the lagged changes in independent variable to represent short run causal impact, while the error correction term is interpreted as representing the long run impact. Annual data for the period 1951-2002 are used for estimation. The data on export and imports at current prices in rupees term are obtained from the Economic Survey 2002-03 by the Union Ministry of Finance.

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.W"LlT'lIIlIImml'._-------_

86 An Empirical Investigation ofthe Causal Relationship

The series on imports and exports are converted into real term by using the deflator of net external income at aggregate level. The series on GNP at factor cost at constant prices is taken from Economic Survey. [n this study, all the variables are converted into. logarithmic forms, LEXP denoting log of real exports; LIMP: log of real imports, LEXIM: log of real exports plus imports, LGNP: log real gross national product at factor cost, DLEXP: first difference of log of real exports, DLIMP: first difference of log of real imports, DLEXIM: first difference of log of real exports plus imports, DLGNP: first difference of log real gross national product at factor cost ANALYSIS

AND RESULTS Table I Unit Root Tests

Variable

LGNP LEXP

LIMP LEXIM

ADF (lag) -.32767 -1.1524 -.6966 -.47774

(1) (0) (1) (1)

AIC

SEC

HQC

98.8532 34.4832 27.8064 36.1405

94.8532 31.4832 23.8064 32.1405

91.1959 28.7402 20.1492 28.4832

93.4831 30.4556 22.4364 30.7705

LL Maximized log-likelihood AIC Akaike Information Criterion SBC Schwarz Bayesian Criterion HQC Hannan-Quinn Criterion 95 per cent critical value for the augmented Dickey-Full"r statistic: -3.5088

Recent development in the field of econometrics showed that most of the macroeconomic series are non-stationary. The infen:nce drawn from such regression is unreliable if the variables are not stationary or are integrated of different orders. Thus it is important to check the stationarity and orders of integration of the variable being used before examining the long run relationship between them. Tablel presents the r~sults of unit root tests obtained using augmented Dickey-Fuller (ADF) test. The results support the presence of unit roots in all the series. The null hypothesis that the series are nonstationary is not rejected at the levels of all variables at the 5 per cent

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Singh and Sudesh

level of significance level at least. However Table 2 implies that he null hypotheses of the series are stationary when the difference of the variables are taken. It means the variables LGNP, LEXP, LIMP and LEXIM are all integrated of order one i.e. I (l). Table 2 Unit Root. Tests of First Difference

of Variables ----'---,

Variable

ADF (lag)

AIC

SSC

_ HQC ____ 1 I

DLGNP DLEXP I DUMP DLEXIM LL AIC SBC HQC 95 per

-8.7502 -6.9673 -9.3568 -9.1313

(0) (I) (0) (0)

96.1565 33.0380 27.5080 35.8223

93.1565 30.0380 24.5080 32.8223

90.4465 27.3280 21.7980 30.1123

92.1463 29.0277 23.4978 31.8120

I i

: Maximized log-likelihood : Akaike Information Criterion : Schwarz Bayesian Criterion : Hannan-Quinn Criterion cent critical value for the augmented Dickey-Fuller statistic: -3.5088

It is also important to test for long run relationship between variables before testing for causality, so the next step of our analysis is test for cointegration, using Johansen co integration tests for LGNP & LEXP, LGNP & LIMP and LGNP and LEXIM. All these four variables has shown linear trend over the period, so intercept term is used in the cointegration equation to have linear trend in the data space. The tableIII & IV present the result of our cointegration analysis. The JohansenJuselius co integration test shows that on all these three cases are cointegrated of one vector. The results of table IV are consistent with the results of table III. It means in case of India, there is a longrun relationship between real export and real GOP, real imports and real GNP and, also between real GNP and real export plus real import which is broader measure of openness. Table V presents the results of cointegrated vector consisting of magnitude of relationship among cointegrated variables., Here each cointegrated vector is normalized at real GNP. It is interesting to observe that all variables have positive influences on the real GNP in long run and real import has more influence in relation to other variables.

Management

l_.

& Change.

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QC) QC)

riS

~ ~

trl

=5:

Table 3 Cointegration

rjO ,

...

Test I

it .-0

z cr-

~ tv

o o 'J.

=<:= Il

~ CO integration LGDP and LEXP LGDI' and L1tvlP LGDP and LEXIM

/I"-ull

Alt.

J"max

95%

9n?-i

Statistics

quantile

Quantile

Null

Alter

Trace

95?/r;

9n%

tiQ.

Statistics

Quantile

Quallfile

45.797

20.18

17.88

7.41

9.16

7.53

::: == o

r= 0

r= I

54315

383868

1587

1381

r= 0

r>= I

r<=

r=2

.14035

7.4103

9.16

7.53

r<= I

r=2

r= I

.57583

42.0238

15.87

13.81

r= 0

r>= I

46.880

15.87

13.81

::r ~ ~ ~.

r<= I

r=2

09437 I

4.8571

916

753

r<= I

r= 2

4.8571

9.16

753

'" !!:.

r=0

r= I

.55594

3977

15.87

13.81

r=O

r>= I

45.896

20.18

17.88

~ ~

r<= I

r=2

.Il 738

6.1184

9.16

7.53

r<= I

r=2

6.1184

9.16

7.53

r=O

o' == '"::r

-6'

____.-

..-..

~----

Singh and Sudesh 89 Table 4 Cointegration Test II Cogeneration

Rank

LGNP & LEXIM

r= 0 r= 1 r=2 r=O r= 1 r=2 r=0 r= 1 r=2

LGNP&LEXP

LGNP & LIMP

Maximized LL

AIC 120.3996 136.2888 137.3480 120.4302 135.6236 137.3287 111.0110 128.0229 128.4515

124.3996 144.2888 147.3480 124.4302 143.6236 147.3287 115.0110 136.0229 138.4515

HQC

SEC 116.6159 128.7215 127.8889 116.6466 128.0563 127.8696 107.2274 120.4556 118.9924

118.9641 133.4178 133.7592 118.9947 132.7526 133.7399 109.5755 125.1519 124.8627

Table 5 Cointegration Vector Co integration Equation (Normalized values) LGDP and LEXP LGDP and LIMP LGDP and LEXIM

LIMP

LGNDP

LEXP

.087182 (-1.0000) -.0085877 (-1.0000) .042737 (-1.0000)

-.11162 (1.2803)

LEXIM

Intercept

-.27935 (3.2042) -.40395 .076792 (-47.0381) (8.9421) .242 -.098687 (2.3084) (-5.6625)

Note: Values given in parentheses are normalized. The question then arises as to how cause and effect vary between these variables. For identifying the causality between the variables Granger test is used by estimating error correction model (ECM). The result of this model is given in Table 6. The decision to add the number of lags in ECM is taken on the basis of Vector Auto Regression (VAR) model by using the AIC and the SSC criteria. The first two equations enable us to know whether any causal relation exists between real export growth and real GNP growth rate. Here in the first equation, the coefficient of error correction term (ECMI) is negative and statistically significant, while in case of second the ECMI is insignificant. It implies

Management

& Change.

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'0"

-"'" Z'R ~C""'T"=rr"""2rz=R'T';,,'J'W

90 An Empirical Investigation of the Causal Relationship that in case of India growth of real export in longrun Granger cause growth in real GNP but not other way around. However, in short run no cause and effect relationship exists between these two variables. The third and fourth equations are related to the ECM of growth of real GNP and growth of real imports". In both the equations co-efficient of error term (ECM) ECM2 and ECM3 are statistically significant, which implies that causal relationship exists between growth of import and growth of GNP. The positive sign of the estimated co-efficient of error term ECM2 in equation 3 and 4 implies that any disequilibrium arises in the relationship between imports and GNP may destabilize the system. It is further observed that no short-run relationship exists between these two variables. The last two equations are estimated to identify the causal relationship between growth of real GNP and openness, which is measured by the growth of real export plus imports. The coefficients of error terms in both the equations is statistically significant and having negative sign. It means growth of openness in Indian system is Granger cause which shows the growth of real GNP and also growth of real GNP reinforcing the openness of the system. The statistically significant non-zero coefficient of DLGNP reflects feedback between current changes in GNP and its own 'Iagged values. The other coefficients are insignificant which implies absence of short run cause and effect relationship between openness and real GNP. CONCLUDING

REMARKS

This paper applies cointegration and error correction modelsto test causal relation between real GNP and openness. In this study openness is taken in broader sense by taking the summation of both exports and imports. The integration and cointegration properties of the data are analyzed and the Granger Representative Theorem is used to identify the nature of the causal relationship. The results obtained that a feedback causal relationship exist between economic growth and exports plus imports. There is no evidence for short run Granger causality between the economic growth and openness.An important implication of the study findings is that India's economic growth and openness reinforce each other. A high degree of openness is associated with enhanced economic performance for India.

Management

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.'IV

, Singh and Sudesh 91 Table 6 Results of Error Correction Mode Coefficient

OLGNP(-I) OLEXP(-I)

(Eq l) DLGNP -30558 (-22142) 042884 ( 1.2708)

(Eq2) DLE.YP 55704 (.92720) 017983 (.12241)

OLlMP(-I)

(Eq3) DLGNP -302122 (-21302)

(EqA) DUMP .57812 (.84642)

0015976 (.054185)

-3.1195 (-21906)

(Eq5) DLGNP -30327 (-21643)

(Eq6) DLEXfM -12133 (-.20833)

019960 (.56986)

-.24749 (-17001)

-20527 (-72936) 17821 2.0994 1039712 101.1335

'-.31161 (-2.6640) .082784 2.0462 341653

15857 (.690)

16413 (.200)

1.4619 (227)

OLEXIM

ECMI(-I)

-20573 (-73952)

-14483 (-I 1959) .21028 (7.4135)

ECM2(-I)

39845 (29084)

ECM3(-I) 2

OW AIC

197 2.11 104.5387

03868 20059 32.46

.16258 2.11 103.588

11501 2.006 26.4208

SSC

10170

29.6253

100.75

23.5831

Autocorrelation

x' Functional FOnll 2

1. Nonnality )

X' Hetroscedasity 2

2.4387 (.118)

31.3275

16508 (.199)

36838 (.544)

.085387 (.770) 9.5472 (.008)

20244 (.653)

28877 (.591)

19812 (.656)

22433 (.636)

.61173 (.434)

36109 (.164)

30556 (.217)

9.4135 (.009)

.44065 (.802)

15638 (.211)

56511 (.452)

9.4355 (.009) 76005 (385) (.186)

19696 (.657)

Ll493 (.284)

13207 250]

Note: The values given in the last four rows are computed values of test statics with corresponding probabilities in parenthesis. Where Autocorrelation X2 is Langrange multiplier test, Functional Form X2 is Ramsey's RESET test, Normality Xl is based on test of skewness and kurtosis of residuals, Hetroscedasity X2 is based on square of residuals

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92 An Empirical Investigation ofthe Causal Relationship

REFERENCES Ahmad,

1. and ACC

K wan. (1991) "Causal ity between

Exports

and

Economic Growth," Economic Letters, 37: 243-248. Amade and Vasavada, (1995) "Causality between Productivity and Export in Agriculture: Evidence from Asia and Latin America," Jour-

Ital of Agricultural

Economics, 46 (2): 174-186.

Bahmani - Oskoeem and 1. Asic (1993) "Export Growth and Economic (}rowth: An Application of Cointeration and Error Correction Model-

irJg," Journal ojDeveloping Areas, 27 (4): 535-542. Balassa B. (1985) "Exports, Policy Choices, and Economic Growth in Developing Countries after the 1973 Oil Shock", Journal of Development Economics, 8: 23-35. Chow, P.CY (1987) "Causality Between Exports Growth and Industrial Development: Empirical Evidence from NICS," Journal of Development Economics, 26: 55-63. Chandra Ramesh, (2002) "Export Growth and Economic Growth: An Investigation of Causality in India," The Indian Economic Journal,. 49 noJ. Dodaro, S.(1993) "Exports nal of Developing

and:

A Reconsideration

Areas, 27:

of causality,"

Jour-

227-244.

Dhawan U and Biswal B (1999) "Re-examining Export-leg-Growth Hypothesis; A Multivariate Cointegration Analysis for India," Applied

Economics, 31: 525-530. Eagle R. & Granger. CWJ (1987) "Cointegration and Error Correction: Representation, estimation and testing," Ecomometrica, 55: 251-276. Fedar G (1985) "An Export and Economic Growth," Journal of Development Economics, 12: 59-73. Gha.rtley, E.E. (1993) "Causal Relationship Between Exports and Economic Growth:

Some Empirical

Applied Economics,

Evidence

in Taiwan,

I i

Japan and US,"

25: 553-563.

Ghatak, S., C. Milner, and U. Utkulu (1997) "Exports, Export Composition and Growth: cointegration and Causality Evidence for Malaysia,"

Applied Economics, 29 (2): 213-223. Heller, P.S., and R.C. Porter (1978) "Exports and Growth: An Empirical Re-lnvestigation," Journal of Development Economics, 5: 191-193. Holman, J.A., and P.E. Graves (1995) "Korean Exports Economics Growth: An Ec'onometric Reassessment," Journal of Economic

Development, Man;lgement

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'1\.

'. f

Singh and Sudesh

Hsiao, M.C.W. (1987) "Test of Causality and Exogeneity Between Exports and Economic Growth: The case of Asian NICs," Journal of Economic Development, 12: 143-159. Jung, W.S., and PJ. Marshall (1985) "Exports, Growth and Causality in Developing Countries," Journal of Development Economics, 18: 1-12. Kavoussi, R.M. (1984) "Export Expansion and Economic Growth: Further Empirical Evidence," Journal of Development Economics, 14: 241-250 ...â&#x20AC;˘. Kunst, R.M., and D. Marin (1989) "On Exports and Productivity: A Causal Analysis," Review of Economics and Statistics, 71: 699-703. Lio,Song,Romil1y( 1997) "An Emirical Investigation of Causal Relationship between Openness and Economic Growth in China," Journal of Applied Economics, 29: 1679-1686. Mallie, SK (1996) "Causality between Exports and Economic Growth in India, : Evidence from Cointegration. Based Error Correction Model," The Indian Journal of Economics, LXXVI: 307-20 Michaely, M. (1997) "Exports and Growth: An Empirical Investigation," Journal of Development Economics, 4: 49-53. Moschos, D.( 1989) "Export Expansion, Growth and level of Economic Development," Journal of Development Economics, 30: 93-102. Rahman, M., and M. Mustafa (1998) "Dynamics of Real Exports and Real Economic Growth in 13 Selected Asian Countries," Journal of Economic Development, 22 (2):. 81-95. Ram, R. (1987) "Exports and Economic Growth in Developing countries: Evidence from Time-Series and Cross-Section Data," Economic Development and Culturai Change, 36( 1): 51-72. Salvatore and Hatch(1991) "Inward Oriented and Outward Oroiented Trade Strategies," Journal of Economic Development, 27: 7-25. Sheehey,EJ.( 1990) "Export and Growth: A Flawed Framework," Journal of Development Economics, 27: 11-116. Sengupta, J .K., and J .R. Espana (1994) "Exports and Econom ic Growth in Asian NICs: An Econometric Analysis for Korea," Applied Economics, 26: 41-51. Sprout, R.Y.A., and J.H. Weaver (1993) "Exports and Economics Growth in a Simultaneous Equations Model," Journal of Developing Areas, 27 (3): 289-30~ Tyler, W.G.(1981) "Growth and Export Expansion in Developing Countries: Some Empirical Evidence," Journal of Development Economics, 9: 121-30. Wheelan C, 'Naked Economics', Norton 2002. Management & Change, Volume 9, Number I (2005)

CROSS-CULTURAL MANAGEMENT IN A MULTINATIONAL: A CASE STUDY OF AN ANGLO-AMERICAN MNC IN INDIA

Richa Awasthy

Rajen K. Gupta

This case study relates to cross-cultural issues of an Anglo-American MNC It aims to study impact of transfer of organizational practices of the MNC in home country to the subsidiary organization in host country in respect of organizational structure, management style, human resource practices and non-work practices and analyze their impact on organizational commitment. The study broadly recommends that for the success of an MNC whereas corporate values of the parent company can remain unchanged. some jlexibi/i(y what could be called 'glocal' way of managing a subsidiary (a combination of 'global' and 'local' approache~) is necessary for organizational functioning in keeping with local conditions in host country.

INTRODUCTION In view of liberalization, privatization, globalization of the economy, a number of MNCs have extended their operation into the Indian market by opening up subsidiaries or joint ventures with local organizations. Whereas these subsidiaries in host country operate generally by following organizational practices of the firm in home country, but at the same time they often need to adjust with cultural issues of host country. Transfer of organizational practices often affects commitment level of employees in the host country unit. In this paper it is attempted to study the impact of transfer of organizational practices of an Anglo-American MNC subsidiary in !ndia (SI India as a synonym) on organizational commitment (OC) of employees. A number of such empirical studies have been carried out earlier in respect of MNCs operating in Mexico (Schaan, 1983), USA (Blumenthal, 1988), Japan and Thailand (Tillman, 1990). Canada (Hebert, 1994), UK (Hill and Hellriegel, 1994), P.R. China (Child, et al., 1997) and Norway (Mjoen and Tallman, 1997). Kostova (1999) has studied transfer of organizational practices in social, organizational and relational contexts from home country to host country. Management & Change, Volume 9, Number 1 (2005) ~ 2005 Institute for Integrated Learning in Management

96 Cross-Cultural

Management in a Multinational

The term organizational

practice, although widely used is defined dif-

ferently by different researches. For example, March and Simon (1958), use the concept of 'stabilizing function' in describing organizational practices. Some organizations prefer 'performance programmes' comprising habitualized actions, routines', and standard operating procedures as a surrogate of organizational practice (Scott, 1995). Nelson and Winter (1982) view organizational practices as 'genes' of an organization, often considered as 'taken-for-granted, subconscious, and tacit nature'. Szulanski (1996) consider organizational practices as routine application of organizational knowledge. Kostova (1999) defines organizational

practices

as particular

ways of

conducting organizational functions that are evolved over a period under the influence of an organization's history, people, interests, actions and that become institutionalized in the organization. Organizational practices reflect the shared knowledge and competence of the organization; that are generally viewed as 'taken-for-granted' way of performing certain organizational activities, many of which may not be following any well-documen ted procedure or work instructions. Organization practices also at time

act as surrogate of organizational values and beliefs (Hofstede, 1991). For example, a firm committed to business ethics may pursue CSR (Corporate Social Responsibility) more seriously than others. The practices that organizations develop and institutionalize vary

widely. For example, some organizations may perceive appraisal in its limited role while other may link it with total quality management. Organizational practices also vary according to degree of formal ization, ranging from highly well-documented and formalized to completely informal way of working. According to Winter (1990), organizational genes range from 'hard' (i.e., activities encoded into technologies) to 'soft' (i.e., activities encoded into people's actions). Kedia and Bhagat (1988) distinguish organizational practices as driven by 'people-embodied' and 'product-embodied' technologies. An organization generally expects its employees to follow laid down guidelines. While some are followed strictly, others may be modified in some way or even ignored. In most organizations activities are generally carried out in quasi-formal way i.e. some formally and others informally. For achieving synergy and efficiency, organizations often engage in cross-business unit transfers of organizational practices that reflect their Management

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core competencies and superior knowledge which determine their competitive advantage. Internal transfer of practices is important for an organization, but critical for an MNC as it serves as an instrument of transfer of superior knowledge from 'home' to 'host' country (Bartlett ~nd Ghoshal, 1997; Kogut, 1991). In many cases organizational practices ard management training programmes are based on practices in 'home' COllntry which may not be appropriate for the needs of 'host' country (Sinha and Kao, 1988, p.II). Organizational practices in MNCs experience th~ee kinds of effects i.e., societal impact (Maurice, 1979; Streeck. 1985; Loveridge, 1990), organizational impact (Muller, 1992) and the globalization impact (Bartlett and Ghoshal, 1992). Transfer of organizational practices is generally beset with probleJJ1S on account of particular characteristics of the practices being transferred and on account of cultural and organizational factors (Ghoshal and Bartlett, 1988; Kedia and Bhagat, 1988; Szulanski, 1996; Zander and Kogut, 1995). This often poses cross-cultural and organizational difficul~ies in 'host' country towards their transfer, as a result either they are not implemented or remain only partially implemented. ORGANIZATIONAL

PROFILE

OF SI-INDIA

SI-International (pseudonym) is an Anglo-American MNC wherein the British partners are the major shareholders, who represent the par~nt company interest at the SI-India. The company's product profile includ:es wide range of heaith food drinks for all age groups. The Indian operations were initiated in 1958 by a team of British expatriates. The to~al workforce of SI-India in 2005 comprised 498 executives including two British expatriates, namely, the Managing Director and the Vice-President (Operations) and 2840 non-executives. It has following offices and pla!nt in host country (India): The Head Office. Located in state-of-the art premises of a huge corporate house near Delhi, the HO has the best of interiors. According to an HR executive, SI-India's head office (HO) and regional sales office (RSO) layout is similar to that of 51-UK. Entry is regulated through 'access control system.' All company meetings including some routine ones are held in the company's conference rooms.

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Sales Office (RSO). There is one RSO located each in

the northern, southern, eastern, and western regions of the country. The study team visited RSO (North) in New Delhi, which was found to have the same pleasant and affluent looks with modern open office structure including cubicles as at the HO.

The Research Office (RO). The RO was found to be somewhat dull, and aesthetically less appealing as compared to the HO and the RSO (North) and had no open office structure. It did not have much flurry of activity being smaller in size with only twenty two persons as compared to over hundred in RO (UK). Its research activities are confined to making only minor improvements in the products to suit local conditions to enhance their nutritional value. Sizeable staff regard their activities as monotonous, in spite of their work being innovative in nature. Its progress report is sent to the parent company on monthly basis. Professional advise from parent company is always open and fast.

The Plant in India. Located

in a small town in Punjab, the plant runs three shifts of eight hours each, six days a week with a rest period of one hour per shift. Its nine production lines produce two health drinks. The plant is very clean, airy, and well maintained. The office layout is different from the one at HO. Whereas HODs occupy cubicles but the office staff sits in large open space as at the RSO and the HO. Plant has infonmil and open work culture as the HODs cubicles have transparent glass walls, which also facilitate close supervision and coordination. Being located in semi-urban area, many of the workmen particularly in higher age group are illiterate. Some of the employees have their length of service as long as 35 years. Overall the plant is managed efficiently with due consideration to quality and productivity and cordial interpersonal relations among staff.

RESEARCH

METHODOLOGY

A review of related literature clearly reveals that cross-culture issues of MNCs in India have not been adequately researched. This case study is based on findings of interaction with the cross-section of employees as well as pre-scheduled interviews. In that sense, this study can be claimed to be richer than other studies adopting quantitative approach, as informal interactions facilitate accurate reporting, decoding and interpretManagement

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Awasthy and Gupta 99 ing the whole gamut of cross-cultural issues (Cassell and Symon, 1994). This case study method which analyzes underlining processes of single organization could be more revealing and factual that also faci Iitates identification of a number of areas for further research than possible with the questionnaire method. A case study method always throws up areas for further research in identified directions (Yin, 1984). By interacting with employees of different business units of the SIInternational (pseudonym) through informal and formal meetings it has been possible to gather first hand knowledge and impressions of the 'organizational practices' prevalent in the organization. A little over two months were spent in different locations of the organization to assess employees reactions to organizational settings and obtain first hand data. A total of ninety-one employees were interviewed across different levels and functions. The technique of template analysis (King, 1994) was used in collecting and analyzing data. Apart from obtaining preliminary information, detailed information was gathered during the course this study relating to: (i) organizational structure, (ii) management style, (iii) human resource practices and (iv) nonwork practices. (a) Organizatinal

Structure

During the course of interaction it emerged that the company maintains informal work culture of 'openness' and 'boundarylessness' which characterize the SI organisational structure. As informal work culture was found to have considerable impact on organizational effectiveness, it was attempted to obtain employee reactions on this score.

Open Office. The HO, RSO and plant have an open office

structure with open cubicles and glass partitions. Only the MD and directors occupy separate chambers. The HO does not have system of peons. Attempts were made to make people of different departments sit together for improving inter-departmental cODrdination. Name plates were avai lable at everybody's desk. An interesting pattern in the sitting arrangement was that everything was not visible. Observations of the open office seem to refiect a calm and comfortable atmosphere. An open office facilitates communication but according to some seniors, it affects privacy and time is wasted going to a conference room whenever two or more people may need to discuss some Management

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~ issue. A few employees observed that, 'we all sit in an open office but all of us would prefer personal chambers'. In open system employees become vulnerable to unwanted visits by their colleagues and staff walking in just to say 'hello.' Hierarchy and Decentralization. SI-India's hierarchical structure comprises 14 levels from a confirmed worker to the managing director (MD). Among foreign employees, MD and VP (Operations) are British expatriates. At plant the GM is overall in-charge at the plant. Out of the thirty five years of his long association with the company, he has spent over twenty five years at the plant. He is highly respected and Iike a father figure (baap) to the subordinates. Organizational structure is decentralized and all the decisions are not taken at the top. Employees are consulted who are not bound to follow the hierarchy. In other words, the line of authority is not rigid. According to one respondent, 'the company has a channel to follow but we are not bound to adhere to it.' According to a sales executive, 'people can directly interact with a person, share any agenda and solve any problem.' Seniors also delegate authority. Employees are fairly comfortable talking to seniors. A saks trainee at the RSO stated: 'Whenever I come to the office, I feel.good, because infrastructure is excellent: fast computers, working in teams, cooperative people, and freedom to do my work. Moreover, if I have a problem, I am free to discuss it with the area sales manager and, if necessary, with the regional sales manager. I have to follow the channel but I can go to any level.'

I I

Formalization. Formalization can be understood in terms of clarity of policies, preference for written communication and to what extent rules are followed. In SI-India, these policies are clearly laid down and written communication is preferred. There is, however, no rigidity about it and adjustments are often made. For instance, executives travel by economy class and top level managers travel by executive class. Most information such as, 'so-and-so will be on leave for two days' is shared through e-mails or company intranet. The overall impression drawn from the experiences of employees is that they have role clarity, and are clear about policies. Rules and regulations are clearly stated and are followed most of the time. Observations at the plant also brought out the fact that most pol icies were followed most of the times, but not always. Management

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Boundarylessness. SI has a mix of 'horizontal and vertical syste!Ds of functioning'. Instead of being segmented into the hierarchical departmental structure, the emphasis is on 'cross-functional communication through process thinking'. The HR Department facilitates the setting-up of crossfunctional teams and meetings for interdepartmental coordination. Boundarylessness, a distinctive feature at SI, is thus an important dimension of the organizatIonal structure in terms of facilitating interdepartmental coordination. Observations indicate that boundarylessness existed moderately at Sl, as people did feel that 'processes were not the only means to get the work done, and that personal relations did matter.' Furthermore, personalized relationships were seen to work at times to facilitate performance and, at times, to create aberrations in the otherwise highly normative work culture prevalent in the organization. For example, interdepartmental coordination is so streamlined that work gets done as a matter of routine, but there are still some who would rather call a colleague to get it expedited. 'It is better to know who is the right person to contact and request him to get it done.' Another respondent said, 'I have good public relations with other departments. Therefore, in my department, I am asked to get the work done from other departments.' An incident reflects the status of inter-departmental coordination. As a case-in-point, a manager in finance delayed the work of an HR manager,' because the HR manager was not cooperating in a matter of signing some papers. Only one respondent felt inter-departmental relations were not depen.dent on personal relationships, 'it is our tendency to feel that if I do not know anybody in a department, my work may get delayed or will not be attended to, so it is our mental block which says that having good personal relations in other departments is a necess ity.' Another respondent tried to explain why teamwork was not so effective at SI. He felt it had more to do with cultural hang-ups than the organizational culture. 'Indians might speak like collectivists but they behave individualistically', he said. (b) Management

Style

A der.lOcratic and participative style of management prevails at the SI. This was reflected at various levels. Employees feel a sense of freeManagement

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dom during work, as they can take certain decisions on their own. A senior sales officer said, 'I am the boss in my territory except for major decisions.' Decisions are based on discussions. Executives asserted that decisions were based on consensus and that, 'we do not have a one man show.' A GM was observed during his interaction with subordinates. He asked the junior whether he had 'gone through the papers'. The GM then gave a quick glance at papers and said, 'If it is okay by you send it'. The common pattern that emerged from the responses was they tried to find the reason behind their mistakes so that they did not repeat it. However, none was scared about it. The same style of GM was discernible down the line .. Supervisors spoke nicely to workers. Furthermore, permanent workers did not try to boss over casual workers. Most workers do not find any problems communicating with seniors. They mostly feel that the management is 'cooperative' and 'listens to our point of view'. A sense of trust prevails among various levels. Top Leadership. The MD, a Britisher, who had joined SI-India as a management trainee in 1963, was thereafter given a promotional tenure by the parent company and came back as MD in ] 97$. Director (HR & Adm.) head joined as Executive (Personnel) more than twenty two years ago. Similarly, the Director (Sales & Mktg.) has been working in the SI since 1972. Director (Legal) had joined as an Executive (Legal) in 1977. Directors are viewed as role models by the employees. The MD and VP (Operations) who are Britishers freely mix up with employees. Their style is to assign a task but they give full autonomy without any interference. VP (Operations) who is also a Britisher believes that Indians are as effective as people of other nationalities. MD freely mixes with employees and attends marriages in their families. He has a good sense of humour and is a great listener. He occasionally speaks in Hindi alsoUanam din mubaarak ho). Director (HR & Adm.) is widely admired for his humanitarian outlook and nurturing ways even as he coaches his subordinates. He is also very respectable executive who is known to interact with all in very humble and cordial manner. Director (HR & Adm.) is widely respected by all sections of employees. He is one of the most popular Directors. One manager when contacted expressed. 'Directof(HR) is really a Guru. He is very clear in his thoughts, has a good memory and possesses immense knowledge not only of his subject but also of other areas such as sports'. Management

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Awasthy and Gupta 103 Other Directors and GMs are also informal and easily accessible to their juniors~ though in varying degrees. A trainee narrated an experience with the Director (Sales & Mktg.): 'I was attending an qrea sales conference where all sales and marketing officers were present. A man walked up to me, put his hand on my shoulder, and asked how I was doing. I continued talking without realizing (I was told later) that he was the Director (Sales & Mktg). I was thrilled!' The researcher of this study had another experience with the Director (Sales & Mktg). He was in a meeting. He came out of the meeting, introduced himself, and said that he would be sending his assistant to escort the researcher to the conference room where he had granted an interview with her (researcher) at length.

Perceptions

about Indian Bosses. Most respondents' felt that the Indian Qosses needed to be managed. Just how SI executives handled their bosses (both Indian and British) was an issue found worth exploring. It was pointed out the senior managers staying at the company's guesthouse were sometime picked up on his way to work by his subordinate although the company vehicle was there to take him to the office. The most common themes that emerged from the discussion seemed to be typical of the relationship between Indian bosses and Indian subordinates. Employees impress the boss by words and actions and try to develop a personal relationship at the family level. Interaction with Indian managers was perceived to be a mix of good and bad feeling. It was observed that managers made unpleasant utterances occasionally, 'If you end up losing your job, it is your problem'. Such utterances were however more at the plant than at other locations. It was also a common observation that at ali locations Indian bosses were much more difficult to deal with as compared to the British expatriates. 11 was pointed out that Indian bosses' every now and then enquired from juniors why they had not been able to finish their job on time and how much more time they would need to complete it. (c) Human Resource Practices Human resource practices were generally tai lor made to suit local requirements keeping in mind the parent company's core values. One executive affirmed, 'The core values are operational and not just on paper.' In view of satisfactory HR practices, employees generally feel Management

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well looked after and cared. Director (HR & Adm.) conveyed to one of the HR executives, that he would like to 'provide a good work environment and a good living to the people at SI-India'. Employees are given interest free loans for a car, or white goods to help maintain th~~irstandard of living. There is a gym and a swimming pool on the eleventh floor in the tower, which houses the HO that can be shared by others in the building. Employees use these facilities to relax and relieve stress. There is also a dispensary and library for HR related topics. Workers as part of welfare measures are provided earplugs to stave off hearing problems in the event of excessive production noises. HR practices include corporate social responsibility (CSR) initiatives such as charity work in nearby villages, around the plant and in schools. Town beautification, animal health and family welfare, are also on the agenda. SI employees were by and large very appreciative' of welfare measures whose common comment was 'satisfying and good'. Recruitment. System of selection for promotion is both from outside and inviting applications from internal candidates. However, the latter practice is more common. According to the Director (HR & Adm.): 'We grow our own timber. We don't want to lose the key managers.' There are indeed people at all rungs who have been working in the SI for 2035 years. It may be the MD, the Directors, workers, or even a driver. No more than five to ten per cent of the employees are inducted externally at the middle or higher levels. SI-India follows policy of internal selection and cross-functional exposure. In case of vacancies, those interested may apply through their immediate boss. If an employee has necessary potential to take up particular task but lacks core competence initially, one is encouraged to move to a new work area. Information about them is passed on for further assessment and close scrutiny. External recruitment is made through campus selection as Management Trainees (MTs). The process for promoting from inside, or inducting laterally is procedurally the same. Apart from technical competence, candidates attitudes and their disposition to work in a team and acceptance of the SI culture are particularly assessed before their final selection. Training. HR Department organizes one year long in-company induction training for the MTs. On the very first day they are handed over visiting cards and th~~office entry card, which provides them with a sense of identity with the organization. They are also exposed to the company Management

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familiarization programme that covers corporate culture, core values, leadership expectations and company introduction. They are also sensitized. to their emotional intelligence, leadership styles, attitudes, and so on. Finally, they are rotated through various departments, factories, sales offices, packing offices, etc. to have first hand exposure to diverse organizational practices. Induction training is generally seen as an important management initiative. At the end of every fourth month, trainees share their training experiences. They are evaluated with regard to their learning objectives, strengths and weaknesses, and the further training inputs that they might need. At the end of the year, trainees are expected to make presentation before HODs and company Directors based on which they are offered permanent tenure at the SI India. There is an in-company training calendar every year from which managers can choose modules in which they are interested. Managers on an average' spend five days per year for undergoing training. Some are also sent abroad for training. Non-executives are generally imparted training in first areas such as first aid, good manufacturing practices, safety measures and environmental protection, etc. 'Mentor' and 'Buddy'. During induction training year each trainee is attached to a mentor and a buddy. The mentor is generally a senior person with at least five years of experience. He could be a Director, a GM, a regional sales officer, or a senior manager, but they should not be from the department where the trainee is likely to be placed. The success rate of the mentorship role is reported to be around 70 to 80 per cent. One of the respondents said that the mentor used to invite them over to his place. An executive shared her experience with an expatriate mentor: 'The mentor was able to relate easily to Indian values.' She told that when she was leaving for outstation training her father was transferred and her mother would have been alone in the city. Though she herself did not make specific request, her mentor (a Britisher) realizing the family compulsion approached the Director (HR & Adm.) for dispensing with her outstation training requirement and substitute it by the Delhi-based training. Besides a mentor, each trainee is attached to a 'buddy' who is marginally senior to the trainee with one to three years of experience. The buddy is a friend with whom the trainee can confine his thoughts, concerns, worries, hopes, and whatever else two friends may like to share.

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The success rate of this role was assessed to be anywhere between 80 to 90 per cent. An executive recalled, 'I used to visit my buddy's residence quite frequently. He really helped me to adjust to the culture of the company'. According to another respondent, 'The mentor-buddy relationship has brought about informal ness among different grades of employees.'

Target and Performance Orientation. Targets are fixed through mutual discussions between SI-UK and SI-India authorities, which are further split up for each department and individual. Job descriptions for all positions including the lowest level are duly coded. Managers need to draw an action plan and are given full autonomy to perform accordingly. They are accountable to the extent they are responsible to achieve their goals. They are not only accountable for meeting their individual targets, but also for adherence to the organizational core values. For the sales team, the annual target was split up into weekly targets. Sales managers met weekly to take stock of target-real ization and to explore if there was scope for improving sales further. Monthly targets are seen as 'creating pressure' on the sales people. Those who fail to reach the month ly target try to make it up next month so that the annual targets are realized. Despite such efforts, sales targets may not be met and the pressure on the sales offices remains intact. However, most of the employees do not feel the pressure on a daily basis. Some managers felt, 'SI is not a task or result oriented company. We are process driven. We have to give reasons for not achieving targets. Workers also feel that they are not pressurized to achieve targets.' According to one of the operators, 'SI follows soft and easy means to achieve targets.'

Performance

Appraisal System and Employee Promotions. Performance appraisals as in most organizations are made annually. The pro-

cedure is quite transparent. It involves both qualitative as well as quantitative criteria. Appraisahi are shared and discussed. Managers are appraised with refe:rence to the core values and the ratings are linked to compensation packages they receive. Employees were trained to undertake performance appraisal. Promotions are time bound. However, instances are not uncommon of quicker or slower promotions depending partly on performance and partly at the discretion of the seniors. One sales executive said, 'I am credited for my efforts through incentives, and appreciation which was missing in the previous company.' Management

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Not many employees expressed dissatisfaction with the appraisal process. One young executive observed, 'The discussion part was not very intense and the ratings were at the discretion of the seniors.' Appraisals and promotions, despite their procedural fairness, seem to be affected to a certain extent by personal equations. Employees at the same level, whether their workload is greater or smaller, are likely to go through a similar appraisal procedure. Several seniors often grant patronage to their loyal subordinates. Compensation. Casual workers are paid daily wages. Bonus is fixed for workers and the staff but is variable for managers depending on company performance. One executive commented, 'HR is doing a good job in terms of compensation but there is a scope for improvement in softer ~ssues.' The annual bonus up to 20 per cent of the basic salary-depending on the performance of the company and individual performance-was statutory for managers across the board, which was given on the eve of Deepavali. Issue of increment to workers is decided as a part of the settl,ement process every three years. Suggestion Scheme. Employees are encouraged to give suggestions and those ideas that are accepted are rewarded. Suggestions are sent to a suggestion committee, which evaluates and forwards the idea to the concerned department for evaluation and implementation. According to a suggestion made sugar pills should be used in the pantry instead of sugar cub~s, as this would help to save costs. The employee who made suggestion received a monetary reward and appreciation for the idea. Workers also actively participate in the suggestion scheme. Small rewards such as biscuits, pen, torch, etc are given for making valuable suggestions to all such employees. Open House. Employees raise common issues at an Open House. The platform is chaired by the GM (Plant) and attended by the staff and all the executives. It takes place once every three to four months. However, this platform is viewed only moderately effective. Mostly employees raise very elementary issues relating to physical infrastructure and avoid talking about complex issues. Canteen and Transport. Employees in general expressed satisfaction with regard to canteen and transport faci I ities. Whereas the food served at the HO was sumptuous, food at the plant was simple meeting only Management & Change. Volume 9, Number I (2005)

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dietary and nutritional needs. Expatriates eat Indian food with Indian employees, though they were seen more in the company of senior executives. Employee turnover rate is very low, but younger employees are more prone to leave early in their career. One employee, who had been serving for nineteen years with SI-India, revealed that when he joined he had thought that he would leave once he was offered another job, As years rolled by, his senJlors realized his worth and he was given further work matching his interest. Accordingly, later he dropped the idea of leaving and he is now a very satisfied employee in the organization. The reasons for his staying back with the organization were satisfactory work environment and salary. There were many employees who had joined at a junior level (as clerks) and gradually grew with the company and later worked as officers. Turnover among workman is hardly any in view of attractive compensation being paid. However, young employees were asked, 'Would you leave this job? and Why?' (As many employees have already been working with the company for the last 20-30 years this question was not put to them). It was found that young professionals are open to the idea of changing jobs. The reasons given were a better portfolio and work satisfaction. It was especially true for Research Office and Marketing Department employees. Overall Perception of HR. The overall impression seems to be mixed and skewed towards the positive side. One respondent assigned '75 marks out of 100 to different HR initiatives and its role in the company.' Another employee rated, 'HR as 2.5 on the scale of effectiveness ranging from 1 to 5.' The role of the HR was assessed to be very effective at the HO but not so impressive at other organization loc~tions. A deputy manager said, 'The HR section does not impose practices like calling everybody by their first name, on employees. That is left to an individual's discretion.' Another respondent felt that, 'HR does not have any major role in the set up.' A contradictory view was put forward by another colleague who said, 'It is not that there is no role of HR in the growth of employees. HRD may not be doing anything to innovate, but they are definitely following laid down processes.' Some employees, however, feel that there is discrimination in the treatment of managerial and staff cadres. For instance, staff is 'given a five per cent salary raise as compared to managers, who are given 10 per cent. However, for any grievances employees feel comfortable to go to the HR section. Management

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Some HR-related employees were however were not happy with their role. 'If an HR professional is asked to monitor the lights, cleaning operations or any simple administrative task, one would have a feeling of under-utilization. HR executives working for infrastructural services like logistics also viewed their state of affairs somewhat similarly. (d) Non-Work

Practices

Non-work practices refer to such activities which are expected to be performed by all, by virtue of being members of the same organization, and may not relate to their field of expertise. Non-work practices include participation in social events and recreational activities, etc. and issues like how to address each other, participation in recreational activities, etc. On a First Name Basis. The MD is addressed by his first name and being an expatriate likes to be addressed in this way. Most colleagues and subordinates are accordingly addressed by their first name. Some seniors are also addressed by their first name but only by their immediate subordinates. Many still feel comfortable using 'sir' for their seniors. One of the respondent said, 'It took me two or three years to adjust to this, I still feel odd addressing everybody by their first name'. At the Regional Sales Office and the Plant seniors are routinely called 'sir'. A manager shared the following experience: 'A few years back it was decided at a workshop in the US to. address each other QYthe first name. It was desired to build informal relationships to facilitate teamwork, sharing information, decision-making, and so on. As soon as the participants came back here, their genior manager said that it was all right to call each other by the first name in the workshop. As they were back again on the routine this was not an issue anymore. There was no such requirement any more.' A junior manager concedes: 'I still feel awkward addressing my seniors by their first name. They are my father's age.' This practice is not followed at the plant because it is realized that workers would not respect seniors if they addressed them by the first name. The researcher was told that this practice was more common within the managerial cadre. It was told that staff level employees are not encouraged and even scolded if they followed this practice. A senior level executive made an interesting observation, 'Imagine a new youngster addressing a top executive, say, MD by his first name!' Another similar comment, which reflects our cultural hang ups, was Management

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(

made by a deputy manager who said, 'How can a peon be expected to address the MD by his first name?' At the SI-India, therefore, calling each other by the first name is by design and not something done with spontaneity. Dress Code. Executives at the head office and sales offices are expected to wear a tie. Overall, it may be said that non-work practices are not imposed upon on the executives. The MD was overheard saying, 'If you do not feel like wearing a tie don't wear one. It would be better if you wore it only for meetings.' Workers get free uniforms (four sets for two years). Fridays are considered 'casual outfit' days. It was observed that on Friday most employees come to office casually dressed, but not in jeans, sports shoes or Tshirts without a collar. However, sales executives, who remain in the field most of the time, need not follow such codes. It was nailed that at the plant that employees were not so particular about wearing a tie and formal outfits. Tea/Coffee Self-service. Everybody was expected to serve tea/coffee oneself (except the VPs had facility of tea and coffee served to them) and clean their mugs themselves. Most executives drank coffee/tea at their workstation. Many served themselves, however, the researcher noted one manager's preference to have tea served at his workplace. At the RO and plal!1t,peons anyway served tea/coffee. Managers cleaned their own glasses or coffee cups before leaving in the evening. Birthday Celebrations. Birthdays were celebrated at 5 p.m. and the company paid for buying the cake. No such facility existed for workers. This seemed to be a wise policy as most workers were from a rural background and would not be able to appreciate such initiatives. The basic idea behind birthday celebrations is to spend some time together. According to many, it was a ritual that hardly excited employees. One of the executives said, 'Birthdays are not celebrated in high spirits.' It was found that a few departments did not celebrate birthdays. It was also noted that the celebrations were deferred until HOD was available. In one of the departments only a greeting card is given duly signed by all members. An executive said, 'We do not celebrate birthdays at all.' Get-togethers and the Annual Picnic. Sometimes a cricket match is organized between the HO and the plant for the employees. In the get together the atmosphere is perceived as being very friendly and casual. Management

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Awasthy and Gupta 111 According to one of the respondents, 'Seniors are casual at such parties and don't discuss business'. At the plant, facilities for outdoor games are available to staff and managers and their families. Employees' families are invited for a party on the annual day, to make them realize that they are part of the SI-India family or that 'SIIndia is an extension of their family', as put by an HR executive. Expatriates are perceived as being more participative on such occasions. The plant celebrates local festivals. This validates that SI-International does respect local realities and modifies practices for their sake. Other Informal Interactions. Most respondents revealed that managers visit each other socially. However, this interaction is .restricted to people of the same level. At the plant, juniors visit seniors at their residence and exchange views and preferences about personal as well as organizational matters. Workers still maintain the t~aditional type of relationship. A few touch their senior managers' feet and seek guidance in personal and family matters. At times managers use workers for personal errands too. There is a tradition of helping each other in exigencies. In one instance workers donated blood for the daughter of one of the managers. One of the respondents, during an informal interaction with the researcher threw light on a very significant dimension of the use of the 'language at the workplace': 'Once I leave the office premises I would like to speak in Hindi. I get tired of speaking English'. It was observed that while people mostly used English, in informal interactions they were observed speaking in their mother tongue, such as Bengali or some other. As one manager put it, 'Hindi is so rich that it is difficult to find an appropriate translation in English.'

ANALYSIS

AND RESULTS

In this paper it has been attempted to study and analyze nature of organizational practices in an Anglo-American subsidiary operating in [ndia. This organization had been unique in the sense that production processes were handled in technologically efficient ways while human resources managed in 'glocal' ways. While contextual realities were taken into account but at the same time organizational values were never ignored at any stage. It is worth considering this SI-India case as a model example of managing operations of its Indian subsidiruy with a 'glocal' approach. Management

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the major

limitation

of the present

study is that it sought

to cover many aspects in a single study. It thus needed to be substantiated with further qualitative and quantitative analysis. This case study is based on descriptive narrations made by employees. It may thus suffer from some inaccuracies and lack of comprehensive cov~rage. There is thus clear scope for studying some related aspects further. For instance, there is a need to analyze impact of formal and non-formal practices on commitment level of employees. The major inferences drawn from this study could be summed

up as follows:

Cross-cultural management through 'glocal' approach. Being a fully owned subsidiary, all strategic decision-making is done by the parent company only. Practically, all major directions such as target setting, targets, quality, budgets, etc., are made by the parent company. However, it is one of the policies of the parent company to incorporate country specific

imperatives

while taking major decisions.

uniform for SIs allover the world. The parent company does not interfere

Reporting

systems are

in the day.-to-day

local op-

erations or issues. However, 51-India keeps the parent company duly informed. They also share information related to the RO and successful marketing or sales strategies. However, the employees of its Research Office in India feel that there is scope of improving coordination. Purchasing and marketing are moderately influenced and human resources, although guided by the corporate culture of the parent company, is entirely managed by the HR department at 51-India. The parent company regularly helps to modernize the plant and machinery and add production lines. It provides continuous RO support to improve products and servIces. A number of systems and procedures have been transplanted from the parent company, including cross-functional communication through process thinking (as discussed in the section on boundarylessness) and qual ity control. HR department contributed significantly in managing company operations in 'glocal' way. Parent company's core values are always respected and taken care, while on softer issues practices are not imposed, such as calling by first name. HR department is fully seized of quality-of-life concerns of the employees for which the company employees were fully

aware.

Ii I

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Interaction with Expatriates. Understanding

employees perceptions regarding interfacing with British expatriates formed an important objective of this study. Views of respondents were thus specifically sought in this regard. Expatriates were assessed to be more professional in their approach. Their style, according to a Director, 'is to let you do things yourself with lots of freedom and have no ego hassles.' It was revealed the Britishers did not encourage working beyond normal working hours, who always emphasized that work should be completed within the office hours only. They stick to their commitments. Whereas foreigners may not harbour any superiority complex but others may surely carry some inferiority complex. . Expressing their perceptions about senior British colleagues, another director said it was, 'quite easy to work with them. They are more focused. I have a good personal relationship with them and experience a personal touch.' He expressed that Indian bosses would never show as much concern as their British counterpart. He observed, 'Indian bosses believe in maintaining strict protocol.' According to one Director, 'The expatriates have brought lateral thinking into the company and they also tend to learn from us. They openly share their own weaknesses.' An older executive added, 'One beautiful thing about expatriates is that they are clear in their thinking, honest and accept when they. do not know something.' Workers greet expatriates and accord them heroic welcome. Expatriates are perceived as keeping an edge over others. One executive shared an incidence that when a team of Britishers visited their plant; workers and other villagers looked upon them as 'film actors'. tried to shake hands with them; and even the police help was sought to regulate the crowd. However, the expatriates are seen as being fussy about cleanliness, at times appearing as somewhat unreasonable. More or less, Indian employees carry a positive image of the British expatriates and perceive them to be better than others. For analyzing the relationship in depth, the executives were asked to share experiences about tbe parent company. SIIndia, like other SI subsidiaries worldwide, has verticill linkages with the parent company. Overall experience was found nice and comfortable. Parent company was seen open to share information, and Indian employees were found highly appreciative of their interface with British expatriates. Management

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Information Sharing. Employee experiences are shared globally through national e-SI newsletter. All relevant information about SI companies at different locations in the world is available online through the global eSI newsletter of the parent company. Any SI personnel can log in, read and download any related information about their respective SI unit. The Indian distribution system is taught in China, Singapore, Middle East, UK, and USA. An Indian manager was sent to the UK for sharing the 'best practices' at the plant with managers from other countries. Similarly, when an advertisement of a company product proved successful in Germany, it was shared with all SI country units through e-newsletter of the parent company. Executives in SI units visit their parent company in UK from time to time for their business related activities. Organizational Commitment. Most employees consider SI-India as 'a nice place to work in', an organization which views its human resources as its most important asset, employees duly cared and look after, a professional approach followed in employees 'higher and fire' policy; and congenial, informal and open work environment. In general, employees' loyalty toward this organization is considerably high barring few young executives who consider the present job as a stepping stone toward better job opportunities. The top-level executives appear to have won the trust of most, if not of all. The MD is respected but also seen as an employee of the company and not its owner. Overall, there's not much deviation from the parent company culture. Top executives, especially the MD and Director (HR & Adm.), were perceived as top executives concerned with the development and welfare of the emp(oyees. However, there was also small population of employees who felt that all is not 'impartial and fair' in employee promotions but such instances of dissatisfaction were very limited. Despite such positive feelings, 'association with the organization' is largely based on the tangible and intangible benefits of working therein. One employee said, 'if you ask me, I just remember the pay cheque that I get every momh.' However, another executive revealed that 'I was offered double the salary but I refused to leave the SI.' Another executive said, 'I joined the SI for the money but later realized that the job portfolio was indeed good. My expectations at joining the SI were pay and culture, which were fulfilled.'

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According to a deputy manager working for the last six years, 'SI is like a lala-company as we take money in advance from the purchasers, but (unlike a lala company) the SI spends significantly in developing people and technology.' As per one respondent, 'If I feel like changing my job I would first try (sticking) at the SI, then anywhere else.' One possible reason for low employee turnover rate was that in comparison to other companies the SI maintained comparative edge. An HR executive shared that some former employees would like return to the SI as vis-a-vis their present organization they felt they were at loss. However, younger employees were not averse for job switch. One of such employees commented: 'Gone are the days when people were wedded to the organization permanently.' According to the HR Department all employees cannot be kept fully satisfied. Some younger employees go with the notion that if they stick with one company their market value may go down. Furthermore, some young managers also feel that their services are not fully utilized and they may be shifted to shoulder administrative responsibilities. Employees, by and large, were loyal and committed to the company. Most employees displayed a sense of ownership towards the company in meeting the organizational goals as well as meeting their own individual aspirations. Trust and harmony of top management characterized their attitude towards employees. For managing foreign subsidiaries a combination of global and local approach 'glocal' seemingly emerged as most appropriate way. HR Departments should view employees as 'internal customer' and serve them with sincerity and humility. Local employees should be served in a manner that they don't feel out-of-fit. This would help to secure employees unconditional commitment towards organizational goals. Everything, however, depends 01) organizational culture for whose building top management has an important role. CONCLUDING

REMARKS

One of the limitations of the present study is that it has sought to cover many issues in a single endeavour. To alleviate this problem it thus needs to be substantiated with further qualitative and quantitative analysis. The case study is based on descriptive information provided by employees. It may thus suffer from accuracy at some places and lack of complete Management

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coverage. Considering that no claim for comprehensive coverage is made, there is, among others, scope for analyzing impact of ~8rmal and nonformal practices on commitment level of employees. It has been attempted to study the nature of the organizational practices in an Anglo-American subsidiary operating in India. The organization was also unique in the sense that product processes were handled in technologically efficient 'global' ways while human resources were managed in 'glocal' ways. While contextual realities are: taken into account but at the same time organizational values are also upheld. It is worth considering the SI-India case as a model for managing local operations of a subsidiary in India in a 'glocal' way i.e. local plus global outlook, which is the main thrust of the cross-cultural management strategy recommended vide this study.

REFERENCES Bartlett, C. and S. Ghoshal, (1997) Transnational Management: Text. Cases, and Readings. In "Cross-Border Management (2nd ed.). Boston: Irwin." Blumenthal, J. F. (1988) "Strategic and Organizational Condition for Joint Venture Formation and Success." Ph.D. Dissertation., University of Southern California, CA. Cassell, C and G. Symon, (1994) Qualitative Methods in Organizational Research. London: Sage Publications. Chatterjee, Bhaskar (1990) Japanese Management: Maruti and Indian Experience. New Delhi: Sterling Publication Pvt. Ltd. Child, J; Y. Van, and Y. Lu, (1997) Ownership and Control in Sino-foreign Joint Ventures, in "Beamish, P. W. and Killing, J. P. (eds.) Cooperative Strategies: Asian Pacific perspectives. San Francisco, CA: The new Lexington Press," 181-225. Ghoshal, S., and C. Bartlett, (1988) "Creation, Adoption, and Diffusion of Innovations by Subsidiaries of Multinational Corporations," Journal of International Business Studies, 19: 365-388. Gupta, Rajen (1994) "Challenges in Developing Indigenous Theories of Organization and Management," Indian Journal of Social Work. LV (2): 220-236. Herbert, L. (1994) "Division of Control, Relationship Dynamic and Joint Venture Performance." Ph.D. Dissertation, University of WestManagement

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ern Ontario. Hill, R. C. and D. Hellriegel, (1994) "Critical Contingencies in Joint Venture Management." Organiza.tion Science, 5 (4): 594-607. Hofstede, G. (1991) International Differences in Work-related Values. New York,: Sage Publications. Kedia, B., and R. Bhagat, (1988) "Cultural Constraints on Transfer of Technology Across Nations: Implications for Research in International and Comparative Management," Academy of Management Review, 13: 559-571. King, N. (1994) The Qualitative Research Interview. In "c. Cassell and G. Symon (eds.) Qualitative Methods in Organizational Research: A Practical Guide. London: Sage." Kogut, B. (1991) "Country Capabilities and the Permeabil ity of Borders," Strategic Management Journal 12: 33-47. Kostova, T. (1999) "Transnational Transfer of Organizational Practices: A Contextual Perspective." Academy of Management Review, 24: 308-324. Loveridge, D. (1990) Footfalls of the Future the Emergence of Strategic Frames and Formule. In "R. Loveridge and M. Pitt (eds.) The Strategic Management of Technological Innovation. Ch ichester: Wiley," 95-126. Mabey, C. and G.R. Mallory, (1995) "Structure and Culture Change in Two UK Organizations: A Comparison of Assumptions, Approaches and Outcomes," Human Resource Management Journal, 5(2): 28-45. March, J. and H. Simon (1958) Organizations. New York: Wiley. Markus, H. and R.B. Zajonc, (1985) The Cognitive Perspective in Social Psychology. In "G. Lindzey and E. Aronson (eds.), Handbook of Social Psychology (3rd ed.), New York: Random House," 137-230. Maurice, M. (1979) For the Study of the Societal Effect: University and Specificity in Organization Research. In "C.J. Lammers and OJ. Hickson (eds.), Organization Alike and Unlike. London: Tavistock," 42-60. Mjoen, H. and S. Tallman, (1997) "Control and Performance in International Joint Ventures," Organization Science, 8 (3): 252-74. Mohanty, A. K.; P.K. Sahu, and S.c. Pati, (1993) "Transfer of Technology: A Study of Experiences of Maruti Udyog Ltd. in India," Indian Journal of Public Enterprise, "8 (15): 6-15. Muller, F. (1992) "Flexible Working Practices in Engine Plants: Evidence Management

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from the European Automobile Industry," Industrial Relations Journal, 23 (3) : 191-204. Nelson, Rand S. Winter, (1982) An Evolutionary Theory of Economic Change. Cambridge, MA: Harvard University Press. Schaan, J. L. (1983) Parent Control and Joint Venture Success: The Case of Mexico. Ph.D Dissertatiol1, Nova University. Scott, R. (1995) Institutions and Organizations. Thousand Oaks, CA: Sage. Sinha, D. and H.S.R. Kao, (1988) Introduction: Value Development Congruence. In "D. Sinha & H.S.R. Kao (eds.), Social Values and Development: Asian Perspective. New Delhi: Sage." Streeck, W. (1985) Industrial Relations and Technical Change in the British, Italian and German Automobile Industry. 11M Working Paper. Berl in: Wissenschaftszentru m. Szulanski, G. (1996) "Exploring Internal Stickiness: Impediments to the Transfer of Best Practice within the Firm", Strategic Management Journal, 17 (winter special issue): 27-43. Tillman, A. U. (1990) "The Influence of Control and Contlict on Performance of Japanese -Thai Joint Ventures." Ph.D dissertation, Nova University. Winter, S. (1990) Survival, Selection, and Inheritance in Evolutionary Theories of Organization. In "J. V. Singh (ed.) Organizational Evolution: New Directions. Newbury Park, CA: Sage," 269-297. Venkataramani, R. (1990) Japan Enters Indian Industry. New Delhi: Radiant Publishers. Yin, R. (1984) Case Study Research: Design and Methods (1st ed.). Beverly Hills, CA: Sage Publishing. Zander, U and B. Kogut, (1995) "Knowledge and the Speed of the Transfer and Limitation of Organizational Capabilities: An Empirical Test," Organization Science, 6: 76-92.

Management

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BOOK REVIEWS

Jagmohan, Soul and Structure of Governance in India. New Delhi: Allied Publishers, 2005. xvi+516 pp. Rs. 475 hardbound. Jagmohan's book forced me to go back to Plato's Republic - a classic which influenced our ideas on governance during the last two millennia. We may r~call that in Republic, Plato tried to show that paliicular types of society would produce particular types of individuals and also showed the linkages between a good society and a good individual. A still more important question, in the context of to day's India on which Jagmohan has focuse~i his spotlight, is why should anyone should be just whenjust tends to lose out to the unjust? Though Republic is not among the many works cited in Jagmohan's erudite and impassioned book, clearly he is raising similar questions in India's current context. The central theme of the Book, as infact the name itself suggests, is that India's current crisis is more moral than economic, that we must retrieve the ancient 'Soul ofIndia', if we have to get out of the present rut. A slightly long quote may give the reader the flavour. "Soon after the attainment ofIndependence on August 15, 1947, the top leadership should have engaged itself ~ith the problems emanating from the poverty of the soul of India and the pollution that had seeped into it during the period of its decline and degeneration. It should have realized that even the goals of material advancement that were being sought through scientific knowledge, technical skill and economic planning could not be attained without simultaneously making an earnest attempt to free her' soul'; that the constitutional morality was as much needed as the sound provisions of the Constitution; that the architects and engineers of soul had to be engaged along with the architects and engineers of modern institutions; and that new temples of ' economic development' required, besides the skill and scientific technique, clean hands and pure hemis." Jagmohan's thesis is that there has been fai lure on the part of the pol itical leadership but also, possibly more so, on the part of 'we-the people.' "It is we at least a substantial number of us - who have to first acquire pure and sympathetic he3lis, powerful and profound minds and enabling soul. Only then the nation would be able to find the right kind of persons and provide Management & Change, Volume 9. Number 1 (2005) ~ 2005 Institute for Intcgrated Lcarning in Managcment.

All Rights

Reserved.

120 Book Reviews

them with the right kind of motivation to take state institutions in the right direction and run them honestly, fairly and firmly". He obviously thinks, possibly rightly, that he is one of such persons (remember Plato's class of guardians). He gave the example of what he could achieve with the upgradation of uti Iities and faci Iities for the famous Vaishna Devi Shr:ine, when he was presiding over Kashmir under Governor's rule. Hrs achievements were no doubt stupendous; what is not clear whether such instances can be multiplied so much as to get the entire nation out of the quagmire. Drawing upon his considerable experience as a civil servant as well as a Minister in the Central government, he has developed an agenda for action which attemptto blend practical hard-nosed reforms with fundamental ethical behaviour. He believes, if the agenda are followed, India which is now a 'peculiar case of a soft and permissive state with stern and stringent laws', can be transformed into an 'ethical state' with an 'ethical governance machinery. , I have a nagging suspicion that like Plato's Republic, which is more debated than practised, Jagmohan's book might have a similar fate, but even that is not a small reward. B.BhattacharyJa, Distinguished Professor and Director, Graduate School of Management, Institute for Integrated Learning in Management, Lodhi Institutional Area, New Delhi 110003.

Sanghi, Seema, The Handbbok of Competency Mapping: Understanding, Designing and Implementing Competency Models in Organizations. New Delhi: Response Books (A division of Sage Publications), 2004. xix+142 pp. Rs. 240 paperback. The subject of 'competency mapping' has acquired growing significance as a performance management tool within overall larger framework of human resource management. Many organizations in public and private sector have competency-based human resource system, but basic fran",ework to 'develop' and 'map' competency is generally missing in most enterprises. The book aims to bridge this gap by providing a valuable source book to help managers design and implement an appropriate competency framework, which is govern~d by several dynamic issues that an organization faces. It Management

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also attempts to enlist and analyze a number of such issues that affect competency frameworks. The book focuses on how to 'develop' and 'map' competencies and design 'competency models' which may help t6 achieve performance improvement at workplace. It also aims to educate reader with various competency models developed by researchers that facilitate decision-making particularly in respect of 'management of change'. A competency model is essentially a set of competencies identified by the organization on demand side vis-a-vis certain available performance norms on supply side, and then assessing actually where one stands. Such model enables employees to know where they figure vis-a-vis particular competency and identify course correction needed to improve their proficiency on that particular competency. Thus, competency models can be appropriate in employee selection (matching competencies of individuals with those required for a job), training and developmet'lt (identifying competencies that need to be improved upon through training and development), and performance appraisal (identifying attainment of proficiency levels vis-a:vis specified competency). The book is divided into a total of seven chapters. Chapter I deals with whole gamut of competency related issues such as competence, competency, competencies, and competitive advantage. According to the author, whereas 'competence' refers to skill and the standard of performance reached with one's continuous efforts at the workplace, 'competency' refers to the employee behaviour through which it is achieved. Competence is a skill set which goes fairly deep into one's personality that affects one's performance in a wide variety of situations and job tasks. Competence can also be viewed as state of being competent. The individual can be considered 'competent' when one can deliver desired standards of performance. Competencies, which are plural of competence, thus become traits of an employee, which one acquires during the course of one's career, that determine one's performance standards. Competencies are components of a job which can be discerned in the employee's behaviour in terms of knowledge, skills and abilities (KSAs) that affect his performance. An individual with more competencies is likely to perfonn better. One can achieve desired standards of performance only when one develops requisite competencies. Competencies are, however, no guarantee that one will necessarily achieve desired standards of performance. Performance at workplace Management

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122 Book Reviews depends on many other factors as well including will to perform and deliver. However, lack of competencies in an individual can be made up by training and extra effort. 'Competency measurement' and 'performance measurement' are two different areas though they affect one another. Performance is !the outcome of actual effort put in regardless of strategy and competencies employed. Chapter 2 is devoted to developing

'competency

models'.

Competency

models are useful aids in several areas including strategic management, employee selection, performance appraisal, training and development and succession planning. Competency models may prove helpful in aligning individual performance with organizational goals. Chapter 3 deals with issues related to developing competency models. Chapter 4 presents a competencybased appl ication invo Ivi ng 'competence aud it' and' 360-degree feedback'; and summarizes benefits of competency-based employee selection, performance appraisal, training and development, and succession planning systems through such application. Chapter 5 deals with setting-up a competency framework that, among others, reviews sources of competency information such as 'position', 'process' and 'HRD' documentation. Chapter 6 deals with issues pertaining to 'competency mapping' and 'assessment centers'. Finally, Chapter 7 deals with strategies fix implementing a competency model by identifying reasons for resistance put up by some as it is in conflict with traditional 'mindsets' and comes out with remedial measures to overcome mental 'roadblocks'. However, in real world situations the technique has not made any discernible impact despite its potential. One limitation could be that the 'competency models' are generally impractical to validate. Data needs to be collected and tested to ensure whether the competencies identified actually distinguished the superior performers from the rest. However, if val idation is to be done in real life each time it is used, it tends to make the technique cumbersome. However, for some specific applications such as selection, training and development, and performance appraisal of ,say, CEOs, Directors, Executive Directors, etc., who constitute small population, and who matter a lot to the organization, 'competency models' may prove particularly beneficial and practical, where validation may al!'io not pose practical difficulties. Nevertheless, it is beneficial to develop 'competency frameworks' and 'competency models' and creatively use them in organizations wherever they can be gainfully utilized. The author needs to be complimented for Management

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Book Reviews writing a very 'authoritative'

and 'excellent'

123

book on such an appropriate

topic which seeks to minimize subjectivity on many fronts in HRM including employee selectionfIJerfonnance appraisal, training and development, and succession planning. Selection and cQverage of topics in the book can be rightly assessed as 'necessary and sufficient', a phrase often used in proving mathematical theorems. The author who is Director of one of the lead ing management institutes in the country should feel enthused to write more of such books in future.

KM.Mital, Learning

Professor of Strategic Management, Institute for Integrated in Management, Lodhi Institutional Area, New Delhi 110003.

Ram Naresh Roy, Operations Management: A Modern Approach. New Delhi: New Age International (P) Limited, 2005. xiv+330 pp. Rs. 150 paperback. Operations Management is a highly challenging and an interesting area in management. It has impact on the manufacturing, services and productivity aspects of an organization which translates into volumes and qual ity of the output, be it product or service. In today's context this area is throwing open huge career opportunities in the market. The subject draws inputs from other fields such as accounting, industrial engineering, management, statistics and operations research. The book basically covers most of the sections which are covered in an introductory course on Operations Management except for 'Maintenance and Reliability'. It has to a satisfactory level drawn concepts and techniques from the various disciplines mentioned earlier on. The chapters have been well organ ized starting from, 'Introduction to Operations Management', proceeding on to 'Location' and' Layout', and then on to the operational dimensions in terms 'Purchasing', 'Operational Planning and Control', 'Inventory Control', 'MRP', 'Quality' and so on. Though the individual chapters are not very detailed in nature, nonetheless the coverage in terms of a mix of qualitative/quantitative content in each of them exposes the reader to the basic concepts/issues to a reasonably acceptable degree. The author states in the 'Preface' of the book, on the various books available on the subject in the market as follows "The books available are mostly written with Western world perspective. The examples included in Managcmcnt

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those books are not very relevant to the students of developing countries". In this context there appears nothing special in the book that makes it more relevant to the students in the developing countries, say, India. Rather the coverage in the book pertains to basic. concepts, tools and techniques, etc. on the subject which have no country bias and to that extent the author's statement appears out of place. The least that could have been done to make the book mqre oriented towarcjs students in the developing countries is to introduce under various top its exhibits from organizations from developing countries and highlighting on how the various tools and techniques are being put into application therein. The various theoretical concepts espoused on the subject can be better assimilated by students by exposing them to situational contexts by way of problems and their solutions. Though the book contains some problems worked out in all most all the chapters, more 'solved problems' along with 'exercises' with answers given in the end, and 'objective questions' in each chapter would have added more value to the book by way of its enhanced uti lity to the students. Inspite of the above suggested improvements, the book c~n still be referred by students on the subject. As the individual chapters are fairly brief i.n their coverage, the students will find the book easy to read and assimilate. V. R. Murali Mohan, Professor, Operations and Strategy Area, Institute for Integrated Leaming in Management, Lodhi Institutional Area, New Delhi 110003.

Arya Bhushan and Madan Mohan Agarwal, Indian Railway Safety: Ultimate Goal to Prevent Railway Accidents. Delhi: Prabha & Co, C157, Anand Vihar, Delhi 1100092, 2005. 20Spp. Rs. 495 paperback and Rs. 750 hardbound. The book is aimed for railwaymen, engineering professionals, safety managers, the media, and public at large who may be interested for safety in the Indian Railways. This comprehensive book, which includes a total of seventeen chapters, deals with practically all aspects of railway safety, and written in a very clear and precise language which is reader friendly (over 100 sketches and photographs). Management

& Change,

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I (2005)

Book Reviews 125 The book makes a detailed survey of causes that lead to accidents such as collisions, derailments, level crossing mishaps, train fires, roof travel causalities, and floods and breaches that damage the railway track. The book appropriately comes out with a lengthy list of remedial and corrective measures that need to be religiously pursued for minimizing accidents. Reasons of accidents are categorized and explained with the help of case examples and lessons drawn to minimize their recurrences in future. For example, derailment that constitutes about 60 per cent of all rail accidents is adequately covered with reasons tracked down to defects in tracks and rolling stock, which are appropriately discussed along with other factors. A full chapter provides details of various accidents occurring on account of adverse law and order situation and public transport required to improve the railway safety. A separate chapter deals with training and development of railway staff whose work impacts railway safety, as human failure is responsible for almost two-third of the accidents. Apart from human resource development, the book includes sufficient coverage of accident prevention devices such as Anti-Collision Device (ACD), Automatic Warning Device (AWD), Train Protection and Warning System (TPWS), and a host of other measures, along with related guidelines. It adequately covers the role of the Commission of Railway Safety in regulating and enforcing safety norms in Indian Railways. It also includes a number of safety related recommendations of the Parliamentary Standing Committee, including one very important one, that is, the Commission of Railway Safety should be made an autonomous body to enable it to function as a public watchdog on railway safety. It also discusses how railway enquiries should be conducted in professional and impartial manner in respect ofrailway accidents following their occurrence. The book discusses at length several global standards ofrailway safety, with case examples and lessons drawn from accidents that occurred in USA, Canada and elsewhere in the world. It also includes relevant statistics of railway accidents that took place not only in India but also in other parts of the world along with their detailed facts and figures. The book is written by two very distinguished authors who have worked from beginning till end of their careers in the service of Indian Railways. The first author (Mr. Arya Bhushan) had a long stint of seventeen years in the Commission of Railway Safety out of his thirty four years of service in the Indian Railways, who finally served as the Chief Commissioner of Railway Safety. The book's co-author (Mr. M. M. Agarwal) worked for Management

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126 Book Reviews three years in Indian Railways by serving in different capaciities including Chief Engineer (Northern Railway), Director (lRWO) and Executive Director (lPWE). In keeping with their distinguished background and experience the authors have come out with an authoritative book as expected on a subject matter around which a larger part of their career was involved. Whereas railway safety norms and instructions can be found in several safety manuals but also what the book attempts to achieve is much more. It aims to bring awareness in people's mind about the serious issues of railway safety, knowledge of new technological innovations for railway safety that need to be urgen~ly introduced, lessons from the major accidents that occurred in India and other countries, and comes out with resulting corrective measures that need to be introduced and popularized. The authors deserve to be complimented for writing a very authoritative book that meets all such goals in full measure. The book however could have also discussed financial implications of introducing and maintaining safety norms proposed including track renewal and maintenanc(: of scores of old bridges of the Indian Railways. Discussion and more facts and figures on outlays on safety measures versus resulting accident minimization, which are positively correlated, could have made the case for more government spending on railway safety, at whatever level it exists at present, but perhaps such discussion on financial and budgetary issues was beyond the scope of this book. Indeed, the authors have succeeded in writing a very good book on a topic which is of great relevance to general public, for which earlier attempts by authors of such distinguished and noted background have been hardly any. This apmt such books should inspire host of professionals in other fields, who may be endowed with similar rich experience and background, to pen down their own experiences and expertise of their professional career, that could go a long way towards Knowledge Management, a newly emerging subject which is fundamentally important for documenting endless knowledge in this world. K. M. Mital, Professor of Strategic Management, Institute for Integrated Learning in Management, Lodhi Institutional Area, New Delhi 110003.

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Walliman, Nicholas, Your Research Project. New Delhi. Vistaar Publications (A division of Sage India), 2005. xiii+450pp. Rs. 560 paperback. The book presumes

that the reader does not have any prior knowledge

research methodology or experience of carrying out research. The book begins with fundamentals which may be of considerable value to novice researchers, starting or planning to do research for the first time in any field or discipline. The book intends to help them in conceptual izing, crystall izing their research idea and writing a successful research proposal. Written in lucid, plain language, it speaks to the reader one-to-one and takes the reader step-by-step through each stage of preparing for, carrying out and writing up a research proposal. The book begins by clarifying the meaning of research, blowing the misconception that one may have due to the way the word 'research' is used in common language - casually and emotively - and explaining the essential elements and requirements of a 'real' and scientific research. It provides a foundation for different types of researches and briefs on the alternative research approaches. It guides the readers how to search for a research idea or topic, shows the way to explore the information from various sources in order to crystallize the research idea or broad research topic into a specific research problem and in the course conduct a literature review efficiently. Research proposal is an instrument for' sponsor of the research' to evaluate the proposed research so much so it is also a roadmap, a guide, that researcher prepares for himself to execute his research work. The book presents a digest of research methods that a researcher can choose from and plan for his proposed research work. An account of honesty and ethical issues presents dos and don'ts for a good research practice. The book ends with a useful guide on writing the research proposal and leaves the reader with a checklist of items that needs to be addressed that wi II lead to acceptance of the research proposal. The book by Nicholas stands out not only in its step-by-step approach, lucid and easy to follow writing style, but also in its format and structure. Important learning points organized into box inserts, exercises along with suggested answers and sample proposals that appear in all the chapters and the 'checklist of activities that help progress the research' at the end of each chapter builds the bridge between learning and insights that is presented and the activities that the researcher might be making at the corresponding Management

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step of proposal writing. Each of the small paragraphs in bold font aptly titled 'Thought' help smooth transition from one point of discussion to the next in a chapter and also sets up context, suggests tips or further readings or opens door for some more thinking. Another useful idea used by writer is to provide his comments on what the reader should specifically look for or expect from each article or book that appear in the 'further reading' list at the end of a chapter. All in all, one can hardly find a better format for a book of this kind. A first-time researcher would find the book helpful in removing the clutter and confusion in formulating the research problem(s) and objectives, resolving the quandary over electing or proposing a research plan and 'what next' and 'how to progress' mind-blocks and hurdles in the exercise of preparing his or her research proposal. If recommended by supervisors or guides to their research students or to their postgraduate students required to do a research project as part of their curricula, it will help them focus more on guiding the students on subject or discipline specific issues by saving some effort and time on generic and basic issues of preparing research proposal. Sachchidanand Kama, Learning in Management,

Assistant Professor, Institute for Integrated Lodhi Institutional Area, New Delhi 1.10003.

Singh, Avtar Negotiable Instruments, (Fourth Edition), Lucknow: Eastern Book Company, 2005. Lxviii+523 pp. Rs. 525 hardbound.

It appears from the study of history that around the early part of the fourteenth century during the Mohammedan rule of Delhi, instrument to exchange were already in use. With the advent of the British rule in this country ,the commercial activity grew considerably, so much so, that the increased demand for money that took place could not be fully met by the supply of coins alone. This lead to the growth of instrument of credit as a means to represent the money involved in the transactions. As there was no law of the land to cover such money transactions using an instrument of cred it, except for the customs and practice in vogue at that point of time which had their own local variations, the British prevailed upon the negotiable instruments act in use in England then for its in principle application in the Indian commercial context as well. Subsequently, over a course of time the British enacted the Negotiable Instruments Act, 1881 which had its jurisprudence over the entire Management

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country. All business laws applicable in India relating to promissory notes, bills of exchange, cheques, and other negotiable instruments are codified under the Act. Over a passage of time the above act underwent two amendments, one in 1988 wherein a new chapter XVII was incorporated for penalties in case of dishonour of cheques due to insufficiency offunds in the account of the drawer of the cheque, and the other more recently in 2002 to give more teeth to the Act w1ith regard to speedy disposal of cases relating to dishonour of cheques, enhancing pun ishment for offenders, etc. The book has captured the essence of the Negotiable Instruments Act, 1881 inclusive of the amendments it has undergone in a lucid and fairly comprehensive manner. It talks about the 'Hundi', which is one of the earliest form's of a negotiable instrument in use in the country even before the advent of the British rule, and its variations, viz, 'Darshani Hundi', 'Muddati or Miadi Hundi', and 'Shah Jog Hundi'. The author has also incorporated the latest amendments to the Act brought in 2002, relating to Sections 64, 81, 89, 131, 138, 141, 142, and incorporation of a new Section 143, etc. Sections 138 to 142 of the Act have been well covered under Chapter 18 of the book, namely, 'Dishonour of Cheques' as it has touched on all the pertinent issues and aspects. The explanations to the various sections of the act have been well supported by reference to relevant cases and the judgments that were passed. On the whole the book is up to date, very informative, handy, and makes an interesting reading. Even students and professionals not trained on legal aspects will find the book useful.

V. R. Murali Mohan, Professor, for Integrated Leaming

Operations and Strategy Area, Institute in Management, Lodhi Institutional Area, New Delhi

11Q003.

Management

& Change.

Volume 9. Number

I (2005)

Guidelines for Contributors Mal1agemel1t & Chal1ge Inv Ites orlgll1dl articles research-based dnd I11dlldQCment Cdses nil tOPICS ot' current Interest practlcdlly

While sen~llI1g contributions following not be eonsld-cred for publication

papers short commUnlGltlons In all areas nt' management may he adhered to failing which they may

'guidelines'

Manuscripts should normally be of up to 10,000 words (20 to 40 A-4 size pages, typed double space with adequate margins on all sides and giving page numbers) ManUSCripts should be submitted in duplicate with the cover page bearing only the title of the paper and authors' names, designations, ollicial addrcsses, c-mail IDs and telephone/I", numbers. Abstracts. Suhmlt an abstract of ahout 150 words

Tablrs and Figures. These should be accurately n18de \\'Ith proper centcrlng, etc, (readers l;lay see recent issues for guidance) Thclr Illeation In the tc,t indicated as follows

Endnotes.

I Table should bet'ore 2.

I around

here

alignmcnt. should he

All notcs should be indicated bv serl~lI numhcrs 111the text and literature Cited be detailed under Notes at the end of the paper bcarlng corresponding numhers the relerences

Rd"rrenccs.

The list should name should

Place the referenccs ~lt the end of the m~1I1useript I(,llllwlng the cndnlltes mentilln only thosc Sllurces actually cited in the tnt or notes I\ulhor's

be the same as in the original

Verma, A, T Kochan

source.

For e\<lll1plc

and R.D. lansbury

(ed) (1995) Gl"IJlI'lng Asia.' Changing hends nl Emp/oymell/ olld Indlls/rial /lela/lOlls. London Routledge Rangnekar, Shanl (1996) In /he World o( COlpof"CI/e ,l/anagers. NcvI' Deih,. Vikas Sheth, N.R. (1997) "Some Rellectlons on Management and Change," ;\lullogemcl7I ,~ Change. 1(1)5-12 Gupta, Amitabh (1991) Dissertation, University

3 4 5

"An Empirical Study of Weak Level l:rrlelcney or Delhi, Del11l

in Indl<l'

MYhil.

For morc than one publication by the same author. lISt them 111chronological order, the older item first. For more than onc publication 111one year hy the same author, small (lower case) letters 10 distinguish them (c.g 1980a, 1980b) Follow 8ritish spellings throughout (progr~lIl1me. not program) Universal 'z' in "ize" "izalion" words Use of numerals One to twelve in words, thirteen and above In figures, relerence is to percentages (5 per cent), disli1l1ce (5 I.:m), or agc (10 years old)

and

191h

century

ith usc

unless lhe Usc 1900s

6 7

No stops aner abbreviatioliS (,IK, MBA) Use stops arier 1I11tiais (K5 Singh) Use double quotes throughout. The usc 01' single quolcs 10 be restricted 1'01' use With III double quotes, e.g .. "In the \lords of 5ze1l, the 'economic question' is todav .. Ouot~lIions in e.\eess of 45 words should be separaled from the le.'t \\Ith a IlI1e space ahOll' and belo\l and indented on the Iel't. Quotes should be cited accurately rrom the original source, should not be edited, and should gin' the page numhers uf the original publlC<llIon Italicization and usc of dlaefltleals IS len tu the contnbutors, but must be consistent When not using diatricais, EnglISh spelling should be t'ollowed 9 Capitalization should be I.:ept to the minllllLlIl1 alld should be consistent lOAn author will receive a complementary copy of the issue III vvhieh hIS/her paper appears I I 8001.: reviews musl provide the rollowing delails, '1I1e1111thiS order Namc or author/title or bool.: reviewed/place of publicallon/pllblisher/year or puhllcallon/number of pages, In Roman ('mel Arabic

figures to include prclimil1ary

as such as papcrbacl.:

or hardbael.:.

pages/and

price, with binding

spccil'!catiolls

For example

Udai Pareek. Training Ins/rulllen/s ./or lI/IlIIOI1 /lcsolll"cn f)e\'e/ojJlllell/. NeVI Deih, Tata-Mcgraw lIill, 1997 .\i+625 pp Rs. 595 hardbound AUlhors, "pari from hardcopy, should also scnd a copy of the eontriblltlon III MS word, Times New Roman Font bye-mail to:kmmital(ii.iilmedu. The hard copy and eleclronic files must match c.,actly Manuscripts not considered for publication Will nOI be sent bacl.:. Acceptance of papcrs 1'01'publicalion shall be 1I1j(JrIl1ed through c-mail or through normal mail. Those submitting papers should also certilY that the paper has not becn published or submitted l'or publication . elsewhere Manuscripts and all editorial correspondence should be addressed to: Editor. & Change, Institute for Integrated Learning JI1 iV1anugcmcllt, 3, Lodhl Arca, Lodhi Road, New Dclhi 110003, India rei 91-11-24647820, Fa, 91-11-24647796, e-mail I.:mmiU1Li!.illmedu

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