Management & Change by IILM Institute for Higher Education

JM[~~~(9illl1t

~ ceIffim~~ Avinash Kumar Srivastav

Role Stress in the Public Sector: An Empirical Study

K.Momaya and Jyoti S.A. Bhat

Cluster and Competitiveness: Issues in Context of Emerging Industries in India

Bijaya Mishra, A. Uday Bahskar and Amulya Khurana

Construction of a Learning Enabling Structure Scale (LESS)

P. R. Sudhakar

Operating Aspects of CNC Machine Tools

Sumit Mitra and Susanna Ghosh Mitra

Can Institutions Make the Difference? Comparative study of Indian Manufacturing Industry Through Liberalization.

M. Srimannarayana

Leveraging Science of Creative Intelligence and Transcendental Meditation for Management Education

Bhimaraya A. Metri

Benchmarking:

Debi S. Saini

Parikshit Steel Limited

Roadmap to Best Practices

BOOK REVIEWS The Journal ofthe Institute for Integrated Learning in Management, New Delhi

Management & Change The Journal of the Institute for Integrated Learning in Management

Associate Editor Dr. Rajesh Pillania Assistant Professor (18 & KM)

Editor Dr. K.M. Mital

Professor of Strategic Management and Chaiperson, General Management Area llLM. Lodhi Road. New Delhi-I 10003 krishna.mita1(wi ilm.edu EDITORIAL Agrawal, L. Mohan Ahmed, Ahad Balaehandran, V. Bala Raxi, Chetan Rhattaeharyya,

Butler, Richard Chatterjee, N.R. Corre, Joseph Ghosh, Avijit Jain, P.K. .Joshi, J. Rama Khan, M.Y. Mamkoottam, K. Mukherji, Badal Nair, N.K. Panchmukhi, Pandey, I.M. Pandit, V.N. Sheth, N.R. Singh, J.D. Szell, Gyorgy Vrat, Prem

V.R.

(IlLM), New Delhi

llLM, Lodhi Road, New Delhi-ll 0003 rajesh.pillania@iilm.edu ADVISORY

BOARD

Professor. Indian Institute of Management. Lucknow Ex-ProVice Chancellor, University of Delhi. Delhi. Distinguished Professor, J.K Kellogg Graduate School of Management, Northwestern Univcrsity, Evanston, Illinois. Dean, Research, Management Developmcnt Institute, Gurgaon. Distinguished Professor and Director, Institute for Integrated Learning in Management New Delhi and Fonner Dean, Indian Institute of Foreign Trade, New Delhi. Professor, Management Centre, University of Bradford, UK. Dean Emeritus, IlLM, New Delhi Professor, Robert Morris College, Pittsburgh, USA. Professor, Stern School of Business, New York University, USA. Professor, Dept of Management Studies, Indian Institute of Technology, New Delhi. Professor, Shri Ram Centre for Industrial Relations, I\'ew Delhi . Ex-Professor, Dept. of Financial Studies, University of Delhi, Delhi. Pro lessor, faculty of Management Studies, I iniversity of Delhi, Delhi Director, IlLM Institute for Higher Education, Gurgaon & Ex-Director, Delhi School of Economics, Delhi. Former Director-Research, National Productivity Council, New Delhi. Ex-Chainnan, Indian Council of Social Science Resarch Professor and Dean, Asian Institute of Technology, Bangkok, Thailand. Ex-Professor, Delhi School of Economics, University of Delhi, Delhi Ex-Director, Indian Institute of Management, Ahmedabad. Director, Jaipuria Institute of Managemcnt. Noida. Professor, University of Osnabruck, Germany. Vice-Chancellor, U.P. Technical University Luchnow and Fornler Director, liT Roorkee.

Manuseript Submission Contributions are invited in diverse areas of management from interested authors In each issue of the journal it is normally planned to include research papers, case studies, original conceptual papers, short communications and book reviews. For contributors guidelines, authors may refer to the inside back cover, Enquiries should be directed to the Editor, Management & Change, IILM. New Delhi I 10 003 or electronically at e-mail lD (krishna.mital(cjli iIm.ed u). Frequency and Subscriptions Management & Change is published bi-annuallY i.e. twice a year (NO.1' Summer; NO.2: Winter). Annual subscription rates arc as follows: Within India - Institutional Rs. 300: Individual. Rs. 200 Overseas - Asian Countries $40; Other Countries' $120 (Air mail) Demand Draft should be drawn in favour of: Institute for Integrated Learning

111

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ment, payable at New Delhi. Edi toria I/Su bscri ption I nformatiun Please write to the Editor/;\ssoeiate Editor. ivlanagement & Change, Institute for Integrated Learning in Management. Lodhi Institutional Area, Lodhi Road. New Delhi 110003. Tel: 9111'43559300, Fax: 91-11-43559339, E-mail krishnamital((lJiilm.edu Management & Change, its Editor, Associate Editor or any mcmbers of the Editorial Advisory Board including the Publisher, llLM, New Delhi disclaim any responsibility and liability lor any statement of fact or opinion madc by the contributors in any of its Issues. Copyright

@ 2006

Institute

for Integrated

Learning

in Management.

All Rights

Reserved

Management & Change VOLUME 10

NUMBER 1

2006

ARTICLES Role Stress in the Public Sector: An Empirical Study

Avinash Kumar

Srivastav

Clusters and Competitiveness: Issues in Context of Emerging Industries in India

K. Momaya and Jyoti S.A. Bhat

Construction of a Learning Enabling Structure Scale (LESS)

Bijaya Mishra, A. Uday Bhaskar and Amulya Khurana

Operating Aspects of CNC Machine Tools

P.R. Sudhakar

Can Institutions Make the Difference? Comparative Study oflndian Manufacturing Industry Through Liberalization

Sumit Mitra and Susanna Ghosh Mitra

Leveraging Science of Creative Intelligence and Transcendental Meditation for Management Education.

M. Srimannarayana

Benchmarking: Roadmap to Best Practices

Bhimaraya

SHORT COMMUNICATIONS

A. Metri

MANAGEMENT CASE Parikshit Steel Limited BOOK REVI.EWS

Debi S. Saini

89 99

Usha Jamani, Empowering Society: An Ana~ysis oj Business, Government and Social Development Approaches to Empowerment, reviewed by B. Bhattacharyya. Makarand Paranjape (ed.), Dharma and Development: The Future ajSurvival, reviewed by K.M. Mita!. Duncan Hughes, Asset Management in Theory and Practice, reviewed by V. R. Murali Mohan. D. Ulrich, L. Carter, M. Goldsmith and Debi S. Saini (ed.), The Change Champions Fieldguide, reviewed by Kakoli Sen. Avtar Singh, Mal /l7kray Evam Avakray /l7dhi,reviewed by Gireesh C. Tripathi .

Contributors 01: Avinash KumarSrivastav

Associate Dean (Research). ICFAI Business School. 64 Krishna Avenue. 13th Cross, 6th Main. 3rd Phase. Jp Nagar Banglaore 560 078. [-mail: aksrivasta vCf! ibsind ia.org

Dr. Kiran Momaya

Associate Professor of Competitiveness. Department of Management Studies. liT Delhi. New Delhi I 10016. E-mail: momaya@dms.iitd.ac.in

Dr. Jyoti S. A. Bhat

Advisor (Scientist G), Department of Scientific and Industrial Research. Technology Bhavan. New Meharauli Road. New Delhi 110016. [-mail: ,isabhat@alpha.nic.in

Dr. (Ms.) Bijaya Mishra

Faculty, Fortune Institute of International Business. 13-44. 2"d Floor. Qutab Enclave. Phase I. Katwaria Sarai. New Delhi I 10 016. E-mail: bi,iayam ishra7@rediffinail.col11

A. Uday Bhaskar

Research Scholar. Department of Management Studies. Vishwa Karma Bhawan. liT. Delhi. New Delhi 110016. E-mail: abuday@rediffillail.com

Dr. Amulya Khurana

Associate Professor, Department of Humanities & Social Sciences. liT. Delhi. New Delhi 110016. E-mail: amulyakhurana@rediffinail.com

Dr. P. R. Sudhakar,

IDFS

Additional General Manager. Avadi. Chennai 600 054.

Engine

Factory,

Dr: Sumit Mitra

Associate Professor, Indian Institute of Management Indore. Pigdamber. Rau. Indore 453331. M.P., E-mail: smitra@iimidr.ac.in

Susanna

Doctoral candidate, Department of Government and International Politics, University of Mancliestet, M 139PL. UK. E-mail: usannagmitra@yahoo.co.uk

Ghosh Mitra

Dr. M. Srimannarayana

Associate Professor, Xavier Labour Relations Institute XLRI), Jamshedpur 831 00 I. E-mail: sriman@xlri.ac.in

Dr. Bhimaraya

Associate Professor, Operations Management Management Development Institute (w\vw.mdi.ac.in). Mehrauli Road. Gurgaon 122 00 I. E-mail: metri@mdi.ac.in

A. Metri

Or. Debi S. Saini

Professor and Chairperson. Human Resource Management Area. Management Development Institute., Mehrauli Road. Gurgaon 122 00 I. E-mail: debisaini@mdi.ac.in

From the Editor's Desk

CHANGE

MANAGEMENT, FLEXIBILITY AND LEADERSHIP

Renowned ph ilosopher Thoreau remarked long ago: 'Th ings don't change. we change'. Mahatma Gandhi once said. -You must be the change you wish to see in the world'. Change is inevitable part of life-cycle which is alvvays welcome as it leads to growth. Best growth is one which can be sustained in the long run. As noted poet Tennyson once wrote: 'The old system changes. yielding place to new. God fulfils himself in many ways. lest one good custom corrupt the world.' In Brihodrall(~vuko Upanishad. there is famous verse 1. 3.28 wh ich says. 'Lead me from unworthy to those with substance and merit. from darkness to light from inactivity to ever widen ing thought and action (4.1'1011](1sal gOl71aya. lam.l'o l71ojFol ir gOIl1Yo. mrilyo

1/1(/

(/ll7irloll7

gUIl7Yo).

A change whether it is deliberate or unexpected is always challenging. Viewing adversity as change, not loss or failure. is reflection of empowered and positive thinking. Individual develop flexibil ity through change. both physiologically. and emotionally. 'Adversity is an inescapable performance indicator, a frequent reminder of our up-coming 360 degree review in how we handle the bumps. We are meant to be stronger, more insightful each time ,ve get walloped' (Charlene Proctor. Embrace Change. The Times of India. June 18. 2006). Change management is not mere instructions to follow a set course. As changes could widely vary, there are no standard solutions which will always work. As art of change management is situation and context specific and standardized approaches may not always work. it is leader who can apply situation and context specific course corrections. To be effective at leading change, a leader needs to exerciseflexihilily to customize to scale up change management efforts based on his intuitive judgment. Leadership role in managing change is crucial as it is business leaders who have right answers to business problems than managers \vho can effectively implement good ideas. It is precisely a leader's competency which drives change. Project teams that introduce change but do not have effective project leaders at the helm may run the risk of missed project objec\'

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tives, unmet deadlines, productivity losses, and time overrun costs. It is a leader who enhances an organization's ability to be flexible, improves adaptability to the market needs, and enhances scalability and responsiveness to customer needs (Roethe). A leader utilizes his intuitive power in managing change. He has cognitive flexibility that provides him decisive insight to act. After a fairly accurate assessment of situation even based on 'soft' facts, he can take a decisive step without loss of time. It occurred to the former IBM CEO, Watson, that as earlier computers were built one at a time and were incompatible from one another, computer incompatibility could be a future constraint, accordingly, he initiated steps for developing business machines which were compatible that eventually brought tremendous economic gains to the organization. A leader's role in change management involves taking timely action for facing future challenges different times and circumstances create different situations. A leader often regards economic hardships as driver for change, not loss or failures. Engineers India between 2001 and 2004 in wake of worldwide recession in petroleum industry faced tight job order position and accordingly the company leadership initiated several cost containment and downsizing initiatives. However, later when the boom retumed the organization following initial contraction consolidated byexpanding again in strategic areas of growth. In other words, leaders are always flexible and proactive who act appropriately before the events happen. Benjamin Disraeli said, 'We are not creatures of circumstance, we are creators of circumstance'. Leaders also possess high degree of intuition and courage to act based on their convictions. Leaders see what others miss, provide strategic directions, and secure employees commitment in meeting deadlines. In an oft-quoted study of CEOs of healthcare systems in US where key decisions about future alliances~ mergers and acquisitions, etc. were to be made, the most successful CEOs cancelled deals that they felt included some conditions they were not comfortable with, even though due-diligence had indicated that they could go ahead with the deal. There are also situations when leaders despite their possessing all needed competencies may fail to perform and deliver. This may happen when em-

I VI

1 I

ployees trust and commitment is not first secured. This may more happen when leaders frequently move from one organization to another or from one culture to another but may not be in finn command to make any discernible impact. Leader's ability lies in making right commitment of resources. Resource commitment need not be full and final in one go but can be stagewise as in case of Zero Base Budgeting (ZBB). A multistage commitment may build responsiveness as a one-time commitment may often lead to unnecessary risk. Stagewise commitment of resources enables executives to determine most appropriate level of investment for a pal1icular task. Entrepreneurs generally prefer outsourcing initially instead of first owning service providing facility entirely. Hiring instead of owning a resource reduces the cost of pulling out of a project should such a need arise. Innovation determines the cutting edge of a business. Innovative employees can act as 'business transformation agents' who bring innovative solutions that can transform the business. It is the leader who himself may not be know-it-all, but can make his team innovate as innovation is a culture and not one person activity. Innovation is essentially an out-of-the-box thinking that has potential to bring extra-ordinary gains to an organization. Mr. Ratan Tata's Rs. 1 lakh car project under his dynamic leadership is essentially an innovative plan which if successful can bring economic wonders to the Tata Group. Some large com pan ies seem to bel ieve that they can handle all opportunities with the resources and expertise they have behind. This, however, may not always be the case. It is much easier and safer for companies to stay with the area of core competence than to search new territories. For instance, Tata Industries, once picked up sizeable equity in Haldia Petrochemicals in West Bengal but later pulled out as petroleum industry was never their forte. On the other hand, Reliance Industries Ltd., whose core competence has oeen in petroleum sector since beginning, gained greater and greater heights in th is area. In the globalization era, leader needs to change their mindset from always local to a mix of local and global what some call 'glocal'. Leaders should see opportunities even beyond country's borders. The word 'selfreliance' needs to be redefil1ed in wider perspective. However, this reVII

l~_~

quires that country's products and services should be of gioba I standard and they should be of 'glooal brands'. Only by encouraging change and experimentation can companies of all sizes adapt and grO\v. Leaders have to be comfortable not only in embracing change out also in acting as cata Iyst of change in the midst of all uncertainty.

IILM, New Delhi

r Environment

K.M. Mital

Ethos inlndia12 CLlltur~ KALIDASA AND ENVIRONMENT

Kalidasa, the great Indian poet often remembered as the 'The Shakespeare of India', was essentially a man ofcu1ture, nature and fine arts. His works , run a potent characteristic. a wonderful, all-surpassing power of description and glorification of nature, of the beauty of forest, field and sky. Abhigyan-Shakuntalam. Meghadoota. Malvikagnimitra. Kwnarsambhava. etc. are all manifestation of his love of nature and fine arts. As an example, Shakuntala was a sister to navomalika creeper which was named as Vanajyotsna. The girls spoke to plants. animals, trees and flowers as if they were human beings. Kalidas created awareness towards environment by appreciating its beauty and emphasizing its conservation. In his poem '"The Seasons". six seasons and Indian year's different periods are described with meticulous details in six books of one hundred and fifty-three cantos. Clouds swoop down to caress the mountain rocks, creepers clinging anns. jasmine petals flashing teeth. etc are symbolic description of nature and their interface with living beings. He vividly described tapovana where the Indian culture was known to flourish. It provided an environment where all men and animals lived in perfect harmony and bliss. This blissful state was a source of all values and philosophies based on the bnsic principles of sacrifice, detachment, renunciation and all that is necessary in this life and heyond. His vision of wpovana had all desirable environment features such as peace, harmony. tranquility and divinity. where one could experience eternal joy. anonuam, and at the same feel part urthe ,,,,,ideand infinite universe. -Editor

VIl!

ROLE STRESS IN THE PUBLIC S.~CTOR: AN EMPIRICAL STUDY Avinash Kumar Srivastav In this paper, it is attempted to ana(vze d(fferent (vpes of role stress that affects employees in a public ente/prise. General(v, the orf.:anizational members either experience all (vpes (?{ role stress or the siress due to overloading. Overload is experienced due to too hif.:h or too many expectations, d(tficulties in balancing between d(r{erent roles occupied, co/~tlictinf.:expectations and expectations for which resources are perceived to be inadequate. These ten (lpeS (?{role stress were measured, using 'ORS Scale'for 453 random(v selected respO/ulentsji'om a larf.:e public sector enterpri.'Ie.Linear regre.\'sionana(vsisfor the eleven role stress variahies (Le. ten (I,pes of role stre.\'Sand total role stres!'.)revealed strong positive correlations hetween each pair (If above-mentioned variables except that 'rol,e erosion', was not sign(ficunt(v related to 'role overload'. 'Role erosion' was found to be the most prominent 'role stressor " Factor ana(I'sis of the ten role stress variables brought out that role stress is being experienced in the orf.:anization in two ways. 'General stress' and 'overload stress' are the two meta role stressorsprominent(F operating in the orWll1ization. INTRODUCTION

[ ,

Outcome of important events affecting individual is often beyond their control as things may not happen in the way planned. Uncertainties and unexpected changes keep occurring in the environment. People may not respond or behave as expected. Stress is therefore inevitable and cannot be avoided in everyday life (Pestonjee, 1999. p.15-34). Stress is the result ofa lack offit between a person (in terms of his personality, aptitudes and abilities) and his environment when he is unable to cope with the constraints or demands encountered (Harrison, 1976). Stress can arise from an oppottunity, threat or challenge when the outcome of the episode!s both uncertain and ill1p'.'ltant (Robbins. 2003). ~lanagemcnl & Change. Volume I n. Number I (2n06) (: LOn6 Institute I()I" Integr:ltcd Learning in "'1an:lgelllcn1.

/\11 Righls Rcst'n ect,

----

2 Role Stress in the Public Sector:

'Organizational role' (Pareek, 1993, p.3-20; 2002, p.477-491) is a pos'ition in an organization or social system which is defined by the expectations of the significant people from the role occupant. Role occupant interacts with the organization through his role and performs certain functions in response to his role expectations. Organizations are networks of roles and occupation of a role is a potential source of stress. Stress due to occupation of a role is known as 'role stress'. Stress in an organizational role or 'organizational role stress' (ORS) reflects the quality of role design (Srivastav, 1999). Well-designed roles have a good matching between the organization (considering its structure, systems, processes and goals) and the individual (considering his personality, competence and needs). When this happens, role stress is low, role occupant gets motivated (may even be self-actualized) and role performance is high. On the other hand, when roles are illdesigned, role stress is high, role occupant gets demotivated and role performance is low. ORS arises due to inadequacies, mismatches or conflicts encountered by the role occupant during his role performance. ORGANIZATIONAL

ROLE STRESS (ORS)

'ORS construct' developed by Pareek (1983) is relevant for the study of 'role stress' in organizations. It is important to understand that an organization is a system of roles and role in itselfis a system. For an individual, there are two role systems (Pareek, 1993, p.3 - 20): (i) 'Role space' represent all the roles performed by the individual. For example, an individual can play the role of a sales manager in the organization and the role of a mother at home. (ii) 'Role set' represents all the roles with whom a role occupant is required to interact for the performance of his role. For example, the role set for a production manager will include his/her boss (the general manager), peers (R&D manager, quality manager, plant manager, marketing manager, finance manager and HR manager) and subordinates (production executives in charge of production planning, manufacturing and testing). Members of a role set who have role expectations from the role occupant are called 'role senders'. Role space and role set have inbuilt potential for conflicts. These con.flicts give rise to ten types of role stress as explained hereunder. ROLE SPACE CONFLICTS Inter-Role Distance (IRD). In general, an individual plays more than one Management & Change. Volume 10 Number 1 (2006)

, l

Avinash KumarSrivastav

role. When one of the roles is excessively demanding, the role occupant is unable to balance between two of one's roles. When one tries to fulfill the expectations from one role, the other role has to suffer. For example, the role of a mother at home can interfere with her role as a HR manager in an IT company and the role occupant may experience lRD, finding it difficult to do justice

to both the roles.

Role Stag1latio1l (RS). After occupying

a role for a long time, an individual may feel insecure in taking up a new role. One may keep stagnating in one's old role in which individual feels more comfortable and secure. RS is commonly encountered when the role occupant lacks skills for the new role. For example, a software programmer of long standing would experience RS on being promoted as a project manager if one does not have project management skills. Lack of delegation by a boss to one's subordinates or the boss trying to perform subordinate's work is often due to RS experienced

by the boss.

Se({-Role Dista1lce (SRD). SRD is experienced

when a role occupant has to do what one dislikes, when one's special knowledge and skills remain unutilized or when there is a conflict between the image/needs/values of the role and role occupant. For example, there is a fertile ground for experiencing SRD when an introvert person is given a sales/ marketing assignment or when a highly creative person is asked to do a highly repetitive and routine work.

ROLE SET CONFLICTS Role Expectatio1l COl~f1ict(REC). REC is experienced

when the role occupant faces conflicting expectations from different role senders. For example. R&D manager experiences REC because marketing manager expects one to introduce product updates at a fast pace while production manager expects him not to introduce product updates without adequate lead times as one cannot satisfy both.

Role Erosio1l (RE). RE is experienced

by the role occupant when some of the important functions belonging to one's role are perfonlled by other roles. Individual may feel deprived. RE is commonly experienced in organizations under restructuring or while undergoing technology up-gradation. when some of the roles become redundant. For example. computerization or process automation may lead to reducing the impOIiance of some roles or elimination of some roles in the organization. Managemenl&Change.

Volume

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4 Role Stress in the Public Sector: Role Overload (RO). RO is experienced when there are too many or too high expectations from a role. Whereas too many expectations from a role generate 'Quantitative Overload', too high expectations from a role generate 'Qualitative Overload'. RO is experienced when role occupant lacks power or when expected performance outcome is significantly higher than the actual performance outcome. For example, if a quality manager is expected to deliver better than 99.9 per cent acceptance (0.1 per cent rejection) from the shop floor under one's charge when one is not able to ensure better than 95 per cent acceptance (5 per cent rejection), one will experience RO. Role Isolation (RI). RI is experienced when the role occupant feels cutoff from the channels of communication. One does not have the required frequency or ease of interaction and feels distanced. Lack of communication in the organization due to any reason - structure, systems, or something else, would lead to role isolation. For example, RI may be experienced due to geographic separation of role set members, due to boss maintaining a distance from the subordinates, lack of coordination at the peer level or when the team members in a project do not relate to each other. Personal Inadequacy (PI). When a new role is assigned to someone without preparing him to undertake one's new responsibilities, the role occupant may find one lacking in necessary knowledge, skills or experience needed for one's effective role performance and experiences PI. For example, a sales manager with inadequate sales management skills, a project manager with inadequate project management skills or a programmer with inadequate programming skills will experience PI. Role Ambigui(V (RA). RA is experienced when the role occupant is not clear about expectations from one's role. One may have doubts about certain responsibilities, functions or activities weather one should undertake them or they will be done by some other role occupant. RA may arise because expectations may not have been defined in the first instance or they would have changed with time. Occupants of newly created roles or process roles having inappropriately defined activities often experience RA. Resource Inadequacy (RIn). RIn is experienced when resources external to the role occupant are not available for carrying out the role responsibilities. Personal competence of the role occupant represents one's internal Management

~~~

& Change. Volume 10 Number

I (2006)

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Avinash Kumar Srivastav 5

resource, captured in PI. External resources could include human resources, buildings, infrastructure, money, materials, machines, tools, equipments, books and documents, which are necessary for successful role performance. For example, a production manager will experience RIn if one does not have adequate number of assembly and testing machines.

l t

ORS SCALE 'ORS Scale' (Pareek, 1983) measures the above-mentioned types of role stress. There are ten sub-scales and five items in each sub-scale. Five point Likert scale is used for scoring each item (0 for the least likely situation and 4 for the most likely situation). Each type of role stress is scored in the range: 0 to 20. Total ORS (TORS) which is the sum of the ten types ofrole stress is scored in the range 0-200. The ORS scale is one of the best instruments for the measurement of role stress in an organizational setting. It has been validated and its reliability has been verified (Pareek, 2002, p.536547). ORS scale has been used very extensively for role stress research (Pestonjee and Pareek, 1997; Pestonjee, 1999, p.87-136; Srivastav, 1993, 1995~ 1995b, 1997). STUDY OBJECTIVES

AND METHODOLOGY

This paper aims to study internal structure of role stress that often operates in a public enterprise by following the four-stage approach, namely, (i) measuring ten types of role stress in the selected organization, (ii) identifying prominent role stressors; (iii) determining correlation between different types of role stress; and (iv) identifying meta role stressors prominently operating in the organization. This study pertained to a large multi-location public sector enterprise. A total of 453 respondents were randomly selected from different units and functions, in accordance with the organizational diversity (different genders, age groups, hierarchical levels and educational qualifications). Organizational Role Stress Scale (ORS) developed by Pareek (1983, 1993) was used for analyzing ten types of role stress for each respondent. Statistical analysis was done using the SPSS. Means were calculated for each type of role stress and for the Total Role Stress (TORS). Rank ordering of the means for the ten types of role stress was done to identify prominent stressors in the organization. Management & Change. Volume 10Number I (2006)

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6 Role Stress in the Public Sector:

Linear regression analysis was carried out to study intercorrelation between the eleven stress variables (i.e. ten types of role stress and total role stress). Two tailed significance testing was done. Correlation coefficients with P ~0.05 were used for interpreting the results. Factor analysis was carried out on the ten role stress variables to study internal structure of role stress experienced in the organization, and determining the meta role stressors operating. Factors with Eigen values greater than 1.0 were considered. Factor loadings of lesser than 0.25 were taken as low. Those equal to or greater than 0.25 but lesser than 0.5 were taken as medium. Factor loadings equal to or greater than 0.5 were taken as high. Factor loadings of 0.25 and above were used for interpreting the results. ANALYSIS AND RESULTS Table 1 depicts rank ordering of role stress variables. It can be seen that 'role erosion' is the most prominent stressor in the organization, followed by 'role isolation', 'resource inadequacy' and 'personal inadequacy'. After 'role erosion', there is not much difference between the successively ranked role stresses, except for 'role stagnation' ranked seventh and 'role overload' ranked eighth. Table 1 Role Stress Variables - Mean & Rank

Mean

IRD

4.947

6.457

REC

6.497

9.227

5.223

7.757

7.623

SRD

6.682

4.943

RIn

7.715

TORS Management

Rank

Variable

& Change.

67.071

Volume 10 Number

I (2006)

Avinash Kumar Srivastav

I :1 il

Table 2 furnishes correlation coefficients between different pairs of the eleven role stress variables. Strong intercorrelations which are positive and significant (better than 0.001 level) were observed between all the eleven role stress variables, except that 'role erosion' and 'role overload' were not significantly related. Table 3 furnishes results of factor analysis onhe ten role stress variables for the ORS sample taken fr"'<I' 'i53 respondents. 'Principal Component Analysis' with 'Quartimax Rotation' gave the best results. Two factors explaining 54 per cent variation have been extracted. Factor 1 explains 41.9 per cent variation. It has high positive loadings on self-role distance, role ambiguity, role stagnation, role isolation, role expectation conflict, role erosion, personal inadequacy and resource inadequacy. Factor 1 also has moderate positive loadings on inter-role distance and role overload. The factor has high positive loadings on eight types of role stress and moderate positive loadings on the remaining two types of role stress. Factor I can therefore be named as 'general stress factor'. Factor 2 explains 12.1 per cent variation. It has high positive loadings on 'role overload' and 'inter-role distance'. Factor 2 has moderate positive loadings on 'role expectation conflict' and 'resource inadequacy'. Factor 2 also has moderate negative loading on 'role erosion'. This reinforces the influence of role overload on the factor. Generally, 'role overload' may not be experienced when 'role erosion' is preselH. The common element in these variables, therefore, is the overload. Overload is experienced due to too high or too many expectations, difficulties in balancing between different roles occupied, conflicting expectations and expectations for which resources are perceived to be inadequate. Factor 2 can therefore be named as 'overload stress factor'. CONCLUDING

REMARKS

Predominance of' role erosion' was confirmed by the respondents. The old technology was being replaced by the new technology needing lesser manpower with higher skills. The consequence of such a transition was surplus manpower which experienced 'role erosion'. 'Role isolation' comes from 'systemic isolation' (systems not permitting therequired interactions) or 'geographic isolation' (geographic separation not permitting the required interactions) (Pestonjee, 1993). Respondents confirmed experiencing' role isolation' due to lack of communication. Management & Change. Volume 10 Number I (2006)

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Table 2 Inter"correlation

of Role Stress Variables

"~ o

'3 r,

::'. ?2

'ro 0

2'3

Vuriuhie

IRD

L c

'3 (') ...,

REC

P PI

'.:2

IRD

SRD

Rill

P TORS

1.000 0.000 0.364 0.000 0349 0.000 0.141 0.003 0.438 0.000 0.211 0.000 0.205 0.000 0.279 0.000 0.171 0.000 0.334 0.000 0.541 0.000

REC

SRD

RIll

TOR,",' '£: ~ '"'"

1.000 0.000 0.431 0.000 0.327 0.000 0.370 0.000 0.414 0.000 0.390 0.000 0.593 0.000 0.483 0.000 0.379 0.000 0.741 0.000

=...•

ro ""0

:::

r::r

1.000 0.000 0.220 0.000 0.410 0.000 0.429 0.000 0.320 0.000 0.461 0.000 0.496 0.000 0.426 0.000 0.702 0.000

;:;" IJJ

I.000 0.000 0.045 0.335 0.297 0.000 0.277 0.000 0.400 0.000 0.279 0.000 0.271 0.000 0.508 0.000

'!'

...:d@

0..., 1.000 0.000 0.175 0.000 0.250 0.000 0.261 b.oOO 0.259 0.000 0.371 0.000 0.556 0.000

I.000 0.000 0.279 0.000 0.467 0.000 0.461 0.000 0.416 0.000 0.643 0.000

_.....F.stat

1.000 0.000 0.422 0.000 O.4l5 0.000 0.271 0.000 0.616 0.000

r __

I.000 0.000 0.546 0.000 0.350 0.000 0.746 0.000

~!t

I.000 0.000 0.407 0.000 0.704 0.000

•••••••

1.000 0.000 0.652 0.000

1.000 0.000

Avinash KumarSrivastav

[ ~

I~ I

'Resource inadequacy' was experienced because new types of resources were required and these were being provided progressively over a period of time. 'Personal inadequacy" was felt because older skills became redundant and newer skills were needed. Experiencing 'role stress' is intensely personal. It depends on individual's perception and reaction. One who experiences high stress of one type is prone to experience high 'role stress' of other types and high total 'role stress'. 'Role erosion' is felt when sign ificant functions of one's role are taken away. In this situation. role becomes lean and 'role overload' is not common Iy experienced. Table 3 Factor Loadings of Role Stress Variables (Principal

Component

Analysis with Quartimax

Variahle

IRD RS REC RE RO RI PI SRD RA RIn EigenValue Percentage Variance Cumulative Variance

Rotation)

Faclor I

Faclor 2

0.29177 0.71703 0.62410 0.61465 0.28858 0.69868 0.61075 0.80332 0.76131 0.56214 4.19077 41.9 41.9

0.71334 0.23543 0.38750 - 0.27967 0.78558 -0.00267 0.04392' 0.02192 0.02578 0.37317 1.21328 12.1 54.0

'General stress' and 'overload stress' are the two me/a role stressors prominently operating in the organization. Generally. the organizational members either experience all types of 'role stress' or just the stress due to 'overload ing'. Overloael is experienced due to too high or too many expectations. difficulties in balancing between different roles occupied, contlicting expectations and expectations for which resources are perceived to be inadequate. rv1anagcIllcnt & Changc. Voluillc

I () l\;ulllbcr

I (20()())

10 Role Stress in the Public Sector:

REFERENCES Harrison, R.Y. (1976) Job Stress as Person - Environment Misfit. presented at the Annual A,feetil7g olthe American Psychological Association, Washington, D.C. Pareek, U. (1983) Organizational Roles Stress. In Goodstein, LD. and J. W. Pfeiffer (eds.), The 1983 Annual, University Associates, San Diego, California, p.115-123. Pareek, U. (1993) Making Organizational Roles Effective. New Delhi: Tata McGraw Hill.' Pareek. U. (2002) Training Instruments in HRD and OD. New Dt?liJi: Tata McGraw Hill Publishing Company Limited (2nd edition) Pestonjee,

D.M. (1993) Personal Communication,

December.

Pestonjee. D.M. (] 999) Stress and Coping: The Indian Experience. New Delhi: Sage Publications India Private Limited (2nd edition). PestollJee. D.M. and U. Pareek (eds.) (1997) Studies in Organizational Role Stress and Coping. Jaipur and New Delhi: Rawat Publications. Robbins, S.P. (2003) Organizational BehoFiow: New Delhi: Prentice-Hall oflndia Private Limited (10th edition). p.5 77. Srivastav, A.K. (1993) "Study of Organizational Climate, Role Stress and Coping Strategy Amongst Public Sector Executives". Ph.D dissertation, Bangalore University, Bangalore. Srivastav, A.K. (1995a) "Behavioural Dimension of R&D: Implications for Change". In Srivastav, A.K, et 01. (eds.): R&D i\/fanagement. New Delhi: Tata McGra\\'Hill Publishing Company Ltd. Srivastav. A.K. (1995b) Human \\'cllb.,;ing in Organizations: A Case Study on the Impact of ISO 9000. Procculillgs of 39'11 Annual Congress of European Organization for Quality (EOQ), Lausanne, Switzerland, .Iune. p.46-54. Srivastav, A.K. (1997) Dynamics of Role Stress in an Organization. In D.M. Pestonjee and U. Pareek (eds.). Studies in Organizational Role Stress & Coping. Jaipur and New Delhi: Ra,vat Publicatiol1s. Srivastav. A.K. (1999) "An Indonesian Case Study on Human Resource MallagemenC. Asian and PacifiC Regional Round TaMe on Enterprise and Societ)' Partnerships. Bangkok: International Labour OrgEln ization. September 22-24. rVlanagemell,

&. Change.

Volume 1() 1\ umber I (~()Ol))

CLUSTERS AND COMPETITIVENESS: ISSUES IN CONTEXT OF EMERGING INDUSTRIES IN INDIA K. Momaya

I !

.Jyoti S.A. Bhat

Cluster .•.• ' are geographic concentration .•.•. (~l interconnccted companies, .•.• pecialized suppliers, .•.•. ervice providers, firms in related industries and a.•.•..•.•. ociated inMitution .•.•. that compete hut also cooperate. Quali(p clusters Cflllplaya crucial role in enhancillg competitiveness. The importance (~lclusters in the context (~l emerging industries is Iike~F to he .•... everal orders higher. While the concept (~l "clusters for competitiveness" is quite well received and experimented in a numher (~ldeveloped regions, in India it is often used in the context ~ltraditional industrie .•.•..Even busine .•.•. s practice.""~l .•.•. ucces.~flll Indian exporters have heen examined, hut the context (~lemerging knowledge-based industrie .•.•. has not heen researched adequate~J!. This paper presents finding .•.•. within hack drop to examine the role (~lclusters in the context (~l emerging indu .•.•. tries. Efforts will he /i}cused Oil defining the terms in the relevant context hm'ed on secondary data and on evolving and prioritizing key issue .•.•.. INTRODUCTION It has been acknowledged that the convergence of technologies, being introduced and integrated in spec ifie world regions provide opportun ities for generating regional wealth. Clusters ofemcrging industries in locations such as Route 128 in the Ne\\ England region and in Silicon Valley along the west coast of the USA have been crucial in enhancing the competitive capability of USA. Similar clusters exist in many parts of the world in countries such as Germany and Japan. and even in India. For instance. rapid competitiveness enhancement in some parts of Ind ia has been partly attributed to the rapid format ion of dynam ic clusters in emergi ng industries such as software. Slow cnl11petitivenessjourney offirms. industries in India and the country hints at considerable scope for improvement on many fronts including \ !<lllagc'llll'llt &: Chall!"l', Volull1e 10, N ull1her I (2006) ( 200(, Illstitute' for i'l1l'I'I'alcd ie,ll"llillg ill Managl"ll1l'll1. ,\II Rights Resl'rleci,

12 Cluster and Competitiveness:

emerging industries. Glimpse of trends in relative country rankings ofIndia and select countries (Table 1) hints at the slow competitiveness improvement at the country level and similar situation at the industry and firm levels. Classical debates on new international economic order and fears of observers in the advanced nations about adverse impact of globalization on their competitiveness as articulated in papers such as "Globalization and the inequality of nations (Krugman and Venables, 1995)" do not appear much true. Even after a decade of globalization, India's competitiveness ranks have hardly improved. In fact, emerging scenario in domestic ICT industry hints that Indian firms are losing out to global players in software services also; we are not talking about many other important sub-segments such as telecom and IT hardware or information. While primary or secondary industries such as agriculture, manufacturing, wholesale and retail, tourism do and can contribute more to GNP and some still have quite high potential for employment generation, large country such as India also need to nurture emerging industries to become a developed country. Table 1 Country's

Performance Rank on Select Criteria (WCY Ranking)

lear Country

2002

USA

Singapore

China

8 14 30 27 26 31

India

Canada Australia Japan Korea Malaysia

Source: WCY, 2002

Management

& Change,

Volume 10 Number

I (2006)

2001

2000

1 2 9 11 26 28 29

1 2 8 10 24 28 27 30 39

"" ..'-' 41

I ~I. I

Ir 1

K. Momaya and Jyoti S.A. Bhat I3

Viewing various factors important for competitiveness; it is seen that competition is becoming more complex, can evolve on multiple fronts and demands competitiveness in a holistic sense if a finn, an organization or an industry has to make a lasting contribution. Competitive firms that qualify for higher stages of competitiveness (Momaya, 200 I) such as globally competitive or world-class, last for decades, if not centuries, and make lasting contributions to their various stakeholders, including country and global society. Interesting empirical perspectives on such companies are given by researchers (Jain, 2004; Collins and Porras, 1994; Collins, 2003). The building of such lasting organizations or institutions demands competencies on multiple facets. Many view competition only in terms of the effect on the resulting end products or services, but competition is also necessary for creating a culture of knowledge sharing in respect of talent, core products and capabilities. New thinking such as one articulated by leading management researchers such as Drucker, Porter, Hamel and Prahalad, and Nonaka may provide new insights for competitiveness. Peter Drucker has emphasized the role of knowledge, innovation and entrepreneurship for competitiveness. C.K. Prahalad has emphasized on co-creation and the need to focus on the fortune at the bottom of the pyramid (BOP) (Prahalad, 2005). Focusing on what works at grassroots, he concluded that the BOP consumers accept advanced technology readily. Advanced technology solutions must coexist with poor and indifferent electrical and telecom infrastructures. Learning from his bold experiments in attempt to transform the R&D systems in the country, Dr. Mashelkar has challenged many for "Learning to Dare", promote technological leadership. New Millennium Indian Technology Leadership (NMITL) Initiative launched in the first year of mil1enn ium has encouraged breakthrough research in emerging industries such as displays and bioinformatics. Technology driven emerging industries can play critical role in scale-up of competitiveness for India, if pragmatic strategies are implemented effectively. Competitiveness comes through technology, whether it is quality or costs (Ramamurthy, 2003). Emerging industries are often carefully identified, nurtured and globalized by many developed countries. They are often the drivers or enablers of new economy such as knowledge-based economy. Insightful comparison of differences between new and old economy on Management

& Change. Volume 10 Number I (2()()6)

14 Cluster and Competitiveness: important characteristics has been provided by Jain (2004). For instance, Australia has focus on emerging industries and research was undel1aken to examine critical issues such as technology, entrepreneurship, distributed expert business services and clusters. While many Indian firms serve companies in the West's knowledge-based industries, such as software, IT services, and pharmaceuticals, industry clusters Attempts

they can also contribute

to development

of emerging

in home market also.

are made in this paper to evolve the context and key issues

for competitivenes~ of emerging industry. The motivation of this exploratory paper is to provoke thinking by raising questions and issues. The issues are evolved after examining Indian context in light of perspectives from USA and Japan and classified for easy reference. Definitions of key terms are given in Annexure I. Relationship between clusters and competitiveness is discussed.below by review of perspectives on subject in context of the USA and Japan.

CLUSTERS

AND COMPETITIVENESS

Clusters are very important for competitiveness and many countries incorporate several measures in their strategy in view of the specific need to nurture identified clusters. The cluster concept represents a new way of thinking about national, state and city economies and points to new roles for companies, governments and institutions striving to enhance competitiveness (Porter, 1998). Knowledge about cluster theory has advanced and a growing number of formal cluster initiatives at regional, country, state or even city level are being implemented

in several countries.

The USA has some of the most dynamic

clusters

in emerging

indus-

tries, and other countries are also catching up. Industrial clusters are considered to be an important tool for strengthening the competitiveness of local industries. Europe has very aggressive plans and continuous benchmarking is done at multiple levels to identify gaps and bridge them. Our recent research in Japan indicated that the concept of industrial cluster is quite systematically used to enhance competitiveness of local regions. It has been decided to focus on two maj9r country contexts, Japan and the USA to get a balanced perspective. Never-the-Iess, efforts have been made to leverage familiarity of the authors to these two country contexts

Managcmenl & Change. Volume 10 Number I (2006)

K. Momaya and Jyoti S.A. Bhat 15

due to years of research and recent visits. Being a first paper in this complex subject, the scope of the paper is rather limited to review perspectives and evolve important issues.

PERSPECTIVES FROM THE USA It has time and again been suggested that technological innovation has always been developed in regions that shared similar characteristics. It has been suggested that these regions are characterized not by an abundance of fixed resources but by a set of developed social and cultural structures that are favourable to conceptual advances (Peter Hall, Cities and Civilization, Fromm International, New York, 2001). In the United States, research carried out to understand the forces that contribute to clustering or agglomeration of innovative activity and affect the growth potential of the firms and cities demonstrates the importance of knowledge spill-overs. Technology development efforts have been known to flourish in specific locations and some of the major reasons attributed to such clustering are proximity to research expertise, venture capital financial support and ease of information sourcing (Bhat, 2003a). The importance of industry life-cycles (Duranton and Puga, 2001), composition of activities within a cluster (Glaeser, et al., 1992; Hendersen, et al., 1995) and the effect of the existing industrial structure (Klepper, 2001) have in addition been identified as other important factors. It has been thought that emerging technology based firms, in their early years invariably grow up around university star scientists who Iicense innovations to companies. Hence, examples of innovative start up ventures in Route 128 and Silicon Valley abound. There has been substantial increase in university patenting, especially. since the passage of the Bayh-Dole Act in 1980. This has been well documented and Fig. 1 indicates total patents assigned to several research universities from 1983 to 1997. A study of existing literature indicates that at the aggregate level, these numbers are consistent with a substantial increase in patenting as a mechanism of university knowledge transfer. For example, while there were only 26 patents as'signed to MIT in 1983, there were 130 in 1997, a 400 per cent increase. Many interesting observations have been indicated in a recent study Management & Change, Volume 10 Number I (2006)

16 Cluster and Competitiveness:

(Feldman, 2002) of the US biotech industry that suggests how regional specialization is determined and how it affects finn survival in emerging industry sectors. It emerges that existing firms may serve as anchors that establish skilled labour pools, specialized intermediate industries and provide knowledge inputs for new technology intensive firms in a region. The established finn may provide expertise and knowledge about specific applications, product markets, and technical development trajectories that move generic scientific innovations in a particular direction, which over time may distinguish the specialization of the industrial cluster. Fig. I University

Patenting

over Time

180 140

120

,..? ,:,.

100

Co.

-* n.

13Q

£:

4()

.._-- ----- ~ .....

1983 .19Ml985

1986

198719881989

w~o

1991

1992

19J3

1.94

...

1995

--_ ....

1997

Y€.<H

Source: SILICON

Cockburn, I. and R. Henderson (1998)

VALLEY: SPECIFIC

LESSONS

A region that has captured the imagination of the world in respect of successful clusters is Silicon Valley in California, USA. The region has weathered several economic meltdowns and has proved to be highly resilient and continuously capable of technological innovation. The region combines all the elements representative of emerging regional networks. It has a world class institution, a high concentration of venture capital and risk management, an entrepreneurial spirit, highly skilled immigrants, and companies and linking associations that support each other in a regional network. Managem<:nt & Change. Volume 10 Number

.•.•••• mr.".m_ ••__

•

I (2006)

.,._"""'_",••••

•••••,

r K. Momaya and Jyoti S.A. Bhat 17

Important perspectives can be gained from a study of this region that are unique and very noteworthy. I

I ! 1

The region also has industry clusters of inter dependent firms that can cross pollinate projects, people and ideas. This enables people to move from project to project, company to company or venture to venture with ease and continue to have gainful employment. Another important indicator for regional wealth creation is its value added or productivity per employee. In the year 2000, individual productivity increased by 7 per cent to $127,100 average per employee compared with the US average of $60,800. The extraordinary productivity is attributable to the integration of technology in the work place as well as to the long hours of work put in by the employees. Fig. 1 illustrates the extraordinary premium paid to knowledge workers in the Valley as compared to salaries in the rest of the US. It can be seen the Valley's average wage is84 per cent above the national average.

Fig. 2 Avera2e Wa2e per Emplovee in the US (1992-2000) 70 60 50 Amount in'OOO 40 US $

30 20 10

o 1992

1996

1994

I 0 Silicon Valley r

1998

2000

o Rest of US

Only when it is dark enough you can see the stars. -Charles Austin Beard

i ,

Management & Change, Volume 10 Number 1 (2006)

18 Cluster and Competitiveness:

The major industry clusters in the Valley are: computers/communications: semiconductors/semiconductor equipment; software; bioscience; defense/ space; innovation services and professional services. The region evolved with a focus on defense in the 1950s to integrated circuits in the 1960s and 1970s, to personal computers in the 1980s to internet in the 1990s. The influx of highly skilled technology workers is said to be responsible for the heightened entrepreneurial activity in the region. The region's capability to easily absorb and integrate talent from all societies, cultures and ethnic groups is an important attribute reflecting that not merely high wages but attitude has had a major role to play in enhancing the innovative capability in the Valley. There are two important characteristics of the Valley that compound its exponential growth: (i) The transnational ethnic groups such as Indians, Chinese, Israelis and others are able to work between their own native countries, the Silicon Valley and other regions around the world in a seamless manner; and (ii) Use of job sharing in multi location teams enables companies to work around the clock everyday through technology linkage and to train many more people around the world in the culture and best practices of the US technology firms. Thus, the Valley serves as a large research and development laboratory and the original think tank for manufacturing enterprises based around the world. The Valley is well positioned to continue to be a global technology economy leader because of the diversity of its business sectors, its linkage to the high tech world regions and the ability of its economy to be flexible and adapt to ever changing technology trends. The Valley has also led to the growth and development of a new global entrepreneurial class of industry executives. This is exemplified by the large number of successful entrepreneurs from different parts of the world who have all migrated to the region and who operate globally. It emerges that regional wealth creation can also be greatly enhanced through skilled use of marketing which can be adapted for the successful enterprises - companies, regions and organizations. This is epitomized in the Valley with so many companies using innovative positioning styles and successful branding to build upon their consumers' minds. The key difference between commercial product positioning and technology regional poManagement & Change. Volume 10 Number 1 (2006)

irI ;

K. Momaya and Jyoti S.A. Bhat 19 sitioning is that the emphasis on branding and positioning in technology must focus on the needs of the market to be fulfi lied positioning ahead of actual product availability.

GLIMPSE OF JAPANESE PERSPECTIVES Japan has achieved very high competitiveness in number of impol1ant industries and the country as a whole. Despite ten years of recession Japan's competitiveness in key industries from automobiles to electronics and telecom (Exhibit 1) has been sustained. While Japan ranks bit lower in many competitiveness ranking, it was found to be second only to the USA with developed country weightages (NCR, 2004). On number of competitiveness factors of trade, finance and technology, it ranks ahead of the USA. In overall competitiveness also it has improved ranking recently. Here are just few indicators of competitiveness of Japan: o

More than eighty five companies

in Fortune Global 500 as compared

just two for India. o

Japan has commanding

positions

in a number of key industries

such as

automobiles including those in the country that brought automotive lution - the USA. o

Clusters are quite developed in such industries almost fully completed in some regions.

and value-chains

revo-

are

Japan is working hard to become competitive in emerging industries to meet the challenges oflow cost competition and resulting outcomes such as hollowing-out. Japan has taken many steps to become competitive and has been quite successful in select sectors such as 3G, 4G communication. For instance, there are scores of IT hubs with impressive growth across the country, referred to as a second silicon valley in the making (Jetro, 2003). Digital authorization, Internet data centers, application services providers, e-Iearning and e-commerce have been identified as five promising e-business areas under government's e-Japan strategy with massive investments. Consequently e-Japan Strategy II was adopted in July 2003. It has signalled shift in focus from development of ICT infrastructure to the promotion of ICT utilization and positioning the ubiquitous network as the goal in developing the next generation ofthe ICT environments. Similar efforts are underway in biotechnology. There were some 300 start-ups in the field as of the spring Management & Change. Volume 10 Numher I (2006)

20 Cluster and Competitiveness:

of2002 and explosion is likely to continue with deregulation such as permitting teachers at national universities to serve as executives for private companies from 2000 (Jetro, 2003). Innovation is given increasing importance considering that strong Japan post-rebirth and clusters can play an important role. Many interesting dimensions of innovation starting from corporate innovation to product, process and societal innovation have emerged from considerable research (Matsuda, 2003). Conceptual architecture oflarge-scale knowledge clusters and satellites was conceived. Importance of corporate innovation and practical ideas for implementation were identified by the team led by Fukushima (2003). Among many important dimensions of innovation, e.g. technological, product, market and customer-focused some of them can be sources of emerging competitive industries . .Japan often creates highly sophisticated domestic market to strengthen the cluster for global competitiveness. For instance, the development of a ubiquitous network society driven by the fourth wave ofICT innovation will create huge demand for new products and services (.Jetro, 2003). The market \vill be worth 30 trillian yen in 2005 and 84 trillian yen in 2010. Japan had the second largest wired population with rapidly expanding broadband capapilities. In fact, in per centage terms it surged far ahead ofthe USA in man)' segments and contributed to as high as 50 per cent of global mobile commerce. Intelligent highway vehicle systems and service innovation from products such as shared cars by Toyota are some other examples that can be found in Japan. Government's e-Japan programme based on e-Japan strategy of2001 is likely to create many such sophisticated markets in Japan for emerging industries. GLIMPSE

OF INDIAN SCENARIO

GOl policies have been continually primed to nurture science and technology related capabilities in various core areas in tune with changing needs. Even after more than a decade of liberalization, government remains the dominant investor in R&D. Share of the private sector in R&D investments in India remains quite low as compared to developed countries or even newly industrialized economies such as Korea and China. Despite havingto cope with very diverse requirements, efforts have been made by the governments to develop and retain core strengths in several areas of industrial activity. Management

& Change.

Volume

10 Number

I (2006)

K. Momaya and Jyoti S.A. Bhat 21

Multiple facets of economy, governance and human resources need.to be explored to fathom the depths of competitiveness. Situation has been improving, but at too slow a pace on important fronts such as Iiteracy, governance, employment, trade and competitiveness to meet accelerated aspirations and wants of masses. There is a viewpoint that without rapid and quality improving on the above fronts, the vision oflndia (Kalam and RCljan, 2002; Mashelkar, 2003; Khanna, 2004) cannot be realized. While there will be clusters of excellence and prosperity in pockets, the overall competitiveness of India will improve rather slowly. Considering that goals of economic parity are very difficult to achieve in even the most competitive economy such as the USA, India should not v"ait to nurture emerging industries ti IIequity is ach ieved. GOI has been the driver of investment in creation of a base for emerging industries but there are limits to sustainable scale-up of the existing model if the commercialization dimension is not improved. Bases of scientific and technical human resources and infrastructure for R&D were built largely by the GOI between 1950s and 1980s with some need based strategic interventions now and then and these have resulted in significant achievements in strategic sectors such as atomic energy, defense and space. However, these bases did not, barring few exceptions, transl?te into significant industrial innovation. Currently, however, there is cause for some concern and need to take corrective measures. The in-built 'indigenous' technological innovation capabilities developed over years has been losing its sheen in the market place in India in the face of global competition, and even rrianufacturing in traditional sectors is increasingly being taken over by global players. Taking the lead in emerging industries in global markets is very challenging but a goal worth pursuing, even if only few can succeed. Our . research about the orient hints that when even small countries such as Taiwan and Korea (countries such as China and Japan are far ahead of India on key parameters) can win commanding market share of the global market, India can and must act to win at least in niches of emerging industries, if not a full market segment. Emerging clusters around metro cities such as Bangalore, Chennai, Delhi, Hyderabad, Kolkata and Mumbai can become anchors for emerging industries.

Management & Change. Volume 10 Number 1 (2006)

3:::

N N

;>l

Table 2 Quick Comparison

rro

of Two Clusters in IT Industry

'"3

CJl

'"2-

Factor

n :r ;>l ::J

Cluster's

national

Texas Austin IT Cluster

share of piOduction

and exports

Major «50

per cent)

"'l

Bangalore

c..

Major«20

per cent)

(compared

~ ~

Annual cluster growth

Fair « I 0 per cent)

Rapid (> 10 per cent)

Annual export growth

Fair«10

Rapid (> 10 per cent)

World export share

Significant

Very small

Vast majority

Minority

Less

High

'"o Z c:

to competitive

clusters)

(")

Local firms have own foreign marketing

firms

Presence

Source: Adapted from Porter and Linde (2004)

o ,s

:.; ::

IT cluster

rro f'l

of foreign

com pan ies

percent)

;:;: ::;::0

I am a great believer in luck, and I find the harder I work the more I have of it. -Thomas Jefferson

~ :: ~

CJl CJl

. K. Momaya and Jyoti S.A. Ghat 23 Quick comparison of two clusters in IT industry provide some insights .. One cluster was taken from the USA and other from India. Competitiveness journey of the two clusters is given in Appendix II. Select comparative factors, including performance factors, of the two are given in Table 2. Despite many achievements, early origin, performance of the Bangalore cluster may not be considered far superior than the Texas cluster. ]n fact, the Texas cluster has better production and export performance. More involvement oflocal or indigenous firms may be a reason for differences in the performance.

KEY QUESTIONS

AND ISSUES

Identification of and prioritization of key issues among a large number of problems is a very difficult but impOliant step. The research and current state of knowledge in India about competitiveness of emerging industries may be at a formative stage in long journey from data finding, problem finding to solution finding, implementation and acceptance finding. One needs to look at many divergent questions for arriving at key issues. o

Do many firms, industries

and clusters in India have real desire to com-

pete in core technology creation and commercial space industries may be an exception)? o

Do they have resources, compete

Is the resource-based competitiveness?

! ~

in adequate

and

quantity

them at the pace needed?

view (e.g. Barney, 200 I) a better perspective

In context of emerging

industries

for

also?

Are we creating environments that help Illlliure right kind of individuals with balance of skills in research as well as business management?

Are we creating

clusters for emerging

are these clusters? o

Is venture

technologies?

How competitive

Will they meet needs of country?

business

business in emerging evant for India?

skills and capabilities

and sustain? Are we building

ization (defence

the best model to connect industry?

basic research

What are alternatives?

to new

Which are rel-

What extent learning from the US/ other developing country contexts are helpful to India? [n bringing newthinking, ifnot implementation?

How can one attune minds of key stakeholders Managemcnt

& Changc.

needed to create clusVolume

10 Number

I (2006)

24 Cluster and Competitiveness:

tel's of new industries? o

What are the key mechanisms to create new industrial clusters and how can one build and upgrade such mechanisms?

How has been the performance of mechanisms in India?

How many years India lags behind developed world in creating right mechanisms?

What are existing acts, programmes in this direction? Are they working effectively? Are they making any impact?

Where is the real problem in India? Relatively less effective design, resources or implementation?

What new strategies India needs to implement to overcome constraints such as low resources, invisible barriers for a developing country.

What global/indigenous business models that have been successful?

How could Japan achieve leadership positions in a number of emerging industries of past despite lagging behind (by years, if not decades) the US style mechanisms?

What are macro issues (e.g. autonomy of state/local government to nurture a cluster)?

Key Issues Many diverse issues can evolve and can be prioritized in a brainstorming session on competitiveness. An attempt is made to delineate some key issues in th is area. Macro/Strategic/Policy

Issues

What are best frameworks for competitiveness at different levels? Do they help in understanding and decision-making? Are they relevant for emerging industries also?

Which dimension ofclusters may provide maximum benefits in Indian context: innovation, employment, venture creation, new business formation, knowledge creation, productivity and competitiveness?

Can competitiveness provide more holistic framework to link clusters to specific improvement areas such as productivity, quality or human

Management & Change. Volume 10 Number I (2006)

i j

K. Momaya and Jyoti S.A. Hilat 25

resource development? o

Why majority of cluster initiatives promoted by UN agencies such as UNIDO are in traditional industries? For instance, "clusters for competitiveness" initiatives facilitated by the CII began with automotive sector.

What adaptations to successful rnr:dels, such as Silicon Valley model, need to be done to indigenous models in India to enhance their effectiveness?

Can India compete in emerging industries? Which industry/segments offer better chance?

Can firms from India make any dent in the monopolistic segments of technology giants such as Microsoft (Appendix II) with huge technological financial and intellectual resources at their command?

Do they have resources and capabilities needed to make even a small impact in face of very tough competition in high value-added segments such as products?

If so, why we don't see many remarkable attempts and wins by the best of Indian giants with huge resources (e.g. more than 30,000 employees)?

What strategies can they implement for rapid capability building?

How practical is the concept of moving to cluster-based policy from Industrial policy as suggested by Porter (2004)? Any concrete evidence of success of cluster-based policy in US/other competitive country? What are good examples in developing country/ Indian context?

Linkages and clusters o

Commercialization phase is highly dependent research community and business sector. strengthened in India?

on linkages among How can they be

In case the majority of firms are SMEs, forums and industry associations and other networks that can link up. down and across supply chains or supply networks may bec3me essential and need nurturing from government (at least in initial phases). Management & Change. Volume 10 Number I (2006)

26 Cluster and Competitiveness:

Exports, Market Access and Brand These practical issues are very important for many firms. Access to dominantdeveloped country markets is important to leverage costly and high risk investments in research that are often needed for emerging industries. o

Interactions with senior executives in industry indicated that there are many invisible barriers to technology exports from India in leading economies. How can Indian firms overcome such barriers?

Building a dominant brand can confer major advantage. How Indian firms can build such global brands when in their local market also they have tough time against MNC brands?

How has been the improvement in brand of India in global markets? Are these only to few sectors' such as software? Even there is it more for cost competitiveness or other advantages?

How has been the impact of brand initiatives such as the India Brand Equity Foundation for brand ofIndia in global context?

Human Capital It is a major asset for emerging industries and quite abundant in India. How can we evaluate optimal use for long term competitiveness ofIndia? Success ofIndia in software is attributed to favourable conditions such as abundant skilled human resources, high labour-intensity of the software projects, low capital intensity and huge wage differentials. To what extent such favourable conditions exist in other emerging industries? How fast can they be created, scaled-up and sustained? Alliances Alliances of different kind are critical to formation, growth and sustainability of clusters in emerging industries. Huge complementary resources needed for a dynamic cluster in an emerging industry is beyond the capabilities of few finns, one level of governance (e.g. city, state or country). Alliances among firms are quite important for clusters. Many examples of such alliances can be found in clusters in Silicon Valley, Europe, Japan, Korea, China and lndia. Tokuda (2004) has highlighted importance of entrepreneurial alliances ofthe firm to create sustainable -competitive advantage.

Management & Change. Volume 10 Number 1 (2006)

K. Momaya and Jyoti S.A. Ghat 27

CONCLUDING

REMARKS

Few concluding remarks are synthesized here, however, it is not possible to draw conclusions from the evolving exploratory research. IntensifYing COIllpetition in India can unfold on many frontiers and demands competitiveness on multiple levels: country, industry and firm. Clusters have played critical role for competitiveness of industries and firms, including emerging industries. Exploratory review of perspectives on clusters in two of the largest competitive countries of the world, the USA and Japan, provides some useful learning. While the USA has some of the most vibrant clusters in emerging industries, Japan and leading European countries also have some dynamic clusters and strategies to nurture many vibrant clusters. While India has many clusters and some competitive clusters in emerging industries, slow improvement in competitiveness hints at considerable scope for improvement. Large number of questions and issues identified for Indian context is indicative of many areas that need to be researched. Acknowledgements Authors would like to acknowledge colleagues in Department of Management Studies, lIT Delhi and researchers in other countries, including Japan and USA for fruitful interactions. Authors convey their gratitude to the Department of Scientific and Industrial Research (DSIR) for financial support in conducting competitiveness research. Various studies sponsored by the Department of Management Studies provided valuable research inputs. A very sincere thanks is conveyed to Mr. Jaykumar Shah, an MBA student for his all-round help.

REFERENCES Afuah, A. (1998) Innovation Management: Strategies. Implementation and Profits, Oxford University Press, New York. Ajitabh and K. Momaya (2004) "Competitiveness of Firms: Review of Theory, Frameworks and Models", Singapore Management Review. first half, 26( 1): 45-61. Barney, J.B. (200 I) "Is the Resource-based "view" a Useful Perspective for Strategic Management Research? Yes", Academ.v of Management Review, 26( 1): 41-56. Bhat, l.S.A. (2003) Issues and Concerns of New Technology based IndusManagement & Change. Volume 10 Number 1 (2006)

28 Cluster and Competitiveness:

tries-Advances in Nanotechnology. Management of Research and Development in the New Millennium. Delhi: Macmillon. Bhat, J.S.A. (2003a) "Heralding a New Future-Nanotechnology", Science, Bangalore, 25th July 2003.

Current

CII, 2004, CII to form 100 Clusters of SMEs by April 2005, ciionline.org, Accessed on November, 30. Cockburn, I. and R. Henderson (1998) "Absorptive Capacity, Coauthoring Behaviour, and the Organization of Research in Drug Discovery", Journal of Industrial Economics, 46 (2): 157-182. Collins J.e. (2001) Good to Great. New York: HarperCollins. Collins, J.e. and J.1. Porras (1994). Build to Last: Successful Habits of Visionary Companies. New York: HarperCollins. Drucker, P.F. (1992) Managing for the Future: The 1990s and Beyond; Dutton and Drucker, P.F. (1985), Innovation and Entrepreneurship: Practice and Principles. Harper and Raw. Durnaton, G. and D. Puga (2001) "Nursery Cities: Urban Diversity, Process Innovation and the Life Cycle of Products", American Economic Review, 91(5): 1454-1477. Feldman, M. (2002) The Locational Dynamics of the US Biotech Industry. Conference of the Technology and Economic Growth (TEG). Groningen, Netherlands, August, 2002. Fukushima, G.S. (ed.) (2003) Management Innovation: Key Factors for Success (in Japanese). Tokyo: Arthur D. Little (Diamond). Glaeser, E., H. Kallal, J. Scheinkman and A. Schleifer (1992), "Growth of Cities", Journal of Political Economy, 100: 1126-1152. Hamel, G. and e.K. Prahalad (2003) Competing for Future. New Delhi: Tata-McGraw Hill Publishing CO.Ltd. Heller, R. (1997) In Search of European Excellence: The 10 Key Strategies of Europe:5 Top Companies. London: Profile Books. Hendersen, Y, A. Kuncoro and M. Turner (1995) "Industrial Development in Cities", Journal of Political Economy, 103 (5): 1067-1090. Jain, A.K., (2004) Managing Innovations, Proc. of the 33rd IFTDO World Management & Change. Volume 10 Number I (2006)

K. Momaya and Jyoti S.A. Bhat 29

Conference, Indian Society for Training and Development, Nov. 22-25. Jetro (2003) Invest in Japan: Attractive Sectors, Information and Communication Technology, Tokyo. Jetro (2004) Regional Cluster Brings Business to the Foot of Mt. Fuji, Japan External Trade Organization, www.jetro.go.jp. Accessed on Jan. II. Kalam, A.P.J. and Y.S. Rajan (2002) India 2020: A Vision for the New Millennium. New Delhi: Penguin India. Khanna, K. (ed.), (2004), Transforming India into an Economic Power and A Developed Nation, i Watch, Mumbai, www.wakeupcall.org. Klepper, S. (200 1) The Evolution of the US Automobile Detroit as its Capital, November.

Industry and

Krugman, P. and A.J. Venables (1995) Globalization and the Inequality of Nations, The Quarterly Journal of Economics, CX (4): 857-880. Mashelkar, R. (2003) Learning to Dare and Daring to Learn. In Khanijo, M.K. (ed.) Reflections on Development, Eminent Speakers Series, Indian Society for Training and Development, New Delhi. Matsuda, S. (2003) Nihon Saisei: Monotzukuri Kigyou no Innobeshon (Rebirth of Japan: Innovation in Manufacturing Firms) (in Japanese). Tokyo: Seisansei Shuppan. Momaya, K. (2001) International Competitiveness. New Delhi: H industan Publishers. Porter, M.E. (1998) On Competition. Boston: Harvard Business School Publishing. Porter (2004) Indian Competitiveness: Where Does the Nation Stand? Transcript of Presentation Done on Jan. 21, Mumbai. Porter M and C. Linde (2004) Cluster Profiles, Institute for Strategy and Competitiveness. Boston: Harvard Business School. WCY, World Competitiveness Appendix

Yearbook. IMD, Geneva, different years.

Definitions and Notes

Key concepts of this paper carry many diverse meaning due to their generic nature. Hence, agreeable definitions will help in understanding issues Management & Change. Volume 10 Number I (2006)

----"."1 30 Cluster and Competitiveness:

a concise summary of which is as follows: Cluster. A cluster is a geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonafities and complementarities (Porter, 1998). The scope of' geographic' has multiple dimensions: city, state or country to network of neighboring countries. Apart from direct value-adding entities such as suppliers and service providers, clusters can include firms in upstream or downstream (e.g. channels or customers) industries, governments and institutions depending on the context. Agglomeration is other term used quite often in economic theory for clustering. Industrial clusters are venues that are geographically close and which can induce innovations on a long-term and continuous basis. Competitiveness. GECD defines competitiveness as "the degree to which a country can, under free and fair market conditions, produce goods and services which meet the test of international markets, while simultaneously maintaining and expanding the real incomes of its people over the long term". Competitiveness at the industry level is, however, more important but poorly defined following rapidly changing industry boundaries (Momaya, 2001). Industry competitiveness. Collective ability of firms in an industry to compete internationally while balancing growth, returns and human resource development. Cluster Competitiveness. Cluster competitiveness is very difficult to define due to fuzzy boundaries of a cluster. A possible generic definition is: "Excelling in a particular type of business that cluster works for, creating inherent strengths by effective collaboration, knowledge management, sharing and complementing of strengths, creating common processes across companies of the cluster that could lead to overall economic development and progress of all the stakeholders in a cluster". Corporate/firm/organization competitiveness. The ability of the entity to perform battery of relevant activities on the value system from design, engineering and manufacturing to services better than competitors in sustainable way. Emerging Industry. It refers to newly formed or refonned industry created by technological innovations, shifts in relative cost relationships, emergence of new customer needs or other economic and sociological changes that Management & Change. Volume 10 Number I (2006)

K. Momaya and Jyoti S.A. Bhat31

elevate a new product' or service to the level of a potentially viable business opportunity (Porter, 1980). The essential characteristic from the viewpoint of formulating strategy is that there are no rules to the game. The competitive problem is that the rules must be established such that the firm can cope and prosper under them. Interactions among driving forces of emerging industries are quite complex and the dynamics is mQstly understood and successfully implemented by developed countries or regional groups only. Capabilities. Capabilities, which include competencies and endowments, can be anything along an organization's or industry's value chain. Competency can be simply defined as an ability to perform an activity. Endowments are things such as intellectual property protection or reputation which corroborate or complement a firm's competencies in its offering of low-cost or differentiated products or services (Afuah, 1998). This definition can be extended to organizations, industries and even countries.In the context of emerging industries, activities can span in areas such as futuristic technological forecasting and capability building in an industry or country through professional societies and academic/research institutes. For instance, leading positions that Japan hold in future industries such as fuel cells, nanotechnology and ubiquitous networking can be attributed to heavy investments in building such capabilities by key stakeholders over decades. Appendix

Examples

[01

of Competitiveness

of Clusters

Journey

2000: First Indian IT company listed on Nasdaq

1968: Birth of Indian IT services industry by formation of TCS

1940: Birth Reasons:

of cluster

â&#x20AC;˘ An Advantageous â&#x20AC;˘ Formation

ofilSe

location

1990': Establishment of external marketing arms of IT companies 1980': Establishment of companies like Infosys, Wipro. etc.

and HAL

Management & Change. Volume 10 Number I (2006)

32 Cluster and Competitiveness:

2000: High cluster awamess and focus on developing electronics cluster by the government â&#x20AC;˘

1980s: Location of Lockheed missiles and space in 1982, MCC consortium in 1982

1966: Branch location of IBM 1969: Branch location of TI

1940: Birth of cluster Reasons: â&#x20AC;˘ Founding of Tracor, Austin's

1974: Branch loction of Motorola 1979: Branch location of AMD

first large home grown electronics co.

Fig. A2 Texas Austin IT Cluster Vignette I Competing with Monopolistic Giants in Technology Industry With one monopoly in Windows, Microsoft by an innovative and ingenious idea is trying to extend that monopoly from personal computers to office servers, handheld computers, table PCs and finally into the web services with Hailstorm, a subscription based e-mail-alert Web service and Passport services. Microsofts aggressive strategy is intertwined with the idea that any user who enters the PC or Internet world must use its own software servIces. Another emerging example of network-based monopoly is AOL, whose 30 million customers are locked-in together sharing many unique services. AOL is refusing access to its instant messaging services to others like Yahoo and Microsoft, but trustbusters have made merger of AOL and Time Warner conditional upon opening the service to others. (Prabhat Kumar, The Economic Times, New Delhi, August 21, 2001).

Management & Change. Volume 10 Number 1 (2006)

CONSTRUCTION OF A LEARNING ENABLING STRUCTURE SCALE (LESS) Bijaya Mishra

A. Uday Bhaskar

Amulya Khurana

The structure of an organization represents -the building block on which it rests. It contains a myriad of jobs, departments, divisions, employee interactions, amI so on. Thus, any change in organizational identity requires simultaneous modifications in its structure. In order to make an organization a 'learning organization', the organizational structure and processes underlying it need to be facilitators of learning. The objective of the present study is to develop a scale to measure the dimensions of learning enabling structure. A pool of twenty three items wasformulated and tested on a sample of randomly selected 213 executives from IT organizations. Reliability and validity of the scale were duly established The final sCllle.consists of thirteen items, with a six point Likert type formllt. INTRODUCTION There is little contradiction to the notion that organizational learning is a competence that all organizations should develop in a fast-changing and competitive environment. R.W. Revans, who stimulated interest in action learning in the 1970s, suggested that the degree oflearning within the organization must be greater than or equal to the rate of change in the environment (Revans, 1982). With increase in environmental turbulence, this organizational competency needs to be in "fit" with the organizational changes. Thus, learning is considered to be the essential factor if organizations are to cope with change and survive in future. The topic of "organizational learning" is not a new concept, rather what is new about this is that, several forms it has been acquiring since 1958. It added a new feather to its cap with the work of Argyris and Schon in 1978. They stated that organizationallearning occurs when individuals within an organization experience a problematic situation and inquire into it on the organizational behalf. Management & Change. Volume 10, Number I (2006) Institute for Integrated Learning in Management.

ÂŤ:J 2006

All Rights Rcscn cd.

34Construction

ofa Learning Enabling

Later on. Senge in 1990 coined the term "learning organization". fined the learning organization as one "where people continuously

He deexpand

their capacity to create the results they truly desire, ""here new and expansive patterns of thinking are nurtured. ",,,here collective aspirations are set free, and where people are continually This "capacity

for creation"

learning how to learn together".

distinguishes

a learning organization

so than any other characteristic. It helps an organization in generating new knowledge thereby making it to embrace change in a proactive manner. As reiterated by Watkins and Marsick (1993), it responds to the turbulence of change by instituting internal organizational structures. Huysman (1999) described a learning organization "as a form of organization that enables the learning of its members in such a way that it create:~ positively valued outcomes, such as innovation, efficiency, better alignment with the environment and competitive advantage". If this is so, then how do organizations learn? Maheshwari (2001) expressed that organizations learn by establishing a learning cu Iture, investing significantly in R&D activities, developing human resources, and incorporating learning into structure and systems. Probst and Buchel (1997) have abo pointed out that there are at least four different approaches organizations can take to promote learning, these are; learning by developing a strategy, learning by developing a structure, learning by developing a culture, and learning by developing human resources. Thus, organizational structure has an irnpOIiant role to play in aiding organizational learning. Fiol and Lyles (1985) emphasized the impOliance of organizational structure in determining learning within an organization. If one takes into account consideration such viewpoints, then ;t can be summarized that structure has a pivotal role for learning to happen in an organization. "Many writers suggest thatto encourage risk taking and innovation inapplying new knowledge, the organization needs a flat organizationa I structure that places work teams very close to ultimate decision makers (Goh, 200 I)". This implies that organizational structure needs to be associated with less formal isation, fewer rules, and a management style that promotes freedom for employees to take appropriate actions (Mohrman and Mohrman, 1995). Thus. such an organization does not depend on strict rules or guideM,Ill,lgclllcnt &: Change. Volume 10 Number

1 (2006)

Bijaya Mishra,A. Uday BhaskarandAmulya

Khurana 35

lines for controls, rather power is based on knowledge. Leonard-Barton (1992) has also stressed that a learning laboratory requires minimal hierarchy, extensive networking, and alliances. These organizational characteristics suggest that for institutionalizing learning, an organization needs to have a structure marked with less formalisation, decentralised decision-making, experimentation, and open line of communication. Goh (2001) carried out a study in various industries by taking structure as one of the variables and concluded that learning organizations generally have an organization structure that is nat hierarchical and highly formalized. He stressed the need for low formalisation as anecessary antecedent for building a learning organization. The structure questionnaire used in his study has been developed by keeping formalisation into account. Ulrich, et al. (1993) suggested that the management actions need to follow certain patterns for shaping an organizational structure that promotes increased learning. These patterns are: a "fluid (boundaryless) organization" with no respect for divisional barriers, a "network organization" that is fluid, flexible, and adaptive, use of ad hoc cross-functional teams, and information and success sharing. The importance of flexible work scheduling and teamwork for formally endorsing school organizational learning has been stated by Lam and Pang (2003). According to Gephart, et al. (1996), a spirit offlexibility and experimentation are the essence oflearning organization. This will help people in taking risks, making them innovative thereby generating new work processes and products. Wang and Ahmed (2003) have provided guidelines for the structure and structural dimensions of knowledge-based organizations. They stated that 'the knowledge economy makes new demands on organizational structuring based on processes'. These structural dimensions are: informal relationship, trust-based relationship, emotionally inclusive relationship and externally-oriented relationship. These dimensions help an organization to attain success in the knowledge economy. Organizational design reflects the systems view, which considers that structure consists of both hard and soft components. The above-mentioned Management & Change, Volume 1o Number 1 (2006)

)

....

36 Construction

of a Learning Enabling

perspectives pertain to soft part. If hard part of structure is taken into account, then Twomey's paper provides valuable reading. Twomey (2002) stated that "The matrix structure has the potential to transform organizational learning and thereby create a continuous acceleration of innovation. The matrix structure (having dual reporting relationship) demands a high degree of openness and collaboration and simultaneously requires the alignment of organizational culture, processes, and people skills - thereby resulting in a learning organization". From the above literature it can be understood that organizations need to have a structural base that supports them in creating a culture of continuous learning. There is little neg8;tion to the fact that organizational structure is a prime driver of learning since it provides the skeletal frame for all organizational processes. Popper and Lipshitz (1995) have emphasized that structural facets, which are the institutionalized structural and procedural arrangements, allow organizations to systematically collect, analyse, store, disseminate, and use information that is relevant to the effectiveness of the organization. However, there remain some unanswered queries. Are there any learning specific structural attributes? If so, how these can be measured? Though Goh (2001) has used an organizational structure questionnaire in his study of "learning organization", it measures "formalisation" aspect of structure. The present study is a modest attempt to develop a questionnaire to measure some other_ attributes of learning enabling structure. These attributes are operationally defined below; Information-Sharing. It helps in free flow of communication across organization which facilitates learning and innovation: When an organization has structures and processes catering to free flow of communication, it creates transparency and idea sharing for effective functioning of the organization. Boundarylessness. It is that state where there exists virtually no boundaries among different departments, levels, functions, etc. The work is entrusted to multifunctional teams, which makes free flow of work, ideas, knowledge, and suggestions without any obstacles, thereby developing learning culture.

Management & Change, Volume 10 Number 1 (2006)

Bijaya Mishra,A. Uday Bhaskar and Amulya Khurana 37

CONSTRUCTION

OF THE INSTRUMENT

First Draft Based on the above operationalised definitions, an attempt has been made to construct a scale to measure perceived organizational structure that helps in enabling organizational learning. Having derived from the idea underlying the above operational definitions, a pool of 23 items was formulated to measure the two structural dimensions of learning organization. The scale has a Likert type scale format. Assigning of scores range from one to six. Where one means, "strongly disagree" and six means, "strongly agree". The scale was given to a panel of twelve judges for determining the "face validity". The jury included professionals and subject experts, who were requested to access each item and categorise it under one of the two dimensions operationally defined earlier. The percentage of judges' agreement with respect to the categorisation of each statement in one of the dimensions of learning enabling structure scale was determined. The items sharing 75 per centage or more of judges agreement were selected. Proceeding in this manner, 21 out of 23 items were retained.

Second Draft The 21-item scale that evolved as a result of the judges agreement with the classification, was administered to randomly selected 213 respondents across all levels in ten IT organizations. Factor analysis was conducted on the data for 'construct validity'. The item validity ofthe instrument was established by factor analysis (Appendix 'B'), to determine whether items measured, what they were intended to measure. For better interpretation, and to obtain clear loading, the items were rotated using varimax rotation. Items having a loading of 0.5 or more were retained. Thus, eight items, which had loadings less than 0.5, were dropped. Those items, which had a loading of 0.5 or more on more than one factor, were included in the factor on which they had the highest loading. Further, to reduce the number of factors, some of the factors were merged keeping in mind the theoretical background as well as the degree of relationships they have. Aaker and Day (1980) say that factors are to be combined keeping the interpretability of the factors in view. Management & Change, Volume 10 Number 1 (2006)

38 Construction

ora Learning Enabling

Final Version of the Scale The final version of the scale consists of 13 items (Appendix A). On the basis offactor analysis two factors emerged, which are redefined as follows. The first factor is named as Creative Problem Solving and included in statement NO.6, 7, 8, 9, 10, 11, 12, and 13. It represented generating ideas and collecting information by using multifunctional teams. Team members unleashed their potential when they were thrown to different problems and ideas. In an organization where opportunities are provided to members to voice and share their feelings, ideas, tacit knowledge it boosted their confidence and resulted in 'creative problem solving'. This is paramount for organizations to unlearn, learn, and relearn. The reliability estimate (Cronbach alpha) for this factor is 0.87. The second factor represented boundarylessness, which included item refers to a situation where breaking down of barriers within and between firms occurs. It eliminates the chain of command, creates empowered teams, and helps in effective intra-organizational and inter-organizational communication. This fosters sharing and learning. The reliability estimate (Cronbach alpha) for this factor is 0.85

NO.1, 2, 3, 4, 5. Boundarylessness

Reliability

If 4

The stability and trustworthiness of a measure is determined by its reliability. The reliability was calculated and was found to be 0.90 (Cronbach alpha).

Validity Inter judgevalidity of the scale was established by the responses of judges. "Confirmatory factor analysis" was computed to assure the construct validity of the scale to conform the theoretical framework being used in the study.

Administration The instrument can be administered individually or in a group, irrespective of the departments of the respondents. The instructions are provided at the beginning of the instrument to be read and the respondents are asked to fill in their responses, on the basis of their observations of the organization.

Scoring and Interpretation All the items are rated on a six-point scale ranging from' 1 : strongly disagree' to '6 : strongly agree' and their score summated for each dimension. Management & Change, Volume 10 Number I (2006)

Bijaya Mishra,A. Uday Bhaskar and Amulya Khurana 39

Table 1 Dimension

and Score of Learning

Structure

Dimension of Learning Enabling Structure Scale

Enabling

Scale (LESS)

No. of Items

Minimum Score

Maximum Score

Creative problem solving

Boundary lessness

Total learning enabling structure score

CONCLUDING

REMARKS

The instrument is useful for gathering information about structural patterns of organizations, which recognize as well as reinforce organizatioJfs learning ability. It can also identify critical problem areas in companies that are desirous of attaining excellence in future. The individuals, groups, and organization can work together to come up with action plans for changing any structural patterns with regard to a particular dimension. The present scale is validated on a sample of executives from IT organizations. The scale needs to be further validated in a cross section of employees from organizations operating in other sectors/industries.

REFERENCES Aaker, D.A and G.S. Day (ed.) (1980) John Wiley and Sons.

Marketing Research. New York:

Fiol, M.C and M. A. Lyles (1985) "Organizational Management Review, 10: 803-13.

Learning," Academy of

Garvin, D. A. (1993) "Building a Learning Organization," Harvard Business Review, 71(4): 78-91. Gephart, et al. (1996) "Learning Organization Come Alive," Training and Development, 50 (12): 34. Goh., S. C. (2001) "The Learning Organization: An Empirical Test of a Normative Perspective," International Journal of Organization Theory and Behaviour, 4 (3 & 4): 329-355. Management & Change. Volume 10 Number I (2006)

40 Construction

ora Learning Enabling

Huysman, M. (1999) Balancing Biases: a Critical Review of Literature on Organizational Learning. In M. Easterby-Smith, J. Burgoyne, and L. Araujo, (ed.), Organizational Learning and the Learning Organization: Developments in Theory and Practice. London: Sage .. Lam, J.Y.L and N.S.K. Pang (2003) "The Relative Effects of Environmental, Internal and Cont,extual Factors on Organizational Learning: The Case of Hong Kong Schools under Reforms," The Learning Organization, 10(2): 83-97. Leonard-Barton, D. (1992) "The Factory as a Learning Laboratory," Sloan Management Review, 23-38, fall. Maheshwari, B.L. (2001) India (1). In T. Tajima, (ed.), Learning Organization. Tokyo: Asian Productivity Organization. Mohrman, S.A and A.M. Mohrman, Jr. (1995) "Organizational Change and Learning'. In J. R .Galbraith, et al. (ed.), Organizingjor the Future: The New Logic jor Managing Complex Organizations. San Francisco: Jossey Bass Publishers. Popper, M and R. Lipshitz (1995) Organizational Learning Mechanisms; A Structural/ Cultural.~:pproach to Organizational Learning. Hafia: University of Haifa. Probst, G and B. Buchel (1997) Organizational Learning. London: Prentice Hall. Revans, R.W. (1982) The Origins and Growth oj Action Learning. London: Chartwell Bratt. Senge, P (1990) The Fifth Discipline. New York: Currency Doubleday. Twomey, D.F. (2002) "Organizational Competitiveness: Building Performance and Learning," CR, 12(2). Ulrich, D.T.J. and M.A.Y. Glinow (1993) "High-impact Learning: Building and Diffusing Learning Capability," Organizational Dynamics, 52-66, Autumn. Wang, C.L and P.K. Ahmed (2003) "Structure and Structural Dimensions for Knowledge-based Organizations," Measuring Business Excellence, 7(1): 51-62.

Management & Change, Volume 10 Number 1 (2006)

Bijaya Mishra,A. Uday Bhaskar and Amulya Khurana 41

Watkins, K.E and Y.l. Marsick (1993) Sculpting the Learning Organization: Lessons in the Art and Practice of a Systemic Change. San Francisco: lossey-Bass.

Appendix A Learning Enabling Structure Scale (Less)

Given below, are some statements describing organizational structure of an organization. Please read them and judge the extent to which they are present in your organization. A space is given at the right side of each statement. Please indicate the degree to which you agree with each statement, by choosing the appropriate number from the box below (where I means 'Strongly disagree' and 6 means 'Strongly agree') and putting it in the given space. (1) (2) (3) (4)

Strongly disagree Moderately disagree Slightly disagree Slightly agree

(5) Moderately agree (6) Strongly agree

1. Communication flows freely across the organization. 2.

Work is allocated to multifunctional teams.

Various functions in the organization are integrated by use of information technology.

Due emphasis is given on information sharing as a key to gaining knowledge.

A cross functional perspective is taken to solve problem in the organization.

Employees are encouraged to participate in problem solving.

8. Organizational culture encourages learning from best practices within organizations. 9. Organizational culture encourages learning best practices from other organ izations. 10. Teams of employees from various departments assemble together to bring out new ideas. 11. Good ideas are examined and adopted no matter where they come from.

12. Ideas once approved get implemented without any hassles. 13. Organizational system is transparent for building trust and confidence.

I !

Management & Change, Volume 10 Number I (2006)

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;<0

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rro

"2 c

(')

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B Factor Matrix Indicating Loading on Each Item of Scale

Appendix

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Parameter STRI STR2 STR3 STR4 STR5 STR6 STR7 STR8 STR9 STRIO STRII STRI2 STRI3 STRI4 STRI5 STRI6 STRI7 STRI8 STRI9 STR20 STR21

.177 .261 .295 .151 .473 .537 .688 .773 .655 .766 -5.2 I6E-02 .391 .101 .585 .401 .677 .568 .644 4.810E-02 -6.260E-02 -7.147E-03

2 .770 .700 .680 .714 .639 .464 .340 .254 .242 .123 .170 .380 -8.299E-02 .267 .450 .178 . 125 .143 9.535E-02 .232 .\36

3 .147 .138 .228 -.157 -3.778E-02 -.106 .123 -5.859E-02 4.016E-03 4.128E-02 .768 -.117 .803 5.284E-02 2.512E-02 .119 -.103 -1.531 E-02 -2.333E-02 .481 7.266E-02

-o' -. ::l

'I>

1.374E-02 .170 4.962E-02 .334 .189 -6.171 E-02 -.111 5.357E-02 .410 1.134E-02 1.263E-02 -.183 .\38 -.254 .305 6.965E-02 .113 6.290E-02 -.122 .603 .826 .

Note: Rotated Component Matrix. Items 6, 11, 12, 13, 15, 19,20, and 21 are deleted.

-1.407E-02 .211 .174 .114 -3.388E-02 -.217 7.487E-02 -.140 .119 -2.093E-02 -9.956E-02 -1.63\ E-02 8.055E-02 .142 .280 .345 .478 .359 .756 -8.488E-02 -6.305E-02

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OPERATING ASPECTS OF CNC MACHINE TOOLS P. R. Sudhakar Computer Numerical Control (CNC) mac/,ine tools are used where the parts to be malU~f(lctured are complex; expensive jigs and fixtures are needed; frequent design changes are often necessary; etc. Purchase of CNC machine tools is general(v influenced by need to reduce maintenance problems. Statistical parameters such as mean, standard deviation, Chi-square test, Hotelling's P test, analysis of variance (A NO VA), Duncan's multiple range test for multiple comparison and factor analysis, were used to analyse operating aspects of CNC mac/,ine tools. INTRODUCTION In CNC machine tools, the controlling is done by a micro-processor. In many ways CNC machine tools are similar to manually controlled machine tools except in one important aspect. In a CNC machine tool manual positional movements are replaced by motor drives, which are controlled by computers (Vickers, el al., 1990). In this paper it is attempted to analyse operating aspects of CNC machine tools with the help of a questionnaire survey. It is significant to note that irrespective of their age, educational qualification, work experience, field of experience (production or maintenance) and grade of work level, all the respondents reported high degree of benefit ofCNC machine tools. A large proportion (81.3 per cent) of the respondents stated that the CNC machine tools were very useful while only 18.7 per cent respondents reported thatthey were only moderately beneficial. The preference for CNC machine tools to conventional machine tools are 10 per cent where they are actually provided. Irrespective of age, educational qual ifications, work experience, field of experience (production or maintenance) and grade of work level, respondents overwhelmingly assessed that CNC machine tools are very useful. CNC Management

machine & Change.

~2 2006 Institute

tools Volume

for Integrated

are appropriate: 10. Number Learning

(Pattern,

1970),

I (2006)

in Management.

;\11 Rights Resenecl.

(i) where

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44 Operating Aspects ofCNC Machine Tools

otherwise very expensive jigs and fixtures are needed, (ii) set-up times are high, (iii) parts are complex (iv) human error can be expensive and (v) product obsolescence rate is high i.e. where frequent design changes are often necessary.

STUDY OBJECTIVES This study was carried out with a view to: (i) study preferences for the CNC machine tools over conventional machine tools, (ii) identify most important reasons for buying CNC machine tools, (iii) identify critical maintenance areas of the CNC machine tools such as mechanical, electrical, electronics or IT related problems commonly encountered, (iv) identify most important suggestions to minimize maintenance problems of the CNC machine tools, and (v) identify how age, educational qualification, work experience, grade of work level and field of experience (production or maintenance) affect respondents' perception towards usefulness of the CNC machine tools.

STUDY METHODOLOGY As per a previous study by Arvind Gulhati & Kulkarni (1997) CNC machine tools existed at 1324 locations in India. This study carried out with the help of questionnaire involved 187 respondents employed in 92 manufacturing locations all over India where a minimum of five CNC machine tools were available. The questionnaire was sought to be filled up by such respondents who worked at locations with minimum offive CNC machine tools. There were 340 manufacturing locations with minimum five CNC machine tools. However, out of them only 270 locations could be contacted due to nonavailability of correct addresses. Out of340 only 92 had responded (34 per cent). According to Gerrard (1988), a noted expeli in statistical analysis, 10 per cent response is considered adequate for questionnaire based surveys. The data must be unbiased and relevant to the characteristics being measured. Experts in the field were consulted and an exhausting literature survey was also carried out. Results for validated through content validation. Extent to which scaling results are free from experimental error is called reliability. Internal consistency method was employed to analyze reliability. Reliability index/coefficient alpha for different variables like 'reason for buying CNC machine tools', was high i.e. more than 0.9. For a sample size Management & Change, Volume 10 Number 1 (2006)

" "

P. R. Sudhakar45

of 187 respondents, a reliability/coefficient alpha value of 0.8 was considered adequate. Only manufacturing locations with a minimum of five CNC machine tools were studied. One study limitation was that opinion of manufacturers and potential users was not covered. STATISTICAL ANALYSIS Statistical analysis covered estimation of (i) mean, (i i) standard deviation, (iii) Chi-square test (iv) Hotelling's P test, (v) analysis of variance (ANaYA), (vi) Duncan's multiple range test for multiple comparison and (vii) factor analysis. This analysis was carried out on personal computer using SPSS (Statistical Package for Social Sciences) and MS Word windows (version 6). Mean and standard deviation were used to determine most important items of the questionnaire. Chi-square test is a test of statistical significance. It analyses whether there exists statistically significant linkage between two variables. It was used to study whether there is any correlation between the usefulness and the characteristics of the respondents like age, educational qualifications, etc. Hotelling's e test is used to compare mean vectors of responses drawn from multivariate normal distribution. Observation on some multi dimensional variate (n variables) obtained from the groups are compared in this test. This test was used to find out if there is a significant difference between production and maintenance groups ofthe respondents on their opinion on various beneficial aspects ofthe CNC machine tools. Analysis of variance (ANaYA) and Duncan's multiple range test for multiple comparison were used to find ifthere were any significant variations in the opinion of different groups of the respondents based on their characteristics like age, etc. and the factors obtained through factor analysis. ANaYA was used to determine if the variation between means of two (or more) samples is small enough to be attributed to chance or large enough to be attributed to some assignable factors. Duncan's multiple range test for multiple comparison was used to test significant difference among means of any two specific groups at a time (post-hoc comparison) by using q statistic (range between any two means). Factor analysis was used to limit factors into meaningful groups. This was done with the help of ' principal component analysis' using 'Yarimax rotation'. Management & Change. Volume 10Number

1(2006)

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Table

I Factor Analysis for 'Reasons for Buying' CNC Machine Tool

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Per Cent of Total Community

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IJQ

Rank

(t>

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5.87

2.92

54.5

0.9

High technology

5.82

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0.84

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~ 5.76

0.57

10.6

0.84

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5.34

0.49

5.12

0.41

9.1 .

0.72

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Company policy and managers' preference

7.7

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P. R. Sudhakar

SUMMARY

OF THE FINDINGS AND CONCLUSIONS

All the 187 respondents have preferred CNC machine tools to conventional machine tools. The four most important reasons for buying CNC machine tools were, (i) Special contours can be better achieved with CNC machine tools, (ii) CNC machine tools improve repeatability, (iii) CNC machine tools improve quality. and (iv) CNC machine tools are flexible in making a variety of components. There is no significant difference in the perception of production managers and maintenance managers in their reasons for buying CNC machine tools. The lowest ranking reasons for buying CNC machine tools are: (i) Technical consultants like MECON have advised purchase ofCNC machine tools, (ii) Collaborators recommended them, (iii) Maintenance problems are less and (iv) CNC machine tools are used in the technical collaborator's plants. A total of 5.71 (81.57 per cent) respondents perceived that the CNC machine tools improve company image. Another 5.56 (76.42 per cent) respondents observed that the factory/ plant is a pioneer in introducing advanced technology. Further 5.4 (77.2 per cent) respondents perceived that higher demand for products requires CNC machine tools in order to increase production. A record 6.53 (93.28 per cent) respondents (mean) observed that special contours can be better achieved with CNC machine tools. This implies that companies with good name, those already having some form of advanced technology and those with good market for their products, are interested to continue with CNC machine tools. A 5.76 (82.2 per cent) respondents (mean) perceived that CNC machine tools are economical in the longer run. This reinforces that the CNC machine tools are economically more viable than conventional machine tools.

Management & Change. Volume 10 Number I (2006)

3'~:: :l

Table 2 Factor Analysis for Eliciting Suggestions for Minimizing CNC Machine Tools

rf6n

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Average of Means

Factor

IJQ

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Rank

0.86

Choice of manu-facturer/agent and availability of spare parts

6.00

Equipping and operating the CNC machine tools

5.62

0.78

12.3

0.75

Maintenance planning house keeping

and

5.57

0.59

9.3

0.84

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for

4.64

0.48

7.6

0.77

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P. R. Sudhakar49

Factor analysis of twenty eight factors enabled shortlisting of five factors which are distinct with little overlapping among them. This included (i) company policy and managers' preference, (ii) productivity, (iii) quality and ergonomics, (iv) flexibility and (v) high technology. 'Quality and ergonomics' and 'high technology' are the most important factors, closely followed by flexibility'. The lowest ranking factor was 'company policy and manager's preference' . Respondents in the age group of 50 years and above accorded more importance to the factor 'quality and ergonomics' than other groups. Respondents of less than 30 years of age accorded less importance to 'flexibility' . Respondents having the lowest level of educational qualification i.e diploma (professional/technical)or graduate (arts/science), accorded more weightage to factors 'company policy and managers preference', 'productivity' and 'high technology' than respondents with higher qualifications. First line managers and top level managers accorded higher importance to 'productivity'. Senior managers also accorded considerable weightage to 'flexibility' . It is found that respondents with 20 to 29 years of work experience (Group 3) attached significantly higher importance to the factor 'company policy and managers preference' than other groups of respondents as a reason for buying CNC machine tools. Similarly, this group accorded significantly higher weightage to 'productivity' than respondents with work experience 10 to 19 years (Group 2). Respondents with work experience of 20 to 29 years and 30 years and above (Groups 3 & 4) gave higher weightage to the factor 'quality and ergonomics' than the lower experience groups. Group 3 respondents also attached higher importance to 'flexibility' than Group 1 (less than 10 years). Only on the factor' high technology' all the four groups of respondents did not significantly differ as a reason for buying CNC machine tools. It was found that while operational considerations were given highest weightages for buying CNC machine tools, the respondents had also expressed that 'CNC machine tools are economical in the longer run'. The respondents were aware of the maintenance problems of CNC machine tools. In view of this, they have given lower rank to the item 'maintenance Management & Change, Volume 10 Number I (2006)

50 Operating Aspects ofCNC Machine Tools

problems are less'. In buying CNC machine tools, situations existing outside the factory were given less weightage than internal percertions. MAINTENANCE

PROBLEMS

OF CNC MACHINE

TOOLS

It was found that mechanical and electronics problems were the most severe maintenance related problems. Degree of severity of problems was found in the order: (i) mechanical, (ii) electronics, (iii) electrical, and (iv) software and programming related problems. It is important to note that the respondents pertaining to production and maintenance discipline were not significantly different in their perception about the severity of different adverse effects arising out from mechanical, electronics, electrical and software and programming related problems. Understandably, 'physical hardship to repair' was the highest mean score for mechanical problems, as mechanical parts are generally heavier in nature. 'Difficulty in fault location' scored highest mean value for electronics problems. Mechanical maintenance problems were critical in view of such factors as 'physical hardship to repair', 'time taken to repair', 'more manpower is required' and 'involving more material handling', which have the highest mean scores. Electronics maintenance related problems were critical in view of 'difficulty in fault location', 'number of man days lost', 'time taken to repair' and 'frequency of break downs'.

'Pollution as an adverse effect' was given a lower rank for all the four categories of maintenance related problems, i.e. mechanical, electronics_ electrical and software and programming related problems. 'Number of accidents caused' and 'severity of accidents caused' were given low ranks for mechanical, electronics and e!ectrical related problems in view of higher safety related features of the CNC machine tools. This may be on account of material handling being automatic, sliding doors protecting the machine operation, etc. However, these two adverse impacts were given higher ranks for software and programming related problems. In fact, items like 'resulting in damage to tools/fixtures' and 'resulting in rejections' were given higher severity for this type of problem. This shows that software and programming related problems also cause considerable damage to the tools/fixtures that result in considerable rejections as well as accidents. Management & Change, Volume 10 Number I (2006)

I I

1-'_ ,,----

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P. R. Sudhakar

SUGGESTIONS FOR MINIMIZING MAINTENANCE PROBLEMS OF THE CNC MACHINE TOOLS It is important to point out that respondents belonging to different grades of employees were not significantly different in their suggestions for minimizing maintenance related problems of the CNC machine tools. This showed that different grades of employees did not differ in their suggestions or minimizing maintenance problems. The four most important suggestions for minimizing maintenance problems identified were- (i) training of maintenance staff, (ii) easy availability ofmaintenance manuals, (iii) operators training, and (iv) adherence to proper maintenance schedule. This apart there were other important suggestions for minimizing maintenance problems which included (i) operators training. (ii), better aftersales-service by the manufacturer/agent, (iii) avai lability of cleaner/proper electric power supply without voltage fluctuations, (iv) avai lability of substitute spares for imported spares, and (v) proper selection of cutting parameters such as speed, feed and depth of cut, and (vi) providing proper air-conditioned work environment.

It is to be noted that even the mean value of the bottom most suggestion was 3.89 out of the maximum value of 7. This ~howed that none of the suggestions were unimportant. The lowest ranking suggestions in their order included: (i) availability of credit facility from the manufacturer/agent, (ii) adequate expansion in maintenance manpower, (iii) providing incentives (monetary rewards, promotions, etc.), and (iv) availability of third party maintenance sources. The analysis of lower ranking suggestions showed that the respondents were very clear in their perceptions. 'Availability of credit facility from the manufacturer/agent' was not as important in view of organization being financially in good health having already invested on the costly CNC machine tools. There was no alternative to 'increasing manpower for maintenance' or 'providing incentives (monetary rewards, promotions, etc)'. 'Maintaining with the help of manufacturer's representatives or with the help of third party sources' was given the lowest rank. This showed that the respondent generally favoured maintenance by company's own personnel. Factor analysis of twenty five suggestions led to five broad groups of Management & Change. Volume 10 Number I (20116\

52 Operating Aspects ofCNC Machine Tools

factors with little overlap among them, which included- (i) maintenance planning and housekeeping, (ii) training and maintenance testing, (iii) manpower planning for maintenance, (iv) acquisition and operation ofCNC machine tools, and (v) choice of manufacturer/agent and avai labil ity of spare parts. It is to be noted that 'training and maintenance testing' and 'choice of manufacturer/agent and availability of spare parts' were rated as most important factors. 'Manpower planning for maintenance' was assessed as the lowest rank among these five factors. Senior level managers accorded higher weightage to 'maintenance planning and house- keeping' than first line managers. This can be understood considering that the first line managers are preoccupied with production activities and find little time for preventive maintenance or house-keeping. Except for this variation, different groups of respondents in terms of age, educational qualification, work experience and grades, did not differ in their perception on the above five factors for minimizing maintenance problems of the CNC machine tools. BENEFITS OF THE CNC MACHINE TOOLS It is significant to note that regardless of their age, educational qualification, work experience, field of experience (production or maintenance) and employee grade, all the respondents reported benefits of the CNC machine tools. While 81.3 per cent of the respondents reported that the CNC machine tools were very beneficial, but a proportion 18.7 per cent reported that they were only moderately useful. In general, as reasons for buying CNC machine tools most respondents reported that operational requirements like production, maintenance, etc. were most important factors. This showed that the CNC machine tools were mainly purchased for meeting operational needs and therefore financial factors were of secondary importance. However, the respondents were unanimous about economic viability ofthe CNC machine tools. Senior executives accorded higher weightage to 'flexibility' as a reason for purchase and 'maintenance planning and house keeping' as a suggestion for minimizing maintenance problems of the CNC machine tools. While these factors were related to the long term aspects which were of main concern to senior executives, first line managers accorded higher weightage for 'productivity' which was their immediate concern being directly linked with their performance. Management & Change. Volume 10 Number I (2006)

P. R. Sudhakar 53 CONCLUDING

REMARKS

The preference for the CNC machine tools to conventional machine tools was total at locations where they are already provided. Irrespective of age, educational qual ifications, work experience, field of experience (production or maintenance) and employee grade, there was an overwhelming perception that these machines were very useful. It is clear that the CNC machine tools are purchased to meet operational considerations like machining special contours; improving quality, repeatability and flexibility. Cost considerations are secondary issues when there is a need to produce sophisticated and high quality parts. Irrespective of the high capital outlay involved there will be a need to buy CNC machine tools. This is based on internal needs of the factory and less governed by exterior factors like those used in 'collaborator's plants' or 'outside advice' or 'company policy and managers preference'. Mechanical and electronics maintenance related problems are more critical than electrical, and software and programming related ones. Mechanical maintenance related problems were critical in view of such reasons as 'physical hardship to repair', 'time taken to repair', 'more manpower is required' and 'involving more material handling'. Electronics maintenance problems were critical in view of reasons such as 'difficulty in fault location', 'number of man days lost', 'time taken to repair' and 'frequency of break-down '. Thus, it is necessary to provide proper training and maintenance manuals to the maintenance staff and to plan for a proper preventive maintenance schedule. Appropriate test/diagnostic maintenance kits/tools should also be provided to locate the fault and rectify it fast. While proper maintenance plans and house-keeping are necessary, 'availability of credit facility from the manufacturer/agent', 'increasing the manpower for maintenance' and 'providing incentives (monetary reward, promotions, etc), are less significant factors. Software and programming related aspects need to be given more attention to avoid damages to tools/fixtures which may result in rejections and some times in accidents also. Hence, these problems may affect quality. Respondents accorded high rank/importance to 'operators training' to minimize their adverse impact. Other important suggestions

for minimizing

maintenance

Management & Change. Volume 10 Number I (2006)

54 Operating Aspects ofCNC Machine Tools

problems included - operator training, better after-sales-service by the manufacturer/agent, availability of uninterrupted power supply without voltage fluctuations, availability of spare substitutes for imported spares; proper selection of cutting parameters like speed, feed and depth of cut and enabling air-conditioned environment. Respondent accorded higher ranking to proper selection of cutting parameters like speed, feed and depth of cut. This could be achieved by proper CNC machine tool operation and by suitable software/computer programmes which otherwise could lead to damages to tool/fixtures/jobs and also cause even accidents. 'Availability of third party maintenance sources' and 'maintaining with the help of manufacturer's representatives or with the help of third party sources' were given lower rank. Hence, it is recommended to strengthen the company's maintenance group for the proper upkeep of CNC machine tools. First, line managers were accorded less weightage to 'maintenance planning and house-keeping' than senior executives. As this factor is important for minimizing maintenance problems, first line managers should be properly educated and encouraged to give more importance to this factor.

REFERENCE Gerrard, W. (1990) A Management Strategy for the controlled Introduction of New Technology/Machine Tools. In B.J. Davies (ed.), Proceedings of the Twenty-eighth International MATADOR Conference. London: McMillan Press, 191-196. Gulhati, A. and Kulkarni, R.Y. (1997) Depth Survey of CNC Machine Tools Market in India upto 2000 (Second Edition). New Delhi: Associated Market Quest Consultants Pvt Ltd. Patton, w.J. (1970) Modern Manufacturing Process and Engineering. New Jersey: Prentice Hall Inc., 244-245. Vickers, G.w., Ly, M.H. and Getter, R.G. (1990) Numerically Controlled Machine Tools. West Sussex (U.K): Ellis Horwood.

Management & Change. Volume 10 Number 1 (2006)

CAN INSTITUTIONS MAKE THE DIFFERENCE? COMPARATIVE STUDY OF INDIAN MANUFACTURING INDUSTRY THROUGH LillERALIZATION Sumit Mitra

Susanna Ghosh Mitra

Globally due to its investment intensiveness, manufacturing is a government supported activity with benefits of new technology and processes. A comparative study of development of the industry in East Asian countries including China reveal an active rolefor government in helping the industry to converge to a private, market driven path to global competitiveness through government coordinated effort by banks, external funding agencies, industry associations and research institutions. The resultant creation of appropriate institutions help reduce role of government in development of manufacturing industry after its performance consistently exceeded overall performance of respective economies. Given the role of government and market forces in shaping the policy environment of an industry, early state monopoly in the manufacturing industry in Indianfollowed by liberalization and market convergence as a political ideology was seriously questioned for the sub.,.optimal improvement in global scale efficiency of manufacturing industry. With societal and industry priorities codified in institutions, manufacturing industry policy in India that reflected state structure and power, was progressively getting out of tune with changing needs of global standards highlighting the needfor appropriateinstitutions to restore the balance. In this paper it is attempted to review how institutional mechanisms can provide fillip to the Indian manufacturing industry.

INTRODUCTION

Much of the shape that a sector of the economy takes in a country is influenced by the policy environment prevalent and emerging over time in

Management & Change. Volume 10. Number 1 (2006) \D 2006 Institute for Integrated Learning in Management.

l____

56 Can Institiutions

Make the Difference?

that country. Two of the critical forces impacting this current and emerging policy environment are - (a) the role of government and (b) the role of market forces. The role of government by its socio-economic philosophy broadly influences industrial policy outcomes. In case ofIndia, its federal form of government has distribution of power between the states and union but in reality tilted in favour of the Union Government despite having a large number of decisions on the concurrent or state purview (Biswas & Marjit, 2002). Hence, under the mixed economy adopted post-independence, where the public and private sectors co-existed, the former dominated the core sectors of the economy as a reminder of central government's control on the industrial sector. Much being articulated, on this through the Industrial Policy Resolution (IPR) of the Government ofIndia (GOI) (Arun & Nixson, 2001). The state was to playa progressively more active role in production and its equitable distribution. According to the GOI, "the adoption of the socialistic pattern of government as the national objective ... all industries of basic and strategic importance, or in the nature of public utility services, should be in the public sector" (GOI, 1956). However, because of the slide in growth rate of the industrial sector (Table 1) by early 1980s there was a growing concern about the need for increasing competitiveness and thus the focus of policies on sharpening the international competitiveness of Indian enterprises by exposing them to increased domestic and international competition (Arun, 1999). However, this was a sizable challenge as over time, the influence of public sector had gone much beyond the core sector into industries like hotel, two-wheeler and even production of bread. Even in the manufacturing sector determination of plant capacity, product mix and location of Public Sector Enterprises (PSE) was based on non-economic factors, which ignored market realities, contributing to high levels of inefficiency (Jalan, 1991). Most of these were outcomes of political considerations and bureaucratic red tapism (GOI, 1997). With a large part of non-manufacturing activities like insurance and banking still strongly in the hands of government, only showing early signs of opening up to globally driven market forces, early Foreign Direct Investment (FDI) mostly came into manufacturing sector in technology intensive machinery, machine tool, electrical goods and chemical and allied products. With first signs ofliberalization ofthese industries through unbundling of Management & Change. Volume 10 Number 1 (2006)

Sumit Mitra and Susanna Ghosh Mitra 57

Table 1 Growth Rate oflndustrial Year

Plan Period

Sector Growth Rate Per Cent

1951-56 1956-61 1961-66 1969-74 1974-79 1980-85 1985-90

7.1 6.6 9.0 4.7 5.9 6.4 8.5

First Second Third Fourth Fifth Sixth Seventh

Source: Mani, 1992 as quoted in Kaplinsky (1997) licenses and decontrol, these three sectors accounted for 58 per cent of total FDI in manufacturing in 1980s against 41 per cent in 1964 (Kumar, 1995). This shift was at the expense of traditional consumer good industries like food, beverages and textile where private sector investments existed. t Foreign share of non-ferrous metal products and heavy chemicals had declined over time. In pre-liberalization period, the manufacturing industry was often divided into three groups in relation to technology - (a) if the indigenous technological capability was sufficient, technology import was not permitted. (b) if it was simple or stable technology, licensing was preferred mode of technology acquisition. (c) if the technology was sophisticated and unavailable through transfer, foreign equity participation was allowed. Even as the GOI thought that it was in control of technology coming into the various industries in the country, the interpretive nature of the decisions gave existing foreign firms opportunity to operate technologies that were internationally obsolete, but never-the-Iess superior to those used by domestic firms (Athreye & Kapur, 1999). The inward-focused policies that protected Indian firms saw changes in post-liberalization period with industry level aggregate concentration reducing with liberalization of industry over time. The top four firm average concentration ratio of38 leading sectors was 70.2 in 1976 that was subsequently reduced to 68.4 in 1983 (Kaplinsky, 1997). High concentration allowed high prices to be charged, monopoly, and no incentive to upgrade technology. All this led to unique ways of managing manufacturing focusing on cornering license to keep Manag~l1lent & Change. Volume 10 Number I (2006)

~~,

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58 Can Institiutions

Make the Difference?

competition at bay under a centralized allocation of resource instead of focusing on quality of product, technology and labour productivity. Hence, in spelling out the objectives of liberalization of the industrial sector, the World Bank focused on market allocation of resources to translate investments into high and sustainable growth rates of output and employment (World Bank, 1994). Under its plans to meet World Bank objectives, GOI undertook disinvestment and public sector reforms but avoided calling it "privatization" to maintain balance and adopt incrementalism in changing its earlier political ideology. However, privatization of the PSEs through this disinvestment has been accepted with skepticism by authors, as not real efforts to improve industrial performance but more of revenue generation (Arun & Nixon, 2000). FDI was not up to expectation, showing difference between approvals and actual investment by foreign companies. Many attributed the reason to political fallouts like stock market scam in 1993 and communal uncertainty like the mosque demolition at Ayodhya in 1992. ]n the bargain, both public and private sector alike could not improve efficiency of management of manufacturing units beyond a limit owing to issues of inefficient exit laws, no pennission for retrenchment of workers and difficulty in downsizing operations. The post-liberalization phase has seen some inherent structural and governance weaknesses in increasing efficiency of sectors of economy including poor co-ordination among various government agencies delaying clearance of projects (Arun, 1999). The management issues in the manufacturing industry arise from the fact that between 1994-95 and 1999-2000, the average growth rate of the intermediate goods sector (9.2 per cent) was higher than consumer goods sector (7.1 per cent) in contrast to the preceding decade of the 1980s when intermediate and consumer goods sector grew at 5.8 per cent and 12.4 per cent, respectively (GOI, 2000; Kaplinsky, 1997). According to Kaplinsky (1997) that in the 1990s, not only had the expansion of middle-income demand been sustained but also openness to imports and to international taste/patterns forced manufacturers to win over customers rather than produce poor quality standardized products in a supply-constrained market. Indications were that in the absence of indigenously manufactured products meeting domestic consumer expectations, imports were being resorted to meet the unmet demand. Import liberalization and Management & Change. Volume 10 Number I (2006)

Sumit Mitra and Susanna Ghosh Mitra S9

downward revision of tariffs and duties making imports a viable option. This needed to be looked at as a new management challenge to be addressed by domestic manufacturing industry in the post-liberalized era. Study of alliances and joint ventures in the 1990s indicated domestic firms seeking complementary assets from foreign partners indicating their interest in competing with imports by stimulating demand in a deregulated economy through domestic manufacturing activity (Arun, 1999). Other studies indicated that Indian firms wer~giving highest priority to shop floor improvement programme in the manufacturing industry to increase reliability and quality of products delivered. Although mean improvement scores of factors Iike worker productivity and customer returns were high, variance was also high indicating need for training at all levels of employees not just to improve productivity but also for optimal utilization of new technology (Chandra & Sastry, 1998; Enos, 1992). Having seen how the Indian industrial sector in general and manufacturing sector in particular had changed due to internal and external pressures from the pre to the post liberalization period it may be required to focus on a few other related and critical issues before trying -toextrapolate the present into the future and hazard a guess on what it portends for Indian manufacturing industry. The immediate next brief section will look at how the captains ofIndian industry, including some of the industry associations that they head and which in turn influence government policy, interpreted the impact ofliberalization on existing industry. A section will follow this on global characteristics of manufacturing industry by highlighting approaches taken by China, Hong Kong, Taiwan and Japan in industrialization. The paper concludes by mapping the path for Indian manufacturing into the future. DID INDIAN INDUSTRY WELCOME

LIBERALIZATION

IN 1990s?

When India went into an economic crisis and decided to liberalize its economy in 1991, most industrialists, politicians and bureaucrats agreed to it. However, they did add the rider that it was an International Monetary Fund (IMF) dictated liberalization process, which was commonly, called economic restructuring. The abolition of licensing in most industrial sectors, incentives for technology transfer, collaborations and foreign investment in priority sectors, and freeing of trade was like euphoria for Indian industry. They thought that the signing of World Trade Organization (WTO) agreement Management & Change. Volume 10 Number 1 (2006)

------

•.•.• ".••••.--' •••....••• '.-'.'-----

60 Can Institiutions

•• ----

•• --_

••••••

Make the Difference?

would push them into the global arena. All was fine till the very same activities exposed the real competitive position of their industries in the international market. Thus, by mid 1990s the Indian industry associations like Confederation of Indian Industry (CII), Associated Chambers of Commerce and Industry (ASSOCHAM) and Feder.ation of Indian Chambers of Commerce and Industry (FICCI) were critical of government's policy ofliberalization. They argued that the transition from too much protection to too little protection for India industry was extremely rapid and did not give time for local industries to adjust to the same. They endorsed the so called "swadeshi" demands oflevel playing field by India companies including the views of the "Bombay Club" demanding curb on foreign entry (Degenbol-Martinussen, 2002). Some of the arguments of domestic firms like poor access to international credit and capital at rates cheaper than domestic rates threatening take over by MNCs and skewness arising out of inter-state excise duties and custom discrepancies affecting competitiveness of products were legitimate. In the prevailing anti-liberalization sentiment, government baulked on some conditionality of liberalization like exit policy for firms fearing repercussions from trade unions, and privatization of public sector units. Not only did the government not try to curb expend iture to reduce budget deficit but even did not rapidly reduce subsidy to sectors like fertilizer and electricity in order to make these sectors competitive and efficient, for fear of losing popu lar pol itical mandate. With the Ind ian manufacturing sector yet to feel the full impact ofWTO compliance particularly in the area of TRIPS (Trade Related Intellectual Property) and TRIMS (Trade Related Investment Measures), being within the adjustment period, the future trajectory of the industry may be unexpectedly disjointed from its trajectory so far in the post-liberalization phase. GLOBAL

MANUFACTURING

Indian manufacturing sector is to be appraised in the background that this sector almost never managed to expand unless there was government support to it. This was largely because of the capital intensive nature of the industry and long gestation period making private investors shy away unless government incentives made ventures profitable. These indirect fiscal, and non-financial incentives or direct investment in manufacturing, inventory, and infrastructure However, had the promise of generating new technology. It is traditionally claimed that faster the manufacturing rate of output, more rapid has been technology advance. Linked closely to improved technology Management & Change, Volume 10 Number I (2006)

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Sumit Mitra and Susanna Ghosh Mitra 61

is improved productivity and hence increased manufacturing output being linked to increased productivity (Sabillon, 2000). It was the issue of governments possessing the policy tools to increase manufacturing output, in turn ensuring technological development with associated productivity improvement. Universal support for the above linkage in different ideologies and sizes of economy from city-states like Hong Kong and Singapore to large countries like USA and Russia is available. A counter argument being that most often government investment in technology and manufacturing is not for reasons of efficiency and productivity or employment but to catch up economically with an advanced nation or to secure profitable return for producers through the creation of monopolies and cartels. Hence, all along the focus of governments on manufacturing industry is influenced by ideological and public policy viewpoint and not from a rational scientific point of view. ROLE OF GOVERNMENT The role of government, within and outside its purview of policy formulation, in shaping the emerging manufacturing industry is captured in the changing priority of the government in choice of sub-sectors to develop within the manufacturing sector in the pre and post liberalization phase. This role is rapidly emerging in India, being influenced by the political and social agenda of the different political ideologies in power under the common umbrella of a democratic government. In reviewing developments in manufacturing, policy authors have highlighted government's reluctance in reforming the exit policy of labour and "sickness act" of companies. In discussing distributive aspect of resources both in the pre and post liberalization era, they have referred to the common or different political agenda of political parties in power, be it, at the centre or state levels. State governments are less committed to the reform process due to their limited freedom in making decisions and the lack of effective competition among states (Arun, 1999). The examples of China, Brazil and Russia underscore the need and importance of regional governments taking the lead in pushing reforms prompting further action by the central government (Bajpai & Sachs, 2000). Porter (1994) on the other hand observed that micro level reforms at the state level were essential to develop the competitive industrial climate in India.

Management & Change. Volume 10Number

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62 Can Institiutions

Make the Difference?

EXPERIENCE OF ASIAN INDUSTRIALIZED/INDUSTRIALIZING COUNTRIES

Japan In the post-world war II construction, Japanese economy focused on manufacturing industry just as those of China, Hong Kong and Taiwan in the last two decades. Bulk of Japanese government support was by way of indirect fiscal and non-financial incentives but no state factories were setup. In the decade of 1950s, Japanese government borrowed abundantly from abroad and transferred the money to state financial institutions like Japan Development Bank and Long Term Credit Bank of Japan to be canalized to manufacturing industry by way of grants, loans at lower than market interest rates (Sabillon, 2000). Banking sector was specifically instructed not to canalize much of these funds to non-manufacturing sector (Economist, 1993). Tax benefits reflected government's encouragement to specific sub sectors of manufacturing sector. Water, electricity and land were made available at subsidized rates for manufacturing units (Tsuru, 1993). Whereas Japan simultaneously created a pool of human skills for manufacturing, Hong Kong neglected this aspect and still managed similar rates of progress but with a lag (Morishima, 1982). Given that the early period of imports had to be balanced by exportable products for balance of trade, Japan was forced to produce products of international quality resulting in great improvement in productivity. Japan's Ministry ofInternational Trade and Industry (MITI) consciously encouraged exports to USA and Western Europe (Tsuru, 1993). By 1970s when factory output was growing at 6.2 per cent annually against 5.2 per cent that of GDP (Gross Domestic Product), government consciously decided to lower support for manufacturing. It reduced grants and subsidized lending to this sector, and transferred resources to non-manufacturing sector. There was simultaneous shift of preference from labour-intensiveto capital-intensive sector with focus on automated mass production of computers and micro-chips. In a continuing trend, state owned enterprises like Nippon Telegraph and Telephone, Japan Airlines and National Railways were privatized in the 1980s as also trade with liberalized, OECD (Organization for Economic Cooperation and Development) and neighbouring Asian countries like Hong Kong and Singapore expanded (Business Week International, 1996). As a result of conscious support to manufacturing excellence for over two decades, by 1990s, Japan was recognized as a source for innovative technology having highest per capita registration of patents in the world. Management &. Change. Volume 10 Number I (2006)

Sumit Mitra and Susanna Ghosh Mitra 63

Hong Kong From a vast shantytown of 1949, Hong Kong (HK) transfonned into one of the worlds wealthiest places by the turn ofthe century. Between 1950 and 1997, under threat of Chinese dominance the British administrator's ofHK decided to provide indirect financial and non-financial incentives to factory producers resulting in average annual growth of 10.8 per cent for manufacturing sector and 8.8 per cent of GOP. Land for factory site was subsidized and even multistorey-flatted factories were constructed and leased at subsidized price to entrepreneurs. Corporate income tax was set very low and utilities were provided at below market price (Sabillon, 2000). Manufacturers were also not required to meet social security costs or minimum wage decrees that would raise production costs: From 1980 onwards when labour-intensive manufacturing moved to China, HK government consciously focused on technology-intensive manufacturing following its inherent inability to emigrate to other countries due to asset specificity. Subsidies were given besides government providing funds for R&D since 1992. With HK Productivity Council providing incentives for improvement in product quality, the bulk of industries in the period went into high technology electronics, computers and telecommunications. From the start of colonial rule to the late twentieth century majority technology of HK was imported. In spite of economic development, HK never became technology creator and leader. Between 1990-97 while all OECD countries spent as much as 2.7 per cent of GDP on R&D (Research and Development), Hong Kong spent as little as 0.08 per cent, less than that by China, India or Thailand but grew twice as fast (Sabillon, 2000). Even though majority of countries in the region invested in education, Hong Kong did not (Fortune, 1994). Besides lack of wage protection, social welfare expenditure never exceeded 3 per cent of government expenditure in early twentieth century (Hopkins, 1971). HK demonstrated that best way to improve living conditions of the masses was by attaining very fast rates of economic growth by supporting private manufacturing initiatives. Taiwan Between 1950 and 1997, GDP of Taiwan rose from an average of 1.4 per cent to 8.4 per cent per annum. However, unlike the private sector growth and encouragement in Japan and HK, the growth in Taiwan was led by large public enterprises particularly in energy, chemicals, plastics, electricity, metals, etc. Management & Change. Volume 10 Number 1 (2006)

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64 Can Institiutions

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Under threat from PR China, trade barriers were high, cartels and monopolies were numerous and Central bank was an appendix of Finance Ministry. Taiwan did benefit from economic aid and business from the US during the Korean War but such aid started reducing from 1965. Large assistance from the government

was namely towards R&D support. Even private banks were

controlled to invest in manufacturing

sector (Far East Economic Review, 1995).

However, from 1980 onwards with the communist reform process set in China, Taiwan reduced subsidies and encouraged private investment in semi-conductors, computers, robotics and telecom (Far East Economic Review, 1994). With manufacturing being technology focused, Taiwan set up the Hsinchu Science Park attract non-resident Taiwanese to invest in high technology industries (Hopkins, 1971). It may be noted that Taiwan had a very authoritarian government, who many thought, contributed to growth by avoiding manipulation by special interest groups. However, this growth had peaked during the 1990s when the government was more westernized and democratized. As Taiwan considered that it already acquired developed nation status in 1990s, it laid further emphasis on service sector for development.

P R China China began liberalizing its economy in 1979. However, even in 1997, private sector accounted for only one tenth of GOP and China was still a highly regulated economy. Between 1950 and 1997, government support for manufacturing led to double digit pace offactory output. However, early growth was not through the indirect route of fiscal and non-financial iocentives but through direct route of central allocation, focus being on heavy industry and not light consumer durables. By 1970s manufacturing averaged about II per cent growth annually against GOP growth of3 per cent. However, it remained tight central planning. By 1980s the focus on manufacturing covered technology, resources were abundantly allocated to this sector and Iight manufacturing industry growth was encouraged. Average annual growth of manufacturing through the 1980s was 16 per cent while GOP grew at about 7 per cent. However, being centrally planned, manufacturing was still inefficient compared to developed countries restricting export of its products. By this time, government however, began providing fiscal and non-financial benefits to manufacturing sector although it still centrally controlled most of it. Myriad tax exemptions and reductions replaced direct subsidy (Economist, 1997). In 1979 it created four special ecoManagement & Change. Volume 10 Number I (2006)

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Sumit Mitra and Susanna Ghosh Mitra 65

nomic zones (SE2), in 1984 it opened 14 coastal cities and in 1988 opened Hainan Island for global business, by accepting external debt to equip its factories with latest technology. Factories in the hands of provincial governments were progressively asked to take responsibility of profits and losses. Instead of import protection, incentive was provided to domestic industries to fight imports thereby improving their efficiency and quality to international level. Focus on manufacturing was so decisive that during 1980s, three-forth of government expenditure and 70 per cent of state bank loans went to finance factories. Exports and FOI added to China's rapid growth. It was believed that imported technology pushed technology-producing capacity of the counny. Many saw China's manufacturing growth as ideological and stemmed from socialist autarchy goals, national security concerns and a desire to catch up with most advanced nations. Later it was attributed to Confucianism and Chinese culture. However, in its state controlled and state promoted forms, China's focus on promotion of manufacturing has remained unabated through 1950s to 1990s. Allocation to manufacturing sector has been as high as 33 per cent of GOP in 1990s from 12 per cent of GOP in 1970s and 25 per cent of GOP in 1950s. By 1970s manufactured exports had been half of total exports rising to 86 per cent by 1997 (Goodman and Segal, 1991). DISCUSSION

AND COMPARATIVE

EVALUATION

It may be observed that many issues of improving efficiency, modernizing technology and competing globally in the field of manufacturing are shaped in the structure of the industry. The shape of the industry, in turn depends on the government policy and prevailing socio-economic and environment. Whereas all governments in power used their ideological priorities, regional biases and ministerial discretion to shape evolving industrial policy, they may have at some point of time been at cross-purposes with the growth and expansion strategies of finns in the industry. What ever be the path chosen for growth of manufacturing industry in countries like Japan, HK, Taiwan and China, they all seem to converge to a more market driven path as the industry matured and tried to be a significant player in the global arena. Although it seems clear that nations lagging technologically with respect to developed nations need to import technology, it is not necessary that it has to subsequently self-create the technology that it consumes. It can continue to import as long as it can maintain pace of growth (Fortune, 1995). This helps in improving general living conditions and the economy as Management & Change. Volume 10 Number I (2006)

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66 Can Institiutions

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is evident from Hong Kong and to an extent Taiwan. Thus, whereas there is almost no doubt that large-scale growth in the economy is dependent on manufacturing's progress; there are alternative paths of progress to choose from. This brings in the question of not just what government policy priorities need to be, but also what institutional frameworks to adopt so that the priorities, beliefs and values set the progress of manufacturing on the chosen path or trajectory and persist with the same till a review decides on a shift. The gearing up of the manufacturing industry of most of the countries in their latter stages of development, to meet challenges of global competition and markets, demonstrates growing dependence on the economic progress of the nation and its people compared to the ideQlogical and public policy priorities of individual countries. This may reveal in the similarity of agenda and priority of institutions like the Hsinchu Science Park project in Taiwan, the SEZs and Hainan Island development in China and MITI of Japan. However, divergent may be the political and ideological agenda of individual countries influencing the development of manufacturing industry, the role of institutions may have been to delimit or mediate the influence of political actors upon particular policy outcomes. Institutions not only include the state, state agencies but also industrial structures and patterns of interest representation in domestic politics. For example, Taiwan created key state agencies such as state-run research institutes-Industrial Technology Research Institute (ITSRl) and Electronic Research Service Organization (ERSO) that provided virtually every research related need for the formation of major semiconductor manufacturing firms including technology and skilled manpower. To the extent that evolution of manufacturing industry in India preliberalization had initially reflected both state and society necessities of prosperity through the socialistic route by having state promoted core sector industries, the course was well charted. However, an increasingly dominant state focusing only on political ideology and bureaucratic rent seeking failed to throw up institutions that either represented the interests of society or the manufacturing industry per se. Accordingly, for some time before economic liberalization, the ideological priorities of the state and efficiency and competitive priorities of manufacturing industry were at cross-purposes. Whereas firms in the pre-liberalization era used benefits of licensing to control for competition, those in the post-liberalization era attempted to use market Management & Change. Volume 10 Number I (2006)

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Sumit Mitra and Susanna Ghosh Mitra 67

forces to ward of competition. Thus, Indian manufacturing industry was converging to the global competitiveness of manufacturing industry followed by other East Asian countries as earlier discussed. The state in case of India was dragging its feet in setting up institutions that captured the n~eds of the manufacturing industry as reflected by its reluctance.to modify labour and exit laws in manufacturing industry. It adopted half the philosophy of global competitiveness by opening up.the external sector leading to changing patterns of demand for intermediary and consumer goods sector prompting knee jerk reaction of industry to improve its shop floor performance while failing to provide institutional support in areas like R&D where the dissemination of knowledge would have created industry wide impact as in case of Taiwan and China. Politically, India neither has a true one party rule like the Chinese Communist Party (CCP) or the Kuo Min Tang (KMT) in Taiwan, nor a true pluralist rule where different interest groups work cohesively as in Japan. It has what was called "a functional democracy" which is movillE;from a one party majority to multiparty coalition. Under the 'statist approach', a strong and autonomous state was responsible for economic development, as in East Asia with the industrial policy in tune with state structure and power. In contrast, pluralist approach advocated the critical role of efficient market factors and/or plural ist competition among various interest groups leading to industrial policy formulation. In case of Japan, Muramatsu & Krauss (1987) added a dimension by arguing for a "patterned pluralist" approach. According to this approach, although the Japanese State was strong, various interest groups and political parties had penetrated into it. In case of Japanese high-tech industry Okimoto (1989) observed that the structural i~tp,rdependence between the core actors in Japanese high-tech industry such as LDP (Liberal Democratic Party), MITI and other business was the critical feature of the Japanese political economy. Only in case of computer industry in India, Evans (1995) argued that "embedded autonomy" or the state autonomy embedded or institutionalized in state-society relationship shaped the making and implementation of industrial policy. Both as revenue sources for state as well as employment generation and high income for society the roles of state and society in shaping industrial policy were complementary. CONCLUDING

REMARKS

In conclusion, looking at the future ofIndian manufacturing industry, underManagement & Change, Volume 10 Number I (2006)

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68 Can Institiutions

Make the Difference?

lying concerns raised either through the "swadeshi" slogan or the misfit between macro management at central government and micro management at state government and firm level needs to be addressed through the institutional framework. Considering the interplay of economic and political environment in society determines efficiency of markets and transactions in it are codified in the institutions, they are the rules of the game of a society (North, 1994). Thus, the institutional structure at any point of time will determine the organization that will be viable at any point of time. Indian manufacturing industry is converging to a market driven globally competitive sector. Given that manufacturing industry, being capital-intensive, has a role for the government, accordingly rules of the game as enshrined in institutions need to constrain political and ideological priorities in favour of societal and industrial aspirations of global standards and scales. These institutions in their physical forms qlay be FlCel, CII, ASSOCHAM or SCOPE (Standing Committee of Public Enterprises). They could be autonomous or quasiautonomous institutions like industry regulators as the TRAI (Telecom Regulatory Authority of India) or IRDA (Insurance Regulatory and Development Authority) with a clear social agenda. While the paths chosen may be unique as in case of East Asian experiences, common priorities as reflected by institutions there, need to manifest in the future development of the industry. Given the democratic form offunctioning ofIndian politics, meeting the objectives of a "patterned pluralistic" form of government may be preferred over a "statist" approach.

REFERENCES Arun, T.G. (1999) "Economic Reform in India since 1991 with Particular J<ejerence to Foreign Direct Investment and Privatization". Ph.D thesis, University of Manchester, Manchester. Arun, T.G.and F.1.Nixon (2000) "The Disinvestment of Public Sector Enterprises: The Indian Experience," Oxford Development Studies, 28 (I): 9-32. Arun, T.G. and F.1.Nixon (2001) Liberalization and the Manufacturing Sector: Indian Experience during the 1990s. In Morrissey, 0 and Tribe, M. (ed.) (2001) Economic Policy and Manufacturing Performance in Developing Countries. UK: Edward Elgar Publishing Limited. Athreye, Sand S. Kapur (1999) Private Foreign Investment in India: Pain or Panacea? Discussion Paper 17, Birkbeck College, University of London. Management & Change. Volume 10 Number 1 (2006)

'!I"tD

I'.

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'•• )""

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Sumit Mitra and Susanna Ghosh Mitra 69 Bajpai, N. and J.D. Sachs (2000) Foreign Direct Investment in India: Issues and Problems. Development Discussion Paper No. 759, Harvard Institute for International Development, Harvard University. Biswas, R. and G. Marjit (2002) "Political Lobbying and Fiscal Federalism: Case of Industrial Licenses and Letters ofIntent," Economic and Political Weekly, February 23. Business Week International September: 28.

(1996) "The Island is Cazy for Chips," 16

Chandra, P. and T. Sastry (1998) "Competitiveness of Indian Manufacturing: Findings of the 1997 Manufacturing Futures Survey," Vikalpa,23(3): 25-36. Degnbol-Martinussen, J. (2001) Policies, Institutions and Industrial Development: Coping with Liberalization and International Competition in India. New Delhi: Sage Publications. Economist (1993) "Multinationals,"

March 27.

Economist (1997) "The Long March to Capitalism," 13 September: 22. Enos, J. (1992) The Creation of Technological Developing Countries. London: Pinter.

Capabilities

Evans, P.B. (1995) Embedded Autonomy: States and Industrial formation. Princeton: Princeton University Press.

Trans-

Far East Economic Review (1994), "Taiwan-Trade and Investment", October: 44.

Far East Economic Review (1995), "The Price of Success", 6 July: 56. Fortune (1994), "The New Power in Asia", 31 October: 46. Fortune (1995), "Jobs for life", 20 March: 74. GOI (1956) Industrial Policy Resolution. New Delhi: Ministry ofIndustry. GOI (1997) Handbook of Industrial Policy and Statistics. New Delhi: Ministry ofIndustry. GOI (2000) Economic Survey 2000-01. New Delhi: Ministry of Finance. 'Goodman, D. and G. Segal (1991) China in the Nineties. New York: Oxford University Press. Management & Change, Volume 10 Number I (2006)

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70 Can Institiutions Make the Difference?

Hopkins, K. (1971) Hong Kong: The Industrial Colony. London: Oxford University Press. Jalan, B. (1991) India's Economic Crisis. New Delhi: Oxford University Press. Kaplinsky, R. (1997) "India's Industrial Development: An Interpretive Survey." World Development, 25(5): 681-94. Kumar, N. (1995) "Industrialization, Liberalization and Two Way Flows of Foreign Direct Investments: Case of India," Economic and Political Week~y,30(50): 3228-37. Mani, S. (1992) "New Industrial Policy: Barriers to Entry, Foreign Investment and Privatization," Economic and Political Weekly, August 29: M86-M94. Maramatsu, M and E.S. Krauss (1987) The conservative Party Line and the Development ofPatterened Pluralism. In Yamamura, K and Yasukichi, Y (ed.) (1987) The Political Economy of Japan. Stanford: Stanford University Press. Morishima, M. (1982) Why has Japan Succeeded. Cambridge: Cambridge University Press. North, D. (1994) "Economic Performance Economic Review, 84:359-68.

Through Time," American

Okimoto, DJ. (1989) Between MIT! and the Market: Japanese Industrial Policy for High Technology. Stanford: Stanford University Press .

Porter, M.E. (1994) The Economic Times, 27 September. Sabillon, C. (2000) Manufacturing, New York: M.E. Sharpe Inc.

Technology, and Economic Growth.

Tsuru, S. (l993)Japan 'sCapitalism. Cambridge: Cambridge University Press. Wade, R. (1990) Governing the Market .. Economic Theory and the Role of Governn!ent in Taiwan's Industrialization. Princeton: Princeton University Press. World Bank, (1994) India ..Recent Economic Development and Prospects, Country Report. Washington DC: World Bank.

\ Management & Change. Volume IONumber 1 (2006)

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Short Communications

LEVERAGING SCIENCE OF CREATIVE INTELLIGENCE AND TRANSCENDENTAL MEDITATION FOR MANAGEMENT EDUCATION M. Srimannarayana

Science of Creative Intelligence is a science that was evolved and perfected by Maharishi Mahesh Yogi in seventies to meet the need for a unified framework for studying any field of activity. This can be developed by practicing Transcendental Meditation (TM). This technique is a simple, natural, effortless procedure that can be practiced in fifteen-twenty minutes each day twice while sitting comfortably with eyes closed. In this paper it is attempted to bring out relevance of 'Science of Creative Intelligence' for managers practiced through TM in perfecting the art of management, management functions, managerial roles and managerial skills needed to perform these roles. INTRODUCTION The Science of Creative Intelligence (SCI) is a science that was evolved by Maharishi Mahesh Yogi in 1970s to come out with a unified framework for studying any field of activity. While other sciences may relate to physical, chemical, or biological fields of nature's intelligence, SCI aims study of pure intelligence structure, and examines how the creative intell igence enshrined in every item of creation can discern in systematic and sequential manner from within in a unified framework. Transcendental Meditation (TM) is the most important enabler of Science of Creative Intelligence. TM is a simple, natural, eff0l11ess procedure practiced 15-20 minutes twice each day while sitting comfortably with eyes closed. While practicing this technique, individual's awareness settles down and experiences the simplest form of human awareness - transcendental consciousness where consciousness is open to itself. TM is one of the most widely practiced and extensively researched meditation techniques. Management & Change. Volume 10. Number I (2006) i1,; 2006 Institute for Integrated Learning in Management.

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72 Leveraging Science of Creative Intelligence

Transcendental Consciousness has been found by physiological research to be a fourth major state of consciousness, a state of restful alertness, distinct from the commonly experienced states of waking, dreaming, and deep sleep. The experience of Transcendental Consciousness develops an individual's latent creative potential while dissolving accumulated stress and fatigue through the deep rest gained during the practice. This experience enlivens creativity, dynamism, orderliness, and organizing power in one's awareness, which results in increasing effectiveness and success in daily life. Transcendental Meditation has been taught by Maharishi Mahesh Yogi since 1958. The first articles about the beneficial effects of this technique were publ ished in seventies in important magazines and scientific journals such as Science (1970, p.167), American Journal of Physiology (1971, p.221) and Scientific American (1972, p.226). Maharishi University of Management, Iowa, USA and Maharishi Institutes of Management at its different campuses in India offer SCI and TM related courses to management students under their curriculum. Students often wonder why they should undergo SCI and TM related courses when their primary objective is to study typical management functions such as Organizational Behaviour and HRM which more commonly form part of their professional life. In this paper it is attempted to highlight relevance of SCI and TM for management education with particular reference to management processes, management functions, managerial roles and different types of skills needed to perform these diverse roles and functions. Management is defined as the process of planning, organizing, directing and controlling work of employees by utilizing available resources for achieving organizational goals (James, et al. 1996, p.7). Management involves getting things done through other people. Accordingly, as per this defin ition teamwork, empowerment and delegation assume significance in management process. Management is partly an art and partly a science of decision-making. This defillition stresses the need for intuitive, subjective skills in the management process and the growing significance of verifiable knowledge as a guide for managerial decision-making and action. Management scientists (operations researchers and decision scientists) regard decision-making as Management

& Change. Volume 10 Number

1 (2006)

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the most impoliant managerial function. Behavioural scientists focus on organization, organizational behaviour, leadership, motivation, and communication. Management is both a professional discipline which has also emerged vast field of research. In other words, management is already recognized as a distinct branch of discipline, which is taught in engineering and management schools world over. Vast developments in past five decades have converted this discipline into a full-fledged profession. Managers as the name suggest are individuals who manage everything under their charge. They plan and organize employee efforts in fulfilling organizational goals and objectives. Managers make decisions, allocate resources, and direct activities of others to attain organizational goals. Whereas some activities managers carry out themselves while others they get largely done through other people. Progress of any organization depends on their managerial effectiveness of its executives. In the Science of Creative Intelligen.ce 'relaxation' and 'activity' are two main elements. Similarly, 'silence' and 'dynamism' are another two major factors for ultimate success and fulfillment in life. 'Goal oflife' does not end with fulfilling life's major responsibilities but continue as long as one is alive and pursuing challenging objectives. Management students studying different courses need to excel in every course one after another. SCI practiced through TM can make learning objective easier as the SCI by its very nature is progressive, integrative, self sufficient, holistic, discriminative, invincible and dynamic. SCI enables management students to have a realistic appraisal of their growth trajectory. SCI may bring positive impact on management students by improving their own sense of value for the knowledge being acquired, as well as familiarizing them with how the holistic nature of intelligence can form the basis of all human endeavours and disciplines of knowledge (Antimuro, 200 I). A student experiencing his inner consciousness developed through SCI and TM courses in his subsequent corporate life can face work challenges more confidently and discharge his duties and responsibilities more intelligently. Students in their later corporate life can function in progressive and integrative manner as they would be in a position to enjoy real fruits of SCI and TM, namely, watering the root, which is in agreement with the 'law of nature'.

Management & Change, Volume 10 Number 1 (2006)

74 Leveraging Science of Creative Intelligence

LEVERAGING SCI AND TM FOR MANAGEMENT FUNCTIONS The planning function covers clefining an organization's goals, establishing an overall strategy for achieving these goals, and developing a comprehensive hierarchy of plans to integrate and coordinate activities for their realization. According to Maharishi, success in planning depends mainly on state of mind (level of determination), prevailing circumstances, and resources on hand (Maharishi, 1990, p.159). An action preceded by deep thinking is more likely to succeed. TM may enable individuals in developing innovative, creative and powerful thoughts which all help in reinforcing creative intelligence. This is because TM raises level of one's transcendental consciousness of mind which may improve ability to plan. A manager's next important function is 'organizing', which is concerned with structuring work in a manner that can be accomplished on time (James, et al., p.ll). The organizing function covers what organizational activities are to be carried out, who will carry them out, how these activities to be grouped, who reports to whom, and where decisions are to be made. Science of creative intelligence develops flexibility in thought process which in turn improves one's creativity that ultimately improves his organizing abilities. Directing (leading) is third important function of the manager, which is concerned with directing and influencing planned activities of team members or the entire organization (James, et al. p.12). The directing (leading) function involves inspiring and motivating employees, selecting most effective communication channels, and even resolving conflicts among members as and when they occur. Motivation can be intrinsic but it can also result from the joy of previous successful work execution. Degree of joy, however, may depend on one's level of conscious~ess. Satisfying experience of successful work execution motivates to undertake yet another challenging job with idea to derive similar thrill in future as well. Moving into higher and higher state of joy is easier for managers who have achieved transcendental consciousness through regular practice of TM. A manager in higher level of consciousness is in a better position to direct and lead his team by making his entire team derive ecstasy and joy. All-round joy and thrill definitely helps improve performance and productivity of team members and this way of organizational as a whole.

Management & Change. Volume 10Number 1(2006)

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The fourth important function of manager is 'controlling' which is concerned with ensuring that planned activities ultimately deliver desired outcome. The controlling function involves monitoring the organizational performance visa-vis identified goals, and applying course-corrections if need be. This involves measuring and monitoring results, comparing results with plans and taking corrective actions wherever shortfalls occur. Ability to control are higher in manager who is alert, agile and flexible due to higher'level of consciousness achieved through TM. LEVERAGING

SCI AND TM FOR MANAGERIAL

ROLES

Managers in corporate world have to perform different roles which OB texts generally divide into three broad groups, namely, interpersonal roles, informational roles and decisional roles (Katz, 1974, p.90-102). In these roles they may have to perform variety of functions such as marketing, finance, human resource management, operations management, strategic management, etc. Interpersonal roles of a manager include giving instructions to one's subordinates, conducting meetings, resolving interpersonal conflicts, counselling employees, appraising performance and achieving higher and higher standards of performance and productivity. Task becomes easier for a manager who is trained in SCI and TM as he has higher levels of 'moral reasoning', greater orderliness of brain functioning, improved reaction time, reduced stress and anxiety, improved self-confidence, congenial relationships at home and at work, increased tolerance levels, improved job performance and higher job satisfaction levels. Managers have to often monitor information, which is of concern to the organization, who act as conduit to transmit it to organizational members. This is the disseminator role as managers act at times as spokesperson when they represent the organization to outsiders. All managers, collect, monitor and transmit the information, which form part of communication process. The success of a manager depends to a large extent on his ability to communicate. Communication is an outcome of internal thought process which is followed by speech, all of which can be improved through transcendental consciousness, which is the source of thought, speech and action. According to Maharishi the absolute field of communication is established where everyone is connected with everyone else with boundless chanManagement & Change, Volume 10 Number 1 (2006)

76 Leveraging Science of Creative Intelligence

nels of connectivity. When equilibrium is established with all others with whom he has to deal, information flow is frictionless and smooth reaching its destination with minimum resistance. When sender and receiver are connected through higher transcendental consciousness, information is given and received without distortion, knowledge is most complete and action most rewarding. Managers also need to perform 'decisional roles' in their day-to-day activities, the abilities of which can again be improved through transcendental consciousness. As resource allocators, managers are responsible for allocating human, physical, and monetary resources. Managers also perform a negotiator role, in which they have to bargain with other units to gain advantages for their own business unit. In the entrepreneur role, managers often initiate and oversee new projects that will improve their organizations performance. As disturbance handlers, managers frequently take corrective action arising out of unforeseen problems. A mind driven by full consciousness becomes so logical and structured that ability to make right decisions comes automatically. For a manager in higher consciousness level, different mental faculties function in unison and accordingly well thought out decisions come out spontaneously to suit different work situations. Not only different mental faculties, but also mind and heart together function in unison to arrive at decisions which are best for a given situation. LEVERAGING

SCI AND TM FOR MANAGERIAL

SKILLS

Managers should possess requisite managerial skills to discharge the above management functions and roles. Managers broadly need three types of skills, namely, technical skills, human skills, and conceptual skills (Katz, 1974). SCI and TM make individuals more flexible which in tum improve ability to find solutions to complex problems. TM is helpful in sharpening all the above three skills categories. Technical Skills. These relate to harnessing technical capabilities of an individual in performing a job. Technical skills are more relevant at the lower levels of management, which are progressively less important as one moves up higher in the hierarchy. Engineering and IT related skills are examples of technical skills. According to Mahrishi, creative intelligence is the basis for harnessing and expanding knowledge. Individuals practicing TM Management & Change, Volume 10 Number I (2006)

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ilit'

M. Srimannarayana 77

can reach the state of consciousness, which enhances knowledge and technical skills acquisition capabilities enonnously following greater orderliness of brain functioning, increased intelligence, higher creativity and improved learning ability. Human Skills. It covers such skills as ability to work with, and understand and motivate other people both individually and in groups. For corporate management that is responsible for such important functions Iike corporate governance and strategic management, conceptual skills are more relevant and important. Many people may be technically skilled but poor in interpersonal skills, due to their being poor listeners, unable to appreciate others viewpoints, or lack necessary motivation to learn. Human skills i.e. ability to deal with individuals, are However, important for all levels of management in some degree, be it, lower, middle, or corporate level. According to Maharishi everyone can unfold his creative intelligence through more realistic assessment of self. Assessing self unleashes creative potential which helps in knowing not only selfbut also others, which contribute for developing human skills immensely. A training in SCI and TM eventually leads to higher tolerance levels, improved relationships at work, increasedjob satisfaction, etc. all of which ultimately help in improving human skills. Conceptual Skills. Managers need ability to diagnose complex work situations, which require conceptual skills. For resolving complex issues, they need to analyze, identify alternatives that can solve them, evaluate available alternatives, and choose the best option among them. Managers can be technically and interpersonally competent but may lack conceptual skills to process and interpret information rationally (Robbins, 2000, p.5). This is where regular practice ofTM may prove particularly beneficial in view of higher levels of intelligence, learning ability, mental reasoning and memory which TM facilitates. CONCLUDING

REMARKS

Management students by regularly practicing SCI and TM can develop necessary skills in discharging 'management functions', 'management roles' and acquiring 'managerial skills' that are necessary to discharge different job responsibilities. In fact, SCI which can be developed through TM is beneficial in developing competent managers and improving their Management & Change. Volume 10 Number I (2006)

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78 Leveraging Science of Creative Intelligence

physiological health, mental abilities, and interpersonal relationships at work and home. SCI and TM can emerge as very important tools in improving managerial effectiveness of students which can make a long lasting impact on their development. Long term benefits of regular TM are cumulative and may benefit students immensely in their subsequent corporate life. A congenial environment for regular practice ofTM for management students by trained faculties need to be created in business schools to achieve desired learning objectives. This can be achieved by such committed and trained teachers who have made SCI and TM as integral their day-to-day life (Antimuro, 2001).

REFERENCES Antimuro, A., A Personal Communication to the Author, September 29, 2001. James A.F., et al. (1996) Management, New Delhi: Prentice-Hall of India Pvt. Ltd. Katz, R.L. (1974) "Skills of an Effective Administrator", Harvard Business Review, September-October. Maharishi Mahesh Yogi (1990), The Science of Being and Art of Living. Jabalpur: Age of Enlightenment Publications. Maharishi Mahesh Yogi (1990) Wholeness on the Move, Maharishi University of Management. Mintzberg, H. (1973) The Nature of Managerial Work. New York: Harper & Row. Robbins, S.P. (2000) Organizational Behaviour. New Delhi: Prentice Hall of India Pvt. Ltd.

It takes twenty years of hard work to become an overnight success. -Diana Rankin

Management & Change, Volume 10 Number I (2006)

I ~.

Short Communications

BENCHMARKING: ROADMAP TO BEST PRACTICES Bhimaraya

A. Metri

Fierce competition, globalization and the development of new information and communication technologies have constrained organizations to continuously search for and adopt new configurations/practices for survival. Benchmarking is a practical approach, which has proved to be very effective in helping individual companies evaluate their competitive position vis-a-vis other best performers. This paper provides an overview of developments and trends in benchmarking and includes references to various types of benchmarking. It is attempted to provide a simple benchmarking process model for an individual organization by carrying out organized search for best practices. The paper enlists benefits of benchmarking including discussion on select benchmarking success stories. The paper concludes that benchmarking is a powerful approach for bringing improvements in any organizational area and transforming it into a world-class organization. INTRODUCTION Benchmarking is a powerful tool for organizations seeking continuous improvement. It is an essential part of many change programms, including total quality management and business process re-engineering. Benchmarking is generally carried out to improve customer satisfaction, accelerate rate of change, identifY breakthrough improvements, provide fact based decisions, create a consensus climate and achieve competitive ant age for the organization as a whole. Benchmarking is defined as the ongoing structured process of identifYing, understanding and adapting outstanding practices of industry leaders to help an organization improve its performance and achieve and sustain competiManagement & Change, Volume 10, Number I (2006) !D2006 Institute for Integrated Learning in Management.

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80 Benchmarking:

Roadmap to Best Practices

tive advantage. It is a fact based, structured and pro-active approach to initiate change by learning from others. Benchmarking requires careful planning and a high level of commitment. Benchmarking if used effectively can provide organizations with a continuous competitive advantage. As benchmarking involves considerable expenditure, it is advisable to focus on key business priorities, potential per.formance improvement areas and priority processes. Priority processes in business generally cover new product development, customer service systems, strategic management, materials management, supply chain management, internal communication, etc. The modem quality movement is now truly international. It was born in the United States with Walter Shewart in the 1920s and 1930s. It then spread to Japan in the 1950s and arrived back in US in the 1980s. In the mean time it also spread to other regions of the Asia. Since 1980, the quality movement has spread to Europe, Latin America, Israel, India and elsewhere (Kenett & Graves, 1998). Today, quality has become one of the critical competitive strategies in all world regions. Due to increased market globalisation and pressures of international competition organizations sought to achiev,e the 'best-in-c1ass' in key areas, which sustain competitive advantage. The search for a best-in-c1ass benchmark implies that this approach has wider applicability and universal appeal. Interest in benchmarking has sky-rocketed since 1979 when Xerox first introduced it (Vaziri, 1992). In fact, benchmarking was a buzzword during 1990s and continues unabated even today (Srividya & Metri, 2000). In Xerox it marks the start of a series of benchmarking exercises that along with other performance improvement initiatives, enabled the company to recapture its market leadership in photocopier business. Starting with the Xerox benchmarking decade, 1976-86, benchmarking has been widely used by various organizations across the globe particularly the manufacturing industry (Lema & Price, 1995). As the manufacturing sector has been relatively quick in responding to the changing business environment, benchmarking is being widely used in this sector for process, product and service performance measurement and improvement. Today, it is geographically spread in large parts ofthe world in every business sector.

Management & Change. Volume 10 Number 1 (2006)

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Bhimaraya A. Metri 81

Benchmarking is a continuous, systematic process for evaluating the products, services and work processes with those recognized as representing the best practices, for the purpose of organizational improvement (Spendolini, 1992). It is a positive, proactive process to change operations in a structured fashion to achieve superior performance. Benchmarking is most sensible approach to transfer best practices from other organizations. Survival in the society depends on adopting best practices i.e. transferring best practices of what others are doing. This alone can provide cutting edge to organ izations in the long run. It singles out those practices that have proved themselves to be the best in the given area and it also involves in making a systematic effort to incorporate them in product and process innovations (Belle, 2000). The MBNQA (Malcolm Baldrige National Quality Award) was instituted in USA to promote benchmarking in American industry in which benchmarking results were required to be detailed out in the application form for the MBNQA (Bemowski, 1991). Today, benchmarking has captured the interest of organizations world over. Gaining insight through systematic observation and analysis of how others are doing is an age old approach. Benchmarking is based on such fundamental and basic ideas which can be Iinked with ancient times. Origin of benchmarking can in fact be traced to two ideas emanating from China and Japan (over 2500 years ago) more or less in contemporary times. In the year 500 BC, Sun Tzu, a Chinese General wrote, "If you know your enemy and know yourself, you need not fear the result of a hundred battles". Similar idea from Japan is contained in a word "dantotsu" which means striving to be the "best of the best". These ide~s contained essence and genesis of benchmarking (Camp, 1989). According to Tai ichi, this business philosophy has been applied in Japan since the end of World War II (Lema & Price, 1995). As no single individual or organization is privy to all good ideas, the search for best practices and innovative ideas from all across is a commonsense approach to improvement. It is "the practice of being humble enough to admit that someone else is better at something and being wise enough to try to learn how to match and even surpass them at it" (Fisher, et al.. 1995).

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According to Camp (1989), the process of benchmarking is "the search for industry best practices that lead to superior performance".

TYPES OF BENCHMARKING Benchmarking can also be classified on the basis of what is being bench marked as, performance, process and strategic benchmarking. There are four basic types of benchmarking: Internal benchmarking. It refers to benchmarking with other units of the same organization. In this type of benchmarking, the relevant information can be acquired much more easily and also with less implementation hassles. However, this may not often lead to significant improvements that meet world class performance standards. However, it is appropriate as a first logical step to set the pace for transferring best practices from other better performing organizations. Competitive benchmarking. It involves industry-specific comparisons made either between direct competitors or from target companies with dissimilar products in the same industry. As it relates to receiving information from direct competitors, they may be afraid to release such information due to confidential reasons. Functional benchmarking. It involves direct comparison of a function in two or more organizations typically non-competitive organizations, which mayor may not be in the same industry which carry out the functional activities of interest. This approach to benchmarking is more practical as functionally superior firms which are not in direct competition may provide requisite information more easily. In this process, confidentiality is usually not an issue and two-way partnerships can be established to share the benefits of best practices. Generic benchmarking. It involves benchmarking of the best practice of recognized world organizations that cut across various functions and in different industries. For instance, whereas Westinghouse Corporation and Apple Computer are considered world class organizations in 'automated inventory control'; American Express is regarded a pioneer in 'billing and collections'; and Xerox is regarded as a world class organization in customer service. This benchmarking approach focuses on excellent work processes Management & Change. Volume 10 Number I (2006)

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Bhimaraya A. Metri 83

rather than on the business practices of a particular organization. It can be very effective even though it is generally the most difficult. It has the potential of revealing the best of best practices. It requires broad conceptualization and careful understanding of the generic process. Choosing wh ich type of benchmarking is more appropriate depends on what an organization plans to benchmark but it is advisable to first begin with internal benchmarking and then proceed to competitive, functional and generic benchmarking (Metri, 2004).

BENCHMARKING

PROCESS

To achieve successful business development a good basis for benchmarking is important in order to address questions such as: Whom to benchmark against? What processes, functions, etc. to benchmark? How to perform the benchmarking? There are a great variety of benchmarking processes used by different organizations and the numbers of steps they include vary to a large extent (Metri, 200 I). They range from a four-step process to a fourteen-step process. Different companies have adopted different models to benchmark. Differences between them are that some of the steps are divided into multiple steps. To implement the benchmarking process in a formal and successful way a simple and self-explanatory framework for individual organizations with all four steps of the Deming cycle is proposed as shown in Fig.l. After conducting all the four steps of benchmarking as suggested in the proposed model, it informs the managers about the competitive gap that their organizations may face and it also informs them about improvement programme to bridge the gap. In other words, benchmarking provides a situational analysis and path to best practices, i.e. "Where do you want to go?" and "How are we doing?" and then automatically it leads to strategic roadmap for' best practices' for "How are we going to get there?" This apart, application ofinformation Technology (IT) in benchmarking process can further improve the quality and speed of benchmarking (Srividya & Metri, 2001). For example, data and fact sheets can be more easily transferred from one organization to another through EDI (Electronic data interchange) technology. Benchmarking in future will become more IT-enabled that would facilitate transfer of best practices from one organization to another. Management & Change, Volume 10 Number I (2006)

84 Benchmarking:

Roadmap to Best Practices

Fig. 1 Steps for Organized Search for Best Practices STEPS

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I. Setting improvement goals 2. Gaining support for changes 3. Closing performance gaps

OF BENCHMARKING

Benchmarking offers several benefits. It saves efforts in reinventing the wheel when someone else is already doing it economically and efficiently. It facilitates incorporating 'outside the box' ideas practiced by others. It constrains organizations to evaluate existing processes which may often lead to improvement. It makes more objective evaluation of the organization vis-a-vis others. Benchmarking ifroutinely practiced can help identify gaps on regular basis. It helps build inventory of ideas for break-through improvement in process execution. It facilitates to identify 'best of breed' practices. It enables develop creative approaches to process redesign. It helps develop "stretch" performance goals, significantly higher than current targets. It may help identify new techniques for improving quality, service and efficiency. It helps change culture and mindset towards process improvement. Managemcnt

& Change. Volume 10 Number

1 (2006)

BhimarayaA.

SUCCESSFUL

APPLICATIONS

Metri 85

OF BENCHMARKING

There are innumerable examples of remarkable success achieved in manufacturing and services through benchmarking best practices. Xerox is the one of the first successful users of benchmarking as a technique for continuous improvement in different areas. For example, Xerox achieved tenfold increase in product and operations quality in terms of defects per 100 machines produced (Dence, 1995). It also achieved more than tenfold reduction in number of production suppliers from 5000 to 500. It also resulted in tenfold reduction in production line defective parts per machine from 4000 to 300. Inspection of incoming materials was reduced to 5 per cent and production acceptance levels improved by 99.5 per cent. Company inventory was reduced by two-third and service labour cost reduced by 30 per cent. Level of customer satisfaction on the other hand was increased by38 per cent in a period five years. Similarly, many culture changes took place as a result of the benchmarking pilot study at General Motors Service Parts Operation (SPa). These included higher acceptance of process improvement, willingness to look 'outside the box' and focus on process rather than systems. As for economic gains the spa has dramatically improved in many areas from 1992 to 1994 (Powers, 1995). For example, cycle time decreased from 54 days to 20 days, and service readiness improved 73 per cent in 1992 to 94 per cent in 1994. The slogan for 1995 was "95 per cent in 95". Optimum cycle hours dropped from 240 hours to 24 hours. Dealer satisfaction improved from 92.5 per cent to 96.58 per cent. Overall spa saved nearly $2 million from its first benchmarking study: $ 1.8 million in operation savings and $48000 in system cost savings. I

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Apart from Xerox and General Motors, companies like Motorola and Milliken & Co also derived immense benefits from benchmarking, which for their significant achievements for adopting benchmarking as a standard tool for quality improvement have received prestigious US Malcolm Baldrige National Quality Awards (Stratton, 1988). It is worth noting that benchmarking is not only practiced by those enterprises which are coming up but also by globally renowned companies for maintaining their cutting edge. IBM is an example of a large multinational corporation using benchmarking despite its established leadership in the field. Benchmarking has acted as in incentive to US companies to have a relook at their ongoing operations with a Management & Change. Volume 10 Number I (2006)

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critical eye for bringing all-round improvement (Jackson, et al., ]994). Achievement of firms in manufacturing sector has been particularly impressive (Metri, 200 I). Successful benchmarking efforts were an important factor for these companies to win numerous awards (Vaziri, ]992). Typical benchmarking outcomes in the manufacturing sector have achieved results such as: 'Sales per employee per annum went up by 300 per cent'; 'Manufacturing waste reduced by 69 per cent'; 'Customs cycle time reduced to 72 per cent'; 'Team participation increased by 350 per cent'; 'Manufacturing costs reduced by 34 per cent'; 'Lead time reduced from 6 months to 2 days'; 'Lost-time accidents reduced by 30 per cent'; 'Supervisory staff reduced by 50 per' cent'; 'Absenteeism levels reduced by 50 per cent'; 'Cycle time down from 54 to 20 days'; 'Lead time reduced to 83 per cent'; 'Service readiness went up from 73 to 91 per cent'; 'Optimum cycle time reduced from 240 to 24 hours', etc. CONCLUDING

REMARKS

Benchmarking is an effective quality technique to identify best practices. Benchmarking helps in identifying areas that need improvement, it analyses what others are "doing right" and reveals how to be innovate in order to establish a process of continuous as well as breakthrough improvements to achieve excellence. This paper reviews the benchmarking background, con. cept and typology. To facilitate the implementation of benchmarking, a simple process model has been presented along with its benefits. Success stories of benchmarking in Xerox Corporation and General Motors SPO have been more specifically covered. Typical benchmarking outcomes in manufacturing with quantifiable results highlight strength of benchmarking. Benchmarking is relevant for all types of organizations and across wide range of business processes. It may lead to a roadmap for world class performance. With rapidly changing technology and intense global competition, it is high time for organizations to derive benefits from benchmarking as a sensible approach to minimise gaps in quality performance and productivity.

REFERENCES Belle, R.A. (2000) "Benchmarking and Enhancing Best Practices in the Engineering and Construction Sector", Journal of Management in Engineering, ]6(4): 58-71. Management & Change. Volume 10 Number I (2006)

Bhimaraya A. Metri 87

Bemowski, K. (1991) "The Benchmarking Bandwagon", Quality Progress, 24(1): 19-24. Camp, R.C. (1989) "Benchmarking: The Search for Best Practices that Lead Superior Performance", Quality Progress, 22 (1): 61-68. Dence, R. (1995) Best Practice Benchmarking: Performance Measurement and Evaluation. In Holloway, J., J. Lewis, and G. Mallory (ed.). London: SAGE Publications, 124-152. Fisher, D., S. Miertschin and D.R. Pollock, (1995) "Benchmarking in Construction Industry", Journal of Management in Engi!,eering, II (I): 50-57. Jackson, A.E., R.R. Safford, and W.W. Swart (1994) "Roadmap to Current Benchmarking Literature", Journal of Management in Engineering, 10(6): 60-67. Kenett, R. and S. Graves (1998) "The Global Village of QualitY", Quality Progress, 13(6): p.93. Lema, N .M. and A.D.F. Price (1995) "Benchmarking: Performance Improvement towards Competitive Advantage", Journal of Management in Engineering, 11(1): 28-37. Metri, B.A. (2004) "Imperatives of Benchmarking and its Implementation Strategy for Construction Industry", Industrial Engineering Journal, 33(4): 24-29. Metri, B.A. (2001) Development and Implementation of Benchmarking Model for Construction Industry. Ph.D Thesis, Reliability Engineering Group, TIT,Bombay. Powers, V. J. (1995) "A Pilot Benchmarking Study", Productivity, 36(3): 403-405. Srividya, A. and B.A. Metri (2000) "Benchmarking: A Route to Quality", R & D Quality Bulletin, 2(2): 5-11. Srividya, A. and B.A Metri (2001) "IT Driven Quality Benchmarking for Competitive Advantage", IETE Technical Review, 18( 1): 13-17. Spendolini, M. J. (1992) The Benchmarking Book. New York: AMACOM. Management & Change, Volume 10 Number I (2006)

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Roadmap to Best Practices

Stratton, B. (1988) "Xerox and Milliken Receive Malcolm Baldrige National Quality Awards", Quality Progress, 22(12): 17-20. Vaziri, H. K. (1992) "Using Competitive Benchmarking to Set Goals", Quality Progress, 25(10): 81-85. Literary Giants

MAHADEVI

VERMA AND NATURE

Mahadevi Verma was born at Farukhabad in U.P. in 1907 in an enlightened family of lawyers. She obtained her BA and MA degrees from the University of Allahabad. She joined Prayag Mahi/a I/'idyapith as Principal and remained till. end, an institution started with a view to impart cultural and literary education to girls through Hindi medium. She is regarded as one of the four major pillars of the ehhayavadi school of Hindi literature along with Suryakant Tripathi 'Nirala', Jaishankar Prasad and Sumitrananadan Pant. Pain and agony (vedna) find considerable expression in her works, which everyone faces one time or other in life. However, at the same time her poetry is not without joy and ecstasy as pain and happiness often alternate in life. She gave ample expression to both unification (milan) and separation (viraha), and light (aalok) and darkness (timir). Her works amply showed that she was inseparably linked with nature. Her poems are laced with references to nature all along. She figuratively used words such as clouds (ghan. megh, ghata), rains (bam'id) and fountains (nirjhar) to figuratively describe conflicting life situations, which individuals often face. Her poems such as 'Priya Sandhya Gagan Mera Jeevan', 'Main Bani Madhumas Aali', 'Main Neer Bhari Dukh ki Badli', 'Biraha kaJaljaat Jeevan', 'Raat si Neerav Vyatha' and 'Tam si Agam Meri Kahani' provide ample evidence for her immense love for nature. She authored famous works such as Nihar (1930), Rashmi (1932), Neerja (19)4), Sandhya Geet (1936), Atita ke Chalehitra (The Moving Frames of Past), Deepshikha and Smriti ki Rekhayen (The Flame of the Earthen Lamp) that was published in 1942. She wrote extensively in prose as well including' Shrinkhala ki Kadiyan' (Links of the Chain) and 'Sahityakaar ki Astha' (Beliefs ofa Literary Person). She edited the Hindi journal Chand for many years and received numerous awards including Seksaria Prize for her contributions in Hindi poetry. President of India honoured her with the Padma Vibhushan. She breathed her last on September II, 1987. Her book Agnirekha, collection of poems, depicting situations in post independence era, was published posthumously in 1990.

-Editor Source: Tiwari, V.P.N., Mahadevi Raehana Sanehayan, Saahitya Academy, New Delhi, 1998.

Management & Change. Volume 10 Number I (2006)

1111

Management Case

PARIKSHIT STEEL LTD Debi S. Saini

This teaching case is prepared to enable any learning group to study industrial relations issues in the context of legal, business and social environmental frameworks and not to highlight any right or wrong decision-making. Reconstruction of this dispute involved studying of over. 150 documents involving, inter alia, demand notices, complaints, memoranda, telegrams, proceedings of conciliation meetings, communications including confidential between labour and district officials at various hierarchical levels. Though the case is real, the name Parikshit Steels Ltd. is a pseudonym. Real name of thefirm is not used, or real names of interviewee!)'or actual dates of events givel,l. This is done for proprietary reasons as tlte idea is to focus on issues rather titan any specific people, firm or date.

BACKGROUND Parikshit Steel Ltd. (PSL) is a public limited company which employed 1008 employees, including 106 managerial and supervisory personnel, 446 core workers and 456 contract workers. It produced engineering goods in its sole factory that was set up in Faridabad in 1960. The first union in it was organized in 1966 by leaders of Faridabad unit ofIndian National Trade Union Congress (INTUC).! Since then, INTUC leader K2 had control over this union. The genesis of the present dispute was traceable to the signing of a settlement3 under section 12 (3)4 of the Industrial Disputes Act 1947 (IDA) between the union office-bearers and the management (This is popularly called a 12 (3) settlement). This three-year settlement was signed on September 3,2004 and was to be effective till June 30, 2007.

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Many workers of PSL viewed this settlement as a "sell out of workers' interest to management whom they perceived as corrupt union leaders." The common worker was not very happy as very limited benefits that were to accrue. They approached some CITUs (Centre ofIndian Trade Unions) leaders to help them form what they thought as a "genuine trade union of workmen" under their guidance. Realizing that this was an opportunity to enhance its influence, CITU began its activities of pulling the general worker towards its camp. The angry workers alleged that the agreement hardly contained any substantive benefits to the workers. The management noticed that even fence-sitters started joining CITU. It surely did not want that to happen. The management suspended forty workmen on charges of indiscipline on October 6, 2004. The suspended workers were CITU activists who were persuading the common workers for their support and for putting pressure on the management to recognize the CITU-led union. The CITU union approached the city deputy labour commissioner (DLC) to take appropriate action, against what they called as, the commission of unfair labour practices and indulging in union-repression activities by the management. Their letter stated that "Ninety five percent of the permanent workmen (i.e. 397 out of a total of 450) had accepted membership of the CITU-affiliated Faridabad Kamgar Union (FKU)" and that despite that they were not given permission for organizing a gate meeting and putting their union flag at the factory gate. It was also alleged that the management was not recognizing the CITU union which was the genuine representative of the workers. The DLC was approached to intervene into the matter to ensure protection oftheir trade-union rights and restore back the suspended workmen. The CITU President also wrote to the city SSP (Senior Superintendent of Police ) that it was due to "high-handedness of the management" that the CITU union was not able to carry on "its legitimate trade union activities and put up its union flag on the factory gate." On the other hand, some supporters ofINTUC leader 'K' also met the SSP and claimed majority support. The PSL management complained to the SSP about violent activities of the CITU activists. The SSP asked the DLC to "inquire into the matter and give the factual position so that law and order can be maintained and industrial peace ensured in the town." The city Management & Change, Volume 10 Number 1(2006)

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Debi S. Saini 91

Deputy Commissioner (DC) also asked the DLC to send a report on the PSL situation. In view of these directions of the SSP, the DLC "formed a committee of management and workmen with a view to facilitating mutual talks between the management and the work~rs." Due to prevailing acrimony between the two sides the committee could not make any headway in its objective. In the mean time, the management sought police assistance at the factory gate to prevent the FKU supporters for holding any gate meeting. A CITU activist who was championing the workers' cause remarked: "The DC and the SSP were under instructions from the political bosses to help the management and prevent the emergence of the CITU union. It was because of the instructions of these friends of the management that our legal and constitutional rights were subverted by the bureaucracy." An HR manager remarked that the union's claims were frivolous and they had a genuine 12 (3) settlement with the lNTUC union; and the violence and false claims by the CITU union were mere symptoms oflegitimizing its attempts to grab union control. The PSL management was consistently complaining to the DLC, LC (Labour Commissioner) and other labour officials about the denial of their trade union rights, with copies endorsed to the State Labour Minister and the Chief Minister. It charged that the CITU leaders were inciting violence in the factory. The management also alleged that the workers committed many cases of assaults on what they described as management's "loyal and sincere" workers. At least forty such complaints were available in the case file within a period of about five months. Interestingly, there was no reference to the registration of any police cases against the CITU activists. A CITU official explained that the insinuation against it was motivated by desire to malign CITU as a criminal and subversive union in the eyes of bureaucrats and politicians. lNTUC leader 'K' on the other hand observed that "there was 'some' truth in the management's complaints." He observed that lNTUC believed in maintaining production in the national interest and did not believe in violent industrial relations. As the CITU was not allowed to hold a gate meeting, it organized a general body meeting on October 10, 2004 at an open space about one kilometer away from the employer's premises. The meeting was largely attended and it resolved to face the management's "indifference and repression" with "unity and resolve," at "whatever cost". For showing their Management & Change, Volume 10 Number 1 (2006)

"._.",,"rr ••,• .,.,!!,'I'III!UV"'fJlI!'r:p"'

92 Parikshit

"'.I.M".'''.'UMMM'.".n

Steel Limited

strength, the CITU activists also went slowly in the smelting department that reduced production to mere 40 per cent. On the morning of October 17,2004 when these workmen were entering the factory, the management told each of them to sign "good-conduct bond" if they wanted to come inside for work. When the workers declined they were prevented to enter. The number of such workers was 199. Fifty one workers, however, signed the good-conduct bond on subsequent thought and entered. On October 19,2004 again, 142 workmen, who were contract labourers, were also told to remain out on refusal to sign good-conduct bonds. Forty workers were already under suspension, out of which three settled their dues and left the company. The management said that these workmen were on strike since they showed no inclination to enter the factory. PSL management gave repeated notices and telegrams to them to "come andjoin work." The workers complained the DC about the denial of worker's entry but nothing happened in their favour. Interestingly, no conciliation meeting were called or held on the issue of worker's entry: DLC asked Labour Officer (LO) to look into the matter and the LO reported following on this vexed issue. "There are 1008 employees in the factory including the contractors' workmen. On October 17,2004, there was a quarrel among workmen of the smelting shop. The management reported the matter to the police. For fear of police harassment, workmen stopped coming to the factory. After that, the workmen made a complaint to the Labour Inspector (LI) that they were not being taken on work. The LI called both the parties to appear before him on November 8, 2004, but the management did not appear. The workmen appeared before him and are eager to resort to work."

CONCILIATION PROCEEDINGS AND REFERENCE' On November 15, the DLC started conciliating the case, which lasted till December 10, 2004. Five conciliation meetings were convened. The PSL management attended only one of these meetings. When it sent its representative for conciliation on November2l, 2004, the DLC set up a committee consisting of 4 workmen and 4 management representatives to review and restore harmony between the two sides. Two meetings of this committee were held, but no solution appeared in sight. The management argued; "We already have a 12 (3) settlement with the recognized INUC union for three Management & Change, Volume 10 Number 1 (2006)

Debi S. Saini 93

years; and there was no question of negotiating with or recognizing any other union at this stage. If its following had gone down somewhat in the short run, it was not a good enough reason for recognizing the union." However, the CITU union claimed support of95 per cent workers, which it said was visible in the gate meeting it organized at a place one kilometer away from the factory.

cnu

On December 7, 2004 the State Government referred the issue of dismissal to 36 workmen (four of the workmen had settled their cases, taken their dues and left) for adjudication to the city Labour Court. The State Government also prohibited under section 10 (3) of the IDA, what the order referred to as, the "strike by the workers." At this point, the conciliation proceedings ended. Interestingly, in this case there was no Failure Report by the CO on the question of taking back the thirty six workmen, presumably because the conciliation proceedings were continuing. The management was happy with these developments and took the government's "reference and strike prohibition" orders as its victory. An HR manager pointed out: "This vindicates our point of view that we argued at the conciliation and other fora." The workers felt disappointed at the wording of the reference order. They said: "We are aggrieved because not only were we not allowed to enter the PSL premises, our ouster by the management, which in fact was a lockout, was also treated as a strike by the state government from which we expect some semblance of justice." THE POST-STRIKE LOCKOUT

PROHIBITION

SITUATION

AND THE

Following the strike-prohibition order, an interesting development took place. On December 15, 2004, the company sent a telegram to the DLC, which read: "Following the prohibition of the strike by some workmen, those in the remaining divisions resorted to a tool down strike since 8: 10 a.m. in their sympathy. Please intervene." The fact that some workers had earlier signed "good conduct bonds" and entered the factory was read by the PSL management as the loss of confidence of workers in FKU. The CITU union leader asked the case writer: "In view of this strike by other departments, and the telegram of the management, will you say that 'K' had any following amongst the workers at all?" But the remaining workers did not participate in the power struggle. No doubt, they perceived the battle for recognition and power to be fierce. Management & Change. Volume 10 Number 1 (2006)

.~---_.

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r 94 Parikshit Steel Limited On the day the telegram was sent, the management declared a lockout. The entire workforce was now out. On December 18,2004 even the INTUC leader 'K' who kept an outwardly low profile throughout this case, wrote to the LC: "The management has suddenly declared a lockout. The workmen are prepared to work. Please direct them to lift the lockout." FKU gave a telegram to the Labour Commissioner and the Haryana Labour Minister which stated: "The management resorted to illegal lockout since October 17,2004, and does not allow 367 workers to enter the factory, no suspension allowance was paid to the 36 suspended workers, and that the labour inspector showed no interest in the matter." There was no reply or action on this complaint of the FKU. On January 1,2005, the management lifted the lockout but again asked for signing of "good-conduct bonds" from every worker who wanted to enter the factory, at which the FKU members again refused to sign any such undertaking. Therefore, such workers were allowed to work but the impasse on account of FKU stand continued. Those workers who joined duty by January 4, 2005, were given Rs. 2000 per head as the incentive for joining work. FRESH DEMAND CHARTERS AND THEIR CONCILIATION On January 10,2005 the President of the FKU gave a demand notice raising the following five demands: (i) reinstatement of the suspended workmen; (ii) an increase of at least Rs. 2000 per month to all workers; (iii) making permanent all the casual workers; (iv) uniforms for all workmen; and (v) payment of full wages to workers for the lockout period. INTUC leader 'K', through the INTUC union executive, to put up a similar demand notice of January 16,2005 which was submitted on February 6, 2005, and included the following six demands: (i) Payment of20 per cent bonus to all workers for the year 2003-04; (ii) Incentive of Rs. 2000 per head being paid to those joining duty after the lockout be paid .even to those who had joined duty after that date; (iii) Overtime should be paid at the double rate; (iv) All items sold in the canteen be supplied at subsidized rates; (v) A loan of Rs. 10,000 per year be given to every worker for buying wheat in the harvesting season; and (vi) Expeditious decisions should be taken about those workmen who have been removed.

Management & Change. Volume 10 Number I (2006)

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Debi S. Saini 95

Separate conciliation started on the two demand notices. There was no overlapping of issues in the two notices. Conciliation on the FKU demand notice began on January 21,2005 and lasted till February 25, 2005. Observation of the scheduling of the conciliation meetings for K's demand notice showed that the conciliation ofK's demand notice was largely symbolic. As told by the dealing clerk in the labour department, "the management was privately negotiating with K". 'K' just appeared before the CO, but the management did not. K did not ask for any enforcement of the attendance of the management by the CO. Later on the clerk also revealed: "The management privately reached an understanding with K and the other office bearers of his union, and a 12 (3) settlement had been arrived at. It was typed and was brought for the CO's signature on March 25,2005 to show it as a 12 (3) settlement." The settlement provided for 8.33 per cent bonus to all "eligible workers." Also, it stated that "in addition to the aforesaid bonus (i.e. 8.33 per cent), an ad-hoc ex gratia payment of 8.33 per cent of the total wages/salary earned during 2003-04, without creating any precedent, shall be paid to those employees only, who are working in the factory on date." Interestingly, the bonus @ 8.33 per cent for the year 2003-04 had already been paid a long time back. The settlement was a package deal and the union had earlier agreed not to raise any financial demands during the operation of the settlement. They also agreed to withdraw the rest of the demands made in the demand notice. The case author was observing the presence of both the parties at the conciliation meetings. On March 26, 2005, he (the author) was suddenly told by Gopal (pseudonym), a dealing clerk, that a 12 (3) settlement had been signed the previous evening, though no meeting was scheduled on that day for conciliation. He said, the CO is duty bound6 to respect the agreement arrived at between the management and the union." THE DISPUTE FINALE Now, on February 13, 2005, the FKU made a complaint to the DLC for prosecution of the PSL management for committing unfair labour practices under section 25T and 25U read with Schedule V of the Industrial Disputes Act, 1947(IDAr. The CITU union cited commission of the ULPs by the management: (i) Threatening of workers for forming the union and taking active part in it and resorting to lockout for organizing the trade union (Schedule V 1 (a) and (b) of the IDA; and (ii) Declaring a lockout on Management & Change. Volume 10 Number 1 (2006)

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96 Parikshit Steel Limited December 15, 2004 which was an unfair labour practice as per schedule V 1 (b), 15 and 16 of the IDA. The Labour Department officials were of the view that "since no unfair labour practices were coinmitted by the management, there was no need to give any serious attention to the complaint made by the CITU." On March 25, 2005 the Labour Officer wrote to the OLC that the management had refused to take the FKU activists on work and had stated that "their lien on work is over, as they did not join work in spite of repeated reminders." He also stated that he had advised these workers to apply to the labour department for legal redressal. Earlier, vide another letter of March 23, 2005 he had stated that "to take the workmen for entry into the workplace is a controversial issue and his office does not want to indulge in it." The proceedings ofthis case culminated in a comprehensive confidential letter by the DLC to the State Labour Commissioner on April 4, 2005. He did not agree that any unfair labour practices were committed by the management. He observed that "the lock-out was consequent to violent activities ofCITU." He wrote that "CITU was not justified to create this situation; particularly because of the existence of a 12 (3) genuine settlement of September 3,2004 with K." The FKU, however, throughout maintained that its struggle did not involve any financial demands and was primarily for putting its flag on the factory gate and holding of a gate meeting, for the prevention of which the management made partisan, continual and frivolous use of police. The OLe praised the "commendable" work of the police. Following this letter, the case file was closed at the OLC office. The FKU workmen lost the battle. Later on, 'K' showed sympathy with some of the FKU activists. He made a 12 (3) settlement with the management related to the workmen who were not being allowed to work. Under this settlement, 85 workmen were taken back in July 2005. Others were advised to take their full and final dues, which they did. The dismissal dispute of the 36 workmen continued at the Labour Court. Replying about why the dispute could not be resolved by the conciliation machinery, the FKU President remarked: '~This is machinery meant to destroy trade unionism and promote employer's interest. In the present case, we approached them - in spite of our total distrust - to make the management talk to us, and Management & Change. Volume 10 Number I (2006)

IE-II!llmlllm!!Ml!rul!ll[JH

Debi S. Saini 97

they carefully saw that it did not take place. They never prosecuted the management for committing unfair .labour practices." An HR manager rejoiced on vindication ofPSL stand. He said that "CITD is all out to revive the old days of hostile unionism. We could persuade the workers to see reason and focus on production and efficiency so that all actors in the system benefit, as we were proactively giving them their dues. The worker today understands these designs of the self-seeking union leaders". The long drawn industrial relations battle seemed to be getting apparently resolved without any proactive involvement of the conciliation or the adjudication machinery: End notes I

The INTUC is the trade union federation of the Congress Party.

Interestingly, there were eleven factions of INTUC in town of which one faction was

headed by K, a pseudonym. Section 2 (p) of IDA defines a settlement as follows: "Settlement means a settlement arrived at in the course of conciliation proceeding and includes a written agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceeding where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to an officer authorized in this behalf by the

appropriate government and the conciliation officer." Section: 12(3) If a settlement of the dispute or of any ofthe matters in dispute is arrived at in the course of the conciliation proceedings the conciliation officer shall send a report thereof to the appropriate government or an officer authorised in this behalfby the appropriate government .together with a memorandum of the settlement signed by the parties to the

dispute. S The CITU is the official wing of the Communist Party of India (Marxist). Section: 12(2) of the IDA provides that the conciliation officer shall, for the purpose of bringing about a settlement of the dispute, without delay, investigate the dispute and all matters affecting the merits and the right settlement thereof and may do all such things as he thinks fit for the purpose of inducing the parties to come to a fair and amicable settlement of

the dispute. 7

Section 25 T and 25 U state as follows, respectively:

2ST. Prohibition of unfair labour practice No employer or workman or a trade union, whether registered under the Trade Unions Act, 1926 (16 of 1926), or not, shall commit any unfair labour practice.

2SD. Penalty for committing unfair labour practices Any person who commits any unfair labour practice shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to one thousand rupees or with both. Management & Change, Volume 10 Number 1 (2006)

98 Parikshit Inspiring

Steel Limited Lives

MAULANA ABUL KALAM AZAD: A GREAT INDIAN LEADER AND EPITOME OF NATIONAL UNITY Abul Kalam Azad was born in 1888 in the holy city of Mecca. His ancestors belonged to Herat, a city in Afghanistan. In 1890 his father settled in Kolkata. Abul Kalam studied Arabic and Persian and then philosophy and mathematics at home in Kolkata from tutors. He adopted his pen name "Azad" to signify his freedom from traditional orthodox ways typical in those days. In 1912, he started his weekly AI-Hilal to arouse conscience of Islamic brethren for adopting lofty Islamic values and participating in India's freedom struggle. The pluralist society saw in him a.scholarly voice of India's composite culture representing India's all faiths. Between 1915 and 1920 he was greatly drawn towards Gandhian ideologies. In 1920, Abul Kalam participated, along with large number of followers, in Disobedience Movement launched by Mahatma Gandhi. He first became President of Indian National Congress when he was barely 35 years and he was again the Congress President in the year of India's independence. In free India, after first general elections (1952), he was country's first Education Minister till his demise in 1958. As Education Minmister, Maulana Azad reorganized the All India Council for Technical Education and established the University Grants Commission. He was also instrumental in establishing the Indian Council for Cultural Relations and when he became its first President, while welcoming the Pakistani delegate attending the ICCR meeting for the first time, Maulana Azad said, "We have separated on political grounds but we have been one people and our cultural life is such that it cannot be divided without the loss of both." After independence he wrote the book, 'India Wins Freedom', which provided a very authoritative account of India's freedom movement. He was very upset with country's partition and the book provided ample evidence of his deep anguish and pain on this unfortunate development linked with India's freedom. He breathed his last on February 22, 1958 in New Delhi. At the time of his burial near Jama Masjid in Delhi, a very huge gathering of countrymen had collected to bid tearful farewell to country's one of the greatest sons and freedom fighters, which included a few tears from Pt. Nehru's eyes as well, that trickled down his cheeks and rolled down into his grave. As a mark of respect to the country's one of the greatest leaders, a number of organizations and educational institutions in the country are named after him including Delhi's famous Maulana Azad College of Medical Sciences and Maulana Azad Education Foundation, which is partly funded by the Union Ministry of Social Justice and Empowerment. Source:

Bhatnagar,

R.K., Maulana Abul Kalam Azad: A Pioneering Bhavan"s Journal, 51(20), May 31,2005.

-Editor Educationst,

Management & Change, Volume 10 Number I (2006)

___ J

BOOK REVIEWS

Empowering Society: An Analysis of Business, Government and Social Development Approaches to Empowerment.

Usha Jumani,

New Delhi: Foundation Books Pvt. Ltd. (Cambridge House, 4381/ 4, Ansari Road, Daryaganj, New Delhi 110002), 2006, vi+263pp. Rs. 495 hardbound. How do you empower a society? This question came to my mind while readIng a thoughtful book by Usha Jumani. The problem that I had in mind is whether the sum-total of empowerment of a society is finite. If so, it is impossible to raise social welfare by empowering one section which is currently not empowered or only insufficiently empowered. On the other hand, if the exercise in empowerment is a non-zero sum game, then aggregate social welfare may as well increase. This is not a hypothetical case but very much rooted in real politics and therefore has strong political economy implications. For example, the trade union movement empowers organized labour, but the same process may create impairment of unorganized labour. Usha Jumani is not really concerned with such issues. The sub-title of her book points out the focus she had in mind: An analysis of business government and social development approaches to empowerment. She begins with a detailed analysis of the perceptions of what constitutes empowerment and finds that the definition tends to be different depending on the perspective, viz, business, government or social. She also looked at the international scene, including the gender issue which is steadily occupying a centre stage in the discussion on empowerment. In addition to a comprehensive review of the existing literature, the author has brought into productive use her own experiences and insights. She has proposed a model of empowerment which has five principal strands: process orientation, bases of power, organizing and organizations, mainstreaming and representative organizations. She has developed five interesting case studies on CSR. The cases are comprehensive and throw light on how some companies are trying to practice Management & Change. Volume 10. Number I (2006) rg 2006 Institute for Integrated Learning in Management.

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I 00 Book Reviews empowerment within the broad framework of CSR. All the five cases are from the corporate sector. Given the subtitle of the book, case studies from the government and social sector would have added value to the work. B. Bhattacharyya, Distinguished Professor and Director, Institute for Integrated Learning in Management, Lodhi Institutional Area, New Delhi 110003. Makarand Paranjape (ed.), Dharma and Development: The Future of Survival. New Delhi: Samvad India Foundation, 2005. iv+329pp. Rs. 595 hardbound. Spirituality can be defined in numerous ways. One simple way is to consider spirituality as anti-thesis of materialism. A spiritual person is basically dharmik who observes righteous conduct and lives for a noble cause. A project leader or any member of his team driven by spirituality will never encourage any fissiparous tendencies such as favouritism, regionalism or caste ism in his team. Idea of deriving guidance from Self could be regarded as a practical approach to practice spirituality. In fact, spirituality provides complete vision for a value-based life. Vedantic concept of ektamnbhuti (oneness with all) and Gita's concept of samatva and samdarshita (even mindedness towards all) are basic human values which a spiritual leader will always follow. Being helpful and harmless the leader of a project team will enjoy cooperation of his team members. A spiritual person is also likely to be divine as spirituality breeds in divinity. Adherence to lofty ideals, human values and ethical standards are hallmarks of a spiritual person. Development and spirituality go hand to hand. There can be no practical proof of this symbiosis than success story of several religious institutions . in the country which were set up in much shorter time span and also without posing any problem for resburce mobilization. It is a common knowledge that whenever project leadership is not committed, many projects particularly government aided ones suffer from time and cost overruns and may lack spontaneity in resource mobilization. This apart, many religious recent periods apart from being fete of information technology instead of traditional stone

institutions particularly those that came in architectural wonders, are also remarkable that have used robots as form of deities statues with carvings. Swaminarayan

Management & Change. Volume 10 Numher I (2006)

IUIIIIIII!"

Book Reviews 101

Akshardham temple at Gandhinagar in Gujarat, New Delhi or Nesaden temple near London are typical examples of such marvellous IT driven projects. Prof. Makarand Paranjape, Professor at JNU, New Delhi has tried to find answer to this dichotomy by discerning much higher level of commitment and passion among staff involved in execution of religious projects which may not be found in personnel of other projects. It obviously raises an issue that if one kind of projects can be completed expeditiously, other projects can likewise be completed efficiently, provided some kind ofspiritual awakening is done in the hearts and minds of their project personnel. This strategy is based on ample evidence that spirituality indeed can drive efficiency and improve resource raising capabilities for project implementation. Prof. Paranjape has organized material for this book by including views of distinguished scholars on this theme in four different chapters (Part I). He has then sought to substantiate this theme with the help of eleven case studies that drive home the idea that spirituality does indeed enhance efficiency and resource mobilization capability of project volunteers (Part II). The book begins with a personal introduction to 'The Dharma of Development' and 'Prologue: Sacred India' by Makarand Paranjape and ends with 'Epilogue: Asia Undermined' by E.F. Schumacher. Part I (Dharma and Development) has contributions by four distinguished scholars, namely, Satish Kumar (Development and Religion: Cultivating a Sense of the Sacred), Katherine Marshall (Development and Religion: A Different Lens of Development Debates), Wendy Tyndale (Poverty and Development: Is Religion Relevant?), and Kamala Chowdhry (Ecological Security: A View from Gandhi's Window). Part II includes a total of eleven case stl:ldies.This includes: (i) Spirituality in Development: The Swaminarayan Experience in Gujarat (Makarand Paranjape), (ii) Ramakrishna Mission: Sanitation in Medinipur District, W.B. (Kamala Chowdhry), (iii) The Brahma Kumaris: Catalysts ofSocio-Spiritual Change (Shyamala Shiveshwarkar), (iv) The Chinmaya Mission: Vedantic Activism (Shyamala Shiveshwarkar), (v) Mother Teresa: A Missionary of Charity (Navin Chawla), (vi) Spiritual Sites as Sources of Social Transformation: Lessons from Svadhyaya (Makarand Paranjape), (vii) The Management & Change, Volume 10 Number 1 (2006)

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102 Book Reviews Sarvodaya Shramadana Movement, Sri Lanka (Kamala Chowdhry), (viii) Sri Sathya Sai Baba: Service and Spirituality (Kamla Chowdhry), (ix) New Initiatives in Education: The Integral Education Movement in Contemporary Orissa (An ant Kumar Giri), (x) National Forum of Fish Workers: A Spiritually Inspired Movement for Alternative Development (Wendy Tyndale), and (xi) Vivekananda Girijana Kalyana Kendra: Taking Development to the Marginalised (K.R.Usha). After studying these papers, one may find that despite authors being of different background, there is a considerable uniformity of perspectives in their thinking on role of spirituality in diverse nature of projects. In the above set of papers, development is viewed differently by different contributors, but ultimately all viewpoints converge as falling somewhere between two ends of spectrum with materialism at one end and spiritualism on the other. Whereas a materialistic project leader being self-focused is inward looking, a spiritual person on the other hand being concerned for welfare of all is outward looking. A spiritual project leader has a spiritual vision driven by Higher Self that guides his actions and accordingly tries to make every task completion, economic, speedy and even ahead of schedule. A spiritual project leader lives with (detachment) and consequently he drives efficiency as materialistic life is no attraction for him. He works with anasakti bhav (sense of detachment) without any selfish motive (Ten tyaktena bhunjitah ma gridha kasyaswi dhanam - Isha Upanishad). A spiritual project leader driven by spirituality, who is harmless and does not have any selfish motive, succeeds in securing everyone's cooperation and commitment in speedy resource mobilization and project completion, which is his supreme concern. This is why Swaminarayan Experience in Gujarat, Brahma Kumaris' Socio-Cultural Change or Mother Teresa's Missionary of Charity has been a remarkable success in their respective mission and goals. Given this background of spirituality impact, Prof. Paranjape needs to be complimented for bringing out this collection of papers on this appropriately chosen theme by a group of distinguished scholars. The book should catch the attention of project leaders particularly those working in design engineering and projects consultancy firms such as Engineers India, Larsen & Toubro, RITES, MECON, WAPCOS, etc. and corporate world at large, in deriving insights as to how value-based, spiritual and divine outlook can Management & Change, Volume 10 Number 1 (2006)

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Book Reviews 103

improve their project management capabilities. This should be followed by suitable training intervention for bringing spirituality in thought process of project personnel. K. M. Mital, Professor of Strategic Management and Chairperson, General Management Area, Institute for Integrated Learning in Management, Lodhi Institutional Area, New Delhi. Duncan Hughes, Asset Management in Theory and Practice, First Edition, New Age International (P) Limited, Publishers, 2005. v+242pp. Rs. 150 paperback. As per Concise Oxford Dictionary asset is defined as 'any possession having value'. Therefore a good Asset Management would mean managing the assets in such a way that it generates good value either by retaining it (expressed in terms of returns on the asset) or selling it (capital gains). Asset could be anything, for example, shares/stocks, property, bonds, deposits, and so on. An asset could be exclusively held by an individual or by a group of people. Given the above basic concepts, the term 'Investment Management' is used to refer to the professional management of various securities (shares, bonds, etc.) and other assets (for instance, real estate), with a view to meet certain specified goals for the benefit of the investors, where the investors could be institutions such as, insurance companies, pension funds, corporations and so on, or private investors via investment contracts or via the more common practice of collective investment schemes e.g. mutual funds. However, in usage the term' Asset Management' refers to the investment management of collective investments which is pooling of investments or funds of many that can give better depth and width in terms of portfolio management, whereas 'Wealth Management' means advis9ry or discretionary management on behalf of generally wealthy private investors. The challenges faced by' Asset Management Companies' (AMC) relate to selection of professional fund (co lIective) managers, research e.g. of individual assets and asset classes, dealing, settlement, marketing, internal audit, and preparing reports for the clients. Besides the 'marketing people' who bring money from the people, and the 'fund managers' who direct where investments are to be made, there are 'compliance staff' to ensure compliance with the laws and financial market regulations, 'internal audiManagement & Change. Volume 10 Number 1 (2006)

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104 Book Reviews

tors' to examine internal systems and controls, 'financial controllers' to control the institutions own money and costs, 'computer experts', and the 'back office personnel' who track and record transactions and fund valuations may be for hundreds or thousands of clients. Given the reality of the asset management business, namely, (a) revenue is directly linked to market valuations and they are adversely affected when the asset prices crash, (b) it is difficult to always sustain above-average performance and keep clients patient during times of poor performance, (c) retaining successful fund managers is not easy, etc. one would like to know what are the key fundamentals governing an AMC - philosophy, process and people. Philosophy addresses issues pertaining to (a) Does the Fund Manager buy growth or value shares and if so why?, (b) Does he believe in market timing and if so on what basis?, and (c) Does he employ a team of researchers or rely on external research. Process explains how the philosophy is applied in practice. It covers issues such as, (a) Which universe of assets is explored before specific assets are chosen for suitable investments?, (b) On what basis the manager decides to buy or sell an asset and when? Are decisions made by an individual or by a committee?, and (d) What controls are in place to prevent a rogue fund emerging? People refers to the staff, in particular the fund managers. It answers queries related to (a) How are they seiected?, (b) Who reports to whom (organization structure)? (c) What is the staff strength? and (d) How long is the team working together? The last question is very pertinent as high staff turnover affects performance of the AMC. The key factor that influences the 'process' is the 'fundamental analysis', namely, the financial and economic analysis of businesses used to (a) evaluate a stock or a security, and (b) to predict the movement of stock prices or bond prices. The analysis covers company's financial reports, and non-financial information such as estimates of growth of demand for competing products, industry comparisons, and analysis ofthe impact of new regulations or demographic changes, and economy-wide changes. Thus in essence to understand asset management or an AMC one has to be basically understand the different functional aspects of the business, Management & Change. Volume 10 Number I (2006)

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Book Reviews 105

besides its 3 P's, viz, philosophy, process, and people. The book is basically for beginners who would like to understand asset management business in terms ofthe dimensions outlined above without being bogged down in details. Principally, the chapters address asset allocation, equity fund management, fixed interest fund management, currency management, dealing, cash management and the back office, compliance and systems and data requirements. The matter in the chapters is well presented and explained. An individual with some knowledge in financial analysis and statistics should be able to assimilate quantitative analyses included in the book. Especially chapters on 'Benchmarks and Indices', "Equity Fund Management', 'Fixed Interest Fund Management', and 'Currency Management' have been especially covered to a reasonably good depth. On the whole the book is well documented and presented and servers both type of readers/students, namely, (a) those who want to understand the basic principles and techniques that are followed by AMCs, and (b) those who want to make in roads into the subject matter before proceeding further to develop different levels of mastery of the techniques and aspects related to the industry. V. R. Murali Mohan, Professor, General Management Area, Institute for Integrated Learning in Management, Lodhi Institutional Area, New Delhi 110003. D. Ulrich, L. Carter, M. Goldsmith and Debi S. Saini, The Change Champion's Fieldguide. New Delhi: Excel Books, 2005, xxiii+376pp. Rs.350 paperback. A recent study from Mercer Human Resource Consulting found that half of the 300 HR professionals it surveyed were working at organizations which were currently undergoing change. Change can be an exciting time; it can be very stressful too because of its challenges. It will invariably encounter resistance. Motivating people towards change on a sustainable basis is a mammoth task by itself. For change to be effective, a collaborative and inclusive approach is necessary. The book, "The Change Champion's Fieldguide" addresses the very pertinent area of leadership and change management in the dynamic environment of today that we are operating in. The book is divided into four sections. Part I deals with transformational and large scale design; Part 2 Management & Change. Volume I 0 Number I (2006)

106 Book Reviews looks at the fundamentals of leading change; Part 3 is all about transformationalleadership and sustaining results; and Part 4 portrays significance of measuring the change results. In the introduction to the book, Prof. Saini sets the background of a thriving, dynamic, changing Indian economy with globalization, advancement in communication, venture capitalists, mergers and acquisitions, customization of manufacturing and service sectors, shorter product life cycles, newer technologies, etc. The current dynamism has thrown up opportunities as well as challenges. With uncertainties in environment, it is essential that the organizations will need to develop their coping and excelling mechanisms. They will have to constantly evolve and adapt to changes. According to the authors while most organizations understand the need for change and adapt, but they are seldom ready for it. Techniques like TQM, BPR, OD, etc. have their own limitations and may not always succeed. Change can come about with changes in attitude and behaviour. It is amazing to note that India who some thousand years ago controlled 33 per cent of the world trade has been reduced to a mere 0.62 per cent in 2004. In between Indian history has undergone many changes. With liberalization beginning in 199 I, the globalized Indian economy posed new challenges including clash with Indian ideologies at times. According to Prof. Saini India will need to understand external variables in determining business success and introducing more robust change management strategies. With uncertainties in environment, it is important that the organizations develop their own coping and excelling mechanisms. Assuming that change is always resisted, organizations may often may take recourse to shock and h.ealing therapy. Diversity management and transformational leadership needs greater acceptance by Indian managers. Leaders at all levels are expected to contribute for value creation. In the introductory section, Goldsmith, Morgan and Effron trace the impact of co-workers and coaches on change leadership behaviour. The chapter provides a review of results of a leadership training-coaching programme in five major organizations from completely different sectors like aerospace, health care, telecom, financial services and a hi-tech manufacturing firm. As per survey findings most important variable in predicting enhanced leadership effectiveness is the leader's interface with this people. Management & Change, Volume 10 Number 1 (2006)

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Book Reviews 107

Sternin J. also known as "The Father of Applied Positive Deviance", takes up the issue of positive deviance for extraordinary social and organizational change. He outlines the PO process with 4 Os, 'define', 'determine' PDs, 'discover' strategies and 'design' practices by others. PO approach is simple and effective. This section also discusses the best practice tools for leadership development. Part 2 brings up the fundamentals of leading change. George Land and Greg Zlevor recommend innovation for competitive edge. They suggest that there are three kinds of change and three kinds of creativity and recommend that it is essential to recognize and create the condition for each phase to flourish and be successful. Lawrence Susskind traces the negotiation training which is happening in public, private and 'not-for-profit' organizations. Such trainings often pay more attention to individual skills and not exactly focused on organizational demands. Judith H. Kanz supports value diversity and inclusion as the leveraging differences for bottom-line success, while Katz suggests organization need to take a serious, strategic, long term approach to diversity and inclusion to create the environment in which people are respected and supported. Scott W. Ventrella in Chapter 10 identifies driving forces for creating a fully integrated ethical framework for total organization integrity (TOl) and recommends that TOI is a comprehensive corporate value system that has to be driven by the senior management. In a separate chapter, Jody Knox looks at the communication perspective of leading to change. He suggests that as the rhythms and patterns of daily life in organization are undergoing rapid changes to meet business challenges, it is essential that mangers and leaders place trust in others. The author strongly recommends that engaging actionable dialogue, working together and appreciated understanding will result in more enthusiastic and energized scope. In order to manage change more meaningfully, Stu Noble suggests the need for continuous learning for technical skill building, conceptual skills, process knowledge, soft 'skills as well as hard skills through simulated learning where participants can meaningfully connect their group experience. This section also takes up the issue of succession management which has attracted global attention. It suggests the star model of succession where each step in logically related to the others. The section on transformational

leadership and sustaining results has

Management & Change. Volume 10 Number I (2006)

-------'----------- ..â&#x20AC;˘ 108 Hook Reviews very interesting insights on how should leaders be developed to build market value and to create sustainable shareholder value. Stating examples of business leaders who have destroyed billions of dollars of market value for their own companies and have also eroded public perception of the entire market, it recommends that to make effective leaders, companies must invest in leadership development which is directly related to company's future success. There is stress an action learning where people apply and discuss the knowledge that they acquire through formal education and individual learning while working. Action learning has been defined as a "continuous proCf:SSoflearning and reflection, supported by colleagues, with the intention of getting things done." It has been prescribed as an essential component ofleadership development. Building a sustainable blue chip creative culture which should be a mix of right environment, trust, enjoyment, etc. has also been recommended for sustainable change management. Larry Peters and Joseph Grenny suggest that the leaders walk the talk and the best way in which they can exert influence is through their conversation which should be aimed at clarifying responsibilities, identifying and removing barriers and providing meaningful and honest feedback to people on their actions. The concluding section is about measuring the change results. The author advocates the use of metrics derived from surveys and focus groups to understand workers' needs and their frustrations too. The metrics, the author emphasizes will offer the ground for making decisions based on facts. As technology spreads to every part of the business, he feels, reliance on members will also increase and HR cannot overlook the importance and relevance of same. Metrics can work as motivators because they excite performance driven individuals. Some of the clear merits ofutiIizing metrics as stated by the author are to drive improvements, understanding critical success factors, detecting early warning, eliminating confusion, obtaining funds among others. There is reluctance by HR managers in using metrics and outlines eight basic steps in developing HR metrics. The book very comprehensively brings together the best practices of change management. It covers many small but critical issues which if neglected may not bring desired impact of change management. It is so detailed in its coverage thatit can almost be looked at as a ready reckoner for the change leaders. The book is recommended for all such individuals who are contributing their mite in making the organization a big success in Management & Change, Volume 10 Number 1 (2006)

Book Reviews 109

fulfillment of strategic goals and objectives. It is particularly recommended for senior executives such as CEO, the vr, the Director or Independent Directors - anyone who is likely to be a champion of change. Written and co-edited by an eminent team of management experts to practitioners of change, the book is very authoritative and comprehensive in coverage. Those interested in fast growing area of change in management, be it, from academics or field will find it as a very valuable reference book. Kakoli Sen, Assistant Professor (OB & HR), Institute for Integrated Learning in Management, Lodhi Institutional Area, New Delhi 110003. Avtar Singh, Mal Vikray Evam Avakray Vidhi (Fifth Edition). Lucknow: Eastern Book Company, 2005 xvi+186pp. Rs.95 paperback. As the name suggests, this book comments on laws relating to sales of goods and hire purchase and accordingly it is divided into two broad groups. The first group includes eight chapters that deal with different provisions of contract relating sales of goods. The second group includes six chapters dealing with hire purchase contracts. The first three chapters of both the groups related to sales of goods and hire purchase are made in identical manner by including definition of related terms, contract structure, essential features of contract, general and special conditions of contract, terms of contract and warranties, etc. The first group makes detailed references to 'Sales of Goods Act-1930'. The items to be treated as 'goods' are detailed out. It also makes references to the' Indian Contract Act- 1872'. Evolution of various sections of the Act is distinctive feature of this book. Rights of buyer and seller at different stages of contract execution are described in a very clear perspective. The book follows the physical movement of goods right from the sellers' premises to the buyers' and covers legality of each and every transaction in the entire sequence. ImpliCations of cancellation of contract by either party at different stages of the contract execution are duly explained. Chapter 7 includes the remedial measures available to either party for violating contract terms including implications of damages for non-acceptance, 'universal commercial code', 'specific performance' and other legal recourses. The second group includes detailed references to 'Hire Purchase ActManagement & Change, Volume 10 Number 1 (2006)

2" 110 Book Reviews

1972'. In fact, hire purchase has become an integral part of Indian business and it is most common in the passenger car segment. In recent years, more than half of the cars sold llaÂĽe-not been financed by the user but instead the cars are bought by a finance company and in turn hired to the user. The user usually buys the vehicle at the end of a specified period as per the terms of the 'hire purchase agreement'. In view of discussion on hire purchase agreement in car segment, in which the public at large is very much interested, the book assumes significance for large population base of the country. The book also deals with legal rights of the hirer and the owner during the entire period of hire purchase agreement in force. However, the hirer has the right to return the goods and cancel the contract at any time and he will not be liable to pay any damages, provided he has paid all rentals up to the date of contract cancellation. Chapters 3, 4 and 5 deal with the limitations of hire purchase charges, passing of authority, provisions ofhypothecation, rights and obligations of both hirer as well as owner. The book elaborates at length about legal remedies available to all concerned parties in the event of any contract provisions. In the event of hirer becoming bankrupt, issues such as provision of appointing a government receiver inlieu thereof, etc. have been adequately covered in the book. The book also includes citation of various court verdicts in relevant cases pursued in different courts. Throughout the text the author has shown his authority and complete understanding ofIndian Business Laws, which he has appropriately interpreted at different places. As the book is written in Hindi and Rajbhasha is official language of the country, the book will have a uti lity for a large population base that who would be able to understand, grasp, assimilate and make its good use in dayto-day hire purchase transactions. The book is very informative and authoritative and will prove useful to a wide readership covering students, consultants, lawyers and general public at large dealing in hire purchase agreements. Gireesh Chandra Tripathi, Assistant Professor, Finance Area, Institute for Integrated Learning in Management, 3, Lodhi Road, New Delhi 110003.

Management & Change, Volume 10 Number 1 (2006)

III

Book Reviews 111 Turning Events BABA AMTE: A GANDHIAN, SOCIAL ENTREPRENEUR ENVIRONMENTALIST

AND

One of India's most revered social and moral leaders, Baba Amte has devoted his life to the care and rehabilitation of leprosy patients, even allowing his body to be used for experiments to grow leprosy germs. His community development project at Anandwan (Forest of Bliss) near Nagpur in Maharashtra, speaks volumes about his commitment to the lepers cause particularly to dispel prejudice against leprosy victims. Anandwan is a selfsufficient sprawling rehabilitation center with over 3000 inmates. Funded largely by donations, the first .of which came from Norma Shearer, it has its own hospital, college, orphanage, industrial units, dairy and farmlands. Murlidhar Devidas Amte is known to countrymen as Baba Amte - "Father Amte". Baba Amte was born on December 26, 1914 at village Hinganghat in Wardha district in Maharashtra in a high-caste affluent Brahmin fam-, ily. According to his wife, Sadhna Tai, he is called 'Baba' not because of deeds of his later life, but because his parents used to address him by that name. His father Devidas Harbaaji was an accountant in the district services. As typical in many families he was close to his mother but afraid of his father. Amte in his childhood was greatly inspired by the heroic deeds of Sardar Bhagat Singh, Rajguru and Sukhdev. He was very fond of travel from childhood. In his teens at his own he visited Gurudev Rabindranath Tagore's Shantiniketan in West Bengal, Narmada Valley at Amarkantak, and tribal areas in Chandrapura district. He also visited several other underdeveloped areas to person?lly see the sight of poor, sick and disabled. His passion to serve poor was from his childhood. Once father gave few coins to buy fireworks during Diwali festivities, but he chose to give away this money to the poor. His earlier desire was to study medicine but somehow circumstances did not favour it. He later studied at Hillop Degree College at Nagpur for graduation and law degree. Initially, he started his legal practice at Durg (Chhattisgarh) but later shifted to Warora in Maharashtra. It is said that he would not charge money from the poor clients. Baba Amte later lost interest in law practice as he had some bigger social ambitions in life to fulfil. He was ardent admirer of the 'richness of heart ofthe poor people' and despised 'the. poverty of heart of the rich'. In 1936 Mahatma Gandhi set up his Sevagram Ashram at Wardha and he was deeply drawn to welfare activities which Gandhiji pursued from there. He renounced western dress code and started wearing khadi. He practiced - Contd. Management & Change, Volume 10 Number I (2006)

--------------------. 112 Book Reviews

Gandhian values in letter and spirit including adherence to simple diet, nature cure and occasional fasting. Saba Amte once in a railway compartment saw a village married woman being mishandled and he immediately intervened and saved her from miscreants. The news of this event later reached Gandhiji~ who complimented him for the heroic act. Gandhiji named Saba Amte an abhaya sadhak, a fearless seeker. This interface with Mahatma Gandhi, and an earlier visit to Shantiniketan and impact of Gurudeva Rabindranath Tagore, were certainly major turning events in his life that transformed him into a great spiritual leader and social entrepreneur. He later underwent imprisonment during Quit India Movement in 1942. On December 18, 1946, Saba Amte was married to !ndu Ghuleshastri, but no gifts were accepted. Her name was subsequently changed as Sadhna Devi and she is often referred to as Sadhna Tai. In October, 1947, the couple was blessed with his first son, Vikas and few years later, second son Prakash. Both studied medicine and pursued social service in keeping with family traditions. Saba Amte after wedding set up a 'friends colony' to function on Gandhian line of simple living and high thinking, with residents belonging to any cast, colour and creed. Shri R.K.Patil, the then Minister in Madhya Pradesh Govt. offered his home for the 'community ashram' but the problem of finances was still unresolved. Some headway was made when later the 'Korgaonkar Trust' started providing some money. Sadhna Tai was busy in basket-making trade and earning some money for the Ashram activities. This apart,_the couple also pursued agricultural activities such as soil preparation, digging wells, ploughing the fields, seed cultivation, etc. Saba Amte, after marriage, paid attention towards welfare of lepers in the area. BabaAmte started working for those struck by leprosy outside Warora. He set up II weekly clinics around Warora and later started Anandwan. In 1949, Saba Amte set up Maharogi Seva Samiti to serve lepers for treatment, training and rehabilitation. His commitment to serve the leprosy patients was so deep that Baba Amte first decided to undergo training for treatment of lepers at Kolkata's 'School of Tropical Medicine.' While undergoing internship at lepers colony at Puralia he contracted tuberculosis, for which he had to undergo treatment at Nagpur Medical College. Saba moved to the quarry land, three kilometers from Warora to set up a clinic for leprosy patients, called this 'outcast land for outcast people', full of boulders, roots and creepers and surrounded by panthers, snakes, scorpions and wild boars, Anandwan (The Forest of Bliss). Baba moved there with his wife, Sadhna Tai, two sons, a dog and fourteen rupees. - Contd. Management

& Change.

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I (2006)

Book Reviews 113 Services of his son, Dr. Prakash Amte, and his wife, Dr. Mandatai Amte who had completed their medical studies, were utilized in treating leprosy patients. He created an environment where a leper is not merely treated but also made to live with self respect. Following treatment, they continue to live at Anandwan. He believed that mental !e~ru3Y is more harmful than physical leprosy. Following treatment, they are encouraged to extend helping hand in treating other lepers to minimize expenses in engaging paid nurses. Anandwan, an ashram run by Baba Amte's family including his wife and two sons, was registered in 1951 and more land was given by the government later. The ashram is largely self"sufficient. Fruits and vegetables are cultivated for daily consumption and few cooks prepare wholesome vegetarian food. There is an abundance of trees and flowers. On June 21, 1951, Acharya Vinoba Bhave, visited Anandwan before undertaking his 'Bhoodaan Yaatra' and said, "Lepers who are compelled to move with begging bowl will now reside respectfully at Anandwan, which will one day surely transform into Nandanwan". This was yet another major landmark event in BabaAmte's life. Sadhna Tai set up Gokul, an orphanage, at Anandwan. Two hospitals, a university, an orphanage, a school for the blind and technical wings were added subsequently. In 1957, Baba Amte set up Ashokwan, about 15 km from Nagpur, for rehabilitating lepers, pursuing agriculture activities, setting up primary school, and running outpatient clinic for leprosy patients, with the help of service of his two sons, Dr. Vikas Amte and Dr. Prakash Amte. Baba's Bharat Jodo (Unite India) movements from Kanyakumari to Kashmir in 1985 and, Gujarat to Arunachal Pradesh in 1988 aimed to bring peace and create environmental awareness. Baba's support for the 'Narmada Bachao Andolan' gave it greater visibility. His main objective in this movement was proper rehabilitation of the displaced population. His Holiness, Dalai Lama, in January 2004 described Anandwan experiment as 'practical compassion, real transformation and proper way to develop India.' Baba has been awarded the UN Human Rights Prize, the Magasaysay Award, the Templeton Prize, the Gandhi Peace Prize, and many other humanitarian and environmental prizes, the proceeds of which amounting to Rs. 15 million, all have been given to Anandwan for its running. -Editor Source: 1. Dharmadhikari, Delhi, 2000.

T., Baba Am/e, National

Book Trust, New

2. Mirchandani, N., Wisdom Song: The Life of Baba Amte, Roli Books, New Delhi, 2006. Management & Change: Volume 10 Number 1 (2006)

114 Book Reviews Service Ethos in Indian Culture

JAMSETJI NUSSERRWANJI

TATA AND CSR

Jamsetji Nusserwarnji Tata, Founder ofTata Group ofIndustries in India, was a great philanthropist and ardent supporter of employees' welfare and community development activities. Jamsetji Tata was always creative, he was no imitator, but carved out a fresh field, going to the sources of supply of the raw material and to the market. Jamsetji Tata was a pioneer in the work of industrial welfare, who had a vivid interest in the lives of his employees. At the same time he had an abiding sense of responsibility to his shareholders including community. Tata Steel under the leadership of Jamsetj i Tata was a pioneer in employee welfare in the country which became the guidelines for several of the country's labour laws that were enacted later on. These included such measures as eight )lour working day, leave with pay, maternity leave with benefits, system of employee provident fund, and payment of gratuity on retirement. When TISCO and its fortunes were reasonably established, he looked beyond to see how best they could be utilized for the benefit of community, society and country at large. Jamsetji Tata was fully aware of the idea and importance of corporate social responsibility (CSR) though the phrase as such was not-existent during his times. This is evident from the contents of a letter which he wrote to his son, Dorabj i over hundred years ago - 'Be sure to lay wide streets planted with shady trees every other one of the quick growing variety. Be sure that there is plenty of space for lawns and gardens. Reserve large areas for football, hockey and parks. Earmark areas for Hindu temples, Mohammedan mosques and Christian churches.' His allied activities such as setting up of Indian Institute of Science at Bangalore to train higher personnel, iron and steel works to start the true economic cycle, and the hydro-electric stations to furnish cheap power and conserve the coal resources, and community development projects (bustee development) around Jamshedpur, speak volumes about his abiding faith in service ethos which has been the fountainhead of Indian culture. He left an enduring mark and a legacy of welfare and service which is continuing from generations to generations by the Tata Group of Industries without any let-up. A great man must have powerfully influenced for good the generation in which he lived, and his work should endure after his death. Test of a truly great man is that he works for a cause much bigger than self which lasts much beyond his life. This is how the memory of a great man lasts even after he departs. Gauged by these standards, Jamsetji Tata was truly a great man whose vision was global and concerned with the welfare of one and all. It can be safely said about Jamsetji that development of whole society and country was his dream and vision for which he worked with untiring passion and zeal all during his life. - Editor Management

& Change.

Volume 10 Number

1 (2006)

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Guidelines for Contributors Management & Change invites original articles, research-based papers, short communications and management cases on topics of current interest practically in all areas of management. While sending contributions following 'guidelines' may be adhered to failing which they may not be considered for publication. I.

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